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MARKET STUDY

Yonkers, , New York 10701

Prepared For:

Zarin & Steinmetz 81 , Suite 415 White Plains, New York 10601

Prepared By:

Cushman & Wakefield, Inc. Valuation & Advisory 1290 Avenue of the Americas New York, New York 10104 C&W File ID: 19-12002-901477

Cushman & Wakefield, Inc. 1290 Avenue of the Americas New York, New York 10104

cushmanwakefield.com

September 30, 2019

Kate Roberts, Esq. Associate Attorney Zarin & Steinmetz 81 Main Street, Suite 415 White Plains, New York 10601

Re: Market Study

C&W File ID: 19-12002-901477

Dear Ms. Roberts:

In fulfillment of our agreement as outlined in the Letter of Engagement, we are pleased to transmit our market study dated September 30, 2019. The purpose of the market study is to determine market conditions in the subject trade area for a hospitality property as of July 26, 2019.

Pursuant to your request, this report consists of a hospitality market study for a proposed upper midscale class property located in Yonkers, New York. In addition to the market study, at the request of our Client, this report also includes income and expense comparables. This report sets forth to highlight the relevant market information and economic outlook for the market area surrounding Yonkers, New York. It is expected that this information will be used for internal decision making in consideration of potential development of an upper midscale class hotel.

The analysis contained in this report is based on estimates, assumptions and other information developed from our research and we do not make any representation to the future market performance. We take no responsibility for any events, conditions, or circumstances affecting the market that exists subsequent to the last day of our fieldwork, July 26, 2019. We did not consider the legal and regulatory requirements applicable to any potential development, including zoning, permits, licenses and other state and local government regulations.

The methodology and details of our conclusions are outlined in the following market study. Thank you for the opportunity to be of service to you. We welcome any comments or suggestions regarding the content or opinions presented in the attached report.

Kate Roberts, Esq. Cushman & Wakefield, Inc. Zarin & Steinmetz September 30, 2019 Page 2

Respectfully submitted,

CUSHMAN & WAKEFIELD, INC.

Mr. Ivan Melendez, MRICS Senior Director - Hospitality & Gaming Group New York-Certified General Real Estate Appraiser License No. 48000050497 [email protected] (212) 713-6894 Office Direct

PROPOSED HOTEL TABLE OF CONTENTS

Table of Contents

Introduction ...... 1 Purpose, Dates and Function of This Study ...... 1 Definitions of the Study ...... 1 Scope of the Assignment ...... 1 Data Collection ...... 1 Intended Use and User ...... 2 Regional Map ...... 3 Regional Market Analysis ...... 4 Westchester County Regional Analysis ...... 13 Local Area Map ...... 24 Local Market Area Analysis ...... 25 New York City Lodging Industry Overview ...... 39 Lodging Market Supply and Demand Analysis ...... 70 Supply Analysis-Existing Competitive Supply ...... 70 Proposed Hotel Facilities ...... 74 Commercial Demand ...... 74 Meeting and Group Demand ...... 75 Leisure Demand ...... 75 Comparable Analysis – Industry Averages and Comparable ...... 77 Assumptions and Limiting Conditions ...... 80 Addenda Contents ...... 83

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PROPOSED HOTEL INTRODUCTION

Introduction

Purpose, Dates and Function of This Study

The purpose of the report is to determine market conditions in the subject trade area of Yonkers, New York for hospitality properties as of July 26, 2019. The area that is the subject of this report as well as the competitive market were visited on July 26, 2019. The date of this report is September 30, 2019. The market study is for use by Zarin & Steinmetz for the potential development of an upper midscale class hotel.

Definitions of the Study

According to the Uniform Standards of Professional Appraisal Practice, a market analysis is a study of real estate market conditions for a specific type of property. Additionally, the following definitions are utilized in connection with the market study of the subject:

Market Study A macroeconomic analysis that examines the general market conditions of supply, demand, and pricing or the demographics of demand for a specific area or property type. A market study may also include analyses of construction and absorption trends (Dictionary of Real Estate Appraisal, 4th Edition, page 176).

Scope of the Assignment

The Standard Rules of the Uniform Standards of Professional Appraisal Practice (USPAP) requires a market analysis or consulting report to state the extent of the process of collecting, confirming, and reporting data. Alternatively, the scope defines the type of report in relation to the consulting problem. This report is to be construed as a “market study assignment” as defined in USPAP. This is an analysis in a summary, narrative report with the intent to perform consulting services in such a manner that the results of the analyses reflect a disinterested third party. The depth of analysis is intended to reflect the complexity of the real estate and nature of the assignment. Therefore, the consulting process includes the following procedures.

Data Collection

General and specific data was obtained from a variety of governmental and private sources specifically detailed in the report. The data used in this report has been verified with sources believed to be reliable to the extent possible. The analyses have relied on information and support services performed by the following companies:

 Data relating to the existing and proposed supply was derived from a variety of sources including but not limited to: Hotel Market Data, STR, property managers, property owners, public records, and primary field research completed by Cushman & Wakefield, Inc.  Key market participants were surveyed regarding general market conditions completed by Cushman & Wakefield, Inc.  Data relating to competitive supply is based on updated field survey research to existing data contained in the database of Cushman & Wakefield, Inc.  Demographic reports of the subject trade area was provided from Experian Marketing Solutions, Inc.

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PROPOSED HOTEL INTRODUCTION

Intended Use and User

Intended Use and User: This report was prepared for the exclusive use of Zarin & Steinmetz in their internal analysis for consideration of potential development of an upper midscale class hotel. This report is not intended for any other use or users.

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PROPOSED HOTEL REGIONAL MAP

Regional Map

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PROPOSED HOTEL REGIONAL ANALYSIS

New York City Regional Market Analysis

Introduction

Travel demand to the trade area is heavily influenced by corporate, group, and leisure demand generators located within the region. New York City, which is located 11.0 miles south of the subject trade area, is the primary driver of hotel demand. Hotel rates and occupancies in the trade area are highly influenced by its proximity to as well as Westchester County. Accordingly, we will first analyze and discuss the greater New York City region. Subsequently, we will provide a market analysis of Westchester County followed by a local area analysis of the subject trade area (Yonkers, New York). Yonkers is situated in lower-western Westchester County and is considered by some to be part of New York City since it is on the border of . The City of Yonkers is located in the southwestern part of Westchester County with a substantial amount of frontage along the eastern shore of the . Market Definition

New York City consists of five counties at the mouth of the Hudson River in the southeast area of New York State. The borough of Manhattan, also referred to as New York County, forms the political, financial and cultural core of the city. It is the economic growth engine of the Greater New York Region. The city’s other boroughs are , , Staten , and the Bronx, otherwise known as Kings, Queens, Richmond, and Bronx counties, respectively. The area’s vast mass transit infrastructure connects the five boroughs as well as the surrounding suburban areas, forming the Greater New York Region. This region covers 21 counties in the southeastern section of New York State, southwestern corner of , and Central and Northern .

The following map highlights the Core Based Statistical Area (CBSA) of New York, NY:

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Current Trends

New York City’s economy continues to thrive on the strength of steady employment gains. The recent job gains have come in many sectors, bolstered by the tech companies and financial services. New York City now employs more than 4.5 million workers, the highest amount on record.

A major source of economic growth comes from the city’s industry. NYC & Company estimates a record 65.1 million people visited the city in 2018, increasing by 3.7 percent from the previous year and marking the ninth straight year in which tourism hit a new high. This total includes 13.5 million international tourists, up 3.1 percent from last year. Three New York City museums were in the top 10 most visited museums in in 2018, with the Metropolitan Museum of Art coming in second with 7.0 million visitors.

The latest report released by the New York Building Congress reports that the overall construction spending in New York City reached 61.8 billion during 2018, the highest in history. The New York Building Congress forecasts over $177 billion in construction spending between 2018 and 2020. The primary driver of non-residential spending continues to be office construction, which is at its highest levels in three decades. The Building Congress estimated that 18.8 million square feet of office space will be completed in Manhattan alone between 2018 and 2020, with an additional 6.6 million square feet of office space anticipated for completion in the outer-boroughs. A major construction development currently underway is the Hudson Yards Project, the largest development in New York City since . Hudson Yards is home to over 100 shops and restaurants, both office and retail space, The Shed, residential space, the Equinox Hotel and 14 acres of public plazas. Further considerations are as follows:

 The New York City Economic Development Corporation released a request for proposal for a private partner to build an Urban Distribution Center totaling 500,000 square feet or more at the Brooklyn Army Terminal as part of the “Freight NYC” initiative. The “Freight NYC” initiative is a $100 million plan to modernize and improve the city’s aging freight delivery system. In addition to the distribution center in the Brooklyn Army Terminal, the NYCEDC plans to propose a four-acre site near JFK Airport for the development of an air cargo and distribution facility. This Freight NYC plan is projected to create 5,000 jobs and serve multiple areas within New York City. The plan aims for improve the city’s air quality and reduce the over-reliance on trucking.

 The New York City residential market has been impacted by recent changes in legislation including new rent regulation and taxes on residential units. In June 2019, the New York State Senate and Assembly passed significant reforms to the existing laws governing rent regulation. The new laws will change investor and landlord behavior with buildings that have rent regulated units. In addition, beginning on July 1st, 2019, New York City residential properties are subject to a supplemental tax of between 0.25 and 2.9 percent based on the purchase price, in addition to the 1.0 percent mansion tax on properties over $1.0 million.

 The passed the Climate Mobilization Act in April of 2019, setting increasingly harsh limits on carbon emission for buildings over 25,000 square feet beginning in 2024. The bill will require these buildings to decrease their greenhouse gas emissions by 40 percent by 2030. These new standards will require

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retrofitting buildings with new energy efficient , creating thousands of jobs in renovation and construction.

 The $1.6 billion expansion of Station, to be called Moynihan Station, is underway as officials unveiled the West End Concourse in June 2017. The West End Concourse is a pedestrian entrance connecting Pennsylvania Station to the project on Eighth Avenue. Development is led by Vornado Realty Trust and Related Companies. In addition to the West End Concourse, this project includes the construction of a train hall from and the Rail Road, 700,000 square feet of commercial office and retail property, as well as a ground level retail concourse that will connect Pennsylvania Station to , Hudson Yards and beyond.  Early in 2016, Governor Andrew M. Cuomo unveiled a planned expansion of the Jacob K. Javits Convention Center, a convention center used to host events such as the New York International Auto Show and the New York Comic Con, aimed to significantly increase the convention center’s potential as an economic engine and maximize its ability to host more high-profile events from around the world. The expansion entails spending $1.5 billion to add an additional 1.2 million square feet of space to the north end of the existing facility and build a roof terrace for outdoor events. The expansion project will serve as a catalyst for new job creation, new business opportunities and enhanced revenue for the hotel, restaurant, tourism and transportation industries. It is projected to generate $393 million in additional annual economic activity each year, support 4,000 new full- time jobs, 2,000 part-time jobs and 3,100 construction jobs. The expansion is expected to lead to an additional 200,000 hotel room nights a year. Construction broke ground in March 2017 and is expected to be completed in 2021.  May 2017 introduced NYC , which is now bringing affordable ferry transportation to local commuters across the city. Destinations such as Hunter’s Point South, Rockaway, Governor’s Island, Astoria and South Brooklyn, have opened up the options for commuters. Service to Soundview and the Lower opened during August 2018.  Plans to rezone Inwood were approved in August of 2018, following East rezoning approval at the end of 2017. The rezoning plans will allow for more building density and low-income housing. East New York and Far Rockaway have already been rezoned to allow for additional building density.  The Midtown East rezoning proposal was passed by the City Council’s Land Use Committee in August 2017, which entails changes to air rights pricing and requirements for new spaces. The rezoning proposal promotes development over approximately a 78-block area in Midtown centered around . North- South, the rezoning starts at 39th Street goes up to . East-West, it spans from to in between Madison and Fifth Avenues. The block between 42nd and 43rd street extends to 2nd Avenue, which is where the Pfizer building is located. The rezoning is expected to create approximately 6.6 million square feet of new office space in the Midtown East district over the next 20 years.  The opened in May of 2019 and features stores such as Banana Republic, Brooks Brothers, Gap Factory and a food hall. Additional retailers will continue to open throughout 2019 and a rooftop beer hall is expected in the spring of 2020. The is a popular tourist destination and the addition of the Empire Outlets will offer tourists an accessible destination after riding the Staten Island Ferry.  Numerous high-profile redevelopment projects in various stages of the development pipeline will contribute to New York City construction spending well into the future. Notable among these include Hudson Yards, Moynihan Station, Pacific Park (formerly known as Atlantic Yards), the World Trade Center site, Flushing Commons, Greenpoint Landing, Domino Sugar Factory, Willets Point, City Point, Hallets Point, and .

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Demographic Characteristics

New York City exceeds the national average in household income at both the top and bottom of the spectrum. As a result, the city’s middle income brackets are relatively small. The high cost of living in New York City pushes out many of those who are not poor enough to qualify for subsidized rents or wealthy enough to afford market-rate housing. The city also has a gap in educational attainment. A higher percentage of New York City residents are without a high school diploma than the national population, and likewise for residents with at least a bachelor’s degree.

The following table compares the demographic characteristics of New York City with those of the :

Demographic Characteristics New York City vs. United States 2018 Estimates Ne w Yor k Unite d Characteristic City States Median Age (years) 36 38 Average Annual Household Income $92,064 $84,609 Median Annual Household Income $58,271 $58,754 Households by Annual Income Level: <$25,000 25.2% 21.1% $25,000 to $49,999 19.4% 22.1% $50,000 to $74,999 15.6% 18.1% $75,000 to $99,999 11.4% 12.9% $100,000 plus 28.4% 25.8% Education Breakdown: < High School 19.4% 13.4% High School Graduate 24.4% 27.7% College < Bachelor Degree 20.4% 29.0% Bachelor Degree 21.1% 18.7% Advanced Degree 14.6% 11.3% Source: © 2018 Experian Marketing Solutions, Inc. •All rights reserved• Cushman & Wakefield Valuation & Advisory Population

According to Moody’s Analytics, the population of New York City is just over 8.6 million. Rapid population growth is and always will be a challenge for New York City, as the densely populated metro area has little room for growth. The recent trend of redeveloping former industrial and office buildings into residential buildings could help, but the city will likely never grow as quickly as the rest of the country. Both Manhattan and Brooklyn are forecast to grow by an average annual rate of 0.2 percent through 2023, while Queens and the Bronx are forecast to grow at 0.1 and 0.3 percent, respectively, through 2023. Staten Island is forecast to grow at an average annual rate of 0.4 percent through 2023.

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The following graph compares population growth between New York City and the United States:

The following table shows New York City’s annualized population growth by county:

Annualized Population Growth by County Ne w Yor k City 2008-2023 Compound Compound Annual Annual Forecast Forecast Grow th Rate Grow th Rate Population (000’s) 2008 2018 2019 2023 08-18 19-23 United States 304,094.0 327,167.4 329,159.4 336,996.4 0.7% 0.6% New York City 8,068.2 8,398.7 8,399.9 8,473.2 0.4% 0.2% Bronx County 1,363.5 1,432.1 1,434.2 1,453.8 0.5% 0.3% Kings County 2,460.4 2,582.8 2,583.7 2,604.0 0.5% 0.2% New York County 1,587.0 1,628.7 1,628.4 1,642.6 0.3% 0.2% Queens County 2,193.6 2,278.9 2,277.7 2,289.5 0.4% 0.1% Richmond County 463.7 476.2 476.0 483.3 0.3% 0.4% Source: Data Courtesy of Moody's Analytics, Cushman & Wakefield Valuation & Advisory Households

Much like population growth, New York City usually lags the country in household formation. This is largely due to issues endemic to New York City. For example, the extremely high cost of living discourages household formation, especially as young residents group together in apartments to live more affordably. It is not uncommon for living rooms to be converted into extra bedrooms. Indeed, recent census data shows that New York City leads the nation in nonfamily households, with almost two-thirds of households having members with no familial relationship.

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PROPOSED HOTEL REGIONAL ANALYSIS

The graph below compares household formation growth between New York City and the United States:

Gross Metro Product

The city’s economic output grew at an average annual rate of 2.3 percent in 2018, slightly below the nation’s economic growth rate of 2.9 percent over the same time period. Consumer spending remained healthy through 2018 as retail sales increased by 6.3 percent in 2018 and are projected to grow 4.3 percent through 2019.

The following graph compares GMP growth by year for New York City and GDP growth for the United States:

Employment Distribution

New York City is heavily weighted in office-using employment sectors, which comprise 30.9 percent of jobs compared to 24.4 percent for the nation. This helps to explain the high wages and job growth found in the metro area. Furthermore, the city’s abundance of service jobs has shielded it from the gradual decay in employment across the nation.

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The following graph compares non-farm employment sectors for New York City and the United States:

Major Employers

New York City’s major employers are a good reflection of the city’s employment distribution. Nearly one-third of New York City jobs are in education/health services and financial activities, many of the largest employers are found in those sectors. Of the ten largest private employers in the city, five work in healthcare, three are banks, one is in communications, and one is a major retailer.

The following table lists New York City’s largest private employers:

Largest Private Employers New York City, NY No. of Company Employees Business Type Montefiore Health System 32,232 Healthcare Mount Sinai Health Systen 32,074 Healthcare JPMorgan Chase & Co. 29,000 Financial Services Bank of America 27,000 Financial Services New York-Presbyterian Healthcare System 23,709 Healthcare NYU Langone Medical Center 23,491 Healthcare Macy's Inc. 22,100 Retail Verizon Communications 16,973 Communications 16,136 Education & Healthcare Citigroup Inc. 15,878 Financial Services Source: Crain's New York Business Book of Lists, CUNY, nj.com, NJBIZ Business Book of Lists and Cushman & Wakefield Valuation & Advisory Employment Growth

New York City has experienced superior job growth compared to the U.S. over the past ten years, with year-to-date growth almost three times that of national growth. According to the New York State Department of Labor, private

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PROPOSED HOTEL REGIONAL ANALYSIS

sector jobs in New York City rose over the year by 95,300 (2.4 percent) to 4,055,700 in May 2019. Gains were greatest in educational and health services, leisure and hospitality, and professional and business services.

The following graph illustrates total non-farm employment growth per year for New York City and the United States:

Unemployment

According to the New York State Department of Labor, New York City’s unemployment rate in May 2019 was 4.3 percent, up 10 basis points year-over-year. The New York City unemployment rate is forecast to continue decreasing through 2020 before facing a slight uptick.

The following graph compares unemployment rates for New York City, the state of New York, and the United States:

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Conclusion

New York City remains healthy with economic growth spurred by expanding tech and financial services sectors driving employment in New York City. New York City’s status as the financial capital of the world, coupled with high per capita income and limited exposure to manufacturing, will be its strength. Over the long term, New York City will continue to be a highly attractive destination for businesses, residents and visitors

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Westchester County Regional Analysis

Introduction

Westchester County spans 433 square land miles and is west of the Hudson River, bordered by Bronx County to the south, Putnam County to the north and Long Island as well as Connecticut’s Fairfield County to the east. The county is located in the southeastern portion of New York State, directly north of New York City (NYC). Westchester County is tied both economically and culturally to Manhattan, as is most of the New York region. Central Westchester County (White Plains) is located approximately 30 miles north of . Westchester’s accessibility to NYC is a key factor to its appeal and stability. According to Experian Marketing Solutions’ 2018 estimates, Westchester County’s population is approximately 980,300. Map

The following map illustrates County regional area:

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Current Trends

Westchester County benefits immensely from its proximity to Manhattan and waterfront location and, as such, is embracing its commuter population and balancing its older demographic with an influx of young professionals. New construction has surged in the county, centering on transit-oriented developments and amenity-rich residential complexes. In an effort to repurpose obsolete structures, Westchester County is redeveloping vacant big-box spaces into multi-family buildings and luxury condominium complexes. As the region focuses its efforts on absorbing both commercial and commuter overflow from nearby Manhattan, many NYC residents will gravitate towards the quiet convenience north of the city, made more accessible by the completion of several new infrastructure projects. The county’s economy has expanded over the last decade, albeit at a rate behind the national average. The education and health services, leisure and hospitality services and construction industries have been the key drivers of healthy job growth in Westchester County over recent years. Additionally, Westchester County continues to support a diverse community by offering incentive programs for developers who incorporate fair and affordable housing into mixed-income developments or rehabilitate existing structures as new fair and affordable housing contribute to the community by promoting diverse neighborhoods. The Westchester County Department of Planning provides, without charge, resources and guidance to assist developers through the process of building fair and affordable housing. Westchester County also provides a marketing consultant to work with each developer to create and implement an affirmative and fair marketing plan. The marketing consultant conducts outreach to potentially eligible households, accepts applications and screens potential renters and home buyers.

