approximately 400 basis points over the safe rate of 2%±. discussed in the highest and best use section of this appraisal report.

estate tax savings for a proposed use that requires rezoning, such as the development of a residential apartment building. The estimated 8% discount rate is estimated at approximately 400 basis points over the safe rate of 2%±. The present value of the tax savings have been added to the indicated present value of the cash flows to arrive at a residual value under each development scenario as discussed in the highest and best use section of this appraisal report. The following are the calculations for the 421A Real Estate Tax Savings, for the potential apartment building development, under the highest and best use as vacant analysis. Larger Parcel Analysis As Vacant Present Value of 421A Real Estate Tax Savings Apartment Building Development Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (8% Rate) Present Value RETX Savings $ 47,253 $47,253 0.925926 $ 48,671 $48,671 0.857339 $ 50,131 $50,131 0.793832 $ 51,635 $51,635 0.735030 $ 53,184 $53,184 0.680583 $ 54,779 $54,780 0.630170 $1,216,791 $56,423 0.583490 1 $2,506,589 $58,116 $2,448,473 100% $2,448,473 0.540269 $1,322,834 2 $2,581,787 $59,859 $2,521,928 100% $2,521,928 0.500249 $1,261,592 3 $2,659,241 $61,655 $2,597,586 100% $2,597,586 0.463193 $1,203,185 4 $2,739,018 $63,505 $2,675,513 100% $2,675,513 0.428883 $1,147,482 5 $2,821,189 $65,410 $2,755,779 100% $2,755,779 0.397114 $1,094,358 6 $2,905,825 $67,372 $2,838,453 100% $2,838,453 0.367698 $1,043,693 7 $2,993,000 $69,393 $2,923,607 100% $2,923,607 0.340461 $ 995,374 8 $3,082,790 $71,475 $3,011,315 100% $3,011,315 0.315242 $ 949,292 9 $3,175,274 $73,619 $3,101,655 100% $3,101,655 0.291890 $ 905,344 10 $3,270,532 $75,828 $3,194,704 100% $3,194,704 0.270269 $ 863,429 11 $3,368,648 $78,103 $3,290,545 100% $3,290,545 0.250249 $ 823,456 $3,469,707 $80,446 $3,389,261 80% $2,711,409 0.2317 $ 628,266 13 $3,573,798 $82,859 $3,490,939 60% $2,094,563 0.214548 $ 449,385 14 $3,681,0 $85,345 $3,595,667 40% $1,438,267 0.198656 $ 285,720 15 $3,791,442 $87,905 $3,703,537 20% $ 740,707 0.183941 $ 136,246 16 $3,905,185 $90,542 $3,814,643 0% $ 0 0.170315 $ 0 Total RETX Savings $38,344,504 $13,109,656 Present Value of RETX Savings (Rounded) $13,100,000 101

Washington Street Roadbed As an Individual Zoning Lot Present Value of 421A Real Estate Tax Savings Apartment Building Development Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (8% Rate) Present Value RETX Savings $ 11,170 $11,170 0.925926 $ 11,505 $11,505 0.857339 $ 11,850 $11,850 0.793832 $,206 $,206 0.735030 $,572 $,572 0.680583 $,949 $,949 0.630170 $ 361,318 $13,337 0.583490 1 $ 744,308 $13,737 $ 730,571 100% $730,571 0.540269 $394,705 2 $ 766,637 $14,149 $ 752,488 100% $752,488 0.500249 $376,431 3 $ 789,636 $14,573 $ 775,063 100% $775,063 0.463193 $359,004 4 $ 813,325 $15,010 $ 798,315 100% $798,315 0.428883 $342,384 5 $ 837,725 $15,460 $ 822,265 100% $822,265 0.397114 $326,533 6 $ 862,857 $15,924 $ 846,933 100% $846,933 0.367698 $311,416 7 $ 888,743 $16,402 $ 872,341 100% $872,341 0.340461 $296,998 8 $ 915,405 $16,894 $ 898,511 100% $898,511 0.315242 $283,248 9 $ 942,867 $17,401 $ 925,466 100% $925,466 0.291890 $270,135 10 $ 971,153 $17,923 $ 953,230 100% $953,230 0.270269 $257,628 11 $1,000,288 $18,461 $ 981,827 100% $981,827 0.250249 $245,701 $1,030,297 $19,015 $1,011,282 80% $809,026 0.2317 $187,461 13 $1,061,206 $19,585 $1,041,621 60% $624,973 0.214548 $134,087 14 $1,093,042 $20,173 $1,072,869 40% $429,148 0.198656 $ 85,253 15 $1,5,833 $20,778 $1,105,055 20% $221,011 0.183941 $ 40,653 16 $1,159,608 $21,401 $1,138,207 0% $ 0 0.170315 $ 0 Total RETX Savings $11,441,168 $3,911,637 Present Value of RETX Savings (Rounded) $3,900,000 102

Water Meter Testing Facility Site As an Individual Zoning Lot Present Value of 421A Real Estate Tax Savings Apartment Building Development Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (8% Rate) Present Value RETX Savings $ 23,871 $23,871 0.925926 $ 24,587 $24,587 0.857339 $ 25,325 $25,325 0.793832 $ 26,084 $26,085 0.735030 $ 26,867 $26,868 0.680583 $ 27,673 $27,674 0.630170 $ 351,291 $28,504 0.583490 1 $ 723,649 $29,359 $ 694,290 100% $694,290 0.540269 $375,103 2 $ 745,358 $30,240 $ 715,118 100% $715,118 0.500249 $357,737 3 $ 767,719 $31,147 $ 736,572 100% $736,572 0.463193 $341,175 4 $ 790,751 $32,081 $ 758,670 100% $758,670 0.428883 $325,381 5 $ 814,474 $33,043 $ 781,431 100% $781,431 0.397114 $310,317 6 $ 838,908 $34,034 $ 804,874 100% $804,874 0.367698 $295,950 7 $ 864,075 $35,055 $ 829,020 100% $829,020 0.340461 $282,249 8 $ 889,997 $36,107 $ 853,890 100% $853,890 0.315242 $269,182 9 $ 916,697 $37,190 $ 879,507 100% $879,507 0.291890 $256,720 10 $ 944,198 $38,306 $ 905,892 100% $905,892 0.270269 $244,834 11 $ 972,524 $39,455 $ 933,069 100% $933,069 0.250249 $233,500 $1,001,700 $40,639 $ 961,061 80% $768,849 0.2317 $178,152 13 $1,031,751 $41,858 $ 989,893 60% $593,936 0.214548 $7,428 14 $1,062,704 $43,114 $1,019,590 40% $407,836 0.198656 $ 81,019 15 $1,094,585 $44,407 $1,050,178 20% $210,036 0.183941 $ 38,634 16 $1,7,423 $45,739 $1,081,684 0% $ 0 0.170315 $ 0 Total RETX Savings $10,872,990 $3,717,381 Present Value of RETX Savings (Rounded) $3,700,000 103

DOT Paint Shed Site As an Individual Zoning Lot Present Value of 421A Real Estate Tax Savings Apartment Building Development Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (8% Rate) Present Value RETX Savings $,2 $,2 0.925926 $,578 $,578 0.857339 $,956 $,955 0.793832 $ 13,344 $13,344 0.735030 $ 13,745 $13,744 0.680583 $ 14,157 $14,156 0.630170 $ 14,582 $14,581 0.583490 $ 15,019 $15,018 0.540269 $ 534,897 $15,469 0.500249 1 $1,101,889 $15,933 $1,085,956 100% $1,085,956 0.463193 $503,008 2 $1,134,946 $16,411 $1,118,535 100% $1,118,535 0.428883 $479,720 3 $1,168,994 $16,903 $1,152,091 100% $1,152,091 0.397114 $457,511 4 $1,204,064 $17,410 $1,186,654 100% $1,186,654 0.367698 $436,330 5 $1,240,186 $17,932 $1,222,254 100% $1,222,254 0.340461 $416,130 6 $1,277,392 $18,470 $1,258,922 100% $1,258,922 0.315242 $396,865 7 $1,315,714 $19,024 $1,296,690 100% $1,296,690 0.291890 $378,491 8 $1,355,185 $19,595 $1,335,590 100% $1,335,590 0.270269 $360,969 9 $1,395,841 $20,183 $1,375,658 100% $1,375,658 0.250249 $344,257 10 $1,437,716 $20,788 $1,416,928 100% $1,416,928 0.2317 $328,319 11 $1,480,847 $21,4 $1,459,435 100% $1,459,435 0.214548 $313,119 $1,525,272 $22,054 $1,503,218 80% $1,202,574 0.198656 $238,898 13 $1,571,030 $22,716 $1,548,314 60% $ 928,988 0.183941 $170,879 14 $1,618,161 $23,397 $1,594,764 40% $ 637,906 0.170315 $108,645 15 $1,666,706 $24,099 $1,642,607 20% $ 328,521 0.157699 $ 51,808 16 $1,716,707 $24,822 $1,691,885 0% $ 0 0.146018 $ 0 Total RETX Savings $17,006,702 $4,984,949 Present Value of RETX Savings (Rounded) $5,000,000 104

In our analysis of the subject larger parcel as vacant under current zoning, the property would be eligible for an ICAP. Therefore, added to the value estimate under this approach is the estimated 25-year ICAP real estate tax savings, which are calculated as follows. Larger Parcel Analysis As Vacant Present Value of ICAP Real Estate Tax Savings One-Story Retail Development Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (8% Rate) Present Value RETX Savings $ 47,253 $ 47,253 0.961538 $111,497 $ 48,671 0.924556 1 $229,672 $ 50,131 $179,541 100% $179,541 0.888996 $159,611 2 $236,562 $ 51,635 $184,927 100% $184,927 0.854804 $158,076 3 $243,659 $ 53,184 $190,475 100% $190,475 0.821927 $156,557 4 $250,969 $ 54,780 $196,189 100% $196,189 0.790315 $155,051 5 $258,498 $ 56,423 $202,075 100% $202,075 0.759918 $153,560 6 $266,253 $ 58,116 $208,137 100% $208,137 0.730690 $152,084 7 $274,241 $ 59,859 $214,382 100% $214,382 0.702587 $150,622 8 $282,468 $ 61,655 $220,813 100% $220,813 0.675564 $149,173 9 $290,942 $ 63,505 $227,437 100% $227,437 0.649581 $147,739 10 $299,670 $ 65,410 $234,260 100% $234,260 0.624597 $146,318 11 $308,660 $ 67,372 $241,288 100% $241,288 0.600574 $144,911 $317,920 $ 69,393 $248,527 100% $248,527 0.577475 $143,518 13 $327,458 $ 71,475 $255,983 100% $255,983 0.555265 $142,138 14 $337,282 $ 73,619 $263,663 100% $263,663 0.533908 $140,772 15 $347,400 $ 75,828 $271,572 100% $271,572 0.513373 $139,418 16 $357,822 $ 78,103 $279,719 100% $279,719 0.493628 $138,077 17 $368,557 $ 80,446 $288,111 90% $259,300 0.474642 $3,075 18 $379,614 $ 82,859 $296,755 80% $237,404 0.456387 $108,348 19 $391,002 $ 85,345 $305,657 70% $213,960 0.438834 $ 93,893 20 $402,732 $ 87,905 $314,827 60% $188,896 0.421955 $ 79,706 21 $414,814 $ 90,542 $324,272 50% $162,136 0.405726 $ 65,783 22 $427,258 $ 93,258 $334,000 40% $133,600 0.3901 $ 52,0 23 $440,076 $ 96,056 $344,020 30% $103,206 0.375117 $ 38,714 24 $453,278 $ 98,938 $354,340 20% $ 70,868 0.360689 $ 25,561 25 $466,876 $101,906 $364,970 10% $ 36,497 0.346817 $,658 26 $480,882 $104,963 $375,919 0% $ 0 0.333477 $ 0 Total RETX Savings $5,024,855 $2,977,483 Present Value of RETX Savings (Rounded) $3,000,000 105

Larger Parcel Analysis If Retain Existing Meter Building Present Value of ICAP Real Estate Tax Savings One-Story Retail Development Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (8% Rate) Present Value RETX Savings $ 47,253 $ 47,253 0.961538 $139,427 $ 48,671 0.924556 1 $287,196 $ 50,131 $237,065 100% $237,065 0.888996 $210,750 2 $295,8 $ 51,635 $244,177 100% $244,177 0.854804 $208,724 3 $304,686 $ 53,184 $251,502 100% $251,502 0.821927 $206,716 4 $313,827 $ 54,780 $259,047 100% $259,047 0.790315 $204,729 5 $323,242 $ 56,423 $266,819 100% $266,819 0.759918 $202,761 6 $332,939 $ 58,116 $274,823 100% $274,823 0.730690 $200,810 7 $342,927 $ 59,859 $283,068 100% $283,068 0.702587 $198,880 8 $353,215 $ 61,655 $291,560 100% $291,560 0.675564 $196,967 9 $363,811 $ 63,505 $300,306 100% $300,306 0.649581 $195,073 10 $374,725 $ 65,410 $309,315 100% $309,315 0.624597 $193,197 11 $385,967 $ 67,372 $318,595 100% $318,595 0.600574 $191,340 $397,546 $ 69,393 $328,153 100% $328,153 0.577475 $189,500 13 $409,472 $ 71,475 $337,997 100% $337,997 0.555265 $187,678 14 $421,756 $ 73,619 $348,137 100% $348,137 0.533908 $185,873 15 $434,409 $ 75,828 $358,581 100% $358,581 0.513373 $184,086 16 $447,441 $ 78,103 $369,338 100% $369,338 0.493628 $182,316 17 $460,864 $ 80,446 $380,418 90% $342,376 0.474642 $162,506 18 $474,690 $ 82,859 $391,831 80% $313,465 0.456387 $143,061 19 $488,931 $ 85,345 $403,586 70% $282,510 0.438834 $3,975 20 $503,599 $ 87,905 $415,694 60% $249,416 0.421955 $105,242 21 $518,707 $ 90,542 $428,165 50% $214,083 0.405726 $ 86,859 22 $534,268 $ 93,258 $441,010 40% $176,404 0.3901 $ 68,819 23 $550,296 $ 96,056 $454,240 30% $136,272 0.375117 $ 51,118 24 $566,805 $ 98,938 $467,867 20% $ 93,573 0.360689 $ 33,751 25 $583,809 $101,906 $481,903 10% $ 48,190 0.346817 $ 16,713 26 $601,323 $104,963 $496,360 0% $ 0 0.333477 $ 0 Total RETX Savings $6,634,772 $3,931,444 Present Value of RETX Savings (Rounded) $3,900,000 106

Washington Street Roadbed As an Individual Zoning Lot Present Value of ICAP Real Estate Tax Savings One-Story Retail Development Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (4% Rate) Present Value RETX Savings $ 11,170 $11,170 0.961538 $ 32,811 $11,505 0.924556 1 $ 67,590 $11,850 $ 55,740 100% $ 55,740 0.888996 $ 49,553 2 $ 69,618 $,206 $ 57,4 100% $ 57,4 0.854804 $ 49,076 3 $ 71,707 $,572 $ 59,135 100% $ 59,135 0.821927 $ 48,605 4 $ 73,858 $,949 $ 60,909 100% $ 60,909 0.790315 $ 48,137 5 $ 76,074 $13,337 $ 62,737 100% $ 62,737 0.759918 $ 47,675 6 $ 78,356 $13,737 $ 64,619 100% $ 64,619 0.730690 $ 47,216 7 $ 80,707 $14,149 $ 66,558 100% $ 66,558 0.702587 $ 46,763 8 $ 83,8 $14,573 $ 68,555 100% $ 68,555 0.675564 $ 46,313 9 $ 85,622 $15,010 $ 70,6 100% $ 70,6 0.649581 $ 45,868 10 $ 88,191 $15,460 $ 72,731 100% $ 72,731 0.624597 $ 45,428 11 $ 90,837 $15,924 $ 74,913 100% $ 74,913 0.600574 $ 44,991 $ 93,562 $16,402 $ 77,160 100% $ 77,160 0.577475 $ 44,558 13 $ 96,369 $16,894 $ 79,475 100% $ 79,475 0.555265 $ 44,130 14 $ 99,260 $17,401 $ 81,859 100% $ 81,859 0.533908 $ 43,705 15 $102,238 $17,923 $ 84,315 100% $ 84,315 0.513373 $ 43,285 16 $105,305 $18,461 $ 86,844 100% $ 86,844 0.493628 $ 42,869 17 $108,464 $19,015 $ 89,449 90% $ 80,504 0.474642 $ 38,211 18 $111,718 $19,585 $ 92,133 80% $ 73,706 0.456387 $ 33,638 19 $115,070 $20,173 $ 94,897 70% $ 66,428 0.438834 $ 29,151 20 $118,522 $20,778 $ 97,744 60% $ 58,646 0.421955 $ 24,746 21 $2,078 $21,401 $100,677 50% $ 50,339 0.405726 $ 20,424 22 $5,740 $22,043 $103,697 40% $ 41,479 0.3901 $ 16,182 23 $9,5 $22,704 $106,808 30% $ 32,042 0.375117 $,019 24 $133,397 $23,385 $110,0 20% $ 22,002 0.360689 $ 7,936 25 $137,399 $24,087 $113,3 10% $ 11,331 0.346817 $ 3,930 26 $141,521 $24,810 $116,711 0% $ 0 0.333477 $ 0 Total RETX Savings $1,560,051 $924,409 Present Value of RETX Savings (Rounded) $900,000 107

