Positive Leasing Activity and Increasing Rents for Downtown Los Angeles

office downtown LOS ANGELES market report Positive Leasing Activity and Increasing Rents for Downtown Los Angeles Market overview MARKET indicators - VACANCY 18.8% NET ABSORPTION -44,700 CONSTRUCTION 771,892 RENTAL RATE $36.85 P UNEMPLOYMENT 7.8% The Downtown Los Angeles market in the first quarter 2015 started the year on a positive note as leasing activity totaled 871,676 square feet (), a 52% increase from last quarter s total of 572,692. The total overall vacancy rate increased to 18.8% from 18.6% in the previous quarter; a 20 basis point increase. Net absorption recorded at -44,700. Rental rates continued their upward climb, recording at a direct weighted average of $36.85 per square foot (P). This marks the 9th consecutive quarter of rate increases for the market. Closed sales activity in the first quarter experienced a slowdown from the previous quarter. Figueroa Courtyard sold to Rising Realty Partners from US Bank for an undisclosed amount. UrbanBlox acquired 718-720 S. Hill St. for $8.45M, or $167 per square foot (P), from ABA Legacy Partners LLC. UrbanBlox, a noted redeveloper, intends to convert the 55,015 property located in the Jewelry District into creative office space. MARKET trends - >> Total vacancy increases slightly to 18.8% >> Weighted average asking rental rate increased to $36.85 P >> Leasing activity at 871,676 >> Absorption of -44,700 recorded >> Construction activity at 771,892 $ P FSG PER ANNUM (WEIGHTED) HISTORICAL VACANCY VS RENTS Q1 2011 - RENTS VACANCY $38 $37 $36 $35 $34 $33 $32 $31 $30 1Q11 1Q12 1Q13 1Q14 1Q15 30% 25% 20% 15% 10% % VACANT (TOTAL) HISTORICAL net absorption & Construction COMPLETIONS Q1 2011-200,000 100,000 0 (100,000) (200,000) (300,000) (400,000) NET ABSORPTION CONSTRUCTION COMPLETIONS 1Q11 1Q12 1Q13 1Q14 1Q15 1 Colliers International continuously refines its database. As a result, data reflected in this report may not be consistent with data reported in previous quarters. www.colliers.com/losangeles

market Report OFFICE LOS ANGELES los angeles DEMOGRAPHICS >> Population: 10,136,509 (2015 Estimate) 10,510,281 (2020 Projection) 3.69% (Growth 2015-2020) >> Household income: $78,309 (Average) $54,514 (Median) >> Job growth: 2.4% (past 12 months) >> Unemployment rate: 7.8% (as of February 2015 VACANCY The total vacancy rate, including sublet space increased to 18.8% compared to 18.6% last quarter, a 20 basis point increase. A longer historical perspective of the total vacancy rate shows that the vacancy rate a year ago stood at 20.1%. Total vacancy rates were highest in the Bunker Hill submarket (23.7%) and lowest in the South Park submarket (11.8%). rates were highest for Class C space (21.8%) and lowest for Class A space (18.5%) with Class B space inbetween (18.9%). NET ABSORPTION Net absorption was negative for the quarter, recording -44,700. The Financial District continued to be the best performing submarket, recording 19,900 of net absorption. Major move-ins contributing to this were Colony Capital completing their move from Santa Monica to 54,510 at 515 S Flower St and Anderson, McPharlin & Conners moving into 18,738 at 707 Wilshire Blvd. Bunker Hill (-23,700 ), South Park (-7,900 ) and Greater Downtown (-33,000 ) recorded negative net absorption for the quarter. UNEMPLOYMENT February 2015 figures for nonfarm employment in Los Angeles County showed a recovering job market. Over the past 12 months, Los Angeles County has gained 101,100 jobs for an increase of 2.4 percent. This gain in employment led to the unemployment lowering to 7.8% compared to 8.7% one year ago. Year-over-year job gains were most significant in Educational and Health Services (+27,400) and Trade, Transportation, and Utilities (+19,600). CONSTRUCTION No new projects were delivered to the market in first quarter; however there is currently 771,892 of office space under construction/renovation. These include 221 N. Figueroa St. (307,552 ), which will come back to market in late 2015 after being renovated for fire damage and the 356,140 square feet of Class A office space that is part of the Wilshire Grand Tower development. This is the largest project under construction and will be operated by InterContinental Hotel & Resorts. The development is expected to deliver in 2017. Creative space conversions continue to VACANCY BY SUBMARKET NET ABSORPTION BY SUBMARKET SUBLEASE VACANCY DIRECT VACANCY 30,000 25% 0.2% 20,000 19,900 20% 0.1% 10,000 % VACANT 15% 10% 5% 0.4% 11.4% 0.3% 14.7% 23.5% 18.3% 0 (10,000) (20,000) (30,000) (23,700) (7,900) 0% SOUTH PARK BUNKER HILL FINANCIAL (40,000) (33,000) BUNKER HILL SOUTH PARK FINANCIAL p. 2 Colliers International

