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RCG 17 Guide to Markets FINAL[1]

SECTION 2 | METRO

SECTION 2 | METRO FORECAST SUMMARIES Metro: San Jose Benchmark: Red 49 Payroll Job Summary Total Payrolls (4Q17) 1,109,300 4Q17 Year-on-Year Change 20,800 / 1.91% RCR 2018 Forecast 35,800 / 3.23% RCR 2019 Forecast 26,400 / 2.31% RCR 2020 Forecast 17,400 / 1.49% RCR 2021 Forecast 17,700 / 1.49% Payroll Job Summary Total Payrolls (4Q17) 75,856,600 4Q17 Year-on-Year Change 1,287,000 / 1.73% RCR 2018 Forecast 1,587,500 / 2.09% RCR 2019 Forecast 1,128,900 / 1.46% RCR 2020 Forecast 916,200 / 1.17% RCR 2021 Forecast 999,000 / 1.29% Occupancy Rate Summary 4Q17 Occupancy Rate (Reis) 95.32% Occupancy Rate Summary Occupancy Rate (Reis) 95.44% RED 49 Rank 27 Annual Chg. (Reis) -0.1% RCR YE18 Forecast 95.6% RCR YE19 Forecast 95.6% RCR YE20 Forecast 95.8% RCR YE21 Forecast 96.1% Annual Chg. (Reis) -0.4% RCR YE18 Forecast 95.0% RCR YE19 Forecast 95.2% RCR YE20 Forecast 95.2% RCR YE21 Forecast 95.2% Effective Rent Summary Mean Rent (Reis) $2,432 Annual Change 2.1% Effective Rent Summary Mean Rent (Reis) $1,342 Annual Change 3.9% RED 49 Rent Change Rank 38 RCR YE18 Forecast 7.1% RCR YE19 Forecast 3.5% RCR YE20 Forecast 2.8% RCR YE21 Forecast 3.4% RCR YE18 Forecast 3.8% RCR YE19 Forecast 3.4% RCR YE20 Forecast 3.1% RCR YE21 Forecast 3.2% Total Return Summary Expected Total Return 7.49% Total Return Summary Avg. Expected Total Return 6.97% ETR RED 49 RANK 13 Risk-adjusted Index (RAI) 3.00 Risk-adjusted Index (RAI) 4.16 RAI RED 49 RANK 40 Generic Purchase Cap Rate 4.50% Derived Terminal Cap Rate 5.21% Average Purchase Cap Rate 5.21% Average Terminal Cap Rate 5.79% 102

SECTION 2 | METRO FORECAST SUMMARIES San Jose Occupancy Rate History and Forecast Souces: Reis, Inc. History and RCR Forecasts RED 49 Occupancy Rate San Jose Occupancy Rate 98% 96.4% 97% 96% 95.3% 95.6% 95.6% 95.8% 96.1% 95% 94% 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 4Q21 4Q22 San Jose Rent Growth History and Forecast Souces: Reis, Inc. History and RCR Forecasts RED 49 Year-On-Year Rent Growth San Jose Year-On-Year Rent Growth 15% 12% 9% 6% 2.1% 7.1% 3.5% 2.8% 3.4% 4.9% 3% 0% 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 4Q21 4Q22 San Jose Payroll Job History and Forecast Souces: BLS History and RCR Forecasts RED 49 Year-On-Year Payroll Growth San Jose Year-On-Year Payroll Job Growth 6% 5% 4% 3.2% 3% 2% 1.9% 2.3% 1.5% 1.5% 1.8% 1% 0% 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 4Q21 4Q22 103

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