SUMMARY MARKET STUDY Proposed Homewood Suites Atlanta Airport

3405 BOBBY BROWN PARKWAY ATLANTA, GEORGIA

SUBMITTED TO:PR OPOSED PREPARED BY: Mr. Sachin Patel HVS Consulting and Valuation Services American Life Inc Division of Hotel Appraisals, LLC 2100 Parklake Drive North East, Suite P 369 Willis Avenue Atlanta, Georgia 30345 Mineola, New York 11501

+1 770 938-2060 +1 516 248-8828

December - 2013

December 20, 2013

Mr. Sachin Patel American Life Inc 2100 Parklake Drive North East, Suite P Atlanta, Georgia 30345

HVS NEW YORK Re: Proposed Homewood Suites Atlanta Airport 369 Willis Avenue Atlanta, Georgia Mineola, New York 11501 HVS Reference: 2013010798 +1 516 248-8828 +1 516 742-3059 FAX www.hvs.com Dear Mr. Patel: Atlanta Boston Pursuant to your request, we herewith submit our summary market study Boulder pertaining to the above-captioned property. We have inspected the real estate and Chicago analyzed the hotel market conditions in the Atlanta, Georgia area. We have studied Dallas the proposed project, and the results of our fieldwork and analysis are presented Denver in this report. We have also reviewed the proposed improvements for this site. Our Houston report was prepared in accordance with the Uniform Standards of Professional Las Vegas Appraisal Practice (USPAP), as provided by the Appraisal Foundation. Mexico City Miami Minneapolis We hereby certify that we have no undisclosed interest in the property, and our Nassau employment and compensation are not contingent upon our findings. This study is New York subject to the comments made throughout this report and to all assumptions and Newport limiting conditions set forth herein. Philadelphia San Francisco Sincerely, St. Louis Hotel Appraisals, LLC Toronto Vancouver Washington Athens Beijing Buenos Aires Dubai Hong Kong Laura N. Kalcevic, Vice President Lima [email protected], +1 (412) 296-0311 London Madrid Milan Moscow Mumbai New Delhi Sao Paulo Shanghai Roland de Milleret, MAI, Managing Director Singapore [email protected], +1 (516) 248-8828

Specialists in Hotel Consulting and Appraisal Worldwide LNK: RdM

Table of Contents

SECTION TITLE PAGE 1. Executive Summary 4 2. Market Area Analysis 7 3. Supply and Demand Analysis 25 4. Projection of Occupancy and Average Rate 45 5. Projection of Income and Expense 48 6. Statement of Assumptions and Limiting Conditions 57 7. Certification 60

Addenda

Penetration Explanation i

Qualifications

1. Executive Summary

Subject of the The subject of the market study is a 95,309-square-foot (2.19-acre) parcel to be Summary Market improved with an extended-stay lodging facility; the hotel will be affiliated with Study the Homewood Suites by Hilton brand. The property is expected to open on July 1, 2014 and will feature 122 rooms. As of the date of this report, the construction of the hotel is estimated to be 40% complete.

The subject site’s location is 3405 Bobby Brown Parkway, Atlanta, Georgia, 30344.

Based on information provided by the proposed subject property’s development representatives, the following table summarizes the facilities that are expected to be available at the proposed subject property.

FIGURE 1-1 PROPOSED FACILITIES SUMMARY

Guestroom Configuration Number of Units Guestrooms 122

Food & Beverage Facilities "Great Room" Breakfast Dining Area

Indoor Meeting & Banquet Facilities One Meeting Room

Amenities & Services Outdoor Swimming Pool Business Center Vending Areas Market Pantry Guest Laundry Facility Sport Court

Infrastructure Parking Spaces As Needed Elevators As Needed Life-Safety Systems Sprinklers, Smoke Detectors Construction Details Steel, Reinforced Concrete

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Pertinent Dates The subject site was inspected by Laura N. Kalcevic on October 9, 2012. Roland de Milleret, MAI participated in the analysis and reviewed the findings, but did not personally inspect the property.

Ownership, Franchise, The subject site has been owned by RI Fund One, LLC since 2008. At this time, the and Management subject site was purchased from Bobby Brown Hospitality, LLC for a reported Assumptions $2,250,000. No other transfers of the property have reportedly occurred within the last three years. The site is not currently under contract for sale nor is it listed for sale.

The proposed hotel will be managed by Rossmore Management Group, LLC. This management agreement calls for a base management fee of 5.0% of total revenues.

The proposed subject property will reportedly operate under a franchise agreement with Hilton Worldwide as a Homewood Suites; the agreement is expected to expire on February 28, 2033. Based on our review of the agreement’s terms or expected terms, the Homewood Suites by Hilton franchise is reflected in our forecasts with a royalty fee of 4.0% of rooms revenue and a marketing assessment of 4.0% of rooms revenue. Reservations fees will also be due, and are included in the rooms expense line item of our forecast.

Scope of Work The methodology used to develop this study is based on the market research and valuation techniques set forth in the textbooks authored by Hospitality Valuation Services for the American Institute of Real Estate Appraisers and the Appraisal Institute, entitled The Valuation of Hotels and Motels,1 Hotels, Motels and Restaurants: Valuations and Market Studies,2 The Computerized Income Approach to Hotel/Motel Market Studies and Valuations,3 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,4 and Hotels and Motels – Valuations and Market Studies.5

1 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 2 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 3 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and Valuations. (Chicago: American Institute of Real Estate Appraisers, 1990). 4 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 5 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001).

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1. All information was collected and analyzed by the staff of Hotel Appraisals, LLC. Information was supplied by the client and/or the property’s development team. 2. The subject site has been evaluated from the viewpoint of its physical utility for the future operation of a hotel, as well as access, visibility, and other relevant factors. 3. The subject property's proposed improvements have been reviewed for their expected quality of construction, design, and layout efficiency. 4. The surrounding economic environment, on both an area and neighborhood level, has been reviewed to identify specific hostelry-related economic and demographic trends that may have an impact on future demand for hotels. 5. Dividing the market for hotel accommodations into individual segments defines specific market characteristics for the types of travelers expected to utilize the area's hotels. The factors investigated include purpose of visit, average length of stay, facilities and amenities required, seasonality, daily demand fluctuations, and price sensitivity. 6. An analysis of existing and proposed competition provides an indication of the current accommodated demand, along with market penetration and the degree of competitiveness. Unless noted otherwise, we have inspected the competitive lodging facilities summarized in this report. 7. Documentation for an occupancy and average rate projection is derived utilizing the build-up approach based on an analysis of lodging activity. 8. A detailed projection of income and expense made in accordance with the Uniform System of Accounts for the Lodging Industry sets forth the anticipated economic benefits of the subject property.

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2. Market Area Analysis

Market Area Definition The market area for a lodging facility is the geographical region where the sources of demand and the competitive supply are located. Situated adjacent to Atlanta in Fulton County, Hapeville functions as a suburb of the larger city. Atlanta is the capital and most populous city in the state of Georgia and serves as the county seat of Fulton County, although a small portion of the city extends into DeKalb County. The Atlanta region, which covers 8,376 square miles, is home to just over five million people, making it the ninth most populous metropolitan area in the United States. The Atlanta metropolitan area boasts numerous headquarter offices of Fortune 100, 500 and 1,000 companies, including United Parcel Service, Coca-Cola Company, Georgia-Pacific, The Home Depot, Delta Air Lines, The Southern Company, Equifax, and AT&T Mobility. Atlanta is home to the Hartsfield-Jackson Atlanta International Airport, which has held its ranking as the world's busiest passenger airport since 1998.

Economic and A primary source of economic and demographic statistics used in this analysis is Demographic Review the Complete Economic and Demographic Data Source published by Woods & Poole Economics, Inc. – a well-regarded forecasting service based in Washington, D.C. Using a database containing more than 900 variables for each county in the nation, Woods & Poole employs a sophisticated regional model to forecast economic and demographic trends. Historical statistics are based on census data and information published by the Bureau of Economic Analysis. Projections are formulated by Woods & Poole, and all dollar amounts have been adjusted for inflation, thus reflecting real change.

The proposed subject property’s market area can be defined by its Combined Statistical Area (CSA): Atlanta-Sandy Springs-Gainesville, GA-AL. The CSA represents adjacent metropolitan and micropolitan statistical areas that have a moderate degree of employment interchange. Micropolitan statistical areas represent urban areas in the United States based around a core city or town with a population of 10,000 to 49,999; the MSA requires the presence of a core city of at least 50,000 people and a total population of at least 100,000 (75,000 in New England). The following exhibit illustrates the market area.

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MAP OF MARKET AREA

These data are summarized in the following table.

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FIGURE 2-1 ECONOMIC AND DEMOGRAPHIC DATA SUMMARY

Average Annual Compounded Change 2000 2010 2012 2020 2000-10 2010-12 2012-20

Resident Population (Thousands) Fulton County 816.2 925.9 960.6 1,053.7 1.3 % 1.9 % 1.2 % Atlanta-Sandy Springs-Marietta, GA MSA 4,277.9 5,286.3 5,469.6 6,372.5 2.1 1.7 1.9 Atlanta-Sandy Springs-Gainesville, GA-AL CSA 4,580.4 5,636.2 5,825.8 6,756.2 2.1 1.7 1.9 State of Georgia 8,227.3 9,712.2 9,961.9 11,176.4 1.7 1.3 1.4 United States 282,162.4 309,330.2 314,659.2 340,554.3 0.9 0.9 1.0 Per-Capita Personal Income* Fulton County $52,065 $49,877 $50,196 $54,881 (0.4) 0.3 1.1 Atlanta-Sandy Springs-Marietta, GA MSA 37,621 34,497 35,006 38,040 (0.9) 0.7 1.0 Atlanta-Sandy Springs-Gainesville, GA-AL CSA 36,849 34,007 34,580 37,618 (0.8) 0.8 1.1 State of Georgia 31,776 31,279 31,763 34,818 (0.2) 0.8 1.2 United States 33,756 35,951 36,741 40,245 0.6 1.1 1.1 W&P Wealth Index Fulton County 153.3 139.4 137.4 137.0 (0.9) (0.7) (0.0) Atlanta-Sandy Springs-Marietta, GA MSA 114.6 99.2 98.4 97.6 (1.4) (0.4) (0.1) Atlanta-Sandy Springs-Gainesville, GA-AL CSA 112.0 97.7 97.1 96.4 (1.4) (0.3) (0.1) State of Georgia 95.8 89.2 88.6 88.6 (0.7) (0.3) 0.0 United States 100.0 100.0 100.0 100.0 0.0 0.0 0.0 Food and Beverage Sales (Millions)* Fulton County $2,289 $2,735 $3,041 $3,564 1.8 5.4 2.0 Atlanta-Sandy Springs-Marietta, GA MSA 6,476 8,137 9,007 11,055 2.3 5.2 2.6 Atlanta-Sandy Springs-Gainesville, GA-AL CSA 6,756 8,469 9,369 11,475 2.3 5.2 2.6 State of Georgia 10,392 12,842 14,131 16,899 2.1 4.9 2.3 United States 341,369 408,974 445,844 512,773 1.8 4.4 1.8 Total Retail Sales (Millions)* Fulton County $14,267 $14,476 $16,068 $18,807 0.1 5.4 2.0 Atlanta-Sandy Springs-Marietta, GA MSA 62,077 68,606 76,040 94,489 1.0 5.3 2.8 Atlanta-Sandy Springs-Gainesville, GA-AL CSA 65,383 72,242 80,011 99,096 1.0 5.2 2.7 State of Georgia 106,674 115,479 127,008 152,517 0.8 4.9 2.3 United States 3,612,260 3,796,423 4,141,888 4,803,190 0.5 4.5 1.9

* Inflation Adjusted Source: Woods & Poole Economics, Inc.

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The U.S. population has grown at an average annual compounded rate of 0.9% from 2010 through 2012. The county’s population has grown at a quicker pace than the nation’s population; the average annual growth rate of 1.9% between 2010 and 2012 reflects a gradually expanding area. Following this population trend, per-capita personal income increased slowly, at 0.3% on average annually for the county between 2010 and 2012. Local wealth indexes have remained stable in recent years, registering a relatively high 137.4 level for the county in 2012.

Food and beverage sales totaled $3,041 million in the county in 2012, versus $2,735 million in 2010. This reflects a 5.4% average annual change, which is stronger than the 1.8% pace recorded in the prior decade, the latter years of which were adversely affected by the recession. Over the long term, the pace of growth is forecast to moderate to a more sustainable level of 2.0%, which is forecast through 2020. The retail sales sector demonstrated an annual increase of 0.1% registered in the decade 2000 to 2010, followed by an increase of 5.4% in the period 2010 to 2012. An increase of 2.0% average annual change is expected in county retail sales through 2020.

Workforce The characteristics of an area's workforce provide an indication of the type and Characteristics amount of transient visitation likely to be generated by local businesses. Sectors such as finance, insurance, and real estate (FIRE); wholesale trade; and services produce a considerable number of visitors who are not particularly rate-sensitive. The government sector often generates transient room nights, but per-diem reimbursement allowances often limit the accommodations selection to budget and mid-priced lodging facilities. Contributions from manufacturing, construction, transportation, communications, and public utilities (TCPU) employers can also be important, depending on the company type.

The following table sets forth the county workforce distribution by business sector in 2000, 2010, and 2012, as well as a forecast for 2020.

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FIGURE 2-2 HISTORICAL AND PROJECTED EMPLOYMENT (000S)

Average Annual Compounded Change Percent Percent Percent Percent Industry 2000 of Total 2010 of Total 2012 of Total 2020 of Total 2000-2010 2010-2012 2012-2020

Farm 0.4 0.0 % 0.2 0.0 % 0.2 0.0 % 0.2 0.0 % (5.8) % (1.0) % (0.7) % Forestry, Fishing, Related Activities And Other 1.2 0.1 0.5 0.0 0.5 0.1 0.5 0.0 (9.1) 2.6 0.7 Mining 0.9 0.1 0.6 0.1 0.6 0.1 0.6 0.1 (3.6) 0.6 (0.7) Utilities 5.3 0.6 3.8 0.4 3.7 0.4 3.4 0.3 (3.2) (1.4) (1.0) Construction 29.0 3.2 25.9 2.8 23.5 2.4 26.1 2.4 (1.1) (4.8) 1.4 Manufacturing 42.0 4.7 27.8 3.0 26.9 2.8 23.9 2.2 (4.0) (1.8) (1.5) Total Trade 122.4 13.5 109.6 11.8 115.6 12.1 126.5 11.7 (1.1) 2.7 1.1 Wholesale Trade 51.7 5.7 45.4 4.9 46.8 4.9 48.6 4.5 (1.3) 1.5 0.5 Retail Trade 70.7 7.8 64.1 6.9 68.8 7.2 78.0 7.2 (1.0) 3.6 1.6 Transportation And Warehousing 46.0 5.1 42.1 4.5 43.8 4.6 49.3 4.6 (0.9) 2.0 1.5 Information 65.9 7.3 49.9 5.4 53.3 5.6 55.4 5.1 (2.7) 3.3 0.5 Finance And Insurance 60.0 6.6 69.3 7.5 69.9 7.3 75.8 7.0 1.5 0.4 1.0 Real Estate And Rental And Lease 33.0 3.7 48.5 5.2 46.7 4.9 52.2 4.8 3.9 (2.0) 1.4 Total Services 392.1 43.4 445.2 48.0 473.4 49.4 559.7 51.7 1.3 3.1 2.1 Professional And Technical Services 93.2 10.3 106.8 11.5 113.5 11.8 136.5 12.6 1.4 3.1 2.3 Management Of Companies And Enterprises 23.0 2.5 21.6 2.3 22.1 2.3 25.5 2.4 (0.6) 1.3 1.8 Administrative And Waste Services 84.2 9.3 76.5 8.2 85.5 8.9 96.9 9.0 (1.0) 5.7 1.6 Educational Services 17.4 1.9 22.1 2.4 23.9 2.5 28.0 2.6 2.4 4.1 2.0 Health Care And Social Assistance 56.9 6.3 79.2 8.5 82.7 8.6 106.0 9.8 3.4 2.2 3.1 Arts, Entertainment, And Recreation 15.2 1.7 19.5 2.1 20.0 2.1 23.0 2.1 2.5 1.1 1.8 Accommodation And Food Services 63.2 7.0 70.5 7.6 75.7 7.9 85.6 7.9 1.1 3.6 1.5 Other Services, Except Public Administration 39.0 4.3 49.0 5.3 49.9 5.2 58.2 5.4 2.3 0.9 1.9 Total Government 105.3 11.7 104.1 11.2 100.7 10.5 108.5 10.0 (0.1) (1.6) 0.9 Federal Civilian Government 23.3 2.6 21.8 2.3 22.2 2.3 20.7 1.9 (0.7) 1.0 (0.9) Federal Military 4.5 0.5 4.7 0.5 4.7 0.5 4.7 0.4 0.5 (0.1) 0.1 State And Local Government 77.5 8.6 77.6 8.4 73.8 7.7 83.1 7.7 0.0 (2.5) 1.5

TOTAL 903.4 100.0 % 927.6 100.0 % 958.6 100.0 % 1,082.1 100.0 % 0.3 % 1.7 % 1.5 %

MSA 2,758.6 — 3,073.2 — 3,180.8 — 3,666.0 — 1.1 % 1.7 % 1.8 % U.S. 165,370.9 — 173,767.3 — 177,066.2 — 197,077.4 — 0.6 0.9 1.3

Source: Woods & Poole Economics, Inc.

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Woods & Poole Economics, Inc. reports that during the period from 2000 to 2010, total employment in the county grew at an average annual rate of 0.3%. This trend was below the growth rate recorded by the MSA and also lagged the national average. More recently, the pace of total employment growth in the county accelerated to 1.7% on an annual average from 2010 to 2012, reflecting the initial years of the recovery.

Of the primary employment sectors, Total Services recorded the highest increase in number of employees during the period from 2010 to 2012, increasing by 28,129 people, or 6.3%, and rising from 48.0% to 49.4% of total employment. Of the various service sub-sectors, Professional And Technical Services and Administrative And Waste Services were the largest employers. Strong growth was also recorded in the Total Trade sector, as well as the Information sector, which expanded by 5.5% and -3.5%, respectively, in the period 2010 to 2012. Forecasts developed by Woods & Poole Economics, Inc. anticipate that total employment in the county will change by 1.5% on average annually through 2020. The trend is above the forecast rate of change for the U.S. as a whole during the same period.

Major Business and Providing additional context for understanding the nature of the regional Industry economy, the following table presents a list of the major employers in the subject property’s market.

FIGURE 2-3 MAJOR EMPLOYERS

Number of Rank Firm Employees

1 Delta Air Lines, Inc. 27,000 2 Wal-Mart Stores, Inc. 26,000 3 Emory University/Emory Healthcare 23,872 4 DeKalb County Government and Schools 20,405 5 AT&T 18,000 6 Publix Super Markets, Inc. 17,765 7 Cobb County School District 14,027 8 City of Atlanta Government and Schools 13,628 9 United States Postal Service - Atlanta 10,324 10 The Coca-Cola Company 9,000

Source: Metro Atlanta Chamber of Commerce, 2012

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Historically, the two largest economic forces in the Atlanta market have been manufacturing and airport-related commerce. In recent years, however, significant growth has been realized in other areas, including professional and business services, university expansions, healthcare, manufacturing, and commercial and residential developments throughout the city. A number of these projects have combined to transform Downtown Atlanta from a strictly commercial center to a tourist destination. The following is based on HVS research:

 Ongoing developments include the construction of the College Football Hall of Fame, the National Center for Civil and Human Rights, and the Downtown Loop streetcar line, all of which planned for completion in 2014.

