Brooklyn Commons - Investment Memorandum

Brooklyn Commons

Boerum Hill | Brooklyn

Investment Memorandum

ALBATROSS DEVELOPMENT LLC

*Highly confidential document - for internal review purposes only ** Above image is for reference only

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Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

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DISCLAIMER THIS INVESTMENT MEMORANDUM (THE “INVESTMENT MEMORANDUM”) HAS BEEN PREPARED TO PROVIDE POTENTIAL INVESTORS WITH THE OPPORTUNITY TO DETERMINE THEIR PRELIMINARY INTEREST REGARDING A POTENTIAL INVESTMENT IN THE BROOKLYN COMMONS PROJECT (THE “PROPERTY”), BY ALBATROSS DEVELOPMENT LLC (THE “SPONSOR”) THAT HAS ORGANIZED TO DEVELOP AND INVEST CAPITAL IN THE PROPERTY ASSET DESCRIBED HEREIN. THIS INVESTMENT MEMORANDUM CONTAINS A PRELIMINARY SUMMARY OF THE PURPOSE AND PRINCIPAL BUSINESS TERMS OF THE COMPANY AND ITS SUBSIDIARIES. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OPERATING AGREEMENT. THE MANAGER HAS THE ABILITY IN ITS SOLE DISCRETION TO CHANGE THE STRATEGIES AND OTHER MATTERS DESCRIBED HEREIN. THE INFORMATION CONTAINED HEREIN IS NOT AUDITED AND IS BASED UPON ESTIMATES AND ASSUMPTIONS. NO INFORMATION IS WARRANTED BY THE COMPANY, THE MANAGER OR ANY OF THEIR AFFILIATES OR SUBSIDIARIES AS TO COMPLETENESS OR ACCURACY, EITHER EXPRESS OR IMPLIED, AND IS SUBJECT TO CHANGE WITHOUT NOTICE. NO PARTY HAS AN OBLIGATION TO UPDATE ANY OF THE INFORMATION IN THIS INVESTMENT MEMORANDUM. THE INFORMATION CONTAINED HEREIN SUPERSEDES ANY PREVIOUS SUCH INFORMATION DELIVERED TO YOU AND MAY BE SUPERSEDED BY INFORMATION DELIVERED TO YOU PRIOR TO THE TIME OF SALE. CONFIDENTIALITY STATEMENT

BY ACCEPTING THIS INVESTMENT MEMORANDUM YOU AGREE THAT YOU WILL HOLD AND TREAT IT IN THE STRICTEST CONFIDENCE, THAT YOU WILL NOT PHOTOCOPY OR DUPLICATE THEM, AND THAT YOU WILL NOT DISCLOSE THIS INVESTMENT MEMORANDUM ALONG WITH ALL OTHER RELATED MATERIAL SHARED BY SPONSOR TO ANY OTHER PERSON OR ENTITY WITHOUT PRIOR WRITTEN AUTHORIZATION FROM THE COMPANY. CONTACT INFO Varun Bajaj Managing Partner Albatross Development LLC 250 W 100th Street New York NY 10025

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

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Table of Contents 1.

Executive Summary

2.

Property & Zoning Overview

3.

Market Analysis

4.

Project Highlights

5.

Underwriting

6.

Sponsor Qualifications

7.

Appendix

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

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Executive Summary Albatross Development LLC (The Sponsor) is seeking $10.27 million of Limited Partner equity (21.32% partnership level IRR, 2.45x project equity multiple, 8.16% yield on cost, 21.20% yield on cash) to facilitate the construction of a 84,810 SF mixed use building, known as Brooklyn Commons (the “Property”) in the historic Boerum Hill area of Brooklyn. The building will have 79 rental units, 30 short-lease serviced apartments and 10,000 SF of grocery and beverage area. The project will take advantage of lower land taxes through a JV structure with the land-owner and frozen building taxes as well as higher FAR through the FRESH tax incentive, to make this deal profitable.

JV with Land Owner; Lower Land Basis & Taxes • Promoted profit split after refinancing in Year 4 • FRESH tax incentive to achieve tax abatements

PROGRAM 79 rental units 30 Serviced Apartments 10,000 SF CSA Grocery + Beer Hall 40 Parking Spots

Mixed Use Building Higher income potential + Risk Diversification • Stability and demand in the rental market 1 • Arbitrage; smaller units + variable leasing strategies • Timing the market; entering low, exiting high

VISION Mixed Use Rental Product designed for Modern Day Living with High Income + Upside at Exit with Potential Condo Conversion

1 1

Creating a Community • Activating the area of Boerum Hill • Grocery facility as hub for residents + neighborhood • Highly amenitized property; convenience + loyalty

Highly Qualified Sponsor Albatross Development LLC specializes in Hospitality and Luxury Residential Condominium development in Manhattan. Construction and management will be handled by the company.

Brooklyn Commons Boerum Hill | Brooklyn

TIMELINE 2.5 Year Construction + 5 Year Hold 7.5 Year Investment Horizon

RETURNS 8.16% Yield on Cost 12.44% Unlevered IRR (Property Level) 17.17% Levered IRR (Property Level) 21.32% Levered IRR (Dev. Co. Level) 2.45x Equity Multiple 21.20% Yield on Cash

ALBATROSS DEVELOPMENT LLC

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Executive Summary Thesis The Boerum Hill neighborhood, and Brooklyn in general, are areas that have seen a lot of growth and have long term potential. Even though ownership is high in the area, new people moving in the area are more likely to rent. It is also an area which could provide extended stay options at affordable prices to travelers, business people and out-of-town students and interns alike. Currently, rental might seem harder to do because of high land prices. However, the sponsor has found a way to reduce the land basis and leverage the tax incentives to come up with a resilient plan which can cater to the rental market, with the option to sell certain units as condominiums during exit.

Vision

Proposal

Brooklyn Commons is envisaged to be a development that physically reflects the historic and tranquil spirit of Brooklyn while still serving as an attractor and activator in the quiet neighborhood of Boerum Hill.

The project would comprise of 79 small apartments (Studios and 1 bedroom), 30 serviced apartments and a large CSA (Community Sourced Agriculture) grocery store on the ground floor with a beer hall, for commercial use, totaling to around 85,000 GSF, including a basement with 40 parking spots.

The Project will activate the surrounding area with an organic CSA grocery store, taking advantage of the FRESH tax incentive and a beer hall which will not only serve as an attractive amenity for the tenants in the building, but also bring in users from the neighborhood, making it a destination rather than a bystander. The programs in The Project are synergetic and will drive demand for each other.

Brooklyn Commons Boerum Hill | Brooklyn

Timeline The sponsor can close on the site by May 2016, starting construction by February 2017 and completing the project for occupancy by November 2018. Anticipated stabilization period is 1 year, and the hold period is 4 years after stabilization, making the total investment period 91 months.

ALBATROSS DEVELOPMENT LLC

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Property & Zoning Overview : Site Analysis

Site Summary Site Summary Block / Lot Block / Lot (Frontage) Dimensions Dimensions Lot Size (SF)(Frontage) Lot Size (SF) Site Assemblage SiteNAssemblage Lot Lot N Frontage on 3rd Avenue 3rd Avenue Frontage on Bergen Street Frontage on Bergen Street Size (SF) Size (SF) Total Site Size Total Site Size Zoning Zoning Resi.

FAR Resi. FAR Comm.

FAR Comm.

Resi. SFFAR Resi. SFSF Comm.

Comm.

SF SF TOTAL Resi.

Resi. SF TOTAL Com. TOTAL Com. SF As of Right FAR As of Right FAR FAR with Bonus FAR with Bonus

Requirements Requirements Max. Lot Coverage Lot Coverage Max. Building Height Max. Parking BuildingSpots Height Min. Min. Parking Spots Tax Incentives Tax Incentives

389 / 5 /5 100'389 x 150' 100'15,000 x 150' 15,000

5 5 50' 50' 100' 100' 5,000 5,000 15,000 15,000 R7A - C2-4 R7A - C2-4

4.0 4.0 2.0 2.0 20,000 20,000 10,000 10,000 65,000 65,000 20,000 20,000 3.67 3.67 5.00 5.00

R7A - C2-4 R7A - C2-4 4.0 4.0 2.0 2.0 20,000 20,000 10,000 10,000

7 7 50' 50' 100' 100' 5,000 5,000 R7B R7B

3.0 3.0 15,000 15,000 -

ZSF FAR ZSFwith FAR Bonus ZSF ZSF with Bonus

80% 80% 80' 80' 50% of Dwelling Units 50% ofFRESH Dwelling Units Program FRESH Program Frontage Frontage 10 10 100' 100' 50' 50' 5,000 5,000 FRESH Bonus FRESH Bonus Yes Yes

10,000 10,000

55000 55000 75,000.00 75,000.00

Key Points • 3 Lots combined; longer frontage • Corner Plot; Higher FAR and heights • Sufficient air-rights not available to buy • FAR increased by utilizing FRESH Tax Incentive; 20,000 SF increase based on total built up area restricted by height limit and coverage requirements Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

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Property & Zoning Overview : Site Analysis Connectivity • Conveniently located 3 blocks from Atlantic Terminal with access to the 2, 3, 4, 5, B, Q, N & R subway lines and the Long Island Rail Road. It takes around 10 minutes to walk.

• 15 minute train ride to the FIDI from Atlantic Terminal and 30-minutes to Midtown.

• Walking distance from all necessary retail

Land Use • Mostly residential neighborhood with walkup brownstones • 4th Avenue (1 block away from the site) is a special zoning district and is being developed as a retail corridor • Some neighboring plots have parking lots, gas stations and old manufacturing uses.

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

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Property & Zoning Overview : Site Analysis Neighbourhood Characteristics • Primarily residential area with old building stock; most buildings date back to the 1920s • The most common typology is the typical Brooklyn Brown-stone, with few buildings exceeding 4 floors • The area has many small, local shops fostering a feeling of community

No. of Stories

Year Built

Bergen Street

Looking towards the plot

No. of Stories

Looking away from the plot Brooklyn Commons Boerum Hill | Brooklyn

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Market Analysis : Neighborhood Amenities Culture & Entertainment

Employment & Education

• Brooklyn Academy of Music • Invisible Dog Art Center • Barcalays Center

Shopping & Eating

• Employment drivers include the newly developed Barcalays Center and various other developments along Atlantic Avenue. Also, like much of Brooklyn, residents often work in Manhattan, and commute by subway.

• Atlantic Avenue is full of new restaurants and cafes, thanks to the new Barcalays Center development.

• There are 4 public schools within a 3 block radius and 31 public schools in the larger neighbourhood.

• Close to the site are delicatessens, convenience shops, as well as a gas station.

• Walking distance from Long Island University, New York City College of Technology and NYU Polytechnic for Engineering. Around 20 minutes by subway from NYU’s Washington Square Park Campus.

Green Space • Close proximity to parks and outdoor areas in Brooklyn such as Gowanus Playground, Boerum Park, and Thomas Greene Playground.

Healthcare Brooklyn hospital and New York Methodist Hospital are close by.

M M

M

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M

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

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Market Analysis : Neighborhood Amenities

Long Island University Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

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Market Analysis : Demographics + Preferences The neighborhood of Boerum Hill is sandwiched between the booming Atlantic Avenue and Barclay’s Center hub and the rapidly gentrifying area of Gowanus to the south. The area has not seen too many transactions in the recent past but is changing, and the renter versus owner demographic profile hints at the upcoming market trend.

Area: 0.431 square miles Population: 24,227 Population density: 56,223 people per square mile

Resident Profile • Most residents are on the younger side of 40 • Median income is well over the Manhattan average but the area is not as posh as Williamsburg • Many involved in arts, education, community work, design fields - not many professionals like lawyers, doctors etc.

• Buyers are looking for the romance and charm of the brownstones. They tend to own larger units; 2-3 bedrooms. These are often people with families.

• Renters in the area want smaller units; studios and 1 bedrooms are most sought after and achieve the highest rent PSF as well. However, amenities are equaly important.

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

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Market Analysis : Target Market

Students/Interns/Job Switchers 18-27 Years Old Looking for 3-6 month short leases

Young Corporate Travelers 25-40 Years Old 2 weeks to a few months Put up by company

Visiting Families Older family memebers visitng Few weeks or months Possibly paid by children / family

TRANSIENT USERS / SHORT TERM LEASES

Stays ranging from 3 days to 6 months

TARGET AUDIENCE RENTERS Signing yearly leases

Full Time Students/Room Mates 18-30 Years Old MIght be aTtending university in Brooklyn orManhattan Brooklyn Commons Boerum Hill | Brooklyn

YUPPIES 21-30 Years Old Earning well and want to be in an upcoming area like Brooklyn.

DINKS 25-35 Years Old Married/live-in couples requiring less space and no family to raise ALBATROSS DEVELOPMENT LLC

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Market Analysis : Residential Rental As Brooklyn has shifted to a residential market of preference, the borough has experienced over 10% annual rent growth during the last four years, narrowing the gap between Brooklyn and Manhattan rental rates. However, rents at Manhattan’s best doorman buildings remain 25%-40% above Brooklyn averages.

Boerum Hill has seen a consistent increase in rental prices in the studio, one bedroom and two bedroom segments.

These segments also command the highest rent per SF.

Map showing average rental values for one bedroom units in Brooklyn’s different neighborhoods; Boerum hill went up by 5.9% from 2015 to 2016, the highest among them.

