FAIR VALUE APPRAISAL OF: TIVOLI VILLAGE AT QUEENSRIDGE

NEC Rampart Blvd & Alta Drive Las Vegas, Nevada

EFFECTIVE APPRAISAL DATE:

September 30, 2015

PREPARED FOR:

Mr. Matthew Bunin GREAT WASH PARK LLC 9525 Hillwood Drive, Suite 100 Las Vegas, NV 89134

Marquette Advisors File #15054

PREPARED BY:

Marquette Advisors Offices:

Minneapolis Office: 50 South Sixth Street, Suite 1370, Minneapolis, MN 55402 Phone: 612-335-8888; Fax: 612-334-3022 Seattle Office: 2723 California Avenue SW, Seattle, WA 98116 Phone: 425-392-7482; Fax: 425-392-7330 Washington DC Office: 1140 Connecticut Avenue NW, Washington, DC 20036 Phone: 202-331-0226; Fax: 612-334-3022

TABLE OF CONTENTS

Identification of the Subject Property ...... 1 Planned Development Program & Construction Status ...... 8 Development Budget ...... 16 Summary of Salient Facts & Conclusions ...... 17 Intended User & Use of the Appraisal ...... 18 Property Rights Appraised & Date of Value ...... 18 Scope of Work ...... 18 Underlying Assumptions ...... 19 Extraordinary Assumptions ...... 20 Limiting Conditions ...... 20 Competency Provision ...... 21 Fair Value Definition ...... 24 Regional Characteristics ...... 25 Tivoli Village Primary Trade Area Analysis ...... 39 Neighborhood Analysis ...... 45 Site Analysis ...... 49 Zoning & Related Entitlements ...... 51 Highest and Best Use ...... 61 Competitive Market Analysis ...... 65 Absorption & Financial Projections ...... 85 Valuation ...... 98 Final Reconciliation of Value ...... 105 Certificate of Appraiser ...... 106

Addenda

Engagement Letter Rent Roll PWC Investor Survey (relevant sections)

November 5, 2015

Mr. Matthew Bunin Great Wash Park LLC 9525 Hillwood Drive, Suite 100 Las Vegas, NV 89134

SUBJECT: Fair Value Appraisal � Tivoli Village at Queensridge, as of September 30, 2015 Marquette Advisors File # 15054

Dear Mr. Bunin:

In accordance with your request, we have inspected and appraised the subject property referenced above. Mr. Louis W. Frillman, FRICS, MAI, CRE is a licensed appraiser in the State of Minnesota (License Number AP-4000728) and has obtained a temporary practice permit for this assignment through the State of Nevada. That permit number is as follows: ATMP.0012927.CG.

We note that Marquette Advisors provided prior appraisals of the subject property. This appraisal reflects an update to prior analyses and valuations by Marquette Advisors. The value assessed by Marquette Advisors as of December 31, 2008 was $200,000,000. Subsequent appraisals by Marquette Advisors reached a valuation conclusion of $201,000,000 as of December 31, 2009, $242,000,000 as of December 31, 2010, $281,000,000 as of September 30, 2011, a value range of $270,000,000 to $300,000,000 as of September 30, 2012, a value of $260,000,000 as of March 31, 2013, a range of $265,000,000 to $270,000,000 as of December 31, 2013, and $278,000,000 as of September 30, 2014.

It is noted that the IFRS Book Value is currently $303,700,000. The appraiser’s opinion of fair value as of September 30, 2015, at $281,000,000 as reported herein, reflects the appraiser’s review of the subject property in terms of construction status and leasing activity, as well as all relevant and available market information for 2014 and 2015. The fact that the current fair value estimate is slightly lower than book value relates to lease-up and absorption lagging slightly behind the ongoing construction of the asset, which is normal in the case of a major development such as the subject.

IDENTIFICATION OF THE SUBJECT PROPERTY - The subject property is located at the northeast corner of the intersection of Rampart Boulevard and Alta Drive in Las Vegas, Nevada. The entire development site contains 28.62 total acres and is owned by Great Wash Park LLC. A major mixed use development is underway at the site, incorporating more than 740,000 square feet (sf) of commercial space to be leased to multiple retail, restaurant, and office tenants, as well as a planned133-room boutique hotel. Additionally, the property owners have an entitlement for 300 multifamily residential units in a future phase. The project developer, Great Wash Park LLC intends to sell this portion of the property to a residential developer/builder in the future, as so entitled. Aerial maps are provided on the following pages, depicting the property’s regional and neighborhood location. The aerials are followed by a site survey.

Marquette Advisors Offices: Minneapolis Office: 50 South Sixth Street, Suite 1370, Minneapolis, MN 55402 Phone: 612-335-8888; Fax: 612-334-3022 Seattle Office: 2723 California Avenue SW, Seattle, WA 98116 Phone: 425-392-7482; Fax: 425-392-7330 Washington DC Office: 1140 Connecticut Avenue NW, Washington, DC 20036 Phone: 202-331-0226; Fax: 612-334-3022

Tivoli Village at Queensridge, Las Vegas, NV

Tivoli Village at Queensridge, Las Vegas, NV

Tivoli Village at Queensridge, Las Vegas, NV

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

DEVELPOMENT PROGRAM & CONSTRUCTION STATUS

The Tivoli Village at Queensridge design evokes a classic European theme, with extensive stonework and intricate architectural details. Located at the eastern periphery of Summerlin and some of Las Vegas’ most affluent neighborhoods, the project features an eclectic mix of high-end retail shops, boutiques and restaurants, along with Class A office space. Future phases will include an upscale hotel, as well as multifamily residential development. The planned development program and phasing schedule is summarized as follows:

• 401,401 sf of retail & restaurant space for lease, developed in three phases:

o Triad A: 202,684 sf -- opened April 2011 o Triad B: 172,573 sf -- projected to open October 2016 o Triad C: 26,144 sf -- projected to open April 2017

• 338,784 sf of office space for lease, developed in three phases:

o Triad A: 162,513 sf – opened April 2011 o Triad B: 133,811 sf -- projected to open October 2016 o Triad C: 42,460 sf -- projected to open April 2017

• A boutique hotel with 133 total guest rooms is also planned, with a projected opening in October 2017. Planned hotel amenities include a high-end 3,000 sf lobby, 3,000 sf restaurant & bar area, and 5,660 sf of meeting and banquet space, as well as another 8,780 sf of multi-tenant commercial space that will be leased separately to individual tenants.

• Phase II residential land as entitled for 300 residential units. The project sponsor plans to sell this land as-entitled to a residential builder/developer in two pieces in 2017 and 2018.

• Total Budget: $589 Million (excluding developer fees, financing and land acquisition costs), with approximately $123 million remaining to complete (including projected tenant improvement costs for remaining space components)

The graphics on the following pages include site and building plans for Tivoli Village at Queensridge. This is followed by the project budget, as provided by Great Wash Park LLC.

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SITE PLAN

“Triad A” “Triad B” Hotel & “Triad C”

Project Rendering � Tivoli Village at Queensridge

Aerial View of Current Improvements & Ongoing Construction of Tivoli Village

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

Main Entry to Tivoli Village

Public Area

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Exterior view of tenancy in place (Triad A)

Restoration Hardware � under construction

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DEVELOPMENT BUDGET

A detailed listing of the various project components along with budgeted hard and soft costs is provided on the following page. Development cost and budget information was provided by Great Wash Park LLC, including all hard and soft costs, projected leasing and sale commissions, as well as tenant improvements (build-out costs) for the commercial space. The appraiser has reviewed the project budget and believes the costs to be reasonable based on experience and review of project cost information for other commercial & residential developments throughout the United States. As discussed, construction is well underway, and the property owners indicate that the remaining construction cost as of the date of valuation (September 30, 2015) was approximately $123 million, as outlined below.

GREAT WASH PARK LLC Updated: 10.12.2015 Project to Date through: September 30, 2015 Remaining Budget to Complete as of through Date

Pro ject Remaining Remaining Budget - Total Remaining Total Projected Project Bud Budget C Budget Hotel Budget - A B Budget Costs get (Q3 HARD COSTS Triad A and Podium ## - - - - - 261,662,490 Triad B ## - 44,823,274 - - 44,823,274 106,584,522 Triads A&B - 44,823,274 - - 44,823,274 368,247,012 Triad C/Hotel ## - - 3,874,107 24,888,382 28,762,489 34,935,276 DESIGN ## - - - - - 1,735,937 TOTAL HARD COSTS ## - 44,823,274 3,874,107 24,888,382 73,585,763 404,918,225 TENANT IMPROVEMENTS ## 1,640,192 27,837,654 2,500,000 2,782,883 34,760,729 77,754,319 TOTAL HARD COSTS & TI ## 1,640,192 72,660,928 6,374,107 27,671,265 108,346,492 482,672,544 22.4% 106.6% SOFT COSTS GENERAL ADMINISTRATIVE AND LEGAL ## - 3,817,668 750,103 - 4,567,771 24,098,951 DESIGN/ARCH & ENGINEERING/GOVT FEES ## - 823,546 750,000 - 1,573,546 29,758,333 LEASING ## - 1,810,122 500,470 - 2,310,592 23,994,124 LEASING COMMISSIONS ## 331,275 2,973,705 - - 3,304,980 6,897,628 PROPERTY TAX & INSURANCE ## - 1,832,101 533,576 - 2,365,677 20,883,019 CONTINGENCY ## - 500,000 250,000 - 750,000 750,000 TOTAL SOFT COSTS ## 331,275 11,757,142 2,784,149 - 14,872,566 106,382,055

TOTAL PROJECT COSTS ## $ 1,971,467 $ 84,418,070 $ 9,158,256 $ 27,671,265 $ 123,219,058 $ 589,054,599 20.9% 108.7%

Source: Great Wash Park LLC

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SUMMARY OF SALIENT FACTS AND CONCLUSIONS PROPERTY Tivoli Village at Queensridge (under construction) NE corner Alta Dr. & Rampart Blvd. Las Vegas, NV 89145

PROPERTY TAX IDENTIFICATION NUMBER(S) Clark County, NV 138-32-601-003

CURRENT OWNER(S) OF RECORD Great Wash Park, LLC

LAND AREA 28.62 Acres PROJECTED LEASABLE/SALEABLE AREA 740,185 sq. ft. of leasable retail and office space, as well as a 135-room hotel of approximately 100,000 sf being constructed by Great Wash Park LLC, plus approximately 8.3 acres of land as entitled for 300 residential units CURRENT OCCUPANCY Partially improved, Tivoli Village at Queensridge currently under construction YEAR BUILT 2011 (Triad A), 2016 (Triad B), 2017 (Triad C & Hotel) ZONING DESIGNATION C-2, General Commercial CONFORMING USE PER CURRENT ZONING Yes (Development is fully entitled) FLOOD ZONE Zone X, not in 500-yr flood zone FLOOD MAP FEMA Comm. Map # 325276, Panel 2145E, dated Sept. 27, 2002

ANNUAL PROPERTY TAXES $587,899.70 (2014) HIGHEST AND BEST USE Mixed use, commercial, hotel & multifamily residential VALUATION Fair value, as of September 30, 2015, subject to the extraordinary assumptions & limiting conditions as outlined in this report

ESTIMATED MARKETING PERIOD Varies by component ESTIMATED EXPOSURE PERIOD Varies by component

APPRAISER�S FINAL OPINION OF FAIR VALUE $281,000,000 as of 9-30-15

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INTENDED USER AND USE OF THE APPRAISAL - We have prepared this appraisal report for client internal accounting purposes and to support the value in the financial statements of Great Wash Park LLC. It is understood that this report may in the future be attached to an Israeli public filing of the following companies: IDB Group USA Investments Inc., Property and Building Corp. Ltd., Discount Investment Corp. Ltd, and/or IDB Development Corp. Ltd.

BOOK VALUE

The current Book Value as of 9-30-15 per IFRS standards is $303,700,000.

PROPERTY RIGHTS APPRAISED AND DATE OF VALUE

The valuation as provided herein is defined as follows:

• �Fair Value� of the property, as determined in accordance with International Accounting Standards-IFRS (IFRS 13), as of September 30, 2015, subject to the extraordinary assumptions and limiting conditions outlined in this report.

SCOPE OF THE APPRAISAL

This appraisal report is not limited in scope as to our analysis of the property. This is a complete appraisal, reported as a complete self contained appraisal report format, in accordance with the Uniform Standards of Professional Appraisal Practice and in compliance with FIRREA, Title XI pertaining to real estate appraisals, as well as International Accounting Standards. As such, this report contains a description of the subject property and provides an analysis of the various details considered in our analysis, along with the appraiser’s opinion of value.

In the preparation of this appraisal report, we have considered all available, relevant market data identified as impacting the market value of the subject. In the preparation of this report, we have completed a physical inspection of the subject property, its immediate neighborhood and competitive market area. We have also analyzed all available and relevant residential and commercial real estate information and related development market data, demographics and economic information for subject sub-market and the greater Las Vegas market.

Data sources relied upon are referenced throughout this report. The data which we have assembled has been confirmed, whenever possible, by personal contact with the buyer, seller or agent handling the particular sale or lease transactions. When personal confirmation was not possible by us, judgment was made as to its relevance and reliability.

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UNDERLYING ASSUMPTIONS

This appraisal report has been made with the following general assumptions:

1. No responsibility is assumed for the legal description or for matters including legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated.

2. The property is appraised free and clear of any and all liens or encumbrances unless otherwise stated.

3. Responsible ownership and competent property management are assumed.

4. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy.

5. All engineering is assumed to be correct. The plans and illustrative material in this report are included only to assist the reader in visualizing the property.

6. It is assumed that there are no hidden or in apparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

7. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report.

8. It is assumed that all applicable zoning and use regulations and restrictions have been complied with unless nonconformity has been stated, defined, and considered in the apprais- al report.

9. It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based.

10. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report.

11. All plans and project information presented herein, including square footages and project budget, tenant lease terms and rate information, were provided by the project sponsor and are the appraiser assumes that this information is accurate and that the project will be developed as described herein. Substantial alteration from the development program as described in this report could result in material financial performance and valuation.

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12. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.

EXTRAORDINARY ASSUMPTIONS

Uniform Standards of Professional Appraisal Practice (USPAP) defines an “extraordinary assumption” as an assumption which is directly related to the assignment that if found to be false, could alter the appraiser’s opinions or conclusions.

In terms of this assignment, the following extraordinary assumptions are applicable: it is assumed that the development program as described in this report is constructed as per the construction and phasing program as outlined herein, and that the project costs as presented in this report are assumed to be accurate. If the project costs, development components or timing vary significantly from those presented within this analysis, the financial viability of the project, the rate of return and valuation could in fact vary substantially. Based on an extensive review of the project budget, actual construction activity and costs to date, construction cost indices, and professional knowledge based on experience in evaluating numerous real estate developments in Las Vegas and nationwide, the appraiser believes from this analysis that the assumed costs and phasing schedule are reasonable.

LIMITING CONDITIONS

This appraisal report has been made with the following general limiting conditions:

1. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used.

2. Possession of this report, or a copy thereof, does not carry with it the right of publication other than as stated in this report. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser and, in any event, only with proper written qualification, and only in its entirety.

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Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

3. The appraiser herein by reason of this report is not required to give further consultation, testimony, or be in attendance in court with reference to the property in question unless arrangements have been previously made.

4. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser.

5. All valuation services rendered by Marquette Advisors are subject to the above enumerated underlying assumptions and limiting conditions.

COMPETENCY PROVISION

Louis W. Frillman, MAI, CRE is competent in valuing similar complex mixed-use commercial, hotel and residential properties and has appraised and consulted on a wide variety of similar development projects and existing property assets throughout Nevada and the United States. Thus he has both the geographic experience and professional experience and expertise as required by this valuation assignment. Mr. Frillman’s professional biography is provided on the following page.

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Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

PROFESSIONAL QUALIFICATIONS OF LOUIS W. FRILLMAN President MARQUETTE ADVISORS

Louis W. Frillman has been engaged in the real estate business nationwide since March 1975. During this time, he has developed skills in all areas of real estate practice including the acquisition, disposition, asset management, development, leasing, sale, financing, and valuation of industrial, commercial, and residential properties, including all major types of income-producing real estate. Currently, Mr. Frillman is President of Marquette Advisors, a national commercial real estate consulting firm.

Marquette Advisors currently operates a national real estate counseling practice with offices in Minneapolis and Seattle. Marquette provides comprehensive solutions to complex real estate problems and is practiced at managing and overseeing large real estate consulting projects nationwide. Mr. Frillman formerly was Executive Vice President of Marquette Partners, a 490-employee firm that managed and oversaw 45 million sq. ft. of investment properties of all types, including primarily regional and community shopping centers nationwide, and also office properties and industrial investment and corporate portfolios.

Mr. Frillman has completed counseling assignments dealing with significant decisions regarding real property utilized for real estate tax petitions, market feasibility and absorption analysis studies, valuations and disposition of major business properties, and investment analyses for acquisition of property by investors of all types. Geographically, he has been active in providing counsel on complex property issues with no boundary limitations for over 20 years. He has completed projects in Europe, the UK, Bermuda, Hawaii, Canada, Mexico, and parts of Central America.

He has developed all types of income producing properties, and in addition, has developed single-family custom housing. Mr. Frillman has provided counsel to real estate buyers, sellers, investors and lenders concerning virtually all types of real estate, worldwide.

In the hospitality and gaming areas, Mr. Frillman has conducted numerous market and financial feasibility studies, going concern and real estate valuations, and has provided other counseling services to scores of hospitality and gaming projects. Mr. Frillman is experienced at managing and overseeing large projects nationwide. His gaming experience spans North America and the Caribbean, including all existing gaming markets.

Mr. Frillman is a frequent guest lecturer at real estate conventions throughout the United States. He is a member of the American Society of Real Estate Counselors, the real estate counseling affiliate of the National Association of Realtors. He is an elected member of the Appraisal Institute and has served on the MAI Demonstration Appraisal Reports Committee nationally, and was a member of the Board of Directors for the local Institute Chapter as well as on the local admissions committee.

In 1973, Mr. Frillman graduated from the College of St. Thomas with a Bachelor of Arts Degree in Finance. He has completed all courses relating to earning and maintaining real estate valuation designations, licenses, and brokerage licenses, in multiple states. Mr. Frillman regularly attends professional educational seminars and has completed courses in a variety of related subjects including market feasibility analysis, syndication structure and analysis, subdivision development, the valuation of industrial real estate, the valuation of multiple-family properties, analysis of deminimus PUDs, methods of joint venture financing, valuation of business enterprises, and others.

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In addition to attending courses in real estate, Mr. Frillman has lectured and taught real estate valuation for the University of St. Thomas and has been a guest lecturer at numerous continuing education seminars for the Law Board, NAIOP, American Society of Real Estate Counselors, and CORENET.

Mr. Frillman is a licensed and bonded real estate broker in the State of Minnesota and is an affiliate member of the National Association of Industrial and Office Parks (NAIOP), and has served on multiple committees of that association. He has also served as judge for the NAIOP "Awards of Excellence".

His community activities include being a full member of the Greater Minneapolis Board of Realtors, a member of the Urban Land Institute, a member of the National Trust for Historic Preservation, the Ramsey County Historical Society, the Ramsey Hill Association, and the Riverfront Development Committee of the Downtown Council of Minneapolis.

Mr. Frillman is a member of the American Society of Real Estate Counselors, the real estate counseling affiliate of the National Association of Realtors. He is an elected member of the Appraisal Institute, has served on the MAI Demonstration Appraisal Reports Committee nationally, and was a member of the Board of Directors for the local Institute Chapter as well as on the local admissions committee. He has also served as Chairman of the Candidate Guidance Committee.

He is an invited member of both the Real Estate Counselors (CRE) and Lambda Alpha, the international Land Economics Fraternity.

His charitable activities include eight years as board director of Catholic Charities for the Elderly. In that capacity, he served as development coordinator of Marion Center, a skilled care and assisted living care facility. He was responsible for coordinating all aspects of development including facility design and review, construction management, marketing programming, and ongoing management supervision.

Currently, he resides at 1661 Harbor Avenue SW, Seattle, Washington. He and his wife maintain a pied’ a tierre at 459 Portland in St. Paul, Minnesota. Mr. Frillman is married to the former Carol A. Motsinger, and has four children.

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Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

DEFINITION OF FAIR VALUE1

Fair Value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.

According to IFRS 13, the process for determining the fair value of investment property is given by current prices in an active market for similar properties in the same location and condition and subject to similar leases and other contracts. However, our analysis indicates that within the context of the subject market environment, there are no transactions involving similar properties which provide meaningful comparison and indication of value for the subject. As such, in accordance with IFRS 13, the appraiser has selected a discounted cash flow (DCF) approach as the appropriate method for determining the current fair value of the subject property.

1 IFRS 13, Section 9.

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REGIONAL CHARACTERISTICS

The following section provides an assessment of the market environment surrounding Tivoli Village at Queensridge. We begin with a discussion of the Las Vegas-Paradise Metropolitan Statistical Area (MSA). As well, we review relevant demographic and economic data, along with a description of the transportation infrastructure and tourism industry in the region. Demographic data is from the U.S. Census and ESRI Business Information Solutions, a nationally recognized econometric forecasting firm. Other economic data and tourism statistics were assembled from a variety of other sources, and are accordingly referenced throughout the report.

Las Vegas-Paradise Metropolitan Area

This section provides an overview of the Las Vegas-Paradise MSA, which consists of Clark County, Nevada, including the cities of Las Vegas, Henderson, North Las Vegas, Boulder City, and the surrounding areas. The county has a total area of 8,091 square miles. Land now covers 97.8% of the total area (7,910 miles), while water covers the remaining 2.2% (180 miles). Las Vegas is obviously the most populous City and the county seat.

The Colorado River forms the county's southeastern boundary, with Hoover Dam forming Lake Mead along much of its length. Las Vegas is frequently, yet incorrectly labeled a valley. By definition, the greater Las Vegas area is a land basin or bowl, surrounded by four mountain ranges, with nearby Mount Charleston being the highest elevation at 11,918 ft, located to the northwest. Other than the forests on Mount Charleston, the geography in Clark County is a desert. A map of Clark County is shown below:

Clark County, NV

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Demographic Characteristics

Economic and demographic data was obtained from the U.S. Census and ESRI Business Information Solutions (ESRI), a national econometric forecasting firm, for Las Vegas and Clark County, NV. Historical data (2000 and 2010) is from the U.S. Census, while current-year (2015) estimates and 5-year projections (2020) are from ESRI.

Population and Household Growth

The table below shows population and household growth data for Las Vegas and Clark County for 2000 and 2010, according to the U.S. Census. Estimates for 2015 and 2020 are from ESRI. For comparison purposes, the U.S. growth trend is also shown. In 2015, Las Vegas has an estimated 614,520 residents, up from 583,756 in 2010, reflecting an annual growth rate of about 1.1%. The remainder of Clark County showed a significant increase in population, growing by more than 20,384 residents per year between 2010 and 2015, a 1.5% annual growth rate. In total, Clark County showed an annual population increase of 1.4% between 2010 and 2015, which significantly outpaced the United States annual growth rate of 0.6% during this timeframe.

Population and Household Growth Trends, 2000-2020 Las Vegas & Clark County

Annual Growth Rates U.S. Census Estimate Forecast 2010-2015 2015-2020 2000 2010 2015 2020 Number Percent Number Percent Population Las Vegas 480,856 583,756 614,520 651,919 6,153 1.1% 7,480 1.2% Remainder of Clark County 894,882 1,367,513 1,469,435 1,579,377 20,384 1.5% 21,988 1.5% Clark County 1,375,738 1,951,269 2,083,955 2,231,296 26,537 1.4% 29,468 1.4%

United States 281,421,906 308,745,538 318,536,439 330,622,575 1,958,180 0.6% 2,417,227 0.8%

Households Las Vegas 177,296 211,689 222,210 235,637 2,104 1.0% 2,685 1.2% Remainder of Clark County 334,944 503,676 537,527 576,619 6,770 1.3% 7,818 1.5% Clark County 512,240 715,365 759,737 812,256 8,874 1.2% 10,504 1.4%

United States 105,480,101 116,716,292 120,746,349 125,477,562 806,011 0.7% 946,243 0.8%

Sources: US Census Bureau; ESRI

Over the next five years, Las Vegas is projected to grow by about 7,480 residents per year, reflecting an annual growth rate of about 1.2%. The remainder of the County is projected to grow by about 21,988 persons per year between 2015 and 2020, reflecting an annual growth rate of 1.5%. Clark County as a whole is projected to add 29,468 residents per year between 2015 and 2020, reflecting a 1.4% annual growth rate.

Meanwhile, the number of households in Las Vegas and Clark County grew by an annual rate of 1.0% (2,104 households per year) and 1.2% (8,874 households per year), respectively, between 2010 and 2015. Between 2015 and 2020, Las Vegas’ household base is projected to increase by an average of 2,685 households per year (+1.2%), while Clark County is projected to grow by an average of 10,504 households per year (+1.5%), outpacing the U.S. annual growth rate of 0.8%.

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Household Incomes

The following table illustrates the number of households by income level for Las Vegas, Clark County, and the United States as of 2015, according to estimates by ESRI. For comparison purposes, the table also shows the median income for each area, as well as projected income growth between 2015 and 2020.

Number of Households by Income Level (2015) Las Vegas and Clark County

Income Level Las Vegas % Clark County % United States % < $15,000 28,154 14.6% 86,940 13.1% 15,400,466 12.8% $15,000 - $24,999 23,860 12.4% 76,539 11.5% 12,433,476 10.3% $25,000 - $34,999 24,872 12.9% 84,696 12.8% 12,393,437 10.3% $35,000 - $49,999 30,131 15.6% 109,471 16.5% 16,288,264 13.5% $50,000 - $74,999 41,516 21.5% 149,499 22.5% 21,288,338 17.6% $75,000 - $99,999 27,170 14.1% 98,888 14.9% 15,085,777 12.5% $100,000 + 17,253 8.9% 56,938 8.6% 27,854,879 23.1% Total 192,956 100.0% 662,971 100.0% 120,744,637 100.0%

Median Household Income (2015) $51,666 $52,541 $53,217

Median Household Income (2020) $58,242 $59,274 $60,683

Projected Annual Increase 2.55% 2.56% 2.81%

Source: ESRI

The Las Vegas median household income is estimated to be $51,566 in 2015, comparable to the national median income of $53,214. Clark County has an estimated median household income of $52,541 in 2015. By 2018, the Las Vegas median household income is projected to increase to $58,242, reflecting an annual growth rate of 2.55%. Clark County’s median household income is projected to increase at a similar annual rate (+2.56%). Household income growth in the Las Vegas Metro Area is expected to remain generally similar to national growth rates between 2015 and 2020, according to forecasts by ESRI.

