Offering Memorandum

class-a OFFIcE INVEsTMENT OppOrTuNITy

FOur buIldINgs421,935 squarE FEET

main street &von karman avenueirvine, california

receiversHiP facilitateD sale

QUINTANA | irvine • oranGe countY • california

gillette ave

MaiN St

vON KaRMaN ave

bldg a

bldg b

bldg c

bldg d

PaRKiNg

aNch

OR S

t

NOTA

PART

exclusive advisors

TABLE OF CONTENTS

Offering summary ..................................5property description ............................10location Overview ................................24Market analysis ....................................30Tenant Information ................................36cash Flow statement ...........................38

CONFIDENTIALITY AND CONDITIONS

The material contained in this Offering Memorandum is confidential and for the purpose of considering the purchase of the real Estate described herein. It is subject to the terms and provisions of the confidentiality agreement signed by the recipient of this material, and is not to be used for any purpose or made available to any other person without the express written consent of cushman & Wakefield of california, Inc. (“broker”).

This Offering Memorandum was prepared in May, 2010, by broker solely for the use of prospective purchasers of quintana, located in Irvine, california (the “real Estate”). Neither broker, receiver nor any of their respective officers, employees or agents, make any representation or warranty, express or implied, as to the completeness or the accuracy of the material contained in the Offering Memorandum or any of its contents, and no legal commitments or obligations shall arise by reason of this package or any of its contents. receiver reserves the right to eliminate any portion or all of the real Estate from any offer for sale at any time prior to the completion of a binding contract of sale executed by both receiver and a prospective purchaser.

prospective purchasers of the real Estate are advised (i) that changes may have occurred in the condition of the real Estate since the time of this Offering Memorandum or the financial statements therein were prepared and that (ii) all financial projections are provided for general reference purposes only in that they are based on assumptions relating to the general economy, competition, and other factors beyond the control of broker and the receiver and, therefore, are subject to material variation. prospective purchasers of the real Estate are advised and encouraged to conduct their own comprehensive review and analysis of the real Estate.

The Offering Memorandum is a solicitation of interest only and is not an offer to sell the real Estate. The receiver and broker expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers to purchase the real Estate, and expressly reserve the right, at their sole discretion, to terminate discussions with any entity at any time with or without notice. The receiver shall have no legal commitment or obligations to any entity reviewing the Offering Memorandum or making an offer to purchase the real Estate unless and until a written agreement satisfactory to the receiver has been fully executed, delivered, and approved by the receiver and any conditions to the receiver thereunder have been satisfied or waived.

This Offering Memorandum is confidential. by accepting the Offering Memorandum, you agree (i) that you hold and treat the Offering Memorandum and its contents in the strictest confidence, (ii) that you will not photocopy or duplicate any part of the Offering Memorandum, (iii) that you will not disclose the Offering Memorandum or any of its contents to any other entity without the prior written authorization of broker, and (iv) that you will not use the Offering Memorandum in any fashion or manner detrimental to the interest of the receiver or broker.

cushman & Wakefield of california, inc.license 00616335

2020 Main street, suite 1000Irvine, ca 92614

Jeffrey [email protected]

949.955.7652license 00833681

ed [email protected]

949.930.4380license 01048813

marc [email protected]

213.955.6413license 00955076

rick kaplan [email protected]

949.955.7643license 00863069

aerial vieW

�

gil

lett

e a

ve

Quintana

NewPORt beach

MaiN St

vON KaRMaN ave

405

jaMbORee Rd

uci

N

Pacific OceaN

MacaR

thu

R b

lvd

jOhNwayNe

aiRPORt

�

of

fe

rin

G s

um

ma

rY

offerinG summarYcushman & Wakefield of california, Inc. has been exclusively retained by the court-appointed receiver to market for sale Quintana (“property”), the largest office campus of its kind in the prestigious airport area market of Irvine, california. The offering consists of four separately parceled, class-a office buildings totaling 421,935 rentable square feet and a 1,570-stall parking structure situated on an irreplaceable 15-acre site. Featuring an extensive park-like setting that includes modern artwork and a dramatic distinctive water feature, quintana is located at the premier intersection of Main street and Von Karman avenue and is in close proximity to the 405, 55 and 5 freeways.

as one of the most recognizable assets in orange county, Quintana represents a compelling opportunity for an investor or owner-user to acquire a landmark office campus, or purchase individual buildings, at a substantial discount to replacement cost.

Assumable financing may be available to qualified investors at the current note rate of 5.066%.

INVEsTMENT suMMary

total Building area: �21,93� sfno. of Buildings: fourland area: 1�.0� acresYears Built: 1989-200�Parking ratio (stalls): �.1 per 1,000 rsf (2,3�1 stalls)% leased: 31.�% (13.1% as of march 2011)

prOpErTy FEaTurEs

n landmark office campus: quintana’s modern architecture and exquisitely landscaped grounds distinguish the property as one of Orange county’s most recognized office assets. dramatic tree-lined entries lead to vaulted building lobbies with marble floors, and provide immediate access to a stunning yet tranquil interior common area surrounding a majestic water fountain at the interior of all four buildings.

n flexible Parking options: The property features an overall parking ratio of 4.1 per 1,000 square feet including 1,570 stalls in the eight-level parking structure adjacent to building c, 595 stalls in the surface lots adjacent to buildings a, b, and d, and 176 subterranean executive stalls below buildings a and b. building F’s allocation is included in the overall ratio.

n irreplaceable owner-user Headquarters / investment opportunity: This offering is the only campus-style location of its kind available in the Orange county airport area and can immediately serve large corporate users of up to 360,000 square feet. quintana can be purchased in its entirety, or each of the four properties, separately parcelized, that comprise the campus can be purchased individually.

n Parcel easements: Each building parcel, including building F which is not a part of the offering, is allocated approximately four (4) of parking stalls per 1,000 rsF from either surface, subterranean, and/or parking structure areas and must reimburse the Managing agent for common area expenses. The Managing agent of the project is selected by a majority vote of the owners of each parcel. Each building owner may establish its own parking rates.

Building a1787� von karman avenue• 128,938 sF • Includes 8,795 sF of storage space• 4 stories • built 1989 • 75,613 sF leased to Jp Morgan chase

until Feb-2011• subterranean and adjacent surface parking

Building c 17872 Gillette avenue• 83,672 sF • 4 stories • built 2004 • 0% leased• adjacent to parking structure

Building B17877 von karman avenue• 154,975 sF • 5 stories • built 1989 • 0% leased• subterranean and adjacent surface parking

Building D17838 Gillette avenue• 54,350 sF • 2 stories • built 2000 • 100% leased to stratacare until Oct-2014• adjacent surface parking

caMpus OVErVIEW

total Project• 421,935 sF • 31% leased• 13% leased when Jp Morgan chase vacates in Feb-2011

Parking structure• 1,570 stalls • 7 stories (8 levels)• built 2004

�

site Plan

NParking Structure

1,570 Stalls

Building F17885

Von Karman151,370 SF

(Not a Part)

SubterraneanParking

Building C17872Gillette83,672 SF

Building D17838Gillette54,350 SF(100% leased

by Stratacare)

FireStation

(Not a Part)

Building B

17877 Von Karman

154,925 SF

Building A

17875 Von Karman

128,938 SF

MA

IN S

TREE

T

IRV

INE

CO

NC

OU

RSE

GILLETTE AVENUE

VON KARMAN AVENUE

AN

CHO

R ST

REET

Parcel lines

NOTA PART

bUILDINg A

bUILDINg b

bUILDINg C

bUILDINg D

Parking summary surface: 595subterranean: 176structure: 1,570total 2,3�1

lOcaTION aNd MarKET FEaTurEs

n center of John Wayne airport area: The property is located in the center of Orange county’s airport area, at Main street and Von Karman avenue near the 405/55 freeway interchange directly across from John Wayne International airport (sNa). Interstate 5 is approximately three miles away. The airport area is the premier office location in Orange county and contains the core of the region’s retail and hospitality amenities.

n corporate signage/Branding options: Valuable building-top signage is available at multiple locations within the four building campus. approximately 45,000 cars pass by quintana daily.

n excellent regional accessibility: The 405 freeway is accessible via northbound and southbound on and off ramps at Macarthur blvd. and Jamboree road, both less than one mile away. The 55 freeway is approximately one mile west and the sr-73 (Tollroad) is only two miles to the south. access to quintana is provided via three points of ingress and egress from Von Karman avenue and gillette avenue off of Main street.

n numerous amenities: The property benefits from its close proximity and access to restaurants and health clubs and other amenities. Two hotels and eight restaurants are within walking distance. World-renown shopping destination south coast plaza (2.6 million square feet) is two miles west of quintana and The district (One million square feet) is 1.5 miles north.

n Premier office market: The Orange county airport area office market totals nearly 36 million square feet and has a direct vacancy rate of 21.9% as of the first quarter of 2010. asking rents average $2.43 per square foot per month on a full service gross basis.

n local tenant Demand: For four decades, the airport area has been a growth center for professional service firms and technology companies seeking access to a college-educated workforce, a high quality of life, affordable and executive housing options, and a dynamic economy ideally located between los angeles and san diego.

n rental rate Growth: The airport area has historically demonstrated quick recoveries in rents as economic conditions improve as evidenced in the mid-1990s and early 2000s. cyclical data projections empirically show that a major increase in rental rates occurs in post-recessionary periods in Orange county.

TENaNcy/FINaNcIal

n in-Place cash flow: credit tenant Jp Morgan chase currently occupies 75,613 square feet in building a and will vacate upon lease expiration in February 2011. The entire 54,350 square foot building d is leased to stratacare through October 2014.

n attractive assumable financing: Through a restructuring of the existing loan, attractive financing may be made available to qualified investors. The current interest rate on the note is 5.066% with a maturity date of december 2011 that may be extended on a short term or long term basis.

