GAMING INDUSTRY UPDATE Appraisal Institute Lake Tahoe Conference 2019

OCTOBER 10, 2019 U.S. ENTERTAINMENT MARKET

IBISWOLRD

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute VOLUME OF OTHER ENTERTAINMENT SECTORS (REVENUE)

• NFL - $15 Billion • MLB - $10.3 Billion

• Film Industry - $43 Billlion

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute VOLUME OF OTHER ENTERTAINMENT SECTORS (REVENUE)

• Online/Video Gaming

• $58.8 Billion in 2018 up 17.8 percent from 2017

• Projected 2019 $66.7 Billion up 13.5 percent

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute OVERVIEW OF U.S. COMMERCIAL GAMING MARKET

Legal Bookmaking, $0.4 Pari-mutuel Wagering, $0.3

Charitable Games Commercial and Bingo, $2.1 Casinos, $41.7

Lotteries, $72.0

Tribal Casinos, $33.8

Card Rooms, $1.9

STATE OF THE STATES 2019 THE AGA SURVEY OF THE COMMERCIAL CASINO INDUSTRY

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute OVERVIEW OF U.S. COMMERCIAL GAMING

• Regulated by the States – some states have unlimited licenses and other have a restricted number of licenses.

• As defined by the American Gaming Association (“AGA”) – commercial gaming includes licensed land-based casinos, riverboat casinos, racetrack casinos (racinos) and jai alai frontons.

• Commercial gaming also includes casino locations in states such as Delaware, New York, Ohio and Rhode Island that offer electronic gaming devices classified as video lottery terminals and are operated by commercial casinos under the authority of those states’ lotteries.

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute OVERVIEW OF U.S. COMMERCIAL GAMING

• 465 Commercial Casinos in 24 states

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute US COMMERCIAL GAMING PROPERTIES – TOP 20 STATES BY REVENUE

STATE OF THE STATES 2019 THE AGA SURVEY OF THE COMMERCIAL CASINO INDUSTRY

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute OVERVIEW OF U.S. COMMERCIAL GAMING

• Ownership concentrated in a handful of companies – even fewer over the last few years because of mergers and acquisitions.

• Gaming taxes – state gaming taxes are a large portion of casino operating expenses ranging from 4.0 percent (Mississippi) to 61 percent (Maryland). Many states tax devices and tables differently. • Nevada’s gaming taxes run 13 percent.

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute OVERVIEW OF NATIVE AMERICAN/TRIBAL GAMING

• 2018 – 30th Anniversary of the Indian Gaming Regulatory Act (IGRA), the federal law passed by Congress in 1988 to establish parameters to govern tribal gaming on the lands of sovereign tribal nations • In 2018, there were 252 Tribal Governments operating 488 gaming facilities with over 24.5 million square feet of gaming space in 28 states • Total gaming revenue in 2018 was $33.8 billion

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute ONLINE GAMBLING OVERVIEW

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute ONLINE GAMING – NEW JERSEY

• New Jersey is the undisputed leader in the online gambling USA space. • New Jersey passed its online gambling law in 2013. This allowed Atlantic City casinos to apply for internet gaming permits and host a variety of online poker and online casino sites under those licenses. • There are now more online casinos in New Jersey than in any other state in the union. Almost every major casino operator owns a New Jersey-based online casino site. • Internet casinos in New Jersey nearly surpassed $300 million in 2018.

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute ONLINE GAMING PENNSYLVANIA

• Pennsylvania legalized online casinos in 2017. There are no online casinos active in Pennsylvania right now, however, the current official launch date was July 2019. • Delaware became the first state to legalize online gambling in 2012. The market opened up in November 2013 with sites operated through the state’s three racinos: • Delaware Park • Dover Downs • Harrington Raceway • These sites offer a variety of blackjack, roulette, slots and video poker games. Much like the state itself, the Delaware market is relatively small. In 2018, the three online casinos combined to earn roughly $2.6 million in revenues.

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute ONLINE GAMING - OTHER

• West Virginia became the fifth state to legalize online casinos in March 2019. The West Virginia Lottery Interactive Wagering Act authorized the state’s five casinos to pursue the development of casino and poker apps.

• In early 2019, the DOJ released a revised Wire Act opinion. The impacts of that new opinion on legal online gambling remain unclear.

• Some states are poised for expansion.

• $306.5 million dollars in revenue in 2019 for all online gambling

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute SPORTS BETTING

• May 2018 – Supreme Court overturned the Professional and Amateur Sports Protection Act ASPA), the 1992 federal law that had essentially restricted lawful sports betting to Nevada. • By year end 2018 - seven additional states in addition to Nevada - legalized sports betting

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute SPORTS BETTING CURRENT SNAPSHOT

SOURCE: UNLV CENTER FOR GAMING RESEARCH

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute WITH THE EXCEPTION OF LAS VEGAS – GAMING IN THE US IS A REGIONAL ATTRACTION

• Casino gaming has become socially acceptable – now a mainstream entertainment option

• Most casinos in the US are supported by a local and regional population

• Casinos of Convenience – how far will people drive

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute WITH THE EXCEPTION OF LAS VEGAS – GAMING IN THE US IS A REGIONAL ATTRACTION

• Many regional and local casinos are offering a range of amenities for locals:

– High-end restaurants and a variety of food and beverage options – Retail amenities – Entertainment and Concerts – whole new circuit for performance artists – Social memberships/activities for the community

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute GAMING APPRAISAL METHODOLOGY

• It doesn’t matter what type of casino that being considered: Bricks and mortar casino Racino Riverboat – many states have allowed these to come on land Racetrack Cardroom

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute GAMING APPRAISAL METHODOLOGY

• The primary Going Concern Valuation based on the Income Approach

• Allocation of the Going Concern Value into: • Real Property • Personal Property • Intangibles (Business Enterprise Value)

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute COMMERCIAL GAMING PROPERTY APPRAISAL ASSIGNMENTS

• Financing

• Estate events

• Property tax appeals

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute MARKET SUPPLY AND DEMAND ANALYSIS WIN (REVENUE) PER UNIT PER DAY ANALYSIS • REVENUE is the money that is retained by the casino payout the patrons’ win. • The confusing thing is that casinos also refer to their revenue as “win”. • Gaming revenue is generated by devices/machines, table games, and other games of change such as Keno, Baccarat, and Bingo.

