California Hotel Sales Survey Year End 2010

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1 St. Regis Monarch Beach Prepared by: 1901 Main St, Ste 175 Irvine, CA Telephone (949) Facsimile (949) Alan X. Reay, President E mail: alan@atlashospitality.com

2 Table of Contents 1. Summary of California Highlights 2. Regional Highlights: Southern California 3. Regional Highlights: Northern California 4. Recap 5. Forecast List of Tables 1. Northern California vs. Southern California 2. Southern California Highlights 3. Northern California Highlights

3 Summary of California Highlights The number of California hotel sales jumped 80.4% to 166 in 2010, up from 2009 s record low of 92. The total dollar volume of California sales was up 240.6%. The median price per room in California dropped 5.2%. Northern California was down only 1.7%, but Southern California decreased 17.9%. Alameda County had the largest median price per room decline, down 33.4%. San Francisco County had the biggest increase in the number of sales, up 650%. Los Angeles County followed with 575%. The 479 key La Costa Resort & Spa in Carlsbad was the largest hotel to sell. The most expensive sale, on a per room basis, was the St. Regis Monarch Beach in Dana Point at $587,500 per room.

4 Southern California Highlights Los Angeles County Los Angeles County saw a 575% increase in the number of individual hotel sales in 2010, from 4 to 27. The total dollar volume rose 886.5%. The county s average price per room increased 118.2% and the median price per room was up 226.4%. The largest hotel sold in Los Angeles County was the 469 room Los Angeles Marriott downtown, which sold for $63 million. The most expensive hotel sold, at $102.8 million, was the 309 room Sheraton Delfina in Santa Monica. Sheraton Delfina Santa Monica San Diego County San Diego County had a 150% increase, from 6 to 15, in individual transactions. The total dollar volume increased 389.8%. San Diego County s average price per room rose 10.6%, but the median price per room was down 13.4%. The largest and most expensive sale was the $125 million paid for the 479 unit La Costa Resort & Spa in Carlsbad. La Costa Resort & Spa Carlsbad Orange County Individual transactions in Orange County increased 12.5%, from 8 to 9. The total dollar volume went up 431.4%. The average price per room rose 102.7%, but the median price per room decreased 17%. The largest and most expensive hotel sale in Orange County was the $235 million paid for the 400 room St. Regis Monarch Beach in Dana Point. St. Regis Monarch Beach Dana Point

5 Riverside County Riverside County experienced a 100% increase in transactions, from 7 to 14. However, the total dollar volume dropped 31.5%. The average price per room dropped 10% and the median price per room decreased 21.4%. The largest and most expensive sale came from the $6.575 million paid for the 129 room Holiday Inn Express in Palm Desert. Holiday Inn Express Palm Desert San Bernardino County San Bernardino County had a 54.6% increase in sales, from 11 to 17. The total dollar volume rose 108.1%. The average price per room dropped 31.4% and the median price per room decreased 16.5%. The largest and most expensive hotel sold was the 299 room Marriott Ontario Airport (now a Radisson) for $12 million. Radisson Ontario Airport

6 Northern California Highlights San Francisco County San Francisco County had a 650% increase in individual transactions in 2010, from 2 to 15. The total dollar volume jumped 466.4%. The county s average price per room increased 15.7%, but the median price per room dropped 18.3%. The largest hotel sold was the 417 room Sir Francis Drake Hotel in San Francisco, at $90 million. The most expensive hotel sold was the $143 million paid for the 360 room Le Meridien in San Francisco. Le Meridien San Francisco Sacramento County Sacramento County had a 50% decrease in transactions, from 4 to 2. The total dollar volume dropped 93.8%. The average price per room decreased 86.8% and the median price per room was down 86.5%. The larger and more expensive sale was the $1.7 million paid for the 94 room Travelodge in Rancho Cordova. Travelodge Rancho Cordova Alameda County Transactions in Alameda Clara County increased 66.7%, from 3 to 5. The total dollar volume was up 149.3%. The average price per room rose 11.2%, but the median price per room was down 33.4%. The largest and most expensive sale, at $12.3 million, was the 170 room Sheraton Hotel in Pleasanton. Sheraton Hotel Pleasanton

