Market Study for Full-Service Hotels

RESTRICTED APPRAISAL REPORT FOR AGGREGATE PORTFOLIO Courtyard by Marriott Tampa North Fairfield Inn & Suites Marriott Orlando Ocoee Holiday Inn Express Fort Myers East The Forum Holiday Inn Express Sarasota East I 75 Staybridge Suites Tampa East Brandon Wingate by Wyndham Tampa at USF

SUBMITTED TO:EXISTING PREPARED BY: Mr. Martin Pinsker HVS Consulting & Valuation American Hotel Income Properties REIT, Inc. Division of TS Worldwide, LLC 401 West Georgia Street, Suite 1660 3000 Weslayan Street, Suite 385 Vancouver, British Columbia, V6B 5A1 Houston, Texas, 77027

+1 (604) 633-2853 +1 (615) 982-3539

November-2016

November 10, 2016

Mr. Martin Pinsker American Hotel Income Properties REIT, Inc. HVS HOUSTON 401 West Georgia Street, Suite 1660 3000 Weslayan Street, Suite 385 Vancouver, British Columbia, V6B 5A1 Houston, Texas, 77027 +1 (615) 982-3539 +1 (516) 742-3059 FAX Re: Courtyard by Marriott Tampa North www.hvs.com 13575 Cypress Glen Lane, Tampa, Florida

Fairfield Inn & Suites Marriott Orlando Ocoee 10971 West Colonial Drive, Ocoee, Florida

Holiday Inn Express Fort Myers East The Forum 3427 Forum Boulevard, Fort Myers, Florida

Holiday Inn Express Sarasota East I 75 5730 Gantt Road, Sarasota, Florida

Staybridge Suites Tampa East Brandon 3624 North Falkenburg Road, Tampa, Florida

Wingate by Wyndham Tampa at USF 3751 East Fowler Avenue, Tampa, Florida

Dear Mr. Pinsker:

Pursuant to your request, we herewith submit our appraisal report pertaining to the above-captioned hotels. This is a restricted appraisal report intended to comply with the reporting requirements set forth under Standard Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice (USPAP) for a restricted appraisal report, as provided by the Appraisal Foundation. It is intended for the

restricted use of American Hotel Income Properties REIT, Inc. only and may not be

relied upon by other parties; furthermore, the rationale for how we arrived at our opinions and conclusions may not be properly understood without additional information in our work file. At the client’s request, we have included the ‘as is’ value of the portfolio of six hotels, henceforth referred to as The Portfolio, in aggregate form.

Based on our analysis, it is our opinion that the “as is” market value of the fee simple interest in the real and personal property of The Portfolio, as of September

16, 2016, is:

$63,500,000 Superior results through unrivaled hospitality intelligence. Everywhere. SIXTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS

This value estimate equates to $113,500 per room. This represents the "as is" value of The Portfolio, assuming a total capital expenditure of $5,568,000 for the six properties. In the event that the actual cost differs from the amount stated, the value of The Portfolio may change. It is assumed that the capital improvements will be completed in a competent and timely manner. The capital expenditures will be discussed in detail in a subsequent section of this report

This report is subject to the extraordinary assumption that capital deductions will be required to fund necessary upgrades for The Portfolio. The use of this extraordinary assumption may have affected the assignment results. Moreover, several important general assumptions have been made that apply to this report and our valuations of hotels in general. These items are set forth in the Assumptions and Limiting Conditions chapter of this report.

We hereby certify that we have no undisclosed interest in The Portfolio, and our employment and compensation are not contingent upon our findings. This study is subject to the comments made throughout this report and to all assumptions and limiting conditions set forth herein.

Sincerely, TS Worldwide, LLC

J. Carter Allen, MAI, Senior Vice President [email protected], +1 (615) 982-3539 State-certified general appraiser RZ3785

Table of Contents

SECTION TITLE PAGE 1. Summary of Salient Data and Conclusions 1 2. Nature of the Assignment 8 3. Real Estate Overview - Courtyard by Marriott Tampa North 15 4. Real Estate Overview - Fairfield Inn & Suites Marriott Orlando Ocoee 32 5. Real Estate Overview - Holiday Inn Express Fort Myers East The Forum 49 6. Real Estate Overview - Holiday Inn Express Sarasota East I 75 65 7. Real Estate Overview - Staybridge Suites Tampa East Brandon 82 8. Real Estate Overview - Wingate by Wyndham Tampa at USF 98 9. Market Area Analysis - Tampa 113 10. Market Area Analysis - Orlando 130 11. Market Area Analysis - Fort Myers 142 12. Market Area Analysis - Sarasota 154 13. Lodging Trends 166 14. Approaches to Value 170 15. Income Capitalization Approach 172 16. Sales Comparison Approach 177 17. Reconciliation of Value Indications 178 18. Statement of Assumptions and Limiting Conditions 180 19. Certification 183

Addenda

Qualifications Copy of Report License(s)

1. Summary of Salient Data and Conclusions

Property: Courtyard by Marriott Tampa North Location: 13575 Cypress Glen Lane Tampa, Florida 33637 Hillsborough County Interest Appraised: Fee Simple Ownership: Boulder Hotel East LLC Highest and Best Use (as improved): Select-Service

LAND DESCRIPTION

Area: 1.56 acres, or 67,954 square feet Zoning: PD - Planned Development Assessor's Parcel Number(s): A0347760676 FEMA Flood Zone: X

IMPROVEMENTS DESCRIPTION

Year Opened and Renovated: 1995; Renovated: 2014 Property Type: Select-Service lodging facility Building Area: 47,571 square feet Guestrooms: 86 Number of Stories: Four Food and Beverage Facilities: A restaurant and lounge Meeting Space: 326 square feet Additional Facilities: An outdoor pool, a fitness center, a business center, a market pantry, and a guest laundry room Parking Spaces: 89 (Surface)

November-2016 Summary of Salient Data and Conclusions Florida Portfolio of Six Hotels 1

Property: Fairfield Inn & Suites Marriott Orlando Ocoee Location: 10971 West Colonial Drive Ocoee, Florida 34761 Hillsborough County Interest Appraised: Fee Simple Ownership: Boulder Hotel Orlando West LLC Highest and Best Use (as improved): Limited-Service

LAND DESCRIPTION

Area: 2.39 acres, or 103,969 square feet Zoning: C-3 - Wholesale Commercial District Assessor's Parcel Number(s): 20-22-28-0000-00032 FEMA Flood Zone: Zone X

IMPROVEMENTS DESCRIPTION

Year Opened and Renovated: 2004; Renovated: 2013 Property Type: Limited-Service lodging facility Building Area: 45,667 square feet Guestrooms: 86 Number of Stories: Three Food and Beverage Facilities: A breakfast dining area Meeting Space: 600 square feet Additional Facilities: An outdoor pool, an outdoor whirlpool, a fitness room, a lobby workstation, a market pantry, a guest laundry room, and an outdoor patio and seating area Parking Spaces: 97 (Surface)

November-2016 Summary of Salient Data and Conclusions Florida Portfolio of Six Hotels 2

Property: Holiday Inn Express Fort Myers East The Forum Location: 3427 Forum Boulevard Fort Myers, Florida 33905 Hillsborough County Interest Appraised: Fee Simple Ownership: Boulder Hotel Co. LLC Highest and Best Use (as improved): Fee Simple

LAND DESCRIPTION

Area: 2.78 acres, or 121,096 square feet Zoning: SDA - Special Development Area Assessor's Parcel Number(s): 27-44-25-P3-00401.0020 FEMA Flood Zone: Zone X

IMPROVEMENTS DESCRIPTION

Year Opened: 2009 Property Type: Fee Simple lodging facility Building Area: 64,613 square feet Guestrooms: 86 Number of Stories: Six Food and Beverage Facilities: A breakfast dining area Meeting Space: 326 square feet Additional Facilities: An outdoor pool, a fitness room, a business center, a market pantry, a guest laundry room, and vending areas Parking Spaces: 136 (Surface)

November-2016 Summary of Salient Data and Conclusions Florida Portfolio of Six Hotels 3

Property: Holiday Inn Express Sarasota East I 75 Location: 5730 Gantt Road Sarasota, Florida 34233 Hillsborough County Interest Appraised: Fee Simple Ownership: Boulder Hotel FLA LLC Highest and Best Use (as improved): Limited-Service

LAND DESCRIPTION

Area: 4.70 acres, or 204,650 square feet Zoning: CHI - Commercial , Highway Interchange Assessor's Parcel Number(s): 0094141004 FEMA Flood Zone: Zone X

IMPROVEMENTS DESCRIPTION

Year Opened and Renovated: 2003; Renovated: 2012 Property Type: Limited-Service lodging facility Building Area: 51,172 square feet Guestrooms: 86 Number of Stories: Four Food and Beverage Facilities: A breakfast dining area Meeting Space: 326 square feet Additional Facilities: An outdoor pool, an outdoor whirlpool, a fitness room, a lobby workstation, a market pantry, a guest laundry room, and vending areas Parking Spaces: 108 (Surface)

November-2016 Summary of Salient Data and Conclusions Florida Portfolio of Six Hotels 4

Property: Staybridge Suites Tampa East Brandon Location: 3624 North Falkenburg Road Tampa, Florida 33619 Hillsborough County Interest Appraised: Fee Simple Ownership: Boulder Hotel Co II LLC Highest and Best Use (as improved): Limited-Service

LAND DESCRIPTION

Area: 5.55 acres, or 241,808 square feet Zoning: PD - Planned Development Assessor's Parcel Number(s): A0654570025 FEMA Flood Zone: X

IMPROVEMENTS DESCRIPTION

Year Opened: 2007 Property Type: Limited-Service lodging facility Building Area: 67,391 square feet Guestrooms: 86 Number of Stories: Four Food and Beverage Facilities: A breakfast dining area Meeting Space: 326 square feet Additional Facilities: An outdoor pool, an outdoor whirlpool, an outdoor pet walk area, an outdoor patio and barbeque area, an outdoor fire pit, a coffee station, indoor guest storage lockers, a fitness room, a library, a guest laundry area, a market pantry, and a business center Parking Spaces: 100 (Surface)

November-2016 Summary of Salient Data and Conclusions Florida Portfolio of Six Hotels 5

Property: Wingate by Wyndham Tampa at USF Location: 3751 East Fowler Avenue Tampa, Florida 33612 Hillsborough County Interest Appraised: Fee Simple Ownership: Boulder Hotel Co WG LLC Highest and Best Use (as improved): Limited-Service

LAND DESCRIPTION

Area: 1.90 acres, or 82,764 square feet Zoning: CG - Commercial Assessor's Parcel Number(s): A1405151102 FEMA Flood Zone: X

IMPROVEMENTS DESCRIPTION

Year Opened and Renovated: 1998; Renovated: 2007 Property Type: Limited-Service lodging facility Building Area: 48,446 square feet Guestrooms: 86 Number of Stories: Four Food and Beverage Facilities: A breakfast dining area Meeting Space: 326 square feet Additional Facilities: An outdoor pool, an indoor whirlpool, a fitness room, an outdoor smoking patio, a business center, a guest laundry room, and vending areas Parking Spaces: 111 (Surface)

November-2016 Summary of Salient Data and Conclusions Florida Portfolio of Six Hotels 6

OPINIONS OF “AS IS” MARKET VALUE - SEPTEMBER 16, 2016

Income Capitalization Approach: $63,500,000 Sales Comparison Approach: $50,400,000 to $73,900,000 Cost Approach: Not Applicable

“As Is” Market Value, as of September 16, 2016: $63,500,000 Market Value Conclusion per Room: $113,500

Total Capital Deduction (after deducting reserve): $5,568,000

Real and Personal Property: The real and personal property value conclusions exclude any value attributable to intangibles. All value attributable to the intangible property has been removed with the assumed expense of a management fee and a franchise fee (if applicable) in the valuation process. As a result, our value conclusion pertains to the real and personal property components only, which have been valued at $62,400,000 and $1,100,000, respectively, as of the current date of value.

November-2016 Summary of Salient Data and Conclusions Florida Portfolio of Six Hotels 7

2. Nature of the Assignment

Property The property rights appraised are the fee simple ownership of the real and Rights Appraised personal property of each hotel. The fee simple estate is defined as “absolute ownership unencumbered by any other interest or estate, hotel only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat."1

Objective of the The objective of the report is to evaluate the supply and demand factors affecting Report the market for transient accommodations in the Central Florida area for the purpose of developing an opinion of The Portfolio’s aggregate market value. The following definition of market value has been agreed upon by the agencies that regulate federal financial institutions in the United States:

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

1. buyer and seller are typically motivated; 2. both parties are well informed or well advised, and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.2 “As is” market value is defined by the Report Institute as follows:

1 Report Institute, The Dictionary of Real Estate Report, 6th ed. (Chicago: Report Institute, 2015). 2 Federal Register, Vol. 75, No. 237, December 10, 2010: 77472.

November-2016 Nature of the Assignment Florida Portfolio of Six Hotels 8

The estimate of the market value of real property in its current physical condition, use, and zoning as of the report date.3

Ownership, Franchise, The Courtyard by Marriott is currently owned by Boulder Hotel East LLC, which is and Management based in Ocean City, Maryland. The subject property was last sold in 2013; Boulder History and Hotel East LLC has owned the property since that time, having purchased it from Assumptions McKibbon Brothers for a reported price of $6,650,000. No other transfers of the property have reportedly occurred within the last three years. The hotel is part of a six-property portfolio that is now under contract for purchase by American Hotel Income Properties REIT, Inc. for an aggregate price of $61,000,000. An allocated purchase price for the subject property was not provided.

The Fairfield Inn & Suites by Marriott is currently owned by Boulder Hotel Orlando West LLC, which is based in Ocean City, Maryland. The subject property was last sold in August 2015; Boulder Hotel Orlando West LLC has owned the property since that time, having purchased it from Florida Lodging Development LLC for a reported price of $8,000,000. No other transfers of the property have reportedly occurred within the last three years. The hotel is part of a six-property portfolio that is now under contract for purchase by American Hotel Income Properties REIT, Inc. for an aggregate price of $61,000,000. An allocated purchase price for the subject property was not provided.

The Holiday Inn Express Fort Myers is currently owned by Boulder Hotel Co. LLC, which is based in Ocean City, Maryland. The subject property was last sold in 2011; Boulder Hotel Co. LLC has owned the property since that time, having purchased it from M&I Marshall & Ilsley Bank for a reported price of $5,200,000, according to the Lee County Property Appraiser and the Lee County Clerk of Court records. We note that the 2011 transfer does not appear to reflect the true market value of the subject property given that a Final Judgment of Foreclosure names Boulder Hotel Co. LLC as the successor in interest to M&I Marshall & Ilsley Bank. No transfers of the property have reportedly occurred within the last three years. The hotel is part of a six-property portfolio that is now under contract for purchase by American Hotel Income Properties REIT, Inc. for an aggregate price of $61,000,000. An allocated purchase price for the subject property was not provided.

The Holiday Inn Express Sarasota is currently owned by Boulder Hotel FLA LLC, which is based in Ocean City, Maryland. The subject property was last sold in 2013; Boulder Hotel FLA LLC has owned the property since that time, having purchased it from CIS Sarasota LLC for a reported price of $9,000,000. No transfers

3 Report Institute, The Dictionary of Real Estate Report, 6th ed. (Chicago: Report Institute, 2015).

November-2016 Nature of the Assignment Florida Portfolio of Six Hotels 9

of the property have occurred within the last three years. The hotel is part of a six- property portfolio that is now under contract for purchase by American Hotel Income Properties REIT, Inc. for an aggregate price of $61,000,000. An allocated purchase price for the subject property was not provided.

The Staybridge Suites is currently owned by Boulder Hotel Co II LLC, which is based in Ocean City, Maryland. No transfers of the property have reportedly occurred within the last three years. The hotel is part of a six-property portfolio that is now under contract for purchase by American Hotel Income Properties REIT, Inc. for an aggregate price of $61,000,000. An allocated purchase price for the subject property was not provided.

The Wingate by Wyndham is currently owned by Boulder Hotel Co WG LLC, which is based in Ocean City, Maryland. No transfers of the property have reportedly occurred within the last three years. The hotel is part of a six-property portfolio that is now under contract for purchase by American Hotel Income Properties REIT, Inc. for an aggregate price of $61,000,000. An allocated purchase price for the subject property was not provided.

The Portfolio is now under contract for purchase by American Hotel Income Properties REIT, Inc. for an aggregate price of $61,000,000. The aggregate "as is" market value opinion in this appraisal is within 4% of the contracted purchase price. Our analysis of the price reflects that it is consistent with our market value opinion.

Each hotel in the portfolio is managed by Boulder Hotel Company, an affiliate of the ownership entities, with no formal management agreement in place. Our appraisal assumes that the subject hotel will be managed by a professional hotel- operating company throughout the assumed holding period, with fees deducted at rates consistent with current market standards.

Most Probable Buyer The subject hotels are select- or limited-service hotels that would be attractive to active buyers. The hotels are favorably located throughout primary markets in Central Florida. It is our opinion that the most probable buyer of the hotel would be a private investment fund, REIT, or ownership group looking to supplement its national hotel portfolio. This type of buyer would seek to implement its own management team, or a third-party professional hotel operator, and to maintain a nationally recognized brand affiliation for each hotel in the portfolio.

Intended Use of the This report is being prepared for use with investment decision making, financing, Report and/or financial reporting.

November-2016 Nature of the Assignment Florida Portfolio of Six Hotels 10

Identification of the The client for this engagement is American Hotel Income Properties REIT, Inc. This Client and Intended report is intended for the addressee firm and may not be distributed to or relied User(s) upon by other persons or entities.

Assignment Conditions This appraisal is subject to the extraordinary assumption that a capital deduction will be required to fund necessary upgrades throughout the portfolio. The use of this extraordinary assumption may have affected the assignment results. Moreover, several important general assumptions have been made that apply to this appraisal and our valuations of hotels in general. These items are set forth in the Assumptions and Limiting Conditions chapter of this report.

Marketing and Our opinion is that the exposure period for The Portfolio, if sold as individual Exposure Periods hotels, prior to our date of value, is estimated to be less than or equal to five to seven months, while the marketing period for The Portfolio, if sold as individual hotels, subsequent to our date of value, is less than or equal to five to seven months. Published surveys report marketing time, not the exposure period. Marketing time is an opinion of the amount of time it might take to sell a property at the concluded market value level during the period immediately after the effective date of an appraisal. According to the HVS Brokers Survey - Spring 2016, reported marketing times averaged 5.2 months for luxury/upper-upscale properties, 5.8 months for full-service hotels, and 5.0 months for select-service hotels. Marketing time for luxury/upper-upscale properties, full-service hotels, and select-service hotels averaged 6.3, 7.0, and 5.9 months, respectively, according to the PWC Real Estate Investor Survey - Third Quarter 2016. USRC reported average marketing times of 7.7 and 8.3 months, respectively, for full-service and limited-service hotels in its mid-year 2016 survey. Overall marketing time is averaging 5.3 months for hotels, as reported by the Situs Real Estate Research Corporation’s Real Estate Report - Second Quarter 2016.

Competency Our qualifications are included as an addendum to this report. These qualifications reflect that we have the competence required to complete this engagement, in accordance with the competency provision of the Uniform Standards of Professional Report Practice. Our knowledge and experience is appropriate for the complexity of this assignment.

November-2016 Nature of the Assignment Florida Portfolio of Six Hotels 11

Scope of Work The methodology used to develop this report is based on the market research and valuation techniques set forth in the textbooks authored by Hospitality Valuation Services for the American Institute of Real Estate Appraisers and the Report Institute, entitled The Valuation of Hotels and Motels,4 Hotels & Motels: Valuations and Market Studies,5 The Computerized Income Approach to Hotel/Motel Market Studies and Valuations,6 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,7 and Hotels and Motels – Valuations and Market Studies,8 as well as in accordance with the Uniform System of Accounts for the Lodging Industry (USALI).

1. All information was collected and analyzed by the staff of TS Worldwide, LLC. Information such as historical operating statements, franchise and/or management agreements, site plans, floor plans, and leases, as applicable, were supplied by the client or property management. 2. The subject sites were evaluated from the viewpoint of its utility for the development and operation of a hotel. The potential existence of surplus or excess land was investigated. We have reviewed adjacent uses, regional and local accessibility attributes, and visibility characteristics. A study of each local neighborhood was undertaken to determine its boundaries, land uses, recent developments, and life-cycle stage. Other aspects of the land, such as soil and subsoil conditions, nuisances, hazards, easements, encroachments, zoning, and the current flood zone of the property, have been evaluated. 3. The improvements were inspected to evaluate their current condition, quality of construction, and design and layout, including any items of physical deterioration or functional obsolescence. A list of facilities and amenities that the property offers has been compiled, and past upgrades of each area of the hotel have been investigated. Recent capital expenditures, as well as planned future upgrades, have been reviewed. The remaining economic life of the hotel has been estimated.

4 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 5 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 6 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and Valuations. (Chicago: American Institute of Real Estate Appraisers, 1990). 7 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Report Institute, 1992). 8 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Report Institute, 2001).

November-2016 Nature of the Assignment Florida Portfolio of Six Hotels 12

4. Economic and demographic statistics for each market have been reviewed to identify specific hostelry-related trends that may affect future demand for hotels. Workforce characteristics have been evaluated, including employment trends by sector and unemployment rates. Major businesses and industries operating in the local area were investigated, and local area office statistics and trends were reviewed, as available. Passenger levels and recent changes at the area’s pertinent airport have been researched, and visitor demand generators have been identified and evaluated. 5. STR Trend Reports pertaining to historical trends in room-night supply, demand, occupancy, average rate, and RevPAR for the each asset and a group of selected competitors has been ordered and analyzed. Performance levels for each of the competitive hotels have been researched and/or estimated. Ownership, management, facilities, renovations, and other pertinent factors for the competitive properties have been investigated. Potential new hotel supply was researched and quantified. Occupancy levels of each property and its existing competition provide a basis for quantifying current accommodated demand in the market. The market for hotel accommodations is segmented based on the specific characteristics of the types of travelers utilizing the area's hotels. By segmenting the demand accommodated by each hotel, the total demand by market segment is quantified. The demand generated by each market segment is then projected by year up through a point of hypothetical market stabilization. Latent demand, if applicable, is estimated and added to the base demand forecast, resulting in a forecast of overall occupancy for the competitive market. 6. Based on the physical, economic, financial, and legal factors influencing each property, a conclusion regarding the property’s highest and best use, as currently improved, was developed. The highest and best use of the subject land, as if vacant, was also evaluated based on current real estate trends and market conditions. The highest and best use analyses are detailed in individual reports. 7. Occupancy of each property was projected based on a forecast of overall market penetration, or penetration by market segment. Average rate was projected based on competitive positioning, through the application of an overall ADR penetration rate, or penetration by each market segment’s average rate. 8. Historical income and expense statements for each hotel have been reviewed, analyzed, and compared to the financial performance of comparable hotels. Inflation forecasts were researched, forming the basis for our own forecast of inflation. A projection of income and expense was prepared in accordance with the USALI, setting forth the anticipated

November-2016 Nature of the Assignment Florida Portfolio of Six Hotels 13

economic benefits of the subject property. All projections are expressed in inflated dollars. Each line item has been reviewed individually. Amounts are forecast based on past performance, expected changes at the property in the future, and comparable hotel performance levels. Property taxes are forecast based on a review of past assessment levels, comparable hotel assessments, and historical tax rates. 9. Our forecast of net income for each property is capitalized into an opinion of value via a ten-year mortgage-equity technique, as well as a discounted- cash-flow analysis. Pertinent direct capitalization rates are also reviewed. Recent trends in interest rates, amortization, loan-to-value ratios, and equity return rates, as well as terminal capitalization rates, are researched and applied during this process. 10. As applicable, sales of comparable hotels have been researched for the local market, by brand nationally, and for the greater region as a whole. Among these sales, a smaller set of sales was selected for more detailed review and analysis. An adjustment grid was developed to assist in deriving our opinion of value via the sales comparison approach. 11. The cost approach was deemed inapplicable in the valuation of the portfolio because it is not relied upon by hotel investors in the valuation process and requires unsubstantiated calculations to derive an estimate of asset depreciation. An opinion of personal property value is presented, as well as an estimate of replacement cost for insurance purposes, if applicable. 12. The appraisal considers the following three approaches to value: cost, sales comparison, and income capitalization. We have investigated numerous improved sales in the market area and have spoken with buyers, sellers, brokers, property developers, and public officials. Because lodging facilities are income-producing properties that are normally bought and sold on the basis of capitalization of their anticipated stabilized earning power, the greatest weight is given to the value indicated by the income capitalization approach. We find that most hotel investors employ a similar procedure in formulating their purchase decisions, and thus the income capitalization approach most closely reflects the rationale of typical buyers.

November-2016 Nature of the Assignment Florida Portfolio of Six Hotels 14

3. Real Estate Overview - Courtyard by Marriott Tampa North

LAND The subject property is located along the Interstate 75 corridor in northeast Tampa, in the northwestern quadrant of the intersection formed by Hidden River Parkway/Morris Bridge Road and East Fletcher Avenue. The street address of the Courtyard by Marriott Tampa North is 13575 Cypress Glen Lane, Tampa, Florida, 33637.

Physical Characteristics The hotel site measures approximately 1.56 acres, or 67,954 square feet. The parcel's adjacent uses are set forth in the following table.

FIGURE 3-1 PARCEL’S ADJACENT USES

Direction Adjacent Use

North Parking Lot, Vacant Land South East Fletcher Avenue East Parking Lot West Wendy's

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 15

PLAT MAP

Topography and The topography of the site is generally flat and the shape permits efficient use of Site Utility the site for building and site improvements, including ingress and egress. The subject site does not contain any significant portion of undeveloped land that could be sold, entitled, and developed for alternate use. The site is fully developed with building and site improvements.

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 16

AERIAL PHOTOGRAPH

VIEW FROM SITE TO THE NORTH VIEW FROM SITE TO THE SOUTH

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 17

VIEW FROM SITE TO THE WEST VIEW FROM SITE TO THE EAST

Access and Visibility Regional access to/from the city of Tampa and the subject property, in particular, is considered excellent. The hotel's market is served by a variety of additional local routes, which are illustrated on the map.

Primary vehicular access to the subject property is provided by Hidden River Parkway, by way of an access easement to the east of the subject property. Access is also available via an access easement to the northwest of the property. The subject property is located at a busy intersection and is relatively simple to locate from Interstate 75, which is the nearest major highway. Overall, the subject property benefits from good accessibility and very good visibility attributes.

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 18

MAP OF REGIONAL ACCESS ROUTES

Airport Access The subject property is served by the Tampa International Airport, which is located approximately ten miles to the southwest of the subject site.

Neighborhood The subject property's neighborhood is generally defined as the Interstate 75 corridor between Bruce B. Downs Boulevard to the north and Harney Road to the south. The neighborhood is characterized by restaurants, commercial office parks, and retail shopping centers along the primary thoroughfares, with residential areas located along the secondary roadways. Some specific entities in the area include the University of South Florida, the University of Phoenix, and Hidden River Corporate Park, which features the new Johnson & Johnson global services headquarters; nearby hotels include the Hilton Garden Inn, Fairfield Inn & Suites, and Hampton Inn. Restaurants located near the subject property include Bob Evans, Wendy's, and Starbucks. In general, this neighborhood is in the stable stage of its life cycle.

