Awarding of a Contract to Newmark Knight Frank To

Table of Contents

Hospitality, Gaming & Leisure Valuation & Advisory

PROPOSAL TO COMPLETE A MARKET DEMAND AND FEASIBILITY STUDY AND SITE ANALYSIS

FOR A PROPOSED HOTEL

PREPARED FOR: City of Walnut September 4, 2019

1 City of Walnut

Table of Contents

Cover Letter………………………………………...……………………...…………...…Page 1

Scope of Work and Timing…………………………………….……………..…………..Page 2

Company Overview and Staff Qualifications……….……………….……...………….Page 8

Terms and Conditions..……………..……………………….………….……………....Page 22

Sample Table of Contents………….……………………………………...... ………….Page 26

Qualifications of the Hospitality, Gaming & Leisure Specialty Practice….….……...Page 27

2 City of Walnut

Cover Letter

August 29, 2019

Ms. Joelle Guerra Senior Management Analyst, City of Walnut 21201 La Puente Road Walnut, CA 91789 (909) 595-7543

Dear Ms. Guerra:

We are pleased to submit a proposal to provide professional real estate valuation and advisory services to conduct a market demand and feasibility study and site analysis in Walnut, CA. We have completed several hotel assignments in the area, including recent assignments in Tracy, West Hollywood, San Diego, Huntington Beach, and Glendale. We also actively engage with hotel owners, management companies, and developers as well national and regional brand representatives, including Choice International, Cobblestone Hotels, Hilton Worldwide, Marriott International, Wyndham Hotels, and others. Our clients include developers, investors, lenders, hotel management companies, and municipalities, all of whom require quality and comprehensive reports.

In the proposal that follows, we will demonstrate that Newmark Knight Frank Valuation & Advisory LLC (NKF V&A) has the geographic reach, depth of experience, and array of professional talent to satisfy your needs for an accomplished valuation and advisory firm.

Our team for this hotel feasibility study will be led by Laurel Keller, MAI and John Kelley, CHIA, who will serve as the primary points of contact. The team will be assisted by colleagues who frequently work in and have knowledge of the greater Los Angeles hotel market.

We are confident that our team of qualified consultants will conduct a feasibility study that provides objective, credible, data-based guidance. The City of Walnut is the client in this assignment and shall be referred to in this proposal as “Client.”

NKF V&A can meet all of the insurance requirements set forth in the City of Walnut Hotel Feasibility Study RFP.

We appreciate the opportunity to prepare this proposal and hope that we can develop a mutually beneficial business relationship.

Respectfully submitted,

1 City of Walnut

Scope of Work and Timing

OBJECTIVE The objective of this engagement is to estimate the demand and market feasibility for a hotel in Walnut, CA. It is our understanding that the estimate of feasibility will be used to solicit potential developers. It is our understanding that the estimate of feasibility will be used by City of Walnut to answer the following:

 What is the market, what are the market constraints, what is the future lodging demand potential, and who are the subject’s potential competitors?

 What revenues can be generated, including municipal room tax revenue?

 What public incentives could improve commercial viability?

 What is the general cost to develop, operate, and maintain the facility?

 Would the city-owned site at 21701 Valley Boulevard or a different site within the city of Walnut be best suited for the proposed hotel?

 What are the ideal characteristics of the proposed hotel regarding number and mix of guestrooms, food and beverage components, configuration, functionality, amenities, location, parking, and ancillary requirements?

Component I – Market Demand and Feasibility Study and Site Analysis

SCOPE OF WORK This portion of the study will involve a thorough examination of the overall Walnut market. In preparing this portion of the assignment, we will:

 Travel to the subject market for a site visit, neighborhood and market tour, and meetings with the Client

 Review the overall business objectives and goals for the proposed development

 Request a list of people with whom you wish for us to consult during our research

 Review previous market research and information you have regarding developments in and around Walnut, CA.

 Conduct research and interview potential users of the proposed hotel to gauge interest and potential demand. These research techniques may include in-person meetings, phone interviews, online surveys, and other methods as appropriate.

 Identify primary leisure, group, and commercial attractions and demand generators within the market and examine their growth and changes

 Study the local and larger region’s population, household growth, employment, income levels, transportation, etc., to determine the economic environment of the subject hotel and the sources from which business is generated

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Scope of Work and Timing

 Review and analyze the performance of similar hotels, considering monthly and daily trends

 Analyze the area’s proximity and travel time to nearby visitor attractions, nearby corporate and group demand generators, and access to convention and event facilities relative to competitive properties

 Analyze the potential site at 21701 Valley Boulevard for the proposed hotel development, along with other sites in Walnut (up to two additional sites)

 Conduct a SWOT and weighted-average ranking analysis of the three potential sites in the City of Walnut to determine the competitiveness relative to other hotel sites. Such analysis will consider traffic counts, pedestrian and auto linkages, access, visibility, surrounding uses, ambiance, proximity and travel time, nearby visitor attractions, nearby corporate and group demand generators, competitive advantages/disadvantages relative to competitive hotels, with and without conference space.

 Meet with managers and/or owners of competitive hotels

 Interview hotel management and development companies that own and/or operate hotels in the greater Walnut, CA region

 Interview representatives of hotel chains to determine performance of area hotels, proposed new supply additions, and available franchising opportunities

 Meet with representatives of the local convention and visitors’ bureau, chamber of commerce, assessor’s office, and city, county, and economic development officials

 Research associations, governmental agencies, non-governmental organizations, and other organizations in the greater Walnut region that host conferences that could use the proposed facilities

 Examine the current hotel supply and review the impact of recent openings on the existing hotel and event market and projections for future demand

 Identify new hotels that are under construction, planned, or proposed in the market

 Recommend the subject facility’s chain scale, potential brand affiliation(s), room count and mix, convention center square footage, and amenities, including but not limited to food and beverage offerings and recreational spaces.

 Analyze the historical market segmentation of the competitive properties, including corporate transient, leisure transient, group, and contract demand, and project the market segmentation for the proposed property

 Analyze the historical performance of the market and forecast performance of the market and the subject property

 Analyze the projected range of development costs for the proposed facility

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Scope of Work and Timing

Utilizing the results of the market analysis, we will estimate the probable future operating performance of the hotel for the standard holding period. In preparing the financial analysis, we will draw on various resources, including:

 The available operating results of similar properties in the market area

 Our database of actual financial statements of comparable hotels

 Hotel-related operating data from industry publications, including STR’s Host Report

 The experience of our consultants and their daily interaction with industry contacts

This analysis will reflect the effects of estimated future inflation on revenues and expenses and will arrive at the estimated cash flow from operations. Our forecasts will provide calculations based on total revenue, per available room, per occupied room, and percentage of total revenue. The financial analysis will include detailed comparisons with actual operating statements of similar properties and will provide a line-by-line discussion of each of the major departments. Based on appropriate hotel discount and capitalization rates, we will project the property’s net present value. We will compare this to the subject’s development budget (if available), cost estimates provided by MVS, and actual development costs of other hotels.

Deliverable: We will communicate our findings in a full narrative market study report. Our analysis will confirm the strength and growth of available markets, trends in occupancy patterns, and other factors important to the success of comparable hotel properties. We will estimate occupancy levels and average daily rates and forecast income and expenses for a standard 10-year holding period.

