1441 Montiel Road, Escondido

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INVESTMENT OPPORTUNITY 49,990 SF, 85.6% LEASED MULTI-TENANT INDUSTRIAL/FLEX BLDG $9,860,000 ($197/SF)

1441 M O N T I E L R OA D ESCONDIDO

CONFIDENTIAL OFFERING MEMORANDUM

DISCLAIMER

This Confidential Offering Memorandum (“Memorandum”) is being delivered subject to the terms of the Confidentiality Agreement (the “Confidentiality Agreement”) signed by you and constitutes part of the Confidential Information (as defined in the Confidentiality Agreement). It is being given to you for the sole purpose of evaluating the possible investment in 1441 Montiel Road, Escondido, CA 92026 (the “Project”), and is not to be used for any other purpose or made available to any other party without the prior written consent of Alexander Development Group (“Managing Member”), or its exclusive broker, Cushman & Wakefield. This Memorandum was prepared by Cushman & Wakefield based primarily on information supplied by Managing Member. It contains select information about the Project and the real estate market but does not contain all the information necessary to evaluate the Project. The financial projections contained herein (or in any other Confidential Information) are for general reference only. They are based on assumptions relating to the overall economy and local competition, among other factors. Accordingly, actual results may vary materially from such projections. Various documents have been summarized herein to facilitate your review; these summaries are not intended to be a comprehensive statement of the terms or a legal analysis of such documents. While the information contained in this Memorandum and any other Confidential Information is believed to be reliable, neither Cushman & Wakefield nor Managing Member guarantees its accuracy or completeness. Because of the foregoing and since the investment in the Project is being offered on an “As Is, Where Is” basis, a prospective investor or other party authorized by the prospective investor to use such material solely to facilitate the prospective purchaser’s investigation, must make its independent investigations, projections and conclusions regarding the investment in the Project without reliance on this Memorandum or any other Confidential Information. Although additional Confidential Information, which may include engineering, environmental or other reports, may be provided to qualified parties as the marketing period proceeds, prospective purchasers should seek advice from their own attorneys, accountants, engineers and environmental experts. Neither Cushman & Wakefield nor Managing Member guarantees the accuracy or completeness of the information contained in this Memorandum or any other Confidential Information provided by Cushman & Wakefield and Managing Member. Managing Member expressly reserves the right, at its sole discretion, to reject any offer to invest in the Project or to terminate any negotiations with any party at any time with or without written notice. Managing Member shall have no legal commitment or obligations to any prospective investor unless and until a written sale agreement has been fully executed, delivered and approved by Managing Member and any conditions to Managing Member’s obligations thereunder have been satisfied or waived. Managing Member has retained Cushman & Wakefield as its exclusive broker and will be responsible for any commission due to Cushman & Wakefield in connection with a transaction relating to the Project pursuant to a separate agreement. Cushman & Wakefield is not authorized to make any representation or agreement on behalf of Managing Member. Each prospective investor will be responsible for any claims for commissions by any other broker in connection with an investment in the Project if such claims arise from acts of such prospective investor or its broker. This Memorandum is the property of Managing Member and all parties approved by Managing Member and may be used only by parties approved by Managing Member. No portion of this Memorandum may be copied or otherwise reproduced or disclosed to anyone except as permitted under the Confidentiality Agreement.

1441 MONTIEL ROAD, ESCONDIDO

TABLE OF CONTENTS

INVESTMENT ADVISOR: Mark Avilla, Senior Director P 760.431.4223 Mark.Avilla@cushwake.com CA Lic. 01104562 LOCAL MARKET ADVISORS: Bob Cowan, Director P 760.431.3836 Bob.Cowan@cushwake.com CA Lic. 01838109 FINANCIAL ADVISORS: Steven Hildebrand, Senior Director P 858.546.5450 Steven.Hildebrand@cushwake.com CA Lic. # 01921356 Ian Bradley, Financial Analyst P 858.546.5449 Ian.Bradley@cushwake.com CA Lic. # 01913759

Executive Summary................................................................... 4 Property Overview....................................................................10 Tenant Overview........................................................................ 18 Market Overview....................................................................... 26 Financial Analysis.....................................................................48

DEBT & EQUITY ADVISOR: Gary Goss, Senior Director P 858.546.5452 Gary.Goss@cushwake.com CA Lic. # 00952570

1000 Aviara Parkway, Suite 100 Carlsbad, CA 92011 T 760.431.4200 F 760.454.3869 www.cushmanwakefield.com www.cushwakeprivateclient.com

OFFERING MEMORANDUM

1 E X E C U T I V E SUMMARY

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EXECUTIVE SUMMARY Cushman &Wakefield, as exclusive advisor, is pleased to present the opportunity to acquire 1441 Montiel, (the “Project”) a highly desirable multi-tenant industrial project located in the Escondido submarket of San Diego County. Totaling approximately 49,990 square feet, 1441 Montiel was thoughtfully designed and developed in 2002 to accommodate the expanding base of industrial tenants that thrive throughout the inland area of North San Diego County. The Project is located in one of San Diego’s highest occupied industrial markets and provides expedient access to Interstate 15, Highway 78, a wide variety of amenities and a significant concentration of residential housing units, which results in one of North San Diego County’s most coveted business locations. 1441 Montiel is 86% leased to three (3) tenants, with varied lease expirations, and one (1) vacancy. Suite sizes range between 7,182 square feet and 17,406 square feet, which range from 14.4% to 34.8% of the Project’s total square footage. The vacancy represents 14% of the project with in place rents approximately 9.3% below current market rents in a market with 2.2% vacancy. As a result of these dynamics, 1441 Montiel provides the investor secure in-place cash flow, with insulation from market and rent roll fluctuations, while allowing the unique opportunity for near term upside.

The Project was developed as a two (2) building, high bay, multi-tenant industrial park. The North Coast Church purchased the adjacent building in 2015, which it occupies and conducts services after normal business hours. There is a reciprocal access and parking agreement, which allows parking to the benefit of 1441 Montiel during normal business hours.

1441 MONTIEL ROAD, ESCONDIDO

49,990 SF MULTI-TENANT FLEX / INDUSTRIAL BUILDING

85.6% LEASED

$9,860,000 ($197/SF) ASKING PRICE

6.2% PROJECTED YEAR-1 CAP

15% 3-YEAR LIRR

OFFERING MEMORANDUM

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RARE MULTI-TENANT INDUSTRIAL OPPORTUNITY 1441 Montiel represents an extremely rare opportunity for an investor to acquire a multi-tenant industrial project within the Escondido Industrial market with extremely low vacancy. 1441 Montiel’s high historical occupancy can be attributed to the overall functionality of the Project, including a contemporary design, concrete parking lot with full drive around access, rear grade level loading with twelve (12) grade level roll up doors (12’w x 14’h) and 22’-24’ warehouse clear height. The units include highly improved office areas on the first floor with a mixture of second floor mezzanine. With minimal available future development opportunities, an investor will benefit from increasing demand, limited leasing options and continued spikes in rental rates.