Water Meter Testing Facility Site As an Individual Zoning Lot Present Value of ICAP Real Estate Tax Savings One-Story Retail Renovate Existing Building Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (4% Rate) Present Value RETX Savings $ 23,871 $23,871 0.961538 1 $113,534 $24,587 $ 88,947 100% $ 88,947 0.924556 $ 82,237 2 $116,940 $25,325 $ 91,615 100% $ 91,615 0.888996 $ 81,445 3 $0,448 $26,085 $ 94,363 100% $ 94,363 0.854804 $ 80,662 4 $4,061 $26,868 $ 97,193 100% $ 97,193 0.821927 $ 79,886 5 $7,783 $27,674 $100,109 100% $ 100,109 0.790315 $ 79,118 6 $131,616 $28,504 $103,1 100% $ 103,1 0.759918 $ 78,357 7 $135,564 $29,359 $106,205 100% $ 106,205 0.730690 $ 77,603 8 $139,631 $30,240 $109,391 100% $ 109,391 0.702587 $ 76,857 9 $143,820 $31,147 $1,673 100% $ 1,673 0.675564 $ 76,118 10 $148,135 $32,081 $116,054 100% $ 116,054 0.649581 $ 75,386 11 $152,579 $33,043 $119,536 100% $ 119,536 0.624597 $ 74,662 $157,156 $34,034 $3,2 100% $ 3,2 0.600574 $ 73,944 13 $161,871 $35,055 $6,816 100% $ 6,816 0.577475 $ 73,233 14 $166,727 $36,107 $130,620 100% $ 130,620 0.555265 $ 72,529 15 $171,729 $37,190 $134,539 100% $ 134,539 0.533908 $ 71,831 16 $176,881 $38,306 $138,575 100% $ 138,575 0.513373 $ 71,141 17 $182,187 $39,455 $142,732 90% $ 8,459 0.493628 $ 63,411 18 $187,653 $40,639 $147,014 80% $ 117,611 0.474642 $ 55,823 19 $193,283 $41,858 $151,425 70% $ 105,998 0.456387 $ 48,376 20 $199,081 $43,114 $155,967 60% $ 93,580 0.438834 $ 41,066 21 $205,053 $44,407 $160,646 50% $ 80,323 0.421955 $ 33,893 22 $211,205 $45,739 $165,466 40% $ 66,186 0.405726 $ 26,853 23 $217,541 $47,111 $170,430 30% $ 51,9 0.3901 $ 19,947 24 $224,067 $48,524 $175,543 20% $ 35,109 0.375117 $ 13,170 25 $230,789 $49,980 $180,809 10% $ 18,081 0.360689 $ 6,522 26 $237,713 $51,479 $186,234 0% $ 0 0.346817 $ 0 Total RETX Savings $2,400,399 $1,534,070 Present Value of RETX Savings (Rounded) $1,500,000 108

Water Meter Testing Facility Site As an Individual Zoning Lot Present Value of ICAP Real Estate Tax Savings One-Story Retail Demolish Existing Building Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (4% Rate) Present Value RETX Savings $ 23,871 $23,871 0.961538 1 $ 62,482 $24,587 $37,895 100% $37,895 0.924556 $35,036 2 $ 64,357 $25,325 $39,032 100% $39,032 0.888996 $34,699 3 $ 66,288 $26,085 $40,203 100% $40,203 0.854804 $34,366 4 $ 68,277 $26,868 $41,409 100% $41,409 0.821927 $34,035 5 $ 70,325 $27,674 $42,651 100% $42,651 0.790315 $33,708 6 $ 72,435 $28,504 $43,931 100% $43,931 0.759918 $33,384 7 $ 74,608 $29,359 $45,249 100% $45,249 0.730690 $33,063 8 $ 76,846 $30,240 $46,606 100% $46,606 0.702587 $32,745 9 $ 79,151 $31,147 $48,004 100% $48,004 0.675564 $32,430 10 $ 81,526 $32,081 $49,445 100% $49,445 0.649581 $32,119 11 $ 83,972 $33,043 $50,929 100% $50,929 0.624597 $31,810 $ 86,491 $34,034 $52,457 100% $52,457 0.600574 $31,504 13 $ 89,086 $35,055 $54,031 100% $54,031 0.577475 $31,202 14 $ 91,759 $36,107 $55,652 100% $55,652 0.555265 $30,902 15 $ 94,5 $37,190 $57,322 100% $57,322 0.533908 $30,605 16 $ 97,347 $38,306 $59,041 100% $59,041 0.513373 $30,310 17 $100,267 $39,455 $60,8 90% $54,731 0.493628 $27,017 18 $103,275 $40,639 $62,636 80% $50,109 0.474642 $23,784 19 $106,373 $41,858 $64,515 70% $45,161 0.456387 $20,611 20 $109,564 $43,114 $66,450 60% $39,870 0.438834 $17,496 21 $1,851 $44,407 $68,444 50% $34,222 0.421955 $14,440 22 $116,237 $45,739 $70,498 40% $28,199 0.405726 $11,441 23 $119,724 $47,111 $72,613 30% $21,784 0.3901 $ 8,498 24 $3,316 $48,524 $74,792 20% $14,958 0.375117 $ 5,611 25 $7,015 $49,980 $77,035 10% $ 7,704 0.360689 $ 2,779 26 $130,825 $51,479 $79,346 0% $ 0 0.346817 $ 0 Total RETX Savings $1,022,700 $653,595 Present Value of RETX Savings (Rounded) $700,000 109

DOT Paint Shed Site As an Individual Zoning Lot Present Value of ICAP Real Estate Tax Savings One-Story Retail Development Benefit Year Full RETX (3% Inflation) Estimated Base RETX (3% Inflation) RETX Exemption Percentage Savings RETX Savings Present Value Factor (4% Rate) Present Value RETX Savings $,2 $,2 0.961538 $ 46,077 $,578 0.924556 1 $ 94,919 $,955 $ 81,964 100% $ 81,964 0.888996 $72,866 2 $ 97,767 $13,344 $ 84,423 100% $ 84,423 0.854804 $72,165 3 $100,700 $13,744 $ 86,956 100% $ 86,956 0.821927 $71,471 4 $103,721 $14,156 $ 89,565 100% $ 89,565 0.790315 $70,785 5 $106,833 $14,581 $ 92,252 100% $ 92,252 0.759918 $70,104 6 $110,038 $15,018 $ 95,020 100% $ 95,020 0.730690 $69,430 7 $113,339 $15,469 $ 97,870 100% $ 97,870 0.702587 $68,762 8 $116,739 $15,933 $100,806 100% $100,806 0.675564 $68,101 9 $0,241 $16,411 $103,830 100% $103,830 0.649581 $67,446 10 $3,848 $16,903 $106,945 100% $106,945 0.624597 $66,798 11 $7,563 $17,410 $110,153 100% $110,153 0.600574 $66,155 $131,390 $17,932 $113,458 100% $113,458 0.577475 $65,519 13 $135,332 $18,470 $116,862 100% $116,862 0.555265 $64,889 14 $139,392 $19,024 $0,368 100% $0,368 0.533908 $64,265 15 $143,574 $19,595 $3,979 100% $3,979 0.513373 $63,648 16 $147,881 $20,183 $7,698 100% $7,698 0.493628 $63,035 17 $152,317 $20,788 $131,529 90% $118,376 0.474642 $56,186 18 $156,887 $21,4 $135,475 80% $108,380 0.456387 $49,463 19 $161,594 $22,054 $139,540 70% $ 97,678 0.438834 $42,864 20 $166,442 $22,716 $143,726 60% $ 86,236 0.421955 $36,388 21 $171,435 $23,397 $148,038 50% $ 74,019 0.405726 $30,031 22 $176,578 $24,099 $152,479 40% $ 60,992 0.3901 $23,794 23 $181,875 $24,822 $157,053 30% $ 47,116 0.375117 $17,674 24 $187,331 $25,567 $161,764 20% $ 32,353 0.360689 $11,669 25 $192,951 $26,334 $166,617 10% $ 16,662 0.346817 $ 5,779 26 $198,740 $27,4 $171,616 0% $ 0 0.333477 $ 0 Total RETX Savings $2,293,961 $1,359,287 Present Value of RETX Savings (Rounded) $1,400,000 110

ZONING MAP Zoning Map Subject Area Zoning Map Immediate Subject Area 111

ZONING EXCERPT The Washington Street Roadbed is part of a demapped roadbed and is not a part of any zoning lot and does not contain a zoning designation. According to the statement of work for this appraisal assignment, the portion of this street proposed for abandonment must be hypothetically appraised as if free of all street right-of-way restrictions. This abandonment does not include utility easements (if any)." Furthermore, a representative of the client of this appraisal report indicated that in terms of applicable zoning and tax lot status, the appraiser through research should determine the likelihood of what zoning the city would assign and the risk and time for the purchaser to accomplish getting that done. Rather than the appraiser determining the potential of a change from one zoning district to another, he/she should determine to which zoning the property will be subject from its current position of none. The appraisal should not merely assume a zoning from the adjacent property. Therefore, in the valuation of the subject property as available to its highest and best use, a highest and best use analysis was performed to determine the effects on value of different zoning districts, the approval process and the level of risk. The Water Meter Testing Facility site and the DOT Paint Shed Facility site are situated within an M3-1 Manufacturing district, as mapped by the City of New York. Each of these sites is a separate zoning lot 19. M3 zoning districts are designed for areas with heavy industries that generate noise, traffic or pollutants. Uses with potential nuisance effects are required to conform to minimum performance standards. No new residential uses are permitted. 19 Zoning lot A "zoning lot" is either: (a) a lot of record existing on December 15, 1961 or any applicable subsequent amendment thereto; (b) a tract of land, either unsubdivided or consisting of two or more contiguous lots of record, located within a single block, which, on December 15, 1961 or any applicable subsequent amendment thereto, was in single ownership; (c) a tract of land, either unsubdivided or consisting of two or more lots of record contiguous for a minimum of ten linear feet, located within a single block, which at the time of filing for a building permit (or, if no building permit is required, at the time of the filing for a certificate of occupancy) is under single fee ownership and with respect to which each party having any interest therein is a party in interest (as defined herein); or (d) a tract of land, either unsubdivided or consisting of two or more lots of record contiguous for a minimum of ten linear feet, located within a single block, which at the time of filing for a building permit (or, if no building permit is required, at the time of filing for a certificate of occupancy) is declared to be a tract of land to be treated as one zoning lot for the purpose of this Resolution. (Source: New York City Department of City Planning Zoning Text). 1

The subject property is also situated within a Waterfront Area and is subject to the special regulations as per the New York City Zoning Resolution. The special regulations were designed to guide development along the City's waterfront and in so doing to promote and protect public health, safety and general welfare. These general goals include, among others, the following purposes: (a) to maintain and reestablish physical and visual public access to and along the waterfront; (b) to promote a greater mix of uses in waterfront developments in order to attract the public and enliven the waterfront; (c) to encourage water dependent uses along the City's waterfront; (d) to create a desirable relationship between waterfront development and the water's edge, public access areas and adjoining upland communities; (e) to preserve historic resources along the City's waterfront; and (f) to protect natural resources in environmentally sensitive areas along the shore. According to Chapter 2 of the zoning regulation, a waterfront block or waterfront zoning lot is a block or zoning lot in the waterfront area having a boundary at grade coincident with or seaward of the shoreline. For the purposes of this Chapter: (a) a block within the waterfront area shall include the land within a street that is not improved or open to the public, and such street shall not form the boundary of a block; (b) a block within the waterfront area that abuts a public park along the waterfront shall be deemed to be part of a waterfront block; and (c) a zoning lot shall include the land within any street that is not improved or open to the public and which is in the same ownership as that of any contiguous land. The provisions of this Chapter shall not be deemed to supersede or modify the regulations of any State or Federal agency having jurisdiction on affected properties. It is noted that the subject s two existing zoning lots and the Washington Street roadbed may be merged. To merge a zoning lot an owner of the properties files a notice of zoning lot merger with the New York City Department of Finance. The requirements for a lot merger are as follows: 113

1) Completed application for Merger 2) Deed on record showing common ownership. (If the deed lacks a metes and bounds description but refers only to a filed map, please provide a current metes and bounds description, prepared by a licensed surveyor.) 3) Outstanding taxes, charges or tax liens for prior tax years must be satisfied. 4) Real estate taxes for the current year must be up-to-date. 5) Payment of fees 6) Merging of exempt parcels with non-exempt parcels is not allowed. There are no additional requirements in a waterfront area. This process is not viewed at presenting undue risk to a developer. The subject property is mapped in an M3-1 zoning district and major regulations of this district in conjunction with the waterfront area district are presented on the following pages. 114

Permitted Uses: M3-1 Convenience retail or service establishments such as: bakeries, provided that floor area used for production shall be limited to 750 square feet per establishment, barber shops, beauty parlors, drug stores, dry cleaning limited to 2,000 square feet of floor area per establishment; eating or drinking establishments, including those which provide outdoor table service or have music for which there is no cover charge and no specified showtime, and those which have accessory drive-through facilities; food stores, including supermarkets, grocery stores, meat markets, or delicatessen stores, hardware stores, laundry establishments, hand or automatic self-service, liquor stores, post offices, shoe or hat repair shops, stationery stores, tailor or dressmaking shops, variety stores, limited to 10,000 square feet of floor area per establishment; offices, business, professional including ambulatory diagnostic or treatment health care, or governmental; veterinary medicine for small animals; antique stores, art galleries, commercial, artists' supply stores, automobile supply stores, with no installation or repair services; banks, including drive-in banks; bicycle sales, book stores, candy or ice cream stores, carpet, rug, linoleum or other floor covering stores, limited to 10,000 square feet of floor area per establishment; cigar or tobacco stores, clothing or clothing accessory stores, limited to 10,000, square feet of floor area per establishment; dry goods or fabrics stores, limited to 10,000 square feet of floor area per establishment; eating or drinking establishments with entertainment/musical entertainment, but not dancing, with a capacity of 200 persons or fewer; florist shops, frozen food lockers, furniture stores, limited to 10,000 square feet of floor area per establishment; furrier shops, gift shops, interior decorating establishments, provided that floor area used for processing, servicing or repairs shall be limited to 750 square feet per establishment; jewelry or art metal craft shops, leather goods or luggage stores, photographic equipment or supply stores, photographic studios; newsstand, public service establishments; wholesale establishments with not more than 1,500 square; amusements, including billiard parlors or pool halls, bowling alleys, limited to not more than 16 lanes per establishment, model car hobby center, including racing, limited to not more than 8,000 square feet of floor area per establishment; theaters -in order to prevent obstruction of street areas, a new motion picture theater, in a new or existing building, shall provide a minimum of four square feet of waiting area within the zoning lot for each seat in such theater (required waiting space shall be either in an enclosed lobby or open area that is covered or protected during inclement weather and shall not include space occupied by stairs or space within 10 feet of a refreshment stand or of an entrance to a public toilet), ; public parking garages or public parking lots with capacity of 150 spaces or less; children's amusement parks, provided that the total area of the zoning lot shall not exceed 10,000 square feet and that no amusement attractions shall be located within 20 feet of a Residence District boundary, circuses, carnivals or fairs of a temporary nature, golf driving ranges, miniature golf courses, outdoor roller skating rinks, outdoor skateboard parks, provided that the total area of the zoning lot, excluding the area used for accessory off-street parking spaces, shall not exceed two acres, and provided further that temporary enclosure of the skating runs, such as air supported structures, shall not be permitted, outdoor skating rinks; bicycle rental and repair shops; depositories for storage of office records, microfilm or computer tapes, or for data processing. 115

