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Financial Assumptions for Pro-Forma Income & Expense Projections for

346 West 53rd Street, NYC 10019 for 2018-2019 (Page 1)

**UPDATE as of 10/01/18 First Apt to become Vacant in Over 10 years (May 2018). Owners spent $5000 renov the apt and had it re-rented immediately for $2500/mo (56% increase over previous rent at $1600/month)

1) Square Footage (sf) will be in terms of Gross Square Feet for both:

i. Residential Apartment & Commercial Store measurements.

ii. $/sf/year

2) Residential Gross Sf:

a. Total Gross Sf of the 5 Floors (2-6) will be the dimensions ((20’ x 60’) x 5) + Approx 600sf on the 7th Floor Roof Structure for Grand Total of 6600sf

b. This 7th Floor Roof Structure is the Upper 2nd Bedroom Duplex portion of both Apts 6F (300sf) + 6R (300sf) (see 6th & 7th Floor Schematics)

c. There are nine residential apts consisting of 3 x 2BR duplexes + 6 x 1BR (Front (F) & Back (B) Apts.

d. All apartments have their own self contained separate gas furnaces and hot waters heaters and tenants pay their own heat, h/w & electric.

• The duplexes range from approx. 900-1200 sf. The largest duplex, 2R/3R, has a 1200sf footprint & the two Top Floor Duplex, 6F/7F & 6R/7R

have footprints of approx. 900sf@.

** All six 1BR units, 2F, 3F, 4F, 4R, 5F, 5R plus the lower portion of the Penthouse duplexes—ie. 6F & 6R all have footprints of 600sf gross.

However, on a Net Sf basis the Front Apts (F) are approx. 518 net sf while the Back Apts (B) are approx. 446 net sf (or 72sf ) due to

more of the common areas (staircases & elevator & hallways) being located in the rear of each floor in the building. Theoretically

then the back apts at the market apt rate in Hell’s Kitchen Elevator Buildings (bet. $50-$60/sf/yr) apts 4R & 5R are the smallest apts in

the building and should be priced at approx. $200-$250/month less than the larger front 1BR units (3F & 4F).

3) Finished Outdoor Spaces at 346 West 53rd St-Each of the 9 Residential Units has it’s own finished outdoor space. Apts 6F & 6R have 2 outdoor spaces.

a. 8 of the 9 apts-2F,3F,4F,4R,5F & 5R,6F & 6R each have a 4’ by 9’ Outdoor Terrace.

b. Apt 2R has a 20’ x 40’ (800sf) tiled terrace over the ground floor store.

c. In addition to Apts 6F & 6B having one of these 36sf smaller terraces on the lower levels of their duplex—both apts on their

7th Floor have access to approx. 600sf of finished roof terrace space (approx 300sf/apt) on their 7F & 7B levels.

*** Although the finished out door space is not counted as built square footage (or deducted from FAR) we estimate that:

i. The 9 x 36sf outdoor terraces could add between $50-$75/month/apt to the market rent of each of the 346 W 53rd St units.

ii. That the 800sf outdoor tiled terrace for Apt 2R could add between $175-$200/month to the market rent of this unit.

iii. That the 2 outdoor roof terraces for apts 6F/7F & 6R/7R could add between $150-$175/apt/month to these two units.

d. Residential Market Rate Rents in Hells Kitchen 10019 versus current rents at 346 W. 53d St: The Market Rate for Similar 1-2 Bedroom Apts in

(Modern Elevator Bldgs with Outdoor Space Each Apt & Tenants Paying Own Utilities (gas & electric) should be (see Trulia) bet. $50-$60/sf/yr.

The actual rents today at 346 West 53rd St are between $32-$45/sf/yr. In our opinion these rents are 25-93% below the market rate!!

(Continued on Page 2)

Financial Assumptions for Pro-Forma Income & Expense Projections for

346 West 53rd Street, NYC 10019 for 2018-2019 (page 2)

3d)—continued--For the Residential Pro Forma Projections we will use Market Rates of between $55-$60/sf/year and apply these these rates to

The 9 individual apts at 346 W 53rd based on each apts size and whether it is a Front (F) or back apartment (see Columns 6 & 7 on Pro

Forma)

i. 4 of the 1BR apts which are currently listed at $1600/mo (or $32/sf/yr)—we project at $57/sf/yr for Front Apts (F) and $55/sf/yr for

somewhat smaller (on a Net Sf basis) back unit apts.. This is a significant 78% increase from current to the market rate.

ii. The Apt 2R/3R Duplex is both the largest apt in the bldg. (1200 gross sf) with the most Finished Outdoor Space (800sf).

At it’s current rent of $3200/mo ($32/sf/yr) we are projecting a rent of $6000/mo or $60/sf/year (a 93% increase).

(Although this may seem high it is very hard to find a similar unit in Manhattan with this amount of Outdoor space.)

iii. The highest rents being charged right now in the building (on a $/sf/year basis) are the 900 gross sf Penthouse Duplex Apts at

6F/7F-$300/mo (or $45/sf/yr) & Apt 6R/7R--$3200/mo (or $42.66/sf/yr)

We feel strongly that the rents here could be boosted to the $56-$58/sf/year level which be an approx. 30% increase.