1441 MONTIEL ROAD, ESCONDIDO

INVESTMENT HIGHLIGHTS

CASH FLOW PROTECTION | NEAR TERM UPSIDE Currently 86% leased, with no tenant occupying more than 34.8% of the Project, 1441 Montiel’s ideal multi-tenant design eliminates concerns from a large all-at-once vacancy exposure protecting cash flow and net operating income. Additionally, a new investor will be able to capture near term upside with 14% of the project vacant and in place rents approximately 9.3% below current market rents in a market with 2.2% vacancy. This is especially advantageous in a market that is experiencing continuous tenant demand, limited leasing options and an anticipated spike in rental rates. OUTSTANDING MARKET DYNAMICS The Escondido industrial market is one of the strongest and most dynamic industrial markets in San Diego County. Consisting of 6,913,435 square feet, the Escondido industrial market has one of the lowest vacancy factors in all of San Diego County at 2.2%. By comparison, it has a lower vacancy factor than the averages in all of San Diego County and North County, which total 4.4% and 5.1% vacancy respectively. Since 2013, the Escondido industrial market has experienced a 73% increase in rents while remaining in single digit vacancy. FANTASTIC LOCATION 1441 Montiel is strategically located at the northwest corner of Interstate 15 and Highway 78. This junction is the confluence of the two main freeways serving North San Diego County. Being centrally located on both Highway 78 and Interstate 15 Freeways, Escondido serves as the gateway to North County for commercial trade, servicing areas as far North as the Inland Empire/ Riverside County and South to the Mexico Border. Escondido also serves as one of the largest retail hubs in North County, boasting one of the highest sales tax per capita in the County. The amenity rich trade area includes national retailers surrounding the site such as Costco, Wal-Mart, Kohl’s, Starbucks, McDonald’s, Taco Bell, Hooters, Jersey Mikes, Verizon, Temecula Valley Bank and Navy Federal Credit Union. In close proximity is the famous Stone Brewery World Bistro and the 740,000 sf, 11-story, Palomar Medical Center West. The project is also near a North County Transit Station (Nordahl Road), where the Sprinter light rail line travels from Escondido through San Marcos and Vista to Oceanside. The rail line then travels north via Amtrak and Metrolink and south via the Coaster and Amtrak. The North County Transit Station also offers bus services. HIGH BARRIERS OF ENTRY & ESCALATING RENTS The Escondido industrial market offers very few sites for future development. The Escondido Research and Technology Park was to be the area for industrial expansion. However, a significant portion of that land has been developed as medical and build-to- suit projects. Those projects include a total of 1,753,588 square feet. The breakdown of those projects include: 740,000 square foot, 319 bed, Palomar Hospital, two (2) multi-tenant medical buildings totaling approximately 135,000 square feet and another planned multi-tenant medical building of 75,000 square feet, a 15,000 square foot Davita Dialysis building, Stone Brewery’s corporate headquarters within two (2) buildings totaling approximately 110,000 square feet and Corovan’s 90,000 square foot facility. Additionally, Vertiv recently occupied approximately 212,088 square feet at 1925-2005 Harmony Grove, which represents one of San Diego County’s largest lease transactions. There is currently 376,500 square feet of projects that are either under construction or planned for construction. Of this total, approximately 273,000 square feet is pre-leased to Stone Brewery. Only 103,500 square feet is not currently preleased. This incredible amount of activity demonstrates the high barriers of entry to the Escondido market and the effect it will continue to have on rents.

OFFERING MEMORANDUM

2 P R O P E R T Y OVERVI EW

SITE DETAILS

PROPERTY ADDRESS:

1441 Montiel Road, Escondido, California 92026

PROPERTY DESCRIPTION:

Industrial / Flex Building

RENTABLE BUILDING AREA:

49,990 square-feet

MEZZANINE AREA:

Approximately 18,000 square-feet

APN(S) / SITE ACRES:

4.93 Aces (214,751 SF)

APN:

228-290-62-01

ZONING:

PDC, Escondido

YEAR BUILT/RENOVATED:

2002

VISIBILITY/FRONTAGE:

500 feet on Montiel Road

PARKING:

4.3/1,000 SF (including spaces under reciprocol agreement)

ELECTRIC & GAS UTILITY:

San Diego Gas & Electric Company

INTERNET:

Coaxial Cable & Fiber provided by Cox Communications

WATER & SEWER UTILITY:

City of Escondido

TOPOGRAPHY:

Level with retaining wall along Montiel Road

1441 MONTIEL ROAD, ESCONDIDO

ACCESS/EGRESS: Dual curbcut on Montiel Road PAVING: Concrete throughout LANDSCAPE: NEED INFO SECURITY: Tenant supplied, as needed SPRINKLERS: Wet

Consists of mature trees and shrub around the building and parking areas

SITE IMPROVEMENTS:

NEED INFO

COOLING EQUIPMENT:

NEED INFO

ROOF COVER:

CONSTRUCTION TYPE/FOUNDATION:

Reinforced concrete tilt-up

EXTERIOR FINISHES:

Stamped concrete and glass

POWER:

2,000a/120-208v 3p Heavy

CLEAR HEIGHT:

22’-24’

OFFICE CLEAR HEIGHT:

Approximately 8.5 to 9 feet

DOCK LEVEL LOADING:

12 tot./12’w x 14’h

OFFERING MEMORANDUM

AERIAL LOCATOR

SITE

MONTIEL ROAD

WEST MISSION ROAD

INLAND RAIL TRAIL

1441 MONTIEL ROAD, ESCONDIDO

SITE AERIAL

MONTIEL ROAD

SITE

OFFERING MEMORANDUM

ALLS

29643 N

CLIENT West

SITE PLAN

TALLS

BUILDING TOTAL 130 STALLS REQUIRED

ESCONDIDO, CA 92026 1441 MONTIEL RD. 760-746-4955 CTE, TOM GAETO

NG TOTAL

L STALLS, PLUS A RECIPROCAL PARKING

PROJECT

A-3 OCCUPANCY

NORTHCOAST CHURCH: 9,000 SQ FT/100 + 1/TEACHER * 100 REQUIRED STALLS

1441 MONTIEL ROAD

BUILDING TOTAL 133 STALLS REQUIRED

A-3 OCCUPANCY BUILDING TOTAL 100 STALLS REQUIRED

EXISTINGACCESSIBLESIDEWALK ANDFIRSTFLOORENTRYDOORS (COVEREDWALKWAY)

L STALLS, PLUS A RECIPROCAL PARKING

CTE

760-746-4955

PROPOSED STE 'A'

PROPOSED STE 'B'

1441 MONTIEL RD.

ESCONDIDO, CA 92026

CTETESTING

DEHESACHARTERSCHOOL

WIRELESSTENANT

1441 MONTIEL ROAD

A COMMERCIAL INTERIOR 2ND FLOOR ADDITION FOR:

(E)COVERED TRASHAND RECYCLING ENCLOSURE EXISTING SDGEMAIN ELECROOM

EXISTING -T-MOBILEGENERATOR

MPA ARCH ITECTS INC .

