Investment Overview of the U.S. Lodging Industry

Investment Overview of the U.S. Lodging Industry Presented to: NYSSCPA/FAE Restaurant and Hospitality Breakfast Conference November 7, 2007 Daniel H. Lesser Senior Managing Director Industry Leader Hospitality & Gaming Group CB Richard Ellis, Inc. One Penn Plaza, Suite 1835 Phone: 212.207.6064

Overview of U.S. Hotel Economic Performance Overview of Q3 2007 CB Richard Ellis Significant U.S. Hotel Sales (over $10 million) Return Analysis of Three Recent Significant U.S. Hotel Sales Valuation/Pricing Challenges in Today s Market Lodging Industry Risk Considerations Summary

Twelve Month Moving Average 1989 to August 2007 6 Supply % Change Demand % Change 4 2 0-2 -4-6 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Twelve Month Moving Average 1989 to August 2007 10 8 Occ % Chg ADR % Chg 6 4 2 0-2 -4-6 -8 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

2005 2007 2003 Twelve Month Moving Average 1989 to August 2007 66 64 62 60 58 56 54 Occupancy Percent 1989 1991 1993 1995 1997 1999 2001

Twelve Month Moving Average 1989 to August 2007 110 Average Daily Rate 100 90 80 70 60 50 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

2005 2007 2003 Twelve Month Moving Average 1989 to August 2007 15 10 5 0-5 -10-15 RevPAR % Chg 1989 1991 1993 1995 1997 1999 2001

Twelve Month Moving Average August 2007 110 Occupancy (%) ADR ($) 100 90 80 Peak $101.66 August 2007 $101.66 August 2007 70 60 Peak 64.6% June 1997 63.4% August 2007 50 1997 1999 2001 2003 2005 2007

Twelve Months Ended August 2007 80 75 70 65 71.2 71.3 69.7 65.9 60 59.3 57.2 55 50 45 40 Luxury Upper Upscale Upscale Midscale W/FB Midscale w/o FB Economy

Twelve Months Ended August 2007 290 283.66 240 190 156.62 140 90 40 116.26 Luxury Upper Upscale Upscale Midscale W/FB 84.77 85.51 Midscale w/o FB 53.31 Economy

San Diego, CA Oahu Island, HI New York, NY Orlando, FL Seattle, WA Miami-Hialeah, FL San Francisco/San Mateo, CA Anaheim-Santa Ana, CA Los Angeles-Long Beach, CA Denver, CO Boston, MA Houston, TX Chicago, IL Phoenix, AZ San Antonio, TX Philadelphia, PA-NJ Washington, DC-MD-VA Nashville, TN 85 75 65 55 45 35 August 2007 YTD Detroit, MI Dallas, TX St Louis, MO-IL Norfolk-Virginia Beach, VA Total United States Atlanta, GA Tampa-St Petersburg, FL Minneapolis-St Paul, MN-WI

Miami-Hialeah, FL Oahu Island, HI New York, NY Boston, MA Washington, DC-MD-VA Chicago, IL San Diego, CA San Francisco/San Mateo, CA Phoenix, AZ Anaheim-Santa Ana, CA Philadelphia, PA-NJ Seattle, WA Los Angeles-Long Beach, CA Orlando, FL Tampa-St Petersburg, FL San Antonio, TX Total United States Denver, CO Minneapolis-St Paul, MN-WI August 2007 YTD $250 $200 $150 $100 $50 St Louis, MO-IL Detroit, MI Atlanta, GA Nashville, TN Houston, TX Dallas, TX Norfolk-Virginia Beach, VA

Miami-Hialeah, FL Oahu Island, HI New York, NY Boston, MA Washington, DC-MD-VA San Diego, CA San Francisco/San Mateo, CA Seattle, WA Anaheim-Santa Ana, CA Los Angeles-Long Beach, CA Chicago, IL Phoenix, AZ Orlando, FL Philadelphia, PA-NJ San Antonio, TX Total United States Tampa-St Petersburg, FL Denver, CO August 2007 YTD $225 $175 $125 $75 St Louis, MO-IL Dallas, TX Atlanta, GA $25 Norfolk-Virginia Beach, VA Nashville, TN Houston, TX Minneapolis-St Paul, MN-WI

Change From Last Year Phase August 2007 August 2006 Difference % Change In Construction 194,564 162,020 32,544 20.1% Final Planning 59,157 59,686-529 -0.9% Planning 310,504 302,102 8,402 2.8% Active Pipeline 564,225 523,808 40,417 7.7% Pre-Planning 113,098 78,314 34,784 44.4% Total 677,323 602,122 75,201 12.5% Source: STR / TWR / Dodge Construction Pipeline