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

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Residential Rental Market Trends

Market Analysis : Residential Rental Comparable Properties

Neighborhood

468 Warren Street 468 State Street State Renaissance Court 556 State Street 328 Dean Street 307 Atlantic Av. The Brooklyner The Brooklyner 316 Bergen 316 Bergen 316 Bergen 66 Rockwell Pl #32

Boerum Hill Fort Greene Boerum Hill Fort Greene Prospect Heights Boerum Hill Fort Greene Fort Greene Boerum Hill Boerum Hill Boerum Hill Fort Greene

Built Date

Rent

[2011] [2013] 2005 2006 2009 2010 2010 2011 2012 2012 2012 2013

AVERAGE MEDIAN NEW CONSTRUCTION RENTAL AVERAGE (Post 2012)

316 Bergen

Size (SF)

$/SF

$4,500 $2,500 $3,550 $3,250 $5,050 $3,175 $3,125 $4,395 $4,995 $2,650 $4,350 $5,315

1,084 600 852 800 1,276 584 561 918 925 510 900 1000

$50 $50 $50 $49 $47 $65 $67 $57 $65 $62 $58 $64

$4,034 $4,350 $4,328

830 900 833.75

$59 $62 $62

State Rennaissance Court

Residential Condo Comparable Properties

Neighborhood

360 Baltic Street 349 Pacific Street 378 Baltic Street 92 Wyckoff Street 353 State Street 351 State Street 556 State Street 457 Atlantic Avenue 378 Baltic Street 256 Bergen Street 87 Smith Street 556 State Street 560 State Street 88 Wyckoff Street 423 Atlantic Avenue 74 4th Avenue 560 State Street 559 Warren Street

Gowanus Boerum Hill Gowanus Boerum Hill Fort Greene Fort Greene Fort Greene Boerum Hill Gowanus Boerum Hill Brooklyn Heights Fort Greene Fort Greene Boerum Hill Boerum Hill Boerum Hill Fort Greene Boerum Hill

AVERAGE MEDIAN

Transaction Date

9/11/2015 11/8/2015 1/14/2016 9/23/2015 1/6/2016 3/22/2016 8/12/2015 3/24/2016 11/10/2015 1/15/2016 12/17/2015 9/23/2015 9/25/2015 2/25/2016 7/13/2015 1/19/2016 10/29/2015 12/3/2015

Price

Area

$/SF

Bedrooms

Bathrooms

$1,425,000 $849,000 $999,999 $1,500,000 $4,300,000 $3,995,000 $1,100,000 $1,250,000 $660,000 $525,000 $1,150,000 $990,000 The Brooklyner $545,000 $995,000 $1,250,000 $2,750,000 $925,000 $589,000

1,148 703 831 1,250 3,583 3,390 975 1,142 609 500 1,132 975 540 1,010 1,300 2,940 1,070 800

$1,241 $1,208 $1,203 $1,200 $1,200 $1,178 $1,128 $1,095 $1,084 $1,050 $1,016 $1,015 $1,009 $985 $962 $935 $864 $736

2 2 2 2 5 3 2 2 1 1 2 2 0 2 2 4 2 2

2 1 2 2 4 3 2 2 1 1 2 2 1 1 1 2 1 1

$1,433,222 $1,050,000

1,328 1,040

$1,062 $1,067

2 2

2 2

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Untitled map Top 5 Rental Buildings 316 Bergen St The Project 468 Warren St The Brooklyner Apartments 66 Rockwell Pl 307 Atlantic Ave

Brooklyn Commons Boerum Hill | Brooklyn

MEDIAN NEW CONSTRUCTION RENTAL AVERAGE (Post 2012)

$4,350 $4,328

900 833.75

$62 $62

M arket Analysis : Residential Condominiums Residential Condo Comparable Properties

Neighborhood

Transaction Date

360 Baltic Street 349 Pacific Street 378 Baltic Street 92 Wyckoff Street 353 State Street 351 State Street 556 State Street 457 Atlantic Avenue 378 Baltic Street 256 Bergen Street 87 Smith Street 556 State Street 560 State Street 88 Wyckoff Street 423 Atlantic Avenue 74 4th Avenue 560 State Street 559 Warren Street

Gowanus Boerum Hill Gowanus Boerum Hill Fort Greene Fort Greene Fort Greene Boerum Hill Gowanus Boerum Hill Brooklyn Heights Fort Greene Fort Greene Boerum Hill Boerum Hill Boerum Hill Fort Greene Boerum Hill

Price

9/11/2015 11/8/2015 1/14/2016 9/23/2015 1/6/2016 3/22/2016 8/12/2015 3/24/2016 11/10/2015 1/15/2016 12/17/2015 9/23/2015 9/25/2015 2/25/2016 7/13/2015 1/19/2016 10/29/2015 12/3/2015

AVERAGE MEDIAN

349 Pacific Street

Area

$/SF

Bedrooms

Bathrooms

$1,425,000 $849,000 $999,999 $1,500,000 $4,300,000 $3,995,000 $1,100,000 $1,250,000 $660,000 $525,000 $1,150,000 $990,000 $545,000 $995,000 $1,250,000 $2,750,000 $925,000 $589,000

1,148 703 831 1,250 3,583 3,390 975 1,142 609 500 1,132 975 540 1,010 1,300 2,940 1,070 800

$1,241 $1,208 $1,203 $1,200 $1,200 $1,178 $1,128 $1,095 $1,084 $1,050 $1,016 $1,015 $1,009 $985 $962 $935 $864 $736

2 2 2 2 5 3 2 2 1 1 2 2 0 2 2 4 2 2

2 1 2 2 4 3 2 2 1 1 2 2 1 1 1 2 1 1

$1,433,222 $1,050,000

1,328 1,040

$1,062 $1,067

2 2

2 2

378 Baltic Street

Untitled map Top 5 Condominium Sales 349 Pacific St 353 State St 378 Baltic St 360 Baltic St 92 Wyckoff St The Project

378 Baltic Street Brooklyn Commons Boerum Hill | Brooklyn

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Market Analysis : Residential Pipeline The Boerum Hill has not seen too many land transactions in the last few years but certain projects are coming up in the vicinity, most of them luxury condominiums. Even though there has been a rise in the price per SF of condos, their absorption rate may not be very high. There are transactions that happened at prices close to $1,200 PSF but the transaction volume is not necessarily high. In this market, to compete with more condos just to realize faster returns is not justified. Also, the neighborhood is still gentrifying and new condominiums might be too much of a leap.

The Hendrick

Brooklyn Commons Boerum Hill | Brooklyn

590 Pacific Street

Completion

late 2017

Units

33

Floors The Hendrick

6

Min. Sale Price

$575,000 590 Pacific Street

Completion RSF

late 2017 90,000

Units Max. Sale Price

33 $2,100,000

Floors The Hendrick RSF Completion 465 Pacific

6

Min. Sale Price

90,000 late 2017

Max. Units Sale Price

$575,000 590 Pacific Street $2,100,000 33

Floors Completion

6 mid 2017

Min. UnitsSale Price

$575,000 30

RSF Floors 465 Pacific

90,000 6

Max. Sale Price Price Min. Sale

$2,100,000 $835,000

Completion RSF

mid 2017 84,767

Units Max. Sale Price

30 $4,850,000

Floors 465 Pacific RSF Completion 363 Dean Completion Floors

6

Min. Sale Price

$835,000

84,767 mid 2017

Max. Units Sale Price

$4,850,000 30

late 2015 6

UnitsSale Price Min.

6 $835,000

Floors RSF 363 Dean Completion RSF

6 84,767

Min. Sale Price Max. Sale Price

$975,000 $4,850,000

late 2015 5,987

Units Sale Price Max.

6 $1,150,000

Floors

6

Min. Sale Price

$975,000

363 Dean RSF Completion

5,987 late 2015

Max. Sale Price Units

$1,150,000 6

Floors

6

Min. Sale Price

$975,000

RSF

5,987

Max. Sale Price

$1,150,000

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Untitled map

Untitled map

Market Analysis : Retail + Parking Retail

Comparable Retail Rental Rates Britain

Comparable Retail Rental Rates

Montague St are142 highly variable

Retail rents depending on not just 163 floors, Remsen St location, but also tenants and lease term. Apart 453 Fulton St retail, the immediate vicinity of from small neighborhood 163 Remsen St good comparable properties. the area does not have any Given that the residential 396 Atlantic Averents that would be commanded by a property this location are quite high (>$60 PSF TheinProject annualy), the retail rents should be atleast that much if Comparable Grocery Stores not more. Most comparable properties are from Brooklyn Trader Joe'swhich is not very far from the site and has a good Heights, retail presence.

Whole Foods Market Same applies to Atlantic avenue, which is grossing north of $90 PSF currently.

Gristedes

Britain 142 Montague St 163 Remsen St

Untitled map

453 Fulton St 163 Remsen St 396 Atlantic Ave The Project

Untitled map

Union Market Grocery stores The Project

Given the nature of the site and the tax incentive, a grocery store chain or collective is the most likely tenant.

Comparable Grocery Stores Trader Joe's Whole Foods Market

Trader Joes Located in Cobble hill, the store is now opening an outlet at City point where rents are in the $75 PSF range.

Gristedes Union Market The Project

Whole Foods Located in Gowanus, the store is around 8 blocks away from the site. It was leased in 2011, at $35 PSF, but rents have risen dramatically in the area in the last few years.

Union Market An expensive farmers market concept that is very ‘Brooklyn’, the area already has 3 outlets that more than cover the project’s location. in terms of delivery radius.

Comparable Properties

Britain, Smith Street 142 Montague Street 163 Remsen Street 453 Fulton Street 163 Remsen Street 396 Atlantic Avenue AVERAGE MEDIAN

Use

Tenant Resident Tenant Non Resident Parking Reserved / Locked Motorcycle

Brooklyn Commons Boerum Hill | Brooklyn

Neighborhood

Tenant / Type

Size

$/SF

Boerum Hill Brooklyn Heights Brooklyn Heights Brooklyn Heights Brooklyn Heights Boerum Hill

Restaurant Retail Retail Retail Retail Retail

4,000 2,039 2,200 1,400 2,000 1,300

$72.40 $200 $80 $214 $90 $93

2,157 2,039

$125 $90

Monthly Charge

$400 $425 $475 $200

Parking

Being more car dependant than Manhattan, Brooklyn does have more provision for parking on the roads as well as in garages.

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led map Market Analysis : Serviced Apartments + Extended Stay Hotels

e Serviced Apartments

We see an opportunity to provide flexible

housing forHill affluent millennials, who are oklyn Suites - Clinton

flocking to urban areas at a higher rate than any other previous generation, even as rents in cities like New York and San n - PacificFrancisco Crown hit record highs.

k Slope Inn

Wall St

WeLive WeWork’s offshoot is set to launch it’s first product in Wall Street, right above a WeWork office.

n - Albany Crowne

n - Havemeyer Studio Rental - $2,550 per month sburg Lease - 1 month and upwards Bergen St

Common Common is launching 3 projects in brooklyn, by partnering with developers, providing amenities and rentals without the need for a guarantor.

Studio Rental - $1450 - $1800 per month Lease - 1 month and upwards

Brooklyn Suites 4 properties with a similar profile to the other two but with larger units and longer term stays.

Brooklyn Suites

Studio Rental - $3290 per month Lease - 1 month and upwards

Park Slope Inn Extended Stay Hotel allowing daily as well as monthly rentals. The building is quite old and is not well advertised but has high ADRs ADR - $175 - $230 per night (seasonal) Lease - 2 days and upwards Comparable Properties

Neighborhood

Brooklyn Suites

Boerum Hill Boerum Hill Fort Greene South Slope Clinton Hill

AVERAGE MEDIAN Brooklyn Commons Boerum Hill | Brooklyn

Built Date

Rent

Size

$/SF

Bedrooms

Bathrooms

$3,290 $4,390 $4,990 $4,390 $4,390

325 420 650 650 650

$121 $125 $92 $81 $81

0 2 2 2 3

1 1 1 2 1

$4,290 $4,390

539 650

$100 $92

1.8 2.0

1.2 1.0

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Project Highlights : Concept + Strategy A building is most efficiently utilized when it has co-dependencies. Interdependent uses and programs is what Brooklyn Commons is trying to create. Utilizing the mixed use zoning to its full potential, the building can be viewed as a combination of 4 components; residential rental units, serviced apartments, grocery retail and parking, but it really comes together as a whole, which is greater than the sum of its parts. These inter-dependancies go beyond the building to the neighborhood.

SYNERGY

Guest visit the brewery Residents visit the grocery store Residents visit the lounge and meet Guests Neighbors shop at the grocery store and park their cars in the cellar

COMMUNITY

Built language in sync with Boerum Hill Brownstones, but with a clean m odern aesthetic.

Brooklyn Commons Boerum Hill | Brooklyn

ACTIVITY

Inside; there are work areas, a gym, pool table, hot tub Outside, the brewery is a source of light and life till late in the night and the grocery store from early morning to evening.

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Project Highlights : Area Program Area Breakdown Floors

Total

Serviced Apartments RSF (Rooms) NSF (Amenities) Circulation + BOH

Floor to Floor 10' 10' 10' 10' 10'

Building Height 80' 70' 60' 50' 40'

GSF 1000 10419 10483 10629 10629

RSF

GSF

3262 3651 2822 3147

3702 4027 3702 4027

2822 3147 2822 3147

0 0 0 0

880 880 880 880

6717 6456 6927 6602

5611 5286 6261 5936

440 504 0 0

3 2

10' 10'

30' 20'

9136 9087

3388 3177

1273 1435

0 0

936 936

337 499

5411 5411

4961 4961

0 0

450 450

1

10'

10'

9437

2452

469

0

0

469

6516

4526

0

1990

Cellar Total

10'

'

13992 84,812 100.00%

9543 31,442 37.07%

337 18,972 22.37%

0 11,938 62.92%

0 1,872 9.87%

337 5,162 27.21%

962 45,002 53.06%

0 37,542 83.42%

800 1,744 3.88%

162 5,716 12.70%

Floor Terrace 7 6 5 4

Floor to Floor 10' 10' 10' 10' 10'

Building Height 80' 70' 60' 50' 40'

GSF

Grocery Retail RSF

BOH / Loading

0 0 0 0

0 0 0 0

0 0 0 0

3

10'

30'

2452

2452

0

2 1

10' 10'

20' 10'

2241 2452

2241 2452

0 0

Cellar

10'

'

2893

2893

0

7800

5850

39

2000

10,038 11.84%

10,038 100.00%

0 0.00%

7,800 9.20%

5,850 75.00%

39

3,000

Break-Up

GSF

Residential Rental RSF (Rooms) NSF (Amenities) Corridor + BOH

Floor Terrace 7 6 5 4

666 666 666 666

Area Breakdown Floors

Total Break-Up

Areas

Serviced Apartments Residential Rental (Includes storage) Grocery Retail Parking Mechanical Total Rentable to Gross (Efficiency)

Parking GSF

No. of spots

GSF

%

RSF

%

18,972 45,002 10,038 7,800 3,000 84,812

22% 53% 12% 9% 4% 100%

11,938 37,542 10038 5850 0 65,368

18% 57% 15% 9% 0% 100%

Mechanical GSF 1000

77%

Residential Type

Studio 1 Bed Total Net to Gross

Average Room Size

GSF

372 745 37973.2

NSF

No.

Rent/Unit/Month

Rent/SF/Year

325

56

$1,800.00

$66.46

650 33150.0

23 79

$3,000.00 2,149.37 $

$55.38 63.24

$

87%

419.62

Serviced Apartments Type

Studio 1 Bed 2 Bed / Suite Total Net to Gross

Average Room Size

GSF

516 572 1,330 18972

NSF

No.

ADR

Rent/SF/Year

325

22

$100.00

$112.31

360 837 11938

4 4 30

$125.00 $200.00 116.67 $

$126.74 $87.22 110.89

NSF

No.

