OFFERING MEMORANDUM 165 Avenue B | New York • NY

OFFERING MEMORANDUM

165 Avenue B | New York • NY MARKETING TEAM

Peter Von Der Ahe 260 Madison Avenue, 5th Floor New York, NY Tel: (212) 430-5114 Fax: (646) 349-3308 [email protected]

Joe Koicim 260 Madison Avenue, 5th Floor New York, NY 10016 Tel: (212) 430-5147 Fax: (212) 500-7565 [email protected]

David Lloyd 260 Madison Avenue, 5th Floor New York, NY 10016 Tel: (212) 430-5185 Fax: (212) 500-7565 [email protected]

Corey Isdaner 260 Madison Avenue, 5th Floor New York, NY 10016 Tel: (212) 430-5162 Fax: (646) 808-3210 [email protected]

Andrew Dansker | Financing Inquiries 260 Madison Avenue, 5th Floor New York, NY Tel: (212) 430-5168 Fax: (212) 500-5110 [email protected]

165 Avenue B TABLE OF CONTENTS

INVESTMENT OVERVIEW Section I

PRICING & FINANCIAL ANALYSIS Section II

PROPERTY DESCRIPTION Section III

MARKET OVERVIEW Section IV

165 Avenue B 165 Avenue B INVESTMENT OVERVIEW 165 Avenue B | $7,500,000 Is being offered at

THE OFFERING

Marcus & Millichap is pleased to offer the following • Price Point Deal: $7,500,000 opportunity located in the booming Alphabet City • Tax Class 2A neighborhood. 165 Avenue B is located on the East • Terrific Location: Steps from Tompkins Square side of Avenue B between East 10th and East 11th Park and Several of East Village’s Trendiest Street, and contains a gross square footage of establishments 5,608 feet. The building is built 24 x 63 feet on a 23 x 93 lot (Block: 393 Lot: 4). The property is zoned C1-5/R7A. LISTING METRICS THE OPPORTUNITY

• Prime 5 Story Mixed-Use Building Located on 5 5,608 UNITS TOTAL SQUARE FEET Avenue B • 4 Gut Renovated 3-Bedroom Apartments • Apartments Feature: high-end condo finishes, $1,337 $15,100 white oak floors, open views, renovated kitchen PRICE /SF PROJECTED TAXES with stainless steel appliances and dishwasher, and upgraded bathrooms • 1 Retail Tenant: Sum Restaurant, Newly signed 4.1% 21.13 lease, 1,000 Square Foot space, occupied by CAP RATE GRM restaurant that features outdoor seating • Building wide improvements have been made: new plumbing and electric 24' 3,196 FRONTAGE TOTAL AIR RIGHTS

OFFERING MEMORANDUM

P R I C I N G & FINANCIAL ANALYSIS PRICING & FINANCIAL ANALYSIS

FINANCIAL OVERVIEW

INCOME CURRENT PRO FORMA $7,500,000 Gross Potential Residential Rent $255,000 $270,744 OFFERING PRICE Gross Potential Commercial Rent $105,060 $105,060 Gross Income $360,060 $375,804 PRICE PER SQUARE FEET $1,337 Vacancy/Collection Loss ($5,100) ($5,415) PRICE PER UNIT $1,500,000 Effective Gross Income $354,960 $370,389 TOTAL SQUARE FEET 5,608 Average Residential Rent/Month/Unit $5,313 $5,641 TOTAL UNITS 5 CURRENT CAP RATE 4.1% CURRENT GRM 21.1 EXPENSES PRO FORMA CAP RATE 4.3% Property Taxes Tax Class: 2A $15,100 $15,100 PRO FORMA GRM 20.2 Fuel Includes Electric $3,000 $3,000 PRO FORMA CASH ON CASH RETURN 2.64% Insurance $6,500 $6,500 Water and Sewer $4,020 $4,020 Repairs and Maintenance $3,750 $3,750 PROPOSED DEBT Super Salary $4,200 $4,200 Loan Amount $4,750,000 Management Fee $10,649 $11,112 Interest Rate 3.25% Elevator Contract N/A N/A Amortization 30 Legal & Miscellaneous N/A N/A Annual Debt Service ($250,238) SCRIE/DRIE N/A N/A Debt Coverage Ratio 1.23 Other N/A N/A Net Cash Flow After Debt Service $72,469 Total Expenses $47,219 $47,682 Net Operating Income $307,741 $322,707 UPSIDE ANALYSIS

