ATHENS, GEORGIA

ADDENDUM No. 4

DATE: June 18, 2020

TO: Potential Respondents/Interested Hotel Developers

SUBJECT: REQUEST FOR PROPOSAL (RFP) for HOTEL DEVELOPER No. 05042020 HOTEL

NOTICE TO ALL POTENTIAL RESPONDENTS The Request for Proposals (RFP) is modified as set forth in this Addendum. The original RFP Documents and any previously issued addenda remain in full force and effect, except as modified by this Addendum, which is hereby made part of the RFP. Respondent shall take this Addendum into consideration when preparing and submitting its Proposal.

The Authority is aware of interest in market/feasibility information it has obtained for the envisioned project in the RFP. By issuance of this Addendum, the Authority is hereby providing such information, herein, as Exhibit A. The Authority reserves the ability to provide any additional new or updated information as it deems necessary in subsequent steps of the RFP process.

End of Addendum #4 Exhibit A MARKET ANALYSIS AND PROJECTIONS: Proposed Classic Center Hotel Athens, GA

Prepared for:

DRAFT

April 9, 2020 9 4 Assignment ScopeAssignment Location Overview & SWOT Analysis 3 Table of Contents Lodging Market Analysis Proposed Hotel Programming AnalysisFinancial Appendix 12 14 21 Assignment Scope

Jones Lang LaSalle’s Hotels & Hospitality Group (“JLL”) has been engaged by The Classic Center (“Client”) to provide an independent analysis regarding the financial feasibility of a proposed hotel to be located in Athens, GA (“Proposed Hotel” or “Project”). During the course of our analysis, JLL completed the following tasks in order to arrive at recommendations for the Project:

ƒ Reviewed and visited the site to assess its locational attributes and surrounding environs.

ƒ Reviewed existing hotel inventory and their amenities, branding and positioning in the market area.

ƒ Identified a suitable set of competitive hotels and compiled a five-year history of the growth in supply and demand, as measured by average annual occupancy and average daily rate (ADR) for hotels, and analyzed their day of week and seasonality patterns.

ƒ Compiled and analyzed relevant hotel supply pipeline to understand their influence on the Proposed Hotel’s performance.

ƒ Projected lodging demand, occupancy, ADR, revenue per available room (RevPAR) and supply changes over a five-year horizon.

ƒ Developed five-year pro-forma operating projections for the Proposed Hotel, based on benchmark statistics, projected hotel occupancy, average daily rates, departmental revenues and expenses and profitability.

ƒ Calculated the unleveraged IRR for the Proposed Hotel using development costs provided by the Client, JLL projected cashflows for the Proposed Hotel, and estimates of as completed and reversionary value (exit value).

ƒ Based upon hotel investors’ typical unleveraged IRR requirements for new hotel development in the market, the cash flow projections for the Proposed Hotel and estimates of reversionary value (exit value), JLL provided a range of residual land value for Subject Site as well as a range of supportable ground lease payments for the Subject Site in the event of its lease to hotel developer.

3 Location Overview & SWOT Analysis Location Overview

ƒ The Subject Site is part of the Classic Center, in Athens, Georgia. The Classic Center is located in Downtown Athens, next to the University of Georgia campus on N Thomas St. The site is easily accessible via US-78, which connects Athens with Atlanta, located approximately 70 miles to its southwest. ƒ Athens is a vibrant college town. The downtown area is right by the entrance to the campus and offers a variety of restaurants, retail and entertainment options that are attractive to college students as well as visitors to the Classic Center. ƒ With a population of about 127,000, Athens is anchored by the University of Georgia, the state’s main university with an enrollment of close to 38,900 students. The University is the largest employer in Athens with 10,655 employees. Other major employers are St Mary’s Hospital, Pilgrim's Pride Corporation, Piedmont Athens Regional Medical Center and Caterpillar, located in nearby Bogart, GA. ƒ The Athens-Ben Epps Airport is located four miles from the Subject Site and currently operates mostly charter flights. The airport recently received a $750,000 grant from the US Department of Aviation that will be used to attract a commercial airline to offer passenger service to a Southeast hub.

5 Subject Site Overview

• The Classic Center is a 95,000-square-foot convention center that also includes a 2,100-seat performance arts center. The center hosts over 600 events per year with a total attendance of over 385,000 people. The events range from conventions and conferences to meetings, social events, religious services and sport events. One of the unique characteristics of the Center is the high capture of student related events, with many student associations hosting events and competitions that attract thousands of students from all over Georgia. • The Classic Center is planning an expansion that will include the construction of a new arena with 5,500 seats. The arena will host a variety of events including concerts, sporting events with a focus on hockey and gymnastics, conventions, and religious events. Overall, based on a study contracted by the center, total attendance of over 360,000 people is expected to be generated by the Proposed Arena. • The expansion project also includes a senior living residential building, an expansion of the existing parking deck with an additional 300 spaces, a new parking deck with 500 spaces, a 150,000-square-foot office building and the new Judicial Center Building.

The proposed hotel would be built over the existing auto bridge. The structure of the auto bridge was reinforced to be able to accommodate the new tower.

Classic Center Proposed Site - Auto Bridge

Proposed Arena

View to new arena site Proposed Residential

6 SWOT Analysis

Strengths Weaknesses

ƒ The Subject Site is located next to the Classic Center, the main ƒ The Subject Site’s functionality is somewhat constrained due to its events venue in Athens, GA. It is located within walking distance of location over the auto bridge next to the Classic Center. The auto restaurants, bars and retail in the Downtown area, as well as bridge’s structure was reinforced to be able to accommodate a walking distance from UGA’s campus. building on top of it. However, this may affect the construction cost as compared to typical ground-up construction. ƒ The Classic Center attracts more than 600 events every year, including conventions, conferences, meetings, sports and religious ƒ The lack of major corporations in Athens makes it difficult to retain events, concerts and social events that generate demand to all the graduates that tend to move to Atlanta in search of higher-paying hotels in Athens. jobs. As a result, the broader economy is left vulnerable to shifts in funding and slowdowns in enrollment at UGA. ƒ Athens is a vibrant college town home to Georgia’s main state university, UGA, with a total enrollment of 38,900 students in 2019, a ƒ Other than Caterpillar and Pilgrim’s Pride, there are no major number that continues to grow every year. The university generates corporate demand generators for the hotels. Therefore, occupancy a wide range of demand to the local hotels, from visiting parents at the hotels is concentrated on the weekends, generated by and faculty, to recruiters, meetings and sports events. student related events, sports events and tourists. ƒ The Healthcare sector is the second largest employer in Athens and favorable demographics are allowing the sector to grow. The Piedmont Athens Regional Medical Center is undergoing a $171 million expansion to be completed by 2022 and has recently been appointed as the official healthcare provider for UGA’s Athletic Association. ƒ Athens is growing as a tourist destination, attracting tourists from Atlanta that come to enjoy the music scene and restaurant and entertainment options in the Downtown area.

