Mission Creek at Folsom and 23Rd

MISSION CREEK AT FOLSOM AND 23RD

SAN FRANCISCO, CA

Development Opportunity In Nation’s Hottest Residential Market

MISSION CREEK AT FOLSOM AND 23RD

SAN FRANCISCO, CA

CONTACTS CONTENTS

Michael Thomas Executive Summary Vice President 03 Lic. 01354698 T +1 415 772 0484 Development Scenarios [email protected] 09

Dave Noravian First Vice President Location Overview 25 Lic. 01419471 T +1 415 772 0178 [email protected] Market Overview 41

Toby Costello Senior Associate Lic. 01704407 T +1 415 772 0410 [email protected]

Don LeBuhn First Vice President Lic. 01821805 T +1 415 772 0248 [email protected]

MISSION CREEK AT FOLSOM AND 23RD Executive Summary

03 Executive Summary

Development Opportunity In Nation’s Hottest Residential Market

THE OPPORTUNITY INVESTMENT SUMMARY

CBRE, as exclusive advisor, is pleased to offer for sale Address 2675 Folsom Street & Mission Creek at Folsom and 23rd (the “Property”), a 970 Treat Avenue 35,734 sf three parcel assemblage located in the heart of Price Best Offer San Francisco’s Mission District. The Property is located Percentage Leased 100% on Folsom Street at 23rd and has excellent visibility and Tenancy Charyn Asset Management (LED 9/30/18) frontage along Folsom Street as well as frontage along Treat Royal Inc. (LED 10/18/14) Avenue. Current In-Place $195,928 Annual Income

The Property currently consists of a 22,111 sf* industrial building with a large yard, all of which is leased to two DEVELOPMENT SUMMARY tenants. The current in-place income at the Property is

$195,928 annually. Address/ Land SF Zoning Floor Total Parcel Area Buildable Mission Creek at Folsom and 23rd offers investors a Ratio SF prime urban infill development opportunity in one of 2675 25,322 sf UMU (Urban 3 to 1 75,966 sf Folsom Mixed Use) the nation’s strongest residential markets. Perennially (3936/006) supply constrained, San Francisco’s residential market is 2675 7,350 sf RH-3 (Residential 1.8 to 1 13,230 sf extremely tight with vacancy market-wide under 5%, and it Folsom House, Three is increasingly challenging to find large parcels suitable for (3936/007) Family) residential development. 970 Treat 3,062 sf RH-2 (Residential 1.8 to 1 5,511 sf (3936/024) House, Two Family) The Property benefits from very favorable UMU (Urban Total 35,734 sf 94,707 sf Mixed Use) zoning which allows for residential, retail and office uses. The two smaller parcels also allow for residential development with RH-2 and RH-3 zoning. PROPERTY SUMMARY

* per public records Building Size 22,111 sf Land Size 35,734 sf (0.82 acres) Year Built 2675 Folsom (3936/006) – 1952 2675 Folsom (3936/007) – 1900 970 Treat (3936/024) – N/A Number of Floors Two Height Limit 40 feet Construction Type Steel & Masonry Frontage Folsom Street – 242’ Treat Avenue – 45’

04 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

INVESTMENT HIGHLIGHTS

• Prime redevelopment site located in Mission Creek, one of San Francisco’s trendiest submarkets

• Extremely rare large assemblage with very favorable UMU (Urban Mixed Use) zoning which would allow for up to 94,707 sf of new development

• In-place income allows for investors to offset carry costs during the entitlement period

• Excellent frontage and visibility along Folsom Street with 242 feet of frontage

• Central location with excellent access to public transportation, BART (at 24th Street) as well as US-101 and Interstate 280

• Amenity rich neighborhood: Immediate proximity to retail along 24th Street and walking distance to hip restaurants and retail such as Asiento, Flour + Water, Central Kitchen, Salumeria, Coffee Bar, Adventurous Sports, Southern Pacific Brewery and Ohio Design

TREAT AVENUE 23RD STREET

FOLSOM STREET

05 Executive Summary OFFERING GUIDELINES

The Owner is seeking to enter into a sale contract for fee simple ownership of the site. The property shall be delivered free and clear of debt at closing.

Environmental Disclosure: There was one 1,000 gallon underground storage tank at the property. The tank was removed and surrounding soil was excavated. The case was closed by the State Water Resources Control Board in March, 2005, and no further action was recommended. Additional information regarding the case closure will be provided to qualified investors.

In addition to the information contained herein, further details regarding the asset shall be made available to qualified investors.

Property tours may be scheduled immediately with: Michael Thomas Dave Noravian Toby Costello Don LeBuhn Vice President First Vice President Senior Associate First Vice President Lic. 01354698 Lic. 01419471 Lic. 01704407 Lic. 01821805 T +1 415 772 0484 T +1 415 772 0178 T +1 415 772 0410 T +1 415 772 0248 [email protected] [email protected] [email protected] [email protected]

Financing inquiries may be directed towards: Andrew Behrens CBRE T +1 415 772 0211 [email protected]

The Owner kindly requests that all interested parties provide CBRE with a formal Letter of Intent (“LOI”) outlining the terms and conditions under which they propose to acquire the site. In addition to standard terms and conditions, a detailed summary of your company, principals and transaction history would be greatly appreciated.