Permitted Uses: Waterfront Area Waterfront-Enhancing (WE) uses include: art galleries, non-commercial, libraries, museums and schools; community center; outdoor ice skating rinks, playgrounds or private parks; non-commercial recreation centers; outdoor tennis courts; transient hotels; antique stores, commercial art galleries; artist supply stores, automotive supply; banks including drive-in; bicycle sales; book, candy, ice cream, cigar and tobacco stores; clothing or clothing accessory stores, limited to 10,000 square feet of floor are per establishment; eating or drinking establishments with entertainment/musical entertainment, but not dancing, with a capacity of 200 persons or fewer; catering establishments and banquet halls; eating or drinking places, without restrictions on entertainment or dancing but limited to location to hotels; eating or drinking establishments without entertainment or dancing; amusement establishments including arcades, children s amusement parks with no limitation on floor area per establishment; animal exhibits; ferris wheels or similar open midway attractions. Height, Area and Bulk Requirements M3-1 Waterfront Area Maximum Floor Area Ratio (FAR): 2.00 2.00 Maximum Base Height: 60 feet or 4 stories 60 feet or 4 stories, with a maximum building height of 110 feet after a 15 foot setback Minimum Initial Setback: 20 feet narrow street 15 feet wide street 20 feet narrow street 15 feet wide street Minimum Lot Area: None None Minimum Yard Requirements Front: Sides: Rear: Off-Street Parking: Parking Waiver for Spaces Below Minimum Number: None None; however, if an open area extending along a side lot line is provided, it shall be at least 8 feet wide. 20 feet Manufacturing or Commercial Use one space for each 1,000 sq. ft. of floor area Places of Assembly i.e. Banquet Hall one space per 8 persons Retail Use food stores - one space for each 200 sq. ft. of floor area; general retail or service (including catering establishments) - one space for each 300 sq. ft. of floor area Commercial Amusements one space for each 500 sq. ft. of lot area 15 116

It is noted that any change from one as-of-right use 20 to another does not trigger a prolonged approval process or present risk. The following chart includes a breakdown of the land and building areas achievable (in terms of FAR 21 ) on the Replacement Property (under one zoning lot), Washington Street Roadbed, Water Meter Testing Facility and the DOT Paint Shed (as separate zoning lots) as available to their highest and best use under the M3-1 zoning regulations. This assumes the Washington Street Roadbed were assigned an M3-1 zoning. Replacement Property Larger Parcel Washington Street Roadbed Water Meter Testing Facility Block 7, part of Lot 21 DOT Paint Shed Block 7, part of Lot 1 Total Land (Sq. Ft.) 37,617 11,170 10,860 15,587 Max GBA Permitted (Sq. Ft.) 23,540 5,540 9,585 7,780 Sq. Ft. Required per Parking Space 300 300 300 300 Number of Parking Spaces Required 78 18 32 26 Waive spaces Existing Water Meter Testing Facility 32 N/A 32 N/A Required Spaces, less Spaces Waived 46 18 0 26 Land Area Required for Parking (Sq. Ft.) 13,800 5,400 N/A 7,800 Total Land Area Required for Building & Parking (Sq. Ft.) 37,340 10,940 10,860 15,580 It is noted that the Water Meter Testing Facility site does not have any on-site parking but is not considered a non-conforming use. 22 For the site, as improved, any as- 20 As-of-right Development An as-of-right development complies with all applicable zoning regulations and does not require any discretionary action by the City Planning Commission or Board of Standards and Appeals. Most developments and enlargements in the city are asof-right. (Source: New York City Department of Planning, Zoning and Land Use (ZOLA) website) 21 Floor Area Ratio (FAR) "Floor area ratio" is the total floor area on a zoning lot, divided by the lot area of that zoning lot. If two or more buildings are located on the same zoning lot, the floor area ratio is the sum of their floor areas divided by the lot area. (For example, a zoning lot of 10,000 square feet with a building containing 20,000 square feet of floor area has a floor area ratio of 2.0, and a zoning lot of 20,000 square feet with two buildings containing a total of 40,000 square feet of floor area also has a floor area ratio of 2.0). (Source: New York City, Department of City Planning zoning text.) 22 Non-conforming, or non-conformity A "non-conforming" use is any lawful use, whether of a building or other structure or of a zoning lot, which does not conform to any one or more of the applicable use regulations of the district in which it is located, either on December 15, 1961 or as a result of any subsequent amendment thereto. A non-conforming use shall result from failure to conform to the applicable district regulations on either permitted Use Groups or performance standards. A non-conformity is a failure by a non-conforming use to conform to any one of such applicable use regulations. However, no existing use shall be deemed non-conforming, nor shall a nonconformity be deemed to exist, solely because of any of the following: (a) the existence of less than the required accessory offstreet parking spaces or loading berths; (b) the existence of non-conforming accessory signs ; or (c) the existence of conditions in violation of the provisions of either Sections 32-41 and 32-42, relating to Supplementary Use Regulations, or Sections 32-51 and 32-52 relating to Special Provisions Applying along District Boundaries, or Sections 42-41, 42-42, 42-44 and 42-45, relating to Supplementary Use Regulations and Special Provisions Applying along District Boundaries. 117

of-right use within the M3-1 would also not be required to provide parking. If the site were vacant, any new development would require parking according to use. Any planned construction that will create a new building, or will result in a change of use, egress, or occupancy for an existing building, a new or amended Certificate of Occupancy is necessary. A final Certificate of Occupancy will be issued when the completed work complies with the submitted plans and applicable laws, all paperwork is completed, all necessary approvals have been obtained from other appropriate City agencies, all fees owed to the Department are paid, and all relevant violations are resolved. A new building cannot be legally occupied until either a final or a temporary Certificate of Occupancy has been issued. Any as-of-right use is not anticipated to require a prolonged process for the issuance of a Certificate of Occupancy. Over the past several years, sections of DUMBO have been rezoned south of John Street at the east side of the Manhattan Bridge and south of Water Street along the west side of the Manhattan Bridge (last rezoning effective June 10, 2009). These areas were up-zoned to permit residential uses within manufacturing-zoned areas. Many of the former industrial loft/manufacturing buildings have been converted to include either residential or office development. This up zoning helped meet the growing demand for residential and office uses in this market. Based on neighborhood conformity a rezoning to C6-2A or R8A is a likely consideration. The C6-2A Commercial District permits a wide range of commercial uses. Residential uses are permitted based on an R8A Residential District equivalent. C6-2A is a contextual district with maximum building heights. We have also considered an R8A zoning district. The following are the zoning regulations under the R8A and C6-2A zoning districts. 118

C6-2A and Waterfront Area Major Regulation and Uses Permitted Uses: C6-2A Transient accommodations, retail and service establishments; offices (business & professional); C6 districts are designed to provide for a wide range of retail, office, eating or drinking establishments with entertainment/musical entertainment, but not dancing, with a capacity of 200 persons or fewer; public service establishments; wholesale establishments; amusements (billiard parlors etc.); theaters; large retail establishments (i.e. department stores); custom manufacturing establishments; large entertainment facilities (i.e. bowling alleys, eating or drinking establishments with entertainment and a capacity of more than 200 persons, or establishments of any capacity with dancing. Quality housing; multi-family housing, with FAR bonus with Inclusionary Housing Program. Zoning: C6-2A Waterfront Area Maximum Commercial FAR: 6.0 6.0 Maximum Residential FAR: Minimum Lot Area: Minimum Lot Width: Minimum Required Open Space Ratio: Maximum Height of Front Wall: 6.02; increase in FAR with Inclusionary Housing Program bonus 1,700 sq. ft. 18 feet 85 feet or 6 stories; whichever is less Sky plane Narrow street - 2.7 to 1 Wide street - 5.6 to 1 Lot Coverage of Towers on small zoning lots: Area of zoning lot 10,501 to 11,500 square feet 49% lot coverage 6.02 Min. /Max. Base Height: 60 ft./85 ft. Max. Heights of Buildings: 0 feet Maximum Lot Coverage: 70% Minimum Initial Setback: Minimum Yard Requirements Front: Sides: Rear: Off-Street Parking: 20 feet narrow street 15 feet wide street None 8 feet 20 feet Commercial Use one space for each 1,000 sq. ft. of floor area Retail Use food stores - one space for each 200 sq. ft. of floor area; general retail or service (including catering establishments) - one space for each 300 sq. ft. of floor area Commercial Amusements one space for each 500 sq. ft. of lot area 119

R8A and Waterfront Area Major Regulation and Uses Permitted Uses: R8A Quality housing; multi-family housing, with FAR bonus with Inclusionary Housing Program. Zoning: R8A Waterfront Area Maximum Commercial FAR: N/A N/A Maximum Residential FAR: Minimum Lot Width: Maximum Height of Front Wall: 6.02; increase Inclusionary Housing designated area bonus 18 feet 85 feet or 6 stories; whichever is less Sky plane Narrow street - 2.7 to 1 Wide street - 5.6 to 1 Lot Coverage of Towers on small zoning lots: Area of zoning lot 10,501 to 11,500 square feet 49% lot coverage 6.02 Min. /Max. Base Height: 60 ft./85 ft. Max. Heights of Buildings: 0 feet Maximum Lot Coverage: 70% Minimum Initial Setback: Minimum Yard Requirements Front: Sides: Rear: Off-Street Parking: 20 feet narrow street 15 feet wide street None None 30 feet 40% of the units The Uniform Land Use Review Procedure (ULURP) establishes a standardized procedure whereby applications affecting the land use of the city would be publicly reviewed. As per the City Charter, actions requiring a Uniform Land Use Review Procedure (ULURP) are: Changes to the City Map, Mapping of subdivisions or platting of land into streets, avenues or public places, Designation or change of zoning districts, Special Permits within the Zoning Resolution requiring approval of the City Planning Commission (CPC), Site selection for capital projects, Revocable consents, requests for proposals and other solicitations or franchises, and major concessions, Improvements in real property the costs of which are payable other than by the City, Housing and urban renewal plans and project pursuant to city, state and 0

federal laws, Sanitary or waterfront landfills, Disposition of city owned property, and Acquisition of real property by the city. The Charter also established mandated time frames within which application review must take place. Key participants in the ULURP process are now the Department of City Planning (DCP) and the City Planning Commission (CPC), Community Boards, the Borough Presidents, the Borough Boards, the City Council and the Mayor. The following is a flow and time chart of the Uniform Land Use Review Procedure (ULURP) process. 1

2

We have spoken with the Director of the Brooklyn Office of the Department of City Planning to gain insight into a hypothetical change in zoning of the subject site. Through this conversation we obtained an overview of the process that a private developer must undertake prior to certification of a Uniform Land Use Review Procedure ( ULURP ) application, which commences the formal land use review process. We also obtained information regarding the ULURP process itself. We were informed that a developer initially submits basic information concerning the proposed project facilitated by the rezoning, as well as its land use setting to City Planning. This is followed up with submission of more detailed information including a pre-application statement and relevant maps, plans, and drawing. During the pre-ulurp phase, City Planning does not decide the merits of the proposed project and associated changes in zoning, but rather considers how the project relates to surrounding land use (i.e., conformity of bulk and height), the rationale of the project in term of its compatibility and how it fits into the neighborhood, and whether the requested zoning makes sense in terms of land use and zoning policy. City Planning can provide insight to the developer into the needs and issues of the neighborhood and encourages the developer to reach out to the Community Board(s) affected by the project. The pre-ulurp process is fluid, the developer may modify its original project plans several times either of its own accord or in response to City Planning or community comments and concerns. This pre ULURP process can take as little as a few months or several years; depending on the issues raised by this initial outreach and the developer s response to them. There may be instances in which the developer either decides not to proceed with the project or to modify it substantially to address the anticipated concerns. If the project is to move forward in the process, Department of City Planning must certify, that the ULURP application is complete, which includes the application and all related documents, plans and environmental review. The complexity of environmental review and, in particular, the need in some 3

cases to prepare an Environmental Impact Statement can significantly alter the timetable for ULURP certification. Certification commences the review of the application on its merits; a decision by City Planning that the application is complete and ready for review does not constitute a determination that the project should be approved. The City Charter mandated ULURP procedure is a 7 month public review and approval process (please refer to previously presented flow chart). By the l50th day of the process following advisory review by the Community Board and Borough President, the City Planning Commission either approves, modifies or disapproves the application. Disapprovals of zoning changes are final. If the application is approved, or approved with modifications it is filed with the City Council which may either vote to approve, approve with modification or disapprove. The Council acts within 50 days, but this time frame is extended to 65 days if the Council proposed modifications prior to final action. The mayor may veto the Council action, and the Council may override the Mayor's veto by a 2/3 vote; however, vetoes and overrides are rare. Once approval is in place, the developer may submit the plans to the City Buildings Department for approval. The length of the Buildings Department process is a function of the complexity of the plans, and an iterative process of objections and modifications to drawings to comply both with code and zoning issues is commonplace; however, unlike the ULURP process, which allows the decision makers considerable discretion with regard to whether approve a zoning application, the Buildings Department process is ministerial in nature. The Director of the Brooklyn Office of the Department of City Planning provided insight into situations where the approval process can become prolonged and contentious. The development project opposite the Empire Stores/Tobacco Warehouse property at 60 Water Street at Dock Street is one such example. In 2004 the initial proposed residential project was withdrawn. At issue were the community's concerns about the views of the Brooklyn Bridge and the open space. Five years later (2009), the City Council finally 4

approved a l7-story residential tower with a 300-seat school. The scaled down improvement included a narrow tower that would not obscure the view of the bridge. Construction finally began in the summer 20, following litigation challenging the legality of the approvals. Another prolonged proposed development is the Domino Sugar site in Williamsburg, Brooklyn. It went through a lengthy and contentious public review process that resulted in a modified project being approved by the City Planning Commission and City Council in 2009. The modifications included reduction in building heights and other changes to the site plan. However, the site now has a new developer who may resubmit project plans with major modifications. The original version of the project was also the subject of litigation. As evident, the process to change zoning may be prolonged and increases the risk for a proposed project with a prerequisite of a zoning change. The following is our analysis of the subject property in terms of FAR for the Larger Parcel, Water Meter Testing Facility, DOT Paint Shed site and the Washington Street roadbed assuming that the roadbed were assigned an C6-2A or R8A zoning by the City of New York and the other two sites were rezoned to C6-2A/R8A (FAR 6.02). Development Potential Under C62A/R8A Rezoning Total Land (Sq. Ft.) Maximum FAR Max GBA Permitted (Sq. Ft.) Parking Required (% of Units) Number of Parking Spaces Required Average Size of Parking Space Land Area Required for Parking (Sq. Ft.) Replacement Property Larger Parcel Washington Street Roadbed Water Meter Testing Facility Block 7, part of Lot 21 DOT Paint Shed Block 7, part of Lot 1 37,617 6.02 226,454 40% 91 300 27,300 11,170 6.02 67,243 40% 27 300 8,100 10,860 6.02 93,834 40% 38 300 11,400 15,587 6.02 65,377 40% 26 300 7,800 * Under the current zoning code, structured parking would not be considered part of FAR as long it does not exceed a height of 23 feet. Since the parking would be located at grade level for this potential development, it would not be considered part of FAR. 5

The subject Washington Street roadbed is located adjacent to the Brooklyn Bridge Park and the properties located directly adjacent to the subject property are located in the M3-1 zoning district along the waterfront of the East River and M1-2 / R8A and C6-2A surrounding the subject property. Based on the existing waterfront zoning and to maintain conformity, it is highly likely that the City of New York would assign an M3-1 zoning. With the three parcels zoned M3-1 it is reasonable to assume that a private developer would request a zoning lot merger of the three parcels. This process does not present an undue risk. 6

