CHRISTOPHER KARLIN, CFAAQUITANIA CAPITAL MANAGEMENT, LLC

Marcus & Millichap (MMI)

June 28, 2016Wide Moat Investing Summit 2016

DisclaimerThe discussion of portfolio investments represents the views of the investmentmanager. These views are current as of the date of this commentary but are subject tochange without notice. As of the date of this publication, Aquitania CapitalManagement has a position in the securities mentioned herein and may purchase orsell shares at any time without notice. All information provided is for informationpurposes only and should not be considered as investment advice or arecommendation to purchase or sell any specific security. Security examples featuredare samples for presentation purposes and are intended to illustrate our investmentphilosophy and its application. While the information presented herein is believed tobe reliable, no representations or warranty is made concerning the accuracy of anydata presented. Portfolio composition will change due to ongoing management ofthe portfolios. References to individual securities are for informational purposes onlyand should not be construed as recommendations by Aquitania Capital Managementor its members.

Aquitania Capital Management• Long-Biased, global investor across the capital structure• Two Strategies: Value & Event-Driven• Asymmetric reward-to-risk situations with high conviction in a variant thesis

through intensive independent research• Securities that are either being accidentally overlooked or actively avoided by

most investors

Moats & Value Investing• Any business under investment consideration can be evaluated on three factors• Each factor provides a margin of safety to protect invested capital• Investors typically get to select businesses with any two factors of their liking

Business Quality

Management Quality Discount to IV

• All three factors are somewhat challenging to measure on an ex-ante basis• Academic research tends to support valuation over quality for excess returns• Absent a business moat, the perceived discount to IV can quickly erode

Ideal Investment Opportunity•Business Quality

• Low capital intensity – high variable costs• High cash generating – not dependent on capital markets• Stability and visibility – recurring revenues• Ability to deploy additional capital at high ROIC

•Management Quality• Management competent and aligned with shareholders

•Discount to Intrinsic Value• Massive discount to current IV which is growing

•Unicorns only appear on special occasions

You Can’t Always Get What You Want•Successful value investors win by not losing

• Price conscious portfolios will rarely have enough growth to outperform in strong markets

• The key to long-term outperformance is to avoid the mistakes that destroy track records

•Value investors have to overcome the cognitive challenge of being contrarian• Focus on the downside• Risk is the permanent loss of capital that forces you out of the game• Viewed in this context moats are not optional• If you can only pick two of the three factors, prioritize price and business

Mind the Gap•In evaluating a business, ask ‘What could kill this business?’

• The opposite of the ideal business quality factors• The opposite of the ideal management quality factors (lesser)

•In evaluating an investment, ask “What could result in a permanent impairment of capital?”• The opposite of any of the ideal investment factors

•A moat will allow a business to not only maintain its viability in a downturn but will afford its management the opportunity to capitalize on any turmoil to consolidate its position and emerge stronger into the next cycle

•Identifying the best businesses isn’t enough - look for the few that are markedly better than the market perceives• Particularly, look for businesses that are significantly less risky than consensus view

MARCUS & MILLICHAPA WIDE MOAT BUSINESS PRICED AT A SUBSTANTIAL

DISCOUNT TO A GROWING INTRINSIC VALUE

Marcus & Millichap (MMI) $24.21•National commercial real estate firm offering brokerage, financing and research services

•Market leader in private client market segment ($1MM-$10MM)•$1b market capitalization•Moat driven by structural business factors

• Low capital intensity – high variable costs• Not reliant on external financing• Stability drivers:

• Focused on market segment characterized by a large number of relatively small value transactions• National footprint, deep customer relationships and leading market share

•When the downturn comes:• MMI will endure because of its low-risk business model• MMI should strengthen if management can consolidate market share

•Discount to intrinsic value driven by macroeconomic fears

Market Leader• 79 offices, 1,600+ investment sales & financing professionals• 8,700 transactions for $37.8b closed in 2015• Top US broker 10 years running

Diversified Market Leadership

Marcus & Millichap 1,296 Marcus & Millichap 1,959 CB Richard Ellis 450 CB Richard Ellis 222 CB Richard Ellis 601 Cushman & Wakefield 273 Berkadia 208 Cushman & Wakefield 277 Marcus & Millichap 247

Apartment Retail Office

2015 Transactions ($1MM - $10MM)

Property Type Transactions Volume ($B) Avg. Deal Size ($MM)Multifamily 3,382 17.9$ 5.3$ Retail 3,351 10.8$ 3.2$ Office 567 2.4$ 4.2$ Hospitality 225 1.6$ 7.1$ Industrial 253 1.0$ 4.0$ Self-Storage 201 9.0$ 44.8$ Seniors Housing 83 0.9$ 10.8$ Land 266 0.6$ 2.3$ Manufactured Housing 101 0.4$ 4.0$ Mixed-Use/Other 286 1.3$ 4.5$ Total 8,715 45.9$ 5.3$

