Self Contained Appraisal Report Prepared For

LA VENTANA State Highway 286 La Paz, La Paz County, Baja California Sur Mexico CBRE File No. 06-361HO-3163

Self Contained

Appraisal Report

Prepared for:

Terresa Cordova Senior Loan Closing Coordinator REDWOD CAPITAL ADVISORS, LLC 4309 Hacienda Drive, Suite 480 Pleasanton, CA 94588

VALUATION & ADVISORY SERVICES

2700 Post Oak Blvd., Suite 250 Houston, Tx 77056

T (713) 840-6620 F (713) 840-6649

www.cbre.com

November 2, 2006

Terresa Cordova Senior Loan Closing Coordinator REDWOD CAPITAL ADVISORS, LLC 4309 Hacienda Drive, Suite 480 Pleasanton, CA 94588

RE: Appraisal of La Ventana State Highway 286 La Paz County, Baja California Sur CBRE File No 06-361HO-3163

Dear Ms. Cordova:

At your request and authorization, CB Richard Ellis (CBRE) has prepared an appraisal of the market value of the referenced property. Our analysis is presented in the following Self Contained Appraisal Report.

The subject is a 597.326-acre tract of vacant land located approximately one mile north of State Highway 286 southeast of the City of La Paz. Unique property characteristics include the fact that the site contains extensive frontage along the Sea of Cortez, has a positive atypical frontage to depth ratio in comparison to other tracts and has utilities (electricity) available at a cost of $750,000. Additionally, the property is located in a recently designated Tourism Zone. The subject is more fully described, legally and physically, within the enclosed report.

The subject is proposed to be developed with a master planned mixed use development consisting of single family (from low to medium density) and commercial. The site is located in a recently declared Tourism area which will have a positive impact on the property.

Based on the analysis contained in the following report, the market value of the subject is concluded as follows:

MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion As Is Fee Simple Estate October 27, 2006 $45,000,000 Compiled by CBRE

Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter.

The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and Title XI Regulations.

The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter.

CBRE hereby expressly granted to Client the right to copy this report and distribute it to other parties in the transaction for which this report has been prepared, including employees of Client, other lenders in the transaction, and the borrower, if any. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us.

Respectfully submitted,

CBRE - VALUATION & ADVISORY SERVICES

Michael D. McAuliffe, MAI Senior Real Estate Analyst Texas Certification TX-1321367-G

Phone: 713-888-4769 Fax: 713-840-6649 Email: [email protected]

LA VENTANA CERTIFICATION OF THE APPRAISAL

CERTIFICATION OF THE APPRAISAL

We certify to the best of our knowledge and belief: 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, impartial and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment. 4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 5. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 6. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan. 7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal. 8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice. 9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 10. As of the date of this report, Michael D. McAuliffe, MAI has completed the continuing education program of the Appraisal Institute. 11. Michael D. McAuliffe, MAI has made a personal inspection of the property that is the subject of this report. 12. Stephen D. Duplantis, MAI, has reviewed this appraisal report. 13. No one provided significant real property appraisal assistance to the persons signing this report. 14. Valuation & Advisory Services operates as an independent economic entity within CBRE. Although employees of other CBRE divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy are maintained at all times with regard to this assignment without conflict of interest.

Michael D. McAuliffe, MAI Texas Certification TX-1321367-G

LA VENTANA SUBJECT PHOTOGRAPHS

SUBJECT PHOTOGRAPHS

TYPICAL VIEW OF THE SUBJECT

TYPICAL VIEW OF THE SUBJECT ii

LA VENTANA SUBJECT PHOTOGRAPHS

TYPICAL VIEW OF THESUBJECT

VIEW OF THE ARROYO ON THE EAST OF THE SITE iii

LA VENTANA SUMMARY OF SALIENT FACTS

SUMMARY OF SALIENT FACTS

Property Name La Ventana Location State Highway 286, La Paz, La Paz, Baja California Sur Mexico

Assessor’s Parcel Number Mulitple Highest and Best Use As Vacant Mixed Use Residential As Improved Mixed Use Residential Property Rights Appraised Fee Simple Estate Land Area 597.33 AC 26,019,503 SF Land Area 241.73 HECTARES 2,417 SQUARE METERS Estimated Exposure Time 12 Months

VALUATION Total Per SF Land Value $45,000,000 $1.73

CONCLUDED MARKET VALUE Appraisal Premise Interest AppraisedDate of Value Value As Is Fee Simple EstateOctober 27, 2006 $45,000,000

Compiled by CBRE

EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS

The value contained herein is predicated upon the following assumptions:

• The subject property is located within a designated Tourism Area;

• The property has adequate public electric service available at a cost of approximately $750,000;

• The subject property has access via an access easement to a public road which is noted as being 50 meters wide;

• The property rights represent fee simple estate;

• Any adverse legal or governmental vents that preclude development of the site will likely have an adverse effect on the market value;

• The property will have rights and permits to be developed with a mixed use residential development.

LA VENTANA TABLE OF CONTENTS

TABLE OF CONTENTS

CERTIFICATION OF THE APPRAISAL...... i SUBJECT PHOTOGRAPHS ...... ii SUMMARY OF SALIENT FACTS...... iv TABLE OF CONTENTS...... v INTRODUCTION ...... 1 AREA ANALYSIS...... 6 NEIGHBORHOOD ANALYSIS ...... 10 SITE ANALYSIS ...... 18 ZONING ...... 23 HIGHEST AND BEST USE ...... 24 APPRAISAL METHODOLOGY ...... 26 LAND VALUE...... 28 RECONCILIATION OF VALUE ...... 34 ASSUMPTIONS AND LIMITING CONDITIONS ...... 35 ADDENDA A Glossary of Terms B Land Sale Data Sheets C Legal Description D Letter of Engagement E Qualifications

LA VENTANA INTRODUCTION

INTRODUCTION

PROPERTY IDENTIFICATION

The subject is a 597.326-acre (26,019,503 SF) tract of vacant land located to the north of State Highway 286 , southeast of the City of La Paz, Baja California Sur, Mexico. Unique property characteristics include the fact that the subject property has extensive frontage along the Sea of Cortez and exhibits a positive atypical frontage to depth ratio for properties in the area. Additionally, the property is bordered on the east by an arroyo which is not developable thereby enhancing the views of the eastern boundary of the subject. The subject is more fully described, legally and physically, within the enclosed report.

OWNERSHIP AND PROPERTY HISTORY

Title to the property is currently vested in the name of Baja Peninsula Properties, who acquired title to the property in December, 2005 for $8,000,000 with the seller financing $4,000,000 of the purchase price for one year, as recorded in Volume 503, Deed 20,948 of the La Paz County Deed Records. This most recent sale transaction of the subject appears to have been arm’s length and reasonable based upon the fact that this involved five ejido families, had never been exposed to the market for sale and was placed under contract within 24 hours of knowledge of the tract becoming available. As is the case with most all ejido transactions, the properties are acquired at prices well below market value when the buyer can close within a reasonable period of time. In the case of the subject, the occupation of each of the sellers was listed as peasant and the sellers virtually became millionaires over night.

This acquisition price represented the ejido status price in that ejido land cannot be transferred to foreigner’s until privatization occurs. In general, an ejido is a collective group of people that live and work on a determined piece of property as a community. While the concept of the ejido in Mexico is pre-hispanic, most of the fundamental ideas and concepts that created what an ejido is today stem from the theories of democratic communism. Understanding this is very important when dealing with ejidos as in a communistic society the community determines what it is going to do, including agreeing upon how the land they hold is to be used. Taking this into consideration, it is not hard to imagine the confusions that could exist when discussing ownership of ejido land. As opposed to words such as “fee simple” or “private property”, the ejidatarios idea would be more in lines with “Community rights” or “Governmental concession”.

At the time of sale the property was not located within a designated tourism zone, had no access from a public road and was originally thought to be bordered on the east by an additional ejido tract. Since the acquisition, the property has been designated as being in the tourism zone, has a 50 meter access easement to a public road through an adjoining ejido tract and after the final survey it was

LA VENTANA INTRODUCTION

determined that the site actually borders an arroyo on the east at the point where it reaches the beach frontage.

Based on conversations with owners of the subject, there have been numerous offers to acquire the site with the most recent offer being for $1.40 per square foot ($15.00 per square meter).

To the best of our knowledge, there has been no other ownership transfer of the property during the previous three years. Based upon discussions with the current owners, the subject was not listed for sale and was acquired as the result of a long relationship between Hetcor Magallanes and the Mayor of La Ventana, who represented the ejido

PREMISE OF THE APPRAISAL/RELEVANT DATES

The following table illustrates the various dates associated with the valuation of the subject and the valuation premise(s):

PREMISE OF THE APPRAISAL/RELEVANT DATES Date of Report: November 2, 2006 Date of Inspection: October 27, 2006 Date of Value As Is: October 27, 2006 Compiled by CBRE

TERMS AND DEFINITIONS

The current economic definition agreed upon by agencies that regulate federal financial institutions in the U.S. (and used herein) is as follows:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated; 2. both parties are well informed or well advised, and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

LA VENTANA INTRODUCTION

5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 1 The Glossary of Terms in the addenda provides definitions for additional terms that are, and may be used in this appraisal.

INTENDED USE AND USER OF REPORT

This appraisal is to be used by the client for lending purposes.

