583 Pacific Street, Stamford, CT Offering Memorandum For Sale / Investment Opportunity ITY UN ORT PP NE O ZO Presented by: Kravet Realty LLC • 203.430.7811 • [email protected] Confidentiality & Disclaimer Statement This Offering Memorandum contains select information pertaining to the business and affairs of the Property at 583 Pacific Street, Stamford, CT. It has been prepared by Kravet Realty LLC. This Offering Memorandum may not be all-inclusive or contain all of the information a prospective purchaser may desire. The information contained in this Offering Memorandum is confidential and furnished solely for the purpose of a review by a prospective purchaser of the Property. It is not to be used for any other purpose or made available to any other person without the written consent of Seller or Kravet Realty LLC. The material is based in part upon information supplied by the Seller and in part upon financial information obtained by 583 Pacific Street, Stamford, CT from sources it deems reliable. Owner, nor their officers, employees, or agents makes any representation or warranty, express or implied, as to the accuracy or completeness or this Offering Memorandum or any of its contents and no legal liability is assumed or shall be implied with respect thereto. Prospective purchasers should make their own projections and form their own conclusions without reliance upon the material contained herein and conduct their own due diligence. By acknowledging your receipt of this Offering Memorandum from 583 Pacific Street, Stamford, CT, you agree: 1) The Offering Memorandum and its contents are confidential; 2) You will hold it and treat it in the strictest of confidence; and 3) You will not, directly or indirectly, disclose or permit anyone else to disclose this Offering Memorandum or its contents in any fashion or manner detrimental to the interest of the Seller. Owner and Kravet Realty LLC expressly reserve the right, at their sole discretion, to reject any and all expressions of interest or offers to purchase the Property and to terminate discussions with any person or entity reviewing this Offering Memorandum or making an offer to purchase the Property unless and until a written agreement for the purchase and sale of the Property has been fully executed and delivered. If you wish not to pursue negotiations leading to the acquisition of 583 Pacific Street, Stamford, CT or in the future you discontinue such negotiations, then you agree to purge all materials relating to this Property including this Offering Memorandum. A prospective purchaser’s sole and exclusive rights with respect to this prospective transaction, the Property, or information provided herein or in connection with the sale of the Property shall be limited to those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Seller or Kravet Realty LLC or any of their affiliates or any of their respective officers, directors, shareholders, owners, employees, or agents for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Property. This Offering Memorandum shall not be deemed to represent the state of affairs of the Property or constitute an indication that there has been no change in the state of affairs of the Property since the date this Offering Memorandum. P. 2 Table of Contents Executive Summary . 4 Proforma Pre-Construction . .6 Proforma Post-Construction . .7 Proposed Plans . .8 - 9 Federal Opportunity Zones . .10 - 11 Lease Comps . .12 Site Map . .13 Overview . .14 Demographics* . .16 - 19 Population . .16 Education . .17 Income . .18 Unemployment . .19 *City of Stamford; Economic Development P. 3 Executive Summary Rare opportunity to acquire a stabilized asset with a secure rental stream in a sale leaseback from a credit worthy company, and the investor or fund can take full advantage of the recently passed opportunity zone . This fully leased asset has approvals to build an additional 20,000 s.f. thereby doubling the initial basis which enables the investor, or opportunity fund, to fully realize the benefits of the recently passed legislation. Although most opportunity zones have the inherent risk of investing in blighted areas, this asset is located in the path of the amazing gentrification of the south end of Stamford that has been on going for the past several years. Further enhancing this rare opportunity is the premier location within the zone, just a few short blocks to the Stamford train station which serves as a direct commute to NewYork City, just 45 minutes away. Additional flexibility includes the current ownership willingness to master lease the asset, providing the pricing expectations are realized. The term and square footage being master leased