Displacement Alert Watchlist July 2018

DISPLACEMENT ALERT WATCHLIST JULY 2018

Landlords, developers, banks, and brokers often seek speculative prices and overleveraged financing, which fuel a cycle of tenant harassment and displacement known as “predatory equity”. The monthly Speculator Beware Watch List shows rent-regulated buildings that are currently being marketed for sale at prices that may rely on low-rent paying tenants being pushed-out. This is a valuable new tool because tenants and community organizers can work together with proactive organizing strategies if they can identify speculation before it happens. We use three standard real estate industry metrics to assess the risk of speculation. For organizers and tenants, we think that the Gross Rent Multiplier (Asking Sales Price ÷ Gross Rental Income) gives the clearest view of the risk of speculation in each building, so we have color-coded that column to make the risk clear. A high gross rent multiplier (above 11) could mean the buyer will either have to wait an unusually long time to make back their investment, or, they are expecting to push out low-rent paying tenants.

Where Is The Is It Rent- Is It Speculative? Should Tenants Be Concerned?* Risky Building? Regulated? Speculation Address CD Total % of Rent Asking Capital- Est. Debt Gross Rent Current Projected Notes & Quotes from Offering if it’s an 11 or above # of Regulated Sales Price ization Service Multiplier Avg Speculative Sheet Units Units Rate Coverage (GRM) Monthly Avg Monthly (Cap Rate) Ratio Rent Rent Very Risky XXX 5 25 100% $4,100,000 5.25% 1.57 11.73 $1,165 $1,242 5 units have preferential rents Speculation Miller Ave if it’s a 15 or above XXX East 12 20 95% $4,500,000 3.11% 0.93 17.31 $1,083 $1,705 One unit is vacant. 5th St XXX East 11 53 100% $14,995,000 2.21% 0.66 23.03 $1,024 $2,143 "The buildings have received a J-51 Highest Risk 105th St tax abatement since 1991 and will Speculation phase out in 2025." 10 units have preferential rent. if it’s a 20 or above

Should Tenants Be Concerned?* Should Tenants Be Concerned?* 1. Current Avg Monthly Rent (ANHD estimate of average monthly rent) is based on actual rent roll. Current Projected Notes & Quotes from 2. Projected Speculative Avg Monthly Rent (an estimate of the average rent needed to bring the Avg Speculative Offering Sheet Monthly Avg Monthly Gross Rent Multiplier - or GRM- to 11) For a buyer to get a reasonable return on their investment, ANHD Rent Rent estimates that average monthly rents could need to increase to the amount shown in this column.

*These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set.

Please see the last page for a full Glossary / Methodology

1 SPECULATOR BEWARE WATCH LIST JUNE 2018

77 Atlantic 2 6 67% $4,750,000 4.47% 1.34 16.14 $3,065 $4,498 "four of the six apartments are subject to rent regulation, offer- Avenue ing both immediate and long-term upside." 554 Dekalb 3 6 N/A $3,950,000 4.91% 1.47 15.73 $2,616 $3,741 "Unit 1 and 3 will be delivered vacant, as well as the rear retail, Avenue offering immediate upside potential via renovation." 349 Hoyt 6 4 0% $3,700,000 3.72% 1.11 21.87 $3,525 $7,008 Gross Rental Income is based off projected annual rent. 2 of 4 Street units are vacant, other two units rent for $1,700 & $1,400. Both units are "projected" to increase to $3,200/month. 353 Bay 10 42 98% $15,250,000 3.00% 0.90 21.12 $1,399 $2,687 Average residential rent $1,258 Ridge Parkway 2151-2155 15 24 100% $11,900,000 4.74% 1.42 21.97 $1,881 $3,756 Ocean Ave- nue BROOKLYN - STILL ON MARKET FROM JUNE (ALL NEW UPDATES ARE IN RED TEXT)