SCOPE OF WORK

The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered and analysis is applied, all based upon the following problem-identifying factors stated elsewhere in this report:

• Client • Intended use • Intended user • Type of opinion • Effective date of opinion • Relevant characteristics about the subject • Assignment conditions This appraisal of the subject has been presented in the form of a Self-Contained Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of USPAP. That is, this report incorporates, to the fullest extent possible, practical explanation of the data, reasoning and analysis that were used to develop the opinion of value. This report also includes thorough descriptions of the subject and the market for the property type. CBRE completed the following steps for this assignment:

Extent to Which the Property is Identified

CBRE collected the relevant information about the subject from the owner (or representatives), public records and through an inspection of the subject. The property was legally identified through its assessor’s records, legal description and title report. Economic characteristics of the subject were identified via an analysis of area mixed use develoments.

Extent to Which the Property is Inspected

CBRE inspected the subject, as well as its surrounding environs on the effective date of appraisal.

1 Office of Comptroller of the Currency (OCC), 12 CFR Part 34, Subpart C – Appraisals, 34.42 (g); Office of Thrift Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP).

LA VENTANA INTRODUCTION

Type and Extent of the Data Researched

CBRE reviewed the micro and/or macro market environments with respect to physical and economic factors relevant to the valuation process. This process included interviews with regional and/or local market participants, available published data, and other various resources. CBRE also conducted regional and/or local research with respect to applicable tax data, zoning requirements, flood zone status, demographics, income and expense data, and comparable listings and sales information.

Type and Extent of Analysis Applied

CBRE analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. Approaches to value used include the sales comparison approach. The steps required to complete each approach are discussed in the methodology section. CBRE then correlated and reconciled the results into a reasonable and defensible value conclusion, as defined herein. A reasonable exposure time and marketing time associated with the value estimate presented has also been concluded.

SPECIAL APPRAISAL INSTRUCTIONS

There have been no special appraisal instructions for this assignment.

EXPOSURE/MARKETING TIME

Current appraisal guidelines require an estimate of a reasonable time period in which the subject could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. In consideration of these factors, we have analyzed the following:

• exposure periods for comparable sales used in this appraisal; • marketing time information from the CBRE National Investor Survey; and • the opinions of market participants. The following table presents the information derived from these sources.

LA VENTANA INTRODUCTION

EXPOSURE TIME INFORMATION Exposure Time (Months) Investment Type Range Average Comparable Sales Data 3.0 - 12.0 6.0 CBRE General Investment Class A 1.0 - 5.0 3.2 Class B 3.0 - 12.0 5.5 Class C 5.0 - 12.0 7.0 Local Market Professionals 6.0 - 12.0 9.0 CBRE Estimate 12 Months Source: CBRE National Investor Survey

In general, the sales indicate exposure times in the lower to middle portion of the range indicated by the investor survey. In addition to the sales and survey data, we have also reviewed the assumptions and conclusions reached, particularly the income estimates and rates of return and there potential impact on exposure/marketing time. Based on these analyses, we have concluded an exposure/marketing time of 12 months or less would be considered reasonable for the subject.

This exposure/marketing time reflects current economic conditions, current real estate investment market conditions, the terms and availability of financing for real estate acquisitions, and property and market-specific factors. It assumes that the subject is (or has been) actively and professionally marketed. The marketing/exposure time would apply to all valuation premises included in this report.

LA VENTANA NEIGHBORHOOD ANALYSIS

AREA ANALYSIS

HISTORY OF BAJA CALIFORNIA SUR

Baja California Sur is one of 31 states forming the Republic of Mexico (Estados Unidos Mexicanos). The state of Baja California Sur is the westernmost state in Mexico and can be described as a 1,100

LA VENTANA NEIGHBORHOOD ANALYSIS

mile long peninsula that extends southward from the U.S. Border directly south of California. This is the largest peninsula in the world. The peninsula is bound on the west by the Pacific Ocean and on the east by the Sea of Cortez (also known as the Gulf of California). Except for two large coastal plains on the Pacific side, the peninsula consists largely of rugged mountain ranges averaging 5,000 feet, with one peak, the San Pedro Martir, more than 10,000 feet. Surface transportation on the peninsula is via the Transpeninsula Highway (also known as Highway 1).

The area is lightly populated and has little arable land. However, there is some cotton grown commercially and there is significant salt mining in the desert region in the northern portion of the state. The land is generally desolate and arid. However, irrigation systems on the Colorado River have made possible the development of a rich farming area around Mexicali and the region is a leading national producer of cotton and wheat. There are fisheries and fish canneries at Ensenada, which is also developing as a resort area. Baja California Sur is not economically prosperous as a whole, although tourism is developing rapidly, particularly between Cabo San Lucas, San Jose del Cabo, and most recently La Paz.

The state capital is La Paz, which is located on the eastern side of the Peninsula on the Bay of La Paz. The main tourist attractions are located on the southern portion of the peninsula known as Los Cabos. This includes the cities of Cabo San Lucas, San Jose del Cabo and the 20 mile stretch along Highway 1 known as “the corridor”.

Baja California Sur is one of the youngest states in the Republic of Mexico not attaining statehood until 1974. Before 1960, there were only a limited number of resort properties in Los Cabos. The area was frequented by Hollywood Stars who sought a remote (and beautiful) getaway spot. Several of the original resorts include the La Palmilla resort, Club Las Cruces and the Cabo San Lucas hotel. The area has long attracted wealthy fishermen who could afford the high cost of travel to the area. From 1960 to the 1970’s development of resort properties was slow and Los Cabos only had eight hotels. From 1980 through 2000, Los Cabos began to increase with rapid development occurring after 1990. In 1981, the Los Cabos International Airport opened, which accelerated travel to the area. From 1980 to 1990, the number of hotel rooms grew from 800 to 2,500. From 1990 to September 2005 the number of hotel rooms grew from 2,500 to over 10,069. At the same time, the area experienced development in timeshares and condominiums.

CLIMATE

The weather in the area is comparable to Palm Springs, California. Most days are hot and sunny with low humidity due to the desert terrain. However, along the coast ocean breezes help to temper the temperature. Average high temperatures range from highs in the mid 70’s in the winter time and the mid 90’s in the summer. Annual rainfall is less than 7 inches and most of the rain can fall in one or two storms which typically occur in the fall. The area is subject to a hurricane season. Water is

LA VENTANA NEIGHBORHOOD ANALYSIS

always in limited supply in the region. Most large developments require saltwater desalination plants to provide water.

POPULATION

Baja California Sur has a population of approximately 500,000 inhabitants. Los Cabos comprises roughly 22% of the overall population in the state with a population of approximately 110,000. while La Paz exhibits a population of approximately 250,000. However, the majority of the population is not native to the area, but has been drawn to the area from other regions of Mexico by the increasing demand created by tourism.

EMPLOYMENT

The state’s main economic activity is tourism. For 2004, the labor force was estimated at 211,258 in the state of Baja California Sur. Low unemployment is reported with recent figures being less than 1.2%.

AIRPORT TRAFFIC

San Jose del Cabo International Airport is located just north of the town of San Jose del Cabo. It is the primary airport serving the region. During 2004, airport traffic totaled more than 200 flights per week. Airlines with commercial flights into this airport include Continental Airlines, Alaska Airlines, American Airlines, Aeromexico, Delta and America West. The total number of passengers for 2004 was 896,020 with a total of 14,369 commercial and chartered flights. As access to Los Cabos continues to improve, more and more tourists from the west coast and other areas are expected to travel to the area.

La Paz also has an airport and features a constantly growing number of flights and carriers. La Paz is served by American/ Aero Mexico, Alaskan/Aero Mexico, United/Mexicana, Aero Litoral, Delta/Aero Mexico and America West. The airport is 12 kilometers outside town. Taxis and shuttles run regularly. There is a standard fee for given distances and it always seems to be more coming into town than returning to the airport. Last year the airport exhibited 6,836 commercial flights plus 121 charter flights.

CONCLUSION

The rate of development and tourism growth dramatically increased after 1990 in Los Cabos. This growth was followed by the growth in La Paz and the East Cape. The market is heavily impacted by U.S. tourism and experienced a downturn in 2001 and 2002 similar to the U.S. tourist market. However, the area has been on a growth track ever since. The area is currently one of the most popular destinations in Mexico. It is noted for its beautiful ocean views, beautiful beaches, high quality golf and sport fishing. However, due to the arid mountainous terrain, lack of fresh water and

LA VENTANA NEIGHBORHOOD ANALYSIS

isolation from agricultural areas it is and will remain one of the more expensive destinations in Mexico.

LA VENTANA NEIGHBORHOOD ANALYSIS

NEIGHBORHOOD ANALYSIS

LA VENTANA NEIGHBORHOOD ANALYSIS

LOCATION

The subject is located to the southeast of the city of La Paz and is considered a suburban location. The city of La Paz is situated in an area referred to as the East Cape and is located in La Paz County,

OVERVIEW

La Paz is a city where an estimated 250,000 Mexicans live and work. It dedicates just a five block strip for tourist shops, restaurants and tours. Local business establishments intermingle with tourist stops and give the city a lived - in feeling. The romantic seaside walkway (the Malecon) is the vantage point for stunning sunsets and early morning walks.. La Paz is quickly establishing itself as Baja's eco-tourism center with a wide variety of tours offered by professionals dedicated to preserving the environment.

