harlem investment opportunity initial overview & analysis june 2012

Investment Opportunity in Harlem, New-York, NY

Initial Overview & Analysis

June 2012

The approach…In order to provide an initial opinion regarding the investment

opportunity in question, I reviewed:

• The invetment opportunity in view of Harlem’s Real Estate

Market trends and recent figures;

• As a general reference - Yields and recent years capital

appreciation of U.S. residential REIT’s, which offer exposure to

similar type of properties.

2Prepared by: Tomi Deutsch (C.P.A., EMBA) [email protected] , June 2012

similar type of properties.

Harlem Real Estate Market

Trends & Figures Trends & Figures

3

Harlem Real Estate Market - Trends

4

http://www.trulia.com/real_estate/Harlem-New_York/5131/market-trends/


5


• The median sales price for homes in Harlem for Mar 12 to May 12 was

$243,000. This represents a decline of 65.8%, or $467,000, compared to the

prior quarter and a decrease of 59.2% compared to the prior year.


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• Sales prices have depreciated 66.6% over the last 5 years in Harlem, New

York. Average listing price for homes on Trulia in Harlem was $784,924 for the

week ending Jun 06, which represents an increase of 2.9%, or $21,948

compared to the prior week and an increase of 2.6%, or $19,976, compared

to the week ending May 16.

• Average price per square foot for homes in Harlem was $271 in the most

recent quarter.

Harlem Real Estate Market - FiguresResidential

7Multifamily Month in Review: Northern Manhattan, April 2012 http://arielpa.com/newsroom/report-MFMIR-Apr-2012-N-Man

Harlem Real Estate Market - TrendResidential

8Northern Manhattan Fundamentals Report - comprehensive overview of the retail, rental and condo market Released February 2012

http://arielpa.com/newsroom/report-ArielPA-NM-Fundamentals-2011

Harlem Real Estate Market - FiguresResidential - 2011



Harlem Real Estate Market - TrendAverage Retail Asking Rents Per Sq. Ft.



Harlem Real Estate Market - FiguresAverage Retail Rents Per Sq. Ft.



Market figures vs. the investment opportunity

Upside potential ~

Status vs. current

market value

INVESTMENT

OPPORTUNITY

Rent stabilization

MARKET

Rent regulated

?$ 16$ 16-17Average Rents

Per Sq. Ft.

Residential

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Upside potential ~

Status vs. current

market value

INVESTMENT

OPPORTUNITY

MARKET

Below market

value

$ 158 (3)

$ 85 – 203 (4)

$ 174 (1)

$ 271 (2)

Average Sell

Price Per Sq. Ft.

(1) Multifamily Month in Review: Northern Manhattan, April 2012 http://arielpa.com/newsroom/report-MFMIR-Apr-2012-N-Man

(2) http://www.trulia.com/real_estate/Harlem-New_York/5131/market-trends/

(3) According to the OFFERING MEMORANDUM/Excel spreadsheet

(4) According to the adjusted calc. (see also annex A)

Market figures vs. the investment opportunity

Upside potential ~

Status vs. current

market value

INVESTMENT

OPPORTUNITY

Average Retail

Rents Per Sq. Ft.

MARKET

Average Retail

Rents Per Sq. Ft.

Location

?$ 53$ 54116th st.

Below market

value

$ 23$ 84125th st.

Retail

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value

According to the gatherd data, it seems as if the upside potential exists only re. the

retail space on 125th st.

As a result, should the rent be adjust to the abovementioned

average market value then the Gross Potential Commercial Rent

would increase by an additional $167,750 p.a. (compared to an

estimated increase presented in the pro forma of $68,132)

U.S. residential REIT’s

Yields & Capital AppreciationYields & Capital Appreciation

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Largest residential REIT’s by Mkt. Cap

Div. - Yields

2.2%

2.8%

14.9%

3.4%

In the past 3 years those REITs gained 68.25 – 182.66 % in capital appreciation

June 15, 2012

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http://finance.yahoo.com/echarts?s=EQR+Interactive#symbol=eqr;range=20090617,20120615;compare=avb+agnc+udr;indicator=volume;charttype=area

;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

Fund Summary

• The investment seeks to provide a high level of income and moderate long-term capital appreciation by tracking the performance

of a benchmark index that measures the performance of publicly traded equity REITs. The fund employs an indexing investment

approach designed to track the performance of the MSCI US REIT Index. The index is composed of stocks of publicly traded equity

real estate investment trusts (known as REITs). It attempts to replicate the index by investing all, or substantially all, of its assets in

the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.

• It pays dividends on a quarterly basis. Beta (3y): 0.95

• .Performance Overview

Vanguard REIT Index ETF (VNQ)

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Year to Date Return (Mkt): 13.77%

3-Year Total Return (Mkt): 32.47%

Yield (ttm)²:²As of Apr 29, 2012

3.27

http://finance.yahoo.com/q?s=VNQ

• In the past 3 years it

gained 93.65% in capital

appreciation (more than

doubled the S&P 500)

http://finance.yahoo.com/echarts?s=VNQ+Interactive#symbol=vnq;range=20090615,20120611;compare=^gspc;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

SummaryInspite the fact that it seems that the investment opportunity in question has an upside potential and that some of the figures indicate that the properties were acquired below market value, further consideration and clarifications are required in light of:

• Various assumptions taken (including aspects concerning the

refinance);

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• The suggested distribution terms and preferences;

• Yields and recent years capital appreciation of U.S. residential REIT’s, which offer exposure to similar type of properties.

harlem investment opportunity initial overview & analysis june 2012

Documents

market price

condo market

market figures

average price

nman2 http

average listing price

recent figures

median sales price