Rent Per Month

Rent/Year

200

39

425

5100

$

63%

397.933333

Parking Type

GSF

Resident Parking Grocery Retail

Tenants Glen's Market Brooklyn Brewery

GSF 7586 2452 10038

Rent PSF

Lease Term

7586 $

RSF

15.00 $

TI

341,370 $

LC Rent/Unit per Month 47,412.50 $

75.00

10

2452 $ $

35.00 $ 19.89

102,984 $

20,433.33 $ Weighted Average $

100.00 81.11

7

Miscellaneous

Spaces Hotel Terrace (Vending Machine) Gym Storage

Brooklyn Commons Boerum Hill | Brooklyn

GSF

RSF Rent/SF/Year Revenue per Year 3950 $ 1.85 $7,300 504 $ 500 $

59.52 94.80

$30,000 $47,400 ALBATROSS DEVELOPMENT LLC

18

Project Highlights : Massing + Programming Greens Serviced Apt. Terrace with vending machine

Lobby

Parking

Brooklyn Commons Boerum Hill | Brooklyn

Renter’s Roof with Hot-Tub

Gym

Conference

Residential rental

Short-term serviced rental

Grocery with Beer Hall

Double Floor Lounge Storage + Laundry

ALBATROSS DEVELOPMENT LLC

19

Project Highlights : Exploded View Short-lease Serviced Apartments Residential Rental Grocery Retail Greens Parking

e Terrac

or

7th Flo

or

6th Flo

or

5th Flo

or

4th Flo

or

3rd Flo

loor

2nd F

or

1st Flo Cellar

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

20

90째

16'-4"

11'-6"

Studio Studio / 325 SF / 325 SF

90째

16'-4"

90째

12' 12'

1 5'-74"

3 8'-14"

12' 12'

1 5'-74"

3 8'-14"

6'

1 11'-72"

1 13'-54"

3 4'-84"

16'-1"

1 5'-72"

1 5'-72"

3 4'-84"

27'

3 8'-24"

1 8'-82"

1 13'-54"

1 8'-82"

3 8'-24"

1 7'-14"

1 11'-72"

1 11'-54"

1BR / 650 1BRSF / 650 SF

1 11'-72"

1 11'-72"

27'

1 11'-54" 16'-1"

90째

6'

4'-2" 1 5'-42"

4'-2" 1 5'-42"

Studio Studio / 325 SF / 325 SF

ELDAOTC O_TT_XUIF

ET DS T LA OW C H_UF

ELT D AS T LTA O OW C H T_UF

EDOC_TXIF

27'

ELDAOTC O_TT_XUIF

ET DS T LA OW C H_UF

ELT D AS T LTA O OW C H T_UF

EDOC_TXIF

Boerum Hill | Brooklyn E ELD T D AO S T LTA C O OW _C H TT_XUIF

Brooklyn Commons E ELD T D AO S T LTA C O OW _C H TT_XUIF

27'

Project Highlights : Unit Design

ALBATROSS DEVELOPMENT LLC

21

12' 1 7'-14"

12'

24'-6"

24'-6"

11'-6"

Project Highlights : Amenities Amenities

Floor

Serviced Apartments

Rental

Laundry Room (Common)

Cellar

Free

Free

Storage

Cellar

Paid

Free

Gym

6th Floor

Free

Paid

Conference Room

7th Floor

N/A

Free

Lounge

2nd & 3rd Floors

Accessible

Accessible

Roof Deck with Vending Machine

Roof Top

Paid

Paid

Roof Deck with Hot Tub

Roof Top

N/A

Free

The building will be quite heavily amenitized for a regular rental building. This is for two reasons: • More amenities required to attract short term visitors to the serviced apartments. • In order to make the transition to condominiums easier, from a design point of view.

These amenities, some of which do have revenue generating capacity, will be crucial in differentiating this product in the market and attracting the client base. When the market and the project mature, the residential units can be converted into condomiums with excellent complimentary facilities, and ideally, appealing to the same group of people who would have grown older and started earning enough to put down a deposit. This is how Brooklyn Commons will foster a community,

Sample image : Lounge Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

22

Sample Image Beer Hall

Glen’s Garden Market, Washington DC

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

23

Project Highlights : Operations + Marketing

Retail Tenant 1 - Glen’s Garden Market

Retail Tenant 2 - Brooklyn Brewery

Glen’s garden is an organic grocery shop and brewery which would be new to the city and would appeal to the younger renter base that Brooklyn Commons will cater to.

• Based in Washington DC, with two outlets, out of which one is in Du Pont Circle. The rents in the area are $50+.

• Their entire supply chain is based on locally sourced produce, from the New York Watershed area • They engage with the community and provide heavy discounts to local buyers • Green from the word Go! - The entire fit-out is done in a sustainable manner. This is something that would be supported by the FRESH tax incentive as well.

• The brewery will liven up the project with people from within and outside the property coming in to use it.

• Brooklyn brewery is a local name and with it’s main outlet in Williamsburg, it could save a lot of costs by taking up this space in Boerum hill.

• It could also stock organic beers produced by Glen’s Garden • This would really appeal to the younger renter base.

Marketing Strategy • The internet will play the biggest role in attracting people to Brooklyn Commons.

Social Media, a website, some OTAs and rental websites like VRBO would be the major ways of reaching out.

• Glen’s Garden and the Brewery would also serve as attractors to the project and drive revenue, especially if a percentage rent clause is incorporated iin their leases.

Serviced Apartments - Self Managed The serviced apartment component of the project provides a great opportunity to make a much higher revenue by taking the risk of a lower occupancy. This too can be minimized if managed efficiently. The management could have been outsourced to a company like Common which is a Brooklyn based short term rental company. However, the drain on profits is much higher in their partnership agreement. Common charges a base 4% management fee plus 50% of all profits above and beyond the projected market rate NOI for a similar property. This is a huge portion of the upside that the developer would be letting go off. This might be suitable for a longer term investor or owner, but does not suit our investment.

Albatross will be setting up a management arm to manage these units and will charge only the base 3% fee. Albatross has developed hotel properties in the past and has access to the best managers.

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

24

Project Highlights : Flexibility + Resilience Small for Rental, Large For Condo

Stu dio /

1B

Smaller rental apartments have more services per unit SF, which makes the cost of building them higher.

Younger people tend to rent smaller spaces, which are still more affordable to them. Hence rental yields are better with a smaller product, like the studios and one bedroom units offered by the project.

Condominiums are bought by people who want to settle down and can afford them. In Brooklyn, these people tend to be families, which need 2-4 bedroom units. These condos still tend to be quite affordable compared to Manhattan.

Condo Conversion - Exit Strategy Merging Units Merging one bedrooms with studios, and 3 units to make 3 or 4 bedroom units would be one way to appeal to the right market with the right product.

The shafts for plumbing have been planned to accomodate this flexibility. This would approximately halve the number of units.

Upgrading finishes Currently, the rental product is envisaged to be young and natural. A finished concrete floor, for instance, will give a clean look to the unit and can easily be ugraded to a more sophisticated material like wood or granite when a renovation or conversion takes place. Same applies to walls and counter tops.

Exclusive Access The residential part of the building is segregated quite seamlessly from the rest of the project such that the condominiums that are eventually sold, have their own space.

Unique Product There is an opportunity to convert the lower 2 or 3 floors into townhouse duplexes, which could be larger units, accessed directly from the street, revisiting the old world charm of Brooklyn Brownstones.

Brooklyn Commons Boerum Hill | Brooklyn

1B

R/1

ath

+S

tud

io/

R/2

ath

th +

Stu dio /

ath

= 2 BR

/2

Ba

th +

1B

R/

= 1 BR

/1

Ba

1B

2B

1B

1B

ath

= 3 BR

/3

Ba

th (

Ba

th +

1W C

Ba

th

Tow n

hou se)

Serviced Apartments / Short Term Rental Units Exit Strategy Currently, the units are designed the same as the rental units (studios) with one 2 bedroom suite on each floor, aimed at friends who want to share or corporate clients with families. They only differ from the rental units in the following ways: • Fully finished with FF&E • More amenitized room (electronics, etc.)

• Serviced - Weekly cleaning + Wifi + Complimentary beers / snacks in lounge • Seperate elevator core • Short term leases (1 day to multiple months), without the need for guarantors etc.

These rooms will be managed by the sponsor based on similar brands like Common and WeLive. At exit, this component may be sold unencumbered to another owner, with or without the management contract. These could also be converted into condominiums very easily, if that seems to be more appropriate for the market.

ALBATROSS DEVELOPMENT LLC

25

Underwriting : Feasibility Analysis The Back-of-Envelope calculation was done in order to get to a prelimnary estimate of how much one can pay for the land. The price is close to the $300 per buildable SF range that the JV has been partnered at.

Lot Size Blended FAR Max. ZFA (As of Right without Incentives)

15000 3.67 55000

Use Rental Hotel Grocery Store Parking

Annual Rent per RSF $63 $111 $81 $5,100

Zoning Rental Residential Extended Stay Grocery (FRESH Incentive) Parking

Max. Buildable Area (ZSF) 45000 20000 10000 39.00

Expenses

18%

NOI

$3,787,336

Terminal Cap Rate

5.82%

Value

$65,086,552

Costs Hard Costs Soft Costs Carrying Costs Total Construction Costs

PSF (on GSF)

Required Yield on Cost (Unlevered)

8.00%

Per Spot

74012

59673.6

Total Revenue $2,128,900 $1,304,019 $773,443 $198,900 $4,405,261.39

a

Total $268 $101 $28 $397

$17,995,103 $327 $1,200

Total Costs

$47,341,700

JV Land Contribution (JV Partner) Construction Cost Contribution (Sponsor)

$17,995,103 $29,346,596

Boerum Hill | Brooklyn

Saleable Area (RSF) 35437.5 14700 9536.1

(Assuming that rents will inflate higher than expenses)

Acquisition / Land Costs Max Payable Per Buildable SF Max Payable Per Land SF

Brooklyn Commons

Actual Built Area (GSF) 45,002 18,972 10,038

Break Up $19,807,607 $7,484,727 $2,054,262 $29,346,596

67.5% 25.5% 7.0% 100%

ALBATROSS DEVELOPMENT LLC

26

Underwriting : Land Acquisition Strategy Brooklyn has seen a huge increase in land prices over the last 4 years. Prices rose more than 30% between certain years. For Brooklyn Commons, the 15,000 SF site would be valued on the basis of the as of right build able area of 55,000 SF.

Comparable Sales

Tax shelter

The immediate surrounding area of Boerum Hill has seen almost no empty plot transactions in the last 1-2 years.

The comparable ones have been taken from neighboring areas of similar characteristics like Fort Greene and Park Slope as well as more upcoming and even established areas like Williamsburg.

By doing a JV, the land tax is kept to a minimum for a part of the project and the building taxes are fixed in any case thanks to the FRESH incentive. This helps defer that land tax increase until the property is stabilised.

The transaction values vary from as low as 200$ to 650$ across the contexts. In Boerum hill no transaction over 200$ per buildable SF has taken place. Based on our target returns and yield on Cost, the project can support a maximum of 320$ per SF.

Negotiating leverage - Desperate seller - Upcoming area but uncertain market - Guarantee of cash out in the future at higher price versus low cash out now The seller may put forward a demand for a higher value, but given the negotiating leverage the sponsor has, the sponsor has been able to get the seller to agree to contribute the land as the owners equity in the JV at 300$, which makes the owner a 56% partner. However, as the sponsor will be developing the project and managing the property to generate value, after refinancing, the development company will recieve a 20% promoted interest on all cashflows and sale proceeds.

Land Comparable Properties (Sold)

953 Pacific St,Brooklyn 529 Park Pl # 31,Brooklyn 31 N Elliott Place 407 Herkimer Street 25, Hope Street, Brooklyn 263 Union Ave,Brooklyn 75 Mcguinness Blvd,Brooklyn 208 Java St,Brooklyn

Neighborhood

Lot Area

Sale Price

Sale Date

Zoning

AOR Buildable

Price per Buildable SF

Price per Site Area

Prospect Heights Prospect Heights

2000 1500

$1,150,000 $1,130,000

3/3/15 5/28/15

R6B -

2.00 -

$288 -

$575 $753

Atlantic Avenue Atlantic Avenue

2103 2000

$1,037,000 $900,000

3/2/16 3/26/15

R6 R6A

2.43 3.00

$203 $150

$493 $450

Williamsburg Williamsburg

2288 2275

$2,662,500 $1,880,000

10/30/15 9/17/16

M1-2/R6 R6

2.43 2.43

$479 $340

$1,164 $826

Green Point Green Point

2500 3500

$2,400,000 $959,688

9/18/15 8/31/15

R6

3.45 2.00

$278 $137

$960 $274

Average (2015) $

Comparable Properties (On Sale)

205 12 Street 209 Butler St,Brooklyn 1163 Atlantic Ave,Brooklyn

Brooklyn Commons Boerum Hill | Brooklyn

267.82

Neighborhood

Lot Area

Sale Price

Sale Date

Zoning

AOR Buildable

Price per Buildable SF

Price per Site Area

Park Slope

2500

$2,999,000

Asking

R6B

2.00

$600

$1,200

Boerum Hill / Gowanus

2500

$925,000

Asking

M1-2

2.00

$185

$370

Atlantic Avenue

28000

$8,275,000

Asking

M1-1 / R6B

1.16

$254

$296

Average (2015)

$346

ALBATROSS DEVELOPMENT LLC

27

Underwriting : Project Budget Some important factors that have been considered for calculating construction costs are: • Lower Hard Cost as this is a corner plot, in Brooklyn • Lighter Structure, as the building is only 8 floors high • Sales Tax Discount of 8.875% on construction materials due to the FRESH tax Incentive

Hard Cost Rental Hotel (including FF&E) Retail Parking + Mechanical Total Sales Tax Saving on Hard Cost Final Hard Cost Cost

Area

FF&E Per Room No. of Rooms Cost Per GSF

Area $

$/GSF 45,002 18,972 10,038 10,800 8.88%

$ $

$300.00 $350.00 $200.00 $125.00 $277.06 $12 $265

7,500.00 30 225,000 2.86

Soft Cost % of Hard Cost

30%

$83.12

ARCHITECTURE & ENGINEERING EXPEDITOR & DOB PERMITS LEGAL & ACCOUNTING MARKETING INSURANCE PROPERTY & MISCELLANEOUS EXPENSES SOFT COST CONTINGENCY

35% 3% 9% 30% 6% 13% 5%

$29.09 $2.40 $7.48 $24.54 $4.83 $10.57 $4.27

5%

$18.01

DEVELOPER FEES Total Soft Cost

Financing Cost (Including assumed interest cost) % of Total Cost

Hard Cost (Including FF&E) Soft Cost Financing Cost

Brooklyn Commons Boerum Hill | Brooklyn

$101.13

7% $

27.76

67.50% 25.50% 7.00% $

$267.63 $101.13 27.76 $396.51

ALBATROSS DEVELOPMENT LLC

28

Underwriting : Operating Expenses The property has different components that would have different expense profiles, In general, the expenses are on the lower side because the serviced apartment component has limited service and the retail tenant is expected to sign a triple net lease.

