Menlo Park City Council
June 11, 2024

City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 menlopark.gov City Council

SPECIAL AND REGULAR MEETING AGENDA
Date: 6/11/2024
Time: 5:30 p.m.

Location: Zoom.us/join – ID# 832 1285 7140
City Council Chambers
751 Laurel St., Menlo Park, CA 94025

EARLY STAFF REPORT RELEASE NOTICE
The following staff report is being released eight days in advance of the City Council meeting:

Consider a resolution affirming a proposed in-lieu payment satisfies the requirement to provide community amenities for a proposed bonus-level development project of approximately 228,398 square feet in the LSB (Life Science – Bonus) zoning district located at 985-1005 O’Brien Dr. and 1320 Willow Rd. (Staff Report #24-098-CC)
This notice is posted in accordance with Government Code §§54954.2(a) or 54956. Members of the public can view electronic agendas and staff reports by accessing the city website at menlopark.gov/agendas and can receive notifications of agenda postings by subscribing at menlopark.gov/subscribe. Agendas and staff reports may also be obtained by contacting the City Clerk’s Office at 650-330-6620. (Posted 6/3/2024)
Community Development

City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 menlopark.gov

STAFF REPORT
City Council
Meeting Date: 6/11/2024
Staff Report Number: 24-098-CC
Public Hearing: Consider a resolution affirming a proposed in-lieu payment satisfies the requirement to provide
community amenities for a proposed bonus-level
development project of approximately 228,398
square feet in the LS-B (Life Science – Bonus)
zoning district located at 985-1005 O’Brien Dr. and
1320 Willow Rd.

Recommendation
Staff recommends the City Council consider the community amenity proposal for a new bonus-level life science research and development (“R&D”) project and whether the proposed in-lieu payment bears a reasonable relationship to the increased intensity of development and increased effects on the surrounding community, and whether the community amenities in-lieu payment addresses community needs. A draft resolution affirming that the in-lieu payment satisfies the community amenity requirement for the proposed project is included in Attachment A.

Policy Issues
The ConnectMenlo General Plan update (“General Plan”) included a guiding principle for Corporate Contribution. This principle identified that in exchange for added development potential, development projects will provide physical benefits in the adjacent neighborhoods (e.g., Belle Haven and the area north of US 101). Policy LU-4.4 (Community amenities) and Program LU-4.C (Community amenity requirements) implement this guiding principle by requiring developments at the bonus level to contribute to programs that benefit the community (e.g., education, transportation infrastructure, neighborhood-serving amenities/services, housing, and job training and employment). These contributions are ensured through zoning ordinance and other implementing regulations and memorialized in a list that may be modified over time to reflect changes in community priorities and desired amenities. Applicants may also satisfy the community amenity requirement for a project by paying an in-lieu payment calculated at 110% of the required community amenity value. In-lieu payments are deposited in the Bayfront Community Amenity Fund and used by the City to provide community amenities in the area between US 101 and the San Francisco Bay. The City Council will need to consider whether the in-lieu payment is appropriate for the proposed project or if on- or off-site community amenities are preferred.

Background
Project history
On June 25, 2021, the applicant submitted an application for a new bonus-level project to construct two new R&D buildings and a parking structure located at 985-1005 O’Brien Dr. and 1320 Willow Rd. Since the application date, staff has been reviewing the proposed project to confirm compliance with applicable development standards and preparing environmental documents for the project. The City published a notice of preparation (NOP) of an environmental impact report (EIR) June 2, 2023, and staff is working with its Staff Report #: 24-098-CC

City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 menlopark.gov environmental consultant to analyze the potential environmental impacts of the project. The draft EIR is anticipated to be released for public review in summer 2024.

Community amenities procedures
In August 2023, the City Council adopted updated community amenity implementing regulations and community amenity appraisal instructions, included as hyperlinks as Attachments B and C, respectively.

The implementing regulations and appraisal instructions were updated to clarify the process by which a final community amenity value is determined when a bonus-level project is proposed, and to allow for initial feedback from the City Council as to the appropriateness of the proposed community amenity through a screening meeting. A hyperlink to the staff report detailing the updates to the community amenity regulations is included as Attachment D.

Generally, the applicant and the City prepare appraisals that analyze the value of bonus gross floor area (GFA) in a bonus-level project. The appraisals are compared, and if necessary, either adjustments to the appraisals are made or a third party appraisal is conducted to ensure an accurate value for the bonus GFA is determined. Once the value of the bonus GFA is determined, the applicant submits an initial community amenity proposal detailing their strategy to provide the required community amenity at a value equal to 50% of the value of the bonus GFA. The City Council has the opportunity to discuss whether the proposed community amenity is appropriate for the project. Per the implementing regulations, the applicant is considered an “existing applicant” and is exempt from the implementing regulations since the community amenity proposal was submitted before adoption of the implementing regulations. However, the applicant has opted into the process to receive early feedback on their community amenity proposal.

Updated community amenities list
In July 2023, the City Council adopted an updated community amenity list to replace the list that was originally adopted in 2016 as part of the ConnectMenlo process. A hyperlink to the updated amenity list is included as Attachment E. The updated community amenity list was created through a robust public outreach and input process which sought to develop a list of community amenities that would more accurately reflect the community’s current needs. The updated community amenities list includes the following list of four broad categories of community amenities:
• Carbon-free transit and enhanced transportation;
• Community-serving retail;
• Energy, technology, utilities, and communication infrastructure in the Belle Haven neighborhood; and • Enhanced quality of life.

The list offers examples of potential community amenities that would fall under each category. In addition to the amenities included in the list, applicants have the option to propose an alternate community amenity, not included on the list, through a negotiated development agreement (DA). Finally, applicants have the option to propose an in-lieu payment instead of providing physical amenities. The in-lieu payment would be equal to 110% of the required value of the community amenity.

Analysis
Project description
The applicant is proposing to demolish three existing buildings and construct two new R&D buildings with a total of 228,398 square feet of GFA and a parking structure. The project site consists of three parcels in the LS-B zoning district, two along O’Brien Drive and one along Willow Road, which would be reconfigured to accommodate the proposed project. Properties to the west are also located in the LS-B zoning district and are developed with a mix of R&D and light industrial uses. Mid Peninsula High School abuts the project site Staff Report #: 24-098-CC

City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 menlopark.gov to the north, with the recently approved Willow Village project site further north. Properties to the south are in the LS district (Life Science district without the bonus designation) and are also developed with a mix of R&D and light industrial uses. Properties to the east across Willow Road are in multifamily and mixed use zoning districts. The project site is near the intersection of Willow Road and Ivy Drive, which serves as a main route into the Belle Haven Neighborhood west of Willow Road. A location map is included as Attachment F.

The project would be developed in two phases with the first phase (“Phase 1”) beginning immediately after entitlement. The applicant states that they intend to begin the second phase (“Phase 2”) immediately after Phase 1; however, existing lease agreements may require the Phase 2 to begin up to 10 years after completion of the Phase 1. The applicant has indicated their interest in entering into a DA with the City in order to extend the life of the entitlements to account for the potential gap between phases. Staff will analyze the request and return to City Council with more information at a later date.

Phase 1 would consist of demolition of the two buildings along O’Brien Drive and a portion of the 1320 Willow Rd. building, and construction of the new 154,381-square-foot building (“Building 1”) located at 1005 O’Brien Dr., and partial construction of the parking structure. The Phase 2 would consist of demolition of the remainder of the 1320 Willow Rd. building, construction of the new 73,617-square-foot building (Building 2) located at 1320 Willow Rd., and construction of two additional stories on the parking structure. Each building would have an associated chemical storage building of 200 square feet. The applicant’s project description letter is included as Attachment G, and the project plans are included as Attachment H. When built out, the proposed project would consist of approximately 228,400 square feet for R&D uses. The proposed R&D use is permitted in the Life Sciences (LS) zoning district and is consistent with the project site land use designation from the general plan. The applicant is proposing to develop the building utilizing the bonus level provisions permitted by Menlo Park Municipal Code (MPMC) Chapter 16.44 which permits developments to obtain an increase in FAR and/or height in the LS-B zoning district, in exchange for providing community amenities. Table 1 below summarizes the proposed project data.

Table 1: Proposed project floor area ratio
Existing Proposed project
Zoning Ordinance
bonus level standards
(maximums)
Zoning Ordinance
base level standards
(maximums)
R&D square footage 90,600 228,398 229,520 100,998
R&D floor area ratio 0.49 1.24 1.25 0.55
Site layout
The proposed R&D buildings and parking structure would all be constructed in an east-west orientation.

Building 1 would face O’Brien Drive and would be connected to the street by a landscaped entry plaza. The Willow Road frontage is the narrower of the two street frontages. Due to the east-west orientation of Building 2, this building would have a narrower profile at the Willow Road frontage. The main entrance for this building would be located along Willow Road and would have a similar entrance plaza to Building 1.

The parking structure would be located behind the buildings, to the north of Building 1 and to the east of Building 2. The site plan is included as Attachment I.

Height
The two proposed buildings and the parking structure would vary in height. Table 2 details the height and the weighted average height of the proposed buildings. The average height would be approximately 74.1 Staff Report #: 24-098-CC

City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 menlopark.gov feet which would be compliant with the allowed height of 77.5 feet.

Table 2: Proposed building height
1005 O’Brien Dr. 1320 Willow Rd. Parking structure
Height* (maximum) 101 feet 74 feet 74 feet
Height** 74.1 feet
* Maximum height does not include roof-mounted equipment, utilities and, parapets used to screen mechanical equipment.
** Height is calculated as a weighted average height of the three proposed buildings, detailed on Sheet A11.7 of the project plans
Community amenity appraisal and proposal
On Aug. 14, 2023, the applicant submitted the Applicant’s Appraisal (Attachment A, Exhibit A). The City determined that the form and content of the Applicant’s Appraisal was consistent with the appraisal instructions and conducted the City’s Appraisal (Attachment A, Exhibit B). The appraised values differed by more than 10% of the lower appraisal (Applicant’s Appraisal). In lieu of conducting a third-party appraisal, the applicant opted to adjust their appraisal value so the City’s Appraisal was within 10% of the Applicant’s Appraisal, and submitted an adjusted appraisal (Attachment A, Exhibit C). The results of the appraisals are summarized in Table 3 below.

Table 3: Adjusted applicant community amenity appraisal Appraisal Value of base level
development
Value of bonus level
development
Difference (value of the
bonus GFA)
Applicant’s Adjusted
Appraisal $27,545,455 $56,000,000 $28,454,545
City’s Appraisal $30,300,000 $61,600,000 $31,300,000
Since the applicant adjusted their appraisal, the Final Appraised Value, per the Community Amenity Implementing Regulations and Appraisal Instructions, is the midpoint of the adjusted appraisal value and the City Appraisal value. The Final Appraised Value (also referred to as the Bonus Level Development Value) is $29,877,000 (rounded to the nearest $1,000). Per the implementing regulations, the required community amenity value is $14,939,000, which is 50% of the Bonus Level Development Value.

The applicant proposes to meet the community amenity requirement by paying the in-lieu payment (Attachment A, Exhibit D). In lieu payments are calculated at 110% of the required amenity value. The applicant proposes to pay an in-lieu payment of $16,432,900, which would satisfy the community amenity requirement. Per the City’s standard practice, the in-lieu payment is anticipated to be paid in full before issuance of building permits for the first building.

Conclusion
The applicant’s community amenities proposal to provide an in-lieu payment of approximately $16.4 Million would comply with the minimum required community amenity based on the Final Appraised Value of the bonus level development. The City Council has the ability to review and provide feedback on the applicant’s proposed community amenities. The City Council should consider the proposal and determine whether the proposed in-lieu payment is appropriate for this site. If the City Council determines the payment is appropriate, a draft resolution affirming the proposed community amenity has been provided as Attachment A. If an in-lieu payment is determined to not be appropriate for the site, the City Council should direct staff to return with an amended resolution recommending modifications to the community amenities proposal.

Staff Report #: 24-098-CC

City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 menlopark.gov Impact on City Resources
As stated in the community amenities implementing regulations, the in-lieu payment revenues shall be deposited in a restricted community amenities fund to be used to implement the community amenities identified in the community amenities list adopted by City Council resolution. If the project is approved and an in-lieu payment is deemed appropriate to satisfy the requirement to provide community amenities, the City would receive approximately $16,432,900 from the applicant to be used to implement the community amenities identified in the list. The applicant is required to pay planning, building and public works permit fees, based on the City’s Master Fee Schedule, to fully cover the cost of staff time spent on the review of the project. The applicant is also required to fully cover the cost of work by consultants performing environmental review and additional analyses to evaluate potential impacts of the project.

Environmental Review
Determination of appropriateness of community amenities is not a California Environmental Quality Act (CEQA) project. An EIR is being prepared for the proposed project. The draft EIR is anticipated to be released for public review in summer 2024.

Public Notice
Public notification was achieved by posting the agenda, with the agenda items being listed, at least 72 hours prior to the meeting. Public notification also consisted of publishing a notice in the local newspaper and notification by mail of owners and occupants within a ¼-mile radius of the subject property.

Attachments
A. Draft City Council resolution affirming community amenities proposal Exhibits to Attachment A
A. Applicant’s Community Amenity Appraisal (Original)
B. City’s Community Amenity Appraisal
C. Applicant’s Community Amenity Appraisal (Amended)
D. Applicant’s Initial Community Amenity Proposal
B. Hyperlink – Current Community Amenity Implementing Regulations:
menlopark.gov/files/sharedassets/public/v/1/community-development/documents/community-amenitiedimplementing-regulations-2023-update.pdf C. Hyperlink – Community Amenity Appraisal Instructions:
menlopark.gov/files/sharedassets/public/v/1/community-development/documents/generalplan/appraisal-instructions-to-determine-the-value-of-community-amenities-2023-update.pdf D. Hyperlink – Aug. 15, 2023 Staff Report #23-182-CC:
menlopark.gov/files/sharedassets/public/v/2/agendas-and-minutes/city-council/2023- meetings/agendas/20230815-city-council-agenda-packet-w-pres.pdf#page=345 E. Hyperlink – Community Amenities List: menlopark.gov/files/sharedassets/public/v/1/communitydevelopment/documents/6849-community-amenities-list-adopted-july-2023.pdf F. Location map
G. Project description letter
H. Hyperlink – Project Plans: menlopark.gov/files/sharedassets/public/v/1/communitydevelopment/documents/projects/under-review/1005-o%e2%80%99brien-drive-and-1320-willowroad/feb.-2023-plans.pdf I. Plan set excerpt – site plan
Staff Report #: 24-098-CC

City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 menlopark.gov Report prepared by:

Chris Turner, Senior Planner
Report Reviewed by:

Kyle Perata, Assistant Community Development Director
RESOLUTION NO. XXXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MENLO PARK

AFFIRMING THE INITIAL COMMUNITY AMENITY PROPOSAL OF AN IN LIEU

PAYMENT SATISFIES THE COMMUNITY AMENITY REQUIREMENT FOR A

PROPOSED BONUS-LEVEL DEVELOPMENT LIFE SCIENCES PROJECT
LOCATED AT 985-1005 O’BRIEN DRIVE AND 1320 WILLOW ROAD
WHEREAS, on June 25, 2021, the City received an application from Tarlton Properties, Inc (“Applicant”) for a use permit, architectural control permit, Below Market Rate (BMR) Housing agreement, and environmental review to demolish three existing, one-story commercial buildings on three parcels and construct one new five-story building for research and development (R&D) and office uses, one new four-story building for R&D and office uses, with a total of approximately 228,400 square feet, and one new seven-story parking structure on two parcels located in the Life Science, Bonus (LS-B) zoning district (“Proposed Project”); and WHEREAS, the Proposed Project would be developed utilizing the City’s bonus-level development provisions which would include additional floor area ratio (FAR) and height in return for the applicant providing community amenities; and WHEREAS, on July 13, 2023, the City Council adopted an updated list of approved community amenities that reflect the community’s current needs and which could be provided in order to meet the requirement to provide community amenities for a bonus-level development; and WHEREAS, in lieu of providing amenities from the adopted list Applicant may provide amenities not on the list through a negotiated development agreement or payment of an in-lieu payment; and
WHEREAS, on August 15, 2023, the City Council amended Section 16.44.070 of the Menlo Park Municipal Code in order to clarify the process for determining the required value of the community amenities to be provided by an applicant; and WHEREAS, on August 15, 2023, the City Council adopted by resolution community amenities implementing regulations (“Implementing Regulations”) and community amenities appraisal instructions (“Appraisal Instructions”) detailing the process by which the value of the required community amenity would be determined; and
WHEREAS, the applicant provided a community amenity appraisal (“Applicant’s Appraisal”), attached hereto as Exhibit A, which met the requirements as to the form and content of the appraisal detailed in the Appraisal Instructions, and which identified the bonus level development value of the proposed project; and
WHEREAS, the City conducted a subsequent community amenity appraisal (“City’s Appraisal”), attached hereto as Exhibit B, pursuant to the Appraisal Instructions; and WHEREAS, the City’s Appraisal and Applicant’s Appraisal identified bonus level development values that were more than 10 percent apart; and
WHEREAS, pursuant to the Implementing Regulations, the Applicant revised the Applicant Appraisal, attached hereto as Exhibit C, to bring its bonus level development value to within 10 percent of the City Appraisal for bonus level development value; and

ATTACHMENT A
WHEREAS, pursuant to the Implementing Regulations, the Final Appraised Value of the bonus level development value is determined to be the midpoint between the Applicant’s Appraisal and the City’s Appraisal; and
WHEREAS, The Final Appraised Value of the bonus level development value is determined to be $29,877,000; and
WHEREAS, the Applicant is required to provide a community amenity valued at a minimum of 50 percent of the Final Appraised Value, and
WHEREAS, the value of the community amenity required to be provided by the applicant is $14,939,000, and
WHEREAS, pursuant to Section 16.44.070 (B), in lieu of providing physical community amenities, applicants may elect to pay an in-lieu payment equal to 110 percent of the required value of the community amenity; and
WHEREAS, the Applicant provided an Initial Community Amenity Proposal, attached hereto as Exhibit D, to pay an in-lieu payment in the amount of $16,432,900, which is 110 percent of the required community amenity value and satisfies the required value of the community amenity; and
WHEREAS, pursuant to the Implementing Regulations, the City Council conducted a hearing where they considered the proposed community amenity in-lieu payment, and after taking public comment and deliberating on the proposal, found that the proposed in-lieu payment bears a reasonable relationship to the increased intensity of the development and its increased effects to the surrounding community.

NOW, THEREFORE BE IT RESOLVED, that the City of Menlo Park, acting by and through its City Council, having considered and been fully advised in the matter and good cause appearing therefore do hereby affirms the proposed community amenity in-lieu payment is appropriate for the bonus level development project to construct two new R&D buildings and associated parking structure at 985-1005 O’Brien and 1320 Willow Road. //
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Resolution No. XXXX

I, Judi A. Herren, City Clerk of Menlo Park, do hereby certify that the above and foregoing City Council Resolution was duly and regularly passed and adopted at a meeting by said City Council on the eleventh day of June, 2024, by the following votes:

AYES:

NOES:

ABSENT:

ABSTAIN:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of said City on this __ day of June, 2024.

Judi A. Herren, City Clerk
Exhibits
A. Applicant’s Appraisal
B. City’s Appraisal
C. Applicant’s Appraisal (Amended)
D. Initial Community Amenity Proposal
Resolution No. XXXX

NEWMARK VALUATION & ADVISORY
985-1001 O'Brien Dr.,
1320 Willow Rd.
985-1001 O'Brien Drive, 1320 Willow Road
Menlo Park, San Mateo County, CA 94025
Newmark Job No.: 22-0160779-2
Appraisal Report Prepared For:

Mr. John Tarlton
O’Brien Drive Portfolio II, LLC
1530 O’Brien Drive, Suite C
Menlo Park, CA 94025
Prepared By:

Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
EXHIBIT A Resolution No. XXXX

NEWMARK VALUATION & ADVISORY
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
August 19, 2022
Mr. John Tarlton
O’Brien Drive Portfolio II, LLC
1530 O’Brien Drive, Suite C
Menlo Park, CA 94025
Menlo Park, CA 94025RE: Appraisal of Land located at 985-1001 O'Brien Drive, 1320 Willow Road, Menlo Park, San Mateo County, CA 94025, prepared by Newmark Valuation & Advisory, LLC (herein “Firm” or “Newmark”)
Newmark Job No.: 22-0160779-2
Dear Mr. Tarlton:

The purpose of this appraisal is to help determine the value of the community amenities, Amenity Value, under the bonus level zoning. The subject site is zoned LS-B which reflects the Life Science zoning and the B representing the bonus in obtaining higher FAR, (Floor Area Ratio) for the subject site.

Under the current zoning the FAR is 55% (Base Level). In other words a site with 100,000 square feet could legally support a building with 55,000 “gross floor area” square feet. Under the bonus level zoning the permitted FAR is up to 125% (Bonus Level). Therefore, in the above example, under the Bonus Level, the site would be eligible for a building area of up to 125,000 “gross floor area” square feet.

In the above examples, the Bonus Level is 70,000 square feet. Typically, developers will pay a premium for sites that provide a higher FAR or “gross floor area”. It is this premium which are to determine in the following appraisal report. Following the conclusion of the Bonus Level Value, per the city appraisal instructions, Bonus Level Value will then be reduced by 50% to reach the Value of the Amenity.

The City of Menlo Park has specific instructions for the appraiser when determining the value of the bonus FAR. The formula which they have dictated in their instructions is based solely on the sales comparison approach. The have eliminated the use of the land residual approach.

Land sales are most commonly compared on a price per square foot of useable land area or on the price per square foot of permitted building area or “Gross Floor Area”. Their instructions are specific in describing the use of the price per building area or price per “Gross Floor Area”.

Resolution No. XXXX

August 19, 2022
MR. JOHN TARLTON
985-1001 O'Brien Dr., 1320 Willow Rd.

We will employ this methodology in the following report.

Key Value Considerations
Site Area
The subject is comprised of three assessor parcels, 055-421-050, 060, 160. Combined they reflect a total site area of 183,616 square feet or 4.2152 acres. The parcels wrap around the corner of O’Brien Drive and Willow Road. A lot line adjustment is requested to adjust lot lines between 1001 O’Brien and the neighboring 1035 O’Brien property in order to make the lot lines perpendicular to the right of way, as well as to merge lots on the project site.

Existing Buildings
The three existing building addresses are 985 and 1001 O’Brien drive, and 1320 Willow Road.

The existing buildings are located on three parcels.
 Building use is storage, office, R&D
 Total 90,600 sq. ft. (0.49 FAR)
 114 uncovered stalls on the surface parking lots
 Minimal landscaping at the front entry of 1320 Willow; no sensitive habitat Proposed Buildings
Tarlton Properties has proposed a phased project to replace three existing single-story buildings with one 5-story new building, one 4-story new building, a parking garage, a sport court and a open space accessible to the community.
 One 4-story and one 5-story R&D building
 Total 228,398 sq. ft. (1.24 FAR) of R&D, office Life Science  (154,581 sq. ft. (1.25 FAR) in Phase 1; 73,817 sq. ft. (1.24 FAR) in Phase 2)  545 Parking stalls (511 in parking garage and 34 surface parking spaces)  All buildings to be elevated 24” above BFE (12.8’)
 New entry lobbies facing O’Brien Drive and Willow Road  High performance bird friendly glazing with aluminum mullions  Mechanical equipment located within roof screen
 Environmentally sensitive and pedestrian friendly landscaping along three sides of property, including facing the public right of way and Peninsula High School The two R&D buildings are designed to accommodate life science tenants with anticipated ratios ranging from 30-45% office and 55-70% lab areas. Tarlton Properties has supported a variety of tenants over the last 36 years. In the last 15 years the tenants have predominantly been R&D type facilities. These have included companies that design medical devices and services, develop clean technology products, and engineer environmentally sustainable foods. All tenants require lab-related, clean manufacturing environments. The open office areas adjacent to the labs provide technical working areas for scientists, lab technicians and researchers. The open office Resolution No. XXXX

August 19, 2022
MR. JOHN TARLTON
985-1001 O'Brien Dr., 1320 Willow Rd.
areas also provide working space for sales, marketing and office support staff. Since these companies are in the development stages of their products, their R&D staff is proportionately larger than their support staff.

