VALUATION ADVISORY SERVICES

Appraisal of 87 River Street, 105 River Street and West 1st Street Prepared for Consolidated Edison Company of New York, Inc.

Partnership. Performance.

Effective Date of Value: November 1, 2015 87 River Street, 105 River Street and West 1st Street Brooklyn, NY 11249 1166 Avenue of the Americas 15th Floor New York, NY 10036

T 212.729.3863 F 212.591.9300

avisonyoung.com November 24th, 2015

Mr. Scott Sanders Vice President and Treasurer Consolidated Edison Company of New York, Inc. 4 Irving Place New York, NY 10003

Re: Three Williamsburg Parcels 105 & 87 River Street, West 1st Street, Brooklyn, NY 11249 (Block 2355 / Lot 1R, Block 2361 / Lot 1R and Block 2376 / Lot 50)

Dear Mr. Sanders:

As requested, Avison Young New York (“AYNY”) has prepared an appraisal indicating the current market value of the land located at 105 River Street, 87 River Street, and West 1st Street, Brooklyn NY 11249 as of November 1, 2015 for the purposes of corporate planning.

The subject properties are located in an M3-1 zoning district and are subject to waterfront zoning regulations. Additional information regarding each parcel is presented in the table below.

Subject Parcels Under M3-1 Zoning Upland As-of-Right Developable Parcel Address Area (SF) FAR Area (SF) 1 105 River Street 57,348 2.0 114,696 2 87 River Street 50,431 2.0 100,862 3 West 1st Street 12,627 2.0 25,254

This valuation takes into consideration the three traditional appraisal approaches, namely the Income, Sales Comparison, and Cost Approaches to value. The subject property has been valued using the Sales Comparison Approach. As requested, we have valued the parcels under two scenarios. The first scenario contemplates the value of each parcel if sold separately, while the second envisions the sale of all three parcels as one large assembled property. Additionally, within each scenario we have analyzed the market value of the parcels as currently zoned for commercial use, and as if a rezoning to permit residential use could be obtained.

This appraisal contains the extraordinary assumption that Parcel 3, located at West 1st Street (Block 2376, Lot 50) would be purchased in conjunction with Parcel 2 (87 River Street, Block 2361, Lot 1R) and would be developed as a park. Parcel 3 is located directly north of Grand Ferry Park and the configuration of the lot is not conducive to large-scale development. Therefore, we have assumed that the lot would be developed as a public promenade/park and the development rights attributable to Parcel 3 would be transferred to Parcel 2. Additionally, we assume that the sites are free of any significant contamination that would inhibit the properties being put to their highest and best use.

1166 Avenue of the Americas, 15th Floor, New York, NY 10036 T: 212-729-7140 F: 917-591-9300 Mr. Scott Sanders November 24, 2015 Vice President and Treasurer

In appraising the subject properties an inspection was made of the properties and the surrounding neighborhood. Analysis and consideration was given to location, surrounding uses, market trends, property type, physical condition, zoning, highest and best use, comparable property sales, as well as the overall economic conditions existing and anticipated as of the date of the appraisal. The highest and best use of each parcel was reviewed in terms of its physical and location characteristics plus current and foreseeable market conditions.

Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in the subject properties as of November 1, 2015 is as follows:

Market Value Conclusions as of November 1, 2015 Scenario As-of-Right With a Future M3-1 Zoning Rezoning to R8 Parcel Address 1 105 River Street $54,000,000 $120,000,000 2 & 3 87 River Street & $60,000,000 $132,000,000 West 1st Street 1, 2 & 3 105 River Street, 87 River Street & $102,000,000 $224,000,000 West 1st Street

This appraisal conforms with and is subject to the Code of Professional Ethics and Standards of Professional Appraisal Practice set forth by the Appraisal Institute. This report complies with the reporting requirements set forth under the Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice (USPAP), presenting limited discussions of the data, reasoning and analyses that were used in the appraisal process to develop the value estimate rendered. Supporting documentation regarding some of the data, reasoning and analyses is retained on file. The depth of discussion contained in this report is specific to your needs and intended use stated in the report. We are not responsible for unauthorized use of this report.

This letter is not an appraisal in and of itself and is invalid if detached from the complete appraisal report, which contains the text, exhibits, and addenda.

Randal Grenier participated in the production of this report.

Respectfully Submitted, Avison Young

William Picoli, MAI, CRE, FRICS John T. Farrell, MAI, MSRE Senior Vice President Senior Vice President NY Certification #46000005694 NYS Certification #46000049037

1166 Avenue of the Americas, 15th Floor, New York, NY 10036 T: 212-729-7140 F: 917-591-9300

TABLE OF CONTENTS Salient Facts And Conclusions ...... 1 Subject Photographs ...... 3 Area Map ...... 6 Land Map ...... 7 Aerial Photograph ...... 8 Introduction ...... 9 Property Identification ...... 9 Purpose And Intended Use Of Appraisal ...... 9 Client/Intended Users ...... 9 Definition Of Fair Market Value ...... 9 Property Rights Appraised ...... 9 Effective Date Of Appraisal ...... 10 Property Inspection ...... 10 Ownership ...... 10 Scope Of Work ...... 10 Extraordinary Assumptions And Hypothetical Conditions...... 10 North Brooklyn Real Estate Market Analysis ...... 11 Neighborhood Analysis ...... 14 Property Description ...... 16 Assessed Value And Real Estate Taxes ...... 17 Zoning Analysis ...... 18 Zoning Map ...... 20 Highest And Best Use ...... 23 Method Of Valuation ...... 26 Sales Comparison Approach ...... 27 Reconciliation And Final Value Conclusion ...... 38

Addenda

Comparable Manufacturing Zoned Sales Map ...... 41 Comparable Manufacturing Zoned Sales Details ...... 42 Comparable Residential Zoned Sales Map ...... 52 Comparable Residential Zoned Sales Details ...... 53 Statement Of Basic Assumptions And Limiting Conditions ...... 63 Certificate Of Appraisal – William Picoli, MAI, CRE, FRICS ...... 66 Certificate Of Appraisal – John T. Farrell, MAI, MSRE ...... 67 Professional Qualifications Of William Picoli, MAI, CRE, FRICS ...... 68 Professional Qualifications Of John T. Farrell, MAI, MSRE ...... 72

Con Edison – Three Williamsburg Parcels

SALIENT FACTS AND CONCLUSIONS

Subject Property: Parcel 1: 105 River Street Parcel 2: 87 River Street Parcel 3: West 1st Street Brooklyn NY 11249

Property Type: Vacant Land

Description: The subject properties are three individual waterfront parcels with frontage along the East River. Parcels 1 & 2 feature additional frontage along River Street.

Tax Map Identification: Parcel 1: Block 2355, Lot 1R Parcel 2: Block 2361, Lot 1R Parcel 3: Block 2376, Lot 50

Date of Value: November 1, 2015

Land Area: Parcel 1: 57,348 Sq. Ft. Parcel 2: 50,431 Sq. Ft. Parcel 3: 12,627 Sq. Ft.

Zoning District: M3-1 Manufacturing District

Maximum FAR: 2.0 for Commercial and Manufacturing Uses As-of-Right

Total Developable Bulk: Total Developable Bulk As Zoned M3-1 If Rezoned to R8 Zoning District M3-1 R8 As-of Right FAR 2.0 6.02 Parcel 1 114,695 Sq. Ft. 345,232 Sq. Ft. Parcel 2 &3 126,116 Sq. Ft. 379,609 Sq. Ft. Combined 240,811 Sq. Ft. 724,841 Sq. Ft.

Highest and Best Use: Considering the unique conditions currently present in Williamsburg’s real estate market, the highest and best use of the subject properties has been concluded to be for either as-of-right office/retail use development, or for hotel development with a variance, or for residential use development by way of pursuing a rezoning application under the ULURP process.

Valuation Process: All appraisal approaches were considered in this report with reliance placed on the value indicated by the Sales Comparison Approach.

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Valuation: Scenario

As-of-Right With a Future M3-1 Zoning Rezoning to R8 Parcel Address 1 105 River Street $54,000,000 $120,000,000 2 & 3 87 River Street & $60,000,000 $132,000,000 West 1st Street 1, 2 & 3 105 River Street, 87 River Street & $102,000,000 $224,000,000 West 1st Street

This market value assumes that Parcels 2 & 3 would be sold together. Furthermore, it assumes that Parcel 3 would be developed as a public park and the developable bulk attributable to Parcel 3 would be used for development on Parcel 2. Additionally, we assume that the sites are free of any significant contamination that would inhibit the properties being put to their highest and best use.

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SUBJECT PHOTOGRAPHS

View of 87 River Street (Foreground) and 105 River Street (Background)

View of 87 River Street and West 1st Street facing west

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Kent Avenue in the vicinity of the subject properties, looking north

Kent Avenue in the vicinity of the subject properties, looking south

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Views to the north along River Street

Views to the south along River Street

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AREA MAP

Source: Google Maps

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LAND MAP

Brooklyn Block 2355 Lot 1R (Parcel 1) Brooklyn Block 2361 Lot 1R (Parcel 2) Brooklyn Block 2376 Lot 50 (Parcel 3)

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AERIAL PHOTOGRAPH

View of the subject properties from the southeast Source: Bing Maps

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INTRODUCTION

PROPERTY IDENTIFICATION The subjects of this appraisal are the development sites located at 105 River Street, 87 River Street, and West 1st Street, County of Kings, City and State of New York. The sites are identified on the New York City Tax Map as Block 2355 / Lot 1R (105 River Street – Parcel 1), Block 2361 / Lot 1R (87 River Street – Parcel 2), and Block 2376 / Lot 50 (West 1st Street – Parcel 3).

PURPOSE AND INTENDED USE OF APPRAISAL The purpose of the appraisal is to indicate the current “as-is” fair market value of the fee simple interest in the subject properties. The intended use of this report is for corporate planning purposes.

CLIENT/INTENDED USERS The intended user of this report is the Consolidated Edison Company of New York, Inc. The Public Service Commission may also ultimately become an intended user of this report.

DEFINITION OF FAIR MARKET VALUE The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and passing of title from seller to buyer under conditions whereby:

• Buyer and seller are typically motivated; • Both parties are well informed or well advised and each acting in what he considers his own best interest; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • The price represents normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.1

PROPERTY RIGHTS APPRAISED The real property interest to be appraised is the fee simple interest. Fee Simple Interest is defined as: “Absolute ownership unencumbered by any other interest of estate, subject only to the limitations imposed by the powers of taxation, eminent domain, police power, and escheat”2

1 The Dictionary of Real Estate, Fifth Edition 2010, Page 123 2 The Dictionary of Real Estate, Fifth Edition 2010, Page 78

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EFFECTIVE DATE OF APPRAISAL The properties are valued as of November 1, 2015

PROPERTY INSPECTION The subject properties were inspected by William Picoli and John T. Farrell on February 24, 2015. Randal Grenier inspected the subject properties on March 13, 2015.

OWNERSHIP The current owner of the subject properties is the Consolidated Edison Company of New York, Inc. We are not aware of any transfers of the subject properties within the last five years.

SCOPE OF WORK This valuation takes into consideration the three traditional appraisal approaches, namely the Income, Sales Comparison, and Cost Approaches to value. The subject property has been valued using the Sales Comparison Approach.

In appraising the properties an inspection was made of each property and the surrounding neighborhood. Analysis and consideration was given to location, surrounding uses, market trends, property type, physical condition, zoning, highest and best use, comparable improved property sales, as well as the overall economic conditions existing and anticipated as of the date of the appraisal. Highest and best use was reviewed in terms of physical and location characteristics plus current and foreseeable market conditions.

This appraisal has been completed in compliance with the reporting requirements set forth under the Uniform Standards of Professional Appraisal Practice of the Appraisal Institute and the Appraisal Standards Board. Additional steps taken to complete this appraisal are described in each valuation section of the report.

EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS An extraordinary assumption is an assumption directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property, or about conditions external to the subject property, such as market conditions or trends; or about the integrity of data used in an analysis. This appraisal assumes that Parcel 3, located at West 1st Street (Block 2376, Lot 50) would be purchased in conjunction with Parcel 2 (87 River Street, Block 2361, Lot 1R) and would be developed as a park. Parcel 3 is located directly north of Grand Ferry Park and the configuration of the lot is not conducive to large-scale development. Considering that the zoning lots share a contiguous boundary, we have assumed that the lot would be developed as a public promenade/park and the parcel’s developable area would be transferred to the parcel located at 87 River Street (Block 2361, Lot 1R). Additionally, we assume that the sites are free of any significant contamination that would inhibit the properties being put to their highest and best use.

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A hypothetical condition is that which is contrary to what exists but is assumed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends. There are no hypothetical conditions in this analysis. NORTH BROOKLYN REAL ESTATE MARKET ANALYSIS The real estate market in Brooklyn exhibited signs of continued growth throughout the first half of 2015. The average transaction size in the first half of 2015 was $5.08 million, representing a 61.2% increase over the $3.15 million transaction size observed during the first half of 2014. Furthermore, the number of transactions greater than $10 million nearly doubled from 68 in the first half of 2014 to 113 during the first half of 2015. The North Brooklyn market, which includes the neighborhoods of Williamsburg and Greenpoint, contained the highest overall dollar volume with over $1.2 Billion in total sales across 103 transactions. This region also had the largest dollar volume of development in Brooklyn within the Mixed-Use and Development categories. Additionally, the North Brooklyn market had the largest Mixed-Use transaction of the first half of 2015 with the sale of 184 Kent Avenue in Williamsburg, which sold for $275 million.