65,368 84812 RSF GSF

Distributed Expenses per component Rental Housing Utilities CAM + Insurance Superintendant Total

$ $ $ $

2.51 2.50 2.00 7.01

Extended Stay Utilities Maintenance Cleaning Front Desk / Doorman Marketing Hotel Taxes + Licenses Total

$ $ $ $ $ $ $

2.55 2.00 2.21 2.00 3.00 8.43 20.18

Retail Triple Net

$

-

Parking Management

79 Units

30 Rooms

0.12

10% of revenue

$ $

Land tax abatement of 25 years with a deduction of $500 per full employee in the grocery store.

Also, this number remains as it is as the land is not being sold but is bundled up in a JV.

Building Tax

Hence, the total property taxes remain almost the same, with a slight deduction thanks to the employee credit. The figure is around $7 PSF.

Mortgage Recording Tax 5%

A deferral of mortgage recording tax relating to the project’s financing may be offered, equal to 2.80%.

Hotel Sales Taxes

Non-Distributed Fixed Expenses

Land Assessed Value Land Tax

Land Tax

a 25 year abatement freezes the building taxes to their pre-assessed value.

52 Spots $

Taxes

326,250 41,939

Building Assessed Value $ 4,301,550.00 Building Tax $ 552,964.25 Employees Abatement

$

20 10,000

Property Taxes Property Taxes PGSF

$ $

584,904 6.90

Tax Rate

12.86%

Empty Plot

Residential Expenses = 22% of Rental Revenue

For stays longer than 30 days, these taxes do not apply, which reduces the cost and/or ADR, making the hotel more attractive. Also, these taxes might be deferred by the incorporated companies which sign the leases.

Construction Materials Sales Taxes There would be an 8.875% sales tac that would be exempt on all constriuction materials. This has been conservatively assumed to apply to half of the hard cost (other half being labor), resulting in a 5% reduction in hard cost to $265 PGSF.

Serviced Apartment Expenses = 25% of Rental Revenue

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

29

Debt Equity Total

41% 59.44%

U

:T

$20,160,236 $ $29,540,189 $ $49,700,425 $

+E

237.71 $ 348.30 $ 586.01 $

S

308.41 451.91 760.32

No. of Units Corporate lease up Vacancy

30 40% 10%

Uses % of Total $/GSF nderwriting imeline xitTotaltrategy Acquisition Cost 33% $ 16,500,000 $ 194.55 $ Hard Cost 45% $ 22,475,180 $ 265.00 $ Soft Cost 17% $ 8,540,568 $ 100.70 $ The project has 4 major working components, that Financing Cost 1% $403,205 $ 4.75 $

nterest Cost Total

exit capped at an appropriate cap rate of 5.75% 3.58% $ $

1,781,472 $ 49,700,425 $

$/RSF Operating + Marketing Expenses 26% $ 252.42 Grocery 343.83 (NNN) With an 8 year investment horizon, are 130.65 incomeRent/PSF generating.

6.17 a Leasing Commission would yield positive NPV. This is the base case scenario.

21.00 $ 586 $

27.25 760.32

Tenant Improvements Parking

28.75 $81 a simple

6%

$

19.89 $5,100

Sellout assumptions - Conversion to CondominiumsCondo Sellout

Scenario

Deal Level Returns Unlevered The - intended sellout strategy is to maximise profits by Profit $ selling 40,980,671 putting in capital expenditure of $200/RSF and XIRR 12.50% off the residential rental units (79 units), as condos, XNPV 2451719.762 potentially in a stronger market for a higher sellout price Equity Multiple 1.86 x

and absorption than what one is seeing now.

Deal Level Returns - Levered Profit $ 65,593,740 This is a decision that can be taken according to the XIRR 26.33% market, but will affect the current proposal in terms of XNPV $ 16,486,928 Equity Multiple 3.22 x design and build in flexibility for updating the materials

Sales Assumptions Cost of Sale Exit Cap Rate

6.0% 5.750%

Condo Conversion Cap Ex $/PSF Condo Conversion Sellout $/PSF

$ $

200.00 1,340

Discount Rate Income Tax Recapture Tax Capital Gain Tax

10.0% 35.0% 25.0% 15.0%

and potentially combining studio and one bedroom units 6.00% LTC 41% form 2 bedroom units.

WACC 11.35% 15%

nterest Rate Discount Rateto

Land Owner'sRegular Return Sellout = Leveraged IRR 17.17% (Property Level) Profit (based Condo on implied Sellout equity) $ Level) 31,004,724 = Leveraged IRR 26.60% (Property True Profit $ 47,504,724 mplied Price per Buldable SF $ 863.72 The serviced apartment component could also 22.83% be RR Equity Multiple 2.88x converted to condos or rentals, but would ideally be sold

as an operating business with the opportunity for the exit cap has been estimated very $ 34,802,624

Albatross's Return buyer to brand it. The Profit conservatively at 8%.

RR Equity Multiple

31.22% 3.67x

The grocery component is envisioned as a 10 year lease, which means that the sellout in year 5 (post-construction), As of Right FAR 3.67 ZSF FAR 55000 would not be affected5.00 by any rollovers.ZSF with Bonus FAR with Bonus 75000

Property Info

Lot Size (SF) The exit strategy GSF/ZSF GSF/RSF off the residential

15,000 effectively makes it possible to sell 1.13 No. of Parking Spots / Unit 0.5 component separately from the hotel 1.30 and grocery components, hence increasing returns and ZSF (as planned) to be more GSFliquid and RSFphased.

Efficiency providing the opportunity

Use Rental Residential Serviced Apartments Grocery Mechanicalear

Y

Use Parking (no.s) Building Total

Financing

Year 1

0

45000 20000 10000 0

Required Spots 40 Permits 75000

Design + Const. Doc.

Acquisition Loan Acquisition Equity Total

37,542 11,938 10,038 ear 0

2 Y

Max LTV

83% 63% 100% 0%

75% 77%

LTC / LTV

Interest Rate

Amount

0% 100% 100%

6.00%

$0 $16,500,000 $16,500,000

Prelease 6.00% + $20,160,236 Stabilization$10,855,512

Boerum Hill | Brooklyn

Total $20,160,236 $ $29,540,189 $

Profit IRR (including management + dev. fee) Equity Multiple

$

18,303,152 65.3% 7.62x

Date Duration Month Number 5/1/16 5/1/16 0 mths 1 5/1/16 0 mths 1 2/1/17 9 mths 10 11/1/18 21 mths 31 11/1/19 12 mths 43 11/1/22 36 mths 79 11/1/23 12 mths 91 11/1/23 0 mths 91

Timing Closing Acquisition Loan Closing Construction Loan Closing Pre-Construction Period Construction Period Stabilizing Period Holding Period Renovations + Sales Exit

Acquisition Purchase Price / Buildable SF (as of Right)

$300

$16,500,000

Comp Set Sales Price Premium over Comp Set Purchase Price / Buildable SF (as approved) Rental Assumptions Inflation Inflation in Expenses

$267.82 12.0% $220

3% 2%

Residential Rent/PSF Average Unit Size Rent Per Unit

$63 419.62 $26,535.36

Broker's Fees (over annual lease) Serviced Apartments Rent/PSF Average Room Size Rent Per Unit

$/GSF 237.71 $ 348.30 $

$/RSF 308.41 451.91

No. of Units Corporate lease up

79 50% 5%

Hold Period

Operating Expenses

5.75%

41% 59.44%

is imagined to take months. This would be after the pre sales that would take Sponsor's Return place during the 12 month updation period.

Initial Equity $2,765,189

No. of Units Prelease Vacancy

4.75%

Condo Conversion Scenario Brooklyn Commons % of Total

10,275,000 18,291,390 23.99% place over 6 2.78x

$31,015,748

1.25 9% 2% 25 10

Cap Rate for Valuation

$ $

Lot Purchase Price

5850 65,368

70%

T

3 Year 4 Year 5 Year 6 Year 7

7800 84,812.00

65% 35% 100%

DSCR Debt Yield (Permanent Loan) Origination Cost Amortization (Permanent Loan - Years) Term (Years)

Sources Debt Equity

Y

Construction

Construction Loan Construction Equity Total

Permanent Loan

45,002 18,972 10,038 ear 3,000

Investor's Return Initial Equity (to be raised) imeline Profit IRR The Equity sellout Multiple of condos

22%

Renovation

$

13.91

Sales

5%

$111 397.9 $44,125.22 ALBATROSS DEVELOPMENT LLC

30

30 40%

Underwriting : Risks + Mitigants If the JV does not work out The current return expectations are met if the land basis is reasonable. This value is approximately 320$ per as of right buildable SF. Buying the land at a higher price, would make the project in feasible. If the land owner does not agree to enter a JV, and demands a higher price upfront, the deal would be unfeasible.

The Land-owner has agreed to contribute land at $300 PSF, which is 12% more than the comp set. The JV can be made more favorable for the partner by offering to buy out their equity at refinancing, thus giving them returns faster as well as increasing our equity and returns from the cashflow.

If construction costs rise too much The ongoing basis is lower because the initial phase is planned as rentals, which could have cheaper finishes. However, if the basic price of construction goes too high, the project might become unfeasible. This is illustrated in the Sensitivity Tables.

Even if constructon costs rose by $100 PSF, the returns would be at 20% IRR at the property level in the condo scenario.

Discretionary nature of FRESH tax incentive + FAR Bonus The fresh tax incentives main advantages are as follows: • Frozen building tax and lower land tax • Extra build able area equivalent to grocery component.

It is possible that the city may not approve of the grocery component as is, and may not give the same benefits for the project, as the decision is discretionary. Any reduction in benefits would significantly affect the bottom line and might make the development unfeasible.

If the FRESH incentive is not granted, the major impact will be the lack of FAR. However, this may not be a bad thing because the construction costs will also go down.

Renter Sentiment about Transient Population Long term renters in the residential units may have concerns over safety and privacy due to the transient nature of the serviced apartments.

This issue is being addressed by providing certain amenities exclusively for the residents as well as having an up-to-date security system. Also, serviced apartments would mostly be leased monthly, not daily.

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

31

arks ef Passu mote mote

Underwriting : Capital Stack

Sponsor (Albatross Dev. LLC)

Investor (LP)

$2.7M

$10.3M

Land Owner

Development Co.

$16.5M (Land)

$13.05M

Brooklyn Commons LLC

Construction Loan

$29.55M

$20.15M (40% LTC)

Brooklyn Commons

$49.7M Albatross Development LLC

JV Partnership Post- Refinancing

JV Partnership Pre- Refinancing

Capital Stack

Land Owner 56% Dev. Partner 53%

Dev. Partner 44%

Land Owner

Land Owner 47%

Land Owner

Dev. Partner

41%

Construction Debt (Secured

by Land)

33%

Land Owner

21%

Investor (LP)

6%

Sponsor (Albatross)

Dev. Partner

Brooklyn Commons Brooklyn Commons JV Structure

JV Structure

JV Pre

LandDev. Owner Dev. Partner Land Owner Partner Contributions $16,500,000 $16,500,000 $13,040,189 $13,040,189 Contributions 56%44% 44% 56% Returns at Refinancing Parri-passu Returns at Refinancing Parri-passu 47% Returns after Refinancing47% 52.97% Returns after Refinancing 52.97% Promote - 20% 20% Promote Waterfall Structure Waterfall Structure

Tier 4

Brooklyn Commons Boerum Hill | Brooklyn

Tier I

Tier I

Tier II Tier III Tier 4

Tier II Tier III

Hurdle (LP)( Sponsor ( Hurdle Investors (LP) Investors Sponsor Remarks 12%12% 12% 12% 12% 12% Pref 79% 21%Passu Return of Capital Return of Capital 79% 21% Parri 15% 15% 15% 15% Promote 18% 30% 18% Promote 30% >18% 50%Promote >18% 50%

Dev.

Remarks Partner 44% Pref Parri Passu Promote Promote Land Promote

ALBATROSS DEVELOPMENT LLC

32

Underwriting : Sources + Uses Financing Assumptions Property Info

Timing Date Duration Mo Closing 5/1/16 We are a low recently55000 hiked Acquisition rates. Higher rates are a Loan Closing As ofin Right FAR interest rate environment 3.67 and the Federal ZSF Reserve FAR 5/1/16 0 mths Construction FAR withand Bonus 5.00 with Bonus 75000 5/1/16 0 mths possibility hence, conservative asumptions have beenZSFmade about leverage in this deal. Loan Closing Pre-Construction Period 2/1/17 9 mths Lot Size (SF) 15,000 Construction Period 11/1/18 21 mths Construction GSF/ZSF Loan 1.13 No. of Parking Spots / Unit 0.5 Stabilizing Period 11/1/19 12 mths 6% interest that it is only financing part of the construction and is not taking out GSF/RSF rate on a low LTV loan, given 1.30 Holding Period 11/1/22 36 mths Renovations + Sales 11/1/23 12 mths an acquisition loan.

Exit Use ZSF (as planned) GSF RSF Efficiency 11/1/23 0 mths Rental Residential 45000 45,002 37,542 83% Permanent Financing Serviced Apartments 20000 18,972 11,938 63% Acquisition The 4.75% like Brooklyn Commons.

Grocery interest rate is quite conservative 10000 for a rental 10,038 asset 10,038 100% Purchase Price / Buildable SF (as of Right) Mechanical 0 3,000 0 0% Lot Purchase Price Renovation Financing

Use term loan of 17 months Required Spots assumed with a high interest rate of 6.5% and Compan Set LTV Salesof Price A short has been 70%.

