The Hotel Property Handbook - Deloitte US

1 @ 2016 DeloiteFinancial Advisory1 The Hotel Property HandbookInvestment & Financing KeysBalearicIslandsSnapshotFinancial Advisory I Real Estate -HospitalityOctober 2017@ 2016 DeloiteFinancial Advisory2 The Hotel Property HandbookBalearicIslandsSnapshotJavier Garc a-Mateo, MRICSP artnerFinancial Advisory Real +34 659 90 02 15 Ana Granado, MRICSD irectorFinancial Advisory Real +34 630 78 44 73 Jose Mar a Espejo Senior ManagerFinancial Advisory Real +34 918 232 692 Jordi SchoenenbergerPartnerHospitality Industry +34 932 543 932 Fernando BaldellouPartnerHead of Financial Advisory Hospitality +34 914 432 514@ 2016 DeloiteFinancial Advisory35 Key FactorsFull Due Diligence required to perform the optimal deal analysis: Financial Factors: Understanding of GOP vs. NOP. Business Performance: Analysis of market and income sustainability.

2 Legal Factors: Analysisofallintervenient contracts. Comprehensive legal risk analysis. Tax Factors: Analysisof tax risks and potential tax structuring alternatives. Technical Factors: Functional use (Back of House vs. Front of House), equipment condition, legal complianceand the Hotel design (BREEAM + LEED certifications).Key investment and Financing Drivers High Liquidity for both Equity and Lending due to the improvement of KPIs throughout Spain. Increasing financing demand forprime development projects, including refurbishment, repositioning and greenfield Location, category, performance and Hotel brand significantly impact on financing Overview1 Tourism is the key economic driver of Balearic Islands. During 2016 Balearic Islands Tourism GDP accounted for 45% of total GDP and 32% of total Employment.

3 Balearic Islands isoneof the leading regions in Spain terms of GDP growth, reaching + record breaking figure. 2017 GDP growth is expected to hit all times high with c. 4% growth. Unemployment has fallen down to 12% 2017 YTD, registering it s lower figure since the crisis peak ( -2013). 2015 vs 2016 Balearic Islands growth Key drivers Balearic Islands is one Top 5 ranked destination in Spain in terms of visitors; in 2016 the Islands registered 13m visitors an +11% growth compared to the same figure in 2015. As at Aug 2017 the islands have already registered >9m visitors and are expected to beat all times highs. Average Stay in the Islands stands at 5 days, However they are affected by a significant seasonality, with almost 80% of the Hotel supply closed during low season months. 11 new hotels have opened in 2017 with a total of +1,707 new rooms, furthermore 15 refurbishments have been executed accounting for +2,622 rooms.

4 Balearic Islands average RevPAR grew +37% (2013-2016) due to robust ADR growth of +27% and occupancy rate increases of +600pb. The main chains priorities are innovation, sustainability, asset renovation, brand repositioning, the client experiences and digital strategy to become the market Real Estate investment MarketThe Hotel Property HandbookBalearic Island SnapshotEXECUTIVE SUMMARY The EMEA region accounts for27% of the total Hotel Real Estate investment accounts for 12% In Spain, Hotel investment volume increased by 21% in 2017 YTD ( 2,600m) and accounted for 35%of total non-residential investment Balearic Islandsregistered 281m representing for 11% of total Spain s investment market figure. Mallorca Island registered the lions share with 68% of total Balearic Island investment . Palmade Mallorca represents the outmost growth importance in terms of capital values ( k/room) within Europe with growth (2016-2015).