06 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

FOLSOM STREET

MISSION CREEK AT FOLSOM AND 23RD Development Scenarios

09 Development Scenarios

DEVELOPMENT SCENARIOS

SCENARIOS PREPARED BY

The investigation of conceptual site options for 2675 Folsom Eric Ibsen began with diagrammatic illustrations of maximum possible total Architect, LEED AP floor area on the site, taking into consideration: F | M | E 500 Montgomery St • The basic requirement for light and air at all sleeping rooms, San Francisco, CA 94111 using a standard double-loaded corridor +1 415 434 0320 x242 • The zoning height limit of 40 feet [email protected]

This yields iterations #1 and #2 with 82,000 and 90,000 SF respectively. Next FME layered the side yard setbacks that would be required for there to be windows along the property line and the addition of rear yards as shown in iterations #3 and #4. The impact on total built area is the resulting 65,000 and 67,000 SF. Iteration #5 takes the refinement process to the next step, addressing some of the limitations in #3 and #4 but exercising some liberty in the Planning code by:

• Combining the rear yards for the back-to-back property condition, contributing to the common rear yard objective for the block

• Introducing the necessary “notch” for relief in facades greater than 200’ along Folsom

• Stretching the footprint back out to the PL on the side yards and relying on the front- and rear-facing sides of those units to accommodate the window requirement

About FME: FME Architecture + Design is an architectural and interior design practice that has been serving the San Francisco Bay Area since 1980. FME’s 30-person staff delivers a wide range of talent and experience while maintaining the personalized service of a smaller firm. By adapting FME’s approach and processes to suit the needs of their clients, FME is able to produce large and small scale projects in equal measure. FME offers full-service architectural design and documentation for ground-up construction, adaptive reuse and retrofit, and expansion of existing facilities as well as comprehensive interior design for both building owners and end- users.

10 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

11 Development Scenarios

CONCEPTUAL PLAN - OPTION 1

LEVELS 3-4 PLAN 245'-0" 40'-0" 71'-6" 212'-0" 108'-0"

65'-0" 60'-0" 120'-0" LEVEL 2 PLAN

A R E A S C H E D U L E - 1 30'-0" 20'-0" FLOOR AREA GROUND LEVEL 5186 SF 42'-6" FLEX AREA 5186 SF 20'-0"

GROUND LEVEL 29875 SF PARKING 29875 SF TREAT AVE. FOLSOM STREET FOLSOM GROUND LEVEL 1000 SF 139'-6" LEVEL 2 26989 SF RESIDENTIAL LEVEL 3 26989 SF FLEX AREA* LEVEL 4 26989 SF RESIDENTIAL 81968 SF PARKING 23RD STREET GROUND LEVEL PLAN

FOLSOM AND 23RD N.T.S. 12 ITERATION 1 06/20/14 MASSING STUDIES PDPDPD A1A1A1 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

LEVELS 3-4 PLAN 245'-0" 40'-0" 71'-6" 212'-0" 108'-0"

65'-0" 60'-0" 120'-0" LEVEL 2 PLAN

A R E A S C H E D U L E - 1 30'-0" 20'-0" FLOOR AREA GROUND LEVEL 5186 SF 42'-6" FLEX AREA 5186 SF 20'-0"

FOLSOM AND 23RD N.T.S. ITERATION 1 06/20/14 13 MASSING STUDIES PDPDPD A1A1A1 Development Scenarios

CONCEPTUAL PLAN - OPTION 2

LEVELS 3-4 PLAN

65'-0" 57'-6" 122'-6" 40'-0" 55'-0" 131'-6" 242'-0"

REAR YARD

LEVEL 2 PLAN

A R E A S C H E D U L E - 2 30'-0" 20'-0" FLOOR AREA GROUND LEVEL 5186 SF FLEX AREA 5186 SF 100'-0" GROUND LEVEL 29875 SF 20'-0" PARKING 29875 SF TREAT AVE. FOLSOM STREET FOLSOM GROUND LEVEL 1000 SF 64'-0" LEVEL 2 29840 SF RESIDENTIAL LEVEL 3 29840 SF FLEX AREA* LEVEL 4 29840 SF RESIDENTIAL 90519 SF PARKING 23RD STREET GROUND LEVEL PLAN

FOLSOM AND 23RD N.T.S. ITERATION 2 06/20/14 MASSING STUDIES PDPDPD A2A2A2 14 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

LEVELS 3-4 PLAN

65'-0" 57'-6" 122'-6" 40'-0" 55'-0" 131'-6" 242'-0"

REAR YARD

LEVEL 2 PLAN

FOLSOM AND 23RD N.T.S. ITERATION 2 06/20/14 MASSING STUDIES PDPDPD A2A2A2 15 Development Scenarios

CONCEPTUAL PLAN - OPTION 3

LEVELS 3-4 PLAN

10'-0" 65'-0" 108'-0" 62'-0" 10'-0" 10'-0"

43'-0" 65'-0" 214'-0" 54'-6" 80'-6" 65'-0" REAR YARD 10' -0 " LEVEL 2 PLAN

A R E A S C H E D U L E - 3 30'-0" 20'-0" FLOOR AREA GROUND LEVEL 5186 SF 42'-6" FLEX AREA 5186 SF 20'-0"

GROUND LEVEL 29875 SF PARKING 29875 SF TREAT AVE. 139'-6" FOLSOM STREET FOLSOM GROUND LEVEL 1000 SF LEVEL 2 21506 SF RESIDENTIAL LEVEL 3 21506 SF FLEX AREA* LEVEL 4 21506 SF RESIDENTIAL 65518 SF PARKING 23RD STREET GROUND LEVEL PLAN

FOLSOM AND 23RD N.T.S. ITERATION 3 06/20/14 MASSING STUDIES PDPDPD A3A3A3 16 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

LEVELS 3-4 PLAN

10'-0" 65'-0" 108'-0" 62'-0" 10'-0" 10'-0"

43'-0" 65'-0" 214'-0" 54'-6" 80'-6" 65'-0" REAR YARD 10' -0 " LEVEL 2 PLAN

A R E A S C H E D U L E - 3 30'-0" 20'-0" FLOOR AREA GROUND LEVEL 5186 SF 42'-6" FLEX AREA 5186 SF 20'-0"