HIGHEST AND BEST USE Highest and Best Use 23 The reasonably probable and legal use of vacant land or an improved property, that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of land or improved property, specific with respect to the user and timing of the use, that is adequately supported and results in the highest present value. To determine the highest and best use of the site, we have considered the physically possible, legally permitted, economically feasible and maximally productive uses of the subject property both as vacant and as improved. LARGER PARCEL Highest and Best Use of Larger Parcel, As Vacant 24 Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements. Legally Permitted The subject Water Meter Testing Facility and the DOT Paint Shed sites are mapped in an M3-1 zoning district within a Waterfront Area. For our analysis we have assumed that the City of New York would assign an M3-1 zoning to the Washington Street Roadbed. The legally permitted broad category uses include non-noxious industrial uses; offices; convenience stores, retail and service establishments (certain users limited to 10,000± square feet per establishment); amusement (i.e. billiard parlor, pool halls, bowling alley, etc.); transient hotel; eating and drinking establishments, with and without entertainment/musical 23 The Dictionary of Real Estate Appraisal Fifth Edition, Appraisal Institute, Chicago, IL, 2010, p. 93. 24 Ibid., p. 93. 7

entertainment (dancing limited to location in a hotel); catering establishments and banquet halls; outdoor recreation (i.e. skating rink, driving range, etc.); art galleries; antique stores; and museums. The subject s M3-1 zoning with an FAR of 2.0 and the Waterfront Area encourages a lower sky plane and retains a visual corridor to the Brooklyn Bridge Park, the bridges (Brooklyn and Manhattan) and the East River waterfront. Surrounding uses to the subject on Plymouth and Washington Streets include renovated 1- to 15-story loft buildings that have been converted to commercial office space, commercial retail or luxury residential on a rental or condominium form of ownership. A new construction site on Water Street opposite the Empire Stores and Tobacco Warehouse site is underway for a school, residential apartments and retail (60 Water Street). The permitted broad categories of industrial; offices; convenience stores, retail and service establishments; eating and drinking establishments; catering establishments and banquet halls; outdoor recreation and amusement; art galleries; antique stores; and museums are likely uses for the subject site. Over the past several years, sections of DUMBO have been rezoned south of John Street along the east side of the Manhattan Bridge and south of Water Street along the west side of the Manhattan Bridge (last rezoning effective June 10, 2009). These areas were up-zoned to permit residential uses within manufacturing-zoned areas. Many of the former industrial loft/manufacturing buildings have been converted to include either residential, commercial or office development. This up zoning addressed the lack of demand for the existing stock of manufacturing and loft buildings in the area and the reuse of the buildings to meet the growing demand for residential, commercial and office uses in this market. The subject property is located in the DUMBO section of Brooklyn, which is comprised of the M3-1 zoning district along the waterfront of the East River and M1-2 / R8A and C6-2A surrounding the subject property. Within the vicinity of the subject property, the Manufacturing districts have predominately been up zoned to include the uses and 8

regulations of the R8A zoning or the commercial uses of the C6-2A. All of these zoning changes have occurred south of Water, Plymouth and John Streets. The contextual quality housing regulations are mandatory under the R8A zoning and permitted uses are multi-family housing. Permitted uses for the C6-2A district include the office, retail and amusement uses already included in the M3-1 zoning, but also include large retail establishments (i.e. department store), large eating and drinking establishments with entertainment and a capacity of more than 200 persons. Based on the principle of conformity within a neighborhood, it is likely that a private developer of the subject property may consider rezoning the subject site to accommodate a residential and/or commercial office/retail development. In the zoning section of this report, we have summarized the permitted uses and regulations for the C6-2A and R8A zoning districts. We have also presented a flow chart of the process and time frame to achieve a rezoning for a project. It is noted that a project based on a change in zoning has a high risk level as opposed to a project based on the as-of-right uses within its zoning district that inherently has nominal risk. Since Superstorm Sandy, the subject has been mapped in the FEMA Post Hurricane Sandy Advisory Base Flood Elevation Map 407317 and is within the Special Flood Hazard Area (SFHA). This area is where the National Flood Insurance Program s (NFIPs) Floodplain Management Regulations must be enforced and the area where the mandatory purchase of flood insurance applies. All development, including buildings and other structures, is subject to construction regulations if it occurs within a SFHA. Any new structure or structure that is substantially improved or substantially damaged by any cause is subject to floodplain development regulations. The subject site s proximity to the East River has a negative influence on the site in terms of building design challenges and these burdensome restrictions increase the cost of construction and create additional risk to a project. 9

Physically Possible The physically possible uses are determined by the size, topography and configuration of the subject site. The subject property is basically a level, interior parcel containing 243.72± feet of frontage on the north side of Plymouth Street and 147.52± feet along the west boundary of the subject Washington Street Roadbed, which abuts the Brooklyn Bridge Park, with an aggregate land area of 37,617± square feet. The subject s extensive street frontage provides adequate access and exposure to the site. The subject s land area size is sufficient to provide a positive attribute for a development site in terms of design potential. The subject land parcel is very irregular in shape and its configuration does present development challenges in terms of placement of potential improvement on the site. The subject s most eastern site (DOT Paint Shed) is under the Manhattan Bridge and the Meter Testing Facility site in partially in the shadows of the bridge. We have been informed that the bridge has a height at the subject s location of 115± feet. The New York City Department of Transportation has confirmed that they do not have any specific regulations or height restrictions on building under bridges and deal with development under bridges on a case-by-case basis. The proximity of the bridge presents major design challenges for the site. The bridge and the configuration of the site directly hinder the utility of the site in terms of layout and design. The proximity of the bridge requires a design that optimizes views of the park and river, while at the same time minimizing visual exposure to the bridge structure and footings. Another design challenge is the noise level the bridge generates from overhead vehicles and how it can be diminished (construction materials) or externally camouflaged (i.e. landscape including running water foundation). The subject is adjacent at its north boundary to the Brooklyn Bridge Park and the East River at the north boundary of the park. To the west of the subject is the Brooklyn Bridge. The subject is situated at the east end of the park and there is an entrance trail that starts a Plymouth Street that abuts the southwest corner of the subject Washington Street Roadbed site. There is also a pedestrian trail at Adams Street just east of the DOT Paint Shed site that 130

provides similar access to the park. The open space of the park affords visual access in a westerly direction to the East River and the Manhattan skyline. Although the proximity of the park entrance provides additional pedestrian foot traffic for the site, the bridge structure is massive and overshadows the site. As previously stated in the Property Description section of this report, the subject s proximity to the East River has a negative influence on the site as was evident during Superstorm Sandy in October 20. During this superstorm, the East River at this location overflowed and engulfed the subject site with four to five feet of water. The stigma of a site in a floodplain increases the risk of a project as it reduces the potential use of a site and the pool of potential users. The subject site s physical characteristics do present some major design and development challenges stemming from its proximity to the Manhattan Bridge and the potential for flooding from the East River. However, overall the subject parcel has sufficient utility to support the permitted uses under its M3-1 zoning. Furthermore, if the subject site were rezoned to C6-2A commercial zoning district or R8A residential zoning district, the subject site can support the discussed likely permitted uses within these zoning districts. It is noted that the subject s physical and location influences have a direct bearing on the achievable for the site. Financially Feasible The feasible uses that are legally permissible and physically possible under the current M3-1 and Waterfront area zoning regulations include industrial, office and commercial retail uses; including eating and drinking establishments, amusement and recreation. We have also considered the potential to rezone the subject site to R8A and C6-2A. The feasible uses under the R8A zoning are residential multi-family apartment units, on a rental or condominium ownership basis. The feasible uses for the C6-2A district include the office and retail uses already included in the subject M3-1 and Waterfront area regulations, but also include large retail establishments (i.e. department 131

store) and large eating and drinking establishments with entertainment and a capacity of more than 200 persons. The subject property is located within the DUMBO section of Brooklyn, where there is a strong demand for commercial and residential uses. The analysis of financial feasibility will focus on which potential uses are likely to produce an income (or return) equal to or greater than the amount needed to satisfy operating expenses, financial obligations, and capital amortization of the investment. A crucial element of this analysis is the timing for a specific use including when the improvements would be built and the future expectations of occupancy and rent levels. To this goal, we estimated the future gross income that can be expected from each use. Vacancy and collection losses and operating expenses are then subtracted from each gross income to obtain the likely net operating income from each use. A rate of return on the invested capital was then calculated for each use. If the net revenue capable of being generated for a use is sufficient to satisfy the required market rate of return on the investment, the use is financially feasible. In the Income Capitalization Approach section of this approach, we have presented support for our various conclusions of the key components for this analysis (please refer to comparable rentals, vacancy and collection loss, operating expenses, and rates of return within the section). A financial feasibility test was conducted for the uses permitted under the current M3-1/Waterfront zoning as well as any proposed rezoning into the R8A or C62A zoning districts. The permitted uses tested include industrial, retail, office, and residential apartment. Uses such as restaurant, catering, pool halls, billiards, etc. are included in the retail category. The maximum buildable area for each type of use was estimated based on the type of construction required for each and parking requirements. 132

Industrial uses require loading doors at grade with the majority of the building area located on the ground floor. The second floors of typical industrial buildings include ancillary office space; however, they typically do not contain industrial space. Therefore, a feasibility analysis was conducted for an industrial building, which would be constructed subject to the current parking requirements and all other zoning requirements under the M31/Waterfront area districts. The following is the projected maximum buildable area and grade level required for parking for the subject property, which meets the current zoning requirements for an industrial building under the M3-1/Waterfront area. Estimate of Building Area/Parking Requirements Industrial Use Use Total Land Max GBA Permitted Max Achievable FAR Industrial 37,617 28,915 0.769 Square Feet per Space # of Parking Spaces Required Average Size of Parking Space (Sq. Ft.) 1,000 29 300 Land Area Required for Parking Total Land Area Bldg & Parking 8,700 37,615 Note: The maximum building area permitted takes into consideration the parking required for the specific use. A larger building would require additional parking, which cannot be accommodated by the subject site. Therefore, this is the maximum building area permitted on the site for this specific use. The total subject land area of 37,617± square feet can accommodate an industrial building containing 28,915± square feet of building area, which will require 29 parking spaces. The following analysis indicates what the financially feasible rent would be for an industrial building constructed at the subject site that is constructed based on the preceding zoning requirements. 133

Test of Financial Feasibility Industrial Use Construction Cost Land Cost Operating Expense Real Estate Taxes* Insurance Structural Repairs & Reserves Management & Professional Fees Current Overall Rate Normal Vacancy $96.77 $115.00 /sq. ft. /sq. ft. $1.50 $1.00 $0.25 3% 7% 5% /sq. ft. /sq. ft. /sq. ft. of EGI Calculations of Required Rent Calculation of Total Cost Construction Cost Land Cost Total Cost Calculation of Feasibility Rent Required NOI Add Operating Expenses: Real Estate Taxes Insurance Structural Repairs & Reserves Subtotal Expenses Management & Professional Fees (NOI + Exp/(1 - Mgmt%) - NOI + Exp) Total All Expenses Effective Gross Income Vacancy and Collection Loss Potential Gross Income Calculation of Required Rent for New Construction Building Size/FAR Land Area Required for Parking Land Size % Bldg. Rented Concluded Market Rent Size (Sq. Ft.) 28,915 8,700 37,617 100% $15.00 $ / Sq. Ft. Sq. Ft. Sq. Ft. Sq. Ft. Sq. ft. $ Amount 28,915 37,617 x x $ 96.77 $115.00 = = $2,798,105 $4,325,955 $7,4,060 $7,4,060 x 7.0% = $ 498,684 37,617 28,915 28,915 x x x $1.50 $1.00 $0.25 = = = $ $ $ $ $ 56,426 28,915 7,229 92,570 18,286 $ 110,856 $ 609,540 $ 32,081 $ 641,621 PGI $641,621 Rentable Area 28,915 = $22.19 *Current real estate taxes based on land area. Based on the trend over the past few decades to convert existing industrial and industrial loft properties, an industrial development on the subject site is precluded given the achievable rent and the cost of construction. The above analysis indicates the market-derived industrial rent of $15.00 per square foot is below the required rent for new construction of $22.19 per square foot; therefore, industrial use is not an economically feasible use of the subject property. 134

Retail uses in the subject area are all at grade level and do not contain upper floor retail space. Therefore, any new construction retail use would be required at grade level, with consideration to the parking requirements under the M3-1/Waterfront area districts. A feasibility analysis was conducted for a retail building, which would be constructed subject to the current parking requirements and all other zoning requirements under the M31/Waterfront area districts. The following is the projected maximum buildable area and grade level required for parking for the subject property, which meets the current zoning requirements for a retail building under the M3-1/Waterfront area. Estimate of Building Area/Parking Requirements Retail Use Use Total Land Max GBA Permitted Maximum Achievable FAR Square Feet per Space # of Parking Spaces Required Average Size of Parking Space (Sq. Ft.) Land Area Required for Parking Total Land Area Bldg & Parking Retail 37,617 18,745 0.50 300 62 300 18,600 37,345 Note: The maximum building area permitted takes into consideration the parking required for the specific use. A larger building would require additional parking, which cannot be accommodated by the subject site. Therefore, this is the maximum building area permitted on the site for this specific use. The total subject land area of 37,617± square feet can accommodate a retail building containing 18,745± square feet of building area, which will require 62 parking spaces. The following analysis indicates what the financially feasible rent would be for a retail building constructed at the subject site that is constructed based on the preceding zoning requirements. 135

Test of Financial Feasibility Retail Use Construction Cost Land Cost Operating Expense Real Estate Taxes* Insurance Structural Repairs & Reserves Management & Professional Fees Current Overall Rate Normal Vacancy $147.89 $115.00 /sq. ft. /sq. ft. $1.50 $1.00 $0.25 3% 5.8% 5% /sq. ft. /sq. ft. /sq. ft. of EGI Calculations of Required Rent Calculation of Total Cost Construction Cost Land Cost Total Cost Calculation of Feasibility Rent Required NOI Add Operating Expenses: Real Estate Taxes Insurance Structural Repairs & Reserves Subtotal Expenses Management & Professional Fees (NOI + Exp/(1 - Mgmt%) - NOI + Exp) Total All Expenses Effective Gross Income Vacancy and Collection Loss Potential Gross Income Calculation of Required Rent for New Construction Building Size/FAR Land Area Required for Parking Land Size % Bldg. Rented Concluded Market Rent Size (Sq. Ft.) 18,745 18,600 37,617 100% $40.00 $ / Sq. Ft. Sq. Ft. Sq. Ft. Sq. Ft. Sq. ft. $ Amount 18,745 37,617 x x $147.89 $115.00 = = $2,772,198 $4,325,955 $7,098,153 $7,098,153 x 5.8% = $ 411,693 37,617 18,745 18,745 x x x $1.50 $1.00 $0.25 = = = $ $ $ $ $ 56,426 18,745 4,686 79,857 15,203 $ 95,060 $ 507,753 $ 26,671 $ 533,424 PGI $533,424 Rentable Area 18,745 = $28.46 *Current real estate taxes based on land area. The above analysis indicates the market-derived retail rent of $40.00 per square foot is above the required rent for new construction of $28.46 per square foot; therefore, retail use is an economically feasible use of the subject property. Many of the former loft buildings in the subject area have been converted to office use. Although many of the existing buildings do not contain parking, any new construction office building would require on-site parking, based on the M3-1/Waterfront area districts. Many of the office buildings in the area with on-site parking contain lower-level parking garages with street grade retail uses. However, these buildings are not of new construction and predate the existing zoning code and were constructed prior to the current flood zone. 136

Any new construction office building at the subject location would not be able to be developed with lower-level parking, due to its location proximate to the East River, and its location within a major designated flood area. Since parking will be required at grade level, any new construction can be developed above the grade level parking structure. As previously discussed, retail uses in the subject area are located at grade level and an upper floor retail use would not be viable in the subject market. Therefore, if the subject property were developed with an office building, any new construction office development could not contain grade level retail space. A feasibility analysis was conducted for an office building, which would be constructed subject to the current parking requirements and all other zoning requirements under the M3-1/Waterfront area districts. The following is the projected maximum buildable area and grade level required for parking for the subject property, which meets the current zoning requirements for an office building under the M3-1/Waterfront area. Estimate of Building Area/Parking Requirements Office Use Use Total Land Max GBA Permitted Max Achievable FAR Office 37,617 75,234 2.00 Square Feet per Space # of Parking Spaces Required Average Size of Parking Space Land Area Required for Parking Space* 1,000 75 300 22,500 Land Area Available for Parking Maneuverability and Ramps Stories Required for Parking 37,617 1.00 * Under the current zoning regulations, structured parking would not be considered part of FAR as long it does not exceed a height of 23 feet. Since the parking would be located at grade level for this potential development, it would not be considered part of FAR. 137

