W Est Mountain Properties Tableof Contents Exeutive Summary

W EST MOUNTAIN PROPERTIES TABLEOF CONTENTS EXEUTIVE SUMMARY

INVESTMENT HIGHLIGHTS

PROJECT OVERVIEW • Development Concept • Programming • Site Plan • Design Concept • Amenities ZONING ANALYSIS • Site Overview • HBU Analysis/Massing MARKET ANALYSIS • South Bronx Overview • Demand Drivers • Market Rate Rental Market • Retail Market FINANCIAL ANALYSIS • Key Assumptions • Development Budget • Capitalization & Returns • Pro Forma DELIVERY & EXECUTION • Project Delivery Schedule • Marketing Strategy RISKS & MITIGATIONS

2 EXECUTIVE SUMMARY

West Mountain Properties LLC (“West Mountain”) is pleased to present the opportunity to invest in an exciting mixed-use development project at 111 Willow Avenue in the up and coming neighborhood of Port Morris, Bronx. The proposed 9-story development will combine 172 rental apartments with 150,000 square feet of ground floor retail space.

The 20,648 square foot site is perfectly situated to attract residents and a ground floor retail tenant due to its desirable location and growth of the South Bronx neighborhood in general. For market rate rental portion, 111 Willow Avenue will leverage the South Bronx’s up and coming neighborhood position in order to attract New York singles who currently reside in Manhattan but seek for affordable options while enjoying the similar amenities they are accustomed to in Manhattan. For the ground floor retail, we will not only utilize the site’s Fresh Zone Incentive to increase the residential density but also capitalize on lack of grocery options in the neighborhood by attracting the first national grocer in the area.

West Mountain is currently under contract to purchase the site for $11.5 million, and intends to break ground in January 2020. The project is expected to be delivered in December 2022, with a total development budget of $75.7 million. The project will be funded with a $49.2 million construction loan.

West Mountain is seeking an LP equity investment of $23.8 million in exchange for a 90% share in the partnership.

Sources % of total Construction Loan $ 49,202,660 65.00% GP Equity $ 2,649,374 3.50% LP Equity $ 23,844,366 31.50%

TOTAL SOURCES $ 75,696,399 100.00%

Uses % of total Land Acquisition and Preparation Cost $ 13,535,595 17.88% Construction Costs (Hard & Soft) $ 54,424,726 71.90% Interest Reserve $ 4,761,428 6.29% Operating Reserve $ 1,282,727 1.69% Developer's Fee $ 1,691,923 2.24%

TOTAL USES $ 75,696,399 100.00% 3 INVESTMENT H IGH LIGH TS

1.Opportunity to set the standard for similar projects yet to be presented in the neighborhood • Ever since the majority of the South Bronx was rezoned in 1997 and 2005 to become a mixed-use district, the neighborhood has been the subject of rapid development. Most of revitalization projects to date, however, are still concentrated in the western portion of the South Bronx known as Mott Haven. Due to the general population growth in the South Bronx neighborhood and the wave of revitalization moving slowly yet steadily towards the eastern portion of the neighborhood, the site has a unique opportunity to set the standard for similar projects yet to be presented in eastern portion of the South Bronx known as Port Morris.

2. Easy access to major business districts in Manhattan and rest of South Bronx • 111 Willow Avenue is located only 10-minute walk from the 6 train Cypress Avenue station on 138th Street providing easy connectivity (20-minute subway ride to Grand central Station) to the major business districts in Manhattan. As mentioned in Executive Summary section, 111 Willow Avenue gives the New York singles a great affordable option with easy commute to Manhattan. In addition, the site is closely located to the growing number of businesses, such as film industry, in the South Bronx.

3. Capitalize on the zoning incentives in order to maximize the property value • The site was rezoned from M1-2/R6A to M1-4/R7D MIH in 2018 and this up-zoning enables us to increase the zoning floor area by approximately 50% (MIH and Fresh Zone Incentive blended). This extra density will generate higher income which will eventually result in maximizing the property value at the exit.

4. Attractive Risk-Adjusted Returns • The proposed development project provides an attractive risk-adjusted return. The expected project-level levered return, with modest leverage of 65%, is 23.66%. The return to LP investors is projected to be 20.39%.

IRR Multiple Profit Project Level Unlevered 19.19% 1.56 $33,815,500 Levered 23.66% 2.07 $28,362,699

LP Equity 20.39% 1.89 $25,022,540 4 PROJECT OVERVIEW

5 DEVELOPMENT CONCEPT/ PROGRAMMING OVERVIEW

Development concept and programming aims to capitalize on: 1. On-going gentrification of greater South Bronx neighborhood, 2. Easy access to Manhattan, 3. Affordability compare to Manhattan, 4. Zoning Incentives (Mandatory Inclusionary Housing, Fresh Zone) 5. Demand drivers nearby, by providing following three different uses: 1. Market rate apartments, 2. Affordable rate apartments, 3. Ground floor retail. We believe this development will set the standard for similar projects which have yet to be presented in Port Morris neighborhood, especially east of Bruckner Boulevard.