Source: TerraCRG Semi-Annual Report - 2015

Price indicators were up on an annual basis in the North Brooklyn (Greenpoint/Williamsburg) residential market in 2014. Aside from the median sales price, which edged lower by 4.4% from 3Q 2014 levels, all price indicators registered gains over levels observed in the prior year quarter. On a quarterly basis, average and median prices per square foot for condominiums decreased, but overall sales activity surged by 77.0%. As of the 3rd quarter of 2015, the median sales price for a residential dwelling in North Brooklyn was $875,000. North Brooklyn Residential Market Matrix 3Q 2015 % Change (QTR) 2Q 2015 % Change (YR) 3Q 2014 Average Sales Price $1,133,071 -18.5% $1,390,013 7.7% $1,051,927 Average Price Per Sq. Ft. $1,176 0.1% $1,175 39.5% $843 Condo $1,007 -2.5% $1,033 2.4% $983 Median Sales Price $875,000 -16.7% $1,050,000 -4.4% $915,000 Number of Sales 239 77.0% 135 58.3% 151 Source: The Elliman Report 3Q 2015 - Brooklyn

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New Development Pipeline: The following developments were observed to be under construction in the vicinity of the subject property along Kent Avenue as of the date of inspection. Additional details regarding each development and a rendering of the projects’ expected appearance are presented below.

149 Kent Avenue Property Photograph Property Information

Type: Rental Apartments

Developer: L + M Development Partners

Estimated Completion: Spring 2016

Planned Residential Units: 164

New Domino – 316 Kent Avenue Property Photograph Property Information

Type: Mixed-Use Residential

Developer: Two Trees

Estimated Completion: 2025 (Final Phase)

Planned Residential Units: ± 2,300

429 Kent Avenue – The Oosten Property Photograph Property Information

Type: Condominium

Developer: XIN Development

Estimated Completion: December 2015

Planned Residential Units: 216

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Conclusion: The real estate market in North Brooklyn has experienced growth across virtually all asset classes in recent years as New York City’s economy has recovered from the recession. The neighborhood of Williamsburg has been especially appealing to the media and technology demographic that has expanded rapidly with the growth of the technology industry in New York City. Investor sentiment appears to be high as evidenced by the volume of new residential and commercial projects currently under construction in the neighborhood. The high concentration of new residential building stock being delivered to the market has caused investors to examine sites for infill office, hotel, and retail development to support the influx of residents to the neighborhood.

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NEIGHBORHOOD ANALYSIS The subject property is located in the Williamsburg neighborhood of Brooklyn. Additionally, the subject falls within the boundaries identified as Brooklyn Community District 1. A breakdown of the most recent data regarding land use in the subject’s Community District is presented in the following exhibits:

Brooklyn Community District 1 Map Brooklyn Community District 1 Land Use Profile 2014: Lot Area Lots Sq. Ft. (000) % 1-2 family Residential 2,615 5,083.4 5.3 Multifamily Residential 6,183 22,846.6 23.9 Mixed Resid. / Commercial 2,557 9,067.4 9.5 Commercial / Office 512 3,432.5 3.6 Industrial 1,436 26,201.8 27.4 Transportation / Utility 194 9,235.6 9.7 Institutions 351 4,990.5 5.2 Open Space / Recreation 79 4,833.1 5.1 Parking Facilities 523 3,358.3 3.5 Vacant Land 400 2,710.4 2.8 Miscellaneous 321 3,853.4 4.0 Total 15,171 95,613 100

Land Use Map 2014: Legend:

Residential Uses

One & Two Family Buildings

Multi-Family Buildings

Mixed Resid. / Comm. Buildings Non-Residential Uses

Commercial / Office Buildings

Industrial / Manufacturing

Open Space and Outdoor Rec.

Public Facilities and Institutions

Transportation and Utility

Parking Facilities

Vacant Land

Source: New York City Department of City Planning

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As shown in the tables and map on the preceding page, District 1 is highly developed with minimal vacant land (2.8%). 23.9% of land is developed with multi-family residential buildings and an additional 9.50% is developed with mixed-use residential/commercial buildings. Industrial uses account for 27.4% of the land usage within District 1. Office buildings account for 3.6% of the total developed land and transportation/utility uses occupy an additional 9.7% of the land area.

Community District 1 recorded a 7.9% increase in population between the years 2000 and 2010. As of the 2010 Census, the total population of the district was 173,083, up from 160,338 in 2000. The median and average household income figures for the subject’s district in 2013 were $50,778 and $72,434, respectively. The median 2013 home value was $687,800. Of the 60,608 occupied housing units in the subject’s district, 9,849 (16.3%) were owner occupied as of the 2013 American Community Survey.

Once a primarily industrial area, Williamsburg has transformed dramatically into a trendy neighborhood that is home to a wide array of unique restaurants, stylish clothing boutiques and a vibrant nightlife scene.

Starting in the early 1990’s, artists in WILLIAMSBURG search of relief from Manhattan’s rising rents settled in Williamsburg and created a bohemian community that was the catalyst for the neighborhood’s metamorphosis into one of the most fashionable neighborhoods for young professionals in New York City. Following the adoption of the Greenpoint-Williamsburg Rezoning Plan in 2005, luxury apartment buildings began to replace the former warehouse and industrial buildings that once lined the neighborhoods streets and the East River waterfront.

Conclusion: The subject properties are located along the East River waterfront which has experienced a wave of redevelopment following the 2005 rezoning. Immediately to the north of the subject is 184 Kent, the former Austin Nichols warehouse which has been converted to a luxury rental apartment building with retail at grade. Further up Kent Avenue are the Edge Condominium Towers which contain a combined 205 units overlooking the East River and Bushwick Inlet Park. A few blocks to the south of the subject is the Domino Sugar Factory redevelopment project which will add 2,200 units to Williamsburg’s housing stock upon completion. Located 10 minutes from the BMT Canarsie Line L Train, the subject is well positioned for a variety of potential uses.

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PROPERTY DESCRIPTION

Site

Location: Waterfront parcels located along the East River between North 1st Street and North 3rd Street in the Williamsburg neighborhood of the Borough of Brooklyn, in the county of Kings, City and State of New York.

Shape: Varies, see Land Map for additional information

Area: Parcel 1: 105 River Street is a waterfront parcel that features 203.0 feet of frontage along River Street, 283.0 feet of frontage along North 3rd Street, 282.0 feet of frontage along Metropolitan Avenue., and approximately 220 feet of frontage along the East River. The total upland area of the site is approximately 57,348 square feet.

Parcel 2: 87 River Street is a waterfront parcel that features 180.75 feet of frontage along River Street and approximately 290.0 feet of frontage along Metropolitan Avenue, 265.0 feet of frontage along North 1st Street, and 200.0 feet of frontage along the East River. The total upland area of the site is approximately 50,431 square feet.

Parcel 3: West 1st Street is a waterfront parcel that features 61.0 feet of frontage along West 1st Street and 278.0 feet of frontage along the East River. The total upland area of the site is approximately 12,627 square feet.

Topography: While a measured site survey was not performed to determine the exact grade change, the sites observed to slope downward slightly from River Street to the East River.

Zoning: M3-1; 2.0 Commercial FAR

Street Improvements: Typical improvements including sidewalks, street lighting, curbs and gutters were present in the area.

Utilities: All public utilities, including water, sewer, gas, electricity and telephone, are available to the sites.

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Access: Access to the sites is available from River Street, Metropolitan Avenue, North 3rd Street and North 1st Street.

Soil Conditions: The appraisers did not receive or review a current soil report. This appraisal report assumes that the soil's load- bearing capacity is adequate to support multi-story improvements similar to those present on the surrounding and nearby blocks. We observed no evidence to the contrary during our physical inspection of the property. The tract's drainage appears to be adequate.

Land Use Restrictions: There appraisers were not given a title report to review and thus do not know of any easements, encroachments, or restrictions that would adversely affect the subject site’s use. However, a title search to determine whether any adverse conditions exist is recommended.

Hazardous Substances: This appraisal assumes that no hazardous materials, such as toxic soil or contaminated groundwater, are present on the subject site.

Site Improvements: Vacant Land.

ASSESSED VALUE AND REAL ESTATE TAXES

The subject properties are identified as Block 2355 / Lot 1R (Parcel 1), Block 2361 / Lot 1R (Parcel 2), and Block 2376 / Lot 50 (Parcel 3) on New York City’s tax rolls. Parcels 1 and 2 are designated as tax class 3 (utility) for which the 2015/2016 tax rate is 10.813% while Parcel 3 is designated as tax class 4 (commercial) for which the corresponding 2015/2016 tax rate is 10.656%. No assessment for Parcels 1 and 2 currently exists on file with the New York City Department of Finance. Upon a sale of these parcels to a new owner for redevelopment, the site would be reassessed based on the value of comparable properties in the current market and the current assessment ratio. The 2015/2016 assessment and real estate tax liability for Parcel 3 is presented below.

Assessed Value And Real Estate Taxes

Block 2376 Lot 50 2015/16 Actual 2015/16 Transitional Land $121,950 $121,950 Improvements $39,600 $36,000 Total $161,550 $157,950 Class 4 Tax Rate $10.656 per $100 Estimated Taxes $16,831

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ZONING ANALYSIS The subject site is located within an M3-1 Manufacturing Zoning District. According to the Department of City planning, M3 districts are designated for areas with heavy industries that generate noise, traffic or pollutants. Typical uses include power plants and solid waste transfer facilities, but a wide range of commercial uses are permitted within the district. M3 districts are usually located near the waterfront and buffered from residential areas. The subject is adjacent to R8 zoning districts to the north and south along the East River waterfront. Projects along the waterfront that have been rezoned for residential use have also generally included a C2-4 commercial overlay. Considering this, along with the precedent set by neighboring redevelopment projects, it is assumed that the site could achieve rezoning to an R8 district with a commercial overlay through a Uniform Land Use Review Procedure (ULURP) to permit residential usage. Basic zoning guidelines for both districts are presented below. Current M3-1 Zoning Anticipated R8 Rezoning Scenario

As-of-Right FAR Comparison By Zoning District Current M3-1 Zoning

Anticipated R8 Rezoning Scenario

Source: New York City Department of City Planning

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WATERFRONT ZONING

As waterfront lots, the properties are subject to additional zoning regulations. The configuration of any future development bulk on the parcels would have to conform to public access and visual corridor requirements as set forth for waterfront lots by the Department of City Planning. These regulations were enacted in 2009 to ensure the development of public spaces along the waterfront. Additional information on each component, obtained from the Department of City Planning, is presented below.

Public Access Requirements

Waterfront zoning lots are required to provide and maintain public open space at the water’s edge with pedestrian links to upland communities. Public access is also mandated on piers, platforms and floating structures. Water-dependent uses, such as docks for ferries and marinas, are also required to provide waterfront public access areas but are subject to a more flexible standard. In districts permitting an FAR greater than 4.0, the minimum lot area dedicated to public access must be 20 percent.

Waterfront public access areas have three components: shore public walkways, upland connections and supplemental public access areas. Shore public walkways, which must be located on the waterfront yard, provide the public with a place to stroll and sit along the shoreline, and upland connections give direct access to the shore public walkway at regular intervals (at least every 600 feet) from upland public streets or other public places. A supplemental public access area is required only when the combined space devoted to the shore public walkway and upland connections does not fulfill the minimum square footage requirement for public access on a zoning lot. This additional open space must complement the shore public walkway, having similar design elements that enhance the experience along the water’s edge. An accessible lawn must be provided when the supplemental area is of a substantial size. In addition, space for active recreation, such as playgrounds or dedicated bike paths, may be incorporated into the supplemental public access area.

Visual Corridors

Waterfront zoning also requires visual corridors, which are open areas that provide an unobstructed view from upland streets through a waterfront zoning lot to the shoreline. Intended to extend existing views to the shore from the upland communities, visual corridors are required at regular intervals corresponding to the existing street grid, or spaced between 400 and 600 feet apart. Visual corridors, which are not required to be open to the public, may contain certain obstructions such as parking and trees

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ZONING MAP

Zoning Map 12c (Excerpt) Source: New York City Department of City Planning

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2005 Greenpoint-Williamsburg Rezoning

On May 11, 2005, New York City Council adopted a large-scale rezoning of the north Williamsburg and Greenpoint waterfront. In response to the declining manufacturing industry in the area, much of the waterfront was rezoned to allow for higher density residential use. The zoning plan set forth strict guidelines for redevelopment in the area with the intent of creating a continuous row of promenades and parks along the north Brooklyn waterfront. Additionally, the plan contained an inclusionary housing provision that aimed to provide developers with economic incentives in exchange for the creation of additional affordable housing in the area. As manufacturing and light industrial activity declined in the region, many of the warehouses that lined the waterfront prior to the rezoning of 2005 had been abandoned and fallen into a state of disrepair.

The maps below illustrate the zoning districts prior to the 2005 rezoning (left map) and the current zoning map with all rezoning activity from 2002 to present highlighted (right map). The location of the subject has been added to each map to illustrate the compatibility for a residential rezoning based on adjacent rezoning activity.

Zoning Prior to 2005: After 2005 Rezoning:

Source: New York City Department of City Planning

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2005 Greenpoint-Williamsburg Waterfront Access Plan

The subject properties are not located within the boundaries of the comprehensive Greenpoint- Williamsburg Waterfront Access Plan. However, given the location of the subject sites, there is a possibility that any approved rezoning activity at the properties would stipulate that the guidelines of the Greenpoint-Williamsburg Waterfront Access Plan be applied to future development at the properties.