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Employment Trends

Recent employment trends for the Las Vegas-Paradise MSA are shown on the table on the following pages. According to statistics published by the State of Nevada’s Workforce Informer, the Las Vegas economy shed nearly 131,000 jobs (covered employment, by place of work) between 2007 and 2010. Most of those losses occurred during 2008 and 2009, with the market stabilizing somewhat beginning in 2010. Since 2011, the economy has improved considerably, with job growth totaling 111,200 from December 2010 through September 2015. Current employment as of Sept. 2015 was estimated at 916,600. While conditions continue to improve, it is not yet a full recovery, as regional employment remains about 20,000 jobs short of the pre- recession level.

The construction industry was particularly hard-hit by the recent recession, with job losses of – 58,500 between 2007 and 2010. Construction has bounce back nicely, however, with more than 16,000 jobs added over the last two years. The Professional & Business Services and Leisure & Hospitality sectors have shown the most significant growth, adding 25,500 and 38,300 jobs since December of 2010, respectively.

The region is obviously well known for its gaming and tourism industries. The region employs a total of 290,900 workers in the Leisure and Hospitality sector, representing a nearly one-third of regional employment. Current industry employment has in fact surpassed the pre-recession level by an estimated 15,500 jobs. Casino openings such as SLS Las Vegas, MGM City Center and Cosmopolitan, and a major expansion at Caesar’s Palace have resulted in employment gains for this important sector, offsetting recent layoffs at other locations. The gaming sector has shown marked improvement over several months, as will be discussed later in this report. As such, casino and related employment should increase going forward. The Construction sector will likely take longer to achieve a full recovery, due to the severity of the housing market downturn in the Las Vegas market, although conditions have improved considerably.

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Covered Employment, 2007-2015 Clark County, NV

2007 2008 2009 2010 2011 2012 2013 2014 2015 Change, 2007-2010 Change, 2010 to date Total Jobs Total Jobs Total Jobs Total Jobs Total Jobs Total Jobs Total Jobs Total Jobs Total Jobs Total Total Industry Description (Dec) (Dec) (Dec) (Dec) (Dec) (Dec) (Dec) (Dec) (Sept) No. Pct. No. Pct.

Natural Resources and Mining 400 300 300 200 200 300 300 400 400 -200 -50.0% 200 100.0% Construction 99,000 80,800 53,300 40,500 38,400 36,100 37,100 48,300 53,300 -58,500 -59.1% 12,800 31.6% Manufacturing 26,100 23,700 20,100 19,400 19,800 19,900 20,200 21,400 21,300 -6,700 -25.7% 1,900 9.8% Trade, Transportation & Utilities 168,900 160,000 152,200 152,900 154,800 153,300 158,500 170,000 162,400 -16,000 -9.5% 9,500 6.2% Wholesale Trade 24,200 23,100 20,800 20,500 20,900 21,300 20,600 21,600 22,000 -3,700 -15.3% 1,500 7.3% Retail Trade 106,200 100,000 96,700 97,600 97,700 96,000 102,000 109,300 101,300 -8,600 -8.1% 3,700 3.8% Information 11,100 10,200 9,400 9,300 9,300 9,400 9,200 10,300 10,400 -1,800 -16.2% 1,100 11.8% Financial Activities 49,000 45,900 40,900 40,300 39,000 37,900 42,100 43,900 41,500 -8,700 -17.8% 1,200 3.0% Professional and Business Services 113,100 103,000 98,500 99,200 100,900 99,600 110,000 118,000 124,700 -13,900 -12.3% 25,500 25.7% Educational and Health Services 64,700 67,600 69,000 71,300 72,200 74,900 76,900 83,500 86,500 6,600 10.2% 15,200 21.3% Leisure and Hospitality 275,400 258,900 252,100 252,600 262,900 268,400 266,800 280,700 290,900 -22,800 -8.3% 38,300 15.2% Casino-Hotels and Gaming 168,500 155,700 152,600 150,100 155,600 162,900 157,900 171,300 166,300 -18,400 -10.9% 16,200 10.8% Food Services and Drinking Places 75,900 74,400 72,100 74,800 79,100 81,600 85,000 90,300 96,800 -1,100 -1.4% 22,000 29.4% Other Services 26,200 24,600 23,000 22,900 24,000 24,800 24,300 25,900 27,100 -3,300 -12.6% 4,200 18.3% Government 102,400 105,600 98,100 96,800 93,400 86,600 96,800 98,400 98,100 -5,600 -5.5% 1,300 1.3% Total Private and Government 936,300 880,600 816,900 805,400 814,900 811,200 842,200 900,800 916,600 -130,900 -14.0% 111,200 13.8%

Source: Nevada Workforce Informer

Resident Employment and Unemployment Trends Clark County, 1999-2015 (Not Seasonally Adjusted) Unemployment Year Labor Force Employment Unemployment Rate 2002 789,849 744,686 45,163 5.7% 2003 816,255 777,231 39,024 4.8% 2004 843,659 808,947 34,712 4.1% 2005 885,534 851,771 33,763 3.8% 2006 924,301 887,075 37,226 4.0% 2007 946,940 896,716 50,224 5.3% 2008 975,080 887,243 87,837 9.0% 2009 981,513 850,533 130,980 13.3% 2010 989,544 847,455 142,089 14.4% 2011 987,519 856,280 131,239 13.3% 2012 993,702 885,644 108,058 10.9% 2013 982,131 894,533 87,598 8.9% 2014 1,023,287 952,117 71,170 7.0% 2015 (Sept.) 1,048,600 977,800 70,800 6.8%

59,056 130,345 -71,289 -7.61% Change, Dec 2010 to date 6.0% 15.4% -50.2%

Source: U.S. Bureau of Labor Statistics

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

Through 2014 year-end, the Clark County School District remained the region’s single largest employer, by far, with over 30,000 employees. The next largest employers were Clark County, MGM Grand, Wynn Las Vegas, and Bellagio, each with between 8,000 and 8,499 workers. Twelve casino resort properties in Las Vegas employ between 3,000 and 8,499 workers each, according to the Nevada Workforce Informer. Other major employers include the University of Nevada-Las Vegas with 5,000+ workers, the LV Metro Police with 4,500+ workers, the University Medical Center of Southern Nevada, with more than 3,000 employees, and Southwest Airlines and the City of Las Vegas, each with 3,000+ employees.

Largest Employers, Clark County, NV as of December 2014

Employer Industry Sizeclass CLARK COUNTY SCHOOL DISTRICT Elementary and Secondary Schools 30000 to 39999 employees

CLARK COUNTY Executive & Legislative Offices Combined 8000 to 8499 employees MGM GRAND HOTEL/CASINO Casino Hotels 8000 to 8499 employees

BELLAGIO LLC Casino Hotels 8000 to 8499 employees

WYNN LAS VEGAS Casino Hotels 8000 to 8499 employees

ARIA RESORT & CASINO LLC Casino Hotels 7000 to 7499 employees MANDALAY BAY RESORT AND CASINO Casino Hotels 7000 to 7499 employees

CAESARS PALACE Casino Hotels 5500 to 5999 employees

UNIVERSITY OF NEVADA LAS VEGAS Colleges and Universities 5000 to 5499 employees LAS VEGAS METROPOLITAN POLICE Police Protection 4500 to 4999 employees

MIRAGE CASINO-HOTEL, THE Casino Hotels 4500 to 4999 employees

THE VENETIAN CASINO RESORT Casino Hotels 4000 to 4499 employees

THE COSMOPOLITAN OF LAS VEGAS Casino Hotels 4000 to 4499 employees THE PALAZZO CASINO RESORT Casino Hotels 3500 to 3999 employees

UNIVERSITY MEDICAL CTR OF S NV General Medical and Surgical Hospitals 3000 to 3499 employees

ENCORE LAS VEGAS Casino Hotels 3000 to 3499 employees

SOUTHWEST AIRLINES CO Scheduled Passenger Air Transportation 3000 to 3499 employees

LUXOR HOTEL AND CASINO Casino Hotels 3000 to 3499 employees

CITY OF LAS VEGAS Executive & Legislative Offices Combined 3000 to 3499 employees

PARIS LAS VEGAS Casino Hotels 2500 to 2999 employees Source: Nevada Workforce Informer

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Transportation & Travel Patterns

Las Vegas is ideally placed as a major transportation hub for the western United States. Moreover, the region is well served by a transportation system providing excellent links to other parts of the U.S. and the world.

Highways

• U.S. Interstate 15 is the fourth-longest north-south transcontinental interstate highway in the United States, traveling through the states of California, Nevada, Arizona, Utah, Idaho, and Montana, as well as up to Alberta, Canada. I-15 crosses through major cities that include Los Angeles, Las Vegas, and Salt Lake City. Los Angeles is approximately 270 miles away from Las Vegas to the south, while Salt Lake City is roughly 430 miles away to the north.

• U.S. Highway 93 is a main arterial is a major north-south United States highway in the Western United States. The southern terminus is at U.S. Route 60 in Wickenburg, Arizona. The northern terminus is at the Canadian border north of Eureka in Lincoln County, Montana, where the roadway continues into Roosville, British Columbia, as Highway 93. Major cities that US-93 travels through include Las Vegas, Phoenix (AZ), Twin Falls (ID), and Missoula (MT). Phoenix is only roughly 290 miles from Las Vegas to the southeast.

• U.S. Highway 95 is a north-south highway in western United States. The highway's northern terminus is in Boundary County, Idaho, at the Canadian border crossing of Eastport, where it continues north as British Columbia Highway 95. Its southern terminus is in San Luis, Arizona, on the Mexican border, where a short spur leads to Mexican Federal Highway 2 at San Luis Río Colorado, Sonora. Reno (NV) is roughly 450 miles from Las Vegas and is accessed via U.S. Highway 95.

McCarran International Airport

McCarran International Airport is the principal commercial airport serving the Las Vegas region. The airport is located five miles south of the central business district of Las Vegas, within the unincorporated town of Paradise. McCarran is owned by Clark County and operated by the Clark County Department of Aviation. It serves as a focus city for Allegiant Air, Southwest Airlines, and US Airways; McCarran is also the largest operation base for both Allegiant and Southwest Airlines.

McCarran is the ninth busiest airport in the U.S. and is served by over 40 air carriers. With over 1,100 flights arriving and departing daily, McCarran International Airport offers direct flights to more than 125 U.S. Cities. In 2014, McCarran accommodated nearly 42.9 million passengers. Total passengers peaked at 47.7 million in 2007, which was just prior to the major U.S. economic recession. The table below shows total passengers for McCarran International Airport from 2002 through 2014.

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Annual Passenger Traffic (Enplanements + Deplanements) McCarran International Airport, 2002-2014

Year Total Passengers Domestic Charter & International

2014 42,885,350 38,620,770 4,264,580 2013 41,857,059 37,959,389 3,897,670 2012 42,102,011 39,529,310 2,572,701 2011 41,479,814 39,137,931 2,341,883 2010 39,757,359 37,680,055 2,077,304 2009 40,469,012 38,259,962 2,209,050 2008 44,074,642 41,830,579 2,244,063 2007 47,728,414 43,001,110 2,781,195 2006 46,193,329 41,772,944 2,639,684 2005 44,267,362 39,316,207 2,757,593 2004 41,441,531 36,910,019 3,284,127 2003 36,265,932 32,560,018 3,112,080 2002 35,009,011 31,108,364 3,249,287

Source: McCarran International Airport

Maximum capacity for the airport is estimated at 53 million passengers and 625,000 aircraft movements. As McCarran is predicted to reach this capacity around 2017, Ivanpah Airport is currently being planned as a relief airport. As McCarran continues to expand and come closer to reaching capacity, future plans are in the works. A major component of the infrastructure expansion is the plan to extend the Las Vegas Monorail to McCarran. The proposed extension will add stops at Terminal 1 and at Terminal 3.

Tourism

Tourism, gaming and conventions are the economic driving forces for Las Vegas. Often referred to as the Entertainment Capital of the World, Las Vegas is famous for the number of large hotel/casino resorts and their associated entertainment. Nineteen of the twenty-five largest hotels in the world are located in Las Vegas.

The table and graphics on the following pages show a comparison of Las Vegas historical visitor counts, visitor origins and hotel/motel room inventory over the past several years.

Annual Visitor Volume

Corresponding with a severe economic recession, Las Vegas visitation declined by 4.4% in 2008, followed by a 3.0% decline in 2009. The visitor declines of 2008/2009 are even more significant than the 2.3% decline experienced during the prior 2001/2002 U.S. recession. At that time, Las Vegas visitation declined for about a one-year timeframe, before stabilizing in 2002/03 and then showing impressive growth in 2004/05.

More recently, Las Vegas tourism has shown a robust recovery. In 2014, over 41.1 million people visited Las Vegas according to the Las Vegas Convention and Visitors Authority (LVCVA). This

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was a record year for Las Vegas. Visitor volume has increased by a full 10.9% since 2010. With visitation gains outstripping hotel room development, Las Vegas hotel operators have seen improvement in occupancy levels, as well as room rates.

Las Vegas Visitor Counts & Hotel/Motel Room Iventory Growth 1987-2014

Total Visitation Hotel/Motel Room Inventory Year Number % Change Number % Change 1987 16,216,102 - 58,474 - 1988 17,199,808 6.1% 61,394 5.0% 1989 18,129,684 5.4% 67,391 9.8% 1990 20,954,420 15.6% 73,730 9.4% 1991 21,315,116 1.7% 76,879 4.3% 1992 21,886,865 2.7% 76,523 -0.5% 1993 23,522,593 7.5% 86,053 12.5% 1994 28,214,362 19.9% 88,560 2.9% 1995 29,002,122 2.8% 90,046 1.7% 1996 29,636,361 2.2% 99,072 10.0% 1997 30,464,635 2.8% 105,347 6.3% 1998 30,605,128 0.5% 109,365 3.8% 1999 33,809,134 10.5% 120,294 10.0% 2000 35,849,691 6.0% 124,270 3.3% 2001 35,017,317 -2.3% 126,610 1.9% 2002 35,071,504 0.2% 126,787 0.1% 2003 35,540,126 1.3% 130,482 2.9% 2004 37,388,781 5.2% 131,503 0.8% 2005 38,566,717 3.2% 133,186 1.3% 2006 38,914,889 0.9% 132,605 -0.4% 2007 39,196,761 0.7% 132,947 0.3% 2008 37,481,552 -4.4% 140,529 5.7% 2009 36,351,469 -3.0% 148,941 6.0% 2010 37,335,436 2.7% 148,935 0.0% 2011 38,928,708 4.3% 150,161 0.8% 2012 39,727,022 2.1% 150,481 0.2% 2013 39,668,221 -0.1% 150,593 0.1% 2014 41,126,512 3.7% 150,544 0.0%

Source: Las Vegas Convention and Visitors Authority

Total Visitation 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

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Visitor Origins

According to the most recently published “Las Vegas Visitor Profile” report by the Las Vegas Convention and Visitors Authority, reflecting travel data for 2014, about 81% of Las Vegas visitors originated from the United States, with the remaining 19% coming from a foreign country. Just over half of Las Vegas visitors (53%) were from the Western states2, while 9% were from the Midwest3, 12% from the South4, and 7% from the East5.

Distribution of Visitors by Point of Origin Las Vegas, NV: 2000-2014

Origin 2000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USA 87% 87% 88% 87% 88% 85% 86% 82% 84% 83% 80% 81%

East 9% 10% 9% 8% 9% 8% 7% 6% 6% 7% 6% 7% South 13% 13% 13% 13% 13% 13% 11% 11% 12% 11% 12% 12% Midw est 18% 17% 14% 14% 14% 12% 12% 12% 11% 11% 10% 9% West 48% 48% 52% 52% 52% 52% 55% 54% 55% 54% 52% 53% Foreign 13% 13% 12% 13% 12% 15% 14% 18% 16% 17% 20% 19%

Western States 48% 48% 52% 52% 52% 52% 55% 54% 55% 54% 52% 53% California 30% 31% 33% 32% 31% 28% 31% 30% 31% 33% 33% 33% Southern Cal 26% 27% 29% 27% 25% 24% 26% 26% 26% 26% 26% 27% Northern Cal 4% 4% 4% 6% 6% 4% 5% 4% 5% 7% 7% 6% Arizona 4% 6% 6% 7% 9% 9% 10% 16% 9% 6% 6% 6% Other Western States 14% 11% 13% 12% 13% 15% 14% 16% 15% 15% 13% 14%

Source: Las Vegas Convention and Visitors Authority, Las Vegas Visitor Profile 1995-2014

Hotel/Motel Room Supply Trends

Tourism and the Las Vegas gaming industry clearly drive the local and regional economy. Through 2014, Las Vegas featured approximately 150,000 hotel and motel rooms. Las Vegas “Strip” hotels feature approximately 87,000 rooms. The most recently completed hotels in this market are The Cosmopolitan in 2010 (2,995 rooms), the MGM “City Center” development in 2009, with Aria (4,004 rooms), Mandarin (392 rms), and Vdara (1,495 rms), as well as a 665 room expansion at Caesar’s Palace, which opened in January of 2012. Two major developments were also completed in 2008, including Las Vegas Sands’ “Palazzo” (3,066 rooms), which is connected to The Venetian, and Wynn-Encore (2,045 rooms). More recently, SLS Las Vegas opened (former Sahara), with

2 Western States include: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada (excluding Clark County), New Mexico, Oregon, Utah, Washington, & Wyoming. 3 Midwest States include: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, & Wisconsin. 4 Southern States include: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, & West Virginia. 5 Eastern States include: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, & Vermont.

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1,600 guest rooms. Resorts World Las Vegas (formerly known as the Echelon project by Boyd Gaming, recently purchased by Genting Group) (3,500 rooms) is now in development.

Las Vegas Visitor Spending

The LVCVA also publishes an annual visitor profile study. The most recently published survey was completed December 2014. It is important to note that this report is based upon a survey of approximately 3,600 visitors and thus expenditure amounts do not reflect actual revenues at Las Vegas resorts. Rather, the survey respondents provide an estimate of their daily and/or trip budget on various items, including gaming, lodging, food and beverage, shows, sight-seeing and transportation within the Las Vegas area. From this report, we have assembled average daily expenditure data per visitor for each of the past seven years. This information is displayed on the table on the following page.

The 2014 survey indicated an average of $1,164.70 in total expenditures per visitor, per trip in 2014, up a full 2.96% compared to the prior year. To summarize, Las Vegas visitation has fully recovered, with the number of visitors in 2014 surpassing pre-recession levels and visitor spending on the rise. Due to the importance of the gaming and resort industries in Las Vegas, this trend is very positive and should have a corresponding positive impact on local and regional economics and real estate demand and values.

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Mean Daily Expenditures per Las Vegas Visitor (including those that only gambled) Year Food & Bev. Transportation Shopping Shows Sightseeing Lodging Gambling Totals 2010 $256.82 24.75% $62.87 6.06% $122.80 11.83% $49.28 4.75% $7.21 0.69% $79.64 7.68% $466.20 44.93% $1,037.61 2011 $274.69 26.47% $64.25 6.19% $129.34 12.47% $47.52 4.58% $10.24 0.99% $84.04 8.10% $447.63 43.14% $1,047.47 2012 $265.11 25.55% $57.77 5.57% $149.29 14.39% $42.89 4.13% $9.63 0.93% $93.13 8.98% $484.70 46.71% $1,092.89 2013 $278.95 26.88% $59.68 5.75% $140.90 13.58% $38.45 3.71% $9.29 0.90% $83.62 8.06% $529.57 51.04% $1,131.17 2014 $281.88 27.17% $68.83 6.63% $149.77 14.43% $47.56 4.58% $14.49 1.40% $86.55 8.34% $530.11 51.09% $1,164.70

Source: Las Vegas Convention & Visitors Authority

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

Conventions and Meetings

Las Vegas continues to be one of the world's premier meeting and convention destinations, with more meeting space (9.0+ million square feet) than any other city in the world. Las Vegas conventions can accommodate all types and sizes of groups ranging from a small intimate poolside gathering to a lavish banquet for 10,000 people, or a major international convention. The city has earned its distinction as a world-class meeting destination by providing some of the most complete, flexible and extensive meeting and convention facilities and services in the world. Two of the largest convention centers in City include the Las Vegas Convention Center and the Sands Expo Center and Venetian Congress Facility.

The Las Vegas Convention Center is one of the largest convention centers in the world with over 3.2 million square feet of exhibit and meeting space. The massive facility offers 16 exhibit halls (1,940,631 square feet) separable by movable walls, 144 meeting rooms (more than 241,000 square feet) to handle seating capacities ranging from 20 to7,500, and a lobby and concourse area with 109,515 square feet. The Las Vegas Convention Center planned an $890 million expansion in 2006, the 14th in its history. The expansion is intended to increase the center's space by 500,000 square feet, with 86,000 square feet of meeting space. This project initially started in 2006 and is currently stalled, mainly due to the decline in visitation over recent years. The project is currently being reevaluated.

The Sands Expo Center and Venetian Congress facility, located at “The Venetian,” houses more than 2.25 million square feet of combined meeting and event space (the 3rd largest in the Country). The Sands Expo Center is the site of numerous events throughout the year, including portions of the Consumer Electronics Show (CES) and the World Shoe Association show.

Sports

Las Vegas does not currently have a major-league professional sports franchise, although the metropolitan population is as large as or larger than many cities that do have them. Nonetheless, the city currently has two minor league sports teams, in baseball and hockey: The Las Vegas 51s baseball team of the Pacific Coast League (the AAA farm club of the New York Mets) and the Las Vegas Wranglers hockey team of the ECHL.

In the past, the city had teams in the Canadian Football League, the XFL and the Arena Football League. There was recent mention in the local media that the San Diego Chargers of the NFL may be considering Las Vegas as a potential future relocation destination. There had been speculation that the completion of a new arena formerly planned by Harrah’s would bring teams from the NBA and/or NHL, although that project has been shelved. The city is also reportedly on the short list of Major League Soccer for an expansion franchise in the near future. There have also been contacts between city officials and several Major League Baseball owners regarding relocation.

High profile limited-duration sporting events have been successful. Las Vegas hosted the 2007 NBA All-Star Game. The NASCAR Sprint Cup series has drawn up to 165,000 fans. Las Vegas also hosts a significant number of professional fights. Many of these fights (such as those in

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MMA's UFC) take place near downtown or on the Strip in one of the major resort/hotel/casino event centers. Mandalay Bay is frequently a top contender as a venue for the UFC. The National Finals Rodeo has drawn thousands of fans to the city since 1985, and a contract extension was signed in 2005 keeping the event in Las Vegas through 2014. The NBA Summer League is currently held in the city, and the USA Olympic basketball team trained in the city in 2008.

The University of Nevada, Las Vegas competes in NCAA Division I in men's and women's sports. UNLV is a member of the Mountain West Conference. The College of Southern Nevada also has an athletic program, with significant success in baseball at the community college level.

TIVOLI VILLAGE PRIMARY TRADE AREA ANALYSIS

Tivoli Village at Queensridge is located at the northeast corner of Alta Dr. & Rampart Blvd. in the western portion of the City of Las Vegas. Summerlin is a master planned community developed by The Howard Hughes Corporation, spanning nearly 22,500 acres. These neighborhoods as shown on the following map are home to some of Las Vegas’ wealthiest residents.

Summerlin is a fully integrated community, offering a mix of high quality residences and amenities throughout its diverse neighborhoods. Summerlin offers nine of the region’s premier golf courses, including two TPC (Tournament Players Club) venues, more than 100 parks and a 150-mile pedestrian trail system. Major resorts within Summerlin include the JW Marriott Las Vegas Resort & Spa and the Red Rock Casino Resort.

Although the property is technically not located within the Summerlin community, it is in fact immediately adjacent to it and attracts much of its customer base from Summerlin’s affluent residential communities.

Commercial development within and near Summerlin is concentrated primarily along its major arteries, especially Charleston Boulevard and Sahara Avenue to the south. The location of various retail centers is discussed in later sections of the report. Generally, the Summerlin area has been “under-retailed” considering recent population growth and its affluent resident base, although the subject development, Tivoli Village, and the recently completed Shops at Summerlin Center will continue to further penetrate this dynamic market over the next several months.

For our analysis purposes, we have defined the primary trade area for Tivoli Village to include the neighborhoods both within and in close proximity to Summerlin as depicted on the trade area map on the following page. This area spans roughly a 10- to 15-minute drive time surrounding Tivoli Village.

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According to estimates by ESRI Business Information Solutions, the primary trade area is home to nearly 493,000 residents and about 192,600 households in 2015.

The trade area is forecast to grow to approximately 519,000 residents (+26,000) and about 202,000 households (+9,400) in 2020, accounting for around 18% of Clark County growth during this timeframe. The median household income in the trade area is estimated at $51,417 in 2015, and is projected to increase to approximately $57,700 in 2020.

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The preceding table presents a summary of trade area resident spending on retail goods and services, according to ESRI reports. ESRI develops estimates of current year (2015) total spending by trade area residents based on 2011 and 2012 consumer expenditure surveys by the U.S. Bureau of Labor Statistics. ESRI adjusts those reports to reflect population growth and changes in personal income levels and expenditure patterns within the subject trade area.

Trade area residents are projected to spend an estimated $4.95 billion on retail goods and services, including restaurants. This equates to an average of about $25,700 per household in 2015. We note that the ESRI report references a “Spending Potential Index” well in excess of 100% for most product categories. The Spending Potential Index reflects the percentage of the U.S. average household expenditure on various goods and services. The high Spending Potential Index for the subject trade area is reflective of this market’s affluence. The information above will be used later in projecting potential retail sales for the subject trade area as a whole, and for Tivoli Village specifically.

NEIGHBORHOOD ANALYSIS

Property Location & Neighborhood Boundaries

The subject property is located at the northeast corner of the intersection of Alta Boulevard and Rampart Drive. Tivoli Village is located in a neighborhood known as Queensridge, which is located in the far western portion of the city of Las Vegas, just east of the Summerlin master planned community. The general boundaries of the immediate neighborhood are as follows:

North: Summerlin Parkway and Angle Park Golf Club South: W. Sahara Avenue West: Town Center Drive East: S. Rainbow Boulevard

Rampart Boulevard functions as a main north/south street within the central portion of the neighborhood, connecting various residential neighborhoods with the area’s main commercial arterties, those being Sahara, Charleston and Summerlin Pkwy.

Alta Drive provides access to both residential and commercial development to the east and west of the subject site.

