901-Battery-OM

FINANCIAL ANALYSIS 51

52 TENANT INFORMATION

CONFIDENTIAL

TENANT INFORMATION

TENANT INFORMATION 53

54 MARKET ANALYSIS

M A R K E T A N A LYS I S

MARKET ANALYSIS 55

56 MARKET ANALYSIS

SAN FRANCISCO OFFICE OVERVIEW

WEST COAST’S PREMIER OFFICE MARKET

Encompassing just over 79.0 million square feet of office space, San Francisco is the west coast’s
premier office market and one of the most dynamic real estate investment markets in the world.
San Francisco leads the region as a worldwide technology, financial and cultural center, a corporate
headquarters location for major global companies, and the hub of Bay Area finance, design, fashion,
accounting, consulting, and advertising. In addition to its scenic beauty and sought-after global
location, San Francisco draws companies because of its highly skilled and educated workforce, a
world-class amenity base, outstanding bay and city views, a unique skyline that continues to grow,
and convenient access to other major economic centers in the Bay Area.

Major regional transit systems are routed through San Francisco, making it one of the most
accessible cities for public transportation in the country. In addition, several billion dollars of public
works and private construction projects are currently in the pipeline, including the $4.5 billion new
Transbay Transit Center project which will stimulate over 125,000 new jobs, 27,000 of which will be
permanent once the Transit Center is completed.

$14,000 SAN FRANCISCO OFFICE SALES VOLUME
$12,000

$10,000

$ I N$ iMnI L LmiIlliOoNnSs $8,000

$6,000

$4,000

$2,000

$0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

MARKET ANALYSIS 57

SAN FRANCISCO INVESTMENT MARKET

ONE OF THE SAFEST AND MOST CONSISTENT INVESTMENT MARKETS

San Francisco is considered by investors as the safest and most consistent office market in which
to invest in the United States. Strong demand for San Francisco office space, limited supply,
significant barriers to entry, aggressive tech growth, and continually increasing rents create excellent
investment opportunities. The San Francisco office market had a total sales volume of $7.4 billion in
2016, which marks the third largest year of transaction volume in the market.

Major developers including Boston Properties, Kilroy, and Alexandria Real Estate are capitalizing
on the market momentum with large-scale office projects such as Salesforce Tower, 181 Fremont,
and Park Tower. Over 4.2 million square feet is expected to be delivered in 2017, and 48 percent of
these deliveries are already pre-leased. Despite these new developments, the supply of office space
still remains scarce as vacancy sits at 6.290 percent and further development is limited in the city
through Proposition M.

CREATIVE OFFICE IN HIGH-DEMAND DRIVEN BY TECH

Creative and boutique office buildings continue to garner high sales prices as tech companies
compete for these prime spaces. Several creative office buildings including 634 Second Street, 340
Bryant Street, and 55 Hawthorne have traded for close to $900 per square foot. Core assets such as
140 New Montgomery Street, and 100 First Street and 303 Second Street have sold for in the mid-
$900s in 2016. Foundry III, which American Realty Advisors purchased from Tishman Speyer and JP
Morgan at the end of 2016 set a high-watermark for pricing on a per square basis in San Francisco
at over $1,200 per square feet. Since these sales, prices have continued to remain strong, reflecting
the attractiveness of the market.

SAN FRANCISCO OFFICE SALES PRICE PSF

$900 TOP QUARTILE $/SF AVERAGE SALES $/SF

$800

$700

$600

$500

$400

$300

$200

$100

$0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

58 MARKET ANALYSIS

SAN FRANCISCO OFFICE LEASING MARKET

The San Francisco office market remains strong at the end of the first quarter of 2017, with vacancy
at just 6.290 percent and average direct asking rates over $70.66 per square foot. Technology com-
panies continue to dominate market activity as new tenants move to San Francisco and existing
companies expand. Uber announced in the first quarter 2017 that it is expanding its presence in
Mission Bay, taking half of office space at the new Warriors campus, which is located adjacent to its
under-construction headquarters building. Also in the first quarter, Google expanded in the market
by 166,279 square feet, WeWork expanded by 125,434 square feet across two locations, Cengage
subleased 45,625 square feet, and Ubisoft renewed its 42,429 square-foot lease. Over 200 tenants
are in the market looking for a combined 6.2 million square feet of space in San Francisco at the first
quarter of 2017.

Total employment in San Francisco has reached its all-time highest, and the market is expected to
continue growing. Moody’s Analytics predicts modest employment growth over the next five years
with the unemployment rate in San Francisco remaining under 3 percent.

SAN FRANCISCO OFFICE MARKET

1ST QUARTER 2017

R E N TA B L E : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78,962,807 SF
VAC A N T: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,868,845 SF
OV E R A L L VAC A N C Y R AT E : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2%

AVERAGE ASKING RENTAL RATE
C L A S S A : $72.80
C L A S S B : $67.29

SAN FRANCISCO ASKING RATE CLASS A OFFICE

$ PSF/YEAR

MARKET ANALYSIS 59

VACANCY & NET ABSORPTION

Vacancy rates stood at 6.2 percent at the end of the first quarter of 2017. Vacancy rates are lower in
the North Waterfront submarket with vacancy at 5.4 percent. Numerous technology companies are
actively expanding throughout the city, led by both Salesforce, which has committed to nearly 2.5
million square feet of space in San Francisco and Uber, which has committed to nearly 1.4 million
square feet. As job growth in San Francisco continues, vacancy rates will continue to remain low.
Furthermore, office construction in San Francisco is limited through Proposition M, creating supply
constraints, and allowing for a quicker market bounce back. Although new office buildings are set to
enter the market within the next few years, strong demand for office space will continue to keep va-
cancy levels down, and nearly 45 percent of projects under construction are pre-leased. The success
of technology companies in San Francisco, coupled with their need to draw from a pool of talent
unique to the city, indicates the technology boom and resulting demand for quality office space
won’t disappear in the foreseeable future.

