EX-99.56 22 d283359dex9956.htm INTERIM PRELIMINARY WORK PAPERS RELATING TO ALLOCATION OF CONSIDERATION Interim Preliminary Work Papers Relating to Allocation of Consideration

Exhibit 99.56

Interim Preliminary Work Papers Relating to Allocation of Consideration

Delivered by the Independent Valuer

to the Supervisor on October 5, 2011

The following are interim preliminary work papers with respect to allocations of consideration submitted by the independent valuer to the supervisor for its review and verification and were not intended to, and did not, reflect the final work product or advice or conclusions of the independent valuer.

The tables that follow also include a summary of projections that were utilized by the independent valuer in calculating the exchange values reflected in these preliminary work papers. The projections included in these interim preliminary work papers were not final and were being prepared solely for the purpose of determining the relative values among the subject LLCs, the private entities and the management companies and to establish exchange values to facilitate the consolidation and should not be relied upon for any other purpose, including without limitation, as an indicator of future performance of the company, the properties, the subject LLCs or the private entities. The final projections used in preparing the exchange values are included as Appendix C-1 to the prospectus/consent solicitation. The projections should not be relied upon in determining the market value or the estimated value of the company after giving effect to the consolidation and the IPO. The actual performance of the properties may be materially different from these projections because of changes in market conditions and many other factors.

Neither the subject LLCs nor the supervisor as a matter of course make public projections as to future performance, earnings or other results beyond the current fiscal year, and the supervisor is especially reluctant to disclose projections for extended periods due to the unpredictability of the underlying assumptions and estimates. The projections with respect to the properties were presented by the independent valuer based on the information provided by management of the supervisor and analysis performed by the independent valuer and reviewed and approved by management of the supervisor.

These projections were not prepared in accordance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial projections. This information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this prospectus/consent solicitation are cautioned not to place undue reliance on the prospective financial information. Neither the company’s independent registered public accounting firm nor any other independent accountants have examined, compiled or otherwise applied procedures to the projections presented herein or express an opinion or any other form of assurance on them. The summary of the projection is being included in this prospectus/consent solicitation solely because the projections were used by the independent valuer in calculating the illustrative exchange values using the discounted cash flow method to allocate residual value.

The projections were based on numerous assumptions that may prove to be wrong. Important factors that may affect actual results and cause the projections to not be achieved include, but are not limited to, risks and uncertainties relating to the company and other factors described under “Risk Factors” and “Forward-Looking Statements.” The projections also reflect assumptions as to certain business decisions that are subject to change. As a result, actual results may differ materially from those contained in the projections. Accordingly, there can be no assurance that the projections will be realized.

Certain of the prospective financial information set forth herein may be considered non-U.S. GAAP financial measures. The independent valuer believed this information could be useful in valuing the properties. Non-U.S. GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP, and non-U.S. GAAP financial measures may not be comparable to similarly titled amounts used by other companies.

The inclusion of the summary of the projections in this prospectus/consent solicitation should not be regarded as an indication that any of the company, the subject LLCs or the supervisor or their respective affiliates, advisors or representatives considered the projections to be predictive of actual future events, and the projections should not be relied upon as such. None of the company, the subject LLCs or the supervisor or their respective affiliates, advisors, officers, directors, partners or representatives can give you any assurance that actual results will not differ from the projections, and none of them undertakes any obligation to update or otherwise revise or reconcile the projections to reflect circumstances existing after the date the projections were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the projections are shown to be in error. None of the company, the supervisor and the subject LLCs intend to make publicly available any update or other revision to the projections. None of the company, the supervisor and the subject LLCs or their respective affiliates, advisors, officers, directors, partners or representatives has made or makes any representation to any participant or other person regarding the company’s or the subject LLCs ultimate performance compared to the information contained in the projections or that forecasted results will be achieved. None of the subject LLCs, the private entities, the management companies or any of their affiliates has made any representation to the company concerning the projections.

Westport Main Street Retail L.L.C. Waterfall

 

 

Amount to Allocate for Capital Transaction

   $ 4,923,389         
    Class A      GP      Class B  

Original Capital

   $ 9,119,000       $ 92,111       $ 0   

Remaining Capital

     9,119,000         92,111         0   

Priority 1

     805,485         8,136         0   

Return of Capital

     4,068,670         41,098         0   

Remainder

     0         0         0   

Net to Investors

   $ 4,874,155       $ 49,234       $ 0   
    Pool Share of Class B (20.0%)         0   
    Allocated Pool          $ 0   

Consolidated Equity Value

 

 

Property

  

Legal Entity

   

Investor Class

    Value      Total Value
Check		        

112-122 West 34th Street

  

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

   

50% LMH (master partner)

    $ 80,509,294        
 

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

   

23% of PLM group not subject to override

    $ 37,034,275        
 

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

   

27% of PLM group subject to override

    $ 22,277,509        
 

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

   

Wien - Override

    $ 19,627,323        
 

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

   

Override

    $ 1,570,186        
 

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

   

Malkin Holdings LLC - Override

    $ 8,325,807        
 

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

   

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

    $ 90,725,582        
 

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

   

Malkin Holdings LLC - Override

    $ 9,580,620       $ 269,650,597        6.0 % 
       

 

 

     

 

 

    

1333 Broadway

  

1333 Broadway Associates L.L.C.

   

Participants

    $ 125,421,763       $ 125,421,763        2.8 % 
       

 

 

     

 

 

    

1350 Broadway

  

1350 Broadway Associates L.L.C.

   

Peter L. Malkin Group

    $ 70,855,484        
 

1350 Broadway Associates L.L.C.

   

Malkin Holdings LLC - Override

    $ 17,665,609        
 

1350 Broadway Associates L.L.C.

   

David M. Baldwin Group

    $ 88,521,092       $ 177,042,184        3.9 % 
       

 

 

     

 

 

    

1400 Broadway

  

1400 Broadway Associates L.L.C.

   

Anthony E. Malkin

    $ 59,654,650        
 

1400 Broadway Associates L.L.C.

   

Peter L. Malkin

    $ 125,378,211        
 

1400 Broadway Associates L.L.C.

   

LMH 1400 LLC

    $ 62,689,106        
 

1400 Broadway Associates L.L.C.

   

Malkin Holdings LLC - Override

    $ 13,095,075        
 

1400 Broadway Associates L.L.C.

   

Peter L. Malkin Family 5 LLC - Override

    $ 1,517,228        
 

1400 Broadway Associates L.L.C.

   

Override

    $ 1,517,228       $ 263,851,497        5.8 % 
       

 

 

     

 

 

    

501 Seventh Avenue

  

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

   

Participants

    $ 42,420,875        
 

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

   

Malkin Holdings LLC - Override

    $ 3,923,585        
 

501 Seventh Avenue Associates L.L.C.

   

Participants

    $ 74,179,596        
 

501 Seventh Avenue Associates L.L.C.

   

Malkin Holdings LLC - Override

    $ 8,133,733       $ 128,657,789        2.8 % 
       

 

 

     

 

 

    

1359 Broadway

  

Marlboro Building Associates L.L.C.

   

Participants

    $ 125,108,806        
 

Marlboro Building Associates L.L.C.

   

Malkin Holdings LLC - Override

    $ 8,740,204       $ 133,849,010        3.0 % 
       

 

 

     

 

 

    

One Grand Central Place

  

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

   

Participants

    $ 266,646,519        
 

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

   

Malkin Holdings LLC - Override

    $ 29,518,502        
 

Lincoln Building Associates L.L.C.

   

Participants

    $ 288,514,720        
 

Lincoln Building Associates L.L.C.

   

Malkin Holdings LLC - Override

    $ 32,012,747       $ 616,692,489        13.6 % 
       

 

 

     

 

 

    

Empire State Building, 350 Fifth Ave

  

Empire State Building Co L.L.C.

   

Master Partners

    $ 821,134,012        
 

Empire State Building Co L.L.C.

   

PLM 4-2-71 JV, 10% Investors

    $ 81,217,280        
 

Empire State Building Co L.L.C.

   

PLM 4-2-71 JV, 10% Override

    $ 26,472,427        
 

Empire State Building Co L.L.C.

   

PLM 4-2-71 JV, 5% Investors

    $ 40,608,640        
 

Empire State Building Co L.L.C.

