10. Appraisal Report — South San Francisco City Council, March 23, 2022

Integra Realty Resources
San Francisco
Appraisal of Real Property
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Office Property
379 Oyster Point Blvd.

South San Francisco, San Mateo County, California 94080 Prepared For:

City of South San Francisco
Effective Date of the Appraisal:

November 2, 2021
Report Format:

Appraisal Report – Standard Format
IRR ‐ San Francisco
File Number: 193‐2021‐0475
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) 379 Oyster Point Blvd.

South San Francisco, California
Integra Realty Resources 555 Meridian Avenue T 408.299.0444 San Francisco Suite C F 408.299.0449
San Jose, CA 95126 www.irr.com
March 11, 2022
Ms. Janet Salisbury
Finance Director
City of South San Francisco
400 Grand Ave
South San Francisco, CA 94080
SUBJECT: Market Value Appraisal
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) 379 Oyster Point Blvd.

South San Francisco, San Mateo County, California 94080 IRR ‐ San Francisco File No. 193‐2021‐0475
Dear Ms. Salisbury:

Integra Realty Resources – San Francisco is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value, subject to a hypothetical condition, pertaining to the fee simple interest in the property. The client for the assignment is City of South San Francisco, and the intended use is for bond underwriting purposes. The appraisers understand and agree this Appraisal Report is expected to be, and may be, utilized by the City of South San Francisco and Community Facilities District No. 2021‐1 in the marketing of the Special Tax Bonds of the Community Facilities District No. 2021‐1 (Public Facilities and Services) and to satisfy certain legal requirements in connection with issuing the Bonds.

The subject currently comprises five parcels and 44.23 acres of land within the proposed and under construction Kilroy Oyster Point life sciences campus. At completion of build out, the subject will include 2,520,892 square feet of rentable area within four phases. In addition to life sciences space, the area within the District will also include open space and walking paths, various amenities for the project's life science users, and three parking garages; it is noted not all land uses within the District are taxable. Horizontal and vertical construction of Phase I, which is 100% pre‐leased to two tenants, is nearly complete, and backbone infrastructure of Phase II has commenced. Phases III and IV are expected to be finished in 2025/26, as market demand dictates. The subject's assessor parcels are expected March 11, 2022

Page 2 ends

to be reconfigured as development progresses, with each Phase eventually having its own parcel.

The appraisal is intended to conform with the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, applicable state appraisal regulations, and the appraisal guidelines of City of South San Francisco. The appraisal is also prepared in accordance with the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (CDIAC) (2004).

To report the assignment results, we use the Appraisal Report option of Standards Rule 2‐ 2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report – Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions.

Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value is as follows:

Value Conclusion
Value Type & Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value, Subject to a Hypothetical Condition Fee Simple November 2, 2021 $1,248,200,000 Extraordinary Assumptions and Hypothetical Conditions
None.

1. We have been requested to provide an opinion of market value of the subject property as of November 2, 2021. It is a hypothetical condition of the Appraisal that proceeds from the Bonds are available for public improvements.

The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.

The value conclusions are based on the following hypothetical conditions. A hypothetical condition is a condition, directly related to a speci fic 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 subject to the following extraordinary assumptions. An extraordinary assumption is an assignment‐speci fic 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.

March 11, 2022

Page 3 ends

If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service.

Respectfully submitted,
Integra Realty Resources ‐ San Francisco
Kevin Ziegenmeyer, MAI
Certified General Real Estate Appraiser
California Certificate # AG013567
Telephone: 916‐435‐3883, ext. 224
Email: [email protected]
Laura Diaz
Certified General Real Estate Appraiser
California Certificate # 3005037
Telephone: 408‐299‐0444
Email: [email protected]

Eric Segal, MAI
Certified General Real Estate Appraiser
California Certificate # AG026558
Telephone: 916‐435‐3883, ext. 228
Email: [email protected]

Table of Contents
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Executive Summary 2
General Information 3
Identification of Subject 3
Sale History 4
Pending Transactions 5
Purpose of the Appraisal 5
Definition of Market Value 5
Definition of Property Rights Appraised 5
Intended Use and User 5
Applicable Requirements 6
Report Format 6
Prior Services 6
Scope of Work 6
Economic Analysis 9
Area Analysis – San Mateo County 9
Surrounding Area 15
Office Market Analysis 22
Life Sciences Market Analysis 28
Property Analysis 36
Land Description and Analysis 36
Improvements Description and Analysis 49
Real Estate Taxes 63
Highest and Best Use 64
Valuation 66
Valuation Methodology 66
Income Capitalization Approach 67
Leased Status of Property – Phase I 68
Market Rent Analysis – Phase I 68
Stabilized Income and Expenses 75
Capitalization Rate Selection 78
Direct Capitalization Analysis – Phase I 82
Direct Capitalization Analysis – Phases II, III,
& IV 83
Extraction Analysis 87
Subdivision Development Method – Phases II‐IV
93 Conclusion of Value 100
Exposure Time 100
Marketing Period 100
Certification 101
Assumptions and Limiting Conditions 103
Addenda
A. Appraiser Qualifications
B. Financials and Property Information
C. Comparable Data
Lease Comparables
Executive Summary 2
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Executive Summary
Property Name
Address
Property Type
Owner of Record
Tax ID
Land Area 44.23 acres; 1,926,698 SF
Gross Building Area 2,520,892 SF
Rentable Area 2,206,690 SF
Percent Leased Phase I ‐ 100% / Phases II ‐ IV ‐ Proposed Year Built Phase I ‐ 2021 / Phases II ‐ IV ‐ Proposed
Zoning Designation
Highest and Best Use ‐ As if Vacant
Highest and Best Use ‐ As Improved
Exposure Time; Marketing Period 12 months; 12 months
Effective Date of the Appraisal November 2, 2021
Date of the Report March 11, 2022
Property Interest Appraised
Kilroy Oyster Point I, LLC ("Kilroy OP I"), Kilroy Oyster Point II, LLC ("Kilroy OP II"), Kilroy Oyster Point III, LLC ("Kilroy OP III"), and KR Crescent Beach, LLC
015‐010‐240, 015‐010‐910, 015‐010‐930, 015‐010‐940 and
015‐010‐950
City of South San Francisco CFD No. 2021‐1 (Public
Facilities and Services)
379 Oyster Point Blvd.

South San Francisco, San Mateo County, Cali fornia 94080 Office ‐ Li fe Sciences
The values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than City of South San Francisco and its associated finance team may use or rely on the information, opinions, and conclusions contained in the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions contained therein.

OPSPD, Oyster Point Speci fic Plan District
Life sciences use
Fee Simple
Continued development for li fe sciences use
Extraordinary Assumptions and Hypothetical Conditions
None.

The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.

The value conclusions are subject to the following extraordinary assumptions. An extraordinary assumption is an assignment‐speci fic assumption as of the effective date regarding uncertain information used in an analysis which, i f found to be false, could alter the appraiser’s opinions or conclusions.

General Information 3
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) General Information
Identification of Subject
The subject currently comprises five parcels and 44.23 acres of land within the proposed and under construction Kilroy Oyster Point life sciences campus. At completion of build out, the subject will include 2,520,892 square feet of rentable area within four phases. In addition to life sciences space, the area within the District will also include open space and walking paths, various amenities for the project's life science users, and three parking garages; it is noted not all land uses within the District are taxable. Horizontal and vertical construction of Phase I, which is 100% pre‐leased to two tenants, is nearly complete, and backbone infrastructure of Phase II has commenced. Phases III and IV are expected to be finished in 2025/26, as market demand dictates. The subject's assessor parcels are expected to be reconfigured as development progresses, with each Phase eventually having its own parcel. A legal description of the property is in the addenda.

Property Identification
Property Name City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Address 379 Oyster Point Blvd.

South San Francisco, California 94080
Tax ID 015‐010‐240, 015‐010‐910, 015‐010‐930, 015‐010‐940 and 015‐010‐950 Owner of Record Kilroy Oyster Point I, LLC ("Kilroy OP I"), Kilroy Oyster Point II, LLC ("Kilroy OP II"), Kilroy Oyster Point III, LLC ("Kilroy OP III"), and KR Crescent Beach, LLC Land Area Summary
Tax ID Address SF Acres
015‐010‐240 379 Oyster Point Blvd 165,001 3.79
015‐010‐910 385 Oyster Point Blvd 921,076 21.14
015‐010‐930 ‐ 238,883 5.48
015‐010‐940 ‐ 163,045 3.74
015‐010‐950 348 Oyster Point Blvd 438,693 10.07
Total 1,926,698 44.23
Source: Public Records
The above table reflects the current subject assessor parcels. Lot lines are expected to be adjusted throughout the development process, and the upcoming analysis allocates acreage to each of the four Phases. The following page depicts the subject parcels within the District boundary.

General Information 4
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Sale History
The most recent closed sale of the subject is summarized as follows:

Sale Date June 5, 2018
Seller Oyster Point Development, LLC
Buyer KR Oyster Point I, LLC, KR Oyster Point II, LLC, KR Oyster Point III, LLC, KR Crescent Beach, LLC
Sale Price $308,203,000
Recording Instrument Number 2018.43303, 43304, 43305, 43307 The above transaction was recorded on four separate deeds in June of 2018. Our market value conclusion differs significantly from the sale price due to the strengthening life sciences market, the current entitlement status of the property, and infrastructure/site development costs which have been incurred to date. To the best of our knowledge, no other arm’s length sale or transfer of ownership has taken place within a three‐year period prior to the effective appraisal date.

General Information 5
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Pending Transactions
To the best of our knowledge, the property is not subject to an agreement of sale or an option to buy, nor is it listed for sale, as of the effective appraisal date.

Purpose of the Appraisal
The purpose of the appraisal is to develop an opinion of the market value, subject to a hypothetical condition, pertaining to the fee simple interest in the property as of the effective date of the appraisal, November 2, 2021. The date of the report is March 11, 2022. The appraisal is valid only as of the stated effective date.

Definition of Market 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
 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[h]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Definition of Property Rights Appraised
Fee simple estate is defined as, “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.”
Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015)
Intended Use and User
The intended use of the appraisal is for bond underwriting purposes. The client is the City of South San Francisco. The intended users are the City of South San Francisco and its associated finance team. The appraisal is not intended for any other use or user. No party or parties other than the City of South San General Information 6
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Francisco and its associated finance team may use or rely on the information, opinions, and conclusions contained in this report.

Applicable Requirements
This appraisal is intended to conform to the requirements of the following:
 Uniform Standards of Professional Appraisal Practice (USPAP);  Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute;
 Applicable state appraisal regulations;
 Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004);
Report Format
This report is prepared under the Appraisal Report option of Standards Rule 2‐2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report – Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions.

Prior Services
USPAP requires appraisers to disclose to the client any other services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. We have performed no 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.

Scope of Work
To determine the appropriate scope of work for the assignment, the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors were considered. The concluded scope of work is described below.

Valuation Methodology
This appraisal report has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). This analysis is intended to be an “appraisal assignment,” as defined by USPAP; the intention is the appraisal service be performed in such a manner that the result of the analysis, opinions, or conclusion be that of a disinterested third party.

Several legal and physical aspects of the subject property were researched and documented. A physical inspection of the property was completed and serves as the basis for the site description contained in this report. The sales history was verified by consulting public records. Numerous documents were provided for the appraisal, including: the developer’s budget, project renderings, General Information 7
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) marketing materials, Phase I lease/tenant information, development timeline, and entitled land uses.

The zoning, earthquake zone, flood zone and utilities were verified with applicable public agencies.

Property tax information for the current tax year was obtained from the San Mateo County Assessor’s office online resource.

Data relating to the subject’s neighborhood and surrounding market area were analyzed and documented. This information was obtained through personal inspections of portions of the neighborhood and market area, newspaper articles, and interviews with various market participants, including property owners, property managers, brokers, developers and local government agencies.

In this appraisal, the highest and best use of the subject property as though vacant was determined based on the four standard tests (legal permissibility, physical possibility, financial feasibility and maximum productivity).

It is not uncommon for appraisers to be asked to appraise properties at atypical times, relative to when market participants most often transfer properties. The market recognizes typical points during the development process when master planned projects often transfer, such as upon obtaining entitlements, completion of spinal infrastructure and/or recordation of final maps, for example. In valuation assignments that involve value scenarios that do not coincide with the typical transaction points along the development timeline, the appraiser must apply market logic to the particular stage of the project. Since the subject is at one of these atypical points, we have employed market logic in the valuation of the subject in its hypothetical condition.

In the valuation of the subject property, which comprises the taxable land within the boundaries of the City of South San Francisco Community Facilities District No. 2021‐1 (Public Facilities and Services), subject to the Lien of the Special Tax securing the Bonds, the market value of the taxable components comprising Community Facilities District No. 2021‐1 were estimated using multiple approaches to value.

The valuation begins with employing extraction analyses to estimate of the market value for each of the subject Phases. This analysis considers the direct and indirect construction costs, lease up costs, and entrepreneurial profit associated with each Phase and deducts these costs from the market value as if stabilized to arrive at the value of the underlying land. Direct capitalization analyses are utilized to determine the market value of the proposed vertical improvements as if stabilized. As a test of reasonableness, we also consider improved life sciences sales. Because Phase I improvements are nearly complete, remaining costs are deducted from the as if stabilized value to arrive at an indication of value. No further discounting is required, as the disposition period for this Phase is expected to be under 12 months. The extraction analyses for Phases II through IV, however, result in the market value of the underlying land for these Phases which must be further discounted.

After the market value of the various land use components comprising Phases II through IV is determined, the subdivision development method to value is also employed in the estimate of market value of the City of South San Francisco Community Facilities District No. 2021‐1 (Public Facilities and Services) Special Tax Bonds. The subdivision development method is a form of discounted cash flow analysis (DCF) in which the expected revenue, absorption period, expenses, and internal rate of return associated with the development and sell‐off of the various land use components to end users are considered.

General Information 8
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Under the subdivision development method to value, it is common for surveys of market participants to reveal different estimations of anticipated absorption periods for the sell‐off of multiple components comprising a master planned development, with some developers preferring to hasten the holding period in favor of mitigating exposures to fluctuations in market conditions; whereas, other developers prefer to manage the sell‐off of the property over an extended period of time so as to minimize direct competition of product within the master planned project. The estimates of market values for the various land use components serve as the revenue component of the subdivision development method (DCF analysis). In addition to the expected revenue, the absorption period, expenses, and discount rate associated with the development and sell‐off of the land components comprising the subject property to vertical life sciences developers are utilized, the results of which provided an estimate of market value of the subject property.

Research and Analysis
The type and extent of our research and analysis is detailed in individual sections of the report. This includes the steps we took to verify comparable sales, which are disclosed in the comparable sale profile sheets in the addenda to the report. Although we make an effort to confirm the arms‐length nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary verification from sources deemed reliable.

Inspection
Kevin Ziegenmeyer, MAI, and Laura Diaz conducted a interior and exterior inspections of the property on November 2, 2021.

Area Analysis – San Mateo County 9
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Economic Analysis
Area Analysis – San Mateo County
Introduction
San Mateo County is located between San Francisco and Santa Clara Counties on the San Francisco Bay. The County covers 531 square miles and boasts 54 miles of spectacular coastline bluffs and beaches. About three‐fourths of its land is in agricultural use, watershed, open space, wetlands or parks. Mild climate, abundant natural resources, picturesque foothills, creeks and old redwoods best describe San Mateo County, making it an attractive community for residents and businesses.

As one of several counties significantly contributing to the economy of the San Francisco Bay Area, San Mateo County is strategically located in proximity to world‐renowned research universities – University of California at Berkeley and San Francisco and Stanford University. As a result, many leading industry employers, such as medical therapeutic leader Genentech, Fortune 500 Oracle Corporation, gaming leader Electronic Arts, and Academy Award winner PDI DreamWorks, all call San Mateo County home. Consistently, San Mateo County boasts among the highest incomes and among the lowest unemployment rates in both the state and the nation.

Population
The county has a population of 765,000 and, on average, has had no annual growth over the past five years. The vast majority of county residents live in incorporated areas, the largest of which are Daly City, San Mateo and Redwood City. The following table illustrates population trends for areas within San Mateo County over the past five years.

Area Analysis – San Mateo County 10
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) The Bay Area consistently has among the highest housing costs in the state and nation and the lack of affordable housing is one impediment to further growth in the region. Since 2014, San Mateo County has typically had the second highest median home prices in the Bay Area, surpassed only by San Francisco.

Employment & Economy
The California Employment Development Department has reported the following employment data for San Mateo County over the past five years.

Most areas within the state and nation, including San Mateo County, saw declining unemployment rates in 2004 through 2006, increases from 2007 to 2010, and declines between 2011 and 2019.

However, this downward trend has shifted as a result of the COVID‐19 crisis. In an effort to prevent the spread and impact of the virus, statewide public health stay‐at‐home orders were issued in March 2020, which directed residents to stay at home except to perform essential activities necessary for the health and safety of individuals and their families. These unprecedented measures left just "essential" Population Trends
City 2016 2017 2018 2019 2020 2021 %/Yr
Atherton 6,927 6,945 6,948 6,950 6,942 6,896 ‐0.1% Belmont 26,963 26,951 26,898 26,808 26,669 26,470 ‐0.4% Brisbane 4,648 4,653 4,654 4,642 4,621 4,579 ‐0.3% Burlingame 30,377 30,355 30,318 30,224 30,068 29,746 ‐0.4% Colma 1,495 1,493 1,476 1,496 1,678 1,659 2.2% Daly City 108,421 108,599 109,088 109,102 108,767 108,599 0.0% East Palo Alto 30,571 30,641 30,747 30,716 30,630 30,350 ‐0.1% Foster City 32,624 32,741 32,746 33,221 33,025 32,842 0.1% Half Moon Bay 12,373 12,391 12,423 12,444 12,404 12,309 ‐0.1% Hillsborough 11,418 11,455 11,486 11,444 11,442 11,391 0.0% Menlo Park 33,478 35,195 35,398 35,279 35,120 34,825 0.8% Millbrae 23,000 22,986 22,975 22,874 22,742 22,509 ‐0.4% Pacifica 38,802 38,673 38,632 38,470 38,267 37,890 ‐0.5% Portola Valley 4,615 4,611 4,614 4,607 4,598 4,560 ‐0.2% Redwood City 84,697 84,779 84,943 85,686 86,444 85,182 0.1% San Bruno 45,408 45,423 45,442 45,391 45,392 44,936 ‐0.2% San Carlos 29,684 29,689 29,713 29,644 30,067 29,814 0.1% San Mateo 102,877 103,038 103,412 103,140 102,766 103,045 0.0% South San Francisco 67,182 67,156 67,193 67,070 67,730 67,135 0.0% Woodside 5,659 5,665 5,670 5,647 5,670 5,628 ‐0.1% Unincorporated 65,880 65,962 66,151 66,305 66,019 64,880 ‐0.3% Total 767,099 769,401 770,927 771,160 771,061 765,245 0.0% Source: California Department of Finance
Employment Trends
2015 2016 2017 2018 2019 2020
Labor Force 434,300 441,800 445,500 449,500 460,000 433,900 Employment 419,400 428,300 433,400 439,300 450,600 404,100 Job Growth 10,500 8,900 5,100 5,900 11,300 (46,500)
Unemployment Rate 3.4% 3.1% 2.7% 2.3% 2.0% 6.9%
Source: California Employment Development Department
Area Analysis – San Mateo County 11
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) businesses open. The closure of non‐essential businesses has had a significant impact on employment, with some sectors of the workforce impacted more significantly than others.

The average annual unemployment rate in San Mateo County was 2.0% in 2019 and remained in the

2.1% to 2.5% range in the first quarter of 2020, spiking up to 11.8% in April 2020. The average annual unemployment rate was 6.9% in 2020. As of April 2021, the rate has dropped to 4.8%, which is above the year ago estimate of 11.8%. This compares to rates of 8.1% for California and 5.7% for the nation in April 2021.

The California Employment Development Department reports the following allocation of total employment for each sector within the San Francisco‐Redwood City‐ South San Francisco Metropolitan Division, which includes San Francisco and San Mateo Counties. Current employment by sector for just San Mateo County was not available as of the date of this report.

The metro’s largest employment sector is Professional and Business Services, followed by Educational/Health Services, and Trade/Transportation/Utilities (including retail and wholesale trade).

Combined, these sectors account for 52% of all employment in the metro. In San Mateo County, the Information and Leisure/Hospitality sectors historically rank just below these sectors.

As of April 2021, it was reported a total of 57,300 jobs were gained in the metro year‐over‐year, after having lost nearly 170,000 jobs in April 2020 in response to the coronavirus economic shutdown.

Consistent with the metro and other counties in the Bay Area, the Leisure/Hospitality and Trade/Transportation/Utilities sectors have experienced the strongest impact from the policies enacted to slow the spread of COVID‐19.

The county’s largest employers are presented on the following page.

Area Analysis – San Mateo County 12
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Household Income
Median household income represents a broad statistical measure of well‐being or standard of living in a community. The median income level divides households into two equal segments with one half of households earning less than the median and the other half earning more. The median income is considered to be a better indicator than the average household income as it is not dramatically affected by unusually high or low values. According to the U.S. Census Bureau, the median household income for San Mateo County in 2019 dollars was $122,641, which was significantly higher than the state of California’s median income of $75,235. The county’s income is the second highest among all California counties.

Transportation
The San Mateo County area is well served by State Highway 101. This freeway runs in a north‐south direction and travels through the center of the county. It provides access to the city and county of San Francisco to the north. To the south, State Highway 101 provides access to San Jose and other areas of Santa Clara County. Further south, State Highway 101 travels through Salinas and then onto the Central Coast of California. Another major arterial in the County is Interstate 280, which commences in San Francisco near the San Francisco‐Oakland Bay Bridge at Highway 101, and then bisects the County and the peninsula before terminating at Interstate 880 in San Jose. The Pacific Coast Highway (Highway 1) also travels through San Mateo County; specifically, through Daly City, Pacifica, and Half Moon Bay. To the north of the County, Highway 1 eventually crosses the Golden Gate Bridge, providing access to Marin County to the north of San Francisco. The East Bay Area is most proximately accessible via the San Mateo‐Hayward Bridge in Foster City and the Dumbarton Bridge (Highway 84) in the Menlo Park/East Palo Alto area, both of which connect to Interstate 880 across the bay.

San Mateo County offers extensive public transportation, the most notable of which is the Bay Area Rapid Transit (BART). There are currently six stations in the county. In June 2003, BART opened the Millbrae/SFO extension, which included four new stations – South San Francisco, San Bruno, San Francisco International Airport (SFO) and Millbrae. In June 2004, Caltrain launched the Baby Bullet Largest Employers
Employer Industry Employees
1 Facebook, Inc. Social Network 15,407
2 Genentech Inc. Biotechnology 10,023
3 Oracle Corp. Computer Hardware/Software 7,656
4 County of San Mateo Government 5,640
5 Gilead Sciences Inc. Biotechnology 4,000
6 YouTube LLC Online Video Streaming Platform 2,384
7 Sony Interactive Entertainment Interactive Entertainment 1,650 8 Robert Half International, Inc. Professional Staffing Services 1,642 9 Electronic Arts Inc. Interactive Entertainment 1,478
10 SRI International Nonprofit Research Institute 1,418 Source: County of San Mateo, Comprehensive Annual Financial Report, Fiscal Year Ended June 30, 2020 Area Analysis – San Mateo County 13
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) train service, which provides express service including travel between San Francisco and San Jose in less than an hour. In 2005, Caltrain doubled the number of Baby Bullet trains (from 10 to 22).

San Francisco International Airport (SFO) is located in an unincorporated area of the county. According to the Airports Council International of North America, SFO is consistently one of the top 15 busiest airports in the nation in terms of both passenger and cargo volume. The airport is accessed along State Highway 101, between the cities of Millbrae and San Bruno.

The Redwood City Port is also located in the county. The Port has a deep‐water channel and handles bulk and specialty cargo including lumber, scrap metal and liquid cargos. Each year, the Port handles about two million metric tons of cargo.

Recreation & Culture
The County operates 17 regional parks in a wide variety of natural settings, including a coastal marine reserve, a bayside recreational area, coastal mountain woodland areas, and urban sites. Northern San Mateo County is home to eight parks including Coyote Point, Coyote Point Marina, Crystal Springs, Fitzgerald Marine Reserve, Junipero Serra, San Bruno Mountain, San Mateo Fishing Pier, and San Pedro Valley Park. Mid‐ and southern county parks include Edgewood Park, Flood Park, Huddart Park, Wunderlich Park, Heritage Grove, Memorial Park, Pescadero Creek, and Sam McDonald Park. The county is also known for its extensive trail system. San Mateo County hosts an annual County Fair each summer, located near the intersection of U.S. Highway 101 and State Highway 92.

Conclusion
San Mateo County is one of California’s most affluent regions, with income and home prices nearly the highest in the state. Among the county’s most notable advantages are its central location in the San Francisco Bay Area, picturesque surroundings, mild climate and diverse employment opportunities.

The area also boasts extensive transportation routes, strong schools and an abundance of shopping centers, public services and recreational activities.

In recent years, market and economic conditions have been strong, with unemployment rates falling to historical lows. However, employment conditions declined sharply in April 2020 following stay‐at‐ home mandates and business closures in response to the COVID‐19 pandemic. Market and economic conditions have since improved, but some uncertainty remains in the near term as policies aimed at financial relief and resuming business operations continue to be developed and implemented. The historical stability of the local economy bodes well for the long‐term outlook for the region.

Area Analysis – San Mateo County 14
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Area Map
Surrounding Area 15
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Surrounding Area
Location
The subject is located in the Oyster Point community in South San Francisco. The neighborhood is characterized by a high concentration of life sciences users. The following table summarizes the boundaries of the larger neighborhood.