Compliance: The feasibility study will conform to the 2018-2019 Uniform Standards of Professional Appraisal Practice (USPAP). The persons signing the report would be providing appraisal practice services.

Intended User(s): We understand that the study will be provided to potential hotel developers, management companies, and hotel brands interested in participating in the development project. Because the sole intended user of the study shall be the Client, no other party is entitled to rely on the study. Further, we do not permit you to post/upload a copy of the study via the internet. NKF V&A disclaims liability to any party other than the Client. If Client discloses the study in its entirety to a third party, in furtherance of the stated objective, Client will obtain the written acknowledgement by such third party that the study was prepared exclusively for the Client, any such review of the study is for information purposes only.

(OPTIONAL) Component II – RFQ Preparation & Solicitation

Should you decide the results of NKF’s feasibility study warrant a hotel development, we can prepare a customized RFP that will be disseminated to regional and national hotel development/management companies. The RFP will summarize pertinent information regarding the development. In preparing this portion of the assignment, we will:

 Review the scope of development/management services required for the proposed hotel and develop a customized three- to five-page RFP document outlining key information about the

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Scope of Work and Timing

proposed hotel, findings from NKF’s feasibility study, background on the developer, and deal structure

 Contact preferred developers/operators to introduce and explain the opportunity and determine if any of the potential developers/operators do not fit the client’s requirements due to brand/territorial restrictions, conflicts of interest, or other reasons

 Distribute the RFP through industry-relevant news sources, including Hotel Online and through NKF V&A’s Hospitality, Gaming & Leisure practice’s expansive network of industry contacts. The document will be shared with the client before circulating it to the potential developers/operators

 Provide a full copy of NKF’s feasibility study to those who respond to the RFP and are considered qualified, and introduce them to the client

 Discuss the development with each qualified developer/operator prior to the established deadline, assist them in understanding the location and physical aspects of the subject development, the client’s goals and objectives, and to provide any clarifications required for them to prepare their developer/management proposal

 Review all materials submitted by the developers/operators to check conformity with the RFP

 Review and rank all developer/management proposals received according to: o Local and regional experience with comparable developments/operations o Credibility and track record o Proposed fee structure and contract terms o Suitability for and successful experience with comparable independent luxury hotel developments/operations

Deliverable: We will communicate the solicited replies in a summarized letter format.

Additional Consulting Services Available We are available to assist beyond RFP preparations and solicitation, including providing advisory services in selecting the development and hotel management company, negotiating terms of the hotel management agreement, and acting as a liaison between ownership and the hotel management company (asset management). Terms of these services will be provided on an hourly basis and outlined in a separate engagement.

Report Deliverables The feasibility study will be delivered in electronic format (typically pdf). One original hard copy of the final report will be provided on request. Additional hard copies may be requested for an added fee (in addition to the capped expenses).

Quality Control Prior to issuance of the draft report, a senior level NKF V&A Hospitality, Gaming, & Leisure team member who did not participate in the study conducts a thorough math and grammar review of the report. This process ensures the narrative report is free of grammatical and calculation errors and assesses whether the underlining analysis adequately supports the report’s conclusions.

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Scope of Work and Timing

Commencement and Delivery Date The feasibility study process will commence on receipt of this signed proposal letter with the required retainer (amount included in cost proposal) and conclude when the final report is delivered.

We plan to provide you with the draft version of the report within 45 days of receiving the retainer payment and the signed engagement letter. We will work with your appointed representative to ensure the required data is made available. The delivery date of the report is contingent on receiving the data requested for the property on a timely basis.

The following summarizes the major milestones and deliverables for this assignment:

1. Week of engagement – Kick-off conference call with Client to review scope of work, address any specific issues or requests you may have, and arrange date of site visit. This call will also review data needed for the analysis, including collecting names and contact information of local business leaders.

2. One to two weeks after engagement – Site visit/inspection and interviews with city officials, business leaders, managers of existing hotels in area, and other individuals as appropriate.

3. Three to four weeks after engagement – Follow-up conference call with Client to review preliminary findings including demand for a hotel, potential franchise affiliation, and overall feasibility, etc. Should our preliminary findings indicate that hotel development is not viable, the Client may choose to terminate the project and compensate NKF for work completed to date.

4. Five to six weeks after engagement – Submit draft of hotel feasibility study to Client.

5. One to two weeks after draft submittal – Conference call with Client to review the report and address any comments or questions presented concerning the hotel feasibility study.

6. One week after final comments submitted – Address the Client’s comments and submit final hotel feasibility study to Client.

Assumptions/ Limiting Conditions The assignment will be subject to NKF V&A’s standard Assumptions and Limiting Conditions, which will be incorporated into the assignment. In addition, the assignment may be subject to Extraordinary Assumptions and Hypothetical Conditions.

Changes to The Agreement Any significant changes to the assignment as outlined in this proposal letter such as the identity of the client, intended users, or intended use, will necessitate the preparation and execution by both parties of a new proposal letter.

Cancellation of Assignment Client may cancel this agreement at any time prior to the NKF V&A’s delivery of the assignment upon written notification to the firm. Client will pay NKF V&A for all work completed on the assignment prior to firm’s receipt of such written cancellation notice, unless otherwise agreed by firm and client in writing.

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Scope of Work and Timing

No Third-Party Beneficiaries Except as may be expressly provided for in this agreement, nothing in this agreement will create a contractual relationship or any legal duty between NKF V&A and client and any third party, or any cause of action, rights, or claims in favor of any third party and against NKF V&A and client. In addition, this agreement is not intended to, and will not be construed to, render any person or entity a third-party beneficiary of this agreement. Client acknowledges and agrees that the assignment shall reflect the foregoing and shall specifically state that no third-party other than an “Intended User” identified herein shall be entitled to rely upon the study.

This proposal letter may be withdrawn by the NKF V&A unless this proposal letter is fully signed and returned to the undersigned within 30 days from the date of this letter.

If this letter correctly sets forth the client’s understanding of the services to be rendered to it, and if the terms of this proposal letter are satisfactory, please execute the enclosed copy of this letter and return it to us together with any required retainer.

AGREED:

SIGNATURE: ______

PRINT NAME: ______

TITLE: ______

DATE: ______

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Company Overview and Staff Qualifications

Overview NKF V&A’s Hospitality, Gaming & Leisure group is focused exclusively on providing superior valuation and consulting services for a broad range of hotels, casinos, and leisure properties. Our team differentiates itself through a holistic, consulting-driven approach that goes far beyond the physical asset; by analyzing every aspect of a property’s business and real estate operations, we uncover maximum return on investment for owners and investors. The V&A Hospitality, Gaming & Leisure group completes assignments globally for a vast range of complex assets—from bed-and-breakfasts to luxury hotels, off-track betting facilities to Las Vegas casinos, bowling alleys to mega sports complexes, and municipal aquatic centers to indoor waterpark resorts. Our senior appraisers, each of whom possesses more than 15 years of dedicated experience, are hands on throughout every phase of the process and actively involved with all reports and client deliverables.

