Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Resolution 2018-30425
RESOLUTION NO. 2018-30425 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING, FOLLOWING SECOND READING/PUBLIC HEARING, A DEVELOPMENT AND GROUND LEASE AGREEMENT AS AUTHORIZED, RESPECTIVELY, UNDER SECTION 118-4 OF THE CITY CODE, SECTIONS 163.3220 - 163.3243, FLORIDA STATUTES, AND SECTION 82-37 OF THE CITY CODE, BETWEEN THE CITY AND MB MIXED USE INVESTMENT, LLC ("MIAMI BEACH CONNECT"), FOR THE DEVELOPMENT OF A CONVENTION HOTEL WITH UP TO 800 ROOMS AND RELATED FACILITIES, INCLUDING UP TO 60,000 SQUARE FEET OF CONFERENCE AND BALLROOM FACILITIES, AND UP TO 52,000 SQUARE FEET OF ACCESSORY RETAIL AND RESTAURANT FACILITIES TO SERVICE HOTEL GUESTS AND THE PUBLIC (THE "HOTEL"), ON AN APPROXIMATELY 2.6 ACRE SITE ON THE NORTHEAST CORNER OF 17TH STREET AND CONVENTION CENTER DRIVE, BOUNDED ROUGHLY BY THE MIAMI BEACH CONVENTION CENTER TO THE NORTH, 17TH STREET TO THE SOUTH, THE FILLMORE MIAMI BEACH AT THE JACKIE GLEASON THEATER TO THE EAST, AND CONVENTION CENTER DRIVE TO THE WEST (THE "LEASED PROPERTY"); DELINEATING THE CONDITIONS FOR THE DESIGN, CONSTRUCTION, EQUIPPING AND OPERATION OF THE HOTEL ON THE LEASED PROPERTY WITH NO CITY FUNDING THEREFOR; PROVIDING FOR A 99-YEAR TERM OF THE LEASED PROPERTY ONCE CERTAIN CONDITIONS ARE SATISFIED; PROHIBITING GAMBLING ESTABLISHMENTS ON THE LEASED PROPERTY; AND PROVIDING FOR ANNUAL BASE RENT TO THE CITY, AFTER THE HOTEL OPENS, OF THE GREATER OF MINIMUM FIXED RENT OR A PERCENTAGE OF THE REVENUES OF THE HOTEL, AMONG OTHER RENT. WHEREAS, the Mayor and City Commission desire to promote economic development within the City of Miami Beach by attracting a more robust mix of conferences and conventions to the Miami Beach Convention Center ("MBCC" or "Convention Center"), including "fly-in" conferences and conventions drawing national and international attendance that would reduce the MBCC's reliance on "drive-in" events that primarily attract local/commuter attendance; and WHEREAS, in support of the foregoing and in an effort to maintain the competitiveness of the Convention Center as a local and regional asset that supports the South Florida tourism economy, the City is in the process of completing the Miami Beach Convention Center Renovation and Expansion Project (the "MBCC Renovation Project"), a public construction project that includes a complete renovation of the MBCC, expansion of ballroom and auxiliary spaces, parking above portions of the MBCC, exterior landscaping and creation of a 6 acre public park; and WHEREAS, in addition to, and separate from, the MBCC Renovation Project, the City desires to attract more "fly-in" conferences and conventions to the MBCC through the development of a convention headquarter hotel that is (i) entirely privately-funded; (ii) sufficiently close to the Convention Center to serve as an "on-site" hotel option for conference attendees, and (iii) large enough to provide the group room blocks necessary to support and secure national and international conferences and conventions at the Convention Center; and WHEREAS, on November 19, 2014, the Mayor and City Commission adopted Resolution No. 2014-28836, approving an Amended and Restated Interlocal Cooperation Agreement between the City and Miami-Dade County ("County"), whereby, in recognition that a convention hotel in the proximity of the Convention Center will generate additional Convention Development Tax ("CDT") and resort tax revenues, the County has agreed to provide the City with up to $1,500,000 per year in an additional allocation of CDT revenues once a convention hotel opens, with such additional payments to the City continuing annually until 2048; and WHEREAS, on April 13, 2016, the Mayor and City Commission established the Mayor's Ad Hoc Blue Ribbon Steering Committee on the Convention Center Hotel (the "Committee"), chaired by Commissioner Ricky Arriola and Vice-chaired by Commissioner Kristen Rosen- Gonzalez; and !i WHEREAS, on February 14, 2018, the Mayor and City Commission considered the Committee's report regarding potential options for a Convention Center Hotel development, including options with respect to a proposed Hotel's location, size, height, and related issues such as traffic mitigation, and the like, and directed the Administration to prepare a Request for Proposals ("RFP"); and WHEREAS, on May 16, 2018, the Mayor and City Commission approved Resolution No. 2018-30310, authorizing the issuance of an RFP for the Convention Center Hotel for a lease of the approximately 2.6 acre site located adjacent to the Convention Center; and WHEREAS, on May 17, 2018, the City issued Request for Proposals No. 2018-238-KB (the RFP) for the Development of a Convention Headquarter Hotel Adjacent to the Miami Beach Convention Center. A voluntary pre-proposal meeting was held on May 24, 2018; and WHEREAS, the RFP solicited proposals for the development of a convention hotel with up to 800 rooms and related facilities (the "Hotel") on approximately 2.6 acres on the northeast corner of 17th Street and Convention Center Drive, bounded roughly by the Miami Beach Convention Center to the North, 17th Street to the South, the Fillmore Miami Beach at the Jackie Gleason Theater to the East, and Convention Center Drive to the West, as approximately depicted in Appendix 2 attached to the Commission Memorandum accompanying this Resolution (the "Leased Property"); and WHEREAS, on June 7, 2018 the City Manager, via Letter to Commission (LTC) No. 323-2018, appointed an Evaluation Committee (the "Committee"), and on June 14, 2018 the City received a responsive proposal from MB Mixed Use Investment, LLC ("Miami Beach Connect"); and WHEREAS, on June 21, 2018, the Evaluation Committee convened to consider the responsive proposal and conduct oral presentations, and favorably recommended moving forward with the proposal; and WHEREAS, on July 2, 2018, the Mayor and City Commission approved Resolution No. 2018-30378, authorizing the Administration to negotiate a Development and Ground Lease Agreement, including a Room Block Agreement (collectively, the "Lease") with Miami Beach Connect, with said Lease subject to prior approval by the Mayor and City Commission before the final execution thereof; and WHEREAS, if approved by the City Commission, the Lease is also subject to approval by vote of at least 60% of the voters voting thereon in a City-wide a referendum pursuant to Section 1.03(b)(3) of the City Charter; and WHEREAS, on July 13, 2018, the Finance and City-Wide Projects Committee reviewed the terms of the proposed Lease, as required pursuant to Section 82-37(a)(1) of the City Code; and on July 17, 2018, the Mayor and City Commission approved the proposed lease, following a first reading/public hearing; WHEREAS, the Planning Department has completed a planning analysis using the criteria set forth in Section 82-38 of the City Code, and the Administration has obtained an independent appraisal, attached as Appendix "4" to the Commission Memorandum accompanying this Resolution, in accordance with Section 82-39 of the City Code; and WHEREAS, as part of the Lease, Miami Beach Connect will also be seeking to enter into a development agreement with the City pursuant to Sections 163.3220 — 163.3243, Florida Statutes, to memorialize, among other provisions, the terms and conditions for the development of the Hotel Project (as hereinafter defined); WHEREAS, Sections 163.3220 — 163.3243, Florida Statutes, and Section 118-4 of the City's Code require two public hearings for a development agreement, and Section 82-37(a)(2) of the City Code also requires two readings of the proposed Lease, with the second reading to be accompanied by a public hearing; and WHEREAS, the Administration and Miami Beach Connect have negotiated the Lease, a copy of which is attached hereto as Appendix "1" to the Commission Memorandum accompanying this Resolution, including the Room Block Agreement on the terms the City outlined in the RFP, which is incorporated as Exhibit "L"to the Lease; and WHEREAS, MB Mixed Use Investment, LLC, the entity that will serve as the Lessee under the proposed Lease, is a joint venture between MB Mixed Use Investment Holdings Member, LLC (a special purpose entity controlled by the principals of Terra International Developments, LLC, including David Martin) and TB MBCC Hotel Investment, LLC (a special purpose entity controlled by Jacquelyn Soffer, a principal of Turnberry Associates); and WHEREAS, the Lease provides, among other provisions, the following terms and conditions: a. The Hotel will include up to, and not to exceed, 800 rooms, with up to 60,000 square feet of conference and ballroom facilities, up to 52,000 square feet of accessory retail and restaurant facilities to service Hotel guests and the public, 320 parking spaces (.4 parking spaces per room, as required by the City's Land Development Regulations), the installation of all furniture, fixtures and equipment required for the Hotel, an overhead pedestrian walkway connecting the Hotel with the MBCC ("Skybridge"), and all supporting amenities and related facilities (collectively, the "Hotel Project") with a maximum height for the Hotel Project of up to 185 feet; and b. Miami Beach Connect will be solely responsible for all costs and expenses to develop, design, construct, finance, equip and operate the Hotel Project, with no City funding or financing for the Hotel Project; and c. The Lease includes the City's approval, in its proprietary capacity as owner of the Leased Property, of the preliminary concept design for the Hotel Project, attached as Exhibit "E" to the Lease. Notwithstanding the preceding, and in further recognition that the design for the Hotel Project will evolve as part of the City's regulatory development process, including review and approval by the City's Design Review Board, the Lease also requires the City's approval of substantial design changes to the Hotel Project, including any change that materially affects the exterior facade or other exterior elements of the Hotel Project; and d. The Lease has a Term of 99 years, commencing once Miami Beach Conned meets certain key milestones with respect to the development and financing of the Hotel Project (referred to in the Lease as "Possession Conditions"); and e. The Leased Property cannot be used as a Gaming Establishment (i.e. casinos or other gambling or wagering activities), and Miami Beach Connect and/or subsequent owners of the Hotel Project cannot own, manage or operate a Gambling Establishment in Miami- Dade County, as prescribed in the Lease; and f. The hotel brand or "flag" of the Hotel must be an "Approved Brand," which may include (i) Marriott (i.e., the Marriott, Marriott Marquis, Renaissance, Gaylord, Westin, Sheraton or JW Marriott brands), Omni, Hyatt Regency, La Meridien, Hilton and Intercontinental, or any other hotel brand approved by the City. From and after the twentieth anniversary of the Opening Date, the Hotel may be operated by an "Upper Upscale" brand as then rated by Smith Travel Research and generally recognized in the hospitality industry as an experienced convention center hotel brand, or the Hotel may be operated as a "non- branded" Hotel, provided that the Hotel Operator must comply with the Hotel Standards set forth in the Lease; and g. The Leased Property must be continuously operated as a Hotel pursuant to the Approved Brand's standards; from and after the twentieth year of the Opening Date, if the Hotel is operated by other than an Approved Brand, the Hotel must meet the level of service and quality (i) comparable to other convention hotels in the "Upper Upscale" category as determined by Smith Travel Research, or(li)with respect to a "non-branded" hotel, so as to maintain a 3.5-diamond rating from the American Automobile Association ("AAA") (the "Hotel Standards") as provided in the Lease; and h. The Hotel Operator must either be an Approved Brand or a management company with a franchise agreement with an Approved Brand. The Hotel Operator must operate the Hotel in accordance with the Hotel Standards, and must comply with the Room Block Agreement, as set forth in Exhibit L of the Lease; and i. As of the Rent Commencement Date (defined in the Lease as the Hotel's Opening Date), the City will receive, as annual Base Rent: a. The greater of: 1. Minimum Fixed Rent (pursuant to the annual schedule of minimum fixed rent specified in the Lease), or 2. The sum of (i) 2.5% of the Gross Operating Revenues of the Hotel Project (defined to include revenues and income from gross room sales, resort fees, Internet services charges, in-room video charges, parking, valet service receipts, among other revenues related to the use or operation of the Hotel [other than food and beverage revenues covered in subsection (ii) below], including rental income received by Lessee from ground floor retail subtenants); plus (ii) 1.25% of the Gross Operating F&B Revenues (defined to include gross food and beverage sales, room service, banquets and catering receipts, among other food and beverage-related receipts, other than revenues derived from third-party leased restaurants operated within ground floor areas); and j. Miami Beach Connect (or any subsequent lessee) must pay all ad valorem taxes and other public charges, with no City tax abatements or subsidies for public charges of any kind; and k. City will also receive Transaction Rent in the amount of the lesser of $2 million or .25% of the gross sales price of the first three Transfers of the Hotel Project that effect a sale of the entire Hotel Project or a transfer of a Controlling interest (more than 50% interest) in the Lessee; provided that City will only receive Transaction Rent if the gross sales price exceeds 120% of the Improvement Costs (the costs to develop and construct the Hotel) (or pro rata portion if the first Transfer is of a controlling interest in Lessee); and I. With respect to all Transfers in excess of 25% of the direct or indirect ownership interest in the Lessee, and in particular, Transfers effecting a sale of the Hotel Project or a controlling interest in Lessee, the City shall have the right to approve Transfers in accordance with the Acceptable Owner criteria and process outlined in Exhibit "A" of the Lease, including limitations with respect to Transfers to Foreign Instrumentalities; and m. City's rights and interest in the Lease, including with respect to Rent payments, will not be subordinate to any debt, mortgage, lien or encumbrance placed on Miami Beach Connect's (or any subsequent lessee's) interest in the Lease. NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission hereby approve, following second reading/public hearing, the Development and Ground Lease Agreement, as authorized, respectively, under Section 118-4 of the City Code, Sections 163.3220 - 163.3243, Florida Statutes, and Section 82-37 of the City Code, between the City and MB Mixed Use Investment, LLC, for the development of a convention hotel with up to 800 rooms and related facilities, including up to 60,000 square feet of conference and ballroom facilities, and up to 52,000 square feet of accessory retail and restaurant facilities to service Hotel guests and the public (the "Hotel"), on an approximately 2.6 acre site on the northeast corner of 17th Street and Convention Center Drive and bounded roughly by the Miami Beach Convention Center to the North, 17th Street to the South, the Fillmore Miami Beach at the Jackie Gleason Theater to the East, and Convention Center Drive to the West (the "Leased Property"); delineating the conditions for the design, construction, equipping and operation of the Hotel on the Leased Property, with no City funding therefor; providing for a 99-year term of the Leased Property once certain conditions are satisfied; prohibiting gambling establishments on the Leased Property; and providing for base rent to the City once the Hotel opens, including, after the Hotel's opening, the greater of Minimum Fixed Rent or a percentage of the revenues of the Hotel. PASSED AND ADOPTED this aS day of J 2018. ATTEST: ler Dan Gelber, Mayor Rafael E. Granado, City L'lerk APPROVED AS TO B.Eq C1 `y &FOR EXECUTION `Zr \ -7.... .�. , crya..Ae.:�� 7 -t(f t1 t * '1NOOFp OFPIED cryo R,aP Date S C ; "q.CHZ v Agenda Item R7 A Date 7-3.5-if MIAMI BEACH City of Miami Beach, 1700 Convennon Censer Drive,Mom;Beach,Florida 33139,www.miambeachfl.gov COMMISSION MEMORANDUM TO: Mayor Dan Gelber and Members .f the City o mmission FROM: Jimmy L. Morales, City Manage SECOND READING PUBLIC HEARING DATE: July 25, 2018 , SUBJECT: A RESOLUTION OF THE M •YOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, LORIDA, APPROVING, FOLLOWING SECOND READING/PUBLIC HEARING, A DEVELOPMENT AND GROUND LEASE AGREEMENT AS AUTHORIZED, RESPECTIVELY, UNDER SECTION 118-4 OF THE CITY CODE, SECTIONS 163.3220 - 163.3243, FLORIDA STATUTES, AND SECTION 82-37 OF THE CITY CODE, BETWEEN THE CITY AND MB MIXED USE INVESTMENT, LLC ("MIAMI BEACH CONNECT"), FOR THE DEVELOPMENT OF A CONVENTION HOTEL WITH UP TO 800 ROOMS AND RELATED FACILITIES, INCLUDING UP TO 60,000 SQUARE FEET OF CONFERENCE AND BALLROOM FACILITIES, AND UP TO 52,000 SQUARE FEET OF ACCESSORY RETAIL AND RESTAURANT FACILITIES TO SERVICE HOTEL GUESTS AND THE PUBLIC (THE "HOTEL"), ON AN APPROXIMATELY 2.6 ACRE SITE ON THE NORTHEAST CORNER OF 17T" STREET AND CONVENTION CENTER DRIVE, BOUNDED ROUGHLY BY THE MIAMI BEACH CONVENTION CENTER TO THE NORTH, 17TH STREET TO THE SOUTH, THE FILLMORE MIAMI BEACH AT THE JACKIE GLEASON THEATER TO THE EAST, AND CONVENTION CENTER DRIVE TO THE WEST (THE "LEASED PROPERTY"); DELINEATING THE CONDITIONS FOR THE DESIGN, CONSTRUCTION, EQUIPPING AND OPERATION OF THE HOTEL ON THE LEASED PROPERTY WITH NO CITY FUNDING THEREFOR; PROVIDING FOR A 99-YEAR TERM OF THE LEASED PROPERTY ONCE CERTAIN CONDITIONS ARE SATISFIED; PROHIBITING GAMBLING ESTABLISHMENTS ON THE LEASED PROPERTY; AND PROVIDING FOR ANNUAL BASE RENT TO THE CITY,AFTER THE HOTEL OPENS, OF THE GREATER OF MINIMUM FIXED RENT OR A PERCENTAGE OF THE REVENUES OF THE HOTEL, AMONG OTHER RENT. BACKGROUND On April 13, 2016, the Mayor and City Commission established the Mayor's Ad Hoc Blue Ribbon Steering Committee on the Convention Center Hotel (the"Committee"), chaired by Commissioner Ricky Arriola and Vice-chaired by Commissioner Kristen Rosen-Gonzalez. On February 14, 2018, the Mayor and City Commission considered the Committee's report regarding potential options for a Convention Center Hotel development, including options with respect to a proposed Hotel's location, size, height, and related issues such as traffic mitigation, Convention Center Hotel—Development and Ground Lease Agreement July 25, 2018 Page 2 of 11 and the like. At the February 14, 2018 City Commission meeting, the Mayor and City Commission directed the Administration to prepare a Request for Proposal ('RFP") for development of a Convention Center Hotel on alternative parcel sites. On May 16, 2018, the Mayor and City Commission approved Resolution No. 2018-30310, authorizing the issuance of an RFP for the Convention Center Hotel for a lease of the approximately 2.6 acre site located adjacent to the Convention Center on a time frame to be able to place the referendum item on the November 6, 2018 ballot. On May 17, 2018 the City issued Request for Proposals No. 2018-238-KB (the RFP) for the Development of a Convention Headquarter Hotel Adjacent to the Miami Beach Convention Center. A voluntary pre-proposal meeting was held on May 24, 2018. On June 7, 2018 the City Manager, via Letter to Commission (LTC) No. 323-2018, appointed an Evaluation Committee(the"Committee"). On June 14, 2018 the City received a responsive proposal from MB Mixed Use Investment, LLC, a joint venture between Tumberry and Terra Group. On June 21, 2018, the Evaluation Committee convened to consider the responsive proposal and conduct oral presentations,and favorably recommended proceeding with the Miami Beach Connect proposal. On July 2,2018,the Mayor and City Commission approved Resolution No.2018-30378, authorizing the Administration to negotiate a Development and Ground Lease Agreement, including a Room Block Agreement (collectively, the "Lease") with MB Mixed Use Investment, LLC, with said Lease subject to prior approval by the Mayor and City Commission before the final execution thereof. On July 13, 2018, the Administration submitted the proposed Lease for the Finance and Citywide Projects Committee's review and input, in accordance with the requirements of Section 82-37(a)(1) of the City Code. On July 17,2018,the Mayor and City Commission approved Agenda Item R7A,approving the lease on first reading, following a public hearing. ANALYSIS Need for a Convention Hotel The City of Miami Beach has been contemplating the development of a convention center hotel for more than two decades. In that span, the City has solidified its brand as an international destination for tourism, arts and culture, shopping, dining and entertainment. The City of Miami Beach is currently engaged in a public construction project that includes a complete renovation and expansion of the Convention Center. This state-of-the-art building will enable our City to compete for world-class events and meetings. A hotel adjacent to the Miami Beach Convention Center is the next step in creating a highly competitive convention destination. The hotel will have a dramatic impact on the ability to book conventions and events that generate hotel room nights and spending throughout the city. The following summarizes the key impacts: • Competitive Landscape—Out of the 30 top U.S. convention destinations, Miami Beach is one of four that currently does not have a headquarter hotel attached or adjacent to its convention center. The other three cities include: Ft. Lauderdale,which is in the process of Convention Center Hotel-Development and Ground Lease Agreement July25, 2018 Page 3 of 11 developing a hotel; Los Angeles,which is also in the process of developing a hotel;and New York, which does not need a headquarter hotel in view of the significant hotel inventory in the nearby Broadway District. With the addition of a convention hotel for the Miami Beach Convention Center, Miami Beach will be truly competitive as a convention destination. • Client Demands - The City and the Greater Miami Convention and Visitors Bureau (GMCVB) have reached out to the Convention Center's target market and continue to receive feedback that many convention planners will only consider Miami Beach for their event if there is an attached hotel. With a hotel, the City will finally have an opportunity to book these events. Art Basel has also expressed strong support for the hotel. • Center Bookings-Case studies in other destinations that have expanded/renovated their convention center, and developed a convention hotel, have shown material increases in convention bookings. Average convention room night impact increased 42%. The City and GMCVB have already established increased convention center booking goals to be implemented once the hotel is approved. • Area Hotel Impact - City staff has studied the impact on existing hotels when a new convention hotel opens. In cities where new convention hotels have been developed, hotel room night demand exceeded the increase in room night supply within 1 to 3 years. • Room Rate Driver- City staff has analyzed the times of year when Miami Beach realizes its highest hotel rates. Other than New Year's Eve and large sporting events, many of the high rate periods coincide with convention center events. More conventions booked means more high-rate periods, which means more hotel revenues, equating to more tax revenues that support City services. • Traffic-The convention hotel is critical to change the Convention Center's booking mix from "drive-in" consumer and trade shows to "Fly-in" conferences and conventions. This should reduce the traffic impact of the convention center by reducing the number of daily trips. The Miami Beach Connect team used a thoughtful approach to reduce traffic on 17th Street and Convention Center Drive, by internalizing the pickup, drop off, valet and queuing inside the footprint of the building. Also, in the Lease, the Lessee has agreed to submit to the City an MOT plan and traffic plan to minimize impacts during and after the construction. The plan may include various elements, subject to negotiation with the initial Hotel Operator, including providing hotel guests with an online link to the City's trolley service map, offering Hotel guests the ability to purchase airport shuttle services or transit passes to encourage public transit usage, providing a reservation portal for guests to include their airport arrival times, with the system identifying available shuttle services based on those arrival times, partnering with on-demand multi-passenger services, such as the FreeBee golf carts,as an amenity for hotel guests, offering off-site parking and shuttle services for Hotel employees, utilizing Miami-Dade County's corporate discount program to reduce the costs of transit passes for Hotel employees using transit to work and providing a covered area for bicycle parking within the Hotel Project. • Lease Revenues - The net present value (NPV) of the proposed lease payments to the City approximate $64.8 million ($81,000 per room, $25.4 million per acre, $584 per square foot of land). The rent received by the City can be spent on general City needs,or dedicated to specific projects that are of importance to the City's residents. The price per room is consistent with the market. For a more detailed summary of the rent payments to the City, see Summary of Development and Ground Lease Agreement below. Convention Center Hotel-Development and Ground Lease Agreement July 25, 2018 Page 4 of 11 • Contractual Room Block- One of the challenges with booking the Convention Center is that the City has no room block agreements with any hotels in the area, including large-scale hotels capable of providing large enough group room blocks to support convention events. Room commitments are critical to attracting premier conventions. The proposal provides for a Room Block Agreement, requiring the Hotel to commit 80% of its rooms to citywide events that are to occur at least 30 months in the future and, among other things, include price protection to ensure a fair rate is offered. This is a game changer for Miami Beach. See Summary of Development and Ground Lease Agreement below. • Tax Impact-The Hotel will pay hotel, resort and property taxes that go to the City. The net present value of the City taxes total $96 million over 30 years and $143 million over the 99-year lease term. These funds support both the Convention Center itself, and a number of other projects within the City. Public schools will receive an additional$29 million NPV from the Hotel, and the County an additional $82 million NPV. • Voluntary Surcharge - The Lessee will impose a voluntary surcharge of 1% of Room Revenues will be dedicated to marketing of the hotel and the Convention Center. It is estimated that the voluntary surcharge could result in a $17 million net present value over the term of the 99-year Lease. • Increased Dedicated County Funding-Miami-Dade County is contractually obligated to increase its Convention Development Tax funding to the City of Miami Beach by up to $1.5 million annually through 2048-only if a convention hotel is developed. This totals $31.5 million more to the City. • Art in Public Places-The hotel will contribute$3.2 million of the budget to the City's Art in Public Places fund, to be used for Art in Public Places projects in the City. The advantages of developing the proposed convention hotel are substantial and complement the City's investment in the MBCC Renovation and Expansion Project. I truly believe that our investment in the Convention Center, coupled with a new convention hotel, will catapult Miami Beach into a leadership position in the convention market. Failure to build an adjacent convention hotel will diminish the return on our investment in the Convention Center. SUMMARY OF DEVELOPMENT AND GROUND LEASE AGREEMENT The proposed Lease is between the City and MB Mixed Use Investment, LLC, a joint venture between MB Mixed Use Investment Holdings Member, LLC (a special purpose entity controlled by the principals of Terra International Developments, LLC, including David Martin)and TB MBCC Hotel Investment, LLC (a special purpose entity controlled by Jacquelyn Soffer, a principal of Turnberry Associates) (hereinafter, "Miami Beach Connect"). The proposed Lease is attached hereto as Appendix 1. The Lease includes the following terms: 1. Description of Hotel Site/Leased Property The proposed boundaries for the leased property are attached hereto as Appendix 2 (the "Leased Property"). The Leased Property generally consists of an approximately 2.6 acres on the northeast corner of 17'"Street and Convention Center Drive, bounded roughly by the Miami Beach Convention Center to the North, 17th Street to the South, the Fillmore Miami Beach at the Jackie Gleason Theater to the East, and Convention Center Drive to the West. 2. Development and Funding of Hotel Proiect at Miami Beach Connect's Sole Cost Miami Beach Connect shall be solely responsible for the development, design, construction, equipping and operation of a full-service convention hotel with up to, and not-to-exceed, 800 hotel Convention Center Hotel—Development and Ground Lease Agreement July 25, 2018 Page 5 of 11 rooms and related improvements ("Hotel"), including the design, construction and operation of an enclosed overhead pedestrian walkway or "Skybridge" connecting the Hotel and the MBCC (collectively, as described more fully in the Lease, the "Hotel Project"). The City shall not provide any City funding or City financing for the Hotel Project. 3. Fillmore Miami Beach Rehearsal Room and 555 17th Street The Fillmore Miami Beach at the Jackie Gleason Theater (the "Fillmore") will remain in place and operational during and after the Hotel Project construction. As part of its construction obligations, Miami Beach Connect will be responsible for demolition of the 555 17'" Street property and the Fillmore's rehearsal or"black box" room, both of which are currently located on the Leased Property. Miami Beach Connect will also be responsible for certain Off-Site Improvements, including enclosure of the remaining portion of the Fillmore located outside the Leased Property. 4. Proposed Hotel Program Consistent with the RFP requirements, the Hotel shall include the following program elements: Ballroom/Meeting Space Sq. Feet Food & Beverage Seats Ballroom 20300 Restaurant Club 400 Junior Ballroom (2) 16300 Lobby Lounge 150 Breakout Meeting 23,118 Pool Grille 65 Support 37 120 Lobby Bar 100 Total 96,538 Parking Spaces: 320 The 320 parking spaces adheres to the requirement of 0.4 parking spaces per room (including ancillary uses) in accordance with the City's Land Development Regulations. Notwithstanding the maximum height permitted by the City's Land Development Regulations,the Lease provides that the maximum height of the hotel cannot exceed 185 feet. 5. Lease Term The Lease has a term of 99 years, commencing once certain development and financing conditions are satisfied, as set forth in Section 4.1(b)of the Lease (Possession Conditions"). Specifically, the City will not deliver possession of the Leased Property to Miami Beach Connect until Miami Beach Connect has met certain key milestones and satisfied a number of conditions with regard to the development of the Hotel Project, including delivery of evidence that equity commitments and construction loan commitments required to build the Hotel Project are in place, verification that a management agreement with the initial Hotel Operator is in place, and evidence that all required governmental approvals for commencement of construction have been obtained. 6. Approval of Preliminary Design; Final Design Subject to City's Design Review Process The Lease includes approval by the City, in its proprietary capacity as owner of the Leased Property, of the initial preliminary concept design for the Hotel Project attached as Exhibit E to the Lease. In recognition that the design for the Hotel Project will evolve as part of the development process, the Lease also requires City's approval of substantial design changes to the Hotel Project, including any change that materially affects the exterior facade or other exterior elements. In addition, the final design for the Hotel Project shall be subject to review and approval by the City's Design Review Board and, if applicable, the Planning Board. Miami Beach Connect shall be required to obtain all final, non-appealable regulatory approvals and/or permits that may be required for the Hotel Project, in the same manner as may be applicable to any other developer. Convention Center Hotel—Development and Ground Lease Agreement July 25, 2018 Page 6 of 11 7. Use Restrictions/No Gambling The Lease contains a use restriction to prohibit gambling on the Leased Property. Miami Beach Connect and/or subsequent owners of the Hotel may not own, operate or manage any establishment offering gambling or wagering in Miami-Dade County. The Lease further provides that the foregoing provisions cannot be subsequently amended without approval by the City Commission and approval by at least sixty percent (60%) of the voters voting thereon in a City-wide referendum. 8. Approved Brand/Hotel Operator The hotel brand or"flag" of the Hotel must be an "Approved Brand," which may include (i) Marriott (i.e.,the Marriott, Marriott Marquis, Renaissance, Gaylord,Westin, Sheraton or JW Marriott brands), Omni, Hyatt Regency, La Meridien, Hilton and Intercontinental, or any other hotel brand Approved by the City. From and after the twentieth (20U1)anniversary of the Opening Date, the Hotel may be operated by an "Upper Upscale" brand, as then rated by Smith Travel Research and generally recognized in the hospitality industry as an experienced convention center hotel brand, or may be operated by other than an Approved Brand, provided that the Hotel Operator must comply with the Hotel Standards set forth in the Lease. Miami Beach Connect has indicated it intends to consider national hotel brand/operators with an established and consistently maintained reputation for quality operations. Brands to be considered include Marriott, Hyatt and Hilton. The Hotel Operator must either be an Approved Brand or a management company with a franchise agreement with an Approved Brand. The Hotel Operator must operate the Hotel in accordance with the Hotel Standards and must comply with the Room Block Agreement, as set forth in Exhibit L of the Lease. The initial brand/hotel operator selection is a condition which must be satisfied prior to City's delivery to Miami Beach Connect of possession of the Leased Property. 