Located on a large bay on the Sea of Cortes, La Paz is 137 miles by road north of the southern tip of the peninsula. Looking out from the downtown core you see the Mogote Peninsula with its many varieties of birds. Traveling north by water takes you to the wilderness islands of El Espiritu Santo, La Partida and Los Islotes. The islands are destinations for scuba divers, kayakers, fishermen, snorkelers, hikers and beach lovers. Ecologists work to keep these islands pristine so existing flora and fauna survive and so visitors can learn about the sea and enjoy the white sand beaches, the multi-colored cliffs and the sea life.

La Paz, meaning “Peace,” as in calm waters and tranquility, is the capital of Baja California Sur. Known worldwide for sports fishing, diving, snorkeling, and whale watching, it is no wonder why Jacques Cousteau called this area of the Sea of Cortez “the world’s aquarium.” People have been drawn here for years because of its friendly, safe atmosphere and unique natural treasures. With their role as “Protectors” of the Sea of Cortez, Governor of Baja California Sur Narciso Agúndez Montaño, and La Paz Mayor, Victor Castro Cosío are allowing controlled development to preserve the beauty and natural peace of the place. La Paz is now experiencing a flurry of development activity with the groundbreaking, opening, and renovation of several hotels and resort communities. Fortunately, all these new resort properties are committed to maintaining those very special charms for all to continue to enjoy.

TOURISM

La Paz is one of the favorite beach areas for Mexican and foreign visitors. Its international fishing tournaments are famous. Scuba diving, yachting, sailing and ecotourism trips to the islands enchant the visitors but it is the beaches that keep people coming back. Although situated on a lovely long beach, the best beaches for swimming and sunbathing are found north of the city on the road to Tecolote. Playa Palmira, Playa el Coromuel, Playa el Caimancito, Playa del Tesoro, Playa Pichilingue, Playa Balandra, Playa el Tecolote and Playa el Coyote are havens for the beach lover.

LA VENTANA NEIGHBORHOOD ANALYSIS

Because La Paz is a large center it has perhaps the best shopping on the peninsula. There are corner stores, supermarkets, department stores, pharmacies (many concentrated around the public market), auto parts, marine supplies and hardware stores. Large outlets take charge cards or exchange US dollars.

REAL ESTATE

Real estate values in southern Baja and at the Cape have experienced significant increases over the last few years. And there are no indications that the housing market in Baja will be slowing down any time soon.

Home prices in Baja have increased for a variety of reasons. This is in part due to the dramatic increases in the cost of housing in the U.S., but just as important is the availability of financing and title insurance, which have only recently become available.

For most of Baja's history title insurance underwritten by U.S. title companies was not available. Seeing some pretty huge upside potential, Stewart Title Company jumped into the Baja real estate market with both feet and that has eased the concerns of many U.S. buyers.

The availability of financing has also helped fuel the fire in Baja's real estate market. Each year new companies join the small but growing club of lenders willing to lend a significant portion of the sales price of Baja homes.

Probably the biggest push for Baja real estate came when the Mexican government changed the laws preventing ownership of Mexicna land by foreigners. Now individuals and corportations can buy property in Mexico using a fiedeicomiso, where the owner retains a full equity interest if the title in the buyer's name is held by a Mexican Bank.

As you would expect, most gringos buying in Baja are looking for property along the coast. Beachfront property is still affordable, and property just inland from the coast is even more affordable.

President Vicente Fox Quesada celebrated the inauguration of Marina Costa Baja, a beachfront resort community. . On the edge of the Sea of Cortez, it has two state-of-the-art marinas with 250 prime slips for 30 to 250 ft. crafts, managed by well-regarded Bellport of Newport Beach, California. A lively marina village with restaurants, outdoor cafés, and charming boutiques is almost fully leased and provides lots of choices for both homeowners and visitors. Luxury villas and condos overlook one of three white sand beaches. Models are open and many homes are move-in ready. Sales are soon to begin on hillside homes and lots with panoramic bay-views. A new on-site 120-room Fiesta Inn makes it easy to come for a visit to explore. Mexico-City-based Parque Reforma, whose founder was noted environmentalist Manuel Arango, is the developer of Marina Costa Baja. Prudential California Realty is handling the condo sales, with prices starting at under $200,000. Baby-boomers, young families,

LA VENTANA NEIGHBORHOOD ANALYSIS

and investors are quickly snatching up these great buys. RNM Design of Newport Beach, California is designing the master plan for the next phase of 100 hill top residential lots.

Paradise of the Sea is a resort on the El Megote Peninsula, which expects to complete an 18-hole Arthur Hills design. Accessible by a 5-minute ferryboat ride across the Bay of La Paz, the resort has city-light views of the mainland from many locations. Luis Cano, who owns Gravi Constructora a large building firm in Cabo, and John Fair, the Denver-based developer of Auberge at Esperanza in Cabo San Lucas, are heading up the project. With the recently obtained Audubon International stamp of approval, the development began construction on its first phase of a total of 458 2- and 3- bedroom condominiums, and 294 luxury 2- and 3-bedroom casas in June 2005.

In anticipation of the area’s growth, legendary and charming Hotel La Concha, the only hotel actually located directly on the beach, is renovating its 100 guest rooms, lobby, restaurant, and 4,000+ Sq. Ft. conference center. Owner-partners, Kaveh Lahijani and Safi Mirsaeavi, mentioned that they are considering building two condominium towers of 35 units each on the 3 acres adjacent to the hotel.

Punta Colorada, a scenic peninsula with 640-acres and plans for a championship Robert von Hagge golf course with spectacular view holes, 350 single-family homes, a hotel, and 300 condo units, has been approved. Three adjacent companion parcels with additional potential golf courses, home sites, and hotel pads, will bring this total area to over 4,660 acres, estimated at $1 billion upon completion. Prudential California Realty is representing the owners to subdivide and sell off some of the parcels.

Punta Arena, with over 9,000 acres, including an existing private airstrip, is in the design phase of several subdivisions for development in the near future. The Las Vegas based owner is also considering remodeling and reopening an old 40-room hotel on the property. Recently, it as been reported that a large portion of this tract will be developed with the largest marina in Baja California. The marina will reportedly be a protected inland marina with development around it.

Last but not least, Bahia de los Sueños (Bay of Dreams), a 4,300-acre resort development 45 minutes south of town, began construction in 2001 with low-density beachfront estates and The Giggling Marlin Beach Club, named by the owner of the popular restaurant with the same name in Cabo San Lucas. Since construction began Tom Doak was signed as the golf architect for the project’s 18-hole golf course and a 6-hole “barefoot” golf course for family and informal play. Additionally, Bahia de los Sueños has hired the same team that designed and built the famed Las Ventanas al Paraíso hotel in Cabo San Lucas. Sales in the development did not live up to expectations as the property was reportedly experiencing title issues and on-going litigation. It has been reported that litigation is in the final stages and that the development, as well as sales should make a turn for the best in the immediate future.

LA VENTANA NEIGHBORHOOD ANALYSIS

GROWTH PATTERNS

The following is information from an article in the 2006-2007 Collectors Edition of Baja Traveler Magazine by Jay West.

The East Cape….On the Move!

The next time you find yourself at the Los Cabos International Airport….turn left. Point your car north and drive for 45 minutes to Bahia de Las Palmas, the picture perfect bay which is the weekend getaway for many of Cabo’s residents in the know.

Ask many tourists and even a few locals where the “East Cape” is and they will tell you to go to San Jose del Cabo, turn left at La Playita and drive the washboard dirt road until you find houses run on generators and trucked-in water. WRONG!

Much of the real excitement is up on the Sea of Cortez where the road is paved, the electricity is actually wired to your home and the water runs out of your pipes aplenty.

You won’t be disappointed. Federal Highway #1 is paved all the way and the time will pass quickly on the easy drive through the scenic Baja desert. Just watch your speed and keep an eye out for livestock which can wander onto the Highway without notice.

You will soon arrive at Bahia de Las Palmas, home to Mexico’s best sport fishing at least 7 months out of the year, as well as some of the Baja’s most spectacular white-sand swimming beaches, and where all variety of water recreation abounds.

In fact, the resort and artist community of Los Barriles is in the midst of an aesthetic make-over, complete with a wide thoroughfare entrance into the town beginning at a new landmark fountain on the highway and following classic wrought iron streetlamps descending to the entrance of the centerpiece Las Palmas de Cortez hotel. And more welcome news to the locals includes an announcement by the Baja California Sur Government that the completion of the beautification project for 2006 will include environmental improvements to the lagoon and the re-paving of the roads in town center.

The Los Barriles and Buena Vista area is now an official destination, and is currently being promoted by the State Tourism Department with considerable resources from both the public and private sectors. “Escape to the Cape” has generated a huge amount of interest in the area, and virtually all of the remaining beachfront development parcels have been scooped up by high end developers with deep pockets and a vision for maintaining the spectacular beauty of the bay and its pristine surroundings.

At the center of this commitment to area development is the Van Wormer family, who have long been the anchors of the local community, particularly in the town of Los Barriles. The Van Wormer hotels at

LA VENTANA NEIGHBORHOOD ANALYSIS

Palmas de Cortez and Playa del Sol have provided employment and a steady economic base for many, if not most, of the area’s inhabitants. In addition, the family is developing several other parcels of land which it owns in the area, including the magnificent beach front resort of Villas de Cortez adjacent to the Palmas de Cortez property. This luxury resort-spa development currently under construction will consist of more than 100 beachfront condominium villas, each possessing a sweeping and unobstructed first row view of the Bay at a fraction of Cabo prices. In fact, more than 50% of the villas in Phase One pre-construction have been sold as of this writing.

