CONFIDENTIAL OFFERING MEMORANDUM

TUMBLEWEED HOTEL 6333 E. CAVE CREEK ROAD | CAVE CREEK, AZ 85331 AFFILIATED BUSINESS DISCLOSURE DISCLAIMER

CBRE, Inc. operates within a global family of companies with many subsidiaries This Memorandum contains select information pertaining to the Property and and related entities (each an “Affiliate”) engaging in a broad range of commercial the Owner, and does not purport to be all-inclusive or contain all or part of the real estate businesses including, but not limited to, brokerage services, property information which prospective investors may require to evaluate a purchase and facilities management, valuation, investment fund management and of the Property. The information contained in this Memorandum has been development. At times different Affiliates, including CBRE Global Investors, Inc. obtained from sources believed to be reliable, but has not been verified for or Trammell Crow Company, may have or represent clients who have competing accuracy, completeness, or fitness for any particular purpose. All information is interests in the same transaction. For example, Affiliates or their clients may presented “as is” without representation or warranty of any kind. Such information have or express an interest in the property described in this Memorandum (the includes estimates based on forward-looking assumptions relating to the general “Property”), and may be the successful bidder for the Property. Your receipt of economy, market conditions, competition and other factors which are subject this Memorandum constitutes your acknowledgement of that possibility and to uncertainty and may not represent the current or future performance of the your agreement that neither CBRE, Inc. nor any Affiliate has an obligation to Property. All references to acreages, square footages, and other measurements disclose to you such Affiliates’ interest or involvement in the sale or purchase are approximations. This Memorandum describes certain documents, including of the Property. In all instances, however, CBRE, Inc. and its Affiliates will act leases and other materials, in summary form. These summaries may not be in the best interest of their respective client(s), at arms’ length, not in concert, complete nor accurate descriptions of the full agreements referenced. Additional or in a manner detrimental to any third party. CBRE, Inc. and its Affiliates will information and an opportunity to inspect the Property may be made available conduct their respective businesses in a manner consistent with the law and to qualified prospective purchasers. You are advised to independently verify all fiduciary duties owed to their respective client(s). the accuracy and completeness of all summaries and information contained herein, to consult with independent legal and financial advisors, and carefully investigate the economics of this transaction and Property’s suitability for your CONFIDENTIALITY AGREEMENT needs. ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY Your receipt of this Memorandum constitutes your acknowledgement that (i) it is AT YOUR OWN RISK. a confidential Memorandum solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property, The Owner expressly reserves the right, at its sole discretion, to reject any or all (ii) you will hold it in the strictest confidence, (iii) you will not disclose it or its expressions of interest or offers to purchase the Property, and/or to terminate contents to any third party without the prior written authorization of the owner discussions at any time with or without notice to you. All offers, counteroffers, of the Property (“Owner”) or CBRE, Inc., and (iv) you will not use any part of and negotiations shall be non-binding and neither CBRE, Inc. nor the Owner shall this Memorandum in any manner detrimental to the Owner or CBRE, Inc. have any legal commitment or obligation except as set forth in a fully executed, If after reviewing this Memorandum, you have no further interest in purchasing definitive purchase and sale agreement delivered by the Owner. the Property, kindly return it to CBRE, Inc.

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© 2019 CBRE, Inc. All rights reserved. This information has been obtained from sources believed reliable, but has not been verified for accuracy or completeness. You should conduct a careful, independent investigation of the property and verify all information. Any reliance on this information is solely at your own risk. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited.

2 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA I. Executive Summary

II. Property Overview

III. Area Overview

IV. Financial Performance

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 3 CONTENTS Executive Summary

4 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA EXECUTIVE SUMMARY

CBRE Hotels is pleased to present a unique opportunity to acquire the Tumbleweed Hotel, a newly remodeled, western-chic hotel centrally located in downtown Cave Creek, Arizona.

Referred to as “Fashionable revival or what was cool about the West,” the hotel is on the market for the first time in over 15 years, having been transformed from a place to stay while passing through Cave Creek, to a destination in and of itself. Using their background in art and retail, ownership has transformed the guestrooms and casitas into eclectic and modern, well-designed rooms, while maintaining its western heritage and complementing the surrounding art galleries, restaurants and boutiques that line Cave Creek Road. The Tumbleweed Hotel now draws visitors from all over the world, looking for an authentic western experience, with modern amenities and exceptional style.