NKF V&A is the industry’s leading innovator, comprising an extensive team of the most trusted and recognized names in the valuation industry. The V&A team brings a deep understanding of local markets and trends, coupled with access to extensive proprietary and third-party market data. We leverage added proprietary value through close alignment with NKF Capital Markets—one of the most prevalent and fastest-growing capital markets practices in the industry.

Hospitality, Gaming & Leisure Specialty Practice Leadership NKF HGL’s leadership team comprises experts from all regions of the United States that have a wealth of knowledge pertaining to assets within hospitality, gaming, and leisure. The following are our specialty practice team leaders. Donna Bradley and Chad Eschmeyer will supply local market insight and statistical information as part of our analysis.

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Company Overview and Staff Qualifications

Unmatched Expertise Staffed by MAIs, CREs, MBAs, CFAs, CCIMs, MRICS, FRICS and ASA certified appraisers, financial consultants and accomplished research professionals. Newmark Knight Frank V&A is fully equipped to service complex, visionary and nontraditional projects in addition to the traditional suite of asset classes.

Access to Market Data NKF has its own in-house market research department devoted to the collection and analysis of data, demand drivers and market trends on a global basis. Local experts and brokerage professionals work with experienced researchers to analyze and benchmark economic and demographic factors, rental rates, net absorption, availability, inventory, new construction, and leasing and sales activity, among other real estate indicators, as a means of determining both current and future market conditions – and the optimal time to implement a client’s real estate plan.

Research Resources and Tools NKF maintains subscriptions with multiple services that contribute to our breadth of analyses, including Argus, Bloomberg, Claritas, CoStar, ESRI, Hoovers, LexisNexis, Loopnet, NCREIF, OneSource, Real Capital Analytics and TreppLLC.

Names, Contact Information, And Qualifications of Consultants Our team for this hotel feasibility study will be led by Laurel Keller, MAI, Donna Bradley, MAI, Chad Eschmeyer, and John Kelley, CHIA, who have a combined total of more than 80 years of experience performing real estate valuation and consulting with specialty expertise in the hospitality, gaming, and leisure industry.

The next section highlights the credentials and experience of Ms. Keller, Mr. Kelley, and their team members that would be involved in the assignment. There will be no subcontracted consultants or firms since our team is experienced and qualified to complete all parts of the components of the market demand and feasibility study.

9 City of Walnut

Company Overview and Staff Qualifications

LAUREL A. KELLER, MAI PROFESSIONAL BACKGROUND Senior Vice President Laurel A. Keller, MAI, joined Newmark Knight Frank Valuation & Advisory in 2018 and serves as a senior vice president in the Cleveland, Ohio, office, where she is a member of the V&A team’s Hospitality, Gaming & Leisure specialty practice. Ms. Keller has substantial expertise in the valuation and advisory of hotels and resorts, amusement and theme parks, waterparks, family entertainment centers, golf courses, casinos, campgrounds and other leisure-related assets. She has completed appraisal and consulting studies for existing and proposed properties in 34 states and the Middle East. Ms. Keller has appraised individual assets ranging in value from less than $1 million to over one-half billion dollars. She has worked with various major hospitality brands and management companies as part of numerous

assignments and has extensive knowledge of brand criteria, best practices Newmark Knight Frank 1300 East 9th Street, Suite and current market trends. She has also provided litigation support related 105 to tax appeals. Cleveland, OH 44114 [email protected] Ms. Keller joined NKF after more than 12 years at Hotel & Leisure Advisors, T 216.453.3023 a Cleveland-based hospitality and leisure appraisal and consulting firm, M 216.513.7486 where she was vice president. At H&LA, Ms. Keller was responsible for completing appraisals, feasibility studies, economic impact studies, brand- Years of Experience on-brand impact studies and operational reviews for various hospitality- 22 Years related assets throughout the United States. Unique property types included high ropes courses and zip lines, indoor waterpark resorts, simulated golf Areas of Specialization entertainment centers, brew pubs and artificial ski slopes.  Valuation of Hospitality and Leisure Assets for Development and Lending Prior to Hotel & Leisure Advisors, Ms. Keller served in a similar capacity  Economic Impact and Brand-on- with Columbus, Ohio-based US Realty Consultants, where she was a Brand Impact Studies for Hospitality senior associate. During her four-year tenure at USRC, Ms. Keller and Leisure Assets completed a variety of hospitality and leisure-related valuation and  Operational Performance Reviews for consulting assignments throughout the United States. Hospitality and Leisure Properties

 Property Tax Appeals for Hospitality Ms. Keller began her hospitality career as dining operations manager at the and Leisure Real Estate 100-year-old Onwentsia Club in Chicago and as revenue manager and front  Speaker and panel moderator at office manager for Sheraton hotels in Cleveland. Hospitality Industry Conferences

CERTIFICATIONS

 Certified general real estate appraiser, states of Michigan, Indiana, Minnesota, and Ohio and Commonwealth of Pennsylvania, and Commonwealth of Kentucky  MAI designation, Appraisal Institute AFFILIATIONS  Board member, Ohio Chapter of the Appraisal Institute; public relations committee chair  Member, Ohio Hotel and Lodging Association  Member, Boutique & Lifestyle Lodging Association (BLLA)  Member, Purdue Alumni Club of Cleveland  Member, World Waterpark Association (WWA)

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Company Overview and Staff Qualifications

 Member, International Association of Amusement Parks & Attractions (IAAPA) SPEAKING ENGAGEMENTS, PUBLICATIONS AND MEDIA  Panelist, “Graduates that Win: Creating a Life in Hospitality that Works,” Castell Project at Purdue University, West Lafayette, Indiana; March 2019  Featured Speaker, “What is my hotel worth? An expert and entertaining explanation of the appraisal process” Cobblestone Annual Conference; Denver, Colorado; March 2019  Panelist “Hotel Feasibility Study Industry Leaders” Cobblestone Annual Conference; Minneapolis, Minnesota; March 12, 2018  Panel moderator, “The current pipeline: Building momentum or a developing problem?” STR Hotel Data Conference, Nashville, August 2017  "The Financial Impact of Hotel Renovations,” Hotel News Now, December 2016  Panel moderator, “Reinventing Obsolete Hotels,” STR Hotel Data Conference, Nashville, September 2016  "Cleveland a 'City of Choice' for Development," Hotel News Now, August 2014  “Convenience Shops: Cash-Flowing Amenity Creep,” Hotel News Now, October 2013  "Weight Loss Resorts are Boon to Developers,” Hotel News Now and Hotel-Online, August 2012  "Lower-Tier Sale Prices Plummet; Upper-Tier Prices Soar: An Analysis of 431 Recent U.S. Hotel Sales," Hotel News Now and Hotel-Online, March 2011  "Value Place - A Hotel/Apartment Fusion," Hotel-Online, July 2009  "Unique Ways for Resorts to Radically Increase Revenue," Developments magazine, April 2008  "Ohio's Lodging Market: Historical Analysis & 2006 Forecast," Hotel- Online, March 2006  "Indoor Waterpark Resorts Continue Impressive Growth in '05," Hotel- Online, January 2005  "Hotel Capitalization Rates Drop," Hotel-Online, March 2004  "Cleveland Market at Bottom with Improvement Predicted," Hotel- Online, January 2004 In addition, Ms. Keller has been quoted in other publications, including Crain’s Cleveland Business and the Cleveland Plain Dealer, and she has been featured on television segments for Fox News.

