Preview
FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
BUDIMIR EXHIBIT 42G
FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
HOLLIS REAL ESTATE CO., LLC
FHA Project No. 012-22299
Financial Statements
Year Ended December 31, 2021
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Year Ended December 31, 2021
TABLE OF CONTENTS
Page No.
INDEPENDENT AUDITOR'S REPORT 1–2
FINANCIAL STATEMENTS:
Balance Sheet 3
Statement of Operations 4
Statement of Members’ Equity 5
Statement of Cash Flows 6
Notes to the Financial Statements 7 - 10
Supplementary Information Required By HUD 11 - 17
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH
REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT
18 - 20
ON HUD-ASSISTED PROGRAM IN ACCORDANCE WITH CONSOLIDATED
AUDIT GUIDE FOR AUDITS OF HUD PROGRAMS
SCHEDULE OF FINDINGS, QUESTIONED COSTS & RECOMMENDATIONS 21
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND COMPLIANCE AND OTHER MATTERS
22 - 23
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNNMENT AUDITING STANDARDS
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
INDEPENDENT AUDITOR'S REPORT
To the Members
Hollis Real Estate Co., LLC
Bronx, New York:
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Hollis Real Estate Co., LLC which comprise the balance sheet as of December
31, 2021, and the related statements of operations, changes in members’ equity and cash flows for the year then ended, and
the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Hollis
Real Estate Co., LLC as of December 31, 2021, and the results of its operations, and its cash flows for the year then ended
in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS)
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Hollis
Real Estate Co., LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements
relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America, and for the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about Hollis Real Estate Co., LLC’s ability to continue as a going
concern within one year after the date that the financial statements are available to be issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit
conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it
exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would
influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
ï‚· Exercise professional judgment and maintain professional skepticism throughout the audit.
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NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Independent Auditors’ Report Continued
ï‚· Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements.
ï‚· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Hollis Real
Estate Co., LLC’s internal control. Accordingly, no such opinion is expressed.
ï‚· Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the financial statements.
ï‚· Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about the Hollis Real Estate Co., LLC’s ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Supplementary Information
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying
supplementary information shown on pages 11 through 17 is presented for the purposes of additional analysis and is not a
required part of the financial statements.
Such information is the responsibility of management and was derived from and relates directly to the underlying accounting
and other records used to prepare the financial statements. The information has been subjected to the auditing procedures
applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the financial statements or to the
financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted
in the United States of America. In our opinion, the supplementary information on pages 11 through 17 is fairly stated, in all
material respects, in relation to the financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 14, 2022 on our
consideration of Hollis Real Estate Co., LLC’s internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and
not to provide an opinion on the effectiveness of Hollis Real Estate Co., LLC’s internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering Hollis Real Estate Co., LLC’s internal control over financial reporting and compliance.
MARTIN FRIEDMAN, C.P.A. P.C.
Certified Public Accountants
Brooklyn, NY
March 14, 2022
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Balance Sheet
December 31, 2021
Assets
Cash $ 104,841
Accounts Receivable - Other: Staffing Agency 142,475
Prepaid Expenses 210,175
Loan Receivable - Holliswood Center 253,063
Total Current Assets $ 710,554
Land 3,445,922
Building & Improvements 13,783,688
17,229,610
Less: Accumulated Depreciation & Amortization 3,905,378
Total Fixed Assets 13,324,232
Loan Receivable - Holliswood Center 15,220,841
Interest Receivable - Holliswood Center 2,237,983
Escrow Deposits 401,087
Replacement Reserve 907,630
Total Other Assets 18,767,541
Total Assets $ 32,802,327
Liabilities and Equity
Mortgage Payable $ 907,437
Accounts Payable 10,000
Accounts Payable- Staffing Agency 256
Accrued Interest 92,247
Total Current Liabilities $ 1,009,940
Mortgage Payable (Net) 29,541,238
Security Deposit 34,605
Total Long Term Liabilities 29,575,843
Total Members' Equity 2,216,544
Total Liabilities & Members' Equity $ 32,802,327
5
See accompanying notes to the financial statements. 3
FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Statement of Operations