This project will be phased between Phase I and Phase 2. Up to ten years may be required due to existing lease agreements. The anticipated tenants are R&D/ office or Life Science.

Open Space
Public open space is provided in multiple locations for Phase 1 and 2 of the project.

In Phase 1, 15% of the publicly accessible open space is located along O’Brien Drive adjacent to the street/sidewalk. 85% of the publicly accessible open space is located adjacent to existing open space and proximate to proposed publicly accessible open spaces on three neighboring and nearby properties: playing fields for the Mid-Peninsula High School, Greenspace at 20 Kelly Court, Willow Village public park and community space. The publicly accessible open space will also provide community access to the sports court and will also provide pedestrian access to the facility which is located close to the Belle Haven neighborhood.

The developer, Tarlton Properties, has designed the publicly accessible open space for this project in response to community comments that asked for public open space to be aggregated with other proposed and existing open space, and to provide connections with that space from public rights of way. It is anticipated that these contiguous open spaces could eventually be linked to more publicly accessible spaces proposed along the Hetch Hetchy corridor. Additionally, publicly accessible open space leads from public rights of way. It is anticipated that the publicly accessible open space will work in conjunction with the building to extend public indoor/outdoor space. In Phase 1 and 2 combined, 38% of the publicly accessible open space on the project directly fronts either Willow Road or O’Brien Drive, with the remaining open space is directly accessible from those public rights of way and connecting to other existing and proposed publicly accessible open space. Phase 2 connection to the Public open space along the Hetch Hetchy corridor is directly connected to and visible from Willow Road as well as to O’Brien Drive via a pathway that is accessible to the public but is not counted towards project totals. Directional signage for phase 1 could be added if required to clarify that areas are open to the public.

Environmentally sensitive and pedestrian friendly landscaping will be planted along three sides of property, including facing the public right of way and Peninsula High School.

Utilities
The existing site is served by all required utilities and public services including a 4” water line for fire sprinklers.

Resolution No. XXXX

August 19, 2022
MR. JOHN TARLTON
985-1001 O'Brien Dr., 1320 Willow Rd.

Proposed project will provide:
 New fire department connection (FDC) and backflow preventer.  All new electrical connected underground from existing service on O’Brien Drive.  Two new sprinkler risers for each of the building and parking garage Given the above, the subject site which comprises a total of 4.2152 acres or 183,616 square feet of R&D or Life Science has the base level capacity of 100,989 gross floor area (183,616 X 55%).

The project sponsor is proposing 228,398 square feet of Gross Floor Area which reflects an FAR of approximately 124% coverage and is within the Bonus Level permitted FAR of 125%.

Based on the analysis contained in the following report, the opinion of value for the subject is:

Extraordinary Assumptions
An extraordinary assumption is defined in USPAP as an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions. The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results.

Value Conclusions
Appraisal Premise Interest Appraised Date of Value Value Conclusion Phase 1
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $34,800,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $17,000,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $17,800,000 Less: 50% Deduction Fee Simple 5/26/2022 $8,900,000
Value of the Amenity Fee Simple 5/26/2022 $8,900,000
Phase 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $16,600,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $8,200,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $8,400,000 Less: 50% Deduction Fee Simple 5/26/2022 $4,200,000
Value of the Amenity Fee Simple 5/26/2022 $4,200,000
Combined Phases 1 & 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $51,400,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $25,200,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $26,200,000 Less: 50% Deduction Fee Simple 5/26/2022 $13,100,000
Value of the Amenity Fee Simple 5/26/2022 $13,100,000

1. None
Resolution No. XXXX

August 19, 2022
MR. JOHN TARLTON
985-1001 O'Brien Dr., 1320 Willow Rd.

Hypothetical Conditions
A hypothetical condition is defined in USPAP as a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. The value conclusions are based on the following hypothetical conditions that may affect the assignment results.

The appraisal was developed based on, and this report has been prepared in conformance with the Client’s appraisal requirements, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

1. At least one of the buildings on the subject site is leased. We have used the hypothetical condition that the subject buildings are unencumbered by leases and thus we are appraising the fee simple interest.

2. In order to comply with the City's instructions, we have employed the Hypthetical Condition that the subject has entitlements to build the development as proposed.

The use of these hypothetical conditions might have affected assignment results.

Resolution No. XXXX

CERTIFICATION 7
985-1001 O'Brien Dr., 1320 Willow Rd.

Certification
We certify that, to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions.

3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.

4. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

5. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

6. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

7. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.

8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of California.

9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

11. As of the date of this report, Kenneth Matlin, MAI, AI-GRS, SRA, ASA has completed the continuing education program for Designated Members of the Appraisal Institute.

12. Kenneth Matlin, MAI, AI-GRS, SRA, ASA made a personal inspection of the property that is the subject of this

13. No one provided significant real property appraisal assistance to the person(s) signing this certification.

14. The Firm operates as an independent economic entity. Although employees of other service lines or affiliates of the Firm may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest.

15. Within this report, "Newmark", "Newmark Valuation & Advisory", "Newmark, Inc.", and similar forms of reference refer only to the appraiser(s) who have signed this certification and any persons noted above as having provided significant real property appraisal assistance to the persons signing this report.

16. Kenneth Matlin, MAI, AI-GRS, SRA, ASA has not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment. Kenneth Matlin, MAI, AI-GRS, SRA, ASA has not performed any services, Resolution No. XXXX

CERTIFICATION 8
985-1001 O'Brien Dr., 1320 Willow Rd.

Kenneth Matlin, MAI, AI-GRS, SRA, ASA
Senior Vice president
Certified General Real Estate Appraiser
California # AG0022
Telephone: 408.982.8419
Email: [email protected]

Resolution No. XXXX

TABLE OF CONTENTS
985-1001 O'Brien Dr., 1320 Willow Rd.

Table of Contents
Appraisal Transmittal and Certification
Certification
Table of Contents
Subject Maps
Subject Photographs
Executive Summary ................................. 14
Introduction ............................................... 16 Economic Analysis .................................. 19 The Impact of COVID-19 ...................... 19
Area Analysis ....................................... 19 Neighborhood Analysis ........................ 26
Office Market Analysis .......................... 31
San Francisco Bay Area Life Science
Market Analysis .................................... 36 Land and Site Analysis ............................ 40
Zoning and Legal Restrictions ............... 47
Real Estate Taxes ..................................... 49 Highest and Best Use .............................. 50
Appraisal Methodology ........................... 52
Sales Comparison Approach .................. 53
Calculation & Conclusion of Amenity
Value .................................................... 59 Alternate Date of Value – 6/25/2021 .... 61
Reconciliation of Value ............................ 64 Assumptions and Limiting Conditions .. 66
Addenda
A. Glossary of Terms
B. Engagement Letter
C. Legal Description
D. Property Information
E. Comparable Data
Land Sales
F. Appraiser Qualifications and Licenses
Resolution No. XXXX

SUBJECT MAPS 10
985-1001 O'Brien Dr., 1320 Willow Rd.

Aerial Photo
Location Map
Subject Sites
Resolution No. XXXX

SUBJECT PHOTOGRAPHS 11
985-1001 O'Brien Dr., 1320 Willow Rd.

Front (Westerly) View of 985 O'Brien Drive Rear (Easterly Elevation) of 985 O'Brien Drive Side (Southerly) Elevation of 985 O'Brien Drive Front (Westerly) Elevation of 1001 O'Brien Drive Rear (Easterly) Elevation of 1001 O'Brien Drive Side (Southerly) Elevation of 1001 O'Brien Drive Resolution No. XXXX

SUBJECT PHOTOGRAPHS 12
985-1001 O'Brien Dr., 1320 Willow Rd.

Front View of 1320 Willow Road Rear (Easterly) Elevation of 1320 Willow Road Side (Westerly) Elevation of 1320 Willow Road Southerly View Along O'Brien Drive Northerly View Along O'Brien Drive Looking West Along Willow Road Resolution No. XXXX

SUBJECT PHOTOGRAPHS 13
985-1001 O'Brien Dr., 1320 Willow Rd.

Looking East Along Willow Road

Resolution No. XXXX

EXECUTIVE SUMMARY 14
985-1001 O'Brien Dr., 1320 Willow Rd.

Executive Summary
Property Type: Land-Industrial
Street Address: 985-1001 O'Brien Drive, 1320 Willow Road City, State & Zip: Menlo Park, San Mateo County, CA 94025 MSA Name: San Francisco
Market Name: CA - San Mateo
Submarket Name: Menlo Park
Proposed Gross Building Area LS/Office Area (SF): 228,398 Proposed Net Rentable Area LS/Office Area (SF): 228,398 Land Area: 4.215 acres; 183,616 SF
Zoning: LS-B
Highest and Best Use - As Vacant: A Land Use
Highest and Best Use - As Improved: Land Use
985-1001 O'Brien Dr., 1320 Willow Rd.

Analysis Details
Valuation Date:

Inspection Date and Date of Photos:

Report Date:

Report Type:

Client:

Intended Use:

Intended User:

Appraisal Premise:

Intended Use and User:

Interest Appraised:

Exposure Time (Marketing Period) Estimate:

May 26, 2022
Value of Community Amenity
August 19, 2022
The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to non-client, non-intended users does not extend reliance to any other party and Newmark will not be responsible for unauthorized use of the report, its conclusions or contents used partially or in its entirety.

Appraisal Report
Internal Business Decisions
Monchamp Meldrum, LLP & O'Brien Drive Portfolio II, LLC May 26, 2022
Fee Simple
6 Months (6 Months)
Monchamp Meldrum, LLP & O'Brien Drive Portfolio II, LLC Compiled by Newmark
Value Conclusions
Appraisal Premise Interest Appraised Date of Value Value Conclusion Phase 1
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $34,800,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $17,000,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $17,800,000 Less: 50% Deduction Fee Simple 5/26/2022 $8,900,000
Value of the Amenity Fee Simple 5/26/2022 $8,900,000
Phase 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $16,600,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $8,200,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $8,400,000 Less: 50% Deduction Fee Simple 5/26/2022 $4,200,000
Value of the Amenity Fee Simple 5/26/2022 $4,200,000
Combined Phases 1 & 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $51,400,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $25,200,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $26,200,000 Less: 50% Deduction Fee Simple 5/26/2022 $13,100,000
Value of the Amenity Fee Simple 5/26/2022 $13,100,000
Resolution No. XXXX

EXECUTIVE SUMMARY 15
985-1001 O'Brien Dr., 1320 Willow Rd.

Concluded Exposure Time 6 Months or Less
Concluded Marketing Time 6 Months or Less
Compiled by Newmark

1. None

1. At least one of the buildings on the subject site is leased. We have used the hypothetical condition that the subject buildings are unencumbered by leases and thus we are appraising the fee simple interest.

2. In order to comply with the City's instructions, we have employed the Hypthetical Condition that the subject has entitlements to build the development as proposed.

Compiled by Newmark
A hypothetical condition is defined in USPAP as a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. The value conclusions are based on the following hypothetical conditions that may affect the assignment The use of these hypothetical conditions might have affected assignment results.

Extraordinary Assumptions and Hypothetical Conditions
An extraordinary assumption is defined in USPAP as an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.

The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results.

Resolution No. XXXX

INTRODUCTION 16
985-1001 O'Brien Dr., 1320 Willow Rd.

Introduction

OWNERSHIP HISTORY
The current owner is O'Brien Drive Portfolio, LLC.

To the best of our knowledge, no sale or transfer of ownership has taken place within a threeyear period prior to the effective date of the appraisal.

INTENDED USE AND USER
The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to non-client, non-intended users does not extend reliance to any other party and Newmark will not be responsible for unauthorized use of the report, its conclusions or contents used partially or in its entirety.
– The intended use of the appraisal is for Internal Business Decisions and no other use is permitted.
– The client is Monchamp Meldrum LLP and O'Brien Drive Portfolio II, LLC. – The intended users are Monchamp Meldrum LLP, O'Brien Drive Portfolio II, LLC and no other user is permitted by any other party for any other purpose.

DEFINITION OF VALUE
Market value is defined as:
“The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
– Buyer and seller are typically motivated;
– Both parties are well informed or well advised, and acting in what they consider their own best interests;
– A reasonable time is allowed for exposure in the open market; – Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
Resolution No. XXXX

INTRODUCTION 17
985-1001 O'Brien Dr., 1320 Willow Rd.
– The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”
(Source: Code of Federal Regulations, Title 12, Chapter I, Part 34.42[g]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472)

INTEREST APPRAISED
The appraisal is of the Fee Simple interest.1
 Fee Simple Estate: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

APPRAISAL REPORT
This appraisal is presented in the form of an appraisal report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of USPAP. This report incorporates sufficient information regarding the data, reasoning and analysis that were used to develop the opinion of value in accordance with the intended use and user.

PURPOSE OF THE APPRAISAL
The primary purpose of the appraisal is to develop an opinion of the 0 of the Fee Simple interest in the property.

SCOPE OF WORK
Extent to Which the Property is Identified
– Physical characteristics
– Legal characteristics
– Economic characteristics
1 The Dictionary of Real Estate, 6th Edition, Appraisal Institute Purpose of the Appraisal
Appraisal Premise Interest Appraised Date of Value
Value of Community Amenity Fee Simple 5/26/2022
Compiled by Newmark
Resolution No. XXXX

INTRODUCTION 18
985-1001 O'Brien Dr., 1320 Willow Rd.

Extent to Which the Property is Inspected
Newmark inspected the subject property on May 26, 2022 as per the defined scope of work.

Kenneth Matlin, MAI, AI-GRS, SRA, ASA made a personal inspection of the property that is the subject of this report. Kenneth Matlin, MAI, AI-GRS, SRA, ASA has not personally inspected the subject.

Type and Extent of the Data Researched
– Exposure and marketing time;
– Neighborhood and land use trends;
– Demographic trends;
– Market trends relative to the
subject property type;
– Physical characteristics of the site
and applicable improvements;
– Flood zone status;
– Zoning requirements and
compliance;
– Real estate tax data;
– Relevant applicable comparable
data; and
Type and Extent of Analysis Applied
We analyzed the property and market data gathered through the use of appropriate, relevant, and accepted market-derived methods and procedures. Further, we employed the appropriate and relevant approaches to value, and correlated and reconciled the results into an estimate of market value, as demonstrated within the appraisal report.

Resolution No. XXXX

ECONOMIC ANALYSIS 19
985-1001 O'Brien Dr., 1320 Willow Rd.

Economic Analysis
THE IMPACT OF COVID-19
It is well known that the past several months have been volatile. Real estate market volatility has resulted from the COVID-19 pandemic as well as other events such as oil price declines. Every day, there is greater clarity about the effects and expectations as evidenced by transaction activity, various data sources, and market participants. We have continuously reached out to brokers and other market participants to understand how the market is reacting.

Most of our major data sources, such as Moody’s economy.com, include both COVID-19 pandemic period data and projections inclusive of its effects. This data is included within this section as well as throughout this report and is a central foundation of our analysis. There are an increasing number of transactions occurring and these are providing indications of trends.

AREA ANALYSIS
Area Map
The subject is located within Menlo Park and San Mateo County, California. It is part of the San Francisco metro area (San Francisco MSA).

Resolution No. XXXX

ECONOMIC ANALYSIS 20
985-1001 O'Brien Dr., 1320 Willow Rd.

Moody’s Analytics’ Economy.com provides the following economic summary for the San Francisco MSA as of July, 2021.

Moody’s summarizes the area’s economic performance in recent months as follows:

Recent Performance
San Francisco MSA's recovery is in its infancy. Less than half of jobs lost last year have come back. The public sector is still shedding jobs and leisure/hospitality is barely off the mat. At 4.7%, the unemployment rate is still twice the pre-pandemic rate, but the labor force is edging forward.

Market Comparison
The following table illustrates key economic indicators and a comparison of the San Francisco MSA to the regional grouping as a whole. As indicated, San Francisco is projected to outperform the West Region Metros in six of eight performance categories shown over the next five years.

Employment Sectors and Trends
Employment data by occupation and business/industry sectors provides an indication of the amount of diversification and stability in the local economy. Job sector composition also gives an indication of the predominant drivers of current and future demand for supporting commercial real 2015 2016 2017 2018 2019 2020 INDICATORS 2021 2022 2023 2024 2025 2026 187.1 200.1 215.8 229.6 245.8 247.1 Gross metro product (C12$ bil) 269.3 288.3 297.7 308.0 317.5 325.9

7.9 7.0 7.8 6.4 7.0 0.5 % change 9.0 7.1 3.3 3.5 3.1 2.6 1,038.5 1,080.2 1,104.4 1,136.8 1,177.8 1,072.7 Total employment (ths) 1,082.2 1,146.5 1,176.7 1,195.3 1,207.7 1,217.2

4.8 4.0 2.2 2.9 3.6 -8.9 % change 0.9 5.9 2.6 1.6 1.0 0.8

3.6 3.2 2.9 2.4 2.2 7.5 Unemployment rate (%) 4.2 1.6 1.1 1.5 2.0 2.3

10.1 6.6 8.3 8.8 4.5 -0.5 Personal income growth (%) 5.6 3.5 6.7 7.1 6.4 6.2

98.3 105.2 112.1 120.3 130.4 133.8 Median household income ($ ths) 138.4 138.8 143.9 149.7 155.4 161.2 1,628.1 1,639.4 1,646.9 1,649.4 1,648.1 1,656.2 Population (ths) 1,666.5 1,677.3 1,688.6 1,699.3 1,709.3 1,719.1

1.3 0.7 0.5 0.1 -0.1 0.5 % change 0.6 0.6 0.7 0.6 0.6 0.6

12.3 3.7 0.4 -3.7 -6.9 3.6 Net migration (ths) 6.9 5.7 6.3 5.9 5.4 5.4 626 550 405 348 376 365 Single-family permits (#) 661 988 1,397 1,333 1,244 1,131 4,659 5,512 5,211 5,946 4,176 2,713 Multifamily permits (#) 2,982 3,215 4,221 4,166 3,758 3,165 357 389 407 444 442 428 FHFA house price (1995Q1=100) 431 465 508 563 616 665 Source: Moody's Analytics Précis® US Metro
Moody's Analytics Précis® Metro Indicators: San Francisco MSA Indicator 2015 2020 2025 2015 - 2020 2020 - 2025 2015 2020 2025 2015 - 2020 2020 - 2025 Gross metro product (C12$ bil) 200.1 269.3 325.9 6.1% 3.9% 4,314 4,844 5,814 2.3% 3.7% Total employment (ths) 1,080.2 1,082.2 1,217.2 0.0% 2.4% 32,023 32,850 35,894 0.5% 1.8% Unemployment rate (%) 3.2% 4.2% 2.3% 5.7% 9.2% 4.8%
Personal income growth (%) 6.6% 5.6% 6.2% 6.8% 6.0% 5.1% Population (ths) 1,639.4 1,666.5 1,719.1 0.3% 0.6% 75,743 78,939 81,916 0.8% 0.7% Single-family permits (#) 550 661 1,131 3.8% 11.3% 160,707 221,687 333,584 6.6% 8.5% Multifamily permits (#) 5,512 2,982 3,165 -11.6% 1.2% 116,528 128,243 142,057 1.9% 2.1% FHFA house price (1995Q1=100) 389 431 665 2.0% 9.1% 452 612 719 6.2% 3.3% San Francisco MSA outperforming West Region Metros
San Francisco MSA underperforming West Region Metros
Source: Moody's Analytics Précis® US Metro; Compiled by Newmark San Francisco MSA Annual Growth West Region Metros
Comparison of Key Economic Indicators - San Francisco MSA Metro to West Region Annual Growth
Resolution No. XXXX

ECONOMIC ANALYSIS 21
985-1001 O'Brien Dr., 1320 Willow Rd.
estate sectors. The following tables display employment data by occupation sector and by business/industry sector for the area and region.

Comparing the industry sectors for the local market area (3-Miles Radius) to Menlo Park City indicates the local market area is somewhat more heavily weighted toward the Construction, Retail Trade, Manufacturing, Transportation/Utilities, Agriculture/Mining, and Wholesale Trade sectors. By contrast, the industry employment totals for Menlo Park City indicate somewhat higher proportions within the Services, Information, Finance/Insurance/Real Estate, and Public Administration sectors. The following graphic further illustrates this comparison.

Occupation Sector
White Collar 18,810 82.7% 15,071 84.1% 297,855 72.9% 1,758,920 73.1% 11,580,421 64.0% Administrative Support 1,269 5.6% 920 5.1% 40,057 9.8% 225,260 9.4% 1,955,983 10.8% Management/Business/Financial 6,311 27.8% 4,963 27.7% 98,245 24.0% 569,889 23.7% 3,318,432 18.3% Professional 9,532 41.9% 7,870 43.9% 123,887 30.3% 758,471 31.5% 4,611,876 25.5% Sales and Sales Related 1,698 7.5% 1,318 7.4% 35,666 8.7% 205,300 8.5% 1,694,130 9.4% Services 2,184 9.6% 1,658 9.3% 54,704 13.4% 316,086 13.1% 2,768,509 15.3% Blue Collar 1,741 7.7% 1,194 6.7% 56,039 13.7% 329,972 13.7% 3,746,712 20.7% Construction/Extraction 826 3.6% 505 2.8% 15,218 3.7% 93,582 3.9% 901,454 5.0% Farming/Fishing/Forestry 17 0.1% 13 0.1% 1,072 0.3% 4,505 0.2% 266,802 1.5% Installation/Maintenance/Repair 148 0.7% 106 0.6% 7,274 1.8% 40,815 1.7% 437,054 2.4% Production 270 1.2% 190 1.1% 9,727 2.4% 62,106 2.6% 768,621 4.2% Transportation/Material Moving 480 2.1% 380 2.1% 22,748 5.6% 128,964 5.4% 1,372,781 7.6% Total Employees (16+ Occupation Base) 22,735 100.0% 17,923 100.0% 408,598 100.0% 2,404,978 100.0% 18,095,642 100.0% Source: ESRI; Compiled by Newmark
San Francisco-OaklandMenlo Park City San Mateo County Berkeley, CA MSA Current Employment by Occupation Sector
94025 California
Industry Sector
Agriculture/Mining 57 0.3% 39 0.2% 2,052 0.5% 9,885 0.4% 402,905 2.2% Construction 1,038 4.6% 689 3.8% 22,692 5.6% 138,300 5.8% 1,236,406 6.8% Manufacturing 1,706 7.5% 1,323 7.4% 28,371 6.9% 164,545 6.8% 1,567,303 8.7% Wholesale Trade 351 1.5% 281 1.6% 8,443 2.1% 50,494 2.1% 487,645 2.7% Retail Trade 1,365 6.0% 1,072 6.0% 36,835 9.0% 210,847 8.8% 1,818,261 10.0% Transportation/Utilities 578 2.5% 455 2.5% 28,088 6.9% 137,473 5.7% 1,093,654 6.0% Information 1,552 6.8% 1,315 7.3% 15,983 3.9% 87,751 3.6% 495,228 2.7% Finance/Insurance/Real Estate 1,667 7.3% 1,342 7.5% 31,908 7.8% 190,040 7.9% 1,155,716 6.4% Services 13,919 61.2% 11,024 61.5% 218,646 53.5% 1,318,051 54.8% 8,900,763 49.2% Public Administration 502 2.2% 384 2.1% 15,580 3.8% 97,592 4.1% 937,761 5.2% Total Employees (16+ Occupation Base) 22,735 100.0% 17,923 100.0% 408,598 100.0% 2,404,978 100.0% 18,095,642 100.0% Source: ESRI; Compiled by Newmark
Current Employment by Industry Sector
94025 Menlo Park City San Mateo County
San Francisco-OaklandBerkeley, CA MSA California
Resolution No. XXXX

ECONOMIC ANALYSIS 22
985-1001 O'Brien Dr., 1320 Willow Rd.