The following are notable initiatives and developments in the Westchester County market:

 The $4 billion Mario M. Cuomo Project will replace the former Tappan Zee Bridge in the largest infrastructure undertaking in the nation. Since construction began in 2013, over 5,000 people have worked on the project and upon completion it should drastically reduce commuter congestion in Westchester County and increase desirability for business relocation and commuter in-migration. Office space leasing and new developments will be incited by the completion of the project. In September 2018, the eastbound span of the bridge opened.  As part of a $29 billion, five-year capital investment program, the Metropolitan Transit Authority will spend over $2 billion on improvements to the Metro-North Railroad, which services the Hudson and Harlem train lines linking Manhattan to the Westchester, Putnam, and Duchess counties. The infrastructure undertaking will generate hundreds of thousands of jobs across New York, equip all trains with Positive Train Control, add electronic ticketing to the Hudson line and revitalize five Metro-North stations. With $15 million in infrastructure upgrades, the initiative will revamp the Riverdale, Crestwood, White Plains, Port Chester and Harlem-125th stations. The stations to be updated were selected by the MTA based on usage and economic need. In March 2018, Metro-North Railroad started their $94 million renovations of the . The upgrades will provide more efficient ridership and accessibility for the Westchester County region.  In May 2018, Houston-based Million Air unveiled its new 52,000-square foot hangar at Westchester County Airport. The completion of the new hangar concludes the first phase of Million Air’s $80 million renovation and expansion project at Westchester County Airport. The company also invested in an 18,000-square foot terminal, which features seating areas, conference rooms, a pilot lounge, a coffee bar and a valet area. These investments are intended to bring businesses and private companies into the area for travel and follows a federal funding investment plan to improve the existing infrastructure of the airport.

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 Longtime Somers tenants IBM and PepsiCo have vacated expansive campuses to consolidate their Westchester operations. In September 2016, IBM Corp. sold its 723-acre, 1.2 million-square foot Somers campus to a Delaware limited liability company for almost $32 million ahead of the move into its new North Castle facility. At its peak, IBM’s Somers facility was home to 3,000 employees and while that number has continuously decreased, recent revenue losses and a refocus on data analytics have hinted at further layoffs in the near future. PepsiCo consolidated its operations in White Plains and Harrison in spring 2016, vacating nine floors of office space at its 500,000-square foot 1 Pepsi Way location. While both companies’ payrolls will remain concentrated in Westchester County, the relocations cause high vacancy rates and property tax losses for the region.  Luxury rental developments are thriving in Westchester County, driven by demand from New York City defectors looking to escape small living spaces and pricey payments. To accommodate Westchester’s newest residents, most of whom are young professionals commuting to New York City, developers are providing luxury amenities at rates more affordable than comparable living spaces in New York City. In May 2017, the $100 million River Tides at Greystone luxury rental building opened in Yonkers, offering 330-units with rental rates ranging from $1,500 to $5,000. In the first two months of leasing, the SOYO Lofts in downtown Yonkers were nearly full and in mid-2018, additional luxury projects including the Modera Hudson Riverfront and 1177 @Greystone began leasing.  Several large-scale, community-based developments are complete or nearing completion in Westchester County, including the massive mixed-use development of Rivertowns Square on the former Akzo Nobel site in Dobbs Ferry. This development includes 202 luxury apartments, a 138-room hotel, a luxury movie theater, a day care center, an urgent care center, a restaurant, a supermarket and retail stores. The developers of Rivertowns Square, Saber White Plains LLC and Chauncey White Plains LLC, are moving forward with a $120 million mixed-use development on Westchester Avenue in White Plains, which will add 25,000 square feet of retail space and 276 apartment units. Rivertowns Square was sold to Regency Centers in April 2018 for $69 million.  Westchester County’s New Rochelle will undergo major redevelopment in the near term with RDRXR as its pioneer. RDRXR has revealed a 10-year plan to build out new restaurants, hotels, retail and about 6,000 residential units in the city’s downtown. The plans will begin with the revitalization of the long-vacant Loews Theater where RDRXR will build a 28-story, mixed-use development. The city planning board approved the $149 million project in July 2016 and developers believe that their work will generate an additional $70 million for the city. At full build-out, the master plan could span more than 12 million square feet of new construction, including 6,370 residential units. Developers broke ground on 26 S Division Street in March 2018, which will replace the Church-Division Street parking garage with two 28-story towers, adding a combined 730 rental units, 25,000 square feet of retail and 698 parking spots. The city’s decision to fast-track projects with guaranteed approval in 90 days has propelled the city’s growth rate in recent years. Additional efforts to rejuvenate the city include the designation of an arts and cultural district and an independent plan for nine miles of waterfront.  Adjacent to New Rochelle, Mount Vernon is seeing an uptick in transit-oriented development as investors look to tap-into Manhattan’s dense population of young professionals being priced out of the market. Across the county, a shift in zoning has incited increased mixed-use development and recent rezoning in Mount Vernon will allow up to 3,153 new residential units and 263,700 square feet of new commercial and retail space.

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 In the space that General Motors occupied nearly twenty years ago, a $1 billion waterfront development has begun construction on 1,177 housing units, 135,000 square feet of retail space, a 140-room hotel and 16 acres of park and promenade space. The Sleepy Hollow, NY “Edge-On-Hudson” project will spur economic development in the area, just 25 miles from Manhattan, and breed the live, work, play movement sweeping the office market. Residential developments such as Edge-On-Hudson and RDRXR’s New Rochelle project demonstrate an emphasis on transit-oriented-developments and a new focus on recruiting young- professionals into the Westchester residential community. Both developments have indicated that they will market millennials, but plan on including age-restricted housing for the older population.  Home to the largest biotechnology company in New York, Regeneron Pharmaceuticals, Westchester has grown its identity as a biotech hub exponentially over the past few years. The biotech cluster is complemented by the presence of premiere medical and research institutions such as New York Medical College, Cornell, and Westchester Medical Center along with Westchester’s proximity to hospitals in New York City. In January 2016, Fareri Associates pitched a $1.2 billion biotech and medical office complex, retail and a 100-room hotel for 80 acres near Westchester Medical Center. Developer John Fareri stated that the creation of a bioscience center would fit Westchester’s highly educated demographics and it speaks to the high demand for biotech space in the county. Upon completion, the biotech center will include 2.2 million square feet of biotech/research space, 400,000 square feet of medical offices, a 100,000-square foot hotel, 114,000 square feet of ground-level office space and a 34,000-square foot Children’s Living Center.  Westchester Medical Center (WMC), the county’s largest employer, “topped off” its new 280,000-square foot, $230 million Ambulatory Care Pavilion in September 2017. The expanded Valhalla campus will allow WMC to accommodate patient volume and emergent care needs. An Advanced Imaging Center, Ambulatory Surgery Center and Heart and Vascular Institute, a private-room expansion and physician offices were all included in the new construction. The expansion has created 180 new full-time jobs. Demographic Characteristics

The demographic profile of Westchester County reflects an older, more educated and affluent population than that of the nation. The area’s proximity to New York City, strong school system and growing healthcare network have attracted families into the area.

The following table shows demographic characteristics for Westchester County and the United States:

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Demographic Characteristics Westchester County vs. United States 2018 Estimates Westchester Unite d Characteristic County States Median Age (years) 41 38 Average Annual Household Income $144,337 $84,609 Median Annual Household Income $92,313 $58,754 Households by Annual Income Level: <$25,000 15.1% 21.1% $25,000 to $49,999 15.1% 22.1% $50,000 to $74,999 12.5% 18.1% $75,000 to $99,999 10.3% 12.9% $100,000 plus 46.9% 25.8% Education Breakdown: < High School 12.6% 13.4% High School Graduate 20.6% 27.7% College < Bachelor Degree 20.5% 29.0% Bachelor Degree 23.6% 18.7% Advanced Degree 22.6% 11.3% Source: © 2018 Experian Marketing Solutions, Inc. •All rights reserved• Cushman & Wakefield Valuation & Advisory Population

New York State residents have one of the the highest property and income tax rates in the country. The high cost of living impedes the county’s ability to attract and retain young professionals, pushing Westchester County’s median age above national averages. According to Moody’s Analytics, Westchester County maintains a 2018 estimated population of 980,300 and has experienced limited growth, at the average annual rate of 0.4 percent, over the past decade. Slow construction growth over the past decade has stifled population growth, which remained stagnant in 2018. Though the county is forecast to remain behind the national population growth average, the population is projected to grow through 2023, as numerous multi-family developments set to come online. Major infrastructure improvements such as the New NY Bridge Project and Metro-North upgrades will make transportation between Westchester and Manhattan more efficient and will increase the area’s attractiveness for young professionals seeking more affordable alternatives to life in New York City.

The following chart details population trends within Westchester County and the United States:

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The following table shows Westchester County’s population growth as compared to the United States:

Annualized Population Growth Westchester County, NY 2008-2023 Compound Compound Annual Annual Forecast Forecast Grow th Rate Grow th Rate Population (000’s) 2008 2018 2019 2023 08-18 19-23 United States 304,094.0 327,167.4 329,159.4 336,958.4 0.7% 0.6% Westchester County 937.4 980.3 981.4 987.8 0.4% 0.2% Source: Data Courtesy of Moody's Analytics, Cushman & Wakefield Valuation & Advisory Households

Although Westchester County’s location relative to New York City has helped it establish a residential commuter community, many young professionals still prefer the urbanized “live, work, play” environment of downtown Manhattan. This is supported by the county’s comparatively low population growth rate and annual average household formation growth from 2008 through 2018. Going forward, as the number of new listings decreases for both single-family homes and condos, properties will sell faster and at lower median prices, making for a competitive housing market in which buyers gain confidence. The improving housing market will cause the existing population to buy homes sooner, accelerating household formation ahead of population growth. Over the next five years, household growth in Westchester County is expected to record an average annual increase of 0.5 percent. Despite the increase, the county will remain behind the United States average annual household formation growth of 1.0 percent.

The following graph compares household growth between Westchester County and the United States:

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Gross Metro Product

The gross metro product (GMP) of Westchester County has averaged an annual increase of 1.1 percent during the recovery period (since 2010). The strength of the education & health services employment sector has anchored the economy and bolstered its resilience while improvements in leisure & hospitality have contributed directly to the health of the county’s GMP. The redevelopment of waterfront areas, along with hotel renovations and tourist attractions, will encourage tourism and lead to higher spending in the near term. Rising personal income levels and retail space underway will breed a live, work, play environment that inspires spending and builds consumer confidence. Westchester County’s GMP growth is projected to increase through 2023, averaging 1.5 percent growth per year. This is 50 basis points below the national average of 2.0 percent annually over the same time. Improved transportation routes from the Mario M. Cuomo Bridge Project should help the regions trade, transportation & utilities sector, which accounts for 17.9 percent of total employment.

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The following chart details gross metro product growth in Westchester County and the United States:

Employment Distribution

Westchester County’s employment profile is heavily weighted in the trade, transportation & utilities, professional & business services and education & health services sectors. Education & health services holds the largest share of total nonfarm employment at 22.1 percent and was one of few employment sectors in the county to demonstrate positive average growth over the past decade at 1.8 percent annually. The high-wage positions typically offered by the education & health services sector have contributed to the high average incomes of the area. Westchester County’s total nonfarm payroll employment has averaged 0.4 percent growth annually over the past decade and is expected to decelerate slightly, to a growth rate of 0.2 percent through 2023.

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The following graph details employment by sector in Westchester County and the United States:

Major Employers

Westchester County has over 34,000 firms and headquarters over 170 businesses. The county is home to the headquarters of two Fortune 500 companies: IBM (ranked #34) and PepsiCo (ranked #45). Growth within the financial and professional & business services sectors have spearheaded the transition of Westchester County’s business district from one of large, corporate headquarters to a more diversified business community. The industry mix of the region’s top employers exemplifies the diversity of the county’s economy. In recent years, mergers and acquisitions along with campus downsizing have changed the profile for many of Westchester County’s primary employers. IBM Corporation, the largest employer in the county, has laid off a significant portion of their employees over the past few years as part of their global restructuring strategy. However, IBM’s layoffs were executed outside of New York, a relief for Westchester’s employment picture.

The following chart details Westchester County’s largest private employers: Largest Private Employers Westchester County, NY No. of Company Employees Business Type Westchester Medical Center 5,900 Healthcare IBM Enterprise Systems 4,200 Technology PepsiCo Inc. 3,600 Consumer Products 2,753 Healthcare Verizon Communications Inc. 2,200 Telecommunications New York Medical College 2,000 Education Phelps Memorial Hospital Center 1,789 Healthcare St. John's Riverside Hospital 1,700 Healthcare St. Joseph's Medical Center 1,562 Healthcare Consolidated Edison 1,500 Energy Source: Westchester County Book of Lists 2017, InfoGroup Business Listings and Cushman & Wakefield Valuation & Advisory

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Employment Growth

Annual nonfarm payroll growth in Westchester County has mirrored national trends during the past decade. The education & health services industry is the economic backbone of the region and its non-cyclical nature has supported payroll growth in the region. The surge of hospital expansions over the past few years has propelled economic progress within the county. After suffering losses during the past recession, the professional & business services sector has entered a period of expansion and is forecast to average annual payroll growth of 0.8 percent over the next five years. Professional & business services’ 14.0 percent share of total employment in Westchester County is in line with the national share of professional & business services payrolls, due in large part to the region’s location just north of New York City. Westchester County is host to a growing number of financial services companies seeking to remain in the New York City area, but at a more cost-effective rate. MasterCard Inc., Morgan Stanley, and IBM Corporation are some of the global firms that have large offices in the county. The county has recorded an employment growth rate at 0.4 percent annually over the past decade and is projected to grow 0.2 percent annually over the five years through 2023.

The following graph details employment growth in Westchester County and the United States:

Unemployment

The county’s unemployment rate has improved significantly thanks to the success of the education & health services sector as well as the growth of financial businesses. Government cuts have been difficult for Westchester County cities and towns as federal grants to government-based projects have been delayed or eliminated altogether. Nevertheless, unemployment should continue to trend downward in 2019.

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The following graph compares unemployment for Westchester County, New York and the United States:

Conclusion

The Westchester County economy is in a period of economic stability with modest job growth driven by key industries. Infrastructure upgrades will not only boost construction payrolls in the near term, but also attract an influx of new businesses and young professionals. Westchester County is home to many of the state’s best public schools and healthcare facilities. Schools in the county are consistently ranked in the top ten in US News & World Report’s Top Schools list, which is an incentive for families to relocate to the area. However, the county holds one of the country’s highest property tax rates as a result of spending on the public-school systems, retirement funds and public services. Such investments make the region attractive for families looking for a suburban area with excellent schools but the cost of living has stifled population growth and household formation rates over the past decade. Although many companies continue to relocate from Manhattan to Westchester County for its availability of space and more affordable prices, the high property taxes are causing office consolidations by major corporations and are deterring some smaller businesses.

The county’s economic stability stems from its large share of employment in the services industry. Over recent years, the leisure & hospitality has become increasingly influential to the county’s GMP and will continue to grow with the rise of waterfront development. Strong job growth in New York City may spill over into Westchester County and subsequently attract more families to the high-income area. As Westchester becomes more accessible and multi-family developments come online, the region will develop a live, work, play environment similar to that of New York City, but without the congestion and metro pricing.

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PROPOSED HOTEL LOCAL MARKET AREA MAP

Local Area Map

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Local Market Area Analysis

The subject property is located at the southwest intersection of Herriot Street and South in the City of Yonkers, Westchester County, New York. Adjacent uses include various retail and light industrial uses. The subject is located in a densely populated area that includes retail, light industrial, and residential development. Joseph Cerrato Park is located three blocks west of the subject property, and Saint Joseph’s Medical Center is located one block north along South Broadway. Columbus Park is located 3 blocks east of the subject.

Yonkers is situated in lower-western Westchester County and is considered by some to be part of New York City since it is on the border of the Bronx. The City of Yonkers is located in the southwestern part of Westchester County with a substantial amount of frontage along the eastern shore of the Hudson River. The city covers an area of approximately 18.1 square miles. Yonkers was incorporated in 1872 and is the fourth largest city in New York State, and the largest in Westchester County. Neighboring cities and physical boundaries to Yonkers include Hastings- on-Hudson and the Town of Greenburgh (north), the Bronx, City of New York (south), Scarsdale (northeast), Tuckahoe and Bronxville (east), Mount Vernon (southeast) and the Hudson River (west).

There are numerous new developments and under construction projects in Yonkers that support the growth and revitalization of the entire city. South Broadway runs north/south and is a major retail and multi-family corridor in Yonkers, with numerous restaurants, high rise apartment, and general retail uses. St. Joseph’s Medical Center, located less than 0.5 miles north of the subject, is one of the largest medical facilities in Westchester County, and includes a 194-bed teaching hospital, 200-bed nursing home, and two affordable senior housing facilities for elderly residents. An area known as i.Park Hudson is a 24-acre technology and office campus situated right at the heart of the Yonkers Waterfront District. i.Park contains 800,000 square feet of space in 8 newly renovated buildings. The buildings feature expansive river views, bright natural lighting, high ceilings, heavy floor loads and flexible layouts with expansion options. The campus is served by excellent transportation options, extensive telecommunications capabilities, ample power and other utilities. The campus is located just 1.0 mile north of the subject property. Cross County Shopping Center, located 3.6 miles east of the subject property, is an open-air that covers over 1.0 million square feet of retail and contains over 100 stores and restaurants. The mall is anchored by stores such as Macy’s, Old Navy, and Sears. The city of Yonkers recently embarked on a ambitious project to revive the which was buried under downtown Yonkers for almost a century. The project, known as “Daylighting of the Saw Mill River”, cost $19.0 million and is nearly complete, providing for a more scenic downtown area, as well as benefits to the natural habitat and local economy. The resulting economic development and job creation anticipates that approximately 950 permanent jobs will be created within 5 to 10 years as a result of the project. Additionally, the subject is located approximately 12.0 miles north of Manhattan, providing for easy access to its numerous attractions. Public transportation via bus lines, subway, and the Hudson rail line provide for easy access to the heart of the city.

Access

The subject site is accessible via Herriot Street to the north and locally via the larger arteries of U.S. Route 9 & 9A – South Broadway to the east and Riverdale Avenue to the west. The north/south Saw Mill River Parkway, , Sprain Brook Parkway, and Interstate 87-the New York State Thruway, and the east/west Cross County Parkway, together with two Metro-North rail lines, provide Yonkers residents convenient access to all of the business centers of the metropolitan region, including those in New York City, Westchester County, New Jersey, and Connecticut.

Local area accessibility is generally good, relying on the following transportation arteries:

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Interstate 87 – New York Travels north/south through Westchester & Yonkers, beginning in State Thruway: Tarrytown & terminating in the Bronx as the Major Deegan Expressway, providing access to the Bridge.

Sprain Brook Parkway: Travels north/south through Westchester & the eastern border of Yonkers, east of I-87. The parkway terminates in the Yonkers at the Cross County Parkway.

Saw Mill River Parkway: Travels north/south through Westchester & Yonkers, west of I-87 with ten exits in the city. The Saw Mill Parkway terminates in the Bronx as the Parkway.

Bronx River Parkway: Establishes the eastern border of Yonkers and intersects with the Cross County Parkway.

Cross County Parkway: Travels east/west through the center of Yonkers with four exits providing direct access. It connects Yonkers with Pelham and New Rochelle.

U.S. Route 9 & 9A – South Both serve Yonkers in the north/south directions providing local access Broadway: to the central business district and the Bronx.

Yonkers benefits from a good network of public transportation. Metro-North has four train stations along the Hudson line within the city limits. The Yonkers station is located in the CBD running express and local trains into New York City’s Grand Central Terminal. Peak express travel time is approximately 35 minutes. The Ludlow train station is just south of downtown Yonkers, while the Glenwood and Greystone stations are north of the CBD. Three additional Metro-North train stations along the are near the Yonkers border in the Town of Eastchester. The Bronxville, Tuckahoe and Crestwood Metro-North stations all serve the northern sections of Yonkers.

The city and county also has an efficient local bus system, the Bee-Line bus system travels in and around Yonkers and to White Plains and New York City. Westchester County Airport is located about 17 miles northeast of Yonkers and LaGuardia Airport is located approximately 45 minutes away in New York City – Queens on Long Island.

Land Use Patterns

The City of Yonkers is comprised of many residential and business districts and has a diverse population from all levels of the economic spectrum. Southwestern Yonkers, adjacent to the Bronx, is the oldest and most densely populated part of the city. , the hub of the central business district was at one time a bustling downtown area. However, for the past five to seven years, it is in the process of re-; the CBD does not contain any major department stores and only a few new-modern offices buildings. North and east of Getty Square, Yonkers consists largely of various residential neighborhoods that range from apartment house districts to tree-lined neighborhoods of moderately expensive detached single-family homes.

Central (Route 100) is an intensely developed shopping corridor extending north from the Bronx border through the City of Yonkers, the Town of Greenburgh to the City of White Plains. It is one of the most sought after retail corridors in Westchester County and comprises the second greatest concentration of retail development in southern Westchester County with more than 2.5 million square feet of retail development. At the base of Central (Park) Avenue is Yonkers Raceway – Empire City Casino, approximately 7.3 miles from the proposed subject site.

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Multi-Family

Yonkers is experiencing a wave of multifamily growth in its development pipeline. The following are some of the major projects recently completed, under construction, or in the final planning process:

 AMS Acquisitions recently acquired the Teutonia Hall site for $18 million. Located just outside the heart of Getty Square at 41-59 Buena Vista Avenue, this property will consist of a 25 story high rise, with 3 parking levels and 361 rental units. This project has been online/offline since 2012.

 As of January 2018, The Community Builders Inc. obtained roughly $38.3 million in financing to assist in the redevelopment of Cottage Gardens Phase III. The project will consist of 70 mixed income units, at the site of a former public housing site. This project represents a joint effort between The Community Builders Inc. and the Municipal Housing Authority of The City of Yonkers. The property is currently under construction.