Slab Cumul. Gross Total Residential Retail Floor Amenity Use Height Height SF ZFA ZFA ZFA In ZFA Not in ZFA

Mechanical 9 11 103 2,200 - - - - 2,000

Residential 8 11 92 13,475 12,250 12,250 - - -

Residential 7 11 81 15,092 13,720 13,720 - - -

Residential 6 11 70 15,092 13,720 13,720 - - -

Residential 5 11 59 19,943 18,130 18,130 - - -

Residential 4 11 48 19,943 18,130 18,130 - - - Residential 3 11 37 18,130 - - - 19,943 18,130

Residential 2 11 26 20,053 18,230 13,230 - 5,000 -

Reatil/Lobby 1 15 15 20,350 18,500 - 15,000 3,500 - Total 146,091 130,810 107,310 15,000 8,500 2,000 FAR 6.34 5.20 0.73 0.41

Total Gross SF 146,091 Total Retail Rentable SF 14,280

Total Market Rate Rentable SF 82,559 Total Amenity SF 8,500

Total Market Rate Units 129 Building Footprint 20,648

Total Affordable Rate Rentable SF 27,520 Building Height (Feet) 103

Total Affordable Rate Units 43 6 PROGRAMMING: MARK ET RATE RENTALS Target: Market rate units target New York singles who currently reside alone in the priciest areas of Manhattan, such as Midtown, the Financial District, and Downtown Brooklyn, by paying premium known as “singles tax”. New York singles reside in these areas because not only the high share of studio and 1-bedroom inventory but also the close proximity to city’s major business districts where large number of New York singles work. By having great access to Manhattan (only 20-minute subway ride to Grand Central Station from Cypress Avenue Station), we expect to position 111 Willow Avenue to capture the demand from the New York singles who are willing to relocate to the affordable yet hip enough markets where they can save substantial amount in rent payment while enjoying similar amenities they are accustomed to in Manhattan. Unit Distribution: Market rate apartments will be located on floors from 2 to 8 occupying approximately 62% of useable building square footage. There will be 133 units of the market rate rentals and the unit mix will be 55 studios and 54 1-bed rooms, targeting the New York singles mentioned above. Average unit sizes for studios, 1-bed rooms, 2-bed rooms are 600 sf, 750 sf, and 900 sf respectively taking not only the average square footage of studios (550 sf), 1-bed rooms (750 sf), 2 bed-rooms (900 sf) in Manhattan (Curbed: “NYC apartments are shrinking, but not as much as other cities”) but also the units sizes of comparable products in the South Bronx. Pricing: The market rate units will be offered at attractive monthly average rent at $1,892 per unit for studio, $2,303 for 1-bed room, $2,708 for 2-bed room. Rents for studios and 1 bed-rooms reflect a 35-40% discount to median rent of Midtown South market ($3,550) where has the highest share of studio and 1-bedroom inventory in Manhattan. (Streeteasy: “The 'Singles Tax': Where Singles Live in NYC and What It Costs Them”) Amenities: Residents will have exclusive access to approximately 8,500 square feet of indoor amenity space such as a gym, resident lounge and bike racks located on the ground and second floor. In addition, with the "stepping down" height design of this proposed building, it will create approximately 17,500 square feet of green terraces on 6th, 8th floor setback and roof top spaces where outdoor BBQ grills and lounge chairs will be featured for residents to use during the spring/summer months. In addition to convenient access to Manhattan and attractive rental rates, residents are able to enjoy number of great amenities in the neighborhood and the site’s close proximity to Randall’s Island is one of the most significant benefits we can offer. Randall’s Island offers great environment for any kind of the athletic activities all year around and there is a large variety of cultural activities, such as film festivals and concerts, during Spring and Summer.

7 TYPICALFLOOR PLANS: MARK ET RATE RENTALS

Studio One Bed Room

Two Bed Room 8 PROGRAMMING: AFFORDABLE RATE RENTALS Unit Distribution: There will be 42 units of affordable rate apartments located on floors from 2 to 8 occupying approximately 22% of total useable building square footage (25% of residential square footage) in order to satisfy Mandatory Inclusionary Housing requirements imposed on the site due to the up-zoning achieved in 2018. The unit mix for affordable rate units will be 15 studios, 10 one bed-rooms, 11 two bed-rooms and 6 three bed-rooms to reflect the unit allocation ratio recommended by the borough president during the ULURP process. The size of each unit type is regulated by HPD design guidelines as shown in the table below.

Pricing: Affordable rate units will be targeted for the residents who are earning at or below 60% AMI and monthly rent can be charged for the affordable rate units is also regulated by HPD as shown in the table below. Though the rent can be charged for the affordable rate units are substantially below that of the market rate units, we do not have to take into account the vacancy risk for these units. The residents of affordable rate units are chosen through the lottery system coordinated by HPD and there is a long line of applicants who are on the waiting list for years. Thus the annual revenue stream of approximately $ 525,000 is guaranteed regardless of the market conditions.