Situated on nearly three acres in the heart of downtown Cave Creek, Tumbleweed Hotel is comprised of a 16-unit, two- story hotel, an 8-unit, two-building casita complex, a 3,570 sq. ft. building that currently houses the lobby and small gift shop, an outdoor pool, and picnic/BBQ area. The hotel also features superb views of Black Mountain and access to its trails. Ownership is in the process of completing a renovation that includes new furniture and fixtures in all hotel rooms and four of the eight casitas.

Tremendous upside exists at the Tumbleweed Hotel that will allow a new owner an extraordinary opportunity to further shape and improve upon the property, thereby maximizing revenue and profits.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 5 VALUE ENHANCEMENT OPPORTUNITIES

Refine Revenue Management Strategies

Develop Eight Luxury Tepees On Underutilized Open Space

Convert Four Owner-Occupied Casitas Into Rentable Inventory

Maximize Open Space To Generate Additional Income

6 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA Convert Portion Of Main Building Into Restaurant/Retail Space or Bring In A Third-Party Operator

Increase Occupancy through Airbnb rentals

Partner With Boutique Booking Reservation Program Or Soft-Brand Affiliation

Established as a gold mining town and stopping point for the U.S. Calvary in the mid-1870s, the wild west character is preserved in Cave Creek, featuring several saloons, western shops, rodeo events, galleries, and live music. Located high above Phoenix in the foothills of Black Mountain, Skull Mesa and Elephant Butte, Cave Creek is a must-visit location just minutes from nearby Phoenix and Scottsdale.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 7 INVESTMENT HIGHLIGHTS

IRREPLACEABLE LOCATION IN THE HEART OF CAVE CREEK The Tumbleweed Hotel boasts an excellent location within walking distance to downtown Cave Creek’s numerous and eclectic shops, restaurants, art galleries, and live entertainment.

HIGH BARRIER TO ENTRY MARKET INTO CAVE CREEK/CAREFREE MARKET Extremely high barriers to entry exist in the Cave Creek/Carefree market due to limited, developable land availability and stringent and expensive entitlement processes.

UPSIDE POTENTIAL FOR EXPANDED MARKETING AND NEW MANAGEMENT The property would benefit from a new owner with more sophisticated hotel management experience that could take the Tumbleweed Hotel to new heights, through expanded marketing and refined revenue management strategies.

8 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA UNENCUMBERED BY BRAND OR MANAGEMENT The hotel is ideally offered unencumbered by brand or management, allowing a new owner full optionality to implement their own operational strategies.

ADDITIONAL VALUE ENHANCEMENT OPPORTUNITIES AVAILABLE A full array of value enhancement opportunities are available at the Tumbleweed Hotel, including developing eight luxury teepees, converting owner-occupied units into rentable inventory, add/lease retail or restaurant space in main building, include units in Airbnb inventory, and affiliation with soft brand or boutique hotel booking reservation programs.

DYNAMIC RESORT MARKET The Phoenix region consistently maintains a status of being one of America’s most popular vacation spots, receiving over 16 million visitors annually. In addition to the many shopping, sightseeing and cultural possibilities, the area offers ample outdoor adventuring activities including camping, golf, fishing, biking, hiking and kayaking. Furthermore, the Phoenix Metro is one of the Southwest’s most acclaimed cultural hubs and is home to the Heard Museum of Native Cultures, Phoenix Art Museum, University of Phoenix Stadium, Arizona Science Center, Comerica Theatre, Desert Botanical Garden, Talking Stick Resort Arena, and multiple theme parks.

9 10 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA Property Overview

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 11 PROPERTY OVERVIEW

The Tumbleweed Hotel boasts an excellent location along Cave Creek Road in downtown Cave Creek, within walking distance to an eclectic mix of restaurants, boutiques, art galleries, and bull riding activities. Set on 2.51 acres, the hotel features four separate buildings: 1) an approximate 3,500 sq. ft. main building that currently houses the lobby/check-in area, 2) a two-story, 16-unit hotel, and 3-4) two, 4-unit casita buildings.

The hotel has been artfully recreated and has authentic western visual appeal, having been featured in three movies, several music videos, a Ford commercial, Phoenix Home and Garden, and many photography shoots. The Tumbleweed Hotel also has links to a famous past, with Waylon Jennings and Dick Van Dyke as past hotel guests.

ADDRESS: 6333 E Cave Creek Rd., Cave Creek, AZ 85331

LOCATION: South of Cave Creek Rd., between School House Rd. to the east and Linda Dr. to the west

ASSESSOR PARCEL #: 211-10-002-D, 025

YEAR CONSTRUCTED: 1971 (casitas), 1973 (hotel), 1976 (main building)

SITE SIZE: 2.51 ac. or 109,657 sq. ft.

