452 FIFTH AVENUENEW YORK, NY 10018

Joseph HararyJoe Mann

David SalamonJack Shalom

--------------------Professor Letdin

452 Fifth Avenue

Location&

Background

Building Location

• On West 40th Street and 5th Ave

• On Southwest corner of 40th Street

• Combined with 10-story landmark Beaux-Arts Knox Building

• Midtown Neighborhood

Source: Google maps

Building History

• Built in 1902, altered in 1982-1984• Combined the landmark Edward Knox Building (John

H. Duncan)• Produced by Studios Architecture• Architect/Designer: Eli Attia• Architecture Technique: International Style II using

Victorian Façade

Source: crainsnewyork.com

Tenants

• Baker & Mckenzie• HSBC• Man Investments• NCH Capital • R.W. Pressprich• VTB Capital• Wood Mackenzie

(Owner: IDB Group and PBC Corp)

Source: 452fifthave.com

Property Transaction History

Property History

Event Amount Date

Deed Transfer Recorded $330,000,000 4/13/2010

Buyer 452 Fifth Owners LLC

Seller Property Owner (USA) LLC

Source: PropertyShark

452 Fifth Avenue

Demographics&

Neighborhood

Midtown Demographics

• Asian=13.7%• African American=6.6%• Hispanic=5.8%• White=70.4%• Other=3.6%• Total Population: 54,634• 47% Male, 53% Female• Average Members Per Household: 1.67• Median Age: 36.92• Average Household Income: $132,397 • Blue Collar Employees: 18,423• White Collar Employees: 112,751

Source: Zillow.com

Midtown East Crime Statistics

• Very rarely are there very violent crimes

• The crimes that do happen are usually targeted towards tourists

• Per capita crime rate is 723 major crimes per 10,000 residents (including tourists)

• The crimes are usually pickpocketing

Zillow.com

The Area

• Plaza Hotel• Bryant Park

• Rockefeller Center• Times Square• Central Park

• 5th Avenue Shopping• New York Public Library

Buildings in the Area• Empire State Building

• Chrysler Building• Metlife Building

• Helmsley Building• Many More

Famous Restaurants in Midtown

• Alto (53rd Street)• La Fonda Sol (44th Street)• Le Bernardin (51st Street)• 21 Club (52nd Street)• The Modern (53rd Street)

Nycgo.com

Transportation

• Three blocks away from Grand Central Terminal

(Served 50 million passengers so far in 2012)

• Easy to catch a cab

• 8 Buses: M1, M2, M3, M4, M42, M101, M102, M103

• 5 Subway Lines: 4,5,6,7, S (shuttle to Times Square)

• Metro North: Hudson Line, Harlem Line, New Haven Line, New Canaan Branch, Danbury Branch, many, many more

MTA.info

452 Fifth Ave

Comparable Properties

Comparable Property 1

• Location: 711 Third Avenue (Between 44th & 45th St.)• Owner: SL Green Realty

Corp.• Total Square Feet: 546,299• Use: Commercial• Vacancy: 78,184 SF or

14.31%• Tenants: Crain

Communications, Inc., KPR, Newport News, Inc., Parade Publications, Sovereign Bank, Taylor & Francis Group LLC

Comparable Property 2

• Location: 125 Park Ave(Between 40th & 41st St.)• Owner: SL Green Realty

Corp.• Total Square Feet: 604,245• Use: Commercial/Retail• Vacancy: 169,229 or 28%• Tenants: Chase, Canon,

American Express, Lexis Nexis, Phillip Morris, Starbucks

Comparable Property 3

• Location: 535 Madison Ave(54th & Madison)• Owner: Park Tower Group• Total Square Feet: 502,319• Property Type: Commercial• Vacancy: 23,318 SF or 5.25%• Tenants: Wells Fargo Advisors,

Morgan Keegan Investment Firm, Canaccord Genuity, Kobe Steel USA

Comparable Property 4

• Location: 625 Madison Avenue

(Between 58th & 59th St.)• Owner: SL Green Realty

Corp.• Total Square Feet: 542,368• Use: Commercial• Vacancy: 69,660 or 12.84%• Tenants: Baccarat, Bergdorf