FOLSOM AND 23RD N.T.S. ITERATION 3 06/20/14 MASSING STUDIES PDPDPD A3A3A3 17 Development Scenarios

CONCEPTUAL PLAN - OPTION 4

LEVELS 3-4 PLAN

10'-0" 65'-0" 43'-0" 65'-0" 62'-0" 10'-0" 36'-0" 100'-6" 67'-0" 65 ' -0 " 214'-0"

REAR YARD 173'-0"

LEVEL 2 PLAN

A R E A S C H E D U L E - 4 30'-0" 20'-0" FLOOR AREA GROUND LEVEL 5186 SF 42'-6" FLEX AREA 5186 SF 20'-0"

GROUND LEVEL 29875 SF PARKING 29875 SF TREAT AVE. 139'-6" FOLSOM STREET FOLSOM GROUND LEVEL 1000 SF LEVEL 2 22119 SF RESIDENTIAL LEVEL 3 22119 SF FLEX AREA* LEVEL 4 22119 SF RESIDENTIAL 67356 SF PARKING 23RD STREET GROUND LEVEL PLAN

FOLSOM AND 23RD N.T.S. ITERATION 4 06/20/14 MASSING STUDIES PDPDPD A4A4A4 18 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

LEVELS 3-4 PLAN

10'-0" 65'-0" 43'-0" 65'-0" 62'-0" 10'-0" 36'-0" 100'-6" 67'-0" 65 ' -0 " 214'-0"

REAR YARD 173'-0"

LEVEL 2 PLAN

A R E A S C H E D U L E - 4 30'-0" 20'-0" FLOOR AREA GROUND LEVEL 5186 SF 42'-6" FLEX AREA 5186 SF 20'-0"

FOLSOM AND 23RD N.T.S. ITERATION 4 06/20/14 MASSING STUDIES PDPDPD A4A4A4 19 Development Scenarios

CONCEPTUAL PLAN - OPTION 5

OFFSET AT LEVEL 4 ONLY

30'-0" 5'-0" 60'-0"

LEVEL 3-4 PLAN 1" = 100'-0"

65' 58' 58' 65' 40'

A R E A S C H E D U L E 242' FLOOR AREA TREATTREAT AVE. AVE. TREATTREAT AVE. AVE. FOLSOMFOLSOM STREET STREET GROUND LEVEL 5250 SF FOLSOMFOLSOM STREET STREET FLEX AREA 5250 SF

GROUND LEVEL 30811 SF 65' 112' 68' PARKING 30811 SF 23RD STREET LEVEL 2 26220 SF LEVEL 3 24420 SF LEVEL 2 PLAN LEVEL 4 23845 SF 1" = 100'-0" RESIDENTIAL 74485 SF

23RD AND FOLSOM 1" = 100'-0" MASSING - OPTION 5 06/19/14 POTENTIAL MAXIMUM ENVELOPE PDPDPD A0.5A0.5A0.5

20 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

OFFSET AT LEVEL 4 ONLY

30'-0" 5'-0" 60'-0"

LEVEL 3-4 PLAN 1" = 100'-0"

65' 58' 58' 65' 40'

A R E A S C H E D U L E 242' FLOOR AREA TREATTREAT AVE. AVE. TREATTREAT AVE. AVE. FOLSOMFOLSOM STREET STREET GROUND LEVEL 5250 SF FOLSOMFOLSOM STREET STREET FLEX AREA 5250 SF

GROUND LEVEL 30811 SF 65' 112' 68' PARKING 30811 SF 23RD STREET LEVEL 2 26220 SF LEVEL 3 24420 SF LEVEL 2 PLAN LEVEL 4 23845 SF 1" = 100'-0" RESIDENTIAL 74485 SF

23RD AND FOLSOM 1" = 100'-0" MASSING - OPTION 5 06/19/14 POTENTIAL MAXIMUM ENVELOPE PDPDPD A0.5A0.5A0.5

21 Development Scenarios

LEASE ABSTRACTS

LEASE SUMMARY - CHARYN ASSET MANAGEMENT

Tenant Charyn Asset Management Group; Charyn Auctions (dba); and SF Restaurant Supply (dba) Square Footage Warehouse 13,000 sf Office 3,000 sf Total Square Footage 16,000 sf Floor First Floor Term 5 years Commencement Date 10/1/13 Expiration Date 9/30/18 Current Monthly Rent $12,525.61 Current Annual Rent $150,307 Current Annual Rent ($ PSF) $9.39 Security Deposit N/A Use Operation of auction business, including storage of inventory for auctions

RENT SCHEDULE

Period $ Amt/Mo $ Amt/Yr $ PSF/Yr 10/1/13 - 9/30/14 $12,525.61 $150,307.32 $9.39 10/1/14 - 9/30/15 $12,901.38 $154,816.54 $9.68 10/1/15 - 9/30/16 $13,288.42 $159,461.04 $9.97 10/1/16 - 9/30/17 $13,687.07 $164,244.87 $10.27 10/1/17 - 9/30/18 $14,097.68 $169,172.21 $10.57

Opex Reimbursements Pro-rata share of costs of gas, electrical & water Tax Reimbuursements Reimbursed over Base Year (2013/2014 Fiscal Year) Tenant’s Pro Rata Share 80% Parking Exclusive use of the entire yard area for parking, loading and business related activities with the exception of six spaces designated for second floor tenant. Options to Extend None Right of First Refusal Tenant shall have the Right of First Refusal to purchase the property if marketed for sale. Tenant shall have 10 days from receipt of written notice from Landlord, which shall contain price & terms, to submit an offer to purchase.

