Punnett Properties Development250 Apartments

850 East 55th Street. NEW YORK, NEW YORK

Confidential Investment Memorandum

Executive Summary

Property PUNNETT PROPERTIES is currently developing 850 East 55th Street. The new project will be erected on a corner lot with dimensions of approximately 100’ x 200’. A 350,000 square foot, 22 story residential building will be built with open city views from most apartments. The building will have 250 rentals apartments: 100 one bedrooms and 150 two bedrooms. In addition, the building will have full service doorman/concierge, private tenant storage, common landscaped courtyard, and more. Also being developed on the site is 3 retail stores totaling approximately 52,000 square feet.

Punnett Properties is offering an equity stake in this premium investment opportunity. A $50,000,000 investment will create a 50% investment partner in 850 E 55th Street Owners LLC. Holding ownership of subject property in a limited liability company will offer full liability protection as well as providing advantageous tax benefits. As required by law, 10% of the one bedroom units will be reserved for low income tenants. We plan on a 5 year holding period, with an overall post tax IRR of 16.4%.

Timeframe* Enter into contract, due diligence, final design Current - December 2009 Close on land purchase November 15, 2008 Close construction loan December 31, 2008 Construction Year

2009 Close Permanent LoanDecember 31, 2010 Lease Up Year2010 Stabilization Year, operational years

2011 – 2014 Property RentedDecember 31, 2014

* Time frame subject to change due to unforeseen construction circumstances.

Ownership StructureOwning Entities Equity Investment % of Equity

     850 NYC Developers LLC $11,522,028 10.3%

     890 NYC Investors LLC $100,000,000 89.7%

Investor 1 $25,000,000 22.4%Investor 2 $25,000,000 22.4%Investor 3 $25,000,000 22.4%Investor 4 $25,000,000 22.4%

Ownership Total $111,522,028 100%

Entity Structure We have selected to hold the ownership of the subject property in a limited liability company, LLC, as they offer excellent liability

protection. The tax implications also benefits owners and investors involved.

Location, Market The building is situated in the popular Midtown East area, one of the most gentrified and up and coming districts of all of New York City. Near all major, transportation, Restaurant Row and Times Square this property’s location is one of the most desirable addresses New York City for first time renters and people looking for a better value proposition then buying.

Other successful rental developments in our neighborhood include the 148 unit Clinton West directly across the street at 516 West East 55th Street (fully rented) plus current new luxury rental developments on 46th between 10th & 11th, 44th & 10th and the Orion (rented out) & the Atelier on west 42nd street.

Site Evaluation, Current Condition The property is located on East 55th street approximately 100 feet west of 3rd Avenue

within an R8 District in the Special Midtown East District in Manhattan, Community

District 4. The site is currently vacant building and has a lot area of 200 x 100 square

feet allowing for 350,000 buildable square feet.

Because the site is located above an active subway right-of-way, a special permit

pursuant to Section 74-681(1)(a) is required and was obtained. In addition, a Special

Permit was requested and was duly adopted by the city Planning Commission on May 12,

2008 (Calendar No.24).

The building fronting on West East 55th Street will rise to

a height of 200 feet (20 stories) and will contain

250 units. Developments in this area are subject to

special floor area ratio (4.2 maximum), lot coverage

(60% maximum), and height (199 feet maximum)

requirements. Residential developments in the

Preservation Area of the Special Midtown East District

also require that at least 20% of the dwelling units

contain 2 bedrooms or more, and at least 20% of the lot

area be useable landscaped open space for residents.

The building will meet or exceed all of these

requirements.

Proposed Site

Artist’s Rendering

Ground Floor

2nd to 19th Floor

20th Floor

Private & Common Roof Decks

North – South Building Section

Investment Summery

We are looking for investor(s) to purchase $100,000,000 of preferred equity in this project. This will make up 89.7% of the cash equity investment. The total equity requirement for this project is $111,522,028 towards a $184,014,528 total project cost (60% Equity/40% Debt). The preferred security will have an accruing 8% dividend that will be paid first and before the developer gets an 8% return on his cash equity investment. After all investors have earned an 8% dividend the profits on the investors’ capital will be split 50%/50%, with 50% for the investors and 50% for the developer.

Assuming preferred investors invest $100 million of the equity and the project is rented for $340,320,239 (at a 4.5% cap based on 2015 NOI - reasonable assumption based on the current market) then the IRR to the preferred investor over the 5 year expected time horizon of the investment will be 16.44%.

HSBC is providing a $72,492,500 construction loan and the developers are providing personal guarantees for 30% of the loan. In summary, the developers are not only putting up $11,522,028 hard cash but they are personally guarantying $18 million to the Bank and land renteder. The developer’s enormous capital commitment to this project should give confidence and comfort to the preferred equity investors about the developers’ strong conviction in this project

Comparative Market Analysis

850 East 55th Street targets first time condo buyers who are working within walking distance of the Midtown business district. We are targeting the buyer who is looking to spend $450,000 to $1,000,000. The condominium will be mostly smaller apartments with average price of $1,000-$1,100 for the top floor private rooftop apts and group floor apts with a private garden.The following are comparative new development condominiums similar in style, brand and quality that have recently opened and or are near completed rented out. While there are a number of condominium projects recently completed or underway, there are not many that specifically targeted the entry-level market. Most of the new construction condominium and town home projects are targeted at the high-end, high-rise market. These projects are within walking distance, however, we feel they do not compare because of the size of the units which result in a high starting price for their apartments. Starting price pre-construction sales begin at over $55 per square foot and go up to $75+ per square foot in high-rise buildings.

Clinton West - 516 West East 55th Street

The building at 516 West East 55th Street is the most comparable. It is located across the street and it targeted the same market. The project was recently completed while building sales begun on June 2005 and the 148 units were rented out in 8 days. Several of the units have recently rerented or are currently on the market. The average for apartments on the market is $1,044 per square foot. Amenities includes: 24 hours doorman, gym, laundry, common garden area.

Location & Local Market Report

Midtown East is a neighborhood of New York City that includes the area between 35th Street and 56th Street, from 1st Avenue to 5th Aveneu.

MIDTOWN EAST

In recent years, the neighborhood has undergone gentrification along with many other neighborhoods in New York City. Partly as a result, the alternative name "Clinton" (the neighborhood is legally known as the Clinton Special Use District) has gained in popularity. The name has long had some currency, however; the Chelsea Clinton News, covering this area and the adjoining Chelsea, has been published for decades.

The term Clinton refers to the former New York City Mayor and New York State Governor in the 18th century, DeWitt Clinton. The neighborhood stands on what was once his farm land. One of the neighborhood's gathering places is DeWitt Clinton Park.

NEIGHBORHOOD

Midtown Eastis known as one of the most popular neighborhoods for dining in the city, both by locals and tourists. One of the city's biggest street fairs, the Ninth Avenue Association's International Food Festival, stretches through the Kitchen from 37th to 57th Streets every May, usually on the third weekend of the month.

The neighborhood is also home to a number of broadcast and music-recording studios, including the CBS Broadcast Center at 524 West 57th Street (also the home of Black Entertainment Television's 106 & Park show), Sony Music Studios at 460 West 54th Street, and Right Track Recording's Studio A509 orchestral recording facility at West 38th Street and 10th Avenue. The syndicated Montel Williams show is also taped

locally at the Unitel Studios, 433 W. 53rd Street, between Ninth and Tenth Avenues.

Comedy Central's satirical program, The Daily Show with Jon Stewart, is also taped in Midtown East— recently trading one local studio for another. In the summer of 2005 it moved from its quarters at 54th Street and 10th Avenue to a new studio in the neighborhood, at 733 11th Avenue, between 51st and 52nd Streets.

Development Team

SPONSER/DEVELOPER

ARCHITECT

Architect, PLLC

Established in 1997Architect, PLLC is a full service architectural firm based in Manhattan. The firm's primary specialties are hi-rise residential buildings and conversion and/or renovation of existing buildings.

Our client’s success is our reward, from comprehensive initial zoning analysis to the final punch list; our focus is on the project and our client's needs. Besides doing much of our own design work we also work closely with some of the world's foremost architects such as Michael Graves, Philip Johnson, Robert Stern, David Rockwell, to name a few.

Other projects have included private residences, zoning consulting, tax lot and attorney general reports for condominiums, BSA approvals, landmarks commission approvals, fitness gyms, large scale window replacements, and commercial interiors work.