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 19

MAP OF NEIGHBORHOOD

Utilities According to property ownership, the subject site is served by all necessary utilities.

Soil and Geological and soil reports were not provided to us or made available for our Subsoil Conditions review during the preparation of this report. We are not qualified to evaluate soil conditions other than by a visual inspection of the surface; no extraordinary conditions were apparent.

Nuisances We were not informed of any site-specific nuisances or hazards, and there were no and Hazards visible signs of toxic ground contaminants at the time of our inspection. Because we are not experts in this field, we do not warrant the absence of hazardous waste and urge the reader to obtain an independent analysis of these factors.

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 20

Flood Zone According to the Federal Emergency Management Agency map illustrated below, the subject site is located in flood zone X.

COPY OF FLOOD MAP AND COVER

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 21

The flood zone definition for the X designation is as follows: areas outside the 500- year flood plain; areas of the 500-year flood; areas of the 100-year flood with average depths of less than one foot or with drainage areas less than one square mile and areas protected by levees from the 100-year flood.

Zoning According to the local planning office, the subject property is zoned as follows: PD - Planned Development. This zoning designation allows for most commercial uses, including restaurants, office space, and hotels and motels. We assume that all necessary permits and approvals have been secured (including the appropriate liquor license if applicable) and that the subject property was constructed in accordance with local zoning ordinances, building codes, and all other applicable regulations. Our zoning analysis should be verified before any physical changes are made to the hotel.

Easements and We are not aware of any easements or encroachments encumbering the property Encroachments that would significantly affect its utility or marketability. The subject site benefits from an access easement to the northwest of the hotel structure, as well as a parking easement to the east of the hotel site.

IMPROVEMENTS The Courtyard by Marriott Tampa North is an select-service lodging facility Property Overview containing 86 rentable units. The descriptions and pictures presented in this section reflect the hotel as observed at the time of our inspection on September 16, 2016. The hotel was designed and developed as a Courtyard by Marriott in 1995; the configuration and array of facilities and amenities are consistent with Marriott’s standards for the Courtyard by Marriott brand as of that date. The property has undergone some renovations since its opening and is in overall very good condition. In February 2016, Marriott prepared a property improvement plan (PIP) outlining the renovations required for the hotel to meet current brand standards. A new owner would be required to complete these renovations in connection with a new franchise agreement. The necessary upgrades are noted in the following section; furthermore, the cost of these renovations forms the basis for the capital deduction that is incorporated in our opinion of the “as is” value of the hotel.

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 22

HOTEL – FRONT OF HOTEL HOTEL – BACK OF HOTEL

Summary of the Based on information provided by the hotel’s management representatives, the Facilities following table summarizes the facilities available at the hotel.

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FIGURE 3-2 FACILITIES SUMMARY

Guestroom Configuration Number of Units King 39 Double/Double 39 King Suite 3 Total 81

Food & Beverage Facilities Seating Capacity

The Bistro 30

Meeting & Banquet Facilities Square Footage Cypress Room 326

Amenities & Services Outdoor Swimming Pool Market Pantry Fitness Center Guest Laundry Area Business Center

Infrastructure

Parking Spaces 89 (includes 54 parking spaces granted by easement) Elevators 2 Guest Life-Safety Systems Sprinklers, Smoke Detectors Construction Details Wood Framing, Poured Concrete, EIFS Coating

Site Improvements and The hotel comprises one four-story building that is positioned in the center of the Hotel Structure site. Surface parking is located to the south of the building; additional parking, by way of an easement, is located to the east of the hotel site. Other site improvements include signage, located at the entrance to the hotel property, and well-kept landscaping and sidewalks; an outdoor pool area is situated to the north of the hotel structure. The hotel's main entrance, located on the south side of the building, leads directly into the lobby. The first floor houses the public areas and the back-of-the-house space, while the guestrooms are located on all levels. The site and the structure appeared to be in good condition upon inspection. The landscaping was updated in 2013 and the pool pump was replaced in 2014. In 2015, the irrigation system was rebuilt, and in 2016, the pool heater was replaced. In conjunction with the PIP issued in February 2016, the porte-cochere will receive new lighting, the landscaping will be updated, and the parking lot will be resealed and re-striped.

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SITE PLAN

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 25

LOBBY SEATING AREA FRONT DESK

THE BISTRO MEETING ROOM

November-2016 Real Estate Overview - Courtyard by Marriott Tampa North Florida Portfolio of Six Hotels 26

FITNESS ROOM POOL

MARKET PANTRY BUSINESS CENTER

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TYPICAL GUESTROOM – SLEEPING AREA TYPICAL GUESTROOM – LIVING AREA

TYPICAL GUESTROOM BATHROOM – SINK TYPICAL GUESTROOM BATHROOM – BATH

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TYPICAL GUESTROOM – CORRIDOR ADDITIONAL LOBBY SEATING

Hotel facilities and amenities include The Bistro restaurant (serving breakfast, cocktails, and dinner), one meeting room, an outdoor pool, a fitness center, a business center, a market pantry, and a guest laundry room. These spaces are functional, appearing to be well kept upon inspection. In 2014, The Bistro received new furniture and updated point-of-sale technology, while the lobby flooring was re-grouted and the lobby air-conditioning unit was replaced. In January 2015, the business center was renovated and received new equipment. The hotel features standard and suite-style guestrooms, which offer typical amenities for this hotel's asset class. In 2014 and 2015, guestrooms received new flat-panel televisions, as well as updated PTAC units. Overall, the public areas and guestrooms were in very good condition upon inspection. In accordance with the PIP issued in February 2016, the FF&E in the public spaces will be updated, the meeting room is scheduled to receive new granite countertops and millwork, the fitness center will be expanded, the guest laundry room will receive new millwork, and the pool area will receive new signage. Additionally, the guestrooms are expected to receive new softgoods and the guestroom bathrooms are scheduled to receive new chrome fixtures.

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the-house water softener system was replaced and one of the dryers was repaired. In 2014, one washer was repaired, one dryer was replaced, and two boilers were replaced. In 2015, the air-conditioning systems were repaired. In 2016, an air compressor was repaired and one boiler was replaced. The hotel's back-of-the- house equipment and appliances were reported to be operational at the time of inspection, appearing to be in good condition.

LAUNDRY KITCHEN/FOOD PREP AREA

ADA and According to information provided by management representatives, there are no Environmental environmental hazards present in the subject property's improvements, nor did we observe any. The property reportedly complies with the Americans with Disabilities Act; furthermore, the ADA-mandated pool lift was added in 2012.

Functional Due to the age of the subject property, which was constructed roughly 21 years Obsolescence ago, some functional obsolescence is to be expected. However, upon our inspection, we found no major components or aspects of the property's design that significantly limit its profitability.

Effective Age and Our opinion of effective age and remaining economic life for the building is Remaining Economic presented as follows. Life

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FIGURE 3-3 EFFECTIVE AGE AND REMAINING ECONOMIC LIFE

Typical Economic Life 50 Years Chronological Age 21 Effective Age 15 Remaining Economic Life 35

Hotels are typically renewed on a regular basis. With good ongoing maintenance and regular upgrading, the remaining economic life can be periodically extended.

Capital Expenditures The subject hotel underwent various renovations and received a number of repairs and updates from 2013 through year-to-date 2016, as summarized in the following table.

FIGURE 3-4 CAPITAL EXPENDITURES

2013 2014 2015 2016 YTD Item Amount Amount Amount Amount

Guest Areas LCD TVs $2,100 PTAC units 3,400 List here Total $5,500 Per Room $68

Public Areas Bistro FF&E 2,294 Lobby 1,250 Business Center 2,725 Total $3,544 $2,725 Per Room $44 $34 Structure and Site Landscaping 7,000 Total $7,000 Per Room $86

Technological Systems 2,649 11,627 14,183 Water Softener 5,000 Laundry Equipment 1,566 7,084 Air Handling & Air Conditioning 3,605 7,426 18,463 6,622 Pool Pump / Heater 1,228 3,439 Boilers 20,816 11,300 Irrigation System 1,858

Totals: $19,820 $51,725 $42,729 $21,361 Per Room: $245 $639 $528 $264 Source: Ownership

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4. Real Estate Overview - Fairfield Inn & Suites Marriott Orlando Ocoee

LAND The subject property is located in Ocoee, a suburb of Orlando, in the northeastern quadrant of the intersection formed by Maguire Road and West Colonial Drive/State Highway 50. The street address of the Fairfield Inn & Suites Marriott Orlando Ocoee is 10971 West Colonial Drive, Ocoee, Florida, 34761.

Physical Characteristics The hotel site measures approximately 2.39 acres, or 103,969 square feet. The parcel's adjacent uses are set forth in the following table.

FIGURE 4-1 PARCEL’S ADJACENT USES

Direction Adjacent Use

North Vacant Land South Vacant Land (Planned Retail Development) East Parking Lot West Retail

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PLAT MAP

Topography and The topography of the site is generally flat, and the shape permits efficient use of Site Utility the site for building and site improvements, including ingress and egress. The subject site does not contain any significant portion of undeveloped land that could be sold, entitled, and developed for alternate use. The site is fully developed with building and site improvements.

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AERIAL PHOTOGRAPH

VIEW FROM SITE TO THE NORTH VIEW FROM SITE TO THE SOUTH

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VIEW FROM SITE TO THE WEST VIEW FROM SITE TO THE EAST

Access and Visibility Regional access to/from the city of Ocoee and the subject property, in particular, is considered very good. The hotel's market is served by a variety of additional local routes, which are illustrated on the map.

Vehicular access to the subject property is provided by Maguire Road. The subject property is located near a busy intersection and is relatively simple to locate from Florida's Turnpike, which is the nearest major highway. Overall, the subject property benefits from very good accessibility and visibility attributes.

November-2016 Real Estate Overview - Fairfield Inn & Suites Marriott Orlando Ocoee Florida Portfolio of Six Hotels 35

MAP OF REGIONAL ACCESS ROUTES

Airport Access The subject property is served by the Orlando International Airport, which is located approximately 15 miles to the southeast of the subject site.

Neighborhood The subject property's neighborhood is generally defined by Maine Street to the north, South Clarke Road to the east, Florida's Turnpike (Toll Road) and State Highway 408 to the south, and State Highway 429 to the west. The neighborhood is characterized by restaurants, a hospital, vacant land, and retail shopping centers along the primary thoroughfares, with residential areas located along the secondary roadways. Some specific businesses and entities in the area include Manheim Orlando and Health Central Hospital; the only nearby hotel is the Red Roof Inn. Restaurants located near the subject property include McDonald's, Mi Querida Colombia Restaurant and Bakery, and RusTeak Restaurant & Wine Bar. In general, this neighborhood is in the growth stage of its life cycle. Notable changes in this neighborhood include an ongoing expansion to the Health Central Hospital and the demolition of the 110-room Sabal Hotel and Perkins Restaurant & Bakery in the spring of 2016, immediately south of the subject site. In September 2016, the site was being cleared for new development, which will reportedly be a

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12,000-square-foot retail development planned to include dining establishments and retail outlets. In addition, a large mixed-use development, City Center West Orange, is planned for the area southwest of Maguire Road and West Colonial Boulevard. Initial plans call for a 122-room Hilton Garden Inn, 172,000-square-feet of retail space, and over 270 condominium units. In September 2016, the project received approval and an incentive package from the local government; construction is anticipated to commence in the next year.

MAP OF NEIGHBORHOOD

Utilities According to property ownership, the subject site is served by all necessary utilities.

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Flood Zone According to the Federal Emergency Management Agency map illustrated below, the subject site is located in flood zone Zone X.

COPY OF FLOOD MAP AND COVER

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The flood zone definition for the Zone X designation is as follows: areas outside the 500-year flood plain; areas of the 500-year flood; areas of the 100-year flood with average depths of less than one foot or with drainage areas less than one square mile and areas protected by levees from the 100-year flood.

Zoning According to the local planning office, the subject property is zoned as follows: C-3 - Wholesale Commercial District. This zoning designation allows for most commercial uses, including retail and service establishments, office buildings, and hotels and motels. We assume that all necessary permits and approvals have been secured (including the appropriate liquor license if applicable) and that the subject property was constructed in accordance with local zoning ordinances, building codes, and all other applicable regulations. Our zoning analysis should be verified before any physical changes are made to the hotel.

Easements and The subject site features a reciprocal cross-access easement agreement along the Encroachments southern border of the site with the adjacent site to the south of the subject property; however, this easement does not significantly affect the site's utility or marketability.

IMPROVEMENTS The Fairfield Inn & Suites Marriott Orlando Ocoee is an limited-service lodging Property Overview facility containing 86 rentable units. The descriptions and pictures presented in this section reflect the hotel as observed at the time of our inspection on September 19, 2016. The subject hotel opened in 2004 and was originally designed and developed as a Courtyard by Marriott. In 2013, the hotel underwent significant renovations and was converted to a Fairfield Inn & Suites by Marriott. The hotel reflects the current standards for the Fairfield Inn & Suites by Marriott brand. Based on our inspection of the property and understanding of current brand standards, we are of the opinion that a new owner would need to complete only minor upgrades and would anticipate funding these from the forecasted reserve for replacement.

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HOTEL – FRONT OF HOTEL HOTEL – BACK OF HOTEL

Summary of the Based on information provided by the hotel’s management representatives, the Facilities following table summarizes the facilities available at the hotel.

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FIGURE 4-2 FACILITIES SUMMARY

Guestroom Configuration Number of Units King 41 Queen/Queen 32 Executive King 4 One-Bedroom Suite 3 Total 80

Food & Beverage Facilities Seating Capacity

Breakfast Dining Area 54

Meeting & Banquet Facilities Square Footage Meeting Room 600

Amenities & Services Outdoor Swimming Pool Market Pantry Outdoor Whirlpool Guest Laundry Area Fitness Room Lobby Workstation Outdoor Patio

Infrastructure

Parking Spaces 97 Elevators 2 Guest Life-Safety Systems Sprinklers, Smoke Detectors Construction Details Wood Framing, Poured Concrete

Site Improvements and The hotel comprises one three-story building that is positioned in the center of the Hotel Structure site. Surface parking is located around the building. Other site improvements include well-kept landscaping and sidewalks; an outdoor pool and whirlpool area and an outdoor patio area are situated to the north of the hotel structure. Monument signage is located off-property in the northeastern corner of the intersection formed by Maguire Road and West Colonial Drive/State Highway 50. The hotel's main entrance, located on the south side of the building, leads directly into the lobby. The first floor houses the public areas and the back-of-the-house space, while the guestrooms are located on the on all levels of the building. The site and the structure appeared to be in good condition upon inspection.

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PROPERTY LAYOUT

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LOBBY SEATING AREA FRONT DESK

DINING MEETING ROOM

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FITNESS ROOM POOL

MARKET PANTRY BUSINESS CENTER

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TYPICAL GUESTROOM – SLEEPING AREA TYPICAL GUESTROOM – LIVING AREA

TYPICAL GUESTROOM BATHROOM – SINK TYPICAL GUESTROOM BATHROOM – BATH

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TYPICAL GUESTROOM – CORRIDOR

Hotel facilities and amenities include a breakfast dining area, an outdoor pool and whirlpool, a fitness room, a two-computer lobby workstation, a market pantry, and a guest laundry room. These spaces are functional, appearing to be well kept upon inspection. All of these areas were completely renovated in 2013 as a part of the conversion of the hotel from a Courtyard by Marriott to a Fairfield Inn & Suites by Marriott. The hotel features standard and suite-style guestrooms, which offer typical amenities for this hotel's asset class. In 2013, the guestrooms received new wallcovering, carpeting, lighting fixtures, mirrors, and flat-panel televisions. The guestroom bathrooms received new wallcovering, mirrors, and lighting fixtures in 2013 as well. The corridors received new carpet, wallcovering, and lighting fixtures in 2013. Overall, the public areas and guestrooms were in very good condition upon inspection.

Back-of-the-House The subject property is served by the necessary back-of-the-house space, including an in-house laundry facility, administrative offices, and a prep kitchen. The kitchen is located adjacent to the breakfast dining area. The kitchen facilities are appropriate for the scope of service provided, appearing to be in good condition; no significant or persistent problems were reported by hotel management. The kitchen equipment is original to the opening of the hotel as a Courtyard by Marriott and features a grill, fryer, and oven. The in-house laundry facility contains two large-capacity washers and three dryers. The hotel's back-of-the-house equipment and appliances were reported to be operational at the time of inspection, appearing to be in good condition.

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LAUNDRY KITCHEN/FOOD PREP AREA

Functional Due to the age of the subject property, which was constructed roughly twelve Obsolescence years ago, some functional obsolescence is to be expected. However, upon our inspection, we found no major components or aspects of the property's design that significantly limit its profitability.

Effective Age and Our opinion of effective age and remaining economic life for the building is Remaining Economic presented as follows. Life FIGURE 4-3 EFFECTIVE AGE AND REMAINING ECONOMIC LIFE

Typical Economic Life 45 Years Chronological Age 21 Effective Age 10 Remaining Economic Life 35

Hotels are typically renewed on a regular basis. With good ongoing maintenance and regular upgrading, the remaining economic life can be periodically extended.

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Capital Expenditures Major expenditures in 2013 and early 2014 included a reported $742,000 to convert the hotel from a Courtyard by Marriott to a Fairfield Inn & Suites by Marriott. Reportedly, no major capital was spent in 2015. Major capital expenditures thus far in 2016 have included a new surveillance system and boiler.

The following table provides a summary of capital expenditure data pertinent to the subject property.

FIGURE 4-4 CAPITAL EXPENDITURES

2013 2014 2015 2016 YTD Item Amount Amount Amount Amount

Courtyard by Marriott conversion to Fairfield Inn & Suites by Marriott 742,000

Surveillance System 5,000 Boiler 8,397

Totals: $742,000 $0 $0 $13,397 Per Room: $9,275 $0 $0 $167

Source: Ownership

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5. Real Estate Overview - Holiday Inn Express Fort Myers East The Forum

LAND The subject property is located on the east side of Fort Myers, in the northeastern quadrant of the intersection formed by Colonial Boulevard and Forum Boulevard/Colonial Court. The street address of the Holiday Inn Express Fort Myers East The Forum is 3427 Forum Boulevard, Fort Myers, Florida, 33905.

Physical Characteristics The hotel site measures approximately 2.78 acres, or 121,096 square feet. The parcel's adjacent uses are set forth in the following table.

FIGURE 5-1 PARCEL’S ADJACENT USES

Direction Adjacent Use

North Vacant Land (Under Development) Southeast Vacant Land West Forum Boulevard

PLAT MAP

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Topography and The topography of the site is generally flat, but the irregular configuration of the Site Utility site somewhat limits its overall utility. The subject site does not contain any significant portion of undeveloped land that could be sold, entitled, and developed for alternate use. The site is fully developed with building and site improvements.

AERIAL PHOTOGRAPH

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VIEW FROM SITE TO THE NORTH VIEW FROM SITE TO THE SOUTH

VIEW FROM SITE TO THE WEST VIEW FROM SITE TO THE EAST

Access and Visibility Regional access to/from the city of Fort Myers and the subject property, in particular, is considered very good. The hotel's market is served by a variety of additional local routes, which are illustrated on the map.

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Vehicular access to the subject property is provided by a driveway that stems east from Forum Boulevard. The subject property is located at a busy intersection and is relatively simple to locate from Interstate 75, which is the nearest major highway. Overall, the subject property benefits from very good accessibility and visibility attributes.

MAP OF REGIONAL ACCESS ROUTES

Airport Access The subject property is served by the Southwest Florida International Airport, which is located approximately five miles to the south of the subject site.

Neighborhood The subject property's neighborhood is generally defined by Dr. Martin Luther King Jr. Boulevard to the north, Antica Street and Via San Marco Loop to the east, Colonial Boulevard to the south, and Interstate 75 to the west. The neighborhood is characterized by retail shopping centers and large apartment complexes along the primary thoroughfares, with additional residential areas located along the secondary roadways. Some specific entities in the area include Keiser University and Promise Hospital of Fort Myers; the only hotel located in the immediate neighborhood is the Hyatt Place Fort Myers at the Forum. Restaurants located near the subject property include Firehouse Subs, Bajio Mexican Grill, Bella Mozzarella,

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and Buffalo Wild Wings. In general, this neighborhood is in the growth stage of its life cycle. As of September 2016, the land to the north of the subject site and south of Dynasty Drive was under development; reportedly, this land will be developed with a Moe’s Southwest Grill, a McAlister's Deli, and a Sherwin Williams. Additionally, in 2016, Discovery Senior Living started an expansion of the Discovery Village at The Forum, which is located along Forum Boulevard on the northern side of the neighborhood. The expansion is planned to total 204,000 square feet of new living space, which will include 176 independent-living apartments and 24 condominiums; the $50-million development is anticipated to be completed mid-year 2017.

MAP OF NEIGHBORHOOD

Utilities According to property ownership, the subject site is served by all necessary utilities.

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Flood Zone According to the Federal Emergency Management Agency map illustrated below, the subject site is located in flood zone Zone X.

COPY OF FLOOD MAP AND COVER

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Zoning According to the local planning office, the subject property is zoned as follows: SDA - Special Development Area. This zoning designation allows for a mixture of commercial uses, including banks, retail and service establishments, and hotels and motels. The overall purpose of this special designation is to improve and protect the public health, safety, and welfare. We assume that all necessary permits and approvals have been secured (including the appropriate liquor license if applicable) and that the subject property was constructed in accordance with local zoning ordinances, building codes, and all other applicable regulations. Our zoning analysis should be verified before any physical changes are made to the hotel.

Easements and We are not aware of any easements or encroachments encumbering the property Encroachments that would significantly affect its utility or marketability.

IMPROVEMENTS The Holiday Inn Express Fort Myers East The Forum is an limited-service lodging Property Overview facility containing 86 rentable units. The descriptions and pictures presented in this section reflect the hotel as observed at the time of our inspection on September 21, 2016. The hotel was designed and developed as a Holiday Inn Express Hotel & Suites in 2009; the configuration and array of facilities and amenities are consistent with InterContinental Hotels Group’s (IHG) standards for the Holiday Inn Express Hotel & Suites brand as of that date. The property has received some updates since its opening and is in overall very good condition. In August 2016, IHG prepared a property improvement plan (PIP) outlining the renovations required for the hotel to meet current brand standards. A new owner would be required to complete these renovations in connection with a new franchise agreement. The cost of these renovations forms the basis for the capital deduction that is incorporated in our opinion of the “as is” value of the hotel.

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HOTEL – FRONT OF HOTEL HOTEL – BACK OF HOTEL

Summary of the Based on information provided by the hotel’s management representatives, the Facilities following table summarizes the facilities available at the hotel.

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FIGURE 5--2 FACILITIES SUMMARY

Guestroom Configuration Number of Units King 33 Queen/Queen 49 One-Bedroom Suite 17 Whirlpool Suite 5 Accessible Suite 7 Total 111

Food & Beverage Facilities Seating Capacity

Breakfast Dining Area 25

Meeting & Banquet Facilities Square Footage Forum Meeting Room 225 Boardroom 100

Total 325

Amenities & Services Outdoor Swimming Pool Market Pantry Fitness Room Guest Laundry Area Business Center Vending Area(s)

Infrastructure

Parking Spaces 136 Elevators 2 Guest Life-Safety Systems Sprinklers, Smoke Detectors Construction Details Steel, Reinforced Concrete

Site Improvements and The hotel comprises one six-story building that is positioned in the center of the Hotel Structure site. Surface parking is located to the west, east, and south of the hotel building. Other site improvements include well-kept landscaping and sidewalks; an outdoor pool area is situated to the west of the hotel structure. The hotel's main entrance, located on the eastern side of the building, leads directly into the lobby. The first floor houses the public areas and the back-of-the-house space, while the guestrooms are located on all levels of the building. The site and the structure appeared to be in very good condition upon inspection. In 2014, the parking lot was resealed and new exterior lighting was installed.

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PROPERTY LAYOUT

LOBBY SEATING AREA FRONT DESK

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DINING MEETING ROOM

FITNESS ROOM POOL

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MARKET PANTRY BUSINESS CENTER

TYPICAL GUESTROOM – SLEEPING AREA TYPICAL GUESTROOM – LIVING AREA

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TYPICAL GUESTROOM BATHROOM – SINK TYPICAL GUESTROOM BATHROOM – BATH

TYPICAL GUESTROOM – CORRIDOR

Hotel facilities and amenities include a breakfast dining area, a fitness room, a business center, a market pantry, a guest laundry room, and vending areas. These spaces are functional, appearing to be well kept upon inspection. No major renovations in recent years were noted by management. The hotel features

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standard and suite-style guestrooms, which offer typical amenities for this hotel's asset class. No significant renovations or updates to the guestrooms, guestroom bathrooms, or guestroom hallways were noted by management. Overall, the public areas and guestrooms were in very good condition upon inspection.

Back-of-the-House The subject property is served by the necessary back-of-the-house space, including an in-house laundry facility, administrative offices, and a prep kitchen. The prep kitchen is located adjacent to the breakfast dining area. The limited kitchen facilities are appropriate for the scope of service provided, appearing to be in good condition; no significant or persistent problems were reported by hotel management. New equipment was purchased in 2014 and 2015, including a convection oven and a refrigerator, respectively. The in-house laundry facility contains two large-capacity washers and three dryers. The hotel's back-of-the- house equipment and appliances were reported to be operational at the time of inspection, appearing to be in good condition.

LAUNDRY KITCHEN/FOOD PREP AREA

Functional The subject hotel, which opened in 2009, features a modern layout and design that Obsolescence largely precludes any functional obsolescence. Upon our inspection, we found no

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major components or aspects of the property's design that significantly limit its profitability.

Effective Age and Our opinion of effective age and remaining economic life for the building is Remaining Economic presented as follows. Life FIGURE 5-3 EFFECTIVE AGE AND REMAINING ECONOMIC LIFE

Typical Economic Life 50 Years Chronological Age 18 Effective Age 7 Remaining Economic Life 43

Hotels are typically renewed on a regular basis. With good ongoing maintenance and regular upgrading, the remaining economic life can be periodically extended.

Capital Expenditures The subject hotel received a number of repairs and updates from 2011 through the year-to-date 2016 period, as summarized in the following table.

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FIGURE 5-4 CAPITAL EXPENDITURES

2011 & 2012 2013 2014 2015 2016 YTD Item Amount Amount Amount Amount Amount

Guest Areas Guestrooms $18,818 $37,308 $9,512 $4,571 $1,975 Total $18,818 $37,308 $9,512 $4,571 $1,975 Per Room $170 $336 $86 $41 $18

Public Areas Guest Laundry 1,090 0 0 0 0 Pool 3,500 3,500 0 2,260 0 Ice Machine and Vending 0 0 0 2,915 0 Total $4,590 $3,500 $0 $5,175 $0 Per Room $41 $32 $0 $47 $0

Back-of-House Technology 0 15,035 1,900 3,215 0 Kitchen 0 0 1,992 1,324 0 Total $0 $15,035 $3,892 $4,539 $0 Per Room $0 $135 $35 $41 $0

Structure and Site Parking Lot 0 0 6,281 0 0 Fire and Safety 0 0 5,829 6,300 4,370 Lighting 0 0 1,700 0 0 Total $0 $0 $13,810 $6,300 $4,370 Per Room $0 $0 $124 $57 $39

Repipe Mechanical Room 11,351 0 0 0 0 CC Tokenization 4,000 0 0 0 0 Repaint Interior of Building 11,500 0 0 0 0 Hot Water Circulation Pump 2,200 0 1,575 4,994 0

Totals: $52,459 $55,843 $28,789 $25,579 $6,345 Per Room: $473 $503 $259 $230 $57 Source: Ownership

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6. Real Estate Overview - Holiday Inn Express Sarasota East I 75

LAND The subject property is located in southeastern Sarasota, in the northwest quadrant of the intersection formed by Interstate 75 and Clark Road/State Highway 72. The street address of the Holiday Inn Express Sarasota East I 75 is 5730 Gantt Road, Sarasota, Florida, 34233.