   

PLM 4-2-71 JV, 5% Override

    $ 13,236,213        
 

Empire State Building Co L.L.C.

   

1273 Realty Company Investors

    $ 45,817,043        
 

Empire State Building Co L.L.C.

   

1273 Realty Company - Override

    $ 48,411,450        
 

Empire State Building Associates L.L.C.

   

Participants

    $ 1,147,680,334        
 

Empire State Building Associates L.L.C.

   

Malkin Holdings LLC - Override

    $ 116,359,480       $ 2,340,936,878        51.8 % 
       

 

 

     

 

 

    

250 West 57th Street

  

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

   

Participants

    $ 130,047,051        
 

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

   

Malkin Holdings LLC - Override

    $ 9,803,026        
 

Fisk Building Associates L.L.C.

   

Participants - 45% Group

    $ 30,109,122        
 

Fisk Building Associates L.L.C.

   

Participants - 55% Group

    $ 73,421,134        
 

Fisk Building Associates L.L.C.

   

Override

    $ 13,554,561        
 

Fisk Building Associates L.L.C.

   

Malkin Family - Override

    $ 13,554,561        
 

Fisk Building Associates L.L.C.

   

Malkin Holdings LLC - Override

    $ 17,675,033       $ 288,164,489        6.4 % 
       

 

 

     

 

 

    

10 Bank Street

  

1185 Gotham L.L.C.

   

GP

    $ 180,592        
 

1185 Gotham L.L.C.

   

Class 2 LP

    $ 0        
 

1185 Gotham L.L.C.

   

Class 1 LPs

    $ 8,877,855       $ 9,058,447        0.2 % 
       

 

 

     

 

 

    

500 Mamaroneck Ave

  

Malkin 500 Mamaroneck Avenue L.P.

   

Class A LPs

    $ 6,371,300        
 

Malkin 500 Mamaroneck Avenue L.P.

   

Class B LP

    $ 0        
 

Malkin 500 Mamaroneck Avenue L.P.

   

GP

    $ 64,357        
 

Viviane Paris, LLC

   

Viviane Paris, LLC

    $ 2,021,136        
 

Viviane Paris, LLC

   

Class B LP

    $ 124,083       $ 8,580,875        0.2 % 
       

 

 

     

 

 

    

383 Main Ave

  

Fairfield Merritview SPE L.L.C.

   

GP

    $ 65,064        
 

Fairfield Merritview SPE L.L.C.

   

Class B LP

    $ 2,891,742        
 

Fairfield Merritview SPE L.L.C.

   

Class A LPs

    $ 3,549,614        
 

Fairfield Merritview SPE L.L.C.

   

Malkin Holdings LLC - Override

    $ 722,936       $ 7,229,356        0.2 % 
       

 

 

     

 

 

    

100, 200 & 300 First Stamford Place

  

First Stamford Place SPE L.L.C.

   

Class A & A2

    $ 942,920        
 

First Stamford Place SPE L.L.C.

   

GP

    $ 19,049        
 

First Stamford Place SPE L.L.C.

   

Class B

    $ 942,920        
 

Fairfax First Stamford SPE L.L.C.

   

Fairfax First Stamford SPE L.L.C.

    $ 1,611,551        
 

Fairfax First Stamford SPE L.L.C.

   

Malkin Holdings LLC - Override

    $ 179,061        
 

Merrifield First Stamford SPE L.L.C.

   

Merrifield First Stamford SPE L.L.C. - 55% Members

    $ 886,353        
 

Merrifield First Stamford SPE L.L.C.

   

Merrifield First Stamford SPE L.L.C. - 45% Members

    $ 362,599        
 

Merrifield First Stamford SPE L.L.C.

   

PLM - Override

    $ 179,061        
 

Merrifield First Stamford SPE L.L.C.

   

PLMalkin Family 9 LLC - Override

    $ 181,299        
 

Merrifield First Stamford SPE L.L.C.

   

Override

    $ 181,299       $ 5,486,113        0.1 % 
       

 

 

     

 

 

    

10 Union Square

  

New York Union Square Retail L.P.

   

GP

    $ 230,926        
 

New York Union Square Retail L.P.

   

Class B LP

    $ 11,430,813        
 

New York Union Square Retail L.P.

   

Class A LPs

    $ 11,430,813       $ 23,092,552        0.5 % 
       

 

 

     

 

 

    

Metro Center

  

One Station Place, Limited Partnership

   

GP

    $ 379,701        
 

One Station Place, Limited Partnership

   

Class A LP

    $ 3,417,305        
 

One Station Place, Limited Partnership

   

Class B LP

    $ 34,173,054       $ 37,970,060        0.8 % 
       

 

 

     

 

 

    

103-107 Main Street

  

Westport Main Street Retail L.L.C.

   

Manager

    $ 49,234        
 

Westport Main Street Retail L.L.C.

   

Class B Members

    $ 0        
 

Westport Main Street Retail L.L.C.

   

Class A Members

    $ 4,874,155       $ 4,923,389        0.1 % 
       

 

 

     

 

 

    

66-99 Main Street

  

Malkin Co-Investor Capital L.P.

   

GP

    $ 49,570        
 

Malkin Co-Investor Capital L.P.

   

Class B LPs

    $ 0        
 

Malkin Co-Investor Capital L.P.

   

Class A LPs

    $ 4,907,382        
 

Peter L. Malkin

   

Peter L. Malkin

    $ 2,263,317        
 

New Soundview Plazza Associates, Limited Partnership

   

LP

    $ 2,150,150       $ 9,370,419        0.2 % 
       

 

 

     

 

 

    

77 West 55th Street

  

Malkin East West Retail Portfolio L.P.

   

GP

    $ 155,772        
 

Malkin East West Retail Portfolio L.P.

   

Class B LP

    $ 7,710,727        
 

Malkin East West Retail Portfolio L.P.

   

Class A LPs

    $ 7,710,727       $ 15,577,227        0.3 % 
       

 

 

     

 

 

    

170 East 8th Street

  

1185 Gotham L.L.C.

   

GP

    $ 158,453        
 

1185 Gotham L.L.C.

   

Class 2 LP

    $ 0        
 

1185 Gotham L.L.C.

   

Class 1 LPs

    $ 7,789,502       $ 7,947,955        0.2 % 
       

 

 

     

 

 

    

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

  

Allocations to Investors Pending

   

Allocations to Investors Pending

    $ 14,600,000        
       

 

 

     

 

 

    

Malkin Holdings, LLC (Ex Overrides)

         $ 16,558,133       $ 16,558,133        0.4 % 

Malkin Properties

         $ 6,943,061       $ 6,943,061        0.2 % 

Malkin Construction Corp.

         $ 9,087,141       $ 9,087,141        0.2 % 

Total Value of Equity Interests

         $ 4,520,691,424       $ 4,520,691,424        100.0 % 

Overrides

         $ 275,735,418        

Malkin Holdings LLC Equity Waterfall

 

 

Property / Entity

   

Legal Entity

   Capital Override ($)     Class A     Class B (1)  

112-122 West 34th Street

   

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

   $ 8,325,807      $ 7,801,281      $ 524,526   

112-122 West 34th Street

   

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

     9,580,620        8,977,041        603,579   

1350 Broadway

   

1350 Broadway Associates L.L.C.

     17,665,609        16,552,675        1,112,933   

1400 Broadway

   

1400 Broadway Associates L.L.C.

     13,095,075        12,270,085        824,990   

501 Seventh Avenue

   

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

     3,923,585        3,676,399        247,186   

501 Seventh Avenue

   

501 Seventh Avenue Associates L.L.C.

     8,133,733        7,621,308        512,425   

1359 Broadway

   

Marlboro Building Associates L.L.C.

     8,740,204        8,189,571        550,633   

One Grand Central Place

   

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

     29,518,502        28,234,487        1,284,016   

One Grand Central Place

   

Lincoln Building Associates L.L.C.

     32,012,747        30,728,731        1,284,016   

Empire State Building, 350 Fifth Ave

   

Empire State Building Associates L.L.C.

     116,359,480        115,075,465        1,284,016   

250 West 57th Street

   

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

     9,803,026        9,185,436        617,591   

250 West 57th Street

   

Fisk Building Associates L.L.C.

     17,675,033        16,561,506        1,113,527   

383 Main Ave

   

Fairfield Merritview SPE L.L.C.