Year Ended December 31, 2021
Income:
Rental Income $ 2,656,841
Expenses:
Mortgage Interest $ 1,138,706
Depreciation Expense 459,456
Mortgage Insurance Premium 202,179
Real Estate Tax 202,090
Property & Liability Insurance 39,650
Audit Fee 10,000
Filing Fees 3,000
Total Expenses 2,055,081
Income from Operations 601,760
Interest Income 774,055
Staffing Agency - Revenue 903,411
Staffing Agency - Expenses (887,819)
Income Before Taxes 1,391,407
Less: Pass-Through Entity Tax 9,186
Net Income $ 1,382,221
6
See accompanying notes to the financial statements. 4
FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Statement of Members' Equity
Year Ended December 31, 2021
Members' Equity:
Balance - Beginning of Period $ 834,323
Net Income for the Period 1,382,221
Total Members' Equity
End of Year $ 2,216,544
7
See accompanying notes to the financial statements. 5
FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Statement of Cash Flows
Year Ended December 31, 2021
Cash Flows From Operating Activities:
Rental Receipts $ 2,656,841
Interest Receipts 360
Staffing Agency Receipts 861,904
Total Receipts $ 3,519,105
Interest on First Mortgage (1,124,082)
Real Estate Taxes (188,702)
Property & Liability Insurance (40,798)
Miscellaneous Taxes and Insurance (9,186)
Mortgage Insurance Premium (MIP) (200,175)
Staffing Agency Disbursements (887,633)
Administrative Fees (13,000)
Total Disbursements (2,463,576)
Net Cash Provided By Operating Activities 1,055,529
Cash Flows From Investing Activities
Net Deposits to the Escrow Account (164,883)
Net Deposits to the Reserve Account (61,609)
Net Cash Used In Investing Activities (226,492)
Cash Flows From Financing Activities
Principal Payments (1st Mortgage) (875,485)
Exchanges (11,675)
Net Cash Used In Financing Activities (887,160)
Net Decrease in Cash (58,123)
Beginning of Period Cash 162,964
End of Period Cash $ 104,841
Reconciliation Of Net Income To Net Cash Flows From Operating Activities
Net Income $ 1,382,221
Depreciation Expenses 459,456
Amortization of Debt Issuance Costs 17,243
Decrease (Increase) in Interest Receivable (773,695)
Decrease (Increase) in Entity Assets - Accounts Receivable (41,507)
Decrease (Increase) in Prepaid Expenses 14,244
Increase (Decrease) in Accounts Payable 186
Increase (Decrease) in Accrued Interest Payable (2,619)
Net Cash Provided By Operating Activities $ 1,055,529
8
See accompanying notes to the financial statements. 6
FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Notes to Financial Statements
1) Organization:
On May 7, 2013, Hollis Real Estate Co., LLC, a limited liability company which was formed on August 16, 2010
purchased property, on which there is a 314 bed skilled nursing facility licensed by the New York State
Department of Health. On May 20, 2014, the project was refinanced under Section 232 pursuant to Section 223
(f) of the National Housing Act, as amended, and is administered and regulated by the U.S. Department of
Housing and Urban Development (HUD). Section 232 may be used to finance the purchase, refinance, new
construction, or substantial rehabilitation of a project. The property which is located in Hollis, New York is
leased to Hollis Operating Co., LLC D/B/A Holliswood Center for Rehabilitation & Healthcare.
2) Summary of Significant Accounting Policies:
The accounting policies that affect the significant elements of the financial statements are summarized below.
Method of Accounting -
The company maintains its books and prepares its financial statements on the accrual basis of accounting.
Cash –
For purposes of the statement of cash flows, the company considers time deposits, certificates of deposits, and
all highly liquid debt instruments with original maturities of three months or less, to be cash. The company
maintains cash balances at financial institutions which may periodically exceed the Federal Deposit Insurance
Corporation limit during the year.
Fixed Assets -
Property and equipment are stated at cost. Depreciation is computed for financial statement purposes using the
straight-line method over the estimated useful lives of the related assets as follows:
Building 30 years
Use of Estimates -
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from
those estimates.
Income Taxes –
Hollis Real Estate Co., LLC is treated as a partnership for income tax purposes, and as such each member is taxed
separately on their distributive share of the company’s income whether or not that income is actually
distributed.
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Notes to Financial Statements
3) Loan Receivable – Hollis Operating Co., LLC D/B/A Holliswood Center for Rehab & Health Care:
In May 2013, the company provided an unsecured loan to Hollis Operating Co., LLC in the amount of
$16,858,800 which will mature in May 2049. Principal and interest payments at a rate of 5% are due monthly.
During 2021 it was agreed that there would be a one year suspension of payments on the loan, and the maturity
date of the loan was extended until May 2050. The principal balance as of December 31, 2021 is $15,473,904 of
which $253,063 is classified as short term. Interest income relating to the loan for the year ended December 31,
2021 was $773,696.
As of December 31, 2021 Hollis Real Estate Co., LLC is owed $2,237,983 which is recorded as Interest Receivable,
which is not expected to be collected in the current year.