Boundaries & Delineation
Boundaries
Market Area San Francisco Bay Area
Submarket Northern San Mateo
Area Type Suburban
Delineation
North San Francisco Bay
South South Francisco International Airport
East San Francisco Bay
West Highway 101
Access and Linkages
Primary highway access to the area is via Highway 101 and Interstate 280. Highway 101, also known as the Bayshore Freeway, runs north/south through San Mateo County before connecting to San Francisco and Marin County to the north and Santa Clara County to the south. Interstate 280 generally runs parallel to Highway 101, but along the eastern edge of the Peninsula’s various open space preserves. Interstate 280 travels north into San Francisco where it intersects with Highway 101 before terminating just before Interstate 80. To the south, Interstate 280 runs through San Jose before connecting with Interstates 880 and 680. California State Route 82, or El Camino Real, is a major commercial thoroughfare which provides local access throughout the Peninsula. CA‐82 runs somewhat parallel to Highway 101 before joining Interstate 280 in San Francisco and intersecting with Interstate 880 to the south in San Jose.

Caltrain provides rail access throughout the Peninsula and runs from San Francisco to Gilroy. The subject property is approximately 1.9 miles east from the nearest Caltrain station, South San Francisco. There is a free shuttle which runs from the nearest Caltrain station to Oyster Point. Bay Area Rapid Transit (BART) provides regional commuter rail service, and the South San Francisco station is also approximately 4.2 miles from the subject property. SamTrans provides bus service throughout San Mateo County. The overall primary mode of transportation in the area is the automobile.

Additional details on the area’s access and linkages are provided in the following table, including the distance between the subject and the three primary regional airports.

Surrounding Area 16
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Access & Linkages
Vehicular Access
Major Highways Highway 101 / Interstate 280
Primary Corridors Oyster Point Boulevard / Gateway Boulevard Vehicular Access Rating Good
Public Transit
Providers Caltrain / BART / samTrans
Transit Access Rating Good
Airport(s)
Airport San Francisco International / Oakland International / San Jose International Distance 4.4 miles / 27.6 miles / 37.9 miles
Driving Time 10 minutes / 35 minutes / 45 minutes
Primary Transportation Mode Automobile
Demographic Factors
A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table.

Surrounding Area Demographics
2021 Estimates
5‐Minute Drive
Time
10‐Minute Drive
Time
15‐Minute Drive
Time
San Mateo
County
Population 2010 2,408 87,046 527,258 718,451
Population 2021 2,746 96,727 581,965 770,038
Population 2026 2,855 99,632 597,805 791,123
Compound % Change 2010‐2021 1.2% 1.0% 0.9% 0.6%
Compound % Change 2021‐2026 0.8% 0.6% 0.5% 0.5%
Households 2010 779 28,276 180,754 257,837
Households 2021 891 31,293 202,624 275,845
Households 2026 927 32,214 208,527 283,183
Compound % Change 2010‐2021 1.2% 0.9% 1.0% 0.6%
Compound % Change 2021‐2026 0.8% 0.6% 0.6% 0.5%
Median Household Income 2021 $103,052 $109,307 $130,086 $136,043 Average Household Size 3.0 3.1 2.8 2.8
College Graduate % 29% 35% 46% 52%
Median Age 38 39 39 41
Owner Occupied % 42% 53% 52% 59%
Renter Occupied % 58% 47% 48% 41%
Median Owner Occupied Housing Value $1,077,721 $1,015,002 $1,173,401 $1,381,998 Median Year Structure Built 1974 1970 1964 1967
Average Travel Time to Work in Minutes 32 34 36 33
Source: Claritas
Surrounding Area 17
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) As shown above, the current population within a 10‐minute drive time of the subject is 96,727, and the average household size is 3.1. Population in the area has grown since the 2010 census, and this trend is projected to continue over the next five years. Compared to San Mateo County overall, the population within a 10‐minute drive time is projected to grow at a faster rate.

Median household income is $109,307, which is lower than the household income for San Mateo County. Residents within a 10‐minute drive time have a considerably lower level of educational attainment than those of San Mateo County, while median owner occupied home values are considerably lower.

Land Use
South San Francisco is generally suburban in character, and densely developed with housing; however, given its proximity to San Francisco and convenience to major transit options (SFO, U.S. Highway 101), there is also a prevalence of industrial and life science uses in the area. The subject’s specific neighborhood is characterized by life science, research and development, and technology uses. The map on the following page is from the subject’s marketing brochure and demonstrates the heavy concentration of life science users in the immediate area. Overall, the area is 99% developed, with the only opportunities for new construction being limited to infill and redevelopment sites.

Surrounding Area 18
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Land uses east of Highway 101 are primarily commercial and industrial in nature, with some retail uses. Residential use is concentrated west of Highway 101. The following table summarizes land uses in the subject’s neighborhood.

Surrounding Area Land Uses
Character of Area Suburban
Predominant Age of Improvements (Years) New to 40+ years Predominant Quality and Condition Average to Excellent
Approximate Percent Developed 99%
Land Use Allocation
Single‐Family 0%
Multi family 0%
Retail 15%
Office 45%
Industrial 40%
Vacant Land Less than 1%
Infrastructure and Planning Average
Predominant Location of Undeveloped Land Infill redevelopment Prevailing Direction of Growth Infill redevelopment
Th following table summarizes the availability of public services proximate to the subject. In addition, South San Francisco’s City hall and public library are located two miles west of the subject.

Public Services
Service Name/Station Distance (Miles ) Direction
Police Department South San Francisco 4 West
Fire Department South San Francisco 2.6 West
Hospital Kaiser Permanente South San Francisco 4.1 West Elementary School 9 Elementary Schools in SSF Uni fied District 1.9 (closest) West Middle/Junior High School 3 Middle Schools in SSF Uni fied District 3.2 (closest) West High School 3 High Schools in SSF Uni fied District 3.6 (closest) West The following map depicts land uses proposed for the Kilroy Oyster Point project, of which the subject is a part. The subject property is shaded yellow, and also includes a portion of the open space/Bay Trail improvements.

Surrounding Area 19
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services)

Surrounding Area 20
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Land uses immediately surrounding the subject are as follows:

Immediate Surroundings
North San Francisco Bay
South Light Industrial
East San Francisco Bay / Office
West San Francisco Bay / Office
Outlook and Conclusions
The area is in the stable stage of its life cycle. Recent development activity has been limited to infill uses due to the lack of available land. The Bay Area life sciences market has been strengthening since the onset of the COVID‐19 pandemic, as the public health crisis spurred additional interest in the biotechnology and health sciences sectors. As will be demonstrated, life sciences inventory is constrained; there are multiple new life science campuses under construction along the Peninsula, and many investors are converting general office space to life science use. Given the history of the area and the growth trends, it is anticipated that property values will continue to increase in the near future.

In comparison to other areas in the region, the area is rated as follows:

Surrounding Area Ratings
Highway Access Good
Demand Generators Excellent
Convenience to Support Services Average
Convenience to Public Transit Average
Employment Stability Above Average
Neighborhood Amenities Average
Police and Fire Protection Average
Barriers to Competitive Entry Average
The following section includes an overview of the office market in San Mateo County, which includes life sciences space. This will be followed by an analysis of the Bay Area life sciences market specifically.

Surrounding Area 21
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Surrounding Area Map
The “x” symbol designates Phase I of the subject. Subsequent Phases are located north of Phase I, along Oyster Point Boulevard.

Office Market Analysis 22
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Office Market Analysis
The subject is located in the San Francisco Peninsula office market, as defined by Cushman and Wakefield’s research report, which is relied upon in this analysis. It is noted this research report includes both office and R&D space. The San Francisco Peninsula encompasses San Mateo County.

The San Francisco Peninsula office market experienced steady growth in recent years, with the technology and life science sectors driving demand. The market is desirable due to its lower cost compared to San Francisco to the north and Silicon Valley to the south. The region had positive job growth and steadily declining unemployment. New construction was very active, delivering significantly pre‐leased to large tech and life science tenants. San Mateo County has one of the largest life science markets in the nation.

The year 2020 began with sustained demand for good quality office space, with positive leasing activity and net absorption in the first quarter, but the second quarter reflected declining conditions from the impact of the COVID‐19 pandemic. Office touring and leasing activity declined significantly as a result of shelter‐in‐place mandates, and leasing activity continued to be subdued the balance of the year as uncertainty kept businesses in a holding pattern as to what operations and space needs would look like post‐COVID‐19. Market activity improved in the first half of 2021 as restrictions eased, with positive net absorption in both the first and second quarters. Leasing activity, particularly for life science tenants, has remained robust, currently driving demand for both office and R&D space.

Local market research reports prepared by real estate professional services firms highlight the likelihood that companies’ recovery from the economic disruption will likely include a re‐organization to a new operating environment which may involve reducing real estate footprint and working remote or striking a balance by use of creative/flexible work schedules. A return to the workplace was expected in September 2021, following the termination of COVID‐19 restrictions but the emergence of the delta variant posed additional challenges, delaying that return.

Employment
Employment conditions in the San Francisco‐Redwood City‐South San Francisco Metropolitan Division (San Francisco and San Mateo Counties) had been steadily improving since 2011, reaching near full employment in recent years. Conditions remained healthy through much of the first quarter 2020 but declined sharply in April 2020 as a result of the coronavirus outbreak and the subsequent policies enacted to slow the spread.

According to data from the California Employment
Development Department (EDD), as of September
2021, total employment in the metro had grown 8.6%
year‐over‐year and total jobs increased by 6.6% year‐
over‐year, with 68,400 jobs gained. Every employment
sector, except Government and Construction,
experienced job growth. Government jobs declined by
2,900 and Construction jobs declined by 500. The
largest gain in jobs was in the Leisure/Hospitality
sector with 35,000 jobs gained, followed by the
Office Market Analysis 23
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Professional/Business Services sector with 23,300 jobs gained. The chart to on the previous page illustrates year‐over‐year job growth by sector.

The unemployment rate in the metro was 4.0% as of September 2021, down from 8.4% a year ago.

The unemployment rate for San Mateo County alone was 3.8%. By comparison, the unemployment rates for California and the U.S. were 6.4% and 4.6%, respectively, for the same period.

Vacancy and Absorption
Vacancy in the San Francisco Peninsula office market was on a steady decline from roughly 2013 through 2015, at which point it increased into the mid‐7% range until 2017, then into the mid‐to‐high 8% range until 2019, where it gradually declined from 8.2% to 7.7%. While the first quarter 2020 vacancy held steady, it increased 120 basis points in the second quarter, beginning an upward trend for the remainder of the year and into 2021. The following chart illustrates vacancy trends in the region over the past three years.

The third quarter 2021 closed out with an overall vacancy of 11.1%, which is 50 basis points higher than the previous quarter and 130 basis points higher than the previous year. The office components had a higher increase in vacancy, increasing from 14.5% in the second quarter to 15.0% in the third, compared to R&D product, which closed out the quarter at 4.9%, up from 4.6% in the second quarter.

Office product makes up 82% of the total vacancy in the market. Sublease availability declined from

33.0% of all vacant space in the first quarter, to 24.5% in the third quarter 2021.

Net absorption in the market was positive for seven quarters prior to the coronavirus outbreak. The second, third and fourth quarters of 2020 posted negative net absorption as a result of decreased leasing activity. Activity improved as restrictions eased and the first half of 2021 posted positive net absorption. The following chart highlights net absorption activity over the past three years.

Office Market Analysis 24
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Net absorption in the first and second quarters 2021 is primarily attributed to strong demand in the life science industry. Cushman & Wakefield reports also cite occupancy of recently completed buildings, which were preleased, as a source for the positive net absorption. The third quarter, however, again posted negative net absorption, with an occupancy loss of 212,341 square feet as more space was vacated and fewer major tenants took occupancy.

The following table summarizes current vacancy and absorption data by submarket.

San Francisco Peninsula Office Market Summary
Submarket Total SF (millions) Vacancy 3Q 2021 Net Absorption 3Q 2021 Net Absorption YTD Daly City 0.97 4.3% (1,463) 54,974
Brisbane 1.62 6.7% 55,868 605,294
South San Francisco 14.86 6.2% (101,360) 1,597,509
San Bruno / Millbrae 1.82 1.9% (7,155) (54)
Burlingame 3.48 14.9% (963) (46,173)
North County Totals 22.74 7.3% (55,073) 2,211,550
San Mateo 8.01 21.3% (128,898) (345,044)
Foster City 5.11 9.9% 28,802 12,285
Redwood Shores 6.34 17.3% (33,479) (116,514)
Central County Totals 19.47 17.0% (133,575) (449,273)
Belmont / San Carlos 3.05 12.1% (7,160) 497,107
Redwood City 7.35 8.6% (41,176) (245,181)
Menlo Park 10.12 9.9% 24,643 13,436
South County Totals 20.52 9.7% (23,693) 265,362
San Francisco Peninsula Total 62.73 11.1% (212,341) 2,027,639 Source: Cushman & Wakefield Marketbeat Reports
Office Market Analysis 25
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) The North County region closed the quarter with negative 55,073 square feet of net absorption and an average vacancy of 7.3%, the lowest of the three regions. San Bruno/Millbrae had the lowest vacancy rate in the region, and in the market overall, at 1.9%. This submarket is among the smallest in terms of inventory.

The Central County region experienced the greatest occupancy loss this quarter, with 133,575 square feet of negative net absorption. The submarkets in this region have vacancy rates ranging from 9.9% to 21.3%, with an average of 17.0%, the highest of the three regions.

The South County region closed out the quarter with an average vacancy rate of 9.7% and 23,693 square feet of negative net absorption. Vacancy rates within the submarkets in the South County region ranged from 8.6% in Redwood City to 12.1% in Belmont/San Carlos.

Leasing activity slowed significantly after the first quarter 2020 as a result of the shelter‐in‐place order in effect during the bulk of the second quarter and subsequent operating restrictions. It was reported new leases totaled just under 381,000 square feet in the fourth quarter 2020, 569,000 square feet in the third quarter, 911,000 square feet in the second quarter, and 1.4 million square feet in the first quarter 2020. The annual gross absorption in 2020 was 3.5 million square feet, compared to 7.9 million square feet in 2019.

The first half of 2021 saw improvement in leasing activity with gross leasing of 2.8 million square feet and an additional 1.9 million square feet were leased in the third quarter. Some of the more significant leases signed this quarter are highlighted below. Three of the below leases are to life sciences users (Freenome, Altos Labs, and Nkarta).
 335,419 square feet were preleased to Freenome at 3000‐3300 Marina Blvd, Brisbane  C3.ai leased 283,015 square feet at 1400 Seaport Blvd, Redwood City  Altos Labs leased 232,987 square feet at Redwood LIFE in Redwood Shores  Roblox leased 122,630 square feet at 1 Franklin Parkway, San Mateo  Nkarta leased 88,106 square feet at 1150 Veterans Blvd, South San Francisco Rental Rates
This section discusses average asking rental rates. The reader should note these rates provide only a snapshot of activity at a specific point in time, which is influenced by the quality and quantity of space available at that time. Guarded reliance should be placed on average asking rates given the number of variables impacting these figures.

According to market research reports, the average asking rental rate for office space in the San Francisco Peninsula market has trended upward slowly since 2010. As of the third quarter 2021, the region’s average asking rate was $5.94 psf/month (full service), down $0.08 psf/month from the second quarter and up $0.34 psf/month year‐over‐year (6.1% increase). The average asking rate for Class A office was $6.56 psf/month, down from $6.63 psf/month in the second quarter and up from $5.55 psf/month a year ago. The average asking rate for R&D office was $5.39 psf/month (triple net), up from $4.73 psf/month in the second quarter. The highest rents in the market are achieved in downtown, mixed‐use projects, life science complexes and projects accessible to Caltrain stations.

Office Market Analysis 26
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) New Construction
Over the most recent expansionary cycle, the San Francisco Peninsula office and R&D market had high demand for new construction. It is reported that 90% of projects built since 2012 have had pre‐leasing activity. Projects that were not pre‐leased were typically fully leased within 90 days of delivery. Pre‐ leasing has slowed in the wake of the economic disruption from the pandemic. Cushman & Wakefield reports there are 2.7 million square feet of new, speculative office and R&D space under construction as of the third quarter 2021, with 30.3% of that preleased. The following table highlights some of the notable office and R&D (life sciences) projects recently completed and under construction.

Prior to the coronavirus outbreak, absorption of new space kept pace with new deliveries and vacancy remained steady. However, growth plans for tech companies have largely been put on hold and it is expected that general office projects under construction will deliver without being fully pre‐leased.

This is in contrast to life science/R&D properties, which continue to be consistently pre‐leased prior to delivery due to supply constraints. Vacancy rates are expected to increase initially in submarkets where new construction is active, though, as will be demonstrated in the following section, life sciences vacancy rates remain very low. Likewise, as new buildings are delivered, there is the risk of an increase in vacancy as second and third generation spaces are left vacant when tenants relocate to more desirable new spaces.

Conclusion
The San Francisco Peninsula remains a sought‐after market for technology and life science users and tenants looking for a Bay Area location. New office and R&D developments have increased in the past several years, and leasing and absorption have likewise been strong, fueled by these industries, with most new construction projects delivering pre‐leased. Market activity declined, particularly for office product, following the onset of the pandemic as employers implemented remote working solutions and companies put growth plans on hold. Demand for R&D product has been less impacted than office product, sustained by the thriving life science industry. The market has had strong leasing activity over the past three quarters. However, vacancy is expected to continue to increase into the fourth quarter, as over 900,000 square feet of new construction is scheduled to be completed, with only 38% of that preleased. Likewise, occupancy losses in older buildings will continue to impact net absorption.

Significant New Construction Office Projects
Project Product Type Submarket Size (SF) Status
The Alexandria District / 825 Industrial Rd Office R&D Belmont/San Carlos 299,508 Completed Q1 2021 The Alexandria District / 835 Industrial Rd Office R&D Belmont/San Carlos 243,988 Completed Q1 2021 Shore at Sierra Point / 1400‐1600 Sierra Point Pkwy Office R&D Brisbane 269,185 Completed Q1 2021 201 Haskins Way Office R&D South San Francisco 350,000 Completed Q1 2021 Gateway of Pacific Phase II Office R&D South San Francisco 441,000 Completed Q2 2021 Kilroy Oyster Point Phase I / N1 Inception ‐ Oyster Point Blvd Office R&D South San Francisco 655,765 Completed Q2 2021 Gateway of Pacific Phase III Office R&D South San Francisco 350,000 Delivery Q4 2021 Station 1 / 2750 S Delaware St Class A Office San Mateo 219,000 Delivery Q4 2021 Station 5 / 3150 S Delaware St Class A Office San Mateo 213,999 Delivery Q4 2021 Springline (formerly Station 1300) / 1300‐1302 El Camino Real Class A Office Menlo Park 236,037 Delivery Q1 2022 MPK 22 / 301‐309 Constitution Drive Class A Office Menlo Park 449,500 Delivery Q2 2022 Gateway at Millbrae Station Class A Office Millbrae 157,694 Delivery Q3 2022 500 El Camino Real Class A Office Menlo Park 154,000 Delivery Q3 2022 220 Park Road Class A Office Burlingame 185,000 Delivery Q2 2023 San Mateo County Offices / 617 Hamilton Street Class A Office Redwood City 121,000 Delivery Q3 2023 Source: CoStar; Cushman & Wakefield; Colliers International; Kidder Mathews Office Market Analysis 27
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Improvement in the market was anticipated in the second half of 2021, with the projected return to work in person following a reopening of the economy in June 2021, but additional COVID challenges have delayed that return, particularly in the tech sector, where companies have been the first to announce longer‐term mobile working options. Recovery in the office market is expected to be gradual as companies continue to define their remote working policies, space needs and growth projections. The following section discusses the life sciences market specifically, which has been strengthening since the onset of the pandemic.

Life Sciences Market Analysis 28
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Life Sciences Market Analysis
National Life Science Market Overview
Life science space is qualitatively different from office space requiring structural characteristics and strict environmental and safety restrictions coupled with the hybrid nature of space required by hospitals and lab tenants. New construction is highly specialized and is an integral part of the clinical delivery and scientific discovery process. The additional amenities and physical characteristics required dictates that these buildings generally command a much higher price per square foot than office space. According to a 2018 report by brokerage firm JLL, construction costs can range from $350 to $1,325 per square foot. Tenant improvement costs from shell typically range from $150 to $200 per square foot in the Bay Area. The following describes some of the characteristics that differentiate life science facilities from general commercial properties.

Lab to Office Space Ratios ‐ The majority of lab facilities include a split of 50% lab and 50% office use on a floor by floor basis. New life science facilities typically offer multiple common areas such as lounges and cafes where researchers can meet, discuss, and collaborate.

Building Services ‐ Special consideration must be made for the proposed research in each respective building, including the evaluation of the chemicals that will be stored and transported and how biological waste will be disposed.

HVAC – Sufficient air circulation is critical to life science users and required ventilation systems must be worked into the base building upgrades.

Electrical – The electrical design criteria for a state‐of‐the‐art research facility have skyrocketed as science and technology have become interdependent. The power grid must be capable of supplying the appropriate electrical capacity for augmenting HVAC requirements, research data, and scientific analysis tools.

Clear Height and Structure – Sufficient clear height for fume hoods and exhaust is essential. The concentrated equipment and workbench areas in lab buildings require heavy loading.

Vertical Shafts – A life science building must contain ample vertical space for supplying sufficient air and removing the exhaust fumes of any biotech user without overburdening cost or compromising the function of the space.

Lab Module – Any efficient lab planner must identify critical lab space requirements such as bench layouts.

Acoustics, Air Quality, and Vibration – The potential for vibration from equipment and the street environment to effect sensitive lab experiments is a key factor. Building adjustments must be made to prevent such vibrations from occurring.

Zoning – Zoning restrictions and other state and federal regulations can inhibit or prevent use changes, the handling of hazardous materials, and the ability to local equipment or systems on tops of buildings.

Life Sciences Market Analysis 29
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Flexibility – The only certain thing in the life science industry is change. Every floor of each building should be built with its own infrastructure so that all air, electric wiring, and plumbing can be easily modified and office space turned into lab space or clinical space if necessary.

Biosafety Levels – In addition to the characteristics described above, each life science facility must meet certain standards for biosafety depending upon the type of research being conducted.

Regulations as to safety and security requirements and licenses for buildings vary depending upon the research.

Impact of COVID‐19 on the Life Sciences Market
In contrast to the general office market, the pandemic has increased demand for life sciences space.

The following is an excerpt from Newark’s 2021 Mid‐Year Life Science Overview & Market Clusters report which summarizes the impact of COVID‐19 on the life sciences market:
“Life science real estate in 2021 continues to benefit from unprecedented levels of institutional investor demand across the major cluster markets and secular growth from expanding venture capital‐backed biotechnology, medical device and pharmaceutical tenants.

One of the early realities responsible for the acceleration of demand during the pandemic was that many life science lab workers could not do vital research and development from home, and therefore circumvented the lockdowns and work‐from‐home mandates that impacted other property types. While lockdowns and government‐mandated restrictions largely ended in most of the United States early in the summer of 2021, concerns are once again rising with the prevalence of the Delta variant of COVID‐19. This sentiment continues to feed into investor psychology and impact demand for conventional office space, which in turn is heightening the interest in life science and laboratory properties. Additionally, the global push for the creation of multiple COVID‐19 vaccines has galvanized US government support for on‐ shoring of biomanufacturing and research and development efforts, particularly for pharmaceutical and drug companies that ran short of supplies early into the pandemic.” The following table depicts the top ten life science owners in the United States, many of which are active in the Bay Area market.

Life Sciences Market Analysis 30
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Source: Newark’s 2021 Mid‐Year Life Science Overview & Market Clusters The table on the following page reflects the 30 largest transactions since 2020.

Life Sciences Market Analysis 31
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Source: Newark’s 2021 Mid‐Year Life Science Overview & Market Clusters Life Sciences Market Analysis 32
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Life Sciences in the Bay Area
The San Francisco Bay Area is considered a prominent life science cluster, second to only the Cambridge/Boston market and above the San Diego cluster (ranked third in the United States).

Newmark reports the Bay Area market has the largest lab market by size in the U.S. with over 30 million square feet of space. The region also benefits from a robust venture capital network, with $5.4 billion in venture capital funding raised midway through 2021. In addition, the Bay Area also benefits from three major research universities: Stanford, UCSCF, and UC Berkeley.

Source: Newark’s 2021 Mid‐Year Life Science Overview & Market Clusters Life Sciences Market Analysis 33
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) As evidenced on the previous page, vacancy rates in the South San Francisco market are at 3.6%. The following chart is courtesy of Cushman & Wakefield’s 2021 report Life Sciences on the Rise. Vacancy and rental rates are reported for the overall market, rather than by submarket.

Source: C&W’s 2021 Life Sciences on the Rise
Life Sciences Market Analysis 34
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Source: C&W’s 2021 Life Sciences on the Rise
Life Sciences Market Analysis 35
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) The previous graphics are useful for identifying prominent Bay Area sale and lease transactions. Please note, Longfellow, the buyer of the Redwood LIFE property, is proposing to demolish the existing 20 buildings on the site and construct a new 84‐acre life science campus with over three million square feet of space.

Within the larger Bay Area market, different types of life science and technology users tend to congregate in specific submarkets. For example, South San Francisco is known for its concentration of biotechnology and chemical technology users; the mid and south Peninsula also attract biotechnology uses. The South Bay has a high concentration of medical technology and device companies. The area from Sunnyvale to Fremont also has a cluster of auto‐technology companies. Food technology companies are located in the East Bay, and the Northeast Bay and Emeryville includes a high number of chemical technology users.

We discussed the local market with a broker with CBRE who is active in the life sciences arena. He stated there is very little space available in the Bay Area and the space is subdivided into three categories: new construction, conversion space, older life sciences buildings (the vast majority of which are leased). The broker was of the opinion that even if all life sciences space within the development pipeline is constructed until 2025, demand would still not be entirely satisfied. He also noted strong preleasing activity at an under‐construction life sciences campus he is involved with.