$6,000 SCHEDULE OF INCOME UNIT BREAKDOWN TOTAL % OF TOTAL RENT $5,000 Studio 0 0% $0 $4,000 1 Bedroom 0 0% $0

$3,000 2 Bedroom 0 0% $0 3 Bedroom 4 100% $5,313 $2,000 4 Bedroom 0 0% $0 $1,000 5 Bedroom 0 0% $0

$0 6 Bedroom 0 0% $0 Studio 1 2 3 4 5 6 SRO SRO 0 0% $0 BedroomBedroomBedroomBedroomBedroomBedroom Current Avg RS Units Market Rents Current Avg FM Rents

5,608 $1,337 21.13 4.1% SQUARE FEET

GROSS TOTAL SF PPSF GRM CAP RATE

165 Avenue B PRICING & FINANCIAL ANALYSIS

RENT ROLL

COMMERCIAL RENT UNIT TENANT NAME REIMBURSEMENTS NOTES LEASE START SF EXPIRATION ACTUAL PRO FORMA $/PSF Outdoor Space, pays 25% of RE Tax increase Apr-16 1,000 Aug-26 $8,755 $8,755 $105 1 Sum Restaurant above base year 2015/2016 MONTHLY COMMERCIAL REVENUE 1,000 $8,755 $8,755

RESIDENTIAL RENT UNIT# LEASE STATUS NOTES BEDROOMS ROOMS SF EXPIRATION ACTUAL PRO FORMA $/PSF 1 FM 2 Bath, Washer/Dryer 3 Bedroom 6 1,300 Aug-17 $6,550 $6,812 $63 2 FM 3 Bedroom 5 1,000 Jul-17 $4,900 $5,250 $63 3 FM 3 Bedroom 5 1,000 May-17 $4,900 $5,250 $63 4 FM Skylight/Raised Ceiling 3 Bedroom 5 1,000 May-17 $4,900 $5,250 $63 MONTHLY RESIDENTIAL REVENUE 12 21 4,300 $21,250 $22,562

ANNUAL RESIDENTIAL REVENUE $255,000 $270,744 ANNUAL COMMERCIAL REVENUE $105,060 $105,060

ACTUAL PRO FORMA TOTAL ANNUAL REVENUE $360,060 $375,804 There are currently 0 vacant units in the building. The super lives off site.

165 Avenue B PRICING & FINANCIAL ANALYSIS

INCOME AND EXPENSE ANALYSIS

GROSS POTENTIAL INCOME ACTUAL PRO FORMA %EGI $/UNIT %EGI $/UNIT AVERAGE RENT Gross Potential Residential Rent $255,000 71% $63,750 $270,744 72% $67,686 PER MONTH Gross Potential Commercial Rent $105,060 29% $26,265 $105,060 28% $26,265 Gross Income $360,060 $90,015 $375,804 $93,951 $5,313 Vacancy/Collection Loss ($5,100) 2% ($1,275) ($5,415) 2% ($1,354) Effective Gross Income $354,960 $88,740 $370,389 $92,597 PERCENT Average Residential Rent/Month/Unit $5,313 $5,641 FAIR MARKET

EXPENSES Property Taxes Tax Class: 2A $15,100 4% $3,775 $15,100 4% $3,775 Fuel Includes Electric $3,000 1% $750 $3,000 1% $750 80% Insurance $6,500 2% $1,625 $6,500 2% $1,625 Water and Sewer $4,020 1% $1,005 $4,020 1% $1,005 Repairs and Maintenance $3,750 1% $938 $3,750 1% $938 Super Salary $4,200 1% $1,050 $4,200 1% $1,050 Management Fee $10,649 3% $2,662 $11,112 3% $2,778 Total Expenses $47,219 13% $11,805 $47,682 13% $11,920 TAXES AS Net Operating Income $307,741 $322,707 PERCENT OF EGI

