Loading...
HomeMy WebLinkAboutAppraisal - BlakeBLE APPRAISAL REPORT (MARKET RENT STUDY) Jungle Island Hotel 1111 Parrot Jungle Trail Miami, Miami -Dade County, FL 33132 PREPARED FOR Ms Jacqueline Lorenzo, Property Manager Representative Property Management Representative City of Miami -Department of Real Estate & Asset Management 444 SW 2nd Avenue, 3rd Floor Miami, Florida 33130 PREPARED BY Joseph J. Blake and Associates, Inc. 4000 Ponce De Leon Boulevard Suite 410 Miami, FL 33146 BL JOSEPH J. BLAKE AND ASSOCIATES. INC. HEAL ESTATE VALUATION AND CONSULTING 4000 Ponce De Leon Boulevard, Suite 410 I Miami, FL 33146 I Phone: (305) 448-1663 I Fax: (305) 448-7077 I www.josephjblake.com April 5, 2018 Ms. Jacqueline Lorenzo, Property Manager Representative Property Management Representative City of Miami -Department of Real Estate & Asset Management 444 SW 2nd Avenue, 3rd Floor Miami, Florida 33130 Re: Market Rent Study Jungle Island Hotel 1111 Parrot Jungle Trail Miami, FL 33132 Dear Ms Lorenzo: As requested, we have prepared an appraisal of the property referenced above presented in the attached Appraisal Report {Market Rent Study). The purpose of the market rent study is to develop an opinion of the 'as is' fair market rent and terms of the unencumbered fee simple interest for a proposed 300 room hotel with 10,000 SF of retail space and 30,000 SF of meeting space, to be placed in the southern portion of Jungle Island, to be paid to the City by Jungle Island, as of March 16, 2018. Briefly described, the site is estimated to consist of approximately 104,093 SF or 2.39± acres of uplands located in the southern portion of the Jungle Island site on Watson Island, in Miami, Miami -Dade County, Florida. The site is owned by the City of Miami. According to the developer, the site is proposed for a 300 room hotel, plus 10,000 SF of retail space and 30,000 SF of meeting/banquet space. There are no plans or square footage estimates for the hotel presented by the developer. The appraiser estimated a total gross building area including the hotel, retail, meeting space and parking to be 346,000 SF. The subject is zoned CS Civic Space, under Zoning Ordinance Miami 21, per the City of Miami. The report contains 84 pages plus related exhibits. The appraisal and the attached Appraisal Report (Market Study) have been prepared in conformity with and are subject to the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP). After an inspection of the subject, and analysis of pertinent physical and economic factors that affect value, we are of the opinion that the 'as is' fair market rent and terms of the unencumbered fee simple interest for a proposed 300 room hotel with 10,000 SF of retail space and 30,000 SF of meeting space, to be placed in the southern portion of Jungle Island, to be paid to the City by Jungle Island, as of March 16, 2018, is: Rent $1,410,000 Percentage Overage Rent 5.5% over $25,600,000 Breakeven Point Term 99 Years Escalations CPI Every 5 Years ReEvaluation Every 5 Years Corporate Headquarters: 425 Broad Hollow Road, Suite 429 I Melville, New York 11747 I (516) 827-0222 Regional Offices: Atlanta I Boston I Chicago I Dallas I Los Angeles I Miami I New York City I San Francisco I Washington D.C. Blake & Sanyo Alliance: Tokyo I Osaka I Nagoya I Sendai Aprils, 2018 Ms Jacqueline Lorenzo, Property Manager Representative Page 2 of 2 The percentage overage rent is based on gross revenue and assumes a breakpoint of $25,600,000. The base rent conclusions assume increases at CPI every 5 years and also assume the tenant (Jungle Island) would be responsible for the payment of all ad valorem and non ad valorem property taxes and assessments levied on the property. No consideration is given for the construction period and any rent abatement during the construction period; not the lease -up or future stabilization of the income streams from the various components. We were not provided with building or site plans. We make the assumption that all construction will be of similar quality to the cornparables noted in this report The use of the aforementioned Extraordinary Assumptions might have affected the assignment results. The use of the aforementioned Extraordinary Assumptions might have affected the assignment results. This appraisal is not based on any hypothetical conditions. The opinion(s) of value are based on exposure times of 6 to 12 months, assuming the property was properly priced and actively marketed. The attached Appraisal Report summarizes the documentation and analysis in support of our conclusions. If you have any questions, please contact the undersigned. We thank you for retaining the services of our firm. Respectfully submitted, JOSEPH J. BLAKE AND ASSOCIATES, INC. Ted Allen, MAI, MRICS Matthew Roach, MAI Managing Partner Director Florida -State -Certified General Real Estate Appraiser Florida -State -Certified General Real Estate Appraiser No. RZ426 No. RZ3189 Expires: November 30, 2018 Expires: November 30, 2018 tallen@josephjblake.com Jungle island Hotel 18-085-02 TITLE PAGE TRANSMITTAL LETTER TABLE OF CONTENTS EXECUTIVE SUMMARY 1 PHOTOGRAPHS OF THE SUBJECT 3 CERTIFICATION ..5 GENERAL ASSUMPTIONS & LIMITING CONDITIONS 7 PURPOSE OF THE APPRAISAL 9 INTENDED USER AND USE OF THE APPRAISAL 9 PERTINENT DATES OF INSPECTION, APPRAISAL VALUE AND REPORT 9 EXPOSURE TIME 9 SCOPE OF THE APPRAISAL 10 IDENTIFICATION OF THE PROPERTY 10 CURRENT USE OF THE SUBJECT 11 HISTORY OF THE SUBJECT 11 AREA ANALYSIS 12 NEIGHBORHOOD ANALYSIS 17 NATIONAL MARKET ANALYSIS 23 MIAMI-DADE COUNTY HOTEL MARKET ANALYSIS 35 DESCRIPTION OF THE SITE 59 ZONING 62 TAXES 63 ANALYSIS OF DATA AND CONCLUSIONS 64 LAND RENT METHOD 1 65 LAND VALUE 69 LAND RENT METHOD 2 81 RECONCILIATION AND FINAL VALUE 83 ADDENDA Glossary of Terms Qualifications of the Appraisers JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING Jungle Island Hotel 18-085-02 PROPERTY APPRAISED PROPERTY ADDRESS PARCEL/TAX ID PROPERTY LOCATION PURPOSE OF THE APPRAISAL DATE OF INSPECTION DATE OF REPORT DATE OF "AS IS" VALUE AS IMPROVED AS IF VACANT IMPROVEMENT DATA SITE DESCRIPTION CURRENT USE ZONING CENSUS TRACT EXECUTIVE SUMMARY PROPERTY SUMMARY Jungle Island Hotel 1111 Parrot Jungle Trail Miami, FL 33132 01-3231-000-0014 The subject is located on Watson Island on the MacArthur Causeway, just east of Biscayne Boulevard. The purpose of the market rent study is to develop an opinion of the 'as is' fair market rent and terms of the unencumbered fee simple interest for a proposed 300 room hotel with 10,000 SF of retail space and 30,000 SF of meeting space, to be placed in the southern portion of Jungle Island, to be paid to the City by Jungle Island, as of March 16, 2018. PERTINENT DATES March 16, 2018 April 5, 2018 March 16, 2018 HIGHEST AND BEST USE The redevelopment of the existing improvements with a more intensive use To maximize the utility of the site in relation to the zoning PROPERTY DATA Briefly described, the site is estimated to consist of approximately 104,093 SF or 2.39± acres of uplands located in the southern portion of the Jungle Island site on Watson Island, in Miami, Miami -Dade County, Florida. The site is owned by the City of Miami. According to the developer, the site is proposed for a 300 room hotel, plus 10,000 SF of retail space and 30,000 SF of meeting/banquet space. There are no plans or square footage estimates for the hotel presented by the developer. The appraiser estimated a total gross building area including the hotel, retail, meeting space and parking to be 346,000 SF. The subject is zoned CS Civic Space, under Zoning Ordinance Miami 21, per the City of Miami. Subject Building SF #of Rooms SF/Room 300 650 Hotel 195,000 Hotel Ancillary 58,500 30% Retail 10,000 Meeting Space 30,000 Garage 52,500 150 350 Totals 346,000 1,153 The subject's site is estimated to contain approximately 104,093 SF or approximately 2.39 acres of land. As of the date of the value opinion(s), the subject was being used as parking garage. For the purposes of this report, the market rent will be determined based on the use of the subject as a full service hotel. "CS," Civic Space under the jurisdiction of the City of Miami. 12-086-9810.00 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 1 Jungle Island Hotel 18-085-02 Hotel EXECUTIVE SUMMARY RENTAL VALUE SUMMARY Per Room Total Rooms 1 300 Room Nights 365 109,500 ADR $180.00 $180.00 Occupancy 78.00% $0,78 RevPAR $140.40 $140.40 Total Room Revenue Ancillary Revenue $51,246 $15,373,800 40% $10,249,200 Total Revenue Ground Rent Percent Ground Rent FLR $25,623,000 5.50% $1,409,265 $/FLR Land Value Total Building Area 346,000 $80.00 $27,680,000 Capitalization Rate 5.00% Land Rent $1,384,000 Rent/FLR $4.00 Site Size 104,093 Rent/SF Land $13.62 CONCLUSIONS Rent $1,410,000 Percentage Overage Rent 5.5% over $25,600,000 Breakeven Point Term 99 Years Escalations CPI Every 5 Years ReEvaluation Every 5 Years JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 2 Jungle Island Hotel 18-085-02 Front of Jungle Island Parking Garage South Elevation Parking Garage PHOTOGRAPHS OF THE SUBJECT Entrance/Exit along Jungle Island Trail Parking Garage East Elevation Parking Garage JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 3 Jungle Island Hotel 18-085-02 PHOTOGRAPHS OF THE SUBJECT View Along Jungle island Trail Facing North View Along Jungle Island Trail Facing South JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 4 Jungle Island Hotel 18-085-02 CERTIFICATION We, the undersigned, certify that, to the best of our knowledge and belief: • Ted Allen, MAI, MRICS, has made a personal inspection of the property that is the subject of this report. Matthew Roach, MAI, has made a personal inspection of the property that is the subject of this report. • As of the date of this report, Ted Allen, MAI, MRICS has completed the continuing education program for Designated Members of the Appraisal Institute. As of the date of this report, Matthew Roach, MAI has completed the continuing education program for Designated Members of the Appraisal Institute. • The statements of fact contained in this report are true and correct. • The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. • We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. • We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • Our engagement in this assignment was not contingent upon developing or reporting predetermined results. • Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. • The Appraisal Report is not based on a requested minimum valuation, a specific valuation, or the approval of a loan. In addition, our engagement was not contingent upon the appraisal producing a specific value and neither engagement, nor employment, nor compensation, is based upon approval of any related loan application. • Our analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. • The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. • No one provided significant real property appraisal assistance to the persons signing this certificate. • The use of this report is subject to the requirements of the State of Florida relating to review by the Real Estate Appraisal Subcommittee of the Florida Real Estate Commission. • The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. • The appraisers have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the date of acceptance of this assignment. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 5 Jungle Island Hotel 18-085-02 CERTIFICATION The percentage overage rent is based on gross revenue and assumes a breakpoint of $25,600,000. The base rent conclusions assume increases at CPI every 5 years and also assume the tenant (Jungle Island) would be responsible for the payment of all ad valorem and non ad valorem property taxes and assessments levied on the property. No consideration is given for the construction period and any rent abatement during the construction period; not the lease -up or future stabilization of the income streams from the various components. We were not provided with building or site plans. We make the assumption that all construction will be of similar quality to the comparables noted in this report The use of the aforementioned Extraordinary Assumptions might have affected the assignment results. The use of the aforementioned Extraordinary Assumptions might have affected the assignment results. This appraisal is not based on any hypothetical conditions. The opinion(s) of value are based on exposure times of 6 to 12 months, assuming the property was properly priced and actively marketed. Respectfully submitted, JOSEPH J. BLAKE AND ASSOCIATES, INC. Ted Allen, MAI, MRICS Matthew Roach, MAI Managing Partner Director Florida -State -Certified General Real Estate Appraiser Florida -State -Certified General Real Estate Appraiser No. RZ426 No. RZ3189 Expires: November 30, 2018 Expires: November 30, 2018 tallen@josephjblake,com JOSEPH L. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 6 Jungle Island Hotel 18-085-02 GENERAL ASSUMPTIONS & LIMITING CONDITIONS This Appraisal Report is subject to underlying assumptions and limiting conditions qualifying the information contained in the Report as follows: The valuation opinions(s) apply only to the property specifically identified and described in the ensuing Report. Information and data contained in the report, although obtained from public record and other reliable sources and, where possible, carefully checked by us, is accepted as satisfactory evidence upon which rests the final opinion(s) of property value. We have made no legal survey, nor have we commissioned one to be prepared, and therefore, reference to a sketch, plat, diagram or previous survey appearing in the report is only for the purpose of assisting the reader to visualize the property. It is assumed that all information known to the client and/or the property contact and relative to the valuation has been accurately furnished and that there are no undisclosed leases, agreements, liens or other encumbrances affecting the use of the property, unless otherwise noted in this report. Ownership and management are assumed to be competent and in responsible hands. No responsibility beyond reasonableness is assumed for matters of a legal nature, whether existing or pending. We, by reason of this appraisal, shall not be required to give testimony as expert witness in any legal hearing or before any Court of Law unless justly and fairly compensated for such services. By reason of the Purpose of the Appraisal and the Intended User and Use of the Report herein set forth, the value opinion(s) reported are only applicable to the Property Rights Appraised, and the Appraisal Report should not be used for any other purpose. Disclosure of the contents of this Appraisal Report is governed by the By -Laws and Regulations of the Appraisal Institute. Neither all nor any part of the contents of this report (especially any opinions as to value, our identity, or the firm with which we are connected, or any reference to the Appraisal Institute or to the MAI Designation) shall be reproduced for dissemination to the public through advertising media, public relations media, news media, sales media or any other public means of communication without our prior consent and written approval. We have not been furnished with soil or subsoil tests, unless otherwise noted in this report. In the absence of soil boring tests, it is assumed that there are no unusual subsoil conditions or, if any do exist, they can be or have been corrected at a reasonable cost through the use of modern construction techniques. This appraisal is based on the conditions of local and national economies, purchasing power of money, and financing rates prevailing at the effective date(s) of value. We are not engineers and any references to physical property characteristics in terms of quality, condition, cost, suitability, soil conditions, flood risk, obsolescence, etc., are strictly related to their economic impact on the property. No liability is assumed for any engineering -related issues. Unless otherwise stated in this report, we did not observe the existence of hazardous materials, which may or may not be present on or in the property. The presence of substances such as asbestos, urea - formaldehyde foam insulation, or other potentially hazardous materials, may affect the value of the property. The value opinion is predicated on the assumption that there is no such material on or in the property that would cause a loss in value or extend their marketing time. No responsibility is assumed for any such conditions, or for the expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. JOSEPH J. BLAKE AND ASSOCIATES, INC, REAL ESTATE VALUATION AND CONSULTING 7 Jungle Island Hotel 18-085-02 GENERAL ASSUMPTIONS & LIMITING CONDITIONS Toxic and hazardous substances, if present within a facility, can introduce an actual or potential liability that may adversely affect marketability and value. Such effects may be in the form of immediate clean-up expense or future liability of clean-up costs (stigma). In the development of our opinion(s) of value, no consideration was given to such liabilities or their impact on value. The client and all intended users release Joseph J. Blake and Associates, Inc., from any and all liability related in any way to environmental matters. Possession of this report or a copy thereof does not imply right of publication, nor use for any purpose by any other than the client to whom it is addressed, without our written consent. Cash flow projections are forecasts of estimated future operating characteristics and are based on the information and assumptions contained within the Appraisal Report. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may well vary from the projections contained herein. We do not warrant that these forecasts will occur. Projections may be affected by circumstances beyond our current realm of knowledge or control. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific compliance survey and analysis of this property to determine whether it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements for the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. unless otherwise stated in this report, we have no direct evidence relating to this issue and we did not consider possible non-compliance with the requirements of the ADA in forming the opinion of the value of the property. EXTRAORDINARY ASSUMPTIONS The percentage overage rent is based on gross revenue and assumes a breakpoint of $25,600,000. The base rent conclusions assume increases at CPI every 5 years and also assume the tenant (Jungle Island) would be responsible for the payment of all ad valorem and non ad valorem property taxes and assessments levied on the property. No consideration is given for the construction period and any rent abatement during the construction period; not the lease -up or future stabilization of the income streams from the various components. We were not provided with building or site plans. We make the assumption that all construction will be of similar quality to the comparables noted in this report The use of the aforementioned Extraordinary Assumptions might have affected the assignment results. The use of the aforementioned Extraordinary Assumptions might have affected the assignment results. HYPOTHETICAL CONDITIONS This appraisal is not based on any hypothetical conditions. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 8 Jungle Island Hotel 18-085-02 INTRODUCTION PURPOSE OF THE APPRAISAL The purpose of the market rent study is to develop an opinion of the 'as is' fair market rent and terms of the unencumbered fee simple interest for a proposed 300 room hotel with 10,000 SF of retail space and 30,000 SF of meeting space, to be placed in the southern portion of Jungle Island, to be paid to the City by Jungle Island, as of March 16, 2018. INTENDED USER AND USE OF THE APPRAISAL The intended user of this appraisal is the client, City of Miami -Department of Real Estate & Asset Management. We assume any affiliates, successors and assigns noted herein have the same intended use, knowledge and understanding as the original named client. The intended use of this appraisal is to assist the client with asset management purposes. This appraisal is not intended to be used by any other parties, for any other reasons, other than those which are stated here. Non -identified parties are riot intended users of this report. PERTINENT DATES OF INSPECTION, APPRAISAL VALUE AND REPORT This Appraisal Report, with its analyses, conclusions and final opinions of market value, is specifically applicable to the following pertinent dates: DATE OF INSPECTION March 16, 2018 DATE OF REPORT April 5, 2018 DATE OF "AS IS" VALUE March 16, 2018 DEFINITION OF MARKET VALUE Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised, and acting in what they consider their own best interests; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.' Source: 12 C.F.R. § 34.42, 225.62, 323.2, 564.2, 722.2 EXPOSURE TIME To form an opinion of exposure time, we considered the exposure times of properties similar to the subject in the same or similar sub -markets that have recently sold and/or conversations with local market participants. Based on our research, we are of the opinion that 6 to 12 months is a reasonable exposure time, assuming that the property was reasonably priced and actively marketed. PROPERTY RIGHTS APPRAISED The subject is appraised on the basis of a fee simple estate. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 9 Jungle Island Hotel 18-085-02 INTRODUCTION SCOPE OF THE APPRAISAL The scope of an appraisal assignment is relative to the intended use of the market rent study. The following outlines the extent of property inspection, market data collection, verification and analysis performed for this assignment. Inspection Ted Allen, MAI, MRICS, has made a personal inspection of the property that is the subject of this report. Matthew Roach, MAI, has made a personal inspection of the property that is the subject of this report. This inspection included the interior and exterior of the subject. The inspection was visual in nature, to assess the economic condition of the property, in order to effectively compare it to other properties in the market. We are not engineers, and we did not assess the property from the standpoint of its structural integrity, or to determine whether any latent defects (water leaks, plumbing or electrical problems, etc.) were present. Subject Physical and Economic Characteristics The types of information obtained and the sources providing such information are detailed in the following table. Information Sources Information Type Received? Source Proposed Project Details Yes Owner Most Recent Deed Yes County Legal Description Yes County Zoning information Yes City Type of Analysis Applied The client has requested a market study be performed on the property to determine the market rent as defined in the purpose of the appraisal. As such, the Cost, the Sales Comparison and income Capitalization Approaches to value were not performed as a market value for the subject was not requested. It is noted that the study is to result in specific conclusions regarding the market rent under the proposed development plan. Within the determination of the market rent, we use aspects of the Sales Comparison Approach and the Income Capitalization Approach. Extent of Data Research General economic data and market data were reviewed. Comparable rental information was compiled from a survey of similar facilities to the subject as well as from published sources including Loopnet, CoStar Comps, and public records. These data are a result of research specific to the Miami -Dade County market and pertinent to the subject. The data were verified by brokers, managers, government officials and owners or other sources regarded as knowledgeable and reliable. Market data reports prepared by different entities were utilized, which summarize general market information. Information specific to the subject was provided by the client, the City of Miami, and is assumed to be correct. The information appeared reliable, based on an inspection of the property on March 16, 2018. Other information, such as zoning and tax records, was obtained from governmental sources. IDENTIFICATION OF THE PROPERTY The property is commonly known as: Jungle Island Hotel 1111 Parrot Jungle Trail Miami, FL 33132 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 10 Jungle Island Hotel 18-085-02 INTRODUCTION The property is also identified by the Miami -Dade County Tax Assessor's Office as tax parcel number(s) 01- 3231-000-0014. The legal description of the property is assumed to be correct. We have not commissioned a survey, nor have we had one verified by legal counsel. Therefore, we suggest a title company, legal counsel, or other qualified expert verify this legal description before it is used for any purpose. CURRENT USE OF THE SUBJECT As of the date of the value opinion(s), the subject was being used as parking garage. For the purposes of this report, the market rent will be determined based on the use of the subject as a full service hotel. HISTORY OF THE SUBJECT The subject is currently owned by City of Miami. The subject site is located on Watson Island, which is located within Biscayne Bay, mid -way between Downtown Miami and Miami Beach. The island is accessed by the MacArthur Causeway (State Road 41), which travels from Miami to Miami Beach. The roadway approximately bisects the island, with undeveloped land located on the northeast and southwest of the roadway. The site is owned by the city of Miami, which has owned the site since Watson Island was deeded to the City of Miami by the State of Florida in 1949. Approximately 12 years ago, the City of Miami determined Watson Island was underutilized, and set out to develop the island. Parrott Jungle was originally located in Pinecrest in Southwest Miami -Dade County since 1936. From 1995 to 2000 Parrott Jungle went through the process to move to Watson Island by securing a $25,000,00 loan from the US Department of Housing and Urban Development. Construction of the current facility began in 2000. Parrott Jungle opened in 2003. In 2007 the name was changed to Jungle Island with plans to make changes to the park. In 2012 the park sought to expand on an adjacent 13 acre parcel, however, this was never approved. In 2016 the Aventura based company ESJ Capital Partners takes over a $10.75 million mortgage from HSBC. In 2017 ESJ Capital Partners takes over ownership of the park in a $60 million deal, $15 million in cash. The lease for the property was transferred to ESJ and the firm assumes about $45 million in debt. Plans were announced that a renovation of the park was proposed. Plans are to add zip lines and a two acre man made lagoon. ESJ is now exploring the possibility of developing a 300 room hotel with 10,000 SF of retail and 30,000 SF of meeting/banquet space. This is proposed to be located where the current parking garage is at the southern portion of the property. We are not aware of any listings, real property transactions, or ownership transfers pertaining to the subject in the three years prior to the date of the "as is" value opinion, other than that which is reported here. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 11 Jungle Island Hotel 18-085-02 Miramar .16''' Country Club Pala Sprir•gs ,'a22'1 Noah Miami Lakes (2-229 • Hialeah tGardens _--- Medley Doral Fr 040 AREA MAP l ijigl i°TWj Wesi Park 1`441 Miami Gardens ISI Upa-locka Hialeah (2:7) Miami Springs 9i4B .ontainebleau #;t? Westchester 2E11 Hallandale Beach Avemura Nort''l M imi Reach 95 5} 1,9 may, North Miarni CV Miami Shores Ill. �. I 795 Bar Sjr;"side 'i 934 1 Miami Beach Miami B Idsss) Miami Fisher Island Virguua Key i�7?1 Sunset South Miami <endall Pinecrest sg2 Palmetto Bay Coral Gables Biscayne Bay Aqu•attc Preserve Key Biscayne eh AREA ANALYSIS Map data ©2018 Gcogle INTRODUCTION The Miami -Fort Lauderdale -West Palm Beach Metropolitan Statistical Area (MSA) encompasses Broward, Miami -Dade, Monroe and Palm Beach counties. The subject is located in Miami -Dade County, Florida. Miami -Dade County is located in the southeast portion of Florida's east coast and is the southernmost county situated on Florida's mainland. Miami is the county seat of Miami -Dade County, which includes many other incorporated areas such as Miami Beach, Key Biscayne, Coral Gables, South Miami, Pinecrest, Aventura, Hialeah and Homestead. Miami -Dade County boasts an excellent geographic location, allowing it to serve as a gateway to the Caribbean and Latin America. A tourist destination in itself, it is also within a day's drive to some of Florida's major tourist destination cities. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION ANR CONSULTING 12 Jungle Island Hotel 18-085-02 AREA ANALYSIS Development and growth in Miami -Dade County are often attributed to the climate, which draws the northern United States tourist trade during the winter months. Miami -Dade County is a recognized banking and finance center, with over 120 financial institutions featuring a growing community of international banks serving Latin America. This international activity has emerged due to the more than 150 multi- national firms that have established their offices in Miami -Dade in order to direct their Latin American, Caribbean and in some cases, worldwide operations. The growth in business relations between Latin America and Miami -Dade County has been accompanied by ongoing growth in tourism from Latin America. Latin American tourists who enjoy shopping in the United States represent a major demand segment in Miami -Dade County's lodging and retail markets. The concurrency provision in the 1985 Growth Management Act requires that all water, sewer, roads, schools, parks and storm water facilities necessary to support existing improvements be in place before new construction is permitted. Thus, if a location is deficient in one or more categories, the affected infrastructure component must be expanded to support any new construction. A developer may choose to provide the various facilities and/or services necessary to support their project. However, in some cases the expense associated with offsite improvements may render a project economically unfeasible. Transportation Miami International Airport is the largest gateway between the United States and Latin America, and is one of the largest airline hubs in the United States, owing to its proximity to tourist attractions, local economic growth, large local Latin American and European populations, and strategic location to handle connecting traffic between North America, Latin America, and Europe. The Port of Miami is a leader in the maritime industry and home to nearly a dozen of the world's most distinguished cruise lines. The port offers more cargo sailings to more destinations in the Western hemisphere than any other port, and offers access to virtually every port in the world. Metrorail is a 21-mile rapid transit system on an elevated railway providing access to Downtown Miami from portions of both south and north Miami -Dade County. It connects with Metromover, a 30-station, five -mile system, that loops through the center of Downtown Miami's CBD. Metrobus provides the feeder system to Metrorail and bus service to all other parts of Miami -Dade County. A network of 5,640 miles of roadway serves Miami -Dade County, of which 1-95, 1-75, Florida's Turnpike, and the Palmetto Expressway (SR-826) are the most utilized north/south highways, while SR-112, SR-826 and SR-836 are the most utilized east/west expressways. US-1 and SR-A1A are also components of this network. Other primary thoroughfares include 1-395 (east/west), 1-195 (east/west), SR-9, SR-94, SR-874, US-27, US-41 and US-441. Education Miami -Dade County is served by more than 900 public and private secondary and elementary schools. Seven colleges and universities are located in the county. Miami -Dade College currently offers more than 175 programs and 1,500 courses, with enrollment of over 160,000 students. The University of Miami in Coral Gables has more than 15,000 degree -seeking students and offers 150 undergraduate and 192 graduate degree programs. Florida International University, with two campuses, 36,000 students and more than 800 full-time faculty, received the nation's fifth largest philanthropic gift in the history of public higher education —the Wolfsonian Museum on Miami Beach, with 70,000 artifacts worth an estimated $75 million. It was donated to the college in 1997 and features a wide array of objects ranging from high art to pop culture. Four-year degree programs are also available at Barry University, St. Thomas University, Florida Memorial College and Miami Christian College. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 13 Jungle Island Hotel 18-085-02 AREA ANALYSIS Tourism/Recreation Known mainly for its trendy nightclubs and oceanfront resorts, Miami -Dade County is also a recognized center for the fine arts and the performing arts, offering an array of enriching cultural activities. These include the Miami Art Museum, Museum of Contemporary Art, Miami Art Central, Wolfsonian-FIU, and the Lowe Art Museum, which are filled with collections and exhibitions from all parts of the world. Broadway plays, the Repertory Theater, the Philharmonic, the Opera Guild, and a large number of historical attractions and exhibits are also favorites. Every year, numerous art festivals make their homes in Miami, including the world-renowned Coconut Grove Arts Festival and Art Basel. The Miami Beach Symphony Orchestra and the Greater Miami Opera Association both offer top-notch performances throughout the year. In addition, the Coconut Grove Playhouse, the Actor's Playhouse and the Gusman Center features a variety of plays and dance pieces from local, regional and national troupes. Medical According to the Greater Miami Chamber of Commerce, Miami -Dade County boasts two major medical networks: the Jackson Health System and Baptist Health South Florida. Jackson Health System, the largest group of medical services in the Southeastern United States, is assembled in a medical complex just west of Downtown Miami. At its hub is the University of Miami School of Medicine/Jackson Memorial Medical Center, ranked in the top 10 of more than 8,000 hospitals in the nation and situated in the city limits of Miami. In Miami -Dade County alone, there are more than 29,000 health care professionals and 28 hospitals. The extensive network of community hospitals includes: Mount Sinai Medical Center, Columbia Cedars Medical Center, Hialeah Hospital, Baptist Hospital, Jackson Memorial Hospital, Mercy Hospital and Miami Children's Hospital. AREA DEMOGRAPHIC AND INCOME DATA The following data was obtained from MOODY'S ANALYTICS Precis° U.S. Metro South, April 2016. The full report is located in the Addenda, and contains additional information about the social, economic, governmental and environmental forces that influence value. Moody's Source for Charts 2011 2012 2013 2011 2015 2016 2017 2018 2019 2020 2021 2022 Gross metro product(C09$ bil) 105,0 106.2 108.3 110.8 114.5 117,4 122.0 128.0 133.1 137.1 142.2 147.9 %change 0.24% 1.19% 1.97% 2.28% 3.32% 2.60% 3,92% 4.87% 4.03% 2.99% 3,74% 3,98% Total employment (ths) 1,007.3 1,031.3 1,056,5 1,089.3 1,125.8 1,157.7 1,180.4 1,202.5 1,220.8 1,230.0 1,235,5 1,251,2 % change 2.25% 2.38% 2.45% 3.10% 3.36% 2.83% 1.96% 1.87% 1.52% 0.76% 0,45% 1,26% Unemployment rate(%) 9.40% 8.27% 7.48% 6.77% 5.92% 5.42% 5.00% 4.44% 4.05% 4.37% 4.98% 5,08% Personal income growth (%) 4 80% 2 60% 0.38% 744% 5.01% 3.98% 4.61% 6.88% 6.93% 5.98% 5.56% 6.05% Median household income ($ ths) 41.7 42.0 42.4 42.9 43.8 45.2 47.3 49.4 51.5 53.2 54.7 56.6 Population (ths) 2,573,4 2,608,0 2,641,3 2,667,3 2,692.6 2,712.9 2,751.1 2,790.5 2,830.0 2,869.0 2,906.6 2,944.2 %change 2.63% 1.35% 1.28% 0.99% 0.95% 0.76% 1.41% 1,43% 1.41% 1.38% 1.31% 1.29% Single -fa milt' permits (4) 962.0 1,819.0 2,266.0 2,077.0 2,800.0 2,873.0 3,146.7 5,434.0 7,063.4 7,035,7 5,867,6 6,945,9 Mu ltifa mi It' permits(#) 1,656,0 3,250,0 8,050,0 5,654,0 9,817,0 6,444.0 7,350.3 7,124,6 6,672.2 5,472.4 5,428,8 6,233.4 FHFA house prlce(1995Q1=100) 5182.81 $185.82 $207.53 $233.08 $256.32 $281.97 5302..45 $310.14 $306.99 $301.00 $297.96 $298.65 Source: MOODY'S ANALYTIC'S Precis® U.S. Metro South, April 2016 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 14 Jungle island Hotel 18-085-02 Total Employment (ths) 1,400 1,200 1,000 800 600 400 200 0 - ^. V y4, A� yh y4 y1 Os' y� yQ titi titi ,ti0 tiQ tiQ tiQ tiQ „Q ,0 0 4 ,tiQ 0 Q 10.00% 8.00% 6.00% 4, 00% 2.00% Unemployment Rate 0 ,0 1, 1, 1, 1, ,1, 1Q ,1Q yQ 0 ryQ 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% Median Household Income (ths) $60 $350 $5q $300 $250 $40 $30 — — — — — — $200 $150 $20 $100 $10 $50 $ 0 L^ .` ��� �' ,• $0 "rs 'y'L h4) yTx y`o 'yco yh ,yam 'yQ ,y0 ,yNr 'Pt. ,tiQ 1, 1, ,tiQ 1, ,tiQ ,tiQ 1, ,tiQ y0 1,1, AREA ANALYSIS Change in Employment N.- '1, ti° by ti. ti^ °' ° titi �ti O .Q Q .tiQ .Q ryQ ,Q ^Q .tiQ ,tiQ ,tiCZ, Personal Income Growth titi~ti.)) Nr h'y° " ^y% tig,ti0,titi,titi �1Q .tiQ 1, 1, le �Q ,1Q "vv le y0 ,1, ti0 Existing Home Price (ths) yy titi y� ySx yy CO,yY1 ycb ti� b� titi lv� ti� tiO `V ,tiQ ,tiQ ,tiQ tiQ .ti4 tiQ 'V yQ 4 JOSEPH J. BLAKE AND ASSOCIATES, INC, REAL ESTATE VALUATION AND CONSULTING 15 Jungle Island Hotel 18-085-02 2,750 2,700 2,650 2,600 2,550 - 2, 500 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Historic Population Growth (ths) Si ngle-Family Permits "7, y'L y� yE by NI "7, NJ' yos v0 yti vv via Q. '1, tifl vfl 1, '1, „, ti° 1, vfl ,0 3,000 2,950 2,900 2,850 2,800 2,750 2,700 2,650 12,000 10,000 8,000 6,000 4,000 2,000 0 AREA ANALYSIS Projected Population Growth (ths) 1 c of fl ti ti v°y v°ti �Oti ryflti flti vo Multi -Family Permits titi 'ram ti� tih tiff co Ne �� le titi A, CONCLUSION An analysis of South Florida and more specifically, Miami -Dade County, demonstrates that the area has historically been on a path of growth. Previous population growth is primarily due to in -migration, with the majority of the migrants coming from within the state, as well as New York, Georgia and international sources. With the recession receding, the values of the County's office, industrial, commercial and residential properties have recovered substantially, with decreased vacancies appearing in office complexes, industrial neighborhoods, and shopping centers, and homes increasing in value. Despite the effects of the recent recession, many of the factors that led to Miami -Dade County's historical success remain in place. Therefore, the county will likely continue to grow. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 16 Jungle Island Hotel 18-085-02 NEIGHBORHOOD MAP NEIGHBORHOOD ANALYSIS Biscayne Island © lvSacA -11 C_?% Perez Art Museum Miami Jungle !stand 'ark San Marco island Watson island Park INTRODUCTION A property is an integral part of its surroundings and must not be treated as an entity separate and apart from its surroundings. The value of a property is not found exclusively in its physical characteristics; physical, economic, political and sociological forces in the area interact to give value to a property. in order to determine the degree of influence extended by these forces on a property, their past and probable future trends are analyzed. Therefore, in order to form an opinion of the value of a property, an analysis is made of the area in which the property under study is found. This area is referred to as a neighborhood. A neighborhood can be a portion of a city, a community or an entire town. It is usually an area which exhibits a fairly high degree of homogeneity as to use, tenancy and certain other characteristics. Homogeneity is a state of uniform structure or composition throughout. Therefore, in real estate terminology, a homogeneous neighborhood is one in which the property types and uses are similar. A neighborhood is more or less a unified area with somewhat definite boundaries. As a neighborhood's boundaries serve to limit the physical area that exerts germane influences on a property's value, the boundaries may indeed run concurrent with variations in prevailing land uses or physical characteristics. LOCATION The subject is located on Watson Island on the MacArthur Causeway, just east of Biscayne Boulevard. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 17 Jungle Island Hotel 18-085-02 NEIGHBORHOOD ANALYSIS Watson Island serves as the only significant land mass between the City of Miami and Miami Beach. The MacArthur Causeway traverses Watson Island, and two new bridges connect the island to the mainland. The island offers excellent views of the Port of Miami to the south, the City of Miami skyline to the southwest, the Venetian Islands to the north and Palm and Hibiscus Islands to the east. The Port of Miami is known as the "Cruise Capital of the World". It is home to nearly 20 cruise ships, and has the largest year-round cruise fleet in the world. The Port also handles more "megaships" - vessels capable of transporting more than 3,000 guests - than any other port in the world. Carnival Cruise Lines, Norwegian Cruise Line, and Royal Caribbean International and Celebrity Cruises all operate exceptional cruise vessels from the Port of Miami. Since the subject is located directly across the waterway from the Port of Miami, any development on the site would benefit from the proximity to the cruise terminal. The Port of Miami is recognized, and has been for many years, as the "Cruise Capital of the World' and "Cargo Gateway of the Americas". It has retained its status as the number one cruise/passenger port in the world for well over two decades accommodating the largest cruise ships in the world and the operations of such major cruise lines as Carnival, Royal Caribbean and Norwegian Cruise Line, until the late 2000s, when Port Everglades was chosen as home to the largest cruise ships in the world, Oasis of the Seas and its sister ship, Allure of the Seas. As the "Cargo Gateway of the Americas", the port primarily handles containerized cargo with small amounts of break bulk, vehicles and industrial equipment. It is the largest container port in the state of Florida and ninth in the United States. As a world -class port, the Port of Miami is among an elite group of ports in the world which cater to both cruise ships and containerized cargo. The Port of Miami is an important contributor to the local south Florida and state economies. Over four million cruise passengers pass through the Port, 7.4 million tons of cargo and over 1 million twenty -foot equivalent units (TEU) (FY 2004/2005) of intermodal container traffic move through the seaport per year. This combination of cruise and cargo activities supports approximately 176,000 jobs, and has an economic impact in Miami -Dade County of over $17 billion, $14 billion of which is generated by its cargo operations. The port currently operates eight passenger terminals, six gantry cranes wharves, seven Ro-Ro (Roll -on - Roll -off) docks, four refrigerated yards for containers, break bulk cargo warehouses and nine gantry container handling cranes. In addition, the port tenants operate the cruise and cargo terminals which include their cargo handling and support equipment. Completed in August 2014, the Port Miami tunnel provides direct vehicle access to the interstate highway system via Watson Island to 1-395 for the Port users bypassing the traffic of downtown Miami. The entrance to the Port of Miami tunnel is just northeast of the subject site. ACCESSIBILITY Access is via the Mac Arthur Causeway from the City of. Miami to the west and from the City of Miami Beach to the east. North of the subject is the Venetian Causeway, which connects Biscayne Boulevard to San Marco Island, San Marino Island, Dilido Island, Rivo Alto Island, and Miami Beach. These islands are dominated by exclusive waterfront homes. Star Island, Hibiscus Island and Palm Island are located to the east of the subject, north of the MacArthur Causeway and are home to multimillion -dollar waterfront homes. South of the subject is the Port of Miami. Southeast of the subject is Fisher Island, a secluded island with mid -rise condominium and single- family homes, as well as a golf course and country club. The only access to Fisher Island is by ferry. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 18 Jungle Island Hotel 18-085-02 NEIGHBORHOOD ANALYSIS The MacArthur Causeway traverses the subject's neighborhood. This roadway is called 836 and 395 to the west of Watson Island. This limited access roadway provides access to the Miami International Airport, as well as South Beach, and the Art Deco District in Miami Beach. With more than 10.1 million' overnight guests in 2000, and with many of them accessing Miami Beach via the MacArthur Causeway, the subject is well located to attract both businesspeople and tourists. DEVELOPMENT Watson Island was created by land reclamation in 1926 with material dredged from the ship channel to the Port of Miami, and was originally named Causeway Island, The island was later named for John W. Watson, Sr„ who was Mayor of Miami 1912-1915 and 1917-1919. The Goodyear Blimp base in Florida was located on Watson Island for many years, Vestiges of the old base still remain such as the imprint of the mooring circle and a paved path for a small tram that would transport passengers to the airship. Plans to develop the island started in the late 1990s and came to fruition when Jungle Island opened its doors in the summer of 2003. Since then, the Miami Children's Museum relocated to the island as of 2004. On May 24, 2010, construction began on the Miami Port Tunnel project connecting the Port of Miami on Dodge Island under the main shipping channel to the MacArthur Causeway on Watson Island. The tunnel was completed in August 2014. Currently, development on Watson Island consists of Jungle Island, the Miami Children's Museum and the Port of Miami tunnel. It was originally named Parrot Jungle and moved from its original suburban Pinecrest to its present location just east of Downtown Miami renamed as Parrot Jungle Island. In 2007, the park was again renamed to Jungle Island. The theme park's landmark is its sails covering the Jungle Theater, an arena where visitors encounter wildlife from all over the world. The entire facility was planted without the use of any artificial fertilizers or pesticides, making it one of the only entirely sustainable theme parks or zoos in the United States. Also located on Watson Island is the Miami Outboard Club which has been located on Watson Island since 1948. It is active in conservation and artificial reef programs, and provides social and educational activities. The club has boat slips, dry storage, a boat lift, a ramp for jet skis and other small craft, and a restaurant, bar and Internet cafe. Adjacent to that is the Miami Yacht Club, which has been located on Watson Island since the late 1940s. It offers youth and adult sailing programs, and sponsors races, regattas and a Sea Scout ship. The club has boat slips, dry storage, and a lounge, bar and restaurant. Additional development in the area includes the Miami Worldcenter. Miami Worldcenter is planned to sit just west of Biscayne Boulevard, within walking distance of the Adrienne Arsht Center for the Performing Arts, Perez Art Museum Miami (PAMM), the new Patricia and Philip Frost Museum of Science and Bayside Marketplace. Miami Worldcenter will include the Marriott Marquis World Convention Center Hotel, which will feature approximately 1,800 rooms and 600,000 square feet of convention space. Additionally, All Aboard Florida (AAF) will be bringing its multi -billion dollar private passenger rail, connecting Orlando to Miami, immediately adjacent to the site. Set to begin service in 2018, AAF's new grand central station is estimated to bring five million visitors to the site, and will connect with the existing Metromover and Metrorail, to create a truly integrated transportation hub. The development will also include 750,000 square feet of retail space as part of Miami Worldcenter's first phase, which is currently under construction. Current plans call for the retail center to open in 2019. The retail mall is to be anchored by Bloomingdales and Macy's who have already signed leases. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 19 Jungle Island Hotel 18-085-02 NEIGHBORHOOD ANALYSIS DEMOGRAPHICS The Site To Do Business is a service that provides demographic data, including historical, current and forecasted population estimates for a specified region. Patterns of development, density and migration are reflected in the population estimates. A survey of the subject area's population and growth rate is summarized in the following charts, followed by a map of the surveyed area. Demographics 2017 2022 Summary 1 mile 3 mile 5 mile 1 mile 3 mile Population Households Families Average Household Size Owner Occupied Housing Units Renter Occupied Housing Units Median Age Population by Age 0-4 5-9 10 - 14 15-19 20-24 25-34 35 - 44 45-54 55-64 65 - 74 75 - 84 85+ Households by Income <$15,000 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999 $100,000 - $149,999 $150,000 - $199,999 $200,000+ Median Household Income Average Household Income Per Capita Income 8,270 4,942 1,565 1.62 1,175 3,767 36.5 211,502 102,747 42,038 1.99 22,832 79,915 37.5 455,069 192,532 97,612 2.32 52,290 140,242 38.7 1 mile 3.4% 2,9% 2.3% 2.4% 8.2% 28.0% 17.0% 13.5% 11.0% 7.1% 3.1% 1.1% 1 mile 8.80% 7.70% 6.30% 13.40% 17.80% 12.70% 16.50% 6.10% 10.70% $67,576 $103,046 $61,733 3 mile 5.0% 4,3% 3.6% 3.6% 6.9% 21.8% 16.8% 12.8% 10.5% 8.0% 4.5% 2,1% 3 mile 20.80% 12.50% 9.70% 11.80% 15.10% 9.30% 10.30% 4,20% 6.30% $42,777 $72,776 $36,221 5 mile 5.6% 5,2% 4.7% 4.5% 6.5 % 17.8% 14.8% 13.3% 11.6% 8.8% 5.1% 2.2% 5 mile 22.60% 14.40% 11.30% 12.30% 14.20% 8.10% 8,60% 3.50% 5.00% $36,496 $63,908 $27,634 Source: Site To Do Business 9,357 5,612 1,764 1.62 1,222 4,390 35,9 1 mile 3,6% 2.9% 2.3% 2.1% 7.4% 30.0% 17.2% 12.0% 10.6% 7.3% 3.6% 1.1% 1 mile 7.20% 5.70% 4.60% 9,90% 17.30% 15.70% 20.30% 7.00% 12.20% $81,790 $120,104 $71,843 230,249 112,255 45,644 1.99 24,335 87,920 38.0 3 mile 5.1% 4.2% 3.8% 3.6% 6.7 % 21.4% 16.6% 12.5% 10,5% 8.6% 5.1% 2.0% 3 mile 18.90% 10.80% 8.20% 9.80% 15,10% 11.80% 12.90% 5.10% 7.50% $52,890 $86,086 $42,771 5 mile 487,487 206,645 104,031 2.32 55,116 151,529 39.4 5 mile 5.6% 5.0% 4.9% 4.6% 6.0% 17.1% 14.8% 12.6% 11.8% 9.7% 5.6% 2,2% 5 mile 21.00% 12.80% 9.90% 10.60% 14.40% 10.40% 10.80% 4.20% 5.90% $42,906 $75,150 $32,415 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 20 Jungle Island Hotel 18-085-02 1 mile Radius Population Households Families Owner HHs Median Household Income 3 mile Radius Population Households Families Owner HHs Median Household Income 5 mile Radius Population Households Families Owner HHs Median Household Income NEIGHBORHOOD ANALYSIS Trends: 2017 - 2022 Annual Rate Area State National 2.50% 1.36% 0.83% 2.58% 1.30% 0.79% 2.42% 1.25% 0.71% 0,79% 1.19% 0.72% 3.89% 2,13% 2.12% Area State National 1.71% 1.36% 0.83% 1.79% 1.30% 0.79% 1.66% 1.25% 0.71% 1.28% 1.19% 0.72% 4.34% 2.13% 2.12% Area State National 1,39% 1,36% 0.83% 1.42% 1.30% 0.79% 1.28% 1.25% 0.71% 1.06% 1.19% 0.72% 3.29% 2.13% 2.12% Source: Site To Do Business Source: Site To Do Business JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 21 Jungle Island Hotel 18-085-02 NEIGHBORHOOD ANALYSIS LIFE CYCLE A neighborhood's life cycle usually consists of four stages: • Growth - a period during which the neighborhood gains public favor and acceptance • Stability - a period of equilibrium without marked gains or losses • Decline - a period of diminishing demand • Revitalization - a period of renewal, redevelopment, modernization, and increasing demand Source: The Appraisal of Real Estate, 14th Edition The neighborhood is well located within Miami -Dade County. Downtown Miami, Miami Beach, Miami International Airport, and the Port of Miami are all located within 15 minutes driving time from the subject. The immediate neighborhood offers good accessibility to nearby area amenities, several retail and residential developments, and other types of support facilities. As previously stated, the age of the developments in the neighborhood varies from moderately new to relatively old. The overall quality and condition of the improvements within the area range from fair to excellent. Additionally, there is uniformity within the area in terms of land usage. The neighborhood, and surrounding neighborhoods to the east and west, is expected to experience continued growth and development when and where it is feasible. There are numerous new condominium and hotel condominium developments occurring in the downtown Miami and Miami Beach neighborhoods, located to the west and east of Watson Island. A testament to the new development is the number of land sales that have occurred in the last 12 months in Miami Beach, each with the promise of some type of new or redevelopment. NEIGHBORHOOD ANALYSIS CONCLUSION To recapitulate, the neighborhood has continued to uphold its reputation as one of the more desirable areas in Miami -Dade County. Accessibility to the major employment hubs, all within a 30-minute drive, as well as nearby support facilities and recreational areas, adds to the neighborhood's appeal. The area has a world-renowned reputation as a quality vacation spot, and many people choose the neighborhood for the location of their vacation home, or a primary luxury residence. Therefore, the neighborhood should continue to be in high demand, building upon the solid foundation it has established as a luxury area. Consequently, the subject should be well suited for development of a mixed use facility, as is proposed on the site. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 22 Jungle Island Hotel 18-085-02 MARKET ANALYSIS MARKET ANALYSIS The following information was compiled from published sources and is used in conjunction with primary and secondary data to analyze the market trends impacting the value of the subject property. NATIONAL LODGING MARKET - PWC According to Hospitality Directions US, published by PwC in August 2017: As uncertainty weighs on the economy, softening lodging industry growth expected to continue. Following a weak first quarter, the U.S. economy strengthened in the second quarter. An initial second-quarter GDP estimate of 2.7% and further solid contributions from consumer spending suggest that the U.S. economy will remain on solid footing for the balance of 2017. Overall, moderate demand growth in the second quarter supported increases in both occupancy and ADR, resulting in a RevPAR increase of 2.7%. Despite ongoing political uncertainty, consumer and business spending are expected to continue to support economic growth in the second half of 2017. Benefiting from rising employment, real disposable income, and household wealth, consumers have been a driving force of economic growth this cycle. Business fixed investment is also expected to contribute meaningfully to economic growth, according to IHS-Markit. For the U.S. lodging industry, this increase in domestic spending is expected to support growth in demand and ADR, though supply growth continues to be a meaningful downside risk. ADR growth of 2.1% is expected to continue to outpace inflation, resulting in a 2.3% increase in RevPAR in 2017. Looking ahead to 2018, policy uncertainty and Congressional gridlock, combined with the accelerating timeline to midterm elections, pose as significant overhangs to business and consumer confidence. The U.S. dollar is anticipated to continue to weaken in 2018, which could help support inbound international travel. However, it may also weigh negatively on domestic consumer spending, as prices on imported goods increase and consumers reallocate discretionary spending. Though inflation is forecast to remain well below the 2.0% targeted by the Federal Reserve, ADR is expected to continue to grow, albeit at a slower pace. Overall, we continue to anticipate RevPAR growth of 2.0%, the lowest increase since the beginning of the economic recovery. Supply Supply growth for the U.S. lodging industry is expected to accelerate to 1.9% in 2017 (up from 1.5% in 2016). PwC's updated lodging outlook for 2018 anticipates supply growth peaking in the first quarter and. tapering throughout the balance of the year. For 2018, the upper midscale chain -scale segment is forecast to see the greatest increase in supply, growing at 4.0% (up from its expected growth of 3.2% in 2017). In contrast, the economy chain -scale segment is expected to realize a 0.5% increase in supply in 2018. Demand For 2017, PwC's lodging outlook anticipates demand growing 2.1% for the industry and also increasing in each chain -scale segment (between 0.3% in the economy chain -scale segment to 5.1% in the upscale chain - scale segment). Demand is expected to largely follow the same trends as supply in 2018. As a result, the supply -demand balance is expected to shift in 2018 for the first time this cycle, resulting in a minor decline in occupancy for the U.S. lodging industry. In 2018, PwC forecasts demand growth to decelerate for the industry as a whole, as well as in the upscale and midscale chain -scale segments. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 23 Jungle Island Hotel 18-085-02 MARKET ANALYSIS Occupancy Only two of the six chain -scale segments included in our lodging analysis are forecast to see increases in annual occupancy in 2017, led by the midscale segment. For 2018, acceleration of supply growth paired with a continued deceleration in the rate of demand growth is expected to result in a decline in the industry's occupancy for the first time this cycle. Specifically, PwC forecasts the industry's occupancy level to decrease to 65.5% in 2018. Exhibit 1.-r OCCUPANCY 76.0% 72.u% 68.o% _.�. 1- -- 4. 2'1 6o.o% i 2u% 4ao% 1 1 1 I 2009 2010 2011 2012 *US, 0 Luxury Upper/Upseaie .it Up Source; SrR (2o09 thtu 2014); I'tirC(2017 Forecast) 1 1 2013 2014 le + Upper Midncale 1 `i 2015 2016 t Midscale 1 2017 F0rec 11t k Economy Average Daily Rate (ADR) ADR growth is forecast for each chain -scale segment in 2017. However, the overall rate of growth is 100 basis points below the average in 2016. For 2018, PwC forecasts ADR for the U.S. lodging industry to grow 2.1% — equal to the rate projected for full -year 2017. JOSEPH J. BLAKE AND ASSOCIATES, ING. REAL ESTATE VALUATION ANB CONSULTING 24 Jungle Island Hotel 18-085-02 MARKET ANALYSIS EN II injt I--2 AVERAGE DAILY RATE (ADR) $349.00 _. `) - - $311.00 _ ) s271.00 y 8235.00 $197.00 -air _ ___- 'i1 --+-'�.1 tr� fi� $83.00 --d 'ir -9M- -* r . -__ .----4.-. $45,00 I I ¶1 I 2009 2010 2011 2012 2013 US. ,.l Luxury * Upper/Upecale *Upscale Suu e: STR (2ooy thru amok PwC (2r 17 Forecast) I I I 2014 201S 2010 +} Upper Mid1cale N Midscale I 2017 Forecast A. Economy Market spotlight: Manhattan Despite a strong April for both occupancy and ADR, which increased 2.4% and 3.0%, respectively, the months of May and June failed to maintain this strength. Several national headwinds, including political uncertainty and the potential for reduced inbound international travel, still remain a concern for the Manhattan lodging market. However, as supply growth continues to moderate, it could prove to be an eventual tailwind for pricing power. Hotel performance was mixed in Manhattan's five neighborhoods. While hotels in Midtown South were the only ones to increase ADR, they reported the largest decrease in occupancy and RevPAR in the second quarter. Hotels in Upper Manhattan performed best, increasing RevPAR 1.2%, as a 4.3% increase in occupancy more than offset a 2.9% decline in ADR. Hotels in Midtown East experienced the largest increase in occupancy, at 5.4%, but also the most dramatic decline in ADR, at 4.9%. On a year-to-date basis, Upper Manhattan was the only are to experience an increase in RevPAR, albeit minimal, of 0.4%. Investment Activity U.S. hotel sales totaled $13.5 billion for the first half of 2017 — comparable to the same period in 2016, as per Real Capital Analytics. While portfolio and entity -level activity boosted hotel sales in the second quarter of 2017, these "megadeals" were concentrated in non -major markets. On a year -over -year basis, hotel sales volume in major markets was down 29.0% in the first half of 2017. By comparison, it was up 58.0% in tertiary markets. When looking at specific metros, volume was up in 19 of the top-25 markets year over year in 2017. The top -five metros in terms of sales volume for the first half of 2017 are in the table below. Only one had the distinction of being in the top five for 2016 while four are new to the list. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 25 Jungle Island Hotel 18-085-02 First Half 2017 Hotel Sales Volume Metro Total Rank 2016 Los Angeles $1,054 5 Honolulu $527 7 Atlanta $516 12 Charlotte $489 54 Dallas $436 15 Source; Real CapitaI Analytics, Inc. MARKET ANALYSIS JOSEPH J. BLAME AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 26 Jungle Island Hotel 18-085-0Z MARKET ANALYSIS NATIONAL FULL -SERVICE LODGING SEGMENT - PWC According to Hospitality Directions US, published by PwC in August 2017: For the second half of 2017, most surveyed investors expect a steady performance for the national full -service lodging sector, albeit with slower growth, especially in locations with additions to supply. "This sector's performance should be stable with only some negative impact in cities with substantial supply growth," remarks a participant. "We foresee a relatively flat outlook for 2017," says another. In the upscale chain -scale segment, PwC forecasts supply to grow 6.0% in 2017 — well above the U.S. lodging industry's forecast average of 1.9%. For 2018, the rate of supply growth in the upscale segment is expected to decrease to 3.1%, but will remain well above the industry's average forecast of 1.9%. In the upper-midscale segment, supply growth is forecast to increase 3.2% in 2017 and 4.0% in 2018. Both chain -scale segments are forecast to post higher demand growth in 2017 compared to 2016. However, demand growth is expected to lag the growth of supply, causing occupancy to fall slightly in each segment in 2017. (pg. 59) National Market Yield Rates for Real Estate Investments National Full -Service Lodging Segment Third Quarter 2017 Current Qua rter Fi rst Qua rter 2017 Discount Rate (I RR) 8.00%-13.00% 8.00%-13.00% Average 10.19% 10.19% Overall Cap Rate (OAR) 6.00%-10.00% 6.00%-10.00% Average 7.85% 7.90% Year Ago 8.00%-12.75% 10.40% 6.25%-10.00% 7.78% Residual Cap Rate 7.00%-10.00% 7.00%-10.00% 7.00%-10.00% Average 8.44% 8.40% 8.38% Average Daily Rate Average (2.00°47,00% (2.00%)-7.00% 2.75% 2.83% Operating Expense 1.00%-4.00% 1.00%-4.00% Average 2.92% 2.92% Ma rketi ng Ti me Range 3-9 months 3-9 months Average 6.3 6.3 0.00%-5.00 % 3.10% 1.00%-4.00% 2.80% 3-9 months 7 Source: PwC Real Estate Investor Survey, 3rd Quarter 2017 JOSEPH J. BLAKE AND ASSOCIATES. INC. REAL ESTATE VALUATION AND CONSULTING 27 Jungle Island Hotel 18-085-02 Lodging Forecasts National Full -Service Lodging Segment Third Quarter 2017 Segment Upscale Occupa ncy ADR RevPAR Upper Midscale Occupancy ADR RevPAR 2017 AnnuaIChange 73.1% $140.04 $102.35 67.2% $113.00 $75.93 -0.9% 1.3% 0.4% -0.4% 1,4% 1,0% Source: PwC Real Estate Investor Survey, 3rd Qua rter 2017 MARKET ANALYSIS NATIONAL LIMITED -SERVICE MIDSCALE & ECONOMY LODGING SEGMENT - PWC According to Hospitality Directions US, published by PwC in August 2017: While some surveyed investors see a flat near -term performance for the national limited -service midscale & economy lodging segment, others expect slight gains in ADR, occupancy, and RevPAR, but at considerably lower levels. "Aging product and new supply threats will keep this segment's performance neutral," notes a participant. "Fundamentals will moderate," projects another. For the midscale segment, PwC forecasts a 0.3% increase in occupancy in 2017 as supply growth stays below demand. In 2018, however, supply is forecast to move ahead of demand in this segment, resulting in a 0.5% decline in occupancy. In the economy segment, demand is forecast to trend faintly ahead of supply in 2017, allowing for only a 0.1% increase in occupancy. The anticipation of muted occupancy gains is revealed in this market's key indicators. First, the low end of the overall cap rate range rises to 7.75%. And second, the high end of the range for its ADR growth rate assumption falls to 4.00% — moving its average down 65 basis points to 2.30%. (pg. 60) National Market Yield Rates for Real Estate Investments National Limited -Service Midscale & Economy Lodging Segment Third Quarter 2017 Discount Rate (I RR) Average Current Quarter First Quarter 2017 Year Ago 8.50%-13.00% 8.50%-13.00% 8.50%-12.00% 11.00% 11.00% Overa I I Cap Rate (OAR) 7,50%-11.00% Average 9.08% Residual Cap Rate Avera ge Average Daily Rate Average Operating Expense Average Ma rketi ng Ti me Range Average 7.75%-11.00% 9.83% (2.50%)-4.00% 2.30% 2.50%-3.00% 2.95% 2-12 months 6.9 7,50%-11.00% 9.06% 7.75%41.00% 9.66% (2.50%)-8.00% 2.95% 2.50%-3.00% 2.95% 2-12 months 6.5 10.55% 7.50%-10.00% 8.70% 7.75%-10.00% 9.43% 0,00%-4,00% 2,65% 2.50%-3.00% 2.95% 2-12 months 6.8 Source: PwC Rea Estate Investor Survey, 3rd Qua rter 2017 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 28 Jungle Island Hotel 18-085-02 Lodging Forecasts National Limited -Service Midscale & Economy Third quarter 2017 Segment 2017 Ann uaIChange Midscale Occupancy 59.5% 0.3% ADR $86.64 1.7% RevPAR $51.56 2.0% Economy Occupancy 57,8% 0.1% ADR $62.11 2.1% RevPAR $35.93 2.2% Source: PwC Real Estate Investor Survey, 3rd Qua rter 2017 MARKET ANALYSIS JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 29 Jungle Island Hotel 18-085-02 MARKET ANALYSIS NATIONAL LUXURY/UPPER-UPSCALE LODGING SEGMENT - PWC According to Hospitality Directions US, published by PwC in August 2017: As supply growth stays ahead of demand, many surveyed investors expect "fundamentals to moderate" in the national luxury/upper-upscale lodging segment as it moves into the second half of 2017. "This hotel sector will continue to show growth, but at a slower pace compared to prior years," comments an investor. Others, however, see fundamentals holding steady. A shown in the table below, occupancy for the luxury segment is forecast to remain at 73.7% for 2017 compared to 2016, but it is forecast to decline 0.4% in the upper -upscale segment. When analyzing investments in this lodging market, our investors' assumptions for ADR growth have moderated. As shown in the table below, the high end of the range for this cash flow assumption declines 100 basis points to 5.00% this quarter. In addition, its average slips ten basis points to 3.00%. Even though this average is well below the assumption from a year ago, it is the highest average of the Survey's four national lodging markets. Select -service lodging posts the second -highest quarterly average at 2.80%. (pg. 61) National Market Yield Rates for Real Estate Investments National Luxury/Upper-Upscale Lodging Segment Third Quarter 2017 Current Quarter First Quarter 2017 Year Ago Discount Rate (IRR) 6.50%-12.00% 6.50%-12.00% 6.50%-12.00% Average 9.53% 9.53% 9.60% Overa II Cap Rate (OAR} 4.00%-9.00% 4.00%-9,00% 4.00%-9.00% Average 7.03% 7.00% 6.92% Residual Cap Rate 5.50%-9.50% 5.50%-9.50% 5.50%-9.50% Average 7.18% 7.18% 7.23% Average Daily Rate 0.00%-5.00% 0.00%-6.00% 0.00%-9.00% Average 3.00% 3.10% 4.00% Operating Expense 0.00%-4.00% 0.00%-4.00% 0.00%-5.00% Average 2.60% 2.60% 2.75% Ma rketi ng Time Range 3-12 months 3-12 months 3-12 months Average 6,8 6.8 6.3 Source: PwC Rea I Estate investor Survey, 3rd Quarter 2017 Lodging Forecasts National Luxury/Upper-Upscale Lodging Segment Third Quarter 2017 Segment 2017 Annual Change Luxury Occupancy 73.7% 0.0% ADR $323.42 2.0% RevPAR $238.49 1.9% Upper Upscale Occupancy 73.9% -0.4% ADR $182.38 1.6% RevPAR $134.78 1.1% Source: PwC Real Estate Investor Survey, 3rd Quarter 2017 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 30 Jungle Island Hotel 18-085-02 MARKET ANALYSIS NATIONAL SELECT SERVICE LODGING SEGMENT - PWC According to Hospitality Directions US, published by PwC in August 2017: Changes in this quarter's cash flow assumptions suggest that surveyed investors have become more conservative and cautious about the near -term performance of the national select -service lodging segment. First, this sector's average overall capitalization rate moves up ten basis points to 8.70% — the highest average reported for this segment since its Survey debut in 2011. Second, its average ADR change rate slips 20 basis points to 2.80% — the sixth consecutive semiannual decline for this assumption and its lowest average since its debut. Five years ago, investors' expectations for this market were more positive than they are now. In 2012, the average ADR growth rate assumption was 4.80%—the highest average of the four Survey lodging markets. In addition, the average expected change in property values was 5.2%. This quarter, that average expectation is a decline of 1.5%. A main reason for investors' Tess favorable outlook for this sector today is the "continued pressure that new supply is placing on property performance." (pg. 62) National Market Yield Rates for Real Estate Investments National Select Service Lodging Segment Third Quarter 2017 Current Quarter First Quarter 2017 Year Ago Discount Rate (IRR) 8.00%-12.00% 8.00%-11.00% 8.00%-11.00% Average 10.20% 9.90% 9.80% Overall Cap Rate (OAR) 6.50%-10.00% 6.50%-10.00% 6.50%-10.00% Average 8.70% 8.60% 8.55% Residual Cap Rate 7.00%-10.75% 7.00%-10.75% 7.00%-10.75% Average 9.08% 9.03% 9.03% Average Daily Rate (2.00%)-5.00% 0.00%-5.00% 0.00%-6.00% Average 2.80% 3.00% 3.20% Operating Expense 2.00%-4.00% 2.00%-4.00% 2.00%-4.00% Average 2.70% 2.70% 2.70% Marketing Time Range 2-12 months 2-12 months 2-12 months Average 6.0 6.0 5.9 Source; PwC Real Estate Investor Survey, 3rd Quarter 2017 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 31 Jungle Island Hotel 18-085-02 MARKET ANALYSIS NATIONAL LODGING MARKET - REALTYRATES.COM According to the RealtyRates.com Investor Survey, 3rd Quarter 2017, the following tables summarize prevailing mortgage terms and resulting built-up overall capitalization rates (OAR's) via debt coverage ratio and band of investment techniques, together with OAR's from consummated transactions as reported by survey respondents based on actual net operating income (NOI) exclusive of reserves and actual sales price exclusive of deferred maintenance. These data are for Class A and B properties nationwide. Mortgage terms and equity dividend rates are likewise national rates as reported by survey respondents. RealtyRates.com Investor Survey Lodging Facilities - All Types Third Quarter 2017 Item Input Minimum Spread Over 10-Year Treasury 1.24% Debt Covera ge Ratio 1.00 Interest Rate 3.56% Amortization 40 Mortgage Consta nt 0.046920 Loan -to -Value Ratio 80% Equity Dividend Rate 8.17% Maximum Spread Over 10-Year Treasury 11.58% Debt Coverage Ratio 2.85 interest Rate 13.90% Amortization 15 Mortgage Constant 0.159004 Loan -to -Value Ratio 50% Equity Dividend Rate 20.09% Ave rage Spread Over 10-Year Treasury 3.59% Debt Coverage Ratio 1.53 Interest Rate 5.91% Amortization 23 Mortgage Constant 0.080021 Loan -to -Value Ratio 66.8% Equity Dividend Rate 14.7% OAR OCR Technique 1,00 x 0.046920 x 0.80 = 3.75% Band of Investment Technique Mortgage 80% x 0.046920 = 0.037536 Equity 20% x 0.081725 = 0.016345 OAR 0.037536 + 0.016345 = 5.39% Surveyed Rates 5.12% DCR Technique 2.85 x 0.159004 x 0.50 = 22.66% Band of Investment Technique Mortgage 50% x 0.159004 = 0.079502 Equity 50% x 0.200871 = 0.100435 OAR 0.079502 + 0.100435 = 17.99% Surveyed Rates 17.09% OCR Technique 1.53 x 0.080021 x 67% = 8.17% Band of Investment Technique Mortgage 67% x 0.080021 = 0.053439 Equity 33% x 0.147255 = 0.048916 OAR 0.053439 + 0.048916 = 10.24% Surveyed Rates 11.07% Source: Rea ItyRates.com Investor Survey, 3rd Qua rter 2017 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION ANII CONSULTING 32 Jungle Island Hotel 18-085-02 MARKET ANALYSIS RealtyRates.com Investor Survey Lodging Facilities - Full Service Third Quarter 2017 Item Minimum Spread Over 10-Yea r Treasury Debt Coverage Ratio Interest Rate Amortization Mortgage Constant Loa n-to-Va l ue Rati o Equity Dividend Rate Maximum Spread Over 10-Year Treasury Debt Coverage Ratio Interest Rate Amortiza ti on Mortgage Constant Loan -to -Val ue Ratio Equity Dividend Rate Average Spread Over 10-Year Treasury Debt Covera ge Ra ti o Interest Rate Amortization Mortgage Consta nt Loan -to -Value Ratio Equity Dividend Rate Input 1.24% 1.00 3.56% 40 0.046920 80% 8.17% 7.43% 2.60 9.75% 15 0.127124 60% 18.89% 4.34% 1.30 6.66% 28 0.079340 70% 12.99% OAR DCR Technique 1.00 x 0.046920 x 0.80 = 3.75% Band of Investment Technique Mortgage Equity OAR Surveyed Rates 80% x 0.046920 = 0.037536 20% x 0.081725 = 0.016345 0.037536 + 0.016345 = 5.39% 5.12% DCR Technique 2.60 x 0.127124 x 0.60 = 19.67% Band of Investment Technique Mortgage 60% x 0.127124 = 0.075638 Equity OAR Surveyed Rates 41% x 0.188871 = 0.076493 0.075638 + 0.076493 = 15.21% 14.45% DCR Technique 1.30 x Band of Investment Technique Mortgage Equity OAR Surveyed Rates 70% x 0.079340 30% x 0.129941 0.055340 0.079340 x 70% = 7.19% = 0.055340 = 0.039307 + 0.039307 = 9.46% 10.96% Source: RealtyRates.com Investor Survey, 3rd Quarter 2017 RealtyRates.com Investor Survey Lodging Facilities - Limited Service Third Quarter 2017 Item Minimum Spread Over 10-Year Treasury Debt Coverage Ratio Interest Rate Amortization Mortgage Consta nt Loa n-to-Va I ue Ratio Equity Dividend Rate Maximum Spread Over 10-Yea r Trea s ury Debt Coverage Ratio Interest Rate Amortization Mortgage Constant Loa n-to-Va I ue Ratio Equity Dividend Rate Average Spread Over 10-Year Treasury Debt Coverage Ratio Interest Rate Amortization Mortgage Constant Loan -to -Value Ratio Equity Dividend Rate Input 1.44% 1.25 3.76% 30 0.055642 65% 8.37% 11.58% 2.85 13.90% 15 0.159004 50% 20.09% 6.51% 1.51 8.83% 23 0.102453 58% OAR DCR Technique 1.25 x 0.055642 x 0.65 = 4.52% Band of Investment Technique Mortgage 65% x 0.055642 = 0.036167 Equity 35% x 0.083725 = 0.029304 OAR 0.036167 + 0.029304 = 6.55% Surveyed Rates 6.22% DCR Technique 2.85 x 0.159004 Band of Investment Technique Mortgage Equity OAR Surveyed Rates x 0.50 = 22.66% 50% x 0.159004 = 0.079502 50% x 0.200871 = 0.100435 0,079502 + 0.100435 = 17.99% 17.09% DCR Technique 1.51 x 0.102453 Band of Investment Technique Mortgage 58% x 0.102453 Equity 43% x 0.136441 OAR 0.058910 13.64% Surveyed Rates Source: RealtyRates.com Investor Survey, 3rd Quarter 2017 x 58% = 8.92% - 0.058910 = 0.057987 + 0.057987 = 11.69% 11.34% JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 33 Jungle Island Hotel 18-085-02 MARKET