ny - tase · level valuation provided valuation services (the “services”) to all year holdings...

244 5th Avenue, Suite E82, New York, NY 10001 | www.levelvaluation.com

Appraisal Report

Appraisal of Evergreen Gardens Under‐Development Mixed‐Use Property

Located at 123 Melrose Street, Brooklyn, NY

As of June 30, 2017

PREPARED FOR:

Joel I. Greenfeld All Year Holdings Limited 199 Lee Avenue Brooklyn, NY 11211

SUBJECT PROPERTY – CURRENT PHOTO

SUBJECT PROPERTY – RENDERING OF A COMPLETED DEVELOPMENT

August 30, 2017 Joel I. Greenfeld All Year Holdings Limited 199 Lee Avenue Brooklyn, NY 11211

Dear Mr. Greenfeld,

Level Valuation provided valuation services (the “Services”) to All Year Holdings Limited (“Client”). Pursuant to our engagement agreement dated June 23, 2017, Level Valuation estimated the fair value of Evergreen Gardens which is an under‐development mixed‐use property located at 123 Melrose Street in Brooklyn, Kings County, New York (the “Property”). The Property site (the “Site”) is comprised of 155,490 square feet and is bounded by Melrose Street to the south, Noll Street to the north, Stanwix Street to the west and Evergreen Avenue to the east, within the Bushwick neighborhood of Brooklyn, NY. The development plan is for a mixed‐use project with residential and commercial uses within an 8‐story and part 9‐story buildings on top of cellar and sub‐cellar levels containing parking spaces to support both uses. The plan includes a public park linking the two buildings and spanning between Stanwix Street and Evergreen Avenue. Residential unit mix is expected to include studio, one‐bedroom and two‐bedroom units. As of June 30, 2017 (the “Effective Date”), development was underway and was approximately 34% completed.

This appraisal report documents the results of our analysis. The date as of which our analysis shall apply is June 30, 2017, under market conditions and information available as of this time frame. The date of the report is August 30, 2017.

This is an appraisal report prepared according to reporting guidelines as contained in the Uniform Standards of Professional Appraisal Practice (USPAP), Standard Rule 2‐2(a). The report lists our assumptions and describes the limiting conditions under which our analysis has been made.

This appraisal is performed strictly for financial reporting purposes in accordance with IFRS 13, Fair Value Measurement and IAS 40, Investment Property. This appraisal has been conducted to conform to USPAP as promulgated by the Appraisal Foundation and the Code of Professional Ethics of the Appraisal Institute.

Level Valuation understands that its fair value estimate for the Property is to be used to aid All Year Holdings Limited in the preparation of its financial statements. Level Valuation gives full consent to the inclusion of the appraisal report in its entirety within the Client's financial statements for the six months ended on June 30, 2017, to be published in the Tel Aviv Stock Exchange in August 2017.

Level Valuation LLC

244 5th Avenue, Suite E82

New York, NY 10001

C 917‐885‐4419

O 646‐929‐3893

[email protected]

August 30, 2017 Mr. Greenfeld Page 2

Based upon our analysis, and subject to the assumptions and limiting conditions described in the accompanying report, it is our opinion that the fair value of the Property, as of June 30, 2017 was:

The above estimate is subject to the Certification, and Assumptions and Limiting Conditions presented later in this report.

In addition, we made the following specific assumption as part of this appraisal assignment:

The Property is currently under construction. We assumed that development costs (including remaining to be spent) provided by the Client are complete and accurate. We also assumed that the remaining improvements are built to a standard typical for mixed‐use development in a market where the Property is located with Client provided architectural plans / specifications and per the timeline specified by the Client.

If the specific assumption listed above proves false, our fair value estimate will likely change.

Evergreen Gardens ‐ Value Conclusion Detail

Valuation

Type

Value

Premise

Value

Perspective

Interest

Appraised

Effective

Date

Indicated

Value

Fair Value As Is Current Fee Simple 06/30/2017 $300,000,000


The following table presents certain valuation metrics relating to the current valuation, the prior valuation (as of December 31, 2016), and any material changes we noted since the prior valuation.

Evergreen Gardens ‐ Comparison to Prior Appraisal

Item Current PriorChange

(%, bpts)

Fair Value $300,000,000 $227,000,000 32%

$/SF of GBA $464 $351 32%

$/Residential Unit $329,308 $249,177 32%

Implied OCR 4.75% 4.75% 0

Cost Incurred to Date $78,482,715 $39,131,000 101%

Total Budget $227,960,632 $219,644,210 4%

Remaining Cost to Complete $179,373,501 $221,128,682 ‐19%

PGI $34,908,302 $32,951,654 6%

Current Occupancy 0% 0% 0

V&CL ‐$1,202,541 ‐$1,434,535 ‐16%

EGI $33,422,636 $30,396,019 10%

NOI $19,431,997 $17,516,177 11%

Fair Value of RE Tax Benefit $133,000,000 $132,000,000 1%


The accompanying prospective financial analyses are based on estimates and assumptions developed in connection with the appraisal. However, some assumptions inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our prospective financial analyses will vary from our estimates and the variations may be material.

This report, the final estimate of value and the prospective financial analyses are intended solely for your information and assistance for the function stated above, and should not be relied upon for any other purpose. Neither our report nor any of its contents nor any reference to the appraisers or our firm, may be included or quoted in any document, offering circular or registration statement, prospectus, sales brochure, other appraisal, loan or other agreement without Level Valuation’s prior written approval of the form and context in which it will appear.

Level Valuation appreciates this opportunity to be of service to you. If you have any questions or comments about this report, please do not hesitate to call us.

Respectfully submitted,

LEVEL VALUATION LLC

________________________ Lev Yagudayev, MAI 244 5th Avenue, Suite E82 New York, NY 1001 646.929.3893 [email protected] NY General Real Estate Appraiser License Number: 46000044217 Expiration: March 6, 2019

TABLE OF CONTENTS

TABLE OF CONTENTS

EXECUTIVE SUMMARY ....................................................................................................................... 8

INTRODUCTION ............................................................................................................................... 11

AREA ANALYSIS ................................................................................................................................ 15

NEIGHBORHOOD ANALYSIS ............................................................................................................. 32

MARKET ANALYSIS ........................................................................................................................... 35

PROPERTY ANALYSIS ........................................................................................................................ 50

SITE DESCRIPTION ............................................................................................................................ 50

PLANNED DEVELOPMENT ................................................................................................................ 56

REAL ESTATE TAX ANALYSIS ............................................................................................................ 66

HIGHEST AND BEST USE .................................................................................................................. 69

VALUATION METHODOLOGY .......................................................................................................... 71

COST APPROACH ............................................................................................................................. 72

SALES COMPARISON APPROACH ..................................................................................................... 82

INCOME APPROACH ........................................................................................................................ 88

RECONCILIATION ........................................................................................................................... 122

CERTIFICATION .............................................................................................................................. 125

ADDENDA ...................................................................................................................................... 127

Addendum A – Assumptions and Limiting Conditions Addendum B – Property Photographs Addendum C – Comparable Land Grid Addendum D1 – Comparable Land Sale Write‐ups Addendum D2 – Secondary Comparable Land Sale Write‐ups Addendum E – Comparable Improved Sales Grid Addendum F – Comparable Improved Sale Write‐ups Addendum G – Comparable Residential Rental Grid Addendum H – Comparable Residential Rental Write‐ups Addendum I – Comparable Retail Rental Grid Addendum J – Comparable Retail Rental Write‐ups Addendum K ‐ Qualifications / License

EXECUTIVE SUMMARY

8

EXECUTIVE SUMMARY

Evergreen Gardens ‐ Executive Summary

Subject Physical

PROPERTY IDENTIFICATION:

Property Name Evergreen Gardens

Address 123 Melrose Street

City, State, Zip Code Brooklyn, New York 11206

Neighborhood Bushwick

Block 3152

Lot 1, 48, 100

Property Type Land

Property Sub Type Under Development Mixed‐Use Multi‐Family

SITE DATA:

Dimensions (W x L)447 (Melrose St), 490 (Stanwix St), 436 (Evergreen St),

350 (Noll St)

Site Area (SF) 155,490

Land‐to‐Building Ratio 0.24

Parcel Type Full‐Block

Shape Irregular

Number of Lots 3

PROPOSED IMPROVEMENT DATA:

Number of Buildings 2

Number of Market Units 735

Number of Regulated Units 176

Total Number of Residential Units 911

Residential Occupancy 0.0%

Number of Commercial Units Multiple

Commercial Occupancy 0.0%

Number of Stories 8 & 9

Basement Type Finished

Type Elevator

Gross Building Area (SF) (ZFA) [1] 646,022

Rentable Area (SF) [2] 639,620

Year Built Under Construction (Expected Completion: Phase 1 ‐

1Q 2018, Phase 2 ‐ 3Q 2018)

Number of Parking Spaces 417

Open Violations / Complaints with NYC BD [3] Yes

ZONING SUMMARY:

Zoning Code R6A and R7A with C2‐4 Commercial Overlay

Zoning Description General Residence District

Permitted Uses Residential and Mixed‐Use

Allowable Floor Area Ratio 4.09

Subject's Actual FAR 4.15

Potential Existence of Air Rights No

Parking Requirements Yes

Conforming to Zoning Conforming (under construction)

EXECUTIVE SUMMARY

9

Evergreen Gardens ‐ Executive Summary ‐ Continued

Client and Appraisal Info

CLIENT All Year Holdings Limited

PROPERTY OWNER Evergreen Gardens I LLC & Evergreen Gardens II LLC

APPRAISER Lev Yagudayev

PURPOSE AND INTENT OF APPRAISAL:

Purpose Estimate Fair Value

Intended Use Financial Reporting

Intended User Client

REAL PROPERTY INTEREST APPRAISED Fee Simple

RELEVANT DATES:

Analysis Date 8/30/2017

Effective Date of Fair Value 6/30/2017

Date of Field Visit 7/3/2017

HIGHEST AND BEST USE:

Highest and Best Use as Improved Mixed‐Use Multi‐Family

Highest and Best Use as Vacant Mixed‐Use Multi‐Family

EXPOSURE / MARKETING TIME:

Exposure Time 6 to 12 months

Marketing Time 6 to 12 months

SALES HISTORY:

Most Recent Transfer 4/5/2016

Purchase Price $140,700,000

CapEx Incurred Since Purchase $78,482,715

Expected Future CapEx (including profit) $179,373,501

VALUATION APPROACHES USED:

Use Cost Approach? Yes

Use Sale Approach? Yes

Use Income Approach? Yes

Notes :

[1] Gross Bui lding Area i s above grade area.

[2] Rentable Area includes fini shed basement and mezzanine space (i f appl i cable).

[3] The Property has violations/compla ints from the NYC Bui lding Department. While this i s typica l for bui ldings in

New York City, we assumed that a l l violations/complaints from the NYC Bui lding Department wil l be cleared and

wil l not impact the current development of the Property and i ts operations in the future.

EXECUTIVE SUMMARY

10

Evergreen Gardens ‐ Value Indications

AnalysisValue

Indication$/SF of GBA

$/Residential

Unit

Fair Value of RE Tax Benefit $133,000,000 $206 $145,993

Cost $296,000,000 $458 $324,918

Sales Comparison $298,000,000 $461 $327,113

Income Capitalization $303,000,000 $469 $332,602

Δ Sales/Income Approach 2%

Final Value Estimate $300,000,000 $464 $329,308

Notes :

[1] Fina l Value Estimate includes va lue of a rea l estate tax benefi t (i f appl icable).

INTRODUCTION

11

INTRODUCTION

PROPERTY IDENTIFICATION

Evergreen Gardens which is an under‐development mixed‐use property located at 123 Melrose Street in Brooklyn, Kings County, New York (the “Property”). The Property site (the “Site”) is comprised of 155,490 square feet and is bounded by Melrose Street to the south, Noll Street to the north, Stanwix Street to the west and Evergreen Avenue to the east, within the Bushwick neighborhood of Brooklyn, NY. The development plan is for a mixed‐use project with residential and commercial uses within an 8‐story and part 9‐story buildings on top of cellar and sub‐cellar levels containing parking spaces to support both uses. The plan includes a public park linking the two buildings and spanning between Stanwix Street and Evergreen Avenue. Residential unit mix is expected to include studio, one‐bedroom and two‐bedroom units. As of June 30, 2017 (the “Effective Date”), development was underway and was approximately 34% completed.

The Site is currently identified on Kings County tax map as Block 3152, Lots 1, 48 and 100.

PROPERTY OWNERSHIP

The Property is owned by Evergreen Gardens I LLC and Evergreen Gardens II LLC, who acquired the Property in three phases, as indicated in the following table:

We are not aware of any other transactions involving the Property within the past three years and the Property is currently not listed for sale.

Evergreen Gardens ‐ Summary of Recent Transactions

Block Lot Buyer SellerContract

Date

Closing

Date

Acquisition

Price

3152 48 Evergreen Gardens I LLC See notes 1 & 3 January 20, 2015 October 13, 2015 $68,500,000

3152 1 Evergreen Gardens II LLC See notes 1 & 3 January 20, 2015 April 5, 2016 $72,200,000

3152 100 Evergreen Gardens II LLC See note 2 June 22, 2016 July 26, 2016 $0

Total Purchase Price $140,700,000

Notes:

[1] Seller included the following entities: JTB Stanev I LLC, JTB Stanev II LLC, JTB 930 V LLC, and JTB 930 VI LLC.

[2] Seller included the following entities: Flushing Lots W LLC, JTB Flushing Lots I LLC, and JTB Flushing Lots II LLC,

[3] The actual companies behind the transactions are All Year Holdings (the Client) as a buyer and Princton Holdings and Read Properties as sellers.

INTRODUCTION

12

SCOPE OF WORK

The objective of this appraisal is to estimate the fair value of the Property as of the Effective Date. In preparing this appraisal, we performed the following:

Visited the Property and the comparable properties;

Reviewed documentation provided by the Client, including copies of the sale‐purchase agreements, zoning studies, architectural plans, proposed construction budget, costs incurred to‐date, etc.;

Researched regional and local social and economic data;

Researched regional and local real estate market data;

Reviewed Property related data, including site dimensions and size, zoning, real estate taxes, easements, city utilities, etc;

Performed a highest and best use analysis of the Site;

Determined the applicable approaches to estimate the fair value of Property, and performed associated analysis;

Determined reasonable exposure time associated with the concluded fair value.

As part of this analysis, the Client management (“Management”) provided Level Valuation with the architectural plans, development costs (both total and remaining to be spent), financial budget, as well as other relevant information necessary to complete the analysis. We relied on information provided by Management relating to the Property, and we did not verify the accuracy of such information. We have made a best effort to identify and list herein all of the information provided by the Client which was relied upon by Level Valuation. There might have been information provided by the Client which was relied upon by Level Valuation which is not listed herein. In general, we relied on all information provided by the Client and did not in any way independently verify that information. We made the following specific assumption as part of this appraisal assignment:



INTRODUCTION

13

DEFINITION OF VALUE

For financial reporting purposes, the type of value is fair value. Fair value is defined by IFRS 13, Fair Value Measurement, as the “price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”.

INTEREST APPRAISED

The real property interest appraised is considered to be the fee simple Interest in the Property. According to the Sixth Edition of the Dictionary of Real Estate Appraisal, fee simple interest is defined as the “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.”

PURPOSE AND INTENDED USE OF THE REPORT

As stated in the engagement agreement dated June 23, 2017 between Level Valuation LLC and All Year Holdings Limited (the “Client”), the Services and Level Valuation’s work product are solely for the Client’s internal use to assist it in meeting its financial reporting requirements with regards to the Property.

Level Valuation understands that its fair value estimate for the Property is to be used to aid All Year Holdings Limited in the preparation of its financial statements. Level Valuation gives full consent to the inclusion of the appraisal report in its entirety within the Client's financial statements for the six months ended on June 30, 2017, to be published in the Tel Aviv Stock Exchange in August 2017.

INTENDED USER

The Client is the sole intended user of Level Valuation’s work product.

EXPOSURE PERIOD

The Dictionary of Real Estate Appraisal, Sixth Edition, defines exposure time as “the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market.”

Marketing times look forward to how long it will take to sell a property while exposure time looks backward to how long the property was on the market before it sold. An indication of an exposure time can be seen from reviewing marketing times.

To determine an exposure time for the Property, marketing times for similar properties were reviewed. As shown in the table below, we considered the months on market for the comparable sales used in the Improved Sales Approach.

INTRODUCTION

14

We also relied on discussions with local brokers.

Based on the aforementioned research and analysis, and considering the size of the Property, we have estimated an exposure time of approximately 6 to 12 months.

EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS

We did not make any extraordinary assumptions or assumed any hypothetical conditions as part of this appraisal assignment. Please refer to the list of specific assumptions made as part of this appraisal assignment, as listed earlier in this report.

Evergreen Gardens ‐ Comparable Sale Marketing Times

Item Property NameApproximate

Listing DateContract Date

Months on

Market

Sale # 1 97 Grand Ave & 96 Steuben St Aug‐16 Mar‐17 7

Sale # 2 The Addison Apr‐16 Dec‐16 8

Sale # 3 The Berkley Jun‐16 Sep‐16 3

Sale # 4 385 Union Avenue Feb‐16 Jul‐16 5

Sale # 5 Atelier Williamsburg Jun‐15 Mar‐16 11

Sale # 6 250N10 Jan‐15 Apr‐15 3

Sale # 7 Triangle Court Feb‐16 N/A 17

AREA ANALYSIS

15

AREA ANALYSIS

The Property is located in Brooklyn, Kings County, New York in the New York‐Jersey City‐White Plains, NY‐NJ Metropolitan Statistical Area (MSA). The Property’s location within the MSA is displayed in the map below.

NEW YORK CITY

New York City (the “City” or “NYC”), the most populous city in the US, is located at the southern tip of the State of New York. The City is the center of the New York metropolitan area, which is one of the most populous urban clusters in the world. Being a global center of commerce, finance, media, art, fashion, research, technology, education, and entertainment, the City is considered as one of the world’s most powerful metropolitans.

Dutch settlers first came to the City in 1624 and founded New Amsterdam in Lower Manhattan. The British seized the City in 1664 and renamed it New York. Over the next century, diverse immigration from Europe and Africa grew the City’s population. The City served as capital of the United States between 1785 and 1790, and remained the largest city in the country ever since.

AREA ANALYSIS

16

NYC consists of five boroughs, each of which is a separate county of New York State. The five boroughs – Brooklyn, Queens, Manhattan, Bronx, and Staten Island – all previously independent cities that were consolidated into a single city in 1898 increasing its population from 2 million to almost 3.5 million people overnight. The opening of the subway in 1904 helped bind the new city together. Throughout the first half of the 20th century, the City became a world center for industry, commerce, and communication. Returning World War II veterans created a post‐war economic boom and New York emerged from the war as the leading city of the world, with Wall Street leading America's place as the world's dominant economic power. The United Nations Headquarters was completed in 1952, solidifying New York's global geopolitical influence.

In the 1970s, job losses due to industrial restructuring caused NYC to suffer from economic problems and rising crime rates. While a resurgence in the financial industry greatly improved the City's economic health in the 1980s, the City's crime rate continued to increase through that decade and into the beginning of the 1990s. By the mid‐1990s, crime rates started to drop dramatically due to revised police strategies, improving economic opportunities, gentrification, and the influx of new residents, both Americans and new immigrants from Asia and Latin America. Important new sectors, such as the City’s high tech industry (referred to as “Silicon Alley”), emerged in the City's economy.

Population

New York's population reached 8 million people in 2000, and was reported at over 8.5 million people in 2015. With famous attractions like Times Square, Central Park, the Empire State Building and the Statue of Liberty ‐ to name a few – NYC drew 58.3 million visitors in 2015 and reportedly over 60 million visitors in 2016. The table below presents historical population statistics for NYC.

Brooklyn had the highest growth in population with a total increase of 5.3% over the 2010 Census. The NYC boroughs are all projected to experience moderate growth, ranging between 1.2% and 5.3% over 2010 Census.

Components of Population Change. According to the NYC Department of City Planning,

New York City Population

Geographic Area 2010 Census 2015 CensusChange

(#)

Change

(%)

Bronx 1,385,107 1,455,444 70,337 5.1%

Brooklyn 2,504,710 2,636,735 132,025 5.3%

Manhattan 1,585,874 1,644,518 58,644 3.7%

Queens 2,230,541 2,339,150 108,609 4.9%

Staten Island 468,730 474,558 5,828 1.2%

New York City Total 8,174,962 8,550,405 375,443 4.6%

Source: U.S. Census Bureau

AREA ANALYSIS

17

demographers divide population change into components. Natural increase represents the difference between births and deaths. Net migration represents the balance between persons entering and leaving an area. Together, these components describe how populations change over time. The U.S. Census Bureau constructs population estimates for all counties in the United States by separately estimating the components of change. Births and deaths are compiled using data from the national vital statistics system. Net migration is calculated by estimating the rate of net migration for persons coming in from and leaving for other counties in the 50 states (net domestic migration) and the balance of people who immigrate from and emigrate to other nations and Puerto Rico (net international migration). The net domestic migration rate is derived using income tax returns from the Internal Revenue Service and Medicare enrollment data from the Social Security Administration.

It is important to keep in mind that NYC has a very dynamic population, with several hundred thousand people coming and going each year. This “churn” has long characterized the City, and represents a fluidity that is difficult to characterize using the net migration measures presented by the NYC Department of City Planning. This dynamism is a testament to the City being a magnet for those seeking opportunities, then moving on, only to be replaced by the next set of individuals aspiring for a better life. This very vibrant picture is what makes NYC’s population very different from most other places in the nation and, perhaps, the world and the reason why the rental market in NYC is so dynamic and generally successful.

The most recent estimates from the U.S. Census Bureau indicate the following for the 2010 to 2015 period:

Positive natural increase – the surplus of births over deaths added 341,300 persons to New York City’s population between April of 2010 and July of 2015;

Net migration was positive for the City overall, with a net migration gain of 49,600 persons for the period. While small by the standards of the City’s overall population, the picture of positive net migration represents a reversal of longstanding pattern of population losses through migration. The recent gain through migration was the result of a net inflow of 452,500 persons through international migration, which offset a net domestic migration loss of 402,900 persons. For the first time in over a half century, migration fueled population growth;

Every borough, except Staten Island, displayed positive net migration between April 2010 and July of 2015. The relevant figures are presented in the table below.

AREA ANALYSIS

18

Number of Households

Number of households statistics based on the 2010 and 2015 census data are summarized as follows:

As illustrated in the table above, NYC has a total of 3.1 million households with Brooklyn having the highest number households and Staten Island the lowest.

Components of Population Change: 2010 to 2015

Natural Increase Net Migration

Geographic Area

Total

Population

Change [1]

Births ‐ Deaths Total

Net

International

Migration

Net Domestic

Migration

Bronx 70,337 64,274 7,212 90,151 ‐82,939

Brooklyn 132,025 135,380 1,339 127,723 ‐126,384

Manhattan 58,644 47,000 15,520 85,362 ‐69,842

Queens 108,609 84,612 29,029 142,235 ‐113,206

Staten Island 5,828 10,073 ‐3,539 7,028 ‐10,567

New York City Total 375,443 341,339 49,561 452,499 ‐402,938

Source: The City of NY and Department of City Planning

Notes :

[1] The estimated components of population change wil l not equal the numerical population change because of

a smal l res idual after control l ing to the nationa l tota ls .

New York City Number of Households


(#)

Change

(%)

Bronx 484,902 480,323 ‐4,579 ‐0.9%

Brooklyn 931,786 925,371 ‐6,415 ‐0.7%

Manhattan 750,419 745,089 ‐5,330 ‐0.7%

Queens 780,644 780,069 ‐575 ‐0.1%

Staten Island 165,784 165,079 ‐705 ‐0.4%

New York City Total 3,113,535 3,095,931 ‐17,604 ‐0.6%


AREA ANALYSIS

19

Household Median Income

Household median income statistics based on the 2010 and 2015 census data are summarized as follows:

As illustrated in the table above, Staten Island has the highest household income of the NYC boroughs and Bronx has the lowest.

Housing Units

Housing units statistics based on census data are summarized as follows:

As illustrated in the table above, NYC has a total of 3.5 million housing units with Brooklyn having the highest number units and Staten Island the lowest.

New York City Household Median Income

Geographic Area 2010 CensusMost Recent

Census

Change

($)

Change

(%)

Bronx $34,299 $34,284 ‐$15 0.0%

Brooklyn $48,201 $46,958 ‐$1,243 ‐2.6%

Manhattan $72,871 $71,656 ‐$1,215 ‐1.7%

Queens $57,720 $57,210 ‐$510 ‐0.9%

Staten Island $73,197 $74,043 $846 1.2%


New York City Housing Units


(#)

Change

(%)

Bronx 511,896 523,690 11,794 2.3%

Brooklyn 1,000,293 1,025,752 25,459 2.5%

Manhattan 847,090 869,866 22,776 2.7%

Queens 835,127 849,505 14,378 1.7%

Staten Island 176,656 179,001 2,345 1.3%

New York City Total 3,371,062 3,447,814 76,752 2.3%


AREA ANALYSIS

20

Employment

An overview of the total civilian labor force in the New York‐Jersey City‐White Plains, NY‐NJ Metropolitan Statistical Area from 2006 through June 2017 is included in the following chart supplied by the Bureau of Labor Statistics. From June 2016 to June 2017, the trend shows an increase of 2.1%. When looking at the industries separately, over the past ten years Leisure and Hospitality sector exhibited the most significant positive growth. On the other hand, the Manufacturing sector had a significant decline.

The following table presents a more detailed picture of the non‐agricultural industry trends from 2006 to June 2017.

AREA ANALYSIS

21

Non‐Agricultural Industry Trends: New York‐Jersey City‐White Plains, NY‐NJ Metropolitan Division

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jun‐16 Jun‐17

Avg Annual

Growth:

2006 to 2016

Avg Annual

Growth:

2009 to 2016

Avg Annual Growth:

June‐2016 to

June‐2017

NON‐FARM EMPLOYMENT

Goods Producing 505.8 505.5 494.9 437.1 413.0 412.6 415.7 426.8 439.0 456.8 465.4 472.2 473.9 ‐0.8% 0.9% 0.4%

Service‐Providing 5,613.1 5,708.2 5,756.2 5,618.8 5,652.4 5,751.8 5,854.5 5,964.3 6,118.9 6,267.4 6,389.5 6,420.5 6,565.8 1.3% 1.9% 2.3%

Total Non‐Farm Employment 6,118.9 6,213.7 6,251.1 6,055.9 6,065.4 6,164.4 6,270.2 6,391.1 6,557.9 6,724.2 6,854.9 6,892.7 7,039.7 1.1% 1.8% 2.1%

Employment Growth N/A 1.5% 0.6% ‐3.1% 0.2% 1.6% 1.7% 1.9% 2.6% 2.5% 1.9% N/A 2.1% N/A N/A N/A

SELECT NON‐AGRICULTURAL INDUSTRIES

Mining, Logging, and Construction 232.8 243.6 244.0 214.3 199.8 201.0 205.4 217.6 230.1 246.3 254.9 259.7 263.5 0.9% 2.5% 1.5%

Manufacturing 273.0 261.9 251.0 222.8 213.1 211.7 210.3 209.3 208.9 210.5 210.5 212.5 210.4 ‐2.6% ‐0.8% ‐1.0%

Trade, Transportation, and Utilities 1,114.2 1,126.2 1,122.9 1,071.2 1,078.4 1,099.1 1,120.0 1,138.4 1,161.9 1,176.9 1,179.7 1,180.6 1,179.1 0.6% 1.4% ‐0.1%

Information 229.0 229.1 229.4 220.0 218.6 222.3 226.8 229.3 235.3 239.2 242.5 242.3 242.6 0.6% 1.4% 0.1%

Financial Activities 621.6 630.0 625.7 588.0 578.4 588.1 585.8 585.9 594.5 605.6 615.2 622.0 631.9 ‐0.1% 0.6% 1.6%

Professional and Business Services 921.4 949.7 960.3 902.0 911.1 947.5 979.4 1,008.4 1,039.1 1,080.0 1,113.1 1,119.4 1,158.1 1.9% 3.0% 3.5%

Education and Health Services 1,077.8 1,097.0 1,119.3 1,143.8 1,169.8 1,191.9 1,216.4 1,248.0 1,293.1 1,336.0 1,383.4 1,365.7 1,421.9 2.5% 2.8% 4.1%

Leisure and Hospitality 468.1 484.6 498.6 496.1 513.8 537.2 563.3 589.1 618.2 641.7 657.3 686.4 717.9 3.5% 4.1% 4.6%

Other Services 257.3 262.2 261.9 258.1 258.0 263.8 271.6 276.3 284.0 290.6 295.5 298.2 302.8 1.4% 2.0% 1.5%

Government 923.8 929.5 938.1 939.7 924.5 901.9 891.4 889.0 892.8 897.4 902.8 905.9 911.5 ‐0.2% ‐0.6% 0.6%

Total Select Non‐Agricultural Empl. 6,119.0 6,213.8 6,251.2 6,056.0 6,065.5 6,164.5 6,270.4 6,391.3 6,557.9 6,724.2 6,854.9 6,892.7 7,039.7 1.1% 1.8% 2.1%

Source: U.S. Department of Labor. Figures are in mil l ions .