7

of

fe

rin

G s

um

ma

rY

8

local maP

Tustin

Irvine

NewportBeach

Newport Beach

Costa Mesa

Santa Ana

Edinger Ave

Warner Ave

MacArthur Blvd

Mac

Arth

ur B

lvd

Sunflower Ave

Dyer Rd

Barranca Pkwy

Barranca Pkwy

Alton Pkwy

Alton Pkwy

Alton Pkw

y

Bake

Ln

Main St

Jam

bore

e Rd

Michelson Dr

Har

vard

Ave

University Dr

Campus DrTu

stin

Ran

ch R

d

Edinger Ave

Irvine Center Dr

Trabuco Rd

Bryan Ave

Walnut Ave

Harva

rd A

ve

Von

Karm

an A

ve

Jeffr

ey R

d

Jeffr

ey R

d

Sand

Can

yon

Ave

Portola Pkwy

Portola Pkwy

Irvine Blvd

Red

Hill A

ve

Red

Hill A

ve

McFadden AveB

rist

ol S

t

Culve

r Dr

Culve

r DrSt. Gertrude Pl

Sta

ndar

d A

ve

Gra

nd A

ve

1st St

Irvine Blvd

Mai

n S

t

5

5

5

261

73

133

55

55

405

405

405

TUSTINMARINE CORPAIR STATION

(Tustin Legacy Development)

(Great Park)

El Toro Marine CorpAir Station

ORANGECOUNTY

JOHN WAYNEAIRPORT

THEDISTRICT

PARKPLACE

RETAIL DJ

MARKET PLACE

SOUTH COASTPLAZA

UCI

Gillette

Ave

IRVINESPECTRUM

Quintana

N

9

of

fe

rin

G s

um

ma

rY

prOpErTy HIsTOry 1980s The subject site is a parking area for the former smith Tools company, the adjacent

property at 17871 Von Karman avenue.

1989 buildings a and b are developed by Hillman properties and sold to american savings bank for use as their headquarters.

1996 Washington Mutual bank acquires american savings bank and its headquarters and adjacent land, the subject property.

2000 building d is developed by lba and sold to Washington Mutual.

2004 Washington Mutual constructs and occupies building c and the parking structure with plans completed and steel stored for building F (not a part).

Washington Mutual sells the campus to Maguire properties for $151 million ($365 per sF) and leases it back for five to ten years.

Maguire finances the property with a $106 million ($255 per sF) cMbs loan secured by the four buildings, parking structure and common area, excluding the building F parcel.

2008 Maguire completes construction of 17885 Von Karman avenue aka building F, a 150,000 sF, five-story building (not a part – currently 38% leased).

stratacare leases building d through October 2014.

Washington Mutual is seized by the FdIc and sold to J.p. Morgan chase. The existing lease obligation is reduced to building a by the FdIc. buildings b and c are vacated.

2009 The property was placed into receivership with the ability to market and sell the asset.

BuilDinG a - 1787� von karman

10

size: 128,338 sFstories: FourYear Built: 1989assessor’s Parcel no.: 435-111-13Parcel size: 0.89 acres% leased: 58.4% 75,613 sF leased to Jp Morgan chase who will vacate on 2/28/2011other: First Floor cafeteria subterranean parking and storage

11

Pr

oP

er

tY

De

sc

riP

tio

n

BuilDinG B - 17877 von karman

size: 154,975 sFstories: FiveYear Built: 1989assessor’s Parcel no.: 435-111-14Parcel size: 0.88 acres% leased: 0%other: subterranean parking and storage

12

13

Pr

oP

er

tY

De

sc

riP

tio

n

1�

BuilDinG c - 17872 Gillette

size: 83,672 sFstories: FourYear Built: 2004assessor’s Parcel no.: 435-111-15Parcel size: 0.88 acres% leased: 0%other: First Floor Training rooms raised Floors

1�

Pr

oP

er

tY

De

sc

riP

tio

n

1�

BuilDinG D -17838 Gillette

size: 54,350 sFstories: TwoYear Built: 2000assessor’s Parcel no.: 435-111-32Parcel size: 3.26 acres% leased: 100% to stratacare through 10/31/2014other: separate surface parking

Pr

oP

er

tY

De

sc

riP

tio

n

17

imProvements DescriPtionquintana (“property”) is a trophy class a office development comprised of four low-rise buildings totaling approximately 421,935 square feet on five parcels. The property benefits from its prominent location at the junction of two of Orange county’s busiest transportation corridors with 819 feet of direct frontage on Von Karman avenue. The property is distinguished by extensive landscaping, flowing water features, and serene courtyards. The property includes subterranean storage space and an eight-level parking structure with 1,570 parking stalls.

SPECS bLDg A bLDg b bLDg C bLDg D PARKINg STRUCTURE

address 17875 Von Karman ave

17877 Von Karman ave

17872 gil-lette ave

17838 gillette ave

17892 gillette ave

stories 4 5 4 2 7

size (sF 128,938 154,975 83,672 54,350 1,570 stalls

Floor plates (sF) 28,299-34,459

25,927-33,656

19,118-21,518

27,175

year built 1989 1989 2004 2000 2004

apN No. 435-111-13 435-111-14 435-111-15 435-111-32 435-111-36

architect Ware/Malcomb, lpa and callison architectures, Inc.

Zoning 5.1-Irvine business complex Multi-use

parking 4.1/1,000 sF; 2,341 Total (1,570 structure + 595 surface + 176 subterranean)

Building f excluded – Note that the property known as building F, 17885 Von Karman avenue, is not a part of this offering. It totals 151,370 square feet and lies on a footprint parcel of 0.81 acres. per existing cc&rs, the building has the right to the use of four parking stalls per 1,000 rentable square feet in the parking structure only.

strategically located within one mile of John Wayne International airport and Irvine’s office core, quintana is situated in the heart of the Orange county central business district. Flexible floor plates of approximately 20,000 to 30,000 square feet and in four buildings of varying sizes enable the property to accommodate tenants with a wide variety of requirements.

quintana benefits from its exceptional grounds and campus environment. Tall palm trees line the main driveway off of gillette avenue, leading to a circular motorcade entrance surrounded by manicured lawn and accented by pine trees, plants, and sitting areas. The buildings encircle an expansive courtyard dominated by a majestic water fountain and lush green space befitting an urban garden. along the edge of the courtyard are sitting areas and idyllic walkways, as well as signage displaying property information.

sITE arEa

n location: The property is located on the northwest corner of Main street and Von Karman avenue, with the west boundary line abutting gillette avenue.

n land area: ± 655,623 square feet; or ±15.05 acres

PARCEL NO. 435-111-13 435-111-14 435-111-15 435-111-32 435-111-36

Includes building a footprint

building b footprint

building c footprint

building d & adjacent parking

parking struc-ture, parking & common areas

size (sF) 38,589 38,196 32,998 142,138 403,702

size (acres) 0.89 0.88 0.88 3.26 9.27

Total SF 655,623

Total Acres 15.05

n frontage: ±819 feet along Von Karman avenue; ±640 feet along gillette avenue; ±550 feet along Main street

n access: Vehicular access to quintana’s common area parking lots is via two entrance driveways: one off of gillette avenue at the north end of the site and one off of Von Karman avenue, via anchor street at the southeast corner of the site. Entrance into the parking structure is via a two-way drive aisle off of gillette avenue. pedestrian access is from public sidewalks paralleling Von Karman avenue, Main street, and gillette avenue.

grade-level sidewalks and plazas provide pedestrian access to and between each of the buildings and the parking structure, as well as access to public sidewalks lining adjacent streets.

The property’s close proximity to the costa Mesa (55) Freeway at its intersection with the san diego (I-405) Freeway creates a distinct competitive advantage within the submarket. This stretch of the costa Mesa Freeway recorded an average annual daily traffic volume of 233,000 cars in 2008. daily traffic counts on the san diego Freeway at this junction averaged 274,000 cars during the same period.

The costa Mesa Freeway connects inland areas of Orange county with south coast Metro job centers. The san diego Freeway is one of the region’s primary north-south transportation corridors and provides access to Irvine and John Wayne International airport to the south and los angeles county to the north. located at the heart of the Irvine central business district, quintana is less than a mile from John Wayne airport.

18

19

Pr

oP

er

tY

De

sc

riP

tio

n

n campus Parking: parking is provided by grade-level asphalt and concrete paved lots located west of buildings b and c, south of building a and b, and on the northeast and west sides of building d. a single level of subterranean parking is available under buildings a and b. an eight-level parking structure is located at the southwest corner of the campus. parking stalls have configurations for standard and compact automobiles, as well as motorcycle and disabled-accessible parking. lighting for surface parking areas is provided by pole-mounted, high-intensity discharged (HId) fixtures of varying heights and finishes. lighting for parking structure and subterranean parking is provided by ceiling-mounted HId fixtures. parking stall distribution is as follows:

Parking type Buildings total stalls surface parking a, b, & c 384 surface parking d 211 subterranean a & b 176 structure b, c & F 1,570 total stalls 2,3�1

n Parking structure: The parking structure is accessible through a single access point located off of gillette avenue. The structure consists of post-tensioned decks and cast-in-place concrete structure. The perimeter consists of pre-cast concrete spandrel panels with smooth and ribbed finished attached to structure by clip angles. clear height is set at 8 feet and 2 inches (ramp clearance at 7 feet). Vertical circulation is provided via pre-cast concrete stairs and traction elevators. Each level has security cameras and contains panic security systems that are monitored by security personnel at the guard desk.

n loading Docks: located at the east end of building a at the end of anchor street is a single, open-air loading dock that serves the campus. a single doorway and two-stop lift provide access to delivery/storage areas at the ground level and subterranean garage of building a.

n on-site amenities: quintana provides an array of convenient and desirable on-site amenities, including a 24-hour security console desk, ground-floor patio and lobby seating areas, large conference rooms, and a café with existing improvements in building a.

n landscaping: Extensive landscaping consists of mature trees, bushes, shrubs, groundcover, lawn areas, and blooming annuals and perennials. all landscaped areas are irrigated with automatic irrigation systems.

n Hardscaping: a large central plaza with a dramatic water fountain gives the campus an elegant and contemporary appearance. The fountain, a 50-foot red granite architectural piece arcs over the green lawn and as it pours translucent water into a grade-level pool, adds a colorful presence to an idyllic urban garden environment. Water features are well-illuminated during nighttime hours.

