SOUTH FLORIDA HOTEL MARKET REPORT

SOUTH FLORIDA HOTEL MARKET REPORT

South Florida Hotel Market South Florida's tri-county area has been one of the nation s preeminent vacation destinations for both domestic and international visitors. Tourism in Florida as a whole experienced its fourth consecutive record year in 2014 with 97.3 million visitors, a 3.9% increase over 2013. In the second quarter of 2015, Florida welcomed close to 25.8 million visitors, up 5.5% over the same period last year. South Florida continues to be the epicenter for new development and acquisition activity in the state. Increased demand drivers, local economic growth and increased flights between Latin America and Europe have helped South Florida gain greater recognition as a global tourist destination. Across - Dade, Broward and Palm Beach counties, hotel fundamentals have continued to experience strong numbers. -Dade and Broward County led the region in July, both achieving occupancy rates of 78.3%, up 4.4% and 3.5% year-over-year ( YoY ), respectively. In the same month, -Dade, Broward and Palm Beach counties all reported gains, with ADRs of $155, $108.78, and $121.81, an increase YoY of 4.8%, 4.9%, and 8.5%, respectively. In terms of revenue per available room ( RevPar ), -Dade and Broward reported increases of 8.9% and 8.4%, with reported RevPar numbers of $121.25 and $85.18. Record Visitation in 2014 Dade County - 14.6 million ANNUAL FLORIDA VISITORS (in Millions) Broward County 14.3 million Palm Beach County - 6.24 million 87.3 82.3 80.8 91.5 94.3 97.3 51.1 54.1 2009 2010 2011 2012 2013 2014 1H 2014 1H 2015 Source: STR, Wells Fargo Securities, Florida Taxwatch Research Institute Inc., Visit Florida, Primrose Capital Research

-Dade Hotel Market Top 15 U.S. Hotel Markets (Jan-June 2015) Rank City RevPar Occ. ADR 1 New York $197 82.2% $240 2 Oahu $178 83.9% $213 3 San Francisco $178 83.1% $214 4 $176 80.8% $218 5 Boston $133 74.0% $180 6 Los Angeles $123 79.6% $154 7 New Orleans $117 74.1% $156 8 San Diego $114 77.4% $147 9 Washington DC $112 72.0% $156 10 Anaheim $108 77.7% $139 11 Seattle $105 74.6% $140 12 Phoenix $99 72.1% $138 13 Tampa $95 77.1% $123 14 Orlando $94 80.1% $117 15 Chicago $93 67.3% $138 During the first six months of 2015, - Dade County reported occupancy rates of 80.8%, down 0.2% from the same period last year, while average daily rates rose by 7.6% to record levels achieving $217.62 through the first two quarters of the year. Overall, revenue per available room increased by 7.4% to $176. Over the next five years, it is expected that there will be close to 8,000 new hotel keys added to the already 50,000 rooms in s hotel inventory. Much of the new development has been focused on Beach and Brickell, with select development in Doral and near the airport. Two new major projects Brickell City Centre (2015) and World Center (2018) will serve as catalysts for growth in the lodging sector, as they will create new demand generators in the Brickell/Downtown corridor. Surrounding areas including Midtown, Wynwood, The Design District and Edgewater are steadily evolving, adding new retail and residential product to the market. These areas will become more in focus as they continue to mature and primary lodging submarkets become too costly to develop. 2011 2012 2013 2014 1H 2014 1H 2015 ADR $154 $163 $175 $185 $202 $218 Occupancy 75.4% 76.4% 77.4% 78.3% 81.0% 80.8% RevPAR $116 $125 $135 $145 $163 $176 Source: Smith Travel & Research, Greater Convention & Visitors Bureau, Primrose Capital Research LLC

Broward Hotel Market Greater Ft. Lauderdale Hotel Snapshot Occupancy (Jan-June) ADRs (Jan-June) 83.0% $148.59 77.3% 79.3% 81.5% $124.75 $130.01 $138.92 2012 2013 2014 2015 2012 2013 2014 2015 Source: Greater Fort Lauderdale Convention & Visitors Bureau, Smith Travel Research, Primrose Capital Research Broward County has seen increased hotel investment activity in recent years, topping a billion dollars in hotel upgrades and new lodgings during the last 12 months. Broward County currently has 54 projects with 8,910 rooms currently under construction and close to 117 projects totaling 13,185 keys in final planning stages. In the first six months of 2015, the greater Fort Lauderdale area hit all-time highs in hotel occupancy, averaging 83.0%. During the same period, ADRs were $148.59, a 7% increase from 2014. According to the Greater Fort Lauderdale Convention & Visitors Bureau, the county welcomed a record 14.3 million visitors and is on pace to surpass 15 million visitors in 2015, which would represent close to $12 billion worth of impact to the economy. Some of the major Broward hotels which have changed hands over the past year include: The Westin Beach Resort & Spa ($149 million), The Sheraton Fort Lauderdale Beach ($100 million), W Fort Lauderdale ($144 million), Bahia Mar Fort Lauderdale Beach ($159.8 million), Westin Diplomat ($460 million), Ritz- Carlton, and the former B Ocean Fort Lauderdale, now a Sonesta ($65 million)