BUILDING CONFIGURATION: One 3,570 sq. ft. main building with lobby; one 2-story, 16-unit hotel, two 4-unit casita buildings

BUILDING SIZE: 15,376 sq. ft.

NUMBER OF GUESTROOMS: 16 hotel units and 8 casitas

OWNERSHIP INTEREST: Fee-simple

MANAGEMENT: Unencumbered

AMENITIES: Outdoor pool, picnic/BBQ area

Note: Some furnishings located in the main building and around the resort are not included in the sale; please see list in the Virtual Deal Room.

12 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA CAVE CREEK ROAD N. SCHOOLN. HOUSE RD.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 13 14 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA GUESTROOMS

The hotel features 16 hotel guestrooms and eight casitas in multiple configurations, including one king, two queens, or two full beds.

Room Type Count

Casita King 8

One King 4

Two Queens 8

Two Doubles 4 Total 24

Note: Four of the eight casitas are currently owner occupied.

CASITAS Spanish for “little house,” the eight casitas are tucked away at the base of Black Mountain for those wanting to embrace the desert and its solitude. These units feature a full Kitchen, quaint living room, private king size bedroom and door to private patio.

CASITA AMENITIES

• Kitchen • Patio

• Microwave • Oven

• Flat Screen Smart TV • Coffee Maker

• Iron/Board • Fridge with Freezer

• Wi-Fi • Bath

• Desk • Hair Dryer

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 15 HOTEL ROOMS Located in the hotel building along the western border of the site, these feature beautiful décor and kitchenettes.

HOTEL ROOM AMENITIES

• Desk • Bath

• Sitting area • Flat Screen Smart TV

• Mini Fridge • Sink

• Coffee Maker • Bistro Table

• Iron/Board • Cabinets and counter

• Microwave

16 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA ADDITIONAL AMENITIES

The Tumbleweed Hotel also features an outdoor pool with loungers and BBQ/picnic area.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 17 PROPERTY TAXES

JURISDICTION CAVE CREEK Tax Year 2018 APN 211-10-002-D Taxes Paid: $15,310 APN 211-10-025 Taxes Paid: $236 Total Taxes Paid in 2018: $15,546

CAPITAL EXPENDITURES

The Tumbleweed Hotel is extremely well-built, and ownership does an excellent job at maintaining the property. Ownership is currently investing approximately $5,000 per unit to upgrade fixtures and furnishings of the hotel units and casitas. Ownership’s keen artistic eye to masterfully inject a hip, modern and western-chic vibe into each room has been featured in numerous magazines, including Phoenix Home and Garden, as well as several movies, commercials and photo shoots.

VALUE UPSIDE OPPORTUNITIES Tremendous upside exists at the Tumbleweed Hotel that will allow a new owner an extraordinary opportunity to further shape and improve upon the property, thereby maximizing revenue and profits. Some ideas include: an owner with more sophisticated hotel experience could refine revenue management strategies; preliminary plans call for the addition of eight luxury teepees on an underutilized portion of the property; four of the eight casitas are currently used by ownership and renovating these and adding them into the hotel’s inventory would increase revenue; a separate parcel of land near those casitas could be converted into meeting/event space or another revenue generating activity; a portion of the 3,000 square foot building that houses the lobby could be converted into prime Cave Creek Road frontage retail and/or restaurant space, either owner operated or third-party leased, or additional guestrooms; the hotel rooms, casitas and proposed teepees would be well-received as Airbnb rentals; and the hotel may benefit from a soft brand affiliation that would widen its reservation capabilities.

18 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA Area Overview

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 19 20 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA CAVE CREEK & CAREFREE

Located about 30 miles north of Downtown Scottsdale, Cave Creek is a picturesque community in the Sonoran Desert Foothills, rich in history and ripe with year-round activities. Cave Creek and neighboring Carefree combine a lush desert landscape with small town character, charm and all the amenities of a big city just a short distance away. The area is a nature lover’s paradise, boasting numerous hiking, biking, and horse-riding trails. The beauty of the natural environment is said to inspire artists, musicians and writers that live in and visit the community. The galleries in Cave Creek and Carefree rival those found in the bigger cities of Scottsdale and Sedona. Cave Creek is also a well-traveled destination for western enthusiasts and motorcycle riders, providing entertainment that includes live bull riding, rodeo events, western dance lessons, stand- up comedians, concerts, car shows, and live theater. The Arts are a cornerstone of Cave Creek’s community. Galleries throughout the town’s commercial core, festivals and an overall appreciation of the creative spirit contribute to making Cave Creek an attractive place to live and visit.