ANALYSIS Item Minimum Spread Over 10-Year Treasury Debt Coverage Ratio Interest Rate Amortization Mortgage Cons to nt Loa n-to-Va I ue Ra ti o Equity Dividend Rate Maximum Spread Over 10-Year Treasury Debt Coverage Ratio Interest Rate Amortization Mortgage Constant Loan -to -Val ue Ra ti o Equity Dividend Rate Average Spread Over 10-Year Treasury Debt Coverage Ratio Interest Rate Amortization Mortgage Constant Loan -to -Value Ratio Equity Dividend Rate RealtyRates.com Investor Survey Lodging Facilities - Golf/Gaming/Resort Third Quarter 2017 Input 1.34% 1.60 3.66% 30 0.054963 65% 8.27% 9.51% 2.70 11.83% 15 0.142672 50% 19.49% 5.42% 1.56 7.74% 23 0.093979 58% 13.32% OAR DCR Technique 1.60 x 0.054963 x 0.65 Band of investment Technique Mortgage Equity OAR Surveyed Rates = 5.72% 65% x 0.054963 = 0.035726 35% x 0.082725 = 0.028954 0.035726 + 0.028954 = 6.47% 6.14% DCR Technique 2.70 x 0.142672 x 0.50 = 19.23% Band of Investment Technique Mortgage 50% x 0.142672 = 0.071336 Equity 50% x 0.194871 = 0.097436 OAR 0.071336 + 0.097436 = 16.88% Surveyed Rates 16.03% DCR Technique 1.56 x 0.093979 x 0.58 = 8.43% Band of Investment Technique Mortgage Equity OAR Surveyed Rates 58% x 0.093979 = 0.054038 43% x 0.133191 = 0.056606 0.054038 + 0.056606 = 11.06% 10.42% Source: RealtyRates.com Investor Survey, 3rd Quarter 2017 The following tables summarize discount and equity dividend rates reported by survey respondents. In all cases, rates were derived from Class A and B properties nationwide and are exclusive of reserves. Note that "Recapitalizations" refers to re -financing under current use. RealtyRates.com Investor Survey Lodging - Discount Rates Third Quarter 2017 Property Type Lodging Full Service Facilities Limited Service Facilities Golf/Gaming/Resort New Development Min. Max. Avg. 7.21% 19.13% 13.52% 7.21% 16.34% 13.63% 8.22% 19.13% 13.85% 7.79% 18.06% 12.74% Acquisitions Min. Max. Avg. 6.05% 16.07% 11.35% 6.05% 13.73% 11.45% 6.91% 16.07% 11.63% 6.54% 15.17% 10,70% Recapitalizations Min. Max. Avg. 6.99% 18.55% 13.11% 6.99% 15.85% 13.22% 7,98% 18.55% 13.43% 7.55% 17.52% 12.36% Source: RealtyRates.com Investor Survey, 3rd Qua rter2017 RealtyRates.com Investor Survey Lodging - Equity Dividend Rates Third Quarter 2017 Property Type Lodging Full Service Facilities Limited Service Facilities Min. 8.17% 8.17% 8.37% Max. 20.09% 18.89% 20.09% Avg. 14.73% 12.99% 13.64% Golf/Gaming/Resort 8.27% 19.49% 13.32% Source: Rea ItyRates.com Investor Survey, 3rd Quarter 2017 JOSEPP J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 34 Jungle Island Hotel 18-085-02 MARKET ANALYSIS MIAMI-DADE COUNTY HOTEL MARKET The Miami hotel market is one of the larger hotel markets in the nation. According to the Greater Miami Convention and Visitors Bureau, there are four primary hotel submarkets in Miami -Dade County, Florida: Downtown/North Miami -Dade, Miami Beach, South Miami -Dade and Airport/Civic Center. There are also five secondary submarkets. The following chart summarizes the hotel inventory in Miami -Dade County, as of October 2017. Miami Beach has the largest percentage of hotels, as well as the highest percentage of hotel rooms. Miami -Dade Monthly Hotel Inventory September 2017 By Regions Miami -Dade Region Units % Rooms Ell Airport 51 11.9% 8,610 Ems 5.1% Aventura/Sunny isles 14 MEM 2,837 Central Dade 19 4.4% 2,025 3.6% Coral Gables 15 3.5% 1,624 2.9% Doral 28 6.5% 4,342 7.8% Downtown 37 8.6% 7,862 14.2% Grove/Key Biscayne 2.6% 1,593 2.9% Miami Beach 40.9% 20,193 36.4% North Dade 37 8.6% 3,042 5.5% South Dade 30 7.0% 2,247 4.0% Surfside/BaI Harbor 11 2.6% ERR 2.0% Total Hotel Inventory 428 100.0% 55,511 100.0% Updated:10/18/17 Source: Smith Travel Research JOSEPH J. BLARE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 35 4 5 6 7 8 9 Miami &each 10 Midtown 11 Midtown 12 North Miami Beach 13 North Miami Beach 14 5urfside 1 Airport 2 Downtown 3 Downtown 4 Downtown Jungle Island Hotel 18-085-02 MARKET ANALYSIS GREATER MIIAMI AND THE BEACHES NEW HOTEL PRODUCT 1 Airport 2 Airport 3 Airport 4 Aventura 5 Doral 6 Downtown - Brirkail 7 Downtown - Bricked 8 Downtown - Brickell 9 Downtown - Brickell 10 Downtown - Bricked Holiday Inn Express & Suites Hilton Garden Inn flnm.ewaod Suites Stayt,ridge Surtes Residence Inn Homewood Suites East Hotel @ Etrictell CityCentre Afton Hotel SLS Hotel Hotel Indigo 11 Downtown Miami Langford Hotel 12 Downtown Miami ME Hotel 13 Homestead TownePlace 14 Miami - Midtown Hyde Hotel 15 Miami Beach Residence Inn 16 Surfside Residence Inn 17 West Dade Residence Inn 1 Airport Aloft Hotel 2 Aventura AC Hotels by Marriott 3 Aventura AutographCoaectiion Aventura Aloft Hotel Aventura Embassy Suites Aventura Coral Gables Aloft Hot& Coral Gables Downtown - Bricked Panamora Tower Downtown - Bricked SLS Lux Hotel Jun-16 Oct-16 Oct-16 Nov-16 May-16 Jun-16 Jun-16 Jul-16 Dec-16 Q32015 May-16 Jul-16 Aug-16 Q4 2016 Mar-16 Jun-16 Jul-16 102 132 100 160 129 102 263 275 132 140 126 125 97 40 116 175 123 TOTAL 2016 2,337 lberostar Berkeley Hampton inn & Suites Triptych -Miami Design District Holiday Inn Express & Suites Cambria Hotel Four Seasons Hotel @ Surf Club Radisson Red Hotel Ibis Hot& Motel Hotel Flagstone Project Mar-17 Feb.-17 Jun-17 Jul-17 Aug-17 Apr-17 Late 2017 Oct-17 Jun-17 Jan-17 Dec-17 Apr-17 Dec-17 Mar-17 2018 2018 Jun-18 Late 2018 12 233 2i3o 137 155 137 205 85 96 151 296 1S0 165 80 155 520 250 605 TOTAL aria a. Beynnd 1,700 TOTAL NEW HOTEL SUPPLY 7,7E2 Source: SrnithTrave# Updated: 1/17/2017 As can be seen above there were a total of over 116 rooms added to the Miami Beach in 2016 and an additional 96 hotel rooms in 2017. There are no additional rooms expected to open in the next year or so. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 36 Jungle Island Hotel 18-085-02 MARKET ANALYSIS A summary of the major submarkets in Miami -Dade County is as follows: DOWNTOWN/NORTH MIAMI-DADE The Downtown Miami submarket is similar to the Miami Beach market in that it attracts business travelers, conventioneers and overnight guests associated with the cruise ship industry. However, unlike the Miami Beach market, the Downtown Miami market mainly caters to businessmen instead of the tourist trade. The premier hotels in this market include the JW Marriott, the Inter -Continental, the Hyatt Regency, the Mandarin Oriental, the Omni and the Marriott. Joining this list are the newly completed Four Seasons, and the recently completed Conrad Hotel. The North Miami -Dade hotel submarket is primarily derived from business travelers, groups, transient guests and some tourists. The majority of the hotels in this submarket are limited -service properties or mid - priced full -service properties, which offer food and beverage services. There are a limited number of upscale, full -service hotels within this submarket. MIAMI BEACH The Miami Beach market consists primarily of business travelers, conventioneers, tourists and some overnight guests associated with the cruise ship industry. The Miami Beach Convention Center is currently in the final stages of a renovation and expansion process. When completed, the facility will provide more than one million square feet of meeting and exhibit space. To support this new facility, the City of Miami Beach continues to seek new hotel development. Older properties, especially in the Art Deco District, continue to be renovated by investors. The premier hotels on Miami Beach are the Fontainebleau and the Loews convention hotel. More recent additions to the Miami Beach market are the Royal Palm Crowne Plaza, The Shore Club, The Ritz Carlton DiLido, The W Hotel, and the Setai. SOUTH MIAMI-DADE The South Miami -Dade submarket is composed mainly of business travelers and vacationers. Coral Gables and Coconut Grove represent a major office corridor within Miami -Dade County, which attracts numerous business travelers. Additionally, this submarket encompasses a number of the county's premier lodging facilities such as: The Biltmore, The Grand Bay, The Hyatt, The Omni, The Mayfair, the Ritz Carlton Key Biscayne and the Sonesta Beach Resort. Key Biscayne attracts a number of tourists each year who come specifically to Key Biscayne. The Ritz Carlton Coconut Grove joined these hotels in the first quarter of 2002. AIRPORT/CIVIC CENTER The final hotel market in Miami -Dade County is the Airport/Civic Center market. This market boasts the newest and most competitive inventory, as well as the widest variety of quality type hotels. The airport market caters primarily to overnight stays for businessmen and overnight stays for tourists waiting for plane or ship transfers. This market consists of a mixture of high -end, middle of the road and budget properties. At the high -end, the market includes the Intercontinental, Marriott, Hilton, Hotel Sofitel, Embassy Suites and Radisson Mart Plaza Hotel. The middle of the market consists of several Holiday Inn, Marriott Courtyard and Ramada Hotel. The budget or lower end of the market is composed of the Howard Johnson motel, Quality Inn, Fairfield Inn and Days Inn. Prior to 1998, there were very few, if any high -quality hotels in the Miami market. Since the Loews Hotel with 948 rooms opened in December of 1998, there have been a number of high -end hotels that have decided to open for business in Miami. These include three Ritz Carlton hotels, (Key Biscayne, Coconut Grove and Miami Beach), the Four Seasons, the Setai, the Bentley Beach Hotel, the Conrad by Hilton, the Mandarin Oriental, the JW Marriott, the Shore Club, the Trump Ocean Grand among other less luxurious brands. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 37 jungle Island Hotel 18-085-02 MARKET ANALYSIS Miami -Dade County Average Occupancy Levels The following chart summarizes the average level of occupancy in Miami over the last twenty four months for which data is available: 100% GREATER MAINI OCCUPANCY 00% 40% 20% Oc1.16 3ouroe' Sre4h Travel Research Rue-66 . DecleJan-17 . Feb.17 Mar.17 Apr-17 M4-17 Jun-17 Jel.17 Aug.17 Sep-17 M1r261N11 ar2615,11 fidIIng 12 Flacai Year Calendar 00.16 Nov-16 Oec-16 Jan-17 Feb-17 Mar -I Apr-17 May-17 Jun-17 Jut-17 Aug17 Sep-17 Mortis 2016/2017 YTi) 2016117 67.2% 7301 727% 76.81 83.3% 85.71 60.7% 74.4% 7281 80.9% 75.4% 59.3% 75.1% 75.1% 76.6% 2015r16 73.3% 78.3% 76.3% 80.7% 83.9% 84.01 80.4% 76.4% 71.3% 78.0% 73.71 66.1% 76.9% 76.9% 77.3% %lunge 8.3% 68% -4.846 -4.8% -0.7% 2.1% OA% -2.6% 2.1% 3.7% 2.3% -13.0% 23% -23% 0.9% Source: Greater Miami Convention and Visitors Bureau and Smith Travel Research Miami -Dade County Average Room Rates The following chart summarizes the average level of ADR in Miami over the last twenty four months for which data is available: $300 5250 3200 5150 GREATER MIAMI ROOM RATE S100 3e0 601g0e' Ora-16 Now10 Ban el Travel Research Dealt Jan-17 Feb-17 Mar-17 Ap1-17 May-17 Jun-17 J1L17 Au¢17 Sep-17 a.3016117 4.2315116 Ocl-l6 Nay-16 Dec-16 Jan-17 Feb-17 Mar-17 Ayr-17 May-17 Jun-i7 Jul-17 Aug-17 Sep-17 2016/17 $159.18 617570 $21858 0215-48 $232.23 5233.20 $207.27 $170.38 3146.91 $159.07 $145.01 $144.48 2015116 $168.88 510153 0241.12 5237.48 5243.32 9290.78 S203.49 S173.130 5148.32 5157.77 5143.61 $140.53 S102.75 5102.75 5191.34 Rolling 12 Months $185.60 Fiscal Year 2016l:017 $185.60 Calendar YTD $1135.87 %dnvge 4.6% -32% -9.3% -93% -6.9% -7.0% 1.9% -2.0% -1.0% 0.8% 1.0% 2.8% 3.7% 3.7% 3.0% Source: Greater Miami Convention and Visitors Bureau and Smith Travel Research The multiplication of the average daily rate and the average occupancy is called the RevPAR, or the revenue per available room. As previously noted, the Miami market currently has one of the highest RevPARs in the nation. The historical county RevPAR for the last 24 months for which data is available, is shown on the graph that follows: JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 38 Jungle Island Hotel 18-085-02 Miami -Dade County Historical RevPAR Rates MARKET ANALYSIS GREAATERMIAMI REV PAR 5240 AO 3200.00 3100.00 3120 oa 3130.00 340.00 o01-10 Source: Smith Travel Research now-lo Dec -la Jan -II fan.17 Mar-17 Apr-r7 May-17 Jun-17 J447 Aug-17 Sep. 17 -8OI61t7 . 201S114 Rcifing 12 Oct-10 Nov-16 Dec-16 Jos-17 Feb-17 Mar-17 Apr-17 May-17 Jul-17 Jul-17 Aug-17 Sep-17 Months 2016/17 510602 5128.15 $158.62 5165-49 5193,52 349086 $187.28 5126-79 $106.96 312968 $10932 5855.61 5139-44 2015116 512235 514216 51134.03 5191.63 5209.17 5210,66 5163.50 513204 5105.80 5123.02 5105.80 595.73 5148.30 %large -126% -9.9% -13.8% -13.6% -75% -5.1% 23% -4.6% 1.1% 4.6% 3.3% -10.6% -0.0% The total number of visitors to the Greater Miami area is illustrated in the following chart. Fiscal Year 20162017 $139.44 $146.30 -6.0% Calendar YID 6142.17 $147.91 -3.9% 1,250000 1,000.0110 750.000 500,000 MA511I NRPORT INTERNATIONAL ARRIVALS Sep -Id 00.1d Source: Miami Intemationaf Airport Nov-18 Dec-10 Jan-17 Fah-17 Mar-17 Apr.17 May17 Jun-17 Ju1-17 Aep-17 ,2616117 i2013114 Rolling 12 Fiscal Year Calendar Sep-16 Ocl-16 Nov-18 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 ,f11-17 Aug-17 Montle 20162017 YTD 2016/17 776,551 834,907 857,273 1,023,465 1,021,167 787,786 900,468 949,015 864,761 959,519 1,067,969 1046,323 11,089,204 10,312,653 7,597.008 2015/16 792,142 844,655 867.709 1,003,103 1,004,826 819,699 948.242 871,173 845,785 878,0176 1,070,203 1,014.592 10.960,337 10,168,195 7,452,728 %change -211% -12% -1.2% 2.0% 1.6% 39% 5.0% 8,9% 22% 9.3% -02% 3.1% 1.2% 1.4% 1.946 1,258,000 1,300,000 750,000 500A0 Source: Miami MIAA41 AIRPORT DOMESTIC ARRIVALS SB0-15 International Airport oc/.18 Nov-16 Oee16 Jan-17 Fen-17 Mar-17 Apr-17 May-17 Juml7 h417 , Au0-17 +-20107I7 �2015110 Rolling 12 Racal Year Sep-16 0c1-16 Nov-16 Doc16 Jim-17 Feb-17 Mer-17 Apr-17 Fiery-17 Ji m17 JA-17 Aur}17 Mon8r9 28182017 2016/17 813,070 847,923 920,492 1,1131,543 952,462 887937 1052,576 973,521 992406 956,479 1,030,077 942,487 11,400,955 10,587,665 2015/16 855,064 964875 953,577 1,081,967 980,713 949,469 1,087598 983,450 1,027,002 983.961 1,033,519 943,507 11,844,702 10,989,838 %thasge 4.9% -12,1% -3.5% -4.7% -2.9% -6.5% 32% -1.0% -3.4% -2,8% -0,3% -0.1% 3.7% -3.7% Source: Greater Miami Convention and Visitors Bureau and Smith Travel Research Calendar YT13 7,787927 7,989,219 -2.5% JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL. ESTATE VALUATION AND CONSULTING 39 Jungle Island Hotel 18-085-02 MARKET ANALYSIS 09.000 57,500 — 55030 52.509 50.000 47.500 45.000 GREATER MIAMI LODGING ROOM INVENTORY Or-.t-le Rennie De.10 Jan-17 Feb-17 Moot/ Apr17 May-17 Source, Smith Travel Research Jen-17 Jar-17 Anp-17 5ap•17 vvv�301a117 i180916 Rolling 12 Mosel Year Calendar Ocl-16 Nos-16 D¢C16 .Ian-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 ,kJ-17 Aug-17 Sep-17 Maths 2016/2017 YID 2016117 54,232 54.512 54.693 54076 54,863 55,126 55241 55,353 55.421 55.502 55.598 55.112 55,027 55.027 55.210 2015116 51,720 52,041 52,253 52,192 52,192 52,590 52,855 53,079 53,022 53,426 53,489 53,915 52,731 52,731 52,973 %change 4.9% 4.7% 4.7% 4.8% 5.1% 4.8% 45% 4.394 4.5% 3.9% 3.9% 22% 44% 44% 42% 1,500.000 1.2519000 GREATER MIAMI MOTEL ROOMS SOLD 1,000.000 750,000 Get-16 5mace1 Smah Ttevel Relcomb Nov.16 Dec.16 Jan-17 Feb-17 Mar-17 .11u-17 May-17 J:1 17 Jul -IT Poo-17 Sep-17 'OUL T ..7111516 Ralfna I'iscaTVe Cale Ocl-16 2016117 1,127,713 2016116 1,172,432 %change -3.8% Nov-16 Dec-16 Jan-17 Feb-17 Mar.17 Apr-17 May-17 Jrel-17 1.190,796 1,228,186 1301 759 1,280,095 9 464,618 1,336,833 1 276,949 1,210,489 1219 995 1234 576 1,305532 1,226,033 1 3E9 435 1274,103 1.257,642 1,134,626 -24% 0,5% 03% 44% 70% 49% 1.6% 6.7% Source; Greater Miami Convention and Visitors Bureau and Smith Travel Research Ju1-17 Aug-11 Sep-17 Months 2016.12617 YTD 1,391,845 1,299, 346 979,651 15,072, 99 / 15,098,200 11,529,376 1,291.387 1.221,273 1,101,795 14 804.045 14 868,829 11,180 415 78% 64% -11.1% 18% 1.9% 31% The total number of international visitors has increased every year since 2001, with the exception of 2002 and 2009, while the total number of domestic visitors has increased annually since 2001. The increasing number of visitors to the area is beneficial to the hotel market as demand and occupancy for the rooms should continue to increase. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 40 Jungle Island Hotel 18-085-02 MARKET ANALYSIS Regional Origins of Overnight Visitors to Greater Miami 2012 2013 2014 2015 2016 % Change 2016 v. 2015 Domestic Regions Northeast 3,421.2 3,401.4 3,520.1 3,860.5 3,915.3 1.4% Southern 1,750.6 1,781.0 1,833.1 2,004.8 2,026.7 Midwest 1,300.9 1,263.6 1,270.8 1,385.1 1,405.5 1.5% Western 600.2 641.2 679.2 739.8 752.5 1.7% Total Domestic 7,074.9 7,087.2 7,303,2 7,990,1 8,100.0 1.4% International Regions Latin Amenca 4 704.5 5,017.8 5,009.4 5,154.2 5.187.7 0.7% South America 3,435.6 3,737.1 3,659.0 3,739.6 3,683.5 -1,5% Central America 550.1 561.5 595.3 615.6 650.1 5.6% Caribbean 718.8 719.2 755.0 799.0 854.1 6.9% Europe 1, 368.4 1,332.4 1,430.2 1,515.2 1,554.7 2.6% Canada 640.5 660.6 689.7 696.6 661.8 -5.0% Other Countries 120.3 120.9 130.7 140.1 220.0 5 7.0% Total International 6,833.7 7,131,7 7,260.0 7,506.0 7,624.2 1.6% Total Overnight Visitors 13,908.6 14,218,9 14,563.2 15,496.3 15,724.3 1.5% Please note: Domestic and international numbers may not equal total due to rounding The visitor industry continued to improve in 2016, as total overnight visitors to Greater Miami and the Beaches increased by 1.5% compared to 2015. The majority of the increase in visitors was during the first quarter; January, February and March all saw at least 4.8% more visitors than for that month in 2015. There was an estimated, record -high 15.7 million visitors who spent at least one night in Greater Miami and the Beaches during January -December 2016. Consistent with previous years, Miami Beach remained the most common area for visitor lodging and has grown in popularity over the past two years. Downtown Miami and North-Dade/Sunny Isles Beach were also top areas for lodging. The following is a percentage breakdown of where visitors who used lodging stayed in 2016: • Miami Beach (55.6%) • Downtown Miami (15.0%) • North-Dade/Sunny Isles Beach (11.7%) • Airport Area (8.3%) • South Miami -Dade (3.8%) • Doral (2.9%) • Key Biscayne (2.4%) • Coconut Grove (1.7%) • Coral Gables (1.3%) JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 41 Jungle Island Hotel 18-085-02 MARKET ANALYSIS Area of Lodging 2016 Total Visitors Miami Beach 42.0% Downtown Miami 17.6% North-Dade/Sunny Isles Beach 10 0% Airport Area 17.2% South Miami -Dade 5.0% Doral 0.7% Key Biscayne 2.9% Coconut Grove 0.5% Coral Gables 5.2% 47.3% 12.1% 13.9% 16.5% 6.8% 1.2% 1.3% 0.5% 1.7% 57.8% 13,2% 11.8% 12.8% 3.9% 3,3% 1.5% 1.5% 1.4% 54.7% 14.3% 9.8% 11.6% 4,1% 4.4% 2.1% 1.2% 1.4% 55.6% 15.0% 11.7% A 8.3% • 3.8% 2.9% • 2.4% 1.7% 1.3% Q.B: What areas of Greater Miami did you stay in? Select all that appfies. - Visitors who stayed in a Hotel, Motel or Spa only •A Denotes significance at a 95% confidence level vs. previous year There was a significant increase in domestic visitors coming to Miami for leisure and vacation, causing the number of total visitors traveling for pleasure to be significantly more in 2016 than 2015. In 2016, there was a significant decrease from 2015 in domestic and international visitors traveling for business. Domestic visitors traveled for business purposes more than twice as much as international visitors. Purpose of Visit 2012 2013 2014 2015 2016 Total Visitors Leisure/Vacation Business 75.6% 73.7% 81.2% 81.9% 84.8% 10.8% 13.3% 7.4% 8.3% 6.6% • Cruise 8.1% 7.8% 7.2% 6.6% 5.0% • Personal/Other S.5% 5.2% 4.2% 3.2% 3.6% Q.3a: What was the MAIN purpose of your visit to the Greater Miami area? Only select one. Note: Leist,re/Vocation is comprised of those visiting for vocation/pleasure and visiting friends and relatives T• Denotes significance at a 95% confidence level vs. previous year There were 3.7% of all visitors rented a residence, and of those who rented a residence, 71.8% of them used a peer to peer website. Peer to peer websites are common channels for people to rent residences during their visit to the Greater Miami area. Domestic visitors and international visitors utilized P2P sites at nearly same rate. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 42 Jungle Island Hotel 18-085-02 MARKET ANALYSIS According to Smith Travel Research, 2016 continued the trends we saw in 2014 for the Top 25 U.S. Hotel Markets. Performances in all categories used in the lodging industry were above a year ago, spurred by room demand, which increased by approximately +1.7%. This is an indicator that demand from all major sources (business, transient, leisure and group) was strong and is expected to remain strong. The number of available rooms grew by +1.6%. The year-end occupancy for the Top 25 U.S. Hotel Markets reached 73.4%, a decrease of +0.2%. Average daily rate for the Top 25 U.S. Hotel Markets reached $151.22 an increase of +2.6% Revenue Per Available Room for Top 25 U.S. Hotel Markets increased to $110.97 up +2.4%, according to STR. The year-end occupancy for the total U.S. Hotel Market saw an increase of +0.1% reaching 65.5% from 2015. Average daily rate for the total U.S. increased +3.1% reaching $123.97. Revenue Per Available Room for the total U.S. Hotel Market increased by +3.2% to $81.19 according to STR. 2016 was a challenging year in Greater Miami for the hotel industry with increased room inventory, declines from two of our largest international markets, and the Miami Beach Convention Center being off line, hotels in Greater Miami and the Beaches finished the year with an occupancy rate of 75.1%, a decrease of -2.7% versus 2015. Hotels in Greater Miami and the Beaches have an average daily room rate (ADR) of $189.77, a decrease of -2.9% compared to 2015. The decrease in occupancy and average daily room rate resulted in revenue per available room (RevPAR) of $143.95, a decline of -5.5% for Greater Miami and the Beaches. Even with all these challenges, Greater Miami and the Beaches sold a record 14.7 million room nights in 2016, representing +1.5% growth over the previous year. The area also continued to grow in the number of available rooms, reaching a total of 54,468 rooms, an increase of +4.5% compared to total rooms available in December 2015. In 2016, Greater Miami and the Beaches ranked among the top ten in all three major categories (Occupancy, ADR and RevPar) when compared against the Top 25 U.S. Hotel Markets by STR. Greater Miami was the top performing Florida market among the Top 25 U.S. Hotel Markets as listed by STR. The following chart summarizes the average daily rate (ADR), occupancy and Revenue per Available Room (RevPAR) for the various submarkets located in Miami -Dade County in 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016. The subject is located in the Miami Beach submarket. The following chart summarizes the average daily rate (ADR), occupancy and Revenue per Available Room (RevPAR) for the various submarkets located in Miami -Dade County in 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016. Occupancy 2016 2015 2014 2013 2012 2011 2010 2009 2008 Airport/Civic Center 86.4% 88.2% 86.0% 84.8% 84.1% 82.1% 78.6% 69.7% 78.1% Aventura/Sunny Isles 72.3% 74.3% 75,5% 76.8% 73.2% 73.2% 69.7% 67.5% 70.6% Central Dade 76.3% 78.0% 74.8% 73.6% 72.3% 72.1% 67.4% 60.6% 65.1% Grove/Key Biscayne 69.6% 72.6% 74.7% 76.6% 74.9% 74.7% 70.6% 67.0% 71.5% Coconut Grove 74.3% 76.1% 73.2% 75.8% N/A N/A N/A N/A N/A Coral Gables 77,0% 77.4% 77.7% 76.0% 76.8% 74.7% 70.7% 65.6% 67.3% Dora! 79.4% 81.0% 77.6% 77.4% 81.7% 81.0% 77.2% N/A 75.6% Downtown 74.8% 80.2% 79.9% 76.4% 74.4% 72.6% 67.6% 60.8% 67.7% Miami Beach 72.7% 74.5% 77.1% 77.9% 75.5% 75.3% 68.5% 65.7% 72.4% North Date 78.3% 78.6% 77.2% 76.0% 78.0% 74.9% 68.2% 63.9% 69.1% South Dade 73.5% 74.0% 67.0% 59.9% 66.5% 63.6% 59.3% 53.3% 57.5% Surfside/Bal Harbor 68.4% 69.5% 67.5% N/A N/A N/A N/A N/A N/A Miami -Dade 75.9% 78.0% 78.0% 77.4% 76.4% 75.6% 70.2% 65.1% 71.4% JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 43 Jungle Island Hotel 18-085-02 YTD Sept Occupancy Airport/Civic Center Aventura/Sunny Isles Central Dade Grove/Key Biscayne Coconut Grove Coral Gables Doral Downtown Miami Beach North Dade South Dade Surfside/Bal Harbor Miami -Dade 2017 86.10% 72.20% 77.30% 68.60% 72.10% 78.00% 79.80% 74.30% 74.70% 76.80% 74.20% 68.30% 76.60% 2016 87.40% 74.90% 76.60% 70.70% 74.90% 77.80% 80.80% 77.10% 74.40% 78.30% 74.20% 70.70% 77.30% MARKET ANALYSIS The subject is located in the Downtown submarket. The Downtown submarket has averaged consistently near the average rate of occupancy for the entire county in the last six years. The submarket has ranged in occupancy from 60.8% to 80.2%. 