9. Annual Rent Payments to the City Commencing on the Opening Date and continuing throughout the Term of the Lease, the City will receive annual rent in the amount of the greater of (x) Minimum Fixed Rent or (y) Percentage Rent calculated as a percentage of the Gross Operating Revenues of the Hotel and a percentage of Gross Operating F&B Revenues of the Hotel. Minimum Fixed Rent Guaranteed Rent to the City The schedule of Minimum Fixed Rent payments, representing the minimum guaranteed rent the City will receive for the first ten (10) years following the Rent Commencement Date is attached hereto as Appendix 3. These minimum guaranteed rent payments are included to provide the City with greater certainty for its internal planning/budgeting purposes as to the projected Lease revenues. The schedule of Minimum Fixed Rent is to be re-calculated after every ten (10) years to be the greater of the Minimum Fixed Rent payable for the period immediately preceding the Minimum Fixed Rent Reset Date, or 60% of the average of the annual rent over the prior ten years. As noted in Appendix 3, the Minimum Fixed Rent, commencing in Year 5 of the Lease, shall be fixed at$2 million,and shall be increased annually thereafter by two percent(2%). In recognition that the first four years following the Hotel's opening represent a critical period for the establishment and success of a hotel operation, the City has agreed to receive, with respect to the Minimum Fixed Rent: $400,000 in year 1, $800,000 in year 2, $1,200,000 in year 3, $1,600,000 in year 4, and $2,000,000 in year 5. Convention Center Hotel—Development and Ground Lease Agreement July 25, 2018 Page 7 of 11 Percentage Rent The Lease provides for the City to receive the rent as follows: Gross Operating Revenues (other than food and beverage) 2.5% Gross Operating F&B Revenues 1.25% The Lease defines Gross Operating Revenues according to the Uniform System of Accounts for Hotels, but excludes any room revenues received from guest loyalty stays (points programs), and provides that revenues generated by Online Travel Agencies shall be net of commissions paid to those Online Travel Agencies. Both the definition of Gross Operating Revenues and Gross Operating F&B Revenues exclude operating revenues from subleased portions of the ground floor retail areas of the Hotel, provided that the City will receive 2.5% of the sublease rent for such areas. The table below summarizes the Miami Beach Connect's final lease proposal: Over 30 years Over 99 years 2027(Yr 5) Total NPV @ 5% Total NPV @ 5% Final Proposal Minimum Fixed Rent $2.0m $71.3m $26.7m $560.2m $45.lm Variable Rent` 0.6m $30.5m $12.7m $217.8m $19.7m Total Rent $2.6m $101.8m $39.4m $777.9m $64.8m Percentage Rent(%Gross) 2.00% assumes unionized F&B operations The reduced lease stream NPV of $64.8 million over the term of the Lease equates to $81,000 per room or $25.4 million per acre. The modifications to the lease results in an average Percentage Rent of 2.0% of Gross Revenues. 10.Transaction Rent(For Sale of Hotel or Controlling Interest in Lessee) The City will receive transaction rent in connection with the first three sales of the Hotel to a third party, including a sale effected by a transfer of a Controlling interest in the Lessee(i.e., in excess of 50% interest in the Lessee). Under the Lease, the City is to receive, as Transaction Rent, the lesser of$2 million or 0.25% of the gross sales price for each such transaction, provided that the City shall only receive payment if the gross sales price is 120% of the development cost. 11. Development Budget and Finance Plan Miami Beach Connect has estimated the preliminary development budget to be $362 million and intends to finance the Hotel Project with an estimated 65% in debt and 35% in equity. Miami Beach Connect estimates it will invest up to $20 million in the project and must provide a minimum equity contribution of $10 million, with the remaining equity to be funded by third parties. Miami Beach Connect has provided construction debt financing support letters from JP Morgan Chase Bank, HSBC, Wells Fargo, Regions Bank, among other banking institutions. 12. Development Schedule If the Lease is approved by the voters in November of 2018, design and development would commence thereafter, and Miami Beach Connect anticipates the Hotel would open in September of 2022. The Lease includes outside dates by which certain key development activities must take place, including an Outside Possession Date, and Outside Opening Date. The City may terminate the Lease if any of the outside dates are not met. The City has the right to terminate if Convention Center Hotel—Development and Ground Lease Agreement July 25, 2018 Page 8 of 11 the project has not been designed, permitted and financed within three years after the November 2018 referendum (excluding extensions for specified categories of delays). 13. Room Block Agreement Miami Beach Connect has agreed to the Citys terms outlined in the City's proposed Room Block Agreement,which provides that a City-wide Event is defined in the same manner as the Miami Beach Convention Center booking policy whereby an event needs to use a minimum of 115,000 gross square feet of exhibit or meeting space in the Convention Center for not less than three(3)days and (ii)in connection with such event, requests 1,500 or more guest rooms on the peak night and 4,000 or more guest rooms in the aggregate be made available in hotels in the City (including the Hotel) and surrounding metropolitan areas. A City-wide Event also includes the annual Orange Bowl and any Super Bowl, even though they may not utilize the MBCC. Key terms of the Room Block Agreement include: • For City-wide Events that are to occur at least 30 months in the future, Miami Beach Connect will make available eighty percent(80%)of all guest rooms(and associated suites), for up to 14 nights per calendar month. Miami Beach Connect can book rooms in excess of that amount at its discretion, at the rate of its choosing. • For City-wide Events that are to occur between 18 and 30 months in the future, Miami Beach Connect will make available eighty percent(80%)of all guest rooms(and associated suites) if rooms and space are available, and will make available for City-wide Events eighty percent (80%)of all guest rooms(and associated suites)for one consecutive four(4)day period each month. Miami Beach Connect will determine the four(4)day period and will notify City on a monthly basis. Miami Beach Connect may book rooms in excess of that amount at its discretion. • For up to fourteen (14) nights per month, City may elect to require the Hotel to offer room block pricing at 105% of Miami Beach Connect's average group room rates. In addition, for up to six (6) special events per year, City may elect to require the Hotel to offer room block pricing at 100% of Miami Beach Connect's average group room rates. 14. Other Lease Terms • Miami Beach Connect accepts the Leased Property in its"AS IS"condition. • The Lease provides for payment to the City, as additional consideration under the Lease, of an amount equal to 1% of room revenues, but only to the extent paid by Hotel guests as a voluntary surcharge and collected by the Lessee, with the proceeds thereof used for joint marketing purposes to benefit the MBCC, the Hotel, and general tourism in the City, with the final determination with regard to expenditures to be made by the City Commission as part of the regular budget process. • Miami Beach Connect is required to comply with the City's Art in Public Places program requirements set forth in the City Code, and must contribute 1.5% of the construction cost for the Hotel Project(approximately$3.2 million)to the Art in Public Places fund,which may be used for Art in Public Places projects throughout the City. • Miami Beach Connect has requested an exclusivity provision with respect to the development of other hotels on City-owned or City-leased property, to permit the Convention Hotel to stabilize after it opens. As proposed, the City would agree to not permit any hotel with over 500 rooms to open on City-owned or City-leased property between 5'^ and 4V St, and the Atlantic Ocean to Biscayne Bay, for a period of ten (10)years following the Opening Date. Convention Center Hotel—Development and Ground Lease Agreement July 25, 2018 Page 9 of 11 • The Leased Property must be continuously operated as a Hotel pursuant to the Approved Brand's standards; from and after the twentieth year of the Opening Date, if the Hotel is operated by other than an Approved Brand, the Hotel must meet the level of service and quality (i) comparable to other convention hotels in the "Upper Upscale" category as determined by Smith Travel Research, or(ii)with respect to a"non-branded" hotel, so as to maintain a 3.5-diamond rating from the American Automobile Association("AAA")(the"Hotel Standards")as provided in the Lease. • The Lease delineates "Acceptable Owner" criteria and requires City review and/or approval of major transfers effecting a sale of the Hotel or Controlling Interest in Lessee, including transfers to Foreign Instrumentalities(foreign governments or Persons Controlled thereby). • The Lease provides for arbitration of(i)disputes regarding any City disapproval of a proposed brand, (ii)development disputes arising prior to Opening Date, i.e. disputes involving City's disapproval of major modifications to the Approved Plans, etc.), or (iii) any City Manager disapproval of a proposed Transfer. Notwithstanding the preceding, any disapproval of a proposed Transfer, if such determination is made by the City Commission, shall not be subject to arbitration and the exclusive remedy lies in a court of competent jurisdiction in Miami-Dade County. • The Lease provides the City Manager with delegated authority, following consultation with City's CFO and City Attorney, to amend specific Lease provisions that impact lender rights, in an effort to timely accommodate the initial loan financing and initial refinancing thereof. All other amendments subject to City Commission approval or further referendum approval, if applicable. • City's rights and interest in the Lease will not be subordinate to any mortgage, lien or encumbrance placed on Miami Beach Connects (or any subsequent owner's)interest in the Lease. • Separate from the Outside Dates provided in the Lease, the Lessee is vested with certain development rights for a limited period of ten (10) years. The Lease further includes additional provisions with respect to concurrency requirements, which provisions require Lessee to conduct applicable mitigation or pay all required impact fees, concurrency fees, and/or mobility fees at time of building permit. • The Lease provides outside dates for the Lessee to satisfy the Possession Conditions. If the City terminates the Lease for failure to meet the Outside Possession Date, the City's remedy shall be limited to the lesser of: (i)the unfunded portion, if any, of the Initial Lessee Minimum Equity Contribution; or (H) the actual, documented costs and expenses paid by City to third parties in connection with this Lease, not to exceed $500,000.00 in the aggregate. • The Lease also includes a variety of other terms, including with respect to maintenance and repair obligations, insurance requirements, obligations to reconstruct the Hotel in the event of force majeure or other casualty, indemnification in favor of the City, and remedies to the City in the event of default, including termination rights. Appraisal An appraisal of the Leased Property, as required by Section 82-39 of the City Code, has been completed by Blazejack&Company, indicating that the fee simple value of the land is of$59 million Convention Center Hotel—Development and Ground Lease Agreement July 25, 2018 Page 10 of 11 and that fair market value of stabilized rents range from 4% to 5% of land value. This equates to $2.36 million to $2.96 million in annual rent payments. Based on the percentage rent proposed in the Lease,the proposed stabilized rent of$2.6 million(by the fifth year following the Hotels opening) is within the fair market value range of the appraisal. The appraisal noted that the guaranteed fixed minimum rate of$2 million that escalates overtime is relatively higher than those seen elsewhere in the market place,supporting a stabilized rent on the lower end of the range.The appraisal is included in Appendix 4. In my view, the most important change made to the Lease since this matter was presented to the Finance Committee and at first reading is with respect to the percentage rent structure. In this regard, the proposed percentage rent(which is anticipated to yield $2.6 million by Year 5), is in line with the City's independent appraisal for the Project,which concluded that fair value would be between$2.36- $2.9 million. Therefore, I am comfortable with the final resolution as to percentage rent, as fair value is achieved even before considering the other revenues and significant public benefits associated with the Hotel Project, such as the$3.2 million for Art in Public Places,the additional$1.5 million per year that the City is entitled to receive from Miami-Dade County until 2044 if the Hotel is built; other revenues, such as the transaction rent, voluntary surcharge, and taxes; and the labor peace agreement that will protect the City against potential labor disruptions with respect to the project and will clarify the process for Hotel employees to decide for themselves whether they desire to unionize. With regard to the substantive Lease provisions, the Administration is comfortable that the final Lease includes commercially reasonable terms that protect the City's interests with respect to the Hotel Project, and include reasonable terms that do not make it prohibitive for the Lessee to obtain lender financing and equity financing for the Hotel Project. ADDITIONAL CONSIDERATIONS Planning Analysis A planning analysis, as required by Section 82-38 of the City Code, is attached as Appendix 5. Public Revenue Impact The Leased Property is currently a parking lot that generates $104,600 annually in revenues for the City, along with modest revenues paid to the City for the Fillmore's use of the rehearsal/"black box" room. If the site is developed with a hotel annual lease and tax revenue generated is estimated to be $10.4 million by year five. Over time, the Hotel is estimated to generate: • City: $365 million($146 million NPV)over 30 years and$2.4 billion($225 million NPV)over 99 years in lease payments, resort taxes, CRA revenues, property taxes and County CDT allocations to the City. • County: $117 million ($41 million NPV) over 30 years and $1.2 billion ($82 million NPV) over 99 years in convention development taxes, local option sales taxes and property taxes, • Schools: $45 million ($18 million NPV) over 30 years and $340 million ($29 million NPV) over 99 years in property taxes. • State: $278 million ($107 million NPV) over 30 years and $2.1 billion ($177 million NPV) over 99 years in sales taxes. • Total: $810 million($314 million NPV)over 30 years and$6.1 billion($516 million NPV)over 99 years in lease payments and taxes. Refer to attached Appendix 6. Convention Center Hotel-Development and Ground Lease Agreement July 25, 2018 Page 11 of 11 Voter Referendum Requirement The Lease is contingent upon sixty percent (60%) voter approval in accordance with Section 1.03(b)(3)of the City Charter. The referendum is contemplated to occur on November 6, 2018. A Resolution adopting the ballot question will accompany this item on the July 25, 2018 City Commission agenda. RECOMMENDATION As I have noted previously, there are many positive aspects of the deal: 1. The Project incorporates the issues recommended by the Mayor's Blue Ribbon panel; 2. A maximum height of 185 feet; 3. 800 rooms, the Greater Miami Convention Visitor's Bureau (GMCVB's) as well as the Mayor's Blue Ribbon panel recommended target room number to support room blocks for convention events; 4. An efficient approach to vehicle circulation and traffic, by using the majority of the footprint of the site to internalize pickup and drop-offs, and to minimize impacts to 17th Street and Convention Center Drive; 5. A design that is compatible with the renovated MBCC and the surrounding area; 6. The utilization of a world class architect to produce an iconic design; 7. A resilient design that incorporates the use of solar power, green and blue infrastructure, native vegetation, and water& resource conservation; 8. Significant resort tax, property tax and CDT revenues, and the absence of any City funding, subsidy or financing for the project; 9. LEED Gold Certified Building; 10. No need to tear down the Jackie Gleason Theater; and 11. Strong locally based development team. In light of the foregoing, and based on the final terms included in the proposed Lease, my recommendation is that the Mayor and City Commission hereby approve, following second reading/public hearing, the Development and Ground Lease Agreement attached hereto as Exhibit 1. Exhibits: Appendix 1: Development and Ground Lease Agreement Appendix 2: Proposed boundaries for Leased Property Appendix 3: Summary of Proposed Minimum Fixed Rent Appendix 4: Appraisal Appendix 5: Planning Analysis Appendix 6: Summary of Public Revenue Impact Resolutions - R7 A MIAMI BEACH COMMISSION MEMORANDUM TO: Honorable Mayor and Members of the City Commission FROM: Jimmy Morales, City Manager DATE: July 25, 2018 9:30 a.m. Second Reading Public Hearing SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING, FOLLOWING FIRST READING/PUBLIC HEARING, A DEVELOPMENT AND GROUND LEASE AGREEMENT AS AUTHORIZED, RESPECTIVELY, UNDER SECTION 118-4 OF THE CITY CODE, SECTIONS 163.3220 - 163.3243, FLORIDA STATUTES, AND SECTION 82-37 OF THE CITY CODE, BETWEEN THE CITY AND MB MIXED USE INVESTMENT, LLC ("MIAMI BEACH CONNECT"), FOR THE DEVELOPMENT OF A CONVENTION HOTEL WITH UP TO 800 ROOMS AND RELATED FACILITIES, INCLUDING UP TO 60,000 SQUARE FEET OF CONFERENCE AND BALLROOM FACILITIES, AND UP TO 52,000 SQUARE FEET OF ACCESSORY RETAIL AND RESTAURANT FACILITIES TO SERVICE HOTEL GUESTS AND THE PUBLIC (THE "HOTEL"), ON AN APPROXIMATELY 2.6 ACRE SITE ON THE NORTHEAST CORNER OF 17TH STREET AND CONVENTION CENTER DRIVE, BOUNDED ROUGHLY BY THE MIAMI BEACH CONVENTION CENTER TO THE NORTH, 17TH STREET TO THE SOUTH, THE FILLMORE MIAMI BEACH AT THE JACKIE GLEASON THEATER TO THE EAST, AND CONVENTION CENTER DRIVE TO THE WEST (THE "LEASED PROPERTY"); DELINEATING THE CONDITIONS FOR THE DESIGN, CONSTRUCTION, EQUIPPING AND OPERATION OF THE HOTEL ON THE LEASED PROPERTY WITH NO CITY FUNDING THEREFOR; PROVIDING FOR A 99-YEAR TERM OF THE LEASED PROPERTY ONCE CERTAIN CONDITIONS ARE SATISFIED; PROHIBITING GAMBLING ESTABLISHMENTS ON THE LEASED PROPERTY; AND PROVIDING FOR ANNUAL BASE RENT TO THE CITY, AFTER THE HOTEL OPENS, OF THE GREATER OF MINIMUM FIXED RENT ORA FIXED PERCENTAGE OF THE REVENUES OF THE HOTEL, AMONG OTHER RENT. (ITEM TO BE SUBMITTED IN SUPPLEMENTAL) RECOMMENDATION Item to be submitted in the Supplemental. Legislative Tracking Office of the City Manager Page 1021 of 1464 ATTACHMENTS: Description o Ad Page 1022 of 1464 CITY OF MIAMI BEACH NOTICE OF PUBLIC HEARING AND INTENT TO CONSIDER A DEVELOPMENT AND GROUND LEASE AGREEMENT NOTICE IS HEREBY given that a Second Reading/Rub:c Hearing will he heard by the Mayor and City Commission of the City of Miami Beach,Florida,in the Commission Chamber.3rd Floor,City Hell,llOoConvention Center Drive,Miami Beach Florida.on Wednesday,July 25,2018 at 9:30 am.,or as soon thereafter as the matter can be heard,to consider Oe following Resolution (provided that the proposed Development and Ground Lease Agreement is approved by the Mayor and City Commis0n foll0wing first readinglpuhllC hearing on July 17,2015): A Resolution Of The Mayor And.Cly Commission Of The City Of Miami Beach,Approving,Following Second Reading/ Public Hearing,A Development And Ground Lease Agreement As Authorized.Respectively,Under Section 118-4 Of The City Code,Sections 163.3220-163.3243,Florida Slatutes,And Section 82-37 Of The City Code.Between The CityAnd MB Mixed Use Investment,LLC,For The Development Of A Convention Hotel With Up to 800 Roams And Related Facilities, Including Up To 60,000 Square Feet Of Conference And Ballroom Facilities.And Up To 52,000 Square Feet Of Accessory Retail and Restaurant Facilities to Service Hotel Guests and the Public(The Notel"),On An Approximately 2.6 Acre Site On The Northeast Corner Of V'"StreetAnd Convention Center Drive,Bounded Roughly By The Miami Beach Convention Center To The North,17"Street To The South,The Fillmore Miami Beach At The Jackie Gleason Theater To The East,And I Convention Center Drive To The West{The lLeased Property"):Delineating The Conditions For The Design.Construction. Equipping And Operation Of The Hotel On The Leased Properly Wlth No City Funding Therefor:Providing For A 00-Year i Term Of The Leased Property Once Certain Conditions Are Satisfied;Prohibiting Gambling Establishments On The Leased Property,Providing For Annual Base Rent To The City,Alter The Hotel Opens.Of The Greater of Minimum Fixed Rent Or A Percentage Of The Revenues Of The Hotel.Among Other Rent PROPERTY The proposed Leased Properly consists of a portion of Folio No.02-3227,000-0090.on an approximately 2.6 acre site on the northeast corner of 17'-Street and Convention Center Drive,bounded roughly by the Miami Beach Convention Center to the North.iP Street to the South.the Fillmore Miami Beach at the Jackie Gleason Theater to the East,and Convention Center Drive to the West. PERMITTED USES'.The current main permitted uses in the Caps Civic and Convention Center CCC)District include parking lots,garages,performing arts and cultural facilities:hotelmerchandise mad',commercial or office development; landscape open space;parks and any use that is customarily associated with a convention center or governmental buildings and uses.The proposed Development and Ground Lease Agreement will permit a convention hotel with up to Egg rooms and related facilibes.including up to 6O 000 square feel of conference and ballroom facilities,and up to 52,000 square feet of accessory retail and restaurant facilities to service hotel guests and the public Under the City's Land Development Regulations,the maximum building intensity for this zoning district(the CCC Civic and Convention Center district)is a floor area ratio of 2.75,and the maximum buil0ing height for a hotel is 300 feet.The scale of the hotel use is limited by setback,height,floor area ratio,minimum room size,parking requirements of.4 spaces per room and other provisions of the City's Land Development Regulations.The City's Land Development Regulations do not provide for population densities for thi� gzzoning B2SId of 1464 Nobvithstanding the maximum building height of 300 feet permitted by the City's Land Development Regulations, the proposed Development and Ground Lease Agreement provides that the height of any habitable building on the Leased E Properly shall not exceed 185(eel to the top of the roof,and architectural projections will comply with the terms of the Development and Ground LeaseAgreement(and other applicable provisions of the City's Land Development Regulations). A copy of the proposed Development and Ground Lease Agreement is evadable for public inspection during normal business Lee hours in the Office of the City Clerk.1700 Convenlan Center Nye,Is!Floor.City Hal{Miami Beach,Florida 35139. w INTERESTED PARTIES are invited to appear at this meeting.or be represented by an agent.or to express their views in writing addressed to the City Commission.c/o the City Cle .1700 Convention Center Drive,1'Floor,City Hall,Miami Beach,Florida — 33139.This item it available for public inspection during normal business hours in the Office of the City Clerk,1700 Convention Center Drive.1"Floor,City Hall,Miami Beach,Florida 33139.This meeting,or any item herein,may be continued,and under e such circumstances,additional legal notice need net be provided. Pursuant to Section 286.3105,Fla.Stat.,the City hereby advises the public that if a person decides to appeal any decision made by Me City Commission with respect to any matter considered at its meeting or its hearing,such person must ensure that a verbatim record of the proceedings is made,which record includes the testimony and evidence upon which the appeal is to be based.This notice does not constitute consent by.the City for the introduction or admission of otherwise inadmissible or irrelevant evidence,nor does it authorize challenges or appeals not otherwise allowed by law. To request thlsmaterel in alternate format,sign bnguage interpreter(five-day notice required),information on access for persons with disabilities.and/or any accommodation to review any document or participate in any City-sponsored proceedings, call 306604 2489 and select option 6;TTY users may call via 711(Florida Relay Service). Rafael E.Grande,City Clerk City of Miami Beach Ad 072518-06 Appendix 1 Development & Ground Lease Agreement between MB Mixed Use Investment, LLC and CITY OF MIAMI BEACH, a Florida municipal corporation City Commission Resolution No. 2018- 3 0125 TABLE OF CONTENTS ARTICLE I 2 VOTER REFERENDUM,EFFECTIVE DATE AND DEFINITIONS 2 Section 1.1. Voter Referendum Requirement 2 Section 1.2. Effective Date 2 Section 1.3. Defined Terms 2 Section 1.4. Exhibits 19 Section 1.5. Interpretation 19 ARTICLE II 19 THE HOTEL PROJECT IMPROVEMENTS 19 Section 2.1. Development and Conformity of Plans 19 Section 2.2. Approved Plans 20 Section 2.3. Lessee's Hotel Project Obligations 20 Section 2.4. Payment of Hotel Project Costs 20 Section 2.5. Financing Matters. 21 Section 2.6. No Claim for Value of Lessee Improvements 22 Section 2.7. Schedule of Performance 22 Section 2.8. Construction Obligations 22 Section 2.9. Progress of Construction/City's Representative 24 Section 2.10. Delivery of Plans 25 Section 2.11. Connection of Buildings to Utilities 25 Section 2.12. Permits and Approvals 25 Section 2.13. City and Lessee to Join in Certain Actions 25 Section 2.14. Compliance with Laws 26 Section 2.15. Alterations and Renovations 26 Section 2.16. Art in Public Places 26 ARTICLE III 26 LAND USES AND DEVELOPMENT OBLIGATIONS 26 Section 3.1. Covenant Regarding Land Uses 26 Section 3.2. Applications for Development Approvals and Development Permits 26 Section 3.3. Concurrency 26 Section 3.4. Compliance with Local Regulations Regarding Development Permits 27 Section 3.5. Consistency with the City's Comprehensive Plan 28 Section 3.6. Presently Permitted Development 28 Section 3.7. Public Facilities to Serve the Leased Property 28 Section 3.8. Public Reservations, Dedications 28 Section 3.9. Required Development Permits 28 Section 3.10. Responsible Wages and Local Employment 28 Section 3.11. Laws Governing this Lease 28 Section 3.12. Duration of Development Rights 28 Section 3.13. Lessee's Right of Termination 29 ARTICLE IV 29 GENERAL TERMS OF LEASE 29 Section 4.1. Lease of Leased Property to 29 Section 4.2. Restrictive Covenants 33 Section 4.3. Representations 34 Section 4.4. Rent and Other Payments.. 35 Section 4.5. Covenants for Payment of Public Charges by Lessee 39 ARTICLE V 40 ASSIGNMENT 40 Section 5.1. Purpose of Restrictions on Transfer 40 Section 5.2. Transfers 41 Section 5.3. Permitted Transfers 41 Section 5.4. Transfer Requiring City's Approval 43 Section 5.5. Effectiveness of Transfers 43 Section 5.6. Subletting 43 ARTICLE VI 44 MORTGAGE FINANCING;RIGHTS OF MORTGAGEE AND LESSEE 44 Section 6.1. Conditions of Financing and Leasehold Mortgage 44 Section 6.2. No Waiver of Lessee's Obligations or City's Rights 50 ARTICLE VII 51 REMEDIES; EVENTS OF DEFAULT 51 Section 7.1. Default by Lessee 51 Section 7.2. Remedies for Lessee's Default 54 Section 7.3. Default by the City 56 Section 7.4. Force Majeure and Economic Force Majeure 56 Section 7.5. Remedies Cumulative; Waiver 57 Section 7.6. Right to Cure 57 Section 7.7. Room Block Agreement 57 Section 7.8. Dispute Resolution 58 Section 7.9. Expedited Arbitration of Development Disputes 58 Section 7.10. Disputes Regarding Disapproval of a Proposed Brand or Proposed Transferee 60 Section 7.11. Plans and Data 61 ARTICLE VIII 62 PROTECTION AGAINST MECHANICS'LIENS 62 AND OTHER CLAIMS;INDEMNIFICATION 62 Section 8.1. Lessee's Duty to Keep Project Free of Liens 62 Section 8.2. Contesting Liens 63 Section 8.3. Indemnification 63 Section 8.4. Environmental Matters 64 Section 8.5. Limitation of City's Liability 66 ARTICLE IX 67 INSURANCE AND RECONSTRUCTION 67 Section 9.1. General Insurance Provisions 67 Section 9.2. Evidence of Insurance 67 Section 9.3. Required Coverages 68 Section 9.4. Premiums and renewals 69 Section 9.5. Adequacy Of Insurance Coverage 69 Section 9.6. City May Procure Insurance if Lessee Fails To Do So 69 Section 9.7. Effect of Loss or Damage 70 Section 9.8. Proof of Loss 70 Section 9.9. Insurance Proceeds 70 Section 9.10. Reconstruction 71 Section 9.11. Waiver of Subrogation 71 Section 9.12. Inadequacy of Insurance Proceeds 72 Section 9.13. No City Obligation to Provide Property Insurance 72 Section 9.14. Compliance 72 Section 9.15. Right to Examine 72 Section 9.16. Personal Property 72 ARTICLE X 72 CONDEMNATION 72 Section 10.1. Complete Condemnation 72 Section 10.2. Partial Condemnation 73 Section 10.3. Restoration After Condemnation 73 Section 10.4. Temporary Taking 74 Section 10.5. Determinations 74 Section 10.6. Payment of Fees and Costs 74 ARTICLE XI 74 QUIET ENJOYMENT AND OWNERSHIP OF IMPROVEMENTS 74 Section 11.1. Quiet Enjoyment 74 Section 11.2. Waste 74 Section 11.3. Maintenance and Operation of Improvements 74 Section 11.4. Ownership of Improvements During Lease 75 Section 11.5. Surrender of Leased Property 75 ARTICLE XII 75 MAINTENANCE AND REPAIRS 75 Section 12.1. Standards Generally 75 Section 12.2. Utilities 76 Section 12.3. Cleaning 76 Section 12.4. Removal of Trash 76 Section 12.5. Maintenance and Repairs 76 Section 12.6. Excavation of Land 76 Section 12.7. Water and Sewerage System 77 Section 12.8. Industrial Waste Facilities 77 Section 12.9. Inspections 77 Section 12.10. Failure of Lessee to Maintain 77 ARTICLE XIII 78 MANAGEMENT OF HOTEL 78 Section 13.1. Hotel Standards 78 Section 13.2. Covenant to Continuously Operate Hotel 78 Section 13.3. Hotel Name 79 ARTICLE XIV 79 MISCELLANEOUS PROVISIONS 79 Section 14.1. No Partnership or Joint Venture 79 Section 14.2. Recording,Documentary Stamps 79 Section 14.3. Florida and Local Laws Prevail 80 Section 14.4. No Conflicts of Interest 80 Section 14.5. Notice 80 Section 14.6. Estoppel Certificates 81 Section 14.7. Provisions not Merged with Deed 82 Section 14.8. Titles of Articles and Sections 82 Section 14.9. Counterparts 82 Section 14.10. Successors and Assigns; No Third Party Beneficiaries 82 Section 14.11. Entire Agreement 83 Section 14.12. Amendments 83 Section 14.13. Non-Subordination of City's Interest 83 Section 14.14. City Manager's Delegated Authority. 84 Section 14.15. Holidays 84 Section 14.16. No Brokers 84 Section 14.17. No Liability for Approvals and Inspections 84 Section 14.18. Radon 84 Section 14.19. Lessee Entity 84 Section 14.20. Inflation Adjustments 84 Section 14.21. Standard of Conduct 85 Section 14.22. Waiver of Consequential Damages 85 Section 14.23. Reservation of Rights 85 List of Exhibits EXHIBIT"A" ACCEPTABLE OWNER DEFINITION 86 EXHIBIT"B" HOTEL STANDARDS 91 EXHIBIT"C" BUDGETED IMPROVEMENT COSTS 93 EXHIBIT"D" LEGAL DESCRIPTION OF HOTEL SITE 94 EXHIBIT"E"APPROVED PLANS 96 EXHIBIT"F" RESERVED 112 EXHIBIT"G" FORM OF EASEMENTS 113 EXHIBIT"H" PRESENTLY PERMITTED DEVELOPMENT 129 EXHIBIT"I" PUBLIC FACILITIES 130 EXHIBIT"1" PUBLIC RESERVATIONS AND DEDICATIONS 131 EXHIBIT"K" REQUIRED DEVELOPMENT PERMITS AND VARIANCES 132 EXHIBIT"L" ROOM BLOCK AGREEMENT 133 EXHIBIT"M"OWNERSHIP INTERESTS IN LESSEE 159 EXHIBIT"N" RESERVED 162 EXHIBIT"0"TRANSACTION RENT 163 EXHIBIT"P" RESERVED 164 EXHIBIT"Q" RESERVED 165 EXHIBIT"R"SCHEDULE OF MINIMUM FIXED RENT 166 EXHIBIT"S"MANDATORY HOTEL PROJECT DESIGN ELEMENTS 167 EXHIBIT"T" LESSEE'S ARTICLES OF ORGANIZATION 168 EXHIBIT"U" FILLMORE THEATER PARKING 177 DEVELOPMENT AND GROUND LEASE AGREEMENT St- THIS DEVELOPMENT AND GROUND LEASE AGREEMENT ("Lease") is executed on the 31 day of jul y, , 2018, by and between the CITY OF MIAMI BEACH, FLORIDA, a municipal corporation (the "City") and MB MIXED USE INVESTMENT, LLC,a Florida limited liability company(the"Lessee"). RECITALS: A. The City has a material interest in maximizing the performance of the Miami Beach Convention Center (as hereinafter defined in Section 1.3) and encouraging convention and tourism business in the City. To further those goals,the City desires to facilitate development of an adjacent full service convention center headquarter hotel on real property owned by the City and described more fully in Exhibit "D" hereto, to be connected to the Convention Center by an enclosed overhead pedestrian Skybridge (as hereinafter defined in Section 1.3). B. The City is a Florida municipal corporation with powers and authority conferred under the Florida Constitution, the Municipal Home Rule Powers Act set forth in Chapter 166 of the Florida Statutes, and the Miami Beach City Charter and Code of Ordinances (the "City Code'). The City has all governmental, corporate and proprietary powers to enable it to conduct municipal government, perform municipal and governmental functions, and render municipal services, including the authority to adopt, implement and enforce (together with any other required Governmental Approvals) comprehensive plans, zoning ordinances, redevelopment plans, and other police power and legislative measures necessary to assure the health, safety and general welfare of the City and its inhabitants. C. This Lease, among other things, is intended to and shall constitute a development agreement between the parties pursuant to Sections 163.3220-163.3243, Florida Statutes, the "Florida Local Government Development Agreement Act"and Section 118-4 of the City's Code. D. On or about May 17, 2018, the City issued Request for Proposal No. 2018-238-KB, for the Development of a Convention Hotel Adjacent to the Miami Beach Convention Center("RFP"). After a competitive RFP process, and the City having fully considered this Lease at two duly noticed public hearings in compliance with Section 163.3225 of the Act; having determined that the Hotel Project (as hereinafter defined in Section 1.3) and this Lease are in compliance with the City's Comprehensive Plan and Land Development Regulations (as each are hereinafter defined in Section 1.3) as of Twp' al ,, 2018;and having further determined that it is in the City's best interest to address the issues covered by this Lease in a comprehensive manner, in compliance with all applicable laws, ordinances, plans, rules and regulations of the City, the City has agreed to enter into this Lease with the Lessee, subject to the terms and conditions herein. E. On July 25, 2018, the Mayor and City Commission, by Resolution No. 2018-3C 4),c, approved the execution of this Lease. NOW THEREFORE, for and in consideration of the foregoing, and of the mutual covenants and agreements contained herein,the parties agree as follows: 1 ARTICLE I VOTER REFERENDUM, EFFECTIVE DATE AND DEFINITIONS Section 1.1. Voter Referendum Requirement. The parties acknowledge and agree that, pursuant to Section 1.03(b)(3) of the City Code, this Lease and the obligations herein are subject to and contingent upon the approval of this Lease by vote of at least sixty percent (60%) of the voters voting thereon in a City-wide referendum on November 6, 2018 (the "2018 Referendum") or such later date in 2019 as further described in this Section (each, a "2019 Referendum" and together with the 2018 Referendum, each, a "Referendum"). In the event that the 2018 Referendum is not successful, or if the ballot question is removed or election results are invalidated by a court of competent jurisdiction, then the Lessee may, within 90 days after the date on which it is determined that the 2018 Referendum was not successful, request that the City Commission consider adopting a resolution calling for a special election for approval of the Lease in a 2019 Referendum. If (a) the City Commission declines to adopt a resolution calling for approval of the Lease in a 2019 Referendum or (b) within such ninety (90) day period, Lessee either fails to so notify the City or notifies the City that it wishes to terminate this Lease, then in any such event, this Lease shall be deemed null and void and the parties shall have no obligations or liabilities of any kind or nature whatsoever hereunder. In the event that, following Lessee's request,the City Commission adopts a resolution calling for a 2019 Referendum and the 2019 Referendum is not successful, or if the ballot question is removed or election results are invalidated by a court of competent jurisdiction, in each case following the last date on which a 2019 Referendum occurred, this Lease shall be deemed null and void and the parties shall have no obligations or liabilities of any kind or nature whatsoever hereunder. Section 1.2. Effective Date. If a Referendum is successful and all requirements of the City Code and applicable law are satisfied, this Lease shall be effective upon the City Commission's adoption of a resolution accepting the certification of the official results of the applicable election with respect to the applicable Referendum ("Effective Date"). Section 1.3. Defined Terms. As used herein the term: "Acceptable Owner" has the meaning ascribed to it in Exhibit"A" "Additional Base Rent" has the meaning ascribed to it in Section 4.4(a)(iiil. "Additional Rent" means any and all payments required of Lessee to the City by the terms of this Lease other than Base Rent. "Affiliate" means, regarding any Person,any other Person directly or indirectly Controlling, Controlled by or under common Control with such Person. When used in reference to Lessee, for so long as Lessee(or any of its Affiliates) holds an interest,directly or indirectly, in Lessee, "Affiliate"shall include any Person Controlling,Controlled by, or under common Control with Lessee. "Approval, Approve or Approved" means the written approval or consent of a Party, which unless otherwise specified herein by reference to "sole discretion" or words of similar effect, shall be commercially reasonable and made in good faith and with due diligence. 