This is a confidential memorandum intended solely for your limited use and benefit in determining whether you desire to express any further interest in the financing of 160 East 48th Street (“The Buchanan” or the “Property”) This memorandum has been reviewed by representatives of Madison Realty Capital (the “Sponsor”). It contains selected information pertaining to the Property and does not purport to be all-inclusive or to contain all of the information that prospective investors may desire. It should be noted that all financial projections are provided for general reference purposes only in that they are based on assumptions relating to the general economy, competition, and other factors beyond the control of Sponsor and, therefore, are subject to material variation. Additional information and an opportunity to inspect the Property and plans will be made available to interested and qualified investors. Neither Sponsor, Jones Lang LaSalle, nor any of their respective officers nor employees have made any representation or warranty, expressed or implied, as to the accuracy or completeness of this memorandum or any of its contents, and no legal commitments or obligations shall arise by reason of this memorandum or any of its contents.

Sponsor expressly reserves the right, at its sole discretion, to reject any or all expressions of interest or offers to invest in the Property and/or to terminate discussions with any entity at any time with or without notice. Sponsor shall have no legal commitment or obligation to any entity reviewing this memorandum or making an offer to invest in the Property unless and until a written agreement satisfactory to Sponsor has been fully executed, delivered, and approved by Sponsor and any conditions to Sponsor’s obligations thereunder have been satisfied or waived. By receipt of this memorandum, you agree that this memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence, and that you will not disclose this memorandum or any of its contents to any other entity without the prior written authorization of Sponsor, nor will you use this memorandum or any of its contents in any fashion or manner detrimental to the interest of Sponsor or Jones Lang LaSalle. It is essential that all parties to real estate transactions be aware of the health, liability and economic impact of environmental factors on real estate. Jones Lang LaSalle does not conduct investigations or analyses of environmental matters and, accordingly, urges its clients to retain qualified environmental professionals to determine whether hazardous or toxic wastes or substances (such as asbestos, PCBs, and other contaminants or petrochemical products stored in underground tanks) or other undesirable materials or conditions are present at the Property and, if so, whether any health danger or other liability exists. Such substances may have been used in the construction or operation of buildings or may be present as a result of previous activities at the Property. Various laws and regulations have been enacted at the federal, state and local levels dealing with the use, storage, handling, removal, transport, and disposal of toxic or hazardous wastes and substances. Depending upon past, current, and proposed uses of the Property, it may be prudent to retain an environmental expert to conduct a site investigation and/or building inspection. If such substances exist or are contemplated to be used at the Property, special governmental approvals or permits may be required. In addition, the cost of removal and disposal of such materials may be substantial. Consequently, legal counsel and technical experts should be consulted where these substances are or may be present.

No representation or warranty is being made by Sponsor or Jones Lang LaSalle with respect to the Property’s compliance with any applicable statutes, laws, ordinances, rules, regulations, requirements and/or codes (collectively, the “Laws”). It is expressly understood that it is the responsibility of any prospective investor to investigate whether or not the Property is in compliance with the Laws and such prospective investor will be relying strictly and solely upon its own inspections and examinations and the advice and counsel of its own consultants, agents, legal counsel and officers with respect to the condition of the Property and its compliance with the Laws.

Disclaimer JLL 2 THE BUCHANAN , NY - VALUE-ADD JOINT VENTURE EQUITY OPPORTUNITY IN ’S MIDTOWN EAST NEIGHBORHOOD Executive Summary 5

Sponsor Overview 14

Property Overview 21

Project Overview 26

Market Overview 33

Appendix: Floor Plans 49

5 JLL, engaged as exclusive advisor to Madison Realty Capital (“MRC” or the “Sponsor”), is pleased to request proposals for $99.7 million in joint venture equity to facilitate the acquisition and repositioning of The Buchanan (the “Property”), a 16-story, 289 unit pre-war rental building that includes four office suites and approximately 13,648 square feet of prime retail space. The Property is located on , between 47th and 48th Street in Manhattan’s Midtown East neighborhood.

Built in 1928 and owned by a family trust since 1959, the Property is a 297,703 gross square foot mixed-use complex consisting of five separate interconnected mid-rise towers surrounding a large garden courtyard. The Property contains 289 residential units, 69% of which are market rate, 25% rent stabilized, and 6% rent controlled. The unit mix consists of 31 large studios (437 square feet), 197 one bedroom units (752 square feet), 60 two bedroom units (1,205 square feet), and one three bedroom unit (1,533 square feet) with ceiling heights of approximately 9’3’’ and outdoor terraces for penthouse units. The Property also includes 13,648 square feet of retail space, 2,524 square feet of office space and 139,000 square feet of excess development rights. Given existing inefficiencies such as oversized unit layouts, elevated operating expense levels, and in-place rents well below market rates, the investment presents an opportunity to acquire an underperforming multi-family mixed-use Property located within a highly desirable and liquid submarket with significant growth potential. Following the acquisition, the Sponsor will implement a detailed business plan that involves the following: • Renovating and reconfiguring 100% of the market rate units as they become vacant • Pursuing 51 tenant buyouts of rent stabilized units (targeting 56% of the 91 rent regulated units over a 3 year period), and then renovating and reconfiguring each unit • Implementing a building wide capital improvement plan to enhance operating efficiencies and marketability of the Property • Repositioning the existing office space into retail • Re-leasing the existing retail space at market • Conducting a feasibility study to assess further development potential or explore the possibility of a sale of the excess air rights The residential space is currently 93% occupied and is expected to be 87% occupied at close as free market units roll during the contract period, allowing the Sponsor to immediately begin renovations on 37 units

Property Snapshot Address: 160 East 48th Street Midtown East, Location: New York, NY

Floors: 16 Residential Units: 289

Fair Market Units: 198 Rent Stabilized Units: 73 Rent Controlled Units: 18 Commercial Units: 14 Property Gross SF: 297,703 Commercial Net SF*: 16,172

*Includes 13,648 SF of retail and 2,524 SF of office

Section 1: Executive summary JLL 6 The Sponsor is requesting a $99.7 million joint-venture equity investment with a five year target hold. The limited partner will be contributing 90% of the required equity.

Equity Request Closing Date 2/11/2016 Closing Date Extension Option 3/14/16 Total Costs $316,640,000 Equity Request $99,741,600 Investment Ratio 90% / 10% Investment Term 5 Years

Sources & Uses Sources of Capital Amount Per GSF Per Unit % of Total Debt $205,816,000 $691.35 $679,261 65.00% Equity $110,824,000 $372.26 $365,756 35.00% LP Equity (90%) $99,741,600 $335.04 $329,180 31.50% Sponsor Equity (10%) $11,082,400 $37.23 $36,576 3.50% Total Sources $316,640,000 $1,064 $1,045,017 100.00%

Uses of Capital Amount Per GSF Per Unit % of Total Purchase Price $270,000,000 $906.94 $891,089 85.27% Closing Costs $1,620,000 $5.42 $5,347 0.51% Sponsor Acquisiton Fee $4,050,000 $13.60 $13,366 1.28% Unit Renovations $18,000,000 $60.46 $59,406 5.68% General CapEx $3,000,000 $10.08 $9,901 0.95% Contingency (5%) $1,100,000 $3.69 $3,630 0.35% Soft Costs $3,570,000 $11.99 $11,782 1.13% Tenant Buyout Costs $4,180,000 $14.02 $13,795 1.32% Financing Costs $9,020,000 $30.30 $29,769 2.85% Interest Reserve $2,100,000 $7.05 $6,931 0.66% Total Uses $316,640,000 $1,064 $1,045,017 100.00%

Section 1: Executive summary JLL 7 Section 1: Executive summary JLL 7 Exit Analysis 2021 EGI $25,588,189 $25,588,189 $25,588,189 25,588,189 25,588,189 (Less: Operating Expenses) ($6,357,376) ($6,357,376) ($6,357,376) ($6,357,376) ($6,357,376) 2021 NOI $19,230,812 $19,230,812 $19,230,812 $19,230,812 $19,230,812

Exit Cap Rate 3.75% 4.00% 4.25% 4.50% 4.75%

Gross Sales Proceeds $512,822,000 $480,770,000 $452,490,000 $427,351,000 $404,859,000 (Less: Sales Costs) ($20,512,880) ($19,230,800) ($18,099,600) ($17,094,040) ($16,194,360) Net Sales Proceeds $492,309,120 $461,539,200 $434,390,400 $410,256,960 $388,664,640 Net CF $38,801,141 $38,801,141 $38,801,141 $38,801,141 $38,801,141