Rent to Qualifying Tenants Construction Budget11/15/2008 - 12/31/2009 Total Equity Loan Per SQFT 350,000Acquisition costs 100% 0%

Cost of land and existing building shell $35,000,000 $100.00

Closing cost $525,000 $1.50 $35,525,000 $35,525,000 $101.50 Predevelopment costs 100% 0%

Engineer, design, architects, fees & costs $45,000 $0.13NYC plumbing, water, steam connection

permits $3,500 $0.01

Land, soil tests, environmental testing $13,000 $0.04 $61,500 $61,500 $0.18 Construction costs 50% 50%

Demolition costs $400,000 $1.14Hard costs $133,875,000 $382.50

Soft costs $10,710,000 $30.60 $144,985,000 $72,492,500 $72,492,500 $414.24 Financing costs - construction loan 100% 0%

Construction financing fees $60,000 $0.17

Construction loan interest $2,815,825 $8.05 $2,875,825 $2,875,825 $8.22

Real estate taxes 100% 0% Year 2008 $3,438 $0.01

Year 2009 $27,500 $0.08 $30,938 $30,938 $0.09

Total Cost of the Property $183,478,262 $110,985,762 $72,492,500 $524.22

Financing costs - permanent loan 100%

Commitment letter fees $275,196 $0.79

Closing fees $194,797 $0.56 $469,993 $469,993 $1.34

Total Development Costs $183,948,256 $111,455,756 $72,492,500 $525.57

Rent to Qualifying Tenants

Loan Amount 72,492,500Annual Interest Rate 7.50%Monthly Interest Rate 0.63%Retainage 10%

Date Amount RetainageActual Draw Interest

Loan Balance

January-09 9,061,563 906,156 8,155,406 8,155,406February-09 9,061,563 906,156 8,155,406 50,971 16,361,784

March-09 9,061,563 906,156 8,155,406 102,261 24,619,451April-09 9,061,563 906,156 8,155,406 153,872 32,928,729May-09 5,178,036 517,804 4,660,232 205,805 37,794,766June-09 5,178,036 517,804 4,660,232 236,217 42,691,215July-09 5,178,036 517,804 4,660,232 266,820 47,618,267

August-09 5,178,036 517,804 4,660,232 297,614 52,576,114September-09 5,178,036 517,804 4,660,232 328,601 57,564,947

October-09 5,178,036 517,804 4,660,232 359,781 62,584,960November-09 5,178,036 517,804 4,660,232 391,156 67,636,348December-09 7,249,250 422,727 75,308,325

Totals 72,492,500 7,249,250 72,492,500 2,815,825 75,308,325

Rent to Qualifying Tenants Permanent Loan Amortization Schedule  

Permanent Loan less Construction Loan Balance $51,488,975 Loan amount $ 126,797,299  

Interest rate 6.75% annually 0.6% monthly

Amortization period 25 years

300 month

Debt service amount ($876,057) per month ($10,512,686) per year

Loan closing date 12/31/2009  

Payment Dates Beginning Balance Debt Service Interest Paid

Principal Amortized

Outstanding Balance

1/31/2010 126,797,29

9 (876,057)

(713,235) ($162,822)

126,634,477

2/28/2010 126,634,47

7 (876,057)

(712,319) ($163,738)

126,470,739

3/31/2010 126,470,73

9 (876,057)

(711,398) ($164,659)

126,306,080

4/30/2010 126,306,08

0 (876,057)

(710,472) ($165,585)

126,140,494

5/31/2010 126,140,49

4 (876,057)

(709,540) ($166,517)

125,973,977

6/30/2010 125,973,97

7 (876,057)

(708,604) ($167,454)

125,806,524

7/31/2010 125,806,52

4 (876,057)

(707,662) ($168,395)

125,638,128

8/31/2010 125,638,12

8 (876,057)

(706,714) ($169,343)

125,468,786

9/30/2010 125,468,78

6 (876,057)

(705,762) ($170,295)

125,298,490

10/31/2010 125,298,49

0 (876,057)

(704,804) ($171,253)

125,127,237

11/30/2010 125,127,23

7 (876,057)

(703,841) ($172,216)

124,955,021

12/31/2010 124,955,02

1 (876,057)

(702,872) ($173,185)

124,781,836

2010 Total 1,510,617,253

(10,512,686)

(8,497,222)

(2,015,464)

1,508,601,789

1/31/2011 124,781,83

6 (876,057)

(701,898) ($174,159)

124,607,676

2/28/2011 124,607,67

6 (876,057)

(700,918) ($175,139)

124,432,537

3/31/2011 124,432,53

7 (876,057)

(699,933) ($176,124)

124,256,413

4/30/2011 124,256,41

3 (876,057)

(698,942) ($177,115)

124,079,298

5/31/2011 124,079,29

8 (876,057)

(697,946) ($178,111)

123,901,187

6/30/2011 123,901,18

7 (876,057)

(696,944) ($179,113)

123,722,074

7/31/2011 123,722,07

4 (876,057)

(695,937) ($180,120)

123,541,954

8/31/2011 123,541,95

4 (876,057)

(694,923) ($181,134)

123,360,820

9/30/2011 123,360,82

0 (876,057)

(693,905) ($182,153)

123,178,668

10/31/2011 123,178,66

8 (876,057)

(692,880) ($183,177)

122,995,490

11/30/2011 122,995,49

0 (876,057)

(691,850) ($184,208)

122,811,283

12/31/2011 122,811,28

3 (876,057)

(690,813) ($185,244)

122,626,039

2011 Total 1,485,669,238

(10,512,686)

(8,356,889)

(2,155,796)

1,483,513,441

Payment Dates Beginning Balance Debt Service Interest Paid

Principal Amortized

Outstanding Balance

1/31/2012 122,626,039 (876,057) (689,771) ($186,286) 122,439,754

2/28/2012 122,439,754 (876,057) (688,724) ($187,334) 122,252,420

3/31/2012 122,252,420 (876,057) (687,670) ($188,387) 122,064,033

4/30/2012 122,064,033 (876,057) (686,610) ($189,447) 121,874,586

5/31/2012 121,874,586 (876,057) (685,545) ($190,513) 121,684,073

6/30/2012 121,684,073 (876,057) (684,473) ($191,584) 121,492,489

7/31/2012 121,492,489 (876,057) (683,395) ($192,662) 121,299,827

8/31/2012 121,299,827 (876,057) (682,312) ($193,746) 121,106,081

9/30/2012 121,106,081 (876,057) (681,222) ($194,835) 120,911,246

10/31/2012 120,911,246 (876,057) (680,126) ($195,931) 120,715,315

11/30/2012 120,715,315 (876,057) (679,024) ($197,034) 120,518,281

12/31/2012 120,518,281 (876,057) (677,915) ($198,142) 120,320,139

2012 Total 1,458,984,143 (10,512,686) (8,206,786) (2,305,900) 1,456,678,243

1/31/2013 120,320,139 (876,057) (676,801) ($199,256) 120,120,883

2/28/2013 120,120,883 (876,057) (675,680) ($200,377) 119,920,506

3/31/2013 119,920,506 (876,057) (674,553) ($201,504) 119,719,001

4/30/2013 119,719,001 (876,057) (673,419) ($202,638) 119,516,364

5/31/2013 119,516,364 (876,057) (672,280) ($203,778) 119,312,586

6/30/2013 119,312,586 (876,057) (671,133) ($204,924) 119,107,662

7/31/2013 119,107,662 (876,057) (669,981) ($206,077) 118,901,586

8/31/2013 118,901,586 (876,057) (668,821) ($207,236) 118,694,350

9/30/2013 118,694,350 (876,057) (667,656) ($208,401) 118,485,948

10/31/2013 118,485,948 (876,057) (666,483) ($209,574) 118,276,375

11/30/2013 118,276,375 (876,057) (665,305) ($210,753) 118,065,622

12/31/2013 118,065,622 (876,057) (664,119) ($211,938) 117,853,684

2013 Total 1,430,441,02

1 (10,512,686) (8,046,231) (2,466,455) 1,427,974,566

1/31/2014 117,853,684 (876,057) (662,927) ($213,130) 117,640,554

2/28/2014 117,640,554 (876,057) (661,728) ($214,329) 117,426,225

3/31/2014 117,426,225 (876,057) (660,523) ($215,535) 117,210,690

4/30/2014 117,210,690 (876,057) (659,310) ($216,747) 116,993,943

5/31/2014 116,993,943 (876,057) (658,091) ($217,966) 116,775,977

6/30/2014 116,775,977 (876,057) (656,865) ($219,192) 116,556,785

7/31/2014 116,556,785 (876,057) (655,632) ($220,425) 116,336,359

8/31/2014 116,336,359 (876,057) (654,392) ($221,665) 116,114,694

9/30/2014 116,114,694 (876,057) (653,145) ($222,912) 115,891,782

10/31/2014 115,891,782 (876,057) (651,891) ($224,166) 115,667,616

11/30/2014 115,667,616 (876,057) (650,630) ($225,427) 115,442,190

12/31/2014 115,442,190 (876,057) (649,362) ($226,695) 115,215,495 2014 Total 1,399,910,500 (10,512,686) (7,874,497) (2,638,189)  

Rent to Qualifying Tenants Projected Lease-up Schedule  

January to December 2010  

   

Lease-up Schedule  

  Total January February March April May June

Residential  

1 bedrooms at market rent $4,500 per month        

Units leased 20 40 40 45 50 50

% leased 40% 80% 80% 90% 100% 100%

Gross Income $2,452,500 $90,000 $180,000 $180,000 $202,500 $225,000 $225,000

Rent-up Charges $135,000 $54,000 $54,000 $0 $13,500 $13,500  

   

1 bedrooms at 45% market $2,025 per month        

Units leased 20 30 40 45 50 50

% leased 40% 60% 80% 90% 100% 100%

Gross Income $1,083,375 $40,500 $60,750 $81,000 $91,125 $101,250 $101,250

Rent-up Charges $48,600 $24,300 $12,150 $12,150  

   