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Approximate Neighborhood Boundaries

Land Use

Immediate neighbors to the property include the following:

North: Angel Park Legacy Golf Club East: Residential neighborhoods Southwest: One Queensridge Condo complex West: SunCoast Casino and Hotel South: Boca Park Shopping Center (about 1.0 million sf)

Neighboring properties include high quality residential development primarily to the east, a luxury condo building known as One Queensridge immediately to the southwest, the SunCoast Casino property to the west, and Angel Park Legacy Golf Club to the north. The area immediately south is developed with a major shopping center development known as Boca Park.

The following aerial and street view photos depict the subject property and its immediate neighborhood.

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Aerial view across site. Single family homes to the east.

Aerial view looking northward across site. Angel Park Golf Club in distance.

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Aerial view to the west. One Queensridge condos at SW and SunCoast Casino immediately west.

View of One Queensridge Place luxury condos, immediately SW of subject property

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View of Boca Park shopping area south of subject property

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SITE ANALYSIS

Size

The total acreage of the property subject to this analysis is 28.62 acres, or 1,246,687 square feet.

Shape

The shape of the site is somewhat irregular, as depicted on survey map and site plans presented previously in this report.

Improvements

Construction of Tivoli Village at Queensridge is underway, as depicted in the aerial construction photos provided in this report. Site work and infrastructure improvements are in place. Underground parking areas have been constructed. Triad A improvements are complete and have been open since April of 2011, comprising 202,684 sf of rentable retail/restaurant areas and 162,513 sf of rentable office space. Construction on Triads B & C is underway, which will add 198,717 sf of additional retail/restaurant area and 176,271 sf of office area, as well as a 133-room hotel.

Access

Both pedestrian and vehicular access are available to the property on both its western and southern boundaries, at Rampart and Alta. The property is centrally located within the neighborhood, thus providing ease of access for neighboring residential in all directions. The property’s location is strategic in that it is easily accessible from the single family residential areas immediately east and for the residents of One Queensridge Place, with some of Las Vegas’ most luxurious condo residences.

Topography & Drainage

The site is generally level and at grade with adjacent roadways. Site topography appears to be conducive to development as planned and the appraiser’s inspection did not reveal any drainage problems which would impede any of the planned project components.

Soil Conditions

Soil reports were not made available for review by the appraiser. The project developers and related contracting professionals have obviously determined that the site should support the development as programmed, since it is currently under construction. The appraiser assumes this to be true for purposes of this valuation assignment.

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Utilities

The property is located within the City of Las Vegas in Clark County and all necessary public utilities are available at the site, including water, sewer, gas, electric and services such as garbage collection, police and fire protection.

Flood Hazard Information

According to FEMA flood hazard information (Zone X, per community map number 32003, panel 2145E, dated Sept. 27, 2002) the subject property is located outside both the 100 and 500-year flood zones. A flood zone map is shown below.

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Summary � Site Analysis

In conclusion, the appraiser’s site analysis indicates that the property should support the planned development project and, in fact the property is strategically located for development to its highest and best use, that being a mixed-use commercial and residential village.

ZONING & RELATED ENTITLEMENTS

The property is subject to zoning regulation by the City of Las Vegas, Nevada. The property is currently zoned “C-2 – General Business.” The planned development components, including commercial and residential, are legal and conforming uses within this zoning district. Moreover, the project sponsors have been granted all required entitlements related to the development program as described herein in accordance with the conditions documented in the April 20, 2006 approval letter from the City of Las Vegas as presented on the following pages. Further, the residential condominium portion of the development were more recently re-designed and re-entitled earlier this year. The hotel portion of the project has not yet been formally submitted to the city for approval. However, the hotel concept was presented to the Ward Councilman, as well as the Mayor, both of whom reviewed the concept favorably.

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Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

HIGHEST AND BEST USE ANALYSIS

The highest and best use of the subject real estate as it is regarded in this report conforms to the following definition:

The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability.

The definitions of highest and best use indicate that there are two types of highest and best use. The first type is highest and best use of land or a site as though vacant. The second is highest and best use of a property as improved. Each type requires a separate analysis. Moreover, in each case the existing use may or may not be different from the site's highest and best use.

Any determination of highest and best use includes identifying the motivations of probable purchasers. The motivations are based on perceptions of benefits that accrue to property ownership. Different motivations influence highest and best use and are significant to an appraiser's conclusions about the highest and best use of any parcel of real estate.

The first type of highest and best use -- highest and best use of land or a site as though vacant -- assumes that a parcel of land is vacant or that it can be made vacant through the demolition of any improvements. The question to be answered in the analysis of this type of highest and best use is, "If the land is (or were) vacant, what use should be made of it?" That is, what type of building or other improvements (if any) should be constructed on the land?

The second type of highest and best use -- highest and best use of a property as improved -- pertains to the use that should be made of the property as it exists.

The purpose of estimating the highest and best use for land or a site is to identify the use that causes the land to have value. There are two reasons for identifying the highest and best use of land as though vacant in an appraisal. First, the identification is required in certain appraisal techniques that require a separate land value. Second, the identification helps to identify comparable properties.

There are also two reasons for analyzing the highest and best use of a property as improved. The first is to identify the use of the property that is expected to produce the highest overall return per dollar of invested capital. The second reason is to help in identifying comparable properties.

For use to be the highest and best use of both land as though vacant and property as improved it must meet four criteria. The criteria are that the highest and best use must be (1) physically possible, (2) legally permissible, (3) financially feasible, and (4) maximally productive. These criteria should usually be considered sequentially because, for instance, it makes no difference that a use is financially feasible if it is physically impossible to construct an improvement or if such a use is not legally permitted. Only when there is a reasonable possibility that one of the prior

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unacceptable conditions can be changed is it appropriate to proceed with the analysis. For example, if the current zoning does not accommodate a likely candidate for highest and best use, but there is a possibility that the zoning can be changed, the proposed use could be considered on that basis. Some factors to consider under each criterion are discussed below.

Physically Possible

Size, shape, area, and terrain affect the uses to which land may be developed. Because of limited size, certain parcels can reach their highest and best use only as part of an assemblage. Availability and capacity of public utilities and the site's topography and subsoil conditions affect future utilization of the site.

Highest and best use of a property as improved also depends on physical considerations. Whether or not the property is in good repair and can continue to accommodate the current use may be relevant. If the property should be converted to another use, the cost of conversion must be analyzed relative to the returns to be generated by the converted use. Obviously, the costs of conversion depend on the property's existing physical status.

Legally Permissible

Except for a legally nonconforming property, the first area of inquiry in questionable cases is to determine what is legally permissible. Private restriction, zoning, building codes, historic district controls, and environmental regulations are considered because they may preclude many possible highest and best uses.

Financially Feasible

After determining the uses that are physically possible and legally permissible, an appraiser need not consider the uses that do not meet those criteria. The uses that do meet them are analyzed further to determine those that are likely to produce some income, or return, greater than the combined income needed to satisfy operating expenses, financing expenses, and capital amortization. All uses that are expected to produce a positive return are regarded as financially feasible.

Maximally Productive

Among financially feasible uses, the use that provides the highest rate of return, or value, is the highest and best use.

Analysis of the Subject Property and Conclusions

All public utilities are available at the site and the development program as described in this report is partially complete (Triad A opened April 2011), with remaining improvements (Triads B & C retail and office components, and a 133-room hotel) currently in development scheduled to open in 2016 and 2017, with construction, marketing and pre-leasing activity for these phases well underway. The construction progress to date, the development budget as assumed, and projected

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financial performance as presented in this analysis indicate that the development as proposed is physically possible and financially feasible. The proposed development is a legal and conforming use in accordance with the property’s current zoning, C-2, General Business District, and the development program as described has been granted all zoning related entitlements from the governing authority, that being the City of Las Vegas, NV. From our analysis of the planned Tivoli Village at Queensridge’s commercial and residential components and a review of related real estate market conditions, we believe that the planned commercial and residential components are also the maximally productive use of this property in comparison with other forms of development.

In summary, we believe the highest and best use is for the construction of a mixed use commercial and residential development, incorporating retail, restaurant, and office space for lease to multiple tenants, along a hotel and for-sale residences as depicted on the development plans provided by the project sponsor and presented in this report. This is supported by physical, legal, and financial considerations.

The following section of the report contains an assessment of market conditions related to the proposed development, culminating with occupancy and financial projections for the development project.

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COMPETITIVE MARKET ANALYSIS

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

MARKET ANALYSIS INTRODUCTION

This section of the report contains an assessment of relevant market conditions related to the planned Tivoli Village at Queensridge development project. Key profit centers for the property are as follows:

• 401,401 sf of retail & restaurant space for lease, developed in three phases:

o Triad A: 202,684 sf -- opened April 2011 o Triad B: 172,573 sf -- projected to open October 2016 o Triad C: 26,144 sf -- projected to open April 2017

• 338,784 sf of office space for lease, developed in three phases:

o Triad A: 162,513 sf – opened April 2011 o Triad B: 133,811 sf -- projected to open October 2016 o Triad C: 42,460 sf -- projected to open April 2017

• A boutique hotel with 133 total guest rooms is also planned, with a projected opening in October 2017. Planned hotel amenities include a high-end 3,000 sf lobby, 3,000 sf restaurant & bar area, and 5,660 sf of meeting and banquet space, along with multi-tenant retail spaces (rentable) totaling 8,780 sf.

• Phase II residential land as entitled for 300 residential units. The project sponsor plans to sell this land as-entitled to a residential builder/developer in two pieces in 2017 and 2018.

• Total Budget: $589 Million (excluding developer fees, financing and land acquisition costs), with approximately $123 million remaining to complete (including projected tenant improvement costs for remaining space components)

Our market analysis focuses on each of the primary profit centers. Occupancy and financial projections are presented later in the report for all project components.

SUBJECT OPERATING STATUS AS OF SEPTEMBER 30, 2015

Triad A at Tivoli Village at Queensridge is complete, having opened in April of 2011. Lease-up of Triad A continues to date, while construction of remaining components is underway.

Tivoli Village - Retail/Restaurant Leasing to Date. Triad A, with 202,684 sf of leasable retail area, opened in April 2011. As of the valuation date, September 30, 2015, a total of 167,373 sf in Triad A had been leased (83%). Triad B, with 172,573 sf, is presently under construction, scheduled to open in October 2016, followed by another 26,144 sf in Triad C, expected to open in

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April 2017. Major pre-leasing activity to date for Triad B includes Restoration Hardware (77,060 sf). Negotiations are ongoing with several tenants for the remaining spaces.

Based on current leases in place, the projected year one weighted average base gross rate for current retail tenants scheduled to pay base rent in the coming year is $29 psf NNN (net of abatement). It is important to note that this includes several tenants for which leases were negotiated well in advance of the Triad A occupancy date. It also includes rent abatement for some tenants, although recent leasing activity shows very minimal, if any, abatement has been required in recent leasing due to continued construction progress and ramp up in occupancy and marketing of the center. Our analysis shows that the average base rental rate among the most recently negotiated retail leases is approximately $36 psf NNN. Our market analysis follows, which leads us to this conclusion regarding achievable rental rates for the subject.

Tivoli Village -- Office Leasing to Date. Triad A office leasable area consists of 162,513 sf. To date, a total of 138,741 sf (85%) has been leased. The average base rental rate for occupied office space equates to $31 psf (gross) in the coming year.

RETAIL MARKET ENVIRONMENT

This section presents an analysis of the competitive market within which the proposed commercial village will operate. We begin with a discussion of the regional retail real estate market, followed by a closer examination of occupancy and rental rates for selected comparable and/or competitive commercial shopping centers within the subject trade area.

The Nevada economy and that of Las Vegas continues to recover, according to the UNLV Center for Business and Economic Research (CBER). Local market experts expect a continuance of a somewhat uneven recovery for the greater Las Vegas economy, mainly driven by tourism. Unemployment had declined to 6.8% in September 2015, down from 7.0% in December 2014 and 8.9% in December 2013. The current 6.8% unemployment rate is a low point since the recession, as total employment has increased by more than 111,000 jobs since December of 2010, including 74,000 jobs added over the past 21 months. Regional non-farm employment remains approximately 20,000 jobs short of the pre-recession level.

The recent recession created major downward pressure on consumer spending, and as a result, retailers and owners/operators of commercial real estate were negatively impacted. A recovery has taken hold, however, as retail vacancy has since declined to 9.5% metro-wide, and 5.9% in the Summerlin area, by far the lowest among all of the Las Vegas submarkets. With improving fundamentals, the Summerlin submarket has transitioned from recovery to expansion, as the Tivoli Village and Shops at Summerlin developments have forged ahead.

Given the strong fundamentals inherent to the Las Vegas market, most notably its prominence as an international tourist destination and sustained population and household growth, local and national retail market experts note that while there will continue to be volatility from quarter to quarter, current trends are positive and the Las Vegas market continues to improve. Notably, in the case of

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the Las Vegas-Summerlin submarket, specifically, where the subject property is located, retail construction lagged the addition of residential rooftops, and now retail development is following. Importantly, the residential build-out in Summerlin has included some of the region’s most affluent housing, which in turn fuels demand for high-quality retailers and restaurants.

The following points summarize the current status and our analysis of the Las Vegas retail market. Market statistics are from CB Richard Ellis-Las Vegas or other sources as noted.

Supply

• The Las Vegas metro market contains about 63.1 million sf of net rentable shopping center space. The Summerlin submarket contains 8.7 million sf, comprising 13.8% of the regional market.

• The Las Vegas metro market saw the construction of approximately 17.8 million sf of retail shopping center space between 2005 and 2009. Of that total, the Summerlin submarket accounted for 1.02 million sf, or about 5.7% of new construction in the region during that timeframe, preceding a major U.S. recession.

• Construction activity slowed throughout the metro area commensurate with the recession, with only about 542,000 sf added between 2009 and 2013, compared to 3,540,000 sf constructed in 2008 and 5,210,000 sf in 2007. A number of projects were postponed or cancelled during the recent economic recession. Since that time, conditions have shown marked improvement, with the market has transitioning from a recovery phase to one of expansion in much of the region.

• In Summerlin, specifically, market economics have improved significantly, with construction and absorption both on the upswing. Major developments here include the subject Tivoli Village and The Shops at Summerlin Centre, a 1.5 million square-foot open air regional mall developed on 106 acres just south of the Red Rock Casino Resort. This project was originally planned in the mid-2000’s by General Growth, who reported to have pre-leased more than 50% of the center by 2008. However, the project was tabled during the recession as General Growth filed for bankruptcy. In July 2013, Howard Hughes Corporation resumed construction of The Shops at Summerlin Center, which includes a 200,000 sf Dillards and 180,000 sf Macy’s as anchors, as well as Nordstrom Rack as a junior anchor within the center, and Trader Joe’s. The center opened in late 2014 and to date has leased approximately 90% of the total rentable area.

• The Shops at Summerlin Centre has had a successful lease-up, and as such as has impacted leasing activity at Tivoli. However, we note that in spite of the lease-up of The Shops at Summerlin over the past several months, Tivoli’s occupancy in Triad A held steady and the commitment of Restoration Hardware in Triad B during this same timeframe is an indication of a robust Summerlin market, strong underlying market demographics and economics, and sustained demand from retailers for high-quality space in the submarket.

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• In the months ahead, we expect a much less competitive leasing situation between The Shops at Summerlin and Tivoli Village. The Shops at Summerlin has leased approximately 90% of its space. Meanwhile, the design, tenant mix, and locations of the two competing shopping centers are differentiated, such that there is sufficient demand in the market for both assets. The Shops at Summerlin is nearing full lease-up, and it is expected that small in-line spaces at The Shops will featuring very high asking rents, likely in excess of $50 to $60 psf. Meanwhile, by comparison, Tivoli’s rent structure will be very competitive, and offers a number of high-quality spaces for rent along with a diverse tenant mix, which will include a significant anchor in Restoration Hardware, opening in the next phase.

Summerlin & Las Vegas Metro Area Retail Shopping Center Space Inventory (Total Sq. Ft.) 80,000,000 60,810,589 62,406,834 62,331,101 62,920,291 62,805,576 62,948,805 62,726,153 63,117,410 56,114,715 48,726,578 60,000,000 44,593,562

40,000,000

20,000,000 8,206,762 8,206,762 8,206,762 7,184,722 7,819,742 7,999,517 8,491,896 8,491,896 8,491,896 8,597,155 8,702,414 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 YTD Summerlin Las Vegas Metro

Source: CB Richard Ellis

Demand

• The metro area saw negative absorption of -318,326 sf during 2011, before rebounding in 2012, when 784,955 sf were absorbed. In 2013, retail absorption totaled 364,369 sf in the metro area, followed by another 600,000+ sf in 2014 and 383,000 sf during the first half of 2015. Demand to date remains strongest in the western half of metro area, while eastern submarkets lag somewhat. Absorption in the Summerlin submarket totaled 96,000 sf through the first six months of 2015, by far the most among all metro area submarkets. Summerlin has accounted for more than one-fourth of regional absorption since 2012 (excluding the 1.5 million SF at Shops at Summerlin, which opened in Oct 2014).

• The Las Vegas metro area market reported a 9.5% retail vacancy rate for 2015 Q2, down from 10.4% in 2014 and 11.5% in 2013. Summerlin’s vacancy rate, at 5.9% for 2015 Q2, was by far the lowest among nine Las Vegas submarkets according to CBRE’s quarterly reporting. The next lowest vacancy rate was 6.1% in the Northeast submarket. The majority of existing retail centers in the Summerlin submarket maintain relatively high occupancy levels. The submarket benefits from an affluent resident base and a retail market which added less than 500,000 sf of rentable retail space over a six year period leading up to the Fall 2014 opening of The Shops at Summerlin Center, with 1,500,000 sf, and continued expansion of the subject Tivoli Village.

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Summerlin & Las Vegas Metro Area Retail Shopping Center Vacancy Rates

15.0% 14.0% 12.3% 12.2% 9.9% 11.3% 11.2% 11.5% 10.4% 10.0% 9.5% 7.9% 8.8% 7.9% 6.6% 6.2% 5.9% 5.0% 3.9% 3.7% 4.8% 5.3% 2.7% 2.7% 2.0% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2

Summerlin Las Vegas Metro

Source: CB Richard Ellis

Rental Rates

• As of 2015 Q2, the Las Vegas metro area average rental rate was reported at $17.04 psf (per year), unchanged through the first half of the year. In spite of improved economic conditions and market recovery, rents in most parts of the metro area remain well below pre- recession levels, which were in the mid to upper-$20s psf.

Summerlin & Las Vegas Metro Area Retail Shopping Center Avg. Lease Rates PSF

$29.00 $28.20 $27.00 $26.64 $25.68 $25.00 $26.04 $23.00 $22.20 $21.60 $21.00 $20.76 $20.64 $20.64 $19.00 $19.56 $19.08 $18.60 $18.36 $18.24 $17.00 $17.28 $17.28 $17.04 $17.04 $15.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2

Summerlin Las Vegas Metro

Source: CB Richard Ellis

• The West (Summerlin) submarket finished 2015 Q2 with an average NNN lease rate of $20.64 psf. This is the highest among all metro area submarkets, with the increase in the average rate attributable to high demand for quality space among retail concepts and leasing activity at Summerlin Center and Tivoli Village at top-of-market rents.

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• Rental rates at the subject Tivoli Village and Summerlin Center are “top of market” for suburban Las Vegas, reflecting the high quality of the assets and locations, and pent-up demand for quality space among high-end and boutique retailers and restaurants. Leasing agents indicate that interest from high-end national tenants remains strong in Summerlin, with several high-quality prospects continuing to show interest in Tivoli Village. This includes Restoration Hardware which has inked a deal for a new 77,060 sf store expected to open in Fall 2016.

• The Restoration Hardware lease, at 5.5% of sales capped at $40 psf through year five, is assumed for our analysis purposes to equate to $33 psf in the initial year, increasing to $40 psf for years 2 through 5, and then increasing by 5% annually, based on our review of the lease terms, subject trade area economics, and the performance of comparable Restoration Hardware large-format stores. The presence of major, high-quality tenants such as Restoration Hardware is expected to drive significant rent growth for remaining in-line spaces at the center.

Analysis of Comparable/Competitive Shopping Centers

Additionally, Marquette Advisors compiled current leasing information on a number of newer shopping centers throughout the western portion of the Las Vegas metro area. The table on the following page summarizes current space availability and asking rental rates at a variety of retail centers in the Summerlin area of Las Vegas.

• We found very limited availability of in-line space in high-quality retail centers in and around Summerlin. Much of the inline space currently listed for-lease is in west metro centers which are considerably older and of lesser quality in comparison with the subject property, Tivoli Village at Queensridge. We found that asking NNN rates in the selected shopping centers varied widely, from $17 to $34 psf, with an average of about $26 psf.

• Projected year one retail rent at Tivoli Village equates to $29 psf NNN (net of abatement). However, this includes several tenant deals which were negotiated ahead of construction, during the recession. More recent deals and lease negotiations are focusing at considerably higher rent levels, generally in the range of $35 to $45+ psf NNN, with an average of $36 psf. This activity and an uptick recently in inquiries from high-end national retailers are an indication of the desirability of this location, the quality of the development program and in- place tenant roster, in comparison with market alternatives.

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Current Retail Space Availability (October 2015) Selected Shopping Centers - Las Vegas Summerlin Submarket

Total Vacancy Net Lease Property Name Address Sq. Ft. Available Rate Rates PSF Anchor Tenants in Center or Adjacent Cheyenne Corporate Center 7660 West Cheyenne 16,000 1,280 8.0% $28.00 Starbucks, Subway, Gyro Time, King Buffet Whole Foods Anchored Center 7290 W. Lake Mead Blvd. 90,373 4,736 5.2% $22.80 Whole Foods, Fed Ex, Five Guys Burgers Rock Springs Plaza 7175 W. Lake Mead Blvd. 38,526 2,893 7.5% $30.00 Panera, Massage Envy Trailwoods Center 9691 Trailwood Dr. 167,182 1,209 0.7% $27.00 Fitness in Motion, Kumon, Rachel's Kitchen Gateway to Summerlin Plaza 7470 W. Lake Mead Blvd. 150,000 4,500 3.0% $17.76 CVS, Von's, Del Taco, Jack in the Box, Panda Express Pueblo Place 2120 N. Rampart 17,000 2,866 16.9% $30.00 Starbucks Rainbow Promenade 2201 N. Rainbow 228,278 17,577 7.7% $16.50 Barnes & Noble, Hobby Lobby, Petco, Chili's, Macaroni Grill El Dorado Village 5558 Camino El Norte 96,200 2,405 2.5% $30.38 Chase Bank, Smiths Food & Drug, UPS, Subway Peccole Plaza 8671 W. Charleston Blvd. 158,000 2,370 1.5% $23.83 Kohl's, Guitar Center, Walgreens North Shore Plaza 8300 W. Cheyenne 150,000 0 0.0% $26.83 Albertson's, CVS, Steiner's Pub Durango Commons 8550 W. Charleston Blvd. 235,000 3,552 1.5% $33.93 Target, Ross, CVS Total-surveyed properties 1,346,559 43,388 3.2% $26.09

Sources: REIS; LoopNet; Marquette Advisors

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

Key Conclusions: Retail Market Analysis

The Las Vegas retail market suffered greatly under the strains of a recent economic recession, bringing substantial negative absorption and a decline in rental rates. However, the past several months have brought much improvement, particularly in the Summerlin submarket. Demand and absorption of space has been very strong, with rent growth in the submarket accelerating as quality tenants enter quality centers, with the opening of the 1.5 million square-foot Shops at Summerlin development and new space at the subject Tivoli Village. Improvement in the economy and renewed interest among national tenants considering high-quality Vegas suburban locations (e.g. Restoration Hardware taking 77,060 sf at Tivoli Village) suggest that the area’s retail market recovery is in fact robust, particularly within the Summerlin submarket, which has clearly moved into an expansion phase, with strong demand from high-quality, well established retail stores and restaurant concepts.

The subject property is located within the Summerlin submarket of Las Vegas, which maintains strong fundamentals compared to most of the nine submarkets in this region, reporting a 2015 Q2 vacancy rate of 5.9% compared to a 9.5% metro-wide vacancy rate. The Summerlin vacancy rate is by far the lowest among the region’s nine submarkets, according to CBRE’s most recent survey. The submarket benefits from an established base of affluent households, and a relatively short supply of high-quality shopping centers until recently, as retail development lagged residential rooftops during past growth years. The Shops at Summerlin Center by Howard Hughes Corporation (1.5 million sq. ft.) recently opened and has leased more than 90% of its space, while Tivoli Village has leased more than 282,000 sq. ft. to date in Triads A and B.

We believe that the best indicator of success for Tivoli Village is its leasing activity to date. Thus far, approximately 167,000 sf out of Triad A has been leased, with another 115,000 sf pre-leased to date in Triad B. The projected gross rent for current tenants in the coming year is $29 psf (net of abatement). More recently executed deals and current lease negotiations reflect considerably higher rates, ranging from around $35 to $45+ psf NNN, with an average of $36 psf.

Based on our market analysis, detailed review of the subject leasing activity to date and projected improvement in market conditions, we believe that an appropriate market rental rate for the subject property as of the valuation date is approximately $36 psf NNN in the coming year for Triad A and $42 for Triad B, with average concessions of approximately 3 months free rent in Triad A, declining to 2 months upon opening of Triad B in Fall 2016. We believe that the property’s market rate for new leases will improve substantially in the coming months as lease-up continues, with an expanded, diversified and successful tenant mix, including Restoration Hardware in Triad B. Triad C space is projected to open in Spring 2017, with a projected average rate of $50 psf. Rent growth is projected at 3% annually for our financial modeling.

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OFFICE MARKET ENVIRONMENT

Tivoli Village at Queensridge will also include a total of 338,784 sf of rentable office space when complete. Accordingly, we have reviewed Tivoli Village office leasing activity to date, as well as local and regional office lease market conditions. We begin with a discussion of the regional office real estate market, followed by a closer examination of occupancy and rental rates for selected comparable and/or competitive Class A office buildings within the submarket and elsewhere in Las Vegas.

Much like the Las Vegas retail market, the office market continues its recovery from the recession of 2008/2009. Tenant demand remained very weak through 2010, resulting in a rise in vacancy and creating downward pressure on rental rates. Meanwhile, development slowed due to weak market fundamentals and limited availability of credit. More recent improvement has been noted in the market, and leasing activity to date at Tivoli Village is indicative of a positive market response to high-quality suburban office space within the Summerlin market.

The following points summarize our analysis of the Las Vegas office market. Market statistics are again from CB Richard Ellis-Las Vegas or other sources as noted.