AREA ANALYSIS

22

Employment Statistics

The following table presents the unemployment data from the U.S. Bureau of Labor Statistics for New York City from 2006 through June 2017.

As illustrated in the table above, NYC was severely impacted by the Great Recession; however, has since then recovered and the current unemployment rate is below pre‐recession levels.

New York City ‐ Employment Statistics

Year Labor Force EmploymentChange in

EmploymentUnemployment

Unemployment

Rate

2006 3,816,394 3,626,608 N/A 189,786 5.0%

2007 3,858,605 3,664,279 1.04% 194,326 5.0%

2008 3,926,197 3,705,457 1.12% 220,740 5.6%

2009 3,960,774 3,591,529 ‐3.07% 369,245 9.3%

2010 3,950,405 3,573,552 ‐0.50% 376,853 9.5%

2011 3,962,833 3,602,687 0.82% 360,146 9.1%

2012 4,022,460 3,646,479 1.22% 375,981 9.3%

2013 4,064,737 3,705,551 1.62% 359,186 8.8%

2014 4,102,965 3,804,556 2.67% 298,409 7.3%

2015 4,118,858 3,883,658 2.08% 235,200 5.7%

2016 4,138,533 3,924,088 1.04% 214,445 5.2%

June 2016 4,127,738 3,913,490 N/A 214,248 5.2%

June 2017 4,220,679 4,034,948 3.10% 185,731 4.4%

Notes:

[1] Source: New York State Department of Labor

[2] Annual numbers represent average over the year.

AREA ANALYSIS

23

Transportation

New York’s networks of expressways include four major interstates. North/South highways spanning the city include I‐87 and I‐95, each of these interstates enter and stop within the City limits. East/West highways include I‐78 and I‐80. I‐80’s eastern terminus is in Teaneck, New Jersey and connects I‐287, which is a beltway around the City.

The John F. Kennedy (“JFK”) Airport is located in the borough of Queens, and is the United States’ 5th busiest airport in terms of total passenger traffic and the busiest airport in terms of international passenger traffic. It is situated on 4,930 acres and contains more than 125 gates within six terminals. 2016 statistics show there were over 450,000 plane movements serving approximately 58.8 million passengers, and over 1.25 million tons of Air Cargo were moved through the JFK Airport.

The LaGuardia Airport is located in the borough of Queens, and is the United States’ 20th busiest airport. It is situated on 680 acres and can accommodate up to 76 aircraft gates at a time. 2016 statistics show there were 370,000 plane movements serving approximately 29.8 million passengers passing through LaGuardia Airport.

The Newark Liberty International Airport is located in Newark, New Jersey and is the United States’ 15th busiest airport in terms of total passenger traffic and the 4th busiest airport in terms of international passenger traffic. It is situated on 425 acres and contains 59 gates within three terminals. 2016 statistics show there were over 435,000 plane movements serving approximately 40.3 million passengers, and over 700,000 tons of Air Cargo were moved through Newark Liberty International Airport.

The New York City area is served by the MTA subway and bus system, this provides a fixed‐fare subway and bus service throughout the New York City metropolitan area. New York is cited as having the most extensive public transportation system in the nation; the subway system is over 720 miles, and an annual estimated of 2.4 billion passengers using the system. Amtrak provides the long distance ground travel for New York with rails connecting New York to several large cities along the east coast from Canada to Florida.

AREA ANALYSIS

24

Tourism

According to NYC & Company, the City’s official marketing, tourism and partnership organization, a record 60.3 million visitors arrived in New York City in 2015, surpassing the previous record of 58.5 million visitors set in 2015. New York City’s number of visitors increased from 36.2 million visitors in 2000 to 47.1 million visitors in 2008 (a 30% increase), and after an approximately 3% decline to 45.6 million visitors in 2009 rebounded and consistently grown by a total of 28% through 2015 (or over 2 million per year). NYC & Company is forecasting 61.7 million in 2017 and projecting approximately 67 million visitors in 2021. According to NYC & Company, over 47 million of the 2016 visitations were domestic travelers and the remaining 12.7 million were international.

AREA ANALYSIS

25

BROOKLYN

Brooklyn is the most populous of NYC's five boroughs, with an estimated 2.64 million residents

in 2015. Since 1896, Brooklyn has had the same boundaries as Kings County, the most populous

county in the State of New York, and the second‐most densely populated county in the United

States, after the County of New York (Manhattan). In fact, if each of the five boroughs was a

separate city today, Brooklyn would rank as the third most populous city in the US, behind Los

Angeles and Chicago.

The Dutch colonized Brooklyn in 1646, establishing six different towns with defined borders,

which eventually became English settlements, and later consolidated to create the City of

Brooklyn. The original six Brooklyn towns settled by the Dutch were Bushwick, Brooklyn,

Flatlands, Gravesend, New Utrecht and Flatbush. Present‐day Brooklyn neighborhoods bearing

these names are located roughly in the center of each of these original towns. Brooklyn

experienced multiple economic cycles during its history. Supported by waves of immigrations in

the 19th and 20th centuries, Brooklyn’s economy experienced several expansion periods, and

the rise and fall of industries over the years. The New York Bridge Company was founded in

1865 and constructed the Brooklyn Bridge, which opened in 1883 and brought a new wave of

people into Brooklyn who were seeking relief from the high rents and small apartments of New

York City (much like the current days).

By the 1950s, Brooklyn's industrial energies began to wane. Heavy manufacturers began to

move to cheaper locations in other cities, and the ports became less active as large container

ships, requiring deep harbors, began to dominate the shipping trade. Economic dislocation and

the easy availability of government‐sponsored housing loans spurred the middle classes to leave

their old neighborhoods for the suburbs. Hundreds of thousands of middle class residents

abandoned Brooklyn for Queens, Long Island's Nassau County, Staten Island, and New Jersey.

Once‐vibrant neighborhoods fell into disrepair, decay, and poverty. Manufacturing fell by one

half between 1954 and 1990, and the Brooklyn dockyards were largely abandoned. Even the

Brooklyn Navy Yard, which was built in 1801, closed in 1966. The blackout of 1977 became one

of Brooklyn's worst moments. The power failure led to widespread rioting, looting, and arson;

entire sections of various neighborhoods went up in flames. Several blocks of the main

Broadway shopping district in Bushwick were torched, with devastating effects. One‐third of the

remaining stores closed immediately, and more than 40% of Bushwick's commercial and retail

operations went out of business within a year.

Despite the turmoil of the 1970s and early 1980s, the final decade of the 20th century witnessed

a revival in Brooklyn's fortunes. Crime rates decreased during the 1990s, and neighborhoods like

Brooklyn Heights, Fort Greene, and Clinton Hill began to spring back to life. The Brooklyn

Academy of Music began to draw avant‐garde crowds from Manhattan, the Navy Yard began

redevelopment into a booming industrial park, and a new generation of artists, fleeing from the

high rents in Manhattan, created vibrant new communities in DUMBO (Down Under the

Manhattan Bridge Overpass), Williamsburg, and Greenpoint. Additional new waves of

AREA ANALYSIS

26

immigrants continued to make the borough their home, lending new accents, flavors, and

textures to old Brooklyn neighborhoods.

In the first decades of the 21st century, Brooklyn has experienced a renaissance as an avant‐

garde destination for hipsters, with associated gentrification, dramatic house price increases,

and a decrease in housing affordability. Since 2010, Brooklyn has evolved into a thriving hub of

entrepreneurship and high technology startup firms, and of postmodern art and design.

Expected Long‐Term Population Trend

The following table presents historical population statistics for NYC and its boroughs between

1950 and 2010 as well as the forecast through 2040. An interesting and import trend to note is

with regards to expected future composition of the population of Brooklyn as a total percentage

of NYC population. The population of Brooklyn as a percentage of total NYC population is

expected to increase in the future. This is opposite for Manhattan, where population as a

percentage of total NYC population is expected to decrease with residents from Manhattan

presumably moving to a lower cost alternative (Brooklyn).

New York City Population by Borough, 1950 ‐ 2040

Geographic Area 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

Bronx 1,451,277 1,424,815 1,471,701 1,168,972 1,203,789 1,332,650 1,385,108 1,446,788 1,518,998 1,579,245

Brooklyn 2,738,175 2,627,319 2,602,012 2,230,936 2,300,664 2,465,326 2,552,911 2,648,452 2,754,009 2,840,525

Manhattan 1,960,101 1,698,281 1,539,233 1,428,285 1,487,536 1,537,195 1,585,873 1,638,281 1,676,720 1,691,617

Queens 1,550,849 1,809,578 1,986,473 1,891,325 1,951,598 2,229,379 2,250,002 2,330,295 2,373,551 2,412,649

Staten Island 191,555 221,991 295,443 352,121 378,977 443,728 468,730 487,155 497,749 501,109

New York City Total 7,891,957 7,781,984 7,894,862 7,071,639 7,322,564 8,008,278 8,242,624 8,550,971 8,821,027 9,025,145

Bronx 18.4% 18.3% 18.6% 16.5% 16.4% 16.6% 16.8% 16.9% 17.2% 17.5%

Brooklyn 34.7% 33.8% 33.0% 31.5% 31.4% 30.8% 31.0% 31.0% 31.2% 31.5%

Manhattan 24.8% 21.8% 19.5% 20.2% 20.3% 19.2% 19.2% 19.2% 19.0% 18.7%

Queens 19.7% 23.3% 25.2% 26.7% 26.7% 27.8% 27.3% 27.3% 26.9% 26.7%

Staten Island 2.4% 2.9% 3.7% 5.0% 5.2% 5.5% 5.7% 5.7% 5.6% 5.6%

New York City Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Source: NYC Population Projections by Age/Sex & Borough, 2010–2040 publ ished by The City of NY and Department of City Planning, 12‐2013

AREA ANALYSIS

27

POPULATION, BUSINESS AND JOBS

Demographic changes in Brooklyn over the past 15 years have been fairly dramatic. Data by the U.S. Census Bureau indicates that Brooklyn’s population grew from roughly 2.5 million in 2000 to just under 2.7 million at the end of 2015. The overall population has increased by about 8% over the past 15 years, which has largely been driven by the influx of Millennials (those born between 1981 and 1997). Since 2000, Brooklyn’s population between the ages of 25 and 34 has exploded by more than 19.5% while that age group has increased by only 8.4% across the US as a whole.

According to an August 2015 report by the Brooklyn Chamber of Commerce, between 2009 and 2014, Brooklyn netted 9,600 new businesses. In 2014 alone, 2,300 new businesses opened in the borough giving it a business growth rate of 4.3%, compared to New York City’s overall average of 3.1%. According to this report, Brooklyn added approximately 91,000 net new jobs between 2009 and 2014. This was primarily due to job growth in three industries – Health Care and Social Assistance, Retail Trade, and Tourism and Entertainment – which accounted for more than 60,000 net new jobs, approximately two‐thirds of the total growth. It is not surprising that employment growth has been highly concentrated in these industries. Employment in these industries is highly correlated with personal consumption expenditures. Therefore, as Brooklyn’s population and income levels increased, these industries experienced substantial job growth.

Technology and Innovation are widely recognized as drivers of economic growth. According to the Brooklyn Chamber of Commerce, Brooklyn naturally developed a thriving ecosystem for tech, creative, and innovation firms; the Greater Downtown Brooklyn area has seen a rise in entrepreneurship, technology and creative firms over the last decade, especially in the DUMBO and Brooklyn Navy Yard areas (these three neighborhoods are known as the Tech Triangle). These tech and innovation (creative or arts) firms have a tremendous impact on the Brooklyn economy and are expected to continue growing rapidly. This growth is demonstrated by the following chart.

AREA ANALYSIS

28

A study by the Brooklyn Tech Triangle found the following:

The Brooklyn Tech Triangle is home to approximately 10% of all tech firms citywide – the largest concentration outside Manhattan.

12% of firms surveyed moved to Brooklyn from other (non‐NYC) places in the U.S. and abroad.

More than 30% of firms surveyed started in one of the other boroughs of NYC and moved to Brooklyn.

Over 99% of firms currently in the Tech Triangle would like to stay there.

Top factors in real estate selection were rent, proximity to transit, and neighborhood character, neighborhood amenities.

77% of Tech Triangle Firms say that more than half of employees live in Brooklyn.

32% of Tech Triangle firms say that all their employees live in Brooklyn.

Similar percentages were found for firms located outside the Tech Triangle.

57% of surveyed firms originated in Brooklyn.

26% of Tech Triangle firms purchase more than half of their supplies/services in Brooklyn.

These findings indicate that, under the right conditions, the innovation and technology sector will continue to play an important and expanding role in the economic growth of Brooklyn in the years ahead.

Further, the Brooklyn Chamber of Commerce emphasizes that indicators of innovation illustrate Brooklyn’s rapid transformation of its economy and labor force. Patents per worker are increasing, the share of adults with terminal degrees (e.g., graduate and professional degrees) is increasing faster than the rest of the City, State, and Country, and so is the number of adults with degrees in science and engineering fields. Brooklyn is growing and attracting a large number of entrepreneurs. Furthermore, Brooklyn has high rates of small and relatively young companies, which tend to drive innovation.

AREA ANALYSIS

29

LINKAGE

The NYC subway system is the primary means of transportation, connecting between the boroughs, with an average daily ridership of almost 5 million passengers in 2016. The following photo is a portion of the NYC subway map.

As can be seen in the subway map, Northern Brooklyn is very accessible via the subway system, with the famous L‐train running along Manhattan’s 14th Street through Williamsburg and the Northern part of Bushwick before turning south towards East New York. The J, Z and M trains serve the southern part of Bushwick and Williamsburg, as well as Bedford Stuyvesant, which is also well served by the A and C trains. Crown Heights is connected through the red, green and blue lines which are running through Downtown Brooklyn, east and west of Manhattan and all the way to the Bronx.

AREA ANALYSIS

30

RESIDENTIAL REAL ESTATE

The evolution of Northern Brooklyn’s residential market development over recent years should be viewed in conjunction with the major growth in a specific population age group – the Millennials. According to a June 2016 article published by The Real Deal, the impact of Millennials on real estate has to be viewed through the lens of the broader sharing economy that Millennials have embraced, as well as their demand for experiences over things, social engagement and — above all else — flexibility. The article notes that research on Millennials indicates that they are not making decisions about where they are going to live beyond the next 12 months.

With the barrier of entry to buying residential real estate much higher now than it was before the financial crisis in 2008, many New Yorkers (particularly younger ones) have been forced to rent. This fact has not been lost on developers who have geared much of their NYC rental product to Millennials — whether it’s extra bike storage (one in five Millennials bikes at least once a week, according to the Urban Land Institute), USB charging ports in apartments (two‐thirds of Millennials don’t have landlines, according to the Centers for Disease Control) or co‐working space (nearly one‐third of Millennials are self‐employed, according to a 2015 survey by online stock brokerage TD Ameritrade).

Millennials are more used to a college sort of mentality of living with neighbors in close proximity, and they like saving $500 to $1,000 a month on rent which they can spend on entertainment. While data on co‐living spaces and shared living is still hard to come by, landlords can achieve a higher price per foot since bedrooms are smaller than they are in average apartments — even as tenants pay at‐ or below‐market rates for apartments.

AREA ANALYSIS

31

OFFICE REAL ESTATE

Brooklyn is no longer completely dependent on Manhattan for employment. During 2016, Brooklyn averaged 687,217 jobs accounting for approximately 16.5% of all jobs in the City and 7.5% of jobs in NY State. If Brooklyn were an independent city, it would be the city with second largest job base in the NY State after Manhattan.

Brooklyn has recovered well since the Great Recession based on the Employment Statistics presented in the table below.

Total office inventory in Brooklyn stands at 32.6 million square feet as of 2Q 2017, according to Newmark Grubb Knight Frank (“NGKF”). This is about 7% of the total office inventory of Manhattan which stood at 448 million square feet as of 2Q 2017. According to NGKF, the spread between Brooklyn Class A rents and Downtown Manhattan rents has fallen to 14.1% from 36.3% in 2014. NGKF also noted that tenants continue to relocate and expand from Manhattan to Brooklyn.

CONCLUSION

The Property is located in NYC within the borough of Brooklyn. The Northern Brooklyn neighborhoods (including Bushwick where the Property is located) which went through (and are going through) a process of gentrification, drawing in young population which has been changing the makeup of neighborhood demographics and the job market in Brooklyn. Over the past few years, Brooklyn has evolved into a thriving hub of entrepreneurship and high technology startup firms, and of postmodern art and design. All indications are showing that this trend can continue in coming years, strengthening demand for rental properties.

Brooklyn ‐ Employment Statistics

Year Labor Force EmploymentChange in

EmploymentUnemployment

Unemployment

Rate

2006 1,073,743 1,016,247 N/A 57,496 5.4%

2007 1,086,423 1,027,298 1.09% 59,125 5.4%

2008 1,106,224 1,039,579 1.20% 66,645 6.0%

2009 1,119,823 1,008,638 ‐2.98% 111,185 9.9%

2010 1,163,502 1,047,981 3.90% 115,521 9.9%

2011 1,170,616 1,058,657 1.02% 111,959 9.6%

2012 1,190,125 1,073,762 1.43% 116,363 9.8%

2013 1,206,130 1,093,227 1.81% 112,903 9.4%

2014 1,217,191 1,124,085 2.82% 93,106 7.6%

2015 1,218,209 1,146,149 1.96% 72,060 5.9%

2016 1,223,044 1,157,960 1.03% 65,084 5.3%

June 2016 1,219,973 1,154,717 N/A 65,256 5.3%

June 2017 1,246,605 1,190,536 3.10% 56,069 4.5%

Notes:

[1] Source: New York State Department of Labor

[2] Annual numbers represent average over the year.

NEIGHBORHOOD ANALYSIS

32


The Property is located in the Bushwick neighborhood of Brooklyn. The map of Bushwick as well as the Property location with Bushwick is presented below.

As noted earlier, the neighborhood of Bushwick is situated at the center of the old township of Bushwick, which also included territories that are now part of Williamsburg and Greenpoint, and became part of the City of Brooklyn in 1683. The neighborhood is located in Northern Brooklyn, and shares borders with Ridgewood, Queens (northeast), Williamsburg (northwest), East New York and the cemeteries of Highland Park (southeast), Brownsville (south) and Bedford‐Stuyvesant (southwest).

Bushwick was initially an area for farming food and tobacco; however, as Brooklyn and NYC grew, factories that manufactured sugar, oil, and chemicals were built in the neighborhood. In the 1850’s, a massive wave of German immigration settled in Bushwick and established a considerable brewery industry, including "Brewer's Row" ‐ a two‐by‐seven‐block area of Brooklyn which covered Scholes and Meserole Streets and extended from Bushwick Place to Lorimer Street, and in which 14 breweries operated by the end of the 19th century. By 1898, nearly fifty breweries operated in Brooklyn, which became the Brewing Capital of the United States. The most prominent of these breweries, which was established in 1883 by the German American Leibmann family, was the Rheingold Brewery, which by the middle of the 20th century held 35% of New York State’s beer market (the Rheingold Brewery was located at the subject’s site, and shut down operations in 1976, when they were unable to compete with the large national breweries).


33

Also during this period, substantial development in railroad connections to Queens and Long Island (built by the LIRR) and elevated railways improved Bushwick’s connectivity to Downtown Brooklyn and to Manhattan, and rapid residential development began. With the successful brewing industry and the improved linkage, parts of Bushwick became affluent, and the neighborhood became a cultural center through the 1940’s. Over time, significant proportion of Italian Americans settled in Bushwick, and by 1950, Bushwick was one of New York City's largest Italian American neighborhoods.

The demographic transition of Bushwick after World War II was similar to that of many Brooklyn neighborhoods. Rising energy costs, advances in transportation, and the invention of the steel can encouraged beer companies to move out of NYC, and as breweries in Bushwick closed, the neighborhood's economic base eroded. Discussions of urban renewal took place in the 1960s, but never materialized, resulting in the demolition of many residential buildings with nothing new built in its place.

Another contribution to the change in the socioeconomic profile of the neighborhood was the John Lindsay administration's policy of raising rent for welfare recipients. Since these tenants now brought higher rents than ordinary tenants would pay on the open market, Bushwick landlords actively began to fill vacant units with welfare tenants. By the mid‐1970s, half of Bushwick's residents were on public assistance. According to the New York Times, "In a five‐year period in the late 1960's and early 70's, the Bushwick neighborhood of Brooklyn was transformed from a neatly maintained community of wood houses into what often approached a no man's land of abandoned buildings, empty lots, drugs and arson."

As a result of the blackout of 1977 (which was mentioned earlier), arson, looting, and vandalism occurred in low‐income neighborhoods across the city. Bushwick saw some of the most devastating damage and losses. Twenty‐seven stores, some of which were in mixed use properties along Broadway, were burned. Looters saw the blackout as an opportunity to get what they otherwise could not afford. Fires spread to many residential buildings as well, and streets were destroyed. Business vacancy rate on Broadway reached 43%.

After the blackout, more middle‐class residents who could afford to leave left, in some cases abandoning their homes. New immigrants continued to move to the area, many of whom were from Puerto Rico, the Dominican Republic and Central America; however, apartment renovation and new construction did not keep pace with the demolition of unsafe buildings, forcing overcrowded conditions at first. As buildings came down, the vacant lots made parts of the neighborhood look and feel deserted and more residents left. With a lack of job opportunities, Bushwick became an epicenter for the illegal drug trade. The neighborhood was a hotbed of poverty and crime by the 1980s and 1990s.

Starting in the mid‐2000s, the City and State of New York began pouring resources into Bushwick, primarily through a program called the Bushwick Initiative. The Bushwick Initiative was a two‐year pilot program spearheaded by the New York City Department of Housing Preservation and Development (HPD), the Ridgewood Bushwick Senior Citizens Council (Ridgewood Bushwick), and the Office of Assemblyman Vito Lopez. The program's goal was to improve the lives of Bushwick residents in the twenty‐three square blocks surrounding Maria Hernandez Park through various housing and quality‐of‐life programs. The Bushwick Initiative's objectives included addressing deteriorated housing conditions, increasing economic development opportunities, reducing drug dealing activities, and enhancing the quality of life in


34

these areas.

The last half of the 20th century transformed Bushwick into a home for low‐income renters. However, since 2000, the rise of real estate prices in nearby Manhattan has made the neighborhood more attractive to younger professionals. In the wake of reduced crime rates citywide and a shortage of cheap housing in nearby neighborhoods such as Park Slope and Williamsburg, and with good subway linkage to other Brooklyn neighborhoods and to Manhattan, a large number of young professionals and artists have moved into converted warehouse lofts, brownstones, limestone‐brick townhouses, and other renovated buildings. A flourishing artist community is now a main demographic of Bushwick, with many art studios and galleries scattered throughout the neighborhood.

The impact, which started with the Bushwick Initiative in 2005, can be seen in the real estate statistics which will be presented in the next section of this report. Since the Great Recession, development in Bushwick has been very steady as have been rent increases.

Local Demographic Statistics

The following table provides a brief demographic comparison of a 1‐, 3‐ and 5‐mile radii around the Property.

Conclusion

The neighborhood is expected to continue to develop and gentrify in the future.

Neighborhood Profile

Item 1 Mile Radius 3 Mile Radius 5 Mile Radius

Population 181,830 1,145,741 3,225,892

Households 62,679 431,335 1,298,497

Average Age 33.90 35.40 37.20

Median HH Income $38,657 $50,254 $64,175

Population Growth 2017 to 2022 4.6% 4.1% 3.7%

Household Growth 2017 to 2022 4.4% 4.0% 3.5%

Source: CoStar, 2Q 2017

MARKET ANALYSIS

35

MARKET ANALYSIS

Overview of local market conditions is a necessary aspect of the appraisal process. The market analysis forms a basis for assessing market area boundaries, supply and demand factors, and indications of financial feasibility. The following discussion illustrates some general observations about the Property’s surrounding apartment market (i.e. Kings County). The information which follows was compiled by CoStar as of 2Q 2017 and does not account for the entire market but only for properties covered by CoStar. The information below should be used to observe trends of the market in previous years and not for gathering specific market volume data.

MACRO MARKET

The Property’s macro market consists of Kings County. The map of the macro market is as follows.

MARKET ANALYSIS

36

Inventory

According to CoStar, Kings County has 16,220 apartment buildings containing 417,561 apartment units. The inventory has remained generally steady in recent years. Given the relatively steady supply and considering the population growth in Kings County (as previously discussed in the Area Analysis), one can understand the above inflation rent growth experienced in Kings County (as will be shown later in this section).

Please refer to the table below for a presentation of historical supply in Kings County.

Kings County ‐ Apartment Inventory

PeriodInventory

(Buildings)

Inventory

(Units)

Change

(No. of

Units)

Change

(%)

2017 Q2 16,220 417,561 7,183 1.8%

2016 Q2 16,138 410,378 4,451 1.1%

2016 16,176 412,302 4,215 1.0%

2015 16,107 408,087 3,671 0.9%

2014 16,047 404,416 3,140 0.8%

2013 16,010 401,276 2,514 0.6%

2012 15,974 398,762 2,590 0.7%

2011 15,921 396,172 1,335 0.3%

2010 15,887 394,837 4,512 1.2%

2009 15,845 390,325 3,218 0.8%

2008 15,759 387,107 2,584 0.7%

2007 15,667 384,523 5,276 1.4%

2006 15,529 379,247 3,403 0.9%

2005 15,403 375,844 2,776 0.7%

2004 15,270 373,068 1,481 0.4%

2003 15,183 371,587 693 0.2%

2002 15,153 370,894 1,034 0.3%

2001 15,115 369,860 734 0.2%

2000 15,080 369,126 N/A N/A


MARKET ANALYSIS

37

Vacancy Rates

According to CoStar, vacancy in Kings County currently stands at 2.30%. Vacancy has historically been between 2% and 3%; it increased to near 4% levels after the recession but has been decreasing since. Vacancy has been decreasing even with constantly new supply which is being absorbed and in our experience (and lease‐up data presented later in this report); new supply gets leased relatively quickly.

