The Hotel Property Handbook - Deloitte US

1 @ 2016 DeloiteFinancial Advisory1 The Hotel Property HandbookInvestment & Financing KeysAndalusiaSnapshotFinancial Advisory I Real Estate -HospitalityDecember 2017@ 2016 DeloiteFinancial Advisory2 The Hotel Property HandbookAndalusiaSnapshotJavier Garc a-Mateo, MRICSP artnerFinancial Advisory Real +34 659 90 02 15 Leopoldo PariasPartnerFinancial Advisory +34 629894186 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 Advisory3 Andalusia is one Top 5 ranked destination in Spain; 2016 was a landmark year in terms of visitors accounting for visitors,+7% growth compared 2015. 2017 (Jan-Oct) data suggests a potential deceleration with a modest growth of 2% for the same period in 2016. VacationalHotspots accounted for the 52% of the total visitors.

2 Andalusia s vacationalhotspot 2017 (Jan-Oct) figures registered an Average Stay of daysand 33m overnight stays. Vacationaldestinations are affected by a significant seasonality, with almost 80% of the Hotel supply closed during low season months. During 2017, 10 new hotels have opened with rooms, while 3 Hotels have been refurbishedaccounting for +1,072 rooms. Andalusia s Vacationaldestinations average RevPAR has grown +46% (2013-17) due to robust occupancy rate growth reaching 67% record breaking figure and ADR growth of +17%. Andalusia s Urban destinations average RevPAR has grown +55% (2013-17) boosted by occupancy rate growth reaching 72% and ADR upturns of +13%.5 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. Legal Factors: Analysisof allintervenient contracts. Comprehensive legal risk analysis.

3 Tax Factors: Analysisof tax risks and potential tax structuring alternatives. Technical Factors: Functional use (Back of House vs. Front of House), equipment condition, legal compliance and 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 Andalusian economy is expected to reachpre-crisis growth levels through tourism deceleration could tail-off positive prospects. Andalusian provisional GDP growth for 2017 stands while a growth is expected for 2018. Furthermore, Tourism GDP accounted for 13%of total GDP registering a 4% growth when compared with 2016 levels. During 2017, Tourism represented of total Employment and achieved a 5% growth over 2016.

4 Tourism employment amounted jobs during 2016, Malagaachieved the lions share with of the total tourism employment followed by Sevilleand Cadiz with and out of the vs 2017 Andalusiagrowth Key drivers2 Supply&Demand43 Hotel Real Estate investment MarketThe Hotel Property HandbookAndalusia SnapshotEXECUTIVE SUMMARY The EMEA region accounts for27% of the total Hotel Real Estate investment volumewhile Spain accounts for 12% In Spain, Hotel investment volume increased by 27% in 2017 YTD ( 2,717m) and accounted for 31%of total non-residential investment Malaga Province registered 100% of the total Andalusian investment market figure of 320m (2017),representing a 12% share out of the total Spanish Hotel investment volume. Sevilla & Malaga strong capital value ( k/room) growth of has been driven by the solid Tourism Strategy Plansimplemented by each City Town Hall.@ 2016 DeloiteFinancial Advisory4( )( )( )( ) ( )( ) Capital Values Growth (%)2015-2016 Capital Value per room (2015-16) 800k 600k 400k 200k 100kThe Hotel Property HandbookAndalusia 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)To take away: Malaga and Seville cities CapitalValues ( /room) growth has been gaining momentum through 2015-2016.

5 2017 growth is expected break record breaking figures due to the strong effort on asset repositioning and solid Tourism Strategy Plans implemented by each City Town expected in Spain through Hotel investment are above the European average 10 Year Bond2016-2017(1 March 2017)Yield 2016 Dif. 10 years bond2,12% 50 bps1,15% 65 bps0,92% 4 bps0,23% 34 bps2,12% 50 bps2,12% 50 bps1,67% 17 bps1,67% 17 bps0,34% 43 bps-0,22% 22 bps-0,22% 22 bps363 bps310 bps408 bps477 bps388 bps388 bps433 bps516 bps538 bps522 bps547 bps458 bps458 bps458 bps458 bps1,67% 17 bps1,67% 17 bps1,67% 17 bps - 200k 400k 600k 800k ParisLondonZ richGenevaRomeFlorenceAmsterdamBarcelona MilanMunichMadridEuropeSevillaM lagaGranadaC rdoba1,67% 17 bps4* Hotel Category@ 2016 DeloiteFinancial Advisory5644 687 365 867 2,297 1,894 3,769 2,420 750 576 519 607 932 2,702 2,145 2,717 1,467 591 571 751 2,242 1,263 660 571 1,460 1,056 544 807 2,520 5,313 4,895 1,993 150 279 88 120 596 674 930 1,143 4,470 3,189 2,087 3,151 8,587 11,845 12,398 8,845 - 2,000 4,000 6,000 8,000 10,000 12.

