Project Legacy Fairness Analysis dated November 2011

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Duff & Phelps Disclaimer

•

The following

pages

contain

material

that

was

provided

Duff

Phelps,

LLC

(“Duff

Phelps”)

the

Company

(as

herein

defined)

consider

the Proposed Transaction, as herein defined.

•

The

accompanying

material

was

compiled

confidential

basis

for

the

sole

use

the

Company

and

not

with

view

toward

public

disclosure.

•

The

information

utilized

preparing

this

document

was

obtained

from

the

Company

and

public

sources.

Any

estimates

and

projections

contained

herein involve numerous and significant subjective determinations, which may or may not prove to be correct. No representation or warranty,

expressed

implied,

made

the

accuracy

completeness

such

information

and

nothing

contained

herein

is,

shall

relied

upon

as,

a representation, whether as to the past or the future. Duff & Phelps did not attempt to independently verify such information.

•

Because this material was prepared for use in the context of an oral presentation to the Company, who is familiar with the business and affairs of

Malkin, Duff & Phelps does not take any responsibility for the accuracy or completeness of any of the material if used by persons other than the

Company.

•

These materials are not intended to represent an opinion but rather to serve as discussion materials for the Company to review and as a basis

upon which Duff & Phelps may render opinions.

•

Our analysis did not take into account (i) any potential incremental value attributable to the portfolio of assets taken as a whole after giving effect to

the

Proposed

Transaction;

and

(ii)

the

effects

variations

aggregate

values

attributed

the

portfolio

assets

after

giving

effect

the

Proposed

Transaction on relative values of such portfolio assets.

•

This analysis should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of the Company’s credit worthiness, as

tax advice, or as accounting advice.

•

Duff & Phelps has not made, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter.

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Table of Contents

Introduction and Background

Valuation Analysis of the Properties

Valuation Analysis of Malkin Holdings LLC

Valuation Analysis of Malkin Construction Corp.

Valuation Analysis of Malkin Properties

Appendix

Assumptions, Qualifications and Limiting Conditions

Property Value Allocation Waterfalls

Detailed Exchange Value Summary

–

112-122

West

Street

–

1333 Broadway

–

1350 Broadway

–

1400 Broadway

–

501 Seventh Avenue

–

1359 Broadway

–

One Grand Central Place

–

Empire State Building

–

250 West 57th Street

–

10 Bank Street

–

500 Mamaroneck Ave

–

383 Main Ave

–

100, 200 & 300 First Stamford Place

–

10 Union Square

–

Metro Center

–

103-107 Main Street

–

66-99 Main Street

–

77 West 55th Street

–

170 East 8th Street

–

B.B.S.F., L.L.C.

Duff & Phelps -

CONFIDENTIAL

Introduction and Background

The Engagement

•

Malkin Holdings LLC (the “Company”) has engaged Duff & Phelps, LLC (“Duff & Phelps”) to serve as independent financial advisor to the Company

and on its behalf to each of the Partnerships (as herein defined) and to provide an opinion (the “Opinion”) to the Company, its officers, managers

and members and each of the Partnerships as of the date hereof as to the fairness, from a financial point of view, to each of the Partnerships and

the holders of membership interests or partnership interests, holders of participation and subparticipation interests in the membership interests held

by the agents, and partners, members and shareholders of entities which directly or indirectly hold interests in the Partnerships (the “Investors”), of

the allocation of Consideration (as herein defined) (i) among the Partnerships, Malkin Properties, L.L.C., Malkin Properties of New York, L.L.C.,

Malkin Properties of Connecticut, Inc. and Malkin Construction Corp. (collectively, the “Management Companies”) and the Company, and (ii) to the

Investors in the contemplated transaction described below (the “Proposed Transaction”) (without giving effect to any impact of the Proposed

Transaction on any particular Investor other than in its capacity as an Investor in the Partnerships).

The Proposed Transaction

•

The Proposed Transaction involves the consolidation of certain office and retail properties in Manhattan and the New York City metropolitan area

owned

the

Partnerships

(the

“Properties”)

into

the

operating

partnership

whose

general

partner

Empire

Realty

Trust,

Inc.,

(the

“REIT”)

conditioned,

among

other

things,

upon

the

closing

the

initial

public

offering

(the

“IPO”)

the

REIT’s

Class

common

stock.

After

the

series

transactions in which the assets of the Partnerships will be consolidated into the REIT, the REIT will own, through direct and indirect subsidiaries,

the assets of the Partnerships, and the assets of the Company and the Management Companies, that provide asset management and property

management, leasing services, and construction services to the Partnerships and certain other parties.

•

The REIT will issue to each of the participants in certain of the Partnerships (other than certain affiliates of the Company) which are public reporting

entities (the “Public LLCs”)

either, at each participant’s option, (i) a specified number of shares of common stock that the REIT expects to be listed

on the New York Stock Exchange or (ii) cash, to the extent available, subject to a cap, as described herein (the “Public LLC Consideration”). The

REIT

will

issue

each

the

participants

certain

the

Partnerships

which

are

private

entities,

affiliates

the

Company

which

are

participants

in the Public LLCs and owners of the Company (the “Private Entities”, and together with the Public LLCs, the “Partnerships”) and the equity holders

the

Management

Companies,

specified

number

limited

partnership

interests

the

operating

partnership

the

REIT

or,

each

participant’s

option, cash, to the extent available, subject to a cap, or shares of Class A or Class B common stock in the REIT (the “Private Entity Consideration”

and together with the Public LLC Consideration, the “Consideration”).

•

We understand that the Company does not know which of the Private Entities or the Public LLCs will approve the Proposed Transaction, and

assuming the receipt of all necessary approvals, whether the REIT will acquire all of the properties from the Private Entities and the Public LLCs, or

the exact composition of the REIT’s properties.

•

Duff & Phelps has prepared the valuation of the Properties, the Partnerships, the Company, and the Management Companies as of July 1, 2011

(the “Valuation Date”) and assumes (i) no responsibility for changes in market conditions and (ii) no obligation to revise its analysis to reflect any

such changes which occurred subsequent to July 1, 2011.

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Introduction and Background

Scope of Analysis

•

In connection with our analysis, Duff & Phelps has made such reviews, analyses and inquiries as we have deemed necessary and appropriate

under the circumstances.

•

Reviewed the following documents:

–

A draft of the consent solicitation in substantially the form intended to be sent to participants in the private entities;

–

Draft

the

private

consent

solicitation

(the

“Private

Solicitation”

and

together

with

the

S-4,

the

“Solicitations”)

substantially

the

form

intended

to be provided to the participants in the Private Entities;

–

Unaudited segment and pro forma financial information for the Partnerships, the Company, and the Management Companies for the years

ended December 31, 2010 and 2011 and for the six months ended June 30, 2011, in each case, provided to us by management of the

Company;

–

Historical operating and financial information including property-level financial data relating to the business, financial condition and results of

operations

the

Partnerships,

the

Properties,

the

Company,

and

the

Management

Companies,

each

case,

provided

management

the Company;

–

Other internal documents relating to the history, current operations, current budgets, and probable future outlook of the Partnerships, the

Properties, the Company, and the Management Companies, including

financial projections of the Company, and the Management Companies,

in each case provided to us by management of the Company, and financial projections of the Partnerships and the Properties, which financial

projections were (i) presented by Duff & Phelps based on the Information (as herein defined) provided by management of the Company and

analysis performed by Duff & Phelps, and (ii) reviewed and approved by management of the Company;

–

A letter dated November [ ], 2011 from the management of the Company which made certain representations as to historical financial

statements,

financial

projections

and

the

underlying

assumptions

for

the

Properties,

the

Partnerships,

the

Company,

and

the

Management

Companies, the allocation of fee simple value among certain entities which are ground lessees or operating lessees, and the equity interest

allocation worksheets for the Partnerships;

–

Other documents and information related to the Properties and prepared by management of the Company, including: floor plans, re-

measurement

projections,

stacking

plans,

present

market

rental

package

including

market

rents

and

concessions,

rent

rolls,

lease

abstracts,

property tax cards, capital expenditure projections, stabilization estimates for the Properties, and Argus files and operating expense estimates

(collectively, the “Information”);

–

Organizational and related documents of the Partnerships; and

–

The

schedule

setting

forth

the

allocation

Consideration

among

participants

within

each

Partnership

(the

“Allocation

Schedule”)

provided

by management of the Company.

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CONFIDENTIAL

Introduction and Background

Scope of Analysis (Continued)

•

Discussed the information referred to on the prior page and the background, other elements of the Proposed Transaction, conditions in property

markets, conditions in the market for sales or acquisitions of properties similar to the Properties, current and projected operations and

performance, financial condition, and future prospects of the Properties, the Company, and the Management Companies with the management of

the Company, and professionals from Pearson Partners, Inc. and CBRE Group, Inc., both as representatives of a significant investor in certain

partnerships;

•

Reviewed the historical trading price and trading volume of the publicly traded securities of certain other companies that Duff & Phelps deemed

relevant;

•

With respect to the Company and the Management Companies, performed certain valuation and comparative analyses using generally accepted

valuation

and

analytical

techniques

including

discounted

cash

flow

analysis,

and

analysis

selected

public

companies

that

Duff

Phelps

deemed relevant;

•

With respect to the Properties and the Partnerships, conducted independent valuations using generally accepted valuation and analytical

techniques that Duff & Phelps deemed relevant;

•

Performed site visits for each of the Properties, with the exception of the properties located in Westport, CT at 66-69 Main Street and 103-107

Main Street; and

•

Conducted such other analyses and considered such other factors as Duff & Phelps deemed appropriate.

Duff & Phelps -

CONFIDENTIAL

Introduction and Background

Overall Portfolio Summary

Notes:

[1] Net rentable square feet based on the square footage input into the Argus models provided by client.

[2] Occupancy percentage for all properties is based on rent roll occupancy as of the Valuation Date.

[3] Year 1 Net Operating Income ("NOI") is the period beginning July 1, 2011 and ending June 30, 2012.

[4] Net operating income includes third party ground rent payments as operating expense.

[5] Net operating income is for the property as a whole and does not reflect intra-party or third party ground lease payments.

[6] NOI is inclusive of 1010 Third Avenue. Both properties are part of "East West Manhattan Retail".

[7] 1010 Third Avenue and 77 West 55th Street have been separated in the summary. Collectively these properties are "East West Manhattan Retail".

[8] Size listed is gross buildable area.