Parking (no.s) Total

40 75000

7800 84,812.00

5850 65,368

75% 77%

LTC / LTV

Interest Rate

Amount

Acquisition Loan Acquisition Equity Total

0% 100% 100%

6.00%

$0 $16,500,000 $16,500,000

Construction Loan Construction Equity Total

65% 35% 100%

6.00%

70%

4.75%

Financing

Permanent Loan

Max LTV

DSCR Debt Yield (Permanent Loan) Origination Cost Amortization (Permanent Loan - Years) Term (Years)

% of Total

Uses Acquisition Cost Hard Cost Soft Cost Financing Cost

% of Total

41% 59.44%

33% $ 45% $ 17% $ 1% 3.58% $ $

$ $ $ $

1,781,472 $ 49,700,425 $

$/GSF 237.71 $ 348.30 $ 586.01 $

$/RSF 308.41 451.91 760.32

$/GSF 194.55 265.00 100.70 4.75

$ $ $ $

$/RSF 252.42 343.83 130.65 6.17

21.00 $ 586 $

27.25 760.32

Condo Sellout

Deal Level Returns - Unlevered Profit XIRR XNPV Equity Multiple

$ 40,980,671 12.50% 2451719.762 1.86 x

Deal Level Returns - Levered Profit XIRR XNPV Equity Multiple

$ 65,593,740 26.33% $ 16,486,928 3.22 x 6.00% 15%

LTC WACC

Profit (based on implied equity)

Month No. Stabilization of Units Prelease NOI (Stabilized) Vacancy

43 $3,767,570.45 5.75% $65,522,964 22%

$

70.00% $45,866,075 9% $ 41,861,894

Loan Amount

No. of Units Corporate lease up Vacancy

DSCR Monthly Debt Service Operating + Marketing Expenses Loan Amount Grocery Rent/PSF (NNN) Permanent loan Leasing Commission

amount

PMT Tenant Improvements Parking LTV

1.25 $3,014,056 26% $44,056,080

$

$41,861,894 $238,662 64%

$

Sales Assumptions Cost of Sale Exit Cap Rate

Condo Conversion Cap Ex $/PSF Condo Conversion Sellout $/PSF

$ $

Discount Rate Income Tax Recapture Tax Capital Gain Tax

41% 11.35%

Brooklyn Commons Land Owner's Return Boerum Hill | Brooklyn

5% 25 10

LTV

Scenario

Interest Rate Discount Rate

Residential Interest Rate Rent/PSF Amortization Average Unit Size Term Rent Per Unit

Serviced Apartments Loan Amount Rent/PSF Average Room Size RentDebt Per Unit Yield

Total $20,160,236 $ $29,540,189 $ $49,700,425 $ Total 16,500,000 22,475,180 8,540,568 $403,205

3% 2%

Broker's Fees (over annual lease) Criteria

5.75%

Sources Debt Equity Total

Rental Assumptions Permanent Financing Inflation Loan Sizing Inflation in Expenses

Cap Rate Capitalized Value Operating Expenses

1.25 9% 2% 25 10

Cap Rate for Valuation

Interest Cost Total

$20,160,236 $10,855,512 $31,015,748

Premium over Comp Set Purchase Price / Buildable SF (as approved)

$ 31,004,724

Investor's Return Initial Equity (to be raised)

ALBATROSS DEVELOPMENT LLC

33

$

Underwriting : Returns for Regular Sellout

$ 325 20.00%/2.22x 17.77%/2.07x 15.68%/1.94x 13.71%/1.82x 11.84%/1.70x

$ 350 18.75%/2.13x 16.63%/1.99x 14.63%/1.86x 12.73%/1.75x 10.94%/1.64x

Hard Cost/GSF

$ 300 21.32%/2.32x 18.99%/2.17x 16.80%/2.02x 14.74%/1.89x 12.79%/1.77x

Hard Cost/GSF

$ 250 $ 275 24.26%/2.56x 22.74%/2.44x 21.66%/2.38x 20.28%/2.27x 19.24%/2.21x 17.98%/2.11x 16.98%/2.06x 15.83%/1.97x 14.86%/1.92x 13.80%/1.84x

$265 $290 $315 $340 $365

Scenario

$ 350 14.74%/1.73x 12.79%/1.60x 10.94%/1.47x 9.17%/1.35x 7.49%/1.24x

Property Level Levered Returns

Land Cost per As-of-Right Buildable SF $ 300 $ 325 17.17%/1.86x 15.91%/1.79x 15.03%/1.71x 13.88%/1.65x 13.00%/1.57x 11.94%/1.52x 11.08%/1.43x 10.10%/1.39x 9.25%/1.31x 8.34%/1.28x

Development Partner's Returns (GP+LP)

$265 $290 $315 $340 $365

$ 250 $ 275 19.97%/2.01x 18.51%/1.93x 17.59%/1.83x 16.27%/1.77x 15.35%/1.66x 14.14%/1.61x 13.23%/1.51x 12.12%/1.47x 11.23%/1.37x 10.21%/1.34x

Property Level Levered Returns

Regular Sellout

$265 Condo Sellout 26.33% Regular Sellout 17.17%

Hard Cost per GSF $290 24.44% 15.03%

$315 22.64% 13.00%

$340 20.93% 11.08%

$365 19.30% 9.25%

$265 $290 $315 $340 $365

4.75% 21.62%/2.56x 19.61%/2.39x 17.71%/2.24x 15.90%/2.10x 14.18%/1.97x

5.250% 19.31%/2.28x 17.24%/2.13x 15.28%/1.99x 13.42%/1.86x 11.64%/1.74x

Exit Cap Rate 5.75% 17.17%/2.06x 15.03%/1.91x 13.00%/1.78x 11.08%/1.66x 9.25%/1.54x

6.25% 15.14%/1.87x 12.94%/1.73x 10.84%/1.61x 8.86%/1.49x 6.96%/1.38x

6.75% 12.89%/1.72x 10.71%/1.59x 8.63%/1.47x 6.66%/1.36x 4.79%/1.26x

$265 $290 $315 $340 $365

4.75% 26.30%/2.92x 24.08%/2.74x 22.00%/2.58x 20.04%/2.42x 18.19%/2.28x

5.250% 23.72%/2.59x 21.45%/2.43x 19.32%/2.27x 17.31%/2.13x 15.41%/2.00x

5.75% 21.32%/2.32x 18.99%/2.17x 16.80%/2.02x 14.74%/1.89x 12.80%/1.77x

6.25% 19.06%/2.10x 16.66%/1.95x 14.40%/1.81x 12.29%/1.69x 10.29%/1.57x

6.75% 16.68%/1.94x 14.32%/1.80x 12.10%/1.67x 10.02%/1.55x 8.06%/1.44x

$265 31.22%

$2900 5/1/16 29.14%

$340 3 5/31/19 25.32%

$365 5 5/31/21 23.57%

Regular Sellout 21.32%

18.99%

Property Level Levered Returns

Hard Cost/GSF

Development Partner's Returns (GP+LP)

Hard Cost/GSF

Regular Sellout

Dev. Co. Level Levered Returns

Scenario

Property Level Distribution Year

Unlevered Property Returns Initial Cash Outlay Unlevered Free Cash Flow Total Cash Flow

Condo Sellout

Scenario

Dev. Co. Level Levered Returns

Total Profit Unlevered IRR XNPV Equity Multiple Stabilized Yield on Cost

Levered Property Returns Equity Cash Outlay Levered Free Cash Flow Total Cash Flow to Equity

Scenario

Dev. Co. Level Levered Returns

Total Profit Levered IRR XNPV Equity Multiple Stabilized Cash on Cash

$40,978,244 12.44% $2,317,463 1.86x 8.16% $63

Scenario

($21,946,520)

($16,148,986)

($8,669,536)

$0

($21,946,520)

($16,148,986)

($8,669,536)

16.80%

Regular Sellout 21.23%

$0 19.26%

($22,349,725)

$0

($22,349,725)

Condo

$31,269,229 17.17% $2,432,378 2.06x 10% 16.09% 31.22% Sellout

Sellout 21.32%

10% $14,233,367 Condo Sellout 24.0% 1.86x Regular Sellout 14.22% 18.3% 13.76%

Development Partner's Returns Equity Cash Outlay Levered Free Cash Flow Profit Total Cash Flow to Equity Annual Net Cash Flow Equity Multiple IRR Stabilized Cash on Cash

$17,249,470 2.32x 21.32% 21.20%

14.74%

4 5/31/20 $3,538,385 $3,538,385

Residential Rent per RSF $53 $48 29.12% 28.07%

31.19%

Condo Sellout

JV Partners' Returns Equity Cash Outlay Levered Free Cash Flow Profit Total Cash Flow to Equity

LP's Levered Returns

$0

$58 30.15%

JV Partnership Distribution Regular

Annual Net Cash Flow Equity Multiple IRR Stabilized Cash on Cash

Hard Cost per GSF

1 $315 2 5/31/1727.17%5/31/18

($7,190,464) 17.24% ($7,190,464)

($92,390)

15.17%

($92,390)

12.79% $3,817,351 $3,817,351

$24,052,592 $24,052,592

13.04% $953,408 $953,408

Serviced Apartment Vacancy 20% 25% 29.84% 29.13%

30% 28.41%

20.60%

19.86%

18.37%

($16,500,000)

$0

($16,500,000)

15% $0 23.6% 17.8%

19.12% $0

$0

Serviced Apartment Vacancy $0 $0 20% 25% ($16,500,000) $0 $0 23.1% 22.7% 17.3% 16.8%

7 5/31/23

8 11/1/23

$3,940,578 $3,940,578

$4,067,677 $4,067,677

$72,379,296 $72,379,296

$1,076,635 $1,076,635

$1,203,734 $1,203,734

$33,615,440 $33,615,440

$43 27.04%

15% 30.54%

$0

6 5/31/22

$13,404,164

$448,362

$506,313

$566,084

$15,808,444

$13,404,164

$448,362

$566,084

$15,808,444

$13,404,164

30% $448,362 22.2% 16.3%

$506,313 $506,313

$566,084

$15,808,444

$0

($5,849,725)

($7,190,464)

($83,964)

$10,685,313

$545,273

$611,756

$680,327

$17,850,954

$0

($5,849,725)

($7,190,464)

($83,964)

$10,685,313

$545,273

$611,756

$680,327

$17,850,954

$0

($5,849,725)

($7,190,464)

($83,964)

$10,685,313

$545,273

$611,756

$680,327

$17,850,954

Waterfall Distribution

Brooklyn Commons Tier 1 Boerum Hill | Brooklyn Investor (LP) Beginning

ALBATROSS DEVELOPMENT LLC

$10,275,000

$0

$0

($4,609,283)

($10,828,114) ($12,193,647)

($5,237,406)

($5,436,247)

($5,606,564)

($5,743,289)

34

Underwriting : Returns for Condo Sellout Property Level Levered Returns

Hard Cost/GSF

Development Partner's Returns (GP+LP)

Hard Cost/GSF

Property Level Levered Returns

Scenario

Condo Sellout $265 $290 $315 $340 $365

Land Cost per As-of-Right Buildable SF $ 250 $ 275 $ 300 $ 325 $ 350 29.16%/3.01x 27.62%/2.90x 26.20%/2.79x 24.87%/2.69x 23.63%/2.60x 26.94%/2.76x 25.53%/2.67x 24.21%/2.59x 22.98%/2.50x 21.82%/2.42x 24.84%/2.54x 23.54%/2.47x 22.32%/2.40x 21.18%/2.32x 20.10%/2.26x 22.86%/2.33x 21.65%/2.28x 20.52%/2.22x 19.46%/2.16x 18.46%/2.10x 20.97%/2.14x 19.86%/2.10x 18.81%/2.05x 17.82%/2.01x 16.88%/1.96x

$265 $290 $315 $340 $365

$ 250 $ 275 $ 300 $ 325 $ 350 34.04%/3.81x 32.40%/3.61x 30.87%/3.44x 29.43%/3.27x 28.07%/3.13x 31.61%/3.58x 30.10%/3.40x 28.69%/3.24x 27.36%/3.10x 26.10%/2.96x 29.33%/3.36x 27.94%/3.21x 26.64%/3.06x 25.41%/2.93x 24.24%/2.81x 27.18%/3.17x 25.91%/3.03x 24.70%/2.90x 23.56%/2.77x 22.47%/2.66x 25.17%/2.99x 23.99%/2.86x 22.87%/2.74x 21.80%/2.63x 20.79%/2.53x Hard Cost per GSF $265

Condo Sellout Regular Sellout

Hard Cost/GSF

Property Level Levered Returns

Condo Sellout Brooklyn Commons JV Structure

Contributions

Hard Cost/GSF

Development Partner's Returns (GP+LP)

Returns at Refinancing Returns after Refinancing Promote Waterfall Structure

Tier I

Tier II Tier III Tier 4

$265 $290 $315 Land Owner $340 $16,500,000 56% $365 47% -

$315

26.20% 18.45%

24.21% 16.25%

22.32% 14.16%

4.75% 27.37%/3.25x 25.41%/3.06x 23.55%/2.88x Dev. Partner 21.78%/2.71x $12,842,798 44% 20.09%/2.56x

5.250% 26.74%/3.15x 24.76%/2.96x 22.89%/2.79x 21.10%/2.62x 19.40%/2.47x

Exit Cap Rate 5.75% 26.20%/3.07x 24.21%/2.88x 22.32%/2.71x 20.52%/2.55x 18.81%/2.40x

Parri-passu

52.52%

4.75% 20% $265 32.21%/3.66x $290 30.05%/3.45x Hurdle Investors (LP) 12% 12% $315 28.02%/3.27x Return of Capital 80% $340 26.10%/3.09x 15% 18% $365 24.29%/2.93x >18%

$290

5.250% 5.75% 31.48%/3.54x 30.87%/3.44x Dev. 29.32%/3.34x Sponsor (Albatross) Remarks 28.69%/3.24x Partner 44% 12% Pref 27.28%/3.15x 26.64%/3.06x 20% Parri Passu 25.35%/2.98x 24.70%/2.90x 15% Promote 30% 23.52%/2.83xPromote 22.87%/2.74x 50%

Promote

$340 20.52% 12.18%

$365 18.81% 10.29%

6.25% 25.73%/3.00x 23.73%/2.81x 21.83%/2.64x JV Partnership 20.02%/2.49x Pre- Refinancing 18.30%/2.34x Land

6.25% Owner 56% 30.34%/3.35x 28.15%/3.16x 26.09%/2.98x 24.14%/2.82x 22.30%/2.67x Land Owner Dev. Partner

6.75% 24.26%/2.87x 22.29%/2.69x 20.41%/2.53x JV Partnership 18.63%/2.38x Post- Refinancing 16.93%/2.24x

Albatross Developm Capital Stack

Construction Deb

by Land

41%

6.75% 28.79%/3.22x Dev. Partner 26.64%/3.04x 53% 24.62%/2.87x 22.71%/2.71x 20.90%/2.56x Land Owner

33% Land Owner 47%

Land Ow

21%

Investor (

5%

Sponsor (Alb

Dev. Partner

Property Level Distribution Year Unlevered Property Returns Initial Cash Outlay Unlevered Free Cash Flow Total Cash Flow

Total Profit Unlevered IRR XNPV Equity Multiple Stabilized Yield on Cost

1 5/31/17

2 5/31/18

3 5/31/19

4 5/31/20

5 5/31/21

6 5/31/22

7 5/31/23

8 11/1/23

$0

($21,946,520)

($16,148,986)

($4,034,466)

$0

($21,946,520)

($16,148,986)

($4,034,466)

$3,273,302 $3,273,302

$3,442,571 $3,442,571

$3,553,930 $3,553,930

$13,831,685 $13,831,685

$52,200,205 $52,200,205

$0

($22,349,725)

($6,993,074)

$0

$0

($22,349,725)

($6,993,074)

$0

$26,396,942 $26,396,942

$905,130 $905,130

$1,022,349 $1,022,349

$11,308,972 $11,308,972

$50,347,490 $50,347,490

$0

($16,500,000)

$0

($16,500,000)

$0

$0

$14,814,622

$429,739

$485,393

$6,470,855

$23,904,095

$0

$0

$14,814,622

$429,739

$485,393

$6,470,855

$23,904,095

$0

($16,500,000)

$0

$0

$14,814,622

$429,739

$485,393

$6,470,855

$23,904,095

$0

($5,849,725)

($6,993,074)

$9,487

$11,623,851

$520,683

$583,607

$4,886,169

$26,492,888

$0

($5,849,725)

($6,993,074)

$9,487

$11,623,851

$520,683

$583,607

$4,886,169

$26,492,888

$0

($5,849,725)

($6,993,074)

$9,487

$11,623,851

$520,683

$583,607

$4,886,169

$26,492,888

$34,171,720 11.56% $429,328 1.72x 8.17%

Levered Property Returns Equity Cash Outlay Levered Free Cash Flow Total Cash Flow to Equity

Total Profit Levered IRR XNPV Equity Multiple Stabilized Cash on Cash

0 5/1/16

$60,638,084 26.20% $15,344,159 3.07x 27.66%

JV Partnership Distribution

JV Partners' Returns Equity Cash Outlay Levered Free Cash Flow Profit Total Cash Flow to Equity Annual Net Cash Flow Equity Multiple IRR Stabilized Cash on Cash

$29,604,704 2.79x 23.01% 23.33%

Development Partner's Returns Equity Cash Outlay Levered Free Cash Flow Profit Total Cash Flow to Equity Annual Net Cash Flow Equity Multiple IRR Stabilized Cash on Cash

$31,273,887 3.44x 30.87% 36.65%

Waterfall Distribution

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

35

Underwriting : Conclusion

Why Invest?