Win per Unit per Day Total Revenue/number of units/365

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute MARKET SUPPLY AND DEMAND ANALYSIS WIN (REVENUE) PER UNIT PER DAY ANALYSIS

• Devices – Each machine is one unit • Slot Machines • Electronic Gaming Devices • Video Lottery Terminals • Video Gaming Terminals • Video Poker

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute MARKET SUPPLY AND DEMAND ANALYSIS WIN (REVENUE) PER UNIT PER DAY ANALYSIS • Table Games • Games of chance such as blackjack, craps, roulette, and baccarat that are played against the casino and operated by one or more dealers. Each table is one unit.

• Positions • Some markets use Positions as the analytical unit typically defined as one position per device and six positions per table game

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute RECENT GAMING DEVICE HISTORY

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute RECENT GAMING DEVICE HISTORY

• IGT introduced Megabucks in 1986

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute RECENT GAMING DEVICE HISTORY

• 1996 – Introduction of Video multi line slot machines with more than one payline and the requirement of more than one coin to win a jackpot.

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute RECENT GAMING DEVICE HISTORY

• With the change in technology and products widely introduced from 2011 to 2013, the dynamics of slot trends changed dramatically. Players were introduced to higher wagers on smaller denominational devices. Casinos have been incrementally reducing the number of machines on the floor and the WPUPD has increased.

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute NEVADA DEVICE SUPPLY HISTORY

Number of Devices - Nevada - 1963 to 2018 250,000

200,000

150,000

100,000

50,000

0 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

SOURCE: UNLV CENTER FOR GAMING RESEARCH

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute NEVADA SLOT MACHINE ANALYSIS

Nevada Slot Machine Analysis 250,000 $160.00

$140.00

200,000 $120.00

$100.00 150,000

$80.00

100,000 $60.00

$40.00 50,000

$20.00

0 $0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Number of Units Win per Unit per Day

SOURCE: UNLV CENTER FOR GAMING RESEARCH

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute TABLE GAMES

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute TABLE GAMES

SOURCE: UNLV CENTER FOR GAMING RESEARCH

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute NEVADA TABLE GAME SUPPLY HISTORY

Number of Tables - Nevada - 1963 to 2018 1,200

1,000

800

600

400

200

0

SOURCE: UNLV CENTER FOR GAMING RESEARCH

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute GAMING DATA RESOURCES NEVADA GAMING CONTROL BOARD PUBLICATIONS

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute SOUTH LAKE TAHOE MARKET GAMING DEVICES (SLOT MACHINES)

Douglas County South Lake Tahoe Gaming Devices Year Win (000s) % Change Units % Change WPUPD % Change 1 1 2007 $223,394 --- 3,772 --- $162 --- 2 2 2008 $212,346 (4.9) % 3,736 (1.0) % $155 (4.3) % 3 3 2009 $155,241 (26.9) 3,242 (13.2) $131 (15.5) 4 4 2010 $148,808 (4.1) 2,765 (14.7) $147 12.4 5 5 2011 $139,686 (6.1) 2,693 (2.6) $142 (3.6) 6 6 2012 $137,214 (1.8) 2,664 (1.1) $141 (1.0) 7 7 2013 $139,153 1.4 2,683 0.7 $142 1.0 8 8 2014 $135,704 (2.5) 2,542 (5.3) $146 2.9 9 9 2015 $144,160 6.2 2,968 16.8 $133 (9.0) 10 10 2016 $150,073 4.1 2,888 (2.7) $142 6.7 11 11 2017 $154,922 3.2 2,815 (2.5) $151 6.2 12 12 2018 $165,080 6.6 2,730 (3.0) $166 9.9 12 1 Avg. Annual % Change (2.7) % (2.9) % 0.2 % YTD Jul - 18 $94,540 --- 2,751 --- $162 --- YTD Jul - 19 $91,038 (3.7) % 2,651 (3.6) % $162 (0.1) % LTM Jul - 18 $164,358 --- 2,730 --- $165 --- LTM Jul - 19 $161,578 (1.7) % 2,631 (3.6) % $168 2.0 %

Source: Las Vegas Gaming Control Board

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute SOUTH LAKE TAHOE MARKET TABLE GAMES

Douglas County South Lake Tahoe Table Games Year Win (000s) % Change Units % Change WPUPD % Change 1 1 2007 $93,500 --- 243 --- $1,054 --- 2 2 2008 $82,324 (12.0) % 225 (7.4) % $1,000 (5.2) % 3 3 2009 $62,214 (24.4) 180 (20.0) $947 (5.3) 4 4 2010 $55,983 (10.0) 162 (10.0) $947 (0.0) 5 5 2011 $64,571 15.3 159 (1.9) $1,113 17.5 6 6 2012 $69,708 8.0 160 0.6 $1,190 7.0 7 7 2013 $61,418 (11.9) 162 1.3 $1,039 (12.7) 8 8 2014 $64,082 4.3 162 0.0 $1,084 4.3 9 9 2015 $55,973 (12.7) 198 22.2 $774 (28.5) # 10 2016 $60,411 7.9 196 (1.0) $842 8.7 # 11 2017 $60,542 0.2 195 (0.5) $851 1.0 # 12 2018 $58,852 (2.8) 189 (3.1) $853 0.3 1 Avg. Annual % Change (4.1) % (2.3) % (1.9) % YTD Jul - 18 $38,023 --- 197 --- $910 --- YTD Jul - 19 $38,738 1.9 % 175 (11.0) % $1,042 14.5 % LTM Jul - 18 $60,855 --- 193 --- $864 --- LTM Jul - 19 $59,567 (2.1) % 167 (13.3) % $975 12.9 %

Source: Las Vegas Gaming Control Board

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute WASHOE COUNTY MARKET GAMING DEVICES (SLOT MACHINES)

Washoe County Gaming Devices Year Win (000s) % Change Units % Change WPUPD % Change 1 1 2007 $824,211 --- 22,106 --- $102 --- 2 2 2008 $733,389 (11.0) % 21,236 (3.9) % $94 (7.6) % 3 3 2009 $639,506 (12.8) 19,364 (8.8) $90 (4.1) 4 4 2010 $609,087 (4.8) 18,567 (4.1) $90 (0.7) 5 5 2011 $599,034 (1.7) 18,147 (2.3) $90 0.6 6 6 2012 $584,521 (2.4) 17,884 (1.4) $89 (1.3) 7 7 2013 $603,671 3.3 17,839 (0.3) $93 3.8 8 8 2014 $600,344 (0.6) 18,069 1.3 $91 (1.8) 9 9 2015 $623,509 3.9 17,340 (4.0) $99 8.2 10 10 2016 $656,691 5.3 16,836 (2.9) $107 8.2 11 11 2017 $675,912 2.9 16,504 (2.0) $112 5.3 12 12 2018 $707,415 4.7 16,572 0.4 $117 4.2 12 1 Avg. Annual % Change (1.4) % (2.6) % 1.2 % YTD Jul - 18 $404,385 --- 16,549 --- $115 --- YTD Jul - 19 $396,615 (1.9) % 16,156 (2.4) % $116 0.5 % LTM Jul - 18 $715,134 --- 16,483 --- $119 --- LTM Jul - 19 $699,645 (2.2) % 16,539 0.3 % $116 (2.5) %