F. 619.236.0557 SanDiego,CA92104 V.619.236.0595 3578 30thStreet

EXISTING COVERED TRASH ENCLOSURE

AMERICAN INSTITUTEOFARCHITECTS www.mpa-architects.com MEMBER

DESCRIPTION REVISIONS

NO.

DATE

NORTHCOASTCHURCH

EXISTING LANDSCAPE

1451 MONTIEL ROAD

SHEETTITLE PARKING

PARKING CALCULATIONS

CALCULATIONS

NTS

DATE:

SCALE:

JW 9/3/2017

075-2016 ASNOTED

DATABASE:

DRAWNBY:

CHECKEDBY:

SHEETNUMBER:

A2.1

PROJECTNO:

075-2016

1441 MONTIEL ROAD, ESCONDIDO

PARCEL MAP

APN# 228-290-62-01

OFFERING MEMORANDUM

3 T E N A N T OVERVI EW

TENANT OVERVIEW

Founded in 1989, Construction Testing & Engineering, Inc. (CTE) commenced operations with two professional engineers and one engineering geologist. Over the past 25 plus years, CTE has grown to become a large regional multi-disciplined engineering company employing more than 150 professionals. Locally owned and operated, CTE today is a leading engineering firm primarily doing business in the southwestern United States. From offices located in San Diego County, Riverside, Ventura, and Pasadena, California, CTE provides geotechnical, environmental, and civil engineering, survey, construction inspection, and materials testing services for owners, developers, contractors, and public entities within the communities they reside. Engineering project types have included high-rise and mid-rise office buildings, hotels, condominiums and apartments, casinos, universities, and various K-12 public school projects, churches, shopping malls, residential developments, industrial parks, earth and rock fill dams, as well as hundreds of US Navy, US Army Corps, Federal Highway, State, City, Municipal, and Utility projects. For more information please visit their website at www.cte-inc.net

Construction Testing & Engineering Suite 115

17,406 square feet Rent: $1.20/SF NNN Exp: 1/31/2026

1441 MONTIEL ROAD, ESCONDIDO

TENANT OVERVIEW

Since 2001 our staff have been leaders in innovative ways to approach education. Element Education is a non-profit corporation which oversees three publicly funded charter schools. Dehesa Charter School, which is operated out of 1441 Montiel Road, Escondido is a student-driven learning program operating in San Diego, Riverside and Orange Counties. With the guidance of a California credentialed Educational Facilitator, a personalized academic plan is designed to align with the learning styles, interests, talents, and goals of each student. The majority of a student’s academic work is completed with his or her parent(s) serving as the primary guide. Optional group instruction is offered via Co-Ops and Cohorts. Multiple opportunities are provided for other specialized instruction and real world learning. For more information please visit their website at www.myelement.org and www.mydehesa.org

Element Education, Inc. Suite 143-145

12,962 square feet Rent: $1.23/SF NNN Exp: 6/30/21

T-Mobile West LLC offers mobile communications services under the T-Mobile brands. It provides wireless telecommunication services and voice and data services to customers. It engages in installing, operating, and maintaining wireless telecommunication system. The company was incorporated in 1995. T-Mobile West LLC operates as a subsidiary of T-Mobile USA, Inc. For more information please visit their website at www.t-mobile.com

T-Mobile West, LLC Suite 141 12,440 square feet Rent: $1.01/SF NNN Exp: 2/28/23

OFFERING MEMORANDUM

STACKING PLANS

VACANT

2021

2023

2026

office

5,432 SF

1,750 SF

storage

not a part

open area

1441 MONTIEL ROAD

SECOND FLOOR

FIRST FLOOR

EXISTING ACCESSIBLE SIDEWALK AND FIRST FLOOR ENTRY DOORS (COVERED WALKWAY)

PROPOSED STE 'A'

PROPOSED STE 'B'

CTE TESTING Construction Testing & Engineering Suite 115

CTE TESTING VACANT Suite 115 7,182 RSF

DEHESA CHARTER SCHOOL Element Education, Inc. Suite 143-145 12,962 RSF Exp 6/30/21

T-Mobile West uite 141 12,440 RSF Exp 2/28/23

WIRELESS TENANT

17,706 RSF Exp 1/31/26

(E) COVERED TRASH AND RECYCLING ENCLOSURE EXISTING SDGE MAIN ELEC ROOM

EXISTING -T-MOBILE GENERATOR

FIRST FLOOR

1441 MONTIEL ROAD, ESCONDIDO

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OFFERING MEMORANDUM

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1441 MONTIEL ROAD, ESCONDIDO

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OFFERING MEMORANDUM

4 M A R K E T OVERVI EW

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ESCONDIDO, CA Settled in a long valley in the coastal mountains of Southern California, Escondido, which means “hidden” in Spanish, lies about 18 miles inland, 100 miles south of Los Angeles, and 30 miles northeast of San Diego. Surrounded by avocado and citrus groves, Escondido is a diverse, vibrant community with just the right mix of small town friendliness and big-city buzz. Established in 1888, the city’s rich past brings charm and stability to the community. You can see it in the historic homes of Old Escondido or experience it in the thriving downtown area and the weekly blast to the past, “Cruisin’ Grand.” Yet integrated with Escondido’s treasured heritage is a progressive future, bright and brimming with promise. New jobs, new cultural amenities, new entertainment venues, new choices for residential living, and a new vision for Escondido’s future, make Escondido a city to watch.

1441 MONTIEL ROAD, ESCONDIDO

ESCONDIDO, CA

In addition, the 78 Freeway lies in the middle of the submarket and offers connections to the I-5 and I-15 Freeways in addition to east/west access between coastal and inland north San Diego County communities. Escondido is also well-served by public transportation with access to the Sprinter commuter rail systems, three major ports, and three major international airports: San Diego International Airport (32 miles); John Wayne International Airport (98 miles); and Los Angeles International Airport (106 miles). In the last six years, Escondido has been a leader in economic growth. The unemployment rate is 4.6% and industrial vacancy is 3.6%, the lowest in North County. Annual sales tax has reached a record level of 36 million dollars. In 2016 we have added 560 net new businesses. Today they have 35 significant, high-end commercial and residential projects in progress, valued at 1.2 billion dollars in capital investment and creating more jobs in Escondido. The collaboration with neighboring cities, Innovate 78, has received strong recognition as a successful model and a catalyst to promote regional economies. A CITY FOCUSED ECONOMIC DEVELOPMENT, FINANCIAL STABILITY, PUBLIC SAFETY AND NEIGHBORHOOD IMPROVEMENT.

