BAKE OFFICE PLAZA | 10 ORCHARD RD LAKE FOREST, CA

OFFICE INVESTMENT FOR SALE

OFFERING MEMORANDUM

DISCLAIMER

This Confidential Offering Memorandum (this “Memorandum”) is being delivered subject to the terms of the Confidentiality Agreement signed by you (the “Confidentiality Agreement”) and constitutes part of the evaluation material. It is being given to you for the sole purpose of evaluating the possible acquisition of 10 Orchard Road, Lake Forest, California (“Property”), and is not to be used for any other purpose or made available to any other party without the prior written consent of the Owner or Lee & Associates, Inc. - Irvine Commercial Real Estate Services (“Broker”).

This Memorandum was prepared by the Broker based on information supplied by the Owner and the Broker. It contains selected information about the Property and the real estate market but does not contain all the information necessary to evaluate the acquisition of the Property. The financial projections contained herein (or in any other evaluation material) are for general reference only. They are based on assumptions relating to the general economy and local competition, among other factors. Accordingly, actual results may vary materially from such projections. Various documents have been summarized herein to facilitate your review; these summaries are not intended to be a comprehensive statement of the terms or a legal analysis of such documents.

While the information contained in this Memorandum or any other evaluation material is believed to be reliable, neither Broker nor Owner guarantees its accuracy or completeness. Because of the foregoing and since the Property will be sold on an “AS IS,” “WHERE IS” basis, a prospective purchaser must make its own independent investigations, projections, and conclusions regarding the acquisition of the Property without reliance on this Memorandum or any other evaluation material. Although additional evaluation material (why may include engineering, environmental or other reports) may be provided to qualified parties as marketing information, prospective purchasers should seek advice from their own attorneys, accountants and engineering/environmental experts.

Owner expressly reserves the right, at its sole discretion, to reject any offer to purchase the Property or to terminate any negotiations with any party at any time with or without written notice. Owner shall have no legal commitment or obligations to any prospective purchaser until a written sale agreement has been fully executed, delivered and approved by Owner and any conditions to Owner’s obligations hereunder have been satisfied or waived. Owner has retained Broker as its exclusive broker and will be responsible for any commission due to Broker in connection with a sale of the Property pursuant to separate agreement. Broker is not authorized to make any representation or agreement on behalf of Owner. Each prospective purchaser will be responsible for any claims or commissions by any other broker in connection with a sale of the Property if such claims arise from acts of such prospective purchaser or its broker.

This Memorandum is the property of Owner and Broker and may be used only by parties approved by Owner and Broker. No portion of this Memorandum may be copied or otherwise reproduced or disclosed to anyone except as permitted under the Confidentiality Agreement.

AJ WEST RANCH10 ORCHARD ROAD | LAKE FOREST, CA 92630

CRAIG FITTERERSENIOR VICE PRESIDENTCALDRE: 01246929949.790.3123CFITTERER@LEEIRVINE.COM

MARK JERUESENIOR VICE PRESIDENTCALDRE: 01073399949.790.3121MJERUE@LEEIRVINE.COM

AJ WEST RANCH10 ORCHARD ROAD | LAKE FOREST, CA 92630

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INVESTMENT OVERVIEW

PROPERTY OVERVIEW

AREA OVERVIEW

TENANT OVERVIEW

FINANCIAL OVERVIEW

INVESTMENT SUMMARY10 ORCHARD ROAD | LAKE FOREST, CA 92630

ASKING PRICE$7,750,000 ($297 PSF)

YEAR 1 CAP RATE5.94%

BUILDING SIZE26,067 SF

YEAR 1 NOI$460,514

ANNUAL INCREASESThree Percent (3%)

LEASE TERMS2-5 Years

LAND SIZE60,566 SF / 1.39 Acres

INVESTMENT HIGHLIGHTS10 ORCHARD ROAD | LAKE FOREST, CA 92630

HIGH-IMAGE CREATIVE OFFICE INVESTMENT OPPORTUNITY WITH PROXIMITY TO THE IRVINE SPECTRUM

• Well-appointed campus setting, featuring generous onsite

amenities, well-decorated common areas, exceptional glass

line with hillside views, and frontage on Bake Parkway.

• Recent renovations—include the modernization of a two-

story lobby with high finishes, new exterior landscaping

and painting, creative buildouts and outdoor community

spaces.