Goodman, Fratelli Rossetti, Neiman Marcus, Polo Ralph Lauren, Stuart Weitzman, Swarovski

Comparable Property 5

• Location:100 Park Avenue (Between 40th & 41st St.)• Owner: SL Green Realty

Corp.• Total Square Feet: 887,489• Use: Commercial• Vacancy: 37,297 or 4.2%• Tenants: BDO Seidman, Wells

Fargo, Aecom Technology, Ameriprise, Aetna

Commercial Market Report

2012 for Midtown

Midtown Commercial Market Report

Source: www.cresa.com/newyork

Class A Market Report (Midtown)

2Q 2012 3Q 2012

Leasing Activity 4.75 3.3

Absorption -0.01 0.09

Availability Rate 13.00% 13.10%

Vacancy Rate 8.40% 8.30%

Average Asking Rent $72.17 $72.70

Midtown Commercial Market Report

452 Fifth Ave

History&

Pictures

View from 40th Street Side

View Looking South, on Fifth Ave

View of Library Across the Street

View from Corner of 40th & 5th Avenue Looking Out From Building Corner

View Looking East from East 40th Street Entrance

View Looking SouthFrom 5th Ave

Bryant Park

View looking West from 40th Street

View Inside the Lobby

452 Fifth Ave

CASHFLOW

ANALYSIS

Assumptions

452 Fifth Ave

PRO FORMA INCOME STATEMENT ASSUMPTIONS

Building Address: 452 Fifth Ave Real Estate Taxes: $6,769,227 Tax Bill

  NY, NY 10018 $7.82 per sq. ft.

    Insurance: 1.50%

Total Floors: 29 Management Fee: 5% of EGI

Total Square Feet: 616,352 CAM: $4 per sq. ft.

     

Current Vacancy: 7.48% Lease Types: NNN

Market Vacancy: 8.4%  

    Discount Rate: 3.50%

Current Rent: $75.00 per sq. ft. Mortgage Rate: 3.50%

Market Rent: $72.01 per sq. ft.  

    Utilities 1,700,000

    Adminstrative Fees 175,000

Rent Increase: 4% Holding Period: 5 Years

Source: PropertyShark

Pro Forma Income Statement

Potential Gross Income Year 1 Year 2 Year 3 Year 4 Year 5

Base Rental Revenue $35,730,900.00 $35,977,320.00 $48,465,187.70 $50,403,795.20 $52,419,947.01

Expense Reimbursement Revenue $10,159,162.70 $10,159,162.70 $10,159,162.70 $10,159,162.70 $10,159,162.70

Total Potential Gross Income $45,890,062.70 $46,136,482.70 $58,624,350.40 $60,562,957.90 $62,579,109.71

Vacancy & Collection Loss $3,432,576.69 $3,451,008.91 $4,385,101.41 $4,530,109.25 $4,680,917.41

Effective Gross Income $42,457,486.01 $42,685,473.79 $54,239,248.99 $56,032,848.65 $57,898,192.31

Operating Expenses

CAM & Related $2,465,408.00 $2,465,408.00 $2,465,408.00 $2,465,408.00 $2,465,408.00

Insurance $924,528.00 $924,528.00 $924,528.00 $924,528.00 $924,528.00

Utilities $1,700,000.00 $1,700,000.00 $1,700,000.00 $1,700,000.00 $1,700,000.00

Real Estate Taxes $6,769,226.70 $6,769,226.70 $6,769,226.70 $6,769,226.70 $6,769,226.70

Management Fee $2,122,874.30 $2,134,273.69 $2,711,962.45 $2,801,642.43 $2,894,909.62

Administrative & Marketing $175,000.00 $175,000.00 $175,000.00 $175,000.00 $175,000.00

Total Operating Expenses $14,157,037.00 $14,168,436.39 $14,746,125.15 $14,835,805.13 $14,929,072.32

Net Operating Income $28,300,449.01 $28,517,037.40 $39,493,123.84 $41,197,043.52 $42,969,119.99

