OFFERING MEMORANDUM

Red Carpet Inn & Suites 208 E NEW BERN RD, KINSTON, NC 28504 1 | Red Carpet Inn & Suites CONFIDENTIALITY AND DISCLAIMER

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Colliers International should not be made available to any other person or entity without the written consent of Colliers International. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Colliers International has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject substances, PCB’c or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant or any tenants plan or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Colliers International has not verified, and will not verify, any of the information contained herein, nor has Colliers International conducted any investigation regarding this matter and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

NON-ENDORSEMENT NOTICE

Colliers International is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Colliers International . Its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Colliers International is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR COLLIERS INTERNATIONAL AGENT FOR MORE DETAILS. TABLE OF CONTENTS

SECTION ONE INVESTMENT OVERVIEW \\ 6

SECTION TWO FINANCIAL ANALYSIS & MARKET COMPARABLES \\ 12

SECTION THREE MARKET OVERVIEW \\ 20

3 | Red Carpet Inn & Suites EXCLUSIVELY LISTED BY

PRASHANT MERCHANT Senior Vice President | Investment Sales Hospitality Capital Markets Group Mobile - (757) 589 - 6954 [email protected] License: VA 0225226862

NIC WADE Assistant Vice President | Investment Sales Hospitality Capital Markets Group Mobile - (757) 672 - 3692 Direct - (804) 267- 7231 [email protected] License: VA 0225242365

J. SCOTT ADAMS, CCIM Broker of Record License: NC 313635 SECTION 0NE

INVESTMENT OVERVIEW

5 | Red Carpet Inn & Suites INVESTMENT OVERVIEW

Colliers International, in association with Hospitality Capital Markets Group, on an exclusive basis, is pleased to present for sale the Red Carpet Inn & Suites of Kinston, North Carolina. The subject property is a 100-key, two-story, exterior-corridor asset located at the intersection of US Highway 70 (27,000 VPD) and US Highway 258 (10,000 VPD) with +/- 5.5 acres of frontage. The property, originally built in 1968 as a , has undergone significant renovations and will be delivered with minimal-to-no expected PIP. The property is offered on an unpriced basis with guidance at a fraction of replacement cost, considering the original cost of the property’s concrete and cinderblock construction with a utility service alley behind the rooms.

The property overlooks the scenic Neuse River, but was damaged as a result of hurricane Matthew in 2016 when the river overflowed onto the property. Immediately following hurricane Matthew, ownership set out to complete an extensive renovation plan of more than $10,000 per key to restore the property to operational order, including a brand new roof installed within the last two years.

The property boasts a +/- 11,000-square-foot lobby/office building with conference space, restaurant space, meeting room, a full bar outfit, and a manager’s quarters. These areas have also been restored over the last four years with an anticipated opening date of 2020, however they remained unoccupied as a result of COVID-19. These areas are fully equipped with audio/video equipment and can hold a capacity of +/- 300 guests. An investor has the unique opportunity to drive revenue by utilizing this space to operate a restaurant and bar. Alternatively, the restaurant is separately metered and therefore provides new ownership with the opportunity to generate additional passive income through a net lease. With President Biden’s plan to deliver 100 million doses within the first 100 days of office, an investor can also likely expect group and corporate travel to steadily pick up. In conjunction with the newly-renovated available conference and meeting space at the property, an investor has the opportunity to capture market share in that segment to drive revenue.

The property has remained especially resistant to COVID-19 and has performed better despite the pandemic in 2020 than previous years for a variety of reasons: 1) the recent completion of extensive renovations, 2) the stability and necessity of economy properties during downturns, and 3) the presence of extended-stay guests and accommodating suites.

The property amenities include a pool, fishing deck, a pet-walking area, and ample onsite storage for new ownership. Many of the rooms are equipped with tile floors, which make the property one of the only suitable options in Kinston for pet-friendly rooms. Ownership purchased the non-performing note for the property in 2009, and eventually foreclosed in 2012, though has remained mostly absentee. A more aggressive, hands-on, owner-operator can significantly increase revenue and gross operating profits by creating operational efficiencies and increasing RevPAR market share by leveraging the recently-completed renovations to rooms and common areas. The North Carolina Department of Transportation also intends to expand the Kinston Bypass over the next decade, which overlaps Kinston just half a mile south of the property, which will increase traffic and therefore revenue for a long- term investor at the property.