A substantial percentage of the land in Cave Creek is designated open space. These undevelopable areas provide an amenity for citizens of Cave Creek and tourists alike. Cave Creek has an extensive network of trails open to all members of the public who wish to hike, bike, and horseback ride through town. Access to the Open Space and the Historic Town Core via these trails and roads adds to Cave Creek’s desirability and livability. Cave Creek takes pride in the preservation of the Sonoran Desert. This environment is home to many unique native plant and animal species, some of which are protected by State and/or Federal law.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 21 WESTERN HERITAGE IN CAVE CREEK

“Heritage Tourism" has been explosive in the past few years and communities, such as Cave Creek, have been extremely successful capitalizing on communities with unique heritage. History came to Cave Creek on horseback in 1870. Soldiers from Fort McDowell rode past the boulder piles in what is now the north side of Black Mountain. Pictures show they rested in shaded grassy areas under Mesquite trees in the present center of Cave Creek. In fact, the mesquite grove located on the southwest corner of the Tumbleweed Hotel parcel is one spot where those soldiers would rest, & the trees are still there!

For over 40 years the sport of Rodeo has been alive and kicking in the Sonoran Desert. Each year, the town hosts the Cave Creek Rodeo Days in the Memorial Arena Rodeo Grounds that consists of a Parade, Mutton Bustin', two Rodeo Dances, a Golf Tournament, three action packed PRCA Rodeo performances and more to round out a weeklong celebration of an Arizona town’s Western Heritage.

Another popular western celebration is the annual Wild West Days Cave Creek, that welcomes more than 10,000 people to the heart of one of America’s most authentic western towns.

Built in 1951, the now famous Buffalo Chip Saloon has grown to encompass five acres and has become one of the most authentic dance halls and saloons in the country. Every Wednesday and Friday night, people come from all over for live bull riding. Buffalo Chip Saloon has been voted by Phoenix Magazine “Best in the Valley.”

The Sonoran Desert offers a beautiful backdrop for horseback riding, offering visitors an authentic ride through a vast system of natural local trails. Multiple establishments through downtown Cave Creek offer saddle hookups in town.

22 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA RANCHO MAÑANA GOLF CLUB In the mid-1940s, Rancho Mañana opened as a dude ranch with accommodations staying overnight in the Sonoran Desert. Today, ranch traditions continue and is known as a lush oasis with spectacular views of Skull Mesa, Elephant Butte and Tonto National Forest. The golf course has won many awards and has been voted “Arizona’s Most Scenic Course.”

SPUR CROSS RANCH CONSERVATION Preserved by the town of Cave Creek, Spur Cross Ranch is located at the end of the road and beginning of Tonto National Forest, north of town in Cave Creek, making it 35 miles to the north of Phoenix. Here lies the rugged terrain of Spur Cross Ranch, a beautiful spot attracting tourists and locals for a day away. It has acres and acres of land open for hiking and biking and horseback riding, with areas of vivid green along the creek, and of course the arid land of the ranch. There are also remains of the early mines that can be visited today. Wildflower season in the early spring brings to life the natural splendor in this pristine part of the desert. Mountain lions, bobcats, coyotes, roadrunners, and quail, among many other species, thrive in this conservation area.

CAVE CREEK MUSEUM The Cave Creek Museum preserves and presents artifacts of the prehistory, culture and legacy of the Desert Foothills area. The Museum’s collection is located in both indoor and outdoor exhibits. Inside, you’ll see colorful and informative exhibits in the Archaeology and Pioneer wings. Beautiful paintings, jewelry and sculptures are located within the central area of the Museum. Outside you’ll find the historic first church of Cave Creek, the tubercular cabin (which is listed in National Register of Historic Buildings), the Golden Reef Stamp Mill and garden area.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 23 CLOSEST LANDMARKS

Frontier Town 0 mi. Outlets at Anthem 12.1 mi. Cave Creek Museum 0.5 mi. TPC Scottsdale 13.3 mi. Carefree Desert Gardens 1.5 mi. Deer Valley Rock Art Center 13.9 mi. Troon North Golf Club 7.7 mi. WestWorld 14.3 mi. Musical Instrument Museum 11.5 mi. The School of Architecture at Taliesin 16.6 mi. Pioneer Living History Village 11.6 mi. City of Scottsdale 26 mi. Pioneer Living History Museum 11.8 mi. City of Phoenix 34 mi. Mayo Clinic Hospital 11.9 mi.