2 "Approved Brand" means (a) each of the following national hotel brands, provided that with respect to any such operator engaged by Lessee after the fifth anniversary of the Opening Date, such operator's reputation for quality and quality of operation as of the date of engagement is generally known and recognized by the hotel industry as not having substantially declined, as of the date of engagement, in comparison to their reputation for quality and quality of operation as of the Effective Date: Marriott (i.e., the Marriott, Marriott Marquis, Renaissance, Gaylord, Westin, Sheraton or JW Marriott brands), Omni, Hyatt Regency, La Meridien, Hilton and Intercontinental, (b) from and after the twentieth (20`h) anniversary of the Opening Date, any other "Upper Upscale" brand as then rated by Smith Travel Research and generally recognized in the hospitality industry as an experienced convention center hotel brand, or (c) any other hotel brand Approved by City pursuant to this Lease. For avoidance of doubt, from and after the twentieth (20`h) anniversary of the Opening Date, Lessee may elect to operate or cause the Hotel to be operated as a "non-branded" hotel, provided,that the Hotel must comply with the Hotel Standards set forth on Exhibit"B". "Approved Operator" means (a) any Approved Brand or(b) any management company approved by an Approved Brand to either (i) serve as the Hotel Operator pursuant to a franchise agreement with the Approved Brand or(ii)operate another Approved Brand hotel. "Approved Plans" means the renderings and diagrams attached hereto as Exhibit "E" depicting the Mandatory Hotel Project Design Elements (other than the Skybridge), which renderings and diagrams the City has Approved as of the Effective Date, as may be modified from time to time in accordance with the terms of this Lease. "Approved Skvbridge and Off-Site Improvements Plans" means the renderings and diagrams depicting the Skybridge and Off-Site Improvements to be Approved by the City Manager prior to the Possession Date, which, following Approval by the City Manager, may be modified from time to time in the same manner as the Approved Plans in accordance with the terms of this Lease. The Skybridge will have finishes consistent with the finishes in the connecting point in the Convention Center, or as needed to comply with the Hotel Operator's generally applicable national brand standards. The repairs to the Fillmore Theater as part of the Off-Site Improvements will be done consistently with the quality of the Fillmore Theater prior to the work being done by Lessee in connection with the Hotel Project. "Arbitrator"shall have the meaning ascribed to it in Section 7.10(a). "Assignment of Contracts and Agreements" means an assignment from Lessee, as assignor, to the City, as assignee, assigning in favor of the City, on a non-recourse basis without any warranties or representations from Lessee, all of Lessee's right, title and interest in and to all contracts and agreements (other than the Hotel Project General Construction Contract and the Assignment of Plans and Approvals) executed in connection with the design,construction and equipping of the Hotel Project prior to the Completion of Construction, including such contracts and agreements with design professionals, which assignment shall be in form and substance reasonably satisfactory to the City (together with any necessary consents required in connection with such assignment), which assignment shall be an absolute assignment from Lessee to the City, provided that for so long as no Event of Default has occurred and is continuing hereunder, the City shall give Lessee a license of all such contracts and agreements, with the right to enforce all of the terms thereof, for the duration of the Term; provided, further that for so long as a First Leasehold Mortgage encumbers the Hotel Project, the City agrees to permit Lessee to make an assignment of such contracts and agreements to such First Leasehold 3 Mortgagee (which First Leasehold Mortgagee shall have priority with respect thereto pursuant to the non-disturbance, recognition and attornment agreement entered into pursuant to Section 6.1(b) hereof). "Assignment of Hotel Project General Construction Contract" means an assignment from Lessee, as assignor, to the City, as assignee, assigning in favor of the City all of Lessee's right, title and interest in and to the Hotel Project General Construction Contract,which assignment shall include a duly executed consent by the Hotel Project General Contractor and shall otherwise be in form and substance reasonably satisfactory to the City (together with any necessary consents required in connection with such assignment), which assignment shall be an absolute assignment from Lessee to the City, provided that for so long as no Event of Default has occurred and is continuing hereunder, the City shall give Lessee a license of the Hotel Project General Construction Contract, with the right to enforce all of the terms thereof, for the duration of the Term; provided, further that for so long as a First Leasehold Mortgage encumbers the Hotel Project, the City agrees to permit Lessee to make an assignment of the Hotel Project General Construction Contract to such First Leasehold Mortgagee (which First Leasehold Mortgagee shall have priority with respect thereto pursuant to the non-disturbance, recognition and attornment agreement entered into pursuant to Section 6.1(b) hereof). "Assignment of Plans and Approvals" means an assignment from Lessee, as assignor, to the City, as assignee,assigning in favor of the City all of Lessee's right,title and interest in and to all Approved Plans, designs, Governmental Approvals and other work product produced by Lessee and any other Person for use in the development, construction and operation of the Work,which assignment shall include a duly executed consent by each Person other than the Lessee having an interest in such Approved Plans, designs, Governmental Approvals and other work product and shall otherwise be in form and substance reasonably satisfactory to the City (together with any necessary consents required in connection with such assignment), which assignment shall be an absolute assignment from Lessee to the City, provided that for so long as no Event of Default has occurred and is continuing hereunder, the City shall give Lessee a license of all such Approved Plans, designs, Governmental Approvals and other work product assigned to the City for the duration of the Term; provided,further that for so long as a First Leasehold Mortgage encumbers the Hotel Project,the City agrees to permit Lessee to make an assignment of such Approved Plans, designs, Governmental Approvals and other work product to such First Leasehold Mortgagee (which First Leasehold Mortgagee shall have priority with respect thereto pursuant to the non-disturbance, recognition and attornment agreement entered into pursuant to Section 6.1(b) hereof). "Audited Gross Operating Revenues Schedule" means a schedule prepared in accordance with the Uniform System and reconciled in accordance with GAAP, and showing all Gross Operating Revenues and Gross Operating F&B Revenues for a Lease Year. Such Audited Gross Operating Revenues shall be based on Lessee's audited financial statements for such Lease Year. "Bankruptcy Code"means Title 11 of the United States Code entitled "Bankruptcy," as amended. "Base Rent"shall have the meaning ascribed to it in Section 4.4(a). "Brand Approvals" means the written confirmation from the Initial Hotel Operator approving the design of the Hotel Project,and, prior to Opening, approving the FF&E to be installed in the Hotel Project. 4 "Budgeted Improvement Costs" means the estimated Improvement Costs as of the date hereof, as set forth in Exhibit"C". "Business Day" means a day other than a Saturday,a Sunday or a day on which the offices of the City,or national banks in Miami-Dade County, Florida are closed for business. "Certificate of Occupancy" means a certificate of occupancy or certificate of completion, as applicable, for the buildings and structures on the Leased Property, and shall include any such certificate designated as"Temporary" in nature, provided it allows for occupancy of the Hotel by paying guests. "City" shall mean the City of Miami Beach, a Florida municipal corporation, having its principal offices at 1700 Convention Center Drive, Miami Beach, Florida 33139. In all respects hereunder, City's obligations and performance is pursuant to City's position as the owner of the Hotel Site acting in its proprietary capacity. In the event City exercises its regulatory authority as a governmental body, the exercise of such regulatory authority and the enforcement of any rules, regulations, laws and ordinances (including through the exercise of the City's building,fire, code enforcement, police department or otherwise) shall be deemed to have occurred pursuant to City's regulatory authority as a governmental body and shall not be attributable in any manner to City as a party to this Lease or in any way be deemed in conflict with,or a default under,the City's obligations hereunder. "City Code" has the meaning ascribed to it in the recitals hereto. "City Commission"shall mean the governing and legislative body of the City. "City Delays" shall mean the number of days in which the City performs any obligation under Section 2.13 hereof in excess of the number of days set forth for such performance therein. "City Manager" shall mean the Chief Administrative Officer of the City. The City Manager shall be construed to include any duly authorized representatives designated in writing with respect to any specific matter(s) concerning this Lease (exclusive of those authorizations reserved to the City Commission or regulatory or administrative bodies having jurisdiction over any matter(s) related to this Lease). "City's Representative" has the meaning ascribed to it in Section 2.9(b). "Commence Construction" or "Commencement of Construction" means, with respect to the Hotel Project, the commencement of bona-fide pouring of the concrete foundation for the Hotel Project, provided that the pour is completed in the ordinary course. "Complete Construction" or "Completion of Construction" means the date Lessee has completed the Hotel Project substantially in accordance with the requirements of the Approved Plans and all conditions of permits and regulatory agencies to obtain a Certificate of Occupancy have been satisfied, all applicable Governmental Authorities have issued a Certificate of Occupancy, the Hotel has been accepted by the Hotel Operator, and the Hotel Project is ready for occupancy, utilization and continuous commercial operation for the uses and purposes intended by this Lease, without material interference from incomplete or improperly completed Work, and substantially all of the FF&E required for the Opening Date has been purchased, delivered to and installed in the Hotel Project to the extent required by the Hotel Operator. 5 "Comprehensive Plan" means the comprehensive plan which the City Commission has adopted and implemented for the redevelopment and continuing development of the City pursuant to Chapter 163 Part IL of the Florida Statutes. "Concurrency Requirements"shall have the meaning ascribed to it in Section 3.3. "Construction Lender" means the Institutional Lender selected by Lessee to provide the Construction Loan. "Construction Loan" means the loan or loans to be provided by the Construction Lender(s)to the Lessee for development and construction of the Hotel Project in an aggregate amount not more than 85% of the Budgeted Improvement Costs. "Construction Loan Commitment" means a financing commitment, term sheet or similar agreement by the Construction Lender that has been executed and delivered by and between Lessee and the Construction Lender(s) that confirms availability (subject to satisfaction of the terms and conditions contained therein) of the Construction Loan to fund the construction of the Hotel Project in accordance with the requirements of this Lease. "Control " "Controlling' or "Controlled" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, by Governmental Requirements or otherwise, or the power to elect in excess of fifty percent (50%) of the directors, managers, general partners or other Persons exercising similar authority with respect to such Person (it being acknowledged that a Person shall not be deemed to lack Control of another Person even though certain decisions may be subject to "major decision" consent or approval rights of limited partners, shareholders or members, as applicable). For avoidance of doubt, if a Person (for purposes of this definition, "Person A") cannot elect in excess of fifty percent (50%) of the directors, managers, general partners or other Persons exercising similar authority with respect to a Person (for purposes of this definition, "Person B")without the consent or approval of another Person or Persons,then Person A shall not be deemed to Control Person B. "Convention Center" means the Miami Beach Convention Center located at 1901 Convention Center Drive, Miami Beach, Florida, 33139. "Convention District Fee" has the meaning ascribed to it in Section 4.5(a)(iii). "Corrective Action Work" has the meaning ascribed to it in Section 8.4(a)(vii). "CPA" means a national firm of certified public accountants Approved by the City Manager, used by Lessee for the purpose of certifying the annual reports, its financial condition or for any other purpose specified herein. "Credit Enhancement" means a credit enhancement with respect to, or guaranty of, the financing for the Hotel provided by a Hotel Operator,or an Affiliate thereof. "Debt Service Coverage Ratio" means the ratio of: (i) Gross Operating Profit for the previous twelve (12) months; to (ii) the amount of Debt Service Payments actually required to be paid in such twelve (12) months. For example, if Gross Operating Revenues and Gross Operating F&B Revenues for a particular 6 twelve (12) months equal $3,700,000, Project Expenses equal $1,000,000 and Debt Service Payments actually required to be paid equal $1,800,000, the Debt Service Coverage Ratio for that twelve (12) months would be 1.50. "Debt Service Payments" means all principal, interest and other regularly scheduled sums and amounts paid or payable by Lessee for or during the applicable or pertinent period, in connection with any debt secured by a Leasehold Mortgage. "Default Rate" means an interest rate equal to five percent (5%) per annum above the highest annual prime rate (or base rate) published from time-to-time in The Wall Street Journal under the heading "Money Rates" or any successor heading as being the rate in effect for corporate loans at large U.S. money center commercial banks (whether or not such rate has actually been charged by any such bank) or if such rate is no longer published, then the highest annual rate charged from time-to-time at a large U.S. money center commercial bank, selected by the City, on short term, unsecured loans to its most creditworthy large corporate borrowers. "Development Arbitrator"shall have the meaning ascribed to it in Section 7.9(b). "Development Dispute" means any dispute between Lessee and City (acting in its proprietary capacity) arising prior to the Opening Date with respect to (i) whether a modification to the Hotel Project is a substantial deviation from the Approved Plans or a Prohibited Hotel Project Change requiring City's Approval pursuant to Section 2.2; (ii) any contention that City has unreasonably failed to Approve modifications to the Approved Plans in accordance with this Lease; (iii) any contention that City has unreasonably failed to Approve the proposed Approved Skybridge and Off-Site Improvements Plans or modifications thereto in accordance with this Lease; (iv) any contention that City has unreasonably failed to Approve a Hotel Project General Contractor in accordance with Section 2.8(b); (v) any disagreement as to permitted delays in Outside Dates;or(vi) any disagreement as to permitted delays in the Schedule of Performance pursuant to Section 2.7. "Development Order" means any order granting, denying, or granting with conditions an application for a Development Permit. "Development Permit"shall have the meaning set forth in Section 163.3221(5), Florida Statutes (2014). "Economic Force Majeure" means economic or political conditions or events that materially impair access to debtor equity markets by developers for development of projects in the United States similar to the Hotel Project or allow a committed debt or equity participant to terminate its debt or equity commitment, such as a temporary or long term liquidity crisis or major recession. "Effective Date" has the meaning ascribed to in Section 1.2. "Environmental Condition"has the meaning ascribed to it in Section 8.4. "Environmental Claim" has the meaning ascribed to it in Section 8.4. "Environmental Laws" has the meaning ascribed to it in Section 8.4. "Environmental Permit" has the meaning ascribed to it in Section 8.4. 7 "Environmental Requirements" has the meaning ascribed to it in Section 8.4. "Equity Commitment" means the commitment of Lessee to contribute an amount in cash to pay Improvement Costs as may be necessary, at the time of determination, when combined with the Initial Hotel Operator Financial Commitment, if any, and the proceeds available under the Construction Loan and Mezzanine Loan, if any, to maintain the Hotel Project In Balance, a portion of which Equity Commitment shall be funded by the Initial Lessee Estimated Equity Contribution but in no event less than the Initial Lessee Minimum Equity Contribution. "Event of Default" has the meaning ascribed to it in Article VII. "FF&E" means the furniture, fixtures and equipment for the Hotel Project to be procured and maintained by the Lessee. "Fillmore Theater" means the performing arts center located at 1700 Washington Avenue, Miami Beach, Florida, adjacent to and east of the Hotel Project and also known as the "Fillmore Miami Beach at the Jackie Gleason Theater". "First Leasehold Mortgage" means a Leasehold Mortgage which is a first lien on Lessee's interest in this Lease and the leasehold interest created hereby and the Hotel Project. "First Leasehold Mortgagee" means the Institutional Lender that is a holder of a First Leasehold Mortgage, which shall be evidenced by, and the City shall be able to rely absolutely on, a title report current as of the time of any determination and prepared by a generally recognized title insurance company doing business in Miami-Dade County, Florida, or upon a certificate of Lessee, signed and verified by a Responsible Officer of Lessee. "First Rent Year" has the meaning ascribed to it in Section 4.4(a). "Force Majeure Event" means the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies, whether actual or threatened; orders of any civil or military authority; insurrections; riots; acts of terrorism; epidemics; landslides, earthquakes, lightning, fires, hurricanes, storms, floods, washouts and other natural disasters; inability to procure or a general shortage of labor, equipment, facilities, materials or supplies in the open market, or failure or unavailability of transportation generally;or other similar extraordinary causes beyond the commercially reasonable control of the Party claiming such inability. In no event shall "Force Majeure Event" include economic hardship or financial inability to perform specific to the Party nor shall it include Economic Force Majeure. "Foreign Instrumentality" means a foreign (non-U.S.) government or agency thereof or a Person Controlled thereby. "Franchise Agreement" means the hotel franchise agreement, as it may be extended, supplemented, amended or replaced from time to time, between Lessee and the applicable Approved Brand, which provides lessee with the right to use the name or flag of the Hotel (if Lessee does not otherwise have such rights). 8 "GAAP" means generally accepted accounting principles, as in effect from time to time, as promulgated by the Financial Accounting Standards Board, consistently applied or a system generally recognized in the United States as having replaced GAAP. "Gaming Establishment" means any establishment offering or otherwise engaged in gambling or wagering of any nature or kind. "Governmental Approvals" means all permits, approvals, certificates of occupancy, notifications, certifications, registrations, authorizations and other rights and privileges that are required by any Governmental Authority. Notwithstanding anything to the contrary in this Lease, the Lessee retains its rights in accordance with applicable Governmental Requirements to challenge or appeal any denial of Governmental Approvals. "Governmental Authority" means any federal, state, county, municipal or other governmental department, entity, authority, commission, board, bureau, court, agency, or any instrumentality of any of them, with jurisdiction over the Leased Property, the Lessee Improvements, the Work or the Off-Site Improvements. "Governmental Requirements" means any law, enactment, statute, code, order, ordinance, rule, regulation, judgment, decree, writ, injunction, franchise, permit, certificate, license, or other similar requirement of any Governmental Authority, now existing or hereafter enacted, adopted, promulgated, entered, or issued, affecting the Leased Property or the construction and operation of the Lessee Improvements. Notwithstanding anything to the contrary in this Lease, the Lessee retains its right to challenge Governmental Requirements in accordance with all other applicable Governmental Requirements, including based on a constitutional objection that a Governmental Requirement violates Lessee's constitutional rights regarding contracts. "Gross Operating Profit" means the amount calculated by subtracting Project Expenses from the sum of Gross Operating Revenues and Gross Operating F&B Revenues. "Gross Operating F&B Revenues" means all revenues and income of any nature derived directly or indirectly from Hotel food and beverage operations as determined in accordance with the Uniform System, including revenues and income generated from banquets and catering, lobby bar, the restaurant club, three-meal a day restaurants and/or food and beverage facilities located on the pool deck and surrounding areas within the Hotel (whether any food and beverage establishment is operated by Lessee or a Subtenant, provided that Gross Operating F&B Revenues shall not include any revenues derived from third-party leased restaurants operated within the ground floor retail areas). Notwithstanding the foregoing,the following shall not constitute Gross Operating F&B Revenues: (i) any gratuities or service charges added to a customer's bill and distributed as compensation to the Hotel's employees; (ii) any credits or refunds made to customers, guests or patrons; and (iii) any sales taxes, excise taxes,or other similar taxes or charges collected by the Hotel and remitted to tax authorities. "Gross Operating Revenues" means all revenues and income of any nature derived directly or indirectly from the Hotel or from the use or operation of the Leased Property, including gross rooms sales (excluding the value of any redeemed guest loyalty program credits or points), resort fees, online travel bookings net of any commissions paid to an online travel agency or other similar entity, telephone, facsimile and/or internet services, in-room video and parking and valet service receipts (whether the parking or valet services are operated by Lessee or a Subtenant, excluding any revenues derived from 9 third-party leased restaurants operated within the ground floor retail areas), vending machines, gross receipts, rents (excluding amounts collected by Lessee for payment of operating expenses, taxes or insurance) or license fees from the operation by Lessee or any Affiliate of Lessee of newsstand, gift shop, or business center, or from any other sub-lessees, concessionaires, third-parties conducting operations on the Leased Property or other sources (except as provided in Section 5.6(c) hereof), the fair rental value of space within the Hotel Project occupied by Lessee or any entity affiliated with or employed by Lessee for purposes other than managing the Hotel Project (to the extent the occupants of such space are paying less than the fair market value of such space) and the proceeds of business interruption, other loss of income, use, occupancy or similar insurance, as determined in accordance with GAAP (to the extent not inconsistent with the Uniform Systems of Accounts), and the Uniform System of Accounts, and without any reduction or allowance for uncollectable charges or bad debts. Notwithstanding the foregoing, the following shall not constitute Gross Operating Revenues: (i) any gratuities or service charges added to a customer's bill and distributed as compensation to the Hotel's employees; (ii) any credits or refunds made to customers, guests or patrons; (iii) any sums and credits received for lost or damaged merchandise; (iv) any sales taxes, excise taxes, or other similar taxes or charges collected by the Hotel and remitted to tax authorities; (v) any proceeds from the sale or other disposition of FF&E or capital equipment; (vi) any interest earned with respect to the deposit or investment of proceeds from operation of the Hotel; (vii) any fire and extended coverage insurance proceeds (except that proceeds of business interruption or other loss of income insurance shall be included in Gross Operating Revenues); (viii) any condemnation awards; (ix) Gross Operating F&B Revenues; (x) any proceeds of sale or financing or refinancing of the Hotel; and (xi) any revenues received as part of a frequent guest reward or guest loyalty program. "Hazardous Substance" has the meaning ascribed to it in Section 8.4. "Hearing" has the meaning set forth in Section 7.9(c). "Hearing Date" has the meaning set forth in Section 7.9(c). "Hotel" means the hotel complex to be developed and constructed on the Hotel Site substantially in accordance with the Approved Plans, which will contain approximately 800 rooms, separately keyed sleeping rooms capable of individual rental on a day-to-day overnight basis to hotel patrons and guests. For the purpose of determining the maximum number of separately keyed sleeping rooms contained within the Hotel at any time during the Term, each such room which is capable of being separately keyed will be deemed to be separately keyed,without regard to the actual use thereof. "Hotel Operator" means and includes any Approved Operator engaged by Lessee to be responsible for overseeing the day- to-day management of the Hotel Project (or, if at any time there is no such operator, Lessee as operator of the Hotel Project). "Hotel Project" means Lessee's leasehold created by this Lease and the development, design, construction and purchase of the Lessee Improvements and their subsequent use;the completion of the Work substantially in accordance with the Approved Plans, including (1) the Hotel and all associated infrastructure (including on-site parking and all supporting Hotel facilities and amenities), (2) the Skybridge and all associated infrastructure, (3) the installation of FF&E and other improvements and appurtenances of every kind and description (including all landscaping, planting and other improvements of any type) now located or hereafter erected, constructed or placed upon the Leased 10 Property; and (4) any and all alterations, renewals and replacements thereof, additions thereto and substitutions therefor. "Hotel Project General Construction Contract" means the construction contract between Lessee and the Hotel Project General Contractor for the construction of the Hotel Project in accordance with the Approved Plans, within the contract time specified for completion of the Work, for a guaranteed maximum price that will not exceed the sum allocated for construction of the Work in the Budgeted Improvement Costs, and that includes provisions requiring a Performance Bond and Payment Bond and all other terms or conditions required under this Lease. "Hotel Project General Contractor" means the duly licensed general contractor(s) engaged by Lessee for the construction of the Hotel Project and completion of the Work. "Hotel Site means the parcel of real property described in Exhibit"0". "Hotel Standards" means the standards set forth in Exhibit"B". "Improvement Costs" means the actual, verifiable costs and expenses paid to third parties, not Affiliates of Lessee (unless such costs paid to Affiliates of Lessee are at fair market value and with notice to the City), in the design, permitting,development, construction and equipping of the Hotel Project; "In Balance" means, at any time in question, that the sum of (a) the then unfunded amount of the Construction Loan available to Lessee for payment of costs of labor and materials to achieve Completion of Construction of the Hotel Project, plus (b) the then unfunded amount of the Mezzanine Loan, if any, available to Lessee for the payment of costs of labor and materials to achieve Completion of Construction of the Hotel Project, plus (c) the then remaining balance to be funded under the Equity Commitment, plus (d) the then remaining balance to be funded under the Initial Hotel Operator Financial Commitment if any, plus (e) any additional cash amounts deposited with the City or any Leasehold Mortgagee or any Mezzanine Lender by Lessee in order to fund the difference, if any, between the sum of(a), (b), (c)and(d) above and the then remaining Improvement Costs is adequate to pay all of the then remaining Improvements Costs that are reasonably likely to be incurred through Complete Construction of the Hotel Project. "Initial Hotel Operator" means the initial Hotel Operator engaged by Lessee. "Initial Hotel Operator Financial Commitment" means the commitment, if any, of the Initial Hotel Operator to fund, in the aggregate, cash, to be used to pay Budgeted Improvement Costs, in such amount as may be necessary when combined with the Equity Commitment and the proceeds available under the Construction Loan and Mezzanine Loan,if any,to maintain the Hotel Project In Balance. "Initial Lessee" means MB Mixed Use Investment, LLC, a Florida limited liability company. "Initial Lessee Estimated Equity Contribution" means an amount up to$20,000,000 but not less than the Initial Lessee Minimum Equity Contribution to be funded in cash by Initial Lessee or one or more of its Affiliates to pay Improvement Costs. "Initial Lessee Minimum Equity Contribution" means $10,000,000.00 to be funded in cash by Initial Lessee or one or more of its Affiliates to pay Improvement Costs. 11 "Initial Owner" has the meaning ascribed to it in Section 5.2. "Institutional Lender" means, any of the following entities that as of the date of closing of the financing (i) is not a Prohibited Person, CO with respect to those entities in clause (g), (h), 0) and 0) below is not a Foreign Instrumentality (other than any of the member countries of the European Union or the Gulf Cooperation Council, each as existing as of the Effective Date, United Kingdom, Canada, Mexico, countries located in South America (excluding Venezuela),Japan, South Korea, Singapore and Australia, and Persons Controlled by any of the foregoing countries) and (iii) (A) with respect to those entities in clauses (a) through (e) and (i) below providing loans to be secured by Leasehold Mortgages, has a net worth in excess of One Hundred Million Dollars ($100,000,000) (as adjusted by inflation over the Term pursuant to Section 14.20 hereof), (B) with respect to those entities in clauses (a) through (e) and (i) below providing Mezzanine Loans, has a net worth in excess of Fifty Million Dollars ($50,000,000) (as adjusted by inflation over the Term pursuant to Section 14.20 hereof) and (C) with respect to those entities in clauses (h) and 0) below has total assets (in name or under management) in excess of $500,000,000(as adjusted by inflation over the Term pursuant to Section 14.20 hereof)for(h)and (j): (a) any federal or state chartered commercial bank or national bank or any of its subsidiaries; (b) any federal or state chartered savings and loan association, savings bank or trust company; (c) any pension, retirement or welfare trust or fund, whose loans on real estate are regulated by state or federal laws; (d) any public limited partnerships, public real estate investment trust or other public entity investing in commercial mortgage loans whose loans on real estate are regulated by state or federal laws; (e) any licensed life insurance company in the business of making commercial mortgage loans or a subsidiary or affiliate of any such institution, in each case, whose loans on real estate are regulated by state or federal laws; (f) any agent, designee, or nominee of an Institutional Lender that is an Affiliate (solely as described in clause (a) of the definition thereof) of any Institutional Lender or any other Person that is a subsidiary or an Affiliate (solely as described in clause (a) of the definition thereof) of an Institutional Lender; (g) a governmental agency; (h) an investment bank; (i) a securitization trust that is rated by S&P, Fitch or Moody's (or any like-extant national rating agency); (j) a hedge fund,opportunity fund, private debt fund,or like entity; and 12 (k) any other source of funding, public or private, which is otherwise Approved by the City Manager. In the event of a syndicated loan, if fifty-one percent (51%) or more of the syndicate of lenders are Institutional Lenders, then the syndicated loan shall be deemed to be made by an Institutional Lender. City Manager's failure to notify Lessee of any disapproval of any proposed lender under(k)above within twenty (20)days from its receipt of a notice by Lessee shall be deemed to constitute the City Manager's conclusive Approval of any such proposed lender. "Insurance Trustee" has the meaning ascribed to it in Section 9.9(a). "Land Development Regulations" shall have the meaning set forth in Section 1633221(8), Florida Statutes and shall also include the definition of"land development regulations" in Section 114-1 of the City Code. "Lease" means this Development and Ground Lease Agreement, and all exhibits annexed hereto and made a part hereof, as the same may be modified or amended from time to time. "Leased Property" means the Hotel Site. "Leasehold Mortgage" means a mortgage, including an assignment of the rents, issues and profits from the Hotel Project or other security instrument in favor of a Leasehold Mortgagee, which constitutes a lien on Lessee's leasehold interest created by this Lease during the Term. "Leasehold Mortgagee" means an Institutional Lender that is the owner and holder of a Leasehold Mortgage. "Lease Year" means a year, other than the first and last year of the Term, consisting of twelve (12) consecutive calendar months. The first Lease Year during the term of this Lease shall commence on the Rent Commencement Date and end on December 31" of the year in which the Rent Commencement Date occurs. The second and following Lease Years shall commence on the 1" day of January each calendar year and end on December 31"of such year. "LEED Status"means a certification by the U.S. Green Building Counsel's ("USGBC") Leadership in Energy and Environmental Design ("LEED") that the Hotel Project has satisfied all of the requirements associated with the then current USGBC Gold LEED certification. "Lessee" means MB Mixed Use Investment, LLC, a Florida limited liability company, and the successors, assigns or transferees thereof expressly Approved or permitted by the terms and provisions of this Lease. A certified copy of Lessee's articles of organization is on file with the City as set forth on Exhibit "Lessee Improvements" means any and all permanent buildings, structures and machinery, equipment and fixtures, which are existing and may from time to time and at any time during the Term be erected or located on the Leased Property, including the Hotel and associated infrastructure and the Skybridge and associated infrastructure. 