Executive Summary ...... 1 Property Record ...... 2 1. Location ...... 2 2. Description & Accommodation ...... 3 3. Structural Condition and Repair ...... 4 4. Statutory Enquiries ...... 5 5. Tenure and Management ...... 5 6. Operational Structure ...... 6 7. Local Hotel Market Analysis ...... 7 8. Business Analysis ...... 7 9. Principal Valuation Considerations ...... 8 Appendix A: Maps and Plans ...... 14

Executive Summary Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

EXECUTIVE SUMMARY

This summary is strictly confidential to you as the Addressee. It must not be copied, distributed or considered in isolation from the full report.

Property Summary

Location The hotel is located a short distance from Poole town centre, within close proximity to the Dolphin Shopping Centre and the waterfront.

Description The hotel comprises 85 bedrooms. There is an ancillary Great Room, business centre and two meeting rooms.

Condition Good

Tenure Leasehold

Operating Structure Held subject to a lease to Eclipse Hotels

Market Value and Yield

Valuation Date 1 May 2019

Market Value £9,800,000

Net Initial Yield 5.50%

Capital expenditure None deducted from gross valuation

Loan security We consider the Property represents adequate security against a loan over the proposed period.

Liquidity Reasonable subject to the comments in the property record and the head report.

Key Investment / Market Considerations for Loan Security

Strengths / Opportunities • Strong hotel demand in local area; • Close to Poole town centre; • Secure fixed rental income.

Weaknesses / Risks • Hotel older than several competitors; • The hotel is not compliant with IHG’s Generation Four requirement at present; • Hotel potentially over rented; • Relatively weak tenant covenant.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

PROPERTY RECORD

Inspection The Property was subject to an external inspection, from ground level on 7 May 2019. The inspection was undertaken by Ian Thompson.

1. Location

1.1. Location

General The hotel is well located within walking distance of Poole town centre. Adjoining the site is the local leisure centre, and the Lighthouse Arts centre is nearby. Bournemouth is approximately five miles to the east and Dorchester 25 miles west of the Property. Communications are good, with easy access to the local road network. The central bus station is nearby, and Poole railway station is 0.5 miles to the west, offering mainline connections. Poole has a resident population of 151,000 and an unemployment rate of 3.2%, significantly below the national average of 4.2% (ONS, 2018). Local businesses include the regional headquarters of Barclays, Honeywell, Siemens, RNLI, Lush, Animal and Sunseeker International.

Site Boundary

The plan above is shown for indication purposes only and many not accord strictly with the title plan which we have reviewed.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

2. Description & Accommodation

Summary The hotel comprises 85 bedrooms. There is an ancillary Great Room, business centre and two meeting rooms. The Property comprises four storeys, constructed with concrete block elevations beneath a flat roof. The main entrance, which has a porte cochère, is situated centrally, with the bedroom wings to either side.

Guestrooms The following table summarises the Property's guestroom facilities, based on information provided by Atlas Hotels.

Category Unit Count

Twin 31

Double 54

Accessible 5 (inclusive)

Total 85

The hotel distinguishes between Superior and Standard bedrooms. The only material difference between the two is that the Superior doubles have been refurbished to Generation Three, featuring dark wood furniture and a sofa that can be folded out to a bed. We are advised that the Superior rooms are charged at a higher rate and include additional beverages and snacks.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

All rooms are non-smoking and standard Internet is available free of charge for all guests

Food & Beverage There is a Great Room comprising approximately 80 covers.

Meeting Rooms We have obtained a schedule outlining the meeting room facilities and their respective capacities from the hotel’s website:

Room Floor Boardroom Theatre U-Shape

The Quay Ground 18 43 14

The Marina Ground 12 15 10

The Harbour Ground 10 15 N10

Car Parking

There are approximately 110 car parking spaces, which are chargeable at £6 per day. Parking Eye is in force to monitor car park payment.

Back of House Accommodation

There is adequate storage, back of house, office accommodation and staff facilities within the hotel.

3. Structural Condition and Repair

The Property appears to be in reasonable condition and adequately maintained. However, by comparison with the Atlas hotels it was very obvious that this hotel was effectively held under a different ownership as the Property appeared dated and lacked key hallmarks, which characterises the Atlas portfolio.

We understand the Great Room was last refurbished in 2006, with air conditioning installed in all bedrooms also in 2006. The ground and third floor bedrooms received a soft refurbishment to Generation Three in 2014, while the remainder are still as Generation Two. The Generation Three refurbishment was only partial, as the bedrooms do not have papered walls or the shower screen that feature in the Generation Three specification. The bathrooms appear not to have been refurbished since construction, comprising dated tiling and open fronted showers. We understand that there are no immediate plans for further refurbishment.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

3.1. Indication of Reinstatement Cost Our informal guide to the Day One Cost is £7,300,000 (exclusive of VAT) This guide figure envisages clearance and reinstatement using modern methods and materials, which may not necessarily be appropriate or permitted. It does not reflect any additional costs attributable to conservation area status or listed building status (or similar – for example proximity to listed buildings) You should not rely on this guide for any purpose before it has been confirmed by a formal assessment carried out by a building surveyor or other person with sufficient current experience of replacement costs.

4. Statutory Enquiries

We have been provided with an Argyll Environmental report dated 29 May 2019, which we have had regard to in undertaking our valuation.

Ground Conditions Please refer to head report.

Flooding Risk

The Environment Agency show the Property is located within flood zone 1, with a low probability of flooding.

Environmental Considerations Please refer to head report.

Planning The planning policy for the subject is determined by the Borough of Poole. The hotel has the necessary planning consents. We are not aware of any outstanding or unimplemented planning applications.

Conservation Area and Listed Building Status The Property is not listed and nor is it located within a conservation area.

Business Rates

Demise Description Rateable Values Holiday inn Express, Poole Hotel & Premises £275,500

In England, the Non-Domestic Rating Multiplier for the fiscal year 2019/2020 has been set at 50.4 pence.

5. Tenure and Management

Title We have been provided with a Certificate of Title prepared by Reed Smith LLP dated 3 November 2017 and based on this we summarise our understanding of the title below:

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

Overview

Type of tenure Long Leasehold

Title no(s) DT283428

Any material encumbrances or unduly None onerous / unusual easements, restrictions, outgoings or conditions?

Any title characteristics likely to have an None adverse impact on value, either now or over the proposed loan term?

The long leasehold interest is held from 1999 for an unexpired term of 106 years from Poole City Council at a peppercorn rent.

6. Operational Structure The hotel is leased to Eclipse Hotels who subsequently run it as an owner operator with a franchise agreement from IHG to operate under the Holiday Inn Express brand. The occupational lease is summarised below.

Occupational Lease Summary

Tenant Eclipse Hotels

Term From 22 December 2000 for a term of 35 years

Break options None

Current rent £575,121 pa

Rent review 5 yearly Open Market Rent

Repair The tenant undertakes full repairing liabilities

Insurance Insurance rent of £7,685.22

User As a hotel within Class C1, with ancillary uses

Alienation The tenant may assign the whole with landlords consent. The tenant may not assign part only.

Alterations Not without landlord’s consent (not to be unreasonably withheld).

Income Summary The total contracted rent is £575,121 per annum. The rent was first subject to review on 22 December 2005 and every five years thereafter, to the higher of the then open market rental value or the open market review rent, which is calculated by reference to the Retail Price Index, subject to a maximum increase of 3%. 6.1. Covenant Strength Eclipse Hotels Group is a privately-owned company with a number of hotels in the UK, as well the Bahamas, Switzerland and Tanzania. In the UK, it has Holiday Inn hotels in Bristol City Centre and Bristol Airport, and Holiday Inn Express hotels at Cardiff Airport, Norwich and Poole, as well

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

as an Easy Hotel at Heathrow and Luton airports. The Group also operates a Holiday Inn Express at Zurich Airport. Consequently, the Group enjoys a strong relationship with IHG. We have obtained information from the rating agency Dun & Bradstreet. Eclipse Hotels Limited has a rating of B3 with a tangible net worth of £279,747. Dunn & Bradstreet analytics have shown the business to have a failure score of 53 out of 100, with a 1.23% incidence of failure. The delinquency score is 90 out of 100, with a 2.80% incidence of delinquency. These figures represent the percentage of businesses with the same score that have been subject to insolvency or paid late, based on payment information provided to D&B. These risk indicators suggest that Eclipse Hotels Limited represents a greater than average risk of business failure. While acceptable, Eclipse Hotels Limited is likely to be viewed as weak in relation to operators of comparable hotels which may benefit from greater scale and correspondingly net worth.

7. Local Hotel Market Analysis

7.1. Existing Market Supply According to AM:PM Hotels, there are 23 hotels in Poole, accounting for 1,062 bedrooms. Ten of these hotels are located within a one-mile radius of the Property. The market is largely dominated by the budget segment (511 rooms), followed by four and three star hotels. Out of this supply, 62% is branded, with Holiday Inn Express, Premier Inn and Travelodge in the budget sector.

7.2. Competitor Trading Analysis We have not been provided with any competitor analysis from Smith Travel Research (STR) as the subject hotel is held as an investment property and not directly operated by Atlas hotels.

7.3. Proposed Supply There are currently five projects in the pipeline in Poole, all in their planning phase, including the proposed 81 bedroom Travelodge Poole Fleets Corner Business Park, two miles north from the subject.

8. Business Analysis We have not been provided with any trading performance of the hotel.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

9. Principal Valuation Considerations

Location / Situation and Competition The Property is well located just a short distance from Poole town centre. From an investment perspective Poole would be viewed as a secondary hotel market.

Building Design / Condition / Suitability The hotel is in good condition, however, it would benefit from refurbishment in order to bring the hotel in line with IHG’s Generation Four requirements.

Tenure The hotel is held leasehold, subject to an occupational lease, as described above. At the current rent, we consider the hotel is over rented which, together with the covenant strength of Eclipse Hotels and that the hotel is held leasehold is reflected in the yield we have adopted in our valuation. We consider that a realistic marketing period would be between 9 and 12 months.

Asset Management Opportunities There is limited scope for additional growth through specific asset management. The hotel is stabilised.

Saleability

Current Sale Prospects

What is the estimated period it would take to sell the Property at 9-12 months Market Value?

Purchaser demand is likely to be Average

9.1. Market Rent

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

We have not received any trading information for the Property and accordingly have assessed the current rent payable compared with the rents of other budget hotels as set out below.

No Rent Lease Tenant and lease Address of (per annum Comments terms Start Date Beds per room)

Agreement for West Cliff, 100 Premier Inn £588,000 New Lease 2019 Bournemouth (£5,600) development in 25 year FRI lease with regional location tenants break at year 15. 5 yearly CPI linked rent reviews 8 months rent free

Practical Ringwood, New 85 Premier Inn £437,500 New Completion Forest, development in 25 year FRI lease with (£5,147) expected late regional location 5 yearly CPI linked rent 2017 reviews 10 months rent free

Practical Moreton in 60 Premier Inn (£4,250) New Completion Marsh, development in 25 year FRI lease with expected 2017 Gloucester regional location 5 yearly CPI linked rent reviews

Practical Basing View, 86 Travelodge £500,950 New Completion Basingstoke development in 25 year FRI lease with (£5,825) expected 2017 regional location 5 yearly CPI linked rent reviews 6 months rent free period

Practical Tentercroft 127 Travelodge £724,700 New Completion Street, Lincoln (£5,700) development in 25 year FRI lease with expected 2017 regional location 5 yearly CPI linked rent reviews 6 months rent free period

Practical Christchurch 128 Premier Inn £681,600 New Completion Road, development in 25 year FRI lease (£5,325) expected 2016 Bournemouth regional location (tenant break at year 20) with 5 yearly CPI linked rent reviews 5 months rent free period

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

Recent rental evidence would suggest some level of disparity for budget hotel rents in regional locations, depending on the size of the centre and the type and breadth of demand generators. In any case, it should be noted that the rent for an operational hotel is often set as a proportion of the sustainable net operating profit. Based on the above we would expect the Market Rent of the hotel element to be in the region of £4,800 to £5,200 per bedroom. This compares to the rent passing of £575,121 or £6,766 per bedroom at the Property, which would suggest that the current passing rent is considered to be over rented. Our opinion of the Market Rent of the Property is £415,000 per annum.

9.2. Market Value

Value Conclusion In assessing the value of the hotel, we have adopted the investment method of valuation. In assessing the appropriate yield requirement, we have identified the following comparable sales transactions.

Travelodge Haverhill and Beacon • January 2019 Hill • £12.55M • 5.0% NIY The 40-bedroom Travelodge Beacon Hill and the 80- bedroom Travelodge Haverhill have been sold as part of a two-property portfolio by LXI REIT. The Haverhill property is let on a 25 year lease with 5 yearly reviews, collar and cap at 1% and 4% respectively. Current passing rent is at £344,000 per annum. The Beacon Hill property is let on a 35 year lease subject to 5 yearly, upward only rent reviews, tied to RPI. Current passing rent is at £326,000 per annum.

Travelodge Bath Waterside • December 2018 • £22M • 5.20% NIY The hotel was sold by LaSalle Investment Management to CCLA Investment Management. The sale went through in December 2018 after being considered withdrawn a month earlier. 125-bedroom hotel opened in 1980 and was last renovated in 2008. The property features a bar, restaurant and parking facilities.

Jurys Inn, Newcastle Gateshead • November 2018 • £27.6M • 5.62% NIY The 203-bedroom hotel was sold by Welling Properties to BP Pension Fund. The hotel is let to Jurys Inn with approximately 28 years unexpired and a passing rent of £1.64m. It is considered to be overrented.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

Travelodge Swansea • June 2018 • £5.5M • c.5.0% NIY The 70-bedroom hotel was bought by Knight Frank Investments from Marylebone Asset Management. It is let to Travelodge with an unexpired term of 20 years subject to 5 yearly rent reviews tied to RPI.

Travelodge, Portsmouth Central • June 2018 • £19M • NIY 5.17% Newbuild Travelodge with full Bar Café and comfort cooling. On site works commenced with PC due by year end 2019. The 152 bedroom hotel was sold by a private developer to Rockspring. The hotel has a lease term of 25 years from practical completion subject to 5 yearly rent reviews, tied to CPI 1% -4%. The initial rent of £1,004,800 pa reflects £6,611 per bedroom per annum.

Holiday Inn, York • April 2018 • £15.3M • 5.25% NIY The hotel is let to Kew Green Hotels (York) Limited for a term of 99 years from 27 November 1971, with an unexpired term of circa 53 years. The rent is subject to review every 14 years to the greater of the passing rent and the “Notional Rental Value”. The next review is in 2027. The passing rent of £802,500 pa reflects £5,651 per key. The Notional Rental Value is calculated by reference to any increase in the “Net Bedroom Revenue” since the previous rent review date. Jurys Inn Derby • Sold Q1 2018 • £20M • 5.85% NIY Freehold 213 bedroom hotel constructed in 2008 comprising five meeting rooms, a gym, Costa Coffee and restaurant / bar. Let to Jurys Hotel Management (UK) Limited for a term of 35 years from 19 June 2009 (expires 18 June 2044) subject to five yearly, uncapped RPI rent reviews. Current

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

rent is £1,250,000 pa. Anticipated rental uplift to approx. £1,350,000 pa. There is no single transaction that we have relied on in arriving at our opinion of value. The majority of investment sales that have occurred have been those hotels let to Travelodge or Premier Inn which are significantly stronger covenants and therefore appeal to institutional investors. These have typically achieved yields in the range of 4.5-5% where the unexpired term has been in excess of 15 years. Perhaps the most comparable of these in terms of location is the Travelodge Portsmouth Central, which sold in June 2018 off a yield of 5.18%. we would expect the Property to achieve a softer yield given the covenant strength and location. Other sales that have occurred in the sector have been of hotels let to Jurys Inn or Dalata where in the case of the latter this have been forward funding transactions. Yields for these hotels have been in the range of 4.5%-5.8% although those at the upper end have been for those where the rent was considered to be over rented. Giving consideration to the above factors, we would expect the subject to trade at a net initial yield in the range of 5.5%. We have deducted purchaser’s costs at the prevailing rate as is standard practice when valuing investment properties. In summary, in arriving at our opinion of value we have adopted the following approach and inputs:

Market Value

Initial yield 5.50%

Equivalent Yield 6.04%

Purchasers Costs 6.69%

Market Value £9,800,000

Capital value Per Bedroom £115,294 per bedroom

9.3. Market Value with Vacant Possession For the purpose of our valuation with vacant possession we have adopted our trading assessment with regards to the hotels trading potential on an unencumbered basis. On an individual basis, we have mainly focussed our assumptions on increased marketing expenses and operating fees. The majority of the sales and marketing expenses relate to the franchise sales and marketing fees, which we have shown as a separate line item. We have allowed for increased sales and marketing expenses to reflect that the hotel will be operated individually. We have deducted franchise fees equivalent to a royalty fee of 5% of rooms revenue and a sales and marketing of 3% of rooms revenue, which we consider would be the likely level paying assuming the hotel was sold on an individual basis. We have deducted an amount of 2% of total revenue to provide the services provided centrally by management such as sales and marketing and revenue management as opposed to making a separate allocation to each department as these costs would need to be provided whether through another management company or at hotel level. In arriving at our opinion of value on this basis, we have adopted the following:

Market Value with Vacant Possession

Capitalisation Rate 9.5%

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

Market Value with Vacant Possession

Discount Rate 11.5%

Market Value £6,800,000

Capital value Per Bedroom £80,000 per bedroom

Appendix A: Maps and Plans Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Holiday Inn Express Poole, Walking Field Valuation Date: 1 May 2019 Lane, Poole, BH15 1RZ

APPENDIX A: MAPS AND PLANS

Holiday Inn Express Poole, Walking Field Lane, Poole, BH15 1RZ

This plan is published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds. Holiday Inn Express Poole, Walking Field Lane, Poole, BH15 1RZ

This plan is published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds. s Po

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Valuation of: Park Inn by Radisson York City Centre, North Street, York YO1 6JF

Prepared for Morgan Stanley Bank N.A.

Valuation Date: 1 May 2019

Executive Summary Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

TABLE OF CONTENTS

Executive Summary ...... 1 Property Record ...... 3 1. Location ...... 3 2. Description & Accommodation ...... 4 3. Structural Condition and Repair ...... 7 4. Statutory Enquiries ...... 8 5. Tenure ...... 9 6. Operational Structure ...... 9 7. Local Hotel Market Analysis ...... 12 8. Business Analysis ...... 12 9. Principal Valuation Considerations ...... 13 Appendix A: Maps and Plans ...... 22

Executive Summary Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

EXECUTIVE SUMMARY

This summary is strictly confidential to you as the Addressee. It must not be copied, distributed or considered in isolation from the full report.

Property Summary

Location The hotel is located within York city centre, on the southern bank of the River Ouse.

Description The hotel comprises 200 guest bedrooms with multiple food and beverage outlets and extensive meeting room facilities. The Property was constructed in 1969 with subsequent refurbishments, most recently 126 bedroom were refurbished in 2016. Ancillary accommodation includes a car park, a gym and office space.

Condition Reasonable

Tenure Part freehold / part leasehold

Operating Structure Let to Park Hotels Management Limited for a term of 25 years from 12 April 2006 (approximately 12 years unexpired).

Market Value and Yields

Valuation Date 1 May 2019

Market Value £26,700,000

Net Initial Yield 6.59%

Capital expenditure No deducted from gross valuation

Loan security We consider the Property represents adequate security against a loan over the proposed period.

Liquidity Reasonable subject to the comments in the property record and the head report.

Key Investment / Market Considerations for Loan Security

Strengths / Opportunities • Located in the heart of the historic and vibrant city of York; • The tenant’s hotel business has a proven trading history; • Extensive meeting facilities and guestrooms to accommodate those meetings; • Dedicated car park albeit not within the freehold demise; • Occupational lease to Park Inn by Radisson UK Ltd (former Park Hotels Managements Limited) with parent company guarantee; • York is one of the highest performing and most robust hotel markets in the UK with exceptional leisure and corporate demand drivers.

Executive Summary Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Weaknesses / Risks • Configuration of the hotel is not ideal; • Complicated ownership structure, with part of the Property owned freehold and part leasehold; • The rent review on the prevailing occupational lease is linked to turnover, in an upwards and downwards direction, which is less attractive to investors, than one which incorporates an upwards only rent review clause, with fixed rental increases. • Whilst the tenant would be perceived to be of acceptable covenant strength, they would be considered less favourably than more institutionally accepted covenants like Whitbread or Travelodge; • Limited tenant demand on re-letting; • On expiry of the occupational lease, it may not be possible to persuade another tenant to take on the head lease payment for those parts of the Property owned leasehold. This obligation would be seen as a potential risk by a buyer of the Property today; • The Property’s exterior seems dated and does not provide for a great sense of arrival.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

PROPERTY RECORD

Inspection The Property was subject to an external inspection, from ground level and an internal inspection, on 8 May 2019. The inspection was undertaken by Katrin Krause.