Property Summary

Property

Year Built

Net Rentable

Square Feet

Occupancy

Year 1 NOI

112-122 West 34th Street

1955

769,392

87.7%

$13,106,877

1333 Broadway

1915

356,513

78.8%

6,994,702

1350 Broadway

1929

385,489

75.6%

10,158,338

1400 Broadway

1938

867,480

81.1%

16,060,959

501 Seventh Avenue

1923

450,751

86.9%

8,490,025

1359 Broadway

1924

460,567

94.7%

11,904,381

One Grand Central Place

1930

1,297,450

81.5%

29,674,485

Empire State Building

1931

2,932,002

69.2%

76,873,782

250 West 57th Street

1921

535,648

81.8%

12,342,640

10 Bank Street

1989

221,179

84.5%

3,087,738

500 Mamaroneck Ave

1987

304,980

93.8%

3,882,039

383 Main Ave

1985

276,310

84.8%

3,285,049

100, 200 & 300 First Stamford Place

1986

793,083

89.7%

18,362,068

10 Union Square

1987

57,977

100.0%

2,732,789

Metro Center

1987

290,978

100.0%

9,839,019

103-107 Main Street

1900

4,330

100.0%

347,376

66-99 Main Street

1922

17,282

40.1%

910,838

77 West 55th Street

6, 7

1962

24,102

100.0%

3,425,987

1010 Third Avenue

1962

42,118

100.0%

N/A

170 East 87th Street

1993

56,250

100.0%

2,053,822

Stamford, CT Land

N/A

325,000

N/A

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CONFIDENTIAL

Introduction and Background

Summary Property / Company Values

Valuation Summary

Property / Company

Valuation Range

Concluded

Value

Discount

Rate

112-122 West 34th Street

$365,000,000

$403,000,000

$384,100,000

8.75%

1333 Broadway

180,000,000

198,000,000

189,000,000

8.75%

1350 Broadway

177,000,000

195,000,000

186,000,000

8.75%

1400 Broadway

314,000,000

348,000,000

331,000,000

8.75%

501 Seventh Avenue

151,000,000

167,000,000

159,000,000

8.75%

1359 Broadway

182,000,000

202,000,000

192,000,000

8.75%

One Grand Central Place

652,000,000

722,000,000

687,000,000

7.25%

Empire State Building

2,394,000,000

2,646,000,000

2,520,000,000

7.25%

250 West 57th Street

300,000,000

332,000,000

316,000,000

7.50%

10 Bank Street

43,000,000

47,000,000

45,000,000

9.00%

500 Mamaroneck Ave

42,000,000

46,000,000

44,000,000

9.25%

383 Main Ave

38,000,000

42,000,000

40,000,000

9.25%

100, 200 & 300 First Stamford Place

244,000,000

270,000,000

258,000,000

8.75%

10 Union Square

47,000,000

51,000,000

49,000,000

7.00%

Metro Center

131,000,000

145,000,000

138,000,000

8.50%

103-107 Main Street

4,800,000

5,300,000

5,000,000

7.50%

66-99 Main Street

24,000,000

26,000,000

25,000,000

7.50%

77 West 55th Street

53,000,000

59,000,000

56,000,000

7.00%

170 East 8th Street

30,000,000

34,000,000

32,000,000

7.00%

B.B.S.F., L.L.C.

14,000,000

15,000,000

14,600,000

Malkin Holdings, LLC (Ex Overrides)

4,000,000

5,000,000

4,500,000

Malkin Properties

4,000,000

4,550,000

4,250,000

Malkin Construction Corp.

5,325,000

6,250,000

5,775,000

Total Value

$5,399,125,000

$5,969,100,000

$5,685,225,000

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CONFIDENTIAL

Introduction and Background

Summary of Partnership Exchange Values

•

The following table indicates the exchange value, which is the value to be allocated to Investors and override holders in each of the

Partnerships.

Exchange Value Summary

Property / Company

Entity

Exchange Value Range

Concluded

Exchange

Value

As % of

Total REIT

112-122 West 34th Street

112 West 34th Street Company L.L.C.

$134,114,899

$153,114,899

$143,664,899

3.2%

112 West 34th Street Associates L.L.C.

140,568,283

159,568,283

150,118,283

3.3%

274,683,182

312,683,182

293,783,182

6.5%

1333 Broadway

1333 Broadway Associates L.L.C.

127,432,404

145,432,404

136,432,404

3.0%

1350 Broadway

1350 Broadway Associates L.L.C.

136,057,081

154,057,081

145,057,081

3.2%

1400 Broadway

1400 Broadway Associates L.L.C.

240,903,429

274,903,429

257,903,429

5.7%

501 Seventh Avenue

Seventh & 37th Building Associates L.L.C.

52,063,072

60,063,072

56,063,072

1.2%

501 Seventh Avenue Associates L.L.C.

48,625,499

56,625,499

52,625,499

1.2%

100,688,572

116,688,572

108,688,572

2.4%

1359 Broadway

Marlboro Building Associates L.L.C.

132,870,166

152,870,166

142,870,166

3.1%

One Grand Central Place

60 East 42nd St. Associates L.L.C.

285,507,222

320,507,222

303,007,222

6.7%

Lincoln Building Associates L.L.C.

269,421,306

304,421,306

286,921,306

6.3%

554,928,528

624,928,528

589,928,528

13.0%

Empire State Building

Empire State Building Co L.L.C.

1,126,775,581

1,252,775,581

1,189,775,581

26.2%

Empire State Building Associates L.L.C.

1,146,442,285

1,272,442,285

1,209,442,285

26.7%

2,273,217,867

2,525,217,867

2,399,217,867

52.9%

250 West 57th Street

250 West 57th Street Associates L.L.C.

134,086,267

150,086,267

142,086,267

3.1%

Fisk Building Associates L.L.C.

123,287,437

139,287,437

131,287,437

2.9%

257,373,704

289,373,704

273,373,704

6.0%

10 Bank Street

1185 Bank L.L.C.

8,063,663

12,063,663

10,063,663

0.2%

500 Mamaroneck Ave

Malkin 500 Mamaroneck Avenue L.P.

3,986,141

7,986,141

5,986,141

0.1%

Duff & Phelps -

CONFIDENTIAL

Introduction and Background

Summary of Partnership Exchange Values (continued)

Exchange Value Summary

Property / Company

Entity

Exchange Value Range

Concluded

Exchange

Value

As % of

Total REIT

383 Main Ave

Fairfield Merritview SPE L.L.C.

$6,232,647

$10,232,647

$8,232,647

0.2%

100, 200 & 300 First Stamford Place

First Stamford Place SPE L.L.C.

9,349,716

4,832,916

0.1%

Fairfax First Stamford SPE L.L.C.

7,953,736

4,212,136

0.1%

Merrifield First Stamford SPE L.L.C.

7,953,736

4,212,136

0.1%

25,257,187

13,257,187

0.3%

10 Union Square

New York Union Square Retail L.P.

25,098,031

29,098,031

27,098,031

0.6%

Metro Center

One Station Place, Limited Partnership

29,970,060

43,970,060

36,970,060

0.8%

103-107 Main Street

Westport Main Street Retail L.L.C.

4,725,541

5,225,541

4,925,541

0.1%

66-99 Main Street

Malkin Co-Investor Capital L.P.

14,375,300

16,375,300

15,375,300

0.3%

77 West 55th Street

Malkin East West Retail Portfolio L.P.

23,582,583

29,582,583

26,582,583

0.6%

170 East 8th Street

1185 Gotham L.L.C.

9,953,171

13,953,171

11,953,171

0.3%

B.B.S.F., L.L.C.

14,000,000

15,000,000

14,600,000

0.3%

Malkin Holdings, LLC (Ex Overrides)

5,396,278

6,396,278

5,896,278

0.1%

Malkin Properties

4,000,000

4,550,000

4,250,000

0.1%

Malkin Construction Corp.

5,325,000

6,250,000

5,775,000

0.1%

Total Exchange Value

$4,252,863,347

$4,822,095,534

$4,538,220,534

100.0%

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Methodology

•

Duff & Phelps valuation and fairness analysis comprised the following steps:

–

Determine the value of each of the Properties using generally accepted valuation methodologies as described herein.

–

Allocate such values to each of the Partnerships that have an interest (fee-simple, leased fee, leasehold) related the Properties to determine the

exchange value of such Partnerships.

–

Allocate the Partnership exchange values to the Investors and override holders of each Partnership based on the equity allocation waterfalls

provided by management of the Company to determine the exchange value of each Investor or override holder’s interest.

•

Based on the Investor exchange values, the Company determined the allocation of Class A common stock, Class B common stock, operating

partnership units or cash consideration among the Partnerships, the Company, and the Management Companies, as well as to the Investors. Duff

& Phelps then considered these allocations in its fairness analysis.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Property Valuation Methodologies

•

Duff & Phelps considered the cost approach, sales comparison approach, and Income Approach, as defined herein, to value the

Properties. Each approach assumes valuation of the property at the property’s highest and best use. From the indications of these

analyses, Duff & Phelps rendered an opinion of value based upon expert judgment within the context of the appraisal process.

Income Approach

•

The income capitalization approach (“Income Approach”) simulates the reasoning of an investor who views the cash flows that would result

from the anticipated revenue and expense on a property throughout its lifetime. The NOI developed in our analysis is the balance of

potential income remaining after vacancy and collection loss, and operating expenses. This net income is then capitalized at an

appropriate rate to derive an estimate of value or discounted by an appropriate yield rate over a typical projection period in a discounted

cash flow analysis. Thus, two key steps are involved: (1) estimating the net income applicable to the subject and (2) choosing appropriate

capitalization rates and discount rates.

•

The discounted cash flow (“DCF”) analysis focuses on the operating cash flows expected from the property and the anticipated proceeds of

a hypothetical sale at the end of an assumed holding period. These amounts are then discounted to their present value. The discounted

present values of the income stream and the reversion are added to obtain a value indication.

•

We relied primarily on the DCF method to determine the market value of the operating Properties. We relied on the sales comparison

approach to value the Stamford, CT land. However, we corroborated our results through an analysis of the implied capitalization rate for

each property. We analyzed the implied capitalization rate based on the value determined by the DCF and the first several years of

projected NOI.

•

The income approach was relied upon in determining the market value of the Properties. This is the approach utilized by typical investors

and other market participants in the local market of the Properties, and was therefore determined to be the most reliable indicator of market

value.

Application of Income Approach

•

In applying the discounted cash flow technique, we estimated the operating results over a hypothetical 10-year holding period and assumed

the Properties would be sold at the end of the final year for a price calculated by capitalizing the following year's projected NOI.

•

We averaged the 11 , 12 and 13 years to account for any inconsistencies in cash flow. We then discounted the cash flows at a rate

reflective of market conditions, bearing in mind the investment characteristics of the Properties.

•

Lastly, we selected a terminal capitalization rate reflective of anticipated market conditions, the likely future condition of the Properties, and

the uncertainty associated with estimates of future income and value.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Property Valuation Methodologies

Cost Approach

•

The cost approach considers the cost to replace the existing improvements, less accrued depreciation, plus the market value of the land. The cost

approach is based on the understanding that market participants relate value to cost. The value of the property is derived by adding the estimated

value of the land to the current cost of constructing a reproduction or replacement for the improvements and then subtracting the amount of

depreciation in the structure from all causes. Profit for coordination by the entrepreneur is included in the value indication.

•

The

cost

approach

was

omitted

from

our

analysis,

not

approach

typically

utilized

investors

the

local

market

the

Properties.

Additionally,

number

the

Properties

are

unique

and

historic

buildings.

The

reproduction

the

improvements

would

not

possible

many

cases, and a replacement of the improvements would not necessarily constitute an adequate substitute, given their unique and historic nature.

Sales Comparison Approach

•

To value the Stamford, CT land, we relied on the sales comparison approach. The sales comparison approach estimates value based on what

other purchasers and sellers in the market have agreed to as price for comparable properties. This approach is based upon the principle of

substitution,

which

states

that

the

limits

prices,

rents,

and

rates

tend

set

the

prevailing

prices,

rents,

and

rates

equally

desirable

substitutes. In conducting the sales comparison approach, we gather data on reasonably substitutable properties and make adjustments for

transactional and property characteristics. The resulting adjusted prices lead to an estimate of the price one might expect to realize upon sale of

the property.

•

The

sales

comparison

approach

was

considered

but

omitted

from

our

analysis

(with

the

exception

the

Stamford,

land),

the

income

approach was deemed to be a more reliable indicator of market value, as it is the typical approach utilized by investors in the local market of the

Properties. Sales comparables were used to corroborate our value conclusions arrived at using the income approach.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Property Valuation Methodologies

•

The analysis detailed previously considers the in-place ground leases at the Properties. As noted, we determined the leased fee values (assuming

they are not subject to any in-place ground leases) for all properties before allocating the value to the various interests. In order to value the

Properties, we analyzed the following assumptions in our use of the income approach.

Market Rent

•

In estimating the market rental rates, we surveyed competitive properties in the neighborhood of the Properties, in addition to analyzing the

recently signed leases at the Properties and conversations with owner’s management to provide an indication of market rent. We also utilized third

party databases including CoStar, Loopnet, and Real Capital Analytics, in addition to third-party market reports from various brokerage houses (i.e.

CBRE, Cushman Wakefield, Colliers, NAI, etc.) to provide an indication of market rent.