Tenants and guests are provided with benches and umbrella-covered tables situated in the courtyards throughout the property.

cONsTrucTION dETaIl

n foundation: buildings a and b are founded on deep friction pile foundation systems comprised of square pre-stressed concrete piles. concrete columns in the basement are supported on reinforced pile caps. The parking levels consist of concrete slab-on-grade- reinforced with steel welded wire mesh reinforcing.

building c and the parking structure are founded on soil reinforcement foundation system comprised of compressed aggregate piles. steel and concrete columns are supported on reinforced continuous and isolated spread pile caps. The ground floor consists of concrete slab-on-grade reinforced with steel reinforcing bars.

building d has conventional concrete foundation that consists of slab-on-grade concrete reinforced with steel enforcing bars.

n framing: buildings a and b contain post-tensioned concrete slab supported by concrete masonry walls and concrete columns. The main roof and all floors above grade consist of hardrock concrete filled over metal decking. The penthouse roof consists of metal decking supported by standard wide-flange steel beams and girders. all steel beams and girders are supported by structural steel columns.

building c’s roof and floors consist of hardrock concrete filled over metal decking, supported by standard wide-flange steel beams and girders. all steel beams and girders are supported by structural steel columns.

PARKINg STRUCTURE

ProPertY DescriPtion

20

building d’s second floor consists of hardrock concrete filled over metal decking, supported by standard wide-flange steel beams and girders. The roof structure consists of a panelized wood system comprised of plywood sheathing. all steel beams and girders are supported by structural steel columns.

The parking structure consists of cast-in-place, post-tension concrete slabs spanning to post-tensioned beams, which are supported by structural steel columns. The perimeter of the structure consists of concrete walls.

n roof: The main roofs in buildings a and b consist of a fluid-applied urethane elastomeric coating installed directly over the structural concrete decks and main roof decks. at building c, the roof system consists of a granulated sbs modified bitumen surfacing sheet over a smooth modified bitumen interplay sheet, torched applied over a standard fiberglass base sheet which was attached into the lightweight insulating concrete deck. building d contains a hot asphalt applied capsheet built-up roof system. roof warranties are in-place for two more years and can be extended in accordance with the maintenance program.

n exterior Walls: The exterior walls of buildings a, b and c consist of exposed aggregate pre-cast concrete panel accented with reveals. The base of these walls consists of either granite or marble face. building d consists of a tilt-up concrete panel system with a paint finish. The main entry is accented with aluminum skin system that is similar to an alucabond panel.

nWindows: buildings a, b and c have full-height, floor-to-ceiling window systems. The glazing systems for buildings a and b are single-pane set in factory finished aluminum framing with rubber gasket systems. building c is provided with insulated glazing in factory finished aluminum framing. The window system at building d consists of punched windows, tinted glazing set in place with a friction fit rubber gasket.

n Doors: The exterior doors for buildings a, b and c at the main entrances consist of tempered glazing systems with top and bottom rail with top and bottom pivot hinge. These doors are provided with loop pull and push plates on the inside, as well as magnetic security locks for after-hour access. The other doors consist of storefront door systems. Many of these doors are provided with card readers for security access. There are a limited number of hollow-metal doors set in hollow-metal metal frames.

INTErIOr IMprOVEMENTs

n interior Walls: For all buildings, lobby walls are finished with marble tiles. The corridor walls are finished with vinyl wall covering over gypsum board. The elevator walls are finished with fabric wall covering over gypsum board. The elevator lobby walls in the parking garage of buildings a and b are painted gypsum board.

n interior Doors/frames: Interior elevator lobby doors on tenant floors are solid-core wood with metal frames and have magnetic hold-opens. Elevator lobby doors at the parking garage in buildings a and b consist of glass doors with aluminum frames and kick plate. Interior doors along the corridor leading into tenant suites consist of solid-core wood with metal frames. doors within tenant suites consist of either hollow-core or solid-core wood with metal frames. all door hardware is lever-type with the exception of the elevator lobby doors in the parking garage of buildings a and b.

n ceilings: The majority of the corridors and elevator lobby ceilings consist of painted gypsum board with recessed can lights and fluorescent light. ceiling heights are 8’5” to 8’9”. building c has a three inch raised floor on the upper floors.

n flooring: The lobbies are provided with marble tile floors. Elevator lobbies are typically provided with carpet floors with stained wood base. corridor floors consist of wall-to-wall carpet and rubber base.

n restrooms: restrooms in buildings a, b and c are located in the tenant corridors on each floor. They consist of wall-mounted toilets and sinks, floor-mounted painted metal partitions, granite (a&b)/stone (c) countertops with granite backsplash and apron, and automatic sensor faucets. Floors and walls are finished with ceramic tiles. ceilings consist of painted gypsum boards.

restrooms for building d are located in the tenant corridors on each floor. They consist of ceramic floors, painted gypsum board walls and ceilings, floor-mounted toilets and painted metal partitions, wall-mounted sinks, plastic laminate countertop with granite backsplash and aprons, and lever-type faucets.

n utilities rooms: utilities rooms generally consist of painted and unpainted gypsum board walls, exposed ceiling, and exposed concrete floors.

n tenant improvements: The standard finishes are generally comprised of painted gypsum board walls, suspended acoustical ceilings with integral lighting, and medium-grade carpeting.

Pr

oP

er

tY

De

sc

riP

tio

n

21

MEcHaNIcal sysTEMs n Hvac: The HVac systems for the buildings consists of variable air volume systems. buildings a

and b have two built-up air-handling systems that provide cooled air to a portion of all floors. Each air-handling system consists of return-relief fans, filter banks, direct expansion cooling coil, and supply fan. building c has two Ventrol custom air-handling units mounted on the roof. The air-handling units are provided with return-relief fans, filter banks, chilled water-cooling coil, and supply fan. VaV boxes regulate the amount of air supplied to the tenant spaces to maintain the desired temperature. VaV boxes with electric reheat serve the perimeter zones. building d is provided with two Trane 75-ton rooftop package units that supply cooled air to one floor.

n cooling: cooling is provided by one 153-ton compressor for each air-handling unit at building a and two 100-ton compressors for each air-handling unit at building b. The chillers reject heat through one cooling tower at each building, with heat exchangers at each compressor. building a also has a closed-circuit fluid cooler that serves water source heat pumps for special training and meeting rooms that have longer than normal operating hours. building a also has two 50-ton Trane rooftop package units that were added to support the fourth floor for after-hour use. The elevator equipment rooms are cooled by water-cooled package units at buildings a and b and one vertical air-cooled package unit mounted on the wall of the elevator equipment room at building c and the parking structure.

special air-cooled equipment is provided at the buildings for tenant computer rooms and other areas with special cooling requirements.

chilled water in building c is provided by two carrier 153-ton chillers with two screw compressors for each chiller. chiller water is circulated by two chilled water pumps with variable speed drives that operate as a variable primary flow system. The chillers reject heat through one bac cooling tower with two condenser water pumps serving the chillers.

nWater Heaters: domestic hot water is provided by one 80-gallon electric water heater in each of buildings a and b. building c has lochinvar natural gas water boilers with two circulating pumps and building d has ajax natural gas boilers with two circulating pumps. a separate system with water softener and two natural gas water heaters serves the kitchen in building a.

n air-conditioning controls: The buildings are provided with an automated logic computerized direct digital control system. This provides start/stop and temperature control for all major equipment, as well as temperature control of the VaV boxes at buildings c and d. Tenants are provided with the ability to vary the temperature set-point within a narrow range. at buildings a and b, control of the VaV boxes is provided by a pneumatic control system with one duplex compressor at each building.

n ventilation: Toilet exhaust fans are provided that ventilate through the roof of each building. The air-handling units and package units are provided with dampers and controls to provide an outside air economizer cycle used when temperatures are appropriate. The kitchen at building a is provided with commercial exhaust fans and make-up air systems.

n trash Disposal system: Trash disposal consists of a compactor and roll-off bin located in a designated enclosure adjacent the loading dock at the east end of building a.

n elevators: The quintana buildings all contain several elevators that are in excellent condition. a summary of these are as follows:

bLDg QNTY TYPE CAPACITY SPEED LANDINgS MFg. CONTROL

a 3 geared Traction

4,500 lb 350 fpm 5 Montgomery Elevator

MIprOM

b 4 geared Traction

3,500 lb 350 fpm 6 Montgomery Elevator

MIprO

c 2 geared Traction

3,500 lb 350 fpm 4 Thyssen Elevator

Tac 50

d 1 Hydrau-lic

2,500 lb 100-150 fpm (up-down)

2 Thyssen Elevator

dMc Ia

buildings a, b and c are equipped with card readers inside the elevators, which restrict traffic after normal business hours and on weekends. building d has a security person located in the front of the elevator.

ElEcTrIcal sysTEMs n Power: The facility is currently metered on a high-voltage service with one service point for all

buildings. The system then servers separate transformers and feeds to each building. The high-voltage equipment is leased from southern california Edison, which also provides maintenance of the equipment as part of the lease.

Main service for the buildings are 277/480-volt, 3-phase, 4-wire services with a capacity of 2,500 amperes for building a, 4,000 amperes for building b, 2,500 amperes for building c, and 3,000 amperes for building d. Each floor of each building is provided with two electric rooms with one or two 277-volt panels for lighting and heating in buildings a and b, and two or three 120-volt panels for normal power requirements. Transformers are provided on every other floor of each building. The floor electric rooms are fed by conduit from the main switchboard. This system provides capacity of 15.5 to 41.3 watts per square foot, which is adequate to ample for normal office use.

n emergency Power: Emergency power for buildings a, b, c and the parking structure is provided by one caterpillar 600-kW diesel generator located at the loading dock at building a. This generator serves emergency loads through separate automatic transfer switches at each building.

standby power for tenant equipment in building a, b and c is provided by a separate caterpillar 500-kW diesel generator. loads are served through separate automatic transfer switches for each building that is separate from the emergency power system.

Emergency power for building d is provided through external connections and a manual transfer switch to allow a truck-mounted generator to serve the building.

n lighting: Interior lighting is provided by fluorescent fixtures with T-8 lamps and electronic ballasts. a complete lighting system is provided for each building. lighting in the parking structure is provided by low-bay high-pressure sodium fixtures.