On October 13, 2021, CoStar reported three firms proposed adding over 1.25 million square feet of biotechnology space within a two week span. A representative with Healthpeak, a prominent life sciences developer involved in the proposal, stated:
“In the Bay Area, we are seeing record levels of demand…Everything that is coming between now and the end of 2022, early 2023, is 60% preleased, and the balance of that 40% has a significant amount of interest. We feel really good about the supply and demand characteristics in the Bay Area and looking forward.”
In addition, a Business First article dated November 12, 2021 discusses the robust life sciences market in the Bay Area. The article reports 2021 has surpassed 2019's record for lab leasing. The article also states asking rents are 27% higher for life sciences space than this time last year.

Outlook and Conclusions
Both nationally and locally, demand for life sciences space has been strong since the onset of the pandemic. Supply in the Bay Area remains constrained, particularly in the desirable South San Francisco submarket, and there are multiple new construction and conversion proposal in the development pipeline over the next several years. Rents have also been increasing in the South San Francisco submarket, and the majority of new construction is preleased prior to delivery. These trends are expected to continue in the near future, and the long term outlook for the life sciences industry remains positive.

Land Description and Analysis 36
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Property Analysis
Land Description and Analysis
Location
The property is located along Oyster Point Boulevard, east of Highway 101 and north of Forbes Boulevard.

Land Area
The following table summarizes the subject’s land area.

Land Area Summary
Tax ID Address SF Acres
015‐010‐240 379 Oyster Point Blvd 165,001 3.79
015‐010‐910 385 Oyster Point Blvd 921,076 21.14
015‐010‐930 ‐ 238,883 5.48
015‐010‐940 ‐ 163,045 3.74
015‐010‐950 348 Oyster Point Blvd 438,693 10.07
Total 1,926,698 44.23
Source: Public Records
As noted, the above table reflects the current configuration of assessor parcels within the District.

These are expected to be adjusted as development progresses, with each of the four Phases within the District having its own parcel. As will be shown in the following section, approximately 40 acres of land are associated with the proposed improvements within the four phases. The remaining land will reflect open space and infrastructure.

Shape and Dimensions
The site is irregular in shape, though site utility based on shape and dimensions is average.

Topography
The site is generally level and at street grade. The topography does not result in any particular development limitations.

Drainage
No particular drainage problems were observed or disclosed at the time of field inspection. This appraisal assumes that surface water collection, both on‐site and in public streets adjacent to the subject, is adequate.

Land Description and Analysis 37
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Flood Hazard Status
The following table provides flood hazard information.

Flood Hazard Status
Community Panel Number 06081C0042F
Date April 5, 2019
Zone X
Description Outside of 500‐year floodplain
Insurance Required? No
The Developer has raised portions of the open space/Bay Trail along the Marina out of the flood zone.

The elevation range of the District is above special flood hazard areas, typical tidal elevations, and the 100‐year extreme water level in the San Francisco Bay, as defined by the Federal Emergency Management Agency (FEMA).

Mid‐century sea level rise (“SLR”, in the year 2050) is expected to be between 11 inches (most likely) to 24 inches (the upper end of the range. End of century sea level rise (year 2100) is expected to be between 36 inches (most likely) to 66 inches (upper range). The following information was provided by the subject Developer and details the steps taken to design the project to accommodate future sea level rise.
“The design basis for flood protection for the project is to accommodate extreme high tides (100‐yr tide) plus upper range, end‐of‐century SLR projections for proposed buildings, and upper range, mid‐century SLR projections (at a minimum) for the roadways and open space areas.

The extreme high tide in the vicinity of the project (Base Flood Elevation, BFE) as estimated by the Federal Emergency Management Agency (FEMA), is 13.0 feet, NAVD. Therefore, the project site will be elevated such that it accommodates the BFE.

Buildings – All buildings are recommended to be resilient to the maximum expected sea level rise at the year 2100. The National Research Council of the National Academies published a range of the anticipated sea level rise for the California coast, and we understand that San Francisco Bay Conservation and Development Commission (BCDC) and the City of South San Francisco recommend using the upper end of the range (66”) for designing buildings to accommodate the expected sea level rise for the year 2100. This would require the ground floors to be at, or above elevation 16.5 feet, NAVD.

Parking Lots and the Bay Trail – Parking lots and the Bay trail are recommended to be resilient to sea level rise at the year 2050, and adaptable to sea level rise for the year 2100. Consistent with the approach for buildings, BCDC and the City of South San Francisco recommend using the upper end of the range (24”) for designing improvements to accommodate the expected sea level rise for the year 2050. Therefore, the lowest elevation of these improvements would be at or above elevation 13.0 feet, NAVD.”
Land Description and Analysis 38
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Environmental Hazards
A portion of the District was formerly used as a municipal landfill, which required remediation work prior to development of Phase I. Ongoing monitoring for water leachate and methane release is also required. The Developer reports they are unaware of any hazardous substance condition of the property within the District that has not been remediated to allow for the continued proposed development. As part of the environmental remediation of the site, the Developer off‐hauled significant quantities of refuse and repaired/replaced the clay cap. The Developer reports the environmental remediation process has been closely observed by regulators and developer has achieved closure.

An environmental assessment report was not provided for review, and during our inspection, we did not observe any obvious signs of contamination on or near the subject. However, environmental issues are beyond our scope of expertise. It is assumed that the property is not adversely affected by environmental hazards.

Seismic Hazards
All properties in California are subject to some degree of seismic risk. The Alquist‐Priolo Earthquake Fault Zoning Act was enacted by the State of California in 1972 to regulate development near active earthquake faults. The Act required the State Geologist to delineate “Earthquake Fault Zones” (formerly known as “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 investigations demonstrate that the sites are not threatened by surface displacement from future faulting.

According to information from the California Geological Survey (formerly known as the Division of Mines and Geology), the subject is not located within an Alquist‐Priolo Special Studies Zone. However, portions of the subject are located in a liquefaction zone. (California Division of Mines and Geology, Official Map of Alquist‐Priolo Earthquake Fault Zones, San Francisco South Quadrangle (2021)).

Ground Stability
A soils report was not provided for our review. Based on our inspection of the subject and observation of development on nearby sites, there are no apparent ground stability problems. However, we are not experts in soils analysis. We assume that the subject’s soil bearing capacity is sufficient to support the existing improvements.

Land Description and Analysis 39
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Streets, Access and Frontage
Details pertaining to street access and frontage are provided in the following table.

Streets, Access and Frontage
Street Oyster Point Blvd
Frontage Feet 2,160
Curbs Yes
Sidewalks Yes
Lanes 2 way, 1 lane each way
Condition Good/New
Traffic Levels Low
Visibility Good
The following map depicts the proposed improvements to Oyster Point Boulevard, including vehicular and bike routes, as well as proposed parking structures.

Land Description and Analysis 40
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Utilities
The availability of utilities to the subject is summarized in the following table.

Utilities
Service Provider
Water City of South San Francisco
Sewer City of South San Francisco
Electricity Paci fic Gas & Electric
Natural Gas Paci fic Gas & Electric
Local Phone Various Providers
Zoning
The subject is zoned OPSPD, Oyster Point Specific Plan District, by City of South San Francisco. This district is specific to the subject’s proposed development. The following table summarizes our understanding and interpretation of the zoning requirements that affect the subject.

Zoning Summary
Zoning Jurisdiction City of South San Francisco
Zoning Designation OPSPD
Description Oyster Point Specific Plan District
Legally Conforming? Appears to be legally conforming
Zoning Change Likely? No
Permitted Uses Various commercial uses
Category Phase I
Minimum Lot Area PH I ‐ 43,560 SF / PH II ‐ 10,000 SF
Maximum Site Coverage 60%
Maximum Floor Area Ratio 1
Parking Requirement Not to exceed 2.5 spaces per 1,000 gross SF of floor area According to the local planning department, there are no pending or prospective zoning changes. It appears that the proposed use of the site is a legally conforming use. We are not experts in the interpretation of zoning ordinances. An appropriately qualified land use attorney should be engaged if a determination of compliance is required. A zoning map is provided on the following page.

Land Description and Analysis 41
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Other Land Use Regulations
We are not aware of any other land use regulations that would affect the property.

Easements, Encroachments and Restrictions
We have reviewed a preliminary title report prepared by Fidelity National Title Company and dated March 11, 2021. The report identifies 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.

Timeline
Backbone infrastructure work for Phase I is expected to be complete by the end of 2021, and infrastructure for Phase II recently commenced. Backbone infrastructure for Phases III and IV is expected to be completed somewhat concurrently with vertical development these Phases, which is Land Description and Analysis 42
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) projected to be around 2025 to 2026. The following table depicts the developer’s infrastructure budget, including costs spent to date. The below costs include rough grading, erosion control, wet and dry utilities, traffic signals and roadway improvements, landscaping and irrigation, new sewer pump station, and soft costs associated with infrastructure improvements.

Conclusion of Site Analysis
Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses including those permitted by zoning. Uses permitted by zoning include various commercial uses. We are not aware of any other particular restrictions on development.

Land Description and Analysis 43
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Assessor Aerial
Land Description and Analysis 44
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Developer Aerials
Above: From Left to Right: Building C, Building B, Building A Above: Facing Building C
Land Description and Analysis 45
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Developer Aerials
Above: From Left to Right: Building A, Building B, Building C Above: From Left to Right: Building A, Building B, Building C Land Description and Analysis 46
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Developer Aerials
Above: Site Development Work
Above: Building C
Land Description and Analysis 47
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Plat Map
Land Description and Analysis 48
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) CFD No. 2020‐1 Boundary Map
Improvements Description and Analysis 49
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Improvements Description and Analysis
The subject currently comprises five parcels and 44.23 acres of land within the proposed and under construction Kilroy Oyster Point life sciences campus. At completion of build out, the subject will include 2,520,892 square feet of rentable area within four phases. In addition to life sciences space, the area within the District will also include open space and walking paths, various amenities for the project's life science users, and three parking garages; it is noted not all land uses within the District are taxable. Horizontal and vertical construction of Phase I, which is 100% pre‐leased to two tenants, is nearly complete, and backbone infrastructure of Phase II has commenced. Phases III and IV are expected to be finished in 2025/26, as market demand dictates. The subject's assessor parcels are expected to be reconfigured as development progresses, with each Phase eventually having its own parcel.

The following table depicts the proposed improvements, by Phase.

Proposed Improvements
Building Phase Rentable SF1 Gross SF Stories No. of Spaces Completion Date2 Tenant Acreage3 A (354 Oyster Point Blvd) 147,070 5 ‐
B (352 Oyster Point Blvd) 179,524 6 ‐
C (350 Oyster Point Blvd) 234,892 220,007 7 ‐ Cytokinetics Parking Structure ‐ ‐ 4 1,190
Total Phase 1 655,892 546,601
D 315,000 282,164 8 ‐ ‐
E 275,000 247,409 7 ‐ ‐
F 275,000 247,409 7 ‐ ‐
Parking Structure ‐ ‐ 10 2,016 ‐
Total Phase 2 865,000 776,982
G 250,000 215,229 6 ‐ ‐
H 250,000 212,654 6 ‐ ‐
Parking Structure ‐ ‐ 9 2,356 ‐
Total Phase 3 500,000 427,883
I 250,000 205,762 6 ‐ ‐
J 250,000 249,462 7 ‐ ‐
Total Phase 4 500,000 455,224
2 Phases III & IV are dependent on market demand; anticipated delivery 2025 or 2026. 3 Phase III & IV acreage is approximate and may vary in final lot‐line adjustments. 2 Ea rly 2024 9.80
1 End of 2021 10.07
421,000 Stripe
1 Total Phase II, III, and IV divided evenly over number of buildings, in‐lieu of more specific calculations. 3 2025/2026 10.05
4 2025/2026 10.05
Buildings A, B, and C are constructed over a shared four‐level parking structure. Building C is 100% pre‐leased to Cytokinetics, while Buildings A and B are 100% pre‐leased to Stripe. In each Phase, rentable area exceeds gross building area. This is due to two factors: first, some outdoor common areas are included in the rentable area (this is not uncommon for new, Class A space in the area); second, life sciences buildings include significant mechanical areas which are included in rentable area, but not the gross square footage measurement (which reflects what the City considers taxable square footage).

The subject project will also include multiple amenities. In Phase I, Building C will offer a ground floor restaurant (open to the public), fitness center, and auditorium. Buildings A and B will include a cafeteria and café, and all Phase I buildings will share outdoor meeting space. Phase II improvements Improvements Description and Analysis 50
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) will include outdoor meeting space, a fitness center, juice bar, food and beverage area, conference area, and amphitheater.

The following table provides further detail on the under‐construction Phase I buildings.

Improvements Description ‐ Phase 1
Name of Property City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) General Property Type Office
Property Sub Type Li fe Sciences
Competitive Property Class A
Occupancy Type Single Tenant
Percent Leased 100%
Number of Tenants 2
Tenant Size Range (SF) 234,892 ‐ 421,000
Number of Buildings 3
Stories 5 to 7
Construction Class A
Construction Type Steel frame
LEED Certi fication Gold
Construction Quality Good
Condition New
Gross Building Area (SF) 546,601
Rentable Area (SF) 655,892
Land Area (SF) 438,649
Floor Area Ratio (RA/Land SF) 1.50
Floor Area Ratio (GBA/Land SF) 1.25
Building Area Source Owner
Year Built 2021
Actual Age (Yrs.) 0
In addition, compared to general office, life sciences space general includes higher ceiling heights, additional duct work, significantly more HVAC and power capacity, and high floor load capacity designed to reduce/minimize vibrations.

Proposed Improvements Analysis
Quality and Condition
The quality and condition of the subject is considered to be consistent with that of newly constructed, competing life sciences properties.

Functional Utility
The improvements appear to be adequately suited to their proposed use, and there do not appear to be any significant items of functional obsolescence.

Improvements Description and Analysis 51
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Conclusion of Improvements Analysis
In comparison to other competitive properties in the region, the subject improvements are rated as follows:

Proposed Improvements Ratings
Visibility/Exposure Average
Design and Appearance Above Average
Age/Condition Above Average
% Sprinklered Average
Lobby Average
Interior Amenities Average for New Life Science Properties Floor to ceiling heights Average
Elevators Average
Parking Ratios Average
Distance of Parking to Building Access Average
Landscaping Average to Above Average
Overall, the quality, condition, and functional utility of the improvements are average to above average for their age and location. For the reader’s reference, renderings and schematics for the subject proposed improvements are shown on the following pages.

Improvements Description and Analysis 52
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Proposed Improvements – Phase II

Improvements Description and Analysis 53
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Proposed Improvements – Phase II

Improvements Description and Analysis 54
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Proposed Improvements – Phase II Building D

Improvements Description and Analysis 55
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Proposed Open Space

Improvements Description and Analysis 56
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Proposed Amenities – Phase II

Improvements Description and Analysis 57
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Proposed Floor Plan – Phase II
Improvements Description and Analysis 58
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services)

Phase I – Buildings B & C Phase I – Building B
Phase I – Building A Phase I – Building A & Outdoor Meeting Space Stripe Stripe
Improvements Description and Analysis 59
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services)

Stripe Stripe
Stripe Stripe
Stripe Stripe
Improvements Description and Analysis 60
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services)

Stripe Breezeway
Stripe View from Stripe Space
Flatwork Cytokinetics
Improvements Description and Analysis 61
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services)

Cytokinetics Cytokinetics
Cytokinetics Cytokinetics
Cytokinetics Shared Lobby
Improvements Description and Analysis 62
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Parking Garage (shared by PH I buildings) Open Space along Marina Sewer Pump Station Future Phase (improvements to be demolished) Oyster Point Boulevard Oyster Point Boulevard
Real Estate Taxes 63
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Real Estate Taxes
The property tax system in California was amended in 1978 by Article XIII to the State Constitution, commonly referred to as Proposition 13. It provides for a limitation on property taxes and for a procedure to establish the current taxable value of real property by reference to a base year value, which is then modified annually to reflect inflation (if any). Annual increases cannot exceed 2% per year.

The base year was set at 1975‐76 or any year thereafter in which the property is substantially improved or changes ownership. When either of these two conditions occurs, the property is to be re‐ appraised at market value, which becomes the new base year assessed value. Proposition 13 also limits the maximum tax rate to 1% of the value of the property, exclusive of bonds and direct charges.

Bonded indebtedness approved prior to 1978, and any bonds subsequently approved by a two‐thirds vote of the district in which the property is located, can be added to the 1% tax rate.

The existing ad valorem taxes are of nominal consequence in this appraisal, primarily due to the fact these taxes will be adjusted as subdivision and development continues. According to the San Mateo County Treasurer‐Tax Collector’s Office, the appraised properties have a cumulative annual tax rate of

1.05790%. This tax rate does not include the Community Facilities District Special Tax, which is discussed below.

According to the Rate and Method of Apportionment, the assigned Special Tax for Developed Property within the District is presented in the following table (for the Fiscal Year 2021‐22). We have calculated the Special Tax obligation of each Phase based upon gross building area.

City of South San Francisco CFD No. 2021‐1 Special Taxes Special Tax A (facilities) $2.00 psf of non‐residential floor area; developed land Special Tax B (services) $0.35 psf of non‐residential floor area; developed land Phase Building Area Special Tax A Special Tax B Total
Phase I 546,601 $1,093,202 $191,310 $1,284,512
Phase II 776,982 $1,553,964 $271,944 $1,825,908
Phase III 427,883 $855,766 $149,759 $1,005,525
Phase IV 455,224 $910,448 $159,328 $1,069,776
It is noted, “Developed Property” is defined in the Rate and Method of Apportionment as, “all Assessor’s Parcels of Taxable Property for which a Certificate of Occupancy was issued after January 1, 2021 an on or before May 1 of the Fiscal year preceding the Fiscal year for which the Special Taxes are being levied.”
Highest and Best Use 64
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Highest and Best Use
Process
Before a property can be valued, an opinion of highest and best use must be developed for the subject site, both as if vacant, and as improved or proposed. By definition, the highest and best use must be:
 Legally permissible under the zoning regulations and other restrictions that apply to the site.  Physically possible.
 Financially feasible.
 Maximally productive, i.e., capable of producing the highest value from among the permissible, possible, and financially feasible uses.

As If Vacant
Legally Permissible
The site is zoned OPSPD, Oyster Point Specific Plan District. Permitted uses include various commercial uses. To our knowledge, there are no legal restrictions such as easements or deed restrictions that would effectively limit the use of the property. The subject is entitled for development of a life sciences campus, and the present entitlements are the result of significant planning and review; any rezone or land use different than currently approved is unlikely. Given prevailing land use patterns in the area, and the subject entitlements, only life sciences use is given further consideration in determining highest and best use of the site, as though vacant.

Physically Possible
The physical characteristics of the site do not appear to impose any unusual restrictions on development. Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses, including those permitted by zoning.

Financially Feasible
Based on our analysis of the market, there is currently adequate demand for life sciences use in the subject’s area. The life sciences market has strengthened since the onset of the pandemic, and vacancy rates remain low. In addition, rental rates have been increasing over the past year, and nearly all new construction is delivered pre‐leased. As will be demonstrated in the upcoming extraction analyses, the land values for the subject’s various Phases are positive, which demonstrates that office development is financially feasible. It appears that a newly developed life sciences use on the site would have a value commensurate with its cost. Therefore, life sciences use is considered to be financially feasible.

Maximally Productive
There does not appear to be any reasonably probable use of the site that would generate a higher residual land value than life sciences use. Accordingly, it is our opinion that life sciences use, developed to the normal market density level permitted by zoning, is the maximally productive use of the property.

Highest and Best Use 65
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Conclusion
Development of the site for life sciences use is the only use that meets the four tests of highest and best use. Therefore, it is concluded to be the highest and best use of the property as if vacant.

As Improved (Proposed)
As of the effective appraisal date, backbone infrastructure and vertical construction is nearly complete for Phase I, and Phase II construction recently commenced. The planned infrastructure improvements are necessary for development of future Phases. The proposed improvements are planned in accordance with the subject entitlements and are consistent with the highest and best use of the subject property as if vacant.

Most Probable Buyer
Taking into account the size, complexity, and characteristics of the property, there are two separate probable buyers associated with the subject. The most probable buyer of Phase I, given its current construction status, is a regional or national investor. The most probable buyer of Phases II, III, and IV is a sophisticated land developer with highly specialized knowledge of the local life sciences market.

Valuation Methodology 66
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Valuation
Valuation Methodology
Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach and the income capitalization approach.

The cost approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties.

The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data. The sales comparison approach is less reliable in an inactive market or when estimating the value of properties for which no directly comparable sales data is available. The sales comparison approach is often relied upon for owner‐user properties.

The income capitalization approach reflects the market’s perception of a relationship between a property’s potential income and its market value. This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied, as appropriate. This approach is widely used in appraising income‐producing properties.

Additional analyses often undertaken in the valuation of subdivisions include extraction, land residual analysis, and the subdivision development method.

Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type.

This analysis begins with income capitalization approaches to determine the market value of the subject Phases as if complete and stabilized. A summary of sales of life sciences improvements is then presented as a test of reasonableness. Next, extraction analyses are employed to determine the value of Phase I, which will require no additional discounting, and of the underlying land for Phases II through IV. Finally, the subdivision development method is used to estimate the market value of the land components associated with Phases II through IV in bulk. The subdivision development method is a form of discounted cash flow analysis (DCF) in which the expected revenue, absorption period, expenses and internal rate of return associated with the development and sell‐off of the various land use components comprising the subject property to end users are considered.

Income Capitalization Approach 67
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Income Capitalization Approach
The income capitalization approach converts anticipated economic benefits of owning real property into a value estimate through capitalization. The steps taken to apply the income capitalization approach are:
 Analyze the revenue potential of the property.
 Consider appropriate allowances for vacancy, collection loss, and operating expenses.  Calculate net operating income by deducting vacancy, collection loss, and operating expenses from potential income.
 Apply the most appropriate capitalization method, either direct capitalization or discounted cash flow analysis, or both, to convert anticipated net income to an indication of value.

The two most common capitalization methods are direct capitalization and discounted cash flow analysis. In direct capitalization, a single year’s expected income is divided by an appropriate capitalization rate to arrive at a value indication. In discounted cash flow analysis, anticipated future net income streams and a future resale value are discounted to a present value at an appropriate yield rate.

In this analysis, we use only direct capitalization to determine the market value as if stabilized of the proposed improvements for the subject’s taxable land. A direct capitalization analysis will be presented for each of the four phases within the District. Sales of newly constructed life science properties are somewhat scarce, but it is not uncommon for multiple buildings to be included in one transaction (often representing all or a portion of a campus) when transfers occur. A summary of the subject’s existing and proposed improvements is recreated on the following page; the analysis for Phase I will be presented first.

Income Capitalization Approach 68
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Proposed Improvements
Building Phase Rentable SF1 Gross SF Stories No. of Spaces Completion Date2 Tenant Acreage3 A (354 Oyster Point Blvd) 147,070 5 ‐
B (352 Oyster Point Blvd) 179,524 6 ‐
C (350 Oyster Point Blvd) 234,892 220,007 7 ‐ Cytokinetics Parking Structure ‐ ‐ 4 1,190
Total Phase 1 655,892 546,601
D 315,000 282,164 8 ‐ ‐
E 275,000 247,409 7 ‐ ‐
F 275,000 247,409 7 ‐ ‐
Parking Structure ‐ ‐ 10 2,016 ‐
Total Phase 2 865,000 776,982
G 250,000 215,229 6 ‐ ‐
H 250,000 212,654 6 ‐ ‐
Parking Structure ‐ ‐ 9 2,356 ‐
Total Phase 3 500,000 427,883
I 250,000 205,762 6 ‐ ‐
J 250,000 249,462 7 ‐ ‐
Total Phase 4 500,000 455,224
2 Phases III & IV are dependent on market demand; anticipated delivery 2025 or 2026. 3 Phase III & IV acreage is approximate and may vary in final lot‐line adjustments. 2 Ea rly 2024 9.80
1 End of 2021 10.07
421,000 Stripe
1 Total Phase II, III, and IV divided evenly over number of buildings, in‐lieu of more specific calculations. 3 2025/2026 10.05
4 2025/2026 10.05
Leased Status of Property – Phase I
Phase I includes three buildings leased to two tenants. The rent roll for Phase I is provided below.

Please note, the lease commencement date is somewhat of an estimate, as it is contingent on delivery of the improvements. However, Stripe is began occupying Level 2 of Building B at the end of October 2021 and is expected to occupy another floor every two weeks. Stripe will also occupy Building A in February 2022. Cytokinetics is projected to occupy Building C in January 2022.

Suite Tenant SF Lease Start Lease End
Term
(Mos.) Lease Type Income Type
Contract
Rent
Contract
Rent/SF/Mo.

Bldg C Cytokinetics 234,892 1/1/2022 12/31/2033 144 Triple Net $/SF/Mo. $15,502,872 $5.50 Bldg A & B Stripe 421,000 1/1/2022 12/31/2033 144 Triple Net $/SF/Mo. $27,533,400 $5.45 Total/Average* 655,892 $43,036,272 $5.47
Vacant SF 0 0%
Leased SF 655,892 100%
*Average contract rent is based on leased square feet.

Rent Roll
Both leases have annual escalations of 3.5%.

