BUSINESS ISSUES FORUM: LITIGATION SERVICES MARCH 30, 2009 COUNSELORS OF REAL ESTATE CASE STUDY PRESENTATION BY: Marilyn

1. BUSINESS ISSUES FORUM: LITIGATION SERVICES MARCH 30, 2009 COUNSELORS OF REAL ESTATE CASE STUDY PRESENTATION BY: Marilyn Kramer Weitzman, MAI, CRE, FRICS President, The Weitzman Group, Inc. & Mark Jon Sugarman, Esq. Partner, Bryan Cave LLP

2. TYPES OF ARBITRATION • 2 Out of 3; • Baseball; • Neutral Decides; and, • AAA

3. RETENTION OF NEUTRAL • Usually, two (2) party appointed appraisers must agree on a neutral.

4. RETENTION OF EXPERTS • Appraiser of Land Value • Market Consultant – Residential, Hotel, Office, Retail • Real Estate Economist – Particularly in Troubled Times for Current Assessment and Forecast • Mortgage Banker – Availability and Cost of Financing, Financing Climate

5. RETENTION OF EXPERTS (cont.) • Zoning Consultant – Building Envelope for a Land Residual • Architect – Renderings and Building Envelope • Cost Estimation Consultant – Hard and Soft Costs of Potential Development Scenarios • High-Profile Manhattan Developer – Providing Support for Marketability and FeasibilityConclusions

6. DEVELOPMENT OF STRATEGY FOR VALUATION • Zoning Issues • Comparable Sales • Land Residual • Two (2) or Three (3) Logical, Marketable Scenarios to Determine Highest and Best Use • Other Issues • Falling Market • Rising Market

7. RULES OF ARBITRATION • Time Limits • Number of Expert Witnesses • Rebuttals • Meeting Dates • Formality – Attorneys, Court Reporters

8. SPECIAL ISSUES • Interpretation of Ground Lease Renewal Clauses • Highest and Best Use • Subject to Existing Improvements (Highest and Best Use Issue) • Subject to Existing Ground Lease (Coop vs. Condo)

9. LITIGATION SERVICES: Case Study Facts • Land Underlying Major Manhattan Class A Skyscraper (Office Building) • Significant Multi-Level Retail Space on 57th Street • Ground Lease Clause: Market Value, Highest and Best Use, Unencumbered, As Vacant • FAR (Floor Area Ratio) of 15 for Commercial and Mixed-Use Commercial/Residential • No Major Construction Development Constraints • Date of Value: January 1, 2008

10. LITIGATION SERVICES: Major Disagreement Points • Market Value of Land: $825 per square foot vs. $375 per square foot • Appraisal Methodology: • Sales Comparison Approach Only • Sales Comparison Approach plus Land Residual Technique • Which Provides Best Indication of Market Value at a Development Site?

11. LITIGATION SERVICES: Major Disagreement Points (cont.) • Highest and Best Use: • Condominium with Major Retail Component • Hotel and Condominium with Small Amount of Ground Floor Square Footage • Retail/ Office/ Condominium

12. LITIGATION SERVICES: Major Disagreement Points (cont.) • Necessity of Feasibility Study • Economic Outlook as of August 2007 (Date of Exchange of Appraisal Reports and then Rebuttals) and as of January 1, 2008 (Date of Valuation) • Availability of Acquisition and Construction and Mezzanine Loan Financing for Over $100 Million Development Projects in Manhattan

13. LITIGATION SERVICES: Major Disagreement Points (cont.) • Selection of Land Sales: • Applicability of Smaller Land Sales (under 10,000 Square Feet) to a Much Larger Subject Site • Applicability of West 57th Street Land Sales • Potential Decline in Land Value due to Impending Decline in Economy: • No Sizeable Land Sales Past May 2007

14. LITIGATION SERVICES: Major Disagreement Points (cont.) • Length of Construction Schedule: 36 vs. 48 Months • Height of Building and Availability of Views from Upper Floor Condominium Residences • Health of the Condominium Market (New Units)

15. LITIGATION SERVICES: Major Disagreement Points (cont.) • Health of the Hotel Market • Correct Amount and Type of Retail Square Footage: High-End vs. Middle Market Retail • Key Issue: Was there any Market for Vacant Land as of January 1, 2008?

16. Questions and Comments?