Principal payments for the next five years and on are as follows:
Year Amount
For the year ending 2022 $253,063
For the year ending 2023 266,011
For the year ending 2024 279,620
For the year ending 2025 293,926
For the year ending 2026 308,964
For the years thereafter 14,072,320
TOTAL $ 15,473,904
4) Mortgage Payable:
On May 20, 2014, Hollis Real Estate Co., LLC refinanced the property that is occupied by Hollis Operating Co., LLC
D/B/A Holliswood Center for Rehabilitation & Healthcare with a $36,696,000 HUD insured mortgage under
Section 232 of the National Housing Act from Greystone Bank. The mortgage is payable in 360 monthly
payments of principal and interest of $166,631 for 30 years to expire in June 2044, at 3.59% interest. In addition,
monthly deposits for taxes, insurance, and replacement of depreciable assets are required. Substantially all of
the rental property and equipment is pledged as collateral on the mortgage. No member is personally liable on
the mortgage note. The mortgage note includes a rider in regards to prepayment. Prepayment is allowed
providing a premium is paid as a percentage of the amount owed. The premium has a sliding scale beginning at
10% and continues until it reduces to 0% at July 1, 2024. The following are the balances as of December 31,
2021:
Principal Balance: $30,834,645
Unamortized debt issuance cost: (385,970)
30,448,675
Less current portion: 907,437
Long-term Debt $29,541,238
Principal payments for the next five years and on are as follows:
Year Amount
For the year ending 2022 $ 907,437
For the year ending 2023 940,555
For the year ending 2024 974,883
For the year ending 2025 1,010,462
For the year ending 2026 1,047,341
For the years thereafter 25,953,967
TOTAL $ 30,834,645
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Notes to Financial Statements
5) Lease:
The Premises, which are located in Hollis, New York are leased to Hollis Operating Co., LLC D/B/A Holliswood
Center for Rehabilitation & Healthcare pursuant to a arms length lease expiring in April 2042. During May 2014,
the lease was amended from the commencement of the HUD insured mortgage. The lease was modified that as
long as the property is subject to HUD insured financing, rent shall be no less than $4,864,509 per annum. Lease
revenue is further adjusted by other additions and subtractions to the mortgage escrow accounts. Due to
COVID-19 Pandemic, Holliswood Center needed to conserve additional funds to be able to fund operations
during the pandemic. As such it was agreed, that amounts due as rent in excess of the debt service requirements
will be temporarily suspended until a later date. Lease revenue for the year ended December 31, 2021 was
$2,656,841.
The following is a schedule by years of minimum future rentals on noncancelable operating leases as of
December 31, 2021.
Year ending December 31:
2022 $ 4,864,509
2023 4,864,509
2024 4,864,509
2025 4,864,509
2026 4,864,509
Later Years 74,589,138
Total Minimum Future Rentals $ 98,911,683
6) Allowable Distributions to Members:
Under the regulatory agreement for Section 232 projects, distributions to members from funds provided by
operations are allowed, provided: 1) surplus cash, as defined by HUD, is available for such purposes; 2) the
project is in compliance with all outstanding notices of requirements for proper maintenance; and 3) there is no
default under the regulatory agreement or under the mortgage note. For the year ended December 31, 2021,
there were no distributions to members. Surplus cash as of December 31, 2021 amounted to $12,594 and as of
June 30, 2021 amounted to $12,000.
7) Current Vulnerability Due to Certain Concentrations:
The Project’s sole asset is the property of Hollis Real Estate Co., LLC. The Project’s operations are concentrated
in the nursing home multifamily real estate market. In addition, the Project operates in a heavily regulated
environment. The operations of the Project are subject to the administrative directives, rules and regulations of
federal, state and local regulatory agencies, including, but not limited to, HUD. Such administrative directives,
rules and regulations are subject to change by an Act of Congress or an administrative change mandated by
HUD. Such changes may occur with little notice or inadequate funding to pay for the related cost, including the
additional administrative burden, to comply with a change.
8) Uncertainty in Income Taxes:
Management has determined that there are no material uncertain tax positions that require recognition or
disclosure in the financial statements. Periods ended December 31, 2017 and subsequent remain subject to
examination by applicable taxing authorities.
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Notes to Financial Statements
9) Coronavirus:
In December 2019, an outbreak of a novel strain of Coronavirus (COVID-19) originated in Wuhan, China and has
since spread to other countries, including the U.S. On March 11, 2020, the World Health Organization
characterized COVID-19 as a pandemic. In addition, multiple jurisdictions in the U.S. have declared a state of
emergency. It is anticipated that these impacts will continue for some time. Future potential impacts may
include disruptions or restrictions on the tenant’s ability to pay the required monthly rent. Operating functions
that may be changed include intake, recertification and maintenance. Changes to the operating environment
may increase operating costs. The future effects of these issues are unknown.
