mark a. mclaughlin

Mark A. McLaughlin Chief Executive Officer Pacific Union International, Inc.

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Hans Treuenfels Principal

Rupert Hoogewerf Chairman Hurun Report

Agenda Bay Area Economic Overview 2018 Nine-Market Perspective for 2018 Bay Area Similarities 2018 Questions & Answers Conclusions

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Timing is Everything

What we got wrong Rising Interest Rates

What we got Double-Digit Appreciation

Regional Key Drivers

John Burns Chief Executive Officer John Burns Real Estate Consulting

Definitions

Burns Home Value Index

Our estimate of home value appreciation for all of the homes in a given area.

Single-Family Homes Condominiums

Perspective Macro

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

1930

1932

1934

1936

1938

1940

1942

1944

1946

1948

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Popu

latio

n

Year Born

2015 US Population by Place of Birth

Foreign Born

U.S. Born

Sources: U.S. Census Bureau December 2014 Population Projections; John Burns Real Estate Consulting,LLC

14 Million

27 Million

40 Million 43 Million 41 Million 44 Million 44 Million

41 Million

1930s (76-85)

1940s (66-75)

1990s (16-25)

1950s (56-65)

1960s (46-55)

1970s (36-45)

1980s (26-35)

2000s (6-15)

Savers Achievers Innovators Egalitarians Balancers Sharers Connectors Globals

Study the generations by decade born. The term “Millennial” refers to a 18+ year age gap, which is far too long to make good conclusions.

Source: U.S. Census Bureau December 2014 Population Projections

A surge in retirement will slow U.S. economic growth, and create unprecedented levels of housing demand for 65+ year-olds.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

1980

19

81

1982

19

83

1984

19

85

1986

19

87

1988

19

89

1990

19

91

1992

19

93

1994

19

95

1996

19

97

1998

19

99

2000

20

01

2002

20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

2012

20

13

2014

20

15

2016

20

17

2018

20

19

2020

20

21

2022

20

23

2024

20

25

Population Entering and Leaving the Labor Pool 20-Year-Olds Entering 65-Year-Olds Leaving

Sources: U.S. Census Bureau; John Burns Real Estate Consulting, LLC

Unprecedented international immigration has created a surge in demand for the U.S.’ great cities.

Share of Persons Obtaining Green Cards, 2004-2013

New York

17%

Los Angeles / Orange County

9%

Miami

7%

Washington, D.C.

4%

Chicago

4%

Houston

3%

San Francisco / Oakland / San Jose

5%

Dallas / Fort Worth

2%

Boston

2%

Atlanta

2%

Source: Department of Homeland Security Yearbook of Immigration Statistics

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

0-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Change in Population by Age, 2005-2015

Source: U.S. Census Bureau Intercensal Estimates, December 2014 Population Projections

The “Urban Lifestyle Population” ages, 20-29 and 55-64, grew by a combined 15 million people in the last decade.

+4.7 million (+11.7%) +10.3 million (+33.5%)

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

0-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Change in Population by Age, 2015-2025

Source: U.S. Census Bureau December 2014 Population Projections

Both of these age groups will grow much more slowly over the next decade.

-33,000 (-0.1%) +655,000 (+1.6%)

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

55,000,000

60,000,000

65,000,000

70,000,000

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

65+

Popu

latio

n

65+ Population by Decade of Birth

1960s1950s1940s1930sPre-1930s

Sources: U.S. Census Bureau; John Burns Real Estate Consulting, LLC

66 million

48 million

ACTIVE SENIORS: The 65+ population will grow by 18 million people in 10 years – a 38% increase – and will need housing!

1.  Living Alone: Only 55% of households are led by couples (49% married, 6% living together), compared to 77% of households in 1950.

2.  Marrying Later: Only 22% of women aged 25-29 are married with children today, compared to 68% in 1967.

3.  Cohabitation: 13% of 1980s Sharers lived together in their late 20s, double the 1960s Egalitarians. Does less marital commitment mean less likely to cosign a mortgage?

4.  Never Marrying: Marital rates for those under 30 have dropped in half to 39%; and marital rates for those aged 40-54 have dropped 12+.