• 100% leased to well-established tenants — anchored

by - Higher Ground Education, a leader in developing

montessori schools, on a 5-year lease”which provides

stability and certainty. With in-place rents projected to be

11% below market upon rollover, the Property additionally

offers future upside potential, capitalizing on tightening

market fundamentals and rising rents.

• Highly versatile floor plates can efficiently accommodate

various space requirements, further enhancing the stability

of future cash flows.

INVESTMENT HIGHLIGHTS10 ORCHARD ROAD | LAKE FOREST, CA 92630

STRONG MARKET FUNDAMENTALS DRIVING SOUTH ORANGE COUNTY AND IRVINE SPECTRUM AREA

• Highly sought-after South Orange County office market

with strong fundamentals, driven by lack of available space

as well as robust positive net absorption and rental rate

growth.

• The South Orange County submarket features one of the

lowest direct vacancy rates (8.1%, OC’s lowest in 4Q2017)

and highest rent growths (21% 2-year growth) in Southern

California. Vacancy in Lake Forest is 5.3% and the lowest of

any Orange County city above 1.3 MSF of office inventory.

PROPERTY OVERVIEW

INVESTMENT HIGHLIGHTS10 ORCHARD ROAD | LAKE FOREST, CA 92630

ONE-OF-A-KIND AMENITY-RICH LOCATIONSURROUNDING WORLD-CLASS RETAIL AND ENTERTAINMENT OFFERINGS:

UNFETTERED ACCESS TO A DEEP AND TALENTED LABOR POOL, WORLD-CLASS SCHOOLS AND UNPARALLELED AMENITIES. THE SURROUNDING 5-MILE RADIUS PROVIDES A COLLEGE-EDUCATED POPULATION THAT IS ABOVE 50% AND A WORKFORCE THAT TOTALS 172,732 EMPLOYEES.

• Irvine Spectrum Entertainment Center. The renowned

retail and lifestyle destination with over 130 stores,

services, and restaurants including anchor tenants

Nordstrom, Macy’s, and Target.

• Orange County Great Park. One of Orange County’s most

significant development in a generation, covering more

than 4,700 acres and with more $1 billion in development

costs, that will deliver a 122-acre arts/culture center, 70-

acre botanical garden, 165-acressports park, thousands

of homes, and 3-mile long wildlife corridor, among other

projects.

• Foothill Ranch Towne Center. Lake Forest’s largest retail

and entertainment complex totaling 1 MSF.

INVESTMENT HIGHLIGHTS10 ORCHARD ROAD | LAKE FOREST, CA 92630STRATEGIC “TECHNOLOGY COAST” LOCATION

Central location within Orange County’s “Technology Coast”€€ an area that is ranked 15th in the nation for its density of

high-skilled technology talent pool and is home to a large and growing number of technology tenants.

Proximity to an extensive transportation network off Bake and Alton Parkways, touching nearby SR-241, I-5,

I-405, SR-133. Within a short drive to John Wayne Airport and Irvine Regional Transportation Center’s

Metrolink station.

Excellent access to millennial workforce and executive housing in all directions. Superior location

capitalizing on exploding South Orange County population and providing relief to commute- weary

tenants, most of whom live with three miles of the Property. Perfect locational alternative to

traffic-congested Irvine Spectrum-Greater Airport Area corridor to the north.

Adjacency along Orange County’s most significant corridor of development, with the

scheduled delivery of approximately 9,500 new homes at Irvine’s Great Park to the

immediate north and 14,000 new homes at nearby Rancho Mission Viejo to

the south.

PROPERTY OVERVIEW

BAKE PARKWAY

ORCHARD ROAD

RANCHO PA

RKWAY S

CALIFORNIA

241

10 ORCHARD ROADLAKE FOREST, CA 92630

AJ WEST RANCH

BAKE PARKWAY

ORCHARD ROAD

RANCHO PA

RKWAY S

CALIFORNIA

241

10 ORCHARD ROADLAKE FOREST, CA 92630

AJ WEST RANCH

PROPERTY OVERVIEW10 ORCHARD ROAD | LAKE FOREST, CA 92630

APN612-193-03

BUILDING SIZE26,067 SF

LAND SIZE60,566 SF / 1.39 Acres

STORIESTwo (2)

PARKING4.0 / 1,000 SF surface parking

CONSTRUCTION TYPEConcrete tilt-up

HVAC SYSTEMRooftop packaged R-22 units manufactured by Carrier.

ROOFING SYSTEMLow-slope asphaltic BUR with granular cap sheet.