10) Pass-Through Entity Tax:
The Realty elected to pay an optional Pass-Through Entity Tax to the State of New York. A pass-through entity
such as a partnership or S-corporation can elect to pay the optional state tax, which is a valid deductible
business expense for the entity, and the partners/shareholders are then be able to claim a refundable tax credit
on their personal tax returns for the taxes paid by the entity. For the year 2021, the amount paid by the Realty
was $9,186.
11) Subsequent Events:
The company has evaluated subsequent events through March 14, 2022, the date which the financial statements
were available to be issued. No significant subsequent events have been identified by management.
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Year Ended December 31, 2021
INDEX TO ADDITIONAL INFORMATION REQUIRED BY HUD
Page No.
Balance Sheet Data 12
Statement of Operations Data 13
Statement of Members’ Equity Data 14
Statement of Cash Flows Data 15
Computation of Surplus Cash & Reserve For Replacement 16
Schedule of Changes in Fixed Asset Accounts 17
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Balance Sheet Data
December 31, 2021
HUD DESCRIPTION AMOUNT
ASSETS
Current Assets:
1120 Cash - Operations $ 104,841
1140 Accounts and Notes Receivable - Operations 253,063
Loan Receivable - Lesse Receivable: Current Portion
1140 detail of Holliswood Center Loan from Account 1590 253,063
1145 Accounts Receivable - Entity: Other - Staffing Agency 142,475
1200 Prepaid Expenses 210,175
1100T Total Current Assets 710,554
Restricted Deposits:
1310 Escrow Deposits 401,087
1320 Replacement Reserve 907,630
1300T Total Deposits 1,308,717
Fixed Assets:
1410 Land 3,445,922
1420 Buildings 13,783,688
1400T Total Fixed Assets 17,229,610
1495 Less: Accum.Depreciation & Amortization 3,905,378
1400N Net Fixed Assets 13,324,232
Other Assets:
1590 Miscellaneous Other Assets 17,458,824
1590 detail Loan Receivable - Holliswood Center 15,220,841
1590 detail Interest Receivable - Holliswood Center 2,237,983
1500T Total Other Assets 17,458,824
1000T Total Assets $ 32,802,327
LIABILITIES & EQUITY
Current Liabilities:
2110 Accounts Payable $ 10,000
2113 Accounts Payable - Entity 256
2131 Accrued Interest Payable 92,247
2170 Mortgage Payable - 1st Mortgage (short term) 907,437
2122T Total Current Liabilities 1,009,940
Long Term Liabilities:
2320 Mortgage Payable - 1st Mortgage (Net) 29,541,238
2390 Miscellaneous Long Term Liabilities 34,605
2390-010 Description Security Deposit
2390-020 Amount 34,605
2300T Total Long Term Liabilites 29,575,843
2000T Total Liabilities 30,585,783
Member's Equity
3130 Total Members' Equity 2,216,544
2033T Total Liabilities & Equity $ 32,802,327
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Statement of Profit & Loss Data
Year Ended December 31, 2021
HUD DESCRIPTION AMOUNT
Rent Revenue
5195 Lease Revenue $ 2,656,841
5100T Total Rent Revenue 2,656,841
5152N Net Rental Revenue 2,656,841
Financial Revenue
5410 Financial Revenue-Operations 773,696
5440 Revenue from Investments - Rep. Reserve 359
5400T Total Financial Revenue 774,055
5000T Total Revenue 3,430,896
Administrative Expenses
6350 Audit Expense 10,000
6263T Total Administrative Expenses 10,000
Taxes & Insurance
6710 Real Estate Taxes 202,090
6720 Property & Liability Insurance 39,650
6790 Misc. Taxes & Permits 3,000
6700T Total Taxes & Insurance 244,740
Financial Expenses
6820 Interest on Mortgage (or Bonds) Payable 1,138,706
6850 Mortgage Insurance Premium /Svc Ch. 202,179
6800T Total Financial Expenses 1,340,885
Operating Results
6000T Total Cost of Operations before Depreciation 1,595,625
5060T Profit (Loss) Before Depreciation 1,835,271
Less:
6600 Depreciation Expenses 459,456
5060N Operating Profit or (Loss) 1,375,815
Corporate or Mortgagor Rev/ Exp
7105 Entity Revenue 903,411
7130 Federal, State, & Other Income Taxes 9,186
7190 Other Expenses - Payroll and Related Expenses 887,819
7100T Net Entity Expenses (6,406)
Profit or Loss
3250 Profit or (Loss) Net Income or (Loss) $ 1,382,221
Part II
Total first mortgage principal payments required
S1000-010 $ 875,485
during the audit period (usually 12 months).