400 5th Ave 6 3 33% $2,790,000 4.84% 1.45 14.87 $3,908 $5,284

85 Quay St 1 6 67% $5,950,000 6.27% 1.88 12.55 $5,642 $6,439 Under Contract The two FM units are vacant/former owner occupied. The RS units are under "loft law." They list two possible "pro forma" scenarios, one of which assumes renovating unit with existing unit mix and the other divides the vacant units into additional small- er apartment units. Gross potential income is listed for "current" situation, pro forma 1 and pro forma 2. 397 4th Ave 6 6 83% $2,250,000 N/A N/A 30.12 $1,038 $2,841 Price Drop

706 Grand St 1 6 0% $3,700,000 2.79% 0.84 23.97 $1,838 $4,004 "All of the residential units are on month-to-month leases. The current owner has owned and attentively managed the building for nearly three decades." 305 Living- 2 6 83% $4,500,000 2.24% 0.67 26.40 $1,776 $4,261 One unit is vacant. "The commercial units are presently occupied ston St by a hair salon and a hat store, both of which are on month-to- month leases at below-market rents. In addition to the upside in both residential and commercial rents, 305 Livingston Street falls within the Special Downtown Brooklyn zoning district, which allows for an asof-right FAR of 10 (12 with the Inclusion- ary housing bonus) providing an additional 10,377-13,215 sf of development rights."

2 *These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

2351 Pacific 16 6 100% $1,150,000 5.09% 1.53 12.65 $1,082 $1,245 St 206 Bush- 1 7 86% $2,795,000 4.47% 1.34 17.44 $1,669 $2,647 wick Ave 285 Mac- 3 7 43% $2,895,000 4.92% 1.48 15.50 $2,223 $3,133 Donough St 283 Ever- 4 8 100% $3,700,000 8.03% 2.41 10.71 $3,600 $3,504 Under Contract green Ave Vacant eight-unit building. All units are 4 bedrooms; pro forma rent is $3600/unit. In contract. 164 Dikeman 6 8 50% $2,750,000 5.31% 1.59 14.98 $1,912 $2,604 "Currently there are average in place rents of $30.87/SF, which is St significantly below the market of $50/SF." 313 South 1 12 25% $4,000,000 4.04% 1.21 16.17 $1,718 $2,525 "Three apartments are rent stabilized yielding roughly 60% of 4th St market rent. Three apartments are currently vacant and have been renovated, while the remaining 6 are free-market." 646 Presi- 6 12 17% $5,450,000 4.31% 1.29 15.95 $2,373 $3,441 dent St 1097 Pros- 8 13 23% $6,500,000 5.87% 1.76 12.86 $3,240 $3,788 "Three (3) three-bedroom apartments are vacant. Ownership can pect Pl potentially deliver additional vacancies in the building." 211 Lafayette 2 15 100% Submit N/A N/A N/A $1,294 N/A "The property offers investors the ability to capitalize on a be- Ave offers low-market rent roll." 70 Patchen 3 17 100% $5,050,000 5.02% 1.50 14.98 $1,653 $2,250 Under Contract Ave Has a J-51 tax benefit. Benefit is in year 23 of 34 (started in 1994 and goes until 2028). East Flatbush 17 17 N/A $4,300,000 5.37% 1.61 13.30 $1,497 $1,810 "The East Flatbush Portfolio is opportunity for investors to ac- Multifamily quire a package of residential apartment buildings at an attrac- Portfolio tive gross rent multiple in an up and coming neighborhood."