SAN FRANCISCO ABSORPTION & VACANCY

Net Absorption Vacancy Rate
20.00%
2,500,000

ABSORPTION (SF)2,000,000 18.00%
ABSORPTION (SF)1,500,000 16.00%
VACANCY PERCENT1,000,00014.00%
VACANCY (%) 12.00%
500,000 10.00%
0 8.00%
6.00%
-500,000 4.00%
-1,000,000 2.00%
-1,500,000

-2,000,000 0.00%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

60 MARKET ANALYSIS

RENTS

Asking rents have equalized over the past year, but still remain some of the highest that San
Francisco has ever seen. Low vacancy and strong tenant demand continued to keep rents at a city-
wide average of nearly $70 per square foot full service. Average Class A and Class B rents are both
being pushed by landlords, particularly for creative and well-located buildings. Rents are projected
to remain stable or increase, especially as tenants begin to lease up in several new projects that are
expected to be delivered this year. Geographical and political factors impose supply constraints on
the office market, and the high desirability of San Francisco as a place to do business will result in
demand for office space over the long term. Space constraints, increasing tenant demand, rising
rents, and job growth will continue to create a healthy leasing market.

CLASS A ASKING RENTS BY SUBMARKET - Q1 2017

Class A Asking Rents by Submarket - 1Q 2017

$80.00 $73.83 $72.43 $73.00 $72.79
$70.00 SOMA
$60.00 $65.30 $63.19
$50.00
$40.00
$30.00
$20.00
$10.00

$0.00

NORTH SOUTH N. WATERFRONT UNION SQUARE VAN NESS /
FINANCIAL DISTRICT FINANCIAL DISTRICT JACKSON SQUARE CIVIC CENTER

MARKET ANALYSIS 61

NORTH WATERFRONT / JACKSON SQUARE

MARKET OVERVIEW
North Waterfront / Jackson Square is one of the City’s most attractive neighborhoods due both to
spectacular water views as well as proximity to the Financial District and world-class shopping and
dining. When compared to the Financial District, North Waterfront / Jackson Square offers tenants
pleasant surroundings and less congestion amid an urban setting that boasts a rich history and
distinct architecture. This combined neighborhood creates a submarket which contains approximately
5.1 million square feet of office space, nearly 82 percent of which is located in institutional-quality
Class A and B buildings. The submarket attracts a number of technology clients (Esurance and Intel),
retail companies (Levi Strauss & Co. and Williams Sonoma), professional services (Keker & Van Nest
and Y&R), and venture capital firms (Jackson Square Ventures and Azure Capital Partners).

NORTH WATERFRONT / JACKSON SQUARE RECENT SALES
Prices for premium office buildings in in the North Waterfront / Jackson Square submarket are
comfortably in the $700 per square foot range as demonstrated by recent sales in the submarket.
394 Pacific Avenue, a 44,000 SF building in Jackson Square, sold in July 2016 for $730 PSF. 755
Sansome Street sold for $709 PSF, and similar historic buildings such as 20 California sold for $740
PSF. Pricing and demand will continue to remain strong in the submarket as technology and venture
capital tenants gravitate towards San Francisco’s attractive waterfront.

394 PACIFIC 755 SANSOME 55 FRANCISCO

DATE SOLD July 2016 DATE SOLD June 2016 DATE SOLD November 2016

SIZE 44,331 SIZE 60,128 SIZE 143,379

PRICE $32,340,000 PRICE $42,650,000 PRICE $91,000,000

$ PSF $730 $ PSF $709 $ PSF $635

BUYER Grosvenor BUYER Shanghai Lingang BUYER Jamestown

SELLER PMI Properties SELLER Market Street Partners SELLER Lincoln Property

62 MARKET ANALYSIS

NORTH WATERFRONT / JACKSON SQUARE

Asking rents in the North Waterfront / Jackson Square submarket have historically trended closely
to the greater San Francisco office market. Rents have dramatically increased during the recovery
between 2009 and 2014 and have stabilized at above $60 per square foot since the end of 2014.
As of the first quarter of 2017, asking rents for Class A product stand at $65.30, more than double
the rate at the bottom of the market in 2009 and are projected to continue at a healthy rate due to
the low vacancy in the submarket. Even at these strong rates, rents in North Waterfront / Jackson
Square represent a relative value in San Francisco and have much room for additional growth.

In the past two years, vacancy in North Waterfront / Jackson Square have continued on a downward
trajectory while San Francisco as a whole has shown a slight uptick in the vacancy rate. The vacancy
rate, which stands at 4.1 percent, represents the third lowest rate in San Francisco in the latest
quarter, after Union Square and SoMa. Over the past five years, the North Waterfront / Jackson
Square submarket has not seen the vacancy rate rise above 6 percent.