Q3 06 Q1 07 Q3 05 Q1 06 Q1 05 Q3 04 Q1 2000 Q2 2007 Rooms in Thousands 350 300 250 200 150 100 50 In Construction In Planning Q1 00 Q3 00 Q1 01 Q3 01 Q1 02 Q3 02 Q1 03 Q3 03 Q1 04 *Source: STR / TWR / Dodge Construction Pipeline 31 18

Construction Costs Interest Rates Steel, Concrete, Lumber Availability Land (Competition for Sites) Hurricanes Rising Operating Costs Energy Natural Gas, Electricity Insurance Health Care, Property, Liability Labor Visa Caps, Union Contracts, Aging Work Force

August 2007 Market # Rooms Existing Supply Las Vegas 14,262 9.7% New York 8,375 10.4% Washington, DC 7,109 7.7% Chicago 6,499 6.4% Phoenix 6,039 11.5% San Antonio 4,418 12.8% LA Long Beach 4,310 4.7% Source: STR / TWR / Dodge Construction Pipeline

Existing Supply In Construction Planning Las Vegas, NV 147.4 14.3 21 Orlando, FL 111.2 4.2 8 Chicago, IL 101.6 6.5 6.8 Washington, DC 92.6 7.1 6.6 LA-Long Beach, CA 92 4.3 5.6 Atlanta, GA 90.3 2.6 9.8 New York, NY 80.6 8.4 6.6 Dallas, TX 71.2 3.2 3.8 Houston, TX 61.5 1.3 3.4 San Diego, CA 53.8 3.4 5.8 0 50 100 150 Number of Rooms (thousands)

100% 90% 20.0% 5.0% 80% 70% 60% 74.0% 53.0% 50% 40% 80.0% 95.0% 30% 20% 10% 26.0% 47.0% 0% PrePlanning Planning Final Planning Under Constrution Opened Abandoned Source: STR / TWR / Dodge Construction Pipeline

Average Duration From Construction Start to Open Luxury 23.9 Upper Upscale 20.3 Months Upscale 15.8 Midscale w/f&b 13.7 Midscale w/out F&B 12.9 Economy 10.3 0 6 12 18 24 Source: STR / TWR / Dodge Construction

1990 2006 Number of Rooms Closed 3 Year Moving Average 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1990 1992 1994 1996 1998 2000 2002 2004 20

2002 2008P 5 4 4.0 Supply % Chg Demand % Chg 3 2.8 2 1 0 1.6 0.3 1.0 1.3 0.4-0.1 0.3 0.7 1.4 1.6 2.0 2.0-1 2002 2003 2004 2005 2006 2007P 2008P (P) - Projection

2002 2008P 70 63.1 63.4 63.5 63.5 61.3 60 59.0 59.2 50 2002 2003 2004 2005 2006 2007P 2008P (P) - Projection

2002 2008P 4 3.6 3 2.9 2 1 0 0.3 0.4 0.2 0-1 -2-1.2 2002 2003 2004 2005 2006 2007P 2008P (P) - Projection

2002 2008P 125 108.85 100 82.72 82.84 86.30 91.02 97.61 103.47 75 50 2002 2003 2004 2005 2006 2007P 2008P (P) - Projection

2002 2008P 7 5 4.2 5.5 7.2 6.0 5.2 3 1 0.1-1 -3-1.5 2002 2003 2004 2005 2006 2007P 2008P (P) - Projection

2002 2008P 10 7.9 8.5 7.7 5 6.2 5.2 0 0.5-2.7-5 2002 2003 2004 2005 2006 2007P 2008P (P) - Projection

(Billions $) 1982 2008 Estimated $40.00 $35.00 $30.00 29.6 28.1 26.6 Billions $25.00 $20.00 $15.00 12.5 17 20.9 22.1 22.5 22.6 16.2 16.7 14.212.8 $10.00 8.5 $5.00 $0.00 2.5 1.9 1.7 0.1 0 2.4 5.5 -$5.00 -$10.00-0.9-1.1-1.3-2.1-5.7-2.8 08E 07E 06 05 04 03 02 01 00 99 98 97 96 95 94 93 92 91 90 89 88 87 86 85 84 83 82 Source: PWC 2007, 2008 & 2009 Estimates (July 07)