Source: Las Vegas Gaming Control Board

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute WASHOE MARKET TABLE GAMES

Washoe County Table Games Year Win (000s) % Change Units % Change WPUPD % Change 1 1 2007 $194,084 --- 623 --- $854 --- 2 2 2008 $169,533 (12.6) % 594 (4.7) % $780 (8.6) % 3 3 2009 $138,282 (18.4) 534 (10.1) $709 (9.0) 4 4 2010 $134,427 (2.8) 517 (3.2) $712 0.4 5 5 2011 $122,241 (9.1) 502 (2.9) $667 (6.3) 6 6 2012 $119,277 (2.4) 497 (1.0) $656 (1.7) 7 7 2013 $123,216 3.3 499 0.4 $677 3.2 8 8 2014 $123,115 (0.1) 495 (0.8) $681 0.7 9 9 2015 $124,284 0.9 479 (3.2) $711 4.3 # 10 2016 $128,568 3.4 454 (5.2) $774 8.8 # 11 2017 $127,913 (0.5) 437 (3.7) $802 3.6 # 12 2018 $129,845 1.5 423 (3.2) $841 4.9 # 1 Avg. Annual % Change (3.6) % (3.5) % (0.1) % YTD Jul - 18 $73,936 --- 431 --- $810 --- YTD Jul - 19 $71,515 (3.3) % 393 (8.8) % $859 6.1 % LTM Jul - 18 $129,206 --- 421 --- $840 --- LTM Jul - 19 $127,424 (1.4) % 420 (0.4) % $832 (1.0) %

Source: Las Vegas Gaming Control Board

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute DOUGLAS COUNTY – REVENUE CONTRIBUTION NEVADA GAMING ABSTRACT 2018

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute WASHOE COUNTY – REVENUE CONTRIBUTION NEVADA GAMING ABSTRACT 2018

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute DOWNTOWN LAS VEGAS $12 MILLION AND OVER– REVENUES & EXPENSES NEVADA GAMING ABSTRACT 2018

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute LAS VEGAS HISTORICAL GAMING AND NON-GAMING REVENUES ($B)

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute LAS VEGAS STRIP $72 MILLION AND OVER– REVENUES & EXPENSES NEVADA GAMING ABSTRACT 2018

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute WHO ARE THE PRIMARY CASINO OWNERS

• Increased consolidation of owners – many active buyers are public companies • Evolution of casino REITS • VICI • Gaming and Leisure Properties • MGM Growth Properties • Blackstone?

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASINO OWNERSHIP STRUCTURE

• LICENSING is critical

• Owner-Operation • Casino Leases • Casino Management

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASE STUDY –

Downtown Las Vegas $12 million and over Gaming Devices Year Win (000s) % Change Units % Change WPUPD % Change 1 2007 $453,623 --- 10,973 --- $113 --- 2 2008 $417,140 (8.0) % 10,924 (0.4) % $104 (7.9) % 3 2009 $379,310 (9.1) 10,726 (1.8) $97 (7.1) 4 2010 $345,574 (8.9) 9,862 (8.1) $96 (0.9) 5 2011 $351,487 1.7 9,825 (0.4) $98 2.1 6 2012 $364,523 3.7 9,658 (1.7) $103 5.2 7 2013 $350,423 (3.9) 9,448 (2.2) $102 (1.5) 8 2014 $351,850 0.4 9,577 1.4 $101 (0.9) 9 2015 $368,831 4.8 9,203 (3.9) $110 9.1 10 2016 $387,389 5.0 9,136 (0.7) $116 5.5 11 2017 $420,933 8.7 9,259 1.4 $125 7.5 12 2018 $426,669 1.4 8,950 (3.3) $131 4.9 Avg. Annual % Change (0.6) % (1.8) % 1.3 % YTD Nov - 17 $394,106 --- 9,256 --- $127 --- YTD Nov - 18 $399,305 1.3 % 8,919 (3.6) % $134 5.2 % LTM Nov - 17 $417,573 --- 9,247 --- $124 --- LTM Nov - 18 $426,132 2.0 % 8,950 (3.2) % $130 5.4 %

Note: 2018 Year End is estimated by Cushman & Wakefield Source: Las Vegas Gaming Control Board

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASE STUDY

Downtown Las Vegas $12 million and over Table Games Year Win (000s) % Change Units % Change WPUPD % Change 1 2007 $106,960 --- 362 --- $810 --- 2 2008 $126,664 18.4 % 357 (1.4) % $969 19.8 % 3 2009 $112,125 (11.5) 358 0.3 $858 (11.5) 4 2010 $103,413 (7.8) 334 (6.7) $848 (1.1) 5 2011 $103,530 0.1 331 (0.9) $857 1.0 6 2012 $103,409 (0.1) 331 0.0 $854 (0.4) 7 2013 $104,287 0.8 320 (3.3) $893 4.6 8 2014 $110,174 5.6 340 6.3 $888 (0.6) 9 2015 $119,500 8.5 331 (2.6) $989 11.4 10 2016 $121,955 2.1 337 1.8 $989 (0.0) 11 2017 $146,810 20.4 374 11.0 $1,075 8.8 12 2018 $137,738 (6.2) 356 (4.8) $1,060 (1.5) Avg. Annual % Change 2.3 % (0.1) % 2.5 % YTD Nov - 17 $133,691 --- 374 --- $1,071 --- YTD Nov - 18 $125,144 (6.4) % 354 (5.2) % $1,057 (1.3) % LTM Nov - 17 $144,438 --- 371 --- $1,066 --- LTM Nov - 18 $138,263 (4.3) % 356 (4.0) % $1,064 (0.2) %

Note: 2018 Year End is estimated by Cushman & Wakefield Source: Las Vegas Gaming Control Board