1. Location

1.1. Location The subject hotel is centrally located within York, on the southern bank of the River Ouse and about 500 metres from the main shopping area. York is strategically located on the River Ouse and in the centre of the Vale of York, North Yorkshire. Due to its location, the city has been of importance to the nation’s transport system. York is situated close to the Pennines, the North York Moors and the Yorkshire Wolds. The city is approximately 24 miles north east of Leeds, 56 miles north west of Sheffield and 71 miles north west of Manchester. The hotel is situated in close proximity to York Minster and Yorkshire Museum. The York economy is based on the service industry including public sector employment. Major employers include British Telecom, CPP Group, Nestle, NF Mutual and a number of railway companies. Tourism has become an important element of the economy with the city offering a wealth of historic attractions. York is well connected to the national motorway network with the city surrounded on all sides by an outer ring road, at a distance of circa three miles from the centre of the city. The city lies at the intersection of the A19 from Doncaster to Tyneside, the A59 from Liverpool to York and the A64 from Leeds to Scarborough. The A64 provides the principal link to the motorway network, linking York to both the A1(M) and the M1 motorways at a distance of approximately ten miles from the city. York railway station is situated on the East Coast Main Line, with services to London, Newcastle and Edinburgh. Services to London run approximately four per hour, with a fastest journey time of circa two hours. TransPennine Express provides a frequent service of trains linking York to Newcastle, Scarborough, Leeds, Manchester and Liverpool.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Site Boundary

The plan above is shown for indication purposes only and may not accord strictly with the title plans which we have reviewed. The land edged red is held freehold. The land edged blue is held leasehold.

2. Description & Accommodation

Summary The accommodation is split between multiple adjacent buildings and briefly comprises a hotel, car park, conference facilities, an un-manned gym and office space. The hotel accommodation comprises 200 guest bedrooms with ancillary bar, restaurant and extensive conference facilities. The main hotel building, known as the Tower, was built in 1969 and comprises a concrete frame, with brick elevations. It is built over ground and seven upper floors. The main entrance to the hotel is off the north western corner of the Tower, where there is a porte-cochere. Immediately to the south of the main building is a brick fronted building known as the Riverside Block, which houses a covered car park. To the south of the Riverside Block is the Riverside Conference Centre, part of which has previously been used as a gym. The Riverside Conference Centre is set above a ground floor restaurant, which does not form part of the demise. The Riverside Block and the Riverside Conference Centre are set over ground and part three and part four upper floors. To the south again of the Riverside Conference Centre is a period property, the ground floor of which does not form part of the demise. The upper two floors comprise vacant former office space.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Guestrooms The following table summarises the Property's guestroom facilities, based on information provided by hotel management.

Category Unit Count

Single 14

Double / Twin 166

Superior 20

Total 200

The bedrooms are laid out over the upper floors, with two main room categories, being either double or twin rooms. Access to 126 of the bedrooms is via the main lift shaft, in the northern part of the hotel. The remaining 74 bedrooms are set within the southern part of the hotel, around a courtyard known as Garden Court, with access via a secondary lift shaft. From our limited inspection, the bedrooms appeared to be of appropriate size for a mid-market hotel. The rooms are fitted with a range of furniture including bedside tables, desk, table and chairs. Standard room amenities include flat screen TV, direct dial telephone, tea and coffee making facilities, ironing facilities, hairdryer and safe. The superior rooms are also fitted with robe and slippers as well as luxury cosmetic products. We have been informed that approximately two thirds of the bedrooms have been soft refurbished. Refurbishment of the 74 rooms in the southern building is outstanding.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

From an operational point of view, the configuration of the bedroom stock is not ideal, given that there is no direct access from those rooms within the Tower, to those rooms within the Riverside Block.

Food & Beverage We summarise below the principal food and beverage outlets available at the hotel.

Room Location Capacity

RBG Bar First 50

Restaurant Ground 140

The RBG Bar is located close to the main entrance, with the restaurant in the southern part of the hotel. The fit-out comprises a mixture of wood strip flooring, plastered and painted walls and ceiling with pendant and spot lights. The furniture comprises a mixture of wood and metal loose tables and upholstered chrome or wooden chairs with some leather covered bench seating. Within the bar, the furniture includes a number of leather sofas and armchairs. Overall, the décor is of modern design and in good condition.

Meeting Rooms We have been provided with a schedule outlining the meeting room facilities and their respective capacities:

Room Floor Boardroom Theatre Banquet

Henley Regatta Suite First m/a 400 210

Ridings Suite First 40 80 50

Conference Café First n/a n/a n/a

Castle Howard Suite First 40 80 50

Wharfe Second 12 n/a n/a

Loxley Second 12 n/a n/a

Derwent Suite Second 40 120 72

Riverside Suite Second 60 140 92

Foss Room Second 20 30 n/a

Some of the meeting room facilities, including the Henley Regatta Suite, are situated within the Tower and some are situated within the Riverside Conference Centre.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

The Henley Regatta Suite, Ridings Suite, Castle Howard Suite and Derwent Suite can be separated into smaller meeting rooms, through the use of partition walls. There is a break-out area. We were not able to inspect any of the meeting rooms as they were occupied. We understand from management that all rooms are fitted with overhead projectors and flip charts. The fit-out comprises suspended ceilings, papered wall finishes and a carpeted floor finish.

Car Parking

The multi-storey car park has a capacity, so we understand, of about 60 spaces. There is an entry barrier. Car parking is charged at £12 for a 24 hour period. Daily delegates are charged £8.

Gym We have been informed that the hotel comprises a small, unmanned gym. It was previously open for external members and manned but it was refurbished in 2018 and is now only available for hotel guests.

Back of House Accommodation The back of house accommodation is mostly arranged at ground and first floor level. Off the ground floor hotel reception are staff offices, which were not inspected. Situated between the bar, at one end of the Tower, and the restaurant, within the Riverside Block, is a large fully equipped kitchen. It is over-sized for the demands of the business. We understand that there is appropriate provision of storage throughout the building. We are advised that the building incorporates four passenger lifts, with two lifts in each of the lift cores. There are two service lifts. Riverside Conference Centre (6 North Street) The majority of the space within the Riverside Conference Centre comprises meeting rooms. There is also a large vacant room which comprises the gym. Vacant Office Space (21 – 23 Bridge Street) A connecting corridor provides internal access from the Riverside Conference Centre to some adjoining office space. The ground floor of this three storey period building does not form part of the demise. The office space is set over the upper two floors of the building.

3. Structural Condition and Repair We have not carried out a full building or condition survey, nor have we had sight of one as part of this valuation. Our comments below are subject to review, if one is subsequently made available to us. Our valuation assumes that the hotel has been constructed with good quality materials, workmanship and conforms to all building, energy efficiency and health and safety legislation. Where any deleterious materials are found to be present within the building fabric, we have assumed that they are appropriately contained. From our enquiries of the tenant, we understand that significant levels of capital expenditure have been invested into the business in recent years. We have not been provided with a schedule of recent expenditure however at the date of inspection we were informed of the following recent refurbishment works: • 2018: refurbishment of the gym.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

• 2015 / 2016 – refurbishment of 126 bedrooms within the Tower. • 2014 – M&E works, including replacement of boilers, installation of high speed fibre optic broadband and works to the passenger / service lifts. • Q1 2013 – refurbishment of the RBG Bar. • Q4 2012 – refurbishment of the reception lobby. • 2012 – refurbishment of 74 bedrooms within the Riverside Block. The hotel accommodation appeared to be in reasonable condition and we understand that a rolling refurbishment programme is in place.

3.1. Indication of Reinstatement Cost Our informal guide to the Day One Cost is £24,000,000 (exclusive of VAT) This guide figure envisages clearance and reinstatement using modern methods and materials, which may not necessarily be appropriate or permitted. It does not reflect any additional costs attributable to conservation area status or listed building status (or similar – for example proximity to listed buildings) You should not rely on this guide for any purpose before it has been confirmed by a formal assessment carried out by a building surveyor or other person with sufficient current experience of replacement costs.

4. Statutory Enquiries We have been provided with an Argyll Environmental report dated 29 May 2019, which we have had regard to in undertaking our valuation.

Ground Conditions Please refer to head report.

Flooding Risk From a summary provided to us, which outlines the environmental status of the Property, we understand that part of the Property falls within Flood Zone 2, with a medium probability of flooding and part falls within Flood Zone 3, with a high probability of flooding. In December 2015, severe flooding affected much of central York. Although the Property is situated adjacent to the River Ouse, the Property escaped largely unscathed, other than some water seepage into the ladies changing rooms. This was largely due to the fact that the Property is sited some distance above the river level. Please refer to the head report for further comment.

Environmental Considerations Please refer to head report.

Planning The planning policy for the Property is determined by the City of York Council Planning Department. We are not aware of any outstanding or unimplemented planning applications.

Conservation Area and Listed Building Status The Property is not listed.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Business Rates

Demise Description Rateable Values Park Inn, North Street, York Hotel & Premises £594,000 1st Floor, 21 / 23 Bridge Street Offices & Premises £42,000 2nd Floor, 21 / 23 Bridge Street Offices & Premises £49,750 Total We have not been able to verify as to whether there is a separate rating entry for the Riverside Block and Riverside Conference Centre. In any case, our valuations assume that any rates liability falls due to the occupational tenant. In England, the Non-Domestic Rating Multiplier for the fiscal year 2019/2020 has been set at 50.4 pence.

5. Tenure

Title The northern part of the Property, comprising the hotel and car park, is held freehold. The southern part of the Property is held leasehold. The hotel gym and secondary conferencing facilities are held on a lease for a term of 125 years, commencing 24 June 1983 and expiring 23 June 2108 (approximately 89 years unexpired). A head rent of £260,123 pa is payable, which is subject to five yearly rent reviews, with the next review on 23 June 2023. Under the terms of the lease, the rent payable to the freeholder is currently paid by Park Inn, as an additional payment. The vacant office space is held on a lease for a term of 92 years, commencing 17 January 1991 and expiring 23 June 2083 (approximately 64 years unexpired). A notional rent of £1 pa is payable. We have been provided with a Certificate of Title prepared by Reed Smith LLP dated 3 November 2017, which states the following:

Overview

Type of tenure Part freehold, part leasehold

Title no(s) NYK12585 / NYK28101

Any material encumbrances or unduly onerous / unusual None other than disclosed in the easements, restrictions, outgoings or conditions? draft certificate of title and overview reports, for which title indemnity insurance has been obtained.

Any title characteristics likely to have an adverse impact on None other than as noted below. value, either now or over the proposed loan term?

6. Operational Structure The hotel is subject to an occupational lease on terms as summarised below.

Occupational Lease Summary

Tenant Park Hotels Management Limited

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Occupational Lease Summary

Term From 12 April 2006 to 11 April 2031 (approximately 12 years unexpired)

Guarantor Rezidor SAS Hospitality A/S

Break options None

Current rent £1,839,780 per annum (Turnover based)

Rent review The rent is reviewed annually. A Guaranteed Minimum Rent is payable at levels set out within the lease, with any annual increase from a Guaranteed Minimum Rent of £1,950,000 from 12 July 2008 until 11 July 2009 linked to the Retail Prices Index. In addition to the Guaranteed Minimum Rent, an amount is payable equal to the difference (if any) between the Turnover Rent and the Guaranteed Minimum Rent. The Turnover Rent means 26% of the Total Revenue, as defined within the lease. There is an annual ceiling on the Turnover Rent, with the formula for calculating this figure being set out within the lease.

Rent review If the total of all Rent Subsidies accumulated from the Rent Commencement Date should at any time amount to the equivalent of a stated Cap (£2,200,000) then the Tenant shall pay the Cap Rent per annum quarterly in arrears. The Rent Subsidy is defined as a sum equal to the amount (if any) by which 26% of Total Revenue for any relevant year is less than the Guaranteed Minimum Rent. The Cap Rent means 26% of Total Revenue with the ceiling of the Cap Rent being an amount effectively equal to £1,950,000 plus 12% or circa £2,200,000. We are informed that at the Valuation Date, the provision for a Guaranteed Minimum Rent is no longer in place, because the accumulated Rent Subsidies from the start date of the lease has reached the Cap of £2.2M. As such, the rent payable is the Cap Rent, being 26% of Total Revenue, but effectively capped at circa £2,200,000.

Repair The tenant undertakes full repairing liabilities.

Insurance The tenant insures the landlord.

User As a hotel within Class C1, of at least 3 star quality and capable of being operated under the Park Inn brand name or other brand name of similar quality. The permitted use includes all uses reasonably ancillary to the primary use and appropriate to a hotel of the type described including restaurant, bureau de change, bar, leisure / health club, casino, conference and banqueting, landscaped areas and gardens, car parking, staff accommodation, nightclub and in respect of the Retail Parts any retail uses within Class A1.

Alienation The tenant may assign or underlet the whole, subject to landlord’s consent, not to be unreasonably withheld. The tenant may underlet a Permitted Part.

Alterations Not without landlord’s consent (not to be unreasonably withheld).

Forfeiture The landlord has the right to re-entry if the tenant fails to observe certain covenants as set out within Clause 6 of the lease.

The following applies to the Property: • The rent under the head lease for the Riverside Block includes an assumption that the premises are used for such use as would at the review date command the highest rent. The permitted use is any use permitted by planning. It is not clear whether that gives the

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

landlord an opportunity to apply for planning for a high value use for the York Property and then impose a rent that is in line with that use. For now, the Occupational Tenant is obliged to pay an equivalent rent and so it washes through, but once the Occupational Lease comes to an end in 2031, it may not be possible to persuade another tenant to take this on if it is an abnormally high rent. The Borrower's Solicitor has also confirmed that the only permitted use at present is as a hotel.

• The whole of the York Property – freehold and leasehold – is let to an Occupational Tenant who pays a rent that is in two parts – first, the rent payable to the superior landlord under the Lease (i.e. the Relevant Obligor's Lease so that is passed up to the landlord under that Lease) and second, a turnover rent of 26% of the aggregate turnover. This is subject to a cap and collar. In 2006 the cap was approximately £1,950,000 plus 12% and the collar was £1,950,000 in 2008. Both are subject to annual RPI uplifts although the collar is increased by 75% of the RPI figure as opposed to 100%. The rent is supposed to be paid quarterly but is actually paid monthly, with different amounts payable each month. In 2018, the aggregate of the monthly rent that has been paid is £1,839,780. The range of monthly rents was from £112,088 to £172,803. As there is a collar there will always be a minimum rent payable even if the Occupational Tenant does not trade from the York Property.

• If the leasehold part of the Property is forfeited because of the Relevant Obligor's insolvency and the Agent does not step in and request relief in the form of a new lease, it may lose the Occupational Tenant (of the remaining freehold part) because that Occupational Tenant may be entitled to walk away if it no longer has the ability to use the whole premises. The Occupational Tenant could argue that this constituted derogation from grant or frustration.

• The Occupational Lease (of the whole of the York Property) has the benefit of a schedule of condition. We have reflected the foregoing within our opinion of value.

Income Summary The total rent in 2018 was £1,839,780 per annum.

6.1. Covenant Strength We have obtained information from the rating agency Dun & Bradstreet, as summarised below. Park Inn by Radisson Hotels Management Ltd (previously Park Hotels Management Limited) We have obtained a Dun & Bradstreet report and Park Inn by Radisson Hotels Management Limited has a rating of N1 with a tangible net worth of (£59,784,000). According to their latest accounts of 2017 they have an annual turnover of £40,143,000. Park Inn by Radisson Hotels Management Limited has a failure score of 94 out of 100. D&B analytics have shown that businesses with this score have a very low risk of business failure. Park Inn by Radisson Hotels Management Limited has a delinquency score of 82 out of 100. D&B analytics have shown that 18% of UK businesses have a lower risk of paying significantly late. We have obtained information from the rating agency Dun & Bradstreet, as summarised below, for the parent company, Park Inn by Radisson UK Limited. Park Inn by Radisson UK Ltd (previously Rezidor Park UK Limited) Park Inn by Radisson UK Ltd has a rating of 5A1 with a tangible net worth of £118,017,000. According to their latest accounts they have an annual turnover of £3,790,000 Park Inn by Radisson UK Ltd has a failure score of 99 out of 100. D&B analytics have shown that businesses with this score have the lowest probability of failure. 97% of businesses are classified in a higher

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

risk category. Park Inn by Radisson UK Ltd has a delinquency score of 33 out of 100. D&B analytics have shown that 67% of UK businesses have a lower risk of paying significantly late.

We set out the most recent accounts as follows:

Year end Turnover Tangible Net Worth

31/12/2015 £3,654,000 £15,965,000

31/12/2016 £3,714,000 £110,689,000

31/12/2017 £3,790,000 £118,017,000

The Dun & Bradstreet report details a risk indicator of 1, which represents a minimum risk of business failure.

7. Local Hotel Market Analysis

7.1. Existing Market Supply According to AM:PM Hotels, there are 95 hotels and 4,239 bedrooms in York. 75 of these hotels are located within a one mile radius of the Property. The market is dominated by the four star segment with 1,422 rooms, followed by budget and three star hotels. Of this supply, over 70% is branded, with an important share of Travelodge hotels in the budget sector.

7.2. Proposed Supply There are currently 23 projects in the pipeline in York, with only half confirmed including the 118 bedroom MOXY York, due to open in 2019 and the 155 bedroom Hampton by Hilton York Piccadilly due in 2021, both located less than a mile away from the subject.

8. Business Analysis The hotel has been trading as a Park Inn by Radisson since 2006 and has a continuous refurbishment plan in place. The latest renovation works undertaken included the gym in 2018.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

We have not been provided with any trading feedback beyond the revenue figures provided to us. We understand however that the Property is one of the top performing Park Inn hotels within the UK, outside of London. We understand that the hotel generated a revenue of £7,076,076 in 2018. Especially the hotel’s central location, located at the river front and providing great views across the city is a main demand driver. Trading is constant throughout the week, with minor peaks on Tuesdays and Wednesdays through leisure groups and Saturdays through individual transient guests. Approximately 65% of total revenue can be allocated to leisure guests with the remaining 35% contributed through corporate contracts. The hotel obtained an advantage over its competition thanks to its numerous meeting spaces whereby it is able to accommodate big groups, including on overnight rates. Major corporate accounts are related to York’s railway and chocolate industries. We understand that the biggest competitor in terms of meeting space is the Principal, located just off the train station. In terms of F&B, the main competitors are the events spaces at the railway museum and the merchant’s hall. Management has also informed us that additional competitors entering the market have been absorbed well, reflecting only a minor decrease in rate. However, there are a vast number of new competitors entering the market. Notable future openings are a Moxy hotel, Hampton by Hilton, an Ibis hotel and the Malmaison, which is located within short walking distance of the Property. Of significance will be the rooftop terrace on the Malmaison, which we have been informed will most probably have an impact on the subject’s F&B performance. A further income stream is the on-site car parking facilities for which a fee is charged.

9. Principal Valuation Considerations

Location / Situation and Competition The hotel is well located in York, being close both to York railway station and also the city centre including the main shopping areas. It is within short walking distance of York Minster.

Building Design / Condition / Suitability The hotel is in good condition and under the terms of the prevailing occupational lease, any repair obligations are the responsibility of the tenant. We understand that a remaining 74 bedrooms require soft-refurbishment works and that the façade requires attention in order to create a better sense of arrival.

Tenure The main part of the hotel is held freehold, which is the most attractive form of ownership.

Asset Management Opportunities Re-gearing or extending the occupational lease represents the clearest asset management opportunity.

Saleability

Current Sale Prospects

What is the estimated period it would take to sell the Property at 6 to 9 months Market Value?

Purchaser demand is likely to be Moderate

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

9.1. Market Rent

Primary Approach In most instances, the agreed rent on a hotel will be determined by the potential profitability of the property, albeit that the possible level of trade will be assessed using market evidence. Hotel rents will rarely be determined solely by comparable evidence, as is sometimes the case with other property classes. This is because it is rare for there to be two hotels in similar locations, with similar facilities, trading in a sufficiently similar manner to enable the rent offered in one to be used as a direct comparable. Most operators looking to lease a hotel will review the trading potential of the property before determining the level of affordable rent. The usual method for assessing the rental value of a property is to determine the “divisible balance” and to apportion that amount between the landlord and the tenant. Calculating this involves working out the EBITDA/Net Operating Profit for the property and then deducting a number of items. These will include the annualised amount for the tenant’s fixtures and fittings and a sum for working capital. The apportionment of the divisible balance will reflect the tenant’s bid which will be influenced by a number of factors including location, supply, demand, the type of operation and the lease terms. If the market is performing strongly and the property is desirable, the tenant will be prepared to offer more of the divisible balance to secure the premises. If, on the other hand, the market is weak and the demand for the property is low, the landlord will be prepared to accept a lower proportion of profit. There is little rental evidence available for full service hotels as leasehold interests are not a preferred property holding structure in the hotel asset class. The majority of evidence that does exist is for budget hotels, such as Travelodge and Premier Inn, where this structure dominates. These budget hotels are fundamentally a different business and offer no comparison to the subject hotel. We consider that there is likely to be very limited tenant demand for the Property, making it extremely difficult to re-let. Where there is tenant demand for hotels these typically range between 50% and 60% of EBITDA. Due to the characteristics of the York hotel market and the likely demand it would generate if it was hypothetically put to market to let, we have assumed that a tenants bid of 60% would be considered reasonable. From the trading information provided, we have assumed that the hotel is delivering a profit on turnover margin of 28% before rent, which is in line with market parameters for a hotel of this type. This gives rise to an EBITDA of approximately £2,000,000 before rent. A tenants bid of 60% would equate to a rent of say £1,200,000 pa. This is equivalent to a rent of £6,000 per bedroom.