Physical Characteristics The hotel site measures approximately 4.70 acres, or 204,650 square feet. The parcel's adjacent uses are set forth in the following table.

FIGURE 6-1 PARCEL’S ADJACENT USES

Direction Adjacent Use

North Parking Lot, Vacant Land South East Fletcher Avenue East Parking Lot West Wendy's

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PLAT MAP

November-2016 Real Estate Overview - Holiday Inn Express Sarasota East I 75 Florida Portfolio of Six Hotels 66

AERIAL PHOTOGRAPH

VIEW FROM SITE TO THE NORTH VIEW FROM SITE TO THE SOUTH

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VIEW FROM SITE TO THE WEST VIEW FROM SITE TO THE EAST

Access and Visibility Regional access to/from the city of Sarasota and the subject property, in particular, is considered very good. The hotel's market is served by a variety of additional local routes, which are illustrated on the map.

Vehicular access to the subject property is provided by Soldier Court. The subject property is located near a busy intersection and is relatively simple to locate from Interstate 75, which is the nearest major highway. Overall, the subject property benefits from very good accessibility and visibility attributes.

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MAP OF REGIONAL ACCESS ROUTES

Airport Access The subject property is served by the Sarasota Bradenton International Airport, which is located approximately ten miles to the northwest of the subject site. The subject property is also served by Tampa International Airport, located approximately 50 miles north of the subject site.

Neighborhood The subject property's neighborhood is generally defined by Proctor Road to the north, Interstate 75 to the east, Sawyer Loop Road and Jem Lane to the south, and Sawyer Road to the west. The neighborhood is characterized by restaurants, car dealerships, and retail shopping centers along the primary thoroughfares, with residential areas located along the secondary roadways. Some specific entities in the area include Sarasota Memorial Rehab Services and All Children's Specialty Care; nearby hotels include Comfort Suites, Days Inn, and Quality Inn. Restaurants located near the subject property include Waffle House, Wendy's, Dunkin' Donuts, Gecko's Grill & Pub, and Applebee's. In general, this neighborhood is in the growth stage of its life cycle. Several new developments have recently been completed or are currently underway along Clark Road. A new Public Storage facility opened in 2015 at the southeast corner of the Deacon Place and Clark Road intersection. In

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2016, a new Audi car dealership opened in the southwestern corner of the intersection formed by Clark Road and Rosin Way.

MAP OF NEIGHBORHOOD

Utilities According to property ownership, the subject site is served by all necessary utilities.

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Flood Zone According to the Federal Emergency Management Agency map illustrated below, the subject site is located in flood zone Zone X.

COPY OF FLOOD MAP AND COVER

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Zoning According to the local planning office, the subject property is zoned as follows: CHI - Commercial , Highway Interchange. This zoning designation is intended to create and enhance interstate interchange areas where automobile-associated traveler services are desired; this zoning designation allows for various commercial uses, including drive-through dining establishments, parking areas, car washes, and convenience stores. Additional uses, including hotels and motels, are permitted with limitations. We assume that all necessary permits and approvals have been secured (including the appropriate liquor license if applicable) and that the subject property was constructed in accordance with local zoning ordinances, building codes, and all other applicable regulations. Our zoning analysis should be verified before any physical changes are made to the hotel.

Easements and We are not aware of any easements or encroachments encumbering the property Encroachments that would significantly affect its utility or marketability.

IMPROVEMENTS The Holiday Inn Express Sarasota East I 75 is an limited-service lodging facility Property Overview containing 86 rentable units. The descriptions and pictures presented in this section reflect the hotel as observed at the time of our inspection on September 20, 2016. The subject hotel was designed and developed as a Country Inn & Suites in 2003. In 2012, the hotel was converted to a Holiday Inn Express Hotel & Suites following an extensive renovation. The exterior of the building still retains some of the design of the original Country Inn & Suites product; however, the configuration and array of facilities and amenities are consistent with InterContinental Hotels Group's standards for the Holiday Inn Express Hotel & Suites brand as of the conversion date. The property was last significantly renovated in 2012. In August 2016, InterContinental Hotels Group prepared a property improvement plan (PIP) outlining the renovations required for the hotel to meet current brand standards. A new owner would be required to complete these renovations in connection with a new franchise agreement. The necessary upgrades are noted in the following section; furthermore, the cost of these renovations forms the basis for the capital deduction that is incorporated in our opinion of the “as is” value of the hotel.

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HOTEL – FRONT OF HOTEL HOTEL – BACK OF HOTEL

Summary of the Based on information provided by the hotel’s management representatives, the Facilities following table summarizes the facilities available at the hotel.

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FIGURE 6-2 FACILITIES SUMMARY

Guestroom Configuration Number of Units King 10 Queen/Queen 54 Studio Suite 29 Whirlpool Suite 1 One-Bedroom Suite 7 Total 101

Food & Beverage Facilities Seating Capacity

Breakfast Dining Area 35

Meeting & Banquet Facilities Square Footage Charter Meeting Room 1,000 Palmer Meeting Room 100

Total 1,100

Amenities & Services Outdoor Swimming Pool Market Pantry Outdoor Whirlpool Guest Laundry Room Fitness Room Vending Area(s) Lobby Workstation

Infrastructure

Parking Spaces 108 Elevators 2 Guest Life-Safety Systems Sprinklers, Smoke Detectors Construction Details Wood Framing, Poured Concrete

Site Improvements and The hotel comprises one four-story building that is positioned in the center of the Hotel Structure site. Surface parking is located around the building. Other site improvements include signage, located at the entrance to the hotel property, and well-kept landscaping and sidewalks; an outdoor pool and whirlpool area is situated to the south of the hotel structure. The hotel's main entrance, located on the south side of the building, leads directly into the lobby. The first floor houses the public areas and the back-of-the-house space, while the guestrooms are located on all levels of the building. The site and the structure appeared to be in good condition upon inspection. Management noted that the site and structure were last updated in

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2012 when the hotel was converted from a Country Inn & Suites to a Holiday Inn Express Hotel & Suites.

PROPERTY LAYOUT

LOBBY SEATING AREA FRONT DESK

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DINING MEETING ROOM

FITNESS ROOM POOL

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MARKET PANTRY BUSINESS CENTER

TYPICAL GUESTROOM – SLEEPING AREA TYPICAL GUESTROOM – LIVING AREA

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TYPICAL GUESTROOM BATHROOM – SINK TYPICAL GUESTROOM BATHROOM – BATH

TYPICAL GUESTROOM – CORRIDOR

Hotel facilities and amenities include a breakfast dining area, a fitness room, a two- computer lobby workstation, a market pantry, a guest laundry room, and vending areas. These spaces are functional, appearing to be well kept upon inspection. The hotel's public areas and guestroom were last renovated in 2012 when the hotel

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was converted from a Country Inn & Suites into a Holiday Inn Express. The hotel features standard and suite-style guestrooms, which offer typical amenities for this hotel's asset class. In 2012, the guestrooms received new wallcovering, carpeting, lighting fixtures, mirrors, and 32-inch flat-panel televisions. The guestroom bathrooms received new wallcovering, mirrors, and lighting fixtures in 2012 as well. The corridors were completely renovated in 2012. Overall, the public areas and guestrooms were in good condition upon inspection.

Back-of-the-House The subject property is served by the necessary back-of-the-house space, including an in-house laundry facility, administrative offices, and a prep kitchen. The kitchen is located adjacent to the breakfast dining area. The kitchen facilities are appropriate for the scope of service provided, appearing to be in good condition; no significant or persistent problems were reported by hotel management. New equipment was purchased in 2013, including a new commercial refrigerator. The in-house laundry facility contains three large-capacity washers and three dryers. The hotel's back-of-the-house equipment and appliances were reported to be operational at the time of inspection, appearing to be in good condition. Management noted that two new boilers were purchased in 2016.

LAUNDRY KITCHEN/FOOD PREP AREA

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Functional Due to the age of the subject property, which was constructed roughly 13 years Obsolescence ago, some functional obsolescence is to be expected. However, upon our inspection, we found no major components or aspects of the property's design that significantly limit its profitability.

Effective Age and Our opinion of effective age and remaining economic life for the building is Remaining Economic presented as follows. Life FIGURE 6-3 EFFECTIVE AGE AND REMAINING ECONOMIC LIFE

Typical Economic Life 45 Years Chronological Age 13 Effective Age 10 Remaining Economic Life 35

Hotels are typically renewed on a regular basis. With good ongoing maintenance and regular upgrading, the remaining economic life can be periodically extended.

Capital Expenditures The subject hotel received a number of repairs and updates from 2013 through year-to-date 2016, as summarized in the following table.

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FIGURE 6-4 CAPITAL EXPENDITURES

2012 2013 2014 2015 2016 YTD Item Amount Amount Amount Amount Amount

Guest Areas Guestroom PTAC and HVAC $0 $0 $7,115 $17,640 $0 Pillows and Furniture 0 0 5,500 0 2,100 Lighting 0 0 0 1,774 0 Total $0 $0 $12,615 $19,414 $2,100 Per Room $0 $0 $125 $192 $21

Public Areas Pool and Spa 0 0 13,185 0 0 Fitness Room 0 0 0 2,000 0 Breakfast Dining Area 0 0 0 2,250 0 Total $0 $0 $13,185 $4,250 $0 Per Room $0 $0 $131 $42 $0

Back-of-House & Technology Property Management System 0 0 0 0 3,475 HVAC 0 0 0 0 7,989 Total $0 $0 $0 $0 $11,464 Per Room $0 $0 $0 $0 $114

Structure and Site New Entry Driveway 0 24,330 0 0 0 Parking Lot Updates 0 0 3,500 0 0 LED Pole Conversion 0 0 0 1,474 0 Total $0 $24,330 $3,500 $1,474 $0 Per Room $0 $241 $35 $15 $0

Boilers 0 28,483 0 0 0 Sales Pro 0 2,100 0 0 0 PIP Expense 0 10,000 0 0 0 Ice Machine 0 0 3,000 0 0 House Laudry Equipment 0 0 1,000 0 0 Prep Kitchen Refridgerator 0 0 0 1,300 0 Water Main Repair 0 0 0 2,500 0 Employee Lockers 0 0 0 653 0 Five Televisions 0 0 0 2,154 0 Hot Water Heater Booster Pump Motor 0 0 0 2,020 0 Remove Stairwell Closet 0 0 0 0 3,500

Totals: $0 $64,913 $33,300 $33,765 $17,064 Per Room: $0 $643 $330 $334 $169 Source: Ownership

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7. Real Estate Overview - Staybridge Suites Tampa East Brandon

LAND The subject property is located in eastern Tampa, in the southwest quadrant of the intersection formed by Princess Palm Avenue and North Falkenburg Road. The street address of the Staybridge Suites Tampa East Brandon is 3624 North Falkenburg Road, Tampa, Florida, 33619.

Physical Characteristics The hotel site measures approximately 5.55 acres, or 241,808 square feet. The parcel's adjacent uses are set forth in the following table.

FIGURE 7-1 PARCEL’S ADJACENT USES

Direction Adjacent Use

North Water Retention Ditch South Ford Motor Credit East North Falkenburg Road West Ford Motor Credit

PLAT MAP

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Topography and The topography of the site is generally flat, and although the shape is irregular, it Site Utility permits efficient use of the site for building and site improvements, including ingress and egress. The subject site does not contain any significant portion of undeveloped land that could be sold, entitled, and developed for alternate use. The site is fully developed with building and site improvements.

AERIAL PHOTOGRAPH

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VIEW FROM SITE TO THE NORTH VIEW FROM SITE TO THE SOUTH

VIEW FROM SITE TO THE WEST VIEW FROM SITE TO THE EAST

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Vehicular access to the subject property is provided by North Falkenburg Road. The subject property is located near a busy intersection and is relatively simple to locate from Interstate 75, which is the nearest major highway. Overall, the subject property benefits from good accessibility and visibility attributes.

MAP OF REGIONAL ACCESS ROUTES

Airport Access The subject property is served by the Tampa International Airport, which is located approximately ten miles to the west of the subject site.

Neighborhood The subject property's neighborhood is generally defined as the Interstate 75 corridor between Harney Road to the North and East Broadway Avenue to the south. The neighborhood is characterized by restaurants, office buildings, and retail shopping centers along the primary thoroughfares, with residential areas located along the secondary roadways. Some specific businesses in the area include Citigroup Technology, Ford Motor Credit, Coca-Cola, and Bisk Education; nearby hotels include Residence Inn by Marriott, Quality Inn & Suites, and Sheraton. Restaurants located near the subject property include Mary's Miracle Restaurant and Danny's All American Dinery. In general, this neighborhood is in the stable stage of its life cycle.

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MAP OF NEIGHBORHOOD

Utilities According to property ownership, the subject site is served by all necessary utilities.

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Flood Zone According to the Federal Emergency Management Agency map illustrated below, the subject site is located in flood zone X.

COPY OF FLOOD MAP AND COVER

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Zoning According to the local planning office, the subject property is zoned as follows: PD - Planned Development. This zoning designation allows for most commercial uses, including office space, restaurants, and hotels and motels. We assume that all necessary permits and approvals have been secured (including the appropriate liquor license if applicable) and that the subject property was constructed in accordance with local zoning ordinances, building codes, and all other applicable regulations. Our zoning analysis should be verified before any physical changes are made to the hotel.

Easements and We are not aware of any easements or encroachments encumbering the property Encroachments that would significantly affect its utility or marketability.

IMPROVEMENTS The Staybridge Suites Tampa East Brandon is an limited-service lodging facility Property Overview containing 86 rentable units. The descriptions and pictures presented in this section reflect the hotel as observed at the time of our inspection on September 15, 2016. The hotel was designed and developed as a Staybridge Suites in 2007; the configuration and array of facilities and amenities are consistent with IHG's standards for the Staybridge Suites brand as of that date. The property has undergone some renovations since opening and is in generally good condition. In connection with the pending transaction, IHG has developed a property improvement plan (PIP), issued August 2016, that outlines the renovations necessary for the hotel to comply with current brand standards. A new owner would be required to complete these renovations in connection with a new franchise agreement. The necessary upgrades are noted in the following section; the cost of these renovations forms the basis for the capital deduction that is incorporated in our opinion of the “as is” value of the hotel.

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HOTEL – FRONT OF HOTEL HOTEL – BACK OF HOTEL

Summary of the Based on information provided by the hotel’s management representatives, the Facilities following table summarizes the facilities available at the hotel.

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FIGURE 7-2 FACILITIES SUMMARY

Guestroom Configuration Number of Units One-Bedroom Suite 8 Studio Suite 63 Double/Double Suite 16 Accessible Suite 10 Two-Bedroom Suite 3 Total 100

Food & Beverage Facilities Seating Capacity

Breakfast Dining Area 25

Meeting & Banquet Facilities Square Footage Meeting Room (Divisible by 2) 1,400 Boardroom 150

Total 1,550

Amenities & Services Outdoor Swimming Pool Indoor Guest Storage Lockers Outdoor Whirlpool Fitness Room Outdoor Pet Walk Area Library Outdoor Patio & Barbecue Area Guest Laundry Area Outdoor Fire Pit Market Pantry Coffee Station Business Center

Infrastructure

Parking Spaces 100 Elevators 2 Guest, Service Life-Safety Systems Sprinklers, Smoke Detectors Construction Details Wood Framing, Stone Siding

Site Improvements and The hotel comprises one four-story building that is positioned on the Hotel Structure northwestern side of the site. Surface parking is located around the building. Other site improvements include signage, located at the entrance to the hotel property, and well-kept landscaping and sidewalks; an outdoor pool and whirlpool area is situated to the west of the hotel structure, while an outdoor patio and barbecue area is situated north of the hotel structure. The hotel's main entrance, located on the south side of the building, leads directly into the lobby. The first floor houses the public areas and the back-of-the-house space, while the guestrooms are

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located on all levels. The site and the structure appeared to be in good condition upon inspection. In 2015, stairwell fire doors were installed and the northern side of the parking area was repaired and repaved. In accordance with the change-of- ownership PIP, the signage will be replaced, the parking area will be resealed and re-striped, and the building exterior will be pressure washed and painted. Additionally, the outdoor patio will receive a new barbecue grill, new fencing, and new furniture cushions.

LOBBY COFFEE AREA FRONT DESK

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DINING MEETING ROOM

FITNESS ROOM POOL

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MARKET PANTRY BUSINESS CENTER

TYPICAL GUESTROOM – SLEEPING AREA TYPICAL GUESTROOM – LIVING AREA

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TYPICAL GUESTROOM BATHROOM – SINK TYPICAL GUESTROOM BATHROOM – BATH

TYPICAL GUESTROOM – CORRIDOR OUTDOOR PATIO AND BARBEQUE AREA

Hotel facilities and amenities include a breakfast dining area, an outdoor pool and whirlpool, an outdoor pet walk area, an outdoor patio and barbecue area, an outdoor fire pit, a coffee station, indoor guest storage lockers, a fitness room, a library, a guest laundry area, a business center, and a market pantry. These spaces

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are functional, appearing to be well kept upon inspection. In 2013, the breakfast dining area received new furniture. The public areas and corridors received new carpeting and the business center received new equipment in 2014. The hotel features suite-style guestrooms that offer typical amenities for this hotel's asset class. In 2013, the guestrooms received new bedding and desk chairs. In 2014, guestrooms received new pots and pans. Overall, the public areas and guestrooms were in good condition upon inspection. In accordance with the upcoming PIP, the lobby will receive new wallcovering, décor, lighting, and furniture. The public areas are scheduled to receive fresh paint, as well as new lighting, carpeting, window treatments, wallcovering, furniture, and décor. Furthermore, the breakfast dining area will be reconfigured to incorporate IHG's "Gathering Table" concept, the fitness room will receive new equipment, and the pool furniture will be upgraded. The guestrooms and guestroom bathrooms are expected to be fully renovated per the PIP.

Back-of-the-House The subject property is served by the necessary back-of-the-house space, including an in-house laundry facility, administrative offices, and a kitchen. The kitchen is located adjacent to the dining area. The kitchen facilities are appropriate for the scope of service provided, appearing to be in good condition; no significant or persistent problems were reported by hotel management. The in-house laundry facility contains two large-capacity washers and three dryers. The hotel's back-of- the-house equipment and appliances were reported to be operational at the time of inspection, appearing to be in good condition. Both washers were replaced in 2014. Additionally, in 2015, a boiler and a commercial ice machine were replaced and several HVAC units were repaired.

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LAUNDRY KITCHEN/FOOD PREP AREA

Functional The subject hotel, which opened in 2007, features a modern layout and design that Obsolescence largely precludes any functional obsolescence. Upon our inspection, we found no major components or aspects of the property's design that significantly limit its profitability.

Effective Age and Our opinion of effective age and remaining economic life for the building is Remaining Economic presented as follows. Life FIGURE 7-3 EFFECTIVE AGE AND REMAINING ECONOMIC LIFE

Typical Economic Life 45 Years Chronological Age 18 Effective Age 6 Remaining Economic Life 39

Hotels are typically renewed on a regular basis. With good ongoing maintenance and regular upgrading, the remaining economic life can be periodically extended.

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Capital Expenditures The subject hotel underwent various renovations and received a number of repairs and updates from 2013 through 2015, as summarized in the following table.

FIGURE 7-4 CAPITAL EXPENDITURES

2013 2014 2015 2016 YTD Item Amount Amount Amount Amount

Guest Areas Bedding $38,500 $0 FF&E 5,400 4,000 0 Pots & Pans 4,900 0 Total $43,900 $8,900 $0 $0 Per Room $439 $89 $0 $0

Public Areas Breakfast Dining Area 8,500 0 Carpeting 158,000 0 Business Center 9,738 0 Total $8,500 $167,738 $0 $0 Per Room $85 $1,677 $0 $0

Structure and Site Parking Lot 3,400 0 Fire Doors 3,500 0 Total $0 $0 $6,900 $0 Per Room $0 $0 $69 $0

Technology Systems 19,980 0 Laundry Equipment 26,000 0 Air Handling Equipment 1,550 5,380 0 Misc. BOH Equipment 1,053 14,291 0

Totals: $73,433 $204,188 $26,571 $0 Per Room: $734 $2,042 $266 $0 Source:

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8. Real Estate Overview - Wingate by Wyndham Tampa at USF

LAND The subject property is located in northeastern Tampa, in the southwest quadrant of the intersection formed by East Fowler Avenue and McKinley Drive. The street address of the Wingate by Wyndham Tampa at USF is 3751 East Fowler Avenue, Tampa, Florida, 33612.

Physical Characteristics The hotel site measures approximately 1.90 acres, or 82,764 square feet. The parcel's adjacent uses are set forth in the following table.

FIGURE 8-1 PARCEL’S ADJACENT USES

Direction Adjacent Use

North East Fowler Avenue South Vacant Land, Home2 Suites (U/C) East McKinley Drive West La Quinta Inn & Suites USF

PLAT MAP

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Topography and The topography of the site is generally flat, and the shape, although irregular, Site Utility permits efficient use of the site for building and site improvements, including ingress and egress. The subject site does not contain any significant portion of undeveloped land that could be sold, entitled, and developed for alternate use. The site is fully developed with building and site improvements.

AERIAL PHOTOGRAPH

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VIEW FROM SITE TO THE NORTH VIEW FROM SITE TO THE SOUTH

VIEW FROM SITE TO THE WEST VIEW FROM SITE TO THE EAST

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Vehicular access to the subject property is provided by East Fowler Avenue. The subject property is located at a busy intersection and is relatively simple to locate from Interstate 275, which is the nearest major highway. Overall, the subject property benefits from excellent accessibility and visibility attributes.

MAP OF REGIONAL ACCESS ROUTES

Airport Access The subject property is served by the Tampa International Airport, which is located approximately ten miles to the southwest of the subject site.

Neighborhood The subject property's neighborhood is generally defined by East Fletcher Avenue to the north, North 56th Street to the east, Temple Terrace Highway to the south, and Interstate 275 to the west. The neighborhood is characterized by educational institutions, restaurants, office buildings, and retail shopping centers along the primary thoroughfares, with residential areas located along the secondary roadways. Some specific businesses and entities in the area include the University of South Florida, Busch Gardens, Adventure Island, Yuengling Beer Company of Tampa, and the University Mall; nearby hotels include La Quinta Inn & Suites, Embassy Suites by Hilton, and Holiday Inn & Suites. Restaurants located near the

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subject property include Chipotle Mexican Grill, Chili's Grill & Bar, Panera Bread, and TGI Fridays. In general, this neighborhood is in the stable stage of its life cycle.

MAP OF NEIGHBORHOOD

Utilities According to property ownership, the subject site is served by all necessary utilities.

Soil and The provided Phase I Environmental Site Assessment document, prepared by Subsoil Conditions Metropolitan Laboratories, Inc. on April 23, 2003, revealed no evidence of recognized environmental conditions in connection with the subject site. We are not qualified to evaluate soil conditions other than by a visual inspection of the surface; no extraordinary conditions were apparent.

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Flood Zone According to the Federal Emergency Management Agency map illustrated below, the subject site is located in flood zone X.

COPY OF FLOOD MAP AND COVER

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Zoning According to the local planning office, the subject property is zoned as follows: CG - Commercial. This zoning designation allows for most commercial uses, including retail outlets, restaurants, and hotels and motels. We assume that all necessary permits and approvals have been secured (including the appropriate liquor license if applicable) and that the subject property was constructed in accordance with local zoning ordinances, building codes, and all other applicable regulations. Our zoning analysis should be verified before any physical changes are made to the hotel.

Easements and We are not aware of any easements or encroachments encumbering the property Encroachments that would significantly affect its utility or marketability.

IMPROVEMENTS The Wingate by Wyndham Tampa at USF is an limited-service lodging facility Property Overview containing 86 rentable units. The descriptions and pictures presented in this section reflect the hotel as observed at the time of our inspection on September 16, 2016. The hotel was designed and developed as a Wingate by Wyndham in 1998; the configuration and array of facilities and amenities are consistent with Wyndham's standards for the Wingate brand as of that date. The property has undergone some renovations since opening and is in generally good condition. In connection with the pending transaction, Wyndham has developed a property improvement plan (PIP) that outlines the renovations necessary for the hotel to comply with current brand standards. A new owner would be required to complete these renovations in connection with a new franchise agreement. The necessary upgrades are noted in the following section; the cost of these renovations forms the basis for the capital deduction that is incorporated in our opinion of the “as is” value of the hotel.

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HOTEL – FRONT OF HOTEL HOTEL – BACK OF HOTEL

Summary of the Based on information provided by the hotel’s management representatives, the Facilities following table summarizes the facilities available at the hotel.

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FIGURE 8-2 FACILITIES SUMMARY

Guestroom Configuration Number of Units King 41 Double/Double 19 Queen 9 ExecutiveKing 9 Accessible (ADA-Compliant Room)Twin 8 Total 86

Food & Beverage Facilities Seating Capacity

Breakfast Dining Area 48

Meeting & Banquet Facilities Square Footage Meeting Room 825 Boardroom 100

Total 925

Amenities & Services Outdoor Swimming Pool Business Center Indoor Whirlpool Guest Laundry Area Fitness Room Vending Area(s) Outdoor Smoking Patio

Infrastructure

Parking Spaces 111 Elevators 2 Guest Life-Safety Systems Sprinklers, Smoke Detectors Construction Details Wood Framing, Poured Concrete, EIFS

Site Improvements and The hotel comprises one four-story building that is positioned on the western side Hotel Structure of the site. Surface parking is located to the north, east, and south of the hotel structure. Other site improvements include signage, located at the entrance to the hotel property, and well-kept landscaping and sidewalks; an outdoor pool area is situated to the south of the hotel structure. The hotel's main entrance, located on the north side of the building, leads directly into the lobby. The first floor houses the public areas and the back-of-the-house space, while the guestrooms are located on all levels. The site and the structure appeared to be in good condition upon inspection. In 2015, the parking lot was resealed and re-striped, and new pavers were installed under the porte-cochere. As part of the upcoming PIP, the

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building's exterior will be redesigned to meet current brand standards and will receive fresh paint.