Unemployment
The following table displays the historical unemployment data for the area derived from the US Department of Commerce, Bureau of Labor Statistics. The most recent reported unemployment rate for the San Francisco-Oakland-Hayward, CA Metropolitan Statistical Area is 3.8% (November 2021).

Source: ESRI; Compiled by Newmark
Employment Comparison

61.5%

7.4%

6.0%

7.5%

7.3%

3.8%

2.5%

2.1%

1.6%

0.2%

59.4%

7.9%

7.9%

6.3%

5.9%

5.8%

3.0%

1.7%

1.6%

0.6%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
Services
Manufacturing
Retail Trade
Finance/Insurance/Real Estate
Information
Construction
Transportation/Utilities
Public Administration
Wholesale Trade
Agriculture/Mining
3‐Miles Radius Menlo Park City
Resolution No. XXXX

ECONOMIC ANALYSIS 23
985-1001 O'Brien Dr., 1320 Willow Rd.

Major Employers
The following table lists a number of major employers with the San Francisco MSA as reported by Moody’s. While not all-encompassing, this list provides further indication of the types of economic sectors that are drivers for the area.

Bars represent beginning to end range of unemployment rates in each year Orange bars denote increasing unemployment from beginning to end of year Blue bars are declining unemployment from beginning to end of year Compiled by Newmark
Unemployment Rate: San Francisco-Oakland-Hayward, CA Metropolitan Statistical Area

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Resolution No. XXXX

ECONOMIC ANALYSIS 24
985-1001 O'Brien Dr., 1320 Willow Rd.

Analysis
Further economic analysis from Moody’s is detailed as follows:

Tech
Tech's direct contribution to the jobs recovery will fade this year but will remain the key driver.

Tech barely missed a beat during the recession, with minimal job losses and full recovery before the end of last year. The industry will keep expanding, but high costs will limit employment gains as firms increasingly look to lower-cost venues. The Bay Area's deep talent pool and innovative culture will keep some relocations within the broader region, however. While some firms are relocating entirely, others are merely downsizing their office space and allowing flexible working arrangements. Many employees taking advantage of this option are staying in the Bay Area-just not in the San Francisco MSA urban core.

Services
Even as tech-employment growth decelerates, the high salaries of tech workers will prove vital in the recovery of consumer industries. It will take years for this sector to fully recover, but since the Rank Employer Employees
1 University of California, San Francisco 34,690
2 Salesforce.com Inc. 9,100
3 Wells Fargo 7,296
4 Kaiser Permanente 6,659
5 United Airlines 6,153
6 Sutter Health 6,134
7 Uber Technologies Inc. 5,500
8 Oracle Corp. 5000-9999
9 Lucile Packard Health Care System 5000-9999
10 Gap Inc. 4,000
11 PG&E Corp. 3,800
12 Gilead Sciences Inc. 1000-4999
13 Facebook Inc. 1000-4999
14 Williams-Sonoma Inc. 1000-4999
15 Visa USA 1000-4999
16 California Pacific Medical Center 1000-4999
17 Genentech Inc. 1000-4999
18 SS&C Advent 1000-4999
19 Ernst & Young LLP 1000-4999
20 San Francisco Marriott 1000-4999
Source: Moody's Analytics Précis® US Metro
Selected Major Employers: San Francisco MSA
Resolution No. XXXX

ECONOMIC ANALYSIS 25
985-1001 O'Brien Dr., 1320 Willow Rd.
economy has reopened, leisure/hospitality and personal services payrolls are finally rebounding.

Gains will accelerate through early next year as residents renew spending on services that were off-limits during the pandemic. Given that most of the San Francisco MSA office workers have kept their jobs in the last year and already have high incomes, the local consumer base is betterequipped than most to fuel a rapid uptick in spending. However, business travel will be slower to recover because of the transition to videoconferencing and firms departing the Bay Area.

Establishments that cater to business travelers will face an especially long slog.

Priced out? Low housing affordability will persist as a hurdle for the San Francisco MSA residents.

Though recent house price appreciation pales compared with the state and national pace, any increase in the region's already-high prices will weigh on potential buyers. Affordability is no worse than at the end of the last business cycle because both prices and incomes are high, and the San Francisco MSA high-wage earners were largely insulated from the recession. Price hikes will hasten the out-migration of low- and mid-wage earners, however.

Home sales are soaring at record highs as low interest rates stoke demand. Inventories are low but little changed from recent years, likely because rising prices and high demand are motivating sellers and builders. While single-family housing permits are rising for the first time in four years, capacity and zoning restrictions will limit how many units builders can add. Supply constraints will persist. Domestic out-migration will ease demand but only slightly, and immigration will pick up after several weak years as President Biden eases the Trump administration's restrictive immigration policies. Price pressures will endure.

Conclusion
Positive Attributes Negative Attributes
– Highly educated and skilled
workforce.
– Very high incomes.
– Robust cluster of internet and other
tech-service companies.
– High costs, including housing, office
rents and energy.
– Land constraints and regulations
limit construction.

Recovery in San Francisco MSA has a long way to go. Job growth will gain steam this year, but a full recovery will lag the nation. The Bay Area will endure as the world's tech capital, but job growth will moderate as lower-cost tech hubs farther inland gain prominence. Still, a legacy of entrepreneurship and tech agglomeration ensures a bright future for the San Francisco MSA on the forecast horizon.

Resolution No. XXXX

ECONOMIC ANALYSIS 26
985-1001 O'Brien Dr., 1320 Willow Rd.

NEIGHBORHOOD ANALYSIS
Area Map
Boundaries
The subject is located in the suburban area of Menlo Park City. This area is part of the Menlo Park submarket as defined by Costar and is generally delineated as follows:

North State Highway 84
South Bay Road
East San Francisco Bay
West US Highway 101
Surrounding Area of Influence Trends
Description
The subject’s surrounding area is viewed as suburban with commercial and residential developments. The immediate area around the subject can be described as mixed with both commercial and residential uses.

Characteristics
– Good access to the US Highway 101, and State Highway 84.

Resolution No. XXXX

ECONOMIC ANALYSIS 27
985-1001 O'Brien Dr., 1320 Willow Rd.
– The subject property is surrounded by many residential and commercial developments in the neighborhood.

Fundamental Real Estate Cycle
The surrounding area is considered to be within the expansion stage of its real estate cycle.

Access
Primary Access
US Highway 101, State Highway 114, State Highway 109, and State Highway 84.

Major Thoroughfares
State Highway 114 (State Route 114), better known by its street name Willow Road, is a short, unsigned state highway in the U.S. state of California. It runs in San Mateo County from U.S.

Route 101 in East Palo Alto to State Route 84 in Menlo Park west of the Dumbarton Bridge.

US Highway 101 is a north–south US Highway that runs through the states of California, Oregon, and Washington, in Northern California it is a primary coastal route providing motorists access in and out of the San Francisco Bay Area, as well as the primary commuter route between San Francisco and the North Bay. It is one of two major freeway routes connecting San Jose and Silicon Valley with San Francisco and the North Bay. It serves as a more urban alternative to the rural I-280, as US 101 runs through Peninsula cities closer to the Bay. Urban portions of the route in the Bay Area are called the James Lick Freeway, Bayshore Freeway, and Central Freeway.

Transportation
The City of Menlo Park offers free shuttle service for local community destinations and for commuters working in business parks. SamTrans provides bus service throughout San Mateo County and into parts of San Francisco and Palo Alto. The nearest bus stop is Laurel Street & Sherwood Way, it is situated within a half a mile of subject. The local market perceives public transportation as good compared to other areas in the region.

Distance from Key Locations
The commute to the Downtown Menlo Park is about 16 minutes and the drive to San Francisco International Airport is about 27 minutes, depending upon the traffic conditions The following illustrates the 10-minute drive time from the subject.

Resolution No. XXXX

ECONOMIC ANALYSIS 28
985-1001 O'Brien Dr., 1320 Willow Rd.

Drive Time Map
Land Use
The following was developed from Costar data for the major property types in the surrounding 1.0 mile radius around the subject.

Resolution No. XXXX

ECONOMIC ANALYSIS 29
985-1001 O'Brien Dr., 1320 Willow Rd.

Within the immediate area of the subject, property uses include the following:
– The subject’s immediate area is a mix of property types including office, multifamily, industrial, flex and retail developments, within the vicinity of the subject there are a total of 184 commercial properties. Based on square footage and the number of properties, the area is majorly occupied by office, multifamily, industrial and flex properties.
– There are 27 office properties occupying a total area of 2,923,591 SF within a mile radius from the subject.

Demographics
A demographic summary for the defined area is illustrated as follows:

Souce: Costar; Compiled by Newmark
Surrounding Area Commercial Property Characteristics
MultiFamily
Industrial
Flex
Retail
Office
Specialty
By # of Properties
MultiFamily
Industrial
Flex
Retail
Office
Specialty
By Size (SF)
Resolution No. XXXX

ECONOMIC ANALYSIS 30
985-1001 O'Brien Dr., 1320 Willow Rd.

Demand Generators
The primary demand generator for the subject is its proximity to Downtown, Menlo Park, subject is located 3.3 miles northeast of Downtown. Downtown Menlo Park is the major retail destination for the City featuring unique and upscale retail shops and restaurants surrounded by tree lined streets.

Stanford Shopping Center is an upscale open-air shopping mall located on Route 82 (El Camino Real) at Sand Hill Road in Palo Alto, California, 3.7 miles south of subject. it takes eight minutes’ drive to reach the shopping center from the subject. The shopping mall has 1,347,935 square feet of retail space. Anchor stores are Bloomingdale's, Macy's, Neiman Marcus, and Nordstrom.

Stanford University is located 3 miles from the subject, the university offers undergraduate and graduate studies. The university enrolled 6,996 undergraduate and 10,253 graduate students as of the 2019–2020 school year.

Major employers include University of California, San Francisco, Salesforce.com Inc, Wells Fargo, Kaiser Permanente, United Airlines, and Sutter Health.
1-Mile Radius 3-Miles Radius 5-Miles Radius 94025 Menlo Park City San Mateo
County
San FranciscoOaklandBerkeley, CA
MSA California
Population
2010 Total Population 25,388 94,310 214,030 41,489 32,038 718,451 4,335,391 37,253,956 2021 Total Population 26,777 98,245 225,941 43,844 34,431 741,360 4,641,032 39,476,705 2026 Total Population 27,228 99,644 231,100 44,598 35,192 753,560 4,789,448 40,507,842 Projected Annual Growth % 0.3% 0.3% 0.5% 0.3% 0.4% 0.3% 0.6% 0.5% Households
2010 Total Households 6,105 32,185 74,757 15,698 12,352 257,837 1,627,360 12,577,498 2021 Total Households 6,476 33,325 79,014 16,367 13,053 265,976 1,735,591 13,283,432 2026 Total Households 6,582 33,801 80,806 16,630 13,320 270,343 1,790,031 13,615,954 Projected Annual Growth % 0.3% 0.3% 0.4% 0.3% 0.4% 0.3% 0.6% 0.5% Income
2021 Median Household Income $71,612 $143,147 $134,254 $176,845 $176,453 $132,440 $112,557 $80,044 2021 Average Household Income $122,260 $204,378 $195,059 $231,810 $232,235 $177,991 $158,125 $113,468 2021 Per Capita Income $29,754 $69,499 $68,464 $86,583 $88,787 $63,900 $59,204 $38,272 Housing
2021 Owner Occupied Housing Units 45.5% 47.5% 44.8% 53.3% 50.6% 55.8% 51.5% 51.3% 2021 Renter Occupied Housing Units 47.3% 45.7% 49.2% 40.4% 43.5% 38.9% 42.6% 40.8% 2021 Median Home Value $1,090,513 $1,915,825 $1,926,280 $2,000,001 $2,000,001 $1,260,277 $952,431 $625,650 Median Year Structure Built 1958 1959 1963 1959 1959 1965 1966 1975 Miscellaneous Data Items
2021 Bachelor's Degree 12.7% 23.5% 25.0% 27.7% 28.9% 30.2% 30.5% 22.3% 2021 Grad/Professional Degree 10.6% 34.0% 36.6% 41.0% 41.9% 23.0% 21.3% 13.4% 2021 College Graduate % 23.3% 57.5% 61.6% 68.6% 70.7% 53.1% 51.8% 35.6% 2021 Average Household Size 4.08 2.90 2.74 2.62 2.60 2.75 2.62 2.91 2021 Median Age 30.7 36.8 36.3 39.5 39.2 41.0 39.8 36.6 Source: ESRI; Compiled by Newmark
Demographic Analysis
Resolution No. XXXX

ECONOMIC ANALYSIS 31
985-1001 O'Brien Dr., 1320 Willow Rd.

OFFICE MARKET ANALYSIS
Classification
The subject is in the Menlo Park submarket of the San Francisco market. The property is considered a Class C Warehouse building in this market.

Office Market Overview
The following discussion outlines overall market performance in the surrounding Office market using Costar market metric data. Presented first are market statistics of the San Francisco area and the subject Menlo Park submarket overall. The analysis is then further refined to focus on demand for the subject and the properties considered to be primary competition.

Period San Francisco Menlo Park
Q2 2018 93.9% 96.4%
Q3 2018 93.9% 96.7%
Q4 2018 94.1% 95.4%
Q1 2019 93.6% 96.2%
Q2 2019 93.6% 97.3%
Q3 2019 93.5% 97.3%
Q4 2019 93.9% 96.4%
Q1 2020 93.6% 94.8%
Q2 2020 92.2% 94.0%
Q3 2020 91.0% 94.0%
Q4 2020 89.7% 93.3%
Q1 2021 87.5% 92.2%
Q2 2021 86.5% 91.5%
Q3 2021 86.3% 92.5%
Source: Costar; Compiled by Newmark Valuation & Advisory Occupancy Rate

80.0%

82.0%

84.0%

86.0%

88.0%

90.0%

92.0%

94.0%

96.0%

98.0%
100.0%
Q3 2018 Q2 2019 Q1 2020 Q4 2020 Q3 2021
San Francisco Menlo Park
Resolution No. XXXX

ECONOMIC ANALYSIS 32
985-1001 O'Brien Dr., 1320 Willow Rd.
– The average vacancy rate for the subject submarket is lower than that of the overall market area.
– The average rental rate for the submarket is higher than the overall San Francisco market.
– The overall San Francisco office market and Menlo Park submarket contains 186,538,775 SF and 10,444,161 SF of inventory as of Q3 2021 respectively.

Period San Francisco Menlo Park
Q2 2018 $59.38 $77.95
Q3 2018 $60.82 $79.49
Q4 2018 $61.53 $81.77
Q1 2019 $62.72 $78.18
Q2 2019 $63.42 $79.95
Q3 2019 $62.88 $78.02
Q4 2019 $63.08 $83.52
Q1 2020 $63.51 $83.91
Q2 2020 $65.76 $83.07
Q3 2020 $64.33 $84.68
Q4 2020 $62.39 $85.28
Q1 2021 $61.92 $86.04
Q2 2021 $61.92 $87.03
Q3 2021 $62.25 $87.44
Source: Costar; Compiled by Newmark Valuation & Advisory Asking Rent Per SF
$58.00
$63.00
$68.00
$73.00
$78.00
$83.00
$88.00
Q3 2018 Q2 2019 Q1 2020 Q4 2020 Q3 2021
San Francisco Menlo Park
Trailing Four Quarters Ended Q3 2021
Market / Submarket Inventory (SF)
Completions
(SF) Vacancy (%)
Net Absorption
(SF)
Office Gross
Rent Overall / SF
Office Base Rent
Overall / SF
San Francisco 186,538,775 4,409,181 13.70% -4,899,076 $62.25 $57.68 Menlo Park 10,444,161 1,109,782 7.50% 876,898 $87.44 $79.47 Source: Costar; Compiled by Newmark Valuation & Advisory Office Market Statistics
Resolution No. XXXX

ECONOMIC ANALYSIS 33
985-1001 O'Brien Dr., 1320 Willow Rd.

Market and Submarket Trends
– The overall market and submarket area have been a following a decreasing trend with respect to occupancy over the past year but increased in submarket in Q3 2021. – Over the past several years, effective rental rates have been following a fluctuating trend in the overall market and submarket areas but has increased within the submarket in the past 12 months.

Long Term San Francisco Market Metrics
The following provides a longer-term view of the market.

Inventory (SF)
Completions
(SF) Vacancy %
Office Gross
Rent Overall /
SF Inventory (SF)
Completions
(SF) Vacancy %
Office Gross
Rent Overall /
SF
Q3 2019 181,590,996 1,969,087 6.5% $62.88 9,265,010 0 2.7% $78.02 Q4 2019 182,123,348 501,934 6.1% $63.08 9,290,430 25,420 3.6% $83.52 Q1 2020 182,068,251 134,273 6.4% $63.51 9,290,430 0 5.2% $83.91 Q2 2020 182,119,251 58,000 7.8% $65.76 9,345,430 55,000 6.0% $83.07 Q3 2020 182,317,827 481,658 9.0% $64.33 9,345,430 0 6.0% $84.68 Q4 2020 182,394,719 99,561 10.3% $62.39 9,355,081 9,651 6.7% $85.28 Q1 2021 183,256,262 862,454 12.5% $61.92 9,376,037 20,956 7.8% $86.04 Q2 2021 185,954,420 2,698,158 13.5% $61.92 10,005,712 629,675 8.5% $87.03 Q3 2021 186,538,775 749,008 13.7% $62.25 10,444,161 449,500 7.5% $87.44 * Forecast
Source: Costar; Compiled by Newmark Valuation & Advisory San Francisco Menlo Park
Office Market Trends
Resolution No. XXXX

ECONOMIC ANALYSIS 34
985-1001 O'Brien Dr., 1320 Willow Rd.

San Francisco Market Metrics
Period Inventory (SF) Vacancy %
Net
Absorption
(SF)
Completions
(SF)
Office Gross
Rent Overall
Office Base
Rent Overall
Q1 2019 179,124,807 6.4% -117,506 807,581 $62.72 $59.58 Q2 2019 179,638,147 6.4% 399,209 583,703 $63.42 $60.16
Q3 2019 181,590,996 6.5% 1,693,365 1,969,087 $62.88 $59.47 Q4 2019 182,123,348 6.1% 1,122,613 501,934 $63.08 $61.57 Q1 2020 182,068,251 6.4% -482,055 134,273 $63.51 $61.70 Q2 2020 182,119,251 7.8% -2,597,732 58,000 $65.76 $62.44 Q3 2020 182,317,827 9.0% -1,920,425 481,658 $64.33 $61.15 Q4 2020 182,394,719 10.3% -2,379,142 99,561 $62.39 $59.48 Q1 2021 183,256,262 12.5% -3,185,441 862,454 $61.92 $58.58 Q2 2021 185,954,420 13.5% 417,332 2,698,158 $61.92 $57.88 Q3 2021 186,538,775 13.7% 248,175 749,008 $62.25 $57.68 Y 2001 160,126,037 13.1% -9,297,914 5,914,203 $33.47 $31.36 Y 2002 163,933,988 15.0% 175,151 3,878,027 $26.04 $24.15 Y 2003 166,358,467 15.8% 857,192 2,652,351 $23.28 $21.53 Y 2004 166,646,170 13.9% 3,312,216 341,551 $23.26 $21.42 Y 2005 167,231,398 11.9% 3,899,041 920,027 $24.58 $22.83 Y 2006 167,405,096 10.5% 2,449,833 365,962 $28.53 $26.10 Y 2007 168,006,439 9.0% 3,139,133 683,495 $35.17 $32.22 Y 2008 169,877,074 9.9% 219,169 2,483,515 $34.10 $31.84 Y 2009 170,177,793 12.7% -4,529,052 575,560 $28.25 $26.29 Y 2010 170,217,138 13.1% -659,481 402,421 $28.76 $26.31 Y 2011 169,598,162 11.0% 3,067,338 155,505 $33.66 $31.25 Y 2012 169,885,371 10.3% 1,322,946 646,153 $38.57 $36.17 Y 2013 169,301,163 8.7% 2,186,477 506,916 $42.17 $39.67 Y 2014 169,460,903 6.8% 3,493,020 693,028 $45.99 $43.38 Y 2015 171,480,009 6.2% 2,921,335 2,204,577 $52.02 $48.89 Y 2016 173,919,920 6.3% 1,945,865 2,701,043 $56.19 $53.48 Y 2017 174,532,462 6.6% 216,476 898,598 $58.47 $55.48
Y 2018 178,410,195 5.9% 4,700,822 4,387,576 $61.53 $58.45 Y 2019 182,123,348 6.1% 3,097,681 3,862,305 $63.08 $61.57 Y 2020 182,394,719 10.3% -7,379,354 773,492 $62.39 $59.48 5 Year Average 178,276,129 7.0% 516,298 2,524,603 $60.33 $57.69 10 Year Average 174,110,625 8.3% 1,355,739 1,566,510 $49.35 $46.74 15 Year Average 172,452,653 8.9% 1,079,481 1,422,676 $44.59 $42.04 Source: Costar; Compiled by Newmark Valuation & Advisory Resolution No. XXXX

ECONOMIC ANALYSIS 35
985-1001 O'Brien Dr., 1320 Willow Rd.

Supply & Demand
Demand Generators
– The subject Menlo Park submarket is within one of the expanding segments of the San Francisco area.

Construction Versus Absorption
– Absorption in the Menlo Park submarket has fallen behind construction over the past three years.

Trends and Projections
Subject and Market Historical and Forecast Trends
Market / Submarket
SF Built SF Absorbed Const. /
Abs. Ratio SF Built SF Absorbed Const. / Abs. Ratio SF Built SF Absorbed Const. / Abs. Ratio San Francisco 773,492 -7,379,354 -0.1 9,023,373 419,149 21.5 12,623,014 2,581,490 4.9 Menlo Park 64,651 -234,656 -0.3 880,122 351,141 2.5 1,544,073 995,564 1.6 Source: Costar; Compiled by Newmark Valuation & Advisory Prior Calendar Years History
Construction/Absorption Change
Prior Calendar Year History Prior Three Year History Prior Five Year History Current Most Recent
Full Year
Trailing 3-
Year
Trailing 5-
Year
Trailing 10-
Year
Costar
San Francisco 13.70% 10.30% 5.90% 6.30% 11.00%
Menlo Park 7.50% 6.70% 4.60% 7.80% 9.30%
Subject N/A
Concluded Subject Vacancy Rate 7.50%
Source: Costar, Newmark Valuation & Advisory
Market Vacancy Rate Indicators
Resolution No. XXXX

ECONOMIC ANALYSIS 36
985-1001 O'Brien Dr., 1320 Willow Rd.

SAN FRANCISCO BAY AREA LIFE SCIENCE MARKET ANALYSIS
Recording its fifth consecutive quarter of positive net absorption at 399,614 square feet, the San Francisco Bay Area life science bull market shows no signs of subsiding, with average rates across all markets steadily rising and demand continuing to remain at all-time highs. Already the nation’s second-largest biotech hub with 32.0 million square feet of inventory, current tenant demand was recorded at 4.3 million square feet this quarter, continuing to outpace supply levels that were recorded at 1.8 million square feet (6.8% availability down from 7.3% in the previous quarter). With the heightened sense of uncertainty witnessed in the last 18 months in virtually every non-biotech related sector, investors and developers continue to actively look for opportunities to capitalize on in the thriving life science market.