EDUCATION Ms. Keller earned a Bachelor of Science degree in hospitality management from Purdue University.

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Company Overview and Staff Qualifications

DONNA M. BRADLEY, MAI PROFESSIONAL BACKGROUND Senior Vice President Donna Bradley, MAI, joined Newmark Knight Frank Valuation & Advisory in 2018 as Senior Vice President for the Los Angeles office and is currently a member of the Hospitality, Gaming & Leisure Group.

Ms. Bradley has been actively engaged in the valuation and consulting services segment of the commercial real estate industry since 1986, receiving her MAI designation in 1992. As a production appraiser with over 30 years of experience, Ms. Bradley specializes in institutional investment grade properties in Southern California. Her appraisal practice concentrates on hospitality, which includes resorts, full service hotels, boutique hotels, limited service motels as well as general commercial property such as apartment, retail and office properties

Newmark Knight Frank and other income-producing property types. She is also experienced 700 South Flower Street in Senior Housing. Ms. Bradley joined Newmark Knight Frank Suite 2500 Valuation & Advisory after serving as a Vice President for over 25 years Los Angeles, CA 90017 [email protected] with CBRE, Inc. T 949.633.6009 F 213.488.0819 PROFESSIONAL AFFILIATIONS

Years of Experience  Designated member, Appraisal Institute 30+ Years  Certified general real estate appraiser, states of California and

Areas of Specialization Hawaii  Valuation & Advisory  Hospitality EDUCATION  Seniors Housing Ms. Bradley earned a Bachelor of Arts degree in Economics from the University of California, Irvine.

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Company Overview and Staff Qualifications

CHAD ESCHMEYER PROFESSIONAL BACKGROUND Senior Vice President Chad Eschmeyer joined Newmark Knight Frank’s Valuation & Advisory in 2017 as a senior vice president in the Phoenix office. His experience encompasses resorts, full-service and limited-service hospitality properties, amusement and recreational facilities, office buildings, industrial buildings, retail facilities, land, multi-family residential properties and special-use facilities. His practice extends to Arizona, California, Hawaii, Nevada, New Mexico and Texas.

Prior to NKF, Mr. Eschmeyer was director for over four years in the Hospitality and Leisure Group of Colliers International Valuation & Advisory Services, first in Hawaii and then in Phoenix. He moved to Hawaii after two years as a vice president with Scottsdale-based HVS Consulting and Valuation Services. Mr. Eschmeyer also owned Lyons

Newmark Knight Frank Valuation Group, a boutique appraisal firm in Scottsdale, for 12 years. 2398 E. Camelback Road He was first exposed to the hospitality industry via a 40-unit hotel in Suite 950 Sedona he owned and operated for five years. Phoenix, AZ 85016 [email protected] T 602.952.3879 NOTABLE ASSIGNMENTS M 602.315.5888  AC by Marriott, Houston, TX Years of Experience  Aqua Joy Waikiki, Honolulu, HI 20 Years  Arizona Grand Resort, Phoenix, AZ

 Coconut Hotel Waikiki, Honolulu, HI Areas of Specialization  Comfort Inn & Suites, Hotel Circle, San Diego, CA  Valuation & Advisory  Dual-branded TownePlace Suites/Home2 Suites, Las Vegas, NV  Hospitality, Gaming and Leisure  Eilan Hotel and Spa, San Antonio, TX  Hampton Inn – Ka Makana Ali’I, Oahu, HI  Hotel Rutherford, Napa, CA  Hyatt House, Pleasant Hill, CA  Hyatt House, Pleasanton, CA  Hyatt House, Scottsdale, AZ  Proposed Hall Arts Hotel, Dallas, TX  Proposed Texican Court, Irving, TX  Queen Kapiolani Hotel Waikiki, Honolulu, HI  Residence Inn Marriott Mayo Clinic, Phoenix, AZ  Scottsdale Hilton Resort, Scottsdale, AZ  Shoreline Hotel Waikiki, Honolulu, HI  SpringHill Suites/Residence Inn, San Diego, CA

EDUCATION Mr. Eschmeyer is a certified general real estate appraiser in the states of Arizona, California, Hawaii, New Mexica and Texas. He is also a candidate for designation by the Appraisal Institute and has completed Several Appraisal Institute courses toward attaining his MAI designation. He earned a Bachelor of Science degree in business management from the University of South Dakota.

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Company Overview and Staff Qualifications

JOHN A. KELLEY III, CHIA John A. Kelley III, CHIA, joined Newmark Knight Frank’s Valuation & Advisory in 2018 and currently serves as a vice president in the Vice President Cleveland, Ohio, office. A nine-year hospitality and leisure real estate veteran, Mr. Kelley has substantial expertise in the valuation and advisory of amusements, convention and conference centers, hotels and resorts, waterparks, and other leisure-related assets. He has completed appraisals and studies on assets ranging between $1 million to more than one-half billion dollars throughout the United States and the Middle East.

Mr. Kelley joined Newmark Knight Frank after serving as a senior associate for about three years with Hotel & Leisure Advisors, a Cleveland-based hospitality and leisure appraisal and consulting firm. In this capacity, Mr. Kelley was responsible for completing appraisals, Newmark Knight Frank feasibility studies, economic impact studies, impact studies and 1300 East 9th Street, Suite 105 operational reviews for various hospitality-related assets. Some unique Cleveland, OH 44114 assets included indoor waterpark resorts, aquariums, municipal [email protected] aquatic centers and mixed-use developments. He also is an adjunct, T 216.453.3083 instructor teaching courses related to hospitality management at M 301.801.5620 Cuyahoga Community College and Bryant & Stratton College, and Years of Experience assists with course development. 9 Years In recent years, Mr. Kelley has shared his expertise through articles

appearing in highly respected hospitality trade publications, including: Areas of Specialization  Valuation of Hospitality and Leisure Assets  “In Ohio Markets, Occupancy Doesn’t Tell Whole Story,” Hotel for Development and Lending News Now, March 2018  Economic Impact and Impact Studies for Hospitality and Leisure Assets  "Convention Center Hotels Boost Both Supply, Demand,” Hotel  Operational Performance Reviews for News Now, June 2017 Hospitality and Leisure Properties  "Measuring the Economic Benefits of Tourism,” Hotel News Now,  Property Tax Appeals for Hospitality and July 2016 Leisure Real Estate  "How Hoteliers Can Handle Minimum-Wage Jump,” Hotel News Now, December 2015 Prior to Hotel & Leisure Advisors, Mr. Kelley was a senior quality assurance consultant with LRA Worldwide (now LRA by Deloitte). During his tenure there, he traveled to more than 20 countries completing hotel and resort quality assessments for some of the largest brands. He managed Westin Hotels in Providence, Rhode Island, and Baltimore, Maryland, prior to joining LRA Worldwide.