 In December of 2012, the Georgia World Congress Center Authority approved plans for the development of a new retractable-roof stadium for the Atlanta Falcons, with an initial cost estimate of approximately $1 billion. Construction of the stadium is scheduled to begin in 2014, with completion expected in time for the 2017 football season.

 Further potential development projects for the area surrounding the GWCC and Georgia Dome include the proposed Multi-Modal Passenger Terminal (MMPT) in The Gulch area of Downtown, which would create a transportation hub tying together numerous regional networks. In July of 2012, the permitting process for the project was fast-tracked as part of the federal government's Dashboard initiative.

 In addition, Atlanta is one of the top convention markets in the country, and the airport market directly benefits from the presence of the Georgia International Convention Center (GICC).

 Emory University is one of the market's largest employers and is recognized internationally for its outstanding liberal arts college, its reputable professional schools, and one of the Southeast's leading healthcare systems. The undergraduate business program of the university's Goizueta Business School was ranked seventh nationally by BusinessWeek in 2013. Emory had a total enrollment of 14,236 students for the 2012 fall semester and was ranked #15 on Kiplinger's 2012/13 list of the Best Values in Private Colleges.

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 The Georgia Institute of Technology, Georgia Tech, is one of the nation's top research universities. The school's enrollment stands at approximately 20,000 undergraduate and graduate students, and the campus extends over 400 acres in the heart of Atlanta.

 Georgia Tech has consistently been ranked one of the top ten public universities in the United States by U.S. News & World Report. Furthermore, Georgia State University is currently in the midst of a ten- year, $1-billion expansion to its Downtown Atlanta facilities, expected to be completed in 2015.

Airport-Related Airport-related commerce continues to be an important economic driver for the Commerce city and drives demand for hotels located in the airport submarket. Aviation companies such as Delta Air Lines, Flight Safety International, Landmark Aviation, and Express Jet maintain operations in the market. In addition, new developments are planned for the area that is expected to positively impact lodging demand in the near term. The following is based on HVS research:

 Delta Air Lines is the area's largest employer and the largest airline in the world in terms of both fleet size and scheduled passenger traffic. Delta is headquartered in Atlanta, with Hartsfield-Jackson Atlanta International Airport serving as its central hub, and is the fastest-growing international carrier in America. In cooperation with its worldwide airline partners, SkyTeam, Delta offers flights to 570 destinations in 120 countries.

 In June of 2011, Delta announced plans to relocate its Minneapolis-St. Paul flight attendant training center, pilot training center, and flight simulator facilities to Atlanta, along with certain engineering and technical support operations, all of which were acquired in Delta's 2008 merger with Northwest Airlines.

 In March of 2013, Delta submitted bids to the Department of Transportation for 21 of 28 additional weekly routes to Sao Paolo, Brazil, which were opened for competition in February. In June of 2013, the Department of Transportation tentatively awarded rights to Delta for the routes, which would allow the airline a second daily flight from Atlanta to Sao Paolo in 2013 and seven frequencies for Detroit to Sao Paolo service in 2014.

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 Furthermore, Delta recently expanded its operations with the relocation of MLT Vacations to a new headquarters office on the company's campus in early 2013 and also consolidated and moved several other departments from Minnesota to Atlanta in conjunction with Delta's 2008 acquisition of Northwest Airlines.

 The addition of Southwest Airlines flights to Hartsfield-Jackson International Airport in February of 2012 and the opening of the Maynard H. Jackson, Jr. International Terminal in May of 2012 have positively influenced the greater market. Other major companies and operations in Atlanta such as UPS and The Coca-Cola Company, continue to positively contribute to the local economy.

Aerotropolis Atlanta The Atlanta Airport is the backbone of the city’s economy and allows it to remain competitive with other major metropolitaiton areas in the United States such as New York City and Chicago. As such, there is a push for a new development in the area immediately surrounding the airport; similar to what has occurred at the O’Hare International Airport in Chicago. A planned mixed-use development in Hapeville/Atlanta on the site of the former Ford Motors Assembly plant is the start of what is being called the “Aerotropolis Atlanta” movement. The old Ford Motors site was purchased by Jacoby Development, Inc in June of 2008 for an estimated $40 million. The site is zoned for 6.5 million square feet of Class-A office, hotel, conference center, retail, data center, and business park use, as well as for a 4,000- space parking facility. The expansion of commerce surrounding the Atlanta Airport is expected to drive future demand to hotels in the proposed subject property’s market. This is based on factors included in The Valuation of Hotels and Motels,6 Hotels, Motels and Restaurants: Valuations and Market Studies,7 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,8 and Hotels and Motels – Valuations and Market Studies.9

6 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 7 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 8 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 9 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001).

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Porsche North America Porsche Cars North America is planning to spend $100 million on the construction Headquarters of a new 26.4-acre facility that is the first complex to be built in the “Aerotropolis Atlanta” business district. The facility is expected to be a cornerstone development for Porsche Cars North America and its affiliates Porsche Financial Services, Porsche Business Services, Porsche Consulting, and Porsche Group. Once complete, most of Porsche’s North American operations will be consolidated to this new facility that is expected to be finished in the second-half of 2014.

An estimated 400 employees, including the creation of 100 new jobs, will be housed at the new facility. In addition to the corporate offices, the facility will comprise the Technical Service and Training Center, a Conference Center, a Museum, and Customer Experience Center including a 1.6-mile test track and handling road course.

NEW PORSCHE CARS NORTH AMERICA FACILITY

When the facility opens during the second-half of 2014, it will become a major new tourist attraction and demand generator for area hotels in the airport market. The location of this facility was selected based on its proximity to the ever growing Atlanta Airport and the fact that 80% of the United States Population is able to reach the facility (Atlanta Airport) within a two-hour flight. We expect a significant amount of room nights to be generated from this facility from both corporate and leisure travelers. This is based on fact that new tourist attractions increase

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demand for hotels as stated in The Valuation of Hotels and Motels,10 Hotels, Motels and Restaurants: Valuations and Market Studies,11 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,12 and Hotels and Motels – Valuations and Market Studies.13

Flight Safety Flight Safety is the world’s leading aviation training company with a major facility International Training located two miles from the Atlanta Airport. The center offers short-term and initial Center training programs for pilots, flight attendants, maintenance technicians, and dispatchers. The following information was provided from Scott Layman, Account Manager at Flight Safety International Training Center and individual in charge of placing trainees at hotels in the Atlanta Airport market:

 Short-Term Program- comprises 70% of their business and length of stay is three to five nights

 Initial Program- comprises 30% of their business and length of stay is 18 to 20 nights

 The facility generated an estimated 7,000 room nights in 2012 and 7,500 room nights in 2013. The amount of room nights is expected to remain stable at 7,500 in 2014 and onward. However, the facility previously hosted government training programs that generated an estimated 1,000 room nights in the market. This portion of business ceased in 2012 because the government stopped funding the program. Although, there is the potential for this government program to return once negations have occurred and the government reinstates this program for its employees. This would then generate an additional 1,000 room nights in the market.

 Reportedly, the trainees at the facility have the option of what hotel they would like to stay at in the market. The Flight Safety Account Manager provides them with a list of 10 to 11 hotels located in the Atlanta Airport market based on brand affiliation and service-type (limited-service, full- service, extended-stay). Based on the trainee’s per diem and personal

10 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 11 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 12 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 13 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001).

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preference, the hotel in the market is selected for their stay during the training program.

 According to the account manager, Hilton hotels are the most popular choice among trainees, there are more Hilton preferred customers than any other hotel, followed by Marriott and Hyatt branded properties. The proposed subject property is expected to be well-received in the market, as there are currently no extended-stay Hilton properties and this provides an additional choice for trainees and loyal brand customers.

Woodward Academy Woodward Academy is the largest independent school in the United States with 2,800 students in two campuses; Woodward North in Johns Creek (35-acre campus) and Main Campus in College Park (75-acre campus). This college preparatory school offers programs from pre-kindergarten to 12 grades.

Office Space Statistics Trends in occupied office space are typically among the most reliable indicators of lodging demand, because firms that occupy office space often exhibit a strong propensity to attract commercial visitors. Thus, trends that cause changes in vacancy rates or in the amount of occupied office space may have a proportional impact on commercial lodging demand, and a less direct effect on meeting demand. The following table details office space statistics for the pertinent market area.

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FIGURE 2-4 OFFICE SPACE STATISTICS – MARKET OVERVIEW

Inventory Occupied Office Vacancy Average Asking Submarket Buildings Square Feet Space Rate Lease Rate

1 Cumberland/I-75 147 20,429,000 16,935,600 17.1 % $21.69 2 W Atl/I-20W/I-75 32 2,008,000 1,712,800 14.7 23.36 3 Marietta/E Cobb 78 3,404,000 2,665,300 21.7 16.87 4 N Central/I-285 176 23,689,000 18,903,800 20.2 22.67 5 Roswell/Alpharetta 195 15,149,000 12,104,100 20.1 20.07 6 Peachtree Corners 95 7,236,000 5,513,800 23.8 17.16 7 NE Gwinnet/I-85 151 8,737,000 6,648,900 23.9 17.01 8 Buckhead/Lenox 81 14,707,000 11,192,000 23.9 27.85 9 NE Atlanta/I-85N 73 8,437,000 7,264,300 13.9 17.98 10 Northlake/Stn Mtn 24 1,318,000 1,005,600 23.7 17.23 11 E Atlanta/Decatur 51 2,096,000 1,808,800 13.7 20.27 12 Midtown/Pershing 81 14,128,000 11,966,400 15.3 26.29 13 Airport/S Atlanta 84 4,177,000 3,116,000 25.4 15.49 14 Downtown 58 16,213,000 12,078,700 25.5 21.43 15 Far South 36 942,000 721,600 23.4 17.77 Totals and Averages 1,362 142,670,000 113,637,700 20.3 % $21.64

Source: REIS Report, 3rd Quarter, 2013

The greater Atlanta market comprises a total of 142.7 million square feet of office space. For the 3rd Quarter of 2013, the market reported a vacancy rate of 20.3% and an average asking rent of $21.64. The subject property is located in the Airport/S Atlanta submarket, which houses 4,177,000 square feet of office space. The submarket's vacancy rate of 25.4% is above the overall market average. The average asking lease rate of $15.49 is below the average for the broader market.

According to REIS, the greater Atlanta market offers over 140,000,000 square feet of Class A and B office space, with the majority of that space located in the North Central/I-285 submarket. The proposed subject property is located in the Airport/South Atlanta submarket, which represents approximately 3.0% of the overall supply. No new inventory has entered the submarket since 2010; however vacancy rates have continued to remain in the low to mid-20% range since 2008, while asking rates have remained generally stable over the last five years. Commercial demand generated from the surrounding office buildings in an important component for the hotels in the Atlanta Airport market.

The following table illustrates a trend of office space statistics the Airport/S Atlanta submarket.

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FIGURE 2-5 HISTORICAL AND PROJECTED OFFICE SPACE STATISTICS –SUBMARKET

Airport/S Atlanta Submarket Available Occupied Vacancy Asking Year Office Space % Chg Office Space % Chg Rate Lease Rate % Chg

2000 3,562,000 — 2,935,000 — 17.6 % $14.75 — 2001 3,555,000 (0.2) % 2,659,000 (9.4) % 25.2 15.16 2.8 % 2002 3,538,000 (0.5) 2,636,000 (0.9) 25.5 15.21 0.3 2003 3,538,000 0.0 2,689,000 2.0 24.0 15.16 (0.3) 2004 3,911,000 10.5 3,004,000 11.7 23.2 15.54 2.5 2005 3,918,000 0.2 3,150,000 4.9 19.6 15.55 0.1 2006 3,918,000 0.0 3,221,000 2.3 17.8 15.83 1.8 2007 3,982,000 1.6 3,261,000 1.2 18.1 16.11 1.8 2008 4,049,000 1.7 3,146,000 (3.5) 22.3 15.64 (2.9) 2009 4,177,000 3.2 3,112,000 (1.1) 25.5 15.25 (2.5) 2010 4,177,000 0.0 3,149,000 1.2 24.6 15.17 (0.5) 2011 4,177,000 0.0 3,258,000 3.5 22.0 15.25 0.5 2012 4,177,000 0.0 3,195,000 (1.9) 23.5 15.41 1.0

Forecasts 2013 4,177,000 0.0 % 3,141,000 (1.7) % 24.8 % $15.52 0.7 % 2014 4,177,000 0.0 3,212,000 2.3 23.1 15.75 1.5 2015 4,177,000 0.0 3,262,000 1.6 21.9 16.29 3.4 2016 4,177,000 0.0 3,337,000 2.3 20.1 17.02 4.5 2017 4,177,000 0.0 3,417,000 2.4 18.2 18.07 6.2

Average Annual Compound Change 2000 - 2012 1.3 % 0.7 % 0.4 % 2000 - 2007 1.6 1.5 1.3 2007 - 2010 1.6 (1.2) (2.0) 2010 - 2012 0.0 0.7 0.8 Forecast 2012 - 2017 0.0 % 1.4 % 3.2 %

Source: REIS Report, 3rd Quarter, 2013

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Convention Activity A convention center serves as a gauge of visitation trends to a particular market. Convention centers also generate significant levels of demand for area hotels and serve as a focal point for community activity. Typically, hotels within the closest proximity to a convention center – up to three miles away – will benefit the most. Hotels serving as headquarters for an event benefit the most by way of premium rates and hosting related banquet events. During the largest of conventions, peripheral hotels may benefit from compression within the city as a whole.

The Georgia International Convention Center, located approximately ten miles from Downtown Atlanta and adjacent to Hartsfield-Jackson Atlanta International Airport, is a multi-purpose facility with 150,000 square feet of dividable exhibit hall space, a 40,000-square-foot ballroom, and over 60,000 square feet of pre- function space and meeting rooms. In November of 2009, an Automated People Mover (APM) train system opened, enabling event attendees to travel directly from the airport to the convention center. The following table illustrates recent use statistics for this facility.

FIGURE 2-6 CONVENTION CENTER STATISTICS

Conventions, Meetings, and Other Percent Percent Year Events Change Total Attendance Change

2006/07 4,951 — 380,159 — 2007/08 3,774 (23.8) % 371,518 (2.3) % 2008/09 3,257 (13.7) 258,095 (30.5) 2009/10 3,110 (4.5) 243,774 (5.5) 2010/11 4,388 41.1 314,006 28.8 2011/12 4,907 11.8 373,478 18.9 2012/13 4,715 (3.9) 355,711 (4.8)

Source: Georgia International Convention Center

The illustrated data for the Georgia International Convention Center (GICC) reflect a decline in both the number of events and attendance during the 2007/08, 2008/09, and 2009/10 fiscal years. According to GICC officials, the decline in activity was attributed to the convention center's lack of an on-site headquarters hotel; however, a SpringHill Suites by Marriott opened adjacent to the convention center in December of 2009, and the 403-room, full-service Atlanta Airport Marriott Gateway hotel opened in August of 2010. With the addition of these hotels, events and attendance rose significantly in 2010/11 and in 2011/12. Despite the moderate dip in events and attendance in 2012/13, the outlook for the GICC is positive as the overall convention market in Atlanta is expected to experience growth in the near term.

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Airport Traffic Airport passenger counts are important indicators of lodging demand. Depending on the type of service provided by a particular airfield, a sizable percentage of arriving passengers may require hotel accommodations. Trends showing changes in passenger counts also reflect local business activity and the overall economic health of the area.

Hartsfield-Jackson Atlanta International Airport (ATL), serviced by a variety of major commercial airlines, features a terminal complex measuring 6.8 million square feet; the airport is a major connecting hub for global travelers and has been the world's busiest airport in terms of passengers and aircraft movement since 2005. ATL is one of the largest employers in Georgia and has a significant regional economic impact. The 67.5-acre Consolidated Rental Car (CONRAC) facility and ATL SkyTrain, which connects the terminal to the CONRAC and Georgia International Convention Center (GICC), opened in 2009. Southwest Airlines began service to ATL on February 14, 2012 following the airline’s acquisition of Orlando- based airline AirTran.

On May 16, 2012, the $1.4-billion Maynard H. Jackson Jr. International Terminal opened. The terminal, dubbed the city's "new front door" for the world, added twelve new gates to Concourse F; the 28-gate Concourse E, along with the 40 gates at Concourse F, will now use the international terminal's entrance. As part of the continued capital improvement plan, the $47-million expansion of Concourse D was completed in July of 2013, and the subsequent expansion of Concourse C is scheduled for completion in 2014.

ATL is a hub for Delta Air Lines and a focus city for Southwest Airlines. Delta Air Lines is the world's largest airline and is the area's largest employer. Delta has been headquartered in Atlanta since 1941, with Hartsfield-Jackson Atlanta International Airport serving as its central hub, and is the fastest-growing international carrier in America. In 2010, the U.S. Department of Transportation named Delta one of three airlines approved to operate non-stop flights to Tokyo's Haneda Airport, the first expansion of U.S. carriers to that airport since 1978. In June of 2011, Delta announced plans to relocate its Minneapolis-St. Paul flight attendant training center, pilot training center, and flight simulator facilities to Atlanta, along with certain engineering and technical support operations, all of which were acquired in Delta's 2008 merger with Northwest Airlines.

Southwest Airlines began service to ATL on February 14, 2012 with 15 daily non- stop flights to five cities following the airline’s acquisition of Orlando-based airline AirTran, which operates over 220 flights into and out of ATL. Service from Southwest Airlines is expected to increase in the future.

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The following table illustrates recent operating statistics for the Hartsfield-Jackson Atlanta International Airport, which is the primary airport facility serving the proposed subject property’s submarket.

FIGURE 2-7 AIRPORT STATISTICS - HARTSFIELD-JACKSON ATLANTA INTERNATIONAL AIRPORT

Passenger Percent Percent Year Traffic Change* Change**

2003 79,086,792 — — 2004 83,606,583 5.7 % 5.7 % 2005 85,907,423 2.8 4.2 2006 84,846,639 (1.2) 2.4 2007 89,379,287 5.3 3.1 2008 90,039,280 0.7 2.6 2009 88,001,381 (2.3) 1.8 2010 89,238,059 1.4 1.7 2011 92,389,023 3.5 2.0 2012 95,486,697 3.4 2.1 Year-to-date, Sep 2012 72,005,624 — — 2013 71,107,117 (1.2) % —

*Annual average compounded percentage change from the previous year **Annual average compounded percentage change from first year of data Source: Hartsfield-Jackson Atlanta International Airport

FIGURE 2-8 LOCAL PASSENGER TRAFFIC VS. NATIONAL TREND

10% 8% 6% 4% 2% 0% -2%

-4% Change in in PassengerActivity Change -6% 2004 2005 2006 2007 2008 2009 2010 2011 2012

Local Passenger Volume National Passenger Volume

Source: HVS, Local Airport Authority

December - 2013 Market Area Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 23

This facility recorded 95,486,697 passengers in 2012. The change in passenger traffic between 2011 and 2012 was 3.4%. The average annual change during the period shown was 2.1%.