 AvalonBay Communities in constructing a 609 rental units along the Hudson, just north of Getty Square. The property will be completed in multiple phases, with delivery expected at the beginning of 2020. Avalon secured an 18 year tax credit with the city, where they will pay reduced taxes over that period. As part of the deal, Avalon will construct a public water front esplanade on their site, and connect with an existing public esplanade.

 Larkin Tower located at 20 & 40 Larkin Plaza, will consist of a 25 and 17 story apartment building, with a total of 439 rental units. Developer’s RXR and Hudson Meridian are spending an estimated $200 million and is scheduled to deliver in October 2019.

 Strategic Capital is heading up the third phase of the Hudson Park development, originally started in the early 2000’s by Collins Enterprise. Strategic Capital will build a 24-story, 213 unit apartment building on Alexander Street.

 AMS Acquisitions is in the preliminary stage of planning a mixed use development at the former Chicken Island site in Downtown Yonkers. AMS and The City’s vision is to turn the site into a downtown epicenter with dining, shopping, apartments and a luxury hotel. Plans are preliminary as they still have yet to be reviewed by the City’s zoning board.

 Proposed Hudson Piers, will be a mixed-use multi-family/retail development containing 1,395 residential apartment units and 51,800 square feet of ground-floor retail space. Located on 21.50 acres, it will consist of 7 residential building, which 6 and 15 stories in height. The proposed unit mix is generally typical for this submarket, having a blend of studio, one-bedroom, two-bedroom and three-bedroom units with an average unit size of 790 square feet.

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The following table includes data on major apartment developments in Yonkers. As highlighted below, the average occupancy of the set is 81.0 percent:

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Westchester Office Market Analysis

Market Characteristics

At first quarter 2019, the Westchester County office market contains approximately 23.6 million square feet of inventory between its CBD and Non-CBD submarkets. The CBD totals approximately 5.3 million square feet of office space and the Non-CBD contains approximately 18.3 million square feet of inventory.

The following map of the Westchester market provides approximate locations for each of the region’s office markets:

Current Trends

New leasing activity for first quarter 2019 was slightly better than a year ago last year, reaching just over 251,000 square feet compared to last year’s 245,000 square feet. The major lease transactions for first quarter 2019 happened in the East I-287 submarket.

Listed below are highlights of the Westchester office market for first quarter 2019:

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 Average asking rents rose to $28.64 per square foot, increasing by 1.1% ($0.30 per square foot) year-over- year, increasing the last three quarters. Direct Class A rents, averaging $29.62 per square foot, rose three percent over first quarter 2018.  At 22%, direct vacancy decreased 90 basis points year-over-year.  Lease transactions totaled 251,127 square feet for the first quarter of 2019, activity was led by leasing in the Non-CBD submarkets. Vacancy

Overall office vacancies in Westchester County measured just over 5.6 million square feet for the first quarter of 2019, equating to an overall vacancy rate of 23.9%. The reasoning for the overall vacancy rate is mainly due to removing 1.1 million square feet of the former IBM campus in Somers from the inventory due it may be changing into a private school. As a result, the Hudson Valley submarket’s overall vacancy rate became 89%, compared to last year’s 96.2%. The other submarket’s vacancy rates only had slight changes compared to a year ago. Large dispositions within the market and a struggle to attract large-scale tenants to relatively outdated inventory which has burdened overall vacancy rates in recent quarters, and the market has struggled to recover from large footprints vacated by PepsiCo and IBM. Overall vacancy rates went down 70 basis points on a year-over-year basis.

The table below denotes the current statistics of the Westchester office market by submarket:

Office Market Statistics by Submarket Westchester County First Quarter 2019

YTD YTD Overall Wtd Dir e ct Wtd Overall Dir e ct Construction Overall Net Under Avg Asking Avg Class Market/Submarket Inventory Vacancy Vacancy Completions Absorption Construction Re nt A Rent White Plains CBD 5,282,330 18.1% 15.1% 0 (51,492) 0 $33.80 $37.38 Hudson Valley 568,000 89.0% 89.0% 0 0 0 $24.00 $24.00 Northern 1,763,189 29.3% 29.0% 0 3,582 0 $27.97 $28.22 West I-287 4,774,652 16.1% 14.9% 0 (48,938) 0 $26.98 $28.36 East I-287 9,353,917 17.1% 16.1% 0 25,109 0 $29.56 $29.66 Southern 1,830,296 9.8% 9.8% 0 2,855 0 $26.31 $28.16 NON-CBD TOTAL 18,290,054 25.5% 24.0% 0 (17,392) 0 $27.64 $28.14 WESTCHESTER COUNTY TOTAL 23,572,384 23.9% 22.0% 0 (68,884) 0 $28.64 $29.62 Source: Cushman & Wakefield Research; compiled by C&W V&A Construction

No traditional ground-up office construction has been delivered within Westchester County since 2005. Many landlords in the West and East I-287 submarkets are beginning to renovate and complete building improvements

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The following graph summarizes construction completions in the Westchester office market from 2009 and 2019:

Asking Rents

Overall average asking rents rose from first quarter 2018, up $0.30 per square foot over the year to $28.64 per square foot. Average rents in the CBD were reported at $33.80 per square foot for first quarter 2019, while the Non- CBD market’s inventory averaged a rent of $27.64 per square foot. The overall average asking rents have increased the last three quarters due to the Northern and White Plains CBD submarkets increasing by 0.80 and 0.30 compared from first quarter last year. The overall Non-CBD average asking rents increased by 0.30 from first quarter last year. The Class A average rents increased by 0.88 compared from first quarter last year.

The graphs below highlight the relationship between the overall vacancy rate and overall average asking rents for the Westchester County CBD and Non-CBD submarkets since 2009:

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WESTCHESTER NON-CBD, 2009-1Q19

$32 32% Overall Average Asking Rent Overall Vacancy Rate Overall VacancyRate

$30 26% (psf)

$28 20% Overall Avg Asking Rent Rent Asking Avg Overall

$26 14% 09 10 11 12 13 14 15 16 17 18 1Q19

Source: Cushman & Wakefield Research; compiled by C&W V&A

Leasing Activity

For first quarter 2019, Westchester’s office market reported a leasing total of just over 251,000 square feet, up slightly from first quarter 2018’s leasing activity of almost 246,000 square feet. UnitedHealth Group’s 63,575 square foot lease this quarter has been the largest leasing transaction since second quarter 2017’s 100,000 square foot lease transaction with Sumitomo Mitsui Banking Corporation in White Plains CBD.

The table below lists the most significant leases signed in the first quarter of 2019:

Significant Office Market Lease Trasactions Westchester County First Quarter 2019

Building Address Submarket Tenant Size (sf) 1311 Mamaroneck Avenue, White Plains East I-287 UnitedHealth Group 63,575 1 International Drive, Rye Brook East I-287 POP Displays 25,523 2500 Westchester Avenue, Purchase East I-287 Wells Fargo 25,000 50 Main Street, White Plains White Plains CBD Goldberg Segalla 17,812 117 Stevens Avenue, Valhalla West I-287 State of NY 16,493 Source: Cushman & Wakefield Research; compiled by C&W V&A Absorption

For first quarter 2019, the overall net absorption was a negative 68,884 square feet, mainly due to negative absorptions in the White Plains CBD and West I-287 submarkets. The CBD and Non-CBD markets contributed negative net absorptions of 51,492 square feet and 17,392 square feet, respectively, for first quarter 2019. Compared to first quarter last year, this quarter had just over 14,000 square feet more negative absorption.

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The following chart highlights overall net absorption by year:

OVERALL NET ABSORPTION Westchester Office Market, 2009-2019 YTD 0.5

0.2 0.1 0.0 -0.2 -0.3 -0.1 -0.5 -0.4 -0.4 -0.5 -0.6 -0.7 -0.5 Million Square Feet Square Million

-1.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: Cushman & Wakefield Research; compiled by C&W V&A

Demand Forecast

Cushman & Wakefield’s office market forecasts are derived using a regression model developed by our Research staff. The model is based on trends in historical occupancy and rental rate movements as well as factors such as employment growth, new construction and absorption tendencies.

Highlights of the demand analysis are as follows:

 Economic data suggests that office-occupying employment will begin to slow, contracting in 2020 at a rate of 0.4%.  The CBD is expected to see a decline in its vacancy, which is forecast to drop to 16.3% over the following three years. Office construction should remain minimal over the next few years, which will allow for more office space to be absorbed.  Inventory is forecast to remain stable over the next three years. There are no new major projects in the pipeline for the Westchester County office market.

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The following table and subsequent graph outline details of the demand analysis for the Westchester office market:

Conclusion

Westchester County’s office vacancy rate of 23.9% decreased largely because of the removal of the 1.1 million square foot IBM facility. The first quarter of 2019 began with good start on leasing velocity while asking rents are continuing to increase in the last few quarters. Westchester County saw its largest transaction of 63,575 square feet with UnitedHealth Group since 2nd quarter 2017. While Westchester County has no on-going construction, landlords are starting to renovate and complete building improvements to their buildings.

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Local Demographics The following discussion is based upon an Experian Marketing Solutions, Inc. demographic study for a one, three, and five mile radius of the subject property. To add perspective, we have included data for Westchester County, the State of New York, and the United States.

DEMOGRAPHIC SUMMARY 1.0-Mile 3.0-Mile 5.0-Mile Westchester State of United Radius Radius Radius County New York States POPULATION STATISTICS 2000 68,313 229,397 910,979 923,462 18,963,955 281,422,025 2018 70,345 235,818 943,394 969,348 19,855,613 326,573,050 2023 70,629 236,191 942,848 982,473 20,070,323 339,560,400

Compound Annual Change 2000 - 2018 0.16% 0.15% 0.19% 0.27% 0.26% 0.83% 2018 - 2023 0.08% 0.03% -0.01% 0.27% 0.22% 0.78% HOUSEHOLD STATISTICS 2000 22,891 88,111 331,056 337,143 7,052,616 105,480,443 2018 24,149 92,071 350,001 361,017 7,542,861 123,611,231 2023 24,888 93,867 356,158 371,577 7,731,610 130,100,346 Compound Annual Change 2000 - 2018 0.30% 0.24% 0.31% 0.38% 0.37% 0.89% 2018 - 2023 0.60% 0.39% 0.35% 0.58% 0.50% 1.03% AV ERAGE HOUSEHOL D INCOM E 2000 $40,218 $60,710 $57,309 $99,567 $61,883 $56,675 2018 $60,938 $89,401 $83,319 $144,337 $95,292 $84,609 2023 $72,512 $101,742 $94,120 $165,712 $107,892 $97,196 Compound Annual Change 2000 - 2018 2.34% 2.17% 2.10% 2.08% 2.43% 2.25% 2018 - 2023 3.54% 2.62% 2.47% 2.80% 2.51% 2.81% OCCUPANCY Ow ner Occupied 16.96% 40.73% 33.91% 60.60% 52.66% 63.50% Renter Occupied 83.04% 59.27% 66.09% 39.40% 47.34% 36.50% SOURCE: © 2018 Experian Marketing Solutions, Inc. •All rights reserved

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.

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NEW YORK CITY LODGING INDUSTRY OVERVIEW

New York City Lodging Industry Overview

Area Map

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NEW YORK CITY LODGING INDUSTRY OVERVIEW

Introduction Travel demand to the trade area is heavily influenced by corporate, group, and leisure demand generators located within the region. New York City, which is located 11.0 miles south of the subject trade area, is the primary driver of hotel demand. Hotel rates and occupancies in the trade area are highly influenced by its proximity to Manhattan.

New York City’s tourism industry has been a major growth driver over the past five years with total visitation increasing by approximately 20.1 percent since 2013. According to NYC & Company, NYC’s official convention and visitor’s bureau, 2018 witnessed a 5.5 percent increase in total visitation with a record breaking 65.2 million tourists (up from 61.8 million in 2017). This lends significant support to the strength and stability of the greater New York City area as a global financial, media, entertainment, cultural hub which generates high levels of hotel room night demand.

Due to a significant level of new supply entering the market over the past four years, the market’s average daily rate (ADR) eroded between 2015 and 2017; as new hotel’s offered bargain prices to entice trial and repeat visitation. As a result, RevPAR declined marginally. Nevertheless, in the face of new supply, the Manhattan hotel market achieved an all-time high occupancy of 88.1 percent in 2018. Evidently, new supply has been absorbed swiftly. Furthermore, for the first time since 2014, with an improved overall hotel stock and a diminishing supply pipeline, pricing power returned to the market resulting in an ADR increase of 2.5 percent and a revenue per available room (RevPAR) increase of 3.2 percent.

Over the past 10 years Manhattan has witnessed a 54.0 percent increase in demand in the face of a 40.0 percent increase in supply; diminishing worries that growth in demand would not keep pace with that of supply. However, considering the magnitude of the recent growth, some waning uncertainty remains regarding the market’s ability to support the continued development of new lodging facilities; although overall hotel fundamentals remain strong.

The recent injection of new supply in Manhattan reached an inflection point in 2015; resulting in a marginal decrease in occupancy of -0.9 percent. Additionally, the recent increase in supply has led operators to take a conservative stance on yield management while new hotels deploy discount pricing in an effort to entice trial and repeat visitation. As a result, downward pressure has been placed on rate growth as operators ensure occupancy is maintained at the expense of rate. This dynamic was evident in 2017, which experienced a marginal increase in occupancy of 0.9 percent, at the expense of ADR which decreased by -1.8 percent; resulting in a RevPAR decline of -0.9 percent. However, Manhattan overall ended 2018 on a strong note with growth across all metrics, including rate, with a growth of 2.5 percent. RevPAR also grew at 3.2 percent for the year, mitigating the decline experienced in the previous year.

We have also considered the trend in the market’s equilibrium index. The equilibrium index is a measure of a market’s ability to absorb new supply and is the difference between supply growth and demand growth. An equilibrium index significantly lower than zero indicates supply is growing faster than demand. Since 1996, on a compound annual basis, the annual change in demand of 3.0 percent outpaced the 2.5 percent change in supply for the Manhattan market. This translates to an equilibrium index of 0.5 percent. In the face of unprecedented supply growth, a positive long term equilibrium index illustrates the depth of the market and the appeal that Manhattan has to a variety of lodging demand generators. It is important to note that due to the introduction of new supply in 2015, the market recorded an equilibrium index of -1.0 percent. This seems to indicate that the absorption period has slowed somewhat relative to the past. Nevertheless, we do not believe the recent decline indicates a long term trend. This is supported by the positive 0.7 percent and 0.9 percent equilibrium index achieved in 2016 and 2017.

In 2019, operators will continue to maintain a close eye on demand with a potential 6,400 additional rooms slated to come on-line; thereby hampering the market’s ability to increase RevPAR. That being said, once the new supply is absorbed, with an overall improved product offering, Manhattan hotel operators, including the subject, should be well poised to reverse this trend; resulting in upward pressure in ADR and corresponding RevPAR. It is important

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to note that a majority of the potential rooms slated to come on-line will likely be delayed and/or stalled. This notion is supported by the fact that in 2018, only 51.0 percent of potential additional rooms actually opened. Herein lies the challenge with anticipating the impact of new supply over the long term. In 2018, considering the lack of anticipated new supply in the immediate area, as well as healthy demand trends, we expect the subject property to capitalize on compression enabling it to grow ADR.

In 2016, Smith Travel Research deployed a re-alignment of the Manhattan hotel market to better reflect the impact of new supply as well as the variation between submarkets. As a result, the Manhattan hotel market has been subdivided into 6 submarkets (versus the prior 3 submarkets). These submarkets consist of Uptown, Midtown West/, Midtown East, , Village/SoHo/, and Financial District. A summary of each submarket is provided below. Uptown

Uptown is defined as the area north of , running alongside and beyond. It has the highest ADR among all six of the Manhattan submarkets, due to the number of luxury hotels found in the area, most notably in the Upper and . Visitors come for attractions such as: Lincoln Center, Beacon Theatre, several Museums, Columbia University, and Central Park.

The Upper East Side has historically been one of the more desirable parts of New York City in which to reside and Park East is an especially attractive area. , which forms the eastern border of Central Park, was formerly lined with mansions and townhomes that were built by wealthy industrialists and socialites in the late 1880s, shortly after Central Park was laid out. While nearly all of the mansions on Fifth Avenue have been razed for high-rise development, the side streets are still improved with turn-of-the-century mansions. Many of the townhouse and mansions in the Park East area have been converted to apartments, offices, schools or are used by foreign consulates of the .

Manhattan’s is generally known as the area bounded by Central Park on the east, the Hudson River on the west, West 59th Street on the south and 110th Street on the north. The Upper West Side is primarily residential in nature, with adequate retail to support the area. Manhattan’s central business district is located southeast of the Upper West Side. Immediately to the south is the Clinton area, which is characterized by a wide range of uses including residential, office, and the Theater District. The neighborhood bordering the Upper West Side to the north is known as Morningside Heights, which is primarily residential and home to Columbia University. This area contains a unique mix of demand generators including universities, medical centers, and museums. Areas located north of the Upper West Side are undergoing gentrification as an increasing number of professionals with higher incomes have sought more affordable housing in less centralized areas of Manhattan. Occupancy for the Uptown hotel market grew at a compound annual average of 0.2 percent from 1995 through 2018, while ADR increased by 3.4 percent, resulting in a 3.6 percent increase in revenue per available room (RevPAR). Midtown West/Times Square

Perhaps most important to the Midtown West/ market is the commercial demand generated by the significant amount of occupied office space. Midtown West is defined as the area between 41st and 59th Streets west of 5th Fifth Avenue and the Times Square neighborhood is generally defined as the area bounded by to the east, Ninth Avenue to the west, 40th Street to the south and to the north. Midtown Manhattan contains many of the city’s largest office buildings, retail stores, residential buildings, theaters, and hotels; making it the busiest Central Business District in the United States. More than ±2.3 million people work in Manhattan daily. In addition, thousands of international, regional and out-of-town visitors and tourists travel to Midtown to avail themselves of the vast theatrical, tourist and entertainment offerings of the Broadway/ District.

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Midtown West/Times Square brings in millions of visitors every year with attractions like Rockefeller Center and Times Square. Other highlights include the New York Public Library and , which hosts free movies and music events during the summer. Midtown also includes the revitalized Times Square and the Theater District, where world-renowned Broadway productions entertain audiences nightly. The (MOMA), a midtown attraction, recently reopened in a larger renovated space which showcases the best in contemporary art. In addition, the Diamond District on and the Fifth Avenue retail corridor from to 59th Street are major attractions to tourist and business visitors alike. Occupancy for the Midtown West/Times Square hotel market grew at a compound annual average of 0.4 percent from 1996 through 2018, while ADR increased by 3.1 percent, resulting in a 3.6 percent increase in revenue per available room (RevPAR). Midtown East

Also at the core of the Midtown Manhattan market is Midtown East, defined as the area between 40th and 59th Streets east of Fifth Avenue. The submarket is home to many notable attractions, including: Grand Central Terminal, , the United Nations complex, St. Patrick's Cathedral, and . In October 2012, Mayor Bloomberg and the Department of City Planning (DCP) put forth a proposal to rezone Midtown East, focusing on a 73-block area surrounding Grand Central Terminal, where 80.0 percent of the buildings were at least 50 years old. Features of the proposal included increasing FAR, instituting an air-rights sale, and creating a funding mechanism for public improvements in the district. The City estimated that the proposal would -result in an additional 4.5 million square feet of office development over the long term. After some concessions, the plan received approval from the City Planning Commission in September 2013, only to be withdrawn in November due to the lack of support by the City Council. In 2014, a more targeted approach was conceived by Mayor focusing on a five-block area along the west side of between East 42nd and East 47th Streets, known as the Vanderbilt Corridor. This area became the subject of a 2015 zoning text amendment which was approved by the City Planning Commission in March 2015. This amendment offers the opportunity to increase floor area in exchange for substantially improving the surrounding open space. Additionally, the amendment permits Landmarked buildings to transfer a greater amount of unused development rights to new developments nearby. In response to this narrow approach, a Steering Committee was formed to create a more comprehensive proposal for Greater Midtown East. Midtown East Rezoning was passed in August 2017. The rezoning proposal promotes development over approximately a 78-block area in Midtown centered around Grand Central Terminal. The rezoning is expected to create approximately 6.6 million square feet of new office space in the Midtown East district over the next 20 years.

The City cites the following as driving factors for the proposal: the district’s aging building stock, limited new development in the past decade, the onerous zoning currently in place, the lack of pedestrian friendly features, and global competitor cities that are replacing outdated office space in existing office core districts. As such, goals of the rezoning include protecting the district’s position as a premier business center, promoting modern and sustainable office space, improving the district’s quality of life through better pedestrian access, and complementing the current office developments in Hudson Yards and to facilitate New York City’s long-term expansion of its overall stock of office space. Currently, the hotel market in Midtown East has been overshadowed by submarkets such as Midtown South due to the new expansion of projects like Hudson Yards. Occupancy for the Midtown East hotel market grew at a compound annual average of 0.4 percent from 1996 through 2018, while ADR increased by 3.1 percent, resulting in a 3.6 percent increase in revenue per available room (RevPAR). Midtown South

Midtown South is defined as the area between 24th and 42nd Streets spanning across Manhattan. Notable attractions include and the building. As with Midtown West and Midtown East, hotel demand is fostered by the significant amount of office space located within the Hudson Yards District, a 46-block area located in Midtown Manhattan, roughly between the Hudson River on the west and Penn Station and the Port Authority Bus Terminal to the east, between West 42nd and West 30th Streets. Formerly a manufacturing and port-

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related area, the district was rezoned in 2005 to facilitate mixed-use development. The 2005 rezoning also brought about a boom in Hudson Yards hotel construction.