Market Rent Growth

•

Market rent growth was determined primarily through conversations with local market participants, taking into consideration how investors in the

market of the Properties are modeling market rent growth. Market rent growth is primarily a function of location, quality, and property type. The

projected

market

rent

growth

for

the

New

York

City

properties

0.0

percent

growth

year

5.0

percent

growth

years

2-4,

and

3.0

percent

growth thereafter. The projected market rent growth for the suburban properties is 0.0 percent growth in year 1, and 3.0 percent growth thereafter.

Vacancy and Collection Loss

•

We held conversations with management and local market participants to estimate downtime, renewal probability and stabilized occupancy, which

were different for each Property. The downtime, renewal probability, and stabilized occupancies are primarily a function of location, quality, and

use (i.e. office vs. retail).

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Property Valuation Methodologies

Operating Expense Analysis

•

Current and historical expenses constitute a guide for estimating future expenses. Depreciation reserves, mortgage charges, income tax,

corporation tax and capital additions were not included among the projected annual expenses the Income Approach.

•

In estimating the individual expense categories for the Properties, we looked at historical expenses from 2007 to 2010, year-to-date expenses as of

June

30,

2011,

well

management's

budget

for

2011.

also

held

discussions

with

management

regarding

their

expense

budget.

Additionally we spoke to other market participants to aid in properly estimating projected expenses. We placed primary reliance on management’s

2011 budget, and considered historical performance as applicable, while corroborating our expense estimates with estimates from the Building

Owners and Managers Association (“BOMA”) and through conversations with local market participants.

Capital Expenditures

•

We were provided specific 10 year capital expenditure projections for each property by management. These 10 year projections were the basis for

the capital expenditure projections utilized in our analysis.

Cash Flow Forecast

•

applying

the

DCF

methodology,

estimated

the

operating

results

over

hypothetical

holding

period.

assumed

the

property

would

sold

the

end

the

final

year

for

price

calculated

capitalizing

the

projected

following

year's

net

income.

averaged

the

and

years

account

for

any

inconsistencies

cash

flow.

then

discounted

the

cash

flows

rate

reflective

market

conditions

July

2011,

bearing

mind

the

investment

characteristics

the

Properties.

selected

terminal

capitalization

rate

reflective

anticipated

market

conditions,

the

likely

future

condition

the

Properties,

and

the

uncertainty

associated

with

estimates

future

income

and

value.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Property Valuation Methodologies

Discount Rate

•

A discount rate is an interest rate used to convert future payments or receipts into present value. The discount rate may or may not be the same

the

internal

rate

return

(“IRR”)

yield

rate

depending

how

extracted

from

the

market

and/or

used

the

analysis.

•

considered

conversations

with

investors

and

local

market

participants

(institutional

investors,

publically

listed

real

estate

companies/REITs,

and other privately held real estate companies), as well as third-party surveys in determining the discount rate. The discount rates were

determined on a property by property basis. The discount rates utilized in our analysis are primarily function of property type, location, quality,

projected NOI growth during the holding period, projected capital expenditures during the holding period, and current occupancy.

Terminal Capitalization Rate

•

The

terminal

capitalization

rates

were

determined

property

basis.

The

terminal

capitalization

rates

utilized

our

analysis

are

primarily a function of property type, location, quality, projected NOI growth during the holding period, projected capital expenditures during the

holding period, and current occupancy.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Property Valuation Methodologies

Notes:

[1] Rents noted are not contractual in-place rents, but are market rent estimates as of the July 1, 2011.

[2] Market rents noted at the office properties do not include any of the retail portions and are solely for the office space.

[3] Market rent omits "storage" space for all properties.

[5] Lease terms are inclusive of any rent abatements.

[6] Market rent, tenant improvements, and abatements are inclusive of "pre-built" space.

[7] Market rent, tenant improvements, and abatements are inclusive of "courtyard" space.

[8] Assumes 100% renewal probability for parking garages.

[9] Market rent inclusive of Loew's Theatre space.

[10] Market rent, tenant improvements, and abatements are inclusive of "interior" and "showroom" office space.

[4] Leasing commission amounts noted above are approximated based on a sliding scale. The following

percentages are leasing commissions based on annual lease amount for new leases, with renewal

commissions being half of these amounts:

10 Year Term: Year 1: 6.25%, Year 2-3: 5.00%, Year 4-5: 3.75%, Year 6-10: 3.13% (39.38%)

5 Year Term: Year 1: 6.25%, Year 2-3: 5.00%, Year 4-5: 3.75% (23.75%)

Property Summary

Building

Renewal

Probability

Market Rent (PSF)

1, 2, 3

Tenant Improvements PSF

(New/Renewal)

External Leasing Commissions %

(New/Renewal)

Rent Abatements

(New/Renewal)

months

Reimbursements

Term (Yrs)

112-122 West 34th Street

6, 10

70.00%

$36.00 -

$44.00

$10.00-$50.00/$0.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 1 -

Net; with Base Stop

5.00 -

10.00

1333 Broadway

70.00%

$42.00 -

$45.00

$10.00-$50.00/$0.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 1 -

Net; with Base Stop

5.00 -

10.00

1350 Broadway

70.00%

$42.00 -

$47.00

$10.00-$50.00/$0.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 1 -

Net; with Base Stop

5.00 -

10.00

1400 Broadway

70.00%

$43.00 -

$47.00

$20.00-$50.00/$10.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 1 -

Net; with Base Stop

5.00 -

10.00

501 Seventh Avenue

70.00%

$41.00 -

$42.00

$20.00-$50.00/$10.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 2 -

Net; with Base Stop

5.00 -

10.00

1359 Broadway

70.00%

$40.00 -

$46.00

$10.00-$50.00/$0.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 1 -

Net; with Base Stop

5.00 -

10.00

One Grand Central Place

70.00%

$42.00 -

$54.00

$10.00-$55.00/$0.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

4 / 1 -

Net; with Base Stop

5.00 -

10.00

Empire State Building

70.00%

$45.00 -

$55.00

$10.00-$55.00/$0.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

9 / 1 -

Net; with Base Stop

5.00 -

15.00

250 West 57th Street

6, 7

70.00%

$35.00 -

$50.00

$10.00-$45.00/$0.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 1 -

Net; with Base Stop

5.00 -

10.00

10 Bank Street

70.00%

$32.00 -

$33.00

$30.00-$40.00/$10.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 0 -

Net; with Base Stop

5.25 -

10.50

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Property Valuation Methodologies

Notes:

[1] Rents noted are not contractual in-place rents, but are market rent estimates as of the July 1, 2011.

[2] Market rents noted at the office properties do not include any of the retail portions and are solely for the office space.

[3] Market rent omits "storage" space for all properties.

[5] Lease terms are inclusive of any rent abatements.

[6] Market rent, tenant improvements, and abatements are inclusive of "pre-built" space.

[7] Market rent, tenant improvements, and abatements are inclusive of "courtyard" space.

[8] Assumes 100% renewal probability for parking garages.

[9] Market rent inclusive of Loew's Theatre space.

[10] Market rent, tenant improvements, and abatements are inclusive of "interior" and "showroom" office space.

[4] Leasing commission amounts noted above are approximated based on a sliding scale. The following

percentages are leasing commissions based on annual lease amount for new leases, with renewal

commissions being half of these amounts:

10 Year Term: Year 1: 6.25%, Year 2-3: 5.00%, Year 4-5: 3.75%, Year 6-10: 3.13% (39.38%)

5 Year Term: Year 1: 6.25%, Year 2-3: 5.00%, Year 4-5: 3.75% (23.75%)

500 Mamaroneck Ave

70.00%

$25.00 -

$27.00

$20.00-$40.00/$10.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 0 -

Net; with Base Stop

5.25 -

10.50

383 Main Ave

70.00%

$25.00 -

$26.00

$20.00-$40.00/$10.00-$20.00

23.75%-39.38% / 11.88%-19.69%

4 -

6 / 0 -

Net; with Base Stop

5.33 -

10.50

100, 200 & 300 First Stamford Place

70.00%

$40.00 -

$42.00

$30.00-$40.00/$10.00-$20.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 0 -

Net; with Base Stop

5.25 -

10.50

10 Union Square

70.00%

$35.00 -

$260.00

$5.00-$10.00/$0.00

39.38% / 19.69%

4 -

6 / 0

Net; with Base Stop

10.00

Metro Center

70.00%

$49.00 -

$51.00

$10.00-$20.00/$5.00-$10.00

23.75%-39.38% / 11.88%-19.69%

2 -

4 / 0 -

Net; with Base Stop

5.17 -

10.33

103-107 Main Street

70.00%

$100.00

$5.00/$0.00

23.75% / 11.88%

3 / 0

Net

5.00

66-99 Main Street

70.00%

$95.00 -

$100.00

$5.00/$0.00

23.75%-39.38% / 11.88%-19.69%

3 -

6 / 0

Net

5.00 -

10.00

77 West 55th Street

70.00%

$32.00 -

$275.00

$0.00-$10.00/$0.00

39.38% / 19.69%

4-5/ 0

Net; with Base Stop

10.00

1010 Third Avenue

70.00%

$58.00 -

$90.00

$0.00-$10.00/$0.00

39.38% / 19.69%

4/ 0

Net; with Base Stop

10.00

170 East 87th Street

70.00%

$16.11-

$300.00

$5.00-$10.00/$0.00

39.38% / 19.69%

4 -

6 / 0

Net; with Base Stop

10.00

Stamford, CT Land

70.00%

N/A

Property Summary

Building

Renewal

Probability

Market Rent (PSF)

1, 2, 3

Tenant Improvements PSF

(New/Renewal)

External Leasing Commissions %

(New/Renewal)

Rent Abatements

(New/Renewal)

months

Reimbursements

Term (Yrs)

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Property Valuation Methodologies

Discount Rate Assumptions

Building

Terminal Cap Rate

(Midpoint)

Discount Rate

(Midpoint)

112-122 West 34th Street

6.75%

8.75%

1333 Broadway

6.75%

8.75%

1350 Broadway

6.75%

8.75%

1400 Broadway

6.75%

8.75%

501 Seventh Avenue

6.75%

8.75%

1359 Broadway

6.75%

8.75%

One Grand Central Place

6.00%

7.25%

Empire State Building

6.00%

7.25%

250 West 57th Street

6.25%

7.50%

10 Bank Street

7.25%

9.00%

500 Mamaroneck Ave

7.25%

9.25%

383 Main Ave

7.25%

9.25%

100, 200 & 300 First Stamford Place

7.00%

8.75%

10 Union Square

6.00%

7.00%

Metro Center

7.00%

8.50%

103-107 Main Street

6.25%

7.50%

66-99 Main Street

6.25%

7.50%

77 West 55th Street

6.00%

7.00%

1010 Third Avenue

6.00%

7.00%

170 East 87th Street

6.00%

7.00%

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Property Valuation Methodologies

•

The following able indicates the Partnership ownership type for each property. Those properties with separate Partnerships that have a leased

fee

and

leasehold

interest

are

referred

“Two-Tier”

properties.

The

methodology

for

allocation

property

value

each

Partnership,

Investor

and override holder is described on the following pages.

Entity

Entity Type

Entity

Entity Type

Empire State Building

Empire State Building Associates L.L.C.

Leased Fee

Empire State Building Company L.L.C.

Leasehold

One Grand Central Place

60 East 42nd St. Associates L.L.C.

Leased Fee

Lincoln Building Associates L.L.C.

Leasehold

250 West 57th St.

250 West 57th St. Associates L.L.C.

Leased Fee

Fisk Building Associates L.L.C.

Leasehold

1333 Broadway

1333 Broadway Associates L.L.C.

Fee Simple

1350 Broadway

1350 Broadway Associates L.L.C.

Leasehold

1359 Broadway

Marlboro Building Associates L.L.C.

Fee Simple

501 Seventh Avenue

Seventh & 37th Building Associates L.L.C.

Leased Fee

501 Seventh Avenue Associates L.L.C.

Leasehold

66-99 Main Street

Soundview Plaza Associates II L.L.C.