Mr. Kelley is a certified general appraiser in Indiana, Kentucky, Michigan, and Ohio and a Candidate for Designation in the Appraisal Institute. He earned a Master of Business Administration degree and a Master of Science degree in finance from Northeastern University. He previously earned a Bachelor of Science degree in international hotel and tourism management from Johnson & Wales University. Additionally, Mr. Kelley holds a certificate in hotel real estate investment and asset management from Cornell University.

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Company Overview and Staff Qualifications

ALEXANDRA CHAPEKIS, CHIA Alexandra Chapekis, CHIA, joined Newmark Knight Frank’s Senior Analyst Valuation & Advisory team in 2018 and currently serves as an analyst in the Cleveland, Ohio, office.

Ms. Chapekis joined Newmark Knight Frank after serving as an investment analyst with ValStone Partners, a private equity firm based in Birmingham, Michigan. In this capacity, Ms. Chapekis was responsible for constructing tailored financial models, conducting due diligence in pursuit of underwriting, creating and arranging future strategies for hospitality operations, and performing hospitality and commercial real estate analyses throughout the United States. She has analyzed assets valued between $1 million to more than $100 million.

Newmark Knight Frank Prior to ValStone, Ms. Chapekis served as an accounting assistant th 1300 East 9 Street, Suite 105 at The Accounting Office, Inc., performing bank reconciliations for Cleveland, OH 44114 approximately 100 clients, completing staff training, and creating [email protected] T 216.453.3035 and managing the firm’s social media accounts. M 734.812.0400 Ms. Chapekis is a Practicing Affiliate in the Appraisal Institute. She Years of Experience earned a Bachelor of Arts Degree from Michigan State University’s 4 Years Honors College, double majoring in Hospitality Business and Economics and minoring in Hospitality Real Estate Investment Areas of Specialization Management. Ms. Chapekis is Certified in Hotel Industry Analytics  Valuation of Hospitality and Leisure Assets (CHIA certification) and has completed numerous professional for Development and Lending development programs including the Jones Lang LaSalle  Economic Impact and Impact Studies for Professional Workshop, the HVS Hotel Valuation Professional Hospitality and Leisure Assets Workshop, and the Michigan State University Excel Modeling  Operational Performance Reviews for Professional Workshop. Hospitality and Leisure Properties

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Company Overview and Staff Qualifications

RELEVANT EXPERIENCE The team has completed hundreds of hospitality and leisure-based feasibility studies throughout the United States. The following case studies provide an overview of some of the assignments we have completed.

Hospitality, PROPOSED HOTEL AND CONVENTION CENTER Gaming & Leisure Frisco, Texas

Visit Frisco – a convention and visitors bureau in northern Dallas – engaged us complete a market demand and financial feasibility study and economic impact analysis for a proposed upper-upscale or luxury hotel and attached convention center. The city desired a large- scale tourism development that would increase visitors to the area and help increase bed and sales tax revenues.

For this analysis, we visited Frisco and interviewed managers and owners of hotels and convention centers in the region, interviewed hotel developers and brand representatives, and researched main demand generators in the market. A large concentration of sports stadiums and arenas in Frisco and neighboring cities generate significant demand from sports tourism. In addition to conducting market research and financial analysis, we researched and analzyed usage of existing convention centers and spending habits of convention attendees. The projected hotel and convention center construction costs, ongoing operations, and visitor spending were used to estimate the proposed development’s economic impact on the community. This analysis included estimating temporary and permanent direct, indirect, and total impact in terms of job creation, real estate taxes, sales taxes, bed taxes, and other relevant tax revenues.

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Company Overview and Staff Qualifications

Hospitality, Proposed Cobblestone Hotel Gaming & Leisure Brunswick County, Virginia

Brunswick County Executives engaged NKF Hospitality, Gaming, & Leisure (HGL) Group consultants to complete a market demand and financial feasibility study for a proposed Cobblestone hotel on one of two potential development sites in Brunswick County, Virginia.

NKF HGL consultants conducted market research and financial analysis to recommend the proposed hotel’s optimal guestroom count and amenities as well as estimate the value created upon completion. This value was compared to estimated development costs to gauge financial viability of the project. As part of the scope of the assignment, NKF analyzed two potential development sites, completing a sophisticated weighted SWOT analysis to determine which site was best suited for hotel development.

Hospitality, Proposed TownePlace Suites by Marriott Hotel Gaming & Leisure Cleveland, Ohio

The client engaged our consultants to complete a market demand and financial feasibility study for a proposed TownePlace Suites by Marriott hotel in the Cleveland, Ohio suburb of Solon.

For this analysis, the developer had already selected a brand and size for the proposed hotel development. We were tasked with gauging financial feasibility of the project, which included demolition of a portion of an existing retail strip center and connection of the new hotel development to the existing improvements, which would be leased to outside operators. We conducted market research throughout the surrounding area, interviewing hotel operators and several demand generators. The final report included occupancy and rate forecasts as well as a full 10-year operating forecast by department.

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Company Overview and Staff Qualifications

Hospitality, Proposed Brewery District Hotel & Mixed-Use Development Gaming & Leisure Columbus, Ohio

The client engaged NKF to complete a market demand and financial feasibility study for a proposed hotel at a former mid-1800s brewery in downtown Columbus. The adaptive reuse project included analyses of multiple components: hotel and meeting space, market- rate apartments, upscale food hall and restaurants, office and co-working space, and other live-work-play amenities.

NKF HGL consultants conducted market research and financial analysis to credibly recommend the proposed hotel’s room count, chain (i.e. brand) and service level (full-service vs. select-service), amount of meeting space, and other amenities as well as estimate the value created. Because it was determined the proposed hotel was financially feasible, NKF HGL was further engaged to prepare and distribute a hotel management company RFQ to eligible companies, analyze and rank hotel management company responses to the RFQ, and assist our client in the hotel management company interview selection process.

Hospitality, Proposed Hotel Gaming & Leisure City of Ashtabula, Ohio

The City of Ashtabula engaged our consultant to complete a site analysis and market demand and financial feasibility analysis study for a proposed hotel. The city manager and his colleagues provided four recommended sites for hotel development, including a site off historic Bridge Street and one that overlooked the Ashtabula River and Ashtabula Lift Bridge.

Market research included interviewing local and regional business owners and managers, interviewing hotel operators in the region, and analyzing macro and micro economic factors. As part of the scope of the assignment, we analyzed four potential development sites, completing a sophisticated weighted SWOT analysis to determine which site was best suited for hotel development. The final report included occupancy and rate forecasts as well as a full 10-year operating forecast by department.

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Company Overview and Staff Qualifications

Hospitality, Proposed Dual-Brand Hilton Garden Inn & Homewood Suites Gaming & Leisure Columbus, Ohio

The client engaged NKF to complete a market demand and financial feasibility study for a proposed dual-brand Hilton Garden Inn and Homewood Suites near the upscale Easton Town Center and L Brands corporate headquarters. The client had predetermined the room count and types of amenities. We conducted market research and financial analysis to credibly estimate the value created and then compared that value to actual development costs of similar projects studied and a development budget prepared by the developer. The consultants interviewed managers and owners of hotels in the local market, researched supply additions, examined macro and micro economic factors that influence hotel room night demand, and referenced internal and external sources to credibly forecast the proposed hotels’ financial performance and estimate financial feasibility.