Extensive exterior lighting consists of pole-mounted, high-intensity discharge lighting fixtures, decorative bollards and ground-mounted fixtures that illuminate the buildings’ silhouette, landscaped areas, motor court and water features.

F IrE/lIFE saFETy/cOMMuNIcaTIONs sysTEMs

n fire Protection Water services: The office buildings and parking garage are equipped automatic wet pipe fire sprinkler systems with each floor served as a separate zone with isolation, drain, and test valves.

The parking structure system is supported by a 100-gallon per minute electric fire pump. at each building, one stairwell contains a combination standpipe/riser with fire sprinkler connection and fire department hose connections on each floor and the other stairwell contains a wet standpipe. design criteria for the office building were noted to be 0.10 gallons per minute per square foot over the most remote 1,500 square feet. a separate fire sprinkler service with backflow preventer is provided for the system at each building.

n Portable fire extinguishers: Extinguishers are provided throughout common areas and tenant spaces.

n fire alarm system: The system includes a central alarm panel with fire pull-stations at exit pathways, ceiling mounted smoke detectors, illuminated exit signs and fire extinguishers on each tenant floor. alarms are also equipped with horns in public areas and most tenant spaces. This system is monitored by an outside service.

n security system: The 24-hour security system includes on site personnel, security cameras throughout the campus, and an after-hours card-key system that also controls access to special tenant areas.

n communications system: Telephone service is provided through the telephone switch located in building a and then connected throughout the site. service is provided with both copper and fiber-optic cable. a digital recording system is also provided.

pluMbINg sysTEMs

n natural Gas: Natural gas service is provided by the southern california gas company to all buildings except for building c.

n Domestic Water: Each building is provided with separate domestic water service by the Irvine ranch Water district from water meters located beyond the building line along the public street. The domestic water service utilizes copper pipes.

n sanitary sewer system: cast iron drain, waste, and vent lines from the buildings connects under-grade to the city of Irvine sanitary sewer system, located in the public street.

MIscEllaNEOus

tax rate: approximately 1.01%

utilities: Electricity: southern california Edison Water: Irvine ranch Water district sewerage: city of Irvine gas: southern california gas Telephone: aT&T Fiber Optics: aT&T

Police Department: city of Irvine

fire Department: Orange county Fire authority

22

Pr

oP

er

tY

De

sc

riP

tio

n

23

jaMbORee Rd

405

vON KaRMaN ave

Pacific OceaN

NewPORt beach

bldg a

bldg b

bldg c

bldg d

MaiN St

gil

lett

e a

veaN

chOR St

NOTA

PART

oranGe countY overvieWquintana is situated in Orange county, california—the fifth most populous county in the united states and an influential metropolitan area with world-class educational, cultural, scientific, and business institutions. Featuring 42 miles of pristine coastline, Orange county is comprised of 34 cities within its 798 square miles, and is located in the heart of southern california between los angeles to the north, san diego to the south, and riverside and san bernardino counties to the east. Orange county consistently ranks among the most desirable places in the country to live, work, and enjoy an excellent quality of life. Its population is significantly younger, more affluent, and better educated than most u.s. metro areas.

arEa aTTracTION

n Diverse economic Base: Orange county’s economy offers investors access to a unique, diverse, and growing economic base. With a $184 billion economy, Orange county ranks as one of the largest economies in the world. The area enjoys a diverse employment base with no single industry accounting for more than one-third of the county’s economic output or labor market.

n Population: Orange county has over three million residents and has shown steady and consistent growth since the 1990s. This constant inflow of new residents provides Orange county with a stable, innovative, and diverse workforce.

n employment & Production: While the downturn in housing, construction, and financial industries has slowed Orange county’s robust gross Metro product (gMp) and employment growth in recent years, the county’s long-term market fundamentals remain strong, supported in large part by international trade, retail and professional services, tourism, and technology-producing industries, such as aerospace, defense, biotechnology, healthcare and interactive entertainment. as of december 2009, the county’s unemployment rate was 9.1%.

n corporate commitment: Orange county owes part of its economic success and rapid growth to its pro-business environment and diversified corporate base. The county enjoys the support of

the Orange county business council, a leading, well developed business organization that meets with state legislators and campaigns aggressively for plans to continue improving infrastructure and workforce development in Orange county.

n affluent Demographics: Orange county residents earn a significant premium over many other major metropolitan areas, making the county one of the wealthiest areas in the united states. Orange county’s average household income is estimated at $99,353 for 2009, over 43% higher than the national average household income of $69,376.

n modern infrastructure: Orange county benefits from modern transportation and communications networks. The entire county has upgraded to digital switching equipment, and from the early 1990s through 2000, Orange county invested over $2 billion in highway and other transportation projects. The county provides convenient regional access via several major interstate freeways and state highways, in addition to a commercial airport, John Wayne International airport, which handles over 9 million passengers annually.

n World-class tourist Destinations: Orange county has increased its reputation as a travel destination-gateway due to the anaheim area’s popular attractions including disneyland, california adventure and Knott’s berry Farm. The county is also home to multiple beaches, museums and world-renowned shopping such as Fashion Island, Irvine spectrum and south coast plaza.

newport Beach Harbor

2�

Disneyland, anaheim, ca

lo

ca

tio

n o

ve

rv

ee

W

2�

MaJOr INdusTrIEs

n Defense: boeing company is the fourth largest employer in Orange county with 8,100 workers.

n Biomedical: Orange county is known as the birthplace of the medical device industry and has significant emerging clusters in pharmaceuticals and biotechnology. leading biomedical firms employ over 29,000 employees.

n technology: according to the Milken Institute, Orange county has the most diverse high-tech economy in the country. The Orange county economy is centered on several “clusters” of activity—including Irvine (around the Irvine spectrum and university of california, Irvine campus) and in the mid-county area. areas of emphasis includecomputer software, semiconductors, and bio-med applications. Orange county’s computer hardware presence is led by Western digital, broadcom, and conexant systems.

n manufacturing: Orange county is a major manufacturing center, employing nearly 170,000 workers, which places the county behind Houston and ahead of san Jose. leading county exports include computer and electronic products, fabricated metal products, transportation equipment, textile mill products and apparel, and printing.

n corporate Headquarters: There are four Fortune 500 companies with headquarters located in Orange county: Ingram Micro Inc., First american corporation, Western digital, and pacific life. These companies benefit from the region’s highly skilled work force, excellent market access, and quality housing for employees and executives alike.

n international trade: strong international trade with pacific rim countries has resulted in asian companies expanding into Orange county and establishing North american headquarters offices within the region. Orange county businesses utilize the ports of long beach and los angeles, as well as John Wayne, long beach, la/Ontario International, and los angeles International airports.

n tourism: Orange county augmented its world-renowned status as a premier visitor destination with the development and marketing of anaheim resort—an american destination/gateway for international tourism. The anaheim resort area is home to some of the nation’s most famous amusement and leisure time playgrounds, including Knott’s berry Farm, disneyland and disney’s california adventure. In addition, Orange county is famous for its luxurious homes, championship golf courses, and splendid coastline, which offers miles of sandy beaches and premier surfing spots in Newport beach, laguna beach and Huntington beach. disneyland continues to be one of Orange county’s most popular attractions, drawing an estimated 14.7 million visitors in 2008 according to Themed Entertainment association.

TraNspOrTaTION

Orange county enjoys a highly strategic location between los angeles and san diego, with convenient access to major cities and attractions throughout southern california and beyond.

Highways surface transportation in Orange county is primarily focused on three major interstate highways: the santa ana Freeway (I-5), the san diego Freeway (I-405 and I-5 south of Irvine), and the san gabriel Freeway (I-605). additional freeways serving the county include the riverside and artesia Freeway (sr 91), garden grove Freeway (sr 22), Orange Freeway (sr 57), costa Mesa Freeway (sr 55), laguna Freeway (sr 133), san Joaquin Transportation corridor (sr 73) and Eastern Transportation corridor (sr 261, sr 133 and sr 241). The Interstate 405/55 freeway interchange is one of the most heavily trafficked in the united states, with an average daily volume of over 400,000 vehicles. state route 1, also known as pacific coast Highway, is a state highway that runs along much of the pacific coast. The route is famous for running by some of the most beautiful coastlines in the world. at its southernmost end, pacific coast Highway ends at Interstate 5 in capistrano beach.

Public transitpublic transit is offered primarily by the Orange county Transportation authority, recognized as one of the best public transportation systems in the nation. OcTa manages the county’s bus network and works closely with southern california’s Metrolink, which operates three commuter rail lines that connect Orange county to los angeles, the Inland Empire and san diego county: the Orange county line, the 91 line, and the Inland Empire-Orange county line. Including amtrak service, more than 40 trains run along these lines and generate approximately 15,000 boardings per weekday.

airportJohn Wayne International airport (sNa) is Orange county’s only commercial airport, handling approximately 9 million passengers annually through 14 different airlines, the most prominent being southwest airlines, american airlines, and united airlines. Other commercial airports providing national and international service within the los angeles basin include long beach airport (25 minute drive from John Wayne airport), los angeles International airport (45 minute drive) and la/Ontario International airport (45 minute drive).

qualITy OF lIFE

With nearly 42 miles of coastline, three large recreational boat harbors, near perfect weather, and a majestic mountain backdrop, Orange county offers the quintessential california lifestyle. Few areas in the nation compare to Orange county’s natural beauty and breadth of cultural and recreational activities.

n With one of the most desirable Mediterranean climates in the world, residents enjoy year-round recreation, including a myriad of water sports, championship golf, over 350 miles of trails and bikeways, 35,000 acres of regional parkland and a host of world famous, family-based attractions.

nFrom the Orange county performing arts center to the Verizon amphitheater, from symphony performances to dramatic opera, Orange county offers the best in quality performing arts venues. additional renowned cultural attractions include the bowers Museum, discovery science center and Mission san Juan capistrano.

nThe affluent communities of Orange county are home to a number of world-class shopping destinations: Fashion Island, south coast plaza, Irvine spectrum, Irvine/Tustin Marketplace, bella Terra, The block at Orange and brea Mall.

nOrange county is home to 11 public and seven private colleges and universities. Many companies, especially technology, have established operations near these prestigious institutions to draw from their intellectual resources and graduates. The university of california, Irvine, california state university, Fullerton, chapman university and the southern california college of Optometry are a few of Orange county’s more notable higher education facilities, in addition to several well-regarded community colleges.

nThe area boasts two professional sports teams including the los angeles angels of anaheim (Mlb) and the Mighty ducks of anaheim (NHl) and provides various other excellent spectator sports opportunities including the us Open of surfing in Huntington beach.