Please refer to the table below for a presentation of historical vacancy rates in Kings County.

Kings County ‐ Apartment Vacancy

PeriodInventory

(Buildings)

Inventory

(Units)

No. of

Vacant UnitsVacancy

Change

(bpts)

2017 Q2 16,220 417,561 7,892 2.30% 0

2016 Q2 16,138 410,378 7,995 2.30% ‐30

2016 16,176 412,302 7,292 2.10% ‐40

2015 16,107 408,087 8,469 2.50% ‐10

2014 16,047 404,416 8,909 2.60% ‐50

2013 16,010 401,276 10,520 3.10% ‐30

2012 15,974 398,762 11,488 3.40% 0

2011 15,921 396,172 11,309 3.40% 10

2010 15,887 394,837 10,871 3.30% 30

2009 15,845 390,325 9,782 3.00% 10

2008 15,759 387,107 9,403 2.90% 30

2007 15,667 384,523 8,309 2.60% 10

2006 15,529 379,247 8,062 2.50% ‐20

2005 15,403 375,844 8,729 2.70% 10

2004 15,270 373,068 8,276 2.60% 40

2003 15,183 371,587 6,869 2.20% 30

2002 15,153 370,894 6,065 1.90% 40

2001 15,115 369,860 4,765 1.50% 10

2000 15,080 369,126 4,461 1.40% N/A


MARKET ANALYSIS

38

Rental Rates

According to CoStar, rents in Kings County have generally been increasing except during 2008 and 2009, the time of the Great Recession, which impacted Brooklyn, as it did the rest of the United States. Since 2010, rent increases have been above inflationary even though there has been steady supply growth due to some of the other factors already covered in the Regional Analysis section of this report.

Please refer to the table below for information on historical rental rates in Kings County.

Given the historical data provided above, the apartment market in Kings County is stable and we can expect rents to continue increasing in the future. CoStar does show that rent growth has slowed in 2016 and somewhat through 2Q 2017. The trend was also reported by some of the other market sources we reviewed and is possible as there has been such a run up in rents during the past few years.

Kings County ‐ Apartment Rents

PeriodAsking Rent

Per Unit

Change

(%)

Asking Rent

Per SF

Change

(%)

2017 Q2 $2,253 5.3% $3.11 5.1%

2016 Q2 $2,140 4.4% $2.96 4.6%

2016 $2,148 3.3% $2.97 3.5%

2015 $2,079 6.3% $2.87 6.7%

2014 $1,956 5.0% $2.69 5.5%

2013 $1,862 4.0% $2.55 4.5%

2012 $1,791 1.8% $2.44 1.7%

2011 $1,759 1.9% $2.40 2.1%

2010 $1,727 5.6% $2.35 5.9%

2009 $1,635 ‐9.1% $2.22 ‐9.8%

2008 $1,798 ‐0.8% $2.46 ‐0.8%

2007 $1,813 6.6% $2.48 6.4%

2006 $1,701 5.8% $2.33 5.9%

2005 $1,608 2.4% $2.20 2.3%

2004 $1,571 1.9% $2.15 1.9%

2003 $1,542 ‐0.5% $2.11 ‐0.5%

2002 $1,550 0.1% $2.12 0.0%

2001 $1,548 2.9% $2.12 2.9%

2000 $1,505 N/A $2.06 N/A


MARKET ANALYSIS

39

Absorption

According to CoStar, net absorption has been positive in Kings County, which is indicative of a strong market in which market demand meets the supply.

Please refer to the table below for information on historical absorption rates in Kings County.

Kings County ‐ Apartment Absorption

PeriodNet Absorption

Units

Net Absorption

Percent

2017 Q2 1,064 0.3%

2016 Q2 993 0.3%

2015 Q2 1,090 0.3%

2016 4,596 1.1%

2015 3,587 0.9%

2014 4,171 1.0%

2013 3,237 0.8%

2012 2,226 0.6%

2011 663 0.2%

2010 1,957 0.5%

2009 1,858 0.5%

2008 185 0.0%

2007 2,059 0.5%

2006 1,721 0.5%

2005 1,694 0.5%

2004 ‐212 ‐0.1%

2003 ‐370 ‐0.1%

2002 ‐373 ‐0.1%

2001 400 0.1%

2000 701 0.2%


MARKET ANALYSIS

40

New Construction

According to CoStar, the amount of new supply delivered to the market has historically been steady. It increased after 2010 and is currently going strong.

Please refer to the table below for information on historical information on new construction in Kings County.

Kings County ‐ Apartments Under Construction

Period

Under

Construction

Bldgs

Under

Construction

Units

Under

Construction

Percent

2017 Q2 252 25,339 6.1%

2016 Q2 261 27,294 6.7%

2015 Q2 161 13,354 3.3%

2016 270 27,148 6.6%

2015 233 23,980 5.9%

2014 126 11,788 2.9%

2013 80 6,895 1.7%

2012 62 4,957 1.2%

2011 75 3,651 0.9%

2010 50 1,879 0.5%

2009 56 5,096 1.3%

2008 103 5,287 1.4%

2007 116 3,704 1.0%

2006 157 5,990 1.6%

2005 156 5,697 1.5%

2004 152 4,207 1.1%

2003 102 1,866 0.5%

2002 42 999 0.3%

2001 40 1,063 0.3%

2000 46 1,027 0.3%


MARKET ANALYSIS

41

MICRO MARKET

The Property’s micro market consists of Bushwick. The map of the micro market is as follows.

MARKET ANALYSIS

42

Inventory

According to CoStar, Bushwick has 1,316 apartment buildings containing 12,750 apartment units. The inventory has remained generally steady in recent years. Given the relatively steady supply and considering the general neighborhood trends (as previously discussed in the Area Analysis), one can understand the above inflation rent growth experienced in Bushwick (as will be shown later in this section).

Please refer to the table below for a presentation of historical supply in Bushwick.

Bushwick ‐ Apartment Inventory

PeriodInventory

(Buildings)

Inventory

(Units)

Change

(No. of

Units)

Change

(%)

2017 Q2 1,316 12,750 130 1.0%

2016 Q2 1,311 12,620 111 0.9%

2016 1,315 12,730 132 1.0%

2015 1,309 12,598 128 1.0%

2014 1,304 12,470 72 0.6%

2013 1,302 12,398 252 2.1%

2012 1,298 12,146 59 0.5%

2011 1,296 12,087 93 0.8%

2010 1,294 11,994 78 0.7%

2009 1,293 11,916 108 0.9%

2008 1,287 11,808 192 1.7%

2007 1,277 11,616 332 2.9%

2006 1,265 11,284 280 2.5%

2005 1,255 11,004 190 1.8%

2004 1,242 10,814 273 2.6%

2003 1,226 10,541 64 0.6%

2002 1,222 10,477 64 0.6%

2001 1,220 10,413 227 2.2%

2000 1,213 10,186 N/A N/A


MARKET ANALYSIS

43

Vacancy Rates

According to CoStar, vacancy in Bushwick currently stands at 2.40%. Vacancy has historically been between 3% and 4%; it increased to above 4% levels after the recession but has been decreasing since. Vacancy has been decreasing even with constantly new supply which is being absorbed and in our experience (and lease‐up data presented later in this report); new supply gets leased relatively quickly.

Please refer to the table below for a presentation of historical vacancy rates in Bushwick.

Bushwick ‐ Apartment Vacancy

PeriodInventory

(Buildings)

Inventory

(Units)

No. of

Vacant UnitsVacancy

Change

(bpts)

2017 Q2 1,316 12,750 302 2.40% ‐10

2016 Q2 1,311 12,620 311 2.50% ‐100

2016 1,315 12,730 311 2.50% ‐40

2015 1,309 12,598 349 2.90% ‐70

2014 1,304 12,470 436 3.60% ‐70

2013 1,302 12,398 519 4.30% 10

2012 1,298 12,146 489 4.20% 10

2011 1,296 12,087 482 4.10% 40

2010 1,294 11,994 425 3.70% ‐10

2009 1,293 11,916 441 3.80% ‐20

2008 1,287 11,808 461 4.00% 80

2007 1,277 11,616 359 3.20% 10

2006 1,265 11,284 338 3.10% ‐80

2005 1,255 11,004 429 3.90% 70

2004 1,242 10,814 342 3.20% 40

2003 1,226 10,541 288 2.80% 10

2002 1,222 10,477 284 2.70% 10

2001 1,220 10,413 264 2.60% 20

2000 1,213 10,186 237 2.40% N/A


MARKET ANALYSIS

44

Rental Rates

According to CoStar, rents in Bushwick have generally been increasing except during 2008 and 2009, the time of the Great Recession, which impacted Brooklyn, as it did the rest of the United States. Since 2010, rent increases have been above inflationary even though there has been steady supply growth due to some of the other factors already covered in the Regional Analysis section of this report.

Please refer to the table below for information on historical rental rates in Bushwick.

Given the historical data provided above, the apartment market in Bushwick is stable and we can expect rents to continue increasing in the future. CoStar does show that rent growth has slowed in 2016 and somewhat through 2Q 2017. The trend was also reported by some of the other market sources we reviewed and is possible as there has been such a run up in rents during the past few 5 years.

Bushwick ‐ Apartment Rents

PeriodAsking Rent

Per Unit

Change

(%)

Asking Rent

Per SF

Change

(%)

2017 Q2 $1,747 2.4% $2.65 1.1%

2016 Q2 $1,706 4.2% $2.62 5.2%

2016 $1,740 3.5% $2.64 2.7%

2015 $1,681 5.5% $2.57 7.1%

2014 $1,594 2.0% $2.40 2.1%

2013 $1,562 4.8% $2.35 3.5%

2012 $1,491 1.0% $2.27 1.3%

2011 $1,476 1.0% $2.24 0.9%

2010 $1,462 2.5% $2.22 2.8%

2009 $1,427 ‐8.8% $2.16 ‐10.0%

2008 $1,564 ‐0.8% $2.40 ‐1.2%

2007 $1,576 6.6% $2.43 7.0%

2006 $1,479 9.2% $2.27 10.2%

2005 $1,354 1.3% $2.06 1.5%

2004 $1,336 2.0% $2.03 2.0%

2003 $1,310 ‐0.5% $1.99 ‐0.5%

2002 $1,317 0.0% $2.00 ‐0.5%

2001 $1,317 2.8% $2.01 3.1%

2000 $1,281 N/A $1.95 N/A


MARKET ANALYSIS

45

Absorption

According to CoStar, net absorption has been positive in Bushwick, which is indicative of a strong neighborhood in which market demand meets the supply.

Please refer to the table below for information on historical absorption rates in Bushwick.

Bushwick ‐ Apartment Absorption

PeriodNet Absorption

Units

Net Absorption

Percent

2017 Q2 12 0.1%

2016 Q2 18 0.1%

2015 Q2 20 0.2%

2016 163 1.3%

2015 183 1.5%

2014 156 1.3%

2013 222 1.8%

2012 51 0.4%

2011 36 0.3%

2010 94 0.8%

2009 75 0.6%

2008 90 0.8%

2007 211 1.8%

2006 284 2.5%

2005 71 0.6%

2004 212 2.0%

2003 61 0.6%

2002 43 0.4%

2001 202 1.9%

2000 2 0.0%


MARKET ANALYSIS

46

New Construction

If one was to walk the streets of Bushwick, one would see plenty of construction activity. One of the most recent development projects and certainly the largest is the development of the Property. Given the size of the Property and number of developments currently in the pipeline in Bushwick, below we present only relevant larger new / under planning developments of multi‐family projects.

Bushwick ‐ Large Apartment Projects

AddressProposed

UnitsType Status

10 Montieth Street 367 Multi‐Family Under Construction

115 Stanwix Street 130 Mixed‐Use Multi‐Family Under Planning

336 Himrod Street 63 Mixed‐Use Multi‐Family Under Construction

338 Evergreen Avenue 180 Multi‐Family Under Planning

343 Himrod Street 55 Mixed‐Use Multi‐Family Under Planning

350 Saint Nicholas Avenue 129 Multi‐Family Under Planning

405 Evergreen Avenue 68 Multi‐Family Under Planning

600 Bushwick Avenue 66 Mixed‐Use Multi‐Family Under Construction

668 Bushwick Avenue 50 Mixed‐Use Multi‐Family Under Planning

889 Bushwick Avenue 54 Mixed‐Use Multi‐Family Under Construction

1 DeSales Place 58 Multi‐Family Under Construction

946 Myrtle Avenue 132 Mixed‐Use Multi‐Family Under Planning

961 Willoughby Avenue 63 Mixed‐Use Multi‐Family Under Construction

1123 Myrtle Avenue 196 Multi‐Family Under Planning

1870 Troutman Street 126 Mixed‐Use Multi‐Family Under Planning


MARKET ANALYSIS

47

Please refer to the table below for information on historical information on new construction in Bushwick.

Bushwick ‐ Apartments Under Construction

Period

Under

Construction

Bldgs

Under

Construction

Units

Under

Construction

Percent

2017 Q2 24 1,650 12.9%

2016 Q2 17 862 6.8%

2015 Q2 9 243 1.9%

2016 19 895 7.0%

2015 14 760 6.0%

2014 7 134 1.1%

2013 6 124 1.0%

2012 6 322 2.7%

2011 3 84 0.7%

2010 2 93 0.8%

2009 2 165 1.4%

2008 6 108 0.9%

2007 10 192 1.7%

2006 13 414 3.7%

2005 11 342 3.1%

2004 16 296 2.7%

2003 17 282 2.7%

2002 4 64 0.6%

2001 2 64 0.6%

2000 8 288 2.8%


MARKET ANALYSIS

48

MULTI FAMILY MARKET DEMAND ANALYSIS

Demand for apartments in Brooklyn is heavily tied to changes in population. As previously discussed, the population in Brooklyn has been growing and is expected to continue growing in the future.

Based upon an analysis of historical population and number of households, the following demand forecast has been prepared as part of this analysis:

We make the following observation based on the demand analysis ‐ assuming a population growth of 3.50% during the next 5 years in Brooklyn and development of all 30,631 units which are under construction or being planned, the Brooklyn apartment market is currently undersupplied by approximately 19,000 apartment units. This bodes well for the Property and other developments similar to the Property.

Brooklyn Apartment Market Demand Analysis

Year 2010 2015 Change 2020F

Population [1] 2,504,710 2,636,735 5.3% 2,729,021 [4]

Households [2] 925,371 925,371 995,993 [5]

Persons per Household 2.71 2.85 2.74

Housing Units [1] 1,000,293 1,025,752 2.5% 1,096,374 [6]

Renter Occupancy Rate [3] 70.5% 70.5% 70.5% [7]

Total New Renter‐Occupied Housing Units Demanded 49,788

Units Currently Under Construction or Being Planned 30,631 [8]

Estimated Surplus (Deficit) ‐19,000

Notes :

[1] Source ‐ US Census Bureau.

[2] Source ‐ US Census Bureau of July 1, 2015; the figure presented i s Households , 2010‐2014.

[3] Source ‐ US Census Bureau of July 1, 2015; the figure presented i s Renter Occupancy Rate, 2010‐2014.

[4] Population i s forecasted by NeuStar to increase by approximately 3.50% for Brooklyn.

[5] Persons per household i s assumed by the appraiser to be 2.74 as publ ished by the US Census Bureau.

[6] The 2020 estimate represents the hous ing units needed to meet the estimated growth in population.

[7] Renter Occupancy Rate i s assumed by the appraiser to be 70.5% as publ ished by the US Census Bureau.

[8] Source ‐ CoStar as of 2Q 2017.

MARKET ANALYSIS

49

MARKET ANALYSIS CONCLUSION

The apartment market in Brooklyn and Bushwick has been exhibiting robust growth during at least the past 5‐years. Our demand analysis, suggests that this robust growth is not going to be over anytime soon. As a result, it seems that the Property and other developments such as the Property are currently feasible.

PROPERTY ANALYSIS

50

PROPERTY ANALYSIS

SITE DESCRIPTION

General

The following table summarizes the Site’s characteristics:

Location

The Site is located at 123 Melrose Street within the Bushwick neighborhood of Brooklyn, NY. The Site is bounded by Melrose Street to the south, Noll Street to the north, Stanwix Street to the west and Evergreen Avenue to the east.

The following tax map shows the Site boundaries and positioning.

Evergreen Gardens ‐ Site Characteristics

Address 123 Melrose Street

City, State, Zip Code Brooklyn, New York 11206


Block 3152

Lot 1, 48, 100

Site Area (SF) 155,490

Parcel Type Full‐Block

Shape Irregular

Topography Level

Environmental Conditions None known

Flood Risk Flood zone X ‐ outside the 500 year flood plain

Utilities All public

Access Average

Frontage Melrose Street (South) ‐ 447'

Noll Street (North) ‐ 350'

Evergreen Avenue (East) ‐ 436'

Stanwix Street (West) ‐ 490'

Zoning R6A and R7A with C2‐4 Commercial Overlay

Conforming to Zoning Conforming (under construction)

SITE DESCRIPTION

51

Access, Frontage and Visibility

The Property occupies a full block and has frontage on four different streets (Melrose, Noll, and Stanwix Streets, and Evergreen Avenue). The Site is located approximately two‐blocks away from the Myrtle Avenue J, M, and Z subway station. The Site is also located with walking distance (approximately 10 minutes) from the Morgan Avenue L subway station.

Given that the Property is currently under construction, its visibility is limited (with the exception of Phase I). Once developed, the improvements are expected to have typical visibility for similar type of developments.

SITE DESCRIPTION

52

Flood Zone

The Site is located in flood zone X (Areas determined to be outside the 500 year flood plain) as indicated by FEMA Panel 3604970208F, dated September 5, 2007. The flood map is shown below.

Topography

The Site is level and is at street grade.

SITE DESCRIPTION

53

Zoning

The following map shows the Site’s zoning, and the zoning in the immediate area.

The Site is zoned R6A and R7A with a C2‐4 commercial overlay.

R6A Residential Districts. R6A is a contextual district where the Quality Housing bulk regulations are mandatory. These regulations produce high lot coverage, six‐ or seven‐story apartment buildings set at or near the street line. Designed to be compatible with older buildings found in medium‐density neighborhoods, R6A districts are mapped in the Bronx, Brooklyn and Queens. Parts of Kingsbridge in the Bronx and Williamsburg in Brooklyn are typical R6A areas.

The floor area ratio (FAR) in R6A districts is 3.0. Above a maximum base height of 60 feet, the building must set back by at least 10 feet on a wide street and 15 feet on a narrow street before rising to its maximum height of 70 feet. To preserve the traditional streetscape, the street wall of a new building can be no closer to the street line than any building within 150 feet on the same block, but need not be farther than 15 feet. The area between a building’s street wall and the street line must be planted. R6A buildings must have interior amenities for the residents pursuant to the Quality Housing Program Off‐street parking, which is not allowed in front of a building, is required for 50% of a building’s dwelling units, or can be waived if five or fewer spaces are required.

R7A Residential Districts. The contextual Quality Housing regulations, which are mandatory in R7A districts, typically produce high lot coverage, seven‐ and eight‐story apartment buildings, blending with existing buildings in many established neighborhoods. R7A districts are mapped

SITE DESCRIPTION

54

along Prospect Park South and Ocean Parkway in Brooklyn, Jackson Heights in Queens, and in Harlem and along the avenues in the East Village in Manhattan.

The floor area ratio (FAR) in R7A districts is 4.0. Above a base height of 40 to 65 feet, the building must set back to a depth of 10 feet on a wide street and 15 feet on a narrow street before rising to a maximum height of 80 feet. In order to preserve the traditional streetscape, the street wall of a new building can be no closer to the street line, than any building within 150 feet on the same block, but need not be farther than 15 feet. Buildings must have interior amenities for the residents pursuant to the Quality Housing Program. Off‐street parking is not allowed in front of a building. Parking is required for 50% of all dwelling units.

C2‐4 Commercial Districts. C1‐1 through C1‐5 and C2‐1 through C2‐5 districts are commercial

overlays mapped within residence districts. Mapped along streets that serve local retail needs,

they are found extensively throughout the city’s lower‐ and medium‐density areas and

occasionally in higher‐density districts.

Typical retail uses include neighborhood grocery stores, restaurants and beauty parlors. C2

districts permit a slightly wider range of uses, such as funeral homes and repair services. In

mixed buildings, commercial uses are limited to one or two floors and must always be located

below the residential use.

When commercial overlays are mapped in R1 through R5 districts, the maximum commercial

floor area ratio (FAR) is 1.0; when mapped in R6 through R10 districts, the maximum commercial

FAR is 2.0. Commercial buildings are subject to commercial bulk rules.

Overlay districts differ from other commercial districts in that residential bulk is governed by the

residence district within which the overlay is mapped. All other commercial districts that permit

residential use are assigned a specific residential district equivalent. Unless otherwise indicated

on the zoning maps, the depth of overlay districts ranges from 100 to 200 feet.

Generally, the lower the numerical suffix, the more off‐street parking is required. For example,

in C1‐1 districts, typically mapped in outlying areas of the city, a large food store would require

one parking space for every 100 square feet of floor area, whereas no parking is required in C1‐5

districts, which are well served by mass transit.

Zoning Conclusion. The development plan on the Site is for a mixed‐use project with residential

and commercial uses within an 8‐story and part 9‐story buildings on top of cellar and sub‐cellar

levels containing required parking spaces to support both uses. The plan includes a public park

linking the two buildings and spanning between Stanwix Street and Evergreen Avenue.

Residential unit mix is expected to include studio, one‐bedroom and two‐bedroom units.

The current zoning appears to allow for this development.

SITE DESCRIPTION

55

Environmental and Soil Conditions

Level Valuation is not an environmental expert; likewise Level Valuation has not received a Phase 1 environmental survey. However, we assume that there are no recognized environmental conditions in connection with the site. Any evidence indicating otherwise may impact the conclusions attained in this report.

Site – Conclusion

The Site has 155,490 square feet bounded by Melrose Street to the south, Noll Street to the north, Stanwix Street to the west and Evergreen Avenue to the east, within the Bushwick neighborhood of Brooklyn, NY.

The size, shape, and topography of the site appear adequate to support most any typical dense development observed in the neighborhood. The Site is located in a low risk flood zone. The Site is located in an area around many ongoing or proposed new developments.

According to information provided by the Client, the development plan on the Site is for a mixed‐use project with residential and commercial uses within an 8‐story and part 9‐story buildings on top of cellar and sub‐cellar levels containing required parking spaces to support both uses. The plan includes a public park linking the two buildings and spanning between Stanwix Street and Evergreen Avenue. Residential unit mix is expected to include studio, one‐bedroom and two‐bedroom units. This proposed zoning floor area equates to a floor area ratio of 4.15. It should be noted that the proposed FAR of 4.15 is higher than what is allowed by the requirements of the R6A and R7A with C2‐4 Commercial Overlay zoning districts (FAR of 4.09x); however, given the approvals provided by the NYC Department of Buildings and documentation provided by the Client, we assumed that the proposed improvements are in compliance with the zoning requirements.

PLANNED DEVELOPMENT

56

PLANNED DEVELOPMENT

General

The development plan consists of two buildings referred to as the Noll Building and the Melrose Building linked by an 18,000 square feet public park spanning between Stanwix Street and Evergreen Avenue, as can be seen in the following plan view.

A rendering of the buildings and the park is available in the following photo.

PLANNED DEVELOPMENT

57

Both buildings are 8‐story, with a small portion of the Melrose Building including a 9th floor space (facing Evergreen Avenue). The planed buildings are mixed‐use and comprising approximately 558,000 square feet of net rentable residential space and 82,000 square feet of commercial space. Within the two buildings, there are 911 planned apartments, of which 282 are studio units, 442 are 1‐bedroom units and 187 are 2‐bedroom units. Both buildings are expected to be constructed over a cellar and a sub‐cellar levels, and the sub‐cellar level will provide the required amount of parking for both commercial and residential uses (364 spaces for residential use, 53 for commercial use, with 417 spaces in total).

The following rendering shows the Melrose Building from the corner of Melrose Street and Evergreen Avenue.

The perimeter (street‐facing) walls of the buildings are expected to be brick with punched windows, with curtainwall along commercial facades and window walls and steel‐clad concrete trusses (as can be seen in the above rendering).

The courtyard‐facing facades are a mix of stucco and panelized rainscreen system with punched windows, as well as all window wall facades and steel‐clad structure. These facades also support private projected balconies, as can be seen in following rendering.

PLANNED DEVELOPMENT

58

The Noll and Melrose buildings are expected to have five different courtyards in total, four of which provide direct access to the public park between the two buildings. Each courtyard is expected to have a unique atmosphere and offer a variety of outdoor amenities; these include a zen garden, reading space, outdoor lounge with water feature, performance space, children’s play area, outdoor spa garden, and a small wooded courtyard with a treehouse. The renderings below and on the following page show a few of these courtyards.

PLANNED DEVELOPMENT

59

Each building is expected to have a large accessible roof level offering a variety of outdoor amenities; these include a mini golf course, sheltered reading areas, an outdoor theater, bouldering wall, an observatory overlooking the city, yoga decks, an outdoor entertainment area with kitchen, grilling stations, and a wet bar.

Secluded seating areas are distributed along an exercise path connecting the different amenity spaces. A generous portion of the rooftop area (approximately 4,000 square feet), along with an

PLANNED DEVELOPMENT

60

enclosed greenhouse located on the top floor of the south building (approximately 1,500 square feet), is dedicated to urban farming, which aims to be a productive enterprise with high‐yield vertical towers based on aeroponic technology. Rooftop amenities can be seen in the plan below.

Most of the indoor amenities are located on the ground and cellar portion of both buildings and parking spaces on the sub‐cellar level. The retail portion is expected to have two levels on the ground and cellar level.

Amenities within the two buildings are expected to be divided based on two concepts:

The Noll Building – Mind: Art and work

The Melrose Buildings – Body: Active and health

PLANNED DEVELOPMENT

61

The Noll Building offers approximately 33,000 square feet of collaborative working spaces with individual studio space, meeting space, and specialty lab spaces such as laser cutting lab, 3D printing lab, and welding lab. The Noll Building’s ground amenity level includes different lounge spaces with a café and a brewing lab/kitchen. The following cross section and rendering show these spaces.

PLANNED DEVELOPMENT

62

The Property is expected to have a multi‐level gym with boxing room, a golf simulation room, a spinning room, and an indoor‐outdoor pool which is expected to have direct connection to courtyard level amenities. The sub‐cellar level of Melrose Building is expected to have an indoor movie theater as well as an extensive spa amenity including a hammam. Location of these amenities can be seen in the following plan.

PLANNED DEVELOPMENT

63

Interior finishes

The typical units are expected to have bathroom with ceramic tile floors and walls. Sinks, showers, and toilets are expected to have acrylic. Various options presented by the project’s architect are presented below.

PLANNED DEVELOPMENT

64

Typical kitchens are expected to have wood or lacquer cabinets and stone countertops. Floors are engineered hardwood. Appliances are excellent quality with 4 burner gas range, oven, dishwasher, and refrigerator. A couple of options are presented below.

The living/bedroom areas are expected to have large windows that provide ample natural lighting and have painted sheet rock walls with engineered hardwood floors.

PLANNED DEVELOPMENT

65

Construction Budget

The construction budget provided to the appraiser, excluding acquisition and financing costs, estimates $227,960,632 in total hard ($213,077,675) and soft ($14,882,957) costs for the total mixed‐use project.

Costs Spent to Date

According to the Client, there have been $78,482,715 in costs spent to date on the project. See table below for additional breakdown.