13 "Liquid Assets" means (a) cash on hand or on deposit in any federal or state chartered commercial bank or national bank or any of its subsidiaries, (b) readily marketable securities, (c) readily marketable commercial paper rated A-1 by Standard & Poor's Corporation (or a similar rating by any similar organization that rates commercial paper), (d) certificates of deposit issued by commercial banks operating in the United States with maturities of one year or less, (e) money market mutual funds, and (f)the uncommitted amount of any available line(s)of credit. "Management Agreement" means the hotel operating or management agreement, as it may be extended, supplemented, amended or replaced from time to time, between Lessee and the Hotel Operator and which specifies the terms and conditions applicable to the day-to-day management of the Hotel, including the obligation of the Hotel Operator to comply with the Room Block Agreement. "Mandatory Hotel Project Design Elements" means the design features, components or other elements of the Hotel Project to be developed by the Lessee as further described on Exhibit"S". "MBCC Project" means the Miami Beach Convention Center Renovation and Expansion Project, consisting of the renovation of the Convention Center, expansion of ballroom and auxiliary spaces, parking levels above portions of the Convention Center, exterior landscaping and a 6 acre public park, the renovation of Convention Center Drive, including relocation of utilities, and other improvements to the Convention Center and surrounding areas. "MBCC Standard of Operation" means the average standard of physical and operational quality for the MBCC Project facilities and associated infrastructure consistent with the principal convention centers operated in Orlando, Atlanta, New Orleans, Dallas, Houston, Boston, Chicago, San Francisco, San Diego and Los Angeles, as of the Effective Date. "Mezzanine Borrower" means the borrower under any Mezzanine Loan. "Mezzanine Lender" means (a) the Institutional Lender selected by Lessee to provide the Mezzanine Loan or (b) a Hotel Operator, or an Affiliate thereof, to the extent it is providing a Mezzanine Loan or Credit Enhancement and is receiving a pledge of the equity interests in Lessee. "Mezzanine Loan" means a loan to be made by the Mezzanine Lender to the Mezzanine Borrower to provide financing for the Hotel Project, subordinate to the First Leasehold Mortgagee, which may be secured by a lien on the ownership interests in Lessee. "Mezzanine Loan Commitment" means a mezzanine financing commitment, term sheet or similar agreement by the Mezzanine Lender that has been executed and delivered by and between Lessee and/or Mezzanine Borrower and the Mezzanine Lender that confirms the availability (subject to satisfaction of the terms and conditions contained therein)of the Mezzanine Loan. "Minimum Fixed Rent" has the meaning ascribed to it in Section 4.4(a)(i). "MOT Plan" has the meaning ascribed to it in Section 4.1(b)(xv). "Off-Site Improvements" means any and all improvements not located on the Leased Property shown on the Approved Plans and in accordance with the Governmental Approvals, including demolition of any portion of the Fillmore Theater located on the Leased Property, enclosure of any remaining portion of 14 the Fillmore Theater located outside the Leased Property, and paving and striping of up to twenty-five surface parking spaces for Fillmore Theater personnel as depicted in Exhibit"U". "Opening Date" means the date on which the Hotel first opens for business to the general public. "Outside Date" means either of the Outside Opening Date or Outside Possession Date. "Outside Opening Date" means that date that is sixty(60) months after the Possession Date,the date by which the Opening Date must have occurred, as such date shall be reasonably extended by (i) a Force Majeure Event or Economic Force Majeure in accordance with this Lease; (ii) City Delays; and/or (iii) Unanticipated Circumstances, if applicable. "Outside Possession Date" means that date that is thirty-six (36) months after the Effective Date, by which date the Possession Conditions must be satisfied, as such date shall be reasonably extended for(i) a Force Majeure Event or Economic Force Majeure in accordance with this Lease; (ii)City Delays;and/or (iii) Unanticipated Circumstances, if applicable. "Parties" means City and Lessee, and "Party` is a reference to either City or Lessee, as the context may indicate or require. "Performance Bond and Payment Bond"means a performance bond and a payment bond with regard to the Hotel Project General Construction Contract in the full amount of the guaranteed maximum price thereof, with a good and sufficient surety,in compliance with all applicable Governmental Requirements and in form and content Approved by the City Manager, or such other security as is reasonably acceptable to the City Manager,after consultation with the City Attorney. "Permitted Transfers" has the meaning ascribed to it in Section 5.3. "Person" means any corporation, unincorporated association or business, limited liability company; business trust, real estate investment trust, common law trust, or other trust, general partnership, limited partnership, limited liability limited partnership, limited liability partnership, joint venture, or two or more persons having a joint or common economic interest, nominee, or other entity, or any individual(or estate of such individual);and shall include any Governmental Authority. "Prohibited Person" shall mean any of the following Persons: (A) any Person (whose operations are directed or controlled by an individual) who has been convicted of or has pleaded guilty in a criminal proceeding for a felony or who is an on-going target of a grand jury investigation convened pursuant to United States laws concerning organized crime; or (B) any Person organized in or controlled from a country, the effects of the activities with respect to which are regulated or controlled pursuant to the following United States laws and the regulations or executive orders promulgated thereunder to the extent the same are then effective: (x) the Trading with the Enemy Act of 1917, 50 U.S.C. App. §1, et seq., as amended (which countries are,as of the date hereof, North Korea, Cuba and Venezuela); (y)the International Emergency Economic Powers Act of 1976, 50 U.S.C. §1701, et seq., as amended; and (z) the Anti-Terrorism and Arms Export Amendments Act of 1989, codified at Section 6(j) of the Export Administration Act of 1979, 50 U.S.C. App. § 2405(j), as amended (which countries are, as of the date hereof, Iran, Sudan and Syria); or (C) any Person who has engaged in any dealings or transactions (i) in contravention of the applicable money laundering laws or regulations or conventions or (ii) in contravention of Executive Order No. 13224 dated September 24, 2001 issued by the President of the 15 United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time- to-time or any published terrorist or watch list that may exist from time to time; or(D) any Person who appears on or conducts any business or engages in any transaction with any person appearing on the list maintained by the US. Treasury Departments Office of Foreign Assets Control list located at 31 C.F.R., Chapter V, Appendix A or is a person described in Section 1 of the Anti-Terrorism Order; or (E) any Affiliate of any of the Persons described in paragraphs(A)through(D)above. "Possession Conditions" has the meaning ascribed to it in Section 4.1(b). "Possession Date" has the meaning ascribed to it in Section 4.1(b). "Prohibited Hotel Project Changes" means (a) after the Effective Date and prior to the Possession Date, any changes to the Approved Plans that result in any of the following except to the extent previously Approved in a writing executed by the City Manager and expressly providing that the City Manager is thereby Approving a Prohibited Hotel Project Change (which Approval may be granted or withheld by City Manager in his sole and absolute discretion),or which are required because of Governmental Requirements:(i)a failure of the Hotel Project to contain any of the Mandatory Hotel Project Design Elements,or a material change to the design thereof; (ii)failure to obtain any Brand Approval; (iii)a material change in the massing of the development, including the orientation and general configuration of the tower structure or the size and configuration of the tower structure and podium design reflected in the Approved Plans, or(iv)any change that materially affects the facade of the Hotel Project Approved by the City,or otherwise materially affects the exterior appearance of the Hotel Projector materially impairs the ability of the Hotel Project to function as a convention center hotel,or (b) after the Possession Date and prior to the Opening Date, any changes to the Approved Plans or any actual construction that results in any of the following, except to the extent previously Approved in a writing executed by the City Manager and expressly providing that the City Manager is thereby Approving a Prohibited Hotel Project Change (which Approval may be granted or withheld by City Manager in his sole and absolute discretion), or which are required because of Governmental Requirements: (i) a failure of the Hotel Project to contain any of the Mandatory Hotel Project Design Elements, or a material change to the design thereof; (ii) failure to obtain any Brand Approval; (iii) a material change in the design or actual scope, appearance or quality of any of the Mandatory Hotel Project Design Elements; (iv) a material change in the massing of the development, including the orientation and general configuration of the tower structure or the size and configuration of the tower structure and podium design reflected in the Approved Plans, or (v) any change that materially affects the facade of the Hotel Project Approved by the City, or otherwise materially affects the exterior appearance of the Hotel Project or materially impairs the ability of the Hotel Project to function as a convention center hotel. "Project Expenses" means: (a) operating expenses of the Hotel Project incurred to Persons other than Affiliates of the Lessee (unless such expenses paid to Affiliates of Lessee are at a fair market rate and with notice to the City); 16 (b) wages and benefits paid and payable to the Hotel Operator's full time or part-time on- site or off-site management employees and full or part-time non-management employees;and (c) management fees, at prevailing market rates. "Proposed Transferee" has the meaning ascribed to it in Section 7.10(b). "Public Charges" has the meaning ascribed to it in Section 4.5(a). "Reconstruction Work" has the meaning ascribed to it in Section 9.9(b). "Rent" means all payments required pursuant to Section 4.4 and any other payments characterized as rent hereunder,including Base Rent,Additional Rent and Transaction Rent. "Rent Commencement Date" has the meaning ascribed to it in Section 4.4(a). "Rent Year" has the meaning ascribed to it in Section 4.4(a). "Responsible Officer" means any executive officer or manager of Lessee responsible for the administration of the obligations of Lessee in respect of this Lease. "Room Block Agreement" means the room block agreement, in the form of Exhibit"1" attached hereto, to be executed by and between the City and the Lessee, and pursuant to which Lessee agrees to provide the services therein described to City in exchange for the agreements of City hereunder. "Schedule of Performance" has the meaning ascribed to it in Section 4.1(b)(viii). "Second Rent Year" has the meaning ascribed to it in Section 4.4(a). "Section " "Subsection " "Paragraph " "Subparagraph " "Clause "or"Subclause"followed by a number or letter means the section, subsection, paragraph, subparagraph, clause or subclause of this Lease so designated. "Single Purpose Entity" means: (a) an entity or organization that does not and cannot by virtue of its organizational documents: (i) engage in any business other than owning, developing, leasing and operating the Hotel Project; or acquire or own material assets other than the Hotel Project and incidental personal property;and that (b) does not hold itself out to the public as anything but a legal entity or organization separate from any other Person;and (c) conducts business solely in its name or under a duly registered fictitious name. 17 "Skybridge" means the overhead, enclosed, climate-controlled pedestrian walkway to be constructed, operated and maintained by Lessee in accordance herewith connecting the Hotel Project to the Convention Center and included in the Hotel Site described on Exhibit"D". "Sublease" means any lease, sublease, license or other agreement by which Lessee demises, leases, or licenses the use and occupancy by another Person of one or more specific retail, parking/valet, spa or restaurant spaces,or other defined portion of the Hotel Project. "Subtenant" means any Person using and occupying or intending to use and occupy one or more specific spaces or other defined portion of the Hotel Project pursuant to a Sublease. "Target Dates" means the following dates that have been targeted by Lessee to achieve the following activities or events: (a) The "Target Possession Date": the date targeted for satisfaction of the Possession Conditions, which is eighteen (18) months after the Effective Date, as such date shall be reasonably extended for (i) a Force Majeure Event or Economic Force Majeure in accordance with this Lease; (ii) City Delays;and/or(iii) Unanticipated Circumstances, if applicable. (b) The "Target Completion Date": the date targeted for completion of construction of the Hotel Project, which date is forty-eight (48) months after the Possession Date, as such date shall be reasonably extended for (i) a Force Majeure Event or Economic Force Majeure in accordance with this Lease; (ii) City Delays;and/or(iii) Unanticipated Circumstances, if applicable. "Term" has the meaning ascribed to it in Section 4.1(a). "Third Rent Year" has the meaning ascribed to it in Section 4.4(a). "Transaction Rent" shall have the meaning ascribed to it in Section 4.4(b). 'Transfer" means any sale, assignment or conveyance (including any sublease of the entire Leased Property) or any other transaction or series of transactions in the nature of a sale, assignment or conveyance(including any sublease of the entire Leased Property)of: (a) the Hotel Project or any part thereof; (b) any legal or beneficial interest in the Hotel Project, or any part thereof; (c) any direct or indirect legal or beneficial interest in Lessee (including the syndication of tax benefits);or any series of such Transfers that have the cumulative effect of a sale,transferor conveyance (including any sublease of the entire Leased Property)of any of the foregoing(a), (b), or(c). "Unanticipated Circumstances" means (a) concealed or subsurface conditions not reasonably anticipated by Lessee, including any Environmental Condition and any geothermal system located within or proximate to the Hotel Site, the areas in which the Off-Site Improvements are to be constructed or the areas in which the Skybridge is to be constructed, or under or within any existing improvements located on or within any portion of any of the foregoing, (b) off-site improvements required by any 18 Governmental Authority other than those depicted on the renderings and diagrams attached hereto as Exhibit "E", (c) any relocation of underground utilities located on the Hotel Site and (d) any appeals of Governmental Approvals to a court of competent jurisdiction. "Uniform System" means the Uniform System of Accounts for the Lodging Industry, 11th Revised Edition, 2014, as published by the Educational Institute of the American Hotel and Motel Association, as revised from time-to-time. "Work" means the design, permitting, development and construction of the Lessee Improvements in accordance with the Approved Plans, including all design, architectural, engineering and other professional services, demolition and construction services, supervision, administration and coordination services and the provision of all drawings, specifications, labor, materials, equipment, supplies, tools, machinery, utilities, fabrication, transportation, storage, insurance, bonds, permits and conditions thereof, zoning approvals, changes required to comply with building codes and Governmental Approvals, licenses, tests, inspections, surveys, studies, and other items, work and services that are necessary or appropriate for the demolition of existing structures and other preparatory or remediation work on the Hotel Site; utility relocations, installations, hook-ups or other infrastructure as may be required to make the Leased Property suitable for the use of the Hotel Project; total design, construction, installation, furnishing, equipping, and functioning of the Lessee Improvements, together with all additional, collateral and incidental items, work and services required for completion of the Lessee Improvements (including all such items,work and services as are necessary to provide fully functional and functioning Lessee Improvements).The Work also includes completion of all Off-Site Improvements. Section 1.4. Exhibits. If any exhibit to this Lease conflicts with the body of this Lease, the body of this Lease shall govern. Section 1.5. Interpretation. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as appropriate. The words "herein," "hereof," "hereunder," "hereinafter," and words of similar import refer to this Lease as a whole and not to any particular Article, Section or Subsection hereof. The terms "include" and "including" and words of similar import shall each be construed as if followed by the phrase "without limitation". This Lease will be interpreted without interpreting any provision in favor of or against either party by reason of the drafting of such provision. ARTICLE II THE HOTEL PROJECT IMPROVEMENTS Section 2.1. Development and Conformity of Plans. (a) Lessee shall be responsible for preparing all plans and specifications for constructing the Hotel Project. Such plans and specifications shall conform in all material respects to the Approved Plans; (b) Notwithstanding any other provision or term of this Lease or any Exhibit hereto, the Approved Plans and all work by Lessee regarding the Hotel Project shall conform to the City Code, the Florida Building Code and all other Governmental Requirements and, to the extent consistent with the above,the provisions of this Lease. 19 Section 2.2. Approved Plans. The City shall have the right to Approve, in its sole discretion, (x) any substantial deviation of the Hotel Project from the Approved Plans and (y) any Prohibited Hotel Project Changes. Notwithstanding any Approval provided pursuant to this Section 2.2, Lessee shall be solely responsible for obtaining all required final, non-appealable Governmental Approvals as more fully set forth in Article IV of this Lease. Any Approval of the Approved Plans or any component thereof by the City shall be for its own benefit in its proprietary capacity as the owner of the Leased Property and shall not be deemed to mean, and the City, in such proprietary capacity, makes no representation, that such Approved Plans comply with all applicable Governmental Approvals and Governmental Requirements. (a) Lessee shall submit to the City Manager, prior to Commencement of Construction, any proposed modifications to the Approved Plans for the City Manager's determination of whether such modifications include any substantial deviation of the Hotel Project from the Approved Plans or Prohibited Hotel Project Changes. Modifications to the Approved Plans shall be indicated by "ballooning;' highlighting, blacklining or describing such modifications in writing in reasonable detail in an accompanying memorandum. The City shall not be responsible for, and shall not be deemed to have Approved, any modification to the Approved Plans that is not indicated as required by this Section. (b) Within twenty-one (21) days of receipt of any proposed modifications to the Approved Plans, the City Manager shall notify Lessee, in writing, that he approves such modifications, or the basis for any disapproval of any substantial deviation of the Hotel Project from the Approved Plans or Prohibited Hotel Project Change; provided, however, that the City shall not disapprove any material modification necessitated by Governmental Requirements. City's failure to notify Lessee of any disapproval within such twenty-one (21) day period shall be deemed to constitute the City's conclusive Approval of the proposed modifications to the Approved Plans. The Approved Plans, as amended by such Approved modifications, shall thereafter be the Approved Plans referred to herein. (c) If the City disapproves of any modification pursuant to this Section 2.2, then Lessee shall, at its election, either(x) submit City's disapproval to expedited arbitration pursuant to Section 7.9 of this Lease, or (y) within thirty (30) days after receiving the City's disapproval notice, submit revised proposed modifications to the Approved Plans for City's review and Approval as provided in this Section 2.2, provided that the time period for approval or disapproval shall be fifteen (15)days. (d) At any time during the design development phase of the Hotel Project, Lessee may (but shall not be required to) submit to the City Manager any proposed modifications to the Approved Plans for City's review and Approval pursuant to this Section 2.2, so as to mitigate or avoid any potential delays to the Schedule of Performance as a result of disputes regarding the final proposed Approved Plans. Section 2.3. Lessee's Hotel Project Obligations. Subject to the terms hereof, Lessee is obligated to and shall (i) design, permit, and construct, in a good and workmanlike manner, and at its sole cost and expense, the Hotel Project in all material respects in accordance with and subject to all of the terms and provisions of this Lease and to Complete Construction thereof by the Outside Opening Date, (ii) obtain a certificate of the LEED Status in accordance with Section 133-6 of the City Code and provide reasonable evidence of such certification to City within a reasonable period following the Opening Date, and (iii) operate, maintain, repair and replace, at its sole cost and expense,the Hotel Project in accordance with and subject to all of the terms and provisions of this Lease. Section 2.4. Payment of Hotel Project Costs. 20 (a) As between lessee and the City, the Lessee shall bear and be solely responsible for all costs and expenses related to the design, permitting and construction of the Work, the Hotel Project and its subsequent use, including the following: (i) Lessee's land use approvals,development fees,and permit fees for the design, construction,and subsequent use of the Hotel Project; (ii) Lessee's design and construction of the Hotel Project; (iii) Lessee's financing, construction bonding and insurance, building permits, utility installations and/or hook-ups or other infrastructure, as may be required to make the Leased Property suitable for the use of the Hotel Project; (iv) Lessee's consultants, accountants, financing charges, legal fees, furnishings, . equipment,and other personal property of the Lessee;and (v) all other Lessee direct or indirect costs associated with the approvals, design, construction, and financing of the Lessee Improvements, and their subsequent use. (b) Lessee acknowledges that the City shall have no maintenance responsibility for any of the Leased Property and Lessee Improvements, and utilities and infrastructure to be constructed by Lessee. (c) Lessee shall be exclusively responsible for all matters relating to underground utility lines and facilities, including locating, relocating and/or removal, as necessary. Under no circumstances shall City be responsible for paying the cost of,or otherwise reimbursing Lessee for, relocation, removal, or payment of charges to utility companies for, any utility lines or facilities lying on, under,or around the Leased Property. City shall provide reasonable cooperation and assistance to Lessee in the resolution of issues associated with existing underground utilities. Lessee shall not remove, disturb, or relocate any existing utilities on the Leased Property without the City Manager's prior written Approval. Section 2.5. Financing Matters. (a) Lessee shall pay for all Improvement Costs from funds required to be provided under the Equity Commitment, the Initial Hotel Operator Financial Commitment, if any, the Construction Loan and the Mezzanine Loan, if any; provided that if the proceeds of the foregoing sources are not available or are inadequate for any reason, Lessee shall be responsible to provide funds from such other sources as Lessee may identify to pay all costs and expenses necessary to Complete Construction of the Hotel Project and cause the Opening Date to occur in accordance herewith. (b) Lessee shall be solely responsible for obtaining the Construction Loan and the Mezzanine Loan, if any, for all completion guaranties required in connection with the Construction Loan and the Mezzanine Loan, if any, and for providing all collateral and other security, and otherwise satisfying all conditions thereof and covenants,agreements and obligations of the borrower thereunder. In no event shall City have any responsibility, obligation or liability with respect to the Construction Loan or the Mezzanine Loan, if any, and Lessee shall reimburse City for all of City's third party costs and expenses (including attorneys' fees) reasonably incurred in connection with any requirements or 21 requests of the Construction Lender in connection with the Construction Loan or the Mezzanine Lender in connection with the Mezzanine Loan,if any. Section 2.6. No Claim for Value of Lessee Improvements. Lessee shall have no claim against the City for the value of the Lessee Improvements following any termination of this Lease, whether at the natural expiration of the Term or otherwise, except, with respect to any claims against the City acting in its governmental capacity, including any claims related to a condemnation by the City. Section 2.7. Schedule of Performance. Lessee shall prosecute completion of the Work substantially in accordance with the Approved Plans (with only such changes hereto that do not constitute Prohibited Hotel Project Changes, except as otherwise permitted or Approved pursuant to this Lease), with all commercially reasonable diligence and in good-faith, in good and workmanlike manner, and shall use diligent,good-faith efforts to prosecute the Work in accordance with the Schedule of Performance,time being of the essence. The dates to be reflected in the Schedule of Performance, including the Target Dates, shall not be extended except for (i) a Force Majeure Event, (ii) Economic Force Majeure, (iii) a City Delay and/or (iv) Unanticipated Circumstances. If the Parties disagree with respect to any permitted delays in the Schedule of Performance, such disagreement shall be resolved in accordance with Section 7.9 hereof. (a) Lessee shall endeavor, through the use of diligent, good-faith efforts, to cause the prosecution of the Work in accordance with the Target Dates, the Outside Dates and other dates to be set forth in the Schedule of Performance, but failure to meet the Target Dates or other date (other than any Outside Date)to be set forth in the Schedule of Performance shall not be a default under this Lease. (b) As further to be delineated in the Schedule of Performance, Lessee shall Complete Construction and cause the Opening Date to occur by the Outside Opening Date. Section 2.8. Construction Obligations. (a) Bonds. By no later than Commencement of Construction, Lessee shall provide a Performance Bond and Payment Bond, with all premiums paid and in favor of Lessee with an obligee rider in favor of the City and the First Leasehold Mortgagee. Lessee shall also provide City with a demolition bond or other form of financial instrument reasonably acceptable to City to assure the availability of funds for demolition or removal of any uncompleted facility in the event Lessee, after receipt of a written demand from City, fails to demolish and remove the uncompleted facility following Lessee's failure to substantially complete such facility as required herein. (b) Approval of Hotel Project General Contractor. Lessee's selection of the Hotel Project General Contractor shall be subject to the advance Approval of the City Manager,after consultation with the City Attorney, as to the qualifications and responsibility of the proposed Hotel Project General Contractor to perform the contract, based on the contractor's licensure, bonding capacity, financial capacity, history of compliance with laws, and satisfactory past performance on similar projects. Provided that the Hotel Project General Contractor proposed by Lessee does not have a significant history of material non-compliance with the law, City agrees to Approve any Hotel Project General Contractor proposed by Lessee that satisfies each of the following: (I) Has a State of Florida Building and Business License; (ii) Has completed at least one project in the past three years under a construction 22 contract that specified a guaranteed maximum price at or above$100,000,000; (iii) Has completed at least one high-rise hotel of at least eight (8) stories and four hundred (400) rooms in the last 5 years;and (iv) Has total bonding capacity in excess of $1 Billion with at least $250,000,000 available for a single project. (c) Construction Obligations. Prior to the Outside Opening Date, Lessee shall, or shall cause its Hotel Project General Contractor to: (I) Perform and complete the Work; (ii) Select the means and methods of construction. Only adequate and safe procedures, methods,structures and equipment shall be used; (iii) Furnish, erect, maintain and remove such construction plant and such temporary work as may be required; and be responsible for the safety, efficiency and adequacy of the plant, appliance and methods used and any damage which may result from failure, improper construction, maintenance or operation of such plant, appliances and methods; (iv) Provide all architectural and engineering services, scaffolding, hoists, or any temporary structures, light, heat, power, toilets and temporary connections, as well as all equipment, tools and materials and whatever else may be required for the proper performance of the Work; (v) Order and have delivered all materials required for the Work and shall be responsible for all materials so delivered to remain in good condition; (vi) Maintain the Hotel Project site in a clean and orderly manner at all times, and remove all paper, cartons and other debris from the Hotel Site; (vii) Erect, furnish and maintain a field office with a telephone at the Hotel Site during the period of construction in which a supervisor-level employee shall be on site during the performance of any Work in connection with the Hotel Project; and cause the Hotel Project General Contractor to require in each subcontract having a price in excess of$5,000,000 (and to require each subcontractor to require in each sub-subcontract having a price in excess of $5,000,000) that such subcontractor (and sub-subcontractor) have on-site a supervisor-level employee at all times during the performance of any Work under such subcontract(and sub-subcontract); (viii) Protect all Work prior to its completion and acceptance; (ix) Restore and repair any properties adjacent and leading to the Hotel Site damaged as a result of construction of the Hotel Project, whether such properties are publicly or privately owned; (x) Implement, and maintain in place at all times, a comprehensive hurricane and flood plan for the Hotel Site and the Work, and provide a copy of same to the City; 23 (xi) Upon Completion of Construction, deliver to the City as built drawings and plans and specifications of the Hotel Project;and (xii) Upon Completion of Construction, deliver to the City, a copy of the final certificate of occupancy or certificate of completion,as applicable,for the Hotel Project. Notwithstanding any provision hereof to the contrary, (x) at no time during construction of the Hotel Project may Lessee make any Prohibited Hotel Project Changes without the express, prior written Approval of City (which Approval may be granted or withheld by City in City's sole and absolute discretion), (y) Lessee and the City shall reasonably cooperate with each other so that the performance and completion of the Work does not materially interfere with the loading dock operations of the Convention Center or impair or impede access to such operations during a Convention Center event, other than during the construction of the Skybridge, during which Lessee and the City will reasonably cooperate with each other in good faith to minimize such interference and (z) Lessee and the City shall reasonably cooperate with each other so that the performance and completion of the Work does not materially interfere with the loading dock operations of the Fillmore Theater. (d) Completion of Construction. Lessee shall carry on any construction, maintenance or repair activity with diligence and dispatch and shall use diligent,good-faith efforts to complete the same in accordance with the Schedule of Performance. Lessee shall not, except if an emergency exists (then only to the extent that the City can grant such an exception), carry on any construction, maintenance or repair activity in any easement area that unreasonably interferes with using and enjoying the property encumbered by such easement. (e) Skybridge and Off-Site Improvements. Lessee shall deliver the proposed Approved Skybridge and Off-Site Improvements Plans to the City for Approval as required to maintain the Schedule of Performance. The 25 surface parking spaces for Fillmore Theater personnel to be constructed by Lessee as part of the Off-Site Improvements will be constructed as depicted on Exhibit "U" hereto. Lessee shall have no obligations or liabilities with respect to the ownership or operation of such parking spaces after completion. Section 2.9. Progress of Construction/City's Representative. (a) Lessee shall keep the City apprised of Lessee's progress regarding the Work, including Lessee's progress towards meeting the Target Dates and Outside Dates set forth in the Schedule of Performance. Lessee shall deliver written reports of same not less than monthly; and (b) The City may,from time-to-time, designate one or more employees or agents to be the City's representative ("City's Representative"), who may, during normal business hours, in a commercially reasonable manner, visit, inspect and monitor the Hotel Project, the materials to be used thereon or therein, contracts, records, plans, specifications and shop drawings relating thereto,whether kept at Lessee's offices or at the Hotel Project construction site or elsewhere, and the books, records, accounts and other financial and accounting records of Lessee (which shall be kept at the address specified in Section 14.5) as often as may be reasonably requested. Further, City's Representative shall be advised of, and entitled to attend, meetings among Lessee, Lessee's representative and the Hotel Project General Contractor or any subset of this group. Lessee will cooperate with the City to enable City's Representative to conduct such visits, inspections and appraisals. Lessee shall make available to City's Representative for inspection, with commercially reasonable notice, daily log sheets covering the 24 period since the immediately preceding inspection showing the date, weather, subcontractors on the job, number of workers and status of construction. To the fullest extent permitted by law, City shall protect from disclosure any records that are confidential and exempt from disclosure under Florida law, provided, however,that nothing herein shall preclude the City or its employees from complying with the disclosure requirements of the Public Records Act, and any such compliance shall not be deemed an event of default by the City under this Lease. City shall use its good-faith, diligent efforts to provide timely written notice to Lessee of any public records request seeking any records of the Lessee that may be within the City's custody, possession or control,to permit Lessee the opportunity to seek to protect such information from disclosure. Section 2.10. Delivery of Plans. Promptly after completing the Work and Lessee's receipt of a Certificate of Occupancy, as applicable,for the Work, Lessee will deliver to the City a copy of the plans and specifications, including shop drawings, for the Lessee Improvements. Section 2.11. Connection of Buildings to Utilities. (a) lessee, at its sole cost and expense for the Leased Property and in compliance with all Governmental Approvals and Governmental Requirements, shall install or cause to be installed all necessary connections between the Lessee Improvements, and the water, sanitary and storm drain mains and mechanical and electrical conduits whether or not owned by the City. (b) Lessee shall pay for the cost, for the Leased Property, if any, of locating, grounding and installing within the Leased Property, as applicable, new facilities for sewer, water, electrical, and other utilities as needed to service the Hotel Project, and,at its sole cost and expense for the Leased Property, will install or cause to be installed inside the property line of the Leased Property, all necessary utility lines, with adequate capacity and the sizing of utility lines for the Hotel Project, as contemplated on the Approved Plans. Section 2.12. Permits and Approvals. Lessee shall secure and pay for all Governmental Approvals for the Work, including any alterations and renovations made pursuant to Section 2.15, and shall pay any and all fees and charges due to and collected by the City or any other Governmental Authority connected with issuing such Governmental Approvals,if any. Section 2.13. City and Lessee to Join in Certain Actions. Within fifteen (15) days after receiving a written request from Lessee that is consistent with all Governmental Requirements and in accordance with this Lease,the City,at Lessee's sole cost and expense (including City's reasonable attorneys'fees in reviewing any agreements), shall join Lessee when required by law in any and all applications and agreements for Governmental Approvals as may be commercially reasonably necessary for developing and constructing the Hotel Project,which applications and agreements are necessary because City is the fee owner of the Leased Property and/or the properties surrounding the Leased Property, and which applications and agreements may include applications for subdivision approval, covenants in lieu of unity of title, easement and operating agreements, and demolition permits and applications for Design Review Board approval for buildings located on the Hotel Site. Lessee shall pay all fees and charges for all such applications. Failure of the City to perform as requested within such fifteen (15) day period shall be deemed a City Delay for the number of days of delay beyond such fifteen (15)day period. 