Demand for life science product in the Bay Area continued to fuel office to lab conversions in the third quarter; the most notable acquisition for life science repositioning this quarter being BioMed Realty’s purchase of the three Oracle owned office buildings located at 301,401, and 501 Island Parkway in Belmont for $160.0 million. Market activity in the life science sector was absolutely blistering this quarter, as there was a total of 24 leases greater than 20,000 square feet executed, compared with 10 in the previous quarter and 6 one year ago. Cancer diagnostics company Freenome completed the largest deal of the quarter, pre-leasing 335,460 square feet at the Genesis Marina project in Brisbane, which is expected to be delivered in the first half of 2023.

Resolution No. XXXX

ECONOMIC ANALYSIS 37
985-1001 O'Brien Dr., 1320 Willow Rd.

The largest sale recorded this quarter was made by the Florida State Board of Administration, which purchased the Brittan West project located at 1091 Industrial Road in San Carlos from Premia Capital for $177.0 million, or $1,018/SF.

The 173,757- square-foot life science development is currently under construction with an estimated delivery of June 2023. The life science market is expected to continue to be one of the most heavily sought-after sectors well into the next quarter and beyond 2021 as the market fundamentals remain stronger than ever.

Resolution No. XXXX

ECONOMIC ANALYSIS 38
985-1001 O'Brien Dr., 1320 Willow Rd.

Asking Rents
North and Mid-Peninsula asking rates continue to stand in the $5.50/SF and $6.50/SF triple net range.

South Peninsula asking rates remained steady this quarter and continue to range between $4.95/SF and $6.85/SF.

Asking rates continue to range between $4.25/SF and $5.25/SF in the northern part of the East Bay and between $1.75/SF and $4.50/SF in the Southern East Bay submarkets.

Construction Pipeline
At over 3.0 million square feet of inventory awaiting completion coupled with surging demand for quality lab space, developers continue to wager on the Bay Area's life science boom as a significant portion of the region's current construction pipeline is already 22.0% preleased or currently in negotiations to be leased. Phase 1 of Tishman Speyer's Mission Rock development in San Francisco broke ground this quarter and will feature a 300,000 square foot life science and office building with an anticipated delivery date in early 2023. On the delivery front, Phase 2 and 3 of BioMed's Gateway of Pacific project were completed this quarter, delivering 441,00 and 350,000 square feet, respectively. lnvesco's 91,910-square-foot office and lab building at 1430 Harbor Bay Parkway in Alameda, which was preleased to Senti Biosciences in the previous quarter, was also delivered.

VC Funding
Resolution No. XXXX

ECONOMIC ANALYSIS 39
985-1001 O'Brien Dr., 1320 Willow Rd.

Venture capital funding continued to surge during the third quarter of 2021; over $86.1 billion was invested throughout the United States. The Bay Area accounted for 36.8% of that total, or $31.7 billion. This follows a second quarter in which more than $80.3 billion was raised; the Bay Area captured 35.3% of that total.

The life sciences sector accounted for 11.4%, or over $9.8 billion, of all U.S. VC investment in the third quarter. The Bay
Area landed $2.41 billion, or 24.5%, of that total, surpassing all other major U.S. life sciences hubs. There were 72 completed life science deals Bay Area-wide this quarter, bringing the total to 250 deals executed year-to-date.

Large amounts of funding continue to be injected into companies involved in healthcarerelated research development, particularly ones that emphasize the development of COVID19 treatments.

Newmark
Chris Teranishi, Senior Market Analyst
[email protected]
Resolution No. XXXX

LAND AND SITE ANALYSIS 40
985-1001 O'Brien Dr., 1320 Willow Rd.

Land and Site Analysis
Site Area
The subject is comprised of three assessor parcels, 055-421-050, 060, 160. Combined they reflect a total site area of 183,616 square feet or 4.2152 acres. The parcels wrap around the corner of O’Brien Drive and willow Road. A lot line adjustment is requested to adjust lot lines between 1001 O’Brien and the neighboring 1035 O’Brien property in order to make the lot lines perpendicular to the right of way, as well as to merge lots on the project site.

Existing Buildings
The three existing building addresses are 985 and 1001 O’Brien drive, and 1320 Willow Road.

The existing buildings are located on three parcels.
 Building use is storage, office, R&D
 Total 90,600 sq. ft. (0.49 FAR)
 114 uncovered stalls on the surface parking lots
 Minimal landscaping at the front entry of 1320 Willow; no sensitive habitat Proposed Buildings
Tarlton Properties has proposed a phased project to replace three existing single-story buildings with one 5-story new building, one 4-story new building, a parking garage and a sport court.  One 4-story and one 5-story R&D building
 Total 228,398 sq. ft. (1.24 FAR) of R&D, office Life Science  (154,581 sq. ft. (1.25 FAR) in Phase 1; 73,817 sq. ft. (1.24 FAR) in Phase 2)  545 Parking stalls (511 in parking garage and 34 surface parking spaces)  All buildings to be elevated 24” above BFE (12.8’)
 New entry lobbies facing O’Brien Drive and Willow Road  High performance bird friendly glazing with aluminum mullions  Mechanical equipment located within roof screen
 Environmentally sensitive and pedestrian friendly landscaping along three sides of property, including facing the public right of way and Peninsula High School The two R&D buildings are designed to accommodate life science tenants with anticipated ratios ranging from 30-45% office and 55-70% lab areas. Tarlton Properties has supported a variety of tenants over the last 36 years. In the last 15 years the tenants have predominantly been R&D type facilities. These have included companies that design medical devices and services, develop clean technology products, and engineer environmentally sustainable foods. All tenants require lab-related, clean manufacturing environments. The open office areas adjacent to the labs provide technical working areas for scientists, lab technicians and researchers. The open office areas also provide working space for sales, marketing and office support staff. Since these companies are in the development stages of their products, their R&D staff is proportionately larger than their support staff.

Resolution No. XXXX

LAND AND SITE ANALYSIS 41
985-1001 O'Brien Dr., 1320 Willow Rd.

This project will be phased between Phase I and Phase 2. Up to ten years may be required due to existing lease agreements. The anticipated tenants are R&D/ office or Life Science.

Open Space
Public open space is provided in multiple locations for Phase 1 and 2 of the project.

In Phase 1, 15% of the publicly accessible open space is located along O’Brien Drive adjacent to the street/ sidewalk. 85% of the publicly accessible open space is located adjacent to existing open space and proximate to proposed publicly accessible open spaces on three neighboring and nearby properties: playing fields for the Mid-Peninsula High School, Greenspace at 20 Kelly Court, Willow Village public park and Community space. The publicly accessible open space will also provide community access to the community to the sports court and will also provide pedestrian access to the facility which is located close to the Belle Haven neighborhood.

The developer, Tarlton Properties, has designed the publicly accessible open space for this project in response to community comments that asked for public open space to be aggregated with other proposed and existing open space, and to provide connections with that space from public rights of way. It is anticipated that these contiguous open spaces could eventually be linked to more publicly accessible spaces proposed along the Hetch Hetchy corridor. Additionally, publicly accessible open space leads from public rights of way to the commercial building. Since this building will provide community and meeting space for non-profits and members of the surrounding community, it is anticipated that the publicly accessible open space will work in conjunction with the building to extend public indoor/outdoor space. In Phase 1 and 2 combined, 38% of the publicly accessible open space on the project directly fronts either Willow Road or O’Brien Drive, with the remaining open space is directly accessible from those public rights of way and connecting to other existing and proposed publicly accessible open space. Phase 2 connection to the Public open space along the Hetch Hetchy corridor is directly connected to and visible from Willow Road as well as to O’Brien Drive via a pathway that is accessible to the public but is not counted towards project totals. Directional signage for phase 1 could be added if required to clarify that areas are open to the public.

Environmentally sensitive and pedestrian friendly landscaping will be planted along three sides of property, including facing the public right of way and Peninsula High School.

Utilities
The existing site is served by all required utilities and public services including a 4” water line for fire sprinklers.

Proposed project will provide:
 New fire department connection (FDC) and backflow preventer.  All new electrical connected underground from existing service on O’Brien Drive.  Two new sprinkler risers for each of the building and parking garage Resolution No. XXXX

LAND AND SITE ANALYSIS 42
985-1001 O'Brien Dr., 1320 Willow Rd.

Resolution No. XXXX

LAND AND SITE ANALYSIS 43
985-1001 O'Brien Dr., 1320 Willow Rd.

Resolution No. XXXX

LAND AND SITE ANALYSIS 44
985-1001 O'Brien Dr., 1320 Willow Rd.

Land Parcels
Parcel Summary Associated APN(s) Land Area (SF) Land Area (Acres) Combined Site 055-421-050, 060, 160 183,616 4.2152
183,616 4.2152
183,616 4.2152

00.0000

00.0000
Compiled by Newmark
Total Gross Land Area
Total Usable Land Area
Total Surplus Land Area
Total Excess Land Area
Resolution No. XXXX

LAND AND SITE ANALYSIS 45
985-1001 O'Brien Dr., 1320 Willow Rd.

EASEMENTS, ENCROACHMENTS AND RESTRICTIONS
We were not provided a current title report to review. Further, there are identified exceptions to title, which include various utility and access easements that are typical for a property of this type.

Such exceptions would not appear to have an adverse effect on value. Our valuation assumes no adverse impacts from easements, encroachments, or restrictions, and further assumes that the subject has clear and marketable title.

ENVIRONMENTAL ISSUES
No environmental issues were observed or reported. Newmark is not qualified to detect the existence of potentially hazardous issues such as soil contaminants, the presence of abandoned underground tanks, or other below-ground sources of potential site contamination. The existence Total Land Area 4.2152 Acres; 183,616 SF
Usable Land Area 4.2152 Acres; 183,616 SF
Excess Land Area None
Surplus Land Area None
Source of Land Area DES Architects & Engineers
Site Characteristics
Traffic Control at Entry Traffic light
Traffic Flow Moderate
Accessibility Rating Above Average
Visibility Rating Above Average
Shape Irregualr
Corner No
Rail Access No
Topography Level
Site Vegetation None
Other Site Characteristics None noted
Easement/Encroachments None Noted
Environmental Issue None Noted
Flood Zone Analysis
Flood Area Panel Number 06081C0307F
Date 4/5/2019
Zone Zone AE
Description Special Flood Hazard Area where base flood elevations are Insurance Required? Yes
Utilities
Utility Services Electricity, gas, sewer, telephone, water Compiled by Newmark
Land Description
Resolution No. XXXX

LAND AND SITE ANALYSIS 46
985-1001 O'Brien Dr., 1320 Willow Rd.
of such substances may affect the value of the property. For this assignment, we have specifically assumed that any hazardous materials that would cause a loss in value do not affect the subject.

SEISMIC HAZARDS
All properties in California are subject to some degree of seismic risk. The Alquist-Priolo Special Studies Zone Act of 1972 was enacted by the State of California to regulate development near active earthquake faults. The Act required the State Geologist to delineate “special studies zones” along known active faults in California. Cities and Counties affected by the identified zones must limit certain development projects within the zones unless geologic investigation demonstrates that the sites are not threatened by surface displacement from future faulting. According to “FaultRupture Hazard Zones in California” published in 1992 by the California Department of Conservation, Department of Mines and Geology, the subject is not located within an AlquistPriolo Special Studies Zone Boundary. While most properties on the Peninsula have some level of seismic risk, related development limitations do not apply as it is not located within an AlquistPriolo Special Studies Zone Boundary.

IMPROVEMENTS
Existing Buildings
The three existing building addresses are 985 and 1001 O’Brien drive, and 1320 Willow Road.

The existing buildings are located on three parcels.
 Building use is storage, office, R&D
 Total 90,600 sq. ft. (0.49 FAR)
 114 uncovered stalls on the surface parking lots
 Minimal landscaping at the front entry of 1320 Willow; no sensitive habitat

CONCLUSION
– The subject site appears functional for the proposed development. – The subject site has access on to two roadways and is convenient to Highway 101 and Highway 84.
– The subject site is in the midst of the Tarleton Properties life science business park.

Resolution No. XXXX

ZONING AND LEGAL RESTRICTIONS 47
985-1001 O'Brien Dr., 1320 Willow Rd.

Zoning and Legal Restrictions
We are not experts in the interpretation of zoning ordinances. A qualified land use/zoning expert should be engaged if there are any zoning concerns or if a determination of compliance with zoning is required.

According the current Menlo Park zoning.

The purpose and intent of the life sciences district is to:
 Attract research and development and light industrial uses, particularly those that support bioscience and biomedical product development and manufacturing and/or are potentially revenue generating businesses;
 Allow administrative and professional office uses and other services that support light industrial and research and development sites nearby;  Provide opportunities for quality employment and development of emerging technology, entrepreneurship, and innovation;
 Facilitate the creation of a thriving business environment with goods and services that support adjacent neighborhoods as well as the employment base.

Permitted uses in the life science district are as follows:
 Light industrial and research and development and accessory uses, except when requiring hazardous material review;
 Administrative and professional offices in buildings, twenty thousand (20,000) or less square feet of gross floor area;
 Retail sales establishments, excluding the sale of beer, wine and alcohol; Category Description
Zoning Jurisdiction City of Menlo Park
Zoning Designation LS-B
Description Life Science with a Density Bonus
Legally Conforming? Yes
Zoning Change Likely? Unlikely
Permitted Uses Office, Retail, Specialty
Maximum Floor Area Ratio 1.24
Allowable Building Area 227,684
Other None noted
Compiled by Newmark
Zoning Summary
Resolution No. XXXX

ZONING AND LEGAL RESTRICTIONS 48
985-1001 O'Brien Dr., 1320 Willow Rd.
 Eating establishments, excluding the sale of beer, wine, and alcohol or live entertainment, and/or establishments that are portable. For the purpose of this chapter, an eating establishment is primarily engaged in serving prepared food for consumption on or off the premises;
 Personal services, excluding tattooing, piercing, palm-reading, or similar services;  Recreational facilities privately operated, twenty thousand (20,000) or less square feet of gross floor area;
 Community education/training center that provides free or low-cost educational and vocational programs to help prepare local youth and adults for entry into college and/or the local job market.
 Conditional uses allowed in the life sciences district, subject to obtaining a use permit.
 Administrative and professional offices and accessory uses, greater than twenty thousand (20,000) square feet of gross floor area;
 Eating establishments, including alcohol, and/or establishments that are portable;  Drinking establishments, including beer, wine and alcohol. For purposes of this chapter, a drinking establishment is a business serving beverages for consumption on the premises as a primary use;
 Retail sales establishments, including the sale of beer, wine and alcohol;  Recreational facilities, privately operated, greater than twenty thousand (20,000) square feet of gross floor area;
 Special uses, in accordance with Chapter 16.78
 Uses identified in Sections 16.44.020 and 16.44.030 and this section proposing bonus level development, in accordance with Section 16.44.060;  Public utilities
Resolution No. XXXX

REAL ESTATE TAXES 49
985-1001 O'Brien Dr., 1320 Willow Rd.

Real Estate Taxes
Under the provisions of Article XIIIA of the California Tax and Revenue Code (Proposition 13), properties are assessed their market value as of March 1, 1975, the base year lien date, or a later date, such as when a property was last sold or substantial renovation/construction occurred.

Under Proposition 13 the base tax rate is limited to 1.0 percent plus any additional increase subject to a two-thirds voter approval (55% approval in the case of educational districts). Because of the required voter approval ratio, the tax rate is usually stable.

The assessed value may be increased for inflation a maximum of 2.0 percent per year until the property is again sold, substantial new construction occurs, or the property’s use changes significantly. In no event should a property be assessed above its current market value.

Reassessment due to new construction is usually based on the additional construction costs.

Should the property sell, it would be reassessed according to the Assessor’s opinion of market value. Generally, market value for reassessment after transfer of ownership is based on the sale price.

Thus, assessed value typically only relates to market value as of a particular sale date. As a result, comparison of assessed value with other properties in the market is not material to this analysis.

Therefore, tax comparables are not pertinent and not included herein.

This analysis assumes taxes are current to the date of value. The tax amount used in the analysis assumes taxes based on a market sale as of the appraisal date (assessed at the estimated market value of the property and based on the current tax rate) plus any special assessments.

Real estate taxes and assessments for the current tax year are shown in the following table.

Tax Year 2022
Tax ID Land Improvements Total
Assessment
Ratio
Land &
Improvements
Ad Valorem
Taxes
Direct
Assessments Total
055-421-050 $5,686,958 $546,822 $6,233,780 100.0% 1.0938% $68,185 $2,275 $70,460 055-421-060 $6,015,052 $546,822 $6,561,874 100.0% 1.0938% $71,774 $2,278 $74,052 055-421-160 $9,842,814 $3,280,937 $13,123,751 100.0% 1.0938% $143,548 $2,326 $145,874 $21,544,824 $4,374,581 $25,919,405 100.0% 1.0938% $283,506 $6,879 $290,385 Compiled by Newmark
Assessor's Market Value Tax Rates Taxes and Assessments Taxes and Assessments
Resolution No. XXXX

HIGHEST AND BEST USE 50
985-1001 O'Brien Dr., 1320 Willow Rd.

Highest and Best Use

AS VACANT
Legally Permissible
The site is zoned LS-B which allows for office, retail, specialty . Based on available data and analysis, no other legal restrictions such as easements or deed covenants are present which would impair the utility of the site. Given that surrounding properties have similar zoning and the future land use plan is focused on similar uses as well, it is unlikely that there would be a change of zoning classification. Further information and analysis about the legal restrictions to the subject property is included in the Site Analysis and Zoning and Legal Restrictions sections of this report.

Physically Possible
The subject site contains 183,616 square feet (4.215 acres), has favorable topography, adequate access, and all necessary utilities to support the range of legally permissible uses. No significant physical limitations were noted. The size of the site is typical for the categories of uses allowed under zoning. In total, the site is physically capable of supporting the legally permissible uses.

Financially Feasible
Of the legally permissible and physically possible uses, research and development and life science uses appear most probable based on observation of surrounding properties as well as the location. These uses are more fully analyzed for their financial feasibility.

The following are relevant points related to the subject’s market segment:
– The subject submarket has high occupancy and rents are increasing at a pace faster than inflation.
– Market metrics indicate that concessions are basically nonexistent.

Given the underlying market conditions and activity, it appears that a research and development or life science development would have a sufficient degree of feasibility.

The test of maximum productivity is to determine the actual use of the property that results in the highest land value and/or the highest return to the land. It is important to consider the risk of potential uses as a use that may generate the highest returns in cash could also be the riskiest and thus not as likely for a developer to consider. In this case, the maximally productive use is a land development. The associated risk is typical and market conditions appear to be supportive.

Resolution No. XXXX

HIGHEST AND BEST USE 51
985-1001 O'Brien Dr., 1320 Willow Rd.

Highest and Best Use Conclusion – As Vacant
The highest and best use of the subject as though vacant is the development of a research and development or life science complex.

Most Probable Buyer
The most likely buyer would be a developer.

AS IMPROVED
The highest and best use as improved is for the removal of the existing improvements to be replaced by a new life science development which is consistent with other nearby new development.

Resolution No. XXXX

APPRAISAL METHODOLOGY 52
985-1001 O'Brien Dr., 1320 Willow Rd.

Appraisal Methodology

COST APPROACH
The cost approach is based on the proposition that the informed purchaser would pay no more for the subject than the cost to produce a substitute property with equivalent utility. This approach is particularly applicable when the property being appraised involves relatively new improvements that represent the highest and best use of the land, or when it is improved with relatively unique or specialized improvements for which there exist few sales or leases of comparable properties.

SALES COMPARISON APPROACH
The sales comparison approach utilizes sales of comparable properties, adjusted for differences, to indicate a value for the subject. Valuation is typically accomplished using physical units of comparison such as price per square foot, price per unit, price per floor, etc., or economic units of comparison such as gross rent multiplier. Adjustments are applied to the property units of comparison derived from the comparable sale. The unit of comparison chosen for the subject is then used to yield a total value.

INCOME CAPITALIZATION APPROACH
The income capitalization approach reflects the subject’s income-producing capabilities. This approach is based on the assumption that value is created by the expectation of benefits to be derived in the future. Specifically estimated is the amount an investor would be willing to pay to receive an income stream plus reversion value from a property over a period of time. The two common valuation techniques associated with the income capitalization approach are direct capitalization and the discounted cash flow (DCF) analysis.

The subject property is a tract of land. In the absence of ground leases, subdivision, or other income sources, the sales comparison approach is viewed as most applicable in the valuation of land parcels. Therefore, the sales comparison approach is the sole approach to value utilized in this appraisal. The exclusion of the other two approaches does not impact the reliability of the appraisal.

Application of Approaches to Value
Approach Comments
Cost Approach
Sales Comparison Approach
Income Capitalization Approach
Compiled by Newmark
The Income Capitalization Approach is not applicable and is not utilized in this appraisal.

The Sales Comparison Approach is applicable and is utilized in this appraisal.

The Cost Approach is not applicable and is not utilized in this appraisal.

Resolution No. XXXX

SALES COMPARISON APPROACH 53
985-1001 O'Brien Dr., 1320 Willow Rd.

Sales Comparison Approach
Land value can be developed from a number of different methodologies. In this case, we have employed the sales comparison as sufficient comparable data exists from which to derive a reliable indication of value. Sales comparison includes the following steps. – Research and verify information on properties in the market that are similar to the subject and that have recently sold, are listed for sale, or are under contract. – Select the most relevant units of comparison in the market and develop a comparative analysis.
– Examine and quantify via adjustments differences between the comparable sales and the subject property using all appropriate elements of comparison. – Reconcile the various value indications to a value indication.

Based on a review of market activity, the appropriate unit of comparison is price per far.

Land Comparables Map
Resolution No. XXXX

SALES COMPARISON APPROACH 54
985-1001 O'Brien Dr., 1320 Willow Rd.

ANALYSIS OF LAND COMPARABLES
The following paragraphs analyze the most relevant comparable data against the subject property.

Comparable One
Sale Comparable One represents the March 2022 sale of 1.676 acres of land located at 1 Casey Court, Menlo Park, California. The sale price is $8,712,500. However, there is an adjustment for tenant buy-out of $3,000,000 and demolition of $100,000 for a total purchase price of $11,812,500. The sale is to closed in March of 2022.

An upward adjustment was applied for market conditions (time) due to increasing value trends in the local market. Recent listing and closed transaction data indicates an annualized rate of 5.0% is applicable. We used the date of the contract to make this adjustment. We made an adjustment for Conditions of Sale as the site was purchased by a developer who will add this site to their neighboring development.

The site was not yet entitled for LS land use. We have found that developers will pay a premium for sites already entitled as there are both time and cost savings had by acquiring an already entitled parcel. Combining transaction and physical adjustments, an overall net upward adjustment is indicated resulting in a price per FAR indication of $141.19.

Comparable Two
Sale Comparable Two represents the January 2022 sale of 4.768 acres of land located at 240 Twin Dolphin Drive, Redwood City, California. The is the sale of an entitled building site overlooking the Redwood Shores Lagoon.

Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 Sale 6 Sale 7 Sale 8 Address 985-1001 O'Brien Drive,
1320 Willow Road
1 Casey Court 240 Twin Dolphin Drive 1030 Brittan Ave. 210 Adrian Road 1360 Bayport Avenue 440 Forbes Boulevard 803, 833 and 841 Old County Road
1091 Industrial Road
City, State Menlo Park, CA Menlo Park, CA Redwood City, CA San Carlos, CA Millbrae, CA San Carlos, CA South San Francisco, CA San Carlos, CA San Carlos, CA Use at Sale Vacant Proposed Planned Proposed Planned Planned Planned Proposed Proposed Proposed Use Land Industrial Office Commercial Office Commercial Office Commercial Office Commercial Office Commercial Industrial Office Commercial Gross Land SF 183,616 SF 73,007 SF 207,685 SF 87,991 SF 89,951 SF 94,961 SF 225,654 SF 151,687 SF 68,331 SF Useable Acres 4.22 Acres 1.68 Acres 4.77 Acres 2.02 Acres 2.06 Acres 2.18 Acres 5.18 Acres 3.48 Acres 1.57 Acres Useable Land SF 183,616 SF 73,007 SF 207,685 SF 87,991 SF 89,951 SF 94,961 SF 225,654 SF 151,687 SF 68,331 SF Allowable Bldg Area 228,398 SF 91,259 SF 205,608 SF 95,910 SF 262,657 SF 189,922 SF 225,654 SF 320,060 SF 138,712 SF Shape/Topography Irregualr/Level Irregular/Level Irregular/Level Rectangular/Level Rectangular/Level Rectangular/Level Rectangular /Level Irregular/Level Irregular Site/Generally level
Utilities Available All Urban Utilities All Urban Utilities All Urban Utilities All Urban Utilities All Urban Utilities All Urban Utilities All Urban Utilities Electricity, Gas, Sewer, Telephone, Water
Electricity, Gas, Sewer,
Telephone, Water
Zoning LS-B LS-B (Life Science Bonus) CP GCI ML GCI MH00M2 IH (Heavy Industrial) GCI Transaction Type Closed Closed Closed Closed Closed Closed Closed Closed Buyer Tarlton Properties 200-240 Twin Dolphin LLC MBC Bio Labs 1030 Longfellow 1021 Howard Owner LLC Ls Forbes SI 74 LLC Premia Capital Seller Clayton Patterson/Grek
Trust
SHP Westshore LLC Robert Williamson Trust Finn Capital Hamilton Investors Jem Capital 1031 EP4 Inc., Patricia Renn
Swenson
Interest Conveyed Fee Simple Leased Fee Fee Simple Fee Simple Fee Simple Leased Fee Leased Fee Fee Simple Fee Simple Transaction Date Mar-22 Jan-22 Dec-21 Oct-21 Jul-21 Apr-21 Aug-20 Jun-19 Price $8,712,500 $64,875,000 $20,000,000 $80,000,000 $33,000,000 $60,506,000 $26,900,000 $15,000,000 Adj. Sale Price $11,812,500 $64,875,000 $20,000,000 $80,427,500 $33,230,000 $61,346,000 $27,400,000 $15,200,000 Price per Gross Land Acre $7,048,031 $13,606,929 $9,901,013 $38,947,942 $15,243,087 $11,842,164 $7,868,466 $9,689,775 Price Per Gross Land SF $161.80 $312.37 $227.30 $894.13 $349.93 $271.86 $180.64 $222.45 Price per Usable Land Acre $7,048,031 $13,606,929 $9,901,013 $38,947,942 $15,243,087 $11,842,164 $7,868,466 $9,689,775 Price Per Usable Land SF $161.80 $312.37 $227.30 $894.13 $349.93 $271.86 $180.64 $222.45 Price per FAR $129.44 $315.53 $208.53 $306.21 $174.97 $271.86 $85.61 $109.58 Compiled by Newmark
Comparable Land Sales Summary
Resolution No. XXXX

SALES COMPARISON APPROACH 55
985-1001 O'Brien Dr., 1320 Willow Rd.

An upward adjustment was applied for market conditions (time) due to increasing value trends in the local market. Recent listing and closed transaction data indicates an annualized rate of 5.0% is applicable.

A downward adjustment was applied for location since the site is on the Redwood Shores Lagoon which is viewed as an amenity and higher rents can be achieved. Combining transaction and physical adjustments, an overall net upward adjustment is indicated resulting in a price per FAR indication of $354.02.

Comparable Three
Sale Comparable Three represents the December 2021 sale of 2.020 acres of land located at 1030 Brittan Ave., San Carlos, California. This surface parking lot sold with approvals to construct a 96,175 square foot life-science building.

An upward adjustment was applied for market conditions (time) due to increasing value trends in the local market. Recent listing and closed transaction data indicates an annualized rate of 5.0% is applicable.

The transaction and physical adjustments indicate an overall net upward adjustment resulting in a price per FAR indication of $255.24.

Comparable Four
Sale Comparable Four represents the October 2021 sale of 2.065 acres of land located at 210 Adrian Road, Millbrae, California. The buyer plans to demolish the self storage facility on this site and construct a 263,042 square foot, 5-story, life-science facility with below and above grade parking. The building will be designed to support a future research lab or office tenant improvement build-out. The project requires a Conditional Use Permit to allow a bioscience use within the Transit-Oriented Development (TOD) zone of the Millbrae Station Area Specific Plan (MSASP) and is under review by the city. Demolition costs estimated at $5 per square foot.

An upward adjustment was applied for market conditions (time) due to increasing value trends in the local market. Recent listing and closed transaction data indicates an annualized rate of 5.0% is applicable.

A downward adjustment was applied for location as we have found that Millbrae can achieve higher rents than Menlo Park with all other factors equal. We have found that developers will pay a premium for sites already entitled as there are both time and cost savings had by acquiring an already entitled parcel. The seller of this parcel had already begun the entitlement process so the adjustment is less than other unentitled sites. Combining transaction and physical adjustments, an overall net downward adjustment is indicated resulting in a price per FAR indication of $283.86.

Resolution No. XXXX

SALES COMPARISON APPROACH 56
985-1001 O'Brien Dr., 1320 Willow Rd.

Comparable Five
Sale Comparable Five represents the July 2021 sale of 2.180 acres of land located at 1360 Bayport Avenue, San Carlos, California. This is the sale of three adjacent properties (1021-1045 Howard, 1360-1370 Bayport, and 1390 Bayport). The buyer of this property has submitted plans to develop a three story building with 190,000 square feet of space for life science. It would also include 13,000 square feet of public open space, including a plaza and an interior courtyard, as well as two levels of underground parking. Demolition costs for the 45,800 square feet of industrial buildings on the site estimated at $5 per square foot or $230,000.

An upward adjustment was applied for market conditions (time) due to increasing value trends in the local market. Recent listing and closed transaction data indicates an annualized rate of 5.0% is applicable.

An upward adjustment was applied for entitlements. The site was not yet entitled for LS land use.

We have found that developers will pay a premium for sites already entitled as there are both time and cost savings had by acquiring an already entitled parcel. Combining transaction and physical adjustments, an overall net upward adjustment is indicated resulting in a price per FAR indication of $218.36.

Comparable Six
Sale Comparable Six represents the April 2021 sale of 5.180 acres of land located at 440 Forbes Boulevard, South San Francisco, California. This property sold with a short term lease in place to a beverage distributor. Demolition costs for the 105,000 square foot warehouse estimated at $8 per square foot. Immediate development plans for this site are not available. Buyer is currently developing life-science properties in South San Francisco.

An upward adjustment was applied for market conditions (time) due to increasing value trends in the local market. Recent listing and closed transaction data indicates an annualized rate of 5.0% is applicable.

A downward adjustment was applied for location South San Francisco generally has higher rents than Menlo Park. The site was not yet entitled for LS land use. We have found that developers will pay a premium for sites already entitled as there are both time and cost savings had by acquiring an already entitled parcel. Combining transaction and physical adjustments, an overall net upward adjustment is indicated resulting in a price per FAR indication of $285.45.

Comparable Seven
Sale Comparable Seven represents the August 2020 sale of 3.482 acres of land located at 803, 833 and 841 Old County Road, San Carlos, California. The sale site is located along the east side of Old County Road between Commercial Street and Bransten Road in San Carlos. The site Resolution No. XXXX

SALES COMPARISON APPROACH 57
985-1001 O'Brien Dr., 1320 Willow Rd.
comprises 10 assessor parcels including an abandoned rail spur. The site is zoned for heavy industrial but was acquired for the development of life science or Class A office space. The grantee, Sobrato, is looking to develop 320,000 SF of space which is an FAR of 2.11. At the the time of the sale the site was developed with a mixture of industrial buildings including a dog boarding facility and a garden supply store with yard storage. The previous owners have leased the property back. The leases range from month to month to a longer term which expires in October of 2022. The interim rent is $432,000 per year. The demolition has been estimated at $500,000. SI 74 LLC acquired the site from 1031 EP4 Inc for a total consideration of $27,400,000 or $86 per FAR.

An upward adjustment was applied for market conditions (time) due to increasing value trends in the local market. Recent listing and closed transaction data indicates an annualized rate of 5.0% is applicable.

An upward adjustment was applied for entitlements as we have found that developers will pay more for a site that is already entitled since there both time and cost savings. Combining transaction and physical adjustments, an overall net upward adjustment is indicated resulting in a price per FAR indication of $111.98.

Comparable Eight
Sale Comparable Eight represents the June 2019 sale of 1.569 acres of land located at 1091 Industrial Road, San Carlos, California. A joint venture with Swenson Development had plans to develop this land into a hotel before selling the asset to Premia Capital for $15,000,000 or $219.52 per square foot of land or $109 per FAR. The City Council had approved zoning for the hotel but the developer decided not to proceed with the project and sold the 1091 Industrial Road property, a city staff report said. Planning commissioners in March 2020 rezoned the site back to general commercial and industrial at the request of the new property owner. Premia Capital is currently going through the entitlement process to redevelop the property into a three story life science building that would total 139,200 square feet. Currently, the development is under review with the city. There will be two levels parking below the building. The site currently has improvements totaling 40,067 net rentable square feet.

An upward adjustment was applied for market conditions (time) due to increasing value trends in the local market. Recent listing and closed transaction data indicates an annualized rate of 5.0% is applicable.

An upward adjustment was applied for entitlements. Since the site was not yet entitled for LS land use we have adjusted the comparable upward. We have found that developers will pay a premium for sites already entitled as there are both time and cost savings had by acquiring an already Resolution No. XXXX

SALES COMPARISON APPROACH 58
985-1001 O'Brien Dr., 1320 Willow Rd.
entitled parcel. Combining transaction and physical adjustments, an overall net upward adjustment is indicated resulting in a price per FAR indication of $152.54.

LAND VALUE CONCLUSION
– Market participants have indicated land value trends have been on an upward trend because of continuing demand for land that would be appropriate for the development of life science properties.
– Prior to adjustments, the sales reflect a range of $85.61 to $315.53 per FAR. – After adjustment, the range changed to $111.98 to $354.02 per FAR, with an average of $225.33 per FAR.
– We conclude to a unit value of $225.00 per FAR foot.
– The above analysis is for the Bonus Density of up to 125%. As part of the following analysis to estimate the Community Benefits, we must also provide a value for the FAR Base Value of 55%. There is insufficient data to make adjustments for this level of FAR. We have valued the lower Base Value of 55% at a slightly higher value as the cost of construction and development is lower. We have concluded to an FAR unit value of $250.00 per FAR foot for the Base level density which will presented in the calculations of the Base Value density in the next section of the report.

Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 Sale 6 Sale 7 Sale 8 Address 985-1001 O'Brien Drive,
1320 Willow Road
1 Casey Court 240 Twin Dolphin Drive 1030 Brittan Ave. 210 Adrian Road 1360 Bayport Avenue 440 Forbes Boulevard 803, 833 and 841 Old County Road
1091 Industrial Road
City, State Menlo Park, CA Menlo Park, CA Redwood City, CA San Carlos, CA Millbrae, CA San Carlos, CA South San Francisco, CA San Carlos, CA San Carlos, CA Gross Land SF 183,616 SF 73,007 SF 207,685 SF 87,991 SF 89,951 SF 94,961 SF 225,654 SF 151,687 SF 68,331 SF Usable Land Area (Acres) 4.22 Acres 1.68 Acres 4.77 Acres 2.02 Acres 2.06 Acres 2.18 Acres 5.18 Acres 3.48 Acres 1.57 Acres Usable Land Area (SF) 183,616 SF 73,007 SF 207,685 SF 87,991 SF 89,951 SF 94,961 SF 225,654 SF 151,687 SF 68,331 SF Allowable Bldg Area 228,398 91,259 205,608 95,910 262,657 189,922 225,654 320,060 138,712 Transaction Type -- Closed Closed Closed Closed Closed Closed Closed Closed Transaction Date -- Mar-22 Jan-22 Dec-21 Oct-21 Jul-21 Apr-21 Aug-20 Jun-19 Price per FAR $129.44 $315.53 $208.53 $306.21 $174.97 $271.86 $85.61 $109.58 Property Rights 0% 0% 0% 0% 0% 0% 0% 0%
Financing 0%0%0%0%0%0% 0% 0%
Conditions of Sale (Assemblage) -10% 0% 0% 0% 0% 0% 0% 0% Market Conditions (Time) 1% 2% 2% 3% 4% 5% 9% 16%
Subtotal (adjustments are multiplied) -9.1% 2.0% 2.0% 3.0% 4.0% 5.0% 9.0% 16.0% Transaction Adjusted Price per FAR $117.66 $321.84 $212.70 $315.40 $181.97 $285.45 $93.31 $127.11 Location 0% -10% 0% -20% 0% -20% 0% 0%
Corner 0% 0% 0% 0% 0% 0% 0% 0%
Frontage 0% 0% 0% 0% 0% 0% 0% 0%
Size 0% 0% 0% 0% 0% 0% 0% 0%
Shape 0%0%0%0%0%0% 0% 0%
Topography 0% 0% 0% 0% 0% 0% 0% 0%
Utilities 0% 0% 0% 0% 0% 0% 0% 0%
Entitlements 20% 20% 20% 10% 20% 20% 20% 20%
Subtotal (adjustments are summed) 20% 10% 20% -10% 20% 0% 20% 20% Gross Adjustment 31% 32% 22% 33% 24% 45% 29% 36%
Overall Adjustment 9.08% 12.2% 22.4% -7.3% 24.8% 5.0% 30.8% 39.2% Indicated Price per FAR $141.19 $354.02 $255.24 $283.86 $218.36 $285.45 $111.98 $152.54 Compiled by Newmark
Physical Adjustments
Transaction Adjustments
Comparable Land Sales Adjustment Grid
Resolution No. XXXX

SALES COMPARISON APPROACH 59
985-1001 O'Brien Dr., 1320 Willow Rd.

CALCULATION & CONCLUSION OF AMENITY VALUE
Per the instructions provided by the city of Menlo Park, the value of the amenity is calculated by subtracting the value conclusion of the Base Level from the value conclusion of the Bonus Level.

The final value is based on 50% of the market value of the additional gross floor area proposed at the Bonus Level. The calculations are shown below broken down between Phase 1 and Phase 2:

Allowable Bldg Area 228,398
Comparable Sales Indications Range Average
Unadjusted Price per FAR $85.61 - $315.53 $200.22
Adjusted Price per FAR $111.98 - $354.02 $225.33
Reconciled Value per FAR $225.00
Total Indicated Value $51,389,550
Rounded $51,400,000
Compiled by Newmark
Land Value Conclusion
Phase 1
Useable Land Area SF FAR Proposed Bldg. Area SF
123,738 125% 154,581
Proposed Bldg. Area SF Value/FAR Bonus Level Land Value 154,581 $225.00 $34,780,725
Rounded: $34,800,000
Useable Land Area SF Base FAR Base Bldg. Area SF
123,738 55.00% 68,056
Base Bldg. Area SF Value/FAR Base Level Land Value
68,056 $250.00 $17,014,000
Rounded: $17,000,000
Resolution No. XXXX

SALES COMPARISON APPROACH 60
985-1001 O'Brien Dr., 1320 Willow Rd.

Phase 1
Value Conclusion at Bonus Level $34,800,000
Less: Value Conclusion at Base Level $17,000,000
Value of Additional Gross Floor Area: 17,800,000
Less: 50% of the Value of Additional Floor Area: $8,900,000 Value of the Amenity: $8,900,000
Phase 2
Useable Land Area SF FAR Proposed Bldg. Area SF
59,878 123% 73,817
Proposed Bldg. Area SF Value/FAR Bonus Level Land Value 73,817 $225.00 $16,608,825
Rounded: $16,600,000
Useable Land Area SF Base FAR Base Bldg. Area SF
59,878 55.00% 32,933
Base Bldg. Area SF Value/FAR Base Level Land Value
32,933 $250.00 $8,233,225
Rounded: $8,200,000
Phase 2
Value Conclusion at Bonus Level $16,600,000
Less: Value Conclusion at Base Level $8,200,000
Value of Additional Gross Floor Area: 8,400,000
Less: 50% of the Value of Additional Floor Area: $4,200,000 Value of the Amenity: $4,200,000
Resolution No. XXXX

SALES COMPARISON APPROACH 61
985-1001 O'Brien Dr., 1320 Willow Rd.

ALTERNATE DATE OF VALUE – 6/25/2021
There appears to be an inconsistency between the City's Community Amenity Ordinance (Section

16.44.070) and the City's Appraisal Instructions regarding the applicable date of value. While the Instructions state that the appraisal must use a date of value no more than 90 days from the date of submission of the report, the Community Amenity ordinance states that the appraisal must be within 90 days of the application date, which places the date of value at the date of application.

This appraisal follows the City's published instruction, however we note in this section the value at the date of application, June 25, 2021.
– The above analysis is for the Bonus Density of up to 125%. As part of the following analysis to estimate the Community Benefits, we must also provide a value for the FAR Base Value of 55%. There is insufficient data to make adjustments for this level Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 Sale 6
Address 985-1001 O'Brien Drive,
1320 Willow Road
210 Adrian Road 1360 Bayport Avenue 440 Forbes Boulevard 803, 833 and 841 Old County Road
915 Old County Rd, 1015
Commercial St, 1063 Old
1091 Industrial Road
City, State Menlo Park, CA Millbrae, CA San Carlos, CA South San Francisco, CA San Carlos, CA San Carlos, CA San Carlos, CA Gross Land SF 183,616 SF 89,951 SF 94,961 SF 225,654 SF 151,687 SF 542,322 SF 68,331 SF Usable Land Area (Acres) 4.22 Acres 2.06 Acres 2.18 Acres 5.18 Acres 3.48 Acres 12.45 Acres 1.57 Acres Usable Land Area (SF) 183,616 SF 89,951 SF 94,961 SF 225,654 SF 151,687 SF 542,322 SF 68,331 SF Allowable Bldg Area 228,262 262,657 189,922 225,654 320,060 813,483 138,712 Transaction Type -- Closed Closed Closed Closed Closed Closed Transaction Date -- Oct-21 Jul-21 Apr-21 Aug-20 Apr-20 Jun-19 Price per FAR $306.21 $174.97 $271.86 $85.61 $139.22 $109.58 Property Rights 0%0%0% 0% 0%0%
Financing 0%0%0% 0% 0%0%
Conditions of Sale 0% 0% 0% 0% 0% 0%
Market Conditions (Time) 2% 4% 6% 11% 14% 22%
Subtotal (adjustments are multiplied) 2.0% 4.0% 6.0% 11.0% 14.0% 22.0% Transaction Adjusted Price per FAR $312.33 $181.97 $288.17 $95.03 $158.71 $133.69 Location -10% 0% -10% 0% 0% 0%
Corner 0% 0% 0% 0% 0% 0%
Frontage 0% 0% 0% 0% 0% 0%
Size 0% 0% 0% 0% 0% 0%
Shape 0%0%0% 0% 0%0%
Topography 0% 0% 0% 0% 0% 0%
Utilities 0% 0% 0% 0% 0% 0%
Zoning 20% 20% 20% 20% 20% 20%
Subtotal (adjustments are summed) 10% 20% 10% 20% 20% 20% Gross Adjustment 32% 24% 36% 31% 34% 42%
Overall Adjustment 12.2% 24.8% 16.6% 33.2% 36.8% 46.4%
Indicated Price per FAR $343.57 $218.36 $316.99 $114.03 $190.45 $160.43 Compiled by Newmark
Physical Adjustments
Transaction Adjustments
Comparable Land Sales Adjustment Grid
Allowable Bldg Area 228,262
Comparable Sales Indications Range Average
Unadjusted Price per FAR $85.61 - $306.21 $181.24
Adjusted Price per FAR $109.92 - $330.09 $214.59
Reconciled Value per FAR $215.00
Total Indicated Value $49,076,330
Rounded $49,100,000
Compiled by Newmark
Land Value Conclusion
Resolution No. XXXX

SALES COMPARISON APPROACH 62
985-1001 O'Brien Dr., 1320 Willow Rd.
of FAR. We have valued the lower Base Value of 55% at a slightly higher value as the cost of construction and development is lower. We have concluded to an FAR unit value of $235.00 per FAR foot for the Base level density.

Phase 1
Useable Land Area SF FAR Proposed Bldg. Area SF
123,738 125% 154,581
Proposed Bldg. Area SF Value/FAR Bonus Level Land Value 154,581 $215.00 $33,234,915
Rounded: $33,200,000
Useable Land Area SF Base FAR Base Bldg. Area SF
123,738 55.00% 68,056
Base Bldg. Area SF Value/FAR Base Level Land Value
68,056 $235.00 $15,993,137
Rounded: $16,000,000
Phase 1
Value Conclusion at Bonus Level $33,200,000
Less: Value Conclusion at Base Level $16,000,000
Value of Additional Gross Floor Area: 17,200,000
Less: 50% of the Value of Additional Floor Area: $8,600,000 Alternate Value of the Amenity as of Date of Application: $8,600,000 Resolution No. XXXX

SALES COMPARISON APPROACH 63
985-1001 O'Brien Dr., 1320 Willow Rd.

Phase 2
Useable Land Area SF FAR Proposed Bldg. Area SF
59,878 123% 73,817
Proposed Bldg. Area SF Value/FAR Bonus Level Land Value 73,817 $215.00 $15,870,655
Rounded: $15,900,000
Useable Land Area SF Base FAR Base Bldg. Area SF
59,878 55.00% 32,933
Base Bldg. Area SF Value/FAR Base Level Land Value
32,933 $235.00 $7,739,255
Rounded: $7,700,000
Phase 2
Value Conclusion at Bonus Level $15,900,000
Less: Value Conclusion at Base Level $7,700,000
Value of Additional Gross Floor Area: $8,200,000
Less: 50% of the Value of Additional Floor Area: $4,100,000 Alternate Value of the Amenity as of Date of Application: $4,100,000 Combined Phases 1 & 2 (Alternate Date) Interest Appraised Date of Value Value Conclusion Site Value of Proposed Gross Floor Area Fee Simple 6/25/2021 $49,100,000 Site Value of Base Gross Floor Area (55%) Fee Simple 6/25/2021 $23,700,000 Value of Additional (Bonus) Floor Area Fee Simple 6/25/2021 $25,400,000 Less: 50% Deduction Fee Simple 6/25/2021 $12,700,000
Value of the Amenity Fee Simple 6/25/2021 $12,700,000
Resolution No. XXXX

RECONCILIATION OF VALUE 64
985-1001 O'Brien Dr., 1320 Willow Rd.

Reconciliation of Value
Cost Approach
As previously discussed, the Cost Approach was not utilized for valuation of the subject property as it is land.

Sales Comparison Approach
The Sales Comparison Approach is focused on comparing the subject to sale and other market transactions with the aim to develop an indication of value that is founded on the theory of substitution. Basically, the intention is to determine value through considering the prices of properties which would be a substitute property to the subject. In this case, a selection of reasonably similar sales were obtained and the adjustment process was well founded by reasoning and direct evidence. In the absence of ground leases, subdivision, or other income sources, the sales comparison approach is viewed as most applicable in the valuation of land parcels. Therefore, the sales comparison approach is the sole approach to value utilized in this appraisal.

Income Capitalization Approach
As the subject property is a tract of land and is not leased (or has any other reasonable income source), the Income Capitalization Approach was not applicable and not utilized.