LEASE STATUS MIX UNIT BREAKDOWN % OF TOTAL RENT TOTAL AVG. RENT Total Units 100% $21,250 5 $4,250 Total RS Units 0% $0 0 $0 4% Total RC Units 0% $0 0 $0 Total FM Units 80% $21,250 4 $5,313 Total Commercial 20% $0 1 $8,755

RENTAL ANALYSIS BY UNIT TYPE TYPE % OF TOTAL RENT TOTAL AVG. RENT Studio 0% $0 0 $0 EXPENSE RATIO 1 Bedroom 0% $0 0 $0 2 Bedroom 0% $0 0 $0 3 Bedroom 100% $21,250 4 $5,313 4 Bedroom 0% $0 0 $0 5 Bedroom 0% $0 0 $0 13% 6 Bedroom 0% $0 0 $0 SRO 0% $0 0 $0

UPSIDE ANALYSIS $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom 5 Bedroom 6 Bedroom SRO

Current Avg RS Units Market Rents Current Avg FM Rents 165 Avenue B PROPERTY DESCRIPTION PROPERTY DESCRIPTION

CITY: New Yorki

STATE: NYi

BLOCK & LOT: 393 / 4i

LOT DIMENSIONS: 23 x 93i

LOT SF: 2,201i

BUILDING DIMENSIONS: 24 x 63i

BUILDING SF: 5,608i

ZONING: C1-5/R7Ai

MAX FAR: 4.00i

AVAILABLE AIR RIGHTS: 3,196i

LANDMARK DISTRICT: Nonei

HISTORIC DISTRICT: Nonei

ANNUAL TAX BILL: __$15,100i

TAX CLASS: 2Ai

165 Avenue B BOROUGH

Manhattan is a significant part of a much larger population system; the New York City metropolitan area is the largest in the United States, with more than 19 million inhabitants in three states.

CONFIDENTIAL

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2016 Marcus & Millichap SUBJECT PROPERTY

165 Avenue B

PROPERTY DESCRIPTION | PROPERTY PHOTOS

165 Avenue B PROPERTY DESCRIPTION | PROPERTY PHOTOS

165 Avenue B MARKET OVERVIEW MANHATTAN

The island is one of New York City's five boroughs, is an island New York Harbor contains docks for freight and approximately 13 miles long and two miles wide. Solid bedrock provides passenger ships and provides ferry service to New a firm foundation for the high-rise buildings that dominate the skyline. Jersey and around the city.

Manhattan's deep-water port and proximity to the nation's interior bolster its position as a global economic powerhouse. Manhattan also contains Central Park, which encompasses 843 acres in the center of the MARKET HIGHLIGHTS island and is considered one of the nation's premier public spaces.

BOROUGH Large population: New York City is the United States’ largest city, Manhattan is home to over 1.6 million residents who are part of a much with upwards of 8 million residents. larger population system; the New York City metropolitan area is the largest in the United States, with more than 19 million inhabitants in Top address for corporate headquarters: three states. New York City consists of five boroughs with about 8.4 40+ Fortune 500 companies call New York City million people. home.

Manhattan is well placed, being 100 miles from Philadelphia, 210 miles High barriers to development: from Boston, 230 miles from Washington, D.C., and 790 miles from few parcels of developable Chicago. land + high costs = limits to new construction. INFRASTRUCTURE

New York City has an extensive mass-transportation network. Subway GROWTH PATTERNS and bus systems serve virtually every area in the five boroughs. There are 468 stations in the New York City Transit subway system, including 147 stations in Manhattan. Grand Central Station and Penn Station, both in Midtown Manhattan, provide rail service to the suburbs and long- distance connections, while three international airports offer flights to most global destinations.

The island of Manhattan is linked to the other boroughs and New Jersey by 11 bridges and four tunnels for vehicular traffic, with numerous additional tunnels for subway and rail lines. Highways along the borough's eastern and western edges connect to freeways throughout the five boroughs.