INVESTMENT HIGHLIGHTS

Fee Simple Interest in the 2-Story Asset Concrete Construction with Brand New Roof

2020 Performance Uninterrupted by COVID-19 Significant Upside for Owner-Operator

Recently Renovated and Offered with Minimal PIP Proximity to Major MSAs: Raleigh-Durham, Greenville, Wilson, Goldsboro, Jacksonville, New Bern

6 | Red Carpet Inn & Suites INVESTMENT OVERVIEW PROPERTY AMENITIES

Vital Data

Property Name Red Carpet Inn & Suites Free High Speed WiFi Address 208 E New Bern Rd, Kinston, NC 28504 Price Unpriced Complimentary Hot Breakfast PIP Minimal Ownership Type Fee Simple Pet Friendly Number of Rooms 100 Free Parking Number of Buildings 2 Number of Stories 2 Outdoor Pool Corridors Exterior Truck & RV Parking Year Built 1968 Lot Size 5.50 Acres Onsite Fishing Rentable Square Feet 11,000 SF Franchise Hospitality International Picnic Area Management Unencumbered by Third-Party Management Business Center

Photo Copier & Fax Machine Room Type No. of Rooms Self Serve Laundry King Room 25 Flatscreen TVs in Rooms Queen Room 33 Double Full Room 39 Microwave & Fridge in Rooms Extended-Stay Suites 2 ADA Accessible Room 1

7 | Red Carpet Inn & Suites PROPERTY PHOTOS

8 | Red Carpet Inn & Suites PROPERTY PHOTOS PROPERTY PHOTOS SECTION TWO

FINANCIAL ANALYSIS & MARKET COMPARABLES

11 | Red Carpet Inn & Suites FINANCIAL ANALYSIS - STR

Subject Property 2018 2019 2020 Year 1 Year 2 Year 3 Year 4 Year 5 Occupancy 27.00% 36.65% 44.4% 46.18% 48.02% 48.98% 49.96% 50.96% % Change 35.74% 21.15% 4.00% 4.00% 2.00% 2.00% 2.00% Occupancy Penetration 53% 74% 120% 99% 97% 97% 97% 97%

Average Daily Rate $60.00 $60.00 $60.00 $62.40 $63.65 $64.92 $66.22 $67.54 % Change 0.00% 0.00% 4.00% 2.00% 2.00% 2.00% 2.00% ADR Penetration 84% 75% 86% 86% 86% 86% 86% 86%

RevPAR $16.20 $21.99 $26.64 $28.81 $30.57 $31.80 $33.09 $34.42 % Change 35.74% 21.15% 6.08% 4.04% 4.04% 4.04% Rev PAR Penetration 45% 56% 103% 85% 84% 84% 84% 84%

Competitive Set 2018 2019 2020 Year 1 Year 2 Year 3 Year 4 Year 5 Occupancy 50.80% 49.20% 36.90% 46.49% 49.28% 50.27% 51.27% 52.30% % Change -3.15% -25.00% 26.00% 6.00% 2.00% 2.00% 2.00%

Average Daily Rate $71.65 $79.87 $69.87 $72.66 $74.12 $75.60 $77.11 $78.65 % Change 11.47% -12.52% 4.00% 2.00% 2.00% 2.00% 2.00%

RevPAR $36.40 $39.30 $25.78 $33.78 $36.53 $38.00 $39.54 $41.14 % Change 7.96% -34.39% 8.12% 4.04% 4.04% 4.04%

STR # Name City, State Zip Phone Rooms Open Date 8368 Goldsboro Goldsboro, NC 27534-1605 (919) 736-4510 46 198801 13003 Goldsboro Goldsboro, NC 27534-1627 (919) 735-7911 112 197910 15678 Kenly Kenly, NC 27542-7544 (919) 284-1050 65 198803 39869 Quality Inn Goldsboro Goldsboro, NC 27534-7448 (919) 778-9759 67 200011 40908 Country Inn & Suites Goldsboro Goldsboro, NC 27534-1675 (919) 581-0503 66 200011 *This property is not a member of STR research **Historical occupancy and ADR estimated