market Report OFFICE LOS ANGELES office OVERVIEW EXISTING PROPERTIES VACANCY ACTIVITY ABSORPTION CONSTRUCTION RENTS Submarket/ Class Bldgs Total Inventory Direct Sublease Total Total Prior Qtr Leasing Activity Current Qtr Leasing Activity YTD Net Absorption Current Qtr Net Absorption YTD Completions Current Qtr Under Construction Weighted Avg Asking Lease Rate FINANCIAL A 9 9,732,700 15.4% 0.0% 15.4% 15.2% 63,580 63,580 (23,800) (23,800) 0 356,140 $40.07 B 25 8,388,400 21.5% 0.1% 21.6% 22.2% 231,763 231,763 47,800 47,800 0 0 $34.98 C 2 326,400 21.1% 0.0% 21.1% 19.9% 695 695 (4,100) (4,100) 0 0 $26.55 Subtotal 36 18,447,500 18.3% 0.1% 18.4% 18.4% 296,038 296,038 19,900 19,900 0 356,140 $37.07 BUNKER HILL A 6 7,221,100 24.2% 0.2% 24.5% 24.2% 493,715 493,715 (19,100) (19,100) 0 0 $39.40 B 4 537,844 10.7% 0.0% 10.7% 10.5% 0 0 (900) (900) 0 307,552 $39.00 C 1 370,200 28.2% 0.0% 28.2% 27.2% 1,498 1,498 (3,700) (3,700) 0 0 $26.35 Subtotal 11 8,129,144 23.5% 0.2% 23.7% 23.4% 495,213 495,213 (23,700) (23,700) 0 307,552 $38.68 SOUTH PARK A 2 1,144,200 5.5% 0.7% 6.2% 3.6% 38,388 38,388 (29,300) (29,300) 0 78,500 $38.84 B 7 1,850,500 14.1% 0.2% 14.3% 16.4% 16,588 16,588 38,700 38,700 0 0 $32.20 C 2 266,400 18.4% 0.0% 18.4% 11.9% 8,095 8,095 (17,300) (17,300) 0 0 $30.00 Subtotal 11 3,261,100 11.4% 0.4% 11.8% 11.5% 63,071 63,071 (7,900) (7,900) 0 78,500 $33.03 B 6 1,828,500 13.0% 0.4% 13.4% 11.8% 15,188 15,188 (28,400) (28,400) 0 29,700 $30.89 C 8 592,300 19.9% 0.0% 19.9% 19.1% 2,166 2,166 (4,600) (4,600) 0 0 $24.72 Subtotal 14 2,420,800 14.7% 0.3% 14.9% 13.2% 17,354 17,354 (33,000) (33,000) 0 29,700 $28.85 MARKET TOTAL A 17 18,098,000 18.3% 0.2% 18.5% 18.0% 595,683 610,871 (72,200) (72,200) 0 434,640 $39.69 B 42 12,605,244 18.7% 0.2% 18.9% 19.3% 263,539 250,517 57,200 57,200 0 337,252 $34.36 C 13 1,555,300 21.8% 0.0% 21.8% 19.9% 12,454 12,454 (29,700) (29,700) 0 0 $26.35 Total 72 32,258,544 18.6% 0.2% 18.8% 18.6% 871,676 871,676 (44,700) (44,700) 0 771,892 $36.85 Colliers International p. 3

market Report OFFICE LOS ANGELES >> Leasing activity increased 52% from fourth quarter 2014 to 871,767, a 4-year high >> Looking ahead, landlords are expected to push for 4% escalations >>Landlords in core properties, as well as those in creative office conversions on the fringes of the CBD, continue to court creative office tenants with smarter, more efficient space planning and amenities accumulate, as the 78,500 office building at 425 W. 11th St. in South Park and the 29,700 building at 353 S. Broadway in Greater Downtown are expected to be completed by the second half of 2015. For proposals, the Fourth and Traction development at 963 E. 4th St. will be converted to 150,000 of creative office space. Shorenstein s Seventh and Santa Fe redevelopment of the former Ford Factory is also slated to break ground in 2015 with 271,000. activity New leasing activity during first quarter totaled 871,767 compared to 572,692 in fourth quarter 2014, a 52% increase. Legal, financial services and engineering firms continue to account for a large portion of the leasing activity. Bunker Hill led all submarkets with 495,213 of leasing activity. The leasing highlights included Capital Group renewing 323,000 for 15 years at 333 S. Hope St., Nixon Peabody signing for 36,505 at 300 S. Grand Ave. and Frandzel Robins LLP leasing 24,258 at 1000 Wilshire Blvd. South Park, expanding by another 28,057 at 1149 S. Hill St., while also taking building signage in the process. Finally, a