Market Rent Analysis – Phase I
Contract rents typically establish income for leased space, while market rent is the basis for estimating income for current vacant space and future speculative re‐leasing of space due to expired leases. To estimate market rent, we analyze comparable rentals most relevant to the subject in terms of location, property type, size, and transaction date. Comparables used in our analysis are summarized in the following table. Comparables 1 and 2 reflect the subject leases Income Capitalization Approach 69
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Summary of Comparable Rentals ‐ Life Science
No. Property Information Description Tenant SF
Contract
Date
Lease
Start
Term
(Mos.) Rent/SF Escalations
Free Rent
(Months) TI/SF Lease Type
1 Kilroy Oyster Point Yr Blt. 2021 Stripe 421,000 Oct‐19 Jan‐22 144 $5.50 Fixed Percentage – – Triple Net 379 Oyster Point Blvd. Stories: –
South San Francisco RA: 421,000
San Mateo County
CA
2 Kilroy Oyster Point Yr Blt. 2021 Cytokinetics, Inc 234,892 Jul ‐19 Jan‐22 144 $5.45 Fixed Percentage 2 $145.00 Triple Net 379 Oyster Point Blvd. Stories: –
South San Francisco RA: 234,892
San Mateo County
CA
3 The Shore at Sierra Point Yr Blt. 2021 Annexon, Inc. 65,818 Dec‐20 Nov‐21 120 $5.75 Fixed Percentage 3 $165.00 Triple Net 1400 Sierra Point Pky. Stories: –
Brisbane RA: 616,000
San Mateo County
CA
4 Alexandria District for Yr Blt. 2021 Allakos 93,332 Feb‐20 Jul ‐21 124 $5.75 Fixed Percentage 6 $150.00 Triple Net 825‐835 Industrial Rd. Stories: 6
San Carlos RA: 282,190
San Mateo County
CA
5 201 Haskins Way Yr Blt. 2021 Lyell 105,000 Feb‐20 Feb‐21 120 $5.50 Fixed Percentage – – Triple Net 201 Haskins Way Stories: –
South San Francisco RA: 315,000
San Mateo County
CA
6 Genesis North Tower Yr Blt. 2019 Fluidigm 77,929 Mar‐19 Jan‐20 123 $5.60 Fixed Percentage 2 $176.00 Triple Net 2 Tower Pl. Stories: 21
South San Francisco RA: 375,000
San Mateo County
CA
Comments: Lease of life science/biotech space at the Alexandria District for Science and Technology, a two building development nearing completion in San Carlos. Lease includes TI allowance of $150/SF plus additional TIs to be amortized at 8%.

Comments: Lease of two newly constructed buildings (352 and 354 Oyster Point Boulevard) to tech tenant Stripe, which focuses on payment processing. The commencement date is an estimate, as the lease begins upon completion of the landlord's work; the lease was negotiated in 2019.

Comments: Twelve year lease of newly constructed space in Oyster Point to a life sciences user. Lease was negotiated in 2019; the commencement date is approximate, as the lease will begin when the landlord's work is complete. The improvements will include an auditorium, fitness center, food and beverage space. The tenant received two months of free rent and a $145 psf TI allowance.

Comments: Lease of newly constructed life sciences space within Building C at The Shore at Sierra Point campus to a biosciences tenant. Commencement date is an estimate, as occupancy is dependent on completion of construction. The tenant received 3 months of free rent and a $165 psf TI allowance.

Comments: Lease within newly constructed life sciences building in South San Francisco to Lyell Pharmaceuticals. Lease was signed in February 2020 but commenced in February 2021.

Comments: New 123‐month lease to biotech tenant within the Genesis life sciences campus. The tenant received a $176 psf TI allowance and the equivalent of 2 months of free rent. The free rent was structured as a rent abatement on a portion of the space over the first 8 month of the lease.

Income Capitalization Approach 70
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Comparable Rentals Map
Income Capitalization Approach 71
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Lease 1
Kilroy Oyster Point
Lease 2
Kilroy Oyster Point
Lease 3
The Shore at Sierra Point
Lease 4
Alexandria District for Science & Technology
Lease 5
201 Haskins Way
Lease 6
Genesis North Tower
Income Capitalization Approach 72
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Rental Analysis Factors
The following elements of comparison are considered in our analysis of the comparable rentals.

Rental Analysis Factors
Expense Structure Division of expense responsibilities between landlord and tenants.

Conditions of Lease Extraordinary motivations of either landlord or tenant to complete the transaction.

Market Conditions Changes in the economic environment over time that affect the appreciation and depreciation of real estate.

Location Market or submarket area influences on rent; surrounding land use influences.

Access/Exposure Convenience to transportation facilities; ease of site access; visibility from main thoroughfares; traffic counts.

Size Difference in rental rates that is often attributable to variation in sizes of leased space.

Building Quality Construction quality, amenities, market appeal, functional utility.

Age/Condition Effective age; physical condition.

Economic
Characteristics
Variations in rental rate attributable to such factors as free rent or other concessions, pattern of rent changes over lease term, or tenant improvement allowances.

Each of the comparables reflect a triple net expense structure, which is common for life sciences leases. A summary of expense responsibilities is presented below.

Subject Expense Structures
Space Type
Lease Type
Owner Tenant
Real Estate Taxes x
Insurance x
Utilities x
Repairs/Maintenance x
Cleaning/Janitorial x
General/Administrative x
Management x
Triple Net
Li fe Science
Income Capitalization Approach 73
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Analysis of Comparable Rentals – Phase I
The comparable rentals are compared to the subject and adjusted to account for material differences that affect market rental value. The following table summarizes our analysis of each comparable.

Rental Analysis Summary ‐ Life Science
No.

Property Name;
Tenant Leased SF Rent/SF
Overall
Comparison to
Subject Comments
1 Kilroy Oyster Point 421,000 $5.50 Similar
Stripe
2 Kilroy Oyster Point 234,892 $5.45 Similar
Cytokinetics, Inc
3 The Shore at Sierra Point 65,818 $5.75 Similar
Annexon, Inc.
4 Alexandria District for 93,332 $5.75 Similar
Allakos
5 201 Haskins Way 105,000 $5.50 Similar
Lyell
6 Genesis North Tower 77,929 $5.60 Similar
Fluidigm
Lease commenced in February 2021
and was negotiated in February
2020.

Lease was negotiated in October
2019 and includes two buildings.

Lease was negotiated in July 2019.

Contract date is December 2020;
lease commences upon completion
of construction.

Space is located in San Carlos.

Contract date is February 2020 and
improvements are nearing
completion.

Space is located within a high‐rise
(21‐story) li fe sciences building. The
lease was negotiated in March 2019.

Market rent is the rental income that a property would most probably command in the marketplace. A number of comparable life sciences properties within the subject’s market area were surveyed in order to determine market rent. The comparable properties presented above are considered the most similar to the subject that we could accurately confirm.

In addition to expense structure, factors considered when adjusting the comparables consisted of lease conditions, market conditions, and differences in physical characteristics. In equating the comparables to the subject, all are considered reasonable indicators of market rent.

With the exception of Comparable 1 (the subject lease to Stripe, a technology tenant), each of the above comparables reflect leases to life sciences users. The comparables are located in South San Francisco, Brisbane, and San Carlos, and all leases reflect new construction. It is common for newly constructed life sciences properties to be pre‐leased prior to completion of construction, meaning leases for properties coming to market in 2021 were negotiated in 2019 and 2020.

Demand for life sciences space has only increased in 2021 and the second half of 2020; this is partly due to supply constraints and the lack of available space, as well as increased interest in the life Income Capitalization Approach 74
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) sciences sector due to the onset of the COVID‐19 pandemic. A paired analysis of leases located at comparable life science campuses suggest rental rates have increased between 4% and 8% from 2020 to 2021. In addition, we are aware of two confidential proposed leases (one executed lease and one letter of intent) for under construction space (over 100,000 square feet) at a life sciences campus competitive with the subject. The rental rates range from $6.65 to $7.75 per square foot, triple net with 3.5% annual increases; the TI allowance is slightly above the range indicated by the previous comparables. These rates for leases with future commencement dates reflect an increase over the rental rates indicated by the previous comparable set. Given strengthening market conditions, and continued strong pre‐leasing activity, we conclude to different rental rates for the subject’s existing (nearly complete) Phase I buildings and the proposed Phases II through IV buildings.

After analysis, the comparables indicate that a rental rate of $5.65 per square foot per month, triple net, is applicable to the subject’s Phase I space. We estimate market rent for Phases II through IV at $6.00 per square foot, per month, triple net. This reflects an increase of approximately 6% over Phase I rates. As sustained growth multiple years in the future remains somewhat speculative, we have elected not to trend rents for Phases III and IV over the market rent conclusion for Phase II.

Market Rent Conclusion
Based on the preceding analysis of comparable rentals and trends evident in the market, we conclude market lease terms for the subject as follows:

Concluded Market Lease Terms ‐ Phase I
Space Type
Market
Rent Measure
Rent
Escalations Lease Type
Lease
Term
(Mos.)
Free Rent
(Mos.)
TI/SF
New
Life Science $5.65 $/SF/Mo. 3.5% annually Triple Net 120 3 $165.00 Concluded Market Lease Terms ‐ Phases II, III, & IV
Space Type
Market
Rent Measure
Rent
Escalations Lease Type
Lease
Term
(Mos.)
Free Rent
(Mos.)
TI/SF
New
Li fe Science $6.00 $/SF/Mo. 3.5% annually Triple Net 120 3 $165.00 Annual escalations of 3.5% are common among comparable properties in the local market. Free rent and TI allowances range from two to six months and $145 to $176 per square foot, respectively.

Conversations with local brokers indicate TI allowances between $175 to $200 per square foot are also becoming common for new life science space.

Income Capitalization Approach 75
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Stabilized Income and Expenses
Potential Gross Rent
Potential gross rent is typically based on contract rent from the existing leases in place and market rent for vacant space. As indicated in the following table, contract rent for Phase I is generally consistent with our market rent conclusion. It is our opinion the subject’s Phase I rental rates (and corresponding TI allowances) are consistent with the local market and contract rent will be utilized in the upcoming Phase I analysis. The previously concluded market rent will be used to calculate potential gross rent for Phases II, III, and IV. Potential gross rent for these phases is reported below.

Income is projected for the 12‐month period following the effective date of the appraisal.

Potential Gross Rent ‐ Phase I
Space Type SF Annual $/SF/Mo. $/SF/Mo. Annual
Li fe Science 655,892 $43,036,272 $5.47 $5.65 $44,469,478 97% Total Subject 655,892 $43,036,272 $5.47 $5.65 $44,469,478 97% Potential Rent at Contract Potential Rent at Market
Contract
as % of
Market
Potential Gross Rent ‐ Phase II
Space Type SF $/SF/Mo. Annual
Total Subject 865,000 $6.00 $62,280,000
Potential Rent at Market
Potential Gross Rent ‐ Phase III & IV
Space Type SF $/SF/Mo. Annual
Total Subject 500,000 $6.00 $36,000,000
Potential Rent at Market
Expense Reimbursements
Reimbursement income is based upon a triple net expense structure that requires tenants to reimburse the owner for all operating expenses except management.

Vacancy & Collection Loss
Please refer to the Life Sciences Market Overview section for a detailed discussion of market and/or submarket vacancy factors. Space within the life sciences market remains severely constrained and there is limited available space. Conversations with market participants indicate there is strong demand for life sciences space within the development pipeline through at least 2025. As discussed, new construction typically comes online preleased. Therefore, stabilized vacancy and collection loss is estimated at 3.0% for all Phases.

Income Capitalization Approach 76
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Effective Gross Income – Phase I
Effective gross income for Phase I is calculated at $59,467,616, or $90.67 per square foot.

Expenses
To estimate pro forma operating expenses for the subject property, we considered expense data from comparable life sciences properties throughout the Bay Area. Due to the somewhat limited availability of data, we have supplemented Bay Area expense data with Class A, recently constructed, life sciences data in coastal markets across the United States. Note that a replacement reserve expense has not been estimated for the subject property, since the overall capitalization rates extracted from the sales data did not include this as an expense. Management is estimated at 2% of effective gross income.

Additionally, property taxes have been calculated by applying the subject’s tax rate to the market value estimate via the income capitalization approach. The premise is that taxes would be reassessed upon the sale of the property.

As previously described herein, the subject is encumbered with special taxes due to the City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services); tenants are expected to reimburse for this expense, consistent with a triple net expense structure. Operating projections for Phase I are reported below.

Operating Projections ‐ Phase I
Income
Base Rent $43,036,272
Expense Reimbursements 18,759,885
Potential Gross Income* $61,796,157
Vacancy & Collection Loss @ 3.0% ‐1,853,885
Effective Gross Income $59,942,273
Expenses
Real Estate Taxes $9,407,901
CFD 2021‐1 Special Tax 1,284,512
Insurance 655,892
Utilities 3,607,406
Repairs/Maintenance 1,967,676
Cleaning/Janitorial 852,660
General/Administrative 983,838
Management 1,198,845
Total Expenses $19,958,731
Net Operating Income $39,983,542
Operating Expense Ratio 33.3%
IRR
Projection
*IRR projected income is the total potential income attributable to the property before deduction of vacancy and collection loss.

The following table reflects life science comparables in San Mateo and Alameda Counties.

Income Capitalization Approach 77
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Expense Analysis per Square Foot ‐ Bay Area
Comp 1 Comp 2 Comp 3 Comp 4
Year Built 2000 1998
SF 176,955 183,344 92,250 81,569
Prevailing Lease Type Triple Net Triple Net Triple Net – Operating Data Type In Place In Place In Place In Place Year 2019 2019 2019 2019
Real Estate Taxes $7.89 $5.98 $3.11 $8.23 $14.34
CFD 2021‐1 Special Tax $0.00 $0.00 $0.00 $0.00 $1.96
Insurance $1.29 $0.63 $0.55 $0.41 $1.00
Utilities $6.76 $5.38 $0.15 $0.01 $5.50
Repairs/Maintenance $4.36 $2.33 $1.42 $0.45 $3.00
Cleaning/Janitorial $0.29 $0.33 $0.00 $0.00 $1.30
General/Administrative $0.39 $0.79 $0.07 $1.50 $1.50
Management $2.23 $1.78 $0.60 $3.00 $1.83
Total $23.20 $17.22 $5.90 $13.60 $30.43
Operating Expense Ratio 31.2% 29.0% 20.2% 19.0% 33.3%
Subject
IRR Projection
Comp Data*
Projected Expenses
2021
655,892
Triple Net
Life science properties often have higher utility costs than traditional office properties. For additional support, we consider the following Class A comparables in Cambridge and Boston, Massachusetts, and Seattle, Washington.

Expense Analysis per Square Foot ‐ Coastal Markets
Comp 1 Comp 2 Comp 3 Comp 4 Comp 5
Year Built 2006 2018 2018 2015 2004
SF 128,601 224,252 160,035 123,838 127,537
Prevailing Lease Type Triple Net Triple Net Triple Net – – Operating Data Type
Pro‐forma
Owner
Pro‐forma
Owner
Pro‐forma
Owner In Place In Place
Year 2019 2021 2019 2019 2019
Real Estate Taxes $7.82 $10.56 $7.79 $4.74 $1.15
CFD 2021‐1 Special Tax $0.00 $0.00 $0.00 $0.00 $0.00
Insurance $0.32 $0.20 $0.56 $0.42 $0.36
Utilities $1.36 $3.82 $1.62 $3.27 $5.03
Repairs/Maintenance $2.05 $3.82 $1.36 $3.77 $3.86
Cleaning/Janitorial $0.68 $2.73 $1.13 $0.77 $0.40
Grounds $0.00 $1.37 $0.06 $0.00 $0.00
Security $0.78 $0.00 $2.08 $0.00 $0.00
General/Administrative $4.74 $0.82 $0.95 $2.47 $3.12
Management $3.36 $1.89 $1.69 $1.64 $1.87
Total $21.11 $25.21 $17.24 $17.09 $15.80
Operating Expense Ratio 35.5% 27.8% 27.8% 22.2% 25.3%
Comp Data*
Income Capitalization Approach 78
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Capitalization Rate Selection
A capitalization rate is used to convert net income into an indication of value. Selection of an appropriate capitalization rate considers the future income pattern of the property and investment risk associated with ownership. We consider the following data in selecting a capitalization rate for the subject. The first table includes Bay Area life sciences properties; however, due to the age of the majority of the comparables, we also consider Class A trophy life sciences properties in other national markets in the second table.

Capitalization Rate Comparables ‐ Bay Area
No. Property Name
Year
Built
Sale
Date Rentable Area
%
Occup.

Effective
Price/SF Cap Rate
1 Genesis South San Francisco N/A 10/15/2020 784,088 96% $1,294.50 4.80% 2 130‐150 Shoreline Dr. 1986 4/23/2020 81,569 100% $993.02 5.80% 3 7000 Marina Blvd. 1986 6/27/2019 90,000 100% $855.56 4.40% 4 75‐125 Shoreway Rd. 1978 1/11/2019 82,462 100% $887.68 4.90% 5 500 Forbes Blvd 2001 8/6/2019 155,685 100% $995.60 4.20% Indicated Cap Rate Range: 4.20% ‐ 5.80%
Average (Mean) Cap Rate: 4.82%
The overall capitalization rate is the rate at which an investor of an income‐producing property will see a return on capital used to buy a particular property/investment. Thus, the capitalization rate can reasonably be viewed as a function of risk. A high risk implies a high possibility of investment loss; a property with high risk will have a high capitalization rate causing a lower selling price or value than one with a relatively low risk factor, all else being equal.

Attributes such as location, building area, visibility/accessibility, condition, effective age and overall quality were taken into account when equating sales and rent comparables to the subject in order to determine market value. The same is true when determining a capitalization rate for the subject property. Also considered when deriving a capitalization rate for an income‐producing property is deferred maintenance, security of the income stream (terms of leases and strength of tenants), as well as general economic conditions and local market conditions.

The subject improvements will reflect new construction; given the ages of the comparables, this would apply downward pressure to the average reported cap rate. In addition, we also discussed the local Bay Area life sciences market with a broker with CBRE active in the space; he stated life sciences Capitalization Rate Comparables ‐ National Life Science Properties No. Property Name City
Sale
Date Rentable Area
Effective
Price/SF Cap Rate
1 Cambridge Discovery Park Boston 12/1/2020 604,064 $1,191.93 4.30% 2 Project Genome Cambridge 3/1/2021 1,729,376 $1,994.94 4.00% 3 One Memorial Cambridge 8/1/2021 409,422 $2,015.28 3.90% Indicated Cap Rate Range: 3.90% ‐ 4.30%
Average (Mean) Cap Rate: 4.07%
Income Capitalization Approach 79
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) cap rates for new product are currently between 4.00% and 4.50%. We are also aware of an under construction life sciences building in San Francisco which has a forecasted cap rate of 4.75 for modeling purposes.

To determine a capitalization rate for the subject we have also examined capitalization rate information published in national surveys, presented on the following page.

It should be noted, the above rates reflect all types of office space and therefore tend to be higher than what would be expected for newly constructed, Class A, life sciences space in the Bay Area market.

Capitalization Rate Conclusion
Based on an analysis of the preceding data, a going‐in capitalization rate for the subject is indicated within a range of 4.00% to 5.00%. To reach a capitalization rate conclusion, we consider each of the Capitalization Rate Surveys – Office Properties
IRR‐ViewPoint
National
CBD Office
IRR‐ViewPoint
National
Suburban Office
PwC
2Q‐21
National
CBD Office
PwC
2Q‐21
National
Suburban Office
ACLI
1Q‐21
National
Office
Range 5.00% ‐ 11.00% 5.50% ‐ 9.75% 4.25% ‐ 8.00% 4.00% ‐ 9.00% NA Average 7.31% 7.54% 5.78% 6.22% 5.30%
Source: IRR‐Viewpoint 2021; PwC Real Es ta te Inves tor Survey; America n Council of Li fe Ins ure rs Inves tment Income Capitalization Approach 80
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) following investment risk factors to gauge its impact on the rate. The direction of each arrow in the following table indicates our judgment of an upward, downward, or neutral influence of each factor.

Risk Factor Issues Impact on
Rate
Income Characteristics Credit strength of tenant, escalation pattern, above/below market rent, rollover risk. Phase I is
leased at market, and market rent utilized in the
analyses for Phases II, III, and IV.
↔
Competitive Market Position Construction quality, appeal, condition, effective age, functional utility. The subject will reflect
new, Class A construction in a highly desirable
life sciences submarket.
↓
Location Market area demographics and life cycle trends; proximity issues; access and support services.

The subject has good interstate access and
reasonably good access to public transit. In
addition, the subject is located within a cluster of
other life sciences users.
↓
Market Vacancy rates and trends; rental rate trends;
supply and demand. Life sciences supply remains
constrained, and rental rates have increased
over the past year.
↓
Highest & Best Use Upside potential from redevelopment, adaptation, expansion. The subject proposal is
consistent with the highest and use of the
property.
↔
Overall Impact ↓
Phase I reflects a fully pre‐leased property which is expected to be completely occupied early in 2022.

Construction of Phases II, III, and IV have longer timelines, with construction of Phase II just now commencing. Considering the development size of Phases II through IV, and future timelines associated with development, we conclude capitalization rates for Phase I and Phases II through IV as follows:

Income Capitalization Approach 81
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Capitalization Rate Conclusion ‐ PH I
Method Capitalization Rate Indication
Analysis of Comparable Sales 4.20% ‐ 5.80%
National Investor Surveys 5.50% ‐ 6.00%
Market Participant Interviews 4.00% ‐ 4.50%
Primary Weight Comparable Sales
Secondary Weight Market Participant Interviews
Conclusion 4.50%
Capitalization Rate Conclusion Phases II ‐ IV
Conclusion 4.75%
Income Capitalization Approach 82
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Direct Capitalization Analysis – Phase I
Net operating income is divided by the capitalization rate to indicate the stabilized value of the subject. Valuation of the subject by direct capitalization is shown in the following table.

Direct Capitalization Analysis ‐ Phase I
SF Space Type
Rent
Applied $/SF Annual $/SF Bldg.

Income
Base Rent
Cytokinetics 234,892 Li fe Science Contract $66.00 $15,502,872 – Stripe 421,000 Li fe Science Contract $65.40 $27,533,400 – Potential Gross Rent 655,892 $43,036,272 $65.61
Expense Reimbursements $18,759,885 $28.60
Net Parking Income $0 $0.00
Potential Gross Income $61,796,157 $94.22
Vacancy & Collection Loss 3.00% ‐$1,853,885 ‐$2.83
Other Income $0 $0.00
Effective Gross Income $59,942,273 $91.39
Expenses
Real Estate Taxes $9,407,901 $14.34
CFD 2021‐1 Special Tax $1,284,512 $1.96
Insurance $655,892 $1.00
Utili ties $3,607,406 $5.50
Repairs/Maintenance $1,967,676 $3.00
Cleaning/Janitorial $852,660 $1.30
General/Administrative $983,838 $1.50
Management 2.00% $1,198,845 $1.83
Total Expenses $19,958,731 $30.43
Net Operating Income $39,983,542 $60.96
Capitalization Rate 4.50%
Indicated Value $888,523,152 $1,354.68
Rounded $888,500,000 $1,354.64
Phase I is currently 100% leased. Lease up costs for the subject’s remaining Phases will be considered in the upcoming extraction analyses.

Income Capitalization Approach 83
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Direct Capitalization Analysis – Phases II, III, & IV
The same methodology is utilized in the valuation of the proposed improvements, as if stabilized, for Phases II, III, and IV. A separate direct capitalization analysis is provided for each Phase.

Consistent with Phase I, a 3% vacancy and collection loss is assumed for the remaining improvements.

As noted, market rent is concluded to be $6.00 per square foot, per month, triple net. However, as will be demonstrated, construction costs are also projected to increase for future phases.

Direct Capitalization Analysis ‐ Phase II
SF Space Type
Rent
Applied $/SF Annual $/SF Bldg.

Income
Base Rent
Vacant 315,000 Li fe Science Market $72.00 $22,680,000 – Vacant 275,000 Li fe Science Market $72.00 $19,800,000 – Vacant 275,000 Li fe Science Market $72.00 $19,800,000 – Potential Gross Rent 865,000 $62,280,000 $72.00
Expense Reimbursements $25,379,914 $29.34
Net Parking Income $0 $0.00
Potential Gross Income $87,659,914 $101.34
Vacancy & Collection Loss 3.00% ‐$2,629,797 ‐$3.04
Other Income $0 $0.00
Effective Gross Income $85,030,117 $98.30
Expenses
Real Estate Taxes $12,914,506 $14.93
CFD 2021‐1 Special Tax $1,825,908 $2.11
Insurance $865,000 $1.00
Utilities $4,757,500 $5.50
Repairs/Maintenance $2,595,000 $3.00
Cleaning/Janitorial $1,124,500 $1.30
General/Administrative $1,297,500 $1.50
Management 2.00% $1,700,602 $1.97
Total Expenses $27,080,516 $31.31
Net Operating Income $57,949,600 $66.99
Capitalization Rate 4.75%
Indicated Value $1,219,991,584 $1,410.39
Rounded $1,220,000,000 $1,410.40
Income Capitalization Approach 84
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Direct Capitalization Analysis ‐ Phase III
SF Space Type
Rent
Applied $/SF Annual $/SF Bldg.

Income
Base Rent
Vacant 250,000 Li fe Science Market $72.00 $18,000,000 – Vacant 250,000 Li fe Science Market $72.00 $18,000,000 – Potential Gross Rent 500,000 $36,000,000 $72.00
Expense Reimbursements $14,624,529 $29.25
Net Parking Income $0 $0.00
Potential Gross Income $50,624,529 $101.25
Vacancy & Collection Loss 3.00% ‐$1,518,736 ‐$3.04
Other Income $0 $0.00
Effective Gross Income $49,105,793 $98.21
Expenses
Real Estate Taxes $7,469,004 $14.94
CFD 2021‐1 Special Tax $1,005,525 $2.01
Insurance $500,000 $1.00
Utilities $2,750,000 $5.50
Repairs/Maintenance $1,500,000 $3.00
Cleaning/Janitorial $650,000 $1.30
General/Administrative $750,000 $1.50
Management 2.00% $982,116 $1.96
Total Expenses $15,606,645 $31.21
Net Operating Income $33,499,148 $67.00
Capitalization Rate 4.75%
Indicated Value $705,245,226 $1,410.49
Rounded $705,200,000 $1,410.40
Income Capitalization Approach 85
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Direct Capitalization Analysis ‐ Phase IV
SF Space Type
Rent
Applied $/SF Annual $/SF Bldg.