Less: Senior Debt Repayment ($205,959,889) ($205,959,889) ($205,959,889) ($205,959,889) ($205,959,889) Less: Equity ($110,810,000) ($110,810,000) ($110,810,000) ($110,810,000) ($110,810,000) Net Profit Net Profit $214,340,371 $183,570,451 $156,421,651 $132,288,211 $110,695,891 Deal Level IRR 25.2% 22.8% 20.4% 18.1% 15.9% Deal Level Multiple 2.93x 2.66x 2.41x 2.19x 2.00x

Section 1: Executive summary JLL 8 Section 1: Executive summary JLL 8 Project Budget Acquisition Costs Amount Per GSF Per Unit % of Total Purchase price $270,000,000 $906.94 $891,089 85.27% Closing Costs $5,665,000 $19.03 $18,696 1.79% Total Acquisition Costs $275,665,000 $925.97 $909,785 87.06%

Hard Costs General Capex $3,000,000 $10.08 $9,901 0.95% Renovations $18,000,000 $60.46 $59,406 5.68% Contingency $1,100,000 $3.69 $3,630 0.35% Total Hard Costs $22,100,000 $74.24 $72,937 6.98%

Soft Costs Legal & Prof. Fees $150,000 $0.50 $495.05 0.05% Architects & Engineering $280,000 $0.95 $924 0.09% Project Manager $250,000 $0.84 $825 0.08% General Overhead $100,000 $0.34 $330 0.03% Inspections & Testing $70,000 $0.24 $231 0.02% Marketing $100,000 $0.34 $330 0.03% Interior Design $40,000 $0.12 $132 0.01% Permits & Fees/Expeditor $110,000 $0.38 $363 0.04% Developer Fee $1,110,000 $3.71 $3,663 0.35% Violations $30,000 $0.10 $99 0.01% Leasing Costs $1,230,000 $4.12 $4,059 0.39% Contingency $110,000 $0.37 $363 0.03% Total Soft Costs $3,580,000 $12.01 $11,815 1.13%

0.00% Buyout Costs $4,175,000 $14.02 $13,779 1.32%

Financing Costs Lender Legal $150,000 $0.50 $495 0.05% Title Insurance $410,000 $1.38 $1,353 0.13% Lender Origination Fee $2,060,000 $6.92 $6,799 0.65% Debt & Equity Brokerage Fee $2,060,000 $6.92 $6,799 0.65% Mortgage Recording Tax $4,340,000 $14.58 $14,323 1.37% Interest Reserve $2,100,000 $7.05 $6,931 0.66% Total Financing Costs $11,120,000 $37.35 $36,700 3.51%

Total Costs $316,640,000 $1,064 $1,045,017 100.00%

Section 1: Executive summary JLL 9 Section 1: Executive summary JLL 9 The Sponsor plans to close on the asset in Q1 2016 and sell the Property in Q1 2021 upon full recognition of operating expense savings and revenue growth. The Sponsor anticipates the Property will generate an NOI of approximately $19.2 million at exit, representing an 148% increase over in-place NOI.

In Place Year Ending 2016 2017 2018 2019 2020 2021 Project Year 0 1 2 3 4 5

Number of Buyouts 0 16 17 18 - - Number of FM Renovations 0 196 2 - - - Total Units Renovated 0 212 231 249 249 249

Revenues Residential Rental Income $11,595,135 $10,254,585 $17,676,803 $19,653,385 $21,025,282 $22,272,460 Commercial Rental Income $1,999,819 $1,925,486 $2,036,839 $2,630,436 $3,562,527 $3,747,776 Reimbursable Income $180,678 $180,678 $148,907 $151,485 $202,727 $214,679 Other Income $30,000 $40,000 $154,500 $159,135 $163,909 $168,826 Total Gross Income $13,805,631 $12,400,749 $20,017,050 $22,594,442 $24,954,445 $26,403,742 Residential Vacancy ($276,113) $0 $0 ($308,062) ($56,746) ($445,449) Commercial Vacancy $0 $0 $0 $0 ($76,959) ($106,066) Collection Loss $0 ($124,007) ($200,170) ($225,944) ($249,544) ($264,037) Total Effective Gross Income $13,529,519 $12,276,742 $19,816,879 $22,060,435 $24,571,195 $25,588,189

Operating Expenses Real Estate Taxes ($2,898,263) ($3,031,960) ($3,131,846) ($3,220,307) ($3,497,269) ($3,781,340) Insurance ($141,873) ($141,873) ($146,129) ($150,513) ($155,029) ($159,680) Fuel / Gas / Steam ($307,263) ($307,263) ($316,480) ($325,975) ($335,754) ($345,827) Electric ($329,981) ($229,981) ($156,880) ($111,586) ($114,934) ($118,382) Water & Sewer ($208,746) ($208,746) ($215,008) ($221,459) ($228,102) ($234,945) Payroll & Burden ($1,262,267) ($1,262,267) ($1,300,135) ($821,131) ($459,502) ($473,287) Repairs & Maintenance ($151,500) ($151,500) ($156,045) ($160,726) ($165,548) ($170,515) General & Administrative ($37,875) ($37,875) ($39,011) ($40,182) ($41,387) ($42,629) Reserves ($60,600) ($60,600) ($62,418) ($64,291) ($66,219) ($68,206) Legal / Professional ($65,000) ($60,600) ($62,418) ($64,291) ($66,219) ($68,206) Elevator ($75,000) ($75,000) ($77,250) ($79,568) ($81,955) ($84,413) Other ($37,584) ($37,584) ($38,711) ($39,873) ($41,069) ($42,301) Management ($202,118) ($202,118) ($594,506) ($661,813) ($737,136) ($767,646) Total Operating Expenses ($5,778,070) ($5,807,367) ($6,296,840) ($5,961,713) ($5,990,123) ($6,357,376)

Net Operating Income $7,751,449 $6,469,374 $13,520,039 $16,098,722 $18,581,072 $19,230,812

Yield On Cost 2.9% 2.0% 4.3% 5.1% 5.9% 6.1%

Section 1: Executive summary JLL 10 Section 1: Executive summary JLL 10 Upside Through Unit Reconfigurations Favorable Rent Restricted Rental Levels The Property’s apartments are not currently configured to On average, “rent stabilized” tenants currently pay $2,470 a month maximize rental income, creating an opportunity to significantly for two bedroom units and $1,931 a month for one bedroom units. increase rents by adding bedrooms across each unit line. While With an average of over $70,000 of renovations planned per unit, three bedroom units across the Property’s competitive set are on the majority of these units will cross the legal rent threshold, average 258 square feet larger than the Property’s two bedroom allowing the Sponsor to charge market rent one year from units, they command rents in excess of $9,300 per month, renovation. Furthermore, “rent controlled” tenants currently pay representing a 36% pricing premium to the Property’s largest units. $3,013 a month for two bedroom units and $2,018 a month for one This same rental premium also exists between the Property’s one bedroom units, which is even higher than the in place rent bedroom units and comparable two bedroom units in the market stabilized tenants. With the Sponsor only planning to execute which are on average only 76 square feet larger. With a target buyout agreements with 56% of the rent stabilized tenants, these demographic of young families and professionals seeking two and extremely high in-place rents significantly improve the probabilities three bedroom apartments that offer close proximity to the Midtown of successfully buying out tenants quickly. office district, the UN headquarters and Grand Central, there exists an excellent opportunity to capitalize on these pricing premiums Relevant Sponsorship Experience without incurring major renovation costs. The Property will benefit from an experienced Sponsor who has completed over 300 debt and equity transactions with a face value Immediate Commencement of Renovations of $4.0 billion in the multifamily, retail, office and light industrial There will be 37 vacant residential units at closing, thereby sectors. In the last five years, the Sponsor has acquired in excess allowing the Sponsor to immediately commence renovations. All of $1.1 billion worth of real estate. The Sponsor has a proven track 198 market rate units will roll within the first 18 months post record of successfully executing similar business plans throughout closing. In addition, the Sponsor plans to reposition 2,524 square a number of investment opportunities, more specifically, executing feet of` office space into retail that is either vacant or occupied by a strategy almost identical to that of the Project. 361 East 50th month-to-month leases. Lastly, there is 1,200 square feet of retail Street, is a mixed-use elevator building located a few blocks from space that is currently occupied by month-to-month tenants at the Property. The Sponsor has fully renovated and reconfigured 28 below market rent levels. out of 44 apartments and increased the residential rent roll by 64% within the first year of ownership. Attractive Project Returns The Project is expected to generate equity returns of $156.4 Additional Value From Air Rights million upon a sale in 2021. This corresponds to a deal level IRR The Property has approximately 139,000 square feet of un-used of 20.4%, a yield on cost of 6.1%, and an equity multiple of development rights that have not been monetized in the 2.41x. investment return analysis.

