600 california - transwestern cuti summary proposal to provide ... 600 california street will become...

Management Services Proposal

www.transwestern.net

San Francisco, California

Presented to Michael J. DuffyClarion Partners

January 18, 2013

600 California

ProPosal to Provide real estate MaNaGeMeNt services

Contents

executive summary 5 a organization/Professional staff 9 B experience 29 c accounting & reporting 35 d Fee Proposal 41 e references 47

coNteNts

the undersigned hereby certifies that he/she has been properly authorized by transwestern to submit the following proposal, and to negotiate regarding the proposal on behalf of transwestern.

________ ____________________________________date signature ____________________________________ title

1/18/2013

Senior Vice President

transwestern has the team that will make this a top operating asset, and will elevate 600 california’s status to a dynamic, exciting brand among tenants in the market.

■■ only Transwestern has 3 San francisco-based senior property management professionals to transition and support the on-site team 24-7.

■■ With our immediate move into Suite 990, Transwestern reduces the property’s vacancy rate and improves noi by not requesting a procuring broker fee and taking the space as-is.

■■ our senior-level team is experienced in the Bay area, with 1.5 million square feet under management in San francisco and 11 million square feet in the Bay area.

■■ With over 5 million square feet of Clarion Partners projects nationwide already in our portfolio, our accounting team is ready to jump in immediately.

■■ at an aggressive 1.25% of gross receipts, our property management fees show that we are committed to earning your business.

We are ready to get started, and we are ready to make 600 California our home.

5 ProPosal to Provide real estate MaNaGeMeNt services

exeCuTive Summary

5 proposal to provide real estate management services


ExEcutivE Summary

As your real estate partner, Transwestern will maximize your return on 600 California by delivering integrated resources, powerful insight and accurate reporting in a seamless package.

Transwestern is singularly well suited to embrace the special opportunities and challenges at 600 California Street. After touring the project, we have identified opportunities to materially improve the condition, performance and tenant experience at 600 California. This project would benefit greatly from our San francisco-based team that will attend to the details, apply best-in-class operating principles, and bring the building to the very top of its asset class.

Transwestern will take great pride in representing 600 California as our flagship management assignment; more than that, we will make it our home in San francisco. We propose to open our regional office at 600 California Street. our senior leadership and operations team will provide on-site support to the management and leasing teams, 24-7.

Why Transwestern?■■ only Transwestern has a senior San francisco-

based property management team with unmatched experience of over 49 years to support building team, paired with Transwestern’s local in-house resources (agency leasing, tenant advisory, marketing, research and graphic design)

■■ We will immediately implement a tenant retention strategy and identify potential tenant growth to address significant lease roll-over next few years

■■ our focus is to elevate 600 California Street to top-tier Class a status and develop a strategy to differentiate from competitors to achieve highest rental rates possible

■■ 600 California Street will become Transwestern’s new San francisco corporate office location and flagship assignment

600 California will immediately benefit from Transwestern’s leadership with:■■ on-site corporate office with leadership,

operations, research, leasing and tenant advisory directly supporting the management team

■■ Seamless transition with a property management team already familiar with Clarion Partners’ operations and policies

■■ invigorated building identity and branding


ExEcutivE Summary

■■ Superior accounting – responsive and accurate accounting; automated processes

■■ leveraged purchasing power

■■ industry leadership in leeD® and sustainability initiatives

■■ long history in value creation

Organization and Professional StaffDavid ford, Tracy letchworth and Katy low will be on-site directly supporting the management team every day. our on-site leasing and tenant advisory brokers, Janet Burch and markus Shayeb, will increase exposure to 600 California. our in-house research and marketing team will develop 600 California’s branding and marketing programs. our engineering and construction management team will be available for project management support.

ExperienceDavid ford, Tracy letchworth and Katy low successfully transitioned over four million square feet in the Bay area in 2012, developing strong relationship with local vendors and reducing operating costs during the bidding process. adding 600 California to our existing portfolio will allow us to increase our already significant purchasing power.

Accounting and ReportingWe understand that accounting and financial reporting are absolutely critical components for Clarion Partners. Transwestern is presently providing property management services for Clarion Partners in several other locations around the country. our Southern California-based accounting team includes Pat Jenney, senior vice president and controller; mary Cass, assistant controller; and Parrish Winchell, accounting supervisor/property accountant. We are fully aware of, and in compliance with, all of Clarion Partners’ policies, procedures and governance measures.

Financial AdvantageTranswestern offers an immediate increase in occupancy by leasing suite 990, with no procuring broker commission or tenant improvement dollars. our proposed staffing will reduce engineering costs from the previous allocation of 35% of one engineer to the property. finally, we propose an aggressive management fee of 1.25%. We are committed to creating value in every way for Clarion Partners.

Transwestern will take great pride in representing 600 California as our flagship management assignment.

More than that, we will make it our home in San Francisco.


organizaTion/ProfeSSional STaff

9 proposal to provide real estate management services

Company Overview

1. Provide an overview of your senior management and organization.

Transwestern is one of the largest private, employee-owned full-service commercial real estate companies in the United States.Headquartered in Houston, Transwestern employs 1750 professionals and support personnel in 31 offices across the country. in 2011, Transwestern oversaw the leasing and management of 1245 properties, representing 258 million square feet—leased and managed combined. Within that same time period, the firm completed leasing, sales and finance transactions totaling $6.46 billion.

Since its beginning in 1978, Transwestern has grown from a Houston, Tx development company, to a regional management services firm, to a full-service,

national firm combining comprehensive national knowledge with outstanding local and regional market insights and highly effective execution capabilities.