LOBBY SEATING AREA FRONT DESK

DINING MEETING ROOM

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FITNESS ROOM POOL

VENDING BUSINESS CENTER

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TYPICAL GUESTROOM – SLEEPING AREA TYPICAL GUESTROOM – LIVING AREA

TYPICAL GUESTROOM BATHROOM – SINK TYPICAL GUESTROOM BATHROOM – BATH

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TYPICAL GUESTROOM – CORRIDOR GUESTROOM SUITE LIVING AREA

Hotel facilities and amenities include a breakfast dining area, an outdoor pool, an indoor whirlpool, a fitness room, an outdoor smoking patio, a business center, a guest laundry room, and vending areas. These spaces are functional, appearing to be well kept upon inspection. The hotel features standard and suite-style guestrooms, which offer typical amenities for this hotel's asset class. Select guestrooms received new PTAC units in 2015. Additionally, in 2015, the ADA- mandated pool lift was installed to the outdoor pool area, the pool and spa pumps were repaired, the ceiling in the indoor whirlpool area was replaced, the public- space marble flooring was polished, a vending machine was replaced, the lobby area and the business center received new carpeting, and an elliptical machine was purchased for the fitness room. Overall, the public areas and guestrooms were in good condition upon inspection, although appearing somewhat dated. Per the change-of-ownership PIP, the lobby area and guestrooms will be fully renovated in line with the brand's "reFresh" initiative, a Wyn Mart market pantry will be installed, and the fitness room will receive new flooring and equipment. Additionally, the meeting spaces are slated to receive new carpeting, window treatments, wallcovering, furniture, and décor.

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units in the laundry area and the lobby were repaired in 2015. Additionally, a grease trap was installed in the kitchen and the pantry freezer was replaced in 2015. The hotel's back-of-the-house equipment and appliances were reported to be operational at the time of inspection, appearing to be in good condition.

LAUNDRY KITCHEN/FOOD PREP AREA

Functional Due to the age of the subject property, which was constructed roughly 18 years Obsolescence ago, some functional obsolescence is to be expected. However, upon our inspection, we found no major components or aspects of the property's design that significantly limit its profitability.

Effective Age and Our opinion of effective age and remaining economic life for the building is Remaining Economic presented as follows. Life

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FIGURE 8-3 EFFECTIVE AGE AND REMAINING ECONOMIC LIFE

Typical Economic Life 45 Years Chronological Age 18 Effective Age 10 Remaining Economic Life 35

Hotels are typically renewed on a regular basis. With good ongoing maintenance and regular upgrading, the remaining economic life can be periodically extended.

Capital Expenditures The subject hotel underwent various renovations and received a number of repairs and updates in 2015, as summarized in the following table.

FIGURE 8-4 CAPITAL EXPENDITURES

2013 2014 2015 2016 YTD Item Amount Amount Amount Amount

Guest Areas LCD TVs $2,100 PTAC units 3,400 List here Total $5,500 Per Room $68

Public Areas Bistro FF&E 2,294 Lobby 1,250 Business Center 2,725 Total $3,544 $2,725 Per Room $44 $34 Structure and Site Landscaping 7,000 Total $7,000 Per Room $86

Totals: $19,820 $51,725 $42,729 $21,361 Per Room: $245 $639 $528 $264 Source: Ownership

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9. Market Area Analysis - Tampa

Market Area Definition The market area for a lodging facility is the geographical region where the sources of demand and the competitive supply are located. Three hotels are located in the city of Tampa, the county of Hillsborough, and the state of Florida. Tampa is part of the greater Tampa-St. Petersburg-Clearwater Metropolitan Statistical Area (MSA); the city extends along the northern and eastern shores of Tampa Bay. Similar to much of Florida, Tampa's economy is heavily based on services and tourism; the area is home to many beaches and the Port of Tampa, which serves as the starting point for various Carnival, Holland America, Royal Caribbean, and Norwegian Cruise Lines cruises. The MSA contains one of the largest financial-services clusters and overall largest office-space communities in the state. Research and development facilities, including the research park at the University of South Florida (USF), and a major military installation, MacDill Air Force Base, call Tampa home. The Tampa Bay area also hosts three professional sports teams: the Tampa Bay Rays, the Tampa Bay Buccaneers, and the Tampa Bay Lightning. Furthermore, the New York Yankees' spring training is held in Tampa.

The subject property’s market area can be defined by its Metropolitan Statistical Area (MSA): Tampa-St. Petersburg-Clearwater, FL MSA. The MSA is the most standard definition used in comparative studies of metropolitan areas. The federal government defines an MSA as a large population nucleus, which, together with adjacent counties, has a higher degree of social integration. The following exhibit illustrates the market area.

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MAP OF MARKET AREA

Economic and A primary source of economic and demographic statistics used in this analysis is Demographic Review the Complete Economic and Demographic Data Source published by Woods & Poole Economics, Inc.—a well-regarded forecasting service based in Washington, D.C. Using a database containing more than 900 variables for each county in the nation, Woods & Poole employs a sophisticated regional model to forecast economic and demographic trends. Historical statistics are based on census data and information published by the Bureau of Economic Analysis. Projections are formulated by Woods & Poole, and all dollar amounts have been adjusted for inflation, thus reflecting real change.

These data are summarized in the following table.

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FIGURE 9-1 ECONOMIC AND DEMOGRAPHIC DATA SUMMARY

Average Annual Compounded Change 2000 2010 2015 2020 2000-10 2010-15 2015-20

Resident Population (Thousands) Hillsborough County 1,003.4 1,233.4 1,359.4 1,481.0 2.1 % 2.0 % 1.7 % Tampa-St. Petersburg-Clearwater, FL MSA 2,404.0 2,788.2 2,989.9 3,207.5 1.5 1.4 1.4 State of Florida 16,047.5 18,838.6 20,179.0 21,658.1 1.6 1.4 1.4 United States 282,162.4 309,330.2 324,186.9 340,554.3 0.9 0.9 1.0 Per-Capita Personal Income* Hillsborough County $35,128 $37,758 $38,627 $40,790 0.7 0.5 1.1 Tampa-St. Petersburg-Clearwater, FL MSA 35,121 37,429 38,913 41,265 0.6 0.8 1.2 State of Florida 34,981 37,721 39,407 42,027 0.8 0.9 1.3 United States 36,473 39,144 41,554 44,387 0.7 1.2 1.3 W&P Wealth Index Hillsborough County 97.3 99.9 96.8 96.0 0.3 (0.6) (0.2) Tampa-St. Petersburg-Clearwater, FL MSA 97.3 99.2 97.3 96.8 0.2 (0.4) (0.1) State of Florida 99.3 101.5 100.1 100.0 0.2 (0.3) (0.0) United States 100.0 100.0 100.0 100.0 0.0 0.0 0.0 Food and Beverage Sales (Millions)* Hillsborough County $1,411 $1,998 $2,324 $2,621 3.5 3.1 2.4 Tampa-St. Petersburg-Clearwater, FL MSA 3,052 3,924 4,438 4,916 2.5 2.5 2.1 State of Florida 22,184 29,113 33,196 37,143 2.8 2.7 2.3 United States 368,842 447,396 499,600 548,160 1.9 2.2 1.9 Total Retail Sales (Millions)* Hillsborough County $17,259 $20,308 $24,219 $27,683 1.6 3.6 2.7 Tampa-St. Petersburg-Clearwater, FL MSA 37,724 41,927 48,598 54,554 1.1 3.0 2.3 State of Florida 241,576 276,484 320,455 360,559 1.4 3.0 2.4 United States 3,902,969 4,149,070 4,707,800 5,187,469 0.6 2.6 2.0

* Inflation Adjusted Source: Woods & Poole Economics, Inc.

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The U.S. population grew at an average annual compounded rate of 0.9% from 2010 to 2015; the state’s population changed by 1.4% during that period. The county’s population increased at a quicker pace than the nation’s population; the average annual growth rate of 2.0% between 2010 and 2015 reflects a gradually expanding area. In 2015, the county’s population was approximately 1,360,000; it is forecast to be roughly 1,480,000 by 2020.

Following this population trend, per-capita personal income increased slowly, at 0.5% on average annually for the county between 2010 and 2015. The county’s annual per-capita personal income level was approximately $39,000 in 2015; it is expected to be $41,000 by 2020. This compares to respective state and U.S. levels of $39,000 and $42,000 in 2015, and $42,000 and $44,000 by 2020. The county’s local wealth index in 2015 was a relatively near average 96.8, lower than the state’s 2015 wealth index of 100.1. The county’s wealth index is anticipated to be 96.0 by 2020, while the state’s wealth index is forecast to be 100.0.

Food and beverage sales totaled $2,324 million in the county in 2015, versus $1,998 million in 2010. This reflects a 3.1% average annual change, which is weaker than the 3.5% pace recorded in the prior decade. The pace of growth is anticipated to moderate to a more sustainable level of 2.4% through 2020. The retail sales sector demonstrated an annual increase of 1.6% from 2000 to 2010, followed by an increase of 3.6% during the period from 2010 to 2015. An increase of 2.7% average annual change in county retail sales is forecast through 2020.

Workforce The following table sets forth the county workforce distribution by business sector Characteristics in 2000, 2010, and 2015, as well as a forecast for 2020.

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FIGURE 9-2 HISTORICAL AND PROJECTED EMPLOYMENT (000S)

Average Annual Compounded Change Percent Percent Percent Percent Industry 2000 of Total 2010 of Total 2015 of Total 2020 of Total 2000-2010 2010-2015 2015-2020

Farm 10.0 1.4 % 10.4 1.4 % 10.0 1.2 % 10.4 1.2 % 0.5 % (0.8) % 0.7 % Forestry, Fishing, Related Activities And Other 3.6 0.5 3.1 0.4 3.2 0.4 3.4 0.4 (1.6) 1.1 1.2 Mining 0.4 0.0 0.7 0.1 0.8 0.1 0.9 0.1 7.7 2.6 2.0 Utilities 3.6 0.5 2.6 0.4 2.8 0.3 2.9 0.3 (3.2) 0.9 1.0 Construction 36.5 5.0 35.9 4.8 38.9 4.8 43.2 4.9 (0.2) 1.6 2.2 Manufacturing 34.5 4.7 24.9 3.3 24.9 3.1 24.7 2.8 (3.2) (0.0) (0.1) Total Trade 109.4 14.9 106.2 14.3 117.2 14.4 129.6 14.6 (0.3) 2.0 2.0 Wholesale Trade 33.4 4.6 31.6 4.2 33.5 4.1 36.0 4.1 (0.6) 1.2 1.5 Retail Trade 75.9 10.3 74.7 10.0 83.7 10.3 93.6 10.6 (0.2) 2.3 2.2 Transportation And Warehousing 24.1 3.3 20.2 2.7 21.8 2.7 23.2 2.6 (1.7) 1.5 1.3 Information 26.0 3.5 19.8 2.7 20.1 2.5 21.1 2.4 (2.7) 0.3 1.0 Finance And Insurance 53.4 7.3 60.2 8.1 67.2 8.3 71.9 8.1 1.2 2.2 1.4 Real Estate And Rental And Lease 21.0 2.9 30.3 4.1 31.9 3.9 33.4 3.8 3.7 1.0 0.9 Total Services 333.9 45.5 342.5 46.0 383.0 47.2 426.6 48.2 0.3 2.3 2.2 Professional And Technical Services 50.0 6.8 65.0 8.7 70.9 8.7 76.9 8.7 2.7 1.7 1.6 Management Of Companies And Enterprises 4.0 0.5 7.2 1.0 8.6 1.1 10.3 1.2 6.0 3.7 3.6 Administrative And Waste Services 121.3 16.5 68.8 9.2 77.4 9.5 87.3 9.9 (5.5) 2.4 2.4 Educational Services 7.5 1.0 14.5 1.9 18.1 2.2 21.8 2.5 6.7 4.6 3.8 Health Care And Social Assistance 57.3 7.8 78.8 10.6 87.6 10.8 98.9 11.2 3.2 2.2 2.5 Arts, Entertainment, And Recreation 15.2 2.1 18.8 2.5 20.7 2.6 22.3 2.5 2.2 1.9 1.5 Accommodation And Food Services 44.8 6.1 49.3 6.6 53.4 6.6 57.0 6.4 1.0 1.6 1.3 Other Services, Except Public Administration 33.7 4.6 40.2 5.4 46.2 5.7 52.2 5.9 1.8 2.8 2.5 Total Government 77.6 10.6 88.3 11.8 90.3 11.1 93.2 10.5 1.3 0.5 0.6 Federal Civilian Government 11.5 1.6 14.9 2.0 14.7 1.8 15.2 1.7 2.6 (0.3) 0.7 Federal Military 7.3 1.0 8.3 1.1 8.4 1.0 8.5 1.0 1.3 0.3 0.1 State And Local Government 58.8 8.0 65.1 8.7 67.2 8.3 69.5 7.9 1.0 0.6 0.7

TOTAL 733.8 100.0 % 745.2 100.0 % 812.1 100.0 % 884.6 100.0 % 0.2 % 1.7 % 1.7 %

MSA 1,441.6 — 1,460.7 — 1,568.8 — 1,693.9 — 0.1 % 1.4 % 1.5 % U.S. 165,371.0 — 173,626.7 — 185,504.6 — 198,343.5 — 0.8 1.3 1.3

Source: Woods & Poole Economics, Inc.

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Woods & Poole Economics, Inc. reports that during the period from 2000 to 2010, total employment in the county grew at an average annual rate of 0.2%. This trend was above the growth rate recorded by the MSA and also lagged the national average, reflecting the stable nature of the local economy throughout most of the decade until the recession in the latter years. More recently, the pace of total employment growth in the county accelerated to 1.7% on an annual average from 2010 to 2015, reflecting the initial years of the recovery.

Of the primary employment sectors, Total Services recorded the highest increase in number of employees during the period from 2010 to 2015, increasing by 40,469 people, or 11.8%, and transitioning from 46.0% to 47.2% of total employment. Of the various service sub-sectors, Health Care And Social Assistance and Administrative And Waste Services were the largest employers. Forecasts developed by Woods & Poole Economics, Inc. anticipate that total employment in the county will change by 1.7% on average annually through 2020. The trend is above the forecast rate of change for the U.S. as a whole during the same period.

Radial Demographic The following table reflects radial demographic trends for our market area Snapshot measured by three points of distance from the hotel.

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FIGURE 9-3 DEMOGRAPHICS BY RADIUS

0.00 - 1.00 miles 0.00 - 3.00 miles 0.00 - 5.00 miles Population 2021 Projection 6,603 52,916 180,735 2016 Estimate 5,939 49,264 169,011 2010 Census 5,063 44,774 155,038 2000 Census 3,244 35,171 126,146 Gr owth 2016 - 2021 11.2% 7.4% 6.9% Gr owth 2010 - 2016 17.3% 10.0% 9.0% Gr owth 2000 - 2010 56.1% 27.3% 22.9% Households 2021 Projection 2,674 18,660 67,208 2016 Estimate 2,399 17,273 62,769 2010 Census 2,041 15,601 57,624 2000 Census 1,249 11,995 46,195 Gr owth 2016 - 2021 11.5% 8.0% 7.1% Gr owth 2010 - 2016 17.5% 10.7% 8.9% Gr owth 2000 - 2010 63.3% 30.1% 24.7% Income 2016 Est. Average Household Income $50,301 $61,962 $59,122 2016 Est. Median Household Income 40,787 46,651 46,661 2016 Est. Civ. Employed Pop 16+ by Occupation 3,051 21,356 76,456 Architect/Engineer 13 265 839 Arts/Entertainment/Sports 73 294 978 Building Grounds Maintenance 54 693 2,734 Business/Financial Operations 134 1,065 3,592 Community/Social Services 39 277 1,138 Computer/Mathematical 252 999 2,876 Construction/Extraction 116 1,180 4,033 Education/Training/Library 72 850 3,221 Farming/Fishing/Forestry 4 104 272 Food Prep/Serving 74 1,180 4,784 Health Practitioner/Technician 220 1,105 4,041 Healthcare Support 113 586 2,451 Maintenance Repair 42 742 2,629 Legal 27 353 878 Life/Physical/Social Science 7 64 352 Management 221 1,804 6,560 Office/Admin. Support 779 3,929 13,718 Production 197 1,028 2,781 Protective Services 65 530 2,085 Sales/Related 325 2,452 8,796 Personal Care/Service 69 600 2,383 Transportation/Moving 154 1,255 5,314 Source: The Nielsen Company

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This source reports a population of 169,011 within a five-mile radius of the hotel, and 62,769 households within this same radius. Average household income within a five-mile radius of the hotel is currently reported at $59,122, while the median is $46,661.

The following table illustrates historical and projected employment, households, population and average household income data as provided by REIS for the overall Tampa - St. Petersburg market.

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FIGURE 9-4 HISTORICAL & PROJECTED EMPLOYMENT, HOUSEHOLDS, POPULATION, AND HOUSEHOLD INCOME STATISTICS

Total Office Industrial Household Year Employment % Chg Employment % Chg Employment % C hg Households % Chg Population % Chg Avg. Income % Chg

2003 1,134,030 — 359,187 — 141,629 — 1,070,000 — 2,556,750 — $76,477 — 2004 1,188,470 4.8 % 380,597 6.0 % 146,887 3.7 % 1,094,030 2.2 % 2,620,650 2.5 % 80,886 5.8 % 2005 1,216,900 2.4 388,362 2.0 148,146 0.9 1,115,590 2.0 2,678,720 2.2 84,790 4.8 2006 1,236,270 1.6 397,975 2.5 148,587 0.3 1,128,710 1.2 2,714,870 1.3 89,626 5.7 2007 1,219,930 (1.3) 392,826 (1.3) 145,144 (2. 3) 1,136,990 0.7 2,737,450 0.8 91,342 1.9 2008 1,162,170 (4.7) 374,721 (4.6) 135,649 (6. 5) 1,143,130 0.5 2,755,460 0.7 90,151 (1.3) 2009 1,100,830 (5.3) 359,688 (4.0) 120,492 (11. 2) 1,149,740 0.6 2,773,990 0.7 88,944 (1.3) 2010 1,112,970 1.1 366,989 2.0 119,384 (0. 9) 1,170,470 1.8 2,809,330 1.3 94,072 5.8 2011 1,133,070 1.8 375,376 2.3 120,548 1.0 1,180,060 0.8 2,839,540 1.1 97,046 3.2 2012 1,156,530 2.1 385,273 2.6 122,510 1.6 1,189,580 0.8 2,858,080 0.7 97,837 0.8 2013 1,186,830 2.6 395,287 2.6 125,140 2.1 1,209,260 1.7 2,893,610 1.2 96,178 (1.7) 2014 1,223,970 3.1 406,508 2.8 127,660 2.0 1,224,550 1.3 2,945,290 1.8 100,225 4.2 2015 1,268,570 3.6 424,011 4.3 129,311 1.3 1,255,910 2.6 3,000,050 1.9 101,987 1.8

Forecasts 2016 1,292,390 1.9 % 434,496 2.5 % 128,155 (0.9) % 1,287,680 2.5 % 3,052,490 1.7 % $105,839 3.8 % 2017 1,323,960 2.4 450,026 3.6 129,055 0.7 1,322,930 2.7 3,108,550 1.8 112,771 6.5 2018 1,352,380 2.1 462,690 2.8 130,360 1.0 1,353,550 2.3 3,165,850 1.8 119,424 5.9 2019 1,368,150 1.2 469,761 1.5 130,559 0.2 1,381,700 2.1 3,223,850 1.8 124,431 4.2 2020 1,374,880 0.5 473,109 0.7 129,813 (0.6) 1,407,720 1.9 3,281,070 1.8 128,808 3.5

Average Annual Compound Change 2003 - 2015 0.9 % 1.4 % (0. 8) % 1.3 % 1.3 % 2.4 % 2003 - 2007 1.8 2.3 0.6 1.5 1.7 4.5 2007 - 2010 (3.0) (2.2) (6. 3) 1.0 0.9 1.0 2010 - 2015 2.7 2.9 1.6 1.4 1.3 1.6 Forecast 2016 - 2020 1.6 % 2.2 % 0.3 % 2.3 % 1.8 % 5.0 %

Source: REIS Report, 2nd Quarter, 2016

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For the Tampa - St. Petersburg market, of the roughly 1,300,000 persons employed, 33% are categorized as office employees, while 10% are categorized as industrial employees. Total employment decreased by an average annual compound rate of -3.0% during the recession of 2008 to 2011, followed by an increase of 2.7% from 2011 to 2015. By comparison, office employment reflected compound change rates of -2.2% and 2.9%, during the same respective periods. Total employment is expected to expand by 1.9% in 2016, while office employment is forecast to expand by 2.5% in 2016. From 2015 through 2020, REIS anticipates that total employment will increase at an average annual compound rate of 1.6%, while office employment will increase by 2.2% on average annually during the same period.

The number of households is forecast to increase by 2.3% on average annually between 2015 and 2020. Population is forecast to expand during this same period, at an average annual compounded rate of 1.8%. Household average income is forecast to grow by 5.0% on average annually from 2015 through 2020.

Unemployment The following table presents historical unemployment rates for the hotels’ market Statistics area, the state, and the nation.

FIGURE 9-5 UNEMPLOYMENT STATISTICS

Year County MSA State U.S.

2006 3.3 % 3.5 % 3.2 % 4.6 % 2007 4.2 4.4 4.0 4.6 2008 6.5 6.8 6.3 5.8 2009 10.6 11.0 10.4 9.3 2010 10.7(r) 11.1(r) 11.1 9.6 2011 9.6(r) 9.9(r) 10.0(d) 8.9 2012 7.9(r) 8.2(r) 8.5(d) 8.1 2013 6.6(r) 6.9(r) 7.3(d) 7.4 2014 5.8(r) 6.0(r) 6.3(d) 6.2 2015 5.0(r) 5.1(r) 5.4(d) 5.3 Recent Month - Jul 2015 5.3 % 5.5 % 5.8 % 5.3 % 2016 4.7 4.8 5.1 4.9

* Letters shown next to data points (if any) reflect revised population controls and/or model re-estimation implemented by the BLS.

Source: U.S. Bureau of Labor Statistics

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After the U.S. unemployment rate declined to an annual average of 4.6% in 2006 and 2007, the Great Recession, which spanned December 2007 through June 2009, resulted in heightened unemployment rates. The unemployment rate peaked at 10.0% in October 2009, after which job growth resumed; the national unemployment rate has steadily declined since 2010. Total nonfarm payroll employment increased by 271,000, 275,000, and 151,000 jobs in June, July, and August 2016, respectively. The strongest gains in August were recorded in most service-providing sectors. The national unemployment rate was reported to be 4.9% in June, July, and August; it has remained near the 5.0% mark since August 2015, reflecting a trend of relative stability and the overall strength of the U.S. economy.

Locally, the unemployment rate was 5.0(r)% in 2015; for this same area in 2016, the most recent month’s unemployment rate was registered at 4.7%, versus 5.3% for the same month in 2015. Unemployment began to rise in 2007 as the region entered an economic slowdown, and this trend continued through 2009. Unemployment stabilized in 2010 and began to fall in 2011 given the strengthening economic conditions, and this trend continued through 2015. The most recent comparative period illustrates improvement, indicated by the lower unemployment rate in the latest available data for 2016. Local economic development officials noted that employment remains strong within the healthcare and financial sectors. Furthermore, the increase in tourism numbers in the most recent year has prompted hiring in the hospitality sector; hotels, restaurants, and area attractions are reportedly increasing their employee bases in order to keep pace with growing demand.

Major Business and Providing additional context for understanding the nature of the regional Industry economy, the following table presents a list of the major employers in the subject property’s market.

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FIGURE 9-6 MAJOR EMPLOYERS

Number of Rank Firm Employees

1 BayCare Health System 22,900 2 Publix Super Markets, Inc. 13,000 3 Home Shopping Network 10,500 4 University of South Florida 9,000 5 Tech Data Corporation 6,900 6 WellCare 6,700 7 Tampa General Hospital 6,400 8 Verizon 6,000 9 JP Morgan Chase 5,400 10 Citi 4,300

Source: Tampa Bay Partnership, 2015

The Tampa area hosts a variety of financial services firms, including Bank of America, Citigroup, HSBC, and JPMorgan Chase. Additionally, one of the largest employers for the market is the MacDill Air Force Base, which has an estimated annual economic impact of $5 billion on the greater Tampa area and employs roughly 18,000 personnel. Healthcare is a major economic anchor, with six of the top ten employers comprising healthcare companies such as BayCare Health System, HCA West Florida, and Tampa General Hospital. In addition, tourism and leisure visitation are important components of the local economy. Area universities, such as the University of South Florida and the University of Tampa, support the market by providing an educated workforce, and a high quality of living also supports the overall strength of the area. This market has also benefited from the distribution of stimulus funds, which have paved the way for construction projects such as the $421-million Selmon Expressway/Interstate 4 connector project and improvements at the airport. Completed in January 2014, the connector features dedicated exit/entry lanes to the Port of Tampa, which officials report is critical to the expansion and competitiveness of the Port's container trade business. Furthermore, Tampa's downtown landscape is on the cusp of a ten-year, $1-billion redevelopment, led by Jeff Vinik’s Strategic Property Partners LLC in a partnership with Bill Gates’ Cascade Investment LLC. Developments will include USF's new urban medical school, corporate headquarters, condominiums, the relocated Museum of Science and Industry (MOSI), a convention hotel, meeting space, and shops and restaurants in Downtown Tampa. The project is estimated to have a total economic impact of $910 million on the area and to create 6,700 jobs.

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Office Space Statistics Trends in occupied office space are typically among the most reliable indicators of lodging demand, as firms that occupy office space often exhibit a strong propensity to attract commercial visitors. Thus, trends that cause changes in vacancy rates or occupied office space may have a proportional impact on commercial lodging demand and a less direct effect on meeting demand. The following table details office space statistics for the pertinent market area.

FIGURE 9-7 OFFICE SPACE STATISTICS – MARKET OVERVIEW

Inventory Occupied Office Vacancy Average Asking Submarket Buildings Square Feet Space Rate Lease Rate

1 Gateway/Mid-Pinellas 83 3,821,000 2,873,400 24.8 % $18.95 2 Downtown St. Petersburg 40 2,635,000 2,242,400 14.9 21.02 3 Interstate 75 Corridor/East Tampa 93 6,888,000 5,565,500 19.2 19.37 4 Clearwater/Bayside 84 3,849,000 2,794,400 27.4 19.48 5 North Tampa 108 6,087,000 4,936,600 18.9 21.49 6 Downtown Tampa 50 7,033,000 5,879,600 16.4 24.58 7 Westshore 87 10,457,000 8,919,800 14.7 26.94

Totals and Averages 545 40,770,000 33,211,700 18.5 % $22.60 Source: REIS Report, 2nd Quarter, 2016

The greater Tampa - St. Petersburg market comprises a total of 40.8 million square feet of office space. For the 2nd Quarter of 2016, the market reported a vacancy rate of 18.5% and an average asking rent of $22.60. The hotel is located in the Interstate 75 Corridor/East Tampa submarket, which houses 6,888,000 square feet of office space. The submarket's vacancy rate of 19.2% is on par with the overall market average. The average asking lease rate of $19.37 is below the average for the broader market.

The following table illustrates a trend of office space statistics for the overall Tampa - St. Petersburg market and the Interstate 75 Corridor/East Tampa submarket.