     722,936        677,391        45,545   

100, 200 & 300 First Stamford Place

   

Fairfax First Stamford SPE L.L.C.

     179,061        167,780        11,281   
   Total Override Value   $ 275,735,418      $ 265,719,156      $ 10,016,262   
  

Malkin Holdings LLC (Ex-Overrides)

     16,558,133        15,514,970        1,043,162   
  

Total Value of Malkin Holdings LLC

     $ 281,234,126      $ 11,059,424   
   % Ownership in REIT       6.221 %      0.245 % 
  

Total Value of Malkin Holdings LLC

       $ 292,293,550   
   % Ownership in REIT         6.466 % 

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

       

       Total REIT Value      $ 4,520,691,424     

100, 200 & 300 First Stamford Place Equity 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)		     100, 200 & 300  First
Stamford Place
Consolidated		  

Asset Value

    $ 79,820,000      $ 79,820,000      $ 96,360,000      $ 256,000,000   

Plus: Excess Cash

      0        0        0        0   

Less: Supervisory Fees

      (79,388 )      (79,388 )      (355,110 )      (513,887 ) 

Less: Debt

      (77,950,000 )      (77,950,000 )      (94,100,000 )      (250,000,000 ) 

Amount to Allocate for Capital Transaction

    $ 1,790,612      $ 1,790,612      $ 1,904,890      $ 5,486,113   

100, 200 & 300 First Stamford Place Waterfall

 

 

Amount to allocate for capital transaction

    $ 5,486,113            
    

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%      31.18%  
   $ 1,904,890       $ 3,581,223       $ 1,790,612       $ 1,790,612   

First Stamford Place SPE L.L.C.:

            
     Class A      GP      Class B         

Original capital

    $ 22,800,000       $ 230,303       $ 0      

Remaining capital

      0         0         0      

Return of capital

      0         0         0      

Priority

      0         0         0      

Remainder

      942,920         19,049         942,920      

Total

    $ 942,920       $ 19,049       $ 942,920      
     Pool Share of Class B (20.0%)         188,584      

Fairfax First Stamford SPE L.L.C.:

            
   $ 1,790,612            

Return of capital

      0            
  

 

 

           

Net for override

      1,790,612            

MH override

      179,061            
  

 

 

           

Net to Investors

      1,611,551            

Merrifield First Stamford SPE L.L.C.:

            
   $ 1,790,612            
     45%      55%                

Allocation

    $ 805,775.3       $ 984,836.4         

Return of capital

      0         0         
  

 

 

     

 

 

        

Net

      805,775         984,836         

10% to MP (PLM)

      80,578         98,484         

22.5% to PLMalkin Family 9 LLC

      181,299         0         

22.5% to EWM

      181,299         0         

Net to Investors

   $ 362,599       $ 886,353         

112 West 34th Street Equity 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)		     Consolidated  

Asset Value

    $ 190,000,000      $ 170,000,000      $ 360,000,000   

Plus: Excess Cash

      0        0        0   

Less: Supervisory Fees

      (520,797 )      (655,606 )      (1,176,403 ) 

Less: Debt

      (89,173,000 )      0        (89,173,000 ) 

Amount to Allocate for Capital Transaction

    $ 100,306,203      $ 169,344,394      $ 269,650,597   

112 West 34 St. Waterfall

 

 

Amount to allocate for capital transaction

    $ 269,650,597         
     112 West 34th  Street
Company L.L.C.		      112 West 34th  Street
Associates L.L.C.		         
     169,344,394         100,306,203      

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

      169,344,394         

Breakpoint

      2,828,258         
  

 

 

        

Net for override

      166,516,136         

Override to MH

      8,325,807         
  

 

 

        

Net to Investors

    $ 161,018,588         
     50% LMH (master
partner)		      23% of PLM group
not subject to
override		      27% of PLM group
subject to override		  

Allocation

      80,509,294         37,034,275         43,475,019   

Cumulative priority

            0   

Return of capital

            1,080,000   

Net for override

            42,395,019   

Override to Wien

            19,627,323   

Override

            1,570,186   
  

 

 

     

 

 

     

 

 

  

To investors

      80,509,294         37,034,275         22,277,509   
  

 

 

     

 

 

     

 

 

  

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

         100,306,203      

Return of capital

         4,500,000      
     

 

 

     

Net for override

         95,806,203      

Override to MH

         9,580,620      
     

 

 

     

Net to Investors

       $ 90,725,582      

 

* Does not include 2nd tier override override to MH from 6.3% of investors.

250 West 57th Equity Value

 

 

     Fisk Building
Associates L.L.C.
(Operating Lessee)		     250 West 57th  St.
Associates L.L.C.
(Fee Owner)		     250 West 57th
Consolidated		  

Asset Value

    $ 150,000,000      $ 181,000,000      $ 331,000,000   

Plus: Excess Cash

      0        0        0   

Less: Supervisory Fees

      (729,588 )      (717,872 )      (1,447,460 ) 

Less: Unpaid Cash Override

      (956,000 )      0        (956,000 ) 

Less: Debt

      0        (40,432,051 )      (40,432,051 ) 

Amount to Allocate for Capital Transaction

    $ 148,314,412      $ 139,850,077      $ 288,164,489   

250 West 57th Waterfall

 

 

Amount to allocate for capital transaction

    $ 288,164,489      
     Fisk Building
Associates L.L.C.		      250 West 57th  Street
Associates L.L.C.		  
   $ 148,314,412       $ 139,850,077   

Fisk Building Associates L.L.C.:

    $ 148,314,412      

MH Override

      14,821,441      
  

 

 

     

Net to investors

    $ 133,492,970      
  

 

 

     
     55% Group      45% Group  
   $ 73,421,134       $ 60,071,837   

Unpaid priority

         0   

Return of capital

         3,000,000   
  

 

 

     

 

 

  

Net for override

         57,071,837   

MH override

         2,853,592   

Malkin Family

         13,554,561   

Override

         13,554,561   

Net to Investors

    $ 73,421,134       $ 30,109,122   

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

      
   $ 139,850,077      

Return of capital

      10,800,000      
  

 

 

     

Net for override (VC)

      129,050,077      

MH override (VC)

      9,803,026      
  

 

 

     

Net to Investors

    $ 130,047,051      

Fairfield Merritview SPE L.L.C. Equity Value

 

 

Asset Value

    $ 39,000,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      (117,664 ) 

Less: Debt

      (31,652,980 ) 

Amount to Allocate for Capital Transaction

    $ 7,229,356   

Fairfield Merritview SPE L.L.C. Waterfall

 

 

Amount to Allocate for Capital Transaction

   $ 7,229,356           
    Class A     GP      Class B      Override  

Original Capital

     8,800,000        89,000         

Remaining Capital

     0        0         

Return of Capital

     0        0         

Priority @ 8.0%

     0        0         0      

Priority @ 12.0%

     0        0         0         0   

Remainder

     3,549,614        65,064         2,891,742         722,936   

Net to Investors

   $ 3,549,614      $ 65,064       $ 2,891,742       $ 722,936   
 

 

Pool Share of Class B (20.0%)

  

      578,348      
    Allocated Pool         $ 332,550      

500 Mamaroneck Avenue L.P. Equity Value

 

 

Asset Value

    $ 43,000,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      (187,479 ) 

Less: Debt

      (34,231,646 ) 

Amount to Allocate for Capital Transaction

    $ 8,580,875   

500 Mamaroneck Avenue L.P. Waterfall

 

 

Amount to Allocate for Capital Transaction

    $ 8,580,875       
     500 Mamaroneck
Avenue L.P.		     Viviane Paris, LLC        

Allocation %

      75.0 %      25.0 %   

Allocation $

    $ 6,435,657      $ 2,145,219     

500 Mamaroneck Avenue L.P.:

       
     Class A     GP     Class B  

Remaining capital

      13,500,000        136,364     
  

 

 

    

 

 

    

 

 

  

Return of capital

      6,371,300        64,357        0   

Priority

      0        0        0   

Remainder

      0        0        0   
  

 

 

    

 

 

    

 

 

  

Total

    $ 6,371,300      $ 64,357      $ 0   
  

 

 

    

 

 

    

 

 

  

Viviane Paris, LLC:

       
     Viviane Paris, LLC           Class B  

Remaining capital

      4,388,121          0   
  

 

 

      

 

 

  