Transwestern operates through six distinct functional lines of business, which are agency leasing, property and facility management, investment services, tenant advisory, development and research—for a broad range of property types, including office, industrial, retail, healthcare and multifamily.

Privately held, debt free. as a privately held company, Transwestern remains focused on our clients, not our shareholders. Transwestern’s financial stability, which has kept us free from long-term debt and profitable, ensures that we can maintain the highest service levels.

All offices are wholly-owned by the firm. Since we do not maintain a franchise or network structure, Transwestern can deliver coordinated, personal service while also offering the depth and breadth of our national resources.

We are focused on our clients.

Transwestern is locally and regionally empowered, giving local leaders an entrepreneurial spirit that allows them to quickly assemble a team around a client’s or property’s immediate needs.


sectioN aorGaNizatioN/ ProfessioNal staff

Transwestern History



FEB

RU

ARY

19782012 &

BE

YO

ND

1980s1996

19981998 - 2004

2005 - 2011

COMPANY ESTABLISHEDTranswestern founded as a Texas-based development company. Developed five million square feet in Dallas, Austin and Houston.

DIVERSIFIED SERVICETransitioned into a third-party management, leasing and investment sales business in response to the changing economic climate. Grew to 30 million square feet across the Southwest and West by the end of 1987.

MILLENNIUM PLANTo serve a growing national client base, launched a successful plan for geographic and product line expansion, including the addition of tenant advisory and research services.

EXPANSION & INNOVATIONContinued U.S. expansion via merger with Carey Winston Company (est. 1942), creating a presence in Mid-Atlantic. Acquired Delta Associates as research arm. Created industry-leading sustainability program and became an early partner with ENERGY STAR®.

KEY MARKET LAUNCHESOpened offices in Denver, Chicago, San Francisco, Atlanta and Miami. Experienced significant growth in existing market. Developed 12 million square feet.

ACQUISITION & ORGANIC GROWTHCompleted key mergers with NAI Stoneleigh; DRI, Inc.; and Equity Commercial Services. Secured significant assignment for RREEF’s 47 million-square-foot portfolio. Partnered with USGBC on pilot program to LEED® certify firm’s management portfolio. Expanded into the Northeast, established New York Region and continued growth in the Midwest through Balke Brown partnership in 2011.

GLOBAL DEBUT & FORWARD THINKINGIn 2012, extended leading real estate capabilities globally through a strategic alliance with BNP Paribas Real Estate. Furthered goal of becoming the number one real estate value creator in America through strategic growth, innovation and empowerment of our 1800+ team members. Will continue to pursue geographic expansion and exceed client expectations.

Transwestern Locations

AtlantaAustinBaltimoreBethesdaChicagoDallasDenverDetroitFt. Lauderdale

Fort Worth GreenwichHoustonInland EmpireLos AngelesMiamiMilwaukeeMinneapolisNew Jersey

New OrleansNew York Northern VirginiaOklahoma CityOrange CountyOrlandoPhoenixSalt Lake CitySan Antonio

San DiegoSan FranciscoSeattleSilicon ValleySt. LouisWalnut CreekWashington, D.C.



Service Lines

transwestern provides integrated, multi-disciplinary real estate services organized across six major service lines. Teams from six functional lines of business work collaboratively to create turnkey solutions for each client we serve, while national service line leadership ensures consistent service delivery for all lines of business. Based on this principle, the Transwestern business model pairs nationally integrated operations with top-notch local expertise.

Agency Leasingour specialists combine an integrated suite of brokerage resources and market intelligence to exceed performance expectations and enhance value over the life of a project. Transwestern is an industry leader in providing comprehensive leasing and targeted marketing strategies. our time-tested approach to tenant prospecting, financial modeling and lease negotiation has earned a reputation as one of the best project representation firms in the country.

Property & Facility Managementasset owners seeking operational excellence that impacts the bottom line look to Transwestern, the nation’s strongest resource for property and facility management that adds quantifiable value to client assets. Transwestern has been recognized with numerous energy STar awards by the environmental Protection agency for reducing building energy consumption through no- and low-cost operational strategies.

Tenant Advisory ServicesTranswestern’s Tenant advisory Services team develops comprehensive workplace strategies using nationally integrated resources and local market expertise. as advocates for our clients, we drive results through cost containment, space efficiency, time savings and sustainable work environments. Transwestern applies a proven process that ensures the best possible outcome for our clients’ real estate needs.



Capital MarketsTranswestern’s Capital markets group offers a wide breadth of knowledge and services to private investors, corporations and institutional owners involving office, industrial, retail, multifamily, hospitality and healthcare properties. our professionals partner with clients as their trusted advisors, maximizing their financial objectives on each and every transaction. favorable results are delivered by seasoned professionals who possess a comprehensive understanding of investment opportunities and unique financing requirements. our Capital markets experts have decades of experience, laser focus, discipline and creativity, all of which are brought to bear on our clients’ investment objectives.

DevelopmentSuccessful development practices are built on a clear understanding of local supply-and-demand dynamics. Transwestern’s ability to combine a powerful national presence with proven local market teams ensures well conceived projects that deliver on time and on budget. We align our interests with our clients through direct company and local market ownership. Transwestern’s full-service capabilities and legendary service allow us to uncover opportunities, capitalize on trends and deliver uncommon results.