24 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA NATURAL BEAUTY

Black Mountain 0 mi.

Spur Cross Ranch Preserve 5 mi. Lower Verde River 15 mi.

Cave Creek Regional Park 10 mi. Pinnacle Peak Park 14 mi.

Bartlett Lake 15 mi. Phoenix Sonoran Preserve 17 mi.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 25 26 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA PHOENIX MSA

Phoenix is the largest city in the state of Arizona, with a population of 1,600,000 people as of 2016, and is currently the fifth most populous city nationwide. The city also serves as the nation’s largest state capital by population as no other capital city in the U.S. has a population of more than 1 million residents. With a population of 4,574,531 as of 2015, the Phoenix-Mesa-Scottsdale MSA was ranked as the 11th largest in the nation. The regional economy has become a national leader coming out of the last recession as it has seen continual high paying broad-based employment gains, particularly in its emerging high-tech cluster, which has led to broader gains throughout the economy. The Phoenix area also benefits from a well- established and thriving tourism sector that has grown around the region’s diversity of leisure amenities.

The backbone of the Phoenix region’s recent economic success has been built on the area’s traditionally proven industry clusters. Companies like Honeywell, Banner Health Systems and Wells Fargo established the city as a high-tech manufacturing center, west coast healthcare hub and major financial center respectively. Additionally, these major regional industry clusters brought high skilled, educated workers to Phoenix and offered the The Phoenix region also consistently maintains a status of being tech industry a favorable economy with complimentary workers. one of America’s most popular vacation spots, receiving over Looking ahead, Phoenix, Mesa and Scottsdale’s growth is likely to remain 16 million visitors annually. In addition to the many shopping, robust. GMP is set to grow by $42.7 billion through 2022 which will be driven sightseeing and cultural possibilities, the area offers ample outdoor by the area’s growing status as an inland trade hub, favorable demographics adventuring activities including camping, golf, fishing, biking, and competitive business costs. Traditionally established industry clusters like hiking and kayaking. Furthermore, the Phoenix metro area is one aerospace engineering and manufacturing, healthcare and financial services are of the Southwest’s most acclaimed cultural hubs and is home widely expected to keep pace with the booming level of growth. Furthermore, to the Heard Museum of Native Cultures, Phoenix Art Museum, the strong underlying econometrics will drive personal income growth, currently Chase Field home of the Diamondbacks, Arizona Science Center, projected to grow by an average of 5.8% through 2022 and is expected to lead Comerica Theatre, Desert Botanical Garden, Talking Stick Resort to a residential real estate boom as demand will continue to outstrip supply Arena home of the Suns and multiple theme parks. largely due to above average population growth. TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 27 PHOENIX METRO FACTS

Waste Management Open, 15 Major League Phoenix Metro is hosted at TPC Scottsdale, Baseball Teams home to is the world’s largest sporting conduct spring training more than event, attracting more than annually in the Cactus League in 200 golf courses 500k spectators annually Scottsdale and Phoenix

Scottsdale is home to

McDowell Sonoran Preserve, Phoenix Metro gets including the beautiful more sunshine and McDowell Mountains than any other major metropolitan currently encompasses more than area in the United States; the sun 30,000 contiguous acres with over shines on the Phoenix Metro area 180 miles of hiking and biking trails, during 85% of its daylight hours as well as equestrian trails

28 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA PHOENIX SKY HARBOR INTERNATIONAL AIRPORT

Phoenix Sky Harbor International Airport (PHX), the 8th busiest airport in the U.S., is located 20 minutes from the Sanctuary. In 2018, airport serviced 45 million passengers, up 2.3% over 2018. Sky Harbor is American Airlines’ sixth-largest hub with nearly 300 daily departures to approximately 80 destinations in four countries and is one of the largest hubs for Southwest Airlines, which has 179 daily departures to over 50 cities across the United States.