Supply

• The Las Vegas metro market contains a total of about 35.8 million sf of rentable office space. The Tivoli Village at Queensridge project is located within the region’s “West” submarket, which includes buildings located west of Rainbow Boulevard, south of Lake Mead Blvd. and north of Tropicana. The West submarket contains 6.43 million sf, comprising about 18% of the regional multi-tenant office market.

• Market economics have improved significantly, and as a result, development is again on the rise. According to CBRE, development and leasing of Class A office space is strongest within the West submarket. Within the West submarket, this includes Tivoli Village and One Summerlin, a 197,000-sf development by Howard Hughes Corp, which opened in 2015 Q2 reportedly 50% leased. Other significant Class A office developments in the West submarket in recent years include The Pavilion at Summerlin Centre and City Center West on Lake Mead Boulevard.

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West Submarket & Las Vegas Metro Area Multi-Tenant Office Space Inventory (Total Sq. Ft.)

45,000,000 35,239,614 35,251,981 35,836,498 33,487,257 33,963,956 34,299,618 40,000,000 32,374,952 33,522,645 28,398,927 31,323,207 35,000,000 27,294,444 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 6,246,898 6,434,179 5,467,889 5,486,329 5,887,006 6,142,514 6,166,543 5,000,000 4,793,757 4,852,757 5,297,433 5,337,389 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2

West Submarket Las Vegas Metro

Source: CB Richard Ellis

Demand

• According to CBRE, office employment in Las Vegas grew by 1.8% between 2014 Q1 and 2015 Q2 and is expected to grow by 3.8% annually for the 2015 and 2016 period. With businesses expanding and adding jobs, the office market is expected to continue to gain positive momentum, shifting from a recovery phase to expansion in the coming months.

• Year-to-date net absorption totaled more than 632,000 sf through the first six months of 2015, with the West submarket accounting for 297,000 sf of during this period. This includes more than 100,000 sf leased at the new One Summerlin property and another 67,000 sf lease by Shift4 Corporation within the submarket.

• The Las Vegas office market posted a 20.3% vacancy rate for 2015 Q2, down 129 bps from a year ago. At 13.5%, vacancy in the subject submarket (West) was considerably lower than the regional vacancy rate, and much lower than 16.3% a year ago, reflecting continued strengthening of demand and positive absorption within the submarket. The West submarket vacancy rate, at 13.5%, was the lowest among all metro area submarkets in 2015 Q2 according to CBRE’s most recent survey.

Rental Rates

• Office space in Las Vegas is typically leased on a full service gross (FSG) rate basis, thereby including all tenant costs for occupancy such as monthly rent and CAM and tax payments on a pro-rata basis.

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• The metro average FSG rate according to CBRE published reports in 2015 Q2 was $1.93 psf per month, or $23.16 psf per year, up from $22.32 psf a year ago. By comparison, the average gross rate for office space pre-recession (2008) was $28.80 psf.

West Submarket & Las Vegas Metro Area Retail Shopping Center Avg. Lease Rates PSF (Full Service Gross Rates) $29.76 $30.00

$28.00 $27.84 $28.80 $25.44 $25.44 $26.00 $25.56 $23.76 $24.12 $24.24 $24.06 $24.00 $23.64 $22.92 $22.44 $23.16 $22.92 $22.00 $22.74 $22.44

$20.00 $20.28 $20.16 $19.80 $18.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2

West Submarket Las Vegas Metro

Source: CB Richard Ellis

• Office buildings in the West submarket reported a $25.56 psf average monthly gross rental rate, up from $22.56 psf a year ago. The West market still has a relatively shallow supply of modern Class A office buildings, although recent developments such as One Summerlin, The Pavilion, and Tivoli Village have been well received and command market-leading rental rates. Those projects command near top-of-market rental rates for the metro area, just slightly below or in some cases comparable to rent levels at Hughes Center, Las Vegas premier office address. An analysis some of the West’s Class A office buildings, as well as Hughes Center is provided on the following page.

Analysis of Market Leading Class A Office Buildings

Clearly the office space at Tivoli Village will continue to be positioned as a top-of-market office facility within the West submarket. We believe that the best indicators of supportable rental rates here is reflected by recent leasing activity and rates at the subject property, as well as newer Class A buildings within the West submarket and others elsewhere in the metro area, including the Hughes Center. The Hughes Center is outside the submarket but considered a premier office park in the Vegas market. A table summarizing current space availability by center and current asking gross rental rates is provided below.

Our analysis showed premier office space at the Hughes Center commands gross rents in the low to upper-$30s psf on a gross basis. Similarly, prime downtown properties are leasing in the $29 to $32 psf range. Meanwhile, our survey revealed that the majority of Class A buildings within the West submarket have gross asking rental rates ranging from the low to mid-$20s psf, although Tivoli,

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One Summerlin and The Pavilion are in the $30 to $38 psf range. Interviews with local brokers revealed that actual effective rental rates are slightly lower than listed rates, as brokers continue to cut deals on renewals and in an effort to lure new tenants within a recovering market. Concessions have moderated, now ranging from around 2 to 4 months typically on five year deals. Our market interviews also indicate that tenant paid CAM and related occupancy costs generally run from around $6 to $10 psf.

Survey of Selected Class A Office Buildings - Current Listings Las Vegas Metro Area -- October 2015

Sq. Ft. Total Sq. Ft. Vacancy Full Service Property Name Address Total Vacant Rate Rate PSF

One Summerlin (new const.) 1980 Festival Plaza Dr. 197,080 84,203 42.7% $38.00 The Pavilion 10801 W. Charleston 143,643 3,430 2.4% $33.00 Plazas at Summerlin 1635-1645 Village Center Cr. 87,990 33,946 38.6% $28.20 Canyons at Summerlin 1120 Town Center Dr. 43,279 15,415 35.6% $29.40 Subtotal - Selected Buildings in West Submarket 471,992 136,994 29.0% $32.15

Rainbow Sunset Pavilion 6385 S. Rainbow 215,940 49,274 22.8% $32.00 Bank of America Plaza 300 S. 4th Street (downtown) 270,254 35,000 13.0% $31.80 Hughes Center 3800 Howard Hughes Pkwy 259,080 28,875 11.1% $36.00 Hughes Center 3930 Howard Hughes Pkwy 85,923 34,219 39.8% $33.60 Hughes Center 3960 Howard Hughes Pkwy 161,542 95,000 58.8% $34.80 Hughes Center 3753 Howard Hughes Pkwy 120,824 7,827 6.5% $32.40 Hughes Center 3773 Howard Hughes Pkwy 164,673 41,523 25.2% $34.20 Subtotal - Other Selected Class A Buildings 1,062,296 242,444 22.8% $33.80

Sources: REIS; LoopNet; CBRE; Colliers; Equity Office; Marquette Advisors

Key Conclusions: Office Market Analysis

The Las Vegas office market saw a marked increase in vacancy as a result of the recent economic recession, rising from 16% in 2007 to more than 25% in midst of the recession. Since that time, economic conditions have improved considerably. The West submarket has demonstrated the most strength in terms of construction and absorption, as there has been a positive response to high- quality assets, including new construction, within the submarket. At 13.5%, the vacancy rate for the West submarket was the lowest among all regional submarkets as of 2015 Q2. For the metro area as a whole, the average rent remains roughly 20% lower compared to the beginning of the recession, with the metro average hovering around the $22-23 psf mark over the past two years. The office market in Las Vegas is tied to growth in the hospitality and gaming sectors, as well as population growth. Population growth stalled in 2008/2009, corresponding with a major housing market correction, while the Las Vegas gaming market also saw declines due to a marked decline in in- migration. Las Vegas as a whole is well into a recovery phase, with several submarkets, including the West (Summerlin) market now in an expansion phase. Job creation has returned to the region. Further, long-term population growth is expected to continue to drive population-serving

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employment growth, and corresponding office space demand. Meanwhile, the well-established Las Vegas gaming/resort industry has shown much improvement since 2011.

The subject property is located within the West submarket of Las Vegas, which reported a 13.5% vacancy rate at 2015 Q2. Recent Class A office buildings in the submarket, such as The Pavilion, One Summerlin, and Triad A of Tivoli at Queensridge have been well received and command top- of-market rental rates for suburban Class A space. The best indication of the market’s response to the subject property is its leasing activity to date. Tivoli Village Triad A opened in April of 2011, with 162,513 sf of leasable office area. To date, 138,741 sf has been leased in Triad A (84%), with an average scheduled base rent of $31 psf gross (net of abatement) for the coming year as of September 30, 2015. The West submarket still has a relatively shallow supply of modern Class A office properties, which are presently concentrated within the Howard Hughes office park area. The Summerlin market, with strong demographics and an expanding business community, should support an increase in long-term demand for high quality professional office space.

The subject will be one of the premier office properties for lease within the Summerlin market. Based on our market analysis and review of the subject leasing activity to date we estimate a current going-in year one market rental rate of approximately $31 psf (gross) for remaining spaces in Triad A at Tivoli Village, improving to $36 psf for Triad B commencing Fall 2016. Based on continuing improvement in the economy and most recent lease negotiations, we expect have factored in a 3% rent growth rate for our projection period. Abatement is estimated to average 3 months on new leases for Triad A, declining to 2 months for Triads B and C.

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HOTEL MARKET ANALYSIS

Introduction

The developers are planning a 133-room luxury “boutique” concept hotel, carrying a well-known national brand. The hotel will include an attractive 3,000 sf lobby area is planned, along with a large bar-restaurant area of approximately 3,000 sf, and 5,660 sf of meeting and banquet space on the main floor. The hotel will also include 8,780 sf of rentable commercial spaces that will be leased to retail shops. Hotel amenities will include a high-quality fitness center and outdoor pool area. Based on our analysis of the Tivoli Village development plan and local hotel market characteristics, we have determined that the competitive supply of hotels includes a group of eight hotel properties in the greater Summerlin area of Las Vegas. We have included the following properties in our analysis of the local hotel supply:

Primary Comparables

1. JW Marriott: 548 rooms (1999 built) 2. Courtyard by Marriott Las Vegas Summerlin: 154 rooms (2000) 3. Element by Westin: 123 rooms (2008)

We believe that the planned hotel at Tivoli Village will be well positioned to capture demand from both business and leisure segments. Affluent travelers will be attracted to the high quality of the hotel and the adjacent retail village. As well, for business travelers, the property will offer convenient access to offices within the center. The three hotels noted above (JW Marriott, Element and Courtyard) provide the best indication of supportable room rates for the planned boutique hotel at Tivoli Village, due to their comparative property characteristics and overall quality level.

The following limited service properties were also included in our analysis due to their location within the Summerlin market area, so as to provide an accurate reflection of total market demand and hotel occupancy. Clearly, however, the rate structure of the following properties is somewhat below that of the upscale properties noted above and that which is planned for Tivoli Village.

Secondary Comparables

4. Hampton Inn Summerlin: 127 rooms (1998) 5. Hampton Inn – Red Rock – Summerlin: 106 rooms (2007) 6. LaQuinta Inn-Summerlin Tech Center: 128 rooms (1999) 7. LaQuinta Inn-Red Rock Summerlin: 75 rooms (2000) 8. Best Western-Plus Las Vegas West: 59 rooms (1996)

Our analysis of these hotels provides an indicator of local lodging demand, as well as market room rates. A map of the eight competitive properties is provided on the following page. The table following the map summarizes the room supply and rack rates for JW Marriott, Element

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and the Courtyard by Marriott, which are considered the primary competitors and best indicators of supportable room rates for the subject hotel. Our research showed that rack rates in October and November 2015 for standard guest rooms at the three primary competitive properties ranged from $145 to $199 mid-week, while weekend rates ranged from $114 to $179 per room/night.

Competitive Hotel Supply � Las Vegas Summerlin Area

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Competitive Hotel Properties Summerlin-Las Vegas, NV Area

Advertised Rates (Nov. 2015) # of (rates shown for standard guest rooms only) Hotel Name Property Type Year Built Rooms Weeknights Weekends Amenities JW Marriott Full Service-Luxury Resort 1999 545 $159 - $199 $129 - $179 Full restaurant and bar facilities, meeting/convention, fitness and resort pool and spa components. Courtyard by Marriott Limited Service-Upscale 2000 154 $145 - $179 $114 - $149 Bistro dining and beverage service; recently renovated lobby; fitness facilities and outdoor pool. Element Limited Service-Upscale 2008 123 $151 - $189 $123 - $159 Breakfast bar and evening appetizer/drink reception; outdoor pool; fitness (studio suite lodging) center Total/Avg 822 $152 - $189 $122 - $162

Source: advertised rates per hotel websites

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

Market ADR and Occupancy Trends

The table below presents data on the annual performance of the competitive hotel set. This data was obtained from Smith Travel Research (STR), a nationally recognized provider of hotel market information. STR provides both independent market analysts and the hotel industry with data on hotel occupancy, average daily room rates and revenue per room. STR collects property- specific data from hotels throughout the country, and provides up-to-date and historical hotel performance data representing an aggregation of a selected group of hotels, including those being studied as part of this analysis in Las Vegas.

Hotel Occupancy and Rate Trends Competitive Hotel Properties * - Summerlin Las Vegas Market Area 2011-2015 Competitive Hotel Set - Annual Statistics * 2011 2012 2013 2014 2015* Occupancy Rate 62.5% 68.2% 72.5% 75.8% 79.5% Annual Room Demand 300,353 327,977 348,608 364,913 382,794 Annual Room Supply 480,705 480,705 480,705 481,707 481,707 Avg. Room Rate (ADR) $107.38 $105.55 $103.44 $106.22 $112.59

RevPar $67.09 $72.02 $75.01 $80.47 $89.48 Annual Change 2010-11 2011-12 2012-13 2013-14 2014-15* Occupancy Rate 5.2% 5.7% 4.3% 3.2% 3.7% Annual Room Demand 9.9% 9.2% 6.3% 4.7% 4.9% Annual Room Supply 0.0% 0.0% 0.0% 0.2% 0.0% ADR -7.2% -1.7% -2.0% 2.7% 6.0% RevPar 2.0% 7.3% 4.2% 7.3% 11.2%

*Competitive set includes JW Marriott, Courtyard by Marriott, Hampton Inns(2), La Quinta Inns (2), and Best Western-Plus hotels in the Summerlin area of Las Vegas.

* 2015 Projections by Marquette Advisors, based on Sept. 2015 YTD statistics from STR. Sources: Smith Travel Research; Marquette Advisors

Data from STR shows that room rates have escalated considerably, showing a 2.7% year-over- year increase in 2014, followed by 6.0% growth in 2015. This follows three consecutive years of declines. Demand in 2015 is up 4.9%, following 4.7% growth in 2014 and 6.3% growth in 2013. The market ADR for the sample group was $106.22 in 2014, and is forecast to increase to $112.59 for the full year in 2015. Again, we note that the overall market ADR is held down somewhat due to the inclusion of mid-price limited service properties such as LaQuinta and Best Western-Plus. We expect that the ADR for the subject property will be positioned within range of Element and the Courtyard by Marriott, albeit somewhat lower than JW Marriott which features upscale full service resort facilities.

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Lodging Demand Analysis

In the following paragraphs we present our analysis of market demand and the projected utilization and rate structure for the eight competitive hotels in aggregate. As well, we have provided projections of market share (rooms sold) and rooms revenue for the subject property, assumed to open on October 1, 2017.

The competitive hotels are projected to accommodate 382,704 total room nights in 2015, with a market occupancy rate of 79.5%. Economic conditions continue to improve, as room demand has accelerated considerably over the past 2+ years. Considering all elements of our analysis, we expect that hotel market demand will expand at an annual rate of 4.9% in 2015, followed by 3% annual growth thereafter. Our projections of market demand (rooms sold) for the nine competitive hotels, including the Tivoli Village Hotel, is shown on the table below.

` Projected Market-Wide Room Demand, Occupancy & ADR by Year Summerlin Las Vegas Area Hotels

Historical Projected* 2011 2012 2013 2014 2015 2016 2017 2018

Room Supply 480,705 480,705 480,705 481,707 481,707 481,707 493,677 530,252

Market Occupancy Rate 62.5% 68.2% 72.5% 75.8% 79.5% 81.9% 82.3% 76.6%

Rooms Sold (annual) 300,353 327,977 348,608 364,913 382,794 394,278 406,106 406,106 Annual Growth Rates 9.2% 6.3% 4.7% 4.9% 3.0% 3.0% 3.0%

Market ADR $107.38 $105.55 $103.44 $106.22 $112.59 $115.97 $119.45 $120.03 Annual Growth Rates -1.7% -2.0% 2.7% 6.0% 3.0% 3.0% 3.5%

* Projected competitive supply includes the subject Tivoli Village property (opening Oct. 2017) plus 8 existing hotels.

Tivoli Village Hotel (projected) Subject "Fair Share" 2.4% 9.2% Subject Penetration Rate 90.0% 100.0% Subject Property Occupancy % 74.0% 79.0% Subject Property Occupied Rooms 8,862 37,179 Subject Projected ADR $189.00 $193.00 Sources: Smith Travel Research (historical); Marquette Advisors (projected)

The table also presents a summary of the projected market share and occupancy for the subject property from its opening point in October 2017 through 2018. This approach assumes that the property will be able to capture its “fair share” of Summerlin lodging demand, which we believe to be reasonable considering its superior location and characteristics of the property.

Our analysis indicates that the subject hotel should capture about 38,351 rooms sold (79% occupancy) by 2018. We estimate that the subject hotel will support an ADR of approximately $189 at opening in 2017. This is based on a current year rate estimate for the subject of approximately $180, per our review of rates at hotels such as JW Marriott, Element and Courtyard by Marriott.

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Presented below is a summary of hotel occupancy and rate projections for the hotel at Tivoli Village for 2017 through 2019. Full revenue and expense projections are provided later in the valuation section of the report.

Tivoli Village Hotel Projected Occupancy & ADR

Projected Hotel Projected Occupied Projected Rooms Occupancy Rate Room Nights ADR Revenue Year 1 (end Sept 2018) 75% 36,409 $188.70 $6,870,331 Year 2 79% 38,351 $192.47 $7,381,484 Year 3 79% 38,351 $196.32 $7,529,113

Source: Marquette Advisors

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FINANCIAL PROJECTIONS

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

ABSORPTION ANALYSIS & FINANCIAL PROJECTIONS

Introduction

Based on our market analysis, we have concluded that there is sufficient market support for the subject development as proposed. In this section we present a summary of our absorption and financial projections for Tivoli Village at Queensridge. Triad A opened in April of 2011 and is currently in lease-up as described in this report. Office and retail components in Triads B and C, as well as the 133-room hotel, are scheduled to open in 2016 and 2017. We have developed projections of overall utilization and financial performance for four primary profit centers, including:

• Retail space rentals (401,401 sf rentable area) • Office space rentals (338,784 sf rentable area) • Hotel with 133 guest rooms and related amenity components, as well as 8,780 sf of additional rentable retail spaces • Future residential land sale, as entitled for 300 multifamily units

Based on our analysis of subject development, leasing activity to date, and in consideration of regional and national population growth trends, economics and market characteristics, we have estimated the financial performance for all components at Tivoli Village at Queensridge. Projected revenues are from current leases in place, plus the absorption of remaining retail and office space, as well as the 133-room hotel. The property’s retail and office components area projected to be fully complete (Triads A, B, and C) by Spring 2017, and reach a stabilized occupancy level (95%) by mid to late 2019. The planned 133-unit hotel is projected to open on or about October 1, 2017. Residential land as entitled for 300 units is projected to be sold to a homebuilder(s) in 2017 and 2018, as planned.

We have developed separate financial projections for 1) the combined retail and office operating components, and 2) the 133-room hotel. These forecasts are discussed as follows.

Financial Projections: Tivoli Village Retail & Office Components

Our financial projections and valuation modeling for the retail and office components at Tivoli Village reflects an analysis period including the remaining construction and lease-up phase (projected to be span from approximately Fall 2015 to 2019), and five years following stabilization (by 2019 year-end), with projected EBITDA for stabilized year six following stabilization used for exit valuation purposes. In developing our projections, several key assumptions were made, including the following:

• Management personnel for all facility components will have extensive experience in the operation and leasing/sales of comparable properties;

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• All components of Tivoli Village will use comprehensive accounting and control systems capable of providing management with accurate and timely performance data, as well as ensuring control and reporting of all transactions;

• Management will ensure a comprehensive program of on-going maintenance covering all facilities, furnishings and equipment;

• Throughout the period under analysis, management will institute an aggressive program of advertising and promotions targeted toward all local and regional demand components;

• The property will incorporate the facilities described herein, in accordance with the phasing schedule contained in this report; and,

• No new competitive developments, other than those mentioned and assumed as competitors in this report, will enter the competitive market during the projection period.

In addition, all findings, estimates, assumptions and conclusions discussed in this report are integral parts of the analyses and estimates that follow.

Retail Village

Absorption: A total of 401,401 sf of retail/restaurant space will be included at Tivoli Village upon completion in 2017. Triad A, with 202,684 sf opened in April of 2011. As of September 30, 2015, a total of 167,373 sf of retail area had been leased, or about 83% of Triad A. As well, 115,468 sf out of 172,573 sf in Triad B has been pre-leased to tenants, including Restoration Hardware (77,060 sf). Based on our analysis of the property’s leasing activity to date, paired with a review of local and regional demand and absorption trends, we estimate that the remaining retail & restaurant space will be absorbed at a rate of about 5,000 sf per month, following the completion of construction of each Triad B and C. From our analysis of the subject property and the surrounding market, we believe it is reasonable to expect that the total 401,401 sf of rentable retail/restaurant area in Triads A, B and C will achieve a stabilized 95% occupancy level in mid to late 2019.

Rental Rates: Based on our market analysis, detailed review of the subject leasing activity to date and projected improvement in market conditions, we believe that an average rate of approximately $36 psf (NNN) is achievable for year one of our projection period for remaining Triad A space. Based on the quality of the asset, the tenant mix and the initial sales performance of these tenants, and considering the strength of the surrounding Summerlin market, we believe that management will be well positioned to raise the market rent beginning in 2016 and 2017, commensurate with continued lease-up momentum and opening of Triads B & C. Therefore, the market rent estimate for spaces in Triads B is estimated at $42 psf commencing in Fall 2016, with an average rate of $50 psf projected for Triad C commencing Fall 2017. Abatement of 3 months is estimated for new leases in Triad A, declining to 2 months for Triads B and C.

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Retail Sales Percentage Revenue: The property will also generate substantial retail sales, given the projected high-end tenant mix, the affluence of the trade area, especially the nearby Summerlin neighborhoods, and the quality of Tivoli Village in comparison with other retail centers and shopping nodes in the trade area. We have completed an analysis of current and projected consumer retail & restaurant spending by the trade area resident base, as shown on the table below.

Tivoli Village at Queensridge - Retail Sales Percentage Rent Calculations

2019 Summerlin Trade Area Projected Retail Sales $7,700,000,000 Estimated Tivoli Tenants paying % Rent 100,000 Tivoli Retail Sales "Fair Share" Capture Rate by Year 0.91% Tivoli Projected Capture Rate as % of "Fair Share" 110% Tivoli Projected Capture Rate 1.00% Projected Retail Sales by Year for Relevant Tenants at Tivoli $77,000,000 Tivoli Retail Sales PSF for relevant tenants $770 Projected Avg. Minimum Rent PSF by Year $34 Divided by Average % Basis 6.00% Equals $567 Tivoli Retail Sales PSF $770 Projected Overage $203 (times) Estimated Tivoli Tenants paying % Rent 100,000 Equals $20,333,333 Tivoli Percentage Rent Income by Year $1,220,000 Tivoli Percentage Rent Income (2019) $1,200,000

Source: Marquette Advisors

ESRI projections indicate that total trade area resident spending on retail and restaurants is expected to be approximately $5 billion in 2015, with total retail sales by trade area businesses estimated at $6.7 billion, reflecting migration of shoppers into the Summerlin trade area from other areas in the Las Vegas market. Based on improving trade area economics, paired with the considerable addition of new retail stores and restaurants at Tivoli Village and the Shops at Summerlin development, we expect a marked increase in sales captured within the Summerlin trade area. We project that trade area retail sales will increase to approximately $7.7 billion by 2019. This is based upon the current expenditure characteristics of the trade area population base, inflated to 2019 dollars to reflect population, income, and expenditure growth during this timeframe, and the increase in retail stores and restaurants within the trade area.

Tivoli Village will compete with other retail centers throughout the trade area for these expenditures. By 2019, Tivoli Village is projected to be approaching a stabilized occupancy level with a more established tenant base and ramp-up in marketing. We believe that the subject property is very well located due to its proximity to residential density to the east, and some of Summerlin’s most affluent neighborhoods to the west and north. As well, the property will enjoy a prominent location that is within easy driving distance for the entire trade area. Tivoli Village will offer a diverse tenant base, with a mix of very unique, high-end retail shops and restaurants. In evaluating the potential “market share” for those retail stores expected to pay % rent at Tivoli Village, which equates to about 25% of the tenant mix, we have considered a “fair share” analysis which assumes that the center would capture its proportionate share of retail spending in the area based on its size (approximately 100,000 sf of retail tenants paying % rent) compared to the total amount of

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retail/restaurant space in the trade area (projected at approximately 11,000,000 sf in 2019). We believe the subject property is well positioned to capture a disproportionately high percentage of trade area expenditures for the reasons described above. We have concluded that it is reasonable to expect that Tivoli Village at Queensridge will capture as much as 110% of its “fair share” of consumer spending in the trade area by 2019. On this basis, we estimate that those stores and restaurants expected to pay percentage rent (about 100,000 sf of tenants) at Tivoli Village will capture total combined sales of approximately $770 per square foot by 2019. We have also analyzed retail lease agreements to-date for the subject property, as provided by the property owner. Based on this analysis and projected future leasing activity, we estimate an approximate average percentage basis for Tivoli Village leases will be approximately 6% for the forecast period. From here, we can calculate the estimated percentage rent for Tivoli Village, estimated at approximately $1.2 million in 2019 as shown on the preceding page.

Office Space

Absorption: To date, a total of 138,741 sf has been leased out of 162,513 sf in Triad A, or about 85%. Another 133,871 sf is scheduled to come online in Triad B in October 2016, followed by 42,460 sf in Triad C in October 2017. With the Las Vegas economy now moving from recovery to an expansion phase, businesses are hiring. The long-term growth pattern and economic fundamentals indicate that office-related employment in the Las Vegas region will continue to improve. The West submarket remains somewhat underserved in terms of high quality Class A office buildings, given its affluence and the expansion of population and commercial growth into this area. Based on our review of local and regional growth characteristics, paired with leasing activity at Tivoli Village to date and interviews with management, we estimate that the subject office space will achieve a stabilized occupancy level during 2019.