22 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

LEASE SUMMARY - ROYAL

Tenant Royal Inc. Total Square Footage 4,000 sf Floor Second Floor Term One year Commencement Date 11/19/13 Expiration Date 10/18/14 Current Monthly Rent $3,801.73 Current Annual Rent $45,621 Current Annual Rent ($ PSF) $11.41 Security Deposit $5,000.00 Opex Reimbursements Pro-rata share of costs of gas, electrical & water Tax Reimbuursements N/A Tenant's Pro Rata Share 20% Parking Exclusive use of six spaces Options to Extend Tenant may renew the lease for extended terms of one year with 180 days’ written notice during the first three years and 90 days’ notice thereafter. The renewal rate will be a 3% increase of the prior year’s rent. Right of First Refusal None

MISSION CREEK AT FOLSOM AND 23RD L ocaTION Overview

25 L ocation Overview

BAY AREA OVERVIEW

The San Francisco Bay Area has long been recognized as the financial and cultural center of the West. Sometimes referred to as the “Wall Street of the West” or the “Technology Capital of the World,” the region is home to a knowledge-based economy that boasts the world’s largest concentrations of technology and related venture capital firms. The nine-county Bay Area region, with 3.5 million jobs and a population of 7.5 million residents, is the sixth largest metropolitan market in the United States and boasts a gross regional product in excess of $487 billion, making it the world’s 22nd largest economic market.

DYNAMIC AND DIVERSIFIED ECONOMIC BASE

The Bay Area has a leading position in the growth sectors of high- tech, life sciences, clean tech, energy, domestic security, and defense technology.

WEALTHY AND GROWING POPULATION

The region is one of the largest and wealthiest regional markets in the world, with per capita income rates exceeding the national and state averages.

LARGE WELL-EDUCATED WORKFORCE

The region comprises the nation’s largest concentration of scientific, professional and managerial talent and is also home to leading educational institutions with world-class programs in science, engineering and finance.

URBAN RENAISSANCE

Major new projects, including the Transbay Transit Center Project, Mission Bay master development, 5M development and Pier 70 redevelopment, to name a few, are well underway and will further invigorate the region.

26 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

SAN FRANCISCO METROPOLITAN INDICATORS Forecast Indicators 2006 2007 2008 2009 2010 2 011 2012 2013 2014 2015 2016 2017 Gross metro product 123 125 126 120 123 127 135 140 145 153 158 161 % change 2.9 1. 4 1. 0 -4.9 2.1 3.8 5.7 4.0 3.9 5.2 3.3 2.2 Total employment (000) 968 989 997 945 936 960 998 1,024 1,048 1,077 1,100 1,112 % change 2.1 2.2 0.8 -5.2 -1.0 2.6 4.0 2.6 2.4 2.7 2.1 1. 1 Unemployment rate 3.9 4.0 5.0 8.5 9.0 8.2 6.9 5.6 4.9 4.8 4.8 4.6 Personal income growth 9.4 4.3 -0.2 -5.7 3.3 8.1 5.3 2.7 6.0 6.7 5.2 3.9 Population (000) 1,703 1,719 1,743 1,766 1,779 1,799 1,821 1,837 1,855 1,873 1,892 1,910 Single-family permits 897 987 556 384 349 3 74 454 556 1,252 1,865 1,839 1,662 Multifamily permits 3,088 2,735 3,023 598 869 2,376 3,813 4,188 1,677 1,992 1,902 1,849 Existing-home price ($ths) 890 945 840 697 74 3 692 74 3 894 912 939 961 988

Source: Moody’s Analytics - Precis San Francisco Metro - December 2013

27 L ocation Overview

As one of the few places in the world with high-level resources in R&D, human capital, venture capital, manufacturing, business consulting, marketing and advertising, the Bay Area has everything needed to turn an idea into a successful product.

28 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

In addition to its strong economic climate, San Francisco is also recognized as one of America’s most endearing, romantic, and cosmopolitan cities. The popular slogan calls it “Everybody’s Favorite City,” which is confirmed year after year as Conde Nast’s Traveller magazine rates San Francisco as one of the most popular tourist destinations in the world. It combines sheer physical beauty, cultural diversity, and leisure/recreational offerings in an idyllic climate. In an age of freeways and urban sprawl, San Francisco remains a compact city of just 47 square miles with a thriving downtown business and retail center and attractive, friendly neighborhoods making it one of the world’s most livable and modern 24-hour cities.

One cannot separate what makes San Francisco a premier place for business from what makes people want to live and work here. The City’s quality attracts and fosters exceptional talent from around the world. In turn, the savvy talent base drives the local economy through cutting-edge innovation and creativity. The tremendous spirit and achievements of the City all derive in one way or another from the quality of San Francisco living.

HOTBED OF INNOVATION & PRODUCTIVITY

Despite strides made by areas such as Austin, Texas and the Research Triangle Park in North Carolina, the Bay Area maintains its unquestioned pre-eminence as the top knowledge-based, innovation-led regional economy in the United States. Fundamental strengths include a highly skilled work force, global connectivity and a multifaceted economy - not to mention vibrant art and culture, a temperate climate and natural beauty.

An innovative and progressive mindset has been demonstrated time and time again in the San Francisco Bay Area. As one of the few places in the world with high-level resources in R&D, human capital, venture capital, manufacturing, business consulting, marketing and advertising, the Bay Area has everything needed to turn an idea into a successful product. The region has spawned numerous companies that have established new, trend-setting technologies. These companies have permeated our society and have had a profound effect on our everyday lives.

29 L ocation Overview SAN FRANCISCO’S BOOMING OFFICE MARKET

COMPANY DEMAND TOPS SPACE SUPPLY...