Secondary Approach Our primary approach to establishing rental value has been a consideration of the trading potential of the business and the level of affordable rent therefrom. As a cross-check however, we have considered the rental value on a comparable basis, analysed on a per key basis. Rental value has been assessed assuming a new lease drawn on standard, effective full repairing and insuring terms, for a term certain of 25 years with upwards only index linked rent reviews. There is a general lack of comparable rental transactions, for fixed income hotels, outside of the mainstream budget market. We note however the following confidential data:

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Address Comment / Comparison

Travelodge York Type Central Hotel Standing investment – Q4 2018 Rate per bedroom £2,337 • Let to Travelodge Hotels Limited (93 bedrooms) • 35 year FRI lease. • Five yearly upwards only rent reviews at the higher of 50% of OMV or annual increases of 3% per annum compounded. Next rent review is in Q3 2020.

Travelodge York Type Central Standing investment – Q1 2018 Layerthorpe Rate per bedroom c.£5,450 • Let to Travelodge Hotels Limited (128 bedrooms) • 25 year lease without break option, to be reviewed on an upward only RPIX basis, capped at 4%.

Malmaison, Type York Open Market Letting – Agreement for Lease in place Rate per bedroom £9,275 • Lease terms agreed with Malmaison in Q1 2016 (124 bedrooms) • 35 year FRI lease. Commencement rent of £1,150,000 pa (£9,275 per key), rising to £1,300,000 (£10,483) in year two and £1,450,000 (£11,693 per key) in year 3. • At the fifth anniversary and at five yearly intervals thereafter, the rent is subject to compounded index linked increases by reference to CPI, capped and collared at 4% per annum and 0% per annum.

Where a lease structure is in place, full service hotels in regional locations commonly achieve rents in the range of £6,000 – £8,500 per room (excluding Malmaison hotels). One of the major shortcomings in the evidence lies in the fact that much of it comprises rent reviews which provide for fixed rental index linked uplifts, as opposed to open market review mechanisms. Moreover, from our knowledge of many of the lettings noted, a significant proportion were set prior to development of the hotel and were set at an artificially high level, in exchange for significant incentives, in order to facilitate the development. Additionally, in a market where there are few prospective operators, some of the lettings were either negotiated off-market and were not openly market tested or were otherwise agreed between interconnected parties, and would not be considered to be an arm’s length transaction. It should also be noted that no two hotels are the same in terms of the quality of their location and product, extent of facilities and profit potential generated by the brand and hotel management. By definition, a rent set as a proportion of the sustainable profits of an operational entity is intrinsically linked to all of these factors, besides many others. As such, hotel rents will rarely be determined solely by comparable evidence, as is sometimes the case with other property classes. As a measurement of rental value, the level of rent per room is often distorted, most commonly by the achievable ADR and the extent and quality of non-rooms facilities (such as F&B and leisure facilities). Malmaison hotels commonly incorporate a substantial F&B offering and are therefore let at higher levels of rent, on a per bedroom basis, than say a Jury’s Inn, as evidenced with the

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Malmaison transaction above showing a rent in excess of £9,000 per bedroom per annum. Nevertheless, applying the above metrics would give rise to a rental value for the Property in the range of circa £6,000 – £8,000 per bedroom per annum.

Conclusion Having regard to the turnover of the business, as provided to us and viewed within the context of the comparable evidence, we have adopted a Market Rent of £6,000 per bedroom per annum, which is broadly in line with market levels. We have concluded that the Market Rent for the property is £1,200,000 per annum, on which basis the Property is significantly over-rented.

9.2. Market Value

Value Conclusion In assessing the value of the hotel we have adopted the investment method of valuation. In assessing the appropriate yield requirement, we have identified the following comparable sales transactions.

Birmingham Maldron Hotel • On the market • £43.12M (guide price) • NIY 4.5% (guide price) 330 bedroom hotel subject to a 35 year lease with no breaks guaranteed by Dalata Hotels plc. The passing rent is £2,062,500 per annum (£6,250 per room) subject to 5 yearly compounded RPI uplifts with a cap and collar of 0.5/3.5%.

Travelodge York Central Hotel • November 2018 • £6.6M • 4.62% NIY The Freehold interest of the 93 bedroom hotel was sold to Oxford Colleges. The property includes a retail element let to JD Wetherspoon which has a current passing rent of £94,750. The hotel element is let to Travelodge on a 35 year lease with a current passing rent of £210,326.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Malmaison, Edinburgh • Q3 2018 (Under Offer) • Offers invited in excess of £25m (guide price) • 4.50% NIY (guide price) Forward funding opportunity. Let to Malmaison Trading Limited with parent company guarantee. New 35 year lease with five yearly rent reviews to RPI (0 – 3%). 72 bedroom boutique hotel with a substantial food and beverage offering in line with the Malmaison model. The passing rent of £1.2 million per annum reflects £16,666 per annum per key. Travelodge, Portsmouth Central • June 2018 • £19M • 5.17% NIY Newbuild Travelodge with full Bar Café and comfort cooling. On site works commenced with PC due by year end 2019. The 152 bedroom hotel was sold by a private developer to Rockspring. The hotel has a lease term of 25 years from practical completion subject to 5 yearly rent reviews, tied to CPI 1% -4%. The initial rent of £1,004,800 pa reflects £6,611 per bedroom per annum.

Holiday Inn, York • April 2018 • £15.3M • 5.25% NIY The hotel is let to Kew Green Hotels (York) Limited for a term of 99 years from 27 November 1971, with an unexpired term of circa 53 years. The rent is subject to review every 14 years to the greater of the passing rent and the “Notional Rental Value”. The next review is in 2027. The passing rent of £802,500 pa reflects £5,651 per key. The Notional Rental Value is calculated by reference to any increase in the “Net Bedroom Revenue” since the previous rent review date. Travelodge York Central • February 2018 Layerthorpe • £16.37M • 4.25% NIY • The 128 bedroom hotel was sold by Osprey Equity Partners to Blackrock. It is let to Travelodge on a 25 year lease, subject to rental reviews linked to RPIX and capped at 4%.

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Jurys Inn Derby • Sold Q1 2018 • £20M • 5.85% NIY Freehold 213 bedroom hotel constructed in 2008 comprising five meeting rooms, a gym, Costa Coffee and restaurant / bar. Let to Jurys Hotel Management (UK) Limited for a term of 35 years from 19 June 2009 (expires 18 June 2044) subject to five yearly, uncapped RPI rent reviews. Current rent is £1,250,000 pa. Anticipated rental uplift to approx. £1,350,000 pa. Park Inn York – subject property • 2016 - Withdrawn from the market prior to sale • Offer received at c. £21M • 7.20% NIY • The subject property was marketed in 2016. We understand that a bid was received in around Q3 2016 at a figure just in excess of £21m, when we understand the passing rent to have been £1,615,242. An offer at £21m reflects a yield of 7.20%. The sale did not proceed. The guide price was £20m, which reflected a 7.7% NIY based on a budget rent of £1,638,698 pa.

Such transactions as there are for full service hotels commonly demonstrate yields in the range of circa 5.0% to 6.0% although limited service hotels have achieved yields sharper than this. Whilst the covenants are of comparable investor appeal, the lease residue at each of the properties is however considerably longer and they also feature index linked fixed income rental payments, reviewed either annually or on a five yearly basis. Our assessment of the appropriate yield requirement for the Property is somewhat higher than the referenced transactions. Firstly, this is because there remains a considerably shorter residue of twelve years on the occupational lease. Secondly, the rent review structure, being linked to turnover and with no guaranteed rental increases, is considerably more unattractive to the landlord. Thirdly, the prevailing head and occupational leases include various provisions which could be seen in an onerous light. Our approach has been to consider the appropriate yield requirement for 12 years of term certain income, assuming an index linked upwards only rent review provision, before making due allowance for the prevailing terms of the lease. • Attractive lot size.

• Predominantly held freehold.

• Unexpired term of circa 12 years.

• Turnover linked rent, which is reviewed annually in an upwards and downwards direction, thus potentially impacting the security of income for the remainder of the term.

• Single-let to tenant of perceived acceptable covenant.

• Opportunity for owner occupation on expiry of the lease, or otherwise re-letting of the whole on a long lease (in the order of 25 years), which offers fixed rental increases.

On this basis, we have applied a hardcore rate of circa 5.25% to the more secure bottom slice of rental income (up to the Market Rent of £1,200,000 per annum) and applied a froth rate of circa

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

6.25% to the over-rented element of the rental income, which is higher risk and is projected to fall away on re-letting. We are advised that there are no costs which are not recoverable from the tenants. Due to the length of income, no specific allowance has been made for void period on expiry of the lease. Similarly, no capital expenditure allowance has been made. The Riverside Block does not revert to the landlord for a further 89 years while the office space does not revert to the landlord for a further 64 years. As such, these elements of the Property are considered de minimis in value terms and their value has been implicitly reflected within our valuation. Whilst the occupational tenant pays the head rent of £260,123 pa, once the occupational lease expires in 2031, it may not be possible to persuade another tenant to take this liability on if it is an abnormally high rent. This obligation would evidently be seen as a potential risk by a buyer of the property today, which has been reflected implicitly within our choice of capitalisation rate. For the avoidance of doubt, our valuation assumes that the stated passing rent for 2018 of £1,839,780, per annum, relate only to those parts of the hotel which are situated within the freehold demise. Our valuation assumes that the turnover figure does not include the part of the conference facilities within the leasehold demise. If this should prove otherwise, then the turnover generated by those parts of the hotel within the freehold part only has been overstated and the value attributable to the rent, at 26% of Total Revenue, has been overstated, in which case we reserve the right to amend our valuation accordingly. We have adopted purchaser’s costs at the prevailing rate. Applying our explicit assumptions at our capitalisation rate produces a Market Value of £26,700,000, which reflects an initial yield of 6.59%, an equivalent yield of 5.3% and a reversionary yield of 4.21%. In our opinion, the initial yield reflects a suitable discount from pricing achieved on assets let on leases with longer unexpired terms, where the passing rent is subject to annual or five yearly index linked rental increases. It also reflects the tenant of perceived acceptable but less market tested covenant strength, the questionable re-letting prospects, the over-rented nature of the property, the strengths, weaknesses and risks attached to the underlying asset and the current appetite of the market for this type of investment. It is also reflects the underlying value of the hotel with vacant possession.

Conclusion As a cross check valuation, we have considered the value attached to receive 12 years of term certain income. On expiry of the prevailing lease, we have assumed that the unencumbered hotel reverts to the landlord for owner operation. The reversion is therefore valued as a fully operational trading entity, having regard to trading potential, with vacant possession. In the absence of any trading data about the profitability of the hotel, we have assumed that the hotel is capable of generating a sustainable EBITDA of £2,000,000, which represents a 28% profit conversion rate on the turnover for 2018. We have adopted a capitalisation rate of 7.5%, implicitly reflecting the attractive location, the likelihood that the hotel will require investment in the trading inventory, as well as the trading risk. The resultant value is £26,500,000, which is equivalent to circa £132,500 per bedroom. This value assumes that the hotel is held on a predominantly freehold basis unencumbered by any onerous lease or management agreement. The figure of £26,500,000 has been shown within the valuation as a capital receipt, which is receivable on 12 April 2031 (the day following expiry of the prevailing occupational lease). A deferral rate of 5.00% per annum has been adopted. We have made an allowance for replacement inventory of 15%. Over a 12 year period, this gives rise to a value of the reversion at the valuation date of £12,542,763. The choice of deferral rate reflects the opportunity cost of the Property, relative to other investments, such as bonds and gilts and forecast levels of interest rates. It also implicitly reflects an element of “hope” value, reflecting the possibility that the tenant may wish to surrender the

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

lease prematurely. This is due to the fact that as the unexpired term erodes, the tenant will be increasingly disincentivised to invest in the underlying asset, leading to a detrimental impact on the trading performance and the tenant’s level of return. As such, it is likely that at some point before the end of their lease term, the tenant may try to either re-gear the lease, or surrender the lease prematurely, giving vacant possession to the landlord. The resultant value under this approach is around £26.5 million. Although both approaches deliver a similar figure, our preference is for the first approach, as we consider this would be the primary methodology taken by prospective purchasers today. We have also had regard to the reported level of interest when the Property was put to the market in 2016, although as the Property did not transact, this does not constitute proven evidence. Nevertheless, we consider that a figure of £26.7 million represents an appropriate premium in value since that time, to reflect an improvement in the level of trade, which has led to an increase in the passing rent as well as a general hardening of yields for secure income which is in excess of ten years, albeit the Property does not offer any guaranteed future rental increases. We have concluded a Market Value in the order of £26,700,000, as outlined below:

Market Value

Initial yield 6.59%

Hardcore rate 5.25%

Froth rate 6.25%

Market Value £26,700,000

Capital value Per Bedroom £133,500 per bedroom

Market Value with Vacant Possession

Capitalisation Rate 7.5%

Discount Rate 9.5%

Property Record Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

Market Value with Vacant Possession

Market Value £26,500,000

Capital value Per Bedroom £132,500 per bedroom

Appendix A: Maps and Plans Cushman & Wakefield | Morgan Stanley Bank N.A. Valuation of: Park Inn by Radisson York City Centre, North Valuation Date: 1 May 2019 Street, York YO1 6JF

APPENDIX A: MAPS AND PLANS

Park Inn by Radisson, York City Centre, North Street, York, YO1 6JF

This plan is published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds. Park Inn by Radisson, York City Centre, North Street, York, YO1 6JF

This plan is published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds.

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About Cushman & Wakefield

Valuation of: Holiday Inn Express Exeter - City Centre, Tudor St, Exeter EX4 3FL

Prepared for Morgan Stanley Bank, N.A.

Valuation Date: 1 May 2019

Executive Summary Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

TABLE OF CONTENTS

Executive Summary ...... 1 Property Record ...... 3 1. Location ...... 3 2. Description & Accommodation ...... 4 3. Structural Condition and Repair ...... 6 4. Statutory Enquiries ...... 6 5. Tenure and Management ...... 7 6. Operational Structure ...... 8 7. Local Hotel Market Analysis ...... 8 8. Business Analysis ...... 8 9. C&W Trading Projections ...... 11 10. Principal Valuation Considerations ...... 14 Appendix A: Maps and Plans ...... 17

Executive Summary Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

EXECUTIVE SUMMARY

This summary is strictly confidential to you as the Addressee. It must not be copied, distributed or considered in isolation from the full report.

Property Summary

Location The hotel lies within Exeter’s City Centre, approximately 6 miles from Exeter City Airport.

Description The hotel comprises 103 guest bedrooms with ancillary Great Room and one conference and two syndicate rooms. Prior to conversion to a hotel, the property comprised a 1970’s office block. The hotel opened on 9th May 2019.

Condition Good

Tenure Long leasehold

Operating Structure Owner operator

Trading Performance

Year 2019 (2+10) forecast 2020 Forecast

Occupancy 75.00% 83.30%

ADR £76.00 £78.66

RevPAR £57.00 £65.52

Total Revenue £1,792,123 £2,741,791

NOI (post FF&E and £507,104 £919,501 ground rent)

Profit Margin 28.3% 33.5%

C&W Trading Projections

Year Year 1 Year 2 Year 3

Occupancy 75.00% 83.00% 86.00%

ADR £76.00 £78.66 £81.02

RevPAR £57.00 £65.29 £69.68

Total Revenue £2,406,415 £2,723,265 £2,893,653

NOI (post FF&E and £725,561 £924,713 £1,031,779 ground rent)

Profit Margin 30.2% 34.0% 35.7%

Market Value and Yields

Valuation Date 1 May 2019

Market Value £11,700,000

Capitalisation Rate 8.25% Discount Rate 10.25%

Executive Summary Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

Gross Initial Yield 6.2%

Capital expenditure None deducted from gross valuation

Loan security We consider the Property represents adequate security against a loan over the proposed period.

Liquidity Reasonable subject to the comments in the property record and the head report.

Key Investment / Market Considerations for Loan Security

Strengths / Opportunities • Well located; • Strong hotel demand in local area;

Weaknesses / Risks • Existing more established Holiday Inn Express in Exeter, albeit close to the motorway and non-city centre.

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

PROPERTY RECORD

Inspection The Property was subject to an external inspection, from ground level and an internal inspection, on 8 May 2019. The inspection was undertaken by Ian Thompson.

1. Location

1.1. Location

General Exeter is one of two large urban centres within the rural county of Devon, alongside Plymouth (Exeter Council,2019). The hotel situated a short distance from the A377 which leads onto the A30 and then onto the M5 one of the major routes by road and is also located approximately 6 miles away from Exeter airport and approximately 0.2 miles away from Exeter St Thomas Station. The city is on the River Exe, about 37 miles (60 km) northeast of Plymouth, and 70 miles (110 km) southwest of Bristol. According to the latest estimated in mid- 2017, Exeter count a resident population of 128,916 (ONS, 2017). Around 35,000 people commute into Exeter on a daily basis, from nearby surrounding towns and the Council records that there are 4,877 registered companies registered for business rates in the City (Exeter City Council, 2019). Exeter provides services, employment and shopping for residents within the city limits and from nearby towns in Teignbridge, Mid Devon and East Devon, together sometimes known as the Exeter & Heart of Devon area (EHOD). The Met Office, the main weather forecasting organisation for the United Kingdom and one of the most significant in the world, relocated from Bracknell in Berkshire to Exeter in early 2004. It is one of the three largest employers in the area (together with the University of Exeter and Devon County Council). The City is also home to the University of Exeter ranking at 8th place within the Russel group for the top universities in the country (Exeter Council, 2019). Although Exeter contains a number of tourist attractions, the city is not dominated by tourism. The Council have invested over £500 million into the city between 2011 and 2016, improving the cities infrastructure including public areas (roads, cycle paths, the implantation of new transport links via a new railway station), the building of new housing, creation of new university facilities, the introduction of new business premises and the development of new public amenities including a

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

new swimming pool and Ikea store. The Council are also anticipating the development of a new Science Park (Exeter City Council, 2019) . The city's transport hubs include Exeter St David’s railway station, Exeter Central railway station, the M5 motorway and Exeter International Airport connecting the city both nationally and internationally. The hotel is located within a 10 minute walk from the city centre shopping area. The immediate surrounding area comprises a mix of residential, office and student accommodation. There is a Fitness First Health Club adjacent to the property.

Site Boundary

The plan above is shown for indication purposes only and many not accord strictly with the title plan which we have reviewed.

2. Description & Accommodation

Summary The hotel comprises 103 guest bedrooms with Great Room and onsite parking. The property was converted into a Holiday Inn Express, achieving practice completion in May 2019 and comprises ground and three upper floors of brick construction underneath a flat roof.

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

Guestrooms The following table summarises the Property's guestroom facilities, based on information provided by Atlas Hotels.

Category Unit Count

Twin 70

Double 30

Accessible 3

Total 103

There are three room types, namely twin, double and accessible rooms (which can accommodate up to three guests). The style of the bedrooms is a brand new generation four with various features that serve to make the room feel much more luxurious than the soft refurbished generation four rooms. There is a cushioned sound reducing head board which stands out as one of the key differentiators. The bedrooms are ultimately quite flexible with zip and link beds which can also be converted into a King room. All guest bedrooms are air conditioned.

Food & Beverage Express Breakfast area and bar, located on the ground floor, covers for approximately 76 guests. There is a full dinner menu on offer at the hotel despite its city centre location.

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

Meeting Rooms There are no meeting rooms.

Car Parking There are approximately 66 Car parking spaces, which are to be charged at £12 for overnight parking.

Back of House Accommodation There is appropriate storage and back of house accommodation.

3. Structural Condition and Repair The property is in excellent condition as it has only recently opened. Therefore, we do not consider that a purchaser would allow for any additional expenditure over and above the FF&E reserve.

3.1. Indication of Reinstatement Cost Our informal guide to the Day One Cost is £8,800,000 (exclusive of VAT) This guide figure envisages clearance and reinstatement using modern methods and materials, which may not necessarily be appropriate or permitted. It does not reflect any additional costs attributable to conservation area status or listed building status (or similar – for example proximity to listed buildings) You should not rely on this guide for any purpose before it has been confirmed by a formal assessment carried out by a building surveyor or other person with sufficient current experience of replacement costs.

4. Statutory Enquiries We have been provided with an Argyll Environmental report dated 21 June 2019, which we have had regard to in undertaking our valuation.

Ground Conditions Please refer to head report.

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

Flooding Risk The hotel is located in an area which has a low risk of flooding.

Environmental Considerations Please refer to head report.

Planning The planning policy for the subject property is determined by Exeter City Council. We are not aware of any outstanding or unimplemented planning applications.

Conservation Area and Listed Building Status The property is not listed and nor is it located within a conservation area.

Business Rates

Demise Description Rateable Values Holiday Inn Express, Exeter Not established, recent Hotel & Premises City Centre opening

In England, the Non-Domestic Rating Multiplier for the fiscal year 2019/2020 has been set at 50.4 pence.

5. Tenure and Management

Title The Property is held freehold (Title Number: DN701334) although the proposal is to sell the freehold interest and simultaneously be granted a ground lease back. The terms of the ground lease are set out in the head report.