Value Conclusions
Appraisal Premise Interest Appraised Date of Value Value Conclusion Phase 1
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $34,800,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $17,000,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $17,800,000 Less: 50% Deduction Fee Simple 5/26/2022 $8,900,000
Value of the Amenity Fee Simple 5/26/2022 $8,900,000
Phase 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $16,600,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $8,200,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $8,400,000 Less: 50% Deduction Fee Simple 5/26/2022 $4,200,000
Value of the Amenity Fee Simple 5/26/2022 $4,200,000
Combined Phases 1 & 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $51,400,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $25,200,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $26,200,000 Less: 50% Deduction Fee Simple 5/26/2022 $13,100,000
Value of the Amenity Fee Simple 5/26/2022 $13,100,000
Resolution No. XXXX

RECONCILIATION OF VALUE 65
985-1001 O'Brien Dr., 1320 Willow Rd.

EXPOSURE TIME
Exposure time is the estimated length of time the subject property would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. It is a retrospective estimate based on an analysis of past events assuming a competitive and open market.

Recent sales transaction data for similar properties, supply and demand characteristics for the local land market, and the opinions of local market participants were reviewed and analyzed.

Based on this data and analysis, it is our opinion that the probable exposure time for the subject at the concluded market value / values stated previously is 6 months.

MARKETING TIME
Marketing time is an opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. As no significant changes in market conditions are foreseen in the near term, it is our opinion that a reasonable marketing period for the subject is likely to be the same as the exposure time. Accordingly, we estimate the subject’s marketing period at 6 months.

1. None

1. At least one of the buildings on the subject site is leased. We have used the hypothetical condition that the subject buildings are unencumbered by leases and thus we are appraising the fee simple interest.

2. In order to comply with the City's instructions, we have employed the Hypthetical Condition that the subject has entitlements to build the development as proposed.

Compiled by Newmark
A hypothetical condition is defined in USPAP as a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. The value conclusions are based on the following hypothetical conditions that may affect the assignment The use of these hypothetical conditions might have affected assignment results.

Extraordinary Assumptions and Hypothetical Conditions
An extraordinary assumption is defined in USPAP as an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.

The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results.

Resolution No. XXXX

ASSUMPTIONS AND LIMITING CONDITIONS 66
985-1001 O'Brien Dr., 1320 Willow Rd.

Assumptions and Limiting Conditions
The Appraisal contained in this Report (herein “Report”) is subject to the following assumptions and limiting conditions:

1. Unless otherwise stated in this report, title to the property which is the subject of this report (herein “Property”) is assumed to be good and marketable and free and clear of all liens and encumbrances and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. No responsibility is assumed for the legal description, zoning, condition of title or any matters which are legal in nature or otherwise require expertise other than that of a professional real estate appraiser. This report shall not constitute a survey of the Property.

2. Unless otherwise stated in this report, it is assumed: that the improvements on the Property are structurally sound, seismically safe and code conforming; that all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the elements; that the Property and improvements conform to all applicable local, state, and federal laws, codes, ordinances and regulations including environmental laws and regulations. No responsibility is assumed for soil or subsoil conditions or engineering or structural matters. The Property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report is based, unless otherwise stated. The physical condition of the Property reflected in this report is solely based on a visual inspection as typically conducted by a professional appraiser not someone with engineering expertise. Responsible ownership and competent property management are assumed.

3. Unless otherwise stated in this report, this report did not take into consideration the existence of asbestos, PCB transformers or other toxic, hazardous, or contaminated substances or underground storage tanks, or the cost of encapsulation, removal or remediation thereof. Real estate appraisers are not qualified to detect such substances.

The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater or other potentially hazardous materials and substances may adversely affect the value of the Property. Unless otherwise stated in this report, the opinion of value is predicated on the assumption that there is no such material or substances at, on or in the Property.

Resolution No. XXXX

ASSUMPTIONS AND LIMITING CONDITIONS 67
985-1001 O'Brien Dr., 1320 Willow Rd.

4. All statements of fact contained in this report as a basis of the analyses, opinions, and conclusions herein are true and correct to the best of the appraiser's actual knowledge and belief. The appraiser is entitled to and relies upon the accuracy of information and material furnished by the owner of the Property or owner’s representatives and on information and data provided by sources upon which members of the appraisal profession typically rely and that are deemed to be reliable by such members. Such information and data obtained from third party sources are assumed to be reliable and have not been independently verified. No warranty is made as to the accuracy of any of such information and data. Any material error in any of the said information or data could have a substantial impact on the conclusions of this Report. The appraiser reserves the right to amend conclusions reported if made aware of any such error.

5. The opinion of value stated in this report is only as of the date of value stated in this report.

An appraisal is inherently subjective and the conclusions stated apply only as of said date of value, and no representation is made as to the effect of subsequent events. This report speaks only as of the date hereof.

6. Any projected cash flows included in the analysis are forecasts of estimated future operating characteristics and are predicated on the information and assumptions contained within this report. Any projections of income, expenses and economic conditions utilized in this report are not predictions of the future. Rather, they are estimates of market expectations of future income and expenses. The achievement of any financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary from the projections considered herein. There is no warranty or assurances that these forecasts will occur. Projections may be affected by circumstances beyond anyone’s knowledge or control. Any income and expense estimates contained in this report are used only for the purpose of estimating value and do not constitute predictions of future operating results.

7. The analyses contained in this report may necessarily incorporate numerous estimates and assumptions regarding Property performance, general and local business and economic conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by the analysis will vary from estimates, and the variations may be material.

8. All prospective value opinions presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraphs, several events may occur that could substantially alter the outcome of the estimates such as, but not limited to changes Resolution No. XXXX

ASSUMPTIONS AND LIMITING CONDITIONS 68
985-1001 O'Brien Dr., 1320 Willow Rd.
in the economy, interest rates, capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. In making prospective estimates and forecasts, it is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future.

9. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. This report shall be considered only in its entirety. No part of this report shall be utilized separately or out of context.

10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the Firm. Possession of this report, or a copy hereof, does not carry with it the right of publication.

11. Client and any other Intended User identified herein should consider this report and the opinion of value contained herein as only one factor together with its own independent considerations and underwriting guidelines in making any decision or investment or taking any action regarding the Property. Client agrees that Firm shall not be responsible in any way for any decision of Client or any Intended User related to the Property or for the advice or services provided by any other advisors or contractors. The use of this report and the appraisal contained herein by anyone other than an Intended User identified herein, or for a use other than the Intended Use identified herein, is strictly prohibited. No party other than an Intended User identified herein may rely on this report and the appraisal contained herein.

12. Unless otherwise stated in the agreement to prepare this report, the appraiser shall not be required to participate in or prepare for or attend any judicial, arbitration, or administrative proceedings.

13. The Americans with Disabilities Act (ADA) became effective January 26, 1992. No survey or analysis of the Property has been made in connection with this report to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines.

No expertise in ADA issues is claimed, and the report renders no opinion regarding the Property’s compliance with ADA regulations. Inasmuch as compliance matches each owner’s financial ability with the cost to cure the non-conforming physical characteristics of a property, a specific study of both the owner’s financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance.

Resolution No. XXXX

ASSUMPTIONS AND LIMITING CONDITIONS 69
985-1001 O'Brien Dr., 1320 Willow Rd.

14. Acceptance and/or use of this report constitutes full acceptance of these Assumptions and Limiting Conditions and any others contained in this report, including any Extraordinary Assumptions and Hypothetical Conditions, and is subject to the terms and conditions contained in the agreement to prepare this report and full acceptance of any limitation of liability or claims contained therein.

Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.

Addendum A
Glossary of Terms
Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.

The following definitions are derived from The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015).
 Absorption Period: The actual or expected period required from the time a property, group of properties, or commodity is initially offered for lease, purchase, or use by its eventual users until all portions have been sold or stabilized occupancy has been achieved.
 Absorption Rate: 1) Broadly, the rate at which vacant space in a property or group of properties for sale or lease has been or is expected to be successfully sold or leased over a specified period of time. 2) In subdivision analysis, the rate of sales of lots or units in a subdivision.
 Ad Valorem Tax: A tax levied in proportion to the value of the thing(s) being taxed.

Exclusive of exemptions, use-value assessment provisions, and the like, the property tax is an ad valorem tax. (International Association of Assessing Officers [IAAO])  Assessed Value: The value of a property according to the tax rolls in ad valorem taxation; may be higher or lower than market value, or based on an assessment ratio that is a percentage of market value.
 Cash Equivalency: An analytical process in which the sale price of a transaction with nonmarket financing or financing with unusual conditions or incentives is converted into a price expressed in terms of cash or its equivalent.
 Contract Rent: The actual rental income specified in a lease.  Disposition Value: The most probable price that a specified interest in property should bring under the following conditions: 1) Consummation of a sale within a specified time, which is shorter than the typical exposure time for such a property in that market. 2) The property is subjected to market conditions prevailing as of the date of valuation. 3) Both the buyer and seller are acting prudently and knowledgeably. 4) The seller is under compulsion to sell. 5) The buyer is typically motivated. 6) Both parties are acting in what they consider to be their best interests. 7) An adequate marketing effort will be made during the exposure time. 8) Payment will be made in cash in US dollars (or the local currency) or in terms of financial arrangements comparable thereto. 9) The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. This definition can also be modified to provide for valuation with specified financing terms.  Effective Rent: Total base rent, or minimum rent stipulated in a lease, over the specified lease term minus rent concessions; the rent that is effectively paid by a tenant net of financial concessions provided by a landlord.

Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.
 Excess Land: Land that is not needed to serve or support the existing use. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land has the potential to be sold separately and is valued separately. See also surplus land.
 Excess Rent: The amount by which contract rent exceeds market rent at the time of the appraisal; created by a lease favorable to the landlord (lessor) and may reflect unusual management, unknowledgeable or unusually motivated parties, a lease execution in an earlier, stronger rental market, or an agreement of the parties.  Exposure Time: 1) The time a property remains on the market. 2) [The] estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.
 Extraordinary Assumption: An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions. See also hypothetical condition.  Fee Simple Estate: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.
 Floor Area Ratio (FAR): The relationship between the above-ground floor area of a building, as described by the zoning or building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area.  Frictional Vacancy: The amount of vacant space needed in a market for its orderly operation. Frictional vacancy allows for move-ins and move-outs.  Full Service Lease: See gross lease.
 General Vacancy: A method of calculating any remaining vacancy and collection loss considerations when using discounted cash flow (DCF) analysis, where turnover vacancy has been used as part of the income estimate. The combined effects of turnover vacancy and general vacancy relate to total vacancy and collection loss.  Going-Concern Premise: One of the premises under which the total assets of a business can be valued; the assumption that a company is expected to continue operating well into the future (usually indefinitely).
 Going Concern Value: An outdated label for the market value of all the tangible and intangible assets of an established and operating business with an indefinite life, as if sold Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.
in aggregate; more accurately termed the market value of the going concern or market value of the total assets of the business.
 Gross Building Area (GBA): 1) Total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the above grade area. This includes mezzanines and basements if and when typically included in the market area of the type of property involved. 2) Gross leasable area plus all common areas. 3) For residential space, the total area of all floor levels measured from the exterior of the walls and including the superstructure and substructure basement; typically does not include garage space.  Gross Lease: A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating and fixed expenses; also called full-service lease.  Hypothetical Condition: 1) A condition that is presumed to be true when it is known to be false. (Appraisal Institute: The Standards of Valuation Practice [SVP]) 2) A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. See also extraordinary assumption.  Intended Users: 1) The party or parties the valuer intends will use the report. (SVP) 2) The client and any other party as identified, by name or type, as users of the appraisal or appraisal review report by the appraiser, based on communication with the client at the time of the assignment. (USPAP, 2020-2021 ed.)
 Investment Value: 1) The value of a property to a particular investor or class of investors based on the investor’s specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market.
2) The value of an asset to the owner or a prospective owner for individual investment or operational objectives. (International Valuation Standards [IVS])  Land-to-Building Ratio: The proportion of land area to gross building area; one of the factors determining comparability of properties.
 Lease: A contract in which the rights to use and occupy land, space, or structures are transferred by the owner to another for a specified period of time in return for a specified rent.
 Leased Fee Interest: The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.
 Leasehold Interest: The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease.

Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.
 Lessee: One who has the right to occupancy and use of the property of another for a period of time according to a lease agreement.
 Lessor: One who conveys the rights of occupancy and use to others under a lease agreement.
 Liquidation Value: The most probable price that a specified interest in property should bring under the following conditions: 1) Consummation of a sale within a short time period. 2) The property is subjected to market conditions prevailing as of the date of valuation. 3) Both the buyer and seller are acting prudently and knowledgeably. 4) The seller is under extreme compulsion to sell. 5) The buyer is typically motivated. 6) Both parties are acting in what they consider to be their best interests. 7) A normal marketing effort is not possible due to the brief exposure time.
8) Payment will be made in cash in US dollars (or the local currency) or in terms of financial arrangements comparable thereto. 9) The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. This definition can also be modified to provide for valuation with specified financing terms.
 Market Rent: The most probable rent that a property should bring in a competitive and open market reflecting the conditions and restrictions of a specified lease agreement, including the rental adjustment and revaluation, permitted uses, use restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements (TIs).
 Market Value: A type of value that is the major focus of most real property appraisal assignments. Both economic and legal definitions of market value have been developed and refined, such as the following. 1) The most widely accepted components of market value are incorporated in the following definition: The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress. 2) Market value is described, not defined, in the Uniform Standards of Professional Appraisal Practice (USPAP) as follows: A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. 2 2 The actual definition of value used for this appraisal is contained within the body of the report.

The definition of market value given above is general in viewpoint and is only provided for amplification.

Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.
 Market Value of the Going Concern: The market value of an established and operating business including the real property, personal property, financial assets, and the intangible assets of the business.
 Marketing Time: An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal.  Modified Gross Lease: A lease in which the landlord receives stipulated rent and is obligated to pay some, but not all, of the property’s operating and fixed expenses. Since assignment of expenses varies among modified gross leases, expense responsibility must always be specified. In some markets, a modified gross lease may be called a double net lease, net net lease, partial net lease, or semi-gross lease.  Net Lease: A lease in which the landlord passes on all expenses to the tenant. See also gross lease; modified gross lease.
 Net Net Net Lease: An alternative term for a type of net lease. In some markets, a net net net lease is defined as a lease in which the tenant assumes all expenses (fixed and variable) of operating a property except that the landlord is responsible for structural maintenance, building reserves, and management; also called NNN lease, triple net lease, or fully net lease.
 Occupancy Rate: 1) The relationship or ratio between the potential income from the currently rented units in a property and the income that would be received if all the units were occupied.
2) The ratio of occupied space to total rentable space in a building.  Overage Rent: The percentage rent paid over and above the guaranteed minimum rent or base rent; calculated as a percentage of sales in excess of a specified breakpoint sales volume.
 Percentage Rent: Rental income received in accordance with the terms of a percentage lease; typically derived from retail store and restaurant tenants and based on a certain percentage of their gross sales.
 Prospective Opinion of Value: A value opinion effective as of a specified future date.

The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy.

Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.
 Rentable Area: For office or retail buildings, the tenant’s pro rata portion of the entire office floor, excluding elements of the building that penetrate through the floor to the areas below. The rentable area of a floor is computed by measuring to the inside finished surface of the dominant portion of the permanent building walls, excluding any major vertical penetrations of the floor. Alternatively, the amount of space on which the rent is based; calculated according to local practice.
 Retrospective Value Opinion: A value opinion effective as of a specified historical date.

The term retrospective does not define a type of value. Instead, it identifies a value opinion as being effective at some specific prior date. Value as of a historical date is frequently sought in connection with property tax appeals, damage models, lease renegotiation, deficiency judgments, estate tax, and condemnation. Inclusion of the type of value with this term is appropriate, e.g., “retrospective market value opinion.”  Shell Rent: The typical rent paid for retail, office, or industrial tenant space based on minimal “shell” interior finishes (called vanilla finish or white wall finish in some areas).

Usually the landlord delivers the main building shell space or some minimum level of interior build-out, and the tenant completes the interior finish, which can include wall, ceiling, and floor finishes, mechanical systems, interior electricity, and plumbing. Typically these are long-term leases with tenants paying all or most property expenses.  Surplus Land: Land that is not currently needed to support the existing use but cannot be separated from the property and sold off for another use. Surplus land does not have an independent highest and best use and may or may not contribute value to the improved parcel. See also excess land.
 Turnover Vacancy: A method of calculating vacancy allowance that is estimated or considered as part of the potential income estimate when using discounted cash flow (DCF) analysis. As units or suites turn over and are available for re-leasing, the periodic vacancy time frame (vacancy window) to release the space is considered.  Usable Area: 1) For office buildings, the actual occupiable area of a floor or an office space; computed by measuring from the finished surface of the office side of corridor and other permanent walls, to the center of partitions that separate the office from adjoining usable areas, and to the inside finished surface of the dominant portion of the permanent outer building walls. Sometimes called net building area or net floor area. See also floor area. 2) The area that is actually used by the tenants measured from the inside of the exterior walls to the inside of walls separating the space from hallways and common areas.  Use Value: The value of a property assuming a specific use, which may or may not be the property’s highest and best use on the effective date of the appraisal. Use value may or may not be equal to market value but is different conceptually. See also value in use.

Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.
 Value In Use: The value of a property assuming a specific use, which may or may not be the property’s highest and best use on the effective date of the appraisal. Value in use may or may not be equal to market value but is different conceptually. See also use value.  Value Indication: A valuer’s conclusion of value resulting from the application of an approach to value, e.g., the value indication by the sales comparison approach.

Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.

Addendum B
Legal
Descriptions
Resolution No. XXXX

Resolution No. XXXX

Resolution No. XXXX

Resolution No. XXXX

Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.

Addendum C
Property Information
Resolution No. XXXX

 


 
 





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ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.

Addendum D
Comparable Data
Resolution No. XXXX

ADDENDA
985-1001 O'Brien Dr., 1320 Willow Rd.

Land Sales
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Resolution No. XXXX

ADDENDA
1125 O'Brien Drive
Addendum E
Appraiser Qualifications and Licenses
Resolution No. XXXX

1 Kenneth E. Matlin, MAI, ASA, SRA, serves as a senior vice president in the San Jose office of Newmark Valuation & Advisory. Kenneth joined NKF in 2017, after founding his own appraisal firm, Kenneth E. Matlin & Associates.

As an appraiser, Kenneth has successfully completed assignments involving a range of property types, including vacant land, office buildings, industrial properties and residential housing. These assignments have been used for mortgage lending, corporate advisory, off-balance sheet financing, disposition, acquisition, assessment districts, tax appeals, litigation and rent arbitration.

Kenneth founded his appraisal firm and joined Newmark after serving as an appraiser and manager at Cushman & Wakefield for 33 years. As a senior director of Valuation & Advisory in the San Jose office, Kenneth was responsible for completing appraisals for clients ranging from private investors to local and international banks and pension fund advisors. Kenneth was also responsible for client relationships and managing the appraisal of portfolios of properties.

Prior to returning to appraising in 1999, Kenneth managed Cushman & Wakefield’s Valuation & Advisory offices in San Francisco and Walnut Creek as well as San Jose. In this role, he was responsible for interfacing with clients, directing personnel, maintaining quality control and providing litigation support.

Licenses and Designations
– Accredited Senior Appraiser, American Society of Appraisers – MAI designation, Appraisal Institute
– SRA designation, Appraisal Institute
– Certified general real estate appraiser, state of California In addition, Kenneth has qualified as an expert before the U.S. Bankruptcy Court in San Jose, San Francisco Los Angeles, Las Vegas and Santa Rosa; and before the Superior Court of California in Santa Clara and San Mateo counties.

Education
Kenneth earned a Bachelor of Science degree in real estate from San Diego State University. He has also met the requirements for the continuing education programs of the Appraisal Institute, American Society of Appraisers and he has met the continuing education requirements for the State of California.

Kenneth E.

Matlin

MAI, AI-GRS, ASA,
SRA
Senior Vice President
CA Appraiser License #AG002022
t 408-982-8419
[email protected]

YEARS OF

EXPERIENCE
46+

AREAS OF

SPECIALTY
Litigation Support
Tenant Representation
Landlord Representation
Office Appraisals
Industrial Appraisals
Land Appraisals
Resolution No. XXXX

Resolution No. XXXX

COMMUNITY AMENITIES
APPRAISAL OF:
985 AND 1001 O’BRIEN DRIVE AND
1320 WILLOW ROAD

MENLO PARK, CALIFORNIA
PREPARED FOR:

CITY OF MENLO PARK

MENLO PARK, CALIFORNIA
23-RBA-042
NOVEMBER 2023
EXHIBIT B Resolution No. XXXX

November 16, 2023
Mr. Christopher R. Turner
Associate Planner
City Hall – 1st Floor
701 Laurel Street
Menlo Park, CA 94025
Re: 23-RBA-042, Community Amenities
Appraisal
985 & 1001 O’Brien Drive and 1320
Willow Road
Menlo Park, California

Dear Mr. Turner:

At your request and authorization, R. Blum and Associates has prepared an appraisal of the above referenced property.

The subject property appraised consists of three contiguous assessor’s parcels which are irregular in shape and have frontage on O’Brien Drive and Willow Road in the City of Menlo Park, California. The parcels have the street addresses of 985 and 1001 O’Brien Drive and 1320 Willow Road. They are identified by the San Mateo County Assessor as Parcel Numbers 055-421-050, -060, and -160. Total site area is 183,616 square feet, or 4.22 acres. The parcels are currently improved with three single-story industrial buildings totaling approximately 90,600 square feet.

The properties are proposed to be redeveloped in two phases with two R&D / life sciences buildings, five and four stories, with a freestanding 7-story parking garage. The proposed addresses are 985 and 1001 O’Brien Drive and 1320 Willow Road. Total proposed building area is 228,081 square feet. A total of 527 parking stalls are proposed of which 504 will be in the parking garage. A total of 59,344 square feet of open space will be provided, of which 31,535 square feet will be publically accessible and will apparently connect to the adjacent Hetch Hetchy corridor which adjoins the site. The developer is Tarlton Properties.

This appraisal addresses the Bonus Level Development Value (Value of the Amenity) based on instructions provided by the City of Menlo Park. The Bonus Level Development Value (Value of the Amenity) is to be based on 50 percent of the difference between the hypothetical market value of the land without improvements assuming it is entitled under the base level density (55 percent FAR) and the hypothetical market value of the land without improvements assuming it is entitled for the proposed project under the bonus level density (1.242 percent based on 228,081 SF Resolution No. XXXX

Mr. Christopher Turner 2 November 16, 2023
Proposed / 183,616 SF Land) percent. The base density is concluded to be 100,989 square feet (183,616 SF Land X .55).

This appraisal was requested by Mr. Christopher Turner, Associate Planner with the City of Menlo Park. The client for this report is the City of Menlo Park. The intended users are the City of Menlo Park and the applicant as part of the appraisal process to establish the value of the Bonus Level Development Value (Value of the Amenity) for the proposed project under the appraisal instructions. This report should not be used or relied upon by any other parties for any reason.

HYPOTHETICAL CONDITIONS AND EXTRAORDINARY ASSUMPTIONS
Hypothetical Conditions
The concluded market land values under both density scenarios assume that the subject site is cleared of all improvements and are based on the fee simple interest.

The concluded market land values under both density scenarios assume that the property is fully entitled to build a life sciences project at the concluded densities.

There are no extraordinary assumptions associated with this appraisal.

The use of any hypothetical conditions or extraordinary assumptions in this report might have affected the assignment results.

VALUE CONCLUSIONS

Based on the research and analysis contained in the attached report, and subject to the assumptions and limiting conditions contained therein, it is the opinion of the appraiser that the concluded hypothetical fee simple market land values and Bonus Level Development Value, as of May 26, 2022, are as follows:

Hypothetical Market Value as if Vacant at Bonus Level Density: $61,600,000 Hypothetical Market Value as if Vacant at Base Level Density: $30,300,000 Differential (Value of Bonus Floor Area): $31,300,000
Bonus Level Development Value (50% of Value of Bonus Floor Area): $15,650,000 It is concluded that the above market land values could be achieved within a 12-month exposure period.

