634 Second, San Francisco

FULLY LEASED CLASS A CREATIVE CORE SOMA OFFICE BUILDING _ SAN FRANCISCO, CA

634OND STR

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EXCLUSIVE ADVISOR

INVESTMENT OPPORTUNITY

THE OFFERING

Newmark Knight Frank, as exclusive advisor, is pleased to present the
opportunity to acquire 634 Second Street (the “Property”), located
in San Francisco, California. Fully net leased, the three-story, 46,752
rentable square foot Class A Creative office building is anchored by
Okta, the world's leading identity-management technology company
that recently debuted a successful IPO in April, 2017. Okta continues
to exceed investor expectations, reporting $55.9 million in revenue
in the second quarter, which represents an impressive 63 percent
increase over the previous year. Over $6.1 million was recently
invested in a significant capital improvement program to bring 634
Second Street to Class A Creative standards. The Property boasts
modern interior finishes, abundant natural light, polished concrete
floors, and exposed ceilings, features that are highly desirable among
today’s technology and creative users. Plans are in place to add further
density to the building by constructing a vertical addition that would
consist of approximately 16,000 square feet on a new fourth and fifth
floor. Ideally positioned along SoMa’s Second Street Corridor, 634
Second Street benefits from the extraordinary tenant demand in an
area that is regarded as the epicenter of technology and innovation.
At approximately $80 per square foot, average Class A asking rates in
the submarket are among the highest in San Francisco, and vacancy
remains among the lowest at 4.2 percent. The Property’s combination
of a strong, publicly traded anchor tenant, significant recent building
improvements, and the ability to further add density in San Francisco’s
leading submarket, makes the purchase of 634 Second Street a highly
attractive investment opportunity.

FULLY LEASED & RECENTLY RENOVATED

46,752 square foot Class A Creative office building which has
been recently renovated with state-of-the-art improvements.

OKTA TENANCY

Worldwide leader in cloud-based identity management that
recently went public in April, 2017.

BELOW-MARKET RENTS

In-place rents are approximately 10% below prevailing market
rents in SoMa.

LEADING SAN FRANCISCO SUBMARKET

SoMa Location: San Francisco's most dynamic and top
performing mixed-use submarket.

PROPERTY PROFILE

A D D R E S S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634 Second Street, San Francisco
R E N TA B L E A R E A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,752 Rentable Square Feet
S I T E A R E A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16,000 Square Feet
O C C U PA N C Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Percent
Z O N I N G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mixed-Use Office (MUO)
F R O N TA G E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Second Street and Stanford Street
S T O R I E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Three
T E N A N C Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OKTA, SAJJ
S U B M A R K E T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . South of Market Area (SoMa)

COMPANY: Okta

FOUNDED: 2009

IPO DEBUT: April, 2017

TICKER: NASDAQ: OKTA

CUSTOMERS: 3,300+

Q2 2018 REVENUE: $55.9 million

MARKET CAP: $2.1 billion

HIGH-PROFILE TENANCY

O K TA : Fully occupying the office space in the building, Okta is the worldwide leader in identity management and

security for cloud-based applications. The growing Identity Access and Service (IDaaS) industry is an estimated $18
billion market for Okta’s existing product lines with near limitless possibilities to apply the company’s technology to
other external applications. Okta considers this location and 301 Brannan Street adjacent to the Property, which they
also fully occupy, as their main headquarters.

SUCCESSFUL IPO DEBUT: In April, 2017, Okta went public on the NASDAQ with a highly successful initial public

offering that exceeded pricing expectations. Initially targeted at $13 per share, then $15 per share, the price at IPO was
$19 per share due to strong interest pre-IPO. Okta’s market cap currently stands at $2.1 billion, with shares trading
above $27.