Rental Rates: Base rental rates for current office tenants average $31 psf (gross) (after abatement). We expect that the subject office space will be able to command top-of-market rental rates within the West submarket. It is being marketed as the premier office address within the greater Summerlin area, featuring very high-quality space, comparable or superior to that found at Howard Hughes Place. Based on our market analysis and most recent lease transactions, we estimate a current base market rental rate of $31 psf (gross) in current year dollars for the remaining space in Triad A. Similar to the retail component, we expect that the ramp up in construction and leasing activity will create the opportunity for significant rent increases in the initial years of the projection period. We estimate a market rent of $36 psf for Triad B, increasing to $40 psf for Triad C. A 3% rent growth rate is assumed for our modeling, while abatement of 3 months is estimated for new leases in Triad A, declining to 2 months of free rent for new leases in Triads B and C.

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Other Income

Additionally, Tivoli Village at Queensridge will generate revenue from miscellaneous categories including parking, advertising sales, tenant marketing charges, vending and other miscellaneous revenue. Our estimates include “other miscellaneous income” at 1.5% of base rental revenue, based on our review of historical performance and miscellaneous revenues generated by the center to date.

Market Leasing Assumptions

Remaining Triad A, B and C space is projected to be absorbed between the September 30, 2015 valuation date and 2019 year-end. Lease-up reflects the projected year one base rental rates as set forth in this section ($38 psf NNN retail and $31 psf gross for office in 2015) for new leases in Triad A. Rent abatement of 3 months (total) is assumed for new retail tenancy, based on somewhat more aggressive abatement terms for retail and office leasing based on recent activity, declining to 2 months on new deals commensurate with continued absorption and opening of Triads B and C. Note that tenant improvement (TI) expense on projected new retail and office leases is accounted for in the estimated remaining construction cost.

For expiring leases, our modeling reflects a 75% renewal probability with assumed market lease rates as set forth above. We assume no TI costs on renewals, and a $20 psf cost is assumed for non- renewals (new second generation leases) to account for TI’s. We estimate an average of three months vacant on non-renewing spaces. The average lease term is projected to be five years. Leasing commissions are estimated at 5% for new office leases and 3% on new retail leases, commensurate with recent leasing activity. No commissions are applicable on lease renewals.

Vacancy Assumptions

Our modeling includes a 20% general vacancy factor in the initial year, declining to 5% at stabilization by 2019 year-end. General vacancy as calculated is in addition to structural vacancy and turnover vacancy in the property during the projection period.

Effective Gross Revenue

Effective gross revenue is projected to be approximately $10.4 million in year one (ending Sept 2016), increasing to $31.6 million in year 5 and $35.7 million in year 10 of the projection period.

Operating Expenses

Operating expense estimates were developed for the property based on our analysis of operating expenses for Triad A to date, budget information as provided by Great Wash Park LLC, and from our review of expense ratios for comparable high-end retail/office properties throughout the western

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U.S.

• Real estate taxes are estimated at $1.40 psf of total net rentable area for the projection period. • Retail CAM is estimated at $10.00 psf of retail area in year one, and is expected to decrease to $7.50 psf following completion of all retail improvements due to economies of scale. CAM rates are projected to increase at a rate of 2% annually for the projection period. • Office CAM expenses are projected at $6.00 psf of office area in year one, decreasing to $4.30 psf following completion of all office space due to economies of scale and thereafter increasing at a rate of 2% annually. • Additional expenses include administrative & general expenses, projected at approximately 2.5% of effective gross income. We have also factored in an annual reserve payment equal to 1% of effective gross income.

Total operating expenses (including reserves) are estimated at approximately $4.2 million in year one, increasing to $6.9 million in year 5, and $7.7 million in year 10.

Projected Income & Expenses � Tivoli Village at Queensridge Retail & Office Components

The tables on the following pages summarize our income and operating expenses for the operating retail and office area at Tivoli Village at Queensridge. Financial projections were developed for a ten-year period commencing September 30, 2015 based on the terms described in this section. The retail and office components at Tivoli Village are projected to generate EBITDA (before leasing commissions and TIs) of approximately $24.6 million by year 5, increasing to $27.9 million in year 10. (These projections exclude additional revenue during this timeframe from the planned 133-room hotel and the sale of the entitled residential land parcel).

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Tivoli Village at Queensridge -- Retail & Office Space Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 10/1/2015

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 For the Years Ending Sep-2016 Sep-2017 Sep-2018 Sep-2019 Sep-2020 Sep-2021 Sep-2022 Sep-2023 Sep-2024 Sep-2025 ______Potential Gross Revenue Base Rental Revenue $11,410,403 $24,002,230 $27,031,761 $27,783,148 $28,385,002 $28,525,535 $29,288,160 $30,063,899 $30,969,177 $31,869,358 Absorption & Turnover Vacancy (516,432) (4,660,994) (1,029,939) (2,122) (8,738) (296,816) (161,539) (42,343) (149,327) (107,870) Base Rent Abatements (941,327) (1,771,985) (891,327) (260,448) (137,439) (200,030) (275,431) (94,857) (35,365) (43,868) ______Scheduled Base Rental Revenue 9,952,644 17,569,251 25,110,495 27,520,578 28,238,825 28,028,689 28,851,190 29,926,699 30,784,485 31,717,620 Expense Reimbursement Revenue 1,262,261 2,480,206 2,789,741 2,783,000 2,859,243 2,831,125 2,759,382 3,127,059 3,234,964 3,343,981 Retail Sales Pct. Rent 900,000 1,000,000 1,224,000 1,248,480 1,273,450 1,298,919 1,324,897 1,351,395 1,378,423 1,405,991 Marketing Reimbursement 189,339 372,031 418,461 417,450 428,886 424,669 413,907 469,059 485,245 501,597 Misc Revenue 171,156 360,033 405,476 416,747 425,775 427,883 439,322 450,958 464,538 478,040 ______Total Potential Gross Revenue 12,475,400 21,781,521 29,948,173 32,386,255 33,226,179 33,011,285 33,788,698 35,325,170 36,347,655 37,447,229 General Vacancy (2,081,934) (518,967) (1,617,297) (1,653,008) (1,368,589) (1,535,973) (1,726,033) (1,675,522) (1,769,885) ______Effective Gross Revenue 10,393,466 21,781,521 29,429,206 30,768,958 31,573,171 31,642,696 32,252,725 33,599,137 34,672,133 35,677,344 ______Operating Expenses Tax 511,276 1,008,001 1,078,124 1,099,686 1,121,680 1,144,114 1,166,996 1,190,336 1,214,143 1,238,425 Retail CAM 2,026,840 3,300,797 3,010,508 3,070,718 3,132,132 3,194,775 3,258,670 3,323,844 3,390,320 3,458,127 Office CAM 975,078 1,587,766 1,456,771 1,485,907 1,515,625 1,545,937 1,576,856 1,608,393 1,640,561 1,673,372 Admin & General 600,000 650,000 800,000 824,000 848,720 874,182 900,407 927,419 955,242 983,899 Reserves 103,935 217,815 294,292 307,690 315,732 316,427 322,527 335,991 346,721 356,773 ______Total Operating Expenses 4,217,129 6,764,379 6,639,695 6,788,001 6,933,889 7,075,435 7,225,456 7,385,983 7,546,987 7,710,596 ______Net Operating Income 6,176,337 15,017,142 22,789,511 23,980,957 24,639,282 24,567,261 25,027,269 26,213,154 27,125,146 27,966,748 ______Leasing & Capital Costs Tenant Improvements 77,425 37,673 29,939 17,772 553,414 275,569 68,892 249,528 116,830 Leasing Commissions 41,112 20,295 23,002 9,667 395,948 167,068 37,474 185,261 81,756 ______Total Leasing & Capital Costs 118,537 57,968 52,941 27,439 949,361 442,637 106,366 434,789 198,586 ______Total Hard/Construction Costs 67,445,500 28,102,293 ______Cash Flow Before Debt Service ($61,387,700) ($13,143,119) $22,736,570 $23,980,957 $24,611,843 $23,617,899 $24,584,632 $26,106,788 $26,690,357 $27,768,162 & Taxes ======

Source: Marquette Advisors

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

Financial Projections -- Hotel

Over the last 3 to 4 years, the Summerlin market has seen a considerable growth in lodging demand. The planned hotel at Tivoli Village is well designed and located so as to attract both business and leisure segments of the market, considering its high quality level, its location within Summerlin and proximity to popular shops, dining and offices within the Tivoli Village complex itself. Based on our analysis set forth herein, we expect that the planned hotel at Tivoli Village will achieve a stabilized occupancy rate of 79% by its second year of operations, with an ADR of approximately $192 at that time. This reflects a “going-in” ADR of approximately $180 in current-year dollars.

Estimates of cash flow from operations before debt service (EBITDA) have been prepared for the hotel project, reflecting the construction period and opening date of October 2017, and then an assumed 5-year holding period following stabilization. Projected year-six EBITDA is used for exit valuation purposes. The estimates and assumptions presented in this section were derived from the analyses performed in this study, our review of financial operating statistics for the lodging industry as a whole, as well as our knowledge of the regional lodging and resort industry and operations data for comparable facilities throughout the United States.

The paragraphs below outline the methodology and assumptions applied in our projections. Detailed financial projection tables are provided at the end of this section.

Revenue

Estimated rooms revenue is based upon the utilization and rate estimates previously presented. Estimates of occupancy and average rate were applied to the 133 room hotel. From our property review and market analysis we expect that the property will reach a stabilized occupancy level of 79% by 2018. Rooms revenue is projected to total approximately $7,381,000 in during its first full year of operations, increasing to about $7,989,000 in year five.

Food and beverage revenue is estimated at approximately 60% of rooms revenue, or about $90 per occupied room (in current year dollars), equating to approximately $3,790,000 in the first stabilized year, increasing to $4,102,000 in year five. This includes revenue derived from the sale of food and beverage at the restaurant and lounge, as well as room service income, and banquet/event food sales income.

Retail lease income – the hotel is programmed to include 8,780 sf of rentable retail tenant spaces. Based on our retail market analysis we anticipate these spaces will command an average NNN rate of $45 psf, increasing at an average of 3% per year. We estimate that the spaces will achieve a 50% pre-lease rate, reaching a stabilized 95% occupancy level in 2018.

Other miscellaneous revenue from retail sales within the hotel gift shop, vending, telephone usage charges, and other ancillary revenue were estimated in relation to occupied room nights, based upon industry statistics and our review of operating statements for comparable properties. Miscellaneous revenue equates to approximately $15 per occupied room, totaling about $598,000 in the first stabilized year, increasing to $648,000 in year five.

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In total, our projections result in total hotel revenues of approximately $12,157,000 during the first stabilized year of operations, increasing to $13,176,000 in year five.

Departmental Expenses

Rooms departmental expenses include payroll and related expenses for the front office and housekeeping, cleaning and guest room supplies, linens, travel agent commissions and other direct operating costs for the rooms department. Based on our review of financial statements for comparable upscale hotel properties, we have estimated rooms departmental expenses at approximately 25% of rooms revenue on a stabilized basis.

Food & Beverage departmental expenses were also estimated based on historical operations for comparable hotel properties which we have analyzed. Food & beverage departmental expenses are estimated at 75% of F&B revenue. These expenses include payroll and related costs, the cost of food and beverage raw materials and the cost of supplies and other direct expenses in the food and beverage facilities within the hotel, including meetings and banquets.

Other departmental expenses include the direct cost related to gift shop, telecommunications, equipment, labor and other related costs for all other departments, estimated at 60% percent of departmental revenue throughout the period under analysis.

Total departmental expenses are estimated to be approximately $5,047,000 for the first stabilized year of operations, equating to about 42% of property revenues, increasing to $5,463,000 in year five.

Undistributed Operating Expenses

Administrative & General expenses include the general operating costs associated with operating the hotel, including administrative payroll and related expenses, credit card commissions, bank charges, professional fees, office supplies, insurance and other miscellaneous costs. Expenses are projected in relation to the performance of other comparable facilities. Total administrative and general costs are projected to equal approximately 8.0% of facility revenues on a stabilized basis.

Marketing expenses include marketing payroll and related costs and the cost of advertising, supplies, promotional materials, and other expenses related to the marketing and advertising of the hotel. Total marketing expense is projected to equal approximately 7.0% of hotel revenues on a stabilized basis.

Property Operations and Maintenance expenses include the cost of maintaining the property, repairs, contract services, maintenance payroll and related costs, and utilities. Total property operations and maintenance expense was estimated based on our review of historical costs at comparable hotel properties. Property operations and maintenance expenses are projected at 4% of hotel revenues.

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Fixed Charges

Insurance costs for the hotel are estimated at approximately $145,000 in year one, or about 1.3% of total revenues, thereafter increasing at 2% per year for the projection period, based on current insurance expenses as incurred by similar properties.

Property Taxes are projected at approximately $368,000 during the first full year of operations, based on a review of current tax rates in Las Vegas and budget estimates by the property owner. This equates to approximately 3.3% of hotel revenues. Property tax expense is projected to increase at a rate of 2% annually for the projection period.

Management Fees are projected at 3.0% of total revenues for the projection period, based on the anticipated agreement.

We have also included an allocation for Replacement Reserves, at approximately 3.0% of total hotel revenues, or about $335,000 during the first year of operations. This level of reserves should be sufficient for replacement costs based on the range and quality of the improvements and FF&E and the lifecycle of those components.

Summary of Hotel Financial Projections

The table on the following page presents a summary of our financial projections for the planned Tivoli Village Hotel. This includes costs associated with the construction projects as well as the revenue and expense forecast as described herein. Our projections indicate that the hotel should generate EBITDA of approximately $3,547,000 in the first stabilized year, increasing to $3,852,000 in year five.

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Planned Tivoli Village Hotel - Las Vegas, NV Financial Projections, as of Sept. 30, 2015 Notes & Assumptions Total Available Roomnights 0 0 48,545 48,545 48,545 48,545 48,545 48,545 48,545 Projected Occupancy 0.0% 0.0% 75.0% 79.0% 79.0% 79.0% 79.0% 79.0% 79.0% Projected Occcupied Room Nights 0 0 36,409 38,351 38,351 38,351 38,351 38,351 38,351 Projected Average Daily Rate (ADR) $180.00 $185.00 $188.70 $192.47 $196.32 $200.25 $204.25 $208.34 $212.51 Projected F&B per Occupied Room $90.00 $95.00 $96.90 $98.84 $100.81 $102.83 $104.89 $106.99 $109.13 Projected Retail, Meetings & Misc Rev. per Occupied Rm. $13.00 $15.00 $15.30 $15.61 $15.92 $16.24 $16.56 $16.89 $17.23 Retail Tenant Spaces (SF) 0 0 8,780 8,780 8,780 8,780 8,780 8,780 8,780 Retail Lease Rate (NNN) $0.00 $0.00 $45.00 $46.35 $47.74 $49.17 $50.65 $52.17 $53.73 Retail Vacancy Factor (%) 0% 0% 50% 5% 5% 5% 10% 5% 5%

(Hotel opens Oct 1, 2017) (Stabilized occupancy) Year 1 (ending Sept 2016) Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Amt. Pct. Amt. Pct. Amt. Pct. Amt. Pct. Amt. Amt. Amt. Amt. Amt. REVENUE: Rooms $0 0.0% $0 0.0% $6,870,331 61.6% $7,381,484 60.7% $7,529,113 $7,679,696 $7,833,290 $7,989,955 $8,149,755 Food Beverage $0 0.0% $0 0.0% $3,528,008 31.6% $3,790,492 31.2% $3,866,301 $3,943,628 $4,022,500 $4,102,950 $4,185,009 Retail Lease Income (net) $0 $0 $197,550 1.8% $386,605 3.2% $398,204 $410,150 $400,220 $435,128 $448,182 Other Income $0 0.0% $0 0.0% $557,054 5.0% $598,499 4.9% $610,469 $622,678 $635,132 $647,834 $660,791 Total Revenue $0 0.0% $0 0.0% $11,152,943 100.0% $12,157,079 100.0% $12,404,087 $12,656,151 $12,891,141 $13,175,867 $13,443,736

DEPARTMENTAL EXPENSES: % of Dept. % of Dept. % of Dept. % of Dept. Rooms $0 0.0% $0 0.0% $1,786,286 26.0% $1,845,371 25.0% $1,882,278 $1,919,924 $1,958,322 $1,997,489 $2,037,439 Food & Beverage $0 0.0% $0 0.0% $2,681,286 76.0% $2,842,869 75.0% $2,899,726 $2,957,721 $3,016,875 $3,077,213 $3,138,757 Other Depts. $0 0.0% $0 0.0% $345,373 62.0% $359,099 60.0% $366,281 $373,607 $381,079 $388,701 $396,475 Total Departmental Expenses $0 0.0% $0 0.0% $4,812,945 43.2% $5,047,339 41.5% $5,148,286 $5,251,251 $5,356,276 $5,463,402 $5,572,670

Total Departmental Profit $0 0.0% $0 0.0% $6,339,997 56.8% $7,109,741 58.5% $7,255,801 $7,404,899 $7,534,865 $7,712,465 $7,871,066

UNDISTRIBUTED OPERATING EXPENSES: Administrative & General Expenses $0 0.0% $0 0.0% $948,000 8.5% $972,566 8.0% $992,327 $1,012,492 $1,031,291 $1,054,069 $1,075,499 Marketing Expenses $0 0.0% $0 0.0% $836,471 7.5% $850,996 7.0% $868,286 $885,931 $902,380 $922,311 $941,062 Maintenance $0 0.0% $0 0.0% $245,365 2.2% $243,142 2.0% $248,082 $253,123 $257,823 $263,517 $268,875 Utilities $0 0.0% $0 0.0% $245,365 2.2% $243,142 2.0% $248,082 $253,123 $257,823 $263,517 $268,875 Total Undistributed Operating Expenses $0 0.0% $0 0.0% $2,275,200 20.4% $2,309,845 19.0% $2,356,777 $2,404,669 $2,449,317 $2,503,415 $2,554,310

Gross Operating Profit $0 0.0% $0 0.0% $4,064,797 36.4% $4,799,895 39.5% $4,899,025 $5,000,231 $5,085,548 $5,209,051 $5,316,756

FIXED CHARGES: Insurance $0 0.0% $0 0.0% $144,988 1.3% $147,888 1.2% $150,846 $153,863 $156,940 $160,079 $163,280 Property Tax $0 0.0% $0 0.0% $368,047 3.3% $375,408 3.1% $382,916 $390,575 $398,386 $406,354 $414,481 Total Fixed Charges $0 0.0% $0 0.0% $513,035 4.6% $523,296 4.3% $533,762 $544,437 $555,326 $566,433 $577,761

OTHER EXPENSES: Reserves for Replacement $0 0.0% $0 0.0% $334,588 3.0% $364,712 3.0% $372,123 $379,685 $386,734 $395,276 $403,312 Management Fee $0 0.0% $0 0.0% $334,588 3.0% $364,712 3.0% $372,123 $379,685 $386,734 $395,276 $403,312

PROJECTED OPERATING EBITDA $0 0.0% $0 0.0% $2,882,585 25.8% $3,547,175 29.2% $3,621,018 $3,696,425 $3,756,753 $3,852,066 $3,932,371

Less: Remaining Cost to Construct $9,223,755 $18,447,510

NET CASH FLOW ($9,223,755) ($18,447,510) $2,882,585 $3,547,175 $3,621,018 $3,696,425 $3,756,753 $3,852,066 $3,932,371

Source: Marquette Advisors

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

Present Value of Excess Land

With respect to the Phase II land (8.3 acres), the developers have secured entitlement for a total of 300 residential condo units on the site, along with around 30,000 sf of added commercial retail density. They have indicated that they intend to sell this parcel in two pieces in 2017 and 2018, after the Las Vegas residential market has more fully corrected.

We understand that the project sponsor is considering a partial sale of the excess land, although the details of that transaction are uncertain as the prospective buyer continues to evaluate this portion of the site and potential development scenarios, which may in fact require rezoning.

Determining the ultimate sale value of that land, as entitled, as of that future date is difficult at this time considering the current market circumstances and the amount of time between this writing and the consummation of the sale. Nonetheless, given the market information available as of the date of this report, and in consideration of the quality of this location and the Tivoli Village development components, as with our prior analysis and valuations, we believe it is reasonable to assume that those 300 units, as finished, would command end sale prices in the range of $700,000 to $900,000 on average. On that basis, we have concluded for purposes of this valuation that a developer/builder would pay approximately $160,000 per unit for the land as entitled, reflecting a future (2017 and 2018) gross value of approximately $50 million. Assuming a market-appropriate discount rate of approximately 20% to 25%, this equates to a present value as of September 30, 2015 of approximately $20.0 million, unchanged from our prior year appraisal.

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VALUATION

Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

VALUATION

Introduction

We have been asked to provide an opinion of the �Fair Value,� as-is, as of September 30, 2015 subject to the assumptions noted within this report. The property is partially complete as of the valuation date, and is leased to tenants totaling approximately 304,000 sf in Triad A at this time. Approximately 91,000 sf has been pre-leased in Triad B, with a number of additional leases in negotiation. Triads B and C are now in construction, including future retail, office and hotel improvements. Development programming and construction cost estimates have been provided and are assumed for purposes of this report.

In accordance with IASCF standards, in developing an opinion of the “Fair Value,” the appraiser has relied upon the income approach to value the property via a discounted cash flow approach (or “DCF”), given the unique income-producing characteristics of the development. Moreover, we note that the likely buyer would also place primary reliance upon the income and profitability characteristics of the asset in making an investment decision regarding such a property.

Income Approach to Value

Normally, the sale of a commercial real estate development such as the subject is based upon the income flow generated by that operation. For this reason the Income Approach to value is considered to be the primary indicator of fair value, with the valuation based upon market-derived cash flow projections. We have relied upon such an approach in valuing the subject mixed-use facility.

Discounting

Discounting is the process of converting forecast future income receipts to a present worth estimate. The mathematical foundation of this process is the basic formula for compound interest. Discounting is the mechanical basis for all income capitalization analysis in income property appraising.

Value as of a given valuation date is the discounted present worth of the anticipated future income(s) reasonably expected to be generated by an income-producing property over a specified period of time. The appraiser is called upon to identify the value, as defined, of the future income receipts forecast to be receivable by the holder of a specific interest (rights) in the income-producing real property being appraised. The process by which future income receipts are converted to a present capital value is termed discounting.

Capitalization is the process of converting periodic income payments into an appropriate lump-sum capital value. It may be used to estimate either present worth or future worth. Discounting is that form of capitalization specifically concerned with the calculation of present worth of future receipts.

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Appraisals nearly always involve discounting because the final objective is usually a present worth estimate.

Many different capitalization methods and techniques are available to process anticipated future income into a present worth estimate. The method used depends primarily on the characteristics of the forecast income stream itself. Each technique incorporates specific assumptions about the character of that income stream, the form of the appropriate rate of return, or discount rate, and the time period involved. The appraiser cannot properly select the appropriate technique without being fully aware of these underlying assumptions. He must assure himself that they correspond to and describe the income, rate, and time characteristics of the appraisal problem represented by the subject property. Only then can the appraisal reflect the appraiser's best analytical judgment applied to pertinent and relevant facts of the market.

Every capitalization method or technique therefore requires inputs of amount of income, time of receipt, and rate or yield. The role of discounting and compound interest is to develop the proper factor(s) in terms of rate and time, which are then used in processing income to a present worth estimate.

The basic valuation formula for all valuations is "V=I/R." This formula is a simple representation of the discounting process. "I" represents the forecast future income receipts. "R" is the rate incorporating compensation to the investor for waiting a specified time, for giving up alternative investment income opportunities, and for assuming the risks of the investment position. Finally, "V" is the present worth of the forecast future income (I) discounted at the applicable rate of discount (R).

Discounting is based on rigidly defined mathematical relationships. It is not appraising. Merely processing an income stream by an indisputably correct mathematical formula does not in itself produce supportable present worth of market value estimates. Discounting is necessary to measure value correctly, which is the appraiser's task. The mathematical or arithmetic manipulation of figures is sterile, however, without good, reliable, and appropriate market data. Moreover, the appraiser's judgment -- based on his informed, trained observations and analysis of the market -- is essential to select the most applicable technique for the given appraisal problem. It is also necessary to identify and obtain the data required to put into the formula.

Discounting is based on the concept of time preference. This means that present money is always worth more than future money. Conversely, money (income) due and receivable in the future is worth less today. This is because the investor is foregoing alternative income opportunities or alternative uses of the money, while it is committed to the particular investment in question. The anticipated future income receipts are to be discounted. A rate of discount that reflects compensation for overcoming time preference only is termed a "riskless money rate," and represents the opportunity cost of making a particular investment.

It has already been pointed out that the future income receipts receivable from ownership of rights in income-producing real estate can be categorized in two ways: an annual stream of net cash income, and a lump sum reversion at some specified future date. In fact, the total flow of future

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income receipts is really a series of individual payments, and can be treated as such in the discounting process.

The discount rate, also called the interest rate, or rate of return on investment in appraisal literature, is the basic building block in the capitalization process. The forces of market supply and demand for investment funds determine it. Thus, the appraiser must evaluate the market environment in terms of which the subject property is being appraised. There are in fact many sub-markets in "the money market," just as there are in "the real estate market." The appraiser must identify the submarket in which an investor in the property in question would be competing in order to identify the prevailing rate that must apply to the subject property.

A discount rate is a ratio between annual net income and value or sale price. It is expressed as a percentage on an annual basis, or as a related decimal figure. It represents one basis for comparing alternative investments: What is the rate of return on alternative investment "A" as compared with that on alternative investment "B"?

A rate of return is paid or offered on an investment in order to attract investment capital. The rate offered or anticipated must be competitively attractive in terms of similar alternative investments with the same risks and income streams. This represents the operation of the principle of substitution or opportunity cost. A rate of return must be paid or offered to compensate the investor for: 1) overcoming time preference; 2) giving up liquidity; 3) assuming investment management burdens; and, 4) assuming the risks of investment and ownership.

The principle of substitution or opportunity cost dictates that a rate of return must be offered or paid to meet the competition of alternative investment outlets for the investor's funds. This is the basis for the "pure" or riskless rate of discount. Even with no change in the purchasing power of the dollar and absolute certainty of receipt of the income in the future, a rate of return must be anticipated to overcome the opportunity cost of waiting and for giving up liquidity. Discount fac- tors found in compound interest tables represent this opportunity cost of time only. Mathematically, they ignore changes in purchasing power and are based on certain receipt of the future income.

Differential rates of return must be offered or paid by different properties to compensate the investor for:

1) differences in liquidity or marketability; 2) differences in investment management or administrative costs; and 3) differences in investment risks. These investment risks include the risk of loss or diminution of principal; the risk of nonpayment or decline of anticipated net income; the risk of instability or variability of anticipated net income; and the risk of a decrease in the time period over which net income is actually generated.