7 SWOT Analysis

Opportunities Threats

ƒ The construction of the Proposed Arena by the Classic Center will ƒ UGA has been growing every year during the past ten years and its allow it to capture additional events as well as accommodate expanding enrollment has led to the need for additional faculty and current events that on the verge of outgrowing the existing facilities. staff. While this has positively impacted the Athens market, According to a study by CLS, it is expected to bring an additional budgetary and infrastructure concerns have the potential to 125 events to Athens with a total of 365,000 attendees. negatively impact UGA’s enrollment at some point in the future. ƒ Athens’ music scene is noteworthy with internationally recognized ƒ Increasing construction costs could potentially erode project bands such as REM and B52 having their origins in the city and with returns. an abundant calendar of live performances throughout the year. ƒ The current Covid-19 crisis that has been developing since the The Proposed Arena will allow Athens to host larger concerts for up beginning of March has had an unprecedented negative impact on to 5,500 people. the economy in general and the hotel industry in particular. As of ƒ Currently there is no new hotel supply being developed within two April 2020, it is very challenging to predict how long the crisis will miles of the Classic Center. After three new hotel openings in the last and how long it will take for the economy to recover. last three years, new development has slowed down and is limited to locations further away. ƒ There is opportunity to increase accessibility to Athens via the existing airport. A recent $750,000 grant received by the Airport will allow it to attract a commercial airline to offer passenger service to a Southeast hub.

8 Lodging Market Analysis Competitive Set

ƒ The Athens hotel supply is comprised of 27 hotels totaling 2,955 rooms. The majority of the hotels are select-service properties, with the exception of the 130-room Indigo and the 122-room Graduate. These two hotels are upper upscale properties located close to the Classic Center. ƒ After touring the hotels in the Downtown area, JLL defined the competitive set for the Proposed Hotel. It includes eight select-service properties totaling 1,301 rooms. All hotels are branded properties ranging from 105 to 201 rooms in the upscale and upper midscale classes. ƒ The 185-room Hilton Garden Inn and the 190-room Hyatt Place are located next to the Classic Center while the other hotels are within a mile radius from the Center. ƒ After over ten years with no new openings, three hotels were inaugurated in the last three years: the Hyatt Place in 2017 and the 130-room Homewood Suites and 200-room Springhill Suites in 2018. ƒ All the older hotels have either been recently renovated, are going through renovations or have renovations plans. Athens Competitive Set ƒ In terms of new supply, there are two projects in the Hotel Name Location Number of Open Date Scale planning stage. The first project is an 87-room Rooms Fairfield Inn to be located on Broad St, about three Courtyard Athens Downtown Athens, GA 105 1990 Upscale miles from the Classic Center. The second project is a Best Western Athens Athens, GA 121 1972 Midscale 100-room Holiday Inn Express to be located on Homewood Suites by Hilton Athens Athens, GA 130 2018 Upscale Highway 316 close to the Oconee Connector. None of these projects are expected to compete directly with Holiday Inn Express Athens University Area Athens, GA 160 1974 Upper Midscale the Proposed Hotel due to their location. Hilton Garden Inn Athens Downtown Athens, GA 185 2006 Upscale Hyatt Place Athens Downtown Athens, GA 190 2017 Upscale Springhill Suites Athens Downtown University Area Athens, GA 200 2018 Upscale Holiday Inn Athens University Area Athens, GA 210 1960 Upper Midscale Total 1,301

10 Historical Performance

ƒ After reaching a peak of 72.0% in 2014, occupancy in the competitive set hovered at 70.0% until 2017, when it declined to 67.0% due to the opening of the Hyatt Place. In 2018, the opening of the Spring Hill Suites and the Homewood Suites pushed occupancy down further to 59.0% while the new rooms were being absorbed by the market. In 2019, occupancies started to recover and the competitive set reached 61.0%. Although the occupancy rate decreased in 2018, total occupied room nights in the competitive set increased 19.6%, followed by a 21.7% increase in 2019. Overall, total demand as measured by occupied room nights achieved a compound annual growth rate of 7.1% between 2014 and 2019. ƒ The competitive set’s ADR increased every year between 2014 and 2019 despite the declines in occupancy. The quality of the new hotels combined with renovations at the existing hotels allowed for annual ADR growth. The competitive set’s ADR achieved a compound annual growth rate of 6.5% between 2014 and 2019, above the U.S. average of 3.2% for the same period. In 2019, the competitive set’s ADR reached $142, an increase of 4.6% relative to 2018. ƒ The competitive set’s RevPAR also increased each year between 2014 and 2019 – driven by rate growth – with the exception of 2018, when the steep decline in occupancy resulted in a RevPAR decrease for that year. Overall, the competitive set’s RevPAR achieved a 3.0% compound annual growth rate between 2014 and 2019. ƒ With respect to daily demand patterns, the competitive set hotels have historically realized peak demand during the weekends, when student related events, sporting events and visitors allow for average hotel occupancy rates near 75%. During weekdays, corporate demand, smaller events and University related demand supports lower hotel occupancy rates between approximately 55% and 65%. Rates also reach a peak during the weekends with a $40 to almost $50 premium over the weekdays rates. Competitive Set Performance Day of the Week Seasonality 2014 - 2019 Average of 2017 through 2019