Income
Base Rent
Vacant 250,000 Li fe Science Market $72.00 $18,000,000 – Vacant 250,000 Li fe Science Market $72.00 $18,000,000 – Potential Gross Rent 500,000 $36,000,000 $72.00
Expense Reimbursements $14,688,081 $29.38
Net Parking Income $0 $0.00
Potential Gross Income $50,688,081 $101.38
Vacancy & Collection Loss 3.00% ‐$1,520,642 ‐$3.04
Other Income $0 $0.00
Effective Gross Income $49,167,439 $98.33
Expenses
Real Estate Taxes $7,468,305 $14.94
CFD 2021‐1 Special Tax $1,069,776 $2.14
Insurance $500,000 $1.00
Utilities $2,750,000 $5.50
Repairs/Maintenance $1,500,000 $3.00
Cleaning/Janitorial $650,000 $1.30
General/Administrative $750,000 $1.50
Management 2.00% $983,349 $1.97
Total Expenses $15,671,430 $31.34
Net Operating Income $33,496,009 $66.99
Capitalization Rate 4.75%
Indicated Value $705,179,133 $1,410.36
Rounded $705,200,000 $1,410.40
As rentable area for Phases III and IV is proposed to be 500,000 square feet for both phases, the direct capitalization values are consistent. A summary of the market value, as if stabilized, of the subject improvements via the direct capitalization analyses is provided below.

Summary of Direct Capitalization Values
Conclusion Rentable SF Per Rentable SF
Phase I $888,500,000 655,892 $1,354.64
Phase II $1,220,000,000 865,000 $1,410.40
Phase III $705,200,000 500,000 $1,410.40
Phase IV $705,200,000 500,000 $1,410.40
As further support for our improved value conclusions, we have arrayed a series of office sales in San Mateo County. The transactions occurred between January 2019 and October 2020.

Income Capitalization Approach 86
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Summary of Comparable Improved Sales
No. Name/Address
Sale
Date;
Status
Yr. Blt.;
# Stories;
% Occ.

Acres;
FAR;
Parking Ratio
Prop Class;
Const Type;
Prop Rights
Effective Sale
Price
Rentable
SF
$/Rentable
SF Cap Rate
1 Genesis South San Francisco Oct‐20 – 20.15 A $1,015,000,000 784,088 $1,294.50 4.80% 2 Tower Pl Closed – – Steel
South San Francisco 96% 2.61/1,000 Leased Fee
San Mateo County
CA
2 130‐150 Shoreline Dr. Apr‐20 1986 5.01 B $81,000,000 81,569 $993.02 5.80% 130‐150 Shoreline Dr. Closed – 0.37 CTU
Redwood City 100% 3.05/1,000 Leased Fee
San Mateo County
CA
3 7000 Marina Blvd. Jun‐19 1986 4.56 A $77,000,000 90,000 $855.56 4.40% 7000 Marina Blvd. Closed – 0.45 0
Brisbane 100% 2.92/1,000 Leased Fee
San Mateo County
CA
4 75‐125 Shoreway Rd. Jan‐19 1978 2.76 B $73,200,000 82,462 $887.68 4.90% 75‐125 Shoreway Rd. Closed 1 0.69 CTU
San Carlos 100% 3.20/1,000 Leased Fee
San Mateo County
CA
Comments: Sale of an office/R&D building located along Shoreline Dr. in Redwood City. The building was 100% occupied at the time of sale by Auris Health, a subsidiary of Johnson and Johnson developing bronchoscopy diagnostic and therapeutic procedures. The buyers reportedly paid $42.7 million in cash, and also assumed the existing interest only loan. The debt assumption did not appear to have any impact on the purchase price, but representatives of Eastdil Secured did not respond to requests for additional information. The property was reportedly renovated in 2017 with state of the art lab and manufacturing space. The cap rate is based on income in place at the time of sale. The contract rents appear to be near market rates.

Comments: Sale of two R&D/biotech buildings located along Shoreway Rd. in San Carlos. The buildings were reportedly at stabilized occupancy at the time of sale with multiple biotech tenants including BioCardia and Alkahest. No brokers were listed on the transaction and none of the participants responded to requests for additional information. The in place capitalization rate of 4.9% was reported by a broker active in the Bay Area life science property sector, but was uninvolved in this transaction.

Comments: Sale of three life sciences buildings totaling nearly 800,000 square feet in South San Francisco. The improvements include 1 Tower Place (340,000 square feet), 2 Tower Place (374,433 square feet), and 4000 Shoreline Court (72,000 square feet). The sale price calculates to approximately $1,295 per square foot, and the buyer reports a cap rate of 4.8%.

Comments: Sale of a recently renovated multi‐story biotech building located at Sierra Point in Brisbane. Seller verified sale details and indicated that the interior of the building had "very heavy" life science lab build‐out at a cost of more than $500/SF over warm shell. NOI and OAR are based on actual income at the time of sale.

The comparables range from $855.56 to $1,294.50 per square foot. Comparable 1, at the high end of the range, is most similar to the subject, as it reflects a large transaction (784,088 square feet of life sciences space for $1,015,000,000) of life sciences space. It includes three buildings built in 2009, 2019, and 2001. The remaining comparables reflect older construction. The subject conclusions range from $1,355 to $1,410 per square foot of rentable area. Phase I is approximately 5% above the comparable range, while Phases II through IV are approximately 9% above the high end of the range.

However, this is considered reasonable because the subject will reflect new construction and market conditions have strengthened since January 2019 through October 2020.

Extraction Analysis 87
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Extraction Analysis
Extraction (residual) analyses are employed to determine the market value of Phase I and of the land associated with Phases II through IV. An extraction (residual) analysis takes into account revenue, direct and indirect construction costs, accrued depreciation, and developer’s incentive in order to arrive at an estimate of land value. An extraction analysis will be conducted for each of the subject’s taxable Phases. The elements of the extraction technique are discussed below.

Revenue
The market value as if stabilized was provided in the previous sections for each of the subject Phases.

A summary of the market value conclusions is provided below.

Summary of Direct Capitalization Values
Conclusion Rentable SF Per Rentable SF
Phase I $888,500,000 655,892 $1,354.64
Phase II $1,220,000,000 865,000 $1,410.40
Phase III $705,200,000 500,000 $1,410.40
Phase IV $705,200,000 500,000 $1,410.40
Direct and Indirect Construction Costs
The next step in the extraction technique is to estimate typical costs associated with the construction of life sciences improvements.

Construction costs are generally classified into direct and indirect costs. Direct costs reflect the cost of labor and materials to build the project. Direct costs generally are lower per square foot for larger floor plans, all else being equal, due to economies of scale. Indirect items are the carrying costs and fees incurred in developing the project and during the construction cycle. Construction quality and market‐segment are significant factors that affect direct construction costs. In addition, national/public builders, which are able to achieve lower costs due to the larger scale in which orders are placed, routinely achieve lower direct costs. Recent conversations with builders confirm construction costs have increased over the last several years.

Regarding indirect costs, the following list itemizes some of the typical components that generally comprise indirect costs:
• Architectural and engineering fees for plans, plan checks, surveys and environmental studies; • Appraisal, consulting, accounting and legal fees;
• The cost of carrying the investment in land and contract payments during construction. If the property is financed, the points, fees or service charges and interest on construction loans are considered;
• All‐risk insurance;
• The cost of carrying the investment in the property after construction is complete, but before sell‐out is achieved.

Extraction Analysis 88
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Indirect costs can vary widely as a percentage of the direct costs, as indicated in the comparable expense table below.

The subject reflects a master planned life sciences campus. The similarities between Bay Area office construction cost comparables and the subject improvements are limited. The developer’s budget best considers the intricacies of the subject proposal. Bay Area cost comparables will be presented for comparison purposes, followed by the developer’s budget.

In 2018, brokerage firm JLL reported direct costs for life sciences space can range from $350 to $1,325 per square foot, depending on the market and the percentage of lab or other specialized build out. In addition, compared to general office, life sciences space typically includes higher ceiling heights, additional duct work, significantly more HVAC and power capacity, and construction designed to reduce/minimize vibrations. This suggests a life sciences costs typically fall above the direct costs for the office comparables listed above, which range from $310 to $825 per square foot. The comparables indicate indirect costs range from 19% to 35% of direct costs.

The developer’s budget was provided by Phases I and II. While the details of the budget are confidential, direct costs generally range from $725 to $825 per square foot. This falls toward the high end of the Bay Area office comparable range, but is squarely within the comparable range provided by JLL. Based on the comparable and market data previously available, and our review of the developer’s budget, we have selected a market driven direct cost of $735 per square foot for the subject’s Phase I space (which is nearly complete), and $810 per square foot for the subject’s Phase II, III, and IV.

The developer’s estimate of indirect costs as a percentage of direct costs also varies by Phase, with Phase I soft costs estimated at 25% of directs and Phase II estimated at 30% of directs. As construction costs continue to rise, and the developer’s indirect costs both fall within the comparable range, we estimate indirect costs consistent with the developer’s budget. It is our understanding the developer’s budget also includes lease up costs, with TI allowances included in hard costs and leasing commissions included in soft costs. Therefore, these costs are not allocated separately in the upcoming analysis.

Accrued Depreciation
For new construction on the subject, an allocation for depreciation (physical, functional, or economic) is not applicable.

Extraction Analysis 89
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Developer’s Incentive
According to industry sources, developer’s incentive (profit) historically has ranged anywhere from 5% to 25%, with a predominate range of 5% to 15%. Profit is based on the perceived risk associated with the development. Low profit expectations are typical for projects focused on more affordable product with faster sales rates. Higher profit expectations are common in projects with more risk such as developments where sales rates are slower, project size produces an extended holding period, or the product type is considered weak or untested.

Elements affecting profit include location, supply/demand, anticipated risk, construction time frame and project type. Another element considered in profit expectations is for the development stage of a project. First phases typically generate a lower profit margin due to cautious or conservative pricing, as new subdivisions in competitive areas must become established to generate a fair market share.

Additionally, up front development costs on first phases can produce lower profit margins.

Positive attributes of the subject property include:
• Approved entitlements;
• Phase I is 100% preleased to a tech tenant and life sciences tenant • Life sciences market conditions are strong, with very little available supply. The COVID‐19 pandemic increased demand for life sciences/lab space. Rental rates are continuing to increase.
• New life sciences improvements are almost always preleased prior to completion of construction. Many office buildings are being converted to life sciences use in response to pent up demand.
• The subject is located in a biotech and chemtech hub and is surrounded by notable life sciences users.

There are generally few “negative” attributes associated with the subject property, other than the potential for deterioration in market conditions in the life sciences sector that would result from a change in macroeconomic factors (e.g., unemployment rates, interest rates, etc.). In addition, construction costs have recently increasing. Based on the characteristics of the subject property, we estimate incentive at 10.0% of costs for Phases II, III, and IV. Because Phase I is nearly complete, a lower incentive of 3.0% is used for this Phase, as a buyer would only need to manage the completion of construction prior to the tenants occupying the entirety of the space in early 2022.

Conclusion
Our estimates of land value for the subject’s Phases via the extraction analysis are presented below and on the following page.

Extraction Analysis 90
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Cost Analysis ‐ Phase I
Direct Costs1 546,601 SF at $735 /SF $401,751,735
Indirect Costs at 25% of directs $100,437,934
Total Direct & Indirect Costs $502,189,669
Less: Costs Spent to Date at 97% of costs $487,123,979
Remaining Direct & Indirect Costs $15,065,690
$3,049,708
Remaining Costs $18,115,398
Developer's Incentive at 3% of costs $543,462
Total Remaining Costs $18,658,860
Rounded $18,700,000
1 Direct costs are divided over gross building area. Costs include parking structures and site work.

Plus: Remaining Infrastructure Costs
The Phase I analysis is unique from the other Phases because construction of the vertical improvements is nearly complete. The most likely buyer associated with Phase I would be a life sciences investor, looking to hold the property long term; whereas, the most likely buyer of the land use components associated with Phases II through IV is a developer familiar with the local and national market for life sciences development. Because the disposition period associated with Phase I is expected to be under 12 months, no further discounting is required.

In the above table, remaining direct and indirect costs are calculated by deducting an estimate of costs spent to date from total direct and indirect costs. Remaining infrastructure costs are also considered.

Because the improvements are nearly complete, a lower incentive of 3.0% is utilized (versus 10.0% for future phases); this is because a buyer would need to only manage the completion of construction through the end of the year and prior to the occupancy of the tenants (pre‐leased) in early 2022. The market value conclusion for Phase I is presented below.

Extraction Analysis ‐ Phase I
Market Value as i f Stabilized $888,500,000
Less: Remaining Costs to Complete ($18,700,000)
Indicated PH I Value $869,800,000
The following pages include extraction analyses to value the land use components associated with Phases, II, III, and IV. Further discounting of these components will be required.

Extraction Analysis 91
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Cost Analysis ‐ Phase II
Direct Costs1 776,982 SF at $810 /SF $629,355,420
Indirect Costs at 30% of directs $188,806,626
Total Direct & Indirect Costs $818,162,046
Developer's Incentive at 10% $81,816,205
Total Projects Costs $899,978,251
Rounded $900,000,000
1 Direct costs are divided over gross building area. Costs include parking structures and site work.

Extraction Analysis ‐ Phase II
Market Value as i f Stabilized $1,220,000,000
Less: Construction & Lease Up Costs ($900,000,000)
Indicated Land Value $320,000,000
Cost Analysis ‐ Phase III
Direct Costs1 427,883 SF at $810 /SF $346,585,230
Indirect Costs at 30% of directs $103,975,569
Total Direct & Indirect Costs $450,560,799
Developer's Incentive at 10% $45,056,080
Total Projects Costs $495,616,879
Rounded $495,600,000
1 Direct costs are divided over gross building area. Costs include parking structures and site work.

Extraction Analysis ‐ Phase III
Market Value as i f Stabilized $705,200,000
Less: Construction & Lease Up Costs ($495,600,000)
Indicated Land Value $209,600,000
Extraction Analysis 92
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Cost Analysis ‐ Phase IV
Direct Costs1 455,224 SF at $810 /SF $368,731,440
Indirect Costs at 30% of directs $110,619,432
Total Direct & Indirect Costs $479,350,872
Developer's Incentive at 10% $47,935,087
Total Projects Costs $527,285,959
Rounded $527,300,000
1 Direct costs are divided over gross building area. Costs include parking structures and site work.

Extraction Analysis ‐ Phase IV
Market Value as i f Stabilized $705,200,000
Less: Construction & Lease Up Costs ($527,300,000)
Indicated Land Value $177,900,000
A summary of our land value conclusions is provided below.

Summary of Extraction Analyses
Phase Land Residual Rentable SF Per Rentable SF
Phase I* $869,800,000 655,892 $1,326.13
Phase II $320,000,000 865,000 $369.94
Phase III $209,600,000 500,000 $419.20
Phase IV $177,900,000 500,000 $355.80
Total ‐ Phases II ‐ IV $707,500,000
*Phase I improvements are nearly complete.

The above table reflects the market value of the land use components in a state that is generally inconsistent with market transactions. There is little vacant land in the area, and market‐wide life science land sales generally reflect improved land purchased for redevelopment. As such, our search for land sales did not return any transactions of life sciences land truly comparable in scope and scale to the subject.

Subdivision Development Method – Phases II‐IV 93
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Subdivision Development Method – Phases II‐IV
In order to estimate the market value of Phases II, III, and IV, in bulk, a discounted cash flow analysis will be employed; the expected revenue, absorption period, expenses and discount rate associated with the sell‐off of the holdings will be taken into account. A discounted cash flow analysis is a procedure in which a discount rate is applied to a projected revenue stream generated from the sale of individual components of a project. In this method of valuation, the appraiser/analyst specifies the quantity, variability, timing and duration of the revenue streams and discounts each to its present value at a specified yield rate.

As a discounted cash flow analysis, the subdivision development method consists of four primary components summarized as follows:

Revenue – the gross income is based on the individual component values previously derived.

Absorption Analysis – the time frame required for sell off. Of primary importance in this analysis is the allocation of the revenue over the absorption period – including the estimation of an appreciation factor (if any).

Expenses – the expenses associated with the sell‐off are calculated in this section – including infrastructure costs, administration, marketing and commission costs, as well as taxes and special taxes.

Discount Rate – an appropriate discount rate is derived employing a variety of data.

Discussions of these four concepts follows below, with the discounted cash flow analysis offered at the end of this section.

Revenue
The revenue component associated with the subject includes the concluded values for the various land use components derived in the previous analyses, which are summarized below.

Summary of Extraction Analyses
Phase Land Residual Rentable SF Per Rentable SF
Phase II $320,000,000 865,000 $369.94
Phase III $209,600,000 500,000 $419.20
Phase IV $177,900,000 500,000 $355.80
Total ‐ Phases II ‐ IV $707,500,000
Subdivision Development Method – Phases II‐IV 94
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Absorption
Absorption rates are best measured by looking at historic absorption rates for similar properties in the region. In developing an appropriate absorption period for the disposition of the parcels, we have considered historic absorption rates for similar properties and also attempted to consider the impacts of present market conditions, as well as the anticipated changes in the market. Real estate is cyclical in nature, and it is difficult to accurately forecast specific demand over a projected absorption period.

A number of assumptions are made in the discounted cash flow analysis, not the least of which is the forecast of absorption, or disposition, of the various land use components comprising the subject properties. It is common for surveys of market participants to reveal different estimations of anticipated absorption periods for the sell‐off of multiple components comprising a master planned development, or large land holding, with some developers preferring to hasten the holding period in favor of mitigating exposures to fluctuations in market conditions; whereas, other developers prefer to manage the sell‐off of the property over an extended period of time so as to minimize direct competition of product within the master planned project.

At build out, the subject will include approximately 1,865,000 square feet of rentable area within Phases II through IV. The boundaries of the Special Tax District will also open space, and multiple parking garages; these components are excluded from the valuation because they are not subject to the Lien of the Special Tax. Backbone infrastructure for Phase II is expected to be complete in 2023, and Phases III and IV will be developed commensurate market demand and will likely be complete in 2025/26.

Expense Projections
Changes in Expenses (Expense Increases or Decreases)
Market participants widely expect expenses to increase either from inflation or labor increases.

General and administrative and marketing and sale expenses are calculated in this section as a fixed percentage of revenue. Property tax expenses are trended upward, as will be discussed in a later section.

General and Administrative
General and administrative expenses would include management of project entitlements and Community Facility District financing, as well as coordination with others. This expense category typically ranges from 2.0% to 4.0%, depending on length of the project and if all of the categories are included in a builder’s budget. Given the complexity of the proposed development and the holding period of the subject, we have estimated this expense at 3.0% of revenue, which is spread evenly over the sell‐off period.

Marketing and Sale
The costs associated with marketing, commissions and closing costs relative to the disposition of the subjects’ components are estimated at 3% of the total gross sale proceeds. Although this rate is somewhat negotiable, it is consistent with current industry trends. Larger transactions, such as the subject, typically have a lower sales commission as a percentage of sale price. For the sell‐off of individual Phases to builders, marketing costs would be negligible, since master developers often contact builders directly and indicate lots are available, rather than openly list properties and have marketing costs.

Subdivision Development Method – Phases II‐IV 95
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Property Taxes (Ad Valorem and Special Taxes)
This appraisal is predicated on, and assumes, a sale of the appraised property in bulk. Interim ad valorem real estate taxes are based on a tax rate of 1.05790%. This rate is applied to the estimated market value (in bulk) and divided by the total acreage to yield an estimate of ad valorem taxes/acreage/year. The ad valorem taxes are appreciated by 2% per year and the total tax expense is gradually reduced over the absorption period, as the land components are sold off.

The appraised properties are within the boundary of the City of South San Francisco Community Facilities District No. 2021‐1 (Public Facilities and Services). However, the subject’s Special Taxes are only applicable to “developed property”, which is defined in the Rate and Method of Apportionment as “all Assessor’s Parcels of Taxable Property for which a Certificate of Occupancy was issued after January 1, 2021 an on or before May 1 of the Fiscal year preceding the Fiscal year for which the Special Taxes are being levied.” As developed property requires a certificate of occupancy, and this analysis is concerned with the sell‐off of the land components, the Special Tax will likely be levied after the sale of the land. Therefore, Special Taxes are not included in the subdivision development method.

Backbone Infrastructure
According to the master developer, total remaining infrastructure costs are presented below.

Backbone Infrastructure Costs
Budget Incurred Remaining
Phase I $47,112,589 $44,062,881 $3,049,708
Phases II ‐ IV $21,801,872 $0 $21,801,872
Total Budget $68,914,461 $44,062,881 $24,851,580
Phases II ‐ IV Pro‐rata Allocation Acreage Pro‐Rata Share Allocation Phase II 9.80 32.8% $7,145,764
Phase III 10.05 33.6% $7,328,054
Phase IV 10.05 33.6% $7,328,054
Total 29.90 100% $21,801,872
As discussed, Phase I infrastructure is nearly complete and has already been considered in the Phase I extraction analysis. This portion of the analysis is concerned with the costs associated with Phases II, III, and IV. The costs cited above will be disbursed during the development and sell‐off period commensurate with the development timeline provided.

Internal Rate of Return
The project yield rate is the rate of return on the total un‐leveraged investment in a development, including both equity and debt. The leveraged yield rate is the rate of return to the “base” equity position when a portion of the development is financed. The “base” equity position represents the total equity contribution. The developer/builder may have funded all of the equity contribution, or a consortium of investors/builders as in a joint venture may fund it. Most surveys indicate that the threshold project yield requirement is about 20% to 30% for production home type projects. Instances Subdivision Development Method – Phases II‐IV 96
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) in which project yields may be less than 20% often involve profit participation arrangements in master planned communities where the master developer limits the number of competing tracts.

According to a leading publication within the appraisal industry, the PwC Real Estate Investor Survey[1], discount rates for land development projects ranged from 10.00% to 25.00%, with an average of 16.70% during the Second Quarter 2021, which is 110 basis points higher than the average reported in the Fourth Quarter 2020, the last time the survey was conducted and 150 basis points higher than a year ago. Without entitlements in place, certain investors will increase the discount rate of 188 basis points. These rates are free‐and‐clear of financing, are inclusive of developer’s profit, and assume entitlements are in place.

According to the data presented in the survey prepared by PwC, the majority of those respondents who use the discounted cash flow (DCF) method do so free and clear of financing. Additionally, the participants reflect a preference in including the developer’s profit in the discount rate, versus a separate line item for this factor. As such, the range of rates presented above is inclusive of the developer’s profit projection.

The discount rates are based on a survey that includes residential, office, retail and industrial developments. Participants in the survey indicate the highest expected returns are on large‐scale, unapproved developments. The low end of the range was extracted from projects where certain development risks had been lessened or eliminated. Several respondents indicate they expect slightly lower returns when approvals/entitlements are already in place.

Excerpts from recent PwC surveys are copied below.
“2020 revealed that where people work and where people live can be very far apart,” says a development land participant. This philosophy is a driving force behind a resurgence of new‐home construction in the United States. In the nonresidential sector, each segment reported year‐over‐ year declines in spending as of March 2021. Over the next 12 months, surveyed investors are most optimistic regarding value trends for the national development land market. Their expectations range from a decline of 5.0% to growth of 25.0% with an average expected value change of +5.8%.

This average is better than where it was six months ago (+4.9%), as well as a year ago (‐6.9%). (Second Quarter 2021)
For 2021, most Emerging Trends respondents (53.0%) believe that debt capital for development and redevelopment will be undersupplied. This percentage is more than twice the figure from last year’s report and is likely due to the uncertainty tied to the pandemic. Interestingly, the percentage of respondents that feel debt capital for such projects will be “in balance” drops this year to 35.0% – down from 57.0% in 2020. (Fourth Quarter 2020) Amid the COVID‐19 crisis, participants in the national development land market are looking to reduce leverage, lessen their holding costs, and preserve cash flow. “These are highly uncertain times, and we are moving in a direction no one thought we’d be headed a few months ago,” [1] PwC Real Estate Investor Survey, PricewaterhouseCoopers, 2nd Quarter 2021, Volume 34, Number 2.

Subdivision Development Method – Phases II‐IV 97
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) shares a participant. Although some investors are looking to acquire distressed properties, it is difficult to ascertain pricing amid such uncertainty. For now, most investors are content to wait on the sidelines for a clearer path to emerge before they formulate new strategies for the rest of 2020 and beyond. (Second Quarter 2020)
While investors are more optimistic about development opportunities for the year ahead in the apartment, office, warehouse, and even retail sectors, they are less enthusiastic about the hotel sector, where the annual score drops from 3.21 to 2.94 (on a scale of 1 being abysmal and 5 being excellent). (Fourth Quarter 2019)
Over the next 12 months, surveyed investors hold mixed opinions regarding value trends for the national development land market. Their expectations range from ‐5.0% to +10.0% with an average expected value change of +3.2%. This average is slightly below where it was six months ago (+3.8%), but ahead of the rate from a year ago (+1.2%). (Second Quarter 2019) Subdivision Development Method – Phases II‐IV 98
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) We recently conducted a survey of market participants familiar with land development in both urban and suburban locations through California. Over the past two years, the Port of San Francisco has solicited proposals for future public/private partnerships for Piers 30‐32 and SWL 330; the proposals were submitted to the Port in 2020, during the COVID‐19 pandemic. Three respondents, including Strada TCC Partners, LLC, a joint venture between Strada Investment Group and Trammell Crow Company, Tishman Speyer, and Vornado Realty each provided proposals with internal rates of return ranging from below 10% to 23%, and with income projections associated with future land uses based on pre‐pandemic market rents. While these proposals are for properties located in San Francisco and include both commercial and residential land uses, they provide examples of internal rate of return forecasts by sophisticated developers with large redevelopment project experience.