NORTH WATERFRONT / JACKSON SQUARE OFFICE MARKET
1ST QUARTER 2017

R E N TA B L E : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,163,660SF
VAC A N T: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277,047 SF
C L A S S A VAC A N C Y R AT E : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1%

AVERAGE ASKING RENTAL RATE
C L A S S A : $65.30
C L A S S B : $62.00

NORTH WATERFRONT / JACKSON SQUARE VS. SAN FRANCISCO NORTH WATERFRONT / JACKSON SQUARE VS. SAN FRANCISCO
CLASS A ASKING RENTS CLASS A VACANCY RATES

SaSnaFnraFnrcainscciosco NWNJWSJS SSaanSnFaFrnaranFncrcaisinscccoiosco NNWWNJJWSSJS

$ 7$57. 50 .00 0 2 02. 0 .%0 % 20.0%
$75.00 15.0%
10.0%
$ 6$56. 50 .00 0ASKING RENTS ($/SF/YR.) 1 $516. 505.%.00%0 5.0%
VACANCY 0.0%
$ 5$55. 50 .00 0 $55.00
1 01. 0 .%0 %
$ 4$54. 50 .00 0
$45.00
$ 3$53. 50 .00 0
5 . 50 .%0 %
$35.00

$ 2$52. 50 .00 0 $0 2. 05.%.00%0

MARKET ANALYSIS 63

BAY AREA VENTURE CAPITAL

TOP VENTURE CAPITAL MARKET

Investors’ demand for Bay Area real estate remains strong compared to other U.S. markets, and the

San Francisco Bay Area is one of the most active investment markets in the United States. Venture

capital investment totaled $58.6 billion in the U.S. in 2016, with Bay Area start-up companies receiving

$24.9 billion, or 43 percent of these funds. Funding for Bay Area start-ups marked the third highest in

over a decade. Six of the top ten venture capital deals in the fourth quarter of 2016 went to Bay Area

companies Opendoor, Stripe, Postmates, Zymergen, Memebox, and Unity Biotechnology. These and

other new companies continue to drive the incredible demand in Bay Area properties and represent

many of the tenan$4t0,s000chasing prime creative office space inTOSTAaLnINFVEraSTnMcEisNTco. # OF DEALS
2,000

$35,000 BAY AREA VENTURE CAPITAL INVESTMENTS IN 2016 1,750

$30,000 TOTAL INVESTMENT # OF DEALS
2,000
$40,000
1,500
$25,000
$ IN MILLIONS 1,750 # OF DEALS
$35,000
1,250# OF DEALS
$20,000
1,500
$30,000
1,000
$15,000
1,250
$25,000

$20,000$10,000

$15,000 $5,000

$10,000 $0 750

2007 2008 2009 2010 2011 2012 2013 2014 2015 210,10600

$5,000

$0 750
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

VENTURE CAPITAL FUNDING BY REGION IN 2016

BAY AREA

NY METRO

BAY AREA

NEW ENGLAND

NY METRO

NELWA/EONRGALANNGDE COUNTY
LA/ORANGE COUNTY OTHER

O T HSEORU T H E A S T
S O U TDHCE/AMSETT R O P L E X

DC/METROPLEX

MIDWEST

MIDWEST

TEXAS TEXAS
N O R T H WNE SOTR T H W E S T

$0 $0 $5,000 $5,000 $10,000 $10,000 $15,000 $15,000 $20,000 $20,000 $25,000 $25,000
V E N TVUERNETCUARPEI TCAALPFI TUANLDFI NUGN D( IINN GM (I LI NL I OMNI LSL) I O N S )

64 MARKET ANALYSIS

TECHNOLOGY HEADQUARTERS IN SAN FRANCISCO

SOCIAL MEDIA

ONLINE TICKETING ONLINE DELIVERY

CLOUD STORAGE SOCIAL ENTREPRENEURSHIP CRM

DIGITAL MEDIA VIRTUAL PIN BOARD

GLOBAL TECH
COMPANIES

ON-DEMAND TRANSPORTATION CLICK & BRICK RETAIL ONLINE ENCYCLOPEDIA

ONLINE LODGING MOBILE PAYMENTS
PHOTO SHARING

San Francisco is home to a major technology presence with more than 500 tech
companies within its borders.

Tech companies occupy about one-third of office space in San Francisco accounting
for 25 million square feet out of 78 million total square feet.

Currently, there are more than 53 “unicorn” companies – private companies with a
valuation greater than $1 billion – within San Francisco. These companies account for 30%
of all unicorns globally.

MARKET ANALYSIS 65

TECHNOLOGY TENANTS ARE DRIVING THE MARKET

The technology sector continues to drive the San Francisco office market. As the term “technology”
takes on more diversity and depth, San Francisco continues to be the beneficiary of organically
grown startups and mature companies migrating from the Silicon Valley. The chart below reflects
the global technology companies with a San Francisco headquarters. Many of these companies,
including Uber, Twitter, Salesforce and Square, began as start-ups in San Francisco and have grown
into household names representing the expansive influence of the tech industry.

