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MIDWOOD MEDICAL CENTER

1660-1664 EAST 14TH STBROOKLYN, NEW YORK

OFFERING PRICE: $22,100,000

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EXECUTIVE SUMMARY

Marcus & Millichap has been selected to exclusively market for sale Midwood Medical Center a mark-to-market, value-add opportunity located at 1660-1664 East 14th Street in the Midwood section of Brooklyn. This fully occupied 40,000 square foot offering is a rare opportunity to enter the desirable and underserved medical office category in a growing market. Currently 30% of the rent roll pays below market rent, expiring within 4 years. The building’s 13 tenants include Brooklyn institutions Maimonides, Interborough, and All Heart Homecare. The building has been fully occupied since it opened in 1996, and has an effective gross revenue of $1,896,785 and a net operating income of $1,244,492.

Property Address: 1660-1664 E. 14th StLocation: Midwood, BrooklynBlock/Lot: 06776-0032 & 0030Zoning: C4-4AYear Completed: 1996Gross Floor Area SF: 40,000Lot Dimensions: 80 x 100Lot SF: 8,000Commercial Units: 15Number of Floors: 5Net Operating Income: $1,244,492

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VALUE-ADD MARK TO MARKET OPPORTUNITY

• Below market rents rolling within 4 years

• Maimonides currently paying 30.56% below market with a 2022 lease expiration

LONG HISTORY OF HIGH OCCUPANCY

• 100% occupied by 13 medical tenants

• Building has not had a vacancy since it opened in 1996

• 1 in 4 tenants have been in place since 2000

RARE OPPORTUNITY TO ENTER DESIRABLE MEDICAL OFFICE ASSET CLASS

• Amazon-proof business model

• Senior population growing 3x the rate of under 65’s

• Healthcare employs 19% of the Brooklyn workforce

GROWING MARKET

• Aging in place demographic meets wave of gentrification

• Significant area development across asset classes

• Highly accessible via car, foot, and train

INVESTMENT HIGHLIGHTS

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CORPORATE ENTITIES MAIMONIDES

Incorporated in 1911, Maimonides Medical Center is a non-profit academic medical center and teaching hospital with over 5,700 employees in Brooklyn. The largest hospital in Brooklyn, Maimonides has numerous locations throughout the Borough and also provides outpatient care and community services. Maimonides pays 5% annual increases on their 22 year lease with 3 years remaining. They occupy approximately 20% of the GLA.

ALL HEART HOME CARE

A leader in Brooklyn’s booming home care industry, All Heart Home Care provide comprehensive care to clients in the comfort of their own home. Services include nursing, physical therapy, licensed home health aide care, homemaker-companionship, occupational therapy, speech therapy, and hospice services. They offer CDPAP services through the Medicaid program.

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Brooklyn is the 4th largest metro in the United States. Its Midwood neighborhood is a historically Orthodox Jewish enclave whose population is both aging in place and gentrifying. South Brooklyn was recently identified by the City of New York as having both a substantial, increasing over-65 population and a lack of sufficient medical resources.

The property is part of the major commercial center created by the intersection of Coney Island Avenue and Kings Highway. As reported in The Wall Street Journal, Midwood is receiving a high volume of North Brooklyn transplant residents seeking value in the South Brooklyn market. This migration makes Midwood prime for the commercial rent growth and accelerated appreciation associated with increasing population. East 14th St is historically a medical corridor.

LOCATION OVERVIEW

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NOTABLE AREA DEVELOPMENTS:

Kingswood Center: 230,000 square foot retail complex includes tenants TJ Maxx and New York Sports Club.

Target: The leading retailer’s newest New York City location at 1715 East 13th St is currently under construction, to be delivered Q3 2018. The 115,000 square foot complex also includes Marshall’s.

1601 Kings Highway: Lake Realty’s 68,000 Square Foot Retail destination delivered in Spring 2018 and home to Modell’s, CVS, and Planet Fitness.

Area retailers include Starbucks, Duane Reade, Chipotle, Taco Bell, KFC, Walgreen’s, Chase Bank, Santander, and others.