5 @ 2016 DeloiteFinancial Advisory4 Capital Values Growth (%)2015-2016 Capital Value per room (2015-16)( )( )( )( ) ( )( ) ( ) 800k 600k 400k 200k 100k - 200k 400k 600k 800k ParisLondonZ richGenevaRomeFlorenceAmsterdamBarcelona MilanMunichCopenhagenMadridEuropeDublinE dinburghPalma MallorcaThe Hotel Property HandbookBalearic Island SnapshotEXECUTIVE SUMMARYD rivers increase in cross-border investments:2314 Yielding Assets are more attractive than investment Grade BondsStrength of the dollar (For American investors) and weakness of the Euro since 2014 Political and financial uncertainly in certain countries is favouring SpainCapital Value per room Trend (2006-16)20152016 Source: HSV LondonThe Hotel Market: Unitary Values Analysis( /room)The outstanding tourism performanceis expected to continue improving in expected in Spain through Hotel investment are above the European average 10 Year Bond2016-2017(1 March 2017)Yield 2016 Dif.

6 10 years bond2,12% 50 bps1,67% 17bps1,15% 65 bps0,92% 4 bps1,15% 65 bps0,23% 34 bps0,91% 16 bps2,12% 50 bps2,12% 50 bps1,67% 17 bps1,67% 17 bps0,34% 43 bps0,62% 22 bps-0,22% 22 bps-0,22% 22 bps363 bps433 bps310 bps408 bps360 bps477 bps509 bps388 bps388 bps433 bps458 bps516 bps538 bps522 bps547 bps@ 2016 DeloiteFinancial Advisory5750 576 519 607 932 2,702 2,145 2,600 150 279 88 120 596 674 930 428 1,467 591 571 751 2,242 1,263 660 595 644 687 365 867 2,297 1,894 3,769 2,277 1,460 1,056 544 807 2,520 5,313 4,895 1,781 4,470 3,189 2,087 3,151 8,587 11,845 12,398 7,334 - 2,000 4,000 6,000 8,000 10,000 12,00020102011201220132014201520162017 YTDTop 10 Spanish single asset transactions:A total pipeline investment volume of 800m is expected to be traded in SpainSpanish investment MarketSource: DeloitteSource: DeloitteEXECUTIVE SUMMARYT otal Hotel investment volume in Spain as at 2017 YTD: 2,600mShort TermMedium TermLong TermTOTAL75%100%17%8%In 2017 YTD the Hotel investment volume has exceed by 21%the investment volume of 2016.

7 Hotel typology represents 35% of the total investment volumeSource: Deloitte Data Base and third party sourcesFor more information see CHAPTER 3( investment Market)35% Hotel +21%HotelsLogisticRetail High StreetRetail Shopping CentreOffices#AssetUnitsPrice ( m)Typology1 Ritz-C arlton Abama461 183 Vacational 2 Hotel Villaitana390 101 Vacational 3 Jardin Tropical390 101 Vacational 4 Sol Pr ncipe799 89 Vacational 5 Hotel Silken240 80 Urban 6 Hilton Diagonal Mar Barcelona (55%)238 80 Urban 7 Ritz-C arlton Abama 50%461 75 Vacational 8 Sol Palmanova653 73 Vacational 9 Silken Puerta de Am rica315 48 Vacational 10 AC Malaga Palacio214 48 Urban The Hotel Property HandbookBalearic Island SnapshotBalearic Islands 281mMallorca68%Ibiza32%@ 2016 DeloiteFinancial Advisory6 EuropeanYields & Capital Values (2016):For more information see CHAPTER 4(Key investment and Financing Drivers)in the full report.

8 Source: Deloitte Data BaseEXECUTIVE SUMMARYE uropeanInvestment Market3 Spanish transactions are includedwithin the Top 10 European to 987m, these Spanish transactions account for 30%of the Top 20 investment volumeBalearic Islands investment Market: 2016-2017 YTDB alearic Islands,with 281m of Hotel investment volume in 2017 YTD, is playing a main role within the Spanish market representing a 11% : Deloitte Data Base and third party sourcesFor more information see CHAPTER 3( investment Market)CityCountryCapital Value( k per room)Lease Yield 2016 ParisFrance 644k5,00%LondonUK 601k4,25%Z richSwitzerland 506k5,25%GenevaSwitzerland 440k5,00%RomeItaly 394k5,75%FlorenceItaly 375k6,00%AmsterdamNetherland 371k5,50%BarcelonaSpain 327k6,00%MilanItaly 318k6,00%MunichGermany 297k5,00%C openhagenDenmark 276k6,00%MadridSpain 268k6,25%Europe 267k6,00%The Hotel Property HandbookBalearic Island SnapshotYearQAssetProvince*RoomsPriceVen dor Buyer20173 TSol PalmanovaMallorca4*65372,600,000 Starmel (JV Starwood Capital y Meli )