ResearchThrough our research affiliate, Delta associates, Transwestern provides market research and evaluation services on a nationwide basis for all commercial property types including office, industrial, retail, apartments, condominiums, hotels and seniors and student housing. Client service teams are comprised of professionals experienced in management, construction, planning, demographics, economics, statistics, and finance. our comprehensive approach to research provides in-depth market insight, identifies opportunities and enables our clients to make informed decisions.



eNerGy starPartner of the year 2004-2005sustained excellence 2006-2012

transwestern is the first third-party real estate services company to receive both awards.

Sustainability

transwestern is taking action to reduce its environmental footprint by educating team members and providing clients with sustainable energy efficient solutions for their real estate. since 1999, our energy management practices - including no- and low-cost operational adjustments, strategic capital improvements and energy procurement - have consistently reduced operating costs across the transwestern managed portfolio by an average of 20 percent. converting equipment, making changes to existing structures and management practices make the difference. the immediate benefit is reduced overhead connected to energy costs.

transwestern’s leadership role in protecting the environment stems from a long-term business strategy as well as a deep commitment to doing the right thing. sustainable new construction is the next frontier for transwestern’s “green” endeavors. Partnering with the U.s. Green Building council (UsGBc), transwestern is currently pursuing leed certification on over 4.5 million square feet of new and existing commercial space.

transwestern is also a leader in the UsGBc leed for existing Buildings (leed-eBoM) program, and

has completed certification for 25 of 44 existing buildings registered to become leed-eB certified thus far. transwestern also has hands-on experience in leed for New construction (leed-Nc), leed for commercial interiors (leed-ci) and leed for existing Buildings (leed-eB) with two buildings certified and 51 existing buildings registered. transwestern’s chicago office is now leed-ci certified, soon to be followed by our atlanta office.

Commitment to eneRGY stARsince 1999, we have proactively embraced the eNerGy star benchmarking program as a way to reduce property operating costs and greenhouse gas emissions. our integrated approach allows us to quickly evaluate buildings and enables us to make continuous improvements in the energy performance of the properties we manage, regardless of age or class of the building.

For several years running, transwestern has been recognized as an eNerGy star Partner of the year, and is also a multiple year sustained excellence winner, the only third-party services firm to achieve both designations.

16ProPosal to Provide real estate MaNaGeMeNt services

sectioN aorGaNiZatioN/ProFessioNal staFF



Mike WattsPresident

Midwest region

Robert Bagguleychief innovation officer

Chip ClarkePresident, americas

Jack eimerPresident

central region

Bruce FordPresident

southeast region

George GarfieldPresident

West region

eric MocklerPresident

Mid-atlantic region

Kevin RobertsPresident

southwest region

Patrick RobinsonPresident

Northeast region

Mark Doran chief operating officer

Larry HeardPresident & chief

executive officer

Robert Duncanchairman

steve Harding chief Financial officer

tom Mcnearneyinvestment

Management

steve Pumperexec. Managing director

investment/asset services

Kim CroleyNational director

Marketing

Laurie Dotter investment Management

Regional leadeRship executive leadeRship national leadeRship

Property Management Leadership175 total years of experience



Mike ogdencentral region

steve ashGulf coast region

Matt Rosecentral texas region

dave RockWest region

lyla gambowMountain region

Bob deMarkeMidwest region

glen FernaldMid-atlantic region

Russell lipscombsoutheast region

175 total years of experience



2. Identify on-site and off-site personnel who will have key roles in fulfilling the responsibilities of this assignment. Specifically, who do you propose as the building manager, accountant(s), construction supervisor, etc. Please provide a biographical sketch (i.e. name, resume, salary) and photo for each person.

Property Management TeamDavid ford, senior vice president, Tracy letchworth, vice president, and Katy low, operations coordinator, will provide valuable senior level support to the proposed management team. David leads Transwestern’s property management operations in northern California. Working closely with Paige Salazar, we will explore refinements to the property staffing prior to the property management transition. We are recommending going forward with only 3 full-time engineers on the property, reducing the cost to the property of allocating 35% of a stationary engineer. if after further discovery we need more manpower, we would add a utility engineer that would improve the current financial position, and then have a lower-cost person for the less technical jobs on the property.

Paige Salazar will lead the property management team at 600 California. She will monitor the team’s performance and focus on ownership’s goals. Paige, with mike miles, assistant property manager, and Christine Carriero, tenant coordinator, will work on-site with the chief building engineer, Bob Phillips, and Transwestern leadership and operations teams. The accounting team is located at our Woodland Hills office.

Transwestern understands your expectation for professional management services. To ensure success, David ford and Tracy letchworth will work with Clarion Partners to evaluate the current staffing plan. With our limited access to the current staff’s performance, and with their existing knowledge of the property, we do recommend retaining them. if during your due diligence you became aware of performance deficiencies, we will assemble a top-notch team of professionals prior to the transition.