There are several positive attributes associated with the subject property that we consider in our selection of a discount rate. Positive attributes of the subject property include:
• Approved entitlements;
• Phase I is 100% preleased to a tech tenant and life sciences tenant. • Life sciences market conditions are strong, with very little available supply. The COVID‐19 pandemic increased demand for life sciences/lab space. Rental rates are continuing to increase.
• New life sciences improvements are almost always preleased prior to completion of construction. Many office buildings are being converted to life sciences use in response to pent up demand.
• The subject is located in a biotech and chem‐tech hub and is surrounded by notable life sciences users.

Considering these factors, the anticipated sell‐off period of the subject project, and the positive and negative characteristics previously described, a discount rate of 14% is estimated for the subject property.

Conclusion
The subdivision development method is presented on the following page.

Subdivision Development Method – Phases II‐IV 99
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Subdivision Development Method ‐ Phases II ‐ IV
Inputs
Revenue & Expenses
Taxable Land Acreage ‐ PH II ‐ IV 29.90 Annual Increase in Property Taxes 2.0% Total Land Revenue $577,600,000 First Year Annual Taxes/Acre $134,157 Total Revenue per Acre $19,317,726
Phase II Max Special Assessments ‐ City of South San Francisco CFD No. 2021‐1 Phase II Land Acreage 9.80
Phase II Revenue $320,000,000 $2.00 per SF
Phase III
Phase III Land Acreage 10.05 $0.35 per SF
Phase III Revenue $209,600,000
Phase IV
Phase IV Land Acreage 10.05
Phase IV Revenue $177,900,000
Annual Revenue Appreciation 1.000
General & Administrative 3.0%
Marketing & Commissions 3.0%
Infrastructure Costs ‐ PH II ‐ IV $21,801,872
Phase II $7,145,764 60%
Phase III $7,328,054
Phase IV $7,328,054
Revenue, Expenses and Valuation
2022 2023 2024 2025 2026
Revenue Period (1 year) 1 2 3 4 5 Total
Sales (Acreage):

Phase II 0.00 0.00 9.80 0.00 0.00 9.80
Phase III 0.00 0.00 0.00 10.05 0.00 10.05
Phase IV 0.00 0.00 0.00 0.00 10.05 10.05
Total Sales 0.00 0.00 9.80 10.05 10.05 29.90
End of Period Inventory 29.90 29.90 20.10 10.05 0.00
Total Period Inventory (acres ) 29.90 29.90 29.90 20.10 10.05 Land Sales Revenue Unappreciated
Phase II $0 $0 $320,000,000 $0 $0 $320,000,000
Phase III $0 $0 $0 $209,600,000 $0 $209,600,000
Phase IV $0 $0 $0 $0 $177,900,000 $177,900,000
Total Revenue $0 $0 $320,000,000 $209,600,000 $177,900,000 $707,500,000 Revenue Appreciated $0 $0 $320,000,000 $209,600,000 $177,900,000 $707,500,000 Total Revenue $0 $0 $320,000,000 $209,600,000 $177,900,000 $707,500,000 Expenses All Categories
General & Administrative ($4,245,000) ($4,245,000) ($4,245,000) ($4,245,000) ($4,245,000) ($21,225,000) Marketing/Commissions $0 $0 ($9,600,000) ($6,288,000) ($5,337,000) ($21,225,000) Backbone Infrastructure
Phase II ($3,572,882) ($3,572,882) $0 $0 $0 ($7,145,764) Phase III $0 $0 ($3,664,027) ($3,664,027) $0 ($7,328,054) Phase IV $0 $0 $0 ($3,664,027) ($3,664,027) ($7,328,054) Total Infrastructure ($3,572,882) ($3,572,882) ($3,664,027) ($7,328,054) ($3,664,027) ($21,801,872) Ad Valorem Taxes ($4,011,309) ($4,091,535) ($4,173,365) ($2,861,617) ($1,459,425) ($16,597,250) City of SSF CFD No. 2021‐01 $0 $0 $0 $0 $0 $0
Total Expenses ($11,829,191) ($11,909,417) ($21,682,392) ($20,722,671) ($14,705,451) ($80,849,122) Net Income ($11,829,191) ($11,909,417) $298,317,608 $188,877,329 $163,194,549 $626,650,878 Internal Rate of Return 14.00% 0.87719 0.76947 0.67497 0.59208 0.51937 Discounted Cash Flow ($10,376,483) ($9,163,910) $201,355,888 $111,830,542 $84,758,135 $378,404,172 Net Present Value $378,404,172
Conclusion of Market Value, in Bulk (Rd.) $378,400,000
Ad Valorem Tax Table
Special Tax A ‐ Developed Property
CFD No. 2021‐01
Special Tax B ‐ Developed Property
CFD No. 2021‐01
Conclusion of Value 100
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Conclusion of Value
The following table summarizes the value conclusions for Phase I and Phases II, III, and IV. As noted, the most probable buyer for Phase I is different for than the most probable buyer for the remaining Phases (an investor versus a land developer).

Based on the preceding valuation analysis and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of market value of the appraised properties, subject to the hypothetical condition cited herein, is as follows:

The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.

The value conclusions are based on the following hypothetical conditions. A hypothetical condition is 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 subject to the following extraordinary assumptions. An extraordinary assumption is 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.

Exposure Time
Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Based on our review of recent sales transactions for similar properties and our analysis of supply and demand in the local development site market, it is our opinion that the probable exposure time is 12 months.

Marketing Period
Marketing time is an estimate of the amount of time it might take to sell a property at the concluded market value immediately following the effective date of value. We estimate the subject’s marketing period at 12 months.

Summary of Value Conclusions
Phase I $869,800,000
Phases II, III, & IV $378,400,000
Total Indicated Value $1,248,200,000
Certification 101
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) 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 performed no 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.

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

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

7. 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.

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 applicable state appraisal regulations.

9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of 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. Kevin Ziegenmeyer, MAI, made a personal inspection of the property that is the subject of this report. Laura Diaz has also personally inspected the subject.

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

13. We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP.

14. As of the date of this report, Kevin Ziegenmeyer, MAI, has the continuing education program for Designated Members of the Appraisal Institute.

Certification 102
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services)

15. As of the date of this report, Laura Diaz, has completed the Standards and Ethics Education Requirements for Candidates/Practicing Affiliates of the Appraisal Institute.

Kevin Ziegenmeyer, MAI
Certified General Real Estate Appraiser
California Certificate # AG013567
Laura Diaz
Certified General Real Estate Appraiser
California Certificate # 3005037

Eric Segal, MAI
Certified General Real Estate Appraiser
California Certificate # AG026558

Assumptions and Limiting Conditions 103
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Assumptions and Limiting Conditions
This appraisal and any other work product related to this engagement are limited by the following standard assumptions, except as otherwise noted in the report:

1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use.

2. There are no existing judgments or pending or threatened litigation that could affect the value of the property.

3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property.

4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction.

5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes.

6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy.

This appraisal and any other work product related to this engagement are subject to the following limiting conditions, except as otherwise noted in the report:

1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised.

2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events.

3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated.

4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies.

5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment.

6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal Assumptions and Limiting Conditions 104
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct.

7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal.

8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability; and civil, mechanical, electrical, structural and other engineering and environmental matters. Such considerations may also include determinations of compliance with zoning and other federal, state, and local laws, regulations and codes.

9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal 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 appraisers, 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 persons signing the report.

11. Information, estimates and opinions contained in the report and obtained from third‐party sources are assumed to be reliable and have not been independently verified.

12. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results.

13. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate.

14. Unless otherwise stated in the report, no consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered.

15. The current purchasing power of the dollar is the basis for the values stated in the appraisal; we have assumed that no extreme fluctuations in economic cycles will occur.

16. The values found herein are subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions.

17. The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic Assumptions and Limiting Conditions 105
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) 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 our analysis will vary from our estimates, and the variations may be material.

18. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject 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.

19. The appraisal report is prepared for the exclusive benefit of you, your subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk.

20. No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property. IRR ‐ San Francisco, Integra Realty Resources, Inc., and their respective officers, owners, managers, directors, agents, subcontractors or employees (the “Integra Parties”), shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist.

Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property.

21. The persons signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. However, we are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non‐existent or minimal.

22. We are not a building or environmental inspector. The Integra Parties do not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended.

23. The appraisal report and value conclusions for an appraisal assume the satisfactory completion of construction, repairs or alterations in a workmanlike manner.

24. IRR ‐ San Francisco is an independently owned and operated company. The parties hereto agree that Integra shall not be liable for any claim arising out of or relating to any appraisal report or any information or opinions contained therein as such appraisal report is the sole and exclusive responsibility of IRR ‐ San Francisco. In addition, it is expressly agreed that in Assumptions and Limiting Conditions 106
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) any action which may be brought against the Integra Parties arising out of, relating to, or in any way pertaining to the engagement letter, the appraisal reports or any related work product, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with intentional misconduct. It is further expressly agreed that the collective liability of the Integra Parties in any such action shall not exceed the fees paid for the preparation of the assignment (unless the appraisal was fraudulent or prepared with intentional misconduct).

It is expressly agreed that the fees charged herein are in reliance upon the foregoing limitations of liability.

25. IRR ‐ San Francisco is an independently owned and operated company, which has prepared the appraisal for the specific intended use stated elsewhere in the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided.

Accordingly, the appraisal report is addressed to and shall be solely for the Client’s use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report or any other work product related to the engagement (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable).

26. The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer‐seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. The Integra Parties are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property.

27. 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 paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future.

28. The appraisal is also subject to the following:

Assumptions and Limiting Conditions 107
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Extraordinary Assumptions and Hypothetical Conditions
None.

The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.

The value conclusions are based on the following hypothetical conditions. A hypothetical condition is 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 subject to the following extraordinary assumptions. An extraordinary assumption is 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.

Addenda
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Addendum A
Appraiser Qualifications
Kevin Ziegenmeyer, MAI Integra Realty Resources -
Sacramento
irr.com
T 916-435-3883
F 916-435-4774
590 Menlo Drive
Suite 1
Rocklin, CA 95765
Experience
Mr. Ziegenmeyer is a Certified General real estate appraiser and holds the Appraisal Institute's MAI designation. In 1989, Mr. Ziegenmeyer began his career in real estate as a controller for a commercial and residential real estate development corporation. In 1991 he began appraising and continued to be involved in appraisal assignments covering a wide variety of properties, including office, retail, industrial, residential income and subdivisions throughout the state of California, and Northern Nevada. Mr. Ziegenmeyer handles many of the firm’s master-planned property appraisals and over the past two decades has developed expertise in the valuation of Community Facilities Districts and Assessment Districts.In fact, Mr. Ziegenmeyer was one of five appraisers to collaborate with other professionals in developing the appraisal guidelines for the California Debt and Investment Advisory Commission (Recommended Practices in the Appraisal of Real Estate for Land-Secured Financing - 2004). He has developed the experience and background necessary to deal with complex assignments covering an array of property types, with a particular focus on urban redevelopment in the cities and counties of San Francisco, Dublin, Monterey, Newport Beach, Alameda, Napa and San Mateo. In early 2015, Mr. Ziegenmeyer obtained the Appraisal Institute's MAI designation. Kevin is currently Senior Managing Director of the Integra-San Francisco office and Managing Director of the Integra-Sacramento office.

Licenses
California, Certified General Real Estate Appraiser, AG013567, Expires June 2023 Education
Academic:

Bachelor of Science in Accounting, Azusa Pacific University, California Appraisal and Real Estate Courses:

Standards of Professional Practice, Parts A, B & C
Basic Valuation Procedures
Real Estate Appraisal Principles
Capitalization Theory and Techniques, Part A
Advanced Income Capitalization
Report Writing and Valuation Analysis
Advanced Applications
IRS Valuation Summit I & II
2008, 2009, 2010 & 2011 Economic Forecast
Business Practices and Ethics
Contemporary Appraisal Issues with Small Business Administration Financing General Demonstration Appraisal Report Writing Seminar
7-Hour National USPAP Update Course
Valuation of Easements and Other Partial Interests
2009 Summer Conference
Uniform Appraisal Standards for Federal Land Acquisitions 2008 Economic Update
Valuation of Conservation Easements
Subdivision Valuation
2005 Annual Fall Conference
[email protected] - 916-435-3883 x224
Kevin Ziegenmeyer, MAI Integra Realty Resources -
Sacramento
irr.com
T 916-435-3883
F 916-435-4774
590 Menlo Drive
Suite 1
Rocklin, CA 95765
Education (Cont'd)
General Comprehensive Exam Module I, II, III & IV
Advanced Income Capitalization
Advanced Sales Comparison & Cost Approaches
2004 Central CA Market Update
Computer-Enhanced Cash Flow Modeling
Forecast 2000, 2001, 2002, 2003 & 2004
Land Valuation Assignments
Land Valuation Adjustment Procedures
Highest & Best Use and Market Analysis
Entitlements, Land Subdivision & Valuation
Real Estate Value Cycles
El Dorado Hills Housing Symposium
Federal Land Exchanges
M & S Computer Cost-Estimating, Nonresidential
[email protected] - 916-435-3883 x224

Laura Diaz San Francisco
Integra Realty Resources
irr.com
T 415-715-4690
F
555 Meridian Avenue
Suite C
San Jose, CA 95126
Experience
Ms. Diaz is a Certified General real estate appraiser. She began her career in real estate as a research analyst with Integra - Kentucky-Southern Indiana as she pursued her Master of Urban Planning degree. Since graduating in 2013, Ms. Diaz has been writing narrative appraisal reports for a variety of property types, including office, retail, industrial, multifamily housing, and commercial and agricultural land. She has also worked with special-purpose properties, including self-storage facilities, religious facilities, student housing projects, hotels, and data centers. In addition, Ms. Diaz has experience in multifamily market analysis, including development and analysis of survey techniques and models of demand for proposed multifamily projects. In 2017, Ms. Diaz relocated to the San Francisco Bay Area and joined the Integra - San Francisco office.

Licenses
California, Certified General Real Estate Appraiser, 3005037, Expires January 2022 Education
Academic:

Bachelor of Arts in English, University of Louisville
Master of Urban Planning, University of Louisville
Graduate Certificate in Real Estate Development, University of Louisville Appraisal and Real Estate Courses:

Uniform Standards of Professional Appraisal Practice
Basic Appraisal Principles
Basic Appraisal Procedures
Real Estate Finance Statistics and Valuation Modeling
Site Valuation and Cost Approach
General Market Analysis and Highest and Best Use
Sales Comparison Approach
Income Capitalization Approach Part I
Income Capitalization Approach Part II
General Appraiser Report Writing and Case Studies
Expert Witness for Commercial Appraisers
Basic Hotel Appraising – Limited Service Hotels
[email protected] - 415-715-4690

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About IRR
Integra Realty Resources, Inc. (IRR) provides world‐class commercial real estate valuation, counseling, and advisory services. Routinely ranked among leading property valuation and consulting firms, we are now the largest independent firm in our industry in the United States, with local offices coast to coast and in the Caribbean.

IRR offices are led by MAI‐designated Senior Managing Directors, industry leaders who have over 25 years, on average, of commercial real estate experience in their local markets. This experience, coupled with our understanding of how national trends affect the local markets, empowers our clients with the unique knowledge, access, and historical perspective they need to make the most informed decisions.

Many of the nation's top financial institutions, developers, corporations, law firms, and government agencies rely on our professional real estate opinions to best understand the value, use, and feasibility of real estate in their market.

Local Expertise...Nationally!
irr.com
Addenda
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Addendum B
Financials and Property Information
Fidelity National Title Company
100 Pine Street, Suite 2460, San Francisco, CA 94111
Phone: (415) 276-0220 Fax:

CLTA Preliminary Report Form – Modified (11/17/06) Page 1 Issuing Policies of Fidelity National Title Insurance Company Title Officer: Kevin Davis
Escrow Officer: Major Accounts OAC
TO:

Wilsey Ham
3130 La Selva Street, Suite 100
San Mateo, CA 94403
ATTN: Eric Cohen
YOUR REFERENCE: Oyster Point-91
Order No.: 991-30065165-KD9
PROPERTY ADDRESS: 377, 385 and 389 Oyster Point Boulevard, South San Francisco, CA

PRELIMINARY REPORT
In response to the application for a policy of title insurance referenced herein, Fidelity National Title Company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a policy or policies of title insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an exception herein or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations or Conditions of said policy forms.

The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy or policies are set forth in Attachment One. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner’s Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Attachment One.

Copies of the policy forms should be read. They are available from the office which issued this report.

This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested.

The policy(s) of title insurance to be issued hereunder will be policy(s) of Fidelity National Title Insurance Company, a Florida Corporation.

Please read the exceptions shown or referred to herein and the exceptions and exclusions set forth in Attachment One of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered.

It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects and encumbrances affecting title to the land.

Countersigned by:

Authorized Signature
Fidelity National Title Company
100 Pine Street, Suite 2460, San Francisco, CA 94111
Phone: (415) 276-0220 Fax:

CLTA Preliminary Report Form – Modified (11/17/06) Page 2

PRELIMINARY REPORT
EFFECTIVE DATE: March 11, 2021 at 7:30 a.m.

ORDER NO.: 991-30065165-KD9
The form of policy or policies of title insurance contemplated by this report is:

ALTA Standard Owners Policy (6-17-06)

1. THE ESTATE OR INTEREST IN THE LAND HEREINAFTER DESCRIBED OR REFERRED TO COVERED BY THIS REPORT IS:

Fee Estate

2. TITLE TO SAID ESTATE OR INTEREST AT THE DATE HEREOF IS VESTED IN:

KR Oyster Point III, LLC, a Delaware limited liability company

3. THE LAND REFERRED TO IN THIS REPORT IS DESCRIBED AS FOLLOWS:

See Exhibit A attached hereto and made a part hereof.

PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9 CLTA Preliminary Report Form – Modified (11/17/06) Page 3

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SOUTH SAN FRANCISCO IN THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

ALL THAT REAL PROPERTY IN THE CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN MATEO, STATE OF CALIFORNIA, BEING A PORTION OF THE LANDS AS DESCRIBED IN DOCUMENT NUMBER 2016- 082620, OFFICIAL RECORDS OF SAN MATEO COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS;
COMMENCING AT THE SECTION CORNER COMMON TO SECTIONS 15, 14, 22, & 23 AS SHOWN ON THAT CERTAIN PARCEL MAP TITLED "OYSTER POINT BUSINESS PARK" RECORDED IN VOL 52 OF PARCEL MAPS AT PAGE 59, OFFICIAL RECORDS OF SAN MATEO COUNTY; THENCE FROM SAID SECTION CORNER N 89° 59' 05" E ALONG THE NORTHERLY LINE OF PARCEL 1 AS SHOWN ON SAID MAP, A DISTANCE OF 260.00 FEET TO AN ANGLE POINT ON THE WESTERLY LINE OF PARCEL B AS DESCRIBED ON THAT CERTAIN LOT LINE ADJUSTMENT RECORDED AS DOCUMENT NUMBER 92141612, OFFICIAL RECORDS OF SAN MATEO COUNTY; THENCE ALONG THE WESTERLY LINE OF SAID PARCEL B N 00° 00' 55" W A DISTANCE OF 123.88 FEET TO THE POINT OF BEGINNING OF THIS DESCRIPTION:

THENCE FROM SAID POINT OF BEGINNING LEAVING SAID WESTERLY LINE; N 89° 59' 05" E A DISTANCE OF 66.62 FEET TO THE BEGINNING OF A TANGENT CURVE;
THENCE ALONG SAID CURVE TO THE LEFT THROUGH A CENTRAL ANGLE OF 40° 28' 59", HAVING A RADIUS OF 30.00 FEET A DISTANCE OF 21.20 FEET TO THE BEGINNING OF A REVERSE CURVE; THENCE ALONG SAID CURVE TO THE RIGHT THROUGH A CENTRAL ANGLE OF 44° 53' 11", HAVING A RADIUS OF 30.00 FEET A DISTANCE OF 23.50 FEET;
THENCE S 85° 36' 43.0" E A DISTANCE OF 32.50 FEET;
THENCE S 77° 44' 32" E A DISTANCE OF 11.08 FEET TO THE BEGINNING OF A TANGENT CURVE; THENCE ALONG SAID CURVE TO THE LEFT THROUGH A CENTRAL ANGLE OF 40° 27' 50", HAVING A RADIUS OF 40.00 FEET A DISTANCE OF 28.25 FEET TO THE BEGINNING OF A REVERSE CURVE; THENCE ALONG SAID CURVE TO THE RIGHT THROUGH A CENTRAL ANGLE OF 18° 03' 33", HAVING A RADIUS OF 52.00 FEET A DISTANCE OF 16.39 FEET TO THE BEGINNING OF A TANGENT CURVE; THENCE ALONG SAID CURVE TO THE LEFT THROUGH A CENTRAL ANGLE OF 17° 09' 52", HAVING A RADIUS OF 40.00 FEET A DISTANCE OF 11.98 FEET;
THENCE N 62° 41' 20" E A DISTANCE OF 18.28 FEET TO THE BEGINNING OF A TANGENT CURVE; THENCE ALONG SAID CURVE TO THE LEFT THROUGH A CENTRAL ANGLE OF 48° 44' 36", HAVING A RADIUS OF 10.00 FEET, A DISTANCE OF 8.51 FEET TO THE BEGINNING OF A REVERSE CURVE; THENCE ALONG SAID CURVE TO THE RIGHT THROUGH A CENTRAL ANGLE OF 126° 33' 21", HAVING A RADIUS OF 18.00 FEET, A DISTANCE OF 39.76 FEET TO THE BEGINNING OF A REVERSE CURVE; THENCE ALONG SAID CURVE TO THE LEFT THROUGH A CENTRAL ANGLE OF 48° 51' 12", HAVING A RADIUS OF 10.00 FEET, A DISTANCE OF 8.53 FEET;
THENCE S 88° 21' 08" E A DISTANCE OF 44.42 FEET TO THE BEGINNING OF A NON-TANGENT CURVE; PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9

EXHIBIT A
(Continued)
CLTA Preliminary Report Form – Modified (11/17/06) Page 4 THENCE ALONG SAID CURVE TO THE LEFT WHOSE RADIUS POINT BEARS N 08° 02' 23" W THROUGH A CENTRAL ANGLE OF 24° 17' 21", HAVING A RADIUS OF 176.33 FEET, A DISTANCE OF 74.75 FEET; THENCE N 16° 48' 02" E A DISTANCE OF 54.90 FEET;
THENCE N 13° 58' 47" E A DISTANCE OF 28.56 FEET;
THENCE N 16° 06' 38" E A DISTANCE OF 36.60 FEET;
THENCE N 03° 37' 19" E A DISTANCE OF 55.79 FEET;
THENCE N 01° 38' 46" W A DISTANCE OF 68.96 FEET TO THE BEGINNING OF A NON-TANGENT CURVE; THENCE ALONG SAID CURVE TO THE RIGHT WHOSE RADIUS POINT BEARS N 08° 30' 16" E THROUGH A CENTRAL ANGLE OF 143° 57' 53", HAVING A RADIUS OF 6.50 FEET, A DISTANCE OF 16.33 FEET; THENCE NON-TANGENT TO SAID CURVE N 09° 20' 30" W A DISTANCE OF 18.28 FEET; THENCE N 07° 35' 49" W A DISTANCE OF 25.94 FEET;
THENCE N 06° 19' 36" W A DISTANCE OF 28.59 FEET;
THENCE N 05° 04' 01" W A DISTANCE OF 76.77 FEET TO THE BEGINNING OF A NON-TANGENT CURVE; THENCE ALONG SAID CURVE TO THE RIGHT WHOSE RADIUS POINT BEARS S 82° 53' 01" E THROUGH A CENTRAL ANGLE OF 25° 45' 49", HAVING A RADIUS OF 380.06 FEET, A DISTANCE OF 170.90 FEET TO THE BEGINNING OF A NON-TANGENT CURVE;
THENCE ALONG SAID CURVE TO THE RIGHT WHOSE RADIUS POINT BEARS S 44° 56' 11" E THROUGH A CENTRAL ANGLE OF 21° 53' 56", HAVING A RADIUS OF 30.00 FEET, A DISTANCE OF 11.47 FEET TO THE BEGINNING OF A NON-TANGENT CURVE;
THENCE ALONG SAID CURVE TO THE LEFT WHOSE RADIUS POINT BEARS N 23° 11' 48" W THROUGH A CENTRAL ANGLE OF 53° 11' 40", HAVING A RADIUS OF 67.79 FEET, A DISTANCE OF 62.94 FEET TO THE BEGINNING OF A NON-TANGENT CURVE;
THENCE ALONG SAID CURVE TO THE RIGHT WHOSE RADIUS POINT BEARS S 74° 52' 24" E THROUGH A CENTRAL ANGLE OF 17° 17' 38", HAVING A RADIUS OF 87.32 FEET, A DISTANCE OF 26.36 FEET; THENCE NON-TANGENT TO SAID CURVE N 38° 02' 09" E A DISTANCE OF 49.24 FEET TO THE BEGINNING OF A NON-TANGENT CURVE;
THENCE ALONG SAID CURVE TO THE LEFT WHOSE RADIUS POINT BEARS N 50° 27' 28" W THROUGH A CENTRAL ANGLE OF 80° 53' 32", HAVING A RADIUS OF 14.00 FEET, A DISTANCE OF 19.77 FEET; THENCE N 41° 20' 59" W A DISTANCE OF 52.69 FEET;
THENCE N 42° 33' 46" W A DISTANCE OF 23.84 FEET;
THENCE N 46° 49' 36" W A DISTANCE OF 28.16 FEET;
THENCE N 43° 03' 14" W A DISTANCE OF 17.21 FEET;
THENCE N 51° 21' 09" W A DISTANCE OF 16.15 FEET;
PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9