$190 72% 80% 80% 74% 75% $190 69% 70% 67% $170 59% 61% 70% 64% 65% $170 70% 61% $150 60% $167 $150 60% 55% $162 $130 $142 50% $130 $135 $113 $110 40% 50% $124 $127 $110 $112 $114 $119 $90 $103 30% 40% $116 $117 37% $90 $70 $83 $80 $86 20% $74 $77 $79 30% $70 $50 10% 20% $50 $30 0% Sun Mon Tue Wed Thur Fri Sat 2014 2015 2016 2017 2018 2019 Occupancy ADR ADR RevPAR Occupancy

Source: STR Source: STR

11 Proposed Hotel Programming Hotel Programming

ƒ The Proposed Hotel’s preliminary design contemplates the development of a 200-room select-service hotel on the existing Recommended Hotel Program auto bridge next to the Classic Center. ƒ JLL recommends that the hotel is positioned as a upper midscale extended stay product. The majority of the rooms should consist of a queen or king bed and a sofa bed to accommodate four guests. A portion of the rooms should feature two queen beds and an 200 rooms additional sofa bed that can increase the room capacity to six (Upper midscale positioning, extended stay) guests. ƒ It is also recommended that the guestrooms offer limited kitchen amenities such as refrigerators and microwaves. ƒ As a select-service property, the Proposed Hotel is advised to offer only breakfast, which can be served in a designated area next to 1 Breakfast area the lobby. For lunch and dinner, guests will have easy access to several restaurants and bars located within walking distance in the Downtown area. ƒ JLL recommends that the Proposed Hotel offer a large bar separate from the breakfast area. The hotels in the competitive set have bars that are larger than the typical bars of select service Lobby bar hotels. The significant number of sports and social events 1 associated with the University generate high demand for the hotel bars. ƒ JLL also recommends that the Proposed Hotel offer a fitness center, which is a requirement of most select service brands and is an important amenity for guests that are increasingly health 1 Fitness Center conscious. ƒ The Proposed Hotel will share the parking with the other components of the Classic Center complex. Part of the Classic Center expansion includes the expansion of the existing parking deck as well as a new parking deck to serve the Proposed Arena and the proposed judicial building.

13 Financial Analysis Assumptions

ƒ Given the unusually high degree of uncertainty clouding the outlook for hotel performance and economic growth in the wake of the ongoing coronavirus pandemic, JLL has refrained from making hotel operating performance projections for the period from 2020 through 2023. JLL assumed that by 2023, the local hotel market will have recovered its performance to similar levels achieved in 2019. ƒ JLL conducted an in-depth assessment as to how the Proposed Hotel is likely to perform against the competitive market using the competitive market performance projections as the basis to perform a penetration analysis. ƒ JLL assumed that the Proposed Hotel will open on January 1, 2024, at the same time as the anticipated opening of the Proposed Arena. The analysis considers the previously outlined market conditions in the Athens market, and the facilities and amenities recommended for the Proposed Hotel. ƒ JLL assumed that the Proposed Hotel will be affiliated with a nationally recognized brand, benefiting from a large reservations and marketing platform and robust guest rewards/loyalty program as a result.

Revenues and Expenses Assumptions

ƒ JLL utilized a set of comparable hotels as benchmarks to inform its revenue and expense projections for the Proposed Hotel. ƒ We have assumed an inflationary rate of approximately 2.0% throughout our analysis. Upon stabilization, inflationary growth in revenues and expenses is generally assumed unless otherwise indicated. ƒ Management fees of 3.0% of gross revenue are utilized. ƒ Local tax comparables are used to estimate property taxes for the Proposed Hotel. ƒ A replacement reserve of 2.0% is used for the first year of operations, growing one percentage point each year until reaching 4.0% in year three. ƒ The hotel’s cash flow is presented before the payment of any potential ground lease.

15 Penetration Analysis

ƒ The opening of the Proposed Hotel is expected to be concurrent with the opening of the Proposed Arena, which is expected to bring additional events to Athens and therefore induce hotel demand to the market. Based on the “Economic Impact Analysis” study completed by CSL in December of 2017, the Proposed Arena is expected to receive over 365,000 attendees per year when stabilized. Using assumptions regarding the percentage of people staying at hotels, length of stay and double occupancy, JLL estimates that about 49,300 new rooms nights could be induced to the competitive set and the Proposed Hotel by 2026. The details of these estimates are presented in the Appendix.

ƒ JLL estimates that with the induced demand of the Proposed Arena and the opening of the Proposed Hotel that will offer new, brand affiliated product next to the Classic Center, the market occupancy will reach 62.6% in 2024, growing to 66.8% in 2025 and stabilizing at 71.1% in 2026.

ƒ In terms of ADR, due to the lack of new supply other than the Proposed Hotel, ADR is projected to grow 2.0% in 2023. In 2024, the opening of a new major demand generator will create periods of compression and allow the competitive set hotels to achieve rate growth in excess of the inflationary rate. JLL estimates that the ADR in the competitive set will grow at 3.5% per year from 2024 to 2026, the period of the Proposed Arena ramp up, and will grow at an inflationary rate of 2.0% per year thereafter.

ƒ The Proposed Hotel is projected to open in 2024 with an Occupancy Index of 97.0%, increasing to 100.0% in the second year of operation. As a result, the Proposed Hotel is projected to achieve an occupancy of 60.7% in the first year of operation, increasing to 66.8% in the second year and stabilizing at 71.1% by 2026.

ƒ Given its location next to the Classic Center, the Proposed Hotel will have an advantage over most of the hotels in the competitive set and is projected to achieve an ADR Index of 102.0% in the first year of operation, stabilizing at 105.0% in the second year.