will be part of the investor or funds offer to purchase. The offering plan and suggested pricing are guidelines, the expenses are actual (2017). P. 4 P. 5 583 Pacific Proforma Pre-Construction TENANT SQ. FT. PRICE/SF ANUAL RENT TOTALS Existing: Caro Home Master Lease* 1st Floor 4,200 $30.00 $126,000.00 NNN 1st Floor Studio 1,000 $25.00 $25,000.00 2nd Floor 5,000 $20.00** $100,000.00 NNN $251,000.00 Poster Restoration/Art Studio 4,800 $20.88 $100,224.00 TOTAL GROSS INCOME $351,224.00 EXPENSE Real Estate Taxes $36,142.00 Insurance $6,348.00 Maintenance $7,200.00 Super $6,000.00 Utilities (E,G&W) $19,200.00 Management Fee $8,640.00 TOTAL EXPENSES $83,530.00 CAM Reimbursement (Caro Home only - 57%) $47,612.10 EXISTING NOI PRE-CONSTRUCTION $315,306.10 ASKING PRICE $5,900,000.00 TI ALLOWANCE $100,000.00 TOTAL INVESTMENT $6,000,000.00 CAP RATE 5.25% *Term to be negotiated; Minimum 5 years **TI Allowance $20/sf P. 6 583 Pacific Street, Stamford, CT 583 Pacific Proforma Post -- -Construction Potential Income SQ. FT. PRICE/SF ANNUAL RENT TOTALS Existing: Caro Home Master Lease* 1st Floor 4,200 $30.00 $126,000.00 NNN 1st Floor Studio 1,000 $25.00 $25,000.00 2nd Floor 5,000 $20.00 $100,000.00 NNN GROSS INCOME CARO HOMES $251,000.00 New Construction 20,000 $40.00 $800,000.00 NNN TOTAL POTENTIAL GROSS INCOME $1,051,000.00 Vacancy @ 5% -$52,550.00 POTENTIAL GROSS INCOME $998,450.00 Investment Initial Acquisition Cost (Includes TI Allowance $100,000 for 2nd Floor) $6,000,000.00 New Construction Costs 20,000 $250.00** $5,000,000.00 Leasing Brokerage Fees @ 5% 20,000 $100,000.00 TOTAL ACQUISITION COST $11,100.000.00 INITIAL CAP RATE ` 9%*** *Term to be negotiated; Minimum 5 years **Includes all soft costs - legal and architectural. City of Stamford has fully approved the 20,000 square foot addition. ***Assumes all leases are assumed to be NNN, therefore no expenses have been accouned for, Kravet Realty LLC P. 7 Proposed Plans P. 8 583 Pacific Street, Stamford, CT Kravet Realty LLC P. 9 Federal Opportunity Zones Federal Opportunity Zones is a new tax incentive to direct private capital investment into designated zones. This program is designed to be transformative in urban redevelopment. Similar to the 1031 Like-Kind Exchange Provision, but with an added benefit and applicable to the sale of ANY appreciated property. The new tax provisions provide for a deferral of capital gains realized on sales of “any property” to an unrelated party where an amount equal to such gain is reinvested in a Qualified Opportunity Fund within 180 day. In addition, certain amounts of the capital gains tax attributable to the reinvested money may be permanently exempted from tax. How It Works • Taxpayers can invest capital gains from a sale or Exchangite with an unrelated person/party and invest in a Qualified Opportunity Fund. - Sales or exchange must occur by December 31, 2026. - Proceeds must be reinvested in Qualified Opportunity Fund with 180 days of sale/exchange. - Taxpayer has the ability to dispose of Fund investment and replace with a different Fund investment within 180 days. • A Qualified Opportunity Fund can be any corporation or partnership organized for the purpose of investing in Qualified Opportunity Zone Property which is: - Stock or partnership interest in a qualified opportunity zone business, which has an active business in a zone. - Qualified opportunity zone property is acquired in 2018 or later, and is either first used in the zone or substantially improved - A Fund can hold qualified property directly as well. • Qualified Opportunity Fund must have assets of which 90% constitute qualified opportunity zone property. • Any form of capital may be invested in a Qualified Opportunity Fund, but tax benefits, including th 10-year step-up in basis to fair market value only available for capital gains invested. • Qualified Opportunity Fund self-certifies and report assets with IRS Form 8996 - Funds can choose their tax year and month for becoming a Qualified Opportunity Fund • Future regulations anticipated which would afford a Qualified Opportunity Fund the ability to sell/transfer Qualified Opportunity Zone Property if the proceeds are reinvested in other Qualified Opportunity Zone Property. P. 10 583 Pacific Street, Stamford, CT Tax Benefits • Deferral of capital gains until 2026 - Applicable to any capital gains - Eligible investors include: individuals, corporations, partnerships, trusts, estates, regulated investment companies and real estate investment trusts. - Recognition date is earlier of: 2026 or when fun interest sold • Reduction of capital gains invested in the Qualified Opportunity Fund - 10% if Opportunity Fund investment held for