Overview

Type of tenure Proposed long leasehold

Title no(s) Unknown

Lease Term 125 years

Rent £133,900 pa to be reviewed annually in line with the RPI subject to a cap and collar of 0% and 5%.

Any material encumbrances or unduly None other than disclosed in the draft certificate. onerous / unusual easements, restrictions, outgoings or conditions?

Any title characteristics likely to have an None. adverse impact on value, either now or over the proposed loan term?

Full details of the proposed leasehold interest are detailed in the head report.

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

6. Operational Structure Please refer to the head report for operational structure, franchise agreement and information relating to the IHG/Holiday Inn Express brand.

7. Local Hotel Market Analysis

7.1. Existing Market Supply According to AM:PM Hotels, Exeter counts 1,863 bedrooms across 36 hotels, 22 of which are located within a one-mile radius of the subject Property. Almost half of the total room supply in Exeter is of budget category (820 rooms) followed by three- star (564 rooms) and four-star (382 rooms). This compares to a national trend characterised by less than 30% of total rooms in the four-star category and approximately 25% of total rooms in the budget sector. Just over 80% of this total room supply is operated by brands such as Premier Inn or Mercure.

7.2. Competitor Trading Analysis Smith Travel Research (STR) is an independent research firm that is recognised by the hotel industry as the standard source of reliable data, providing operating statistics on the local market as a whole. We have not been provided with STR data for the hotel due to its recent opening and unproven track record.

7.3. Proposed Supply The current pipeline indicates eight projects (668 rooms), of which seven are confirmed and half are of three-star category. The only notable branded development will be the Courtyard Exeter, comprising 250 rooms.

8. Business Analysis

Overview The hotel has only just opened and therefore has no operating history.

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

We have been provided with projections for the next two years which show the hotel reaching around 83% occupancy at an average rate of £78. Considering that Exeter is a city, there are limited hotels in the central area and these tend to be either budget or 4 star hotels. Therefore, we consider that the subject Holiday Inn Express will fill a gap in the market for a more comfortable mid-market hotel in this location. We have also valued the existing Holiday Inn Express hotel which is part of the Atlas portfolio and therefore have a good understanding as to the type of business being generated by the local market. We would anticipate that Monday to Thursday will see a higher proportion of corporate guests, transitioning to leisure guests during the weekends. Although Exeter is not a stand out tourist city, it benefits from high visitor numbers in the Spring and Summer due to its location at the gateway of the west country counties of Devon and Cornwall.

Trading Performance The income and expense statements, illustrated in the table on the following page, were provided by Atlas Hotels. The statements show the subject's operating forecasts and trading projections for 2019 and 2020, which includes the proposed ground rent.

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

Data Type Forecast Forecast Period Ending March December Year 2019 (2+10) 2020

No of Bedrooms: 103 103 Occupancy rate 75.00% 83.30% Average Room Rate 76.00 78.66 Revenue Per Available Room (RevPAR) 57.00 65.52 Number of Days Open 365 365 Available Rooms 37,595 37,595 Occupied Rooms 28,196 31,316

TOTAL SALES 1,792,123 % POR PAR 2,741,791 % POR PAR

BEDROOMS Room Sales 1,614,525 90.1% 57.26 15,675 2,470,081 90.1% 78.88 23,981 Room Expenses 592,531 36.7% 21.01 5,753 919,658 37.2% 29.37 8,929 Departmental Profit 1,021,994 63.3% 36.25 9,922 1,550,423 62.8% 49.51 15,053

FOOD & BEVERAGE Food & Beverage Sales 160,313 8.9% 5.69 1,556 245,264 8.9% 7.83 2,381 Other Income / Room Hire 10,961 0.6% 0.39 106 16,769 0.6% 0.54 163 Food & Beverage Cost 63,717 37.2% 2.26 619 98,893 37.7% 3.16 960 Departmental Profit 107,557 62.8% 3.81 1,044 163,140 62.3% 5.21 1,584

CAR PARK Car Park Revenue 3,610 0.2% 0.13 35 5,523 0.2% 0.18 54 Car Park Expenses - 0.0% 0.00 0 - 0.0% 0.00 0 Departmental Profit 3,610 100.0% 0.13 35 5,523 100.0% 0.18 54

TELEPHONE Telephone Revenue 1,455 0.1% 0.05 14 2,226 0.1% 0.07 22 Telephone Expenses 5,839 401.2% 0.21 57 9,062 407.0% 0.29 88 Departmental Profit (4,383) (301.2%) -0.16 43 (6,836) (307.0%) -0.22 66

MISCELLANEOUS Miscellaneous Revenue 1,259 0.1% 0.04 12 1,927 0.1% 0.06 19 Miscellaneous Expenses 773 61.4% 0.03 8 1,200 62.3% 0.04 12 Departmental Profit 486 38.6% 0.02 5 727 37.7% 0.02 7

GROSS OPERATING INCOME 1,129,264 63.0% 40.05 10,964 1,712,977 62.5% 54.70 16,631

LESS EXPENDITURE Administrative & General 51,422 2.9% 1.82 499 57,893 2.1% 1.85 562 Sales & Marketing 48,812 2.7% 1.73 474 74,594 2.7% 2.38 724 Repairs & Maintenance 35,843 2.0% 1.27 348 56,524 2.1% 1.80 549 Energy Costs 49,923 2.8% 1.77 485 68,912 2.5% 2.20 669 TOTAL UNDISTRIBUTED COSTS 185,999 10.4% 6.60 1,806 257,922 9.4% 8.24 2,504

GROSS OPERATING PROFIT 943,264 52.6% 33.45 9,158 1,455,055 53.1% 46.46 14,127

LESS FIXED COSTS Property Tax 115,646 6.5% 4.10 1,123 119,115 4.3% 3.80 1,156 Franchise Royalty Fees 64,581 3.6% 2.29 627 98,803 3.6% 3.16 959 Head Office 35,842 2.0% 1.27 348 54,836 2.0% 1.75 532 TOTAL FIXED COSTS 216,069 12.1% 7.66 2,098 272,754 9.9% 8.71 2,648

EBITDA (Pre FF&E Reserve) 727,195 40.6% 25.79 7,060 1,182,301 43.1% 37.75 11,479

FF&E RESERVE 44,803 2.5% 1.59 435 82,254 3.0% 2.63 799

NET OPERATING INCOME (Post FF&E Reserve) 682,392 38.1% 24.20 6,625 1,100,047 40.1% 35.13 10,680

Proposed Ground Rent 175,287 9.8% 6.22 1,702 180,546 6.6% 5.77 1,753

NET OPERATING INCOME (Post Ground Rent) 507,104 28.3% 17.98 4,923 919,501 33.5% 29.36 8,927

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

9. C&W Trading Projections

Trading Projections The following chart depicts our summary profit and loss projections showing the hotels income and expenses for the five years commencing May 2019. The statements are expressed in inflated terms for each year.

Cushman & Wakefield | Morgan Stanley Bank, N.A. Property Record Valuation Date: 1 May 2019 Valuation of: Holiday Inn Express Exeter -City Centre, Tudor St, Exeter EX4 3FL

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

Commentary on C&W Projections We have adopted a stabilised occupancy of 86% at an ADR of £81. This produces a stabilised RevPAR of £69.68. This compares with the current RevPAR of the M5 junction 29 Holiday Inn Express of £59. Adjusting our stabilised RevPAR for inflation results in a like for like RevPAR of £65, representing a circa £5 premium over and above the existing Holiday Inn Express. We consider this to be achievable given the new hotel benefits from a newer product overall as well as a city centre location. The format of the accounts is not strictly in accordance with the Uniform System of Accounts for the Lodging Industry with all payroll costs shown within the rooms expenses as opposed to being allocated to individual departments given the nature of the operation. As a result, it is more difficult to undertake full benchmarking of the departmental expenses. The departmental expenses have however been relatively consistent as a percentage of departmental revenue and on a Per Occupied Room (POR) basis and therefore we have had regard to the actual expenses within our projections. The miscellaneous expenses actually show a negative figure being the forecast cost savings being implemented by management we have adopted these savings within our assessment. The undistributed costs do not appear unreasonable based on other limited service hotels in the market taking into account they do not include payroll costs. As a result, we have had regard to current levels in preparing our assessment. The majority of the sales and marketing expenses relate to the franchise sales and marketing fees, which we have shown as a separate line item. We have allowed for increased sales and marketing expenses to reflect that the hotel will be operated individually. Property tax has regard to the hotels current rating assessment. The accounts provided by management show the insurance charges within the administration and general expenses. We have adopted the same approach for ease. We have deducted franchise fees equivalent to a royalty fee of 5% of rooms revenue and a sales and marketing of 3% of rooms revenue, which we consider would be the likely level paying assuming the hotel was sold on an individual basis. We have deducted an amount of 2% of total revenue to provide the services provided centrally by management such as sales and marketing and revenue management as opposed to making a separate allocation to each department as these costs would need to be provided whether through another management company or at hotel level. We have deducted an amount for an FF&E reserve equivalent to 3% of total revenue in each year of our projection period. Our resultant net operating profit post FF&E reserve is circa £859,461, which compares to the forecast for the current year of £507,104 (although this represents a part year only compared to our full year projection). However, by Year Two our projections are at £924,713, very similar to the Atlas Year Two projection of £919,501. After the deduction of the proposed ground rent of £133,900 per annum our adjusted net operating profit is £725,561, which is equivalent to a profit margin of 30.2%.

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

10. Principal Valuation Considerations

Location / Situation and Competition The property is well located in the city centre approximately 10 minutes walk from the shopping area.

Building Design / Condition / Suitability The hotel is in good condition having just opened following re-development.

Tenure The hotel will be held on long lease for a term of 125 years with a buy back option at year 60 for £1. There is limited comparable evidence of the sale of long leasehold as the structure is relatively new within the hotel market. We would however expect there to be a narrower pool of purchasers for the leasehold interest compared to the freehold interest, which will result in the interest achieving a softer yield. We consider the yield gap between a freehold interest and a ground lease interest will be influenced by a number of factors including location, quality of the asset and rent cover. The yield gap will also be influenced by whether the hotel is sold as part of the existing portfolio or as a single asset. We consider that there is likely to be a wider yield gap if sold as a single asset as the hotel will lose some of its appeal and economies of being operated as part of a larger platform. The proposed rent payable will be £133,900 per annum subject to annual increases in line with RPI with a cap and collar of 0% and 5%. The proposed rent represents 13% of the stabilised NOI. We consider the proposed rent to fall within an acceptable range of NOI based on other transactions that have occurred in the market providing sufficient rent cover in the short term.

Business & Income Security

The hotel is new and therefore its trading position has not yet been established. Therefore, there is some potential risk prior to the performance being proven over a period of time.

Asset Management Opportunities There is scope to stabilise the hotel.

Saleability

Current Sale Prospects

What is the estimated period it would take to sell the Property at 6 to 9 months Market Value?

Purchaser demand is likely to be Good

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

The market for hotels held on long ground leases such as that proposed has been largely untested to date. Whilst this will result in a greater level of uncertainty in terms of purchaser appetite and saleability, we are of the opinion that there would be fewer purchasers in the market than for the equivalent freehold interest.

10.1. Market Value

Value Conclusion In assessing the value of the hotel we have adopted a discounted cash flow (DCF) based on our trading projections and rationale as set out above. In arriving at our choice of capitalisation rate, we have had regard to the comparable evidence of Holiday Inn Express hotels that have occurred generally as set out in our head report together with other hotels in the surrounding area. There has been limited sales of hotels held on ground leases and therefore we have made an appropriate adjustment to reflect the leasehold interest. The yields for similar quality hotels held on a freehold basis have ranged between 7.5% and 9.5%. Unfortunately, there have been no recent single asset transactions to have traded in Exeter. The latest hotels to be sold include the two Mercure hotels in the city centre which were sold by Lone Star to LRC in early 2018. The closest hotel to have sold more recently is the Hampton by Hilton at Bristol airport which sold in January 2019 for £24.4million which equated to £121,000 per bedroom. We consider that the hotel would achieve a softer yield than those hotels located in prime locations such as Edinburgh and Manchester but a stronger yield than those in weaker locations such as Leigh. The yields for similar quality hotels held on a freehold basis have ranged between 7.00% and 9.00%. Having regard to the comments above and the fundamentals of the Property including the location of the hotel within the national and local context and quality of the asset, we are of the opinion that the equivalent freehold interest would achieve a yield of 7.00%. We have made an adjustment in our choice of capitalisation rate to reflect the proposed leasehold interest having regard to the location of the hotel and the level of rent payable as detailed in the head report. Based on these factors, we have adopted a capitalisation rate of 8.25%. We have adopted a discount rate of 10.25%. Our valuation is the net figure that would appear in a sale and purchase agreement with any purchaser’s costs being paid in addition to the figure reported. We have not made any explicit deduction for purchaser’s costs within our calculation rather implicitly reflecting this in our capitalisation rate. In summary, in arriving at our opinion of value we have adopted the following:

Market Value

Capitalisation Rate 8.25%

Discount Rate 10.25%

Market Value £11,700,000

Capital value Per Bedroom £113,592 per bedroom

Gross Initial Yield 6.20%

Property Record Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

10.2. Market Rent Our opinion of the Market Rent of the Property on the basis set out in the head report is £360,000 per annum.

10.3. Market Value with Vacant Possession For the purpose of our valuation with vacant possession we have adopted our trading assessment as set out above. In arriving at our opinion of value on this basis, we have adopted our Market Value.

Appendix A: Maps and Plans Cushman & Wakefield | Morgan Stanley Bank, N.A. Valuation of: Holiday Inn Express Exeter -City Centre, Valuation Date: 1 May 2019 Tudor St, Exeter EX4 3FL

APPENDIX A: MAPS AND PLANS

Holiday Inn Express Exeter City Centre, Tudor Street, Exeter EX4 3FL

This plan is published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds. Holiday Inn Express Exeter City Centre, Tudor Street, Exeter EX4 3FL

This plan is published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds.

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U T Exeter EX4 3FL should be checked against Title Deeds. Title should be checked against Holiday Inn Express Holiday Subway Subway Any site boundaries shown are indicative only and Exeter City This plan is published for convenience of identification.

Renslade House

About Cushman & Wakefield

Cushman & Wakefield | Morgan Stanley Bank N.A. Appendix D – Terms of Business Valuation Date: 01 May 2019 Valuation of: Atlas Hotel Portfolio

APPENDIX D – TERMS OF BUSINESS

125 Old Broad Street London, EC2N 1AR Tel +44 (0) 20 3296 3000 Fax +44 (0) 20 3296 3100 cushwake.com

Nick George Email [email protected] Morgan Stanley Collateral Valuation Team Direct +44 (0)20 7152 5436 Morgan Stanley Bank N.A. Mobile +44 (0)7710 153982 Morgan Stanley Mortgage Capital Holdings LLC 1585 Broadway, 25th Floor New York, New York 10036 Our Ref 1913UB00 United States

19 June 2019

Dear Nick,

Valuation of Atlas Portfolio

We are delighted that you have chosen Cushman & Wakefield to work with you in relation to the above matter. The schedule to this letter details the services we will provide, the basis of our appointment, our fees and anticipated expenses, together with other information relevant to our services (the "Services Schedule" and together with this letter, the "Engagement Letter").

Enclosed are our standard terms of business containing exclusions and limitations on our liability and detailing our respective obligations (the "Terms of Business") which, together with the Engagement Letter, comprise the terms of our engagement (the "Engagement"). Please take a moment to check that you are happy with the contents of the Engagement Letter, the Services Schedule and the Terms of Business and understand the basis of the Engagement.

The instruction letter sent by you and dated 7 May 2019 (the “MS Instruction Letter”) shall also form part of the Engagement and, to the extent that there is any contradiction between the documents forming the Engagement, save where the relevant document is supplements or refines the content of another, the following order of precedence shall apply: 1) the MS Instruction Letter; 2) the Engagement Letter; and then 3) the Terms of Business.

I will have overall responsibility for the provision of our services to you, assisted by Katrin Krause and such other professional staff as it may be appropriate for us to involve. I will be your first point of contact on this matter.

I should be grateful if you would return a signed and dated a copy of the Engagement Letter as soon as possible to confirm that you accept the basis of the Engagement. Please be aware that your continuing instructions in relation to this matter will amount to your acceptance of the terms of the Engagement. If there is any matter that requires clarification please do not hesitate to contact me.

Cushman & Wakefield Debenham Tie Leung Limited, 125 Old Broad Street, London EC2N 1AR. Registered in England & Wales with registration number 02757768. Regulated by RICS. Cushman & Wakefield Debenham Tie Leung Limited is an appointed representative (FRN: 481082) of DTZ Insurance Services Limited which is authorised and regulated by the Financial Conduct Authority (FRN: 477013). VAT No. GB 466425139.

Yours sincerely,

Carl Ridgley Partner, Hospitality EMEA Cushman & Wakefield Debenham Tie Leung Limited

Acceptance of Cushman & Wakefield Engagement Letter and Terms of Business

I have read the Engagement Letter (including the Services Schedule and incorporating the Cushman & Wakefield Terms of Business (Version 2.01 – May 2018)) and hereby accept the terms and confirm this Engagement.

______Nick George

______For and on behalf of Morgan Stanley Bank N.A.

Date: ______

Services Schedule – Valuation & Advisory

Type of Instructions: Valuation and Advisory

Property Details: Appendix 1 includes the address, tenure and property type of the property or each of the properties ("Property") to be valued ("Property Schedule").

The Properties are held by London & Regional Properties "Borrower".

Client Instructions: The Client has instructed C&W to:

a. Undertake a valuation of the legal interests in the Properties described in the Property Schedule ("Valuation") as at the date of issue of the Valuation Report (the "Valuation Date"). b. Provide a valuation report in the format referred to in the 'Scope of Services' section below ("Valuation Report") for the following purpose of valuation ("Purpose of Valuation"): • in connection with a proposal by London & Regional Properties (the "Borrower") to refinance the Property. c. Provide an estimated reinstatement cost assessment. The approach C&W will adopt is set out in item 23 of 'Special and Additional Terms' below. C&W reserves the right not to undertake this part of the Engagement if it transpires that there are properties that are unduly complex or Listed, as it would be inappropriate. In such circumstances, C&W will discuss with the Client an appropriate fee adjustment for excluded properties.

Addressee: The Valuation Report will be addressed to Morgan Stanley (the “Client”) and the addresses set out in the MS Instruction Letter (the "Addressees").

The Addressees shall be entitled to rely on the Valuation Report subject always to the terms of the Engagement. By relying on the Valuation Report, each Addressee shall be deemed to acknowledge and agree that C&W’s duties and obligations to the Addressees under and in connection with the Valuation Report shall be no different or greater and of no longer duration than the duties and obligations which C&W owes to the Client under the Engagement. C&W shall have no greater liability to the Addressees by virtue of such reliance, either in nature, extent, or in time, than C&W has to the Client under the Engagement and C&W shall be entitled to rely on any limitation in the Engagement and to raise the equivalent rights in defence of liability or indemnity to the Addressees (both jointly and severally) as are available to C&W against the Client under the Engagement. C&W’s limit of liability under this Engagement represents the maximum total liability to the Client, the Addressees and all other parties permitted to rely on the Valuation Report in the aggregate.

Scope of Services: Included in the Services are: a. Valuation Report Providing a Valuation Report that will be prepared in English. C&W will provide one electronic copy of the Valuation Report and, if requested, one signed hard copy. Where the Valuation Report is required to contain site plans these will be based on extracts of the Ordnance Survey or other maps showing, for identification purposes only, C&W's understanding of the extent of title based on site inspections or copy title plans supplied to C&W. The Client should not rely on C&W's plans to define boundaries.

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As agreed, C&W will not provide full details of the valuation approach and reasoning in the Valuation Report.

b. Currency Providing a Valuation in UK pounds sterling (£).

c. Inspections External inspection of the Property from ground level and an internal inspection of the Property.

d. Floor Areas As the Properties are trading entities where the value is assessed by reference to trading potential, we will not undertake a measured survey.

e. Tenancies & Leasing Relying on tenancy information provided by the Borrower, subject to the provisions of item 4 of the Assumptions. For the avoidance of doubt, C&W will not read copy leases.

f. Environmental Matters (including Flooding) Reviewing the relevant Local Authority websites regarding environmental matters, including contamination and flooding (subject to the provisions of item 5 of the Assumptions). For the avoidance of doubt, C&W will not undertake an environmental assessment or prepare a land quality statement, which would be the responsibility of an environmental consultant or chartered environmental surveyor. In this respect, C&W will have regard to any environmental reports provided to C&W (subject to the provisions of item 5 of the Assumptions).

g. Title Reading a Certificate of Title where this is provided to C&W and C&W will reflect its contents in the Valuation (subject to the provisions of item 7 of the Assumptions). C&W will not inspect the title deeds of the Property.

Unless agreed in writing in advance with the Client, C&W will not obtain information from the Land Registry.

h. Condition of Structure & Services, Deleterious Materials and Ground Conditions Taking into account the general condition of the Property as observed from the inspection (subject to item 8 of the Assumptions). Where a separate condition or structural survey has been undertaken and made available to C&W, C&W will reflect the contents of the survey or condition report in the Valuation Report, but may need to discuss the survey or condition report with the originating surveyor.