3. Please prepare a staffing/organizational chart showing how these people fit within your organization, where they will be located and how they are allocated to the property.



transwestern team

dave Rock cpm®

Managing senior vice PresidentManagement services

dave rock is a member of the Management services operating committee and is responsible for all levels of performance and the strategic expansion of property and facility management, engineering and construction services in the West region. Prior to joining transwestern, dave was vice President and regional Manager for the voit companies, with direct responsibilities of over eight million square feet of property management. He was also vice President and director of operations for cB commercial real estate Group, inc., in the los angeles area. in this capacity, he was responsible for the operation and management of over five million square feet of property. Previously, dave was with tishman West companies and managed a number of the company’s most challenging high-rise projects. He was involved in all aspects of real estate accounting, budgeting, contract services, engineering, construction and tenant relations activities.

dave received his Ba in finance at Brigham young University. He is a certified Property Manager (cPM®) and a licensed real estate broker in the state of california. He is also a member of the advisory committee for BoMa in los angeles.

david Ford, cpm®

senior vice PresidentManagement services

david oversees operations for transwestern’s Northern california management services platform, including business development, service delivery, client relations, recruiting, and strategic expansion. He has over 27 years of diverse commercial real estate experience, ranging from ground-up development and construction supervision to leasing and sales for developers, owners and institutions. david served as senior vice president and director of management services at Grubb & ellis, where he oversaw the Northern california property management operations and new business development. Previously, he was president of asset Management services, was chief operations officer and managing director for two local san Francisco brokerage firms, and was a senior vice president at PM realty Group, where managed a portfolio of over 20 million square feet in the western United states.

david is on the board of directors for ireM in san Francisco and is a member of BoMa and the U.s. Green Building council. He holds bachelor’s degrees in real estate management from Belford University and business administration from the University of Phoenix, and holds a Nasd series 7 license. He is certified Property Manager (cPM®) and a licensed real estate broker in the state of california.



tracy letchworthvice PresidentManagement services

tracy oversees all aspects of the management services operation for transwestern’s office, industrial and retail properties in Northern california. she brings expertise in property and facility management, leasing and marketing, construction services, financial reporting, lease administration and tenant relations activities. she has over 15 years of experience in property management, asset management, leasing, construction management and property repositioning. she was a portfolio manager with cushman and Wakefield in Northern california overseeing retail, mixed-use, office and industrial properties and developing cushman & Wakefield’s third-party management business. Prior to that, she oversaw the retail and mixed-use assets property management for shelter Bay retail Group and held the position of property manager for rreeF and Mack-cali. tracy has extensive experience in transitioning assets, conducting due diligence and establishing and maintaining strong client relationships.

tracy is a member of BoMa and icsc. she received her bachelor’s degree with honors from virginia commonwealth University. tracy is a licensed real estate professional in the state of california.

Katy lowoperations coordinatorManagement services

Katy specializes in the operations administration and quality assurance for property management services in Northern california. Her responsibilities include transition coordination and implementation of transwestern’s policies and procedures for new assignments. Katy provides on going back up support to property management teams assisting with coordination of tenant events, tenant relations and administration, vendor and contract management, and accounting.

Katy has 7 years of commercial real estate experience with a strong background in operations and administrative support. Prior to joining transwestern, Katy spent 6 years at Grubb & ellis as the management services administrator for the west coast. she supported three regional executives assisting in the oversight and operations of an 8.5 million square foot mixed portfolio for private and institutional clients. Katy was voted 2008’s employee of the year and was awarded Grubb & ellis’ ace (award celebrating excellence) award in 2011.

Katy received a bachelor’s degree in communication design and media arts from california state University, chico.



paige salazarvice PresidentGeneral ManagerManagement services

Paige salazar is the current vice President and General Manager at 600 california street. she has 23 years of commercial real estate management experience and currently oversees all property management operations for both office and retail properties in the san Francisco market, which includes accounting, budgeting, capital projects, tenant improvements, tenant relations, and supervising administrative, security and janitorial staffs.

Paige earned a B.s. degree in managerial economics from University of california, davis. she holds an rPa® designation and is in the process of obtaining a certified Property Manager® designation. she is also a licensed real estate agent in california, an active member of BoMa, she is certified by the san Francisco Fire department and local 39 as a Fire safety director.

Mike Milesassistant Property ManagerManagement services

Mike Miles is the operations Manager of terwilliger Management company. He has 20 years of administrative experience in the commercial real estate industry and a strong background in both security and construction. Mike also has expertise in life safety procedures and janitorial management. He has been involved in building management operations for several class a high-rise buildings in san Francisco including 650 california, 111 Pine and 88 Kearny.

Mike currently oversees all daily administrative operations for terwilliger Management company and assists with the building management for office and retail properties in the san Francisco market, including 600 california street. Mike works closely with vendors and oversees all security and janitorial issues for tMc managed properties. His duties also include administering accounts payables and receivables, processing and tracking purchase orders, coordinating tenant service requests and managing special events.



christine carrierotenant coordinatorManagement services

christine has over 15 years of experience in commercial real estate providing operations management, staff supervision, financial management and reporting, and client and tenant services. christine also has expertise in technical writing and contract review. she has assisted in the management and operations for several class a high-rise buildings and office campuses in the Bay area.

christine currently coordinates and manages special projects for terwilliger Management company and assists with other administrative duties for office and retail properties in the san Francisco market. Past projects include managing the implementation of the elevator security access system, working with building engineering staff to set up equipment lists and PM schedules in Building engines, providing consultants with information necessary to complete leed Gold certification, ongoing energy star and Benchmarking management and coordinating the implementation of the electronic tenant Handbook. christine also provides tenant and vendor services support, including handling inquiries and service requests, publishing a tenant newsletter, and reviewing and maintaining vendor contracts. she holds a bachelor’s degree in english from california state University, east Bay.

Janet Burchvice Presidentagency leasing

Janet has over 27 years of commercial real estate experience both in the U.s. and internationally, including landlord and tenant representation, investment sales and consulting services. specializing in agency leasing, she has represented premier landmark buildings in markets such as chicago, detroit and san Francisco (including 345 california street and 525 Market street) totaling over ten million square feet.