165 Avenue B MANHATTAN

ECONOMY Manhattan is also an important location for many retailers, both national and local. Retail sales in the borough typically New York City is home to around 40 Fortune 500 companies, grew faster than the U.S. rate over the past decade. more than any other MSA in the country, and most are located in Manhattan. The city serves as the epicenter for a wide LABOR variety of industries, making the performance of its local economy integral to the nation. The Port of New York is also a Job growth in Manhattan slowed over the past five years as the vital component of New York’s centrality to American and economic downturn weighed on the local manufacturing; regional trade. information; trade, transportation and utilities; and financial activities sectors. Losses will continue in manufacturing As one of the leading financial centers in the world, New York through 2015, although the pace will decelerate from previous City boasts many international banks and financial firms years. maintaining offices in the city. Professional and business services is the largest employment Wall Street is a major driver of the local economy, as a sector, accounting for over 470,000 positions, or 20 percent of significant number of people are employed directly in the the labor force. The government sector follows closely, with 19 securities industry. The city is a hub for the media, percent of jobs in Manhattan. These sectors will post average communications and publishing industries. The major annual gains of 2.3 percent and 1.2 percent, respectively, over television networks have substantial operations in Manhattan, the next five years. while hundreds of newspapers, magazines and several music recording companies are headquartered in the city. In The leisure and hospitality and education and health services addition, New York City is the advertising capital of the United sectors will record the largest growth through 2015, increasing States and has a growing presence in the Internet/new media at average annual rates of 3.1 percent and 2.9 percent, field. The entertainment and tourism industries are crucial to respectively. An annual gain of 2.9 percent is also expected in the Manhattan economy, with numerous theaters and the other services sector. attractions drawing billions of dollars each year.

CONFIDENTIAL

EMPLOYERS MAJOR EMPLOYERS

Over half of Manhattan’s labor market is involved in financial A partial list of Manhattan’s most major employers is: activities and the services sectors. This is due to New York City New York-Presbyterian Healthcare, Wellchoice Inc., United being the headquarters of some of the largest U.S.-based Nations, Verizon Communications Inc., Continuum Health consulting businesses, accounting offices, insurance Partners Inc., Mount Sinai Hospital, New York University, companies and legal firms, as well as the United Nations. In Columbia University, Viacom, and Time Warner. addition, Manhattan is the financial center of the country and home to the New York Stock Exchange, being one of the only DEMOGRAPHICS two Alpha++ cities in the world, sharing the title with London. Many of the world's top securities firms and banks are located New York City is the largest city in the United States, with over here. Major employers in the finance industry based in 8 million residents. An estimated 19 million people live within Manhattan include Goldman Sachs, JPMorgan Chase and the tri-state metro area. Among the five boroughs, Manhattan Morgan Stanley Smith Barney. is third largest behind Brooklyn and Queens, with a population of over 1.6 million. Manhattan grew 0.7 percent annually Media conglomerate Time Warner is the largest company in during the past decade, a rate expected to continue through the information sector, employing thousands of people in 2015. Manhattan from its headquarters at the Time Warner Center in Midtown. Other large media employers in the borough are The share of Manhattan residents with a Bachelor’s degree is Viacom and Verizon. The education and health services sector more than 34 percent, far above the national average of almost accounts for 13 percent of jobs in Manhattan. Large employers 28 percent. Additionally, more than 14 percent of the borough include New York University, Columbia University, New York- residents over age 25 have a graduate degree, compared to Presbyterian Healthcare, Mount Sinai Hospital and Continuum just over 10 percent nationally. There are significant and Health Partners Inc. noteworthy differences between Manhattan’s demographic profile and the profile of the nation.

165 Avenue B MANHATTAN

In particular, residents under age 20 make up only 20 percent A variety of entertainment options are available to of Manhattan's population, compared to 27 percent at the U.S. Manhattanites, including Broadway shows, first-run films and level. Additionally, residents ages 25 to 44 comprise 37 famous nightlife venues. There are two MLB teams, two NFL percent of the local population, up from 27 percent nationally, teams, two NHL teams and two NBA teams within the metro. as this vital job market attracts many in their prime working New York City has an extensive public park system, the jewel of years. which is Central Park in Manhattan.