MMI 2015 Transactions by Property Type

Brokerage BusinessTTM (3/16)

Commercial RE Segment Transactions % TotalVolume ($MM) % Total

Avg Deal $(MM)

Revenues ($MM) % Total

Avg Fee %

Avg Fee ($000)

Below $1MM 1,163 18% 718$ 2% 0.6$ 30$ 5% 4.2% 26$ Private Client Market ($1MM - $10MM) 4,719 73% 15,162$ 51% 3.2$ 448$ 69% 3.0% 95$ Middle Market ($10MM - $20MM) 357 6% 4,824$ 16% 13.5$ 89$ 14% 1.8% 250$ Institutional Market ($20MM+) 218 3% 9,133$ 31% 41.9$ 85$ 13% 0.9% 388$

6,457 29,837 4.6$ 652 2.2% 101$

2015

Commercial RE Segment Transactions % TotalVolume ($MM) % Total

Avg Deal $(MM)

Revenues ($MM) % Total

Avg Fee %

Avg Fee ($000)

Below $1MM 1,174 19% 718$ 3% 0.6$ 30$ 5% 4.2% 26$ Private Client Market ($1MM - $10MM) 4,611 73% 14,898$ 52% 3.2$ 439$ 69% 2.9% 95$ Middle Market ($10MM - $20MM) 352 6% 4,776$ 17% 13.6$ 90$ 14% 1.9% 255$ Institutional Market ($20MM+) 195 3% 8,052$ 28% 41.3$ 74$ 12% 0.9% 377$

6,332 28,444 4.5$ 633 2.2% 100$ Y/Y Change 13% 12% -1% 21% 7% 6%

2014

Commercial RE Segment Transactions % TotalVolume ($MM) % Total

Avg Deal $(MM)

Revenues ($MM) % Total

Avg Fee %

Avg Fee ($000)

Below $1MM 1,300 23% 792$ 3% 0.6$ 34$ 6% 4.3% 26$ Private Client Market ($1MM - $10MM) 3,825 68% 11,748$ 46% 3.1$ 351$ 67% 3.0% 92$ Middle Market ($10MM - $20MM) 306 5% 4,184$ 17% 13.7$ 78$ 15% 1.9% 255$ Institutional Market ($20MM+) 157 3% 8,627$ 34% 54.9$ 62$ 12% 0.7% 394$

5,588 25,351 4.5$ 525 2.1% 94$

Solid Operating Metrics2010 2011 2012 2013 2014 2015 TTM (3/16)

Revenues 218$ 275$ 386$ 436$ 572$ 689$ 707$ Y/Y Growth 26% 40% 13% 31% 20%Operating Income 14$ 23$ 49$ 53$ 85$ 115$ 116$ OI % 6.4% 8.5% 12.7% 12.1% 14.8% 16.6% 16.4%Net Income 8$ 13$ 28$ 32$ 66$ 66$ 68$

Real Estate Brokerage Commissions 2010 2011 2012 2013 2014 2015 TTM (3/16)Avg # of Sales Professionals 1,084 968 982 1,125 1,297 1,428 1,481 Y/Y Growth -11% 1% 15% 15% 10%Avg # of Transactions per Sales Professional 2.7 3.3 4.3 4.1 4.3 4.4 4.4 Y/Y Growth 22% 32% -4% 5% 3%Avg Commission per Transaction 68,355$ 77,686$ 83,075$ 84,852$ 93,943$ 99,901$ 104,746$ Y/Y Growth 14% 7% 2% 11% 6%Avg Commission Rate 2.4% 2.2% 2.2% 2.3% 2.1% 2.2% 2.1%Avg Transaction Size ($000) 2,907$ 3,551$ 3,761$ 3,736$ 4,537$ 4,492$ 5,048$ Y/Y Growth 22% 6% -1% 21% -1%Total # of Transactions 2,902 3,158 4,230 4,634 5,588 6,332 6,457 Y/Y Growth 9% 34% 10% 21% 13%Total Sales Volume ($MM) 8,437$ 11,215$ 15,908$ 17,313$ 25,351$ 28,444$ 29,836$ Y/Y Growth 33% 42% 9% 46% 12%

Financing Fees 2010 2011 2012 2013 2014 2015 TTM (3/16)Avg # of Financing Professionals 46 48 46 69 79 85 99 Y/Y Growth 4% -4% 50% 14% 8%Avg # of Transactions per Financing Professional 9.8 15.5 19.8 16.9 16.9 18.8 16.8 Y/Y Growth 58% 28% -15% 0% 12%Avg Fee per Transaction 24,206$ 22,267$ 23,170$ 22,250$ 25,436$ 26,582$ 24,365$ Y/Y Growth -8% 4% -4% 14% 5%Avg Fee Rate 1.1% 0.9% 1.0% 1.0% 0.9% 0.9% 0.8%Avg Transaction Size 2,190$ 2,394$ 2,418$ 2,297$ 2,837$ 3,053$ 3,025$ Y/Y Growth 9% 1% -5% 24% 8%Total # of Transactions 451 742 912 1,165 1,332 1,601 1,660 Y/Y Growth 65% 23% 28% 14% 20%Total Dollar Volume ($MM) 988$ 1,777$ 2,205$ 2,676$ 3,779$ 4,888$ 5,044$ Y/Y Growth 80% 24% 21% 41% 29%