Custom single family homes have replaced most of the primitive palapa and mobile dwellings which the first foreign inhabitants thrust upon the landscape a dozen or more years ago. Lot sales have exploded and most of the current inventory has been depleted in the same manner as in Cabo and San Jose. The good news for those who are not candidates for the upscale beach investment is that new land developments are being created and a quality home can still be built on a view lot for a modest price.

Many visitors have also taken note of the strong sense of community that exists in the town of Los Barriles and the local arts scene continues to attract artists and devotees of the theatre from throughout the Baja and beyond.

The lack of nightlife and Cabo’s sometimes sleazy after-dark street scene makes the town even more appealing for those who reject the din and frantic pace of traffic, sales promotion, and general day- after-day hustle of Los Cabos’ two towns. Los Barriles is still known for a good steak and excellent fresh fish or coconut shrimp, and you can still hear good music although rarely after midnight. People still rise early to enjoy a walk on the beach, or to get in a full day of fishing, kayaking, or wind surfing the consistent breezes on winter days.

Next door to Los Barriles, in Buena Vista, the historic Rancho Buena Vista resort has recently been sold and a complete master planned development is rumored to be in the works beginning in 2006. A similar buzz involves the various owners or developers of all of the remaining beach front property from Rancho Leonero at the far southern end of the Bay north to Los Barriles. Those in the know consider this to be more than fantasy and prices in the area are now beginning to reflect the growing market demand.

And why not? Considering the density and sky high prices already achieved in the Los Cabos corridor and the growing urban conditions within and around the town centers of San Jose del Cabo and Cabo San Lucas, the environmental quality of life along the “Bay of Palms” has become very attractive to many. For those of us who remember, it is indeed reminiscent of the serenity of “Old Cabo”.

LA VENTANA NEIGHBORHOOD ANALYSIS

There is also every indication that those responsible for the future development of the Bahia de Las Palmas area, know the value of preserving the intrinsic reasons why people will want to live and invest in the area for many years to come.

If there is still a ground floor opportunity in Los Cabos, surely this is one for the prudent investor looking for appreciation, with recreational use and quality of life as the all important added benefits to enjoy with family and friends.

CONCLUSION

The neighborhood appears to be in a period of growth as the amount of vacant available land in the southern portions of baja are diminishing and prices are reaching record levels. La Paz offers an affordable alternative to the Cabo San Lucas area. The La Paz area has recently developed a master plan in anticipation of the on-going and future development. The overall economic outlook for the area is positive.

LA VENTANA SITE ANALYSIS

PLAT MAP

LA VENTANA SITE ANALYSIS

SITE ANALYSIS

The following chart summarizes the salient characteristics of the subject site.

SITE SUMMARY

Physical Description Gross Site Area 597.33 Acres 26,019,503 Sq. Ft. Net Site Area 597.33 Acres 26,019,503 Sq. Ft. Primary Road Frontage State Highway 286 164 Feet Beach Frontage Yes 5,398 Feet Additional Road Frontage None Average Depth 5,238 Feet Excess Land Area None Surplus Land Area None Zoning District Tourism Comparative Analysis Rating Access Average Visibility Average Functional Utility Good Traffic Volume Average Adequacy of Utilities Good Landscaping Natural Drainage Assumed adequate UtilitiesProvider Adequacy Water Desalination and On-Site Wells Assumed Yes Sewer On-Site Septic Assumed Yes Natural Gas On-Site Tanks Assumed Yes Electricity CFE (Public) Assumed Yes Other Yes No Unknown Detrimental Easements X Encroachments X Deed Restrictions X Reciprocal Parking Rights X Common Ingress/Egress X

Source: Various sources compiled by CBRE

LOCATION

The subject is located somewhat in a cove on the southwest side of the Sea of Cortez, north of state Highway 286, approximately 25 miles southeast of the city of La Paz. Ingress and egress is available to the site via a 50 meter access easement from State Highway 286.

LA VENTANA SITE ANALYSIS

ASSESSOR’S PARCEL NUMBER

The La Paz County Tax Assessor’s parcel number(s) were not available from the client. As the site was acquired from five ejido, it is assumed that the site will be re-assessed as a single parcel.

LAND AREA

The land area size was obtained via the survey provided and is assumed to be correct. The site is considered adequate in terms of size and utility. There is no unusable, excess or surplus land area.

SHAPE AND FRONTAGE

The site is generally rectangular and has what is considered as excellent frontage (5,398 feet) along the Sea of Cortez.

TOPOGRAPHY AND DRAINAGE

The site is generally level and sloping upward from the Sea of Cortez towards the back of the property. This allows views from most of the site. The topography of the site is not seen as an impediment to the development of the property. During our inspection of the site, we observed no drainage problems and assume that none exist.

SOILS

A soils analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soils report, it is a specific assumption that the site has adequate soils to support the highest and best use.

EASEMENTS AND ENCROACHMENTS

Based on an inspection and review of the site plan, the property does not appear to be adversely affected by any easements or encroachments. It is recommended that the client/reader obtain a current title policy outlining all easements and encroachments on the property, if any, prior to making a business decision.

COVENANTS, CONDITIONS AND RESTRICTIONS

There are no known covenants, conditions and restrictions impacting the site that are considered to affect the marketability or highest and best use.

UTILITIES AND SERVICES

The site is within the jurisdiction of La Paz County and will reportedly be provided with electrical service. Water will be provided either by on-site wells or via the development of a desalination facility.

LA VENTANA SITE ANALYSIS

Sanitary sewer will be provided by on-site septic systems. All utilities are assumed available or capable of being provided to the site in adequate quality and quantity to service the highest and best use.

ENVIRONMENTAL ISSUES

CBRE has not observed and is not qualified to detect, the existence of potentially hazardous material or underground storage tanks which may be present on or near the site. The existence of hazardous materials or underground storage tanks may affect the value of the property. For this appraisal, CBRE has specifically assumed that the property is not affected by any hazardous materials that may be present on or near the property.

ADJACENT PROPERTIES

The adjacent land uses are summarized as follows:

North: Sea of Cortez South: Vacant ejido land – reportedly under contract East: Arroyo, ejido tract and single family development across the arroyo West: Undeveloped ejido land – reportedly under contract The adjacent properties are similar to the subject. It has been reported that the ejido site located to the west and south of the subject have either been sold within the past two weeks or are under contract for the development of a several thousand acre mixed-use property.

CONCLUSION

The site is located in an area of on-going development. Vacant available acreage sites are becoming nonexistent as the ejido tracts are diminishing and the sites are being acquired for master planned mixed-use developments.

LA VENTANA ZONING

PROPOSED SITE PLAN

LA VENTANA ZONING

ZONING

The following chart summarizes the subject’s zoning requirements.

ZONING SUMMARY Current Zoning Tourism Legally Conforming Yes Uses Permitted Residential and commercial uses associated with tourism and related services Zoning Change Not likely Source: La Paz Planning & Zoning Dept.

ANALYSIS AND CONCLUSION

The subject is reportedly zoned for Tourism. It is an assumption of this appraisal that the zoning classification as represented is correct. If additional information is required, please contact the local planning and/or zoning office.

LA VENTANA HIGHEST AND BEST USE

HIGHEST AND BEST USE

In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are:

• legal permissibility; • physical possibility; • financial feasibility; and • maximum profitability. Highest and best use analysis involves assessing the subject both as if vacant and as improved.

AS VACANT

Legal Permissibility

The legally permissible uses were discussed in detail in the Site Analysis and Zoning Sections.

Physical Possibility

The subject will be adequately served by utilities, has an adequate shape and size, sufficient access, etc., to be a separately developable site. The subject site would reasonably accept a site layout for any of the legally probable uses. There are no known physical reasons why the subject site would not support any legally probable development. The development of similar sites in the area provides additional evidence for the physical possibility of development.

Financial Feasibility

The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally probable land uses versus the cost to create the uses. With respect to the legal uses for the subject site, the local residential market is in the growth stages of its life cycle and development of new master planned developments has occurred in the recent past and continues to this day. Further, within the subject market, there are several proposed mixed use projects in the competitive market. These factors indicate that it would be financially feasible to complete a new mixed use project if the site acquisition cost was low enough to provide an adequate developer’s profit.

Maximum Profitability

The final test of highest and best use of the site as though vacant is that the use be maximally productive, yielding the highest return to the land. In the case of the subject as if vacant, the analysis has indicated that a new mixed use project would be most appropriate.

LA VENTANA HIGHEST AND BEST USE

CONCLUSION: HIGHEST AND BEST USE AS VACANT

Based on the information presented above and upon information contained in the market and neighborhood analysis, we conclude that the highest and best use of the subject as if vacant, would be the development a master planned mixed use property. Our analysis of the subject and its respective market characteristics indicate the most likely buyer, as if vacant, would be a developer.

LA VENTANA APPRAISAL METHODOLOGY

APPRAISAL METHODOLOGY

In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available. Based on information contained in the Twelfth Edition of The Appraisal of Real Estate, published in 2001, depending on a specific appraisal assignment, any of the following four methods may be used to determine the market value of the fee simple interest of land:

• Sales Comparison Approach; • Income Capitalization Procedures; • Allocation; and • Extraction. The following summaries of each method are paraphrased from the text.