In March 2019, American Airlines launched their first- ever nonstop service to Europe from Phoenix with a daily flight to London Heathrow Airport. Condor Airlines, which also offers nonstop service to Frankfurt, Germany, has returned in 2019 and extended their seasonal service, also due to strong demand from the Phoenix market. Both American and Condor’s service as well as British Airways’ daily nonstop service, provide travelers with a time-effective way to get to Europe for business or leisure. The Airport also continues to offer nonstop service to more than 100 domestic destinations as well as service to many cities in Canada and Mexico, and seasonal service to Costa Rica.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 29 CITY OF SCOTTSDALE

Scottsdale is located in the beautiful Sonoran Desert, bordered by Phoenix to the west and the McDowell Mountains to the east. Scottsdale has a vibrant Old Town and is commonly

considered the finest urban center in Arizona. Old Town Scottsdale has more than 90 restaurants, 320 retail shops and 80 art galleries. In addition to the many shopping, sightseeing and

cultural venues, the area offers ample outdoor adventuring activities including camping, golf, fishing, biking, hiking and kayaking. Scottsdale’s McDowell Preserve is the largest urban

wilderness area in the United States featuring more than 60 miles of trails through diverse and scenic desert terrain. Scottsdale’s economic vibrancy, combined with a traditional and growing

leisure component, drives the strength and depth of its lodging market.

30 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA ACCOLADES

Top 10 City to Launch a Startup (DataFox)

No. 1 City in the U.S. to Live an Active Lifestyle (WalletHub)

Top 100 Best Communities for Young People (America’s Promise Alliance)

2017 Excellence in Economy Award (Voice of the People)

ECONOMY

Scottsdale has a diverse economy built on medical research, high-tech companies and one of the most successful shopping centers in the southwest innovation, tourism, and corporate headquarters. The Scottsdale Airpark is United States – Scottsdale Fashion Square. Farther north, the Scottsdale Cure one of the largest employment centers in the state of Arizona with more than Corridor is a partnership of premier health care providers and biomedical 2,900 businesses employing approximately 51,000 employees in 2 million companies seeking to advance medicine and patient care through cutting- square feet of commercial space. The high-tech innovation center SkySong, edge research. located just a few miles from downtown, is designed to help companies grow The City of Scottsdale is highly focused on the attraction and retention of through a unique partnership with nearby Arizona State University. The Airpark businesses and residents within the community, by promoting the low cost of is home to GoDaddy, Axon, JDA Software, Nautilus Insurance, and regional doing business, an educated workforce, a high quality of life, an abundance of operations for CVS Health, Ingenuand, and Vanguard. Scottsdale Airpark is amenities and services, modern infrastructure, and convenient transportation situated approximately nine miles north of the Hampton Inn & Suites Scottsdale network. Scottsdale is home to a significant corporate presence, with more Riverwalk along Route 101. The Scottsdale Airport is a general aviation reliever than 20% of Arizona’s corporate headquarters located in the city, with the facility and home to many of the Valley’s corporate aircraft. The airport does number of headquarters growing by 28% from 2012 to 2017. Target industries not provide commercial commuter or airline service. include information, communications and technology, advanced business Downtown Scottsdale is home to a number of technology and healthcare services, retail & hospitality, and bio-life science and health care.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 31 MAJOR EMPLOYERS IN SCOTTSDALE

C4 Systems

HEALTHCARE Located along Shea Boulevard and Scottsdale Road, Scottsdale’s “Cure Corridor” boasts a large concentration of the city’s health care and biotech companies. Facilities such as Mayo Clinic and Honor Health are medical leaders working on innovative research and treatments that are placing Scottsdale at the forefront of many medical breakthroughs.

In Arizona, the Mayo Clinic services more than 100,000 patients each year in more than 65 medical and surgical disciplines, supported by world- renowned programs in medical education and research. Opened in 1987, As of December 2017, the Mayo Clinic employs 616 staff physicians and the original Scottsdale campus of the Mayo Clinic includes the Mayo Clinic scientists and 6,018 allied health staff in the clinic and hospital. Building, the Samuel C. Johnson Research Building and the Mayo Clinic Collaborative Research Building. The Phoenix campus includes the Mayo Honor Health Scottsdale Shea Medical Center has 433 beds, women’s Clinic Specialty Building and Mayo Clinic Hospital. The Scottsdale clinic services, a dedicated pediatric emergency department, pediatric ICU, and houses a 5-story, 240 exam room outpatient clinic offering outpatient a Level III neonatal ICU. The hospital is known as a bariatric surgery center surgery, a laboratory, diagnostic testing, imaging and pharmacy services, of excellence, total joint replacement center, and provides cardiology and as well as a patient education library and multilevel underground parking. oncology services.