Amenities: Residents of the affordable rate units can enjoy the same building amenities offered for the market rate units residents if affordable rate unit residents decides to pay annual fee of $500/unit. Market Rate Rentals Avg. Size Avg. Size GSF NSF # of Units Rent PSF Rent / Unit Studio 600 510 15 1.64 836 1 BR 750 638 10 1.66 1,059 2 BR 900 765 11 1.58 1,209 3 BR 1000 850 6 1.44 1,224 9 PROGRAMMING: GROUND FLOOR RETAIL

Target: Taking advantage of Fresh Zone incentive, we will have 15,000 square feet of retail space on the ground floor to increase the residential floor area by the equal square footage. In addition to the additional residential square footage, the maximum building height to be increased by up to 15 feet to enable the additional floor area to be accommodated. In order to be eligible for Fresh Zone incentive, our tenant target needs to be grocer who sell a general line of food and nonfood grocery products intended for home preparation, consumption, and utilization.

Having a grocer as ground floor retail tenant is great amenity not only for the residents of 111 Willow Avenue but also for the neighborhood as a whole because there are no retail options in place within a three block radius 111 Willow Ave. Most notably is the lack of a supermarket and drug store. Moreover, having a major grocer as a retail tenant on the ground floor will further increase the foot traffic along Willow Avenue and the intersecting streets.

Pricing: 111 Willow Avenue will offer attractive rental rates at $40 PSF. This is about 12% discount to the general retail market in South Bronx. By offering discounted rents, we aim to attract a grocer who is willing to open up a store in the neighborhood where one of the fastest population growth in the NYC market is achieved.

Size: 15,000 sf of the ground floor retail is perfectly in line with the recent trend of grocers shrinking their store footprint in urban communities. Chains such as Aldi and Trader Joe’s, which both operate stores typically under 20,000 square feet have been extremely successful, are opening new locations left and right.

In addition, 111 Willow Avenue can be interesting opportunity for FreshDirect to open their first physical store, similar to Amazon Books concept. FreshDirect will be able to obtain better market reputation by having physical presence at this location to demonstrate that they are not only occupying the last-mile logistic space (just opened last year) in Bronx but also delivering the healthy and fresh grocery options for the local residents. Being very close to its warehouse facility (only 2-minute drive) from 111 Willow Avenue, FreshDirect’s cost for having the physical store can be “zero to none” level.

10 PROGRAMMING: GROUND FLOOR RETAIL

Residential Lobby/ Retail Amenities

11 DESIGN CONCEPT: EXTERIOR

Exterior design will reflect the "industrial" context of the surrounding community by having modernized "factory-loft style" windows coupled with a brick façade. These design features are reminiscent of an industrial building that will complement the surrounding community rather than conflict with it. With the “Stepping-down” building height design, the building mass is reduced so that it matches with the low-built profile of the surrounding community. The type of construction will be reinforced concrete superstructure with masonry façade.

12 DESIGN CONCEPT: INTERIOR

The understated decor of mostly warm, natural materials such as oak flooring, earthen walls, real stone in the bathrooms. Minimal but welcoming, cozy and functional interior design will fill a gap between luxury and cheaper apartments in the neighborhood.

13 AMENITIES

Residents will have exclusive access to approximately 8,500 square feet of dedicated indoor amenity space, located on the ground and 2nd floor of the building and 17,500 square feet of green terraces on 6th, 8th floor setback space and roof top. Indoor amenities will include: a gym, resident lounge, and bike racks

14 Z ONING ANALYSIS

15 SITE OVERVIEW

111 Willow Avenue is a 20,648 square foot site containing 4 adjacent lots making a corner through lot along Willow Avenue between East 133rd Street and East 134th Street. The site is only a block away from Randall’s Island Connector, the ﬁrst at-grade connection from the Bronx to Randall’s Island completed in 2015 as a part of the South Bronx Greenway initiative. Through the ULURP process, the site was just up-zoned in 2018 from M1-2/R6A to M1-4/R7D. Current zoning permits residential FAR of 5.6 with the requirement of 25% residential floor area allocated for affordable housing. Due to the R7D zoning, Quality Housing bulk regulations are mandatory so new building wall needs to be at or near the street line.

