1441 Montiel Road, Escondido

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.

1

2

3

4

5

6

7

8

9

10

11

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%

80.0%

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

60 Months

60 Months

Average Market Rent

$1.25 NNN

$1.25 NNN

$1.25

Recovery Type

NNN (excl. Taxes)

Annual Rent Adjustment

3.00%

3.00%

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

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

$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

IRR

Price

IRR

IRR

IRR

IRR

IRR

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

50