COMPAN Y . . . . . . . . . . . . . . . . . . . . . . . . S.IZ.E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BUILDING
S A L E S F O R C E . . . . . . . . . . 2 , 4 5 8 , 3 0 8 . . . . . . . . . . . . M U LT I P L E
U B E R . . . . . . . . . . . . . 1, 3 5 7,7 12 . . . . . . . . . . . . M U LT I P L E
G O O G L E . . . . . . . . . . . . 9 2 2 , 9 3 1 . . . . . . . . . . . . M U LT I P L E
T W I T T E R . . . . . . . . . . . . 6 2 7, 2 0 7 . . . . . . . . . . . . M U LT I P L E
W E W O R K . . . . . . . . . . . 5 2 8 ,7 5 9 . . . . . . . . . . . . . M U LT I P L E
F I T B I T . . . . . . . . . . . . . 4 8 0 ,74 5 . . . . . . . . . . . . M U LT I P L E
A D O B E S Y S T E M S . . . . . . . . 4 6 1, 2 2 0 . . . . . . . . . . . . . M U LT I P L E
L I N K E D I N C O R P O R AT I O N . . . . 4 5 0 , 2 0 9 . . . . . . . 2 2 2 S E C O N D S T R E E T
D O L B Y L A B O R AT O R I E S . . . . . 4 3 7, 6 5 4 . . . . . . . . . . . . M U LT I P L E
A M A Z O N / T W I T C H . . . . . . . 4 3 5 , 8 6 2 . . . . . . . . . . . . M U LT I P L E
S T R I P E . . . . . . . . . . . . 4 0 2 , 3 9 2 . . . . . . . . . . . . M U LT I P L E
S L A C K . . . . . . . . . . . . . 3 11, 4 4 4 . . . . . . . . . . . . M U LT I P L E
P I N T E R E S T . . . . . . . . . . . 3 0 8 ,12 9 . . . . . . . . . . . . . M U LT I P L E
D R O P B O X . . . . . . . . . . . 2 9 7, 0 0 0 . . . . . . . . . . . . M U LT I P L E
S Q U A R E . . . . . . . . . . . . 2 7 1, 3 9 4 . . . . . . . 14 5 5 M A R K E T S T R E E T
Z Y N G A . . . . . . . . . . . . 2 6 6 , 9 0 5 . . . . . 6 5 0 T O W N S E N D S T R E E T
L E N D I N G C L U B C O R P O R AT I O N . 2 4 6 , 8 9 9 . . . . . . . . . . . . M U LT I P L E
M A C Y S . C O M . . . . . . . . . . 2 4 2 ,7 5 3 . . . . . . . 6 8 0 F O L S O M S T R E E T
A I R B N B . . . . . . . . . . . . 2 3 0 , 8 7 3 . . . . . . 8 8 8 B R A N N A N S T R E E T
Y E L P . . . . . . . . . . . . . 2 13 , 6 0 0 . . . . . . . . . . . . M U LT I P L E
M E R A K I / C I S C O . . . . . . . . 18 9 ,13 5 . . . . . . . 5 0 0 T E R R Y F R A N C O I S
S P L U N K . . . . . . . . . . . . 18 2 , 0 0 0 . . . . . . . . . . . . . M U LT I P L E
A U T O D E S K . . . . . . . . . . 16 7, 0 8 5 . . . . . . . . . . . . M U LT I P L E
I B M / T E A L E A F . . . . . . . . . 16 4 , 3 6 8 . . . . . . . . . . . . M U LT I P L E
LY F T . . . . . . . . . . . . . . 16 2 , 0 0 0 . . . . . . . . 18 5 B E R R Y S T R E E T
N E W R E L I C , I N C . . . . . . . . . 14 4 , 3 14 . . . . . . . . . . . . . M U LT I P L E
S T U B H U B / E B AY . . . . . . . . 14 0 , 3 7 8 . . . . . . 19 9 F R E M O N T S T R E E T
C R U I S E A U T O M AT I O N . . . . . 13 9 ,10 2 . . . . . . . 12 0 1 B R YA N T S T R E E T
N E U S TA R . . . . . . . . . . . 13 8 , 0 0 0 . . . . . . . 5 0 5 H O W A R D S T R E E T
R I V E R B E D T E C H N O L O G Y I N C . . . 13 8 , 0 0 0 . . . . . . . 6 8 0 F O L S O M S T R E E T
I N V I TA E . . . . . . . . . . . . 12 6 , 2 7 3 . . . . . . . . . . . . M U LT I P L E
O R A C L E . . . . . . . . . . . . 12 5 , 3 7 3 . . . . . . . . . . . M U LT I P L E