4) Commercial Spaces Sf:

a. This Basement Level Retail at the present time is combined with the Ground Floor level business (the Paradise Day Spa) & is currently paying only***

$9000/month (for approx.) this combined 3800sf of ground & retail basement square footage. There are just under 2 years left on it’s current lease and the store rent has automatic 3% increases each year. FOR A NEW OWNER A BUYOUT OF THIS BUSINESS IS POSSIBLE FOR AN ADDITIONAL $200,000 over the final agreed upon Sales Price here.

*** $9000/month for 3800sf of space is Only $28.42/sf/year which is significantly below Retail Market Rents in the Hells Kitchen retail district which can range from $50/sf/yr. to over $1000/sf/year (for some of the smaller spaces along 8th & 9th Avenues. If the current owner were thinking that they are giving the Basement Level space to the current tenant for gratis then that rate becomes approx. $54/sf/year which is still somewhat below

the market rate in Hell’s Kitchen.

b. The foot print of the Ground Floor Store is approx. 20’X 100’ (2000sf) with approx.. 12’ceilings and 2 stair cases—one for the common staircase for the entire building + 7 floor elevator in the common hallway and a 2nd internal staircase leading to the SEPARATE ENTRANCE to the Basement Level retail area.

c. The foot print of the Ground Floor Store is approx. 20’X 100’ (2000sf) with approx.. 12’ceilings and 2 stair cases—one for the common staircase for the entire building + 7 floor elevator in the common hallway and a 2nd internal staircase leading to the SEPARATE ENTRANCE to the Basement Level retail area.

d. Because the Basement Level has it’s OWN SEPARATE ENTRANCE as well as the required 2 means of “alternate egress’ required by New York City this space could be rented out separately as a 2nd store “as of right” as allowed by this buildings Commercial (C2-7) overlay.

e. The basement level we estimate has approx. 200-250sf less square footage than the ground floor due to 2nd stair case area as well as the extra

square footage required here to house the buildings utilities including electrical meters & boxes, gas meters& the building’s Sprinkler System.

Financial Assumptions for Pro-Forma Income & Expense Projections for

346 West 53rd Street, NYC 10019 for 2018-2019 (cont. page 3)

f. The foot print of the Ground Floor Store is approx. 20’X 100’ (2000sf) with approx.. 12’ceilings and 2 stair cases—one for the common staircase for the entire building + 7 floor elevator in the common hallway and a 2nd internal staircase leading to the SEPARATE ENTRANCE to the Basement Level retail area.

g. Because the Basement Level has it’s OWN SEPARATE ENTRANCE as well as the required 2 means of “alternate egress’ required by New York City this space could be rented out separately as a 2nd store “as of right” as allowed by this buildings Commercial (C2-7) overlay.

h. The basement level we estimate has approx. 200-250sf less square footage than the ground floor due to 2nd stair case area as well as the extra

square footage required here to house the buildings utilities including electrical meters & boxes, gas meters& the building’s Sprinkler System.

5) CURRENT UPSIDE POTENTIAL AT 346 West 53d St, NYC 10019—this building has been successfully well run and well maintained by it’s current owner & Original Developer for 30 years (since 1987). The owner’s never elected when they built the building to take advantage of the 421A tax abatement. Therefore this building has always been considered by New York City as a newly built Non Rent Stabilized Building that is allowed to charge FREE MARKET RENTS. Real Estate Taxes for 2016-2017 were approx. $108,000 (approx $10.38/built sf/yr).

Upside Could Be Provided by the 2nd New Prospective Building Owner in the following ways as shown in our Very Conservative Pro- Forma Projections:;

A. New Owner either buys out current store or asks current business to consolidate it’s basement level to just the ground floor & then rents out the basement level separately (usually at about 50% of the ground floor $/sf/year).

In our Pro Forma Projections we increase the Ground Floor to a very fair $60/sf/year. And then we rent out the Retail Basement to

Physical Therapist or medical or legal related business for a very fair $30/sf/year.

Instituting this Pricing yields a $66,000 increase (approx. 61%) INCREASE IN COMMERCIAL STORE REVENUE ALONE:

B. If new owner raised the residential rents to what we suggest both in the Pro Forma projections and on page one Section 3d) i,ii & iii

Residential Revenues should rise from the current $247,200/year to approx. $375,000, a $127,800/year or 52% increase.

Financial Assumptions for Pro-Forma Income & Expense Projections for

346 West 53rd Street, NYC 10019 for 2018-2019 (Page 4)

6) Current Status of Commercial & Residential Lease Expirations:

A. Commercial Store—Day Spa-Ground Floor-2000sf + Retail Basement-1800sf—Lease Expires in September 2020*

• Tenant here had indicated a buyout by a New Owner can be arranged.

• Or New Owner might suggest Day Spa consolidate it’s operations to just just the ground floor 2000sf at

a market rental rate of between $50-$60/sf/yr (ie. $100,000-$120,000/yr ($8333-$10,000/mo).

The Basement Retail Space then could be rented out separately to another tenant for between $25-$30/sf+/year

which could result in Incremental Revenue of an extra $45,000 to $54,000/year (for the 1800 usable sf)

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