HISTORICAL OFFICE VACANCY AND TENANT DEMAND

15 Q113 Q213 Q313 Q413

10 Millions (SF)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Vacant Space Tenants in the Market (Demand)

Tenant demand exceeds vacant office space supply for the first time since 2000. The shortage is acute for large blocks of 100,000+ sq. ft., which have dropped from 22 to 8 in the past three years. Eleven tenants are currently seeking large blocks.

30 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO SAN FRANCISCO’S BOOMING OFFICE MARKET

...FUELING SIZABLE OFFICE RENT GROWTH

Folsom at Mission Creek

S o M a +87% Rent Growth Since Q4 2009

YERBA BUENA

+95% Rent Growth Since Q4 2009

SOMA WEST

+84% Rent Growth Since Q4 2009

OVERALL OFFICE MARKET +70%

31 L ocation Overview

STRONG, DIVERSE ECONOMIC BASE

The Bay Area is one of the largest and most diversified business sectors, coupled with the new technologies economies in the United States. Well known as the continually developed and refined throughout the region, “Technology Capital of the World,” the Bay Area’s will continue to drive the Bay Area’s economy. economy is in fact very multifaceted; Bay Area companies are distributed among a broad group of industries and The Bay Area benefits from its strategic location that business sectors including financial services, business is equidistant from Europe and the Pacific Rim and is services, retail and entertainment / tourism. The Bay deeply integrated within the global economy through Area’s percentage of math and engineering jobs is twice trade, investment and the composition of its workforce. the national average, and more than one-third of Bay The Bay Area’s ties with Asia in particular are significant Area workers are employed in managerial, professional or in terms of both business and tourism. Approximately 40 technical occupations. percent of U.S. exports and international trade with Asia goes through Bay Area ports and airports. As the global The Bay Area is currently home to 31 of the 2013 Fortune economy becomes increasingly integrated, the Bay Area 500 companies that collectively generate $1.13 trillion of will be in a strong position to benefit from the growth of revenue. The strength of these various companies and developing economies, particularly in Asia.

BAY AREA FORTUNE 500 EMPLOYERS Revenues Revenues Rank Company ($b) Rank Company ($b)

3 Chevron 233.9 278 Ross Stores 9.7

6 Apple 156.5 280 Gilead Sciences 9.7

14 McKesson 122.7 302 Applied Materials 8.7

15 Hewlett-Packard 120.4 362 Franklin Resources 7. 1

25 Wells Fargo 91.2 368 Core-Mark Holding 6.9

54 Intel 53.3 371 Agilent Technologies 6.9

55 Google 52.2 379 Symantec 6.7

60 Cisco Systems 46.1 408 NetApp 6.2

62 Safeway 44.2 420 Sanmina 6.1

80 Oracle 37.1 461 Clorox 5.5

179 Gap 15.7 464 Advanced Micro Devices 5.4

183 PG&E Corp. 15 482 Facebook 5.1

196 eBay 14.1 487 SanDisk 5.1

248 URS 11 488 Charles Schwab 5

260 Visa 10.4 494 Yahoo 5

262 Synnex 10.3

32 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

UNSURPASSED TALENT

As a business location, the Bay Area’s greatest advantage INCOME is its diverse, highly educated and exceptionally skilled population. The Bay Area is in the top ranking among The Bay Area is one of the wealthiest regions in the U.S. all regions in its proportion of scientists, computer While only 26 percent of households nationwide have programmers, engineers, business consultants, incomes of over $75,000 a year, 48 percent of households physicians, lawyers, musicians, authors and artists. in the Bay Area enjoy such incomes. The percentage of With a “brain trust” unequaled by any other region in households with incomes exceeding $100,000 in the the United States, the Bay Area is a constant generator Bay Area is double the nationwide percentage. Forty-nine of new ideas and businesses. Bay Area residents made Forbes magazine’s 400 Richest Americans list in 2013. EDUCATION POPULATION The educational attainment of Bay Area residents is among the highest in the nation, with approximately As of 2013, the Bay Area housed a population of more 41 percent of residents aged 25 years and over having than 7.5 million, making it the second largest metropolitan a bachelor’s degree or higher, and one in six having a area in California and the sixth largest in the United graduate or professional degree. Containing over 50 States. California is the nation’s first “majority-minority” institutions of higher learning, the Bay Area boasts state where no single racial group constitutes more than some of the top universities in the country including 50 percent of the population. The Bay Area provides Stanford University, the University of California Berkeley, businesses a huge pool of well-qualified, ethnically University of California San Francisco and Santa Clara diverse candidates for employment and an ideal market University, to name a few. for many kinds of products and services.

DEMOGRAPHIC HIGHLIGHTS

1 mile radius 2 mile radius 3 mile radius

2014 Estimated Population 83,109 526,450 858,520 2019 Projected Population 87,216 554,919 902,508 2010 Census Population 79,932 503,190 823,412 Growth 2010-2014 3.85% 3.23% 2.91% Growth 2014-2019 5.99% 5.17% 4.77%

2014 Est. Median Household Income $79,719 $68,277 $71,804 2019 Prj. Median Household Income $89,194 $75,666 $79,185 2000 Census Median Household Income $55,506 $51,219 $55,941

2014 Estimated Median Housing Value $747,360 $712,900 $712,830 2014 Estimated Average Housing Value $818,956 $793,400 $790,908

2014 Estimated Households 35,165 237,386 366,351 Growth 2014-2019 6.26% 6.17% 5.75% 2014 Estimated Average Household Size 2.30 2.14 2.28 Daytime Population 35,615 524,723 639,289