Hospitality, Proposed Dual-Brand Holiday Inn and Candlewood Suites Gaming & Leisure Greater Cleveland, Ohio

A commercial bank engaged NKF to complete an as- is appraisal of an existing Holiday Inn, in addition to an as-complete and as-stabilized appraisal of a proposed dual-brand hotel that included the Holiday Inn with a reduced room count and a proposed Candlewood Suites that would take a portion of the Holiday Inn’s room inventory.

For this analysis, NKF consultants interviewed managers and owners of competitive hotels in the region for both service chains, researched main demand generators in the market, and analyzed local and regional economic factors. The dual-brand hotel was appraised assuming shared amenities but having separate management. A thorough analysis was completed of property taxes, historical operating data, and performance of the competitive set. The final appraisal report provided a detailed supply and demand analysis and financial analysis assuming the dual-brand hotel and completed renovations.

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Company Overview and Staff Qualifications

Hospitality, Proposed Luxury Mixed-Use Downtown Development Gaming & Leisure Rochester, Minnesota

An international client engaged NKF consultants to estimate the demand for a luxury hotel, leased retail and office space, seniors housing, and condominiums for a riverfront site, three blocks from the Mayo Clinic. Additionally, the consultants were tasked with recommending the appropriate sizing for all components to maximize the proposed development’s feasibility and returns.

NKF’s specialty practices, which included Healthcare & Seniors Housing; Hospitality, Gaming & Leisure; Retail/Regional Malls; and Multihousing, collaborated on the assignment. Extensive market research included interviewing local and regional business owners and managers, local and regional hotel operators, national hotel brands, local and regional developers, and government and non-government organizations, including the Destination Medical Center to ensure the project scope aligned with the City of Rochester and Mayo Clinic’s long-term plans. Furthermore, macro and micro economic factors were analyzed from a variety of prominent sources and development costs were cross referenced. As part of the scope of the assignment, the consultants analyzed phasing of the proposed development and completed a SWOT analysis for the site and each component. The investment analysis component included analyzing cash-on-cash, equity, and internal rates of return for each individual component, each phase, and the total development. The final report provided a comprehensive national and regional overview for each component, supply and demand analysis, recommended facilities, financial performance projections, and investment analysis.

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Company Overview and Staff Qualifications

Contact information for the person we worked with in the referenced related experience is summarized in the following table:

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Terms and Conditions

TERMS AND CONDITIONS ATTACHED TO AND A PART OF THE ENGAGEMENT LETTER DATED AUGUST 29, 2019 TO PROVIDE VALUATION AND ADVISORY SERVICES FOR THE CITY OF WALNUT 1. These Terms and Conditions are attached to and incorporated into the above referenced engagement letter as though fully set forth in full therein, and together form the “Agreement.” Capitalized terms if not defined herein shall have the same meaning as defined in the Agreement. 2. With respect to any appraisal report, use of or reliance on the appraisal by any party, regardless of whether the use or reliance is authorized or known by the Firm, constitutes acceptance of these Terms and Conditions as well as acceptance of all other appraisal statements, limiting conditions and assumptions stated in the Agreement and appraisal report. 3. It is assumed that there are no matters affecting the Property that would require the expertise of other professionals, such as engineers or an environmental consultant, for Firm to provide the appraisal. If such additional expertise is required, it shall be provided by other parties retained by Client at Client’s sole cost and expense. 4. Client acknowledges that the Firm is being retained as an independent contractor to provide the services described herein and nothing in this Agreement shall be deemed to create any other relationship between Firm and Client, including but not limited to an agency relationship. The parties neither intend nor have any expectation that any such relationship will arise as a matter of law or as a result of this Agreement. This assignment shall be deemed concluded and the services hereunder completed upon delivery of the appraisal described herein to Client. 5. All statements of fact contained in the appraisal report as a basis of the appraiser's analyses, opinions, and conclusions will be true and correct to the best of the appraiser's actual knowledge and belief. The appraiser is entitled to, and shall rely upon the accuracy of information and material furnished to the Firm by Client. Appraiser is also entitled to, and shall, rely on information provided by sources upon which members of the appraisal profession typically rely and that are deemed to be reliable by members of that profession without independent verification. 6. The Firm and the appraiser shall have no responsibility for legal matters, or questions or issues involving survey or title, soil or subsoil conditions, engineering, zoning, buildability, environmental contamination, structural matters, construction defects, material or methodology, or other similar technical matters with regarding the Property. Furthermore, the appraisal will not constitute a survey of the Property. 7. The appraisal and the data and information gathered in its preparation (other than the confidential data and information provided by Client) is and will remain, the property of the Firm. The Firm shall not violate the confidential nature of the appraiser-client relationship by improperly disclosing any confidential information furnished by Client to the Firm. Notwithstanding the foregoing, the Firm and the appraiser are authorized by Client to disclose all or any portion of the appraisal and appraisal report and the related data and information, including confidential data and information provided by Client, to appropriate representatives of the Appraisal Institute if such disclosure is required to comply with the Standards, Bylaws and Regulations of the Appraisal Institute, as well as, such disclosure as required by law and regulations, including compliance with a subpoena and licensing authority regulatory inquiries. The Firm is also authorized to include both confidential and non-confidential data assembled in the course of preparing the appraisal and which may be incorporated into the appraisal report in a database controlled by the Firm for the aggregation of such data and information to produce analytics and other metrics or products.

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Terms and Conditions

8. Unless specifically noted in the appraisal report, the appraisal will not take into consideration the possibility or probability of the existence of asbestos, PCB transformers, other toxic, hazardous, or contaminated substances and/or underground storage tanks (hazardous material) at on or in the Property, or the cost of encapsulation, removal or remediation thereof. 9. Client shall indemnify, defend (by counsel to be selected by Firm), protect, and hold Firm and Firm’s appraisers, agents, employees, affiliates, representatives, successors and assigns (each a “Firm Party”), free and harmless from any and all claims, liabilities, losses, penalties, fines, forfeitures, amounts paid in settlement, judgments, and all reasonable attorneys' fees and related litigation costs, fees and expenses incurred by the any of such indemnitees, which result from (i) any failure by Client or Client’s agents or representatives to provide Firm with complete and accurate information regarding the Property; (ii) any material breach by Client of the provisions of the Agreement; (iii) if delivery of the appraisal to a third party is permitted by the Firm, Client providing an incomplete copy of the appraisal to such third party; or (iv) arising from Client or Client’s agents or representatives providing a copy of the appraisal to a party not authorized by the Firm to receive such copy. 10. In preparing the appraisal, it is possible that the appraiser will discover conflicting information. In that event, appraiser will utilize information and data considered to be the most authoritative and for critical information will document the source. Information and data referred to may include, but is not limited to, legal descriptions; physical street addresses; assessor parcel numbers; property history; dimensions and areas of the site/land; dimensions and areas of the building improvements; physical unit counts; rent rolls; leases; lease abstracts; income and expense data; and any other related data. Any material discrepancy and/or error in any of the above data could have a substantial impact on the conclusions reported, and the Firm therefore reserves the right to amend conclusions reported if the Firm is made aware of any such discrepancy and/or error. 11. The appraisal may not be used, included or referenced, in whole or in part, in any offering or other materials without the prior written consent of the Firm, which consent may be conditioned upon the receipt by the Firm of an indemnity agreement, in form and content, satisfactory to Firm and provided by an indemnitor satisfactory to Firm. Client agrees to pay the fees of the Firm’s legal counsel for review of any materials which is the subject of the requested consent. Except as agreed by the Firm expressly in writing, the Firm disclaims liability to any party other than Client. 12. The Firm shall not provide a copy of the appraisal to, or disclose the results of the appraisal to, any party other than Client, unless Client authorizes same, except as provided in the Confidentiality Section of the ETHICS RULE of the Uniform Standards of Professional Appraisal Practice (USPAP) or as otherwise required by law or regulations. 13. Client and any other identified Intended User should consider the appraisal as only one factor together with its own independent considerations and underwriting guidelines in making any decision or investment or taking any action regarding the Property. Client agrees that Firm shall not be responsible in any way for any decision of Client or any Intended User related to the Property or for the advice or services provided by any other advisors or contractors. 14. Unless otherwise stated in this Agreement, Client agrees that the services pursuant to this Agreement shall not include participation in or preparation for, or attendance at, any legal, judicial, administrative, or arbitration proceeding relating to this assignment. In the event the Firm or any Firm Party is required, whether through the service of a subpoena or otherwise, to produce documents or participate in or prepare for any discovery, testimony or attendance, relating to the appraisal or this assignment, where the Firm or Firm Party is not a party to the action or proceedings involved, Client agrees to reimburse expenses incurred