6 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: 2,717mShort TermMedium TermLong TermTOTAL75%100%17%8%In 2017 YTD the Hotel investment volume has exceed by 27%the investment volume of 2016. Hotel typology represents 31% of the total investment volume, while Andalusia represents the 12% share. #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 HandbookAndalusia SnapshotSource: Deloitte Data Base and third party sourcesFor more information see CHAPTER 3( investment Market)31% Hotel +27%HotelsLogisticRetail High StreetRetail Shopping CentreOfficesAndalusia 320m Malagaregion accounted for the 100% of Hotel investment market@ 2016 DeloiteFinancial Advisory6 EuropeanYields & Capital Values (2016).

7 For more information see CHAPTER 4(Key investment and Financing Drivers)in the full report. 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 volumeAndalusia investment Market: 2016-2017 YTDA ndalusia accounted for 320m of Hotel investment volume in 2017 YTD, which has represented the 12% of the Spanish market. investment appetite for coastal and urban Andalusian destinations is expected to peak during : 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 HandbookAndalusia SnapshotYearQAssetProvince*RoomsPrice ( ) /roomVendorBuyer20173 QSol Pr ncipeM laga4*79988,900,000*111,264* StarmelLondon & Regional Halley M laga (2 assets)

8 M laga4*21464,900,000*223,832 HI PartnersBlackstone20163 QByblosM laga5GL14460,000,000416,667 Lord SugarAyco20171 QNH M lagaM laga4*13341,000,000308,271 NH Hotel GroupHispania - SOCIMI 20173 QPueblo Camino RealM laga4*52440,000,00076,336 Romano 430 Tourism laga4*85032,000,00037,647 Neinor HomesHIG20173 QVincci Selecci n Posada del PatioM laga5*10626,700,000251,887 Dos PuntosInternos Global Investors20164 QPlayacapricho HotelAlmer a4*33524,560,000*73,313 Merlin PropertiesFonci re des R gions20164 QCosta ParkM laga4*25022,850,000*91,400 Merlin PropertiesFonci re des R gions20164 QBarcelo Costa Ballena Golf & SpaC diz4*22820,840,000*91,404 Merlin PropertiesFonci re des R gions20162 QIncosolM laga5*19720,000,000101,523 Grupo JALEHI Partners20171 QVincci Selecci n Estrella del MarM laga5*13813,480,000*97,681 Forestal SuecoM lagaApt. 2*4613,408,000291,478 Properties20162 QLas PalomasM laga4*30913,100,00042,395 Hoteles CPalia Hotels20171 QGran Cervantes by Blue SeaM laga4*39812,600,000*31,658 Blue SeaPortobello20164 QTryp AlamedaM laga4*1369,970,000*73,309 Merlin PropertiesFonci re des R gions20164 QTryp JerezJerez4*988,960,000*91,429 Merlin PropertiesFonci re des R gions20162 QMarlin Hotel Antilla PlayaHuelva2*752,300,000*30.

9 667 Gesti n LepemarSeville Private investor20162 QEurostars Gran V aGranada5* HotelesEurostars Hotel Company 20162 QEurostars Sevilla BoutiqueSevilla4* HotelesEurostars Hotel Company20162 QBest SabinalAlmeria4* HesperiaBest Hotels20163 QMonasterio de San MiguelC diz4* RentingHotusa20173 QParque Central de ValenciaValencia4* Senator Hotels & Resorts20173 QHoliday Inn San Juan BeachAlicante4* Hotels20173 QHoliday Inn ElcheAlicante4* Hotels20174 QHotel Suites Puerto MarinaAlmer a4* Hotels & Resorts *Estimated Value@ 2016 DeloiteFinancial Advisory7 EXECUTIVE SUMMARYThe Hotel Property HandbookAndalusia SnapshotGROWTHEMPLOYMENTT ourism-related employments accounts for 12% of Spain s employmentsIn contrast to previous estimates, 12% more UK tourists came to Spain during 2016 BREXITT ourism Business Confidence close to max. levels since 2016 BUSINESS CONFIDENCECCI has experienced an Uptrend since 2012 and is close to max.

10 LevelsCONSUMERCONFIDENCEThe Spanish Tourism Industry is benefiting from the current geopolitical contextGEOPOLITICAL CONTEXT grew by during 2016. Tourism accounts for Spain s GDPSPAIN S million tourists came to Spain in 2016 spending millionRECORD FIGURES 2016 Spanish Tourism industry acknowledged as the world s most competitiveTOURISM COMPETITIVENESSA ndalusia vacationalHotspotsRevPar( ) Evolution by hotspot (2013=100)VACATIONALMain vacationalhotspotsFor more information see CHAPTER 2(Supply and Demand)VacationalHotspots performanceAndalusia s VacationalHotspots RevParincreased by 49%on average from 2013 to 2017 YTD (oct2017).KPI s evolution (2013 to 2017 YTD)ADRRevParOccupancy+=SPAIN -Vacational +27%+785bps+41%Andalusia VacationalDestinations+1,323bps+49%Andal usia vacationaldestinations current supply is in general termsobsolete and outdated. To Take Away: Both refurbishment and repositioning would be the key drivers of revenue increases in (Jan-Oct)Andalus aCataloniaCommunity of ValenciaBalearic IslandsCanary IslandsAvrg.