*These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings 3 on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

27-35 Madi- 3 21 100% $8,495,000 5.88% 1.76 9.90 $3,404 $3,065 Average Studio Apt rents: $785 Average 2BR rents: $2088 "Op- son Street portunity to reposition both the commercial and residential to capitalize on the changing neighborhood and upside in the current rents." 451 West 4 21 62% $7,250,000 2.67% 0.80 19.90 $1,446 $2,615 36th Street 202 Eighth 4 8 100% $8,725,000 3.55% 1.07 21.77 $3,710 $7,344 "The property is an opportunity for an investor to purchase a Avenue mixed-use asset with at remendous amount of upside in the rents in the heart of Chelsea" **Average Residential Rendt $827/ Month** 215 West 4 16 100% $7,250,000 2.08% 0.62 52.49 $677 $3,231 100% SRO units 14th Street 410 West 4 20 50% $10,250,000 4.80% 1.44 14.00 $2,773 $3,530 36th Street 106 West 7 9 44% $5,750,000 2.87% 0.86 20.30 $2,622 $4,840 80th Street 473 Central 7 61 39% $45,000,000 3.78% 1.13 19.24 $2,953 $5,165 "The Rent Stabilized units are renting for an average of $1,166 Park West per month, which represnts a 69% discount to prevailing Free Market rents within the building." 166 & 168 7 40 100% $13,450,000 2.42% 0.72 23.63 $1,186 $2,547 "Rents of 50% Below Market" West 107th Street 445 East 8 13 0% $9,400,000 4.23% 1.27 19.73 $3,054 $5,478 78th Street

4 *These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

Where Is The Is It Rent- Is It Speculative? Should Tenants Be Concerned?* Building? Regulated? Address CD Total % of Rent Asking Capital- Est. Debt Gross Current Projected Notes & Quotes from Offering Sheet # of Regulated Sales Price ization Service Rent Avg Speculative Units Units Rate Coverage Multiplier Monthly Avg Monthly (Cap Rate) Ratio (GRM) Rent Rent 1761 Amster- 9 13 54% $5,750,000 4.74% 1.42 14.02 $2,442 $3,111 dam Avenue 40-42 West 10 24 29% $11,950,000 4.64% 1.39 14.06 $2,951 $3,772 127th Street 48 Saint 10 42 31% $21,500,000 4.24% 1.27 16.50 $2,585 $3,878 "Chance to own a turn-key elevator building and still capitalize Nicholas on the remaining upside in the rents." Place 214 East 11 7 71% $2,550,000 5.91% 1.77 20.53 $1,479 $2,760 111th Street 337 East 11 8 100% $2,400,000 2.90% 0.87 21.07 $1,186 $2,273 All units are 2 BR with average rents of $1,186 104th Street 561-569 West 12 19 100% $10,500,000 4.19% 1.26 17.02 $2,448 $3,788 "Residential operating rents are below market providing inves- 181st Street tors the opporunity to ake advantage of a strengthening rental market in Washington Heights." 502 West 12 12 67% $3,950,000 3.75% 1.13 15.62 $1,621 $2,302 "Present ownership reently completed a full upgrade of the 167th Street common areas to a quality reminiscent of buildings typically found in downtown markets." 533 West 12 13 100% $1,450,000 2.31% 0.69 23.11 $402 $845 """ Once vacant, this represents an incredible opportunity for a 162nd Street 1-4 family conversion where an end user can live and/or collect income""" 452 Fort 12 56 63% $25,000,000 3.27% 0.98 19.57 $1,901 $3,382 "Upside Chart" signifies large potential for "upside" for 3 BR units Washington in building Avenue MANHATTAN - STILL ON MARKET FROM JUNE (ALL NEW UPDATES ARE IN RED TEXT)

8 Beach St 1 5 20% $19,995,000 N/A N/A N/A N/A $18,935

34 8th Ave 2 19 42% Submit N/A N/A N/A $3,371 N/A offers 101 7th Ave 2 7 29% Submit N/A N/A N/A $5,041 N/A South Offers 127 West 2 7 14% $12,500,000 1.29% 0.39 48.19 $3,088 $13,528 12th Street 125 Madison 3 15 87% $4,950,000 4.36% 1.31 16.33 $1,579 $2,344 Price Drop St

*These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings 5 on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