33 L ocation Overview

MISSION DISTRICT OVERVIEW

Mission Creek at Folsom and 23rd is located in the heart Excellent Transportation Access: The Mission offers of the Mission District. The Mission District generally outstanding public transportation options, including two encompasses the area roughly bounded by Highway BART stations and 10 different bus lines serving the 101 to the north and east, 26th Street to the South and area. It also benefits from easy access to Highway 101 Guerrero Street to the west. The Mission has traditionally and Interstate 280 for those working on the Peninsula or been a mix of industrial buildings in the eastern portion in Silicon Valley. Many major South Bay employers runs of the district and housing and neighborhood-serving their own private bus systems for employees living in San retail in the western portion. As the San Francisco office Francisco – buses for Apple, Facebook, Yahoo, Google, market has matured and expanded beyond the CBD into eBay, and Genentech employees all have multiple stops SOMA and Mid-Market, the Mission has grown to become in the Mission. a commercial submarket of its own as former industrial buildings have been converted in to modern office space Robust Mission Tenant Demand: Demand from filled with growing technology firms and other creative technology and creative tenants seeking open plan, space users. Due to recent changes to zoning in the collaborative space in the Mission is at an all time high. Mission, only buildings with proven, pre-existing office These companies, with engineers and executives who live uses were allowed to be legitimized with office as an in the Mission, Noe Valley, and Potrero Hill and Showplace approved use. Further conversion of former industrial Square neighborhoods, want their office located an easy properties to office use will be severely limited. . walk or bike ride from their homes. More so than any other San Francisco neighborhood, the Mission offers Supply Constrained Residential and Office Market: The tenants their preferred urban, 24/7 live/work environment. underlying zoning for the entire Mission District was re-done in 2008 with the passing of the Eastern Neighborhoods Program, which was an extensive effort to preserve certain neighborhood-serving land uses through a complete re-zoning of many of San Francisco’s former industrial neighborhoods, including the Mission, Showplace Square, and Potrero Hill neighborhoods surrounding Mission Creek at Folsom and 23rd.

34 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

PUBLIC TRANSPORTATION

8th St 9L SF BUS LINE 9/9L Downtown - Visitaction Valley 9 36 Market Analysis 9th St 10 Harrison St 12 Russian Hill - The Mission 14L 47 14/14L Downtown - Daly City 47 14 27 27 19 Fisherman’s Wharf - Hunter’s Point 12 49 22 The Marina - Potrero Hill 47 33 10th St 80 47 Fisherman’s Wharf - Caltrain 9 47 49 Fort Mason - SF City College 12 19 9L 11th St Balboa Park - Embarcadero BART 12th St PRIVATE BUS LINES 47 19 10 Apple 47 14 Google 13th St Facebook 14L

14th St 10 49 Alameda St 9

15th St 15th St 9L

12 Mission St Mission

Valencia St Valencia 16th St Guerrero St Guerrero Dolores St Dolores 22 33 16th and Mission 16th St 10 Station Florida St Florida 27 17th St 22 22 17th St 33

17th St

19 Mission St Mission

Valencia St Valencia 18th St 18th St

18th St St Vermont

Kansas St Kansas

York St York Bryant St Bryant

Hampshire St Hampshire

Alabama St Alabama

Harrison St Harrison Church St Church

18th St 33 St Folsom 19 Florida St Florida

South Van Ness Ave Ness Van South 9 19th St 19th St 14 9L 20th St 14L 20th St 20th St

49 12 Carolina St Carolina 33 St Haro De

21st St St York

Bryant St Bryant

Rhode Island St Island Rhode Florida St Florida Harrison St Harrison

21st St St Alabama 27 St Hampshire

J 19 Mission St Mission

South Van Ness Ave Ness Van South SITE22nd St Church St Church

Sanchez St Sanchez 22nd St

23rd St

Valencia St Valencia 23rd St 48 10

Guerrero St Guerrero 23rd St Dolores St Dolores 24th St

24th St 48 24th St 33 24th and Mission 12 Station 25th St

25th St 19 Mission St Mission

Folsom St Folsom 26th St Guerrero St Guerrero

Dolores St Dolores 26th St 27 Church St Church 12 Cesar Chavez St 27 27

35 L ocation Overview

MISSION DISTRICT OVERVIEW

SIGNIFICANT NEARBY RESIDENTIAL DEVELOPMENTS

1880 Mission Street - Vara 2652 Harrison Street Units 202 Units 20 Owner Behringer Harvard Developer Harrison / Treat LLC Delivery Completed 2013 Delivery Late 2013

17th & De Haro - The Onyx 2558 Mission Street - Mission Theatre Units 20 Units 114 Developer Equity Residential Developer Oyster Development Delivery Late 2013 Delivery Late 2015

55 Division Street 801 Brannan Street Units 215 Units 824 Developer Equity Residential Developer Equity Residential Delivery 2015+ Delivery 2015+

346 Potrero Avenue 16th & 7th - Daggett Place Units 72 Units 450 Developer Trumark Urban Developer Equity Residential Delivery 2015+ Delivery 2015+

36 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

SIGNIFICANT NEARBY RESIDENTIAL DEVELOPMENTS SOMA TECH MAP

FOLSOM STREET

SOUTH VAN NESS

20TH STREET

37 L ocation Overview

NEIGHBORHOOD AMENITIES

RESTAURANTS/BARS

15 12 13

11 SITE

7 4 9 2 3 8 1 6 5 10 14

1. Philz Coffee 5. Dynamo Donut 9. Blind Cat 13. Trick Dog 2. Humphy Slocombe 6. St. Francis Fountain 10. El Farolito 14. Mission Pie 3. La Palma 7. Sugarlump 11. Limon Rotisserie 15. Southern Pacific Brewing 4. Arizmendi Bakery 8. Wise Sons 12. Flour and Water