CERTIFICATION
I, the undersigned, hereby certify that, to the best of my knowledge and belief: the statements of fact contained in this report are true and correct; the reported analyses, opinions, and conclusions Resolution No. XXXX

Mr. Christopher Turner 3 November 16, 2023
are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions; I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved; I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment; my engagement in this assignment was not contingent upon developing or reporting predetermined results, my compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal; the appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan; my analyses, opinions and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice, Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, and is in compliance with FIRREA; I have made a personal inspection of the property that is the subject of this report; Robert Dawson provided significant professional research assistance to the person signing this report. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report Ronald Blum has completed the requirements under the continuing education program of the Appraisal Institute.

In accordance with the Competency Provision in the USPAP, I certify that my education, experience and knowledge are sufficient to appraise the type of property being valued in this report.

We previously provided appraisal review services for this property for the same client in 2023.

Otherwise we have not provided any appraisal or valuation services related to this property in the last three years.

I am pleased to have had this opportunity to be of service. Please contact me if there are any questions regarding this appraisal.

Sincerely,
R. BLUM AND ASSOCIATES

Ronald Blum, MAI
Certified General Real Estate Appraiser
State of California No. AG009958
Resolution No. XXXX

Table of Exhibits
23-RBA-042
I. REPORT SUMMARY.................................................................................................................... 1 A. Property Appraised .................................................................................................................... 1 B. Client, Intended Use and Intended User .................................................................................. 1 C. Reporting Format ....................................................................................................................... 1 D. Scope of Appraisal ...................................................................................................................... 1 E. Effective Date of Appraisal, Date of Inspection and Report Date ......................................... 2 F. Value Conclusions ...................................................................................................................... 3 G. Assumptions and Limiting Conditions ..................................................................................... 3 II. AREA AND NEIGHBORHOOD DESCRIPTION ........................................................................ 6 A. County of San Mateo .................................................................................................................. 6 B. Neighborhood Description and Immediate Environs ............................................................. 6 C. Conclusion ................................................................................................................................... 7 III. MARKET OVERVIEW ................................................................................................................. 8 A. Life Sciences Market Overview ................................................................................................ 8 B. Marketing and Exposure Period Analysis ............................................................................... 9 IV. PROPERTY DESCRIPTION ....................................................................................................... 10 A. Site Description ......................................................................................................................... 10 B. Ownership and Sales History .................................................................................................. 10 C. Easements and Restrictions ..................................................................................................... 10 D. Environmental Observations .................................................................................................. 11 E. Flood Zone and Seismic Information ..................................................................................... 11 F. Assessed Valuation and Real Estate Taxes ............................................................................ 11 G. Zoning and Status of Entitlements ......................................................................................... 11 H. Improvements Description ...................................................................................................... 12 V. HIGHEST AND BEST USE AND VALUATION METHODOLOGY ...................................... 13 A. Highest and Best Use ................................................................................................................ 13 B. Methodology ............................................................................................................................. 13 VI. LAND VALUATION – BOTH DEVELOPMENT SCENARIOS .............................................. 15 A. Comparable Land Sales ........................................................................................................... 15 B. Analysis and Land Value Conclusion – Base Density ........................................................... 17 C. Analysis and Land Value Conclusion – Bonus Density ........................................................ 20 D. Bonus Level Development Value Conclusion ........................................................................ 21 E. Final Value Conclusions .......................................................................................................... 21 Resolution No. XXXX

Table of Exhibits
23-RBA-042

LIST OF TABLES
Table 1 - Comparable Land Sales 15.1
Table 2 ` Comparable Land Sales Adj. Grid – Base Dev. Density 17.1 Table 3 - Comparable Land Sales Adj. Grid – Bonus Dev. Density 20.1

LIST OF EXHIBITS
Regional Map following 6
Area Map following 7
Assessors Parcel Map following 10
Aerial View following 12
Subject Photographs following 12.1
Comparable Land Sales Map following 15.1

ADDENDA
Comparable Photographs
Qualifications and License of Appraiser
Resolution No. XXXX

Appraisal: 985 & 1001 O’Brien Dr. and 1320 Willow Rd., Menlo Park, CA Page 1 23-RBA-042
I. REPORT SUMMARY
A. Property Appraised
The subject property appraised consists of three contiguous assessor’s parcels which are irregular in shape and have frontage on O’Brien Drive and Willow Road in the City of Menlo Park, California. The parcels have the street addresses of 985 and 1001 O’Brien Drive and 1320 Willow Road. They are identified by the San Mateo County Assessor as Parcel Numbers 055-421-050, -060, and -160. Total site area is 183,616 square feet, or

4.22 acres. The parcels are currently improved with three single-story industrial buildings totaling approximately 90,600 square feet. The properties are proposed to be redeveloped in two phases with two R&D / life sciences buildings, five and four stories, with a freestanding 7-story parking garage. The proposed addresses are 985 and 1001 O’Brien Drive and 1320 Willow Road. Total proposed building area is 228,081 square feet. A total of 527 parking stalls are proposed of which 504 will be in the parking garage. A total of 59,344 square feet of open space will be provided, of which 31,535 square feet will be publically accessible and will apparently connect to the adjacent Hetch Hetchy corridor which adjoins the site. The developer is Tarlton Properties.

This appraisal addresses the Bonus Level Development Value (Value of the Amenity) based on instructions provided by the City of Menlo Park. The Bonus Level Development Value (Value of the Amenity) is to be based on 50 percent of the difference between the hypothetical market value of the land without improvements assuming it is entitled under the base level density (55 percent FAR) and the hypothetical market value of the land without improvements assuming it is entitled for the proposed project under the bonus level density (1.242 percent based on 228,081 SF Proposed / 183,616 SF Land) percent. The base density is concluded to be 100,989 square feet (183,616 SF Land X .55).

B. Client, Intended Use and Intended User
This appraisal was requested by Mr. Christopher Turner, Associate Planner with the City of Menlo Park. The client for this report is the City of Menlo Park. The intended users are the City of Menlo Park and the applicant as part of the appraisal process to establish the value of the Bonus Level Development Value (Value of the Amenity) for the proposed project under the appraisal instructions. This report should not be used or relied upon by any other parties for any reason.

C. Reporting Format
This appraisal is presented in a narrative report.

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D. Scope of Appraisal
The scope of work for this appraisal assignment report is to utilize the appropriate approaches to value in accordance with Uniform Standards of Professional Appraisal Practice (USPAP) to arrive at a market value conclusion. Specific steps include the inspection of the subject property (exterior) and the research, analysis and verification of comparable data to arrive at value indication as put forth in this report. The market values of the property under the appraisal instructions are based on the hypothetical condition that the improvements do not exist and the site is fully entitled under the base and bonus level densities. Land value is based on a Sales Comparison Approach only. The Income and Cost Approaches are not considered relevant and would not be consistent with the appraisal instructions. They are not included.

E. Effective Date of Appraisal, Date of Inspection and Report Date The effective date of the appraised value is May 26, 2022.

The date of this report is November 16, 2023.

Definition of Terms
Market Value (OCC 12 CFR 34.42 (f)) (OTS 12 CFR, Part 564.2 (f)) “Market Value” means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:
a. Buyer and seller are typically motivated;
b. Both parties are well informed or well advised, and acting in what they consider their own best interest;
c. A reasonable time is allowed for exposure in the open market; d. Payment is made in terms of cash in US dollars or in terms of financial arrangements comparable thereto; and
The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

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Leased Fee Interest (The Dictionary of Real Estate Appraisal, 7th Edition, 2022, p. 105)
The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.

Fee Simple Estate (Interest), (The Dictionary of Real Estate Appraisal,7th Edition, 2022, p. 73)
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

F. Value Conclusions

Based on the research and analysis contained in this report, and subject to the assumptions and limiting conditions contained herein, it is the opinion of the appraiser that the concluded hypothetical fee simple market land values and bonus level development value, as of May 26, 2022, are as follows:

Hypothetical Market Value as if Vacant at Bonus Level Density: $61,600,000 Hypothetical Market Value as if Vacant at Base Level Density: $30,300,000 Differential (Value of Bonus Floor Area): $31,300,000
Bonus Level Development Value (50% of Value of Bonus Floor Area): $15,650,000 It is concluded that the above market land values could be achieved within a 12-month exposure period.

G. Assumptions and Limiting Conditions
This appraisal report and all of the appraiser’s work in connection with the appraisal assignment are subject to the limiting conditions and other terms stated in the report. Any use of the appraisal by any party, regardless of whether such use is authorized or intended by the appraiser, constitutes acceptance of all such limiting condition and terms.

Hypothetical Conditions
The concluded market land values under both density scenarios assume that the subject site is cleared of all improvements and are based on the fee simple interest.

The concluded market land values under both density scenarios assume that the property is fully entitled to build a life sciences project at the concluded densities.

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There are no extraordinary assumptions associated with this appraisal. The use of any hypothetical conditions or extraordinary assumptions in this report might have affected the assignment results.

Standard Limiting Conditions
No responsibility is assumed for legal matters. It is assumed that title of the property is marketable and it is free and clear of liens, encumbrances and special assessments other than as stated in this report. The property is appraised assuming responsible ownership and competent management.

Information, estimates, and opinions furnished to the appraiser, and contained in the report, were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for their accuracy can be assumed by the appraiser.

All information has been checked where possible and is believed to be correct, but is not guaranteed as such.

No survey of the property has been made or reviewed by the appraiser unless noted in this report. No responsibility is assumed in connection with such matters.

Illustrative material, including maps and plot plans are included only to assist the reader in visualizing the property.

The appraiser assumes that there are no hidden or unapparent physical deficiencies or adverse conditions of the property, including soil contamination, which would make it more or less valuable. The appraiser assumes no responsibility for such conditions, or for engineering which might be required to discover such factors.

This appraisal report is not a contractor inspection report and the appraiser is not a contractor. It does not guarantee or imply that the property is free of defects or property condition problems. It is suggested that a professional inspection be secured if a detailed analyses of the structural and building systems is desired.

In this assignment, the existence (if any) of potentially hazardous materials used in the construction or maintenance of the improvements or disposed of on the site, or affecting it from off site, has not been considered except as noted within the report.

The appraiser is not qualified to detect such substances and this report should not be considered as an environmental assessment of the property; the client is advised to retain an expert in this field.

Any projections of income and expenses in this report are not predictions of the future. Rather, they are an estimate of current market thinking of what future income and expenses will be. No warranty or representation is made that these projects will materialize.

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The appraiser is not required to give testimony or appear in court in connection with this appraisal unless arrangements have been previously made.

The appraiser has not identified any purchaser, borrower or seller as an intended user of this appraisal and such parties should not rely on the appraisal for their own purposes. Neither payment for the appraisal nor receipt of a copy of the appraisal by such a party or any other third party means that the party is an intended user of the appraisal. Such parties are advised to obtain an appraisal from an appraiser of their own choosing if they require an appraisal for their own use. This appraisal report should not serve as the basis for any property purchase decision or any appraisal contingency in a purchase agreement relating to the property.

Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event only with the proper written qualification, only in its entirety, and only for the contracted intended use.

Neither all nor part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales, or other media without the written consent and approval of the appraiser. The appraiser, client, firm, and any reference to the Appraisal Institute or the MAI designation shall be identified without written consent of the appraiser.

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II. AREA AND NEIGHBORHOOD DESCRIPTION
A. County of San Mateo
San Mateo County is one of the nine counties comprising the San Francisco Bay Area. It totals approximately 450 square miles of land extending from the Pacific Ocean on the west to San Francisco Bay on the east, and benefits from its proximity to both San Francisco and the Silicon Valley. The county is geographically divided into eastern and western portions by the Santa Cruz foothills, with most development traditionally having taken place along the more accessible eastern portion, facing San Francisco Bay.

The county is characterized by a ribbon of manufacturing, engineering and technical products firms closest to the bay, with business and residential areas stretching westward into the foothills. Land available for development is in short supply. Consequently, population expansion has slowed considerably following the fast growing decades of the 1950s and 1960s. As of January 1, 2023, the State Department of Finance (DOF) estimated the county’s population at 737,644, a 0.4 percent decrease from the year earlier.

In terms of employment, San Mateo County has a diversified economy. Its unemployment has historically been below state and national levels and is currently very strong.

County residents’ household earnings, average education levels, and spending power are all above average for the region. Both rents and home sale prices are high in San Mateo County, and there is a generally recognized dearth of affordable housing for area residents.

Consequently, many workers commute from other counties and cities, adding to traffic congestion throughout the area.

Transportation systems serving the County are well established and heavily used by area residents and workers. Two primary freeways running north/south through the area are the Bayshore Freeway (Highway 101) and Interstate 280. Highways 92 and 380 connect these arteries in the central and north/central portions of the county. El Camino Real is the main, commercially developed surface street on the San Francisco Peninsula. CalTrain passenger trains and limited rail freight serve the area, and SamTrans bus service is also available.

The San Francisco International Airport is the region’s main airport.

B. Neighborhood Description and Immediate Environs
The subject property is located in the City of Menlo Park which is bordered by San Francisco Bay to the north and east, Palo Alto and East Palo Alto to the south, and Atherton and Redwood City to the west. Largely residential in nature, the City has industrial uses adjacent to San Francisco Bay including the headquarters of Meta, formerly Facebook. As of January 1, 2023, the population was estimated at 32,478, down 0.8 percent from the prior year.

Resolution No. XXXX

Copyright © and (P) 1988–2012 Microsoft Corporation and/or its suppliers. All rights reserved. http://www.microsoft.com/streets/ Certain mapping and direction data © 2012 NAVTEQ. All rights reserved. The Data for areas of Canada includes information taken with permission from Canadian authorities, including: © Her Majesty the Queen in Right of Canada, © Queen's Printer for Ontario. NAVTEQ and NAVTEQ ON BOARD are trademarks of NAVTEQ. © 2012 Tele Atlas North America, Inc. All rights reserved. Tele Atlas and Tele Atlas North America are trademarks of Tele Atlas, Inc. © 2012 by Applied Geographic Solutions. All rights reserved. Portions © Copyright 2012 by Woodall Publications Corp. All rights reserved.

REGIONAL MAP
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The subject property is located in an industrial and mixed-use area in the northern portion of Menlo Park adjoining the City of East Palo Alto. This largely industrial area directly adjoins the access to the Dumbarton Bridget to the East Bay and houses the main Facebook campus. The general subject neighborhood boundaries can be defined as Willow Road to the west, the Bayfront Expressway (Highway 84) to the north, O’Brien Drive and the Menlo Park City limits to the south and University Avenue and the Menlo Park City limits to the east. The site is within the Kavanaugh Industrial Park in the Bayfront area of the City.

The immediate environs of the site include the right-of-way for the Hetch-Hetchy water line and Mid-Peninsula High School to the north, Willow Road to the west, and industrial properties to the east and west on O’Brien Drive. There is an industrial building currently used as a church to the southwest on O’Brien Drive at Willow Road. Across Willow Road are residential and other industrial uses.

The subject site is at approximately 12 feet above mean sea level with relatively level topography. Groundwater flow slightly to the north toward the Bay. Based on a Phase II report from 2021, groundwater is approximately 15 feet below the surface.

Access to the property is very good, approximately one half mile from the interchange of Willow Road and State Highway 101 to the south, and with proximate access Highway 84 and the Dumbarton Bridge.

C. Conclusion
San Mateo County and Menlo Park are each developed with diversified economic bases.

As developable land in the area is mostly improved, future growth in both the County and City will likely be comprised primarily of infill and redevelopment. The subject property is located within an older industrial area, has good vehicular access, and is proposed for development with a higher density industrial / life sciences use. The outlook for the neighborhood and area are positive.
.

Resolution No. XXXX

Copyright © and (P) 1988–2012 Microsoft Corporation and/or its suppliers. All rights reserved. http://www.microsoft.com/streets/ Certain mapping and direction data © 2012 NAVTEQ. All rights reserved. The Data for areas of Canada includes information taken with permission from Canadian authorities, including: © Her Majesty the Queen in Right of Canada, © Queen's Printer for Ontario. NAVTEQ and NAVTEQ ON BOARD are trademarks of NAVTEQ. © 2012 Tele Atlas North America, Inc. All rights reserved. Tele Atlas and Tele Atlas North America are trademarks of Tele Atlas, Inc. © 2012 by Applied Geographic Solutions. All rights reserved. Portions © Copyright 2012 by Woodall Publications Corp. All rights reserved.

AREA MAP
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III. MARKET OVERVIEW
A. Life Sciences Market Overview
As of the May 2022 appraisal date, the life science market in the San Francisco Bay Area was enjoying very strong conditions and had been considered one of the strongest markets nationwide. Life science space is generally comprised of a combination of laboratory and office space, once found in traditional one-story industrial buildings, and now often found in high quality multi-story steel frame buildings with interior improvement buildouts in the range of $200 to $300 per square foot. The proximity to elite research institutions, venture capital funding and existing pharmaceutical companies along with the recent global pandemic has led to the expansion of the region’s life science industry.

According to Newmark’s San Francisco Bay Area Life Science Market Overview for the second quarter 2022, the market-wide life science availability rate (direct plus sublease available space) for the San Francisco Bay Area was 7.7 percent, up from 6.6 percent in the first quarter 2022 and 7.3 percent in the second quarter 2021. Total available space for the second quarter 2022 was 2.6 million square feet. The reported net absorption was 284,363 square feet for the second quarter 2022, up from negative 225,000 in the first quarter 2022 and 212,000 in the second quarter 2021. Tenant demand was reported at 4.4 million square feet for the second quarter, similar to the previous quarter, but down from

5.4 million square feet in the second quarter 2021. As of the second quarter 2022, there was 5.6 million square feet under construction, up from 3.4 million in the first quarter 2022 and 3.3 million in the second quarter 2021. Asking rents continued to increase and were reported to be in the range of $6.50 to $7.50 per square foot, triple net for the North Peninsula, $5.75 to $7.75 per square foot for the Mid-to-South Peninsula, $4.50 to $7.25 for the North East Bay and $3.75 to $4.95 for the South East Bay.

The subject property is located in Menlo Park which is in the South Peninsula submarket (Menlo Park, Palo Alto and Mountain View) which according to Newmark has a total inventory of approximately 3.57 million square feet of life science space. As of the second quarter 2022, the availability rate was 10.1 percent, or 359,930 square feet. There was no available sublease space in the South Peninsula submarket. According to the report, Menlo Park has a total inventory of approximately 954,197 square feet of life science space. As of the second quarter 2022, the availability rate for Menlo Park was 0.7 percent, or 6,252 square feet. Average asking rent was not reported for the South Peninsula submarket, but was reported to be in the range of $5.75 to $7.75 per square foot for the Mid-to-South Peninsula submarkets which includes the area from Millbrae to the north to Mountain View to the south.

Overall, market conditions were considered to be very strong in the Bay Area life science market in the second quarter 2022. According to the Newmark report, the San Francisco Bay Area life science market continued to experience unprecedented growth heading into the second half of 2022 and interest in premium life science space showed no signs of Resolution No. XXXX

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abating across the Bay Area in the second quarter of 2022. The overall outlook for the subject market area and subject property was considered positive.

B. Marketing and Exposure Period Analysis
The exposure period is defined as "the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal." Thus it is assumed to have occurred prior to the appraisal date. In contrast the marketing period is the estimated time that it would take to consummate the sale after the appraisal date.

Based on the attributes of the subject property an exposure period is concluded at 12 months. The required marketing period is also estimated to be 12 months. These estimates are applicable to the hypothetical land values under both valuation scenarios. The value of the amenity conclusion is not considered to be an estimate of market value.

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IV. PROPERTY DESCRIPTION
A. Site Description
The subject property currently consists of three assessor’s parcels comprised of approximately 183,616 square feet, or 4.22 acres. The parcels have the street addresses of 985 and 1001 O’Brien Drive and 1320 Willow Road. They are identified by the San Mateo County Assessor as Parcel Numbers 055-421-050, -060, and -160. The pending development is proposing a lot-line adjustment and the site will be divided into two assessor parcels in the future.

The topography of the subject site is generally level and at street grade. The precise nature and condition of subsurface soils is not known; however, judging from the condition and appearance of the subject improvements and adjacent properties, it is assumed that soil conditions are satisfactory for the construction of conventional building improvements.

The subject property currently does not have a known underground storm drain system and it appears current drainage is currently on overland flow to discharge storm water to an offsite inlet near the northeast corner of the property with no treatment or detention. New storm drainage improvements will be made when the property is developed.

All streets adjacent to the subject are fully paved and contain sidewalks, curbs, gutters and street lighting. The property is serviced with all typical urban utilities, including public water and sewer systems. Local companies supply electricity, gas, and telephone service.

B. Ownership and Sales History
According to the public record, fee title to the subject property is held by Obrien Drive Portfolio LLC. Based on public records, the sites were acquired in 2013 and 2015 and no transfers have occurred in the last three years. The sites are not known to be currently marketed or in escrow to be sold.

C. Easements and Restrictions
A preliminary title report was not provided. However, legal descriptions were reviewed.

It appears that there are non-exclusive easements for pedestrian ingress and egress and rain water drainage. The specific locations of these easements are not known but they may be in part by and between the subject parcels. It is likely that any issues regarding these easements will be incorporated into the design of the proposed buildings.

It is assumed that there are no easements or restrictions which would negatively impact the utility or marketability of title to the subject property. No specific exceptions to title were observed based on physical inspection of the property.

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ASSESSOR’S MAP

SUBJECT
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D. Environmental Observations
Phase I and II environmental reports were prepared by Farallon for the subject property and a combined report dated September 10, 2021 was reviewed. The reports did not identify any recognized environmental conditions in connection with the site.

Site inspection revealed no evidence of toxic contamination although some hazardous substances are reportedly stored on site. The reader is directed to the limiting condition regarding environmental issues.

E. Flood Zone and Seismic Information
According to Flood Insurance Rate Map, Community Panel 06081C-0307F, Participating Community, Regular Program, dated April 5, 2019, the subject property is located in Flood Zone AE. Zone AE is a flood hazard area and flood insurance is mandatory.

The subject property is not located within an Alquist-Priolo earthquake special studies zone.

F. Assessed Valuation and Real Estate Taxes
The subject property is currently comprised of three assessor parcels which are currently assessed for the 2023 – 2024 tax year at approximately $26.97 million, of which $22.42 million is for land and $4.55 million is for improvements. The current tax rate in Menlo Park is 1.1329 percent plus special assessments. Total current taxes are approximately $313,542 with approximately $8,037 for special assessments.

In California real property is assessed at full market value as determined by the County assessor. A property assessed value increases by a maximum of 2 percent annually, as mandated by Proposition 13, until the property transfers or is improved. Upon sale, a property is taxed on the basis of 1 percent of purchase price plus existing bonded indebtedness.

G. Zoning and Status of Entitlements
The subject site is designated under the Menlo Park General Plan as LS or Life Sciences and is zoned LS-B, or Live Sciences / Bonus Available. The purpose of this zoning designation is to provide opportunity for new life science and R&D uses, and high-tech offices with supportive sales and personal services. Base building height is 35 feet and up to 110 feet with Bonus Level designation. The maximum FAR is 55 percent for life sciences use up to 125 percent with Bonus Level designation and a minimum open space of 20 percent.

The proposed project is still in the entitlement stage and an EIR is underway. The concluded hypothetical land values in this appraisal assume that the site is fully entitled for Resolution No. XXXX

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the proposed life sciences use under the two distinct development densities. Both of these scenarios are considered to be consistent with zoning and General Plan requirements.

H. Improvements Description
The subject property is currently improved with three single-story industrial buildings which were built between 1955 and 1963. The values concluded in this appraisal re subject to the hypothetical condition that the existing improvements have been removed. They are therefore are not relevant and are not considered in in this appraisal.