Where Is The Is It Rent- Is It Speculative? Should Tenants Be Concerned?* Building? Regulated? Address CD Total % of Rent Asking Capital- Est. Debt Gross Current Projected Notes & Quotes from Offering Sheet # of Regulated Sales Price ization Service Rent Avg Speculative Units Units Rate Coverage Multiplier Monthly Avg Monthly (Cap Rate) Ratio (GRM) Rent Rent 197 East 3rd 3 16 100% $9,200,000 3.96% 1.19 16.78 $2,687 $4,100 "The building currently benefits from a J-51 Tax Abatement, St which expires in 2024/2025. As a result, all of the residential apartments are rent stabilized. Units 2, 5, 6, 7, 8, 10, 11 and 13 have recently been completely got renovated with significant updates and therefore have legal rents that are above market. As a result, these units are receiving preferential rents below the legal rent." 318 East 9th 3 16 100% $9,200,000 3.10% 0.93 19.71 $2,161 $3,872 Two units have preferential rents. St 534 East 3 16 31% $8,950,000 4.66% 1.40 14.88 $2,784 $3,767 14th St 146-150 10th 4 48 19% Ownership N/A N/A N/A $4,825 N/A Ave Requests Offers 410-412 West 4 18 11% $12,975,000 3.36% 1.01 20.28 $2,963 $5,461 22nd St 246-248 10th 4 15 13% $28,000,000 3.52% 1.05 21.20 $6,878 $13,258 "246-248 Tenth Avenue is ideal for a long term neighborhood Ave investor or foreign purchaser seeking a low maintenance asset." 105 West 5 52 31% $55,000,000 N/A N/A 29.88 $2,691 $7,310 "The rent stabilized component of the property offers long term 55th St potential either through buyouts of existing tenants or through unit turnover over time." 42, 44 & 46 5 9 11% $28,500,000 3.30% 0.99 20.34 $6,867 $12,701 "There is significant upside potential of more than 35% in the East 21st St fair market rents which average approximately $47 per square foot. The rent regulated unit is paying approximately $14 per square foot." 224 East 6 24 13% $14,950,000 2.67% 0.80 20.18 $2,572 $4,719 48th St 440 3rd Ave 6 13 46% $13,500,000 1.93% 0.58 29.42 $2,731 $7,305 "The building offers investors a unique opportunity to own a cash flowing asset with tremendous upside in the 6 rent stabilized units as well as the 7 free market units which are all well below market for renovated apartments of the same size in this neighborhood." 342 East 6 25 12% $13,250,000 3.99% 1.20 16.86 $2,620 $4,015 "Free market units are achieving an average rent per square foot 55th St of $75. Rent stabilized units are renting at a 41% discount to prevailing market rents within the building"

6 *These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

958 Madison 8 4 25% $35,000,000 3.88% 1.16 18.43 $22,604 $37,879 Price Drop Ave 118 East 8 38 55% $48,500,000 3.18% 0.95 22.77 $4,671 $9,669 "The property is currently renting at approximately $57 per net 93rd St square foot in a market than can achieve rents close to $85." 1122 Third 8 7 29% $8,600,000 4.80% 1.44 15.39 $5,821 $8,144 Ave 1020-1024 8 25 24% $27,500,000 4.63% 1.39 14.58 $5,613 $7,440 "Residential rents throughout are below market and present Third Avenue immediate upside upon turnover." 313 East 61st 8 22 27% $7,995,000 3.20% 0.96 16.43 $1,763 $2,633 Under Contract St 424 East 8 10 30% $10,950,000 1.22% 0.36 43.02 $2,121 $8,295 "Aside from taking advantage of a rising rental market, investors 83rd St can also realize significant upside by redeveloping the property to accommodate larger units and capitalize on the demand for luxury-grade product. Such capital improvements may allow investors to nearly double the present gross income to match today’s market levels."