Section 1: Executive summary JLL 11 Booming Rental Market Prime Retail The Property will greatly benefit from the positive rental market The Property is perfectly positioned in Midtown East, with nearly fundamentals and the limited amount of newly renovated units in 200’ of frontage along Third Avenue plus 145’ of frontage on both

Midtown East. The East Side of Manhattan has historically 47th and 48th Street. As a result of the neighborhood’s established maintained value due to its long-established reputation and and sophisticated residential population, there are a plethora of convenience . Rents remain strong within the area as exemplified convenient shopping and dining options. Second and Third by an average increase of 6% year-over-year for 1-bedroom units. Avenues in the immediate vicinity of the Buchanan are populated With a current vacancy rate of just 1.54%, Midtown East is poised with a wide range of supermarkets, pharmacies, restaurants and for additional growth in prevailing rental rates. Significant barriers nightclubs. Some of Manhattan’s most celebrated gourmet to entry will preserve this acutely low vacancy rate, with high restaurants are located in the neighborhood, catering to the construction cost, strict zoning regulations, a lack of developable discerning palates of the international community. The Property’s sites, and soaring land costs all contributing to the dearth of new retail component presents a reliable income stream augmented rental development. Rents for Manhattan as a whole are also with near-term upside potential. The Property’s retailers enjoy a performing exceptionally well. In July 2015 median Manhattan significant captive demand base while tenants are provided with rental prices were the second highest on record. the convenience of in-house retail. All of the Property’s retail suites are located along high-volume Third Avenue, with the exception of Primary Residential Location The Sea Fire Grill, which is located along East 48th Street. The Property enjoys one of the most sought after residential locations in all of Manhattan. Located in the Turtle Bay neighborhood in Midtown East, the Property is proximate to various upscale and affordable eateries, small shops, bars, parks, as well as the United Nation Headquarters. Furthermore, the Property is conveniently located blocks from , providing residents with easy access to neighboring boroughs and other areas of Manhattan. The median household income in Midtown East is $122,136, on par with Manhattan’s most exclusive neighborhoods. This elite population includes a vital mix of young professionals, working diplomats, empty nesters and families who enjoy a favorable combination of convenience and international flavor provided by the neighborhood.

Section 1: Executive summary JLL 12 The offering to invest in the Property is being distributed exclusively by JLL to a select group of qualified institutional investors. The prospective investor(s) will be selected by the Sponsor in consultation with JLL at its sole discretion. For more information on this transaction, please contact:

Jones Lang LaSalle Equity Placement Contacts

Aaron Appel Mark Fisher Jonathan Schwartz Mason Powell Managing Director Senior Vice President Senior Vice President Associate Capital Markets Group Capital Markets Group Capital Markets Group Capital Markets Group [email protected] [email protected] [email protected] [email protected] +1 212 812 6459 +1 212 812 5966 +1 212 812 6567 +1 212 812 6447 +1 917 797 1253 (cell) +1 914 740 3808 (cell) +1 516 672 1247 (cell) +1 202 669 0519 (cell)

Patrick Cotter Analyst Capital Markets Group [email protected] +1 212 812 5967 +1 240 997 4977

JLL 13 Section 1: Executive summary JLL 13 14

Madison Realty Capital (MRC) Madison Realty Capital is a leading real estate investment management firm based in Manhattan, New York. Through the firm’s vertically integrated structure, MRC has closed in excess of $4.0 billion of real estate debt and equity transactions in the multifamily, retail, office and industrial sectors. The firm was co-founded by Brian Shatz and Joshua Zegen in 2004 to pursue U.S. real estate investment opportunities in the middle market. MRC aims to provide institutional investors with superior risk-adjusted returns with downside principal protection.

Brian Shatz Managing Principal, Co-Founder Mr. Shatz co-founded Madison Realty Capital in 2004 and is responsible for risk and portfolio management, raising institutional capital, and asset management. Since MRC's inception, Mr. Shatz has closed real estate transactions totaling in excess of $4.0 billion. Mr. Shatz serves on several investment committees related to both the debt and equity platforms. Prior to co-founding MRC, he established Bluegrass Growth Fund Partners, LLC, a private investment fund which focused on investing in structured equity and debt investments for U.S. public companies. Mr. Shatz began his career at BlackRock where he worked closely with fixed income portfolio managers and developed institutional client relationships with some of the country's largest pension funds. Mr. Shatz graduated cum laude from Brandeis University with a Bachelor of Arts degree in economics.

Joshua Zegen Managing Principal, Co-Founder Mr. Zegen co-founded Madison Realty Capital in 2004 and is responsible for overseeing the origination and structuring of all of MRC's investment activities, as well as raising institutional capital and portfolio management. Since MRC's inception, Mr. Zegen has closed real estate transactions totaling in excess of $4.0 billion. At the firm, Mr. Zegen serves on several investment committees related to both the debt and equity platforms. Prior to founding MRC, he founded and was president of Alpine Commercial Capital, a mortgage advisory firm that successfully closed over $500 million in real estate financings. Prior to forming Alpine, Mr. Zegen was an investment banker in Salomon Smith Barney's financial sponsors/private equity group where he focused on leveraged buyouts, equity and debt financings, mergers and acquisitions and private placement transactions. He began his career as an analyst in Merrill Lynch's debt capital markets division where he executed both mortgage backed and asset backed debt offerings. He is a co-founder and board member of The New York Private Equity Network ("NYPEN"). Mr. Zegen graduated cum laude from Brandeis University with a Bachelor of Arts degree in economics.

JLL 15 SectionSection 2: Sponsor 1: Executive overview summary JLL 15 The Sponsor has acquired 35 assets and sold 10 assets throughout since 2011. The acquired properties have been value-add multi-family opportunities with grade level retail that have required some degree of renovation in order to drive rents. Assets include both existing buildings and select development opportunities. The following represents a subset of the most recently acquired assets and realized deals.

Recent MRC Deals Address Residential Units Commercial Units Buildable SF 361 East , 43 7 101,050 New York, NY 157 Suffolk Street, 33 2 22,398 New York, NY 65 North 6th Street, 24 0 37,700 Brooklyn, NY 143-145 West 4th Street, 26 0 21,364 New York, NY 885 Park Avenue, 28 0 57,125 Brooklyn, NY 150 West 84th Street, 20 0 13,260 New York, NY 409-413 Broadway, 20 2 30,669 Brooklyn, NY 1 Hanson Place, 0 4 41,400 Brooklyn, NY 392 Clinton Avenue, 16 0 16,720 Brooklyn, NY 283-285 Graham Avenue, 3 4 11,250 Brooklyn, NY 1419 8th Avenue, 14 1 12,068 New York, NY 350 5th Street, 8 0 6,300 Brooklyn, NY 14 / Whale Square, 0 50 398,418 Brooklyn, NY 78 Prospect Park West, 40 0 41,113 Brooklyn, NY (1) Full track record to be furnished upon request.

247 East 28th Street 157 Suffolk Street 65 North 6th Street

Section 2: Sponsor overview JLL 16 Section 1: Executive summary JLL 16 Executive Summary On July 16th, 2014 an affiliate of Madison Realty Capital (“MRC”) closed on the acquisition of a six-story 55,501 SF mixed-use elevator building (the “Property”) for $40.20 MM. At acquisition, the Property contained 43 residential units1, 7 commercial units and an additional 45,549 SF of air-rights. The Property is located at 361 East 50th Street within the Midtown East / Turtle Bay neighborhood of Manhattan and has 85 feet of frontage along East 50th Street and 150 feet of frontage along 1st Avenue.

Business Plan

The business plan was to reposition the Property as a premier luxury residential rental building, capture market rents and drive Net Operating Income by: • Renovating and reconfiguring units as they turn into high-end apartments. • Repositioning and re-leasing retail units upon vacancy at market rents to maximize commercial rental income. • Pursuing tenant buyouts to capture market rents. • Enhancing the overall marketability of the Property through a vigorous capex program geared toward minimizing operating costs and improving the common space and overall curb appeal. • Conducting a feasibility study to assess further the development potential on top of the existing structure. (1) A combined unit was divided to bring the current residential unit count to 44

Execution

After closing on the acquisition, MRC immediately began executing on its business plan. Since acquiring the asset MRC has; • Executed buyout agreements with 9 stabilized tenants at an average cost of roughly $38,000. The average in-place rent for these stabilized tenants was $1,954. • Renovated and reconfigured 28 apartments at an average cost of roughly $68,600 per unit. MRC was able to add at least one bedroom to each unit. • Leased up all renovated units at market rents ranging from $78 PSF to $97 PSF.