2015 saw an increase in occupancy from the previous years. Occupancy has decreased from 2015 to 2016. Also, as can be seen above, the subject's submarket as well as the entire market has seen a decrease. Average Daily Rate Airport/Civic Center Aventura/Sunny Isles Central Dade Grove/Key Biscayne Coconut Grove Coral Gables Doral Downtown Miami Beach North Date South Dade Surfside/Bal Harbor Miami -Dade 2016 $119.20 $212.03 $121.54 $226.37 $174.53 $161.19 $137.36 $195.99 $ 250.58 $102.48 $93.53 $382.22 $189.77 2015 $120.84 $211.50 $123,58 $236.75 $175.44 $162.74 $138.08 $198.67 $264.36 $100.84 $88.84 $434.93 $195.45 2014 $113.29 $200.80 $119.42 $222.74 $172.37 $156.05 $125.86 $191.19 $251.36 $99.42 $85.12 $359.88 $184.79 2013 $106.02 $188.23 $113,58 $214.52 . $163.50 $148.56 $117.17 $182.35 $236.59 $89.90 $84.42 N/A $174.90 YTD Sept ADR Airport/Civic Center Aventura/Sunny Isles Central Dade Grove/Key Biscayne Coconut Grove Coral Gables Doral Downtown Miami Beach North Dade South Dade Surfside/Bal Harbor Miami -Dade 2012 2011 $99.37 $98.67 $170.06 $167.32 $107.22 $102,25 $200.99 $192.14 N/A N/A $136.45 $130.52 $104.41 $100.84 $169.27 $156.97 $227,19 $211.23 $8435 $77.38 $82.11 $152.95 N/A N/A $163.59 $144.13 2017 2016 $116.03 $120.75 $205.21 $215.19 $118.93 $122.02 $225.75 $231.27 $170.17 $176.84 $157.25 $163.04 $129.24 $139.89 $193.42 $197.40 $244.32 $250.30 $104.88 $103.81 $94.84 $94.48 $364.87 $381.24 $185.67 $191.34 2010 2009 2008 $94.23 $95.45 $113.81 $158.92 $159.77 $181.54 $100.43 $102.04 $119.74 $184.98 $184.83 $221.91 N/A N/A N/A $128.29 $130.17 $160,08 $96.20 N/A $109.38 5150.31 $145.26 $175.06 $197.56 $182,86 $202.76 $76.27 $77.30 $92.25 $75.20 $77.89 $88.08 N/A N/A N/A $143.98 $140.22 $160.14 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 44 Jungle Island Hotel 18-085-02 MARKET ANALYSIS The Downtown submarket has averaged consistently above the average daily rate for the entire county in the last nine years. The submarket has over performed the county as a whole. Over the last four years, the average daily rate for the Downtown submarket has ranged from $182.35 to $198.67. The 2013 average daily rate has surpassed the 2008 average daily rate. ADR has decreased from 2015 to 2016. Also, as can be seen above, the subject's submarket as well as the entire market has seen a decrease. RevPAR 2016 2015 2014 2013 2012 2011 2010 2009 2008 Airport/Civic Center $102.99 $106.58 $97.43 $89.90 $83.57 $81.01 $74.06 $66.53 $88.89 Aventura/Sunny Isles $153.30 $157.14 $151.60 $144.56 $124.48 $122.48 $110,77 $107.84 $128.17 Central Dade $92.74 $96.39 $89.33 $83.59 $77.52 $73.72 $67,69 $61.84 $77.95 Grove/Key Biscayne $157.55 $171.88 $166.39 $164.32 $150.54 $143.53 $130.60 $123.84 $158.67 Coconut Grove $129.68 $133.51 $126.17 $123.93 N/A N/A N/A N/A N/A Coral Gables $124.12 $125.96 $121.25 $112.91 $104.79 $97.50 $90.70 $85.39 $107.73 Doral $109.06 $111.84 $97.67 $90.69 $85.30 $81.68 $74.27 N/A $82.69 Downtown $146.60 $159.33 $152.76 $139.32 $125.94 $113.96 $101.61 $88.32 $118.52 Miami Beach $182.17 $196.95 $193.80 $184.30 $171.53 $159.06 $135.33 $120.14 $146.80 North Date $80.24 $79.26 $76.75 $68.32 $65.79 $57.96 $52.02 $49.39 $63.74 South Dade $68.74 $65.74 $57,03 $50.57 $54.60 $97.28 $44.59 $41.52 $50.65 Surfside/Sal Harbor $261.44 $302.28 $242.92 N/A N/A N/A N/A N/A N/A Miami -Dade $144.04 $152.45 $144.14 $135.37 $124.98 $108.96 $101.07 $91.28 $114.34 YTD Sept RevPAR 2017 2016 Airport/Civic Center $99.90 $105.54 Aventura/Sunny Isles $148.16 $161.18 Central Dade $91.93 $93.47 Grove/Key Biscayne $154.86 $163.51 Coconut Grove $122.69 $132.45 Coral Gables $122.66 $126.85 Doral $103.13 $113.03 Downtown $143.71 $152.20 Miami Beach $182.51 $186.22 North Dade $80.55 $81.28 South Dade $70.37 $70.10 Surfside/Bal Harbor $249.21 $269.54 Miami -Dade $142.22 $147.91 The Downtown submarket's 2015 RevPAR grew by roughly 10.33% compounded annually from 2009. The Miami -Dade County saw a RevPAR growth of roughly 8.92% compounded over the same time period, showing that the market recovery is occurring throughout the county. However, RevPAR has decreased more than 8% from 2015 to 2016. Also, as can be seen above, the subject's submarket as well as the entire market has seen a decrease. DOWNTOWN HOTEL SUBMARKET Briefly described, the site is estimated to consist of approximately 104,093 SF or 2.39± acres of uplands located in the southern portion of the Jungle Island site on Watson Island, in Miami, Miami -Dade County, Florida. The site is owned by the City of Miami. According to the developer, the site is proposed for a 300 room hotel, plus 10,000 SF of retail space and 30,000 SF of meeting/banquet space. There are no plans or square footage estimates for the hotel presented by the developer. The appraiser estimated a total gross building area including the hotel, retail, meeting space and parking to be 346,000 SF. The subject is zoned CS Civic Space, under Zoning Ordinance Miami 21, per the City of Miami. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 45 Jungle Island Hotel 18-085-02 MARKET ANALYSIS In order to better understand the subject's immediate hotel market, we present information obtained from the Greater Miami Convention and Visitors Bureau pertaining to hotels within the Downtown submarket. Occupancy ranged from a low of 60.8% in 2009 to a high of 80.2% in 2015 and has averaged 72.71% over the past nine years. Average daily rates ranged from a low of $145.26 in 2009 to a high of $198.67 in 2015 and have averaged $173.90 over the past nine years. In the Downtown submarket revenue per available room, or RevPAR ranged from a low of $88.32 in 2009 to a high of $159,33 in 2015 and has averaged $127.37 over the past nine years. A graphic depiction of the average occupancy, average daily rate (ADR) and RevPAR within the Miami Beach submarket is shown below. Downtown Occupancy, ADR and RevPAR 91% 81% 67.7% 74.4% ° 74.8% 200 72.6% 71�4(0 r� ♦ $ 71% 61% 60.8% $182. 5}9i.�9 w�■ 9 150 51% - 41% �� ��F wi�T $100 31% - 21%— 1 1 —$50 11%° - 1% $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 $250 According to a Miami Herald article among the top 25 markets in the country, Miami -Dade was one of two (the other was Houston, Texas) to report decreases across three key hotel metrics, according to a report from data and analytics firm STR, which tracks hotel performance. Supply, or the number of new hotel rooms, is the lead perpetrator of Miami-Dade's declining numbers, Miami -based hotel consultant Scott Brush said. The region welcomed a 4.2 percent increase in hotel rooms in 2016, a giant leap in a local hotel business that already has more than 50,000 hotel rooms. (Nationally, cities welcomed 1.6 percent new hotel rooms on average.) But demand for those rooms has not kept pace. Room nights sold grew by 1.4 percent on average in 2016, causing other metrics to decline. Other factors, chiefly Zika and Airbnb, hacked away at Miami-Dade's performance, too. Over the summer, the Centers for Disease Control and Prevention issued an unprecedented travel warning to the region. Hotels across Miami -Dade experienced a drop in bookings; one reported experiencing its three worst weeks in 15 years. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 46 Jungle Island Hotel 18-085-02 MARKET ANALYSIS That impact may have dripped into the fall months, Brush said. Hotel room occupancy, the average daily rate and revenue per available room went negative during the last five months of the year. Room nights sold were down between October to December. "Zika impact probably hurt conventions and meetings more than it hurt the individual tourist because if you're a meeting coordinator you don't want to be the guy known as setting up a meeting in a Zika-infested whatever," Brush said. Meanwhile, the popularity of Airbnb and other short-term rental platforms has been on the rise. According to a separate STR report released last week, Airbnb has impacted hotels, though the extent is not yet quantifiable. In Miami -Dade, Airbnb was responsible for 3.6 percent of total room nights sold in the overall hotel industry from July 2015 and July 2016. Scott Berman, Miami -based industry leader for hospitality and leisure at PwC, said local hotel managers are worried about home sharing platforms. Another point of concern is the international markets that typically feed Miami. Many countries in Latin American and Europe faced economic challenges in 2016. At the same time, the U.S. dollar strengthened, making Miami more expensive for foreigners. Four of the top five markets fueling Miami are outside the U.S., according to the Greater Miami Convention and Visitors Bureau. Travel to Miami International Airport painted the picture: Traffic from No.1 international market Brazil declined by 30 percent. The number of Canadian visitors, the No. 2 international market according to the tourism bureau, declined by 10 percent. Passenger traffic began to drop in August and continued on a decline through November, plunging as much as 7 percent in October. (The airport has not yet released figure for December.) Although scraping through for a tiny overall passenger increase of 0.53 percent over 2015, the airport experienced its weakest growth rate since 2009. There are numerous financing vehicles available for hotel development and are numerous proposed hotels moving toward development. The hotels that were included in the Market Analysis represent some hotels that are either on par with, or possibly superior to the subject, as well as hotels that are inferior to the subject. This report surveyed seven properties, which contained a total of 2,664 rooms, located in the Downtown Miami submarket. The following chart shows the properties included in this survey: Property # of Rooms Marriott Biscayne Bay 600 Hilton Downtown 528 Doubletree Hilton Grand Hotel 219 Courtyard Marriott Miami Downtown 233 Hotel Intercontinental 641 Destination YVE Hotel 243 Holiday Inn Port of Miami Hotel 200 Total 2,664 A summary of the comparables located in the Downtown Miami submarket, which were noted by the appraiser as offering the greatest amount of competition, is presented on the pages that follow. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 47 Jungle Island Hotel 18-085-02 Market Comparable 1 Name: Marriott Biscayne Bay Hotel Property Type: Full Service Hotel Location: 1633 N. Bayshore Drive # of Guest Rooms: Year Built: Amenities: Pool - Meeting Room - Restaurant - Lounge - Trip Advisor Rank Trip Advisor Stars Room Rates: Season 2017 - Non Season 2017 - Miami, FL 33132 600 1982 Yes Yes Yes Yes #18 out of 128 hotels in Miami 4.0 of 5 based on 3,364 reviews $293 - $389 $169 - $249 MARKET ANALYSIS Comments: This is an older full service located along Biscayne Bay, just off the Venetian Causeway along North Bayshore Drive. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 48 Jungle Island Hotel 18-085-02 Market Comparable 2 Name: Hilton Downtown Hotel Property Type: Full Service Hotel Location: 1601 Biscayne Boulevard # of Guest Rooms: Year Built: Amenities: Pool - Meeting Room - Restaurant - Lounge - Trip Advisor Rank Trip Advisor Stars Room Rates: Season 2017 - Non Season 2017 - Miami, FL 33132 528 1975 Yes Yes Yes Yes #38 out of 128 hotels in Miami 4.0 of 5 based on 3,928 reviews $244 - $404 $154 - $274 MARKET ANALYSIS Comments: This hotel is part of the old Omni Mall. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 49 Jungle Island Hotel 18-085-02 Market Comparable 3 Name: Doubletree Hilton Grand Hotel Property Type: Full Service Hotel Location: 1717 North Bayshore Drive # of Guest Rooms: Year Built: Amenities: Pool - Meeting Room - Restaurant - Lounge - Trip Advisor Rank Trip Advisor Stars Room Rates: Season 2017 - Non Season 2017 - Miami, FL 33132 219 1986 Yes Yes Yes Yes #60 out of 128 hotels in Miami 4.0 of 5 based on 2,155 reviews $283 - $509 $103 - $249 MARKET ANALYSIS Comments: This is an older full service located along Biscayne Bay, just off the Venetian Causeway along North Bayshore Drive. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTINO 50 jungle Island Hotel 18-085-02 Market Comparable 4 MARKET ANALYSIS Name: Courtyard Marriott Miami Downtown Brickell Hotel Property Type: Full Service Hotel Location: 200 SE 2nd Avenue # of Guest Rooms: Year Built: Amenities: Pool - Meeting Room - Restaurant - Lounge - Trip Advisor Rank Trip Advisor Stars Room Rates: Season 2017 - Non Season 2017 - Miami, FL 33131 233 1975 Yes Yes Yes No #43 out of 128 hotels in Miami 4.0 of 5 based on 1,207 reviews $332 - $359 $161 - $194 Comments: This is an older hotel located north of the Miami River. They offer a fitness center and business center. JOSEPH J. DLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION ANTI CONSULTING 51 Jungle Island Hotel 18-085-02 Market Comparable 5 MARKET ANALYSIS Name: Hotel Intercontinental Property Type: Full Service Hotel Location: 100 Chopin Plaza # of Guest Rooms: Year Built: Amenities: Pool - Meeting Room - Restaurant - Lounge - Trip Advisor Rank Trip Advisor Stars Room Rates: Season 2017 - Non Season 2017 - Comments: Miami, FL 33131 641 1983 Yes Yes Yes Yes #8 out of 128 hotels in Miami 4.5 of 5 based on 6,651 reviews $281 - $525 $165 - $278 This is a luxury hotel located at the mouth of the Miami River. This hotel also has luxury suites with rates of roughly $1,950 per night. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 52 Jungle Island Hotel 18-©85-02 Market Comparable 6 MARKET ANALYSIS Name: Destination YVE Hotel Property Type: Full Service Hotel Location: 146 Biscayne Boulevard # of Guest Rooms: Year Built: Amenities: Pool - Meeting Room - Restaurant - Lounge - Trip Advisor Rank Trip Advisor Stars Room Rates: Season 2017 - Non Season 2017 - Comments: Miami, FL 33132 243 1926/1950 No Yes Yes Yes #69 out of 128 hotels in Miami 3.5 of 5 based on 2,899 reviews $159 - $239 $109 - $209 This is an older hotel located along Biscayne Boulevard in Downtown Miami across from Bayside Shoppes. They offer a fitness center and business center. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 53 Jungle Island Hotel 18-085-02 Market Comparable 7 MARKET ANALYSIS !'"l>iaia! ig , 111 "".y,,, 'ilr Name: Holiday Inn Port of Miami Hotel Property Type: Full Service Hotel Location: 340 Biscayne Boulevard # of Guest Rooms;. Year Built: Amenities: Pool - Meeting Room - Restaurant - Lounge - Trip Advisor Rank Trip Advisor Stars Room Rates: Season 2017 - Non Season 2017 - Comments: Miami, FL 33132 200 1950 Yes Yes Yes Yes #68 out of 128 hotels in Miami 3.5 of 5 based on 2,505 reviews $234 - $287 $112 - $164 This is an older hotel located along Biscayne Boulevard in Downtown Miami across from Bayside Shoppes. They offer a fitness center and business center. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 54 Jungle Island Hotel 18-085-02 SUBJECT PROJECTIONS MARKET ANALYSIS The following table summarizes the properties that are considered direct competition for the subject. Property # of Rooms Room Rates Marriott Biscayne Bay 600 $169 - $389 Hilton Downtown 528 $154 - $404 Doubletree Hilton Grand Hotel 219 $103 - $509 Courtyard Marriott Miami Downtown 233 $161 - $359 Hotel Intercontinental 641 $165 - $525 Destination YVE Hotel 243 $109 - $239 Holiday Inn Port of Miami Hotel 200 $112 - $287 We surveyed seven hotels in the subject's market to determine quoted room rates for the subject. The quoted room rates range from $103 to $525. The upper end of the range is represented by suites. The most similar properties to the subject are the Marriott Biscayne Bay and Doubletree Hilton Grand. We provided information pertaining to other hotels in the subject's market that directly compete with the subject. Although these hotels represent the subject's primary competitors, they display a range of lodging types and facilities. The comparables include limited service, full service and suite hotels and range in size from 200 to 641 rooms. The subject, proposed for 300 rooms, falls within the range of the competitors in terms of size. Next is to determine the percentage relationship of each market segment to the whole for each of the competitive facilities. As previously stated, the market's overall room night demand must be divided into individual market segments. In the lodging activity approach, market segmentation is accomplished during the competitive interviews by asking questions about the percentage each market segment contributes to the whole. When quantifying demand based on lodging activity, it is necessary to determine the room counts of all the competitive hotels. This information can be obtained from each property or from various directories. The ADR's and Occupancies were estimated by the consultant, based upon discussions with each of the properties, other knowledgeable parties in the market and a Trend Report by Smith Travel Research, on the Primary Competitors. A study obtained from Smith Travel Research shows average room rates and occupancy rates for the main competitive set of properties. This study includes all nine primary competitors. The trends are from January 2012 through January 2018 and are summarized on the following graph. ADR's and Occupancies for each individual hotel was estimated by the appraiser from discussions with people in the market. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 55 Jungle Island Hotel 18-085-02 MARKET ANALYSIS 230 L f0 g 200 Q 170 F140 110 V 0 80 ♦ `{ 50 ADR, Occupancy and RevPar Trends Primary Competitive Set • A • Mmtimm 2012 2013 2014 2015 2016 2017 ADR f Occupancy RevPar ADR Occupancy RevPAR 2012 2013 2014 2015 2016 2017 $149.11 $157.61 $165.49 $173.14 $174.93 $175.32 79.9% 80.3% 84.6% 84.5% 79.0% 77.9% $119.08 $126.53 $139.97 $146.24 $138.27 $136.49 As can be seen by the previous chart, ADR has shown a 3.52% annual increase from 2012 to 2017. ADR increased 0.2% from 2016 to 2017. Occupancy jumped from 79.9% in 2012 to 84.6% in 2014. Occupancy slipped from 84.5% in 2015 to 77.9% in 2017. RevPar has shown a steady increase from 2011 to 2015, with a 6.67% decrease from 2015 to 2017. The projected occupancies for the proposed subject range from a low of 67% in its opening year, to an average of 80% upon stabilization in the third year of operation. Because the hotel has a commercial and leisure orientation, it should perform at a somewhat higher occupancy than purely commercial properties, and will probably achieve occupancy levels at the low end of the comparable mid -priced hotels. Based on this analysis, a stabilized occupancy of between 78% to 84% is considered appropriate for the proposed subject. The subject's competitive set RevPAR increased 14.62% or 2,92% annually from 2012 to 2015. However, the RevPAR decreased 1.29% from 2015 to 2017. The competitive set, Miami -Dade County market and Downtown Miami hotels show occupancies of 77.9%, 76.6% and 74.3% for 2017. The average occupancy for the competitive set over the past six years is 81.0%. The subject should achieve 67% occupancy in the first year of operation, 75% in the second year of operation, then stabilize at 80% occupancy in the third year of operation. The competitive set, Miami -Dade County market and Downtown Miami hotels show ADR's of $175.32, $185.67 and $193.42 for 2017. The average ADR for the competitive set over the past six years is $165.93. The estimate of ADR for the subject as stabilized is $175 and occupancy of 80%. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 56 Jungle Island Hotel 18-085-02 Projected Revenue Per Available Room (RevPAR) MARKET ANALYSIS 2012 2013 2014 2015 2016 2017 Subject Occupancy Occupancy Occupancy Occupancy Occupancy Occupancy Occupancy Projection Subject N/A N/A N/A N/A N/A N/A 78.00% Competitive Set 79.90% 80.30% 84.60% 84.50% 79.00% 77.90% Downtown 74.40% 76.40% 79.90% 80.20% 74.80% 74.30% Miami -Dade 76.40% 77.40% 78.00% 78.00% 75.90% 76,60% 2012 2013 2014 2015 2016 2017 Year ADR ADR ADR ADR ADR ADR ADR Projection Subject N/A N/A N/A N/A N/A N/A $180.00 Competitive Set $149.11 $157.61 $165.49 $173.14 $174.93 $175.32 Downtown $169.27 $182.35 $191.19 $198.67 $195.99 $193.42 Miami -Dade $163.59 $174.90 $184.79 $195.45 $189.77 $185.67 2012 2013 2014 2015 2016 2017 Year1 RevPAR RevPAR RevPAR RevPAR RevPAR RevPAR RevPAR Projection Subject N/A N/A N/A N/A N/A N/A $140.40 Competitive Set $119.08 $126.53 $139.97 $146.24 $138.27 $136.49 Downtown $125.94 $139.32 $152.76 $159.33 $146.60 $143.71 Miami -Dade $124.98 $135.37 $144.14 . $152.45 $144.04 $142.22 Year Year1 Room Revenues 2012 2013 2014 2015 2016 2017 Projection N/A N/A N/A N/A N/A N/A $15,373,800 Hotels generate income from room revenue, but also from food and beverage sales, and other income sources. We also projected the subject's total revenue, based on actual performance statistics of full service hotels in the subject's area. The following chart summarizes the percentage of income that comes from the various components of a full service hotel. The source is 2017Annual Smith Travel Hospitality Trends. All Full Service Chain South Independent Hotels Affiliated Atlantic Resort Upper Upscale Class 2016 Percent of Revenue Rooms 64.7% 65.6% 56,4% 67,8% 56,1% 64.8% Food and Beverage 28.4% 28.1% 33.1% 25.8% 31.7% 29.0% Other Operated Departments 4.1% 3.8% 7.3% 3.9% 7.6% 3.3% Rentals and Other Income 2.7% 2.6% 3,3% 2.5% 4.6% 2.9% Total Revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% ADR $193.94 $192,14 $215.38 $154.41 $219.35 $187.5 Occupancy 74.6% 74.9% 70.7% 75.0% 74.1% 75.3% Based on the information provided, we conclude the subject's hotel will generate approximately 60% of the total hotel revenue from the sale of room nights. The remaining income of 40% is projected to come from ancillary income such as food and beverage, banquet room rentals, telecommunications and other departments. The subject is to include 300 hotel rooms, 10,000 SF of retail space and 30,000 SF of meeting and banquet space. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 57 Jungle Island Hotel 18-085-02 The total projected revenue for the hotel at the subject is calculated as follows. Hotel Per Room Total Rooms 1 300 Room Nights 365 109,500 ADR $180.00 $180.00 Occupancy 78.00% $0.78 RevPAR $140.40 $140.40 Total Room Revenue Ancillary Revenue $51,246 $15,373,800 40% $10,249,200 Total Revenue $25,623,000 MARKET ANALYSIS For future market share projections, we determined that there would be an increase in supply over the next ten years in the subject's submarket to meet increasing demand from tourists and population increases. Our research in the market revealed several projects that will be competitive to the subject property. According the Miami -Dade County Convention and Visitors Bureau, there are over 7,700 additional rooms that should come on-line within the next 12 to 48 months for Miami -Dade County. These hotel rooms may or may not directly compete with the subject. Given their distant proximity to the subject and amenities, these hotels will offer only some competition for the subject. The subject is a limited service hotel, with small meeting space. Based upon the comparables surveyed, as well as the future supply and demand for hotels in the Miami -Dade County market, we are of the opinion that the subject should be able to obtain its fair share of the room nights sold among its competitors. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 58 Jungle Island Hotel 18-085-02 DESCRIPTION OF THE SITE SITE DETAILS ADDRESS 1111 Parrot Jungle Trail, Miami, Miami -Dade County, FL 33132 PARCEL NUMBER 01-3231-000-0014 LOCATION The subject is located on Watson Island on the MacArthur Causeway, just east of Biscayne Boulevard. LOCATION TYPE Urban MAP LATITUDE/LONGITUDE 25.7860793/-80.1750513 CENSUS TRACT 12-086-9810.00 SIZE 104,093 SF or 2.39 acres ZONING The parcel is zoned "CS," under the jurisdiction of the City of Miami. BUILDABLE SF 346,000 SF PRIMARY FRONTAGE STREET MacArthur Causeway. ADJACENT PROPERTIES - NORTH Water/Biscayne Island ADJACENT PROPERTIES - SOUTH Port of Miami/Government Cut ADJACENT PROPERTIES - WEST Palm and Hibiscus Islands ADJACENT PROPERTIES - EAST City of Miami PROPOSED USE Hotel - Full Service NUMBER OF PROPOSED UNITS 300 PROPOSED UNIT STATUS Planned VIEW Good ACCESS Access is via the Mac Arthur Causeway from the City of Miami to the west and from the City of Miami Beach to the east. INGRESS/EGRESS Ingress/egress is via the MacArthur Causeway. SITE VISIBILITY Good STREET LIGHTING Good STREET CONDITION Paved with asphalt SIDEWALKS No CURBS AND GUTTERS No LANDSCAPING The subject's landscaping is typical for the area. TOPOGRAPHY The subject's topography is level and at street grade. SHAPE The subject site is irregular in shape. REQUIRED SITE WORK Demolition SOIL CONDITIONS AND DRAINAGE The soil conditions observed at the subject appear to be typical of the region and adequate to support development. FLOOD ZONE The site lies within Zone AE. This information was obtained from the National Flood Insurance Rate Map Number 12086C 0316 L dated September 11, 2009. FLOOD ZONE DEFINITION The base floodplain where base flood elevations are provided. AE Zones are now used on new format FIRMs instead of Al-A30 Zones. In communities that participate in the NFIP, mandatory flood insurance purchase requirements apply to this zone. OTHER HAZARDS None Known ENCUMBRANCES AND EASEMENTS There are no known adverse encumbrances or easements. Please reference Limiting Conditions and Assumptions. ENVIRONMENTAL HAZARDS There are no known adverse environmental conditions on the subject's site. Please reference Limiting Conditions and Assumptions. WETLANDS AND WATERSHEDS No wetlands were observed during our site inspection. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTINO 59 Jungle Island Hotel 18-085-02 DESCRIPTION OF THE SITE ADEQUACY OF UTILITIES The subject's utilities are typical and adequate for the market area. PUBLIC ELECTRICITY FPL WATER SUPPLY TYPE City water SEWER TYPE City sewer POLICE AND FIRE PROTECTION City of Miami CONCLUSION The subject site is considered well -suited to functionally support its current use. AERIAL PHOTOGRAPH Sailtobahiamas.com Jungre Is3and Tropical atirac with exotisii JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 60 Jungle Island Hotel 18-085-02 • _ It..hirnora Mimi JapanGarden Measure distance Click on the map to add to your path Total area: 104,093.11 ftz (9,670.57 m2) Total distance: 1,283.50 ft (391.21 m) DESCRIPTION OF THE SITE atsoe IslarIcr7ark JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 61 Jungle Island Hotel 18-085-02 The subject is zoned "CS," Civic Space, under the jurisdiction of the City of Miami. ZONE DETAILS ZONING CODE ZONING DESCRIPTION PERMITTED USES ZONED DENSITY/FAR CURRENT USE CURRENT USE LEGALLY CONFORMING? BUILDABLE SF PROPOSED FAR CS Civic Space Civic/Public Use 3.3 PARCEL DETAILS Parking Garage is a legal and conforming use of the site. 346,000 3.32 ZONING Based on a review of the subject in relation to the CS zoning district, it appears the subject is a legal and conforming use of the site. However, we are not experts in determining if a property is fully in compliance with all aspects of the zoning code. We suggest interested parties obtain a letter of zoning compliance from the City of Miami to determine if the subject is zoning compliant. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 62 Jungle Island Hotel 18-085-02 TAXES The subject is assessed by the Miami -Dade County property appraiser's office, and is taxed by the City of Miami. The following table summarizes the subject's assessment and taxes: Parcel ID Assessment Year School Total Taxable Assessment Total Taxable Assessment School Millage Rate Millage Rate Total Tax Rate Tax Rate Per Taxes Special Assessments Taxes with Special Assessments Early Payment Discount Percentage Total Taxes 01-3231-000-0014 2017 $22,214,837 $7,708,008 $ 6.9940 $14.1902 $ 21.1842 $1,000.00 $264,749 $0 $264,749 4% $254,159 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 63 Jungle Island Hotel 18-085-02 ANALYSIS OF DATA AND CONCLUSIONS IDENTIFICATION OF A LIKELY BUYER The most likely buyer of a property such as the subject would be a large regional or national investor who would recognize the long-term economic potential of the property as market conditions improve. These factors will be considered in the valuation of the subject. VALUATION METHODOLOGIES The subject's market rental rate will be determined via two methods. The first method will estimate the gross rental income that will be generated by the hotel. A market derived factor will then be applied to determine the appropriate rental rate for the underlying land. The second method will estimate the value associated with the additional development rights. This method will analyze the amount that developers have paid for the development rights at other sites in the subject's area. Once a market derived price/FLR has been determined, we will then multiply that value by a market derived land capitalization rate, to determine an appropriate rental rate for the subject. As of the date of the report, the subject is vacant land available for development. For the purposes of this report, the market rent will be determined based on the use of the subject as a full service hotel. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 64 Jungle Island Hotel 18-085-02 LAND VALU E The first method will estimate the gross rental income that will be generated by the two components. A market derived factor will then be applied to determine the appropriate rental rate for the underlying land. First we will estimate the revenue that can expect to be generated from the additional hotel rooms. Then we will estimate the revenue that can expect to be generated from the retail space. Hotel Rooms Within the Market Analysis, we estimated the total revenue from the hotel operations will be as follows: Luxury Hotel Revenue $25,600,000 Percentage Rents We have researched other municipality owned properties (land) that are leased to the developer or owner of the improved property. We are attempting to determine the appropriate percentages to apply to the subject's various development components, as percentage rent that will be paid to the City of Miami for the rights to the underlying site. Case Study 1 Grove Key Marina and Scotty's Landing (Restaurant and Marina) The site is owned by the City of Miami and is leased to a lessee (Grove Key Marina) and a sub -lessee (Scotty's Landing Bar). In early 2012, the City of Miami published a request for proposals (RFP) for bids on a new, 40-year lease on the property. A substantial tenant improvement is required in the RFP as the city seeks a state-of-the-art marina and bar. The winning bidder must make required minimum renovations including renovating the hangars, pavement, and bar kitchen, and repairing the dock and seawall, In exchange, the lease would be Tong -term, 40 years, with a 10-year renewal option. Per the RFP, the successful proposer must pay a minimum City's proposed lease details are as follows: Minimum Annual Rent: Percentage Rent: Marina Operations Bar/Restaurant Sales Marine Fueling Facility base rent and percentage rent, Some of the $500,000 and: Minimum 15% of gross revenue Minimum 10% of gross revenue Minimum 10% of gross revenue The RFP call for substantially higher minimum annual rent and a higher percentage of sales from the revenue generating components on the site. Case Study 2 Biscayne Landing (Mixed Use Project Retail/Office/Residential) The site is owned by the City of North Miami and is leased to a lessee (Oleta Partners, LLC). The lease was negotiated in 2012 and is based on a proposed build out of the 183.8 acre site with approximately 900,000 SF of retail, hotel, residential and recreational space. The ground lease is for 99 years, NNN, with increases in the base rental rate of 15% every ten years. The lease calls for development deadlines for the construction of the project, a public park and community center and future rights to developable land with participation in the revenues from this property. Some of the lease details are as follows: Base Rent: Percentage Rent: Residential Revenues Retail Revenues Hotel Revenues Sales (Condo or ALF Units) $1,500,000 1.75% of gross revenue 1.75% of gross revenue 2.25% of gross revenue 3.25% or gross revenues JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 65 Jungle Island Hotel 18-o85-az LAND VALUE Case Study 3 Village of Merrick Park (Mixed Use Retail/Office/Residential) This is a mixed use project on an 18± acre site located in the City of Coral Gables. Coral Gables has a 99 year ground lease in place with the developer of the property with a base rent of $300,000 with increases of $50,000 every 10 years. The city receives 10% of the property's net cash flow as percentage rent and has received approximately $90,000 to $100,000 in additional rent from this percentage rent clause. The city is also entitled to any proceeds from any sale or refinance in the amount of 10% of the net proceeds. The residential component was subleased to a residential developer at the onset of the project. The city is entitled to only the revenues from the retail and office components. Case Study 4 Biltmore Hotel (Hotel) There is a 99 year ground lease in place between the City of Coral Gables and the current hotel operator that calls for rental payments of 3.5% of net hotel revenues. Case Study 5 (Subject) Jungle Island (Entertainment) This property is a tourist attraction that is situated on a waterfront site on Watson Island, off of downtown Miami's mainland. The site is approximately 18.61 acres and is developed with a $50,000,000 attraction and convention venue. The development was built in 2003 with the City of Miami providing the underlying site, via a ground lease for 60 years, with options. The lease calls for base yearly payments of the greater of $500,000 or 5.0% of gross revenues up $20,000,000 and 6% over that break point from the attraction and other revenue generating sources within the attraction. Jungle Island negotiated in the past for 13.0 more acres adjacent to the Jungle Island property to develop with a retail and hotel component. They offered fixed rental payments during the construction period with 5% of gross revenues after the completion of the construction. If approved, after the completion of the construction, the base rent for the entire property would increase to $750,000 and the existing 60 year lease will roll into a 99 year lease. Case Study 6 Bayside Marketplace (Retail and Parking Garage) This property is an 18.72 acre site that is developed with an open-air festival retail center with 1,200 parking spaces in two five -story parking structures. The site features a waterfront location in Miami's CBD. The City of Miami owns the underlying land and leased the site to Bayside Center Partnership in 1985. There is a 45 ground lease, with two 15-year options, between the City of Miami and Bayside Center Partnership that calls for a base annual rent of the greater of $1,540,000. In addition, the developer will pay 6% of gross receipts over the initial breakpoint of $25,659,000. The Skyrise Tower rent will be $1,059,082 per year. In addition, the developer will pay 1% of gross receipts over the initial breakpoint of $55,000,000. There is a separate lease on the parking structure that calls for a similar lease term with a 675,000, plus an additional $241,920 base rent upon completion of the second garage. These rents can increase at the CPI each year. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION ANO CONSULTING 66 Jungle Island Hotel 18-085-02 LAND VALUE Case Study 7 The Palace at Coral Gables (Residential) The Palace at Coral Gables is a 240-unit senior housing community located just south of Miracle Mile in Coral Gables. This 0.75± acre site is leased from the City of Coral Gables for a base rent of $237,500 annually with percentage rents of 2.0% of property revenues. The city is entitled to 10% of any net proceeds from any sale or refinance of the property. Additional Comparables With regards to the subject's rental rate, it is noted that there are a number of City of Miami waterfront developments in Miami -Dade County that are leased with the property's rental rate stipulated on a base amount, base amount plus percentage rent, percentage rent or the greater of percentage rent or base rent. Detailed as follows is information regarding several comparables within the market. Comparable Base Rent % Rent Confidential $320,000 and Bayshore — Monty's $1,500,000 or Miami Yacht Club Miami Outboard Club Coconut Grove Sail Club Grove Harbour Marina Rickenbacker $49,080 and $35,004 and $30,000 or $550,000 or $360,000 and 10% of gross receipts 16.75% of gross revenue for rental dockage 11.75% for restaurant dockage 11.75% for upland rents 9.0% of gross revenue in excess of $380,000 10.0% of Gross revenue in excess of $120,000 for restaurant 7.5% of gross revenues 15% of gross revenue for marina 10% of gross revenue for boatyard 10% of gross revenue for restaurants 5% of gross revenue for service/fuel 15.00% of gross revenues for wet slips 12.00% of gross revenues for dry slips Increasing by 1% after 4.5 years The Rusty Pelican lease, along the Rickenbacker Causeway, stipulates that it will pay base rent of $360,000/year plus a variable percentage rate, starting at 2.5% and rising to a maximum of 8% of gross revenues over sales of $12,000,000. The New Spanish Concepts lease states that they will pay a minimum annual rent of $57,375 plus 11% over a $2,200,000 breakpoint. CONCLUSION We have concluded that, in general, percentage rents are based on the gross retail revenues generated by a property rather than the net operating income. The calculation of the gross retail rent is generally a less subjective figure as the number represents the total collections of rent by the property owner, and does not consider operating expenses or any other type of obligations. The comparables offer a wide array of rental scenarios, with some tenants paying a percentage of gross revenue, others paying a percentage of net revenue. Some other tenants pay a base rent, plus percentage rent, or a base rent plus percentage rent over a breakpoint. Some other tenants pay varying percentage rents based on the type of use, typically with a higher percentage for higher margin activities. For parcels where the lessee is required to incur significant construction costs, the rents tend to be lower than for properties where the improvements already are in existence, or little or no improvements are required. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 67 Jungle Island Hotel 18-085-02 LAND VALUE One of the most recent lease comparable properties is the subject Jungle Island, who is offering to pay 5% of gross revenue after the completion of construction. They plan to operate retail space and hotel rooms on the leased land. This is the developer's offer, and would represent the minimum percentage rent that would be expected in the market. The upper end of the comparables would be the Rusty Pelican lease which stipulates rents going up to 8% of gross revenue, for sales above $12,000,000/year. Based on these comparables, we conclude to a rental rate in the range of 5% to 8%. The subject will require a significant amount of input by the land lessee with the construction of the hotel buildings and the retail space. The property will not generate any income without the developer's construction expenditures. Therefore, due to the high level of cost incurred by the developer, we conclude the appropriate rental rate for the underlying land would be toward the lower end of the previously established range. We have concluded that it would be market oriented for the tenant to pay a percentage of gross revenues of between 5% and 6%. We conclude to 5.50% of gross revenue. Many leases are established with a minimum base rent, plus an additional percentage after the property achieves success in the market. We will conclude to a structure with an established base rent, plus an additional overage rent that is based on total percentage of gross sales. We conclude the base rent for the subject would equate to 5.50% of gross revenue, plus percentage overage rent equal to 5.50% of gross revenue over a breakeven point of $25,600,000. The base rental revenue is assumed to grow at CPI, every 5 years. Base lease term is 99 years with a reevaluation every five years. METHOD 1- RENT CONCLUSION Hotel Rooms Previously, the total revenue associated with the hotels rooms were projected as follows: Hotel Per Room Total Rooms 1 300 Room Nights 365 109,500 ADR $180.00 $180.00 Occupancy 78.00% $0.78 RevPAR $140.40 $140.40 Total Room Revenue Ancillary Revenue $51,246 $15,373,800 40% $10,249,200 Total Revenue Ground Rent Percent Ground Rent $25,623,000 5.50% $1,409,265 JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 68 Jungle Island Hotel 18-085-02 LAND VALUE LAND VALUATION The land, as if vacant, is valued by direct sales comparison, in which sales of comparable sites within the subject's area are analyzed in context with the subject's site. Adjustments are made to compensate for differences between the submitted sales data and the subject for such factors as location, size, shape, topography, utility, and marketability, etc. Since the subject is zoned for commercial use, commercial land sales are presented to arrive at a $/FLR for the subject. In an effort to locate comparable land sales, a search throughout the subject's area was conducted. The presented sales are valid indicators of land values in the subject's area. Information pertaining to these sales has been verified by the buyer, seller, broker or other sources considered reliable and having knowledge of the particular transaction when available. Land Comparable 1 Name 3200 Biscayne Boulevard Address 3200 Biscayne Boulevard City Miami County Miami -Dade County State FL Zip 33137 Price $5,215,000 Date 12/1/17 Grantor TBD Harbor 265, LLC Grantee Green Circle Develoment, LLC Recordation 30790-4730 Tax Parcel ID 01-3230-010-0050 Property Rights Fee Simple Estate Financing Cash to Seller Conditions of Sale Arm's Length Verification Knowledgeable Third Party Price Per Land SF $324.48 Price Per Acre $14,094,595 Price Per FAR $23.33 Price Per Proposed Unit $81,818.00 Site Land SF 16,072 Land Acres 0.37 Topography Level and at street grade Shape Rectangular Required Site Work Typical Clear and Grade Utilities All Available Zoning T6-36a-0 Proposed Use Mixed -Use Zoning Type Commercial Zoned Density 150 units per acre Buildable SF 192,864 Allowable FAR 12.00 No. of Proposed Units 55 Proposed Unit Type Condominiums Road Frontage Biscayne Boulevard View Street Water Frontage No Effective Water Frontage NA Comments This vacant site is located at the northwest corner of Biscayne Boulevard and NE 32nd Street. The buyer's do not have any definitive pla ns on what the site will be developed with. The price per unit and price per FAR are based on the zoning. The property sold previously in 2015 for$4,500,000. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 69 Jungle Island Hotel 18-085-02 LAND VALUE Land Comparable 2 Name Collins Avenue Address 6372 & 6382 Collins Avenue City Miami Beach County Miami -Dade State FL Zip 33141 Price $5,500,000 Date 2/2/17 Grantor Mypp Holdings, LLC Grantee 6372, LLC Recordation 30414-4507 Tax Parcel ID 02-3211-007-1540; 1530; 2050 Property Rights Fee simple Estate Financing Cash to Seller ConditionsofBale Arm's length Verification Buyer Price Per Land SF $269.44 Price Per Acre $11,702,128 Price Per FAR $134.72 Price Per Proposed Unit NA Site Land SF 20,413 Land Acres 0.47 Topography Level and at street grade Shape Irregular Required Site Work Typical Clear and Grade Utilities All Ava ilable Zoning MultiFamily Proposed Use NA Zoning Type Multifamily Zoned Density NA Buildable SF 40,826 Allowable FAR 2.00 No. of Proposed Units NA Proposed Unit Type NA Road Frontage Collins Avenue View Street Water Frontage No Effective Water Frontage NA Comments This is the acquisition of three contiguous lots, two located on along the west side of Collins Avenue and one along the west side of Indian Creek Road within the Miami Beach subrnarket. The buyer confirmed the purchase price, but the future use is not known at this time. Currently, the lots are being used for parking. They are zoned RM-2, Residential Multifamily Medium Intensity, under the jurisdiction of Miami Beach. Under this zoning the average unit size shall be 8005F and the building heights is 50feet or 5-story. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTINO 70 Jungle Island Hotel 18-085-02 LAND VALUE Land Comparable 3 Name Marlborough House Address 5775 Collins Avenue City Miami Beach County Miami -Dade County State FL Zip 33140 Price $87,773,644 Date 6/1/16 Grantor Various Grantee CCC Miami Beach, LLC Recordation Multiple Deeds were Tax Parcel ID Multiple folio numbers Property Rights Fee Simple Estate Financing Cash to Seller Conditions of Sale Assemblage Verification Buyer Price Per Land SF $1,379.26 Price Per Acre $60,118,934 Price Per FAR $459.75 Price Per Proposed Unit $1,253,909.00 Site Land SF 63,638 Land Acres 1.46 Topography Level and at street grade Shape Rectangular Required Site Work Demolition Utilities All Available Zoning RM-3 Proposed Use Luxury Condominium Zoning Type Multifamily Zoned Density NA Buildable SF 190,914 Allowable FAR 3.00 No. of Proposed Units 70 Proposed Unit Type Condominiums Road Frontage Collins Avenue View Ocean Water Frontage 225 feet Effective Water Frontage NA Comments This sale consists of the purchase of all of the 107 individual condominium units located within the Marlborough House. The buyer intends on demolishing the building in order to construct a 70-unit Luxury condominium building. The process of negotiating with the unit owners to assemble all of the condominium units within this building was approximately 12 months. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTIN0 71 Jungle island Hotel 18-085-02 LAND VALUE Land Comparable 4 Name Biscayne 27 Address 2701 Biscayne Boulevard City Miami County Miami -Dade County State FL Tip 33137 Price $30,000,300 Date 5/6/16 Grantor Various Grantee Biscayne Apartments LLC Recordation 30065- Tax Parcel ID 01-3230-103-0010 Property Rights Fee Simple Estate Financing Cash to Seller Conditions of Sale Assemblage, Redevelopment Verification Knowledgeable Third Party Price Per Land SF $333.81 Price Per Acre $14,563,252 Price Per FAR $27.82 Price Per Proposed Unit $90,910.00 Site Land SF 89,873 Land Acres 2.06 Topography Level and at street grade Shape Irregular Required Site Work Demolition Utilities All Available Zoning T6-36a L Proposed Use Apartments Zoning Type Multifamily Zoned Density 150.00 Buildable SF 1,078,476 Allowable FAR 12.00 No. of Proposed Units 330 Proposed Unit Type Apartments Road Frontage Biscayne Boulevard View Street Water Frontage No Effective Water Frontage NA Comments This is an assemblage of 15 parcels that have since been combined under one foiho number. The buyer plans to construct a 330-unit, eight -story residential project with a 380-space parking ga rage and 7,000 SF of retail. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 72 Jungle Island Hotel 18-085-02 Narne City State Price Grantor Recordation Property Rights Conditions of Sale Price Per Land SF Price Per FAR Land SF Topography Required Site Work Zoning Zoning Type Buildable SF No. of Proposed Units Road Frontage Water Frontage Latin Cafe Miami FL $13,000,000 Latin Group II, Inc. 29969-0662 Leased Fee Estate Sale Leaseback $500.94 $41.75 Land Comparable 5 Address County Zi p Date Grantee Tax Parcel ID Financing Verification Price Per Acre Price Per Proposed Unit 25,951 Level and at street grade Demolition T6-36a-0 Commercial 311,412 90 Biscayne Boulevard No Site Land Acres Shape Utilities Proposed Use Zoned Density Allowable FAR Proposed Unit Type View Effective Water Frontage LAND VALUE 2501 Biscayne Boulevard Miami -Dade County 33137 2/17/16 35 Oak US 4, Inc. 01-3 230-023-0100 Cash to Seller Seller $21,821,124 $144,444,00 0.60 Rectangular All Available Hold for investment 150.00 12.00 Apartments Street NA Comments This is the sale of a restaurant, Latin Cafe, located on the northeast corner of Biscayne Boulevard and NE 25th Street in Miami, FL. The seller is leasing back the property for six years. The property is located across Biscayne Boulevard from a 20- story, 156-unit mixed -use apartment/retail building that is under construction. The property sold for land value and the restaurant is an interim use. The density and FAR are based on the zoning. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 73 Jungle Island Hotel 18-085-02 LAND VALUE Land Comparable 6 Name Bath Club Estates Address 6747 Collins Avenue City Miami Beach County Miami -Dade State FL Zip 33141 Price $38,500,000 Date 10/15/15 Grantor 6747 Collins Development, Grantee CCCC Miami Beach, LLC Recordation 29816-4473 Tax Parcel ID 02-3211-007-0430 Property Rights Fee Simple Estate Financing Cash to Seller Conditions of Sale Arm's length Verification Knowledgeable Third Party Price Per Land SF $924.53 Price Per Acre $40,104,167 Price Per FAR $308.18 Price Per Proposed Unit $641,667,00 Site Land SF 41,643 Land Acres 0.96 Topography Level and at street grade Shape Rectangular Required Site Work Typical Clear and Grade Utilities All Available Zoning RM-3 Proposed Use Condominiums Zoning Type Multifamily Zoned Density 62.50 Buildable SF 124,929 Allowable FAR 3,00 No. of Proposed Units 60 Proposed Unit Type Condominiums Road Frontage 136' View Ocean Water Frontage 136 feet Effective Water Frontage NA Comments This transaction involved parcels with direct ocean frontage, east of Collins Avenue. The buyer intends to develop the parcels with 60 residential units. Prior approvals for the site allowed for 124,929 SF of development, an FAR of3,00. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTIN') 74 Jungle Island Hotel 18-085-02 LAND VALUE Land Comparable 7 Name The Winter Garden Condo Address 8955 Collins Avenue City Surfside County Miami -Dade State FL Zip 33154 Price $39,975,000 Date 6/1/15 Grantor Various Grantee ASRR Suzer 8955, LLC Recordation Various Tax Parcel ID 14-2235-009-0001 Property Rights Fee Simple Estate Financing Cash to Seller Conditions of Sale Assemblage Verification Knowledgeable Third Party Price Per Land SF $1,239.53 Price Per Acre $54,020,270 Price Per FAR $379,71 Price Per Proposed Unit $2,498,438.00 Site Land SF 32,250 Land Acres 0.74 Topography Level and at street grade Shape Rectangular Required Site Work Typical Clear and Grade Utilities All Ava ilable Zoning H120 Proposed Use Condominiums ZoningType Multifamily Zoned Density 21.62 Buildable SF 105,277 Allowable FAR 3.26 No. of Proposed Units 16 Proposed Unit Type Condominiums Road Frontage Collins Avenue View Ocean Water Frontage 100 feet Effective Water Frontage NA Comments This transaction represents the purchase of 41 individual condominium units within a building that was built in 1952. There is an associated parcel for parking on the west side of Collins, directly across the street. According to plans for the project submitted thus far, the existing building will be demolished to make way for a 16-unit residential condominium building which will have a total of 105,277 SF of buildingarea and 77,977 SF of net saleable residential area. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTINO 75 Jungle !stand Hotel 18-085-02 Name City State Price Grantor Recordation Property Rights ConditionsofBale Price Per Land SF Price Per FAR Land SF Topography Required Site Work Zoning Zoning Type Buildable SF No. of Proposed Units Road Frontage Water Frontage 3023 Biscayne Boulevard Miami FL $5,900,000 Daniel T. a nd Carmen 29494-4489 Fee Simple Estate Arm's Length. $291.50 $24.29 20,240 Level and at street grade Demolition T6-36a-O Commercial 242,880 69 Biscayne Boulevard No Land Comparable 8 Address County Zip Date Grantee Tax Parcel ID Financing Verification Price Per Acre Price Per Proposed Unit Site Land Acres Shape Utilities Proposed Use Zoned Density Allowable FAR Proposed Unit Type View, Effective Water Frontage LAND VALUE 3023 Biscayne Boulevard Miami -Dade County 33137 2/2/15 Biscayne Edge, Inc. 01-3230-036-0020 a nd 003D Cash to Seller Knowledgeable Third Party $12,697,826 $85,507.00 0.46 Rectangular All Available Mixed -Use 150 units per acre 12.00 Condominiums Street NA Comments This parcel is located along the east side of Biscayne Boulevard between NE 30th Street and NE 31st Street. The site is currently improved with a Pronto Supermarket and is being leased until July 31, 2017. The price per unit and price per FAR are based on the zoning. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 76 Jungle Island Hotel 18-085-02 LAND SALES SUMMARY LAND VALUE Comp Address Price Zoning No. of Proposed Units Allowable FAR Land SF Price per Land SF City Date Zoning Type Price Per Proposed Unit Price per FAR Land Acres Price per Acre 1 3200 Biscayne Boulevard $5,215,000 16-36a-0 55 12.00 16,072 $324.48 Miami 12/01/2017 Commercial $81,818 $23,33 0.37 $14,094,595 2 6372 & 6382 Collins Avenue $5,500,000 Multi Fami ly NA 2.00 20,413 $269.44 Miami Beach 02/02/2017 Multifamily NA $134.72 0.47 $11,702,128 3 5775 Collins Avenue $87,773,644 RM-3 70 3,00 63,638 $1,379.26 Miami Beach 06/01/2016 Multifamily $1,253,909 $459.75 1,46 $60,118,934 4 2701 Biscayne Boulevard $30,000,300 T6-36a L 330 12.00 89,873 $333.81 Miami 05/06/2016 Multifamily $90,910 $27.82 2.06 $14,563,252 5 2501 Biscayne Boulevard $13,000,000 T6-36a-0 90 12.00 25,951 $500.94 Miami 02/17/2016 Commercial 5144,444 541.75 0.60 $21,821,124 6 6747 Collins Avenue $38,500,000 RM-3 60 3.00 41,643 $924.53 Miami Beach 10/15/2015 Multifamily $641,667 $308.18 0.96 $40,104,167 7 8955 Collins Avenue $39,975,000 H120 16 3,26 32,250 $1,239.53 Surfside 06/01/2015 Multifamily $2,499,438 $379,71 0,74 554,020,270 8 3023 Biscayne Boulevard $5,900,000 T6-36a-0 69 12.00 20,240 $291.50 Miami 02/02/2015 Commercial $ 5507 $24 0.46 $12,697,826 Westview".. West Little River li _ Gladeview fd:6'F,'N5'•i1iLr Pinewood 'ik goo a V LWEL MN LAND SALES COMPARISON MAP North Miami ry2a:' Biscayne Park Miami Shores CI Portal t:TTUL HA,7 W'NWOOD ED&E a4"st 1 I Jlt.glc Island P8r�z >Art Museum Miami n Goog e Nosh Bait' ', iage BaI Harbour Surfs' arm Beach i ,o i tl'i iR Itami Beach tsar, iota 'D2 19 LAND SALES ANALYSIS To derive an estimated value of the site, as if vacant, we analyzed the land comparables and have made adjustments for varying characteristics. Property Rights Conveyed The property rights conveyed for each sale are shown in the adjustment grid. The subject is valued in this report on the basis of a fee simple estate. No adjustments for property rights conveyed were made to the sales. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 77 Jungle Island Hotel 18-085-02 LAND VALUE Financing Terms The financing terms for each sale are shown in the adjustment grid. The subject is valued in this report on the basis of a cash to seller transaction. No adjustments for financing terms were made to the sales. Conditions of Sale The conditions of sale for each sale are shown in the adjustment grid. The subject is valued in this report on the basis of an arm's length transaction. No adjustments for conditions of sale were made to the sales. Market Conditions In terms of an adjustment for market conditions, from the sales shown, it is somewhat subjective to determine an exact adjustment. We have applied a 0% adjustment to each comparable, annualized from the date of each sale to March 16, 2018. Location The adjustment for location reflects the trend that properties in areas of active growth and development, as well as those which offer good accessibility in terms of frontage on major thoroughfares, should sell for a higher price per SF than properties which do not offer these attributes, with all other factors held constant. The subject is located on Watson Island along the MacArthur Causeway, which travels to Miami Beach. Sales 1, 4, 5 and 8 are all located along Biscayne Boulevard in the Edgewater District of Miami. These sales are all considered inferior in location and are adjusted upward. Sale 2 is a street side parcel located in Miami Beach. This sale is considered superior in location to the subject and is adjusted downward. Sales 3, 6 and 7 are all ocean front parcels located in Miami Beach. All are considered superior in location to the subject and are adjusted downward. Size In terms of size, it is noted that smaller parcels typically sell for a higher price per SF than larger parcels, with all other factors held constant, The subject consists of 2.39 acres or 104,093 SF. Sales 1, 2, 5, 6, 7 and 8 are all smaller than the subject and are adjusted downward. Sales 3 and 4 are similar in size to the subject and are not adjusted. Zoning The subject's site is zoned "CS", Civic Space, under the jurisdiction of City of Miami, FL. The only information provided in regard to the construction of the hotel is that it will have 300 rooms, plus 10,000 SF of retail space and 30,000 SF of meeting/convention space. The hotel is reportedly to be constructed where the current parking garage exists at the south side of the site. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALIDATION AND CONSULTING 78 Jungle Island Hotel 18-085-02 The following charts show how we calculated the size of the improvements. Hotel Courtyard Marriott Downtown Destination YVE Holiday Inn Port of Miami Intercontinental Hilton Downtown Averages Subject Hotel Hotel Ancillary Retail Meeting Space Garage Totals Lot Size Floor Lot Ratio BuildingSF 187,096 324,407 127,739 465,000 620,552 1,724,794 # of Rooms 233 243 200 641 528 1,845 SF/Room 803 1,335 639 725 1,175 935 Building SF # of Rooms SF/Room 195,000 300 650 58,500 30% 10,000 30,000 52,500 150 350 346,000 1,153 104,093 3.32 LAND VALUE Sales 2, 3, 6 and 7 are all similar in FLR to the subject and are not adjusted. Sales 1, 4, 5 and 8 all have higher FLR's and are adjusted upward on a price/FLR basis. Required Site Work The subject is valued as if vacant and available for development. No adjustments are made to the sales. Shape The shape of the subject's site is irregular in shape. No adjustments are made to the sales. View Visibility/Exposure The view visibility of the subject's site has water frontage and is good. Sales 1, 2, 4, 5 and 8 all have street frontage and are adjusted upward. Sales 3, 6 and 7 have ocean frontage and are adjusted downward. LAND SALES ANALYSIS CONCLUSION The previously described adjustments are summarized in the following grid. The percentage adjustments are used to show the emphasis placed on each adjustment, and are not based on a paired sales analysis. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 79 Jungle Island Hotel 18-085-02 LAND SALES ADJUSTMENT GRID LAND VALUE Land Analysts Grid Comp Comp2 Comp Comp4 Comps Comp .6 Comp Compel Name Jungle Island Hotel Address 1131 Parrot Jungle hail Gty Miami State FL Date Price DuildableSF 346.000 Priceper5F 3200 Biscayne Boulevard 32018iscayne Bald yard Miami FL 12/1/2017 $5,215,000 192,861 52704 Collins Avenue 6372 & 6352 Collins Avenue Miami Beach FL 2/2/2017 S5,509,000 40,826 $134.77 Marlborough House Condominium 5775 Collins Avenue Miami Beach FL 6/1/2016 567,273,644 190,914 5459.75 Biscayne 27 2701 Biscayne Boulevard Miami FL 5/6/2016 530,000,300 1,078,476 527.82 Latin Cald 2501 Biscayne Boulevard Miami FL 2/17/2016 513,000,000 311,412 541.75 Bath Club Estates 6747 Collins Avenue Miami Beach FL 10/15/2015 538,500,000 124,929 5_306.18 The Winter Garden Condo 8955 Collins Avenue Surfsi de FL 6/1/2015 539,975,000 105,277 5379.71 3023 Biscayne Bain cord 3023 Biscayne BOO ewe! Mi emi fi. 2/2/21115 S5,900,009 242,880 $24.29 Transaction Adjustments Plope,9 Rghh tee Slmete hla le Financing Cash la Selle, Condili ors ofSa le Arm,. l*ralh lee Simple Este le 094 Cash lo5eller 0% 41S Length 0% fee Simple heap 0% GO le Sell*, 0% Am% I*r41A 0% I ee 5lmple Bute 0% Grhlo seller 0% Hsembbge 0% fee Simple Mete 0% GO to Seller 0% Rederelopme nl 0% I. eased Fee Es la le 0% Cash co Seller 0% Sale Lea, ebaxh 0% 6 re Simple heat* 0% GO to Sella, 0% 4rm%I*nph 0% Fee iimpleesble 0% Ca.h to Seller 0% ins embhae 0% roe Simple Ls,o,e 0% Gth la Seller 0% Hm%leng1A 0% Adjusted Prise per SF $27,04 5134-77 $459,75 527.82 $41,75 5308.18 $379.71 $24,29 wade. Trend, mreagh 3f16/20e0 0% 0% 0% 0% 0% 0°G 0% 016 0% A.u4ed Price per SF $27.04 $134,72 $459,76 $27.72 $41,75 { 308.18 $379,71 4.29 Location %Adjustment $0.djustment Good Inferior 25% Superior .30% Superior -30% Inferior 25% Inferior 25% Superior -30% superior -30% Interior 25% 2.38 56.76 0.37 -10% 1$40A2j 0.47 -10% (511793) 1.46 0% 56.95 2,06 0% $10.44 0.60 -1095 1592451 0.96 -10% (5113.91) 0.74 -1014 $6.07 0.46 -1034 Land Acres %Adjustment $ Adiustment 3.32 152.70) 12,00 20% I$13A7) 2.00 0% $0.00 3.00 056 60,00 12.00 20% ($4.17) 12.90 20% 1$30.82) 3.00 0% {$37.97) 3.26 014 I$2.431 12.00 20% Allowable FAR %Adjustment 5 Adjustment Demolition 55-41 Typical Clear and Grade 0% 50.00 Typical Clear and Grade 0% 50.00 Dennlibon 0% 55.56 Denoll Bon 0% 58-35 Demolition 0% 50,00 typical Gear and Grade 0% 50.00 Typical Clear and Grade 0% 54.66 Demolition 056 ee9ulrel Site Work %Adjustment $ Adjustment Irtegular in shape $0.00 Rectangular 0% $0.00 Irregular 0% 50.00 Rectangular 0% 50.00 Irregular 0% $0.00 Rectangular 0% $0.00 Rectangular 0% $0110 Rectangular 0% 50.00 Rectangular 0% Shag %Adjustment $Adjustment Water $0.00 Street 25% 50.00 street 25% $0.00 Ocean -25% $0.00 Street 25% $0.00 Street 25% 50.00 Orin -2556 $0.00 Ocean -25% 50.00 Street 2556 New %Adjustment $Adjustme01 55.75 $31.65 15114,94) 56.95 510.44 1577.041 1594.931 56,07 Adjusted Prix per SF $43.27 $114.51 $206.86 547.28 $66.81 5107.87 $132.90 $38.88 Net Adjustments Gross MFn1nents 60.02% 79.99% -15% 65% -55.0% 55.0% 69.96% 69.96% 60.03% 60.01% -65% 65% -65% 6596 59.98% 79.99% Net Adjustment. mrs Adjustments 60.02% 79.99% -15% 6S% -55.0% 55.0% 69.96% 69.96% 60.03% 80.01% -65% 65% -65% 65% 59.98% 79.99/6 LAND VALUE CONCLUSION The comparables show a price/FLR range of $24.29/FLR to $459.75/FLR on an unadjusted basis, an average of $175.41/FLR. The comparables show a price/FLR range of $38.86 /FLR to $206.88 /FLR on an adjusted basis, an average of $94,80 /FLR. The subject's allowable FLR of 3.32 is at the lower end of the range indicated by the sales which would typically lead to a price per FLR at the higher end of the range. We have placed primary emphasis on Land Sales 2, 3, 6 and 7 which involved parcels intended for similar FLR. These sales indicated Price/FLR, after adjustments of $114.51, $206.88, $107.87 and $132.90. Secondary emphasis was placed on Sales 1, 4, 5 and 8, which have the higher FLRs, and have an adjusted price/FLR range from $38.86 to $66.81. We are of the opinion that an appropriate FLR value for the subject should be between $65/FLR to $100/FLR. Due to the subject's unique location and the types of development that been taking place in the subject's immediate market, including the proposed development on the former Miami Herald Site, the World Center Miami site, the proposed addition to Jungle Island, and the continued revitalization of the Miami CBD, we have concluded to the upper end of the range. This is based on the subject's location, access and visibility and quality and condition of the surrounding neighborhood. Therefore, we conclude the subject site has a value of $80.00/FLR. Now that we have determined the value associated with the FLR that will be afforded the site, we can apply a market derived land capitalization rate to determine an appropriate rental rate for the overall site. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 80 Jungle Island Hotel 18-085-02 GROUND LEASE CAPITALIZATION RATE LAND RENT METHOD 2 In order to support an appropriate first year capitalization rate for the subject, we looked at comparable ground lease comparables. The following are ground lease comparables in the South Florida area. Exact locations for these ground leases are confidential. We have attempted to include recent transactions but due to the lack of directly comparable data, we included research from as far back as 2010. GROUND LEASE COMPARABLES Comp 2 3 4 5 6 Address Recordation Price Land SF NRA Price per Land SF City Year Built Date LTB Ratio Price per SF NOl/SF Cap Rate 15715 SW 72nd Street 30555-3840 $3,480,090 15,670 2,132 $222.08 Miami 2016 04/28/2017 7.35 $1,632.27 $69.37 4.25% 3750 NW 87th Ave 30387-3336 67,100,000 47,530 16,252 6149.38 Dora! 2016 01/17/2017 2.92 6436.87 $21.27 4.87% 1177 SW 8th Street 30161-3315 $13,100,000 95,396 22,335 $137.32 Miami 2012 07/21/2016 4.27 $586.52 $7.54 5.49% 14180 SW 8th Street 30098-4409 62,000,000 30,971 3,191 $64.58 Miami 2004 05/26/2016 9.71 $626.76 $27.15 4.33% 2151 NW 79th St 29887-0029 $2,457,000 41,033 9,741 559.88 Miami 2013 12/04/2015 4.21 5252.23 $18.26 7.24% 561 NE 79th 51 29534-2485 59,770,000 61,294 15,945 $159.40 Miami 2015 01/01/2015 3.84 $612.73 527.57 4.5014 Market Index We have also included information from a national market survey of sites that are under ground lease with particular property types. 1-14alt7Ftiste .tom IIVM'tV1'UR SURVEY - 1th Quaiter 24E7f' I.ARID CEASES Propel Le live Flµintr�rrc aoV HWptGaraf88sttl0tRousing InlusciliI Catttaisdliinat 1941ss Grsnoset Fla tr3 M. I Mai, Avg, Min. Moir. Mg. 2 7 •:i tiM6;: 6.2i 51: 7.iri;: .8 .14 1fi.li r.t6 u &7.1:1 i 2.8L -4 II3T;i T.C6:i 011J 4 1137% E Y. 2.45',e ii:ioK 6.F3 ti ' e: ht107. F.T3r_ Lodging 2.65% i5.75x 16. ' fain rvietiaHaraIFYFPalk Ettt-i I3.trM T.E 14 520X T2. 4 5I S Q ll"e:. 2 e.67 K 520k 11lXe ?An' Flnrauar! I.15x 1525x• 15?5n 9.utxa Roo _ 227g 11614 4$t3 4. 1t 123T: Tom. S olf-Stour, 2 873E 10.50t` 7.E4 u 527o 110Cgt 6847- Gpeatal P tra o5c 3.I;tbi 16Ap1 i.Ei K Gal-; 13673s BA, AIFToFoi23'd I6.16A. 7.483 4}.51t4 Et77}: °3rd 9art N12011Osts, Capri+ t2Crl?FkaI. P41 0amr'" JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION APIO CONSUITING 81 Jungle Island Hotel 18-085-02 Capitalization Rate Conclusion LAND RENT METHOD 2 Based on the comparables, we have concluded that an appropriate overall rate for the subject should be at the lower end of the range due to the proposed quality of the development and the strength of the subject's market, for retail and hotel. After the construction completion, the income flow from the components is projected to rise annually with CPI based increases in rental rates and improving levels of occupancy. There is significant potential for rising income to the investor based on the proposed terms of the lease. Therefore, we have concluded to an overall rate toward the lower end of the range indicated by the comparables. Based on the comparables and the adjustments made to them, we conclude to a value in the range of $70.00 /SF to $1.00.00 /SF. We conclude to $80.00/SF. Land Value Conclusion $80.00 /SF Multiplied by Subject Size 346,000 SF Indicated Land Value $27,680,000 We have concluded to an overall rate for the subject of 5.00% which is in line with the comparables. We have calculated a market rental rate for the subject as follows: The land value of the subject is calculated as follows: FLR $/FLR Land Value Total Building Area 346,000 $80.00 $27,680,000 Capitalization Rate 5.00% Land Rent $1,384,000 Rent/FLR $4.00 Site Size 104,093 Rent/SF Land $13.30 The base rental revenue is assumed to grow at CPI, every 5 years. Base lease term is 99 years with a reevaluation every five years. All rent conclusions assume annual increases at CPI and also assume the developer (Jungle Island) would be responsible for the payment of all ad valorem and non ad valorem property taxes and assessments levied on the property. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 82 Jungle Island Hotel 18-085-02 RECONCILIATION AND FINAL VALUE The purpose of the appraisal is to provide our opinion of the fair market rent with any overages and percentage rents of the unencumbered fee simple interest in the underlying land. Hotel Per Room Total Rooms 1 300 Room Nights 365 109,500 ADR 5180.00 $180.00 Occupancy 78.00% $0.78 RevPAR $140.40 $140.40 Total Room Revenue Ancillary Revenue $51,246 $15,373,800 40% $10,249,200 Total Revenue Ground Rent Percent Ground Rent FIR $25,623,000 5.50% $1,409,265 $/FLR Land Value Total Building Area Capitalization Rate Land Rent Rent/FLR Site Size Rent/SF Land 346,000 $80.00 $27,680,000 5.00% $1,384,000 $4.00 104,093 $13.30 The subject's market rental rate was determined via two methods. The first method estimated the income that will be generated by the various components. In order to determine an estimate of the revenue that would be generated by the hotel, we surveyed similar type hotel facilities. After concluding to a projected average rate, we deducted an appropriate vacancy factor, to arrive at a projected revenue of hotel. Once the projected revenue was determined for the hotel, we then presented data pertaining to the percentage rental rates that are paid at other properties located on leased land in South Florida. After analyzing these comparables, we established a reasonable factor (a percentage rent) that would be applied to the projected revenue. This same percentage rental factor would also be applied to the gross revenue that either component would generate over and above the projected base revenue. Our conclusion assumes the payment of a base rent, increased annually at CPI, plus a percentage rent. The second method estimated the value associated with the development rights. This method analyzed the price/FLR that developers have historically paid for the development rights at other sites in the subject's area. Once a market derived price/FAR has been determined, then a value associated with the subject's additional rights was calculated. We then multiplied that value/FLR by a market derived land capitalization rate, to determine an appropriate rental rate for the subject. After considering both methods, we conclude the percentage rent method (Method 1) is more appropriate when determining the market rent for the additional hotel rooms and retail space. This method allows for a base rent, plus additional rent in the future, in the event that revenues are greater than are currently projected. Given the long term nature of most land leases, this method is also most common in the marketplace. The second method, which estimated rent based on the current value of development rights ($/FLR) was used as a check on the first method, and serves as a test on the conclusions reached in the first method. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 83 Jungle Island Hotel 18-085-02 RECONCILIATION AND FINAL VALUE After an inspection of the subject, and analysis of pertinent physical and economic factors that affect value, we are of the opinion that the 'as is' fair market rent and terms of the unencumbered fee simple interest for a proposed 300 room hotel with 10,000 SF of retail space and 30,000 SF of meeting space, to be placed in the southern portion of Jungle Island, to be paid to the City by Jungle Island, as of March 16, 2018, is: Rent $1,410,000 Percentage Overage Rent 5.5% over $25,600,000 Breakeven Point Term 99 Years Escalations CPI Every 5 Years ReEvaluation Every 5 Years The percentage overage rent is based on gross revenue and assumes a breakpoint of $25,600,000. The base rent conclusions assume increases at CPI every 5 years and also assume the tenant (Jungle Island) would be responsible for the payment of all ad valorem and non ad valorem property taxes and assessments levied on the property. No consideration is given for the construction period and any rent abatement during the construction period; not the lease -up or future stabilization of the income streams from the various components. We were not provided with building or site plans. We make the assumption that all construction will be of similar quality to the comparables noted in this report The use of the aforementioned Extraordinary Assumptions might have affected the assignment results. The use of the aforementioned Extraordinary Assumptions might have affected the assignment results. This appraisal is not based on any hypothetical conditions. JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING 84 Jungle island Hotel 18-085-02 ADDENDA JOSEPH J. BLAKE AND ASSOCIATES, INC. REAL ESTATE VALUATION AND CONSULTING Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source Air Rights The right to undisturbed use and control of designated Appraisal Institute, The air space above a specific land area within stated Dictionary of Real elevations. Air rights may be acquired to construct a Estate Appraisal, 6th building above the land or building of another or to Ed. (Chicago: Appraisal protect the light and air of an existing or proposed Institute, 2015) structure on an adjoining lot. Air rights do not always include development rights. See also transferable development right (TDR). As Is Market Value The estimate of the market value of real property in its Appraisal Institute, The current physical condition, use, and zoning as of the Dictionary of Real appraisal date. (Interagency Appraisal and Evaluation Estate Appraisal, 6th Guidelines) Note that the use of the "as is" phrase is Ed. (Chicago: Appraisal specific to appraisal regulations pursuant to FIRREA Institute, 2015) applying to appraisals prepared for regulated lenders in the United States. The concept of an "as is" value is not included in the Standards of Valuation Practice of the Appraisal Institute, Uniform Standards of Professional Appraisal Practice, or International Valuation Standards. Band of Investment A technique in which the capitalization rates attributable Appraisal Institute, The to components of an investment are weighted and Dictionary of Real combined to derive a weighted -average rate attributable Estate Appraisal, 6th to the total investment (i.e., debt and equity, land and Ed. (Chicago: Appraisal improvements). Institute, 2015) Condominium A multiunit structure, or a unit within such a structure, Appraisal Institute, The with a condominium form of ownership. Dictionary of Real Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Debt Coverage Ratio (DCR) The ratio of net operating income to annual debt service Appraisal Institute, The (DCR = NOI/IM), which measures the relative ability of a Dictionary of Real property to meet its debt service out of net operating Estate Appraisal, 6th income; also called debt service coverage ratio (DSCR). A Ed. (Chicago: Appraisal larger DCR typically indicates a greater ability for a Institute, 2015) property to withstand a reduction of income, providing an improved safety margin for a lender. Deferred Maintenance Depreciation is the difference between the market value Appraisal Institute, The of an improvement and its reproduction or replacement Appraisal of Real cost at the time of appraisal. The depreciated cost of the Estate, 14th Ed. improvement can be considered an indication of the (Chicago, Illinois: improvement's contribution to the property's market Appraisal Institute; value. 