creative office building made inroads with a FIRE tenant, as the law firm of Hurst & Herrigan signed for 21,000 at 523 W. 6th St, where they had temporarily occupied 6,000. rental rates Rental rates continued to climb in the Downtown Los Angeles market. Overall annual average asking rental rates for first quarter recorded at $36.85 P, a 3% increase from last quarter at $35.77 P. Average asking rents were highest in the Bunker Hill submarket ($38.68 P) and lowest in Greater Downtown submarket ($28.84 P). Class A asking rents were $39.69 P compared to Class B at $34.36 P and Class C at $26.35 P. The Department of Building and Safety, which was the last major tenant displaced by the DaVinci fire, signed for 126,000 at 350 S Grand Ave. USC reaffirmed its commitment to WEIGHTED AVERAGE ASKING LEASE RATES BY SUBMARKET LEASING ACTIVITY BY SUBMARKET $40 $38.68 $37.07 600,000 $35 $30 $33.03 $28.85 500,000 495,213 $ P PER ANNUM (FSG) $25 $20 $15 $10 400,000 300,000 200,000 296,038 $5 $0 BUNKER HILL FINANCIAL SOUTH PARK 100,000 0 17,354 63,071 SOUTH PARK BUNKER HILL FINANCIAL p. 4 Colliers International

market Report OFFICE LOS ANGELES Outlook The outlook for Downtown Los Angeles remains optimistic, although not quite on the pace of the rest of the Greater Los Angeles market. In the face of weaker demand this quarter, leasing activity reached a 4-year high. experienced a slight uptick, but remained relatively steady as there were no major move-outs. Landlords are keying in on this, as rents continue to climb for the 9th straight quarter and 4% escalations are becoming more commonplace. Despite a flat quarter, we expect investment activity to pick up before the Federal Government raises rates in late 2015. market description Downtown LA is a moderately large office market comprised of 32.5 million, representing 11% of the total office space over 25,000 in the LA Basin. Approximately 52% of the space in this market was built prior to 1980, and is considered relatively old by Southern California standards. Downtown Los Angeles is the most dense market in the region with only one percent of the space contained within low-rise buildings, while 24% and 75% of the space are in mid-rise and high-rise structures, respectively. Downtown includes a large concentration of firms from the legal, utilities, accounting and financial services sectors, and is home to many federal, state, and local government agencies as well. HISTORICAL LEASING ACTIVITY - UNEMPLOYMENT RATE United States, California & Los Angeles County February 2015 4,000,000 900,000 9% 800,000 3,500,000 700,000 8% 7% 6.8% 7.8% 3,000,000 600,000 6% 5.8% 500,000 2,500,000 5% 400,000 4% 2,000,000 300,000 3% 200,000 1,500,000 2% 100,000 1% 1,000,0000 4Q08 1Q11 4Q09 1Q12 4Q10 1Q13 4Q11 1Q14 4Q121Q15 0% UNITED STATES CALIFORNIA LOS ANGELES COUNTY RECENT TRANSACTIONS & MAJOR DEVELOPMENTS SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER 221 S Figueroa St, Los Angeles 46,085 TBD TBD Rising Realty Partners US Bank NA 718-720 S Hill St, Los Angeles 51,055 $8,540,000 $167 P UB Hill Partners LLC ABA Legacy Partners LLC LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG TYPE LESSEE LESSOR 333 S Hope St, Los Angeles 323,000 Renewal A Capital Group Brookfield Office Properties 350 S Grand Ave, Los Angeles 126,000 New A City of Los Angeles CIM Group 300 S Grand Ave, Los Angeles 36,505 New A Nixon Peabody Beacon Capital 1149 S Hill St, Los Angeles 28,057 Expansion B USC LBA Realty 1000 Wilshire Blvd, Los Angeles 24,258 New A Frandzel Robins LLP Lincoln Property Company MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION 900 Wilshire Blvd, Los Angeles Hanjin International Corp 356,140 Financial District Under Construction Q1 2017 221 N Figueroa St, Los Angeles The City of Los Angeles 307,552 Greater Downtown Under Renovation Q4 2015 425 W 11th St, Los Angeles Lincoln Property Company 78,500 South Park Under Renovation Q2 2015 353 S Broadway, Los Angeles Flatiron Development Co LLC 29,700 Greater Downtown Under Renovation Q2 2015 963 E 4th St, Los Angeles Atlas Capital Group, LLC 150,000 Greater Downtown Proposed TBD 2060 E 7th St, Los Angeles Shorenstein Properties, LLC 271,000 Greater Downtown Proposed TBD Colliers International p. 5