ELECTRICAL SYSTEMThe building service size is rated at 1,000-amps, 277/480 volt, three phase, four-wire.

ZONINGLI

LAND USECommercial (NEC)

YEAR BUILT2001

PROPERTY FLOOR PLAN10 ORCHARD ROAD | LAKE FOREST, CA 92630

FIRST FLOOR

SECOND FLOOR

16 | ORCHARD BUSINESS PARK

PROPERTY DESCRIPTIONFLOOR PLANS - 10 ORCHARD: FIRST FLOOR

CUSHMAN & WAKEFIELD | 17

PROPERTY DESCRIPTIONFLOOR PLANS - 10 ORCHARD: SECOND FLOOR

SUITE #150LEASE EXPIRES 9/30/21

SUITE #100LEASE EXPIRES 6/30/21

CONFERENCE ROOM

KITCHEN

SUITE #200LEASE EXPIRES 4/30/24

FLOOR PLAN

AREA OVERVIEW10 ORCHARD ROAD | LAKE FOREST, CA 92630

LAKE FOREST, CA

Lake Forest has the charm of a small community with the convenience of a large metro-politan city. The city offers well-planned neighborhoods that are safe and beautiful, as well as an idyllic landscape that includes lush green hills, groves of eucalyptus trees and lakes. Lake Forest is adjacent to the I-5/-405 intersection and the Foothill and Eastern Transportation Corridors, which provide easy access to Los Angeles, San Diego, and the Inland Empire.

Located within the beautiful Saddleback Valley, in the heart of South Orange County. The city, incorporated in 1991, includes the master-planned communities of Foothill Ranch and Portola Hills. From its roots as an agricultural community best known for its eucalyp-tus trees, the city has developed into one of the best master-planned communities in the United States.

AREA OVERVIEW10 ORCHARD ROAD | LAKE FOREST, CA 92630

ORANGE COUNTY, CA

Orange County (OC) is a 948-square-mile coastal community centrally located within Southern California and widely celebrated as the “California Riviera.” Encompassing 34 incorporated cities, this coastline county is one of the most desirable markets in the country. Orange County offers pro-business communities, a robust and entrepreneurial regional economy, an exceptional labor pool supported by first-class universities, a broad infrastructure network and world-class amenities—all the qualities make it a highly sought after commercial location and a great place to live.

Orange County’s well-diversified economy, high-quality labor force and “quality-of-life” desirability, superior education and multi-modal transportation systems, and strategic location on the Pacific Rim provide an excellent locational advantage for commercial properties.

UNRIVALED WORLD-CLASS AMENITIES

42 miles of coastal living filled with sun-soaked Mediterranean weather year-round, Orange County is a destination with endless possibilities. Its natural landscape and breath-taking views provide the backdrop for some of the most iconic real estate in the country.

5

405

405

5

5

74

241

241

133

73

73

55

55

57

22

1

1

133

W 1st St

Euclid St

West St

W 17th St 17th St

E Chapman Ave

Hew

es St

N TustinSt

E 16th St

Irvine Ave

S antia

go D

r

Fair Dr

W Warner Ave

Irvine Center Dr

Irvine Blvd

Alton Pkwy

Bake Pkwy

Lake F

orest D

rEl T

oro

RdSanta Margarita Pkwy

Alicia Pkwy

Los Alisos Blv

d

Ridge Rte Dr

Barranca Pkwy

Main St

Univ ersity Dr

Turtle Rock Dr

San Joaquin Hills Transportation Corridor

Garden Grove

Costa Mesa

NewportBeach

Santa Ana

Irvine

Orange

Fountain Valley

Tustin

North Tustin

LagunaWoods

Rancho SantaMargarita

Mission Viejo

Aliso Viejo

WillowStaging Area

Ronald WCaspers

WildernessPark

O’NeillRegional Park

Lake Forest

Orange CountyGreat Park

Santiago Peak

Whiting RanchWilderness

Park

LimestoneCanyon

Regional Park

Regional Pk

John WayneAirport

LOCATOR MAP

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TENANT OVERVIEW10 ORCHARD ROAD | LAKE FOREST, CA 92630PORTFOLIO RECOVERY GROUPTENANT BIOThe company went public on November 8, 2002 as Portfolio Recovery Associates, Inc. and changed its name to PRA Group, Inc. in October 2014. Over the past 20 years, PRA, through its subsidiaries, has grown to become one of the largest debt buyers in the world, with more than 5,700 employees in 16 countries throughout the Americas and Europe. Their primary business is the purchase, collection, and management of portfolios of nonperforming loans they acquire portfolios of nonperforming loans in two broad categories: Core and Insolvency.