Tourist Attractions The Atlanta airport market benefits from a variety of tourist and leisure attractions in the area. The peak season for tourism in this area is from March to July. During other times of the year, weekend demand comprises travelers passing through en route to other destinations, people visiting friends or relatives, and other similar weekend demand generators. Primary attractions in the area include: Six Flags, Stone Mountain Park, and The World of Coca-Cola museum and amusement complex. The opening of the Porsche Cars North America complex is expected to increase tourism demand to the area and benefit local hotels.

Conclusion Atlanta is experiencing a period of economic strength and expansion, led by the aviation and logistics sectors. The city of Atlanta is home to headquarter offices of ten Fortune 500 companies and benefits from the presence of multiple higher- educational institutions, major convention venues, and popular leisure attractions. Moreover, the market is heavily impacted by the presence of the Hartsfield- Jackson Atlanta International Airport, and as the airport continues to experience growth, recovery in the region is well supported. In addition, the opening of the Porsche Cars North America complex in the second-half of 2014 and the growth of the “Aerotropolis Atlanta” mixed-use development is expected to drive demand for airport hotels in the future. This based on HVS research based on factors included in The Valuation of Hotels and Motels,14 Hotels, Motels and Restaurants: Valuations and Market Studies,15 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,16 and Hotels and Motels – Valuations and Market Studies.17 . Overall, the outlook for the market is positive.

14 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 15 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 16 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 17 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001).

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3. Supply and Demand Analysis

In the economic principle of supply and demand, price varies directly, but not proportionately, with demand and inversely, but not proportionately, with supply. In the lodging industry, supply is measured by the number of guestrooms available, and demand is measured by the number of room occupied; the net effect of supply and demand towards equilibrium results in a prevailing price, or average rate. The purpose of this section is to investigate current supply and demand trends as indicated by the current competitive market, and set forth a basis for the projection of future supply and demand growth.

Definition of Subject The 122-room Proposed Homewood Suites will be located in the Atlanta Airport Hotel Market market (within the northern submarket). The Atlanta Airport market offers 80 hotels and motels, spanning 10,960 rooms. The two largest hotels are the 638- room Marriott Atlanta Airport and the 507-room Hilton Atlanta Airport. This large hotel market is divided into three submarkets based on location: northern, southern, and eastern. We have included the branded or top hotels for each submarket on the following page.

MAP OF ATLANTA AIRPORT SUBMARKETS

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 25

FIGURE 3-1 NORTHERN AIRPORT SUBMARKET SUPPLY

Hotel Supply- Northern Airport Submarket Open Date Rooms Hilton Atlanta Airport Jan 1989 507 Residence Inn Atlanta Airport N Virginia Ave Jun 1990 126 Courtyard Atlanta Airport N Virginia Ave Aug 1990 152 Crowne Plaza Atlanta Airport Jan 1997 378 Drury Inn & Suites Atlanta Airport Feb 1998 151 Country Inn & Suites Atlanta Airport North May 1998 71 Hampton Inn Suites Atlanta Airport North Jul 2001 105 Wellesley Inn Atlanta Hartsfield Intl Arprt Jul 2001 191 Fairfield Inn & Suites Atlanta Airport North Apr 2003 85 Comfort Inn & Suites Airport North Apr 2005 243 Hyatt Place Atlanta Airport North Aug 2007 150 Doubletree Atlanta Airport Dec 2007 220 Hilton Garden Inn Atlanta Airport North Nov 2009 174 Motel 6 Atlanta Airport North Aug 2010 192 Holiday Inn Atlanta Airport North Oct 2012 326 Submarket Total 3,071

*Note a 149-room Staybridge Suites opened in the Northern Airport submarket on November 1, 2013.

FIGURE 3-2 SOUTHERN AIRPORT SUBMARKET SUPPLY

Hotel Supply- Southern Airport Submarket Open Date Rooms Marriott Atlanta Airport Jan 1981 638 Courtyard Atlanta Airport S Sullivan Rd Jun 1986 144 Hampton Inn Atlanta Airport Jun 1988 127 Embassy Suites Atlanta Airport Oct 1989 232 Sheraton Hotel Gateway Atlanta Airport Feb 1993 395 Westin Atlanta Airport Jul 1996 500 Sleep Inn Airport College Park Mar 1997 63 Comfort Inn & Suites Airport South Atlanta Jul 2000 75 Country Inn & Suites Atlanta Airport South Mar 2002 186 Hilton Garden Inn Atlanta Airport Millenium Ctr Apr 2004 200 Holiday Inn Express Atlanta Airport College Park Jan 2006 162 Hyatt Place Atlanta Airport South Nov 2006 123 La Quinta Inns & Suites Atlanta Airport Dec 2006 70 Fairfield Inn & Suites Atlanta Airport South Sullivan Road May 2007 127 Holiday Inn Atlanta Airport South Apr 2009 190 Quality Inn & Suites Atlanta Airport South College Park Dec 2010 95 Submarket Total 3,327

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 26

FIGURE 3-3 EASTERN AIRPORT SUBMARKET SUPPLY

Hotel Supply- Eastern Airport Submarket Open Date Rooms Courtyard Atlanta Airport West Jul 2008 128 Hampton Inn Suites Atlanta I 285 & Camp Crk Pkwy May 2008 119 Comfort Inn & Suites Airport Camp Creek Jan 2005 186 *Various lower-rated hotels and motels Submarket Total 433

As illustrated, the Southern Airport submarket has the greatest number of guestrooms followed by the Northern Airport submarket. The Eastern Airport submarket has the least amount of hotel supply, being located the farthest distance and offering the lowest rates. Within all three submarkets, there was only one extended-stay hotel, the Residence Inn Atlanta Airport North, until the opening of the 149-room Staybridge Suites on November 1, 2013. The Residence Inn Atlanta Airport North and Staybridge Suites are both located within the proposed subject property’s neighborhood and benefit from their location proximate to the Delta Air Lines Headquarters and Training Center.

With the inclusion of these two hotels, there will only be a total of three extended- stay hotels in the greater Atlanta Airport market. The Residence Inn Atlanta benefits from its Marriott brand affiliation but suffers from a dated condition being constructed in 1990. The new Staybridge Suites benefits from its new product offering but is positioned as a lower-tiered hotel compared to the proposed subject property based on its scope of facilities and IHG brand affiliation. The proposed subject property is expected to be well-received as it will be the only Hilton affiliated, extended-stay hotel in the Atlanta Airport market. All three hotels cater to individuals that require long-term stays in the area, and benefit guests by offering rooms at a lower price point that allow for staying longer periods more affordable. We note this greatly benefits construction crews, trainees, and individuals requiring medical treatments at local hospitals.

Historical Supply Smith Travel Research (STR) is an independent research firm that compiles and and Demand Data publishes data on the lodging industry, routinely used by typical hotel buyers. STR has compiled historical supply and demand data for a group of hotels considered applicable to this analysis for the proposed subject property. This information is presented in the following table, along with the market-wide occupancy, average rate, and rooms revenue per available room (RevPAR). RevPAR is calculated by multiplying occupancy by average rate and provides an indication of how well rooms revenue is being maximized.

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 27

We have included all the branded, upper-tier hotels located within the Northern Airport submarket for review. These hotels are expected to compete with the subject property based on location and their affiliation with a nationally recognized hotel brand.

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FIGURE 3-4 HISTORICAL SUPPLY AND DEMAND TRENDS

Average Daily Available Room Occupied Room Average Year Room Count Nights Change Nights Change Occupancy Rate Change RevPAR Change 2001 1,461 533,390 — 377,740 — 70.8 % $94.37 — $66.83 — 2002 1,671 609,800 14.3 456,494 20.8 74.9 84.23 (10.7) 63.05 (5.7) 2003 1,720 627,800 3.0 454,380 (0.5) 72.4 79.61 (5.5) 57.62 (8.6) 2004 1,720 627,800 0.0 497,577 9.5 79.3 82.04 3.0 65.02 12.8 2005 1,720 627,800 0.0 510,496 2.6 81.3 90.57 10.4 73.65 13.3 2006 1,720 627,800 0.0 503,330 (1.4) 80.2 102.39 13.0 82.09 11.5 2007 1,720 627,800 0.0 486,260 (3.4) 77.5 106.96 4.5 82.84 0.9 2008 1,720 627,800 0.0 % 485,170 (0.2) % 77.3 103.05 (3.7) % 79.64 (3.9) % 2009 1,749 638,414 1.7 466,913 (3.8) 73.1 92.73 (10.0) 67.82 (14.8) 2010 1,894 691,310 8.3 508,356 8.9 73.5 90.45 (2.5) 66.51 (1.9) 2011 1,894 691,310 0.0 490,446 (3.5) 70.9 90.73 0.3 64.37 (3.2) 2012 1,897 692,405 0.2 504,147 2.8 72.8 90.51 (0.2) 65.90 2.4

Year-to-Date Through September 2012 1,897 517,881 — 389,289 — 75.2 % $90.53 — $68.05 — 2013 1,897 517,881 0.0 % 396,987 2.0 % 76.7 90.93 0.4 % 69.71 2.4 % Number Year Year Hotels Included in Sample of Rooms Affiliated Opened Crowne Plaza Atlanta Airport 378 Jan 1997 Aug 1973 Hilton Atlanta Airport 507 Jan 1989 Jan 1989 Residence Inn Atlanta Airport N Virginia Ave 126 Jun 1990 Jun 1990 Courtyard Atlanta Airport North Virginia Avenue 152 Aug 1990 Aug 1990 Doubletree Atlanta Airport 220 Dec 2007 Aug 1998 Hampton Inn Suites Atlanta Airport North 105 Jul 2001 Jul 2001 Fairfield Inn & Suites Atlanta Airport North 85 Apr 2003 Sep 2001 Hyatt Place Atlanta Airport North 150 Aug 2007 May 2002 Hilton Garden Inn Atlanta Airport North 174 Nov 2009 Nov 2009

Total 1,897

Source: STR Global

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 29

The STR data for the competitive set reflect an overall market occupancy level of 72.9% in 2012, which compares to 70.9% for 2011. Year-to-date September 2013 data shows continued growth in marketwide occupancy. Hartsfield-Jackson Atlanta International Airport, Interstate 85, and Downtown Atlanta compression serve as the primary sources of lodging demand in this area. New supply entered the market in 2001/02 and 2009/10 and demand spiked, mirroring the increase in supply. Occupancy peaked in this market in 2005 at 81.3% and has remained above the 70.0% throughout the historical period shown. An indicator for the health of a hotel market and whether there is a need for new hotel supply is a market-wide occupancy of 70.0% or greater. This historically high marketwide occupancy supports the existence of such a large supply of hotels within the greater airport market compared to other airport hotel markets throughout the country.

Average rate began to slow in 2007, and rate fell from 2008 through 2010, along with the contraction of the national economy. Average rate increased modestly in 2011 following extensive renovations and the replacement of lower-rated base demand with higher-rated corporate- and leisure-transient demand. However, the stability of the government per diem, combined with Delta's significant rate- negotiation power, negatively affected average rate in 2012. The STR data for the competitive set reflect an overall market average rate level of $90.51 in 2012, which compares to $90.73 for 2011. These occupancy and average rate trends resulted in a RevPAR level of $65.90 in 2012.

Our market interviews and research indicate that the market should continue to grow due to demand increases and the continued recovery of the national economy. Hotels are currently focusing on recovering room rates now that significant levels of demand have returned to the market. Overall, the outlook for the market is favorable.

SUPPLY The following tables summarize the important operating characteristics of the future primary competitors and the secondary competitors (if applicable). This information was compiled from personal interviews, inspections, lodging directories, and our in-house library of operating data. The table also sets forth each property’s penetration factors; penetration is the ratio between a specific hotel’s operating results and the corresponding data for the market. If the penetration factor is greater than 100%, the property is performing better than the market as a whole; conversely, if the penetration is less than 100%, the hotel is performing at a level below the market-wide average. The room count of each secondary competitor has been weighted based on its assumed degree of competitiveness with the subject property.

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 30

FIGURE 3-5 COMPETITORS – OPERATING PERFORMANCE

Est. Segmentation Estimated 2010 Estimated 2011 Estimated 2012

Weighted Weighted Weighted Annual Annual Annual Number Room Average Room Average Room Average RevPAR Occupancy Yield Count Count Count Change Penetration Penetration Property of Rooms Commercial Meeting and Group Leisure Occ. Rate RevPAR Occ. Rate RevPAR Occ. Rate RevPAR

Courtyard by Marriott Atlanta Airport North Virginia Avenue Hapeville 152 50 % 10 % 40 % 152 61 % $82.00 $50.02 152 72 % $80.00 $57.60 152 80 % $84.00 $67.20 16.7 % 110.0 % 102.1 % Crowne Plaza Atlanta Airport 378 50 20 30 378 70 84.00 58.80 378 64 80.00 51.20 378 70 73.00 51.10 (0.2) 96.2 77.6 DoubleTree by Hilton Hotel Atlanta Airport 220 50 20 30 220 81 67.00 54.27 220 72 71.00 51.12 220 67 67.00 44.89 (12.2) 92.1 68.2 Fairfield Inn & Suites by Marriott Atlanta Airport North East Point 85 45 10 45 85 67 77.00 51.59 85 74 73.00 54.02 85 68 74.00 50.32 (6.8) 93.5 76.5 Hampton Inn & Suites Atlanta Airport North I85 105 60 10 30 105 72 102.00 73.44 105 66 103.00 67.98 105 64 99.00 63.36 (6.8) 88.0 96.3 Hilton Atlanta Airport 507 50 20 30 504 81 109.00 88.29 504 72 112.00 80.64 507 74 113.00 83.62 3.7 101.7 127.1 Hilton Garden Inn Atlanta Airport North 174 60 10 30 174 59 92.00 54.28 174 70 90.00 63.00 174 69 99.00 68.31 8.4 94.8 103.8 Hyatt Place Atlanta Airport North 150 60 10 30 150 79 75.00 59.25 150 82 78.00 63.96 150 77 83.00 63.91 (0.1) 105.8 97.1 Residence Inn by Marriott Atlanta Airport North Virginia Avenue 126 60 10 30 126 76 96.00 72.96 126 74 97.00 71.78 126 88 96.00 84.48 17.7 120.9 128.4

Totals/Averages 1,897 53 % 16 % 32 % 1,894 73.6 % $90.36 $66.47 1,894 70.9 % $90.35 $64.06 1,897 72.8 % $90.46 $65.81 2.7 % 100.0 % 100.0 %

FIGURE 3-6 HISTORICAL OCCUPANCY BY MONTH

Month 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

January 75.5 % 74.3 % 70.6 % 79.0 % 79.9 % 77.9 % 78.9 % 77.8 % 72.1 % 71.3 % 72.1 % 68.4 % 71.0 % February 78.7 76.6 79.0 82.6 81.8 86.2 85.6 81.8 76.0 81.9 81.4 73.8 78.1 March 81.3 82.4 69.0 85.8 83.5 86.1 89.1 84.6 82.1 81.0 83.6 80.3 75.2 April 77.6 81.3 67.7 75.7 86.2 79.3 84.9 84.1 85.6 76.2 79.2 73.4 83.2 May 73.5 73.6 70.1 75.3 79.0 77.8 78.4 73.5 70.2 70.6 73.5 75.6 73.8 June 78.4 76.8 75.3 82.5 83.4 86.0 80.5 81.4 78.7 74.5 74.8 77.8 78.8 July 74.4 79.7 80.3 82.5 86.6 80.4 77.0 84.5 78.7 79.3 74.2 76.7 79.7 August 77.3 73.1 75.0 79.9 82.6 83.9 75.0 80.0 74.1 71.2 68.7 76.6 75.4 September 54.5 73.4 72.9 86.2 82.9 78.7 73.2 74.3 69.6 73.2 67.8 73.9 75.2 October 70.0 79.4 81.0 82.0 87.0 87.0 78.1 77.7 75.7 77.1 69.2 75.1 — November 61.5 67.0 67.2 75.4 75.6 73.5 64.0 66.1 58.1 67.0 59.2 64.9 — December 52.9 62.2 60.9 64.6 67.4 65.8 65.4 61.9 59.9 59.9 48.5 57.4 —

Annual Occupancy 70.8 % 74.9 % 72.4 % 79.3 % 81.3 % 80.2 % 77.5 % 77.3 % 73.1 % 73.5 % 70.9 % 72.8 % — Year-to-Date 74.3 76.7 73.3 81.0 82.9 81.8 80.2 % 80.2 % 76.3 % 75.4 % 75.0 % 75.2 % 76.7 %

Source: STR Global

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 31

The following map illustrates the locations of the proposed subject property and its future competitors.

MAP OF COMPETITION

Supply Changes The 149-room Staybridge Suites Atlanta Airport opened November 1, 2013 within the proposed subject property’s neighborhood. Besides the 122-room proposed subject property, no new supply is expected to enter the market within the near term. However, we note that the subject market has illustrated strong occupancy levels in excess of 70% over the last decade. This indicated unaccommodated demand in the market and a need for new supply.

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 32

FIGURE 3-7 NEW SUPPLY

Total Weighted Number Competitive Room Estimated Opening Proposed Property of Rooms Level Count Date Developer Development Stage

Proposed Homewood Suites Atlanta 122 100 % 122 July 1, 2014 0 Early Development Proposed Staybridge Suites 149 100 149 November 1, 2013 0 Recently Opened

Totals/Averages 271 271

The opening of Staybridge Suites and proposed subject property should have a positive affect on the local lodging market. There is currently a lack in this type of supply in the market. Management at the Residence Inn Airport North noted that demand for their property comes from the greater region due to it being the only extended-hotel hotel (larger capture area), indicating there is need for this type of property. Furthermore, interviews revealed that due to the lack of this type of lodging supply, individuals needing this accommodation were pushed to rent short-term apartments to be able to stay the desired periods on time. We expect this demand to enter into the market with the opening of the two new extended- stay hotels. We have accounted for this in our induced demand analysis. These concepts are stated in The Valuation of Hotels and Motels,18 Hotels, Motels and Restaurants: Valuations and Market Studies,19 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,20 and Hotels and Motels – Valuations and Market Studies.21

Supply Conclusion We have identified various properties that are expected to be competitive to some degree with the proposed subject property. We have also investigated potential increases in competitive supply in this Atlanta submarket. The Proposed Homewood Suites Atlanta should enter a dynamic market of varying product types and price points. Next, we will present our forecast for demand change, using the historical supply data presented as a starting point.

18 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 19 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 20 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 21 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001).

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DEMAND The following table presents the most recent trends for the subject hotel market as tracked by HVS. These data pertain to the competitors discussed previously in this section; performance results are estimated, rounded for the competition, and in some cases weighted if there are secondary competitors present. In this respect, the information in the table differs from the previously presented STR data and is consistent with the supply and demand analysis developed for this report.