JLL 17 SectionSection 2: Sponsor 1: Executive overview summary JLL 17 Relevant Transaction Experience: 361 East 50th Street Case Study

The next three slides provide before and after floor plans for 361 East 50th Street. The scale of interior work shown in these floor plans will be similar to the business plan that will be executed at the Buchanan.

Section 2: Sponsor overview JLL 18 Section 1: Executive summary JLL 18 Relevant Transaction Experience: 361 East 50th Street Case Study

Section 2: Sponsor overview JLL 19 Section 1: Executive summary JLL 19 Relevant Transaction Experience: 361 East 50th Street Case Study

Section 2: Sponsor overview JLL 20 Section 1: Executive summary JLL 20 21 Property Description The Property is a mixed-use elevator building located on Third Avenue extending from East to East 48th Street. The building has 200’ of frontage along the avenue and 145’ of frontage along each of the side streets. There are two entry points that lead into a large open-air, landscaped courtyard. Residential units are stacked in 5 towers, each serviced by two elevators, one passenger and one service, and with four units per floor.

The 16-story building, which totals 297,703 gross square feet was constructed in 1928 and offers generous layouts and ceiling heights at approximately 9’3’’. Residential unit interiors feature pre-war moldings and hardwood floors, and a portion of the units have recently been renovated with stainless steel appliances, Silestone Kensho kitchen countertops, brushed chrome Kohler bathroom and kitchen fixtures, and marble bathrooms. Fireplaces are featured in upper floor residences beginning on the 11th floor and nearly 25% of the units contain functional wood burning fireplaces. The full cellar is currently underutilized with only a portion allocated to commercial use and the balance used as a laundry room and storage.

At the two entrance points are doormen stations which allow for the drop-off of deliveries and laundry services. The penthouse units include private outdoor terraces which look over the courtyard. The Property also has 139,097 square feet of additional unused air rights. The residential unit mix consists of oversized studios, one-bedroom, two-bedroom, and three-bedroom apartments. The commercial portion of the property includes a portion of the basement and the first floor and is currently occupied by 10 retail tenants and 4 office tenants. The retail tenancy includes 2 month-to-month tenants, while all 4 office tenants are currently occupying the space on a month-to-month basis. The retail space is currently 100% occupied with tenants including a restaurant, nail salon, electronics store, and former Capital One bank branch which has gone dark. The Capital One space totals 3,825 SF and the tenant is current on all rent. The average in-place retail rent is $138 PSF, representing a significant discount to market.

Residential Unit Type Total Avg. Rent % of Total Free Market 198 $3,936 69% Rent Stabilized 73 $2,038 25% Rent Controlled 18 $2,163 6% Total Residential Units 289 $3,259 100%

Residential Unit Mix Current Avg. Rent At Exit 0 BR 31 $2,226 31 1 BR 197 $3,057 54 1.5 BR - - 23 2 BR 60 $4,412 77 2.5 BR - - 48 3 BR 1 - 56 Total 289 $3,259 289

Commercial Unit Mix Current Avg. Rent At Exit Office 4 $47 - Retail 10 $138 14 Total 14 $124 14

Section 3: Property overview JLL 22 Section 1: Executive summary JLL 22 Site Overview The Property is a 297,703 gross square foot mixed-use apartment building with 298 residential units, 4 office units, and 10 retail units, prominently located in the heart of Midtown East, Manhattan, with nearly 200’ of frontage along Third Avenue and 145’ of frontage along both 47th and 48th Street. The site benefits from its close proximity to the City’s corporate core, Grand Central and the United Nations Headquarters, which are all just a few blocks away. Located within .25 miles of seven different subway lines, residents are provided easy access to the rest of Manhattan and neighboring boroughs.

Section 3: Property overview JLL 23 Section 1: Executive summary JLL 23 Background Rent control regulations were first introduced by the federal government during World War II. New York State chose to continue this legislation in 1947, intended as a temporary measure to prevent dramatically increasing rents following the war. The laws were modified and replaced in 1969 by rent stabilization regulations. Over the past decades, the regulations have been revised and extended numerous times, most recently in July 1997. Both rent control and rent stabilization guidelines establish the increase in rent that can be charged for a vacant apartment and for a lease that is renewed by the same tenant. A tenant in an apartment subject to rent control or stabilization cannot be evicted except under extraordinary circumstances. In general, these laws affect apartment buildings with more than six apartments and those which receive any of a number of City sponsored real estate tax abatements and/or tax exemptions.

Applicability Generally, most residential units in apartment buildings in New York City with six or more units that were built before February 1, 1974 are subject to rent-stabilization regulations. Residential units in New York City buildings that were built before February 1947 and have been occupied by the same tenant continuously since before July 1, 1971 are subject to the more stringent rent- control regulations. Approximately 1.057 million or 48.2% of the rental stock in New York City as of 2014 are subject to rent control or rent stabilization laws, which is a decrease from the 70 percent subject to restrictions during the early 1990’s. Of this 1.057 million rental apartments, approximately 27,000 apartments (2014 Housing and Vacancy Survey) remain under the protection of rent control laws, a 6.55 percent decrease since 2005.

Tenant Renewal Rights The rent-stabilization regulations generally restrict the rights of landlords to evict tenants, except on specific grounds as allowed by law. For units subject to rent-stabilization, leases must be entered into and renewedQueens for one Borough-year orPerforming two-year Arts terms, Center at the tenant's choice.

Rental Increases for Rent-Stabilized Apartments

Degradation Threshold Every rent-stabilized apartment has a "legal rent", which is the maximum rent that the landlord is allowed to charge for the apartment. The legal rent increases from time to time due to permissible adjustments that are described below. If the landlord chooses to rent an apartment for less than the legal rent, the legal rent remains in effect and is used as the basis for future allowable rents (the difference between the legal rent and the actual rent is referred to as "preferential rent").

Allowable Rental Increases on Renewal Leases The New York City Rent Guidelines Board sets the maximum allowable one-year and two-year rental increases above previous legal rents for renewal leases commencing during each fiscal year between October 1 and September 30.

For the fiscal year of October 1, 2015 through September 30, 2016, the maximum allowable renewal lease rental increases are as follows:

• One-year leases: 0.0% • Two-year leases: 2.0%

Museum of the Moving Image

Section 3:Location3: Property Overview overview JLLJLL 2424

Allowable Rental Increases on Vacant Unit Leases Tenants renting a rent-stabilized apartment for the first time have the option of either a one-year or two-year lease. The maximum allowable legal rent for a new lease on a vacant unit is equal to the last legal rent plus the sum of the following:

• For a two-year lease, a vacancy increase of 20%; for a one-year lease, a vacancy increase equal to 18% less the difference between the guideline percentages applicable to one-year and two-year renewal leases for the current fiscal year. For the fiscal year from October 1, 2015 through September 30, 2016, the difference between the applicable percentages is 2.25% (4.50% - 2.25%); therefore the allowable vacancy increase for a one-year lease is 17.75%. • If the landlord did not collect a permanent vacancy increase within eight years of the new vacancy lease, in addition to the vacancy increase described in Item 1, the landlord is entitled to an additional vacancy increase equal to 0.6% multiplied by the number of years since the collection of the last permanent increase. • If the previous legal rent was less then $300 per month, in addition to the vacancy increases described in Items 1 and 2, the landlord is entitled to increase the rent an additional $100 per month. • If the previous legal rent was between $300 and $500 per month, the landlord is entitled to collect a vacancy increase equal to the greater of: (a) the combined vacancy increases described in Items 1 and 2 or (b) $100 per month.

Allowable Rental Increases Due to Individual Apartment Improvements ( IAI ) If a landlord makes an improvement (including installing a new appliance) to a vacant rent-stabilized apartment, the legal rent of the unit is increased by 1/40th of the cost of the improvement, including installation (or 1/60th in buildings with more than 35 units). If the landlord makes any such improvement to a leased apartment, written consent of the tenant is required in order for the legal rent to be increased. Queens Borough Performing Arts Center

Allowable Rental Increases Due to Major Capital Improvement s (MCI) If a landlord makes a qualified building-wide capital improvement, the legal rents of all apartments in the building are increased by an aggregate amount from 1/84th to 1/96th of the cost of the improvement, including installation, with the increases being allocated to the individual apartments based on the number of rooms in each. Rental increases due to major capital improvements must be approved by the New York State Division of Housing and Community Renewal before they become effective.