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PRO RATA SHAREBUILDING

SHARESF

MONTHLY BASE RENT

ANNUAL RENT

CAM INCOME

TAX INCOME

RENT PSF

TENANT START

LEASE END

ANNUAL INCREASE

OPTIONS

Maimonides/HOAB 18.98% 7,592 $17,570.83 $210,850 $58,557 $75,298 $27.77 9/1/00 8/31/22 5.0%

All Heart Homecare (Suite 201B) 8.95% 3,580 $10,544.42 $126,533 $28,728 $30,620 $35.34 1/1/16 12/31/20 5.0%

Dr. Jeffrey Rubin 3.20% 1,280 $4,555.17 $54,662 $- $- $42.70 8/1/95 7/30/19 N/A

Quest Diagnostics 3.57% 1,428 $4,487.92 $53,855 $11,001 $14,146 $37.71 1/1/99 12/31/20 3.0%

Dr. Harris Kleeman 2.02% 808 $2,573.67 $30,884 $6,237 $8,020 $38.22 1/1/96 12/31/20 4.0% 1 Five Year

Orthopedic Associates, P.C. 6.93% 2,772 $9,776.50 $117,318 $- $- $42.32 4/1/96 3/31/20 4.0% 2 Five Year

Dr. Yanina Kovler 3.11% 1,244 $4,500.00 $54,000 $- $- $43.41 4/1/13 3/31/23 5.0% 1 Five Year

Hear U.S.A. 3.25% 1,300 $2,704.33 $32,452 $10,015 $12,878 $24.96 4/1/15 3/31/19 3.5%

All Heart Homecare (Suite 201A) 8.62% 3,448 $9,500.00 $114,000 $27,617 $35,512 $33.06 11/1/17 10/31/22 5.0%

National Technologies 9.04% 3,616 $14,221.00 $170,652 $- $4,959 $47.19 12/1/04 11/30/20 4.5%

Brooklyn Cardiology 6.68% 2,672 $11,061.17 $132,734 $- $- $49.68 3/1/10 1/31/20 3.5%

Dr. Kerenyi, Scher, and Grazi 4.10% 1,640 $5,700.42 $68,405 $13,670 $14,570 $41.71 8/1/08 7/31/23 2.5% 1 Five Year

7th Avenue Accupuncture 4.31% 1,724 $3,208.50 $38,502 $14,364 $15,310 $22.33 8/1/16 7/31/21 3.5% 2 Five Year

Interborough (Suite 401) 8.62% 3,448 $10,000.00 $120,000 $28,728 $30,620 $34.80 2/1/17 1/31/27 4.0% 1 Ten Year

Interborough (Suite 501) 8.62% 3,448 $10,400.00 $124,800 $28,728 $30,620 $36.19 11/1/16 11/14/26 4.0% 1 Ten Year

TOTAL: 100.00% 40,000 $120,804 $1,449,647 $227,645 $272,553 $37.16

FOR 1660 & 1664 EAST 14TH STREET

RENT ROLL

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YEAR 1JUNE 19

YEAR 2JUNE 20

YEAR 3JUNE 21

YEAR 4JUNE 22

YEAR 5JUNE 23

YEAR 6JUNE 24

YEAR 7JUNE 25

YEAR 8JUNE 26

YEAR 9JUNE 27

YEAR 10JUNE 28

YEAR 11JUNE 29

RENTAL REVENUE $ $ $ $ $ $ $ $ $ $ $

Potential Base Rent 1,468,435 1,541,322 1,566,799 1,651,722 1,762,930 1,823,423 1,880,748 1,940,751 2,013,569 2,085,597 2,146,886

Absorption & Turnover Vacancy -4,333 -23,679 -34,663 -6,526 -70,093 -6,586 0 -5,538 -67,836 -42,631 -8,026

Free Rent -8,667 -53,426 -84,853 -15,336 -111,221 -17,174 0 -5,538 -131,507 -116,603 -18,861

Scheduled Base Rent 1,455,435 1,464,218 1,447,284 1,629,861 1,581,617 1,799,663 1,880,748 1,929,674 1,814,226 1,926,363 2,119,999

Total Rental Revenue 1,455,435 1,464,218 1,447,284 1,629,861 1,581,617 1,799,663 1,880,748 1,929,674 1,814,226 1,926,363 2,119,999

OTHER TENANT REVENUE

Total Expense Recoveries 485,846 545,076 650,665 719,097 708,354 796,673 833,237 863,372 858,111 909,208 972,251

Total Other Tenant Revenue 485,846 545,076 650,665 719,097 708,354 796,673 833,237 863,372 858,111 909,208 972,251

Total Tenant Revenue 1,941,281 2,009,294 2,097,949 2,348,958 2,289,970 2,596,336 2,713,985 2,793,046 2,672,336 2,835,571 3,092,250

Potential Gross Revenue 1,941,281 2,009,294 2,097,949 2,348,958 2,289,970 2,596,336 2,713,985 2,793,046 2,672,336 2,835,571 3,092,250

VACANCY & CREDIT LOSS

Vacancy Allowance -44,496 -37,985 -44,665 -54,064 -40,007 -59,734 -67,850 -64,426 -37,410 -60,224 -71,138