Growth Strategy•Increase market share in private client market segment•Grow specialty segment & Larger Transaction market share•Expand financing business

•Share gains will likely accelerate in a weakening market

Proven Management•Hessam Nadji, CEO

• Joined MMI in 1996, appointed CEO in 2015• Previously served as Chief Strategy Officer

• Marty Louie, CFO• Joined MMI in 2006

• George Marcus, Co-Chairman & Founder• Owns 55% of equity• Age 75

• Business founded in 1971• 45 year history of operating and growing across several market cycles• Mr. Marcus did very well without selling his business at every market top and

repurchasing it at every market bottom

The Real Estate Cycle is Over!

Premature Devaluation

MMI Operating Metrics & Valuation6/30/2015 6/27/2016 % Change

Market Cap 1,712$ 910$ -47%Enterprise Value 1,536$ 711$ -54%

TTM Revenues 604$ 707$ 17%TTM EBITDA 99$ 119$ 20%TTM EBIT 96$ 116$ 20%TTM Net Income 56$ 68$ 21%

EV/Revs 2.5x 1.0x -60%EV/EBITDA 15.5x 6.0x -61%EV/EBIT 16.0x 6.1x -61%P/E 30.5x 13.4x -56%

Valuation & Consensus Outlook

Price (6/27/16) $24.21Shares o/s 37.6 Market Cap $910Restricted stock 2.4 Diluted shs o/s 40.0 FD Market Cap $968

Cash (77)$ Mkt Securites (132) Def. Taxes (33) Note Payable 11 Def. Comp 20 Net Debt (212)$

Enterprise Value $699FD Enterprise Value $757

Consensus 2015 TTM (3/16) 2016E 2017ERevenues 689$ 707$ 743$ 786$ Revenue Growth % 7.9% 11.2%EBIT 115$ 116$ 117$ 132$ EBIT % 16.6% 16.4% 15.7% 16.7%Net Income 66$ 68$ 69$ 77$ Earnings Growth % 3.5% 13.9%

EV/Revenues 1.1x 1.1x 1.0x 1.0xEV/EBIT 6.6x 6.5x 6.5x 5.8xP/E 14.6x 14.3x 14.1x 12.6x

Probable Outcomes

2016E 2017E 2016E 2017E 2016E 2017ERevenues 744$ 834$ Revenues 737$ 781$ Revenues 748$ 841$ Revenue Growth % 8.0% 12.0% Revenue Growth % 7.0% 5.0% Revenue Growth % 8.5% 13.0%EBIT 119$ 142$ EBIT 111$ 109$ EBIT 123$ 147$ EBIT % 16.0% 17.0% EBIT % 15.0% 14.0% EBIT % 16.5% 17.5%Net Income 71$ 85$ Net Income 66$ 66$ Net Income 74$ 88$ Earnings Growth % 7.6% 19.0% Earnings Growth % -0.1% -1.1% Earnings Growth % 11.5% 19.3%

EV/Revenues 1.4x 1.5x EV/Revenues 0.9x 0.8x EV/Revenues 1.7x 1.8xEV/EBIT 9.0x 9.0x EV/EBIT 6.0x 6.0x EV/EBIT 10.0x 10.0xP/E 18.0x 18.5x P/E 13.2x 14.4x P/E 17.3x 17.8x

Enterprise Value 1,072$ 1,275$ Enterprise Value 664$ 656$ Enterprise Value 1,234$ 1,472$ Market Cap 1,283$ 1,572$ Market Cap 875$ 943$ Market Cap 1,445$ 1,773$ Implied Share Price 32.08$ 39.30$ Implied Share Price 21.88$ 23.57$ Implied Share Price 36.13$ 44.33$ Upside/(Downside) 33% 62% Upside/(Downside) -10% -3% Upside/(Downside) 49% 83%

Base Downside Upside

Summary• Real estate is a cyclical, but enduring market• The current real estate cycle has been extended by low rates and job

growth• MMI’s business will shrink as the cycle turns• MMI’s durable business model will survive the market cycle• MMI is priced as if the cycle has already turned, providing downside

protection to buyers

What would change my position?•Real estate fundamentals

• Evidence of loose lending standards• Evidence of credit freeze • Evidence of slowing absorption creating excess supply

•Management actions• Evidence of poor or self-serving capital allocation

CONTACT

Aquitania Capital Management, LLCinfo@aquitaniacapital.comwww.aquitaniacapital.com