Resolution No. XXXX

AERIAL VIEW

SUBJECT
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Northeasterly View of Subject from O’Brien Drive Easterly View Along O’Brien Drive Northwesterly View of Subject from O’Brien Drive Westerly View Along O’Brien Drive

SUBJECT PHOTOGRAPHS
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Northerly View Along Willow Road View of Subject from Willow Road Southerly View Along Willow Road

SUBJECT PHOTOGRAPHS
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V. HIGHEST AND BEST USE AND VALUATION METHODOLOGY
A. Highest and Best Use
The highest and best use is that use, from among reasonably probable and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in the highest land value.

As-If Vacant
In determining the highest and best use of the subject site as if vacant, the four tests are applied to the subject. These include: legal permissibility, physical possibility, financial feasibility and maximum productivity.

The physical parameters of the site allow a wide variety of development, although the flood zone will mandate some design issues and flood insurance will be required.

The subject property is zoned for life science and other R&D and office uses with density bonus available. Those uses remain in some demand in the Menlo Park area although demand is lower than in recent years. Development is likely still feasible as evidenced by the current developers plans. The highest and best use as if vacant is for development in accordance with existing zoning, with the use of the density bonus.

As Improved
The concluded value in this appraisal assumes the existing improvements have been removed so the highest and best use as improved would be consistent with the highest and best use as if vacant. The existing one-story industrial buildings are at or near the end of their economic lives and even considering the existing improvements, the highest and best use is for interim use of the existing buildings until development is entitled and the development market stabilizes at which time redevelopment in accordance with the highest and best use as if vacant would be undertaken.

B. Methodology
The valuation of any parcel of real estate is derived principally through three approaches to market value. From the indications of these analyses and the weight accorded to each, an opinion of value is reached. Each approach is more particularly described below.

Cost Approach
This approach is the summation of the estimated value of the land, as if vacant, and the reproduction or replacement cost of the improvements. From these are deducted the appraiser’s estimate of physical deterioration, functional obsolescence and economic obsolescence, as observed during inspection of the property and its Resolution No. XXXX

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environs. The Cost Approach is based on the premise that, except most unusual circumstances, the value of a property cannot be greater than the cost of constructing a similar building on a comparable site.

Sales Comparison Approach
This approach is based on the principal of substitution, i.e., the value of a property is governed by the prices generally obtained for similar properties. In analyzing the market data, it is essential that the sale prices be reduced to common denominators to relate the degree of comparability to the property under appraisal.

The difficulty in this approach is that two properties are never exactly alike.

Income Approach
An investment property is typically valued in proportion to its ability to produce income. Hence, the Income Approach involves an analysis of the property in terms of its ability to provide a net annual operating income. This estimated income is then capitalized at a rate commensurate with the risks inherent in ownership of the property, relative to the rate of return offered by other investments. In this analysis, a direct capitalization analysis is utilized.

This appraisal is being prepared in conformance with appraisal instructions provided by the client, the City of Menlo Park. This document, entitled Appraisal Instructions to Determine the Value of Community Amenities Under Bonus Level Zoning was recently updated. The base and bonus levels of zoning are determined by the City of Menlo Park and are stated on a Gross Floor Area basis as defined. The values under both scenarios are based on the assumption that the site is fully entitled. Market value is defined. The date of value is to be no more than 90 days of submission of the appraisal report to the City of Menlo Park. The only allowed methodology is the Sales Comparison Approach.

The comparables are to be located in or as close to Menlo Park, as current, and as physically similar as reasonably available data allows and are to have similar intended uses. After reasonable adjustment for differences, the appraisal is to conclude the GFA per square foot value under both scenarios with analysis and explanation of any adjustments. The comparables under both analyses are to be the same. The Value of the Amenity is to be calculated by taking the difference between the two value conclusions which results in the Value of the Additional GFA Proposed and multiplying that amount by 50 percent.

Given the instructions, the Cost and Income Approaches are not used. This would generally be the case, even without the specific instruction, as the Sales Comparison Approach is considered to be the primary methodology for valuing vacant entitled land.

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VI. LAND VALUATION – BOTH DEVELOPMENT SCENARIOS
Fee simple land value is estimated using the Sales Comparison Approach. The table on the following page presents five comparable land transaction used to estimate the market land value under both development density scenarios, base and bonus. Unless otherwise noted, these properties transferred on an all cash basis or in terms reflecting a cash equivalent price. The comparable sales are discussed in the following paragraphs. The comparables are discussed in detail in the following section.

A. Comparable Land Sales
Comparable 1 is the sale of the generally rectangular shaped site located at 1 Casey Court in Menlo Park. The property is improved with a 20,955 square foot industrial building built in 1965. Total site area is 73,180 square feet, or 1.68 acres. The site is zoned LS-B, or Life Science - Bonus. This site is within a flood zone.

In March 2022, O’Brien Drive Portfolio, LLC (Tarlton Properties, Inc.) purchased this property from Grek Decedents Trust for $8,712,500. Reportedly, the buyer paid $3,000,000 to buyout the existing tenant which increases the price to $11,712,500, or $160 per square foot of land area. The buyer intends to assemble this site with three other parcels the buyer acquired between 2007 and 2019. The total assembled site area is 179,538 square feet, or 4.12 acres. The site is planned for a five story, 131,642 square foot life science development with 229 surface parking spaces. The overall floor area ratio (FAR) for the development is 73.3 percent. The comparable parcel will be used for 147 surface parking spaces. However, the site was purchased without entitlements and the maximum FAR allowed under zoning without the density bonus is 55 percent. That is equivalent to 40,249 square feet which indicates a price per square foot of FAR / gross building area of $291.

Comparable 2 is the sale of the Westshore Office Park located at 200 Twin Dolphin Drive in Redwood City. The property is improved with six, one-story office buildings that were built in 1984 and contain 61,366 square feet. According to the broker, the property was vacant at the time of sale. Total site area is 204,045 square feet, or 4.68 acres. The site is zoned CP, or Commercial Park District and was entitled by the seller in March 2021 for a 202,010 square foot, 5-story office building with a separate five level parking garage. The indicated floor area ratio (FAR) is 99 percent. The project will include 655 garage spaces and 35 surface spaces for a total of 690 parking spaces. The garage area will be 232,595 square feet, or 355 square feet per parking space. This site is not in a flood zone.

In January 2022, 200-240 Twin Dolphin, LLC (Trammell Crow Company) purchased this property from SHP Westshore, LLC (Sand Hill Property Company) for $64,875,000, or $318 per square foot of land area and $321 per square foot of proposed building area.

According to the broker, the buyer intends to build the approved building for life science use. Reportedly, converting the approved project from office to life science use was not an issue. The buyer started construction in July 2023 and anticipates a late 2024 completion date.

Resolution No. XXXX

Table 1 Page 15.1
Land Grantor/
Sale Area Sale Planned Grantee/
No. Location Date Prop. FAR Price Development Zoning Document No. 1 1 Casey Ct. 3/22 73,180 SF $8,712,500 $160 Site improved with a 20,955 SF industria LS-B Grek Decedent's Trust/ Menlo Park 1.68 AC $3,000,000 (2) $291 building built in 1965. Comparable parcel is (Life Science - Bonus) O'Brien Drive Portfolio, LLC APN: 055-433-180 40,249 SF $11,712,500 part of a larger 179,538 SF (4.12 AC) site Flood Zone AE #026942

0.55 FAR(1) (unentitled) proposed for a 5-story, 131,642 SF Life Science development with surface parking.
2 200 Twin Dolphin Dr. 1/22 204,045 SF $64,875,000 $318 Site improved with a 61,366 SF office park. CP SHP Westshore, LLC/ Redwood City 4.68 AC (entitled by seller) $321 Site was entitled in March 2021 for a 5-story (Commercial Park District) 200-240 Twin Dolphin, LLC APN: 111-910-010 thru -250 202,010 SF 202,010 SF office development with a Not in Flood Zone #003113(25 Parcels) 0.99 FAR 5-level parking garage. Buyer to develop approved building for Life Science use.
3 1030 Brittan Ave. 1/22 87,990 SF $20,000,000 $227 Site improved with a surface parking lot. GCI Robert A. Williamson Tr./ San Carlos 2.02 AC (entitled by buyer) $227 Site entitled for a 3-story building with ground (General Commercial MBC BioLabs 1030, LP APN: 046-162-300 88,054 SF (3) level and below grade parking garage. Industrial Zone) #008508(former 046-162-060 & -070) 1.00 FAR Proposed use is Life Science. Flood Zone AO 4 210 Adrian Rd. 10/21 89,951 SF $80,000,000 $889 Site improved with an 85,500 SF industria TOD Real Property Storage, LLC/ Millbae 2.06 AC (partially entitled $304 building built in 1946 and 1956. Site proposed (Transit Oriented Millbrae Adrain Science Park, LLC APN: 024-353-300 263,042 SF (3) by seller) for a 6-story, 263,042 SF Life Science building Development) #140980(former 024-353-180) 2.92 FAR with above and below grade parking garage Not in Flood Zone 5 1021 Howard Ave. 7/21 95,519 SF $33,000,000 $345 Site improved with three, one-story industria GCI Hamilton Investors Bayport, LLC/ San Carlos 2.19 AC (unentitled) $173 buildings (44,774 SF) built in 1958 and 1965 (General Commercial 1021 Howard Owner, LLC APN: 046-191-020, -070 & -080 190,869 SF (3) Site proposed for a 3-story, 190,869 SF Industrial Zone) #107662

2.00 FAR building plus two levels of below grade parking Not in Flood Zone Proposed use is Life Science.
**SUBJECT** 183,616 SF LS-B

4.22 AC (Life Science - Bonus)
228,081 SF

1.24 FAR
GBA at Base Densit 100,989 y of 55%
(1) Maximum allowed under zoning without bonus payment, proposed FAR of larger project is 73.3%(2) Tenant buyout.(3) Excludes ground level and lower level parking garage Source: R.Blum and Associates, 23-RBA-042, November 2023 Price
Per SF/
FAR

COMPARABLE LAND SALES
Appraisal of 1005 O'Brien and 1320 Willow Road
Menlo Park, California
Resolution No. XXXX Page 149 of 175
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COMPARABLE LAND SALES MAP
0 mi 2 4 6 8
Resolution No. XXXX Page 150 of 175
Appraisal: 985 & 1001 O’Brien Dr. and 1320 Willow Rd., Menlo Park, CA Page 16 23-RBA-042
Comparable 3 is the sale of a surface parking lot located at 1030 Brittan Avenue in San Carlos. The rectangular shaped site contains approximately 87,990 square feet, or 2.02 acres. The site is zoned GCI, or General Commercial / Industrial Zone. The buyer entitled the site during escrow for an 88,054 square foot, 3-story life science building with an above grade and below grade parking garage. The indicated floor area ratio (FAR) is 100 percent.

The project will include 221 garage spaces and 17 surface spaces for a total of 238 parking spaces. The planning application for the project was submitted in approximately October 2020. This site is in Flood Zone AO.

In January 2022, BMC BioLabs, 1030, LP (MBC BioLabs) purchased this property from Robert A. Williamson Trust for $20,000,000, or $227 per square foot of land area and $227 per square foot of proposed building area. According to the buyer, the price was established in approximately 2020. The proposed development is under construction with an expected completion date of early 2025.

The buyer also owns the adjacent property at 930 Britton Avenue which was purchased in 2018 from the same seller and redeveloped with a life science project which was completed in 2020.

Comparable 4 is the sale of a self-storage facility located at 210 Adrian Road in Millbrae.

The property is improved with a one-story industrial buildings that that contains 85,500 square feet and was built in 1946 and 1956 and was later converted to a self-storage facility.

According to the listing broker, the property was vacant at the time of sale. Total site area is 89,951 square feet, or 2.06 acres. The site is zoned TOD, or Transit Oriented Development and was approximately 80 percent entitled by the seller for a life science development. The seller had spent approximately 18 months on entitlements and the property was then marketed for sale with a potential of approximately 290,000 square feet of life science space. After the sale the buyer redesigned the existing project to include 263,042 square feet of life science space in a 6-story building with two levels of above grade parking and two levels of below grade parking. The indicated floor area ratio (FAR) is 292 percent. The project will include approximately 459 garage parking spaces. This site is not in a flood zone.

In October 2021, Millbrae Adrian Science Park, LLC (Longfellow Real Estate Partners) purchased this property from Real Property Storage, LLC (Finn Capital) for $80,000,000, or $889 per square foot of land area and $304 per square foot of proposed building area.

According to the listing agent, the property was actively marketed with multiple offers received. The property was in escrow for approximately three months and the price paid was equivalent to a fully entitled sale. According to the broker, this sale represented the peak on a price per FAR basis for the market cycle. The broker estimated prices declined 20 to 30 percent between the contract date and May 2023 due to the increase in interest rates.

Comparable 5 is the sale of the property located at 1021 Howard Avenue, at the southwest corner of Bayport Avenue in San Carlos. The property is improved with three, one-story Resolution No. XXXX

Appraisal: 985 & 1001 O’Brien Dr. and 1320 Willow Rd., Menlo Park, CA Page 17 23-RBA-042
industrial buildings containing 44,774 square feet. The buildings were built in 1958 and 1965. Total site area is 95,519 square feet, or 2.19 acres. The site is zoned CGI, or General Commercial / Industrial Zone. This site is not in a flood zone.

In July 2021, 1021 Howard Owner, LLC (Premia Capital) purchased this property from Hamilton Investors Bayport, LLC (R&M Properties) for $33,000,000, or $345 per square foot of land area and $173 per square foot of proposed building area. After the sale the buyer filed an application for a three story, 190,869 square foot life science development with two levels of below grade parking. The indicated floor area ratio (FAR) is 200 percent. The project will include approximately 465 garage parking spaces.

B. Analysis and Land Value Conclusion – Base Density
The comparables indicate a range of sale prices between $173 and $321 per square foot of allowed or proposed gross building area. After further analysis, an appropriate unit value can be concluded for the subject site assuming it is entitled under the base development density of 55 percent. As shown, the comparables indicate allowed / proposed densities ranging from 0.55 to 2.92. The allowed subject base development density is below the low end of the range.

The adjustments are summarized on the grid on the following page. It should be emphasized that although the adjustment process is a mechanical one, the analysis applied by the appraiser is actually less mechanical and more intuitive in nature. Specific adjustments are intended to represent the appraiser’s best judgment concerning the differential between each comparable and the subject. Any specific adjustment should be considered general in nature and the overall process is intended to narrow the pattern indicated by the comparable data.

For adjustment purposes, the cost to provide structured, surface and underground parking is estimated. Marshall Valuation Cost Estimation Manual is used to provide baseline adjustments. These approximate costs for adjustment purposes are estimated as follows:

Structured Parking
Class A: $96.50 / SF + $5.00 Sprinklers X 1.01 Height X

1.34 Local X 1.19 Current X 1.05 Addl. Indirect = $171.64 Rounded to: $170.00 / SF
Per Parking Space Based on 350 SF / Space: $59,500 /Space Below Grade Parking
Class A Excellent, $132.00 / SF + $5.00 Sprinklers X 1.01 Height X

1.34 Local X 1.24 Current X 1.05 Addl. Indirect = $241.41 Resolution No. XXXX

Table 2 Page 17.1
Comparable Sales
Sale 1 Sale 2 Sale 3 Sale 4 Sale 5
Characteristics:

Address: 1 Casey Ct. 200 Twin Dolphin Dr. 1030 Brittan Ave. 210 Adrian Rd. 1021 Howard Ave.

City: Menlo Park Redwood City San Carlos Millbrae San Carlos Land Area 73,180 204,045 87,990 89,951 95,519
Allowed / Proposed Bldg. Area 40,249 202,010 88,054 263,042 190,869 FAR 55% 99% 100% 292% 200%
Sale Date: 3/22 1/22 1/22 10/21 7/21
Transaction Price: $11,712,500 $64,875,000 $20,000,000 $80,000,000 $33,000,000 Price Per Sq.Ft. of GBA $291 $321 $227 $304 $173
Property Rights Conveyed 0.0% 0.0% 0.0% 0.0% 0.0%
Adjusted Price/Sq. Ft.: $291 $321 $227 $304 $173
Financing Terms: 0.0% 0.0% 0.0% 0.0% 0.0%
Adjusted Price/Sq. Ft.: $291 $321 $227 $304 $173
Conditions of Sale: -10.0% 0.0% 0.0% 0.0% 0.0%
Adjusted Price/Sq. Ft.: $262 $321 $227 $304 $173
Expenditures After Purchase 0.0% 0.0% 0.0% 0.0% 0.0%
Adjusted Price/Sq. Ft.: $262 $321 $227 $304 $173
Market Conditions: 0.0% 0.0% 0.0% -10.0% -10.0%
Price Adj. For Mkt. Cond. $262 $321 $227 $274 $156
Location 0.0% -20.0% 0.0% -10.0% 0.0%
Status of Entitlements 10.0% 0.0% 5.0% 5.0% 10.0%
Zoning 0.0% 0.0% 0.0% 0.0% 0.0%
Flood Zone 0.0% -5.0% 0.0% -5.0% -5.0%
Size 0.0% 0.0% 5.0% 0.0% 0.0%
Shape 0.0% 0.0% 0.0% 0.0% 0.0%
Density - Other 0.0% 5.0% 0.0% 5.0% 0.0%
Density - Parking 0.0% 19.4% 38.0% 28.0% 59.5%
Improvements 2.0% 2.0% 0.0% 2.0% 2.0%
Other -5.0% 0.0% 0.0% 0.0% 0.0%
Frontage / Visibility / Access 5.0% 0.0% 0.0% 0.0% 0.0% Net Adjustment 12.0% 1.4% 48.0% 25.0% 66.5%
Adjusted Unit Value
for the Subject: $293 $326 $336 $342 $259
Estimated Parking Cost / SF $9.46 $124.56 $172.77 $153.22 $185.07 PRICE PER SQ.FT. RANGE $259 - $326
VALUE CONCLUSION $300 / SQ.FT.

SF X 100,989 $300 /SF = $30,296,640
ROUNDED $30,300,000
Parking Adjustments
$955,300 $0 $38,972,500 $18,564,000 $32,933,250 $39,060,000 $143,500 $69,700 $0 $0
$39,116,000 $18,633,700 $32,933,250 $39,060,000 Total Est. Cost $9.46 $193.63 $211.62 $125.20 $204.64 Per SF / FAR
$184.17 $202.16 $115.74 $195.18 Differential

2.31 3.42 2.70 1.74 Parking Ratio 2.44

0.676 0.85 1.32 Multiplier 0.95
$124.56 $172.77 $153.22 $185.07 Adjustment Adj. for Ratio R. Blum and Associates, November 2023, 23-RBA-042

COMPARABLE LAND SALE ADJUSTMENT GRID - BASE DEVELOPMENT DENSITY Appraisal of 1005 O'Brien and 1320 Willow Road
Menlo Park, California
Resolution No. XXXX

Appraisal: 985 & 1001 O’Brien Dr. and 1320 Willow Rd., Menlo Park, CA Page 18 23-RBA-042
Rounded to: $240.00 / SF
Per Parking Space Based on 350 SF / Space: $84,000 / Space Surface Parking
Excellent Cost Per Space $2,925 X Local 1.34 X 1.05 Addl. Indirect: $4,115 / Space Rounded: $4,100 / Space
Under the base level density, the subject property would have only surface parking which has a maximum of 2.5 spaces per 1,000 sf for R&D and 3.0 per 1,000 sf for office. The proposed parking for the subject property is 527 spaces of which 23 are open spaces and 504 are in a garage. The parking density proposed is 2.31 spaces per 1,000 square feet.

For comparative purposes, an equivalent density of 2.31 spaces per 1,000 square feet is used for both scenarios. An estimate for parking cost for the two subject development scenarios are estimated as follows:

Base Scenario:
100,989 SF / 1,000 X 2.31 / Spaces per 1,000 Gross SF = 233 Spaces 233 Spaces X $4,100 / Space = $955,300
Per SF of GBA: $9.46

Bonus Scenario:
504 Structured Spaces X $59,500 / Space = $29,988,000
23 Open Spaces X $4,100 / Space = $ 94,300
Total: $30,082,300
Per SF of GBA (228,081) = $131.89
The parking cost on a per square foot of gross building area basis for each of the comparable properties is estimated as shown at the bottom of the adjustment grid. The difference between that cost and the subject cost is estimated. That difference is further adjusted to reflect the subject’s parking ratio. The differential is then multiplied by an adjustment factor of 50 percent to reflect the fact that a garage space has more value to the owner than an open space which could be reflected in slightly higher rent and a slightly lower capitalization rate. A discount of 50 percent of cost is considered to reasonable to account for the potential benefit of garage parking over surface parking.

Resolution No. XXXX

Appraisal: 985 & 1001 O’Brien Dr. and 1320 Willow Rd., Menlo Park, CA Page 19 23-RBA-042
Comparable 1 indicated the lowest FAR. It is the only sale in Menlo Park and was purchased for assemblage with two other parcels and the indicated density is based on the base allowed density of 55 percent. Negative adjustment is warranted for conditions of sale due to the motivations of the buyer. Negative adjustment is also warranted for the potential for the comparable to increase development density with the use of the density bonus. Positive adjustment is warranted for the assumed entitlements for the subject property and the lack of improvements which will have to be demolished on the comparable property. A slight positive adjustment is warranted for the subject’s superior frontage. A similar price per square foot of FAR is concluded assuming the subject property is entitled at the base development density.

Comparable 2 is the January 2022 sale of a large site in Redwood City which was entitled at the time of sale and sold for $321 per square foot of entitled FAR / gross building area.

The proposed development density is 99 percent. The proposed building is five-stories in height and will include a five-story parking structure to include 655 parking spaces plus 35 surface spaces. Total estimated cost for parking based on the figures above is approximately (655 X $59,500 + 35 X $4,100 / 202,010) $193.63 per square foot of FAR / gross building area indicating a per square foot differential of $184.17. However, this cost is for parking at a ratio of 3.42 spaces per 1,000 square feet. The per square foot cost is therefore adjusted to the subject’s parking ratio by multiplying it by 2.31 / 3.42, which brings the cost per square foot down to $124.56 per square foot of FAR / gross building area. Negative adjustment is warranted for location due to the comparable’s more established business park / waterfront location. Positive adjustment is made for density – parking as well as density –other due to the taller proposed building for this site. Positive adjustment is also warranted for the existing improvements on the comparable site which will require demolition. Negative adjustment is warranted for the subject’s flood zone status. No other adjustments are made. A similar unit value is indicated by this sale.

Comparable 3 is the January 2022 sale of a site in San Carlos that was entitled by the buyer with a proposed life sciences use. The sale price was $227 per square foot of gross building area / FAR. Positive adjustment is warranted for status of entitlements. The parking cost for this comparable is estimated at (221 below grade spaces X $84,000 / space 17 surface spaces X $4,100 / space / 88,054 sf) is equal to $211.62 per square foot. Adjusting for the cost difference and parking ratio reduces the total to $172.77 per square foot. Positive adjustment is warranted for status of entitlements (buyer entitled during escrow) and density – parking. A much higher unit value is concluded based on this sale.

Comparable 4 is the October 2021 sale of a partially entitled site in Millbrae which sold for $304 per square foot of FAR / gross building area. The cost for parking, which is approximately 50 percent below grade and 50 percent above grade in a garage is approximately $125.20 per square foot of building area, but at a lower ratio of 1.74 spaces per 1,000 square feet. Adjusting for the cost differential and parking ratio, the parking adjustment is approximately $153.22 per square foot of building area. Negative adjustment is warranted for market conditions, flood zone, and location. This is more than offset by positive adjustment for status of entitlements (buyer re-entitled), density-other, density – parking and improvements. A higher unit value is concluded based on this sale.

Resolution No. XXXX