The first is the sales comparison approach. This is a process of analyzing sales of similar, recently sold parcels in order to derive an indication of the most probable sales price (or value) of the property being appraised. The reliability of this approach is dependent upon (a) the availability of comparable sales data, (b) the verification of the sales data regarding size, price, terms of sale, etc., (c) the degree of comparability or extent of adjustment necessary for differences between the subject and the comparables, and (d) the absence of nontypical conditions affecting the sales price. This is the primary and most reliable method used to value land (if adequate data exists).

The income capitalization procedures include three methods: land residual technique, ground rent capitalization, and Subdivision Development Analysis. A discussion of each of these three techniques is presented in the following paragraphs.

The land residual method may be used to estimate land value when sales data on similar parcels of vacant land are lacking. This technique is based on the principle of balance and the related concept of contribution, which are concerned with equilibrium among the agents of production--i.e. labor, capital, coordination, and land. The land residual technique can be used to estimate land value when: 1) building value is known or can be accurately estimated, 2) stabilized, annual net operating income to the property is known or estimable, and 3) both building and land capitalization rates can be extracted from the market. Building value can be estimated for new or proposed buildings that represent the highest and best use of the property and have not yet incurred physical deterioration or functional obsolescence.

The subdivision development method is used to value land when subdivision and development represent the highest and best use of the appraised parcel. In this method, an appraiser determines the number and size of lots that can be created from the appraised land physically, legally, and economically. The value of the underlying land is then estimated through a discounted cash flow analysis with revenues based on the achievable sale price of the finished product and expenses based on all costs required to complete and sell the finished product.

LA VENTANA APPRAISAL METHODOLOGY

The ground rent capitalization procedure is predicated upon the assumption that ground rents can be capitalized at an appropriate rate to indicate the market value of a site. Ground rent is paid for the right to use and occupy the land according to the terms of the ground lease; it corresponds to the value of the landowner's interest in the land. Market- derived capitalization rates are used to convert ground rent into market value. This procedure is useful when an analysis of comparable sales of leased land indicates a range of rents and reasonable support for capitalization rates can be obtained.

The allocation method is typically used when sales are so rare that the value cannot be estimated by direct comparison. This method is based on the principle of balance and the related concept of contribution, which affirm that there is a normal or typical ratio of land value to property value for specific categories of real estate in specific locations. This ratio is generally more reliable when the subject property includes relatively new improvements. The allocation method does not produce conclusive value indications, but it can be used to establish land value when the number of vacant land sales is inadequate.

The extraction method is a variant of the allocation method in which land value is extracted from the sale price of an improved property by deducting the contribution of the improvements, which is estimated from their depreciated costs. The remaining value represents the value of the land. Value indications derived in this way are generally unpersuasive because the assessment ratios may be unreliable and the extraction method does not reflect market considerations.

METHODOLOGY APPLICABLE TO THE SUBJECT

For the purposes of this analysis, we have utilized the sales comparison approach as this approach is typically used for residential sites that are feasible for immediate development. The other methodologies are used primarily when comparable land sales data is non-existent.

LA VENTANA LAND VALUE

LAND VALUE

The following map and table summarize the comparable data used in the valuation of the subject site. A detailed description of each transaction is included in the addenda.

Subject

4 2

LA VENTANA LAND VALUE

SUMMARY OF COMPARABLE LAND SALES Transaction Actual Sale Adjusted Sale Size Price Per No. Property Location Type Date Zoning Price Price 1 (Acres) Acre

1 County Road, Los Barilies, MX Contract Nov-05 Mixed Use $20,000,000 $20,000,000 247.10 $80,939

2 State Highway 19, Cabo San Sale Sep-05 Mixed Use $50,869,132 $50,869,132 840.14 $60,548 Lucas, MX

3 State Highway 19, Cabo San Sale Jun-05 Mixed Use $85,101,966 $85,101,966 1,729.00 $49,220 Lucas, MX

4 Kilometer Marker 11, Hwy 1, Sale Mar-05 Densidad Baja $39,809,607 $39,809,607 533.61 $74,604 Cabo San Lucas, MX

Subject State Highway 286, ------Tourism ------597.33 --- La Paz, Baja California Sur

1 Transaction amount adjusted for cash equivalency and/or development costs (where applicable) Compiled by CBRE

The sales utilized represent the best data available for comparison with the subject and were selected from the greater southern Baja area. These sales were chosen based upon their size, dates of sale and highest and best use.

DISCUSSION/ANALYSIS OF LAND SALES

Land Sale One

This comparable represents 247.1 acres located in the East Cape, south of La Ribera, along a County Road. The site has an irregular shape with rough topography and exhibits the following frontage: a Secondary County Road and the Sea of Cortez. At the time of the contract, the property was vacant and remains that way. The site is zoned Mixed Use, and the proposed use is for mixed use residential. No utilities were available to the site and are not expected to become available for two to three years. The property was placed under contract in November 2005 for $20,000,000, or $80,939 per acre. The property is currently in the permitting stages as the buyer required permits prior to closing. Approximately 50% of the sites frontage along the Sea of Cortez exhibits very steep and high cliffs and additional permits for development are required.

In comparison to the subject property, this property is similar in terms of ocean frontage, topography and highest and best use and therefore no adjustments were applied. In further comparison to the subject property this site superior in terms of size and was therefore adjusted downward. This is a long rectangular shaped parcel with the depth being greater than the frontage and this is considered inferior to that of the subject. For this a positive adjustment was applied. The location of this site, as well as the status of utilities are both inferior to those of the subject and therefore positive adjustments were applied. Overall, this site is inferior in comparison to the subject and a net positive adjustment was applied.

LA VENTANA LAND VALUE

Land Sale Two

This comparable represents 840.14 acres located along State Highway 19 north of Cabo San Lucas. The site has an irregular shape with gently rolling topography and exhibits the following frontage: Highway 19 and Pacific Ocean. At the time of the sale, the property was vacant. The site is zoned Mixed Use, and the proposed use is for a mixed use residential development. The site reportedly has utilities available to the site. The property sold in September 2005 for $50,869,132, or $60,548 per acre. The master plan will start construction in March, 2007 after completing all necessary permits. Currently there is no formal pricing and no pre-sales have been offered.

Based on the date of sale and taking into consideration the escalating prices in the area, an adjustment for market conditions was warranted. In comparison to the subject property, this property is similar in terms of ocean frontage, topography, location, and highest and best use and therefore no adjustments were applied. In further comparison to the subject property this site superior in terms of utilities and was therefore adjusted downward. This is a long rectangular shaped parcel with the depth being greater than the frontage and this is considered inferior to that of the subject. For this a positive adjustment was applied. The location of this site is similar to that of the subject and therefore no adjustment was applied. Overall, this site is inferior in comparison to the subject and a net positive adjustment was applied.

Land Sale Three

This comparable represents 1,729 acres located north of Cabo san Lucas along State Highway 19. The site has an irregular shape with gently rolling topography and exhibits the following frontage: Highway 19 and Pacific Ocean. At the time of the sale, the property was vacant. The site is zoned Mixed Use, and the proposed use is for mixed use residential. The site reportedly has utilities available to the site. The property sold in June 2005 for $85,101,966, or $49,220 per acre. Currently there is no formal pricing and no pre-sales have been offered. The property has 1.55 miles of ocean frontage and a depth of 1.74 miles.

LA VENTANA LAND VALUE

Land Sale Four

This comparable represents 533.61 acres located between Cabo san Lucas and San Jose del Cabo at Kilometer Marker 11, Hwy 1. The site has an irregular shape with gently rolling topography and exhibits the following frontage: Highway 1 (north and south sides). At the time of the sale, the property was improved with 24 villa units. The site is zoned Densidad Baja, and the proposed use is to mixed use golf/hotel resort. Electricity was available to the site. The property sold in March 2005 for $39,809,607, or $74,604 per acre. The tract was part of a three property assemblage for a mixed use tourist resort.

Based on the fact that this was part of an assemblage, an adjustment was applied. Additionally, based on the date of sale and taking into consideration the escalating prices in the area, an adjustment for market conditions was warranted. In comparison to the subject property, this property is similar in terms of size, ocean frontage, topography, utilities and highest and best use and therefore no adjustments were applied. In further comparison to the subject property this site inferior in terms of shape as it is a long rectangular shaped site and is bisected by a highway. Based on this a positive adjustment has been applied. As indicated, this site is located between Cabo San Lucas and San Jose del Cabo which is a superior location in comparison to the subject and therefore an adjustment was applied. Overall, this site is inferior in comparison to the subject and a net positive adjustment was applied.

SUMMARY OF ADJUSTMENTS

Based on our comparative analysis, the following chart summarizes the adjustments warranted to each comparable.