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASE STUDY

Projected Gaming Inventory and Calculated Fair Share: Gaming Devices Historical 2017 2018 2019 2020 2021 2022 2023 Gaming Devices Supply - Downtown $12 million and over Existing Gaming Devices 8,950 8,919 8,919 9,974 10,319 Additions to Supply - Gaming Devices (31) 0 1,055 345 0 Total Gaming Devices 9,259 8,950 8,919 8,919 9,974 10,319 10,319 % Change (3.3) % (0.3) % 0.0 % 11.8 % 3.5 % 0.0 % CASINO RESORT NEVADA Existing Gaming Devices 625 625 625 625 625 Additions to Supply - Gaming Devices 0 0 0 0 0 Total Gaming Devices 650 625 625 625 625 625 625

Calculated Fair Share - Gaming Devices 7.0 % 7.0 % 7.0 % 7.0 % 6.3 % 6.1 % 6.1 %

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASE STUDY

Projected Gaming Inventory and Calculated Fair Share: Table Games Historical 2017 2018 2019 2020 2021 2022 2023 Table Games Supply - Downtown $12 million and over Existing Table Games 356 354 354 391 403 Additions to Supply - Table Games (2) 0 37 12 0 Total Table Games 374 356 354 354 391 403 403 % Change (4.8) % (0.6) % 0.0 % 10.4 % 3.1 % 0.0 % CASINO RESORT NEVADA Existing Table Games 22 22 22 22 22 Additions to Supply - Table Games 0 0 0 0 0 Total Table Games 20 20 22 22 22 22 22 Calculated Fair Share - Table Games 5.3 % 5.6 % 6.2 % 6.2 % 5.6 % 5.5 % 5.5 %

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASE STUDY

Forecast of Marketwide Gaming Revenue Historical 2017 2018 2019 2020 2021 2022 2023 Gaming Devices Estimated Growth in WPUPD ------4.0 % 4.0 % 3.0 % 3.0 % 3.0 % Estimated WPUPD $125 $131 $136 $141 $146 $150 $154 Units 9,259 8,950 8,919 8,919 9,974 10,319 10,319 Win (000s) $420,933 $426,669 $442,198 $459,886 $529,714 $564,478 $581,412 Growth Rate 1.4 % 3.6 % 4.0 % 15.2 % 6.6 % 3.0 % Table Games Estimated Growth in WPUPD ------2.0 % 2.0 % 2.0 % 2.0 % 3.0 % Estimated WPUPD $1,075 $1,060 $1,081 $1,102 $1,124 $1,147 $1,181 Units 374 356 354 354 391 403 403 Win (000s) $146,810 $137,738 $139,704 $142,498 $160,533 $168,767 $173,830 Growth Rate (6.2) % 1.4 % 2.0 % 12.7 % 5.1 % 3.0 % Total Gaming Win (000s) $567,743 $564,407 $581,902 $602,384 $690,247 $733,245 $755,242 Growth Rate (0.6) % 3.1 % 3.5 % 14.6 % 6.2 % 3.0 %

Revenue Mix Gaming Devices 74.1 % 75.6 % 76.0 % 76.3 % 76.7 % 77.0 % 77.0 % Table Games 25.9 % 24.4 % 24.0 % 23.7 % 23.3 % 23.0 % 23.0 %

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASE STUDY

Forecast of Subject Property Gaming Revenue Historical 2017 2018 2019 2020 2021 2022 2023 Marketwide Gaming Win Gaming Devices $420,933 $426,669 $442,198 $459,886 $529,714 $564,478 $581,412 Table Games 146,810 137,738 139,704 142,498 160,533 168,767 173,830 Total Gaming Win (000s) $567,743 $564,407 $581,902 $602,384 $690,247 $733,245 $755,242 Estimated Penetration Factors Gaming Devices 126.9 % 127.5 % 105.0 % 105.0 % 105.0 % 105.0 % 105.0 % Table Games 146.5 164.8 125.0 125.0 125.0 125.0 125.0 Overall 127.5 % 128.7 % 105.7 % 105.7 % 105.7 % 105.7 % 105.7 % Captured Gaming Win Gaming Devices $37,500 $38,000 $32,540 $33,840 $34,850 $35,900 $36,980 Table Games 11,500 12,750 10,850 11,060 11,290 11,510 11,860 Total Capture (000s) 49,000 50,750 43,390 44,900 46,140 47,410 48,840 Growth Rate Gaming Devices --- 1.3 % --- 4.0 % 3.0 % 3.0 % 3.0 % Table Games --- 10.9 --- 1.9 2.1 1.9 3.0 Total --- 3.6 % --- 3.5 % 2.8 % 2.8 % 3.0 % Revenue Mix Gaming Devices 76.5 % 74.9 % 75.0 % 75.4 % 75.5 % 75.7 % 75.7 % Table Games 23.5 25.1 25.0 24.6 24.5 24.3 24.3 Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASE STUDY Projected Calendar WPUPD and Total Gaming Win Historical 2017 2018 2019 2020 2021 2022 2023 Gaming Devices WPUPD $122 $137 $143 $148 $153 $157 $162 Units 850 820 840 840 840 840 840 Win $37,954 $40,934 $43,730 $45,480 $46,840 $48,250 $49,700 Table Games WPUPD $1,377 $1,403 $1,351 $1,378 $1,405 $1,434 $1,476 Units 25 25 27 27 27 27 27 Win $12,569 $12,800 $13,310 $13,580 $13,850 $14,130 $14,550 Table and Device Win $50,523 $53,734 $57,040 $59,060 $60,690 $62,380 $64,250 Other Gaming Revenue $554 $390 $520 $540 $550 $570 $590 Total Gaming Win $51,077 $54,124 $57,560 $59,600 $61,240 $62,950 $64,840 Growth Rate --- 6.0 % 6.3 % 3.5 % 2.8 % 2.8 % 3.0 %

Projected Fiscal WPUPD and Total Gaming Win Historical 2017 2018 2019/20 2020/21 2021/22 2022/23 2023/24 Gaming Devices WPUPD $122 $137 $143 $148 $153 $157 $162 Units 850 820 840 840 840 840 840 Win $37,954 $40,934 $43,759 $45,502 $46,863 $48,274 $49,724 Table Games WPUPD $1,377 $1,403 $1,373 $1,378 $1,406 $1,434 $1,477 Units 25 25 27 27 27 27 27 Win $12,569 $12,800 $13,533 $13,584 $13,855 $14,137 $14,557 Table and Device Win $50,523 $53,734 $57,292 $59,087 $60,718 $62,411 $64,282 Other Gaming Revenue $554 $390 $522 $538 $553 $569 $586 Total Gaming Win $51,077 $54,124 $57,814 $59,625 $61,271 $62,979 $64,867 Growth Rate --- 6.0 % --- 3.1 % 2.8 % 2.8 % 3.0 %