FIGURE 3-8 PRIMARY DEMAND GENERATORS

Existing Demand Generators Comments Hartsfield-Jackson Atlanta International Airport Busiest Airport in the World Delta Airlines Headquarters and Training Center Largest Airline in the World and Largest Employer in Atlanta Georgia International Convention Center New Hotel Offering Expected to Surge Business Woodward Academy Largest Independent School in Country Airport/South Atlanta Office Market Benefits from Airport Location Downtown Atlanta Overflow Demand, Airport Market Lower-Rate Alternative Flight Safety International Large Extended-Stay Demand Driver

New Demand Generators Comments New International Airport Terminal Opened May 2012 Porsche Headquarters and Raceway Expected Second-Half 2014 Aerotropolis Atlanta Future

Source: HVS

Demand Analysis For the purpose of demand analysis, the overall market is divided into individual Using Market segments based on the nature of travel. Based on our fieldwork, area analysis, and Segmentation knowledge of the local lodging market, we estimate the 2012 distribution of accommodated-room-night demand as follows.

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 34

FIGURE 3-9 ACCOMMODATED ROOM NIGHT DEMAND

Marketwide Accommodated Percentage Market Segment Demand of Total

Commercial 265,933 53 % Meeting and Group 79,110 16 Leisure 158,737 32

Total 503,780 100 %

Source: HVS

The purpose of segmenting the lodging market is to define each major type of demand, identify customer characteristics, and estimate future growth trends. Starting with an analysis of the local area, three segments were defined as representing the proposed subject property’s lodging market. Various types of economic and demographic data were then evaluated to determine their propensity to reflect changes in hotel demand. Based on this procedure, we forecast the following average annual compounded market segment growth rates.

FIGURE 3-10 AVERAGE ANNUAL COMPOUNDED MARKET SEGMENT GROWTH RATES

Annual Growth Rate Market Segment 2013 2014 2015 2016 2017 2018

Commercial 2.5 % 1.0 % 2.5 % 0.0 % 0.0 % 0.0 % Meeting and Group 1.0 0.0 1.0 0.0 0.0 0.0 Leisure 2.0 1.0 2.0 0.0 0.0 0.0

Base Demand Growth 2.1 % 0.8 % 2.1 % 0.0 % 0.0 % 0.0 %

Source: HVS

We have estimated the growth in demand for 2013 based on year-to-date September 2013 data compared to the same period in 2012. In 2014 and 2015, demand is projected to increase with the opening of the Porsche North American Headquarters facility. We note that our projected growth rates are considered to be conservative based on the increase in demand expected from this facility.

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 35

Latent Demand A table presented earlier in this section illustrated the accommodated-room-night demand in the proposed subject property’s competitive market. Because this estimate is based on historical occupancy levels, it includes only those hotel rooms that were used by guests. Latent demand reflects potential room-night demand that has not been realized by the existing competitive supply; this type of demand can be divided into unaccommodated demand and induced demand. These concepts are stated in The Valuation of Hotels and Motels,22 Hotels, Motels and Restaurants: Valuations and Market Studies,23 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,24 and Hotels and Motels – Valuations and Market Studies.25

Unaccommodated Unaccommodated demand refers to individuals who are unable to secure Demand accommodations in the market because all the local hotels are filled. These travelers must defer their trips, settle for less desirable accommodations, or stay in properties located outside the market area. Because this demand did not yield occupied room nights, it is not included in the estimate of historical accommodated-room-night demand. If additional lodging facilities are expected to enter the market, it is reasonable to assume that these guests will be able to secure hotel rooms in the future, and it is therefore necessary to quantify this demand.

Unaccommodated demand is further indicated by a market with a year-end occupancy average in excess of 70.0%. This is a signal that the market sells out many nights during the year. These concepts are stated in The Valuation of Hotels and Motels,26 Hotels, Motels and Restaurants: Valuations and Market Studies,27

22 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 23 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 24 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 25 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001). 26 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 27 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983).

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 36

Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,28 and Hotels and Motels – Valuations and Market Studies.29

Based on data from Smith Travel Research (illustrated in Figure 3-11), the market generally sells out during week nights, as well as sporadically within other periods throughout the year. Of important note is that being an airport market, flight cancelations and delays create a surge in demand for area hotels.

Forecast of Figure 3-6 shown prior in this chapter illustrates the historical occupancy by Unaccommodated month for the Northern Airport submarket from 2001 to September 2013. The Demand market has historically demonstrated occupancy levels well in excess of 70.0% over the last decade and has been able to quickly absorb supply. New supply entered the market in 2001/02 and 2009/10 and demand spiked, mirroring the increase in supply and demonstrating unaccommodated demand in the market.

Step 1- To estimate the amount of unaccommodated demand that exists in the market, we have used the Smith Travel Research data for the proposed subject property’s submarket to analyze demand levels by the month and day of the week. The following table illustrates the average annual marketwide occupancy by day of the week for the last three years.

FIGURE 3-11 AVERAGE ANNUAL MARKETWIDE OCCUPANCY BY DAY OF THE WEEK

Occupancy (%) Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total Year

Oct 10 - Sep 11 59.6 % 76.8 % 82.4 % 81.8 % 75.3 % 69.8 % 66.9 % 73.2 % Oct 11 - Sep 12 55.4 71.6 79.1 78.5 73.9 70.4 69.2 71.1 Oct 12 - Sep 13 59.0 74.7 80.9 80.7 77.9 73.2 71.1 73.9 Change (Occupancy Points) FY 11 - FY 12 -4.3 -5.2 -3.3 -3.3 -1.4 0.6 2.3 -2.1 FY 12 - FY 13 3.6 3.1 1.8 2.3 3.9 2.8 1.9 2.8

Source: Smith Travel Research

As illustrated in the prior table, the market generally sells out Monday to Friday. We have taken this data for the most recent period and estimated the number of days per month that the market has sold out room nights (the number of days per

28 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 29 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001).

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 37

week that have an occupancy level in excess of 70.0% multiplied by four to conclude on the total number of sold out room nights per month). The following table illustrates our estimate of sold-out room nights for the proposed subject property’s submarket in the last 12-month period.

FIGURE 3-12 UNACCOMMODATED DEMAND BY MONTH AND DAY OF THE WEEK

Sold Out Month Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total Month Nights Per Month Oct - 12 60.0 % 80.6 % 84.8 % 79.6 % 77.6 % 72.9 % 65.3 % 75.1 % 20 Nov - 12 49.0 67.0 75.9 74.1 69.2 61.6 57.0 64.9 8 Dec - 12 44.2 61.9 62.7 64.4 57.4 55.4 58.0 57.4 0 Jan - 13 56.5 74.2 78.5 80.7 76.2 62.9 62.6 71.0 16 Feb - 13 60.0 78.9 88.2 87.5 85.6 74.0 72.3 78.1 24 Mar - 13 56.2 79.5 84.3 83.1 80.2 77.7 70.3 75.2 24 Apr - 13 73.1 80.2 88.1 91.0 88.3 83.6 77.6 83.2 28 May - 13 62.6 70.1 80.2 80.0 79.2 71.5 70.8 73.8 24 Jun - 13 59.5 84.0 87.6 86.3 86.7 82.6 71.3 78.8 24 Jul - 13 68.4 71.4 77.1 81.1 83.8 88.6 89.7 79.7 24 Aug - 13 55.8 75.6 80.1 80.5 75.3 76.6 81.9 75.4 24 Sep - 13 65.0 74.8 81.5 80.6 77.8 72.2 77.3 75.2 24 Average 59.0 % 74.7 % 80.9 % 80.7 % 77.9 % 73.2 % 71.1 % 73.9 % 240 Source: Smith Travel Research

We have estimated a total of 240 room nights per year that the subject market has sold out room nights.

Step 2- Analyze the number of accommodated room nights per month by demand segment. The following table illustrates total accommodated demand by month and by segment based on the Smith Travel Research data:

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 38

FIGURE 3-13 ACCOMMODATED ROOM NIGHTS PER MONTH PER SEGMENT

Month Commerical Meeting and Group Leisure Total January 21,209 6,309 12,660 40,179 February 20,678 6,151 12,343 39,171 March 24,900 7,407 14,863 47,171 April 22,042 6,557 13,157 41,756 May 23,443 6,974 13,993 44,410 June 23,352 6,947 13,939 44,238 July 23,782 7,075 14,196 45,052 August 23,747 7,064 14,174 44,985 September 22,194 6,602 13,248 42,044 October 23,298 6,931 13,907 44,136 November 19,474 5,793 11,624 36,892 December 17,814 5,299 10,633 33,746 Total 265,933 79,110 158,737 503,780

Source: HVS and Smith Travel Research

Step 3- Estimate the percentage of unaccommodated per month into each of the three demand segments.

FIGURE 3-14 ESTIMATED UNACCOMMODATED ROOM NIGHTS

Commercial Meeting and Group Leisure

% Room Nights % Room Nights % Room Nights January 11 % 2,289 11 % 681 11 % 1,366 February 17 3,433 17 1,021 17 2,049 March 14 3,433 14 1,021 14 2,049 April 18 4,006 18 1,192 18 2,391 May 15 3,433 15 1,021 15 2,049 June 15 3,433 15 1,021 15 2,049 July 14 3,433 14 1,021 14 2,049 August 14 3,433 14 1,021 14 2,049 September 15 3,433 15 1,021 15 2,049 October 12 2,861 12 851 12 1,708 November 6 1,144 6 340 6 683 December 0 0 0 0 0 0 Total 13 % 34,333 13 % 10,213 13 % 20,494

Source: HVS

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 39

Step 4- Review of findings. The following table presents the accommodated demand in the market versus our estimate of total unaccommodated demand.

FIGURE 3-15 UNACCOMMODATED DEMAND ESTIMATE

Accommodated Room Unaccommodated Unaccommodated Market Segment Night Demand Demand Percentage Room Night Demand

Commercial 265,933 12.9 % 34,333 Meeting and Group 79,110 12.9 10,213 Leisure 158,737 12.9 20,494

Total 503,780 12.9 % 65,040

Source: HVS and Smith Travel Research

We believe the amount of estimated unaccommodated demand is supported by the market dynamic of size, with a large quantity of hotels in the Atlanta airport market, in which the northern and southern submarkets mirror each other with the same branded hotels. Demand, which is currently turned away, should return to this submarket concurrent with the addition of the Staybridge Suites Atlanta Airport and the proposed subject property.

Forecast of As illustrated earlier in this section, there is only one extended-stay hotel Induced Demand (Residence Inn Atlanta North) within the greater Atlanta Airport market. Due to the opening of the Staybridge Suites and proposed subject property entering the greater Atlanta Airport market, we believe their opening will induce demand as there is currently a lack in this type of hotel supply in the market. Based on our market interviews with participants, there is a need for more extended-stay hotel product; individuals who seek this type of demand were unable to find adequate accommodations in the market prior to the opening of these two hotels. This induced demand is in addition to the unaccommodated demand we have calculated.

We expect that the opening of extended-stays product, the Staybridge Suites and proposed subject property, within the Atlanta Airport market will induce an estimated 7,754 rooms in 2014, 8,185 rooms in 2015, and 8,616 rooms in 2016 and onward. This is based on assumption that the induced demand will be phased in over a three-year period as the hotel is penetrating the market and gaining awareness (90% in Year 1, 95% in Year 2, and 100% in Year 3).

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 40

The following table summarizes our estimate of induced demand.

FIGURE 3-16 FORECAST OF INDUCED DEMAND

Market Segment 2014 2015 2016 2017 2018

Commercial 4,514 4,765 5,016 5,016 5,016 Meeting and Group 767 809 852 852 852 Leisure 2,473 2,611 2,748 2,748 2,748

Total 7,754 8,185 8,616 8,616 8,616

Source: HVS

Demand Summary As illustrated earlier in this section, there was only one extended-stay hotel (Residence Inn Atlanta North) within the greater Atlanta Airport market until the opening of the Staybridge Suites on November 1, 2013. Due to the proposed subject property being the third extended-stay hotel to enter the greater Atlanta Airport market, we believe its opening will drive demand based on brand strength and product offering. Based on our market interviews with participants, there is a need for more extended-stay and Hilton hotel product; reportedly, Hilton has the strongest brand loyalty for guests in the market.

Furthermore, offering an extended-stay hotel will fulfill a gap that currently exists in the lodging market based on HVS’s research. This apartment-style accommodation will benefit local businesses and citizens by offering a decrease in rate by duration structure for guests needing to stay longer periods of time; including employees for the construction of the Porsche North American Headquarters, individuals and families relocating to the area, attendees to training session, construction crews for area projects and improvements to the airport, family members of people at local hospitals, and people traveling in for family reunions. These factors sourced from The Valuation of Hotels and Motels,30 Hotels, Motels and Restaurants: Valuations and Market Studies,31 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,32 and Hotels and Motels –

30 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 31 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 32 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992).

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 41

Valuations and Market Studies.33 In addition, management at the Residence Inn Airport North noted that demand for their property comes from the greater region due to it being the only extended-hotel hotel (larger capture area) and there is need for this type of property.

Demand Level and With the opening of the new $1.4-billion Maynard H. Jackson Jr. International New Supply Terminal in May 2012 and the development of the Porsche North America Headquarters and Raceway slated to open second-half 2014, there is expected to be an increase in demand that calls for new hotel supply in the market. In particular, the development of the Porsche North America Headquarters is expected to create a surge in extended-stay demand with three types of demand drivers generated from the facilities. Once complete, the Porsche Headquarters will draw existing and new customers to its driving courses at the new tracks; mechanics from Porsche dealerships in the United States will need to come to the facility every year for a one-week training program, and corporate employees from Germany will need to come for extended periods throughout the year. The subject market currently experiences high occupancy levels with sold out nights and a significant amount of unaccommodated demand. The Residence Inn is currently the only extended-stay property in the market. This, coupled with the addition of the Porsche North America Headquarters and tracks, indicates a need for another extended-stay hotel in the market. The opening of the Staybridge Suites and proposed subject property are expected to have a positive affect on the market. These factors sourced from The Valuation of Hotels and Motels,34 Hotels, Motels and Restaurants: Valuations and Market Studies,35 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,36 and Hotels and Motels – Valuations and Market Studies.37

Accommodated Based upon a review of the market dynamics in the proposed subject property’s Demand and Market- competitive environment, we have forecast growth rates for each market segment. wide Occupancy Using the calculated potential demand for the market, we have determined

33 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001). 34 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 35 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 36 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 37 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001).

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 42

market-wide accommodated demand based on the inherent limitations of demand fluctuations and other factors in the market area.

The following table details our projection of lodging demand growth for the subject market, including the total number of occupied room nights and any residual unaccommodated demand in the market.

FIGURE 3-17 FORECAST OF MARKET OCCUPANCY

2013 2014 2015 2016 2017 2018 Commercial Occupied Room Nights 275,815 311,419 323,387 323,638 323,638 323,638 Residual Demand 31,958 3,945 0 0 0 0 Accommodated Demand Growth 3.7 % 12.9 % 3.8 % 0.1 % 0.0 % 0.0 % Meeting and Group Occupied Room Nights 80,849 89,838 91,928 91,971 91,971 91,971 Residual Demand 9,368 1,145 0 0 0 0 Accommodated Demand Growth 2.2 % 11.1 % 2.3 % 0.0 % 0.0 % 0.0 % Leisure Occupied Room Nights 163,833 184,773 190,947 191,084 191,084 191,084 Residual Demand 18,983 2,344 0 0 0 0 Accommodated Demand Growth 3.2 % 12.8 % 3.3 % 0.1 % 0.0 % 0.0 %

Totals Occupied Room Nights 520,497 586,031 606,262 606,693 606,693 606,693 Residual Demand 60,308 7,434 0 0 0 0 Accommodated Demand Growth 3.3 % 12.6 % 3.5 % 0.1 % 0.0 % 0.0 % Existing Supply 1,897 1,897 1,897 1,897 1,897 1,897 Proposed Supply Proposed Homewood Suites Atlanta ¹ 62 122 122 122 122 Proposed Staybridge Suites ² 25 149 149 149 149 149

Available Rooms per Night 1,922 2,108 2,168 2,168 2,168 2,168 Nights per Year 365 365 365 365 365 365 Total Supply 701,494 769,238 791,320 791,320 791,320 791,320 Rooms Supply Growth 1.3 % 9.7 % 2.9 % 0.0 % 0.0 % 0.0 % Marketwide Occupancy 74.2 % 76.2 % 76.6 % 76.7 % 76.7 % 76.7 %

¹ Opening in July 2014 of the 100% competitive, 122-room Proposed Homewood Suites Atlanta ² Opening in November 2013 of the 100% competitive, 149-room Proposed Staybridge Suites

Source: HVS

December - 2013 Supply and Demand Analysis Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 43

Residual demand is the total projected demand by segment less the existing accommodated demand in the market. The sum of unaccommodated and induced demand equals the latent demand in a market. These factors found in The Valuation of Hotels and Motels,38 Hotels, Motels and Restaurants: Valuations and Market Studies,39 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,40 and Hotels and Motels – Valuations and Market Studies.41

As illustrated, the marketwide occupancy is expected to stabilize at 76.7% in 2016. We note marketwide occupancy peaked at 81.3% in 2005 and our stabilized occupancy is well below this historical performance achieved. Furthermore, the market has consistently maintained an occupancy level in excess of 70%, indicating unaccommodated demand in the market that should allow for the Staybridge Suites and proposed subject property to be easily absorbed.

38 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 39 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 40 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 41 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001).

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4. Projection of Occupancy and Average Rate

Forecast of Subject The proposed subject property's occupancy forecast is set forth as follows, with Property’s Occupancy the adjusted projected penetration rates used as a basis for calculating the amount of captured market demand.

FIGURE 4-1 FORECAST OF SUBJECT PROPERTY'S OCCUPANCY

Market Segment 2014 2015 2016 2017 2018

Commercial Demand 311,419 323,387 323,638 323,638 323,638 Market Share 2.8 % 6.0 % 6.4 % 6.4 % 6.4 % Capture 8,735 19,264 20,558 20,558 20,558 Penetration 96 % 106 % 113 % 113 % 113 %

Meeting and Group Demand 89,838 91,928 91,971 91,971 91,971 Market Share 1.8 % 4.1 % 4.1 % 4.1 % 4.1 % Capture 1,638 3,762 3,764 3,764 3,764 Penetration 62 % 73 % 73 % 73 % 73 %

Leisure Demand 184,773 190,947 191,084 191,084 191,084 Market Share 2.4 % 5.6 % 5.6 % 5.6 % 5.6 % Capture 4,370 10,745 10,753 10,753 10,753 Penetration 81 % 100 % 100 % 100 % 100 %

Total Room Nights Captured 14,743 33,771 35,075 35,075 35,075 Available Room Nights 22,448 44,530 44,530 44,530 44,530 Subject Occupancy 66 % 76 % 79 % 79 % 79 % Marketwide Available Room Nights 769,238 791,320 791,320 791,320 791,320 Fair Share 3 % 6 % 6 % 6 % 6 % Marketwide Occupied Room Nights 586,031 606,262 606,693 606,693 606,693 Market Share 3 % 6 % 6 % 6 % 6 % Marketwide Occupancy 76 % 77 % 77 % 77 % 77 % Total Penetration 86 % 99 % 103 % 103 % 103 %

December - 2013 Projection of Occupancy and Average Rate Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 45

These positioned segment penetration rates result in the following market segmentation forecast.

FIGURE 4-2 MARKET SEGMENTATION FORECAST – SUBJECT PROPERTY

2014 2015 2016 2017 2018

Commercial 59 % 57 % 59 % 59 % 59 % Meeting and Group 11 11 11 11 11 Leisure 30 32 31 31 31

Total 100 % 100 % 100 % 100 % 100 %

Based on our analysis of the proposed subject property and market area, we have selected a stabilized occupancy level of 79%.

