1201 Broadway - Investment Analysis Model

($ USD in $ as Stated, Unless Otherwise Noted)

Operating Assumptions: Units: Units:

Property Name: Name 1201 Broadway Real Estate Taxes % Property Value: % 4.00%
Location: Name New York, NY Real Estate Taxes Annual Growth Rate: % 2.0%

Months in Year: # 12 Replacement Reserve per RSF per Year: $ / sq. ft. / Yr $ 2.50
Rentable Square Feet (RSF): sq. ft. 25,000 sq. ft. Replacement Reserve Annual Growth Rate: % 3.0%

Property Management Fees % EGI: % 3.0% Common Area Utilities per RSF per Year: $ / sq. ft. / Yr $ 3.00
Common Area Utilities Annual Growth Rate: % 3.0%
Common Area Maintenance (CAM) per RSF per Year: $ / sq. ft. / Yr $ 5.00
Common Area Maintenance Annual Growth Rate: % 3.5%

Insurance per RSF per Year: $ / sq. ft. / Yr $ 2.00

Insurance Annual Growth Rate: % 2.5%

Acquisition and Exit Assumptions: Units: Units:

Acquisition Date: Date 2017-12-31 Exit Date: Date 2022-12-31

Acquisition Price per Rentable Square Foot: $ / sq. ft. $ 1,000.00 Exit Cap Rate: % 6.00%
Acquisition Price: $ $ 25,000,000
Exit Price: $ $ 35,684,042
Implied Going-In Cap Rate: % 6.99% Exit Price per RSF: $ / sq. ft. $ 1,427.36

Acquisition Costs (% Gross Acquisition Price): % 1.00% Selling Costs (% Gross Sale Price): % 1.50%
Loan Issuance Fees (% Total Debt): % 1.50%

Senior Loan Loan-to-Value (LTV) Ratio: % 50.0% Mezzanine Loan-to-Value (LTV) Ratio: % 10.0%
Senior Loan Interest Rate: % 5.00% Mezzanine Cash Interest Rate: % 7.00%
Senior Loan Amortization Period: # Years 25 Mezzanine PIK Interest Rate: % 3.00%
Senior Loan Maturity: # Years 5 Mezzanine Amortization Period: # Years N/A
Mezzanine Maturity: # Years 5
Operating Partner Equity Contribution: % 10.0%
Asset Management Fee % Initial Equity Invested: % 1.5%
Profit Split Below IRR Hurdle: % -
IRR Hurdle (Based on Levered IRR to LPs): % 10.0%
Profit Split Beyond IRR Hurdle: % 20.0%

Limited Partner Equity Contribution: % 90.0%

Acquisition Sources and Uses of Funds:

Uses of
Sources of Funds: Funds:
Senior Debt: $ 12,500,000 Acquisition Price: $ 25,000,000
Mezzanine: 2,500,000 Acquisition Costs: 250,000
Operating Partner - Equity: 1,053,750 Loan Issuance Fees: 225,000
Limited Partners - Equity: 9,483,750 Replacement Reserves: 62,500
Total Sources: $ 25,537,500 Total Uses: $ 25,537,500
 Historical: Projected: Stabilized
Rent Roll & Operating Assumptions: Units: FY17 FY18 FY19 FY20 FY21 FY22 Year:

Property-Wide Operating Assumptions:

New Lease Term (Years): # Years 10
Renewal Probability: % 70.0%
# Months of Downtime for Non-Renewal: # 6

Free Rent and Capital Costs: New: Renewal:

# Months of Free Rent: # 6 3
Tenant Improvements (TIs) per RSF: $ / sq. ft. / Yr $ 10.00 3.00
Leasing Commissions (LCs) % Total Lease Value: % 3.0% 1.0%

Office Tenant #1 - Full Service (FS) Lease:

Rentable Square Feet Occupied: sq. ft. 10,000 sq. ft.
Lease Expiration Date: Date 2019-12-31

Baseline Rent per Square Foot: $ / sq. ft. / Yr $ 120.00 $ 124.80 $ 129.79 $ 134.98 $ 139.03 $ 143.20 $ 147.50
Rental Growth Rate: % 4.0% 4.0% 4.0% 3.0% 3.0% 3.0%

(+) Base Rental Income: $ 1,200,000 1,248,000 1,297,920 1,349,837 1,390,332 1,432,042 1,475,003
(-) Absorption & Turnover Vacancy: $ - - - (202,476) - - -
(-) Concessions & Free Rent: $ - - - (438,697) - - -
(-) Tenant Improvements (TIs): $ - - - (51,000) - - -
(-) Leasing Commissions (LCs): $ - - - (215,974) - - -

Office Tenant #2 - Single Net (N) Lease:

Rentable Square Feet Occupied: sq. ft. 7,000 sq. ft.
Lease Expiration Date: Date 2020-12-31