25 Section 2.14. Compliance with Laws. Lessee will comply with any Governmental Requirements in constructing and operating the Hotel Project. Section 2.15. Alterations and Renovations. After completing the Work, if Lessee wishes to make alterations or renovations thereof: (a) no renovation or alteration shall be made until Lessee obtains all required Governmental Approvals,at Lessee's sole cost and expense; (h) except for FF&E, any renovation or alteration of Lessee Improvements that involves a substantial deviation from the Approved Plans or otherwise substantially affects the overall character or appearance of the exterior of the Hotel Project, unless required by Governmental Requirements shall require the City's approval in its proprietary capacity in its sole discretion;and (c) all such alterations and renovations shall be performed by duly licensed and insured contractors in a good and workmanlike manner, and in any event, shall be consistent with the Hotel Standards. Section 2.16. Art in Public Places. Lessee shall comply with the City's Art In Public Places (AIPP) program requirements under Section 82-536 through 82-612 of the City Code, as applicable, and shall contribute to the City's Art in Public Places fund the total of 1.5% of the "construction cost" of the Hotel Project, as such term is defined in Section 82-537 of the City Code, no later than date of execution of the Hotel Project General Contract by Lessee and the Hotel Project General Contractor, as required by the City Code. ARTICLE III LAND USES AND DEVELOPMENT OBLIGATIONS Section 3.1. Covenant Regarding Land Uses. Lessee agrees and covenants to devote, during the Term of this Lease, the Hotel Project only to the uses specified in this Lease and to be bound by and comply in all material respects with all of the provisions and conditions of this Lease. In addition, and except as hereinafter set forth, Lessee shall not have the right to seek or obtain different uses or a change in such uses either by requesting a zoning change or by court or administrative action without first obtaining the City's Approval,which Approval may be granted or denied in the City's sole discretion. Section 3.2. Applications for Development Approvals and Development Permits. Promptly following the Effective Date of this Lease,the Lessee will initiate and diligently pursue all applications for Development Orders and Development Permits that may be required in connection with the Hotel Project. Lessee shall be solely responsible for obtaining all final, non-appealable Development Orders and Development Permits for the Hotel Project. No extension of any time period herein shall be deemed to be an extension of any time periods contained within the Development Permits or Development Orders. Section 3.3. Concurrency. )a) Lessee shall be solely responsible for obtaining all land use permits, including all permits and approvals required pursuant to Section 163.3180, Florida Statutes, and Chapter 122, City Code, with respect to concurrency requirements for roads, sanitary sewer, solid waste, drainage, potable water, 26 and parks and recreation, (the "Concurrency Requirements"). Prior to applying for its building permit for the Hotel Project, Lessee shall apply for a preliminary concurrency determination for the Hotel Project with the City's concurrency management division. Lessee shall diligently and in good faith comply with the all of the requirements of Section 122-8 of the City Code to obtain a preliminary concurrency determination impact certificate, and if the concurrency management division determines that the required public facilities are or will be available to serve the proposed development, the concurrency management division shall issue a preliminary concurrency determination impact of no less than 36 months from the date of issuance of the determination, which shall be specified on the face of the preliminary concurrency determination. In the event the issuance of a preliminary concurrency determination is based on an approved mitigation program, such certificate shall be expressly conditioned upon compliance with such program. Provided that (i) a preliminary concurrency determination impact certificate is issued, (ii) the Design Review Board approves a development order for the Hotel Project and such order becomes final (after all appeal periods have expired without an appeal being filed, or if filed, resolved favorably for Lessee), and (iii), Lessee pays applicable mitigation fees (including impact fees, concurrency fees, and/or mobility fees that may be due) or provides for applicable mitigation prior to building permit, then in that event, a final reservation certificate shall be issued and the available capacity for public facilities will be reduced by the projected demand for the Hotel Project until the reservation of the capacity expires or becomes permanent. (b) Provided that Lessee complies with the provisions of Section 3.3 (a) above, (i) the City agrees that Concurrency Requirements for the following public facilities and services required to service the Hotel Project have been satisfied or will be satisfied in accordance with the terms of this Lease: potable water transmission capacity; sanitary sewer transmission capacity; storm sewer capacity; local recreation open space; transportation level of service; and solid waste collection capacity and (ii) all subsequent development orders or permits that are in conformity with this Lease are hereby found to meet concurrency standards set forth in the Comprehensive Plan, and to be consistent with the presently permitted development as described on Exhibit"H" and applicable zoning regulations, so long as the Leased Property is developed in substantial compliance with the Governmental Approvals described in Exhibit"K". (c) In addition to the foregoing, the City agrees to prioritize reservation of capacity, as of the Effective Date, for potable water transmission capacity, sanitary sewer transmission capacity and storm sewer capacity facilities and services required to service the Hotel Project; provided, however, that if Miami-Dade County issues a moratorium on new construction for water and sewer services, any such moratorium is beyond the City's control, and City cannot supersede Miami-Dade County's jurisdiction with respect to the reservation of capacity. Upon such reservation, the City will reserve sufficient infrastructure and capacities for potable water transmission, sanitary sewer transmission, and storm sewer based on the Hotel Project as described in this Lease, and such capacity will remain available to serve the Hotel Project. Lessee shall be responsible for the relocation of utilities (including the existing drainage culvert on the Hotel Site) and for improvements to City utilities directly and reasonably required to provide service to the Hotel. Section 3.4. Compliance with Local Regulations Regarding Development Permits. This Lease is not and shall not be construed as a Development Permit, approval or authorization to commence any development,fill, or other land modification.The Lessee and the City agree that the failure of this Lease to address a particular permit, approval, procedure, condition, fee, term or restriction in effect on the Effective Date shall not relieve Lessee of the necessity of complying with the regulation governing said permitting requirements,conditions,fees,terms or restrictions,subject to the terms of this Lease. 27 Section 3.5. Consistency with the City's Comprehensive Plan. The City has adopted and implemented the Comprehensive Plan. The City hereby finds and declares that the provisions of this Lease dealing with the Hotel Site and the Hotel Project are consistent with the City's Comprehensive Plan and Land Development Regulations (subject to all applicable requirements, permits and approvals). Section 3.6. Presently Permitted Development. The development that is presently permitted on the Leased Property, including population densities, and building intensities and height,which are subject to this Lease,are more specifically set forth in Exhibit"H" hereto. Section 3.7. Public Facilities to Serve the Leased Property. A description of the public facilities that will service the Hotel Project of the properties subject to this Lease, including who shall provide such facilities; the date any new facilities, if needed, will be constructed; and a schedule to assure public facilities are available concurrent with the impacts of the development is included as Exhibit"I" hereto. Section 3.8. Public Reservations, Dedications. A description of the reservations and/or dedications of land for public purposes that are proposed under the terms of this Lease is included as Exhibit "J" hereto. Section 3.9. Required Development Permits. Attached and made a part hereof as Exhibit "K" is a listing and description of certain local development permits approved or needed to be approved for the development of the Hotel Project, provided that City makes no representation or warranty that the information set forth on Exhibit "K" is correct or complete, Lessee releases City from any liability with respect to such information and Lessee acknowledges and Lessee agrees that Lessee is solely responsible for confirming the correctness and completeness of such information and obtaining all applicable Governmental Approvals whether or not set forth on Exhibit"K". Section 3.10. Responsible Wages and Local Employment. The City and Lessee support and encourage the application of responsible wages and City of Miami Beach and Miami-Dade County workforce hiring with respect to the Hotel Project. Section 3.11. Laws Governing this Lease. For the entire Term of this Lease, the City hereby agrees that the City's Land Development Regulations governing the development of the Leased Property as they exist as of the Effective Date of this Lease shall govern the development of the Leased Property and the Hotel Project during the Term. Notwithstanding the foregoing, the City may apply subsequently adopted laws or policies to the Leased Property and the Hotel Project (particularly as they may relate to quality of life issues such as, but not limited to noise, litter, and hours of operation) as permitted or required by the Act, including, without limitation,Section 163.3233(2), Florida Statutes, as same may be amended from time to time; provided, however, that this provision shall not be deemed to apply to regulations governing height,floor area ratio (FAR),density, parking requirements or permitted uses. Section 3.12. Duration of Development Rights. Notwithstanding any provision to the contrary in this Lease, the development rights and responsibilities granted to Lessee hereunder shall run for an initial term of ten (10) years from the Effective Date, and may be extended by mutual consent of the City and the Lessee subject to a public hearing(s) pursuant to Section 163.3225, Florida Statutes. Consent to any extension of the development rights granted herein is within the sole discretion of each Party. No notice of termination shall be required by either Party upon the expiration of the development rights granted pursuant to this Lease, provided, however, that the Parties' obligations for the failure to satisfy Possession Conditions shall be as provided for in Section 4.1(f) and any other applicable provisions of this Lease. 28 Section 3.13. Lessee's Right of Termination. Notwithstanding anything to the contrary herein, including Section 7.2(b) of this Lease, Lessee shall have the right to terminate this Lease prior to the Possession Date due to (i) changes to the Approved Plans required by the City's Design Review Board or any other Governmental Authority (including the City) that render the Hotel Project economically unfeasible in the reasonable business judgment of Lessee; (ii) the Hotel Project cannot meet the Concurrency Requirements, or the costs of concurrency mitigation are, in the reasonable business judgment of Lessee, economically unfeasible; (iii) Lessee, after its diligent good-faith efforts, has been unable to obtain a full building permit for the Hotel Project;or(iv) Unanticipated Circumstances exist. In the event of termination pursuant to this Section 3.13, each Party shall bear its own costs and expenses incurred in connection with this Lease and, neither Party shall have any further liability to the other Party. ARTICLE IV GENERAL TERMS OF LEASE Section 4.1. Lease of Leased Property to Lessee. Subject to the conditions set forth in this Lease, including the occurrence of the Possession Date, the payment of all Rent and all other payments by Lessee provided herein, and the City's and Lessee's performance of their duties and obligations required by this Lease: (a) Demise. The City, as of the Possession Date, demises and leases to Lessee, and Lessee takes and hires from the City, the Leased Property for a term of approximately ninety-nine (99) years ending on December 31" of the last Lease Year prior to the 99th anniversary of the Possession Date (the "Term"). Within thirty (30) days after the Possession Date, the City and Lessee, upon request of either Party, shall execute a commencement date agreement and/or one or more written memoranda in such form as will enable them to be recorded among the Public Records of Miami-Dade County, in each case, setting forth the beginning and termination dates of the Term, determined according to this Lease, and recording any such other documents as may be required under this Lease. (b) Possession Date; Conditions Precedent to Possession. The Parties recognize that as of the Effective Date there remain various items and matters to be satisfied, obtained and Approved in order that the Hotel Project may proceed as intended by the Parties. The date that the City delivers possession of the Leased Property to Lessee according to this Section 4.1(b), as designated by the City to Lessee in writing, is referred to herein as, the "Possession Date." The City shall not be obligated to deliver possession of the Leased Property and Lessee's rights as tenant hereunder shall not become effective until each of the events described in this Section 4.1(b) irrevocably shall have occurred, at which time, the City shall deliver possession of the Leased Property to Lessee, Lessee shall take possession thereof and the lease provisions of this Lease shall become effective. Until that time, this Lease shall be construed to be in the nature of a development agreement, and not a lease. The conditions precedent to delivery of possession (collectively,the"Possession Conditions")are as follows: (i) There exists no uncured Event of Default; (li) Lessee shall have entered into, and delivered to the City a duly executed copy of, the Hotel Project General Construction Contract (and all then existing change orders thereto), in form and substance and with a Hotel Project General Contractor Approved pursuant to Subsection 2.8(b) by the City Manager reflecting the guaranteed maximum price for completion of the Lessee Improvements; 29 (iii) Lessee shall have delivered to City written evidence reasonably satisfactory to the City of the existence and availability of(A) Liquid Assets to fund the Equity Commitment, (B) Initial Hotel Operator Financial Commitment, if any, (C) the Mezzanine Loan Commitment, if any, and (D) the Construction Loan Commitment,all of which together demonstrate that the Hotel Project is In Balance; (iv) Lessee shall have provided to City, and City Manager shall have Approved, any changes to the Budgeted Improvement Costs, provided that City Manager shall not withhold its Approval so long as Lessee has obtained and delivered to the City written evidence of the existence and availability of (A) Liquid Assets to fund the Equity Commitment, (B) the Initial Hotel Operator Financial Commitment, (C)the Mezzanine Loan Commitment, if any, and (D)the Construction Loan Commitment that demonstrate that the Hotel Project is In Balance; (v) Lessee shall have reimbursed the City for the costs associated with the City's voter referendum in connection with this Lease, not to exceed Twenty-Five Thousand Dollars($25,000). (vi) Lessee shall have obtained, and shall have delivered to City a copy of, all Governmental Approvals necessary for the Commencement of Construction and for the demolition of all improvements currently located within the Hotel Site,the areas in which the Off-Site Improvements are to be constructed and the areas in which the Skybridge is to be constructed; (vii) Lessee and the Initial Hotel Operator shall have delivered to the City an instrument or instruments reasonably acceptable to the City (A) certifying that Lessee and the Initial Hotel Operator have duly executed and entered into the Management Agreement, and any related franchise, technical services and/or centralized services agreements, that the Management Agreement, Franchise Agreement and any other such agreements are in full force and effect and there are no defaults (or any events that could ripen into defaults), and that the Management Agreement requires the Hotel Operator to comply with the terms of the Room Block Agreement, (B) acknowledging that for so long as the Initial Hotel Operator is managing and operating the Hotel Project it shall observe and comply with the Room Block Agreement and (C) in the form of an agreement among Lessee, the Initial Hotel Operator and the City, to the effect that if this Lease is terminated as a result of any Event of Default, the Hotel Operator shall, at the City's option, continue to perform under the Management Agreement in accordance with the terms thereof and the Franchise Agreement so long as the Hotel Operator is being paid compensation thereafter accruing under the Management Agreement and the City shall perform, and the Hotel Operator shall accept the City's performance of, the duties and obligations under the Management Agreement to be performed by the Lessee, as "owner," thereunder, but only to the extent accruing from and after the date of termination of this Lease; provided, however, if the First Leasehold Mortgagee enters into a similar agreement with the Lessee and the Hotel Operator,the City agrees that the Hotel Operator shall continue to perform and such performance shall not be optional on the part of the City; (viii) Lessee shall have delivered to City, and City Manager shall have Approved, a schedule of performance for the Hotel Project setting forth the dates and times of delivery of the Hotel project, including the Target Dates, the Outside Dates and other milestones for development and approval of the plans and specifications listed in Section 2.2, preparation and filing of applications for and obtaining all applicable Governmental Approvals described on Exhibit "K" for the Hotel Project (other than the items under paragraph 12 of Exhibit "K") and the schedule for completion of the Work (the "Schedule of Performance"). City agrees that it shall not withhold Approval thereof so long as the 30 same reflects Completion of Construction by the Outside Opening Date and Lessee has provided reasonable evidence that such schedule is reasonable; (ix) Lessee shall have presented evidence reasonably acceptable to the City that all insurance coverages required under this Lease are in place; (x) Lessee shall have delivered to the City Manager reasonable evidence that the Approved Plans have been approved by the First Leasehold Mortgagee and the Initial Hotel Operator; (xi) Lessee shall have delivered to the City, a duly executed Assignment of Plans and Approvals, a duly executed Assignment of Hotel Project General Construction Contract and a duly executed Assignment of Contracts and Agreements; (xii) Lessee shall have delivered to the City reasonable evidence that Lessee has invested the Initial Lessee Minimum Equity Contribution prior to the Possession Date, or if the Initial Lessee Minimum Equity Contribution has not been invested prior to the Possession Date, Lessee shall deposit an amount equal to the balance of the unfunded amount of the Initial Lessee Minimum Equity Contribution, less cash amounts deposited with any Leasehold Mortgagee or any Mezzanine Lender by Lessee to satisfy Lessee's equity requirements under the Construction Loan or Mezzanine Loan, in escrow with an escrow agent reasonably satisfactory to the City to be drawn by Lessee on a monthly basis based upon presentation of invoices for Budgeted Improvement Costs; (xiii) Lessee has provided to the City reasonable evidence that the closing of the Construction Loan has occurred; (xiv) the representations and warranties made by the Lessee in this Lease pursuant to Sections 43(a) and 5.2 remain true and correct in all material respects on and as of the Possession Date; (xv) Lessee shall have delivered to the City a maintenance of traffic plan for the staging of the Work during the construction period (the "MOT Plan"), which MOT Plan shall have been Approved by the City Manager and which will include minimal disruptions to 17th Street and Convention Center Drive, subject only to closures for short time periods upon Approval by the City Manager as reasonably necessary to complete the Work; and (xvi) Lessee shall have delivered to the City a parking and transportation plan for the off-site parking and transportation of construction workers and Hotel employees to and from the Hotel, which plan shall have been Approved by the City Manager and which, subject to Lessee's negotiations with the Initial Hotel Operator, may include various traffic mitigation options, including (1) providing hotel guests with an online link to the City's trolley service map, with points of interest, at reservation confirmation, and a copy of the City's trolley brochure at check-in; (2)offering Hotel guests the ability to purchase, as part of a room reservation, airport shuttle services or transit passes to encourage public transit usage; (3) providing a reservation portal for guests to include their airport arrival times,with the system identifying available shuttle services based on those arrival times; (4) partnering with on- demand multi-passenger services, such as the FreeBee golf carts, as an amenity for hotel guests; (5) offering off-site parking and shuttle services for Hotel employees; (6) utilizing Miami-Dade County's corporate discount program to reduce the costs of transit passes for Hotel employees using transit to work;and/or(7) providing a covered area for bicycle parking within the Hotel Project. 31 (c) Pre-Possession Period. From and after the Effective Date, the Parties shall each use their respective diligent and commercially reasonable efforts to achieve the Possession Date timely. (d) Hotel Site Inspections. Commencing on the date hereof and thereafter until this Lease is terminated or the Possession Date occurs,the City shall permit Lessee commercially reasonably access to the Hotel Site, areas in which the Off-Site Improvements are to be constructed and the areas in which the Skybridge is to be constructed to conduct at Lessee's sole cost and expense, physical inspections, tests, studies, samplings and analyses (including soil borings and invasive environmental testing) of the Hotel Site and such other areas and to the extent necessary to carry out the provisions of this Lease; provided, however, that such access shall not materially interfere with any ongoing operations at the Convention Center or the Fillmore Theater. Lessee, at all times and at its sole cost and expense, shall maintain or shall cause its Hotel Project General Contractor or other contractors in privity with Lessee to maintain, comprehensive general liability insurance as required in Article IX. Lessee shall restore any damage to the Hotel Site and such other areas caused by any such inspections,tests or studies; provided that in no event shall Lessee be responsible for the discovery, exposure or release of hazardous substances or materials in, on or about the Hotel Site that are not introduced to the Hotel Site by Lessee, its agents, representatives,contractors,invitees or employees. (e) Indemnification. Whether or not the Possession Date occurs, Lessee shall indemnify, defend and hold City and its respective officers, employees, agents, representatives, consultants, counsel and contractors (of any tier) harmless from and against all claims, actions, suits, charges, complaints, orders, liability, damages, loss, costs and expenses (including any attorneys' fees and costs of litigation) related to, arising from or in connection with the acts or omissions of Lessee, its agents, representatives, contractors or employees, including injury or death to persons or damage to their property, while exercising Lessee's right to access the Hotel Site and performance of such inspections, tests or studies pursuant hereto, except to the extent resulting from the negligence or willful misconduct of City or its officers, employees, agents, representatives, consultants, counsel and contractors, and except as limited in paragraph (d) above.The indemnification obligations of Lessee set forth in this paragraph shall expressly survive the expiration or termination of this Lease and notwithstanding any provision of this Lease to the contrary, City shall have all rights and remedies available at law or in equity in the enforcement of such indemnification obligations of Lessee or arising from Lessee's failure to perform such indemnification obligations. (f) Failure to Satisfy Conditions. Notwithstanding anything contained in this Lease to the contrary, if: (i) any of the Possession Conditions have not occurred by the Outside Possession Date; or (ii)the Opening Date does not occur by the Outside Opening Date,then notwithstanding anything to the contrary set forth in Section 7.1 below and not in limitation of any of the City's remedies set forth in Article VII of this Lease, Lessee hereby waives any further right to cure, and the City shall be entitled to immediately revoke the licenses granted to Lessee pursuant to the Assignment of Plans and Approvals, the Assignment of Hotel Project General Construction Contract and the Assignment of Contracts and Agreements upon written notice to the Lessee. (g) Easements. Lessee agrees that this Lease shall be subject to and contingent upon the execution of certain easements, including any applicable access easements. On the Possession Date,the easements in substantially the forms attached hereto as Exhibit"G"(the "Easements")shall be executed by all necessary parties. The Parties shall also, prior to the Possession Date, enter into any and all easements which may be required by Lessee to (i)design, permit and construct enclosures regarding the Fillmore Theatre in the area of demolition; and (ii) develop, construct, operate, repair, maintain and 32 reconstruct the Hotel Project, including to connect utilities to the Hotel Site as shown in the Approved Plans. The Parties shall thereafter cause the Easements to be promptly recorded among the public records of Miami-Dade County, Florida. Section 4.2. Restrictive Covenants. (a) Permitted Use. Lessee shall operate the Hotel Project throughout the Term as a convention headquarter hotel for the accommodation of hotel guests, and for related banquet, meeting and similar purposes, with related retail shops, restaurants and such other amenities as are consistent with the Hotel Standards. (b) Use Restrictions. The Hotel Project shall not be used by Lessee, nor shall Lessee knowingly permit the use thereof by any other Person for the following: (i) any unlawful or illegal business, use or purpose; (ii) any business, use or purpose which is immoral, disreputable (including "adult entertainment establishments" and "adult" bookstores, but excluding in-room "R Rated" television and on-demand movies) or extra-hazardous; (iii) a nightclub where the sale of food is only incidental to the sale of alcoholic beverages and where the establishment is licensed and primarily operated from midnight to 5:00 a.m. as a "Dance hall" or "Entertainment Establishment" as defined by Section 114-1 of the City of Miami Beach Code (other than and specifically excluding the Hotel's lobby bars, rooftop bars or cocktail lounges, pool bars, restaurants, banquet functions or other similar food and beverage operations contemplated as part of the Approved Plans or the Mandatory Hotel Project Design Elements); or(iv) any Gaming Establishment (whether or not such use is permitted by applicable law). Lessee shall have no right to convert the use of the Hotel Project or any portion thereof to any time sharing, time interval or cooperative form of ownership, or to subject the same to any condominium regime. (c) Nuisances Disallowed. Lessee shall not make any use of the Leased Property, nor shall it allow any of its sub-lessees or invitees to make use of the Leased Property, in a manner that creates or reasonably will lead to a public or private nuisance under state or local law. Upon notification by City that such a nuisance is then being allowed on the Leased Property, Lessee shall promptly take steps necessary to abate such nuisance to the City's reasonable satisfaction. City shall retain all of its contract rights to abate a nuisance under the terms of this Lease, as well as its regulatory rights to abate such nuisance in accordance with then-current law. (d) No Discrimination. Lessee shall comply with, and shall cause others to comply with, Governmental Requirements prohibiting discrimination by reason of race,color, national origin, religion, sex, intersexuality,gender identity, sexual orientation, marital and familial status, and age or disability in the sale, lease, use or occupancy of the Hotel Project or any portion thereof. Lessee's compliance with the City's Human Rights Ordinance, codified in Chapter 62 of the City Code, as may be amended from time to time, shall be a material term of this Lease. Lessee shall cause the requirements of this Section 4.2(d) to be incorporated in the Management Agreement with the Hotel Operator; provided, however, that Lessee shall not be in default hereunder following (i) any discrimination committed by the Hotel Operator or Hotel Operator's employees or (H) Hotel Operator's non-compliance with the City's Human Rights ordinance, codified in Chapter 62 of the City Code,so long as, in each case, Lessee is enforcing the terms of the Management Agreement to require Hotel Operator's compliance with the requirements of this Section 4.2(d), which enforcement shall include termination of the Management Agreement after the third violation by such Hotel Operator of requirements of this Section 4.2(d) within any five (5) consecutive year period during the Term, as such violations have been finally determined by a court of 33 competent jurisdiction. For avoidance of doubt, Lessee shall be deemed to comply with the preceding sentence so long as Lessee is actively pursuing any necessary litigation associated with such termination of the Management Agreement. (e) Lessee's Rights To Operate a Convention Hotel Not Exclusive. Except as specified herein, it is expressly understood and agreed that the rights granted under this Lease are non-exclusive