Average Rate Analysis The following table illustrates the projected average rate and the growth rates assumed. As a context for the average rate growth factors, note that we have applied a base underlying inflation rate of 3.0% annually throughout our projection period.

FIGURE 4-3 MARKET AND SUBJECT PROPERTY AVERAGE RATE FORECAST

Area-wide Market (Calendar Year) Subject Property (Calendar Year)

Average Rate Average Average Rate Average Average Rate Year Occupancy Growth Rate Occupancy Growth Rate Penetration

Base Year 72.8 % — $90.46 — — $106.00 117.2 % 2013 74.2 0.0 % 90.46 — 0.0 % 106.00 117.2 2014 76.2 4.0 94.07 66.0 % 4.0 110.24 117.2 2015 76.6 6.0 99.72 76.0 6.0 116.85 117.2 2016 76.7 6.0 105.70 79.0 6.0 123.87 117.2 2017 76.7 5.0 110.99 79.0 5.0 130.06 117.2 2018 76.7 3.0 114.32 79.0 3.0 133.96 117.2

As illustrated above, marketwide average rate growth is expected to remain flat for 2013 based on year-to-date September data. This is followed by growth rates of 4.0% and 6.0% in 2014 and 2015, respectively.

December - 2013 Projection of Occupancy and Average Rate Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 46

The new international terminal at the airport, strength of Delta Air Lines, surge in growth at the Georgia International Convention Center, expected opening of the Porsche North America Headquarters, and continued recovery of the economy should drive average rate growth in the market. We believe the proposed subject property’s average rate grow will follow the same trend as the market.

The North American lodging market bottomed out in late 2009, at which time demand rebounded and the supply pipeline diminished. In 2010, occupancy rebounded strongly, and by 2011, average rates in most U.S. markets showed increases. In many urban markets, strong occupancy levels are allowing hotel operators to continue to make aggressive average rate gains in 2013, while in some less-robust markets, average rate growth is still constrained by weak demand levels. With demand largely recovered from the correction in 2009, and new supply remaining muted in 2013 and 2014, markets should be able to support healthy average rate gains in the near term.

The following occupancies and average rates will be used to project the proposed subject property's rooms revenue; this forecast reflects years beginning on July 1, 2014, which corresponds with our financial projections.

FIGURE 4-4 FORECAST OF OCCUPANCY, AVERAGE RATE, AND REVPAR

Year Occupancy Average Rate RevPAR

2014/15 71 % $113.52 $80.60 2015/16 77 120.33 92.66 2016/17 79 126.94 100.28 2017/18 79 131.99 104.28

December - 2013 Projection of Occupancy and Average Rate Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 47

5. Projection of Income and Expense

In this chapter of our report, we have compiled a forecast of income and expense for the proposed subject property. This forecast is based on the facilities program set forth previously, as well as the occupancy and average rate forecast discussed previously.

Comparable Operating In order to project future income and expense for the proposed subject property, Statements we have included a sample of individual comparable operating statements from our database of hotel statistics. All financial data are presented according to the three most common measures of industry performance: ratio to sales (RTS), amounts per available room (PAR), and amounts per occupied room night (POR). These historical income and expense statements will be used as benchmarks in our forthcoming forecast of income and expense.

December - 2013 Projection of Income and Expense Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 48

FIGURE 5-1 COMPARABLE OPERATING STATEMENTS: RATIO TO SALES

Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Subject Stabilized $ Occupancy: 67% 85% 81% 76% 85% 79% Average Rate: $116 $123 $123 $96 $121 $113 RevPAR: $78 $104 $100 $72 $102 $89 REVENUE Rooms 97.9 % 100.0 % 98.9 % 97.8 % 99.4 % 98.3 % Other Operated Departments 2.1 0.0 1.1 2.2 0.6 1.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 DEPARTMENTAL EXPENSES* Rooms 26.3 22.5 23.8 27.2 23.3 23.0 Total 25.7 22.5 23.5 26.6 23.2 22.6 DEPARTMENTAL INCOME 74.3 77.5 76.5 73.4 76.8 77.4 OPERATING EXPENSES Administrative & General 7.4 6.9 6.2 10.7 10.7 7.8 Marketing 5.9 6.7 9.0 7.3 5.3 5.1 Franchise Fee 7.3 8.0 4.0 5.0 7.1 7.9 Property Operations & Maintenance 5.1 5.5 4.5 4.9 3.5 3.9 Utilities 6.8 4.4 4.7 6.5 4.1 5.4 Total 32.5 31.5 28.4 34.5 30.7 30.1 HOUSE PROFIT 41.8 46.0 48.1 38.9 46.1 47.3 Management Fee 2.0 3.1 4.0 3.0 4.0 5.0 INCOME BEFORE FIXED CHARGES 39.8 42.9 44.1 35.9 42.1 42.3 FIXED EXPENSES Property Taxes 5.6 2.4 5.3 6.8 3.4 5.4 Insurance 1.5 0.9 1.4 0.7 0.6 0.9 Reserve for Replacement 3.0 0.0 5.0 5.0 0.0 4.0 Total 10.1 3.3 11.7 12.5 4.0 10.3 NET INCOME 29.7 % 39.6 % 32.4 % 23.4 % 38.1 % 32.0 %

* Departmental expense ratios are expressed as a percentage of departmental revenues

December - 2013 Projection of Income and Expense Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 49

FIGURE 5-2 COMPARABLE OPERATING STATEMENTS: AMOUNTS PER AVAILABLE ROOM

Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Subject Stabilized $ Occupancy: 67% 85% 81% 76% 85% 79% Average Rate: $116 $123 $123 $96 $121 $113 RevPAR: $78 $104 $100 $72 $102 $89 REVENUE Rooms $28,364 $38,066 $36,563 $26,429 $37,374 $32,589 Other Operated Departments 620 0 411 587 222 575 Total 28,983 38,066 36,973 27,016 37,596 33,165 DEPARTMENTAL EXPENSES Rooms 7,446 8,575 8,688 7,198 8,717 7,480 Total 7,446 8,575 8,688 7,198 8,717 7,480 DEPARTMENTAL INCOME 21,537 29,491 28,286 19,817 28,879 25,685 OPERATING EXPENSES Administrative & General 2,140 2,623 2,304 2,889 4,010 2,594 Marketing 1,719 2,538 3,321 1,984 1,980 1,696 Franchise Fee 2,124 3,047 1,464 1,349 2,677 2,607 Property Operations & Maintenance 1,479 2,094 1,661 1,333 1,333 1,299 Utilities 1,967 1,689 1,750 1,762 1,535 1,796 Total 9,430 11,991 10,500 9,317 11,535 9,992 HOUSE PROFIT 12,107 17,500 17,786 10,500 17,344 15,693 Management Fee 579 1,170 1,482 810 1,505 1,658 INCOME BEFORE FIXED CHARGES 11,529 16,330 16,304 9,690 15,838 14,035 FIXED EXPENSES Property Taxes 1,612 906 1,946 1,849 1,293 1,802 Insurance 421 349 509 190 222 299 Reserve for Replacement 868 0 1,848 1,349 0 1,327 Total 2,901 1,255 4,304 3,389 1,515 3,428 NET INCOME $8,628 $15,075 $12,000 $6,301 $14,323 $10,607

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FIGURE 5-3 COMPARABLE OPERATING STATEMENTS: AMOUNTS PER OCCUPIED ROOM

Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Subject Stabilized $ Occupancy: 67% 85% 81% 76% 85% 79% Average Rate: $116 $123 $123 $96 $121 $113 RevPAR: $78 $104 $100 $72 $102 $89 REVENUE Rooms $115.84 $123.20 $123.10 $95.83 $120.82 $113.02 Other Operated Departments 2.53 0.00 1.38 2.13 0.72 2.00 Total 118.37 123.20 124.48 97.96 121.53 115.02 DEPARTMENTAL EXPENSES Rooms 30.41 27.75 29.25 26.10 28.18 25.94 Total 30.41 27.75 29.25 26.10 28.18 25.94 DEPARTMENTAL INCOME 87.96 95.44 95.23 71.86 93.36 89.08 OPERATING EXPENSES Administrative & General 8.74 8.49 7.76 10.48 12.96 9.00 Marketing 7.02 8.21 11.18 7.19 6.40 5.88 Franchise Fee 8.67 9.86 4.93 4.89 8.65 9.04 Property Operations & Maintenance 6.04 6.78 5.59 4.83 4.31 4.50 Utilities 8.03 5.47 5.89 6.39 4.96 6.23 Total 38.51 38.81 35.35 33.79 37.29 34.65 HOUSE PROFIT 49.45 56.64 59.88 38.07 56.07 54.42 Management Fee 2.36 3.79 4.99 2.94 4.87 5.75 INCOME BEFORE FIXED CHARGES 47.08 52.85 54.89 35.14 51.20 48.67 FIXED EXPENSES Property Taxes 6.58 2.93 6.55 6.71 4.18 6.25 Insurance 1.72 1.13 1.71 0.69 0.72 1.04 Reserve for Replacement 3.54 0.00 6.22 4.89 0.00 4.60 Total 11.85 4.06 14.49 12.29 4.90 11.89 NET INCOME $35.23 $48.79 $40.40 $22.85 $46.30 $36.78

Inflation Assumption A general rate of inflation must be established that will be applied to most revenue and expense categories. In consideration of the most recent trends and our assessment of probable property appreciation levels, we have applied an underlying inflation rate of 2.5% in 2014, 2.5% in 2015, and 3.0% in 2016 and thereafter. This stabilized inflation rate takes into account normal, recurring inflation cycles. Inflation is likely to fluctuate above and below this level during the projection period. Any exceptions to the application of the assumed underlying inflation rate are discussed in our write-up of individual income and expense items.

December - 2013 Projection of Income and Expense Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 51

Summary of Based on an analysis that will be detailed throughout this section, we have Projections formulated a forecast of income and expense. The following table presents a detailed forecast through the stabilized projection year, including amounts per available room and per occupied room. The second table illustrates our ten-year forecast of income and expense, presented with a lesser degree of detail. The forecasts pertain to years beginning July 1, 2014 and are expressed in inflated dollars for each year.

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FIGURE 5-4 DETAILED FORECAST OF INCOME AND EXPENSE

2014/15 Begins July 2015/16 2016/17 Stabilized Number of Rooms: 122 122 122 122 Occupancy: 71% 77% 79% 79% Average Rate: $113.52 $120.33 $126.94 $131.99 RevPAR: $80.60 $92.66 $100.28 $104.28 Days Open: 365 365 365 365 Occupied Rooms: 31,616 %Gross PAR POR 34,288 %Gross PAR POR 35,179 %Gross PAR POR 35,179 %Gross PAR POR REVENUE Rooms $3,589 98.0 % $29,418 $113.52 $4,126 98.2 % $33,820 $120.33 $4,465 98.2 % $36,598 $126.92 $4,643 98.3 % $38,057 $131.98 Other Operated Departments 73 2.0 596 2.30 77 1.8 629 2.24 80 1.8 652 2.26 82 1.7 672 2.33 Total Revenues 3,662 100.0 30,014 115.82 4,203 100.0 34,448 122.57 4,545 100.0 37,251 129.19 4,725 100.0 38,729 134.31 DEPARTMENTAL EXPENSES * Rooms 936 26.1 7,670 29.60 994 24.1 8,150 29.00 1,035 23.2 8,481 29.41 1,066 23.0 8,735 30.29 Total 936 25.6 7,670 29.60 994 23.7 8,150 29.00 1,035 22.8 8,481 29.41 1,066 22.6 8,735 30.29 DEPARTMENTAL INCOME 2,726 74.4 22,344 86.22 3,208 76.3 26,298 93.57 3,510 77.2 28,770 99.77 3,659 77.4 29,994 104.02 UNDISTRIBUTED OPERATING EXPENSES Administrative & General 325 8.9 2,666 10.29 343 8.2 2,815 10.02 358 7.9 2,934 10.18 370 7.8 3,029 10.51 Marketing 213 5.8 1,743 6.73 225 5.3 1,841 6.55 234 5.2 1,919 6.65 242 5.1 1,981 6.87 Franchise Fee 287 7.8 2,353 9.08 330 7.9 2,706 9.63 357 7.9 2,928 10.15 371 7.9 3,045 10.56 Prop. Operations & Maint. 131 3.6 1,077 4.15 148 3.5 1,213 4.31 164 3.6 1,343 4.66 185 3.9 1,517 5.26 Utilities 225 6.1 1,846 7.12 238 5.7 1,949 6.93 248 5.5 2,031 7.04 256 5.4 2,097 7.27 Total 1,182 32.2 9,685 37.37 1,284 30.6 10,523 37.44 1,361 30.1 11,155 38.69 1,424 30.1 11,669 40.47 HOUSE PROFIT 1,544 42.2 12,659 48.85 1,925 45.7 15,775 56.13 2,149 47.1 17,615 61.09 2,236 47.3 18,325 63.55 Management Fee 183 5.0 1,501 5.79 210 5.0 1,722 6.13 227 5.0 1,863 6.46 236 5.0 1,936 6.72 INCOME BEFORE FIXED CHARGES 1,361 37.2 11,158 43.06 1,714 40.7 14,052 50.00 1,922 42.1 15,752 54.63 1,999 42.3 16,389 56.84 FIXED EXPENSES Property Taxes 249 6.8 2,044 7.89 256 6.1 2,095 7.45 263 5.8 2,158 7.48 271 5.7 2,222 7.71 Insurance 39 1.1 320 1.23 40 1.0 329 1.17 41 0.9 339 1.18 43 0.9 350 1.21 Reserve for Replacement 73 2.0 600 2.32 126 3.0 1,033 3.68 182 4.0 1,490 5.17 189 4.0 1,549 5.37 Total 362 9.9 2,964 11.44 422 10.1 3,458 12.30 486 10.7 3,987 13.83 503 10.6 4,121 14.29 NET INCOME $1,000 27.3 % $8,194 $31.62 $1,293 30.6 % $10,595 $37.70 $1,435 31.4 % $11,766 $40.80 $1,497 31.7 % $12,268 $42.55

*Departmental expenses are expressed as a percentage of departmental revenues.

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FIGURE 5-5 TEN-YEAR FORECAST OF INCOME AND EXPENSE

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

Number of Rooms: 122 122 122 122 122 122 122 122 122 122 Occupied Rooms: 31,616 34,288 35,179 35,179 35,179 35,179 35,179 35,179 35,179 35,179 Occupancy: 71% 77% 79% 79% 79% 79% 79% 79% 79% 79% Average Rate: $113.52 % of $120.33 % of $126.94 % of $131.99 % of $135.95 % of $140.03 % of $144.23 % of $148.56 % of $153.02 % of $157.61 % of RevPAR: $80.60 Gross $92.66 Gross $100.28 Gross $104.28 Gross $107.40 Gross $110.63 Gross $113.94 Gross $117.36 Gross $120.88 Gross $124.51 Gross REVENUE Rooms $3,589 98.0 % $4,126 98.2 % $4,465 98.2 % $4,643 98.3 % $4,783 98.3 % $4,926 98.3 % $5,074 98.3 % $5,226 98.3 % $5,383 98.3 % $5,544 98.3 % Other Operated Departments 73 2.0 77 1.8 80 1.8 82 1.7 84 1.7 87 1.7 90 1.7 92 1.7 95 1.7 98 1.7 Total 3,662 100.0 4,203 100.0 4,545 100.0 4,725 100.0 4,867 100.0 5,013 100.0 5,164 100.0 5,318 100.0 5,478 100.0 5,642 100.0 DEPARTMENTAL EXPENSES* Rooms 936 26.1 994 24.1 1,035 23.2 1,066 23.0 1,098 22.9 1,131 23.0 1,165 23.0 1,199 23.0 1,235 23.0 1,272 23.0 Total 936 25.6 994 23.7 1,035 22.8 1,066 22.6 1,098 22.6 1,131 22.6 1,165 22.6 1,199 22.6 1,235 22.6 1,272 22.6 DEPARTMENTAL INCOME 2,726 74.4 3,208 76.3 3,510 77.2 3,659 77.4 3,770 77.4 3,882 77.4 3,999 77.4 4,119 77.4 4,243 77.4 4,369 77.4 UNDISTRIBUTED OPERATING EXPENSES Administrative & General 325 8.9 343 8.2 358 7.9 370 7.8 381 7.8 392 7.8 404 7.8 416 7.8 428 7.8 441 7.8 Marketing 213 5.8 225 5.3 234 5.2 242 5.1 249 5.1 256 5.1 264 5.1 272 5.1 280 5.1 289 5.1 Franchise Fee 287 7.8 330 7.9 357 7.9 371 7.9 383 7.9 394 7.9 406 7.9 418 7.9 431 7.9 444 7.9 Prop. Operations & Maint. 131 3.6 148 3.5 164 3.6 185 3.9 205 4.2 211 4.2 217 4.2 224 4.2 231 4.2 238 4.2 Utilities 225 6.1 238 5.7 248 5.5 256 5.4 264 5.4 271 5.4 280 5.4 288 5.4 297 5.4 306 5.4 Total 1,182 32.2 1,284 30.6 1,361 30.1 1,424 30.1 1,481 30.4 1,525 30.4 1,571 30.4 1,618 30.4 1,667 30.4 1,716 30.4 HOUSE PROFIT 1,544 42.2 1,925 45.7 2,149 47.1 2,236 47.3 2,289 47.0 2,357 47.0 2,428 47.0 2,501 47.0 2,576 47.0 2,653 47.0 Management Fee 183 5.0 210 5.0 227 5.0 236 5.0 243 5.0 251 5.0 258 5.0 266 5.0 274 5.0 282 5.0 INCOME BEFORE FIXED CHARGES 1,361 37.2 1,714 40.7 1,922 42.1 1,999 42.3 2,046 42.0 2,107 42.0 2,170 42.0 2,235 42.0 2,302 42.0 2,371 42.0 FIXED EXPENSES Property Taxes 249 6.8 256 6.1 263 5.8 271 5.7 279 5.7 288 5.7 296 5.7 305 5.7 314 5.7 324 5.7 Insurance 39 1.1 40 1.0 41 0.9 43 0.9 44 0.9 45 0.9 47 0.9 48 0.9 49 0.9 51 0.9 Reserve for Replacement 73 2.0 126 3.0 182 4.0 189 4.0 195 4.0 201 4.0 207 4.0 213 4.0 219 4.0 226 4.0 Total 362 9.9 422 10.1 486 10.7 503 10.6 518 10.6 533 10.6 549 10.6 566 10.6 583 10.6 600 10.6 NET INCOME $1,000 27.3 % $1,293 30.6 % $1,435 31.4 % $1,497 31.7 % $1,528 31.4 % $1,573 31.4 % $1,621 31.4 % $1,669 31.4 % $1,719 31.4 % $1,770 31.4 % 1 1 1 1 1 1 1 1 1 1 *Departmental expenses are expressed as a percentage of departmental revenues.

December - 2013 Projection of Income and Expense Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 54

Forecast of Income and The following description sets forth the basis for the forecast of income and Expense expense. We anticipate that it will take four years for the subject property to reach a stabilized level of operation. Each revenue and expense item has been forecast based upon our review of the proposed subject property’s operating budget and comparable income and expense statements. Our forecast is based upon calendar years beginning July 1, 2014 and is expressed in inflated dollars for each year.