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Terms and Conditions

by the Firm or Firm Party, including attorney’s fees, in responding to such subpoena or other legal process and compensate the Firm therefor based upon the appraiser’s prevailing hourly or daily rate for providing services as an expert consultant or witness. 15. Except as expressly provided herein, Firm makes no representations or warranties to Client or to any other person or entity with respect to the appraisal and the services to be provided by Firm under this Agreement. To the maximum extent permitted under applicable law, in no event will the Firm or any Firm Party be liable to Client or any third party (regardless of whether such party’s claimed use or reliance on the appraisal was authorized by the Firm or a Firm Party) for any indirect, special, exemplary, incidental, or consequential damages (including loss of profits) arising from or relating to this Agreement or the appraisal, even if such party knew or should have known of the possibility of, or could reasonably have prevented, such damages. In no event shall the total liability of the Firm or any Firm Party to Client or any third party (regardless of whether such party’s claimed use or reliance on the appraisal was authorized by the Firm or a Firm Party) arising from or relating to this Agreement or the appraisal, whether based on tort, contract, or any other legal theory, exceed the amount of fees paid to the Firm for the appraisal and the services described herein. Legal claims or causes of action relating to the appraisal are not assignable, except: (i) as the result of a merger, consolidation, sale or purchase of a legal entity, (ii) with regard to the collection of a bona fide existing debt for services but then only to the extent of the total compensation for the appraisal plus reasonable interest, or (iii) in the case of an appraisal performed in connection with the origination of a mortgage loan, as part of the transfer or sale of the mortgage before an event of default on the mortgage or note or its legal equivalent. 16. Federal banking regulations require banks and other lending institutions to engage appraisers where FIRREA compliant appraisals must be used in connection with mortgage loans or other transactions involving federally regulated lending institutions. In view of that requirement, the appraisal may not be accepted by a federally regulated financial institution. 17. In the event Client fails to make payments of any fees or sums when due and payable under this Agreement; then from the date due and payable until paid, the amount due and payable shall bear interest at the maximum rate permitted under the laws of the state in which the Property is located. If the Firm is required to undertake collection efforts including institution of legal action against Client relating to the Agreement, the Firm shall be entitled to recover attorney's fees, litigation expenses, and costs from Client. 18. To the extent permitted under applicable law, any legal action or lawsuit or other proceeding by Client or any Intended User of the appraisal against Firm or a Firm Party whether based in contract, tort, warranty, indemnity or otherwise, relating to the appraisal shall be commenced within two (2) years from the date of delivery of the appraisal to the claimant in such action or proceeding, unless the applicable law provides for a shorter period, and any such claimant waives the right to a jury in any such legal action or lawsuit or other proceeding. Notwithstanding the state of domicile or residency of either party to this Agreement, this Agreement shall be governed and construed under the laws of the state in which the Property is located, and venue for any action or proceeding arising out of this Agreement shall be deemed proper only in the court of competent jurisdiction located in the state in which the Property is located. 19. Throughout the performance of services under this Agreement, the Firm shall maintain at is sole cost and expense the following insurance: (a) Workers’ Compensation, so as to provide statutory benefits as required by the laws of each state within the United States in which the Firm’s services are being provided, and Employer’s Liability insurance with limits of liability of no less than $1,000,000 each accident, $1,000,000 disease each employee and

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Terms and Conditions

$1,000,000 disease policy limit covering all employees of the Firm engaged in the performance of such services. (b) Fidelity insurance or bond with a limit of not less than $1,000,000 to insure the Firm against loss of its or Client’s assets caused from the dishonest acts of the Firm’s employees. (c) Professional Liability insurance with a limit of liability of not less than $15,000,000 each claim and $15,000,000 aggregate, which limits may be provided by a combination of primary and excess policies. (d) Commercial General Liability insurance providing coverage against damages due to bodily injury (including death), property damage and personal and advertising injury arising in connection with the Firm’s services provided under this Agreement, which insurance coverage shall: (i) be occurrence- based; (ii) provide limits of liability in an amount not less than $1,000,000 each occurrence and $1,000,000 aggregate (including excess and/or umbrella limits), (iii) include at least those coverages generally included in the most current ISO Commercial General Liability insurance policy form (or its equivalent); and (iv) include Client, and such other persons or entities as Client may identify in writing, as additional insureds solely with regard to claims arising out of this Agreement. (e) Commercial automobile liability for owned, hired and non-owned motor vehicles, with a $1,000,000 combined single limit.

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Sample Report Table of Contents

Table of Contents General Information 1 General Description 1 Operational Assumptions 1 Description of the Feasibility Study 2 Scope of Work 2 Economic Analysis 4 Regional Area Analysis 4 Local Area Analysis 11 Office Market Analysis 16 Land Description and Analysis 23 Land Description 23 Proposed Improvements Description 27 Overview 27 Recommended/Proposed Improvements 30 Brand Recommendations 31 Zoning 32 Real Estate Taxes 33 Tax Comparables 34 National Lodging Market Analysis 37 Regional Hotel Market Analysis 42 Operating Performance 43 Supply Changes 44 Looking Forward 48 Supply and Demand Analysis 49 Analysis of Demand Segments 66 Subject Occupancy Projection 75 Penetration Index Analysis 77 Subject Hotel ADR Projection 80 Financial Analysis 83 Projection of Revenue and Expenses 102 Investment Matters Considered 107 Discounted Cash Flow Conclusions 113 Feasibility Analysis 119 Assumptions & Limiting Conditions 120 Glossary 123

Addenda 127

*Note: This report sample table of contents is shown for illustrative purposes only and may change based on the scope of services and availability of information. NKF reserves the right to modify and/or remove sections as deemed appropriate.