5.  Divorcing Less: Divorce rates rose 132% from 1957 to 1979, and have fallen 37% since, creating fewer households.

6.  Childless Households: Only 29% of households now have kids, meaning that good schools are not critical for 71% of households, and traditional floor plans are less relevant.

11 huge social shifts continue to delay the need to form a household or buy a home.

7.  Delaying Childbirth: Women are having their first child 2 years later than their mother did.

8.  Unwed Mothers: 40% of children are born to unmarried women, double the percentage in 1983.

9.  Single-Parent Households: Only 46% of 1990s Connectors lived with both parents in 2013, compared to 73% of 1940s Achievers in 1960.

10. Women are the Breadwinners: •  37% of women graduate from college vs. 31% of men. •  38% of women earn more than their husband, up from 24% in 1987. •  Since 1973, real female incomes are up 36% and male incomes are down

5%.

11.  Raising Kids in a Rental Home: 15.3 million households now live in a single-family rental home, 4.1 million more than in 2007.

11 huge social shifts continue to delay the need to form a household or buy a home.

URBAN, SUBURBAN AND “SURBAN”: Urban and suburban will grow faster than usual, at the expense of rural.

6%7% 10% 8%

21%

15%

71%

79%

69%

77%71%

79%

23%

14%

21%

15%

8% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1970-1980 1980-1990 1990-2000 2000-2010 2010-2015P 2015P-2025P

Share of Household Growth by Decade

Today's Urban

Today's Suburbs

Today's Rural

Source: U.S. Census Bureau Decennial Census; John Burns Real Estate Consulting, LLC

“Surban” areas are redeveloped suburban downtowns, with elements of urban living with suburban affordability.

1.  1929–33 (43 mos.): Consumers borrowed money to buy stocks

2.  1957–58 (8 mos.): Consumers amassed credit card debts 3.  1980–82 (22 mos.)***: Bad bank loans to Latin America; oil

price increase 4.  1990–91 (8 mos.): Junk bonds for Leveraged Buy Outs;

real estate speculation fueled by S&L lending 5.  2000–01 (8 mos.): Tech stock speculation 6.  2007-09 (18 mos.): Housing speculation fueled by

subprime

1.  1937–38 (13 mos.): Post-New Deal 2.  1945 (8 mos.): End of WWII 3.  1948–49 (11 mos.): Post-WWII 4.  1953–54 (10 mos.): Post-Korean War 5.  1969–70 (11 mos.): First Vietnam War

spending cutback

1973–75 (16 mos.): Removal of gold standard, oil price increase

*The leading factors were summarized for the sake of simplicity. **This does not capture every cause of past recessions.

***We grouped the double-dip recessions

Note: We have excluded the small recession in the 1960s from our analysis. Sources: National Bureau of Economic Research; John Burns Real Estate Consulting, LLC (Pub: Aug-15)

Speculative Bubbles Usually fueled by debt

Government Spending Cuts Usually after running up big deficits / debts

Other Gold Standard

The biggest macro concern is excessive debt, which has preceded 11 of the last 12 recessions.

1.  $1.2 trillion+ in student debt 2.  Mortgage debt for 10%+ of homeowners who still have negative equity 3.  Recent surge in debt-fueled private equity acquisitions 4.  Foreign government debt 5.  State and local government debt and unfunded pensions 6.  $146k+ per household in U.S. government debt ($18 trillion) 7.  $990k+ per household in unfunded U.S. retirement obligations

We have many excessive debt worries today.

Source: John Burns Real Estate Consulting US Housing Analysis and Forecast, September 2015

22 short-term early indicators project normal economic growth ahead.

We are going to discuss 5 economic engines known as MSAs that include 8 counties.

Area Definitions: 1.  San Francisco includes San Francisco,

Marin, and San Mateo counties. 2.  East Bay includes Alameda and Contra

Costa counties. 3.  San Jose includes Santa Clara County. 4.  Sonoma is Sonoma County and includes

Santa Rosa 5.  Napa is Napa County.

Venture capital funding to Bay Area companies is approaching levels last seen in 2000.