Property Taxes Property (or ad valorem) tax is one of the primary revenue sources of municipalities. Based on the concept that the tax burden should be distributed in proportion to the value of all properties within a taxing jurisdiction, a system of assessments is established. Theoretically, the assessed value placed on each parcel bears a definite relationship to market value, so properties with equal market values will have similar assessments and properties with higher and lower values will have proportionately larger and smaller assessments.

Depending on the taxing policy of the municipality, property taxes can be based on the value of the real property or the value of the personal property and the real property. We have based our estimate of the proposed subject property's market value (for tax purposes) on an analysis of assessments of comparable hotel properties in the local municipality.

FIGURE 5-6 COUNTY-ASSESSED VALUE OF COMPARABLE HOTELS

Number Total Assessment Hotel of Rooms Land Improvements Total

Hyatt Place Atlanta Airport North 150 $529,200 $5,270,800 $5,800,000 Hampton Inn & Suites Atlanta Airport North I85 105 726,000 5,478,000 6,204,000 Hilton Garden Inn Atlanta Airport North 174 2,380,500 13,233,900 15,614,400 Residence Inn by Marriott Atlanta Airport North Virginia Avenue 126 3,439,800 4,313,300 7,753,100 Assessments per Room Hyatt Place Atlanta Airport North $3,528 $35,139 $38,667 Hampton Inn & Suites Atlanta Airport North I85 6,914 52,171 59,086 Hilton Garden Inn Atlanta Airport North 13,681 76,057 89,738 Residence Inn by Marriott Atlanta Airport North Virginia Avenue 27,300 34,233 61,533

Positioned Subject - Per Room 122 $8,041 $45,000 $53,041 Positioned Subject - Total $981,002 $5,490,000 $6,471,002

Source: Fulton County Board of Assessors

We have based the proposed subject property’s tax burden per key based on the comparables. We have also assumed a $15,000 per room FF&E cost for the personal property assessment that declines going forward based on depreciation.

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Tax rates are based on the city and county budgets, which change annually. The most recent tax rate in this jurisdiction was reported at 29.30300%. The following table shows changes in the tax rate during the last several years.

FIGURE 5-7 COUNTY TAX RATES

Personal Property Real Property Year Tax Rate Tax Rate 2010 28.03300 28.03300 2011 29.03300 29.03300 2012 29.30300 29.30300

Source: Fulton County Board of Assessors

Based on comparable assessments and the tax rate information, the proposed subject property's projected property tax expense levels are calculated as follows.

FIGURE 5-8 PROJECTED PROPERTY TAX EXPENSE

Assessed Value Pers. Prop. Property Tax Year Land Improvements Personal Total Tax Rate Tax Rate Forecast

Positioned $981,002 $5,490,000 $1,830,000 $8,301,002 29.30 29.30 $243,244 2014/15 $981,002 $5,490,000 $1,647,000 $8,118,002 30.04 30.04 $243,829 2015/16 981,002 5,490,000 1,482,300 7,953,302 30.79 30.79 244,854 2016/17 981,002 5,490,000 1,334,070 7,805,072 31.71 31.71 247,499

Conclusion In conclusion, our analysis reflects a profitable operation, with net income expected to total 32.0% of total revenue by the stabilized year. The stabilized total revenue comprises primarily rooms and food and beverage revenue, with a secondary portion derived from other income sources. On the cost side, departmental expenses total 22.6% of revenue by the stabilized year, while undistributed operating expenses total 30.1% of total revenues. Our analysis assumes a 5.0% of total revenues management fee. Overall, the property is expected to be profitable and benefit the local market by fulfilling the gap that current exists for extended-stay hotels.

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6. Statement of Assumptions and Limiting Conditions

1. This report is set forth as a market study of the proposed subject property; this is not an appraisal report. 2. This report is to be used in whole and not in part. 3. No responsibility is assumed for matters of a legal nature, nor do we render any opinion as to title, which is assumed to be marketable and free of any deed restrictions and easements. The property is evaluated as though free and clear unless otherwise stated. 4. We assume that there are no hidden or unapparent conditions of the sub- soil or structures, such as underground storage tanks, that would impact the property’s development potential. No responsibility is assumed for these conditions or for any engineering that may be required to discover them. 5. We have not considered the presence of potentially hazardous materials or any form of toxic waste on the project site. The consultants are not qualified to detect hazardous substances, and we urge the client to retain an expert in this field if desired. 6. The Americans with Disabilities Act (ADA) became effective on January 26, 1992. We have assumed the proposed hotel would be designed and constructed to be in full compliance with the ADA. 7. We have made no survey of the site, and we assume no responsibility in connection with such matters. Sketches, photographs, maps, and other exhibits are included to assist the reader in visualizing the property. It is assumed that the use of the described real estate will be within the boundaries of the property described, and that no encroachment will exist. 8. All information, financial operating statements, estimates, and opinions obtained from parties not employed by Hotel Appraisals, LLC are assumed to be true and correct. We can assume no liability resulting from misinformation. 9. Unless noted, we assume that there are no encroachments, zoning violations, or building violations encumbering the subject property. 10. The property is assumed to be in full compliance with all applicable federal, state, local, and private codes, laws, consents, licenses, and regulations (including a liquor license where appropriate), and that all

December - 2013 Statement of Assumptions and Limiting Conditions Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia 57

licenses, permits, certificates, franchises, and so forth can be freely renewed or transferred to a purchaser. 11. All mortgages, liens, encumbrances, leases, and servitudes have been disregarded unless specified otherwise. 12. None of this material may be reproduced in any form without our written permission, and the report cannot be disseminated to the public through advertising, public relations, news, sales, or other media. 13. We are not required to give testimony or attendance in court by reason of this analysis without previous arrangements, and only when our standard per-diem fees and travel costs are paid prior to the appearance. 14. If the reader is making a fiduciary or individual investment decision and has any questions concerning the material presented in this report, it is recommended that the reader contact us. 15. We take no responsibility for any events or circumstances that take place subsequent to the date of our field inspection. 16. The quality of a lodging facility's on-site management has a direct effect on a property's economic viability. The financial forecasts presented in this analysis assume responsible ownership and competent management. Any departure from this assumption may have a significant impact on the projected operating results. 17. The financial analysis presented in this report is based upon assumptions, estimates, and evaluations of the market conditions in the local and national economy, which may be subject to sharp rises and declines. Over the projection period considered in our analysis, wages and other operating expenses may increase or decrease due to market volatility and economic forces outside the control of the hotel’s management. We assume that the price of hotel rooms, food, beverages, and other sources of revenue to the hotel will be adjusted to offset any increases or decreases in related costs. We do not warrant that our estimates will be attained, but they have been developed on the basis of information obtained during the course of our market research and are intended to reflect the expectations of a typical hotel investor as of the stated date of the report. 18. This analysis assumes continuation of all Internal Revenue Service tax code provisions as stated or interpreted on either the date of value or the date of our field inspection, whichever occurs first. 19. Many of the figures presented in this report were generated using sophisticated computer models that make calculations based on numbers carried out to three or more decimal places. In the interest of simplicity,

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most numbers have been rounded to the nearest tenth of a percent. Thus, these figures may be subject to small rounding errors. 20. It is agreed that our liability to the client is limited to the amount of the fee paid as liquidated damages. Our responsibility is limited to the client, and use of this report by third parties shall be solely at the risk of the client and/or third parties. The use of this report is also subject to the terms and conditions set forth in our engagement letter with the client. 21. Evaluating and comprising financial forecasts for hotels is both a science and an art. Although this analysis employs various mathematical calculations to provide value indications, the final forecasts are subjective and may be influenced by our experience and other factors not specifically set forth in this report. 22. This study was prepared by Hotel Appraisals, LLC. All opinions, recommendations, and conclusions expressed during the course of this assignment are rendered by the staff of Hotel Appraisals, LLC as employees, rather than as individuals.

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7. Certification

The undersigned hereby certify that, to the best of our knowledge and belief:

1. the statements of fact presented in this report are true and correct; 2. the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions; 3. we have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or the specified) personal interest with respect to the parties involved; 4. we have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment; 5. our engagement in this assignment was not contingent upon developing or reporting predetermined results; 6. our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined result or direction in performance that favors the cause of the client, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this study; 7. our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice; 8. Laura N. Kalcevic personally inspected the property described in this report; Roland de Milleret, MAI participated in the analysis and reviewed the findings, but did not personally inspect the property; 9. Laura N. Kalcevic provided significant assistance to Roland de Milleret, MAI, and that no one other than those listed above and the undersigned prepared the analyses, conclusions, and opinions concerning the real estate that are set forth in this report; 10. the reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute;

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11. the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives; and 12. as of the date of this report, Laura N. Kalcevic has completed the requirements of the continuing education program of the Appraisal Institute.

Laura N. Kalcevic Vice President

Roland de Milleret, MAI Managing Director Hotel Appraisals, LLC

LNK: RdM

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Penetration Explanation

Let us illustrate the penetration adjustment with an example.

A market has three existing hotels with the following operating statistics:

BASE-YEAR OCCUPANCY AND PENETRATION LEVELS

Number Meeting and Property of Rooms Fair Share Commercial Group Leisure Occupancy Penetration

Hotel A 100 23.5 % 60 % 20 % 20 % 75.0 % 100.8 % Hotel B 125 29.4 70 10 20 65.0 87.4 Hotel C 200 47.1 30 60 10 80.0 107.5

Totals/Average 425 100.0 % 47 % 38 % 15 % 74.4 % 100.0 %

Based upon each hotel’s room count, market segmentation, and annual occupancy, the annual number of room nights accommodated in the market from each market segment can be quantified, as set forth below.

MARKET-WIDE ROOM NIGHT DEMAND

Annual Room Market Night Percentage of Segment Demand Total Commercial 54,704 47.4 % Meeting and Group 43,481 37.7 Leisure 17,246 14.9 Total 115,431 100.0 %

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The following discussion will be based upon an analysis of the commercial market segment. The same methodology is applied for each market segment to derive an estimate of a hotel’s overall occupancy. The table below sets forth the commercial demand accommodated by each hotel. Each hotel’s commercial penetration factor is computed by:

1) calculating the hotel’s market share % of commercial demand (commercial room nights accommodated by subject hotel divided by total commercial room nights accommodated by all hotels) and

2) dividing the hotel’s commercial market share % by the hotel’s fair share %.

The following table sets forth each hotel’s fair share, commercial market share, and commercial penetration factor.

COMMERCIAL SEGMENT PENETRATION FACTORS

Number Commercial Commercial Commercial Property of Rooms Fair Share Capture Market Share Penetration

Hotel A 100 23.5 % 16,425 30.0 % 127.6 % Hotel B 125 29.4 20,759 37.9 129.0 Hotel C 200 47.1 17,520 32.0 68.1

Totals/Average 425 100.0 % 54,704 100.0 % 100.0 %

If a new 100-room hotel enters the market, the fair share of each hotel changes due to the new denominator, which has increased by the 100 rooms that have been added to the market.

COMMERCIAL SEGMENT FAIR SHARE

Number of Property Rooms Fair Share

Hotel A 100 19.0 % Hotel B 125 23.8 Hotel C 200 38.1 New Hotel 100 19.0 Total 525 100.0 %

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The new hotel’s penetration factor is projected for its first year of operation. It is estimated that the hotel will capture (penetrate) only 85% of its fair share as it establishes itself in the market. The new hotel’s market share and room night capture can be calculated based upon the hotel’s estimated penetration factor. When the market share of the existing hotels and that of the new hotel are added up, they no longer equal 100% because of the new hotel’s entry into the market. The market share of each hotel must be adjusted to reflect the change in the denominator that comprises the sum of each hotel’s market share.

This adjustment can be mathematically calculated by dividing each hotel’s market share percentages by the new denominator of 97.1%. The resulting calculations reflect each hotel’s new adjusted market share. The sum of the adjusted market shares equals 100%, indicating that the adjustment has been successfully completed. Once the market shares have been calculated, the penetration factors can be recalculated (adjusted market share divided by fair share) to derive the adjusted penetration factors based upon the new hotel’s entry into the market. Note that each existing hotel’s penetration factor actually increases because the new hotel is capturing (penetrating) less than its fair share of demand.

COMMERCIAL SEGMENT PROJECTIONS (YEAR 1)

Hist./Proj. Hist./Proj. Adjusted Adjusted Number Penetration Market Market Penetration Projected Property of Rooms Fair Share Factor Share Share Factor Capture

Hotel A 100 19.0 % 127.6 % 24.3 % 25.0 % 131.4 % 13,688 Hotel B 125 23.8 129.0 30.7 31.6 132.8 17,299 Hotel C 200 38.1 68.1 25.9 26.7 70.1 14,600 New Hotel 100 19.0 85.0 16.2 16.7 87.5 9,117 Totals/Average 525 100.0 % 97.1 % 100.0 % 54,704

In its second year of operation, the new hotel is projected to penetrate above its fair share of demand. A penetration rate of 130% has been chosen, as the new hotel is expected to perform at a level commensurate with Hotel A and Hotel B in this market segment. The same calculations are performed to adjust market share and penetration factors. Note that now the penetration factors of the existing hotels decline below their original penetration rates because of the new hotel’s above-market penetration. Also note that after the market share adjustment, the new hotel retains a penetration rate commensurate with Hotel A and Hotel B, though the penetration rates of all three hotels have declined by approximately nine percentage points due to the reapportionment of demand.

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Once the market shares of each hotel have been adjusted to reflect the entry of the new hotel into the market, the commercial room nights captured by each hotel may be projected by multiplying the hotel’s market share percentage by the total commercial room-night demand. This calculation is shown below.

COMMERCIAL SEGMENT PROJECTIONS (YEAR 2)

Hist./Proj. Hist./Proj. Adjusted Adjusted Number Penetration Market Market Penetration Projected Property of Rooms Fair Share Factor Share Share Factor Capture

Hotel A 100 19.0 % 131.4 % 25.0 % 23.1 % 121.5 % 12,662 Hotel B 125 23.8 132.8 31.6 29.3 122.9 16,004 Hotel C 200 38.1 70.1 26.7 24.7 64.8 13,507 New Hotel 100 19.0 130.0 24.8 22.9 120.3 12,531 Totals/Average 525 100.0 % 108.1 % 100.0 % 54,704

December - 2013 Penetration Explanation Proposed Homewood Suites Atlanta Airport – Atlanta, Georgia iv

Laura Kalcevic

EMPLOYMENT

2012-Present HVS- Vice President Mineola, New York

2010-2012 HVS- Vice President Nassau, Bahamas

2008-2010 HVS- Senior Project Manager Mexico City, Mexico

2006-2008 HVS- Project Manager Boston, Massachusetts

2005 University of Queensland- Lecturer and Research Staff Brisbane, Australia

2004 U.S. Environmental Protection Agency- Research Associate Washington, D.C.

1996-2003 Food and Beverage/Restaurant Services- Various Pennsylvania and South Carolina

DESIGNATIONS Appraisal Institute- State Certified Appraiser- MAI Candidate 2013

TEACHING Adjunct Professor at New York University’s Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management (since 2010)

EDUCATION University of Queensland Australia- Masters in International Hospitality Management California University of Pennsylvania- Bachelor of Arts in Geography, Regional Planning

ARTICLES AND “2012 Caribbean Hotel Marcket Survey: The Big Six”, September 2012 PUBLICATIONS “Mexico’s luxury Lodging Segment- Ppportunity for Growth,” April 2009 “How New Hotels Can Transform Emerging Markets,” March 2009 “Supply Impacts Boston Market,” October 2007 "Redevelopment of Brownsville, Pennsylvania as Tourism Destination," Journal of Travel Research, Vol. 42.2

HVS, Mineola, New York Qualifications of Laura Kalcevic 1

PARTIAL LIST OF HOTEL 20/20 Resorts, Inc. Hampshire Hotels & Resorts, LLC CHAINS AND Allegro Resorts Dominicana, S.A. Hilton Hotels Corporation MANAGEMENT Anglo Irish Bank HSBC Bank USA COMPANIES APPRAISED ARCASEUM HSH Nordbank OR EVALUATED Archon Hospitality Hyatt Hotels Bankers Bank Independence Community Bank Barclays Capital ING Clarion Partners Bear Sterns InterAmerica Development Bank Branch Banking and Trust Company InterContinental Hotels Group Bayrock Group LLC Intervest Property Company Boykin Lodging Company Investcorp International Cava Construction IXIS Real Estate Capital CIBC World Markets JMJ Hospitality Citigroup Global Markets Realty Corp. Kader Industrial Company, Ltd. CMK BWI, Ltd. Laureate Capital CNB Bank Latham & Watkins CNL Hospitality Corporation Lehman Brothers, Inc. Column Financial Le Meridien Americas Commerce Bank Loews Hotels & Resorts Couples Resorts Long Island Hotels Credit Suisse M&T Bank CWCapital LLC Mandarin Oriental Hotel Group David Johnston Development, LLC Marathon Asset Management Destination Management, LLC Marriott Hotels Deutsche Bank Merrill Lynch Mortgage Lending Draper and Kramer, Inc. Millennium Hotels & Resorts Driftwood Ventures Morgan Stanley East Bay Associates Moody National Companies Fairmont Hotels & Resorts New Castle Hotels Corporation First Caribbean Bank Nomura Credit & Capital, Inc. First Union Capital Markets Group Natixis GE Capital Real Estate Onyx Equities LLC GEM Realty OTO Development GICSA Occidental Hoteles GMAC Commercial Mortgage Corporation Presidian Companies Great Eagle Holding Limited Property Analytics Grupo Posadas OTO Development Hall Financial Group Occidental Hoteles

HVS, Mineola, New York Qualifications of Laura Kalcevic 2

EXAMPLES OF Presidian Companies Strategic Hotel Capital, LLC CORPORATE Property Analytics Strategic Capital Solutions AND INSTITUTIONAL Prudential Investment Management Sunstone Hotel Investors, Inc. CLIENTS SERVED Puerto Rico Hotel Association Sunterra Corporation (CONTINUED) Radisson Hotels & Resorts Tennessee Commerce Bank RBS Greenwich Capital Textron Financial Resource Real Estate The Situs Companies Rockwood Capital Corporation Trust Company of New Jersey RLJ Development, LLC UBS Rockbridge Capital LLC United Bank Royal Caribbean Cruise Lines Vanderbuilt Commercial Lending Shaner Hotel Group Walstone Leisure Realty Group S&H Equities Watson Hospitality Associates, Inc. Signature Bank Wells Fargo RETECHS Silverton Bank WestLB AG Starwood Financial Trust Westmont Hospitality Starwood Hotels & Resorts Viceroy Hotel Group

EXAMPLES OF HOTELS Alabama Massachusetts APPRAISED OR -Proposed Courtyard, Mobile -Park Plaza, Boston -Proposed Fairfield Inn, Mobile -Millennium, Boston EVALUATED -Courtyard, Oxford -Holiday Inn, Somerville -Fairfield Inn, Oxford -Crowne Plaza, Natick -Hampton Inn, Natick Alaska -Comfort Suites, Anchorage Michigan -EconoLodge, Anchorage -Marriott, Ypsilanti -Fairfield Inn, Ann Arbor Arizona -Doubletree, Detroit -Proposed Homewood Suites, Phoenix -Marriott, Southfield