and City reserves the right to grant similar privileges and similar leases to other lessees on other City- owned or leased property, and to take any and all actions (including the leasing of City property other than the Leased Property for any lawful purpose)that City is permitted to take under federal, state,and local law. Notwithstanding the foregoing, the City shall not for a period of ten (10) years after the Opening Date, permit any other hotel with over 500 separately keyed sleeping rooms to open for business to the general public on City-owned or City-leased property within the geographical area bounded by 5"street to the south,48th street to the north, the Atlantic Ocean to the east and Biscayne Bay/Intracoastal Waterway to the west. (f) Room Block Agreement. Lessee shall operate, and cause the Hotel Operator to operate, the Leased Property in material compliance with the terms of the Room Block Agreement throughout the Term. In addition, Lessee shall not receive any commission, rebate or other compensation from any hotel located in the City of Miami Beach with respect to any group room block or room bookings made by any such Miami Beach hotel. (g) No Ownership Interests in Gaming Establishments in Miami-Dade County. Lessee, and any Persons with an ownership interest in Lessee, shall not, directly or indirectly, own, operate or manage a Gaming Establishment in Miami-Dade County, Florida; provided, however, that the foregoing restriction shall not prevent Persons having an ownership interest in Lessee, from owning or Controlling in the aggregate five percent(5%)or less of the voting securities of any owner,operator or manager of a Gaming Establishment in Miami-Dade County, Florida. (h) Enforceability. The restrictive covenants contained in this Section 4.2 shall be binding upon the Parties and shall be for the benefit and in favor of, and enforceable by, the Parties, and their successors and assigns,as the case may be. It is further understood that such covenants shall not benefit or be enforceable by any other Person. Section 4.3. Representations. (a) Lessees Representation. Lessee represents to the City that its principals and Affiliates are experienced in the development, construction, leasing and operation of hotel properties generally, and that Lessee has independently determined the merits and risks of electing to proceed with the development of the Hotel Project, and that Lessee is not and, will not be relying upon any information that may have been or hereafter be provided to Lessee with respect to or relating to the financial results derived from, financial merits of investing in, or other economic or other benefits that may be realized from the development, construction, leasing and operation of the Hotel Project or sale of Lessee's interests in this Lease. (b) No Representation or Warranties By City. Lessee acknowledges and agrees that it will be given the opportunity to perform all inspections and investigations concerning the Leased Property to its satisfaction prior to the Possession Date, and the City (i) except as specifically provided in this Lease, is not making and has not made any representations or warranties, express or implied, of any kind whatsoever with respect to the Leased Property, including any representation or warranty of any 34 kind with respect to title, survey, physical condition, suitability or fitness for any particular purpose, the financial performance or financial prospects of the Hotel Project, its value, or any other economic benefit that can be realized or expected therefrom, the presence or absence of Hazardous Substances, the tenants and occupants thereof, the zoning or other Governmental Requirements applicable thereto, taxes, the use that may be made of the Leased Property, or any other matters with respect to this transaction or Lease); (ii) Lessee has relied on no such representations, statements or warranties, and (Hi) City will in no event whatsoever be liable for any latent or patent defects in the Leased Property (including any subsurface conditions). (c) "AS IS" Condition of Leased Property. Lessee acknowledges it has relied solely on Lessee's own inspections, tests, evaluations and investigations of and related to this Lease and the Leased Property in its determination of whether to proceed with this Lease and the Hotel Project. As a material part of the consideration of this Lease, Lessee agrees to accept the Leased Property on the Possession Date in its "AS IS" and "WHERE IS" condition "WITH ALL FAULTS" and latent or patent defects, and without representations and warranties of any kind, express or implied, or arising by operation of law. (d) The provisions of this Section 4.3 shall survive the termination of this Lease. Section 4.4. Rent and Other Payments. Lessee covenants and agrees to pay the City,from and after the date hereof and during the Term the following Rent, as applicable: (a) Base Rent. Commencing as of the (i) Opening Date (the "Rent Commencement Date"), and except as set forth below, monthly rent in the amount of the greater of (x) (A) two and one half percent (2.5%) of the Gross Operating Revenues for such month plus (B) one and one quarter percent (1.25%) of the Gross Operating F&B Revenues for such month or (y) one-twelfth (1/12`h) of the Minimum Fixed Rent set forth in Section 4.4(a)(i) of this Lease ("Base Rent"). The Base Rent shall be due and payable on or before the twenty-fifth (25th) day of each month following the month for which the Base Rent is applicable. Prior to the closing of the Construction Loan, Lessee shall provide City with a copy of the pro forma accepted by the Construction Lender in connection with the closing of the Construction Loan. (i) Minimum Fixed Rent. "Minimum Fixed Rent" shall be an annual fixed rent payable in twelve(12) equal monthly installments, prorated as to any partial month, commencing on the Rent Commencement Date and continuing on the first day of each month thereafter. Attached as Exhibit "R" hereto is a schedule setting forth the Minimum Fixed Rent for the period commending on the Rent Commencement Date and ending on December 31 of the year in which the tenth (10'h) anniversary of the Rent Commencement Date occurs; provided that the amount shown for the first year shall apply for the period commencing on the Rent Commencement Date and ending on December 31 of the year in which the first anniversary of the Rent Commencement Date occurs, prorated for any partial calendar years. Commencing on January 1"following the tenth anniversary of the Rent Commencement Date, and every ten (10) Lease Years thereafter (each, a "Minimum Fixed Rent Reset Date"), the Minimum Fixed Rent shall be adjusted to equal the greater of(x) the Minimum Fixed Rent payable for the period immediately preceding the Minimum Fixed Rent Reset Date, or(y) sixty percent (60%) of the average Base Rent payable for each twelve month period during the preceding ten (10) calendar year periods; provided that for the first Minimum Fixed Rent Reset Date item (y) shall be sixty percent (60%) 35 of the average Base Rent for each twelve month period payable during the preceding five (5) calendar year period. (H) Each Base Rent payment shall be accompanied with documentation sufficient for City to verify the accuracy of the Base Rent payment, and in a format and of a detail reasonably required by City. (iii) Each year following the Rent Commencement Date, Lessee shall provide City with the report required in Section 4.4(j)(ii) as to the correct Gross Operating Revenues and Gross Operating F&B Revenues for the previous calendar year. The report shall be prepared in accordance with the American Institute of Certified Public Accountants' requirements for special reports. All Base Rent payments and annual reports are subject to audit under Section 4.4(j). In the event such report reflects that additional Base Rent ("Additional Base Rent") is due to the City with respect to such previous calendar year, Lessee shall deliver such payment to the City contemporaneously with the delivery of such report. In the event such report reflects an overpayment to the City with respect to Base Rent,the City shall return the excess to Lessee within thirty(30) days after receipt of such report. (iv) Lessee shall be responsible for any applicable sales tax payable in connection with the Rent. (b) Transaction Rent. Lessee covenants and agrees to pay the City as Additional Rent, within sixty (60) days after the closing of the first three (3) Transfers that effects either a sale of the entire Hotel Project to a Person that is not an Affiliate of Lessee or a Transfer of a Controlling interest in Lessee to a Person that is not an Affiliate of Lessee(other than (i)a Transfer pursuant to a foreclosure of a Leasehold Mortgage or a delivery by Lessee of a deed in lieu thereof, (ii) the first Transfer by a Leasehold Mortgagee following a Transfer pursuant to clause (i), or (iii) a Transfer pursuant to a foreclosure of the pledge of ownership interests of Lessee granted pursuant to a Mezzanine Loan or Credit Enhancement or a delivery by Lessee of an assignment in lieu thereof, or (iv) the first Transfer by the Mezzanine Lender or the beneficiary of a Credit Enhancement following a Transfer pursuant to clause(iii)), an amount equal to the lesser of(x) $2 million (or a prorated portion thereof if such Transfer is of less than 100% of the ownership interests of Lessee) or (y) 0.25% of the gross sales price (less typical commissions, closing adjustments and credits) in connection with such Transfer (each "Transaction Rent"); provided that Transaction Rent shall be payable in connection with any such Transfer only if the gross sales price in connection with such Transfer exceeds an amount equal to 120% of the Improvement Costs (provided that any Improvement Costs paid to Affiliates of Lessee shall be included up to but not exceeding fair market value for the services provided by such Affiliates), or a prorated portion thereof if such Transfer is of less than 100%of the ownership interests of Lessee. (i) An example of calculating Transaction Rent pursuant to Section 4.4(b) is set forth on Exhibit"O". (c) Non-subordination of Rent. The Rent payable to City hereunder shall never be subordinated, including to any sums due under the Construction Loan or any other financing by Lessee, and City shall at all times have a first priority right to payment of the Rent from Gross Operating Revenues and Gross Operating F&B Revenues. (d) Payment of Rent and Other Payments. All Rent and other payments hereunder required to be made to the City shall be paid to the City at the Office of the Director of Finance, Miami Beach City Hall, 1700 Convention Center Drive, 3`d Floor, Miami Beach, Florida 33139 and in such 36 manner or at such other place as the City shall designate from time-to-time in a notice given pursuant to the provisions of Section 14.5. (e) Late Payment Charge. In the event the Lessee fails to make any payments, as required to be paid under the provisions of this Lease, within fifteen (15) days after same shall become due, interest at the Default Rate shall accrue against the delinquent payment(s) from the original due date until the City actually receives payment.The right of the City to require payment of such interest and the obligation of the Lessee to pay same shall he in addition to and not in lieu of the rights of the City to enforce other provisions herein and to pursue other remedies provided under this Lease. All payments of money required to be paid to the City by Lessee under this Lease other than Base Rent, including interest, late fees, penalties and contributions,shall be treated as Additional Rent. (f) Dishonored Check or Draft. In the event that the Lessee delivers a dishonored check, draft or wire transfer to the City in payment of any obligation arising under this Lease, the Lessee shall incur and pay City an amount that is three (3)times the service fee incurred by City for such dishonored check or draft. Further, in such event, the City may require that future payments required pursuant to this Lease be made by cashier's check or other means acceptable to the City. (g) Holdover Rental. In the event that the Lessee remains in possession of the Leased Property beyond the Term or termination of this Lease,the Lessee shall be bound by all of the terms and conditions of this Lease to the same extent as if this Lease were in full force and effect during the time beyond the expiration date of this Lease. However, during any such possession of the Leased Property, as a holdover tenant after the City has demanded the return of the Leased Property, the Lessee shall be liable for double the Base Rent being paid at that time,or, if Section 83.06, Florida Statutes, as amended provides a greater amount,then whatever greater amount is specified in the Florida Statutes. (h) No Abatement of Rent. Except as may be otherwise expressly provided herein, there will be no abatement, diminution or reduction of Rent payable by Lessee hereunder or of the other obligations of Lessee hereunder under any circumstances.- (i) Lessee Improvements Not Deemed Rent. The Lessee Improvements will be made by Lessee in order to put the Leased Property in a condition suitable for the operation of the Lessee's business. The cost or value of the Lessee Improvements is intended by the parties to inure solely to the benefit of the Lessee and no portion of such cost or value is intended to inure to the benefit of the City or constitute rent, license fee or other consideration for the right to occupy the Leased Property or the Lessee Improvements until the surrender of the Leased Property from Lessee to the City at the expiration or earlier termination of this Lease. (j) Records and Reporting. (i) For the purpose of permitting verification by the City of any amounts due to it, including an account of Gross Operating Revenues, Gross Operating F&B Revenues, Base Rent and Transaction Rent, Lessee shall keep and preserve for at least five (5) years in Miami-Dade County, Florida, at the address specified in Section 14.5, or at its home office, auditable original or duplicate books and records for the Hotel Project,which shall disclose all financial information regarding the Hotel Project, including information required to determine Base Rent and Transaction Rent. All such records shall be maintained in every material respect according to GMP and, as applicable to the Hotel, the Uniform System. The City shall, on commercially reasonable notice, have the right during normal 37 business hours at the expense of the City unless otherwise provided herein to inspect such books and records and make any examination or audit or copy thereof which the City may require at any time within one year after(a)submittal of the annual certification to City set forth in Subsection 4.4(j)(ii)with respect to the Gross Operating Revenues and Gross Operating F&B Revenues, and (b) a Transfer pursuant to which Transaction Rent is due in accordance herewith, with respect to the gross sales price of such Transfer, as applicable. Records copied by the City, if any, shall be subject to the requirements of the Florida Public Records Act set forth in Chapter 119 of the Florida Statutes ('Public Records Act"). To the fullest extent permitted by law, City shall protect from disclosure any records that are confidential and exempt from disclosure under Florida law, provided, however,that nothing herein shall preclude the City or its employees from complying with the disclosure requirements of the Public Records Act, and any such compliance shall not be deemed an event of default by the City under this Lease. City shall use its good-faith, diligent efforts to provide timely written notice to Lessee of any public records request seeking any records of the Lessee that may be within the City's custody, possession or control, to permit Lessee the opportunity to seek to protect such information from disclosure. If such audit shall disclose a liability for Rent in excess of the Rent theretofore paid by Lessee for the period in question, Lessee shall pay such excess amounts, together with interest at the Default Rate, as Additional Rent within thirty (30) days after receipt of written demand therefor, and if such audit shall disclose an overpayment of the Rent theretofore paid,the City shall return the excess to Lessee within thirty(30)days after receipt of written demand therefore. (ii) Lessee shall provide the City with an annual Audited Gross Operating Revenues Schedule for each Lease Year during the Term,certified by the Lessee's outside CPA,within one hundred twenty (120) days after the close of each Lease Year (including the Lease Year in which this Lease terminates or is terminated) specifying the Gross Operating Revenues and Gross Operating F&B Revenues, for each of the categories or items identified in the definitions of Gross Operating Revenues and Gross Operating F&B Revenues, as applicable, Base Rent for the applicable Lease Year and Additional Base Rent, if any. (iii) If Lessee shall fail to deliver the foregoing annual Audited Gross Operating Revenues Schedule to the City within said one hundred twenty (120) day period, the City shall have the right to either conduct an audit itself or to employ an independent certified public accountant to examine such books and records as may be necessary to certify the amount of Rents due with respect to such Lease Year and to obtain the information described above. Lessee shall pay to the City,within thirty (30) days after receipt of written demand thereof, as Additional Rent, the cost of any audit performed by or for the City pursuant to this item (iii). (iv) If the City disagrees with the annual Audited Gross Operating Revenues Schedule provided by Lessee, it may conduct its own audit within one year after receipt of same by City, which Lessee shall pay for if said audit demonstrates a deficiency of more than three percent (3%), in the amount of Base Rent due to the City. If in the course of any audit the City identifies a deficiency in excess of five percent (5%) in the amount of Base Rent, the City shall have the right to audit Lessee's books and records for the three (3) prior calendar years. If the City identifies any deficiencies in excess of five percent(5%) in the amount of Base Rent due as a result of an audit of any of those three (3) prior calendar years, the City shall have the right to audit an additional two (2) prior calendar years. Any dispute between the two audits which cannot be resolved by the Parties shall be resolved in accordance with Section 7.8 of this Lease. The cost of any audit by the City which Lessee is required to pay the cost of pursuant to this Section shall be the cost charged to the City by its independent auditors,or if done by City personnel, the direct employee salary cost to the City for the time spent by said employees in 38 performing such audit, but not in excess of what would have been charged to the City for the same service by the City's outside auditors. (v) Quarterly, commencing on the Possession Date and continuing until the Completion of Construction, and not less often than annually thereafter, Lessee shall deliver to the City a written report detailing the employment by Lessee of City of Miami Beach and Miami-Dade County residents in the construction, operation and maintenance of the Hotel Project. Section 4.5. Covenants for Payment of Public Charges by Lessee. (a) Payment of Public Charges. Lessee, in addition to the Rent and all other payments due to City hereunder, covenants to pay and discharge before any fine, penalty, interest or cost may be added,all public charges(collectively"Public Charges") including: (i) All real and personal property taxes, all ad valorem real property taxes,all taxes on Rents payable hereunder and under Subleases,tourist, room and restaurant taxes, restaurant taxes, and public assessments (including, without limitation, permit fees, impact fees and other public charges);and Special Assessments pursuant to Section 4.5(d), electric, water and sewer rents, rates and charges levied, assessed or imposed by any Governmental Authority against the Leased Property, including all Lessee Improvements thereon, in the same manner and to the same extent as if the same,together with all Lessee Improvements thereon were owned in fee simple by Lessee;and (b) Lessee's obligation to pay and discharge Public Charges levied, assessed or imposed against or with respect to the Leased Property shall not commence until the Possession Date. All such charges shall be prorated, to the extent applicable, if the Possession Date is not at the beginning of the calendar year. Lessee, upon written request, shall furnish or cause to be furnished to the City, official receipts of the appropriate taxing authority, or other proof satisfactory to the City evidencing the payment of any Public Charges. (c) Contesting Impositions. (i) Lessee shall have the right to contest the amount or validity, in whole or in part, of any Public Charges, for which Lessee is, or is claimed to be, liable, by appropriate proceedings diligently conducted but only after payment of such Public Charges, unless such payment would operate as a bar to such contest or materially interfere with the prosecution thereof, in which event, payment of such Public Charges may be postponed if, and only if, Lessee has deposited with City, in its capacity as landlord under this Lease, cash or other security reasonably required by City Manager in the amount so contested and unpaid, together with interest and penalties in connection therewith and any other charges that may be assessed against or become a charge on the Leased Property or any part thereof in such proceedings, less any amounts deposited with any Leasehold Mortgagee or any Mezzanine Lender for such purposes. Upon the termination of any such proceedings, Lessee shall pay the amount of such Public Charges or part thereof, if any,as finally determined in such proceedings,together with any costs, fees, including counsel fees, interest, penalties and any other liability in connection therewith, and may use the cash or other security deposited with the City for such purpose. If Lessee does not so use any 39 such cash or other security deposited with the City, then the City shall promptly return such cash or other security to Lessee upon the termination of any such proceedings. City shall not be required to join in any proceedings referred to in this Section 4.5(d) unless: (1) Governmental Requirements shall require that such proceedings be brought by or in the name of City;or (2) the proceeding involves the assessment or attempted assessment of a real estate or ad valorem tax on the Leased Property, in which event the City shall join in such proceedings or permit the same to be brought in the City's name. Notwithstanding the foregoing, City's joinder and cooperation shall be limited to actions necessary to enable Lessee to satisfy technical requirements of any action or proceeding and in no event shall City be required to join in such action or proceeding in any substantive capacity. (iii) Except for any counsel it retains separately, the City shall not be subjected to any liability to pay any fees, including counsel fees, costs and expenses regarding such proceedings. Lessee agrees to pay such fees, including commercially reasonable counsel fees, costs and expenses or, on demand, to make reimbursement to the City for such payment. The City will endeavor to use in house counsel whenever possible, in accordance with the City's customary practices. (d) Special Assessments. The City retains all its rights to impose nondiscriminatory special assessments or other public charges; provided, however, if at any time the City, in its municipal capacity, subjects non-governmental users to an exclusive franchise for trash removal or other public services, Lessee will be treated the same as similarly sized and situated properties (such as the Miami Beach Loews Hotel). (e) No Tax Abatements or Other Public Subsidies to Lessee. This Lease shall not, in and of itself, entitle Lessee to any City tax abatement, tax rebate, public funding or public financing with respect to any Public Charges, nor shall this Lease prohibit Lessee from seeking or receiving any tax abatement, tax rebate, public funding or public financing with respect to any Public Charges of any Governmental Authorities other than the City. Section 4.6. Additional Consideration. Lessee, in addition to the Rent and all other payments due to City hereunder, covenants to pay to the City for joint marketing purposes to promote the Convention Center,the Hotel and the City, an amount equal to one percent(1%)of all gross room revenues but only to the extent paid by Hotel guests as a voluntary surcharge and collected by Lessee (the "Convention District Fee"), with the expenditure of such funds to be determined by the City Commission through its annual budget process. Lessee will not challenge or contest the validity of the Convention District Fee. ARTICLE V ASSIGNMENT Section 5.1. Purpose of Restrictions on Transfer. This Lease is granted to Lessee solely to develop the Hotel Project and its subsequent use according to the terms hereof, and not for speculation in 40 landholding. Lessee recognizes that, in view of the importance of developing the Hotel Project to the general welfare of the City and the general community, the Lessee's qualifications and identity are of particular concern to the community and the City. Accordingly, Lessee acknowledges that it is because of such qualifications and identity that the City is entering into this Lease with Lessee, and, in so doing, the City is further willing to accept and rely on the Lessee's obligations for faithfully performing all its undertakings and covenants. Section 5.2. Transfers. Lessee represents and warrants that Lessee has not made, created or suffered any Transfers as of the date of this Lease and that the Persons that have an ownership interest in Lessee on the date of this Lease are listed, together with their percentage and character of ownership, on Exhibit "M". No Transfer may or shall be made, suffered or created by Lessee, its successors, assigns or transferees without complying with the terms of this Article V. Any Transfer that violates this Lease shall be null and void and of no force and effect. Notwithstanding anything to the contrary set forth herein, including Section 5.3 hereof, prior to the Opening Date, one or more of the principals of MB Mixed Use Investment Holdings Member, LLC and/or TB MBCC Hotel Investment LLC,as such principals exist on the date of execution of this Lease, or the estate(s) of any such principal(s) (each, an "Initial Owner"), shall, individually or collectively, continue, directly or indirectly, to direct the day-to-day management and policies of Lessee. Section 5.3. Permitted Transfers. (a) Other than Permitted Transfers, no Transfer will be permitted without the written Approval of the City Manager. (b) Each of the following Transfers, shall be permitted hereunder without the City's Approval ("Permitted Transfers"): (i) a Transfer prior to the Opening Date of a direct or indirect interest in Lessee to an equity investor funding all or any portion of the balance of the Equity Commitment in excess of the Initial Lessee Minimum Equity Contribution (together with any additional amounts funded by Initial Lessee or one or more of its Affiliates), provided that such transferee satisfies the applicable "Acceptable Owner Criteria"set forth on Exhibit"A"attached hereto; (ii) a Transfer after the Opening Date of the entire Hotel Project or any direct or indirect interest in Lessee provided that 0) the transferee satisfies the applicable "Acceptable Owner Criteria" set forth on Exhibit "A" attached hereto; (ii) the City is given written notice thereof together with true and correct copies of the applicable information required under Exhibit "A" attached hereto and in accordance with the time frames set forth on Exhibit "A" attached hereto in order for City Manager to confirm that the transferee (or the Lessee) is an Acceptable Owner; (iii) no Event of Default has occurred and is continuing and (iv) all of the conditions precedent to the effectiveness of such Transfer as set forth in Section 5.5 hereof are satisfied; (iii) Any Transfer, if in accordance with the terms and conditions of Article VI, by the First Leasehold Mortgagee, to an agent, designee or nominee of the First Leasehold Mortgagee that is wholly owned or Controlled by such First Leasehold Mortgagee; (iv) Any Transfer directly resulting from the foreclosure of a First Leasehold Mortgage or the granting of a deed in lieu of foreclosure of a First Leasehold Mortgage or any Transfer made to the purchaser at foreclosure of a First Leasehold Mortgage or to the grantee of a deed in lieu of 41 foreclosure of a First Leasehold Mortgage (if such purchaser or grantee is a nominee in interest of the First Leasehold Mortgagee), and provided further that such Transfer, purchase or grant is in accordance with the terms and conditions of Article VI; (v) Any Transfer directly resulting from a conveyance to a First Leasehold Mortgagee of Lessee's interest provided it is in accordance with the terms and conditions of Article VI; (vi) Any Transfer directly resulting from the foreclosure by the Mezzanine Lender of a pledge of ownership interests of Lessee or any Transfer made to the purchaser at a foreclosure of such pledge of ownership interests of Lessee (if such purchaser is a nominee in interest of the Mezzanine Lender), or any assignment in lieu of such foreclosure, provided that such Transfer is in accordance with the terms and conditions of Article VI; (vii) Any Transfer, or series of Transfers not permitted pursuant to Sections 5.3(b)(i) and 5.3(b)(ii)above, of not more than an aggregate of twenty-five percent(25%)of the direct or indirect ownership interests in Lessee, provided that either there is no change in Control of Lessee as a result of such Transferor at all times after such Transfer, an Initial Owner or any Affiliate thereof, an Acceptable Owner or other successor Person Approved by the City Manager has the power to direct the day-to-day management and policies of Lessee; (viii) Any Transfer that occurs by inheritance, devise, bequest or by operation of law upon the death of a natural person who is the owner of a direct or indirect ownership interest in Lessee, provided that, in each case, at all times after such Transfer, the transferor, or in the case of death, the Person who inherits transferor's interest, retains Control of the transferred interest; (ix) Any Transfer to a trust, partnership or other entity for family estate planning purposes, provided that, in each case, at all times after such Transfer, the transferor retains Control of the transferred interest; (x) Any Transfer (A)to an Affiliate of the transferor or (B) among direct or indirect owners of Lessee, provided that, in each case, either there is no change in Control of Lessee as a result of such Transfer or at all times after such Transfer, an Initial Owner or an Affiliate thereof or an Acceptable Owner or other successor Person Approved by the City Manager has the power to direct the day-to-day management and policies of Lessee;or (xi) After an initial Transfer of direct or indirect interests in Lessee to any entity that is listed on any national securities exchange (which shall be subject to the Permitted Transfers or other Approval provisions herein, as applicable), any Transfer of direct or indirect interests in Lessee through any entity that is listed on any national securities exchange; provided, however, in the case of any Transfer hereunder, the proposed transferee shall not, directly or indirectly, own, operate or manage any Gaming Establishment in Miami-Dade County, Florida and any purported Transfer in violation hereof shall be null and void and of no force and effect; provided, however,that the foregoing restriction shall not apply to a proposed transferee if all Persons owning or Controlling such proposed transferee, own or control in the aggregate five percent (5%) or less of the voting securities of any owner, operator or manager of a Gaming Establishment in Miami-Dade County, Florida. 