9 London & Regional Properties20172 TIntertur Hotel Miami IbizaIbiza3*36532,420,000 Intertur HotelsKKR y Dunas Capital20173 TSol House IbizaIbiza4*27530,600,000 Starmel (JV Starwood Capital y Meli )London & Regional Properties20172 TIntertur Hotel Hawaii Mallorca & SuitesMallorca4*29926,550,000 Intertur HotelsKKR y Dunas Capital20163 THotel Marble Stella MarisIbiza4*30025,000, Hotels20172 TFergus TobagoMallorca3*27520,200, Hotel Hawaii IbizaIbiza4*21018,650,000 Intertur HotelsKKR y Dunas Capital20174 THilton Sa TorreMallorca5*10418,100,000HI PartnersBlackstone20172 TIntertur Palmanova BayMallorca4*17015,100,000 Intertur HotelsKKR y Dunas Capital20161 TSamoaMallorca3*33114,415,000 Grupo HotasaOrganizaci n Alexandr a 20162 TCartagoIbiza3*19613,000,000 Real Estate San MiguelHispania - SOCIMI 20171 TMar y ,600,000 HaciendaHarald Fischl 20162 TOl Gale nIbiza4*18212,000,000 Real Estate San MiguelHispania - SOCIMI 20163 TParadise PortinatxIbiza3*13411,000.

10 000 Later DeruserHispania - SOCIMI 20171 TGran Hotel de S llerMallorca5*3810,000,000 Andreu GelabertSermeta20163 THilton Sa Torre MallorcaMallorca5*1048,400,000Sa Torre MallorcaHI Partners20172 TIntertur Apartamentos Miami IbizaIbiza2*827,280,000 Intertur HotelsKKR y Dunas Capital20162 TClub San MiguelIbiza3*1067,000,000 Real Estate San MiguelHispania - SOCIMI 20163 THotel KrossMallorca3*1127,000,000 Banco PopularHM Hotels20171 TBlue Sea Arenal TowerMallorca3*1523,900,000 Blue SeaPortobello20171 TBlue Sea Gran PlayaMallorca3*1393,500,000 Blue SeaPortobello20171 TBlue Sea La PintaMallorca3*1303,300,000 Blue SeaPortobello20171 TBlue Sea Costa VerdeMallorca3*1243,100,000 Blue SeaPortobello20171 TBlue Sea Don JaimeMallorca3*1203,000,000 Blue SeaPortobello20161 TViva Alcudia Sun VillageMallorca4* HotelsBQ Hoteles20162 TUniversal Apartahotel ElisaBaleares3*54 + Hotels20162 TEs Figueral Nou Rural HotelMallorca4* Hotels20162 TBah a Cala RatjadaMallorca4* 20163 TAllsun Lux de MarMallorca4* Fuentemar 16 18 Allsun20164 TGarden LagoMallorcaApt 3* ResortsOnahotels@ 2016 DeloiteFinancial Advisory7100 102 110 123 100 106 104 124 100 108 140 161 80 90 100 110 120 130 140 150 160 170 Mallorca IslandMenorca IslandIbiza & Formentera Island1001111241371001051131241001051151 2610010611913710011011713095100105110115 1201251301351402013201420152016 Andalus aCataloniaCommunity of ValenciaBalearic IslandsCanary IslandsAvrg.