2 bedrooms   $6,500 per month        

Units leased 150 75 100 125 150 150 150

% leased 50% 67% 83% 100% 100% 100%

Gross Income $10,725,000 $487,500 $650,000 $812,500 $975,000 $975,000 $975,000

Rent-up Charges $585,000 $292,500 $97,500 $97,500 $97,500  

   Total Residential Rental Income

$ 14,260,875

$ 618,000

$ 890,750

$ 1,073,500

$ 1,268,625

$ 1,301,250

$ 1,301,250

Total Residential Rent-up Charges

$ 768,600

$ 370,800

$ 163,650

$ 109,650

$ 111,000

$ 13,500 $ -

   

Retails  

Stores   $25,000 per month        

Units leased 3 1 2 3 3 3 3

% leased 33% 67% 100% 100% 100% 100%

Retail Rental Income $825,000 $25,000 $50,000 $75,000 $75,000 $75,000 $75,000

Retail Rent-up Charges $45,000 $15,000 $15,000 $15,000      

Rent to Qualifying TenantsProjected Lease-up Schedule

January to December 2010

 

Lease-up Schedule

  July August September October November December

Residential

1 bedrooms at market rent            

Units leased 50 50 50 50 50 50

% leased 100% 100% 100% 100% 100% 100%

Gross Income $225,000 $225,000 $225,000 $225,000 $225,000 $225,000

Rent-up Charges

 

1 bedrooms at 45% market            

Units leased 50 50 50 50 50 50

% leased 100% 100% 100% 100% 100% 100%

Gross Income $101,250 $101,250 $101,250 $101,250 $101,250 $101,250

Rent-up Charges

 

2 bedrooms            

Units leased 150 150 150 150 150 150

% leased 100% 100% 100% 100% 100% 100%

Gross Income $975,000 $975,000 $975,000 $975,000 $975,000 $975,000

Rent-up Charges

 Total Residential Rental Income

$1,301,250

$1,301,250

$1,301,250

$1,301,250

$1,301,250

$1,301,250

Total Residential Rent-up Charges

$ -

$ -

$ -

$ -

$ -

$ -

 

Retails

Stores            

Units leased 3 3 3 3 3 3

% leased 100% 100% 100% 100% 100% 100%

Retail Rental Income $75,000 $75,000 $75,000 $75,000 $75,000 $75,000

Rent to Qualifying Tenants Lease-up Year Proforma January to December 2010

Total January February March April MayResidential Rental Income1 bedrooms at market rent $2,452,500 $90,000 $180,000 $180,000 $202,500 $225,000 1 bedrooms at 45% market $1,083,375 $40,500 $60,750 $81,000 $91,125 $101,250

2 bedrooms $10,725,000 $487,500 $650,000 $812,500 $975,000 $975,000 Total Residential Income $14,260,875 $618,000 $890,750 $1,073,500 $1,268,625 $1,301,250 Retail Rental Income $825,000 $25,000 $50,000 $75,000 $75,000 $75,000 Potential Gross Income $15,085,875 $643,000 $940,750 $1,148,500 $1,343,625 $1,376,250 Vacancy and Credit LossResidential $427,826 $18,540 $26,723 $32,205 $38,059 $39,038

Retail $33,000 $1,000 $2,000 $3,000 $3,000 $3,000 Total Vacancy and Credit Loss $460,826 $19,540 $28,723 $35,205 $41,059 $42,038 Effective Gross Income $14,625,049 $623,460 $912,028 $1,113,295 $1,302,566 $1,334,213 ExpensesOperating Expenses $2,262,881 $96,450 $141,113 $172,275 $201,544 $206,438

Real Estate Taxes $27,500 $2,292 $2,292 $2,292 $2,292 $2,292 Total Expenses $2,290,381 $98,742 $143,404 $174,567 $203,835 $208,729 Net Operating Income $12,334,668 $524,718 $768,623 $938,728 $1,098,731 $1,125,483 Less: Debt Service ($10,512,686) ($876,057) ($876,057) ($876,057) ($876,057) ($876,057)Less: Rent-up Charges

Residential ($768,600) ($370,800) ($163,650) ($109,650) ($111,000) ($13,500)

Retails ($45,000) ($15,000) ($15,000) ($15,000) $0 $0 Total Rent-up Charges ($813,600) ($385,800) ($178,650) ($124,650) ($111,000) ($13,500)

Plus: Permanent Loan $51,488,975 $51,488,975 ` Before Tax Cash Flow $52,497,356 $50,751,836 ($286,084) ($61,979) $111,674 $235,926

June July August September October November December

$225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $101,250 $101,250 $101,250 $101,250 $101,250 $101,250 $101,250

$975,000 $975,000 $975,000 $975,000 $975,000 $975,000 $975,000 $1,301,250 $1,301,250 $1,301,250 $1,301,250 $1,301,250 $1,301,250 $1,301,250

$75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000

$1,376,250 $1,376,250 $1,376,250 $1,376,250 $1,376,250 $1,376,250 $1,376,250

$39,038 $39,038 $39,038 $39,038 $39,038 $39,038 $39,038

$3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $42,038 $42,038 $42,038 $42,038 $42,038 $42,038 $42,038

$1,334,213 $1,334,213 $1,334,213 $1,334,213 $1,334,213 $1,334,213 $1,334,213

$206,438 $206,438 $206,438 $206,438 $206,438 $206,438 $206,438

$2,292 $2,292 $2,292 $2,292 $2,292 $2,292 $2,292 $208,729 $208,729 $208,729 $208,729 $208,729 $208,729 $208,729

$1,125,483 $1,125,483 $1,125,483 $1,125,483 $1,125,483 $1,125,483 $1,125,483

($876,057) ($876,057) ($876,057) ($876,057) ($876,057) ($876,057) ($876,057)

$0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$249,426 $249,426 $249,426 $249,426 $249,426 $249,426 $249,426

Rent to Qualifying Tenants

Depreciation Schedules Total Cost of Property $183,478,262

Less: Basis of Land Land Purchase Cost $35,000,000 Closing Costs $525,000

Demolition Costs $400,000

Basis of Land $35,925,000

Depreciable Basis (Basis of Building) $147,553,262

Percent allocable to personal property 11%

Portion allocable to personal property $16,230,859 Portion allocable to real property $131,322,404 Useful Life

27.5 years for real property 7 years for personal property

Straight Line Method for Real Property only Annual Depreciation 2010 2011 2012 2013 2014Annual Depreciation real property $4,576,387 $4,775,360 $4,775,360 $4,775,360 $4,775,360 Annual Depreciation personal property $2,319,390 $3,974,937 $2,838,777 $2,027,234 $1,449,416 $6,895,777 $8,750,297 $7,614,137 $6,802,594 $6,224,776 Accumulated Depreciation $6,895,777 $15,646,074 $23,260,211 $30,062,806 $36,287,582 Depreciable Basis $147,553,262 $147,553,262 $147,553,262 $147,553,262 $147,553,262

Less: Accumulated Depreciation ($6,895,777) ($15,646,074) ($23,260,211) ($30,062,806) ($36,287,582)

Plus: Basis of Land $35,925,000 $35,925,000 $35,925,000 $35,925,000 $35,925,000Adjusted Basis $176,582,486 $167,832,188 $160,218,051 $153,415,457 $147,190,681 Assume no Section 1245 Recapture in year of sale 7 Year Depreciation

14.29% 24.49% 17.49% 12.49% 8.93% 8.92% 8.93% 4.46%

Rent to Qualifying Tenants Amortization Schedules Financing Costs: Permanent Loan Fees

Commitment letter fees $275,196Loan Term 25 years

Closing fees $194,797

$ 469,993

Annual Amortization $18,800

Amortization Schedule 2010 2011 2012 2013 2014

Annual Amortization $18,800 $18,800 $18,800 $18,800 $18,800

Unamortized Amount $ 451,194

$ 432,394

$ 413,594

$ 394,794

$ 375,995

Financing Costs Rent-up Charges Rent-up Charges

Residential $768,600 Retail $45,000 Total Rent-up Charges $813,600

Residential Lease Terms 3 years years Retail Lease Terms 5 years years  

Amortization Schedule 2010 2011 2012 2013 2014

Annual Amortization Residential $256,200 $256,200 $256,200 Retail $9,000 $9,000 $9,000 $9,000 $9,000Total Annual Amortization $265,200 $265,200 $265,200 $9,000 $9,000

Unamortized Amount Residential $512,400 Retails $36,000 Total Unamortized Rent-up Charges $548,400 $283,200 $18,000 $9,000 $0

Rent to Qualifying Tenants

Tax Calculations Real Estate Taxes for 2011

Assessed Valuation= Land & (Total Constrcution Cost x 40%)

Real Property Tax= (Assessed Valuation) x 5.911% (Tax Rate)

Land (Acquisition Cost) $35,525,000Total Construction Cost $144,985,000 x 0.40 $57,994,000 $93,519,000

Assessed Valuation Tax Rate @ 5.91%

Real Property Tax $5,527,908

Real Estate Tax Exemption Year RE Tax Exemption % Adjusted RE TaxAcquisition 2008 $3,438 0% $3,438

Construction 2009 $27,500 0% $27,500

Lease-up 2010 $27,500 0% $27,500

Stabilized 2011 $5,527,908 50% $2,763,954Operation 2012 $5,527,908 45% $3,040,349Operation 2013 $5,527,908 40% $3,316,745Operation 2014 $5,527,908 35% $3,593,140Operation 2015 $5,527,908 30% $3,869,536