16 H BU ANALYSIS/ MASSING

Lot Size 20,648 sf Total ZFA 130,629 sf

Lot Coverage 100% Total FAR 6.34

Building Height 103' Residential FAR 5.61

Commercial FAR 0.73 17 MARK ET ANALYSIS

18 SOUTH BRONX OVERVIEW

For many years, the industrial and residential waterfront enclave known as the South Bronx was emblematic of the downtrodden, urban decay that much of New York City experienced in the 1970’s and 1980’s. After the majority of the area was rezoned in 1997 and 2005, however, there has been a significant increase in South Bronx real estate development. Starting with the reposition of The Clock Tower (former piano factory into the luxury rentals) in 2002, prominent developers are coming into this market and scooping up land and properties at record prices. This level of investment, combined with existing area changes such as marked population growth, planned waterfront revitalization, comparatively low land costs and rising rental pricing, all indicate that a real estate boom is underway. Just like the booming Brooklyn neighborhoods of Williamsburg and Dumbo, Mott Haven and Port Morris are one, two, or three subway stops from Manhattan, with waterfront locations that provide great views of Manhattan. The areas are also flush with vacant lots and industrial buildings in disrepair — the types of properties that have long been successfully converted by developers. Additionally, several political and other external factors have laid the groundwork for the impending construction boom, including Borough President Ruben Diaz Jr.’s support for the progression of development in the area, Mayor De Blasio’s $200 million capital investment into the Lower Concourse; the opening of the Randall’s Island Connector (a walking/biking pathway) and the planned revitalization of a substantial stretch of land along the Harlem River (“The Haven Project”).

The Clock Tower Lower Concourse

Randall’s Island Connector The Haven Project 19 DEMAND DRIVERS/ NEW DEVELOPMENTS/ POTENTIALTH REATS

1 Silvercup Studios North 1 Port Mooris Distillery 1 Boles Studio 2 Fresh Direct 2 The Bronx Brewery 2 Thrift World Antiques 3 The Point CDC 3 Bronx Tavern 3 Alexander Antiques 4 Global Energy Efficiency 4 Pier 132 4 ID Studio Theater NY 5 BXL Business Incubator 5 Pio Pio 5 Wallworks 6 BLOX TV 6 Charles Bar and Kitchen 6 LDR Studio Gallery 7 America Works 7 Bruckner Bar and Grill 7 BronxArtSpace 8 Duro UAS 8 Mott Haven Bar and Grill 8 Longwood Art Gallery 9 NYC Human Resources Administration 9 South Bronx Farmer's Market 9 Mott Haven East Historic District 10 Light Box NY 10 Alexander Café 10 Pregones Theater

1 Saint Mary Parks 1 Union Crossing 1 2401 Third Avenue 2 Pier 132 2 Harlem River Yards 2 445 Gerard Avenue 3 Randall's Island Parks 3 Bronx Point 3 1159 River Avenue 4 Bronx Kills 4 570 E 137th St. 4 221 East 138th Street 5 South Bronx Greenway 5 Bronx Commons 5 475 Exterior Street 6 Crossfit SoBro 6 La Central 7 Crossfit Concrete Jungle 7 20 Bruckner Blvd. 8 South Box 8 Bronx General Post office 9 Bronx Yoga Hub 10 Yankees Stadium 20 MARK ET RATE RENTALS

The South Bronx is in the midst of a development boom. Due to its proximity to the waterfront and being the first stop on 4, 5, 6 lines out of Manhattan, Mott Haven, western portion of South Bronx, has received most of the attention. Though Mott Haven’s rental landscape primarily consisted of renovated walk-ups for years, we now see an increasing number of luxury high-rise residential properties in the neighborhood offering amenities comparable to what we might find in Manhattan. Rents in South Bronx are rising fast. According to Zumper, the median rent in the neighborhood has jumped by 15 percent in 2017 while median rents across New York city went down in the same period. Popular neighborhoods in Manhattan and Brooklyn saw the sharpest declining percentages. In Mott Haven, a one-bedroom apartment can run anywhere from $1,900/month for units in renovated walk-ups to $2,600/month for units in newly developed luxury buildings. Two-bedrooms run anywhere from $2,400 to $2,900/month and three-beds can range from $2,300/month to $3,000/month. It is difficult to find much rental apartment comparable in Port Morris, especially in the area east of Bruckner Expressway and this is simply because there had not been enough new residential developments in the neighborhood over the last couple of years. With the demand drivers listed in the previous section, however, we expect to perfectly position 111 Willow Avenue to capitalize on the growing demand which is steadily moving towards the eastern portion of the South Bronx. Bridgeline, the newly developed product located at 329 East 312nd Street in Mott Haven is the comparable which we most carefully studied because it is also targeting the similar tenant base. Though, due to its oddly- shaped site, Bridgleline offers very inefficient floor plans as shown below, it is achieving average rent of $2,000 for Studio and $2,300 for One Bed Room units. Given its right- angled rectangular-shaped corner through lot, 111 Willow Avenue is able to deliver much cleaner and more efficient floor plans to achieve the similar average rent to that of Bridgeline despite of its location disadvantage.