Although Manhattan’s median household income stands at a Central Park offers natural areas, lawns, playing fields, running healthy $68,100 annually, the borough also has one of the trails, biking paths, boating facilities and a zoo. Manhattan's highest housing costs in the country, with the median home world class art museums include the Metropolitan Museum of price resting at nearly $1.2 million. Art, the Guggenheim and the Museum of Modern Art. The city's international flavor is on display in the island's many QUALITY OF LIFE restaurants, featuring recipes from around the world.

Manhattan offers a quality of life unique even within the New York’s island of Manhattan continues to rise in culture, nation’s largest cities. Although housing costs are among the quality of life, and wealth. As a global gateway city, New York most expensive in the country, the borough provides a variety will continue to deliver promising opportunities and investment of cultural, entertainment and employment opportunities. The potential. area is one of the few places in the United States where a person can live without a car and rely completely upon mass transit. You can get anywhere easily by taking the subway, buses or taxicabs, and rail terminals and airports make long- distance travel accessible.

CONFIDENTIAL

NEIGHBORHOOD HISTORY

The East Village stretches from 14th Street to the North and Dutch Governor – General Wouter Van Twiller owned the farm Houston to the South and is between the Bowery and Third of what is now the East Village and left the land to Petrus Avenue to the East River. Within the neighborhood are distinct Stuyvesant in 1651. His family owned the land for seven areas with individual history and characteristics: St. Marks generations, until a family member started selling parcels of Place, the Bowery, Alphabet City, and Loisaida. Known as a the farm for profit in the early 19th century, at which time downtown “bohemian” enclave, the East Village is a mix of owners began developing luxury townhomes in the area. pre-war, walk-up tenement buildings and newly developed Nonetheless, some land owners decided to build multi-family luxury, high-rise condominiums. tenement dwellings to house the growing immigration population of the Germans and Irish in the 1840’s and 1850’s. After the neighborhood’s gentrification, the area no longer This was the start of the East Village changing from a wealthy predominantly attracted young, hip artists, but also appealed classed area, to a working class neighborhood. By the early to families and young professionals seeking a blend of 1900’s, the quickly growing German demographic turned the condominium living and downtown nightlife. As a result, few East Village into America’s first foreign language neighborhoods have experienced such a drastic change in the neighborhood. past few decades as the East Village. In mid-twentieth century, the East Village transitioned again AMENITIES & TRANSPORTATION into a growing music and art scene. In 1968, Bill Graham opened the Fillmore East, which became known as “The The East Village’s highlight attraction is its beautiful and Church of Rock,” and featured up and coming artists that welcoming Tompkins Square Park on the border of Avenue A. would soon become world-renowned, such as The Who, Led Filled with children’s playgrounds and the first dog-run in all Zeppelin, and Jimi Hendrix. The neighborhood was also home of New York City, the park attracts local residents and to the club CBGB, which featured famous musicians like neighborhood visitors alike. Residents can also stroll along the Madonna, the Ramones, the Beastie Boys, the Strokes, and East River Park, which has undergone major renovation and many more! The East Village was also a haven for culture and now includes an amphitheater and soccer field. People can art and introduced post-modern art to America in the 1970’s also enjoy an eclectic mix of modern art, trendy cafes, upscale and 1980’s. boutiques, and one-of-a-kind vintage shops that attract individuals of all different tastes and personalities. The As the East Village became more recognized for its artistic and neighborhood also has no shortage of nightlife. With strong bohemian vibe, and as a “hip” place to hear great musicians restaurant density and diversity, as well as the highest and view the latest art, the neighborhood became more concentration of bars in the city, people are guaranteed a recognized. As a result, the demand for housing increased and good time in the East Village. increased prices. Consequently, the demand has led to gentrification of the area and has driven out many of the The F train is accessible at the Second Avenue Station. The L is musicians and artists who influenced the town. While the East accessible at First and Third Avenues and brings you to the N, Village maintains much of its character, long time residents Q, R, 4, 5, and 6 trains at Union Square . fear that gentrification will diminish the neighborhood’s originality.

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