12 | Red Carpet Inn & Suites HISTORICAL P & L

2018 2019 2020* Rooms 60 70 100 Available Rooms 36,500 36,500 36,500 Rooms Sold 9,855 13,377 16,206 Occupancy 27.0% 36.7% 44.4% ADR $60.00 $60.00 $60.00 RevPAR $16.20 $21.99 $26.64 Revenue/Room $5,829 $8,057 $10,016

Income Room Revenue $582,853 100.0% 805,740 100.0% $1,001,592 100.0%

Total Revenue $582,853 100.0% $805,740 100.0% $1,001,592 100.0%

*Estimated

13 | Red Carpet Inn & Suites HISTORICAL P & L

2018 2019 2020 Departmental Expenses Rooms $274,029 47.0% $378,807 47.0% $260,557 26.0% Food & Beverage $14,540 2.5% $20,100 2.5% $18,500 1.8% Total Departmental Expenses $288,569 49.5% $398,907 49.5% $279,057 27.9%

Gross Operating Income After Rooms & $294,283 50.5% $406,833 50.5% $722,535 72.1% Payroll Expense

Undistributed Operating Expenses Administration & General $15,125 2.6% $20,908 2.6% $50,412 5.0% Marketing $1,113 0.2% $1,539 0.2% $2,000 0.2% Franchise Fees $40,280 6.9% $55,681 6.9% $69,345 6.9% Utility Costs $62,947 10.8% $87,015 10.8% $80,515 8.0% Property Operations & Maintenance $30,575 5.2% $42,265 5.2% $32,350 3.2% Total Undistributed Operating Expenses $150,039 25.7% $207,408 25.7% $234,622 23.4%

Gross Operating Profit $144,244 24.7% $199,425 24.8% $487,913 48.7%

Fixed Expenses Property Taxes $15,196 2.6% $15,196 1.9% $26,303 2.6% Insurance $32,343 5.5% $44,710 5.5% $45,478 4.5% Total Fixed Charges $47,539 8.2% $59,906 7.4% $71,781 7.2%

Total Expenses $486,147 83.4% $666,221 82.7% $585,460 58.5%

Amount Available for Debt Service & $96,706 16.6% $139,519 17.3% $416,132 41.5% Other Fixed Charges Net Operating Income (EBITDA) $96,706 16.6% $139,519 17.3% $416,132 41.5%

14 | Red Carpet Inn & Suites 5 YEAR PRO FORMA

Pro Forma 2020 Year 1 Year 2 Year 3 Year 4 Year 5 Rooms 100 100 100 100 100 100 Available Rooms 36,500 36,500 36,500 36,500 36,500 36,500 Rooms Sold 16,206 16,854 17,528 17,879 18,237 18,601 Occupancy 44.4% 46.2% 48.0% 49.0% 50.0% 51.0% ADR $60.00 $62.40 $63.65 $64.92 $66.22 $67.54 RevPAR $26.64 $28.81 $30.57 $31.80 $33.09 $34.42 Revenue/Room $10,016 $10,949 $11,660 $12,183 $12,724 $13,284

Income 2020 Year 1 Year 2 Year 3 Year 4 Year 5 Room Revenue $1,001,592 100.0% $1,051,705 96.1% $1,115,648 95.7% $1,160,720 95.3% $1,207,614 94.9% $1,256,401 94.6% Bar and Restaurant $0 0.0% $28,800 2.6% $33,600 2.9% $38,400 3.2% $43,200 3.4% $48,000 3.6% Conference Room $0 0.0% $14,400 1.3% $16,800 1.4% $19,200 1.6% $21,600 1.7% $24,000 1.8%

Total Revenue $1,001,592 100.0% $1,094,905 100.0% $1,166,048 100.0% $1,218,320 100.0% $1,272,414 100.0% $1,328,401 100.0%

*Restaurant, bar, and conference areas were under renovation in previous years but will open in 2021 post-Covid.