66 MARKET ANALYSIS

RELEVANT SAN FRANCISCO SALES COMPARABLES

394 PACIFIC 755 SANSOME

DATE SOLD July 2016 DATE SOLD June 2016

SIZE 44,331 SIZE 60,128

PRICE $32,340,000 PRICE $42,650,000

$ PSF $730 $ PSF $709

BUYER Grosvenor BUYER Shanghai Lingang

SELLER PMI Properties SELLER Market Street Partners

115 SANSOME 200 CALIFORNIA

DATE SOLD Nov. 2016 DATE SOLD January 2017

SIZE 114,556 SIZE 23,588

PRICE $83,000,000 PRICE $23,050,000

$ PSF $725 (above grade) $ PSF $988

BUYER Vanbarton Group BUYER Wilad Properties

SELLER TA Realty SELLER Manchester Capital

20 CALIFORNIA 55 FRANCISCO

DATE SOLD Sept. 2015 DATE SOLD November 2016

SIZE 54,737 SIZE 143,379

PRICE $44,000,000 PRICE $91,000,000

$ PSF $803 (above grade) $ PSF $635

BUYER L&B Realty Advisors BUYER Jamestown

SELLER TA Realty SELLER Lincoln Property

807 MONTGOMERY 539 BRYANT

DATE SOLD October 2016 DATE SOLD Pending
SIZE 55,616
SIZE 10,397 PRICE $46,500,000
$ PSF $836
PRICE $11,800,000 BUYER TH Real Estate
SELLER Zurich Alternative
$ PSF $1,135

BUYER Private

SELLER 9 Mile Investment

MARKET ANALYSIS 67

RELEVANT SAN FRANCISCO LEASE COMPARABLES

1000 SANSOME TENANT 1000 SANSOME TENANT
SQ FT SQ FT
DATE SIGNED 4,100 DATE SIGNED 7,519
START RATE PSF Oct-16 START RATE PSF Mar-16
LEASE TYPE $72.00 LEASE TYPE $72.00
BUMPS FSE BUMPS FSE
TI ALLOWENCE PSF 3% TI ALLOWENCE PSF 3%
TERM $125.00 TERM $70.00
6 yrs 8 yrs

560 DAVIS TENANT Pending 650 DAVIS TENANT The State Bar of CA
SQ FT 9,872 SQ FT 3,605
DATE SIGNED Pending DATE SIGNED Jan-17
START RATE PSF $68.00 START RATE PSF $69.00
LEASE TYPE FSG LEASE TYPE FSG
BUMPS 3% BUMPS 3%
TI ALLOWENCE PSF Spec Suite $100 TI ALLOWENCE PSF $29.50
TERM 5 yrs - 3 mos TERM 8 yrs

243 VALLEJO TENANT 731 SANSOME TENANT
915 FRONT ST SQ FT SQ FT
DATE SIGNED 6,518 DATE SIGNED 8,900
START RATE PSF Oct-16 START RATE PSF Sept-16
LEASE TYPE $85.00 LEASE TYPE $62.00
BUMPS FSE BUMPS FSG
TI ALLOWENCE PSF 3% TI ALLOWENCE PSF 3%
TERM Spec Suite TERM $30.00
5 yrs 5 yrs

TENANT 1265 BATTERY ST TENANT
SQ FT SQ FT
DATE SIGNED 8,000 DATE SIGNED 9,269
START RATE PSF Feb-17 START RATE PSF July-16
LEASE TYPE $64.00 LEASE TYPE $65.50
BUMPS FSE BUMPS FSG
TI ALLOWENCE PSF 3% TI ALLOWENCE PSF 3%
TERM As-Is TERM N/A
3 yrs 8 yrs

68 REGIONAL OVERVIEW

REGIONAL OVERVIEW

69

70 REGIONAL OVERVIEW

CITY OF SAN FRANCISCO OVERVIEW

San Francisco, the heart and soul of the Bay Area (America’s fifth-largest metropolitan area with seven million
residents), has long been the financial center of the West Coast. San Francisco’s dynamic and diverse economy
is supported by one of the most educated populations in the country, which enjoys a high quality of life in
one of America’s most desirable 24-hour cities. Businesses have long recognized these attributes and have
established San Francisco as a popular location for company headquarters. In recent years, San Francisco has
established itself as California’s second largest high-tech center, after Silicon Valley. The San Francisco Bay
area has a quality of life that is the envy of the entire country and the world. In 2016, San Francisco hosted
over 16.5 million visitors who visit the city to experience the region’s fantastic shopping, dining, cultural and
recreational options.

REGIONAL OVERVIEW 71

NEXUS FOR BUSINESS

With such diverse local assets to offer, the Bay Area serves as corporate headquarters to 29 Fortune 500 firms,
including Google, Apple, Chevron, Hewlett-Packard, Safeway, Wells Fargo, Intel, Cisco Systems, Gap, and
PG&E Corp. Prominent businesses located in the Bay Area include:

HEADQUARTERS DOLBY LEVI STRAUSS QUALCOMM
DROPBOX LINKEDIN SAFEWAY
ADOBE EBAY LUCASFILM SALESFORCE
AIRBNB EVENTBRITE LYFT SQUARE
ALPHABET/GOOGLE FACEBOOK MCKESSON TESLA
APPLE FITBIT NETFLIX TWITTER
AUTODESK FRANKLIN TEMPLETON ORACLE UBER
BECHTEL GAP PALANTIR VIRGIN AMERICA
BOX GENENTECH PANDORA WELLS FARGO
CHARLES SCHWAB HEWLETT-PACKARD PG&E WILLIAMS-SONOMA
CHEVRON INTEL PINTEREST YELP
CISCO SYSTEMS KAISER PERMANENTE PIXAR YOUTUBE
CLOROX
DEL MONTE

