EFTA01756668.pdf

From: Michael Gargano To: A Barrett Cc: "Jeffrey Epstein - J Epstein & Company [email protected] <[email protected]> Subject: RE: Re: Sent: Tuesday, October 29, 2013 10:31:44 PM FYI —Just had a long conversation with the lead broker at Eastdil. Regarding debt financing, he surprised me - he said that he expects all the bids will be contingent on debt so he is ok if ours is as well but the contingency should be in the 30 day range. He pushed on price and said he thinks the final round bidders will come in around $85M. I told him that sounds like a stretch but I look forward to the tour on Thurs and better understanding the current and future cash flow and the development potential. He was surprisingly unable to articulate the status of the entitlements the current owner is supposedly pursuing for an additional 107,000 sf. He said he would have to get back to me on that. That's the quick update. From: Michael Gargano Sent: Tuesday, October 29, 2013 2:50 PM To: 'A Barrett' Cc: Jeffrey Epstein - J. Epstein & Company ([email protected]) Subject: RE: Re: Thanks, Anthony. I totally agree with Jeffrey. As we discussed yesterday, this is very much an intense hands-on operating business and has more risk than conventional leased real estate. Nevertheless, I think the risks here are manageable. But I will know a lot more after I tour the property on Thurs and will let you know if I change my view. In the meantime, here is the way I'm looking at it: 1. Current Low NOI. The NOI is already on the low end of the range and reflects inattentive management - Lehman. 2. Other Bidders. The other bidders are all traditional real estate players (Carlyle, Hudson Pacific, and CIM). 3. Potential Upside. The plan would be to gradually convert occupancy to long term arrangements with Fox or other entertainment/tech firms, which will mitigate the operational risks and also allow us to lock in long term debt at lower rates. If we can reach agreement with Lehman to buy the property, we would start the discussions with Fox immediately. 4. Development. We need to get a better handle on potential real estate development potential. The broker told me that the other bidders are looking at a long term plan of preserving the historic structures and then demolishing non-historic stages and replacing them with creative office buildings — there is great demand for such space in the Culver City and Westside markets. 5. Risks. I have asked the studio operator (he's one of the best in the business) we are working with EFTA_R1_00058329 EFTA01756668  to list the primary operational risks we need to consider. This way we can review the studio risks on a more informed basis. 6. Other Jv Partners. If Jeffrey prefers, we can bring in other funding sources. I'm just trying to be realistic and plan accordingly as all the other bidders have credit lines which would allow certainty of closing, which is important to Lehman before year end, and then the winning bidder would place the debt after closing. From: A Barrett fmailtomiliiii Sent: Tuesday, October , To: Michael Gargano Subject: Fwd: Re: Anthony Barrett Begin forwarded message: From: Jeffrey Epstein <[email protected]> Date: October 29, 2013 at 11:57:28 AM EDT To: Anthony Barrett Subject: Re: let me think about it, it seems more prone to operational diltictultics than real estate On Tue, Oct 29, 2013 at 10:54 AM, Anthony Barrett < > wrote: Jeffrey, Please let us know if you would be able to close all cash if necessary, or if you have any other ideas. Anthony Anthony On Oct 29, 2013, at 10:41 AM, Michael Gargano wrote: > Looks like other bidders are willing to close all cash and put the debt in place after so that Lehman has certainty of close. Do you think Jeffrey could do that? Use a JP Morgan credit line to close? > Sent from my iPhone Anthony Hairrit Ossa Propertics In, EFTA_R1_00058330 EFTA01756669 301 East 66th St The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of Jeffrey Epstein Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to [email protected], and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved EFTA_R1_00058331 EFTA01756670