California New Hampshire -Proposed Mixed-Use Development, Byron Springs -Proposed Hampton Inn and Suites, Tilton -Homewood Suite, San Francisco -EconoLodge, Concord

Colorado New Jersey -Hilton Garden Inn, Englewood -Hilton, Newark -Proposed Courtyard, Glassboro Connecticut -Proposed Sheraton, Newark -Extended Stay Deluxe, Farmington -Proposed Luxury Hotel, Jersey City -Extended Stay America, Meriden -Proposed aloft, Newark -Extended Stay America, Manchester -Staybridge Suites, Mt. Laurel

Maine New York -Extended Stay America, Scarborough -Proposed Hampton Inn, Brooklyn -Fairfield Inn, Bangor -Proposed Hyatt Place, Garden City -Holiday Inn, Bath -Residence Inn, Hauppauge -TownePlace Suites, Scarborough -Proposed Resort Hotel and Spa, Kerhonkson

HVS, Mineola, New York Qualifications of Laura Kalcevic 3

EXAMPLES OF HOTELS New York (continued) Rhode Island (continued) -Proposed Boutique Hotel, New York City -Extended Stay America, Providence Airport, Warwick APPRAISED OR -Proposed Hotel, New York City -Extended Stay America, East Providence EVALUATED -Proposed Ludlow Hotel, New York City -Homestead Studio Suites, Warwick -Proposed Hilton Garden Inn, Penfield -Proposed Inn and Spa, Rhinebeck South Carolina -Proposed Homewood Suites, Ronkonkoma -Hilton Garden Inn, Anderson -Proposed Hilton Garden Inn, Westbury -Comfort Inn and Suites, Columbia -Courtyard JFK, Jamaica -Country Inn and Suites, Columbia -Millennium, Buffalo -Extended Stay America, East Syracuse Tennessee -Extended Stay America, Amherst -Holiday Inn conversion to Crowne Plaza, Brentwood -Extended Stay America, Albany Resort -Extended Stay America Greece, Rochester -Extended Stay America Henrietta, Rochester Texas -Extended Stay America, Fishkill -Proposed element, Houston -Homestead Studio suites, Fishkill -Proposed Wyndham Grand, San Antonio -Days Inn, Auburn -Hilton, Midland -Holiday Inn, Albany Vermont North Carolina -Proposed Luxury Hotel, Manchester -Proposed Boutique Hotel, Durham -Holiday Inn Express, Elizabeth City Virginia -Doubletree, New Bern -Proposed Full-Service Hotel, Arlington -Hilton Garden Inn, Roanoke Rapids -SpringHill Suites, Durham West Virginia -Fairfield Inn, Raleigh - TownePlace Suites, Bridgeport

Ohio INTERNATIONAL -Holiday Inn Express, North Lima -Embassy Suites, Columbus Canada -Red Roof Inn, St. Clairsville -Proposed Hotel, New Brunswick -Extended Stay America, New Brunswick Pennsylvania -Proposed Courtyard, Shippensburg Caribbean -Residence Inn, Philadelphia -Temenos Resort and Residences, Anguilla -Proposed Luxury Hotel and Spa, Pittsburgh -Viceroy Hotel and Residences, Anguilla -Hampton Inn, Clarion -Atlantis Resort, Bahamas -Clarion, Dubois -Emerald Bay, Bahamas -Doubletree Pittsburgh Airport, Moon Township -Proposed Autograph Resort, Bahamas -Residence Inn, Pittsburgh -Harbour Resort, Bahamas -Extended Stay America, Carnegie -Nassau Palm, Bahamas -Extended Stay America, West Mifflin -Fairmont Royal Pavilion, Barbados -Extended Stay America, Monroeville -Proposed Condo Hotel & Residential Resort, Grenada -Super 8, Canonsburg -Hospitality Training and Development, Haiti -Red Roof Inn Pittsburgh Airport, Pittsburgh -Couples Swept Away, Jamaica -Couples Negril. Jamaica Rhode Island -Couples Sans Souci, Jamaica -Proposed Luxury Hotel, Westerly -Couples Ocho Rios, Jamaica -Extended Stay America, West Warwick -SuperClubs Breezes Runaway Bay, Jamaica

HVS, Mineola, New York Qualifications of Laura Kalcevic 4

EXAMPLES OF HOTELS Caribbean (continued) APPRAISED OR -Royal Caribbean Cruise Lines Falmouth Port, Jamaica -Proposed Master-Planned Development, EVALUATED South Caicos (CONTINUED) -Government Benchmarket Study, Puerto Rico -Proposed Ultra Luxury Hotel, North Caicos -Proposed Ritz Carlton, Turks and Caicos -Proposed MainStay Suites, St. John -Proposed Master-Planned Development, St. Lucia -Rosewood Little Dix Bay, Virgin Gorda

Central America -Proposed Master Planned Development, Belize -Proposed Mandarin Oriental, Costa Rica -Proposed Hotel, Nicaragua

Mexico -All-Inclusive Conversion, Cancun -Elan Resort & Spa, Cancun -All-Inclusive Conversion, Cozumel -Proposed Hotel & Residential, Cozumel -Capella Ixtapa Resort & Spa, Ixtapa -Proposed Hotel & Residential, Ixtapa -Proposed Master-Planned Development, Ixtapa -Tesoro Los Cabos, Los Cabos -Proposed La Mansión de la Vista Antigua, San Miguel de Allende -Proposed Hotel & Residential, Zihuatanejo -Proposed Master-Planned Development, Zihuatanejo

HVS, Mineola, New York Qualifications of Laura Kalcevic 5

Roland de Milleret, MAI

EMPLOYMENT

1999 to present HVS Mineola, New York (Hotel/Motel Valuations, Market Studies, Feasibility Reports, and Investment Counseling)

1997 to 1999 IMC GROUP OF COMPANIES New York, New York

1996 to 1997 MD CONSULTING Paris, France

1991 to 1995 TRAJECTOIRE Paris, France

1987 to 1991 BICH-KOSAIDO Les Bordes, France

1985 to 1987 MIRASSOU WINERY San Jose, California

PROFESSIONAL Designated Member of the Appraisal Institute (MAI) AFFILIATIONS Certified Real Estate General Appraiser – State of New York

EDUCATION MBA – Santa Clara University, California MS – Esitpa, France

TEACHING Adjunct Professor at NYU School of Continuing and Professional Education (since 2007)

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 1

EXAMPLES OF Ackman Ziff Real Estate Group Fitzpatrick Hotels CORPORATE Allegro Resorts Dominicana, S.A. Fortress Drawbridge Special AND INSTITUTIONAL André Balazs Properties Opportunities CLIENTS SERVED Anglo Irish Bank GE Capital Real Estate Apollo Real Estate Capital Advisors GEM Realty Arbor GenCom Bank of East Asia GICSA Bank of New York GMAC Commercial Mortgage Corporation Bank of Novia Scotia Great Eagle Holding Limited Barclays Capital Hall Financial Group Bayrock Group LLC Hampshire Hotels & Resorts, LLC Bear Stearns Hersha Hospitality Boykin Lodging Company Hilton Hotels Corporation Bryan Cave, LLP Hong Kong Shanghai Hotels, Ltd. CapitalSource, Inc. (Peninsula Hotels) Capmark Finance Inc. HSBC Bank USA Carlyle Group HSH Nordbank CDL Management, Inc. Hypo Real Estate Capital Corporation CDR Créances, S.A. Independence Community Bank Cendant Corporation ING Clarion Partners Chase Manhattan Bank InterContinental Hotels Group CIBC World Markets Intervest Property Company Citigroup Investcorp International CNL Hospitality Corporation IXIS Real Estate Capital Commerce Bank Kader Industrial Company, Ltd. Countrywide Commercial Real Estate KG Land CWCapital LLC Lam Group Credit Suisse Latham & Watkins Deutsche Bank Lehman Brothers, Inc. Donaldson, Lufkin & Jenrette Le Meridien Americas The Durst Organization Loews Hotels & Resorts Driftwood Ventures Long Island Hotels Equity Inns, Inc. M&T Bank EuroHypo Bank Mandarin Oriental Hotel Group EXTELL Development Company Merrill Lynch Mortgage Lending Fairmont Hotels & Resorts Millennium Hotels & Resorts FINOVA Capital Corporation Morgan Stanley Dean Witter Mortgage First Union Capital Markets Group Capital, Inc.

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 2

EXAMPLES OF New Castle Hotels Corporation Shangri-La Hotels & Resorts CORPORATE Nomura Credit & Capital, Inc. Silverstein Properties AND INSTITUTIONAL North Fork Bank Stadtmauer Bailkin, LLP CLIENTS SERVED Northmarq Capital Starwood Financial Trust (CONTINUED) Occidental Hoteles Starwood Hotels & Resorts Penn Square Partners Strategic Hotel Capital, LLC Pomeranc Enterprises Sunstone Hotel Investors, Inc. Port Authority of New York & New Jersey Sunterra Corporation Prudential Investment Management Trust Company of New Jersey Radisson Hotels & Resorts UBS RBS Greenwich Capital United Bank Redwood Capital Advisors LLC Unity Bank Related Urban Development Watson Hospitality Associates, Inc. RLJ Development, LLC Wells Fargo RETECHS Robins, Kaplan, Miller & Ciresi, LLP WestLB AG Rockbridge Capital LLC Westmont Hospitality Shanghai Commercial Bank, Ltd. Yotel Ltd.

EXAMPLES OF HOTELS Alabama California (continued) - Homewood Suites, Mobile - Courtyard by Marriott, Irvine APPRAISED OR - Ritz-Carlton, Laguna Niguel EVALUATED Arizona - Estancia La Jolla Hotel & Spa, La Jolla - Holiday Inn Express, Flagstaff - Hyatt Regency, La Jolla - Hyatt Regency, Phoenix - Courtyard by Marriott LAX, Los Angeles - Sheraton Conference Center, San Marcos - Hilton Beverly Hills, Los Angeles - Resort Suites, Scottsdale - Holiday Inn LAX, Los Angeles - Scottsdale Villa Mirage, Scottsdale - Hotel Bel Air, Los Angeles - Sedona Summit Resort, Sedona - Sofitel, Los Angeles - Fiesta Inn Resort, Tempe - SpringHill Suites, Manhattan Beach - Proposed Residence Inn, Tempe - TownePlace Suites, Manhattan Beach - Proposed Summerfield Suites, Tempe - Proposed Courtyard by Marriott, Newark - Hilton, Tucson - Proposed Residence Inn, Newark - Courtyard by Marriott Airport, Oakland Arkansas - Hampton Inn, Oakland - Holiday Inn, Fort Smith - Resort at Squaw Creek, Olympic Valley - Sheraton Ontario Airport, Ontario California - Hilton Garden Inn, Oxnard - Radisson, Berkeley - Lodge at Rancho Mirage, Rancho Mirage - Renaissance, Beverly Hills - Marriott Rancho Las Palmas, Rancho Mirage - Holiday Inn Express, Bishop - Ritz-Carlton Rancho Mirage, Rancho Mirage - Hilton, Burbank - Redlands Dynasty Suites, Redlands - Hilton Garden Inn, Calabasas - Courtyard by Marriott, Sacramento - Proposed Courtyard by Marriott, Culver City - Doubletree Hotel, Sacramento - Holiday Inn Airport, Fresno - Hilton, Sacramento

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 3

EXAMPLES OF HOTELS California (continued) Connecticut (continued) - Courtyard by Marriott, San Diego - Courtyard by Marriott, Norwich APPRAISED OR - Courtyard by Marriott Mira Mesa, San Diego - Holiday Inn, Norwich EVALUATED - Hampton Inn, San Diego - Courtyard by Marriott, Shelton (CONTINUED) - Holiday Inn Harborview, San Diego - Hilton Garden Inn, Shelton - Holiday Inn Old Town, San Diego - Residence Inn, Southington - Ramada Limited Old Town, San Diego - Proposed Staybridge Suites, Stratford - Residence Inn Central, San Diego - SpringHill Suites, Waterford - Residence Inn Downtown, San Diego - Hotel Adagio, San Francisco District of Columbia - Hyatt Regency, San Francisco - Four Seasons, Washington - Park Hyatt, San Francisco - Homewood Suites, Washington - Sofitel, San Francisco - Mandarin Oriental, Washington - Holiday Inn, Santa Ana - Proposed Courtyard by Marriott, Washington - Brisas del Mar, Santa Barbara - Renaissance Mayflower, Washington - Colonial Beach Inn, Santa Barbara - Sofitel, Washington - Inn by the Harbor, Santa Barbara - Westin, Washington - Holiday Inn, Santa Clara - Westin Santa Clara, Santa Clara Florida - Loews, Santa Monica - DoubleTree GuestSuites, Boca Raton - Holiday Inn Express, Solana Beach - Hilton Garden Inn, Boca Raton - Comfort Suites, South San Francisco - Fairfield Inn, Bradenton - Four Points by Sheraton, South San Francisco - Radisson, Daytona Beach - Holiday Inn, South San Francisco - Holiday Inn Express, Destin - Argyle, West Hollywood - DoubleTree GuestSuites, Fort Lauderdale - Holiday Inn Express, Woodland - Holiday Inn Express, Fort Lauderdale - Pink Shell Beach Resort, Fort Myers Beach Colorado - Hampton Inn, Hallandale - Ritz Carlton Bachelor Gulch, Avon - Hilton Melbourne, Indialantic - Doubletree Hotel, Colorado Springs - Quality Inn & Suites, Indialantic - Proposed Viceroy, Snowmass - Hampton Inn, Jacksonville - Vail Marriott Resort & Spa, Vail - Holiday Inn Express, Jacksonville - SpringHill Suites, Jacksonville Connecticut - Wyndham, Jacksonville - Radisson, Cromwell - Embassy Suites, Lake Buena Vista - Residence Inn, Danbury - Residence Inn, Lake Buena Vista - Homewood Suites, Farmington - Walt Disney World Dolphin Resort, Lake Buena - Hilton Garden Inn, Glastonbury Vista - Hampton Inn, Groton - Walt Disney World Swan Resort, Lake Buena - Holiday Inn Express, Hartford Vista - Marriott, Hartford - Hampton Inn & Suites, Lake City - Proposed Homewood Suites, Hartford - Carlton, Miami - Courtyard by Marriott, Manchester - Fairmont Turnberry Isle Resort & Club, Miami - Residence Inn, Manchester - Four Seasons, Miami - Hilton, Mystic - Holiday Inn, Miami - Marriott, Mystic - Mayfair House, Miami - Residence Inn, Mystic - Proposed Residence Inn, Miami - Holiday Inn, North Haven - Sagamore Hotel, Miami

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 4

EXAMPLES OF HOTELS Florida (continued) Idaho - Sofitel, Miami - Doubletree Riverside, Boise APPRAISED OR - Fontainebleau, Miami Beach EVALUATED - Raleigh Hotel, Miami Beach Illinois (CONTINUED) - Setai, Miami Beach - Hampton Inn, Bloomington - Hilton Garden Inn, Miramar - Holiday Inn Express, Bourbonnais - Hampton Inn, Naples - Ambassador East Hotel, Chicago - La Playa Beach & Golf Resort, Naples - Courtyard by Marriott Airport, Chicago - Courtyard by Marriott, Ocala - Crowne Plaza Metro, Chicago - Best Western Movieland, Orlando - Fairmont Hotel, Chicago - Courtyard by Marriott Airport, Orlando - Fitzpatrick Hotel, Chicago - Courtyard by Marriott I-Drive, Orlando - Hilton Garden Inn, Chicago - Marriott, Orlando - Hotel 71, Chicago - Proposed Four Seasons at Walt Disney World, - Hotel Burnham, Chicago Orlando - Hyatt University Village, Chicago - Proposed Westin, Orlando - Le Meridien, Chicago - DoubleTree, Palm Beach Gardens - Proposed Elysian Hotel, Chicago - PGA National Resort & Spa, Palm Beach Gardens - Proposed Mandarin Oriental, Chicago - Hampton Inn, Panama City - Renaissance, Chicago - Radisson Fort Myers, Sanibel - Sofitel, Chicago - Holiday Inn, Sarasota - Westin River North, Chicago - Holiday Inn & Marina, Sarasota - Hampton Inn, Elgin - Best Western, Sebastian - Marriott, Lincolnshire - Proposed Ian Schrager Hotel on South Beach - SpringHill Suites, Lincolnshire - Loews Don Cesar Beach Resort, St. Petersburg - Wyndham Hotel, Lisle - Renaissance Vinoy Resort, St. Petersburg - Holiday Inn, Rockford - Proposed Marriott, Tallahassee - Marriott, Schaumburg - Radisson Riverwalk, Tampa - Hilton, Springfield

Georgia Indiana - Holiday Inn Downtown, Atlanta - Comfort Suites, Carmel - Proposed Loews Hotel, Atlanta - Hampton Inn North Carmel, Carmel - Proposed Mandarin Oriental, Atlanta - Courtyard by Marriott, Columbus - Renaissance Waverly, Atlanta - Fairfield Inn, Evansville - Wingate Inn Buckhead, Atlanta - Hampton Inn, Evansville - Fairfield Inn, Augusta - Residence Inn, Evansville - Chateau Elan Winery & Resort, Braselton - French Lick Springs Resort, French Lick - Hampton Inn, Lawrenceville - Country Inn & Suites, Indianapolis - Comfort Inn, Macon - Courtyard by Marriott, Indianapolis - Hampton Inn, Milledgeville - Hampton Inn Downtown, Indianapolis - Courtyard by Marriott, Tifton - Quality Inn & Suites, Indianapolis - Residence Inn Northwest, Indianapolis Hawaii - Hilton Waikoloa Village, Waikoloa, Hawaii Iowa - Aloha Beach Resort, Kauai - Holiday Inn, Muscatine - Radisson Kauai Resort, Kauai - Ritz-Carlton Kapalua, Maui - Waikiki Beach Marriott, Honolulu, Oahu

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 5

EXAMPLES OF HOTELS Kentucky Minnesota - Radisson, Covington - Country Inn & Suites, Bloomington APPRAISED OR - Holiday Inn, Florence - Sofitel, Bloomington EVALUATED - Holiday Inn, Fort Mitchell - Northland Inn, Brooklyn Park (CONTINUED) - Hampton Inn, Horse Cave - Residence Inn, Edina - Embassy Suites, Lexington - Crowne Plaza, Minneapolis - Hilton Garden Inn, Lexington - Hilton North, Minneapolis - Homewood Suites, Lexington - Candlewood Suites, Louisville Missouri - Courtyard by Marriott, Louisville - Plantation at Fall Creek, Branson - Sleep Inn Fairground, Louisville - Sheraton Hotel, Springfield