FINANCIAL SERVICES ERNST & YOUNG KPMG UBS
ESURANCE MARSH UNION BANK
AON FEDERAL RESERVE BANK MOODY’S VISA
BANK OF AMERICA FIRST REPUBLIC BANK MORGAN STANLEY WR HAMBRECHT + CO
BANK OF THE WEST GOLDMAN SACHS PRICE WATERHOUSE
CITIGROUP JP MORGAN STIFEL
DELOITTE
E*TRADE

PROFESSIONAL SERVICES

AAA DELTA DENTAL GOODBY SILVERSTEIN SHAW PITTMAN
ACCENTURE DESIGN WITHIN REACH IBM ROBERT HALF
ARNOLD & PORTER EXPEDIA LITTLER MENDELSON SKIDMORE OWINGS
BLUE SHIELD FARELLA MORRISON & FORESTER UNITEDHEALTHCARE
CALIFORNIA PACIFIC BRAUN+MARTEL ORRICK
COOLEY GENSLER ARCHITECTS PILLSBURY WINTHROP

72 REGIONAL OVERVIEW

SAN FRANCISCO’S CHANGING LANDSCAPE

San Francisco’s urban landscape is set to undergo dramatic change as a result of these mega-projects
that are anticipated to add millions of square feet of new commercial space, more than 35,000 new units of
much-needed housing, and bring key infrastructure and significantly increase the amount of recreation
space to the city. Private developers, often in partnership with the City of San Francisco, are making the
redevelopment of underutilized portions of the city a reality, as these projects progress from nascent
plans to completion over the next two decades.

1 TRANSBAY CENTER

The Transbay Transit Center is a $2.3B project is at the heart of the
Transbay Development Area. The area encompasses more than
40-acres of land that is currently being redeveloped into several major
mixed-use projects, including Salesforce Tower, 181 Fremont, and Park
Tower. The Transit Center itself will include five levels of retail, parks,
and provide linkages for many Bay Area transit systems. Currently,
more than 6,200 residential units are in the pipeline for development.

2 PIER 70

Forest City, the Port of San Francisco, and Orton Development
are developing the historic Pier 70 in San Francisco’s Dogpatch
neighborhood. The project will include up to 2 million SF of office, up to
2,000 housing units, and about 450,000 SF of retail, industrial, and art
space. The plan also includes the rehabilitation of the historic buildings
and the addition of 9 acres of recreational waterfront space.

3 MISSION ROCK

The San Francisco Giants won the right to redevelop the 28 acres of
land across of AT&T Park in 2009. In 2015, voters approved increased
height and density proposals for the site. The development includes
1,500 housing units, and 1.3 million SF of office, retail, and public open
space, estimated at a cost of $1.7B.

4 TREASURE ISLAND

Lennar Urban, Kenwood, Stockbridge, and Wilson Meany are partnering
to redevelop 45 acres of Treasure Island and the 80-acre Yerba Buena
Island at an estimated cost of more than $6B. The project will include
8,000 housing units, 140,000 square feet of commercial space, and
100,000 square feet of office space that will be built over the next 15
years. The project will also add key infrastructure such as a new ferry
terminal and parks and open space.

SAN REGIONAL OVERVIEW 73
FRANCISCO
4

1
7

3
2

5 6
6
1

BRISBANE

5 PARK MERCED DALY CITY COLMA

Parkmerced, located in the southwestern part of San Francisco, is a
planned developmSOeUnTHt SpAroNject that will bring about 5,700 new housing
units on 152 acFrReAsN. CTIhSCeOfirst phase consists of five projects totaling
about 1,000 units that is currently under construction with an estimated
project cost of $1.4B.

6 CANDLESTICK POINT AND SF SHIPYARD

Lennar’s Candlestick Point and San Francisco redevelopment envisions
more than 12,000 homes, 3 million SF of office, 900,000 SF of retail
space, and more than 380 acres of open space. The Shipyard’s office/
R&D site is the largest remaining undeveloped site in San Francisco
and is slated for priority approval under Proposition M. The total cost is
estimated to exceed $8B over the next 15 years.

7 5M

Forest City and Hearst are redeveloping the SF Chronicle building and
the surrounding 4 acres into 700 residential units, 800,000 SF of office,
35,000 SF of retail, and 50,000 SF of public space. The transformative
mixed-use project aims to activate the intersection of Downtown and
SOMA, two of San Francisco’s most important districts.

74 REGIONAL OVERVIEW

SAN FRANCISCO BY THE NUMBERS

San  Francisco clearly has the talent, technology, innovation, quality
of life, and infrastructure to build upon an already strong position for
sustained long-term growth. Some of the attributes that only attempt
to measure the city’s unique spirit and distinctiveness include the
following:

DEMOGRAPHICS

3.2 M Residents in 3.5 M Jobs in the
labor force Bay Area

66% Of population between $95,000 Per
the ages of 18-64 Capita
years of age Income

EDUCATION 850 phd

36top ranked Scientists and engingeers produced
annually by Bay Area universities
Graduate programs in science,
math & engineering 21 percent

52 percent Of population with graduate
degrees
Of population with college
degrees or beyond finance