*These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings 7 on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

Where Is The Is It Rent- Is It Speculative? Should Tenants Be Concerned?* Building? Regulated? Address CD Total % of Rent Asking Capital- Est. Debt Gross Current Projected Notes & Quotes from Offering Sheet # of Regulated Sales Price ization Service Rent Avg Speculative Units Units Rate Coverage Multiplier Monthly Avg Monthly (Cap Rate) Ratio (GRM) Rent Rent 784-786 8 10 0% $22,500,000 3.94% 1.18 17.84 $8,083 $13,112 Lexington Avenue 624 & 630 9 42 64% Ownership N/A N/A N/A $1,548 N/A "Residential rents are currently operating well below market lev- West 139th requests els, providing investors significant upside potential in a rapidly St proposals expanding area of Hamilton Heights." 3440 Broad- 9 34 62% $22,250,000 3.11% 0.93 22.40 $2,019 $4,111 way 363 & 367 9 46 24% $12,995,000 4.49% 1.35 14.95 $1,575 $2,140 "75% free market units offer a blend of in-place cash flow and Edgecombe future upside" Ave 561-563 West 9 26 65% $7,500,000 2.96% 0.89 18.33 $1,311 $2,185 Under Contract 140th St 1761 Amster- 9 13 54% $5,750,000 4.74% 1.42 14.02 $2,279 $2,904 dam Ave 3427-3435 9 31 65% Ownership N/A N/A N/A $2,279 N/A Under Contract Broadway Seeking One SCRIE and one DRIE tenant. / 600 West Proposals 140th St 759 St Nicho- 9 9 67% $3,250,000 4.60% 1.38 16.46 $1,828 $2,736 "Apartments are currently renting for an average of $1,745 per las Ave month and $39 per net square foot in a market that can achieve close to $50." Three have preferential rents. 187 Lenox 10 5 20% $4,150,000 4.29% 1.29 18.26 $3,157 $5,240 Ave 2299 Adam C 10 20 100% $4,400,000 6.15% 1.85 11.69 $1,364 $1,449 All units are SROs Powell Blvd 2067 Adam 10 16 100% $10,500,000 5.37% 1.61 15.07 $3,225 $4,419 "The property benefits from a J-51 Tax Abatement" Clayton Pow- ell Jr. Blvd 348-350 10 18 61% $9,000,000 3.84% 1.15 18.37 $2,042 $3,409 "Notably, six units will be delivered vacant (two of which are rent Lenox Ave stabilized), presenting significant immediate upside." 108-116 and 10 97 100% $17,500,000 3.30% 0.99 16.81 $894 $1,367 "Both properties are encumbered by an HPD & HOME Regu- 152-158 West latory Agreement...22 of the 97 units are not restricted by the 141st St regulatory agreement."

8 *These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

QUEENS - NEW FOR JULY

12-15 Broad- 1 214 100% $120,000,000 4.49% 1.35 18.93 $2,468 $4,248 way 1706 Linden 5 6 100% $1,500,000 3.92% 1.18 15.18 $1,373 $1,894 Street 94-12 85th 9 16 100% $3,350,000 4.20% 1.26 13.74 $1,270 $1,586 Road 86-50 77th 9 59 100% $17,250,000 N/A N/A N/A N/A $2,215 "potentially convert the building to condominium or co-operative Street units" QUEENS - STILL ON MARKET FROM JUNE (ALL UPDATES ARE IN RED TEXT)

12-15 Broad- 1 214 100% $120,000,000 4.49% 1.35 18.93 $2,468 $4,248 Property benefits from a 15-year 421-A abatement but it is in way one of the 421a program's exclusion zones - meaning there is no affordable housing component and a new owner does not have to charge below market rents for a portion of the building. 2456 44th St 1 24 100% $7,200,000 3.23% 0.97 20.24 $1,235 $2,273 """The current average rent of $1,273.63/month and $29.25/per Sq. Ft. represents approx. 70% of the current market, providing tremendous upside potential.""" 33-14 28th St 1 9 44% $4,250,000 0.98% 0.29 20.46 $1,923 $3,577

*These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings 9 on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