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FIGURE 9-8 HISTORICAL AND PROJECTED OFFICE SPACE STATISTICS – GREATER MARKET VS. SUBMARKET

Tampa - St. Petersburg Market Interstate 75 Corridor/East Tampa Submarket

Available Occupied Vacancy Asking Available Occupied Vacancy Asking Year Office Space % Chg Office Space % Chg Rate Lease Rate % Chg Office Space % Chg Office Space % Chg Rate Lease Rate % Chg

2003 39,406,000 — 32,602,000 — 17.3 % $18.40 — 6,645,000 — 5,050,000 — 24.0 % $17.16 — 2004 39,730,000 0.8 % 33,245,000 2.0 % 16.3 18.46 0.3 % 6,645,000 0.0 % 5,176,000 2.5 % 22.1 16.97 (1.1) % 2005 39,000,000 (1.8) 34,430,000 3.6 11.7 18.99 2.9 6,439,000 (3.1) 5,615,000 8.5 12.8 17.40 2.5 2006 38,911,000 (0.2) 34,352,000 (0.2) 11.7 20.43 7.6 6,573,000 2.1 5,692,000 1.4 13.4 18.63 7.1 2007 39,525,000 1.6 34,801,000 1.3 12.0 21.86 7.0 6,722,000 2.3 5,815,000 2.2 13.5 20.05 7.6 2008 40,076,000 1.4 33,729,000 (3.1) 15.8 22.16 1.4 6,850,000 1.9 5,370,000 (7.7) 21.6 19.36 (3.4) 2009 40,504,000 1.1 31,958,000 (5.3) 21.1 21.49 (3.0) 6,810,000 (0.6) 5,605,000 4.4 17.7 19.67 1.6 2010 40,282,000 (0.5) 31,400,000 (1.7) 22.0 21.06 (2.0) 6,798,000 (0.2) 5,472,000 (2.4) 19.5 19.04 (3.2) 2011 40,282,000 0.0 31,963,000 1.8 20.7 21.02 (0.2) 6,798,000 0.0 5,472,000 0.0 19.5 18.92 (0.6) 2012 40,445,000 0.4 31,909,000 (0.2) 21.1 21.09 0.3 6,888,000 1.3 5,476,000 0.1 20.5 18.71 (1.1) 2013 40,770,000 0.8 31,786,000 (0.4) 22.0 21.43 1.6 6,888,000 0.0 5,380,000 (1.8) 21.9 18.92 1.1 2014 40,770,000 0.0 32,389,000 1.9 20.6 21.75 1.5 6,888,000 0.0 5,386,000 0.1 21.8 19.13 1.1 2015 40,770,000 0.0 33,023,000 2.0 19.0 22.29 2.5 6,888,000 0.0 5,531,000 2.7 19.7 19.28 0.8

Forecasts 2016 40,770,000 0.0 % 33,386,000 1.1 % 18.1 % $22.91 2.8 % 6,888,000 0.0 % 5,586,000 1.0 % 18.9 % $19.56 1.5 % 2017 40,911,000 0.3 33,692,000 0.9 17.6 23.58 2.9 6,921,000 0.5 5,715,000 2.3 17.4 20.01 2.3 2018 41,191,000 0.7 34,032,000 1.0 17.4 24.34 3.2 6,983,000 0.9 5,860,000 2.5 16.1 20.60 2.9 2019 41,557,000 0.9 34,430,000 1.2 17.1 25.19 3.5 7,073,000 1.3 6,061,000 3.4 14.3 21.30 3.4 2020 41,954,000 1.0 34,792,000 1.1 17.1 26.04 3.4 7,169,000 1.4 6,268,000 3.4 12.6 22.07 3.6

Average Annual Compound Change 2003 - 2015 0.3 % 0.1 % 1.6 % 0.3 % 0.8 % 1.0 % 2003 - 2007 0.1 1.6 4.4 0.3 3.6 4.0 2007 - 2010 0.6 (3.4) (1.2) 0.4 (2.0) (1.7) 2010 - 2015 0.2 1.0 1.1 0.3 0.2 0.3 Forecast 2016 - 2020 0.7 % 1.0 % 3.3 % 1.0 % 2.9 % 3.1 %

Source: REIS Report, 2nd Quarter, 2016

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The inventory of office space in the Tampa - St. Petersburg market increased at an average annual compound rate of 0.3% from 2003 through 2015, while occupied office space expanded at an average annual rate of 0.1% over the same period. During the period of 2003 through 2008, occupied office space expanded at an average annual compound rate of 1.6%. From 2008 through 2011, occupied office space contracted at an average annual compound rate of -3.4%, reflecting the impact of the recession. The onset of the recovery is evident in the 1.0% average annual change in occupied office space from 2011 to 2015. From 2015 through 2020, the inventory of occupied office space is forecast to increase at an average annual compound rate of 1.0%, with available office space expected to increase 0.7%, thus resulting in an anticipated vacancy rate of 17.1% as of 2020.

Airport Traffic Airport passenger counts are important indicators of lodging demand. Depending on the type of service provided by a particular airfield, a sizable percentage of arriving passengers may require hotel accommodations. Trends showing changes in passenger counts also reflect local business activity and the overall economic health of the area.

Tampa International Airport (TPA) is served by major commercial airlines, which provide nonstop daily and connecting service to national and international destinations. Tampa International Airport is an award-winning facility due to its unique architectural design and travel-friendly functionality. In 2013, TPA completed a $27.6-million renovation to Airside F in order to improve the flow of passengers through security and customs and to expand the airport's ability to handle baggage. A $2.5-billion master plan was approved in April 2013 for the airport. The first phase of this plan, which will include the construction of a consolidated rental car facility and a people mover to transport passengers to the new facility, should be completed by 2017. Additional changes will include the expansion of the current terminals to accommodate an increased number of international travelers; the development of additional commercial, retail, restaurant, and hotel space; and the construction of a new tower.

The following table illustrates recent operating statistics for the Tampa International Airport, which is the primary airport facility serving the hotels’ submarket.

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FIGURE 9-9 AIRPORT STATISTICS - TAMPA INTERNATIONAL AIRPORT

Passenger Percent Percent Year Traffic Change* Change**

2006 18,867,541 — — 2007 19,154,957 1.5 % 1.5 % 2008 18,262,934 (4.7) (1.6) 2009 16,965,545 (7.1) (3.5) 2010 16,645,765 (1.9) (3.1) 2011 16,670,315 0.1 (2.4) 2012 16,820,859 0.9 (1.9) 2013 16,920,093 0.6 (1.5) 2014 17,552,707 3.7 (0.9) 2015 18,815,425 7.2 (0.0) Year-to-date, Jul 2015 11,344,965 — — 2016 11,503,993 1.4 % —

*Annual average compounded percentage change from the previous year **Annual average compounded percentage change from first year of data

Source: Tampa International Airport

This facility recorded 18,815,425 passengers in 2015. The change in passenger traffic between 2014 and 2015 was 7.2%. The average annual change during the period shown was 0.0%.

Tourist Attractions The subject market benefits from a variety of tourism and leisure attractions in the area. Leisure demand generators include Busch Gardens amusement park, the Museum of Science and Industry (MOSI), and the University of South Florida (USF). Special events also play a role during key weekends, such as football games and other events at USF. In April 2016, MOSI announced plans to relocate to Downtown Tampa as part of the redevelopment efforts led by Strategic Property Partners, the real estate company owned by Jeff Vinik; Vinik also owns the Tampa By Lightning hockey team. The relocation is expected to be finalized by the end of 2017. Additionally, in December 2015, USF broke ground on a new medical school in the heart of Downtown Tampa as part of a $2-billion redevelopment of Tampa’s Channelside District led by a partnership between Strategic Property Partners LLC and Bill Gates’ Cascade Investment LLC. The $153-million medical-school project had received $57 million in state funding and $18 million in private donations as of December 2015.

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Conclusion This section discussed a wide variety of economic indicators for the pertinent market area. Greater Tampa is experiencing a period of economic strength and expansion, led by the fields of consumer services, finance, health care, and professional and business services. Tampa's consistent position among the most cost-efficient places to live and do business in the nation attracts considerable investment to the region. The outlook is positive given the strengthening of the housing market, the expansion of existing employers, and the relocation of new businesses to the area.

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10. Market Area Analysis - Orlando

Market Area Definition The market area for a lodging facility is the geographical region where the sources of demand and the competitive supply are located. One hotel is located in the city of Ocoee, the county of Orange, and the state of Florida. Ocoee is part of the greater Orlando metropolitan area. In addition to being recognized as one of the nation's foremost vacation destinations, anchored by the formidable Walt Disney World Resort and Universal Orlando, Orlando is also the major center for commerce in the Central Florida region. The Central Florida Research Park, totaling more than 1,000 acres, is ranked as one of the top ten research parks in the nation and is home to over 125 companies. Moreover, the University of Central Florida (UCF) is the second-largest university in the nation, with more than 60,000 students. Orlando's economic climate is characterized by tourism, healthcare services and research, financial services, and educational institutions.

The subject property’s market area can be defined by its Combined Statistical Area (CSA): Orlando-Deltona-Daytona Beach, FL. The CSA represents adjacent metropolitan and micropolitan statistical areas that have a moderate degree of employment interchange. Micropolitan statistical areas represent urban areas in the United States based around a core city or town with a population of 10,000 to 49,999; the MSA requires the presence of a core city of at least 50,000 people and a total population of at least 100,000 (75,000 in New England). The following exhibit illustrates the market area.

November-2016 Market Area Analysis - Orlando Florida Portfolio of Six Hotels 130

MAP OF MARKET AREA

These data are summarized in the following table.

November-2016 Market Area Analysis - Orlando Florida Portfolio of Six Hotels 131

FIGURE 10-1 ECONOMIC AND DEMOGRAPHIC DATA SUMMARY

Average Annual Compounded Change 2000 2010 2015 2020 2000-10 2010-15 2015-20

Resident Population (Thousands) Orange County 903.0 1,148.8 1,245.4 1,346.0 2.4 % 1.6 % 1.6 % Orlando-Kissimmee-Sanford, FL MSA 1,656.9 2,139.6 2,329.2 2,540.1 2.6 1.7 1.7 Orlando-Deltona-Daytona Beach, FL CSA 2,206.1 2,824.6 3,058.7 3,322.3 2.5 1.6 1.7 State of Florida 16,047.5 18,838.6 20,179.0 21,658.1 1.6 1.4 1.4 United States 282,162.4 309,330.2 324,186.9 340,554.3 0.9 0.9 1.0 Per-Capita Personal Income* Orange County $33,578 $34,348 $35,568 $37,608 0.2 0.7 1.1 Orlando-Kissimmee-Sanford, FL MSA 33,391 33,848 35,248 37,293 0.1 0.8 1.1 Orlando-Deltona-Daytona Beach, FL CSA 31,973 33,144 34,563 36,630 0.4 0.8 1.2 State of Florida 34,981 37,721 39,407 42,027 0.8 0.9 1.3 United States 36,473 39,144 41,554 44,387 0.7 1.2 1.3 W&P Wealth Index Orange County 93.6 89.9 88.0 87.3 (0.4) (0.4) (0.2) Orlando-Kissimmee-Sanford, FL MSA 93.1 88.6 87.0 86.4 (0.5) (0.4) (0.2) Orlando-Deltona-Daytona Beach, FL CSA 89.9 87.7 86.3 85.8 (0.2) (0.3) (0.1) State of Florida 99.3 101.5 100.1 100.0 0.2 (0.3) (0.0) United States 100.0 100.0 100.0 100.0 0.0 0.0 0.0 Food and Beverage Sales (Millions)* Orange County $2,076 $2,471 $2,830 $3,172 1.8 2.8 2.3 Orlando-Kissimmee-Sanford, FL MSA 3,123 4,087 4,716 5,347 2.7 2.9 2.5 Orlando-Deltona-Daytona Beach, FL CSA 3,814 4,953 5,694 6,441 2.6 2.8 2.5 State of Florida 22,184 29,113 33,196 37,143 2.8 2.7 2.3 United States 368,842 447,396 499,600 548,160 1.9 2.2 1.9 Total Retail Sales (Millions)* Orange County $16,801 $20,888 $24,501 $27,784 2.2 3.2 2.5 Orlando-Kissimmee-Sanford, FL MSA 27,600 35,027 41,186 47,021 2.4 3.3 2.7 Orlando-Deltona-Daytona Beach, FL CSA 34,427 42,830 50,113 56,995 2.2 3.2 2.6 State of Florida 241,576 276,484 320,455 360,559 1.4 3.0 2.4 United States 3,902,969 4,149,070 4,707,800 5,187,469 0.6 2.6 2.0

* Inflation Adjusted Source: Woods & Poole Economics, Inc.

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The U.S. population grew at an average annual compounded rate of 0.9% from 2010 to 2015; the state’s population changed by 1.4% during that period. The county’s population increased at a quicker pace than the nation’s population; the average annual growth rate of 1.6% between 2010 and 2015 reflects a gradually expanding area. In 2015, the county’s population was approximately 1,250,000; it is forecast to be roughly 1,350,000 by 2020.

Following this population trend, per-capita personal income increased slowly, at 0.7% on average annually for the county between 2010 and 2015. The county’s annual per-capita personal income level was approximately $36,000 in 2015; it is expected to be $38,000 by 2020. This compares to respective state and U.S. levels of $39,000 and $42,000 in 2015, and $42,000 and $44,000 by 2020. The county’s local wealth index in 2015 was a relatively modest 88.0, lower than the state’s 2015 wealth index of 100.1. The county’s wealth index is anticipated to be 87.3 by 2020, while the state’s wealth index is forecast to be 100.0.

Food and beverage sales totaled $2,830 million in the county in 2015, versus $2,471 million in 2010. This reflects a 2.8% average annual change, which is stronger than the 1.8% pace recorded in the prior decade, the latter years of which were adversely affected by the recession. The pace of growth is anticipated to moderate to a more sustainable level of 2.3% through 2020. The retail sales sector demonstrated an annual increase of 2.2% from 2000 to 2010, followed by an increase of 3.2% during the period from 2010 to 2015. An increase of 2.5% average annual change in county retail sales is forecast through 2020.

Workforce The following table sets forth the county workforce distribution by business sector Characteristics in 2000, 2010, and 2015, as well as a forecast for 2020.

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FIGURE 10-2 HISTORICAL AND PROJECTED EMPLOYMENT (000S)

Average Annual Compounded Change Percent Percent Percent Percent Industry 2000 of Total 2010 of Total 2015 of Total 2020 of Total 2000-2010 2010-2015 2015-2020

Farm 4.3 0.6 % 2.9 0.3 % 2.7 0.3 % 2.7 0.3 % (4.1) % (0.8) % (0.2) % Forestry, Fishing, Related Activities And Other 0.9 0.1 0.9 0.1 0.9 0.1 0.9 0.1 (0.7) 0.7 0.9 Mining 0.3 0.0 0.6 0.1 0.7 0.1 0.8 0.1 8.4 3.2 1.1 Utilities 1.0 0.1 0.6 0.1 0.6 0.1 0.6 0.1 (5.1) (0.2) (0.0) Construction 37.5 5.1 34.8 4.2 36.1 4.0 39.7 4.0 (0.7) 0.7 1.9 Manufacturing 33.6 4.6 28.5 3.5 29.1 3.2 29.5 3.0 (1.6) 0.4 0.3 Total Trade 104.9 14.3 106.7 13.0 120.5 13.4 133.4 13.6 0.2 2.5 2.1 Wholesale Trade 34.4 4.7 28.4 3.5 29.7 3.3 31.5 3.2 (1.9) 0.9 1.2 Retail Trade 70.5 9.6 78.3 9.5 90.7 10.1 101.9 10.4 1.1 3.0 2.4 Transportation And Warehousing 28.4 3.9 28.8 3.5 31.0 3.4 33.7 3.4 0.1 1.4 1.7 Information 19.1 2.6 19.1 2.3 21.0 2.3 23.0 2.3 0.0 1.9 1.9 Finance And Insurance 29.0 4.0 33.6 4.1 36.2 4.0 37.1 3.8 1.5 1.5 0.5 Real Estate And Rental And Lease 28.8 3.9 44.1 5.4 48.1 5.4 51.2 5.2 4.4 1.7 1.2 Total Services 383.4 52.3 446.5 54.4 494.7 55.1 547.3 55.8 1.5 2.1 2.0 Professional And Technical Services 44.6 6.1 60.4 7.4 65.9 7.3 72.4 7.4 3.1 1.8 1.9 Management Of Companies And Enterprises 7.2 1.0 12.3 1.5 12.0 1.3 13.0 1.3 5.6 (0.5) 1.6 Administrative And Waste Services 94.2 12.8 79.6 9.7 88.0 9.8 98.2 10.0 (1.7) 2.0 2.2 Educational Services 7.5 1.0 15.8 1.9 17.5 1.9 19.6 2.0 7.7 2.1 2.3 Health Care And Social Assistance 56.1 7.7 73.4 8.9 81.8 9.1 90.9 9.3 2.7 2.2 2.1 Arts, Entertainment, And Recreation 60.7 8.3 66.0 8.0 74.1 8.2 81.2 8.3 0.8 2.3 1.9 Accommodation And Food Services 79.6 10.9 98.2 12.0 109.5 12.2 119.2 12.1 2.1 2.2 1.7 Other Services, Except Public Administration 33.5 4.6 40.8 5.0 46.0 5.1 52.7 5.4 2.0 2.4 2.8 Total Government 62.4 8.5 73.5 9.0 77.0 8.6 81.6 8.3 1.7 0.9 1.2 Federal Civilian Government 7.6 1.0 10.2 1.2 10.3 1.2 11.0 1.1 3.1 0.2 1.2 Federal Military 2.5 0.3 2.6 0.3 2.6 0.3 2.6 0.3 0.4 0.2 0.1 State And Local Government 52.3 7.1 60.7 7.4 64.1 7.1 68.0 6.9 1.5 1.1 1.2

TOTAL 733.7 100.0 % 820.5 100.0 % 898.6 100.0 % 981.5 100.0 % 1.1 % 1.8 % 1.8 %

MSA 1,068.0 — 1,248.1 — 1,368.0 — 1,501.5 — 1.6 % 1.9 % 1.9 % U.S. 165,371.0 — 173,626.7 — 185,504.6 — 198,343.5 — 0.8 1.3 1.3

Source: Woods & Poole Economics, Inc.

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Woods & Poole Economics, Inc. reports that during the period from 2000 to 2010, total employment in the county grew at an average annual rate of 1.1%. This trend was below the growth rate recorded by the MSA and also outpaced the national average, reflecting the expanding nature of the local economy throughout most of the decade until the recession in the latter years. More recently, the pace of total employment growth in the county accelerated to 1.8% on an annual average from 2010 to 2015, reflecting the initial years of the recovery.

Of the primary employment sectors, Total Services recorded the highest increase in number of employees during the period from 2010 to 2015, increasing by 48,230 people, or 10.8%, and transitioning from 54.4% to 55.1% of total employment. Of the various service sub-sectors, Accommodation And Food Services and Administrative And Waste Services were the largest employers. Forecasts developed by Woods & Poole Economics, Inc. anticipate that total employment in the county will change by 1.8% on average annually through 2020. The trend is above the forecast rate of change for the U.S. as a whole during the same period.

Radial Demographic The following table reflects radial demographic trends for our market area Snapshot measured by three points of distance from the hotel.

November-2016 Market Area Analysis - Orlando Florida Portfolio of Six Hotels

FIGURE 10-3 DEMOGRAPHICS BY RADIUS

November-2016 Market Area Analysis - Orlando Florida Portfolio of Six Hotels

Unemployment The following table presents historical unemployment rates for the hotels’ market Statistics area, the state, and the nation.

FIGURE 10-4 UNEMPLOYMENT STATISTICS

Year County MSA State U.S.

2006 3.1 % 3.2 % 3.2 % 4.6 % 2007 3.8 3.9 4.0 4.6 2008 6.0 6.1 6.3 5.8 2009 10.4 10.5 10.4 9.3 2010 10.8(r) 11.1(r) 11.1 9.6 2011 9.8(r) 10.0(r) 10.0(d) 8.9 2012 8.2(r) 8.4(r) 8.5(d) 8.1 2013 6.8(r) 7.0(r) 7.3(d) 7.4 2014 5.9(r) 6.0(r) 6.3(d) 6.2 2015 4.9(r) 5.0(r) 5.4(d) 5.3 Recent Month - Jul 2015 5.2 % 5.3 % 5.8 % 5.3 % 2016 4.5 4.6 5.1 4.9

* Letters shown next to data points (if any) reflect revised population controls and/or model re-estimation implemented by the BLS.

Source: U.S. Bureau of Labor Statistics

November-2016 Market Area Analysis - Orlando Florida Portfolio of Six Hotels

Locally, the unemployment rate was 4.9(r)% in 2015; for this same area in 2016, the most recent month’s unemployment rate was registered at 4.5%, versus 5.2% for the same month in 2015. Unemployment began to rise in 2007 as the region entered an economic slowdown; this trend continued through 2009 and 2010, reaching double digits as the height of the national recession took hold. However, unemployment declined in 2011, a trend that continued through 2015. The most recent comparative period illustrates further improvement, indicated by the lower unemployment rate in the latest available data for 2016. Local economic development officials noted that over the course of the economic recovery, Orlando has been a state leader in job creation, and this job growth has been fueled largely by the hospitality sector. Furthermore, local medical, research, and higher-education facilities continue to expand, and employment is strong within these sectors. Continued growth in the tourism industry and the biotechnology sector is anticipated to help stabilize employment levels. Our interviews with economic development officials reflect a positive outlook.

FIGURE 10-5 MAJOR EMPLOYERS

Number of Rank Firm Employees

1 Walt Disney World Resort 74,000 2 Universal Orlando 21,000 3 Adventist Health System/Florida Hospital 20,413 4 Orlando Health 16,828 5 Lockheed Martin Corp. 7,000 6 Darden Restaurants, Inc. 6,149 7 SeaWorld Parks & Entertainment, Inc. 6,032 8 Rosen Hotels & Resorts 4,526 9 Siemens Corporation 4,448 10 Westgate Resorts 3,992

Source: Orlando Economic Development Commission, 2016

The Ocoee area benefits from Orlando's popularity as a year-round tourism destination, anchored by the formidable Walt Disney World and Universal Orlando Resort, which have historically contributed to the area's overall economic strength. According to Visit Orlando, over 66 million people visited Orlando in 2015. New or expanded tourism attractions and refurbishments to area resorts are

November-2016 Market Area Analysis - Orlando Florida Portfolio of Six Hotels

expected to continue to support growth in visitation levels. In late 2015, after a roughly $500-million investment, the long-awaited International Drive shopping and entertainment corridor was completed. The corridor has increased visitation to the area with new attractions such as the Coca-Cola Orlando Eye and Sea Life Orlando Aquarium. Universal Orlando Resort is currently constructing a new water park called Volcano Bay, which spans 28 acres and is expected to open in the summer of 2017. Furthermore, Universal will be closing the 39-year-old Wet n' Wild water park on December 31, 2016. Within Ocoee, growth is occurring in the healthcare sector, as well as several new retail and residential developments, as previously mentioned. Health Central Hospital is expanding its emergency department from 15,000 to 52,000 square feet, increasing the number of patient beds, and creating a new cancer center and nursing home. With significant growth throughout the city, the greater Orlando area is projected to remain a top destination for both business and leisure travel.

Orlando International Airport (MCO) is located approximately six miles southeast of Downtown Orlando. Many major airlines service MCO, and the modern terminal facility offers a convenient passenger transportation system linking the concourse gates to the multilevel terminal. Orlando International Airport offers a variety of retail outlets and services, including numerous restaurants and bars. In January 2015, a $1.1-billion expansion/modernization project commenced at the airport. Initial changes will include the expansion of the automated people mover, a $215- million intermodal transportation hub, upgraded ticket lobbies, and a $114-million expansion and refurbishment of Airside 4. Construction on the initial improvements is scheduled for completion by 2018. Future plans call for the addition of up to 120 domestic and international gates at the South Terminal, a 1,000-room hotel, and over 750,000 square feet of additional retail space. Norwegian Air Shuttle ASA began nonstop Boeing 787 Dreamliner service to/from Oslo twice a week in May 2014 and added service to/from London in April 2015. In June 2015, TAM Airlines introduced new daily nonstop service to/from Brasília, while LAN Peru began new daily nonstop service to/from Lima. Additionally, Emirates Airline began service between Orlando and Dubai in September 2015. Domestic flight service is also expanding; Frontier Airlines began service to/from Indianapolis and Los Angeles in October 2015, and JetBlue Airways began service to/from Albany in December 2015.

November-2016 Market Area Analysis - Orlando Florida Portfolio of Six Hotels

The following table illustrates recent operating statistics for the Orlando International Airport, which is the primary airport facility serving the hotels’ submarket.

FIGURE 10-6 AIRPORT STATISTICS - ORLANDO INTERNATIONAL AIRPORT

Passenger Percent Percent Year Traffic Change* Change**

2006 34,640,451 — — 2007 36,480,416 5.3 % 5.3 % 2008 35,661,269 (2.2) 1.5 2009 33,693,649 (5.5) (0.9) 2010 34,877,899 3.5 0.2 2011 35,426,006 1.6 0.4 2012 35,273,036 (0.4) 0.3 2013 34,768,945 (1.4) 0.1 2014 35,714,091 2.7 0.4 2015 38,809,337 8.7 1.3 Year-to-date, Aug 2015 26,186,666 — — 2016 28,687,224 9.5 % —

*Annual average compounded percentage change from the previous year **Annual average compounded percentage change from first year of data

Source: Orlando International Airport

This facility recorded 38,809,337 passengers in 2015. The change in passenger traffic between 2014 and 2015 was 8.7%. The average annual change during the period shown was 1.3%. The recent uptick in passenger traffic can be attributed in large part to increased service by major air carriers in response to stronger economic conditions and a rise in demand. As one of the most visited cities in the world, Orlando boasts an ever-expanding route network. Healthy increases in domestic and international travel have been partly due to the substantial growth in seating availability in the market. Additionally, new flights on Delta, British Airways, Norwegian Air, and Silver Airways contributed to the growth in 2015. Emirates Airlines also launched nonstop service to/from Dubai in September 2015. The airport reported increases in both domestic and international travel for 2015.

November-2016 Market Area Analysis - Orlando Florida Portfolio of Six Hotels

Tourist Attractions The subject market benefits from a variety of tourism and leisure attractions in the area. Leisure demand generators include Universal Orlando Resort, Orlando International Premium Outlets, and attractions along International Drive. Special events also play a role during key weekends, such as concerts and festivals. No major changes related to these attributes of the market are expected in the near future.

Conclusion This section discussed a wide variety of economic indicators for the pertinent market area. Orlando is experiencing a period of economic strength and expansion, primarily led by the entertainment industry and the healthcare sector. The significant presence of Walt Disney World and Universal Studios continues to bolster the economy and lodging demand in the market. The outlook for the market area is positive.

November-2016 Market Area Analysis - Orlando Florida Portfolio of Six Hotels

11. Market Area Analysis - Fort Myers

Market Area Definition The market area for a lodging facility is the geographical region where the sources of demand and the competitive supply are located. One hotel is located in the city of Fort Myers, the county of Lee, and the state of Florida. The Fort Myers area, located in southwestern Florida, is primarily known for its resorts and beaches and the surrounding shopping, arts, and special-event venues. Fort Myers is home to Southwest Florida International Airport (RSW), making it highly accessible for both domestic and international travelers. The region offers over 130 public and private golf courses, and a growing retirement population has prompted significant investment and expansion within the healthcare sector over the past decade. Fort Myers is also home to numerous colleges and universities, including Edison State College, Florida Gulf Coast University, and Nova Southeastern University, among others. Moreover, the city hosts spring training activities for Major League Baseball's Boston Red Sox and Minnesota Twins clubs.

The subject property’s market area can be defined by its Combined Statistical Area (CSA): Cape Coral-Fort Myers-Naples, FL. The CSA represents adjacent metropolitan and micropolitan statistical areas that have a moderate degree of employment interchange. Micropolitan statistical areas represent urban areas in the United States based around a core city or town with a population of 10,000 to 49,999; the MSA requires the presence of a core city of at least 50,000 people and a total population of at least 100,000 (75,000 in New England). The following exhibit illustrates the market area.