Between 2005 and 2017, 29 major hotels were completed in the area, comprising over 4,800 new rooms. The proximity of Hudson Yards to Times Square and the Broadway theatre district makes the neighborhood an ideal location for hotel development. It is anticipated that this evolving neighborhood will comprise more than ±52.0 million square feet of office, residential, hotel and retail uses, of which close to ±7.0 million square feet has already been completed. To date, over 5,300 residential units and 21 hotels have been constructed in the Hudson Yards District, with many more in pre-development or planning stages. The district is expected to also become a major new office district of roughly ±26.0 million square feet, particularly with its improved access via subway improvements. Currently, Midtown, as the nation’s premier and largest office district, has minimal sites available for expansion. Hudson Yards offers the principal opportunity to continue the trend of office expansion beyond Times Square and Eighth Avenue. The City makes financial incentives available via a PILOT (payment in lieu of taxes) program for eligible developments. Major private-sector developers and public REITs have assembled large sites and have constructed, are currently building, or planning large-scale office, residential and/or mixed-use properties. These firms include Related Companies LLP, Brookfield Properties, Vornado Realty Trust, Extell, Moinian Group, The Gotham Organization and Silverstein Properties. Occupancy for the Midtown South hotel market grew at a compound annual average of 0.9 percent from 1995 through 2018, while ADR increased by 3.4 percent, resulting in a 4.3 percent increase in revenue per available room (RevPAR). Village/Soho/Tribeca

Village/Soho/Tribeca is defined as the area between Worth and 20th Streets. The submarket is characterized primarily by its retail and residential development, but is also home to a high concentration of boutique and luxury hotels, producing the 2nd highest ADR in Manhattan behind the Uptown submarket. Notable attractions include: , , and several museums. Occupancy for the Village/Soho/Tribeca hotel market grew at a compound annual average of 0.4 percent from 2001 through 2018, while ADR increased by 3.0 percent, resulting in a 4.3 percent increase in revenue per available room (RevPAR). Financial District

The Downtown Financial District is defined as the area south of Chambers Street and Worth Street which is home to many of New York City’s major financial institutions, the New York Federal Reserve Bank, and the New York Stock Exchange. As a result of the rapid decline in office occupancies directly following September 11, 2001, the city initiated multiple business incentives in order to provide Downtown with a competitive advantage to retain current and attract new residents and businesses to the Downtown area, including .

Over the past decade, the Downtown area has undergone new construction along with redevelopment/conversion of older commercial buildings into new facilities. Facilitated by new rental and condominium apartment construction and conversions, as well has hotel developments, Downtown is transforming into a 24-hour community compared to its former profile as a 9 to 5 neighborhood. Several factors are driving this resurgence in lower Manhattan. The first is Downtown’s revival as a vibrant mixed-use area. Due to Downtown’s rising popularity as a place to live and play, numerous office buildings have been targeted in recent years for residential or hotel conversion. Some examples include: 37 Warren Street, 67 Liberty Street, 70 Pine Street, 180 Water Street, the , 99 , 110 Wall Street, 346 Broadway, and 140 West Street.

These conversions have typically been limited to pre-war buildings with relatively small floor plates. According to the Alliance for Downtown New York, 10.0 million square feet of office space has been converted to residential or hotel use since 2004, and another 5.1 million square feet of space is in the potential conversion pipeline. The residential conversions provide the added benefit of removing excess office supply from the market. The increased residential population has also spurred demand for retail space consisting of restaurants and shops. This demand

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is being met by high-profile retail developments at the World Trade Center site, Brookfield Plaza (World Financial Center is being repositioned to capitalize on the neighborhood’s change), and the Pier 17 retail redevelopment. The evolving mixed-use nature of Downtown has consequently made the market more attractive for employers. Over the long term, hotel occupancy has remained stable, with pricing increasing by a compound annual average of 0.3 percent, resulting in a 2.6 percent increase in revenue per available room (RevPAR).

Historical Operating Performance Tourism remains a primary driver of NYC employment growth in several industries, including: hospitality, food and beverage, and retail trade. NYC’s consumer-driven industries, including its residential real estate and retail trade industries, received a boost in the first half of 2007 due to the record bonus payouts on Wall Street; however, the credit crunch showed its effects through the first half of 2008 as the residential real estate market began to soften, in part, due to the faltering economy and mortgage crisis. In September 2008, the fall of Lehman Brothers Holding’s Inc. introduced an acceleration of market uncertainty and declines which plunged domestic and international markets into a recessionary state. Where most of the country began to reflect signs of weakening demand early in 2008, thereby reducing occupancy, New York City remained somewhat sheltered from the effects of the credit crunch due to international demand. However, once the recession began to impact international markets in late 2008 and throughout 2009, the negative effects of the downturn compounded in the New York City lodging market. The fourth quarter of 2009 showed continued declines in the New York City lodging market when compared to results from fourth quarter of 2008. However, 2010 began exhibiting strong improvement which resulted in above inflationary RevPar growth through 2012. From 2013 through 2017, a significant level of new supply entered the market. As a result, downward pressure was placed on rate growth as operators focused on maintaining and increasing occupancy at the expense of rate. However, in 2018, the market was able to absorb new supply growth of 2.9 percent while posting rate and RevPAR growth of 2.5 and 3.2 percent, respectively. We expect this trend to continue in the near term as additional new supply is absorbed by the market.

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Manhattan Supply, Demand, Occupancy, ADR and RevPAR Year Supply % Change Demand % Change Occ % % Change ADR % Change RevPAR % Change

1996 57,038 ----- 16,552,381 ----- 79.5% ----- $ 160.76 ----- $ 127.82 ----- 1997 57,645 1.1% 17,149,435 3.6% 81.5% 2.5% $ 176.72 9.9% $ 144.04 12.7% 1998 57,545 -0.2% 17,168,464 0.1% 81.7% 0.3% $ 197.16 11.6% $ 161.16 11.9% 1999 59,612 3.6% 17,577,905 2.4% 80.8% -1.2% $ 207.54 5.3% $ 167.67 4.0% 2000 60,867 2.1% 18,513,128 5.3% 83.3% 3.1% $ 222.47 7.2% $ 185.38 10.6% 2001 63,930 5.0% 17,371,914 -6.2% 74.4% -10.7% $ 194.58 -12.5% $ 144.86 -21.9% 2002 65,615 2.6% 17,924,708 3.2% 74.8% 0.5% $ 184.59 -5.1% $ 138.16 -4.6% 2003 66,899 2.0% 18,503,037 3.2% 75.8% 1.2% $ 180.26 -2.3% $ 136.60 -1.1% 2004 66,589 -0.5% 20,087,767 8.6% 82.6% 9.1% $ 200.10 11.0% $ 165.38 21.1% 2005 65,594 -1.5% 20,263,129 0.9% 84.6% 2.4% $ 231.22 15.6% $ 195.69 18.3% 2006 64,753 -1.3% 19,917,863 -1.7% 84.3% -0.4% $ 265.66 14.9% $ 223.88 14.4% 2007 65,857 1.7% 20,489,789 2.9% 85.2% 1.1% $ 297.94 12.2% $ 253.97 13.4% 2008 67,221 2.1% 20,686,963 1.0% 84.3% -1.1% $ 306.31 2.8% $ 258.26 1.7% 2009 70,739 5.2% 20,708,842 0.1% 80.2% -4.9% $ 236.90 -22.7% $ 190.01 -26.4% 2010 74,475 5.3% 22,688,885 9.6% 83.5% 4.1% $ 256.34 8.2% $ 213.96 12.6% 2011 78,811 5.8% 24,037,261 5.9% 83.6% 0.1% $ 270.59 5.6% $ 226.11 5.7% 2012 80,313 1.9% 25,199,080 4.8% 86.0% 2.9% $ 277.49 2.5% $ 238.53 5.5% 2013 82,402 2.6% 26,050,414 3.4% 86.6% 0.8% $ 285.80 3.0% $ 247.54 3.8% 2014 87,047 5.6% 27,660,150 6.2% 87.1% 0.5% $ 292.05 2.2% $ 254.25 2.7% 2015 89,338 2.6% 28,124,807 1.7% 86.3% -0.9% $ 287.94 -1.4% $ 248.35 -2.3% 2016 93,743 4.9% 29,708,495 5.6% 86.8% 0.7% $ 279.25 -3.0% $ 242.47 -2.4% 2017 96,145 2.6% 30,737,006 3.5% 87.6% 0.9% $ 274.26 -1.8% $ 240.21 -0.9% 2018 98,961 2.9% 31,831,659 3.6% 88.1% 0.6% $ 281.25 2.5% $ 247.85 3.2%

% Change 2.5% 3.0% 0.5% 2.6% 3.1%

YTD June 2018 48,877 ---- 15,324,278 ---- 85.9% ---- $ 257.14 ---- $ 220.87 ---- YTD June 2019 50,194 2.7% 15,398,514 0.5% 84.0% -2.2% $ 251.44 -2.2% $ 211.33 -4.3%

1Q 2018 98,431 ---- 7,189,466 ---- 81.2% ---- $ 215.65 ---- $ 175.01 ---- 1Q 2019 100,755 2.4% 7,093,246 -1.3% 78.2% -3.6% $ 206.43 -4.3% $ 161.47 -7.7%

2Q 2018 98,697 ---- 8,134,812 ---- 90.6% ---- $ 293.80 ---- $ 266.11 ---- 2Q 2019 101,681 3.0% 8,305,268 2.1% 89.8% -0.9% $ 289.88 -1.3% $ 260.19 -2.2%

Source: Smith Travel Research REPUBLICA TION OR OTHER RE-USE OF THIS DA TA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Financial District Supply, Demand, Occupancy, ADR and RevPAR Year Supply % Change Demand % Change Occ % % Change ADR % Change RevPAR % Change

1996 2,360 ----- 681,652 ----- 79.1% ----- $ 162.14 ----- 128.32$ ----- 1997 1,930 -18.2% 575,319 -15.6% 81.7% 3.2% $ 180.93 11.6% 148.89$ 16.0% 1998 1,917 -0.7% 589,224 2.4% 84.2% 3.1% $ 200.83 11.0% 169.13$ 13.6% 1999 2,612 36.3% 808,360 37.2% 84.8% 0.7% $ 213.32 6.2% 180.86$ 6.9% 2000 1,993 -23.7% 615,281 -23.9% 84.6% -0.2% $ 230.07 7.9% 193.44$ 7.0% 2001 1,904 -4.5% 547,452 -11.0% 78.8% -6.9% $ 208.83 -9.2% 161.23$ -16.6% 2002 1,853 -2.7% 490,776 -10.4% 72.6% -7.9% $ 185.56 -11.1% 134.67$ -16.5% 2003 2,530 36.6% 655,516 33.6% 71.0% -2.2% $ 190.18 2.5% 135.00$ 0.2% 2004 2,585 2.2% 766,497 16.9% 81.2% 14.4% $ 207.58 9.2% 168.62$ 24.9% 2005 2,573 -0.5% 778,236 1.5% 82.9% 2.0% $ 236.94 14.1% 196.34$ 16.4% 2006 2,627 2.1% 807,101 3.7% 84.2% 1.6% $ 270.98 14.4% 228.05$ 16.2% 2007 2,637 0.4% 819,944 1.6% 85.2% 1.2% $ 308.69 13.9% 262.97$ 15.3% 2008 2,636 -0.1% 794,027 -3.2% 82.5% -3.1% $ 323.44 4.8% 266.96$ 1.5% 2009 2,967 12.6% 882,187 11.1% 81.5% -1.3% $ 241.12 -25.4% 196.40$ -26.4% 2010 4,122 38.9% 1,199,032 35.9% 79.7% -2.2% $ 253.58 5.2% 202.09$ 2.9% 2011 4,221 2.4% 1,227,046 2.3% 79.6% -0.1% $ 261.39 3.1% 208.18$ 3.0% 2012 4,566 8.2% 1,359,134 10.8% 81.6% 2.4% $ 269.39 3.1% 219.71$ 5.5% 2013 4,656 2.0% 1,439,815 5.9% 84.7% 3.9% $ 276.08 2.5% 233.88$ 6.5% 2014 4,878 4.8% 1,495,189 3.8% 84.0% -0.9% $ 281.05 1.8% 236.01$ 0.9% 2015 5,734 17.5% 1,708,433 14.3% 81.6% -2.8% $ 272.09 -3.2% 222.77$ -5.6% 2016 6,546 14.2% 1,940,479 13.6% 81.2% -0.5% $ 263.45 -3.2% 213.97$ -3.9% 2017 7,228 10.4% 2,188,585 12.8% 83.0% 2.1% $ 268.04 1.7% 222.37$ 3.9% 2018 7,785 7.7% 2,390,566 9.2% 84.1% 1.4% $ 267.91 0.0% 225.40$ 1.4%

Avg Annual % Change 5.6% 5.9% 0.3% 2.3% 2.6%

YTD June 2018 3,768 ---- 1,126,880 ---- 81.9% ---- $ 250.02 ---- 204.87$ ---- YTD June 2019 4,144 10.0% 1,221,171 8.4% 80.7% -1.5% $ 240.16 -3.9% 193.89$ -5.4%

1Q 2018 7,554 ---- 528,656 ---- 77.8% ---- $ 212.40 ---- 165.16$ ---- 1Q 2019 8,275 9.5% 550,727 4.2% 74.0% -4.9% $ 199.65 -6.0% 147.65$ -10.6%

2Q 2018 7,642 ---- 598,224 ---- 86.0% ---- $ 283.27 ---- 243.69$ ---- 2Q 2019 8,439 10.4% 670,444 12.1% 87.3% 1.5% $ 273.44 -3.5% 238.74$ -2.0%

Source: Smith Travel Research REPUBLICA TION OR OTHER RE-USE OF THIS DA TA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Midtown East Supply, Demand, Occupancy, ADR and RevPAR Year Supply % Change Demand % Change Occ % % Change ADR % Change RevPAR % Change

1996 12,930 ----- 3,639,327 ----- 77.1% ----- $ 189.05 ----- $ 145.79 ----- 1997 13,725 6.2% 3,916,812 7.6% 78.2% 1.4% $ 212.48 12.4% $ 166.12 13.9% 1998 14,241 3.8% 4,128,374 5.4% 79.4% 1.6% $ 232.73 9.5% $ 184.84 11.3% 1999 14,531 2.0% 4,214,388 2.1% 79.5% 0.0% $ 244.01 4.8% $ 193.89 4.9% 2000 14,531 0.0% 4,413,175 4.7% 83.2% 4.7% $ 259.44 6.3% $ 215.88 11.3% 2001 14,534 0.0% 3,843,115 -12.9% 72.4% -12.9% $ 227.70 -12.2% $ 164.95 -23.6% 2002 14,410 -0.9% 4,023,584 4.7% 76.5% 5.6% $ 215.10 -5.5% $ 164.55 -0.2% 2003 14,387 -0.2% 4,007,825 -0.4% 76.3% -0.2% $ 206.26 -4.1% $ 157.42 -4.3% 2004 14,239 -1.0% 4,200,873 4.8% 80.8% 5.9% $ 228.39 10.7% $ 184.61 17.3% 2005 14,402 1.1% 4,543,080 8.1% 86.4% 6.9% $ 267.50 17.1% $ 231.19 25.2% 2006 13,900 -3.5% 4,340,308 -4.5% 85.6% -1.0% $ 306.52 14.6% $ 262.23 13.4% 2007 13,803 -0.7% 4,351,272 0.3% 86.4% 1.0% $ 336.82 9.9% $ 290.90 10.9% 2008 13,818 0.1% 4,321,025 -0.7% 85.7% -0.8% $ 346.94 3.0% $ 297.24 2.2% 2009 13,832 0.1% 4,155,467 -3.8% 82.3% -3.9% $ 265.53 -23.5% $ 218.55 -26.5% 2010 13,894 0.4% 4,259,272 2.5% 84.0% 2.0% $ 285.83 7.6% $ 240.07 9.8% 2011 14,067 1.2% 4,294,712 0.8% 83.6% -0.4% $ 301.77 5.6% $ 252.41 5.1% 2012 14,163 0.7% 4,379,893 2.0% 84.7% 1.3% $ 307.46 1.9% $ 260.49 3.2% 2013 14,466 2.1% 4,483,225 2.4% 84.9% 0.2% $ 313.81 2.1% $ 266.44 2.3% 2014 14,600 0.9% 4,646,384 3.6% 87.2% 2.7% $ 324.92 3.5% $ 283.30 6.3% 2015 13,992 -4.2% 4,419,515 -4.9% 86.5% -0.7% $ 320.69 -1.3% $ 277.62 -2.0% 2016 14,546 4.0% 4,410,362 -0.2% 83.1% -4.0% $ 312.43 -2.6% $ 259.53 -6.5% 2017 14,003 -3.7% 4,413,180 0.1% 86.3% 3.9% $ 298.73 -4.4% $ 257.93 -0.6% 2018 13,867 -1.0% 4,424,714 0.3% 87.4% 1.2% $ 310.64 4.0% $ 271.56 5.3%

Avg Annual % Change 0.3% 0.9% 0.6% 2.3% 2.9%

YTD June 2018 6,852 ---- 2,111,465 ---- 84.4% ---- $ 282.70 ---- $ 238.66 ---- YTD June 2019 6,901 0.7% 2,080,321 -1.5% 82.6% -2.2% $ 274.83 -2.8% $ 226.97 -4.9%

1Q 2018 13,801 ---- 984,323 ---- 79.2% ---- $ 240.12 ---- $ 190.29 ---- 1Q 2019 13,917 0.8% 949,453 -3.5% 75.8% -4.3% $ 231.59 -3.6% $ 175.55 -7.7%

2Q 2018 13,836 ---- 1,127,142 ---- 89.5% ---- $ 319.88 ---- $ 286.37 ---- 2Q 2019 13,917 0.6% 1,130,868 0.3% 89.3% -0.3% $ 311.13 -2.7% $ 277.82 -3.0%

Source: Smith Travel Research REPUBLICA TION OR OTHER RE-USE OF THIS DA TA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Midtown South Supply, Demand, Occupancy, ADR and RevPAR Year Supply % Change Demand % Change Occ % % Change ADR % Change RevPAR % Change

1995 8,851 ----- 2,357,143 ----- 73.0% ----- $ 110.18 ----- 80.39$ ----- 1996 9,053 2.3% 2,515,194 6.7% 76.1% 4.3% $ 118.22 7.3% 89.98$ 11.9% 1997 9,067 0.2% 2,650,820 5.4% 80.1% 5.2% $ 126.89 7.3% 101.64$ 13.0% 1998 9,277 2.3% 2,693,224 1.6% 79.5% -0.7% $ 145.30 14.5% 115.56$ 13.7% 1999 9,650 4.0% 2,828,490 5.0% 80.3% 1.0% $ 153.73 5.8% 123.45$ 6.8% 2000 9,964 3.3% 2,903,336 2.6% 79.8% -0.6% $ 160.67 4.5% 128.26$ 3.9% 2001 10,638 6.8% 2,631,252 -9.4% 67.8% -15.1% $ 148.36 -7.7% 100.54$ -21.6% 2002 10,855 2.0% 2,748,754 4.5% 69.4% 2.4% $ 132.91 -10.4% 92.21$ -8.3% 2003 10,810 -0.4% 2,785,749 1.3% 70.6% 1.8% $ 131.18 -1.3% 92.62$ 0.4% 2004 10,855 0.4% 3,269,963 17.4% 82.5% 16.9% $ 147.00 12.1% 121.33$ 31.0% 2005 10,734 -1.1% 3,264,011 -0.2% 83.3% 0.9% $ 172.58 17.4% 143.78$ 18.5% 2006 11,063 3.1% 3,386,467 3.8% 83.9% 0.7% $ 205.33 19.0% 172.19$ 19.8% 2007 11,599 4.8% 3,586,812 5.9% 84.7% 1.0% $ 237.30 15.6% 201.05$ 16.8% 2008 11,922 2.8% 3,595,269 0.2% 82.6% -2.5% $ 249.18 5.0% 205.87$ 2.4% 2009 13,763 15.4% 3,977,548 10.6% 79.2% -4.2% $ 191.42 -23.2% 151.57$ -26.4% 2010 15,965 16.0% 4,892,152 23.0% 84.0% 6.0% $ 204.70 6.9% 171.84$ 13.4% 2011 17,043 6.7% 5,332,663 9.0% 85.7% 2.1% $ 222.19 8.5% 190.47$ 10.8% 2012 17,654 3.6% 5,661,828 6.2% 87.9% 2.5% $ 232.64 4.7% 204.41$ 7.3% 2013 18,880 6.9% 6,077,682 7.3% 88.2% 0.4% $ 241.94 4.0% 213.37$ 4.4% 2014 20,014 6.0% 6,486,680 6.7% 88.8% 0.7% $ 246.25 1.8% 218.66$ 2.5% 2015 20,964 4.7% 6,733,908 3.8% 88.0% -0.9% $ 241.36 -2.0% 211.79$ -3.1% 2016 22,272 6.2% 7,141,888 6.1% 87.9% -0.2% $ 233.89 -3.1% 205.49$ -3.0% 2017 23,459 5.3% 7,492,460 4.9% 87.5% -0.4% $ 231.22 -1.1% 202.33$ -1.5% 2018 24,860 6.0% 8,065,391 7.6% 88.9% 1.6% $ 238.19 3.0% 211.72$ 4.6%