Competitive Set Performance Forecasted Operating Performance Occupancy 2023 2024 2025 2026 2027 2028 2029 Proposed Hotel Classic Center #N/A 60.7% 66.8% 71.1% 71.1% 71.1% 71.1% % Change 10.0% 6.4% 0.0% 0.0% 0.0% Competitive Set 60.7% 62.6% 66.8% 71.1% 71.1% 71.1% 71.1% % Change 0.0% 3.1% 6.7% 6.4% 0.0% 0.0% 0.0% Index (MPI) 0.97 1.00 1.00 1.00 1.00 1.00 Average Daily Rate (USD) Proposed Hotel Classic Center #N/A 152.44 159.32 168.10 171.46 174.89 178.40 % Change 4.5% 5.5% 2.0% 2.0% 2.0% Competitive Set 144.40 149.45 154.68 160.10 163.30 166.56 169.90 % Change 2.0% 3.5% 3.5% 3.5% 2.0% 2.0% 2.0% Index (ARI) 1.02 1.03 1.05 1.05 1.05 1.05 RevPAR (USD) Proposed Hotel Classic Center #N/A 92.59 106.43 119.53 121.92 124.32 126.85 % Change 14.9% 12.3% 2.0% 2.0% 2.0% Competitive Set 87.71 93.58 103.33 113.84 116.11 118.40 120.81 % Change 2.0% 6.7% 10.4% 10.2% 2.0% 2.0% 2.0% Index (RGI) 0.99 1.03 1.05 1.05 1.05 1.05 16 5-Year Pro Forma

Proposed Hotel Classic Center Pro-Forma All Values In (USD'000) 2024 2025 2026 2027 2028 Period Ending December 31 December 31 December 31 December 31 December 31 Days Open in Period 366 365 365 365 366

Available Hotel Rooms 200 200 200 200 200 Available Room Nights 73,200 73,000 73,000 73,000 73,200 Occupied Room Nights 44,459 48,763 51,907 51,907 52,031

Occupancy 60.7% 66.8% 71.1% 71.1% 71.1% Average Daily Rate 152.43 159.32 168.11 171.46 174.89 RevPAR 92.58 106.42 119.53 121.92 124.32

OPERATING REVENUE Amount Ratio PAR POR Amount Ratio PAR POR Amount Ratio PAR POR Amount Ratio PAR POR Amount Ratio PAR POR Rooms Revenue 6,777 95.6% 33,885 152.43 7,769 95.9% 38,845 159.32 8,726 96.2% 43,630 168.11 8,900 96.2% 44,500 171.46 9,100 96.2% 45,500 174.89 Food & Beverage Revenue 222 3.1% 1,110 4.99 234 2.9% 1,170 4.80 245 2.7% 1,225 4.72 250 2.7% 1,250 4.82 255 2.7% 1,275 4.90 Other Operated Departments Revenue 89 1.3% 445 2.00 95 1.2% 475 1.95 100 1.1% 500 1.93 102 1.1% 510 1.97 104 1.1% 520 2.00 Total Operating Revenue 7,089 100.0% 35,445 159.45 8,099 100.0% 40,495 166.09 9,071 100.0% 45,355 174.75 9,252 100.0% 46,260 178.24 9,459 100.0% 47,295 181.79 DEPARTMENTAL EXPENSES Rooms Expenses 1,778 26.2% 8,890 39.99 1,867 24.0% 9,335 38.29 1,943 22.3% 9,715 37.43 1,982 22.3% 9,910 38.18 2,023 22.2% 10,115 38.88 Food & Beverage Expenses 178 80.2% 890 4.00 185 79.1% 925 3.79 191 78.0% 955 3.68 195 78.0% 975 3.76 199 78.0% 995 3.82 Other Operated Departments Expenses 44 49.4% 220 0.99 46 48.4% 230 0.94 48 48.0% 240 0.92 49 48.0% 245 0.94 50 48.1% 250 0.96

Total Departmental Expenses 2,001 28.2% 10,005 45.01 2,098 25.9% 10,490 43.02 2,182 24.1% 10,910 42.04 2,226 24.1% 11,130 42.88 2,272 24.0% 11,360 43.67 Total Departmental Income 5,088 71.8% 25,440 114.44 6,001 74.1% 30,005 123.07 6,888 75.9% 34,440 132.70 7,026 75.9% 35,130 135.36 7,187 76.0% 35,935 138.13 UNDISTRIBUTED EXPENSES Administrative & General 580 8.2% 2,900 13.05 613 7.6% 3,065 12.57 645 7.1% 3,225 12.43 658 7.1% 3,290 12.68 672 7.1% 3,360 12.92 Information & Telecommunication 110 1.6% 550 2.47 116 1.4% 580 2.38 122 1.3% 610 2.35 125 1.4% 625 2.41 127 1.3% 635 2.44 Sales & Marketing 560 7.9% 2,800 12.60 592 7.3% 2,960 12.14 623 6.9% 3,115 12.00 635 6.9% 3,175 12.23 648 6.9% 3,240 12.45 Franchise Fee 441 6.2% 2,205 9.92 505 6.2% 2,525 10.36 567 6.3% 2,835 10.92 579 6.3% 2,895 11.15 591 6.2% 2,955 11.36 Property Operations and Maintenance (POM) 240 3.4% 1,200 5.40 257 3.2% 1,285 5.27 273 3.0% 1,365 5.26 278 3.0% 1,390 5.36 284 3.0% 1,420 5.46 Utilities 220 3.1% 1,100 4.95 232 2.9% 1,160 4.76 245 2.7% 1,225 4.72 250 2.7% 1,250 4.82 255 2.7% 1,275 4.90

Total Undistributed Expenses 2,151 30.3% 10,755 48.38 2,315 28.6% 11,575 47.47 2,475 27.3% 12,375 47.68 2,524 27.3% 12,620 48.63 2,578 27.3% 12,890 49.55 Gross Operating Profit 2,937 41.4% 14,685 66.06 3,686 45.5% 18,430 75.59 4,414 48.7% 22,070 85.04 4,502 48.7% 22,510 86.73 4,609 48.7% 23,045 88.58 Management Fee 213 3.0% 1,065 4.79 243 3.0% 1,215 4.98 272 3.0% 1,360 5.24 278 3.0% 1,390 5.36 284 3.0% 1,420 5.46