EXHIBIT A
(Continued)
CLTA Preliminary Report Form – Modified (11/17/06) Page 5 THENCE N 40° 56' 18" W A DISTANCE OF 100.84 FEET;
THENCE N 43° 55' 08" W A DISTANCE OF 66.91 FEET;
THENCE N 40° 34' 17" W A DISTANCE OF 28.09 FEET TO THE BEGINNING OF A TANGENT CURVE; THENCE ALONG SAID CURVE TO THE RIGHT THROUGH A CENTRAL ANGLE OF 116° 33' 28", HAVING A RADIUS OF 16.00 FEET, A DISTANCE OF 32.55 FEET TO THE BEGINNING OF A TANGENT CURVE; THENCE ALONG SAID CURVE TO THE LEFT THROUGH A CENTRAL ANGLE OF 20° 23' 50", HAVING A RADIUS OF 218.00 FEET, A DISTANCE OF 77.61 FEET;
THENCE NON-TANGENT TO SAID CURVE N 72° 25' 37" E A DISTANCE OF 276.02 FEET; THENCE N 00° 00' 55" W A DISTANCE OF 51.63 FEET;
THENCE N 89° 59' 05" E A DISTANCE OF 88.82 FEET;
THENCE S 26° 41' 01" E A DISTANCE OF 633.96 FEET TO THE BEGINNING OF A NON-TANGENT CURVE; THENCE ALONG SAID CURVE TO THE LEFT WHOSE RADIUS POINT BEARS S 26° 41' 01" E THROUGH A CENTRAL ANGLE OF 42° 56' 01", HAVING A RADIUS OF 62.00 FEET, A DISTANCE OF 46.46 FEET TO THE BEGINNING OF A REVERSE CURVE;
THENCE ALONG SAID CURVE TO THE RIGHT THROUGH A CENTRAL ANGLE OF 42° 56' 01", HAVING A RADIUS OF 50.00 FEET, A DISTANCE OF 37.47 FEET;
THENCE S 63° 18' 59" W A DISTANCE OF 81.73 FEET TO THE BEGINNING OF A TANGENT CURVE; THENCE ALONG SAID CURVE TO THE LEFT THROUGH A CENTRAL ANGLE OF 63° 19' 54", HAVING A RADIUS OF 275.00 FEET, A DISTANCE OF 303.97 FEET;
THENCE S 00° 00' 55" E A DISTANCE OF 410.00 FEET;
THENCE S 89° 59' 05" W A DISTANCE OF 50.42 FEET;
THENCE S 00° 00' 55" E A DISTANCE OF 278.18 FEET TO THE BEGINNING OF A NON-TANGENT CURVE, THENCE ALONG SAID CURVE TO THE RIGHT WHOSE RADIUS POINT BEARS S 41° 58' 57" E THROUGH A CENTRAL ANGLE OF 26° 37' 38", HAVING A RADIUS OF 205.00 FEET, A DISTANCE OF 95.27 FEET; THENCE NON-TANGENT TO SAID CURVE S 46° 03' 05" W FOR A DISTANCE OF 208.12 FEET; THENCE S 34° 49' 05" W A DISTANCE OF 89.36 FEET;
THENCE N 54° 47' 39" W A DISTANCE OF 8.46 FEET;
THENCE S 41° 38' 09" W A DISTANCE OF 122.56 FEET TO THE BEGINNING OF A NON-TANGENT CURVE; THENCE ALONG SAID CURVE TO THE RIGHT WHOSE RADIUS POINT BEARS N 48° 21' 49" W THROUGH A CENTRAL ANGLE OF 25° 59' 03", HAVING A RADIUS OF 395.67 FEET, A DISTANCE OF 179.44 FEET; THENCE NON-TANGENT TO SAID CURVE N 63° 09' 48" W A DISTANCE OF 13.12 FEET; PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9

EXHIBIT A
(Continued)
CLTA Preliminary Report Form – Modified (11/17/06) Page 6 THENCE S 72° 13' 32" W A DISTANCE OF 40.37 FEET;
THENCE N 00° 02' 28" W A DISTANCE OF 489.65 FEET;
THENCE S 64° 44' 05" W A DISTANCE OF 214.80 FEET;
THENCE N 81° 45' 55" W A DISTANCE OF 389.76 FEET;
THENCE N 00° 00' 55" W A DISTANCE OF 192.73 FEET;
THENCE N 89° 59' 05" E A DISTANCE OF 280.00 FEET;
THENCE N 00° 00' 55" W A DISTANCE OF 123.88 FEET TO THE POINT OF BEGINNING.

BEING ADJUSTED PARCEL A, AS DESCRIBED IN THAT CERTAIN CERTIFICATE OF LOT LINE ADJUSTMENT RECORDED SEPTEMBER 26, 2017, AS INSTRUMENT NO. 2017-084368, OF OFFICIAL RECORDS.

APN: 015-010-910
PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9 CLTA Preliminary Report Form – Modified (11/17/06) Page 7

EXCEPTIONS

AT THE DATE HEREOF, ITEMS TO BE CONSIDERED AND EXCEPTIONS TO COVERAGE IN ADDITION TO THE PRINTED EXCEPTIONS AND EXCLUSIONS IN SAID POLICY FORM WOULD BE AS FOLLOWS:

1. Property taxes, which are a lien not yet due and payable, including any assessments collected with taxes to be levied for the fiscal year 2021-2022.

2. Prior to close of escrow, please contact the Tax Collector's Office to confirm all amounts owing, including current fiscal year taxes, supplemental taxes, escaped assessments and any delinquencies.

3. Any liens or other assessments, bonds, or special district liens including without limitation, Community Facility Districts, that arise by reason of any local, City, Municipal or County Project or Special District.

4. The lien of supplemental or escaped assessments of property taxes, if any, made pursuant to the provisions of Chapter 3.5 (commencing with Section 75) or Part 2, Chapter 3, Articles 3 and 4, respectively, of the Revenue and Taxation Code of the State of California as a result of the transfer of title to the vestee named in Schedule A or as a result of changes in ownership or new construction occurring on or after the Date of Policy.

5. Water rights, claims or title to water, whether or not disclosed by the public records.

6. Any rights and easements for commerce, navigation and fishery based upon the assertion that some portion of said land is tide or submerged land that is not filled in accordance with the California Supreme Court decision, entered February 22, 1980, (26 Cal 3rd 515), Santa Fe Land Improvement Co., et al., vs.

City of Berkeley, or presently lies beneath the waters of San Francisco Bay.

7. Any easements or lessor rights of the Public, City, County and/or Public Utilities for roadway, pedestrian and vehicular ingress and egress and/or utilities as to those portions of the Land lying within the areas commonly known as Oyster Point Boulevard.

PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9

EXCEPTIONS
(Continued)
CLTA Preliminary Report Form – Modified (11/17/06) Page 8

8. Easement(s) for the purpose(s) shown below and rights incidental thereto, as granted in a document:

Granted to: Pacific Gas and Electric Company, a California corporation Purpose: Electrical transmission lines and gas conveyances facilities and all appurtenances thereto Recording Date: March 6, 1912
Recording No: Book 206 of Deeds, Page 487
Affects: The exact location and extent of said easement is not defined of record A portion of said easement has been quitclaimed by instrument recorded February 23, 1926, in Book 197, Page 467, of Official Records.

9. Easement(s) for the purpose(s) shown below and rights incidental thereto, as granted in a document:

Granted to: Pacific Gas and Electric Company and The Pacific Telephone and Telegraph Company Purpose: Electrical and communication facilities and all appurtenances thereto Recording Date: November 12, 1946
Recording No: Book 1317, Page 78 of Official Records
Affects: Portion of said land

10. Easement(s) for the purpose(s) shown below and rights incidental thereto, as granted in a document:

Granted to: Pacific Gas and Electric Company, a California corporation Purpose: Erection, maintenance and use of poles and wires and all appurtenances thereto Recording Date: February 14, 1951
Recording No: Book 2023, Page 83, of Official Records
Affects: Portion of said land

11. Easement(s) for the purpose(s) shown below and rights incidental thereto, as granted in a document:

Granted to: Pacific Gas and Electric Company, a California corporation Purpose: Pole lines and all appurtenances thereto
Recording Date: February 14, 1961
Recording No: Book 2023, Page 91, of Official Records
Affects: Portion of said land

12. Covenants and Agreement, and Easements, but excluding any rights of repurchase as mentioned therein, dated October 28, 1974, executed by Cabot, Cabot & Forbes California Properties, Inc., a Delaware corporation, and between R.W.L. Investments, Inc., a California corporation recorded October 31, 1974, Book 6728, Page 241, Instrument No. 96718AH, Official Records.

Terms, covenants and conditions contained in the certain instrument referred to above, reserving easements to Cabot, Cabot & Forbes California Properties, Inc., a Delaware Corporation:

Purpose: Storm drain easement
Affects: 10 foot strip over a portion of Parcel One, lying within Parcel 4, as shown on Parcel Map, filed January 15, 1974, in Book 23 of Parcel Maps, at Page 27 Purpose: Anchor easement
Affects: 5 feet over a portion of Parcel One, lying within Parcel 4, as shown on Parcel Map filed January 15, 1974, in Book 23 of Parcel Maps, at Page 27 Purpose: Slope easement
Affects: Portion of Parcel 1, lying within Parcel 4, as shown on Parcel Map filed January 15, 1974, in Book 23 of Parcel Maps, at Page 27, Official Records of San Mateo County PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9

EXCEPTIONS
(Continued)
CLTA Preliminary Report Form – Modified (11/17/06) Page 9

13. An easement for Ship Channel (250 feet wide), as established by the San Francisco Harbor Line Board, on December 4, 1936, as shown on Parcel Map, filed April 12, 1982, in Book 52 of Parcel Maps, at Page 58.

14. BCDC Jurisdiction as shown on the map entitled, "Parcel Map Oyster Point Business Park", filed April 12, 1982, in Book 52 of Parcel Maps at Pages 58 and 59, Official Records, San Mateo County. (Affects a strip of land 100 feet wide running southerly and westerly through subject lands, as shown on the Parcel Map, filed January 15, 1974, in Book 23 of Parcel Maps, Page 27) As and to the extent relocated as disclosed of record by Resolution No. 2314 of the South San Francisco Planning Commission supporting the relocation of the BCDC Park Priority Area from the South to the West side of the Oyster Point Business Park, adopted by the Planning Commission of the City of South San Francisco, on July 22, 1982, recorded July 10, 1987, Instrument No. 87108115, Official Records.

15. Terms, conditions and provisions in Permit No. 4-82, dated June 21, 1982, issued by the San Francisco Bay Conservation and Development Commission to Richard Diodati, recorded September 14, 1982, Series No. 82078523, San Mateo County Records.

As amended by amendment to Permit Number 4-82(B) and terms and conditions contained therein, dated January 25, 1989, recorded February 8, 1989, Instrument No. 89017808, Official Records.

Together with an agreement imposing restrictions and easements of the use of real property, dated July 22, 1987, executed by Rich Diodati and between San Francisco Bay Conservation and Development Commission, recorded July 22, 1987, Instrument No. 87114139, Official Records.

As amended by amendment to agreement imposing restrictions of the use of real property, dated January 19, 1990, executed by Martha Diodati and Richard Diodati, and between the San Francisco Bay Conservation and Development Commission, recorded January 26, 1990, Instrument No. 90012360, Official Records.

As amended by agreement amending Permit No. 4-82 (B) recorded October 16, 1992, Instrument No. 92169322, Official Records.

Amendment recorded January 8, 2003, Instrument No. 2003-5277, Official Records.

Amendment recorded January 8, 2003, Instrument No. 2003-5278, Official Records.

Amendment recorded July 24, 2003, Instrument No. 2003-205194, Official Records.

16. Easement(s) for the purpose(s) shown below and rights incidental thereto as granted in a document.

Granted to: City of South San Francisco, a municipal corporation of the State of California Purpose: Ingress and egress and replacing sanitary sewers Recorded: November 16, 1982, Instrument No. 82099998, of Official Records Affects: A portion of said land
PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9

EXCEPTIONS
(Continued)
CLTA Preliminary Report Form – Modified (11/17/06) Page 10

17. An Easement for benefit of Pacific Gas and Electric Company as reserved in the Resolution vacating portion of Oyster Point Boulevard dated February 2, 1983, executed by the City and County of South San Francisco recorded March 10, 1983, as Instrument No. 83022834, of Official Records.

18. Easement(s) for the purpose(s) shown below and rights incidental thereto as granted in a document.

Granted to: Pacific Telephone and Telegraph Company
Purpose: To construct and maintain (place, operate, inspect, repair, replace and remove) such underground communication facilities, as grantee may from time to time require (including ingress thereto and egress therefrom) consisting of wires, cables, conduits, manholes, handholes and aboveground markers, pedestals, terminal equipment cabinets, other associated electrical conductors and necessary fixtures and appurtenances Recorded: September 15, 1983, Instrument No. 83099596, of Official Records Affects: The easterly (5) feet of the southerly 480 feet of the northerly 633.96 feet

19. Terms and conditions of Permit 8-74 disclosed by information received by this company, affects that portion,s lying within Parcel 4, as shown on Parcel Map, filed January 15, 1974, in Book 23 of Parcel Maps at Page 27.

Together with an Agreement for Imposing Restriction on Use of Real Property Dated: February 25, 1986
Executed By: R.W.L. Investments, Inc., a California corporation And Between: San Francisco Bay Conservation and Development Commission Upon the terms, provisions, covenants and conditions contained therein, Recorded: March 10, 1986, Instrument No. 86025166, Official Records Including the terms and conditions contained in the agreement last above mentioned providing for easements, for public access, for fishing, walking, picnicking, sitting and other related purposes over portions of premises.

20. Easement(s) for the purpose(s) shown below and rights incidental thereto as granted in a document.

Granted to: TC Northern California, Inc., a Delaware corporation Purpose: Storm drainage purposes
Recorded: August 1, 1997, Instrument No. 97-093545, of Official Records Affects: Parcel One-A, as shown on the Parcel Map, filed January 15, 1974, in Book 23 of Parcel Maps, Page 27
PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9

EXCEPTIONS
(Continued)
CLTA Preliminary Report Form – Modified (11/17/06) Page 11

21. Matters contained in that certain document
Entitled: Development Agreement by and between City of South Francisco and Oyster Point Ventures, LLC
Dated: March 23, 2011
Executed by: City of South San Francisco and Oyster Point Ventures, LLC Recording Date: March 24, 2011
Recording No.: 2011-034324, of Official Records
Reference is hereby made to said document for full particulars.

An Assignment and Assumption dated August 17, 2016, recorded August 18, 2016, as Instrument No. 2016-082622, of Official Records.

A Consent, Assignment and Assumption of Development Agreement dated June 1, 2018, recorded June 5, 2018, as Instrument No. 2018-043311, of Official Records.

22. Any rights, interests, or claims which may exist or arise by reason of the following matters disclosed by surveys,
Job No.: 1025-002
Dated: May 18, 2018
Prepared by: Wilsey Ham Engineering, Surveying & Planning Matters shown: As follows:
a) The “shoreline meander” circa February 22, 1980 (“Berkeley date”) is plotted hereon per Wilsey Ham record of
survey, San Mateo records Volume 42 Page 44.

23. The search did not disclose any open mortgages or deeds of trust of record, therefore the Company reserves the right to require further evidence to confirm that the property is unencumbered, and further reserves the right to make additional requirements or add additional items or exceptions upon receipt of the requested evidence.

24. Any lien or right to a lien for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the Public Records.

25. Any rights of the parties in possession of a portion of, or all of, said Land, which rights are not disclosed by the public records.

The Company will require, for review, a full and complete copy of any unrecorded agreement, contract, license and/or lease, together with all supplements, assignments and amendments thereto, before issuing any policy of title insurance without excepting this item from coverage.

The Company reserves the right to except additional items and/or make additional requirements after reviewing said documents.

26. Matters which may be disclosed by an inspection and/or by a correct ALTA/NSPS Land Title Survey of said Land that is satisfactory to the Company, and/or by inquiry of the parties in possession thereof.

PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9

EXCEPTIONS
(Continued)
CLTA Preliminary Report Form – Modified (11/17/06) Page 12

27. Information in the possession of the Company indicates that a division of land has occurred or is contemplated in the current transaction involving the Land described in this report. Such contemplated division of land appears to fall within the guidelines necessitating approval by the City, County or other applicable government agency. As a prerequisite to the issuance of any title insurance under this application, at least one of the following requirements must be accomplished to the Company’s satisfaction:

A Final Map has been recorded in compliance with City of South San Francisco related ordinances/requirements.

Evidence of compliance or waiver from the City of South San Francisco.

Other evidence, satisfactory to the Company, indicating compliance or non-violation must be furnished.

The Company reserves the right to add additional items or make further requirements after review of the requested documentation.

28. The Company will require the following documents for review prior to the issuance of any title insurance predicated upon a conveyance or encumbrance from the entity named below:

Limited Liability Company: KR Oyster Point III, LLC, a Delaware limited liability company a) A copy of its operating agreement, if any, and all amendments, supplements and/or modifications thereto, certified by the appropriate manager or member.
b) If a domestic Limited Liability Company, a copy of its Articles of Organization and all amendments thereto with the appropriate filing stamps.
c) If the Limited Liability Company is member-managed, a full and complete current list of members certified by the appropriate manager or member.
d) A current dated certificate of good standing from the proper governmental authority of the state in which the entity is currently domiciled.
e) If less than all members, or managers, as appropriate, will be executing the closing documents, furnish evidence of the authority of those signing.
f) If Limited Liability Company is a Single Member Entity, a Statement of Information for the Single Member will be required.
g) Each member and manager of the LLC without an Operating Agreement must execute in the presence of a notary public the Certificate of California LLC (Without an Operating Agreement) Status and Authority form.

29. The Company will require that an Owner’s Affidavit be completed by the party(s) named below before the issuance of any policy of title insurance.

Party(s): KR Oyster Point III, LLC, a Delaware limited liability company The Company reserves the right to add additional items or make further requirements after review of the requested Affidavit.

PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9

EXCEPTIONS
(Continued)
CLTA Preliminary Report Form – Modified (11/17/06) Page 13

30. This transaction requires high liability approval prior to close of escrow together with an inspection of the subject property.

Please advise title department with an estimated date that your transaction will close so we can schedule the necessary approvals and inspections.

31. Prior to the close of escrow and the issuance of an ALTA Coverage Policy, an inspection of the property will be required.

32. The transaction contemplated in connection with this Report is subject to the review and approval of the Company’s Corporate Underwriting Department. The Company reserves the right to add additional items or make further requirements after such review.

PLEASE REFER TO THE “INFORMATIONAL NOTES” AND “REQUIREMENTS” SECTIONS WHICH FOLLOW FOR INFORMATION NECESSARY TO COMPLETE THIS TRANSACTION.

END OF EXCEPTIONS
PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Oyster Point-91 Order No.: 991-30065165-KD9 CLTA Preliminary Report Form – Modified (11/17/06) Page 14

REQUIREMENTS SECTION
NONE

END OF REQUIREMENTS
CLTA Preliminary Report Form – Modified (11/17/06) Page 1

INFORMATIONAL NOTES SECTION

1. Note: The Company is not aware of any matters which would cause it to decline to attach CLTA Endorsement Form 116 indicating that there is located on said Land a commercial building(s), known as 377, 385 and 389 Oyster Point Boulevard, South San Francisco, CA, to an Extended Coverage Loan Policy.

2. Note: There are NO conveyances affecting said Land recorded within 24 months of the date of this report.

3. Note: The charge for a policy of title insurance, when issued through this application for title insurance, will be based on the Short Term Rate.

4. Note: If a county recorder, title insurance company, escrow company, real estate broker, real estate agent or association provides a copy of a declaration, governing document or deed to any person, California law requires that the document provided shall include a statement regarding any unlawful restrictions. Said statement is to be in at least 14-point bold face type and may be stamped on the first page of any document provided or included as a cover page attached to the requested document. Should a party to this transaction request a copy of any document reported herein that fits this category, the statement is to be included in the manner described.

5. Note: Any documents being executed in conjunction with this transaction must be signed in the presence of an authorized Company employee, an authorized employee of a Company agent, an authorized employee of the insured lender, or by using Bancserv or other Company-approved third-party service. If the above requirement cannot be met, please call the Company at the number provided in this report.

6. Notice: Please be aware that due to the conflict between federal and state laws concerning the cultivation, distribution, manufacture or sale of marijuana, the Company is not able to close or insure any transaction involving Land that is associated with these activities.

7. The application for title insurance was placed by reference to only a street address or tax identification number. The proposed Insured must confirm that the legal description in this report covers the parcel(s) of Land requested to be insured. If the legal description is incorrect, the proposed Insured must notify the Company and/or the settlement company in order to prevent errors and to be certain that the legal description for the intended parcel(s) of Land will appear on any documents to be recorded in connection with this transaction and on the policy of title insurance.

8. Note: The policy of title insurance will include an arbitration provision. The Company or the insured may demand arbitration. Arbitrable matters may include, but are not limited to, any controversy or claim between the Company and the insured arising out of or relating to this policy, any service of the Company in connection with its issuance or the breach of a policy provision or other obligation. Please ask your escrow or title officer for a sample copy of the policy to be issued if you wish to review the arbitration provisions and any other provisions pertaining to your Title Insurance coverage.

9. Pursuant to Government Code Section 27388.1, as amended and effective as of 1-1-2018, a Documentary Transfer Tax (DTT) Affidavit may be required to be completed and submitted with each document when DTT is being paid or when an exemption is being claimed from paying the tax. If a governmental agency is a party to the document, the form will not be required. DTT Affidavits may be available at a Tax Assessor-County Clerk-Recorder.

END OF INFORMATIONAL NOTES
Kevin Davis/bd1
Wire Fraud Alert Page 1
Original Effective Date: 5/11/2017
Current Version Date: 5/11/2017 WIRE0016 (DSI Rev. 12/07/17) TM and © Fidelity National Financial, Inc. and/or an affiliate. All rights reserved Wire Fraud Alert
This Notice is not intended to provide legal or professional advice. If you have any questions, please consult with a lawyer.

All parties to a real estate transaction are targets for wire fraud and many have lost hundreds of thousands of dollars because they simply relied on the wire instructions received via email, without further verification. If funds are to be wired in conjunction with this real estate transaction, we strongly recommend verbal verification of wire instructions through a known, trusted phone number prior to sending funds.

In addition, the following non‐exclusive self‐protection strategies are recommended to minimize exposure to possible wire fraud.
 NEVER RELY on emails purporting to change wire instructions. Parties to a transaction rarely change wire instructions in the course of a transaction.
 ALWAYS VERIFY wire instructions, specifically the ABA routing number and account number, by calling the party who sent the instructions to you. DO NOT use the phone number provided in the email containing the instructions, use phone numbers you have called before or can otherwise verify. Obtain the phone number of relevant parties to the transaction as soon as an escrow account is opened. DO NOT send an email to verify as the email address may be incorrect or the email may be intercepted by the fraudster.  USE COMPLEX EMAIL PASSWORDS that employ a combination of mixed case, numbers, and symbols. Make your passwords greater than eight (8) characters. Also, change your password often and do NOT reuse the same password for other online accounts.
 USE MULTI-FACTOR AUTHENTICATION for email accounts. Your email provider or IT staff may have specific instructions on how to implement this feature.

For more information on wire‐fraud scams or to report an incident, please refer to the following links:

Federal Bureau of Investigation: Internet Crime Complaint Center:
http://www.fbi.gov http://www.ic3.gov
Fidelity National Title Company
100 Pine Street, Suite 2460, San Francisco, CA 94111
Phone: (415) 276-0220 Fax:

Notice of Available Discounts (Rev. 01-15-20) Last Saved: April 22, 2021 by BD1 MISC0164 (DSI Rev. 03/12/20) Escrow No.: 30065165-991-991-KD9 Notice of Available Discounts
Pursuant to Section 2355.3 in Title 10 of the California Code of Regulations Fidelity National Financial, Inc. and its subsidiaries ("FNF") must deliver a notice of each discount available under our current rate filing along with the delivery of escrow instructions, a preliminary report or commitment. Please be aware that the provision of this notice does not constitute a waiver of the consumer's right to be charged the filed rate. As such, your transaction may not qualify for the below discounts.

You are encouraged to discuss the applicability of one or more of the below discounts with a Company representative. These discounts are generally described below; consult the rate manual for a full description of the terms, conditions and requirements for such discount. These discounts only apply to transactions involving services rendered by the FNF Family of Companies. This notice only applies to transactions involving property improved with a one-to-four family residential dwelling.

Not all discounts are offered by every FNF Company. The discount will only be applicable to the FNF Company as indicated by the named discount.

FNF Underwritten Title Company Underwritten by FNF Underwriters CTC – Chicago Title company CTIC – Chicago Title Insurance Company CLTC – Commonwealth Land Title Company CLTIC - Commonwealth Land Title Insurance Company FNTC – Fidelity National Title Company of California FNTIC – Fidelity National Title Insurance Company FNTCCA - Fidelity National Title Company of California FNTIC - Fidelity National Title Insurance Company TICOR – Ticor Title Company of California CTIC – Chicago Title Insurance Company LTC – Lawyer’s Title Company CLTIC – Commonwealth Land Title Insurance Company SLTC – ServiceLink Title Company CTIC – Chicago Title Insurance Company Available Discounts

DISASTER LOANS (CTIC, CLTIC, FNTIC)
The charge for a Lender's Policy (Standard or Extended coverage) covering the financing or refinancing by an owner of record, within twenty-four (24) months of the date of a declaration of a disaster area by the government of the United States or the State of California on any land located in said area, which was partially or totally destroyedin the disaster, will be fifty percent (50%) of the appropriatetitle insurance rate.

CHURCHES OR CHARITABLE NON-PROFIT ORGANIZATIONS (CTIC, FNTIC) On properties used as a church or for charitable purposes within the scope of the normal activities of such entities, provided said charge is normally the church's obligation the charge for an owner's policy shall be fifty percent (50%) to seventy percent (70%) of the appropriate title insurance rate, depending on the type of coverage selected. The charge for a lender's policy shall be forty (40%) to fifty percent (50%) of the appropriate title insurance rate, depending on the type of coverage selected.

