Beachfront Hospitality Assemblage

186-Unit Holiday Inn Branded Hotel &

24 Unit Oceanfront Resort $16.5 million

Executive Summary

INTRODUCTION The subject property is a full-service, 186-key Holiday Inn hotel located just North of Ft. Lauderdale in the charming seaside town of Lauderdale by the Sea. It has a room mix of 40 king rooms and 146 double full-size beds. The hotel is 5 stories and has ocean views from 88 guest rooms, of which 39 have kitchenettes. The food and beverage facilities include a dining room that seats 100 and a poolside patio bar with seating for 75. The hotel features a private beach access for its guests in addition to other traditional amenities. The property is a well-known landmark hotel offering mid-scale rate value. It is also the only flagged hotel in the beach in the area. The property has not benefited from any significant capital investment over the past 10 years, leaving it in need of a complete renovation. This has also made it difficult for the hotel to increase rate and occupancy to keep up with a hotel market that has seen above average growth in both categories (occupancy and ADR). Nonetheless, you will see from the historical figures that there has been a significant increase in ADR despite the disrepair, indicating a demand pressures for this type of product. The following information will demonstrate that this hotel will provide a hotel developer/group with a tremendous opportunity to upgrade, renovate, and reposition the asset into a successful hospitality leader competing in a protected environment against boutique hotels that are reaching the end of their useful life spans. SOUTH FLORIDA

South Florida is truly a subtropical paradise filled with palm trees, sunshine, and beaches. It’s not surprising that people from all over the world have flocked to call this area home. The diversity of both residents and visitors contributes to the both exciting and opportunistic environment that truly separates it from the rest of the United States. The area holds the well-known cities of Miami, Fort Lauderdale, and West Palm Beach, communities where many actors, singers, athletes, and other celebrities reside.

Considered a vacation paradise, instability in many South and Central American countries have empowered the South Florida area to become a banking, insurance, and tourism center for those regions. This has also led to comfort for European travelers who enjoy the cultural diversity. Northeastern and Midwest travelers have also flocked to South Florida for events, business, and vacation for many years.

LAUDERDALE BY THE SEA Lauderdale by the Sea is a destination located east of Fort Lauderdale, between the intra-coastal waterway and the Atlantic Ocean. Originally developed in the 1950’s and 1960’s generations of families have grown to make this relaxing beach town their annual vacation destination. Much of the visitors coming from the Northern U.S. and Canada in winter months and South America during the summer months give the area an exciting diversity with year-round tourists. The center of this Key West style town is marked by the Anglin’s Pier, which provides a fishing spot for both locals and visitors alike. Lauderdale by the Sea is known as the “shore diving

capital of the United States” boasting several tiers of north-south reefs under no more than 18 feet of clear blue ocean water. The beach is lined with old-style hotels about .5 miles to the north and south of Anglin’s Pier. This hotel district is the focus of the community attracting beachwear retailers, restaurants and bars to cater to the visitor needs. The town is one of the only remaining areas where high-rise development is not permitted, creating a different “old Florida” atmosphere. Additional commercial services can be found just west of the town’s center on Commercial Boulevard and both north and south on A1A. Lauderdale by the Sea is found a short drive from Miami Beach to the south and West Palm Beach to the north. For a tourist looking to experience all that South Florida has to offer, this town is a great midpoint destination to return to after an exciting day attending the many attractions or a crazy night experiencing the well-known bars and clubs. THE OPPORTUNITY The Holiday Inn Hotel in Lauderdale by the Sea is an extraordinary opportunity for a value-added investor looking to capitalize in this current market. Originally set for purchase in 2005, the Holiday Inn was to be demolished and replaced with a luxury condo-hotel. As the market turned and the project was no longer feasible, the plans were put on hold and focus was placed on the current asset. Neglected by former ownership, the building was in need of the renovation that is currently underway. While current renovations have begun to increase customer satisfaction and give the hotel a new look and feel, the building is in need of an overhaul that will allow 30 – 50% increased rates that will dramatically boost the profitability and value of the building (see projections for details). The elasticity in price is largely evident due to the lack of middle-market, flagged hotels within walking distance to the beach in Broward County. The explosion of the South Florida real estate market from 2003 through early 2006 brought the demolition of many hotels in the area to be replaced with high-end condos, townhouses, and hotels. The beach area of Broward is now mainly composed of small mom and pop motels, residences, high-end hotels, and ultra-luxury condo-hotels, such as the W, Trump, Hilton Q-Club, and St. Regis. The loss of approximately 1,500 rooms creates the opportunity to control the midscale hotel market. What also makes this opportunity unique is the high barrier to entry in the midscale hotel market. Soaring land prices have made it virtually impossible to develop anything other than luxury. At the same time, a massive reduction in construction activity has created a shortage in contractor work, reducing construction costs significantly. Where in the past there were 4 jobs competing for a single contractor, there are now 4 contractors competing for your job. In conjunction with rate and occupancy increases there are other avenues that can improve the cash flow of the hotel. Both the management and the franchise agreements are short term. All aspects together create a dynamic and profitable opportunity for a visionary investor focused on current returns coupled with the large future upside.

VILLA CAPRICE The Villa Caprice Oceanfront Resort is a 24 unit beachfront all suites hotel that features a beautiful grass lawn spanning most of the 300 feet of private oceanfront property. The rooms range from 2000+ SF apartment suites with balconies to typical hotel rooms. Rates range from $99 per night to $425 per night in the high season for the largest room. The Villa Caprice adds flexibility and allure to the assemblage. Clearly not its highest and best use, the property is currently operational and in excellent condition. The property can be maintained as an independent oceanfront resort or as the oceanfront portion of a larger resort including the Holiday Inn if we were to eliminate the franchise. In the future, the property can also be redeveloped into a minimum 80 unit all suites hotel, fractional residences, timeshare, or 40 unit residential condo project, depending on the plan. The height is limited to 4 floors and the zoning is in place.