Income Before Non-Operating Income & Expenses 2,725 38.4% 13,625 61.29 3,443 42.5% 17,215 70.61 4,142 45.7% 20,710 79.80 4,224 45.7% 21,120 81.38 4,325 45.7% 21,625 83.12 NON-OPERATING INCOME & EXPENSES Property Taxes 440 6.2% 2,200 9.90 449 5.5% 2,245 9.21 458 5.0% 2,290 8.82 467 5.0% 2,335 9.00 476 5.0% 2,380 9.15 Insurance 60 0.8% 300 1.35 61 0.8% 305 1.25 62 0.7% 310 1.19 64 0.7% 320 1.23 65 0.7% 325 1.25 Total Non-Operating Income & Expenses² 500 7.1% 2,500 11.25 510 6.3% 2,550 10.46 520 5.7% 2,600 10.02 531 5.7% 2,655 10.23 541 5.7% 2,705 10.40 EBITDA³ 2,225 31.4% 11,125 50.05 2,933 36.2% 14,665 60.15 3,621 39.9% 18,105 69.76 3,694 39.9% 18,470 71.17 3,784 40.0% 18,920 72.73 Replacement Reserve (FF&E) 142 2.0% 710 3.19 243 3.0% 1,215 4.98 363 4.0% 1,815 6.99 370 4.0% 1,850 7.13 378 4.0% 1,890 7.26

EBITDA Less Replacement Reserve຾ 2,083 29.4% 10,415 46.85 2,690 33.2% 13,450 55.17 3,258 35.9% 16,290 62.77 3,324 35.9% 16,620 64.04 3,406 36.0% 17,030 65.46

¹ USALI 11th Edition refers to "Rentals & Other Income" as "Miscellaneous Income" ² USALI 11th Edition refers to "Fixedges" Charas "Non-Operating Income & Expenses" ³ USALI 11th Edition refers to "NOI" as "EBITDA" ຾ USALI 11th Edition refers j.to NOI" "Ad as "EBITDA Less Replacement Reserve"

17 Benchmarks

Proposed Hotel Classic Center Comparable Operating Performance All Values In (USD) Proposed Hotel Classic Center - 2026 Hotel A Hotel B Hotel C Hotel D Hotel E OPERATING REVENUE Ratio PAR POR Ratio PAR POR Ratio PAR POR Ratio PAR POR Ratio PAR POR Ratio PAR POR Rooms Revenue 96.2% 43,630 168.11 86.5% 39,026 206.06 89.2% 38,119 153.17 96.2% 42,479 163.95 91.7% 44,006 182.66 98.4% 37,289 151.59 Food & Beverage Revenue 2.7% 1,225 4.72 7.3% 3,274 17.29 8.2% 3,505 14.08 1.7% 737 2.84 4.4% 2,099 8.71 0.8% 302 1.23 Parking / Garage / Valet Revenue 5.4% 2,416 12.76 Other Operated Departments Revenue 1.1% 500 1.93 0.8% 368 1.95 1.1% 485 1.95 1.2% 526 2.03 3.9% 1,890 7.84 0.7% 268 1.09 Miscellaneous Income 0.1% 37 0.19 1.5% 624 2.51 0.9% 404 1.56 0.0% 7 0.03 Total Operating Revenue 100.0% 45,355 174.75 100.0% 45,121 238.24 100.0% 42,733 171.71 100.0% 44,150 170.41 100.0% 47,994 199.21 100.0% 37,879 153.99 DEPARTMENTAL EXPENSES Rooms Expenses 22.3% 9,715 37.43 26.3% 10,263 54.19 19.9% 7,574 30.44 23.8% 10,103 39.00 21.6% 9,523 39.53 18.5% 6,906 28.08 Food & Beverage Expenses 78.0% 955 3.68 108.7% 3,558 18.79 81.9% 2,871 11.54 13.4% 99 0.38 73.7% 1,547 6.42 8.9% 27 0.11 Total Departmental Expenses 24.1% 10,910 42.04 31.0% 14,000 73.92 25.1% 10,723 43.09 24.0% 10,592 40.88 23.1% 11,081 46.00 19.7% 7,477 30.39 Total Departmental Income 75.9% 34,440 132.70 69.0% 31,121 164.32 74.9% 32,010 128.63 76.0% 33,559 129.53 76.9% 36,913 153.22 80.2% 30,396 123.57 UNDISTRIBUTED EXPENSES Information & Telecommunication 1.3% 610 2.35 1.2% 526 2.78 2.1% 911 3.66 1.3% 610 2.53 Administrative & General 7.1% 3,225 12.43 7.2% 3,242 17.12 8.8% 3,772 15.16 7.4% 3,263 12.59 6.5% 3,116 12.93 7.7% 2,926 11.90 Sales & Marketing 6.9% 3,115 12.00 9.4% 4,263 22.51 6.7% 2,861 11.50 10.7% 4,704 18.16 4.8% 2,302 9.56 10.1% 3,832 15.58 Franchise Fee 6.3% 2,835 10.92 8.7% 3,733 15.00 3.8% 1,700 6.56 8.1% 3,872 16.07 5.9% 2,228 9.06 Property Operations and Maintenance (POM) 3.0% 1,365 5.26 3.1% 1,400 7.39 4.6% 1,950 7.84 4.1% 1,826 7.05 3.5% 1,657 6.88 3.3% 1,262 5.13 Utilities 2.7% 1,225 4.72 2.6% 1,158 6.11 3.0% 1,277 5.13 2.7% 1,207 4.66 4.2% 2,000 8.30 3.2% 1,215 4.94