Total Vacancy & Credit Loss -44,496 -37,985 -44,665 -54,064 -40,007 -59,734 -67,850 -64,426 -37,410 -60,224 -71,138

Effective Gross Revenue 1,896,785 1,971,309 2,053,284 2,294,893 2,249,963 2,536,602 2,646,135 2,728,620 2,634,926 2,775,347 3,021,112

* OPERATING EXPENSES

Total Operating Expenses 652,293 674,907 696,461 735,022 756,214 799,857 833,749 866,329 887,084 927,432 975,755

Net Operating Income 1,244,492 1,296,402 1,356,823 1,559,871 1,493,749 1,736,745 1,812,387 1,862,290 1,747,842 1,847,915 2,045,357

LEASING COSTS

Tenant Improvements 26,650 140,599 201,168 37,505 272,580 37,119 0 30,612 327,139 231,078 43,082

Leasing Commissions 19,656 85,400 110,060 20,721 181,868 14,937 0 12,561 135,550 96,686 14,562

Total Leasing Costs 46,306 225,999 311,228 58,226 454,448 52,056 0 43,174 462,689 327,764 57,644

Total Leasing & Capital Costs 46,306 225,999 311,228 58,226 454,448 52,056 0 43,174 462,689 327,764 57,644

Cash Flow Before Debt Service 1,198,186 1,070,404 1,045,595 1,501,646 1,039,301 1,684,689 1,812,387 1,819,117 1,285,154 1,520,151 1,987,713

*OPERATING EXPENSE ON NEXT PAGE

FOR 1660 & 1664 EAST 14TH STREET

CASH FLOW

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OPERATING EXPENSES

FOR 1660 & 1664 EAST 14TH STREET

YEAR 1JUNE 19

YEAR 2JUNE 20

YEAR 3JUNE 21

YEAR 4JUNE 22

YEAR 5JUNE 23

YEAR 6JUNE 24

YEAR 7JUNE 25

YEAR 8JUNE 26

YEAR 9JUNE 27

YEAR 10JUNE 28

YEAR 11JUNE 29

OPERATING EXPENSES $ $ $ $ $ $ $ $ $ $ $

Taxes 18/19 373,133 391,790 411,379 431,948 453,545 476,223 500,034 525,035 551,287 578,851 607,795

Waste Removal 16,000 16,320 16,646 16,980 17,318 17,666 18,018 18,378 18,746 19,122 19,504

Electric 15,000 15,300 15,606 15,918 16,236 16,562 16,892 17,230 17,574 17,926 18,284

Elevator Phone 600 612 624 636 650 662 676 690 702 718 732

Ambush Alarm 600 612 624 636 649 663 675 689 703 717 732

Internet 525 536 546 557 569 580 592 603 615 628 640

Water/Sewer 12,500 12,750 13,005 13,265 13,530 13,801 14,077 14,358 14,645 14,938 15,237

Elevator Maintenance 10,000 10,200 10,404 10,612 10,824 11,040 11,262 11,486 11,716 11,950 12,190

Insurance 25,500 26,010 26,530 27,061 27,602 28,154 28,717 29,292 29,878 30,475 31,084

Maintenance & Supplies 10,000 10,200 10,404 10,612 10,824 11,040 11,262 11,486 11,716 11,950 12,190

Management Fee (3%) 116,434 117,138 115,782 130,388 126,530 143,974 150,460 154,374 145,138 154,110 169,600

Superintendent 72,000 73,440 74,908 76,406 77,936 79,494 81,084 82,706 84,360 86,046 87,768

Total Operating Expenses 652,293 674,907 696,461 735,022 756,214 799,857 833,749 866,329 887,084 927,432 975,755

Net Operating Income 1,244,492 1,296,402 1,356,823 1,559,871 1,493,749 1,736,745 1,812,387 1,862,290 1,747,842 1,847,915 2,045,357

NAT ROCKETTLICENSED ASSOCIATE REAL ESTATE BROKER

PHONE: (212) 430-5286

EMAIL: NAT.ROCKETT@MARCUSMILLICHAP.COM LICENSE

NY: 30RO0789563

CONFIDENTIALITY AND DISCLAIMER: The information contained in this Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to pro-spective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

NON-ENDORSEMENT NOTICE Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

SAM BARRETT-COTTERLICENSED REAL ESTATE SALESPERSON

PHONE: (646) 805-1494

EMAIL: SAM.BARRETTCOTTER@MARCUSMILLICHAP.COM

LICENSE NY: 10401311015

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