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASE STUDY

Other Gaming Win Subject Market 2018 2017 2018 2017 Table and Device Win $53,734 $50,523 $564,407 $567,743 Keno 390 554 2,927 3,587 % of Table/Device Win 0.7 % 1.1 % 0.5 % 0.6 % Bingo 0 0 0 0 % of Table/Device Win 0.0 % 0.0 % 0.0 % 0.0 % Poker 0 0 3,923 3,874 % of Table/Device Win 0.0 % 0.0 % 0.7 % 0.7 % Race Book 0 0 887 912 % of Table/Device Win 0.0 % 0.0 % 0.2 % 0.2 % Sports Book 0 0 46,523 35,988 % of Table/Device Win 0.0 % 0.0 % 8.2 % 6.3 % Baccarat 0 0 0 0 % of Table/Device Win 0.0 % 0.0 % 0.0 % 0.0 %

Total Other Win 390 554 54,260 44,361 % of Table/Device Win 0.7 % 1.1 % 9.6 % 7.8 %

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASE STUDY

Other Gaming Win Subject Market 2018 2017 2018 2017 Table and Device Win $53,734 $50,523 $564,407 $567,743 Keno 390 554 2,927 3,587 % of Table/Device Win 0.7 % 1.1 % 0.5 % 0.6 % Bingo 0 0 0 0 % of Table/Device Win 0.0 % 0.0 % 0.0 % 0.0 % Poker 0 0 3,923 3,874 % of Table/Device Win 0.0 % 0.0 % 0.7 % 0.7 % Race Book 0 0 887 912 % of Table/Device Win 0.0 % 0.0 % 0.2 % 0.2 % Sports Book 0 0 46,523 35,988 % of Table/Device Win 0.0 % 0.0 % 8.2 % 6.3 % Baccarat 0 0 0 0 % of Table/Device Win 0.0 % 0.0 % 0.0 % 0.0 %

Total Other Win 390 554 54,260 44,361 % of Table/Device Win 0.7 % 1.1 % 9.6 % 7.8 %

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute Operating History - CASINO RESORT NEVADA Fiscal Year: 2016 2017 Days Open: 366 365 Total Rooms: 500 500 Occupied Rooms: 173,850 173,375 Occupancy: 95.0% 95.0% Average Rate: $92.52 $98.18 RevPAR: $87.89 $93.28 Number of Devices: 650 625 Device WPUPD: $158 $167 Number of Table Games: 20 20 Table Game WPUPD: $1,575 $1,747

(000's) % Gross PAR POR (000's) % Gross PAR POR

REVENUES Gaming $44,405 57.2% 88,811 $255.42 $51,646 59.0% 103,292 $297.89 Rooms 16,084 20.7% 32,169 92.52 17,023 19.4% 34,046 98.18 Food and Beverage 13,307 17.2% 26,613 76.54 14,799 16.9% 29,598 85.36 Other Income 3,778 4.9% 7,555 21.73 4,100 4.7% 8,200 23.65

Total 77,574 100.0% 155,148 446.21 87,568 100.0% 175,136 505.08

DEPARTMENTAL COSTS Gaming 23,876 53.8% 47,752 137.34 25,677 49.7% 51,353 148.10 Rooms 10,406 64.7% 20,812 59.86 10,763 63.2% 21,525 62.08 Food and Beverage 6,877 51.7% 13,755 39.56 7,331 49.5% 14,661 42.28 Other Income 981 26.0% 1,962 5.64 897 21.9% 1,795 5.18 Total 42,140 54.3% 84,280 242.39 44,667 51.0% 89,334 257.63

DEPARTMENTAL INCOME 35,434 45.7% 70,868 203.82 42,901 49.0% 85,802 247.45

UNDISTRIB. OPERATING EXPENSES Administrative and General 8,809 11.4% 17,619 50.67 10,179 11.6% 20,357 58.71 Marketing 8,009 10.3% 16,017 46.07 8,009 9.1% 16,017 46.19 Property Maintenance 8,375 10.8% 16,750 48.17 9,456 10.8% 18,912 54.54 Total 25,193 32.5% 50,386 144.91 27,643 31.5% 55,286 159.44

INCOME BEFORE FIXED CHARGES 10,241 13.2% 20,482 58.91 15,258 17.5% 30,516 88.01

FIXED CHARGES Property Tax 252 0.3% 504 1.45 300 0.3% 600 1.73 Ground Lease Payments 1,164 1.5% 2,329 6.70 1,090 1.2% 2,180 6.29 Total 1,416 1.8% 2,833 8.15 1,390 1.5% 2,780 8.02

EBITDA 8,825 11.4% 17,649 50.76 13,868 16.0% 27,736 79.99

Reserve for Replacement 0 0.0% 0 0.00 0 0.0% 0 0.00

NET OPERATING INCOME $8,825 11.4% 17,649 50.76 $13,868 16.0% 27,736 79.99

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute Ten Year Forecast - CASINO RESORT NEVADA Projection Year: 1 2 3 4 5 6 7 8 9 10 Calendar Year: 2019 2020 Stabilized 2022 2023 2024 2025 2026 2027 2028 Days in Year: 365 365 365 365 365 365 365 365 365 365 Number of Rooms: 500 500 500 500 500 500 500 500 500 500 Rooms Available: 182,500 182,500 182,500 182,500 182,500 182,500 182,500 182,500 182,500 182,500 Occupied Rooms: 173,375 173,375 173,375 173,375 173,375 173,375 173,375 173,375 173,375 173,375

Occupancy: 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% Average Rate: $103.18 $108.30 $111.55 $114.90 $118.34 $121.89 $125.55 $129.32 $133.20 $137.19 RevPAR: $98.02 $102.89 $105.97 $109.15 $112.43 $115.80 $119.27 $122.85 $126.54 $130.33 Number of Devices: 625 625 625 625 625 625 625 625 625 625 Device WPUPD: $143 $148 $153 $157 $162 $167 $172 $177 $183 $188 Number of Table Games: 22 22 22 22 22 22 22 22 22 22 Table Game WPUPD: $1,374 $1,378 $1,406 $1,434 $1,478 $1,521 $1,567 $1,615 $1,663 $1,713

(000's) % Gross (000's) % Gross (000's) % Gross (000's) % Gross (000's) % Gross (000's) % Gross (000's) % Gross (000's) % Gross (000's) % Gross (000's) % Gross