The total subject land area of 37,617± square feet can accommodate an office building containing 75,234± square feet of building area, which will require 75 parking spaces. The following analysis indicates what the financially feasible rent would be for an office building constructed at the subject site that is constructed based on the preceding zoning requirements. Test of Financial Feasibility Office Use Construction Cost Parking Cost Land Cost Operating Expense Real Estate Taxes* Insurance Structural Repairs & Reserves Management & Professional Fees Current Overall Rate Normal Vacancy $273.79 $ 93.96 $115.00 /sq. ft. /sq. ft. /sq. ft. $1.50 $1.00 $0.25 3% 7.35% 5% /sq. ft. /sq. ft. /sq. ft. of EGI Calculations of Required Rent Calculation of Total Cost Construction Cost Parking Cost Land Cost Total Cost Calculation of Feasibility Rent Required NOI Add Operating Expenses: Real Estate Taxes Insurance Structural Repairs & Reserves Subtotal Expenses Management & Professional Fees (NOI + Exp/(1 - Mgmt%) - NOI + Exp) Total All Expenses Effective Gross Income Vacancy and Collection Loss Potential Gross Income Calculation of Required Rent for New Construction Building Size/FAR Structured Parking Area Land Size % Bldg. Rented Concluded Market Rent** Size (Sq. Ft.) 75,234 37,617 37,617 100% $22.00 $ / Sq. Ft. Sq. Ft. Sq. Ft/ Sq. Ft. Sq. ft. $ Amount 75,234 37,617 37,617 x x x $273.79 $ 93.96 $115.00 = $28,458,765 x 7.35% = $ 2,091,719 37,617 75,234 75,234 x x x $1.50 $1.00 $0.25 = = = $ $ $ $ $ = $20,598,317 $ 3,534,493 $ 4,325,955 $28,458,765 56,426 75,234 18,809 150,469 69,346 $ 219,815 $ 2,311,534 $ 1,660 $ 2,433,194 PGI $2,433,194 Rentable Area 75,234 = $32.34 *Current real estate taxes based on land area. **Please refer to the Conclusion of Office Market Rents and Terms within the Income Approach section of this report. 138

The above analysis indicates the market-derived office rent of $22.00 per square foot is below the required rent for new construction of $32.34 per square foot; therefore, office use is not an economically feasible use of the subject property. Many of the former loft buildings in the subject area have been converted to residential use and there have been several new construction projects in the areas that are zoned for residential development, including the R8A and C6-2A zoning districts. The analysis of the subject property, under the hypothetical assumption that the subject property is vacant and available for redevelopment, is based on the assumption that a developer would seek rezoning to either the R8A or C6-2A zoning district. Although many of the existing buildings do not contain parking, any new construction apartment building would require on-site parking, based on the zoning regulations. Many of the residential buildings in the area with on-site parking contain lowerlevel parking garages with street grade retail uses. However, these buildings are not of new construction and predate the existing zoning code and were constructed prior to the current flood zone. Any new construction residential building at the subject location would not be able to be developed with lower-level parking, due to its location proximate to the East River, and its location within a major designated flood area. Since parking will be required at grade level, any new construction can be developed above the grade level parking structure. As previously discussed, retail uses in the subject area are located at grade level and an upper floor retail use would not be viable in the subject market. Therefore, if the subject property were developed with a residential apartment building, any new construction residential apartment development could not contain grade level retail space. A feasibility analysis was conducted for a residential apartment building, which would be constructed subject to the current parking requirements and all other zoning requirements as if rezoned under the R8A of C6-2A zoning districts. The following is the projected maximum buildable area and grade level required for parking for the subject 139

property, which meets the current zoning requirements for residential apartment building under a proposed rezoning. Estimate of Building Area/Parking Requirements Residential Apartment Use Use Total Land Max GBA Permitted Max Achievable FAR Average Unit Size Average # of Units Parking Required (% of Units) # of Parking Spaces Required Average Size of Parking Space Land Area Required for Parking Space* Land Area Available for Parking Maneuverability and Ramps Stories Required for Parking Residential Apartment 37,617 226,454 6.02 1,000 226 40% 91 300 27,300 37,617 1.00 * Under the current zoning regulations, structured parking would not be considered part of FAR as long it does not exceed a height of 23 feet. Since the parking would be located at grade level for this potential development, it would not be considered part of FAR. The total subject land area of 37,617± square feet can accommodate a residential apartment building containing 226,454± square feet of building area, which will require 91 parking spaces. The following analysis indicates what the financially feasible rent would be for a residential apartment building constructed at the subject site that is constructed based on the preceding zoning requirements. 140

Test of Financial Feasibility Residential Apartment Use Construction Cost Parking Cost Land Cost Operating Expense Real Estate Taxes* All Other Operating Expenses Current Overall Rate Normal Vacancy $279.93 $ 93.96 $190.00 /sq. ft. /sq. ft. /sq. ft. $1.50 25% 5.25% 5% /sq. ft. of EGI Calculations of Required Rent Calculation of Total Cost Construction Cost Parking Cost Land Cost Total Cost Calculation of Feasibility Rent Required NOI Add Operating Expenses: Real Estate Taxes All Operating Expenses @ 25% Total All Expenses Effective Gross Income Vacancy and Collection Loss Potential Gross Income Calculation of Required Rent for New Construction Building Size/FAR Structured Parking Area Land Size % Bldg. Rented** Concluded Market Rent Size (Sq. Ft.) 226,454 37,617 37,617 85% $38.00 $ / Sq. Ft. Sq. Ft. Sq. Ft/ Sq. Ft. Sq. ft. $ Amount 226,454 37,617 37,617 x x x $279.93 $ 93.96 $190.00 = $63,391,268 $ 3,534,493 $ 7,147,230 $74,072,991 $74,072,991 x 5.25% = $ 3,888,832 37,617 x $1.50 = $ $ $ $ $ $ PGI $5,537,204 Rentable Area** 192,486 = = $28.77 *Current real estate taxes based on land area. ** A proposed residential apartment building would have an efficiency ratio of 85%. Therefore, the rentable area is 192.486± sq. ft. (226,454± sq. ft. of GBA x 85%). The above analysis indicates the market-derived residential apartment rent of $38.00 per square foot is above the required rent for new construction of $28.77 per square foot; therefore, residential apartment use is an economically feasible use of the subject property. 56,426 1,315,086 1,371,5 5,260,344 276,860 5,537,204 141

Financial Feasibility Condominium Ownership Apartment Use With respect to the financial feasibility of an apartment building on a condominium form of ownership, we have research the historical sellout rate of new construction or renovated residential condominium offerings in DUMBO over the past several years and the results are as follows: Historical Residential Condominium Sales 100 Jay Street 266 Total Units C of O 4/29/10 Year 2007 2008 2009 2010 2011 20 2013 # of Units Sold 149 23 8 11 19 5 # of Months 9 4 Units/Month 16.56 1.92 0.67 0.92 1.00 1.58 1.25 133 Water Street 52 Total Units C of O 10/17/07 Year 2007 2008 2009 2010 2011 20 2013 # of Units Sold # of Months Units/Month 18 5 4 1.50 1.25 205 Water Street 65 Total Units C of O 4/27/ Year 20 2013 # of Units Sold 51 # of Months 8 4 Units/Month 6.38 206 Front Street 31 Total Units C of O 5/10/07 Year 2007 2008 2009 2010 2011 20 2013 # of Units Sold 36 1 2 # of Months 6 Units/Month 6.00 0.08 0.17 3 4 1 4 0.33 0.25 142

Historical Residential Condominium Sales (continued) 30 Main Street 87 Total Units C of O 5/30/03 Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 20 2013 # of Units Sold 34 7 2 2 9 5 5 7 6 6 1 # of Months 11 4 Units/Month 3.09 0.58 0.17 0.17 0.75 0.42 0.42 0.58 0.50 0.50 0.25 37 Bridge Street 45 Total Units C of O 2/27/ Year 20 2013 # of Units Sold 18 0 # of Months 9 4 Units/Month 2.00 0.00 50 Bridge Street 56 Total Units C of O 3/29/04 Year 2004 2005 2006 2007 2008 2009 2010 2011 20 2013 # of Units Sold 41 13 # of Months 4 Units/Month 10.25 1.08 3 1 4 0.25 0.25 Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 20 2013 # of Units Sold 8 1 1 3 3 2 # of Months 2 Units/Month 4.00 0.08 0.08 0.25 0.25 0.17 3 0.25 42 Main Street 21Total Units C of O 1/16/04 143

Historical Residential Condominium Sales (continued) 57 Front Street 31 Total Units C of O 2/8/07 70 Washington Street 259Total Units C of O 8/2/06 79 Bridge Street 37Total Units C of O /1/03 84 Front Street 56 Total Units C of O 11/14/06 Year 2006 2007 2008 2009 2010 2011 20 2013 # of Units Sold 14 5 1 2 2 3 5 1 # of Months 5 4 Units/Month 2.80 0.42 0.08 0.17 0.17 0.25 0.42 0.25 Year 2005 2006 2007 2008 2009 2010 2011 20 2013 # of Units Sold 43 65 34 11 5 17 19 24 14 # of Months 5 4 Units/Month 8.60 5.42 2.83 0.92 0.42 1.42 1.58 2.00 3.50 Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 20 2013 # of Units Sold 15 2 3 2 5 1 2 13 2 # of Months 5 Units/Month 3.00 0.17 0.25 0.17 0.42 0.08 0.17 1.08 0.17 1 0.08 Year 2006 2007 2008 2009 2010 2011 20 2013 # of Units Sold 32 8 4 3 4 9 6 1 # of Months 6 4 Units/Month 5.33 0.67 0.33 0.25 0.33 0.75 0.50 0.25 144

The data for these condominium developments indicates that sales activity was active prior to 2009, with diminished sellout after thereafter. In the more recent past, 20 through 2013 to date, two small scale condominium apartment projects have been completed and the individual units were available for sale. 205 Water Street is a luxury condominium building developed by Toll Brothers City Living and contains 65 units, with a total of 51 units sold (according to public records) during the 8 months of 20 (6.38 units per month). However, there have not been any recorded sales during the first quarter of 2013. It is noted that the website for this building currently has an announcement that all units are sold. Assuming the balance of the unsold units are in contract, then the project has a sellout average of 5.42 units per month. Another project, 37 Bridge Street, is a former turn of the century loft building that has been renovated to luxury condominiums. It contains a total of 45 units and according to public records 18 units sold during 9 months 20, or 2 units per month. During the first quarter 2013, there have been no unit sales within this project according to public records, but the website for this project reports 80% of the units have sold. The 80% is equal to 36 units, resulting in an average of 3 units per month (with unit sales commencing in March 20). Both of these projects are situated east of the Manhattan Bridge. In our analysis, we have estimated the subject site could accommodate 696± apartment units. Using the sellout rate of 5.42± units per month for the 205 Water Street luxury new condominium construction, the proposed 696± units for the subject would take 10 years to sellout on a worst case scenario based on the premise that some years will have more robust sales activity than others. We have considered the fact that residential development requires a change in zoning and the high level of risk associated with this process. Furthermore at this time, a large scale residential development with a condominium form of ownership puts additional risk on the project that eliminates the feasibility. Although the DUMBO market exhibits some of the highest residential condominium sales price per square foot 145

in Brooklyn, the sales activity of the residential condominiums is sluggish. Similar to the rental market, the subject s location and views are desirable to potential purchasers and reduce risk to a certain degree. The property specific risk factor due to the proximity to the river and potential for flooding has an additional risk. Added to this risk is that there may be limits to the pool of potential DUMBO condominium buyers willing to consider purchasing a property this close to the water. Based on this reasoning, we have not considered a residential development on a condominium form of ownership as financially feasible. The subject DUMBO market is not an employment center nor does it contain an exhibit/cultural center such as Barclay s Center to attract regional visitors to the area. Due to the lack of neighborhood influences, the demand for a hotel is not likely. It is noted that the 60 Water Street site originally proposed a hotel on the site which was withdrawn from consideration. We have not considered a hotel to be among the financially feasible uses of the subject property. Communities that have outdoor amusement and recreation typically have an area where there is a confluence of similar uses (i.e. tennis courts, skating rinks, driving ranges, miniature golf, etc.) to create a destination for the public and an economically viable project for a developer. Although the subject is adjacent to a park and waterfront, an outdoor amusement/recreation use is not likely because the subject site is not sufficient in size to support a multi-faceted center. Small scale recreation and amusement uses generally produce a lower income than a recreation/amusement complex. We have not considered an amusement or outdoor recreation use as financially feasible uses for the subject site. Based on all of the above, we have determined that retail and residential rental apartment uses are financially feasible for the subject property. 146

Maximum Productivity Of the financially feasible uses, the highest and best use is the use that produces the highest residual land value consistent with the market s accepted risk and with the rate of return warranted by the market for that use given the associated risk. In the income capitalization approach section of this report a residual discounted cash flow models were completed for each of the indicated financially feasible uses. Under this analysis a key element is the risk level of each of the uses. The use with the least risk is retail because it is an as-of-right permitted use under the existing zoning and is projected at one-story in height and such a development is not anticipated to have any undue delay. Furthermore, retail use is in high demand in the subject s submarket as evidence by its current 7.2% vacancy rate, which is skewed by large (greater than 3,000± square feet) blocks of available space. Local brokers report that the vacancy rate for small retail units (less than 3,000± square feet) is much lower than the 7.2% because these smaller units are in high demand and there is a limited supply available. The subject s location in a residential/commercial neighborhood abutting the Brooklyn Bridge Park proximate to the Brooklyn Bridge and the East River attracts a greater pool of potential users drawn by the exposure afforded by the park and the bridge and views of the New York City skyline. The one risk factor is the subject s proximity to the East River and the uncertainty of future flooding as well as the additional operating costs (i.e. insurance including mandatory flood insurance) and potential increased construction costs due to possible stricter construction guidelines. Residential use requires a change in zoning for the Water Meter Testing Facility and DOT Paint Shed sites. The Washington Street Roadbed site could be assigned this zoning by the City of New York but this assignment is viewed as having a lesser probability than a M3-1 zoning. As previously discussed this process can be long and contentious as evidenced by the protracted delays and revisions experienced by the 60 Water Street project (opposite the subject) that took well over 5-years to finally achieve 147

approvals for a 17-story, 289-unit apartment building with a 300-seat school. Mitigating the risk to some degree is the strong rental apartment market in the area. DUMBO exhibits some of the highest rents in Brooklyn for all unit types. Furthermore, DUMBO is one of the Brooklyn neighborhoods that have noteworthy rent appreciations. The subject s location abutting the Brooklyn Bridge Park, with views of the Brooklyn Bridge, the East River and the Manhattan skyline are locational attributes deemed desirable by market participants. Again, a risk factor that is not particularly tied to the use but to the property itself is the proximity to the East River and the potential of flooding and the costs (operating and construction) as previously discussed. In the income capitalization section of this report we have presented supporting documentation and the land residual models for the financially feasible uses. The following are the indicated land values based on the productivity of the feasible uses. Financially Feasible Use Multi-Tenant Retail (As-of-Right) Residential Rental Apartments (As if Rezoned) Indicated Residual Land Value $4,700,000.00 $2,400,000.00 For the highest and best use of the subject larger parcel as if vacant, we have determined that the maximally productive use is a one-story retail building containing a gross building area of 18,825±-square-foot building with on-site surface parking. This use satisfies the local growing demand retail rental uses in the area. Highest and Best Use of the Larger Parcel, as Improved 25 The use that should be made of a property as it exists. An existing improvement should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one. 25 The Dictionary of Real Estate Appraisal Fifth Edition, Appraisal Institute, Chicago, IL, 2010, p. 94. 148