15 | Red Carpet Inn & Suites 5 YEAR PRO FORMA

Departmental Expenses 2020 Year 1 Year 2 Year 3 Year 4 Year 5 Rooms $260,557 26.0% $281,818 25.7% $293,091 25.1% $304,185 25.0% $314,922 24.8% $326,039 24.5% Food & Beverage $18,500 1.8% $25,281 2.3% $30,675 2.6% $35,758 2.9% $41,032 3.2% $46,503 3.5% Total Departmental Expenses $279,057 27.9% $307,100 28.0% $323,766 27.8% $339,943 27.9% $355,955 28.0% $372,542 28.0%

Gross Operating Income After $722,535 72.1% $787,805 72.0% $842,282 72.2% $878,378 72.1% $916,459 72.0% $955,859 72.0% Rooms & Payroll Expense

Undistributed Operating Expenses 2020 Year 1 Year 2 Year 3 Year 4 Year 5 Administration & General $50,412 5.0% $53,437 4.9% $54,505 4.7% $55,596 4.6% $56,707 4.5% $57,842 4.4% Marketing $2,000 0.2% $2,400 0.2% $2,700 0.2% $3,000 0.2% $3,300 0.3% $3,600 0.3% Franchise Fees $69,345 6.9% $72,778 6.6% $77,203 6.6% $80,322 6.6% $83,567 6.6% $86,943 6.5% Utility Costs $80,515 8.0% $87,085 8.0% $92,380 7.9% $95,170 7.8% $98,044 7.7% $101,005 7.6% Property Operations & Maintenance $32,350 3.2% $34,317 3.1% $35,868 3.1% $36,732 3.0% $37,616 3.0% $38,522 2.9% $234,622 23.4% $250,017 22.8% $262,656 22.5% $270,819 22.2% $279,234 21.9% $287,911 21.7% Total Undistributed Operating Expenses $234,371 25.8% $318,120 29.1% $333,222 28.6% $342,768 28.1% $352,605 27.7% $362,741 27.3% Gross Operating Profit $487,913 48.7% $537,788 49.1% $579,626 49.7% $607,559 49.9% $637,225 50.1% $667,947 50.3%

Fixed Expenses 2020 Year 1 Year 2 Year 3 Year 4 Year 5

Property Taxes $26,303 2.6% $36,298 3.3% $37,024 3.2% $37,765 3.1% $38,520 3.0% $39,290 3.0% Insurance $45,478 4.5% $46,388 4.2% $46,573 4.0% $46,759 3.8% $46,946 3.7% $47,134 3.5% Total Fixed Charges $71,781 7.2% $82,686 7.6% $83,597 7.2% $84,524 6.9% $85,466 6.7% $86,425 6.5% Total Expenses $585,460 58.5% $639,802 58.4% $670,019 57.5% $695,285 57.1% $720,655 56.6% $746,878 56.2% Amount Available for Debt Service & Other Fixed Charges $416,132 41.5% $455,102 41.6% $496,029 42.5% $523,035 42.9% $551,758 43.4% $581,523 43.8% Net Operating Income (EBITDA) $416,132 41.5% $455,102 41.6% $496,029 42.5% $523,035 42.9% $551,758 43.4% $581,523 43.8%

16 | Red Carpet Inn & Suites COMPARABLE SALES MAP

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17 | Red Carpet Inn & Suites COMPARABLE SALES

Close of Property Name Location Price Key Price/Key Escrow Red Carpet Inn & Suites 208 E New Bern Rd, Kinston, NC 28504 TBD 100 TBD TBD

1 Days Inn Lumberton 3030 N Roberts Ave, Lumberton, NC 28358 $2,493,740 108 $23,090 9/17/20

2 6 Jacksonville 603 N Marine Blvd, Jacksonville, NC 28540 $3,727,500 117 $31,859 1/22/20

3 America's Best Value Inn Warsaw 2679 NC-24, Warsaw, NC 28398 $1,300,000 44 $29,545 1/2/20 4 Econo Lodge Goldsboro 704 Corporate Drive, US-70 BYP E, Goldsboro, NC 27534 $1,585,000 48 $33,021 10/1/19 5 Quality Inn Elizabeth City 522 S Hughes Blvd, Elizabeth City, NC 27909 $3,100,000 115 $26,957 9/1/19 6 Fayetteville 2076 Cedar Creek Rd, Fayetteville, NC 28312 $2,500,000 113 $22,124 6/21/19