Excellent Risk Adjusted Returns The base case itsef has an IRR >20% with very conservative debt assumptions. The condo conversion and sale is not a difficult scenario to execute at all and can be timed depending on the market to produce much higher returns, as shown.

Future play The current real estate market environment is getting tighter and drier in New York; we might have hit a plateau. By investing in a development project with an experienced developer, for a recession proof product like rental, one can exit out of the project at a very profitable time given the 3 and 8 year timelines for construction and sale. This also matches fund investment timelines.

Large Site with Tax Incentives The site is unique in that its one of the few empty plots being sold in Boerum hill, and its large size is also a rarity.

Smaller Contribution, Higher Returns Due to the double layered structure of the deal, the returns are more enhanced at the development company’s level i.e. for LP and GP. The property level returns are levered further thanks to the JV promote of 20% from the land owner.

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

36

Sponsor Profile

Albatross Development LLC is a real estate development company specializing in Hospitality and Luxury Residential Condominium development in Manhattan. Construction and property management will be performed by affiliates of the Sponsor, allowing for a high level of flexibility and control over the project schedule and budget.

• Very familiar with the area and market • Excellent track record • Great investor and debt relations One of our most successful projects was 316 Bergen, which is also in Brooklyn. The project has gone on to achieve some of the highest rental rates in the area. Our mission is to develop programmatically interesting synergies through our projects which catalyze change in their contexts.

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

37

Appendix

Brooklyn Commons Boerum Hill | Brooklyn

ALBATROSS DEVELOPMENT LLC

38

Assumptions Property Info

As of Right FAR FAR with Bonus Lot Size (SF) GSF/ZSF GSF/RSF

3.67 5.00

ZSF FAR ZSF with Bonus

55000 75000

15,000 1.13 1.30

No. of Parking Spots / Unit

0.5

Use Rental Residential Serviced Apartments Grocery Mechanical

ZSF (as planned) 45000 20000 10000 0

Use Parking (no.s) Total

Required Spots 40 75000

GSF 45,002 18,972 10,038 3,000

RSF Efficiency 37,542 83% 11,938 63% 10,038 100% 0 0%

Timing Closing Acquisition Loan Closing Construction Loan Closing Pre-Construction Period Construction Period Stabilizing Period Holding Period Renovations + Sales Exit

Date Duration Month Number 5/1/16 5/1/16 0 mths 1 5/1/16 0 mths 1 2/1/17 9 mths 10 11/1/18 21 mths 31 11/1/19 12 mths 43 11/1/22 36 mths 79 11/1/23 12 mths 91 11/1/23 0 mths 91

Acquisition Purchase Price / Buildable SF (as of Right)

$300

Lot Purchase Price 7800 84,812.00

5850 65,368

75% 77%

LTC / LTV

Interest Rate

Amount

Acquisition Loan Acquisition Equity Total

0% 100% 100%

6.00%

$0 $16,500,000 $16,500,000

Construction Loan Construction Equity Total

65% 35% 100%

6.00%

70%

4.75%

Financing

Permanent Loan

Max LTV

DSCR Debt Yield (Permanent Loan) Origination Cost Amortization (Permanent Loan - Years) Term (Years)

% of Total

Uses Acquisition Cost Hard Cost Soft Cost Financing Cost

% of Total

41% 59.44%

33% $ 45% $ 17% $ 1% 3.58% $ $

$ $ $ $

1,781,472 $ 49,700,425 $

$/GSF 237.71 $ 348.30 $ 586.01 $

$/RSF 308.41 451.91 760.32

$/GSF 194.55 265.00 100.70 4.75

$ $ $ $

$/RSF 252.42 343.83 130.65 6.17

Grocery Rent/PSF (NNN) Leasing Commission

21.00 $ 586 $

27.25 760.32

Tenant Improvements Parking

Condo Sellout

Deal Level Returns - Unlevered Profit XIRR XNPV Equity Multiple

$ 40,980,671 12.50% 2451719.762 1.86 x

Deal Level Returns - Levered Profit XIRR XNPV Equity Multiple

$ 65,593,740 26.33% $ 16,486,928 3.22 x

Land Owner's Return Profit (based on implied equity) True Profit Implied Price per Buldable SF IRR Equity Multiple Albatross's Return Profit IRR Equity Multiple

Brooklyn Commons Boerum Hill | Brooklyn

6.00% 15%

79 50% 5% 22%

$

LTC WACC

$111 397.9 $44,125.22

No. of Units Corporate lease up Vacancy Operating + Marketing Expenses

30 40% 10% 26%

$

28.75

$81 6% $

Sales Assumptions Cost of Sale Exit Cap Rate

Condo Conversion Cap Ex $/PSF Condo Conversion Sellout $/PSF

13.91 5%

Serviced Apartments Rent/PSF Average Room Size Rent Per Unit

Scenario

Interest Rate Discount Rate

$63 419.62 $26,535.36

Broker's Fees (over annual lease)

Total $20,160,236 $ $29,540,189 $ $49,700,425 $ Total 16,500,000 22,475,180 8,540,568 $403,205

3% 2%

Residential Rent/PSF Average Unit Size Rent Per Unit

Operating Expenses

5.75%

Sources Debt Equity Total

Rental Assumptions Inflation Inflation in Expenses

$267.82 12.0% $220

No. of Units Prelease Vacancy

1.25 9% 2% 25 10

Cap Rate for Valuation

Interest Cost Total

$20,160,236 $10,855,512 $31,015,748

$16,500,000

Comp Set Sales Price Premium over Comp Set Purchase Price / Buildable SF (as approved)

19.89 $5,100

6.0% 5.750% $ $

Discount Rate Income Tax Recapture Tax Capital Gain Tax

200.00 1,340 10.0% 35.0% 25.0% 15.0%

41% 11.35%

$ 31,004,724 $ 47,504,724 $ 863.72 22.83% 2.88x

$ 34,802,624 31.22% 3.67x

Investor's Return Initial Equity (to be raised) Profit IRR Equity Multiple Sponsor's Return Initial Equity Profit IRR (including management + dev. fee) Equity Multiple

$ $

$

10,275,000 18,291,390 23.99% 2.78x

$2,765,189 18,303,152 65.3% 7.62x

ALBATROSS DEVELOPMENT LLC

39

Annual Cashflow Regular Sellout Annual Cash Flows

Regular Sellout

1 5/31/17

Year

Revenue

2 5/31/18

3 5/31/19

4 5/31/20

5 5/31/21

6 5/31/22

7 5/31/23

8 11/1/23

0.00% 39 40 0 5%

0 0 0 $0 $0

0 0 0 $0 $0

39 20 255 $598,217 $568,306

0 20 908 $2,194,024 $2,084,322

0 0 948 $2,359,397 $2,241,427

0 0 948 $2,430,179 $2,308,670

0 0 948 $2,503,084 $2,377,930

0 0 790 $2,148,481 $2,041,057

0.00% 10 20 0 10%

$0 0 0 0 $0 $0

$0 0 0 0 $0 $0

$0 10 10 80 $312,083 $280,875

$0 0 10 340 $1,366,143 $1,229,529

$0 0 0 360 $1,489,900 $1,340,910

$0 0 0 360 $1,534,597 $1,381,137

$0 0 0 360 $1,580,635 $1,422,571

$0 0 0 300 $1,356,711 $1,221,040

Retail Revenue

0 0

$0 $0

$0 $0

$0 $287,911

$0 $889,644

$0 $916,333

$0 $943,823

$0 $972,138

$0 $834,418

Parking Revenue

0 0

$0 $0

$0 $0

$58,215 $58,215

$213,511 $213,511

$229,604 $229,604

$236,492 $236,492

$243,587 $243,587

$209,079 $209,079

$0

$0

$1,195,306

$4,417,006

$4,728,274

$4,870,122

$5,016,225

$4,305,594

0 0 3.00%

$0 $0 $0

$0 $0 $0

$129,059 $79,353 $8,426

$468,742 $343,997 $36,886

$499,179 $371,516 $40,227

$509,163 $378,947 $41,434

$519,346 $386,526 $42,677

$441,444 $328,547 $36,631

5% 6% 0%

$0 $0 $0

$0 $0 $0

$28,151 $0 $199,610

$28,996 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

Total Expenses

$0

$0

$444,600

$878,620

$910,923

$929,544

$948,549

$806,622

Reduction in NOI due to Condo Conversion

$0

$0

$0

$0

$0

$0

$0

$0

NOI NOI FTM

$0 $0

$0 $1,582,637

$750,706 $29,736,620

$3,538,385 $44,962,620

$3,817,351 $46,609,187

$3,940,578 $48,113,078

$4,067,677 $49,664,198

$3,498,971 $42,607,336

Residential Units Pre-Leased Units Lease Up Cumulative Leased Revenue Revenue with Vacancy Loss Extended Stay Corporate Leased Short Term Hotel Units Cumulative Rooms per month Revenue Revenue with Vacancy Loss

$

$

Total Revenue

Expenses Residential Extended Stay Management Fee Residential Leasing Cost Retail Leasing Cost Retail TIs

Debt Service Reserve Debt Service Reserve Payout Cumulative Payout Renovation Loan Proceeds NOI (after reserves) Renovation for Condos

$

-

0% 0 0 0

$0 $0 $0 $0 $0

$0 $0 $0 $0 $0

$0 $0 $0 $0 $750,706

$0 $0 $0 $0 $3,538,385

$0 $0 $0 $0 $3,817,351

$0 $0 $0 $0 $3,940,578

$0 $0 $0 $0 $4,067,677

$0 $0 $0 $0 $3,498,971

$

200.00

$0

$0

$0

$0

$0

$0

$0

$0

$

0.00% 0.00% 0 0

$

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

5.8% 6% 0

$ $ $

Sales Proceeds from Sale of Condos % of Total Condos Sold % of Total Condos Renovated Cumulative Sold Cumulative Renovated Sale Price at Exit Sale Cost Total

-

$ $ $

-

$ $ $

-

$ $ $

-

$ $ $

-

$ $ $

-

$ $ $

-

$ -$ $

0.00% 0.00% 0.00% 0.00% 74,393,634 4,463,618 69,930,016

Construction + Acquisition Costs Hard Cost % Soft Cost %

100.00% 100.00%

9.52% 38.71%

57.14% 38.71%

33.33% 22.58%

Land Hard Cost Soft Cost Total

$16,500,000 $22,475,180 $8,540,568 $47,515,748

$16,500,000 $2,140,493 $3,306,026 $21,946,520

$0 $12,842,960 $3,306,026 $16,148,986

$0 $7,491,727 $1,928,515 $9,420,242

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

Unlevered NCF Unlevered XIRR Unlevered XNPV Unlevered Yield on Cost Unlevered EM

$40,978,244 12.44% $2,317,463 8.03% 1.86x

($21,946,520) ($16,148,986)

($8,669,536)

$3,538,385

$3,817,351

$3,940,578

$4,067,677

$72,379,296

6.00%

5.38%

4.75%

4.75%

3.96%

WACC

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

11.35%

0.00%

6.00%

Interest Financing Cost - Acquisition Loan Financing Cost - Construction Loan Total Cost (with Financing Cost)

$0 $0 $403,205 $47,918,953

$0 $0 $403,205 $22,349,725

$0 $0 $0 $16,148,986

$0 $0 $0 $9,420,242

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

Equity

$29,540,189

$22,349,725

$7,190,464

$0

$0

$0

$0

$0

$0

Interest Rate

Brooklyn Commons Boerum Hill | Brooklyn

6.00%

4.75%

ALBATROSS DEVELOPMENT LLC

40

Annual Cashflow Regular Sellout Annual Cash Flows

Regular Sellout

1 5/31/17

Year

Acquisition and Construction financing Beginning Balance Interest Loan Draw - Acquisition Loan Loan Draw - Construction Loan Paydown Ending Balance

-$

Loan Schedule

Permanent Loan Proceeds Permanent Loan Cost Realized Loan Proceeds Loan Paydown PMT

$

BOP Loan Balance IPMT PPMT EOP Loan Balance

Renovation Loan (Condo Sellout Scenario) Interest Rate Interest Equity Draw Loan Draw - Construction Loan Paydown Ending Balance

$0 0.00% $1,781,472 $0 $18,378,764 20,160,236 0.00%

2 5/31/18

3 5/31/19

$0 $0 $25,820,693 $188,623,668 $173,896 $990,220 $0 $0 $8,958,522 $9,420,242 $0 ($843,097) $34,953,111 $198,191,033

4 5/31/20

5 5/31/21

$0 $127,129,298 $617,357 $0 $0 ($19,317,140) $108,429,515

6 5/31/22

$0 $0 $0 $0 $0 $0 $0

7 5/31/23

$0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0

8 11/1/23

$0 $0 $0 $0 $0 $0 $0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$41,861,894 ($837,238) 0

$0 $0 $0

$0 $0 $0

$0 $0 $0

$41,861,894 ($837,238) $41,024,656

$0 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

0

$0

$0

$0

$0

$0

$0

$0

$0

11,455,772.39

$

0.00 0.00x $0 100%

$

$0 $0 $0 $0 $0 $0 $0

70% 6.50% $0 $0 $0 0.00%

$

-

$

-

$

-

$ 1,193,309.62 $ 2,863,943.10 $ 2,863,943.10 $ 2,863,943.10 $ 1,670,633.47

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$204,357,528 $808,915 $384,394 $244,997,790