By Estimated Sales Price Property Location No. of Rooms Estimated Sales Price Estimated Price/Room Buyer Seller Resorts East Chicago Hotel & Casino East Chicago IN 291 $675,000,000 $2,319,588 Ameristar Casinos Inc. Resort Holdings (Co Capital) Maui Prince Hotel/Makena Resort Westin Boston Waterfront Makena, HI 310 $575,000,000 $1,854,839 JV between Morgan Stanley RE Fund V US, Trinity Investments Boston, MA 793 $330,000,000 $416,141 DiamondRock Hospitality Co. Lokelani Resort Co Boston Convention C Hotel, LLC Hilton Washington Washington DC 1119 $290,000,000 $259,160 Canyon-Johnson Urban Fund & Lowe Enterprises Hilton Hotels Corpor Boston Marriott Long Wharf Hotel Boston, MA 402 $228,200,000 $567,662 Sunstone Hotel Investors Boston Propertie On the Ave Hotel New York, NY 269 $204,000,000 $758,364 Highgate Holdings Rockpoint Group Hyatt Regency San Francisco San Francisco, CA 803 $200,000,000 $249,066 JV between Dune Capital & DiNapoli Capital Strategic Hotel Cap Anaheim Hilton Anaheim, CA 1572 $200,000,000 $127,226 Makar Properties DDRM Paramount Hotel New York, NY 567 $200,000,000 $352,734 Walton Street Capital LLC Hilton Atlanta & Towers Atlanta, GA 1226 $180,000,000 $146,819 Westmont Hospitality Group Becker Ventures N/A Source: CB Richard Ellis (CBRE) has compiled the above information from sources deemed reliable, and the information is thought to be correct, however CBRE cannot warrant absolute accuracy of all the data. Use of this information without verification from original sources is at your own risk.

By Estimated Room Price Property Location No. of Rooms Estimated Sales Price Estimated Price/Room Buyer Seller Resorts East Chicago Hotel & Casino East Chicago IN 291 $675,000,000 $2,319,588 Ameristar Casinos Inc. Resort Holdings (Co Capital) Maui Prince Hotel/Makena Resort Makena, HI 310 $575,000,000 $1,854,839 JV between Morgan Stanley RE Fund V US, Trinity Investments Lokelani Resort Co Casa Malibu Inn Malibu, CA 21 $20,000,000 $952,381 Larry Ellison N/A St. Regis Hotel, Washington, DC Associates & New V Washington DC 193 $170,000,000 $880,829 Claret Capital JV between Brickm Corp On the Ave Hotel New York, NY 269 $204,000,000 $758,364 Highgate Holdings Rockpoint Group Dylan Hotel New York, NY 107 $78,000,000 $728,972 HOTUSA Group & Losan Hotels World Fortuna Realty Gro Lodge & Spa at Cordillera Edwards, CO 56 $35,000,000 $625,000 Behringer Harvard & Cordillera Partners Cordillera Lodge & LLC Boston Marriott Long Wharf Hotel Boston, MA 402 $228,200,000 $567,662 Sunstone Hotel Investors Boston Propertie Hotel Jerome Aspen, CO 92 $50,000,000 $543,478 Elysian Worlwide LLC & Lodging Capital Partners Campton Place Hotel San Francisco, CA 110 $58,000,000 $527,273 Taj Hotels Resorts & Palaces Oklahoma Publishing Kor Hotel Group Source: CB Richard Ellis (CBRE) has compiled the above information from sources deemed reliable, and the information is thought to be correct, however CBRE cannot warrant absolute accuracy of all the data. Use of this information without verification from original sources is at your own risk.

By Number of Rooms Property Location No. of Rooms Estimated Sales Price Estimated Price/Room Buyer Seller Anaheim Hilton Anaheim, CA 1572 $200,000,000 $127,226 Makar Properties DDRM Hilton Atlanta & Towers Atlanta, GA 1226 $180,000,000 $146,819 Westmont Hospitality Group Hilton Washington Washington DC 1119 $290,000,000 $259,160 Canyon-Johnson Urban Fund & Lowe Enterprises N/A Hilton Hotels Corpor Hyatt Regency San Francisco Westin Boston Waterfront San Francisco, CA 803 $200,000,000 $249,066 JV between Dune Capital & DiNapoli Capital Boston, MA 793 $330,000,000 $416,141 DiamondRock Hospitality Co. Strategic Hotel Cap Boston Convention C Hotel, LLC Marriott Branded Complex Miami Int'l Airport Miami, FL 777 $57,500,000 $74,003 Thayer Lodging Group Marriott Internationa Fairmont New Orleans New Orleans, LA 700 $17,000,000 $24,286 Dimension Developmentl Co. N/A Doubletree Chicago Hotel O' Hare Airport Rosemont, IL 660 $65,000,000 $98,485 Dow Hotel Co. Lowe Enterprises Innisbrook Resort & Golf Club Palm Harbor, FL 620 $35,000,000 $56,452 Salamander Hospitality LLC N/A Paramount Hotel New York, NY 567 $200,000,000 $352,734 Walton Street Capital LLC Becker Ventures Source: CB Richard Ellis (CBRE) has compiled the above information from sources deemed reliable, and the information is thought to be correct, however CBRE cannot warrant absolute accuracy of all the data. Use of this information without verification from original sources is at your own risk.

