The Hotel Industry Outlook U.S. Hotel Transactions

The Hotel Industry Outlook U.S. Hotel Transactions Suzanne R. Mellen, MAI, CRE, FRICS, ISHC Senior Managing Director Hotel and Casino Consulting & Valuation HVS San Francisco, Las Vegas, Los Angeles 415-268-0351 smellen@hvs.com

Historical Sales (Total Assets >$2.5M) $140,000 Sales Volume Price Per Key 35.0 Price Per Key $120,000 $100,000 $80,000 30.0 25.0 20.0 15.0 10.0 5.0 $ in Billions $60,000 2005 2006 2007 2008 2009 2010 2011 2012 2013* *2013 statistics are preliminary. 0.0 Source: Real Capital Analytics (RCA) 2

Historical Sales Volume (Assets >$10M) $220,000 Sales Volume Price Per Key 30.0 Price Per Key $190,000 $160,000 $130,000 25.0 20.0 15.0 10.0 5.0 $ in Billions $100,000 2005 2006 2007 2008 2009 2010 2011 2012 2013* Source: Real Capital Analytics (RCA) *2013 statistics are preliminary. 0.0 3

Historical Sales (Assets $2.5-10M) $55,000 Sales Volume Price Per Key 6.0 $50,000 5.0 Price Per Key $45,000 $40,000 $35,000 $30,000 2005 2006 2007 2008 2009 2010 2011 2012 2013* Source: Real Capital Analytics (RCA) *2013 statistics are preliminary. 4.0 3.0 2.0 1.0 0.0 $ in Billions 4

Comparison of $ Sales Volumes $ in Billions 35 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 2010 2011 2012 2013* +44.6% >$10M $2.5-10M +32.7% *2013 statistics are preliminary. Source: Real Capital Analytics (RCA) 5

Comparison of # Properties Sold 2,000 1,500 1,000 500 0 726 622 739 467 380 278 425 891 1,018 886 229 893 587 73 531 681 235 315 2005 2006 2007 2008 2009 2010 2011 2012 2013* *December statistics are preliminary. Source: Real Capital Analytics (RCA) +22.9% >$10M $2.5-10M +31.1% 6

MM Hotel Outperforming in 2013 RCA US CPPI Source: Real Capital Analytics (RCA)/Moody s 7

2013 Sales by Total Price Paid: $10M+ Count Volume 56% 261 7% 33 7% 35 13% 55 18% 83 14% 19% 20% 28% 20% > $200M 100 to 200M 50 to 100M 25 to 50M 10 to 25M Source: Real Capital Analytics (RCA) 8

Sales By Price Per Room: $10M+ # of Properties 500 450 400 350 300 250 200 150 100 50 0 11 3 46 38 11 61 45 207 163 120 122 2012 2013 20 $750k+ $500-750k $300-500k $200-300k $100-200k <$100k Source: HVS and Real Capital Analytics (RCA) 9

Three Sales > $1 Million Per Key Park Lane Hotel Manhattan (605 rooms) Buyer: The Witkoff Group/Jynwel Capital Seller: Helmsley Charitable Trust Interest: Fee Simple Price: $660,000,000 Price/Room: $1,090,909 Langham Place Fifth Avenue Manhattan (214 rooms) Buyer: Pacific Eagle Holdings Seller: Bizzi & Partners Dev. Interest: Fee Simple, Leased Fee Price: $229,000,000 Price/Room: $1,070,093 Calistoga Ranch Napa Valley, California (50 rooms) Buyer: Auberge Partners Calistoga Seller: Olympus Real Estate Partners, LLC Interest: Leasehold Price: $55,000,000 Price/Room: $1,100,000 10

Three Sales > $500M Purchase Price Grand Wailea Resort & Spa Maui, HI (780 rooms) Price: $774,000,000 Price/Room: $992,308 Hyatt Regency Orlando Convention Center Orlando, FL (1,641 rooms) Price: $717,000,000 Price/Room: $436,929 Park Lane Hotel Manhattan (605 rooms) Price: $660,000,000 Price/Room: $1,090,909 11

Omni Enters Resort Market in Big Way La Costa Resort & Spa San Diego, CA (532 rooms) Price: $365,800,000 Price/Room: $598,691 Rancho Las Palmas Palm Springs, CA (444 rooms) Price: $103,011,710 Price/Room: $232,008 Grove Park Inn Resort & Spa Asheville, NC (512 rooms) Price: $128,594,739 Price/Room: $251,162 Homestead Resort Hot Springs, VA (483 rooms) Price: $102,593,396 Price/Room: $212,409 12

GIC Singapore Enters Resort Market Biltmore Resort & Spa Phoenix, AZ (740 rooms) Price: $321,394,785 Price/Room: $434,317 La Quinta Resort & Spa Palm Springs, CA (796 rooms) Price: $281,770,770 Price/Room: $353,983 Grand Wailea Resort & Spa Maui, HI (780 rooms) Price: $774,000,000 Price/Room: $992,308 13