Baseline Rent per Square Foot: $ / sq. ft. / Yr $ 105.00 $ 110.25 $ 115.76 $ 120.39 $ 125.21 $ 128.96 $ 132.83
Rental Growth Rate: % 5.0% 5.0% 4.0% 4.0% 3.0% 3.0%

(+) Base Rental Income: $ 735,000 771,750 810,338 842,751 876,461 902,755 929,838
(-) Absorption & Turnover Vacancy: $ - - - - (131,469) - -
(-) Concessions & Free Rent: $ - - - - (284,850) - -
(-) Tenant Improvements (TIs): $ - - - - (35,700) - -
(-) Leasing Commissions (LCs): $ - - - - (140,234) - -

(+) Expense Reimbursements: $ 280,000 285,600 291,312 297,138 257,619 309,143 315,325

Tenant #3 - Retailer - Triple Net (NNN) Lease:

Rentable Square Feet Occupied: sq. ft. 6,000 sq. ft.
Lease Expiration Date: Date 2024-12-31

Baseline Rent per Square Foot: $ / sq. ft. / Yr $ 90.00 $ 95.40 $ 100.17 $ 104.68 $ 108.86 $ 112.13 $ 115.49
Rental Growth Rate: % 6.0% 5.0% 4.5% 4.0% 3.0% 3.0%

(+) Base Rental Income: $ 540,000 572,400 601,020 628,066 653,189 672,784 692,968
(-) Absorption & Turnover Vacancy: $ - - - - - - -
(-) Concessions & Free Rent: $ - - - - - - -
(-) Tenant Improvements (TIs): $ - - - - - - -
(-) Leasing Commissions (LCs): $ - - - - - - -

(+) Expense Reimbursements: $ 300,000 306,690 313,536 320,543 327,714 335,054 342,566

Annual Capital Costs: $ - - - (266,974) (175,934) - -

Replacement Reserve Amount: $ 62,500 125,000 189,375 255,681 57,003 - 72,455 147,083

Numerical Year: Year 2017 2018 2019 2020 2021 2022 2023
 Historical: Projected: Stabilized
Property Pro-Forma: Units: FY17 FY18 FY19 FY20 FY21 FY22 Year:

Revenue:
(+) Base Rental Income: $ $ 2,715,000 $ 2,841,750 $ 2,968,862 $ 3,090,621 $ 3,198,048 $ 3,293,989 $ 3,392,809
(-) Absorption & Turnover Vacancy: $ - - - (202,476) (131,469) - -
(-) Concessions & Free Rent: $ - - - (438,697) (284,850) - -
(+) Expense Reimbursements: $ 580,000 592,290 604,848 617,681 585,333 644,196 657,891
Potential Gross Revenue: $ 3,295,000 3,434,040 3,573,710 3,067,130 3,367,062 3,938,186 4,050,700
(-) General Vacancy: $ (240,000) (249,600) (259,584) (269,967) (278,066) (286,408) (295,001)
Effective Gross Income (EGI): $ 3,055,000 3,184,440 3,314,126 2,797,163 3,088,996 3,651,777 3,755,700

Expenses:
(-) Property Management Fees: $ (91,650) (95,533) (99,424) (83,915) (92,670) (109,553) (112,671)
(-) Common Area Maintenance (CAM): $ (125,000) (129,375) (133,903) (138,590) (143,440) (148,461) (153,657)
(-) Common Area Utilities: $ (75,000) (77,250) (79,568) (81,955) (84,413) (86,946) (89,554)
(-) Insurance: $ (50,000) (51,250) (52,531) (53,845) (55,191) (56,570) (57,985)
(-) Real Estate & Property Taxes: $ (1,000,000) (1,020,000) (1,040,400) (1,061,208) (1,082,432) (1,104,081) (1,126,162)
(-) CapEx, TI, and LC Reserves: $ (62,500) (64,375) (66,306) (68,295) (70,344) (72,455) (74,628)
Total Expenses: $ (1,404,150) (1,437,783) (1,472,132) (1,487,807) (1,528,491) (1,578,066) (1,614,657)

Net Operating Income (NOI): $ 1,650,850 1,746,657 1,841,994 1,309,356 1,560,505 2,073,712 2,141,043
NOI Margin: % 54.0% 54.8% 55.6% 46.8% 50.5% 56.8% 57.0%

(-) CapEx, TIs, and LCs: $ - - - (266,974) (175,934) - -

(+) Capital Costs Paid from Reserves: $ - - - 266,974 127,347 - -

Adjusted Net Operating Income: $ 1,650,850 1,746,657 1,841,994 1,309,356 1,511,918 2,073,712 2,141,043
Adjusted NOI Margin: % 54.0% 54.8% 55.6% 46.8% 48.9% 56.8% 57.0%

(-) Cash Interest Expense on Senior Debt: $ (625,000) (611,905) (598,155) (583,717) (568,558)
(-) Cash Interest Expense on Mezzanine: (175,000) (180,250) (185,658) (191,227) (196,964)
(-) Senior Debt Principal Repayment: $ (261,906) (275,001) (288,751) (303,189) (318,348)