CITY OF ESCONDIDO Escondido may mean “hidden” but it’s no secret there’s a lot going on here! Located just 30 miles northeast of downtown San Diego and 20 minutes from the coast, Escondido is home to major attractions, beautiful wineries, craft breweries, unique arts and theatre, delicious culinary experiences and a charming historic downtown. Enjoy our beautiful climate with year-round golfing, hiking, biking, fishing, and fantastic events! Escondido is the heart of northern San Diego… rich in history and culture. The list of “must do’s” includes the California Center for the Arts, Escondido, a unique performing arts complex, museum, and conference center; the San Diego Zoo Safari Park, an expansive wildlife sanctuary; the amazing sculpture garden, Queen Califia’s Magical Circle, created by the late world- acclaimed artist Niki de Saint Phalle; Cruisin’ Grand Escondido, one of the greatest ongoing traditions in San Diego County; the San Diego Children’s Discovery Museum; and the Daley Ranch, a wilderness preserve with extensive hiking, biking and equestrian trails. OUTSTANDING LOCATION & ACCESS Escondido is well located with outstanding local and regional access. The I-15 Freeway is located along the west side of the submarket and provides access to Riverside County to the north and Downtown San Diego and the Mexico Border to the south.

OFFERING MEMORANDUM

ESCONDIDO, CA

PARKS & RECREATION With great year-round weather, easy access to transportation corridors and dozens of cultural and recreational amenities, Escondido is the perfect place to call home. Our wide variety of housing choices, from modern urban condos to historic bungalows and large lot estates, attracts residents looking for an enjoyable quality of life at some of the most affordable prices in San Diego County. ECONOMY Escondido’s economy is one of the most diversified in North San Diego County. Industries such as healthcare, specialty food and beverage manufacturing, agriculture, professional services and precision manufacturing all call Escondido home. Retail sales are among the highest in San Diego County due to the presence of the Escondido Auto Park and Westfield North County. From computers to craft beer, Escondido is rich in the entrepreneurial spirit that defines the San Diego region. Escondido has matured from what was primarily an industrial market to a balanced trade area serving the changing needs of the growing communities. With rapid population growth comes the need for more services, which increases the city tax revenues allowing for a higher quality services to the tenants. Escondido also boasts quality executive and affordable housing allowing decision makers and employees to work close without commuting south to San Diego.

TALENTED WORKFORCE Escondido’s excellent access to the region’s talented workforce creates a vibrant ecosystem for professional, scientific and information-focused companies. Our millennial population, residents 18 to 34 years of age, is the third highest of the 78 corridor. Palomar Medical Center, which opened its doors in the Escondido Research and Technology Center in 2012, is the centerpiece of the region’s healthcare system and is recognized as one of the most technologically advanced hospitals in the world. Escondido is home to dozens of innovative companies and entrepreneurs, with one of the highest numbers of recorded patents per capita in the nation.

1441 MONTIEL ROAD, ESCONDIDO

ESCONDIDO, CA

ESCONDIDO AT-A-GLANCE

Escondido’s educational options continue to expand. We are home to award winning charter schools, innovative public schools and institutes of higher education such as John Paul the Great Catholic University and Palomar College. MAJOR INDUSTRIES Escondido continues to be an attractive location for the Healthcare industry with the recent completion of the Palomar Medical Center – which touts itself as the 5th most technologically advanced hospital in the world. Other leading industries include Professional Services, Specialty Foods & Microbreweries and Precision Manufacturing. Historically, Escondido has lacked quality office product, however in the past 10 years the development of high quality office product has done extremely well. As a result of limited supply, these markets have shown decreasing vacancies even during years of increased supply and have never experienced dramatic decreases in rental rates like the surrounding markets. With no speculative office developments under construction, the area is projected to experience strong tenant demand and lower vacancy, particularly for top-tier, well- located assets.

EscondidoishometotwoofNorthCounty’stoptourismdestinations: The world-famous San Diego Zoo Safari Park and Stone Brewing Company, America’s ninth-largest craft brewery.

149,912 POPULATION

$54,268 MEDIAN HH INCOME

33 MEDIAN AGE

68,645 NUMBER OF EMPLOYEES

48,557 NUMBER OF HOUSING UNITS

77.3 O AVERAGE TEMPERATURE

MAJOR EMPLOYERS

OFFERING MEMORANDUM

NEARBY RETAIL AMENITIES

1441 MONTIEL ROAD, ESCONDIDO

NEARBY RETAIL AMENITIES

OFFERING MEMORANDUM

COMPETITIVE SET | LEASE

CAR

LOS VALLECITOS BUSINESS CTR. 800-830 LOS VALLECITOS BOULEVARD & 125-145 VALLECITOS DE ORO, SAN MARCOS, CA Size : 151,434 SF Type : Industrial/Retail/Office Year Built : 1981 Parking : 3.0/1,000 SF Lease Rate: $1.20 to $1.45/SF MG Leased: 88.26% Available : 12 spaces (34,836 SF) 631 to 16,595 SF Mixed use business park with a flexible mix of floor plans for small to large tenants.

SUBJECT: VANGUARD PLAZA 1441 Montiel Rd, Escondido Size : 49,990 SF Type : Class B Industrial Warehouse Year Built : 2002

VISTA CORPORATE CENTER 2790 BUSINESS PARK DRIVE, VISTA, CA Size : 49,299 SF Type : Flex/R&D Year Built : 1989 Parking : 4.0/1,000 SF Lease Rate: $1.35/SF NNN Leased: 63.3% Available : 1 space (18,100 SF) divisible to 8,000 SF Second floor creative office space.

PACIFIC STREET CENTER 250 S. PACIFIC ST., SAN MARCOS, CA Size : 22,892 SF Type : Flex/R&D Year Built : 2007 Parking : 2.45/1,000 SF Lease Rate: $1.25/SF NNN Leased: 100% Available : 1 space (2,950 SF)

Parking : 3.43/1,000 SF Lease Rate : $1.45/SF MG Leased : 100% Available : 1 space (7,182 SF) not divisible

Flex condo available for lease or sale ($270.58/SF)

Parking can be accomodated up to 6.0/1,000 SF. Two-story creative office space.

4-S RANCH CORPORATE PARK 17034 CAMINO SAN BERNARDO, SAN DIEGO Size : 26,535 SF Type : Light Manufacturing Year Built : 1999 Parking : 2.82/1,000 SF Lease Rate: $1.39/SF NNN Leased: 100% Available : 1 space (26,535 SF) not divisible Highly improved w/ engineering labs & offices, 95% HVAC, 2 grade-level lading doors and 1 dock-high loading door.

