Shorenstein Company LLC Real Estate Case Study

Return Expectations Office Cap Rates versus Interest Rates CBD CapMajor Market CBD CapTen-Year Treasury30-Day LIBOR

Park Avenue Building Base Case ProForma (10 Years)

Park Avenue Building Base Case ProForma Summary (10 Years) Purchase Price$226,900,000 Unleveraged IRR9.3% Leveraged IRR14.0% Loan Terms Loan-to-Value Ratio65% Term10 Years All-in Interest Rate5.75% 10-Year Average Cap Rate7.9% 10-Year Average Cash Flow Yield6.9% 10-Year Leveraged Yield9.1% % of Value from Cash Flow / Residual Value40% / 60% Equity Multiple3.1x

Park Avenue Building ProForma 2: Value-Added Opportunity (10-Years)

Park Avenue Building ProForma 2: Value-Added Opportunity Summary (10-Years) Purchase Price$226,900,000 Unleveraged IRR10.1% Leveraged IRR15.2% Loan Terms Loan-to-Value Ratio65% Term10 Years All-in Interest Rate5.75% 10-Year Average Cap Rate8.5% 10-Year Average Cash Flow Yield7.2% 10-Year Leveraged Yield9.8% % of Value from Cash Flow & Residual Value36% / 64% Equity Multiple3.6x

Lexington Avenue Buildings Base Case ProForma (10-Years)

Lexington Avenue Buildings Base Case ProForma Summary (10Years) Purchase Price$405,000,000 Unleveraged IRR8.7% Leveraged IRR16.0% Loan Terms Loan-to-Value Ratio75% Term10 Years All-in Interest Rate6.25% 10-Year Average Cap Rate7.8% 10-Year Average Cash Flow Yield7.1% 10-Year Leveraged Yield12.6% % of Value from Cash Flow & Residual Value49% / 51% Equity Multiple3.5x

Lexington Avenue Buildings ProForma 2: Aggressive Case (10 Years)

Lexington Avenue Buildings ProForma 2: Aggressive Case Summary (10 Years) Purchase Price$405,000,000 Unleveraged IRR10.6% Leveraged IRR20.5% Loan Terms Loan-to-Value Ratio75% Term10 Years All-in Interest Rate6.25% 10-Year Average Cap Rate8.8% 10-Year Average Cash Flow Yield8.5% 10-Year Leveraged Yield17.1% % of Value from Cash Flow & Residual Value57% / 43% Equity Multiple4.5x

Lexington Avenue Buildings IRR Sensitivity (Base Case) Leveraged IRRPurchase PriceIncrease in Price 10% $260,200, % 12% $243,200,0007.2% 14% $226,900, % $211,300,000(6.9%) 18% $196,700,000(13.3%) 20% $183,000,000(19.4%) Park Avenue Building IRR Sensitivity (Base Case) Leveraged IRRPurchase PriceIncrease in Price 10%$490,200, % 12%$461,100, % 14%$432,800,0006.9% 16%$405,000, %$377,800,000(6.7%) 20%$351,000,000(13.3%)

Positive Leverage Loan-to-Value Ratio and Debt Service Coverage Sensitivity PropertyPriceLTV Interest Rate 10-Year Avg. CF YieldIRR 10-Year Avg. DSCR 65%5.75%6.9%14.0%1.2x Park Avenue $226,900,00075%6.25%6.9%15.2%1.1x 85%7.50%6.9%14.6%0.9x 65%5.75%7.1%14.6%1.1x Lexington Avenue$405,000,00075%6.25%7.1%16.0%1.0x 85%7.50%7.1%15.6%0.9x

125 Park Avenue Closing DateAugust 18, 2004 Price$225,000,000 ($391/sf) LocationSoutheast corner of Park Avenue and 42 nd Street Debt Terms Loan amount: $146,250,000 Loan term: 10 years Loan-to-Value: 65% Loan-to-cost (includes closing costs): 63% Interest rate: 5.75% fixed Amortization: None. Interest only Asset Profile 95% leased with high-quality tenant roster Majority of current leases below market Potential retail redevelopment Close proximity to Grand Central Terminal Process Significant investor demand Pre-empted sales process with accelerated due diligence period and assured closing Acquired property at a price below highest offer

125 Park Avenue Proforma Purchase Price ($PSF) 10-Year Average Leveraged Yield Unleverage d IRR Leveraged IRR Equity Multiple Base Case $225,000,000 ($391) 8.6%9.6%13.4%3.2x Value-Add $225,000,000 ($391) 9.3%10.6%14.9%3.6x

Lexington Avenue Buildings Proforma Purchase Price ($PSF) Total Investment ($PSF) Unleverage d IRR Leverage d IRR Equity Multiple Base Case $405,000,000 ($244) $516,500,000 ($311) 8.7%16.0%3.5x Buyer of Property Using Base Case $480,000,000 ($289) $599,200,000 ($361) 6.8%10.7%2.4x Buyer of Property Using Aggressive Case $480,000,000 ($289) $586,400,000 ($353) 8.6%15.4%3.3x