$25.3 billion in venture capital funding was invested in Bay Area companies in 2014, the highest since 2000 when $33.4 billion was invested.

$1,200

$1,350

$1,500

$1,650

$1,800

$1,950

$2,100

$2,250

$2,400

$2,550

$2,700

$2,850

$3,000

$3,150

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

N.Cal Bay Area: Total Venture Capital Dollars Invested vs. Apartment Rents($ Billions)

Total Venture Capital $Bil (left-axis)

San Francisco Avg. Apartment Rent (right-axis)

San Jose Avg. Apartment Rent (right-axis)

Source: John Burns Real Estate Consulting, LLC; PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report (Q2-2015); Axiometrics

55 Bay Area-headquartered companies have had initial public offerings since January 2014.

Source: John Burns Real Estate Consulting, LLC; Renaissance Capital (through August 2015)

Company Proceeds ($millions)

LendingClub $870 Fitbit $732

GoPro $427 8point3 Energy Partners LP $420

Virgin America $307 Sunrun $251

TriNet Group $240 Arista Networks $226 A10 Networks $188

Natera $180 Castlight Health $178

Box $175 Coupons.com $168

Aimmune Therapeutics $160 FibroGen $146 Versartis $126

Nevro $126 Dermira $125

Ultragenyx Pharmaceutical $121


Ooma $65 Ardelyx $60 Xactly $56

Intersect ENT $55 Atara Biotherapeutics $55 Corium International $52

Zosano Pharma $50 Adamas Pharmaceuticals $48

Invuity $48 TubeMogul $44

CareDx $40 SteadyMed $40 Aqua Metals $33

Energous $24 Sysorex Global Holdings $20

Jaguar Animal Health $20 BioPharmX $10


Global Blood Therapeutics $120 Aduro Biotech $119

New Relic $115 Avalanche Biotechnologies $102

Invitae $102 Zendesk $100

MobileIron $100 Hortonworks $100

Revance Therapeutics $96 Apigee $87

Coherus BioSciences $85 Calithera Biosciences $80

TriVascular Technologies $78 Aerohive Networks $75

Yodlee $75 Achaogen $72

Five9 $70 Avinger $65

Carbylan Therapeutics $65

The 3 major metro areas have a similar number of jobs, although the East Bay has more residents and commuters.

Area Definitions: San Francisco includes San Francisco, Marin, and San Mateo counties. The East Bay includes Alameda and Contra Costa counties. San Jose includes Santa Clara County. Sonoma and Napa are their counties.

71,900

197,700

1,062,800

1,085,900

1,179,400

142,800

506,800

1,977,900

2,769,800

1,896,000

Napa

Sonoma

San Jose

East Bay

San Francisco

Total Population and Employment

Population Employment

Sources: BLS, Census Bureau, John Burns Real Estate Consulting

The economies are growing much faster than their populations, bringing unemployment down and creating income growth for many.


2.1%

2.6%

5.5%

1.9%

4.4%

0.6%

1.0%

1.0%

1.4%

1.0%

Napa

Sonoma

San Jose

East Bay

San Francisco

Population and Employment Growth

Population Employment


San Francisco is the most expensive of the 5 metro areas. Because incomes are lower elsewhere, affordability is actually even more of a problem in Napa, San Jose, and Sonoma.


$544,000

$510,000

$898,300

$582,900

$1,188,800

Napa

Sonoma

San Jose

East Bay

San Francisco

Median Home Price and % Who Can Afford It


27.0%

40.0%

39.0%

31.0%

42.0%

Market Summary

Dean Wehrli Senior Vice President John Burns Real Estate Consulting

Sonoma County

Sonoma County •  Vineyards and tech •  Middle income profile ($63,000 and rising

decently) •  Prices +10% YOY at $500k+ •  But modest gains ahead (2-4%) •  Only about 150 sales YOY •  Should be doing better? Jobs v HHs. •  Great potential active adult locale •  SMART train on track – but what impact? •  Vacation rentals and Airbnb heightening

housing shortage?

Sonoma County

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition: Sonoma County.