Avg Annual % Change 4.6% 5.5% 0.9% 3.4% 4.3%

YTD June 2018 12,291 ---- 3,886,401 ---- 86.6% ---- $ 216.90 ---- $ 187.90 ---- YTD June 2019 12,853 4.6% 4,030,423 3.7% 85.9% -0.8% $ 215.02 -0.9% 184.73$ -1.7%

1Q 2018 24,712 ---- 1,819,873 ---- 81.8% ---- $ 176.62 ---- $ 144.52 ---- 1Q 2019 25,585 3.5% 1,867,599 2.6% 81.1% -0.9% $ 172.55 -2.3% 139.95$ -3.2%

2Q 2018 24,858 ---- 2,066,528 ---- 91.4% ---- $ 252.37 ---- $ 230.55 ---- 2Q 2019 26,248 5.6% 2,162,824 4.7% 90.5% -0.9% $ 251.69 -0.3% 227.91$ -1.1%

Source: Smith Travel Research REPUBLICA TION OR OTHER RE-USE OF THIS DA TA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Midtown West/Times Square Supply, Demand, Occupancy, ADR and RevPAR Year Supply % Change Demand % Change Occ % % Change ADR % Change RevPAR % Change

1995 26,138 ----- 7,724,365 ----- 81.0% ----- $ 140.78 ----- 113.98$ ----- 1996 26,011 -0.5% 7,801,352 1.0% 82.2% 1.5% $ 154.50 9.7% 126.95$ 11.4% 1997 25,787 -0.9% 7,904,964 1.3% 84.0% 2.2% $ 169.80 9.9% 142.61$ 12.3% 1998 25,559 -0.9% 7,851,071 -0.7% 84.2% 0.2% $ 190.33 12.1% 160.18$ 12.3% 1999 25,953 1.5% 7,821,697 -0.4% 82.6% -1.9% $ 200.44 5.3% 165.51$ 3.3% 2000 26,250 1.1% 8,180,926 4.6% 85.4% 3.4% $ 218.90 9.2% 186.91$ 12.9% 2001 27,412 4.4% 7,848,349 -4.1% 78.4% -8.1% $ 189.57 -13.4% 148.70$ -20.4% 2002 28,339 3.4% 7,963,486 1.5% 77.0% -1.9% $ 183.90 -3.0% 141.58$ -4.8% 2003 29,052 2.5% 8,307,881 4.3% 78.3% 1.8% $ 180.49 -1.9% 141.41$ -0.1% 2004 28,692 -1.2% 8,848,479 6.5% 84.5% 7.8% $ 200.24 10.9% 169.19$ 19.6% 2005 28,138 -1.9% 8,754,992 -1.1% 85.2% 0.9% $ 231.59 15.7% 197.42$ 16.7% 2006 27,686 -1.6% 8,574,805 -2.1% 84.9% -0.5% $ 259.69 12.1% 220.36$ 11.6% 2007 28,175 1.8% 8,853,650 3.3% 86.1% 1.5% $ 292.90 12.8% 252.16$ 14.4% 2008 28,615 1.6% 8,953,496 1.1% 85.7% -0.4% $ 300.42 2.6% 257.53$ 2.1% 2009 28,750 0.5% 8,562,117 -4.4% 81.6% -4.8% $ 236.33 -21.3% 192.83$ -25.1% 2010 28,139 -2.1% 8,781,577 2.6% 85.5% 4.8% $ 259.07 9.6% 221.51$ 14.9% 2011 30,331 7.8% 9,299,381 5.9% 84.0% -1.8% $ 272.21 5.1% 228.65$ 3.2% 2012 30,700 1.2% 9,804,614 5.4% 87.5% 4.2% $ 277.79 2.1% 243.06$ 6.3% 2013 30,979 0.9% 9,901,748 1.0% 87.6% 0.1% $ 287.41 3.5% 251.68$ 3.5% 2014 33,234 7.3% 10,640,672 7.5% 87.7% 0.2% $ 293.15 2.0% 257.14$ 2.2% 2015 34,281 3.1% 10,888,597 2.3% 87.0% -0.8% $ 289.16 -1.4% 251.91$ -2.0% 2016 35,408 3.3% 11,630,817 6.8% 90.0% 3.4% $ 279.74 -3.3% 251.75$ -0.1% 2017 36,015 1.7% 11,822,503 1.6% 89.9% -0.1% $ 276.90 -1.0% 249.13$ -1.0% 2018 36,724 2.0% 12,018,353 1.7% 89.7% -0.3% $ 283.88 2.5% 254.53$ 2.2%

Avg Annual % Change 1.5% 1.9% 0.4% 3.1% 3.6%

YTD June 2018 18,203 ---- 5,819,049 ---- 87.6% ---- $ 257.77 ---- $ 225.76 ---- YTD June 2019 18,299 0.5% 5,639,425 -3.1% 84.4% -3.6% $ 251.44 -2.5% 212.31$ -6.0%

1Q 2018 36,707 ---- 2,741,546 ---- 83.0% ---- $ 217.48 ---- $ 180.48 ---- 1Q 2019 36,975 0.7% 2,610,766 -4.8% 78.5% -5.5% $ 205.78 -5.4% 161.44$ -10.5%

2Q 2018 36,708 ---- 3,077,503 ---- 92.1% ---- $ 293.67 ---- $ 270.55 ---- 2Q 2019 36,826 0.3% 3,028,659 -1.6% 90.4% -1.9% $ 290.80 -1.0% 262.81$ -2.9%

Source: Smith Travel Research REPUBLICA TION OR OTHER RE-USE OF THIS DA TA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Uptown Supply, Demand, Occupancy, ADR and RevPAR Year Supply % Change Demand % Change Occ % % Change ADR % Change RevPAR % Change

1995 6,494 ----- 1,878,547 ----- 79.3% ----- $ 164.65 ----- 130.49$ ----- 1996 6,684 2.9% 1,914,856 1.9% 78.5% -1.0% $ 187.90 14.1% 147.47$ 13.0% 1997 6,706 0.3% 1,968,106 2.8% 80.4% 2.5% $ 198.98 5.9% 160.00$ 8.5% 1998 6,551 -2.3% 1,906,571 -3.1% 79.7% -0.8% $ 220.39 10.8% 175.73$ 9.8% 1999 6,866 4.8% 1,904,970 -0.1% 76.0% -4.7% $ 233.48 5.9% 177.48$ 1.0% 2000 7,022 2.3% 2,064,543 8.4% 80.5% 6.0% $ 240.97 3.2% 194.09$ 9.4% 2001 7,062 0.6% 1,880,837 -8.9% 73.0% -9.4% $ 210.92 -12.5% 153.90$ -20.7% 2002 7,062 0.0% 1,870,327 -0.6% 72.6% -0.6% $ 201.19 -4.6% 145.99$ -5.1% 2003 6,933 -1.8% 1,877,395 0.4% 74.2% 2.2% $ 194.12 -3.5% 144.02$ -1.3% 2004 6,669 -3.8% 1,925,630 2.6% 79.1% 6.6% $ 229.45 18.2% 181.52$ 26.0% 2005 6,062 -9.1% 1,827,774 -5.1% 82.6% 4.4% $ 255.21 11.2% 210.84$ 16.2% 2006 5,790 -4.5% 1,683,948 -7.9% 79.7% -3.6% $ 311.03 21.9% 247.81$ 17.5% 2007 5,830 0.7% 1,714,832 1.8% 80.6% 1.1% $ 344.67 10.8% 277.74$ 12.1% 2008 5,898 1.2% 1,730,633 0.9% 80.4% -0.2% $ 344.67 0.0% 277.09$ -0.2% 2009 6,067 2.9% 1,616,099 -6.6% 73.0% -9.2% $ 273.59 -20.6% 199.65$ -27.9% 2010 6,440 6.1% 1,802,404 11.5% 76.7% 5.1% $ 300.62 9.9% 230.52$ 15.5% 2011 6,306 -2.1% 1,814,128 0.7% 78.8% 2.8% $ 316.67 5.3% 249.60$ 8.3% 2012 6,159 -2.3% 1,822,286 0.4% 81.1% 2.8% $ 325.29 2.7% 263.69$ 5.6% 2013 5,801 -5.8% 1,778,008 -2.4% 84.0% 3.6% $ 338.79 4.2% 284.47$ 7.9% 2014 6,201 6.9% 1,864,792 4.9% 82.4% -1.9% $ 348.62 2.9% 287.24$ 1.0% 2015 6,250 0.8% 1,846,119 -1.0% 80.9% -1.8% $ 354.84 1.8% 286.89$ -0.1% 2016 6,248 0.0% 1,873,109 1.5% 82.1% 1.5% $ 348.44 -1.8% 286.18$ -0.2% 2017 6,154 -1.5% 1,874,644 0.1% 83.5% 1.6% $ 347.31 -0.3% 289.84$ 1.3% 2018 6,128 -0.4% 1,848,039 -1.4% 82.6% -1.0% $ 357.42 2.9% 295.29$ 1.9%

Avg Annual % Change -0.3% -0.1% 0.2% 3.4% 3.6%

YTD June 2018 3,041 ---- 890,067 ---- 80.2% ---- $ 326.47 ---- $ 261.78 ---- YTD June 2019 3,042 0.0% 876,851 -1.5% 79.0% -1.5% $ 323.60 -0.9% 255.55$ -2.4%

1Q 2018 6,132 ---- 413,444 ---- 74.9% ---- $ 276.53 ---- $ 207.17 ---- 1Q 2019 6,134 0.0% 399,390 -3.4% 72.3% -3.4% $ 270.31 -2.3% 195.56$ -5.6%

2Q 2018 6,133 ---- 476,623 ---- 85.4% ---- $ 369.78 ---- $ 315.79 ---- 2Q 2019 6,135 0.0% 477,461 0.2% 85.5% 0.1% $ 368.17 -0.4% 314.87$ -0.3%

Source: Smith Travel Research REPUBLICA TION OR OTHER RE-USE OF THIS DA TA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Village/Soho/Tribeca Supply, Demand, Occupancy, ADR and RevPAR Year Supply % Change Demand % Change Occ % % Change ADR % Change RevPAR % Change

2001 3,120 ---- 812,928 ---- 71.4% ---- $ 183.95 ---- $ 132.70 ---- 2002 3,095 -0.8% 827,781 1.8% 73.3% 2.6% $ 176.47 -4.1% 129.29$ -2.6% 2003 3,187 3.0% 868,671 4.9% 74.7% 1.9% $ 178.18 1.0% 133.04$ 2.9% 2004 3,549 11.3% 1,076,325 23.9% 83.1% 11.3% $ 191.93 7.7% 159.46$ 19.9% 2005 3,686 3.9% 1,095,036 1.7% 81.4% -2.0% $ 208.48 8.6% 169.68$ 6.4% 2006 3,686 0.0% 1,125,234 2.8% 83.6% 2.8% $ 263.41 26.3% 220.31$ 29.8% 2007 3,813 3.4% 1,163,279 3.4% 83.6% -0.1% $ 301.49 14.5% 252.00$ 14.4% 2008 4,332 13.6% 1,292,513 11.1% 81.7% -2.2% $ 308.30 2.3% 251.99$ 0.0% 2009 5,360 23.7% 1,515,424 17.2% 77.5% -5.2% $ 239.40 -22.3% 185.45$ -26.4% 2010 5,915 10.4% 1,754,448 15.8% 81.3% 4.9% $ 271.46 13.4% 220.59$ 19.0% 2011 6,843 15.7% 2,069,331 17.9% 82.8% 1.9% $ 288.42 6.2% 238.95$ 8.3% 2012 7,071 3.3% 2,171,325 4.9% 84.1% 1.6% $ 297.51 3.2% 250.30$ 4.8% 2013 7,618 7.7% 2,369,936 9.1% 85.2% 1.3% $ 304.74 2.4% 259.74$ 3.8% 2014 8,120 6.6% 2,526,433 6.6% 85.2% 0.0% $ 309.36 1.5% 263.71$ 1.5% 2015 8,168 0.6% 2,545,555 0.8% 85.4% 0.2% $ 311.02 0.5% 265.65$ 0.7% 2016 8,723 6.8% 2,711,840 6.5% 85.2% -0.2% $ 306.21 -1.5% 260.80$ -1.8% 2017 9,292 6.5% 2,942,709 8.5% 86.8% 1.9% $ 294.60 -3.8% 255.63$ -2.0% 2018 9,598 3.3% 3,084,596 4.8% 88.0% 1.5% $ 306.16 3.9% 269.57$ 5.5%

Avg Annual % Change 9.5% 9.9% 0.4% 3.0% 4.3%

YTD June 2018 4,722 ---- 1,490,416 ---- 86.5% ---- $ 287.34 ---- $ 248.45 ---- YTD June 2019 4,955 4.9% 1,550,323 4.0% 85.7% -0.9% $ 282.76 -1.6% 242.36$ -2.5%

1Q 2018 9,525 ---- 701,624 ---- 81.8% ---- $ 241.97 ---- $ 198.04 ---- 1Q 2019 9,869 3.6% 715,311 2.0% 80.5% -1.6% $ 233.35 -3.6% 187.93$ -5.1%

2Q 2018 9,521 ---- 788,792 ---- 91.0% ---- $ 327.69 ---- $ 298.33 ---- 2Q 2019 10,116 6.2% 835,012 5.9% 90.7% -0.4% $ 325.07 -0.8% 294.87$ -1.2%

Source: Smith Travel Research REPUBLICA TION OR OTHER RE-USE OF THIS DA TA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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The market has historically shown strong growth following periods of decline. As many analysts predicted, the growth in occupancy and decelerating ADR declines experienced at the end of 2009 did in fact signal the beginning stage of recovery for the market. Yearend figures indicate that Manhattan RevPAR increased 12.2 percent in 2010 as pent-up demand was accommodated. For the Greater New York City Area, this improvement continued at a more typical pace from 2011 through 2014 with RevPAR increases of 5.6 percent, 5.9 percent, 3.8 percent, and 1.9 percent, respectively. However, as previously discussed, the recent injection of new supply in Manhattan reached an inflection point in 2015; resulting in a marginal decrease in occupancy of -0.9 percent. In conjunction, downward pressure was placed on rate growth as operator’s ensured occupancy was maintained at the expense of rate. This dynamic was evident in 2016, which experienced a marginal increase in occupancy of 0.7 percent, at the expense of ADR which decreased by -3.0 percent; resulting in a RevPar decline of -2.4 percent. This trend continued in 2017, which also experienced an increase in occupancy of 0.7 percent, while ADR decreased -1.8 percent, resulting in a RevPar decline of 0.9 percent. We expect this trend to continue in the near term, albeit at a decelerating rate, as additional new supply is absorbed by the market. Once the new supply is absorbed, with an overall improved product offering, Manhattan hotel operators should be well poised to reverse this trend; resulting in upward pressure in ADR and corresponding RevPAR. Since 1996, on a compound annual basis, occupancy increased 0.5 percent and average rate increased 2.6 percent to yield an average annual RevPAR increase of 3.1 percent.

From 2010 through 2014, the market has for the most part posted strong increases in RevPAR. In 2015, the market reached an inflection point with supply outpacing demand for the first time since 2009. However, 2016 and 2017 proved resilient with occupancy growing, albeit at an anemic rate. The recent increase in supply led operators to take a conservative stance on yield management. As a result, downward pressure was placed on rate growth as operators worked to maintain occupancy at the expense of rate. This trend continued through 2017, as the Manhattan market introduced an additional ±2,400 rooms, resulting in a 0.9 percent decrease in RevPAR.

To illustrate the demand and ADR patterns in the market, we have analyzed the 12-month moving average for demand and ADR in the market since January 1997. This is an effective tool for measuring the most current performance for a market. Since January 1997 we observed the market had several periods of contraction and expansion.

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12-Month Average of Demand and ADR; 1997-2018

Source: Smith Travel Research REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

The following are some salient points about the Manhattan lodging market.

 Since 1996, occupancy has held in the low to mid 80.0 percent range with the exception of the period between 2001 and 2003, which experienced a significant decline in lodging demand due to the events of September 11, 2001. Subsequently, due in part to the combination of declining supply from 2004 through 2006, and a strong economy through late 2008, occupancy in Manhattan climbed to 85.2 percent in 2007 before a softening in the market presented itself in 2008. In 2009, although the US lodging market experienced significant declines in demand, Manhattan managed to achieve 80.2 percent occupancy. Although this decline represents a decrease of ±4.9 percent, an 80.2 percent occupancy is more than five occupancy points higher than the previous low experienced in 2001. From 2010 through 2014, market demand rebounded in a meaningful way. Despite an unprecedented amount of new supply, Manhattan occupancy climbed steadily reaching an all-time high of 87.1 percent in 2014. As previously discussed, in 2015, the market reached an inflection point with supply outpacing demand, resulting in a decrease in occupancy of 0.9 percent. This decline does not appear to indicate a long term trend. This notion is supported by a 0.9 percent increase in 2017 occupancy, despite a 2.6 percent increase in supply.  For the past 20 years, on a compound annual basis, ADR in Manhattan has increased by 2.6 percent. This emphasizes the steady level of compression in the market, which enables hotel operators to drive rate. While the past two up swings experienced consecutive years with double digit ADR growth, the unprecedented increase in supply in recent years has placed downward pressure on rate growth. We expect this trend to continue in the near term as new hotel product is absorbed by the market. By 2019, with a plethora of new hotel rooms in the market, and a declining pipeline of additional supply, operators should be able to take advantage of rising compression. With a significantly improved overall hotel product, the Manhattan lodging stock is expected to increase rate above an inflationary level.

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 Furthermore, on a compound annual basis, RevPAR in Manhattan has increased by 3.1 percent. This illustrates the market’s ability to effectively toggle between occupancy and rate in order to maximize RevPAR. Over the next couple of years, new supply is expected to put downward pressure on RevPAR. As previously discussed, in 2019, the market is expected to potentially introduce an additional ±6,400 hotel rooms; thereby hampering the market’s ability to increase RevPAR in the near term.

Manhattan Historical Operating Statistics: 1995 - 2017

Source: Smith Travel Research REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

 As the preceding graph illustrates, the Manhattan market has exhibited peaks and valleys but exhibits a general upward trend over the last 21 years. As previously shown, RevPAR has increased 3.1 percent on a compound annual basis for Manhattan area hotels; indicating a stable and steadily growing market.

 The market expanded from 1995 through 2000, before transcending into a decline for three years; post September 11, 2001. Subsequently, the market re-entered a growth phase until the beginning of the downturn in September 2008. While Manhattan remained insulated through 2008, the impact was significantly felt in 2009 with RevPAR declining by 26.4 percent. Since 2010, the market has remained relatively stable; and despite an increase of 25.9 percent in supply, demand grew by 30.9 percent.  Since 2010, the Manhattan market has absorbed a significant amount of new supply (19,267 rooms). However, the recent injection of new supply has led hotel operators to focus on building occupancy at the expense of ADR growth. In 2015, for the first time since 2009, supply marginally outpaced demand; as evident by an equilibrium index of -1.0 percent. Considering the market’s history, we do not believe the recent drag to indicate a long term trend. In fact, in 2016 and 2017, the equilibrium index reversed course and posted increases of 0.7 and 0.9 percent, respectively.

The following chart compares each area of Manhattan’s supply, demand, occupancy, average rate, and RevPAR growth in 2018.

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Manhattan - Supply, Demand, Occupancy, ADR, and RevPAR Growth Rates by Area

20.0%

15.0%

10.0%

5.0%

0.0%

-5.0%

-10.0% Financial District Midtown East Midtown South Midtown West/Times Uptown Village/Soho/Tribeca Total Square

Supply Demand Occupancy ADR RevPAR

Source: Smith Travel Research REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED As previously shown, in 2018, the overall Manhattan market increased occupancy by 0.6 percent. This growth was predominantly fueled by demand accommodated by the new supply delivered in the southern half of Manhattan including Midtown South, Village/Soho/Tribeca, and Financial District submarkets.

An overall increase in supply of 2.9 percent resulted in an overall RevPAR increase of 3.2 percent. Both the Midtown West/Times Square and Uptown submarkets are highly developed and are epicenters for both leisure and commercial demand. Whereas the Financial District, Midtown South, and Village/Soho/Tribeca submarkets offered the most development opportunities resulting in a significant amount of new supply. Much of this new supply has occurred in trendy New York City neighborhoods such as Chelsea, Tribeca, and SoHo; as well as emerging destinations such as Hudson Yards located in Midtown South.

The chart on the following page shows the Top 25 lodging markets in the United States. Based on information provided by Smith Travel Research, New York ranked 20th in terms of RevPAR growth in 2018. This is a noticeable reversal from year end 2010 when New York was ranked 3rd in RevPAR growth. Relative to the United Sates overall, this is in most part due to the significant amount of new supply which recently entered the Manhattan market.