EXPERTISE banks, brokerage
securities
tech
tourism
innovation, internet,
software, social media, artists, hotel, entertainers
engineers travel, sales, restaurants

service

consultants, lawyers
accounts, managers

REGIONAL OVERVIEW 75

76 REGIONAL OVERVIEW

AT TRIBUTES FOR LONG -TERM GROW TH

TECHNOLOGY

TALENT Technology is in the very genes of QUALITY OF LIFE
The Bay Area attracts human the city. People in San  Francisco
resource talent that drives the are known to adopt technology San  Francisco’s livability cannot
technology, innovation, and quickly and use it creatively to be reduced to a number on a
creativity that make the region push the bounds of innovation page. While a recent ranking by
a first-rate center for business, and, in many cases, scientific Mercer Management Consulting
scientific, and artistic endeavors. discovery. put San Francisco as Number One
The Bay Area promotes a region in the continental United States
of political, social, and economic The region is the birthplace for having the best quality of life, it
tolerance. and worldwide center of high is not only a visually beautiful city,
technology, and acclaimed as but also a city of excellence and
INFRASTRUCTURE the incubator of biotechnology, tolerance that welcomes all.
thanks to the talent located
San  Francisco’s infrastructure is at the University of California, San  Francisco living extends
a primary focus of the business San  Francisco. There are more beyond the city limits to what the
community and city government. pioneering high-tech and biotech greater San  Francisco Bay Area
San Franciscans recognize the firms than any other region—Dolby and Northern California region has
importance of environmental Labs (audio), Salesforce.com to offer. San  Francisco residents
impacts of traffic and parking and (customer relationship software), and businesses benefit from
place a priority on accessibility George Lucas’ Industrial Light a strong sense of community
while striving to be a “green” and Magic (Entertainment), and and pride in the city. Strong
community. Genentech (bioscience), to name infrastructure helps make the city
a few. poised for business.

CULINARY ARTS REGIONAL OVERVIEW 77

Consistently ranked as one of the ENTERTAINMENT
best cities in the world to dine,
and in 2016 was awarded “Best Thriving Professional Sport
Food City in the Country Right Teams—the World Series winning
Now” by Bon Appetit magazine. San Francisco Giants and Oakland
A’s baseball, 2015 Golden State
Warriors World Champions, the
three-time Super Bowl Champion
Oakland Raiders, two-time
Pacific Division Champion San
Jose Sharks NHL team, and
five-time Super Bowl Champion
San Francisco 49ers.

THRIVING ARTS

World class symphony, ballet,
opera, and museums as well as
thriving non-profit arts center.

ANNUAL SPECIAL EVENTS

Bay to Breakers, International
Grand Prix Cycling, Free Golden
Gate Park Concerts, and
neighborhood and ethnic festivals.

78 REGIONAL OVERVIEW

SAN FRANCISCO NEIGHBORHOODS

FINANCIAL DISTRICT CHINATOWN

The Financial District has been San Francisco’s densest
the center of finance for the neighborhood, Chinatown
West Coast since 1849. The was settled in the 1860’s by
Financial District currently Chinese immigrant railroad
contains 45 million square feet workers, miners, and farm
of office space and continues laborers. Today, it is a vibrant
to be the location of choice for community and tourist
finance, insurance, and real attraction.
estate firms.

JAPANTOWN

UNION SQUARE The heart of Japantown is the GOLDEN GATE PARK
Japan Center, a five-acre complex
of hotels, shops, theaters, sushi San  Francisco’s largest park,
bars, and restaurants at Post and covering 1,013 acres, is about
Buchanan Streets. It is crowned three miles long and ½-mile wide.
by a five-tiered pagoda, a symbol It is bigger than New York’s Central
of eternal peace. Park and has over one million trees
and nine lakes within its borders.
Union Square is the heart of the The Park contains a large number
City and is a world renowned of cultural and recreational
shopping district. Union Square amenities including the de Young
reopened in mid-2002 after Museum, California Academy
an 18-month, $25 million of Sciences, Conservatory of
beautification and renovation Flowers, Japanese Tea Garden,
project designed to retain its old Kezar Stadium, lawn bowling,
world elegance and charm while and a nine-hole golf course. It is
developing a modern character truly the ultimate haven from the
that captures the unique flavor hustle and bustle of the city.
and beauty of San Francisco.

REGIONAL OVERVIEW 79

FISHERMAN’S WHARF PRESIDIO

World-renowned for its historic The Presidio rests at the foot of
waterfront, spectacular the Golden Gate Bridge and is an
views, delicious seafood, and expanse of 1,480 acres of land
unique shopping experiences, rich in cultural history and natural
Fisherman’s Wharf is beauty. In the 1990’s, the Presidio
San Francisco’s most popular became part of the Golden Gate
tourist destination with an National Recreation Area, the
estimated 12 million annual world’s largest urban national
visitors. park. With the goal of becoming
the only self-sufficient national
park, the Presidio has been master
planned to include commercial
and residential redevelopment.

NORTH BEACH LETTERMAN DIGITAL ARTS

As San Francisco’s “Little Italy,” The George Lucas Letterman
North Beach has historically Digital Arts Center project is the
been home to a large Italian- first major redevelopment project
American population and many in the Presidio. The Presidio Trust
Italian restaurants and cafes. selected Lucas to redevelop a
Today, North Beach still retains 23-acre site that was previously
a strong sense of its historical home to the Navy’s Letterman
heritage and is a popular Hospital. The Digital Arts Center
destination for dining and is an 835,000 square foot
nightlife. complex that opened to the public
in the summer of 2005. It houses
many of the Lucas film divisions,
including Industrial Light & Magic,
THX Group and Lucas Arts
Entertainment.