0

1,000

2,000

3,000

4,000

5,000

6,000

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

$3,500,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

Sonoma County - SFH Sales Volume and Units Sold

Sales Volume Units Sold SFH

Sonoma Valley

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition: B1300.

0

100

200

300

400

500

600

$0

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

Sonoma Valley - SFH Sales Volume and Units Sold


Sonoma County - Key Drivers

Napa County

Napa County •  Luxury vacation homes to north •  More middle class to south •  $75k median income going up •  Prices up 8% YOY, but appreciation will

slow •  Investor activity lower but stable at ¼ of

market •  Slow growth and limited supply •  But some recent new home activity •  4th highest concentration of $1 million-plus

homes in the nation

Napa County

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition: Napa County.

0

200

400

600

800

1000

1200

1400

1600

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

Napa County - SFH Sales Volume and Units Sold


Napa County - Key Drivers

Lake Tahoe/Truckee

Lake Tahoe/Truckee •  Resort 2nd home getaway for the Bay •  Older homes and rare new development •  Population growing while supply is not •  Watch Bay – still great, but likely to slow •  Tahoe SFR pricing $575-675k, condos

$350-450k •  Inventory healthy – 7 mos. SFR, 10 mos.

condos •  If El Nino brings snow maybe a little boomlet? •  Big new developments possible in Martis

Valley and Canyon Springs

Lake Tahoe/Truckee

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition areas: North Shore, West Shore, Alpine/Squaw Valley, Northstar, Truckee, Tahoe Donner, Lahontan, and Out of Area (Tahoe Sierra MLS).

0

200

400

600

800

1000

1200

1400

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

Lake Tahoe/Truckee - SFH Sales Volume and Units Sold


Lake Tahoe/Truckee

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition areas: North Shore, West Shore, Alpine/Squaw Valley, Northstar, Truckee, Tahoe Donner, Lahontan, and Out of Area (Tahoe Sierra MLS).

0

50

100

150

200

250

300

350

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

Lake Tahoe/Truckee - Condos Sales Volume and Units Sold


Lake Tahoe/Truckee - Key Drivers

Contra Costa County

Contra Costa County

•  Mostly commuters •  Suburban detached at $600k median (up

17% YOY) •  Jobs are here but not like Silicon Valley and

City •  Strong incomes - $86k median and still

growing •  But finally seeing price resistance •  The word is “normalizing” •  New Highway 4 BART extension •  Open up Oakley? •  Old money likes condos in Lamorinda

Contra Costa County

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition cities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

$0 $500,000,000

$1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 $3,000,000,000 $3,500,000,000 $4,000,000,000 $4,500,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

Contra Costa County - SFH Sales Volume and Units Sold


Contra Costa County - Key Drivers

Alameda County

Alameda County •  More affordable, more commuters •  Jobs solid, but again not Silicon Valley •  Incomes great – median $79k and rising

+/- 4% annually ahead •  Resale prices way up – 27% in 2014 and

10% YOY •  Did I mention “normalizing”? •  Oakland the new hotspot •  Also the southwest – Fremont, etc. •  Dublin more supply too – Wallis Ranch,

Dublin Crossing

Alameda County

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition cities and ZIPs: Alameda, Albany, Berkeley, El Cerrito, Kensington, Piedmont, and Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

Alameda County - SFH Sales Volume and Units Sold


Alameda County - Key Drivers

Marin County

Marin County

•  Rich if not famous –$105k and will pass $120k in 2018

•  You work in the city or you own something

•  Anti-growth = no new homes •  And equals median resale price at $963k •  Resale price + 30% 2012-2014, but flat

YOY and will also slow here •  Many buyers – especially younger –

priced out •  Will tech be moving north?

Marin County

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition cities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.

0

500

1,000

1,500

2,000

2,500

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

$3,500,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

Marin County - SFH Sales Volume and Units Sold


Marin County - Key Drivers

The Peninsula

San Mateo County •  “Surban” paradise •  Split commuters between 2 massive jobs

nodes •  Affluent and working - $98k income, 3.1%

unemployment •  Jobs will slow •  Pricey ($1.1M+ new median) but prices will

slow too •  So an exporter of demand •  $1M homes in DC, Bay Meadows filling out

– what’s next?