market Report OFFICE LOS ANGELES DEFINITIONS OF KEY TERMS USED IN THIS REPORT Total Rentable Square Feet: Office space in buildings with 25,000 or more of speculative office space. Includes competitive space in Class A, B and C singletenant and multi-tenant buildings. Excludes non-competitive owner-occupied buildings, buildings that include 30% or greater of medical or retail space, and space that is underconstruction, under-renovation or off-market. Net Absorption: Net change in occupied square feet from one period to the next (includes the impact of change in vacant space available for sublease). Leasing Activity: Square feet leased from all known transactions completed during the quarter. Excludes lease renewals. 502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 >> $2.3 billion in annual revenue >> 1.7 billion square feet under management >> Over 16,200 professionals Class A Space: Space that an image-conscious company would lease for its headquarters. Typically, this space has a very high level of finish and an excellent location, and commands the highest rents in the market. Class B Space: Highly functional, attractive space, but less prestigious than Class A Space, and commanding lower rental rates. Class C Space: Functional, competitive space, but with a lower level of finish and/or a less desirable location than with Class B Space, and commanding lower rental rates. Low-Rise: Buildings with a total of 4 floors or less. Mid-Rise: Buildings with a total of 5 to 13 floors. High-Rise: Buildings with 14 or more floors. Direct : Space in existing buildings that is vacant and immediately available during the quarter for direct lease, plus space that is vacant but not available for direct lease or sublease (for example, that is being held for a future commitment). Total : Space in existing buildings that is vacant and immediately available during the quarter for direct lease or for sublease, plus space that is vacant but not available for direct lease or sublease. Weighted Average Asking Rental Rates: Weighted by the total square feet available for direct lease. Data is based on Full Service Gross rents, and includes all costs associated with occupying the space, including taxes, insurance, maintenance, janitorial service and utilities. Reported on a monthly, per basis. Space Added (Net): Total square feet added during the quarter via construction completions, including renovated space returned to market, less total square feet taken off-market due to demolitions or conversions. Under Construction: Includes buildings that are in some phase of construction, beginning with foundation work and ending with the issuance of a Certificate of Occupancy. Technical Note Colliers International is continuously refining its database. The data shown in the historical tables and graphics in this report have been adjusted to take into account these changes in the database. This report has been prepared by Colliers International for general information only. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This report and other research materials may be found on our website at www.colliers.com/losangeles. united states: Downtown Los Angeles Office License No. 01908231 865 S. Figueroa Street, Suite 3500 Los Angeles, CA 90017 tel +1 213 627 1214 FAX +1 213 327 3200 ALGERMISSEN, STEPHEN Executive BAER, CHRISTOPHER Executive BISSELL, BRENT Associate DUMONT, CHRIS Senior DWIGHT, TIM Associate KIRK, TERENCE MARADEI, GREG MATTESON, CAITLIN Research Director Research Services MUMPER, HANS Executive Managing Director PELLOW, NATHAN Senior PUTNAM, RICK Managing Director Western Region Capital Markets ROBBINS, JAMES Associate SCHNELL, RICHARD C. Senior STANICH, KYLE Associate TARCZYNSKI, MARK Executive TISCHER, ADAM TUSZYNSKI, GREG VILGIATE, NICO Executive WALKER, SHADD G. Senior WOODS, RANDALL WONG, CHRISTOPHER Regional Analyst Research Services Accelerating success. p. 6 Colliers International www.colliers.com/marketname