On the large waterfront sites in Greenpoint-Williamsburg, an Inclusionary Housing bonus has been tailored to the urban design plan for this waterfront area, and designed to facilitate the creation of affordable housing on large sites that will undergo phased development. The following table outlines maximum Floor Area Ratios and maximum heights in different zoning districts with and without the Inclusionary Housing bonus:

Without Bonus With Incl. Housing Bonus District Max. FAR Max. Height Max. FAR Max. Height Blended R6/R8 3.7 150’/230’/330 4.7 150’/300’/400’ R6 2.43 150’’ 2.75 150’ R8 4.88 230’/330’ 6.5 300’/400’

Sites within the area governed by the Greenpoint-Williamsburg Waterfront Access Plan (WAP) are subject to special regulations for height, bulk, floor area distribution, streetscape, and waterfront access. For instance, development on a waterfront parcel requires the construction and maintenance of public access areas in accordance with the Greenpoint- Williamsburg WAP.

Waterfront developments on blended R6/R8 sites are eligible for a floor area bonus as well as a height bonus of up to 70 feet in R8 districts. On a site located within both R6 and R8 districts, developments must provide the following amount of affordable housing to earn the bonus: • 20% of floor area affordable to low-income households (below 80% of Area Median Income (AMI)); or • 10% of floor area affordable to low-income households (below 80% AMI), plus 15% of floor area affordable to moderate-income households (below 125% AMI).

Inclusionary Housing Bonus on a Blended R6/R8 Waterfront Parcel

Source: New York City Department of City Planning

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HIGHEST AND BEST USE

The reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.3 The following highest and best use analysis is subject to the assumptions and limiting conditions set forth in this report.

In determining the highest and best use, consideration was given to the following factors, among others: (a) the size and physical characteristics of the subject site and improvements, (b) applicable zoning regulations and property restrictions, (c) the subject’s location and neighborhood property uses, (d) the current trends of supply and demand in the market, and (e) rents and sale prices obtained in the market.

The following four tests of highest and best use were applied to the subject property at 218 Kent Avenue.

1. Legally Permissible Use – An investigation into existing zoning regulations, lease terms, and deed restrictions on the site to determine which uses are legally permitted; 2. Possible Use – An analysis to determine those uses of the subject which can be deemed physically possible; 3. Financial Feasibility – An analysis to determine which of those uses deemed possible and legal can provide a net return to the owner of the site; 4. Maximally Productive – Among the feasible uses, the use which will provide the highest net return or highest present worth is considered maximally productive.

The subject sites are currently vacant; therefore a highest and best use analysis “as improved” is not necessary. The analysis of the highest and best use of the subject parcel “as vacant” appears below.

Legally Permissible

As Zoned M3-1: All uses contained in Use Groups #6-14 and #16-18 are permitted within M3-1 zoning districts. This includes a wide range of manufacturing, retail and office uses. Transient hotel and residential uses are not permitted as-of-right in M3-1 zoning districts. A special permit or variance would be required to allow hotel use in the district.

As If Rezoned to R8: R8 districts permit multifamily residential uses as well as community facility uses as-of-right. In the absence of a commercial overlay, office and retail uses are not permitted in R8 zoning districts. New York City laws provide the ability to apply for a rezoning of a property through the ULURP process. The immediately surrounding properties along the waterfront have been rezoned to allow residential uses with commercial/retail uses at grade.

3 The Dictionary of Real Estate, Fifth Edition 2010, Page 93

Con Edison – Three Williamsburg Parcels 23

Physically Possible

Size, shape, and terrain affect the uses for which land may be developed. The parcels’’ land area is sufficiently large to support a variety of land uses. There are no known obstructions at the sites which would adversely affect their use. Furthermore, the configuration and shape of the sites are desirable for commercial or residential development.

Financial Feasibility

Those uses that are likely to produce an income that will satisfy operating expenses, financing costs, and an adequate return on and return of capital are considered here. All uses that are expected to produce a positive return are regarded as financially feasible. Numerous sales of residential and commercially zoned land have recently occurred in Williamsburg, suggesting that investors believe there is adequate demand to justify the feasibility of such redevelopment projects.

As Zoned M3-1: With several large-scale residential development projects currently planned and under construction in the vicinity of the subject sites in Williamsburg, such as the New Domino and 420 Kent developments, evidence suggests that ancillary light industrial, office/retail uses would be economically feasible at the subject site given the area’s rapidly growing residential base.

As If Rezoned to R8: The heavy residential development pipeline in the immediate area combined with the steady annual gains in land values provides conclusive evidence that as rezoned to an R8 district, residential development to the maximum FAR permitted would be economically feasible at the subject sites. Additionally, the proximity of the subject sites to public transportation and neighborhood amenities make them a desirable location for residential development. There are numerous examples of rezoning activity throughout New York City and Brooklyn. The cost and time to achieve a rezoning suggests that to undertake such an effort would be both highly profitable and feasible.

Maximally Productive

The maximally productive use is that which will produce the highest net return or the highest present worth, among all feasible uses. The maximally productive use of the subject properties as zoned M3-1 is for commercial light industrial, office/retail use, with a possible variance for hotel use, while the maximally productive use of the subject sites as rezoned R8 is for residential development with a retail component at grade.

Conclusion: Highest and Best Use as Vacant

Williamsburg’s relatively rapid transformation from an industrial area to one of New York’s most fashionable neighborhoods has had a dramatic effect on the investment activity and the development pipeline of the area. While the sites are currently zoned for manufacturing and commercial use, a rezoning for residential use is possible through the Uniform Land Use Review Procedure (ULURP). The ULURP application process can take 2.5 years to complete, requiring public hearings, approval from the City Planning Commission, and a final review by the City Council and the Mayor.

Con Edison – Three Williamsburg Parcels 24

However, developers in flourishing markets such as Williamsburg often find the rewards associated with rezoning are worth the additional risk and effort associated with the ULURP process.

Alternatively, under the current zoning the properties are well positioned as urban infill projects to support the new residential development pipeline with office/retail uses. Numerous sites in the area that are zoned for manufacturing use have traded recently with plans for conversion to hotel, retail, or other commercial uses. Within the M3-1 zone, a variance would be required to allow hotel use. A use that is permitted as-of-right under the current zoning would not require a variance or a ULURP process and the development risk associated with a special permit or the rezoning uncertainty would effectively be eliminated.

Given the unique conditions currently present in Williamsburg’s real estate market, the highest and best use of the subject properties as vacant has been concluded to be for either as-of-right office/retail use development, or for hotel development with a variance, or for residential use development by way of pursuing a rezoning application under the ULURP process.

Con Edison – Three Williamsburg Parcels 25

METHOD OF VALUATION

This appraisal takes into consideration the three traditional appraisal approaches, namely the Income, Sales Comparison, and Cost Approaches to value.

The Income Capitalization Approach is based on the principle of anticipation, which assumes that value is created by the expectation of benefits to be derived in the future, considering the risks involved. The amount an investor would be willing to pay to receive an income stream over time plus a reversion at the termination of a holding period is estimated by this approach. The Income Approach is not utilized in our valuation.

The Cost Approach is traditionally a good indicator of value for recently built, non-income- producing and special use properties. However, real estate investors today give little consideration to the cost method as a sole indicator of value for properties such as the subjects of this appraisal.

The Sales Comparison Approach estimates market value by comparing the subject with comparable properties that have sold recently in the same market. The Sales Comparison Approach is based on the principle of substitution, which states that a knowledgeable investor will pay no more for a property than the amount that would be paid for a comparable substitute property. Since there have been several transfers of development sites in Williamsburg within the last 30 months that are fairly similar to the subject properties, the Sales Comparison Approach is utilized in the valuation.

The Sales Comparison Approach to value is used exclusively to value the subject properties under their highest and best use as commercial or residential development sites. The following sections of the report discuss the valuation of the subject properties based on the Sales Comparison Approach to value.

Con Edison – Three Williamsburg Parcels 26

SALES COMPARISON APPROACH

In the Sales Comparison Approach, a market value estimate is predicated upon prices paid in actual market transactions for similar property. The sales prices of the comparables are adjusted to the characteristics of the subject property. The major premise of the Sales Comparison Approach is that the market value of a property is directly related to the prices of comparable competitive properties. Based on the principle of substitution, an informed purchaser will pay no more for a property than the cost of acquiring an alternative property with the same utility. The price paid is usually the result of an extensive shopping process in which the purchaser is constantly comparing available alternatives. A key strength of this method is that it directly reflects the actions of buyers and sellers in the marketplace. The Sales Comparison Approach is most often relied on for valuing vacant land.

The Sales Comparison Approach provides the most reliable indication of value when sales of similar properties are available and the necessary adjustments are few in number and relatively minor. Research of the market produced an adequate number of transactions of similarly zoned development sites to fully develop the Sales Comparison Approach to value the subject properties. For comparative purposes, each of the sales was analyzed on a price per square foot of FAR (floor area ratio), or potential zoning development bulk basis. Relying on the indications of the Highest and Best Use Analysis, the subject sites have been valued under two separate scenarios. The first assumes commercial redevelopment (retail and office uses) under the existing M3-1 manufacturing zoning and hotel with a variance. The second presumes a reasonable probability that the sites can successfully achieve R8 rezoning to permit residential development. As such, a survey was performed to identify land sales purchased within the immediate Williamsburg neighborhood for both commercial and residential redevelopment. The intended use of each comparable sale was verified through industry professionals, published reports, and/or New York City Department of Buildings job filings. The parcels have first been valued under the aforementioned scenarios as two distinct pieces, and then as one large assembled property to examine the impact of a bulk sale on value. Market research identified conveyances of land sites for commercial and residential development that are considered fairly similar to the potential of the subject sites in most respects and transferred within 30 months of the valuation date. Separate land sales summary and adjustment grids are prepared for the commercial and residential land sales. The comparable sales adjustment grids are located on the following pages and are followed by an explanation of the quantitative and qualitative adjustments that were applied to each comparable sale.

Con Edison – Three Williamsburg Parcels 27

PARCEL 1: 105 RIVER STREET COMPARABLE MANUFACTURING-ZONED SALES ANALYSIS

COMPARABLE M-ZONED LAND SALES SUMMARY AND ADJUSTMENT GRID MANUFACTURING-ZONED PROPERTIES

Property Data SUBJECT Sale M - 1 Sale M - 2 Sale M - 3 Sale M - 4 Sale M - 5 Address 105 River Street 342 Wythe Avenue 103 North 13th Street 93-97 Wythe Avenue 121 North 12th Street & 206 Kent Avenue 94 North 13th Street Cross Street River Street & Btw. South 1st & Btw. Wythe Ave & North 9th & Btw. North 12th & Btw. Metropolitan Ave & North 3rd Street South 2nd Streets Berry Street North 10th Street North 13th Streets North 3rd Street Neighborhood Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg

Tax Block / Lot 2355 / 1R 2403 / 31 2279 / 34 2303 / 1,7,8 2283 /1,10 2356 / 1 Land Area (Sq. Ft.) 57,348 8,633 12,500 20,000 50,000 22,640 Frontage Waterfront Midlock/Corner Midblock Blockfront Blockfront Full Block Improvements 1-Story Industrial 1-Story Industrial 1-Story Industrial 1-Story Industrial Vacant Lot Gross Building Area (Sq. Ft.) - 8,625 12,469 20,000 38,779 0 Configuration Rectangular Irregular Rectangular Rectangular Rectangular Rectangular

Zoning M3-1 M3-1 M1-2 M1-2 M1-2 M3-1 Effective FAR 2.00 2.00 2.00 2.00 2.00 2.00 Land Area X FAR 114,695 17,266 25,000 40,000 100,000 45,280 Area of TDRs Purchased/Bonus Received 0 0 0 0 0 Total Developable Area 114,695 17,266 25,000 40,000 100,000 45,280

Intended Development Use Unknown Hotel Retail/Hotel Hotel / Retail Unknown Sale Data Valuation / Contract Date 11/1/2015 8/14/2014 10/2/2013 8/28/2013 8/27/2013 8/12/2013 Sale Date 1/28/2015 6/2/2014 8/28/2013 5/4/2014 1/29/2014 Sale Price $7,500,000 $8,200,000 $17,000,000 $26,500,000 $18,000,000 Estimated Demolition Costs: $25 psf $215,625 $311,725 $500,000 $969,475 $0 Ancillary Development Costs $0 $0 $0 $0 $0 Adjusted Sale Price $7,715,625 $8,511,725 $17,500,000 $27,469,475 $18,000,000 Price per Sq. Ft. of Land $894 $681 $875 $549 $795 Price per Sq. Ft. of FAR $447 $340 $438 $275 $398 Adjustment for Market Conditions Months Since Sale 14 25 26 26 26 2013 2014 2015 Adjustment/Month 1.50% 1.00% 0.50% 9.00% 21.50% 23.00% 23.00% 23.00% Adjusted Land Price per Sq. Ft. $487 $414 $538 $338 $489 Qualitative Adjustments Location 5% 10% 0% 10% 0% Retail Potential 0% 0% 0% 0% 0% Site Size & Configuration 5% 5% 5% 0% 5% Developable Area -15% -15% -10% 0% -10% Waterfront Exposure 5% 5% 5% 5% 5% Corner Exposure/Visibility 0% 5% 0% 0% 0% Total Qualitative Adjustments 0% 10% 0% 15% 0% Adjusted Land Value per Sq. Ft. $487 $455 $538 $389 $489 Indicated Land Value per Sq. Ft. $475 Total Developable Area 114,695 Market Value $54,480,125

Con Edison – Three Williamsburg Parcels 28

PARCEL 1: 105 RIVER STREET COMPARABLE RESIDENTIAL-ZONED SALES ANALYSIS

COMPARABLE RESIDENTIAL LAND SALES SUMMARY AND ADJUSTMENT GRID RESIDENTIAL-ZONED PROPERTIES

Property Data SUBJECT Sale R - 1 Sale R - 2 Sale R - 3 Sale R - 4 Sale R - 5 Address 105 River Street 296 Wythe Avenue 418-438 Kent Avenue 161 West Street 510 Driggs Ave 190-96 South 1st St.