REVENUES Gaming 44,007 51.8% 45,347 51.6% 46,599 51.6% 47,884 51.5% 49,328 51.5% 50,803 51.5% 52,328 51.5% 53,893 51.5% 55,519 51.5% 57,186 51.5% Rooms 17,889 21.1% 18,777 21.4% 19,340 21.4% 19,920 21.4% 20,518 21.4% 21,134 21.4% 21,768 21.4% 22,421 21.4% 23,093 21.4% 23,786 21.4% Food and Beverage 17,718 20.9% 18,250 20.8% 18,797 20.8% 19,361 20.8% 19,942 20.8% 20,540 20.8% 21,156 20.8% 21,791 20.8% 22,445 20.8% 23,118 20.8% Other Income 5,273 6.2% 5,431 6.2% 5,594 6.2% 5,761 6.2% 5,934 6.2% 6,112 6.2% 6,296 6.2% 6,485 6.2% 6,679 6.2% 6,880 6.2% Total Revenues 84,887 100.0% 87,805 100.0% 90,330 100.0% 92,926 100.0% 95,722 100.0% 98,589 100.0% 101,548 100.0% 104,590 100.0% 107,736 100.0% 110,970 100.0%

DEPARTMENTAL COSTS Gaming 25,081 57.0% 25,838 57.0% 26,589 57.1% 27,361 57.1% 28,184 57.1% 29,028 57.1% 29,899 57.1% 30,796 57.1% 31,721 57.1% 32,673 57.1% Rooms 11,516 64.4% 11,861 63.2% 12,217 63.2% 12,584 63.2% 12,961 63.2% 13,350 63.2% 13,750 63.2% 14,163 63.2% 14,588 63.2% 15,025 63.2% Food and Beverage 7,905 44.6% 8,143 44.6% 8,387 44.6% 8,638 44.6% 8,898 44.6% 9,165 44.6% 9,439 44.6% 9,723 44.6% 10,014 44.6% 10,315 44.6% Other Income 703 13.3% 724 13.3% 746 13.3% 768 13.3% 792 13.3% 815 13.3% 840 13.3% 865 13.3% 891 13.3% 918 13.3%

Total Departmental Costs 45,205 53.3% 46,566 53.0% 47,939 53.1% 49,351 53.1% 50,835 53.1% 52,358 53.1% 53,928 53.1% 55,547 53.1% 57,214 53.1% 58,931 53.1%

DEPARTMENTAL INCOME 39,682 46.7% 41,239 47.0% 42,391 46.9% 43,575 46.9% 44,887 46.9% 46,231 46.9% 47,620 46.9% 49,043 46.9% 50,522 46.9% 52,039 46.9%

UNDISTRIB. OPERATING EXPENSES Administrative and General 10,879 12.8% 11,221 12.8% 11,553 12.8% 11,895 12.8% 12,252 12.8% 12,619 12.8% 12,998 12.8% 13,388 12.8% 13,790 12.8% 14,203 12.8% Marketing 7,949 9.4% 8,198 9.3% 8,441 9.3% 8,691 9.4% 8,952 9.4% 9,220 9.4% 9,497 9.4% 9,781 9.4% 10,075 9.4% 10,377 9.4% Property Maintenance 9,532 11.2% 9,835 11.2% 10,125 11.2% 10,424 11.2% 10,737 11.2% 11,058 11.2% 11,390 11.2% 11,732 11.2% 12,084 11.2% 12,447 11.2% Other Undistributed D 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0%

Total Undistrib. Operating Expenses 28,360 33.4% 29,254 33.3% 30,119 33.3% 31,010 33.4% 31,941 33.4% 32,897 33.4% 33,885 33.4% 34,901 33.4% 35,949 33.4% 37,027 33.4%

INCOME BEFORE FIXED CHARGES 11,322 13.3% 11,985 13.7% 12,272 13.6% 12,565 13.5% 12,946 13.5% 13,334 13.5% 13,735 13.5% 14,142 13.5% 14,573 13.5% 15,012 13.5%

FIXED CHARGES Property Tax 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% Ground Lease Payments 1,183 1.4% 1,219 1.4% 1,256 1.4% 1,293 1.4% 1,332 1.4% 1,372 1.4% 1,413 1.4% 1,456 1.4% 1,499 1.4% 1,544 1.4%

Total Fixed Charges 1,183 1.4% 1,219 1.4% 1,256 1.4% 1,293 1.4% 1,332 1.4% 1,372 1.4% 1,413 1.4% 1,456 1.4% 1,499 1.4% 1,544 1.4%

EBITDA 10,139 11.9% 10,766 12.3% 11,016 12.2% 11,272 12.1% 11,614 12.1% 11,962 12.1% 12,322 12.1% 12,686 12.1% 13,074 12.1% 13,468 12.1%

Reserve for Replacement 849 1.0% 878 1.0% 903 1.0% 929 1.0% 957 1.0% 986 1.0% 1,015 1.0% 1,046 1.0% 1,077 1.0% 1,110 1.0%

NET OPERATING INCOME 9,290 10.9% 9,888 11.3% 10,113 11.2% 10,343 11.1% 10,657 11.1% 10,976 11.1% 11,307 11.1% 11,640 11.1% 11,997 11.1% 12,358 11.1%

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute VALUATION METHODOLOGY

• Income Approach • Traditional ten Year Discounted Cash flow Analysis • EBITDA Multiplier

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute RECENT GAMING MULTIPLES

Recent Gaming Transactions p Year Property/Seller Buyer $(000,000) EBITDA Multiplier Rate

2019 Announced and Closed Las Vegas Sands (Sands Bethlehem) Porch Band of Creek Indians 1,300.0 8.8 11.3 Empire City Casino and Yonkers Raceway (Yonkers NY) MGM Resorts 850.0 12.1 8.2 Marnell Gaming LLC (Edgewater Hotel & Casino Resort and the Colorado Belle Hotel & Casino - Laughlin NV) Golden Entertainment 168 to 190 8.0 12.5

Margaritaville Resort Casino Bossier City LA Real Estate VICI Properties Real Estate 261.0 11.2 8.9 Margaritaville Resort Casino Bossier City LA Operations Penn National Operations 115.0 5.5 18.2 Margaritaville Resort Casino Bossier City LA - Consolidated Consolidated 376.0 8.5 11.7

Rivers Casino Des Plaines - 50 percent interest - recapitalization Churchill Downs 326.0 Dover Downs Twin Rivers Worldwide Holdings Undisclosed