EMplOyMENT by INdusTry - OraNgE cOuNTyIndustry # %

utilities 381 0.2%

construction 12,158 5.9%

Manufacturing 25,632 12.5%

Wholesale Trade 22,120 10.8%

retail Trade 11,946 5.8%

Transportation & Warehousing 2,625 1.3%

Information 5,384 2.6%

Finance & Insurance 20,259 9.8%

real Estate & rental/leasing 6,230 3.0%

professional, scientific & Technical services 32,356 15.7

Management of companies & Enterprises 5,469 2.7%

administrative & support & Waste Management 19,502 9.5%

Educational services 1,945 0.9%

Healthcare & social assistance 6,384 3.1%

arts, Entertainment & recreation 2,070 1.0%

Hospitality & restaurant services 11,771 5.7%

Other services (except public administration) 3,845 1.9%

governmental 15,614 7.6%

Total of All Industries 205,691 100.00%

TOp EMplOyErs - OraNgE cOuNTy

Employer # Employees (Sector)

Walt disney company 19,800 (arts & Entertainment)

university of california, Irvine 19,279 (Education)

st. Joseph Health system 10,929 (Healthcare)

boeing, Inc. 8,477 (Manufacturing)

yum brands, Inc 7,000 (restaurant & Food service)

Target corp. 6,226 (retail)

supervalu Inc. 5,923 (retail, grocery)

Kaiser permanante 5,598 (Healthcare)

Memorial Health services, Inc. 5,533 (Healthcare)

bank of america corp. 5,450 (Finance)

(source: Orange county business Journal book of lists 2010)

2�

lo

ca

tio

n o

ve

rv

ieW

27

cITy OF IrVINE

quintana is located in the city of Irvine, the heart of southern california’s “Technology coast” and Orange county. With state-of-the-art transportation, and stellar educational institutions, Irvine is renowned for its dynamic business environment, with convenient access to a highly educated and skilled labor force. The city also boasts a reputation as one of the nation’s safest communities and offers a full-range of housing opportunities, excellent climate, and a wealth of lifestyle amenities.

Today, Irvine is one of the nation’s largest master-planned urban communities and encompasses a total of 65 square miles. Irvine is bordered by santa ana, Newport beach, Huntington beach, Fountain Valley, and costa Mesa, with its southern border laguna beach, only a 10-minute drive from the pacific Ocean. With its proximity to the pacific coast, los angeles and san diego, Irvine’s location provides residents and businesses alike easy access to world markets, a quality labor supply and first-class entertainment. The san diego (I-405), costa Mesa (55), santa ana (5) and corona del Mar (73) freeways all intersect Irvine, making the city an extremely accessible and desirable business location.

arEa HIgHlIgHTs

The community of Irvine blends quiet residential neighborhoods with landscaped boulevards and commercial retail centers with hotels, office buildings and industrial complexes. It has the nation’s highest ratio of park acreage and open space, giving it international recognition as a model master-planned community. With a population of nearly 215,000, Irvine has been consistently rated as one the safest cities in the united states. Offering superior employment availability, acclaimed community entertainment, a broad selection of the best education opportunities for children and adults and beautiful southern california weather, Irvine provides an exceptional quality of life for people who live and work in Irvine.

n Irvine is located approximately 40 miles southeast of los angeles and 85 miles north of san diego. Two major regional airports are located nearby - John Wayne International airport is adjacent to the northeastern corner of Irvine, and long beach airport is just over 20 miles northwest of the city. several major freeways traverse Irvine, including the santa ana (I-5), san diego (I-405), costa Mesa (55) and corona del Mar (73) freeways.

n Over 59% of Irvine’s residents 25 years and older hold a bachelor’s degree or higher. The december 2009 unemployment rate for the city of Irvine is estimated to be 6.9%, one of the lowest in the state.

n Irvine has an average household income of nearly $119,000 a year and a median owner-occupied home value of $608,000.

n The top three business sectors in Irvine are professional and related Occupations (32.41%), sales and Office (29.12%), Management and business and Financial (24.57%). some of its top employers include university of california, Irvine (education), Irvine unified school district (education), Verizon Wireless (communications), broadcom corp. (computers chipmaker), st. John Knits (knit garments) and allergen (pharmaceutical).

n The city of Irvine is adjacent to the 3 million square-foot south coast plaza shopping center, one of the largest shopping centers in the world. The center generates more than $1.2 billion in annual sales and attracts over 25 million shoppers a year–more than any other mall in america. south coast features two separately enclosed malls, several distinctive outdoor areas, a luxury hotel, dozens of restaurants, banks, fountains, art gardens and theatres. In addition, many luxury brands have designated the south coast plaza as the home to one of their few if not their only store.

n located within a 15-mile radius of Irvine are eight accredited colleges and universities, along with 10 government and private sector training and vocational schools. Four major hospitals are located within a five mile radius: college Hospital costa Mesa, Hoag Memorial presbyterian Hospital, Newport bay Hospital, and coastal communities Hospital.

n according to the FbI’s 2009 uniform crime report, for the fifth year in a row, Irvine ranked as the safest city in the nation for cities with a population of at least 100,000 residents. On a larger scale, Irvine was also listed among the top 20 safest big cities.

university of california - irvine

affluent and educated residentsThe estimated average household income for the city of Irvine for 2010 is estimated to be $119,000, well above the national average of $69,376. In addition, it is estimated that 59.3% of the 25 and older population in this area has earned a bachelor’s degree or higher, compared to the national estimate of 24.7%. Home to the university of california, Irvine, a world-renowned university with exceptional research facilities, some of the most highly educated residents in the nation call the city of Irvine home.

DemographicsThe city of Irvine has traditionally attracted a younger population base (only 20% of Irvine’s population is in the over 55 category), with the median age being a youthful 36 years. a relatively new and rapidly evolving city, Irvine’s population quadrupled in the last quarter century, though it did not suffer the urban sprawl or congestion typical among growing communities.

It is estimated that the population grew by 49.9% between 2000 and the current year, growing from 143,072 to 214,393, and it is projected to increase an additional 17.4% over the next five years. With a reputation of being one of the safest cities in the nation in which to live, and offering exceptional education in its public school systems, worldclass living, shopping and dining, Irvine continues to attract an affluent population base.

dEMOgrapHIc/EcONOMIc INdIcaTOrs - cITy OF IrVINECalendar Year 2000 2005 2006 2007 2008 2009

population 144,100 183,344 193,419 2,011,154 209,806 212,793

Median age 34.2 36 32.1 33.4 32.9 na

Median HH Income $70,057 $82,827 $84,20 $85,624 $98,923 na

unemployment 2.6% 2.8% 2.5% 2.9% 4.0% 4.1%

sales Tax collection $10.9 $25.7 $31.1 $36.8 $41.4 na

residential units per-mitted

1,802 1,062 1,206 3,884 3,283 na

Median Home appreciation rates

na 4.4% 10.6% (6.4%) (11.6%) na

employmentIrvine is one of the most business friendly communities in the country. located in the heart of southern california’s “Technology coast”, Irvine is home to many technology and industrial clusters, including medical device manufacturers, bio-medical companies, computer software and hardware companies, and automotive design firms, along with hundreds of financial, educational, and entertainment firms. Irvine is renowned for its dynamic business environment with access to a highly educated and skilled labor force. Irvine is home to more than 24 international company headquarters and a host to high technology and bio-medical companies, modern business parks co-mingled with world-class university facilities.

The city of Irvine enjoys a healthy economy, with an estimated unemployment rate of only 7.2%. The presence of a world-renowned university (university of california, Irvine) spurring innovation, and exceptional community colleges such as Irvine Valley, Orange coast and saddleback, and numerous trade and higher learning institutions, enables companies to draw from a highly educated work force that meet the needs of almost any business.

28

irvine spectrum

29

MaiN St

vON K

aRMaN

ave

Mac aRthuR blvd

jOhN wayNe aiRPORt

SOuthcOaStPlaza

aerial

405

55

73 tOllROad

The Orange county Office Market contains a total inventory of 81,612,249 square feet of office space in 1,111 buildings. according to cushman & Wakefield’s research services group, the direct vacancy rate as of first quarter 2010 equaled 18.9 percent for the county, while the overall vacancy rate (including sublease space) was 170 basis points higher at 20.6 percent. The county contains five office sectors, which are identified in the following exhibit.

office market (all classes) - orange county Q1 2010

The chart above compares direct rental trends and direct vacancy rates (excluding sublease space) for each of the five office segments in Orange county. direct weighted average rental rates in the five Orange county submarkets range from $1.97 to $2.25 per-square-foot, monthly. The high end of the range is represented by the greater airport area, which is the central business district (cbd) of Orange county. The overall direct weighted average asking rate for all of Orange county was $2.14 per-square-foot. direct vacancy was lowest in West county at 13.9 percent while highest in the greater airport area at 21.9 percent.

VacaNcy TrENds

during the latter portion of the 1990’s, overall vacancy rates declined to 12.2 percent (1999) after peaking during year-end 1991 at 22.4 percent. New construction during 2000-2001, combined with weak absorption levels during 2001-2002 led to increased vacancy (17.5 percent as of year-end 2002). construction levels declined significantly during the next three years which, together with strong absorption during 2003, 2004, 2005 and 2006, led to a significant decline in vacancy on a county-wide basis. Market conditions have softened recently, precipitated by the sub-prime lending meltdown in 2007, which left above average vacancies in central county and greater airport area markets, and the global recession of 2007-2009. This abrupt shift in demand has caused considerable declines in construction to the point where there is currently no substantive office product under construction in Orange county.