November-2016 Market Area Analysis - Fort Myers Florida Portfolio of Six Hotels

MAP OF MARKET AREA

These data are summarized in the following table.

November-2016 Market Area Analysis - Fort Myers Florida Portfolio of Six Hotels

FIGURE 11-1 ECONOMIC AND DEMOGRAPHIC DATA SUMMARY

Average Annual Compounded Change 2000 2010 2015 2020 2000-10 2010-15 2015-20

Resident Population (Thousands) Lee County 444.3 620.5 678.1 740.7 3.4 % 1.8 % 1.8 % Cape Coral-Fort Myers, FL MSA 444.3 620.5 678.1 740.7 3.4 1.8 1.8 Cape Coral-Fort Myers-Naples, FL CSA 698.3 943.2 1,033.0 1,131.8 3.1 1.8 1.8 State of Florida 16,047.5 18,838.6 20,179.0 21,658.1 1.6 1.4 1.4 United States 282,162.4 309,330.2 324,186.9 340,554.3 0.9 0.9 1.0 Per-Capita Personal Income* Lee County $35,429 $40,872 $42,708 $46,024 1.4 0.9 1.5 Cape Coral-Fort Myers, FL MSA 35,429 40,872 42,708 46,024 1.4 0.9 1.5 Cape Coral-Fort Myers-Naples, FL CSA 40,029 46,181 48,145 52,061 1.4 0.8 1.6 State of Florida 34,981 37,721 39,407 42,027 0.8 0.9 1.3 United States 36,473 39,144 41,554 44,387 0.7 1.2 1.3 W&P Wealth Index Lee County 104.3 118.1 116.4 117.3 1.3 (0.3) 0.2 Cape Coral-Fort Myers, FL MSA 104.3 118.1 116.4 117.3 1.3 (0.3) 0.2 Cape Coral-Fort Myers-Naples, FL CSA 119.0 133.8 131.8 133.2 1.2 (0.3) 0.2 State of Florida 99.3 101.5 100.1 100.0 0.2 (0.3) (0.0) United States 100.0 100.0 100.0 100.0 0.0 0.0 0.0 Food and Beverage Sales (Millions)* Lee County $613 $936 $1,094 $1,253 4.3 3.2 2.7 Cape Coral-Fort Myers, FL MSA 613 936 1,094 1,253 4.3 3.2 2.7 Cape Coral-Fort Myers-Naples, FL CSA 1,046 1,591 1,866 2,144 4.3 3.2 2.8 State of Florida 22,184 29,113 33,196 37,143 2.8 2.7 2.3 United States 368,842 447,396 499,600 548,160 1.9 2.2 1.9 Total Retail Sales (Millions)* Lee County $7,435 $9,608 $11,361 $13,021 2.6 3.4 2.8 Cape Coral-Fort Myers, FL MSA 7,435 9,608 11,361 13,021 2.6 3.4 2.8 Cape Coral-Fort Myers-Naples, FL CSA 12,279 15,145 17,950 20,639 2.1 3.5 2.8 State of Florida 241,576 276,484 320,455 360,559 1.4 3.0 2.4 United States 3,902,969 4,149,070 4,707,800 5,187,469 0.6 2.6 2.0

* Inflation Adjusted Source: Woods & Poole Economics, Inc.

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The U.S. population grew at an average annual compounded rate of 0.9% from 2010 to 2015; the state’s population changed by 1.4% during that period. The county’s population increased at a quicker pace than the nation’s population; the average annual growth rate of 1.8% between 2010 and 2015 reflects a gradually expanding area. In 2015, the county’s population was approximately 680,000; it is forecast to be roughly 740,000 by 2020.

Following this population trend, per-capita personal income increased slowly, at 0.9% on average annually for the county between 2010 and 2015. The county’s annual per-capita personal income level was approximately $43,000 in 2015; it is expected to be $46,000 by 2020. This compares to respective state and U.S. levels of $39,000 and $42,000 in 2015, and $42,000 and $44,000 by 2020. The county’s local wealth index in 2015 was a relatively high 116.4, higher than the state’s 2015 wealth index of 100.1. The county’s wealth index is anticipated to be 117.3 by 2020, while the state’s wealth index is forecast to be 100.0.

Food and beverage sales totaled $1,094 million in the county in 2015, versus $936 million in 2010. This reflects a 3.2% average annual change, which is weaker than the 4.3% pace recorded in the prior decade. The pace of growth is anticipated to moderate to a more sustainable level of 2.7% through 2020. The retail sales sector demonstrated an annual increase of 2.6% from 2000 to 2010, followed by an increase of 3.4% during the period from 2010 to 2015. An increase of 2.8% average annual change in county retail sales is forecast through 2020.

Workforce The following table sets forth the county workforce distribution by business sector Characteristics in 2000, 2010, and 2015, as well as a forecast for 2020.

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FIGURE 11-2 HISTORICAL AND PROJECTED EMPLOYMENT (000S)

Average Annual Compounded Change Percent Percent Percent Percent Industry 2000 of Total 2010 of Total 2015 of Total 2020 of Total 2000-2010 2010-2015 2015-2020

Farm 1.6 0.7 % 1.3 0.5 % 1.5 0.5 % 1.5 0.5 % (2.0) % 2.8 % 0.1 % Forestry, Fishing, Related Activities And Other 1.3 0.6 1.3 0.5 1.5 0.5 1.6 0.5 0.3 2.7 1.5 Mining 0.6 0.3 1.3 0.5 1.6 0.5 1.7 0.5 8.2 3.5 0.8 Utilities 0.7 0.3 0.8 0.3 0.8 0.3 0.8 0.2 1.1 0.5 0.2 Construction 22.4 10.3 21.3 7.5 22.6 7.2 24.7 7.2 (0.5) 1.1 1.9 Manufacturing 6.5 3.0 5.0 1.7 5.3 1.7 5.5 1.6 (2.7) 1.5 0.7 Total Trade 38.5 17.6 44.5 15.7 49.1 15.7 54.1 15.8 1.5 2.0 2.0 Wholesale Trade 6.0 2.8 6.9 2.4 7.4 2.4 7.8 2.3 1.3 1.3 1.1 Retail Trade 32.4 14.8 37.6 13.2 41.7 13.3 46.3 13.5 1.5 2.1 2.1 Transportation And Warehousing 4.0 1.8 5.3 1.9 5.9 1.9 6.4 1.9 2.8 1.9 1.8 Information 5.4 2.4 3.7 1.3 3.9 1.2 4.0 1.2 (3.6) 0.9 0.7 Finance And Insurance 8.6 3.9 14.4 5.1 16.4 5.3 18.5 5.4 5.3 2.6 2.4 Real Estate And Rental And Lease 12.4 5.7 25.0 8.8 25.9 8.3 27.3 7.9 7.3 0.7 1.0 Total Services 89.2 40.8 122.1 43.0 138.5 44.2 154.5 45.0 3.2 2.6 2.2 Professional And Technical Services 12.0 5.5 17.0 6.0 20.0 6.4 21.9 6.4 3.6 3.3 1.8 Management Of Companies And Enterprises 1.1 0.5 2.6 0.9 3.1 1.0 3.5 1.0 8.7 3.9 2.4 Administrative And Waste Services 19.4 8.9 20.6 7.2 23.9 7.6 28.3 8.2 0.6 3.0 3.5 Educational Services 1.7 0.8 4.3 1.5 4.8 1.5 5.6 1.6 9.7 2.5 3.1 Health Care And Social Assistance 18.8 8.6 24.6 8.7 26.5 8.5 28.5 8.3 2.7 1.5 1.5 Arts, Entertainment, And Recreation 6.3 2.9 8.7 3.1 10.6 3.4 11.7 3.4 3.3 4.1 1.9 Accommodation And Food Services 16.2 7.4 25.2 8.9 27.8 8.9 30.3 8.8 4.5 2.0 1.7 Other Services, Except Public Administration 13.7 6.3 19.2 6.7 21.7 6.9 24.7 7.2 3.4 2.5 2.7 Total Government 27.5 12.6 38.0 13.4 40.0 12.8 42.6 12.4 3.3 1.0 1.3 Federal Civilian Government 2.1 1.0 2.8 1.0 2.6 0.8 2.8 0.8 3.1 (1.9) 1.6 Federal Military 1.0 0.5 1.3 0.5 1.3 0.4 1.3 0.4 2.8 (0.1) 0.1 State And Local Government 24.4 11.1 33.8 11.9 36.1 11.5 38.5 11.2 3.3 1.3 1.3

TOTAL 218.7 100.0 % 284.1 100.0 % 313.0 100.0 % 343.3 100.0 % 2.7 % 2.0 % 1.9 %

MSA 218.7 — 284.1 — 313.0 — 343.3 — 2.7 % 2.0 % 1.9 % U.S. 165,371.0 — 173,626.7 — 185,504.6 — 198,343.5 — 0.8 1.3 1.3

Source: Woods & Poole Economics, Inc.

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Woods & Poole Economics, Inc. reports that during the period from 2000 to 2010, total employment in the county grew at an average annual rate of 2.7%. This trend was on par with the growth rate recorded by the MSA and also outpaced the national average, reflecting the expanding nature of the local economy throughout most of the decade until the recession in the latter years. More recently, the pace of total employment growth in the county slowed to 2.0% on an annual average from 2010 to 2015.

Of the primary employment sectors, Total Services recorded the highest increase in number of employees during the period from 2010 to 2015, increasing by 16,384 people, or 13.4%, and transitioning from 43.0% to 44.2% of total employment. Of the various service sub-sectors, Accommodation And Food Services and Health Care And Social Assistance were the largest employers. Forecasts developed by Woods & Poole Economics, Inc. anticipate that total employment in the county will change by 1.9% on average annually through 2020. The trend is above the forecast rate of change for the U.S. as a whole during the same period.

Radial Demographic The following table reflects radial demographic trends for our market area Snapshot measured by three points of distance from the hotel.

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FIGURE 11-3 DEMOGRAPHICS BY RADIUS

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Unemployment The following table presents historical unemployment rates for the hotels’ market Statistics area, the state, and the nation.

FIGURE 11-4 UNEMPLOYMENT STATISTICS

Year County MSA State U.S.

2006 2.9 % 2.9 % 3.2 % 4.6 % 2007 4.7 4.7 4.0 4.6 2008 8.3 8.3 6.3 5.8 2009 12.3 12.3 10.4 9.3 2010 12.5(r) 12.5(r) 11.1 9.6 2011 10.9(r) 10.9(r) 10.0(d) 8.9 2012 8.9(r) 8.9(r) 8.5(d) 8.1 2013 7.3(r) 7.3(r) 7.3(d) 7.4 2014 6.0(r) 6.0(r) 6.3(d) 6.2 2015 5.0(r) 5.0(r) 5.4(d) 5.3 Recent Month - Jul 2015 5.5 % 5.5 % 5.8 % 5.3 % 2016 4.8 4.8 5.1 4.9

* Letters shown next to data points (if any) reflect revised population controls and/or model re-estimation implemented by the BLS.

Source: U.S. Bureau of Labor Statistics

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Locally, the unemployment rate was 5.0(r)% in 2015; for this same area in 2016, the most recent month’s unemployment rate was registered at 4.8%, versus 5.5% for the same month in 2015. Unemployment began to rise in 2007 as the region entered an economic slowdown, and this trend continued through 2010 as the height of the national recession took hold. However, unemployment declined in 2011 as the economy rebounded, a trend that continued through 2015. The most recent comparative period illustrates further improvement, indicated by the lower unemployment rate in the latest available data for 2016. Local economic development officials reported that the tourism industry and the healthcare sector provide strong employment in the market, and the continued diversification of the workforce should support further growth.

FIGURE 11-5 MAJOR EMPLOYERS

Number of Rank Firm Employees

1 Lee Memorial Health System 10,900 2 Lee County Public Schools 10,600 3 Publix Super Markets 5,007 4 Lee County BOCC 2,584 5 Walmart 2,507 6 The Home Depot 1,783 7 City of Cape Coral 1,654 8 Chico's FAS Inc. 1,642 9 Lee County Sheriff's Office 1,585 10 USPS 1,477

Source: Lee County Economic Development Southwest Florida, Oct 2015

Tourism is one of the primary industries in the area, with many attractions drawing year-round visitation. Lee and Collier Counties' white sand beaches stretch intermittently from the Ten Thousand Island region of the Everglades to the northern tip of Captiva Island. Museums and outdoor shopping districts, like those found in the River District area, are also popular. The healthcare sector is important in this area. Lee Memorial Health System operates four acute-care hospitals and two specialty hospitals, as well as outpatient centers, walk-in medical centers, and primary care and specialty physician offices. According to economic officials, the growing healthcare sector has prompted expansion of

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affiliated services within the medical industry. The $250-million expansion of the Golisano Children’s Hospital of Southwest Florida should open by year-end 2017. The HealthPark Medical Center campus is also undergoing expansion with the addition of the Shipley Center for Cardiothoracic Surgery Innovation, Education, & Research. Over the past several years, Southwest Florida has emerged as a center point for growth in software and computer science engineering. Gartner Inc., one of the area's fastest-growing companies, plans to expand in Lee County by constructing new facilities and adding additional jobs by 2019. Additionally, Lee County is home to several corporate headquarters including Chico's FAS and 21st Century Oncology, while Hertz Corporation opened its new worldwide headquarters in Estero in 2016.

FIGURE 11-6 OFFICE SPACE STATISTICS – MARKET OVERVIEW

Average Asking Submarket Year Vacancy Rate Lease Rate

Metro Area 2013 22.1 % $16.70 2014 22.1 16.63 2015 21.6 16.44

Non-CBD 2013 22.1 % $16.70 2014 22.1 16.63 2015 21.6 16.44

Source: REIS Report, 2nd Quarter, 2016

Southwest Florida International Airport (RSW) has consistently outpaced all projections for its growth. The airport is known as the Gateway to Fort Myers and Florida's Gulf Coast and is serviced by many major commercial airlines, as well as

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several charters. In September 2005, an entirely new airport facility opened, spanning 798,000 square feet and 28 aircraft gates along three concourses. The two-story airport includes a more complex baggage-handling system, modified passenger-screening checkpoints and security clearance areas, and restaurants and shops. With roughly 8.4 million passengers in 2015, RSW is one of the busiest single-runway airports in the U.S. Several carriers have announced the addition of seasonal service to RSW. United Airlines, JetBlue, Frontier Airlines, AirBerlin, and Sun Country Airlines are among the carriers that have added new service routes in recent years and contributed to continued growth in passenger counts. In June 2016, the Port Authority Board proposed an expansion of the RSW terminal in order to ease congestion at an initial estimate of $45 million.

The following table illustrates recent operating statistics for the Southwest Florida International Airport, which is the primary airport facility serving the hotels’ submarket.

FIGURE 11-7 AIRPORT STATISTICS - SOUTHWEST FLORIDA INTERNATIONAL AIRPORT

Passenger Percent Percent Year Traffic Change* Change**

2006 7,643,217 — — 2007 8,049,676 5.3 % 5.3 % 2008 7,603,845 (5.5) (0.3) 2009 7,415,958 (2.5) (1.0) 2010 7,514,316 1.3 (0.4) 2011 7,537,745 0.3 (0.3) 2012 7,350,625 (2.5) (0.6) 2013 7,637,801 3.9 (0.0) 2014 7,970,493 4.4 0.5 2015 8,371,801 5.0 1.0 Year-to-date, Jul 2015 5,421,560 — — 2016 5,662,649 4.4 % —

*Annual average compounded percentage change from the previous year **Annual average compounded percentage change from first year of data

Source: Southwest Florida International Airport

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This facility recorded 8,371,801 passengers in 2015. The change in passenger traffic between 2014 and 2015 was 5.0%. The average annual change during the period shown was 1.0%.

Tourist Attractions The subject market benefits from a variety of tourism and leisure attractions in the area. Leisure demand generators include numerous beaches, Spring Training for Major League Baseball teams (including the Boston Red Sox and the Minnesota Twins), and a variety of outlet malls and shopping destinations. Special events also play a role during key weekends, such as graduation and sporting events at local colleges and universities. No major changes related to these attributes of the market are expected in the near future.

Conclusion This section discussed a wide variety of economic indicators for the pertinent market area. The Lee County and Fort Myers area are experiencing a period of economic strength and expansion, primarily led by an increase in retirees relocating to the area, growth at local colleges and universities, a healthy office market, and continued growth in retail and service establishments that support the growing population. Our market interviews and research revealed that the relocation of Hertz worldwide headquarters to Estero, numerous residential developments, and an increase in travel has benefited the local economic base. The outlook for the market area is positive.

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12. Market Area Analysis - Sarasota

Market Area Definition The market area for a lodging facility is the geographical region where the sources of demand and the competitive supply are located. One hotel is located in the city and county of Sarasota and the state of Florida. Sarasota is a principal city of the Sarasota-Bradenton-Venice, Florida Metropolitan Statistical Area and is the county seat for Sarasota County. The city of Sarasota is situated in the Gulf Coast region of the state of Florida, one of the more heavily populated areas within the state. Sarasota’s proximity to the beaches on the Gulf of Mexico makes it a desirable resort destination, especially during the winter months when many travelers seek temperate climates. Sarasota County encompasses approximately 563 square miles and offers roughly 35 miles of beaches along the Gulf of Mexico, the county’s western border. Aside from tourism, the education, healthcare, retail trade, and government sectors provide this area with the strongest employers for the market.

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MAP OF MARKET AREA

These data are summarized in the following table.

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FIGURE 12-1 ECONOMIC AND DEMOGRAPHIC DATA SUMMARY

Average Annual Compounded Change 2000 2010 2015 2020 2000-10 2010-15 2015-20

Resident Population (Thousands) Sarasota County 327.2 380.0 399.4 421.6 1.5 % 1.0 % 1.1 % North Port-Sarasota-Bradenton, FL MSA 592.8 703.5 751.3 806.8 1.7 1.3 1.4 North Port-Sarasota, FL CSA 767.3 898.6 958.8 1,030.2 1.6 1.3 1.4 State of Florida 16,047.5 18,838.6 20,179.0 21,658.1 1.6 1.4 1.4 United States 282,162.4 309,330.2 324,186.9 340,554.3 0.9 0.9 1.0 Per-Capita Personal Income* Sarasota County $48,237 $50,918 $53,300 $57,759 0.5 0.9 1.6 North Port-Sarasota-Bradenton, FL MSA 43,442 45,336 47,237 50,823 0.4 0.8 1.5 North Port-Sarasota, FL CSA 40,253 42,302 44,259 47,625 0.5 0.9 1.5 State of Florida 34,981 37,721 39,407 42,027 0.8 0.9 1.3 United States 36,473 39,144 41,554 44,387 0.7 1.2 1.3 W&P Wealth Index Sarasota County 137.1 139.9 138.6 140.2 0.2 (0.2) 0.2 North Port-Sarasota-Bradenton, FL MSA 124.4 125.5 123.8 124.5 0.1 (0.3) 0.1 North Port-Sarasota, FL CSA 116.4 117.9 116.6 117.3 0.1 (0.2) 0.1 State of Florida 99.3 101.5 100.1 100.0 0.2 (0.3) (0.0 ) United States 100.0 100.0 100.0 100.0 0.0 0.0 0.0 Food and Beverage Sales (Millions)* Sarasota County $487 $642 $721 $797 2.8 2.4 2.0 North Port-Sarasota-Bradenton, FL MSA 770 1,038 1,183 1,327 3.0 2.7 2.3 North Port-Sarasota, FL CSA 927 1,224 1,396 1,568 2.8 2.7 2.4 State of Florida 22,184 29,113 33,196 37,143 2.8 2.7 2.3 United States 368,842 447,396 499,600 548,160 1.9 2.2 1.9 Total Retail Sales (Millions)* Sarasota County $5,592 $5,844 $6,645 $7,360 0.4 2.6 2.1 North Port-Sarasota-Bradenton, FL MSA 8,965 9,889 11,407 12,827 1.0 2.9 2.4 North Port-Sarasota, FL CSA 10,994 12,092 13,946 15,699 1.0 2.9 2.4 State of Florida 241,576 276,484 320,455 360,559 1.4 3.0 2.4 United States 3,902,969 4,149,070 4,707,800 5,187,469 0.6 2.6 2.0

* Inflation Adjusted Source: Woods & Poole Economics, Inc.

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Food and beverage sales totaled $721 million in the county in 2015, versus $642 million in 2010. This reflects a 3.1% average annual change, which is weaker than the 3.5% pace recorded in the prior decade. The pace of growth is anticipated to moderate to a more sustainable level of 2.4% through 2020. The retail sales sector demonstrated an annual increase of 1.6% from 2000 to 2010, followed by an increase of 2.6% during the period from 2010 to 2015. An increase of 2.7% average annual change in county retail sales is forecast through 2020.

Workforce The following table sets forth the county workforce distribution by business sector Characteristics in 2000, 2010, and 2015, as well as a forecast for 2020.

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FIGURE 12-2 HISTORICAL AND PROJECTED EMPLOYMENT (000S)

Average Annual Compounded Change Percent Percent Percent Percent Industry 2000 of Total 2010 of Total 2015 of Total 2020 of Total 2000-2010 2010-2015 2015-2020

Farm 0.6 0.3 % 0.4 0.2 % 0.4 0.2 % 0.4 0.2 % (3.2) % 0.5 % 0.6 % Forestry, Fishing, Related Activities And Other 0.4 0.2 0.3 0.1 0.3 0.1 0.4 0.1 (1.9) 1.6 1.6 Mining 0.2 0.1 0.6 0.3 0.7 0.3 0.7 0.3 10.6 2.9 0.6 Utilities 0.6 0.3 0.5 0.2 0.5 0.2 0.5 0.2 (2.4) (0.6) (0.0) Construction 15.0 7.9 13.4 6.3 14.0 6.2 15.4 6.3 (1.1) 0.9 1.9 Manufacturing 8.6 4.5 5.8 2.7 6.2 2.7 6.3 2.6 (3.9) 1.5 0.3 Total Trade 31.2 16.4 29.0 13.7 30.8 13.5 32.4 13.2 (0.7) 1.2 1.0 Wholesale Trade 4.3 2.2 4.8 2.3 5.5 2.4 6.2 2.5 1.2 2.9 2.2 Retail Trade 27.0 14.2 24.2 11.4 25.3 11.1 26.2 10.7 (1.1) 0.8 0.7 Transportation And Warehousing 2.3 1.2 3.2 1.5 3.3 1.4 3.4 1.4 3.1 0.7 0.7 Information 3.8 2.0 3.3 1.6 3.5 1.5 3.8 1.6 (1.2) 1.1 1.7 Finance And Insurance 10.9 5.7 15.1 7.1 17.1 7.5 18.9 7.7 3.3 2.6 2.0 Real Estate And Rental And Lease 9.1 4.8 17.3 8.2 19.0 8.3 20.5 8.4 6.6 1.8 1.6 Total Services 94.3 49.6 108.0 50.9 116.8 51.3 126.3 51.6 1.4 1.6 1.6 Professional And Technical Services 12.3 6.5 16.9 8.0 18.6 8.1 20.3 8.3 3.2 1.9 1.8 Management Of Companies And Enterprises 0.4 0.2 0.7 0.4 1.1 0.5 1.3 0.5 7.3 7.3 3.4 Administrative And Waste Services 20.3 10.7 15.6 7.4 18.1 7.9 20.8 8.5 (2.6) 2.9 2.8 Educational Services 1.8 0.9 3.7 1.8 4.5 2.0 5.4 2.2 7.7 3.9 3.9 Health Care And Social Assistance 23.7 12.5 30.1 14.2 31.2 13.7 32.8 13.4 2.4 0.7 1.0 Arts, Entertainment, And Recreation 6.9 3.6 8.7 4.1 9.6 4.2 10.4 4.2 2.3 2.1 1.5 Accommodation And Food Services 14.6 7.7 16.0 7.6 16.9 7.4 17.8 7.3 0.9 1.1 1.0 Other Services, Except Public Administration 14.3 7.5 16.1 7.6 16.9 7.4 17.5 7.1 1.2 0.9 0.7 Total Government 13.1 6.9 15.2 7.2 15.2 6.7 15.7 6.4 1.5 (0.0) 0.7 Federal Civilian Government 0.9 0.5 1.4 0.6 1.1 0.5 1.2 0.5 3.7 (3.7) 1.8 Federal Military 0.7 0.4 0.8 0.4 0.8 0.3 0.8 0.3 0.9 0.1 0.1 State And Local Government 11.5 6.0 13.1 6.2 13.3 5.8 13.7 5.6 1.3 0.3 0.6

TOTAL 190.0 100.0 % 212.1 100.0 % 227.8 100.0 % 244.6 100.0 % 1.1 % 1.4 % 1.4 %

MSA 351.9 — 366.2 — 395.4 — 428.5 — 0.4 % 1.6 % 1.6 % U.S. 165,371.0 — 173,626.7 — 185,504.6 — 198,343.5 — 0.8 1.3 1.3

Source: Woods & Poole Economics, Inc.

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Radial Demographic The following table reflects radial demographic trends for our market area Snapshot measured by three points of distance from the hotel.

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FIGURE 12-3 DEMOGRAPHICS BY RADIUS

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Unemployment The following table presents historical unemployment rates for the hotels’ market Statistics area, the state, and the nation.

FIGURE 12-4 UNEMPLOYMENT STATISTICS

Year County MSA State U.S.

2006 3.1 % 3.1 % 3.2 % 4.6 % 2007 4.6 4.4 4.0 4.6 2008 7.4 7.3 6.3 5.8 2009 11.3 11.5 10.4 9.3 2010 11.6(r) 11.5(r) 11.1 9.6 2011 10.2(r) 10.1(r) 10.0(d) 8.9 2012 8.5(r) 8.3(r) 8.5(d) 8.1 2013 7.0(r) 6.9(r) 7.3(d) 7.4 2014 5.9(r) 5.8(r) 6.3(d) 6.2 2015 5.0(r) 5.0(r) 5.4(d) 5.3 Recent Month - Jul 2015 5.3 % 5.3 % 5.8 % 5.3 % 2016 4.7 4.8 5.1 4.9

* Letters shown next to data points (if any) reflect revised population controls and/or model re-estimation implemented by the BLS.

Source: U.S. Bureau of Labor Statistics

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Locally, the unemployment rate was 5.0(r)% in 2015; for this same area in 2016, the most recent month’s unemployment rate was registered at 4.7%, versus 5.3% for the same month in 2015. Local unemployment began to rise in 2007 as the region entered an economic slowdown, and this trend continued through 2010 as the height of the national recession took hold. Unemployment began to decline modestly in 2011 as economic conditions began to improve. In 2012, unemployment levels improved more substantially, and this positive trend continued through 2015. The most recent comparative period illustrates continued improvement, indicated by the lower unemployment rate in the latest data for 2016. Reportedly, regional employment has remained strong within the retail, healthcare, and education sectors, as well as the manufacturing industry, including strong employment levels at entities such as the Sarasota Memorial Health Care System, PGT Industries, and Sun Hydraulics.