FNF Privacy Statement (Eff. January 1, 2021) Copyright © 2021. Fidelity National Financial, Inc. All Rights Reserved MISC0219 (DSI Rev. 01/29/21) Page 1 Order No. 30065165-991-991-KD9 FIDELITY NATIONAL FINANCIAL, INC.

PRIVACY NOTICE
Effective January 1, 2021
Fidelity National Financial, Inc. and its majority-owned subsidiary companies (collectively, “FNF,” “our,” or “we”) respect and are committed to protecting your privacy. This Privacy Notice explains how we collect, use, and protect personal information, when and to whom we disclose such information, and the choices you have about the use and disclosure of that information.

A limited number of FNF subsidiaries have their own privacy notices. If a subsidiary has its own privacy notice, the privacy notice will be available on the subsidiary’s website and this Privacy Notice does not apply.

Collection of Personal Information
FNF may collect the following categories of Personal Information:
 contact information (e.g., name, address, phone number, email address);  demographic information (e.g., date of birth, gender, marital status);  identity information (e.g. Social Security Number, driver’s license, passport, or other government ID number);  financial account information (e.g. loan or bank account information); and  other personal information necessary to provide products or services to you.

We may collect Personal Information about you from:
 information we receive from you or your agent;
 information about your transactions with FNF, our affiliates, or others; and  information we receive from consumer reporting agencies and/or governmental entities, either directly from these entities or through others.

Collection of Browsing Information
FNF automatically collects the following types of Browsing Information when you access an FNF website, online service, or application (each an “FNF Website”) from your Internet browser, computer, and/or device:
 Internet Protocol (IP) address and operating system;
 browser version, language, and type;
 domain name system requests; and
 browsing history on the FNF Website, such as date and time of your visit to the FNF Website and visits to the pages within the FNF Website.

Like most websites, our servers automatically log each visitor to the FNF Website and may collect the Browsing Information described above. We use Browsing Information for system administration, troubleshooting, fraud investigation, and to improve our websites.

Browsing Information generally does not reveal anything personal about you, though if you have created a user account for an FNF Website and are logged into that account, the FNF Website may be able to link certain browsing activity to your user account.

Other Online Specifics
Cookies. When you visit an FNF Website, a “cookie” may be sent to your computer. A cookie is a small piece of data that is sent to your Internet browser from a web server and stored on your computer’s hard drive. Information gathered using cookies helps us improve your user experience. For example, a cookie can help the website load properly or can customize the display page based on your browser type and user preferences. You can choose whether or not to accept cookies by changing your Internet browser settings. Be aware that doing so may impair or limit some functionality of the FNF Website.

Web Beacons. We use web beacons to determine when and how many times a page has been viewed. This information is used to improve our websites.

Do Not Track. Currently our FNF Websites do not respond to “Do Not Track” features enabled through your browser.

Links to Other Sites. FNF Websites may contain links to unaffiliated third-party websites. FNF is not responsible for the privacy practices or content of those websites. We recommend that you read the privacy policy of every website you visit.

Use of Personal Information
FNF uses Personal Information for three main purposes:
 To provide products and services to you or in connection with a transaction involving you.  To improve our products and services.
 To communicate with you about our, our affiliates’, and others’ products and services, jointly or independently.

When Information Is Disclosed
We may disclose your Personal Information and Browsing Information in the following circumstances:
 to enable us to detect or prevent criminal activity, fraud, material misrepresentation, or nondisclosure;  to nonaffiliated service providers who provide or perform services or functions on our behalf and who agree to use the information only to provide such services or functions;

FNF Privacy Statement (Eff. January 1, 2021) Copyright © 2021. Fidelity National Financial, Inc. All Rights Reserved MISC0219 (DSI Rev. 01/29/21) Page 2 Order No. 30065165-991-991-KD9  to nonaffiliated third party service providers with whom we perform joint marketing, pursuant to an agreement with them to jointly market financial products or services to you;
 to law enforcement or authorities in connection with an investigation, or in response to a subpoena or court order; or  in the good-faith belief that such disclosure is necessary to comply with legal process or applicable laws, or to protect the rights, property, or safety of FNF, its customers, or the public.

The law does not require your prior authorization and does not allow you to restrict the disclosures described above. Additionally, we may disclose your information to third parties for whom you have given us authorization or consent to make such disclosure. We do not otherwise share your Personal Information or Browsing Information with nonaffiliated third parties, except as required or permitted by law. We may share your Personal Information with affiliates (other companies owned by FNF) to directly market to you. Please see “Choices with Your Information” to learn how to restrict that sharing.

We reserve the right to transfer your Personal Information, Browsing Information, and any other information, in connection with the sale or other disposition of all or part of the FNF business and/or assets, or in the event of bankruptcy, reorganization, insolvency, receivership, or an assignment for the benefit of creditors. By submitting Personal Information and/or Browsing Information to FNF, you expressly agree and consent to the use and/or transfer of the foregoing information in connection with any of the above described proceedings.

Security of Your Information
We maintain physical, electronic, and procedural safeguards to protect your Personal Information.

Choices With Your Information
If you do not want FNF to share your information among our affiliates to directly market to you, you may send an “opt out” request as directed at the end of this Privacy Notice. We do not share your Personal Information with nonaffiliates for their use to direct market to you without your consent.

Whether you submit Personal Information or Browsing Information to FNF is entirely up to you. If you decide not to submit Personal Information or Browsing Information, FNF may not be able to provide certain services or products to you.

For California Residents: We will not share your Personal Information or Browsing Information with nonaffiliated third parties, except as permitted by California law. For additional information about your California privacy rights, please visit the “California Privacy” link on our website (https://fnf.com/pages/californiaprivacy.aspx) or call (888) 413-1748.

For Nevada Residents: You may be placed on our internal Do Not Call List by calling (888) 934-3354 or by contacting us via the information set forth at the end of this Privacy Notice. Nevada law requires that we also provide you with the following contact information: Bureau of Consumer Protection, Office of the Nevada Attorney General, 555 E. Washington St., Suite 3900, Las Vegas, NV 89101; Phone number: (702) 486-3132; email: [email protected].

For Oregon Residents: We will not share your Personal Information or Browsing Information with nonaffiliated third parties for marketing purposes, except after you have been informed by us of such sharing and had an opportunity to indicate that you do not want a disclosure made for marketing purposes.

For Vermont Residents: We will not disclose information about your creditworthiness to our affiliates and will not disclose your personal information, financial information, credit report, or health information to nonaffiliated third parties to market to you, other than as permitted by Vermont law, unless you authorize us to make those disclosures.

Information From Children
The FNF Websites are not intended or designed to attract persons under the age of eighteen (18).We do not collect Personal Information from any person that we know to be under the age of thirteen (13) without permission from a parent or guardian.

International Users
FNF’s headquarters is located within the United States. If you reside outside the United States and choose to provide Personal Information or Browsing Information to us, please note that we may transfer that information outside of your country of residence. By providing FNF with your Personal Information and/or Browsing Information, you consent to our collection, transfer, and use of such information in accordance with this Privacy Notice.

FNF Website Services for Mortgage Loans
Certain FNF companies provide services to mortgage loan servicers, including hosting websites that collect customer information on behalf of mortgage loan servicers (the “Service Websites”). The Service Websites may contain links to both this Privacy Notice and the mortgage loan servicer or lender’s privacy notice. The sections of this Privacy Notice titled When Information is Disclosed, Choices with Your Information, and Accessing and Correcting Information do not apply to the Service Websites. The mortgage loan servicer or lender’s privacy notice governs use, disclosure, and access to your Personal Information. FNF does not share Personal Information collected through the Service Websites, except as required or authorized by contract with the mortgage loan servicer or lender, or as required by law or in the good-faith belief that such disclosure is necessary: to comply with a legal process or applicable law, to enforce this Privacy Notice, or to protect the rights, property, or safety of FNF or the public.

FNF Privacy Statement (Eff. January 1, 2021) Copyright © 2021. Fidelity National Financial, Inc. All Rights Reserved MISC0219 (DSI Rev. 01/29/21) Page 3 Order No. 30065165-991-991-KD9 Your Consent To This Privacy Notice; Notice Changes; Use of Comments or Feedback By submitting Personal Information and/or Browsing Information to FNF, you consent to the collection and use of the information in accordance with this Privacy Notice. We may change this Privacy Notice at any time. The Privacy Notice’s effective date will show the last date changes were made. If you provide information to us following any change of the Privacy Notice, that signifies your assent to and acceptance of the changes to the Privacy Notice.

Accessing and Correcting Information; Contact Us
If you have questions, would like to correct your Personal Information, or want to opt-out of information sharing for affiliate marketing, visit FNF’s Opt Out Page or contact us by phone at (888) 934-3354 or by mail to:

Fidelity National Financial, Inc.
601 Riverside Avenue
Jacksonville, Florida 32204
Attn: Chief Privacy Officer
ATTACHMENT ONE (Revised 05-06-16)

CALIFORNIA LAND TITLE ASSOCIATION
STANDARD COVERAGE POLICY – 1990

EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of:

1. (a) Any law, ordinance or governmental regulation (including but not limited to building or zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien, or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy.

2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge.

3. Defects, liens, encumbrances, adverse claims or other matters:
(a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy.

4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable doing business laws of the state in which the land is situated.

5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law.

6. Any claim, which arises out of the transaction vesting in the insured the estate of interest insured by this policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws.

EXCEPTIONS FROM COVERAGE - SCHEDULE B, PART I
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:

1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records.

Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records.

2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof.

3. Easements, liens or encumbrances, or claims thereof, not shown by the public records.

4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records.

5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the public records.

6. Any lien or right to a lien for services, labor or material not shown by the public records.

CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE (12-02-13)

ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE

EXCLUSIONS
In addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from:

1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning:
a. building;
b. zoning;
c. land use;
d. improvements on the Land;
e. land division; and
f. environmental protection.

This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27.

2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not limit the coverage described in Covered Risk 14 or 15.

3. The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17.

4. Risks:
a. that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date; c. that result in no loss to You; or
d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28.

5. Failure to pay value for Your Title.

6. Lack of a right:
a. to any land outside the area specifically described and referred to in paragraph 3 of Schedule A; and b. in streets, alleys, or waterways that touch the Land.

This Exclusion does not limit the coverage described in Covered Risk 11 or 21.

7. The transfer of the Title to You is invalid as a preferential transfer or as a fraudulent transfer or conveyance under federal bankruptcy, state insolvency, or similar creditors’ rights laws.

8. Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence.

9. Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances.

LIMITATIONS ON COVERED RISKS
Your insurance for the following Covered Risks is limited on the Owner’s Coverage Statement as follows:
 For Covered Risk 16, 18, 19, and 21 Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A.

The deductible amounts and maximum dollar limits shown on Schedule A are as follows:

Your Deductible Amount
Our Maximum Dollar
Limit of Liability
Covered Risk 16: 1.00% of Policy Amount Shown in Schedule A or $2,500.00 (whichever is less)
$ 10,000.00
Covered Risk 18: 1.00% of Policy Amount Shown in Schedule A or $5,000.00 (whichever is less)
$ 25,000.00
Covered Risk 19: 1.00% of Policy Amount Shown in Schedule A or $5,000.00 (whichever is less)
$ 25,000.00
Covered Risk 21: 1.00% of Policy Amount Shown in Schedule A or $2,500.00 (whichever is less)
$ 5,000.00
2006 ALTA LOAN POLICY (06-17-06)

EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of:

1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to
(i) the occupancy, use, or enjoyment of the Land;
(ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or
(iv) environmental protection;
or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5.
(b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6.

2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.

3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13 or 14); or
(e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.

4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing-business laws of the state where the Land is situated.

5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth-in-lending law.

6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws, that the transaction creating the lien of the Insured Mortgage, is
(a) a fraudulent conveyance or fraudulent transfer, or
(b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy.

7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk 11(b).

The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:

EXCEPTIONS FROM COVERAGE
{Except as provided in Schedule B - Part II,{ t{or T}his policy does not insure against loss or damage, and the Company will not pay costs, attorneys’ fees or expenses, that arise by reason of:
{PART I
{The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:

1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records.

2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land.

3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records.

4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records.

6. Any lien or right to a lien for services, labor or material not shown by the Public Records.}

PART II
In addition to the matters set forth in Part I of this Schedule, the Title is subject to the following matters, and the Company insures against loss or damage sustained in the event that they are not subordinate to the lien of the Insured Mortgage:} 2006 ALTA OWNER’S POLICY (06-17-06)

2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.

3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 and 10); or
(e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title.

4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws, that the transaction vesting the Title as shown in Schedule A, is
(a) a fraudulent conveyance or fraudulent transfer; or
(b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy.

5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A.

EXCEPTIONS FROM COVERAGE
This policy does not insure against loss or damage, and the Company will not pay costs, attorneys’ fees or expenses, that arise by reason of:
{The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:

2. Any facts, rights, interests, or claims that are not shown in the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land.

3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records.

6. Any lien or right to a lien for services, labor or material not shown by the Public Records. }

7. {Variable exceptions such as taxes, easements, CC&R’s, etc. shown here.} ALTA EXPANDED COVERAGE RESIDENTIAL LOAN POLICY – ASSESSMENTS PRIORITY (04-02-15)

EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys’ fees or expenses which arise by reason of:

1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to
(i) the occupancy, use, or enjoyment of the Land;
(ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or
(iv) environmental protection;
or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16.

2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.

3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or
(e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.

4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing-business laws of the state where the Land is situated.

5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury, or any consumer credit protection or truth-in-lending law. This Exclusion does not modify or limit the coverage provided in Covered Risk 26.

6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11.

7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25.

8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6.

9. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws, that the transaction creating the lien of the Insured Mortgage, is
(a) a fraudulent conveyance or fraudulent transfer, or
(b) a preferential transfer for any reason not stated in Covered Risk 27(b) of this policy.

10. Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence.

11. Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances.

Addenda
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Addendum C
Comparable Data
Addenda
City of South San Francisco CFD No. 2021‐1 (Public Facilities and Services) Lease Comparables

Office Lease Profile Lease No. 1
Location & Property Identification
Property Name: Kilroy Oyster Point
Sub‐Property Type: Office/Business Park
Address: 379 Oyster Point Blvd.

City/State/Zip: South San Francisco, CA 94080
County: San Mateo
Submarket: Northern San Mateo
Market Orientation:    Suburban
IRR Event ID:   2729204
Space Information
Space Type: Office
Full Building Lease:   Yes
Leased Area: 421,000
Lease Information
Lease Status: Signed Lease
Lessee:   Stripe
Lease Signed Date: 10/01/2019
Start/Available Date: 01/01/2022
Term of Lease: 144 months
Lease Measure: $/SF/Mo
Face Rental Rate: $5.50
Effective Rental Rate: $6.69
Escalation Type: Fixed Percentage
Escalation Desc.: 3.5% annually
Lease Expense Information
Reimbursement Method:   Triple Net
Improvement and Site Data
GBA‐SF:   1
NRA‐SF:   1
Acres(Gross): 0.00
Land‐SF(Gross): 1
Property Class:   A
Bldg. to Land Ratio FAR: 1.00
Source of Land Info.: Public Records
Comments
Lease of two newly constructed buildings (352 and 354 Oyster Point Boulevard) to tech tenant Stripe, which focuses on payment processing. The commencement date is an estimate, as the lease begins upon completion of the landlord's work; the lease was negotiated in 2019.

Kilroy Oyster Point
Office Lease Profile Lease No. 2
Location & Property Identification
Property Name: Kilroy Oyster Point
Sub‐Property Type: Office/Business Park
Address: 379 Oyster Point Blvd.

City/State/Zip: South San Francisco, CA 94080
County: San Mateo
Submarket: Northern San Mateo
Market Orientation:    Suburban
IRR Event ID:   2729046
Space Information
Space Type: R&D/Life Science Technology
Full Building Lease:   Yes
Leased Area: 234,892
Lease Information
Lease Status: Asking Rent
Lessor:   KR Oyster Point 1, LLC
Lessee:   Cytokinetics, Inc
Lease Signed Date: 07/24/2019
Start/Available Date: 01/01/2022
Term of Lease: 144 months
Lease Measure: $/SF/Mo
Face Rental Rate: $5.45
Effective Rental Rate: $6.55
Escalation Type: Fixed Percentage
Escalation Desc.: 3.5% annually
TI Allowance ($/SF): $145.00
TI Type: New Tenant
Free Rent (Months): 2.00
Renewal Options:   Yes
Desc. of Options:   Two 5‐year options
Lease Expense Information
Reimbursement Method:   Triple Net
Improvement and Site Data
GBA‐SF:   1
NRA‐SF:   1
Acres(Gross): 0.00
Land‐SF(Gross): 1
Property Class:   A
Bldg. to Land Ratio FAR: 1.00
Source of Land Info.: Public Records
Comments
Twelve year lease of newly constructed space in Oyster Point to a life sciences user. Lease was negotiated in 2019; the commencement date is approximate, as the lease will begin when the landlord's work is complete. The improvements will include an auditorium, fitness center, food and beverage space. The tenant received two months of free rent and a $145 psf TI allowance.

Kilroy Oyster Point
Office Lease Profile Lease No. 3
Location & Property Identification
Property Name: The Shore at Sierra Point
Sub‐Property Type: R&D ‐ Life Science Technology
Address: 1400 Sierra Point Pky.

City/State/Zip: Brisbane, CA 94005
County: San Mateo
Submarket: Northern San Mateo
Market Orientation: Suburban
East of Highway 101, south of
Sierra Point Pky
Property Location:

IRR Event ID:   2729922
Space Information
Space Type: R&D/Life Science Technology
Full Building Lease:   No
Leased Area: 65,818
Lease Information
Lease Status: Signed Lease
Lessor:   HCP LS Brisbane, LLC
Lessee:   Annexon, Inc.

Lease Signed Date: 12/18/2020
Start/Available Date: 11/01/2021
Term of Lease: 120 months
Lease Measure: $/SF/Mo
Face Rental Rate: $5.75
Effective Rental Rate: $6.60
Escalation Type: Fixed Percentage
Escalation Desc.: 3.5% annually
TI Allowance ($/SF): $165.00
TI Type: New Tenant
Free Rent (Months): 3.00
Renewal Options:   Yes
Desc. of Options:   One 10‐year option
Transaction Reliability:   Confirmed
Lease Expense Information
Reimbursement Method:   Triple Net
Improvement and Site Data
MSA: San
Francisco‐Oakland‐Hayward,
CA
Legal/Tax/Parcel ID: 007‐165‐150, 007‐165‐140,
007‐165‐130
GBA‐SF:   616,000
NRA‐SF:   616,000
Acres(Usable/Gross): 22.84/22.84
Land‐SF(Usable/Gross): 995,004/995,004
Usable/Gross Ratio: 1.00
Year Built:   2021
Property Class:   A
M&S Class:   A
Construction Quality:   Good
Bldg. to Land Ratio FAR: 0.62
Source of Land Info.: Public Records
Comments
Five building life sciences campus currently under construction by Healthpeak. The campus will include a restaurant/bar, fitness center, retail space, and 4.5 level parking garage. The buildings range from approximately
The Shore at Sierra Point
Office Lease Profile Lease No. 3
Comments (Cont'd)
106,000 to 160,000 square feet.

Lease of newly constructed life sciences space within Building C at The Shore at Sierra Point campus to a biosciences tenant.

Commencement date is an estimate, as occupancy is
dependent on completion of construction. The tenant received 3 months of free rent and a $165 psf TI allowance.

The Shore at Sierra Point
Office Lease Profile Lease No. 4
Location & Property Identification
Alexandria District for Science
& Technology
Property Name:

Sub‐Property Type: R&D ‐ Life Science Technology
Address: 825‐835 Industrial Rd.

City/State/Zip: San Carlos, CA 94070
County: San Mateo
Submarket: Southern San Mateo County
Market Orientation:    Suburban
IRR Event ID:   2558038
Space Information
Space Type: R&D/Life Science Technology
Full Building Lease:   No
Leased Area: 93,332
Lease Information
Lease Status: Signed Lease
Lessor:   Alexandria Real Estate
Equities, Inc.

Lessee:   Allakos
Lease Signed Date: 02/01/2020
Start/Available Date: 07/01/2021
Expiration Date: 10/31/2031
Term of Lease: 124 months
Lease Measure: $/SF/Yr
Face Rental Rate: $69.00
Effective Rental Rate: $69.00
Escalation Type: Fixed Percentage
Escalation Desc.: 3% Annual
Percentage Rent: No
TI Allowance ($/SF): $150.00
TI Type: New Tenant
Free Rent (Months): 6.00
Renewal Options:   Yes
Desc. of Options:   1 option for 5 years at FMR
Lease Expense Information
Reimbursement Method:   Triple Net
Improvement and Site Data
MSA: San
Francisco‐Oakland‐Hayward,
CA
Legal/Tax/Parcel ID: 046‐100‐350
GBA‐SF:   282,190
NRA‐SF:   282,190
Acres(Gross): 7.96
Land‐SF(Gross): 346,738
Year Built:   2021
Property Class:   A
Construction Quality:   Good
Improvements Cond.: Good
Exterior Walls:   Concrete Precast
No. of Buildings/Stories: 1/6
Total Parking Spaces:   847
Park. Ratio 1000 SF GLA:   3.00
Park. Ratio 1000 SF GBA: 3.00
Elevators Count:   Yes
Fire Sprinkler Type:   Wet
Alexandria District for Science & Technology
Office Lease Profile Lease No. 4
Improvement and Site Data (Cont'd)
Air‐Conditioning Type: Central
Bldg. to Land Ratio FAR: 0.81
Bldg. Phy. Info. Source:   Other
Source of Land Info.: Public Records
Comments
Lease of life science/biotech space at the Alexandria District for Science and Technology, a two building development nearing completion in San Carlos. Lease includes TI allowance of $150/SF plus additional TIs to be amortized at 8%.

Alexandria District for Science & Technology
Office Lease Profile Lease No. 5
Location & Property Identification
Property Name: 201 Haskins Way
Sub‐Property Type: R&D ‐ Life Science Technology
Address: 201 Haskins Way
City/State/Zip: South San Francisco, CA 94080
County: San Mateo
Submarket: Northern San Mateo
Market Orientation:    Suburban
IRR Event ID:   2730024
Space Information
Space Type: R&D/Life Science Technology
Leased Area: 105,000
Lease Information
Lease Status: Asking Rent
Lessee:   Lyell
Lease Signed Date: 02/01/2020
Start/Available Date: 02/01/2021
Term of Lease: 120 months
Lease Measure: $/SF/Mo
Face Rental Rate: $5.50
Escalation Type: Fixed Percentage
Lease Expense Information
Reimbursement Method:   Triple Net
Improvement and Site Data
MSA: San
Francisco‐Oakland‐Hayward,
CA
Legal/Tax/Parcel ID: 015‐102‐230
GBA‐SF:   315,000
NRA‐SF:   315,000
Acres(Usable/Gross): 6.44/6.44
Land‐SF(Usable/Gross): 280,439/280,439
Usable/Gross Ratio: 1.00
Year Built:   2021
Property Class:   A
M&S Class:   A
Total Parking Spaces:   733
Park. Ratio 1000 SF GLA:   2.33
Park. Ratio 1000 SF GBA: 2.33
Bldg. to Land Ratio FAR: 1.12
Source of Land Info.: Public Records
Comments
Property includes two new life science buildings constructed in 2021 and developed by Alexandria. Amenities include a cafe, fitness center, conference center, and roof top deck.

Lease within newly constructed life sciences building in South San Francisco to Lyell Pharmaceuticals. Lease was signed in February 2020 but commenced in February 2021.
201 Haskins Way
Office Lease Profile Lease No. 6
Location & Property Identification
Property Name: Genesis North Tower
Sub‐Property Type: R&D ‐ Life Science Technology
Address: 2 Tower Pl.

City/State/Zip: South San Francisco, CA 94080
County: San Mateo
Submarket: Northern San Mateo
Market Orientation:    Suburban
IRR Event ID:   2730055
Space Information
Space Type: R&D/Life Science Technology
Full Building Lease:   No
Leased Area: 77,929
Lease Information
Lease Status: Signed Lease
Lessor:   AP3‐SF3 CT North, LLC
Lessee:   Fluidigm
Lease Signed Date: 03/20/2019
Start/Available Date: 01/17/2020
Term of Lease: 123 months
Lease Measure: $/SF/Mo
Face Rental Rate: $5.60
Effective Rental Rate: $5.52
Escalation Type: Fixed Percentage
Escalation Desc.: 3.5% annually
TI Allowance ($/SF): $176.00
TI Type: New Tenant
Free Rent (Months): 2.00
Concessions: Tenant received rent
abatement on 19,508 SF of
space over first 8 months; this
calculates to approximately the
equivalent of 2 months free
rent
Lease Expense Information
Reimbursement Method:   Triple Net
Improvement and Site Data
MSA: San
Francisco‐Oakland‐Hayward,
CA
Legal/Tax/Parcel ID: 007‐650‐190
GBA‐SF:   375,000
NRA‐SF:   375,000
Acres(Usable/Gross): 2.91/2.91
Land‐SF(Usable/Gross): 126,732/126,732
Usable/Gross Ratio: 1.00
Year Built:   2019
Property Class:   A
M&S Class:   A
No. of Buildings/Stories: 1/21
Elevators Count:   Yes/7
Bldg. to Land Ratio FAR: 2.96
Zoning Desc.: Research &
Development/Office
Source of Land Info.: Public Records
Genesis North Tower
Office Lease Profile Lease No. 6
Comments
High rise life sciences building in South San Francisco constructed in 2019. This is part of the Genesis life sciences campus. Amenities include a fitness center, bakery, restaurant, meeting/event space, and 7‐story parking garage.

New 123‐month lease to biotech tenant within the Genesis life sciences campus. The tenant received a $176 psf TI allowance and the equivalent of 2 months of free rent. The free rent was structured as a rent abatement on a portion of the space over the first 8 month of the lease.

Genesis North Tower

South San Francisco City CouncilMarch 23, 2022

South San Francisco City Council
March 23, 2022