Fee Simple

East West Manhattan Retail Portfolio L.P.

Fee Simple

Metro Center

One Station Place, Limited Partnership

Fee Simple

10 Union Square

New York Union Square Retail L.P.

Fee Simple

103-107 Main Street

Westport Main Street Retail L.L.C.

Fee Simple

First Stamford Place

Fairfax First Stamford SPE L.L.C.

Fee Simple

Merrifield First Stamford SPE L.L.C.

Fee Simple

First Stamford Place SPE L.L.C.

Fee Simple

10 Bank Street

1185 Swap Portfolio L.P.

Fee Simple

170 East 8th Street

1185 Swap Portfolio L.P.

Fee Simple

383 Main Ave

Fairfield Merrittview Limited Partnership

Fee Simple

500 Mamaroneck Ave

500 Mamaroneck Avenue L.P.

Fee Simple

112-122 West 34th Street

112 West 34th Street Associates L.L.C

Leased Fee

112 West 34th Street Company L.L.C.

Leasehold

1400 Broadway

1400 Broadway Associates L.L.C.

Leasehold

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Exchange

Value

Methodology

–

Two

Tier

Properties

•

Duff & Phelps calculated the aggregate exchange value of the Partnerships for Two Tier Properties in which there is a property owner and an

operating lessee as follows:

–

The allocable

value

described

below

shared

equally

between

the

property

owner

and

operating

lessee:

The allocable value equals the sum of:

–

The appraised value, on a fee simple basis, of Partnership’s property, as determined by the Duff & Phelps’s appraisal of such property,

as of July 1, 2011; and

–

The amount of cash held by the Partnership that is expressly designated for property improvements, as of June 30, 2011, as provided by

the Company;

Reduced by:

–

The face value of shared mortgage debt obligations, which are mortgage debt obligations of the property owner that are serviced by

basic rent paid by the operating lessee, as of June 30, 2011; and

–

The present value of the base operating lease payments from the operating lessee to the property owner.

Fifty percent of such allocable value is allocated to the property owner and is adjusted as follows to estimate the exchange value of the

property owner:

–

The amount by which the actual net working capital as of June 30, 2011 exceeds(such value being negative if it is exceeds by) the

normalized level of net working capital required to operate the property owned by the Partnership. Net working capital as used in this

allocation

defined

current

assets

(excluding

cash

and

cash

equivalents),

less

current

liabilities

(excluding

the

current

portion

debt);

–

Subtract

the

property

owner

debt

obligations

that

are

not

shared

mortgage

debt

obligations

serviced

with

basic

rent

paid

the

operating

lessee as of June 30, 2011; and

–

Add the present value of the base operating lease payments from the operating lessee to the property owner.

Fifty percent of such allocable value is allocated to the operating lessee and is adjusted as follows to estimate the exchange value of the

operating lessee:

–

Subtract the after-tax net present value of the supervisory fees paid to the supervisor and the unpaid cash overrides as of June 30, 2011;

and

–

Add/(subtract) the amount by which the actual net working capital as of June 30, 2011 exceeds/(is exceeded by) the normalized level of

net working capital required to operate the property owned by the Partnership.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Exchange

Value

Methodology

–

Two

Tier

Properties

(continued)

•

The allocated exchange value was allocated 50% to the property owner and 50% to the operating lessee in a two tier entity instead of being

allocated in accordance with a discounted cash flow analysis through the term of the ground lease based on representations of the supervisor as to

the original

intent

treat

the

two

tier

entities

equivalent

joint

venture

and

the

historical

treatment

the

two

tier

entities

this

manner.

•

The Company has represented that historically, agreements have been entered into to share capital expenditure and financing costs and the

operating leases have been extended in connection therewith. As a result, the allocated exchange value has been allocated equally to the property

owner

and

operating

lessee,

rather

than

proportion

that

would

indicated

discounted

cash

flow

analysis

through

the

end

the

ground

lease, which would have resulted in a higher allocation to the property owner, which, in the case of Empire State Building Associates, would have

been significantly higher.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Exchange

Value

Methodology

–

One

Tier

Properties

and

Management

Companies

•

Duff & Phelps calculated the aggregate exchange value for the private entities with fee simple properties, properties with co-tenancy arrangements,

and properties with third-party ground leases as follows:

–

The sum of:

The appraised value of a Partnership’s (i) property on a fee simple basis when such property is owned, or (ii) leasehold when the less or of

such

leasehold

third

party,

determined

the

independent

valuers’

appraisal

such

property

leasehold

July

2011;

The

amount

which

the

actual

net

working

capital

exceeds

(such

value

being

negative

exceeded

by)

the

normalized

level

net

working capital required to operate the property owned by the Partnership. As of June 30, 2011 the Company determined that there was

no excess or deficit in the net working capital at any of the Partnerships, with the exception of the unpaid cash overrides addressed below;

and

The amount of cash held in the Partnership that is expressly designated for property improvements as of June 30, 2011, as provided by the

Company;

–

Reduced by:

The face

value

its

mortgage

debt

balance

June

30,

2011;

and

The after-tax net present value of the supervisory fees paid to the supervisor.

•

The

exchange

value

the

management

companies

was

computed

the

operating

business

value

July

2011

plus,

the

case

the

Company,

the

value

the

unpaid

cash

overrides

that

are

accrued

but

unpaid.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Allocation of Exchange Value to Investors and Override Holders

•

The table below summarizes the allocation of the Partnership exchange values to the Investors and override holders of each Partnership based on

the equity allocation waterfalls provided by management of the Company.

•

On the following pages we provide a summary of the Partnership and Investor allocations, with more detailed waterfalls provided in Appendix 2.

Summary Exchange Value

Property

Entity

Participants /

Members

Class B / Override

Holders

Total Exchange

Value

112-122 West 34th Street

112 West 34th Street Company L.L.C.

$118,596,631

$25,068,268

$143,664,899

112 West 34th Street Associates L.L.C.

133,547,660

16,570,623

150,118,283

1333 Broadway

1333 Broadway Associates L.L.C.

136,432,404

1350 Broadway

1350 Broadway Associates L.L.C.

130,589,983

14,467,098

145,057,081

1400 Broadway

1400 Broadway Associates L.L.C.

242,141,936

15,761,493

257,903,429

501 Seventh Avenue

Seventh & 37th Building Associates L.L.C.

50,816,765

5,246,307

56,063,072

501 Seventh Avenue Associates L.L.C.

47,362,949

5,262,550

52,625,499

1359 Broadway

Marlboro Building Associates L.L.C.

128,942,169

13,927,997

142,870,166

One Grand Central Place

60 East 42nd St. Associates L.L.C.

272,804,500

30,202,722

303,007,222

Lincoln Building Associates L.L.C.

258,229,176

28,692,131

286,921,306

Empire State Building

Empire State Building Co L.L.C.

1,091,721,347

98,054,234

1,189,775,581

Empire State Building Associates L.L.C.

1,091,798,057

117,644,229

1,209,442,285

250 West 57th Street

Fisk Building Associates L.L.C.

91,818,702

39,468,735

131,287,437

250 West 57th Street Associates L.L.C.

128,597,641

13,488,627

142,086,267

10 Bank Street

1185 Bank L.L.C.

10,063,663

170 East 8th Street

1185 Gotham L.L.C.

11,953,171

500 Mamaroneck Ave

Malkin 500 Mamaroneck Avenue L.P.

5,986,141

383 Main Ave

Fairfield Merritview SPE L.L.C.

4,116,327

4,116,320

8,232,647

100, 200 & 300 First Stamford Place

First Stamford Place SPE L.L.C.

2,440,623

2,392,293

4,832,916

Fairfax First Stamford SPE L.L.C.

3,790,922

421,214

4,212,136

Merrifield First Stamford SPE L.L.C.

2,937,965

1,274,171

4,212,136

10 Union Square

New York Union Square Retail L.P.

13,684,505

13,413,525

27,098,031

Metro Center

One Station Place, Limited Partnership

3,697,006

33,273,054

36,970,060

103-107 Main Street

Westport Main Street Retail L.L.C.

4,925,541

66-99 Main Street

Soundview Plaza Associates II L.L.C.

15,375,300

77 West 55th Street

Malkin East West Retail Portfolio L.P.

13,424,204

13,158,378

26,582,583

B.B.S.F., L.L.C.

14,600,000

Malkin Holdings, LLC (Ex Overrides)

5,896,278

Malkin Properties

4,250,000

Malkin Construction Corp.

5,775,000

Total Exchange Value

$4,046,316,564

$491,903,970

$4,538,220,534

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

112-122

West

Street

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

112 West 34th Street Exchange Value

112 West 34th Street

Associates L.L.C.

(112-120 Ground Lessee)

(122 Fee Owner &

Sublessee)

112 West 34th Street

Company L.L.C.

(Operating Sublessee)

Concluded Value

Consolidated

Low

Consolidated

High

Consolidated

Property Value

$384,100,000

$365,000,000

$403,000,000

Less: Shared Debt Obligations

(85,394,903)

Less: PV of Base Rent

(10,100,000)

Total Allocable Value

$144,302,549

$288,605,097

$269,505,097

$307,505,097

Less: After-Tax PV of Supervisory Fees

(506,168)

(637,649)

(1,143,818)

Less: Unshared Debt Obligations

(3,778,097)

Plus: PV of Base Rent

10,100,000

Amount to Allocate for Capital Transaction

$150,118,283

$143,664,899

$293,783,182

$274,683,182

$312,683,182

Allocation Detail:

112 West 34th Street Company L.L.C.

50% LMH (master partner)

$68,240,827

$63,704,577

$72,729,577

112 West 34th Street Company L.L.C.

23% of PLM group not subject to override

31,390,780

29,304,105

33,455,605

112 West 34th Street Company L.L.C.

27% of PLM group subject to override

18,965,023

17,740,236

20,176,986

112 West 34th Street Company L.L.C.

Wien - Override

16,560,207

15,426,144

17,682,394

112 West 34th Street Company L.L.C.

Wiessmann - Override

1,324,817

1,234,092

1,414,592

112 West 34th Street Company L.L.C.

Malkin Holdings LLC - Override

7,183,245

6,705,745

7,655,745

112 West 34th Street Associates L.L.C.

$133,547,660

133,547,660

125,084,402

141,922,298

112 West 34th Street Associates L.L.C.

Malkin Holdings LLC - Override

16,570,623

15,483,881

17,645,985

Total

$150,118,283

$143,664,899

$293,783,182

$274,683,182

$312,683,182

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

1350 Broadway

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

1350 Broadway Associates L.L.C. Exchange Value

Concluded Value

Low

High

Property Value

$186,000,000

$177,000,000

$195,000,000

Less: Shared Debt Obligations

(40,427,335)

Less: After-Tax PV of Supervisory Fees

(515,584)

Amount to Allocate for Capital Transaction

$145,057,081

$136,057,081

$154,057,081

Allocation Detail:

1350 Broadway Associates L.L.C.

Peter L. Malkin - 50% Group

$58,061,442

$54,461,442

$61,661,442

1350 Broadway Associates L.L.C.

Malkin Holdings LLC - Override

14,467,098

13,567,098

15,367,098

1350 Broadway Associates L.L.C.

David M. Baldwin - 50% Group

72,528,541

68,028,541

77,028,541

Total

$145,057,081

$136,057,081

$154,057,081

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

1400 Broadway

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

1400 Broadway Associates L.L.C. Exchange Value

Concluded Value

Low

High

Property Value

$331,000,000

$314,000,000

$348,000,000

Less: Shared Debt Obligations

(71,300,000)

Less: After-Tax PV of Supervisory Fees

(1,796,571)

Amount to Allocate for Capital Transaction

$257,903,429

$240,903,429

$274,903,429

Allocation Detail:

Participants - 25% Group

$58,312,617

$54,476,992

$62,148,242

Participants - 50% Group

122,552,879

114,477,879

130,627,879

LMH 1400 LLC

61,276,439

57,238,939

65,313,939

Malkin Holdings LLC - Override

12,797,671

11,947,671

13,647,671

Peter L. Malkin Family 5 LLC - Override

1,481,911

1,380,973

1,582,848

Enid Morse - Override

1,481,911

1,380,973

1,582,848

Total

$257,903,429

$240,903,429

$274,903,429

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

501 Seventh Ave

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

501 Seventh Avenue Exchange Value

Seventh & 37th

Building

Associates L.L.C.