$ 6.50% $0 $0 $0 $0 $0

$ 6.50% $0 $0 $0 $0 $0

$ 6.50% $0 $0 $0 $0 $0

$482,480,367 $1,909,818 $954,125 $481,526,242

$ 6.50% $0 $0 $0 $0 $0

$470,778,284 $1,863,497 $1,000,446 $469,777,838

$ 6.50% $0 $0 $0 $0 $0

$458,508,089 $1,814,928 $1,049,015 $457,459,074

$ 6.50% $0 $0 $0 $0 $0

$261,560,903 $1,035,345 $635,288 $223,924,228

$ 6.50% $0 $0 $0 $0 $0

5.42% $0 $0 $0 $0 $0

$31,269,229 17.17% $2,432,378 17.49% 2.06x

($22,349,725) $0 $0 $0 $0

($7,190,464) $0 $0 $0 $0

($92,390) $0 $0 $0 $0

$24,052,592 $0 $0 $0 $0

$953,408 $0 $0 $0 $0

$1,076,635 $0 $0 $0 $0

$1,203,734 $0 $0 $0 $0

$33,615,440 $0 $0 $0 $0

15%

0

0

0

0

0

0

0

0

Land Owner Equity (Exit after Refinancing) Cashflow split after refinancing XIRR Stabilized Cash-on-Cash Return EM

$16,500,000 47% 14.22% 14.48% 1.86x

($16,500,000) $0 ($16,500,000) $0.00 $0

$0 $0 $0 $0.00 $0

$0 $0 $0 $0.00 $0

$0 $0 $13,404,164 $0.00 $0

$0 $0 $448,362 $0.00 $0

$0 $0 $506,313 $0.00 $0

$0 $0 $566,084 $0.00 $0

$0 $0 $15,808,444 $0.00 $0

Albatross Equity Promote to Albatross after refinancing Cashflow split after refinancing XIRR Stabilized Cash-on-Cash Return EM

$13,040,189 20% 53% 21.32% 21.20% 2.32x

($5,849,725) $0 $0 ($5,849,725) $0 0

($7,190,464) $0 $0 ($7,190,464) $0 0

$0 $0 $0 ($83,964) $0 0

$0 $0 $0 $10,685,313 $0 0

$0 $0 $0 $545,273 $0 0

$0 $0 $0 $611,756 $0 0

$0 $0 $0 $680,327 $0 0

$0 $0 $0 $17,843,628 $0 0

Levered NCF Levered XIRR Levered XNPV Stabilized Cash-on-Cash Return Levered EM

Discount Rate Joint Venture Parnership Cashflows

Fees to be added to Sponsor Cash Flow Development Fee Management Fee

Brooklyn Commons Boerum Hill | Brooklyn

$1,527,396 $251,338

$ $

610,958 $ $

610,958 $ $

356,392 $ 8,426 $

$ 36,886 $

$ 40,227 $

$ 41,434 $

$ 42,677 $

36,631

ALBATROSS DEVELOPMENT LLC

41

Annual Cashflow Condo Sellout Annual Cash Flows

Condo Sellout

1 5/31/17

Year

Revenue

2 5/31/18

3 5/31/19

4 5/31/20

5 5/31/21

6 5/31/22

7 5/31/23

8 11/1/23

0.00% 39 40 0 5%

0 0 0 $0 $0

0 0 0 $0 $0

39 20 255 $598,217 $568,306

0 20 908 $2,194,024 $2,084,322

0 0 948 $2,359,397 $2,241,427

0 0 948 $2,430,179 $2,308,670

0 0 948 $2,503,084 $2,377,930

0 0 790 $2,148,481 $2,041,057

0.00% 10 20 0 10%

$0 0 0 0 $0 $0

$0 0 0 0 $0 $0

$0 10 10 80 $312,083 $280,875

$0 0 10 340 $1,366,143 $1,229,529

$0 0 0 360 $1,489,900 $1,340,910

$0 0 0 360 $1,534,597 $1,381,137

$0 0 0 360 $1,580,635 $1,422,571

$0 0 0 300 $1,356,711 $1,221,040

Retail Revenue

0 0

$0 $0

$0 $0

$0 $287,911

$0 $889,644

$0 $916,333

$0 $943,823

$0 $972,138

$0 $834,418

Parking Revenue

0 0

$0 $0

$0 $0

$58,215 $58,215

$213,511 $213,511

$229,604 $229,604

$236,492 $236,492

$243,587 $243,587

$209,079 $209,079

$0

$0

$1,195,306

$4,417,006

$4,728,274

$4,870,122

$5,016,225

$4,305,594

0 0 3.00%

$0 $0 $0

$0 $0 $0

$129,059 $79,353 $8,426

$468,742 $343,997 $36,886

$499,179 $371,516 $40,227

$509,163 $378,947 $41,434

$519,346 $386,526 $42,677

$441,444 $328,547 $36,631

5% 6% 0%

$0 $0 $0

$0 $0 $0

$28,151 $0 $199,610

$28,996 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

Total Expenses

$0

$0

$444,600

$878,620

$910,923

$929,544

$948,549

$806,622

Reduction in NOI due to Condo Conversion

$0

$0

$0

$0

$0

$0

$9,340,251

$2,791,090

NOI NOI FTM

$0 $0

$0 $1,582,637

$750,706 $29,736,620

$3,538,385 $44,962,620

$3,817,351 $46,609,187

$3,940,578 -$6,111,955

-$5,272,575 -$33,114,426

$707,881 $17,777,882

20% 1,921,373.58 0 0 0

$0 $0 $0 $0 $0

$0 $0 $0 $0 $0

$0 $0 $0 $0 $750,706

$369,788 $0 $0 $0 $3,168,597

$763,470 $0 $0 $0 $3,053,881

$788,116 $0 $0 $0 $3,152,463

$0 -$1,770,005 -$15,768,601 $5,100,227 $1,597,657

$0 -$151,369 -$18,305,523 $525,023 $1,384,274

200.00

$0

$0

$0

$0

$0

$0

$8,250,367

$750,033

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

$ 0.00% 0.00% 0.00% 0.00%

Residential Units Pre-Leased Units Lease Up Cumulative Leased Revenue Revenue with Vacancy Loss Extended Stay Corporate Leased Short Term Hotel Units Cumulative Rooms per month Revenue Revenue with Vacancy Loss

$

$

Total Revenue

Expenses Residential Extended Stay Management Fee Residential Leasing Cost Retail Leasing Cost Retail TIs

Debt Service Reserve Debt Service Reserve Payout Cumulative Payout Renovation Loan Proceeds NOI (after reserves) Renovation for Condos

$

$

Sales Proceeds from Sale of Condos % of Total Condos Sold % of Total Condos Renovated Cumulative Sold Cumulative Renovated Sale Price at Exit Sale Cost Total

$

46,637,110.94 100.00% 100.00% 0 0

$

5.8% 6% 0

$ $ $

-

$ $ $

-

$ $ $

-

$ $ $

-

$ $ $

-

$ $ $

0.00% 0.00% 0.00% 0.00% -

########### $ 27,204,981.38 41.67% 58.33% 91.67% 8.33% 125.00% 825.00% 550.00% 1000.00% $ $ $

-

$ -$ $

31,052,240 1,863,134 29,189,106

Construction + Acquisition Costs Hard Cost % Soft Cost %

100.00% 100.00%

9.52% 38.71%

57.14% 38.71%

33.33% 22.58%

Land Hard Cost Soft Cost Total

$16,500,000 $22,475,180 $8,540,568 $47,515,748

$16,500,000 $2,140,493 $3,306,026 $21,946,520

$0 $12,842,960 $3,306,026 $16,148,986

$0 $7,491,727 $1,928,515 $9,420,242

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

Unlevered NCF Unlevered XIRR Unlevered XNPV Unlevered Yield on Cost Unlevered EM

$40,980,671 12.50% $2,451,720 6.43% 1.86x

($21,946,520) ($16,148,986)

($8,669,536)

$3,168,597

$3,053,881

$3,152,463

$21,029,786

$57,340,986

4.75%

4.75%

4.75%

3.96%

WACC

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

11.35%

0.00%

6.00%

Interest Financing Cost - Acquisition Loan Financing Cost - Construction Loan Total Cost (with Financing Cost)

$0 $0 $403,205 $47,918,953

$0 $0 $403,205 $22,349,725

$0 $0 $0 $16,148,986

$0 $0 $0 $9,420,242

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

Equity

$29,540,189

$22,349,725

$7,190,464

$0

$0

$0

$0

$0

$0

Interest Rate

Brooklyn Commons Boerum Hill | Brooklyn

6.00%

6.00%

5.38%

ALBATROSS DEVELOPMENT LLC

42

Annual Cashflow Condo Sellout Annual Cash Flows

Condo Sellout

1 5/31/17

Year

Acquisition and Construction financing Beginning Balance Interest Loan Draw - Acquisition Loan Loan Draw - Construction Loan Paydown Ending Balance

-$

Loan Schedule

Permanent Loan Proceeds Permanent Loan Cost Realized Loan Proceeds Loan Paydown PMT

$

BOP Loan Balance IPMT PPMT EOP Loan Balance

Renovation Loan (Condo Sellout Scenario) Interest Rate Interest Equity Draw Loan Draw - Construction Loan Paydown -$ Ending Balance

$0 0.00% $1,781,472 $0 $18,378,764 20,160,236 0.00%

$0 $0 $0 $0 $0 $0 $0

2 5/31/18

3 5/31/19

$0 $0 $25,820,693 $188,623,668 $173,896 $990,220 $0 $0 $8,958,522 $9,420,242 $0 ($843,097) $34,953,111 $198,191,033

4 5/31/20

5 5/31/21

$0 $127,129,298 $617,357 $0 $0 ($19,317,140) $108,429,515

6 5/31/22

$0 $0 $0 $0 $0 $0 $0

7 5/31/23

$0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0

8 11/1/23

$0 $0 $0 $0 $0 $0 $0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$41,861,894 ($837,238) 0

$0 $0 $0

$0 $0 $0

$0 $0 $0

$41,861,894 ($837,238) $41,024,656

$0 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

0

$0

$0

$0

$0

$0

$0

$0

$0

11,455,772.39

$

0.00 0.00x $0 100%

70% 6.50% $60,263 $2,700,120 $6,300,280 6,360,543 0.00%

$

-

$

-

$

-

$ 1,193,309.62 $ 2,863,943.10 $ 2,863,943.10 $ 2,863,943.10 $ 1,670,633.47

$0 $0 $0 $0

$0 $0 $0 $0

$0 $0 $0 $0

$204,357,528 $808,915 $384,394 $244,997,790

$ 6.50% $0 $0 $0 $0 $0

$ 6.50% $0 $0 $0 $0 $0

$ 6.50% $0 $0 $0 $0 $0

$482,480,367 $1,909,818 $954,125 $481,526,242

$ 6.50% $0 $0 $0 $0 $0

$470,778,284 $1,863,497 $1,000,446 $469,777,838

$ 6.50% $0 $0 $0 $0 $0

$437,678,807 $1,732,479 $1,131,464 $422,950,733

$ $ 6.50% 6.50% $0 $60,263 $0 $2,475,110 $0 $5,775,257 $0 ($5,835,520) $0 $11,125,567

$85,688,856 $339,185 $1,331,448 $61,731,239

5.42% ($0) $225,010 $525,023 ($525,023) ($0)

$65,593,740 26.33% $16,486,928 3.26% 3.22x

($22,349,725) $0 $0 $0 $0

($7,190,464) $0 $0 $0 $0

($92,390) $0 $0 $0 $0

$23,682,804 $0 $0 $0 $0

$189,937 $0 $0 $0 $0

$288,519 $0 $0 $0 $0

$15,690,733 $0 $0 $0 $0

$55,374,326 $0 $0 $0 $0

15%

0

0

0

0

0

0

0

0

Land Owner Equity (Exit after Refinancing) Cashflow split after refinancing XIRR Stabilized Cash-on-Cash Return EM

$16,500,000 47% 22.83% 2.73% 2.88x

($16,500,000) $0 ($16,500,000) $0.00 $0

$0 $0 $0 $0.00 $0

$0 $0 $0 $0.00 $0

$0 $0 $13,224,821 $0.00 $0

$0 $0 $89,323 $0.00 $0

$0 $0 $135,683 $0.00 $0

$0 $0 $8,013,830 $0.00 $0

$0 $0 $26,041,067 $0.00 $0

Albatross Equity Promote to Albatross after refinancing Cashflow split after refinancing XIRR Stabilized Cash-on-Cash Return EM

$13,040,189 20% 53% 31.21% 5.42% 3.67x

($5,849,725) $0 $0 ($5,849,725) $0 0

($7,190,464) $0 $0 ($7,190,464) $0 0

$0 $0 $0 ($83,964) $0 0

$0 $0 $0 $10,494,868 $0 0

$0 $0 $0 $140,842 $0 0

$0 $0 $0 $194,271 $0 0

$0 $0 $0 $7,719,580 $0 0

$0 $0 $0 $29,369,890 $0 0

Levered NCF Levered XIRR Levered XNPV Stabilized Cash-on-Cash Return Levered EM

Discount Rate Joint Venture Parnership Cashflows

Fees to be added to Sponsor Cash Flow Development Fee Management Fee

Brooklyn Commons Boerum Hill | Brooklyn

$1,527,396 $251,338

$ $

610,958 $ $

610,958 $ $

356,392 $ 8,426 $

$ 36,886 $

$ 40,227 $

$ 41,434 $

$ 42,677 $

36,631

ALBATROSS DEVELOPMENT LLC

43

Waterfall Distribution Regular Sellout Property Level Distribution

4 5/31/20

5 5/31/21

6 5/31/22

7 5/31/23

8 11/1/23

$3,361,055 $3,361,055

$3,623,759 $3,623,759

$3,740,978 $3,740,978

$3,861,884 $3,861,884

$68,724,201 $68,724,201

$0

$26,396,942 $26,396,942

$905,130 $905,130

$1,022,349 $1,022,349

$1,143,255 $1,143,255

$32,383,170 $32,383,170

$0

$0

$14,814,622

$429,739

$485,393

$542,797

$15,374,955

$0

$0

$14,814,622

$429,739

$485,393

$542,797

$15,374,955

($16,500,000)

$0

$0

$14,814,622

$429,739

$485,393

$542,797

$15,374,955

$0

($5,849,725)

($6,993,074)

$9,487

$11,623,851

$520,683

$583,607

$648,509

$17,057,708

$0

($5,849,725)

($6,993,074)

$9,487

$11,623,851

$520,683

$583,607

$648,509

$17,057,708

$0

($5,849,725)

($6,993,074)

$9,487

$11,623,851

$520,683

$583,607

$648,509

$17,057,708

$0 $0 $0 $0 $0 $0 $0

$0 $0 ($4,679,780) $0 ($4,679,780) $0 ($4,679,780)