VILLA CAPRICE RESORT & RESIDENCES

HOTEL FINANCING 2008 2009 2010 2111Hotel Rooms 220

Land Allocation 33,500,000$ Hotel Rooms 186 186 186 186Total Hard Costs 2,750,000$ ADR 97$ 105$ 121$ 130$ Total A&D Costs 1,000,000$ Occupancy 69% 75% 75% 76%Total Cost 37,250,000$ RevPar 67$ 79$ 91$ 99$ Cost / Key 169,318$ Total Revenues 5,232,213$ 6,274,104$ 7,205,093$ 7,748,732$ Equity 10,384,811$ Total Expenses 4,055,954$ 4,700,007$ 4,558,613$ 4,889,375$ Debt (Perm) 26,865,189$ Hotel NOI 1,176,259$ 1,574,098$ 2,646,480$ 2,859,357$ Loan to Cost 72.1%Interest Rate 6.7%

Hotel Rooms 24 24 24 24ADR 165$ 184$ 189$ 197$

Terminal CAP Value 7.5% Occupancy 73% 73% 76% 74%RevPar 120$ 135$ 143$ 145$ Total Revenues 1,058,090$ 1,186,438$ 1,260,451$ 1,272,626$ Total Expenses 652,317$ 663,695$ 669,695$ 672,195$ Hotel NOI 405,773$ 522,743$ 590,756$ 600,431$

Hotel Rooms 10 10 10 10ADR 25$ 50$ 60$ 70$ Occupancy 90% 70% 75% 75%RevPar 23$ 35$ 45$ 53$ Total Revenues 82,125$ 127,750$ 164,250$ 191,625$ Total Expenses 30,000$ 35,000$ 35,000$ 40,000$ Hotel NOI 52,125$ 92,750$ 129,250$ 151,625$

Combined NOI 1,634,158$ 2,189,591$ 3,366,486$ 3,611,413$ Debt - VC 1,080,000$ 1,080,000$ 1,080,000$ 1,080,000$ Debt HI 693,000$ 693,000$ 693,000$ 693,000$ Debt A1A 95,700$ 95,700$ 95,700$ 95,700$ Total Debt 1,868,700$ 1,868,700$ 1,868,700$ 1,868,700$

Cash Flow (234,542)$ 320,891$ 1,497,786$ 1,742,713$ ROI -2% 3% 14% 17%DSCR 0.87 1.17 1.80 1.93

Terminal ValueLess DebtLess Sales CostsNet Sales ProceedsTotal Cash Throw-offGross ProceedsReturn of EquityNet Cash Return

22,206,226$ 10,384,811$ 11,821,415$

VILLAS OF CAPRICE ASSEMBLAGE

Year

HOLIDAY INN

(26,865,189)$ (2,407,608.81)$

3,326,848$ 18,879,378$

VILLA CAPRICE

A1A ATALANTIC

STABALIZED HOTEL SALE (YEAR 4)48,152,176.2$

Task Name Cost Notes

EXTERIORProfessionally Landscaped 8,880$                 

Plants & Re‐plantingMulchFountainsTree TrimmingStump Grinding

Exterior Paint 79,000$               Full Exterior Re‐paintExterior doorsExterior Stairwells

Exterior Carpet 11,530$               Replace carpet with Texture Coat Walkways

Roof 52,000$               Repaired & Replaced both roofs

Ground floor walkway 9,080$                 Replaced exterior carpet with tile

Electrical & Lighting 29,800$               Replaced Lighting Photocell & EquipmentPerimeter Lighting for safetyRewired all Roof electricalReplaced Rooftop Vent MotorsAdditional Electrical Improvements

ROOMSGuest Rooms 80,500$               

Completely Remodeled 6 RoomsPainted DoorsPurchased New Linens & TowelsBathroom Grout CleaningReplaced 52 A/Cs with New UnitsReplaced 34 A/Cs with Quality Used UnitsBalcony Railing RepairsMiscellaneous FF & E

HOLIDAY INN IMPROVEMENT LIST

List of recent improvements made to Holiday Inn Hotel, LBTS, FL since August 1, 2007

Task Name Cost NotesPUBLIC AREASElevator Cabs 34,500$               

Mechanical & Electric overhaulReplaced or Rebuilt All Pumps & EquipmentRenovated Cabs

Lobby 27,790$               Replaced Ceiling Grid & tilesProfessionally Decorated LobbyRe‐tiled FloorReplaced All Lighting and FixturesRenovated Front Desk and Bell stand with OnyxLobby FF&E

Restaurant 21,300$               Replaced CarpetPainted WallsReplaced artworkNew Dishes, Glassware, & SilverwareReplaced LinensNew buffet & buffet serving piecesReplaced Kitchen Equipment

Patio Lounge 11,700$               Repainted Bar AreaRenovated Bar top and SidesBuilt New Liquor Storage Cabinets

Pool Area 37,450$               Replaced Pool & Patio FurnitureRemodeled PoolReplaced Pump Room EquipmentPower Washed Pool DeckRe‐fenced and Re‐gated Pool AreaRe‐marcite & Coping

Banquet Hall 3,000$                 Replaced Ceiling GridReplaced Lighting

SummaryExterior 190,290$             Rooms 80,500$               Public Areas 135,740$             

Total Spent on Renovations as of 2/26/08 406,530$