Expenses as a % of EGI

Expense Ratio

Year 1 33%

Year 2 33%

Year 3 27%

Year 4 26%

Year 5 26%

Purchase & Sale Price

452 Fifth Ave

PURCHASE AND SALE PRICE

Going in Cap Rate: 6%

Exit Cap Rate: 7%

   

Year 1 NOI: $28,300,449.01

Year 5 NOI: $42,969,119.99

   

Purchase Price: $471,674,150.17

Sale Price: $613,844,571.29

Mortgage Amortization Table

452 Fifth AveMORTGAGE AMORTIZATION SCHDEULE

Purchase Price: $471,674,150.17 Loan-To-Value: 79% Interest Rate: 3.5%Down Payment: $100,000,000.00 Loan Amount: $371,674,150.17 Term: 30 Years

Month Starting Balance Payment Interest Principal Ending Balance1 371,674,150.17 (1,617,549.39) 1,084,049.60 (533,499.78) 371,140,650.39 2 371,140,650.39 (1,617,549.39) 1,082,493.56 (535,055.82) 370,605,594.56 3 370,605,594.56 (1,617,549.39) 1,080,932.98 (536,616.40) 370,068,978.16 4 370,068,978.16 (1,617,549.39) 1,079,367.85 (538,181.53) 369,530,796.62 5 369,530,796.62 (1,617,549.39) 1,077,798.16 (539,751.23) 368,991,045.39 . . . . . .

55 340,521,584.04 (1,617,549.39) 993,187.95 (624,361.43) 339,897,222.60 56 339,897,222.60 (1,617,549.39) 991,366.90 (626,182.49) 339,271,040.11 57 339,271,040.11 (1,617,549.39) 989,540.53 (628,008.85) 338,643,031.26 58 338,643,031.26 (1,617,549.39) 987,708.84 (629,840.55) 338,013,190.71 59 338,013,190.71 (1,617,549.39) 985,871.81 (631,677.58) 337,381,513.13 60 337,381,513.13 (1,617,549.39) 984,029.41 (633,519.97) 336,747,993.16

Net Cash Flow Statement

452 Fifth Ave

NET CASH FLOW STATEMENT

  Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Down Payment (100,000,000.00) - - - - -

   

Cash Flow - 28,300,449.01 28,517,037.40 39,493,123.84 41,197,043.52 42,969,119.99

Debt Service - (19,410,592.68) (19,410,592.68) (19,410,592.68) (19,410,592.68) (19,410,592.68)

CFADS - 8,889,856.33 9,106,444.72 20,082,531.16 21,786,450.84 23,558,527.31

   

Sale - - - - - 613,844,571.29

Mortgage Pay-Off - - - - - (368,991,045.39)

   

NET CASH FLOW (100,000,000.00) 8,889,856.33 9,106,444.72 20,082,531.16 21,786,450.84 268,412,053.21

   

NET PRESENT VALUE

PV Cash Flows (100,000,000.00) 8,589,233.17 8,500,963.59 18,113,292.49 18,985,633.25 225,995,746.46

   

  NPV: $180,184,868.97  

    IRR: 25.98%    

Citations

"452 5 Avenue, New York, NY 10018." PropertyShark. N.p., n.d. Web. 05 Dec. 2012."452FifthAvenue." 452FifthAvenue. N.p., n.d. Web. 05 Dec. 2012."Crain's New York Business." Latest from Crains New York Business. N.p., n.d. Web. 05 Dec. 2012."Explore NYC Hotel Options." Nycgo.com. N.p., n.d. Web. 05 Dec. 2012."Google Maps." Google Maps. N.p., n.d. Web. 05 Dec. 2012."Manhattan Bus Schedules." Home Page. N.p., n.d. Web. 05 Dec. 2012."Market." Cresa New York. N.p., n.d. Web. 05 Dec. 2012."Midtown Demographics." Zillow. N.p., n.d. Web. 05 Dec. 2012."PropertyShark Logon." PropertyShark Logon. N.p., n.d. Web. 05 Dec. 2012.