Bridgeline Floor Plans

Studio

One Bed Room

21 MARK ET RATE RENTALS

In terms of supply demand balance, we looked at vacancy rate and leasing velocity of comparable projects in the South Bronx market. One of the comparable projects is Bridgeline mentioned in the previous page. Leasing for this 91-unit apartment building with features like floor-to-ceiling windows, hardwood floors, and modern bathrooms and kitchens kicked off in August 2018 and there are only 11 units currently available. 87 percent occupancy has been achieved in about 7 months with leasing velocity of 10 units per month. The other comparable product we looked at is The Crescendo at 25 Bruckner Boulevard developed by Carnegie Managements. This 130-unit apartment was completed in 2017 and includes features like floor-to-ceiling windows, sprawling wooden floors, lots of built in closets and storage and an open concept modern kitchen. The Crescendo achieved more than 95% occupancy in 6 months from the completion and currently has only 3.8% vacancy. In addition, most of the new listings are on the market for less than 10 days. These factors, together with growing population of South Bronx, provide an expectation for a timely lease up at 111 Willow Avenue.

Residential Pipelie in the South Bronx (Refer to the map on Page 21 for locations) Brookfield acquired the site for $165 million to develop 1,500 apartments 2401 Third Avenue spread out between seven buildings, along with retail, community facilities, and parking Treetop Management will develop414 apartments with certain portion 445 Gerard Avenue allocated for affordable units. 20,000-square-foot market at the base Maddd Equities will develop 750 apartments, the bulk of which will be 1159 River Avenue affordable and supportive units Tahoe Development switched gears and decided to go the tour of condos. 221 East 138th Street Now the building will have 47 condos with units here averaging about $540,000 475 Exterior Street Lighthouse Group to develop 2,000 apartments

The AMI for New York City ($73,100 for a one-person household) provides support for our pricing. As 111 Willow Avenue is mainly targeting New York singles who work and currently reside in Manhattan, the income required to rent our studio and 1 Bed Room units (which comprise 82% of the total market rate units) is below or on par with the recommended 30 percent of their income. According to the survey performed by Streeteasy, 1 in 2 New Yorkers said they are spending more than the recommended 30 percent of their income on rent and 59% of renters are motivated to move because of the rent increase. It is true that the approximate median rent in South Bronx keeps increasing as newer and higher end products have been delivered to the market, but when compared to the pricier rent figures seen in many parts of Manhattan, Brooklyn and Queens, the South Bronx can still be an ideal alternative for the people who are seeking affordable options. 22 MARK ET RATE RENTALS: COMPARABLES

2 1

23 RETAILMARK ET

Number of industrial sites in the South Bronx has been retrofitted for retail space, and more stores have started to move in and open as more new construction in the South Bronx neighborhood gets finished. However, there is currently no data that shows occupancy or median rent in the South Bronx neighborhood but there are several comps in Mott Haven neighborhood. Attached below is a list of comparable retail spaces we could find on Loopnet website.

Address Year Built Rent 350 Brook Avenue 1957 $ 34-36/sf/yr 225 East 138th Street 2018 $ 50.00/sf/yr 126 Alexander Avenue 1915 $ 44.25/sf/yr 2495 Third Avenue NA $ 25.00/sf/yr

In addition, prices for retail spaces along Alexander Avenue, a fairly short road stretching for less than a mile in Mott Haven between 132nd Street and 143rd Street with multiple trendy businesses, such as The Lit. Bar (independent bookstore and wine bar), Beatstro (the hip-hop themed restaurant), Nobodys Clothing, Ceetay (the sushi restaurant) and Nobodys Pizza, clustered along tend to be between $35 to $45 per square foot as well. In the Port Morris neighborhood, however, there is very limited number of retail options in place. Most notably is the lack of a supermarket and drug store. There are couple of grocery stores on the west side of Bruckner Boulevard but there is none in the area east of Bruckner Blvd. The closest grocery store option from our site is Pioneer Supermarket at 256 St. Ann’s Avenue (2 blocks west of Cypress Ave. Station) . Given the growing development activities and residential population of the South Bronx, we believe grocery options operated by more sophisticated national-chain brands such as Aldi and Trader Joe’s will be in high demand. Based on the comparable leases, and our strategy to better serve the residents of 111 Willow Avenue in order to achieve a fast lease-up, we will offer $40 PSF rental rates for the space.

Pioneer Supermarket at 256 St. Ann’s Avenue 24 FINANCIAL ANALYSIS

25 KEY ASSUMPTIONS

Purchase Price $11.6 Million

Total Development Total development budget of $75.7 million. Preliminary hard cost budget is Budget based on per unit estimates per RS Means.

Debt Financing $41.8 million of construction financing at 65% LTC

Total equity capitalization of $26.5 million Equity West Mountain to contribute $2.65 million (10%) Capitalization LP equity partner to contribute $23.85 million (90%)

Distribution All partners to receive distributions pari-passu up to a preferred return of Waterfall 15.0% West Mountain receives 20% promote over the preferred return West Mountain receives 40% promote over an 18% return hurdle

Schedule 6 months of pre-development, after which there is 24 months of construction. Market rate rental lease-up period of 12 months after the completion and reversion 6 months stabilization (Month 48)

Market Rate Average rent for market rate rental per square foot of $3.63/month, which Pricing reflects comparable market rate rents in South Bronx. Unit rents range from $1,892 - $2,708 /month.