(Fee Owner)

501 Seventh

Avenue Associates

L.L.C.

(Operating Lessee)

Concluded Value

Consolidated

Low

Consolidated

High

Consolidated

Property Value

$159,000,000

$151,000,000

$167,000,000

Less: Shared Debt Obligations

(48,414,235)

Less: PV of Base Rent

(4,000,000)

Total Allocable Value

53,292,882

106,585,765

98,585,765

114,585,765

Less: After-Tax PV of Supervisory Fees

(409,934)

(667,383)

(1,077,317)

Less: Unshared Debt Obligations

(819,876)

Plus: PV of Base Rent

4,000,000

Amount to Allocate for Capital Transaction

$56,063,072

$52,625,499

$108,688,572

$100,688,572

$116,688,572

Allocation Detail:

Seventh & 37th Building Associates L.L.C.

Participants

$50,816,765

$47,216,765

$54,416,765

Seventh & 37th Building Associates L.L.C.

Malkin Holdings LLC - Override

5,246,307

4,846,307

5,646,307

501 Seventh Avenue Associates L.L.C.

Member

$47,362,949

47,362,949

43,762,949

50,962,949

501 Seventh Avenue Associates L.L.C.

Malkin Holdings LLC - Override

5,262,550

4,862,550

5,662,550

Total

$56,063,072

$52,625,499

$108,688,572

$100,688,572

$116,688,572

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

One Grand Central Place

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

60 East 42nd St. Associates L.L.C. Exchange Value

60 East 42nd St.

Associates L.L.C.

(Fee Owner)

Lincoln Building

Associates L.L.C.

(Operating

Lessee)

Concluded Value

Consolidated

Low

Consolidated

High

Consolidated

Property Value

$687,000,000

$652,000,000

$722,000,000

Less: Shared Debt Obligations

(92,614,558)

Less: PV of Base Rent

(14,000,000)

Total Allocable Value

290,192,721

580,385,442

545,385,442

615,385,442

Less: After-Tax PV of Supervisory Fees

(1,185,499)

(2,662,580)

(3,848,079)

Less: Unpaid Cash Override

(608,835)

Plus: PV of Base Rent

14,000,000

Amount to Allocate for Capital Transaction

$303,007,222

$286,921,306

$589,928,528

$554,928,528

$624,928,528

Allocation Detail:

60 East 42nd St. Associates L.L.C.

Participants

$272,804,500

$257,054,500

$288,554,500

60 East 42nd St. Associates L.L.C.

Malkin Holdings LLC - Override

30,202,722

28,452,722

31,952,722

Lincoln Building Associates L.L.C.

Members

$258,229,176

258,229,176

242,479,176

273,979,176

Lincoln Building Associates L.L.C.

Malkin Holdings LLC - Override

28,692,131

26,942,131

30,442,131

Total

$303,007,222

$286,921,306

$589,928,528

$554,928,528

$624,928,528

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Empire State Building

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

Empire State Building Exchange Value

Empire State

Land Associates

L.L.C.

(Fee Owner)

Building Company

L.L.C.

(Operating

Lessee)

Concluded Value

Consolidated

Low

Consolidated

High

Consolidated

Property Value

$2,520,000,000

$2,394,000,000

$2,646,000,000

Less: Shared Debt Obligations

(98,500,000)

Less: PV of Base Rent

(81,000,000)

Plus: Cash for Improvements

47,026,456

Total Allocable Value

1,193,763,228

2,387,526,456

2,261,526,456

2,513,526,456

Less: After-Tax PV of Supervisory Fees

(4,820,943)

(3,987,647)

(8,808,589)

Less: Unshared Debt Obligations

(60,500,000)

Plus: PV of Base Rent

81,000,000

Amount to Allocate for Capital Transaction

$1,209,442,285

$1,189,775,581

$2,399,217,867

$2,273,217,867

$2,525,217,867

Allocation Detail:

Empire State Building Co L.L.C.

Members

$907,203,881

$859,166,381

$955,241,381

Empire State Building Co L.L.C.

PLM 4-2-71 JV, 10% Participants

89,683,169

84,958,169

94,408,169

Empire State Building Co L.L.C.

PLM 4-2-71 JV, 10% Override

29,294,390

27,719,390

30,869,390

Empire State Building Co L.L.C.

PLM 7-2-71 JV, 5% Participants

44,841,584

42,479,084

47,204,084

Empire State Building Co L.L.C.

PLM 7-2-71 JV, 5% Override

14,647,195

13,859,695

15,434,695

Empire State Building Co L.L.C.

1273 Realty Company Participants

49,992,713

47,390,157

52,595,270

Empire State Building Co L.L.C.

1273 Realty Company - Override

43,831,730

41,475,137

46,188,324

Empire State Building Associates L.L.C.

Participants

$1,091,798,057

1,091,798,057

1,035,098,057

1,148,498,057

Empire State Building Associates L.L.C.

Malkin Holdings LLC - Override

117,644,229

$10,280,920

127,925,148

121,071,799

134,778,498

Total

$1,209,442,285

$1,189,775,581

$2,399,217,867

$2,273,217,867

$2,525,217,867

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

250 West 57

Street

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

250 West 57th Exchange Value

250 West 57th St.

Associates L.L.C.

(Fee Owner)

Fisk Building

Associates L.L.C.

(Operating

Lessee)

Concluded Value

Consolidated

Low

Consolidated

High

Consolidated

Property Value

$316,000,000

$300,000,000

$332,000,000

Less: Shared Debt Obligations

(40,432,051)

Less: PV of Base Rent

(10,000,000)

Total Allocable Value

132,783,974

265,567,949

249,567,949

281,567,949

Less: After-Tax PV of Supervisory Fees

(697,707)

(709,094)

(1,406,801)

Less: Unpaid Cash Override

(787,443)

Plus: PV of Base Rent

10,000,000

Amount to Allocate for Capital Transaction

$142,086,267

$131,287,437

$273,373,704

$257,373,704

$289,373,704

Allocation Detail:

250 West 57th Street Associates L.L.C.

Participants

$128,597,641

$121,397,641

$135,797,641

250 West 57th Street Associates L.L.C.

Malkin Holdings LLC - Override

13,488,627

12,688,627

14,288,627

Fisk Building Associates L.L.C.

Participants - 45% Group

$26,831,421

26,831,421

25,292,421

28,370,421

Fisk Building Associates L.L.C.

Members

64,987,281

61,027,281

68,947,281

Fisk Building Associates L.L.C.

IW Morose - Override

11,915,710

11,146,210

12,685,210

Fisk Building Associates L.L.C.

Malkin Family - Override

11,915,710

11,146,210

12,685,210

Fisk Building Associates L.L.C.

Malkin Holdings LLC - Override

15,637,314

14,675,314

16,599,314

Total

$142,086,267

$131,287,437

$273,373,704

$257,373,704

$289,373,704

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

500 Mamaroneck Ave

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

500 Mamaroneck Avenue L.P. Exchange Value

Concluded Value

Low

High

Property Value

$44,000,000

$42,000,000

$46,000,000

Less: Shared Debt Obligations

(37,831,646)

Less: After-Tax PV of Supervisory Fees

(182,214)

Amount to Allocate for Capital Transaction

$5,986,141

$3,986,141

$7,986,141

Allocation Detail:

Malkin 500 Mamaroneck Avenue L.P.

Class A LPs

$4,444,709

$2,959,709

$5,929,709

Malkin 500 Mamaroneck Avenue L.P.

Class B LPs

Malkin 500 Mamaroneck Avenue L.P.

General Partner

44,896

29,896

59,896

Viviane Paris, LLC

1,496,535

996,535

1,996,535

Viviane Paris, LLC

Class B LP

Total

$5,986,141

$3,986,141

$7,986,141

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

100, 200 & 300 First Stamford Place

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

100, 200 & 300 First Stamford Place Exchange Value

Fairfax First

Stamford SPE

L.L.C.

(62.36% Co-

Tenant)

Merrifield First

Stamford SPE

L.L.C.

(Operating

Lessee of 62.36%

Co-Tenant)

First Stamford

Place SPE L.L.C.

(37.64% Co-

Tenant)

Concluded Value

Consolidated

Low

Consolidated

High

Consolidated

Property Value

$258,000,000

$244,000,000

$270,000,000

Less: Shared Debt Obligations (1)

(244,243,222)

Total Allocable Value

4,289,363

5,178,051

13,756,778

(243,222)

25,756,778

Less: After-Tax PV of Supervisory Fees

(77,228)

(345,135)

(499,591)

Amount to Allocate for Capital Transaction

$4,212,136

$4,832,916

$13,257,187

$25,257,187

Allocation Detail:

First Stamford Place SPE L.L.C.

Class A & A2 Members

$2,392,293

$4,628,109

Manager

48,329

93,497

Class B

2,392,293

4,628,109

Fairfax First Stamford SPE L.L.C.

$3,790,922

3,790,922

7,158,362

Malkin Holdings LLC - Override

421,214

795,374

Merrifield First Stamford SPE L.L.C.

55% Members

$2,085,007

2,085,007

3,937,099

45% Members

852,957

1,610,631

Malkin Holdings LLC - Override (Assigned)

421,214

795,374

PLMalkin Family 9 LLC - Override

426,479

805,316

Enid Morse - Override

426,479

805,316

Total

$4,212,136

$4,832,916

$13,257,187

$25,257,187

(1) Shared debt obligations net against funds in escrow in the amount of $5,756,778.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

66-99 Main Street

•

Based on our analysis, we determined the range of exchange values, as shown in the table below.

Soundview Plaza Associates II L.L.C. Exchange Value

Concluded Value

Low

High

Property Value

$25,000,000

$24,000,000

$26,000,000

Less: Shared Debt Obligations

(9,452,274)

Less: After-Tax PV of Supervisory Fees

(172,426)

Amount to Allocate for Capital Transaction

$15,375,300

$14,375,300

$16,375,300

Allocation Detail:

Malkin Co-Investor Capital L.P.

General Partner

$81,335

$76,045

$86,625

Malkin Co-Investor Capital L.P.

Class B LPs

Malkin Co-Investor Capital L.P.

Class A LPs

8,052,199

7,528,489

8,575,909

Peter L. Malkin

3,713,727

3,472,188

3,955,265

New Soundview Plaza Associates, Limited Partnership

3,528,039

3,298,578

3,757,501

Total

$15,375,300

$14,375,300

$16,375,300

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Summary of Partnership Exchange Values

Exchange Value Summary

Property / Company

Entity

Exchange Value Range

Concluded

Exchange

Value

As % of

Total REIT

112-122 West 34th Street

112 West 34th Street Company L.L.C.

$134,114,899

$153,114,899

$143,664,899

3.2%

112 West 34th Street Associates L.L.C.

140,568,283

159,568,283

150,118,283

3.3%

274,683,182

312,683,182

293,783,182

6.5%

1333 Broadway

1333 Broadway Associates L.L.C.

127,432,404

145,432,404

136,432,404

3.0%

1350 Broadway

1350 Broadway Associates L.L.C.

136,057,081

154,057,081

145,057,081

3.2%

1400 Broadway

1400 Broadway Associates L.L.C.

240,903,429

274,903,429

257,903,429

5.7%

501 Seventh Avenue

Seventh & 37th Building Associates L.L.C.