Palm Beach Hotel Market Palm Beach County had been dormant over last few years with much of South Florida s hotel activity concentrated in Dade and Broward County. Recently, Palm Beach has seen a bit of a resurgence with several planned developments serving as catalysts for growth. Most notably, All Aboard Florida, a private company who has long been spearheading the development of a high-speed passenger train from Orlando to, has broken ground on their West Palm Beach station. The anticipation of new visitors to the county has already spurred new development. One of the larger additions to supply is Related Group s 400-room Hilton Convention Hotel which is expected to open in 2016. Other planned projects include a 108-roon Autograph by Marriott, a 140-room Aloft, a 180-room AC Hotel, the Holiday Inn Express Lantana, and the Marriott TownePlace Suites among others. Recent hotel openings in West Palm include the Wyndham Grand Jupiter at Harbourside Place, Fairfield Inn & Suites Delray Beach and the Residence Inn by Marriott Downtown West Palm Beach. Occupancy ADR Jan-June 2015 Jan-June 2015 Tourism Tax Collections Jan 2015 Bed Tax Jan 2015 79.1% $192.23 $15.1mm $5mm 21.4% YoY Increase 41.6% YoY Increase

Hotel Financing Landscape The hotel financing landscape has been very liquid in South Florida, with all major domestic and foreign capital sources participating in the marketplace. Both individual asset fundamentals and supply/demand metrics continue to improve, providing greater confidence to lenders and investors alike. Regional and foreign banks have been the most competitive sources of permanent debt financing, offering higher LTV s, low rates (in the high 3 s to mid 4 s), and the availability of non-recourse financing. Borrowers are seeing loan-to-value ratios between 65% and 75% with debt service coverage requirements around 1.2x - 1.45x. Mortgage REITs and debt funds have also played a role in the market, usually offering added flexibility in the form of higher leverage by allowing subordinate financing to be tacked on to the capital stack. In terms of new construction, financing is still readily available, although some lenders are beginning to shy away from taking on construction risk, while others are reaching their hotel lending allocation limit in South Florida. Local and regional banks, mortgage REITs and specialty finance companies have all been active players in the construction financing market, with banks offering the most competitive terms by far. Non-recourse financing for new projects are now back in season, albeit at lower leverage levels (<60%- 70%). Rates continue to remain low with average pricing around 1m Libor + 250-375 bps. PERMANENT FINANCING LTV AMORT PRICING Branded Full-Service Branded Select-Service Branded Limited-Service Managed Boutique Independent Boutique 70%-75% 75% 70% 65%-70% 65% 25-30 yrs 25-30 yrs 25-30 yrs 25-30 yrs 20-25 yrs 4%-4.75% 3.75%-4.5% 3.75%-4.5% 4%-5% 4%-5.25% CONSTRUCTION FINANCING LTC PRICING* Branded Urban Branded Suburban Managed Boutique Independent Boutique 75% L + 220-350 75% L + 300-400 70% L + 350-425 60% L + 350-500 *Interest Rate Caps Available

Hotel Recent Transactions Date City Property Price Units Price Per Unit May-15 Apr-15 Mar-15 Mar-15 Feb-15 Feb-15 Jan-15 Apr-15 Feb-15 Mar-15 May-15 Beach Beach Key Biscayne Hialeah Beach Beach Beach Beach Ft. Lauderdale Ft. Lauderdale Ft. Lauderdale Ft. Lauderdale Dania Beach Deerfield Beach Miramar Palm Beach Airport $ 63 million 365 $ 172,951 Courtyard Airport South $ 52 million 300 $ 172,951 Residence Inn Airport South $ 28 million 163 $ 171,702 SLS Hotel South Beach $ 125 million 142 $ 880,282 Sheraton Airport Hotel $ 70 million 405 $ 171,840 Clinton Hotel $ 29 million 89 $ 320,225 Hotel Indigo $ 19 million 115 $ 162,000 Holiday Inn Express $ 16 million 103 $155,340 Ritz-Carlton Key Biscayne $ 323 million 302 $1,069,536 Howard Johnson Plaza Hotel $ 22 million 259 $ 84,556 James Royal Palm $ 278 million 398 $ 698,492 Roadway Inn $ 17 million 39 $ 423,077 Beach Edition (1F-9F) $ 230 million 294 $ 782,313 Hyatt Place MIA Airport $ 19 million 126 $ 150,857 Canyon Ranch Hotel & Spa* $ 21.5 million N/A N/A Renaissance by Marriott Cruise Port $ 48 million 225 $ 213,778 Residence Inn Intracoastal/II Lugano $ 34 million 105 $ 323,810 Ritz-Carlton Ft. Lauderdale $ 45 million 166 $ 271,084 Hampton Inn Las Olas $ 18 million 156 $ 116, 026 Hyatt Place Ft. Lauderdale Airport $ 19 million 149 $ 127,517 Hampton Inn $ 12 million 106 $ 108,491 Hilton Garden Inn $ 22 million 149 $ 148,322 Best Western Windsor Gardens $ 9.4 million 77 $ 122,078 *$21.5 million was for 13 unsold units, plus hotel common areas and front desk operations. The recent wave of large hotels changing hands are a testament to the strength and attractiveness of South Florida's dynamic hotel market. In the first half of 2015 alone, the 398-key James Royal Palms was purchased by Chesapeake Lodging Trust for $278 million, the Beach Edition hotel was sold to a sovereign wealth fund owned by the Emirate of Abu Dhabi for $230 million and the SLS on South Beach traded hands for close to $880,000 a key. In addition, some long-anticipated hotel openings finalized with the opening of the 426-key 1 Hotel, the 105-key Hyatt Centric South Beach, the 239-key Aloft South Beach, and the 150-room AC Hotel on Beach, among others.

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