Proposal_Brokerage_Advisory_Services_CW

PROCESS MANAGEMENT

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We reviewed the restoration clause in your lease and believe it is operative towards any negotiating strategy as it represents time and money, and could be used as a lever for the Landlord. Your restoration obligation stipulated in the lease would be costly and time consuming to HLT as your lease requires that the premises and related infrastructure and systems be converted to accommodate office use. These alterations include: • Close off entrances to the Hotel from the Galleria Bridges and the basement; • Remove all stairways and escalators in the Premises between floors two and three; • Replace structural slabs in the stairwell openings; and • Perform “all other construction necessary to make the premises suitable [for office use]”. • Modify building systems or Tenant’s Exclusive Facilities to accommodate office use, including tying fire alarms into existing building systems; • Revise the elevator programming, and provide new doors and openings for seven passenger elevators in the low rise; • File applications for any permitting required for the restoration, with the assistance of an expeditor; and • Obtain necessary amendments to the building’s Certificate of Occupancy. Cushman & Wakefield estimates that these restoration obligations could exceed $3 million. Our Project & Development Services team will provide us with a precise number and a meticulous timeline for performing the work, which will include two to four months of planning and agreeing upon restoration specs, two months for expedited permitting and at least four months for the actual restoration work. Additionally, the restoration project must be completed prior to lease expiration as HLT will be subject to holdover penalties if it is done after your lease expires. In HLT’s case, the Project Team estimates that HLT may be obligated to pay an additional $125,000 for each month not vacated on time. Moreover, during the time the premises are being restored in compliance with the lease, events cannot be accommodated and must be held elsewhere, with negative impact to RevPAR. The Landlord will attempt to leverage HLT’s restoration obligation in its favor, given the cost burdens and time constraints confronting HLT. However, The Project Team will demonstrate that the vacated (and restored) premises will be subject to extended downtime to secure a new office tenant. Low base floor plates of 40,000 rentable square feet on a side block do not offer the views, big light, and air that office tenants with open floor plans are pursuing. The Project Team Additionally, at HLT’s expense , the Landlord shall (always dangerous) :

K HLT NY HILTON LLC | CUSHMAN & WAKEFIELD | 34