The overall vacancy rate of 20.6 percent for Orange county as of first quarter 2010 represents an increase of 400 basis points from year-end 2008 (the observed beginning of the recession) and 150 basis points from year-end 2009. The largest increases in the vacancy were in those submarkets with large concentrations of finance and mortgage-related office users (greater airport area and central county). The chart below summarizes the historical vacancy trends for Orange county.

cONsTrucTION cOMplETIONs

The limited amount of new construction on a countywide basis from 1991 to 1998, coupled with tremendous economic growth resulted in significant declines in vacancy rates, particularly in the prime suburban markets in south Orange county and the airport area. The chart shows the construction trend line in Orange county from 1991 through first quarter 2010. as indicated on the chart, the development cycle in the county’s largest sector - greater airport area - restarted in 1999 after seven years of no new completions. The net absorption statistics above illustrate the gradual recovery to equilibrium in the airport area.

The market experienced a very “classic” spike in rental rates from 1997 through 1999, followed by three to four years with significant construction completions. although an increase in rental rates combined with a decline in vacancy rates usually triggers the construction of new commercial buildings, new development has been limited over the past several years, particularly during 2004 and 2005.

One reason for the decline in construction is the limited amount of land available for development, and the fact that many sites that were previously designated to be developed as commercial property have been converted to residential developments. during 2008, a total of 1,246,772 square feet of office space was delivered to the market, approximately 54 percent lower than the 2007 year-end total of 2,730,049. a sharp decline in commercial construction preceded the rising vacancy and falling rental rates of the recession. In 2009 there was only 81,646 sf of new construction completions countywide, and there are currently no expected completions for 2010.

30

market analYsis

Orange County

Overall New Year VacancyConstruction

1991 22.4% 2,706,7931992 21.3% 27,0001993 19.0% 01994 19.3% 258,9121995 17.4% 01996 17.3% 01997 13.1% 42,7561998 13.0% 760,2581999 12.2% 1,745,1242000 13.5% 2,811,4612001 17.4% 2,746,0322002 17.5% 892,2382003 15.8% 842,2132004 12.9% 213,5652005 9.8% 120,0002006 9.7% 1,378,9772007 13.7% 2,730,0492008 16.6% 1,171,7722009 18.8% 0Q1 2010 20.6% 0

Historic Vacancy and Construction Trends

22.4

%

21.3

%

19.0

%

19.3

%

17.4

%

17.3

%

13.1

%

13.0

%

12.2

% 13.5

%

17.4

%

17.5

%

15.8

%

12.9

%

9.8%

9.7%

13.7

%

16.6

% 18.8

% 20.6

%

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0%

5%

10%

15%

20%

25%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010

New

Con

stru

ctio

n SF

Ove

rall

Vaca

ncy

Overall Vacancy New Construction SF

orange countyHistoric vacancy and construction trends

OFFICE MARKET (ALL CLASSES) - ORANGE COUNTYQ1 2010

No. of Direct DirectMarket Buildings Inventory (SF) Vacancy Average Rent

Greater Airport Area 382 36,010,434 21.9% $2.25

Central County 274 18,548,897 15.8% $1.97

South County 307 16,938,530 18.4% $2.13

North County 78 5,859,779 15.5% $2.00

West County 70 4,254,609 13.9% $1.98

Total 1,111 81,612,249 18.9% $2.14

Greater Airport Area

44%South County

21%

West County5%

Central County

23%

North County7%

OFFICE MARKET (ALL CLASSES) - ORANGE COUNTYQ1 2010

No. of Direct DirectMarket Buildings Inventory (SF) Vacancy Average Rent

Greater Airport Area 382 36,010,434 21.9% $2.25

Central County 274 18,548,897 15.8% $1.97

South County 307 16,938,530 18.4% $2.13

North County 78 5,859,779 15.5% $2.00

West County 70 4,254,609 13.9% $1.98

Total 1,111 81,612,249 18.9% $2.14

Greater Airport Area

44%South County

21%

West County5%

Central County

23%

North County7%

31

ma

rk

et

an

alY

sis

grEaTEr aIrpOrT arEa OFFIcE MarKET

The greater airport area contains the most significant concentration of office towers in Orange county and is considered one of the most desirable office locations due to the high quality of the inventory, proximity to executive housing, excellent freeway access, proximity to John Wayne airport, and outstanding amenity base. The greater airport area is arguably the best office location in Orange county and is the preferred business location for Orange county corporations. The office buildings within this market typically command rents 30 to 50 percent above buildings in other locations throughout region.

Known as Orange county’s downtown market or central business district (cbd), the area is diverse with different class, size, and product types. The greater airport area, encompasses several prestigious office centers including Newport center, The Irvine business center, south coast Metro, and Hutton center. Each of these submarkets has its own characteristics, identified by product type, amenities, or locale. The desirability of the greater airport area office market is evident from the exceptional tenant base in the class a buildings. The tenant base is dominated by tenants from the financial services, law and technology sectors of the economy. The quality of the office supply has historically attracted the premiere tenants from these sectors.

Major credit tenants in the market include aetna, Experian, Ernst & young, deloitte & Touche, gibson dunn, google, IbM, Ingram Micro, ITT, KpMg, Metlife, pacific life, paul Hastings, prudential, robinson pharma, state Farm, First american, Jp Morgan and Wells Fargo. as a result of its strategic location adjacent to John Wayne airport, proximity to exclusive residential neighborhoods, strong amenity base and excellent freeway accessibility, the greater airport area is the preferred business location for Orange county corporations.

according to cushman & Wakefield’s first quarter 2010 Orange county Office Market Overview, the greater airport area segment of the market totals 36,010,434 square feet or approximately 44.1 percent of the total county inventory. direct vacancy within the greater airport area equaled 21.9 percent, which compares with overall availabilities, including sublease space, of 7,895,883 square feet or 24.0 percent. The greater airport area Market is divided into four submarkets: south santa ana, costa Mesa, Newport beach and Irvine (excluding the Irvine spectrum).

15.1%

16.7%

18.0%

20.1%

24.0%

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

20.0%

22.5%

25.0%

West County Central County North County South County Greater Airport Area

Ove

rall

Vaca

ncy

Q2 2009 - OVERALL VACANCY

15.1%

16.7%

18.0%

20.1%

24.0%

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

20.0%

22.5%

25.0%

West County Central County North County South County Greater Airport Area

Ove

rall

Vaca

ncy

Q2 2009 - OVERALL VACANCY

7,000,000

9,000,000

OFFICE MARKET (ALL CLASSES) - ORANGE COUNTYLEASING ACTIVITY & NET ABSORPTION

3,000,000

5,000,000

7,000,000

9,000,000

Squa

re F

eet


1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010(3,000,000)

(1,000,000)

1,000,000

3,000,000

5,000,000

7,000,000

9,000,000

Squa

re F

eet


1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010Orange County Leasing Activity 7,405,610 8,091,235 8,282,119 6,617,609 9,456,315 9,039,673 9,329,748 7,714,123 6,555,816 7,243,388 6,235,657 1,787,382 Orange County Net Absorption 1,421,012 2,764,681 235,334 191,953 1,997,954 2,024,325 1,202,194 1,139,535 (1,923,938) (1,731,798) (2,658,864) (172,938)

(3,000,000)

(1,000,000)

1,000,000

3,000,000

5,000,000

7,000,000

9,000,000

Squa

re F

eet


Source: Cushman & Wakefield Research

office market (all classes) - orange countyQ1 2010 - overall vacancy

office market (all classes) - orange countyleasing activity and net absorption

Direct YTD '09 Direct Class ANumber Direct Vacancy Leasing Wtd. Avg.

Market / Submarket Inventory of Bldgs Availabilities Rate Activity Rental Rate

South Coast Metro 1,899,271 9 383,301 20.2% 89,615 $2.11Costa Mesa 5,250,336 46 1,235,358 23.5% 90,603 $2.22Newport Beach 7,055,389 94 1,156,226 16.4% 184,702 $2.57Irvine 21,805,438 233 5,120,998 23.5% 801,802 $2.36

GREATER AIRPORT AREA 36,010,434 382 7,895,883 21.9% 1,166,722 $2.25

Greater Airport AreaOffice Market and Submarket Statistics

End of 1st Quarter 2010

South Coast Metro

5%Costa Mesa15%

Newport Beach20%

Irvine60%

Office Inventory

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

South Coast Metro

Costa Mesa

Newport Beach

Irvine

Squa

re F

eet

Direct Space Availabilities

$2.11 $2.22$2.57

$2.36

$1.00

$2.00

$3.00

$4.00

$5.00

Wtd

. Avg

. Ren

t

Submarket Weighted Average Rental Rate Comparison

South Coast Metro

5%Costa Mesa15%

Newport Beach20%

Irvine60%

Office Inventory

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

South Coast Metro

Costa Mesa

Newport Beach

Irvine

Squa

re F

eet

Direct Space Availabilities

$2.11 $2.22$2.57

$2.36

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

South Coast Metro Costa Mesa Newport Beach Irvine

Wtd

. Avg

. Ren

t

Submarket Weighted Average Rental Rate Comparison

32

Greater airport areaoffice market and submarket statistics

end of 1st Quarter 2010

Gaa office market/suBmarkets

gaa VacaNcy TrENds & rENTal raTEs

The overall vacancy rate of 22.5 percent for greater airport area as of year-end 2009 represents an increase of 11.8 percentage points since year-end 2006. The increase in overall vacancy rate in the airport market is primarily due to the large amount of new construction completions, mortgage industry-related vacancies throughout 2007 and the fallout of the financial markets in 2008.

rental rates in the airport area peaked at the end of the 1990s, reaching a weighted average rent of $2.26 per-square-foot by year-end 2000. The unfavorable absorption and construction trends resulted in a decline in rental rates from 2001 through 2003. This trend reversed during 2004, with the first increase in rents demonstrated since 2000. asking rental rates in the airport area were up 12.7 percent as year-end 2007 over year-end 2006 figures, from $2.59 to $2.92 per-square-foot, monthly. However, the recent vacancy rate increase over the past two years has resulted in a decline of rental rates and is expected to continue through 2009. as of year-end 2009, rental rates in the airport market equaled $2.28 per-square-foot per month, a decline of 21.8 percent from year-end 2007 and 16.5 percent from year-end 2008.

irvine: The Irvine submarket is the largest office submarket within the airport area at 21,805,438 square feet or 60.6 percent of the sector. The majority of high-quality office supply within the Irvine submarket is situated along the I-405 corridor between the sH-55 Freeway to the west and the Jamboree boulevard overpass to the east. significant class a projects in addition to quintana include 3121 Michelson, 3161 Michelson, 2211 Michelson, lakeshore Towers, Jamboree center, 2600 Michelson (citicorp Tower), century center, Waterfield Tower, The atrium, and the nine buildings within the Irvine concourse. premier tenants within these projects include pepperdine university, priceWaterhouse coopers, data general, union bank of california, Hyundai, steadfast, and cigna. The locations of these buildings are considered a tier below that of the Newport center/Newport beach located buildings, but rental rates are only marginally lower.

