Summary Appraisal of the Roger Smith Hotel 501 Lexington Avenue New York, New York
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i. SUMMARY APPRAISAL OF THE ROGER SMITH HOTEL 501 LEXINGTON AVENUE NEW YORK, NEW YORK BLOCK 1302, LOT 21 VALUATION AS OF SEPTEMBER 4, 2012 Prepared for Phoebe Knowles Vice President The Roger Smith Hotel 501 Lexington Avenue New York, New York 10017 Prepared by JEROME HAIMS REALTY, INC. 630 Third Avenue, 22nd Floor New York, New York 10017 The Roger Smith Hotel 501 Lexington Avenue New York, New York ii. TABLE OF CONTENTS Page No. Title Page .................................................................................................................... i. Table of Contents ........................................................................................................ ii. Letter of Transmittal .................................................................................................... 1 Summary of Salient Facts and Conclusions ................................................................ 6 Purpose of the Appraisal ............................................................................................. 8 Intended Use and User of the Appraisal ...................................................................... 8 Property Rights Appraised .......................................................................................... 8 Dates of Value and Inspection .................................................................................... 8 Date of Report ............................................................................................................. 8 Definition of Market Value ........................................................................................... 8 Scope of Work ............................................................................................................. 9 Underlying Assumptions and Limiting and Qualifying Conditions .............................. 10 Hotel Market Analysis ................................................................................................ 12 Neighborhood Analysis ............................................................................................. 21 Description of Property .............................................................................................. 25 Land Description ..................................................................................................... 25 Improvement Description ........................................................................................ 27 Zoning Analysis ......................................................................................................... 30 Assessed Value and real Estate Tax Analysis .......................................................... 31 History of the Subject Property .................................................................................. 33 Highest and Best Use Analysis ................................................................................. 34 VALUATION: Introduction ............................................................................................................. 36 Income Capitalization Approach .............................................................................. 38 Sales Comparison Approach ................................................................................... 56 Final Value Opinion ................................................................................................... 58 Certification ............................................................................................................... 60 ADDENDA: Comparable Income and Expense Data .................................................................... 61 The Historical Cash Flow Summary .......................................................................... 63 PKF Comparable Income and Expenses Data .......................................................... 64 Qualifications of Appraisers………………………………….……………………. .......... 65 JEROME HAIMS REALTY, INC. JEROME HAIMS REALTY, INC. REAL ESTATE APPRAISERS & CONSULTANTS 630 THIRD AVENUE, NEW YORK, NY 10017 212-687-0154, FAX 212-986-4017 December 12, 2012 Phoebe Knowles Vice President The Roger Smith Hotel 501 Lexington Avenue New York, New York 10017 Re: The Roger Smith Hotel 501 Lexington Avenue New York, New York Block 1302, Lot 21 Dear Ms. Knowles: As you requested and in accordance with our agreement, we have inspected and appraised the above-referenced property. The subject of this appraisal is comprised of a 17-story and basement, elevator, full-service hotel, containing 130 guestrooms, a ground floor restaurant and three retail stores. The subject property was constructed in 1927 and has a gross building area of 92,501 square feet (as per New York City records). The subject property is located on the northeast corner of Lexington Avenue and East 47th Street, in the Midtown East section of the borough of Manhattan, city, county and state of New York. The subject site is irregular in shape and has 100.42 feet of frontage on the east side of Lexington Avenue and 50.00 feet of frontage on the north side of East 47th Street, containing 6,050 square feet of lot area. The subject site is located in a C5-3 general commercial zoning district within the Special Midtown District. The maximum allowable floor area ratio (FAR) for commercial uses is 15.0 and 10.0 for residential use. The date of value is September 4, 2012, the date of our property inspection. The date of the appraisal report is December 12, 2012. Phoebe Knowles Vice President The Roger Smith Hotel Re: The Roger Smith Hotel 501 Lexington Avenue New York, New York 2. The intended use of the appraisal is for estate planning purposes. The intended user of the appraisal is our client, Phoebe Knowles, Vice President of The Roger Smith Hotel. The summary report contained herein complies with the Uniform Standards of Professional Appraisal Practice. This summary report outlines the relevant data used in arriving at our opinion of market value and presents the basic approaches to value. Comprehensive data and analysis, upon which this opinion is based, are retained in our work file. We have inspected the subject property and have thoroughly investigated neighborhood and area influences that affect the property’s marketability and our value. In arriving at the appraised value, we have addressed all three standard approaches to value: the Income Capitalization Approach, the Sales Comparison Approach and the Cost Approach. We have relied on the Income Capitalization Approach since the subject property is an income producing property. The Sales Comparison Approach was used to test the reasonableness of our conclusion via the Income Capitalization Approach. The Cost Approach was not used to value the subject considering the difficulty in estimating accrued depreciation from all sources from an improvement constructed in 1927. We refer the reader to the “Scope of Work” section of the appraisal report, which includes, but is not limited to: 1) the extent to which the property is identified, 2) the extent to which the tangible property is inspected, 3) the type and extent of data researched, and 4) the type and extent of analyses applied to arrive at opinions or conclusions. JEROME HAIMS REALTY, INC. Phoebe Knowles Vice President The Roger Smith Hotel Re: The Roger Smith Hotel 501 Lexington Avenue New York, New York 3. Based on the assumptions and limiting conditions contained in this report, our opinion of the market value of the fee simple estate in the subject real estate, as of September 4, 2012, is: $53,100,000 (FIFTY-THREE MILLION ONE HUNDRED THOUSAND DOLLARS) We appreciate this opportunity to provide you with this summary appraisal. If you have any questions concerning its content, please do not hesitate to call. Very truly yours, JEROME HAIMS REALTY, INC. Eric P. Haims, MAI, MRICS, CCRA Senior Vice President Certified New York State General Real Estate Appraiser Certificate No. 46000045128 Man-Keung A. Lau, MAI, CPA Vice President Certified New York State General Real Estate Appraiser Certificate No. 46000048434 LD JEROME HAIMS REALTY, INC. 4. View of The Roger Smith Hotel 5. View East on East 47th Street from Lexington Avenue View North on Lexington Avenue from East 47th Street The Roger Smith Hotel 501 Lexington Avenue New York, New York 6. SUMMARY OF SALIENT FACTS AND CONCLUSIONS Address: The Roger Smith Hotel 501 Lexington Avenue New York, New York Block/Lot: 1302/21 Location: The subject property is located on the northeast corner of Lexington Avenue and East 47th Street, in the Midtown East section of the borough of Manhattan, city, county and state of New York. Description: The subject site is currently improved with a 17-story and basement, elevator, full-service hotel, containing 130 rooms and suites, a ground floor restaurant and three retail stores. Year Built: 1927 Lot Dimensions: 100.42 feet of frontage on the east side of Lexington Avenue and 50.00 feet of frontage on the north side of East 47th Street Lot Shape and Area: The subject site is irregular in shape and has 6,050 square feet of lot area. Gross Building Area: 92,501 square feet (as per New York City records) Zoning/FAR: C5-3/15.0 FAR for commercial uses and 10.0 FAR for residential use (Special Midtown District) Highest and Best Use: Current use as a full-service hotel Date of Report: December 12, 2012 Date of Inspection: September 4, 2012 Date of Value: September 4, 2012 JEROME HAIMS REALTY, INC. The Roger Smith Hotel 501 Lexington Avenue New York, New York 7. Summary of Salient Facts and Conclusions -- continued