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i. Statutory Requirements and Planning Making verbal or electronic enquiries of the relevant planning authorities as to the possibility of highway proposals, comprehensive development schemes and other ancillary planning matters that could affect property values. C&W will also seek to ascertain whether any outstanding planning applications exist which may affect the Property, and whether the Property is listed or included in a Conservation Area. C&W will also attempt to verify the existing permitted use of the Property, and endeavour to have sight of any copies of planning permissions. For the avoidance of doubt, C&W will not undertake formal searches.

j. Disclosures of incentives on new build residential property Endeavouring to obtain a copy of the 'CML Disclosure of Incentives Form' which vendors of newly built residential property are required to complete in order to comply with their duty to disclose whether the sale price includes any incentives.

C&W will take into account the contents of such a form in undertaking our valuation (subject to the provisions of item 14, of the Assumptions).

Where C&W is engaged to prepare a Valuation Report in connection with a proposed transaction in respect of the Property, expressly excluded from the Services is the provision of any recommendation or otherwise by C&W as to whether to proceed with such a proposed transaction. Accordingly the Client must not in any circumstances construe the Valuation Report as a recommendation whether or not to proceed with such a proposed transaction.

Basis of Appointment: C&W confirms that:

a. The Valuation and Valuation Report will be undertaken in accordance with the appropriate sections of the current edition of the RICS Valuation – Global Standards which incorporate the International Valuation Standards ("IVS") and the RICS UK national supplement (the "RICS Red Book"). In this context "current edition" means the version in force at the Valuation Date.

b. The Valuation will be the responsibility of Carl Ridgley, who is in a position to provide

an objective and unbiased Valuation. The Valuation will be undertaken by a suitably qualified valuer, or valuers, who has or have the knowledge, skills and understanding to undertake the Valuation competently and who will act as "External Valuer(s)" (as defined in the RICS Red Book) qualified for the Purpose of Valuation.

C&W does not (and any affiliates of C&W do not) act as external valuers as defined under the Alternative Investment Fund Manager's Directive ("AIFMD") legislation, or its equivalent under local law. C&W expressly disclaims any responsibility or obligations under AIFMD and/or its equivalent unless expressly agreed in writing in advance by C&W.

c. As you are aware, C&W have previously valued the Portfolio for you for loan security

purposes in October 2017. As confirmed with you, we would consider this to not represent a conflict of interest.

Fees and Expenses: C&W's fee for undertaking the Services is £125,000.

The fee excludes VAT and expenses which will also be payable pursuant to Clause 3 of the Terms of Business.

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The fee includes the provision of the copies of the Valuation Report referred to under 'Scope of Services'. Where additional hard copies are required, a charge may be made reflecting the time spent and costs incurred.

C&W's invoice will be addressed to the Client. If C&W is requested to re-address an invoice after it has been issued, C&W reserves the right to make an administrative charge.

Where C&W undertakes to read reports prepared by third parties as part of the Engagement (such as Reports on Title or Structural Surveys), if these reports are provided some time after C&W has submitted the Valuation Report, and C&W is required to review and/or change the Valuation and/or advice in the light of the contents of any such reports, C&W reserves the right to charge an additional fee appropriate in relation to the time involved.

In the event that C&W agrees to re-address the Valuation Report to another party or other parties or permit reliance upon it by another party or other parties, C&W reserves the right to charge additional fees appropriate to the additional work involved and any extension of C&W's liability.

C&W's fees and expenses shall be payable whether or not the transaction proceeds or the loan is drawn down, and in the event that instructions are withdrawn, the fee or a proportion of it will be payable in accordance with Clause 12 of the Terms of Business.

Anticipated Expenses: N/a

Special and Additional 1. Bases of Valuation Terms: In accordance with the Client's instructions, C&W will undertake the Valuation on the following bases:

Market Value

Market Rent

The definitions of the above bases are set out in Appendix 2 (the "Definitions Schedule").

For the avoidance of doubt, our opinion of market value will be reported on the basis of a single portfolio value.

2. Special Assumptions

a. In addition, the Client has requested that C&W provides additional valuations on the basis of the Special Assumption (as defined in item 2 of the Definitions Schedule) referred to in section 2.b. below:

b. The additional valuation will be prepared on the following basis:

• Market Value assuming vacant possession with the following assumptions ("Vacant Possession Value"): • Each hotel was open for trade; • Each of the hotels forming part of the portfolio where sold on an individual basis.

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• The hotels continue to be operated under their respective brands under a franchise agreement on standard franchise fees. • The existing management Atlas platform is no longer in place but each hotel is operated by another management company on a stand alone basis on market facing terms. • Each of the hotels was able to achieve the same revenues as set out in trading assessments. In the circumstances of this instruction, C&W considers the above Special Assumptions may be regarded as realistic, relevant and valid.

3. Use of Valuation Report The Valuation Report may be used only for the Purpose of Valuation referred to in item (b) of 'Client Instructions' in this Services Schedule.

C&W acknowledges, that under the MS Instruction Letter, the Client may disclose the Valuation Report in a prospectus or offering document (a “Prospectus”).

C&W understands that it will therefore be required to provide a final copy of the Valuation Report to be incorporated into the Prospectus, together with a consent letter by which C&W consents to the inclusion of the Valuation Report within the Prospectus provided that (i) C&W has first approved the form in which the Valuation Report is to appear within the Prospectus and (ii) the consent letter is factually correct.

Notwithstanding the foregoing, the Valuation Report or any part of its contents are reproduced or referred to in any document, circular or statement, C&W’s written approval as to the form and context of such publication or disclosure must first be obtained. Such publication or disclosure will not be permitted unless, where relevant, it incorporates the special assumptions referred to herein. For the avoidance of doubt, such approval is required whether or not this firm is referred to by name and whether or not the Valuation Report is combined with others and C&W’s approval may be subject to the payment of an additional fee in consideration of the additional liability exposure of C&W and its insurers in respect of such disclosure.

Except for any responsibility arising under statute, statutory instrument or regulation that cannot be excluded or limited to any person as and to the extent provided under such rules, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in accordance with the Valuation Report or any accompanying statement.

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4. Areas Where C&W measures and calculates the floor areas, measurement will be in accordance with the current edition of the RICS Professional Statement RICS Property Measurement

The RICS Practice Statement "RICS Property Measurement" requires office and residential buildings to be measured in accordance with International Property Measurement Standards ("IPMS"), unless the Client confirms in writing that alternative methodology should be used. Unless the Client so instructs C&W otherwise in writing, C&W will assume that the Client does not require C&W to measure office and residential buildings in accordance with IPMS on the basis that the Client has no use for such data given that at present it is rare for market activity to be based on IPMS measurements.

The areas C&W report will be appropriate for the Purpose of the Valuation but should not be relied upon for any other purpose.

5. Group of Properties / Lotting Unless C&W has confirmed otherwise in this Services Schedule, each property will be valued individually; in the case of a portfolio, C&W will assume that each of the properties would be marketed in an orderly way and not placed on the market at the same time.

6. Limitations N/A

7. Limitation of Liability The cap on C&W's liability in Clause 11.3 of the Terms of Business shall not apply to the Valuation.

C&W's total aggregate liability to the Client or to any other party entitled to rely on the Valuation Report, arising out of, under or in connection with this Engagement shall be limited to an aggregate sum not exceeding the lesser of £75 million or 25% of the Market Value of the Engagement Property.

Where more than one value basis is adopted, the Market Value of the Engagement Property shall be the Market Value without Special Assumptions; or, if this basis is not included in the Valuation Report, the Value basis most similar to the Market Value without Special Assumptions, as referred to in the Definitions Schedule.

Where the Services relate to more than one property, C&W's maximum liability in respect of an individual property shall be in the same proportion to the total aggregate liability as such individual property's reported value is to the aggregate reported value.

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8. Disclosure and Syndication C&W will not consent to publication or disclosure of the Valuation Report unless, where relevant, it incorporates adequate reference to the Special Assumptions and/or Departures from the RICS Red Book referred to in this Services Schedule.

In the event that, after receiving the Engagement Letter, the Client advises C&W of a proposal to syndicate the loan then the Client will, at such point, represent and warrant that it has been duly authorised to enter this Engagement as the lender's agent (the term "lenders" in this Engagement Letter includes any present, proposed or future members of the lending syndicate). C&W and the Client must agree the nature of C&W's responsibility to any further named parties prior to any disclosure of the Valuation Report. In this connection, the cap on liability provisions referred to in section 7 above shall be agreed by the lenders and shall apply to the maximum liability of C&W in respect of any and all claims that maybe brought by the Client and/or any lender(s) arising out of, under or in connection with this Engagement. Without prejudice to the foregoing, prior to any disclosure of the Valuation Report, the Client must also inform syndicate members of the terms of the Engagement by providing them with a copy of the entire Engagement Letter including attachments thereto. The Client must also inform C&W of the identity of the proposed members of the syndicate. If these conditions are satisfied and the Valuation Report is disclosed to syndicate members, the Valuation Report must be disclosed in its entirety.

Clause 8 of the Terms of Business states that the provision of the services is for the Client's benefit only. If C&W is subsequently asked to extend responsibility to other parties, then there will be an additional fee payable, to be agreed, to cover C&W's additional time costs, indemnity and insurance liabilities subject to a minimum of £500, plus VAT.

9. Age of Building If C&W states the age of a building in the Valuation Report, this will be an estimate and for guidance only.

10. Condition of Structure, Foundations, Soil & Services It is a condition of C&W or any related entity, or any qualified employee, providing advice and opinions as to value, that the Client and/or third parties (whether notified to C&W or not) accept that the Valuation Report in no way relates to, or gives warranties as to, the condition of the structure, foundations, soil and services.

11. Plant & Machinery No allowance will made by C&W for any items of plant or machinery not forming part of the service installations of the building(s). C&W will specifically exclude all items of plant, machinery and equipment installed wholly or primarily in connection with any of the occupants' businesses. C&W will also exclude furniture and furnishings, fixtures, fittings, vehicles, stock and loose tools, except where such items would ordinarily transfer to a prospective purchaser in the sale of a trading business as a going concern in accordance with VPGA4 of the RICS Red Book.

12. Goodwill No account will be taken by C&W in the Valuation of any business goodwill that may arise from the present occupation of the Property, except where such business goodwill (excluding any personal goodwill) would ordinarily transfer to a prospective purchaser in the sale of a trading business as a going concern in accordance with VPGA4 of the RICS Red Book.

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13. Statutory Requirements & Planning Please note the fact that employees of town planning departments now always give information on the basis that it should not be relied upon and that formal searches should be made if more certain information is required. Where a Client needs to rely upon the information given about town planning matters, the Client's legal advisers must be instructed to institute such formal searches. C&W recommends that the Client requests C&W to review its comments and Valuation in light of any resultant findings.

14. Defective Premises Act 1972 No allowance will be made by C&W for rights, obligations or liabilities arising under the Defective Premises Act 1972.

15. Legal Issues Legal issues, and in particular the interpretation of matters relating to title and leases, may have a significant bearing on the value of an interest in property. No responsibility or liability will be accepted by C&W for the true interpretation of the legal position of the Client or any other parties in respect of the Valuation. Where C&W expresses an opinion on legal issues affecting the Valuation, then such opinion is subject to verification by the Client with a suitable qualified legal adviser.

16. Deduction of Notional Purchaser's Costs The opinion of value which C&W will attribute to the Property will be the figure C&W considers would appear in a contract for sale, subject to the appropriate assumptions for the Basis of Value reported. Where appropriate, C&W will make an allowance in respect of stamp duty and purchaser's costs.

The Client's attention is drawn to the fact that when assessing Market Value, Fair Value or Existing Use Value for balance sheet purposes, C&W will not include directly attributable acquisition or disposal costs in the Valuation. Where C&W is requested to reflect these costs, they will be stated separately.

17. Taxation & Disposal Costs No adjustment will be made by C&W to reflect any liability to taxation that may arise on disposal, or development of the Property nor for any costs associated with disposal incurred by the Owner. Furthermore, no allowance will be made by C&W to reflect any liability to repay any government or other grants, taxation allowance or lottery funding that may arise on disposal.

C&W's valuation figure for the Property will be that receivable by a willing seller excluding VAT, if applicable.

18. Building Society Act 1986 C&W confirms that it is not disqualified under Section 13 of the Building Societies Act 1986 from reporting to the Client.

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19. Properties to be Developed or in the Course of Development or Requiring Repair / Refurbishment and Recently Completed Developments Unless specifically agreed in writing to the contrary, C&W's fee assumes that C&W will be provided with a specification and floor plans of the proposed / ongoing development as well as information relating to construction and associated costs in respect of both the work completed and the work necessary for completion, together with a completion date or dates. Normally such figures, dates and information will be provided by the professional advisers involved in the construction programme. Unless specifically instructed to the contrary in writing, C&W will rely on such figures, dates and information and the Client should make this fact known to such advisers. Alternatively, on request, C&W can arrange for independent quantity surveyors to provide an assessment of costs and dates at an additional fee charge. If the Valuation is for lending purposes, the Client is advised to seek independent advice and to consider the appointment of a project monitoring surveyor.

20. Monitoring The compliance of the valuations undertaken in accordance with the RICS Red Book may be subject to monitoring by the RICS under its conduct and disciplinary regulations.

21. Valuation Components The components of C&W's valuation calculations (such as future rental values, cost allowances, or void periods) may only be appropriate as part of the valuation calculations and should not be taken as a forecast or prediction of a future outcome. The Client should not rely on any component of the valuation calculations for any other purpose.

22. Trade Related Property Valuation Practice Guidance Application 4 (VPGA 4) of the RICS Red Book sets out examples of properties that are normally bought and sold on the basis of their trading potential. The essential characteristics of such a property is that it has been designed or adapted for a specific use and the value of that property reflects its trading potential. VPGA 4 relates only to the valuation of an individual property that is valued on the basis of trading potential. Where C&W is instructed to value a trade related property or business, C&W will apply the principles of VPGA 4 unless explicitly instructed to do otherwise and confirmed as appropriate in the Valuation Report.

23. Estimated Reinstatement Cost Assessment

C&W will consider the extent and nature of the building with an estimated reinstatement cost assessment being undertaken as part of its normal valuation exercise. C&W will not carry out a formal reinstatement cost assessment through its Building Consultancy Division. C&W's assessment should be treated as a guide only and should not be relied upon. It should be used for comparative purposes only against the borrower's proposed reinstatement cover. Should any discrepancies arise, a formal reinstatement cost assessment should be commissioned.

The figures set out in C&W's Valuation Report will be its indicative assessment of the cost of reconstructing the Property at the Valuation Date. C&W will include an allowance for demolition, removal of debris, temporary shoring, statutory and professional fees which are likely to be incurred on reconstruction, but will exclude any allowance for VAT. If the Borrower is unable to recover VAT, or can recover part only, it should advise its insurers and increase the Base Sum Insured appropriately.

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The figures will make no allowance for loss of rent during the rebuilding period, nor for inflation, nor the cost of dealing with any contamination which may be present and have to be dealt with prior to reconstruction. The assessment will not provide advice in respect of terrorist damage cover and insurers should be consulted in respect of this.

C&W will provide a guide that envisages the reinstated building and its use will be similar to that existing, and the replacement building will be to the original design, in modern materials, using modern techniques to modern standards. Assumptions: 1. Assumptions The RICS Red Book contains a glossary that defines various terms used in the RICS Red Book that have a special or restricted meaning. One such term is an assumption which is defined as "A supposition taken to be true" ("Assumption"). Accordingly in this context, C&W will make certain Assumptions in relation to facts, conditions or situations affecting the subject of, or approach to, the Valuation that C&W will not verify as part of the valuation process but rather, in accordance with the definition in the RICS Red Book, will treat as true because it is agreed that specific investigation by C&W is not required. In the event that any of these Assumptions prove to be incorrect then the Valuation will need to be reviewed.

2. Confirmation of Assumptions

The Client's counter-signature of the Engagement Letter represents confirmation that C&W may make the Assumptions referred to below.

The Client must promptly notify C&W in writing if any of the Assumptions are

incorrect. Should any amendment to the Assumptions set out in the Services

Schedule result in an increase in the scope of the Engagement this may result in an

appropriate increase in C&W's fees and expenses due under the Engagement.

3. Areas Where C&W is provided with floor areas, C&W will make an Assumption that the areas have been measured and calculated in accordance with the current edition of RICS Professional Statement RICS Property Measurement.

4. Tenancies and Leasing C&W's opinion of the Market Value or Fair Value will be subject to existing leases of which the Client or its advisors have made C&W aware but otherwise will reflect an Assumption of vacant possession. Where C&W has undertaken to read the leases and related documents provided to it, C&W will make an Assumption that copies of all relevant documents will be sent to C&W and that they are complete and up to date.

Where C&W relies on tenancy and lease information provided to it, unless such information reveals otherwise, C&W will make the Assumption that all occupational leases are on full repairing and insuring terms, with no unusual or onerous provisions or covenants that would affect value.

C&W will make an Assumption that vacant possession can be given of all accommodation which is unlet or occupied by the entity/borrower or its employees on service tenancies. C&W will not take account of any leases between subsidiaries unless C&W states otherwise in the Services Schedule.

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C&W will not undertake investigations into the financial strength of any tenants unless otherwise referred to in the Valuation Report. Unless C&W has become aware by general knowledge, or has been specifically advised to the contrary, C&W will make an Assumption that: a. where a Property is occupied under leases then the tenants are financially in a position to meet their obligations, and b. there are no material arrears of rent or service charges, breaches of covenant, current or anticipated tenant disputes.

However, the Valuation will reflect a potential purchaser's likely opinion of the credit worthiness of the type of tenants actually in occupation or responsible for meeting lease commitments, or likely to be in occupation.

C&W will take into account any information the Client or its advisors provide concerning tenants' improvements. Otherwise, if the extent of tenants' alterations or improvements cannot be confirmed, C&W will make an Assumption that the Property was let with all alterations and improvements evident during C&W's inspection (or, in the case of a Valuation without internal inspection, as described within the information provided by the Client).

C&W will also make an Assumption that wherever rent reviews or lease renewals are pending or impending, with anticipated reversionary changes, all notices have been served validly within the appropriate time limits.

5. Environmental Matters If C&W's enquiries or any reports supplied to C&W indicate the existence of environmental problems without providing method statements and costings for remedial works, then C&W may not be able to issue a Valuation Report except on the Special Assumption that the subject property is assumed NOT to be affected by such environmental matters. In certain circumstances, the making of such a Special Assumption may be unrealistic and may be a Departure from the requirements of the RICS Red Book. In these circumstances, the Valuation Report may include a recommendation that an investigation should be undertaken to quantify the costs and that subsequently the Valuation should be reviewed.

Where C&W's enquiries lead C&W to believe that the Property is unaffected by contamination or other adverse environmental problems, including the risk of flooding, then, unless the Client instructs C&W otherwise, the Valuation will be based on an Assumption that no contamination or other adverse environmental matters exist in relation to the Property sufficient to affect value.

If the Property lies within or close to a flood plain, or has a history of flooding, C&W will make the Assumption that building insurance is in place and available to be renewed to the current or any subsequent owner of the Property, without payment of an excessive premium or excess.

Depending on the nature of the investigations made and the information revealed, the Valuation Report may include a statement that, in practice, a purchaser might undertake further investigations and that if these revealed contamination or other adverse environmental problems, then this might reduce the value reported.

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6. Mineral Rights C&W will make an Assumption that any mineral rights are excluded from the Property.

7. Title Save as disclosed either in any Certificate of Title or unless specifically advised to the contrary by the Client or its legal advisers and as referred to in the Valuation Report, C&W will make the Assumption that there is good and marketable title in all cases and that the Property is free from rights of way or easements, restrictive covenants, disputes or onerous or unusual outgoings. C&W will also make an assumption that the Property is free from mortgages, charges or other encumbrances.

If verification of the accuracy of any site plans contained in the Valuation Report is required, the matter must be referred to the Client's legal advisers.

C&W will make the Assumption that roads and sewers serving the Property have been adopted and that the Property has all necessary rights of access over common estate roads, paths, corridors and stairways, and rights to use common parking areas, loading areas and other facilities.

In addition, similarly, where the title is leasehold, C&W will make the Assumption that both landlord and tenant have abided by the terms of the lease and that the layout of the accommodation is in accordance with that permitted in the lease. C&W will make a further Assumption that the lease contains no option for the landlord to obtain possession of the Property if they intend to redevelop the Property or a substantial part of the premises in which the Property is situated.

8. Condition of Structure and Services, Deleterious Materials and Ground Conditions Due regard will be paid by C&W to the apparent general state of repair and condition of the Property, but a condition or structural survey will not be undertaken, nor will woodwork or other parts of the structure which are covered, unexposed or inaccessible, be inspected. Therefore, C&W will be unable to report that the Property is structurally sound or is free from any defects. C&W will make an Assumption that the Property is free from any rot, infestation, adverse toxic chemical treatments, and structural, design or any other defects other than such as may be mentioned in the Valuation Report.

C&W will not arrange for investigations to be made to determine whether any deleterious, hazardous or harmful materials (including but not limited to high alumina cement concrete or calcium chloride additive) have been used in the construction or any alterations, and therefore C&W will not be able to confirm that the Property is free from risk in this regard. For the purposes of the Valuation, C&W will make an Assumption that any such investigation would not reveal the presence of such materials in any adverse condition.