Exit Reversion expected 6 months after the stabilization (June 2023) applying 5% cap rate (average for New York City Class B stabilized apartment property, CBRE North America Cap Rate Survey 2018 Q1)

26 DEVELOPMENT BUDGET

Development Budget Land Cost 100 per as of right ZFA 11,562,880 Closing Cost 5% of Land Cost 578,144 Demolition of Exiting structure 7.5 per gsf of existing structure 131,250 Environmental 25.0% of Demolition 32,813 Subtotal 12,305,087 Contingency 10.0% 1,230,509 Land Cost Total 13,535,595 Hard Cost Residential (Market) 257 per gsf 24,961,945 Residential (Affordable) 257 per gsf 8,320,648 Hard Cost Retail 250 per gsf 4,200,000 General Conditions 10% of Total Hard Cost 3,748,259 Hard Cost Total 282 per gsf 41,230,853 Soft Cost Architecture and Engineering 5.00% of hard cost 2,061,543 Legal and Other 3.00% of hard cost 1,236,926 Other Soft Cost 10.00% of hard cost 4,123,085 Taxes during Construction 1.00% of hard cost 412,309 Insurance During Construction 1.00% of hard cost 412,309 Total Soft Cost 20.00% of hard cost 8,246,171 Contingency 10% of hard and Soft cost 4,947,702.38 Development Management Fee 3% 1,691,923.24 Total Development Cost before Interest and operating Reserve 69,652,245 Estimate of Construction Interest Construction Loan 41,766,909 Financing Fee 1.00% 417,669 Construction Interest 8.00% Construction Period (Months) 24 Average Draw 65% Estimate of Construction Loan Interest 4,343,758 Total Project Cost before Operating Reserve 74,413,672 Estimate of Operating Reserve Gross Potential Rent (Monthly) 389,891 Lease-Up period 12 Average Occupancy during Lease-Up 65% Estimated Rent during Lease-Up 3,041,151 Estimated Operating Expenses during Lease-Up 982,526 NOI during lease-Up 2,058,625 Construction Interest During Lease-Up 3,341,353 First-Year Operating Reserve Required 1,282,727 Total Project Cost 75,696,399 27 CAPITALIZATION & RETURNS

Sources % of total Construction Loan $ 49,202,660 65.00% GP Equity $ 2,649,374 3.50% LP Equity $ 23,844,366 31.50%

TOTAL SOURCES $ 75,696,399 100.00%

Uses % of total Land Acquisition and Preparation Cost$ 13,535,595 17.88% Construction Costs (Hard & Soft) $ 54,424,726 71.90% Interest Reserve $ 4,761,428 6.29% Operating Reserve $ 1,282,727 1.69% Developer's Fee $ 1,691,923 2.24%

TOTAL USES $ 75,696,399 100.00%

IRR Multiple Profit Project Level Unlevered 19.19% 1.56 $33,815,500 Levered 23.66% 2.07 $28,362,699

LP Equity 20.39% 1.89 $25,022,540

28 ANNUAL PRO FORMA

Base Scenario: Exit upon stabilization Number Year 0 1 2 3 4 Calendar Year Total 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023

Development

Land Acqusition $11,562,880 $11,562,880 Closing Costs $578,144 $578,144 Hard Costs $41,230,853 $0 $10,307,713 $20,615,427 $10,307,713 $0 Soft Costs $8,246,171 $0 $3,298,468 $3,298,468 $1,649,234 $0 Total $61,618,048 $12,141,024 $13,606,182 $23,913,895 $11,956,947 $0 $0 Interest $951,380 $0 $0 $149,914 $386,318 $415,147 Total $62,569,427 $12,141,024 $13,606,182 $24,063,809 $12,343,265 $415,147 $0 Equity Draw $26,493,740 $12,141,024 $13,606,182 $746,534 $0 $0 Grant $0 $0 $0 $0 $0 $0 $0 Loan Draw $5,535,299 $0 $0 $3,690,199 $1,845,100 $0 Paydown $0 $ - $ - $ - $ - $ -

Operation Base Rent Residential (Market) 5,720,936 - - - 1,797,966 3,922,970 Residential (Affordable) 834,977 - - - 262,415 572,562 Retail 908,749 - - - 285,600 623,149 PGI 7,464,662 - - 2,345,981 5,118,681 5% Vacancy (Market Rate only)) (286,047) - - - (89,898) (196,149) Collection Loss (37,323) - - - (11,730) (25,593) EGI 7,141,292 - - 2,244,353 4,896,939 Operation Expenses - Residential (Market) (1,194,967) - - - (377,573) (817,394) Residential (Affordable) (174,407) - - - (55,107) (119,300) Retail (189,816) - - - (59,976) (129,840) Total Expenses (1,559,189) - - (492,656) (1,066,533) 0 NOI 5,582,102 $0 $0 $1,751,697 $3,830,406