STATE PLACE BUSINESS PARK 101 STATE PLACE, ESCONDIDO, CA Size : 32,368 SF Type : Year Built : 1989 Parking : 3.0/1,000 SF Lease Rate: n/a Leased: 100% Available : 0 spaces (0 SF)

BERNARDO TRENDS BUSINESS PARK 11225-11245 W. BERNARDO CT., SAN DIEGO Size : 42,862 SF Type : Office/R&D Year Built : 1989 Parking : 4.0/1,000 SF Lease Rate: $1.60-$1.85/SF MG Leased: 100% Available : 0 spaces (0 SF)

4S-RANCH CORPORATE PARK 10864 THORNMINT RD. SAN DIEGO, CA Size : 38,613 SF Type : Flex/R&D Year Built : 1997 Parking : 3.7/1,000 SF Lease Rate: $1.45/SF MG Leased: 100% Available : 1 space (38,6136 SF) not divisible Freestanding office/R&D facility with high quality tenant improvements.

100% leased office & industrial multi- tenant business park

3-building office/R&D park that is 100% HVAC Improved.

1441 MONTIEL ROAD, ESCONDIDO

S Y C A M O R E A V E .

VISTA

SBAD

ESCONDIDO

P A L O M A R A I R P O R T R D . E L C A M I N O R E A L

SAN MARCOS

7 5

RANCHO SANTA FE

OFFERING MEMORANDUM

LEASE COMPARABLES

Building Type State Date Direct / Sub Exp Date MFG 1/1/2025 4/30/2027 Direct

Start Rate Eff. Rate NNN Exp. Total Consid $1.64 $1.62 $0.36 $1,588,430 $1.37 $1.45 $0.36 $4,544,437

Lease Type Term Mos Free Mos Escalations

CAM Existing TI Landlord TI Tenant TI

Tenant Status Premises Moved From Industry Type Renewal Second Extension Manufacturing

Property Name Address City State Zip

Lessee

Square Feet Exist. Office % Office 35,088 SF 9,000 SF 26%

Lessor

Crossroads II 16990 Goldentop Rd. Ste D, E, & F San Diego, CA 92127 SD:Rancho Bernardo Crossroads II 16990 Goldentop Rd. Ste A, B, & C San Diego, CA 92127 SD:Rancho Bernardo Wineridge Business Park 2066 Aldergrove Ave. Escondido, CA 92029 SD:Escondido

D&K Engineering

NNN 28 1 3% NNN 100 6 3%

$0.00 $15.00 $2.50 $0.00 $0.00 $15.00 $17.25 $0.00

Westcore II North SD Portfolio, LLC

D&K Engineering

MFG 1/1/2019 4/30/2027 Direct

31,360 SF 15,680 SF 50%

Expansion Second Expansion Manufacturing New Second Arizona Financial Activ- ities New Second Rancho Bernardo Technology

Westcore II North SD Portfolio, LLC

MFG 3/1/2017 2/28/2023 Direct

24,972 SF 20,227 SF 81%

$1.25 $1.35 $0.25 $2,422,986

NNN 72 0 3%

$0.00 $0.00 $5.00 $0.00

MJP Investments, LLC

CC&C, LLC

MFG 10/1/2018 9/30/2025 Direct

18,541 SF 18,541 SF 100%

$1.35 $1.41 $0.00 $2,201,408

NNN 84 4 3%

$0.00 $0.00 $30.00 $0.00

Via Frontera Bus. Prk. 10967 Via Frontera San Diego, CA 92127 SD:Rancho Bernardo

Nextlevel Internet, Inc

Seven C’S Group, LLC

$1.46 $1.52 - $449,798

NNN 36 0 3%

$0.00 - $5.00 $0.00

R&D 11/1/2018 10/31/2021 Direct

Rancho Bernardo Tech 11021 Via Frontera, Ste D San Diego, CA 92127 SD:Rancho Bernardo

New Second Rancho Bernardo Health Care

8,220 SF - -

Companion Medical, Inc.

Windell Investments

MFG 10/1/2018 9/30/2023 Direct

6,496 SF 6,496 SF 100%

$1.42 $1.51 $0.00 $587,678

+E 60 0 3%

$0.00 $0.00 $0.00 $0.00

La Costa Meadows Drive 1890 Diamond St. San Marcos, CA 92069 SD:San Marcos

Renewal Second Renewal Manufacturing

Hunter Industries, Inc.

L C Meadows, LLC

1441 MONTIEL ROAD, ESCONDIDO

LEASE COMPARABLES

S Y C A M O R E A V E .

VISTA

SBAD

ESCONDIDO

P A L O M A R A I R P O R T R D . E L C A M I N O R E A L

SAN MARCOS

1/2

RANCHO SANTA FE

4/5

OFFERING MEMORANDUM

SALE COMPARABLES

Innovation Way Industrial Park 6131 & 6133 Innovation Way, Carlsbad Size/Type : 114,572 SF Industrial (2 Bldgs) Year Built : 2016 Sale Date : 11/7/2018 Sale Price : $24,200,000 ($211.22/SF) Sale Type : Investment CAP Rate : n/a Buyer : Rexford Industrial Realty, Inc. Seller : Shea Properties Management Company, Inc. Comments : 75% Leased at Sale 1031 Exchange

2843 Benet Rd 2843 Benet Rd, Oceanside Size/Type : 35,000 SF Industrial Year Built : 1987 Sale Date : 2/13/2018 Sale Price : $9,333,500 ($266.67/SF) Sale Type : Investment CAP Rate : n/a Buyer : New Mountain Capital Seller : Arctic Glacier, Inc. Comments : 100% Leased at Sale Sale Leaseback, Bulk/Portfolio Sale

Engineer Business Center 1390 Engineer St, Vista Size/Type : 41,949 SF Industrial Year Built : 2001 Sale Date : 1/25/2019 Sale Price : $7,836,500 ($186.81/SF) Sale Type : Owner/User CAP Rate : n/a Buyer : Del Rey Avocado Seller : Dariush Dan Hosseini Comments : None

Burke Sycamore Business Center 2345 La Mirada, Vista Size/Type : 13,295 SF Industrial Year Built : 2006 Sale Date : 11/7/2018 Sale Price : $2,600,000 ($195.56/SF) Sale Type : Owner/User CAP Rate : n/a Buyer : Tytus Holding LLC Seller : James D. & Jacquelyn A. Stuart Comments : 100% Leased at Sale

production Buildings A, B, C & D 2946-2954 Norman Strasse Rd & 195 Bosstick Rd., San Marcos Size/Type : 222,388 SF Industrial (4 Bldgs) Year Built : 2018 Sale Date : 9/27/2018 Sale Price : $38,947,618 ($186.03/SF) Sale Type : Investment CAP Rate : n/a