Cross Street River Street & SWC Wythe Avenue & Btw. Broadway and South NWC West & Huron Streets Btw. North 8th & SEC Driggs Ave & South North 3rd Street North 1st Street 9th Street North 9th Streets 1st Street Neighborhood Williamsburg Williamsburg Williamsburg Greenpoint Williamsburg Williamsburg 2128 / 5 Tax Block / Lot 2355 / 1R 2378 / 21, 26 2134 / 56 2520 / 1 2312 / 23 2407 / 5,9,11 Land Area (Sq. Ft.) 57,348 15,810 57,973 65,000 17,500 12,829 Frontage Waterfront Blockfront Midblock Blockfront / Waterfront Blockfront Corner Improvements 1-Story Industrial 2-Story Industrial 2-Story Industrial Vacant Lot 1-Story Industrial Gross Building Area (Sq. Ft.) - 16,100 60,800 80,000 0 6,600 Configuration Rectangular Irregular Irregular Rectangular Rectangular Irregular M1-2/R6A, R6 Zoning R8 R6B - MX-8 R7-3 C2-4 Overlay M1-2/R6A - MX-8 R6 Effective FAR 6.02 (1) 2.00 & 2.70 3.75 2.43 2.70 2.43 Land Area X FAR 345,232 39,814 600,000 157,950 47,250 31,174 Area of TDRs Purchased/Bonus Received 0 0 0 0 0 Total Developable Area 345,232 39,814 600,000 157,950 47,250 31,174 Intended Development Use Mixed-Use Mixed-Use Residential Mixed-Use Mixed-Use Residential Residential Residential Residential Sale Data Valuation / Contract Date 11/1/2015 6/5/2015 8/15/2014 7/31/2014 2/21/2014 11/29/2013 Sale Date 11/6/2015 2/4/2015 7/31/2014 9/17/2014 4/29/2014 Sale Price $26,500,000 $165,000,000 $45,500,000 $35,000,000 $12,000,000 Estimated Demolition Costs: $25 psf $402,500 $1,520,000 $2,000,000 $0 $165,000 Ancillary Development Costs $0 $10,000,000 (2) $0 $0 $0 Adjusted Sale Price $26,902,500 $176,520,000 $47,500,000 $35,000,000 $12,165,000 Price per Sq. Ft. of Land $1,671 $3,045 $731 $2,000 $948 Price per Sq. Ft. of FAR $676 $294 $301 $741 $390 Adjustment for Market Conditions Months Since Sale 5 15 15 21 23 2013 2014 2015 Adjustment/Month 1.50% 1.00% 0.50% 2.50% 10.00% 10.00% 16.00% 18.50% Adjusted Land Price per Sq. Ft. $693 $324 $331 $859 $462 Qualitative Adjustments Location 0% 10% 20% -20% 0% Retail Potential 0% 10% 0% -20% 0% Site Size & Configuration 5% 5% 0% 5% 5% Developable Area -15% 5% -5% -15% -15% Waterfront Exposure 5% 0% 0% 5% 5% Corner Exposure/Visibility 0% 0% 0% 0% 0% Total Qualitative Adjustments -5% 30% 15% -45% -5% Adjusted Land Value per Sq. Ft. $658 $421 $380 $473 $439 Indicated Land Value per Sq. Ft. $450 Total Developable Area 345,232 Market Value $155,354,378 (1) FAR at anticipated R8 rezoning (2) Estimated cost to construct the required public access waterfront promenade

Con Edison – Three Williamsburg Parcels 29

PARCELS 2 & 3: 87 RIVER STREET / WEST 1ST STREET COMPARABLE MANUFACTURING-ZONED SALES ANALYSIS

COMPARABLE M-ZONED LAND SALES SUMMARY AND ADJUSTMENT GRID MANUFACTURING-ZONED PROPERTIES

Property Data SUBJECT Sale M - 1 Sale M - 2 Sale M - 3 Sale M - 4 Sale M - 5 Address 87 River Street/ 342 Wythe Avenue 103 North 13th Street 93-97 Wythe Avenue 121 North 12th Street & 206 Kent Avenue West 1st Street 94 North 13th Street Cross Street River Street & Btw. South 1st & Btw. Wythe Ave & North 9th & Btw. North 12th & Btw. Metropolitan Ave & Metropolitan Ave. South 2nd Streets Berry Street North 10th Street North 13th Streets North 3rd Street Neighborhood Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg 2361/1R Tax Block / Lot 2376/50 2403 / 31 2279 / 34 2303 / 1,7,8 2283 /1,10 2356 / 1 Land Area (Sq. Ft.) 63,058 8,633 12,500 20,000 50,000 22,640 Frontage Waterfront Midlock/Corner Midblock Blockfront Blockfront Full Block Improvements 1-Story Industrial 1-Story Industrial 1-Story Industrial 1-Story Industrial Vacant Lot Gross Building Area (Sq. Ft.) - 8,625 12,469 20,000 38,779 0 Configuration Rectangular Irregular Rectangular Rectangular Rectangular Rectangular

Zoning M3-1 M3-1 M1-2 M1-2 M1-2 M3-1 Effective FAR 2.00 2.00 2.00 2.00 2.00 2.00 Land Area X FAR 126,116 17,266 25,000 40,000 100,000 45,280 Area of TDRs Purchased/Bonus Received 0 0 0 0 0 Total Developable Area 126,116 17,266 25,000 40,000 100,000 45,280

Intended Development Use Unknown Hotel Retail/Hotel Hotel / Retail Unknown Sale Data Valuation / Contract Date 11/1/2015 8/14/2014 10/2/2013 8/28/2013 8/27/2013 8/12/2013 Sale Date 1/28/2015 6/2/2014 8/28/2013 5/4/2014 1/29/2014 Sale Price $7,500,000 $8,200,000 $17,000,000 $26,500,000 $18,000,000 Estimated Demolition Costs: $25 psf $215,625 $311,725 $500,000 $969,475 $0 Ancillary Development Costs $0 $0 $0 $0 $0 Adjusted Sale Price $7,715,625 $8,511,725 $17,500,000 $27,469,475 $18,000,000 Price per Sq. Ft. of Land $894 $681 $875 $549 $795 Price per Sq. Ft. of FAR $447 $340 $438 $275 $398 Adjustment for Market Conditions Months Since Sale 2013 2014 2015 14 25 26 26 26 Adjustment/Month 1.50% 1.00% 0.50% 9.00% 21.50% 23.00% 23.00% 23.00% Adjusted Land Price per Sq. Ft. $487 $414 $538 $338 $489 Qualitative Adjustments Location 5% 10% 0% 10% 0% Retail Potential 0% 0% 0% 0% 0% Site Size & Configuration 5% 5% 5% 0% 5% Developable Area -15% -15% -10% 0% -10% Waterfront Exposure 5% 5% 5% 5% 5% Corner Exposure/Visibility 0% 5% 0% 0% 0% Total Qualitative Adjustments 0% 10% 0% 15% 0% Adjusted Land Value per Sq. Ft. $487 $455 $538 $389 $489 Indicated Land Value per Sq. Ft. $475 Total Developable Area 126,116 Market Value $59,905,100

Con Edison – Three Williamsburg Parcels 30

PARCELS 2 & 3: 87 RIVER STREET / WEST 1ST STREET COMPARABLE RESIDENTIAL-ZONED SALES ANALYSIS

COMPARABLE RESIDENTIAL LAND SALES SUMMARY AND ADJUSTMENT GRID RESIDENTIAL-ZONED PROPERTIES

Property Data SUBJECT Sale R - 1 Sale R - 2 Sale R - 3 Sale R - 4 Sale R - 5 Address 87 River Street/ 296 Wythe Avenue 418-438 Kent Avenue 161 West Street 510 Driggs Ave 190-96 South 1st St. West 1st Street Cross Street River Street & SWC Wythe Avenue & Btw. Broadway and NWC West & Btw. North 8th & SEC Driggs Ave & South Metropolitan Ave. North 1st Street South 9th Street Huron Streets North 9th Streets 1st Street Neighborhood Williamsburg Williamsburg Williamsburg Greenpoint Williamsburg Williamsburg 2361/1R 2128 / 5 Tax Block / Lot 2376/50 2378 / 21, 26 2134 / 56 2520 / 1 2312 / 23 2407 / 5,9,11 Land Area (Sq. Ft.) 63,058 15,810 57,973 65,000 17,500 12,829 Frontage Waterfront Blockfront Midblock Blockfront / Waterfront Blockfront Corner Improvements 1-Story Industrial 2-sty Industrial 2-Story Industrial Vacant Lot 1-Story Industrial Gross Building Area (Sq. Ft.) - 16,100 60,800 80,000 0 6,600 Configuration Rectangular Irregular Irregular Rectangular Rectangular Irregular M1-2/R6A, R6 Zoning R8 R6B - MX-8 R7-3 C2-4 Overlay M1-2/R6A - MX-8 R6 Effective FAR 6.02 (1) 2.00 & 2.70 3.75 2.43 2.70 2.43 Land Area X FAR 379,609 39,814 600,000 157,950 47,250 31,174 Area of TDRs Purchased/Bonus Received 0 0 0 0 0 Total Developable Area 379,609 39,814 600,000 157,950 47,250 31,174 Mixed-Use Mixed-Use Mixed-Use Mixed-Use Intended Development Use Residential Residential Residential Residential Residential Sale Data Valuation / Contract Date 11/1/2015 6/5/2015 8/15/2014 7/31/2014 2/21/2014 11/29/2013 Sale Date 11/6/2015 2/4/2015 7/31/2014 9/17/2014 4/29/2014 Sale Price $26,500,000 $165,000,000 $45,500,000 $35,000,000 $12,000,000 Estimated Demolition Costs: $25 psf $402,500 $1,520,000 $2,000,000 $0 $165,000 Ancillary Development Costs $0 $10,000,000 (2) $0 $0 $0 Adjusted Sale Price $26,902,500 $176,520,000 $47,500,000 $35,000,000 $12,165,000 Price per Sq. Ft. of Land $1,671 $3,045 $731 $2,000 $948 Price per Sq. Ft. of FAR $676 $294 $301 $741 $390 Adjustment for Market Conditions Months Since Sale 2013 2014 2015 5 15 15 21 23 Adjustment/Month 1.50% 1.00% 0.50% 2.50% 10.00% 10.00% 16.00% 18.50% Adjusted Land Price per Sq. Ft. $693 $324 $331 $859 $462 Qualitative Adjustments Location 0% 10% 20% -20% 0% Retail Potential 0% 10% 0% -20% 0% Site Size & Configuration 5% 5% 0% 5% 5% Developable Area -15% 5% -5% -15% -15% Waterfront Exposure 5% 0% 0% 5% 5% Corner Exposure/Visibility 0% 0% 0% 0% 0% Total Qualitative Adjustments -5% 30% 15% -45% -5% Adjusted Land Value per Sq. Ft. $658 $421 $380 $473 $439 Indicated Land Value per Sq. Ft. $450 Total Developable Area 379,609 Market Value $170,824,122 (1) FAR at anticipated R8 rezoning (2) Estimated cost to construct the required public access waterfront promenade

Con Edison – Three Williamsburg Parcels 31

COMBINED PARCELS 1, 2, & 3: COMPARABLE MANUFACTURING-ZONED SALES ANALYSIS

COMPARABLE M-ZONED LAND SALES SUMMARY AND ADJUSTMENT GRID MANUFACTURING-ZONED PROPERTIES

Property Data SUBJECT Sale M - 1 Sale M - 2 Sale M - 3 Sale M - 4 Sale M - 5 Address 105 & 87 River Street/ 342 Wythe Avenue 103 North 13th Street 93-97 Wythe Avenue 121 North 12th Street & 206 Kent Avenue West 1st Street 94 North 13th Street Cross Street River Street & Btw. South 1st & Btw. Wythe Ave & North 9th & Btw. North 12th & Btw. Metropolitan Ave & Metropolitan Ave. South 2nd Streets Berry Street North 10th Street North 13th Streets North 3rd Street Neighborhood Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg 2355 / 1R 2361 / 1R Tax Block / Lot 2376 / 50 2403 / 31 2279 / 34 2303 / 1,7,8 2283 /1,10 2356 / 1 Land Area (Sq. Ft.) 120,406 8,633 12,500 20,000 50,000 22,640 Frontage Waterfront Midlock/Corner Midblock Blockfront Blockfront Full Block Improvements 1-Story Industrial 1-Story Industrial 1-Story Industrial 1-Story Industrial Vacant Lot Gross Building Area (Sq. Ft.) 8,625 12,469 20,000 38,779 0 Configuration Rectangular Irregular Rectangular Rectangular Rectangular Rectangular

