PHYSICAL CONDITION

The physical condition of the property has been maintained at the highest standard of efficiency.
In August, 1910, the new station at Henderson and Grove Streets, Jersey City, was opened for busi¬
ness, and in November the extension from Twenty-third Street and Sixth Avenue to Broadway and
Thirty-third Street was completed and put into operation. The car storage yard and repair shops at
Henderson Street and Railroad Avenue, Jersey City, were completed in the fall of 1910, and now
provide a much needed facility for the proper care and repair of equipment.

Broadway and Thirty-third Street Station:

The opening of this important terminal in the heart of the business, shopping and theatre
districts of New York City has greatly improved your Company's position. At this station facilities
are provided for the handling of baggage, mail and express matter, as has been done at the Hudson
Terminal at Cortlandt and Church Streets, but these sources of revenue have not yet been tapped,
and cannot well be until the connection with Newark (now under construction) is completed.

The Erie Railroad and the Lehigh Valley Railroad have each established ticket offices on the
Concourse floor of the Thirty-third Street Station, and provision has also been made for ticket
offices of other trunk lines.

Hudson Terminal Buildings:

The Hudson Terminal has become the most important traffic, business and office center in the
downtown district of New York. These buildings have maintained their popularity, and there has
been such a steady demand for space that on May 1, 1911, the beginning of the next " leasing year,"
the buildings will be 99-^s% rented.

The gross income from the buildings for the year ending May 1st, 1912, will be $1,566,318,
as against Si,509,628 for the year ending May 1st, 1911. As all leases in office buildings begin on
May 1st, it is necessary to make comparisons from that date. Rates have been maintained and
the high character of the tenantry has been upheld. The amount payable for assumed leases for
the year ending May 1st, 1912, will be only $16,647.50.

Equipment:

Since the last report your Company has purchased fifty additional steel passenger cars, with full
motor equipment, under a purchase agreement with the Guaianty Trust Company of New York,
which Company has issued Car Purchase Certificates, " Series B," against this equipment. Orders
for thirty-six more cars, this company's portion of the equipment to be used in the joint service to
Newark, have been placed, and Car Purchase Certificates covering these will also be issued, with the
same provision for semi-annual payments on account of principal.

NEW WORK
Newark Extension:

Work on your Company's portion of the joint high-speed line with the Pennsylvania Railroad to
Newark has progressed satisfactorily, and it is expected that this service will be inaugurated during
the summer of 1911. When the operation of this joint line begins it will provide an additional station
of great importance to the Company at or near the Boulevard, Jersey City Heights. With an
efficient rapid transit service connecting it with uptown and downtown centers of New York, this
part of Jersey City will build up rapidly as a residential section. The Hudson Terminal will then
become the downtown terminal of the Pennsylvania system. Trains will be scheduled from the
Hudson Terminal to connect with the Pennsylvania trains at the Manhattan Transfer just east of
Newark, and it is intended that all Pennsylvania Railroad traffic to the downtown district of New
York shall be handled by this Company from the Manhattan Transfer through the Hudson Tunnels.