52,063,072

60,063,072

56,063,072

1.2%

501 Seventh Avenue Associates L.L.C.

48,625,499

56,625,499

52,625,499

1.2%

100,688,572

116,688,572

108,688,572

2.4%

1359 Broadway

Marlboro Building Associates L.L.C.

132,870,166

152,870,166

142,870,166

3.1%

One Grand Central Place

60 East 42nd St. Associates L.L.C.

285,507,222

320,507,222

303,007,222

6.7%

Lincoln Building Associates L.L.C.

269,421,306

304,421,306

286,921,306

6.3%

554,928,528

624,928,528

589,928,528

13.0%

Empire State Building

Empire State Building Co L.L.C.

1,126,775,581

1,252,775,581

1,189,775,581

26.2%

Empire State Building Associates L.L.C.

1,146,442,285

1,272,442,285

1,209,442,285

26.7%

2,273,217,867

2,525,217,867

2,399,217,867

52.9%

250 West 57th Street

250 West 57th Street Associates L.L.C.

134,086,267

150,086,267

142,086,267

3.1%

Fisk Building Associates L.L.C.

123,287,437

139,287,437

131,287,437

2.9%

257,373,704

289,373,704

273,373,704

6.0%

10 Bank Street

1185 Bank L.L.C.

8,063,663

12,063,663

10,063,663

0.2%

500 Mamaroneck Ave

Malkin 500 Mamaroneck Avenue L.P.

3,986,141

7,986,141

5,986,141

0.1%

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis

Summary of Partnership Exchange Values (continued)

Exchange Value Summary

Property / Company

Entity

Exchange Value Range

Concluded

Exchange

Value

As % of

Total REIT

383 Main Ave

Fairfield Merritview SPE L.L.C.

$6,232,647

$10,232,647

$8,232,647

0.2%

100, 200 & 300 First Stamford Place

First Stamford Place SPE L.L.C.

9,349,716

4,832,916

0.1%

Fairfax First Stamford SPE L.L.C.

7,953,736

4,212,136

0.1%

Merrifield First Stamford SPE L.L.C.

7,953,736

4,212,136

0.1%

25,257,187

13,257,187

0.3%

10 Union Square

New York Union Square Retail L.P.

25,098,031

29,098,031

27,098,031

0.6%

Metro Center

One Station Place, Limited Partnership

29,970,060

43,970,060

36,970,060

0.8%

103-107 Main Street

Westport Main Street Retail L.L.C.

4,725,541

5,225,541

4,925,541

0.1%

66-99 Main Street

Malkin Co-Investor Capital L.P.

14,375,300

16,375,300

15,375,300

0.3%

77 West 55th Street

Malkin East West Retail Portfolio L.P.

23,582,583

29,582,583

26,582,583

0.6%

170 East 8th Street

1185 Gotham L.L.C.

9,953,171

13,953,171

11,953,171

0.3%

B.B.S.F., L.L.C.

14,000,000

15,000,000

14,600,000

0.3%

Malkin Holdings, LLC (Ex Overrides)

5,396,278

6,396,278

5,896,278

0.1%

Malkin Properties

4,000,000

4,550,000

4,250,000

0.1%

Malkin Construction Corp.

5,325,000

6,250,000

5,775,000

0.1%

Total Exchange Value

$4,252,863,347

$4,822,095,534

$4,538,220,534

100.0%

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Holdings LLC

Methodology

•

Discounted

Cash

Flow

Analysis

–

Income

Approach

–

Duff & Phelps based its DCF on the financial projections as provided by Management for the fiscal years ending December 31, 2011-2020.

–

Duff & Phelps performed a discounted cash flow analysis of the projected free cash flows.

–

Free

cash

flow

defined

cash

generated

the

business

that

available

either

reinvest

distribute

security

holders.

–

Projected free cash flows are discounted to the present using a discount rate which reflects their relative risk.

–

The discount rate is equivalent to the rate of return that security holders could expect to realize on alternative investment opportunities with

similar risk profiles.

–

For purposes of the income approach, all of the overrides related to the Properties were excluded and valued separately as previously

described.

–

Beyond the projection period, Duff & Phelps estimated the terminal value by utilizing a perpetuity formula, a commonly accepted terminal value

approach.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Holdings LLC

Discounted Cash Flow Analysis Summary

•

Based on Duff & Phelps’

analysis, the range of value, as determined by the discounted cash flow analysis, is $4.0 million to $5.0 million, with a

midpoint of $4.5 million.

Discounted Cash Flow Analysis

Malkin Holdings LLC

LTM

2011E

2012P

2013P

2014P

2015P

2016P

2017P

2018P

2019P

2020P

10-Yr CAGR

Revenue

$7,819,662

$9,250,925

$8,462,634

$9,009,344

$9,131,748

$9,698,554

$9,581,727

$10,493,723

$10,612,224

$10,638,720

$11,056,716

8.1%

Growth

82.0%

(8.5%)

6.5%

1.4%

6.2%

(1.2%)

9.5%

1.1%

0.2%

3.9%

EBITDA

(965,707)

956,046

819,098

1,159,654

1,069,720

1,417,817

1,177,106

1,368,343

1,238,334

1,009,207

1,164,254

EBITDA Margin

(12.3%)

10.3%

9.7%

12.9%

11.7%

14.6%

12.3%

13.0%

11.7%

9.5%

10.5%

7/31-12/31

Earnings Before Interest and Taxes

$92,432

$585,984

$919,152

$821,726

$1,162,190

$913,675

$1,096,914

$958,697

$721,134

$867,506

Pro Forma Taxes @ 39.6%

(36,617)

(232,137)

(364,122)

(325,527)

(460,402)

(361,953)

(434,543)

(379,788)

(285,677)

(343,662)

Net Operating Profit After Tax

55,815

353,846

555,030

496,199

701,789

551,723

662,372

578,909

435,457

523,843

Depreciation

112,888

233,114

240,502

247,993

255,627

263,431

271,428

279,638

288,073

296,748

Capital Expenditures

(173,246)

(257,741)

(265,473)

(273,437)

(281,640)

(290,090)

(298,792)

(307,756)

(316,989)

(326,498)

(Increase) Decrease in Working Capital

(31,813)

7,883

(5,467)

(1,224)

(5,668)

1,168

(9,120)

(1,185)

(265)

(4,180)

Free Cash Flow

($36,355)

$337,102

$524,592

$469,531

$670,107

$526,232

$625,888

$549,606

$406,276

$489,913

Terminal Growth Rate

3.0%

Weighted Average Cost of Capital

13.5%

12.5%

11.5%

Terminal Value

$4,805,812

$5,311,687

$5,936,591

Present Value of Terminal Value

1,537,461

1,840,178

2,228,760

Present Value of Discrete Cash Flow

2,496,821

2,596,741

2,702,773

$4,000,000

$4,500,000

$5,000,000

Implied Enterprise Value Multiples

2011 EBITDA

$956,046

4.2x

4.7x

5.2x

2012 EBITDA

$819,098

4.9x

5.5x

6.1x

2011 Revenue

$9,250,925

0.43x

0.49x

0.54x

Concluded Enterprise Value Range

Source: Provided by Company management

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Holdings LLC

Exchange Value

•

The table below summarizes the exchange value of the Company which included the overrides related to the Partnerships.

Malkin Holdings LLC Exchange Value

Property / Entity

Legal Entity

Capital Override ($)

Class A

Class B (1)

112-122 West 34th Street

112 West 34th Street Company L.L.C.

$7,183,245

$6,730,701

$452,544

112-122 West 34th Street

112 West 34th Street Associates L.L.C.

16,570,623

15,739,152

831,471

1350 Broadway

1350 Broadway Associates L.L.C.

$14,467,098

$13,555,671

$911,427

1400 Broadway

1400 Broadway Associates L.L.C.

12,797,671

11,991,418

806,253

501 Seventh Avenue

Seventh & 37th Building Associates L.L.C.

5,246,307

4,915,790

330,517

501 Seventh Avenue

501 Seventh Avenue Associates L.L.C.

5,262,550

4,931,009

331,541

1359 Broadway

Marlboro Building Associates L.L.C.

13,927,997

13,050,533

877,464

One Grand Central Place

60 East 42nd St. Associates L.L.C.

30,202,722

28,918,707

1,284,016

One Grand Central Place

Lincoln Building Associates L.L.C.

28,692,131

Empire State Building

Empire State Building Associates L.L.C.

117,644,229

116,360,213

1,284,016

Empire State Building

Empire State Building Co L.L.C.

9,740,385

Empire State Building

Empire State Building Co L.L.C.

540,535

250 West 57th Street

250 West 57th Street Associates L.L.C.

13,488,627

12,638,843

849,783

250 West 57th Street

Fisk Building Associates L.L.C.

15,637,314

15,203,082

434,232

100, 200 & 300 First Stamford Place

Fairfax First Stamford SPE L.L.C.

421,214

394,677

26,536

Total Override Value

$291,822,647

$283,402,847

$8,419,801

Malkin Holdings LLC (Ex-Overrides)

5,896,278

5,524,812

371,466

Equity Value of Malkin Holdings LLC

$288,927,659

$8,791,266

% Ownership in REIT

6.367%

0.194%

Total Exchange Value of Malkin Holdings LLC

$297,718,925

% Ownership in REIT

6.560%

(1) The lesser of 6.3% of override and CPI adjusted cap of $1,150,000 ($1,284,016 as of September 30, 2011).

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Construction Corp.

Methodology

•

Discounted

Cash

Flow

Analysis

–

Income

Approach

–

Duff & Phelps considered financial projections as approved by Management for the fiscal years ending December 31, 2011-2020.

–

Duff & Phelps performed a discounted cash flow analysis of the projected free cash flows.

–

Free

cash

flow

defined

cash

generated

the

business

that

available

either

reinvest

distribute

security

holders.

–

Projected free cash flows are discounted to the present using a discount rate which reflects their relative risk.

–

The discount rate is equivalent to the rate of return that security holders could expect to realize on alternative investment opportunities with

similar risk profiles.

–

Beyond the projection period, Duff & Phelps estimated the terminal value by utilizing a perpetuity formula, a commonly accepted terminal value

approach.

•

Selected Public Company Analysis

–

Duff & Phelps reviewed the current trading multiples of five publicly traded companies that were determined to be relevant in its analysis.

–

Analyzed the projected revenue and EBITDA for each of the publicly traded companies.

–

Analyzed the peer group’s trading multiples of enterprise value (“EV”) to their respective EBITDA and revenue.

None of the companies utilized for comparative purposes in the following analysis are, of course, identical to the Malkin Construction

Corp. Accordingly, a complete valuation analysis cannot be limited to a quantitative review of the selected companies, and involves

complex considerations and judgments concerning differences in financial and operating characteristics of such companies, as well as

other factors that could affect their value relative to that of Malkin Construction Corp.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Construction Corp.

Discounted Cash Flow Analysis Summary

•

Based

Duff

Phelps’

analysis,

the

range

value,

determined

the

discounted

cash

flow

analysis,

$5.7

million

$6.5

million,

with a

midpoint of $6.1 million.

Discounted Cash Flow Analysis

Malkin Construction Corp.