LA VENTANA LAND VALUE

LAND SALES ADJUSTMENT GRID

Comparable Number 1 2 3 4 Subject Transaction Type Contract Sale Sale Sale --- Transaction Date Nov-05 Sep-05 Jun-05 Mar-05 --- Zoning Mixed Use Mixed Use Mixed Use Densidad Baja Tourism

Actual Sale Price $20,000,000 $50,869,132 $85,101,966 $39,809,607 --- Adjusted Sale Price 1 $20,000,000 $50,869,132 $85,101,966 $39,809,607 --- Size (Acres) 247.10 840.14 1,729.00 533.61 597.33 Size (SF) 10,763,676 36,596,498 75,315,240 23,244,052 26,019,503 Price Per Acre $80,939 $60,548 $49,220 $74,604 --- Price Per SF $1.86 $1.39 $1.13 $1.71 --- Price ($ Per AC) $80,939 $60,548 $49,220 $74,604 Property Rights Conveyed 0% 0% 0% 0% 1 Financing Terms 0% 0% 0% 0% Conditions of Sale 0% 0% 0% -10% Market Conditions (Time) 5% 10% 15% 20% Subtotal $84,986 $66,603 $56,603 $80,573 Size -20% 5% 20% 0% Shape 10% 10% 10% 10% Ocean Frontage 0% 0% 0% 0% Topography/Views 0% 0% 0% 0% Location 0% 0% 0% -10% Utilities 5% -5% -5% 0% Highest & Best Use 0% 0% 0% 0% Total Other Adjustments -5% 10% 25% 0% Value Indication for Subject $80,737 $73,264 $70,754 $80,573

1 Transaction amount adjusted for cash equivalency and/or development costs (where applicable) Compiled by CBRE

CONCLUSION

Based on the preceding analysis, Comparables One, Two, and Four were the most representative of the subject site, and warranted greatest consideration because of their limited net adjustments. In conclusion, a price per acre within the indicated range was most appropriate for the subject. The following table presents the valuation conclusion:

CONCLUDED LAND VALUE $ Per AC Subject Acs. Total $70,000 x 597.33 = $41,812,792 $80,000 x 597.33 = $47,786,048 Indicated Value: $45,000,000 Compiled by CBRE

LA VENTANA LAND VALUE

The value equates to approximately $75,336 per acre or $1.73 per square foot. This falls within the range of $70,000 to $80,000 per acre indicated by the comparable sales, thereby lending support to our value conclusion.

In addition to the sales utilized, we have been told by local brokers that a tract that adjoins the subject, which contains 1,435 acres, closed within the past two weeks for $1.48 per square foot based on the usable area. The site was approximately 50% below sea level and considered not usable. The site has frontage along the Sea of Cortez and is being acquired with an additional parcel for a master planned mixed use development. This acquisition was directly from the ejido, was not available for sale and was contracted almost immediately upon knowledge of availability. Adjoining this site is another tract that is under option to the same group with $2,000,000 in earnest money (non-refundable) at the same price. This tract has no water frontage and will provide access to a public road. The information concerning these two parcels was obtained by persons associated with the transaction(s).

Additional smaller tracts in the area have recently been sold at prices ranging from $41.00 per square foot for a 6 acre user site to $2.21 per square foot for a 61 acre site with only 725 feet of frontage.

LA VENTANA RECONCILIATION OF VALUE

RECONCILIATION OF VALUE

In the sales comparison approach, the subject is compared to similar properties that have been sold recently or for which listing prices or offers are known. The sales used in this analysis are considered highly comparable to the subject, yet the required adjustments were based on reasonable and well- supported rationale. In addition, market participants are currently analyzing purchase prices on investment properties as they relate to available substitutes in the market. Therefore, the sales comparison approach is considered to provide a reliable value indication.

Based on the foregoing, the market value of the subject has been concluded as follows:

MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion As Is Fee Simple Estate October 27, 2006 $45,000,000 Compiled by CBRE

LA VENTANA ASSUMPTIONS AND LIMITING CONDITIONS

ASSUMPTIONS AND LIMITING CONDITIONS

1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties appraised is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE is not aware of any title defects nor has it been advised of any unless such is specifically noted in the report. CBRE, however, has not examined title and makes no representations relative to the condition thereof. Documents dealing with liens, encumbrances, easements, deed restrictions, clouds and other conditions that may affect the quality of title have not been reviewed. Insurance against financial loss resulting in claims that may arise out of defects in the subject’s title should be sought from a qualified title company that issues or insures title to real property. 2. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on the property or properties being appraised are structurally sound, seismically safe and code conforming; that all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the elements; that the property or properties have been engineered in such a manner that the improvements, as currently constituted, conform to all applicable local, state, and federal building codes and ordinances. CBRE professionals are not engineers and are not competent to judge matters of an engineering nature. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. Unless otherwise specifically noted in the body of the report: no problems were brought to the attention of CBRE by ownership or management; CBRE inspected less than 100% of the entire interior and exterior portions of the improvements; and CBRE was not furnished any engineering studies by the owners or by the party requesting this appraisal. If questions in these areas are critical to the decision process of the reader, the advice of competent engineering consultants should be obtained and relied upon. It is specifically assumed that any knowledgeable and prudent purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. Structural problems and/or building system problems may not be visually detectable. If engineering consultants retained should report negative factors of a material nature, or if such are later discovered, relative to the condition of improvements, such information could have a substantial negative impact on the conclusions reported in this appraisal. Accordingly, if negative findings are reported by engineering consultants, CBRE reserves the right to amend the appraisal conclusions reported herein. 3. 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 appraisers. CBRE has no knowledge of the existence of such materials on or in the property. CBRE, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater 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. We have inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in the appraisal. 4. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real property, have been disregarded with only real property being considered in the report unless otherwise stated. Any existing or proposed improvements, on or off-site, as well as any alterations or repairs considered, are assumed to be completed in a workmanlike manner according to standard practices based upon the information submitted to CBRE. This report may be subject to amendment upon re-inspection of the subject subsequent to repairs, modifications, alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the information, conditions and projected levels of operation. 5. It is assumed that all factual data furnished by the client, property owner, owner’s representative, or persons designated by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal report. Unless otherwise specifically noted in the appraisal report, CBRE has no reason to believe that any of the data furnished contain any material error. Information and data referred to in this paragraph include, without being limited to, numerical street addresses, lot and block numbers, Assessor’s Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any material error in any of the above data could have a substantial impact on the conclusions reported. Thus, CBRE reserves the right to amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should carefully review

LA VENTANA ASSUMPTIONS AND LIMITING CONDITIONS

all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report and should immediately notify CBRE of any questions or errors. 6. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this appraisal. Under the terms of the engagement, we will have no obligation to revise this report to reflect events or conditions which occur subsequent to the date of the appraisal. However, CBRE will be available to discuss the necessity for revision resulting from changes in economic or market factors affecting the subject. 7. CBRE assumes no private deed restrictions, limiting the use of the subject in any way. 8. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposits or subsurface rights of value involved in this appraisal, whether they are gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred. 9. CBRE is not aware of any contemplated public initiatives, governmental development controls, or rent controls that would significantly affect the value of the subject. 10. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the property, both physically and economically, on the open market. 11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics are predicated on the information and assumptions contained within the report. Any projections of income, expenses and economic conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market expectations of future income and expenses. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary from the projections considered herein. CBRE does not warrant these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of CBRE 12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct or indirect recommendation of CBRE to buy, sell, or hold the properties at the value stated. Such decisions involve substantial investment strategy questions and must be specifically addressed in consultation form. 13. Also, unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or regulations governing use, density, or shape are being considered. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report is based, unless otherwise stated. 14. This study may not be duplicated in whole or in part without the specific written consent of CBRE nor may this report or copies hereof be transmitted to third parties without said consent, which consent CBRE reserves the right to deny. Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission to attorneys, accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the report to any court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this appraisal was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any public document without the express written consent of CBRE which consent CBRE reserves the right to deny. Finally, this report shall not be advertised to the public or otherwise used to induce a third party to purchase the property or to make a “sale” or “offer for sale” of any “security”, as such terms are defined and used in the Securities Act of 1933, as amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised that they should rely on their own independently secured advice for any decision in connection with this property. CBRE shall have no accountability or responsibility to any such third party. 15. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in the report. 16. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with any other property or appraisal and are invalid if so used.

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17. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and reliable. None of the exhibits are to be removed, reproduced, or used apart from this report. 18. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been made known to CBRE unless otherwise stated within the body of this report. If the Consultant has not been supplied with a termite inspection, survey or occupancy permit, no responsibility or representation is assumed or made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No representation or warranty is made concerning obtaining these items. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. 19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special assumptions set forth in this report. It is the responsibility of the Client, or client’s designees, to read in full, comprehend and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor CBRE assumes responsibility for any situation arising out of the Client’s failure to become familiar with and understand the same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting profession if so desired. 20. CBRE assumes that the subject analyzed herein will be under prudent and competent management and ownership; neither inefficient nor super-efficient. 21. 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. 22. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be correct. It is further assumed that no encroachments to the realty exist. 23. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of possible readily achievable barrier removal construction items in this report, CBRE has not made a specific compliance survey and analysis of this property to determine whether it is in conformance with the various detailed requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect on the value estimated herein. Since CBRE has no specific information relating to this issue, nor is CBRE qualified to make such an assessment, the effect of any possible non-compliance with the requirements of the ADA was not considered in estimating the value of the subject. 24. Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client proximately result in damage to Appraiser. The Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising as a result of the Client’s failure or the failure of any of the Client’s agents to provide a complete copy of the appraisal report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be entitled to recover from the other reasonable attorney fees and costs. 25. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter. 26. As part of the client’s requested scope of work, an estimate of insurable value is provided herein. CBRE has followed traditional appraisal standards to develop a reasonable calculation based upon industry practices and industry accepted publications such as the Marshal Valuation Service handbook. The methodology employed is a derivation of the cost

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approach which is primarily used as an academic exercise to help support the market value estimate and therefore is not reliable for Insurable Value estimates. Actual construction costs and related estimates can vary greatly from this estimate. This analysis should not be relied upon to determine proper insurance coverage which can only be properly estimated by consultants considered experts in cost estimation and insurance underwriting. It is provided to aid the client/reader/user as part of their overall decision making process and no representations or warranties are made by CBRE regarding the accuracy of this estimate and it is strongly recommend that other sources be utilized to develop any estimate of insurable value.