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Qualifications of the HGL Specialty Practice

Qualifications of the Hospitality, Gaming and Leisure Specialty Practice

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Cost Proposal

Hospitality, Gaming & Leisure Valuation & Advisory

COST PROPOSAL TO COMPLETE A MARKET DEMAND AND FEASIBILITY STUDY AND SITE ANALYSIS

FOR A PROPOSED HOTEL

PREPARED FOR: City of Walnut September 4, 2019

0 City of Walnut

Cost Proposal

Fees and Payment Policies

Task (Scope of Work) Cost

Component I – Market Demand, Financial Feasibility Study, $18,000 and Site Analysis

(Optional) Component II – RFQ Preparation & Solicitation $10,000

Travel and out-of-pocket expenses, including custom STR Included Trend Report ($550)

The hourly fees are based on the following position classifications:

Senior Vice President (Laurel Keller) - $300 an hour Vice President (John Kelley) - $200 an hour Senior Analyst (Alexandra Chapekis) - $100 an hour

The following outline is our man-hour analysis that describes the number of hours associated with our scope of work and relative hourly fee. We reserve the right to adjust the allocation of hours; the total fee quoted will not change.

Estimated Total Time / Capped Task Consultant Blended Fee Performing Task Hourly Fee

Travel to the subject market for a site visit of the potential hotel sites, neighborhood and market tour, and meetings with the Laurel Keller or 10 hours / $2,500 Client. Includes STR Trend Report ($550). John Kelley $250

Interview Walnut city officials, Los Angeles County officials, local and regional convention and visitors’ bureau and economic development representatives, relevant non-profit

groups, key demand generators, and operators from existing Laurel Keller 6 hours / $1,500 hotels in the greater region to gather quantitative and qualitative and/or John Kelley $250 data concerning demand and supply as well as trends in the hotel market. Every effort will be made that these interviews are conducted in person; however, some interviews may be conducted over the phone or via email.

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Cost Proposal

Interview representatives of major hotel chains to determine a potential franchise affiliation, including, but not limited to 3 hours / Marriott, Hilton, IHG, Hyatt, Radisson, Choice, and Wyndham. John Kelley $200 $600

Analyze the existing and future supply of hotels within relevant portions of the Los Angeles MSA. Allie Chapekis 5 hours / $500 $100 Research and analyze the local and regional demographics, including but not limited to household income, level of education, age, population growth, etc. and compare these Allie Chapekis 5 hours / $500 $100 metrics to other locations in the area.

Research and analyze other developments in Walnut and the surrounding area that could make the area more attractive to John Kelley and/or 4 hours / $600 visiting guests that could stay the proposed. Allie Chapekis $150

Consult previous research related to hotels in the area, including actual operating statements, industry trend Laurel Keller 3 hours / $750 statements, and other data. and/or John Kelley $250

Perform a SWOT analysis of the proposed hotel and local area to determine the proposed hotel’s strengths, weaknesses, Laurel Keller, John 5 hours / $1,000 opportunities, and threats, which will be used to recommend Kelley, and Allie $200 Chapekis brand affiliation, sizing, location, etc.

Perform a weighted-average site analysis on three sites within Walnut that could accommodate the proposed hotel. The analysis will consider qualitative and quantitative factors, 4 hours / $1,000 including but not limited to access to a major interstate; Laurel Keller $250 proximity to leisure and corporate demand generators, ancillary and/or John Kelley amenities and attractions; and available acreage for development.

Project demand (usage/attendance) from commercial, leisure, group, and extended-stay clientele. Demand will be projected Laurel Keller 6 hours / $1,350 over a 10-year period. and/or John Kelley $225

Recommend the number and mix of guestrooms, market orientation of the hotel, size and type of food and beverage facilities, meeting space, and other components that are Laurel Keller 4 hours / $800 and/or John Kelley $200 deemed appropriate based on our research.

Project room revenue based on forecasted occupancy and ADR and other operated and/or miscellaneous revenue and Laurel Keller 6 hours/ $1,500 and/or John Kelley $250

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Cost Proposal

project ordinary operating and fixed expenses based on comparable operating data and industry averages.

Estimate annual capital expenditures based on industry Laurel Keller 4 hours / $800 standards and comparable operating data. and/or John Kelley $200

Estimate and/or evaluate development costs of the proposed John Kelley and/or 6 hours / $600 hotel based on Marshall & Swift cost estimates. Allie Chapekis $100

Prepare a detailed 10-year pro forma (inclusive of segmented revenues, operating expenses, and non-operating expenses) that is supported by our analysis and comparable operating Laurel Keller, John 6 hours / $1,200 Kelley, and Allie $200 data and is based on the financial model deemed most Chapekis probable and efficient.

Estimate the proposed hotel’s market value using the discounted cash flow analysis and compare the market value to proposed development costs to determine if the project will Laurel Keller 8 hours / $1,600 and/or John Kelley $200 generate positive or negative cash flows (i.e. will subsidies be necessary; will it generate a profit).

Research potential public incentives that could improve the Laurel Keller 6 hours / $1,200 viability and/or investment attraction for a hotel. and/or John Kelley $200

Total Fee $18,000

Travel expenses (i.e. flight, lodging, meals) are for two persons visiting the Client and subject area on two separate occasions up to three nights per occasion. Additionally, the expenses include subsistence, data purchasing, and other out-of-pocket expenses related to the study.

Client must submit a retainer in the amount of 50% of the total fee and expenses prior to the engagement beginning. The balance of fees and expenses will be invoiced when the draft version of the study is delivered (in PDF format) and is due within 30 days of receipt. The final version of the study will be delivered when final payment is received.

Payment of the assignment fee is not contingent on any predetermined value or on an action or event resulting from the analysis, opinions, conclusions, or use of the assignment.

We will negotiate fees for any additional services when you request them. At the completion of the requested study, additional consulting services are available at a rate of $150-$400 per hour, depending on the staff person involved.

Schedule of Payments Invoices for our advisory services will be earned as well as delivered and due upon receipt on the completion of the following milestones:

1. Initial Engagement/Cost Recovery (10% of Total Fee Earned and Due - $1,800) – Kick-off conference call with Client to review scope of work, address any specific issues or requests

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Cost Proposal

you may have, and arrange date of site visit. This call will also review data needed for the analysis, including collecting names and contact information of local business leaders. Booking of travel to City of Walnut.

2. Completion of Site Visit (30% of Total Fee Earned and Due - $5,400) – Site visit/inspection and interviews with city officials, business leaders, managers of existing hotels in area, and other individuals as appropriate.

3. Submission of Draft Study (30% of Total Fee Earned and Due - $5,400) – Submit draft of hotel feasibility study to Client.

4. Submission of Final Study (30% of Total Fee Earned and Due - $5,400) – Address the Client’s comments and submit final hotel feasibility study to Client.

Method of Payment NKF V&A accepts checks and wire/ACH transfers as form of payment. Checks should be made payable to Newmark Knight Frank Valuation & Advisory, LLC and sent to Newmark Knight Frank, Attention: HGL V&A, 1300 East 9th Street, Suite 105, Cleveland, OH 44114.

For details concerning wire/ACH transfer, we can provide the appropriate information needed on request.