Leasing Costs 150,307 - - - 52,368 97,939 Cap X Reserve ------Total Lease and Cap 150,307 $0 $0 $52,368 $97,939 0 Reversion 95,746,545 - - - - 95,746,545 Sale Fee (5,744,793) - - - - (5,744,793) 0 Unlevered Cash Flow $33,815,500 (12,141,024) (13,606,182) (23,913,895) (10,257,619) 93,734,219

Unlevered IRR 19.19% Equity Multiple 1.56

PERMANENT FINACNING

Debt Service - - - - -

Outstanding Balance - - - - 278,654,476

Permanent Take Out - - - - - Construction - - - - - Finance Proceeds - - - - -

Levered Cash Flow $ 28,362,699 $ (12,141,024) ($13,606,182) ($746,534) $1,699,329 $53,157,110

Levered IRR 23.66% Equity Multiple 2.07 29 ANNUAL PRO FORMA

Alternative Scenario: 5 Year Hold

Number Year 0 1 2 3 4 5 6 7 8 9 Calendar Year Total 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 6/30/2025 6/30/2026 6/30/2027 6/30/2028

Development

Land Acqusition $11,562,880 $11,562,880 Closing Costs $578,144 $578,144 Hard Costs $41,230,853 $0 $10,307,713 $20,615,427 $10,307,713 $0 $0 $0 $0 $0 $0 Soft Costs $8,246,171 $0 $3,298,468 $3,298,468 $1,649,234 $0 $0 $0 $0 $0 $0 Total $61,618,048 $12,141,024 $13,606,182 $23,913,895 $11,956,947 $0 $0 $0 $0 $0 $0 $0 Interest $709,210 $0 $0 $149,914 $386,318 $172,978 $0 $0 $0 $0 $0 Total $62,327,258 $12,141,024 $13,606,182 $24,063,809 $12,343,265 $172,978 $0 $0 $0 $0 $0 $0 Equity Draw $26,493,740 $12,141,024 $13,606,182 $746,534 $0 $0 $0 $0 $0 $0 $0 Grant $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Loan Draw $5,535,299 $0 $0 $3,690,199 $1,845,100 $0 $0 $0 $0 $0 $0 Paydown $ (5,535,299) $ - $ - $ - $ - $ (5,535,299) $ - $ - $ - $ - $ -

Operation Base Rent Residential (Market) 26,668,973 - - - 1,797,966 3,922,970 4,009,275 4,097,480 4,187,624 4,279,752 4,373,906 Residential (Affordable) 3,892,368 - - - 262,415 572,562 585,158 598,032 611,189 624,635 638,377 Retail 4,236,265 - - - 285,600 623,149 636,858 650,869 665,188 679,822 694,778 PGI 34,797,605 - - 2,345,981 5,118,681 5,231,292 5,346,380 5,464,001 5,584,209 5,707,061 5% Vacancy (Market Rate only)) (1,333,449) - - - (89,898) (196,149) (200,464) (204,874) (209,381) (213,988) (218,695) Collection Loss (173,988) - - - (11,730) (25,593) (26,156) (26,732) (27,320) (27,921) (28,535) EGI 33,290,169 - - 2,244,353 4,896,939 5,004,672 5,114,775 5,227,300 5,342,300 5,459,831 Operation Expenses - Residential (Market) (5,533,792) - - - (377,573) (817,394) (833,742) (850,417) (867,425) (884,773) (902,469) Residential (Affordable) (807,663) - - - (55,107) (119,300) (121,686) (124,119) (126,602) (129,134) (131,716) Retail (879,022) - - - (59,976) (129,840) (132,437) (135,085) (137,787) (140,543) (143,354) Total Expenses (7,220,478) - - (492,656) (1,066,533) (1,087,864) (1,109,621) (1,131,814) (1,154,450) (1,177,539) 0 NOI 26,069,691 $0 $0 $1,751,697 $3,830,406 $3,916,808 $4,005,153 $4,095,486 $4,187,850 $4,282,292

Leasing Costs 150,307 - - - 52,368 97,939 - - - - - Cap X Reserve ------Total Lease and Cap 150,307 $0 $0 $52,368 $97,939 $0 $0 $0 $0 $0 0 Reversion 95,746,545 ------95,746,545 Sale Fee (5,744,793) ------(5,744,793) 0 Unlevered Cash Flow $54,303,088 (12,141,024) (13,606,182) (23,913,895) (10,257,619) 3,732,467 3,916,808 4,005,153 4,095,486 4,187,850 94,284,044

Unlevered IRR 9.78% Equity Multiple 1.91

PERMANENT FINACNING

Debt Service 18,137,129 - - - - 1,894,924 3,248,441 3,248,441 3,248,441 3,248,441 3,248,441 - Outstanding Balance 2,959,743,007 - - - - 278,654,476 551,993,155 544,557,540 536,682,928 528,343,400 519,511,507 - Permanent Take Out 46,609,524 - - - - 46,609,524 - - - - - Construction (49,202,660) - - - - (49,202,660) - - - - - Finance Proceeds (2,593,135) - - - - (2,593,135) - - - - -