Conclusion

Once completed the planned development on the Site is expected to be highly desirable for institutional investors, residents, and the Bushwick community. Overall, there are no known factors that adversely impact the marketability of the improvements in its current or proposed state.

Evergreen Gardens ‐ Construction Budget

Item per SF of GBA Amount

Total Hard Costs $330 $213,077,675

Total Soft Costs $23 $14,882,957

Total Project Costs $353 $227,960,632

Costs Incurred To‐Date $121 $78,482,715

Remaining Cost to Complete (Plus 20% Profit) $278 $179,373,501

Source: Cl ient

REAL ESTATE TAX ANALYSIS

66


A summary of the 2017/2018 tentative assessed value, as well as historical assessments for the Site (and/or lots which were eventually consolidated in August 2015 into the current three lots), is shown below.

Real estate taxes in New York City are normally the product of the transitional assessed value times the tax rate, for the fiscal year July 1 through June 30 (payable July 1 and January 1). The transitional assessed value is based on a five‐year phase‐in of actual assessed value. If the actual assessed value is lower than the transitional assessed value for that year, the actual assessed value is multiplied by the tax rate to determine the tax.

The 421‐A Property Tax Exemption Program

The 421‐A Property Tax Exemption Program (“421‐A Program”) was initially established in the 1970s, when New York City officials were concerned that residential construction was dropping as many residents moved to the suburbs. The City decided give property tax breaks to any newly constructed housing development. In the 1980s, as housing rebounded a bit in Manhattan, the City designated an “exclusion zone” in Manhattan, roughly between 14th and 96th Streets, in which affordable units on‐site or off‐site (through purchasing of certificates which fund the creation of affordable housing).

A 421‐A exemption was available for new housing developments with three or more units, located on sites that were vacant, underutilized, or had a “nonconforming” zoning use. Under the program, owners are exempt from paying the increase in property taxes that results from the new construction for period of up to 25 years (depending location and project characteristics).

According to chapter 6 of title 28 of the Rules of The City of New York, during construction and after completion of construction, any increase in assessed valuation over the Prior Assessed Valuation ( of eligible multiple dwellings which have received a Final Certificate of Eligibility shall be exempt from real property taxes, other than assessments for local improvements, for either ten, fifteen, twenty or twenty‐five consecutive tax years (Prior Assessed Valuation taxable assessed valuation in effect, exclusive of any exemption, of a tax lot (land and improvements)

Evergreen Gardens ‐ Real Estate Taxes

Period Land Total Land Total Tax Class Tax Rate Taxes Change (%) Notes

2013 / 2014 $2,306,059 $3,245,185 $1,944,811 $2,812,060 4 10.3230% $290,289 N/A [1]

2014 / 2015 $2,325,150 $3,316,050 $2,125,599 $2,989,409 4 10.6840% $319,388 3.50% [1]

2015 / 2016 $2,071,060 $3,533,560 $1,970,714 $2,864,647 4 10.6560% $305,257 ‐0.26% [1]

2016 / 2017 $4,866,480 $4,866,480 $2,761,859 $2,761,859 4 10.5740% $292,039 ‐0.77% [2]

2017 / 2018 $5,508,000 $5,508,000 $3,408,712 $3,408,712 4 10.6797% $364,042 1.00% [2],[3]

Source: NYC Department of Finance

Notes:

[1] Prior to lots merger, tax amounts include lots 1 (old), 2, 3, 35, 36, 37, 38, 41, 43, 44, 45, 48 (old), 56, 58, 62, 63, 64, 66 and 100 (old).

[2] Post lots merger, tax amounts include new lots 1, 48 and 100.

[3] As of the Effective Date, tax rates for tax year 2017/2018 are not yet avai lable. Tax rate was assumed to grow by 1% over the 2016/2017 rate.

Actual Assessed Value Transitional Assessed Value


67

during the tax year preceding the tax year of Commencement of Construction).

The 421‐A Program was scheduled to expire in June 2015, however New York State extended the date by which a project must commence construction in order to still qualify under the expired 421‐A Program (“Existing Program”) from June 23, 2015 to December 31, 2015, and required that any project that commences after June 15, 2015 and on or before December 31, 2015 to be completed on or before December 31, 2019 in order to qualify under the Existing Program. In April 2017, the NY State Senate voted to resurrect the plan, now called “Affordable New York”. The program will run until 2022.

The 421‐A Property Tax Exemption ‐ Property

According to opinion letters provided by the Client which were prepared by their real estate tax consultants, the Property will be eligible for tax benefits pursuant to Section 421‐A of the real estate tax law of New York State. Considering the Property’s location, site and project characteristics (including setting aside affordable units), the Property will be eligible for a 25‐year exemption, including 100% exemption during the first 21 years, with partial exemptions in gradually declining percentages (20% decline each year) during the remaining years. According to the opinion letters, Prior Assessed Valuation would be based on the 2013/2014 assessments, with an estimated total assessed value for the Property’s lots of $72,404,680. We also note that the Property’s tax class will change from Class 4 (commercial and industrial properties) to Class 2 (rental property with 11 units or more).

Our calculation of the value of the 421‐A benefits includes the discounting of the annual projected tax savings associated with the 421‐A program (calculated as the difference between taxes based on full assessment without 421‐A and actual taxes expected to be paid during the exemption period) to a net present value, using a 6% discount rate, as indicated in the following table.

In addition, please note that full taxes (without exemption) had been assumed in our income and sales analyses.


68

Our analysis assumes that the proposed development obtains approval for a 25‐year 421A tax abatement as conveyed to Level Valuation by the Client

Evergreen Gardens ‐ 421A Model

Block / Lot Appraiser Assumptions

Block 3152 Assessed Value Growth 2.00%

Lot 1, 48, 100 Tax Rate Growth 1.00%

Discount Rate 6.00%

421A

PeriodTax Year

Assessed

Value

(w/o Benefit)

Transitional

Assessed

Value

(w/o Benefit)

Tax

Rate

(Class 2)

Taxes

w/o Benefits

Assessed

Value

(w Benefit)

Transitional

Assessed

Value

(w Benefit)

Taxes

w Benefits% Exempt

Tax

Savings

PV of Savings

(Rounded)

0 2016 / 2017 $4,866,480 $2,761,859 10.574% $292,039 $4,866,480 $2,761,859 $292,039 0% $0

0 2017 / 2018 $5,508,000 $3,408,712 10.680% $364,042 $5,508,000 $3,408,712 $364,042 100% $0

0 2018 / 2019 $5,618,160 $3,476,886 10.787% $375,036 $5,618,160 $3,476,886 $375,036 100% $0 $133,000,000

1 2019 / 2020 $72,404,680 $68,784,446 13.283% $9,136,391 $3,233,869 $3,000,028 $398,483 100% $8,737,908

2 2020 / 2021 $73,852,774 $70,160,135 13.415% $9,412,310 $3,298,546 $3,012,964 $404,203 100% $9,008,107

3 2021 / 2022 $75,329,829 $71,563,338 13.550% $9,696,561 $3,364,517 $3,039,093 $411,786 100% $9,284,776

4 2022 / 2023 $76,836,426 $72,994,604 13.685% $9,989,398 $3,431,808 $3,078,681 $421,321 100% $9,568,076

5 2023 / 2024 $78,373,154 $74,454,496 13.822% $10,291,077 $3,500,444 $3,131,996 $432,903 100% $9,858,174

6 2024 / 2025 $79,940,617 $75,943,586 13.960% $10,601,868 $3,570,453 $3,199,313 $446,630 100% $10,155,238

7 2025 / 2026 $81,539,430 $77,462,458 14.100% $10,922,044 $3,641,862 $3,267,976 $460,778 100% $10,461,267

8 2026 / 2027 $83,170,218 $79,011,707 14.241% $11,251,890 $3,714,699 $3,338,012 $475,359 100% $10,776,531

9 2027 / 2028 $84,833,623 $80,591,941 14.383% $11,591,697 $3,788,993 $3,409,449 $490,388 100% $11,101,309

10 2028 / 2029 $86,530,295 $82,203,780 14.527% $11,941,766 $3,864,773 $3,482,315 $505,877 100% $11,435,890

11 2029 / 2030 $88,260,901 $83,847,856 14.672% $12,302,408 $3,942,068 $3,556,638 $521,841 100% $11,780,567

12 2030 / 2031 $90,026,119 $85,524,813 14.819% $12,673,940 $4,020,910 $3,632,448 $538,293 100% $12,135,647

13 2031 / 2032 $91,826,641 $87,235,309 14.967% $13,056,693 $4,101,328 $3,709,773 $555,250 100% $12,501,444

14 2032 / 2033 $93,663,174 $88,980,015 15.117% $13,451,006 $4,183,354 $3,788,646 $572,725 100% $12,878,280

15 2033 / 2034 $95,536,438 $90,759,616 15.268% $13,857,226 $4,267,021 $3,869,095 $590,736 100% $13,266,490

16 2034 / 2035 $97,447,166 $92,574,808 15.421% $14,275,714 $4,352,362 $3,951,154 $609,297 100% $13,666,417

17 2035 / 2036 $99,396,110 $94,426,304 15.575% $14,706,841 $4,439,409 $4,034,854 $628,426 100% $14,078,415

18 2036 / 2037 $101,384,032 $96,314,830 15.731% $15,150,987 $4,528,197 $4,120,228 $648,140 100% $14,502,847

19 2037 / 2038 $103,411,713 $98,241,127 15.888% $15,608,547 $4,618,761 $4,207,309 $668,457 100% $14,940,090

20 2038 / 2039 $105,479,947 $100,205,949 16.047% $16,079,925 $4,711,136 $4,296,132 $689,395 100% $15,390,530

21 2039 / 2040 $107,589,546 $102,210,068 16.207% $16,565,539 $4,805,359 $4,386,732 $710,973 100% $15,854,566

22 2040 / 2041 $109,741,337 $104,254,270 16.369% $17,065,818 $4,901,466 $4,479,143 $733,210 80% $13,066,087

23 2041 / 2042 $111,936,163 $106,339,355 16.533% $17,581,206 $4,999,496 $4,573,403 $756,126 60% $10,095,048

24 2042 / 2043 $114,174,887 $108,466,142 16.698% $18,112,158 $5,099,486 $4,669,548 $779,742 40% $6,932,967

25 2043 / 2044 $116,458,384 $110,635,465 16.865% $18,659,146 $5,201,475 $4,767,616 $804,079 20% $3,571,013

26 2044 / 2045 $118,787,552 $112,848,174 17.034% $19,222,652 $5,305,505 $4,867,645 $829,159 0% $0

Notes :

[1] Based on an opinion prepared by Ben Rottenstein Associates Inc. for the Property as of March 29, 2016.

Summary

HIGHEST AND BEST USE

69


Highest and best use is defined by The Dictionary of Real Estate Appraisal, Sixth Edition published by the Appraisal Institute as:

The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.

Analyzing the Property’s highest and best use requires consideration of all legal, physical and economic factors. Economic factors such as supply and demand are especially important. Our highest and best conclusions are listed below.

HIGHEST AND BEST USE, AS VACANT

Legally Permissible Uses

While it would be physically possible to develop the Site with a variety of different structures, it is generally limited in its uses by zoning regulations. The Property is currently zoned R6A and R7A with a C2‐4 commercial overlay by the City of New York. According to the zoning ordinance, the allowable uses include a variety of pure residential and mixed‐use residential uses. Therefore, we consider most residential and mixed‐use residential uses would be legal uses.

Physically Possible Uses

The Site is generally level and contains an area of 155,490 square feet. The Site occupies a full block and has frontage on four different streets (Melrose, Noll, and Stanwix Streets, and Evergreen Avenue). There appears to be no physical limitations as to the type of improvements possible on the Site; with its relatively large size, there are many uses that could be supported. Overall, there does not appear to be any issues with regard to any development that could physically take place on the Site.

Financially Feasible Uses

The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally permissible land uses compared to the cost to create those uses.

Uses in the area include several other mixed‐use properties, through predominantly retail users on the ground floor, supporting residential uses above. The Site has typical visibility and access from Melrose, Noll, and Stanwix Streets, and Evergreen Avenue.

Assuming a healthy capital markets environment, development of a mixed‐use residential is considered currently feasible as rental rates, occupancy levels, and typical incentives are adequate to support such development. Please refer to the demand analysis presented in the Market Analysis section for additional details relating to financial feasibility of the subject development.

Maximally Profitable Use

As noted in the previous section, the Site could support a number of different uses, the majority of which would be profitable. However, it was determined during our analysis that the


70

maximally profitable use for the Site be an apartment complex with ground floor retail.

Conclusion

Given the possible uses narrowed down by the stages of highest and best use analysis and considering the approvals already in‐place, Level Valuation has determined the highest and best use of the Site as vacant would be to develop an apartment complex with ground floor retail. Development is currently feasible, as demonstrated through the demand analysis shown in the Market Analysis section of this report. The most probable owner is an institutional real estate investor or developer.

HIGHEST AND BEST USE, AS IMPROVED

The development plan is for a mixed‐use project with residential and commercial uses within an 8‐story and part 9‐story buildings on top of cellar and sub‐cellar levels containing parking spaces to support both uses. The plan includes a public park linking the two buildings and spanning between Stanwix Street and Evergreen Avenue. Residential unit mix is expected to include studio, one‐bedroom and two‐bedroom units.

As concluded above, the estimated highest and best use of the Site, as vacant, is consistent with the current development on the way at the Site. Our review of alternative development possibilities indicates that another use would not economically justify a different use or demolition of the improvements for redevelopment with an alternative use. As shown in the Income Approach section of this report, the Property once completed is capable of producing a return that could attract investment capital as a proposed mixed‐use development. Furthermore, it produces a value that exceeds that of the land, assumed vacant.

Taking all of the foregoing into consideration, it is our opinion that the present use generates the greatest return to the land, and therefore represents a form of the highest and best use of the Site as improved (as planned with a mixed‐use development).

VALUATION METHODOLOGY

71

VALUATION METHODOLOGY

As part of our analysis, we considered and evaluated each of the three traditional approaches to value: income capitalization, sales comparison, and cost. The three approaches are defined briefly as follows:

Cost Approach

The cost approach involves an analysis of the physical value of the property. That is, the current market value of the land, assumed to be vacant, plus the depreciated cost of the improvements present on the site. Depreciated cost is based on the estimated cost of replacing the structural and site improvements, less any accrued depreciation from physical deterioration, functional obsolescence, and or external obsolescence.

Sales Comparison Approach

This approach is based on the principle of substitution. That is, when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, assuming no costly delay occurs in making the substitution. Since no two properties are ever truly identical, the necessary adjustments for differences in quality, location, size, services, and market appeal between the appraised property and comparable (substitute) properties are a function of the appraiser's experience and judgment.

Income Approach

This approach entails an analysis of the property in terms of its ability to provide a sufficient net annual return on investment capital. There are two techniques used to assess the economic potential of the appraised property; direct capitalization and discounted cash flow analysis. The discounted cash flow analysis technique discounts a property's forecasted future income flows over a stipulated holding period to arrive at an indication of present value. Direct capitalization employs an overall capitalization rate to a stabilized income stream to arrive at an indication of value.

The cost, sales comparison and income approaches were all completed for this assignment.

COST APPROACH

72

COST APPROACH

The Cost Approach is defined by The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal Institute, as follows: “A set of procedures through which a value indication is derived for the fee simple estate by estimating the current cost to construct a reproduction of (or replacement for) the existing structure, including an entrepreneurial incentive or profit; deducting depreciation from the total cost; and adding the estimated land value. Adjustments may then be made to the indicated value of the fee simple estate in the subject property to reflect the value of the property interest being appraised.”

The Cost Approach to value is based on the principal of substitution. This principle affirms that a knowledgeable buyer would pay no more for a property than the cost to acquire a similar site and construct improvements of equivalent desirability and utility without undue delay. In the cost approach, existing properties can be seen as substitutes for the property being appraised, and their value is also measured relative to the value of a new, optimal property. In short, the cost of property improvements on the effective date of the appraisal plus the accompanying land value provides a measure against which prices for similar improved properties may be judged.

The cost approach analysis begins with an estimate of the cost of replacing the improvements (including an allowance for entrepreneurial profit) less any accrued depreciation from physical deterioration, functional obsolescence, and external obsolescence. To arrive at a value conclusion, the estimated depreciated cost of the improvements is added to the value of the land, assumed to be vacant.

COST APPROACH

73

LAND VALUE

The Site has been valued by the Sale Comparison Approach, whereby sales of comparable parcels are analyzed in comparison to the Site. The sales analyzed represent the most comparable sales available.

In researching the surrounding market for land sale transactions, a variety of sales were investigated and the most relevant transactions have been selected for this report. The transactions included in this analysis consist of four executed sales and one listing. The sales located and analyzed further within the report are mapped below and followed by a summary of our analysis. Please refer to Addendum C for the presentation of the Comparable Land Grid and Addendum D1 for the presentation of the Comparable Land Sale Write‐ups. For readers convenience we present a brief summary table of land sales in the table below.

Evergreen Gardens ‐ Summary of Land Transactions

Item AddressSite Area

(SF)

Gross

Building

Area (SF)

FAR Sale DateEffective

Sale Price

Price per

Buildable

Area SF

Subject 123 Melrose Street 155,490 646,022 4.15 N/A N/A N/A

Sale # 1 123 Melrose Street 155,490 636,687 4.09 Apr‐16 $140,700,000 $221

Sale # 2 191‐203 Harrison Avenue 30,000 120,000 4.00 Dec‐16 $27,339,525 $228

Sale # 3 1395‐1407 Myrtle Avenue 15,613 49,962 3.20 Listing $9,050,000 $181

Sale # 4 67 Meserole Street 20,000 48,600 2.43 Apr‐16 $15,650,000 $322

Sale # 5 833‐869 Myrtle Avenue 94,000 341,752 3.64 Mar‐15 $71,000,000 $208

MIN $181

MAX $322

AVERAGE $232

Notes :

[1] Sale # 1 i s the most recent sa le of the Property.

COST APPROACH

74

Comparable Vacant Land Sales Map

ANALYSIS OF LAND SALES

Land assets in the Property’s market are generally purchased on a price per buildable area basis. The following analysis discusses the land transactions in a corresponding manner.

Subjectivity of Adjustments

Paired sales quantifying explicit adjustments are difficult to estimate given the number of sales and availability of the right combination of sales to extract the various adjustments. Without adequate data to extract quantitative assessments, an appraiser must rely on qualitative assessments. The appraiser forms these assessments based on many factors relating to prior experience, market observations and judgment as an experienced professional. The appraiser then can provide explicit quantitative adjustments based on these qualitative assessments, as long as the adjustments are not presented in a misleading manner. As stated throughout the history of valuation, an appraisal is not an exact science and relies on judgment and experience coupled with the best market information available. Given the nature of the assignment and the use of the report, we have presented explicit quantitative adjustments that in some cases reflect qualitative assessments based on our judgment as a professional. This decision process exists in many professional fields. According to The Appraisal of Real Estate, 14th Edition, the sales comparison approach is not formulaic. It does not lend itself to detailed mathematical precision. Rather, it is based on judgment and experience as much as quantitative analysis.

Method of Adjustment

The comparable sales are adjusted using additive adjustment method.

The following discussion presents adjustments made to the comparable sales.

COST APPROACH

75

Property Rights Conveyed

A transaction price is predicated on the real property interest conveyed. Many types of real estate, particularly income‐producing property, are sold subject to existing leases. The revenue‐generating potential of a property is often fixed, or limited, by the terms of the existing leases. In the valuation process, adjustments must be made to reflect the difference between contract rent and market rent and how this difference affects property price. All the comparables involved in the transfer are of fee simple interests. As a result, no property rights conveyed adjustments were required.

Financing Terms

In analyzing sale transactions, consideration must be given to the financial terms of sale that apply to the particular properties. Sales with favorable financing must be converted to a cash price in order to compare the sales on a like basis. Premiums are typically paid for sales involving favorable financing. The sales presented in this analysis all sold on a cash basis or involved terms at market interest rates. As a result, no cash equivalency calculations were required.

Conditions of Sale

Adjustments for conditions of sale are sometimes needed to reflect the motivations of buyers and sellers in sales that cause them not to be truly arms‐length transactions. Various conditions may exist, including an existing relationship between the parties; inadequate market exposure; financial constraints; or legal considerations that influence the price or timing of the sale.

Comparables 1, 2, 4 and 5, transferred under normal conditions; as a result, no conditions of sale adjustment were warranted for those sales. Comparable 3 is currently listed for sale on the market. Based on a discussion with a party to this listing, a downward conditions of sale adjustment of $3,000,000 was made to this comparable.

Expenditures Immediately After Sale

If a market participant at the time of a transaction is aware of an expenditure to be incurred on the property, that market participant will subtract it from the offer price in expectation of incurring this cost right after purchase. Demolition cost is a good example of such expenditure. Comparables 2, 3, and 5 had improvements at the time of transfer which the buyer anticipated would be demolished after purchase. Based on discussions with market participants and review of Marshall Valuation Service, an industry‐recognized building cost valuation manual, we estimated demolition costs to be approximately $20 per square foot. These costs were added to the purchase price of comparables 2, 3, and 5.

Market Conditions

Comparable sales that occurred under market conditions different from those applicable to the subject on the effective date of appraisal require adjustment for any differences that affect their values. An adjustment for market conditions is made if general property values have increased or decreased since the transaction dates.

COST APPROACH

76

Comparable sales closed between March 2015 and December 2016. Based on our research and a paired sales analysis of more recent sales which took in Bushwick, a market conditions adjustment of 7.5% per year was warranted to all the sales.

Location

An adjustment for location within a market area may be required when the locational characteristics of a comparable property are different from those of the subject property. Excessive locational differences may disqualify a property from use as a comparable sale.

Comparable 1 is the most recent sale of the Property and does not require an adjustment for location. Comparable 2 is located in Southeast Williamsburg near the border with Bushwick and is considered to have a slightly superior location requiring a minor downward adjustment for location. Comparable 3, while located in the same neighborhood as the Property requires a minor upward adjustment for location due to its location in a part of the neighborhood which commands lower retail and residential rents. Comparable 4 is located in Williamsburg and is considered to have a superior location requiring an downward adjustment for location. Comparable 5 is located in the Bedford Stuyvesant neighborhood of Brooklyn, which in this particular location is considered to be inferior to the Property requiring a minor upward adjustment for location.

Size

Comparables 2, 3 and 4 are significantly smaller than the Site and were adjusted downward.

Shape

As already indicated the Site occupies full‐block and has frontage on four different streets. Its shape makes it more conducive to development. This is not the case for comparables 2, 3, and 4, which where were adjust upward for having an inferior shape.

Utilities

No adjustment was warranted to the comparables for this category.

Topography

Based on discussions with a party to comparable 3, an upward adjustment was made for topography.

Zoning/Entitlements

The Site has approvals for development of a mixed‐use apartment complex, as well as potential to receive a 421‐A exemption. Comparables 2, 3 and 4 are considered inferior with this regard and were adjusted upward.

Please refer to Addendum C for the presentation of the Comparable Land Grid and Addendum D1 for the presentation of the Comparable Land Sale Write‐ups.

COST APPROACH

77

ANALYSIS OF SECONDARY LAND SALES

There have not been recent sales of land sites similar to the Site in terms of size, zoning, and location. As a result, in addition to the sales previously discussed we also considered sales of smaller sites which recently took places in the immediate area of the Property. Please see table below for the presentation of those sales as well as the location map which shows the location of these sales in relation to the Site.

Secondary Comparable Vacant Land Sales Map

Please refer to Addendum D2 for the presentation of the Secondary Comparable Land Sale Write‐ups.

Evergreen Gardens ‐ Summary of Secondary Land Transactions

Item AddressSite Area

(SF)

Gross

Building

Area (SF)

FAR Sale DateEffective

Sale Price

Price per

Buildable

Area SF

Subject 123 Melrose Street 155,490 646,022 4.15 N/A N/A N/A

Sale # 1 100‐102 Suydam Street 3,648 9,958 2.73 Jul‐17 $1,950,000 $196

Sale # 2 373‐383 Harman Street 10,000 24,300 2.43 Mar‐17 $6,050,000 $249

Sale # 3 1351‐1357 Dekalb Avenue 8,315 17,770 2.14 Mar‐17 $4,600,000 $259

Sale # 4 296‐300 St. Nicholas Avenue 7,500 16,500 2.20 Feb‐17 $4,575,000 $277

Sale # 5 102‐104 Central Avenue 5,000 10,904 2.18 Oct‐16 $2,820,000 $259

Sale # 6 1370 Greene Avenue 2,000 4,370 2.19 Mar‐16 $1,200,000 $275

Sale # 7 40 Kossuth Place 2,756 6,697 2.43 Listing $1,545,000 $231

MIN $196

MAX $277

AVERAGE $249

COST APPROACH

78

SALES COMPARISON APPROACH CONCLUSION ‐ LAND

The indicated fair value for the Site is presented in the following table. In arriving at our price per buildable area conclusion, we generally placed equal emphasis on all the primary comparables and also considered secondary comparables.

Evergreen Gardens ‐ Adjusted Price Indications

Minimum Adjusted Price per Buildable Area $208

Maximum Adjusted Price per Buildable Area $286

Average Adjusted Price per Buildable Area $245

Median Adjusted Price per Buildable Area $241

Relative Standard Deviation Adjusted Price (%) 10%

Evergreen Gardens ‐ Indicated Value

Subject Buildable Area 646,022

Reconciled Value per Buildable Area $250

Indicated Value $161,505,500

Rounded $162,000,000

COST APPROACH

79

IMPROVEMENT COSTS ANALYSIS

The cost of the improvements was based on figures from similar developments with consideration given the expected development cost for the Property as reported by the Client.

Replacement Cost New

The following table presents construction costs for similar developments and expected development cost for the Property.

Considering the information above, we estimated the replacement cost new for the Property to be $285 per square foot of total buildable area.

Entrepreneurial Incentive

The entrepreneurial incentive represents the estimated / anticipated profit to the developer of the Property. The estimate is based on historical evidence obtained through surveys of developers, observed actual profits, as well as developer’s anticipated profits. We estimate entrepreneurial incentive to be 30%.

Evergreen Gardens ‐ Construction Cost Comparables

Project Type Status Project Location

Total

Construction

Area (SF)

Total Costs [1]

Total Costs

per SF of Total

Construction

Area

Subject Development [2]Ground up

DevelopmentBrooklyn 1,008,557 $227,960,632 $226

Mixed‐Use (Multi‐Family

and Ground Floor Retail)

Ground up

DevelopmentBrooklyn 133,582 $28,397,827 $213



Ground up




Ground up


Multi‐FamilyGround up

DevelopmentQueens 158,603 $49,493,693 $312

Minimum Total Cost per SF $213

Maximum Total Cost per SF $409

Notes :

[1] Financing costs are not included.

[2] This i s the construction budget provided by the Cl ient for the Property.

COST APPROACH

80

ACCRUED DEPRECIATION

There are three sources of accrued depreciation: (1) Physical deterioration, both curable and incurable; (2) Functional obsolescence, both curable and incurable; and (3) external obsolescence. Physical Deterioration

Curable deterioration affecting the improvements results from deferred maintenance. Incurable deterioration is deterioration due to normal wear and tear associated with natural aging. The Property is currently under construction and is expected to have no physical deterioration at completion. Functional Obsolescence

Functional obsolescence is defined by The Dictionary of Real Estate Appraisal, 6th edition, as follows:

The impairment of functional capacity of a property according to market tastes and standards.