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ADDENDA

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ADDENDUM A

GLOSSARY OF TERMS

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through to the tenant and are known as expense pass- assessed value Assessed value applies in ad valorem throughs. taxation and refers to the value of a property according to the tax rolls. Assessed value may not conform to going concern value Going concern value is the market value, but it is usually calculated in relation to a value of a proven property operation. It includes the † market value base. incremental value associated with the business concern, which is distinct from the value of the real estate only. cash equivalency The procedure in which the sale Going concern value includes an intangible prices of comparable properties sold with atypical enhancement of the value of an operating business financing are adjusted to reflect typical market terms. enterprise which is produced by the assemblage of the land, building, labor, equipment, and marketing contract rent The actual rental income specified in a ‡ operation. This process creates an economically viable lease. business that is expected to continue. Going concern value refers to the total value of a property, including effective rent The rental rate net of financial both real property and intangible personal property concessions such as periods of no rent during the lease attributed to the business value. † term; may be calculated on a discounted basis, reflecting the time value of money, or on a simple, ‡ gross building area (GBA) The total floor area of a straight-line basis. building, including below-grade space but excluding unenclosed areas, measured from the exterior of the excess land In regard to an improved site, the land not walls. Gross building area for office buildings is needed to serve or support the existing improvement. computed by measuring to the outside finished surface In regard to a vacant site or a site considered as of permanent outer building walls without any though vacant, the land no needed to accommodate deductions. All enclosed floors of the building the site’s primary highest and best use. Such land may including basements, mechanical equipment floors, be separated from the larger site and have its own penthouses, and the like are included in the highest and best use, or it may allow for future measurement. Parking spaces and parking garages expansion of the existing or anticipated improvement. are excluded. ‡ See also surplus land. ‡ hypothetical condition That which is contrary to extraordinary assumption An assumption directly what exists but is supposed for the purpose of analysis. related to a specific assignment, which, if found to be Hypothetical conditions assume conditions contrary to false, could alter the appraiser’s opinions or known facts about physical, legal, or economic conclusions. Extraordinary assumptions presume as characteristics of the subject property; or about fact otherwise uncertain information about physical, conditions external to the property, such as market legal, or economic characteristics of the subject conditions or trends; or about the integrity of data used property; or about conditions external to the property in an analysis. See also extraordinary assumption. ‡ such as market conditions or trends; or about the integrity of data used in an analysis. See also ‡ insurable value Insurable Value is based on the hypothetical condition. replacement and/or reproduction cost of physical items that are subject to loss from hazards. Insurable value is fee simple estate Absolute ownership unencumbered that portion of the value of an asset or asset group that by any other interest or estate, subject only to the is acknowledged or recognized under the provisions of limitations imposed by the governmental powers of an applicable loss insurance policy. This value is often taxation, eminent domain, police power, and escheat. ‡ controlled by state law and varies from state to state. † floor area ratio (FAR) The relationship between the investment value Investment value is the value of an above-ground floor area of a building, as described by investment to a particular investor based on his or her the building code, and the area of the plot on which it investment requirements. In contrast to market value, stands; in planning and zoning, often expressed as a investment value is value to an individual, not value in decimal, e.g., a ratio of 2.0 indicates that the the marketplace. Investment value reflects the permissible floor area of a building is twice the total subjective relationship between a particular investor land area; also called building-to-land ratio. ‡ and a given investment. When measured in dollars, investment value is the price an investor would pay for full service lease A lease in which rent covers all an investment in light of its perceived capacity to satisfy operating expenses. Typically, full service leases are his or her desires, needs, or investment goals. To combined with an expense stop, the expense level estimate investment value, specific investment criteria covered by the contract lease payment. Increases in must be known. Criteria to evaluate a real estate expenses above the expense stop level are passed

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investment are not necessarily set down by the never takes possession of the expense payment. In a individual investor; they may be established by an Triple Net Lease all operating expenses are the expert on real estate and its value, that is, an appraiser. responsibility of the tenant, including property taxes, † insurance, interior maintenance, and other miscellaneous expenses. However, management fees leased fee and exterior maintenance are often the responsibility of See leased fee estate the lessor in a triple net lease. A modified net lease is one in which some expenses are paid separately by the leased fee estate An ownership interest held by a tenant and some are included in the rent. landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor (the leased net rentable area (NRA) 1) The area on which rent fee owner) and the leased fee are specified by contract is computed. 2) The Rentable Area of a floor shall be terms contained within the lease.‡ computed by measuring to the inside finished surface of the dominant portion of the permanent outer building leasehold walls, excluding any major vertical penetrations of the See leasehold estate floor. No deductions shall be made for columns and projections necessary to the building. Include space leasehold estate The interest held by the lessee (the such as mechanical room, janitorial room, restrooms, tenant or renter) through a lease conveying the rights of and lobby of the floor. * use and occupancy for a stated term under certain conditions.‡ occupancy rate The relationship or ratio between the income received from the rented units in a property and market rent The most probable rent that a property the income that would be received if all the units were should bring in a competitive and open market occupied.‡ reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and prospective value opinion A forecast of the value revaluation, permitted uses, use restrictions, and expected at a specified future date. A prospective expense obligations. ‡ value opinion is most frequently sought in connection with real estate projects that are proposed, under market value Market value is one of the central construction, or under conversion to a new us, or those concepts of the appraisal practice. Market value is that have not achieved sellout or a stabilized level of differentiated from other types of value in that it is long-term occupancy at the time the appraisal report is created by the collective patterns of the market. Market written. ‡ value means the most probable price which a property should bring in a competitive and open market under reasonable exposure time The estimated length of all conditions requisite to a fair sale, the buyer and time the property interest being appraised would have seller each acting prudently and knowledgeably, and been offered on the market prior to the hypothetical assuming the price is not affected by undue stimulus. consummation of a sale at market value on the Implicit in this definition is the consummation of a sale effective date of the appraisal; a retrospective opinion as of a specified date and the passing of title from based upon an analysis of past events assuming a seller to buyer under conditions whereby: 1) A competitive and open market. †† reasonable time is allowed for exposure in the open market; 2) Both parties are well informed or well rent advised, and acting in what they consider their own See best interests; 3) Buyer and seller are typically full service lease motivated; 4) Payment is made in terms of cash in U.S. net lease dollars or in terms of financial arrangements market rent comparable thereto; and 5) The price represents the contract, coupon, face, or nominal rent normal consideration for the property sold unaffected effective rent by special or creative financing or sales concessions granted by anyone associated with the sale.§ shell rent The typical rent paid for retail, office, or industrial tenant space based on minimal “shell” marketing period The time it takes an interest in real interior finishes (called plain vanilla finish in some property to sell on the market subsequent to the date of areas). Usually the landlord delivers the main building an appraisal. ‡ shell space or some minimum level of interior build- out, and the tenant completes the interior finish, which net lease Lease in which all or some of the operating can include wall, ceiling, and floor finishes; mechanical expenses are paid directly by the tenant. The landlord systems, interior electric, and plumbing. Typically these

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are long-term leases with tenants paying all or most surface of the dominant portion of the permanent outer property expenses. ‡ building walls. Excludes areas such as mechanical rooms, janitorial room, restrooms, lobby, and any surplus land Land not necessary to support the highest major vertical penetrations of a multi-tenant floor. * and best use of the existing improvement but, because of physical limitations, building placement, or use value Use value is a concept based on the neighborhood norms, cannot be sold off separately. productivity of an economic good. Use value is the Such land may or may not contribute positively to value value a specific property has for a specific use. Use and may or may not accommodate future expansion of value focuses on the value the real estate contributes to an existing or anticipated improvement. See also the enterprise of which it is a part, without regard to the excess land. ‡ property’s highest and best use or the monetary amount that might be realized upon its sale. † usable area 1) The area actually used by individual tenants. 2) The Usable Area of an office building is value indication An opinion of value derived through computed by measuring to the finished surface of the application of the appraisal process. ‡ office side of corridor and other permanent walls, to the center of partitions that separate the office from adjoining usable areas, and to the inside finished

† The Appraisal of Real Estate, Twelfth Edition, Appraisal Institute, 2001.

‡ The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute, 2002.

§ Office of Comptroller of the Currency (OCC), 12 CFR Part 34, Subpart C – Appraisals, 34.42 (g); Office of Thrift Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP).

* 2000 BOMA Experience Exchange Report, Income/Expense Analysis for Office Buildings (Building Owners and Managers Association, 2000)

†† Statement on Appraisal Standard No. 6, Appraisal Standards Board of The Appraisal Foundation, September 16, 1993, revised June 15, 2004.