Zoning M3-1 M3-1 M1-2 M1-2 M1-2 M3-1 Effective FAR 2.00 2.00 2.00 2.00 2.00 2.00 Land Area X FAR 240,811 17,266 25,000 40,000 100,000 45,280 Area of TDRs Purchased/Bonus Received 0 0 0 0 0 Total Developable Area 240,811 17,266 25,000 40,000 100,000 45,280

Intended Development Use Unknown Hotel Retail/Hotel Hotel / Retail Unknown Sale Data Valuation / Contract Date 11/1/2015 8/14/2014 10/2/2013 8/28/2013 8/27/2013 8/12/2013 Sale Date 1/28/2015 6/2/2014 8/28/2013 5/4/2014 1/29/2014 Sale Price $7,500,000 $8,200,000 $17,000,000 $26,500,000 $18,000,000 Estimated Demolition Costs: $25 psf $215,625 $311,725 $500,000 $969,475 $0 Ancillary Development Costs $0 $0 $0 $0 $0 Adjusted Sale Price $7,715,625 $8,511,725 $17,500,000 $27,469,475 $18,000,000 Price per Sq. Ft. of Land $894 $681 $875 $549 $795 Price per Sq. Ft. of FAR $447 $340 $438 $275 $398 Adjustment for Market Conditions Months Since Sale 2013 2014 2015 14 25 26 26 26 Adjustment/Month 1.50% 1.00% 0.50% 9.00% 21.50% 23.00% 23.00% 23.00% Adjusted Land Price per Sq. Ft. $487 $414 $538 $338 $489 Qualitative Adjustments Location 5% 10% 0% 10% 0% Retail Potential 0% 0% 0% 0% 0% Site Size & Configuration 5% 5% 5% 0% 5% Developable Area -25% -25% -25% -10% -20% Waterfront Exposure 5% 5% 5% 5% 5% Corner Exposure/Visibility 0% 5% 0% 0% 0% Total Qualitative Adjustments -10% 0% -15% 5% -10% Adjusted Land Value per Sq. Ft. $438 $414 $457 $355 $440 Indicated Land Value per Sq. Ft. $425 Total Developable Area 240,811 Market Value $102,344,675

Con Edison – Three Williamsburg Parcels 32

COMBINED PARCELS 1, 2, & 3: COMPARABLE RESIDENTIAL-ZONED SALES ANALYSIS

COMPARABLE RESIDENTIAL LAND SALES SUMMARY AND ADJUSTMENT GRID RESIDENTIAL-ZONED PROPERTIES

Property Data SUBJECT Sale R - 1 Sale R - 2 Sale R - 3 Sale R - 4 Sale R - 5 Address 105 & 87 River Street/ 296 Wythe Avenue 418-438 Kent Avenue 161 West Street 510 Driggs Ave 190-96 South 1st St. West 1st Street Cross Street River Street & SWC Wythe Avenue & Btw. Broadway and NWC West & Huron Btw. North 8th & SEC Driggs Ave & South Metropolitan Ave. North 1st Street South 9th Street Streets North 9th Streets 1st Street Neighborhood Williamsburg Williamsburg Williamsburg Greenpoint Williamsburg Williamsburg 2355 / 1R 2361 / 1R 2128 / 5 Tax Block / Lot 2376 / 50 2378 / 21, 26 2134 / 56 2520 / 1 2312 / 23 2407 / 5,9,11 Land Area (Sq. Ft.) 120,406 15,810 57,973 65,000 17,500 12,829 Frontage Waterfront Blockfront Midblock Blockfront / Waterfront Blockfront Corner Improvements 1-Story Industrial 2-sty Industrial 2-Story Industrial Vacant Lot 1-Story Industrial Gross Building Area (Sq. Ft.) - 16,100 60,800 80,000 0 6,600 Configuration Rectangular Irregular Irregular Rectangular Rectangular Irregular M1-2/R6A, R6 Zoning R8 R6B - MX-8 R7-3 C2-4 Overlay M1-2/R6A - MX-8 R6 Effective FAR 6.02 (1) 2.00 & 2.70 3.75 2.43 2.70 2.43 Land Area X FAR 724,841 39,814 600,000 157,950 47,250 31,174 Area of TDRs Purchased/Bonus Received 0 0 0 0 0 Total Developable Area 724,841 39,814 600,000 157,950 47,250 31,174 Mixed-Use Mixed-Use Mixed-Use Mixed-Use Intended Development Use Residential Residential Residential Residential Residential Sale Data Valuation / Contract Date 11/1/2015 6/5/2015 8/15/2014 7/31/2014 2/21/2014 11/29/2013 Sale Date 11/6/2015 2/4/2015 7/31/2014 9/17/2014 4/29/2014 Sale Price $26,500,000 $165,000,000 $45,500,000 $35,000,000 $12,000,000 Estimated Demolition Costs: $25 psf $402,500 $1,520,000 $2,000,000 $0 $165,000 Ancillary Development Costs $0 $10,000,000 (2) $0 $0 $0 Adjusted Sale Price $26,902,500 $176,520,000 $47,500,000 $35,000,000 $12,165,000 Price per Sq. Ft. of Land $1,671 $3,045 $731 $2,000 $948 Price per Sq. Ft. of FAR $676 $294 $301 $741 $390 Adjustment for Market Conditions Months Since Sale 2013 2014 2015 5 15 15 21 23 Adjustment/Month 1.50% 1.00% 0.50% 2.50% 10.00% 10.00% 16.00% 18.50% Adjusted Land Price per Sq. Ft. $693 $324 $331 $859 $462 Qualitative Adjustments Location 0% 10% 20% -20% 0% Retail Potential 0% 10% 0% -20% 0% Site Size & Configuration 5% 5% 5% 5% 5% Developable Area -25% -5% -10% -25% -25% Waterfront Exposure 5% 0% 0% 5% 5% Corner Exposure/Visibility 0% 0% 0% 0% 0% Total Qualitative Adjustments -15% 20% 15% -55% -15% Adjusted Land Value per Sq. Ft. $589 $388 $380 $387 $393 Indicated Land Value per Sq. Ft. $400 Total Developable Area 724,841 Market Value $289,936,444 (1) FAR at anticipated R8 rezoning (2) Estimated cost to construct the required public access waterfront promenade

Con Edison – Three Williamsburg Parcels 33

Explanation of Adjustments by Category

Market Conditions Adjustments were applied to reflect changes in market conditions between the date of the comparable sale and the date of value. Based on discussions with industry professionals as well research of land transactions in Williamsburg, the market for developable land has begun to stabilize after experiencing a period of rapid appreciation. Therefore, the adjustment for market conditions in this analysis has been allocated by calendar year as follows:

Year Monthly Rate Annualized 2013 1.50% 18.0% 2014 1.00% 12.0% 2015 0.50% 6.0% Location Adjustments for location offset the superiority or inferiority of the comparables' locations as compared to that of the subject. As part of the determination of the location adjustment for each sale, consideration is given to characteristics of the comparable sale that affect demand for commercial and residential space such as the concentration of amenities within the surrounding neighborhood, foot traffic within the area, the character of the surrounding buildings/streets, and ease of access to public transportation. The comparable sales have been adjusted accordingly.

Retail Potential The addition of a retail component to a development project in a popular neighborhood such as Williamsburg increases the overall value of the development site due to the significant income it is anticipated to generate. Under the current M3-1 zoning, a retail component would be expected as part of a redevelopment of the sites. Additionally, in the R8 district rezoning scenario it is anticipated that a commercial overlay would be included to permit retail use at the subject properties. The comparable sales have been adjusted accordingly.

Site Size and Configuration The most valuable development sites have footprints that allow for flexibility in building design and greater ease in moving construction machinery and materials around the site. Within reason, larger sites can also accommodate more building options and amenities. The comparable sales have been adjusted accordingly.

Developable Area Smaller development sites generally trade for a higher price per square foot of FAR than larger development sites. Considering this, smaller sites are generally available to a larger pool of potential buyers, which puts upward pressure on pricing through a competitive bidding process. In a general sense, sites with greater development density or bulk tend to offer greater utility than lower density sites as a result of recognized economies of scale afforded developers in terms of design and costs. However, the larger the developable area envelope, the smaller the universe

Con Edison – Three Williamsburg Parcels 34 becomes for potential buyers who are more disciplined and able to take on risks of larger projects. When projects become fairly large market conditions can dictate that they be completed in phases, thus negatively impacting land value. The comparable sales have been adjusted accordingly to account for differences in total developable area. Waterfront Exposure

Waterfront exposure along the East River provides a development project with better views of the Manhattan skyline and better access to light and air. As a result, waterfront lots are superior to those located further inland. The comparable sales have been adjusted accordingly.

Corner Exposure/Visibility

Corner exposure offers a development project more recognition, longer frontage, better access, and increased natural light for the interior of the proposed building. As a result, corner locations or block front lots that feature a high degree of visibility are more desirable than midblock lots. The comparable sales have been adjusted accordingly.

Conclusion: Sales Comparison Approach

Scenario: Parcels 1 and Parcels 2 & 3 Sold s Two Distinct Parcels M3-1 Zoning As-Is: Each comparable sale was evaluated on the basis of sale price per developable square foot. After the necessary adjustments were applied to each sale, the adjusted sales prices ranged from $389 to $538 per sq. ft. of FAR, with an average value of $472 and a median value of $487 per sq. ft. of FAR. In formulating a determination of value for the fee simple interest in the subject properties, consideration is given to all of the comparable sales.

After thoroughly considering the indications of each sale, the estimated value of the subject parcels is $475 per sq. ft. of the as-of-right FAR under the existing M3-1 zoning. Applying this unit value to the sites’ total developable area indicates the following market values for each parcel:

Developable Indicated Parcel Address Area Value PSF Market Value 1 105 River Street 114,695 $475 $54,480,125 87 River Street & 2 & 3 126,116 $475 $59,905,100 West 1st Street

Con Edison – Three Williamsburg Parcels 35

As If Rezoned to R8: Each comparable sale in this scenario was evaluated on the basis of sale price per developable square foot. After the necessary adjustments were applied to each sale, the adjusted sales prices ranged from $380 to $658 per sq. ft. of FAR, with an average value of $474 and a median value of $439 per sq. ft. of FAR. In formulating a determination of value for the fee simple interest in the subject properties, consideration is given to all of the comparable sales

After thoroughly reviewing the indications of each sale, the estimated value of the subject parcels as if rezoned R8 is $450 per sq. ft. of FAR. Applying this unit value to the site’s total developable area indicates the following market values for each parcel:

Developable Indicated Parcel Address Area Value PSF Market Value 1 105 River Street 345,232 $450 $155,354,378 87 River Street & 2 & 3 114,695 $450 $51,612,750 West 1st Street

Scenario: Parcels 1, 2 & 3 Sold as One Large Assembled Property M3-1 Zoning As-Is: Each comparable sale was evaluated on the basis of sale price per developable square foot. After the necessary adjustments were applied to each sale, the adjusted sales prices ranged from $355 to $457 per sq. ft. of FAR, with an average value of $421 and a median value of $438 per sq. ft. of FAR. In formulating a determination of value for the fee simple interest in the subject properties, consideration is given to all of the comparable sales.

After thoroughly considering the indications of each sale, the estimated value of the subject parcels, if sold as one large assembled property, is $425 per sq. ft. of the as-of-right FAR under the existing M3-1 zoning. Applying this unit value to the sites’ total developable area indicates the following market value:

Developable Indicated Parcels Address Area Value PSF Market Value 105 River Street & 1, 2 & 3 87 River Street & 240,811 $425 $102,344,675 West 1st Street As If Rezoned to R8: Each comparable sale in this scenario was evaluated on the basis of sale price per developable square foot. After the necessary adjustments were applied to each sale, the adjusted sales prices ranged from $331 to $430 per sq. ft. of FAR, with an average value of $427 and a median value of $388 per sq. ft. of FAR. In formulating a determination of value for the fee simple interest in the subject properties, consideration is given to all of the comparable sales

Con Edison – Three Williamsburg Parcels 36

After thoroughly reviewing the indications of each sale, the estimated value of the subject parcels, as if rezoned R8 and sold as one large assembled property, is $400 per sq. ft. of FAR. Applying this unit value to the site’s total developable area indicates the following market value:

Developable Indicated Parcels Address Area Value PSF Market Value 105 River Street & 1, 2 & 3 87 River Street & 724,841 $400 $289,936,444 West 1st Street

Discounting Applied To Value for Rezoning Approvals The R8 market value per square foot of FAR indicated in each scenario is as of today, as if rezoned. With rezoning often taking 2.5 years to accomplish, that value needs to be projected 2.5 years into the future at a stabilized growth rate, and then reduced to a net future value by the expected cost of the professional services engaged to achieve the rezoning. Lastly, the net future value needs to be discounted back to a present worth by applying an appropriate discount rate.

Looking forward, a prudent expectation for land appreciation would be a normalized annual growth rate of 6%. This rate has been utilized to indicate the future value of the land in 2.5 years. Assuming that it would cost approximately $750,000 for legal and other retained professionals to complete the rezoning of the subject properties, we have deducted this amount from the projected future land value to arrive at a net future land value.

In determining an appropriate discount rate to apply to the net future land value, consideration is given to yield requirements for both debt and equity funding. Mortgage brokers report that lenders in the market will typically lend up to 50% of the purchase price of a land site to be developed by a “known” developer. The pricing on this type of loan has a yield of under 5%. Proven developers in the market have indicated on different occasions that they expect to achieve an annual yield of 25% to 30% on their invested development equity. Given the uncertainty of securing rezoning approvals, the required annual equity yield would be closer to 30%. With 50% debt to equity, an appropriate weighted discount rate is 17.5%.