The direct vacancy rate within the Irvine office market equaled 23.5 percent, which compares with overall availabilities, including sublease space, of 25.2 percent. The overall weighted average rental rate in Irvine equaled $2.19 per-square-foot, monthly.

33

(1,000,000)

(500,000)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

5,500,000

Squa

re F

eet

OFFICE MARKET - GREATER AIRPORT AREALEASING ACTIVITY & NET ABSORPTION

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010GAA Leasing Activity 5,122,797 4,388,896 4,743,475 2,870,460 4,771,609 4,152,763 4,699,753 3,563,818 3,232,943 3,557,587 2,974,151 848,208 GAA Net Absorption 1,037,333 236,103 129,156 (272,496) 2,106,420 2,024,325 172,635 1,139,535 (227,260) (1,077,963) (1,418,694) (410,532)

(1,500,000)

(1,000,000)

(500,000)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

5,500,000

Squa

re F

eet

OFFICE MARKET - GREATER AIRPORT AREALEASING ACTIVITY & NET ABSORPTION


office market - orange county and Greater airport areaoverall vacancy vs. average Direct asking rent

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010OC Overall Vacancy (All Classes) 12.2% 13.5% 17.4% 17.5% 15.8% 12.9% 9.8% 9.7% 13.7% 16.6% 20.2% 20.6%GAA Overall Vacancy (All Classes) 10.2% 12.9% 16.1% 19.2% 14.4% 11.2% 9.2% 10.7% 15.3% 22.5% 22.5% 24.0%OC Avg. Direct Asking Rent (Class A) $2.42 $2.65 $2.54 $2.30 $2.24 $2.31 $2.54 $2.84 $3.13 $2.90 $2.43 $2.38GAA Avg. Direct Asking Rent (Class A) $2.58 $2.81 $2.60 $2.44 $2.28 $2.46 $2.68 $2.94 $3.08 $2.97 $2.49 $2.43

$1.00

$1.25

$1.50

$1.75

$2.00

$2.25

$2.50

$2.75

$3.00

$3.25

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

24.0%

Dire

ct A

skin

g R

ent $

/SF/

Mo

Full

Serv

ice

Ove

rall

Vaca

ncy

%

OFFICE MARKET - ORANGE COUNTY & GREATER AIRPORT AREAOVERALL VACANCY VS. AVERAGE DIRECT ASKING RENT


irvine class a office marketHistorical Direct vacancy and rental trends199� - 2010 Q1

Irvine Class A Office MarketHistorical Direct Vacancy and Rental Trends1996 - 2010 Q1

Year Vacancy Rent PSF/Mo.$3.5032%

1996 8.6% $1.901997 8.0% $2.351998 12.0% $2.661999 10.8% $2.722000 10.4% $2.942001 15.3% $2.72

$1.90

$2.35

$2.66 $2.72$2.94

$2.72

$2.44 $2.41 $2.48 $2.48

$3.09$3.20

$2.97

$2.47 $2.42

$2.00

$2.50

$3.00

$3.50

20%

24%

28%

32%

Ren

t PSF

/Mo.

Dire

ct V

acan

cy

2001 15.3% $2.722002 20.8% $2.442003 13.5% $2.412004 8.4% $2.482005 8.4% $2.482006 9.0% $3.092007 19.8% $3.20

$1.90

$2.35

$2.66 $2.72$2.94

$2.72

$2.44 $2.41 $2.48 $2.48

$3.09$3.20

$2.97

$2.47 $2.42

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

8%

12%

16%

20%

24%

28%

32%

Ren

t PSF

/Mo.

Dire

ct V

acan

cy

2007 19.8% $3.202008 24.5% $2.972009 26.5% $2.47

Q1 2010 27.8% $2.42

$1.90

$2.35

$2.66 $2.72$2.94

$2.72

$2.44 $2.41 $2.48 $2.48

$3.09$3.20

$2.97

$2.47 $2.42

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

0%

4%

8%

12%

16%

20%

24%

28%

32%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010

Ren

t PSF

/Mo.

Dire

ct V

acan

cy

Rent PSF/Mo. Vacancy

office market - Greater airport area, leasing activity and net absorption

3�

RENTAL AND OCCUPANCY SURVEYThe Greater Airport Area As of First Quarter 2010

Building Information

Item Building Name / Bldg No. of Area Parking Ratio Year Annual Rent Lease Occupancy Ratio

No. Location Owner Stories (SF) Unr./Res. Built Direct Sublease Overall PSF PSF Type Direct Overall

1 Irvine Concourse Shorenstein 12 296,194 4:1 1988 62,845 48,907 Total Neg - Neg FSG 78.8% 62.3%

1920 Main Street $80-$200 111,752 sublease $24.00

2 Irvine Concourse Shorenstein 12 280,870 4:1 1988 113,294 10,311 Total Neg - Neg FSG 59.7% 56.0%


3 Irvine Concourse Prisa 12 268,838 4:1 1999 33,812 17,215 Total $35.40 - $35.40 FSG 87.4% 81.0%


4 Wells Fargo Tower Ohio STRS 16 346,684 4:1 1990 22,677 0 Total $33.00 - $33.00 FSG 93.5% 93.5%

2030 Main Street $70-$125 22,677

5 Irvine Concourse Knobbe, Martens 14 303,000 4:1 2002 45,394 0 Total $31.80 - $31.80 FSG 85.0% 85.0%

2040 Main Street Olson & Bear $70-$130 45,394

6 Opus Center Westbrook 13 314,074 4:1 2007 212,380 8,527 Total $30.60 - $34.20 FSG 32.4% 29.7%

2050 Main Street Greenlaw $135 220,907 sublease $23.40

7 Taco Bell Building LBA 12 272,887 4:1 1985 205,081 3,000 Total $30.60 - $33.00 FSG 24.8% 23.7%

17901 Von Karman Avenue Realty 208,081

8 Koll Center Irvine Terrace Tower 8 172,250 4:1 1999 7,712 22,464 Total $28.20 - $31.20 FSG 95.5% 82.5%

1900 Main Street OC LLC $60-$70 30,176

9 Koll Center Irvine Wells RE 8 178,272 4:1 2001 97,540 13,111 Total $31.80 - $31.80 FSG 45.3% 37.9%

1901 Main Street Invest. Funds Free-$125 110,651

10 Quintana - Bldg A JER 4 129,355 4:1 1989 53,742 0 Total N/A - N/A FSG 58.5% 58.5%

17875 Von Karman Ave nue 53,742

11 Quintana - Bldg B JER 5 147,520 4:1 1989 147,520 0 Total $30.60 - $30.60 FSG 0.0% 0.0%

17877 Von Karman Avenue 147,520

12 Quintana - Bldg C JER 4 83,370 4:1 2004 83,370 0 Total $30.60 - $30.60 FSG 0.0% 0.0%

17872 Gillette Avenue 83,370

13 Quintana - Bldg F Maguire 5 151,370 4:1 2007 94,082 0 Total $31.80 - $31.80 FSG 37.8% 37.8%17885 Von Karman Avenue 94,082

14 Century Centre - Tower I Olen Properties 13 223,447 3.4:1 1986 35,224 0 Total $27.00 - $27.00 FSG 84.2% 84.2%

2601 Main Street $65/$125 35,224

15 Century Centre - Tower II Olen Properties 13 223,780 3.4:1 1989 44,349 0 Total $27.00 - $27.00 FSG 80.2% 80.2%

2603 Main Street $65/$125 44,349

16 2100 Main Building Saunders 4 89,041 3.5:1 1985 9,700 0 Total $23.40 - $23.40 FSG 89.1% 89.1%

2100 Main Street $70/$125 9,700

17 17911 Von Karman Arden Realty 5 104,375 3.1:1 1981 72,370 0 Total $23.40 - $23.40 FSG 30.7% 30.7%

17911 Von Karman Avenue $50/$100 72,370

18 Cartwright Building First Winthrop 5 143,165 4.1:1 1982 44,978 0 Total $23.40 - $23.40 FSG 68.6% 68.6%

17770 Cartwright Road Lexington REIT 44,978

MARKET TOTALS 165 3,728,492 1,386,070 123,535 1,509,605 62.8% 59.5%

comPetinG office BuilDinGsThe following chart contains the results of a survey of the buildings considered to be competitive with quintana. The survey covered 18 comparable office properties totaling approximately 3.7 millionrentable square feet. The direct occupancy level was 62.8 percent. The building sizes range from 83,000 square feet to 350,000 square feet. Typical asking rents are structured on a full service gross basis, with the tenants paying pro-rata expense reimbursements above base year costs.

3�

ma

rk

et

an

alY

sis

Building Name/

Location Project Owner

Number of

Stories

Building

Area (SF)

Parking

Ratio

Unr./Res.