Total Undistributed Expenses 27.3% 12,375 47.68 23.5% 10,589 55.91 33.9% 14,505 58.29 28.8% 12,700 49.02 28.2% 13,558 56.28 30.3% 11,463 46.60 Gross Operating Profit 48.7% 22,070 85.04 45.5% 20,532 108.41 41.0% 17,505 70.34 47.2% 20,859 80.51 48.6% 23,349 96.92 50.0% 18,940 77.00 Management Fee 3.0% 1,360 5.24 3.0% 1,353 7.14 2.4% 1,020 4.10 2.5% 1,103 4.26 3.5% 1,680 6.97 3.0% 1,134 4.61 Income Before Non-Operating Income & Expenses 45.7% 20,710 79.80 42.5% 19,174 101.24 38.6% 16,495 66.28 44.7% 19,756 76.25 45.2% 21,674 89.97 47.0% 17,799 72.36 NON-OPERATING INCOME & EXPENSES Property Taxes 5.0% 2,290 8.82 5.3% 2,411 12.73 5.3% 2,277 9.15 4.5% 1,986 7.66 6.4% 3,076 12.77 6.6% 2,510 10.20 Insurance 0.7% 310 1.19 0.8% 353 1.86 0.7% 297 1.19 1.4% 638 2.46 0.7% 326 1.35 0.8% 302 1.23 Rent 0.0% 5 0.03 Leased Plant & Equipment 0.1% 40 0.16 0.0% 9 0.04 Total Non-Operating Income & Expenses 5.7% 2,600 10.02 6.1% 2,768 14.62 6.1% 2,614 10.50 6.0% 2,634 10.17 7.1% 3,401 14.12 7.4% 2,805 11.40 EBITDA 39.9% 18,105 69.76 36.4% 16,405 86.62 32.5% 13,871 55.74 38.8% 17,122 66.09 38.1% 18,273 75.85 39.6% 14,993 60.95 Replacement Reserve (FF&E) 4.0% 1,815 6.99 4.0% 1,805 9.53 4.0% 1,765 6.81 4.0% 1,919 7.96 4.0% 1,517 6.17 Other Income 0.0% 6 0.02

EBITDA Less Replacement Reserve 35.9% 16,290 62.77 32.4% 14,600 77.09 32.5% 13,871 55.74 34.8% 15,357 59.27 34.1% 16,360 67.91 35.6% 13,477 54.79

18 Appendix Proposed Arena Induced Demand

Based on the “Economic Impact Analysis” study elaborated by CSL in December of 2017, the new Arena is expected to receive over 365,000 attendees per year when stabilized. JLL used the percentages of overnight visitors presented in the study and estimated the levels of double occupancy and length of stay based on the types of events. In total, the Proposed Arena is expected to generate 82,200 additional room nights to Athens upon stabilization. JLL assumes that the hotels in the competitive set and the Proposed Hotel would be able to capture the new room nights above their fair share due to the better location close to the new Arena. JLL estimates a 60% capture of the new room nights, or 49,300 room nights. This number of room nights was considered as induced demand on Year 3. In Year 1 JLL considered a 70% of that total, increasing to 85% in Year 2 as the Arena ramps up.

Event Attendees % of Overnight Visitors Double occupancy Avg Stay Room nights Globtrotters 5,540 5% 2.0 1.00 139 Feld 6,080 5% 2.0 1.00 152 Cirque 3,846 10% 2.0 1.00 192 Sesame 4,540 5% 2.0 1.00 114 Rodeo 7,100 10% 2.0 1.00 355

Concerts 89,050 40% 2.0 1.00 17,810 Music Festivals 7,580 40% 2.0 1.00 1,516

UGA Hockey 25,500 5% 3.5 1.00 364 Hockey Tournament 12,600 50% 3.5 1.00 1,800 NBA/NHL 12,120 40% 3.5 1.00 1,385 Roller Girls 13,100 5% 3.5 1.00 187 Gymnastics, AAU, NGB 65,650 60% 3.5 1.00 11,254

Cheerleading 20,000 60% 3.5 1.00 3,429 Conventions 40,500 50% 1.2 1.50 25,313 Jeovah's Witness 21,000 80% 2.0 1.50 12,600 Trade/Consumer Shows 18,000 15% 1.2 1.50 3,375 HS Graduations 10,200 40% 2.0 1.00 2,040 Miscelaneous 3,000 10% 2.0 1.00 150

Total 365,406 82,174

Total Athens Supply 2,955 Competitive Set + Proposed Hotel 1,501 (51% of fair share) Capture 60% Estimated capture of 60% of the new room nights due the location closer to the Arena

Induced Demand to Competitive Set + Proposed Hotel 49,305

Source: JLL, CLS “Economic Impact Analysis”, December of 2017 Hotel Sales Comparables

ƒ The comparable sales reflect recent local hotel transactions that were selected based on location, size and/or overall marketing positioning.

Proposed Hotel Classic Center Comparable Sales Date Sold Property Name Location Rooms Sales Price (USD ) Price Per Room (USD ) Yield 3/3/2020 Residence Inn Columbus Columbus, GA 78 6,600,000 84,615 11.9% 2019 T-12 7/30/2018 Hampton Inn Suites Jekyll Island Jekyll Island, GA 138 12,500,000 90,580 2/26/2018 Candlewood Suites Athens Athens, GA 97 5,825,000 60,052 9.1% 2017 YE 10/18/2017 Holiday Inn Statesboro University Area Statesboro, GA 93 8,925,000 95,968 2/28/2017 Courtyard Albany Albany, GA 84 8,775,000 104,464 9.0% 2016 T-12 1/19/2017 Embassy Suites Brunswick Brunswick, GA 130 16,100,000 123,846 6/1/2016 Country Inn & Suites Athens Athens, GA 81 6,100,000 75,309 7.8% Unknown Montgomery 701Club 64,825,000 92,475

Governor Square Brighton Village

23 Statement of Assumptions and Limiting Conditions

1. Any report prepared by JLL represents an opinion of value, based on forecasts of net income such as are typically used in valuing income-producing properties. Actual results may vary from those forecast in the report. There is no guaranty or warranty that the opinion of value reflects the actual value of the property. 2. JLL is not obligated to predict future political, economic or social trends. JLL assumes no responsibility for economic factors that may affect or alter the opinions in any produced report if said economic factors were not present as of the date of the letter of transmittal accompanying this report. 3. Any report(s) prepared by JLL for the Client reflects a valuation of the property free and clear of any or all liens or encumbrances unless otherwise stated. 4. Responsible ownership and competent property management are assumed. 5. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. 6. All engineering studies provided to JLL, if applicable, are assumed to be correct. The plot plans and illustrative material in this report are included only to help the reader visualize the property. 7. It is assumed that there are no hidden or unapparent conditions of the property, subsoil or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them. 8. It is assumed that the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described, and considered in the report. 9. It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless a non-conformity has been identified, described and considered in the report. 10. It is assumed that all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 11. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property described and that there isno encroachment or trespass unless noted in the report. 12. Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the property, was not observed by JLL. JLL has no knowledge of the existence of such materials on or in the property. JLL, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation and other potentially hazardous materials may affect the value of the property. The value estimated is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to discover them. Client is urged to retain an expert in this field, if desired. 13. Any allocation of the total value estimated in this report between the land and the improvements applies only under the stated program of utilization. The separate values allocated to the land and buildings must not be used in conjunction with any other report and are invalid if so used. 14. Possession of this report, or a copy thereof, does not carry with it the right of publication. 15. JLL, by reason of the report, is not required to give further consultation or testimony or to be in attendance in court with reference to the property in question unless arrangements have been previously made. 16. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the consultant who prepared the report, or the firm with which the consultant is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of JLL, except as outlined in the attached engagement letter.