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ADDENDUM B

LAND SALE DATA SHEETS

Location Data Sale Data Location: County Road Transaction Type: Contract Los Barilies,MX Date: 11/2005 County: Baja California Sur Marketing Time: 12 months Assessor's Parcel No: N/A Grantor: Roger Moran Atlas Ref: N/A Grantee: Confidential Document No.: N/A Sale Price: $20,000,000 Physical Data Financing: Cash to Seller Type: Mixed-Use Cash Eq.Price: $20,000,000 Land Area: Gross Usable Onsite/Offsite Costs: $0 Acres: 247.1000 247.1000 Adj. Sale Price: $20,000,000 Square Feet: 10,763,676 10,763,676 Verification: Broker

Topography: Rough Shape: Irregular Utilities: None Zoning: Mixed Use Allowable Bldg Area: N/A Floor Area Ratio: N/A No. of units: N/A Max FAR: N/A Frontage: County Road; Sea of Cortez

Analysis Use At Sale: Vacant Proposed Use or Dev. Mixed Use Residential Price Per Acre: $80,938 Price Per SF of Land: $1.86 Price Per Unit: N/A Price Per SF of Bldg: N/A

Comments This is an irregular shaped parcel of land located in the east Cape, south of La Ribera along the Sea of Cortez. The property is currently in the permitting stages as the buyer required permits prior to closing. approximately 50% f the sites frontage along the water exhibits cliffs requiring additional permitts. The developer indicated that utilities and development are still about three years out.

Location Data Sale Data Location: State Highway 19 Transaction Type: Sale Cabo San Lucas,MX Date: 9/2005 County: Baja California Sur Marketing Time: 12 months Assessor's Parcel No: N/A Grantor: Confidential Atlas Ref: N/A Grantee: Cabo Christobal Document No.: N/A Sale Price: $50,869,132 Physical Data Financing: Cash to Seller Type: Mixed-Use Cash Eq.Price: $50,869,132 Land Area: Gross Usable Onsite/Offsite Costs: $0 Acres: 840.1400 840.1400 Adj. Sale Price: $50,869,132 Square Feet: 36,596,498 36,596,498 Verification: Broker and developer

Topography: Gently Rolling Shape: Irregular Utilities: Available Zoning: Mixed Use Allowable Bldg Area: N/A Floor Area Ratio: N/A No. of units: N/A Max FAR: Frontage: Highway 19; Pacific Ocean

Analysis Use At Sale: Vacant Proposed Use or Dev. Mixed Use Residential Price Per Acre: $60,548 Price Per SF of Land: $1.39 Price Per Unit: N/A Price Per SF of Bldg: N/A

Comments This is an irregular shaped parcel of land located just nrth of Cabo san Lucas along the pacific ocean. The master plan will strat construction in March, 207 after completing permits. Currently there is no formal pricing and no pre-sales have been offered. The property has 1.11 miles of ocean frontage and a depth of 1.74 miles

Location Data Sale Data Location: State Highway 19 Transaction Type: Sale Cabo San Lucas,MX Date: 6/2005 County: Baja California Sur Marketing Time: 12 months Assessor's Parcel No: N/A Grantor: Confidential Atlas Ref: N/A Grantee: El Cardon Document No.: N/A Sale Price: $85,101,966 Physical Data Financing: Cash to Seller Type: Mixed-Use Cash Eq.Price: $85,101,966 Land Area: Gross Usable Onsite/Offsite Costs: $0 Acres: 1729.0000 1729.0000 Adj. Sale Price: $85,101,966 Square Feet: 75,315,240 75,315,240 Verification: Broker and developer

Topography: Gently Rolling Shape: Irregular Utilities: Available Zoning: Mixed Use Allowable Bldg Area: N/A Floor Area Ratio: N/A No. of units: N/A Max FAR: Frontage: Highway 19; Pacific Ocean

Analysis Use At Sale: Vacant Proposed Use or Dev. Mixed Use Residential Price Per Acre: $49,220 Price Per SF of Land: $1.13 Price Per Unit: N/A Price Per SF of Bldg: N/A

Comments This is an irregular shaped parcel of land located just n0rth of Cabo san Lucas along the pacific ocean. Currently there is no formal pricing and no pre-sales have been offered. The property has 1.55 miles of ocean frontage and a depth of 1.74 miles.

Location Data Sale Data Location: Kilometer Marker 11, Hwy 1 Transaction Type: Sale Cabo San Lucas,MX Date: 3/2005 County: Baja California Sur Marketing Time: N/A Assessor's Parcel No: 4-02-002-0086 & other Grantor: Caleta Linda S.A. de C.V. Atlas Ref: N/A Grantee: Vista Serena Document No.: N/A Sale Price: $39,809,607 Physical Data Financing: Cash to Seller Type: Mixed-Use Cash Eq.Price: $39,809,607 Land Area: Gross Usable Onsite/Offsite Costs: $0 Acres: 533.6100 533.6100 Adj. Sale Price: $39,809,607 Square Feet: 23,244,052 23,244,052 Verification:

Topography: Gently Rolling Shape: Irregular Utilities: Electricity Zoning: Densidad Baja Allowable Bldg Area: N/A Floor Area Ratio: N/A No. of units: N/A Max FAR: Frontage: Highway 1 (north and south sides);

Analysis Use At Sale: 24 villa units Proposed Use or Dev. Mixed Use Golf/Hotel Resort Price Per Acre: $74,604 Price Per SF of Land: $1.71 Price Per Unit: N/A Price Per SF of Bldg: N/A

Comments This is an irregular shaped parcel of land located in the tourist corridor between Cabo San Lucas and San Jose del Cabo. The tract was part of a three property assemblage for a mixed use tourist resort. The property was improved with 24 four-plex residential units. They were partially rentable and partially unrentable with views of the Gulf of California. The tract has frontage and land on the north and south sides of Highway 1. The tract has beach frontage along the Gulf of California and extends north into the desert/mountains to the north of Highway 1.

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ADDENDUM C

LEGAL DESCRIPTION

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ADDENDUM D

LETTER OF ENGAGEMENT

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ADDENDUM E

QUALIFICATIONS

MICHAEL D. McAULIFFE, MAI Senior Real Estate Analyst

CB RICHARD ELLIS, INC. VALUATION & ADVISORY SERVICES 2700 Post Oak Boulevard, Suite 250 Houston, Texas 77056 (713) 888-4769

FORMAL EDUCATION

Southwest Texas State University - B.B.A. Management Real Estate (December 1982)

CONTINUING EDUCATION

Standards of Professional Practice – December 2002 Appraising the Tough Ones – October 2002 Residential Sales Comparison Approach - October 2002 National USPAP – July 2002 Real Estate Overview – September 2001 Comprehensive Appraisal Workshop -August 2000 Litigation Valuation – March 1988

LICENSE(S)/CERTIFICATION(S)

Certified Real Estate Appraiser: State of Texas (TX-1321367-G)

PROFESSIONAL AFFILIATIONS & DESIGNATIONS ATTAINED

Appraisal Institute Designated Member (MAI), Certificate No. 9447

State of Texas Licensed Real Estate Broker, (No. 296158)

EMPLOYMENT EXPERIENCE

Twenty years of Real Estate Appraisal and Consulting experience throughout the United States. Expert witness in United States Federal Bankruptcy Court. Also served on Regional Ethics and Counseling Panel for the Appraisal Institute.

March 2005 – Present CB Richard Ellis, Inc. Houston, Texas Valuation & Advisory Services Senior Real; Estate Analyst 2003-2005 Philip Mushinski & Associates Houston, Texas Senior Real Estate Analyst 1999-2003 Apache Group, Inc Houston, Texas Owner 1997-1999 Archon Financial Irving, Texas Senior Securitization Specialist

STEPHEN D. DUPLANTIS, MAI Senior Managing Director

CB RICHARD ELLIS, INC. VALUATION & ADVISORY SERVICES 2700 Post Oak Boulevard, Suite 250 Houston, Texas 77056 (713) 840-6625

FORMAL EDUCATION

Texas A & M University - B.S. Agricultural Economics (August 1983)

CONTINUING EDUCATION

Texas USPAP Program – March 2004 ACE Projects – Houston Area – March 2004 Golf Course - September 2003 Harris County Government – September 2002 Port of Houston Authority – November 2001 Downtown Construction -April 2000 Subdivision Analysis – June 2000 Approved Instructor – Appraisal Institute

LICENSE(S)/CERTIFICATION(S)

Certified Real Estate Appraiser: State of Arkansas (CG0913N) State of Kansas (G-1255) State of Louisiana (G-0523) State of Mississippi (GA-737) State of Missouri (2002015691) State of Oklahoma (11588CGA) State of Texas (TX-1321138-G)

PROFESSIONAL AFFILIATIONS & DESIGNATIONS ATTAINED

Appraisal Institute Designated Member (MAI), Certificate No. 8149 - May 1989 President – Houston Chapter #33 Appraisal Institute (1998) Vice President – Houston Chapter #33 Appraisal Institute (1997) Secretary - Houston Chapter #33 Appraisal Institute (1996) Board of Directors – Houston Chapter #33 Appraisal Institute (1991-1996) Past Chairman of Social Committee, Education Committee, Candidate Guidance Committee and Admission Committee Approved Instructor – Appraisal Institute

EMPLOYMENT EXPERIENCE

Twenty years of Real Estate Appraisal and Consulting experience throughout the United States. Expert witness in commissioner, condemnation and bankruptcy hearings. Also served on mediation hearings.

March 1996 – Present CB Richard Ellis, Inc. Houston, Texas Valuation & Advisory Services Senior Managing Director 1983-1996 The Gerald A. Teel Company Houston, Texas Manager