120 Mata Way 120 Mata Way, San Marcos Size/Type : 48,705 SF Industrial Year Built : 1987 Sale Date : 9/27/2018 Sale Price : $9,677,663 ($198.70/SF) Sale Type : Investment CAP Rate : n/a Buyer : The Blackstone Group LP Seller : RAF Pacifica Group, Inc. Comments : 100% Leased at Sale Bulk/Portfolio Sale

2063 Wineridge Pl 2063 Wineridge Pl, Escondido Size/Type : 20,783 SF Industrial Year Built : 2000 Sale Date : 8/10/2018 Sale Price : $3,600,000 ($173.22/SF) Sale Type : Owner/User CAP Rate : 5.60% Buyer : 4S Properties Seller : Vit Products Inc Comments : 100% Leased at Sale 1031 Exchange

The Crossroads 10895 Thornmint Rd, San Diego Size/Type : 73,541 SF Industrial Year Built : 1991 Sale Date : 10/3/2017 Sale Price : $14,630,000 ($198.94/SF) Sale Type : Owner/User CAP Rate : n/a Buyer : Grifols, Inc. Seller : Meeting Services Inc. Comments : 100% Leased at Sale

Buyer : The Blackstone Group LP Seller : RAF Pacifica Group, Inc. Comments : Bulk/Portfolio Sale

1441 MONTIEL ROAD, ESCONDIDO

O C E A N S I D E B L V D .

OCEANSIDE

SALE COMPARABLES

S Y C A M O R E A V E . 3 4

VISTA

CARLSBAD

ESCONDIDO

P A L O M A R A I R P O R T R D . 1

SAN MARCOS

E L C A M I N O R E A L

RANCHO SANTA FE

OFFERING MEMORANDUM

MARKET OVERVIEW | 4 TH QTR 2018

ESCONDIDO INDUSTRIAL

ANNUAL NET ABSORPTION VS. DIRECT VACANCY

INVENTORY BREAKDOWN

ANNUAL NET ABSORPTION VS. DIRECT VACANCY

1441 MONTIEL ROAD, ESCONDIDO

MARKET OVERVIEW | 4TH QTR 2018

ESCONDIDO INDUSTRIAL

QUARTERLY NET ABSORPTION VS. DIRECT VACANCY

ANNUAL NET ABSORPTION BY PRODUCT TYPE

ANNUAL DIRECT VACANCY BY PRODUCT TYPE

WEIGHTED AVERAGE MONTHLY ASKING RENT (NNN)

OFFERING MEMORANDUM

MARKET OVERVIEW | 4TH QTR 2018

NORTH COUNTY INDUSTRIAL

1441 MONTIEL ROAD, ESCONDIDO

MARKET OVERVIEW | 4TH QTR 2018

NORTH COUNTY INDUSTRIAL

OFFERING MEMORANDUM

HEADER

1441 MONTIEL ROAD, ESCONDIDO

MARKET OVERVIEW | 4TH QTR 2018

SAN DIEGO COUNTY INDUSTRIAL

grow an additional 3.1% in 2019, above its 10-year average of 2.7%. Continuing to bode well for the industrial marketplace is that economic activity in the manufacturing sector again expanded in December, with an ISM index reading of 54.1% compared to 59.3% in November. An ISM reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting. The overall economy grew for the 116th consecutive month in the U.S. Of the 18

ECONOMY The San Diego employment market continued to record job growth, adding 26,400 jobs (+1.8%) year-over-year through November 2018.1Duringthesame timeperiod, theunemployment rate decreased 30 basis points (bps), dropping to 3.2%. Also worth noting, the current rate is 270 bps below the 28-year average of 5.9%. All employment sectors are expected to grow at a combined growth rate of 1.3% in 2019. San Diego’s economy of $231.8 billion2 as measured by gross regional product is forecasted to

manufacturing industries, 11 reported growth in December of 2018. MARKET OVERVIEW At the close of 2018, industrial vacancy (including sublease) in the San Diego marketplace stood at 5.4%, 40 basis points (bps) higher than last quarter and 60 bps higher compared to a year ago. Q4 2018 is the first quarter in the past five consecutive quarters that overall vacancy has surpassed the 5% threshold.

OFFERING MEMORANDUM

MARKET OVERVIEW | 4TH QTR 2018

29th of the last 30 quarters showing occupancy gains - all except for Q2 2017. In Q4 2018, tenants absorbed 454,000 sf in North County submarkets, 72,700 in South County but returned 95,000 sf in Central County. Demonstrating the county’s demand for new, state-of-the-art industrial space, six of this quarter’s top ten move-ins were at new construction completed during this quarter. These include Camston Wrather (116,000 sf at 2856 Whiptail Loop), PODS (116,000 sf at 2820 Whiptail Loop), Tires Warehouse (106,000 sf at 4400 Ruffin Rd.) and San Diego Hat Co. (83,000 sf at 2875 Whiptail Loop). Other largemove-ins at existingbuildings includedVista Industrial

This slight increase in vacancy was expected due the large amount of speculative (SPEC) construction that was delivered this quarter: 1.1 million square feet (msf). Across the region, the market is the tightest for incubator multi- tenant (IMT) space with vacancy (including sublease) at 3.9%, which has remained flat compared to a year ago. Vacancy for manufacturing space now stands at 4.0% countywide versus 3.0% twelve months ago. Distribution space vacancy currently stands at 5.4%, an increase of 80 bps from last year. Meanwhile, vacancy for R&D product has increased 100 bps over the last year and now stands at 8.8%. This year, tenant activity in San Diego’s industrial sector ramped up aggressively was bolstered by the delivery of several large pre-leased construction projects. This quarter was San Diego’s

1441 MONTIEL ROAD, ESCONDIDO

MARKET OVERVIEW | 4TH QTR 2018

SAN DIEGO COUNTY INDUSTRIAL

Products (leased 67,000 sf at 3210 Executive Ridge) and Boral Roofing (leased 67,000 sf at 3817 Ocean Ranch Blvd). Compared to this quarter’s move-ins, which consisted of organic expansions as well as pre-leased new construction, this quarter’s move-outs were minimal. Hay House moved out of 110,000 sf in Vista, Covan Worldwide moved out of 106,000 sf in Sorrento Mesa (they have already taken occupancy of another building in Poway), and Coleman college moved out of 85,000 sf in Kearny Mesa. Average asking rent for all product types combined was $1.11 per square foot (psf) per month on a triple net basis compared to $1.07 psf last quarter and $1.03 psf a year ago. The average rent at $1.11 psf as of Q4 2018 is the highest level we have ever tracked and has increased 20.7% since the end of the last recession ($0.92 psf Q2 2009). Since then, the average rent has increased the most for IMT space (+30.9%) compared to other product types, followed by distribution (+29.7%), R&D (+24%) and manufacturing (+20.7%). This trend is driven by the demand for and availabilitymodern and specialized space for industrial users. In response, we are not only seeing asking rental rates increase for existing buildings but also in new construction buildings that command the highest rental rates. There are currently 26 industrial buildings totaling nearly 1.4 msf under construction. However, with a low countywide direct vacancy of 4.4%, it is unlikely that this supply will satisfy demand for new, functional space. According to our calculations, 56% of industrial space countywide was built before 1990 and just 4% of space was built after 2010. This means that more than half of leasable industrial buildings in San Diego lack modern design features for today’s demanding tenants who require high- functioning and efficiently designed product. This trend has led to an increase in SPEC construction as developers and landlords become more bullish on their prospect of leasing new space. Of the space that is currently under construction, 73% (or 994,000