Year

Built Direct Sublease Overall

High

PSF

Low

PSF

Lease

Type

Available

SF

Overall %

Available

University Research Park Irvine Company 2-4 2,117,211 4.0/1,000

1997-

2007 132,148 114,180 246,328 $24.00 $18.60 NNN 246,328 11.6%

Jamboree Business Center Irvine Company 3 232,875 4.0/1,000 2008 45,270 4,828 50,098 $18.60 $18.60 NNN 50,098 21.5%

Irvine Technology Center Irvine Company 2 1,196,061 4.0/1,000

2001-

2006 294,867 40,375 335,242 $15.60 $13.80 NNN 335,242 28.0%

5 Peters Canyon TA Associates Realty 3 155,484 4.78/1,000 2000 155,484 0 155,484 N/A $25.80 FSG 155,484 100.0%

Discovery Business Center Irvine Company 2 1,300,000 4.0/1,000

2000-

2007 505,013 28,560 533,573 $17.40 $16.80 NNN 533,573 41.0%

5,001,631 1,132,782 187,943 1,320,725 1,320,725 26.4%

BUILDING INFORMATION ANNUAL RENT

As of First Quarter 2010RENTAL AND OCCUPANCY SURVEY

comPetinG office camPuses

lessee: stratacare, Inc., a delaware corporationBuilding: 17838 gillette avenuesuite: Entire 1st & 2nd Floorsrentable sf: 54,350 (40,000 initial; 14,350 must-take)tenant’s Percentage share: 9.79%commencement Date: January 1, 2008lease expiration: October 31, 2014monthly Base rent: per the schedule below on a “full-service gross” basis:

lease Year Date monthly rent Per sf annual rent Per sf

1 1/01/08 $98,000.50 $2.45 $1,176,000 $29.40

2 1/10/09 $100,000.50 $2.50 $1,200,000 $30.00

2* 7/01/09 $135,875.00 $2.50 $1,630,000 $30.00

3 1/01/10 $138,592.50 $2.55 $1,663,110 $30.60

4 1/01/11 $141,310.00 $2.60 $1,695,720 $31.20

5 1/01/12 $144,027.50 $2.65 $1,728,330 $31.80

6 1/01/13 $146,745.00 $2.70 $1,760,940 $32.40

7 1/01/14 $149,452.50 $2.75 $1,793,550 $33.00

*date of “Must Take” square footage commencement.

options to extend: lessee has one option to extend the lease term as follows: One successive period of five (5) years (“Extension Term”) that shall be

exercised no earlier than twelve (12) months and no later than fifteen (15) months prior to lease Expiration. The rent during the Extension Term shall be 100% of fair market value (FMV) but no less than the rent in effect on the day prior to the Extension Term.

option to terminate: None.

lessee obligations: lessee pays as additional rent its pro rata share of all Operating Expenses and real Estate Taxes each Expenses year in excess over all Operating Expenses and real Estate Taxes due under the 2008 base year. Operating Expenses chargeable to lessee in any lease year shall not exceed 105% of the aggregate of Operating Expenses in the prior lease year.

Parking stalls: lessee is entitled to six (6) unreserved parking stalls per one thousand (1,000) square feet of the rentable area. a minimum of three (3) per one thousand (1,000) square feet must be located in the surface lot and the remaining stalls shall be located in the project parking structure. unreserved stalls shall be free of charge during the Initial Term and at landlord’s prevailing rate during the Extension Term.

security Deposit: $149,462.50

tenant Profile

3�

company name: stratacare, Inc.Headquarters: Irvine, cacompany type: privately heldfounded: 1998industry: Workers’ compensationemployees: 241Website: www.stratacare.com stratacare, Inc. provides national bill review software solutions and service for the workers’ compensation industry. The strataWare suite utilizes the latest browser-based technology to deliver an integrated solution that helps clients lower costs, improve productivity, increase profits, and meet regulatory or governmental compliance.

stratacare’s innovative solutions saved over $2.5 billion dollars in workers’ compensation costs in 2009 for some of the industry’s top insurance companies, third party administrators, managed care companies, and self-insured employers.

stratacare is headquartered at quintana at 17838 gillette avenue and has a regional sales office in atlanta, georgia and a co-location data center in lynnwood, Washington. In april 2010, stratacare purchased the cs stars llc, Medbillpro™ division and added 45 product, support and compliance staff.

lease summarY

37

te

na

nt

Pr

of

ile

/sta

ck

inG

Pl

an

s

stackinG Plan

38

casH floW assumPtions

rentable square feet 421,935

cash flow commencement Date July 1, 2010

length of analysis 11 years

vacancy/credit loss 5%

market rents (Full service gross per sq.Ft. per Month) year 1: $1.85 - $2.05 year 6: $2.38 - $2.63 year 2: $1.85 - $2.05 year 7: $2.47 - $2.74 year 3: $1.94 - $2.15 year 8: $2.57 - $2.85 year 4: $2.08 - $2.15 year 9: $2.68 - $2.96 year 5: $2.22 - $2.46 year 10: $2.78 - $3.08 rents vary by building and suite. see argus model for details.

lease term 5 years

rent escalations 3.0% annual increases

reimbursable expenses based on market estimates.

expense Growth rate - annual 3.0%

management fee 2.0%

insurance based on current policy which includes earthquake coverage.

real estate taxes Taxes shown are based on a proposed tax appeal in progress and will be re-assessed upon sale at a rate of 1.01% of the sale price.

lease-up The remaining available space is assumed leased by december 2011 at market terms shown in the argus model.

Downtime on rollover 6 Months

retention ratio 70%

tenant improvements (Psf) New Tenant $20.00 renewal Tenant $7.00 lease-up $20.00 - $50.00 based on suite

commissions (% of aggregate rent) New lease 6.0% renewal lease 3.0%

capital reserves (Psf) $0.20 psf per year plus inflation

39

ca

sH

fl

oW

sta

te

me

nt

casH floW statement

bldg abldg b

bldg cbldg d

PaRKiNg

10-year holding period beginning 7/01/10 1 2 3 4 5 6 7 8 9 10 11

Fiscal Year (7/1 - 6/30) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Scheduled FSG Effective Rent Per SF/Mo. $2.04 $1.66 $2.02 $2.18 $2.19 $2.22 $2.36 $2.46 $2.59 $2.71 $2.82

Total Operating Expenses Per SF/Mo. $0.59 $0.68 $0.74 $0.76 $0.78 $0.80 $0.82 $0.85 $0.87 $0.90 $0.92

Average Occupancy 33.92% 80.21% 99.72% 100.00% 97.82% 96.51% 94.31% 99.58% 96.30% 97.82% 96.51%

GROSS REVENUEBase Rental Revenue 9,857,289 8,559,437 10,025,910 10,868,014 10,906,084 11,069,755 11,804,601 12,265,486 12,929,966 13,525,564 14,053,622

Absorption & Turnover Vacancy (6,412,314) (1,922,132) (27,910) 0 (245,287) (401,721) (719,969) (56,004) (522,535) (315,894) (502,853)

Expense Recoveries 163 81,807 238,071 361,540 426,220 454,730 294,592 356,797 338,188 359,640 412,936

Gross Rental Income 3,445,138 6,719,112 10,236,071 11,229,554 11,087,017 11,122,764 11,379,224 12,566,279 12,745,619 13,569,310 13,963,705

General Vacancy 0 0 (483,894) (581,668) (330,119) (187,318) 0 (619,785) (164,070) (413,778) (248,454)

Parking Income 0 0 0 403,802 421,099 658,025 913,125 949,492 986,486 1,024,126 1,062,430

Effective Gross Income 3,445,138 6,719,112 9,752,177 11,051,688 11,177,997 11,593,471 12,292,349 12,895,986 13,568,035 14,179,658 14,777,681

OPERATING EXPENSES Repairs & Maintenance (393,865) (405,681) (417,852) (430,387) (443,299) (456,598) (470,296) (484,405) (498,937) (513,905) (529,322)

Janitorial (324,796) (450,200) (513,899) (530,056) (539,993) (552,534) (562,720) (595,333) (603,119) (626,000) (640,539)

Utilities (485,807) (673,376) (768,652) (792,819) (807,682) (826,440) (841,675) (890,455) (902,101) (936,325) (958,071)

General Building (186,568) (192,165) (197,930) (203,868) (209,984) (216,283) (222,772) (229,455) (236,338) (243,429) (250,731)

Administrative (431,179) (444,114) (457,438) (471,161) (485,296) (499,854) (514,850) (530,296) (546,204) (562,591) (579,468)

Insurance (310,946) (320,275) (329,883) (339,779) (349,973) (360,472) (371,286) (382,425) (393,897) (405,714) (417,886)

Real Estate Taxes (757,500) (772,650) (788,103) (803,865) (819,942) (836,341) (853,068) (870,129) (887,532) (905,283) (923,388)

Management Fee (68,903) (134,382) (195,044) (221,034) (223,560) (231,869) (245,847) (257,920) (271,361) (283,593) (295,554)

Total Operating Expenses (2,959,564) (3,392,843) (3,668,801) (3,792,969) (3,879,729) (3,980,391) (4,082,514) (4,240,418) (4,339,489) (4,476,840) (4,594,959)

NET OPERATING INCOME $485,574 $3,326,269 $6,083,376 $7,258,719 $7,298,268 $7,613,080 $8,209,835 $8,655,568 $9,228,546 $9,702,818 $10,182,722

CAPITAL EXPENDITURESTenant Improvements (4,330,670) (6,557,068) (1,319,120) 0 (795,229) (1,174,374) (2,198,214) (166,632) (1,514,826) (921,887)

Leasing Commissions (776,083) (1,820,139) (533,927) 0 (304,729) (472,014) (894,444) (69,576) (649,166) (392,448)

Capital Reserve (82,919) (85,407) (87,969) (90,608) (93,326) (96,126) (99,010) (101,980) (105,039) (108,190)Capital Reserve (82,919) (85,407) (87,969) (90,608) (93,326) (96,126) (99,010) (101,980) (105,039) (108,190)

Total Capital Expenditures (5,189,672) (8,462,614) (1,941,016) (90,608) (1,193,284) (1,742,514) (3,191,668) (338,188) (2,269,031) (1,422,525)

NET CASH FLOW ($4,704,098) ($5,136,345) $4,142,360 $7,168,111 $6,104,984 $5,870,566 $5,018,167 $8,317,380 $6,959,515 $8,280,293

Documents

Offering Memorandum