Total of all monthly reserve for replacement
deposits (usually 12 months) required during the
S1000-020 147,000
audit period even if deposits have been
temporarily waived or suspended.
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
HUD Equity Data
Year Ended December 31, 2021
HUD DESCRIPTION AMOUNT
S1100-010 Beginning of Year Balance $ 834,323
3250 Net Income or (Loss) 1,382,221
3130 End of Year - 3130 $ 2,216,544
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023
NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023
Hollis Real Estate Co., LLC
FHA Project No. 012-22299
Cash Flow Data
Year Ended December 31, 2021
Cash Flows From
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FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 BUDIMIR EXHIBIT 42G FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 HOLLIS REAL ESTATE CO., LLC FHA Project No. 012-22299 Financial Statements Year Ended December 31, 2021 1 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Year Ended December 31, 2021 TABLE OF CONTENTS Page No. INDEPENDENT AUDITOR'S REPORT 1–2 FINANCIAL STATEMENTS: Balance Sheet 3 Statement of Operations 4 Statement of Members’ Equity 5 Statement of Cash Flows 6 Notes to the Financial Statements 7 - 10 Supplementary Information Required By HUD 11 - 17 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT 18 - 20 ON HUD-ASSISTED PROGRAM IN ACCORDANCE WITH CONSOLIDATED AUDIT GUIDE FOR AUDITS OF HUD PROGRAMS SCHEDULE OF FINDINGS, QUESTIONED COSTS & RECOMMENDATIONS 21 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE AND OTHER MATTERS 22 - 23 BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNNMENT AUDITING STANDARDS 2 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 INDEPENDENT AUDITOR'S REPORT To the Members Hollis Real Estate Co., LLC Bronx, New York: Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Hollis Real Estate Co., LLC which comprise the balance sheet as of December 31, 2021, and the related statements of operations, changes in members’ equity and cash flows for the year then ended, and the related notes to the financial statements. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Hollis Real Estate Co., LLC as of December 31, 2021, and the results of its operations, and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Hollis Real Estate Co., LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Hollis Real Estate Co., LLC’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we:  Exercise professional judgment and maintain professional skepticism throughout the audit. 3 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Independent Auditors’ Report Continued  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Hollis Real Estate Co., LLC’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Hollis Real Estate Co., LLC’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information shown on pages 11 through 17 is presented for the purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information on pages 11 through 17 is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 14, 2022 on our consideration of Hollis Real Estate Co., LLC’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Hollis Real Estate Co., LLC’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Hollis Real Estate Co., LLC’s internal control over financial reporting and compliance. MARTIN FRIEDMAN, C.P.A. P.C. Certified Public Accountants Brooklyn, NY March 14, 2022 4 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Balance Sheet December 31, 2021 Assets Cash $ 104,841 Accounts Receivable - Other: Staffing Agency 142,475 Prepaid Expenses 210,175 Loan Receivable - Holliswood Center 253,063 Total Current Assets $ 710,554 Land 3,445,922 Building & Improvements 13,783,688 17,229,610 Less: Accumulated Depreciation & Amortization 3,905,378 Total Fixed Assets 13,324,232 Loan Receivable - Holliswood Center 15,220,841 Interest Receivable - Holliswood Center 2,237,983 Escrow Deposits 401,087 Replacement Reserve 907,630 Total Other Assets 18,767,541 Total Assets $ 32,802,327 Liabilities and Equity Mortgage Payable $ 907,437 Accounts Payable 10,000 Accounts Payable- Staffing Agency 256 Accrued Interest 92,247 Total Current Liabilities $ 1,009,940 Mortgage Payable (Net) 29,541,238 Security Deposit 34,605 Total Long Term Liabilities 29,575,843 Total Members' Equity 2,216,544 Total Liabilities & Members' Equity $ 32,802,327 5 See accompanying notes to the financial statements. 3 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Statement of Operations Year Ended December 31, 2021 Income: Rental Income $ 2,656,841 Expenses: Mortgage Interest $ 1,138,706 Depreciation Expense 459,456 Mortgage Insurance Premium 202,179 Real Estate Tax 202,090 Property & Liability Insurance 39,650 Audit Fee 10,000 Filing Fees 3,000 Total Expenses 2,055,081 Income from Operations 601,760 Interest Income 774,055 Staffing Agency - Revenue 903,411 Staffing Agency - Expenses (887,819) Income Before Taxes 1,391,407 Less: Pass-Through Entity Tax 9,186 Net Income $ 1,382,221 6 See accompanying notes to the financial statements. 