Under consideration is this analysis are whether the existing improvements on the Water Meter Testing Facility site should be demolished and the site redeveloped, should the existing use continue, or should the existing use be modified. The subject property consists of a 37,617±-square-foot land parcel. The following is a summary of each of the site characteristics of each of the subject parcels: Parcel Land Area (Sq. Ft.±): Building Area (Sq. Ft.±) Frontage on Plymouth St. (Ft.) Plot configuration Larger Parcel Washington Roadbed Site Water Meter Site DOT Paint Shed Site 37,617 0 243.72± Very Irregular 11,170 0 31.04± Slightly irregular at southwest corner 10,860 9,585 102.25± Triangular 15,587 0 110.43± Very Irregular The subject Water Meter Testing Facility site is improved with a one story plus partial basement single tenant industrial/office building constructed circa 1988. The building is constructed almost full to the lot and has a mostly triangular shape. This parcel does not have any vehicle access to the small paved area at the rear of the site. It is noted that the Water Meter Testing Facility site does not have any on-site parking and any as-of-right use within the M3-1 would also not be required to provide parking since it consists of an existing building. Under the New York City Zoning Resolution rules, a developer would be allowed to maintain this degree of non-compliance. 26 The subject improvements cannot be expanded because parking would be required for any new space by the Zoning Resolution. A new building containing two-stories or a greater floor area is possible but the first floor area would be reduced to accommodate parking and the income generating potential of any upper floors is less than that of the first floor. A building as large as currently exists would not be permissible on this site due to required 26 Non-complying, or non-compliance A "non-complying" #building or other structure# is any lawful #building or other structure# which does not comply with any one or more of the applicable district #bulk# regulations either on December 15, 1961 or as a result of a subsequent amendment thereto. A "non-compliance" is a failure by a #non-complying building or other structure# to comply with any one of such applicable #bulk# regulations. 149

parking for new construction. The subject property is located in close proximity to the Manhattan Bridge and as indicated in this statement of work for this appraisal report, the New York City Department of Transportation retains a right of access to the Manhattan Bridge. Therefore, the maximum lot coverage of any potential development of the subject property would be affected by this restriction. Furthermore, the effect of the loss of any rights, any associated use restrictions, and the adverse influence from the bridge (if any) must be analyzed. Therefore, the existing improvements should not be demolished; the improvements should be retained. As previously shown, industrial use is not a financially feasible use in the DUMBO market as many of the former industrial properties have been converted to office and residential use. Therefore, a continued use as industrial is not likely. Offices are another potential reuse of the building, however, this use was found not to be financially feasible. Given the subject s location proximate to the park and residential and commercial uses, retail, restaurant, and supermarket, uses are permissible uses under the current zoning regulations that are reasonable for reuse of the building. The building can provide smaller rentable areas since the subject property contains a sidewalk along the western portion of the subject site that can provide access along the west elevation of the building as well as access from Plymouth Street. In the analysis of the ground floor rent comparables, typical ground floor unit sizes range between 1,000± and 6,500± square feet. The subject building can be subdivided to units with smaller rentable area, which are in greater demand in the local market. In order to determine the highest and best use of the Water Meter Testing Facility site, discounted cash flow analyses were performed for the property under three scenarios: (1) retain the existing building and renovate it into retail use, or (2) demolish the existing building and construct a new one-story retail building subject to the current zoning regulations. 150

The indicated residual land values for these two potential reuses for the subject Water Meter Testing Facility are indicated as follows: Type Use Retain Existing Building and Convert to Retail Demolish and Redevelop with a New One-story Retail Building Building Area Sq. Ft.± 9,585 5,275 Indicated Value $3,300,000.00 $1,500,000.00 Based on these findings the maximally productive use of the subject Water Meter Testing Facility is to renovate the existing building into a one-story retail building. The proposed building would contain 9,585± square feet gross building area and could be divided into several smaller retail units. With potential reuse of the existing building to retail, a unity of use with the other parcels is considered. The subject larger parcel as one zoning lot and as vacant can be developed with 18,825± square feet of retail space but requires a total of 63± parking spaces. If the existing building improvements of the Water Meter Testing Facility site were retained and the other two subject sites were to remain as separate zoning lots under M3-1 zoning, then a larger retail development containing 23,540± square feet with 46± parking spaces is possible as shown below: Total Land (Sq. Ft.) Max GBA Permitted (Sq. Ft.) Sq. Ft. Required per Parking Space Number of Parking Spaces Required Waive spaces Existing Water Meter Testing Facility Required Spaces, less Spaces Waived Land Area Required for Parking (Sq. Ft.) Total Land Area Required for Building & Parking (Sq. Ft.) Replacement Property Larger Parcel Washington Street Roadbed Water Meter Testing Facility Block 7, part of Lot 21 DOT Paint Shed Block 7, part of Lot 1 37,617 23,540 300 78 32 46 13,800 37,340 11,170 5,540 300 18 N/A 18 5,400 10,940 10,860 9,585 300 32 32 0 N/A 10,860 15,587 7,780 300 26 N/A 26 7,800 15,580 151

As shown, by retaining the Water Meter Test Facility building and retaining separate zoning lots the property employs contiguity, unity of ownership and unity of highest and best use. This proposed development creates nominal risk to a private developer. Along the waterfront of the East River in DUMBO, New York City has retained the M3-1 zoning. It has been determined that New York City would likely assign an M3-1 zoning to the subject Washington Street Roadbed to maintain conformity of land use. As proposed a developer would not have any risk or undue delay due to zoning change. The size of the three retail buildings can accommodate multiple units within the size range (under 3,000± square feet) in demand within the DUMBO retail market. Therefore, the value of the subject replacement property as improved and as three separate zoning lots is as follows: Replacement Property as Separate Zoning Lots and As Improved Water Meter Testing Facility DOT Paint Shed Washington Street Roadbed Total Replacement Property Indicated Value $3,300,000.00 $1,600,000.00 $1,600,000.00 $6,500,000.00 These findings indicate that the highest and best use of the subject Replacement Property is to maintain three separate zoning lots, to retain the building on the Water Meter Testing Facility site and convert this industrial building to a retail use, and develop the other two subject sites with their own retail buildings. The maximally productive use results in a value of $6,500,000.00. 152

INCOME CAPITALIZATION APPROACH 153

INCOME CAPITALIZATION APPROACH METHODOLOGY The following steps were implemented in arriving at the value estimates of the fee simple estate of the subject property, under the income capitalization approach: 1) The carrying charges were estimated and applied accordingly. 2) An absorption period was estimated for the rent-up period for the proposed subject use(s). 3) Comparable data (rental rates, occupancy, operating costs, operating expense ratios, etc.) from similar property types was sought and applied in this analysis. 4) Information was obtained regarding the general trend of income and expenses. 5) Entrepreneurial incentive is included in the overall project yield rate and was not calculated as a separate line item. 6) The net operating income at the end of the holding period is capitalized using the appropriate market derived rate. A transaction fee was deducted from the estimated amount of the reversion, since to realize this value, appropriate transaction costs, (mortgage refinancing, half of the brokerage costs, legal fees, etc.) would be incurred. 7) In the discounted cash flow (DCF) method, the information was processed into cash flow estimates of revenues after deductions for the appropriate costs and expenses. 8) An appropriate discount rate was chosen and applied to the cash flow stream. The sum of the DCF stream equals the market value estimate of the subject property. 154

ANALYSIS OF THE LOCAL APARTMENT MARKET In order to estimate the appropriate market rental rate for the subject property as if available for development under the C6-2A or R8A we have researched the comparable apartment lease transactions within residential buildings that are blocks from the subject property and consist of renovated former industrial buildings that have been converted to residential buildings or new construction residential buildings. The following is our independent survey of the immediate local market. Comparable Asking Apartment Rents Asking No. 1 2 3 4 5 6 7 8 9 10 11 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Location 70 Washington Street 30 Main Street 1 Main Street 70 Washington Street 81 Washington Street 1 Main Street 220 Water Street 70 Washington Street 70 Washington Street 70 Washington Street 1 Main Street 50 Bridge Street 70 Washington Street 65 Washington Street 65 Washington Street 85 Adams Street 220 Water Street 99 Gold Street 99 Gold Street 99 Gold Street 220 Water Street 100 Jay Street 100 Jay Street 25 Washington Street 70 Washington Street 100 Jay Street 65 Washington Street 70 Washington Street 100 Jay Street Available on Now 6/1/2013 4/15/2013 4/1/2013 4/1/2013 4/15/2013 4/15/2013 5/1/2013 5/15/2013 Now /23/2013 4/8/2013 Now 5/1/2013 Type Rooms Leased Area (± Sq. Ft.) Monthly Rent Annual Rent/Sq. Ft. 2 bed / 3 bath 2.5 bed / 2.5 bath 2 bed / 2 bath 2 bed / 2 bath 2 bed / 2 bath 2 bed / 2 bath 2 bed / 2 bath 2 bed / 2 bath 2 bed / 2 bath 2 bed / 2 bath 1 bed / 1.5 bath 3 bed / 1 bath 2 bed / 2 bath 2 bed / 2 bath 1 bed / 2 bath 1 bed / 1 bath 1 bed / 1 bath 1 bed / 1.5 bath 2 bed / 1 bath 1 bed / 1 bath 1 bed / 1 bath 1 bed / 1 bath 1 bed / 1 bath 1 bed / 1 bath 1 bed / 1 bath 1 bed / 1 bath 1 bed / 1 bath 1 bed / 1 bath 1 bed / 1 bath 6 6 5 5 5 5 5 5 5 5 3.5 5 5 5 3.5 3 3 3.5 4 3 3 3 3 3 3 3 3 3 3 1,765 2,209 1,655 1,267 1,707 1,414 1,340 1,307 1,384 1,307 1,293 1,500 1,262 846 909 875 768 1,384 877 823 788 791 800 6 725 801 598 710 557 $14,000 $11,000 $ 7,500 $ 7,000 $ 6,700 $ 6,600 $ 6,400 $ 6,200 $ 5,995 $ 5,800 $ 5,600 $ 5,300 $ 5,200 $ 4,450 $ 4,400 $ 3,950 $ 3,850 $ 3,750 $ 3,600 $ 3,575 $ 3,550 $ 3,450 $ 3,400 $ 3,300 $ 3,250 $ 3,250 $ 3,200 $ 3,200 $ 2,700 $95.18 $59.76 $54.38 $66.30 $47.10 $56.01 $57.31 $56.92 $51.98 $53.25 $51.97 $42.40 $49.45 $63. $58.09 $54.17 $60.16 $32.51 $49.26 $52.13 $54.06 $52.34 $51.00 $64.71 $53.79 $48.69 $64.21 $54.08 $58.17 Min: Max: Mean: Median: 557 2,209 1,113 909 $ 2,700 $14,000 $ 5,072 $ 4,350 $32.51 $95.18 $55.60 $54.08 155

Comparable Lease Transactions for Apartment Units Asking No. 1 2 3 4 5 6 7 8 9 10 11 13 14 15 16 17 18 19 20 21 22 Location 99 Gold Street 99 Gold Street 100 Jay Street 99 Gold Street 100 Jay Street 85 Adams Street 84 Front Street 220 Water Street 99 Gold Street 79 Bridge Street 99 Gold Street 70 Washington Street 99 Gold Street 204 Front Street 70 Washington Street 99 Gold Street 85 Adams Street 31 Washington Street 37 Bridge Street 85 Adams Street 99 Gold Street 100 Jay Street Unit Number Leased On Type Rooms Leased Area (± Sq. Ft.) Monthly Rent Annual Rent/Sq. Ft. 2P 1E 15H 4B 23B 3/19/2013 3/17/2013 3/13/2013 3/8/2013 3/5/2013 2/26/2013 2/26/2013 2/24/2013 2/22/2013 2//2013 1/26/2013 1/25/2013 1/25/2013 1/7/2013 1/4/2013 /21/20 /5/20 /4/20 11/20/20 11/19/ 11/2/20 10/14/ Studio / 1 bath 2 bed / 1 bath 3 bed / 2.5 bath 2 bed / 1 bath 1 bed / 1 bath 2 bed / 2 bath 1 bed / 1 bath Studio / 1 bath 1 bed / 1 bath 1 bed / 1 bath Studio / 1 bath 2 bed / 2 bath 2 bed / 1 bath 2 bed / 1 bath 3 bed / 3 bath Studio / 1 bath 1 bed / 1 bath 2 bed / 1.5 bath 1 bed / 1.5 bath 2 bed / 1 bath 2 bed / 1 bath 2.5 bed / 1.5 bath 2 4 6.5 4 3 4 3 2 3 3 2 4 4 4 7 2 3 4.5 3.5 4 4 4.5 688 988 1,595 877 791 1,157 729 1,065 753 946 672 1,387 929 900 1,675 672 780 1,758 1,076 1,200 1,057 1,711 $2,800 $4,000 $6,000 $3,600 $3,500 $4,450 $3,100 $4,5 $3,300 $3,400 $2,450 $5,700 $3,900 $3,500 $7,000 $2,650 $3,295 $5,500 $4,200 $4,800 $3,900 $6,850 $48.84 $48.58 $45.14 $49.26 $53.10 $46.15 $51.03 $46.48 $52.59 $43.13 $43.75 $49.32 $50.38 $46.67 $50.15 $47.32 $50.69 $37.54 $46.84 $48.00 $44.28 $48.04 Min: Max: Mean: Median: 672 1,758 1,064 967 $2,450 $7,000 $4,230 $3,900 $37.54 $53.10 $47.60 $48.02 5D HC 1F 4I 2H 7M 4N 3 6R 5H 10C 4 22A 3K 21A The comparable apartment rentals contain unit sizes between 557± and 2,209± square feet. The asking rental rates between $32.51 and $95.18 per square foot, with a mean of $55.60 per square foot and a median of $54.08 per square foot. The actual leased apartment units contain rental rates between $37.54 and $53.10 per square foot. RESIDENTIAL RENTAL APARTMENT ADJUSTMENT PROCESS Prior to estimating the market rental value of the subject proposed apartment units, the differences between the comparables as they relate to the subject property were considered. On this basis, qualitative adjustments were applied to each of the rents per square foot to reflect those differences and refine the indicated range. 156

Market Conditions (Time) The first adjustment considered was for market conditions (time). Available market data indicates that market conditions throughout the subject market have remained relatively stable from 20 to 2013. Therefore, the comparable rentals did not warrant any adjustments. Location The subject property is located in the DUMBO section of Brooklyn, adjacent to the eastern end of the Brooklyn Bridge Park. The subject is overshadowed by the presence of the Manhattan Bridge, as it is partially located beneath this infrastructure. The projected subject development will have views of the East River and the Manhattan skyline; however, it is likely that many of the subject units will contain an undesirable direct view of the Manhattan Bridge structure, limiting the unit s view of other local sites. Furthermore, the traffic flow across the bridge may generate significant noise pollution. Based on these specific subject property characteristics, we have concluded that the subject property has an undesirable locale in comparison to the comparable rentals and downward adjustments to the comparable rentals were considered. Size Typically, smaller units lease for more on a per-square-foot basis than their larger counterparts. This assumes a quantity discount and the diminishing number of users that require larger spaces. A proposed residential development of the subject property will be divided into typical unit sizes that can be absorbed by the local market. Since the proposed units will be similar to the comparable units within the local market, a size adjustment is not warranted. Property Characteristics Upon completion of the new construction project, the subject property will be in similar condition to the comparable apartment buildings, warranting similar rental rates. Therefore, the comparable rentals did not warrant any adjustments for this factor. 157

CONCLUSION RESIDENTIAL RENTAL APARTMENT MARKET RENTS AND TERMS All of the comparable rentals are either new construction or renovated and having architectural details competitive with new construction. The rentals presented are directly competitive with the subject in the Dumbo market. The actual leased apartment units contain rental rates between $37.54 and $53.10 per square foot. The subject units will be a new luxury rental apartment building, adjacent to the Brooklyn Bridge Park and some units will have views of the East River and the Manhattan skyline, while others will have undesirable direct views of the Manhattan Bridge structure. All of the units will be affected by the noise pollution of the overhead traffic from the bridge. All of the comparable rentals are superior to the subject proposed development because they have a view that is not hindered by the Manhattan Bridge structure nor the noise pollution that the subject would encounter. Based on these factors, the market apartment rental for the subject property would fall at the low end of the comparable range in order to maintain its share of market participants. We have estimated an overall rental rate for the subject property at $38.00 per square foot on a gross rental basis, with the tenants responsible for tenant electric and cooking gas. 158

COMPARABLE APARTMENT RENTALS LOCATION MAP 1 2 3 4 5 6 7 8 9 10 1 Main Street 100 Jay Street 109 Gold Street 204 Front Street 206 Front Street 220 Water Street 25 Washington Street 30 Main Street 31 Washington Street 37 Bridge Street 11 13 14 15 16 17 18 19 50 Bridge Street 57 Front Street 65 Washington Street 70 Washington Street 79 Bridge Street 81 Washington Street 84 Front Street 85 Adams Street 99 Gold Street 159