Functional obsolescence is a reduction in the utility of a property resulting from a decreased capacity of the improvements to perform the functions for which they were intended. This type of depreciation is caused by deficiencies in architectural style, placement of the improvements on the site, general floor plan, etc., relative to current market standards. Functional obsolescence both can be curable or incurable and is a deficiency where some aspect or aspects are below standard to the market norm. The Property is currently under construction and is expected to have no functional obsolescence at completion. External Obsolescence

External obsolescence is defined by The Dictionary of Real Estate Appraisal, 6th edition, as follows:

An element of depreciation; a diminution in value caused by negative externalities and generally incurable on the part of the owner, landlord or tenant.

External obsolescence results from a decrease in value resulting from depressed rent levels and extended vacancy, often due to market conditions. External obsolescence is measured by the income shortfall needed to justify new construction, less any other forms of accrued depreciation. Many times the depreciation is incurable, but can either be temporary or permanent, as it depends on market conditions or even size of the market. External obsolescence usually carries a market wide effect and influences all classes of properties. This type of obsolescence can, however, be tied to specific properties when its cause is location. The Property is currently under construction and is expected to have no external obsolescence at completion.

COST APPROACH

81

COST APPROACH CONCLUSION

The following table presents a summary of the development cost assumptions for the Property based on the previously summarized land, cost, depreciation sections, and accounting for the value loss for stabilization, remaining cost to complete and time it takes to complete.

Evergreen Gardens ‐ Cost Approach Summary

TOTAL REPLACEMENT COST NEW [1] 1,008,557 x $285 = $287,438,745

Plus: Entrepreneurial Incentive 30% $86,231,624

Less: Depreciation $0

DEPRECIATED VALUE OF IMPROVEMENTS $373,670,369

PLUS: LAND VALUE $162,000,000

INDICATED VALUE AT PROSPECTIVE STABILIZATION VIA COST APPROACH $535,670,369

Less: Value Loss to Stabilization ‐ Retail $2,895,964

Less: Value Loss to Stabilization ‐ MF $26,975,020

Less: Remaining Cost to Complete $179,373,501

Adjusted Value Indication, As Complete [2] $326,000,000

Indicated Value (rounded) ‐ As of the Effective Date ("As Is") [2] $296,000,000

Notes:

[2] The "As Complete" fair value is discounted back 12 months to arrive at the "As Is" fair value.

[1] Calculated based on the total floor area (plus below grade space), which is how the construction cost

comparables were analyzed.

SALES COMPARISON APPROACH

82


The Sales Comparison Approach is defined by The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal Institute, as follows: “The process of deriving a value indication for the subject property by comparing market information for similar properties with the property being appraised, identifying appropriate units of comparison, and making qualitative comparisons with or quantitative adjustments to the sale prices (or unit prices, as appropriate) of the comparable properties based on relevant, market‐derived elements of comparison.“

The Sales Comparison Approach to value is based on the principal of substitution. That is, when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, assuming no costly delay occurs in making the substitution. Traditional appraisal techniques for estimating value by means of substitution involve the collection and analysis of sale and listing data on properties that have as many characteristics as possible similar to those of the property being evaluated. The validity of findings by this approach depends primarily on the quantity and quality of available data.

Because no two properties are ever truly identical, the prices of market indicators must be adjusted to reflect the value of the property being appraised. Typically, adjustments reflect significant differences for such factors as the terms of the sale, market conditions changes, physical characteristics, and economic characters.

We were able to locate seven transactions of similar quality apartment complexes in the Property’s relevant market area which we used in our analysis. It should be noted that there have not been large transaction of apartment complexes in Bushwick; as a result, we went to other neighborhoods in Brooklyn to search for comparables.

The sales located and analyzed further within the report are mapped on the following page and followed by a summary of our analysis. Please refer to Addendum E for the presentation of the Comparable Improved Sales Grid and Addendum F for the presentation of the Comparable Improved Sale Write‐ups. For readers convenience we present a brief summary table of improved sales in the table below.

Evergreen Gardens ‐ Summary of Improved Transactions

Item Property Name NeighborhoodYear

Built

Gross

Building

Area (SF)

Sale DateEffective Sale

Price

Price

per SF

of GBA

Subject Evergreen Gardens Bushwick 2018 646,022 N/A N/A N/A

Sale # 1 97 Grand Ave & 96 Steuben St Clinton Hill 2012 54,148 7/10/2017 $32,850,000 $607

Sale # 2 The Addison Downtown Brooklyn 2011 200,486 12/15/2016 $130,750,000 $652

Sale # 3 The Berkley Williamsburg 2016 96,984 12/5/2016 $66,375,000 $684

Sale # 4 385 Union Avenue Williamsburg 2008 46,523 9/20/2016 $41,352,000 $889

Sale # 5 Atelier Williamsburg Williamsburg 2013 68,214 3/31/2016 $75,172,500 $1,102

Sale # 6 250N10 Williamsburg 2014 158,118 5/1/2015 $158,200,000 $1,001

Sale # 7 Triangle Court Williamsburg 2012 49,127 Listing $37,050,000 $754

MIN $607

MAX $1,102

AVERAGE $813


83

Comparable Improved Sales Map

ANALYSIS OF IMPROVED SALES

Multi‐family assets in the Property’s market are generally purchased on a price per square foot; however, buyers do consider other metrics such as price per unit and price per bedroom. The following analysis discusses the transactions in a corresponding manner.

Subjectivity of Adjustments

Paired sales quantifying explicit adjustments are difficult to estimate given the number of sales and availability of the right combination of sales to extract the various adjustments. Without adequate data to extract quantitative assessments, an appraiser must rely on qualitative assessments. The appraiser forms these assessments based on many factors relating to prior experience, market observations and judgment as an experienced professional. The appraiser then can provide explicit quantitative adjustments based on these qualitative assessments, as long as the adjustments are not presented in a misleading manner. As stated throughout the history of valuation, an appraisal is not an exact science and relies on judgment and experience coupled with the best market information available. Given the nature of the assignment and the use of the report, we have presented explicit quantitative adjustments that in some cases reflect qualitative assessments based on our judgment as a professional. This decision process exists in many professional fields. According to The Appraisal of Real Estate, 14th Edition, the sales comparison approach is not formulaic. It does not lend itself to detailed mathematical precision. Rather, it is based on judgment and experience as much as quantitative analysis.


84

Method of Adjustment

The comparable sales are adjusted using additive adjustment method.

The following discussion presents adjustments made to the comparable sales.

Property Rights Conveyed

A transaction price is predicated on the real property interest conveyed. Many types of real estate, particularly income‐producing property, are sold subject to existing leases. The revenue‐generating potential of a property is often fixed, or limited, by the terms of the existing leases. In the valuation process, adjustments must be made to reflect the difference between contract rent and market rent and how this difference affects property price.

All the comparables involved in the transfer are of fee simple interests. As a result, no property rights conveyed adjustments were required.

Financing Terms

In analyzing sale transactions, consideration must be given to the financial terms of sale that apply to the particular properties. Sales with favorable financing must be converted to a cash price in order to compare the sales on a like basis. Premiums are typically paid for sales involving favorable financing. The sales presented in this analysis all sold on a cash basis or involved terms at market interest rates. As a result, no cash equivalency calculations were required.

Conditions of Sale

Adjustments for conditions of sale are sometimes needed to reflect the motivations of buyers and sellers in sales that cause them not to be truly arms‐length transactions. Various conditions may exist, including an existing relationship between the parties; inadequate market exposure; financial constraints; or legal considerations that influence the price or timing of the sale.

All of the comparables, similar to the Property, have 421‐A exemptions. Since we estimated the fair value of the Property’s potential to receive a 421‐A exemption in a separate analysis (please refer to the Real Estate Tax Analysis section of this report), we adjusted all the comparable sales for this tax benefits so as to not double count.

Comparable 7 is currently listed for sale. It was adjusted downward to account for the listing premium.

Expenditures Immediately After Sale

If a market participant at the time of a transaction is aware of an expenditure to be incurred on the property, that market participant will subtract it from the offer price in expectation of incurring this cost right after purchase. Demolition cost is a good example of such expenditure.

An adjustment was not deemed necessary for this category.


85

Market Conditions

Comparable sales that occurred under market conditions different from those applicable to the subject on the effective date of appraisal require adjustment for any differences that affect their values. An adjustment for market conditions is made if general property values have increased or decreased since the transaction dates.

Comparable sales closed between May 2015 and July 2017. Based on our research, a market conditions adjustment of 3.0% per year was warranted to sales 2 through 6.

Location

An adjustment for location within a market area may be required when the locational characteristics of a comparable property are different from those of the subject property. Excessive locational differences may disqualify a property from use as a comparable sale.

Comparable 1 is located in Clinton Hill, comparable 2 is located in Downtown Brooklyn and the rest of the comparables are located in Williamsburg. These neighborhoods are considered to be superior to Bushwick and were adjusted downward for location.

Age/Condition/Quality/Design/Amenities

We account for differences in this category primarily based on observations made during our site visit, speaking with leasing agents at the competing properties, and comparing rental levels.

At completion, the Property is expected to be the newest product in the market and have amenities that are unique to this market. As a result, all comparables were adjusted upward for this category.

Tenancy/Occupancy

An adjustment was not deemed necessary for this category.

Size

The Property is substantially larger than all of the comparables. As a result, all comparables were adjusted downward.

Please refer to Addendum E for the presentation of the Comparable Improved Sales Grid and Addendum F for the presentation of the Comparable Improved Sale Write‐ups.


86

SALES COMPARISON APPROACH CONCLUSION ‐ IMPROVED

Based on the analysis presented above, the following table presents our conclusion via sales comparison approach, as of the Effective Date. In arriving at our price square foot conclusion, we generally placed equal emphasis on all the comparables and also considered discussions with market participants. We also accounted for the value loss for stabilization, remaining cost to complete and time it takes to complete.

Evergreen Gardens ‐ Sales Approach ‐ Improved ‐ Adjusted Price Indications

Per SF of GBA

Minimum Adjusted Price $516

Maximum Adjusted Price $815

Average Adjusted Price $641

Median Adjusted Price $566

Relative Standard Deviation Adjusted Price (%) 19%

Evergreen Gardens ‐ Sales Approach ‐ Improved ‐ Indicated Value

Per SF of GBA

Subject 646,022

Assumed Value per Unit of Comparison $625

Indicated Value $403,763,750

Less Adjustments

Lease‐up Costs ‐$29,870,984

Renovation/Remaining Cost to Complete ‐$179,373,501

Plus Adjustments

PV of RE Tax Benefit $133,000,000


Indicated Value via Sales Approach (Rounded) ‐ As of the Effective Date ("As Is") [1] $298,000,000

Notes:



87

REGRESSION ANALYSIS

Secondary support to the sales comparison approach is provided by a regression analysis between the comparable sales NOI per square foot of GBA versus the sale price per square foot of GBA. The chart below visually summarizes the regression analysis and the data used.

Conclusion. The Property NOI per square foot of GBA is in line with the NOI per square foot of GBA of the comparable sales. Overall, the regression analysis helps support our value conclusion via the sales comparison approach.

INCOME APPROACH

88

INCOME APPROACH

The Income Approach is defined by The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal Institute, as follows: “Specific appraisal techniques applied to develop a value indication for a property based on its earning capability and calculated by the capitalization of property income.“

The Income Approach is based on the premise that the value of a property is represented by the present worth of anticipated future benefits derived from ownership. In the analysis that follows, a conclusion regarding the Property’s prospective net operating income is developed. In support of these estimates, the Property’s historical operating statements, along with expenses at comparable apartment complexes, were analyzed. A discussion of the estimated capitalization rate and resulting value estimate are presented in this section.

We have performed the direct capitalization technique, whereby a stabilized first year income has been estimated, and then capitalized into a value estimate by applying a market derived overall capitalization rate. If necessary, the value loss to stabilization is deducted from the resulting stabilized value estimate in order to derive the fair value. The strength of this technique is that the capitalization rate is abstracted from market sales, while a weakness can emanate from the subjectivity in forecasting potential revenues on unleased units.

Our stabilized income and expense forecast is presented in the following table:

INCOME APPROACH

89

What follows is a summary discussion and support for our key assumptions as part of the above forecast.

Evergreen Gardens

Operating Income and Expense Summary

Type / Year Appraiser Stabilized Estimate

Amount /SF of GBA /Res. Unit %EGI

REVENUE

Res identia l Income $31,026,012 $48.03 $34,057 92.8%

Commercia l Income $2,574,190 $3.98 $2,826 7.7%

Parking Income [1] $1,125,900 $1.74 $1,236 3.4%

Recoveries $0 $0.00 $0 0.0%

Other Income $182,200 $0.28 $200 0.5%

Less Vacancy/Credit Loss ‐$1,202,541 ($1.86) ($1,320) ‐3.6%

Less Turnover [2] ‐$283,125 ($0.44) ($311) ‐0.8%

EFFECTIVE GROSS INCOME $33,422,636 $51.74 $36,688 100.0%

OPERATING EXPENSES

Real Estate Taxes $9,136,391 $14.14 $10,029 27.3%

Uti l i ties $969,033 $1.50 $1,064 2.9%

Repairs & Maintenance $646,022 $1.00 $709 1.9%

Management fees $752,009 $1.16 $825 2.3%

Insurance $387,613 $0.60 $425 1.2%

Other Operating $2,099,572 $3.25 $2,305 6.3%

TOTAL EXPENSES $13,990,640 $21.66 $15,357 41.9%

TOTAL EXPENSES W/ RE TAXES $4,854,249 $7.51 $5,328 14.5%

NET OPERATING INCOME $19,431,997 $30.08 $21,330 58.1%

Notes :

[2] Recurring res identia l leas ing commiss ions expense.

[1] The Property i s expected to have 417 parking spaces . Each space i s expected to

achieve a rent of $225 per month.

INCOME APPROACH

90

REVENUE ANALYSIS

Residential Income

The Property is currently under construction; as a result, our revenue analysis is based on rents that the Property can potentially generate once the construction is complete.

The majority of the income at the Property is expected to be derived from rents collected from leasing the Property’s apartment units; as a result, we begin our analysis with this component.

Market Rent Analysis

The table on the following page presents the Property’s residential rent roll together with our market rent estimate. According to information provided by the Client, the Property is expected to have a total of 911 apartment units, of which 735 are expected to be market rate and 176 are expected to be affordable. Rents for the market units have been estimated based on rents prevalent in the market. Rent for the affordable units has been estimated based on the rents provided by the Client, which we understand are based on the 2017/2018 Home and LIHTC – Income and Rent Limits.

INCOME APPROACH

91

Evergreen Gardens ‐ Residential Rent Roll

Total Units 911 Average Unit SF 612 Estimated Market Rent/Unit (avg) $3,282

Total BR 1,098 Average BR SF 508 Estimated Market Rent/BR (avg) $2,725

Total Rentable SF 557,779 Estimated Market Rent/Rentable SF (avg) $5.43

Lot 1 Lot 48 Total

DS Units 354 381 735 Occupied Units 0 0% Δ Market/Contract Rent N/A

RS or RC Units 0 0 0 Vacant Units 911 100%

HPD Units 0 0 0 Total Units 911 100%

J51 Units 0 0 0

421‐A Units 89 87 176

Loft Units 0 0 0

# Unit [1] [2]Unit

TypeBR BA

Unit

SF

No. of

Units

Total Size

SF

Mnts

to

Exp

Occ.

(Y/N)

Legal

Rent

Monthly

Client Budget

Rent

Rent

Comps ‐ Range

Appraiser

Estimate

Monthly

Appraiser

Estimate

per BR

Appraiser

Estimate

per SF

Market

Rent

Monthly

Market

Rent

per BR

Market

Rent

per SF

Lot 1

1 LF ‐ Studio ‐ Market DS 1.0 1.0 426 57 24,293 N/A N N/A $2,300 $1,900‐$3,100 $2,500 $2,500 $5.87 $2,500 $2,500 $5.87

2 LF ‐ 1BR ‐ Market DS 1.0 1.0 615 142 87,393 N/A N N/A $3,000 $2,100‐$4,150 $3,200 $3,200 $5.20 $3,200 $3,200 $5.20

3 LF ‐ 2BR ‐ Market DS 2.0 1.0‐2.0 843 43 36,234 N/A N N/A $4,000 $2,850‐$6,000 $4,200 $2,100 $4.98 $4,200 $2,100 $4.98

4 UF ‐ Studio ‐ Market DS 1.0 1.0 443 21 9,293 N/A N N/A $2,700 $1,900‐$3,100 $2,900 $2,900 $6.55 $2,900 $2,900 $6.55

5 UF ‐ 1BR ‐ Market DS 1.0 1.0 627 64 40,146 N/A N N/A $3,300 $2,100‐$4,150 $3,500 $3,500 $5.58 $3,500 $3,500 $5.58

6 UF ‐ 2BR ‐ Market DS 2.0 1.0‐2.0 875 27 23,628 N/A N N/A $4,300 $2,850‐$6,000 $4,500 $2,250 $5.14 $4,500 $2,250 $5.14

7 Studio ‐ Low Income 421‐A 1.0 1.0 467 19 8,877 N/A N N/A $897 ‐ $897 $897 $1.92 $897 $897 $1.92

8 1BR ‐ Low Income 421‐A 1.0 1.0 657 52 34,143 N/A N N/A $963 ‐ $963 $963 $1.47 $963 $963 $1.47

9 2BR ‐ Low Income 421‐A 2.0 1.0‐2.0 894 18 16,088 N/A N N/A $1,166 ‐ $1,166 $583 $1.30 $1,166 $583 $1.30

Lot 48

1 LF ‐ Studio ‐ Market DS 1.0 1.0 425 123 52,299 N/A N N/A $2,300 $1,900‐$3,100 $2,500 $2,500 $5.88 $2,500 $2,500 $5.88

2 LF ‐ 1BR ‐ Market DS 1.0 1.0 622 105 65,356 N/A N N/A $3,000 $2,100‐$4,150 $3,200 $3,200 $5.14 $3,200 $3,200 $5.14

3 LF ‐ 2BR ‐ Market DS 2.0 1.0‐2.0 824 47 38,726 N/A N N/A $4,000 $2,850‐$6,000 $4,200 $4,200 $5.10 $4,200 $2,100 $5.10

4 UF ‐ Studio ‐ Market DS 1.0 1.0 440 28 12,321 N/A N N/A $2,700 $1,900‐$3,100 $2,900 $2,900 $6.59 $2,900 $2,900 $6.59

5 UF ‐ 1BR ‐ Market DS 1.0 1.0 600 45 27,004 N/A N N/A $3,300 $2,100‐$4,150 $3,500 $3,500 $5.83 $3,500 $3,500 $5.83

6 UF ‐ 2BR ‐ Market DS 2.0 1.0‐2.0 836 33 27,582 N/A N N/A $4,300 $2,850‐$6,000 $4,500 $4,500 $5.38 $4,500 $2,250 $5.38

7 Studio ‐ Low Income 421‐A 1.0 1.0 464 34 15,781 N/A N N/A $897 ‐ $897 $897 $1.93 $897 $897 $1.93

8 1BR ‐ Low Income 421‐A 1.0 1.0 644 34 21,912 N/A N N/A $963 ‐ $963 $963 $1.49 $963 $963 $1.49

9 2BR ‐ Low Income 421‐A 2.0 1.0‐2.0 879 19 16,703 N/A N N/A $1,166 ‐ $1,166 $583 $1.33 $1,166 $583 $1.33

Source: Sizes and number of bedrooms were extracted from floor plans provided by the Cl ient.

Notes :

[1] Units within each group deviate from each other in terms of s izes and individua l unit ameni ties (terrace, configuration, etc.).

[2] Lower floors ("LF") refer to floors 1 through 6. Upper floors ("UF") are floors 7 and above.

Summary

INCOME APPROACH

92

In order to estimate market rents for the Property’s market units, we (1) reviewed asking or actual rents at similar properties in the Property’s market (this discussion will be presented in the next section, (2) rents being budgeted by the Client (presented in the rent roll on the prior page), and (3) reviewed asking rent statistics published by various research sources for the broader market (as presented in the Market Analysis section of this report).

The following is the analysis of rental rates at competing properties. Note that asking rents rent statistics published by various research sources for the broader market have already been discussed in the Market Analysis section of this report.

Comparable Rental Data Analysis

To perform the analysis involving rents at competing properties, we performed a survey of competitive market rate rental properties in the relevant market area. In analyzing the comparable rental data, we considered the competitive property’s location/access/visibility, age/condition/quality/design/amenities, unit sizes and other (if applicable). The properties that have been chosen as market rent competitors are believed to provide adequate support to estimate the Property’s market rental rates.

Please refer to Addendum G for the presentation of the Comparable Residential Rental Grid and Addendum H for the presentation of the Comparable Residential Rental Write‐ups. For readers convenience we present a brief summary table of comparable residential rentals in the table on the following page with a location map following the table.

INCOME APPROACH

93

Please refer to Addendum G for the presentation of the Comparable Residential Rental Grid and Addendum H for the presentation of the Comparable Residential Rental Write‐ups.

Evergreen Gardens ‐ New Developments ‐ Residential Rent Comparables [*]

Min Max Min Max Min Max

1040 Dean Street Crown Heights 2017 8 120 $2,675 $2,700 $3,000 $3,550 $3,800 $5,175 Similar

180 Franklin Avenue Bedford Stuyvesant 2016 5 118 $1,900 $2,650 $2,100 $3,900 $3,000 $4,500 Similar

461 Dean Prospect Heights 2016 32 363 $2,150 $3,100 $2,900 $3,965 $4,900 $6,000 Similar

670 Pacific Prospect Heights 2016 8 81 $2,300 $2,500 $2,850 $3,400 $3,250 $5,700 Similar

The Refinery Clinton Hill 2015 7 232 $1,900 $2,500 $2,150 $2,800 $3,600 $4,300 Similar

505 Saint Marks Avenue Crown Heights 2015 8 147 ‐ $2,200 $2,400 $2,800 $3,300 $3,900 Inferior

341 EPW Crown Heights 2014 8 63 $2,200 $2,300 $2,700 $3,850 $3,500 $4,150 Inferior

500 Sterling Place Crown Heights 2013 7 77 $2,000 $2,500 $2,500 $3,125 $3,100 $4,300 Inferior

Colony 1209 Bushwick 2013 5 127 $2,000 $2,250 $2,200 $2,900 $3,000 $3,600 Inferior

The Plex Brooklyn Crown Heights 2011 7 98 ‐ $1,900 $2,150 $2,450 $2,850 $3,200 Inferior

Castle Braid Apartments Bushwick 2006 5 144 ‐ ‐ $2,500 $4,150 $2,900 $3,450 Inferior

Studio 1BR 2BR

Minimum $1,900 $2,100 $2,850

Maximum $3,100 $4,150 $6,000

Average $2,318 $2,925 $3,885

Appraiser Estimated Rent ‐ Lower Floors $2,500 $3,200 $4,200

Appraiser Estimated Rent ‐ Upper Floors $2,900 $3,500 $4,500

Notes:

[*] Based on asking renta l rates adverti sed in the past 12 months. 1040 Dean are actua l achieved rents .

1 BR 2 BR Overall

Rating

Property

AddressNeighborhood

Year

Built

No. of

Stories

No. of

Units

Studio

INCOME APPROACH

94

Comparable Apartment Market Rental Map

INCOME APPROACH

95

Analysis of Comparable Rents

The following table summarizes our qualitative observations relating to the competitive properties as compared to the Property.

Location/Access/Visibility

The Property is located in Bushwick neighborhood of Brooklyn. It has typical access to public

transportation, commercial thoroughfares, schools, services and employment. It is in an area

with available land for development and moderate/substantial expansion in the projected

future.

Based on observations made during our site visit and discussions with market participants, we

don’t believe an adjustment is necessary for location for comparables 6, and 8 through 11.

Comparables 1, 5, and 7 are located in locations where there is stronger retail and are

considered to be superior. Comparables 2 (labeled as Bedford Stuyvesant in the adjustment

grid, however, very close to Clinton Hill), 3, and 4 are located in Prospect Heights / Clinton Hill

which are perceived as being superior residential neighborhoods, resulting in a downward

adjustment for location.

The Property and rent comparables are located on paved, public streets with similar access.

Overall, no adjustments for access are necessary.

All comparables have similar visibility from neighborhood roads and or frontage roads. No

adjustments are considered necessary for visibility.


At completion, the Property is expected to be the newest product in the market and have amenities that are unique to this market. As a result, all comparables were adjusted upward for this category.

Unit Size

Comparables 1, 2, 4, 5 and 6 generally have similar average unit sizes when compared to the

Property. The rest of the comparables have larger average unit sizes.

Overall

Overall rent comparables 1 through 5 are considered to be similar to the Property. The rest of

the comparables are considered to be inferior to the Property.

Adjustment Grid

Please refer to Addendum G for the presentation of the Comparable Residential Rental Grid and Addendum H for the presentation of the Comparable Residential Rental Write‐ups.

INCOME APPROACH

96

Residential Income Summary

The following table summarizes the estimated market rents for each unit type and the total

residential income.

Evergreen Gardens ‐ Residential Income

Unit Type Unit Type BR BAUnit

SF

Total Size

SF

# of

Units

Market

Rent

Monthly

Market

Rent

per SF

Total Average

Monthly Rent

Lot 1

LF ‐ Studio ‐ Market DS 1.0 1.0 426 24,293 57 $2,500 $5.87 $142,500

LF ‐ 1BR ‐ Market DS 1.0 1.0 615 87,393 142 $3,200 $5.20 $454,400

LF ‐ 2BR ‐ Market DS 2.0 1.0‐2.0 843 36,234 43 $4,200 $4.98 $180,600

UF ‐ Studio ‐ Market DS 1.0 1.0 443 9,293 21 $2,900 $6.55 $60,900

UF ‐ 1BR ‐ Market DS 1.0 1.0 627 40,146 64 $3,500 $5.58 $224,000

UF ‐ 2BR ‐ Market DS 2.0 1.0‐2.0 875 23,628 27 $4,500 $5.14 $121,500

Studio ‐ Low Income 421‐A 1.0 1.0 467 8,877 19 $897 $1.92 $17,043

1BR ‐ Low Income 421‐A 1.0 1.0 657 34,143 52 $963 $1.47 $50,076

2BR ‐ Low Income 421‐A 2.0 1.0‐2.0 894 16,088 18 $1,166 $1.30 $20,988

Lot 48

LF ‐ Studio ‐ Market DS 1.0 1.0 425 52,299 123 $2,500 $5.88 $307,500

LF ‐ 1BR ‐ Market DS 1.0 1.0 622 65,356 105 $3,200 $5.14 $336,000

LF ‐ 2BR ‐ Market DS 2.0 1.0‐2.0 824 38,726 47 $4,200 $5.10 $197,400

UF ‐ Studio ‐ Market DS 1.0 1.0 440 12,321 28 $2,900 $6.59 $81,200

UF ‐ 1BR ‐ Market DS 1.0 1.0 600 27,004 45 $3,500 $5.83 $157,500

UF ‐ 2BR ‐ Market DS 2.0 1.0‐2.0 836 27,582 33 $4,500 $5.38 $148,500

Studio ‐ Low Income 421‐A 1.0 1.0 464 15,781 34 $897 $1.93 $30,498

1BR ‐ Low Income 421‐A 1.0 1.0 644 21,912 34 $963 $1.49 $32,742

2BR ‐ Low Income 421‐A 2.0 1.0‐2.0 879 16,703 19 $1,166 $1.33 $22,154

Estimated Annual Residential Income $31,026,012

INCOME APPROACH

97

Commercial Income

Next we analyze the commercial income.