32 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA SCOTTSDALE AIRPORT Located 18 miles south of the Tumbleweed Hotel, the Scottsdale Airport is owned and operated by the City of Scottsdale. Over 166,100 takeoffs and landings each year, making Scottsdale one of the busiest corporate jet facilities in the state. The airport is home to two FBOs, Ross Aviation and Signature Flight Support, and is an ideal choice for both leisure and business travelers. The airport recently completed a $27 million redevelopment project that features a new Aviation Business Center that features a restaurant and meeting space, and two 30,000 square foot hangers. In May 2019, Jet Aviation announced it acquired a stake in Scottsdale Jet Center with intent to build and operate a new state-of-the-art Jet Aviation branded FBO and tenant hanger by late 2020.

TOURISM Tourism is one of Scottsdale’s largest and most vibrant industries, and is a significant contributor to the City’s economy. With a variety of lodging properties in the area, including several world-class resorts and “boutique” hotels, along with spectacular spas, trend-setting dining and one-of-a kind Sonoran Desert golf courses, Scottsdale is one of the most popular tourist destinations in Arizona. In 2016 (the most recent data available), Scottsdale hosted an estimated 4.5 million overnight U.S. visitors and 4.3 million day trip visitors, creating an annual impact of $2.3 billion in the city. The total number of visitor nights spent in hotels was 3.1 million and an additional 1.4 million stayed in alternative lodging.

TOP 10 ACTIVITIES IN SCOTTSDALE

Shopping Dining Swimming Casinos Night Clubs

Historic Parks & Sites Hiking Art Galleries Golf Museums

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 33 34 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA Financial Performance

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 35 HISTORICAL FINANCIAL SUMMARY

TUMBLEWEED HOTEL ACTUAL 2016 ACTUAL 2017 ACTUAL 2018 BUDGET 2019 $ % $ % $ % $ % Rooms 16 16 16 16 Days in Period 366 365 365 365 Rooms Available 5,856 5,840 5,840 5,840 Rooms Sold 2,342 2,336 2,336 2,453 Occupancy 40.0% 40.0% 40.0% 42.0% ADR $157.21 $144.77 $213.06 $216.08 RevPAR $62.89 $57.91 $85.22 $90.75 RevPAR Growth — (7.9%) 47.2% 6.5% OPERATING REVENUE Rooms 368,257 100.0% 338,172 100.0% 497,713 100.0% 530,000 100.0% Total Operating Revenue 368,257 100.0% 338,172 100.0% 497,713 100.0% 530,000 100.0% DEPARTMENTAL EXPENSES Rooms 60,842 16.5% 69,876 20.7% 117,957 23.7% 168,000 31.7% Total Departmental Expenses 60,842 16.5% 69,876 20.7% 117,957 23.7% 168,000 31.7% Total Departmental Profit 307,415 83.5% 268,296 79.3% 379,756 76.3% 362,000 68.3%

UNDISTRIBUTED OPERATING EXPENSES Administrative and General 87,414 23.7% 103,394 30.6% 148,759 29.9% 35,000 6.6% Sales and Marketing 2,754 0.7% 800 0.2% 19,526 3.9% 5,000 0.9% Property Operations and Maintenance 36,838 10.0% 27,700 8.2% 55,192 11.1% 15,000 2.8% Utilities 14,010 3.8% 25,079 7.4% 36,382 7.3% 22,000 4.2% Total Undistributed Expenses 141,015 38.3% 156,973 46.4% 259,858 52.2% 77,000 14.5% GROSS OPERATING PROFIT 166,400 45.2% 111,323 32.9% 119,897 24.1% 285,000 53.8% NON-OPERATING INCOME & EXPENSES Property and Other Taxes 15,901 4.3% 7,719 2.3% 8,056 1.6% 16,000 3.0% Insurance 17,238 4.7% 22,594 6.7% 24,200 4.9% 14,000 2.6% Total Non-Operating Income & Expenses 33,140 9.0% 30,313 9.0% 32,256 6.5% 30,000 5.7% EBITDA 133,260 36.2% 81,009 24.0% 87,642 17.6% 255,000 48.1% Replacement Reserve 11,048 3.0% 10,145 3.0% 14,931 3.0% 15,900 3.0% NET OPERATING INCOME 122,213 33.2% 70,864 21.0% 72,710 14.6% 239,100 45.1%

Notes: 1. Management Fee excluded as owner operated motel. Replacement Reserve reduced to 3% of total revenues. You are solely responsible for independently verifying the information in this Memorandum. ANY RELIANCE ON IT IS SOLELY AT YOUR OWN RISK.