4 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Statement of Members' Equity Year Ended December 31, 2021 Members' Equity: Balance - Beginning of Period $ 834,323 Net Income for the Period 1,382,221 Total Members' Equity End of Year $ 2,216,544 7 See accompanying notes to the financial statements. 5 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Statement of Cash Flows Year Ended December 31, 2021 Cash Flows From Operating Activities: Rental Receipts $ 2,656,841 Interest Receipts 360 Staffing Agency Receipts 861,904 Total Receipts $ 3,519,105 Interest on First Mortgage (1,124,082) Real Estate Taxes (188,702) Property & Liability Insurance (40,798) Miscellaneous Taxes and Insurance (9,186) Mortgage Insurance Premium (MIP) (200,175) Staffing Agency Disbursements (887,633) Administrative Fees (13,000) Total Disbursements (2,463,576) Net Cash Provided By Operating Activities 1,055,529 Cash Flows From Investing Activities Net Deposits to the Escrow Account (164,883) Net Deposits to the Reserve Account (61,609) Net Cash Used In Investing Activities (226,492) Cash Flows From Financing Activities Principal Payments (1st Mortgage) (875,485) Exchanges (11,675) Net Cash Used In Financing Activities (887,160) Net Decrease in Cash (58,123) Beginning of Period Cash 162,964 End of Period Cash $ 104,841 Reconciliation Of Net Income To Net Cash Flows From Operating Activities Net Income $ 1,382,221 Depreciation Expenses 459,456 Amortization of Debt Issuance Costs 17,243 Decrease (Increase) in Interest Receivable (773,695) Decrease (Increase) in Entity Assets - Accounts Receivable (41,507) Decrease (Increase) in Prepaid Expenses 14,244 Increase (Decrease) in Accounts Payable 186 Increase (Decrease) in Accrued Interest Payable (2,619) Net Cash Provided By Operating Activities $ 1,055,529 8 See accompanying notes to the financial statements. 6 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Notes to Financial Statements 1) Organization: On May 7, 2013, Hollis Real Estate Co., LLC, a limited liability company which was formed on August 16, 2010 purchased property, on which there is a 314 bed skilled nursing facility licensed by the New York State Department of Health. On May 20, 2014, the project was refinanced under Section 232 pursuant to Section 223 (f) of the National Housing Act, as amended, and is administered and regulated by the U.S. Department of Housing and Urban Development (HUD). Section 232 may be used to finance the purchase, refinance, new construction, or substantial rehabilitation of a project. The property which is located in Hollis, New York is leased to Hollis Operating Co., LLC D/B/A Holliswood Center for Rehabilitation & Healthcare. 2) Summary of Significant Accounting Policies: The accounting policies that affect the significant elements of the financial statements are summarized below. Method of Accounting - The company maintains its books and prepares its financial statements on the accrual basis of accounting. Cash – For purposes of the statement of cash flows, the company considers time deposits, certificates of deposits, and all highly liquid debt instruments with original maturities of three months or less, to be cash. The company maintains cash balances at financial institutions which may periodically exceed the Federal Deposit Insurance Corporation limit during the year. Fixed Assets - Property and equipment are stated at cost. Depreciation is computed for financial statement purposes using the straight-line method over the estimated useful lives of the related assets as follows: Building 30 years Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Income Taxes – Hollis Real Estate Co., LLC is treated as a partnership for income tax purposes, and as such each member is taxed separately on their distributive share of the company’s income whether or not that income is actually distributed. 9 7 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Notes to Financial Statements 3) Loan Receivable – Hollis Operating Co., LLC D/B/A Holliswood Center for Rehab & Health Care: In May 2013, the company provided an unsecured loan to Hollis Operating Co., LLC in the amount of $16,858,800 which will mature in May 2049. Principal and interest payments at a rate of 5% are due monthly. During 2021 it was agreed that there would be a one year suspension of payments on the loan, and the maturity date of the loan was extended until May 2050. The principal balance as of December 31, 2021 is $15,473,904 of which $253,063 is classified as short term. Interest income relating to the loan for the year ended December 31, 2021 was $773,696. As of December 31, 2021 Hollis Real Estate Co., LLC is owed $2,237,983 which is recorded as Interest Receivable, which is not expected to be collected in the current year. Principal payments for the next five years and on are as follows: Year Amount For the year ending 2022 $253,063 For the year ending 2023 266,011 For the year ending 2024 279,620 For the year ending 