38 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

NECESSITIES

9 1

12 13

SITE 15 4 14 7 8 2 5 3

1. Sports Basement 6. Chase Bank 11. Whole Foods 2. Walgreens 7. Wells Fargo Bank 12. Heath Ceramics 3. Modern Times Bookstore 8. Bank of America ATM 13. Yoga Tree 4. San Francisco General Hospital 9. Safeway 14. City College of San Francisco – Mission 5. 24th St. BART station 10. Rainbow Grocery Cooperative 15. Valencia Cyclery

MISSION CREEK AT FOLSOM AND 23RD Market Overview

41 Market Overview

FUNDAMENTALS

As of Q1 2014, average monthly effective rent for the effective rents for the latest period were indistinguishable, San Francisco MSA was $2,631. This represents a 6.9% reflecting the negligible level of concessions in the market increase over the trailing 12 months, among the best rent currently. growth rates in the U.S. San Francisco apartment rents continue an expansion that began with the post-recession As of Q1 2014, occupancy was 95.8% which was 10 bps recovery in Q1 2010 and have posted positive gains the higher than a year earlier. This occupancy is in line with the vast majority of the trailing 18 quarters, leading all markets 15 year historical average. During that last downturn the nationally over that period. During this expansion nominal lowest mark for San Francisco occupancy was 94.95% in rents eclipsed the prior cycle peak in 2011. Rent growth Q3 2009. Overall, San Francisco is an exceptionally tight during this period has significantly outpaced inflation, and stable apartment market that fluctuates very slightly leading to valuable gains in real rent levels. Asking rents and around the full occupancy level.

COMPARATIVE EFFECTIVE MONTHLY RENTS

$3,500

$3,000

$2,500

San Francisco

$2,000 USA

$1,500

$1,000

$500

$- 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19

42 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

RENT GROWTH Rent Growth Forecast 30.0%30.0%

20.0%20.0%

10.0%10.0%

3.39%3.39%

0.0%0.0% 1.75%1.75%

-10.0%-10.0%

-20.0%-20.0%

-30.0%-30.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 SF Eﬀ Rent Growth US Eﬀ Rent Growth SF 15-yr Avg US 15-yr Avg SF Eff Rent Growth US Eff Rent Growth SF 15-yr Avg US 15-yr Avg

OCCUPANCY RATE Occupancy Rate Forecast 100.0%100.0%

98.0%98.0%

96.21%96.21% 96.0%96.0%

94.0%94.0% 93.87%93.87%

92.0%92.0%

90.0%90.0%

88.0%88.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 SF Occupancy US Occupancy SF 15-yr Avg US 15-yr Avg SF Occupancy US Occupancy SF 15-yr Avg US 15-yr Avg

43 Market Overview

MISSION CREEK SUBMARKET

In the SoMa submarket, rents have grown 45% since Q4 2009 and current market vacancy registers only 2.5% (Source: Axiometrics). As a result, all new development delivered in SoMa this cycle has been absorbed immediately.

2675 Folsom RENT COMPARABLES San Francisco, CA

Layout ID:L01 MapId:1848641 © 2014 CBRE Limited. Data © TeleAtlas, Google, AerialExpress, DigitalGlobe, Landiscor, USGS, i-cubed. The information contained herein (the “Information”) is intended for informational purposes only and should not be relied upon by recipients hereof. Although the Information is believed to be correct, its accuracy, correctness or completeness cannot be guaranteed and has not been verified by either CBRE Limited or any of its affiliates (CBRE Limited and its affiliates are collectively referred to herein as “CBRE”). CBRE neither guarantees, warrants nor assumes any responsibility or liability of any kind with respect to the accuracy, correctness, completeness, or suitability of, or decisions based upon or in connection with, the Information. The recipient of the Information should take such steps as the recipient may deem appropriate with respect to using the Information. The Information may change and any property described herein may be withdrawn from the market at any time without notice or obligation of any kind on the part of CBRE. The Information is protected by copyright and shall be fully enforced.

44 MISSION CREEK AT FOLSOM AND 23RD | SAN FRANCISCO

1 2 3 4 5 6

Property 2773 Folsom St 3033 22nd St VARA VENN NEMA Fox Plaza Address 2773 Folsom St 3033 22nd St 1600 15th St 1844 Market St 8 10th St 1390 Market St Submarket Inner Mission Inner Mission Inner Mission Hayes Valley Mid-Market Civic Center Year Built 2003 1978/2014 2014 2013 2013 Units 202 113 754 443 RENTAL RANGE Low High Low High Low High Low High Low High Low High Studio Monthly Rent N/A N/A N/A N/A $2,850 $3,000 N/A N/A $3,542 $3,542 $2,500 $2,837 Unit SF N/A N/A N/A N/A 516 523 N/A N/A 463 906 450 450 Rent PSF N/A N/A N/A N/A $5.52 $5.74 $7.65 $3.91 $5.56 $6.30

One Bedroom Monthly Rent N/A N/A N/A N/A $3,488 $4,905 $3,035 $4,550 $3,443 $3,935 $3,492 $3,739 Unit SF N/A N/A N/A N/A 602 797 501 820 734 1,182 672 814 Rent PSF N/A N/A N/A N/A $5.79 $6.15 $6.06 $5.55 $4.69 $3.33 $5.20 $4.59

Two Bedroom Monthly Rent $2,995 $2,995 $3,795 $3,795 $4,829 $7,490 $3,960 $4,725 $5,386 $5,386 $3,542 $3,542 Unit SF 1,200 1,200 800 800 946 1,254 849 1,214 1,356 1,442 814 814 Rent PSF $2.50 $2.50 $4.74 $4.74 $5.10 $5.97 $4.66 $3.89 $3.97 $3.74 $4.35 $4.35