Louisiana Montana - Courtyard by Marriott, Lafayette - Holiday Inn, Billings - Hyatt Regency, New Orleans Nebraska Maryland - Hampton Inn, Lincoln - Brookshire Suites Hotel, Baltimore - Marriott, Lincoln - Courtyard by Marriott, Baltimore - Doubletree Downtown, Omaha - Courtyard by Marriott BWI, Baltimore - Radisson Plaza Lord Baltimore, Baltimore Nevada - Sheraton City Center, Baltimore - Courtyard by Marriott, Las Vegas - Hampton Inn, College Park - Proposed Mandarin Oriental, Las Vegas - Hampton Inn, Danville - Holiday Inn Express, Winnemucca - Hampton Inn, Frederick - TownePlace Suites by Marriott, Gaithersburg New Jersey - Residence Inn, Greenbelt - Comfort Inn, Avenel - Proposed Sheraton, Rockville - Fairfield Inn, Avenel - Proposed Holiday Inn, Bayonne Massachusetts - Proposed Courtyard by Marriott, Bernardsville - Hampton Inn, Andover - Proposed Fairfield Inn, Bordentown - Hilton Financial District, Boston - Hilton Garden Inn, Bridgewater - Hyatt Harborside, Boston - Marriott, Bridgewater - Langham, Boston - Holiday Inn Express, Carlstadt - Nine Zero, Boston - Holiday Inn Select, Clinton - Proposed InterContinental, Boston - Staybridge Suites, Cranford - Proposed W Hotel, Boston - Hampton Inn, Denville - Hawthorne Suites, Franklin - Homewood Suites, Edgewater - Comfort Inn, North Dartmouth - Clarion Hotel & Towers, Edison - Radisson, Plymouth - Proposed Courtyard by Marriott, Edison - Proposed Hilton Garden Inn, Edison Michigan - Courtyard by Marriott, Elizabeth - Hampton Inn, Ann Arbor - Residence Inn, Elizabeth - Hotel Ponchartrain, Detroit - Proposed Hotel, Ewing - Doubletree Hotel, Southfield - Hilton, Fort Lee

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 6

EXAMPLES OF HOTELS New Jersey (continued) New York – Manhattan Properties (continued) - Hampton Inn & Suites, Harrison - Bryant Park Hotel APPRAISED OR - Proposed W Hotel, Hoboken - Buckingham Hotel EVALUATED - Hyatt Hotel, Jersey City - Carlton Hotel (CONTINUED) - Proposed Westin, Jersey City - City Club - Proposed Hampton Inn & Suites, Linden - Clarion Fifth Avenue - Courtyard by Marriott, Lyndhurst - Clarion Hotel Park Avenue - Novotel Hotel, Lyndhurst - Comfort Inn Central Park West - Summerfield Suites, Morristown - Courtyard by Marriott Fifth Avenue - Radisson, Mount Laurel - Courtyard by Marriott Midtown East - Courtyard by Marriott Airport, Newark - Courtyard by Marriott on 92nd Street - Hilton Newark Airport, Newark - Courtyard by Marriott Times Square - Proposed Sheraton, Newark - Crowne Plaza at the UN - AmeriSuites, Paramus - Crowne Plaza Hotel Times Square - Radisson, Paramus - Days Inn on 8th Ave - Hilton, Parsippany - Doubletree Times Square - Proposed Wingate Inn, Parsippany - Dream Hotel - Best Western, Rockaway - Duane Street Hotel - Proposed Wingate Inn, Rockaway - Eastgate Tower - Lodge Hill at Rock Hill, Rock Hill - Econolodge - AmeriSuites, Secaucus - Embassy Suites Battery Park - Hampton Inn, Secaucus - The Empire Hotel - Proposed Bradford Suites, Secaucus - Fitzpatrick Grand Central - Courtyard by Marriott, Somerset - Fitzpatrick Manhattan - Holiday Inn, Somerset - Flatotel - Marriott, Somerset - Four Points by Sheraton Chelsea - Proposed Extended-Stay, Union Township - Gansevoort Hotel - Wilshire Grand, West Orange - Gramercy Park Hotel - Summerfield Suites, Whippany - Hampton Inn Chelsea - Proposed Courtyard by Marriott, Woodbridge - Hampton Inn Herald Square - Proposed Hilton Garden Inn, Woodbridge - Hampton Inn Seaport - Proposed Residence Inn, Woodbridge - Hampton Inn Seaport Suites - Hilton New York New Mexico - Holiday Inn Soho - Courtyard by Marriott Airport, Albuquerque - Hotel 57 - Hyatt, Albuquerque - Hotel Deauville - Staybridge Suites, Las Cruses - Hotel Elysee - Courtyard by Marriott, Santa Fe - Hotel Newton - La Posada de Santa Fe, Santa Fe - Howard Johnson on 8th Ave - InterContinental Barclay New York – Manhattan Properties - InterContinental Central Park West - Affinia 50 - Jumeirah Essex House - Affinia Dumont - Library - Affinia Gardens - Lowell Hotel - Affinia Manhattan - Mandarin Oriental - Beekman Tower - Mansfield - The Benjamin - The Mark - Best Western Convention Center - Marriott East Side - Best Western President - Marriott World Trade Center - Best Western Woodward - Milburn

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 7

EXAMPLES OF HOTELS New York – Manhattan Properties (continued) New York – Manhattan Properties (continued) - Milford Plaza Hotel - Proposed InterContinental Hotel APPRAISED OR - Millennium Broadway - Proposed James Hotel EVALUATED - Millennium Hilton - Proposed Kimpton Hotel (CONTINUED) - Millennium UN Plaza - Proposed Le Meridien - Morgans - Proposed Lexington Suites - New York Helmsley - Proposed London NYC - New York Palace - Proposed Luxury Boutique Hotel on 41st Street - Newton Hotel - Proposed Luxury Boutique Hotel on 56th Street - Novotel - Proposed Luxury Boutique Hotel on Crosby - On the Ave - Proposed Luxury Boutique Hotel on W 14th - Park Central Hotel Street - Park South - Proposed Luxury Boutique on 27th Street - Peninsula - Proposed Luxury Boutique on Grand Street - Plaza Hotel - Proposed Luxury Hotel Financial District - Proposed Aloft Harlem - Proposed Luxury Hotel on Madison Avenue - Proposed Aloft Times Square - Proposed Luxury Hotel on South Street - Proposed Boutique Hotel Harlem - Proposed Mondrian - Proposed Comfort Inn - Proposed Renaissance Harlem - Proposed Comfort Inn on W 44th Street - Proposed Shangri-La - Proposed Comfort Inn on West 28th Street - Proposed Sheraton on Canal Street - Proposed Conference Center Hotel - Proposed Standard Hotel - Proposed Courtyard Harlem - Proposed Trump Hotel SoHo - Proposed Doubletree on Stone Street - Proposed Viceroy - Proposed Downtown Athletic Club Hotel - Proposed West 23rd Street Hotel - Proposed Fairfield Inn by Marriott Times Square - Proposed Wingate Inn - Proposed Fairfield Inn on 37th Street - Proposed World Trade Center Hotel - Proposed Fairfield Inn on Fletcher Street - Proposed Wyndham Garden Inn on 24th Street - Proposed Fairfield Inn on W 40th Street - Proposed Yotel - Proposed Fairfield Inn Seaport - Quality Hotel on Broadway - Proposed Fairmont Hotel - Quality Inn & Suites - Proposed Fifth Avenue Hotel - Residence Inn Times Square - Proposed First-Class Hotel on 125th Street - Rihga Royal - Proposed Four Points by Sheraton SoHo - Roger Williams - Proposed Four Points by Sheraton Times Square - Royalton - Proposed Four Points on W 40th Street - Shelburne - Proposed Gansevoort Park - Shoreham - Proposed Hampton Inn - Sixty Thompson - Proposed Hampton Inn Madison Square Garden - Sofitel - Proposed Hampton Inn SoHo - Solita Hotel - Proposed Hard Rock Hotel - Thirty Thirty Hotel - Proposed Harlem Hotel - Time Hotel - Proposed Hilton Garden Inn - Waldorf=Astoria - Proposed Hilton Garden Inn on 35th Street - Wales Hotel - Proposed Holiday Inn Express 29th Street - W Court - Proposed Holiday Inn Express W 44th Street - W Hotel – Union Square - Proposed Homewood Suites on W 39th Street - W Tuscany - Proposed Hotel on Greenwich Street - Westin Times Square - Proposed Hyatt Place on Beekman Street - Westpark Hotel

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 8

EXAMPLES OF HOTELS New York – Excluding Manhattan North Carolina - Marriott, Albany - Holiday Inn & Suites, Cary APPRAISED OR - Proposed TownePlace Suites, Babylon - Comfort Suites North, Charlotte EVALUATED - Holiday Inn Express, Brooklyn - Hampton Inn & Suites, Charlotte (CONTINUED) - Proposed Aloft, Brooklyn - Hilton Garden Inn Uptown, Charlotte - Proposed Sheraton, Brooklyn - Hilton Garden Suites North, Charlotte - Marriott, Buffalo - Holiday Inn Airport, Charlotte - Proposed Staybridge Suites, Carmel - TownePlace Suites, Charlotte - Proposed Hampton Inn, Central Islip - Wyndham Garden Inn, Charlotte - Holiday Inn Express, Chester - Wingate Inn, Concord - Hampton Inn, Farmingville - Hampton Inn Lake Norman, Cornelius - Fairfield Inn La Guardia Airport, Flushing - Holiday Inn Lake Norman, Cornelius - Wingate Inn, Garden City - Quality Inn, Durham - Holiday Inn, Hamburg - Hampton Inn, Havelock - Holiday Inn Express, Hauppauge - Hampton Inn, Henderson - Radisson, Holtsville - Radisson, High Point - Residence Inn, Holtsville - Best Western, Raleigh - Crowne Plaza JFK Airport, Jamaica - Best Western Raleigh North, Raleigh - Doubletree Club JFK Airport, Jamaica - Holiday Inn Crabtree, Raleigh - Fairfield Inn JFK Airport, Jamaica - Holiday Inn Raleigh North, Raleigh - Hilton Garden Inn JFK Airport, Jamaica - Sheraton Capital Center, Raleigh - Proposed Sheraton JFK Airport, Jamaica - TownePlace Suites, Raleigh - Fairfield Inn, Long Island City - Holiday Inn Express, Long Island City Ohio - Proposed Clarion, Long Island City - Holiday Inn Express, Centreville - Proposed Courtyard by Marriott, Long Island - Holiday Inn Downtown, Cincinnati City - Marriott Airport, Cleveland - Hilton Garden Inn, Nanuet - Sheraton City Center, Cleveland - Proposed Westin Hotel, Newark - Hilton Garden Inn, Columbia - Four Points by Sheraton, Niagara Falls - Marriott, Columbus - Quality Hotel & Suites, Niagara Falls - Sheraton Suites, Cuyahoga Falls - Proposed Hilton Garden Inn, Poughkeepsie - Hampton Inn, Fairfield - Brookwood Inn, Pittsford - Proposed Best Western, Queens Oklahoma - Strathallan Hotel, Rochester - Crowne Plaza, Oklahoma City - Wellesley Inn, Rochester - Hilton Northwest, Oklahoma City - Best Western Mill River Manor, Rockville Centre - Marriott, Oklahoma City - Hilton, Rye Town - Courtyard by Marriott, Tulsa - Proposed Hampton Inn, Staten Island - Crowne Plaza, Tulsa - Embassy Suites, Syracuse - Holiday Inn Select, Tulsa - Holiday Inn, Syracuse - Renaissance, Syracuse - Hampton Inn & Suites, Victor - Proposed Ritz Carlton, White Plains

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 9

EXAMPLES OF HOTELS Oregon Rhode Island - Doubletree Downtown, Portland - Newport Harbor Hotel, Newport APPRAISED OR - Doubletree Lloyd Center, Portland - Courtyard by Marriott, Providence EVALUATED - Doubletree, Springfield - Hotel Providence, Providence (CONTINUED) - Proposed Hampton Inn, Providence Pennsylvania - Radisson Providence Harbor, Providence - Comfort Inn, Allentown - Holiday Inn, South Kingstown - Crowne Plaza, Allentown - Courtyard by Marriott, Warwick - Fairfield Inn, Bethlehem - Penn Harris Radisson, Camp Hill South Carolina - Proposed Residence Inn, Carlisle - Hampton Inn, Aiken - Hampton Inn, Denville - Hampton Inn, Beaufort - Holiday Inn Express, Easton - Renaissance, Charleston - Comfort Inn Philadelphia Airport, Essington - Riverview Hotel, Charleston - Nemacolin Woodlands Resort & Spa, Farmington - TownePlace Suites, Columbia - Holiday Inn Express, Frackville - Holiday Inn Charleston – On the Beach, - Holiday Inn Express & Suites, Harrisburg Folly Beach - The Lodge at Woodloch, Hawley - Hilton Garden Inn, Hilton Head - Sleep Inn/Mainstay Suites, King of Prussia - Marriott Hilton Head, Hilton Head - Courtyard by Marriott, Lancaster - Proposed Marriott Convention Center, Lancaster Tennessee - Courtyard by Marriott, Langhorne - Hilton Garden Inn, Chattanooga - Residence Inn, Langhorne - Bent Creek Golf Village, Gatlinburg - Fairfield Inn & Suites, Mount Laurel - Town Square Resort, Gatlinburg - Hampton Inn, Philadelphia - Fairfield Inn, Jackson - Proposed W, Philadelphia - Hilton Airport, Knoxville - Ritz-Carlton, Philadelphia - Days Inn Vanderbilt, Memphis - Sheraton, Philadelphia - Hampton Inn, Memphis - Sofitel, Philadelphia - Holiday Inn, Memphis - Hilton Garden Inn, Pittsburgh - Holiday Inn Select, Memphis - Marriott City Center, Pittsburgh - Homewood Suites, Memphis - Courtyard by Marriott, Plymouth Meeting - Marriott, Memphis - Proposed SpringHill Suites, Plymouth Meeting - Wyndham Garden, Memphis - Courtyard by Marriott, Scranton - Marriott Vanderbilt, Nashville - Hampton Inn, Scranton - Sheraton Music City, Nashville - Courtyard by Marriott, State College - Fairfield Inn & Suites, Smyrna - Hampton Inn, State College - Sleep Inn & Suites, Smyrna - Holiday Inn Express, State College - Residence Inn, State College - SpringHill Suites, State College - Radisson Plaza, Warwick - Best Western, York - Four Points, York

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 10

EXAMPLES OF HOTELS Texas Washington - Hilton Hotel, Beaumont - Doubletree Bellevue Center, Bellevue APPRAISED OR - Wyndham Market Center, Dallas - Courtyard by Marriott, Spokane EVALUATED - Best Western, Ennis - Doubletree Spokane, Veradale (CONTINUED) - Clarion Hotel, Houston - Doubletree, Yakima - Embassy Suites Galleria, Houston - Hampton Inn Greenpoint, Houston West Virginia - Holiday Inn, Houston - Hampton Inn, Beckley - Proposed Indigo Hotel, Houston - Holiday Inn, Bridgeport - Proposed Mandarin Oriental, Houston - Holiday Inn Express, Charleston - Residence Inn, Houston - Holiday Inn, Fairmont - Embassy Suites, Lubbock - Hampton Inn, Martinsburg - Holiday Inn Hotel & Towers, Lubbock - Holiday Inn, Morgantown - Holiday Inn Park Plaza, Lubbock - Del Lago Resort, Montgomery Wisconsin - Hilton, Nassau Bay - Ramada Inn, Janesville - Holiday Inn Select, Richardson - Radisson, Milwaukee - Radisson Hotel Dallas North, Richardson - Doubletree, San Antonio Wyoming - Holiday Inn, Cheyenne Vermont - Wyndham, Burlington Bahamas - Bahamia Resort, Grand Bahamas Island Virginia - Sheraton Cable Beach, Nassau - Courtyard by Marriott, Alexandria - Wyndham, Nassau - Courtyard by Marriott Pentagon South, - Holiday Inn Nassau, New Providence Island Alexandria - Holiday Inn Sunspree, Paradise Island - Residence Inn, Alexandria - Residence Inn Old Town, Alexandria Canada - Hyatt, Arlington - Westin Nova Scotian, Halifax, Nova Scotia - Wingate Inn, Chantilly - Doubletree, Charlottesville Cayman Islands - Hilton, Crystal City - Courtyard by Marriott - Hilton Garden Inn, Fairfax - Marriott - Hampton Inn, Hampton - Proposed Mandarin Oriental - Holiday Inn, Hampton - Quality Inn & Suites, Hampton Guyana - Embassy Suites Dulles, Herndon - Le Meridien Pegasus, Georgetown - Holiday Inn Tysons Corner, McLean - Ritz-Carlton Tysons Corner, McLean Mexico - Staybridge Suites, McLean - Caribbean Village, Cancun - Comfort Inn, Newport News - Proposed Mandarin Oriental, Los Cabos - Hampton Inn, Norfolk - Proposed Upscale Hotel, Mexico City - Embassy Suites, Richmond - Allegro Resort Playacar, Playa del Carmen - Holiday Inn Select, Richmond - Caribbean Village, Playa del Carmen - SpringHill Suites, Richmond - Royal Hideaway, Playa del Carmen - Courtyard by Marriott Richmond Airport, - Tides Riviera Maya, Playa del Carmen Sandston - TownePlace Suites by Marriott, Sterling - Clarion Hotel, Virginia Beach - Hampton Inn, Woodbridge

HVS, Mineola, New York Qualifications of Roland de Milleret, MAI 11

About HVS

HVS is the world’s leading consulting and services organization focused on the hotel, restaurant, shared ownership, gaming, and leisure industries. Established in 1980, the company offers a comprehensive scope of services and specialized industry expertise to help you enhance the economic returns and value of your hospitality assets.

Because hotels represent both real property and operating businesses, the founding partners of HVS decided to develop the first comprehensive valuation methodology for appraising these specialized assets. Their initial textbook on this topic entitled, The Valuation of Hotels and Motels, published by the Appraisal Institute, created the industry standard for valuing hotels and is now used by virtually every appraiser around the world. HVS continues to be at the forefront of hotel valuation methodology, having published six textbooks and hundreds of articles on this subject, which are used in appraisal courses and seminars and at leading hotel schools such as Lausanne, IMHI, and Cornell. HVS associates are constantly called upon to teach this methodology to hotel owners, lenders, and operators and to participate at industry conferences. HVS principals literally ‘wrote the book’ on hotel valuation, which significantly enhances the credibility and reliability of our conclusions.

Over the past three decades, HVS has expanded both its range of services and its geographical boundaries. The company’s global reach, through a network of 30 offices staffed by 400 seasoned industry professionals, gives you access to an unparalleled range of complementary services for the hospitality industry:

Consulting & Valuation Property Tax Services Investment Banking Convention, Sports & Entertainment Facilities Asset Management & Advisory Interior Design Hotel Management Sales & Marketing Services Hotel Parking Consulting Shared Ownership Services Executive Search Golf Services Food & Beverage Services Eco Services Gaming Services Risk Management

About HVS 1 Our clients include prominent hotel owners, lending institutions, international hotel companies, management entities, governmental agencies, and law and accounting firms from North America, Europe, Asia, Latin America, and the Caribbean. HVS principals are regarded as the leading professionals in their respective regions of the globe. We are client driven, entrepreneurial, and dedicated to providing the best advice and services in a timely and cost-efficient manner. HVS employees continue to be industry leaders, consistently generating a wide variety of articles, studies, and publications on all aspects of the hospitality industry.

HVS is the industry’s primary source of hotel ownership data. Our 2,000+ assignments each year keep us at the forefront of trends and knowledge regarding information on financial operating results, management contracts, franchise agreements, compensation programs, financing structures, and transactions. With access to our industry intelligence and data, you will have the most timely information and the best tools available to make critical decisions about your hospitality assets.

For further information regarding our expertise and specifics about our services, please visit www.hvs.com.

About HVS 2