2011E

2012P

2013P

2014P

2015P

2016P

2017P

2018P

2019P

2020P

10-Yr CAGR

Revenue

$53,566,220

$55,173,207

$56,828,403

$58,533,255

$60,289,253

$62,097,930

$63,960,868

$65,879,694

$67,856,085

$69,891,767

6.2%

Growth

40.4%

3.0%

EBITDA

1,278,879

1,317,245

1,356,762

1,397,465

1,439,389

1,482,571

1,527,048

1,572,859

1,620,045

1,668,646

10-Yr. Avg

EBITDA Margin

2.4%

EBITDA Growth

78.4%

3.0%

7/31-12/31

Earnings Before Interest and Taxes

$767,109

$1,251,785

$1,286,219

$1,324,588

$1,364,311

$1,405,239

$1,447,396

$1,490,818

$1,535,542

$1,581,609

Pro Forma Taxes @ 39.6%

(303,890)

(495,895)

(509,536)

(524,736)

(540,472)

(556,685)

(573,386)

(590,588)

(608,305)

(626,554)

Net Operating Profit After Tax

463,219

755,890

776,684

799,853

823,839

848,554

874,010

900,230

927,237

955,054

Depreciation

184

65,460

70,543

72,877

75,078

77,332

79,652

82,041

84,503

87,038

Capital Expenditures

(58,300)

(70,924)

(73,052)

(75,244)

(77,501)

(79,826)

(82,221)

(84,687)

(87,228)

(89,845)

(Increase) Decrease in Working Capital

31,202

6,428

6,621

6,819

7,024

7,235

7,452

7,675

7,906

8,143

Free Cash Flow

$436,305

$756,854

$780,795

$804,305

$828,440

$853,294

$878,893

$905,260

$932,418

$960,390

Terminal Growth Rate

3.00%

Weighted Average Cost of Capital

17.50%

16.50%

15.50%

Terminal Value

$6,822,081

$7,327,420

$7,913,614

Present Value of Terminal Value

1,597,997

1,853,608

2,163,401

Present Value of Discrete Cash Flow

4,048,647

4,181,214

4,321,575

$5,650,000

$6,050,000

$6,500,000

Implied Enterprise Value Multiples

2011 EBITDA

$1,278,879

4.4x

4.7x

5.1x

2012 EBITDA

$1,317,245

4.3x

4.6x

4.9x

2011 Revenue

$53,566,220

0.11x

0.12x

Concluded Enterprise Value Range (Rounded)

Source: Provided by the management of Malkin Construction Corp.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Construction Corp.

Selected Public Company Analysis

COMPANY INFORMATION

ENTERPRISE VALUE AS MULTIPLE OF

Company Name

Stock

Price

% of 52-

Wk High

Enterprise

Value

LTM

EBITDA

2011

EBITDA

2012

EBITDA

LTM

Revenue

2011

Revenue

Bird Construction Inc. (1)

$9.89

77.9%

$289

3.7x

0.36x

0.32x

Balfour Beatty plc

4.07

72.7

2,100

3.6

3.5

0.15

0.14

Churchill Corp.

13.52

65.3

425

4.5

5.5

3.9

0.31

0.30

Kier Group plc

19.96

89.8

490

4.0

3.7

0.15

Tutor Perini Corporation

12.31

46.2

711

4.2

3.3

2.7

0.25

0.19

Mean

70.4%

803

4.1x

3.5x

0.24x

0.22x

Median

72.7%

490

4.1x

3.8x

3.7x

0.25x

0.19x

LTM = Latest Twelve Months

Enterprise Value = (Market Capitalization) + (Debt + Preferred Stock + Minority Interest) - (Cash & Equivalents)

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

Source: Bloomberg, Capital IQ, SEC filings

MARKET DATA

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Construction Corp.

Selected Public Company Analysis Conclusion

•

Based on Duff & Phelps’

analysis, the range of value, as determined by the selected public company analysis, is $5.0 million to $6.0 million, with a

midpoint of $5.5 million.

Selected Public Company Analysis

Malkin Construction Corp.

Enterprise Valuation Multiples

Valuation Summary

Metric

Public Company

Median

Selected Multiple

Range

Company

Performance

Enterprise Value Range

2011 EBITDA

3.3x

5.5x

3.8x

3.5x

4.5x

$1,278,879

$4,476,075

$5,754,953

2012 EBITDA

2.7x

3.9x

3.7x

3.5x

4.5x

$1,317,245

$4,610,357

$5,927,602

2011 Revenue

0.14x

0.32x

0.19x

0.10x

0.12x

$53,566,220

$5,356,622

$6,427,946

Concluded Enterprise Value Range

$5,000,000

$6,000,000

Public Company

Range

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Properties

Methodology

•

Discounted Cash Flow Analysis –

Income Approach

–

Duff & Phelps considered financial projections as approved by Management for the fiscal years ending December 31, 2011-2020.

–

Duff & Phelps performed a discounted cash flow analysis of the projected free cash flows.

–

Free

cash

flow

defined

cash

generated

the

business

that

available

either

reinvest

distribute

security

holders.

–

Projected free cash flows are discounted to the present using a discount rate which reflects their relative risk.

–

The discount rate is equivalent to the rate of return that security holders could expect to realize on alternative investment opportunities with

similar risk profiles.

–

Beyond the projection period, Duff & Phelps estimated the normalized terminal value by utilizing a perpetuity formula, a commonly accepted

terminal value approach.

–

Duff & Phelps based the terminal value on a normalized terminal year which reflects, among other things, the assumptions for long term growth,

EBITDA margin, capital expenditures, and investment in net working capital.

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Properties

Terminal Value Calculation

•

Based on the projections provided by management, Duff & Phelps normalized the terminal free cash flow as shown in the table below.

Normalized Terminal Free Cash Flow

Management Fees

$4,082,149

Leasing Fees (1)

896,004

Financing Fees (2)

698,447

Other Fees (3)

1,016,101

Total Revenue

6,692,700

Expenses (4)

(5,820,882)

EBITDA

871,818

Depreciation

109,762

EBIT

981,581

Taxes

(388,853)

NOPAT

592,728

Depreciation

(109,762)

Capital Expenditures

(115,539)

Change in New Working Capital

(85,290)

Free Cash Flow

$282,135

(1) Normalized based on the 10-yr average leasing fees as a % of management fees (21.9%).

(2) Normalized based on the 10-yr average financing fees as a % of management fees (17.1%).

(3) Normalized based on the 10-yr average other fees as a % of management fees (24.9%).

(4) Normalized based on the 10-yr average expenses as % of total revenue (85.9%).

Duff & Phelps -

CONFIDENTIAL

Valuation Analysis of Malkin Properties

Discounted Cash Flow Analysis Summary

•

Based on Duff & Phelps’

analysis, the range of value, as determined by the discounted cash flow analysis, is $4.0 million to $4.7 million, with a

midpoint of $4.3 million.

Discounted Cash Flow Analysis

Malkin Properties - MP, MCT, MNY

2011E

2012P

2013P

2014P

2015P

2016P

2017P

2018P

2019P

2020P

10-Yr CAGR

Revenue

$6,046,805

$5,932,825

$6,356,710

$6,265,711

$5,657,604

$6,507,218

$10,353,011

$5,810,629

$6,043,934

$7,023,038

2.9%

Growth

(1.9%)

7.1%

(1.4%)

(9.7%)

15.0%

59.1%

(43.9%)

4.0%

16.2%

EBITDA

1,378,192

894,148

1,175,725

938,148

179,065

944,046

4,407,881

(302,750)

(243,522)

556,448

10-Yr Avg

EBITDA Margin

22.8%

15.1%

18.5%

15.0%

3.2%

14.5%

42.6%

(5.2%)

(4.0%)

7.9%

13.0%

EBITDA Growth

(35.1%)

31.5%

(20.2%)

(80.9%)

427.2%

366.9%

(106.9%)

(19.6%)

(328.5%)

7/31-12/31

Terminal

Earnings Before Interest and Taxes

$1,813,644

$859,629

$1,125,908

$876,140

$107,174

$863,982

$4,320,902

($395,722)

($341,822)

$453,296

$981,581

Pro Forma Taxes @ 39.6%

(718,475)

(340,542)

(446,028)

(347,083)

(42,457)

(342,267)

(1,711,725)

156,765

135,413

(179,573)

(388,853)

Net Operating Profit After Tax

1,095,169

519,087

679,880

529,057

64,717

521,716

2,609,177

(238,957)

(206,409)

273,723

592,728

Depreciation

7,526

34,519

49,817

62,008

71,891

80,064

86,979

92,972

98,300

103,153

(109,762)

Capital Expenditures

(85,721)

(95,710)

(98,581)

(101,538)

(104,585)

(107,722)

(110,954)

(114,282)

(117,711)

(121,242)

(115,539)

(Increase) Decrease in Working Capital

(15,908)

22,221

(87,385)

(97,764)

(86,737)

(55,240)

(86,961)

(84,457)

(37,610)

(111,328)

(85,290)

Free Cash Flow

$1,001,066

$480,118

$543,731

$391,762

($54,714)

$438,818

$2,498,240

($344,724)

($263,430)

$144,305

$282,135

Terminal Growth Rate

3.00%

Weighted Average Cost of Capital

13.50%

12.50%

11.50%

Terminal Value

$2,687,003

$2,969,846

$3,319,239

Present Value of Terminal Value

757,373

914,553

1,117,609

Present Value of Discrete Cash Flow

3,260,267

3,341,707

3,427,419

$4,000,000

$4,250,000

$4,550,000

Implied Enterprise Value Multiples

2011 EBITDA

$1,378,192

2.9x

3.1x

3.3x

2012 EBITDA

$894,148

4.5x

4.8x

5.1x

2011 Revenue

$6,046,805

0.66x

0.70x

0.75x

Concluded Enterprise Value Range (Rounded)

Source: Provided by Company management

Duff & Phelps -

CONFIDENTIAL

Assumptions, Qualifications and Limiting Conditions

•

In performing its analyses with respect to the Proposed Transaction, Duff & Phelps, with the Company’s consent:

–

Relied

upon

the

accuracy,

completeness,

and

fair

presentation

the

Information,

and

all

other

information,

data,

advice,

opinions

and

representations obtained from public sources or provided to it from private sources, including Company management, and did not

independently verify any of the Information or such information;

–

Relied upon the fact that the Company has been advised by counsel as to all legal matters with respect to the Proposed Transaction, including

whether

all

procedures

required

law

taken

connection

with

the

Proposed

Transaction

have

been

duly,

validly

and

timely

taken;

–

Assumed

that

any

estimates,

evaluations,

forecasts,

projections,

the

Information,

and

the

Investor

allocation

schedules

furnished

Duff

Phelps were reasonably prepared and based upon the best information currently available to, and the good faith judgment of, the person

furnishing the same;

–

Assumed that information supplied and representations made by Company management are substantially accurate regarding the Company

and the Proposed Transaction;

–

Assumed that the factual statements concerning the Partnerships and Properties made in the Solicitations do not contain any untrue statement

material

fact

omit

state

material

fact

necessary

order

make

the

statements

made,

the

light

the

circumstances

under

which

they were made, not misleading;

–

Assumed

that

the

final

versions

all

documents

reviewed

Duff

Phelps

draft

form

conform

all

material

respects

the

drafts

reviewed;

–

Assumed that there has been no material change in the assets, financial condition, business, or prospects of the Partnerships, the Properties,

the Company or the Management Companies since the date of the most recent financial statements and other information made available to

Duff & Phelps;

–

Made no investigation of, and assumed no responsibility for, the

legal description or for legal matters including title or encumbrances. Title to

the Properties is assumed to be good and marketable unless otherwise stated. The Properties are further assumed to be free and clear of

liens, easements, encroachments and other encumbrances unless otherwise stated, and all improvements are assumed to lie within property

boundaries;

–

Assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or

national

government

private

entity

organization

have

been,

can

readily

obtained,

renewed

for

any

use

which

the

value

estimates provided in this report are based;

Duff & Phelps -

CONFIDENTIAL

Assumptions, Qualifications and Limiting Conditions

–

Assumed

full

compliance

with

all

applicable

federal,

state

and

local

zoning,

use,

occupancy,

environmental,

and

similar

laws

and

regulations,

unless otherwise stated;

–

Assumed responsible ownership and competent property management;

–

Assumed areas and dimensions of the Properties were obtained from sources believed to be reliable. No independent surveys were

conducted;

–

Assumed there are no hidden or unapparent conditions of the Properties, subsoil, or structures that affect value. No responsibility is assumed

for such conditions or for arranging for engineering studies that may be required to discover them;

–

soil

analysis

geological

studies

were

ordered

made

conjunction

with

Duff

Phelps’

analysis,

nor

was

investigation

made

any

water, oil, gas, coal, or other subsurface mineral and use rights or conditions;