80

CONFIDENTIAL MEMORANDUM AND DISCLAIMER

Newmark Cornish & Carey (“Broker”) has been engaged as the exclusive agent for the sale of 901 Battery Street and 998 Sansome Street, located in
San Francisco, CA (the “Asset”).

The Asset is being offered for sale in an “AS-IS, WHERE-IS,” condition and confidential (“Owner”), its employees and agents and Broker make
no representations or warranties as to the accuracy of the information contained in this Offering Memorandum. The enclosed materials include
highly confidential information and are being furnished solely for the purpose of review by prospective investors of the interest described
herein. Neither the enclosed materials nor any information contained herein is to be used for any other purpose or made available to any other
person without the express written consent of Owner. Each recipient, as a prerequisite to receiving the enclosed, should be registered with
Newmark Cornish & Carey as a registered prospective investor (“Prospective Investor”) or as investor’s broker (“Investor’s Broker”) for an
identified Prospective Investor. The use of this Offering Memorandum and the information provided herein is subject to the terms, provisions
and limitations of the Confidentiality Agreement for Purchasers furnished by Broker prior to delivery of this Offering Memorandum.

The enclosed materials are being provided solely to facilitate the Prospective Investor’s own due diligence for which it shall be fully and solely
responsible. The material contained herein is based on information and sources deemed to be reliable, but no representation or warranty,
express or implied, is being made by Broker or Owner or any of their respective representatives, affiliates, officers, employees, shareholders,
partners and directors, as to the accuracy or completeness of the information contained herein. Summaries contained herein of any legal or
other documents are not intended to be comprehensive statements of the terms of such documents, but rather only outlines of some of
the principal provisions contained therein. Neither Broker nor Owner shall have any liability whatsoever for the accuracy or completeness of
the information contained herein or any other written or oral communication or information transmitted or made available or any action taken
or decision made by the recipient with respect to the Asset. Prospective Investors are to make their own investigations, projections, and
conclusions without reliance upon the material contained herein.

Owner reserves the right, at its sole and absolute discretion, to withdraw the Asset from being marketed for sale at any time and for any
reason, or for no reason. Owner and Broker each expressly reserves the right, at its sole and absolute discretion, to reject any and all
expressions of interest or offers regarding the Asset and/or to terminate discussions with any entity at any time, with or without notice. This
Offering Memorandum is made subject to omissions, correction of errors, change of price or other terms, prior sale, or withdrawal from the
market without notice. Broker is not authorized to make any representations or agreements on behalf of Owner.

Owner shall have no legal commitment or obligation to any interested party reviewing the enclosed materials, performing additional
investigation and/or making an offer to purchase the Asset unless and until a binding written agreement for the purchase of the Asset has
been fully executed, delivered, and approved by Owner and any conditions to Owner’s obligations thereunder have been satisfied or waived.

By taking possession of and reviewing the information contained herein, the recipient agrees that (a) the enclosed materials and their
contents are of a highly confidential nature and will be held and treated in the strictest confidence and shall be returned to Broker or Owner
promptly upon request; (b) the recipient shall not contact employees or tenants of the Asset directly or indirectly regarding any aspect of
the enclosed materials or the Asset without the prior written approval of Owner or Broker; (c) the recipient shall make no attempt to visit the
Asset and/or grounds without the prior written approval of Owner or Broker; and (d) no portion of the enclosed materials may be copied or
otherwise reproduced without the prior written authorization of Owner or Broker or as otherwise provided in the Confidentiality Agreement
for Purchasers executed and delivered by the Prospective Investor to Broker.

Each Prospective Investor shall be responsible for any claims for commissions by any other broker or agent in connection with a sale of the
Asset if such claims arise from acts of such Prospective Investor or its Investor’s Broker. Any Investor’s Broker must provide a registration
signed by Prospective Investor acknowledging said broker/agent’s authority to act on its behalf.

If you have no interest in the Property at this time, please return this Offering Memorandum immediately to:

KYLE KOVAC • 415.477.9220
Executive Managing Director
One Bush Street, Suite 1500 • San Francisco, CA 94104

81

BATTERY SAN FRANCISCO

INVESTMENT ADVISORS M I C H A E L TAQ U I N O DANIEL CRESSMAN MANDY LEE
Executive Managing Director Executive Managing Director Associate Director
KYLE KOVAC 415. 477. 920 0 415.288.3622 4 15 . 4 4 5 . 5 10 3
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
4 15.477.9 22 0 CA License #01431337 CA License #00849877 CA License #01942461
k k o v a c @ n e w m a r k c c a r e y. c o m
CA License #01731229

LEASING ADVISORS DEBT & EQUITY ADVISOR

BART O’CONNOR R A M S E Y DAYA CHRIS MORITZ
Senior Managing Director Vice Chairman Managing Director
415.713.1818 415.399.8085 415.399.8083
b o c o n n o r @ n e w m a r k c c a r e y. c o m [email protected] ch r i s . m o r i t z @ n e w m a r k c c a r e y. c o m
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NGKF Capital Markets