sf) is SPEC development. In Q4 2018, over 1.1 msf (or 13 buildings) of new construction received its Certificate of Occupancy, bringing 2018 annual new deliveries total to over 2.9 msf. This compares to the average annual deliveries of the previous 10 years (2008-2017) of just 532,000 sf. An additional 1.4 msf or more is expected to be completed in 2019 of which 23% pre-leased. Across Q4 2018 deliveries, 48% was pre-leased to tenants or owner-users. The tenants bolstering this new absorption included previously mentioned Camston Wrather, PODS, Tires Warehouse and San Diego Hat Co. Additionally, Mission Imprintables took occupancy of 61,000-sf 1604 Cactus Rd., a building they purchased in Q4 2018. Also, 55,000-sf 195 Bosstick Rd. was delivered occupied by Bernardo Moving & Storage and Redline Express/IEX Delivery. In Q4 2018, nearly 297,000 sf (or six buildings) broke ground on construction. The largest was 137,000-sf 2065 Sanyo Rd. in Otay Mesa. This project is being built speculatively and is estimated to be completed in 2019. OUTLOOK While we do not expect any dramatic shifts in the near future as direct vacancy remains historically low and the demand for space continues to be strong, the increase in newly constructed space will continue to cause vacancy and availability to increase. There are 2.5 msf of active tenant requirements for space over the next 24 months. Over 60% or 1.5 msf of these users are in the earliest stages of their pursuit, having opened their search or toured the market. While not all of the tenants in the market will transact in the short- term, these levels provide a barometer of leasing activity in quarters to follow. Additionally, those tenants in early stages of their pursuit may line up their timing with the delivery of new construction.

OFFERING MEMORANDUM

5 F I N A N C I A L ANALYS I S

FINANCIAL ANALYSIS

EXECUTIVE SUMMARY

Executive Summary

1441 Montiel OM

Analysis Date: 2/6/2019

Analysis Period:

Project Summary:

Start of Investment Period

Project Size

49,990 SF

36 Months May 1, 2019 Apr 30, 2022

Investment Period

In-Place Occupancy - May 1, 2019

85.6%

End of Investment Period

Residual Occupancy - Forward 12 Month - Apr 30, 2022

100.0% Phys. / 95.0% Eco.

FYE 2020 FYE 2021

FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030

Weighted Average Market Rent

$1.25 3.0% 0.0% 0.0% -9.3%

$1.29 3.0%

$1.33 3.0%

$1.37 3.0%

$1.41 3.0% 0.0%

$1.45 3.0%

$1.49 3.0%

$1.54 3.0% 0.0%

$1.58 3.0% 0.0%

$1.63 3.0% 0.0%

$1.68 3.0% 0.0%

Annual Rent Growth

Annual Lease Rollover (Fiscal Year) Cumulative Lease Rollover (Fiscal Year) In-Place Rents Above/(Below) Market

0.0% 25.9% 24.9%

0.0% 34.8%

0.0% 25.9% 50.8% 50.8% 50.8% 85.6% 85.6% 85.6% 85.6% 85.6%

Market Leasing Assumptions:

Suites 115 & 141

Suite 115 B

Suite 143-145

Notes:

Renewal Probability

80.0%

3. Assumes CTE downsize of 1,750 SF and 5,432 SF of new construction. 1. Assumes T-Mobile executes both renewal options with no Free Rent, $0 TI, and no LC. 2. Assumes Element Education renews at expiration with MLA Free Rent, TI, & LC.

Lease Term

60 Months

Average Market Rent

$1.25 NNN

$1.25

Recovery Type

NNN (excl. Taxes)

Annual Rent Adjustment

3.00%

Tenant Improvements (New / Renewal) Lease Commissions (New / Renewal)

$15.00 / $5.00 6.00% / 4.00% 6 Mos / 3 Mos 2 Mos / 1 Mos

Downtime (FY 1-2 / Thereafter)

Base Rent Abatement (New / Renewal)

Bridge Loan Assumptions: Initial Funding

In-Place Lease Expirations

$7,168,220 $7,683,066

(Weighted Avg. Lease Term Remaining = 4.51 YRS)

10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

Fully Funded

Fully Funded to Total Capitalization Fully Funded to Residual Value

73.0% 65.8% 2.00% 2.51% 3.40% 5.91%

Bridge Loan Origination Fee

Index Rate

Spread

Interest Rate

Amortization Period Interest-Only Period

360 Months 36 Months

Percentage

Square Feet

0 5,000

Source of TI/LC/CapEx Future Fundings

Draws 100.0% 100.0%

Lender Portion of Draws - TI/LC Lender Portion of Draws - CapEx

FYE 2020 FYE 2021

FYE 2022

FYE 2023 FYE 2024 FYE 2025

FYE 2026 FYE 2027

Annual In-Place Lease Expirations

Cumulative In-Place Lease Expiration %

PRICING MATRIX

36 Month Month 36 Month 36 Non-Lev Leveraged Non-Lev Leveraged Non-Lev Leveraged Non-Lev Leveraged

Price In-Place Mark to

Year 1 Lev Equity Stabilized Stabilized

IRR

Price

IRR

PSF Cap Rate

Market

Cap Rate Multiple [1]

Costs PSF

ROC 36 Month 36 Month 36 Month 36 Month 36 Month 36 Month 36 Month 36 Month

Range

$10,260,000 10,060,000 9,860,000 9,660,000 9,460,000

$205

5.4% 5.5% 5.6% 5.7% 5.9%

6.3% 6.4% 6.5% 6.6% 6.8%

5.9% 6.0% 6.2% 6.3% 6.4%

1.30x 1.39x 1.48x 1.57x 1.67x

$216

6.5% 10.8% 19.4%

9.2% 14.6%

7.8% 8.6%

9.9% 12.4%

6.5% 7.2%

5.2% 7.8%

201 197 193 189

212

6.6% 6.7% 6.9%

11.5% 12.3%

21.7% 10.0% 24.1% 10.8%

17.1% 19.5%

208 204 200

9.3% 15.0%

8.0% 10.5%

13.1% 26.5%

11.6% 22.0%

10.1%

17.5%

8.7% 9.5%

13.1% 15.8%

7.0% 14.0% 28.9%

12.4% 24.5% 10.9% 20.1%

[1] 6.00% Residual Capitalization Rate and 36 Month Investment Period

Gross Residual Sale Receipts PSF Residual Capitalization Rate % of Return Attrib. to Cash Flow [2] % of Return Attrib. to Residual Value [2]