–

Duff

Phelps

was

not

engaged

nor

are

qualified

detect

the

existence

hazardous

material,

which

may

not

present

near

the Properties. The presence of potentially hazardous substances may affect the value of the Properties. The value estimate herein is

predicated on the assumption that there is no such material on, in, or near the Property that would cause a loss in value. No responsibility is

assumed for any such conditions or for any expertise or engineering knowledge required to discover them;

–

The Americans with Disabilities Act ("ADA") became effective January 26, 1992. Duff & Phelps has not made a specific compliance survey and

analysis

the

Properties

determine

whether

not

they

are

conformity

with

the

various

detailed

requirements

the

ADA.

possible

that a compliance survey of the property along with a detailed study of ADA requirements could reveal that the property is not in compliance

with the ADA. If so, this would have a negative effect on the property value. Duff & Phelps was not furnished with any compliance surveys or

any other documents pertaining to this issue and therefore did not consider compliance or noncompliance with the ADA requirements when

estimating the value of the property;

–

Assumed

that

each

the

Partnerships

will

consent

the

Proposed

Transaction,

and

that

the

REIT

will

acquire

all

assets

and

liabilities

the

Partnerships, the Company, and the Management Companies (other than certain specified excluded assets);

–

Assumed

the

direction

the

Company

that,

for

the

purposes

its

analysis,

the

value

each

form

Consideration

(limited

partnership

interests in the operating partnership of the REIT, cash, or shares of Class A or Class B common stock in the REIT) is equivalent;

–

Assumed that all of the conditions required to implement the Proposed Transaction will be satisfied and that the Proposed Transaction will be

completed

accordance

with

the

Solicitations

without

any

amendments

thereto

any

waivers

any

terms

conditions

thereof;

and

–

Assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Proposed Transaction will

obtained

without

any

adverse

effect

the

REIT,

the

Company,

the

Management

Companies.

Duff & Phelps -

CONFIDENTIAL

Assumptions, Qualifications and Limiting Conditions

•

To the extent that any of the foregoing assumptions or any of the facts on which this analysis is based prove to be untrue in any material respect,

this

analysis

cannot

and

should

not

relied

upon.

Furthermore,

Duff

Phelps’

analysis

and

connection

with

the

preparation

its

Opinion,

Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and

other matters many of which are beyond the control of any party involved in the Proposed Transaction.

•

For purposes of its Opinion, the phrase “the allocation of the Consideration to the Investors in the Proposed Transaction is fair, from a financial

point of view, to each of the Investors (without giving effect to any impact of the Proposed Transaction on any particular Investor other than in its

capacity

member

the

Partnerships)”

means

that,

the

date

hereof

and

our

judgment,

the

Consideration

set

forth

the

Allocation

Schedule opposite each Investor’s name is the Consideration to which such Investor is entitled under the constituent documents of the

Partnerships as provided to Duff & Phelps by management of the Company.

•

Duff & Phelps has prepared the valuation of the Properties, the Partnerships, the Company, and the Management Companies as of July 1, 2011

and assumes (i) no responsibility for changes in market conditions and (ii) no obligation to revise its analysis to reflect any such changes which

occurred subsequent to July 1, 2011. This Opinion is effective as of the date hereof. This Opinion is necessarily based upon market, economic,

financial and other conditions as they exist and can be evaluated as of the date hereof, and Duff & Phelps disclaims any undertaking or obligation

advise

any

person

any

change

any

fact

matter

affecting

this

Opinion

which

may

come

brought

the

attention

Duff

Phelps

after the date hereof.

•

Duff & Phelps has not been requested to, and did not, (i) initiate any discussions with, or solicit any indications of interest from, third parties with

respect to the Proposed Transaction, the assets, businesses or operations of the Properties, the Company, or the Management Companies, or (ii)

advise the Company or any other party with respect to alternatives to the Proposed Transaction.

•

Duff & Phelps is not expressing any opinion as to the market price or value of REIT, including the price at which the Class A common stock may

trade at any time, or, except as set forth in the valuation analysis, any particular Property, the Company or the Management Companies, either

before

after

the

completion

the

Proposed

Transaction

the

IPO.

Duff

Phelps

Opinion

based

its

valuation

analyses

the

Properties,

the Partnerships, the Company, and the Management Companies as of June 30, 2011.

•

Our analysis did not take into account (i) any potential incremental value attributable to the portfolio of assets taken as a whole after giving effect to

the

Proposed

Transaction;

and

(ii)

the

effects

variations

aggregate

values

attributed

the

portfolio

assets

after

giving

effect

the

Proposed

Transaction on relative values of such portfolio assets. This Opinion should not be construed as a valuation opinion, credit rating, solvency

opinion, an analysis of the Company’s credit worthiness, as tax advice, or as accounting advice. Duff & Phelps has not made, and assumes no

responsibility to make, any representation, or render any opinion, as to any legal matter.

Duff & Phelps -

CONFIDENTIAL

Assumptions, Qualifications and Limiting Conditions

•

This analysis is for the information of the Company, its officers, managers and members and the Partnerships in connection with their

consideration of the Proposed Transaction and will be furnished to Investors in the Partnerships pursuant to the Solicitations and will be filed

pursuant to the Form S-4 and may not be used for any other purpose without our prior written consent. The basis and methodology for this

Opinion

have

been

designed

specifically

for

the

express

purposes

the

Company,

the

Management

Companies

and

the

Partnerships

and

may

not translate to any other purposes.

•

Duff & Phelps’

Opinion (i) does not address the merits of the underlying business decision to enter into the Proposed Transaction versus any

alternative

strategy

transaction,

(ii)

not

recommendation

how

the

Investors

should

vote

act

with

respect

any

matters

relating

the

Proposed Transaction, and (iii) does not address whether the Investors should elect to receive Class A common stock, limited partnership interests

in the operating partnership, or cash, or whether to proceed with the Proposed Transaction or any related transaction. The ultimate decision to

participate in the Proposed Transaction or any related transaction must be made by each Partnership and will need to take into account factors

unrelated to the financial analysis on which this Opinion is based. This letter should not be construed as creating any fiduciary duty on the part of

Duff & Phelps to any party.

Duff & Phelps -

CONFIDENTIAL

Property Value Allocation Waterfalls

112-122 West 34

Street

143,664,899

150,118,283

112 West 34th Street Company L.L.C.

143,664,899

Breakpoint

Net for override

143,664,899

Override to MH

7,183,245

Net to Investors

$136,481,654

50% LMH (master

partner)

23% of PLM group

not subject to

override

27% of PLM group

subject to override

Allocation

68,240,827

31,390,780

36,850,047

Cumulative priority

Return of capital

1,080,000

Net for override

35,770,047

Override to Wien

16,560,207

Override to Wiessmann

1,324,817

To investors

68,240,827

31,390,780

18,965,023

112 West 34th Street Associates L.L.C.

150,118,283

Return of capital

4,500,000

Net for override

145,618,283

Override to MH

14,561,828

Net to Investors

$135,556,455

Source: Provided by Company management

112 West 34 St. Waterfall

Amount to allocate for capital transaction

$293,783,182

112 West 34th

Street Company

L.L.C.

112 West 34th

Street Associates

L.L.C.

Duff & Phelps -

CONFIDENTIAL

Property Value Allocation Waterfalls

1400 Broadway

1400 Broadway Associates L.L.C. Waterfall

Amount to allocate for capital transaction

$257,903,429

AEM as agent for 2

groups

PLM as agent

LMH 1400 LLC

Split among groups

Total

25%

50%

25%

Allocation to group

$1,000,000

$175,000

$650,000

$175,000

300,000

150,000

650,000

162,500

325,000

162,500

Net subject to override

255,953,429

MH override

12,797,671

Balance allocated to investors

243,155,758

60,788,939

121,577,879

60,788,939

Total to investors

$61,276,439

$122,552,879

$61,276,439

2nd override

20% of AEM 25% group

$12,255,288

Threshold

400,000

Net for 2nd override

11,855,288

PLM Family 5 LLC

1,481,911

Morse

1,481,911

Net to investors of 20% group

9,291,466

80% of 25% group

49,021,152

Net to investors

$58,312,617

$122,552,879

$61,276,439

Source: Provided by Company management

Duff & Phelps -

CONFIDENTIAL

Property Value Allocation Waterfalls

Empire State Building

Source: Provided by Company management

Empire State Building Waterfall

Amount to allocate for capital transaction

$2,399,217,867

Split Between ESBC and ESBA

Empire State

Building Co L.L.C.

Empire State

Building Associates

L.L.C.

$1,189,775,581

$1,209,442,285

Empire State Building Co L.L.C.

Master Partners (not

subject to any

override)

PLM Joint Venture

dtd

4-2-71

PLM Joint Venture

dtd

7-2-71

1273 Realty

Company (portion

subject to override)

1273 Realty

Company (portion not

subject to override)

Ownership %

76.25%

10.00%

5.00%

8.3125%

0.4375%

Allocation

907,203,881

118,977,558

59,488,779

98,900,095

5,205,268

Return of capital

1,800,000

900,000

1,496,250

Priority

Subject to override

117,177,558

58,588,779

97,403,845

Override

29,294,390

14,647,195

Override

53,572,115

Net to Investors

$907,203,881

$89,683,169

$44,841,584

$45,327,980

$5,205,268

Empire State Building Associates L.L.C.

1,209,442,285

Return of Capital

33,000,000

Net for Override

1,176,442,285

MH Override (VC)

117,644,229

Net to Investors

$1,091,798,057

Duff & Phelps -

CONFIDENTIAL

Property Value Allocation Waterfalls

250 West 57

Street

250 West 57th Waterfall

Amount to allocate for capital transaction

$273,373,704

Fisk Building

Associates L.L.C.

250 West 57th

Street Associates

L.L.C.

$131,287,437

$142,086,267

Fisk Building Associates L.L.C.:

$131,287,437

Breakpoint

Net for Override

131,287,437

MH Override

13,128,744

Net to investors

$118,158,693

55% Group

45% Group

$64,987,281

$53,171,412

Unpaid priority

Return of capital

3,000,000

Net for override

50,171,412

MH override

2,508,571

Malkin Family

11,915,710

Morse Family

11,915,710

Net to Investors

$64,987,281

$26,831,421

250 West 57th Street Associates L.L.C.:

$142,086,267

Return of capital

7,200,000

Net for override (VC)

134,886,267

MH override (VC)

13,488,627

Net to Investors

$128,597,641

Source: Provided by Company management

Duff & Phelps -

CONFIDENTIAL

Property Value Allocation Waterfalls

100, 200 & 300 First Stamford Place

Source: Provided by Company management

100, 200 & 300 First Stamford Place Waterfall

Amount to allocate for capital transaction

$13,257,187

First Stamford Place

SPE L.L.C.

Fairfax First Stamford

SPE L.L.C. / Merrifield

First Stamford SPE L.L.C.

Fairfax First Stamford

SPE L.L.C.

Merrifield First Stamford

SPE L.L.C.

Allocation

37.64%

62.36%

31.18%

$4,832,916

$8,424,271

$4,212,136

First Stamford Place SPE L.L.C.:

Class A & A2 Members

Manager

Member

Original capital

$22,800,000

$230,303

Remaining capital

Return of capital

Priority

Remainder

2,392,293

48,329

2,392,293

Total

$2,392,293

$48,329

$2,392,293

Pool Share of Class B (20.0%)

478,459

Fairfax First Stamford SPE L.L.C.:

$4,212,136

Return of capital

Net for override

4,212,136

MH override

421,214

Net to Investors

3,790,922

Merrifield First Stamford SPE L.L.C.:

$4,212,136

45%

55%

Allocation

$1,895,461.0

$2,316,674.6

Return of capital

Net

1,895,461

2,316,675

10% to MH (Assigned)

189,546

231,667

22.5% to PLMalkin Family 9 LLC

426,479

22.5% to EWM

426,479

Net to Investors

$852,957

$2,085,007