2025 293,926 For the year ending 2026 308,964 For the years thereafter 14,072,320 TOTAL $ 15,473,904 4) Mortgage Payable: On May 20, 2014, Hollis Real Estate Co., LLC refinanced the property that is occupied by Hollis Operating Co., LLC D/B/A Holliswood Center for Rehabilitation & Healthcare with a $36,696,000 HUD insured mortgage under Section 232 of the National Housing Act from Greystone Bank. The mortgage is payable in 360 monthly payments of principal and interest of $166,631 for 30 years to expire in June 2044, at 3.59% interest. In addition, monthly deposits for taxes, insurance, and replacement of depreciable assets are required. Substantially all of the rental property and equipment is pledged as collateral on the mortgage. No member is personally liable on the mortgage note. The mortgage note includes a rider in regards to prepayment. Prepayment is allowed providing a premium is paid as a percentage of the amount owed. The premium has a sliding scale beginning at 10% and continues until it reduces to 0% at July 1, 2024. The following are the balances as of December 31, 2021: Principal Balance: $30,834,645 Unamortized debt issuance cost: (385,970) 30,448,675 Less current portion: 907,437 Long-term Debt $29,541,238 Principal payments for the next five years and on are as follows: Year Amount For the year ending 2022 $ 907,437 For the year ending 2023 940,555 For the year ending 2024 974,883 For the year ending 2025 1,010,462 For the year ending 2026 1,047,341 For the years thereafter 25,953,967 TOTAL $ 30,834,645 10 8 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Notes to Financial Statements 5) Lease: The Premises, which are located in Hollis, New York are leased to Hollis Operating Co., LLC D/B/A Holliswood Center for Rehabilitation & Healthcare pursuant to a arms length lease expiring in April 2042. During May 2014, the lease was amended from the commencement of the HUD insured mortgage. The lease was modified that as long as the property is subject to HUD insured financing, rent shall be no less than $4,864,509 per annum. Lease revenue is further adjusted by other additions and subtractions to the mortgage escrow accounts. Due to COVID-19 Pandemic, Holliswood Center needed to conserve additional funds to be able to fund operations during the pandemic. As such it was agreed, that amounts due as rent in excess of the debt service requirements will be temporarily suspended until a later date. Lease revenue for the year ended December 31, 2021 was $2,656,841. The following is a schedule by years of minimum future rentals on noncancelable operating leases as of December 31, 2021. Year ending December 31: 2022 $ 4,864,509 2023 4,864,509 2024 4,864,509 2025 4,864,509 2026 4,864,509 Later Years 74,589,138 Total Minimum Future Rentals $ 98,911,683 6) Allowable Distributions to Members: Under the regulatory agreement for Section 232 projects, distributions to members from funds provided by operations are allowed, provided: 1) surplus cash, as defined by HUD, is available for such purposes; 2) the project is in compliance with all outstanding notices of requirements for proper maintenance; and 3) there is no default under the regulatory agreement or under the mortgage note. For the year ended December 31, 2021, there were no distributions to members. Surplus cash as of December 31, 2021 amounted to $12,594 and as of June 30, 2021 amounted to $12,000. 7) Current Vulnerability Due to Certain Concentrations: The Project’s sole asset is the property of Hollis Real Estate Co., LLC. The Project’s operations are concentrated in the nursing home multifamily real estate market. In addition, the Project operates in a heavily regulated environment. The operations of the Project are subject to the administrative directives, rules and regulations of federal, state and local regulatory agencies, including, but not limited to, HUD. Such administrative directives, rules and regulations are subject to change by an Act of Congress or an administrative change mandated by HUD. Such changes may occur with little notice or inadequate funding to pay for the related cost, including the additional administrative burden, to comply with a change. 8) Uncertainty in Income Taxes: Management has determined that there are no material uncertain tax positions that require recognition or disclosure in the financial statements. Periods ended December 31, 2017 and subsequent remain subject to examination by applicable taxing authorities. 11 9 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Notes to Financial Statements 9) Coronavirus: In December 2019, an outbreak of a novel strain of Coronavirus (COVID-19) originated in Wuhan, China and has since spread to other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. In addition, multiple jurisdictions in the U.S. have declared a state of emergency. It is anticipated that these impacts will continue for some time. Future potential impacts may include disruptions or restrictions on the tenant’s ability to pay the required monthly rent. Operating functions that may be changed include intake, recertification and maintenance. Changes to the operating environment may increase operating costs. The future effects of these issues are unknown. 