DEARBORN MICHIGAN HOTEL DEVELOPMENT SITE FAIRLANE TOWN CENTER OUTPARCEL University of Michigan-Dearborn World Headquarters Confidential Offering Memorandum DISCLAIMER This Offering Memorandum has been prepared by HVS in partnership with Stokas Bieri Real Estate for use by a limited number of recipients. All information contained herein has been obtained from sources other than HVS in partnership with Stokas Bieri Real Estate, and neither the Owner nor HVS in partnership with Stokas Bieri Real Estate (nor their respective equity holders, officers, employees, and agents) makes any representations or warranties, expressed or implied, as to the accuracy or completeness of the information contained herein. Further, the Offering Memorandum does not constitute a representation that no change in the business or affairs of the Property or the Owner has occurred since the date of the preparation of the Offering Memorandum. All analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the Recipient. The Owner and HVS in partnership with Stokas Bieri Real Estate, as well as their respective officers, directors, employees, equity holders, and agents, expressly disclaim all liability that may be based upon or relate to the use of the information contained in this Offering Memorandum. Additional information and an opportunity to inspect the Property will be made available upon written request to interested and qualified prospective investors. The Owner and HVS in partnership with Stokas Bieri Real Estate each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the Property and/or to terminate discussions with any entity at any time with or without notice. The Owner shall have no legal commitment or obligations to any Recipient reviewing this Offering Memorandum or making an offer to purchase the Property unless and until such offer is approved by the Owner; a written agreement for the purchase of the Property has been fully executed, delivered and approved by the Owner and its legal counsel; and any obligations set by the Owner thereunder have been satisfied or waived. The Recipient agrees that (a) the Offering Memorandum and its contents are confidential information, except for such information contained in the Offering Memorandum, which is a matter of public record, or is provided from sources available to the public; (b) the Recipient, the Recipient’s employees, agents, and consultants (collectively, the “need to know parties”) will hold and treat it in the strictest of confidence, and the Recipient and the “need to know parties” will not, directly or indirectly, disclose or permit anyone else to disclose its contents to any other person, firm, or entity without the prior written authorization of HVS in partnership with Stokas Bieri Real Estate and the Owner; and (c) the Recipient and the “need to know parties” will not use or permit to be used this Offering Memorandum or its contents in any fashion or manner detrimental to the interest of the Owner or HVS in partnership with Stokas Bieri Real Estate, or for any purpose other than use in considering whether to purchase the Property. The Recipient and the “need to know parties” agree to keep this Offering Memorandum and all confidential information contained herein permanently confidential and further agree to use this Offering Memorandum for the purpose set forth above. If the Recipient has no interest in the Property, or if the Recipient or the Owner discontinue negotiations in the future, the Recipient will return this Offering Memorandum to HVS in partnership with Stokas Bieri Real Estate. TABLE OF CONTENTS EXECUTIVE SUMMARY ...................... 4 INVESTMENT HIGHLIGHTS .................. 6 PROPERTY OVERVIEW ...................... 8 AREA OVERVIEW ........................... 12 ATTRACTIVE HOTEL MARKET STATISTICS ..... 16 LAND SURVEY ............................. 18 Executive Summary HVS, as the sole and exclusive advisory firm to Ownership, is pleased to present the opportunity to acquire the fee-simple interest in a 1.05-acre site within the growing Dearborn submarket of Detroit (herein referred to as the “subject site”). The subject site is located adjacent to the Fairlane Town Center “super-regional” mall, which includes 150 stores and is anchored by Macy’s and JCPenney. The mall is bordered by several restaurants, a Class-B office building, and a hospital. Overall, the subject site is located near a diverse mix of corporate, leisure, and group demand generators. The Detroit suburb of Dearborn is home to the Ford Motor Company world headquarters, as well as The Henry Ford, the United States’ largest indoor-outdoor museum complex. Hotel performance in the Dearborn submarket has been exceedingly impressive