San Mateo County

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition: San Mateo County.

0

1,000

2,000

3,000

4,000

5,000

6,000

$0

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

$7,000,000,000

$8,000,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

San Mateo County - SFH Sales Volume and Units Sold


San Mateo County - Key Drivers

Santa Clara County (Silicon Valley) •  Still booming tech and rising prices •  Added over 55,000 jobs YOY, but… •  Income $101k and to $123k by 2018 •  Resale median up 17%, new median over $800k •  So $750k townhomes in Milpitas or $800k small

lot homes in Gilroy •  Or you go live in Dublin or Tracy or Manteca •  But price growth will slow •  Even Silicon Valley not bulletproof •  Normalizing?

Santa Clara County

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition: Santa Clara County.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

$0

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

$14,000,000,000

$16,000,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

Santa Clara County - SFH Sales Volume and Units Sold


Santa Clara County - Key Drivers

San Francisco

San Francisco County •  Plenty of foreign buyers, but most not •  Surging tech & software •  Millennials want to be here even if can’t afford it •  Median income of $83k and rising 5+% / year •  Avg rent $3,000+, nearly double avg in 2004 •  So you live somewhere else •  Supply finally here with 14-15 condo buildings &

more apts •  And more on the way: 1,300 condos & 4,000

apartments being built, thousands more in pipeline •  Normalizing

San Francisco

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition: San Francisco County.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

$3,500,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

San Francisco - Condos Sales Volume and Units Sold


181 Fremont Fulton 555

The Harrison 450 Hayes

San Francisco Pipeline

San Francisco

Source: Terradatum/BrokerMetrics®, November 12, 2015. Definition: San Francisco County.

0

500

1,000

1,500

2,000

2,500

3,000

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

$3,500,000,000

$4,000,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 Est

San Francisco County - SFH Sales Volume and Units Sold


San Francisco County - Key Drivers

Bay Area Similarities

Bay Area Pipeline San Francisco, Oakland, Emeryville, Santa Clara County, San Mateo County

84

Pacific Union 350 Buy Side Deals – All Cash February – June 2015

Primary Residences

66%

Long-Term Investments

31%

Flipping Homes

3%

Buyer Intent International

6% Tech 12%

White Collar 42%

Retirees, Athletes, etc.

40%

Buyer Profile

3% 10%

27% 33%

0% 5% 10% 15% 20% 25% 30% 35%

Other

San Francisco

% of Cash Buyers from Tech Industry

3% 7%

24%

0% 5% 10% 15% 20% 25% 30%

Flippers Investors to Rent Investors to Hold

Long-Term Investor Profile

Existing Homes Sales Projections 32,500

1,350

16,300

18,800

6,400

33,800

1,500

16,900

20,900

6,700

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

East Bay MSA* Napa MSA San Francisco MSA** San Jose MSA Santa Rosa MSA

2015P 2016P 2017P 2018P

How We Did Last Year? JBREC Burns Home Value Index

BHVI Projections 2015 BHVI Projection Last Year 2015 BHVI Projection Near Year End Difference % Difference

East Bay MSA 156.88 169.60 12.72 8.1% Napa MSA 146.13 153.60 7.47 5.1% San Francisco MSA 180.28 207.60 27.32 15.2% San Jose MSA 171.27 189.90 18.63 10.9% Santa Rosa MSA 144.68 152.40 7.72 5.3%

80 100 120 140 160 180 200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015P 2016P 2017P

Burns Home Value Index

East Bay MSA Napa MSA San Francisco MSA San Jose MSA Santa Rosa MSA

JBREC Burns Home Value Index

10.9%

8.4%

15.2%

13.0%

9.3%

1.7% 1.8%

0.0% 0.0%

2.0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

East Bay MSA* Napa MSA San Francisco MSA** San Jose MSA Santa Rosa MSA

2015P 2016P 2017P 2018P

Conclusions

Normalization

November 19th IPO Valuation: IPO @ $4.2B December ’14 @ $6B

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