Prior to joining transwestern, Janet spent seven years in asia, focusing on leading regional and global business initiatives and representing international tenants. during her time in asia, Janet was director of business development for cushman & Wakefield’s asia Pacific operations, responsible for organizing and leading a number of global initiatives for the firm. Previously, Janet served as the first foreign member at sanko estate co., ltd., a leading commercial real estate company in tokyo. as a member of the international Group, she handled new business development and tenant advisory services for the firm’s multi-national clients.

Janet received a bachelor’s degree in sociology from indiana University. she is a licensed real estate professional in the state of california.



paul lilley leed-ap

vice Presidentengineering

Paul is responsible for the implementation of transwestern’s operating procedures, including safety training and energy management for engineering staff in the southern california area. He conducts physical site inspections, performs due diligence to provide reports on technical and operational issues, provides capital improvement recommendations, construction management and supervision of new and existing assignments. Paul is also instrumental in managing transwestern’s eNerGy star and leed

programs.

Paul has over 20 years of commercial real estate facility management experience including expertise in energy management, construction management, operations, capital projects and asbestos inspection/remediation. Prior to joining transwestern in 2000, Paul worked with the irvine company as lead engineer where he was responsible for 2.1 million square feet at Newport center in Newport Beach, california.

Paul is an active member of the UsGBc and serves on the sustainability council for the Building owners and Managers association (BoMa). among other certifications, Paul recently received his certified environmental specialist (ces) designation from osHa.

Bradley greenvice PresidentProject and construction Management

as vice president, Bradley is responsible for overseeing development and construction activity on behalf of clients throughout the West region. Bradley actively manages all aspects of each project, including budgeting, bidding, negotiation, scheduling, inspections, and the communication of all parties involved.

Prior to joining transwestern, Bradley served on the acquisitions team at Palisades associates where he was heavily involved in the due diligence, acquisition, repositioning of industrial, office, retail and mixed-use properties. Bradley also has valuable experience on the management side of commercial real estate, beginning his career in the industry at elkins Property Management. as property manager of a portfolio aggregating in excess of one million square feet, Bradley was primarily responsible for leasing, tenant relations, property oversight, budgeting, and construction management.

Bradley received his bachelor of arts degree in hospitality management from Florida international University.



pat Jenney senior vice President & controllerFinance and accounting

Pat is responsible for overseeing the accounting, reporting, lease administration, and cash management functions of over 47 million square feet of property. this includes managing a staff of 44 professional and clerical individuals based in two regional accounting offices in the West region.

For nine years prior to its merger with transwestern, Pat directed the accounting functions for the voit companies including its property management, brokerage, development and construction companies and was responsible for all client reports, audits, and tax filings. Prior to joining voit, Pat spent ten years as vice president of finance and administration for angeles corporation, a real estate syndicator with 150 properties owned/managed throughout the United states, including commercial, apartments, retail factory outlet malls, and hotels—responsible for property management accounting, real estate tax administration, mortgage processing and insurance programs for the entire real estate portfolio.

Pat received her master’s in business administration from the Peter drucker school of Management at claremont Graduate school with a concentration in accounting and finance. she graduated from radford University with a bachelor’s degree in business.

Mary cassassistant controllerFinance and accounting

Mary is responsible for managing the accounting and reporting functions of nearly 15 million square feet of property in transwestern’s West region. Mary has over 20 years of experience in property management accounting. she oversees a team of nine professional individuals and two administrative associates. Mary is experienced in utilizing all functions of yardi, Mri and cti.

For ten years prior to its merger with transwestern, Mary worked in the accounting department for the voit companies. Her duties included overseeing property accountants, interfacing with clients and preparing audit and tax work papers. Prior to joining voit, Mary was an accountant at lowe enterprises. she was responsible for the financial functions for several properties.

Mary received her bachelor’s degree in psychology from the University of california at los angeles. she continued her education in business through Ucla extension.



parrish Winchell accounting supervisorWest region Financial services

Parrish is responsible for managing the accounts payable, cash receipts, and financial functions for a portfolio of properties totaling over 2.2 million square feet in Transwestern’s West region.

Parrish has been in the real estate industry for 18 years, employed by Transwestern for 16 years. She currently oversees the accounting functions for two portfolios on behalf of Broadreach Capital Partners portfolios, Cornerstone real estate advisers, first Credit Bank and the 601 W Companies, which include 1390 market, Stevenson Point, one montgomery and Civic Center in the San francisco Bay area.

Parrish is an expert in utilizing accounting systems including mri, CTi and yardi. She has extensive experience in system-generated Cam reconciliations, budget systems and transitioning new properties. Parrish serves as the main accounting contact to com-municate and understand all accounting policies and procedures for Broadreach Capital Partners.

Parrish was the Transwestern 2003, 2006 and 2009 accountant of the year.