C&W will not carry out an asbestos inspection and will not act as an asbestos inspector in completing the valuation inspection of Property that may fall within the Control of the Asbestos at Work Regulations 2012. C&W will not make an enquiry of the duty holder (as defined in the Control of Asbestos of Work Regulations 2012), of an existence of an Asbestos Register or of any plan for the management of asbestos to be made. Where relevant, C&W will make an Assumption that there is

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a duty holder, as defined in the Control of Asbestos of Work Regulations 2012 and that a Register of Asbestos and Effective Management Plan is in place, which does not require any immediate expenditure, or pose a significant risk to health, or breach the HSE regulations. C&W recommends that such enquiries be undertaken by the Client's legal advisers during normal pre-contract or pre-loan enquiries.

No mining, geological or other investigations will be undertaken by C&W to certify that the sites are free from any defect as to foundations. C&W will make an Assumption that all buildings have been constructed having appropriate regard to existing ground conditions or that these would have no unusual or adverse effect on building costs, property values or viability of any development or existing buildings. C&W will make the Assumptions that there are no services on, or crossing the site in a position which would inhibit development or make it unduly expensive, and that the site has no archaeological significance, which might adversely affect the present or future occupation, development or value of the Property.

No tests will be carried out by C&W as to electrical, electronic, heating, plant and machinery equipment or any other services nor will the drains be tested. However, C&W will make an Assumption that all building services (including, but not limited to lifts, electrical, electronic, gas, plumbing, heating, drainage, sprinklers, ventilation, air conditioning and security systems) and property services (such as incoming mains, waste, drains, utility supplies etc.) are in good working order and without any defect whatsoever.

9. Statutory Requirements and Planning

Save as disclosed in a Certificate of Title, or unless otherwise advised, C&W shall make the Assumption that all of the buildings have been constructed in full compliance with valid town planning and building regulations approvals and that where necessary, they have the benefit of current Fire Risk Assessments compliant with the requirements of the Regulatory Reform (Fire Safety) Order 2005. Similarly, C&W shall also make the Assumption that the Property is not subject to any outstanding statutory notices as to construction, use or occupation and that all existing uses of the Property are duly authorised or established and that no adverse planning conditions or restrictions apply.

C&W shall make the Assumption that the Property complies with all relevant statutory requirements.

Where the Property is a trading entity C&W shall make the Assumption that all of the necessary licences, registrations and permits required for its ongoing operation are in place and valid unless expressly stated otherwise.

Energy Performance Certificates ("EPC") must be made available for all properties, when bought or sold, subject to certain exemptions. If the Property is not exempt from the requirements of this Directive C&W shall make an Assumption that an EPC is made available, free of charge, to a purchaser of all the interests which are the subject of the Valuation.

In addition, in England and Wales the Minimum Energy Efficiency Standards Regulations are effective from 1 April 2018. The regulations prohibit the granting of a new tenancy or lease renewal of privately rented residential or business premises which do not have an Energy Performance Certificate (EPC) rating of 'E' or above.. C&W will ask the Client or its advisors for information relating to the EPC ratings of the Property if the Property is not exempt from these requirements. In any instance where C&W is not provided with an up to date EPC rating C&W will make the Version 2.02 (Jan 2019) Page 13

Assumption that the subject property meets the minimum requirements to enable it to be let.

In Scotland, the Energy Performance of Non-Domestic Buildings (Scotland) Regulation 2016 (the "Regulation") requires that qualifying properties have an energy assessment completed and an action plan prepared prior to sale or leasing. If the Property is not exempt from the requirements of the Regulation C&W shall make an Assumption that an energy assessment and action plan is made available, free of charge, to a purchaser of the interests which are the subject of the Valuation and that there is no capital expenditure required in order to comply with the requirements of the Regulation.

In any instance where C&W is to value Property with the benefit of a recently granted planning consent, or on the Special Assumption that planning consent is granted, C&W will make an Assumption that it will not be challenged under Judicial Review. Such a challenge can be brought by anyone (even those with only a tenuous connection with the Property, or the area in which it is located) within a period of three months of the granting of a planning consent. When a planning consent is granted subject to a Section 106 Agreement, the three month period commences when the Section 106 Agreement is signed by all parties.

If a planning consent is subject to Judicial Review, the Client must inform C&W and request C&W to reconsider its opinion of value. Advice would be required from the Client's legal advisers and a town planner, to obtain their opinion of the potential outcomes of such a Judicial Review, which C&W will reflect in its reconsideration of value.

10. Information Notwithstanding the Terms of Business, C&W will make an Assumption that the information provided by the Client and/or its professional advisers and/or by the Borrower and/or its professional advisers in respect of the Property to be valued is both full and correct. C&W will make an Assumption that details of all matters relevant to value within their collective knowledge, including but not limited to matters such as prospective lettings, rent reviews, outstanding requirements under legislation and planning decisions, have been made available to it, and that such information is up to date.

If the Valuation is required for the purpose of purchase, loan security or other financial transaction, the Client accepts that full investigation of the legal title and any leases is the responsibility of its legal advisers.

Where comparable evidence is included in the Valuation Report, this information is often based on C&W's verbal enquiries and its accuracy cannot always be assured, or may be subject to undertakings as to confidentiality. However, such information would only be referred to where C&W had reason to believe its general accuracy or where it was in accordance with expectation. It is unlikely that C&W will have inspected comparable properties.

11. Landlord and Tenant Act 1987 The Landlord and Tenant Act 1987 (the "Act") gives certain rights to defined residential tenants to acquire the freehold/head leasehold interest in a building where more than 50% of the floor space is in residential use. Where this is applicable, C&W will make an Assumption that necessary notices have been given to the residential tenants under the provisions of the Act, and that such tenants have elected not to acquire the freehold or head leasehold interest, and therefore disposal into the open

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market is unrestricted.

12. Leasehold Reform Housing and Urban Development Act 1993 and Leasehold Reform Act 1967 If C&W value the freehold or leasehold interest in either blocks of flats or in houses, the following will apply. The Leasehold Reform Housing and Urban Development Act 1993, as amended by the Commonhold and Leasehold Reform Act 2002, or The Leasehold Reform Act 1967 (collectively the "Act") give certain rights to residential tenants to acquire either the freehold/leasehold interest in any building which qualifies under the Act, or the right to lease extension. If this is applicable, C&W shall make an Assumption that no residential tenants have elected under the provisions of that Act to acquire the freehold or head leasehold interests, nor have they elected to acquire a lease extension, unless the Client and/or its advisers specifically inform C&W to the contrary.

13. Properties to be Developed or in the Course of Development or Requiring Repair / Refurbishment and Recently Completed Developments Where C&W undertake a Valuation of the completed Property this will be based on an Assumption that all works of construction have been satisfactorily carried out in accordance with the building contract and specification, current British Standards and any relevant codes of practice. C&W will also make an Assumption that a duty of care and all appropriate warranties will be available from the professional team and contractors, which will be assignable to third parties.

14. Trade Related Property The valuation approach for a trade related property as a fully equipped operational entity necessarily requires an Assumption that on the sale or letting of the property the trade inventory, licences etc required to continue trading are available. C&W's valuation will be provided on this basis unless agreed to the contrary and referred to as appropriate within our Valuation Report.

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Appendix 1 - Property Schedule

PROPERTY INTEREST PROPERTY TYPE

Holiday Inn Express Bath Freehold/Leasehold Hotel and Premises

Holiday Inn Express Bedford Leasehold Hotel and Premises

Holiday Inn Express Birmingham NEC Leasehold Hotel and Premises

Holiday Inn Express Birmingham Oldbury Freehold Hotel and Premises

Holiday Inn Express Bristol City Centre Leasehold Hotel and Premises

Holiday Inn Express Bristol - North Leasehold Hotel and Premises

Holiday Inn Express Cambridge Leasehold Hotel and Premises

Holiday Inn Express Derby Pride Park Freehold Hotel and Premises

Holiday Inn Express Droitwich Freehold Hotel and Premises

Holiday Inn Express East Midlands Airport Leasehold Hotel and Premises

Holiday Inn Express Edinburgh-Waterfront Freehold Hotel and Premises

Holiday Inn Express Exeter Freehold Hotel and Premises

Holiday Inn Express Glasgow Airport Leasehold Hotel and Premises

Holiday Inn Express Glasgow City Centre Hotel and Premises Freehold Riverside

Holiday Inn Express Gloucester South Freehold Hotel and Premises

Holiday Inn Express Hamilton Leasehold Hotel and Premises

Holiday Inn Express Hemel Hempstead Freehold Hotel and Premises

Holiday Inn Express Inverness Freehold Hotel and Premises

Holiday Inn Express Leeds City Centre Freehold Hotel and Premises

Holiday Inn Express Lichfield Leasehold Hotel and Premises

Holiday Inn Express Lincoln City Centre Freehold Hotel and Premises

Hampton Inn by Hilton Liverpool City Centre Leasehold Hotel and Premises

Holiday Inn Express London Chingford - North Hotel and Premises Leasehold Circular

Holiday Inn Express London - Dartford Leasehold Hotel and Premises

Holiday Inn Express London Greenwich Leasehold Hotel and Premises

Holiday Inn Express London - Hammersmith Freehold Hotel and Premises

Holiday Inn Express London - Wandsworth Leasehold Hotel and Premises

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PROPERTY INTEREST PROPERTY TYPE

Holiday Inn Express London - Luton Airport Leasehold Hotel and Premises

Holiday Inn Express Manchester- East Freehold Hotel and Premises

Holiday Inn Express Manchester- Salford Quays Leasehold Hotel and Premises

Holiday Inn Express Milton Keynes Freehold Hotel and Premises

Holiday Inn Express Newcastle City Centre Leasehold Hotel and Premises

Holiday Inn Express Newcastle - Metro Centre Leasehold Hotel and Premises

Holiday Inn Express Newport Freehold Hotel and Premises

Holiday Inn Express Northampton Freehold Hotel and Premises

Holiday Inn Express Peterborough Freehold Hotel and Premises

Holiday Inn Express Southampton - West Leasehold Hotel and Premises

Holiday Inn Express Stafford Leasehold Hotel and Premises

Holiday Inn Express Stevenage Freehold Hotel and Premises

Holiday Inn Express Stirling Freehold Hotel and Premises

Holiday Inn Express Stoke-on-Trent Freehold Hotel and Premises

Holiday Inn Express- Swansea East Freehold Hotel and Premises

Holiday Inn Express Swindon - West Freehold Hotel and Premises

Holiday Inn Express Taunton Freehold Hotel and Premises

Holiday Inn Express Warwick- Stratford-upon- Hotel and Premises Freehold Avon

Park Inn York Freehold/Leasehold Hotel and Premises

Holiday Inn Express Poole Leasehold Hotel and Premises

Holiday Inn Express Portsmouth - North Leasehold Hotel and Premises

Holiday Inn Express Exeter - Renslade House Freehold Hotel and Premises

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Appendix 2 - Definitions Schedule

1. Bases of Valuation:

Market Value Market Value as referred to in VPS4, Item 4 of the current edition of the RICS Valuation - Global Standards which incorporate the International Valuation Standards ("IVS") and the RICS UK national supplement (the "RICS Red Book"), and applying the conceptual framework which is sect out in IVS104:

"The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion"

Fair Value - IFRS Fair Value is referred to in VPS4 Item 7 of the RICS Red Book. Under these provisions, the term Fair Value means the definition adopted by the International Accounting Standards Board ("IASB") in IFRS 13, the term "Fair Value" means:

"The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date".

Fair Value – UK GAAP Fair Value in accordance with RICS UK national supplement ("UKNS") UK VPGA 1.3 . Under these provisions, the term "Fair Value" means:

"The amount for which an asset could be exchanged, a liability settled, or an equity instrument granted between knowledgeable, willing parties in an arm's length transaction."

Market Rent Market Rent as referred to in VPS 4 Item 5 of the RICS Red Book. Under VPS 4 Item 5 the term "Market Rent" is defined in IVS104 as: "The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion".

Whenever Market Rent is provided the "appropriate lease terms" which it reflects should also be stated.

The commentary from VPS4 Item 5 of the RICS Red Book is reproduced below:

"5.1 Market rent will vary significantly according to the terms of the assumed lease contract. The appropriate lease terms will normally reflect current practice in the market in which the property is situated, although for certain purposes unusual terms may need to be stipulated. Matters such as the duration of the lease, the frequency of rent reviews and the responsibilities of the parties for maintenance and outgoings will all impact the market rent. In certain countries or states, statutory factors may either restrict the terms that may be agreed, or influence the impact of terms in the contract. These need to be taken into account were appropriate.

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5.2. Market rent will normally be used to indicate the amount for which a vacant property may be let, or for which a let property be may re-let when the existing lease terminates. Market rent is not a suitable basis for settling the amount of rent payable under a rent review provision in a lease, where the definitions and assumptions specified in the lease have to be used.

5.3 Valuers must therefore take care to set out clearly the principal lease terms that are assumed when providing an opinion of market rent. If it is the market norm for lettings to include a payment or concession by one party to the other as an incentive to enter into a lease, and this is reflected in the general level of rents agreed, the market rent should also be expressed on this basis. The nature of the incentive assumed must be stated by the valuer, along with the assumed lease terms."

Existing Use Value Existing Use Value as defined in RICS UK national supplement ("UKNS") 1. Under UK for valuation of local VPGA 6, the term "Existing Use Value" is defined as follows: authority assets for accounting "The estimated amount for which a property should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction after proper marketing where the parties had acted knowledgeably, prudently and without compulsion, assuming that the buyer is granted vacant possession of all parts of the asset required by the business, and disregarding potential alternative uses and any other characteristics of the asset that would cause its market value to differ from that needed to replace the remaining service potential at least cost".

Projected Market Value Projected Market Value (PMV) as defined in RICS UK national supplement ("UKNS") of residential property UKVPGA 11. Under UK VPGA 11.2the term "Projected Market Value" means: "The estimated amount for which an asset is expected to exchange at a date, after the valuation date and specified by the valuer, between a willing buyer and a willing seller, in an arm's length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion."

The commentary from the RICS Red Book is reproduced below:

A projected market value (PMV) is requested by the lender. This is for the purpose of providing a residential mortgage lender with a simple numeric indication of the valuer’s opinion of short-term market trends, and is to be used only for this purpose. A valuer may comply with such a request, using the established definition set out above:

When adopting PMV it is essential that the following is clearly understood:

a) the valuation date is the date on which the estimate is given

b) the valuation should be carried out on the basis of market value but with a clearly stated and agreed special assumption that the asset will exchange at a future date after the valuation date specified by the valuer – see VPS 4 section 11.

c) this date should assume that marketing begins on the date that the valuation is prepared and reflect the period that the valuer considers will be necessary for adequate marketing and the completion of negotiations and

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d) the definition assumes simultaneous exchange and completion of the contract for sale without any variation in price that might otherwise occur.

A PMV is a projection, not a forecast. It recognises that most reports for this purpose are based on a simple pro forma, and that the degree of market analysis and commentary required in commercial lending situations is inappropriate.

The purpose of a PMV is simply to illustrate the valuer’s opinion of whether the market is likely to fall, rise or remain static in the period that it is anticipated will be necessary to complete the sale. Values can change rapidly due to unpredictable events, thus a valuation based on this special assumption is not a substitute for a current market value, nor is it necessarily the case that the two figures will be the same.

2. Special Assumptions:

Special Assumptions The Glossary of the RICS Red Book states that an Assumption "that either assumes facts that differ from the actual facts existing at the valuation date, or that would not be made by a typical market participant in a transaction on the valuation date" is a Special Assumption.

3. Trade Related Property:

Valuation Practice VPGA4 defines certain terms in accordance with the valuation of trade related property. Guidance Application 4 The definitions are referred to below:

Adjusted Net Profit This is the valuer's assessment of the actual net profit of a currently trading operational entity. It is the net profit that is shown from the accounts once adjustments for abnormal and non-recurring expenditure, finance costs and depreciation relating to the property itself, as well as rent where appropriate, have been made. It relates to the existing operational entity and gives the valuer guidance when assessing the fair maintainable operating profit (FMOP).

Earnings before This term relates to the actual operating entity and may be different from the valuer's interest, taxes, estimated FMOP. depreciation and amortisation (EBITDA)

Fair maintainable This is the level of profit, stated prior to depreciation and finance costs relating to the operating profit (FMOP) asset itself (and rent if leasehold), that the reasonably efficient operator (REO) would expect to derive from the fair maintainable turnover (FMT) based on an assessment of the market's perception of the potential earnings of the property. It should reflect all costs and outgoings of the REO, as well as an appropriate annual allowance for periodic expenditure, such as decoration, refurbishment and renewal of the trade inventory.

Fair maintainable This is the level of trade than a REO would expect to achieve on the assumption that the turnover (FMT) property is properly equipped, repaired, maintained and decorated.

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Market Rent This is the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. Whenever market rent is provided the 'appropriate lease terms' that it reflects should also be stated.

Market Value This is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. An operational entity usually includes: Operational entity • the legal interest in the land and buildings • the trade inventory, usually comprising all trade fixtures, fittings, furnishings and equipment, and • the market's perception of the trading potential, together with an assumed ability to obtain/renew existing licences, consents, certificates and permits Consumables and stock in trade are normally excluded.

Personal goodwill (of This is the value of profit generated over and above market expectations that would be the current operator) extinguished upon sale of the trade related property, together with financial factors related specifically to the current operator of the business, such as taxation, depreciation policy, borrowing costs and the capital invested in the business.

Reasonably efficient This is a concept where the valuer assumes that the market participants are competent operator (REO) operators, acting in an efficient manner, of a business conducted on the premises. It involves estimating the trading potential rather than adopting the actual level of trade under the existing ownership, and it excludes personal goodwill.

Tenant's capital This may include, for example, all consumables, purchase of the inventory, stock and working capital.

Trade related property This is any type of real property designed for a specific type of business where the property value reflects the trading potential for that business.

Trading potential This is the future profit, in the context of a valuation of the property, which an REO would expect to be able to realise from occupation of the property. This could be above or below the recent trading history of the property. It reflects a range of factors (such as the location, design and character, level of adaptation and trading history of the property within the market conditions prevailing) that are inherent to the property asset.