Con Edison – Three Williamsburg Parcels 37

RECONCILIATION AND FINAL VALUE CONCLUSION

This report examines the value of the subject sites if they were sold separately versus together. Additionally, within each of these scenarios, two separate redevelopment schemes are contemplated. The first assumes commercial redevelopment (retail and office uses) and possible hotel use through a variance under the existing M3-1 manufacturing zoning. The second presumes a reasonable probability that the site can successfully achieve R8 rezoning to permit residential development.

Parcel 1: 105 River Street

Comparative Analysis - As-of-Right vs. Scenario for Re-Zoning: 105 River Street

M Zoned As-Is R Zoned Alternative

Total Land Area 57,348 2.00 FAR 6.02 (R8) Estimated FAR 114,695 As-Is 345,232 As Re-Zoned

Current Market Value As-Is $475 $/PSF of FAR

Current Market Value As-If Rezoned $450 $/PSF of FAR As-If Rezoned

Current Market Value $54,480,125 As Is $155,354,378 As-If Re-Zoned

Future Value In 2.5 Years Grown at 6.0%/Year $179,716,585 Less Legal/Professional Rezoning Costs $750,000 Net Future Value $178,966,585

Present Worth Discounted at 17.5% for 2.5 years $119,585,159

Indicated Market Values (Rounded) $54,000,000 $120,000,000

Parcels 2 & 3: 87 River Street and West 1st Street

Comparative Analysis - As-of-Right vs. Scenario for Re-Zoning: 87 River Street

M Zoned As-Is R Zoned Alternative

Total Land Area 63,058 2.00 FAR 6.02 (R8) Estimated FAR 126,116 As-Is 379,609 As Re-Zoned

Current Market Value As-Is $475 $/PSF of FAR

Current Market Value As-If Rezoned $450 $/PSF of FAR As-If Rezoned

Current Market Value $59,905,100 As Is $170,824,122 As-If Re-Zoned

Future Value In 2.5 Years Grown at 6.0%/Year $197,612,249 Less Legal/Professional Rezoning Costs $750,000 Net Future Value $196,862,249

Present Worth Discounted at 17.5% for 2.5 years $131,543,010

Indicated Market Values (Rounded) $60,000,000 $132,000,000

Con Edison – Three Williamsburg Parcels 38

Assembled Parcels 1, 2 & 3: 105 River Street, 87 River Street & West 1st Street

Comparative Analysis - As-of-Right vs. Scenario for Re-Zoning: 87 & 105 River Street & West 1st Street

M Zoned As-Is R Zoned Alternative

Total Land Area 120,406 2.00 FAR 6.02 (R8) Estimated FAR 240,811 As-Is 724,841 As Re-Zoned

Current Market Value As-Is $425 $/PSF of FAR

Current Market Value As-If Rezoned $400 $/PSF of FAR As-If Rezoned

Current Market Value $102,344,675 As Is $289,936,444 As-If Re-Zoned

Future Value In 2.5 Years Grown at 6.0%/Year $335,403,408 Less Legal/Professional Rezoning Costs $750,000 Net Future Value $334,653,408

Present Worth Discounted at 17.5% for 2.5 years $223,614,821

Indicated Market Values (Rounded) $102,000,000 $224,000,000

Con Edison – Three Williamsburg Parcels 39

ADDENDA

Con Edison – Three Williamsburg Parcels 40

COMPARABLE MANUFACTURING ZONED SALES MAP

Comparable Manufacturing Zoned Sales:

Con Edison – Three Williamsburg Parcels 41

COMPARABLE MANUFACTURING ZONED SALES DETAILS

Comparable Manufacturing Land Sale M-1

Location: 342 Wythe Avenue Wythe Avenue between South 1st and South 2nd Streets Brooklyn, NY 11249

Block/Lots: 2403/31

Grantor: Williamsburg Bridge Realty Corp.

Grantee: Frank Billyburg, LLC

Contract Date: August 14, 2014

Deed Date: January 28, 2015

Land Area: 8,633 sq. ft.

Zoning: M3-1

Maximum FAR: 2.0

Maximum Development Bulk: 17,266 sq. ft.

Intended Use: Unknown

Improvements: One-story garage building containing 8,625 sq. ft. of GBA.

Sales Analysis:

Sale Price: $7,500,000 Estimated Demolition Costs: $ 215,625 ($25 per sq. ft. of GBA) Total $7,715,625

Price Per Sq. Ft. of FAR: $447

Con Edison – Three Williamsburg Parcels 42

Comparable Sale Photograph and Land Map:

342 Wythe as viewed from South 2nd Street and Wythe Avenue

Brooklyn Block 2403 Lot 31

Con Edison – Three Williamsburg Parcels 43

Comparable Manufacturing Land Sale M-2

Location: 103 North 13th Street Between Wythe Avenue and Berry Street Brooklyn, NY 11249

Block/Lots: 2279/34

Grantor: Levy Realty, LLC

Grantee: North 13 Holdings, LLC

Contract Date: October 2, 2013

Deed Date: June 2, 2014

Land Area: 12,500 sq. ft.

Zoning: M1-2

Maximum FAR: 2.0

Maximum Development Bulk: 25,000 sq. ft.

Intended Use: Hotel

Improvements: One-story industrial building containing 12,469 sq. ft. of GBA.

Sales Analysis:

Sale Price: $8,200,000 Estimated Demolition Costs: $ 311,725 ($25 per sq. ft. of GBA) Total $8,511,725

Price Per Sq. Ft. of FAR: $340

Con Edison – Three Williamsburg Parcels 44

Comparable Sale Photograph and Land Map:

103 North 13th Street as viewed from North 13th Street

Brooklyn Block 2279 Lot 34

Con Edison – Three Williamsburg Parcels 45

Comparable Manufacturing Land Sale M-3

Location: 93-97 Wythe Avenue Between North 9th and North 10th Streets Brooklyn, NY 11249

Block/Lots: 2303 / 1, 7, 8

Grantor: Sydell Freehand Williamsburg, LLC

Grantee: 93-97 Wythe Avenue, LP (Ennismore Capital)

Contract Date: August 28, 2013

Deed Date: August 28, 2013

Land Area: 20,000 sq. ft.

Zoning: M1-2

Maximum FAR: 2.0

Maximum Development Bulk: 40,000 sq. ft.

Intended Use: Hotel

Improvements: One-story industrial building containing approx. 20,000 sq. ft. of GBA.

Sales Analysis:

Sale Price: $17,000,000 Estimated Demolition Costs: $ 500,000 ($25 per sq. ft. of GBA) Total $17,500,000

Price Per Sq. Ft. of FAR: $438

Con Edison – Three Williamsburg Parcels 46

Comparable Sale Photograph and Land Map:

93-97 Wythe (Image captured Jan 2013)

Brooklyn Block 2303 Lot 1 (Merged with Lots 7 & 8)

Con Edison – Three Williamsburg Parcels 47

Comparable Manufacturing Land Sale M-4

Location: 121 N. 12th Street (Lot 10) & 94 N. 13th Street (Lot 1) a.k.a. 55 Wythe Avenue Wythe Avenue between North 12th & North 13th Streets Brooklyn, NY 11249

Block/Lots: 2283/1, 10

Grantor: 94 North, LLC (Lot 1) Golden Fountain Realty, Inc. (Lot 10)

Grantee: Wythe Berry, LLC

Contract Date: August 27, 2013 (Lot 1) August 16, 2013 (Lot 10)

Deed Date: May 4, 2014 (Lot 1) April 29, 2014 (Lot 10)

Land Area: 20,000 sq. ft. (Lot 1) 30,000 sq. ft. (Lot 10) 50,000 sq. ft.

Zoning: M1-2

Maximum FAR: 2.0

Maximum Development Bulk: 100,000 sq. ft. (as-of-right) 150,000 sq. ft. (as per permit #320593407 secured subsequent to the transfer)

Intended Use: Hotel/Retail

Improvements: Lot 1 was developed with a single-story industrial building containing 19,879 sq. ft. of GBA. Lot 10 was developed with a single-story industrial building containing 18,900 sq. ft. of GBA. Sales Analysis:

Sale Price: $10,000,000 (Lot 1) $16,500,000 (Lot 10) Estimated Demolition Costs: $ 969,475 ($25 per sq. ft. of GBA) Total $27,469,475

Price Per Sq. Ft. of FAR: $275 (as-of-right)

Comments: This sale is an assemblage. Lots 1 and 10 were merged into a single zoning lot. The maximum FAR of 150,000 sq. ft. is calculated from approved applications filed with the NYC Department of Buildings.

Con Edison – Three Williamsburg Parcels 48

Comparable Sale Photograph and Land Map:

94 North 13th St. / 121 North 12th St. as viewed from North 13th St. & Wythe Ave.

Brooklyn Block 2283 Lot 1

Con Edison – Three Williamsburg Parcels 49

Comparable Manufacturing Land Sale M-5

Location: 206 Kent Avenue Kent Avenue Between North 3rd St. and Metropolitan Ave. Brooklyn, NY 11249

Block/Lots: 2356/1

Grantor: Cornell Kent Holdings, LLC

Grantee: 206 Kent Avenue Owner, LLC

Contract Date: August 12, 2013

Deed Date: January 29, 2014

Land Area: 22,640 sq. ft.

Zoning: M3-1

Maximum FAR: 2.0

Maximum Development Bulk: 45,280 sq. ft.

Intended Use: Unknown

Improvements: Vacant Lot

Sales Analysis:

Sale Price: $18,000,000 Estimated Demolition Costs: $ 0 ($25 per sq. ft. of GBA) Total $18,000,000

Price Per Sq. Ft. of FAR: $398

Con Edison – Three Williamsburg Parcels 50

Comparable Sale Photograph and Land Map:

206 Kent Avenue as viewed from North 3rd Street and Kent Avenue

Brooklyn Block 2356 Lot 1

Con Edison – Three Williamsburg Parcels 51

COMPARABLE RESIDENTIAL ZONED SALES MAP

Comparable Residential Zoned Sales:

Con Edison – Three Williamsburg Parcels 52

COMPARABLE RESIDENTIAL ZONED SALES DETAILS

Comparable Residential Land Sale R-1

Location: 296 Wythe Avenue SWC Wythe Avenue and North 1st Street Brooklyn, NY 11249

Block/Lots: 2378 / 21, 26

Grantor: Tri-Boro Shelving & Partition Corp.

Grantee: Wythe Holdings, LLC

Contract Date: June 5, 2015

Deed Date: November 6, 2015

Land Area: 11,705 sq. ft. (Lot 21) 4,105 sq. ft. (Lot 26) 15,810 sq. ft. Total

Zoning: M1-2/R6A (Lot 21), M1-2/R6B (Lot 26) Special District MX-8

Maximum FAR: 2.70 (Lot 21) & 2.00 (Lot 26)

Maximum Development Bulk: 39,814 sq. ft. (as-of-right)

Intended Use: Mixed-Use Residential

Improvements: 1-Story Industrial (16,100 sq. ft.)

Sales Analysis:

Sale Price: $26,500,000 Estimated Demolition Costs: $ 402,500 ($25 per sq. ft. of GBA) Total $26,902,500

Price Per Sq. Ft. of FAR: $676

Comments: The purchase price per square foot of buildable area represents one of the priciest in the neighborhood, according to The Real Deal. Published reports indicate residential building with retail at grade is planned for the site.

Con Edison – Three Williamsburg Parcels 53

Comparable Sale Photograph and Land Map:

296 Wythe Avenue as viewed from Wythe Avenue

Brooklyn Block 2378 Lots 21 and 26

Con Edison – Three Williamsburg Parcels 54

Comparable Residential Land Sale R-2

Location: 418-38 Kent Avenue Kent Avenue and South 8th Street Brooklyn, NY 11249

Block/Lots: 2182/5 and 2134/56

Grantor: Rector Hylan Corporation

Grantee: 420 Kent Avenue, LLC

Contract Date: August 15, 2014

Deed Date: February 4, 2015

Land Area: 57,973 sq. ft.

Zoning: R7-3

Maximum FAR: 3.75

Maximum Development Bulk: 217,399 sq. ft. (as-of-right) 600,000 sq. ft. (through special permits)

Intended Use: Mixed-Use Residential

Improvements: Two-story industrial building with 60,800 sq. ft. of GBA

Sales Analysis:

Sale Price: $165,000,000 Estimated Demolition Costs: $ 1,520,000 ($25 per sq. ft. of GBA) Total $166,520,000

Price Per Sq. Ft. of FAR: $278

Comments: The maximum developable bulk of 600,000 sq. ft. is achieved through a pair of special permits obtained by the previous owners of the site. The buyer is also obligated to restore/reconstruct the existing bulkhead along the East River waterfront.

Con Edison – Three Williamsburg Parcels 55

Comparable Sale Photograph and Land Map:

418-38 Kent Avenue as viewed from Kent Avenue

Brooklyn Block 2128 Lot 1& Block 2134 Lot 56

Con Edison – Three Williamsburg Parcels 56

Comparable Residential Land Sale R-3

Location: 161 West Street NWC West & Huron Streets Brooklyn, NY 11222

Block/Lots: 2520 / 1

Grantor: American Prosperity, LLC Et. Al.

Grantee: Insite Sunrise Beach, LLC

Contract Date: July 31, 2014

Deed Date: July 31, 2014

Land Area: 65,000 sq. ft.