clarion partners

600 california

Property Management David Fordsenior vice President600 california

Accounting

Parrish Winchellaccounting supervisorWoodland Hills

Marketing/Research

Dina simonidirector, Marketing/researchWalnut creek

Marketing/Research

Brian LandisGis analystWalnut creek

Marketing/Research

Joe HolemanGraphic designerWalnut creek

Property Management

Paige salazar vice President, General Manager 600 california

Property Management

Mike Milesasst. Property Manager600 california

Property Management

Christine Carrierotenant coordinator600 california

Property Management

Katy Lowoperations/transition coordinator600 california

Property Management tracy Letchworthvice President600 california

Project Team

Agency Leasing

Janet Burchvice President 600 california

tenant Advisory

Markus shayebsenior vice President600 california

tenant Advisory

Katherine Williamsvice President600 california



PRO

JEC

T TE

AM

ON

-SIT

E S

UPP

ORT

OFF

-SIT

E S

UPP

ORT

senior officers George GarfieldPresident, West region

Dave RockManaging senior vP

Regional officers David Fordsenior vice President

tracy Letchworthvice President

Accounting Pat Jenneysr. vP and controller

Mary Cassassistant controller

engineering

Paul Lilleyvice President

Property transition and operations

Katy Lowoperations coordinator

Project/ConstructionManagement

Bradley Greenvice President

clarion partners

600 california

Support Team



29 ProPosal to Provide real estate MaNaGeMeNt services29 proposal to provide real estate management services

exPerienCe


sectioN bexPerieNce

Experience

1. Provide a list of comparable office buildings under management and leased by your firm in the Central Business District. Please describe the recent financial and leasing performance of these properties. This list should identify the name of the property, the location, gross rentable area, and current leased status.

Comparable office Buildings Under Management by transwestern

ProPerty locatioN siZe occUPaNcy

200 california street Financial district 21,536 sF 81.3%

888 Brannan street soMa 430,000 sF 60%*

153 townsend street soMa 167,986 sF 98%

123 Mission street soMa 347,313 sF 92%

one Montgomery Financial district 75,880 sF 100%

1390 Market street Mid-Market 212,996 sF 92%

*renovation and conversion to office space completion expected Q2 2013

888 Brannan street san Francisco, california

430,000 sF


sectioN bexPerieNce

one Montgomery san Francisco, california

75,880 sF

transwestern currently manages 43 million square feet in its West Region, including 1.5 million square feet in san Francisco and 11 million square feet in the san Francisco Bay Area.With a managed portfolio of over 37 million square feet in Northern and southern california, and 6 million square feet in Phoenix, we are dedicated to the operation, maintenance, and financial well being of our clients’ assets. transwestern is ranked among the top ten largest property management firms in major markets in the West, including the top 5 firms in both orange county and san diego. transwestern’s experience in management is also evident in the awarding of management assignments for numerous top-quality projects.

123 Mission street san Francisco, california

347,313 sF


sectioN bexPerieNce

2. Identify any properties that you lease and/or manage that may compete directly or indirectly with the subject property for prospective tenants. Identify any tenants at the subject property for whom you provide tenant representation services. Please indicate how you would propose handling any potential conflicts of interest in this regard.

there are no properties that transwestern currently manages or leases in the central Business district that directly compete with 600 california. transwestern does, however, manage 200 california street, a 21,536 sF office building. due to its size and class, we do not believe that 200 california offers any direct competition to 600 california.

transwestern will keep the best interests of clarion Partners as the primary objective at all times. any potential future conflict, or even the appearance of a conflict, will be immediately disclosed to clarion and jointly resolved.


sectioN bexPerieNce

3. Describe your in-house capability and experience to handle major construction and building capital projects. If these services are not available in-house, how would you handle this work utilizing outside resources?

transwestern has a heritage of commercial development and a strong background in project and construction managementtranswestern was founded as a development company and has been an active developer in markets across the country since its inception. our teams in the West region and nationally have completed projects in the office, retail, industrial and healthcare sectors. transwestern’s ability to combine a powerful national

8000 sunsetlos angeles, california165,000 sF

st. luke’s community center the Woodlands, texas290,000 sF

18100 von Karmanirvine, california231,200 sF


sectioN bexPerieNce

presence with proven local market teams ensures well-conceived projects that deliver on time and on budget. Whether it’s building systems upgrades, full asset repositioning or ground-up construction, transwestern focuses on maximizing your return on each invested dollar. our team, led by Bradley Green, vice president, looks at each project through an owner’s lens, ensuring each dollar spent directly adds to your asset’s value, either by driving rents or lowering operating costs.

Project & Construction Management Processtranswestern implements a proven project and construction management process that provides the framework for successful completion, from strategy to delivery and occupancy.

Phase 1: strategytranswestern performs due diligence, strategically consulting with your team on how best to spend your resources in order to maximize value.

Phase 2: Concept & DesignBudgets are created and refined, and initial code compliance and environmental issues are addressed. We work with the architects and engineers to evaluate the viability of the design, ensuring value-

added design that suits the unique needs of each tenant.

Phase 3: Bidtranswestern manages the bid process, qualifying and choosing the right general contractor and vendors for the project. We perform a thorough cost analysis, recommending value engineering as required to stay within budget.

Phase 4: Constructionconstruction begins with transwestern actively overseeing the entire process, ensuring the sequence of the project is falling as it should. liability, compliance, inspections and other legal aspects are closely monitored.

Phase 5: Deliverytranswestern coordinates the project’s close-out, lien releases, payment applications, punch lists, and tenant move-ins to ultimately deliver your project on time and on budget.


aCCounTing anD rePorTing


sectioN caccoUNtiNG & rePortiNG

Please refer to the organizational chart provided on page 23.

1. do you issue a soc 1 type i or type ii (formerly sas 70) report that covers property management reporting?

although transwestern is a privately held company, we provide third-party services to a variety of clients, including publicly traded corporations and real estate investment trusts (reits) that are bound by the sarbanes-oxley act (“soX”) reporting requirements. to ensure that our performance and our internal controls and safeguards meet the highest standard, transwestern engages in the annual review of our accounting and information technology operations, both of which are required to pass the ssae 16 report. We will be happy to provide the most recent report to clarion Partners.