7 Recap In reviewing our forecast from the beginning of 2010, we predicted the following: Sales activity will increase dramatically from the 2009 record low; we expect to see transactions. We saw a total of 166 sales transactions Dollar volume will also increase, almost double 2009 s number. Dollar volume jumped over 240% Prices will decline 10 20%. The median price per room was down 17.9% in Southern California and down 1.7% in Northern California. The sale of hotel loans will rise substantially. Lenders substantially increased the number of hotel loans sold. This was achieved through a combination of loan pool sales, auctions and individual sales. We estimate that California hotel loan sales increased over 20% in Lender distress sales will account for over 50% of transactions. The number of hotels sold or taken back by lenders was equal to 47% of the total transactions.

8 Forecast For 2011, we predict the following: Sales will continue to increase. We expect to see individual hotel sales increase 10 20% or close to 200+ transactions. The median price per room will increase 5 10%. There will be continued strong buy activity on trophy hotels. The larger hotel purchases will be dominated by REITs. Lenders will continue to aggressively sell hotel loans, particularly in secondary and tertiary markets. We will start to see new hotel development in select markets. This will primarily be in the Marriott and Hilton select service brands.

9 California Sales Survey Year End 2008 California Hotel Sales Comparable Summary Year-End Report vs Northern California vs. Southern California Entire California Summary Total % $1,787,907,944 $524,992, % 15,126 6, % Average $10,770,530 $5,706, % % $82,999 $71, % Median $2,402,500 $2,130, % % $53,613 $56, % Transactions Above $5,000,000 Total % $1,595,395,680 $408,146, % 10,379 3, % Average $29,544,364 $16,325, % % $150,670 $120, % Median $12,150,000 $11,150, % % $112,500 $108, % Northern California Summary Total % $730,482,444 $289,027, % 6,411 2, % Average $10,006,609 $5,667, % % $79,742 $72, % Median $2,405,000 $2,100, % % $52,419 $53, % Southern California Summary Total % $1,057,425,500 $235,965, % 8,715 3, % Average $11,370,167 $5,755, % % $85,555 $69, % Median $2,400,000 $2,700, % % $54,286 $66, %

10 California Sales Survey Year End 2008 California Hotel Sales Comparable Summary Year-End Report vs Southern California Counties Los Angeles County Total % $405,442,000 $41,100, % 2, % Average $15,016,370 $10,275, % % $115,168 $52, % Median $2,300,000 $3,050, % % $70,000 $21, % Orange County Total % $290,950,000 $54,750, % 1, % Average $32,327,778 $6,843, % % $122,872 $60, % Median $3,450,000 $4,250, % % $57,692 $69, % Riverside County Total % $23,617,000 $34,491, % % Average $1,686,929 $4,927, % % $54,153 $60, % Median $700,000 $1,900, % % $51,955 $66, % San Bernardino County Total % $50,774,500 $24,396, % 1, % Average $2,986,735 $2,217, % % $35,586 $51, % Median $2,300,000 $2,000, % % $33,750 $40, % San Diego County Total % $247,113,000 $50,450, % 2, % Average $16,474,200 $8,408, % % $100,352 $90, % Median $3,000,000 $2,325, % % $56,250 $64, %

11 California Sales Survey Year End 2008 California Hotel Sales Comparable Summary Year-End Report vs Northern California Highlights San Francisco Total % $521,342,944 $92,050, % 2, % Average $34,756,196 $46,025, % % $159,320 $137, % Median $11,475,000 $46,025, % % $112,500 $137, % Alameda Total % $25,900,000 $10,390, % % Average $5,180,000 $3,463, % % $76,544 $68, % Median $3,400,000 $5,100, % % $65,217 $97, % Santa Clara Total % $58,725,000 $190, % % Average $14,681,250 $190, % % $104,569 $47, % Median $12,512,500 $190, % % $93,767 $47, % San Mateo Total % $0 $2,100, % % Average $0 $2,100, % % $0 $63, % Median $0 $2,100, % % $0 $63, % Sacramento Total % $1,700,000 $27,437, % % Average $850,000 $6,859, % % $9,043 $68, % Median $850,000 $4,825, % % $9,043 $66, %