Capital Gain Taxes in 2014

Sale Price=2015 NOI / Sale Cap $278,969,711

Less: Cost of Sale ($6,974,243)Less: Mortgage Balance ($115,215,495)

Before Tax Proceeds $156,779,973 Less: Recapture Tax @ 25% ($9,071,895)Less: Capital Gain Tax @ 15% ($18,720,718)

After Tax Proceeds $128,987,360 Gain on Sale Sale Price $278,969,711

Less: Cost of Sale ($6,974,243)Net Sale Proceeds $271,995,468

Less: Total Adjusted Basis ($147,190,681)Gain on Sale $124,804,787

Depreciation Recapture $22,881,934 Long Term Capital Gain $101,922,853

Tax on Recaptured Depreciation 25% $5,720,483 Tax on Long Term Capital Gain 15% $15,288,428

Rent to Qualifying Tenants

Before Tax Cash Flow Projection

2008 to 2014

Year 2009 2010 2011 2012 2013 2014 2015

Construction Lease-up Stabilization Operation Operation Operation / Sale Year After Sale

Revenues:

Residential Rental Income

1 bedrooms at market rent $2,452,500 $2,700,000 $2,781,000 $2,864,430 $2,950,363

1 bedrooms at 75% market $1,083,375 $1,215,000 $1,251,450 $1,288,994 $1,327,663

2 bedrooms $10,725,000 $11,700,000 $12,051,000 $12,412,530 $12,784,906

Total Residential Income $14,260,875 $15,615,000 $16,083,450 $16,565,954 $17,062,932

Retail Rental Income $825,000 $900,000 $945,000 $992,250 $1,041,863

Potential Gross Income $15,085,875 $16,515,000 $17,028,450 $17,558,204 $18,104,795

Vacancy and Credit Loss

Residential $427,826 $442,800 $458,298 $474,339 $490,940

Retail $33,000 $33,660 $34,333 $35,020 $35,720

Total Vacancy and Credit Loss $460,826 $476,460 $492,631 $509,358 $526,661

Effective Gross Income $14,625,049 $16,038,540 $16,535,819 $17,048,845 $17,578,134

Expenses:

Operating Expenses $2,262,881 $1,651,500 $1,701,045 $1,701,045 $1,701,045

Real Estate Taxes $27,500 $2,763,954 $3,040,349 $3,316,745 $3,593,140

Total Expenses $2,290,381 $4,415,454 $4,741,394 $5,017,790 $5,294,185

Net Operating Income $12,334,668 $11,623,086 $11,794,424 $12,031,055 $12,283,949

Less: Debt Service ($10,512,686) ($10,512,686) ($10,512,686)($10,512,686

) ($10,512,686)

Less: Rent-up Charges ($813,600)

Before Tax Cash Flow $1,008,382 $1,110,400 $1,281,738 $1,518,369 $1,771,263

Less: Equity Contribution ($111,455,756)

Plus: Permanent Loan

Net of Construction Loan $51,488,975

Plus: Sale Proceeds $156,779,973

Total Before Tax Cash Flow ($59,966,781) $1,008,382 $1,110,400 $1,281,738 $1,518,369 $158,551,236

Before Tax IRR 22.69%

NPV @ 10% $103,503,344

Cash On Cash -53.80% 0.90% 1.00% 1.15% 1.36% 142.25%

Rent to Qualifying Tenants

After Tax Cash Flow Projection

2008 to 2014

2009 2010 2011 2012 2013 2014

Construction Lease-up Stabilization Operation Operation Operation / Sale

Net Operating Income $12,334,668 $11,623,086 $11,794,424 $12,031,055 $12,283,949

Less: Interest ($8,497,222) ($8,356,889) ($8,206,786) ($8,046,231) ($7,874,497)

Less: Rent-up Charges Amortization ($265,200) ($265,200) ($265,200) ($9,000)

Less: Financing Fee Amortization ($18,800) ($18,800) ($18,800) ($18,800) ($18,800)

Less: Depreciation ($6,895,777) ($8,750,297) ($7,614,137) ($6,802,594) ($6,224,776)

Taxable Income ($3,342,331) ($5,768,101) ($4,310,499) ($2,845,570) ($1,843,123)

Tax Payable at 35% ($1,169,816) ($2,018,835) ($1,508,675) ($995,949) ($645,093)

Before Tax Cash Flow $1,008,382 $1,110,400 $1,281,738 $1,518,369 $1,771,263

Less: Income Tax $1,169,816 $2,018,835 $1,508,675 $995,949 $645,093

After Tax Cash Flow $2,178,197 $3,129,235 $2,790,413 $2,514,319 $2,416,356

Less: Equity Contribution ($111,455,756)

Plus: Permanent Loan

Net of Construction Loan $51,488,975

Plus: After Tax Sale Proceeds $128,987,360

Total After Tax Cash Flow ($59,966,781) $2,178,197 $3,129,235 $2,790,413 $2,514,319 $131,403,716

After Tax IRR 19.85%

NPV @ 10% $27,277,004

Cash On Cash -53.80% 1.95% 2.81% 2.50% 2.26% 117.90%

Rent to Qualifying Tenants

Quarterly IRR

Pre Tax IRR Calculation 2009 2010 2011 2012 2013 2014 Total

($59,966,781) $1,008,382 $1,110,400 $1,281,738 $1,518,369 $158,551,236 $103,503,344

Yearly IRR 22.69%

After Tax IRR Calculation ($59,966,781) $2,178,197 $3,129,235 $2,790,413 $2,514,319 $131,403,716 $82,049,099

Yearly IRR 19.85%

Quarter Year Quarter Year

4 2008 ($111,455,756) 4 2008 ($111,455,756)

1 2009 1 2009

2 2009 2 2009

3 2009 3 2009

4 2009 $51,488,975 4 2009 $51,488,975

1 2010 $252,095 1 2010 $544,549

2 2010 $252,095 2 2010 $544,549

3 2010 $252,095 3 2010 $544,549

4 2010 $252,095 4 2010 $544,549

1 2011 $277,600 1 2011 $782,309

2 2011 $277,600 2 2011 $782,309

3 2011 $277,600 3 2011 $782,309

4 2011 $277,600 4 2011 $782,309

1 2012 $320,435 1 2012 $697,603

2 2012 $320,435 2 2012 $697,603

3 2012 $320,435 3 2012 $697,603

4 2012 $320,435 4 2012 $697,603

1 2013 $379,592 1 2013 $628,580

2 2013 $379,592 2 2013 $628,580

3 2013 $379,592 3 2013 $628,580

4 2013 $379,592 4 2013 $628,580

1 2014 $442,816 1 2014 $604,089

2 2014 $442,816 2 2014 $604,089

3 2014 $442,816 3 2014 $604,089

4 2014 $158,994,052 4 2014 $132,007,805

Pre Tax IRR 20.90% After Tax IRR 18.51%

Rent to Qualifying Tenants

Key Assumptions

Acquisition Amounts

Purchase date 11/15/2008

Cost of land and existing building shell $35,000,000

Contract deposit 10%of cost of the land $3,500,000

Closing cost 1.5%of cost of the land $525,000

$35,525,000

Building info

Maximum rentable space 350,000 sqft

Retail

3 units

Retail space 15% of total sqft 52,50

0 sqft

Residential 2

50 units 297,50

0 sqft

One bedrooms

100 units

@ market

50 units

@ 45% of market

50 units 50%of one

bedrooms

Two bedrooms

150 units

Rent 50% to low income qualifying tenants (1=yes, 2=no) 1

Predevelopment cost

Engineer, design, architects, fees & costs $45,000

NYC plumbing, water, steam connection permits $3,500

Land, soil tests, environmental testing $13,000

$61,500

Construction costs

Demolition costs $400,000

Hard costs $375per rentable

sqft $133,875,000

Soft costs 8.0%of hard

costs $10,710,000

$144,985,000

Taxes

Income tax Ordinary Rate 35%

Capital gain tax 15%

Capital gain recapture tax

rate 25%

Sale of property

Sale date 12/31/2014

Sale cap rate 4.5%

Cost of sale 2.5%

Construction loan

Loan term

12 months

Interest rate 7.5%

Loan amount 50%

of construction

costs $72,492,500

1/09 - 4/09 4 months 50% of loan $9,061,563 monthly $36,246,250

5/09 - 11/09 7 months 50% of loan $5,178,036 monthly $36,246,250

Mortgage retainage 10% of loan $7,249,250

12/09 100% of retainage $7,249,250

Construction financing fees

Points $30,000

Lender's legal fees $15,000

Engineering review $5,000

Borrower's legal fees $10,000

Total construction loan closing cost $60,000

Permanent loan

Total Cost of the Property

From the Construction

Budget $183,478,262

Valuation $11,623,086 NOI Cap Rate 5.5% $211,328,832

Loan amount 60% $126,797,299

Interest rate 6.75%

Term 25 years

Amortization 25 years

Commitment letter fees

Issuing charge 0.15% of the loan $190,196

Legal fee $30,000

Other costs $15,000

Borrower's costs $40,000

$275,196

Closing fees

Points 0.10% of the loan $126,797

Borrower's legal fees $25,000

Lender's legal fees $15,000

Other fees $28,000

$194,797

Rental assumptions

Lease-up leasing commissions 5%of first lease

year GI

Retail

Lease term 5 years

Monthly rents 2010-2014 $25,000 per store $900,000

Vacancy and collection loss 2010 4% $36,000

Increase 2.0% 2011 2.00% $17,280

2012 2.00%

2013 2.00%

2014 2.00%

Residential

Lease term 3 years

2010 & 2011

One bedrooms $4,500 per month $2,700,000

One bedrooms @ 45% 45%of market

rent $2,025 per month $1,215,000

Two bedrooms $6,500 per month $11,700,000

Residential Gross Potential Income $15,615,000

Vacancy and collection loss 2010 3%

Increase 3.5% 2011 3.5%

2012 3.5%

2013 3.5%

2014 3.5%

Residential Rent Escalation 3%

Commercial Base Rent Escalation 5%

Operating Expenses

Lease-up year 2010 15% of PGI

Stabilized year 2011 10% of PGI

Escalation 3%

Real estate taxes 200845

days/360 $3,438

2009 $27,500

2010 $27,500

Market Rate Rents Construction Budget

11/15/2008 - 12/31/2009 Total Equity Loan Per SQFT 350,000Acquisition costs 100% 0%