FIGURE 12-5 MAJOR EMPLOYERS

Number of Rank Firm Employees

1 School Board of Sarasota County 5,564 2 Sarasota County Government 3,447 3 Sarasota Memorial Hospital 3,099 4 PGT Industries 1,700 5 Publix Super Markets, Inc. 1,335 6 Venice Regional Medical Center 1,200 7 FCCI Insurance Group 720 8 Sun Hydraulics Corporation 702 9 Goodwill Industries 682 10 Sunset Automotive Group 650

Source: Economic Development Corporation Sarasota County, May 2016

Sarasota Memorial Health Care System offers an 819-bed regional medical center and is one of Sarasota County's largest employers. The system is also one of the largest public health systems in the state, with roughly 4,000 staff, over 800 physicians, and 1,000 volunteers. Sarasota Memorial Hospital (SMH) ranked seventh in the state on the prestigious U.S. News & World Report’s annual “Best Hospitals” list for 2015/16. In 2013, SMH completed a $250-million renovation and expansion that included a new central energy plant; a nine-story tower with

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private and delivery rooms; cardiology, orthopedic, and surgery centers; and an emergency clinic. The system opened a new Urgent Care Center in 2014, while SMH invested over $3.5 million in 2015 to create a Level II trauma program in its ER. The area is home to nine higher-education institutions, including the University of South Florida (USF) Sarasota-Manatee, Ringling College of Art and Design, Argosy University, and New College of Florida.

FIGURE 12-6 OFFICE SPACE STATISTICS – MARKET OVERVIEW

Average Asking Submarket Year Vacancy Rate Lease Rate

Metro Area 2013 21.0 % $20.01 2014 19.6 19.98 2015 19.5 20.25 CBD 2013 18.0 % $23.23 2014 17.6 23.24 2015 17.7 23.44

Non-CBD 2013 22.6 % $18.35 2014 20.7 18.31 2015 20.4 18.61

Source: REIS Report, 2nd Quarter, 2016

Sarasota Bradenton International Airport (SRQ) is serviced by several major airlines, serving over one million passengers annually. A large portion of the airport's commercial airline service occurs during the winter and spring months; the area is a popular tourist destination and seasonal home for those escaping the colder northern weather. In late 2015, construction began on a new air-traffic-

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control tower at the airport. The new 139-foot-tall tower is anticipated to cost $25 million and to be completed in 2017.

The following table illustrates recent operating statistics for the Sarasota Bradenton International Airport, which is the primary airport facility serving the hotels’ submarket.

FIGURE 12-7 AIRPORT STATISTICS - SARASOTA BRADENTON INTERNATIONAL AIRPORT

Passenger Percent Percent Year Traffic Change* Change**

2006 1,423,113 — — 2007 1,557,212 9.4 % 9.4 % 2008 1,503,166 (3.5) 2.8 2009 1,343,977 (10.6) (1.9) 2010 1,332,680 (0.8) (1.6) 2011 1,306,464 (2.0) (1.7) 2012 1,272,915 (2.6) (1.8) 2013 1,187,890 (6.7) (2.5) 2014 1,197,097 0.8 (2.1) 2015 1,220,363 1.9 (1.7) Year-to-date, Aug 2015 842,939 — — 2016 831,122 (1.4) % —

*Annual average compounded percentage change from the previous year

Source: Sarasota Bradenton International Airport

This facility recorded 1,220,363 passengers in 2015. The change in passenger traffic between 2014 and 2015 was 1.9%. The average annual change during the period shown was -1.7%.

Tourist Attractions The subject market benefits from a variety of tourism and leisure attractions in the area. Leisure demand generators include Siesta Key and numerous other nearby beaches, Myakka River State Park, John and Mable Ringling Museum of Art, and Nathan Benderson Park. Special events also play a role during key weekends, such as major rowing competitions at the Nathan Benderson Park. The area also benefits from significant demand from "snowbirds" who travel to the area during the winter months. No major changes related to these attributes of the market are expected in the near future.

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Conclusion This section discussed a wide variety of economic indicators for the pertinent market area. Sarasota is experiencing a period of economic strength, led by development of retail and sporting venues. Our market interviews and research revealed that in addition to being a popular leisure destination, the area is increasing its importance as a premier sports destination, with the development of Nathan Benderson Park rowing facility, the expansion of the IMG Academy, and the hosting of the 2017 World Rowing Championship. Furthermore, local government and development officials are aggressively courting new businesses, concentrating mainly on medical, life sciences, and specialty manufacturing. The reputation of Sarasota's beaches, coupled with the strong healthcare, retail, and government sectors, bodes well for the local economy. The outlook for the area is generally favorable.

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13. Lodging Trends

In the lodging industry, supply is measured by the number of guestrooms available, and demand is measured by the number of rooms occupied; the net effect of supply and demand toward equilibrium results in a prevailing price, or average rate. The purpose of this section is to investigate current supply and demand trends.

National Trends STR is an independent research firm that compiles data on the lodging industry, Overview and this information is routinely used by typical hotel buyers. The following STR diagram presents annual hotel occupancy and average rate data since 1987. The next two tables contain information that is more recent; the data are categorized by geographical region, price point, type of location, and chain scale, and the statistics include occupancy, average rate, and rooms revenue per available room (RevPAR). RevPAR is calculated by multiplying occupancy by average rate and provides an indication of how well rooms revenue is being maximized.

FIGURE 13-1 NATIONAL OCCUPANCY, AVERAGE RATE, AND REVPAR TRENDS

70.0% $120

$100 65.0%

$80 60.0%

$60 55.0% $40

50.0% $20

$0 45.0% 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

RevPAR Average Rate Occupancy

Source: STR

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FIGURE 13-2 NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS – YEAR-TO-DATE DATA

Occupancy - Thru August Average Rate - Thru August RevPAR - Thru August

2015 2016 % Change 2015 2016 % Change 2015 2016 % Change United States 67.0 % 66.9 % (0.2) % $120.45 $124.18 3.1 % $80.74 $83.10 2.9 % Region New England 65.3 % 64.8 % (0.8) % $146.21 $150.45 2.9 % $95.48 $97.43 2.0 % Middle Atlantic 67.9 67.6 (0.4) 155.42 156.65 0.8 105.55 105.97 0.4 South Atlantic 68.8 68.9 0.3 118.82 122.22 2.9 81.69 84.24 3.1 East North Central 62.5 62.4 (0.2) 104.95 107.28 2.2 65.60 66.93 2.0 East South Central 62.1 62.9 1.2 90.56 94.74 4.6 56.28 59.56 5.8 West North Central 61.0 60.2 (1.4) 93.47 96.09 2.8 57.02 57.81 1.4 West South Central 64.9 63.0 (2.8) 99.01 99.18 0.2 64.25 62.52 (2.7) Mountain 66.7 67.3 0.9 109.95 114.95 4.6 73.33 77.36 5.5 Pacific 74.8 75.5 0.9 152.30 160.20 5.2 113.96 120.93 6.1 Class Luxury 72.0 % 72.2 % 0.3 % $276.43 $279.75 1.2 % $199.02 $202.07 1.5 % Upper Upscale 74.2 74.1 (0.1) 173.58 177.58 2.3 128.82 131.61 2.2 Upscale 73.9 73.8 (0.2) 135.88 139.79 2.9 100.40 103.13 2.7 Upper Midscale 68.8 68.6 (0.2) 111.61 114.60 2.7 76.79 78.66 2.4 Midscale 61.7 61.3 (0.6) 90.94 93.44 2.8 56.08 57.25 2.1 Economy 60.1 59.8 (0.5) 67.86 70.53 3.9 40.81 42.20 3.4 Location Urban 74.1 % 74.1 % 0.0 % $169.77 $172.99 1.9 % $125.82 $128.20 1.9 % Suburban 68.3 68.3 0.0 102.34 106.37 3.9 69.89 72.66 4.0 Airport 75.4 75.1 (0.4) 110.29 114.49 3.8 83.15 85.94 3.4 Interstate 58.8 57.7 (1.8) 81.73 83.43 2.1 48.06 48.17 0.2 Resort 70.3 70.8 0.7 168.38 172.65 2.5 118.42 122.27 3.3 Small Metro/Town 58.5 58.2 (0.5) 97.84 100.64 2.9 57.23 58.60 2.4 Chain Scale Luxury 76.3 % 75.8 % (0.7) % $313.59 $318.65 1.6 % $239.23 $241.39 0.9 % Upper Upscale 75.8 75.6 (0.2) 174.65 178.68 2.3 132.35 135.07 2.1 Upscale 76.0 75.5 (0.6) 135.03 138.92 2.9 102.61 104.92 2.3 Upper Midscale 69.2 69.0 (0.3) 109.42 112.26 2.6 75.75 77.47 2.3 Midscale 61.2 60.7 (0.8) 84.20 86.33 2.5 51.55 52.42 1.7 Economy 59.7 59.1 (1.0) 59.28 61.36 3.5 35.37 36.24 2.5 Independents 63.5 63.8 0.5 119.32 123.59 3.6 75.73 78.80 4.1

Source: STR - August 2016 Lodging Review

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FIGURE 13-3 NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS – CALENDAR-YEAR DATA

Occupancy Average Rate RevPAR

2014 2015 % Change 2014 2015 % Change 2014 2015 % Change United States 64.4 % 65.6 % 1.7 % $114.92 $120.01 4.4 % $74.04 $78.67 6.3 % Region New England 63.5 64.8 % 2.0 % $139.15 $145.84 4.8 % $88.37 $94.48 6.9 % Middle Atlantic 66.9 67.6 1.1 160.87 162.13 0.8 107.58 109.61 1.9 South Atlantic 64.9 66.6 2.6 110.77 116.36 5.0 71.91 77.49 7.8 East North Central 60.5 61.5 1.6 99.68 104.72 5.1 60.34 64.37 6.7 East South Central 59.2 61.1 3.1 85.96 90.62 5.4 50.92 55.34 8.7 West North Central 59.6 59.7 0.2 89.96 93.06 3.4 53.63 55.56 3.6 West South Central 63.9 63.1 (1.3) 96.05 98.21 2.2 61.36 61.94 0.9 Mountain 63.1 65.0 3.0 103.07 108.69 5.5 65.05 70.66 8.6 Pacific 71.4 73.3 2.7 141.90 150.79 6.3 101.32 110.54 9.1 Price Luxury 69.7 % 70.9 % 1.8 % $270.22 $279.21 3.3 % $188.27 $198.01 5.2 % Upper upscale 72.0 72.6 1.0 166.79 173.45 4.0 120.01 125.99 5.0 Upscale 71.5 72.4 1.3 128.61 134.69 4.7 91.92 97.51 6.1 Upper midscale 65.8 67.0 1.9 105.86 110.41 4.3 69.61 73.99 6.3 Midscale 59.0 60.2 2.1 86.44 90.21 4.4 50.97 54.29 6.5 Economy 57.5 58.6 1.9 62.57 65.69 5.0 36.00 38.50 7.0 Location Urban 72.3 % 73.1 % 1.0 % $168.19 $173.95 3.4 % $121.67 $127.13 4.5 % Suburban 65.5 66.8 2.0 96.70 101.77 5.2 63.29 67.96 7.4 Airport 72.4 73.7 1.7 102.69 109.36 6.5 74.40 80.61 8.3 Interstate 56.8 57.4 1.0 78.67 81.11 3.1 44.66 46.52 4.2 Resort 66.1 68.2 3.2 156.21 163.49 4.7 103.32 111.57 8.0 Small Metro/Town 56.4 57.1 1.2 92.65 95.91 3.5 52.27 54.77 4.8 Chain Scale Luxury 75.0 % 75.3 % 0.5 % $304.72 $317.43 4.2 % $228.44 $239.11 4.7 % Upper Upscale 73.6 74.2 0.7 168.45 175.24 4.0 124.04 129.99 4.8 Upscale 73.8 74.3 0.7 127.55 133.79 4.9 94.15 99.46 5.6 Mid-scale w/ F&B 66.4 67.6 1.9 104.45 108.93 4.3 69.32 73.66 6.3 Mid-scale w/o F&B 58.3 59.5 2.1 79.84 83.18 4.2 46.55 49.50 6.3 Economy 57.5 58.3 1.4 56.14 58.97 5.0 32.26 34.37 6.5 Independents 60.7 62.2 2.5 113.21 118.25 4.4 68.70 73.55 7.1 Source: STR - December 2015 Lodging Review

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Following the significant RevPAR decline experienced during the last recession, demand growth resumed in 2010, led by select markets that had recorded growth trends in the fourth quarter of 2009. A return of business travel and some group activity contributed to these positive trends. The resurgence in demand was partly fueled by the significant price discounts that were widely available in the first half of 2010. These discounting policies were largely phased out in the latter half of the year, balancing much of the early rate loss. Demand growth remained strong, but decelerated from 2011 through 2013, increasing at rates of 4.7%, 2.8%, and 2.0%, respectively. Demand growth then surged to 4.0% in 2014, driven by a strong economy, a robust oil and gas sector, and limited new supply, among other factors. By 2014, occupancy had surpassed the 64% mark. Average rate rebounded similarly during this time, bracketing 4.0% annual gains from 2011 through 2014.

In 2015, demand growth continued to outpace supply growth, a relationship that has been in place since 2010. With a 2.9% increase in room-nights, the nation's occupancy level reached a record high 65.6% in 2015. Supply growth intensified, but remained at 1.1%, following annual supply growth levels of 0.7% and 0.9% of 2013 and 2014, respectively. Average rate posted another strong year of growth, at 4.4% in 2015, in pace with the annual growth of the last four years. Robust job growth, intensified group and leisure travel, and waning price-sensitivity all contributed to the gains. For year-to-date August 2016, occupancy decreased 0.1 of a point to 66.9%, reflecting that demand growth has not quite kept pace with supply growth. Average rate increased 3.1% year-to-date through August 2016. The net change in RevPAR through August 2016 was 2.9%, reflecting a healthy lodging market overall.

Conclusion The individual markets are influenced by conditions in the national lodging market. However, the local lodging markets are most directly affected by the supply and demand trends within the immediate area. We have reviewed national lodging trends to provide a context for the forecast of the supply and demand for the properties in the subject portfolio.

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14. Approaches to Value

In appraising real estate for market value, three approaches to value are considered: income capitalization, cost, and sales comparison. Basic summaries of each approach are provided as follows; please refer to the introduction of each respective chapter for additional description.

Income Capitalization The income capitalization approach analyzes a property's ability to generate Approach financial returns as an investment. The report estimates a property's operating cash flow, and the result is utilized in a direct capitalization technique and a discounted-cash-flow analysis. The income capitalization approach is often selected as the preferred valuation method for operating properties because it most closely reflects the investment rationale of knowledgeable buyers.

Sales Comparison The sales comparison approach estimates the value of a property by comparing it Approach to similar properties sold on the open market. To obtain a supportable estimate of value, the sales price of a comparable property must be adjusted to reflect any dissimilarity between it and the property being appraised. The sales comparison approach is most useful in the case of simple forms of real estate such as vacant land and single-family homes, where the properties are homogeneous and the adjustments are few and relatively simple to compute. In the case of complex investments such as hotels, where the adjustments are numerous and more difficult to quantify, the sales comparison approach loses much of its reliability.

Cost Approach The cost approach estimates market value by computing the cost of replacing the property and subtracting any depreciation resulting from physical deterioration, functional obsolescence, and external (or economic) obsolescence. The value of the land, as if vacant and available, is then added to the depreciated value of the improvements for a total value estimate. The cost approach is most reliable for estimating the value of new properties; however, as the improvements deteriorate and market conditions change, the resultant loss in value becomes increasingly difficult to quantify accurately. Moreover, our experience with hotel investors shows that this group of buyers and sellers relies upon the methods of the income approach when making decisions; the cost approach generally does not play a significant role.

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Reconciliation The final step in the valuation process is the reconciliation and correlation of the value indications. Factors that are considered in assessing the reliability of each approach include the purpose of the report, the nature of the hotel, and the reliability of the data used. In the reconciliation, the applicability and supportability of each approach are considered and the range of value indications is examined. The most significant weight is given to the approach that produces the most reliable solution and most closely reflects the criteria used by typical investors.

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15. Income Capitalization Approach

Each of the properties in the subject portfolio was valued via the income capitalization and sales capitalization approaches to value. The sum of the value conclusions reached for the hotels and the weighted rates of return reflected in the aggregate value provide a basis for comparison when developing our opinion of the “as is” market value of the six-hotel portfolio. This section sets forth the composite forecast of income and expense and derived rates of return for the aggregate valuation.

INCOME APPROACH Forecasts of income and expense for each of the six properties have been developed and are presented in the individual narrative appraisal reports. The forecast of income and expense for the six properties has been derived by adding up the revenue and expense categories of each individual property into a composite statement and is expressed in current dollars for each year.

The forecasts that make up the composite income and expense statement set forth in the following tables are contained in the individual appraisal reports. The first table presents a detailed composite five-year forecast, which represents the aggregate of the individual forecasts for the six hotels, including amounts per available room and per occupied room. The stabilized year is intended to reflect the anticipated operating results of the six properties over their remaining economic lives, given any or all applicable stages of build-up, plateau, and decline in the life cycle of the assets. The second table illustrates our ten-year forecast of income and expense, presented with a lesser degree of detail.

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FIGURE 15-1 DETAILED FORECAST OF INCOME AND EXPENSE AND TRAILING-12-MONTH OPERATING HISTORY

Historical Operating Results 2015/16 Fiscal Year Ending August 2016/17 2017/18 2018/19 Stabilized 2020/21 Number of Rooms: 559 559 559 559 559 559 Occupancy (Paid Rooms): 74% 72% 71% 70% 71% 71% Average Rate: $113.09 $118.86 $123.49 $127.32 $131.12 $135.05 RevPAR: $83.48 $86.02 $87.49 $89.73 $92.62 $95.39 Days Open: 365 365 365 365 365 365 Occupied Rooms (Paid): 150,752 %Gross PAR POR 147,785 %Gross PAR POR 144,677 %Gross PAR POR 143,934 %Gross PAR POR 144,252 %Gross PAR POR 144,252 %Gross PAR POR OPERATING REVENUE Rooms $17,049 97.1 % $30,471 $113.09 $17,566 97.2 % $31,396 $118.86 $17,866 97.2 % $31,932 $123.49 $18,325 97.2 % $32,753 $127.32 $18,914 97.2 % $33,805 $131.12 $19,481 97.2 % $34,819 $135.05 Food 119 0.7 212 0.79 111 0.6 199 0.75 113 0.6 202 0.78 119 0.6 212 0.83 124 0.6 221 0.86 127 0.6 228 0.88 Beverage 38 0.2 68 0.25 37 0.2 66 0.25 37 0.2 67 0.26 39 0.2 70 0.27 41 0.2 73 0.28 42 0.2 75 0.29 Other Operated Departments 215 1.2 385 1.43 156 0.9 279 1.06 159 0.9 284 1.10 163 0.9 292 1.13 168 0.9 300 1.17 173 0.9 309 1.20 Miscellaneous Income 133 0.8 238 0.88 198 1.1 353 1.34 201 1.1 360 1.39 207 1.1 371 1.44 214 1.1 382 1.48 220 1.1 394 1.53 Total Operating Revenues 17,554 100.0 31,374 116.44 18,068 100.0 32,293 122.26 18,377 100.0 32,845 127.02 18,853 100.0 33,697 130.99 19,460 100.0 34,782 134.90 20,044 100.0 35,824 138.95 DEPARTMENTAL EXPENSES * Rooms 3,610 21.2 6,453 23.95 3,928 22.4 7,020 26.58 3,992 22.3 7,134 27.59 4,102 22.4 7,331 28.50 4,228 22.4 7,556 29.31 4,355 22.4 7,783 30.19 Food & Beverage 163 104.2 292 1.08 157 105.8 280 1.06 160 106.4 286 1.11 166 105.2 297 1.15 172 104.6 307 1.19 177 104.6 316 1.23 Other Operated Departments 132 61.2 236 0.88 135 86.3 240 0.91 138 86.7 246 0.95 142 86.8 253 0.98 146 86.8 261 1.01 150 86.8 269 1.04 Total 3,906 22.3 6,981 25.91 4,219 23.4 7,541 28.55 4,289 23.3 7,666 29.65 4,409 23.4 7,881 30.63 4,546 23.4 8,125 31.51 4,682 23.4 8,368 32.46 DEPARTMENTAL INCOME 13,648 77.8 24,393 90.53 13,849 76.6 24,752 93.71 14,087 76.7 25,179 97.37 14,444 76.6 25,816 100.35 14,915 76.6 26,657 103.39 15,362 76.6 27,456 106.49 UNDISTRIBUTED OPERATING EXPENSES Administrative & General 1,722 9.8 3,078 11.42 1,525 8.4 2,726 10.32 1,560 8.5 2,789 10.78 1,605 8.5 2,869 11.15 1,654 8.5 2,957 11.47 1,704 8.5 3,046 11.81 Marketing 914 5.2 1,633 6.06 996 5.5 1,781 6.74 1,019 5.5 1,821 7.04 1,048 5.6 1,874 7.28 1,080 5.6 1,931 7.49 1,113 5.6 1,989 7.71 Franchise Fee 1,011 5.8 1,807 6.71 1,470 8.1 2,627 9.95 1,495 8.1 2,671 10.33 1,533 8.1 2,739 10.65 1,582 8.1 2,827 10.97 1,629 8.1 2,912 11.30 Prop. Operations & Maint. 961 5.5 1,718 6.38 959 5.3 1,715 6.49 981 5.3 1,754 6.78 1,010 5.4 1,805 7.02 1,041 5.3 1,860 7.22 1,072 5.3 1,916 7.43 Utilities 750 4.3 1,340 4.97 767 4.2 1,371 5.19 785 4.3 1,402 5.42 807 4.3 1,443 5.61 832 4.3 1,487 5.77 857 4.3 1,532 5.94 Total 5,357 30.5 9,575 35.54 5,718 31.5 10,219 38.69 5,840 31.7 10,438 40.37 6,004 31.9 10,731 41.71 6,190 31.8 11,063 42.91 6,375 31.8 11,395 44.20 GROSS HOUSE PROFIT 8,291 47.2 14,818 54.99 8,131 45.1 14,533 55.02 8,247 45.0 14,741 57.00 8,440 44.7 15,085 58.64 8,725 44.8 15,594 60.48 8,986 44.8 16,061 62.29 Management Fee 453 2.6 810 3.01 542 3.0 969 3.67 551 3.0 985 3.81 566 3.0 1,011 3.93 584 3.0 1,043 4.05 601 3.0 1,075 4.17 INCOME BEFORE NON-OPER. INC. & 7,837EXP. 44.6 14,008 51.99 7,589 42.1 13,564 51.35 7,696 42.0 13,755 53.19 7,875 41.7 14,074 54.71 8,141 41.8 14,551 56.44 8,385 41.8 14,986 58.13 NON-OPERATING INCOME AND EXPENSE Property Taxes 631 3.6 1,127 4.18 681 3.8 1,217 4.61 702 3.8 1,256 4.86 726 3.9 1,298 5.05 751 3.9 1,343 5.21 778 3.9 1,390 5.39 Insurance 269 1.5 481 1.79 275 1.5 492 1.86 282 1.5 504 1.95 290 1.5 519 2.02 299 1.5 535 2.07 308 1.5 551 2.14 Reserve for Replacement 604 3.4 1,080 4.01 723 4.0 1,292 4.89 735 4.0 1,314 5.08 754 4.0 1,348 5.24 778 4.0 1,391 5.40 802 4.0 1,433 5.56 Total 1,504 8.6 2,688 9.98 1,679 9.3 3,001 11.36 1,720 9.3 3,073 11.89 1,771 9.4 3,165 12.30 1,829 9.4 3,269 12.68 1,888 9.4 3,374 13.09 EBITDA LESS RESERVE $6,333 36.1 % $11,319 $42.01 $5,910 32.8 % $10,564 $39.99 $5,976 32.7 % $10,682 $41.31 $6,104 32.3 % $10,909 $42.41 $6,312 32.4 % $11,281 $43.76 $6,497 32.4 % $11,612 $45.04 *Departmental expenses are expressed as a percentage of departmental revenues.

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FIGURE 15-2 TEN-YEAR FORECAST OF INCOME AND EXPENSE

2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26

Number of Rooms: 559 559 559 559 559 559 559 559 559 559 Occupied Rooms: 147,785 144,677 143,934 144,252 144,252 144,252 144,252 144,252 144,252 144,252 Occupancy: 72% 71% 70% 71% 71% 71% 71% 71% 71% 71% Average Rate: $118.86 % of $123.49 % of $127.32 % of $131.12 % of $135.05 % of $139.11 % of $143.28 % of $147.58 % of $152.00 % of $156.56 % of RevPAR: $86.02 Gross $87.49 Gross $89.73 Gross $92.62 Gross $95.39 Gross $98.26 Gross $101.21 Gross $104.24 Gross $107.37 Gross $110.59 Gross OPERATING REVENUE Rooms $17,566 97.2 % $17,866 97.2 % $18,325 97.2 % $18,914 97.2 % $19,481 97.2 % $20,067 97.2 % $20,668 97.2 % $21,288 97.2 % $21,926 97.2 % $22,584 97.2 % Food 111 0.6 113 0.6 119 0.6 124 0.6 127 0.6 131 0.6 135 0.6 139 0.6 143 0.6 148 0.6 Beverage 37 0.2 37 0.2 39 0.2 41 0.2 42 0.2 43 0.2 44 0.2 46 0.2 47 0.2 48 0.2 Other Operated Departments 156 0.9 159 0.9 163 0.9 168 0.9 173 0.9 178 0.9 184 0.9 189 0.9 195 0.9 201 0.9 Miscellaneous Income 198 1.1 201 1.1 207 1.1 214 1.1 220 1.1 227 1.1 234 1.1 241 1.1 248 1.1 255 1.1 Total Operating Revenue 18,068 100.0 18,377 100.0 18,853 100.0 19,460 100.0 20,044 100.0 20,646 100.0 21,265 100.0 21,903 100.0 22,559 100.0 23,236 100.0 DEPARTMENTAL EXPENSES* Rooms 3,928 22.4 3,992 22.3 4,102 22.4 4,228 22.4 4,355 22.4 4,485 22.4 4,620 22.4 4,758 22.4 4,901 22.4 5,048 22.4 Food & Beverage 157 105.8 160 106.4 166 105.2 172 104.6 177 104.6 182 104.6 188 104.6 193 104.6 199 104.6 205 104.6 Other Operated Departments 135 86.3 138 86.7 142 86.8 146 86.8 150 86.8 155 86.8 160 86.8 164 86.8 169 86.8 174 86.8 Total 4,219 23.4 4,289 23.3 4,409 23.4 4,546 23.4 4,682 23.4 4,822 23.4 4,967 23.4 5,116 23.4 5,270 23.4 5,428 23.4 DEPARTMENTAL INCOME 13,849 76.6 14,087 76.7 14,444 76.6 14,915 76.6 15,362 76.6 15,824 76.6 16,298 76.6 16,787 76.6 17,290 76.6 17,808 76.6 UNDISTRIBUTED OPERATING EXPENSES Administrative & General 1,525 8.4 1,560 8.5 1,605 8.5 1,654 8.5 1,704 8.5 1,755 8.5 1,808 8.5 1,862 8.5 1,918 8.5 1,975 8.5 Marketing 996 5.5 1,019 5.5 1,048 5.6 1,080 5.6 1,113 5.6 1,146 5.6 1,181 5.6 1,216 5.6 1,252 5.6 1,290 5.6 Franchise Fee 1,470 8.1 1,495 8.1 1,533 8.1 1,582 8.1 1,629 8.1 1,678 8.1 1,729 8.1 1,781 8.1 1,834 8.1 1,889 8.1 Prop. Operations & Maint. 959 5.3 981 5.3 1,010 5.4 1,041 5.3 1,072 5.3 1,104 5.3 1,137 5.3 1,172 5.3 1,207 5.3 1,243 5.3 Utilities 767 4.2 785 4.3 807 4.3 832 4.3 857 4.3 883 4.3 909 4.3 937 4.3 965 4.3 994 4.3 Total 5,718 31.5 5,840 31.7 6,004 31.9 6,190 31.8 6,375 31.8 6,567 31.8 6,764 31.8 6,967 31.8 7,176 31.8 7,391 31.8 GROSS HOUSE PROFIT 8,131 45.1 8,247 45.0 8,440 44.7 8,725 44.8 8,986 44.8 9,257 44.8 9,534 44.8 9,820 44.8 10,114 44.8 10,418 44.8 Management Fee 542 3.0 551 3.0 566 3.0 584 3.0 601 3.0 619 3.0 638 3.0 657 3.0 677 3.0 697 3.0 INCOME BEFORE NON-OPER. INC. & EXP. 7,589 42.1 7,696 42.0 7,875 41.7 8,141 41.8 8,385 41.8 8,638 41.8 8,896 41.8 9,163 41.8 9,437 41.8 9,720 41.8 NON-OPERATING INCOME AND EXPENSE Property Taxes 681 3.8 702 3.8 726 3.9 751 3.9 778 3.9 801 3.9 825 3.9 850 3.9 875 3.9 902 3.9 Insurance 275 1.5 282 1.5 290 1.5 299 1.5 308 1.5 317 1.5 327 1.5 337 1.5 347 1.5 357 1.5 Reserve for Replacement 723 4.0 735 4.0 754 4.0 778 4.0 802 4.0 826 4.0 851 4.0 876 4.0 902 4.0 929 4.0 Total 1,679 9.3 1,720 9.3 1,771 9.4 1,829 9.4 1,888 9.4 1,944 9.4 2,003 9.4 2,063 9.4 2,125 9.4 2,188 9.4 EBITDA LESS RESERVE $5,910 32.8 % $5,976 32.7 % $6,104 32.3 % $6,312 32.4 % $6,497 32.4 % $6,693 32.4 % $6,893 32.4 % $7,100 32.4 % $7,313 32.4 % $7,532 32.4 % 1 1 1 1 1 1 1 1 1 1 *Departmental expenses are expressed as a percentage of departmental revenues.