840 E 156th 1 4 N/A $950,000 3.29% 0.99 7.53 $2,628 $1,799 Street 541 Coster 2 6 100% $1,495,000 6.30% 1.89 10.58 $1,962 $1,888 "541 Coster Street is well positioned for future residential Street growth. Hunts Point, the home of the largest food distribution center in the world, is eperiencing significant number of residential conversions 957 Kelly 2 52 100% $8,000,000 6.28% 1.88 11.94 $1,073 $1,166 Street 2304 Sedg- 7 57 100% $15,950,000 4.62% 1.39 13.49 $1,564 $1,918 Legal Rent is $105,646 more than Actual wick Avenue 12 East 14 31 100% $6,925,000 5.21% 1.56 11.54 $1,516 $1,590 196th Street BRONX - STILL ON MARKET FROM JUNE (ALL UPDATES ARE IN RED TEXT)

1151-1155 2 22 100% $4,450,000 5.48% 1.64 10.61 $1,588 $1,532 Under Contract East 165th St 8 units have Section 8. 1049 Kelly St 2 9 78% $1,825,000 6.02% 1.81 11.52 $1,467 $1,536 Under Contract Two units are vacant. 1130 Union 3 17 100% $2,950,000 4.95% 1.48 11.38 $1,200 $1,242 Price Drop Ave 1120 Fox St 3 11 100% $2,100,000 5.67% 1.70 9.60 $1,402 $1,224 Price Drop

10 *These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

721 Henry St 6 7 71% $2,995,000 5.61% 1.68 14.36 $2,173 $2,836 "Two (2) of the units are newly renovated and are now free market, the other five (5) units are rent stabilized and present future upside." 787 Hart St 4 6 67% $2,150,000 4.60% 1.38 16.44 $1,817 $2,715 4 of the 6 units have been recently renovated.

431-433 1 16 19% $6,500,000 4.61% 1.38 18.09 $1,871 $3,078 "Three apartments are rent stabilized yielding roughly 46% of Wythe Ave- market rent. Four ground floor apartments are currently vacant nue (part of and most have been renovated, while the remaining nine are Williamsburg free-market and yield $50/SF in revenue" Southside Portfolio) 471-475 16 12 50% $2,950,000 4.14% 1.24 15.99 $1,281 $1,862 "The average monthly rent is $1,250, 50% of market levels, offer- Chauncey St ing significant and clear upside while collecting a solid return in the short term." 147 Consely- 1 8 100% $2,550,000 1.19% 0.36 37.08 $716 $2,415 Lists a GRM of 37.1 under current metrics and a GRM of 16.4 ea St under pro forma metrics. 299 East 17 6 100% $1,250,000 5.25% 1.58 12.04 $1,442 $1,578 All 6 units have preferential rent. 54th St MANHATTAN

1401-1407 12 33 48% $27,500,000 3.60% 1.08 16.90 $3,154 $4,845 St. Nicholas Ave The Harlem 10 100 80% $32,500,000 4.33% 1.30 15.06 $1,763 $2,414 "With 80% of the units in the portfolio rent regulated at an av- 100 erage rent of $1,543 there is a ton of upside remaining in these units. An investor will also be able to tap in the $127,000 in preferential rent that’s the portfolio offers."

*These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings 11 on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