Cost of land and existing building shell $35,000,000 $100.00

Closing cost $525,000 $1.50 $35,525,000 $35,525,000 $101.50 Predevelopment costs 100% 0%

Engineer, design, architects, fees & costs $45,000 $0.13NYC plumbing, water, steam connection permits $3,500 $0.01

Land, soil tests, environmental testing $13,000 $0.04 $61,500 $61,500 $0.18 Construction costs 50% 50%

Demolition costs $400,000 $1.14Hard costs $133,875,000 $382.50

Soft costs $10,710,000 $30.60 $144,985,000 $72,492,500 $72,492,500 $414.24 Financing costs - construction loan 100% 0%

Construction financing fees $60,000 $0.17

Construction loan interest $2,815,825 $8.05 $2,875,825 $2,875,825 $8.22

Real estate taxes 100% 0% Year 2008 $3,438 $0.01

Year 2009 $27,500 $0.08 $30,938 $30,938 $0.09

Total Cost of the Property $183,478,262 $110,985,762 $72,492,500 $524.22

Financing costs - permanent loan 100%

Commitment letter fees $251,142 $0.72

Closing fees $178,761 $0.51 $429,903 $429,903 $1.23

Total Development Costs $183,908,166 $111,415,666 $72,492,500 $525.45Market Rate Rents Market Rate Rents

Loan Amount 72,492,500

Annual Interest Rate 7.50%Monthly Interest Rate 0.63%Retainage 10%

Date Amount RetainageActual Draw Interest

Loan Balance

January-09 9,061,563 906,156 8,155,406 8,155,406February-09 9,061,563 906,156 8,155,406 50,971 16,361,784

March-09 9,061,563 906,156 8,155,406 102,261 24,619,451April-09 9,061,563 906,156 8,155,406 153,872 32,928,729May-09 5,178,036 517,804 4,660,232 205,805 37,794,766June-09 5,178,036 517,804 4,660,232 236,217 42,691,215July-09 5,178,036 517,804 4,660,232 266,820 47,618,267

August-09 5,178,036 517,804 4,660,232 297,614 52,576,114September-09 5,178,036 517,804 4,660,232 328,601 57,564,947

October-09 5,178,036 517,804 4,660,232 359,781 62,584,960November-09 5,178,036 517,804 4,660,232 391,156 67,636,348December-09 7,249,250 422,727 75,308,325

Totals 72,492,500 7,249,250 72,492,500 2,815,825 75,308,325

Market Rate Rents Permanent Loan Amortization Schedule  

Permanent Loan less Construction Loan Balance $ 35,452,989

Loan amount $

110,761,314  

Interest rate 6.75% annually 0.6% monthly

Amortization period 25 years

300 month

Debt service amount ($765,263) per month ($9,183,152) per year

Loan closing date 12/31/2009  

Payment

Dates Beginning Balance Debt Service Interest PaidPrincipal

AmortizedOutstanding

Balance

1 1/31/2010 110,761,314 (765,263)

(623,032) ($142,230)

110,619,083

2 2/28/2010 110,619,083 (765,263)

(622,232) ($143,030)

110,476,053

3 3/31/2010 110,476,053 (765,263)

(621,428) ($143,835)

110,332,218

4 4/30/2010 110,332,218 (765,263)

(620,619) ($144,644)

110,187,574

5 5/31/2010 110,187,574 (765,263)

(619,805) ($145,458)

110,042,117

6 6/30/2010 110,042,117 (765,263)

(618,987) ($146,276)

109,895,841

7 7/31/2010 109,895,841 (765,263)

(618,164) ($147,099)

109,748,742

8 8/31/2010 109,748,742 (765,263)

(617,337) ($147,926)

109,600,816

9 9/30/2010 109,600,816 (765,263)

(616,505) ($148,758)

109,452,058

10 10/31/2010 109,452,058 (765,263)

(615,668) ($149,595)

109,302,463

11 11/30/2010 109,302,463 (765,263)

(614,826) ($150,436)

109,152,027

12 12/31/2010 109,152,027 (765,263)

(613,980) ($151,283)

109,000,744

2010 Total 1,319,570,306 (9,183,152)

(7,422,583)

(1,760,569)

1,317,809,736

13 1/31/2011 109,000,744 (765,263)

(613,129) ($152,133)

108,848,611

14 2/28/2011 108,848,611 (765,263)

(612,273) ($152,989)

108,695,622

15 3/31/2011 108,695,622 (765,263)

(611,413) ($153,850)

108,541,772

16 4/30/2011 108,541,772 (765,263)

(610,547) ($154,715)

108,387,057

17 5/31/2011 108,387,057 (765,263)

(609,677) ($155,585)

108,231,471

18 6/30/2011 108,231,471 (765,263)

(608,802) ($156,461)

108,075,010

19 7/31/2011 108,075,010 (765,263)

(607,922) ($157,341)

107,917,670

20 8/31/2011 107,917,670 (765,263)

(607,037) ($158,226)

107,759,444

21 9/30/2011 107,759,444 (765,263)

(606,147) ($159,116)

107,600,328

22 10/31/2011 107,600,328 (765,263)

(605,252) ($160,011)

107,440,317

23 11/30/2011 107,440,317 (765,263)

(604,352) ($160,911)

107,279,406

24 12/31/2011 107,279,406 (765,263)

(603,447) ($161,816)

107,117,590

2011 Total 1,297,777,452 (9,183,152)

(7,299,998)

(1,883,154)

1,295,894,298

Rent to Qualifying Tenants Permanent Loan Amortization Schedule  

Permanent Loan less Construction Loan Balance $51,488,975 Loan amount $ 126,797,299  

Interest rate 6.75% annually 0.6% monthly

Amortization period 25 years

300 month

Debt service amount ($876,057) per month ($10,512,686) per year

Loan closing date 12/31/2009  

Payment Dates Beginning Balance Debt Service Interest Paid

Principal Amortized

Outstanding Balance

1/31/2010 126,797,29

9 (876,057)

(713,235) ($162,822)

126,634,477

2/28/2010 126,634,47

7 (876,057)

(712,319) ($163,738)

126,470,739

3/31/2010 126,470,73

9 (876,057)

(711,398) ($164,659)

126,306,080

4/30/2010 126,306,08

0 (876,057)

(710,472) ($165,585)

126,140,494

5/31/2010 126,140,49

4 (876,057)

(709,540) ($166,517)

125,973,977

6/30/2010 125,973,97

7 (876,057)

(708,604) ($167,454)

125,806,524

7/31/2010 125,806,52

4 (876,057)

(707,662) ($168,395)

125,638,128

8/31/2010 125,638,12

8 (876,057)

(706,714) ($169,343)

125,468,786

9/30/2010 125,468,78

6 (876,057)

(705,762) ($170,295)

125,298,490

10/31/2010 125,298,49

0 (876,057)

(704,804) ($171,253)

125,127,237

11/30/2010 125,127,23

7 (876,057)

(703,841) ($172,216)

124,955,021

12/31/2010 124,955,02

1 (876,057)

(702,872) ($173,185)

124,781,836

2010 Total 1,510,617,253

(10,512,686)

(8,497,222)

(2,015,464)

1,508,601,789

1/31/2011 124,781,83

6 (876,057)

(701,898) ($174,159)

124,607,676

2/28/2011 124,607,67

6 (876,057)

(700,918) ($175,139)

124,432,537

3/31/2011 124,432,53

7 (876,057)

(699,933) ($176,124)

124,256,413

4/30/2011 124,256,41

3 (876,057)

(698,942) ($177,115)

124,079,298

5/31/2011 124,079,29

8 (876,057)

(697,946) ($178,111)

123,901,187

6/30/2011 123,901,18

7 (876,057)

(696,944) ($179,113)

123,722,074

7/31/2011 123,722,07

4 (876,057)

(695,937) ($180,120)

123,541,954

8/31/2011 123,541,95

4 (876,057)

(694,923) ($181,134)

123,360,820

9/30/2011 123,360,82

0 (876,057)

(693,905) ($182,153)

123,178,668

10/31/2011 123,178,66

8 (876,057)

(692,880) ($183,177)

122,995,490

11/30/2011 122,995,49

0 (876,057)

(691,850) ($184,208)

122,811,283

12/31/2011 122,811,28

3 (876,057)

(690,813) ($185,244)