As previously mentioned, Smith Travel Research includes each of the five boroughs in its overall New York City data as a Top 25 Market.

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Top 25 Markets RevPAR Growth; 2018 8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

-10.0%

Source: Smith Travel Research REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Sharing Economy

Much has been reported about the growing trend in sharing access to goods and services through community based on-line services such as HomeAway, AirBnb, Flipkey, VacationRentals.com, and Connecting Rentals Worldwide, to name a few. Most notable to the Manhattan lodging industry is the emergence of Airbnb. While the direct impact is difficult to measure, research firm Smith Travel Research, using data provided directly by Airbnb, recently found little evidence to support declining hotel revenues due to the expansion of Airbnb product in Manhattan. The STR study also found that the majority of Airbnb product in Manhattan, based on pricing, potentially competes with only ±12.0 percent (or 11,581 of the 93,743 total hotel units) of the Manhattan hotel market; pointing to the economy/midscale class as the most vulnerable hotel product. Additionally, and likely more importantly, the study found that the length of stay for Airbnb product was typically 7 nights or more. With only ±3.8 percent (or 3,563 of the 93,743 total hotel units) of the Manhattan lodging market positioned as extended stay product, Airbnb appears to be competing with a small slice of the overall hotel market. Considering the typical pricing and length of stay of Airbnb product, we believe the corporate housing market must be analyzed in conjunction with traditional hotel rooms; effectively shrinking the pie further. This is well supported by the recent decline experienced in the corporate housing market.

The Highland Group, a consulting firm and market leader for research, conducts a comprehensive survey of the extended stay market and publishes an annual Corporate Housing Industry Report. Results are based on participant responses to survey questions, similar to the hotel industry’s STR reports. According to their research, there is a total of 2,407 units currently utilized for corporate housing in Manhattan. In its most recent report published in 2018 (with data through the 2017 reporting year), the average occupancy rate for corporate housing in Manhattan increased by roughly 5.0 percent, resulting in an overall occupancy of 82.0 percent. The following chart details the average occupancy rates for corporate housing in Manhattan over the past ten years based on their data.

Occupancy Summary Year Occupancy 2017 82% 2016 78% 2015 83% 2014 83% 2013 85% 2012 87% 2011 86% 2010 86% 2009 82% 2008 85% Average 84% Average Rate Summary Year Average Rate % Increase 2017 $249 6.4% 2016 $234 -7.5% 2015 $253 2.8% 2014 $246 15.0% 2013 $214 2.7% 2012 $220 5.8% 2011 $208 2.5% 2010 $203 0.5% 2009 $204 6.3% 2008 $192 -- Average $222

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The data over the past ten years indicates an average rate of $222 per night for the corporate housing market in Manhattan; in-line with the ADR achieved in the economy/midscale hotel sector. This equates to $6,660 for a 30- day stay. The survey data includes all types of property including product such as Marriot’s ExecuStay branded properties. It also includes information from operators (such as BridgeStreet, Furnished Quarters, Oakwood, and Marriot ExecuStay) that do not own and operate an entire property and instead lease units in various rental apartment buildings.

Between 2012 and 2016, in contrast to the Manhattan hotel market demand trend, occupancy declined in the corporate housing market. This would seem to suggest that the corporate housing market is more significantly impacted by the introduction of Airbnb product (versus the impact on the traditional transient Manhattan hotel market). While some market participants believe there is a negative impact on hotel demand, Airbnb still lacks a critical mass that would enable more meaningful analysis and conclusions. Airbnb’s competitive advantage is its user-friendly on-line platform, which enables peer-to-peer based sharing. Although Airbnb has been successful in fueling collaborative consumption, relative to traditional hotel product, Airbnb is extremely fragmented and decentralized. As a result, there is little control over the customer experience and the quality of product varies significantly from one unit to another. These two issues alone are certainly a detractor for consumers looking to visit Manhattan for only a couple of nights. Considering the high degree of uncertainty, it appears that consumer confidence is achieved when the budgeted travel spend increases to a point which is perceived as a value proposition relative to a traditional hotel room. In this case, it appears that a length of stay of roughly 7 nights, is a good marker indicating when the typical sharing-economy participant will elect to purchase an Airbnb product versus a traditional transient hotel. According to a survey conducted by the appraisers, hotel operators in Manhattan which represent a cross section between class and location, reported the average length of stay ranged between 1.8 and 2.8 nights per stay. This further supports the notion that Airbnb competes more directly with the corporate housing sector versus the hotel sector.

In October 2016, New York City enacted a new law barring the advertisement of short term rentals prohibited by the New York State Multiple Dwelling Law (MDL). The MDL stipulates that a Class A Multiple Dwelling can only be used for “permanent resident purposes” which is defined as a minimum stay of 30 consecutive days by the same person or family. Therefore, rentals listed on Airbnb and various other short-term rental platforms are flat-out illegal. Reportedly, approximately 50.0 of the existing Airbnb inventory in Manhattan violates local and state laws. The new law establishes fines ranging from $1,000 for the first violation up to $7,500 for three or more violations (NYC Admin Code Sec 27.287.1). As a result of the recent law, reports of violating offenders have been made public.

In 2016, Airbnb sued the city of San Francisco after legislation was passed requiring hosts to register their rental properties with the city. The two parties ultimately settled and Airbnb agreed to drop listings that did not comply with local legislation. Reportedly, the decrease in hosts reduced room revenue by approximately 60.0 percent in 2017.

In July 2018, New York City council members passed a bill to require Airbnb to report the names and addresses of its customers in the city to the city’s Office of Special Enforcement. The bill is expected to take effect in the winter of 2019. This information is being requested to assist law enforcement in curtailing illegal short term rentals. However, it is important to note that in August 2018, Airbnb Inc. and HomeAway sued the City of New York over the recently passed law; claiming the bill violates users’ constitutional rights. According to a Bloomberg article published in July 2018, Airbnb and its hosts are estimated to generate $140 million in gross room revenue this year. When the new legislation takes effect, people familiar with the matter reportedly believe this number could be reduced in half.

As the city continues to enforce the new law, and as public awareness builds, the impact of Airbnb on the Manhattan hotel market will likely have a diminishing impact. Considering the data available in conjunction with fundamental hotel trends, we believe the typical traveler will favor dependable as well as tried and tested lodging accommodations, versus a shared economy room product, for the foreseeable future. In the meantime, the emergence of shared economy product types will continue to be monitored closely.

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New Supply

Historically, supply growth in New York has been kept in check due to natural barriers to entry as well as escalating construction and land costs. In Manhattan, during and subsequent the deteriorating global economic conditions experienced in 2008/2009, supply grew at record levels, increasing by roughly 5.2 percent in 2009. In the past 5 years, the market continued this trend as developers forged ahead with previously stalled projects; generating an increase of 18.0 percent in demand, in the face of a supply increase of 16.7 percent. While the recent supply growth has been significant, it has also been absorbed rather swiftly. That being said, as previously discussed, due to new supply, the market recorded an equilibrium index of -1.0 percent in 2015. This seems to indicate that the absorption period has slowed somewhat relative to the past. However, the market’s equilibrium index turned positive in 2016 recording an equilibrium index of 0.7 percent and continued to show positive results in 2017 with an equilibrium index of 0.9 percent; indicating that demand once again outpaced supply. That being said, operators will continue to maintain a close eye on demand with a potential 6,400 additional rooms slated to come on-line in 2019; thereby hampering the market’s ability to increase RevPAR. Once the new supply is absorbed, with an overall improved product offering, Manhattan hotel operators should be well poised to reverse this trend; resulting in upward pressure in ADR and corresponding RevPAR.

As indicated in the table below, hotel supply declined from 2004 to 2006. The decline was the result of hotel closings in favor of residential condominium development. Furthermore, prior to the credit crisis, a number of large, older hotels were considered for demolition in favor of office development including The Roosevelt, with 1,015 rooms, and the , with 1,705 rooms. However, since 2008, we have seen a resurgence of construction as hotel developers regained an appetite to build in Manhattan. Despite the record decline in ADR in 2009, developers forged ahead with their projects. As shown below, in 2009, the Manhattan market witnessed the greatest hotel supply growth of any year since 1995 with growth of 5.2 percent. This trend in supply growth continued in 2010 through 2017, with an annual average increase of 4.2 percent. The following graph depicts supply, demand, and ADR growth rates from 1995 through 2017.

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Manhattan - Supply, Demand, and ADR Growth Rates; 1995 - 2017

Source: Smith Travel Research REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED The following table and chart compare the New York City hotel development pipeline from 2016 through 2018 as well as the change in activity between each year in all stages of development.

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New York City Active Pipeline Data - Hotel Rooms Year End Year End Year End YE 2017 - YE 2018 Stage 2016 2017 2018 Change In Construction 15,276 11,257 13,955 2,698 Final Planning 5,547 4,775 4,272 -503 Planning 8,324 6,218 7,663 1,445 Total Development 29,147 22,250 25,890 3,640

Source: Smith Travel Research REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

Active Development Pipeline for New York City: 2016 vs. 2017 vs. 2018 Active Development Pipeline for New York City: 2016 vs. 2017 vs . 2018 35,000 30,000 25,000 15,276 20,000 13,955 15,000 11,257 5,547 10,000 4,775 4,272 5,000 8,324 6,218 7,663 0 2016 2017 2018 Year End Year End Year End Planning Final Planning In Construction

Source: Smith Travel Research REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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As shown, developers are continuing to forge ahead with development plans in the New York City market. The following table outlines notable hotels that have opened between January 2016 and July 2018, followed by a table showing several Manhattan hotels with expected openings from January 2019 through December 2022.

Select Manhattan Hotel Openings: January 2016 - July 2018 Phase of Room Open Development Hotel Name Brand Count Date Submarket

Luxury Open Firmdale The Whitby Hotel Firmdale 86 Feb-17 Midtown West/Times Square, NY Open Four Seasons Hotel New York Downtown Four Seasons 189 Sep-16 Financial District, NY Open Thompson Hotels The Beekman Hotel Thompson Hotels 287 Sep-16 Financial District, NY Open AKA Wall Street AKA 132 Jun-16 Financial District, NY Subtotal: 694

Upper Upscale Open Embassy Suites New York Midtown Manhattan Embassy Suites 310 Jan-18 Midtown South, NY Open Joie De Vivre 50 Joie De Vivre 229 May-17 Village/Soho/Tribeca, NY Open Renaissance New York Midtown Hotel Renaissance 348 Mar-16 Midtown South, NY Subtotal: 887

Upscale Open AC Hotels by Marriott New York Times Square AC Hotels 290 Apr-18 Midtown West/Times Square, NY Open Ascend Collection Gowanus Inn & Yard Ascend Collection 76 Nov-17 Financial District, NY Open New York Times Square South Hilton Garden Inn 250 Oct-17 Midtown South, NY Open HY36 Midtown Manhattan Crowne Plaza 251 Sep-17 Midtown South, NY Open Hilton Garden Inn NYC Financial Center Manhattan Downtown Hilton Garden Inn 250 Sep-17 Financial District, NY Open House New York Chelsea Hyatt House 150 Apr-17 Midtown South, NY Open Manhattan Midtown West Four Points by Sheraton 148 Feb-17 Midtown South, NY Open DoubleTree Hotel New York Times Square West DoubleTree 612 Feb-17 Midtown South, NY Open New York Midtown East EVEN Hotels 230 Dec-16 Midtown East, NY Open Courtyard New York Downtown Manhattan World Trade Center Area Courtyard 317 Nov-16 Financial District, NY Open Innside by Melia NoMad Innside by Melia 313 Mar-16 Midtown South, NY Open RIU Plaza New York Times Square RIU Hotel 647 Mar-16 Midtown West/Times Square, NY Open Four Points by Sheraton New York Downtown Four Points by Sheraton 261 Jan-16 Financial District, NY Subtotal: 3,795

Upper Midscale Open Fairfield Inn & Suites New York Downtown Manhattan World Trade Center ArFairfield Inn 192 Nov-17 Financial District, NY Open MOXY NYC Times Square MOXY 612 Sep-17 Midtown South, NY Open Fairfield Inn & Suites New York Manhattan Central Park Fairfield Inn 226 Oct-16 Uptown, NY Subtotal: 1,030

Independent Open The Assemblage John Street 75 Apr-18 Financial District, NY Open Freehand NY 395 Feb-18 Midtown South, NY Open The Pod Hotel Times Square 665 Jan-18 Midtown West/Times Square, NY Open Mondrian Park Avenue 109 Oct-17 Midtown South, NY Open The Allen Hotel 161 Sep-17 Village/Soho/Tribeca, NY Open MADE Hotel 50 Aug-17 Midtown South, NY Open Public Hotel 128 Jun-17 Village/Soho/Tribeca, NY Open LUMA Hotel Times Square 130 Apr-17 Midtown West/Times Square, NY Open Carnegie Hotel 330 Dec-16 Midtown West/Times Square, NY Open The Bernic 122 Nov-16 Midtown East, NY Open Arlo Nomad 230 Nov-16 Midtown South, NY Open Arlo SoHo 40 Sep-16 Village/Soho/Tribeca, NY Open Hotel Mimosa 52 Aug-16 Village/Soho/Tribeca, NY Open Sago Hotel 37 Jan-16 Village/Soho/Tribeca, NY Open Riff Downtown 48 Jan-16 Financial District, NY Subtotal: 2,572

Total: 8,978 Source: Smith Travel Research, NYC & Co., Cushman & Wakefield REPUBLICA TION OR OTHER RE-USE OF THIS DA TA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED Note that it is impossible to determine every property that will be developed in the future or what their impact in the market will be. It is inevitable that some of the developments in the table on the following page may not come to fruition. However, the table does represent the trends in hotel development expected to occur in the near term as developers tend to migrate towards the Upscale, also considered select-service, and/or Independent hotel product.

The current economic conditions along with stable and growing hotel fundamentals are driving developments forward. As evidenced by the previous charts, developers continue to plan for new hotel construction. Approximately 9,840 hotel rooms are in various phases of development for the greater New York City area. Evidently, hotels that were not already under construction or without financing in the past are receiving the go ahead for development.

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Select New York City Pipeline January 2019 through April 2022 Phase of Room Anticipated Development Hotel Name Brand Count Completion

Luxury Under Construction Edition Times Square Edition 452 Feb-19 Under Construction Six Senses New York Six Senses 137 Jan-20 Planning Aman New York Aman 83 Jan-20 Final Planning Ritz-Carlton New York City Manhattan/Midtown South Ritz-Carlton 250 Apr-22 Subtotal: 922

Upper Upscale Under Construction Renaissance New York Chelsea Renaissance 341 Apr-19 Under Construction Virgin Hotel New York Virgin Hotel 500 Jun-19 Under Construction Pestana Park Avenue Pestana 97 Jul-19 Under Construction Pestana CR7 Times Square Pestana 177 Jul-19 Under Construction Hard Rock Hotel International New York Hard Rock 445 Sep-19 Under Construction Hyatt Centric NY 39th Street Hyatt Centric 163 Dec-19 Final Planning New York Hotel Indigo 122 Jan-20 Final Planning Hotel Indigo New York City Financial District Hotel Indigo 190 May-20 Under Construction Renaissance New York Harlem Hotel Renaissance 211 Jun-20 Planning Margaritaville Resort New York Margaritaville 234 Nov-20 Final Planning Manhattan Midtown South Autograph Collection 220 Aug-21 Planning Hotel Indigo New York Wall Street Hotel Indigo 173 Sep-21 Subtotal: 2,873

Upscale Under Construction Springhill Suites Manhattan Times Square South Springhill Suites 256 Feb-19 Under Construction Ascend Collection New York Ascend Collection 124Mar-19 Under Construction Courtyard New York Manhattan Financial District Courtyard 200 Mar-19 Under Construction Hyatt Place Times Square Hyatt Place 520 Mar-19 Under Construction Residence Inn New York Manhattan Financial District Residence Inn 120 Apr-19 Under Construction Courtyard New York Manhattan Midtown West Courtyard 399 Apr-19 Under Construction Springhill Suites New York Midtown Manhattan Springhill Suites 130 Apr-19 Under Construction Ascend Collection New York City Ascend Collection 100 May-19 Under Construction Radisson New York Radisson 320 Jul-19 Under Construction SpringHill Suites New York Manhattan/Chelsea Springhill Suites 284 Mar-20 Final Planning AC Hotels by Marriott New York City Manhattan Midtown South AC Hotels by Marriott 168 Jun-20 Under Construction aloft New York City East Chelsea aloft Hotel 232Oct-20 Final Planning Hyatt House Harlem Hyatt House 174 Dec-20 Final Planning aloft Hotel New York Chelsea North aloft Hotel 438 Sep-21 Subtotal: 3,465

Upper Midscale Under Construction Fairfield Inn Manhattan Times Square South Fairfield Inn 314 Feb-19 Under Construction MOXY New York City Chelsea MOXY 349 Mar-19 Under Construction TownePlace Suites New York Manhattan/Chelsea TownePlace Suites 241 Sep-19 Under Construction MOXY New York City Manhattan Midtown South MOXY 282 Oc t -19 Subtotal: 1,186

Midscale Under Construction New York Days Inn 42 Sep-19 Subtotal: 42

Independent Under Construction The Artezen Hotel 89 Mar-19 Under Construction The FiDi Hotel 131 Mar-19 Under Construction Walker Hotel Tribeca 171 Apr-19 Under Construction Unnamed Hotel @ 8th Avenue 261 Jun-19 Under Construction Equinox Hotel New York 260 Jun-19 Under Construction Hotel Hendricks 176 Oct-19 Under Construction Unnamed Hotel @ 100 Jun-20 Final Planning Pendry Manhattan West 164 Jan-21 Subtotal: 1,352

Total: 9,840

Source: Smith Travel Research, NYC & Co., Cushman & Wakefield REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED The following charts illustrate New York City’s position among the Top 25 markets for growth in supply and demand in 2018. The New York City market currently ranks 8th in supply growth and 8th in demand growth in 2018. The New York City market was previously ranked 3nd in supply growth and 14th in demand growth at year end 2017.

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Top 25 Markets Supply Growth; 2018 6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

Source: Smith Travel Research REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Top 25 Markets Demand Growth; 2018 7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

-2.0%

-3.0%

Source: Smith Travel Research REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Leisure

New York City experienced a significant economic downturn as a result of the terrorist attacks of September 11th. However, since 2001, the city has consistently remained a strong tourist destination for visitors both international and domestic. Since 1998, the number of visitors to New York increased by roughly 82.2 percent, or a compound annual growth rate of 3.4 percent per year. Although the market witnessed a decrease in visitor volume in 2009, visitation has since rebounded, resulting in the development of new supply to accommodate the increasing demand. This increase in supply has allowed the market to accommodate additional demand during peak periods.

In 2017, a record high 61.8 million tourists visited the City; a 2.5 percent increase over 2016. Additionally, visitor spending increased to roughly $45.2 Billion or by 5.0 percent in 2017. This lends significant support to strength and stability of the greater New York City area as a global financial, media, entertainment, cultural hub which leads to high levels of hotel room night demand. New York City reported a record breaking 65.2 million tourists in 2018. According to NYC & Company, around 51.6 million Americans and 13.5 million foreign tourists visited the city last year. Visitors from the UK topped the list of overseas visitors.

The following chart shows the increase in the number of visitors and the increase in visitor spending from 1998 through 2017.

New York City Visitor Traffic - 1998 to 2017

Source: New York City & Company

Transactions Market

Hotel transaction volume in 2015 represented what may be pointed to as the peak of the current cycle. According to data from Real Capital Analytics (RCA), not only was the volume notable in 2015, but the price per room was also impressive with an average price of $786,103 per room, driven by 5 hotels that sold for over $1,000,000 per room. A major story for 2015 was the growth of foreign investment activity in US commercial real estate. Foreign

NEW YORK CITY LODGING OVERVIEW

investment continues to be important for hotel transactions. Private and sovereign fund investors from Middle East and were active hotel buyers in 2015, as illustrated in the sales discussed below.

The year started on a strong note highlighted by the acquisition of the Waldorf=Astoria. In February 2015, Insurance Group of China purchased the asset from Hilton Hotels for $1,950,000,000 or $1,368,421 per key. Owned and operated by Hilton Hotels Worldwide, the hotel occupies an entire rectangular city block containing 1.87 acres. The Waldorf=Astoria is a landmarked 47-story iconic hotel that is well known amongst the global travel community who associate the Waldorf=Astoria name with elegance, tradition, and history. While the Waldorf=Astoria New York has successfully operated as a hotel, the property is proposed to be redeveloped to incorporate hotel, retail, and residential uses.

The New York Edition hotel, which was under development when the contract of sale was signed in February 2015, opened on May 14, 2015. was in contract with Abu Dhabi Investment Authority, for $343,000,000 or $1,256,410 per key. The hotel was converted out of the Met Life building’s clock tower, has a second-floor restaurant overlooking Madison Square Park and a 1,400-square-foot penthouse with 360 degree views. The property remains encumbered by Marriott International under a long-term management and franchise agreement. The buyer is the sovereign wealth fund of Abu Dhabi who also purchased the London Edition hotel in 2014 and closed on the Miami Beach Edition hotel in February 2015.