Decontrol of Rent Stabilized Apartments If an apartment is vacated and the legal rent reaches a level of $2,700 per month or more (including the effect of allowable increases as described above), then the apartment is no longer subject to rent-stabilization regulations. If the legal rent of an occupied apartment reaches a level of $2,000 per month or more and the tenants‘ federal adjusted gross income, as reported on their New York State Income Tax returns, have been in excess of $175,000 for each of the two preceding calendar years, then the apartment is no longer subject to rent stabilization regulations.

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Section 3:Location3: Property Overview overview JLLJLL 2525

26 The chart summarizes the in-place unit count, in-place rents, proforma unit count post renovation/buyout, and un-trended proforma rents post renovation/buyout.

In - Place At Exit (2019) Average SF Total SF # of Units % of Total Monthly Rent # of Units % of Total Monthly Rent Avg % Rent Growth Free Market 0 BR 433 9,949 23 7.96% $2,539 26 9.00% $3,905 53.8% 1 BR 753 102,458 136 47.06% $3,632 23 7.96% $5,237 44.2% 1.5 BR 0 0 0 0.00% $0 23 7.96% $5,382 0.0% 2 BR 1,194 45,360 38 13.15% $5,716 73 25.26% $6,733 17.8% 2.5 BR 0 0 0 0.00% $0 48 16.61% $7,442 0.0% 3 BR 1,533 1,533 1 0.35% $9,000 56 19.38% $10,550 17.2% Subtotal 866 159,300 198 68.51% $4,209 249 86.16% $5,631 33.8%

Rent Stabilized 0 BR 454 3,176 7 2.42% $1,585 4 1.38% $1,665 5.1% 1 BR 758 35,633 47 16.26% $1,931 17 5.88% $2,029 5.1% 1.5 BR 0 0 0 0.00% $0 0 0.00% $0 0.0% 2 BR 1,225 23,266 19 6.57% $2,470 1 0.35% $2,596 5.1% 2.5 BR 0 0 0 0.00% $0 0 0.00% $0 0.0% 3 BR 0 0 0 0.00% $0 0 0.00% $0 0.0% Subtotal 917 62,075 73 25.26% $2,115 22 7.61% $2,223 5.1%

Rent Controlled 0 BR 435 435 1 0.35% $1,645 1 0.35% $1,729 5.1% 1 BR 715 10,008 14 4.84% $2,018 14 4.84% $2,121 5.1% 1.5 BR 0 0 0 0.00% $0 0 0.00% $0 0.0% 2 BR 1,216 3,647 3 1.04% $3,013 3 1.04% $3,167 5.1% 2.5 BR 0 0 0 0.00% $0 0 0.00% $0 0.0% 3 BR 0 0 0 0.00% $0 0 0.00% $0 0.0% Subtotal 836 14,090 18 6.23% $2,264 18 6.23% $2,379 5.1%

Total / WAV 878 235,465 289 100.00% $3,541 289 100.00% $4,538 28.2%

Commercial Office 631 2,524 4 28.57% $7,792 4 28.57% $31,550 304.9% Retail 1,365 13,648 10 71.43% $156,860 10 71.43% $303,179 93.3%

Total / WAV 1,250 16,172 14 100.00% $133,595 14 100.00% $260,785 95.2%

*Assumed 1.00% growth for Rent Stabilized and Rent Controlled units through exit

Section 4: Project overview JLL 27 Section 1: Executive summary JLL 27 The Sponsor plans to renovate and reconfigure the residential units and anticipates adding an additional bedroom to the majority of the lines in order to maximize the apartment layouts and capitalize on market rents. The Sponsor will also initiate a capital expenditure program that will include upgrading the elevators, courtyard, gym, storage, bike storage, hallway corridors, electric, plumbing, intercom and other mechanical equipment totaling approximately $3,000,000 in hard costs. Unit downtime from renovations will average 5 months. Unit renovations will total $18,000,000 and will range from a low of $39,000 per unit to a high of $112,000 per unit. The average renovation cost will be $72,300 per unit, or $90 per square foot. In addition, the Sponsor has budgeted $1,100,000 in total hard costs contingencies.

Renovation Costs Projected Market Rent Cost of Current Rooms Converted Floor 1 - Floor 6 - Floor 11 - Line # of Units Average SF Renovation Per Layout Added Layout Floor 5 Floor 10 Floor 16 Unit A 14 2.0 BR 1.0 BR 3.0 BR 1,260 $9,000 $9,075 $9,185 $112,000 B 15 2.0 BR 1.0 BR 3.0 BR 1,073 $9,000 $9,075 $9,185 $104,000 C 10 0.0 BR 0.0 BR 0.0 BR 444 $3,200 $3,275 $3,385 $39,000 D 12 1.0 BR 1.5 BR 2.5 BR 835 $6,250 $6,325 $6,435 $78,000 E 13 1.0 BR 1.0 BR 2.0 BR 767 $5,600 $5,675 $5,785 $70,000 F 12 1.0 BR 1.0 BR 2.0 BR 778 $5,600 $5,675 $5,785 $70,000 G 12 1.0 BR 1.0 BR 2.0 BR 667 $5,600 $5,675 $5,785 $60,000 H 10 1.0 BR 0.0 BR 1.0 BR 693 $4,250 $4,325 $4,435 $62,000 J 12 1.0 BR 1.5 BR 2.5 BR 835 $6,250 $6,325 $6,435 $75,000 K 12 1.0 BR 0.5 BR 1.5 BR 690 $4,500 $4,575 $4,685 $62,000 L 13 1.0 BR 1.5 BR 2.5 BR 844 $6,275 $6,350 $6,460 $80,000 M 11 1.0 BR 0.5 BR 1.5 BR 689 $4,500 $4,575 $4,685 $62,000 N 12 1.0 BR 0.0 BR 1.0 BR 693 $4,250 $4,325 $4,435 $62,000 O 10 1.0 BR 1.0 BR 2.0 BR 667 $5,600 $5,675 $5,785 $60,000 P 12 1.0 BR 1.0 BR 2.0 BR 778 $5,600 $5,675 $5,785 $70,000 Q 13 1.0 BR 1.0 BR 2.0 BR 770 $5,600 $5,675 $5,785 $70,000 R 12 1.0 BR 1.5 BR 2.5 BR 849 $6,250 $6,325 $6,435 $78,000 S 15 0.0 BR 0.0 BR 0.0 BR 433 $3,200 $3,275 $3,385 $39,000 T 13 2.0 BR 1.0 BR 3.0 BR 1,117 $9,000 $9,075 $9,185 $104,000 U 14 2.0 BR 1.0 BR 3.0 BR 1,260 $9,000 $9,075 $9,185 $112,000 Total 247 $18,000,000

* Excludes units 8LM & 13CD. No bedrooms will be added to these units * Some units have already been renovated and will not need full renovation cost

Section 4: Project overview JLL 28 Section 1: Executive summary JLL 28 100% of the market rate units leases expire by Q3 2017. The Sponsor also plans to buyout a total of 51 of the rent stabilized units in the first three years and convert said units to market rate units. Below is a lease expiration schedule for the market rate units and a rent stabilized buyout schedule.

Quarterly Expiration Total Vacant Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Units Expiring 198 37 0 9 71 75 4 0 1 1 % Expiring 100.00% 18.69% 0.00% 4.55% 35.86% 37.88% 2.02% 0.00% 0.51% 0.51% Cum % Expiring 18.69% 18.69% 23.23% 59.09% 96.97% 98.99% 98.99% 99.49% 100.00% 0.0 BR 23 6 0 1 6 10 0 0 0 0 1.0 BR 136 23 0 6 52 50 4 0 1 0 2.0 BR 38 7 0 2 13 15 0 0 0 1 3.0 BR 1 1 0 0 0 0 0 0 0 0

Semi Annual Expiration Total Vacant 7/31/2015 1/31/2016 7/31/2016 1/31/2017 7/31/2017 Units Expiring 198 37 0 80 79 1 1 % Expiring 100.00% 18.69% 0.00% 40.40% 39.90% 0.51% 0.51% Cum % Expiring 18.69% 18.69% 59.09% 98.99% 99.49% 100.00% 0.0 BR 23 6 0 7 10 0 0 1.0 BR 136 23 0 58 54 1 0 2.0 BR 38 7 0 15 15 0 1 3.0 BR 1 1 0 0 0 0 0

Rent Stabilized Unit Buyout Schedule & Estimated Buyout Costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 2/28/2017 2/28/2018 2/28/2019 2/29/2020 2/28/2021 2/28/2022 2/28/2023 2/29/2024 2/28/2025 2/28/2026 Number of Buyouts 16 17 18 ------Number of FM Renovations 196 2 ------Total Renovations 212 19 18 ------Cumulative Renovations 212 231 249 249 249 249 249 249 249 249 % Renovated 85.1% 92.8% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Annual Buyout Cost $625,000 $1,950,000 $1,600,000 ------

Section 4: Project overview JLL 29 Section 1: Executive summary JLL 29 Commercial Overview The Property’s commercial portion is comprised of 14 total units including 4 professional office suites and 10 retail units.