24 Contacts

Kent Michels Senior Vice President Strategic Advisory & Feasibility JLL Hotels & Hospitality Group O: +1 (214) 438-6594 [email protected]

Roberta Oncken Vice President Strategic Advisory & Feasibility JLL Hotels & Hospitality Group O: +1 (954) 609-1758 [email protected]

© 2020 Jones Lang LaSalle IP, Inc. All rights reserved. CONFIDENTIAL DRAFT For Discussion Purposes Only For Discussion Purposes Only

ECONOMIC IMPACT ANALYSIS FOR A NEW ATHENS CLASSIC CENTER ARENA

December 7, 2017 CONFIDENTIAL DRAFT For Discussion Purposes Only

December 7, 2017

Mr. Paul M. Cramer C.F.E. Executive Director The Classic Center Authority 300 North Thomas Street Athens, Georgia 30601

Dear Mr. Cramer:

Conventions, Sports & Leisure International (“CSL”) is pleased to present this report regarding the estimated economic and fiscal impacts that would be generated by the operation of a new Athens Classic Center Arena. The attached report summarizes key assumptions and presents estimates of spending that would be generated by non- local attendees of a potential new Arena.

The analysis presented in this report is based on estimates, assumptions and other information developed from industry research, data provided by facility management, and experience with past comparable projects. The sources of information, the methods employed, and the basis of significant estimates and assumptions are stated in this report. Some assumptions inevitably will not materialize and unanticipated events and circumstances may occur. Therefore, actual results achieved will vary from those described and the variations may be material.

Note (June 17, 2020): It is undeniable that the COVID-19 pandemic has negatively impacted the sports, entertainment, and convention sectors. Broadly speaking, return to some form of normalcy will require a successful widespread roll out of a vaccine. Data indicate that even if large entertainment or sporting events are allowed to be held in 2020, a portion of the population would not feel safe attending. Meanwhile, convention events are experiencing postponements and cancellations through Q1 of 2021.

However, as of June 2020, there are early signs of events starting to be held. Texas has allowed live sporting events with spectators to be held at 50% capacity. Meanwhile, the Denny Sanford Premier Center in Sioux Falls, South Dakota is already planning to host a Professional Bull Riding Monster Energy Team Challenge in July. The producers of the Consumer Electronics Show in Las Vegas announced that it will try to host its live annual convention in January of 2021, which typically attracts 180,000+ attendees per year. It may be a downsized version of the event, with virtual/live hybrid components, but this is significant progress nonetheless. Even with significant social distancing, mask wearing, sanitization and other efforts, the beginning of the process may be taking place. CONFIDENTIAL DRAFT For Discussion Purposes Only

Further, multiple survey research efforts conducted throughout the live entertainment industry indicate that nearly all past event goers miss attending live events. This pent up demand is further highlighted by a Live Nation and Ticketmaster fan survey, which concludes that nine out of ten ticket holders still plan on attending their event once a re-scheduled date has been announced and moderate safety precautions are taken. Further, 79 percent of active fans expect to be back at live music events within four months of COVID-19 restrictions being lifted.

The reality is, we will not return to a sense of normalcy in the industry until a successful vaccine is developed and deployed. If a vaccine is widely available sometime in 2021, we would consider the year 2022 as a “ramp back” period during which people begin to feel comfortable attending live events again. Under this scenario, 2023 could be the first year with room night and attendance levels that are at or near pre-COVID levels. As such, the estimates herein should still be useful in planning for a future Athens arena development.

We sincerely appreciate the opportunity to assist you with this project and would be pleased to be of further assistance in the interpretation and application of the study’s findings.

Very truly yours,

CSL International CONFIDENTIAL DRAFT 1. KEY STUDY ASSUMPTIONS For Discussion Purposes Only

NUMBER OF EVENTS The development of any economic impact study requires numerous Family Shows Concerts assumptions related to per-capita spending data, attendee origin, flow of Globetrotters 1 Full House Concert 13 Feld 2 Music Festival 2 facility operating revenue and other such factors. A description of key Cirque 1 Subtotal - Concerts 15 assumptions used in preparing this study is presented below. Sesame Street 2 Rodeo and Misc. 4 Subtotal - Family Shows 10 Event-Levels and Attendance Assumptions Other Arena Sports Cheerleading 10 The following is a description of key event and attendance assumptions UGA Hockey 15 Conventions 9 Hockey Tournament 3 Jehovah's Witness 6 obtained from the Oak View Group (potential Arena developers) and used in NBA/NHL 2 Trade/Consumer Shows 6 generating facility economic impact estimates. These assumptions are Roller Girls 10 HS Graduations 3 Gymnastics, AAU, NGB 26 Misc. 2 used throughout the following section to estimate the economic benefits Subtotal - Sports 56 Subtotal - Other Events 36 generated by non-local attendees of a potential new Athens Classic Center Arena. TOTAL EVENTS 117

Events NUMBER OF ANNUAL ATTENDEES Family Shows Concerts Event assumptions by category were provided by Oak View Group. The Globetrotters 5,540 Full House Concert 89,050 Feld 6,080 Music Festival 7,580 chart to the top-right provides a summary of event assumptions for the Cirque 3,846 Subtotal - Concerts 96,630 facility during a mature year of operations. Sesame Street 4,540 Rodeo and Misc. 7,100 Subtotal - Family Shows 27,106 Attendance Other Arena Sports Cheerleading 20,000 Attendance data are summarized by event within the exhibit to the bottom UGA Hockey 25,500 Conventions 40,500 Hockey Tournament 12,600 Jehovah's Witness 21,000 right. These figures are identified as “annual turnstile” attendees and NBA/NHL 12,120 Trade/Consumer Shows 18,000 represent the sum of attendees seated in various general session, club Roller Girls 13,100 HS Graduations 10,200 seat, and suite sections. Gymnastics, AAU, NGB 65,650 Misc. 3,000 Subtotal - Sports 128,970 Subtotal - Other Events 112,700