PHOTOGRAPHS OF COMPARABLE APARTMENT RENTALS 1 Main Street 100 Jay Street 160

109 Gold Street 204 Front Street 161

206 Front Street 220 Water Street 162

25 Washington Street 30 Main Street 163

31 Washington Street 37 Bridge Street 164

50 Bridge Street 57 Front Street 165

65 Washington Street 70 Washington Street 166

79 Bridge Street 81 Washington Street 167

84 Front Street 85 Adams Street 168

99 Gold Street 169

NEW YORK CITY OUTER BOROUGHS OFFICE MARKET OVERVIEW According to CoStar Group, Inc., the New York Outer Boroughs Office market ended the fourth quarter 20 with a vacancy rate of 6.5%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 413,749 square feet in the fourth quarter. Vacant sublease space decreased in the quarter, ending the quarter at 344,634 square feet. Rental rates ended the fourth quarter at $27.84, a decrease over the previous quarter. A total of one building delivered to the market in the quarter totaling 3,556 square feet, with 421,735 square feet still under construction at the end of the quarter. The following information is excerpted from the 4th Quarter 20 CoStar Market Report. Absorption Net absorption for the overall New York Outer Boroughs office market was positive 413,749 square feet in the fourth quarter 20. That compares to positive 204,709 square feet in the third quarter 20, negative (17,344) square feet in the second quarter 20, and positive 371,604 square feet in the first quarter 20. Some of the notable move outs occurring in 20 include: JetBlue Airways Corporation moving out of (194,934) square feet at Forest Hills Tower; Visiting Nurse Regional Health Care System moving out of (35,145) square feet at 15 Metrotech Ctr., and Cooperative Home Care Associates moving out of (15,000) square feet at 349 E 149th St. Some of the notable move in s occurring in 20 include: New York City Human Resources Administration moving into 400,000 square feet at 470 Vanderbilt Ave; Federal Emergency Management Agency moving into 239,295 square feet at Forest Hills Tower; and General Services Administration (GSA) moving into 0,000 square feet at two Metrotech Ctr. 170

The Class-A office market recorded net absorption of positive 269,096 square feet in the fourth quarter 20, compared to positive 34,996 square feet in the third quarter 20, positive 145,680 in the second quarter 20, and positive 255,332 in the first quarter 20. The Class-B office market recorded net absorption of positive 164,856 square feet in the fourth quarter 20, compared to positive 251,141 square feet in the third quarter 20, positive 27,970 in the second quarter 20, and positive 135,345 in the first quarter 20. The Class-C office market recorded net absorption of negative (20,203) square feet in the fourth quarter 20 compared to negative (81,428) square feet in the third quarter 20, negative (190,994) in the second quarter 20, and negative (19,073) in the first quarter 20. Vacancy The office vacancy rate in the New York Outer Boroughs market area decreased to 6.5% at the end of the fourth quarter 20. The vacancy rate was 7.0% at the end of the third quarter 20, 7.1% at the end of the second quarter 20, and 7.1% at the end of the first quarter 20. Class-A projects reported a vacancy rate of 6.0% at the end of the fourth quarter 20, 7.5% at the end of the third quarter 20, 7.3% at the end of the second quarter 20, and 8.1% at the end of the first quarter 20. Class-B projects reported a vacancy rate of 5.8% at the end of the fourth quarter 20, 6.2% at the end of the third quarter 20, 6.7% at the end of the second quarter 20, and 6.8% at the end of the first quarter 20. Class-C projects reported a vacancy rate of 7.8% at the end of the fourth quarter 20, 7.7% at the end of third quarter 20, 7.4% at the end of the second quarter 20, and 6.8% at the end of the first quarter 20. 171

Notable Lease Signings Some of the notable lease signings occurring in 20 included: the239,295square-foot lease signed by Federal Emergency Management Agency at Forest Hills Tower in the Queens market; the 187,115-square-foot deal signed by New York City Human Resources Administration at 210 Livingston St in the Brooklyn market; and the 75,060-square-foot lease signed by Mt Sinai Medical Center at One Pierrepont Plaza in the Brooklyn market. Sublease Vacancy The amount of vacant sublease space in the New York Outer Boroughs market decreased to 344,634 square feet by the end of the fourth quarter 20, from 485,481 square feet at the end of the third quarter 20. There was 483,206 square feet vacant at the end of the second quarter 20 and 559,952 square feet at the end of the first quarter 20. New York Outer Boroughs Class-A projects reported vacant sublease space of 304,195 square feet at the end of fourth quarter 20, down from the 453,992 square feet reported at the end of the third quarter 20. There were 453,992 square feet of sublease space vacant at the end of the second quarter 20, and 530,738 square feet at the end of the first quarter 20. Class-B projects reported vacant sublease space of 35,464 square feet at the end of the fourth quarter 20, up from the 26,514 square feet reported at the end of the third quarter 20. At the end of the second quarter 20 there were 26,514 square feet, and at the end of the first quarter 20 there were 26,514 square feet vacant. Class-C projects reported no vacant sublease space from the third quarter 20 to the fourth quarter 20. Sublease vacancy went from 4,975 square feet to 4,975 square feet during that time. There was 2,700 square feet at the end of the second quarter 20, and 2,700 square feet at the end of the first quarter 20. 172

Rental Rates The average quoted asking rental rate for available office space, all classes, was $27.84 per square foot per year at the end of the fourth quarter 20 in the New York Outer Boroughs market area. This represented a 0.1% decrease in quoted rental rates from the end of the third quarter 20, when rents were reported at $27.86 per square foot. The average quoted rate within the Class-A sector was $32.16 at the end of the fourth quarter 20, while Class-B rates stood at $28.77, and Class-C rates at $23.88. At the end of the third quarter 20, Class-A rates were $33.90 per square foot, Class-B rates were $28.78, and Class-C rates were $24.34. The following is a summary of the New York City Outer Boroughs office market and the Brooklyn office market statistics. NEW YORK CITY OUTER BOROUGHS OFFICE MARKET STATISTICS (2003 4th QUARTER 20) 173

OFFICE MARKET STATISTICS BROOKLYN SUBMARKET (1st QUARTER 2009 4th QUARTER 20) Deliveries and Construction During the fourth quarter 20, one building totaling 3,556 square feet were completed in the New York Outer Boroughs market area. This compares to five buildings totaling 4,576 square feet that were completed in the third quarter 20, nothing completed in the second quarter 20, and 262,100 square feet in five buildings completed in the first quarter 20. There were 421,735 square feet of office space under construction at the end of the fourth quarter 20. Some of the notable 20 deliveries include: 745 64th St, a 137,800-square-foot facility that delivered in first quarter 20 and is now 85% occupied, and 423 E 138th St, a 78,400-square foot building that delivered in first quarter 20 and is now 62% occupied. The largest projects underway at the end of fourth quarter 20 were Metro Center Atrium, a 261,645-square-foot building with 0% of its space pre-leased, and 325 Avenue Y, a 44,000-square-foot facility that is 27% pre-leased. 174

Inventory Total office inventory in the New York Outer Boroughs market area amounted to 86,280,610 square feet in 4,144 buildings as of the end of the fourth quarter 20. The Class-A office sector consisted of 17,680,151 square feet in 54 projects. There were 1,5 Class-B buildings totaling 41,000,856 square feet, and the Class-C sector consisted of 27,599,603 square feet in 2,578 buildings. Within the Office market there were 107 owner-occupied buildings accounting for 2,001,937 square feet of office space. Sales Activity Tallying office building sales of 15,000 square feet or larger, New York Outer Boroughs office sales figures rose during the third quarter 20 in terms of dollar volume compared to the second quarter of 20. In the third quarter, six office transactions closed with a total volume of $502,870,000. The six buildings totaled 1,601,326 square feet and the average price per square foot equated to $314.03 per square foot. That compares to four transactions totaling $97,558,000 in the second quarter 20. The total square footage in the second quarter was 722,656 square feet for an average price per square foot of $135.00. Total office building sales activity in 20 was up compared to 2011. In the first nine months of 20, the market saw 16 office sales transactions with a total volume of $627,4,175. The price per square foot averaged $231.51. In the same first nine months of 2011, the market posted nine transactions with a total volume of $487,340,000. The price per square foot averaged $542.71. Cap rates have been higher in 20, averaging 6.61% compared to the same period in 2011 when they averaged 5.90%. One of the largest transactions that has occurred within the last four quarters in the New York Outer Boroughs market is the sale of NE Court Square I in Long Island City. This 1,485,000-square-foot office building sold for $481,000,000, or $323.91 per square foot. The property sold on 7/18/20, at a 7.25% cap rate. 175

ANALYSIS OF THE LOCAL OFFICE MARKET In order to estimate the appropriate market rental rate for the subject property as if renovated to include office units on the upper floors of the subject buildings, an analytic report was compiled using information provided by CoStar Group, Inc. A historic CoStar Vacancy Report was created for the subject submarket which includes all office buildings within a 0.50-mile radius from the subject property located within Brooklyn. The historical CoStar Vacancy Report for the immediate subject office submarket indicates a total of 149 properties, containing a total office rentable area of 7,027,690± square feet, with a current total vacancy of approximately 2.1% with an average rental rate of $33.67 per square foot per annum. The following is a summary of the immediate submarket Aggregate Historical Vacancy and Aggregate Absorption reports from the 3rd Quarter 2010 to the 1st Quarter 2013, including the current period. 176

Aggregate Historical Vacancy Report 0.50-Mile Radius from Subject Aggregate Absorption Report 0.50-Mile Radius from Subject 177

Snapshot of the Subject Submarket 0.50-Mile Radius from Subject Vacancy Rate Chart 0.50-Mile Radius from Subject 178

The local CoStar analytic market report indicates that typical office rental rates in the subject market range between $28.00 and $58.99 per square foot, with a mean of $33.67 per square foot. However, this range is for the area within 0.50 miles from the subject property. In order to have a better understanding of the subject s immediate area, we have researched the comparable office lease transactions within office buildings that are blocks from the subject property and consist of renovated former industrial buildings that have been converted to office buildings. The following is our independent survey of the immediate local market. Comparable Office Rents Rent No. 1 2 3 4 5 6 7 8 9 10 11 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Location 10 Jay Street 10 Jay Street 10 Jay Street 10 Jay Street 10 Jay Street 10 Jay Street 10 Jay Street 10 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street 20 Jay Street Lease Date Move In Date Leased Area (Sq. Ft. ±) Annual Rent Gross Rent/ Sq. Ft. 6/24/11 4/28/11 4/28/11 4/21/11 3/28/11 3/28/11 3/28/11 3/3/11 1/29/13 8/27/ 7/16/ 7/2/ 6/20/ 6/1/ 5/3/ 4/11/ 3/30/ 3/2/ 3/2/ 3/2/ 2/7/ 2/7/ 2/1/ 1/19/ 1/19/ 1/15/ 1/6/ 1/2/ 9/23/11 4/28/11 4/28/11 6/1/11 4/27/11 3/28/11 4/27/11 3/3/11 2/28/13 9/26/ 8/15/ 8/1/ 8/1/ 7/1/ 6/15/ 5/11/ 5/1/ 4/1/ 3/15/ 3/2/ 3/8/ 2/7/ 3/2/ 2/18/ 2/18/ 2/15/ 2/5/ 2/1/ 1,300 1,000 850 900 4,000 900 1,300 900 1,606 3,089 1,136 1,393 1,956 1,486 3,152 1,958 1,641 1,958 583 567 1,109 572 888 2,257 1,486 1,641 2,460 2,459 $21,593 $24,000 $21,599 $29,997 $42,000 $14,400 $25,194 $14,400 $43,201 $61,780 $31,206 $35,995 $51,893 $41,994 $76,594 $48,186 $43,208 $48,852 $ 8,762 $ 9,021 $14,395 $ 8,757 $13,586 $54,010 $37,195 $42,010 $58,253 $55,598 $16.61 $24.00 $25.41 $33.33 $10.50 $16.00 $19.38 $16.00 $26.90 $20.00 $27.47 $25.84 $26.53 $28.26 $24.30 $24.61 $26.33 $24.95 $15.03 $15.91 $.98 $15.31 $15.30 $23.93 $25.03 $25.60 $23.68 $22.61 179

Comparable Office Rents (continued) Rent No. 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 * Location 20 Jay Street 20 Jay Street 20 Jay Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 45 Main Street 55 Washington Street 55 Washington Street 55 Washington Street 55 Washington Street 55 Washington Street 55 Washington Street 55 Washington Street 55 Washington Street 55 Washington Street 55 Washington Street 55 Washington Street 55 Washington Street Lease Date Move In Date /9/11 /9/11 /9/11 1/29/13 /4/ 8/27/ 8/27/ 6/20/ 5/31/ 5/31/ 5/31/ 5/31/ 5/31/ 5/11/ 4/11/ 4/1/ 3/16/ 2/1/ 1/31/ 1/19/ 1/2/ 2/27/13 10/16/ 6/20/ 6/20/ 5/31/ 4/11/ 3/30/ 3/30/ 2/7/ 1/19/ /15/11 /1/11 1/8/ 1/8/ 1/8/ 1/29/13 1/3/13 10/1/ 9/26/ 8/1/ 5/31/ 6/30/ 6/30/ 6/30/ 6/30/ 4/11/ 5/11/ 5/1/ 4/15/ 3/1/ 2/18/ 2/1/ 3/1/13 11/15/ 7/15/ 7/1/ 5/31/ 5/11/ 5/1/ 4/1/ 2/7/ 2/18/ 2/1/ 1/15/ Leased Area (Sq. Ft. ±) Annual Rent Gross Rent/ Sq. Ft. 3,141 1,486 2,500 872 1,429 2,536 2,345 3,430 505 2,382 1,615 2,600 4,749 1,344 1,615 557 1,410 7,692 2,244 4,951 1,400 910 1,249 180 421 444 236 1,818 857 866 1,071 1,033 1,526 $ 77,991 $ 37,195 $ 60,000 $ 51,439 $ 52,201 $ 69,588 $ 65,707 $114,013 $ 18,902 $ 69,197 $ 45,075 $ 77,532 $132,2 $ 43,855 $ 45,721 $ 20,046 $ 40,495 $214,299 $ 63,595 $137,984 $ 42,000 $ 38,784 $ 40,792 $ 3,001 $ 6,361 $ 6,598 $ 6,214 $ 49,195 $ 24,356 $ 24,092 $ 31,198 $ 25,949 $ 43,247 $24.83 $25.03 $24.00 $58.99 $36.53 $27.44 $28.02 $33.24 $37.43 $29.05 $27.91 $29.82 $27.84 $32.63 $28.31 $35.99 $28.72 $27.86 $28.34 $27.87 $30.00 $42.62 $32.66 $16.67 $15.11 $14.86 $26.33 $27.06 $28.42 $27.82 $29.13 $25. $28.34 180 7,692 1,737 Min: Max: Mean: Median: $10.50 $58.99 $25.83 $26.33 The office leases at 10 Jay Street were confirmed with a leasing agent at Safdi Plaza Realty Inc. (718-643-6100). Carly Yosef is the leasing agent for this property. ** The office leases at 20 Jay Street, 45 Main Street and 55 Washington Street were confirmed with a leasing agent at Two Trees Management Company (718-222-2500), who is the managing company for all three of these comparable buildings. 180

As indicated in the above chart, there are four renovated office buildings in the immediate area of the subject property that are most similar to the proposed renovation of the subject property. The comparable office leases contain unit sizes between 180± and 7,692± square feet, and rented for $10.50 to $58.99 per square foot. OFFICE RENTAL ADJUSTMENT PROCESS Prior to estimating the market rental value of the subject renovated office space, the differences between the comparables as they relate to the subject property were considered. On this basis, qualitative adjustments were applied to each of the rents per square foot to reflect those differences and refine the indicated range. An upward adjustment indicates that the comparable is inferior to the subject property, while a downward adjustment indicates the comparable to be superior. Market Conditions (Time) The first adjustment considered was for market conditions (time). Available market data indicates that market conditions throughout the subject market have remained relatively stable from 2011 to 2013. Therefore, the comparable rentals did not warrant any adjustments. Location The subject property is located in the DUMBO section of Brooklyn, adjacent to the eastern end of the Brooklyn Bridge Park. The subject is overshadowed by the presence of the Manhattan Bridge, as it is partially located beneath this infrastructure. The projected subject development will have views of the East River and the Manhattan skyline; however, it is likely that many of the subject units will contain an undesirable direct view of the Manhattan Bridge structure, limiting the unit s view of other local sites. Furthermore, the traffic flow across the bridge may generate significant noise pollution. Based on these specific subject property characteristics, we have concluded that the subject property has an undesirable locale in comparison to the comparable rentals and downward adjustments to the comparable rentals were considered. 181