In March 2015, the 114-unit Baccarat Hotel, located at 20 West between Fifth and Sixth Avenues, sold for $230,000,000 or $2,017,544 per key. The hotel is part of Tribecca Associates’ 45-story mixed-use tower that features 60 luxury condominiums with partial views of Central Park and the New York skyline. The Baccarat Hotel, which is located on the lower floors (2 through 13), contains 114 guestrooms ranging in size from 425 to 780 square feet. The hotel features a bar and restaurant, meeting space, fitness center, lap pool, as well as a spa with 4 treatment rooms. Constructed in 2015, the improvements are of excellent quality. Capital Group, L.P. was in contract with Sunshine Insurance Group, for $230,000,000 or $2,017,544 per key. The sale represents 100.0 percent of the hotel component and the acquisition costs reportedly cover all costs related to the construction of the hotel component. The Baccarat Hotel made its debut on March 18, 2015. The development represents the first Baccarat branded property in the City. Baccarat, as a brand, takes its name from Baccarat crystal.

Hotel REITs, which effectively withdrew from the market in mid-2015, continued to sit on the sidelines as buyers, with some being more active as sellers through 2016. Institutional buyers and private equity groups, however, are recognized as the leading acquirers of hotels in 2016. The impact of new supply reached an inflection point in 2015. Although new supply led to subtle RevPAR erosion in 2016, an increase in leisure and corporate travel positively impacted the market and many new hotels cropped up to meet the increased demand. While the number of hotels sold increased in 2016 by roughly 35.0 percent, the majority of the hotels trading hands consisted of limited service properties. As a result, total sales volume declined considerably, with an average price of $514,910 per room, highlighted by 2 hotels that sold for over $1,000,000 per room; the Andaz 5th Avenue and JW Marriott Essex House.

The 184-unit Andaz 5th Avenue, located at 485 5th Avenue, was originally constructed in 1914 as an office building. The property was subsequently converted to hotel use by renowned designer Tony Chi, and opened as the Andaz 5th Avenue in July 2010. Andaz is a luxury lifestyle brand created by Hyatt. The hotel features loft-style guestrooms and suites, a full service restaurant and lounge, as well as 6,400 square feet of meeting and event space. H.E. Newport, LLC sold the property to TAK Hospitality, LLC, an affiliate of U.S. development Japanese construction services firm Takenaka Corporation, for $215,200,000 or $1,169,565 per unit. The overall rate at the time of sale was 3.4 percent.

In September 2016, China’s Anbang Insurance Group Co. purchased Strategic Hotels & Resorts Inc from Blackstone for about $6.5 billion. Strategic owned 16 luxury properties, including the JW Marriott Essex House in New York. The allocated purchase price for the JW Marriott Essex House was $705,100,000 or $1,361,000 per key.

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Data from Real Capital Analytics (RCA) indicates that transaction volume in 2017 ($1.2 billion) moderated significantly relative to 2016 ($4.6 billion) and was allocated similarly among full- and limited-service hotels. On a per-room basis, hotel prices increased by approximately 3.6 percent from $520,500 to $539,500. The majority of sales were individual transactions with only a few portfolio sales reported in both periods. In 2017, the impact of new supply along with diminishing RevPAR led to a pause in the transactions market as Buyers and Sellers failed to see eye to eye. Additionally, macro concerns surrounding the tightening of travel restrictions, the possibility of inflation, and the impact of corporate tax cuts, weighs heavy on the minds of market participants.

Nevertheless, signs of compression in the hotel market are building. Positive RevPAR growth in 4Q 2017 continued through January and February 2018 with RevPAR increasing by roughly 11.0 percent and 3.7 percent, respectively. Considering Q1 is typically the softest period of the year, the improvement experienced over the past six months bodes well for the NYC hotel market.

Manhattan remains as one of the most active hotel transaction market in terms of volume. With heavy transaction activity in the last six years, many hotels have recently traded hands and these buyers are not yet strategic sellers. While the Manhattan market is still supporting strong performance fundamentals, issues such as new supply, the energy economy, and the cost of financing have muted interest from some investors. The table below summarizes many of the transactions occurring since January 2013.

Conclusion The Manhattan hotel market has enjoyed a period of robust growth and record breaking performance over the last six years but the most recent trends point to a shift in the cycle. The expected change in the pace of transactions materialized and new supply is now a reality.

As previously discussed, over the past 24 months the market has experienced a slowdown in transactions as sellers remain bullish on pricing while buyers look for time to potentially indicate a softening trend. However, signs of compression in the hotel market are building and RevPAR has increased over the past 12 months, diminishing fears of erosion. Additionally, high quality assets in very good to excellent locations continue to achieve strong pricing. With a diminishing supply pipeline, operators believe the opportunity to grow RevPAR is forthcoming in the next 12 to 24 months. Accordingly, improving hotel fundamentals are expected to fuel the hotel transactions market in the near future.

Nevertheless, macro concerns surrounding the tightening of travel restrictions, the possibility of inflation, and the impact of corporate tax cuts, weighs heavy on the minds of market participants. Despite the uncertainty, many investors and lenders are seeking opportunities even as the cautious environment is limiting transactions. The industry remains optimistic that the momentum in performance and transaction volume will escalate in 2019.

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Select Manhattan Hotel Sale Transactions - January 2013 through July 2018

No. of Price Per Date Property Name Rooms Sale Price Room Buyer Name Seller Name

In-Contract The Viceroy Hotel 240$ 41,000,000 $ 170,833 Arden Group NY REIT In-Contract Hotel Indigo 294$ 162,000,000 $ 551,020 MRR Development Brack Capital/Intercontinental Hotel Group Jul-18 The 282$ 600,000,000 $ 2,127,660 Katara Holdings Sahara US Corp & Fiverivers Properties LLC Jul-18 208$ 175,000,000 $ 841,346 Hilton Resorts Corporation 101 West 57th Street Hotel Investors LLC Jun-18 Hilton New York Grand Central 300$ 50,000,000 $ 166,667 Westgate Resorts TUDOR EQUITY ASSOCIATES, LP May-18 The Maxwell 697$ 190,250,000 $ 272,956 DCH LEX PROPCO SUB LP STARLEX LP Apr-18 Edition Times Square 452$ 719,100,000 $ 1,590,929 20 TSQ GROUNDCO LLC 701 SEVENTH PROPERTY OWNER, LLC Mar-18 Hampton Inn Manhattan Downtown Financial District 81$ 32,400,000 $ 400,000 32 PEARL, LLC HHLP PEARL STREET ASSOCIATES, LLC Mar-18 Aloft Harlem 124$ 33,750,000 $ 272,177 Core NYC LLC Hotel 124 LLC 2018 Total: 2,678$ 2,003,500,000 $ 748,000

Dec-17 Gansevoort Park Ave (soon to be Royalton Park) 249 $190,000,000 $763,052 GreenOak/Highgate TGA II, LLC Dec-17 James Hotel 114 $66,300,000 $581,579 Thor Equities PGIM Nov-17 Comfort Inn Times Square South Area 78 $27,200,000 $348,718 YAD LLC Gemini 305 West 39th Street H, LLC Nov-17 Smyth Hotel 100 $72,266,000 $722,660 85 Owner LLC 85 W Broadway Propco LLC Jun-17 Dumont NYC 252 $118,000,000 $468,254 Lefrak Organization New York French Sound May-17 Doubletree Times Square South 224 $106,000,000 $473,214 Ascott Residence Trust CM-36 LLC Jan-17 289 $95,000,000 $328,720 SCCQ Downtown LLC RCQ Hotel FD, LLC 2017 Total: 1,306 $674,766,000 $517,000

Oct-16 McCarren Hotel 64 $20,248,000 $316,375 147-149 McCarren LLC 160 N 12th Street LLC Aug-16 Club Quarters Rockefeller Center & Club Quarters Midtown 400 $155,000,000 $387,500 McSam Hotel Group Rockwood Capital, LLC Jun-16 Andaz 5th Avenue 184 $215,200,000 $1,169,565 H.E. Newport, LLC TAK Hospitality, LLC Jun-16 70 Park Avenue 205 $93,350,000 $455,366 PONTE GADEA PARK, LLC KHP PARK AVENUE HOTEL, LLC Mar-16 Milburn Hotel 137 $69,420,000 $506,715 242 WEST 76 REALTY LLC THE MILBURN HOTEL, LLC Mar-16 Wyndham Garden Manhattan Chelsea West 124 $60,000,000 $483,871 Fortuna Realty Gemini 37 West 24th Street MT, LLC Jan-16 DoubleTree Times Square 468 $540,000,000 $1,154,000 BWAY Hotel Acquisition LLC Sunstone Broadway, LLC 2016 Total: 1,182 $1,153,218,000 $976,000

Sep-15 New York Palace Hotel 899 $805,000,000 $895,000 The Lotte Group Northwood Investors, LLC Sep-15 Carlton Hotel 366 $162,064,000 $443,000 GFI Capital Resources Group, Inc Madison Real Estate Associates, LLC Jul-15 Element Times Square West 411 $163,500,000 $398,000 Ascott Residence Trust LG-39, LLC May-15 Marriott East Side 655 $270,000,000 $412,000 Avenue Hotel, L.P. PPF 525 Apr-15 New York Edition Hotel 273 $343,000,000 $1,256,000 Abu Dhabi Investment Authority Marriott International Apr-15 The GEM Hotel 45 $17,250,000 $383,000 J&N Hotel Associates, LLC Gemini 135 East Houston MT, LLC Mar-15 Baccarat Hotel 113 $230,000,000 $2,035,000 Sunflower American Capital Starwood Capital Group Feb-15 Manhattan Times Square 689 $530,000,000 $769,000 Al Faisal Holding Rockpoint Group JV Highgate Holdings JV The Goldman Sachs Group, Inc. Jan-15 Mondrian Soho 270 $205,000,000 $759,259 Sapir Organization Sochin Downtown Realty LLC 2015 Total: 3,721 $2,725,814,000 $733,000

Dec-14 Marriott Residence Inn 243 $151,150,000 $622,000 Al Khalifa Family Highgate Holdings JV Crown Acquisitions JV Carlyle Group JV Tribeca Assosciates Dec-14 Waldorf-Astoria 1,425 $1,950,000,000 $1,368,421 Anbang Insurance Group Hilton Hotels Oct-14 New York 398 $265,000,000 $666,000 Keck Seng Investments GEM Investors JV Whitehall Real Estate Funds JV Oct-14 Fairfield Inn & Suites Manhattan (Herald Sq) 239 $135,300,000 $566,000 The Shidler Group OTO Development Oct-14 Express West Side 177 $16,500,000 $93,000 Sam Chang UFCW Local 174 Commercial Pension Fund Sep-14 Comfort Inn 35th St 132 $50,000,000 $379,000 Meadow Partners Jeport Hotel Group/Portnof Family Sep-14 Hampton Inn United Nations 148 $71,900,000 $486,000 Global Securitization Services , OBO Kuwait Finance House Magna Hospitality Sep-14 135 $63,300,000 $469,000 Lexington Realty Magna Hospitality Sep-14 600 $190,000,000 $317,000 Chetrit Group Estate of Tran Dinh Truong Sep-14 Hilton Garden Inn Times Square Central 282 $127,200,000 $451,000 DiamondRock Hospitality Co Highgate JV Walton Street JV Crown Acq. JV Ashkenazy Aug-14 Park Hyatt New York 210 $390,000,000 $1,857,000 Hyatt Hotels Extell Development Aug-14 Holiday Inn Soho 227 $89,700,000 $395,000 RFR Realty The Procaccianti Group JV CalPERS Aug-14 Sofitel 398 $265,000,000 $666,000 KSSF Enterprises Ltd West 44th Street OWNERCO, LLC Jul-14 Courtyard Times Square West 224 $95,000,000 $424,000 SBCO-NYC Owner, LLC Carey Watermark Investors Jul-14 SpringHill Suites Manhattan 173 $82,000,000 $474,000 2537 Associates LLC KSG Enterprises, Ltd Jun-14 480 $273,600,000 $570,000 Millenium & Copthorne Hotels Chesapeake Lodging Trust Feb-14 Standard Hotel 330 $407,500,000 $1,235,000 Standard International AB Green Gansevoort 2014 Total: 5,821 $4,623,150,000 $794,000

Dec-13 InterContinental New York Barclay 685 $240,000,000 $350,000 Constellation Hotels Holding Ltd. InterContinental Hotels Gorup Sep-13 The Viceroy Hotel 240 $148,500,000 $619,000 American Realty Capital New York Recovery REIT ARK Real Estate Jun-13 Holiday Inn Manhattan 6th Avenue 226 $113,000,000 $500,000 Carey Watermark Investors MMG-26 LLC May-13 The James Hotel 114 $84,600,000 $742,000 Prudential Real Estate Brack Capital Real Estate Apr-13 Hyatt Union Square 178 $105,000,000 $590,000 Hersha Hospitality Trust Sam Chang Mar-13 James Hotel 114 $85,000,000 $746,000 Prudential Real Estate Investors Brack Capital Jan-13 Setai 5th Avenue 214 $229,000,000 $1,070,000 Great Eagle Holdings Bizzi & Partners Development 2013 Total: 1,086 $765,100,000 $705,000

Compiled b y Cushman & Wakef ield TOTALS/AVERAGES 15,794 $11,945,548,000 $756,000

PROPOSED HOTEL LODGING MARKET SUPPLY AND DEMAND ANALYSIS

Lodging Market Supply and Demand Analysis

Supply Analysis-Existing Competitive Supply

On the following pages, we present details of existing and proposed hotels within the identified trade area. In addition, due to the limited hotel supply in Yonkers, we have analyzed historical trends of branded hotels in Westchester County that are believed to be comparable to the proposed hotel development contemplated by the Client.

STR, a data and analytics specialist, is recognized by the lodging industry as the standard source of reliable data, provided operating statistics on the local market as a whole. In reviewing the data compiled by STR, it is important to note some of its limitations. We have found that because hotels are occasionally dropped in and out of STR samples, and not every property reports data in a consistent and timely manner, the overall quality of this information may be affected. These variables can sometimes skew the data for a particular market. However, we find that STR data is generally relied upon by typical hotel investors. Therefore, it has been considered in this study.

We note that the comparables analyzed do not consist of the entire supply of hotels in the region, but those facilities that are considered most similar to the market orientation of the proposed development contemplated by the Client in terms of location, condition, and operator. Local Hotel Supply

The Competitive Hotel Supply table on the following page outlines relevant operating statistics for the competitors. The Competitive Hotels Profile table illustrates the age and room count for the competitive set, while the map depicts the location of the competitors in relation to the subject.

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Competitive Hotel Supply - Occupancy and Average Rate Comparison

Estimated 2017 Estimated 2018 Number Competitive Average Occupancy ADR RevPAR Average Occupancy ADR RevPAR Property of Rooms Rooms Occupancy Rate Rev PAR Penetration Penetration Penetration Occupancy Rate Rev PAR Penetration Penetration Penetration

Courtyard Tarrytown Westchester County 139 139 71% 140.00 99.40 97.5% 95.6% 93.1% 71% 140.00 99.40 92.5% 97.1% 89.9% Tarrytown House Estate & Conference Center 212 212 60% 170.00 102.00 82.4% 116.1% 95.6% 60% 170.00 102.00 78.2% 118.0% 92.2% Hampton Inn Suites Yonkers 150 150 81% 135.00 109.35 111.2% 92.2% 102.5% 81% 135.00 109.35 105.6% 93.7% 98.9% Residence Inn Yonkers Westchester County 144 144 85% 155.00 131.75 116.7% 105.8% 123.5% 85% 155.00 131.75 110.8% 107.6% 119.1% Hyatt Place New York Yonkers 155 155 86% 150.00 129.00 118.1% 102.4% 120.9% 86% 150.00 129.00 112.1% 104.1% 116.7% Hampton Inn & Suites Yonkers Westchester 150 150 77% 130.00 100.10 105.7% 88.7% 93.8% 79% 130.00 102.70 103.0% 90.2% 92.9%

Overall Totals/Averages 1,247 1,247 72.8% $146.49 $106.71 100.0% 100.0% 100.0% 76.7% $144.11 $110.58 100.0% 100.0% 100.0%

Total Room Nights Occupied 280,079 329,398 Percentage Change from Previous Year 17.6%

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Local Competitive Hotels Profile

Year Number of Hotel/Location Opened Rooms

1 Courtyard Tarrytown Westchester County 1988 139 475 White Plains Road, Tarrytown 2 Tarrytown House Estate & Conference Center 1965 212 49 East Sunnyside Lane, Tarrytown 3 Hampton Inn Suites Yonkers 2009 150 160 Corporate Boulevard, Yonkers 4 Residence Inn Yonkers Westchester County 2009 144 7 Executive Boulevard, Yonkers 5 Hyatt Place New York Yonkers 2015 155 7000 Mall Walk, Yonkers 6 Hampton Inn & Suites Yonkers Westchester 2016 150 559 Tuckahoe Road, Yonkers 7 Courtyard Yonkers Westchester County 2017 154 5 Executive Boulevard, Yonkers 8 Hilton Garden Inn Westchester Dobbs Ferry 2018 143 201 Ogden Ave, Dobbs Ferry

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COMPETITIVE SET

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The table shown below illustrates the combined operating statistics for the competitive set. Over the past 6 years the subject’s hotel market has impressively increased demand at an average annual rate of 12.3 percent; in the face of a significant increase in rooms supply (531 new hotel rooms). This has led to an average annual increase in RevPAR of 1.5 percent, while average daily rates have remained stable.

Market Supply, Demand, Occupancy, ADR and RevPAR Year Rooms Supply % Change Demand % Change Occ % Change ADR % Change RevPAR % Change

2012 645 235,425 ----- 164,421 ----- 69.8% ----- $144.95 ----- $101.23 ----- 2013 645 235,425 0.0% 168,665 2.6% 71.6% 2.6% $152.51 5.2% $109.26 7.9% 2014 645 235,425 0.0% 166,878 -1.1% 70.9% -1.1% $156.60 2.7% $111.00 1.6% 2015 762 278,050 18.1% 195,320 17.0% 70.2% -0.9% $158.82 1.4% $111.56 0.5% 2016 850 310,300 11.6% 220,517 12.9% 71.1% 1.2% $158.04 -0.5% $112.31 0.7% 2017 1,053 384,480 23.9% 278,906 26.5% 72.5% 2.1% $144.46 -8.6% $104.79 -6.7% 2018 1,176 429,272 11.7% 329,455 18.1% 76.7% 5.8% $144.24 -0.2% $110.70 5.6%

Avg Annual Percent Change 10.5% 12.3% 1.6% -0.1% 1.5%

YTD 6/30/2018 1,104 199,824 ----- 151,489 ----- 75.8% ----- $140.31 ----- $106.37 ----- YTD 6/30/2019 1,245 225,402 12.8% 159,264 5.1% 70.7% -6.8% $142.17 1.3% $100.46 -5.6%

Source: STR REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED Proposed Hotel Facilities

Our fieldwork revealed one proposed hotel in the subject’s trade area.

 The 153-room SpringHill Suites Tuckahoe is under construction at 109 Marbledale Road in Tuckahoe. The hotel will offer a meeting room, indoor pool, fitness center, and business center. In addition, the hotel will offer an on-site restaurant. The hotel is anticipated to be completed by November 2019.

While we have taken reasonable steps to determine the potential of new supply within the market, it is impossible to determine every property that will be developed in the future, or what their impact in the market will be. Depending on the outcome of future hotel development projects, the value of the subject property may be positively or negatively affected.

Demand Analysis-Market for Transient Accommodations The market for transient accommodations is an all-encompassing term referring to the various types of travelers that utilize the lodging facilities in a given market area. The total number of rooms occupied by these travelers during a specific time frame represents a market's accommodated room night demand.

In analyzing demand within a specific market, individual segments are considered based on the nature of travel present in the area. Three primary demand classifications occur in most markets including commercial, meeting and group, and leisure.

Commercial Demand

Commercial demand arises from individuals who are conducting business and visiting various firms in the subject's market area. Commercial demand is strongest Monday through Thursday nights and declines significantly on Friday

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and Saturday before increasing somewhat on Sunday. Commercial travelers typical length of stay ranges from one to three days and remains relatively constant throughout the year, although some declines are noticeable in late December and during other holiday periods.

Commercial travelers generally are not rate sensitive and represent a very desirable and lucrative market that provides a consistent level of demand at relatively high room rates. Commercial demand in the subject's market area is generated primarily by the numerous corporate entities surrounding the subject. As a result of the subject’s proximity to New York City, the commercial segment represents the largest segment of the lodging market and accounts for a major portion of transient demand. Hotels in the subject’s area are beneficiaries of business travel in the Yonkers area, especially given the subject’s close proximity to the Saw Mill River Parkway and Interstate 87/New York Thruway.

Meeting and Group Demand

Meeting and group demand includes groups who reserve blocks of rooms for meetings, seminars, trade association shows, and other similar gatherings of ten or more persons. Meeting and group demand is typically strongest during the spring and fall months, while the summer months represent the slowest period for this market. Winter demand can vary based on location. Meeting and group travelers typically achieve an average length of stay of three to five days. Historically, most corporate groups met on weekdays and social groups used the weekend periods. However, in the recent past, corporate group booking trends have changed to include some or all of the weekend. Many corporate groups have been utilizing weekend meetings as a cost containment measure, which usually results in lower airfares and hotel room rates, especially in non-resort markets.