Return of capital

      2,145,219          0   

Priority

      0          0   

Priority

      (744,500 )        (496,333 ) 

Remainder

      620,417          620,417   
  

 

 

      

 

 

  

Total

      2,021,136          124,083   
  

 

 

      

 

 

  
     Pool Share of Class B (20.0%)        24,817   
     Allocated Class B Pool      $ 14,270   

501 Seventh Avenue Waterfall

 

 

Amount to Allocate for Capital Transaction

    $ 128,657,789     
     501 Seventh Avenue
Associates L.L.C.		     Seventh & 37th Building
Associates L.L.C.		  
   $ 82,313,329      $ 46,344,460   

501 Seventh Avenue Associates LLC

    $ 82,313,329     

Total NPV of Malkin Holdings override

      8,133,733     

Net to Investors

    $ 74,179,596     

Seventh & 37th Building Associates

    $ 46,344,460     

Return of capital for VC

      (3,600,000 )   
  

 

 

    

Net for override

      42,744,460     

Malkin Holdings override

      3,923,585     

Net to Investors

    $ 42,420,875     

1185 Gotham L.L.C. Equity Value

 

 

     Gotham     Bank Street  

Asset Value

    $ 28,000,000      $ 44,000,000   

Plus: Excess Cash

      0        0   

Less: Supervisory Fees

      (185,699 )      (185,700 ) 

Less: Debt

      (19,866,346 )      (34,755,853 ) 

Amount to Allocate for Capital Transaction

    $ 7,947,955      $ 9,058,447   

1185 Gotham L.L.C. Waterfall

 

 

Gotham Equity Value

    $ 7,947,955       

Bank Street Equity Value

      9,058,447       
  

 

 

      

Amount to Allocate for Capital Transaction

    $ 17,006,402       
  

 

 

      
     Class 1 LPs     GP     Class 2 LPs  
     98.006 %      1.994 %      0.000 % 

Remaining capital

    $ 24,882,698      $ 506,160      $ 0   

Priority

      1,118,218        22,747        0   

Return of capital

      15,549,139        316,298        0   

Remainder

      0        0        0   

Net to Investors

   $ 16,667,357      $ 339,045      $ 0   
  

 

Pool Share of Class 2 (20.0%)

  

     0   
  

 

Allocated Pool

  

   $ 0   

1333 Broadway Associates L.L.C. Equity Value

 

 

Asset Value

    $ 178,000,000   

Plus: Excess Cash

      19,000,348   

Less: Supervisory Fees

      (378,585 ) 

Less: Debt

      (71,200,000 ) 

Amount to Allocate for Capital Transaction

    $ 125,421,763   

1350 Broadway Associates L.L.C. Equity Value

 

 

Asset Value

    $ 218,000,000   

Plus: Excess Cash

      0   

Less: Other Outstanding Liabilities

      (530,481 ) 

Less: Debt

      (40,427,335 ) 

Amount to Allocate for Capital Transaction

    $ 177,042,184   

1350 Broadway Associates L.L.C. Waterfall

 

 

Amount to Allocate for Capital Transaction

    $ 177,042,184      
     DMB Group      PLM Group  

Allocation to group

    $ 88,521,092       $ 88,521,092   

Return of capital

         193,049   
     

 

 

  

Net for override

         88,328,043   

Malkin Holdings override (20.0%)

         17,665,609   

Net to Investors

    $ 88,521,092       $ 70,855,484   

Marlboro Building Associates L.L.C. Equity Value

 

 

Asset Value

    $ 183,000,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      (752,901 ) 

Less: Debt

      (48,398,090 ) 

Amount to Allocate for Capital Transaction

    $ 133,849,010   

Marlboro Building Associates L.L.C. Waterfall

 

 

Amount to Allocate for Capital Transaction

    $ 133,849,010   

Marlboro Building Associates LLC

      133,849,010   

Return of capital

      3,590,222   
  

 

 

  

Net for Override

      130,258,788   

MH Override (VC)

      8,740,204   
  

 

 

  

Net to Investors

    $ 125,108,806   

1400 Broadway Associates L.L.C. Equity Value

 

 

Asset Value

    $ 337,000,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      (1,848,503 ) 

Less: Debt

      (71,300,000 ) 

Amount to Allocate for Capital Transaction

    $ 263,851,497   

1400 Broadway Associates L.L.C. Waterfall

 

 

Amount to allocate for capital transaction

       $ 263,851,497         
Split among groups    Total      AEM as agent for  2
groups
25%		      PLM as agent
50%		      LMH 1400 LLC
25%		  

Allocation to group

    $ 1,000,000       $ 175,000       $ 650,000       $ 175,000   
     300,000         150,000         0         150,000   
     650,000         162,500         325,000         162,500   
  

 

 

           

Net subject to override

      261,901,497            

MH override

      13,095,075            
  

 

 

           

Balance allocated to investors

      248,806,422         62,201,606         124,403,211         62,201,606   
  

 

 

           

Total to investors

       $ 62,689,106       $ 125,378,211       $ 62,689,106   

2nd override

            

20% of AEM 25% group

       $ 12,537,821         

Threshold

         400,000         
     

 

 

        

Net for 2nd override

         12,137,821         

PLM Family 5 LLC

         1,517,228         

Override

         1,517,228         

Net to investors of 20% group

         9,503,366         

80% of 25% group

         50,151,284         

Net to investors

       $ 59,654,650       $ 125,378,211       $ 62,689,106   

BBSF LLC Equity Value

 

 

Asset Value

    $ 14,600,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      0   

Less: Debt

      0   

Amount to Allocate for Capital Transaction

    $ 14,600,000   

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

 

 

Amount to Allocate for Capital Transaction

    $ 14,600,000     
     ARSA Associates     PLM Family 2000
LLC		  

Allocation %

      47.368 %      52.632 % 

Allocation $

    $ 6,915,786      $ 7,684,214   

ARSA Associates:

     
     PLM Family 2000 LLC     Anthony E. Malikn  
     73.6111 %      26.3889 % 

Remaining capital

    $ 17,249,958      $ 0   
  

 

 

    

 

 

  

Return of capital

      6,915,786        0   

Priority

      0        0   

Remainder

      0        0   
  

 

 

    

 

 

  

Total

    $ 6,915,786      $ 0   
  

 

 

    

 

 

  

Empire State Building Equity Value

 

 

     Empire State Land
Associates L.L.C.
(Fee Owner)		     Empire State
Building Company
L.L.C.
(Operating Lessee)		     Empire State
Building
Consolidated		  

Asset Value

    $ 1,428,000,000      $ 1,081,000,000      $ 2,509,000,000   

Plus: Excess Cash

      0        0        0   

Less: Supervisory Fees

      (4,960,186 )      (4,102,936 )      (9,063,122 ) 

Less: Debt

      (159,000,000 )      0        (159,000,000 ) 

Amount to Allocate for Capital Transaction

    $ 1,264,039,814      $ 1,076,897,064      $ 2,340,936,878   

Empire State Building Waterfall

 

 

Amount to allocate for capital transaction

   $ 2,340,936,878           
Split Between ESBC and ESBA   Empire State
Building Co L.L.C.		     Empire State
Building Associates
L.L.C.		                    
  $ 1,076,897,064      $ 1,264,039,814         
    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)		  

Empire State Building Co L.L.C.

          

Ownership %

     76.25 %      10.00 %      5.00 %      8.3125 %      0.4375 % 

Allocation

     821,134,012        107,689,706        53,844,853        89,517,068        4,711,425   

Return of capital

       1,800,000        900,000        1,496,250     

Priority

       0        0        0     
   

 

 

    

 

 

    

 

 

    

Subject to override

       105,889,706        52,944,853        88,020,818     

Override

       26,472,427        13,236,213       

Override

           48,411,450     

Net to Investors

   $ 821,134,012      $ 81,217,280      $ 40,608,640      $ 41,105,618      $ 4,711,425   

*  does not include 2nd tier and tertiary tier overrides

     

Empire State Building Associates L.L.C.