Size Typically, smaller units lease for more on a per-square-foot basis than their larger counterparts. This assumes a quantity discount and the diminishing number of users that require larger spaces. A proposed office development of the subject property will be divided into typical unit sizes that can be absorbed by the local market. Since the proposed units will be similar to the comparable units within the local market, a size adjustment is not warranted. Property Characteristics Upon completion of the new construction project, the subject property will be in similar condition to the comparable office buildings, warranting similar rental rates. Therefore, the comparable rentals did not warrant any adjustments for this factor. CONCLUSION OFFICE MARKET RENTS AND TERMS All of the comparable rentals are either new construction or renovated and having architectural details competitive with new construction. The rentals presented are directly competitive with the subject in the Dumbo market. The office rentals have a rental range of $10.50 to $58.99 per square foot. A proposed office development of the subject property would be adjacent to the Brooklyn Bridge Park and some units will have views of the East River and the Manhattan skyline, while others will have undesirable direct views of the Manhattan Bridge structure. The rentals located within the 55 Washington Street comparable are most competitive to the subject in terms of location. The rentals for this building range between $14.86 and $42.62 per square foot. The data for this building indicates clustering at two levels. One is around $14.86 to $16.67 per square foot and the other is at $25. to $29.13 per square foot. The subject s proximity to the Manhattan Bridge structure and the noise pollution would be a hindrance to some of the proposed office units facing the bridge and rentals for these units would fall around the low end cluster. Those units that have unobstructed views of the park, river and Manhattan skyline would 182

command rentals at the high end comparable cluster. With these considerations, a blended overall rate for the subject of $22.00 per square foot is deemed competitive. The projected rent is on the basis of the tenants responsible for base rent and all operating expenses. However, as indicated in the highest and best use section of this appraisal report, the required rent for a new construction office building would be $32.34 per square foot, which cannot be generated in the current office market. Therefore, office use is not an economically feasible use of the subject property. 183

COMPARABLE OFFICE RENTALS LOCATION MAP 1 2 3 4 10 Jay Street 20 Jay Street 45 Main Street 55 Washington Street 184

PHOTOGRAPHS OF COMPARABLE OFFICE RENTALS 10 Jay Street 20 Jay Street 185

45 Main Street 55 Washington Street 186

NEW YORK CITY OUTER BOROUGHS RETAIL MARKET OVERVIEW According to CoStar Group, Inc., the New York Outer Boroughs retail market did not experience much change in market conditions in the fourth quarter 20. The vacancy rate went from 4.6% in the previous quarter to 4.6% in the current quarter. Net absorption was positive 14,110 square feet, and vacant sublease space decreased by (1,025) square feet. Quoted rental rates increased from third quarter 20 levels, ending at $33.51 per square foot per year. A total of two retail buildings with 27,705 square feet of retail space were delivered to the market in the quarter, with 817,472 square feet still under construction at the end of the quarter. The following information is excerpted from the 4th Quarter 20 CoStar Market Report. Absorption Retail net absorption was basically flat in New York Outer Boroughs fourth quarter 20, with positive 14,110 square feet absorbed in the quarter. In third quarter 20, net absorption was negative (92,996) square feet, while in second quarter 20, absorption came in at negative (446,243) square feet. In first quarter 20, positive 735,1 square feet was absorbed in the market. Some of the notable move out s occurring in 20 include: El Mundo Department stores moving out of (42,515) square feet at 2510 Valentine Ave; Basha Furniture out of (11,300) square feet at 3961 White Plains Rd; and Foot Locker moving out of (7,713) square feet at 440 Fulton St. Some of the notable move in s occurring in 20 include: Lowes moving into 166,000 square feet at a new facility at 2790 Arthur Kill Rd; Burlington Coat Factory moving into 74,329 square feet at North Retail- Gateway Center; and Marshalls moving into 26,785 square feet at 1623 Avenue Y. 187

Vacancy New York Outer Boroughs s retail vacancy rate changed in the fourth quarter 20, ending the quarter at 4.6%. Over the past four quarters, the market has seen an overall increase in the vacancy rate, with the rate going from 4.1% in the first quarter 20, to 4.5% at the end of the second quarter 20, 4.6% at the end of the third quarter 20, to 4.6% in the current quarter. The amount of vacant sublease space in the New York Outer Boroughs market has trended up over the past four quarters. At the end of the first quarter 20, there were 36,489 square feet of vacant sublease space. Currently, there are 42,674 square feet vacant in the market. Notable Lease Signings Some of the notable lease signings occurring in 20 included: the 239,295square-Some of the notable lease signings occurring in 20 included: the 28,426-squarefoot-lease signed by Michaels at 6110 188th St; the 28,417-square-foot-deal signed by T.J. Maxx at Throgs Neck Shopping Center - Target; and the 23,406-square-foot-lease signed by ALDI at 3785 Nostrand Ave. Rental Rates Average quoted asking rental rates in the New York Outer Boroughs retail market are up over previous quarter levels, and up from their levels four quarters ago. Quoted rents ended the fourth quarter 20 at $33.51 per square foot per year. That compares to $33.09 per square foot in the third quarter 20, and $32.58 per square foot at the end of the first quarter 20. This represents a 1.3% increase in rental rates in the current quarter, and a 2.78% increase from four quarters ago. The following is a summary of the New York City Outer Boroughs retail market and the Brooklyn retail market statistics. 188

NEW YORK CITY OUTER BOROUGHS GENERAL RETAIL MARKET STATISTICS (2006 4th QUARTER 20) GENERAL RETAIL MARKET STATISTICS BROOKLYN SUBMARKET (1st QUARTER 2009 4th QUARTER 20) Inventory and Construction During the fourth quarter 20, two buildings totaling 27,705 square feet were completed in the New York Outer Boroughs retail market. Over the past four quarters, a total of 473,661 square feet of retail space has been built in New York Outer Boroughs. In addition to the current quarter, five buildings with 52,415 square feet were completed 189

in third quarter 20, seven buildings totaling 196,491 square feet completed in second quarter 20, and 197,050 square feet in four buildings completed in first quarter 20. There were 817,472 square feet of retail space under construction at the end of the fourth quarter 20. Some of the notable 20 deliveries include: Lowe s West Shore Center, a 166,000-square-foot facility that delivered in first quarter 20 and is now 96% occupied, and City Point- Phase I, a 130,000-square-foot building that delivered in second quarter 20 and is now 30% occupied. Total retail inventory in the New York Outer Boroughs market area amounted to 168,058,3 square feet in 22,343 buildings and 326 centers as of the end of the fourth quarter 20. Sales Activity Tallying retail building sales of 15,000 square feet or larger, New York Outer Boroughs retail sales figures fell during the third quarter 20 in terms of dollar volume compared to the second quarter of 20. In the third quarter, 11 retail transactions closed with a total volume of $131,405,000. The 11 buildings totaled 385,767 square feet and the average price per square foot equated to $340.63 per square foot. That compares to transactions totaling $139,190,093 in the second quarter 20. The total square footage in the second quarter was 405,409 square feet for an average price per square foot of $343.33. Total retail center sales activity in 20 was up compared to 2011. In the first nine months of 20, the market saw 36 retail sales transactions with a total volume of $322,659,093. The price per square foot averaged $285.50. In the same first nine months of 2011, the market posted 18 transactions with a total volume of $163,036,876. The price per square foot averaged $48.75. Cap rates have been higher in 20, averaging 7.97% compared to the same period in 2011 when they averaged 5.69%. One of the largest transactions that has 190

occurred within the last four quarters in the New York Outer Boroughs market is the sale of 247 Bedford Ave in Brooklyn. This 110,000 square foot retail center sold for $66,000,000, or $600 per square foot. The property sold on 11/28/20, at a 5.00% cap rate. 191

ANALYSIS OF THE LOCAL RETAIL MARKET In order to estimate the appropriate market rental rate for the subject property as if renovated to include ground floor retail, an analytic report was compiled using information provided by CoStar Group, Inc. A historic CoStar Vacancy Report was created for the subject submarket which includes all retail properties within a 0.50-mile radius from the subject property located within Brooklyn. The historical CoStar Vacancy Report for the immediate subject retail submarket indicates a total of 67 properties, containing a total retail rentable area of 431,534± square feet. The CoStar data is inconclusive for the local retail market, since many properties are leased through local brokers who do not list their properties online. The following is a summary of the immediate submarket Aggregate Historical Vacancy and Aggregate Absorption reports from the 3rd Quarter 2010 to the 1st Quarter 2013, including the current period. 192

Aggregate Historical Vacancy Report 0.50-Mile Radius from Subject Aggregate Absorption Report 0.50-Mile Radius from Subject 193

Snapshot of the Subject Submarket 0.50-Mile Radius from Subject Vacancy Rate Chart 0.50-Mile Radius from Subject 194

Since the CoStar analytic report is inconclusive, we have researched the local subject retail market. We have researched the comparable ground floor retail lease transactions that are blocks from the subject property and consist of renovated or new construction buildings. The following is our independent survey of the immediate local market. Comparable Retail Rents Rent No. Location/Tenant Lease Date Store Opening Date Lease Term (Years) Leased Area (Sq. Ft. ±) Annual Rent SemiGross Rent/ Sq. Ft. Confirmed With 1 117 Front Street Pink Berry 4th Qtr. 20 3/27/13 10 year 1,003 $ 50,150 $50.00 Christopher Havens Apartments & Lofts 718-907-2500 2 33 Main Street One Girl Cookies 3rd Qtr. 20 4th Qtr. 20 10 year 1,434 $ 60,228 $42.00 Christopher Havens Apartments & Lofts 718-907-2500 3 1 Main Street Governor Restaurant (Closed due to Sandy) 2nd Qtr. 20 7/5/ 10 year 1,7 $ 75,328 $44.00 Christopher Havens Apartments & Lofts 718-907-2500 4 54 Jay Street Olympia Wine Bar 4th Qtr. 20 2/2013 10 year 1,000 $ 62,000 $62.00 Christopher Havens Apartments & Lofts 718-907-2500 5 81 Washington Street Restaurant 4th Qtr. 20 10 year 2,600 $130,000 $50.00 Christopher Havens Apartments & Lofts 718-907-2500 6 257-277 Gold Street Bike Brooklyn /15/ 4/1/13 10 year 6,500 $137,280 $21. CoStar Group, Inc. 7 70 Washington Street Brooklyn Industries 11/1/10 3/1/11 10 year 2,200 $ 81,906 $37.23 Caroline Pardo Two Trees Mgmt. 718-222-2500 8 66 Water Street Jacques Torres Chocolate 8/1/10 10 year 4,000 $0,000 $30.00 CoStar Group, Inc. 1,000 6,500 2,556 Min: Max: Mean: Median $21. $62.00 $42.04 $43.00 195

The most recent ground floor retail rentals in the subject s immediate market are listed in the above chart. The rentals are located within the most similar renovated or new construction buildings. The comparable retail leases contain unit sizes between 1,000± and 6,500± square feet, and rented for $21. to $62.00 per square foot, with a mean of $42.04 per square foot and a median of $43.00 per square foot. Conversations with local brokers indicated that the immediate DUMBO ground floor market contains 300,037± square feet of rentable area of which 21,630± square feet (7.2%) is currently vacant. Of the vacant rentable area there are seven vacancies of larger unit sizes between 3,300± and 7,000± square feet. The local brokers indicated that units smaller than 3,000± square feet are in high demand in the local market. In addition spaces available for food services and restaurant related uses are in greater demand than typical consumer goods retail uses. RETAIL RENTAL ADJUSTMENT PROCESS Prior to estimating the market rental value of the subject renovated retail space, the differences between the comparables as they relate to the subject property were considered. On this basis, quantative and qualitative adjustments were applied to each of the rents per square foot to reflect those differences and refine the indicated range. Market Conditions (Time) The first adjustment considered was for market conditions (time). Available market data indicates that market conditions throughout the subject market have remained relatively stable from 20 to 2013. Therefore, comparable Rentals #1 to #6 did not warrant any adjustments. Rentals #7 and #8 occurred under inferior market conditions than currently exist, warranting a 10% upward adjustment based on analysis of historical trends and conversations with local brokers. Therefore as adjusted for time, the results are shown on the following chart. 196

ADJUSTMENTS TO THE COMPARABLE RETAIL RENTALS Rental No. Lease Date Leased Area (Sq. Ft. ±) Semi-Gross Rent/ Sq. Ft. 1 4th Qtr. 20 1,003 $50.00 0% $50.00 2 3rd Qtr. 20 1,434 $42.00 0% $42.00 3 2nd Qtr. 20 1,7 $44.00 0% $44.00 4 4th Qtr. 20 1,000 $62.00 0% $62.00 5 4th Qtr. 20 2,600 $50.00 0% $50.00 6 /15/ 6,500 $21. 0% $21. 7 11/1/10 2,200 $37.23 10% $40.95 8 8/1/10 4,000 $30.00 10% $33.00 x Market Conditions Adj. = Market Adj. Rent/Sq. Ft. Location The subject property is located in the DUMBO section of Brooklyn, adjacent to the eastern end of the Brooklyn Bridge Park. The eastern edge of the Brooklyn Bridge Park generates less foot traffic as compared to the central and western areas of the Park. The subject is overshadowed by the presence of the Manhattan Bridge, as it is partially located beneath this infrastructure. The traffic flow across the bridge may generate significant noise pollution. Based on these specific subject property characteristics, we have concluded that the subject property has an undesirable locale in comparison to the comparable rentals and downward adjustments to the comparable rentals were considered. Size Typically, smaller units lease for more on a per-square-foot basis than their larger counterparts. This assumes a quantity discount and the diminishing number of users that require larger spaces. A proposed retail development of the subject property will be divided into typical unit sizes that can be absorbed by the local market. Since the proposed units will be similar to the comparable units within the local market, a size adjustment is not warranted. 197

Property Characteristics Upon completion of the new construction project, the subject property will be in similar condition to the comparable retail buildings, warranting similar rental rates. Therefore, the comparable rentals did not warrant any adjustments for this factor. CONCLUSION RETAIL MARKET RENTS AND TERMS As previously discussed, the local retail market has a high demand and a limited supply of retail space, particularly for smaller sized units (under 3,000 square feet). Conversations with local brokers indicated that the immediate DUMBO ground floor market contains 300,037± square feet of rentable area of which 21,630± square feet (7.2%) is currently vacant. Of the vacant rentable area there are seven vacancies of larger unit sizes between 3,300± and 7,000± square feet. The local brokers indicated that units smaller than 3,000± square feet are in high demand in the local market. In addition spaces available for food services and restaurant related uses are in greater demand than typical consumer goods retail uses. Any proposed retail redevelopment of the subject property could be divided into smaller retail units containing average unit sizes of less than 3,000± square feet. The adjusted comparable rents were as follows: Comparables Adjusted Rent/Sq. Ft. 1 2 3 4 5 6 7 8 $50.00 $42.00 $44.00 $62.00 $50.00 $21. $40.95 $33.00 The subject s location adjacent to the eastern edge of the Brooklyn Bridge Park, the overshadowing presence of the Manhattan Bridge, and the noise pollution which the traffic flow across the bridge reduce the desirability of the subject location. Therefore, the subject s 198

location would not be able to generate rental rates at the upper end of the comparable range, but would generate rental rates at the lower end of the range, which are most comparable to the least desirable comparable locations. Comparable rentals #4 and #6 are the outliers in the data set and are situated outside the subject s immediate area. The remaining rentals exhibit a clustering around the low $40.00s per square foot pricing. Considering the influences of the bridge and the observed foot traffic, we have rounded the estimate for the subject property at $40.00 per square foot. The subject Washington Street Roadbed and Water Meter Testing Facility do appear to be somewhat affected by their proximity to the Manhattan Bridge and the concluded market rent considers their location. Under the larger parcel determination, it is assumed that all improvements will be constructed on the Washington Street Roadbed and the Water Meter Testing Facility, with parking for any new construction development available on the DOT Paint Shed site. Therefore, the larger parcel determination could also generate the market rental rate of $40.00 per square foot. However the DOT Paint Shed site as available as a separate zoning lot would require a rental rate below the market derived rental rate for the other two subject sites. There are no comparable retail rentals located underneath a bridge or overpass. A rental rate of $30.00 per square foot is selected for this subject site, which takes into consideration the noise pollution and overshadowing presence of the Manhattan Bridge. The selected rental rate is 25% less than the rental rate selected for the Washington Street Roadbed, the Water Meter Testing Facility and the larger parcel determination as a whole. 199

COMPARABLE RETAIL RENTALS LOCATION MAP 1 2 3 4 5 6 7 8 117 Front Street, Pink Berry 33 Main Street, One Girl Cookies 1 Main Street, Governor Restaurant (Closed due to Sandy) 54 Jay Street, Olympia Wine Bar 81 Washington Street, Restaurant 257-277 Gold Street, Bike Brooklyn 70 Washington Street, Brooklyn Industries 66 Water Street, Jacques Torres Chocolate 200