Levered Cash Flow $ 31,499,154 $ (12,141,024) ($13,606,182) ($746,534) $1,699,329 ($755,592) $668,367 $756,712 $847,045 $939,409 $53,837,625

Levered IRR 10.10% Equity Multiple 2.27

30 SENSITIVITY ANALYSIS

Base Scenario (Exit upon stabilization)

-$20/sf -$10/sf Base +$10/sf +$20/sf Acquisition Price $80/sf $90/sf $100/sf $110/sf $120/sf Levered IRR 26.03% 24.80% 23.66% 22.60% 21.75%

-10% -5% Base +5% +10% Hard Cost $254sf $268/sf $282/sf $296/sf $310/sf Levered IRR 25.98% 24.80% 23.66% 22.54% 21.45%

-20% -10% Base +10% +20% Market Rate Rent $2.90/sf $3.27/sf $3.63/sf $3.99/sf $3.63/sf Levered IRR 18.25% 21.04% 23.66% 26.13% 26.27%

-0.5% -0.25% Base +0.25% +0.5% Exit Cap Rate 4.50% 4.75% 5.00% 5.25% 5.50% Levered IRR 30.10% 26.82% 23.66% 20.61% 17.65%

31 DELIVERY & EXECUTION

32 PROJECT SCH EDULE

We are currently in contract to close on the site by June 30, 201. We estimate 6 months of pre-construction, after which we estimate 24 months of construction. The project is expected to be delivered by Dec 31, 2021. We expect to begin the pre- marketing process for the market rate rental apartments six months prior to the completion of construction, and to lease up all units by June 30, 2022. We expect to achieve stabilization of the commercial condo by Q3 2022, at which time we would look to sell it off, paying off our construction loan and returning capital to our investors.

Acquisition Date: 6/30/2019 Construction Completion: 12/31/2021

Construction Start: 1/1/2020 Stabilization: 12/31/2022

Construction Loan Close: 3/31/2019 Reversion: 6/30/2023

Year 2019 2020 2021 2022 2023 Quarter 12341234123412341234

Land Acquisition

Acquisition Loan Close

Pre-Development

Construction Loan Close

Construction

Punch List

Lease-Up Period

TCO

Stabilization

Reversion

33 LEASE-UP STRATEGY

Market Rate Rentals: We intend to engage Citi Habitat as exclusive broker for the 111 Willow Ave. market rate rentals because Citi Habits not only has reliable track record in the market but also is the only brokerage firm who has the extensive guide of the South Bronx neighborhood on their website. In addition, we will specifically appoint Ramona Vicenty, who grew up in the neighborhood, to lead our marketing strategy as it is critical to have someone who knows and can tell exactly what is happening in the neighborhood to attract new residents from other market. We will look to launch marketing efforts upon start of the construction and will have a series of events showcasing the property’s model suites and amenities as they become available. In addition to the rooftop event to showcase the unbeatable views from the top units, we will also host a guided tour of the neighborhood for prospective residents moving from other areas so they can truly understand what South Bronx can offer. We anticipate putting 30% of the units into contract prior to completion, which will help us achieve lease-up velocity of 7 units per month between the TCO and stabilization.(1)

Retail: We intend to engage Lee and Associates as exclusive broker for the 111 Willow Ave. ground floor retail because they have significant experience in the neighborhood representing both tenants and landlords. We will specifically appoint Steve Lorenzo to lead the marketing strategy as he has not only worked in the borough for decades but also greatly contributed the transformation of Alexander Avenue into the trendy retail corridor. We intend to pre-lease the retail space in the early stage of construction period in order to minimize the rent free period and tenant improvement cost.

34 RISK S & MITIGATIONS

35 RISK S & MITIGATIONS

Unforeseen Environmental Contamination: Given the site is with E-designation as a consequence of a rezoning action in 2018, there are certain environmental requirements that must be investigated and addressed before obtaining a building permit for the redevelopment. Since the site is in the once industrial and manufacturing neighborhood, there is potential for some environmental contamination in the soil that we will not be able to determine at this point. Mitigant 1: We have a total of $ 6.1 million of contingencies built into our development budget, providing some cushion in the event that we need to remediate the soil. Mitigant 2: In the purchase and sales agreement with the current owner of the site, we intend to include languages saying that we are able to reduce the purchase price by certain amount depending on the magnitude of remediation work we have to complete. Residential market softening: Given the new competitive supply, coupled with the general softening of the New York City rental market, there is a risk that we will not be able to achieve our target rent on the rental apartment units. Mitigant 1: Despite a softening in the overall New York City rental residential market, South Bronx is showing the highest growth among the 5 boroughs. Together with historical and projected population growth as shown in the charts below, we expect the South Bronx rental market will continue to show strong absorption. Mitigant 2: Even if the target rent is decreased by 20%, we will still be able to deliver a 18.25% levered return as shown in the sensitivity analysis section.