Market Rent Analysis

The table on the following page presents the Property’s commercial rent roll together with our market rent estimate. According to information provided by the Client, the Property is expected to have 32,466 square feet of ground floor retail space, 20,570 square feet of leasable commercial cellar space with adequate ceiling height, and 28,805 square feet of second floor commercial space. Commercial space is expected to be accessed through Evergreen Avenue and will consist of various space sizes in different locations. Rents for the commercial space have been estimated based on rents prevalent in the market and discussions with local brokers who are familiar with the Property and the immediate neighborhood.

INCOME APPROACH

98

Evergreen Gardens ‐ Commercial Rent Roll

Total Units Multiple Occupied Units 0 0 Rental Income (Total & PSF) $2,574,190 $31.45

Total Rentable SF 81,841 Vacant Units 3 0 Pass‐Through Income (Total & PSF) $0 $0.00

Total Units 0 0% Total Income (Total & PSF) $2,574,190 $31.45

Δ Market/Contract Rent 0%

#Tenant

TypeLocation Frontage

Unit

SF

Lease

Start

Lease

End

Mnts

to

Exp

Occ.

(Y/N)

Budget

Rent

per SF

Appraiser

Estimate

Annual

Appraiser

Estimate

per SF

Market

Rent

per SF

RE Taxes

Pass‐

Through

Insurance

Pass‐

Through

Other Pass‐

Through

Lease

Notes

1 Various Ground Level Evergreen 32,466 N/A N/A N/A N $35.00 $1,298,640 $40.00 $40.00 $0 $0 $0 [1]

2 Various Cellar Level N/A 20,570 N/A N/A N/A N $25.00 $411,400 $20.00 $20.00 $0 $0 $0 [1]

3 Various 2nd Floor N/A 28,805 N/A N/A N/A N $25.00 $864,150 $30.00 $30.00 $0 $0 $0 [1]

Source: Documentation provided by the Cl ient for each tenant

Notes :

[1] Commercia l space i s expected to be accessed through Evergreen Avenue and wi l l cons is t of various space s i zes in di fferent locations .

Summary

INCOME APPROACH

99

In order to estimate market rents for the Property’s market units, we (1) reviewed rents at similar properties in the Property’s market (this discussion will be presented in the next section, (2) rents being budgeted by the Client (presented in the rent roll on the prior page), and (3) held discussions with local brokers who are familiar with the Property and the immediate neighborhood.

The following is the analysis of rental rates at comparable properties.

Analysis of Comparable Rentals – Ground Floor Retail

In analyzing the comparable retail rental data, we considered the competitive property’s location/access/visibility, age/condition/quality/design/amenities, unit sizes and other (if applicable). The properties that have been chosen as market rent comparables are believed to provide adequate support to estimate the Property’s market rental rates.

Please refer to Addendum I for the presentation of the Comparable Retail Rental Grid and Addendum J for the presentation of the Comparable Retail Rental Write‐ups. For readers convenience we present a brief summary table of comparable retail rentals in the table below with a location map on the following page.

Evergreen Gardens ‐ Summary of Ground Floor Retail Rent Comparables

Item Property Name NeighborhoodYear

Built

Leased

Area

(SF)

Initial

Year Rate

($/SF)

Overall

Rating

Subject Evergreen Gardens Bushwick 2018 81,841 N/A N/A

Rent 1 336 Himrod Street Bushwick 2017 3,678 $60.00 Superior

Rent 2 92 Bogart Street East Williamsburg 2018 64,000 $55.00 Inferior

Rent 3 92 Bogart Street East Williamsburg 2018 16,000 $38.00 Inferior

Rent 4 215 Moore Street East Williamsburg 2018 7,000 $48.00 Inferior

Rent 5 247 Wilson Avenue Bushwick 1931 800 $45.00 Similar

Rent 6 468 Bushwick Avenue Bushwick 1931 800 $45.00 Inferior

Rent 7 608 Bushwick Avenue Bushwick 1931 420 $62.86 Superior

Rent 8 610 Bushwick Avenue Bushwick 1931 700 $72.00 Superior

Rent 9 590 Bushwick Avenue Bushwick 1931 1,500 $40.00 Superior

Rent 10 366 Johnson Avenue East Williamsburg 1954 18,175 $27.00 Inferior

Rent 11 279 McKibbin Street East Williamsburg 2004 15,833 $38.00 Inferior

Rent 12 253 Bushwick Avenue East Williamsburg 1920 800 $60.00 Superior

MIN $27.00

MAX $72.00

AVERAGE $49.24

INCOME APPROACH

100

Comparable Retail Rental Map

Note: Rent comp 2 and 3 are the same property – only rent comp 3 is visible in the map above. Rent comp 7 and 8 are the same property – only rent comp 8 is visible in the map above

Analysis of Comparable Rents

The following table summarizes our qualitative observations relating to the comparable retail rentals as compared to the Property.

Location/Access/Visibility

The Property is located in Bushwick neighborhood of Brooklyn. It has typical access to public

transportation, commercial thoroughfares, schools, services and employment. It is in an area

with available land for development and moderate/substantial expansion in the projected

future.

Comparables 1, 5, 7, 8, and 9 are also located in Bushwick; however, because they are on

primary commercial thoroughfares they are considered to have a superior location resulting in a

downward adjustment.

Comparables 2, 3, 4, 10, and 11 are located in East Williamsburg and are considered to have an

inferior location resulting in an upward adjustment.

Comparable 6 is located in Bushwick and is considered to have a similar location to the Property

requiring no adjustment.

INCOME APPROACH

101

Comparable 12 is located in East Williamsburg on a primary commercial thoroughfare and is

considered to have a superior location to the Property requiring a downward adjustment.

The Property and rent comparables are located on paved, public streets with similar access.

Overall, no adjustments for access are necessary.

All comparables have similar visibility from neighborhood roads and or frontage roads. No

adjustments are considered necessary for visibility.


Comparables 1, 2, 3, and 4 are new developments similar to the Property, thus no adjustment is required for this category.

At completion, the Property is expected to be the newest product in the market and have amenities that are unique to this market. As a result, comparables 5 through 12 were adjusted upward for this category.

Unit Size

No adjustment is warranted for this category as the Property is expected to have various tenant

sizes.

Overall

Overall rent comparables 1, 7, 8, 9 and 12 are considered superior to the Property. Comparable

5 is considered to be similar to the Property. The rest of the comparables are considered to be

inferior to the Property.

Adjustment Grid

Please refer to Addendum I for the presentation of the Comparable Retail Rental Grid and Addendum J for the presentation of the Comparable Retail Rental Write‐ups.

INCOME APPROACH

102

Market Participant Input

We interviewed brokers to gain further insight of market rental rates for properties similar to the Property in the market area.

The following table presents a summary of our discussions with local brokers, and summarizes our analysis together with our estimate of market rents for the commercial space at the Property.

It should be noted that cellar level and second floor commercial space is not prevalent in the market; as a result, we relied on broker opinions to estimate the rents the Property could command once completed rather than comparable leases.

Evergreen Gardens ‐ Market Participant Discussions ‐ Retail Rents / SF

ContactQuoted Range ‐

Ground Level

Quoted Range ‐

Cellar Level

Quoted Range ‐

2nd Floor

Local Broker $35 to $40 $10 to $15 N/A

Local Broker $60 to $65 $20 $45 to $50

Local Broker $40 to $45 $15 to $20 $25 to $30

Local Broker $40 $20 $25 to $30

Appraiser Estimate $40.00 $20.00 $30.00

INCOME APPROACH

103

Commercial Income Summary

The following table summarizes the estimated market rents for each commercial floor type and

the total commercial income.

Evergreen Gardens ‐ Commercial Income

LocationTotal Size

SF

Market Rent

per SF

Total Average

Rent

Ground Level 32,466 $40.00 $1,298,640

Cellar Level 20,570 $20.00 $411,400

2nd Floor 28,805 $30.00 $864,150

Estimated Annual Commercial Income $2,574,190

INCOME APPROACH

104

Parking Income

The Property is expected to have 417 parking spaces. The table below shows parking allocation for commercial and residential components. Based on review of monthly parking rates in the Property’s surrounding area, each space is expected to achieve a rent of $225 per month.

Concessions

One definition of a concession by The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal

Institute, is as follows: “an inducement for a tenant to lease space, sometimes, but not always,

observed in overbuilt markets, which can include above‐standard tenant improvements, free

rent, moving cost reimbursement or credit, and buyout of the tenant’s existing lease.

Concessions are an integral part of the definition of market rent.”

Concessions are not prevalent in the Property’s market; however, based on discussions with

market participants we understand that some properties are offering short‐term concessions

(especially during lease‐up). We have not directly included concessions in our analysis; however,

considered them in our vacancy and collection loss assumption.

Recoveries

We don’t anticipate the Property to collect any recovery income.

Other Income

The Property is expected to collect fees for usage of the amenities estimated at $200 per

residential unit per year.

Parking Use Parking Spaces

Residential 364

Commercial 53

Total 417

Evergreen Gardens ‐ Parking Spaces Summary

INCOME APPROACH

105

Vacancy and Credit Loss

Vacancy and collection loss is defined by The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal Institute, as follows: “a deduction from potential gross income (PGI) made to reflect income reductions due to vacancies, tenant turnover, and nonpayment of rent.”

In order to estimate vacancy and credit loss for the Property, we considered current and

historical vacancy in the market – this information is presented in the table below.

Based on the vacancy statistics presented in the table above and considering discussions with

market participants we estimate vacancy and collection loss to be 0.0% for income from

affordable units, 3.0% for income from market rate residential units and 7.0% for all other

income at the Property.

Unit Turnover

It is typical in the market for the individual tenant to pay a broker commission; however, ownership intends to cover this cost for the tenant in order to achieve higher rents at the Property. We assumed that a broker commission of approximately 1% of the income generated from the market rate units will be incurred at the Property every year.

Vacancy Statistics

MarketCurrent

Vacancy

5‐Year

Average

Vacancy

10‐Year

Average

Vacancy

15‐Year

Average

Vacancy

Brooklyn ‐ Apartment 2.30% 2.74% 2.89% 2.72%

Bushwick ‐ Apartment 2.40% 3.50% 3.63% 3.47%


INCOME APPROACH

106

EFFECTIVE GROSS INCOME

Effective gross income is defined by The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal Institute, as follows: “the anticipated income from all operations of the real estate after an allowance is made for vacancy and collection losses and an addition is made for any other income.”

Stabilized gross income at the Property is estimated to be $33,422,636.

INCOME APPROACH

107

EXPENSE ANALYSIS

The next step in our analysis is to estimate operating expenses for the Property. Operating expenses are subtracted from the effective gross income (which was previously estimated) to arrive at the Net Operating Income.

Below is a discussion of the estimated stabilized operating expenses for the Property.

In order to estimate expenses for the Property, we analyzed (1) the Client’s budget expenses and (2) expenses of seven comparable properties in the Property’s market.

Expense Data Analysis

The following discussion relates to expense assumptions we made in regards to the Property.

Real Estate Taxes

A complete discussion of taxes for the Property is included in the Real Estate Taxes section of this report.

The table below presents the real estate taxes budgeted by the Client for the Property, real estate taxes for comparable properties in the marketplace, and our estimate for this expense.

Real Estate Taxes

Source / SF / Res. Unit %EGI

Evergreen Gardens

Management Budget $0.00 $0 0.00%

Expense Comparables

Comp # 1 $7.82 $6,830 18.26%

Comp # 2 $16.39 $12,124 27.96%

Comp # 3 $2.58 $2,631 6.30%

Comp # 4 $8.56 $8,473 16.00%

Comp # 5 $10.24 $5,821 13.78%

Comp # 6 $9.62 $6,502 15.25%

Comp # 7 $14.03 $13,259 25.22%

Comprable Min $2.58 $2,631 6.30%

Comprable Max $16.39 $13,259 27.96%

Comprable Average $9.89 $7,949 17.54%

Comprable Median $9.62 $6,830 16.00%

Appraiser Stabilized Estimate $14.14 $10,029 27.34%

INCOME APPROACH

108

Utilities

This expense category includes expenses for fuel (heating, cooking and hot water), gas, electricity, water and sewer, trash removal and other utilities. Utilities are generally property specific and vary considerably from property to property in the Property’s market based on the utilities paid by the tenant and the owner.

Tenants are expected to be responsible for all utility expenses at the Property with the exception of water and sewer.

The table below presents the utilities expense budgeted by the Client for the Property, utilities for comparable properties in the marketplace, and our estimate for this expense.

Utilities


Evergreen Gardens


Expense Comparables

Comp # 1 $1.33 $1,158 3.10%

Comp # 2 $3.69 $2,731 6.30%

Comp # 3 $0.92 $936 2.24%

Comp # 4 $1.30 $1,282 2.42%

Comp # 5 $1.62 $921 2.18%

Comp # 6 $2.60 $1,754 4.11%

Comp # 7 $2.64 $2,493 4.74%

Comprable Min $0.92 $921 2.18%

Comprable Max $3.69 $2,731 6.30%




INCOME APPROACH

109

Repairs and Maintenance

This expense category includes all expenses incurred for the general repairs and maintenance, including common areas and general upkeep. Repairs and maintenance expenses include electrical, plumbing, safety systems, pest control/exterminating, and contract services for common area maintenance including roads and grounds (landscaping, snow removal, parking lot maintenance). This expense also includes unit turnover (with the exception of broker fee which was accounted for under Unit Turnover). This portion includes various costs associated with repairs and maintenance of the interior apartment units at tenant turnover, to make ready for new tenant occupancy. These costs include painting, decorating, cleaning and minor repairs and replacements. Additional costs associated with replacements of items such as appliances, carpet and fixtures are reflected in the replacement reserve presented later in this section.

The table below presents the repairs and maintenance expense budgeted by the Client for the Property, repairs and maintenance for comparable properties in the marketplace, and our estimate for this expense.

Repairs & Maintenance


Evergreen Gardens


Expense Comparables

Comp # 1 $0.69 $600 1.60%

Comp # 2 $1.19 $878 2.03%

Comp # 3 $0.58 $587 1.41%

Comp # 4 $1.03 $1,018 1.92%

Comp # 5 $1.23 $700 1.66%

Comp # 6 $2.84 $1,917 4.50%

Comp # 7 $0.65 $615 1.17%


Comprable Max $2.84 $1,917 4.50%

Comprable Average $1.17 $902 2.04%

Comprable Median $1.03 $700 1.66%

Appraiser Stabilized Estimate $1.00 $709 1.93%

INCOME APPROACH

110

Management Fee

This expense includes the costs paid for professional management services. Management services may be contracted for or provided by the property owner.

The table below presents the management fee expense budgeted by the Client for the Property, management fee for comparable properties in the marketplace, and our estimate for this expense.

Management fees


Evergreen Gardens


Expense Comparables

Comp # 1 $1.28 $1,122 3.00%

Comp # 2 $1.47 $1,084 2.50%

Comp # 3 $1.01 $1,032 2.47%

Comp # 4 $1.61 $1,589 3.00%

Comp # 5 $1.49 $845 2.00%

Comp # 6 $1.26 $853 2.00%

Comp # 7 $2.23 $2,103 4.00%


Comprable Max $2.23 $2,103 4.00%




INCOME APPROACH

111

Insurance

This expense includes expenditures for property insurance and owner’s liability insurance. Property insurance includes coverage for loss or damage to the property caused by the perils of fire, lightning, extended coverage perils, vandalism and malicious mischief, and additional perils.

The table below presents the insurance expense budgeted by the Client for the Property, insurance expense for comparable properties in the marketplace, and our estimate for this expense.

Insurance


Evergreen Gardens


Expense Comparables

Comp # 1 $0.86 $755 2.02%

Comp # 2 $0.25 $185 0.43%

Comp # 3 $0.31 $316 0.76%

Comp # 4 $0.40 $400 0.76%

Comp # 5 $0.51 $292 0.69%

Comp # 6 $0.44 $300 0.70%

Comp # 7 $1.17 $1,106 2.10%


Comprable Max $1.17 $1,106 2.10%

Comprable Average $0.57 $479 1.06%

Comprable Median $0.44 $316 0.76%


INCOME APPROACH

112

Other Operating

This expense category includes professional fees and other general administrative expenses and services needed to operate the property such as telephone, legal, audit and accounting, as well as furniture, fixtures and equipment, and other miscellaneous office supplies and expenses. It also includes total payroll costs for on‐site management and maintenance personnel including employee salaries, bonuses, payroll taxes, insurance and other benefits.

In addition, this expense category includes expenses related to advertising, promotion, sales, and publicity and all related printing, stationary, artwork, magazine space, internet/web site, broadcasting, and postage related to marketing.

The table below presents the other operating expense budgeted by the Client for the Property, other operating expense for comparable properties in the marketplace, and our estimate for this expense.

Other Operating


Evergreen Gardens


Expense Comparables

Comp # 1 $0.84 $734 1.96%

Comp # 2 $7.57 $5,602 12.92%

Comp # 3 $2.98 $3,038 7.28%

Comp # 4 $0.91 $902 1.70%

Comp # 5 $7.69 $4,372 10.35%

Comp # 6 $6.03 $4,078 9.56%

Comp # 7 $0.49 $462 0.88%


Comprable Max $7.69 $5,602 12.92%




INCOME APPROACH

113

Total Operating Expenses without Real Estate Taxes

The table below presents the total operating expenses without real estate taxes budgeted by the Client for the Property, total operating expenses without real estate taxes for comparable properties in the marketplace, and our total operating expense without real estate taxes estimate.

The total operating expenses are reasonable and supportable given the market data presented in the table above. It should be noted that while we presented estimates for individual expense items above, our focus is on total operating expenses and their relationship to the effective gross income. Overall, our expenses are on the low end of the rage because the Property is much larger than the comparable properties and newer, which will allow for scale and efficiencies in operations.

TOTAL EXPENSES W/O RE TAXES


Evergreen Gardens

Management Budget $3.13 $2,220 6.26%

Expense Comparables

Comp # 1 $5.00 $4,370 11.68%

Comp # 2 $14.17 $10,480 24.17%

Comp # 3 $5.79 $5,909 14.15%

Comp # 4 $5.24 $5,192 9.80%

Comp # 5 $12.54 $7,130 16.88%

Comp # 6 $13.17 $8,902 20.87%

Comp # 7 $7.18 $6,779 12.89%

Comprable Min $5.00 $4,370 9.80%

Comprable Max $14.17 $10,480 24.17%




INCOME APPROACH

114

NET OPERATING INCOME

Net Operating Income is defined by The Dictionary of Real Estate Appraisal, Sixth Edition, Appraisal Institute, as follows: “the actual or anticipated net income that remains after all operating expenses are deducted from effective gross income but before mortgage debt service and book depreciation are deducted.”

Stabilized net operating at the Property is estimated to be $19,431,997.

INCOME APPROACH

115

DIRECT CAPITALIZATION ANALYSIS

The last step in our income approach analysis is to convert the previously estimate net operating income into value, meaning perform the direct capitalization analysis. This method converts a single year’s income expectancy into an indication of value through the use of the formula I / R = V (income / rate = value). The net operating Income estimate presented previously is divided by an overall capitalization rate, which is derived from market indicators to arrive at a property value.

According to The Appraisal of Real Estate Appraisal, Fourteenth Edition, overall capitalization rates can be estimated with various techniques. The techniques used depend on the quantity and quality of data available. When supported by appropriate market data, accepted techniques include: (1) derivation from comparable sales, (2) band of investment—mortgage and equity components, (3) band of investment—land and building components, (4) the debt coverage analysis, (5) analysis of yield capitalization rates, and (6) surveys.

Derivation from Comparable Sales Data

According to The Appraisal of Real Estate Appraisal, Fourteenth Edition, deriving capitalization rates from comparable sales is the preferred technique when sufficient information about sales of similar, competitive properties is available.

The following table summarizes overall capitalization rates derived from the improved property sales. Data on each property’s sale price, income, expenses, financing terms, and market conditions at the time of sale were obtained. In addition, we made certain that the net operating income of each comparable property is calculated and estimated in a consistent way to that of the net operating income of the Property was estimated.

Evergreen Gardens ‐ Summary of Capitalization Rates from Comparable Sales

Item Property NameYear

Built

Gross

Building

Area (SF)

Sale DateEffective Sale

Price

Price

per SF

of GBA

NOI per

SF of

GBA

NOI

RatioOAR

Subject Evergreen Gardens 2018 646,022 N/A N/A N/A $30.08 55.67% N/A

Sale # 1 97 Grand Ave & 96 Steuben St 2012 54,148 7/10/2017 $32,850,000 $607 $30.01 67.96% 4.95%

Sale # 2 The Addison 2011 200,486 12/15/2016 $130,750,000 $652 $28.07 46.53% 4.30%

Sale # 3 The Berkley 2016 96,984 12/5/2016 $66,375,000 $684 $32.53 78.04% 4.75%

Sale # 4 385 Union Avenue 2008 46,523 9/20/2016 $41,352,000 $889 $39.71 71.69% 4.47%

Sale # 5 Atelier Williamsburg 2013 68,214 3/31/2016 $75,172,500 $1,102 $51.51 68.00% 4.67%

Sale # 6 250N10 2014 158,118 5/1/2015 $158,200,000 $1,001 $40.32 62.28% 4.03%

Sale # 7 Triangle Court 2012 49,127 Listing $37,050,000 $754 $34.45 60.04% 4.57%

MIN $607 $28.07 46.53% 4.03%

MAX $1,102 $51.51 78.04% 4.95%

AVERAGE $813 $36.65 64.93% 4.53%

INCOME APPROACH

116

Derivation from Investor Surveys

According to The Appraisal of Real Estate Appraisal, Fourteenth Edition, various national real estate and research firms survey institutional investors periodically and publish the discount and capitalization requirements of those investors. The results of these surveys can give appraisers an overall picture of current return requirements (in contrast to historical performance data). Many appraisers survey investors and other market observers in their local markets to augment secondary survey data.

In the development of a capitalization rate, surveys are generally used as support rather than as primary evidence of a capitalization rate.

In our analysis we relied on investor surveys (see table below which presents overall capitalization rates we considered in our analysis) and we also interview market participants to obtain their view on a cap rate the Property would command in a hypothetical transaction as of the Effective Date of Fair Value.

Survey information presented in the table above includes rent stabilized buildings with upside to increase cash flows which typically trade at lower going‐in cap rates.

Multi‐Family Overall Capitalization Rates

Source MarketSurvey

DateAverage [1]

Cushman & Wakefield Brooklyn Elevator Apartment Properties 2Q 2017 4.21%

CBRE Manhattan Apartment Properties 2Q 2017 4.00% to 5.00%

Integra Realty Resources Manhattan ‐ Class A Apartment Properties 2Q 2017 3.50% to 4.00%

Ariel Property Advisors Brooklyn Apartment Properties 2Q 2017 4.88%

Notes :

[1] It should be noted that rent s tabi l i zed properties are included as part of this information.

INCOME APPROACH

117

Going‐in Capitalization Rate Conclusion

The criteria outlined in this section served as the basis in the selection of a reasonable and supportable capitalization rate for the Property. The table below summarizes our research relating to the capitalization rates and presents our estimate.

Overall Capitalization Rate Reconciliation

Source Min Max Average

Comparable Sales 4.03% 4.95% 4.5%

Surveys 3.50% 4.50% N/A

Market Participant Input 4.50% 5.00% N/A

Appraiser Overall Capitalization Rate Estimate 4.75%

INCOME APPROACH

118

INCOME APPROACH CONCLUSION

Based on the analysis presented above, the following table presents our conclusion via direct capitalization technique, as of the Effective Date.

Evergreen Gardens

Net Operating Income $19,431,997

Divided By Overall Rate 4.75%

Capitalized Value Indication $409,094,666

Less Adjustments

Lease‐up Costs ($29,870,984)

Renovation Costs or Remaining Cost to Complete ($179,373,501)

Plus Adjustments

PV of RE Tax Benefit $133,000,000


Indicated Value (rounded) ‐ As of the Effective Date ("As Is") [1] $303,000,000

Notes:


Direct Capitalization Summary

INCOME APPROACH

119

ADJUSTMENTS IN THE TABLE ABOVE

Since the Property is currently under construction, the costs to complete the construction and the costs to lease‐up the Property to stabilized occupancy need to be subtracted from the stabilized value calculated above (the same was done in the Cost and Sales Comparison Approaches).

Lease‐up Costs ‐ Residential

The table below presents the calculation of the lease‐up costs to achieve stabilized occupancy for the residential component of the Property.

We assumed that it will take 18‐months to lease‐up the Property. This estimate was based on the review of lease‐up period of newly development properties in Brooklyn (see table below).

Evergreen Gardens ‐ Lease‐up Costs ‐ Residential

Project Status

% Complete 34%

Total Number of Market Residential Units 822.0

Months to Completion & TCO 12.0

Average No. Months to Lease‐up [1] 10.0

Estimated Rent/Unit (avg) $3,282

Items Amount

Leasing Commission $0

Tenant Improvements $0

Free Rent $0

Rent Loss During Downtime $26,975,020

Total Lease‐up Costs ‐$26,975,020

Notes :

[1] Assumed lease‐up of 18 months based on discuss ion with loca l brokers , resul ting in average rent loss of 9 months .

Under Construction (Expected Completion: Phase 1 ‐ 1Q 2018,

Phase 2 ‐ 3Q 2018)

INCOME APPROACH

120

Lease‐up Costs – Commercial

The table below presents the calculation of the lease‐up costs to achieve stabilized occupancy for the commercial component of the Property.

Evergreen Gardens ‐ Lease‐up Comprables ‐ Brooklyn

Property Neighborhood Year BuiltTotal Residential

Units

Lease‐up

Period

(Months)

1040 Dean Crown Heights 2017 120 8

The Berkley Williamsburg 2016 95 12

670 Pacific Prospect Heights 2016 81 12

505 St Marks Crown Heights 2015 147 12

1 N 4th Place Williamsburg 2015 509 12

247 N 7th Street Williamsburg 2015 195 12

Atelier Williamsburg 2015 120 12

365 Bond Gowanus 2016 430 9

The Kestrel Windsor Terrace 2015 126 9

10 City Pt Downtown Brooklyn 2016 438 12

Avalon Willoughby Square Downtown Brooklyn 2016 321 12

The Parkline Prospect Lefferts Gardens 2016 254 12

AVA DoBro Downtown Brooklyn 2015 500 15

Evergreen Gardens ‐ Lease‐up Costs ‐ Commercial Space

Term Period 10 Years

Annual Increase 3.00%

Rent Schedule Rent Leasing Commission

Year 1 $2,574,190 4.5 months

Items Amount

Leasing Commission [1] $965,321

Tenant Improvements $0

Free Rent $0

Rent Loss During Downtime [2] $1,930,643

Total Lease‐up Costs ‐$2,895,964

Notes:

[1] Assumed 4.5 months of fi rs t year's rent based on discuss ions with loca l brokers .

[2] Assumed lease‐up of 18 months based on discuss ion with loca l brokers , resul ting

in average rent loss of 9 months .

INCOME APPROACH

121

Renovation Costs or Remaining Cost to Complete

The remaining costs to complete the construction were previously discussions in the Planned Development section.

Present Value of Real Estate Tax Benefit

The present value of the real estate tax benefit was previously discussions in the Real Estate Tax Analysis section.

Discounting of the “As Complete” Fair Value

According to the Client, the construction is expected to be completed approximately 12 months after the Effective Date. As a result, the “As Complete” fair values estimated via the Income, Sales, and Cost Approaches were discounted back by 12 months at a monthly discount rate of 0.80% to arrive at the “As Is” fair value estimate as of the Effective Date. The discounting is meant to account for the time value of money and the risks in any potential market changes between the Effective Date and the date of completion. The discounting is meant to account for the time value of money and the risks in any potential market changes between the Effective Date and the date of completion.