SYNERGY PACIFIC MANAGEMENTTENANT BIOSynergy Pacific Management is an established restaurant, hotel, development and real estate management organization. Its great passion, vision, and success have enabled it to be recognized throughout the industry as a dynamic company that achieves exceptional results. With a team of talented individuals, Synergy Pacific Management makes it its priority to connect with its customers and their guests each and every day. Focusing on service excellence, Synergy Pacific Management has a Corporate Team that provides training and administrative support specific to the needs of each and every brand we manage.

HIGHER GROUND EDUCATIONTENANT BIOIn addition to owning and operating schools around the world, Higher Ground will also seek to develop an international platform that sources, secures, and develops back-end support to all Montessori-inspired schools and educators. From helping existing school owners overcome perennial challenges to supporting enterprising teachers and parents who wish to start new schools, from delivering leadership trainings and professional development workshops to helping teacher training centers strengthen their operations and expand their student base, from developing customized software tools to facilitating access to real estate and construction partners, Higher Ground will seek to create a technology-enabled, professional “prepared environment” that engages the thousands of Montessori entrepreneurs and organizations world round.

Suite TenantSq. Ft.

Lease Term Current Base Rent Rent Increase ScheduleBase Year Amount

Market Rate Comments

Start Expire $ FSG Date $/Mo $/SF/Mo

1 100Portfolio Recovery Group

9,002 4/1/2010 6/30/2021 $2.004/1/20194/1/20204/1/2021

$18,004$18,454$18,904

$2.00$2.05$2.10

2016 $2.30 FSGHave occupied the suite since 2010.

2 150Synergy Pacific Management

3,626 10/1/2015 9/30/2021 $2.1310/1/201810/1/201910/1/2020

$7,723$7,977$8,267

$2.13$2.20$2.28

2019 $2.30 FSGHave occupied the suite since 2015.

3 200Higher Ground Education

13,419 5/1/2019 4/30/2024 $2.20

5/1/20195/1/20205/1/20215/1/20225/1/2023

$29,522$30,461$31,266$32,206$33,279

$2.20$2.27$2.33$2.40$2.48

2019 $2.25 FSG

Montessori schools operators, currently operating 30 schools across the US with plans to grow to 50 schools within five years.

Total Sq. Ft. -

RENT ROLL10 ORCHARD ROAD | LAKE FOREST, CA 92630

SALES COMPARABLES

Property Address Bldg SFYear Built

Sale Date Sale PricePrice PSF

CAP Rate

Buyer Seller

1.27372 Aliso Creek Rd.Aliso Viejo, CA

14,037 2001 2/6/2019 $4,500,000 $321 6.18% Gary Mark The O’Donnell Group

2.2 Corporate ParkIrvine, CA

43,373 1987 1/15/2019 $13,601,000 $314 - Linda Rombaut Nikken, INc.

3.145 ColumbiaAliso Viejo, CA

27,000 1991 12/20/2018 $8,750,000 $324 - Compass Bible Churchlxys Intergrated Circuits Div A

4.25371 Commercentre DrLake Forest, CA

37,090 1999 10/1/2018 $11,698,000 $315 6.57% Yibin Yuan Harbor Associates, LLC

5.2 Wrigley AveIrvine, CA

15,502 1986 8/3182018 $5,285,000 $341 - T Miller Corp HPC

6.35 JourneyAliso Viejo, CA

19,526 1990 5/7/2018 $5,400,000 $277 - Ning ZhouSoka Gakkai International - USA

7. 9685 Research Dr 30,143 2006 4/26/2018 $11,500,000 $382 - Zein E Obagi Paragon

8.300 Goddard WayIrvine, CA

12,088 2001 4/13/2018 $3,989,040 $330 - Hold Fast Vapors Sonenshine Family Trust

9.9 Corporate ParkIrvine, CA

22,988 1985 3/6/2018 $7,016,520 $305 -Kelemen Caamano Investments

PS Business Parks, Inc.

10.3631 S Harbor BlvdSanta Ana, CA

23,982 1986 2/23/2018 $6,490,893 $271 - Pacshore PartnersThe Blackstone Group LP

SALE COMPARABLES10 ORCHARD ROAD | LAKE FOREST, CA 92630