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Risks

The risks, or conversely, the degree of certainty, inherent and evident in the particular income stream deemed most probable for the property being appraised must be identified and evaluated. These risks are reflected in the rate of discount on which the applicable discount factors are based.

There is always uncertainty about the future. There is necessarily uncertainty about each of the component characteristics of forecast future income receipts: the amount, the timing, the periodicity, the duration, and the variability. The degree of uncertainty over whether each of these components will be realized as forecast is measured in part by the subjective probabilities assigned them by market participants, and by the appraiser. The risks borne by the income property investor combine to form the quality of the income stream. The perceived levels of these risks help establish the rate of discount used in capitalizing the forecast future income.

Entitlement Risk: This is the risk associated in securing necessary planning & zoning approvals and all government required entitlements needed to construct the project as planned. In terms of the subject property, the projected is fully entitled and is in fact under construction. Therefore, entitlement risk is not relevant in the case of the subject property.

Income or Market Risk: This is the risk that the future income receipts will not be as great as the forecast amounts, or that their timing will be other than that forecast. It is based on the possibility that gross income or rental receipts will be lower, or that operating expenses will be higher, or both. There is also risk that market conditions will change as the property comes online and space is offered for lease. There is certainly remaining income risk associated with the subject development as of the valuation date, as the future cash receipts as projected are dependent upon the future absorption of retail and office space through lease agreements, as well as future hotel room rentals. Approximately 282,000 sf of retail space has been leased to date (including more than 115,000 sf pre-leased in Triad B), while more than 149,000 sf of office space has been leased. Roughly 309,000 sf of combined space in Triads A, B and C remains to be leased, with the property’s retail and office components projected to reach a stabilized occupancy level by mid to late-2019. We expect that retail and office leasing velocity will continue to improve as the subject property continues to open in phases and further establish itself as a premier high-end shopping and commercial center within the trade area. Trade area and regional economic conditions also continue to improve. The 133-room hotel is projected to open in October 2017, reaching a stabilized occupancy level in its second full year of operations.

Investment or Money Market Risk: This is the risk that future rates of discount will be higher than those applicable at the time the appraisal and the investment decision is made. If this occurs, then the income stream being produced by the property will have a lower present worth because it must be discounted at a higher rate. Money market and investment market conditions totally beyond the control of the investor

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determine what are acceptable market rates of return, so the evaluation of the interest risk depends primarily on forecasts of money market conditions. This risk is particularly significant for fixed-level income streams, such as level rentals under a lease or fixed debt service on mortgage loans. The rapid rise in rates of interest during the late 1960's illustrates the degree of interest risk that a long-term investor faces. Once again, the longer the income forecast period, the greater the interest risk will be.

Purchasing Power Risk: This is the risk that dollars received in the future will have less purchasing power as the result of inflation. It is encountered in every long-term investment, whether in real property or other assets. Purchasing power risk is not usually taken into account overtly in appraisal analysis. Neither the mathematics of the discounting process nor rates of discount specifically include compensation for the assumption of this risk by the investor. Because it is universal in the economy, its influence is felt primarily in basic long-term rates of interest on which discount rates for real estate investments are based.

The several risks of long-term investments in real property are beyond the control of the individual investor. The investor(s) must recognize and usually accept them.

The second important ingredient in developing an appropriate discount factor is the time period (usually called the income projection period or capital recovery period) over which net income is forecast or expected to be received. An income stream for a finite time period has built into it the requirement that the investor recover his capital investment along with receiving a return on that investment for the time period specified.

If one dollar is deposited to earn interest periodically, and the interest payments added to the original deposit are also left on deposit to earn interest in successive periods, the principal sum grows or accumulates at a compound rate. This is the basic fact of compound interest. The compound interest concept provides the theoretical mathematical basis for discounting, and hence the entire process of income capitalization.

Compounding refers to successive accumulations from the present to a specified future date. Discounting involves successive deductions from a future sum or sums receivable at specified future dates to the present.

Selected Discount & Terminal Cap Rates for Subject Property

The foremost surveyor of discount rates over the last 10+ years in the real estate business nationally is the Real Estate Investor Survey by Price Waterhouse Coopers (PWC). As of the most recently published survey (2015 Q2), national discount rates applicable to retail assets ranged from 5.50% to 12.00% with an average of 7.86%, down from 8.37% a year ago. Meanwhile, residual cap rates ranged from 4.25% to 9.75%, with an average of 6.90%, down from 7.18% a year ago.

Marquette Advisors Page 102 Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

Discount rates for suburban office properties ranged from 6.00% to 10.00% according to the PWC survey in 2015 Q2, with an average of 7.69%, down from 8.03% a year ago, while residual cap rates ranged from 5.50% to 9.50%%, with an average of 7.28%, down from 7.55% last year.

Discount rates for full service hotel properties ranged from 9% to 13%, with an average of 10.71%, according to 2015 survey data, while residual cap rates ranged from 6.5%-11% on full service hotel transactions, averaging 8.17%.

Based on the characteristics of the subject property and the surrounding market environment, various risk elements as relevant to the subject development, and in consideration of the extraordinary assumptions and hypothetical conditions stated in this analysis, remaining development, construction and lease-up risk elements, the appraiser believes that an 8.75% discount rate is appropriate for the retail and office components of the subject property and related cash flows. The appraiser has also determined that a blended residual cap rate of 6.25% for the office/retail cash flow is appropriate. A 10.0% discount rate and 7.25% residual cap rate have been selected for the projected cash flows attributable to the planned 133-room hotel and related cash flows.

Contained on the pages following this analysis is an estimate of the discounted cash flows from the property performance projected, along with the estimated costs anticipated to finalize construction of the asset over the next several months.

Our base model projections include the following assumptions:

• Discount Rate - Retail & Office Components: 8.75 % • Terminal Cap Rate – Retail & Office Components: 6.25% • Discount Rate – Hotel: 10.00% • Terminal Cap Rate – Hotel: 7.25% • Discount Rate – Phase II land as entitled for additional 300 residential units: 25% • Present Value today based on the time period shown, calculated from September 30, 2015 forward, assuming construction completion in accordance with the assumed phasing schedule set forth in this report. • Operating EBITDA and land sale proceeds as set forth in the prior analysis and financial projections. • Remaining project costs (excluding land acquisition cost developer fees and financing costs) as of the valuation date estimated at approximately $123.2 million, including $95.55 million for remaining retail and office components and $27.67 million for the hotel.

The obvious variations set forth below are examples of the valuation results which occur under differing scenarios related to discount and cap rates. In our opinion, we believe the base modeling results reflecting the discounting process as set forth above and the financial performance projections as derived from our the appraiser’s market analysis provide the best indication of value in the case of the subject property as of the date of valuation.

Marquette Advisors Page 103 Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

Tivoli Village at Queensridge -- Retail & Office Space Resale - Cap Rate Matrix Cash Flow Before Debt Service plus Property Resale in Year 9, Sep-2024

Net P.V. of P.V. of P.V. of P.V. of P.V. of P.V. of P.V. of For the Proceeds Property Property Property Property Property Property Property Cap Rates From Sale @ 8.00% @ 8.25% @ 8.50% @ 8.75% @ 9.00% @ 9.25% @ 9.50% ______

5.25% $532,699,962 $307,484,873 $300,731,741 $294,127,696 $287,669,100 $281,352,413 $275,174,187 $269,131,067 5.50% 508,486,327 295,372,027 288,868,350 282,508,065 276,287,676 270,203,783 264,253,072 258,432,320 5.75% 486,378,226 284,312,472 278,036,559 271,898,836 265,895,942 260,024,599 254,281,619 248,663,899 6.00% 466,112,467 274,174,547 268,107,416 262,173,710 256,370,185 250,693,680 245,141,121 239,709,513 6.25% 447,467,968 264,847,656 258,972,605 253,226,594 247,606,488 242,109,235 236,731,862 231,471,478 6.50% 430,257,662 256,238,218 250,540,472 244,967,718 239,516,923 234,185,132 228,969,470 223,867,138 6.75% 414,322,193 248,266,516 242,732,941 237,320,610 232,026,584 226,847,999 221,782,070 216,826,082 7.00% 399,524,971 240,864,221 235,483,091 230,219,725 225,071,269 220,034,947 215,108,055 210,287,959 7.25% 385,748,248 233,972,430 228,733,231 223,608,555 218,595,632 213,691,761 208,894,317 204,200,741

Source: Marquette Advisors

Discounted Cash Flow Analysis -- as of 9-30-15 Tivoli Village Hotel Development (133 Guest Rooms)

Projected Net Cash Flows by Year Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 ($9,223,755) ($18,447,510) $2,882,585 $3,547,175 $3,621,018 $3,696,425 $3,756,753 $3,852,066 $3,932,371

Present Value of Future Cash Flows Discount Rate 10.00% PV of Cash Flows $ (10,982,883)

Present Value of Residual Projected Year 9 NOI (Yr ending 9-30-24) $ 3,932,371 Yr 8, exit year Cap Rate 7.25% Projected Yr 8 Value (as of 9-30-23) $ 53,154,807 Present Value Factor, FV of 1 @ 10.0% 0.466507 PV of Residual $ 24,797,089

Present Value Summary PV of Cash Flows $ (10,982,883) PV of Residual $ 24,797,089 Indicated Present Value as-is, as of 9-30-15 $13,814,207 (Rounded) $13,800,000 Number of Hotel Rooms 133 Present Value per Room $103,759

Source: Marquette Advisors

Based on our analysis and the income (DCF) approach, the appraiser has reached a value conclusion for the operating components of Tivoli Village at Queensridge (retail and office village) of $247,500,000, along with the planned 133-room hotel at $13,800,000. Adding the present value of the residential land parcel at $20,000,000 results in a fair value estimate for the subject property as of September 30, 2015, as follows:

TWO HUNDRED EIGHTY ONE MILLION DOLLARS�$281,000,000

Marquette Advisors Page 104 Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

FINAL RECONCILIATION OF VALUE

Based on the Discounted Cash Flow approach as presented herein, utilizing the income capitalization and discounting process as described above, the estimated Fair Value of the property as of September 30, 2015, subject to all extraordinary assumptions and limiting conditions outlined in this report is:

TWO HUNDRED EIGHTY ONE MILLION DOLLARS�$281,000,000

Marquette Advisors Page 105 Tivoli Village at Queensridge Las Vegas, Nevada Fair Value Appraisal

CERTIFICATE OF APPRAISER

We certify, to the best of our knowledge and belief, that:

1. The statements of fact contained 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, unbiased professional analyses, opinions and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and we have no personal interest or bias with respect to the parties involved. 4. Our compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. 5. Our value conclusions as well as other opinions expressed herein are not based upon a requested minimum valuation, specific valuation or the approval of a loan. 6. Our analyses, opinions and conclusions were developed and this report has been prepared in conformity with the requirements of the Uniform Standards of Professional Appraisal Practice (USPAP) and International Accounting Standards. We have read, understood and satisfied the competency provision of the USPAP, and we have not relied upon any departure provisions of USPAP. 7. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 8. Mr. Louis W. Frillman, MAI, CRE is a licensed appraiser in the state of Minnesota, License Number AP-4000728. Mr. Frillman has obtained a temporary practice permit from the State of Nevada for purposes of this valuation assignment. 9. As of the date of this report, Louis W. Frillman, MAI, CRE has completed the requirements of the continuing education program of the Appraisal Institute. 10. The undersigned have made personal inspections of the property that is the subject of this report on multiple dates in October of 2015. Louis W. Frillman, MAI, CRE personally inspected the subject property. 11. No one provided significant valuation assistance to the person signing this report. 12. The appraiser’s analyses, opinions and conclusions were developed and this report is intended to comply with the appraisal related mandates within Title XI of the Federal Financial Institution’s Reform, Recovery and Enforcement Act of 1989 (FIRREA). 13. The date of this report, November 5, 2015, indicates that our perspective of the market conditions as of the effective date of the appraisal, September 30, 2015, was current. 14. The appraiser’s opinion of the Fair Value of the property, as defined in International Accounting Standards guidelines, for the subject as of September 30, 2015, subject to the assumptions and limiting conditions set forth in this report is: $281,000,000.

Louis W. Frillman, MAI, CRE NV Appraiser Temporary Practice Permit Number: ATMP.0012927.CG

Marquette Advisors Page 106

ADDENDA

ENGAGEMENT LETTER

RENT ROLL

Tivoli Village at Queensridge -- Retail & Office Space Presentation Rent Roll & Current Term Tenant Summary As of Oct-2015

Tenant Name Floor Rate & Amount Type & Suite Number SqFt per Year Changes Changes Lease Dates & Term Bldg Share per Month on to ______

1 Ameli Heart Center $29.40 Dec-2017 $30.00 Office 7,818 $229,849 Dec-2018 $30.60 Dec-2014 to Nov-2024 2.14% $2.45 Dec-2019 $31.20 120 Months $19,154 Dec-2020 $31.80 Dec-2021 $32.40 Dec-2022 $33.00 Dec-2023 $33.60

2 BlueIP $18.49 Apr-2016 $19.05 Office 4,171 $77,136 Apr-2017 $19.62 Apr-2015 to Mar-2022 1.14% $1.54 Apr-2018 $20.21 84 Months $6,428 Apr-2019 $20.81 Apr-2020 $21.44 Apr-2021 $22.08

3 Colonial Life $28.20 Apr-2015 $28.91 Office 4,717 $133,019 Apr-2016 $29.63 Apr-2014 to Mar-2024 1.29% $2.35 Apr-2017 $30.37 120 Months $11,085 Apr-2018 $31.13 Apr-2019 $31.91 Apr-2020 $32.70 Apr-2021 $33.52 Apr-2022 $34.36 Apr-2023 $35.22

4 CPM Management Office $0.00 - - Office 4,258 $0 Jan-2014 to Dec-2023 1.17% $0.00 120 Months $0

5 Duetto Research $28.20 Dec-2015 $29.66 Office 4,620 $130,284 Dec-2016 $30.55 Dec-2014 to Nov-2024 1.27% $2.35 Dec-2017 $31.47 120 Months $10,857 Dec-2018 $32.41 Dec-2019 $33.39 Dec-2020 $34.39

6 First American Title $28.27 Jan-2015 $28.98 Office 7,654 $216,379 Jan-2016 $29.70 Jan-2014 to Dec-2023 2.10% $2.36 Jan-2017 $30.44 120 Months $18,032 Jan-2018 $31.20 Jan-2019 $31.98 Jan-2020 $32.78 Jan-2021 $33.60 Jan-2022 $34.44 Jan-2023 $35.31

7 Interface $28.20 Jan-2015 $28.91 Office 6,770 $190,914 Jan-2016 $29.63 Jan-2014 to Dec-2023 1.85% $2.35 Jan-2017 $30.37 120 Months $15,910 Jan-2018 $31.13 Jan-2019 $31.91 Jan-2020 $32.70 Jan-2021 $33.52 Jan-2022 $34.36 Jan-2023 $35.22

8 Kolesar & Letham Law $20.92 Jun-2012 $24.75 Office 31,009 $648,848 Jun-2013 $28.71 Jun-2011 to May-2021 8.49% $1.74 Jun-2014 $29.28 120 Months $54,071 Jun-2015 $29.87 Jun-2016 $30.47 Jun-2017 $31.08 Jun-2018 $31.70 Jun-2019 $32.33 Jun-2020 $32.33

9 Merril Lynch $25.80 Jun-2012 $26.45 Office 27,072 $698,458 Jun-2013 $27.11 Jun-2011 to May-2021 7.41% $2.15 Jun-2014 $27.78 120 Months $58,205 Jun-2015 $28.48 Jun-2016 $29.19 Jun-2017 $29.92 Jun-2018 $30.67 Jun-2019 $31.43 Jun-2020 $32.22

10 Classic Car Holdings $360.00 Feb-2017 $370.80 Office 2,270 $817,200 Feb-2018 $381.92 Feb-2016 to Jan-2021 0.62% $30.00 Feb-2019 $393.38 60 Months $68,100 Feb-2020 $405.18

11 Gentile Cristalli $30.60 Jul-2016 $31.44 Office 4,003 $122,492 Jun-2017 $29.64 Oct-2015 to Sep-2023 1.10% $2.55 Oct-2017 $30.60 96 Months $10,208 Oct-2018 $31.44 Oct-2019 $32.40 Oct-2020 $33.36 Oct-2021 $34.44 Oct-2022 $35.40

12 Gentile Cristalli $28.80 Oct-2016 $29.64 Office 3,447 $99,274 Oct-2017 $30.60 Oct-2015 to Sep-2023 0.94% $2.40 Oct-2018 $31.44 96 Months $8,273 Oct-2019 $32.40 Oct-2020 $33.36 Oct-2021 $34.44 Oct-2022 $35.40

13 Regus $32.76 Jun-2012 $33.72 Office 12,635 $413,923 Jun-2013 $34.68 Jul-2011 to Jun-2021 3.46% $2.73 Jun-2014 $35.76 120 Months $34,494 Jun-2015 $36.84 Jun-2016 $37.92 Jun-2017 $39.00 Jun-2018 $40.20 Jun-2019 $41.40 Jun-2020 $42.60

14 Jolly Urga $30.00 Dec-2017 $30.60 Office 11,184 $335,520 Dec-2018 $31.20 Dec-2016 to Nov-2026 3.06% $2.50 Dec-2019 $31.80 120 Months $27,960 Nov-2020 $32.40 Nov-2021 $33.00 Dec-2022 $33.72 Dec-2023 $34.44 Dec-2024 $35.16 Dec-2025 $35.88

15 Sklar Williams $25.80 Jan-2015 $26.40 Office 8,648 $223,118 Jan-2016 $27.00 Jan-2012 to Dec-2021 2.37% $2.15 Jan-2017 $27.60 120 Months $18,593 Jan-2018 $28.20 Jan-2019 $28.80 Jan-2020 $29.40 Jan-2021 $30.00

16 Summerlin Dental $30.68 Jan-2015 $31.45 Office 4,005 $122,873 Jan-2016 $32.23 Jan-2014 to Dec-2023 1.10% $2.56 Jan-2017 $33.04 120 Months $10,239 Jan-2018 $33.86 Jan-2019 $34.71 Jan-2020 $35.58 Jan-2021 $36.47 Jan-2022 $37.38 Jan-2023 $38.32

17 Ticor Title $28.80 May-2013 $29.52 Office 5,644 $162,547 May-2014 $30.24 May-2012 to Apr-2018 1.55% $2.40 May-2015 $30.96 72 Months $13,546 May-2016 $31.80 May-2017 $32.64

18 ANGL $19.17 Jan-2018 $19.74 Retail 3,130 $60,000 Jan-2019 $20.34 Jan-2013 to Dec-2022 0.86% $1.60 Jan-2020 $20.95 120 Months $5,000 Jan-2021 $21.58 Jan-2022 $22.22

19 Sportsworks $22.00 Oct-2018 $22.66 Retail 30,573 $672,606 Oct-2019 $23.34 Oct-2016 to Sep-2026 8.37% $1.83 Oct-2020 $24.04 120 Months $56,051 Oct-2021 $24.76 Oct-2022 $25.50 Oct-2023 $26.27 Oct-2024 $27.06 Oct-2025 $27.87

20 Canter's Deli $60.50 Oct-2017 $62.32 Restaurant 5,000 $302,500 Oct-2018 $64.18 Oct-2016 to Sep-2026 1.37% $5.04 Oct-2019 $66.11 120 Months $25,208 Oct-2020 $68.09 Oct-2021 $70.14 Oct-2022 $72.24 Oct-2023 $74.41 Oct-2024 $76.64 Oct-2025 $78.94

21 Shade Store $58.00 Oct-2017 $59.45 Retail 1,466 $85,028 Oct-2018 $60.94 Oct-2016 to Sep-2026 0.40% $4.83 Oct-2019 $62.46 120 Months $7,086 Oct-2020 $64.02 Oct-2021 $65.62 Oct-2022 $67.26 Oct-2023 $68.94 Oct-2024 $70.67 Oct-2025 $72.43 22 Eye Tech $55.00 Oct-2017 $56.65 Retail 1,369 $75,295 Oct-2018 $58.35 Oct-2016 to Sep-2026 0.37% $4.58 Oct-2019 $60.10 120 Months $6,275 Oct-2020 $61.90 Oct-2021 $63.76 Oct-2022 $65.67 Oct-2023 $67.64 Oct-2024 $69.67 Oct-2025 $71.76

23 Gypsy 05 $40.00 - - Retail 1,246 $49,840 Apr-2015 to Mar-2020 0.34% $3.33 60 Months $4,153

24 BluNoir $42.00 Sep-2012 $45.00 Retail 1,700 $71,400 Sep-2013 $46.35 Sep-2011 to Aug-2021 0.47% $3.50 Sep-2014 $47.74 120 Months $5,950 Sep-2015 $49.17 Sep-2016 $50.65 Sep-2017 $52.17 Sep-2018 $53.73 Sep-2019 $55.34 Sep-2020 $57.00

25 Charming Charlies $0.00 Jul-2012 $12.52 Retail 9,585 $0 Apr-2013 $15.65 May-2011 to Apr-2016 2.62% $0.00 Apr-2016 $22.43 60 Months $0

26 David Barton Gym $0.00 Jan-2014 $5.71 Retail 31,547 $0 Jan-2015 $5.82 Mar-2012 to Feb-2027 8.64% $0.00 Jan-2016 $5.94 180 Months $0 Jan-2017 $6.06 Jan-2018 $6.18 Jan-2019 $6.30 Jan-2020 $6.43 Jan-2021 $6.55 Jan-2022 $6.69 Jan-2023 $6.82 Jan-2024 $6.96 Jan-2025 $7.09 Jan-2026 $7.24 Jan-2027 $7.38

27 Designs by Jeff White $30.00 May-2012 $40.00 Retail 2,113 $63,390 May-2013 $65.00 May-2011 to Apr-2021 0.58% $2.50 May-2017 $75.00 120 Months $5,283

28 Diamanti $30.00 Apr-2016 $40.00 Retail 1,875 $56,250 Apr-2020 $50.00 Apr-2013 to Mar-2023 0.51% $2.50 120 Months $4,688

29 D'Annata $38.00 Jan-2016 $45.00 Retail 1,361 $51,718 Jan-2017 $46.35 Jan-2014 to Dec-2023 0.37% $3.17 Jan-2018 $47.74 120 Months $4,310 Jan-2019 $52.00 Jan-2020 $53.56 Jan-2021 $55.17 Jan-2022 $56.82 Jan-2023 $58.53

30 Kidville $0.00 Jan-2014 $14.82 Retail 10,119 $0 Jan-2015 $15.12 Jun-2011 to May-2021 2.77% $0.00 Jan-2016 $15.42 120 Months $0 Jan-2017 $15.73 Jan-2018 $16.05 Jan-2019 $16.37 Jan-2020 $16.69 Jan-2021 $17.03

31 La Casa De La Habana $35.00 Sep-2013 $40.00 Restaurant 2,566 $89,810 Sep-2014 $45.00 Sep-2012 to Aug-2019 0.70% $2.92 Sep-2015 $46.35 84 Months $7,484 Sep-2016 $47.74 Sep-2017 $49.17 Sep-2018 $50.65

32 Look Style Society (l $30.00 Sep-2016 $30.90 Retail 4,245 $127,350 Sep-2017 $31.83 Sep-2015 to Aug-2025 1.16% $2.50 Sep-2018 $32.78 120 Months $10,613 Sep-2019 $33.77 Sep-2020 $34.78 Sep-2021 $35.82 Sep-2022 $36.90 Sep-2023 $38.00 Sep-2024 $39.14

33 Look Style Society (u $28.80 Sep-2017 $30.00 Retail 11,591 $333,821 Sep-2018 $30.90 Sep-2015 to Aug-2025 3.17% $2.40 Sep-2019 $31.83 120 Months $27,818 Sep-2020 $32.78 Sep-2021 $33.77 Sep-2022 $34.78 Sep-2023 $35.82 Sep-2024 $36.90

34 Shaggy Chic $45.00 Nov-2016 $50.00 Retail 803 $36,135 Nov-2014 to Oct-2019 0.22% $3.75 60 Months $3,011

35 Lorna Jane $30.00 - - Retail 1,924 $57,720 Dec-2014 to Nov-2016 0.53% $2.50 24 Months $4,810

36 William Carr Gallery $10.00 Sep-2015 $15.00 Retail 4,121 $41,210 Mar-2015 to Feb-2016 1.13% $0.83 12 Months $3,434

37 Pac Sun $12.98 Jun-2015 $13.91 Retail 5,391 $70,000 Jun-2016 $14.84 Jun-2014 to May-2017 1.48% $1.08 36 Months $5,833 38 Paper Source $26.72 Mar-2017 $29.08 Retail 3,181 $85,000 Mar-2018 $29.95 Mar-2014 to Feb-2024 0.87% $2.23 Mar-2019 $30.85 120 Months $7,083 Mar-2020 $31.78 Mar-2021 $32.73 Mar-2022 $33.71 Mar-2023 $34.72

39 Queensridge Propertie $0.00 - - Retail 700 $0 Oct-2014 to Sep-2024 0.19% $0.00 120 Months $0

40 Resortation Hardware $33.00 Oct-2017 $40.00 Retail 77,060 $2,542,980 Oct-2021 $42.00 Oct-2016 to Sep-2026 21.10% $2.75 Oct-2022 $44.10 120 Months $211,915 Oct-2023 $46.31 Oct-2024 $48.62 Oct-2025 $51.05

41 Ritual Salon ($15.82) Jul-2011 $0.00 Retail 3,792 ($60,000) Jan-2014 $35.00 May-2011 to Apr-2021 1.04% ($1.32) May-2014 $45.00 120 Months ($5,000) May-2018 $50.00

42 The Market LV $0.00 Jun-2014 $34.25 Retail 21,706 $0 Jun-2017 $39.48 Jun-2012 to May-2022 5.94% $0.00 120 Months $0

43 Vasari $0.00 Jul-2012 $60.00 Retail 3,000 $0 May-2014 $65.00 May-2011 to Apr-2021 0.82% $0.00 May-2018 $70.00 120 Months $0

44 Vasari Shoe Salon $50.00 May-2013 $55.00 Retail 1,143 $57,150 May-2014 $56.65 May-2011 to Apr-2021 0.31% $4.17 May-2015 $58.35 120 Months $4,763 May-2016 $60.10 May-2017 $61.90 May-2018 $63.76 May-2019 $65.67 May-2020 $67.64