  

      1,264,039,814         

Return of Capital

       33,000,000         
   

 

 

        

Net for Override

       1,231,039,814         

MH Override (VC)

       116,359,480         

Net to Investors

     $ 1,147,680,334         

waterfall schedule to investors not included for ESBA as yet

Note: there is a fee mortgage on this property for which the debt service is not paid for by the lessee

East West Manhattan Retail Portfolio SPE L.L.C. Equity Value

 

 

Asset Value

    $ 45,000,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      (190,711 ) 

Less: Debt

      (29,232,062 ) 

Amount to Allocate for Capital Transaction

    $ 15,577,227   

East West Manhattan Retail Portfolio SPE L.L.C. Waterfall

 

 

Amount to Allocate for Capital Transaction

    $ 15,577,227         
     Class A      GP      Class B  

Original Capital

    $ 9,900,000       $ 100,000       $ 0   

Remaining Capital

      0         0         0   

Return of Capital

      0         0         0   

Priority

      0         0         0   

Remainder

      7,710,727         155,772         7,710,727   

Net to Investors

    $ 7,710,727       $ 155,772       $ 7,710,727   
     Pool Share of Class B (20.0%)         1,542,145   
     Allocated Pool       $ 1,040,948   

Westport Retail Co-Investors L.L.C. Equity Value

 

 

Asset Value

    $ 19,000,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      (177,307 ) 

Less: Debt

      (9,452,274 ) 

Amount to Allocate for Capital Transaction

    $ 9,370,419   

Westport Retail Co-Investors L.L.C. Waterfall

 

 

Amount to Allocate for Capital Transaction

    $ 9,370,419       
     Malkin Co-Investor
Capital L.P.		     Peter L. Malkin     New Soundview
Plaza Associates,
Limited Partnership		  

Ownership % Split

      52.900 %      24.154 %      22.946 % 

Ownership $ Split

      4,956,952        2,263,317        2,150,150   
     Class A     GP     Class B  

Malkin Co-Investor Capital L.P.:

       

Original capital

    $ 13,850,000      $ 139,899      $ 0   

Remaining capital

      13,850,000        139,899        0   

Priority 1

      2,575,057        26,011        0   

Return of capital

      2,332,325        23,559        0   

Priority 2

      0        0        0   

Remainder

      0        0        0   

Net to Investors

    $ 4,907,382      $ 49,570      $ 0   
     Pool Share of Class B (20.0%)        0   
     Allocated Pool      $ 0   

New York Union Square Retail L.P. Equity Value

 

 

Asset Value

    $ 45,000,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      (195,049 ) 

Less: Debt

      (21,712,399 ) 

Amount to Allocate for Capital Transaction

    $ 23,092,552   

New York Union Square Retail L.P. Waterfall

 

 

Amount to Allocate for Capital Transaction

    $ 23,092,552         
     Class A      GP      Class B  

Original capital

    $ 7,500,000       $ 75,758       $ 0   

Remaining capital

      0         0         0   

Return of capital

      0         0         0   

Priority

      0         0         0   

Remainder

      11,430,813         230,926         11,430,813   

Net to Investors

    $ 11,430,813       $ 230,926       $ 11,430,813   
  

 

Pool Share of Class B (20.0%)

  

      2,286,163   
  

 

Allocated Pool

  

    $ 1,543,160   

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

 

 

     60 East 42nd St.
Associates L.L.C.
(Fee Owner)		     Lincoln Building
Associates L.L.C.
(Operating Lessee)		     One Grand Central
Place Consolidated		  

Asset Value

    $ 390,000,000      $ 324,000,000      $ 714,000,000   

Plus: Excess Cash

      0        0        0   

Less: Supervisory Fees

      (1,220,421 )      (2,739,533 )      (3,959,954 ) 

Less: Unpaid Cash Overrides

      0        (733,000 )      (733,000 ) 

Less: Debt

      (92,614,558 )      0        (92,614,558 ) 

Amount to Allocate for Capital Transaction

    $ 296,165,022      $ 320,527,467      $ 616,692,489   

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

 

 

Amount to Allocate for Capital Transaction

    $ 616,692,489      
     Lincoln Building
Associates L.L.C.		      60 East 42nd St.
Associates L.L.C.		  

Total Allocation

    $ 320,527,467       $ 296,165,022   

Lincoln Building Associates L.L.C.

    $ 320,527,467      

MH Override

      32,012,747      
  

 

 

     

Net to Investors

    $ 288,514,720      

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

       $ 296,165,022   

Threshold

         980,000   
     

 

 

  

Net for Override

         295,185,022   

MH Override

         29,518,502   
     

 

 

  

Net to Investors

       $ 266,646,519   

One Station Place Equity Value

 

 

Asset Value

    $ 139,000,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      0   

Less: Debt

      (101,029,940 ) 

Amount to Allocate for Capital Transaction

    $ 37,970,060   

One Station Place Waterfall

 

 

Amount to Allocate for Capital Transaction

    $ 37,970,060       
     GP     Class A LP     Class BL P  
     1.000 %      9.000 %      90.000 % 

Net to Investors

    $ 379,701      $ 3,417,305      $ 34,173,054   

Westport Main Street Retail L.L.C. Equity Value

 

 

Asset Value

    $ 5,000,000   

Plus: Excess Cash

      0   

Less: Supervisory Fees

      (76,611 ) 

Less: Debt

      0   

Amount to Allocate for Capital Transaction

    $ 4,923,389   

LOGO

 

   

 

Business Enterprise Valuation    October 5, 2011

Malkin Construction Corp.

   

Confidential DRAFT – For Discussion Purposes Only

The information contained herein is of a confidential nature and is intended for the exclusive use of the persons or firm to whom it is furnished by us. Reproduction, publication, or dissemination of portions hereof may not be made without prior approval of Duff & Phelps, LLC.

Enterprise Value   Malkin Construction Corp.

 

 

     Low      Mid      High  

Discounted Cash Flow Analysis

    $ 5,700,000       $ 6,050,000       $ 6,500,000   

Selected Public Company Analysis

      5,000,000         5,500,000         6,000,000   

Enterprise Value Conclusion

    $ 5,350,000       $ 5,775,000       $ 6,250,000   

Plus: Cash and Equivalents (1)

      3,312,141         3,312,141         3,312,141   

Plus: Cash Surrender Value of Life Insurance (1)

      0         0         0   

Less: Debt (1)

      0         0         0   

Aggregate Equity Value

    $ 8,662,141       $ 9,087,141       $ 9,562,141   

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 2 of 7

Discounted Cash Flow Analysis   Malkin Construction Corp.

 

 

          2011E     2012P     2013P     2014P     2015P     2016P     2017P     2018P     2019P     2020P     9-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        3.0 % 

Growth

       40.4 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      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 %      2.4 %      2.4 %      2.4 %      2.4 %      2.4 %      2.4 %      2.4 %      2.4 %      2.4 %      2.4 % 

EBITDA Growth

       78.4 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      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 %      3.00 %      3.00 %                 

Weighted Average Cost of Capital

       18.00 %      17.00 %      16.00 %                 

Terminal Value

     $ 6,594,678      $ 7,065,727      $ 7,609,244                   

Present Value of Terminal Value

       1,546,776        1,785,554        2,073,089                   

Present Value of Discrete Cash Flow

       4,145,841        4,271,223        4,403,789                   

Concluded Enterprise Value Range (Rounded)

     $ 5,700,000      $ 6,050,000      $ 6,500,000                   
Implied Enterprise Value Multiples   

2011 EBITDA

   $ 1,278,879        4.5x        4.7x        5.1x                   

2012 EBITDA

   $ 1,317,245        4.3x        4.6x        4.9x                   

2011 Revenue

   $ 53,566,220        0.11x        0.11x        0.12x                   

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 3 of 7

Capital Expense Reclass - Construction

 

 

           2008A     2009A     2010A     YTD
6/30/2010		     YTD
6/30/2011		     LTM
6/30/2011		     2011E  

Computer Equipment PC/Laptop

        13,628        3,578        13,816        4,738        8,824        17,902      $ 31,500   

Computer Network/Server

        22,391        13,144        12,456        3,227        3,493        12,722        48,510   

Furniture & Fixtures

        4,794        0        0        0        105        105        1,000   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Capital Expenses

      $ 40,813      $ 16,722      $ 26,272      $ 7,965      $ 12,422      $ 30,729      $ 81,010   

Expense Reclass @ 85.0%

      85.0 %      (34,691 )      (14,214 )      (22,331 )      (6,770 )      (10,559 )      (26,120 )      (68,859 ) 

Capital Expenditures

        34,691        14,214        22,331        6,770        10,559        26,120        68,859   

Growth

          (59.0 %)      57.1 %        56.0 %     

as % of Total Fees

        0.1 %      0.1 %      0.1 %      0.0 %      0.0 %      0.1 %      0.1 % 

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 4 of 7

Weighted Average Cost of Capital Analysis - Malkin Construction Corp.