42 Section 5.4. Transfer Requiring City's Approval. Regarding any Permitted Transfer pursuant to Section 5.3(b) or any other Transfer that is not a Permitted Transfer, Lessee shall give or cause to be given to the City written notice of a Transfer (in the case of a Permitted Transfer), or written notice requesting Approval of any other Transfer that is not a Permitted Transfer, and submitting all information reasonably necessary for the City Manager (or the City Commission, with respect to Transfers to certain Foreign Instrumentalities as specified herein) to evaluate the proposed transferees and the Transfer and to obtain the City's Approval of same, when such Approval is required under the terms of this Lease. If a Permitted Transfer under Sections 5.3(b)(i) or (ii), said information shall demonstrate that the transferee is an Acceptable Owner as set forth on Exhibit"A" attached hereto;if a Permitted Transfer under Sections 5.3(b)(vii) or(x), said information shall demonstrate that either there is no change in Control of Lessee as a result of such Transferor an Initial Owner or an Affiliate thereof, an Acceptable Owner or, if applicable, other successor Person Approved by the City Manager has the power to direct the day-to-day management and policies of Lessee; if a Permitted Transfer under Sections 5.3(b)(viii) or(ix)said information shall demonstrate that the transferor, or in the case of death, the Person who inherits transferor's interest, retains Control of the transferred interest. If not a Permitted Transfer, Lessee shall provide to the City the information described in Paragraph C of Exhibit "A" and the provisions described in Paragraph D of Exhibit "A" shall apply. The City's confirmation or Approval process shall proceed as set forth on Exhibit"A" attached hereto. Any Approval of a Transfer to a Foreign Instrumentality (other than to any of the member countries of the European Union or the Gulf Cooperation Council, each as existing as of the Effective Date, United Kingdom, Canada, Mexico, countries located in South America (excluding Venezuela), Japan, South Korea, Singapore and Australia, or Persons Controlled by any of the foregoing countries)shall be subject to the prior written approval of the City Commission, which approval may be granted, conditioned or withheld by the City Commission in its sole discretion. Any Approval of a Transfer shall not waive any of the City's rights to Approve or disapprove of any subsequent Transfer. Lessee shall from time to time throughout the Term, as the City shall reasonably request, furnish the City with a complete statement, subscribed and sworn to by a Responsible Officer of Lessee, setting forth the full names and address of holders of the ownership interests in Lessee who hold, directly or indirectly, at least a ten percent (10%) interest in Lessee as well as to confirm the percentage ownership interest, if any,of such Responsible Officer. Section 5.5. Effectiveness of Transfers. No Transfer shall be effective unless and until all of the following conditions precedent are satisfied within thirty(30)days of such Transfer: (a) executed copies of the documents that convey title to the transferred interest;and (b) where the Transfer is pursuant to Section 5.3(b)(ii), and if it is of the entire Hotel Project, the Person to which any such Transfer is made, by a commercially reasonable, written instrument and in form recordable among the public records, shall, for itself and its successors and assigns, and especially for the benefit of the City, expressly assume all of the obligations of Lessee under this Lease and agree to be liable and subject to all conditions and restrictions to which Lessee is subject. Section 5.6. Subletting. (a) Subject to the other terms and conditions of this Lease, Lessee shall have the right to enter into Subleases of portions of the Leased Property at any time and from time to time during the Term of this Lease with such Subtenants, and upon such commercially reasonable terms and conditions as Lessee shall deem fit and proper, including, without limitation a taxable REIT subsidiary lease under Section 856 of the Internal Revenue Code and an Opco/Propco lease between Lessee and an Affiliate, provided the Sublease is consistent with this Lease (including this Article V) and consistent with the 43 Hotel Standards. At the City's request, Lessee shall allow the City to review and inspect any and all Subleases for the Hotel Project. (b) Lessee covenants that it will perform and observe in all material respects all the terms, covenants, conditions and agreements required to be performed and observed by it under each Sublease. Lessee agrees that each Sublease shall: (i) require the Subtenant to maintain adequate books and records including reasonably detailed information on Gross Operating Revenues and/or Gross Operating F&B Revenues (as applicable) of the applicable subleased portion of the Leased Property and to submit the same for inspection and audit by the City and require the Subtenant to comply with Governmental Requirements; (ii) provide that, if this Lease terminates, the Subtenant shall, if required by the City, pay all rents and all other charges required by such Sublease directly to the City;and obligate the Subtenant not to violate any term, covenant or restriction applicable to Lessee that is contained in this Lease. In addition, Lessee shall in all events require and cause Subtenants to perform obligations imposed by the Lease and applicable to such Sublease (specifically including the obligations set forth in this Section 5.6). (c) Notwithstanding anything to the contrary contained herein, at all times the Base Rent payable to the City with respect to all portions of the Leased Property, whether or not subleased to a Subtenant, shall be based on the Gross Operating Revenues and Gross Operating F&B Revenues of the Leased Property, including any subleased portion of the Leased Property, and shall not be based on the Sublease rent paid by any Subtenant thereunder (and such Sublease rent shall not be included in calculating Gross Operating Revenues or Gross Operating F&B Revenues, as applicable) except solely with respect to a portion of the Leased Property leased to a Subtenant for purposes of operating any areas on the ground floor of the Hotel Project; a gift shop; a car rental facility; FedEx, UPS or a similar delivery service; beachwear and equipment rental; and antennae; in which cases, only such Sublease rent (but not Gross Operating Revenues or Gross Operating F&B Revenues, as applicable, of such Subleased portions of the Leased Property) shall be used for purposes of calculating Gross Operating Revenues and Gross Operating F&B Revenues. ARTICLE VI MORTGAGE FINANCING; RIGHTS OF MORTGAGEE AND LESSEE Section 6.1. Conditions of Financing and Leasehold Mortgage. (a) Lessee shall have the right to secure one or more financings or re-financings and, in conjunction with and to secure that financing or re-financing, may enter into a First Leasehold Mortgage in favor of a First Leasehold Mortgagee and/or a pledge of its ownership interests in favor of a Mezzanine Lender, provided that: (i) any such secured financing of the Hotel Project exclusively secures debt of the Lessee or the Mezzanine Borrower directly related to the Hotel Project; (ii) no First Leasehold Mortgage or other encumbrance executed by the Lessee in connection with such First Leasehold Mortgage or Mezzanine Loan or otherwise will extend to or be a 44 lien or encumbrance upon City's interest in any part of the Leased Property or in any right appurtenant to that interest; (iii) the First Leasehold Mortgage and any other encumbrance executed by the Lessee in connection with such First Leasehold Mortgage or otherwise shall at all times, without the necessity for the execution of any further documents, be subject and subordinate to the interest of the City in the Leased Property subject to this Article VI; provided that (A) the First Leasehold Mortgagee agrees from time to time upon request and without charge to execute, acknowledge and deliver any instruments reasonably requested by the City under this Lease to evidence the foregoing subordination and (B) the City agrees from time to time upon reasonable request and without charge to execute, acknowledge and deliver any instruments reasonably requested by such First Leasehold Mortgagee or Mezzanine Lender to evidence the City's non-disturbance and recognition of the rights granted to such First Leasehold Mortgagee or Mezzanine Lender pursuant to this Section 6.1; (iv) the rights of the City in the Leased Property and arising out of this Lease shall not be affected by the First Leasehold Mortgage, First Leasehold Mortgagee, Mezzanine Loan or Mezzanine Lender, nor shall the City be deprived in any other way of its rights in the Leased Property or under this Lease, except to the extent provided in this Article VI or in any subordination, non- disturbance and recognition agreement between the City and such First Leasehold Mortgagee or Mezzanine Lender that is consistent with the terms of this Lease; (v) Lessee shall at all times remain liable hereunder for the payment of Rent and the performance of all covenants and conditions of this Lease as provided in this Lease; (vi) at the time of the closing of the financing or re-financing other than for the initial Construction Loan, the initial Mezzanine Loan and any other Leasehold Mortgage loan or Mezzanine Loan that is closed prior to the Opening Date, Lessee certifies to the City that the Hotel Project, after taking into account all existing debt of the Lessee, is projected to have and be able to sustain a Debt Service Coverage Ratio of not less than 1.15 (based on the reasonably projected first stabilized year for any financing that closes prior to the end of the reasonably projected first stabilized year, and based on Lessee's approved operating budget for the current Lease Year for subsequent financings); (vii) at the time of the closing of the financing or re-financing,the aggregate amount of the principal indebtedness secured by (a) mortgages encumbering Lessee's interest in the Leased Property and/or (b) pledges of ownership interests of Lessee, does not exceed an amount equal to eighty percent(80%)of the sum of(1)the then value of Lessee's interest in the Leased Property and any improvements previously constructed on the Leased Property, as reasonably determined by a third- party appraiser selected by the City and engaged at Lessee's sole expense,which appraiser must have at least ten (10)years of experience in appraising hotel properties of at least four hundred (400) rooms in the Miami Beach area, (2)the value of any improvements to be constructed on the Leased Property with the proceeds of such financing or re-financing, and (3) all costs incurred, and all reserves required, in connection with such financing or re-financing; (viii) the First Leasehold Mortgagee shall have a first-priority right and option to retain, apply and disburse the proceeds of any insurance or the proceeds of any condemnation award in accordance with the requirements of its First Leasehold Mortgage before any such proceeds are applied towards the demolition, repair or restoration of the Leased Property in accordance with the provisions of this Lease;and 45 (ix) Following a foreclosure sale, any purchaser at such foreclosure sale acquiring any right, title or interest in or to this Lease, shall enter into in a written instrument reasonably satisfactory to the City, to assume and agree to perform all of the terms, covenants and conditions of Lessee hereunder arising after the date of such Transfer(provided that City does not waive or relinquish its right, and shall have the right,to enforce its remedies with respect to any Event of Default existing as of the date of such Transfer), that no additional mortgage or assignment of this Lease or pledge of ownership interests of Lessee will be made except in accordance with the provisions contained in this Article VI, and that a duplicate original of such written instrument, duly executed and acknowledged by such purchaser and in recordable form, is delivered to the City immediately after the consummation of such sale,or, in any event, prior to taking possession of the Leased Property. (b) Prior to the date (i) a First Leasehold Mortgage is recorded or(H)the Mezzanine Lender, if any, enters into a Mezzanine Wan agreement with Lessee, the First Leasehold Mortgagee or Mezzanine Lender, as applicable, Lessee and the City(by and through the City Manager)shall enter into a non-disturbance, recognition and attornment agreement containing the provisions set forth in Section 6.1(d) below and such other terms and conditions as are reasonably acceptable to the First Leasehold Mortgagee or Mezzanine Lender, as applicable, and the City Manager, after consultation with the City's Chief Financial Officer and City Attorney. (c) Lessee shall deliver to the City, promptly after execution by Lessee, (i) a true and verified recorded copy of any First Leasehold Mortgage and any amendment, modification or extension thereof, together with the name and address of the First Leasehold Mortgagee and (ii) a true and correct copy of any Mezzanine Loan agreement and any amendment, modification or extension thereof, together with the name and address of the Mezzanine Lender. (d) For so long as any First Leasehold Mortgage encumbers the Leased Property, or, as applicable, a Mezzanine Lender holds a pledge of Lessee's ownership interest, and provided the conditions of Section 6.1(a)through (c) above have been satisfied: (i) in any event where the City gives Lessee notice of an Event of Default, the City shall deliver a copy of such notice to the First Leasehold Mortgagee and Mezzanine Lender, at the name and address designated in writing by the First Leasehold Mortgagee and Mezzanine Lender to the City from time to time (the City shall be deemed to have fulfilled its notice obligation by providing the required notice to the address delivered to the City in accordance with Section 6.1(c) or such other address so designated by the First Leasehold Mortgagee or Mezzanine Lender to the City in writing and shall not be responsible for any liability in the event such address is not current); notwithstanding the time allowed for Lessee to cure an Event of Default, the First Leasehold Mortgagee and the Mezzanine Lender shall have the right, but not the obligation, up to fifteen (15) days following the City's notice thereof to cure a monetary default and thereafter keep all Rent and other amounts due hereunder current, and up to thirty (30) days following the City's notice thereof to cure a non-monetary Event of Default (except an Event of Default under Section 7.1(c) hereof, for which the First Leasehold Mortgagee and Mezzanine Lender will not be given any additional time to remedy), but if such non-monetary Event of Default cannot be cured within such thirty (30) day period, then the First Leasehold Mortgagee and Mezzanine Lender shall (except as provided in clauses (iii) and (iv) below) have up to ninety (90) days to cure, provided that it has started to do so within the initial thirty (30) day period and thereafter continues to diligently pursue the cure. The City will accept performance by the First Leasehold Mortgagee and Mezzanine Lender of any covenant, condition or 46 agreement on Lessee's part to be performed hereunder with the same force and effect as though performed by Lessee;and (iii) notwithstanding the provisions of this Lease to the contrary, including Article VII hereof, no Event of Default by Lessee will be deemed to exist as to the First Leasehold Mortgagee, and the City shall not be permitted to terminate this Lease due to an Event of Default of Lessee, as long as the First Leasehold Mortgagee, in good faith, either (A) commences to cure such Event of Default and prosecute the same to completion in accordance with clause (H) above, or (B) if the nature of any non- monetary Event of Default (except an Event of Default under Section 7.1(c) hereof, for which the First Leasehold Mortgagee will not be given any additional time to remedy) is such that possession of or title to the Hotel Project is reasonably necessary to cure the Event of Default or if the Event of Default is of the type that cannot commercially reasonably be cured by the First Leasehold Mortgagee (e.g., Lessee bankruptcy) (and which will be waived as to the First Leasehold Mortgagee if the First Leasehold Mortgagee commences to cure all other Events of Default and prosecutes same to completion in accordance with this clause (iii) or clause (ii) above), files a complaint for foreclosure and thereafter prosecutes the foreclosure action in good faith and with due diligence and continuity (subject to any stays, moratoria or injunctions applicable thereto) and obtains possession or title, to the extent a cure cannot be effected without possession or title, directly or through a receiver, and as promptly as practicable after obtaining such possession or title, to the extent a cure cannot be effected without possession or title, commences promptly to cure such Event of Default and to prosecute the same to completion in good faith and with due diligence and continuity; provided, however, that the First Leasehold Mortgagee has delivered to the City, in writing within twenty (20) days following receipt of City's notice of default, its agreement to take the action described in clause (A) or (B) of this clause (iii), and that during the period in which such action is being taken (and any foreclosure proceedings are pending), all of the other obligations of Lessee under this Lease, to the extent they are susceptible of being performed by the First Leasehold Mortgagee (e.g., the payment of Rent), are being duly performed. However, at any time after the delivery of the aforementioned agreement, the First Leasehold Mortgagee may notify the City, in writing, that it has relinquished possession of the Leased Property, or that it will not institute foreclosure proceedings or, if such proceedings have been commenced, that it has discontinued them, and in such event, the First Leasehold Mortgagee will have no further liability under such agreement from and after the date which is 30 days after it delivers such notice to the City (except for any obligations accruing prior to 30 days after the date it delivers such notice), and, thereupon, subject to the rights of the Mezzanine Lender set forth in clause (iv) below,the City will have the unrestricted right to terminate this Lease and to take any other action it deems appropriate by reason of any Event of Default, and upon any such termination,the provisions of Section 6.1(h) hereof will apply. (iv) notwithstanding the provisions of this Lease to the contrary, including Article VII hereof, no Event of Default by Lessee will be deemed to exist as to the Mezzanine Lender, and the City shall not be permitted to terminate this Lease due to an Event of Default of Lessee, as long as the Mezzanine Lender and/or First Leasehold Mortgagee, in good faith, either (A) commences to cure such Event of Default and prosecute the same to completion in accordance with clause (ii)or(iii)above,or(B) if the nature of any non-monetary Event of Default (except an Event of Default under Section 7.1(c) hereof, for which the Mezzanine Lender will not be given any additional time to remedy) is such that title to the ownership interests of the Lessee is reasonably necessary to cure the Event of Default or if the Event of Default is of the type that cannot commercially reasonably be cured by the Mezzanine Lender(e.g., Lessee bankruptcy) (and which will be waived as to the Mezzanine Lender if the Mezzanine Lender and/or First Leasehold Mortgagee commences to cure all other Events of Default and prosecutes same to completion in accordance with clause (ii) or (iii) above), has taken all commercially reasonable 47 steps necessary to foreclose the pledge of the Lessee's ownership interests, and prosecutes such action in good faith and with due diligence and continuity (subject to any customary and reasonable restrictions imposed under any intercreditor agreement or similar agreement between any First Leasehold Mortgagee and Mezzanine Lender and/or any stays, moratoria or injunctions applicable thereto) and obtains title to the ownership interests of the Lessee, and as promptly as practicable after obtaining such title, commences promptly to cure such Event of Default and to prosecute the same to completion in good faith and with due diligence and continuity; provided, however,that the Mezzanine Lender has delivered to the City, in writing within twenty (20) days following receipt of City's notice of default, its agreement to take the action described in clause(A)or(8) of this clause (iv),and that during the period in which such action is being taken, all of the other obligations of Lessee under this Lease, to the extent they are susceptible of being performed by the Mezzanine Lender (e.g., the payment of Rent), are being duly performed. However, at any time after the delivery of the aforementioned agreement, the Mezzanine Lender may notify the City, in writing, that it has relinquished title to the ownership interests of the Lessee or that it will not seek to foreclose the pledge of Lessee's ownership interests or, if such foreclosure has commenced, that it has been discontinued, and in such event, the Mezzanine Lender will have no further liability under such agreement from and after the date which is 30 days after it delivers such notice to the City(except for any obligations accruing prior to 30 days after the date it delivers such notice), and,thereupon, subject to the rights of the First Leasehold Mortgagee set forth in clause (iii) above,the City will have the unrestricted right to terminate this Lease and to take any other action it deems appropriate by reason of any Event of Default, and upon any such termination,the provisions of Section 6.1(h)hereof will apply. (e) From and after the date upon which the City receives the notice described in Section 6.1(c) hereof, the City will not (i) consent to a cancellation or surrender of this Lease (except upon the expiration of the Term),or any amendment or modification hereof or(ii)terminate this Lease other than as provided in this Article VI (except upon the expiration of the Term)without the prior written consent of the First Leasehold Mortgagee and Mezzanine Lender, which consent shall not be unreasonably delayed,conditioned or withheld. (f) Notwithstanding anything in this Lease to the contrary, foreclosure of a First Leasehold Mortgage or any sale thereunder, whether by judicial proceedings or by any power of sale contained in the First Leasehold Mortgage or applicable law, or any conveyance of the Hotel Project from Lessee to the First Leasehold Mortgagee or its designee or nominee in lieu of the foreclosure or other appropriate proceedings in the nature thereof, or any foreclosure of a Mezzanine Loan, or conveyance of the Lessee's ownership interest in lieu thereof,shall not: (i) require the City's consent; or (ii) provided the First Leasehold Mortgagee or the Mezzanine Lender has complied with the provisions of this Article VI, constitute a breach of any provision of or a default under this Lease. (g) If the First Leasehold Mortgagee or any other foreclosure sale purchaser subsequently assigns or transfers its interest under this Lease after acquiring the same by foreclosure or by an acceptance of a deed in lieu of foreclosure or subsequently assigns or transfers its interest under any such new lease entered into pursuant to Section 6.1(h) below, and in connection with any such assignment or transfer, the First Leasehold Mortgagee or any other foreclosure sale purchaser takes back a First Leasehold Mortgage to secure a portion of the purchase price, the holder of such First Leasehold Mortgage shall be a First Leasehold Mortgagee entitled to receive the benefit of this Article VI 48 and all other provisions of this Lease intended for the benefit of a First Leasehold Mortgagee. Similarly, if a Mezzanine Lender or a purchaser under a UCC sale obtains title to the ownership interests in Lessee and subsequently assigns or transfers its interests in such ownership interests, or subsequently assigns or transfers its interest under any new lease entered into pursuant to Section 6.1(h) below, and in connection with any such assignment or transfer, the Mezzanine Lender or any other UCC sale purchaser takes back a pledge of the ownership interests of the Lessee to secure a portion of the purchase price, the holder of such pledge shall be a Mezzanine Lender entitled to receive the benefit of this Article VI and all other provisions of this Lease intended for the benefit of a Mezzanine Lender. (h) Should the Lessee or any First Leasehold Mortgagee or Mezzanine Lender not cure the alleged Event of Default as provided in this Section 6.1,the City has the right to terminate this Lease by reason of any uncured Event of Default as provided in this Lease. If this Lease is terminated by the City in accordance with the foregoing or is terminated as a result of the bankruptcy of the Lessee, the City shall give written notification of such termination to the First Leasehold Mortgagee and Mezzanine Lender, and the City shall, upon written request of the First Leasehold Mortgagee to the City received within thirty (30) days after such notice of termination, enter into a new lease of the Leased Property with such First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as lessee, for the remainder of the Term with the same covenants, conditions and agreements (except for any requirements which have been fully satisfied by Lessee or City prior to termination or which pertain to the ownership of Lessee)as are contained herein. (i) The City's delivery of the Leased Property to the First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender),as applicable, as lessee, pursuant to a new lease shall be: (i) made without representation or warranty of any kind or nature whatsoever either express or implied; (ii) First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as lessee,shall take such Leased Property"as-is" in its then current condition; and (iii) upon execution and delivery of such new lease, First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as lessee, at its sole cost and expense shall be responsible for taking such action as shall be necessary to cancel and discharge this Lease and to remove Lessee named herein and any other occupant (other than as allowed by the First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as applicable,as lessee,or the City)from the Hotel Project. (j) The City's obligation to enter into such new lease of the Leased Property with the First Leasehold Mortgagee or Lessee (as owned by the Mezzanine Lender) shall be conditioned upon, on the date the new lease is executed: (i) the City receiving payment of all Rent due hereunder through the date of such new lease; (ii) all monetary defaults hereunder having been cured; (iii) all non-monetary defaults susceptible to cure having been remedied and cured (or First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as applicable, as lessee, having commenced such cure and continuing to diligently complete the cure in accordance with clauses (Hi)or(iv)of paragraph (d)above,as applicable);and 49 (iv) the City receiving payment of all expenses, including reasonable attorneys' fees and disbursements and court costs, incurred by the City in connection with such Event of Default, the termination of this Lease and the preparation of the new lease, together with interest thereon at the lesser of the Default Rate or the highest rate permitted by law,from the due date or the date expended by the City, as the case may be, to the date of actual payment from First Leasehold Mortgagee or Mezzanine Lender, as applicable. (k) With respect to the payment of Rent by the First Leasehold Mortgagee or Mezzanine Lender pursuant to this Article VI, if the Rent currently due cannot be determined by the First Leasehold Mortgagee or Mezzanine Lender, as applicable, without possession of or title to the Hotel Project or ownership of the Lessee's equity interests, as applicable, then the First Leasehold Mortgagee or Mezzanine Lender may pay the amount of Base Rent which was paid for the immediately previous period, with the adjustment, upward or downward, to be made ninety (90) days after the First Leasehold Mortgagee obtains possession of or title to the Hotel Project or the Mezzanine Lender acquires title to the ownership interests of the Lessee,as applicable. Section 6.2. No Waiver of Lessee's Obligations or City's Rights. Nothing contained herein or in any Leasehold Mortgage shall be deemed or construed to relieve Lessee from the full and faithful observance and performance of its covenants,conditions and agreements contained herein,or from any liability for the non-observance or non-performance thereof, or to require, allow or provide for the subordination to the lien of such Leasehold Mortgage or to any Leasehold Mortgagee of any estate, right, title or interest of the City in or to the Leased Property, buildings and structures or this Lease (including the right to Rent, Public Charges, and other monetary obligations of Lessee to the City under this Lease), nor shall the City be required to join in such mortgage financing or be liable for same in any way. City's interest in the Leased Property and this Lease, as the same may be modified, amended or renewed, will not at any time be subject or subordinate to (a) any mortgage now or hereafter placed upon Lessee's interest in this Lease, or(b) any other liens or encumbrances hereafter affecting Lessee's interest in this Lease. City represents and warrants to Lessee that no mortgages currently exist against its fee interest in the Leased Property, and acknowledges that this Lease shall not be subordinate to any future mortgage against the fee interest in the Leased Property. Notwithstanding anything to the contrary contained in this Lease, if all or any portion of the interest of City in the Leased Property or this Lease shall be acquired by reason of foreclosure of any mortgage, security agreement, lien or other encumbrance or other proceedings brought to enforce the rights of the holder(s) thereof, by deed in lieu of foreclosure or by any other method, and as a result any Person succeeds to such interests of City, this Lease and the rights of Lessee hereunder shall continue in full force and effect and shall not be terminated or disturbed except as otherwise expressly permitted by the terms of this Lease. Section 6.3. Waiver of Landlord's Lien. City hereby waives any statutory liens and any rights of distress with respect to the improvements, fixtures and all Lessee's personal property constructed on, located at or used in connection with the Leased Property, or the Lessee's interest in the Leased Property. This Lease does not grant a contractual lien or any other security interest to City or in favor of City with respect to the improvements, fixtures or any of Lessee's personal property constructed on, located at or used in connection with the Leased Property, or the Lessee's interest in the Lease Property. The City further agrees to execute and deliver such instruments reasonably requested by any Leasehold Mortgagee or Mezzanine Lender from time to time to evidence the aforesaid waiver of City. 50 ARTICLE VII REMEDIES; EVENTS OF DEFAULT Section 7.1. Default by Lessee. Each of the following occurrences shall constitute an "Event of Default' of Lessee that shall entitle City to terminate this Lease and seek any other remedies as set forth in Section 7.2: (a) if Lessee fails to pay any installment of Rent, including Base Rent, or any part thereof, when the same becomes due and payable for a period of three (3) Business Days after notice thereof from the City; (b) if Lessee fails to make any payment of Additional Rent, Public Charges or any other payment required to be paid by Lessee hereunder for a period of 10 Business Days after notice thereof from City to Lessee; (c) if Lessee fails to satisfy all of the Possession Conditions by the Outside Possession Date; (d) [intentionally deleted]; (e) if Lessee fails, after Commencement of Construction,to cause the Opening Date to occur by the Outside Opening Date; (f) if Lessee conducts on the Leased Property any business,the performance of any service,or the sale or marketing of any product or service by Lessee which is prohibited by the terms of this Lease for a period of thirty(30)days after receipt of notice thereof from the City; (g) if Lessee (i) actively participates in the use of any portion of the Hotel Project as a Gaming Establishment (through venue rental, promotion or other similar activities) for a period of three (3) Business Days after written notice thereof from the City; provided, however,that the City shall not be obligated to provide written notice of such failure more than two (2) times in any consecutive twelve (12) month period, and the failure of Lessee to comply with the restrictions in Section 4.2(b) prohibiting use of the Leased Property as a Gaming Establishment after the second written notice in any consecutive twelve (12) month period shall constitute an Event of Default by Lessee hereunder without the requirement of any notice or opportunity to cure; or (ii) knows of the use by any Person of any portion of the Hotel Project as a Gaming Establishment and fails for a period of three (3) Business Days after written notice thereof from the City either to (A) cause the violation to cease or (B) commence action to terminate the Sublease and thereafter diligently prosecute eviction of the Subtenant as immediately as possible; (h) If Lessee or any Person with an ownership interest in Lessee violates Section 4.2(g) (other than as provided in subsection (g) above) or the Acceptable Owner Criteria specified in subparagraph A.4 of Exhibit "A" of this Lease (other than any such violation by any Persons that have ownership interests in Lessee through any entity that is listed on any national securities exchange), or is a Prohibited Person (other than Persons that have ownership interests in Lessee through any entity that is listed on any national securities exchange); provided, however, in the case of any such violation by any Person with an ownership interest in Lessee, Lessee shall have twelve months to cure such violation after Lessee first becomes aware of such violation, including without limitation, in the case of Section 51 4.2(g) by divestiture of the ownership interest in the Gaming Establishment (whether by notice from the City or otherwise); (i) if Lessee fails to maintain or provide evidence of all insurance in compliance in all material respects with Article IX hereof (any lapse in required coverage shall be deemed a failure to comply with Article IX hereof)and such failure continues for a period of ten (10) Business Days from the date of written notice thereof from City; (j) if Lessee fails to operate the Hotel in compliance in all material respects with the Hotel Standards, and such failure continues for a period of ninety(90) days from the date of written notice thereof from City or if the default is not capable of being cured within such ninety (90) day period, Lessee fails within such period to commence a cure and thereafter diligently and in good faith prosecute the same to completion within a reasonable time, subject to the rights of any First Leasehold Mortgagees, Mezzanine Lenders and sub-lessees hereunder; (k) if there is a default by Lessee under the Management Agreement and/or Franchise Agreement and as a result of such default the Management Agreement and/or Franchise Agreement is terminated and a replacement Management Agreement and/or Franchise Agreement is not entered into within ninety (90) days thereafter, provided that if Lessee shall have commenced and thereafter shall have continued diligently to replace the Management Agreement and/or Franchise Agreement within such ninety(90) day period and the Hotel Project continues to operate in the ordinary course of business, then Lessee shall have an additional commercially reasonable period of time not to exceed one hundred eighty (180) days within which to enter into a replacement Management Agreement and/or Franchise Agreement; (I) if prior to the Opening Date, any lawsuit is filed against the Lessee, which is not dismissed within sixty (60) days and the amount in controversy of which is not covered by insurance or bond and which, if adversely determined, would substantially impair the ability of Lessee to perform its obligation to cause the Opening Date to occur by the Outside Opening Date, unless Lessee is contesting such lawsuit in good faith and through appropriate action. (m) if Lessee fails to observe or perform one or more of the other terms,conditions, covenants or agreements of this Lease not otherwise addressed in this Section 7.1 and such failure continues for a period of 45 days after written notice thereof by City to Lessee specifying such failure, unless such failure requires work to be performed, acts to be done, or conditions to be removed which cannot by their nature reasonably be performed, done or removed, as the case may be, within such 45 day period, in which case no Default will be deemed to exist as long as (i) Lessee commences curing the same within such 45 day period and diligently and continuously prosecutes the same to completion and (ii) after the Opening Date the Hotel Project continues to operate in the ordinary course of business, to the extent commercially reasonable taking into account the nature of the alleged failure to perform according to the covenant,condition or agreement in question; (n) if Lessee admits, in writing, that it is generally unable to pay its debts as such debts become due; (o) if Lessee makes an assignment for the benefit of creditors; (p) if Lessee files a voluntary petition under the Bankruptcy Code or if such petition is filed against Lessee and an order for relief is entered, or if Lessee files any petition or answer seeking, 52 consenting to or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Bankruptcy Code or any other present or future applicable federal, state or other statute or law, or seeks or consent to or acquiesces in or suffers the appointment of any trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar official of Lessee, or of all or any substantial part of its properties or of the Leased Property or any interest of Lessee therein; (q) if within 90 days after the commencement of any proceeding against Lessee seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking any reorganization, arrangement, composition, readjustment or adjustment, winding-up, liquidation, dissolution or similar relief under the Bankruptcy Code or any other present or future applicable federal, state or other statute or law of any jurisdiction, domestic or foreign, such proceeding has not been dismissed, or if, within 90 days after the appointment, without the consent or acquiescence of Lessee, of any trustee, receiver, custodian, assignee, sequestrator or liquidator of Lessee, or of all or any substantial part of its properties or of the Leased Property or any interest of Lessee therein, such appointment has not been vacated or stayed on appeal or otherwise, or if, within 30 days after the expiration of any such stay,such appointment has not been vacated; (r) if any case, proceeding or other action is commenced or instituted