2013) Effective Gross Income (EGI) The anticipated income from all operations of the real Appraisal Institute, The estate after an allowance is made for vacancy and Dictionary of Real collection losses and an addition is made for any other Estate Appraisal, 6th income. Ed. (Chicago: Appraisal Institute, 2015) Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source Effective Gross Income Multiplier (EGIM) The ratio between the sale price (or value) of a property Appraisal Institute, The and its effective gross income. Dictionary of Real Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Entrepreneurial Profit 1. A market -derived figure that represents the Appraisal Institute, The amount an entrepreneur receives for his or her Dictionary of Real contribution to a project and risk; the difference Estate Appraisal, 6th between the total cost of a property (cost of Ed. (Chicago: Appraisal development) and its market value (property Institute, 2015) value after completion), which represents the entrepreneur's compensation for the risk and expertise associated with development. An entrepreneur is motivated by the prospect of future value enhancement (i.e., the entrepreneurial incentive). An entrepreneur who successfully creates value through new development, expansion, renovation, or an innovative change of use is rewarded by entrepreneurial profit. Entrepreneurs may also fail and suffer losses. 2. In economics, the actual return on successful management practices, often identified with coordination, the fourth factor of production following land, labor, and capital; also called entrepreneurial return or entrepreneurial reward. See also entrepreneurial incentive. Equity Capitalization Rate (RE) An income rate that reflects the relationship between Appraisal Institute, The one year's equity cash flow and the equity investment; Dictionary of Real also called the cash -on -cash rate, cash flow rate, cash Estate Appraisal, 6th throw -off rate, or equity dividend rate. (RE = IE/VE, or Pre- Ed. (Chicago: Appraisal Tax Cash Flow/Equity Invested) Institute, 2015) Equity Ratio The ratio between the down payment paid on a property Appraisal Institute, The and its total price; the fraction of the investment that is Dictionary of Real unencumbered by debt. Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Excess Land Land that is not needed to serve or support the existing Appraisal Institute, The use. The highest and best use of the excess land may or Dictionary of Real may not be the same as the highest and best use of the Estate Appraisal, 6th improved parcel. Excess land has the potential to be sold Ed. (Chicago: Appraisal separately and is valued separately. Institute, 2015) Exposure Time Estimated length of time that the property interest being Uniform Standards of appraised would have been offered on the market prior Professional Appraisal to the hypothetical consummation of a sale at market Practice, 2016-2017 Ed. value on the effective date of the appraisal. Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source External Obsolescence A type of depreciation; a diminution in value caused by Appraisal Institute, The negative external influences and generally incurable on Dictionary of Real the part of the owner, landlord, or tenant. The external Estate Appraisal, 6th influence may be either temporary or permanent. Ed. (Chicago: Appraisal Institute, 2015) Extraordinary Assumption An assumption, directly related to a specific assignment, Uniform Standards of as of the effective date of the assignment results, which, Professional Appraisal if found to be false, could alter the appraiser's opinions Practice, 2016-2017 Ed. or conclusions. Comment: Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. Fee Simple Estate Absolute ownership unencumbered by any other interest Appraisal Institute, The or estate, subject only to the limitations imposed by the Dictionary of Real governmental powers of taxation, eminent domain, Estate Appraisal, 6th police power, and escheat. Ed. (Chicago: Appraisal Institute, 2015) Gross Building Area (GBA) 1. Total floor area of a building, excluding Appraisal Institute, The unenclosed areas, measured from the exterior of Dictionary of Real the walls of the above -grade area. This includes Estate Appraisal, 6th mezzanines and basements if and when typically Ed. (Chicago: Appraisal included in the market area of the type of Institute, 2015) property involved. 2. Gross leasable area plus all common areas. 3. For residential space, the total area of all floor levels measured from the exterior of the walls and including the superstructure and substructure basement; typically, does not include garage space. Gross Leasable Area (GLA) Total floor area designed for the occupancy and Appraisal Institute, The exclusive use of tenants, including basements and Dictionary of Real mezzanines; measured from the center of joint Estate Appraisal, 6th partitioning to the outside wall surfaces. Ed. (Chicago: Appraisal Institute, 2015) Highest and Best Use 1. The reasonably probable use of property that Appraisal Institute, The results in the highest value. The four criteria that Dictionary of Real the highest and best use must meet are legal Estate Appraisal, 6th permissibility, physical possibility, financial Ed. (Chicago: Appraisal feasibility, and maximum productivity. Institute, 2015) 2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset's existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source that it would be willing to bid. (IVS) 3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions) Hypothetical Condition 1. A condition that is presumed to be true when it Appraisal Institute, The is known to be false. (SVP) Dictionary of Real 2. A condition, directly related to a specific Estate Appraisal, 6th assignment, which is contrary to what is known Ed. (Chicago: Appraisal by the appraiser to exist on the effective date of Institute, 2015) the assignment results, but is used for the purpose of analysis. Comment: Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. (USPAP, 2016-2017 ed.) Insurable Value A type of value for insurance purposes. Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Internal Rate of Return (IRR) The annualized yield rate or rate of return on capital that Appraisal Institute, The is generated within an investment or portfolio over a Dictionary of Real period of ownership. Alternatively, the indicated return Estate Appraisal, 6th on capital associated with a projected or pro forma Ed. (Chicago: Appraisal income stream. Institute, 2015) Leased Fee Interest The ownership interest held by the lessor, which includes Appraisal Institute, The the right to receive the contract rent specified in the Dictionary of Real lease plus the reversionary right when the lease expires. Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Leasehold Interest The right held by the lessee to use and occupy real estate Appraisal Institute, The for a stated term and under the conditions specified in Dictionary of Real the lease. Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Loan -to -Value Ratio (M) The ratio between a mortgage loan and the value of the Appraisal Institute, The property pledged as security, usually expressed as a Dictionary of Real percentage; also called loan ratio or LTV. Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source Marketing Time An opinion of the amount of time it might take to sell a Appraisal Institute, The real or personal property interest at the concluded Dictionary of Real market value level during the period immediately after Estate Appraisal, 6th the effective date of an appraisal. Ed. (Chicago: Appraisal Institute, 2015) Market Rent The most probable rent that a property should bring in a Appraisal Institute, The competitive and open market reflecting the conditions Dictionary of Real and restrictions of a specified lease agreement, including Estate Appraisal, 6th the rental adjustment and revaluation, permitted uses, Ed. (Chicago: Appraisal use restrictions, expense obligations, term, concessions, Institute, 2015) renewal and purchase options, and tenant improvements (Tis). Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source Market Value "A type of value that is the major focus of most real property appraisal assignments. Both economic and legal definitions of market value have been developed and refined, such as the following. 1. The most widely accepted components of market value are incorporated in the following definition: The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under duress. 2. Market value is described, not defined, in the Uniform Standards of Professional Appraisal Practice (USPAP) as follows: A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. Comment: Forming an opinion of market value is the purpose of many real property appraisal assignments, particularly when the client's intended use includes more than one intended user. The conditions included in market value definitions establish market perspectives for development of the opinion. These conditions may vary from definition to definition but generally fall into three categories: 1, the relationship, knowledge, and motivation of the parties (i.e., seller and buyer); 2. the terms of sale (e.g., cash, cash equivalent, or other terms); and 3. the conditions of sale (e.g., exposure in a competitive market for a reasonable time prior to sale). Appraisers are cautioned to identify the exact definition of market value, and its authority, applicable in each appraisal completed for the purpose of market value. (USPAP, 2016-2017 ed.) USPAP also requires that certain items be included in every appraisal report. Among these items, the following are directly related to the definition of market value: • Identification of the specific property rights to be appraised. • Statement of the effective date of the value opinion. • Specification as to whether cash, terms equivalent to cash, or other precisely described fnancing terms are assumed as the basis of the appraisal. • If the appraisal is conditioned upon financing or other terms, specification as to whether the financing or terms are at, below, or above market interest rates and/or contain unusual conditions or incentives. The terms of above- or below -market interest rates and/or other special incentives must be clearly set forth; their contribution to, or negative influence on, value must be described and estimated; and the market data supporting the opinion of Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source value must be described and explained. 3. The following definition of market value is used by agencies that regulate federally insured financial institutions in the United States: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: • Buyer and seller are typically motivated; • Both parties are well informed or well advised, and acting in what they consider their own best interests; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register 12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994) 4. The International Valuation Standards Council defines market value for the purpose of international standards as follows: The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. (IVS) 5. The Uniform Standards for Federal Land Acquisitions defines market value as follows: Market value is the amount in cash, or on terms reasonably equivalent to cash, for which in all probability the property would have sold on the effective date of the appraisal, after a reasonable exposure time on the open competitive market, from a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither acting under any compulsion to buy or sell, giving due consideration to all available economic uses of the property at the time of the appraisal. (Uniform Appraisal Standards for Federal Land Acquisitions)" Mortgage Capitalization Rate (RM) The capitalization rate for debt; the ratio of the annual debt service to the principal amount of the mortgage loan. The mortgage capitalization rate (RM) is equivalent to the periodic (monthly, quarterly, annual) mortgage constant times the number of payments per year on a given loan on the day the loan is initiated. RM = Annual Debt Service/Mortgage Principal Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source Mortgage Debt Service (IM) The periodic payment for interest on and retirement of Appraisal Institute, The the principal of a mortgage loan; also called total Dictionary of Real mortgage debt service. Generally, the abbreviation IM Estate Appraisal, 6th refers to the total debt service, whereas mortgage debt Ed. (Chicago: Appraisal service can be used to refer to either the periodic Institute, 2015) payment or the total of the payments made in a year. Net Income Multiplier (NIM) The relationship between price or value and net Appraisal Institute, The operating income expressed as a factor; the reciprocal of Dictionary of Real the overall capitalization rate. Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Net Operating Income (NOI or la) The actual or anticipated net income that remains after Appraisal Institute, The all operating expenses are deducted from effective gross Dictionary of Real income but before mortgage debt service and book Estate Appraisal, 6th depreciation are deducted. Note: This definition mirrors Ed. (Chicago: Appraisal the convention used in corporate finance and business Institute, 2015) valuation for EBITDA (earnings before interest, taxes, depreciation, and amortization). Net Rentable Area (NRA, Rentable Area) For office or retail buildings, the tenant's pro rata portion Appraisal Institute, The of the entire office floor, excluding elements of the Dictionary of Real building that penetrate through the floor to the areas Estate Appraisal, 6th below. The rentable area of a floor is computed by Ed. (Chicago: Appraisal measuring to the inside finished surface of the dominant Institute, 2015) portion of the permanent building walls, excluding any major vertical penetrations of the floor. Alternatively, the amount of space on which the rent is based; calculated according to local practice. Overall Capitalization Rate (R0) The relationship between a single year's net operating Appraisal Institute, The income expectancy and the total property price or value Dictionary of Real (R0 = to /V0). Estate Appraisal, 6th Ed. (Chicago: Appraisal Institute, 2015) Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source Prospective Market Value "As Completed" and "As Stabilized" A prospective market value may be appropriate for the Appraisal Institute, The valuation of a property interest related to a credit Dictionary of Real decision for a proposed development or renovation Estate Appraisal, 6th project. According to USPAP, an appraisal with a Ed. (Chicago: Appraisal prospective market value reflects an effective date that Institute, 2015) is subsequent to the date of the appraisal report. Prospective value opinions are intended to reflect the current expectations and perceptions of market participants, based on available data. Two prospective value opinions may be required to reflect the time frame during which development, construction, and occupancy will occur. The prospective market value —as completed —reflects the property's market value as of the time that development is expected to be completed. The prospective market value —as stabilized —reflects the property's market value as of the time the property is projected to achieve stabilized occupancy. For an income -producing property, stabilized occupancy is the occupancy level that a property is expected to achieve after the property is exposed to the market for lease over a reasonable period of time and at comparable terms and conditions to other similar properties. (See USPAP Statement 4* and Advisory Opinion 17.) (Interagency Appraisal and Evaluation Guidelines) Prospective Opinion of Value A value opinion effective as of a specified future date. Appraisal Institute, The The term does not define a type of value. Instead, it Dictionary of Real identifies a value opinion as being effective at some Estate Appraisal, 6th specific future date. An opinion of value as of a Ed. (Chicago: Appraisal prospective date is frequently sought in connection with Institute, 2015) projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy. Replacement Cost The estimated cost to construct, at current prices as of a Appraisal Institute, The specific date, a substitute for a building or other Dictionary of Real improvements, using modern materials and current Estate Appraisal, 6th standards, design, and layout. Ed. (Chicago: Appraisal Institute, 2015) Replacement Cost for Insurance Purposes The estimated cost, at current prices as of the effective Appraisal Institute, The date of valuation, of a substitute for the building being Dictionary of Real valued, using modern materials and current standards, Estate Appraisal, 6th design, and layout for insurance coverage purposes Ed. (Chicago: Appraisal guaranteeing that damaged property is replaced with Institute, 2015) new property (i.e., depreciation is not deducted). Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER Term Definition Source Reproduction Cost The estimated cost to construct, at current prices as of Appraisal Institute, The the effective date of the appraisal, an exact duplicate or Dictionary of Real replica of the building being appraised, using the same Estate Appraisal, 6th materials, construction standards, design, layout, and Ed. (Chicago: Appraisal quality of workmanship and embodying all the Institute, 2015) deficiencies, superadequacies, and obsolescence of the subject building. Retrospective Value Opinion A value opinion effective as of a specified historical date. Appraisal Institute, The The term retrospective does not define a type of value. Dictionary of Real Instead, it identifies a value opinion as being effective at Estate Appraisal, 6th some specific prior date. Value as of a historical date is Ed. (Chicago: Appraisal frequently sought in connection with property tax Institute, 2015) appeals, damage models, lease renegotiation, deficiency judgments, estate tax, and condemnation. Inclusion of the type of value with this term is appropriate, e.g., "retrospective market value opinion." Sandwich Lease A lease in which an intermediate, or sandwich, Appraisal Institute, The leaseholder is the lessee of one party and the lessor of Dictionary of Real another. The owner of the sandwich lease is neither the Estate Appraisal, 6th fee owner nor the user of the property; he or she may be Ed. (Chicago: Appraisal a leaseholder in a chain of leases, excluding the ultimate Institute, 2015) sublessee. Sum of the Retail Values The sum of the separate and distinct market value Appraisal Institute, The opinions for each of the units in a condominium, Dictionary of Real subdivision development, or portfolio of properties, as of Estate Appraisal, 6th the date of valuation. The aggregate of retail values does Ed. (Chicago: Appraisal not represent the value of all the units as though sold Institute, 2015) together in a single transaction; it is simply the total of the individual market value conclusions. Also called the aggregate of the retail values or aggregate retail selling price. Surplus Land Land that is not currently needed to support the existing Appraisal Institute, The use but cannot be separated from the property and sold Dictionary of Real off for another use. Surplus land does not have an Estate Appraisal, 6th independent highest and best use and may or may not Ed. (Chicago: Appraisal contribute value to the improved parcel. Institute, 2015) Terminal Capitalization Rate (RN) The capitalization rate applied to the expected net Appraisal Institute, The income for the year immediately following the end of the Dictionary of Real projection period to derive the resale price or value of a Estate Appraisal, 6th property. Also called a going -out, exit, residual, or Ed. (Chicago: Appraisal reversionary capitalization rate. Institute, 2015) Jungle Island Hotel 18-085-02 TED ALLEN, MAI QUALIFICATIONS OF THE APPRAISER Mr. Allen currently holds the position of Managing Partner with the Miami office of Joseph J. Blake and Associates, inc., at 4000 Ponce de Leon Boulevard, Suite 410, Miami, Florida. Previous positions include Principal (1986 to 2011), Regional Manager Southeast Region (1984 to 1986), Senior Appraiser (1982 to 1983) and Associate Appraiser (1979 to 1981). FORMAL EDUCATION University of Texas - Austin, Texas Bachelor of Business Administration PROFESSIONAL AFFILIATIONS Affiliation Florida State -Certified General Real Estate Appraiser Georgia State -Certified General Real Property Appraiser Appraisal Institute, Designated Member Royal Institution of Chartered Surveyors Number No. RZ 426 No. CG 1855 No. 6949 No. 6329062 CURRENT RESPONSIBILITIES Responsibilities include the preparation and direction of a variety of full narrative real estate appraisals and consulting studies prepared on a national basis. Mr. Allen supervises all staff appraisers and consultants and directs all major assignments throughout the southeastern United States and the Caribbean. APPRAISAL EXPERIENCE Mr. Allen has prepared and directed numerous appraisal and consulting assignments which include mixed - use properties, multifamily developments, proposed and existing condominiums and conversions, office buildings, motels, hotels, industrial properties, regional malls, shopping centers, mobile home parks, market studies, feasibility studies, and investment analyses on a variety of institutional and non - institutional grade real property in over 15 states and 10 Caribbean nations. He has appraised and has supervised appraisals, as well as prepared consulting studies of properties for a variety of public pension funds, large institutional investors, pension fund advisors, insurance companies and banks. Mr. Allen has qualified as an expert witness for Federal Bankruptcy Court in the State of Florida and the State of Georgia and has given oral and written testimony in each. He has also been qualified in Florida State and County Courts. LEADERSHIP AND ADDITIONAL EXPERIENCE Mr. Allen is currently one of three executive committee members managing the operations of Joseph J Blake and Associates. This position oversees all aspects of the firms operations throughout the US. His duties including accounting oversight, IT oversight, marketing, short and long range planning, personnel staffing and budgeting. Positions held at the Appraisal Institute include: former service on Chapter Admissions Committee Member, former service on National Admissions Committee, and former service on National Ethics Committee. Additional real estate activities include NCREIF and Mortgage Bankers Association functions and service as Special Magistrate Miami Dade County Value Adjustment Board for the 2014 tax year. Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER CERTIFICATION RICK SCOT% GOVERNOR KEN LAWSON, SECRETARY STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION FLORIDA REAL ESTATE APPRAISAL BD LICENSE NUMBER R2426 The CERTIFIED GENERAL APPRAISER Named below IS CERTIFIED Under the provisions of Chapter 475 F8, Expiratlan date NOV 30, 2018 ALLEN, TED EUGENE 4000 PONCE DE LEON BLVD STE 410 CORAL GABLES FL 33148 ISSUED 1O112/2016 DISPLAY AS REQUIRED BY LAW SE4 # L161O1200a257D Jungle Island Hotel 18-085-02 QUALIFICATIONS OF THE APPRAISER MATTHEW J. ROACH, MAI Mr. Roach holds the position of Director with the Miami office of Joseph J. Blake and Associates, Inc., at 4000 Ponce de Leon Boulevard, Suite 410, Miami, Florida. FORMAL EDUCATION Florida Atlantic University— Boca Raton, Florida Masters in Business Administration/Finance University of Florida — Gainesville, Florida Bachelor of Science in Advertising Minor in Business Administration REAL ESTATE AND APPRAISAL EDUCATION Course Name Real Estate Appraisal I/A.B.I Finance, Statistics and Valuation Basic Income Capitalization Advanced Income Capitalization General Market Analysis and Highest and Best Use Advanced Cost and Sales Comparison Approaches Advanced Applications Report Writing and Valuation Analysis Business Practices and Ethics Provider Gold Coast School of Real Estate Appraisal Institute Appraisal Institute Appraisal Institute Appraisal Institute Appraisal institute Appraisal Institute Appraisal Institute Appraisal Institute PROFESSIONAL AFFILIATIONS Affiliation Florida State -Certified General Real Estate Appraiser Appraisal Institute, Designated Member Number No. RZ 3189 APPRAISAL EXPERIENCE Responsibilities include preparation of full narrative appraisal and market study reports for a wide variety of property types and purposes, including but not limited to business parks, office buildings, industrial buildings, shopping centers, multi -family projects, hotels and land. Jungle Island Hotel 18-085-02 CERTIFICATION RICK SCOT1. GOVERNOR QUALIFICATIONS OF THE APPRAISER KEN LAWSON, SECRETARY STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION FLORIDA REAL ESTATE APPRAISAL BD L FGENSE NUMBER The CERTIFIED GENERAL APPRAISER Named below IS CERTIFIED Under the provisions of Chapter 475 FS. Expiration date NOV 30. 2018 ROACH, MATTHEW JOSEPH 4000 PONCE DE LEON BOULEVARD SUITE 410 CORAL GABLES FL33021 ISSUED 10lt3f2018 DISPLAY AS REQUIRED BY LAW SEAM L1610130001852