 

 

Levered Beta

    Discount Rate Range    

Sources and Considerations

Unlevered Beta

      1.50        2.00     

Selected Public Companies and Cost of Capital Yearbook

Debt % of Capital

      30.0 %      20.0 %   

Selected Public Companies; Cost of Capital Yearbook; Historical Levels

Equity % of Capital

      70.0 %      80.0 %   

Selected Public Companies; Cost of Capital Yearbook; Historical Levels

Tax Rate

      39.6 %      39.6 %   

Blended Federal & State Corporate Income Tax Rate

  

 

 

    

 

 

    

Levered Beta

      1.89        2.30     

Levered Cost of Equity

                 

Risk-free Rate

      4.0 %      4.0 %   

Expected Long-Term Risk Free Rate

Levered Beta

      1.89        2.30     

See Above

Market Risk Premium

      5.5 %      5.5 %   

Duff & Phelps Study

Small Stock Premium

      6.0 %      6.0 %   

Duff & Phelps Cost of Capital Study; SBBI Valuation Edition 2011 Yearbook

  

 

 

    

 

 

    

Levered Cost of Equity

      20.4 %      22.7 %   

Cost of Debt

                 

Cost of Long-term Debt

      5.0 %      5.0 %   

BBB Bond Rate

Tax Rate

      39.6 %      39.6 %   

Blended Federal & State Corporate Income Tax Rate

  

 

 

    

 

 

    

After-tax Cost of Debt

      3.0 %      3.0 %   

Weighted Average Cost of Capital (WACC)

                 

Debt % of Capital

      30.0 %      20.0 %   

Equity % of Capital

      70.0 %      80.0 %   
  

 

 

    

 

 

    

Calculated WACC

      15.2 %      18.7 %   

Selected WACC Range

        17.00 %   

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 5 of 7

Selected Public Company Analysis    Malkin Construction Corp.

 

 

Enterprise Valuation Multiples

      Valuation Summary

Metric

    Public Company
Range		    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

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 6 of 7

Selected Public Company Analysis

 

($ in millions, except per share data)

 

COMPANY
INFORMATION

   MARKET DATA     REVENUE GROWTH     EBITDA GROWTH     EBITDA MARGIN     ENTERPRISE VALUE AS MULTIPLE OF  

Company Name

   Stock
Price		     % of 52-
Wk High		     Enterprise
Value		     3-YR
CAGR		     LTM     2011     2012     3-YR
CAGR		     LTM     2011     2012     3-YR
AVG		     LTM     2011     2012     LTM
EBITDA		     2011
EBITDA		     2012
EBITDA		     LTM
Revenue		     2011
Revenue		  

Bird Construction Inc. (1)

   $ 9.89        77.9 %    $ 289        3.8 %      0.7 %      7.4 %      NM        4.6 %      -54.4 %      -36.0 %      NM        8.1 %      4.1 %      4.2 %      6.9 %      NM        NM        3.7x        0.36x        0.32x   

Balfour Beatty plc

     4.07        72.7        2,100        12.6        -0.3        6.0        2.1        46.5        -6.0        -9.8        3.4        3.6        4.1        3.8        3.8        3.6        3.6        3.5        0.15        0.14   

Churchill Corp.

     13.52        65.3        425        21.0        62.7        10.2        11.3        43.2        45.1        -15.0        40.6        7.5        6.8        5.5        6.9        4.5        5.5        3.9        0.31        0.30   

Kier Group plc

     19.96        89.8        490        -3.1        3.3        3.3        3.9        -8.5        24.6        24.6        7.7        3.5        3.7        3.7        3.8        4.0        4.0        3.7        0.15        0.15   

Tutor Perini Corporation

     12.31        46.2        711        -11.6        -29.2        17.2        22.6        9.9        -19.2        7.7        20.0        5.0        5.9        5.8        5.7        4.2        3.3        2.7        0.25        0.19   

Mean

       70.4 %      803        4.5 %      7.4 %      8.8 %      10.0 %      19.1 %      -2.0 %      -5.7 %      18.0 %      5.5 %      4.9 %      4.6 %      5.4 %      4.1x        4.1x        3.5x        0.24x        0.22x   

Median

       72.7 %      490        3.8 %      0.7 %      7.4 %      7.6 %      9.9 %      -6.0 %      -9.8 %      13.9 %      5.0 %      4.1 %      4.2 %      5.7 %      4.1x        3.8x        3.7x        0.25x        0.19x   

Malkin Construction

           NA        NA        40.3 %      3.0 %      NA        NA        58.7 %      3.0 %      (0.9 %)      2.0 %      2.3 %      2.3 %           

 

(1) Acquired H.J. O’Connell Ltd. on 8/31/11, proforma LTM information not available for acquisition

LTM = Latest Twelve Months

CAGR = Compounded Annual Growth Rate

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

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 7 of 7

LOGO

 

 

 

Business Enterprise Valuation

   

 

 

October 5, 2011

Malkin Holdings LLC   

Confidential DRAFT – For Discussion Purposes Only

The information contained herein is of a confidential nature and is intended for the exclusive use of the persons or firm to whom it is furnished by us. Reproduction, publication, or dissemination of portions hereof may not be made without prior approval of Duff & Phelps, LLC.

Enterprise Value    Malkin Holdings LLC (Formerly Wien & Malkin LLC)

 

 

     Low      Mid      High  

Enterprise Value

         

Discounted Cash Flow Analysis

    $ 4,250,000       $ 4,500,000       $ 5,000,000   

NPV of Voluntary Reimbursements

      3,150,000         3,225,000         3,300,000   

Enterprise Value Conclusion

    $ 7,400,000       $ 7,725,000       $ 8,300,000   

Plus: Cash and Equivalents (1)

      3,158,180         3,158,180         3,158,180   

Plus: Malkin Portfolio Plan Advance

      3,985,952         3,985,952         3,985,952   

Plus: Unpaid Cash Overrides

      1,689,000         1,689,000         1,689,000   

Less: Debt (1)

      0         0         0   

Aggregate Equity Value

    $ 16,233,133       $ 16,558,133       $ 17,133,133   

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 1 of 5

Discounted Cash Flow Analysis    Malkin Holdings LLC (Formerly Wien & Malkin LLC)

 

 

    LTM     2011E     2012P     2013P     2014P     2015P     2016P     2017P     2018P     2019P     2020P     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

     NA        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        NM   

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 %      3.0 %      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

       1,586,354        1,894,549        2,289,553                   

Present Value of Discrete Cash Flow

       2,576,224        2,673,467        2,776,495                   

Concluded Enterprise Value Range

     $ 4,250,000      $ 4,500,000      $ 5,000,000                   
Implied Enterprise Value Multiples   

2011 EBITDA

   $ 956,046        4.4x        4.7x        5.2x                   

2012 EBITDA

   $ 819,098        5.2x        5.5x        6.1x                   

2011 Revenue

   $ 9,250,925        0.46x        0.49x        0.54x                   

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 2 of 5

NPV of Voluntary Reimbursements

 

 

    YTD
6/30/2011		     2011E     2012P     2013P     2014P     2015P     2016P  

Voluntary Reimbursements and Other

   $ 5,050,583      $ 5,068,379      $ 345,186      $ 2,517,763      $ 2,417,587      $ 1,696,999      $ 202,898   

Growth

         (93.2 %)      629.4 %      (4.0 %)      (29.8 %)      (88.0 %) 
          7/31-12/31                                

Voluntary Reimbursements and Other

       17,796        345,186        2,517,763        2,417,587        1,696,999        202,898   

Pro Forma Taxes @ 39.6%

       (7,050 )      (136,745 )      (997,412 )      (957,727 )      (672,266 )      (80,378 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

After-Tax Cash Flow

       10,746        208,440        1,520,351        1,459,860        1,024,733        122,520   

Weighted Average Cost of Capital

       13.5 %      12.5 %      11.5 %       

NPV of Voluntary Reimbursements (Rounded)