Office Current Current Current Market Market Market Lease Extension Total Monthly Annual Rent Monthly Annual Rent Tenant Expiration Option SF Rent Rent PSF Rent Rent PSF SHUM CC MD & 11/30/2016 None 663 $3,000 $36,000 $54 $8,288 $99,450 $150 LAUCHANGO RAUL CACERES 11/30/2016 None 718 $2,192 $59,856 $86 $8,975 $107,700 $150 MABLE MERCER 11/30/2016 None 718 $2,600 $48,000 $69 $8,975 $107,700 $150 FOUNDATION VACANT - None 425 - - - $5,313 $63,750 $150 Subtotal / WAV 2,524 $7,792 $143,856 $58 $31,550 $378,600 $150

Retail Current Current Current Market Market Market Lease Extension Total Monthly Annual Rent Monthly Annual Rent Tenant Expiration Option SF Rent Rent PSF Rent Rent PSF (1) 5-year AP & SS RESTAURANT 10/30/2026 option after 3,450 $25,000 $300,000 $87 $71,875 $862,500 $250 GROUP LLC 2026 FLORA LOUIS INC 7/31/2017 None 660 $15,988 $191,860 $291 $16,500 $198,000 $300

SEIGO RETAIL None 3/31/2017 438 $10,160 $121,918 $278 $10,950 $131,400 $300 CORPORATION Remaining

762 FOOD CORPORATION 4/30/2018 None 1,850 $19,467 $233,603 $126 $38,542 $462,500 $250

764 3RD AVE. LIQUORS None 10/31/2019 650 $11,608 $139,300 $214 $16,250 $195,000 $300 INC Remaining

STAY CONNECTED, INC 4/30/2022 None 850 $11,935 $143,222 $168 $21,250 $255,000 $300

NANCY YOON JEWELRY MTM None 150 $2,806 $33,666 $224 $3,750 $45,000 $300 CORPORATION FASHION FAIRLY NAILS 7/31/2024 None 725 $12,500 $150,000 $207 $18,125 $217,500 $300 SPA, INC

JIN PANG SHON MTM None 1,050 $7,000 $84,000 $80 $26,250 $315,000 $300 (2) 5-year CAPITAL 9/30/2017 options after 3,825 $40,396 $484,750 $127 $79,688 $956,250 $250 ONE\GREENPOINT BANK 2017 Subtotal / WAV 13,648 $156,860 $1,882,319 $138 $303,179 $3,638,150 $267

Section 4: Project overview JLL 30 Section 1: Executive summary JLL 30 There is 8,623 square feet of commercial space expiring by 2019. Two of the current tenants have month-to-month leases, and the Sponsor plans to convert the existing office space into retail in order to fully capitalize on market rate rents.

Commercial Rollover Schedule Year 2016 2017 2018 2019 2020 Expiring Square Feet 1,200 4,923 1,850 650 - Expiring Rent PSF $152 $232 $126 $214 -

6,000 $250 $232 $230 $214 5,000 $210

$190 4,000 $168 $170 $152 3,000 $150 $126 $130 2,000 $110

$90 1,000 $70

0 $50 2016 2017 2018 2019 2020 2021 2022

Expiring Square Feet Expiring Rent PSF

Section 4: Project overview JLL 31 Section 1: Executive summary JLL 31 The Sponsor has identified two opportunities to significantly reduce operating expenses over the 5 year term of the investment:

Phase I: At closing, the Sponsor will generate $1.8 million in cost savings through improved property management oversight. The initial costs savings will be partially offset by a planned increase in management fees, which will be set to a market rate of 3.0% of EGI (currently 1.8% of EGI).

OpEx Savings In-Place EGI $13,529,519

Operating Expenses TTM July 2015 Adjusted OpEx Cost Savings Real Estate Taxes $2,898,263 $2,898,263 - Insurance $120,499 $141,873 ($21,374)

Fuel / Gas / Steam $491,487 $307,263 $184,224 Electric $337,897 $329,981 $7,916 Water & Sewer $326,165 $208,746 $117,419 Payroll & Burden $1,262,267 $1,262,267 - Repairs & Maintenance $1,338,706 $151,500 $1,187,206

General & Administrative $72,789 $37,875 $34,914 Reserves - $60,600 ($60,600) Legal / Professional $401,731 $65,000 $336,731 Elevator $84,077 $75,000 $9,077 Other $46,369 $37,584 $8,786

Management $202,118 $202,118 - Total Operating Expenses $7,582,369 $5,778,070 $1,804,300

Fuel / Gas / Steam: Adjusted to reflect boiler conversion and update (market est. at ~$1,000 per unit) Adjusted, reflects 2014 Water Sewer Charge less $117K savings from RPZ backflow preventer installation which Water & Sewer: should be complete by January 2016 Repairs & Maintenance: Actual includes unit renovation costs and other expenses which are part of capex (interior painting, etc.) Legal / Professional: Excludes leasing commissions and local law 11 work, which is non-recurring and below the line

Phase II: Electricity: The Sponsor will submeter each of the units in order to pass through electrical costs to tenants. Work on the electrical systems will begin upon acquisition and phase in over 4 years as units become renovated. Full cost savings for electricity are expected to be achieved in Year 4.

Payroll & Burden: Payroll & burden expenses are inflated due to a union labor contract that expires in 2018. Following the contract expiration in April 2018, the Sponsor anticipates converting the building to a non-union building, reducing headcount and resetting wages.

Section 4: Project overview JLL 32 Section 1: Executive summary JLL 32 33 Kansas City skyline

View of from the north

Located on one of the world’s largest natural harbors, New Manhattan is regarded as the commercial, economic and cultural York City is the most populous city in the with center of the United States and is home to numerous famous approximately 8.2 million residents and is also the most landmarks and cultural attractions, such as the Metropolitan densely populated major city with a land area of just over Museum of Art, Times Square and the United Nations. Various 300 square miles. With almost 800 languages spoken by its colleges and universities are located within the borough, residents, New York is truly a global city and the most including Columbia University and New York University both of linguistically diverse city in the world. Known as a global which rank among the top 50 universities in the world, according financial center, New York City combines the offices of 168 to the Times Higher Education World University Rankings. banks from 50 countries, and 18 of the top 20 foreign branches of international banks have their U.S. headquarters Tourism in New York City. New York is also the most visited city in Both domestic and international tourism generate significant the United States for both domestic and international income for New York City and particularly the borough of travelers, with 56 million visitors totaling $41.3 billion of Manhattan. New York was ranked 7th amongst the “20 Most direct spending in 2014. Over the past ten years, the number Visited Cities in the World” by Forbes magazine in 2014, with of total visitors in New York City has increased by more than major tourist destinations in New York City including Times 50% and direct visitor spending has increased by more than Square, the Empire State Building, Rockefeller Center and 100%. Central Park. The number of both domestic and international visitors to New York City increased in nine of the past 10 years, Manhattan overview with only 2009 experiencing a drop during the deepest part of the The borough of Manhattan, or New York County, forms the recession. The number of visitors and total direct spending central political, financial and cultural core of New York City and increased by more than 50% and 100%, respectively, over the is the economic engine for the Greater New York region. With a past ten years to 55.8 million in 2014, meeting the visitors targets population of more than 1.6 million and a land area of 23 square initialed outlined by Mayor Bloomberg in 2006. miles, Manhattan is New York City’s most densely populated borough with nearly 70,000 residents per square mile. More than Although international tourists account for less than 22% of 75 percent of New York City’s employees work in Manhattan visitors and spend slightly less on average than domestic visitors home to the Midtown and Downtown business districts. ($210 per day versus $230), the longer average length of stay of Manhattan is the wealthiest county in the United States with per international tourists (7 nights versus 2.7 nights for domestic capita personal income of $62,498 versus the national average of visitors) increases their spending share. $32,283, and its median household income of $69,659 exceeds the national median by more than $11,000.