Greektown Casino - Real Estate Vici Properties Real Estate 700.0 12.6 7.9 Greektown Casino - Operations Penn National Operations 300.0 6.0 16.7 Greektown Casino - Consolidated Consolidated 1,000.0 9.5 10.5

Magestic Star (2 Boats) Gary Indiana Spectacle Entertainment Total Property Undisclosed Ocean Resort Atlantic City New Jesey Undisclosed Total Property Undisclosed

Three Casinos/Eldorado Resorts - Missouri, Lady Luck Casino Caruthersville - Missouri, Mountaineer Century Casinos/VICI Real Estate 278.0 9.0 Casino, Racetrack & Resort - West Virginia 11.1 Operations 107.0 4.1 24.4 Consolidated 385.0 7.5 13.3

Isle of Capri Kansas CityMO and Lady Luck Vickburg MS/Eldorado Resorts Twin River Worldwide Holdings Inc Total Property 230.0 11.9 8.4

Jack Casino Cincinnati and Turfway Park/Jack Entertainment LLC Hard Rock Hotels and Resorts/VICI Real Estate 558.0 13.1 7.7 Operations 187.0 3.7 27.0 Consolidated 745.0 6.1 16.5

Total Property (Net of Rio Hotel/Caesars Entertainment Imperial Companies WSOP/Total Rewards) 516.3 ~15.0 to 17.0 ~5.8 to 6.6 Total Property EBITDA 6.5 15.5

Bellagio Resort (rumored)/MGM Resorts Total Property 4,000.0 10.0 10.0 MGM Resort (rumored)/MGM Resorts Total Property 3,000.0 11.7 8.5 Circus Cirbus (rumored) Phil Ruffin Total Property N/A N/A N/A

Caesars Portofolio (Harrah's New Orleans, Harrah's Atlantic City, Caesars Palace, Harrah's Las Vegas) Eldorado/Vici Real Estate 1,809.0 11.7 8.5

Compiled by: Cushman & Wakefield Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute Discounted Cash Flow Analysis - CASINO RESORT NEVADA ANNUAL PROJECTION NET DISCOUNT PRESENT COMPOSITION CASH ON CASH YEAR CASH FLOW FACTOR VALUE OF YIELD RETURN 14.00%

2019 $9,290,000 x 0.877193 = $8,149,123 9.50% 10.83% 2020 $9,888,000 x 0.769468 = 7,608,500 8.87% 11.52% Stabilized $10,113,000 x 0.674972 = 6,825,992 7.96% 11.79% 2022 $10,343,000 x 0.592080 = 6,123,883 7.14% 12.05% 2023 $10,657,000 x 0.519369 = 5,534,915 6.45% 12.42% 2024 $10,976,000 x 0.455587 = 5,000,523 5.83% 12.79% 2025 $11,307,000 x 0.399637 = 4,518,696 5.27% 13.18% 2026 $11,640,000 x 0.350559 = 4,080,507 4.76% 13.57% 2027 $11,997,000 x 0.307508 = 3,689,173 4.30% 13.98% 2028 $12,358,000 x 0.269744 = 3,333,496 3.89% 14.40%

Total Present Value of Cash Flows $54,864,808 63.97% 12.65% Average

REVERSION

2029 $12,730,000 / 11.00% $115,727,273 Less: Cost of Sale @ 1.00% 1,157,273 Net Reversion $114,570,000

x Discount Factor 0.269744 $30,904,570

Total Present Value of Reversion $30,904,570 36.03%

Total Present Value $85,769,378 100.00%

ROUNDED: $85,800,000

Number of Rooms 500 Estimated Value Per Room $171,600

Year-One (Going-In) Statistics EBITDA Multiplier 8.5 Capitalization Rate 10.8%

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute EBITDA Multiplier Calculation Type EBITDA Multiplier Value First Projection Year $10,139,108 8.5 $86,200,000 Stabilized Deflated $10,081,372 8.5 $85,700,000

Estimated Value Value Estimated Value via Discounted Cashflow Method $85,800,000 Estimated Value via EBITDA Multiplier Method $86,200,000

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASINO REIT RENTAL DATA

Cap Rates from REITS

Real Estate Real Estate Rent RE as % of total Date Property Total Acquisition Component Cap Rate Coverage Acquisition REIT

2019 Three Property Acquisition $385,000,000 $278,000,000 9.0% 1.70 72.2% VICI 2019 Jack Cincinnati Casino $745,000,000 $558,000,000 7.7% 1.70 74.9% VICI 2019 Margaritaville Resort Casino $376,000,000 $261,000,000 8.9% 1.90 69.4% VICI 2018 Greektown Detroit $1,000,000,000 $700,000,000 7.9% 1.70 70.0% VICI 2018 Octavius Tower at Caesers Palace N/A $508,000,000 7.9% 1.70 N/A VICI 2019 Empire City Casino $850,000,000 $625,000,000 8.0% 1.70 73.5% MGP 2019 Park MGM N/A $637,000,000 7.8% N/A N/A MGP 2019 Hard Rock Rocksino (Northfield) $1,006,000,000 $731,000,000 6.8% 1.80 72.7% MGP 2018 Plainridge Park Casino N/A $250,900,000 10.0% N/A N/A GLPI 2018 Four Boyd Assets $575,000,000 N/A N/A 1.86 N/A GLPI 2018 Tropicana Casinos (5) N/A $964,000,000 8.8% 1.97 N/A GLPI 2016 The Meadows Racetrack and Casino $440,000,000 $302,000,000 8.4% 1.80 68.6% GLPI

Compiled by Cushman & Wakefield

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute VALUE ALLOCATION – RENT ALLOCATION METHOD

CASINO RESORT NEVADA - LEASE EXTRACTION ALLOCATION EBITDA $10,139,108 REIT Rent Coverage 1.7 Estimated Rent to Real Estate $5,964,181 59% Rent Attributable to the Real Estate $5,964,181

Real Property Capitalization Rate 9.0% $66,268,677 Rounded Allocation to Real Estate $64,840,000 75.4% Rounded Allocation to Personal Property $8,600,000 10.0% Rounded Allocation to Intangible $12,560,000 14.6% Total Value $86,000,000 100.0%

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute VALUE ALLOCATION – MANAGEMENT FEE ASSUMING MANAGEMENT FEE = 25% OF EBITDA