RECENT RESULTS EXCEED EXPECTATIONS: In Okta’s earnings report this month, the company reported $55.9 million

in revenue for the second quarter, representing a 63% year-over-year growth that surpassed investors’ forecasts. Okta’s
customer base has grown at an impressive rate and the company now counts over 3,300 business customers that rely on
their technology with multi-year contractual agreements, almost triple the number in 2014.

roof shot

View from Roof Deck Towards AT&T Park

CLASS A CREATIVE OFFICE BUILDING
WITH DEVELOPMENT POTENTIAL

SIGNIFICANT RECENT CAPITAL IMPROVEMENTS: Since 2007, over $6.1 million has been invested in building

improvements and $2.5 million in tenant improvements (totaling $184 per square foot). These improvements include
HVAC, Mechanical, and Title 24 upgrades, a brand new roof, and significant interior work to bring the building to
Class A Creative standards.

FUTURE DEVELOPMENT POTENTIAL: Current ownership has engaged Huntsman Architectural Group to design a

vertical addition that would add approximately 16,000 square feet of office space across a brand new fourth and fifth
floor and maximize density on the site. Proposition M allocation will not be required since the addition falls under the
25,000 square foot threshold.

SUCCESSFUL GROUND FLOOR RESTAURANT: Critically-acclaimed SAJJ Mediterranean recently took occupancy

on the ground floor of the building. The popular restaurant is known to draw consistent crowds due to their fresh
ingredients and customizable menu.

ALCATRAZ SALESFORCE TOWER

FINANCIAL DISTRICT

S E CO ND OK TA/ DRO P B OX SPLUNK
GITHUB
S T R E ET

THIRD STREET SOMA DROPBOX

BRANNAN STREET UNDER ARMOUR
TOWNSEND STREET
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THE EMBARCADERO 100 PERCENT SOMA
AT&T PARK LOCATION

INNOVATION CAPITAL OF THE WORLD: As evidenced by the multitude

of name brand tenants choosing San Francisco — and particularly South
of Market — as their headquarters, along with the dramatic amount of
venture capital funding now targeting San Francisco as opposed to Silicon
Valley, the SoMa neighborhood is leading the technology movement in
the United States.

LEADING CREATIVE OFFICE SUBMARKET: East SoMa continues to be

the top creative submarket in San Francisco. Class A asking rents average
some of the highest in the City at $80 per square foot and vacancy stands
at historical lows of just 4.2 percent.

BOOMING RESIDENTIAL DEVELOPMENT ACTIVITY: Over 5,000

residential units are either under construction, approved, or planned in
the SoMa District by world-class developers and include both modern
rentals and luxury condominiums.

CUTTING EDGE RETAIL AND AMENITIES: SoMa is San Francisco’s 24/7

live-work neighborhood and is home to many of the City’s top restaurants,
lounges, and cafes. With AT&T park anchoring the neighborhood
already, the Warriors new arena will be constructed just a few blocks
south in Mission Bay come 2019.

EXCELLENT ACCESS TO TRANSPORTATION: The Property is located

just two blocks from the 4th and King Caltrain station and is served by
multiple MUNI bus lines. The currently under-construction 4th Street
Central Subway will further activate transportation from SoMa to
Market Street, and 634 Second Street will be just two blocks away from
the closest station.

634OND STR VIEW FROM RO OF DECK TOWAR D AT& T PAR K

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INVESTMENT ADVISORS MICHAEL TAQUINO DANIEL CRESSMAN MANDY LEE

KYLE KOVAC Executive Managing Director Executive Managing Director Director
415.477.9200 415.288.3622 415.445.5103
Executive Managing Director m t a q u i n o @ n e w m a r k c c a r e y. c o m d c r e s s m a n @ n e w m a r k c c a r e y. c o m m l e e @ n e w m a r k c c a r e y. c o m
415.477.9220 CA License #01431337 CA License #00849877
k k o v a c @ n e w m a r k c c a r e y. c o m CA License #01942461
CA License #01731229

LEASING ADVISORS DEBT & EQUITY ADVISORS

MIKE BROWN BILL BENTON RAMSEY DAYA DANIEL FROMM

Executive Managing Director Executive Managing Director Vice Chairman Managing Director
415.274.4423 415.274.4421 415.399.8085 212.372.0757
m b r o w n @ n e w m a r k c c a r e y. c o m b b e n t o n @ n e w m a r k c c a r e y. c o m [email protected] [email protected]
CA License #01200178 CA License #01247617 CA License #01860037