Cash Flow to Equity Investors: $ 684,751 774,838 236,792 433,786 989,842

PIK Interest on Mezzanine: $ (75,000) (77,250) (79,568) (81,955) (84,413)

(+) Ending Senior Debt Balance: $ 12,500,000 12,238,094 11,963,093 11,674,342 11,371,154 11,052,806
(+) Ending Mezzanine Balance: $ 2,500,000 2,575,000 2,652,250 2,731,818 2,813,772 2,898,185
Total Debt Balance: $ $ 15,000,000 $ 14,813,094 $ 14,615,343 $ 14,406,160 $ 14,184,926 $ 13,950,991

Debt Yield: % 11.6% 12.3% 8.7% 10.4% 13.8%

Interest Coverage Ratio - NOI: x 2.00 x 2.12 x 1.52 x 1.82 x 2.44 x

Interest Coverage Ratio - Adjusted NOI: x 2.00 x 2.12 x 1.52 x 1.76 x 2.44 x

Debt Service Coverage Ratio (DSCR) - NOI: x 1.54 x 1.61 x 1.14 x 1.35 x 1.78 x
Debt Service Coverage Ratio (DSCR) - Adjusted NOI: x 1.54 x 1.61 x 1.14 x 1.30 x 1.78 x
 Historical: Projected:
IRR Calculations: Units: FY17 FY18 FY19 FY20 FY21 FY22

Project Cash Flows (Unleveraged IRR):

(+) Proceeds from Sale of Property: $ - - - - 35,684,042
(-) Selling Costs: $ - - - - (535,261)
(+) Adjusted NOI (Cash Flows to All Investors): $ 1,746,657 1,841,994 1,309,356 1,511,918 2,073,712
(-) Property Acquisition Price: $ (25,312,500) - - - - -
Total Project Cash Flows (Unleveraged IRR): $ $ (25,312,500) $ 1,746,657 $ 1,841,994 $ 1,309,356 $ 1,511,918 $ 37,222,494

Unleveraged Internal Rate of Return (IRR): % 12.7%

Total Returns: $ 43,632,419

Total Initial Investment: $ 25,312,500
Cash-on-Cash Multiple: x 1.7 x

Cash Flow to Equity Investors (Leveraged IRR):

(+) Proceeds from Sale of Property: $ - - - - 35,684,042
(-) Selling Costs: $ - - - - (535,261)
(+) Cash Flows to Equity Investors: $ 684,751 774,838 236,792 433,786 989,842
(-) Debt Principal Repayment Upon Exit: $ - - - - (13,950,991)
(-) Initial Equity Investment: $ (10,537,500) - - - - -
Total Cash Flows to Equity (Leveraged IRR): $ $ (10,537,500) $ 684,751 $ 774,838 $ 236,792 $ 433,786 $ 22,187,633

Leveraged Internal Rate of Return (IRR): % 19.6%

Total Returns to Equity: $ 24,317,800

Invested Equity: $ 10,537,500
Cash-on-Cash Multiple: x 2.3 x

Historical: Projected:
Waterfall Returns Schedule: Units: FY17 FY18 FY19 FY20 FY21 FY22

(+) Total Cash Flow and Returns to Equity Investors: $ 684,751 774,838 236,792 433,786 22,187,633
(-) Asset Management Fee to Operating Partner: $ (15,806) (15,806) (15,806) (15,806) (15,806)
Equity Cash Flow to Limited Partners: $ 668,945 759,032 220,986 417,979 22,171,827

Tier 1 IRR - Up to 10.0% for JUST Limited Partners:

Beginning Balance: (9,483,750) (9,763,180) (9,980,466) (10,757,527) (11,415,300)
Returns Accrual: 10.0% (948,375) (976,318) (998,047) (1,075,753) (1,141,530)
Repayment: 100.0% 668,945 759,032 220,986 417,979 12,556,830
Ending Balance: (9,483,750) (9,763,180) (9,980,466) (10,757,527) (11,415,300) -

Cash Flow Available for Tier 2 Distribution: $ - - - - 9,614,997

Tier 2 IRR - Above 10.0% Limited Partners' IRR:

Limited Partners (LPs): 80.0% - - - - 7,691,997

Operating Partner (OP): 20.0% - - - - 1,922,999

Returns Analysis by Investor Group:

Limited Partners (LP) - Leveraged Returns: $ (9,483,750) 668,945 759,032 220,986 417,979 20,248,827
Internal Rate of Return (IRR): % 20.2%
Cash-on-Cash Multiple: x 2.4 x
Annual Yield on Initial Investment: % 7.1% 8.0% 2.3% 4.4% 213.5%

Operating Partner (OP) - Leveraged Returns: $ (1,053,750) 15,806 15,806 15,806 15,806 1,938,806
Internal Rate of Return (IRR): % 14.0%
Cash-on-Cash Multiple: x 1.9 x
Annual Yield on Initial Investment: % 1.5% 1.5% 1.5% 1.5% 184.0%