10) Pass-Through Entity Tax: The Realty elected to pay an optional Pass-Through Entity Tax to the State of New York. A pass-through entity such as a partnership or S-corporation can elect to pay the optional state tax, which is a valid deductible business expense for the entity, and the partners/shareholders are then be able to claim a refundable tax credit on their personal tax returns for the taxes paid by the entity. For the year 2021, the amount paid by the Realty was $9,186. 11) Subsequent Events: The company has evaluated subsequent events through March 14, 2022, the date which the financial statements were available to be issued. No significant subsequent events have been identified by management. 12 10 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Year Ended December 31, 2021 INDEX TO ADDITIONAL INFORMATION REQUIRED BY HUD Page No. Balance Sheet Data 12 Statement of Operations Data 13 Statement of Members’ Equity Data 14 Statement of Cash Flows Data 15 Computation of Surplus Cash & Reserve For Replacement 16 Schedule of Changes in Fixed Asset Accounts 17 13 11 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Balance Sheet Data December 31, 2021 HUD DESCRIPTION AMOUNT ASSETS Current Assets: 1120 Cash - Operations $ 104,841 1140 Accounts and Notes Receivable - Operations 253,063 Loan Receivable - Lesse Receivable: Current Portion 1140 detail of Holliswood Center Loan from Account 1590 253,063 1145 Accounts Receivable - Entity: Other - Staffing Agency 142,475 1200 Prepaid Expenses 210,175 1100T Total Current Assets 710,554 Restricted Deposits: 1310 Escrow Deposits 401,087 1320 Replacement Reserve 907,630 1300T Total Deposits 1,308,717 Fixed Assets: 1410 Land 3,445,922 1420 Buildings 13,783,688 1400T Total Fixed Assets 17,229,610 1495 Less: Accum.Depreciation & Amortization 3,905,378 1400N Net Fixed Assets 13,324,232 Other Assets: 1590 Miscellaneous Other Assets 17,458,824 1590 detail Loan Receivable - Holliswood Center 15,220,841 1590 detail Interest Receivable - Holliswood Center 2,237,983 1500T Total Other Assets 17,458,824 1000T Total Assets $ 32,802,327 LIABILITIES & EQUITY Current Liabilities: 2110 Accounts Payable $ 10,000 2113 Accounts Payable - Entity 256 2131 Accrued Interest Payable 92,247 2170 Mortgage Payable - 1st Mortgage (short term) 907,437 2122T Total Current Liabilities 1,009,940 Long Term Liabilities: 2320 Mortgage Payable - 1st Mortgage (Net) 29,541,238 2390 Miscellaneous Long Term Liabilities 34,605 2390-010 Description Security Deposit 2390-020 Amount 34,605 2300T Total Long Term Liabilites 29,575,843 2000T Total Liabilities 30,585,783 Member's Equity 3130 Total Members' Equity 2,216,544 2033T Total Liabilities & Equity $ 32,802,327 14 12 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Statement of Profit & Loss Data Year Ended December 31, 2021 HUD DESCRIPTION AMOUNT Rent Revenue 5195 Lease Revenue $ 2,656,841 5100T Total Rent Revenue 2,656,841 5152N Net Rental Revenue 2,656,841 Financial Revenue 5410 Financial Revenue-Operations 773,696 5440 Revenue from Investments - Rep. Reserve 359 5400T Total Financial Revenue 774,055 5000T Total Revenue 3,430,896 Administrative Expenses 6350 Audit Expense 10,000 6263T Total Administrative Expenses 10,000 Taxes & Insurance 6710 Real Estate Taxes 202,090 6720 Property & Liability Insurance 39,650 6790 Misc. Taxes & Permits 3,000 6700T Total Taxes & Insurance 244,740 Financial Expenses 6820 Interest on Mortgage (or Bonds) Payable 1,138,706 6850 Mortgage Insurance Premium /Svc Ch. 202,179 6800T Total Financial Expenses 1,340,885 Operating Results 6000T Total Cost of Operations before Depreciation 1,595,625 5060T Profit (Loss) Before Depreciation 1,835,271 Less: 6600 Depreciation Expenses 459,456 5060N Operating Profit or (Loss) 1,375,815 Corporate or Mortgagor Rev/ Exp 7105 Entity Revenue 903,411 7130 Federal, State, & Other Income Taxes 9,186 7190 Other Expenses - Payroll and Related Expenses 887,819 7100T Net Entity Expenses (6,406) Profit or Loss 3250 Profit or (Loss) Net Income or (Loss) $ 1,382,221 Part II Total first mortgage principal payments required S1000-010 $ 875,485 during the audit period (usually 12 months). Total of all monthly reserve for replacement deposits (usually 12 months) required during the S1000-020 147,000 audit period even if deposits have been temporarily waived or suspended. 15 13 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 HUD Equity Data Year Ended December 31, 2021 HUD DESCRIPTION AMOUNT S1100-010 Beginning of Year Balance $ 834,323 3250 Net Income or (Loss) 1,382,221 3130 End of Year - 3130 $ 2,216,544 16 14 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM INDEX NO. 451549/2023 NYSCEF DOC. NO. 117 RECEIVED NYSCEF: 06/28/2023 Hollis Real Estate Co., LLC FHA Project No. 012-22299 Cash Flow Data Year Ended December 31, 2021 Cash Flows From