7 Red Carpet Inn Jacksonville 701 N Marine Blvd, Jacksonville, NC 28540 $1,900,000 110 $17,273 6/1/19 8 America's Best Value Inn Wilson 1815 US-301, Wilson, NC 27893 $995,000 50 $19,900 5/10/19 9 Magnuson Washington 1031 Carolina Ave, Washington, NC 27889 $1,400,000 58 $24,138 6/4/18

10 Garysburg 6785 NC-46, Garysburg, NC 27831 $2,350,000 95 $24,737 8/27/18 11 Battleboro 7095 NC-4, Battleboro, NC 27809 $2,950,000 82 $35,976 5/15/18

Averages -- $2,209,204 85 $26,238 --

18 | Red Carpet Inn & Suites SECTION THREE

MARKET OVERVIEW

19 | Red Carpet Inn & Suites MARKET OVERVIEW

20 | Red Carpet Inn & Suites KINSTON, NORTH CAROLINA

Kinston is a city in Lenoir County, North Carolina and is located in the coastal plains region of eastern North Carolina. The main highway in Kinston is US 70, an east-west highway that provides access to the North Carolina coast as well as major cities to the west such as Raleigh and Greensboro and I-95. Billboards into Kinston once proclaimed the city the “world’s foremost tobacco center.” Factories and warehouses kept the money and the people flowing in, including jazz and soul greats like Duke Ellington and Ray Charles, who played to crowds in those warehouses into the 1960s.

Kinston is home to a James Beard award recipient restaurant known as Chef & the Farmer, which was opened in 2006 by Chef Vivian Howard, who born and raised near Kinston but trained in the New York culinary scene, and her husband, Ben Knight. Kinston is also home to the Part of North Carolina’s African-American Music Trail, this park celebrates Kinston’s musical heritage through tile mosaics depicting local musicians, engraved song lyrics, and the 23-foot-wide glass sculpture Intersections.

DEMAND GENERATORS

Highway 70 and Highway 258 Grainger Arts Center Kinston Bypass Expansion Neuse Regional Library System Neuse River Cultural Heritage Museum Downtown Kinston Grangier Stadium Shopping/Retail Areas Kinston Drag Strip Lenoir Community College Woodmen of the World Community Center NC Department of Public Safety/Dobbs Youth Parks Correctional Facility UNC Lenoir Health Care

21 | Red Carpet Inn & Suites PROPERTY LOCATION

RED CARPET INN & SUITES

22 | Red Carpet Inn & Suites PROPERTY LOCATION

Grainger Stadium

Downtown NEUSE RIVER Kinton

HIGHWAY 258 RED CARPET INN & SUITES

McDonald’s

NEUSE RIVER

Lenoir Community College

23 | Red Carpet Inn & Suites DEMAND DRIVERS

UNC LENOIR HEALTH CARE UNC Lenoir Health Care is a non-profit located in Kinston, North Carolina. The hospital is licensed for 261 beds and serves the residents of Lenoir, Greene and Jones counties. The hospital is staffed with over 100 physicians. The hospital offers inpatient, outpatient and services.

HIGHWAY 70 & HIGHWAY 258 Kinston, North Carolina is located in excellent proximity to many surrounding cities and towns such as Durham (2 hours), Greenville (1/2 hour), Richmond (3 hours), Raleigh (1.5 hours), Wilmington (1.5 hours), Charlottesville (4.5 hours), Charlotte (4.5 hours), Greensboro (2.5 hours), and Washington, D.C. (5 hours).

WOODMEN OF THE WORLD COMMUNITY CENTER In 2012, Woodmen of the World constructed the Woodmen of the World Community Center and Lions Water Adventure Park, a 53,000 sq ft facility that offers a cardio and strength training center, an Olympic- sized swimming pool, several corporate reception areas and conference rooms, as well as a quarter-mile elevated track and several sporting courts. The center is now owned by the city of Kinston and is called the “Kinston Community Center”.

24 | Red Carpet Inn & Suites Exclusively Listed by

PRASHANT MERCHANT NIC WADE J. SCOTT ADAMS, CCIM Senior Vice President | Investment Sales Assistant Vice President | Investment Sales Broker of Record Hospitality Capital Markets Group Hospitality Capital Markets Group License NC 313635 Mobile - (757) 589 - 6954 Mobile - (757) 672 - 3692 [email protected] Direct - (804) 267- 7231 License: VA 0225226862 [email protected] www.colliers.com License: VA 0225242365