Meeting and group demand is generally quite profitable for hotels and resorts. Although room rates are sometimes discounted for large groups, the hotel benefits from the use of meeting space and the inclusion of in-house banquets and cocktail receptions. In order to attract the meeting and group segment, hotels must offer meeting and banquet facilities, as well as an adequate number of guestrooms to house function attendees.

Group demand from social groups such as weddings, travelling athletic teams, and tour buses is also present for all the hotels in the competitive set. With the exception of Tarrytown House, all of the hotels in the subject’s competitive set offer limited meeting facilities and as such, meeting and group demand has historically been sparse. Most of the meeting and demand in the subject’s market is generated by social, military, educational, religious and fraternal (i.e. SMERF) groups, including sports teams, religious groups, or educational groups from local universities such as Sarah Lawrence College and Concordia College.

Leisure Demand

The leisure demand segment consists of individual tourists and families visiting the attractions of a local market and/or passing through en route to other destinations. Leisure demand is strongest Friday and Saturday nights, holiday periods and the summer months. These peak periods generally are negatively correlated with commercial and meeting and group demand. The spring is also a prime period for weddings and other social activities.

Leisure travelers tend to be the most price-sensitive segment in the lodging market and typically demand extensive recreational facilities and amenities. Ease of highway access and proximity to vacation-related attractions are important hotel locational considerations.

In the subject property’s area, most leisure demand is generated by people who are visiting and relatives, or those who are taking advantage of the numerous recreational opportunities, and tourist attractions available in the New York . These people may be traveling alone, or with families or tour groups.

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Conclusion

Hotel market health within Westchester County is projected to continue at a measured pace, reflecting regional economic conditions. As previously discussed, Yonkers is experiencing a wave of multifamily growth. This evolution has also led to a robust increase in hotel demand. Additionally, infrastructure changes such as the Governor Mario M. Cuomo Bridge project and Westchester County Airport expansion should help the decision for New York City tenants to relocate to Westchester County only a short distance away. As a result, leisure and corporate hotel demand to the trade area is expected to continue to improve in the near term.

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Comparable Analysis – Industry Averages and Comparable Hotels

At the request of our Client, we have included the operating performance of hotel industry averages and various comparable hotels.

Illustrated on the following page are aggregate averages for four selected property descriptive categories from the most recent HOST Report, published by STR.

Those comparative categories that were analyzed include:

Comparables Categories Affiliation: Chain-Affiliated Geographic Region: Middle Atlantic Location: Urban Price Category: Upper Midscale

A table detailing the operating performance of five comparable hotels follows the industry averages table. The comparable statements were taken from our in-house database and consist of upper midscale and upscale class hotels, similar to the hotel’s in the existing Yonkers trade area.

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Income & Expense Industry Averages - Limited Service Hotels Limited Service Hotels Chain-Affiliated Middle Atlantic Urban Upper Midscale Ratio to Ratio to Ratio to Ratio to Sales PAR POR Sales PAR POR Sales PAR POR Sales PAR POR

Occupancy 75.6% 81.5% 79.3% 75.1% Average Size (Rooms) 125 160 167 122 Average Rate $125.20 $178.39 $182.33 $132.56

REVENUE Rooms 96.4% $34,503 $125.20 95.0% $53,119 $178.39 93.8% $53,791 $182.33 95.9% $36,233 $132.56 Minor Operated Departments 2.3% $839 $3.04 1.8% $1,007 $3.38 3.3% $1,908 $6.47 1.7% $630 $2.30 Rental & Other Income 1.2% $434 $1.58 3.2% $1,798 $6.04 2.9% $1,643 $5.57 2.4% $922 $3.37

TOTAL REVENUE 100.0% $35,776 $129.82 100.0% $55,924 $187.81 100.0% $57,342 $194.36 100.0% $37,785 $138.24

DEPARTMENTAL EXPENSES Rooms 24.1% $8,324 $30.20 28.9% $15,375 $51.64 27.0% $14,527 $49.24 27.3% $9,898 $36.21 Other Departmental Expenses 60.6% $508 $1.84 91.7% $923 $3.10 66.3% $1,264 $4.29 72.8% $459 $1.68

TOTAL DEPARTMENTAL EXPENSES 24.7% $8,832 $32.05 29.1% $16,298 $54.74 27.5% $15,792 $53.53 27.4% $10,356 $37.89

UNDISTRIBUTED OPERATING EXPENSES Administrative & General 8.3% $2,977 $10.80 8.0% $4,462 $14.99 7.9% $4,506 $15.27 7.9% $3,000 $10.97 Marketing 5.3% $1,887 $6.85 5.1% $2,857 $9.59 5.3% $3,054 $10.35 5.3% $1,995 $7.30 Franchise Fees 5.0% $1,796 $6.52 4.2% $2,368 $7.95 4.3% $2,460 $8.34 6.3% $2,377 $8.70 Utility Costs 3.7% $1,306 $4.74 3.0% $1,665 $5.59 2.9% $1,643 $5.57 3.6% $1,359 $4.97 Property Operations & Maintenance 4.5% $1,621 $5.88 4.4% $2,439 $8.19 4.0% $2,280 $7.73 4.5% $1,697 $6.21 Information & Telecommunications Systems 1.1% $404 $1.47 1.1% $622 $2.09 1.0% $598 $2.03 1.3% $501 $1.83

TOTAL UNDISTRIBUTED OPERATING EXPENSES 27.9% $9,992 $36.26 25.8% $14,414 $48.41 25.4% $14,542 $49.29 28.9% $10,930 $39.99

Management Fee 3.2% $1,143 $4.15 2.9% $1,598 $5.37 3.1% $1,799 $6.10 3.4% $1,274 $4.66

GROSS OPERATING PROFIT 44.2% $15,808 $57.36 42.2% $23,615 $79.31 44.0% $25,209 $85.45 40.3% $15,225 $55.70

Taxes 5.2% $1,847 $6.70 8.8% $4,901 $16.46 7.0% $4,019 $13.62 5.3% $1,990 $7.28 Insurance 1.0% $356 $1.29 0.7% $419 $1.41 0.8% $444 $1.51 1.0% $365 $1.33 Reserve for Replacement 1.8% $649 $2.35 1.9% $1,049 $3.52 2.1% $1,183 $4.01 2.0% $739 $2.70

INCOME BEFORE OTHER FIXED CHARGES 36.2% $12,956 $47.01 30.8% $17,246 $57.92 34.1% $19,563 $66.31 32.1% $12,132 $44.38

Totals may not add due to rounding SOURCE: THE HOST REPORT 2019, STR, REPUBLICATION OR OTHER RE-USE OF THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR IS STRICTLY PROHIBITED

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Comparable Income & Expense Data - Limited Service Hotels Hotel 1Hotel 2Hotel 3Hotel 4Hotel 5

Ratio to Ratio to Ratio to Ratio to Ratio to Sales PAR POR Sales PAR POR Sales PAR POR Sales PAR POR Sales PAR POR

Occupancy 79% 75% 84% 86% 78% Average Size (Rooms) 150-200 125-175 50-100 125-175 100-150 Average Rate $153 $130 $132 $152 $152

REVENUE Rooms 93.5% $44,004 $152.73 96.6% $35,295 $129.52 98.8% $40,225 $131.65 95.9% $47,768 $152.00 63.7% $43,674 $152.48 Food & Beverage 4.8% $2,248 $7.80 0.0% $0 $0.00 3.6% $1,811 $5.76 34.5% $23,649 $82.57 Other Income 1.7% $807 $2.80 3.4% $1,257 $4.61 1.2% $472 $1.54 0.4% $211 $0.67 1.9% $1,281 $4.47

TOTAL REVENUE 100.0% $47,059 $163.33 100.0% $36,552 $134.14 100.0% $40,697 $133.20 100.0% $49,790 $158.43 100.0% $68,604 $239.51

DEPARTMENTAL EXPENSES Rooms 21.5% $9,482 $32.91 23.8% $8,412 $30.87 27.6% $11,083 $36.27 25.0% $11,921 $37.93 26.1% $11,413 $39.85 Food & Beverage 96.1% $2,160 $7.50 0.0% $0 $0.00 55.9% $1,012 $3.22 37.5% $8,873 $30.98 Other Income 28.7% $231 $0.80 44.2% $555 $2.04 179.6% $848 $2.77 166.1% $351 $1.12 23.2% $297 $1.04

TOTAL DEPARTMENTAL EXPENSES 25.2% $11,873 $41.21 24.5% $8,967 $32.91 29.3% $11,931 $39.05 26.7% $13,284 $42.27 30.0% $20,583 $71.86

DEPARTMENTAL INCOME 74.8% $35,186 $122.12 75.5% $27,585 $101.23 70.7% $28,767 $94.15 73.3% $36,506 $116.16 70.0% $48,021 $167.65

UNDISTRIBUTED OPERATING EXPENSES Administrative & General 9.2% $4,344 $15.08 8.7% $3,194 $11.72 4.6% $1,868 $6.11 8.7% $4,335 $13.80 7.8% $5,367 $18.74 Marketing 7.5% $3,528 $12.24 9.7% $3,560 $13.06 6.4% $2,610 $8.54 6.4% $3,183 $10.13 4.4% $2,990 $10.44 Utility Costs 2.3% $1,096 $3.80 4.1% $1,484 $5.44 3.7% $1,510 $4.94 3.4% $1,693 $5.39 3.3% $2,293 $8.01 Property Operations & Maintenance 4.1% $1,949 $6.77 5.3% $1,934 $7.10 2.8% $1,156 $3.78 2.8% $1,415 $4.50 5.9% $4,051 $14.14

TOTAL UNDISTRIBUTED OPERATING EXPENSES 23.1% $10,918 $37.89 32.6% $11,939 $43.81 17.5% $7,143 $23.38 25.9% $12,921 $41.12 21.4% $14,702 $51.33

Management Fees Base Management Fee 7.0% $3,294 $11.43 3.0% $1,097 $4.02 3.5% $1,444 $4.73 6.9% $3,439 $10.94 3.2% $2,169 $7.57

GROSS OPERATING PROFIT 44.7% $20,974 $72.80 39.9% $14,549 $53.39 49.7% $20,180 $66.04 40.5% $20,146 $64.11 45.4% $31,150 $108.75

FIXED CHARGES Taxes 3.5% $1,641 $5.70 9.0% $3,298 $12.10 3.7% $1,526 $4.99 2.7% $1,348 $4.29 0.3% $239 $0.83 Insurance 0.4% $190 $0.66 0.4% $139 $0.51 0.6% $256 $0.84 1.1% $563 $1.79 1.5% $1,020 $3.56 Reserve for Replacement 5.0% $2,353 $8.17 0.0% $0 $0.00 0.0% $0 $0.00 4.0% $1,992 $6.34 4.1% $2,844 $9.93

NET OPERATING INCOME 35.8% $16,790 $58.28 30.5% $11,112 $40.78 45.4% $18,398 $60.21 32.7% $16,243 $51.69 39.5% $27,047 $94.43

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Assumptions and Limiting Conditions

"Report" means the appraisal or consulting report and conclusions stated therein, to which these Assumptions and Limiting Conditions are annexed. "Property" means the subject of the Report. "C&W" means Cushman & Wakefield, Inc. or its subsidiary that issued the Report. "Appraiser(s)" means the employee(s) of C&W who prepared and signed the Report. The Report has been made subject to the following assumptions and limiting conditions:  No opinion is intended to be expressed and no responsibility is assumed for the legal description or for any matters that are legal in nature or require legal expertise or specialized knowledge beyond that of a real estate appraiser. Title to the Property is assumed to be good and marketable and the Property is assumed to be free and clear of all liens unless otherwise stated. No survey of the Property was undertaken.  The information contained in the Report or upon which the Report is based has been gathered from sources the Appraiser assumes to be reliable and accurate. The owner of the Property may have provided some of such information. Neither the Appraiser nor C&W shall be responsible for the accuracy or completeness of such information, including the correctness of estimates, opinions, dimensions, sketches, exhibits and factual matters. Any authorized user of the Report is obligated to bring to the attention of C&W any inaccuracies or errors that it believes are contained in the Report.  The opinions are only as of the date stated in the Report. Changes since that date in external and market factors or in the Property itself can significantly affect the conclusions.  The Report is to be used in whole and not in part. No part of the Report shall be used in conjunction with any other analyses. Publication of the Report or any portion thereof without the prior written consent of C&W is prohibited. Reference to the Appraisal Institute or to the MAI designation is prohibited. Except as may be otherwise stated in the letter of engagement, the Report may not be used by any person(s) other than the party(ies) to whom it is addressed or for purposes other than that for which it was prepared. No part of the Report shall be conveyed to the public through advertising, or used in any sales, promotion, offering or SEC material without C&W's prior written consent. Any authorized user(s) of this Report who provides a copy to, or permits reliance thereon by, any person or entity not authorized by C&W in writing to use or rely thereon, hereby agrees to indemnify and hold C&W, its affiliates and their respective shareholders, directors, officers and employees, harmless from and against all damages, expenses, claims and costs, including attorneys' fees, incurred in investigating and defending any claim arising from or in any way connected to the use of, or reliance upon, the Report by any such unauthorized person(s) or entity(ies).  Except as may be otherwise stated in the letter of engagement, the Appraiser shall not be required to give testimony in any court or administrative proceeding relating to the Property or the Appraisal.  The Report assumes (a) responsible ownership and competent management of the Property; (b) there are no hidden or unapparent conditions of the Property, subsoil or structures that render the Property more or less valuable (no responsibility is assumed for such conditions or for arranging for studies that may be required to discover them); (c) full compliance with all applicable federal, state and local zoning and environmental regulations and laws, unless noncompliance is stated, defined and considered in the Report; and (d) all required licenses, certificates of occupancy and other governmental consents have been or can be obtained and renewed for any use on which the value opinion contained in the Report is based.  The physical condition of the improvements considered by the Report is based on visual inspection by the Appraiser or other person identified in the Report. C&W assumes no responsibility for the soundness of structural members or for the condition of mechanical equipment, plumbing or electrical components.  The forecasted potential gross income referred to in the Report may be based on lease summaries provided by the owner or third parties. The Report assumes no responsibility for the authenticity or completeness of lease information provided by others. C&W recommends that legal advice be obtained regarding the interpretation of lease provisions and the contractual rights of parties.

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 The forecasts of income and expenses are not predictions of the future. Rather, they are the Appraiser's best opinions of current market thinking on future income and expenses. The Appraiser and C&W make no warranty or representation that these forecasts will materialize. The real estate market is constantly fluctuating and changing. It is not the Appraiser's task to predict or in any way warrant the conditions of a future real estate market; the Appraiser can only reflect what the investment community, as of the date of the Report, envisages for the future in terms of rental rates, expenses, and supply and demand.  Unless otherwise stated in the Report, the existence of potentially hazardous or toxic materials that may have been used in the construction or maintenance of the improvements or may be located at or about the Property was not considered in arriving at the opinion of value. These materials (such as formaldehyde foam insulation, asbestos insulation and other potentially hazardous materials) may adversely affect the value of the Property. The Appraisers are not qualified to detect such substances. C&W recommends that an environmental expert be employed to determine the impact of these matters on the opinion of value.  Unless otherwise stated in the Report, compliance with the requirements of the Americans with Disabilities Act of 1990 (ADA) has not been considered in arriving at the opinion of value. Failure to comply with the requirements of the ADA may adversely affect the value of the Property. C&W recommends that an expert in this field be employed.  If the Report is submitted to a lender or investor with the prior approval of C&W, such party should consider this Report as only one factor together with its independent investment considerations and underwriting criteria, in its overall investment decision. Such lender or investor is specifically cautioned to understand all Extraordinary Assumptions and Hypothetical Conditions and the Assumptions and Limiting Conditions incorporated in this Report.  In the event of a claim against C&W or its affiliates or their respective officers or employees or the Appraisers in connection with or in any way relating to this Report or this engagement, the maximum damages recoverable shall be the amount of the monies actually collected by C&W or its affiliates for this Report and under no circumstances shall any claim for consequential damages be made.  If the Report is referred to or included in any offering material or prospectus, the Report shall be deemed referred to or included for informational purposes only and C&W, its employees and the Appraiser have no liability to such recipients. C&W disclaims any and all liability to any party other than the party that retained C&W to prepare the Report.  Any estimate of insurable value, if included within the agreed upon scope of work and presented within this report, is based upon figures derived from a national cost estimating service and is developed consistent with industry practices. However, actual local and regional construction costs may vary significantly from our estimate and individual insurance policies and underwriters have varied specifications, exclusions, and non-insurable items. As such, we strongly recommend that the Client obtain estimates from professionals experienced in establishing insurance coverage for replacing any structure. This analysis should not be relied upon to determine insurance coverage. Furthermore, we make no warranties regarding the accuracy of this estimate.  By use of this Report each party that uses this Report agrees to be bound by all of the Assumptions and Limiting Conditions, Hypothetical Conditions and Extraordinary Assumptions stated herein.  The estimated operating results presented in this report are based on an evaluation of the overall economy, and neither take into account nor make provision for the effect of any sharp rise or decline in local or national economic conditions. To the extent that wages and other operating expenses may advance during the economic life of the property, we expect that the prices of rooms, food, beverages, and services will be adjusted to at least offset these advances. We do not warrant that the estimates will be attained, but they have been prepared on the basis of information obtained during the course of this study and are intended to reflect the expectations of typical investors.  Appraising hotels is both a science and an art. Although this analysis employs various mathematical calculations to provide value indications, the final estimate is subjective and may be influenced by our experience and other factors not specifically set forth in this report.  Any distribution of the total value between the land and improvements or between partial ownership interests applies only under the stated use. Moreover, separate allocations between components are not valid if this report is used in conjunction with any other analysis.

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PROPOSED HOTEL ASSUMPTIONS AND LIMITING CONDITIONS

 Our financial analyses are based on estimates and assumptions which were developed in connection with this appraisal engagement. It is, however, inevitable that some assumptions will not materialize and that unanticipated events may occur which will cause actual achieved operating results to differ from the financial analyses contained in this report, and these differences may be material. It should be further noted that we are not responsible for the effectiveness of future management and marketing efforts upon which the projected results contained in this report may depend.  Unless otherwise noted, we were not given a soil report to review. However, we assume that the soil’s load-bearing capacity is sufficient to support existing and/or proposed structure(s). We did not observe any evidence to the contrary during our physical inspection of the property. Drainage appears to be adequate.  Unless otherwise noted, we were not given a title report to review. We do not know of any easements, encroachments, or restrictions that would adversely affect the site’s use. However, we recommend a title search to determine whether any adverse conditions exist.  Unless otherwise noted, we were not given a survey to review. If subsequent engineering data reveal the presence of regulated wetlands, it could materially affect property value. We recommend a wetlands survey by a professional engineer with expertise in this field.  Unless otherwise noted, we observed no evidence of toxic or hazardous substances during our inspection of the site. However, we are not trained to perform technical environmental inspections and recommend the hiring of a professional engineer with expertise in this field.

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PROPOSED HOTEL ADDENDA CONTENTS

Addenda Contents

Addendum A: Qualifications of The Appraisers

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PROPOSED HOTEL ADDENDA CONTENTS

Addendum A: Qualifications of The Appraisers

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Ivan Melendez Senior Director Valuation & Advisory Practice Group Member | Hospitality & Gaming Cushman & Wakefield, Inc.

Professional Expertise Mr. Melendez joined Cushman & Wakefield, Inc. (Cushman & Wakefield) in April 2012. He is a member of the Hospitality & Gaming group within Valuation & Advisory. Prior to joining Cushman & Wakefield, Mr. Melendez was a 13-year with Four Seasons Hotels & Resorts. He gained experience in various aspects of hotel operations at the Four Seasons Hotel and Four Seasons Hotel Los Angeles and his most recent position was Director of Sales of the Beverly Wilshire, a Four Seasons Hotel. His core competencies are in revenue management and sales and marketing. Since joining Cushman & Wakefield, Ivan has participated in the valuation of virtually every hospitality property type, including full-, limited- and select-service hotels, conference centers, resorts and condominium hotels. Work scope includes appraisals, feasibility studies, market surveys, litigation support and investment analysis. Responsibilities entail valuation and analysis of hospitality related real estate in the northeast. Property types include hotels, motels, resorts, timeshare projects, conference centers and the like. Memberships, Licenses, Professional Affiliations and Education • Practicing Affiliate, Appraisal Institute – Metropolitan New York Chapter • Certified General Real Estate Appraiser in the following state: − New York – 46000051560 • Bachelor of Science, Cornell University Appraisal Education • National USPAP • Basic Appraisal Principles (R5) • Basic Appraisal Procedures (R6) • Market Analysis & Highest & Best Use (R7) • Residential Site Valuation & Cost Approach (R8) • Residential Sales Comparison & Income Approach (R9) • Residential Report Writing (R10) • General Appraiser Income Approach (G7) • Statistics, Modeling and Finance (SMF) • General Market Analysis & Highest and Best Use (G4) • General Appraiser Sales Comparison Approach (G5) • General Appraiser Site Valuation and Cost Approach (G6) • General Appraisal Report Writing and Case Studies (G8) • Fair Housing, Fair Lending and Env. Issues (GE1) • He has also completed courses on Financial Management and Principles of Real Estate

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NEW YORK

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