Discounted Cash Flow Analysis - CASINO RESORT NEVADA - Business Value ANNUAL PROJECTION NET DISCOUNT PRESENT COMPOSITION CASH ON CASH YEAR CASH FLOW FACTOR VALUE OF YIELD RETURN 17.00% 2019 $2,534,750 x 0.854701 = $2,166,453 11.79% 13.78% 2020 $2,691,500 x 0.730514 = 1,966,178 10.70% 14.63% Stabilized $2,754,000 x 0.624371 = 1,719,518 9.36% 14.97% 2022 $2,818,000 x 0.533650 = 1,503,826 8.18% 15.32% 2023 $2,903,500 x 0.456111 = 1,324,318 7.21% 15.78% 2024 $2,990,500 x 0.389839 = 1,165,814 6.34% 16.25% 2025 $3,080,500 x 0.333195 = 1,026,407 5.59% 16.74% 2026 $3,171,500 x 0.284782 = 903,186 4.92% 17.24% 2027 $3,268,500 x 0.243404 = 795,566 4.33% 17.76% 2028 $3,367,000 x 0.208037 = 700,461 3.81% 18.30%

Total Present Value of Cash Flows $13,271,727 72.23% 16.08% Average REVERSION 2029 $3,468,250 / 14.00% $24,773,214 Less: Cost of Sale @ 1.00% 247,732 Net Reversion $24,525,482 x Discount Factor 0.208037 $5,102,208 Total Present Value of Reversion $5,102,208 27.77% Total Present Value $18,373,935 100.00% ROUNDED: $18,400,000

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute ALLOCATION VIA MANAGEMENT CONTRACT

CASINO RESORT NEVADA - MANAGEMENT FEE EXTRACTION ALLOCATION

Rounded Allocation to Real Estate $59,000,000 68.6% Rounded Allocation to Personal Property $8,600,000 10.0% Rounded Allocation to Intangible $18,400,000 21.4% Total Value $86,000,000 100.0%

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute VALUE ALLOCATION – RESIDUAL METHOD

Market Value As Is Less: Real Property Less: FF&E Remainder: Intangible or Business Enterprise Value

• Real Property can be a separate land and depreciated improvements analysis Or • Market value of the real property based on comparable sales OR • Extraction of a Management Fee

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute VALUE ALLOCATION – RESIDUAL COST APPROACH

CASINO RESORT NEVADA - DEPRECIATED COST RESIDUAL ALLOCATION

Total Value $86,000,000 Less: Land Value $34,300,000 39.9% Less: Depreciated Replacement Cost $30,000,000 34.9% Less: Allocation to Personal Property $8,600,000 10.0% Allocation to Intangible $13,100,000 15.2%

Rounded Allocation to Real Estate $64,300,000 74.8% Rounded Allocation to Personal Property $8,600,000 10.0% Rounded Allocation to Intangible $13,100,000 15.2% Total Value $86,000,000 100.0%

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CASINO RESORT NEVADA - LEASE EXTRACTION ALLOCATION Rounded Allocation to Real Estate $34,840,000 40.5% Rounded Allocation to Personal Property $8,600,000 10.0% Rounded Allocation to Intangible $42,560,000 49.5% Total Value $86,000,000 100.0%

CASINO RESORT NEVADA - MANAGEMENT FEE EXTRACTION ALLOCATION

Rounded Allocation to Real Estate $59,000,000 68.6% Rounded Allocation to Personal Property $8,600,000 10.0% Rounded Allocation to Intangible $18,400,000 21.4% Total Value $86,000,000 100.0%

CASINO RESORT NEVADA - DEPRECIATED COST RESIDUAL ALLOCATION

Rounded Allocation to Real Estate $79,300,000 92.2% Rounded Allocation to Personal Property $8,600,000 10.0% Rounded Allocation to Intangible ($1,900,000) -2.2% Total Value $86,000,000 100.0%

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute LONG TERM CHALLENGES TO BRICKS AND MORTAR CASINOS

• Competitive pressure from gaming machine manufacturers • Market Saturation • Aging gaming population • Taxes can make or break profitability • Labor Costs • Constant Capital Investments to keep up with changing entertainment trends

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute LONG TERM CHALLENGES TO BRICKS AND MORTAR CASINOS

• Similar to other entertainment – online platform is competition • Competition from other entertainment – “the other gaming” • People who play video games spend an average of seven hours seven minutes each week playing. Playing time has increased 19.3 percent in the last year. • Gamers 26-35 years old play for eight hours 12 minutes per week. This increased more than 25 percent in the last year.

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute CONDITIONS FOR NEW CASINO CONSTRUCTION

• Available license • Available accessible site proximate to target population • Reasonable tax structure • Big pile of money

• Who is building new casinos • Massachusetts Springfield and Wynn • Native American tribes • Arkansas • Chicago projects??

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute LIST OF LAS VEGAS CASINOS NEVER BUILT

29 Playboy Hotel and Casino 1 Asia Resort and Casino 16 Jockey Club Casino 30 Santa Fe Valley 2 Alon Las Vegas 17 Kactus Kate's 31 Shenandoah Hotel and Casino 3 Beau Rivage 18 Las Vegas Plaza 32 Silver City proposals 4 Caribbean Casino 19 London Resort and Casino 33 Starship Orion 5 Carnival 20 London, Las Vegas 34 Sunrise 6 Cascada 21 Montreux Resort 35 Titanic 7 City by the Bay Resort and Casino 22 Moon Resort and Casino 36 W Las Vegas 8 Countryland USA 23 NevStar 2000 37 Wally's Wagon Wheel 9 Craig Ranch Station 24 North Coast/Boyd Gaming project 38 Wild Wild West 10 Crown Las Vegas 25 Palace of the Sea Resort and 11 Desert Kingdom Casino 39 World Port 12 DeVille Casino 26 Paramount Las Vegas 40 World Trade Center 13 Echelon Place 27 Pharoah's Kingdom 41 World Wrestling Federation 14 Fontainebleau Las Vegas 28 Planet Hollywood Resort (original 42 Xanadu plans) 15 Harley-Davidson Hotel and Casino

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute INDUSTRY RESPONSES TO CHALLENGES

• Sports betting • Online gaming • Diversification of entertainment options in casinos • E gaming arenas • Extensive pool areas • A hotel helps • Appealing to particular demographics Food and beverage options Décor Retail

EMBRACING THE ENTERTAINMENT DESTINATION

Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute Cushman & Wakefield | 2019 Lake Tahoe Conference – Sacramento Sierra Chapter of the Appraisal Institute Mark D. Capasso Executive Director Valuation & Advisory Americas Practice Leader Hospitality & Gaming Group

Direct: +1 213 955 -6442 [email protected]

Elaine Sahlins, MAI, CRE Executive Director Valuation & Advisory Hospitality & Gaming Group

Direct: +1 415 773 3531 [email protected]