TOTAL ATTENDANCE 365,406

1 CONFIDENTIAL DRAFT 1. KEY STUDY ASSUMPTIONS For Discussion Purposes Only

Attendee Origination Assumptions

It is important to consider the origination of event attendees at events held in a ORIGIN OF ATTENDEE potential new Athens Classic Center Arena. It is appropriate to assume that Family Shows Local Day Trippers Overnight Concerts Local Day Trippers Overnight much of the spending from attendees that are from the local area is Globetrotters 60% 35% 5% Full House Concert 20% 40% 40% Feld 60% 35% 5% Music Festival 20% 40% 40% “displaced”, or would have taken place somewhere in the local economy if the Cirque 60% 30% 10% event had not been held. Conversely, attendees that are from outside the area Sesame Street 70% 25% 5% Rodeo and Misc. 40% 50% 10% may not have made purchases in the community had the event not been held. Other Arena Local Day Trippers Overnight Sports Local Day Trippers Overnight Cheerleading 5% 35% 60% UGA Hockey 60% 35% 5% Conventions 20% 30% 50% Based on our review of past facility studies in mid-sized markets, and from Hockey Tournament 20% 30% 50% Jehovah's Witness 10% 10% 80% information provided by the Classic Center Authority and the Athens CVB, we NBA/NHL 50% 10% 40% Trade/Consumer Shows 60% 25% 15% Roller Girls 60% 35% 5% HS Graduations 40% 20% 40% use the following assumptions regarding origination of attendees (see top- Gymnastics, AAU, NGB 5% 35% 60% Misc. 60% 30% 10% right exhibit). Note that attendee origination for the Arena is segmented into “Local” (attendees from the City of Athens), “Day Trippers” (drive-in attendees from outside of the City), and “Overnight” (attendees from outside the City who would utilize overnight accommodations to attend an Arena event). ATTENDEE PER DAY SPENDING BY INDUSTRY (Spending Outside of Facility) Attendee Spending Assumptions Local Day Trippers Overnight Hotels $0.00 $0.00 $60.00 Based on survey research conducted in other mid-sized markets, adjustments Meals $5.00 $7.00 $20.00 for local cost of living levels, and other industry data, we have prepared the Entertainment $2.00 $2.00 $5.00 following per-attendee spending assumptions during an assumed mature Transportation $1.00 $3.00 $5.00 Retail $1.00 $2.00 $7.00 year of operations at a potential new Arena (see bottom-right exhibit). Note Other $1.00 $2.00 $10.00 that the lodging spending per-capita’s reflect the fact that not all visitors stay in hotels, and that multiple guests often stay in a single room. TOTAL $10.00 $16.00 $107.00

We also note that not all day trip patrons will make purchases outside the Arena, impacting overall per-capita spending levels.

2 CONFIDENTIAL DRAFT 2. ECONOMIC IMPACT ANALYSIS For Discussion Purposes Only The initial step in estimating facility economic impacts is to calculate the direct IN-FACILITY SPENDING spending that occurs as a result of facility operations. Direct spending occurs in NET NEW two primary areas – purchases made within the facility, and those made outide the Arena throughout the community. Spending estimates for each of these areas, Ticket Sales $372,782 specific to a potential new Athens Classic Center Arena, are discussed below. Concessions & Catering $405,279 Novelty $100,620 Importantly, the spending figures presented to the right represent the spending Parking $396,425 from non-local attendees, or attendees that drive in from outside the City and/or Facility Fees $367,481 stay overnight. Spending by City residents is assumed to be displaced from other Convenience Fee $201,878 areas of the local economy, and therefore is not included in the spending Service Expense $1,063,365 estimates. Naming Rights $311,568 Advertising/Sponsorship $249,255 In-Facility Spending (shown top-right) Premium Seating $630,468 SUBTOTAL $4,099,121 Note that the ticket, food and beverage, and merchandise revenue include revenue primarily going to the facility. Revenue going to other parties that is assumed to immediately leave the economy (payment to a promoter or act, for example) is not O UT -O F-FA C ILIT Y SPEND ING included in the analysis. NE T NE W Out-of-Facility Spending (shown bottom-right) Hotels $13,423,734 M eals $6,797,195 Out-of-facility spending consists of spending by event patrons at local businesses Entertainment $1,728,981 that takes place in conjunction with attendance at facility events. This spending is Transportation $1,847,708 generally separated into six categories, including lodging, food & beverage, retail, Retail $2,325,591 entertainment, transportation and other. O ther $3,220,507

To estimate out-of-arena spending, per-capita assumptions previously presented TOTAL $29,343,715 were applied to facility event attendance figures. The bottom-right table presents total out-of-facility direct spending by category generated by all attendees of a potential new Arena. TOTAL SPENDING $33,442,836

3 CONFIDENTIAL DRAFT 2. ECONOMIC IMPACT ANALYSIS For Discussion Purposes Only

Total Direct Spending

Based on the assumptions and calculations presented on the previous pages, we have developed estimates of the combined direct spending generated by the potential new Arena, inclusive of drive-in and overnight event attendees. Total direct spending is simply the aggregate of in-facility and out-of-facility spending generated as a result of facility operations and event activity. The graphic below presents the cumulative direct spending that is estimated to be generated by a new Arena. As shown, it is estimated that the Arena would generate over $33.4 million in direct spending. Factoring in economic multipliers, this spending is estimated to generate approximately 630 new full-time equivalent jobs.

Other In-Facility $3,220,507 $4,099,121 Retail $2,325,591

Transportation $1,847,708

Entertainment $33,442,836 630 $1,728,981 in Net New Spending New Full-Time Jobs

Hotels $13,423,734

Meals $6,797,195

4