Zoning: R6 / C2-4 Overlay

Maximum FAR: 2.43

Maximum Development Bulk: 157,950 sq. ft. (as-of-right)

Intended Use: Residential

Improvements: Two-story industrial building with 80,000 sq. ft. of GBA

Sales Analysis:

Sale Price: $45,500,000 (See Comments) Estimated Demolition Costs: $ 2,000,000 ($25 per sq. ft. of GBA) Total $47,500,000

Price Per Sq. Ft. of FAR: $301

Comments: Published reports indicate that residential development is planned for the site.

Con Edison – Three Williamsburg Parcels 57

Comparable Sale Photograph and Land Map:

Aerial view of 161 West Street, as viewed from the south

Brooklyn Block 2520 Lot 1

Con Edison – Three Williamsburg Parcels 58

Comparable Residential Land Sale R-4

Location: 510 Driggs Avenue Driggs Avenue between North 8th & North 9th Streets Brooklyn, NY 11249

Block/Lots: 2312/23

Grantor: JMD Driggs, LLC

Grantee: 187 North 8th Street Owner, LLC

Contract Date: February 21, 2014

Deed Date: September 17, 2014

Land Area: 17,500 sq. ft.

Zoning: M1-2/R6A, R6B Special District MX-8

Maximum FAR: 2.70

Maximum Development Bulk: 47,250 sq. ft. (as-of-right)

Intended Use: Mixed-Use Residential

Improvements: Vacant Lot

Sales Analysis:

Sale Price: $35,000,000 Estimated Demolition Costs: $ 0 ($25 per sq. ft. of GBA) Total $35,000,000

Price Per Sq. Ft. of FAR: $741

Comments: The purchase price recorded in New York City’s public record system indicates a purchase price of $25,000,000 for this comparable sale. However, according to published reports and people familiar with the transaction, the contract for this property was purchased from the buyer for $35,000,000.

Con Edison – Three Williamsburg Parcels 59

Comparable Sale Photograph and Land Map:

510 Driggs Avenue as viewed from North 8th Street and Driggs Avenue

Brooklyn Block 2312 Lot 23

Con Edison – Three Williamsburg Parcels 60

Comparable Residential Land Sale R-5

Location: 190-96 South 1st Street

Southeast Corner of South 1st Street and Driggs Avenue Brooklyn, NY 11249

Block/Lots: 2407/5, 9, 11

Grantor: 190 South 1 Holdings, LLC.

Grantee: 190 South 1 Investors, LLC

Contract Date: November 29, 2013

Deed Date: April 29, 2014

Land Area: 12,829 sq. ft.

Zoning: M1-2/R6A, R6B Special District MX-8

Maximum FAR: 2.43

Maximum Development Bulk: 31,174 sq. ft. (as-of-right)

Intended Use: Mixed-Use Residential

Improvements: One-story industrial building with 6,600 sq. ft. GBA

Sales Analysis:

Sale Price: $12,000,000 Estimated Demolition Costs: $ 165,000 ($25 per sq. ft. of GBA) Total $12,165,000

Price Per Sq. Ft. of FAR: $390

Con Edison – Three Williamsburg Parcels 61

Comparable Sale Photograph and Land Map:

190-96 South 1st Street as viewed from South 1st Street and Driggs Avenue

Brooklyn Block 2407 Lots 5, 9, and 11

Con Edison – Three Williamsburg Parcels 62

STATEMENT OF BASIC ASSUMPTIONS AND LIMITING CONDITIONS

The appraisers assume:

1. This Appraisal Report is intended to comply with the reporting requirements set forth under the Uniform Standards of Professional Appraisal Practice.

2. Supporting documentation concerning some of the data, reasoning, and analyses is retained in the appraisal file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

3. The legal descriptions used in this report are assumed to be correct.

4. No survey of the property has been made by the appraiser and no responsibility is assumed in connection with such matters. Sketches in this report are included only to assist the reader in visualizing the property.

5. No responsibility is assumed for matters of a legal nature affecting title to the property nor is an opinion of title rendered. The title is assumed to be good and marketable.

6. Information furnished by others is assumed to be true, correct and reliable. A reasonable effort has been made to verify such information; however, no responsibility for its accuracy is assumed by the appraiser.

7. All mortgages, liens, encumbrances, leases and servitude have been disregarded unless so specified within the report. The property is appraised as though under responsible ownership and competent management.

8. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures which would render it more or less valuable. No responsibility is assumed for such conditions or for engineering which may be required to discover such factors.

9. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless non-compliance is stated, defined and considered in the appraisal report.

10. It is assumed that all applicable zoning, use and building code regulations and restrictions have been complied with, unless a non-conformity has been stated, defined and considered in the appraisal report.

11. It is assumed that the utilization of the land and improvements is within the boundaries of property lines of the property described and there is no encroachment or trespass unless noted within the report.

Con Edison – Three Williamsburg Parcels 63

12. The appraiser is not an engineer. No engineering survey of the improvements described herein has been made, or made available. Any comments by the appraiser as to the general condition of the improvements or the condition of any of the building components are opinions based on the appraiser's real estate market experience and are not intended to be relied upon in lieu of a complete engineering study.

13. We assume there is no material amount of asbestos in the building, nor does the report take into consideration the possibility of the existence of radon gas, PCP transformers, or other toxic, hazardous, or contaminated substances and/or underground storage tanks containing hazardous material. The report does not consider the cost of encapsulation treatment of removal of such materials. We take no responsibility for identifying the level of contaminants such as these or any others, if any are indeed found. We are not qualified to detect toxins or estimate any cost of removal or other treatment. If the client/property owner has a concern about the existence of such hazardous conditions, the appraisers consider it imperative to retain the services of a qualified engineer or contractor to determine the existence and extent of such hazardous conditions. Such consultation should include the estimated cost associated with any required treatment or removal of hazardous material.

14. The Americans with Disabilities Act (ADA) became effective on January 26, 1992. The appraiser has not made a specific compliance survey and analysis of this property to determine whether or not is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is in non-compliance with one or more of the requirements of the act. If so, this fact could have a negative impact upon the value of the property. Since the appraiser has no direct evidence relating to this issue, possible non-compliance with the requirements of the ADA has not been considered in estimating the value of the property.

15. The projections of income and expenses are not predictions of the future. Rather, they are the appraiser’s best estimates of current market thinking on future income and expenses. The appraiser and Valuation & Advisory make no warranty or representation that these projections will materialize. The real estate market is constantly fluctuating and changing. It is not the appraiser’s task to predict or in any way warrant the conditions of a future real estate market; the appraiser can only reflect what the investment community, as of the date of the appraisal, envisions for the future in terms of rental rates, expenses, supply and demand.

The following Limiting Conditions are submitted with this report:

1. All of the facts, conclusions and observations contained herein are consistent with information available as of the date of the report. The value of real estate is affected by many related and unrelated economic conditions, local and national. We, therefore, assume no liability for any unforeseen changes in the economy.

2. The appraiser will not be required to give testimony or appear in court because of having made this appraisal, with reference to the property in question, unless arrangements have been previously made therefore.

Con Edison – Three Williamsburg Parcels 64

3. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper written qualification and only in its entirety.

4. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used.

5. The value estimated herein applies only to the appraisal problem as stated, the value definition, the reported highest and best use, client and/or legal instruction, interest appraised, or other special conditions more fully described in the body of the report.

6. Disclosure of the contents of this report is governed by the Bylaws and Regulations of the Appraisal Institute. Neither all nor any part of the contents of this report, or copy thereof, shall be conveyed to the public through advertising, public relations, news, sales, or any other media without written consent and approval of the appraiser. Nor shall the appraiser, firm, or professional organization of which the appraiser is a member be identified without consent of the appraiser.

7. The appraisers have no present or contemplated interest in the property appraised.

8. Employment in this appraisal and compensation for the report is in no way contingent on the matter involved.

9. This appraisal has been made in conformity to the Standards of Practice of the Appraisal Institute, and represents the best judgment of the appraisers.

10. No responsibility is taken for changes in market conditions after the date of valuation or for the inability of the property owner to find a purchaser at the appraised value.

11. Further, we have not been engaged to evaluate the effectiveness of management, and we are not responsible for future marketing efforts and other management actions upon which actual results will depend.

13. Valuation & Advisory has not, as part of its valuation, performed an audit or review of any of the financial information used and, therefore, does not express an opinion or any other form of assurance with regard to same. Under the terms of this engagement, we have no obligations to revise this report or the financial result to reflect events or conditions which occur subsequent to the date of the report.

14. Acceptance and/or use of this appraisal report by the client and/or any third party constitutes acceptance of the stated limiting conditions and assumptions. The appraisers' and/or reviewers' responsibility and liability extends only to the stated client, not to subsequent parties or users, and is limited to the amount of the fee received by the appraisers in conjunction with performance of this appraisal and related consulting and/or court preparation, deposition, and testimony.

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CERTIFICATE OF APPRAISAL – WILLIAM PICOLI, MAI, CRE, FRICS

Property: 105 & 87 River Street & West 1st Street, Brooklyn NY

I certify that, to the best of my knowledge and belief: − The statements of fact contained in this report are true and correct. − The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. − I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. − I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. − My engagement in this assignment was not contingent upon developing or reporting predetermined results. − My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. − The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. − The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. − I have made a personal inspection of the property that is the subject of this report. − No one other than John T. Farrell and Randal Grenier provided significant real property appraisal assistance to the person signing this certification. − As of the date of this report, I have completed the continuing education program of the Appraisal Institute. − I have not provided prior service on the subject property within the last three years.

Date: November 24, 2015 William Picoli, MAI, CRE, FRICS Senior Vice President NYS Certification #46000005694

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CERTIFICATE OF APPRAISAL – JOHN T. FARRELL, MAI, MSRE

Property: 105 & 87 River Street & West 1st Street, Brooklyn NY

I certify that, to the best of my knowledge and belief: − The statements of fact contained in this report are true and correct. − The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. − I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. − I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. − My engagement in this assignment was not contingent upon developing or reporting predetermined results. − My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. − The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. − The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. − I have made a personal inspection of the property that is the subject of this report. − No one other than William Picoli and Randal Grenier provided significant real property appraisal assistance to the person signing this certification. − As of the date of this report, I have completed the continuing education program of the Appraisal Institute. − I have not provided prior service on the subject property within the last three years.

Date: November 24 2015 John T. Farrell, MSRE Senior Vice President NYS Certification #46000049037

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William Picoli, MAI, CRE, FRICS Senior Vice President Professional Qualifications of William Picoli, MAI, CRE, FRICS William Picoli joined Avison Young in 2014 as Senior Vice President in the Valuation & Advisory Services practice. Mr. Picoli provides consulting and valuation services for a broad spectrum of property types and clients nationwide with focus on the New York Metropolitan area. A significant part of that work is dedicated to litigation support/expert witness services, as well as complex assignments involving market analysis, highest and best use, and land development analysis.

D: 212.729.4835 Mr. Picoli provides valuations for purposes of portfolio valuation reporting, joint ventures, acquisition/disposition, development, condemnation, portfolio valuation, financing, tax [email protected] certiorari, bankruptcy proceedings, estate liquidation, and arbitration and court litigation. Mr. Picoli also consults on acquisitions/dispositions, financial feasibility, variance appeals, site development deals, bankruptcy, arbitration, IRS taxes and a variety of real estate interests and issues.

Mr. Picoli has over 25 years of experience in the real estate business as an appraiser, consultant and expert witness. His consulting and valuation experience involves over 1,500 properties in 15 states. That experience has given rise to his participation as a guest lecturer, a panelist in seminar discussions, and representative serving on local real estate committees.

Mr. Picoli’s experience extends to a broad range of property types, including:

• Fee Land, Leased Land, Transferable Development Rights • Office (CBD Class A, B, and C; suburban; and condominiums) • Special Purpose Properties (schools, hospital/medical, and transportation) • Retail (regional malls, power centers, strip and “big box”) • Multi-Family Residential (high-rise, walk-ups, garden-style apartments, and condominium conversions) • Industrial (warehouse, self-storage, and R&D flex) • Hotels

Professional Credentials

• Qualified as an Expert Witness in the State of New York • Member of the Appraisal Institute (MAI) • Member of the Counselors of Real Estate (CRE) • Member of the Royal Institute Charter of Surveyors (FRICS) • The Real Estate Board of New York, Member • New York General Appraiser License • Connecticut General Appraiser License • New York State Licensed Salesperson

Education

• B.A., Economics, Lake Forest College, Lake Forest, Illinois

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Representative Assignments

• GM Building (767 Fifth Avenue), New York, NY Valuation of this 1.8 million RSF trophy property for the ownership. • 53 West 53rd Street, New York, NY Appraised the market value of this development site (630,000 SF of zoning bulk) for a Singapore investor acquiring a partial interest. This is the 88-story Jean Nouvel designed Torre Verre Residences project under development by Hines adjacent to The Museum of Modern Art. • 12th Avenue and West 46th Street, New York, NY Appraised the market ground rent and provided recommendations for the lease structure and terms for a 40,000 SF land site to be leased by the Intrepid Air & Space Museum for expansion development. • Beekman Tower Hotel, New York, NY Provided a fairness opinion for an Israeli institutional investor acquiring a partial interest in the 174-room hotel that Silverstein Properties was converting to an extended stay hotel apartment concept. • East Midtown Rezoning proposal, New York, NY Consultant to the EDC for this 2013 rezoning proposal intended to preserve the Global competitiveness of a 70-block area within Manhattan’s premier East Midtown district. Retained as a result of knowledge/experience with air rights transfers to provided opinions for the pricing of development improvement bonuses that would increase zoning density to qualifying sites in certain corridors totaling 3.9 million SF. The proposal also included provisions to grant landmark properties broader transferability for the sale of excess air rights, as well as to fund pedestrian circulation improvements throughout the area. • West 110th Street, New York, NY Consultant to Avalon Bay for a leased development of a multi-family site located on the cathedral campus of Saint John the Divine. Provided a discussion of the risks and advantages of a ground lease development, compared land and apartment improvement appreciation trends over time, and reviewed the terms of the lease under negotiation for favorableness with other recent ground leases. • Johnson & Jay Street, Brooklyn, NY Consultant to assist City University of New York in its negotiations (pricing and terms) of a ground lease with Forest City Ratner Corp for a mixed-use educational facility and luxury apartment development on its downtown Brooklyn campus. • Jacobi Medical Center, Bronx, NY Advisor to NYC Health and Hospital Corporation to assist in structuring and negotiating a ground lease to develop a 5.6-acre site with flexible pricing for density of between 500,000 - 1,250,000 square feet of zoning floor area. • Queens Hospital Center, Hillcrest, NY Retained as part of a team of consultants by the hospital and New York City Health and Hospitals Corporation to conduct a land use study to assist Queens Hospital Center (QHC) with strategic outlook and advance planning in an effort to maximize the use of its 19.5-acre campus that was in the initial phases of redevelopment.