2. if not, what internal controls do you have in place that cover property management operations and reporting (e.g. internal audit group/program, documented policies and procedures that are reviewed by an external auditor periodically, other)?

in addition to engaging in annual ssae 16 (formerly sas 70) audits, transwestern has developed and implemented written policies to provide internal accounting controls and procedures to verify the overall accuracy of financial data and the timeliness of reporting that data. our reporting, budgeting, and forecasting systems ensure that all revenues are properly identified and billed and that operating expenses are minimized through careful analysis and reporting.

a recap of key internal controls utilized by transwestern follows:

■■ annual detailed budgets for each property are prepared, which list revenues by tenant and specific expense components by account; such budgets must be approved by the owner before they are input into the accounting system.



■■ to comply with audit protocol, monthly financial reports are closely reviewed by property management personnel who are not involved in generating the reports. variances from budget are explained for both monthly and annual results by the property manager.

■■ a monthly, quarterly, and annual checklist is developed based on the clients reporting requirements and each report is reviewed by one of the quality control officers (the controller and accounting managers) of the company.

■■ controllers at the regional and corporate level regularly perform internal reviews to ensure that owner procedures are being followed and that controls are in place and operating effectively.

■■ checks are not prepared unless the attached invoices are properly coded and approved. checks are not signed and issued until all documentation is reviewed by the controller or accounting manager.

■■ approval and processing of invoices for payment, generation of checks, and check signing are all performed by different transwestern personnel.

■■ the accounts payable systems prevent entry of duplicate invoices.

■■ Bank reconciliations are performed monthly by an assigned accountant who is not the accountant responsible for the accounting and reporting on that project to provide proper controls.

■■ Billings, cash receipts and non-cash adjustments are reconciled each month to rent rolls, general ledgers and supporting documents.

■■ all tenant checks are either mailed to a lockbox or are restrictively endorsed in the management office to the proper property bank account.

■■ collection efforts are documented in tenant files. Write-offs are supported by approvals in accordance with the owner’s policies and procedures.

our staff works closely with the internal accounting representatives and auditors of a myriad of properties to assure that we are following the precise procedures prescribed by them. We have established a well-deserved reputation for accuracy and timeliness and for seamlessly transitioning and effectively managing the accounting and financial reporting needs of our clients.



internal auditstranswestern’s internal audit department is called our innovation and Quality assurance team. our team is much more than a simple internal audit department; their focus is helping our property management, engineering, and accounting teams every day to ensure innovation, quality and the dependable service our clients require by delivering operational excellence through proven best practices and continuous innovation at our clients’ properties. the innovation and Quality assurance team works in tandem with our property teams across the country to ensure that we foster thought leadership in:

■■ Property management operations

■■ accounting

■■ Financial reporting

■■ sustainability

■■ engineering

■■ information technology

3. For this engagement, will you be able to provide the appropriate amount of personnel to accommodate segregation of duties over cash management and reporting (Clarion Partners requires a minimum of three)? Is there any issue with meeting this requirement?

transwestern will provide the appropriate staffing levels and oversight as required by clarion Partners. as might be expected, we have developed an extensive internal controls environment that ensures separation of duties and the proper level of supervision and oversight to mitigate the occurrence of errors, omission and fraud.

our accounting controls are focused in the following areas:

■■ cash Management

■■ accounts Payable

■■ accounts receivable

■■ cash receipts

■■ lease set-up and compliance

■■ systems and technology



4. Provide a description of your accounting, management and reporting systems. It is required that your firm use Clarion Partners’ MRI system and Kardin budgeting software. Are there any additional systems that your firm uses for management and reporting?

While we are proficient in various software packages, the primary accounting software application used by transwestern is Mri. We use the latest version of Mri, allowing users to customize reports for clients who might require specialized reporting services. currently we are using one of two primary software packages for budgeting: Mri Foresight and Kardin.

our expertise with the software extends beyond the basic aP, cM, and Gl functions to include the Fas 13 adjustment feature, expense recovery and foresight budgeting modules, automatic expense allocations, and management fee calculations. We strive to utilize as much of the functionality that the system has to offer in order to provide better accuracy and a more efficient flow of information to our clients.

additionally, transwestern incorporates a number of applications used by both property management and

property accounting to facilitate our budgeting and forecasting processes. For example, transwestern uses angus anywhere as its tool of choice for commercial real estate operations for tenant service requests, work orders, preventive maintenance, risk management, and much more.

to enhance the functionality of angus anyWhere, our client accounting support team, working in conjunction with our application development team, developed an angus Work order export process that provides the ability to export billable work order items on a monthly basis from angus anyWhere to Mri. the angus export automates the manual process of entering billings for work orders and thereby improves efficiencies for the management services and property accounting teams, and ensures that all bill-backs are recorded. this of course translates directly into a more accurate and thorough budgeting and forecasting model.

our regional accounting office in Woodland Hills, as well as our property management personnel at the property offices, has access to Mri and the system’s security feature is utilized to allow access only to those functions they require to perform their jobs in



conformance with our internal control policies and procedures.

accounting systems supportour accounting support team in Houston, texas provides accounting software technical support and training to over 400 Mri users on a nationwide basis. this group also provides technical assistance to our clients on system upgrades, application customizations and new technology implementations.

5. Please include in your recommended staffing the accountant proposed for the team, including a resume. Your accounting staff may be interviewed by Clarion Partners’ controller and/or assistant controller as part of this evaluation.

the project accountant recommended for 600 california is Parrish Winchell. she is to be supported by Mary cass, accounting manager, and Pat Jenney, senior vice president and regional controller.

Please refer to section a for team member bios.