Section 5: Market overview JLL 34

Employment and Economic Overview The overall New York City economy is recovering strongly with While the financial, insurance, health care and real estate 2.7% employment growth year-over-year as of December 2014, industries form the backbone of New York City’s economy, the led by the professional and business services sector, which city is an important center for mass media, journalism and averaged year-over-year employment growth of 4.7% – which publishing as well as the preeminent arts center in country, with exceeds the 3.7% growth reached during the peak of the last creative industries such as advertising, new media, fashion and expansion. Although the financial services have had to adapt to design representing a rapidly increasing number of jobs in the increased regulatory scrutiny and changing markets, the city. accounting, consulting and technology sectors are still expected to grow over the next year. Unemployment in New York City has One of the world’s leading commercial centers, Midtown is home dropped from a high of 9.6% in 2010, to 6.4% as of January to corporate headquarters across multiple industries, including 2015, with Manhattan holding the lowest unemployment rate of fashion (Saks Incorporated, Calvin Klein, Polo Ralph Lauren and the five boroughs at 5.2% nearly 40 bps below the national Ann Taylor), communications (Viacom and Univision average. Much of the decline in unemployment was due to the Communications), publishing (Simon & Schuster and McGraw- strong growth in the private sector which has seen six straight Hill) and media (CBS Corporation, NBC Universal, The New York years of employment gains. Times Company and Thomson Reuters).

With a gross domestic product of $1.38 trillion in 2013, New York New York City has also received a strong boost with the City has the largest regional economy in the United States by and emergence of “Silicon Alley,” named for the emergence and the second largest city economy in the world after Tokyo, Japan. concentration of internet and media companies in Manhattan. New York City is a premier headquarters location for leading Over the past two years, Midtown South has diversified an global financial services companies as well as a diversified base already solid base of tenancy to become New York’s defacto of service sector firms including law, accounting, advertising and home of internet giants and tech start-ups. Heavyweights such as management. Google and Apple, alongside hundreds of new tech start-ups, have received billions of dollars in funding. This story is proven New York City is home to more corporate headquarters than any not only by the quality of firms who have chosen to do business in other city in the country, with the vast majority located in New York City, but also by their ambitious plans for growth. Manhattan. Midtown Manhattan is the largest central business district in the United States and holds the nation’s greatest concentration of Fortune 500 companies, including J.P. Morgan Chase, Citigroup, MetLife, Pfizer and Morgan Stanley.

Section 5: Market overview JLL 35

The Property is located in the center of Midtown East, International Community Manhattan, which is bounded by 42nd and 53rd Streets, The United Nations Headquarters complex, situated along the and the East River. Despite its East River between 42nd and 48th Streets, represents the convenient, central Manhattan location, Midtown East is an world’s largest and most prominent center of diplomatic activity. enticing, community-oriented New York neighborhood, and The UN has created a thriving international community that has one of the most desirable places to live in New York City. been established in the area since the 1950s, creating a permanent demand base for quality restaurants, hotels, schools, Midtown East’s diverse housing stock is attracting a more retail shops, and upscale living accommodations. The Property sophisticated crowd that includes young professionals and currently has several in-place tenants who hold United Nations families. Originally a boatyard that protected ships from the East related jobs. The spending power of these foreign residents has River winds, the neighborhood is now one of the wealthiest, yet expanded dramatically in recent years, a result of the strength of affordable neighborhoods in Manhattan. The area contains a foreign currencies. This amplified spending power has a direct plethora of upscale restaurants, affordable eateries and high-rise impact on the property, increasing achievable apartment rents buildings that tower over small shops and bars. Housing prices while augmenting demand for retail services. range from affordable rentals to multi-million dollar penthouses. Young singles and young families are increasingly moving to Shopping & Dining Midtown East’s residential areas, attracted by the neighborhood's As a result of the neighborhood’s established and sophisticated numerous public parks and proximity to Grand Central Station residential population, convenient shopping and dining options and the United Nations Headquarters. The neighborhood offers abound. Second and Third Avenues in the immediate vicinity of both convenience and lifestyle optionality, while the Property, the Property are populated with a wide range of supermarkets, perfectly located at its center, sits at a central junction point for pharmacies, restaurants and nightclubs. Some of Manhattan’s the rest of New York City. most celebrated gourmet restaurants are located in the neighborhood, catering to the discerning palates of the international community. Notable examples include , Sparks Steak House, Patroon, The Palm and Palm Too, Marchi’s, Pampano, Blair Perrone, Rosa Mexicano, Zarela, and, of course, Nino’s Positano. Section 5: Market overview JLL 3636

Demographics Neighborhood Amenities The median household income in the Midtown East neighborhood The property’s central Midtown location places it within walking is $122,136, on par with Manhattan’s most exclusive distance of many of New York’s most celebrated cultural and neighborhoods. This elite population includes a vital mix of young entertainment destinations. Highlights include the Museum of professionals, working diplomats, empty nesters and families who Modern Art, Fifth Avenue boutiques, Central Park, the New York enjoy the favorable combination of convenience and international Public Library, and the Broadway Theatre District. While these flavor provided by the neighborhood. nearby attractions benefit all residents of the property, they are particularly appealing to suburban residents using the Property Transportation as a pied-a-terre. Similarly, sophisticated individuals and young The area offers convenient access to all areas of the City as well families residing in other parts of the country or the world will find as to Westchester and Connecticut. The 4, 5, and 6 trains provide the Property to be a convenient location for a Manhattan express service from Grand Central to the Upper East Side, apartment, serving as an ideal home base from which to explore Union Square, Downtown, and Brooklyn. Grand Central also the greatest city on earth. The property’s delightful old world offers access to commuter railroad lines and the cross-town 7 charm appeals precisely to this demographic, capturing the and Shuttle trains, which provide convenient access to additional romance and history of Old New York. subway lines and regional transportation terminals including Port Authority and Penn Station. The 7-train provides additional Parks & Recreation access to Queens, the growing Long Island City Market and Citi Located just two blocks east, the United Nations Sculpture Field. In coming years, the 7-train will provide access to the Garden is accessible via 47th or 48th Street, and is the largest development at Hudson Yards. park in the area, an integral part of the United Nations Headquarters complex. Key features include an expansive lawn, a refined sculpture and rose garden, and views of the East River, the Queensboro Bridge, and the United Nations Buildings, making it the perfect setting for residents of the Property to reflect and relax. Between First and Second Avenues, 47th Street becomes a pleasant tree-lined promenade known as Dag Hammarskjold Plaza. The Plaza is the most popular route for pedestrians traveling between the UN and Midtown, adding convenience for the property’s residents while enhancing exposure for the Property’s retail tenants.

Section 5: Market overview JLL 3737 Section 5: Market overview JLL 38 Section 5: Market overview JLL 39 Section 1: Executive summary JLL 39 The High-End Resale Market The New York City economy continues to perform above expectations. Housing prices in Manhattan have held up much better than the national average, and sales activity has picked up and remains strong. Manhattan housing prices continued to press higher in 2015, driven primarily by low inventory and seven consecutive quarters of year-over-year sales growth. In particular, the luxury market showed the most price gains as more development product has begun to close in this sector of the market. The average sales price and average price per square foot of all Manhattan apartments increased 15% and 12% respectively year-over-year. The number of sales that closed at or above the list price at time of contract rose to 46%, the highest level reached since 52% in the third quarter of 2008, indicative of the robust demand for product in the market. In addition, days on the market, a measure of the number of days from the original list date, fell by roughly 16% to 49 days from the prior year quarter as languishing listings were sold off.

Market Forces The reasons for the Manhattan market’s upward trend, despite the national housing market’s sluggish growth, are as follows: 1. Land constraints: Unlike virtually every other metropolitan or suburban market in America, Manhattan remains severely land- constrained. New construction starts relative to existing housing stock has remained at relatively low levels, despite ever-growing demand. This stability in new supply helps to keep inventory in check. Nationally, housing starts rose 33% from 1.5 million units in 2000 to 2.0 million by 2005 and have since declined significantly to approximately 1,174,000 in 2015, which is reflective of the dislocation in the for-sale housing market since the economic downturn. This is in direct contrast to Manhattan’s residential inventory levels, particularly in the high-end market, where demand continues to outstrip supply.