7 8 9 10 11 12

Property AVA 55 Trinity II Edgewater Mosso SOMA 788 Etta Address 55 9th St 1190 Mission St 355 Berry St 900 Folsom St 788 Harrison St 1285 Sutter St Submarket Mid-Market South of Market South of Market South of Market South of Market Civic Center Year Built 2013 2013 2007 2014 2000 2013 Units 273 418 193 463 160 107 RENTAL RANGE Low High Low High Low High Low High Low High Low High Studio Monthly Rent $3,180 $3,675 $2,422 $2,588 $2,853 $2,853 $2,845 $3,046 $2,559 $2,929 $2,950 $2,950 Unit SF 528 578 N/A N/A 520 570 4 74 4 74 453 453 553 553 Rent PSF $6.02 $6.36 N/A N/A $5.49 $5.01 $6.00 $6.43 $5.65 $6.47 $5.33 $5.33

One Bedroom Monthly Rent $3,475 $4,383 $3,249 $3,481 $2,845 $2,845 $3,126 $4,195 $3,482 $4,035 $3,250 $3,250 Unit SF 636 882 N/A N/A 565 860 602 825 74 6 9 74 598 926 Rent PSF $5.46 $4.97 N/A N/A $5.04 $3.31 $5.19 $5.08 $4.67 $4.14 $5.43 $3.51

Two Bedroom Monthly Rent $4,090 $5,700 $4,064 $4,204 $4,678 $4,678 $4,475 $5,334 $4,418 $4,760 $4,000 $5,100 Unit SF 855 1,195 N/A N/A 940 1,330 944 922 884 1,003 990 1,496 Rent PSF $4.78 $4.77 N/A N/A $4.98 $3.52 $4.74 $5.79 $5.00 $4.75 $4.04 $3.41

AFFILIATED BUSINESS DISCLOSURE AND CONFIDENTIALITY AGREEMENT

CBRE, Inc. operates within a global family of companies summaries do not purport to be complete nor necessarily with many subsidiaries and/or related entities (each an accurate descriptions of the full agreements referenced. “Affiliate”) engaging in a broad range of commercial real Interested parties are expected to review all such summaries estate businesses including, but not limited to, brokerage and other documents of whatever nature independently and services, property and facilities management, valuation, not rely on the contents of this Memorandum in any manner. investment fund management and development. At times different Affiliates may represent various clients with Neither the Owner or CBRE, Inc, nor any of their respective competing interests in the same transaction. For example, directors, officers, Affiliates or representatives make any this Memorandum may be received by our Affiliates, representation or warranty, expressed or implied, as to the including CBRE Investors, Inc. or Trammell Crow Company. accuracy or completeness of this Memorandum or any of its Those, or other, Affiliates may express an interest in the contents, and no legal commitment or obligation shall arise property described in this Memorandum (the “Property”) by reason of your receipt of this Memorandum or use of its may submit an offer to purchase the Property and may be the contents; and you are to rely solely on your investigations and successful bidder for the Property. You hereby acknowledge inspections of the Property in evaluating a possible purchase that possibility and agree that neither CBRE, Inc. nor any of the real property. involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of The Owner expressly reserved the right, at its sole discretion, the Property. In all instances, however, CBRE, Inc. will to reject any or all expressions of interest or offers to purchase act in the best interest of the client(s) it represents in the the Property, and/or to terminate discussions with any entity transaction described in this Memorandum and will not act in at any time with or without notice which may arise as a result concert with or otherwise conduct its business in a way that of review of this Memorandum. The Owner shall have no benefits any Affiliate to the detriment of any other offeror or legal commitment or obligation to any entity reviewing this prospective offeror, but rather will conduct its business in a Memorandum or making an offer to purchase the Property manner consistent with the law and any fiduciary duties owed unless and until written agreement(s) for the purchase of the to the client(s) it represents in the transaction described in Property have been fully executed, delivered and approved this Memorandum. by the Owner and any conditions to the Owner’s obligations therein have been satisfied or waived. This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire By receipt of this Memorandum, you agree that this to express further interest in the acquisition of the Property. Memorandum and its contents are of a confident nature, that This Memorandum contains selected information pertaining you will hold and treat it in the strictest confidence and that to the Property and does not purport to be a representation you will not disclose this Memorandum or any of its contents of the state of affairs of the Property or the owner of the to any other entity without the prior written authorization Property (the “Owner”), to be all-inclusive or to contain all of the Owner or CBRE, Inc. You also agree that you will not or part of the information which prospective investors may use this Memorandum or any of its contents in any manner require to evaluate a purchase of real property. All financial detrimental to the interest of the Owner or CBRE, Inc. projections and information are provided for general reference purposes only and are based on assumptions relating to the If after reviewing this Memorandum, you have no further general economy, market conditions, competition and other interest in purchasing the Property, kindly return this factors beyond the control of the Owner and CBRE, Inc. Memorandum to CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These MISSION CREEK AT FOLSOM AND 23RD

SAN FRANCISCO, CA

Development Opportunity In Nation’s Hottest Residential Market

CONTACTS

Michael Thomas Dave Noravian Vice President First Vice President Lic. 01354698 Lic. 01419471 T +1 415 772 0484 T +1 415 772 0178 [email protected] [email protected]

Toby Costello Don LeBuhn Senior Associate First Vice President Lic. 01704407 Lic. 01821805 T +1 415 772 0410 T +1 415 772 0248 [email protected] [email protected]

©2014 CBRE. We obtained the information above from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty or representation about it. It is submitted subject to the possibility of errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. We include projections, opinions, assumptions or estimates for example only, and they may not represent current or future performance of the property. You and your tax and legal advisors should conduct your own investigation of the property and transaction. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners. N:\Team-Marketing\_Brokers\Thomas\2675 Folsom-MissionCreek\2675 Folsom-MissionCreek_OM_v01.indd