     $ 3,150,000      $ 3,225,000      $ 3,300,000         

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 3 of 5

Capital Expense Reclass

 

 

    2008A     2009A     2010A     YTD
6/30/2010		     YTD
6/30/2011		     LTM
6/30/2011		     2011E     2012P  

Total Revenue

   $ 7,674,236      $ 5,806,650      $ 5,084,138      $ 2,357,469      $ 5,092,993      $ 7,819,662      $ 9,250,925      $ 8,462,634   

Expensed Capital Expenditures

                

Repairs & Maintenance

   $ 118,912      $ 12,220      $ 71,661      $ 42,052      $ 41,275      $ 70,884      $ 85,842      $ 88,417   

Purchase Software and Supplies

     22,555        40,468        11,065        20,638        27,150        17,577        69,064        71,136   

Purchase Hardware

     0        25,062        (0 )      2,061        2,953        892        92,534        95,310   

Maintenance / Services

     83,890        68,839        45,586        23,484        19,197        41,298        46,953        48,362   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Capital Expenses

   $ 225,357      $ 146,589      $ 128,312      $ 88,234      $ 90,574      $ 130,652      $ 294,393      $ 303,225   

Expense Reclass @ 85.0%

     (191,554 )      (124,601 )      (109,065 )      (74,999 )      (76,988 )      (111,054 )      (250,234 )      (257,741 ) 

Capital Expenditures

     191,554        124,601        109,065        74,999        76,988        111,054        250, 234        257,741   

Growth

       (35.0 %)      (12.5 %)        2.7 %        129.4 %      3.0 % 

as % of Total Revenue

     2.5 %      2.1 %      2.1 %      3.2 %      1.5 %      1.4 %      2.7 %      3.0 % 
    2013P     2014P     2015P     2016P     2017P     2018P     2019P     2020P  

Total Revenue

   $ 9,009,344      $ 9,131,748      $ 9,698,554      $ 9,581,727      $ 10,493,723      $ 10,612,224      $ 10,638,720      $ 11,056,716   

Expensed Capital Expenditures

                

Repairs & Maintenance

   $ 91,069      $ 93,801      $ 96,616      $ 99,514      $ 102,499      $ 105,574      $ 108,742      $ 112,004   

Purchase Software and Supplies

     73,270        75,468        77,732        80,064        82,466        84,940        87,488        90,113   

Purchase Hardware

     98,169        101,114        104,148        107,272        110,490        113,805        117,219        120,736   

Maintenance / Services

     49,813        51,307        52,846        54,432        56,065        57,746        59,479        61,263   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Capital Expenses

   $ 312,321      $ 321,691      $ 331,342      $ 341,282      $ 351,520      $ 362,066      $ 372,928      $ 384,116   

Expense Reclass @ 85.0%

     (265,473 )      (273,437 )      (281,640 )      (290,090 )      (298,792 )      (307,756 )      (316,989 )      (326,498 ) 

Capital Expenditures

     265,473        273,437        281,640        290,090        298,792        307,756        316,989        326,498   

Growth

     3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 % 

as % of Total Revenue

     2.9 %      3.0 %      2.9 %      3.0 %      2.8 %      2.9 %      3.0 %      3.0 % 

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 4 of 5

Weighted Average Cost of Capital Analysis - Malkin Holdings LLC (Formerly Wien & Malkin LLC)

 

 

Levered Beta

    Discount Rate Range    

Sources and Considerations

Unlevered Beta

      0.65        0.75      Selected Public Companies and Cost of Capital Yearbook

Debt % of Capital

      20.0 %      10.0 %    Selected Public Companies; Cost of Capital Yearbook; Historical Levels

Equity % of Capital

      80.0 %      90.0 %    Selected Public Companies; Cost of Capital Yearbook; Historical Levels

Tax Rate

      39.6 %      39.6 %    Blended Federal & State Corporate Income Tax Rate
  

 

 

    

 

 

    

Levered Beta

      0.75        0.80     

Levered Cost of Equity

                 

Risk-free Rate

      4.0 %      4.0 %    Expected Long-Term Risk Free Rate

Levered Beta

      0.75        0.80      See Above

Market Risk Premium

      5.5 %      5.5 %    Duff & Phelps Study

Small Stock Premium

      6.0 %      6.0 %    Duff & Phelps Cost of Capital Study; SBBI Valuation Edition 2011 Yearbook
  

 

 

    

 

 

    

Levered Cost of Equity

      14.1 %      14.4 %   

Cost of Debt

                 

Cost of Long-term Debt

      5.0 %      5.0 %    BBB Bond Rate

Tax Rate

      39.6 %      39.6 %    Blended Federal & State Corporate Income Tax Rate
  

 

 

    

 

 

    

After-tax Cost of Debt

      3.0 %      3.0 %   

Weighted Average Cost of Capital (WACC)

                 

Debt % of Capital

      20.0 %      10.0 %   

Equity % of Capital

      80.0 %      90.0 %   
  

 

 

    

 

 

    

Calculated WACC

      11.9 %      13.3 %   

Selected WACC Range

        12.50 %   

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 5 of 5

 

LOGO

 

 

   

 

 

Business Enterprise Valuation

    October 5, 2011

 

Malkin Properties, L.L.C.

   

Malkin Properties of New York, L.L.C.

   

Malkin Properties of Connecticut, L.L.C.

   

Confidential DRAFT – For Discussion Purposes Only

The information contained herein is of a confidential nature and is intended for the exclusive use of the persons or firm to whom it is furnished by us.

Reproduction, publication, or dissemination of portions hereof may not be made without prior approval of Duff & Phelps, LLC.

Enterprise Value   Malkin Properties - MP, MCT, MNY

 

     Low      Mid      High  

Enterprise Value Conclusion

    $ 4,150,000       $ 4,400,000       $ 4,650,000   

Plus: Cash and Equivalents (1)

      1,217,106         1,217,106         1,217,106   

Plus: Cash Surrender Value of Life Insurance (1)

      1,325,955         1,325,955         1,325,955   

Less: Debt (1)

      0         0         0   

Aggregate Equity Value

    $ 6,693,061       $ 6,943,061       $ 7,193,061   

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 1 of 6

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

        NA        (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

        NA        (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 %      3.00 %      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

        780,634        940,651        1,147,053                   

Present Value of Discrete Cash Flow

        3,360,401        3,437,068        3,517,715                   

Concluded Enterprise Value Range (Rounded)

      $ 4,150,000      $ 4,400,000      $ 4,650,000                   

 

Implied Enterprise Value Multiples

 

  

2011 EBITDA

   $ 1,378,192         3.0x        3.2x        3.4x                   

2012 EBITDA

   $ 894,148         4.6x        4.9x        5.2x                   

2011 Revenue

   $ 6,046,805         0.69x        0.73x        0.77x                   

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 2 of 6

 

Fee Breakdown

 

 

     2008E     2009E     2010E     YTD
6/30/2010		     YTD
6/30/2011		     LTM
6/30/2011		     2011E     2012P  

Management Fees

    $ 2,974,288      $ 3,172,130      $ 3,015,111      $ 1,516,469      $ 1,570,801      $ 3,069,443      $ 3,091,619      $ 3,060,642   

Leasing Fees

      996,245        681,135        1,232,404        371,901        108,076        968,579        1,201,583        1,239,343   

Financing Fees

      0        76,700        650,000        650,000        0        0        0        75,288   

Other Fees

      735,696        339,519        358,714        106,297        215,123        467,540        955,281        735,281   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Fees

    $ 4,706,229      $ 4,269,484      $ 5,256,229      $ 2,644,667      $ 1,894,000      $ 4,505,562      $ 5,248,483      $ 5,110,553   

Management Fee Growth

        6.7 %      (4.9 %)        3.6 %        2.5 %      (1.0 %) 

Leasing Fee Growth

        (31.6 %)      80.9 %        (70.9 %)        (2.5 %)      3.1 % 

Financing Fee Growth

        NA        747.5 %        (100.0 %)        (100.0 %)      NA   

Other Fee Growth

        (53.9 %)      5.7 %        102.4 %        166.3 %      (23.0 %) 
    

 

 

    

 

 

      

 

 

      

 

 

    

 

 

  

Total Fee Growth

        (9.3 %)      23.1 %        (28.4 %)        NA        (2.6 %) 