122,626,039

2011 Total 1,485,669,238

(10,512,686)

(8,356,889)

(2,155,796)

1,483,513,441

Payment Dates Beginning Balance Debt Service Interest Paid

Principal Amortized

Outstanding Balance

1/31/2012 122,626,039 (876,057) (689,771) ($186,286) 122,439,754

2/28/2012 122,439,754 (876,057) (688,724) ($187,334) 122,252,420

3/31/2012 122,252,420 (876,057) (687,670) ($188,387) 122,064,033

4/30/2012 122,064,033 (876,057) (686,610) ($189,447) 121,874,586

5/31/2012 121,874,586 (876,057) (685,545) ($190,513) 121,684,073

6/30/2012 121,684,073 (876,057) (684,473) ($191,584) 121,492,489

7/31/2012 121,492,489 (876,057) (683,395) ($192,662) 121,299,827

8/31/2012 121,299,827 (876,057) (682,312) ($193,746) 121,106,081

9/30/2012 121,106,081 (876,057) (681,222) ($194,835) 120,911,246

10/31/2012 120,911,246 (876,057) (680,126) ($195,931) 120,715,315

11/30/2012 120,715,315 (876,057) (679,024) ($197,034) 120,518,281

12/31/2012 120,518,281 (876,057) (677,915) ($198,142) 120,320,139

2012 Total 1,458,984,143 (10,512,686) (8,206,786) (2,305,900) 1,456,678,243

1/31/2013 120,320,139 (876,057) (676,801) ($199,256) 120,120,883

2/28/2013 120,120,883 (876,057) (675,680) ($200,377) 119,920,506

3/31/2013 119,920,506 (876,057) (674,553) ($201,504) 119,719,001

4/30/2013 119,719,001 (876,057) (673,419) ($202,638) 119,516,364

5/31/2013 119,516,364 (876,057) (672,280) ($203,778) 119,312,586

6/30/2013 119,312,586 (876,057) (671,133) ($204,924) 119,107,662

7/31/2013 119,107,662 (876,057) (669,981) ($206,077) 118,901,586

8/31/2013 118,901,586 (876,057) (668,821) ($207,236) 118,694,350

9/30/2013 118,694,350 (876,057) (667,656) ($208,401) 118,485,948

10/31/2013 118,485,948 (876,057) (666,483) ($209,574) 118,276,375

11/30/2013 118,276,375 (876,057) (665,305) ($210,753) 118,065,622

12/31/2013 118,065,622 (876,057) (664,119) ($211,938) 117,853,684

2013 Total 1,430,441,02

1 (10,512,686) (8,046,231) (2,466,455) 1,427,974,566

1/31/2014 117,853,684 (876,057) (662,927) ($213,130) 117,640,554

2/28/2014 117,640,554 (876,057) (661,728) ($214,329) 117,426,225

3/31/2014 117,426,225 (876,057) (660,523) ($215,535) 117,210,690

4/30/2014 117,210,690 (876,057) (659,310) ($216,747) 116,993,943

5/31/2014 116,993,943 (876,057) (658,091) ($217,966) 116,775,977

6/30/2014 116,775,977 (876,057) (656,865) ($219,192) 116,556,785

7/31/2014 116,556,785 (876,057) (655,632) ($220,425) 116,336,359

8/31/2014 116,336,359 (876,057) (654,392) ($221,665) 116,114,694

9/30/2014 116,114,694 (876,057) (653,145) ($222,912) 115,891,782

10/31/2014 115,891,782 (876,057) (651,891) ($224,166) 115,667,616

11/30/2014 115,667,616 (876,057) (650,630) ($225,427) 115,442,190

12/31/2014 115,442,190 (876,057) (649,362) ($226,695) 115,215,495 2014 Total 1,399,910,500 (10,512,686) (7,874,497) (2,638,189)  

 Payment

DatesBeginning Balance

Debt Service Interest Paid

Principal Amortized

Outstanding Balance

25 1/31/2012

107,117,590

(765,263)

(602,536) ($162,726)

106,954,864

26 2/28/2012

106,954,864

(765,263)

(601,621) ($163,642)

106,791,223

27 3/31/2012

106,791,223

(765,263)

(600,701) ($164,562)

106,626,661

28 4/30/2012

106,626,661

(765,263)

(599,775) ($165,488)

106,461,173

29 5/31/2012

106,461,173

(765,263)

(598,844) ($166,419)

106,294,754

30 6/30/2012

106,294,754

(765,263)

(597,908) ($167,355)

106,127,400

31 7/31/2012

106,127,400

(765,263)

(596,967) ($168,296)

105,959,103

32 8/31/2012

105,959,103

(765,263)

(596,020) ($169,243)

105,789,861

33 9/30/2012

105,789,861

(765,263)

(595,068) ($170,195)

105,619,666

34 10/31/2012

105,619,666

(765,263)

(594,111) ($171,152)

105,448,514

35 11/30/2012

105,448,514

(765,263)

(593,148) ($172,115)

105,276,399

36 12/31/2012

105,276,399

(765,263)

(592,180) ($173,083)

105,103,316

  2012 Total 1,274,467,20

7 (9,183,15

2) (7,168,87

8) (2,014,27

4) 1,272,452,93

3 37 1/31/2013

105,103,316

(765,263)

(591,206) ($174,057)

104,929,260

38 2/28/2013

104,929,260

(765,263)

(590,227) ($175,036)

104,754,224

39 3/31/2013

104,754,224

(765,263)

(589,243) ($176,020)

104,578,204

40 4/30/2013

104,578,204

(765,263)

(588,252) ($177,010)

104,401,194

41 5/31/2013

104,401,194

(765,263)

(587,257) ($178,006)

104,223,188

42 6/30/2013

104,223,188

(765,263)

(586,255) ($179,007)

104,044,180

43 7/31/2013

104,044,180

(765,263)

(585,249) ($180,014)

103,864,166

44 8/31/2013

103,864,166

(765,263)

(584,236) ($181,027)

103,683,140

45 9/30/2013

103,683,140

(765,263)

(583,218) ($182,045)

103,501,095

46 10/31/2013

103,501,095

(765,263)

(582,194) ($183,069)

103,318,025

47 11/30/2013

103,318,025

(765,263)

(581,164) ($184,099)

103,133,927

48 12/31/2013

103,133,927

(765,263)

(580,128) ($185,134)

102,948,792

  2013 Total 1,249,533,91

8 (9,183,15

2) (7,028,62

8) (2,154,52

4) 1,247,379,39

4

49 1/31/2014 ($186,176)

102,948,792 (765,263) (579,087) 102,762,617

50 2/28/2014 102,762,617

(765,263)

(578,040) ($187,223)

102,575,394

51 3/31/2014 102,575,394

(765,263)

(576,987) ($188,276)

102,387,118

52 4/30/2014 102,387,118

(765,263)

(575,928) ($189,335)

102,197,782

53 5/31/2014 102,197,782

(765,263)

(574,863) ($190,400)

102,007,382

54 6/30/2014 102,007,382

(765,263)

(573,792) ($191,471)

101,815,911

55 7/31/2014 101,815,911

(765,263)

(572,715) ($192,548)

101,623,363

56 8/31/2014 101,623,363

(765,263)

(571,631) ($193,631)

101,429,732

57 9/30/2014 101,429,732

(765,263)

(570,542) ($194,720)

101,235,011

58 10/31/2014 101,235,011

(765,263)

(569,447) ($195,816)

101,039,195

59 11/30/2014 101,039,195

(765,263)

(568,345) ($196,917)

100,842,278

60 12/31/2014 100,842,278

(765,263)

(567,238) ($198,025)

100,644,253

  2014 Total 1,222,864,57

6 (9,183,15

2) (6,878,61

3) (2,304,53

9)  

Market Rate Rents Projected Lease-up Schedule  

January to December 2010  

   

Lease-up Schedule  

  Total January February March April May June

Residential  

1 bedrooms at market rent $4,500 per month        

Units leased 40 80 80 90 100

% leased 40% 80% 80% 90% 100% 100%

Gross Income $4,905,000 $180,000 $360,000 $360,000 $405,000 $450,000 $450,000

Rent-up Charges $270,000 $108,000 $108,000 $0 $27,000 $27,000  

   

1 bedrooms at 45% market $0 per month        

Units leased 0 0 0 0 0

% leased 40% 60% 80% 90% 100% 100%

Gross Income $0 $0 $0 $0 $0 $0

Rent-up Charges $0 $0 $0 $0  

   

2 bedrooms   $6,500 per month        

Units leased 150 75 100 125 150 150

% leased 50% 67% 83% 100% 100% 100%

Gross Income $10,725,000 $487,500 $650,000 $812,500 $975,000 $975,000 $975,000

Rent-up Charges $585,000 $292,500 $97,500 $97,500 $97,500  

   

Total Residential Rental Income $ 15,630,000

$ 667,500

$ 1,010,000

$ 1,172,500

$ 1,380,000 $ 1,425,000

$ 1,425,000

Total Residential Rent-up Charges

$ 855,000

$ 400,500

$ 205,500

$ 97,500

$ 124,500 $ 27,000 $ -

   