2. Strong demand: Manhattan continues to experience greater demand than all other residential markets in the country. This is due in part to the strength of the Manhattan economy, particularly at the high-end with strong bonuses on Wall Street and record high-income job creation. Additionally, Wall Street is posting record earnings and there is stable growth in the hedge fund and private equity markets. Market demand is also driven in part by a strong demand for Manhattan real estate from national and international buyers. Manhattan is perceived as a “winner take all” city within the global economy, which is reflected in the continually strong demand exhibited both nationally and internationally for Manhattan condominiums.

Section 5: Market overview JLL 40

Section 1: Executive summary JLL 40

The Rental Market The East Side of Manhattan has historically maintained value due to its long-established reputation and convenience. Rents remain strong within the area as exemplified by an average increase of 6% year-over-year for 1-bedroom units. With a current vacancy rate of just 1.54%, Midtown East is poised for additional growth in prevailing rental rates. Significant barriers to entry will preserve this acutely low vacancy rate, with high construction cost, strict zoning regulations, a lack of developable sites, and soaring land costs all contributing to the dearth of new rental development. Rents for Manhattan as a whole are also performing exceptionally well. In July 2015 median Manhattan rental prices were the second highest on record.

SectionSection 4: Market 5: Market overview overview JLL 41 Section 1: Executive summary JLL 41 1 2 3 4 5 6

The Buchanan Monterey at Park The Nash Murray Hill Tower The Metropolis River Tower

Address 160 East 48th Street 30 Park Avenue 222 East 39th Street 245 East 40th Street 150 East 44th Street 420 East

Year Built 1929 1955 1971 1972 2000 1982

Lot Size (SF) 29,120 17,485 11,932 22,178 11,207 28,308

Building Size (SF) 297,703 236,397 128,741 387,671 352,725 413,233

Floors 15 20 25 36 52 37

FAR 15 10 10 10 12 10

Units 289 237 191 273 360 323 Average Floorplan (SF/Rent) Studio 438 / $3,200 - / $3,097 - / $3,175 506-576 / $3,535 - / $3,463 - / - 1 BR 709 / $4,250 - / $4,382 - / $4,170 753-853/ $4,470 - / $4,412 566-990 / $4,637 2 BR 769 / $5,600 - / $6,456 - / $5,465 1,118-1,137 / $6,360 - / $6,063 1,061-1,343 / $6,107 3 BR 1,209 / $9,000 - / - - / $8,000 - / - - / - 1,643-3,066 / $9,760

Commercial Space (SF) 16,200 0 7,600 1,215 8,080 272

Fitness Center No Yes Yes Yes Yes Yes

Common Space / Lounge Yes No Yes Yes Yes Yes

Subways (within .25 miles) 4,5,6,E,M,7,S 6 None None 4,5,6,7,S None

Section 5: Market overview JLL 42 Section 1: Executive summary JLL 42 Section 5: Market overview JLL 43 Section 1: Executive summary JLL 43 The Retail Market The Third Avenue retail corridor is also considered an attractive retail location due to its close proximity to Midtown Manhattan and to the numerous high-end office and residential rental properties, as well as the luxury condo developments and hotels located within the neighborhood. On lower Fifth Avenue from 42nd to 49th Streets, the asking rental rate increased to $1,238 per square foot during the first quarter of 2015 from $1,057 per square foot, a solid increase from one year ago. By way of comparison, asking rental rates on the lower section of Fifth Avenue were only $458 per square foot five years ago and have more than doubled since then. The availability rate registered 24.6% at the close of the first quarter, down from 26.2% one year ago. At 580 Fifth Avenue, a new lease was completed by cosmetics giant Sephora, which will be relocating across the street and further south from its current location at 597 Fifth Avenue.

In another top-tier market along Madison Avenue, (from East 57th to East 72nd Streets), asking rents averaged $1,584 per square foot, up moderately from $1,466 per square foot, an 8.0% rise from last year. Of note, the average asking rent has increased in each of the last six quarters, however the average asking rent dipped slightly from year-end 2014 when it registered $1,602 psf. The availability rate remained unchanged at 13.0% at the close of the first quarter 2015 from year-end 2014. New commitments were announced including high-end fashion brand Brioni which leased 5,200 sf at the Carlton House redevelopment, 680 Madison Avenue. Additionally, British woman’s designer L.K. Bennett leased 2,562 sf for its first Manhattan store at 655 Madison Avenue in the former Brian Atwood sublease space. New space additions included the Nespresso store at 761 Madison Avenue and Frey Wille’s sublease space at 624 Madison Avenue.

SectionSection 4: Market 5: Market overview overview JLL 44 Section 1: Executive summary JLL 44 Midtown East Retail Market Comparables

Address Primary Use Size Monthly Rent Rent PSF

904 Second Avenue Retail 404 $8,500 $252

142 East 49th Street Retail 550 $9,500 $207

830 3rd Avenue Retail 900 $22,500 $300

369 Lexington Avenue Retail 500 $15,000 $360 Average 589 $13,875 $280

Section 5: Market overview JLL 45 Section 1: Executive summary JLL 45 Apartment & Mixed-Use Building Sales Comps Address Date Year Built Sales Price Size (GSF) Units Price per SF 420 East 54th Street In Contract 1982 $390,000,000 412,961 323 $944 341-343 East 62nd Street 9/10/2015 1910 $12,870,755 11,900 17 $1,082 31-37 East 31st Street 9/10/2015 1914 $82,431,000 91,500 92 $901 312 East 30th Street 9/10/2015 1986 $50,956,406 47,820 67 $1,066 1 Mitchell Place 7/2/2015 1927 $138,850,000 143,033 181 $971 301 East 21st Street 5/8/2015 1930 $167,500,000 185,196 199 $904 30 Park Avenue 3/12/2015 1955 $194,000,000 205,245 237 $945 425-429 3rd Avenue 2/10/2015 1967 $68,250,000 66,403 102 $1,028 200 East 82nd Street 12/30/2014 1980 $218,000,000 205,254 223 $1,062 Average 152,146 160 $989

The Buchanan $270,000,000 297,703 298 $906

Section 5: Market overview JLL 46 Section 1: Executive summary JLL 46 The Office Market As one of the best performing office markets in the United States, Midtown Manhattan continues to ride an upward economic growth trend that also generates residential demand in the immediate area. The Midtown office leasing market is as strong as it has been since the peak of the last cycle and well positioned for rental rate growth. Key statistics are as follows:

• Midtown asking rents have increased at a rate of 7.6% per annum over the past 3-years and increased 7.3% over the past 12 months. This trend is expected by many to accelerate. • The Taking Rent Index has hit 97% (from 89% 12 months ago) indicating that landlords are getting their asking rents and are going to make large increases shortly. • Leasing activity over the 12 months of 17 million square feet is the second highest over the past decade and is outpacing last year’s activity by 20%. • Availability rate is at its lowest point since 2007 and is continuing to fall. • Absorption over the past 12 months was a positive 3.71 million square feet, second highest in the past 10 years only to 2010. • All of these metrics point in the right direction – indicating a strengthening Midtown leasing market.

SectionSection 5: 4:Market Market overview overview JLL 47 Section 1: Executive summary JLL 47 The offering to invest in the Property is being distributed exclusively by JLL to a select group of qualified institutional investors. The prospective investor(s) will be selected by the Sponsor in consultation with JLL at its sole discretion. For more information on this transaction, please contact:

Jones Lang LaSalle Equity Placement Contacts

Aaron Appel Mark Fisher Jonathan Schwartz Mason Powell Managing Director Senior Vice President Senior Vice President Associate Capital Markets Group Capital Markets Group Capital Markets Group Capital Markets Group [email protected] [email protected] [email protected] [email protected] +1 212 812 6459 +1 212 812 5966 +1 212 812 6567 +1 212 812 6447 +1 917 797 1253 (cell) +1 914 740 3808 (cell) +1 516 672 1247 (cell) +1 202 669 0519 (cell)

Patrick Cotter Analyst Capital Markets Group [email protected] +1 212 812 5967 +1 240 997 4977

JLL 48 Section 1: Executive summary JLL 48 49 Section 6: Appendix: floor plans JLL 50 Section 1: Executive summary JLL 50 Section 6: Appendix: floor plans JLL 51 Section 1: Executive summary JLL 51 Section 6: Appendix: floor plans JLL 52 Section 1: Executive summary JLL 52 Section 6: Appendix: floor plans JLL 53 Section 1: Executive summary JLL 53