Leasing Fees as % of Management Fees

      33.5 %      21.5 %      40.9 %      24.5 %      6.9 %      31.6 %      38.9 %      40.5 % 

Financing Fees as % of Management Fees

      0.0 %      2.4 %      21.6 %      42.9 %      0.0 %      0.0 %      0.0 %      2.5 % 

Other Fees as % of Management Fees

      24.7 %      10.7 %      11.9 %      7.0 %      13.7 %      15.2 %      30.9 %      24.0 % 

Fee Proportion

                 

Management Fees

      63.2 %      74.3 %      57.4 %      57.3 %      82.9 %      68.1 %      58.9 %      59.9 % 

Leasing Fees

      21.2 %      16.0 %      23.4 %      14.1 %      5.7 %      21.5 %      22.9 %      24.3 % 

Financing Fees

      0.0 %      1.8 %      12.4 %      24.6 %      0.0 %      0.0 %      0.0 %      1.5 % 

Other Fees

      15.6 %      8.0 %      6.8 %      4.0 %      11.4 %      10.4 %      18.2 %      14.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Fees

      100.0 %      100.0 %      100.0 %      100.0 %      100.0 %      100.0 %      100.0 %      100.0 % 

 

     2013P     2014P     2015P     2016P     2017P     2018P     2019P     2020P  

Management Fees

    $ 3,182,459      $ 3,318,746      $ 3,439,660      $ 3,516,666      $ 3,637,892      $ 3,755,628      $ 3,808,057      $ 3,963,251   

Leasing Fees

      1,429,324        860,586        254,496        327,996        569,074        367,885        334,231        727,241   

Financing Fees

      102,707        136,250        359,649        1,031,801        4,190,500        0        85,075        161,879   

Other Fees

      795,281        1,077,781        705,281        705,281        1,002,306        705,281        805,281        1,129,038   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Fees

    $ 5,509,771      $ 5,393,363      $ 4,759,085      $ 5,581,744      $ 9,399,772      $ 4,828,794      $ 5,032,643      $ 5,981,409   

Management Fee Growth

      4.0 %      4.3 %      3.6 %      2.2 %      3.4 %      3.2 %      1.4 %      4.1 % 

Leasing Fee Growth

      15.3 %      (39.8 %)      (70.4 %)      28.9 %      73.5 %      (35.4 %)      (9.1 %)      117.6 % 

Financing Fee Growth

      36.4 %      32.7 %      164.0 %      186.9 %      306.1 %      (100.0 %)      NA        90.3 % 

Other Fee Growth

      8.2 %      35.5 %      (34.6 %)      0.0 %      42.1 %      (29.6 %)      14.2 %      40.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Fee Growth

      7.8 %      (2.1 %)      (11.8 %)      17.3 %      68.4 %      (48.6 %)      4.2 %      18.9 % 

Leasing Fees as % of Management Fees

      44.9 %      25.9 %      7.4 %      9.3 %      15.6 %      9.8 %      8.8 %      18.3 % 

Financing Fees as % of Management Fees

      3.2 %      4.1 %      10.5 %      29.3 %      115.2 %      0.0 %      2.2 %      4.1 % 

Other Fees as % of Management Fees

      25.0 %      32.5 %      20.5 %      20.1 %      27.6 %      18.8 %      21.1 %      28.5 % 

Fee Proportion

                 

Management Fees

      57.8 %      61.5 %      72.3 %      63.0 %      38.7 %      77.8 %      75.7 %      66.3 % 

Leasing Fees

      25.9 %      16.0 %      5.3 %      5.9 %      6.1 %      7.6 %      6.6 %      12.2 % 

Financing Fees

      1.9 %      2.5 %      7.6 %      18.5 %      44.6 %      0.0 %      1.7 %      2.7 % 

Other Fees

      14.4 %      20.0 %      14.8 %      12.6 %      10.7 %      14.6 %      16.0 %      18.9 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Fees

      100.0 %      100.0 %      100.0 %      100.0 %      100.0 %      100.0 %      100.0 %      100.0 % 

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 3 of 6

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%).

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 4 of 6

Capital Expense Reclass - Properties

 

 

           2008A     2009A     2010A     YTD
6/30/2010		     YTD
6/30/2011		     LTM
6/30/2011		     2011E     2012E  

Computer Equipment PC/Laptop

      $ 2,440      $ 1,396      $ 3,552      $ 2,516      $ 184      $ 1,220      $ 46,183      $ 47,568   

Computer Network/Server

        157        472        550        3,318        3,662        894        14,866        15,312   

Furniture & Fixtures

        795        0        2,194        653        4,626        6,167        48,271        49,719   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Capital Expenses

      $ 3,392      $ 1,868      $ 6,296      $ 6,487      $ 8,472      $ 8,281      $ 109,320      $ 112,600   

Expense Reclass @ 85.0%

      85.0 %      (2,883 )      (1,588 )      (5,352 )      (5,514 )      (7,201 )      (7,039 )      (92,922 )      (95,710 ) 

Capital Expenditures

        2,883        1,588        5,352        5,514        7,201        7,039        92,922        95,710   

Growth

          (44.9 %)      237.0 %        30.6 %        1,636.3 %      3.0 % 

as % of Total Fees

        0.1 %      0.0 %      0.1 %      0.2 %      0.4 %      0.2 %      1.8 %      1.9 % 

 

     2013E     2014E     2015E     2016E     2017E     2018E     2019E     2020E  

Computer Equipment PC/Laptop

    $ 48,996      $ 50,465      $ 51,979      $ 53,539      $ 55,145      $ 56,799      $ 58,503      $ 60,258   

Computer Network/Server

      15,771        16,244        16,732        17,234        17,751        18,283        18,832        19,397   

Furniture & Fixtures

      51,211        52,747        54,329        55,959        57,638        59,367        61,148        62,983   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Capital Expenses

    $ 115,978      $ 119,457      $ 123,041      $ 126,732      $ 130,534      $ 134,450      $ 138,483      $ 142,638   

Expense Reclass @ 85.0%

      (98,581 )      (101,538 )      (104,585 )      (107,722 )      (110,954 )      (114,282 )      (117,711 )      (121,242 ) 

Capital Expenditures

      98,581        101,538        104,585        107,722        110,954        114,282        117,711        121,242   

Growth

      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 %      3.0 % 

as % of Total Fees

      1.8 %      1.9 %      2.2 %      1.9 %      1.2 %      2.4 %      2.3 %      2.0 % 

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 5 of 6

Weighted Average Cost of Capital Analysis - Malkin Properties - MP, MCT, MNY

 

 

Levered Beta

    Discount Rate Range    

Sources and Considerations

Unlevered Beta

      0.65        0.75     

Selected Public Companies and Cost of Capital Yearbook

Debt % of Capital

      20.0 %      10.0 %   

Selected Public Companies; Cost of Capital Yearbook; Historical Levels

Equity % of Capital

      80.0 %      90.0 %   

Selected Public Companies; Cost of Capital Yearbook; Historical Levels

Tax Rate

      39.6 %      39.6 %   

Blended Federal & State Corporate Income Tax Rate

  

 

 

    

 

 

    

Levered Beta

      0.75        0.80     

Levered Cost of Equity

                 

Risk-free Rate

      4.0 %      4.0 %   

Expected Long-Term Risk Free Rate

Levered Beta

      0.75        0.80     

See Above

Market Risk Premium

      5.5 %      5.5 %   

Duff & Phelps Study

Small Stock Premium

      6.0 %      6.0 %   

Duff & Phelps Cost of Capital Study; SBBI Valuation Edition 2011 Yearbook

  

 

 

    

 

 

    

Levered Cost of Equity

      14.1 %      14.4 %   

Cost of Debt

                 

Cost of Long-term Debt

      5.0 %      5.0 %   

BBB Bond Rate

Tax Rate

      39.6 %      39.6 %   

Blended Federal & State Corporate Income Tax Rate

  

 

 

    

 

 

    

After-tax Cost of Debt

      3.0 %      3.0 %   

Weighted Average Cost of Capital (WACC)

                 

Debt % of Capital

      20.0 %      10.0 %   

Equity % of Capital

      80.0 %      90.0 %   
  

 

 

    

 

 

    

Calculated WACC

      11.9 %      13.3 %   

Selected WACC Range

        12.50 %   

 

CONFIDENTIAL DRAFT - For Discussion Purposes Only   Page 6 of 6