82 Christo- 2 8 13% $11,500,000 3.85% 1.15 20.36 $4,706 $8,712 pher St 224 East 6 16 38% $14,250,000 4.21% 1.26 17.63 $3,963 $6,350 """Of the 16 units, six are rent stabilized, the rest are free 59th St market. There is ability to expand the stabilized units into common area/amenity space upon vacancy.""" 1976 Madi- 11 10 100% $2,675,000 4.79% 1.44 16.59 $1,344 $2,027 "Investors are presented with the opportunity to capitalize on an son Ave a completely rent stabilized building in Northern Manhattan’s most dense area." 1469 5th Ave 11 29 93% $10,200,000 4.29% 1.29 16.15 $1,645 $2,415 Building is in between two brand-new buildings by the same owner. Two units are vacant. 524 East 11 35 94% $9,500,000 4.51% 1.35 13.18 $1,717 $2,056 Two units are vacant. 119th St 88 East 11 28 100% $10,000,000 4.50% 1.35 14.00 $1,984 $2,525 "88 East 111th Street presents investors with the opportunity to 111th St own a well operating asset, with significant retail and residential rental upside, in a rapidly appreciating neighborhood" 13-19 Hamil- 9 78 83% $24,500,000 3.61% 1.08 17.44 $1,501 $2,380 ton Terrace 410 West 4 20 50% $10,250,000 4.39% 1.32 14.39 $2,580 $3,376 36th St 125 West 10 19 100% $14,800,000 5.54% 1.66 16.34 $3,974 $5,901 Both buildings have a J-51 tax abatement. 138th St & 209 West 135th St 99 Allen St 3 18 6% $12,250,000 4.50% 1.35 16.10 $3,170 $4,640

12 *These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

114-11/19 14 16 100% $4,650,000 5.45% 1.64 12.95 $1,425 $1,677 Rockaway Beach Blvd

*These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings 13 on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set. SPECULATOR BEWARE WATCH LIST JUNE 2018

GLOSSARY/METHODOLOGY:

The Speculator Watch List is a partial list, based on information we can glean from available sources. Every building is unique, but we use three standard real estate industry metrics to assess the risk of speculation – 1) Capitalization Rate, 2) Debt Service Coverage Ratio, and 3) Gross Rent Multiplier.

Capitalization Rate, or “Cap Rate” (Net Operating Income ÷ Sales Price) is an indicator of the rate of return the purchaser can expect to earn on his/her investment. We use asking sales price on the Watch List because there is no final sales price yet. If the cap rate is relatively low, there may be reason for concern that the owner may seek to quickly raise the rents to earn a higher rate of return. Currently, cap rates in New York City often range from about 3% to 5.25% depending on location and age of the building. Rent-regulated buildings are often closer to 4.5% - 5.5%. Cap rates below the norm may be cause for concern.

Debt Service Coverage Ratio (Debt Payment ÷ Net Operating Income, ANHD calculation based on an assume 30-year mortage at 60% of the asking price and a 3.75% interest rate) is an indicator of whether the payments on the mortgage debt can be supported by rent from the existing tenants. A debt service coverage ratio less than 1.2X may be cause for concern and less than 1.0X may be cause for alarm because the income from the building cannot support the debt, which may mean that the purchaser expects to push out low-rent paying tenants. Some aspects of this indicator are not publically available, so this particular Watch List indicator may not be accurate. Because it is an important industry measure, we offer a few scenarios based on standard assumptions of debt and interest rates for reference.

Gross Rent Multiplier (Asking Sales Price ÷ Gross Rental Income) is the ratio of the price of a real estate investment to its annual rental income before accounting for expenses such as property taxes, insurance, utilities, etc. The GRM is one commonly-used metric in the real estate industry to compare and select investment properties because it is a broad-brush estimate of the number of years the property would take to pay for itself. A high GRM means that a property will take a long time to pay for itself and may be more speculative. A low GRM means that a property will pay for itself quickly and may be less speculative. For purposes of this Watch List, ANHD used available sources to determine a property’s asking sales price and gross rental income. A GRM of 11 or below is one commonly used indicator of a responsible price in the current New York City real estate market.

The Watch List also includes an estimate of the Current Average Monthly Rent in each building, and an estimate of what the Average Monthly Rent would have to be in order to reach a Gross Rent Multiplier of 11 or below. These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set.

14 *These two rent estimates can help organizers and tenants better understand the speculation risk. But, they are only broad estimates that help compare buildings on the Watch List that should not be taken as fact, and have no impact whatsoever on a tenant’s legal right or how the rent is legally set.