By Market Market Area Number of Property Transactions Los Angeles/ Southern California Area 8 New York/New Jersey Area 8 Miami/South Florida Area 7 Chicago, IL Area 5 San Francisco/ Northern California Area 5 Washington, DC Area 4 Boston, MA Area 4 Hawaii Area 3 Source: CB Richard Ellis (CBRE) has compiled the above information from sources deemed reliable, and the information thought to be correct, however CBRE cannot warrant absolute accuracy of all the data. Use of this information without verification from original sources is at your own risk.

Most Active Buyers Buyer Number of Properties Acquired American Property Hospitality Management 3 Sunstone Hotel Investors, Inc. 3 Behringer Harvard 2 Interstate Hotels & Resorts 2 Lowe Enterprises 2 McSam Hotel Group LLC 2 NCH Corp. 2 Shamrock-Hostmark Hotel Fund 2 Source: CB Richard Ellis (CBRE) has compiled the above information from sources deemed reliable, and the information thought to be correct, however CBRE cannot warrant absolute accuracy of all the data. Use of this information without verification from original sources is at your own risk.

Most Active Sellers Seller Number of Properties Sold Blackstone Group 7 Field Hotel Associates 2 Source: CB Richard Ellis (CBRE) has compiled the above information from sources deemed reliable, and the information thought to be correct, however CBRE cannot warrant absolute accuracy of all the data. Use of this information without verification from original sources is at your own risk.

Trailing 12 Months Gross Revenues $18,000,000 100.00% Implied Cap Rate Assumed $50 Million Sa GOP Before Mgt Fees and Reserves $4,320,000 24.0% 8.6% Gross Management Fee $540,000 3.0% Incentive Management Fee $180,000 1.0% Reserve for Replacement $900,000 5.0% $ % of Gross Revenues NOI After Base Management Fee $3,780,000 21.0% 7.6% NOI After Base & Incentive Management Fee $3,600,000 20.0% 7.2% NOI After Base & Incentive Management Fee & Reserves $2,700,000 15.0% 5.4% Projected Year One $ % of Gross Revenues Gross Revenues $20,000,000 100.00% GOP Before Management Fee $5,200,000 26.0% 10.4% Base Management Fee $600,000 3.0% Incentive Management Fee $200,000 1.0% Reserve for Replacement $1,000,000 5.0% Implied Cap Rate Assumed $50 Million Sa NOI After Base Management Fee $4,600,000 23.0% 9.2% NOI After Base & Incentive Management Fee $4,400,000 22.0% 8.8% NOI After Base & Incentive Management Fee & Reserves $3,400,000 17.0% 6.8%

$50,000,000 Transaction $10,000,000 = Land $7,500,000 = FF&E $32,500,000 = Building, which would typically depreciate over 39 years for Federal tax purposes Cost Segregation reclassifies 18% of Building as Personal Property which depreciates over 5 years and 15% of Building as Site Improvements which depreciate over 15 years This creates $1,000,000 in additional cash flow in the first year Projected Year One With Cost Segregation % of Gross Revenue Implied Cap Rate NOI After Base Management Fee $5,600,000 28.0% 11.2% NOI After Base & Incentive Management Fee $5,400,000 27.0% 10.8% NOI After Base & Incentive Management Fee & Reserves $4,400,000 22.0% 8.8%

Event Risk Labor Unrest Rising Cost of Employee Benefits Rising Energy Costs Continued Room Pricing Pressure from Internet Websites Housing Market Bubble Rising Interest Rates Economic Recession

Supply Growth Accelerates Demand Growth Stabilizes Occupancy Levels Off Aggressive Room Rate Pricing Continues Increased Profitability