6. exhibit “C” attached hereto contains a listing of the sample management reports that may be required in connection with this assignment.

transwestern is experienced in meeting the specific reporting requirements for a variety of clients. a sample of transwestern’s monthly reporting package is included in the appendix.


fee ProPoSal


sectioN dfee ProPosal

1. Proposed compensation schedule

Property Management Fee of 1.25% of Gross Rents, includes gross rent, base year, and escalations, or $10,000.00 per month minimum.trans western’s accounting based in Woodland hills is included in the management fee. our accounting team implements automated payable and collect services using yardi PayPlus and collect, reducing the need for an on-site accountant. there will be no start-up fees related to property management.

Below are our proposed fees for tenant improve-ments and building renovations. We will not un-dertake any improvements or renovations without advance written approval from clarion Partners.

tenant Improvements Fee total Job Cost 4% $0 - $250,000 3% $250,001 - $500,000 2% Greater than $500,000 ti % is applied to the hard costs of the construction project inclusive of design costs.

Building RenovationFee total Job Cost 4% $0 - $250,000 3% $250,001 - $500,000 2% Greater than $500,000 ti % is applied to the hard costs of the construction project inclusive of design costs.

sectioN dFee ProPosal



Reimbursable Payroll expense

transwestern proposes a labor reimbursement fee for the on-site property management staff as follows:

annual salary Benefits Bonus Potentialsalary

allocationannual

total

Paige salazarGeneral Manager

$109,574 $32,872 $10,957 100% $153,403

Mike Milesassistant Property Manager

$63,908 $19,172 $6,390 100% $89,470

Christine Carrierotenant coordinator (part-time)

$24,960 $- $2,496 100% $27,456



other Fees or expensestranswestern shall be reimbursed for the following expenses directly attributable to the management of 600 california, and would be included in the property budget for approval:

■■ answering service charges

■■ courier and delivery service charges, expedited mail charges and certified mail charges

■■ Bank charges

■■ Mileage reimbursement of $0.55 per mile for business-related travel

■■ Mobile phones

■■ other reasonable costs associated with the management of the asset

Additional in-house services which can be provided and proposed fee arrangement. transwestern is a national leader in leed/sustainability and eNerGy star initiatives for managed commercial properties across the country. transwestern provided benchmarking for eNerGy star as a core deliverable. any leed services would be at a proposed additional fee as agreed upon by

owner.



After touring the property, (a) what strategic or tactical suggestions do you have? (b) Can you offer any refurbishment ideas?

after touring through 600 california street, our team has identified opportunities to materially improve the condition, performance and tenant experience of class a operation. the property would benefit from a team that attends to detail and apply best-in-class operating principals.

after our tour of the property we would like to make the following recommendations:

■■ Building identity needs to be more visible. Working with the city agency we should add the address of the building on the exterior visible from both california and Kearny street.

■■ enhance the building lobby to accommodate seating and wireless amenities.

■■ address water intrusion issues at entrance and improve path of travel and aesthetics.

■■ Modernize guard console, directories and elevator lobbies and cabs. shift building greeting

from a security guard approach to a concierge environment.

■■ create market ready spec suites to accelerate leasing efforts and demo existing vacancies to demonstrate a more open plan.

■■ Upgrade current tenant website, integrate with leasing information – one stop website for all services and availabilities.

■■ evaluate parking garage operations to possibly include valet parking and increase amenities/services provided. examples, drop off dry cleaning and car detailing.

■■ Modernize Fire life safety system

■■ avail all of transwestern’s sustainability team and resources to facilitate the leed re-certification process next year



(c) Are there any economies of scale that can be realized?

transwestern will be providing extensive brokerage support to Paige salazar, to help validate all the leasing decisions for the properties.

transwestern maintains excellent relationships with vendors in every area of maintenance and construction. in any given category of service, there are many different contractors/vendors who are invited to bid their service for a property. this keeps costs competitive without sacrificing quality.

Both construction and maintenance/service vendors are pre-qualified for a preferred vendor list which is used by property managers.

as a part of the tenant relations program, this list is shared with tenants to increase the efficiency of obtaining quality maintenance or construction work with insured, qualified businesses who give the tenants preferred pricing.

transwestern also maintains several national contracts for preferred pricing in such services as elevator inspections and maintenance, carpet purchases and

installation and waste management. otis elevator, Phillips lighting, Pollock Paper distributors, Nalco Water treatment and Grainger industrial supply are examples of some of the companies with which transwestern has national agreements. all managers participate in annual surveys to price services for national contracts.


referenCeS


sectioN ereFereNces

1RReeFstephen Georgedirector

101 california street, 26th Floorsan Francisco, ca [email protected]

Property Management

4sumitomo Corporation of Americarobert obringerGeneral Manager

600 third avenueNew york, Ny 10016212.207.0557 [email protected]

Property Management

2shea Propertieslillian Kuosenior vice President, asset Management

130 vantis, suite 200aliso viejo, ca [email protected]

Property Management

5national Real estate Advisorstodd Kindbergdirector, asset Management

3649 e. sands drivePhoenix, aZ [email protected]

Property Management

3Broadreach Capital PartnersJohn osmonddirector

248 Homer avenuePalo alto, ca [email protected]

Property Management

sectioN ereFereNces

This project will benefit greatly from a team that will attend to the details, apply best-in-class operating principles, and bring standards up to where they are rightfully seen as the very top of their asset class.

Thank you for the opportunity to show you that Transwestern is that team.



T 415.489.1821 www.transwestern.net

Four embarcadero Center, suite 1400san Francisco, CA 94111

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