• George Westinghouse High School, Brooklyn, NY Adviser to NYC Department of Education on the rental value of this property’s excess development rights. • Jersey City Medical Center, Jersey City, NJ

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Appraisal and consulting services to Jersey City Redevelopment Agency and the Hudson County Improvement Authority for the adaptive residential re-use and sale of the 1.8 million square foot landmarked hospital facility. Investigated demand and absorption for office and residential uses, plus prepared comprehensive, detailed discounted cash flow feasibility projections for a variety of new uses with consideration of financing costs. Presented findings/recommendations to the Jersey City and Hudson County commissions. • Three Manhattan high school sites, New York, NY Consulting and appraisal services for three Manhattan high school sites for mixed-use redevelopment (school facilities and luxury residential units). The findings enabled the City to monertize latent development density at two under-utilized sites that ultimately delivered new state-of-the-art school facilities at no cost to the public. • Columbia University, Morningside Heights, New York, NY Appraisal of 155 apartment and commercial buildings held by Columbia University in and around its main campus. • 645 Fifth Avenue, New York, NY Appraised the leasehold interest in this 410,000 SF 52-story class A office building for reporting purposes. • Eight properties, Hunters Point, Queens, NY Appraised eight properties for separate property owners in the Queens West urban renewal condemnation. • New York Coliseum Hunters Point, Queens, NY Valuation of the 70,000 square feet. New York Coliseum land site for a re-negotiation of a purchase price between the Metropolitan Transportation Authority and the former developer, Mortimer Zuckerman. This complex valuation considered multiple development densities, extraordinary mandated development costs, preferential equity returns, and MTA participation in the project’s operation and terminal sale • A Major Hotel Flag (confidential) Appraised the leased fee interest in land under 5-year old, 1,000+ room convention center hotel. The analysis was used by the lessee to formulate strategy for a buy-out of the lessor’s position from a municipality that initiated the project under a 75-yr. ground lease. Lessor’s annual cash flow consisted of fixed basic rental payments indexed to CPI and a complex formula for participation rents that involved a priority waterfall from the hotel’s operating income to satisfy a preferred equity return. • Marcy Avenue Armory, Williamsburg, Brooklyn Retained by New York State Office of General Services to provide a market value appraisal to price the property for a possible sale or rental. The armory occupied a full-block site, and is improved with a 137,400 square foot historic National Guard armory constructed in 1883. • Madison Avenue Office Tower, New York, NY Retained as an advisor to assist owners in a transition of a property interest from a terminating ground lease to full ownership of a 180,000 rentable SF office tower. Initially helped client evaluate options and tax implications for a possible sale or continued ownership, either directly or through an operating lease with a focus on estate planning. Client ultimately elected to take possession, and hire an asset manager to modernize and release the building. Helped owners select and negotiate agreements for professionals critical to process (legal counsel, architect, construction manager, project manager, mortgage broker, leasing agent, and an asset manager). Circumstances necessitated functioning as the de facto asset manager during much of the process. As a result of the decision, the client will see their income increase by many multiples and have in place ownership structures for tax efficient wealth transfer to beneficiaries. • Fulton Transit Center, New York, NY Performed an appraisal for NYC Metropolitan Transportation Association to assist them in setting a market rent to a fully net lease operator of this 180,000 SF state-of-the-art subway transit hub project with connection

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to the World Trade Center. The lease involved numerous retail premises (stores & 50+ digital signs) and special provisions for maintaining the retail and public transit circulation spaces. • Aetna Life Insurance Company Campus, Middletown, CT Aetna wanted to consolidate their operations at their Hartford headquarters. Prepared a highest and best use analysis of the company’s 244-acre campus that contained a 1.5 million SF administration building and a 125,000 SF Data Center to help them evaluate their options. • Riverside Park Community, 3333 Broadway, New York, NY Retained by the NYC Educational Construction (as fee land owner) to determine a new market ground rent for a subsidized Mitchell-Lama housing project built on leased land. An investor’s proposal to withdraw the building from the program required bringing the ground rent to market for the duration of the ground lease. The property’s transitioning income necessitated devising a method for phasing in the ground rent increases until the property cash flow could increase to a level capable of covering operating expenses, real estate taxes, a typical market ground rent, the owner’s debt service, plus a reasonable return to both the lessee and lessor.

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John T. Farrell, MAI, MSRE Senior Vice President Professional Qualifications of John T. Farrell, MSRE Mr. Farrell joined Avison Young in 2014 as a Senior Vice President in the Valuation & Advisory Services practice. He has been working in the field of real estate valuation and consulting since 2003. His particular area of expertise is litigation, arbitration, and mediation support in ground rent resets, and office and retail rental redeterminations.

He has prepared appraisal, rental, market, and feasibility studies for a variety of purposes including, lease negotiation, asset acquisition and disposition, corporate mergers, partnership dissolution, condemnation, tax certiorari, income tax, estate planning, gifting, D: 212.729.3702 urban renewal, financing, and various other corporate planning purposes. [email protected] Notable landmarks in which he has provided valuation and advisory services include the former World Trade Center, Grand Central Terminal, South Street Seaport, Rainbow Room, Lever House, One Penn Plaza, Park 51 (Islamic Community Center site), Bellevue Psychiatric Hospital, Battery Maritime Building, Four Freedoms Park (Roosevelt Island), One Chase Manhattan Plaza, and the inclusionary housing certificates for the Nordstrom Tower. He also consulted for the New York City Department of Planning on Local Law 33 (the Post 9/11 revised NYC Construction Codes).

He is also very active with the NYU Schack Institute of Real Estate where he serves on their Alumni Board as well as on the NYU Schack Global Advisory Committee.

ncluding:

• Fee Land, Leased Land, and Transferable Development Rights • Special Purpose Properties (schools, hospitals, and transportation) • Industrial (warehouse, self-storage, R&D flex space, and business parks) • Office (CBD Class A, B, and C, suburban, and office condominiums) • Retail (strip, neighborhood, and big-box) • Multifamily (high-rise, walk-ups, and garden apartments) • Hospitality (hotels, motels, and dormitories)

Professional Credentials

• Qualified as an Expert Witness in the State of New York • Appraisal Institute, Candidate for Designation • NYU Schack Alumni Association, Board Member (2010 Present) • New York State Certified General Real Estate Appraiser • New York State Licensed Real Estate Salesperson o Temporary licenses obtained as required

Education

• M.S., Real Estate (Finance Track), NYU Schack Institute of Real Estate, New York, NY • B.A., History (Economics Minor), New York University, New York, NY • H.S. Diploma, Fairfield College Preparatory School, Fairfield, CT

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Representative Assignments

Four Freedoms Park, Roosevelt Island Valued parcels of land on either side of the Renwick Ruin to facilitate their transfer from the Roosevelt Island Operating Corp. to the Four Freedoms Conservancy. 228-238 East 44th Street Advised the ownership on how to respond to an unsolicited offer to purchase the leased fee interest in the land underlying an apartment building. Also provided them insight on the likely scenarios of an impending land rent reset. 2033 Fifth Avenue, New York, NY Determined the feasibility of various redevelopment scenarios for The National Black Theater site for the ownership. 88-90 South Street & 207-211 Water Street, New York, NY

York, who was interested in exploring ways of extracting value from their real estate, on a possible swap of retail spaces on (Water Street) to Howard Hughes Corp in exchange for cash and the rights to develop a vacant parcel on South Street despite the significant legal hurdles to doing so.

Valued inclusionary housing certificates that could be used to build 81,000 square feet of space anywhere within Manhattan Community District 5 or within half a mile

103-22 99th Street, Ozone Park, NY Advised and provided negotiation support for an owner that was trying to negotiate a renewal lease with the NYC Department of Education, which was in holdover for two years at a significantly below market rent. 255 Greenwich Street, New York, NY Consulted for a medical imaging tenant in a 5-year rent renewal arbitration with their landlord. Services provided to the client included determining the market rent, rebutting the market rent study provided by the tenant, and supporting the client in the arbitration. 760 Madison Avenue, New York, NY Advised a landowner on zoning, historic district restrictions, development potential, and land values in their negotiations with their tenant (SL Green) and to support them in the event of a rental reset. 545 Main Street, Roosevelt Island, NY Advised RIOC on the terms of extending the original ground lease for Island House, a 400 unit Mitchell-Lama (ML) building on Roosevelt Island aged out of the ML program to keep the apartments at affordable rental rates.

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Alexan CityView, Bayonne, NJ Advised AIG on their lawsuit with the City of Bayonne over a master planned residential and retail community that was to have been built on an artificial peninsula that had been constructed by the military during WWII but was instead

Town Square Mall, Las Vegas, NV Advised Turnberry as they defended themselves pursuant to a supposed deficiency on the mortgage up to $40,000,000 per a personal guarantee. 15 Washington Street, Newark, NJ Aided Rutgers University in their decision about whether to convert a mothballed office building to dormitories or to rehabilitate it for office use and construct a new dormitory nearby. 325 Hudson Street, New York, NY Advised the landlord in their rent renewal arbitration with their tenant, Verizon. Services provided to the client included determining the market rent, rebutting the market rent study provided by the tenant, and supporting the client in the arbitration. Various Retail Properties, Brooklyn and Queens, NY Supported the owner of 9 retail properties in Queens and 3 retail properties in Brooklyn during a divorce proceeding. Services provided included appraising the properties, expert witness testimony, and litigation support. 2861-2865 Broadway, New York, NY Negotiated a twelve plus year blend and extend lease renewal on behalf of the landlord with their tenant Citibank in lieu of a five-year rent reset arbitration. Also valued the property for gifting purposes. 408-424 East 51st Street, New York, NY Advised the landlord in their ground rent reset arbitration with their tenant, a co-op board. Services provided to the client included determining the value of the land under different zoning scenarios, rebutting the valuation provided by the tenant, and supporting the client in the arbitration. Aetna Campus, Middletown, CT Consulted for Aetna on how to repurpose their 1.5 million square foot Middletown campus. 49-51 Park Place (WTC Mosque Site), New York, NY Consulted for ConEd who was the owner of a former substation in Downtown Manhattan that had been combined with an adjacent building and repurposed as a Burlington Coat Factory. Services provided included rental arbitration support and then in an arbitration involving a purchase option. 616 First Avenue, New York, NY Facilitated the carving out and transfer of a site and an apportionment of development rights for from Sheldon Solow for the construction of a NYC public school building. Performed an analysis to help demonstrate the value of the development rights, recommended the appropriate acquisition price, selected a

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broker who had previously worked with Solow to assist, and aided in the negotiations. 40-40 75th Street, Queens, NY Valued a stalled multi-family development in Jackson Heights for potential acquisition by the NYC SCA. Rainbow Room, New York, NY Determined the rent on behalf of the tenant for a baseball arbitration as well as supported this determination though expert reports and several rounds of rebuttals. Issues in the case involved the highest and best use of the space and the cost of converting it based on its as-is condition. Additional services provided included selecting other experts to testify in support of the client. Battery Maritime Building, NY Analyzed different proposals for converting a dilapidated ferry terminal adjacent to the Staten Island Ferry terminal at the base of Downtown Manhattan into a San Francisco style Ferry Terminal Market. Since this use was determined not financially self-sustaining, we examined the possibility of adding a boutique hotel and event space. Bellevue Psychiatric Building, NY Performed analysis to explore various ways to reuse the old psychiatric hospital on the Bellevue campus. These various proposals ranged from full demolition and building new under different uses to partial demolition and integration of historic architecture in newer buildings of various uses including boutique hotel, medical space, dorm space, apartments, etc. Issues included the historic architectural sensitivity, location of 9/11 remains that had still not been sorted through, and the competing needs of different institutions in the area. NYC Building Code Safety Revisions (2007) Evaluated several design plans for different property uses both with and without the implementation of the revised 9/11 building codes to determine whether the new code was a detriment to value. I performed an analysis of the revised building costs and rentable areas and their impact on the values of potential new development both with and without the implementation of the new code and advised the City accordingly on whether or not they had an impact on value. MTA Bus Depot Oil Spill, Brooklyn, NY Determined on behalf of the MTA whether or not leaked diesel fuel from a bus depot had damaged the value of houses in the immediate vicinity due to the stigma of environmental contamination as part of a lawsuit. Also advised on acquisition prices so that the MTA could buyout the homeowners.

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