$255

$244 5.75% 41.7% 58.3%

$234

$224 6.25% 58.0% 42.0%

[2] Mid-Point Pricing of $9,860,000 or $197/SF

5.50% 35.9% 64.1%

6.00% 48.9%

51.1%

1441 MONTIEL ROAD, ESCONDIDO

FINANCIAL ANALYSIS

ANNUAL PRO FORMA (BEFORE DEBT)

1441 Montiel OM

Analysis Date: 2/6/2019

Annual Pro Forma (Before Debt)

Year Count

Mark to Market

In-Place

Per RSF

Fiscal Year Ending - April

May-01-19

FYE 2020 FYE 2020 FYE 2021

FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030

Operating Measures Operating Disbursements/Rentable Square Foot

-$2.89 12.0% 0.0% 12.0%

-$2.89

-$2.91 6.7% 0.0% 6.7% 0.0%

-$2.98

-$3.04 0.0% 5.0% 5.0% 25.9%

-$3.13 0.0% 5.0% 5.0% 24.9%

-$3.21 0.0% 5.0% 5.0% 0.0%

-$3.28

-$3.35

-$3.44

-$3.52

-$3.60 2.0% 3.0% 5.0% 0.0% 97.8%

-$3.69

Absorption/Turnover Vacancy Percentage Vacancy/Credit Loss Percentage Total Economic Vacancy Percentage

13.3% 0.0% 13.3%

0.0% 5.0% 5.0% 0.0%

1.1%

2.7% 2.3% 5.0%

0.0% 5.0% 5.0% 0.0%

1.1%

3.9% 5.0% 0.0% 98.8%

In-Place Lease Rollover Occupancy Percentage

34.8%

85.6%

92.8% 100.0% 100.0% 100.0% 100.0%

97.1% 100.0% 100.0%

Operating Receipts Rental Receipts

Potential Base Rental Receipts Absorption/Turnover Vacancy

$749,850 $700,920

$14.11 -1.08 -0.36 12.68 2.38 0.00 15.06 0.00 15.06 -0.47 -0.09 -0.09 -0.12 -0.45 -1.67 -0.01

$705,585 $720,943 $738,618 $758,975 $790,806 $809,501

$831,563 $853,319 $876,747 $908,532 $928,870

-107,736

-53,865 -17,955 633,765 119,037

0 0

0 -10,407

-25,980

0 0

-21,141

-12,065 -14,478 902,327 167,922

Base Rent Abatements

0 -17,490

-12,489

-31,176

0 -25,369

Total Rental Receipts

642,114 144,384

593,184 106,212

720,943

721,128 139,057

758,975 790,806 786,605

774,407

853,319 876,747

862,022 164,426

Operating Disbursements Recoveries

136,312

142,979

146,790

147,441

146,911

157,688

161,548

Other Income

Total Operating Receipts before Vacancy/Credit Loss

786,498

699,396

752,802

857,255

860,185

901,954 937,596 934,046

921,318 1,011,007 1,038,295 1,026,448 1,070,249

Vacancy/Credit Loss

0 -42,863

-43,009 -45,098 -46,880

-36,816

-21,385

-50,550

-51,915

-31,238

-42,051

Total Operating Receipts

786,498

699,396

752,802

814,392

817,176 856,856

890,716 897,230 899,933 960,457

986,380 995,210 1,028,198

Operating Disbursements Utilities Repairs & Maintenance

-23,328 -4,704 -4,608 -6,000 -20,976 -83,328

-23,327 -4,705 -4,602 -6,000 -22,584

-24,027 -4,846 -4,740

-24,748 -4,992 -4,882 -6,365 -24,515

-25,490 -26,255

-27,042 -5,454 -5,335 -6,956 -26,917 -91,996

-27,854 -28,689

-29,550 -30,436

-31,350 -6,323 -6,185 -8,063

-5,141

-5,296 -5,180 -6,753 -26,721 -90,193

-5,618 -5,495 -7,164 -26,998 -93,836

-5,787 -5,660 -7,379 -28,814 -95,713

-5,960 -5,830 -7,601 -29,591 -97,627

-6,139 -6,005 -7,829

Landscaping

-5,029 -6,556 -25,706

Insurance

-6,180

Management Fee

-24,432

-29,856 -30,846

-83,324 -84,990 -86,690 -88,424

-99,580

-101,571

[1] Property Taxes

Non-Recoverable

-1,440

-718

-138

-346

-282

-160

Total Operating Disbursements

-$144,384

-2.91

-145,260 -149,215

-152,192 -156,346 -160,398 -163,838

-167,311

-172,042

-176,159

-180,127 -184,498 815,083 843,700

$642,114

$555,012

12.15

607,542

665,177 664,984 700,510 730,318

733,392

732,622

788,415

810,221

Net Operating Income

Other Operating Receipts/(Disbursements) Tenant Improvements

-7.18

-359,100 -33,240

0 -68,757 0 -53,749

0 0

-58,281

-145,486

0 0

0 -118,387

-67,564 -33,184 -10,077 -110,825

Leasing Commissions

-0.66 -0.15

0 -28,625

-71,455 -8,954

-58,146 -9,784 -186,317

Capital Reserves

-7,499

-7,723

-7,955

-8,194

-8,440

-8,693

-9,222 -9,222

-9,499 -9,499

Total Other Operating Receipts/(Disbursements)

-8.00

-399,839

-7,723

-130,461

-8,194

-8,440 -95,599 -225,895

$4.15 $207,703 $657,454 $534,523 $692,316 $721,878 $637,793 $506,727 $779,193 $800,722 $628,766 $732,875

Non-Leveraged Operating Receipts/(Disbursements)

[1] Property Taxes have been re-assessed based on Mid-Point Pricing, and have been adjusted to reflect ongoing partial tax exemption from educational tenant.

Mid-Point Pricing - $9,860,000 Capitalization Rate

6.5%

5.6%

6.2%

6.2% 2.1% 2.1%

6.7% 6.7% 4.4%

6.7% 5.4% 4.7%

7.1%

7.4% 7.3% 5.7%

7.4% 6.5% 5.8%

7.4% 5.1% 5.7%

8.0% 7.9% 6.0%

8.2% 8.1% 6.2%

8.3% 6.4% 6.3%

8.6% 7.4% 6.4%

Cash on Cash Return

Mark to Market

In-Place Cap Rate

Year 1

7.0% 5.3%

Avg. Cash on Cash Return

Cap Rate

OFFERING MEMORANDUM

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