recently. Despite the opening of three hotels in 2016, representing a 59% increase in supply, market-wide RevPAR increased by a strong 4.4% in 2017 and an astounding 14.4% through October in 2018. Detroit is known as the world’s traditional automotive center, as the city was the home of the invention of the automobile and its mass production, headed by Henry Ford. Detroit also has a long history of producing groundbreaking and influential musical talent. These two historical legacies are celebrated by the city’s two familiar nicknames – Motor City and Motown. Detroit and the surrounding region constitute a manufacturing powerhouse, most notably as home to the Big Three automobile companies: General Motors, Ford Motor Company, and Fiat Chrysler Automobiles’ U.S. headquarters. Additionally, the region has become competitive in emerging technologies, such as driverless technology, biotechnology, nanotechnology, information technology, and hydrogen-fuel-cell (HFC) development. An investor will have the opportunity to realize the substantial value of constructing a nationally branded hotel in a growing market, creating significant upside from current cash flow and upon exit of the investment. Investment Highlights ROBUST DEMAND GENERATORS As the world’s traditional automotive center, Metro Detroit serves as the headquarters to America’s “Big Three” automakers: Fiat Chrysler Automobiles (FCA), Ford, and General Motors (GM). The Big Three each posted significant increases in both revenues and earnings from 2012 through 2016, which represented a record year for the U.S. auto industry, with the major Detroit automakers reporting their highest sales since the early 2000s. Moreover, each of the Big Three has announced plans of future investment in Detroit. In June 2018, Ford purchased the vacant Michigan Central Station as part of its plans to transform Corktown into its new campus for mobile technology and software development. In March 2018, GM announced plans to invest more than $100 million to upgrade manufacturing plants in Southeast Michigan to produce a self-driving Chevy Cruise. Moreover, in December 2018, FCA announced that it would convert a former Detroit engine plant to an assembly plant. Just west of the subject site is the University of Michigan-Dearborn, a regional campus of University of Michigan. The university served over 9,000 students and employed roughly 1,100 faculty members during the academic year of 2017-2018. Enrollment has grown 6% over the last five years, as the university has continued to add new facilities and offer more degree programs. Metro Detroit also ranks among the nation’s top five financial districts, with major financial service employers including KPMG, Fifth Third Bank, Comerica, Deloitte, Ernst & Young, and PricewaterhouseCoopers. Among the metro area’s leading information technology and computer software companies with a major presence or headquarters are Quicken Loans, Compuware, IBM, Google, and Computer Sciences Corporation. The healthcare sector is also important in this area. Headquartered in Detroit, the Henry Ford Health System is one of the nation’s leading comprehensive, nonprofit healthcare organizations. With 8,800 employees in Detroit, the Henry Ford Health System is the third-largest employer in the city. The Henry Ford Health System has a roughly $6-billion economic impact on metro Detroit; an additional 11,500 jobs are indirectly supported by transactions with the Henry Ford Health System. The Detroit Medical Center is a leading academically integrated system in metropolitan Detroit and the largest healthcare provider in Southeast Michigan. VIBRANT MARKET PERFORMANCE Based on an October 2018 STR Trend Report, consisting of seven hotels ranging from upper-midscale to upscale limited-service, select-service, and extended-stay assets, the submarket achieved occupancy and average rate (ADR) levels of 81.4% and $124.45, respectively, resulting in RevPAR of $101.28 through October 2018. • This represents an impressive 14.4% increase year-over-year. EXCELLENT LOCATION AMONG DIVERSE DEMAND GENERATORS The subject site is located within the parking lot of the Fairlane Town Center mall. The regional shopping mall has over 1.2 million square feet of retail space housing over 125 stores and restaurants, major retail anchor tenants, and AMC theatres. The subject site is proximate to a diverse mix of corporate and leisure demand generators, including the following: • University of Michigan Dearborn – 0.6 miles • TPC Michigan – 1.2 miles • The Henry Ford (museum complex) – 1.2 miles • Ford Motor Company world headquarters – 1.7 miles • Downtown Detroit – 9 miles SIGNIFICANT UPSIDE FOR DEVELOPER TO EXIT The subject site