Version 2.02 (Jan 2019) Page 21 Cushman & Wakefield Terms of Business (UK)

referenced and/or attached to the Engagement Letter shall 1. Client Engagement form part of it; 1.1 The Client appoints C&W to provide services on these Terms "Fees" means the amounts specified as payable in the of Business and the terms set out in the Engagement Letter. Engagement Letter, or otherwise calculated in accordance Each Engagement Letter forms a discrete contract with the Engagement Letter; incorporating the latest version of these Terms of Business that have been provided to the Client (together an/the "Intellectual Property Rights" means patents, trade marks, "Engagement"). design rights, applications for any of the foregoing, copyright, database rights, trade or business names, domain names, 1.2 The entire scope of the services to be provided as part of an website addresses, whether registrable or otherwise, Engagement ("Services") is set out in the Engagement (including applications for and the right to apply for Letter. Nothing shall bind C&W to perform any role or function registration of any such rights), know how, methodologies, other than as is documented in the Engagement Letter. and any similar rights in any country whether currently 1.3 The Client shall provide all necessary co-operation to enable existing or created in the future, in each case for their full each member of the C&W Group to discharge its obligations term, together with any renewals or extensions; in respect of all Applicable Laws, particularly those pertaining "Relief Event" means: (i) any delay or failure by the Client or to 'know your client', anti-money laundering and the a person acting on its behalf to perform any obligation of the prevention of other financial crimes, and data protection. Client under an Engagement; (ii) the failure of any Each of the Client and C&W agrees that it shall comply with assumption set out in the Engagement Letter; and (iii) any all Applicable Laws in performing its obligations in relation to other event specified in the Engagement Letter; the Engagement. "RICS" means the Royal Institution of Chartered Surveyors; 1.4 C&W may sometimes require input from third parties to perform all or part of the Services. Where C&W intends to "Services" means the services to be provided to the Client subcontract to a third party, C&W will seek the Client's by C&W as part of the Engagement, as specified in the consent before so subcontracting. The Client consents to the Engagement Letter; use of other members of the C&W Group and C&W Affiliates "Service Materials" means all those works, and all to provide all or part of the Services, and no further Intellectual Property Rights in works, that are created, notification need be given in relation to such use. Except provided, or which arise exclusively in the course of the where C&W contracts third parties directly (otherwise than as provision of the Services to the Client; the Client's agent), in which case it shall be liable in particular "Terms of Business" means the terms set out in this for any breach of C&W's data protection obligations under document; and Clause 7 that is caused by an act, error or omission of its sub- "Value Added Tax" means value added tax as provided for processor, C&W shall not be responsible for supervising or in the Value Added Taxes Act 1994 and subordinated monitoring the performance of third parties. legislation made under it, or any similar sales or turnover tax 2. Definitions and Interpretation in any jurisdiction. 2.1 In an Engagement the following terms shall have the 2.2 Unless the context otherwise requires or the contrary following meanings: intention appears, any reference to an enactment includes "Applicable Law" means all applicable laws, regulations, that enactment as amended or replaced, together with any regulatory requirements and codes of practice of any relevant subordinate legislation made under that or any other jurisdiction, as amended and in force from time to time; applicable enactment; and any reference to an English legal term includes, in respect of any jurisdiction other than "C&W" means the member of the C&W Group that is a party England, a reference to what most nearly approximates in to the Engagement Letter; that jurisdiction to the English legal term. "C&W Affiliate" means a third party licenced by a member of 2.3 Other than for notices to be given, references to "written" or the C&W Group to trade using the Cushman & Wakefield "in writing" include e-mail. The words "including" and "in brand; particular" and any similar words or expressions are by way "C&W Group" means DTZ Worldwide Limited (company of illustration and emphasis only and do not operate to limit number 9073572) and any of its subsidiaries (within the the generality or extent of any other words or expressions. meaning of section 1159 of the Companies Act 2006); The words "subsidiary" and "holding company" have the "C&W Materials" means all those materials owned by C&W meanings given in Section 1159 of the Companies Act 2006 and its licensors, and all Intellectual Property Rights owned (and Clause 2.2 shall not apply in relation to this sentence). by C&W and its licensors, whether before or after the date of The headings in these Terms of Business are for the Engagement, but excluding the Service Materials. convenience only and do not affect their interpretation. "Client" means the addressee(s) of the Engagement Letter 3. Fees, Expenses, and Payments and excludes any third party who pays or may be responsible Fees for paying any part of the Fees; 3.1 In consideration of the provision of the Services, the Client "Client Materials" means all those materials owned by the shall pay the Fees. The Fees, or the method of calculating Client and its licensors, and all Intellectual Property Rights them, shall be as set out in the Engagement Letter. owned by the Client and its licensors, but excluding the Service Materials. 3.2 Fees stated shall be exclusive of Value Added Tax which, where applicable, shall be charged to the Client at the "Engagement Letter" means the letter issued by C&W to the prevailing rate. The Client agrees to pay to C&W any Value Client and identified as the engagement letter, which shall set Added Tax in relation to the provision of the Services out particular Services to be provided by C&W together with provided that C&W has supplied a valid tax invoice as other terms and conditions that shall form part of the required by Applicable Law. Engagement. Where the context permits, documents cross

Version 2.01 (May 2018) 1 Cushman & Wakefield Terms of Business (UK)

Expenses 3.9 C&W may require payments to be made on account before 3.3 The Client shall reimburse all out of pocket expenses and commencing or completing all or part of the Services. In disbursements properly incurred by or on behalf of C&W in specifying on-account payments C&W may have regard to the performance of the Services ("Expenses") up to five the nature and context of Services to be performed, and the hundred pounds (£500) per quarter. Before incurring any likely timing and amounts of Expenses to be incurred. Expenses that would result in that limit being exceeded, C&W 3.10 C&W may, by giving written notice to the Client, suspend shall seek the Client's consent, in which case those further Service provision if any sum is not paid to C&W within the Expenses shall also be payable. Expenses may be invoiced period specified at Clause 3.5, until all outstanding sums at the same time as the Fees, or quarterly in arrears, at have been paid in full in cleared funds. C&W's discretion. 3.11 After completing an Engagement, C&W shall be entitled to 3.4 The Client shall reimburse all marketing costs which shall, keep any Client materials held by it while sums payable to it where relevant, be handled as follows: by the Client remain outstanding. (a) C&W will inform the Client of any marketing costs 3.12 C&W may search the Client's record at credit reference proposed to be incurred on its behalf. C&W will agencies for the purposes of verifying the Client's identity and provide cost estimates for any initial marketing to assess whether the Client is able to fulfil its payment campaign in the Engagement Letter, and further obligations in relation to the Engagement. proposals if additional marketing is required. Client Monies (b) Cost estimates will be best estimates or based on 3.13 C&W handles client monies in accordance with RICS rules actual quotations from suppliers. Final costs may and regulations. differ from estimates provided. Advertising and printing rates provided will be from the publishers' rate 4. Client Obligations cards current at the date of the marketing proposals. 4.1 The Client shall, as soon as reasonably practicable following The Client shall pay any additional sum charged by a request, provide all information, assistance, approvals, and the suppliers for the correction of mistakes in artwork consents reasonably requested by C&W in relation to the or other advertising material not caused by the performance of C&W's obligations in connection with the suppliers. The individual printer or supplier's terms will Engagement. The Client shall ensure that all information apply to all Client work placed with it. All costs are provided by or on behalf of the Client shall be complete and gross and C&W will retain the usual trade discounts accurate in all material respects, and notify C&W as soon as offered by newspapers, periodicals or other media reasonably possible on becoming aware that any information suppliers. is incomplete, inaccurate or misleading. (c) The Client shall instruct all suppliers directly. In the 4.2 The Client acknowledges that C&W: (i) is entitled to rely upon event that C&W agrees to instruct any such supplier, the completeness, accuracy, sufficiency and consistency of C&W may require advance payment of anticipated any information supplied to it by or on behalf of the Client; costs to be incurred on the Client's behalf. Where the and (ii) shall have no liability for any inaccuracies contained sum paid on account exceeds the actual costs in any information provided by or on behalf of the Client incurred, such excess shall be repaid to the Client unless otherwise stated. without interest once all invoices and accounts have 4.3 All estimations made by C&W are based on depth and quality been finalised and settled. Where the marketing costs of information provided by the Client and the Client shall not exceed the sum paid, the Client shall pay the amount be entitled to assume that C&W has performed an inspection. of any difference to C&W immediately on request. The Client must take this into account in relation to all figures, (d) The Client shall reimburse all marketing costs incurred calculations, and advice. on its behalf as and when the costs are incurred, 4.4 The Client shall check and confirm the accuracy and irrespective of completion of the transaction to which completeness of any property particulars prepared by C&W, the Services relate. and shall confirm that they are not misleading. The Client Payment undertakes to notify C&W immediately if any particulars are 3.5 C&W's invoices are payable from the date of each invoice, or become inaccurate or incomplete. and are due for payment within fourteen (14) days. C&W may 5. Measurements charge the Client interest on any amounts due but which have 5.1 Where C&W is required to measure a property, it will do so in not been paid within this period (whether before or after accordance with applicable measuring practices relevant to judgment) at three percent (3%) per annum above the Bank the property. If the Client requires C&W to adopt a particular of England base rate from time to time. Interest shall run from measuring practice, it shall specify the same in writing before the date of the invoice until all outstanding sums have been work starts. The Client acknowledges that the floor areas paid in full in cleared funds. contained in any report are approximate and if measured by 3.6 The Client shall pay all sums by electronic bank transfer to C&W will be within a two percent (2%) tolerance either way. the C&W bank account detailed in an invoice. C&W is unable In cases where the configuration of the floor plate is unusually to accept payment by cash or cheque. irregular or obstructed, this tolerance may be exceeded. 3.7 The Client shall pay all sums payable to C&W in relation to 5.2 C&W is unable to measure areas to which it does not have the Engagement without set-off and free of any deduction. access, in which cases floor area may be estimated from 3.8 If the Client is required by Applicable Law to make any plans or by extrapolation. Where land or site areas are deduction from any payment then it shall increase such measured, all areas will be approximate and will be measured payment to ensure that C&W receives the same amount as it from plans supplied or Ordnance Survey plans, rather than would have received if no deduction were required. being checked on site.

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6. Confidentiality (iii) service providers appointed by a 6.1 The Client consents to C&W announcing that it is providing member of the C&W Group to support or has provided the Services to the Client and using the C&W's business administration and Client's name in publicity. However, C&W shall not publish infrastructure (as identified here and any details of any proposed or actual transaction (other than updated from time to time) those which are publicly available) without prior consent, who are committed, by means of a written contract such consent not to be unreasonably withheld or delayed. with C&W, to protect the Data to the standard required 6.2 The Client shall keep confidential and not disclose to any by this Clause 7. other person (whether before or after termination or expiry of the Engagement): (i) any information received by it in respect If the Client objects to any sub-processor under of the methodologies and/or technologies used by C&W in providing the Services; (ii) the details of the terms on which Clause 7.2(d) on reasonable grounds relating to the C&W provides the Services; and (iii) any other information in protection of personal data, then either C&W will not respect of C&W's business activities which is not publicly appoint the sub-processor or the Client may elect to available. suspend or terminate the Engagement upon written 6.3 C&W shall, during the period commencing on the date of the notice to be given not later than thirty (30) days after Engagement and ending two (2) years following the earlier of such objection has been notified to C&W in writing; the termination or completion of the Services, keep (e) only cause or permit Data to be transferred outside the confidential and not disclose to any other person (whether European Economic Area: before or after termination or expiry of the Engagement) any (i) to those persons identified under Clause 7.2(d) information in respect of the Client's business activities which or otherwise with the Client's prior consent (not comes into its possession as a consequence of C&W to be unreasonably withheld or delayed); and providing the Services and which is not publicly available. 6.4 A party shall not breach this Clause 6 by disclosing (ii) taking such measures as are necessary to information, to the extent reasonably necessary: ensure the transfer is in compliance with applicable data protection law (such as (a) where required to do so by Applicable Law or order of ascertaining that the recipient benefits from an the courts, or by any securities exchange or regulatory EU Commission finding of adequacy of or governmental body to which such party is subject protection for personal data transferred from the or submits, wherever situated (whether or not the European Union or has otherwise agreed requirement for information has the force of Applicable European Union standard contractual clauses Law); or on data processing in countries outside the (b) to the professional advisers, insurers, auditors and European Economic Area); bankers of such party. (f) notify the Client without undue delay and provide 6.5 C&W shall not breach this Clause 6 by disclosing information reasonable information and cooperation on becoming to members of the C&W Group or C&W Affiliates in aware of a breach of data security which would be connection with the Engagement. notifiable under applicable data protection law; 7. Data Protection & Data Handling (g) notify the Client without undue delay (and in any event provide reasonable and timely assistance to the Client Data Protection (at the Client's expense)) to enable the Client to 7.1 The Client appoints C&W as a data processor in relation to respond to: (i) any request from a data subject to personal data which is the subject of each Engagement and exercise any of its rights under applicable data in respect of which the Client is a data controller (the "Data"). protection law; and (ii) any other correspondence, 7.2 In processing Data pursuant to an Engagement, C&W shall: enquiry or complaint received from a data subject, (a) unless otherwise requested by the Client in writing, regulator, or other third party in connection with the process the Data only to the extent, and in such processing of the Data. manner, as is necessary for the provision of the (h) C&W shall make available to the Client such Services, except where otherwise required by any EU information as is necessary to demonstrate its (or any EU Member State) law; compliance with this Clause 7 and, if required, shall (b) ensure that appropriate technical and organisational permit the Client (or its appointed third party auditors measures shall be taken to protect the Data from (i) who are subject to strict obligations of confidentiality accidental or unlawful destruction, and (ii) loss, and whose identity has been agreed with C&W) to alteration, unauthorised disclosure of, or access to, conduct an audit to confirm its compliance, provided Data; that the Client gives reasonable notice of its intention to audit, conducts its audit during normal business (c) ensure that any person whom it authorises to process hours, and takes all reasonable measures to prevent the Data shall be subject to an actionable duty of unnecessary disruption to C&W's operations. The confidence; Client may not exercise this right more than once in (d) only cause or permit Data processing to be sub- any twelve (12) month period except as required by contracted to: instruction of a competent data protection authority. (i) sub-contractors in accordance with Clause 1.4; (ii) members of the C&W Group and C&W Affiliates 7.3 Where the Client is a public authority for the purposes of the and each of their professional advisers, insurers, Freedom of Information Act 2000 ("FOIA") as amended from auditors and bankers; and/or time to time, the Client shall notify C&W of that fact at the start

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of the Engagement. The Client shall notify C&W within five 8.2 Subject to Clause 8.3, the provision of the Services is for the (5) business days of receiving a request pursuant to the FOIA Client's benefit only and no part of any Document produced requesting information which relates to the business by C&W for the Client shall be reproduced, transmitted, arrangements between C&W and the Client and/or any copied or disclosed to any third party without the prior written information C&W has provided to the Client at any time consent of C&W. C&W shall not be liable to any third party (whether or not in connection with the Engagement). In placing reliance upon any such Document. recognition of the fact that C&W may be providing the Client 8.3 The Client may permit other persons to use C&W's with confidential or commercially sensitive information, the Documents only with C&W's written consent and where such Client agrees to consult with C&W and take into account other persons have entered into a written agreement with C&W's views on all such requests, giving C&W reasonable C&W in relation to such use ("Reliance Letter"). C&W notice to respond, before making any decision on whether expressly disclaims any tortious duty of care (e.g., in any particular information should be disclosed. negligence) to any third party in relation to any Document 7.4 The Client shall be responsible for C&W's reasonable and provided in connection with an Engagement, and the Client properly incurred charges in producing any documentation shall not permit any person to rely upon such Document which the Client requires in order to comply with a request for unless that person has first entered into a Reliance Letter. disclosure under the FOIA. For the avoidance of doubt, the Any limitation on C&W's liability set out in the Engagement Client, not C&W, shall liaise with such third party. shall apply in aggregate to the Client and any party entering Data Handling into a Reliance Letter. 7.5 The Client shall use all reasonable procedures to seek to 8.4 Where the Client provides a copy of a Document to another ensure that any materials provided to C&W in any electronic person, or permits a person to rely upon a Document, the format are virus free, and shall be responsible for using Client indemnifies and holds harmless C&W from and against appropriate firewalls and anti-virus software. The Client shall any liability arising out of that person's use or reliance on that not disclose any special categories of data to C&W except by Document except where a Reliance Letter has been entered express written agreement. into by such person. 7.6 Subject to the remainder of this Clause 7, the Client 8.5 Where the Client acts on behalf of a syndicate or in relation authorises C&W to communicate with any person C&W to a securitisation, the Client agrees that it is not entitled to reasonably requires in providing the Services. C&W may pursue any greater claim on behalf of any other person than release to such person any information reasonably necessary it would have been entitled to pursue on its own behalf had to perform the Services and which it has obtained during the there been no syndication or securitisation. Engagement. C&W shall not be liable for any use made of 9. Service Quality that information. 9.1 In carrying out the Services, C&W shall exercise the 7.7 Unless otherwise instructed in writing by the Client to destroy reasonable care and skill to be generally expected of a or return the Data (or any copies thereof) on termination of competent provider of services similar in scope, nature and the Engagement, C&W keeps its Engagement files, including complexity to the Services. the Data, for six (6) years after issue of C&W's final invoice. 9.2 In the event that the Client is dissatisfied with the provision of The Client consents to the deletion and destruction of all the Services by C&W it must refer such complaint in the first Engagement files upon the expiry of that period unless the instance to the C&W representative named in the Client has requested in writing the return of Client papers or Engagement Letter in accordance with the provisions of documents during that period. C&W shall not be liable for any C&W's complaints procedure current at the time of the loss arising out of the destruction of documents occurring complaint. C&W shall supply to the Client a copy of the more than six (6) years after the date of final invoice. C&W complaints procedure upon the request of the Client. shall be entitled to retain Data to the extent required by any EU (or any EU Member State) law. 9.3 No implied terms shall apply under and/or in connection with the Engagement, and no other express warranties are given 7.8 If requested by Client, C&W shall provide reasonable - all such terms are expressly excluded to the extent cooperation to the Client (at Client's expense) in connection permitted by Applicable Law. with any data protection impact assessment and any consultation with the Client's data protection authority that 9.4 C&W is certified as ISO9001:2008, ISO14001, and may be required under applicable data protection law. OHSAS18001 compliant. In this Clause 7, “EU Member State” shall be deemed to 10. Conflicts of Interest and Anti-Corruption include the United Kingdom. 10.1 C&W maintains conflict management procedures designed to 7.9 A copy of C&W’s Privacy Notice can be found here. govern actual or potential conflicts of interest. If the Client becomes aware of a possible conflict, it shall inform C&W 8. Documents and Reliance immediately. If a conflict arises, then C&W will decide, taking 8.1 C&W will take reasonable care in the preparation of any account of legal constraints, relevant regulatory rules and the research, data, report or advice ("Documents") provided as clients' interests and wishes, whether it can continue to act part of the Services. Any opinions expressed in them for both parties (e.g., through the use of ethical walls), for one constitute C&W's judgement, and data upon which this only, or for neither. Where C&W does not believe that any judgement is based are believed to be correct as at the date potential or actual conflict can be managed appropriately and of the Documents (but may be subject to change during the in accordance with C&W policy (available upon request), it life of the project and beyond and as new information will inform all clients affected and consult with them as soon becomes available). C&W reserves the right to change the as reasonably practicable as to the steps to take. underlying data, and its opinions, without prior notice in the 10.2 The Client acknowledges that C&W may earn commissions light of revised market opinion and evidence, but shall not be and referral fees, and may charge handling fees connected required to update any Document already provided. to the services that it performs, and agrees that C&W shall be

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entitled to retain them without specific disclosure. C&W will be limited in all circumstances to an amount equal to the not accept any commissions or referral fees in circumstances lesser of: where it is of the reasonable belief that they would (a) five (5) times the Fees paid or payable by or on behalf compromise the independence of any advice that it provides. of the Client to C&W in relation to the Engagement; or 10.3 It is not C&W policy to provide any services for financial gain (b) two million pounds sterling (£2,000,000). either directly or through connected persons, to a prospective 11.4 Subject always to Clauses 11.2 and 11.3, where an purchaser or tenant in respect of a property for which C&W is Engagement involves C&W being appointed as part of a instructed as agents by the seller/owner, until unconditional project team, liability for loss and/or damage arising under or contracts have been exchanged. C&W will notify the Client if in connection with the Engagement shall be limited to that it is instructed by a prospective purchaser or tenant to provide proportion of the Client's loss and/or damage which it would such services where the Client is the seller/owner. be just and equitable to require C&W to pay having regard to 10.4 C&W and the Client each confirms that it will not, and will the extent of C&W's responsibility for the same and on the procure that its employees will not, knowingly engage in any basis that: activity which would constitute a breach of applicable Anti- (a) all other Client consultants and contractors shall be Bribery & Corruption Laws. C&W confirms that it has in place deemed to have provided contractual undertakings, a compliance and training programme designed to ensure on terms no less onerous than those set out in the compliance with the terms of applicable Anti-Bribery & Engagement, to the Client in respect of the Corruption Laws. performance of their services in connection with the 10.5 For the purposes of this Clause 10, "Anti-Bribery & project; Corruption Laws" means the Bribery Act 2010, the US (b) there are no exclusions of or limitation of liability nor Foreign Corrupt Practices Act 1977 and any other applicable joint insurance or co-insurance provisions between legislation prohibiting bribery and corruption involving public the Client and any other party referred to above; and or private persons. (c) they shall be deemed to have paid to the Client such 11. Liability and Insurance proportion which would be just and equitable for them 11.1 Notwithstanding any contrary provision, neither party limits or to pay having regard to the extent of their excludes its liability in respect of: responsibility. (a) any death or personal injury caused by its negligence; 11.5 No actions or proceedings arising under or in respect of the (b) any fraud or fraudulent misrepresentation; or Engagement or documents signed in connection with it shall be commenced against C&W after six (6) years after the date (c) any statutory or other liability which cannot be limited of the final invoice in relation to the Engagement. or excluded under Applicable Law. 11.6 C&W shall effect and maintain, during the Engagement and 11.2 C&W shall not be liable for any: for a period of six (6) years after issue of C&W's final invoice, (a) indirect or consequential loss (even where the parties professional indemnity insurance with a limit of indemnity of are aware of the possibility of any such loss at the date £10 million provided always that such insurance remains of the Engagement); available at commercially reasonable rates, together with (b) loss of profits or revenue of the Client generally; such other insurance as is required to be maintained in (c) loss of goodwill, reputation or opportunity; accordance with Applicable Law. (d) loss of or corruption of data, or loss resulting from the 11.7 Further to Clause 1.2, nothing appoints or obliges C&W to act Client's receipt of information, data, or as an External Valuer as defined under the Alternative communications supplied or sent by C&W Investment Fund Managers Directive ("AIFMD") legislation, electronically; or its equivalent under local law. C&W expressly disclaims any responsibility or obligations under AIFMD and/or its (e) pure economic loss suffered by the Client or persons equivalent unless expressly agreed in writing by C&W. Where other than the Client arising out of a tortious duty of C&W provides valuation advice to an entity that falls within care, whether in negligence or otherwise; the scope of AIFMD ("Fund"), its role will be limited solely to (f) acts or omissions of third parties (other than where providing valuations of property assets held by the Fund. contracted directly by C&W otherwise than as the Responsibility for the valuation function for the Fund and the Client's agent); or setting of the net asset value of the Fund will remain with (g) delay caused by its duty to comply with legal and others. C&W's Document will be addressed to the Fund for regulatory requirements (such as anti-money internal purposes and third parties may not rely on it. C&W's laundering checks), aggregate liability howsoever arising out of such instruction is in each case arising out of or in connection with an limited in accordance with these Terms of Business. Engagement or any breach or non-performance of it no 11.8 C&W shall not be responsible for the management of any matter how fundamental (including by reason of negligence property the subject of an Engagement, and shall have no or breach of statutory duty). The parties agree that each of other responsibility (such as for maintenance or repair) in sub-clauses (a) to (g) (inclusive) above are separate terms relation to nor shall C&W be liable for any damage occurring and are intended to be severable. to any such property. 11.3 C&W's total aggregate liability arising under or in connection with an Engagement or any breach or non-performance no matter how fundamental (including by reason of negligence or breach of statutory duty) in contract, tort or otherwise shall