RECONCILIATION

122

RECONCILIATION


COST APPROACH

The cost approach was developed via analysis of four comparable land sales and one listing, as well as seven secondary land transactions, replacement cost of the improvements (developer and costs from similar developments were considered), plus the entrepreneurial incentive. The approach is given secondary weight in the reconciliation.


The sales comparison approach was developed utilizing seven transactions of similar apartment properties from the Brooklyn market. The sales are recent and the adjustments are considered reasonable. Overall, the data was considered adequate to provide a reliable indication of value for the subject. The sales comparison approach is given weight in the final reconciliation.

INCOME APPROACH

A potential investor would pay particular attention to the income approach as it provides an indication of the likely income, expenses and cash flow of the property. The subject’s specific analysis included a survey of ten competitive market rate apartment properties to estimate residential market rent. Adequate market data for estimate of vacancy and expenses. The capitalization rate selection included rates extracted form sales, survey data and market participants. Overall, the inputs were adequate to provide a reasonable indication of value. The income approach is given weight in the reconciliation.

Evergreen Gardens ‐ Value Indications

AnalysisValue

Indication$/SF of GBA

$/Residential

Unit

Fair Value of RE Tax Benefit $133,000,000 $206 $145,993

Cost $296,000,000 $458 $324,918

Sales Comparison $298,000,000 $461 $327,113

Income Capitalization $303,000,000 $469 $332,602

Δ Sales/Income Approach 2%

Final Value Estimate $300,000,000 $464 $329,308

Notes :

[1] Fina l Value Estimate includes va lue of a rea l estate tax benefi t (i f appl icable).

RECONCILIATION

123

FAIR VALUE CONCLUSION


The above estimate is subject to the Certification, and Assumptions and Limiting Conditions presented later in this report.

In addition, we made the following specific assumption as part of this appraisal assignment:



Evergreen Gardens ‐ Value Conclusion Detail

Valuation

Type

Value

Premise

Value

Perspective

Interest

Appraised

Effective

Date

Indicated

Value

Fair Value As Is Current Fee Simple 06/30/2017 $300,000,000

RECONCILIATION

124

SENSITIVITY ANALYSIS

The Client requested that we calculate the potential sensitivity around our fair value estimate. As part of the requested sensitivity analysis, we varied our implied overall capitalization rate estimate by 25 basis points and NOI estimate by 2.5%. The sensitivity calculations together with our fair value estimate are shown in the table below.

Sensitivity Analysis: Varying Overall Capitalization Rate (25 bpts)

$312,000,000 $300,000,000 $289,000,000

Sensitivity Analysis: Varying Net Operating Income (2.5%)

$293,000,000 $300,000,000 $308,000,000

CERTIFICATION

125

CERTIFICATION

I certify that, to the best of my knowledge and belief:

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

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

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

I have performed services, as an appraiser, regarding the property that is the subject of this report within the three‐year period immediately preceding acceptance of this assignment.

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

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

My compensation 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.

My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

I have made a personal inspection of the property that is the subject of this report.

No one provided significant real property appraisal assistance to the person signing this certification.

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

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

As of the date of this report, Lev Yagudayev, MAI has completed the requirements of the continuing education program of the Appraisal Institute for Designated Members.

We hereby disclose that in the engagement agreement (the “Engagement Agreement”) between the Client and Level Valuation dated June 23, 2017, the Client agreed to indemnify and hold harmless Level Valuation LLC and its Representatives (individually “Indemnified Party” and collectively, the “Indemnified Parties”), from and against any losses, claims, damages, demands, and liabilities (“Damages”), joint or several, related to or arising in any manner out of (i) any transaction contemplated by this Agreement or in connection with this Agreement or the performance of Services under this Agreement by the Indemnified Party (ii) any actual or alleged untrue statement of material fact, or the actual or alleged failure to state a material fact necessary to make a statement not misleading in light of the circumstances under which it was made with respect to all the information furnished to any Indemnified Party or made available to a prospective party to a transaction, or (iii) an actual or alleged violation of applicable law by Client (including without limitation, securities laws) or the negligence or intentional acts or

CERTIFICATION

126

omissions of Client (including the failure to perform any duty imposed by law).

We also disclose that based on the Engagement Agreement, Client shall not be liable in respect of any Damages that a court of competent jurisdiction shall have determined by final non‐appealable judgment resulted solely from the gross negligence, fraud or willful misconduct of an Indemnified Party. The Indemnified Parties will be responsible for an exposure of three times the fees received (exclusive of reimbursed expenses) by Level Valuation LLC from Client for the services provided herein and the Client shall reimburse for amounts in excess of such threshold, provided, however that no cap on indemnification shall apply with respect to Damages resulting from information received solely from Client, and for which Level Valuation LLC indicated in its appraisal report was received from the Client and that in its appraisal report it relied on it, in which case Indemnified Parties will be fully reimbursed and will not be responsible for the exposure specified above.

LEVEL VALUATION LLC

________________________ Lev Yagudayev, MAI NY General Real Estate Appraiser License Number: 46000044217 Expiration: March 6, 2019

Addenda

Addendum A – Assumptions and Limiting Conditions

Addendum B – Property Photographs

Addendum C – Comparable Land Grid

Addendum D1 – Comparable Land Sale Write‐ups

Addendum D2 – Secondary Comparable Land Sale Write‐ups

Addendum E – Comparable Improved Sales Grid

Addendum F – Comparable Improved Sale Write‐ups

Addendum G – Comparable Residential Rental Grid

Addendum H – Comparable Residential Rental Write‐ups

Addendum I – Comparable Retail Rental Grid

Addendum J – Comparable Retail Rental Write‐ups

Addendum K ‐ Qualifications / License

Addendum A

Assumptions and Limiting Conditions

ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal report has been based on, and is subject to, the following general assumptions and

limiting conditions:

The fair values reported are only applicable to the purpose, function, and terms stated in this report and shall not be used for any other purpose.

The appraisers have assumed that the reader(s) of this report is well versed in real estate and is a sophisticated and knowledgeable business person(s).

No responsibility is assumed for the legal description provided or for matters pertaining to legal or title considerations. Title to the property(ies) is assumed to be good and marketable unless otherwise stated. The property(ies) is appraised free and clear of any or all liens or encumbrances unless otherwise stated. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property(ies) described and that there is no encroachment or trespass unless noted in the report.

Responsible ownership and competent property management are assumed.

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

All engineering studies are assumed to be correct. The plot plans and illustrative material in this report are included only to help the reader visualize the property(ies).

It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them.

It is assumed that the property(ies) is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described and considered in the appraisal report. It is assumed that all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the fair value estimates contained in this report are based.

It is assumed that the property(ies) conforms to all applicable zoning and use regulations and restrictions unless nonconformity has been identified, described and considered in the appraisal report.

The appraisers shall not be required to give testimony as a witness or to appear in any capacity in any legal or administrative hearing or procedure, or to have any continued service responsibility unless compensated, by the engager of this report, in advance, according to their fee schedule then in effect.

Unless otherwise stated in this appraisal report, the existence of hazardous materials, which may or may not be present on the property(ies), was not observed by the appraiser. The appraiser has no knowledge of the existence of such material on or in the property(ies). The appraiser, however is not qualified to detect such substances. The presence of substances such as asbestos, urea‐formaldehyde foam insulation and other potentially hazardous materials may affect the fair value of the property(ies). The fair value estimated is predicated on the assumption that there are no such material on or in the property(ies) that would cause a loss in fair value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to discover them. The Client is urged to retain an expert in this field, if desired.

The appraisers are not engineers, no warranties are made by references to physical property characteristics in terms of quality, condition, cost, suitability, soil conditions, flood risk, obsolescence, etc., and no liability is assumed for any engineering‐related issues.

Possession of this report or a copy thereof does not imply right of publication, nor use for any purpose by anyone other than the person to whom it is addressed, without the written consent of Level Valuation.

The liability of Level Valuation, and its affiliates, employees, officers, directors and agents, is limited to the Client and the limits of liability are covered in the engagement agreement between the Client and Level Valuation. This appraisal was prepared specifically for the Client, to whom this appraisal was addressed.

The Client acknowledges that Level Valuation is a limited liability company and agrees that any claim made by the Client arising out of any act or omission of any director, officer, agent, or employee of Level Valuation, in the execution or performance of its contractual or professional responsibilities shall be made solely against Level Valuation and not against any such director, officer, agent or employee.

Cash flow projections are forecasts of estimated future operating characteristics and are predicated on the information and assumptions contained within the appraisal report. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may well vary from the projections contained herein. The appraisers do not warrant that these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of the appraisers. The appraisers are not trying to forecast the future but rather are attempting to replicate techniques utilized by market participants for properties similar to the subject property(ies).

Level Valuation is not an “expert” as such term is used in the Securities Act of 1933, as amended, and that Level Valuation is neither an issuer nor an underwriter of securities and has no direct liability to any investor in securities which are backed by payments.

The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a specific compliance survey and analysis of the subject property(ies) to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property (ies), together with a detailed analysis of the requirements for the ADA, could

reveal that the property(ies) is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the fair value of the property(ies). Since we have no direct evidence relating to this issue, we did not consider possible non‐compliance with the requirements of the ADA in estimating the fair value of the property(ies).

Addendum B

Property Photographs

View of the Property from Evergreen Avenue

and Melrose Street Corner

View of the Property from Stanwix and

Melrose Streets Corner

Looking North on Evergreen Avenue,

Property in Front and on Left

Looking West on Melrose Street,

Property on Right

Looking East on Melrose Street,

Property on Left

View of the Property from SW corner on

Melrose and Stanwix Streets

Looking North on Stanwix Street,

Property on Right

Looking South on Stanwix Street,

Property on Left

Looking East on Noll Street,

Property on Left

Looking West on Noll Street,

Property in Front

Looking South on Evergreen Avenue,

Property on Right

Inside View of the Property



Property Roof

View from the Property Roof

Addendum C

Comparable Land Grid

Evergreen Gardens - Sales Comparison Approach - Land

Subject Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5


Address 123 Melrose Street 123 Melrose Street 191-203 Harrison Avenue 1395-1407 Myrtle Avenue 67 Meserole Street 833-869 Myrtle Avenue

City, State, Zip Code Brooklyn, New York 11206 Brooklyn, New York 11206 Brooklyn, New York 11206 Brooklyn, New York 11237 Brooklyn, New York 11206 Brooklyn, New York 11206

Neighborhood Bushwick Bushwick Williamsburg Bushwick Williamsburg Bedford StuyvesantBlock 3152 3152 2269 3278 3041 1747Lot 1, 48, 100 1, 48, 100 1 5 9, 11, 12, 23, 25 1Property Sub Type Mixed Use Land Land Mixed Use Land Mixed Use Land Land Mixed Use Land

SITE DATA:

Site Area (SF) 155,490 155,490 30,000 15,613 20,000 94,000Gross Building Area (SF) 646,022 636,687 120,000 49,962 48,600 341,752FAR 4.15 4.09 4.00 3.20 2.43 3.64

Zoning CodeR6A and R7A with C2-4

Commercial OverlayR6A and R7A with C2-4

Commercial OverlayR7A with C2-4 Commercial

OverlayR6 with C2-3 Commercial

OverlayR6

R6A and R7A with C2-4 Commercial Overlay

Parcel Type Full-Block Mid-Block Corner Through Lot Through Lot Double CornerShape Irregular Irregular Irregular Irregular Rectangular RectangularNumber of Lots 3 3 1 1 5 1Site Plans Approved? Yes Yes No No No Yes

TRANSACTION DATA:

Contract Date N/A 1/20/2015 4/11/2016 N/A 4/14/2016 8/25/2014Sale Date N/A 4/5/2016 12/29/2016 Listing 4/21/2016 3/16/2015

Seller N/APrinceton Holdings LLC &

Read PropertiesPfizer, Inc. 1397 Myrtle LLC Verizon Communications

Alliance Private Capital Group

Buyer N/A All Year Management Individual N/A Two Trees Management Individuals

SALE CHARACTERISTICS:

Property Rights Conveyed N/A Fee Simple Fee Simple Fee Simple Fee Simple Fee SimpleConditions of Sale N/A Arms Length Arms Length Arms Length Arms Length Arms LengthFinancing Terms N/A Typical Typical Typical Typical Typical

SALE PRICE ANALYSIS:

Sale Price N/A $140,700,000 $26,889,525 $11,950,000 $15,650,000 $70,000,000 Property Rights Conveyed Adj. N/A $0 $0 $0 $0 $0 Financing Terms Adj. N/A $0 $0 $0 $0 $0 Conditions of Sale Adj. N/A $0 $0 ($3,000,000) $0 $0 Expenditures Immediately After Sale Adj. N/A $0 $450,000 $100,000 $0 $1,000,000 Effective Sale Price N/A $140,700,000 $27,339,525 $9,050,000 $15,650,000 $71,000,000

UNITS OF COMPARISON:

Price per Buildable Area N/A $221 $228 $181 $322 $208

Evergreen Gardens - Sales Comparison Approach (continued) - Land

TIME/MARKET CONDITIONS Annual Increase Apr-16 Dec-16 Listing Apr-16 Mar-15% Adjustment 7.5% 9.3% 3.8% 0.0% 8.9% 17.2%

LOCATION Similar Superior Inferior Superior Inferior% Adjustment 0.0% -5.0% 5.0% -25.0% 5.0%

SIZE Similar Smaller Smaller Smaller Similar% Adjustment 0.0% -5.0% -5.0% -5.0% 0.0%

SHAPE Similar Inferior Inferior Inferior Similar% Adjustment 0.0% 5.0% 5.0% 5.0% 0.0%

UTILITIES Similar Similar Similar Similar Similar% Adjustment 0.0% 0.0% 0.0% 0.0% 0.0%

TOPOGRAPHY Similar Similar Inferior Similar Similar% Adjustment 0.0% 0.0% 5.0% 0.0% 0.0%

ZONING / ENTITLEMENTS Similar Inferior Inferior Inferior Similar% Adjustment 0.0% 5.0% 5.0% 5.0% 0.0%

Total Adjustments to Time Adjusted Price per Buildable Area

Net % Adjustments 9.3% 3.8% 15.0% -11.1% 22.2%Total % Adjustments 9.3% 23.8% 25.0% 48.9% 22.2%

Adjusted Price per Buildable Area $241 $236 $208 $286 $254

Evergreen Gardens - Adjusted Price Indications

Minimum Adjusted Price per Buildable Area $208Maximum Adjusted Price per Buildable Area $286Average Adjusted Price per Buildable Area $245Median Adjusted Price per Buildable Area $241Relative Standard Deviation Adjusted Price (%) 10%

Evergreen Gardens - Indicated Value

Subject Buildable Area 646,022Reconciled Value per Buildable Area $250Indicated Value $161,505,500

Rounded $162,000,000

Notes:

[1] Sale # 1 is the most recent sale of the Property.

Addendum D1

Comparable Land Sale Write‐ups

Land Sale No. 1

PROPERTY

Address 123 Melrose Street Property Type Land

Neighborhood Bushwick Property Subtype Mixed Use Land

City, State Brooklyn, New York

Block / Lot 3152 / 1, 48, 100

SITE

Site Area (SF) 155,490 Number of Lots 3

Parcel Type Mid‐Block Buildable Area 636,687

Shape Irregular Zoning R6A and R7A with C2‐4 Commercial Overlay

TRANSACTION

Date of Contract 1/20/2015 % of Interest Conveyed 100%

Date of Sale 4/5/2016 Conveyance Doc. Type Bargain and Sale Deed

Sale Status Closed Document # N/A

Days on Market N/A Seller Princeton Holdings LLC & Read Properties

Buyer All Year Management

SALE PRICE

Sale Price $140,700,000

PR Conveyed Adj. $0 PR Conveyed Fee Simple

Financing Adj. $0 Financing Terms Typical

Conditions Adj. $0 Conditions of Sale Arms Length

Exp. After P. Adj. $0 Expenditures After Sale N/A

Effective Sale Price $140,700,000

Effective SP / SF $221

REMARKS

This is the most recent sale of the subject property. The transaction closed in two phases from the same seller (October 13, 2015 & April 5, 2016). At the time of sale the site was approved for a development of 467,796 square feet of zoning floor area. The buyer assumed that 636,687 square feet of zoning floor area can be developed on the site.

Land Sale No. 2

PROPERTY

Address 191‐203 Harrison Ave Property Type Land

Neighborhood Williamsburg Property Subtype Mixed Use Land


Block / Lot 2269 / 1

SITE


Parcel Type Corner Buildable Area 120,000

Shape Irregular Zoning R7A with C2‐4 Commercial Overlay

TRANSACTION



Sale Status Closed Document # 2017010900881001

Days on Market N/A Seller Pfizer, Inc.

Buyer Individual

SALE PRICE

Sale Price $26,889,525




Exp. After P. Adj. $450,000 Expenditures After Sale Yes



REMARKS

This parcel is located on the corner of Gerry Street and Harrison Avenue in the Williamsburg neighborhood of Brooklyn. At the time of sale, the site was un‐entitled with existing zoning allowing for a development of approximately 120,000 square feet. There were improvements on the site. Expenditures after purchase of $450,000 was applied to account for the demolition of the improvements.

Land Sale No. 3

PROPERTY

Address 1395‐1407 Myrtle Ave Property Type Land




SITE


Parcel Type Through Lot Buildable Area 49,962

Shape Irregular Zoning R6 with C2‐3 Commercial Overlay

TRANSACTION

Date of Contract N/A % of Interest Conveyed 100%

Date of Listing 6/28/2016 Conveyance Doc. Type N/A

Sale Status Listing Document # N/A

Days on Market N/A Seller 1397 Myrtle LLC

Buyer N/A

SALE PRICE




Conditions Adj. ‐$3,000,000 Conditions of Sale Arms Length

Exp. After P. Adj. $100,000 Expenditures After Sale Yes



REMARKS

The property is comprised of multiple lots (being combined into 1 lot) with frontage on Himrod Street and Myrtle Avenue in the Bushwick neighborhood of Brooklyn. The site could be developed into a mixed‐use property of approximately 49,962 square feet. Note that approvals are currently not in‐place. The property is currently listed for sale with an asking price of $12.0M. A condition of sale adjustment of $3.0M was applied to the asking price to account for the listing premium. There improvements on the site. Expenditures after purchase of $100,000 was applied to account for the demolition of the improvements. The property previously sold in November 2014 for $4,800,000.

Land Sale No. 4

PROPERTY

Address 67 Meserole Street Property Type Land

Neighborhood Williamsburg Property Subtype Land


Block / Lot 3041 / 9, 11, 12, 23, 25

SITE


Parcel Type Through Lot Buildable Area 48,600

Shape Rectangular Zoning R6

TRANSACTION




Days on Market N/A Seller Verizon Communications

Buyer Two Trees Management

SALE PRICE








REMARKS

The property is comprised of 5 lots which span across Meserole and Scholes Street between Lorimer and Leonard Streets in the Williamsburg neighborhood of Brooklyn. The site was vacant and unentitled at the time of sale.

Land Sale No. 5

PROPERTY

Address 833‐869 Myrtle Avenue Property Type Land

Neighborhood Bedford Stuyvesant Property Subtype Mixed Use Land



SITE


Parcel Type Double Corner Buildable Area 341,752

Shape Rectangular Zoning R6A and R7A with C2‐4 Commercial Overlay

TRANSACTION




Days on Market N/A Seller Alliance Private Capital Group

Buyer Individuals

SALE PRICE





Exp. After P. Adj. $1,000,000 Expenditures After Sale Yes



REMARKS

The property is comprised of multiple lots on the corner of Marcy and Myrtle Avenues, and Stockton Street in the Bedford Stuyvesant neighborhood of Brooklyn. The site was improved and in process of being entitled at the time of sale. In December 2014, plans were filed to build a 6‐story building comprising of 303,955 square feet of residential space and 37,797 square feet of commercial space. Expenditures after purchase of $1,000,000 was applied to account for the demolition of existing improvements on the site. The property previously sold in March 2013 for $27,000,000.

Addendum D2

Secondary Comparable Land Sale Write‐ups

Land Sale No. 1

PROPERTY

Address 100‐102 Suydam Street Property Type Land



Block / Lot 3217 / 4, 5

SITE


Parcel Type Interior Buildable Area 9,958

Shape Irregular Zoning R6 with C2‐3 Commercial Overlay

TRANSACTION




Days on Market N/A Seller 100, 102 Suydam Street LLC

Buyer Suydam Realty Holdings LLC

SALE PRICE








REMARKS

This mostly vacant site is located on Suydam Street and has frontage on Suydam Street and Myrtle Avenue. According to the building department records, approvals are in‐place for development of a mixed‐use property. The property previously sold in December 2014 for $1,250,000.

Land Sale No. 2

PROPERTY

Address 373‐383 Harman Street Property Type Land

Neighborhood Bushwick Property Subtype Multi‐Family Land


Block / Lot 3280 / 50, 52, 54

SITE



Shape Square Zoning R6

TRANSACTION



Sale Status Closed Document # Multiple

Days on Market N/A Seller Individual

Buyer Individual

SALE PRICE





Exp. After P. Adj. $100,000 Expenditures After Sale N/A



REMARKS

The property is comprised of 3 adjacent lots located on Harman Street between Wyckoff and Irving Avenues in the Bushwick neighborhood of Brooklyn. At the time of sale, lot 52 was improved with a 9,000 square foot building. Expenditures after purchase of $100,000 was applied to account for the demolition of the improvements.

Land Sale No. 3

PROPERTY

Address 1351‐1357 Dekalb Ave Property Type Land



Block / Lot 3234 / 50, 51, 52

SITE



Shape Irregular Zoning R6

TRANSACTION




Days on Market N/A Seller Be & Yo Realty Inc.

Buyer DCD Construction

SALE PRICE








REMARKS

The vacant site is located on Dekalb Avenue between Central and Wilson Avenues in the Bushwick neighborhood of Brooklyn. According to the building department records, at the time of sale approvals were in‐place for development of an apartment property. The property previously sold in March 2016 for $3,775,000.

Land Sale No. 4

PROPERTY

Address 296‐300 St. Nicholas Ave Property Type Land



Block / Lot 3338 / 31, 32, & 33

SITE


Parcel Type Corner Buildable Area 16,500


TRANSACTION





Buyer Individual

SALE PRICE








REMARKS

The property is a corner residential development site with 16,500 buildable square feet on the border of North Bushwick and Ridgewood. The site has 175 of wrap around frontage on the southeast corner of Linden Street and St Nicholas Avenue in north Bushwick. Public transportation is located around the corner, with the L, M trains two blocks away at the Myrtle / Wyckoff Avenue Station. Each lot is improved with a 2 family dwelling. Expenditures after purchase of $75,000 was applied to account for the demolition of the improvements.

Land Sale No. 5

PROPERTY

Address 102‐104 Central Avenue Property Type Land



Block / Lot 3172 / 32 & 33

SITE




TRANSACTION


Date of Sale 10/27/2016 Conveyance Doc. Type N/A

Sale Status Closed Document # N/A

Days on Market N/A Seller Multiple

Buyer N/A

SALE PRICE








REMARKS

Lot 32 (102 Central Avenue) is vacant land. Lot 34 (104 Central) is improved with a 2‐family dwelling of 1,520 square feet. Expenditures after purchase of $20,000 was applied to account for the demolition of the improvements. Lot 33 previously sold in August 2015 for $1,285,000 (contract signed January 2015).

Land Sale No. 6

PROPERTY

Address 1370 Greene Avenue Property Type Land



Block / Lot 3300 / 18

SITE




TRANSACTION





Buyer Individual

SALE PRICE








REMARKS

The site was improved with a 2‐family dwelling of 2,080 square feet. Expenditures after purchase of $25,000 was applied to account for the demolition of the improvements. The property previously sold in March 2015 for $750,000.

Land Sale No. 7

PROPERTY

Address 40 Kossuth Place Property Type Land



Block / Lot 3263 / 26

SITE



Shape Nearly rectangular Zoning R6

TRANSACTION


Date of Sale N/A Conveyance Doc. Type N/A



Buyer N/A

SALE PRICE




Conditions Adj. ‐$170,000 Conditions of Sale Arms Length




REMARKS

The site is located on Kossuth Place between Bushwick Avenue and Broadway in the Bushwick neighborhood of Brooklyn. The site is improved with a garage building of 1,250 square feet. Expenditures after purchase of $15,000 was applied to account for the demolition of the improvements. The property is currently listed for sale with an asking price of $1.7 million. A condition of sale adjustment of ‐10% was applied to the asking price to account for the listing premium.