November-2016 Income Capitalization Approach Florida Portfolio of Six Hotels 174

Discounted-Cash-Flow In the individual appraisal reports, each property has been valued via a mortgage- Analysis and Derived equity discounted-cash-flow analysis and an unlevered discounted-cash-flow Rates of Return analysis. In order to provide a basis for comparison to our portfolio valuation, the aggregate rates of return for the six properties have been derived based on the aggregate value conclusion and the composite forecast of income and expense for the hotels. The “as is” aggregate market value of the properties, based on derived weighted discount and capitalization rates, is set forth in the following table.

FIGURE 15-3 AGGREGATE DISCOUNTED CASH FLOW – “AS IS”

EBITDA Less Discount Factor @ Discounted Year Reserves 10.35% Cash Flow

2016/17 $5,910,000 0.90621 $5,355,686 2017/18 5,976,000 0.82121 4,907,563 2018/19 6,104,000 0.74419 4,542,527 2019/20 6,312,000 0.67439 4,256,745 2020/21 6,497,000 0.61114 3,970,555 2021/22 6,693,000 0.55382 3,706,695 2022/23 6,893,000 0.50187 3,459,409 2023/24 7,100,000 0.45480 3,229,086 2024/25 7,313,000 0.41214 3,014,009 2025/26 87,355,000 * 0.37349 32,626,042 Estimated Market Value, Prior to Deduct $69,068,317 Capital Deduction (If Applicable) 5,568,000 Estimated Market Value, After Deduct $63,500,317 Rounded To $63,500,000 Per Room $113,500

Reversion Analysis 11th Year's EBITDA Less Reserves $7,758,000 Capitalization Rate 9.4% Total Sales Proceeds $82,292,000 Less: Transaction Costs @ 3.0% 2,469,000

Net Sales Proceeds $79,823,000

10th year EBITDA Less Replacement Resserve of $7,532,000 plus sales proceeds of $79,823,000.

The weighted discount and terminal capitalization rates for the six hotels equate to 10.35% and 9.4%, respectively. The aggregate “as is” market value of the six

November-2016 Income Capitalization Approach Florida Portfolio of Six Hotels 175

properties, following an aggregate capital deduction of $5,568,000, equates to $63,500,000, or $113,500 per room.

Individual Property Each of the properties included in the subject portfolio has been evaluated based Appraisal Reports upon its historical and anticipated operating performance relative to its local lodging market and the U.S. hotel market overall. The details of this investigation and analysis are included in our work file.

November-2016 Income Capitalization Approach Florida Portfolio of Six Hotels 176

16. Sales Comparison Approach

The sales comparison approach is based on the principle of substitution, which defines a property’s value as the cost of acquiring an equally desirable substitute (assuming that no costly delay is incurred in making the substitution). Thus, the sales comparison approach can be used to form an opinion of a property’s market value from the price at which equally desirable properties have sold, or for which they can be purchased, on the open market.

SALES COMPARISON Comparable sales utilized in the individual property valuations were based upon a APPROACH comprehensive search of recent transactions of comparably branded hotels, as well as regional-specific transactions. The tables that were utilized as the basis for the sales comparison approach are included in in our work file. These sales transactions, along with regional sales, were analyzed and adjusted to conclude to a value range via the sales comparison approach in each individual appraisal report.

Conclusion Prior to adjustments, the comparable sales transacted for amounts ranging from $90,000 to $155,000 per room. Following quantitiative and qualititative adjustments detailed in the individual reports, a range of of per key values from $90,000 to $132,000 was selected, which equates to a concluded value range via the sales comparison approach from $50,400,000 to $73,900,000 for the 559-room portfolio of six hotels.

November-2016 Sales Comparison Approach Florida Portfolio of Six Hotels 177

17. Reconciliation of Value Indications

The reconciliation, which is the last step in the report process, involves summarizing and correlating the data and procedures employed throughout the analysis. The final value conclusion is arrived at after reviewing the estimates indicated by the income capitalization and sales comparison approaches. The relative significance, applicability, and defensibility of each indicated value are considered, and the greatest weight is given to that approach deemed most appropriate for the property being appraised.

The purpose of this report is to estimate the market value of the fee simple interest in the hotel; our report involves a careful analysis of the property itself and the economic, demographic, political, physical, and environmental factors that influence real estate values.

Income Capitalization Our nationwide experience indicates that the procedures used in estimating Approach market value by the income capitalization approach are comparable to those employed by the hotel investors who constitute the marketplace. For this reason, we believe that the income capitalization approach produces the most supportable value estimate, and it is given the greatest weight in our final estimate of the hotel's market value.

Sales Comparison The sales comparison approach uses actual sales of similar properties to provide Approach an indication of the hotel's value. Although we have investigated a number of sales in an attempt to develop a range of value indications, several adjustments are necessary to render these sales prices applicable to the hotel. The adjustments, which tend to be subjective, diminish the reliability of the sales comparison approach; furthermore, typical hotel investors employ a sales comparison procedure only to establish broad value parameters.

Cost Approach Due to the practices of typical hotel buyers and sellers in today’s market, the cost approach was not employed in arriving at an “as is” market value estimate.

November-2016 Reconciliation of Value Indications Florida Portfolio of Six Hotels 178

Value Conclusion Based on our analysis, it is our opinion that the “as is” market value of the fee simple interest in the real and personal property of The Portfolio, as of September 16, 2016, is:

$63,500,000

SIXTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS

This value estimate equates to $113,500 per room. This represents the "as is" value of The Portfolio, assuming a total capital expenditure of $5,568,000. In the event that the actual cost differs from the amount stated, the value of the The Portfolio may change. It is assumed that the capital improvements will be completed in a competent and timely manner.

This report is hotel to the extraordinary assumption that capital deductions will be required to fund necessary upgrades for The Portfolio. The use of this extraordinary assumption may have affected the assignment results. Moreover, several important general assumptions have been made that apply to this report and our valuations of hotels in general. These items are set forth in the Assumptions and Limiting Conditions chapter of this report.

November-2016 Reconciliation of Value Indications Florida Portfolio of Six Hotels 179

18. Statement of Assumptions and Limiting Conditions

1. This is a restricted appraisal report that is intended to comply with the reporting requirements set forth under Standard Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Restricted Appraisal Report. As such, it does not include full discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraisers' opinion of value. The information presented in the report is specific to the needs of the client and for the intended use stated in this report. We are not responsible for unauthorized use of this report. 2. This report is to be used in whole and not in part. Furthermore, the rationale for how we arrived at our opinions and conclusions may not be properly understood without additional information in our work file. 3. No responsibility is assumed for matters of a legal nature, nor do we render any opinion as to title, which is assumed marketable and free of any deed restrictions and easements. The property is valued as though free and clear unless otherwise stated. 4. We assume that there are no hidden or unapparent conditions of the subsoil or structures, such as underground storage tanks, that would render the property more or less valuable. No responsibility is assumed for these conditions or for any engineering that may be required to discover them. 5. We have not considered the presence of potentially hazardous materials such as asbestos, urea-formaldehyde foam insulation, any form of toxic waste, polychlorinated biphenyls (PCBs), pesticides, mold, or lead-based paints. We are not qualified to detect hazardous substances and urge the client to retain an expert in this field if desired. 6. The Americans with Disabilities Act (ADA) became effective on January 26, 1992. We have conducted no specific compliance survey to determine whether the hotel has been designed in accordance with the various detailed requirements of the ADA. It is possible that the design does not conform to the requirements of the act, and this could have an unfavorable effect on value. Because we have no direct evidence regarding this issue, our estimate of value does not consider possible non-compliance with the ADA. 7. We have made no survey of the properties, and we assume no responsibility in connection with such matters. Sketches, photographs, maps, and other exhibits are included to assist the reader in visualizing the

November-2016 Statement of Assumptions and Limiting Conditions Florida Portfolio of Six Hotels 180

property. It is assumed that the use of the described real estate is within the boundaries of the property described, and that there is no encroachment or trespass unless noted. 8. All information, financial operating statements, estimates, and opinions obtained from parties not employed by TS Worldwide, LLC are assumed true and correct. We can assume no liability resulting from misinformation. 9. Unless noted, we assume that there are no encroachments, zoning violations, or building violations encumbering the hotels. 10. The properties are assumed to be in full compliance with all applicable federal, state, local, and private codes, laws, consents, licenses, and regulations (including the appropriate liquor license if applicable), and that all licenses, permits, certificates, franchises, and so forth can be freely renewed or transferred to a purchaser. 11. All mortgages, liens, encumbrances, leases, and servitudes have been disregarded unless specified otherwise. 12. None of this material may be reproduced in any form without our written permission, and the report cannot be disseminated to the public through advertising, public relations, news, sales, or other media. 13. We are not required to give testimony or attendance in court because of this analysis without previous arrangements, and shall do so only when our standard per-diem fees and travel costs have been paid prior to the appearance. 14. If the reader is making a fiduciary or individual investment decision and has any questions concerning the material presented in this report, it is recommended that the reader contact us. 15. We take no responsibility for any events or circumstances that take place subsequent to either the date of value or the date of our field inspection, whichever occurs first. 16. The quality of a lodging facility's onsite management has a direct effect on a property's economic viability and value. The financial forecasts presented in this analysis assume responsible ownership and competent management. Any departure from this assumption may have a significant impact on the projected operating results and the value estimate. 17. The financial analysis presented in this report is based upon assumptions, estimates, and evaluations of the market conditions in the local and national economy, which may be hotel to sharp rises and declines. Over the projection period considered in our analysis, wages and other operating

November-2016 Statement of Assumptions and Limiting Conditions Florida Portfolio of Six Hotels 181

expenses may increase or decrease because of market volatility and economic forces outside the control of the hotel’s management. We assume that the price of hotel rooms, food, beverages, and other sources of revenue to the hotel will be adjusted to offset any increases or decreases in related costs. We do not warrant that our estimates will be attained, but they have been developed based upon information obtained during the course of our market research and are intended to reflect the expectations of a typical hotel buyer as of the stated date(s) of valuation. 18. This analysis assumes continuation of all Internal Revenue Service tax code provisions as stated or interpreted on either the date of value or the date of our field inspection, whichever occurs first. 19. Many of the figures presented in this report were generated using sophisticated computer models that make calculations based on numbers carried out to three or more decimal places. In the interest of simplicity, most numbers have been rounded to the nearest tenth of a percent. Thus, these figures may be hotel to small rounding errors. 20. It is agreed that our liability to the client is limited to the amount of the fee paid as liquidated damages. Our responsibility is limited to the client, and use of this report by third parties shall be solely at the risk of the client and/or third parties. The use of this report is also hotel to the terms and conditions set forth in our engagement letter with the client. 21. Although this analysis employs various mathematical calculations to provide value indications, the final estimate is subjective and may be influenced by our experience and other factors not specifically set forth in this report. 22. Any distribution of the total value between the land and improvements or between partial ownership interests applies only under the stated use. Moreover, separate allocations between components are not valid if this report is used in conjunction with any other analysis. 23. Our report has been prepared in accordance with, and is hotel to, the requirements of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and the Uniform Standards of Professional Practice (USPAP), as provided by the Report Foundation. 24. This study was prepared by TS Worldwide, LLC. All opinions, recommendations, and conclusions expressed during the course of this assignment are rendered by the staff of TS Worldwide, LLC as employees, rather than as individuals.

November-2016 Statement of Assumptions and Limiting Conditions Florida Portfolio of Six Hotels 182

19. Certification

The undersigned hereby certify that, to the best of our knowledge and belief:

1. the statements of fact presented in this report are true and correct; 2. the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions; 3. we have no present or prospective interest in the properties that are the hotels of this report and no personal interest with respect to the parties involved; 4. we have no bias with respect to the properties that are the hotels of this report or to the parties involved with this assignment; 5. our engagement in this assignment was not contingent upon developing or reporting predetermined results; 6. our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this report; 7. our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Report Practice; 8. Mallory B. Hall, MBA inspected the Tampa hotels, while the remainder of the hotels were inspected by Jeff Pennington. J. Carter Allen, MAI participated in the analysis and reviewed the findings, but did not personally inspect the properties; 9. Mallory B. Hall, MBA and Jeff Pennington provided significant real property report assistance to J. Carter Allen, MAI, and that no one other than those listed above and the undersigned prepared the analyses, conclusions, and opinions concerning the real estate that are set forth in this report; 10. J. Carter Allen, MAI has not performed services, as an appraiser or in any other capacity, on the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment;

November-2016 Certification Florida Portfolio of Six Hotels 183

11. the reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Report Practice of the Report Institute; 12. the use of this report is hotel to the requirements of the Report Institute relating to review by its duly authorized representatives; and 13. as of the date of this report, J. Carter Allen, MAI has completed the continuing education program for Designated Members of the Appraisal Institute.

J. Carter Allen, MAI Senior Vice President TS Worldwide, LLC State-certified general appraiser RZ3785

November-2016 Certification Florida Portfolio of Six Hotels 184

J. Carter Allen, MAI

EMPLOYMENT

2011 to present HVS CONSULTING AND VALUATION SERVICES Nashville, Tennessee and Atlanta, Georgia

2010 – 2011 PI KAPPA PHI PROPERTIES, INC. Charlotte, North Carolina

2009 CENTERPOINTE HOTELS Houston, Texas

2008 THE HOUSTONIAN Houston, Texas

EDUCATION AND OTHER BS –Hilton College of Hotel and Restaurant Management, University of Houston TRAINING Other Specialized Training Classes Completed: Uniform Standards of Professional Appraisal Practice – 15 hours Basic Appraisal Procedures – 30 hours Basic Appraisal Principles – 30 hours General Appraiser Income Approach (Parts I and II) – 60 hours General Appraiser Market Analysis and HBU – 30 hours General Appraiser Site Valuation and Cost Approach – 30 hours General Appraiser Sales Comparison Approach – 30 hours Statistics, Modeling and Finance – 15 hours Business Practices and Ethics – 7 hours General Appraiser Report Writing and Case Studies – 30 hours Advanced Income Capitalization – 30 hours Advanced Market Analysis and HBU – 35 hours Advanced Concepts & Case Studies – 40 hours Quantitative Analysis – 35 hours General Comp Writing – 7 hours USPAP Update – 2014

STATE CERTIFICATION Colorado, Florida, Georgia, Indiana, Kentucky, Tennessee, Texas

HVS, Atlanta, Georgia Qualifications of J. Carter Allen, MAI 1

PUBLISHED ARTICLES

HVS Journal “Four Key Takeaways: 2015 Hotel Data Conference,” August 2015

HVS Journal “In Focus: Nashville, TN,” co-authored with Jai Patel, September 2014

HVS Journal “In Focus: Galveston, TX,” co-authored with Priscilla Huynh, May 2014

HVS Journal “Eagle Ford Shale Brings Hotel Demand, Development to South Texas,” April 2013

HVS Journal “HVS Market Intelligence Report: Frisco, Texas,” January 2012

PROFESSIONAL Appraisal Institute – Designated Member (MAI) AFFILIATIONS

HVS, Atlanta, Georgia Qualifications of J. Carter Allen, MAI 2

EXAMPLES OF CORPORATE AND HRI Properties Starwood Capital INSTITUTIONAL CLIENTS SERVED IBC Bank Summit Hotel Properties Integrity Group, LLC UBS Securities, LLC Aareal Bank Interfin Companies US Bank Accor North America Jones Walker Valencia Development Corporation Airplan S.A. Joseph Proietti Watermark Capital Partners Amalgated Bank JP Morgan Chase Western Commerce Bank American Equity Investment Life Kessler Collection WPM Construction Insurance Company Kilpatrick Stockton/Torchlight Associated Bank Kirkpatrick – Torchlight Bancorp South Ladder Capital Bank of America Laurus Corporation Bank of Atlanta Live Oak Realty Investments Bank of New York Mellon Corporation Love Hotel Management Company Barclays Capital LTD Hospitality Bellwether Enterprise Capital Manoj Manapatra BNY Mellon MetLife Borrego Springs Bank Metro City Bank Brookline Development Metro Phoenix Bank Butler Burger for Goldman Sachs Midland Loan Services Cambridge Holdings Miya Capital, LLC Cantor Fitzgerald Moody National Citigroup Mountain 1st Bank & Trust Citywide Banks Natixis Civitas Capital Ocean Bank Clarion Partners OM Hospitality, Inc. Commerce Bank Ozark Mountain Bank Community South Pacific West Hotels and Resorts Credit Suisse Paley Rothman Crosson Dannis Peoples Bank Cushman & Wakefield Phillips Realty Capital DDK Real Estate Investment LLC PMC Trust Deutsche Bank Point Bank Dougherty Funding LLC Prudential East Syracuse Lodging, LLC R. Gainsley Emigrant Bank RBS Farmers National Bank Rialto Mortgage Finance Ferrara Jerum International RIDA Development Fidelity Bank Riverside Resources Fillmore Capital Partners Robert Morris Private Equity First Intercontinental Bank Rochester Resorts First Jackson Bank Schlitterbahn Waterparks & Resort Focus Valuation Advisors Shidler Group GE Franchise Finance Shivkrupa, Inc. Hall Financial Group Simon Properties Hall Structured Finance SINERGO Development Group Howard Group Situs RERC

HVS, Atlanta, Georgia Qualifications of J. Carter Allen, MAI 3

EXAMPLES OF PROPERTIES APPRAISED Value Place, Lenexa OR EVALUATED Tween Waters Inn, Captiva JW Marriott (Redevelopment of the KENTUCKY ALABAMA Wyndham Garden), Clearwater Beach Holiday Inn Express, Campbellsville Comfort Inn & Suites, Montgomery Proposed Dual-Branded Residence Value Place, Fairdale Wingate Inn, Montgomery Inn/SpringHill Suites, Clearwater Home Towne Suites, Bowling Green Proposed Home2 Suites by Hilton, Beach Proposed Home2 Suites by Hilton, Oxford Hyatt Place, Fort Lauderdale Bowling Green Renaissance Fort Lauderdale Cruise Galt House Hotel, Louisville ARIZONA Port Hotel, Fort Lauderdale Hilton Garden Inn Northeast, Crestwood Suites, Fort Myers Louisville Desert Rose Inn, Benson Proposed Hilton, Miami Beach Proposed Dual-Branded Hampton Proposed Home2 Suites, Tempe Crestwood Suites of Orlando Disney, Inn/Home2 Suites by Hilton, Best Western Tombstone Orlando Louisville Western Inn, Tucson Crestwood Suites of Orlando UCF, Proposed Home2 Suites by Hilton, Motel 6, Tucson Orlando Louisville Windemere Hotel, Tucson Days Inn, Pensacola Proposed Hotel, St. Petersburg LOUISIANA CALIFORNIA Beachview Cottages, Sanibel Island Castaways Beach & Bay Cottages, Comfort Suites, Baton Rouge La Quinta Inn & Suites, Fresno Sanibel Island Holiday Inn, Houma Proposed Hotel, Merced West Wind Inn, Sanibel Island Hilton New Orleans Airport, Kenner Best Western Ivy, Napa Comfort Inn, Sarasota Best Suites, Lake Charles River Terrace Inn, Napa Days Inn, Sarasota Holiday Inn & Suites, Lake Charles Holiday Inn Airport, San Francisco Proposed Extended-Stay Hotel, Holiday Inn Express Hotel & Suites, Motel 6, Yreka Surfside LaPlace Marriott, West Palm Beach Hilton Garden Inn French COLORADO Quarter/CBD, New Orleans GEORGIA Proposed Gaylord Rockies Hotel & MARYLAND Convention Center, Aurora Proposed Hampton Inn & Suites, Quality Inn & Suites, Denver Kennesaw Proposed Hotel Sorella, Rockville Best Western, Union City CONNECTICUT MASSACHUSETTS ILLINOIS Proposed Steelpointe Harbor Hotel, Hotel Commonwealth, Boston Bridgeport Proposed Extended-Stay Hotel, Bolingbrook MICHIGAN DISTRICT OF COLUMBIA Proposed Residence Inn by Marriott, Bolingbrook Marriott Detroit Troy, Troy Proposed Courtyard by Marriott Proposed Holiday Inn Express, Proposed Residence Inn by Marriott Bridgeview MISSISSIPPI Residence Inn by Marriott Washington DC Vermont Avenue KANSAS Proposed SpringHill Suites, Biloxi South Beach Biloxi Beach Hotel, Biloxi FLORIDA Baymont Inn & Suites, Lawrence Best Western, Canton

HVS, Atlanta, Georgia Qualifications of J. Carter Allen, MAI 4

Comfort Inn, Columbia DoubleTree Guest Suites, Sharonville Proposed Hampton Inn, Houston Comfort Inn, Hattiesburg Proposed Hotel Granduca, Austin Comfort Suites, Hattiesburg TENNESSEE Proposed Luxury Boutique Hotel, Holiday Inn & Suites, Hattiesburg Austin Homewood Suites Brentwood- Quality Inn & Suites, Beaumont MISSOURI Nashville, Brentwood Sleep Inn, Center Hyatt Place, Brentwood Courtyard by Marriott, Corpus Christi Hilton Branson Convention Center, Home Towne Suites, Clarksville Proposed Schlitterbahn Resort, Corpus Branson Comfort Inn & Suites, Germantown Christi Hilton Kansas City Airport, Kansas City Hyatt Place, Germantown Best Western, Cuero Super 8, Kansas City Courtyard by Marriott, Jackson Proposed Hall Arts Hotel, Dallas Proposed Homewood Suites, Value Place, Lebanon Renaissance Dallas Market Center, Springfield Crestwood Suites, Madison Dallas Courtyard by Marriott, Memphis Best Western, Deer Park NEVADA Marriott Memphis East, Memphis Candlewood Suites, Deer Park Country Inn & Suites, Murfreesboro Embassy Suites, El Paso Motel 6, Las Vegas Crestwood Suites, Murfreesboro Holiday Inn Express, Frisco Courtyard by Marriott Nashville Proposed NYLO Hotel, Frisco NEW MEXICO Airport, Nashville Westin Stonebriar, Frisco Courtyard by Marriott Nashville Courtyard by Marriott, Galveston Proposed Boutique Hotel, Santa Fe Downtown, Nashville TownePlace Suites by Marriott, DoubleTree by Hilton, Nashville Galveston NEW YORK Embassy Suites, Nashville Deluxe Inn, Houston Hampton Inn & Suites Nashville Americas Best Value Inn, Houston Days Inn, Batavia Vanderbilt, Nashville Comfort Suites, Houston Super 8, Batavia Hampton Inn Nashville Vanderbilt, Crowne Plaza, Houston Proposed Hampton Inn, Dewitt Nashville Hilton Garden Inn Galleria, Houston Microtel Inn, East Syracuse Homewood Suites Nashville Airport, Proposed Aloft, Houston Motel 6, Niagara Falls Nashville Proposed Hampton Inn/Homewood Econo Lodge, Tonawanda Hotel Indigo, Nashville Suites Downtown, Houston Hotel Preston, Nashville Proposed Hotel Alessandra, Houston NORTH CAROLINA Hyatt Place Opryland, Nashville Proposed Hyatt Place, Houston Land Appraisal, Nashville Proposed JW Marriott, Houston Marriott Charlotte SouthPark, Marriott Vanderbilt, Nashville Proposed Marriott Marquis, Houston Charlotte Proposed Aloft, Nashville Proposed SpringHill Suites, Houston Renaissance Charlotte SouthPark, Proposed Element, Nashville Sheraton Houston West, Houston Charlotte Proposed Embassy Suites, Nashville Marriott DFW Airport, Irving Proposed Hyatt Collection, Nashville Holiday Inn Express, Kingwood OHIO Proposed Lifestyle Hotel, Nashville La Quinta, Port Arthur Holiday Inn Express, White House Proposed Hotel, Roanoke Hampton Inn, Athens Sleep Inn, Roanoke Embassy Suites, Blue Ash TEXAS Homewood Suites San Antonio Wingate by Wyndham, Blue Ash Riverwalk, San Antonio Comfort Inn & Suites, Cincinnati Hilton Garden Inn, Austin Schlitterbahn Resort, South Padre Fairfield Inn, Cincinnati Proposed 21c Hotel, Austin Island Renaissance, Columbus Proposed Hampton/Homewood Proposed Home2 Suites, Stafford Residence Inn, Dayton Downtown, Houston Econo Lodge, Stephenville

HVS, Atlanta, Georgia Qualifications of J. Carter Allen, MAI 5

Baymont Inn & Suites, Victoria Western Inn, West Columbia

UTAH

Holiday Inn Express & Suites, Sandy

WISCONSIN

Holiday Inn, Milwaukee

INTERNATIONAL

Proposed Hotel Carepa, Carepa, Colombia Proposed Hotel Monteria, Monteria, Colombia Proposed Hotel Medellin, Medellin, Colombia Proposed Hotel Quibdo, Quibdo, Colombia Proposed Hyatt Place, Lima, Peru

HVS, Atlanta, Georgia Qualifications of J. Carter Allen, MAI 6