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12. Termination of providing the Services to the Client and performing its other 12.1 Either party may terminate the Engagement upon not less obligations in relation to an Engagement. than thirty (30) days written notice, for convenience without 13.3 C&W and its licensors shall retain all right, title and interest in cause and to the C&W Materials. The Client and its licensors shall 12.2 Either party may terminate the Engagement at any time on retain all right, title and interest in and to the Client Materials. written notice, either immediately or following such notice 14. Non-Solicitation period as it shall see fit if the other party: 14.1 Neither party shall (except with the other party's prior written (a) is in material breach of the Engagement, and such consent) directly or indirectly solicit or entice away (or attempt breach is irremediable; to solicit or entice away) from the employment of the other, (b) commits any remediable material breach of the any employee or contractor working on an Engagement, and Engagement and fails to remedy such breach within a shall not offer employment to any employee working on an period of thirty (30) days from the service on it of a Engagement, for a period of six (6) months following the end notice specifying the material breach and requiring it of any involvement by that person with an Engagement. This to be remedied (or, having so remedied, subsequently shall not prohibit a party from offering employment to an commits a similar breach within the next thirty (30) employee or contractor of the other who has responded to an days); or advertising campaign open to all comers and not specifically (c) ceases or threatens to cease to carry on business, is targeted at any of its employees or contractors. found unable to pay its debts within the meaning of the 14.2 In the event that a party breaches Clause 14.1, the other party Insolvency Act 1986 section 123, has an shall be entitled to be paid compensation of six (6) months' administrator, receiver, administrative receiver or salary or fees of the employee or contractor concerned. The manager appointed over the whole or any part of its parties agree that this is a genuine pre-estimate of loss taking assets, enters any composition with creditors into account the cost of recruitment and training of staff, and generally, or has an order made or resolution passed is agreed on a commercial basis between the parties. for it to be wound up (otherwise than in furtherance of 15. Notices any scheme for solvent amalgamation or solvent reconstruction) or undergoes any similar or equivalent 15.1 Any notice or other information to be given by either party to process in any jurisdiction. the other under the terms of an Engagement shall be given by: 12.3 C&W may terminate the Engagement immediately upon written notice if the Client has failed to pay an invoice within (a) delivering it by hand; or thirty (30) days of the date of such invoice. (b) sending it by pre-paid registered post, 12.4 On termination of the Engagement, the Client shall pay to to the other party at the address given in Clause 15.3. C&W: 15.2 Any notice or information sent by post in the manner provided (a) Fees for the Services it has performed (on a pro rata by Clause 15.1(b) which is not returned to the sender as basis having regard to the Fees payable for the undelivered shall be deemed to have been given on the completion of the Engagement, the expected duration second day after it was so posted; and proof that the notice of the entire Engagement and the Services performed or information was properly addressed, pre-paid, registered prior to termination, unless otherwise specified); and posted, and that it has not been returned to the sender, (b) any Expenses properly incurred in accordance with shall be sufficient evidence that the notice or information has Clause 3.3, and marketing costs incurred in been duly given. accordance with Clause 3.4, on or before the effective 15.3 The address of either party for service for the purposes of this date of the termination; and Clause 15 (but excluding legal proceedings) shall be that of (c) where the right is exercised by the Client, any its registered or principal office, or such other address as it additional sums set out in the Engagement Letter as may last have notified to the other party in writing from time being payable upon termination. to time. Notices to C&W must be addressed to EMEA General Counsel to be valid. 12.5 If a party, acting in good faith, exercises a right of termination, its subsequent failure or refusal to perform all or any of its 16. No Waiver, Partnership or Joint Venture current or future obligations in connection with an 16.1 No waiver of any right in connection with an Engagement Engagement shall not be a breach of an Engagement (including rights to sue for breach) shall operate or be (whether repudiatory or otherwise). construed as a waiver of any other or further right whether of 13. Intellectual Property a like or different character, or be effective unless in writing duly executed by an authorised representative of the affected 13.1 All Service Materials shall vest in the Client on creation. C&W party. The failure to insist upon the performance of the terms, hereby assigns the Service Materials to the Client together conditions and provisions of the Engagement, or time or other with the right to sue for and recover damages or other relief indulgence granted by one party to another, shall not act as in respect of the infringement of any Service Materials by a a waiver of any breach, as acceptance of any variation, or as third party. In relation to future copyright, this shall take effect the relinquishment of any right in connection with the as a present assignment of future rights. Engagement, which shall remain in full force and effect. 13.2 The Client grants to C&W a worldwide, fully paid-up, non- 16.2 Each right or remedy of a party to an Engagement is without exclusive, transferable (to a member of the C&W Group) prejudice to any other right or remedy of that party. licence to use, copy and modify the Client Materials and Service Materials to the extent necessary and for the purpose 16.3 The Engagement shall not be interpreted or construed to create an association, joint venture or partnership between

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the parties, or to impose any partnership obligation or liability governed by both the Arbitration Act 1996 and the Rules of upon either party. Controlled-Cost Arbitration of the Chartered Institute of Arbitrators (2014 Edition), or any amendments thereof, which 17. Force Majeure and Relief Rules are deemed to be incorporated by reference into this 17.1 If either party is prevented or hindered from performing any clause. The seat of the arbitration shall be England. of its obligations in connection with an Engagement by 21.2 Clause 21.1 shall not prohibit a party from applying to the reason of circumstances outside its reasonable control, that court, and shall not require such party to serve notice prior to party ("Claiming Party") shall as soon as reasonably applying, for interim injunctive relief. possible serve notice in writing on the other party specifying the nature and extent of the circumstances preventing or 21.3 Each Engagement and any dispute or claim arising out of or hindering it from performing its obligations. in connection with it or its subject matter or formation (including non-contractual disputes or claims) are governed 17.2 Subject to the Claiming Party serving notice in accordance by and shall be construed in accordance with English law. with Clause 17.1, the Claiming Party shall have no liability in The parties submit to the non-exclusive jurisdiction of the respect of any delay in performance or any non-performance English courts for all purposes relating to and in connection of any such obligation (save for any payment obligation which with each Engagement and any such dispute or claim. shall continue in full force and effect), and the time for performance shall be extended accordingly to the extent that 22. Third Party Rights the delay or non-performance is due to such circumstances. 22.1 To the extent that any loss, damage or expense is suffered or 17.3 The Client agrees that C&W shall be excused from its failure incurred by a member of the C&W Group, the parties agree to perform or delay in performing any affected obligation in that such loss, damage or expense shall be deemed to be the connection with the Engagement to the extent that such loss, damage or expense of C&W, and such loss shall be fully failure results from a Relief Event. C&W shall be entitled to a recoverable from the Client as if the loss, damage or expense reasonable extension of time in relation to any affected was suffered or incurred by C&W directly. obligation, and to recover reasonable additional costs 22.2 Provided that Clause 22.1 remains valid and in full force and incurred by it, as a result of a Relief Event. effect, no term of the Engagement is intended for the benefit 18. Illegality/Severance of a third party and the parties do not intend that any term of the Engagement shall be enforceable by a third party either If any provision is declared by any competent court or body under the Contracts (Rights of Third Parties) Act 1999 or to be illegal, invalid or unenforceable under the law of any otherwise. If Clause 22.1 for any reason is or becomes illegal, jurisdiction, or if any enactment is passed that renders any invalid or unenforceable, then the rights under each provision illegal, invalid or unenforceable under the law of any Engagement shall be enforceable by any member of the jurisdiction, this shall not affect or impair the legality, validity C&W Group. or enforceability of the remaining provisions relating to an Engagement, nor the legality, validity or enforceability of such 23. Entire Agreement provision under the law of any other jurisdiction. 23.1 The Engagement constitutes the entire agreement and 19. Assignment and Novation understanding between the parties relating to the transactions contemplated by or in connection with it and the 19.1 Neither party may at any time, without the prior written other matters referred to in the Engagement and supersedes consent of the other party (such consent not to be and extinguishes any other agreement or understanding unreasonably withheld or delayed), assign all or any part of (written or oral) between the parties or any of them relating to its rights and/or obligations relating to an Engagement. the same. Notwithstanding the previous sentence, C&W may assign/novate (as applicable) all or any part of its rights 23.2 Each party acknowledges and agrees that it does not rely on, and/or obligations in connection with an Engagement to any and shall have no remedy in respect of, any promise, other member of the C&W Group, without the Client's prior assurance, statement, warranty, undertaking or written consent. representation made (whether innocently or negligently) by any other party or any other person except as expressly set 19.2 Each Engagement shall inure to the benefit of, and be binding out in the Engagement. The Client's sole remedy in relation upon, the parties' successors and permitted assignees. to any act or omission of C&W relating to or in connection 20. Further Assurance with the Engagement shall be for breach of contract. Each party shall at all times from the date of the Engagement 24. Miscellaneous Terms Letter, on being required to do so, at its own expense do or 24.1 Each party warrants and represents that it has power to enter use reasonable endeavours to procure the doing by any into the Engagement and that it has obtained all necessary necessary third parties of all such acts as may be required to consents and/or approvals to do so. give full effect to the terms of the Engagement including the execution and delivery of all deeds and documents. 24.2 The Client agrees that C&W shall be entitled to rely upon instructions given by any employee or other representative of 21. Governing Law and Dispute Resolution the Client, and any person holding themselves out as having 21.1 In the event of a dispute arising out of or connection with an the authority to give such instructions. Engagement, a party contemplating instigating legal 24.3 Where the Client comprises two or more persons their liability proceedings shall notify the other party of that fact not less in relation to the Engagement shall be joint and several. than fourteen (14) days before issuing such proceedings. 24.4 Clauses 1.1, 2, 3, 4.2, 4.3, 6, 7.6, 8, 9.3, 10.4, 11, 12.4, 12.5, Either party may, upon receipt of notice or otherwise, apply 13 to 16 (inclusive), 18 and 20 to 24 (inclusive) of these to the President or the Vice President, for the time being, of Terms of Business shall survive termination of the the Chartered Institute of Arbitrators, for the appointment of a Engagement. single arbitrator, for final resolution. The arbitration shall be

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24.5 The Client agrees and acknowledges that the Engagement is between the Client and C&W, and that the Client shall have no right to make any claim against any member (partner), director, employee, agent, or contractor of C&W or any member of the C&W Group or any C&W Affiliate.

24.6 In accordance with the Provision of Services Regulations 2009, C&W is required to make available certain information

to Clients which can be found here. 24.7 In accordance with Section 54, Part 6 of the Modern Slavery

Act 2015, details of the measures C&W has taken to ensure that slavery and human trafficking is not taking place in its supply chains or in any part of its business can be found here.

Cushman & Wakefield Terms of Business (UK) (Version 2.01 – May 2018)

125 Old Broad Street, London EC2N 1AR cushmanwakefield.com Regulated by RICS

Version 2.01 (May 2018) 8 DocuSign Envelope ID: 7BA705B8-FD79-48D6-AC28-8DABE3481AC2

7 May 2019

Cushman & Wakefield 43-45 Portman Square London W1A 3BG

For the attention of: Carl Ridgley

Office: +44 207 152 5436 Email: [email protected]

Re: Project Atlas – A portfolio of 49 hotels located in the UK (as outlined in Appendix 1)

Dear Sirs

This letter serves as your authorization to perform a comprehensive appraisal/valuation in a complete narrative appraisal/valuation reporting format. The report should be in compliance with RICS Valuation – Global Standards 2017 (revised July 2017), incorporating the IVSC International Valuation Standards. The appraisal/valuation must provide the following basis of value:

• Market Rent • Market Value • Market Value subject to the Special Assumption of full vacant possession

The adoption and application of any Special Assumptions should be fully communicated to and approved by Morgan Stanley or their designees.

An estimate of insurance reinstatement cost is also required.

You have agreed to provide Professional Indemnity insurance on the basis of the lesser of 25% of the aggregate portfolio value or £75 million.

Please note that within 2 business days from the awarding of this assignment, the appraiser must submit a comprehensive information request to the property contact(s) listed below. Within 5 business days, the appraiser/valuer must report the status of the information request to the extent that it is unfulfilled. Once all of the critical source documentation has been compiled, it should be sent or uploaded to Morgan Stanley or their designees. Any anticipated report delivery delays should be communicated expeditiously.

Within 5 business days of the engagement, the appraiser/valuer is required to submit the following information:

• “Sales Comps” Comparable Improved Sales Abstracts and Summary • “Lease Comps” Comparable Lease Transaction Abstracts and Summary • General Market Analysis • Sub-Market Analysis • Subject Property’s Real Property Tax Analysis

Further, it is a primary requirement of this assignment that the appraiser/valuer survey market participants to establish current perspective on the subject property’s market position, lease rates, investment criteria, etc.

DocuSign Envelope ID: 7BA705B8-FD79-48D6-AC28-8DABE3481AC2

The appraiser/valuer is responsible for developing their own financial models, including all reporting in Excel and Argus Enterprise. Utilizing non-proprietary models prepared by third parties is prohibited. Argus files are required to be completed and delivered in most recent version Argus Enterprise.

Your authorization is subject to your confirmation that all appraisal/valuation related and other real estate services rendered by your firm with respect to the subject property during the past year has been fully disclosed. Further, that you will not appraise/value it for any other client other than the undersigned for one (1) year from your appraisal date without our permission (such permission will not be unreasonably withheld).

Leonard Sebastian ([email protected], tel: 0207 563 9005) and Helen McCarthy ([email protected], tel: 0207 563 9000) at London & Regional Properties, are your contacts for property information and site access.

Please contact the following individuals with any valuation, information, or processing issues:

Nick George at ([email protected]) or +44 20 7425-7658.

Your Letter of Transmittal/Cover Letter and intended user statement should contain the following reliance language:

This report was prepared for and may be relied upon by Morgan Stanley Bank, N.A., Morgan Stanley Mortgage Capital Holdings LLC, and their respective affiliates and successors and assigns (collectively, “Morgan Stanley”) with respect to any loan(s) placed upon the property (or on direct or indirect ownership interests in the owner of the property) described in the report. This report may also be relied upon by: (i) Morgan Stanley or its designee, in its capacity as Administrative Agent (or any analogous role) on behalf of lenders in the lending syndicate, and the successors and assigns of each of the foregoing; and (ii) Any entity that becomes a finance party in accordance with the related credit agreement or facility agreement.

The valuation shall be capable of being relied upon by 1) Morgan Stanley Bank N.A. or any of its affiliates, 2) any entity that becomes a Finance Party in accordance with the terms of the Senior Facility Agreement, 3) any entity that becomes a Finance Party in accordance with the terms of the Mezzanine Facility Agreement 4) the Senior Facility Agent on behalf of the Senior Lenders and 5) the Mezzanine Facility Agent on behalf of the Mezzanine Lenders

The valuation shall be in a form and the valuer shall permit that the valuation to be included in an Offering Memorandum or prospectus (including responsibility taken for the valuation and confirmation of no material change to value confirmation stated in any Offering Memorandum or prospectus)

The valuer will need to confirm their consent that:

(i) the Valuation or a reference to and summary of it (and the methodologies and concepts on which it is based) may be included in any information memorandum, offering circular, registration statement or similar document as may be required to comply with any applicable laws, regulations or official guidelines relating to the issuance of or investment in any securitisation of a loan related to the subject of the Valuation; and

(ii) The Valuation or references to it may be included in any document provided to any potential providers of finance and their directors, officers, employees, agents and professional advisors in connection with any syndication or securitisation in relation to the financing.

Your Letter of Transmittal/Cover Letter and intended user statement should contain the following disclosure language:

The Valuation shall be disclosed on a non-reliance basis to: DocuSign Envelope ID: 7BA705B8-FD79-48D6-AC28-8DABE3481AC2

• Agents, trustees and advisers of the Addressees • Affiliates, employees, officers, directors and auditors of the Addressees • Any servicer of any loan under any related credit facility (and advisers to such servicer) • Governmental, banking, taxation or other regulatory authority • As required by law, court order or regulation in connection with legal or arbitration proceedings • Any prospective purchaser, transferee or assignee of, participant in, or hedge counterparty in respect of, any related loan, mortgage secured by, the Property or any direct or indirect ownership interests in the owner of the Property • Any entity that becomes an agent or senior facility agent on behalf of lender-parties to a credit agreement • To or pursuant to rules of a stock exchange, listing authority or similar body • To any rating agency actually or prospectively rating any securities issued in connection with a securitisation of any loan related to the subject of the Valuation and its advisers • Any actual or prospective investor in any securities issued in connection with a securitisation of any loan related to the subject of the Valuation , and their advisers

The attached document Minimum Requirements for Real Estate Appraisals and Evaluations in the UK/EMEA and Exhibits thereto is hereby incorporated herein. Requirements regarding RICS Valuation Standards incorporating IVCS International Valuation Standards, USPAP and other criteria are addressed therein. Please note that we require a copy of this engagement letter be incorporated in your final report.

We request you provide us with electronic drafts of your report no later than 15 May 2019 to be followed by one (1) copy of your final report and Argus file (and Argus output reports in the Addenda). Upon receipt of your reports in conformance with the above requirements, we agree to render you a total fee of £125,000 plus VAT and inclusive of out of pocket expenses.

Your invoice should be addressed and directed to Nick George ([email protected]). Please address the Appraisal Report to the following entities:

Morgan Stanley Collateral Valuation Team Morgan Stanley Bank N.A. Morgan Stanley Mortgage Capital Holdings LLC 1585 Broadway, 25th Floor New York, New York 10036

Please e-mail your report to the following individuals:

SITUS RERC Valuation Contacts Morgan Stanley Valuation Contacts [email protected] [email protected] [email protected]

DocuSign Envelope ID: 7BA705B8-FD79-48D6-AC28-8DABE3481AC2

If all the above is agreeable to you, kindly sign and return this letter to us.

Sincerely,

Approved: ______Morgan Stanley Name: Andrew Mascarenhas Title: Executive Director

Accepted by:

______Cushman & Wakefield Name: Title:

DocuSign Envelope ID: 7BA705B8-FD79-48D6-AC28-8DABE3481AC2

Appendix 1 – Schedule of assets to be valued

Ref Name City 1 Holiday Inn Express Bath Bath 2 Holiday Inn Express Bedford Bedford 3 Holiday Inn Express Birmingham NEC Birmingham 4 Holiday Inn Express Birmingham Oldbury Oldbury 5 Holiday Inn Express Bristol City Centre Bristol City 6 Holiday Inn Express Bristol – North Bristol North 7 Holiday Inn Express Cambridge Cambridge 8 Holiday Inn Express Derby Pride Park Derby 9 Holiday Inn Express Droitwich Droitwich 10 Holiday Inn Express East Midlands Airport East Midlands 11 Holiday Inn Express Edinburgh – Waterfront Edinburgh 12 Holiday Inn Express Exeter Exeter 13 Holiday Inn Express Glasgow Airport Glasgow 14 Holiday Inn Express Glasgow City Centre Riverside Glasgow 15 Holiday Inn Express Gloucester South Gloucester 16 Holiday Inn Express Hamilton Hamilton 17 Holiday Inn Express Hemel Hempstead Hemel Hempstead 18 Holiday Inn Express Inverness Inverness 19 Holiday Inn Express Leeds City Centre Leeds 20 Holiday Inn Express Lichfield Lichfield 21 Holiday Inn Express Lincoln City Centre Lincoln 22 Hampton Inn by Hilton Liverpool City Centre Liverpool 23 Holiday Inn Express London Chingford – North Circular Chingford 24 Holiday Inn Express London - Dartford London 25 Holiday Inn Express London Greenwich London 26 Holiday Inn Express London - Hammersmith London 27 Holiday Inn Express London – Wandsworth London 28 Holiday Inn Express London – Luton Airport Luton 29 Holiday Inn Express Manchester – East Manchester 30 Holiday Inn Express Manchester – Salford Quays Manchester 31 Holiday Inn Express Milton Keynes Milton Keynes 32 Holiday Inn Express Newcastle City Centre Newcastle 33 Holiday Inn Express Newcastle – Metro Centre Newcastle 34 Holiday Inn Express Newport Newport 35 Holiday Inn Express Northampton Northampton 36 Holiday Inn Express Peterborough Peterborough 37 Holiday Inn Express Southampton - West Southampton 38 Holiday Inn Express Stafford Stafford DocuSign Envelope ID: 7BA705B8-FD79-48D6-AC28-8DABE3481AC2

39 Holiday Inn Express Stevenage Stevenage 40 Holiday Inn Express Stirling Stirling 41 Holiday Inn Express Stoke-on-Trent Stoke 42 Holiday Inn Express – Swansea East Swansea 43 Holiday Inn Express Swindon – West Swindon 44 Holiday Inn Express Taunton Taunton 45 Holiday Inn Express Warwick – Stratford-upon-Avon Warwick 46 Park Inn York (Leased) York 47 Holiday Inn Express Poole (Leased) Poole 48 Holiday Inn Express Portsmouth - North Portsmouth 49 Holiday Inn Express Exeter - Renslade House Exeter

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