Addendum E

Comparable Improved Sales Grid

Evergreen Gardens - Sales Comparison Approach - Improved

Subject Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5 Sale # 6 Sale # 7


Property Name Evergreen Gardens97 Grand Ave & 96

Steuben StThe Addison The Berkley 385 Union Avenue Atelier Williamsburg 250N10 Triangle Court

Address 123 Melrose Street97 Grand Ave & 96

Steuben St225 Schermerhorn

Street223 North 8th Street 385 Union Avenue

239-261 North 9th Street

250 North 10th Street 442-456 Grand Street

City, State, Zip Code Brooklyn, New York 11206Brooklyn, New York

11205Brooklyn, New York






11211Neighborhood Bushwick Clinton Hill Downtown Brooklyn Williamsburg Williamsburg Williamsburg Williamsburg WilliamsburgBlock 3152 1893 165 2313 2375 2307 2307 2399Lot 1, 48, 100 4 1001-1004 13 16 38 1 1Property Sub Type Multifamily Other Mid, High-Rise Multifamily Other Mid, High-Rise Multifamily Other Mid, High-Rise Mid, High-Rise Multifamily Other

SITE DATA:

Dimensions (W x L)447 (Melrose St), 490

(Stanwix St), 436 (Evergreen St), 350 (Noll St)

75 x 200 111 x 171.50 125 x 200 149.65 x 100 175.15 x 100 521 x 100 150 x 154

Site Area (SF) 155,490 15,150 18,197 20,000 15,250 17,517 50,216 18,268Land-to-Building Ratio 0.24 0.28 0.09 0.21 0.33 0.26 0.32 0.37Parcel Type Full-Block Through Lot Through Lot Through Lot Corner Corner Through Lot Double CornerShape Irregular Nearly rectangular Nearly rectangular L-Shaped Irregular Rectangular Irregular IrregularNumber of Lots 3 1 1 1 1 1 1 1

IMPROVEMENT DATA:

Number of Buildings 2 2 1 1 1 1 1 1Number of Market Units 735 62 263 76 47 120 234 52Number of Regulated Units 176 0 8 19 0 0 0 0Total Number of Residential Units 911 62 271 95 47 120 234 52Number of Commercial Units Multiple 0 3 0 2 0 0 2Number of Bedrooms 1,098 78 360 110 72 126 268 70Number of Stories 8 & 9 7 & 8 26 and 15 7 6 6 7 6Basement Type Finished Finished Finished None Finished Finished Finished FinishedType Elevator Elevator Elevator Elevator Elevator Elevator Elevator ElevatorGross Building Area (SF) 646,022 54,148 200,486 96,984 46,523 68,214 158,118 49,127Average Unit Size (based on GBA & # of Res. Units) 709 873 740 1,021 990 568 676 945Average Bedroom Size (based on GBA) 588 694 557 882 646 541 590 702

Year Built 2018 2012 2011 2016 2008 2013 2014 2012

Year Renovated N/A N/A N/A N/A N/A N/A N/A N/ABuilding Condition Average Average Average Average Average Average Average AverageNumber of Parking Spaces 417 31 109 18 24 74 117 52

Evergreen Gardens - Sales Comparison Approach (continued) - Improved

Subject Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5 Sale # 6 Sale # 7

TRANSACTION DATA:

Contract Date N/A 3/31/2017 12/8/2016 9/21/2016 7/18/2016 3/31/2016 4/17/2015 N/ASale Date N/A 7/10/2017 12/15/2016 12/5/2016 9/20/2016 3/31/2016 5/1/2015 Listing

Seller N/A Soft Stone DevelopmentWaterton Associates

LLCWestbrook Partners and

Largo InvestmentsSugar Hill Capital

PartnersJoy Construction LCOR and CalSTRS Highcap Group LLC

Buyer N/A Madison Realty Capital Bentall KennedyTrinity Place Holdings and Pacolet Milliken

EnterprisesGDC Properties Equity Residential TIAA N/A

SALE CHARACTERISTICS:

Property Rights Conveyed N/A Fee Simple Leased Fee Leased Fee Leased Fee Fee Simple Fee Simple Leased FeeConditions of Sale N/A Arms Length Arms Length Arms Length Arms Length Arms Length Arms Length Arms LengthFinancing Terms N/A Typical Typical Typical Typical Typical Typical Typical

SALE PRICE ANALYSIS:

Sale Price N/A $35,250,000 $154,250,000 $68,875,000 $45,352,000 $79,672,500 $169,000,000 $49,000,000 Property Rights Conveyed Adj. N/A $0 $0 $0 $0 $0 $0 $0 Financing Terms Adj. N/A $0 $0 $0 $0 $0 $0 $0 Conditions of Sale Adj. N/A ($2,400,000) ($23,500,000) ($2,500,000) ($4,000,000) ($4,500,000) ($10,800,000) ($11,950,000)Expenditures Immediately After Sale Adj. N/A $0 $0 $0 $0 $0 $0 $0 Effective Sale Price N/A $32,850,000 $130,750,000 $66,375,000 $41,352,000 $75,172,500 $158,200,000 $37,050,000

FINANCIAL DATA:

Occupancy at Sale 96.40% 90.00% 91.00% 80.00% 100.00% 100.00% 98.00% 100.00%PGI $34,908,302 $2,390,843 $12,092,638 $4,043,324 $2,576,678 $5,166,702 $10,235,071 $2,818,896 EGI $33,422,636 $2,319,118 $11,752,835 $3,966,501 $2,489,586 $5,067,501 $9,979,194 $2,734,329 NOI $19,431,997 $1,624,730 $5,627,146 $3,155,247 $1,847,341 $3,513,405 $6,374,614 $1,692,331 NOI Ratio 55.67% 67.96% 46.53% 78.04% 71.69% 68.00% 62.28% 60.04%Real Estate Taxes $14.14 $7.82 $16.39 $2.58 $8.56 $10.24 $9.62 $14.03 NOI Ratio without RE Taxes 81.84% 85.67% 73.70% 84.22% 87.15% 81.52% 77.15% 84.49%

EGI per SF of GBA $51.74 $42.83 $58.62 $40.90 $53.51 $74.29 $63.11 $55.66 NOI per SF of GBA $30.08 $30.01 $28.07 $32.53 $39.71 $51.51 $40.32 $34.45

UNITS OF COMPARISON:

Price per SF of GBA N/A $607 $652 $684 $889 $1,102 $1,001 $754EGIM N/A 14.16 11.12 16.73 16.61 14.83 15.85 13.55OAR N/A 4.95% 4.30% 4.75% 4.47% 4.67% 4.03% 4.57%

Evergreen Gardens - Sales Comparison Approach (continued) - Improved

TIME/MARKET CONDITIONS Annual Increase Jul-17 Dec-16 Dec-16 Sep-16 Mar-16 May-15 Listing% Adjustment 3.0% 0.0% 1.6% 1.7% 2.3% 3.7% 6.5% 0.0%

LOCATION Superior Superior Superior Superior Superior Superior Superior% Adjustment -5.0% -10.0% -20.0% -15.0% -20.0% -20.0% -15.0%

AGE/CONDITION/QUALITY/DESIGN/AMENITIES Inferior Inferior Inferior Inferior Inferior Inferior Inferior% Adjustment 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

TENANCY/OCCUPANCY Similar Similar Similar Similar Similar Similar Similar% Adjustment 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

SIZE Smaller Smaller Smaller Smaller Smaller Smaller Smaller% Adjustment -20.0% -15.0% -15.0% -20.0% -20.0% -15.0% -20.0%

OTHER Similar Similar Similar Similar Similar Similar Similar% Adjustment 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Total Adjustments to Time Adjusted Price

Net % Adjustments -15.0% -13.4% -23.3% -22.7% -26.3% -18.5% -25.0%Total % Adjustments 35.0% 36.6% 46.7% 47.3% 53.7% 51.5% 45.0%

Adjusted Price per SF of GBA $516 $565 $525 $687 $813 $815 $566

Addendum F

Comparable Improved Sale Write‐ups

Improved Sale No. 1

PROPERTY

Address 97 Grand Ave & 96 Steuben St Property Type Multifamily

Neighborhood Clinton Hill Property Subtype Mid, High‐Rise Multifamily



SITE

Site Area (SF) 15,150 Dimensions (L x W) 75 x 200

Parcel Type Through Lot Number of Lots 1

Shape Nearly rectangular

IMPROVEMENTS

No. of Bldgs. 2 Year Built 2012

No. of Res. Units 62 Year Renovated N/A

No. of Comm. Units 0 Building Condition Average

No. of Bedrooms 78 Basement Type Finished

GBA (SF) 54,148 Open Violations Yes

No. of Stories 7 & 8

Building Type Elevator

TRANSACTION


Date of Sale 7/10/2017 Conveyance Doc. Type Deed


Months on Market 7 Seller Soft Stone Development

Buyer Madison Realty Capital

SALE PRICE






Effective Sale Price $32,850,000 Occupancy at Sale 90.0%

Effective SP / Unit $529,839


Effective SP / BR $421,154

FINANCIAL DATA

Amount Per Unit

EGI $2,319,118 $37,405

Total Expenses $694,388

Expense Ratio 29.94%

NOI $1,624,730 $26,205

EGIM 14.17

OAR 4.95%

REMARKS

The property consists of two elevator apartment buildings (7 and 8 stories) located on Grand Avenue and Steuben Street between Park Avenue and Myrtle Avenue in the Clinton Hills neighborhood of Brooklyn. Both buildings include a total of 62 apartments and 31 indoor parking spaces. 6 apartment units are vacant, the rest are occupied. Both buildings have rooftop lounges. It should be noted that this was a bankruptcy sale. Discussions with a party to a transaction indicate that this did not impact the sales price as the property was extensively marketed. There is a 421‐A exemption which is currently in its 6th of 15 years. A condition of sale adjustment of $2.4M was applied to the asking price to account for the exemption.

Improved Sale No. 2

PROPERTY

Address 225 Schermerhorn St Property Type Multifamily

Neighborhood Downtown Brooklyn Property Subtype Multifamily Other


Block / Lot 165 / 1001‐1004

SITE

Site Area (SF) 18,197 Dimensions (L x W) 111 x 171.50


Shape Nearly rectangular

IMPROVEMENTS





GBA (SF) 200,486 Open Violations No

No. of Stories 26 and 15


TRANSACTION




Months on Market 8 Seller Waterton Associates LLC

Buyer Bentall Kennedy

SALE PRICE

Sale Price $154,250,000

PR Conveyed Adj. $0 PR Conveyed Leased Fee








FINANCIAL DATA

Amount Per Unit

EGI $11,752,835 $43,368

Total Expenses $6,125,689


NOI $5,627,146 $20,764

EGIM 11.13

OAR 4.30%

REMARKS

The Addison is a newly constructed mixed‐use property located in the Downtown Brooklyn neighborhood of Brooklyn. It has a 26‐story and 15‐story tower which have a total of 271 units, 263 of which are market rent apartments and 8 affordable apartments. Additionally, the property has three fully‐leased ground‐floor retail storefronts totaling 6,610 square feet and a 109‐space, below‐grade parking garage managed by a third party. The amenities are the property include laundry facilities, 24‐hour door attendant, lounge with fireplace, fitness center and unobstructed southward views of Boerum Hill. The average in‐place apartment rent at the property was $57.75 per square foot. The average in‐place commercial rent at the property was $42.44 per square foot. There are various 421‐A exemptions at the property. A condition of sale adjustment of $23.5M was applied to the asking price to account for the exemption.

Improved Sale No. 3

PROPERTY

Address 223 North 8th Street Property Type Multifamily

Neighborhood Williamsburg Property Subtype Mid, High‐Rise Multifamily


Block / Lot 2313 / 13

SITE



Shape L‐Shaped

IMPROVEMENTS




No. of Bedrooms 110 Basement Type None


No. of Stories 7


TRANSACTION




Months on Market 3 Seller Westbrook Partners and Largo Investments

Buyer Trinity Place Holdings and Pacolet Milliken Enterprises

SALE PRICE










FINANCIAL DATA

Amount Per Unit

EGI $3,966,501 $41,753



NOI $3,155,247 $33,213

EGIM 16.73

OAR 4.75%

REMARKS

The Berkley is a newly constructed multi‐family property located in the Williamsburg neighborhood of Brooklyn. It has 95 units, 76 of which are market rent apartments and 19 affordable apartments. The amenities are the property include balconies/terraces in 90% of the units, a rooftop sun‐deck lounge, two‐story fitness center and yoga lawn, 3,600 square foot central landscaped courtyard, tenant storage, bike storage, parking garage, and view of the Manhattan skyline. The average in‐place rent for the market rent units was $70.88 per square foot and $16.40 per square foot for the affordable units. There is a 421‐A exemption which is currently in its 1st of 25 years. A condition of sale adjustment of $2.5M was applied to the asking price to account for the exemption.

Improved Sale No. 4

PROPERTY

Address 385 Union Avenue Property Type Multifamily

Neighborhood Williamsburg Property Subtype Multifamily Other


Block / Lot 2375 / 16

SITE

Site Area (SF) 15,250 Dimensions (L x W) 149.65 x 100

Parcel Type Corner Number of Lots 1

Shape Irregular

IMPROVEMENTS






No. of Stories 6


TRANSACTION




Months on Market 5 Seller Sugar Hill Capital Partners

Buyer GDC Properties

SALE PRICE










FINANCIAL DATA

Amount Per Unit

EGI $2,489,586 $52,970



NOI $1,847,341 $39,305

EGIM 16.61

OAR 4.47%

REMARKS

The property is a six‐story 53,023 SF elevator building with 47 apartments with plans to reconfigure a portion of the ground floor to accommodate 2 retail units on a corner. This building has 22 one‐bedroom and 25 two‐bedroom apartments, all of which have floor to ceiling windows, and select units have private terraces and balconies. Ground floor parking in the rear of the building offers 24 spaces reserved for residents. The property is about a block away from the combined Metropolitan Avenue/Lorimer Street G & L train station. There is a 421‐A exemption which is currently in its 5th of 25 years. A condition of sale adjustment of $4.0M was applied to the sales price to account for the exemption. Previously sold in June 2015 for $37,400,000.

Improved Sale No. 5

PROPERTY

Address 239‐261 North 9th St Property Type Multifamily



Block / Lot 2307 / 38

SITE

Site Area (SF) 17,517 Dimensions (L x W) 175.15 x 100

Parcel Type Corner Number of Lots 1

Shape Rectangular

IMPROVEMENTS






No. of Stories 6


TRANSACTION




Months on Market 11 Seller Joy Construction

Buyer Equity Residential

SALE PRICE








Effective SP / SF $1,102


FINANCIAL DATA

Amount Per Unit

EGI $5,067,501 $42,229



NOI $3,513,405 $29,278

EGIM 14.83

OAR 4.67%

REMARKS

Atelier Williamsburg is located at 239‐261 North 9th Street equidistant to the Lorimer and Bedford Avenue subway stations. Additionally, the property is within walking distance of McCarren Park and the East River Waterfront. Completed in 2013, the property has 120 units. Amenities at the property include a 24‐hour doorman; rooftop deck with barbecues and skyline views; resident lounge with billiards table and entertaining kitchen; landscaped courtyard; and a fitness center. The average in‐place rent was $72.32 per square foot. There is a 421‐A exemption which is currently in its 5th of 15 years. A condition of sale adjustment of $4.5M was applied to the asking price to account for the exemption.

Improved Sale No. 6

PROPERTY

Address 250 North 10th Street Property Type Multifamily




SITE



Shape Irregular

IMPROVEMENTS






No. of Stories 7


TRANSACTION




Months on Market 3 Seller LCOR and CalSTRS

Buyer TIAA

SALE PRICE

Sale Price $169,000,000







Effective SP / SF $1,001


FINANCIAL DATA

Amount Per Unit

EGI $9,979,194 $42,646



NOI $6,374,614 $27,242

EGIM 15.85

OAR 4.03%

REMARKS

250N10 is a newly constructed multi‐family property located in the Williamsburg neighborhood of Brooklyn. It has 234 apartment units. The amenities are the property include a 24‐hour doorman, rooftop deck, and a fitness center. The average in‐place rent for the market rent units was $60.65 per square foot. There is a 421‐A exemption which is currently in its 4th of 15 years. A condition of sale adjustment of $10.8M was applied to the asking price to account for the exemption.

Improved Sale No. 7

PROPERTY

Address 442‐456 Grand Street Property Type Multifamily

Neighborhood Williamsburg Property Subtype Multifamily Other



SITE


Parcel Type Double Corner Number of Lots 1

Shape Irregular

IMPROVEMENTS






No. of Stories 6


TRANSACTION


Date of Listing N/A Conveyance Doc. Type N/A


Months on Market 17 Seller Highcap Group LLC

Buyer N/A

SALE PRICE










FINANCIAL DATA

Amount Per Unit

EGI $2,734,329 $52,583



NOI $1,692,331 $32,545

EGIM 13.55

OAR 4.57%

REMARKS

The property is a newly constructed fully leased rental property that has 52 units, 2 retail stores, and a full parking garage in the cellar. 456 Grand uniquely has its light and air protected as it occupies the entire block and secures 150 feet of frontage on Grand Street, 154 feet of frontage on Keap Street, and 146 feet of Borinquen Place. The property is located near the Lorimer Street L stop and the Metropolitan Avenue G stop. Reportedly, the retail tenants are significantly below market (average in‐place rent of approximately $54 per SF). Their leases end in 2023 and 2028, respectively. There is a 421‐A exemption which is currently in its 3rd of 15 years. A condition of sale adjustment of $4.6M was applied to the asking price to account for the exemption. The property is currently listed for sale with an asking price of $49M. A condition of sale adjustment of ‐15% was applied to the asking price to account for the listing premium.

Addendum G

Comparable Residential Rental Grid

Evergreen Gardens - Residential Rent Comprables

Subject Rent 1 Rent 2 Rent 3 Rent 4 Rent 5 Rent 6 Rent 7 Rent 8 Rent 9 Rent 10 Rent 11


Property NameEvergreen Gardens

1040 Dean Street180 Franklin

Avenue461 Dean 670 Pacific The Refinery

505 Saint Marks Avenue

341 EPW500 Sterling

PlaceColony 1209

The Plex Brooklyn

Castle Braid Apartments

Address123 Melrose

Street1040 Dean Street

180 Franklin Avenue

461 Dean Street 670 Pacific Street 490 Myrtle Avenue505 Saint Marks

Avenue341 Eastern

Parkway500 Sterling

Place1209 Dekalb

Avenue958 Nostrand

Avenue114 Troutman

Street

City, State, Zip CodeBrooklyn, New

York 11206Brooklyn, New











York 11206

Neighborhood Bushwick Crown HeightsBedford

StuyvesantProspect Heights Prospect Heights Clinton Hill Crown Heights Crown Heights Crown Heights Bushwick Crown Heights Bushwick

Property Sub Type Mid, High-Rise Multifamily Other Mid, High-Rise Mid, High-Rise Mid, High-Rise Mid, High-Rise Mid, High-Rise Mid, High-Rise Mid, High-Rise Mid, High-Rise Mid, High-Rise Mid, High-Rise

IMPROVEMENT DATA:

Number of Buildings 2 1 1 1 1 1 1 1 1 1 1 1Total Number of Residential Units 911 120 118 363 81 232 147 63 77 127 98 144Number of Stories 8 & 9 8 5 32 8 7 8 8 7 5 7 5Rentable Area (SF) 557,779 111,740 80,000 346,000 61,221 162,400 99,821 75,431 62,190 102,000 80,000 153,909Average Unit Size 612 931 678 953 756 700 679 1,197 808 803 816 1,069Year Built 2018 2017 2016 2016 2016 2015 2015 2014 2013 2013 2011 2006Building Condition Average Average Average Average Average Average Average Average Average Average Average AverageNumber of Parking Spaces 417 N/A 59 146 N/A N/A 74 N/A 39 42 37 N/A

ADJUSTMENTS:

Location/Access/Visibility Superior Superior Superior Superior Superior Similar Superior Similar Similar Similar SimilarAdjustment - - - - - = - = = = =

Age/Condition/Quality/Design/Amenities Inferior Inferior Inferior Inferior Inferior Inferior Inferior Inferior Inferior Inferior InferiorAdjustment + + + + + + + + + + +

Unit Size Similar Similar Larger Similar Similar Similar Larger Larger Larger Larger LargerAdjustment = = + = = = + + + + +

Other Similar Similar Similar Similar Similar Similar Similar Similar Similar Similar SimilarAdjustment = = = = = = = = = = =

Overall Rating Similar Similar Similar Similar Similar Inferior Inferior Inferior Inferior Inferior InferiorAdjustment = = = = = + + + + + +

Notes:

[1] Unit size for 1040 Dean is rated as similar based on the unit size of the residential units. The rentable area includes retail space.

Addendum H

Comparable Residential Rental Write‐ups

Residential Rent Comparable No. 1

PROPERTY

Address 1040 Dean Street Property Type Multifamily

City, State Brooklyn, New York Property Subtype Multifamily Other

Neighborhood Crown Heights

IMPROVEMENTS


No. of Res. Units 120 Building Condition Average

No. of Stories 8

NRA (SF) 111,740


PROPERTY

Address 180 Franklin Avenue Property Type Multifamily

City, State Brooklyn, New York Property Subtype Mid, High‐Rise Multifamily

Neighborhood Bedford Stuyvesant

IMPROVEMENTS



No. of Stories 5

NRA (SF) 80,000


PROPERTY

Address 461 Dean Street Property Type Multifamily


Neighborhood Prospect Heights

IMPROVEMENTS



No. of Stories 32

NRA (SF) 346,000


PROPERTY

Address 670 Pacific Street Property Type Multifamily


Neighborhood Prospect Heights

IMPROVEMENTS



No. of Stories 8

NRA (SF) 61,221


PROPERTY

Address 490 Myrtle Avenue Property Type Multifamily


Neighborhood Clinton Hill

IMPROVEMENTS



No. of Stories 7

NRA (SF) 162,400


PROPERTY

Address 505 Saint Marks Avenue Property Type Multifamily



IMPROVEMENTS



No. of Stories 8

NRA (SF) 99,821


PROPERTY

Address 341 Eastern Parkway Property Type Multifamily



IMPROVEMENTS



No. of Stories 8

NRA (SF) 75,431


PROPERTY

Address 500 Sterling Place Property Type Multifamily



IMPROVEMENTS



No. of Stories 7

NRA (SF) 62,190


PROPERTY

Address 1209 Dekalb Avenue Property Type Multifamily



IMPROVEMENTS



No. of Stories 5

NRA (SF) 102,000


PROPERTY

Address 958 Nostrand Avenue Property Type Multifamily



IMPROVEMENTS



No. of Stories 7

NRA (SF) 80,000


PROPERTY

Address 114 Troutman Street Property Type Multifamily



IMPROVEMENTS



No. of Stories 5

NRA (SF) 153,909

Addendum I

Comparable Retail Rental Grid

Evergreen Gardens - Retail Rent Comparables

Subject Rent 1 Rent 2 Rent 3 Rent 4 Rent 5 Rent 6 Rent 7 Rent 8 Rent 9 Rent 10 Rent 11 Rent 12


Property Name Evergreen Gardens336 Himrod

Street92 Bogart Street

92 Bogart Street

215 Moore Street

247 Wilson Avenue

468 Bushwick Avenue

608 Bushwick Avenue

610 Bushwick Avenue

590 Bushwick Ave

366 Johnson Avenue

279 McKibbin Street

253 Bushwick Avenue

City, State, Zip CodeBrooklyn, New













York 11206

Neighborhood Bushwick BushwickEast

WilliamsburgEast

WilliamsburgEast

WilliamsburgBushwick Bushwick Bushwick Bushwick Bushwick East Williamsburg East Williamsburg

East Williamsburg

IMPROVEMENT DATA:

Year Built 2018 2017 2018 2018 2018 1931 1931 1931 1931 1931 1954 2004 1920Year Renovated N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

LEASE DATA:

Lease Status N/A Listing Listing Executed Executed Executed Executed Executed Executed Executed Executed Executed ExecutedType of Lease N/A New New New New New New New New New New New NewTransaction Quarter N/A N/A N/A 1Q 2016 4Q 2015 3Q 2015 2Q 2015 4Q 2017 2Q 2016 1Q 2016 1Q 2016 3Q 2015 3Q 2016

Tenant N/A N/A N/A Urban Market CartoDB Smoke Shop Barber Shop BarbershopMelrose

HospitalityN/A Ichiran

Blue Bottle Coffee

Barra Brava

Leased Area (SF) 81,841 3,678 64,000 16,000 7,000 800 800 420 700 1,500 18,175 15,833 800

Suite/Space Number Cellar, Ground, & 2nd Floor

Ground Level Ground Level Ground Level Ground Level Ground Level Ground Level Ground Level Ground Level Ground Level Ground Level Ground Level Ground Level

Term of Lease (months) N/A N/A N/A N/A N/A 120 N/A 120 120 N/A N/A N/A 120Initial Year Rate ($/SF) N/A $60.00 $55.00 $38.00 $48.00 $45.00 $45.00 $62.86 $72.00 $40.00 $27.00 $38.00 $60.00

Lease Escalation Terms N/A N/A N/A N/A N/A 3% per year N/A N/A3% (years 2 to

5); 4% afterN/A N/A N/A 3% per year

Rent Abatement (months) N/A N/A N/A N/A N/A N/A N/A N/A 3 N/A N/A N/A 2Tenant Improv ($/SF) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Notes N/AMid-Block Location

Small SpacesCorner

LocationCorner

LocationMid-Block Location

Mid-Block Location

Mid-Block Location

Corner Location Corner LocationMid-Block Location

Mid-Block Location

Mid-Block Location

ADJUSTMENTS:

Location/Access/Visibility Superior Inferior Inferior Inferior Superior Similar Superior Superior Superior Inferior Inferior SuperiorAdjustment - + + + - = - - - + + -

Age/Condition/Quality/Design Similar Similar Similar Similar Inferior Inferior Inferior Inferior Inferior Inferior Inferior InferiorAdjustment = = = = + + + + + + + +

Unit Size Similar Similar Similar Similar Similar Similar Similar Similar Similar Similar Similar SimilarAdjustment = = = = = = = = = = = =

Other Similar Similar Similar Similar Similar Similar Similar Similar Similar Similar Similar SimilarAdjustment = = = = = = = = = = = =

Overall Rating Superior Inferior Inferior Inferior Similar Inferior Superior Superior Superior Inferior Inferior SuperiorAdjustment - + + + = + - - - + + -

Addendum J

Comparable Retail Rental Write‐ups

Retail Rent Comparable No. 1

PROPERTY

Address 336 Himrod Street Neighborhood Bushwick


TRANSACTION

Lease Status Listing TI’s / SF N/A

Tenant N/A Initial Rent / SF $60.00

Suite/Space # Ground Level Free Rent N/A

Leased Area SF 3,678 Term N/A

Transaction Quarter N/A

REMARKS

Ground floor and cellar space is being market for rent at this property. We understand that offers are coming to lease space at this property. We were provided with certain terms of the offers and considered them in our analysis.


PROPERTY

Address 92 Bogart Street Neighborhood East Williamsburg


TRANSACTION

Lease Status Listing TI’s / SF N/A




Transaction Quarter N/A

REMARKS

The leased are is to be divided into multiple smaller spaces.


PROPERTY

Address 92 Bogart Street Neighborhood East Williamsburg


TRANSACTION

Lease Status Executed TI’s / SF N/A

Tenant Urban Market Initial Rent / SF $38.00



Transaction Quarter 1Q 2016


PROPERTY

Address 215 Moore Street Neighborhood East Williamsburg


TRANSACTION


Tenant CartoDB Initial Rent / SF $48.00





PROPERTY

Address 247 Wilson Avenue Neighborhood Bushwick


TRANSACTION


Tenant Smoke Shop Initial Rent / SF $45.00


Leased Area SF 800 Term 120



PROPERTY

Address 468 Bushwick Avenue Neighborhood Bushwick


TRANSACTION


Tenant Barber Shop Initial Rent / SF $45.00


Leased Area SF 800 Term N/A



PROPERTY



TRANSACTION


Tenant Barbershop Initial Rent / SF $62.86





PROPERTY



TRANSACTION


Tenant Melrose Hospitality Initial Rent / SF $72.00

Suite/Space # Ground Level Free Rent 3




PROPERTY

Address 590 Bushwick Ave Neighborhood Bushwick


TRANSACTION







PROPERTY

Address 366 Johnson Avenue Neighborhood East Williamsburg


TRANSACTION


Tenant Ichiran Initial Rent / SF $27.00





PROPERTY

Address 279 McKibbin Street Neighborhood East Williamsburg


TRANSACTION


Tenant Blue Bottle Coffee Initial Rent / SF $38.00





PROPERTY

Address 253 Bushwick Avenue Neighborhood East Williamsburg


TRANSACTION


Tenant Barra Brava Initial Rent / SF $60.00

Suite/Space # Ground Level Free Rent 2



Addendum K

Qualifications / License

Lev Yagudayev, MAI Office: 646-929-3893 Cell: 917-885-4419 [email protected] Experience Lev Yagudayev has over 17 years of experience in different facets of commercial real estate and is a specialist in the area of valuation for financial reporting purposes. He has valued real estate and instruments secured by real estate in nearly every major market in the U.S. and comprising most property types including properties in a similar scope to the appraised Property or larger. Prior to joining Level Valuation, Mr. Yagudayev worked for approximately two years in the appraisal practice at Situs RERC, where he served as a director and Northeast practice leader. While at Situs RERC, Mr. Yagudayev was responsible for managing Situs RERC’s Northeast practice and delivering the following services: portfolio valuation services, purchase price allocation studies, International Financial Reporting Standards (IFRS) valuation services, investor reporting, and due diligence services. Prior to Situs RERC, Mr. Yagudayev worked for nine years in the real estate consulting practice at Deloitte. In his latest role, he served as senior manager and portfolio valuation services leader for the East region. While at Deloitte, Mr. Yagudayev provided valuation and due diligence services to alternative investment managers; advised and consulted clients on a variety of issues relating to commercial real estate and real estate instruments; worked with clients to improve their processes relating to valuation, financial reporting, and investor reporting; and interacted daily with senior executives and decision makers at many real estate firms. Prior to Deloitte, Mr. Yagudayev worked at Emigrant Bank, where he focused on commercial real estate valuation, REO management/disposition, mortgage underwriting, loan origination, and foreclosures. Mr. Yagudayev is also an adjunct professor at the Fordham Graduate School of Business where he teaches real estate finance and is a faculty advisor to the real estate club. Education

Fordham University o M.B.A., finance and professional accounting

Hofstra University o B.S., biochemistry

PROFESSIONAL QUALIFICATIONS

ny - tase · level valuation provided valuation services (the “services”) to all year holdings...

Documents