Retails  

Stores   $25,000 per month        

Units leased 3 1 2 3 3 3

% leased 33% 67% 100% 100% 100% 100%

Retail Rental Income $825,000 $25,000 $50,000 $75,000 $75,000 $75,000 $75,000

Retail Rent-up Charges $45,000 $15,000 $15,000 $15,000      

Market Rate Rents Projected Lease-up Schedule  

January to December 2010  

   

Lease-up Schedule  

  July August September October November December

Residential  

1 bedrooms at market rent            

Units leased 100 100 100 100 100 100

% leased 100% 100% 100% 100% 100% 100%

Gross Income $450,000 $450,000 $450,000 $450,000 $450,000 $450,000

Rent-up Charges  

   

1 bedrooms at 45% market            

Units leased 0 0 0 0 0 0

% leased 100% 100% 100% 100% 100% 100%

Gross Income $0 $0 $0 $0 $0 $0

Rent-up Charges  

   

2 bedrooms            

Units leased 150 150 150 150 150 150

% leased 100% 100% 100% 100% 100% 100%

Gross Income $975,000 $975,000 $975,000 $975,000 $975,000 $975,000

Rent-up Charges  

   

Total Residential Rental Income $ 1,425,000

$ 1,425,000

$ 1,425,000

$ 1,425,000

$ 1,425,000

$ 1,425,000

Total Residential Rent-up Charges $ - $ - $ - $ - $ - $ -

Market Rate Rents Lease-up Year Proforma January to December 2010

Total January February March April MayResidential Rental Income1 bedrooms at market rent $4,905,000 $180,000 $360,000 $360,000 $405,000 $450,000 1 bedrooms at 45% market $0 $0 $0 $0 $0 $0

2 bedrooms $10,725,000 $487,500 $650,000 $812,500 $975,000 $975,000 Total Residential Income $15,630,000 $667,500 $1,010,000 $1,172,500 $1,380,000 $1,425,000 Retail Rental Income $825,000 $25,000 $50,000 $75,000 $75,000 $75,000 Potential Gross Income $16,455,000 $692,500 $1,060,000 $1,247,500 $1,455,000 $1,500,000 Vacancy and Credit LossResidential $468,900 $20,025 $30,300 $35,175 $41,400 $42,750

Retail $33,000 $1,000 $2,000 $3,000 $3,000 $3,000 Total Vacancy and Credit Loss $501,900 $21,025 $32,300 $38,175 $44,400 $45,750 Effective Gross Income $15,953,100 $671,475 $1,027,700 $1,209,325 $1,410,600 $1,454,250 ExpensesOperating Expenses $2,468,250 $103,875 $159,000 $187,125 $218,250 $225,000

Real Estate Taxes $27,500 $2,292 $2,292 $2,292 $2,292 $2,292 Total Expenses $2,495,750 $106,167 $161,292 $189,417 $220,542 $227,292 Net Operating Income $13,457,350 $565,308 $866,408 $1,019,908 $1,190,058 $1,226,958 Less: Debt Service ($9,183,152) ($765,263) ($765,263) ($765,263) ($765,263) ($765,263)Less: Rent-up Charges

Residential ($855,000) ($400,500) ($205,500) ($97,500) ($124,500) ($27,000)

Retails ($45,000) ($15,000) ($15,000) ($15,000) $0 $0 Total Rent-up Charges ($900,000) ($415,500) ($220,500) ($112,500) ($124,500) ($27,000)

Plus: Permanent Loan $35,452,989 $35,452,989 ` Before Tax Cash Flow $38,827,186 $34,837,534 ($119,354) $142,146 $300,296 $434,696

June July August September October November December

$450,000 $450,000 $450,000 $450,000 $450,000 $450,000 $450,000 $0 $0 $0 $0 $0 $0 $0

$975,000 $975,000 $975,000 $975,000 $975,000 $975,000 $975,000 $1,425,000 $1,425,000 $1,425,000 $1,425,000 $1,425,000 $1,425,000 $1,425,000

$75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000

$1,500,000 $1,500,000 $1,500,000 $1,500,000 $1,500,000 $1,500,000 $1,500,000

$42,750 $42,750 $42,750 $42,750 $42,750 $42,750 $42,750

$3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $45,750 $45,750 $45,750 $45,750 $45,750 $45,750 $45,750

$1,454,250 $1,454,250 $1,454,250 $1,454,250 $1,454,250 $1,454,250 $1,454,250

$225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000

$2,292 $2,292 $2,292 $2,292 $2,292 $2,292 $2,292 $227,292 $227,292 $227,292 $227,292 $227,292 $227,292 $227,292

$1,226,958 $1,226,958 $1,226,958 $1,226,958 $1,226,958 $1,226,958 $1,226,958

($765,263) ($765,263) ($765,263) ($765,263) ($765,263) ($765,263) ($765,263)

$0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$461,696 $461,696 $461,696 $461,696 $461,696 $461,696 $461,696

Market Rate Rents

Depreciation Schedules Total Cost of Property $183,478,262

Less: Basis of Land Land Purchase Cost $35,000,000 Closing Costs $525,000

Demolition Costs $400,000

Basis of Land $35,925,000

Depreciable Basis (Basis of Building) $147,553,262

Percent allocable to personal property 11%

Portion allocable to personal property $16,230,859 Portion allocable to real property $131,322,404 Useful Life

27.5 years for real property 7 years for personal property

Straight Line Method for Real Property only Annual Depreciation 2010 2011 2012 2013 2014Annual Depreciation real property $4,576,387 $4,775,360 $4,775,360 $4,775,360 $4,775,360 Annual Depreciation personal property $2,319,390 $3,974,937 $2,838,777 $2,027,234 $1,449,416 $6,895,777 $8,750,297 $7,614,137 $6,802,594 $6,224,776 Accumulated Depreciation $6,895,777 $15,646,074 $23,260,211 $30,062,806 $36,287,582 Depreciable Basis $147,553,262 $147,553,262 $147,553,262 $147,553,262 $147,553,262

Less: Accumulated Depreciation ($6,895,777) ($15,646,074) ($23,260,211) ($30,062,806) ($36,287,582)

Plus: Basis of Land $35,925,000 $35,925,000 $35,925,000 $35,925,000 $35,925,000Adjusted Basis $176,582,486 $167,832,188 $160,218,051 $153,415,457 $147,190,681 Assume no Section 1245 Recapture in year of sale 7 Year Depreciation

14.29% 24.49% 17.49% 12.49% 8.93% 8.92% 8.93% 4.46%

Market Rate Rents Amortization Schedules Financing Costs: Permanent Loan Fees

Commitment letter fees $251,142Loan Term 25 years

Closing fees $178,761

$ 429,903

Annual Amortization $17,196

Amortization Schedule 2010 2011 2012 2013 2014

Annual Amortization $17,196 $17,196 $17,196 $17,196 $17,196

Unamortized Amount $ 412,707

$ 395,511

$ 378,315

$ 361,119

$ 343,923

Financing Costs Rent-up Charges Rent-up Charges

Residential $855,000 Retail $45,000 Total Rent-up Charges $900,000

Residential Lease Terms 3 years years Retail Lease Terms 5 years years  

Amortization Schedule 2010 2011 2012 2013 2014

Annual Amortization Residential $285,000 $285,000 $285,000 Retail $9,000 $9,000 $9,000 $9,000 $9,000Total Annual Amortization $294,000 $294,000 $294,000 $9,000 $9,000

Unamortized Amount Residential $570,000 Retails $36,000 Total Unamortized Rent-up Charges $606,000 $312,000 $18,000 $9,000 $0

Market Rate Rents

Tax Calculations Real Estate Taxes for 2011

Assessed Valuation= Land & (Total Constrcution Cost x 40%)

Real Property Tax= (Assessed Valuation) x 5.911% (Tax Rate)

Land (Acquisition Cost) $35,525,000Total Construction Cost $144,985,000 x 0.40 $57,994,000 $93,519,000

Assessed Valuation Tax Rate @ 5.91%

Real Property Tax $5,527,908

Real Estate Tax Exemption Year RE Tax Exemption % Adjusted RE TaxAcquisition 2008 $3,438 0% $3,438

Construction 2009 $27,500 0% $27,500

Lease-up 2010 $27,500 0% $27,500

Stabilized 2011 $5,527,908 50% $2,763,954Operation 2012 $5,527,908 45% $3,040,349Operation 2013 $5,527,908 40% $3,316,745Operation 2014 $5,527,908 35% $3,593,140Operation 2015 $5,527,908 30% $3,869,536

Capital Gain Taxes in 2014

Sale Price=2015 NOI / Sale Cap $274,775,720

Less: Cost of Sale ($6,869,393)Less: Mortgage Balance ($100,644,253)

Before Tax Proceeds $167,262,074 Less: Recapture Tax @ 25% ($9,071,895)Less: Capital Gain Tax @ 15% ($18,107,347)

After Tax Proceeds $140,082,831 Gain on Sale Sale Price $274,775,720

Less: Cost of Sale ($6,869,393)Net Sale Proceeds $267,906,327

Less: Total Adjusted Basis ($147,190,681)Gain on Sale $120,715,646

Depreciation Recapture $22,881,934 Long Term Capital Gain $97,833,712

Tax on Recaptured Depreciation 25% $5,720,483 Tax on Long Term Capital Gain 15% $14,675,057

Market Rate Rents

Before Tax Cash Flow Projection

2008 to 2014

Year 2009 2010 2011 2012 2013 2014 2015

Construction Lease-up Stabilization Operation OperationOperation /

Sale Year After Sale

Revenues:

Residential Rental Income

1 bedrooms at market rent $4,905,000 $5,400,000 $5,562,000 $5,728,860 $5,900,726 $6,077,748

1 bedrooms at 75% market $0 $0 $0 $0 $0 $0

2 bedrooms $10,725,000 $11,700,000 $12,051,000 $12,412,530 $12,784,906 $13,168,453

Total Residential Income $15,630,000 $17,100,000 $17,613,000 $18,141,390 $18,685,632 $19,246,201

Retail Rental Income $825,000 $900,000 $945,000 $992,250 $1,041,863 $1,093,956

Potential Gross Income $16,455,000 $18,000,000 $18,558,000 $19,133,640 $19,727,494 $20,340,156

Vacancy and Credit Loss

Residential $468,900 $485,312 $502,297 $519,878 $538,074 $556,906

Retail $33,000 $33,660 $34,333 $35,020 $35,720 $36,435 Total Vacancy and Credit Loss $501,900 $518,972 $536,631 $554,898 $573,794 $593,341

Effective Gross Income $15,953,100 $17,481,029 $18,021,369 $18,578,742 $19,153,700 $19,746,816

Expenses:

Operating Expenses $2,468,250 $1,800,000 $1,854,000 $1,854,000 $1,854,000 $1,854,000

Real Estate Taxes $27,500 $5,527,908 $5,527,908 $5,527,908 $5,527,908 $5,527,908

Total Expenses $2,495,750 $7,327,908 $7,381,908 $7,381,908 $7,381,908 $7,381,908

Net Operating Income $13,457,350 $10,153,120 $10,639,461 $11,196,834 $11,771,792 $12,364,907

Less: Debt Service ($9,183,152) ($9,183,152) ($9,183,152) ($9,183,152) ($9,183,152)

Less: Rent-up Charges ($900,000)

Before Tax Cash Flow $3,374,198 $969,968 $1,456,309 $2,013,682 $2,588,640

Less: Equity Contribution ($111,415,666)

Plus: Permanent Loan

Net of Construction Loan $35,452,989

Plus: Sale Proceeds $167,262,074 Total Before Tax Cash Flow ($75,962,677) $3,374,198 $969,968 $1,456,309 $2,013,682

$169,850,714

Before Tax IRR 19.20%

NPV @ 10% $101,702,194

Cash On Cash -68.18% 3.03% 0.87% 1.31% 1.81% 152.45%

Market Rate Rents

After Tax Cash Flow Projection

2008 to 2014

2009 2010 2011 2012 2013 2014

Construction Lease-up Stabilization Operation OperationOperation /

Sale

Net Operating Income $13,457,350 $10,153,120 $10,639,461 $11,196,834 $11,771,792

Less: Interest ($7,422,583) ($7,299,998) ($7,168,878) ($7,028,628) ($6,878,613)

Less: Rent-up Charges Amortization ($294,000) ($294,000) ($294,000) ($9,000)

Less: Financing Fee Amortization ($17,196) ($17,196) ($17,196) ($17,196) ($17,196)

Less: Depreciation ($6,895,777) ($8,750,297) ($7,614,137) ($6,802,594) ($6,224,776)

Taxable Income ($1,172,206) ($6,208,371) ($4,454,750) ($2,660,585) ($1,357,793)

Tax Payable at 35% ($410,272) ($2,172,930) ($1,559,163) ($931,205) ($475,228)

Before Tax Cash Flow $3,374,198 $969,968 $1,456,309 $2,013,682 $2,588,640

Less: Income Tax $410,272 $2,172,930 $1,559,163 $931,205 $475,228

After Tax Cash Flow $3,784,470 $3,142,898 $3,015,472 $2,944,887 $3,063,868

Less: Equity Contribution($111,415,666

)

Plus: Permanent Loan

Net of Construction Loan $35,452,989

Plus: After Tax Sale Proceeds $140,082,831

Total After Tax Cash Flow ($75,962,677) $3,784,470 $3,142,898 $3,015,472 $2,944,887 $143,146,699

After Tax IRR 16.44%

NPV @ 10% $21,122,718

Cash On Cash -68.18% 3.40% 2.82% 2.71% 2.64% 128.48%

Market Rate Rents

Pre Tax IRR Calculation 2009 2010 2011 2012 2013 2014 Total

($75,962,677) $3,374,198 $969,968 $1,456,309 $2,013,682 $169,850,714 $101,702,194

Yearly IRR 19.20%

After Tax IRR Calculation ($75,962,677) $3,784,470 $3,142,898 $3,015,472 $2,944,887 $143,146,699 $80,071,748

Yearly IRR 16.44%

Quarter Year Quarter Year

4 2008 ($111,415,666) 4 2008 ($11,415,666)

1 2009 1 2009

2 2009 2 2009

3 2009 3 2009

4 2009 $35,452,989 4 2009 $35,452,989

1 2010 $843,549 1 2010 $946,117

2 2010 $843,549 2 2010 $946,117

3 2010 $843,549 3 2010 $946,117

4 2010 $843,549 4 2010 $946,117

1 2011 $242,492 1 2011 $785,725

2 2011 $242,492 2 2011 $785,725

3 2011 $242,492 3 2011 $785,725

4 2011 $242,492 4 2011 $785,725

1 2012 $364,077 1 2012 $753,868

2 2012 $364,077 2 2012 $753,868

3 2012 $364,077 3 2012 $753,868

4 2012 $364,077 4 2012 $753,868

1 2013 $503,421 1 2013 $736,222

2 2013 $503,421 2 2013 $736,222

3 2013 $503,421 3 2013 $736,222

4 2013 $503,421 4 2013 $736,222

1 2014 $647,160 1 2014 $765,967

2 2014 $647,160 2 2014 $765,967

3 2014 $647,160 3 2014 $765,967

4 2014 $170,497,874 4 2014 $143,912,666

Pre Tax IRR 18.18% After Tax IRR 15.77%

Market Rate Rents

Key Assumptions

Acquisition Amounts

Purchase date 11/15/2008

Cost of land and existing building shell $35,000,000

Contract deposit 10%of cost of the land $3,500,000

Closing cost 1.5%of cost of the land $525,000

$35,525,000

Building info

Maximum rentable space 350,000 sqft

Retail

3 units

Retail space 15% of total sqft 52,50

0 sqft

Residential 2

50 units 297,50

0 sqft

One bedrooms

100 units

@ market

100 units

@ 45% of market - units 50%

of one bedrooms

Two bedrooms

150 units

Rent 50% to low income qualifying tenants (1=yes, 2=no) 2

Predevelopment cost

Engineer, design, architects, fees & costs $45,000

NYC plumbing, water, steam connection permits $3,500

Land, soil tests, environmental testing $13,000

$61,500

Construction costs

Demolition costs $400,000

Hard costs $375per rentable

sqft $133,875,000

Soft costs 8.0%of hard

costs $10,710,000

$144,985,000

Taxes

Income tax Ordinary Rate 35%

Capital gain tax 15%

Capital gain recapture tax

rate 25%

Sale of property

Sale date 12/31/2014

Sale cap rate 4.5%

Cost of sale 2.5%

Construction loan

Loan term

12 months

Interest rate 7.5%

Loan amount 50%

of construction

costs $72,492,500

1/09 - 4/09 4 months 50% of loan $9,061,563 monthly $36,246,250

5/09 - 11/09 7 months 50% of loan $5,178,036 monthly $36,246,250

Mortgage retainage 10% of loan $7,249,250

12/09 100% of retainage $7,249,250

Construction financing fees

Points $30,000

Lender's legal fees $15,000

Engineering review $5,000

Borrower's legal fees $10,000

Total construction loan closing cost $60,000

Permanent loan

Total Cost of the Property

From the Construction

Budget $183,478,262

Valuation $10,153,120 NOI Cap Rate 5.5% $184,602,189

Loan amount 60% $110,761,314

Interest rate 6.75%

Term 25 years

Amortization 25 years

Commitment letter fees

Issuing charge 0.15% of the loan $166,142

Legal fee $30,000

Other costs $15,000

Borrower's costs $40,000

$251,142

Closing fees

Points 0.10% of the loan $110,761

Borrower's legal fees $25,000

Lender's legal fees $15,000

Other fees $28,000

$178,761

Rental assumptions

Lease-up leasing commissions 5%of first lease

year GI

Retail

Lease term 5 years

Monthly rents 2010-2014 $25,000 per store $900,000

Vacancy and collection loss 2010 4% $36,000

Increase 2.0% 2011 2.00% $17,280

2012 2.00%

2013 2.00%

2014 2.00%

Residential

Lease term 3 years

2010 & 2011

One bedrooms $4,500 per month $2,700,000

One bedrooms @ 45% 45%of market

rent $2,025 per month $1,215,000

Two bedrooms $6,500 per month $11,700,000

Residential Gross Potential Income $15,615,000

Vacancy and collection loss 2010 3%

Increase 3.5% 2011 3.5%

2012 3.5%

2013 3.5%

2014 3.5%

Residential Rent Escalation 3%

Commercial Base Rent Escalation 5%

Operating Expenses

Lease-up year 2010 15% of PGI

Stabilized year 2011 10% of PGI

Escalation 3%

Real estate taxes 200845

days/360 $3,438

2009 $27,500

2010 $27,500