($4,679,780) ($561,574) ($5,594,459) $0 ($10,835,812) $0 ($5,594,459)

($4,284,862) ($514,183) $0 $416,546 ($4,382,499) $416,546 $416,546

($4,382,499) ($525,900) $0 $466,886 ($4,441,513) $466,886 $466,886

($4,441,513) ($532,982) $0 $518,807 ($4,455,687) $518,807 $518,807

($4,455,687) ($534,682) $0 $4,990,370 $0 $4,990,370 $4,990,370

12%

$0 $0 $0

($1,169,945) $0 ($1,169,945)

($1,398,615) $0 ($1,398,615)

$0 $1,897 $1,897

$0 $2,324,770 $2,324,770

$0 $104,137 $104,137

$0 $116,721 $116,721

$0 $129,702 $129,702

$0 $1,247,592 $1,247,592

12%

Cash Flow Remaining After Tier 1

$0

$0

$0

$0

$0

$0

$0

$0

$10,819,746

Tier 2 Investor's Tier II Distribution Sponsor's Tier II Distribution

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$2,271,245 $1,068,821

Investor's Tier II Cash Flow Sponsor's Tier II CashFlow Total Cash Flows

$0 $0

($4,679,780) ($1,169,945)

($5,594,459) ($1,398,615)

$7,590 $1,897

$9,299,080 $2,324,770

$416,546 $104,137

$466,886 $116,721

$518,807 $129,702

$7,261,615 $2,316,414

Cash Flow Remaining After Tier 2

$0

$0

$0

$0

$0

$0

$0

$0

$7,479,679

Tier 3 Investor's Tier III Distribution Sponsor's Tier II Distribution

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$2,755,349 $2,164,917

Investor's Tier II Distribution Sponsor's Tier II Distribution Total Cash Flows

$0 $0

($4,679,780) ($1,169,945)

($5,594,459) ($1,398,615)

$7,590 $1,897

$9,299,080 $2,324,770

$416,546 $104,137

$466,886 $116,721

$518,807 $129,702

$10,016,964 $4,481,331

Cash Flow Remaining After Tier 3

$0

$0

$0

$0

$0

$0

$0

$0

$2,559,414

Tier 4 Investor's Tier III Distribution Sponsor's Tier II Distribution

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$1,023,766 $1,535,648

$0 $0

($4,679,780) ($558,987)

($5,594,459) ($787,656)

$7,590 $367,777

$9,299,080 $2,366,301

$416,546 $149,430

$466,886 $163,373

$518,807 $177,753

$11,040,729 $6,066,472

$0 $0

($4,679,780) ($558,987)

($10,274,239) ($1,346,643)

($10,266,649) ($978,866)

($967,568) $1,387,435

($551,022) $1,536,865

($84,136) $1,700,238

$434,671 $1,877,991

$11,475,400 $7,944,463

Year Unlevered Property Returns Initial Cash Outlay Unlevered Free Cash Flow Total Cash Flow

Total Profit Unlevered IRR XNPV Equity Multiple Stabilized Yield on Cost

1 5/31/17

2 5/31/18

3 5/31/19

$0

($21,946,520)

($16,148,986)

($4,034,466)

$0

($21,946,520)

($16,148,986)

($4,034,466)

$0

($22,349,725)

($6,993,074)

$0

$0

($22,349,725)

($6,993,074)

$0

($16,500,000)

$0

($16,500,000)

$0

$41,181,905 13.20% $3,776,326 1.87x 8.60%

Levered Property Returns Equity Cash Outlay Levered Free Cash Flow Total Cash Flow to Equity

Total Profit Levered IRR XNPV Equity Multiple Stabilized Cash on Cash

0 5/1/16

$32,508,046 18.30% $3,631,986 2.11x 27.66%

JV Partnership Distribution

JV Partners' Returns Equity Cash Outlay Levered Free Cash Flow Profit Total Cash Flow to Equity Annual Net Cash Flow Equity Multiple IRR Stabilized Cash on Cash

$15,147,506 1.92x 15.35% 23.33%

Development Partner's Returns Equity Cash Outlay Levered Free Cash Flow Profit Total Cash Flow to Equity Annual Net Cash Flow Equity Multiple IRR Stabilized Cash on Cash

$17,601,047 2.37x 22.59% 36.65%

Waterfall Distribution Tier 1 Investor (LP) Beginning Required Return Contributions Paid Ending Investor's Tier 1 Distribution Investor's CF After Tier 1

Sponsor (Albatross) Contribution Sponsor's Tier 1 Distribution Sponsor's CF After Tier 1

Investor NCF Sponsor NCF (inc. mgmt + dev fee)

$10,274,239

12.0% $2,568,560

12.0%

$11,475,400 $7,944,463

Accumulated Cash Flows Investor Accum CF Sponsor Accum CF Equity Multiple Investor Sponsor

2.12x 4.09x

IRR Investor Sponsor

19.0% 57.5%

Brooklyn Commons Boerum Hill | Brooklyn

($10,835,812) ($12,128,520) ($1,300,297) ($1,455,422) $0 $0 $7,590 $9,299,080 ($12,128,520) ($4,284,862) $7,590 $9,299,080 $7,590 $9,299,080

15% 17%

18% 24%

ALBATROSS DEVELOPMENT LLC

44

Waterfall Distribution Condo Sellout Property Level Distribution

4 5/31/20

5 5/31/21

6 5/31/22

7 5/31/23

8 11/1/23

$3,273,302 $3,273,302

$3,442,571 $3,442,571

$3,553,930 $3,553,930

$13,831,685 $13,831,685

$52,200,205 $52,200,205

$0

$26,396,942 $26,396,942

$905,130 $905,130

$1,022,349 $1,022,349

$11,308,972 $11,308,972

$50,347,490 $50,347,490

$0

$0

$14,814,622

$429,739

$485,393

$6,470,855

$23,904,095

$0

$0

$14,814,622

$429,739

$485,393

$6,470,855

$23,904,095

($16,500,000)

$0

$0

$14,814,622

$429,739

$485,393

$6,470,855

$23,904,095

$0

($5,849,725)

($6,993,074)

$9,487

$11,623,851

$520,683

$583,607

$4,886,169

$26,492,888

$0

($5,849,725)

($6,993,074)

$9,487

$11,623,851

$520,683

$583,607

$4,886,169

$26,492,888

$0

($5,849,725)

($6,993,074)

$9,487

$11,623,851

$520,683

$583,607

$4,886,169

$26,492,888

$0 $0 $0 $0 $0 $0 $0

$0 $0 ($4,679,780) $0 ($4,679,780) $0 ($4,679,780)

($4,679,780) ($561,574) ($5,594,459) $0 ($10,835,812) $0 ($5,594,459)

($4,284,862) ($514,183) $0 $416,546 ($4,382,499) $416,546 $416,546

($4,382,499) ($525,900) $0 $466,886 ($4,441,513) $466,886 $466,886

($4,441,513) ($532,982) $0 $3,908,935 ($1,065,559) $3,908,935 $3,908,935

($1,065,559) ($127,867) $0 $1,193,426 $0 $1,193,426 $1,193,426

12%

$0 $0 $0

($1,169,945) $0 ($1,169,945)

($1,398,615) $0 ($1,398,615)

$0 $1,897 $1,897

$0 $2,324,770 $2,324,770

$0 $104,137 $104,137

$0 $116,721 $116,721

$0 $977,234 $977,234

$0 $298,357 $298,357

12%

Cash Flow Remaining After Tier 1

$0

$0

$0

$0

$0

$0

$0

$0

$25,001,105

Tier 2 Investor's Tier II Distribution Sponsor's Tier II Distribution

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$1,014,412 $477,370

Investor's Tier II Cash Flow Sponsor's Tier II CashFlow Total Cash Flows

$0 $0

($4,679,780) ($1,169,945)

($5,594,459) ($1,398,615)

$7,590 $1,897

$9,299,080 $2,324,770

$416,546 $104,137

$466,886 $116,721

$3,908,935 $977,234

$2,207,839 $775,727

Cash Flow Remaining After Tier 2

$0

$0

$0

$0

$0

$0

$0

$0

$23,509,322

Tier 3 Investor's Tier III Distribution Sponsor's Tier II Distribution

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

Investor's Tier II Distribution Sponsor's Tier II Distribution Total Cash Flows

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

Cash Flow Remaining After Tier 3

$0

$0

$0

$0

$0

$0

$0

$0

$26,492,888

Tier 4 Investor's Tier III Distribution Sponsor's Tier II Distribution

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$10,597,155 $15,895,733

$0 $0

($4,679,780) ($558,987)

($5,594,459) ($787,656)

$7,590 $367,777

$9,299,080 $2,366,301

$416,546 $149,430

$466,886 $163,373

$3,908,935 $1,025,285

$12,804,994 $16,720,952

$0 $0

($4,679,780) ($558,987)

($10,274,239) ($1,346,643)

($10,266,649) ($978,866)

($967,568) $1,387,435

($551,022) $1,536,865

($84,136) $1,700,238

$3,824,799 $2,725,523

$16,629,793 $19,446,476

Year Unlevered Property Returns Initial Cash Outlay Unlevered Free Cash Flow Total Cash Flow

Total Profit Unlevered IRR XNPV Equity Multiple Stabilized Yield on Cost

1 5/31/17

2 5/31/18

3 5/31/19

$0

($21,946,520)

($16,148,986)

($4,034,466)

$0

($21,946,520)

($16,148,986)

($4,034,466)

$0

($22,349,725)

($6,993,074)

$0

$0

($22,349,725)

($6,993,074)

$0

($16,500,000)

$0

($16,500,000)

$0

$34,171,720 11.56% $429,328 1.72x 8.17%

Levered Property Returns Equity Cash Outlay Levered Free Cash Flow Total Cash Flow to Equity

Total Profit Levered IRR XNPV Equity Multiple Stabilized Cash on Cash

0 5/1/16

$60,638,084 26.20% $15,344,159 3.07x 27.66%

JV Partnership Distribution

JV Partners' Returns Equity Cash Outlay Levered Free Cash Flow Profit Total Cash Flow to Equity Annual Net Cash Flow Equity Multiple IRR Stabilized Cash on Cash

$29,604,704 2.79x 23.01% 23.33%

Development Partner's Returns Equity Cash Outlay Levered Free Cash Flow Profit Total Cash Flow to Equity Annual Net Cash Flow Equity Multiple IRR Stabilized Cash on Cash

$31,273,887 3.44x 30.87% 36.65%

Waterfall Distribution Tier 1 Investor (LP) Beginning Required Return Contributions Paid Ending Investor's Tier 1 Distribution Investor's CF After Tier 1

Sponsor (Albatross) Contribution Sponsor's Tier 1 Distribution Sponsor's CF After Tier 1

Investor NCF Sponsor NCF (inc. mgmt + dev fee)

$10,274,239

12.0% $2,568,560

12.0%

$16,629,793 $19,446,476

Accumulated Cash Flows Investor Accum CF Sponsor Accum CF Equity Multiple Investor Sponsor

2.62x 8.57x

IRR Investor Sponsor

23.8% 72.6%

Brooklyn Commons Boerum Hill | Brooklyn

($10,835,812) ($12,128,520) ($1,300,297) ($1,455,422) $0 $0 $7,590 $9,299,080 ($12,128,520) ($4,284,862) $7,590 $9,299,080 $7,590 $9,299,080

13% 15%

0% 0%

ALBATROSS DEVELOPMENT LLC

45

Brooklyn Commons

Boerum Hill | Brooklyn

2

3

4

5

6

$1,203,734

$4,067,677

$1,076,635

$3,940,578

$953,408

$3,817,351

$3,538,385

$33,615,440

$24,052,592

7

$72,379,296

UNLEVERED + LEVERED CASHFLOW (REGULAR SELLOUT)

7

$55,374,326

$57,340,986

6

$15,690,733

$21,029,786

5

$288,519

$3,152,463

$23,682,804

4

$189,937

$3,053,881

$3,168,597

3 ($92,390)

($8,669,536)

2

($92,390)

($8,669,536)

1 ($7,190,464)

($16,148,986)

($22,349,725)

($21,946,520) 1

($7,190,464)

($16,148,986)

($22,349,725)

($21,946,520)

CashFlow Distribution

8

UNLEVERED + LEVERED CASHFLOW (CONDO SELLOUT)

8

ALBATROSS DEVELOPMENT LLC

46

Executive Summary : Brooklyn Commons, Boerum Hill [97 Third Avenue, Brooklyn, 11217] Albatross Development LLC (The Sponsor) is seeking $10.27 million of Limited Partner equity (21.32% partnership level IRR, 2.45x project equity multiple, 8.16% yield on cost, 21.20% yield on cash) to facilitate the construction of a 84,810 SF mixed use building, known as Brooklyn Commons (the “Property”) in the historic Boerum Hill area of Brooklyn. The building will have 79 rental units, 30 short-lease serviced apartments and 10,000 SF of grocery and beverage area. The project will take advantage of lower land taxes through a JV structure with the land-owner and frozen building taxes as well as higher FAR through the FRESH tax incentive, to make this deal profitable.

JV with Land Owner; Lower Land Basis & Taxes • Promoted profit split after refinancing in Year 4 • FRESH tax incentive to achieve tax abatements

Sponsor (Albatross)

Investor (LP)

$2.7M

$10.3M

Land Owner

Development Co.

$16.5M (Land)

$13.05M

Brooklyn Commons LLC

Construction Loan

$29.55M

$20.15M (40% LTC)

Mixed Use Building Higher income potential + Risk Diversification Brooklyn Commons

• Stability and demand in the rental market 1 • Arbitrage; smaller units + variable leasing strategies • Timing the market; entering low, exiting high

1 1

Creating a Community • Activating the area of Boerum Hill • Grocery facility as hub for residents + neighborhood • Highly amenitized property; convenience + loyalty

$49.7M

PROGRAM 79 rental units 30 Serviced Apartments 10,000 SF CSA Grocery + Beer Hall 40 Parking Spots VISION Mixed Use Rental Product designed for Modern Day Living with High Income + Upside at Exit with Potential Condo Conversion TIMELINE 2.5 Year Construction + 5 Year Hold 7.5 Year Investment Horizon

Highly Qualified Sponsor Albatross Development LLC specializes in Hospitality and Luxury Residential Condominium development in Manhattan. Construction and management will be handled by the company.

Brooklyn Commons Boerum Hill | Brooklyn

RETURNS 8.16% Yield on Cost 12.44% Unlevered IRR (Property Level) 17.17% Levered IRR (Property Level) 21.32% Levered IRR (Dev. Co. Level) 2.45x Equity Multiple 21.20% Yield on Cash ALBATROSS DEVELOPMENT LLC ALBATROSS DEVELOPMENT LLC 47