Top 10 Active Markets by $ Volume Market $ Volume (Millions) $/Room # Properties NYC Metro $2,528.4 $336,765 25 Hawaii $1,803.5 351,354 12 San Francisco Metro $1,326.8 280,268 32 Miami Metro $1,125.1 195,223 51 Orlando $996.3 129,693 31 Los Angeles $955.5 129,347 41 Houston $782.0 117,880 44 San Diego $765.0 265,340 22 Chicago (tie) $620.6 114,035 30 Atlanta (tie) $620.6 83,244 40 Boston $597.2 198,404 13 Source: Real Capital Analytics (RCA) 14

Top 10 Active Markets by Properties Sold Market $ Volume (Millions) $/Room # Properties Dallas / Fort Worth $545.0 67,198 59 Miami Metro $1,125.1 195,223 51 Houston $782.0 117,880 44 LA $955.5 129,347 41 Atlanta $620.6 83,244 40 SF Metro $1,326.8 280,268 32 Orlando $996.3 129,693 31 Chicago $620.6 114,035 30 Phoenix $514.8 115,374 26 NYC Metro $2,528.4 336,765 25 Source: Real Capital Analytics (RCA) 15

Hotel Buyer Composition Q3 Source: Real Capital Analytics (RCA) 16

Top 25 Buyers/Sellers by $ Volume Source: Real Capital Analytics (RCA) 17

Hotel Lender Composition Past 5 Years Source: Real Capital Analytics (RCA) 18

Comparative CRE Cap Rates - PWC 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 Regional Mall CBD Office Suburban Office Apartment Full-Service Lodging Limited-Service Lodging Luxury Lodging Select Service Lodging Source: PriceWaterhouseCoopers Real Estate Investor Survey 19

Hotel Cap Rates Steady 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 Full-Service Lodging Limited-Service Lodging Luxury Lodging Select Service Lodging Source: PriceWaterhouseCoopers Real Estate Investor Survey 20

Hotel Cap Rates Steady 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 Full-Service Lodging Limited-Service Lodging Luxury Lodging Select Service Lodging Source: PriceWaterhouseCoopers Real Estate Investor Survey 21

Derived Cap Rates Steady 10 9 8 7 6 5 4 3 2 1 0 9.5 9.3 9.2 7.7 7.4 7.4 6.1 5.8 6.2 Full Service SS & ES Ltd. Service Full 2011 Service 2012 Ltd. 2013 Service Source: Derived from hotel s appraised by HVS at time of sale 22

Comparative Rates of Return - 2013 22.5 20.0 17.5 17.4 18.2 20.1 15.0 12.5 10.0 7.5 6.2 7.4 9.2 7.3 8.5 10.3 10.6 11.1 12.7 Full Service SS & ES Ltd. Service 5.0 2.5 0.0 Historical NOI 1st Year NOI Discount Rate Equity IRR Source: Derived from hotel s appraised by HVS at time of sale 23

Cap Ex Impacts Cap Rates and Values 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years 200,000 160,000 120,000 80,000 40,000 0 Range # of Rooms Source: ISHC CapEx 2000 and STR 24

Cap Ex Impacts Cap Rates and 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years 200,000 160,000 120,000 80,000 40,000 0 Range # of Rooms +5 Years Source: ISHC CapEx 2000 and STR 25

Cap Ex Impacts Cap Rates and Values 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years 200,000 160,000 120,000 80,000 40,000 0 Range # of Rooms +10 Years Source: ISHC CapEx 2000 and STR 26

OUTLOOK FOR 2014 Ideal conditions for another strong transaction year activity expected to equal or exceed that of 2013 Debt ceiling fight in spring unlikely to derail markets, but a risk Wide array of buyers will continue to pursue hotel investments More sellers will come to the table as sales prices near peak pricing Availability of debt will continue, with lender competition putting pressure on interest rates and loan-to-value ratios Interest rates expected to rise only moderately no major concern Capitalization rates expected to remain steady despite rise in NOI due to availability of capital and buyer competition for quality assets 27

Thank You! Please Contact Me With Any Questions 415-268-0351 smellen@hvs.com 28

Suzanne R. Mellen, MAI, CRE, FRICS, ISHC Suzanne R. Mellen is the Senior Managing Director of HVS Consulting & Valuation and HVS Gaming Services, and is responsible for operation of the firm s San Francisco, Los Angeles and Las Vegas offices. HVS is a full-service consulting and valuation firm specializing in hotel, gaming, and hospitality properties worldwide. HVS offices under her leadership are renowned for excellence and integrity. Ms. Mellen has appraised thousands of hotels, gaming assets, and related real estate over the past 36 years. She has authored numerous articles and is a frequent lecturer and expert witness on the valuation of hotels, casinos, and related issues. Ms. Mellen has a B.S. degree in Hotel Administration from Cornell University and holds the following designations: MAI (Appraisal Institute), CRE (Counselor of Real Estate), FRICS (Fellow of the Royal Institution of Chartered Surveyors), and ISHC (International Society of Hospitality Consultants). Suzanne Mellen s professional experience includes consulting and appraisal positions with HVS New York, Morgan Guaranty Trust, Laventhol & Horwath, and Helmsley-Spear Hospitality Services, Inc. in New York City and Harley-Little Associates in Toronto, Canada. 29