45 Pressed Juicery $40.00 Sep-2015 $45.00 Retail 632 $25,280 Sep-2016 $50.00 Sep-2014 to Aug-2019 0.17% $3.33 Sep-2017 $51.00 60 Months $2,107 Sep-2018 $52.02

46 Cupkates $45.00 Nov-2016 $50.00 Retail 477 $21,465 Nov-2014 to Oct-2019 0.13% $3.75 60 Months $1,789

47 Tapas by Alex Stratta $35.00 Jan-2016 $40.00 Restaurant 5,401 $189,035 Jan-2017 $35.00 Jan-2015 to Dec-2021 1.48% $2.92 Jan-2018 $40.00 84 Months $15,753 Jan-2019 $40.80 Jan-2020 $41.62 Jan-2021 $42.45

48 Brio $0.00 May-2014 $40.00 Restaurant 8,228 $0 May-2011 to Apr-2021 2.25% $0.00 120 Months $0

49 Cafe Leone $0.00 May-2011 $44.87 Restaurant 1,779 $0 May-2013 $57.94 Feb-2011 to Jan-2016 0.49% $0.00 May-2014 $59.10 60 Months $0 May-2015 $60.28

50 Cantina Laredo $33.70 Jul-2013 $35.31 Restaurant 6,231 $209,985 Jul-2014 $41.73 Jul-2012 to Jun-2022 1.71% $2.81 Jul-2016 $43.82 120 Months $17,499 Jul-2021 $46.01

51 Echo & Rig $38.00 Dec-2014 $50.00 Restaurant 8,073 $306,774 Dec-2015 $51.00 Dec-2012 to Nov-2022 2.21% $3.17 Dec-2016 $52.02 120 Months $25,565 Dec-2017 $53.06 Dec-2018 $54.12 Dec-2019 $55.20 Dec-2020 $56.31 Dec-2021 $57.43

52 Kabuki $38.00 Apr-2013 $39.14 Restaurant 4,943 $187,834 Apr-2014 $40.31 Apr-2012 to Mar-2022 1.35% $3.17 Apr-2015 $41.52 120 Months $15,653 Apr-2016 $42.77 Apr-2017 $44.05 Apr-2018 $45.37 Apr-2019 $46.73 Apr-2020 $48.13 Apr-2021 $49.57

53 Made LV $35.00 Sep-2015 $35.70 Restaurant 4,770 $166,950 Sep-2016 $36.41 Sep-2014 to Aug-2024 1.31% $2.92 Sep-2017 $37.14 120 Months $13,913 Sep-2018 $37.89 Sep-2019 $38.64 Sep-2020 $39.42 Sep-2021 $40.20 Sep-2022 $41.01 Sep-2023 $41.83

S1 Triad A - Retail $36.00 Oct-2016 $37.08 Retail, Suite: Mo 1 5,000 $180,000 Oct-2017 $38.19 Oct-2015 to Sep-2025 1.37% $3.00 Oct-2018 $39.34 120 Months $15,000 Oct-2019 $40.52 Oct-2020 $41.73 Oct-2021 $42.99 Oct-2022 $44.28 Oct-2023 $45.60 Oct-2024 $46.97 S1 Triad A - Retail $36.00 Oct-2016 $37.08 Retail, Suite: Mo 2 5,000 $180,000 Oct-2017 $38.19 Nov-2015 to Oct-2025 1.37% $3.00 Oct-2018 $39.34 120 Months $15,000 Oct-2019 $40.52 Oct-2020 $41.73 Oct-2021 $42.99 Oct-2022 $44.28 Oct-2023 $45.60 Oct-2024 $46.97 Oct-2025 $48.38

S1 Triad A - Retail $36.00 Oct-2016 $37.08 Retail, Suite: Mo 3 5,000 $180,000 Oct-2017 $38.19 Dec-2015 to Nov-2025 1.37% $3.00 Oct-2018 $39.34 120 Months $15,000 Oct-2019 $40.52 Oct-2020 $41.73 Oct-2021 $42.99 Oct-2022 $44.28 Oct-2023 $45.60 Oct-2024 $46.97 Oct-2025 $48.38

S1 Triad A - Retail $36.00 Oct-2016 $37.08 Retail, Suite: Mo 4 5,000 $180,000 Oct-2017 $38.19 Jan-2016 to Dec-2025 1.37% $3.00 Oct-2018 $39.34 120 Months $15,000 Oct-2019 $40.52 Oct-2020 $41.73 Oct-2021 $42.99 Oct-2022 $44.28 Oct-2023 $45.60 Oct-2024 $46.97 Oct-2025 $48.38

S1 Triad A - Retail $36.00 Oct-2016 $37.08 Retail, Suite: Mo 5 5,000 $180,000 Oct-2017 $38.19 Feb-2016 to Jan-2026 1.37% $3.00 Oct-2018 $39.34 120 Months $15,000 Oct-2019 $40.52 Oct-2020 $41.73 Oct-2021 $42.99 Oct-2022 $44.28 Oct-2023 $45.60 Oct-2024 $46.97 Oct-2025 $48.38

S1 Triad A - Retail $36.00 Oct-2016 $37.08 Retail, Suite: Mo 6 5,000 $180,000 Oct-2017 $38.19 Mar-2016 to Feb-2026 1.37% $3.00 Oct-2018 $39.34 120 Months $15,000 Oct-2019 $40.52 Oct-2020 $41.73 Oct-2021 $42.99 Oct-2022 $44.28 Oct-2023 $45.60 Oct-2024 $46.97 Oct-2025 $48.38

S1 Triad A - Retail $36.00 Oct-2016 $37.08 Retail, Suite: Mo 7 5,000 $180,000 Oct-2017 $38.19 Apr-2016 to Mar-2026 1.37% $3.00 Oct-2018 $39.34 120 Months $15,000 Oct-2019 $40.52 Oct-2020 $41.73 Oct-2021 $42.99 Oct-2022 $44.28 Oct-2023 $45.60 Oct-2024 $46.97 Oct-2025 $48.38

S1 Triad A - Retail $36.00 Oct-2016 $37.08 Retail, Suite: Mo 8 311 $11,196 Oct-2017 $38.19 May-2016 to Apr-2026 0.09% $3.00 Oct-2018 $39.34 120 Months $933 Oct-2019 $40.52 Oct-2020 $41.73 Oct-2021 $42.99 Oct-2022 $44.28 Oct-2023 $45.60 Oct-2024 $46.97 Oct-2025 $48.38

S2 Triad A - Office $31.00 Oct-2016 $31.93 Office, Suite: Mo 1 5,000 $155,000 Oct-2017 $32.89 Oct-2015 to Sep-2025 1.37% $2.58 Oct-2018 $33.87 120 Months $12,917 Oct-2019 $34.89 Oct-2020 $35.94 Oct-2021 $37.02 Oct-2022 $38.13 Oct-2023 $39.27 Oct-2024 $40.45

S2 Triad A - Office $31.00 Oct-2016 $31.93 Office, Suite: Mo 2 5,000 $155,000 Oct-2017 $32.89 Nov-2015 to Oct-2025 1.37% $2.58 Oct-2018 $33.87 120 Months $12,917 Oct-2019 $34.89 Oct-2020 $35.94 Oct-2021 $37.02 Oct-2022 $38.13 Oct-2023 $39.27 Oct-2024 $40.45 Oct-2025 $41.66

S2 Triad A - Office $31.00 Oct-2016 $31.93 Office, Suite: Mo 3 5,000 $155,000 Oct-2017 $32.89 Dec-2015 to Nov-2025 1.37% $2.58 Oct-2018 $33.87 120 Months $12,917 Oct-2019 $34.89 Oct-2020 $35.94 Oct-2021 $37.02 Oct-2022 $38.13 Oct-2023 $39.27 Oct-2024 $40.45 Oct-2025 $41.66

S2 Triad A - Office $31.00 Oct-2016 $31.93 Office, Suite: Mo 4 5,000 $155,000 Oct-2017 $32.89 Jan-2016 to Dec-2025 1.37% $2.58 Oct-2018 $33.87 120 Months $12,917 Oct-2019 $34.89 Oct-2020 $35.94 Oct-2021 $37.02 Oct-2022 $38.13 Oct-2023 $39.27 Oct-2024 $40.45 Oct-2025 $41.66

S2 Triad A - Office $31.00 Oct-2016 $31.93 Office, Suite: Mo 5 3,772 $116,932 Oct-2017 $32.89 Feb-2016 to Jan-2026 1.03% $2.58 Oct-2018 $33.87 120 Months $9,744 Oct-2019 $34.89 Oct-2020 $35.94 Oct-2021 $37.02 Oct-2022 $38.13 Oct-2023 $39.27 Oct-2024 $40.45 Oct-2025 $41.66

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 13 5,000 $210,000 Oct-2018 $44.56 Oct-2016 to Sep-2026 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 14 5,000 $210,000 Oct-2018 $44.56 Nov-2016 to Oct-2026 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 15 5,000 $210,000 Oct-2018 $44.56 Dec-2016 to Nov-2026 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 16 5,000 $210,000 Oct-2018 $44.56 Jan-2017 to Dec-2026 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 17 5,000 $210,000 Oct-2018 $44.56 Feb-2017 to Jan-2027 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 18 5,000 $210,000 Oct-2018 $44.56 Mar-2017 to Feb-2027 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 19 5,000 $210,000 Oct-2018 $44.56 Apr-2017 to Mar-2027 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 20 5,000 $210,000 Oct-2018 $44.56 May-2017 to Apr-2027 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 21 5,000 $210,000 Oct-2018 $44.56 Jun-2017 to May-2027 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 22 5,000 $210,000 Oct-2018 $44.56 Jul-2017 to Jun-2027 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 23 5,000 $210,000 Oct-2018 $44.56 Aug-2017 to Jul-2027 1.37% $3.50 Oct-2019 $45.89 120 Months $17,500 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S3 Triad B - Retail $42.00 Oct-2017 $43.26 Retail, Suite: Mo 24 2,105 $88,410 Oct-2018 $44.56 Sep-2017 to Aug-2027 0.58% $3.50 Oct-2019 $45.89 120 Months $7,367 Oct-2020 $47.27 Oct-2021 $48.69 Oct-2022 $50.15 Oct-2023 $51.65 Oct-2024 $53.20 Oct-2025 $54.80 Oct-2026 $56.44

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 13 5,000 $180,000 Oct-2018 $38.19 Oct-2016 to Sep-2026 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 14 5,000 $180,000 Oct-2018 $38.19 Nov-2016 to Oct-2026 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 15 5,000 $180,000 Oct-2018 $38.19 Dec-2016 to Nov-2026 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 16 5,000 $180,000 Oct-2018 $38.19 Jan-2017 to Dec-2026 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 17 5,000 $180,000 Oct-2018 $38.19 Feb-2017 to Jan-2027 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 18 5,000 $180,000 Oct-2018 $38.19 Mar-2017 to Feb-2027 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 19 5,000 $180,000 Oct-2018 $38.19 Apr-2017 to Mar-2027 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 20 5,000 $180,000 Oct-2018 $38.19 May-2017 to Apr-2027 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 21 5,000 $180,000 Oct-2018 $38.19 Jun-2017 to May-2027 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 22 5,000 $180,000 Oct-2018 $38.19 Jul-2017 to Jun-2027 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 23 5,000 $180,000 Oct-2018 $38.19 Aug-2017 to Jul-2027 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $36.00 Oct-2017 $37.08 Office, Suite: Mo 24 5,000 $180,000 Oct-2018 $38.19 Sep-2017 to Aug-2027 1.37% $3.00 Oct-2019 $39.34 120 Months $15,000 Oct-2020 $40.52 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 25 5,000 $185,400 Oct-2019 $39.34 Oct-2017 to Sep-2027 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 26 5,000 $185,400 Oct-2019 $39.34 Nov-2017 to Oct-2027 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 27 5,000 $185,400 Oct-2019 $39.34 Dec-2017 to Nov-2027 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 28 5,000 $185,400 Oct-2019 $39.34 Jan-2018 to Dec-2027 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 29 5,000 $185,400 Oct-2019 $39.34 Feb-2018 to Jan-2028 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 30 5,000 $185,400 Oct-2019 $39.34 Mar-2018 to Feb-2028 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 31 5,000 $185,400 Oct-2019 $39.34 Apr-2018 to Mar-2028 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 32 5,000 $185,400 Oct-2019 $39.34 May-2018 to Apr-2028 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 33 5,000 $185,400 Oct-2019 $39.34 Jun-2018 to May-2028 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 34 5,000 $185,400 Oct-2019 $39.34 Jul-2018 to Jun-2028 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 35 5,000 $185,400 Oct-2019 $39.34 Aug-2018 to Jul-2028 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $37.08 Oct-2018 $38.19 Office, Suite: Mo 36 5,000 $185,400 Oct-2019 $39.34 Sep-2018 to Aug-2028 1.37% $3.09 Oct-2020 $40.52 120 Months $15,450 Oct-2021 $41.73 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S4 Triad B - Office $38.19 Oct-2019 $39.34 Office, Suite: Mo 37 2,627 $100,331 Oct-2020 $40.52 Oct-2018 to Sep-2028 0.72% $3.18 Oct-2021 $41.73 120 Months $8,361 Oct-2022 $42.99 Oct-2023 $44.28 Oct-2024 $45.60 Oct-2025 $46.97 Oct-2026 $48.38 Oct-2027 $49.83

S5 Triad C - Retail $50.00 Apr-2018 $51.50 Retail, Suite: Mo 19 5,000 $250,000 Apr-2019 $53.05 Apr-2017 to Mar-2027 1.37% $4.17 Apr-2020 $54.64 120 Months $20,833 Apr-2021 $56.28 Apr-2022 $57.96 Apr-2023 $59.70 Apr-2024 $61.49 Apr-2025 $63.34 Apr-2026 $65.24

S5 Triad C - Retail $50.00 May-2018 $51.50 Retail, Suite: Mo 20 5,000 $250,000 May-2019 $53.05 May-2017 to Apr-2027 1.37% $4.17 May-2020 $54.64 120 Months $20,833 May-2021 $56.28 May-2022 $57.96 May-2023 $59.70 May-2024 $61.49 May-2025 $63.34 May-2026 $65.24

S5 Triad C - Retail $50.00 Jun-2018 $51.50 Retail, Suite: Mo 21 5,000 $250,000 Jun-2019 $53.05 Jun-2017 to May-2027 1.37% $4.17 Jun-2020 $54.64 120 Months $20,833 Jun-2021 $56.28 Jun-2022 $57.96 Jun-2023 $59.70 Jun-2024 $61.49 Jun-2025 $63.34 Jun-2026 $65.24

S5 Triad C - Retail $50.00 Jul-2018 $51.50 Retail, Suite: Mo 22 5,000 $250,000 Jul-2019 $53.05 Jul-2017 to Jun-2027 1.37% $4.17 Jul-2020 $54.64 120 Months $20,833 Jul-2021 $56.28 Jul-2022 $57.96 Jul-2023 $59.70 Jul-2024 $61.49 Jul-2025 $63.34 Jul-2026 $65.24

S5 Triad C - Retail $50.00 Aug-2018 $51.50 Retail, Suite: Mo 23 5,000 $250,000 Aug-2019 $53.05 Aug-2017 to Jul-2027 1.37% $4.17 Aug-2020 $54.64 120 Months $20,833 Aug-2021 $56.28 Aug-2022 $57.96 Aug-2023 $59.70 Aug-2024 $61.49 Aug-2025 $63.34 Aug-2026 $65.24

S5 Triad C - Retail $50.00 Sep-2018 $51.50 Retail, Suite: Mo 24 1,144 $57,200 Sep-2019 $53.05 Sep-2017 to Aug-2027 0.31% $4.17 Sep-2020 $54.64 120 Months $4,767 Sep-2021 $56.28 Sep-2022 $57.96 Sep-2023 $59.70 Sep-2024 $61.49 Sep-2025 $63.34 Sep-2026 $65.24

S6 Triad C - Office $40.00 Apr-2018 $41.20 Office, Suite: Mo 19 5,000 $200,000 Apr-2019 $42.44 Apr-2017 to Mar-2027 1.37% $3.33 Apr-2020 $43.71 120 Months $16,667 Apr-2021 $45.02 Apr-2022 $46.37 Apr-2023 $47.76 Apr-2024 $49.19 Apr-2025 $50.67 Apr-2026 $52.19

S6 Triad C - Office $40.00 May-2018 $41.20 Office, Suite: Mo 20 5,000 $200,000 May-2019 $42.44 May-2017 to Apr-2027 1.37% $3.33 May-2020 $43.71 120 Months $16,667 May-2021 $45.02 May-2022 $46.37 May-2023 $47.76 May-2024 $49.19 May-2025 $50.67 May-2026 $52.19

S6 Triad C - Office $40.00 Jun-2018 $41.20 Office, Suite: Mo 21 5,000 $200,000 Jun-2019 $42.44 Jun-2017 to May-2027 1.37% $3.33 Jun-2020 $43.71 120 Months $16,667 Jun-2021 $45.02 Jun-2022 $46.37 Jun-2023 $47.76 Jun-2024 $49.19 Jun-2025 $50.67 Jun-2026 $52.19

S6 Triad C - Office $40.00 Jul-2018 $41.20 Office, Suite: Mo 22 5,000 $200,000 Jul-2019 $42.44 Jul-2017 to Jun-2027 1.37% $3.33 Jul-2020 $43.71 120 Months $16,667 Jul-2021 $45.02 Jul-2022 $46.37 Jul-2023 $47.76 Jul-2024 $49.19 Jul-2025 $50.67 Jul-2026 $52.19

S6 Triad C - Office $40.00 Aug-2018 $41.20 Office, Suite: Mo 23 5,000 $200,000 Aug-2019 $42.44 Aug-2017 to Jul-2027 1.37% $3.33 Aug-2020 $43.71 120 Months $16,667 Aug-2021 $45.02 Aug-2022 $46.37 Aug-2023 $47.76 Aug-2024 $49.19 Aug-2025 $50.67 Aug-2026 $52.19

S6 Triad C - Office $40.00 Sep-2018 $41.20 Office, Suite: Mo 24 5,000 $200,000 Sep-2019 $42.44 Sep-2017 to Aug-2027 1.37% $3.33 Sep-2020 $43.71 120 Months $16,667 Sep-2021 $45.02 Sep-2022 $46.37 Sep-2023 $47.76 Sep-2024 $49.19 Sep-2025 $50.67 Sep-2026 $52.19

S6 Triad C - Office $40.00 Oct-2018 $41.20 Office, Suite: Mo 25 5,000 $200,000 Oct-2019 $42.44 Oct-2017 to Sep-2027 1.37% $3.33 Oct-2020 $43.71 120 Months $16,667 Oct-2021 $45.02 Oct-2022 $46.37 Oct-2023 $47.76 Oct-2024 $49.19 Oct-2025 $50.67 Oct-2026 $52.19

S6 Triad C - Office $40.00 Nov-2018 $41.20 Office, Suite: Mo 26 5,000 $200,000 Nov-2019 $42.44 Nov-2017 to Oct-2027 1.37% $3.33 Nov-2020 $43.71 120 Months $16,667 Nov-2021 $45.02 Nov-2022 $46.37 Nov-2023 $47.76 Nov-2024 $49.19 Nov-2025 $50.67 Nov-2026 $52.19

S6 Triad C - Office $40.00 Dec-2018 $41.20 Office, Suite: Mo 27 2,460 $98,400 Dec-2019 $42.44 Dec-2017 to Nov-2027 0.67% $3.33 Dec-2020 $43.71 120 Months $8,200 Dec-2021 $45.02 Dec-2022 $46.37 Dec-2023 $47.76 Dec-2024 $49.19 Dec-2025 $50.67 Dec-2026 $52.19

PWC REAL ESTATE INVESTOR SURVEY (Relevant Sections Only)

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Second Quarter 2015 Investors Monitor Construction Levels Across Markets

PwC Real Estate Investor Survey™

As a subscriber, I may not distribute this report, in part or in whole, without the prior written permission of PwC. National Regional Mall Market

Strong economic growth and basis points this quarter, marking its KEY 2Q15 SURVEY STATS* steady employment gains are helping highest quarterly increase in two to increase consumer traffic and years (see Table 1). Even though Tenant Retention Rate: spending at many regional malls, im - store closures continue to occur, the Average 72.0% = proving retail sales per square foot. near-term outlook for this property Range 50.0% to 80.0% “We have seen modest growth in sector remains positive among our retail sales at our malls and expect surveyed investors. Months of Free Rent(1): this to continue,” says a participant. An optimistic viewpoint for the Average (2) “The best malls are getting much national regional mall market is also Range (2) better in terms of retail sales growth, reflected in its average overall cap % of participants using (2) while Class-B malls are reporting flat rate, which falls 25 basis points to to slightly higher growth in retail become the lowest average cap rate Average Overall Cap Rates: sales,” remarks another. ever reported for this market since Class A+ 4.83% t Combined, these positive trends its Survey debut in 1990. While the Class A 5.38% t are enabling many mall owners to average cap rate for both the Class- Class B+ 6.33% = raise rental rates. In fact, this mar- A+ and Class-A mall segments also * t, s, = change from prior quarter ket’s average initial-year market rent slips this quarter, it holds steady for (1) on a ten-year lease (2) 80% are not using free rent change rate assumption increases 23 the Class-B+ mall segment. F

Table 1 NATIONAL REGIONAL MALL MARKET(d) Second Quarter 2015

CURRENT LAST QUARTER 1 YEAR AGO 3 YEARS AGO 5 YEARS AGO DISCOUNT RATE (IRR)a Range 5.50% – 12.00% 5.50% – 12.00% 6.00% – 12.00% 5.50% – 14.00% 6.75% – 14.00% Average 7.83% 8.19% 8.67% 9.33% 10.04% Change (Basis Points) – 36 – 84 – 150 – 221 OVERALL CAP RATE (OAR)a Range 4.00% – 9.00% 4.00% – 9.00% 4.25% – 10.00% 4.75% – 10.50% 5.00% – 10.50% Average 6.13% 6.38% 6.60% 7.23% 7.93% Change (Basis Points) – 25 – 47 – 110 – 180 RESIDUAL CAP RATE Range 4.25% – 9.00% 4.75% – 10.00% 4.50% – 11.00% 5.00% – 12.00% 5.00% – 12.00% Average 6.65% 6.96% 6.94% 7.56% 8.23% Change (Basis Points) – 31 – 29 – 91 – 158 MARKET RENT CHANGEb Range 1.00% – 5.00% 1.00% – 5.00% 1.00% – 5.00% (2.00%) – 3.00% (3.00%) – 5.00% Average 2.90% 2.67% 3.00% 1.58% 0.58% Change (Basis Points) + 23 – 10 + 132 + 232 EXPENSE CHANGEb Range 1.00% – 5.00% 1.00% – 5.00% 0.00% – 3.00% 0.00% – 4.00% 0.00% – 4.00% Average 2.80% 2.71% 2.17% 2.25% 2.21% Change (Basis Points) + 9 + 63 + 55 + 59 MARKETING TIMEc Range 3 – 24 4 – 24 3 – 18 3 – 18 3 – 18 Average 9.0 9.7 8.8 8.4 7.9 Change (t, s, =) tss s

a. Rate on unleveraged, all-cash transactions b. Initial rate of change c. In months d. relates to Class A+, A, B+, and B malls

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Despite limited additions to sup- empty anchor spaces,” shares a par- KEY 2Q15 SURVEY STATS* ply and an improving U.S. economy, ticipant. Certain property owners note

the number of assets sold in the na- that some health care pro viders have Tenant Retention Rate: tional power center market was down been settling into empty big-box Average 70.0% s on both a quarterly and 12-month spaces while other larger units have Range 60.0% to 85.0% rolling-average basis as of the first been split in order to “re-lease to

quarter of 2015, according to Real junior anchor tenants with better Months of Free Rent(1): Capital Analytics. Specifically, prop- credit profiles.” Average 5 s erty sales were down 2.0% on a year- Despite such difficulties, shifts in Range 1 to 12 over-year basis and down 62.0% on this market’s quarterly key indicators = a quarterly basis. suggest a positive outlook among % of participants using 50.0% Empty big-box stores and limited investors for this sector. First, the Average Overall Cap Rates: re-leasing options remain challenges average overall cap rate slips slightly 75.0% big-box space 6.73% = for many investors when reviewing to 6.54% while both the average ten- 85.0% big-box space 6.63% t both offerings and owned assets. “I ant retention rate and average ini- = am still looking for new big-box re - tial-year market rent change rate 100.0% big-box space 6.60% tailers to come into this sector with increase slightly to 70.0% and 1.75%, * t, s, = change from prior quarter (1) on a ten-year lease some gusto and lease some of the respectively. F

Table 2 NATIONAL POWER CENTER MARKET Second Quarter 2015

CURRENT LAST QUARTER 1 YEAR AGO 3 YEARS AGO 5 YEARS AGO DISCOUNT RATE (IRR)a Range 6.00% – 10.00% 6.00% – 10.00% 6.00% – 10.00% 6.00% – 11.00% 8.50% – 12.00% Average 7.90% 7.92% 8.13% 8.32% 9.90% Change (Basis Points) – 2 – 23 – 42 – 200 OVERALL CAP RATE (OAR)a Range 5.50% – 8.00% 5.50% – 8.00% 5.50% – 8.00% 6.00% – 9.00% 7.50% – 10.00% Average 6.54% 6.56% 6.65% 7.14% 8.70% Change (Basis Points) – 2 – 11 – 60 – 216 RESIDUAL CAP RATE Range 5.75% – 9.00% 6.00% – 9.00% 6.00% – 9.00% 6.00% – 9.00% 7.50% – 10.00% Average 6.96% 7.02% 7.15% 7.41% 8.65% Change (Basis Points) – 6 – 19 – 45 – 169 MARKET RENT CHANGEb Range 0.00% – 3.00% 0.00% – 3.00% 0.00% – 3.00% 0.00% – 3.00% (10.00%) – 3.00% Average 1.75% 1.67% 1.40% 1.21% (0.70%) Change (Basis Points) + 8 + 35 + 54 + 245 EXPENSE CHANGEb Range 2.00% – 3.00% 2.00% – 3.00% 0.00% – 3.00% 0.00% – 3.00% 2.00% – 3.00% Average 2.83% 2.83% 2.50% 2.54% 2.90% Change (Basis Points) 0 + 33 + 29 – 7 MARKETING TIMEc Range 2 – 18 2 – 18 2 – 18 3 – 18 3 – 18 Average 6.0 6.3 6.1 7.1 10.2 Change (t, s, =) tttt

a. Rate on unleveraged, all-cash transactions b. Initial rate of change c. In months

