SELF CONTAINED APPRAISAL REPORT BROOKLYN BRIDGE PARK - TOBACCO WAREHOUSE (CONVERSION PROPERTY) Part of 51 Water Street N/E/C Water Street & New Dock Street Brooklyn, New York BLOCK 26, PART OF LOT 1 PREPARED FOR: Mr. Charles R. Kamps Executive Director NYC Department of Citywide Administrative Services 1CentreStreet, 20th Floor North New York, NY 10007 PREPARED BY: Mr. Matthew J. Guzowski - Principal, Ms. Kathleen Rairden – Senior Vice President Ms. Tonia Vailas – Senior Vice President Goodman-Marks Associates, Inc. 420 Lexington Avenue, Suite 456 New York, NY 10017 TABLE OF CONTENTS PAGE Certificate of Appraisal ....................................................................................................5 Summary of Salient Facts and Conclusions ....................................................................7 Appraisal Definitions .......................................................................................................9 Hypothetical Conditions, Extraordinary Assumptions, Limiting Conditions & Jurisdictional Exception..............................................................................................12 Valuation Date/Purpose, Intended Use & Users of the Appraisal/Subject Property Identification & Ownership History..............................................................................14 Survey of Subject Property...........................................................................................16 Site Map of Brooklyn Bridge Park................................................................................17 Aerial Photograph of Subject Property..........................................................................18 Exterior Photographs of Subject Improvements ............................................................19 Scope of the Appraisal & Methods of Valuation ..............................................................28 Area Map......................................................................................................................32 Area Description............................................................................................................33 Local Area Map.............................................................................................................51 Local Area Description ..................................................................................................52 Property Description.....................................................................................................69 Subject Building Layout...............................................................................................72 Sketch of Area Calculations .........................................................................................73 Tax Map.......................................................................................................................76 Assessment and Real Estate Tax Data .............................................................................77 Zoning Map ..................................................................................................................81 Zoning Excerpt..............................................................................................................82 Highest and Best Use ...................................................................................................88 Income Capitalization Approach...................................................................................93 Income Capitalization Approach Methodology.............................................................94 New York City Outer Boroughs Retail Market Overview .................................................95 Analysis of the Local Retail Market ...........................................................................100 Comparable RetailRentalsLocationMap...................................................................108 Photographs of Comparable Retail Rentals.................................................................109 New York City Outer Boroughs Industrial Market Overview..........................................113 Analysis of the Local Industrial Market......................................................................119 New York City Outer Boroughs Office Market Overview ..............................................123 Analysis of the Local Office Market...........................................................................129 Comparable Office Rentals Location Map ..................................................................138 Photographs of Comparable Office Rentals ................................................................139 Analysis of Income & Expenses .................................................................................142 Estimated Construction Costs.....................................................................................144 Construction and Absorption Timetable .....................................................................148 Choice of Residual Capitalization Rate.......................................................................149 Choice of Discount Rate.............................................................................................151 Recapitulation of Assumptions ...................................................................................155 Discounted Cash Flow Analysis – Tobacco Warehouse..................................................156 Larger Parcel Determination.......................................................................................157 TABLE OF CONTENTS (continued) PAGE Discounted Cash Flow Analysis – Larger Parcel Determination ......................................159 Sales Comparison Approach.......................................................................................160 Sales Comparison Approach Methodology.................................................................161 Analysis of Comparable Industrial Land Sales............................................................162 Comparable Industrial Vacant Land Sales Location Map............................................168 Comparable Industrial Vacant Land Sales ..................................................................169 Correlation and Value Choice.....................................................................................179 Qualifications.............................................................................................................185 ADDENDA Statement of Work Engagement Letter CORPORATE HEADQUARTERS / ACCOUNTING DEPARTMENT 170 OLD COUNTRY ROAD, SUITE 501, MINEOLA,NEWYORK11501 PHONE: (516) 248-9777 FAX: (516) 248-9628 NEW YORK CITY OFFICE 420 LEXINGTON AVENUE, SUITE 456, NEW YORK, NEW YORK 10170 PHONE: (212) 324-2870 FAX: (212) 324-2879 www.goodmanmarks.com April 2, 2013 Mr. Charles R. Kamps Executive Director NYC Department of Citywide Administrative Services 1 Centre Street, 20th Floor North New York, NY 10007 Re: Brooklyn Bridge Park – Tobacco Warehouse Part of 51 Water Street N/E/C Water Street & New Dock Street Brooklyn, New York File No. 13-208 Dear Mr. Kamps: At your request, we have inspected and performed the attached self-contained appraisal report of the above-captioned property, which is located at the northeast corner of Water Street and New Dock Street in the DUMBO/Fulton Ferry section of the Borough of Brooklyn, KingsCounty, New York. The property is identified on the tax maps of Kings County as Block 26, part of Lot 1. The subject property is currently owned by the State of New York and is known as the “Tobacco Warehouse” site. The subject is part of the Brooklyn Bridge Park project site, an 85-acre park that would stretch along 1.3± miles of waterfront area consisting of piers, landscaped areas, ecological habitats, recreational facilities, a marina, commercial space, and upland and water areas. It will provide a scenic overlook as well as access to a public waterfront plaza, several landmark buildings and a public pier and esplanade. The subject property is part of lands that involved funding from the Federal government under the Land and Water Conservation Fund (L&WCF). As part of the project, the City of New York is currently seeking to “convert” the property into a non-park use. We have been requested to value the subject on the hypothetical condition that it is not subject to any park use restrictions. The subject property is comprised of an irregular-shaped parcel of M3-1 zoned land within a Waterfront Area and is subject to the special regulations as per the New York City Zoning Resolution. The subject property consists of 27,374± square feet of land plus 4,318± square feet of land situated within the easement area of Old Dock Street, for a total land area of 31,692± square feet. GOODMAN-MARKS ASSOCIATES, INC. REAL ESTATE APPRAISERS AND CONSULTANTS NYC Department of Citywide Administrative Services Page 2 April 2, 2013 The site was formerly improved with an old tobacco warehouse (industrial) building that was built in the 1800’s. However, throughout the years the building has deteriorated, with the only remains being the exterior walls. The property does not have a roof, windows or any other improvements, except for the exterior walls. The subject property is predominately comprised of vacant land (open space), which is encompassed by the exterior walls of the original building. In addition, the exterior walls have open cavities where windows used to be, which opens the space up even more. It has been