36 TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA PROSPECTIVE FINANCIAL ANALYSIS

TUMBLEWEED HOTEL 2020 2021 2022 2023 2024 $ % $ % $ % $ % $ % Rooms 24 24 24 24 24 Days in Period 366 365 365 365 366 Rooms Available 8,784 8,760 8,760 8,760 8,784 Rooms Sold 3,953 4,380 4,818 4,818 4,831 Occupancy 45.0% 50.0% 55.0% 55.0% 55.0% ADR $223.72 $232.66 $239.64 $246.83 $254.24 RevPAR $100.67 $116.33 $131.80 $135.76 $139.83 RevPAR Growth – 15.6% 13.3% 3.0% 3.0% OPERATING REVENUE Rooms $884,301 92.2% $1,019,067 75.2% $1,154,603 77.0% $1,189,241 77.0% $1,228,274 77.0% Retail/Restaurant Rental Income (Net) 75,000 7.8% 77,250 5.7% 79,568 5.3% 81,955 5.3% 84,413 5.3% TeePee Rentals – 258,335 19.1% 266,085 17.7% 274,068 17.7% 282,290 17.7% Total Operating Revenue $959,301 100.0% $1,354,652 100.0% $1,500,256 100.0% $1,545,263 100.0% $1,594,977 100.0% DEPARTMENTAL EXPENSES Rooms $212,232 24.0% $244,576 24.0% $277,105 24.0% $285,418 24.0% $294,786 24.0% TeePee Rentals – – 193,752 75.0% 199,564 75.0% 205,551 75.0% 211,718 75.0% Total Departmental Expenses $212,232 22.1% $438,328 32.4% $476,669 31.8% $490,969 31.8% $506,503 31.8% TOTAL DEPARTMENTAL PROFIT $747,069 77.9% $916,325 67.6% $1,023,587 68.2% $1,054,294 68.2% $1,088,474 68.2% UNDISTRIBUTED OPERATING EXPENSES Administrative and General $160,694 16.8% $162,905 12.0% $167,254 11.1% $172,467 11.2% $178,127 11.2% Sales and Marketing 43,209 4.5% 44,506 3.3% 45,841 3.1% 47,216 3.1% 48,632 3.0% Property Operations and Maintenance 59,079 6.2% 60,365 4.5% 62,095 4.1% 63,987 4.1% 66,087 4.1% Utilities 39,657 4.1% 39,891 2.9% 40,877 2.7% 42,180 2.7% 43,564 2.7% Total Undistributed Expenses $302,640 31.5% $307,667 22.7% $316,067 21.1% $325,850 21.1% $336,411 21.1% GROSS OPERATING PROFIT $444,429 46.3% $608,658 44.9% $707,520 47.2% $728,445 47.1% $752,062 47.2% NON-OPERATING INCOME & EXPENSES Property and Other Taxes $8,571 0.9% $8,804 0.6% $9,068 0.6% $9,340 0.6% $9,647 0.6% Insurance 25,746 2.7% 26,446 2.0% 27,239 1.8% 28,056 1.8% 28,977 1.8% Total Non-Operating Income & Expenses $34,317 3.6% $35,250 2.6% $36,307 2.4% $37,396 2.4% $38,624 2.4% EBITDA $410,112 42.8% $573,408 42.3% $671,213 44.7% $691,048 44.7% $713,438 44.7% Replacement Reserve $28,779 3.0% $40,640 3.0% $45,008 3.0% $46,358 3.0% $47,849 3.0%

NET OPERATING INCOME $381,333 39.8% $532,768 39.3% $626,205 41.7% $644,690 41.7% $665,589 41.7%

Notes: 1. Management Fee excluded as owner operated motel. Replacement Reserve reduced to 3% of total revenues.

You are solely responsible for independently verifying the information in this Memorandum. ANY RELIANCE ON IT IS SOLELY AT YOUR OWN RISK.

TUMBLEWEED HOTEL | CAVE CREEK, ARIZONA 37 CONFIDENTIAL OFFERING MEMORANDUM

TUMBLEWEED HOTEL 6333 E. CAVE CREEK ROAD | CAVE CREEK, AZ 85331

LICENSED REAL ESTATE BROKER, CBRE INC. JENNIFER BERGAMO Vice President +1 602 735 1987 [email protected]

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© 2019 CBRE, Inc. All rights reserved. This information has been obtained from sources believed reliable, but has not been verified for accuracy or completeness. You should conduct a careful, independent investigation of the property and verify all information. Any reliance on this information is solely at your own risk.