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Consistent improvement in its un- of 6.7%. “We look for shopping center KEY 2Q15 SURVEY STATS* derling vacancy rate and robust U.S investments in the Northeast, South,

economic growth continue to draw and California,” shares a participant. Tenant Retention Rate: investors to the national strip shop- “We like owning strip shopping cen- Average 72.0% = ping center market in search of acqui- ters in cities south of the Mason Range 60.0% to 85.0% sition and development opportunities. Dixon Line,” reveals another. In fact,

In the first quarter of 2015, the vacan- Suburban Maryland, Norfolk, and Months of Free Rent(1): cy rate for the U.S. neighborhood and Charlotte also reported vacancy rates Average 3 s community shopping center sector below the national average in the first Range 0 to 6 declined to 10.1% – down 100 basis quarter of 2015. % of participants using 75.0% = points from its historical peak reached Another city cited as a preferred in 2011, as per Reis. locale for strip shopping center invest- Market Conditions Favor: Select metros that outperformed ing is Pittsburgh, where the vacancy Buyers 13.0% = the national vacancy rate during the rate was 8.0% in the first quarter of Sellers 38.0% = first three months of 2015 include Los 2015, as per Reis. “We like Pittsburgh = Angeles with a vacancy rate of 4.9%; due to its low supply of buildable Neither 49.0% Long Island with a vacancy rate of land, which limits the potential for * t, s, = change from prior quarter (1) on a ten-year lease 5.3%; and Miami with a vacancy rate new supply,” says a participant. F

Table 3 NATIONAL STRIP SHOPPING CENTER MARKET Second Quarter 2015

CURRENT LAST QUARTER 1 YEAR AGO 3 YEARS AGO 5 YEARS AGO DISCOUNT RATE (IRR)a Range 6.00% – 10.75% 6.00% – 11.00% 6.25% – 11.00% 6.50% – 12.50% 7.00% – 12.50% Average 7.86% 8.09% 8.31% 8.41% 9.46% Change (Basis Points) – 23 – 45 – 55 – 160 OVERALL CAP RATE (OAR)a Range 4.50% – 10.00% 5.00% – 10.00% 5.00% – 10.00% 5.50% – 9.50% 7.00% – 11.40% Average 6.91% 7.00% 7.09% 7.18% 8.38% Change (Basis Points) – 9 – 18 – 27 – 147 RESIDUAL CAP RATE Range 5.00% – 9.75% 5.00% – 10.00% 6.00% – 10.00% 6.00% – 12.00% 7.00% – 12.00% Average 7.13% 7.19% 7.44% 7.77% 8.63% Change (Basis Points) – 6 – 31 – 64 – 150 MARKET RENT CHANGEb Range 0.00% – 3.00% 0.00% – 3.00% 0.00% – 5.00% 0.00% – 5.00% 0.00% – 3.00% Average 1.84% 1.84% 1.78% 1.59% 0.50% Change (Basis Points) 0 + 6 + 25 + 134 EXPENSE CHANGEb Range 0.00% – 3.00% 0.00% – 3.00% 2.50% – 3.00% 2.50% – 5.00% 1.00% – 4.00% Average 2.72% 2.72% 2.97% 3.11% 2.89% Change (Basis Points) 0 – 25 – 39 – 17 MARKETING TIMEc Range 2 – 12 2 – 12 2 – 12 2 – 18 2 – 18 Average 6.2 6.0 6.3 7.0 8.6 Change (t, s, =) sttt

a. Rate on unleveraged, all-cash transactions b. Initial rate of change c. In months

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As many suburban office locations slips just four basis points for the KEY 2Q15 SURVEY STATS* mirror their improving downtown national CBD office market. In addi-

counterparts and post positive gains tion, the gap between these two aver- Tenant Retention Rate: in absorption and rent growth, many ages has narrowed over the past year, Average 65.0% = investors are ramping up acquisi- sliding from a 56-basis-point spread Range 50.0% to 75.0% tions of suburban office assets. In the in the third quarter of 2014 to a 43-

first quarter of 2015, sales volume for basis-point spread this quarter. Months of Free Rent(1): suburban office properties totaled According to surveyed investors, Average 5 = $18.3 billion, a 66.0% year-over-year some of the best-performing subur- Range 0 to 12 increase as per Real Capital Analytics. ban office markets are San Francisco, = By comparison, sales of CBD assets San Jose, East Bay, Chicago, Denver, % of participants using 88.0% totaled $15.2 billion and represented and Los Angeles. “We like suburbs Market Conditions Favor: a 22.0% year-over-year increase. with mass transit and job growth,” Buyers 12.0% = Investors’ revived enthusiasm for says an investor. “Locations that are Sellers 25.0% s suburban office ownership is also walkable or in proximity to high- t revealed in this quarter’s average income neighborhoods are preferred Neither 63.0% overall cap rates. For this market, the over suburban office campuses,” says * t, s, = change from prior quarter (1) on a ten-year lease average dips 14 basis points, while it another. F

Table 5 NATIONAL SUBURBAN OFFICE MARKET Second Quarter 2015

CURRENT LAST QUARTER 1 YEAR AGO 3 YEARS AGO 5 YEARS AGO DISCOUNT RATE (IRR)a Range 6.00% – 10.00% 6.00% – 10.00% 6.00% – 11.00% 6.00% – 12.50% 7.25% – 14.00% Average 7.69% 7.78% 8.03% 8.72% 9.88% Change (Basis Points) – 9 – 34 – 103 – 219 OVERALL CAP RATE (OAR)a Range 5.00% – 9.00% 5.00% – 9.00% 5.00% – 9.00% 5.00% – 10.50% 6.00% – 12.00% Average 6.50% 6.64% 6.75% 7.57% 8.60% Change (Basis Points) – 14 – 25 – 107 – 210 RESIDUAL CAP RATE Range 5.50% – 9.50% 5.75% – 9.50% 6.00% – 10.00% 6.00% – 11.00% 7.00% – 11.50% Average 7.28% 7.33% 7.55% 8.03% 8.77% Change (Basis Points) – 5 – 27 – 75 – 149 MARKET RENT CHANGEb Range 0.00% – 5.00% 0.00% – 5.00% 0.00% – 5.00% (3.00%) – 4.00% (20.00%) – 3.00% Average 2.56% 2.56% 2.19% 1.38% (2.15%) Change (Basis Points) 0 + 37 + 118 + 471 EXPENSE CHANGEb Range 1.00% – 3.50% 1.00% – 3.50% 1.00% – 3.50% 2.00% – 4.00% 2.00% – 4.00% Average 2.75% 2.75% 2.69% 2.79% 2.75% Change (Basis Points) 0 + 6 – 4 0 MARKETING TIMEc Range 3 – 12 3 – 12 3 – 12 2 – 18 3 – 24 Average 6.3 6.5 7.6 8.5 8.9 Change (t, s, =) tttt a. Rate on unleveraged, all-cash transactions b. Initial rate of change c. In months

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First Quarter 2015 Aggressive Buying Environment Challenges Investors

PwC Real Estate Investor Survey™

As a subscriber, you may not distribute this report, in part or in whole, without the prior written permission of PwC. National Lodging Highlights

The following is extracted from driver of RevPAR gains. Specifically, While each chain-scale segment is "Hospitality Directions US" dated it forecasts over 80.0% of RevPAR expected to see growing demand in January 2015, published by PwC. growth in 2015 to come from increas- 2015, only the luxury chain-scale seg- 2014 shaped up to be a year of es in ADR – the highest contribution ment’s demand growth for 2015 is surprises for the U.S. lodging industry. ADR has made to RevPAR growth in above its 2014 growth rate. For 2015, While the U.S. economy languished the current cycle. PwC forecasts lodging demand growth during the first quarter, experiencing Three factors are key to PwC’s to be the strongest for the upscale a 2.1% decline in GDP (gross domes- 2015 lodging outlook. First, a strong lodging segment, increasing 4.8%, tic product), the lodging industry reg- macroeconomic context is assumed, followed by the upper-midscale istered an impressive performance with a reversal from fiscal drag to a chain-scale segment at 3.7%. with the strength of group demand boost, although the path of economic outpacing all expectations. Even though growth appears to be unclear with SUPPLY both transient and group demand several potential risks, including oil The supply pipeline continues to ex- exhibited strong momentum in 2014, prices, the U.S. dollar’s value, and the pand with hotel construction starts the year-over-year pace of growth in state of the Eurozone economies. expected to increase by over 45.0% in the group segment outpaced that of Second, strong momentum in travel 2015 compared to 2014. This growth the transient segment. activity continues throughout 2015. in hotel room starts is above the 35.0% The momentum experienced thus Third, despite a growing pipeline of year-over-year in-crease posted in far in the industry is expected to con- new hotels, supply growth remains 2014 (compared to 2013). As a result, tinue in 2015, setting the stage for an below the long-term average in 2015. PwC’s outlook anticipates supply impressive outlook for RevPAR growth growth to increase 1.5% in 2015 – and a significant increase in pricing DEMAND above the 0.9% record edfor 2014, but power for hotel owners. While indus- As a whole, demand for the lodging still remain below the long-term aver- try occupancy in 2015 is expected to industry is expected to increase 2.6% age annual increase of 1.9%. reach levels not seen since 1984, PwC’s in 2015, as per PwC. This rate of For 2015, the upscale chain-scale outlook expects growth in average demand growth is below 2014’s rate, segment is forecast to see the largest daily rates (ADRs) to be the primary but above the 2.1% reported for 2013. increase in supply, growing at 4.1%. On the other hand, the economy chain-scale segment is expected to see Exhibit L-1 OCCUPANCY a 0.8% increase in supply in 2015.

76.0% OCCUPANCY

72.0% Occupancy for the U.S. lodging indus- try was 64.4% for 2014, a 3.6% in- 68.0% crease from 2013, according to STR.

64.0% Occupancy improved in each chain- scale segment during the year with 60.0% the midscale segment posting the

56.0% largest gain of 4.3%. The luxury seg- ment reported the smallest occupancy 52.0% gain at 0.9%.

48.0% For 2015, occupancy for the U.S. lodging industry is forecast to increase

✵ U.S. ❍ Luxury ❊ Upper/Upscale ❉ Upscale ✥ Upper Midscale ✩ Midscale ✬ Economy 1.1%. As shown in Exhibit L-1, occu- Source: Smith Travel Research (2007 thru 2014); PwC (2015 Forecast) pancy gains are forecast for each

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As a subscriber, you may not distribute this report, in part or in whole, without the prior written permission of PwC. Exhibit L-2 September, Schidler Group purchased AVERAGE DAILY RATE (ADR) the 239-unit Fairfield Inn & Suites Midtown; Magna Hospitality Group sold both the 148-room Hampton Inn United Nations and the 135-room Holiday Inn Express Herald Square; and Meadow Partners purchased the 131-room Hotel 35 located at 42 West 35th Street.

INVESTMENT ACTIVITY U.S hotel investment volume totaled $34.6 billion in 2014 – up 27.0% from 2013, according to Real Capital Ana- lytics. Full-service properties account- ✵ U.S. ❍ Luxury ❊ Upper/Upscale ❉ Upscale ✥ Upper Midscale ✩ Midscale ✬ Economy ed for a larger portion of total sales, Source: Smith Travel Research (2007 thru 2014); PwC (2015 Forecast) totaling $22.4 billion, compared to limited-service hotels, which totaled chain-scale segment in 2015 with up- segment in 2015. $12.1 billion. However, on a year-over- per-midscale, midscale, and economy year growth comparison, sales volume hotels outperforming the industry. MARKET SPOTLIGHT: of limited-service properties was much Manhattan higher at 55.0% compared to 15.0% AVERAGE DAILY RATE (ADR) After rebounding in the second quar- for the full-service segment. ADR for the U.S. lodging industry was ter of 2014, Manhattan’s lodging per- The top-five markets in terms of $115.45 for 2014, a 4.6% increase from formance continued to improve with sales volume for 2014 are shown in 2013, according to STR. ADR grew in modest increases in occupancy levels, Table NLH-1. While three of the five each chain-scale segment during the combining with solid gains in ADR to metros had the distinction of also year with the luxury (5.6%), upper- drive a 4.3% increase in RevPAR in the being in the top five at year-end 2013, upscale (5.0%), upscale (5.0%), and third quarter. This growth was prima- Los Angeles was within the top ten economy (4.7%) chain-scale segments rily driven by ADR, which increased last year. Broward made a surge up the surpassing the industry average ADR 3.4% in the third quarter, while occu- rankings, moving from number 24 in growth. pancy gains were more moderate, in- 2013 to number 4 in 2014. F For 2015, ADR for the U.S. lodg- creasing only 0.9% on a year-over-year ing industry is forecast to increase basis Trends and forecasts have 6.2%. As shown in Exhibit L-2, ADR Several hotel transactions occurred been extracted from Hos - growth is forecast for each chain-scale in Manhattan during the third quarter pitality Directions US, pub- of 2014. In July, AEW Capital sold the lished by PwC Hospitality &

Table NLH-1 211-unit Residence Inn Midtown East; Leisure. Released January 2014 HOTEL SALES VOLUME a joint venture between Hidrock Realty 2015, this report provides his- Top U.S. Metros and Finvarb Group sold the 173-unit torical data and forecasts for Total 2013 Marriott SpringHill Suites at 25 West Metro Volume ($M) Rank the U.S. lodging industry and 37th Street; and the Procaccianti Group Hawaii $3,327 2 seven chain-scale segments sold the 227-room Holiday Inn Soho. Manhattan $3,115 1 with respect to ADR, supply, In August, the 210-room Park Hyatt San Francisco $1,450 4 demand, occupancy, RevPAR, New York was sold by Extell Develop- Broward $1,396 24 and revenue. For more infor- ment while DiamondRock Hospitality Los Angeles $1,326 6 mation, email contact.hospi- purchased the 282-room Hilton Gar- Source: Real Capital Analytics, Inc. [email protected]. den Inn Times Square Central. And in

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The upscale chain-scale segment As supply continues to rise, even Table FSM-1 posted a solid year of gains in demand, amid growing ADRs, some investors LODGING FORECASTS ADR, and RevPAR in 2014, outper- are having a difficult time justifying Annual forming the U.S. hotel industry in bids for available assets. “This market Segment 2015 Change each of these categories. At the same feels like it's getting frothy in some Upscale time, however, it also outpaced the areas, and I believe there is risk on the Occupancy 74.4% + 0.6% industry in terms of supply growth, horizon,” says a participant. “Finding ADR $135.38 + 5.9% rising 3.5% – well above the national reasonably priced assets is a chal- Nominal RevPAR $100.72 + 6.6% average of 0.9%. Unfortunately, the lenge,” notes another. Unfortunately,

upscale segment is once again expect- prices may not come down in the near Upper Midscale ed to lead the growth in supply for the term as our surveyed investors fore- Occupancy 67.5% + 1.7% industry in 2015. “New supply com- see property values in this market ADR $111.01 + 6.3% ing online is causing labor shortages increasing as much as 5.0% over the Nominal RevPAR $74.98 + 8.2%

in the hospitality sector and increas- next 12 months; the average expected Source: Hospitality Directions US, January 2015; ing costs,” states an investor. value increase is 2.1%. F published by PwC

Table 34 NATIONAL FULL-SERVICE LODGING SEGMENT First Quarter 2015

THIRD QUARTER CURRENT 2014 1 YEAR AGO 3 YEARS AGO 5 YEARS AGO DISCOUNT RATE (IRR)a Range 8.75% – 13.00% 9.00% – 13.00% 9.00% – 12.00% 8.50% – 12.00% 10.00% – 16.00% Average 10.69% 10.71% 10.71% 10.88% 12.43% Change (Basis Points) – 2 – 2 – 19 – 174 OVERALL CAP RATE (OAR)a Range 6.00% – 10.00% 6.00% – 11.00% 6.00% – 10.00% 6.00% – 10.00% 6.00% – 14.00% Average 7.71% 7.81% 7.73% 8.04% 10.08% Change (Basis Points) – 10 – 2 – 33 – 237 RESIDUAL CAP RATE Range 6.50% – 10.00% 6.50% – 11.00% 6.50% – 11.00% 6.00% – 12.00% 7.50% – 12.00% Average 8.31% 8.29% 8.17% 8.68% 10.26% Change (Basis Points) + 2 + 14 – 37 – 195 AVERAGE DAILY RATEb Range 0.00% – 7.00% 0.00% – 7.00% 0.00% – 6.00% (1.00%) – 10.00% (5.00%) – 3.00% Average 4.00% 3.83% 3.88% 3.79% (0.17%) Change (Basis Points) + 17 + 12 + 21 + 417 OPERATING EXPENSEb Range 1.00% – 4.00% 1.00% – 4.00% 1.00% – 5.00% 1.00% – 5.00% 0.00% – 4.00% Average 2.83% 2.83% 2.96% 2.82% 2.42% Change (Basis Points) 0 – 13 + 1 + 41 MARKETING TIMEc Range 3 – 9 3 – 9 3 – 12 3 – 24 3 – 24 Average 6.6 6.7 7.3 10.7 9.3 Change (t, s, =) tttt

a. Rate on unleveraged, all-cash transactions b. Initial rate of change c. In months

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Finding reasonably priced assets, Based on the changes in this mar- Table ELM-1 especially those with upside potential, ket’s key indictors over the past six LODGING FORECASTS is a challenge facing many investors months (see Table 35), it appears sur- Annual in the national limited-service mid- veyed investors are optimistic about Segment 2015 Change scale & economy lodging segment. the near-term performance of this Midscale “The recovery continues to raise prices lodging segment. First, its average Occupancy 59.3% + 1.8% for offerings,” says an investor. Accor- daily rate (ADR) change rate increas- ADR $83.37 + 4.7% ding to Real Capital Analytics, the av- es ten basis points to 3.40%. Second, Nominal RevPAR $49.44 + 6.6% erage sale price for the limited-service both the average overall cap rate and

hotel segment hit a record high of the low end of the cap rate range de- Economy $93,588 per key in 2014 – 18.0% clined. Although the amount by which Occupancy 57.9% + 1.6% above the prior year’s average. As in the average overall cap rate declined ADR $60.04 + 5.7% the full-service hotel segment, limit- is slight, it places the average below Nominal RevPAR $34.75 + 7.4%

ed-service hotel sales have included 9.00% for the first time since this mar- Source: Hospitality Directions US, January 2015; both portfolios and single assets. ket debuted in the Survey in 1993. F published by PwC

Table 35 NATIONAL LIMITED-SERVICE MIDSCALE & ECONOMY LODGING SEGMENT First Quarter 2015

THIRD QUARTER CURRENT 2014 1 YEAR AGO 3 YEARS AGO 5 YEARS AGO DISCOUNT RATE (IRR)a Range 8.50% – 12.00% 9.00% – 12.00% 9.00% – 12.00% 9.50% – 13.00% 10.00% – 15.00% Average 10.55% 10.70% 10.42% 11.13% 12.75% Change (Basis Points) – 15 + 13 – 58 – 220 OVERALL CAP RATE (OAR)a Range 7.50% – 10.00% 8.00% – 10.00% 8.00% – 10.00% 8.00% – 12.00% 9.00% – 12.00% Average 8.95% 9.00% 9.00% 9.75% 10.83% Change (Basis Points) – 5 – 5 – 80 – 188 RESIDUAL CAP RATE Range 7.75% – 11.00% 8.00% – 11.00% 8.00% – 11.00% 8.50% – 12.00% 9.00% – 12.50% Average 9.63% 9.55% 9.25% 9.95% 11.25% Change (Basis Points) + 8 + 38 – 32 – 162 AVERAGE DAILY RATEb Range 2.00% – 5.00% 2.00% – 5.00% 2.00% – 6.00% 0.00% – 7.00% (4.00%) – 3.00% Average 3.40% 3.30% 3.40% 3.70% (1.10%) Change (Basis Points) + 10 0 – 30 + 450 OPERATING EXPENSEb Range 1.00% – 3.00% 1.00% – 3.00% 1.00% – 3.00% 1.00% – 3.00% 1.00% – 5.00% Average 2.75% 2.75% 2.75% 2.75% 2.85% Change (Basis Points) 0 0 0 – 10 MARKETING TIMEc Range 2 – 12 2 – 12 2 – 12 2 – 12 4 – 12 Average 7.0 7.0 7.0 8.3 7.4 Change (t, s, =) ==tt

a. Rate on unleveraged, all-cash transactions b. Initial rate of change c. In months

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While positive, it was a mixed for both chain-scale segments with Table LUM-1 performance for the national luxu- occupancy anticipated to trend below LODGING FORECASTS ry/upper-upscale lodging segment the U.S average and ADR forecast to Annual in 2014. In the luxury segment, trend above it. “It’s finally time to Segment 2015 Change ADR growth (5.6%) trended above raise luxury hotel rates in order to Luxury the U.S. average (4.6%) while de - drive RevPAR growth,” says an inves- Occupancy 75.4% + 0.2% mand, RevPAR, and occupancy tor. PwC forecasts ADR to increase ADR $328.60 + 7.1% growth each trended below the U.S. 7.1% in the luxury chain-scale seg- Nominal RevPAR $247.70 + 7.3% averages. The upper-upscale ment in 2015 (see Table LUM-1).

segment mirrored these trends in Higher ADRs and RevPAR are Upper Upscale 2014 with ADR growth of 5.0% and likely to increaseasking prices, which Occupancy 74.4% + 1.0% RevPAR, demand, and occupancy could keep some buyers sidelined. ADR $180.06 + 6.5% growth below the U.S. averages. “Our goal for this year is to find good Nominal RevPAR $133.88 + 7.5%

Looking ahead to 2015, a mixed deals that are not too expensive,” Source: Hospitality Directions US, January 2015; performance is expected to continue shares an investor. F published by PwC

Table 36 NATIONAL LUXURY/UPPER-UPSCALE LODGING SEGMENT First Quarter 2015

THIRD QUARTER CURRENT 2014 1 YEAR AGO 3 YEARS AGO 5 YEARS AGO DISCOUNT RATE (IRR)a Range 8.00% – 12.00% 8.00% – 12.00% 9.00% – 12.00% 8.50% – 13.00% 9.00% – 18.00% Average 9.83% 9.82% 10.11% 10.60% 12.30% Change (Basis Points) + 1 – 28 – 77 – 247 OVERALL CAP RATE (OAR)a Range 4.75% – 9.00% 4.00% – 9.00% 4.00% – 9.50% 6.00% – 10.00% 7.00% – 13.00% Average 7.10% 7.04% 7.24% 8.05% 9.28% Change (Basis Points) + 6 – 14 – 95 – 218 RESIDUAL CAP RATE Range 5.75% – 10.00% 5.75% – 10.00% 6.00% – 10.00% 6.00% – 12.00% 7.00% – 12.00% Average 7.38% 7.43% 7.62% 8.66% 9.75% Change (Basis Points) – 5 – 24 – 128 – 237 AVERAGE DAILY RATEb Range 0.00% – 9.00% 0.00% – 9.00% 0.00% – 10.00% (2.00%) – 15.00% (5.00%) – 20.00% Average 3.75% 4.14% 4.07% 4.46% 2.06% Change (Basis Points) – 39 – 32 – 71 + 169 OPERATING EXPENSEb Range 0.00% – 5.00% 0.00% – 5.00% 0.00% – 5.00% 0.00% – 6.00% 0.00% – 6.00% Average 2.92% 2.86% 2.71% 3.02% 2.81% Change (Basis Points) + 6 + 21 – 10 + 11 MARKETING TIMEc Range 3 – 12 3 – 12 3 – 20 2 – 20 4 – 20 Average 6.3 6.0 7.8 8.0 10.4 Change (t, s, =) sttt

a. Rate on unleveraged, all-cash transactions b. Initial rate of change c. In months

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Of the four lodging markets in - Recent acquisitions involving Table SSL-1 cluded in our Survey, investors fore- select-service hotels include Inland EXPECTED VALUE CHANGE* cast property values to increase the American Real Estate Trust’s sale of Survey Lodging Markets greatest in the select-service lodging 52 select-service hotels, totaling Segment Range Average segment over the next 12 months 6,976 rooms, to a joint venture for (see Table SSL-1). This expectation approximately $1.1 billion (or roughly Full Service 0.0% to 5.0% + 2.1% has been the same for the past two $143,300 per room). In another deal, Limited-Service years and explains the strong demand Hyatt Hotels Corporation sold five Midscale & for these assets when they are placed select-service hotels consisting of 631 Economy 0.0% to 5.0% + 2.3% up for sale. “Bidding goes up very rooms for about $53.0 million (or quickly, so you need to be careful,” roughly $84,000 per room). The as- Luxury/Upper Upscale (1.0%) to 10.0% + 4.7% comments a participant. “Finding sets are located in Dallas (127 rooms), good select-service deals can be a San Antonio (126 rooms), Greensboro Select Service 0.0% to 15.0% + 5.5%

challenge with so many buyers vying (124 rooms), North Raleigh (127 * Over the next 12 months for assets,” says another. rooms), and Columbia (127 rooms). F Source: PwC Real Estate Investor Survey

Table 37 NATIONAL SELECT-SERVICE LODGING SEGMENT First Quarter 2015

THIRD QUARTER CURRENT 2014 1 YEAR AGO 3 YEARS AGO DISCOUNT RATE (IRR)a Range 9.00% – 13.00% 9.00% – 13.00% 9.00% – 13.00% 10.00% – 15.00% Average 10.90% 10.95% 10.95% 11.65% Change (Basis Points) – 5 – 5 – 75 OVERALL CAP RATE (OAR)a Range 5.00% – 11.00% 5.00% – 11.00% 5.00% – 10.00% 5.00% – 12.00% Average 8.20% 8.25% 8.10% 8.50% Change (Basis Points) – 5 + 10 – 30 RESIDUAL CAP RATE Range 6.00% – 11.00% 5.00% – 11.00% 5.00% – 10.00% 5.00% – 12.00% Average 8.65% 8.45% 8.34% 8.60% Change (Basis Points) + 20 + 31 + 5 AVERAGE DAILY RATEb Range 2.00% – 8.00% 2.00% – 8.00% 1.00% – 8.00% 0.00% – 8.00% Average 4.70% 5.20% 4.70% 4.80% Change (Basis Points) – 50 0 – 10 OPERATING EXPENSEb Range 2.00% – 4.00% 2.00% – 4.00% 2.00% – 4.00% 1.00% – 4.00% Average 2.95% 2.95% 2.95% 2.65% Change (Basis Points) 0 0 + 30 MARKETING TIMEc Range 2 – 12 2 – 12 2 – 12 2 – 12 Average 6.6 6.8 6.8 7.1 Change (t, s, =) ttt

a. Rate on unleveraged, all-cash transactions b. Initial rate of change c. In months

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