against Lessee seeking the issuance of a warrant of attachment, execution or similar process against all or any substantial part of its property, which case, proceeding or other action results in the entry of an order for any such relief which has not been vacated, discharged, stayed or bonded pending Lessee's appeal therefrom within 30 days from the entry thereof; (s) if Lessee fails, or fails to cause the Hotel Operator, to continuously operate the Leased Property in accordance with Section 13.2 hereof; provided, however, that if such failure is a result of the actions or inactions of the Hotel Operator, and in order to cure such failure, Lessee must enforce its rights against the Hotel Operator and/or terminate Hotel Operator, Lessee shall have a period of twelve (12) months after the initial occurrence of such failure within which to cause the Hotel Operator to continuously operate in accordance with Section 13.2 hereof and/or terminate the Hotel Operator provided that Lessee promptly commences such enforcement rights and/or termination and thereafter pursues such enforcement rights and/or termination in good faith and with due diligence and during such enforcement and/or termination process, Lessee uses commercially reasonable efforts to continuously operate the Leased Property in accordance with Section 13.2 hereof; (t) if Lessee, prior to the Opening Date, vacates or abandons the Leased Property or any portion thereof, or voluntarily abandons construction of any portion of the Hotel Project (other than in connection with a Force Majeure Event), which abandonment is not cured within a reasonable time, not less than thirty(30)days,following written notice from City; (u) if this Lease or the leasehold estate of Lessee hereunder is assigned, subleased, transferred, mortgaged, pledged or encumbered in any manner without compliance with the provisions of this Lease, or if Lessee attempts to consummate any Transfer(by entering into an agreement to sell or assign its interest in this Lease or the Hotel Project or to sublet any portion of the Leased Property which is not conditioned on satisfying the Transfer provisions of this Lease, or by agreeing to a Transfer without complying with the provisions governing same in this Lease), except as expressly permitted herein, and fails to correct such Transfer or such other default under this clause (u) within thirty (30) days after receiving notice from City; 53 (v) if a levy under execution or attachment is made against Lessee or its property and such execution or attachment has not been vacated or removed by court order, bonding or otherwise within a period of 30 days after such execution of attachment; and (w) if Lessee or Hotel Operator fails to comply with the Room Block Agreement in a manner that constitutes an Event of Default under such agreement. Notwithstanding any provision to the contrary herein, the Parties' acts or omissions in connection with Section 3.10 shall not be deemed an Event of Default. Section 7.2. Remedies for Lessee's Default. (a) If an Event of Default occurs hereunder, the City may elect any one or more of the following remedies,without limitation: (i) terminate this Lease and commence an action for eviction immediately upon the occurrence of any Event of Default; (ii) immediately revoke the licenses granted to Lessee pursuant to the Assignment of Plans and Approvals and the Assignment of Hotel Project General Construction Contract; and (iii) with respect to any Event of Default under Section 7.1(f), the City shall be entitled, for each month so long as such Event of Default has not been cured, to Base Rent equal to three times the Base Rent being paid at the time of such Event of Default for each month until the earlier of (x) such Event of Default has been cured or (y) City has terminated this Lease pursuant to clause(i)above. The City's election of a remedy hereunder with respect to any one or more Events of Default shall not limit or otherwise affect the City's right to elect any of the remedies available to it hereunder or as provided by law with respect to that or any other Event of Default. (b) If this Lease is terminated as provided in Section 7.2(a)(i) hereof as a result of an Event of Default under Section 7.1(c), Lessee will pay or cause to be paid to the City the lesser of: (i) the unfunded portion, if any, of the Initial Lessee Minimum Equity Contribution; or (ii) the actual, documented costs and expenses paid by City to third parties in connection with this Lease, not to exceed $500,000.00 in the aggregate. If this Lease is terminated as provided in Section 7.2(a)(i) hereof as a result of an Event of Default other than an Event of Default under Section 7.1(c), Lessee will pay or cause to be paid to the City the unfunded portion, if any, of the Initial Lessee Minimum Equity Contribution and will indemnify City against and compensate City from and for any and all reasonable third party costs incurred by City in enforcing its rights and remedies hereunder. If Lessee has already invested the amount of the Initial Lessee Minimum Equity Contribution at the time of termination and has provided reasonable evidence of same to the City, no additional amounts will be due from Lessee; (c) If an Event of Default occurs, Lessee will nevertheless be obligated to continue to pay all Rent for so long as Lessee has possession of the Leased Property. (d) Upon the termination of this Lease, Lessee shall quit and peaceably surrender the Hotel Project (which includes the Leased Property and the Lessee Improvements), and all property in its possession to the City in accordance with Sections 7.9 and 11.5. 54 (e) Upon the termination of this Lease,as provided in this Section 7.2, all rights and interest of Lessee in and to the Hotel Project (which includes the Leased Property and the Lessee Improvements), and every part thereof shall cease and terminate, and the City may, in addition to any other rights and remedies it may have, retain all sums paid to it by Lessee under this Lease. if) If this Lease is terminated prior to the Outside Opening Date, to the extent not previously assigned to the City, City shall have the right to cause Lessee to assign to the City (or another Person as "Assignee") all of its rights under (i) the Hotel Project General Construction Contract, the Management Agreement,the Franchise Agreement, if any,the agreements executed by Lessee with the architect for the Hotel Project and any other design professions and any other agreement executed by Lessee in connection with the development, construction and/or fixturing of the Hotel Project that requires payments by Lessee exceeding $500,000.00 in the aggregate and (ii) to the extent Lessee is able, all other contracts and agreements executed in connection with the Hotel Project, in each case on a non-recourse basis, without any warranties or representations from Lessee, and, subject to the rights of Leasehold Mortgagees and Mezzanine Lenders, to entitle City or Assignee to all of the rights and benefits of Lessee thereunder, and to provide that City or Assignee, upon the assignment of such contracts(s) and agreement(s) pursuant to this section, shall only be responsible for amounts due thereunder for work performed or services rendered with City's or Assignee's consent after such assignment; provided that the other party to any such contracts will continue to have the rights and remedies provided therein for any defaults occurring prior to the assignment to the City or its Assignee. (g) In the event the City elects to terminate this Lease after an Event of Default and such termination is stayed by order of any court having jurisdiction of any matter relating to this Lease, or by any federal or state statute,then following the expiration of any such stay,the City shall have the right, at its election, to terminate this Lease with five (5) days' written notice to Lessee, Lessee as debtor in possession or if a trustee has been appointed,to such trustee. (h) As an additional inducement to and material consideration for City agreeing to this Lease, Lessee agrees that in the event a Bankruptcy or Judicial Action (as defined herein) is commenced which subjects the City to any stay in the exercise of the City's rights and remedies under this Lease, including the automatic stay imposed by section 362 of the United States Bankruptcy Code (individually and collectively, "Stay`), then, provided the Stay is lifted and released as to all Leasehold Mortgagees and Mezzanine Lenders (to the extent the Leasehold Mortgage loan documents and Mezzanine Loan documents, as applicable, include Stay relief provisions), Lessee irrevocably consents and agrees to the Stay being lifted and released against City, and City shall thereafter be entitled to exercise all of its rights and remedies against the Lessee under this Lease. The Lessee acknowledges that it is knowingly, voluntarily, and intentionally waiving its rights to any Stay and agrees that the benefits provided to the Lessee under the terms of this Lease are valuable consideration for such waiver. As used in this Section, the term "Bankruptcy or Judicial Action"shall mean any voluntary or involuntary case filed by or against Lessee under the Bankruptcy Code, or any voluntary or involuntary petition in composition, readjustment, liquidation, or dissolution, or any state and federal bankruptcy law action filed by or against Lessee, any action where Lessee is adjudicated as bankrupt or insolvent, any action for dissolution of Lessee or any action in furtherance of any of the foregoing, or any other action, case, or proceeding that has the effect of staying (or in which a Stay is being obtained against) the enforcement by the City of its rights and remedies under this Lease. (i) Notwithstanding the foregoing, in the event that Lessee seeks to assume and assign this lease pursuant to section 365 of the Bankruptcy Code it will be required to provide to the City adequate 55 assurance of future performance which shall consist of evidence that such assignee satisfies the "Acceptable Owner Criteria"set forth in Exhibit"A". Section 7.3. Default by the City. An event of default by the City shall be deemed to have occurred under this Lease if the City fails to perform any obligation or fulfill any covenant or agreement of the City set forth in this Lease and such failure shall continue for thirty (30) days following the City's receipt of written notice of the non-performance;provided, however,the City shall not be in default of this Lease: (a) if the City provides Lessee with a written response within said thirty (30) day period indicating the status of the City's resolution of the breach and providing for a mutually agreeable schedule to correct same;or (b) with respect to any breach that is capable of being cured but that cannot reasonably be cured within said thirty (30) day period, if the City commences to cure such breach within such thirty (30) day period (or as soon thereafter as is reasonably possible) and diligently continues to cure the breach until completion, but no longer than a total of one hundred twenty(120)days. Section 7.4. Force Majeure and Economic Force Majeure. (a) Neither the City nor Lessee, as the case may be, shall be considered in breach of or in default of any of its non-monetary obligations, including suspension of construction activities, hereunder by reason of unavoidable delay due to any Force Majeure Event; provided that the Party claiming such Force Majeure Event delivers written notice to the other Party of such Force Majeure Event within twenty-one (21) days after first becoming aware of the occurrence thereof, which notice shall describe in reasonable detail the events giving rise to the Force Majeure Event; and such Party shall diligently attempt to remove, resolve or otherwise seek to mitigate such delay and keep the other Party advised with respect thereto. Time is of the essence with respect to this provision, and any failure by a Party to timely deliver such notice of a Force Majeure Event shall be deemed a waiver of such Party's right to delay performance as a result of such Force Majeure Event. With respect to any Force Majeure Event that is an "Act of God" (e.g., a hurricane) that is of such an extent that reasonable methods of communication or access are not available, then notwithstanding Section 14.5 of this Lease to the contrary, notice by Lessee shall be deemed sufficiently given to City if transmitted via electronic transmission to the City Manager and City Attorney; provided that as soon as reasonably practicable following the occurrence of such "Act of God" a copy of such notice is delivered pursuant to the terms of Section 14.5 hereof. (b) Economic Force Majeure. If, prior to Possession, Lessee is delayed, hindered or prevented from being able to obtain a Construction Loan Commitment or satisfy the Possession Conditions due to Economic Force Majeure,then the Outside Possession Date and the Outside Opening Date shall each be extended for the period of such delay (but not to exceed eighteen (18) months); provided, that, with respect to any such delay by Economic Force Majeure,the Lessee shall give written notice of such occurrence to City within twenty-one (21) days after Lessee has knowledge of such occurrence,which notice shall describe in reasonable detail the events giving rise to the Economic Force Majeure and Lessee shall diligently attempt to remove, resolve, or otherwise seek to mitigate such delay, and keep City advised with respect thereto. Time is of the essence with respect to this provision, and any failure by Lessee to timely deliver such notice of Economic Force Majeure shall be deemed a waiver of Lessee's right to extend the Outside Possession Date and the Outside Opening Date, as applicable, as a result of such Economic Force Majeure. 56 Section 7.5. Remedies Cumulative; Waiver. The rights and remedies of the parties to this Lease, whether provided by law or by this Lease,shall be cumulative and concurrent, and the exercise by either Party of any one or more of such remedies shall not preclude the exercise by it,at the same or different times,of any other such remedies for the same default or breach,or of any of its remedies for any other default or breach by the other Party. No waiver of any default or Event of Default hereunder shall extend to or affect any subsequent or other default or Event of Default then existing, or impair any rights, powers or remedies consequent thereon, and no delay or omission of any Party to exercise any right, power or remedy shall be construed to waive any such default or Event of Default or to constitute acquiescence thereof. Section 7.6. Right to Cure. If Lessee shall default in the performance of any term, covenant or condition to be performed on its part hereunder, the City may, in its sole discretion, after notice to Lessee and beyond applicable grace and cure periods (or without such notice and cure in the event of an emergency), perform the same for the account and at the expense of Lessee; provided, however: (i) City shall not exercise its rights under this Section 7.6 if the City has not provided the notices required under Section 6.1(d)(i); and (ii) City shall not exercise its rights under this Section 7.6 if any Leasehold Mortgagee or Mezzanine Lender is complying with the provisions of Sections 6.1(d)(ii), (iii) or (iv), as applicable, with respect to such default. If, at any time and by reason of such default that remains uncured beyond applicable grace and cure periods, except for defaults relating to failure to satisfy all of the Possession Conditions by the Outside Possession Date, or defaults that occur prior to the date the Possession Conditions are satisfied and possession is given to Lessee (unless in each case City waives any right to terminate this Lease),the City is compelled to pay,or elects to pay, any sum of money or do any act which will require the payment of any sum of money, or is compelled to incur any expense in the enforcement of its rights hereunder or otherwise, such sum or sums shall be deemed Additional Rent hereunder and,together with interest thereon at the Default Rate, shall be repaid to the City by Lessee upon demand. Notwithstanding the foregoing, sums expended in connection with the Work or Skybridge (or both) shall not be deemed Additional Rent, and Lessee shall not be required to repay City for such sums, unless either (A) City waives its rights to terminate this Lease regarding all then-existing defaults and Events of Default or (B) if City does not waive its rights to terminate, and this Lease is terminated,then upon any reinstatement of this Lease either by mutual agreement of City and Lessee or by final, non-appealable order of a court of competent jurisdiction. Section 7.7. Room Block Agreement. No termination or expiration of this Lease shall affect or impair the Room Block Agreement, which shall continue to encumber the Hotel with respect to any of Lessee's successors in accordance with the terms of the Room Block Agreement. Upon expiration or earlier termination of this Lease, the City shall honor bookings under the Room Block Agreement which follow such expiration or earlier termination of this Lease. 57 Section 7.8. Dispute Resolution. (a) City and Lessee agree that any dispute, claim or controversy between them relating to or arising under this Lease ("Dispute") will first be submitted, by written notice, to a designated representative of both City and Lessee who will meet at City's place of business or other mutually agreeable location,or by teleconference, and confer in an effort to resolve such dispute.Any decision of the representatives will be final and binding on the parties. In the event the representatives are unable to resolve any dispute within ten (10) days after submission to them, either Party may refer the dispute to mediation. The exclusive venue for any Dispute not resolved by mediation shall be any state or federal court of competent jurisdiction sitting in or for Miami-Dade County, Florida, except for (i) Development Disputes, which shall be resolved in accordance with Section 7.9, or (H) Disputes relating to City's disapproval of a proposed brand as an Approved Brand or a Proposed Transferee as an Acceptable Owner,which shall be resolved in accordance with Section 7.10. (b) TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE CITY AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM OR THEIR HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE PARTIES ENTERING INTO THIS LEASE. Section 7.9. Expedited Arbitration of Development Disputes. (a) If Lessee or City asserts that a Development Dispute has arisen, such asserting Party shall give prompt written notice thereof to the other Party, and such Development Dispute shall be submitted to binding arbitration by the Development Arbitrator in accordance with this Section 7.9. (b) The Parties shall cooperate to select an independent, neutral, professional arbitrator experienced in the resolution of construction claims and associated subject matter having at least ten (10)years of hotel development or construction experience in the Miami-Dade County area to serve as the arbitrator (the "Development Arbitrator"). If the Parties cannot agree on a single Development Arbitrator, then each Party shall select an arbitrator with such hotel development or construction experience, who shall jointly select a third arbitrator with such hotel development or construction experience and the three arbitrators shall collectively constitute the Development Arbitrator. (c) The Development Arbitrator shall, no later than five (5) Business Days after being selected, hold a preliminary, informal meeting with City and Lessee in an attempt to mediate such Development Dispute. If such Development Dispute is not resolved at such meeting,the Development Arbitrator shall at such meeting establish a date (the"Hearing Date"), not earlier than five (5) Business Days after such meeting nor later than twenty(20) days after such meeting for a hearing (a "Hearing") to be held in accordance with this Lease to resolve such Development Dispute. (d) Lessee and City each shall have the right to make one (1) written submission to the Development Arbitrator prior to the Hearing. Such submission shall be received by the Development Arbitrator and the other Party not later than two (2) Business Days prior to the Hearing Date. The Parties agree that no discovery (as the term is commonly construed in litigation proceedings) will be permitted and agree that neither Party nor the Development Arbitrator shall have discovery rights in 58 connection with a Development Dispute. (e) The Hearing shall be conducted by the Development Arbitrator. It is the intention of the Parties that the Hearing on a Development Dispute shall be conducted in an informal and expeditious manner. No transcript or recording shall be made. Each Party shall have the opportunity to make a brief statement and to present documentary and other support for its position, which may include the testimony of not more than four(4) individuals, two (2) of whom may be outside experts. There shall be no presumption in favor of either Party's position. Any procedural matter not covered herein shall be governed by procedures mutually agreed upon by the Parties, or if they are unable to agree, in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association (as amended hereby). (f) The Hearing shall be held in a location selected by the Development Arbitrator in Miami-Dade County, Florida. Provided that the Development Arbitrator is accompanied by representatives of both Lessee and City, the Development Arbitrator may, at its option, visit the Hotel Site to make an independent review in connection with any Development Dispute. (g) The Development Arbitrator, in rendering its decision with regard to any Development Dispute, shall take into account and at a minimum consider the following factors, which shall be used to guide its decision: (i) City does not have any Approval rights with respect to the matter of interior design and decor of the Hotel Project except to the extent the same is reflected in the Approved Plans or Mandatory Hotel Project Design Elements; (H) the Hotel Project shall be designed and constructed to meet or exceed the Hotel Standards; (iii) the mutual goal of Lessee and City is that costs in excess of the Budgeted Improvement Costs should be avoided or minimized unless proposed by Lessee and for which Lessee has agreed to provide adequate funds; (iv) the mutual goal of Lessee and City is that the construction of the Hotel Project be completed and the Opening Date occur by the Outside Opening Date; (v) the Hotel Project must comply with all Governmental Requirements;and (vi) the magnitude of the modification to the Approved Plans. (h) Pending resolution of the Development Dispute, Lessee may not implement the matter which is the subject of such Development Dispute. (i) The Development Arbitrator shall render a decision, in writing, as to any Development Dispute not later than two (2) Business Days following the conclusion of the Hearing regarding such Development Dispute and shall provide a brief written basis for its decision not later than five (5) Business Days thereafter. Such decision of the Development Arbitrator shall be rendered by (a) the 59 decision of the single Development Arbitrator, (b)the decision of two of the arbitrators comprising the Development Arbitrator, if two are able to agree, (c) the decision of the third arbitrator appointed by each of the Parties' arbitrators, if no two of the three arbitrators are able to agree within such period, or(d) agreement between the Parties prior to and independently of the decision of the Development Arbitrator. As to each Development Dispute, the Development Arbitrator's decision shall be limited to resolution of the Development Dispute in question, and the Development Arbitrator shall have no right whatsoever to impose or grant to either Party any remedy other than a decision as to: (i) whether a modification to the Hotel Project is a substantial deviation from the Approved Plans or a Prohibited Hotel Project Change requiring City's Approval pursuant to Section 2.2; (ii) any contention that City has unreasonably failed to Approve modifications to the Approved Plans in accordance with this Lease; (iii) any contention that City has unreasonably failed to Approve the proposed Approved Skybridge and Off-Site Improvements Plans or modifications thereto in accordance with this Lease;(iv) any contention that City has unreasonably failed to Approve a Hotel Project General Contractor in accordance with Section 2.8(6); or (v) any disagreement as to permitted delays in the Schedule of Performance pursuant to Section 2.7. (j) The decision of the Development Arbitrator shall be final and binding on the Parties for all purposes and may be entered in any court of competent jurisdiction. (k) If any matter submitted to the Development Arbitrator hereunder is settled by agreement between the Parties prior to, or independently of, the final determination of the Development Arbitrator, any and all expenses of such binding determination (including fees of the Development Arbitrator) will be shared equally by the Parties; and the expense of such binding determination resolved by final determination of the Development Arbitrator (including fees of the Development Arbitrator) will be borne by the Party against whom such determination has been concluded. Section 7.10. Disputes Regarding Disapproval of a Proposed Brand or Proposed Transferee. (a) If (i) Lessee and City disagree as to whether a proposed Approved Brand satisfies the definition of an Approved Brand pursuant to clause (a) of the definition thereof or (ii) Lessee believes that the City is acting unreasonably in disapproving a proposed brand as an Approved Brand, then in either case,the Lessee may refer the matter to mediation in accordance with Section 7.8(a) above,and if the matter is not resolved by mediation,then Lessee, as its sole remedy, may submit such matter to a panel of experts for a binding determination in accordance with this Section 7.10(an "Arbitrator"). (b) If the City Manager determines that a proposed transferee of the Hotel Project (or any part thereof), any legal or beneficial interest in the Hotel Project (or any part thereof) or any direct or indirect legal or beneficial interest in Lessee (each, a "Proposed Transferee") does not satisfy the definition of an Acceptable Owner and the Acceptable Owner Criteria pursuant to Exhibit A attached hereto,and Lessee disagrees,and if the matter is not resolved by the designated representatives of the City and Lessee as provided in Section 7.8(a) above,then solely with respect to any such determination made by the City Manager, Lessee, as its sole remedy, may submit such matter to an Arbitrator in accordance with this Section 7.10. For the avoidance of doubt, in the event the City Manager exercises his or her right to seek the City Commission's direction or Approval of a Proposed Transferee, the Lessee shall not have the right to submit the City Commission's determination or disapproval of a 60 Proposed Transferee to arbitration pursuant to this Section 7.10, but the City Commission shall be subject to the same time period and standards of judgment as would apply to the City Manager as provided in Exhibit A. (c) If Lessee elects to proceed with an Arbitrator in accordance with this Section 7.10, the determination of whether a proposed brand should be an Approved Brand or a Proposed Transferee is an Acceptable Owner,will be made by(a)an expert selected jointly by the City and Lessee,or(b) if the City and Lessee fail to agree upon a single expert, by an expert selected by the City, an expert selected by Lessee and a third expert appointed by the experts selected by the Parties. Any Arbitrator or expert panelist hereunder will each have at least ten (10) years of professional experience in the hospitality industry as a legal or other consultant. The Parties agree that no discovery (as the term is commonly construed in litigation proceedings) will be permitted and agree that neither Party nor the Arbitrator shall have discovery rights in connection with a Dispute hereunder. The proceeding before the Arbitrator shall be conducted in an informal and expeditious manner. No transcript or recording shall be made. Each Party shall have the opportunity to make a brief statement and to present documentary and other support for its position, which may include the testimony of not more than four (4) individuals, two (2) of whom may be outside experts. There shall be no presumption in favor of either Party's position. Any procedural matter not covered herein shall be governed by procedures mutually agreed upon by the Parties, or if they are unable to agree, in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association(as amended hereby). (d) The matter submitted to the Arbitrator will be conclusively determined within thirty (30) days of the appointment of the last Arbitrator by (a) the decision of the single expert, (b) the decision of any two of the three experts, if two are able to agree, (c) the decision of the third expert, if no two of the three experts are able to agree within such period, or (d) agreement between the Parties prior to and independently of the decision of the Arbitrator. (e) With respect to (i) whether a proposed Approved Brand satisfies the definition of an Approved Brand pursuant to clause (a) of the definition thereof, the Arbitrator will determine that such proposed Approved Brand either satisfies such definition or fails to satisfy such definition or(li)whether the City has acted reasonably in disapproving a proposed Approved Brand pursuant to Section 13.3,the Arbitrator will determine either that the City acted reasonably in disapproving the proposed Approved Brand or that the City acted unreasonably in disapproving the proposed Approved Brand, and the Arbitrator will have no authority to compromise or otherwise modify the issue that is the subject of the determination or(iii)whether a Proposed Transferee satisfies the definition of an Acceptable Owner and the Acceptable Owner Criteria pursuant to Exhibit A, the Arbitrator will determine that such Proposed Transferee either satisfies such definition and criteria or fails to satisfy such definition and criteria. If any matter submitted to the Arbitrator hereunder is settled by agreement between the Parties prior to, and independently of, the final determination of the Arbitrator, any and all expenses of such binding determination (including fees of the Arbitrator)will be shared equally by the Parties;and the expense of such binding determination resolved by final determination of the Arbitrator (including fees of the Arbitrator)will be borne by the Party against whom such determination has been concluded. Section 7.11. Plans and Data. In the event of a termination of this Lease, Lessee shall deliver to City, copies of any and all Subleases and service and maintenance agreements then affecting the Leased Property, all maintenance records, all warranties or guaranties then in effect which Lessee received in connection with any work or services performed or FF&E installed on the Leased Property,the plans and 61 specifications, surveys, studies, reports, cost estimates, designs, Governmental Approvals, keys, combinations to locks, access codes, records, correspondence and any and all other records, files, documents and other items and materials of every kind and nature whatsoever relating to the development, operation, maintenance or ownership of the Hotel Project, all of which shall be delivered by Lessee to the City within thirty(30) days after such termination; provided, however that for so long as a First Leasehold Mortgage encumbers the Hotel Project,the City agrees to permit Lessee to deliver any or all of the foregoing to such First Leasehold Mortgagee (which First Leasehold Mortgagee shall have priority with respect thereto pursuant to the non-disturbance, recognition and attornment agreement entered into pursuant to Section 6.1(b) hereof). Such materials will be provided to City without any representation or warranty of any kind, express or implied (including regarding the truth, accuracy or completeness thereof and fitness for a particular purpose). The obligations of Lessee under this Section 7.11 survive the termination of this Lease. ARTICLE VIII PROTECTION AGAINST MECHANICS'LIENS AND OTHER CLAIMS; INDEMNIFICATION Section 8.1. Lessee's Duty to Keep Project Free of Liens. (a) Pursuant to Section 713.10, Florida Statutes, any and all liens or lien rights shall extend to, and only to, the right title and interest of Lessee in the Hotel Project and shall not encumber or affect the City's fee simple title to the Leased Property. (b) The right,title and interest of the City in the Leased Property shall not be subject to liens or claims of liens for improvements made by Lessee. Nothing contained in this Lease shall be deemed or construed to constitute the consent or request of the City, express or by implication or otherwise,to any contractor,subcontractor, laborer or materialman for the performance of any labor or the furnishing of any materials for any specific improvement of, alteration to, or repair of the Hotel Project, or any part thereof, nor as giving Lessee, any Leasehold Mortgagee, Subtenant, lessee, or sub-lessee any right, power or authority to contract for,or permit the rendering of,any services or the furnishing of materials that would give rise to the filing of any lien, mortgage or other encumbrance against City's interest in the Leased Property, or any part thereof, or against assets of the City, or City's interest in any Rent and other monetary obligations of Lessee as defined in this Lease. (c) Notice is hereby given, and Lessee shall cause all construction agreements entered into between Lessee and the Hotel Project General Contractor or other contractor in privity with Lessee or subcontractor in privity with the Hotel Project General Contractor or any other subcontractor to provide that: (i) City shall not be liable for any work performed or to be performed at the Hotel Project or any part thereof for or on behalf of the Lessee, any Leasehold Mortgagee, Subtenant, lessee, or sub-lessee or for any materials furnished or to be furnished to the Hotel Project, or any part thereof, for any of the foregoing;and (ii) no mechanic's, laborer's,vendor's, materialman's or other similar statutory lien for such work or materials shall be attached to or affect City's interest in the Leased Property, or any 62 part thereof, or any assets of the City, or the City's interest in any Rent or other monetary obligations of Lessee arising under this Lease. (d) Lessee acknowledges and agrees that the City shall be entitled to record in the public records of Miami-Dade County, Florida a notice of no lien in accordance with Chapter 713.10, Florida Statutes, and that if requested by the City, Lessee will execute and deliver a countersignature to such notice within ten (10)days of the City's request. Section 8.2. Contesting Liens. If Lessee desires to contest any such lien as described in Section 8.1, it shall notify the City of its intention to do so within thirty(30)days after Lessee has notice of the filing of such lien. In such case, Lessee, at Lessee's sole cost and expense, shall furnish a cash deposit or surety bond in an amount sufficient to pay such lien and any cost (including interest and penalties), liability or damage arising out of such contest. The lien, if Lessee timely provides the bond described above, shall not be an Event of Default hereunder until thirty (30) days after the final determination of the validity thereof provided that, within that time, Lessee shall satisfy and discharge such lien to the extent held valid; provided, however, that the satisfaction and discharge of any such lien shall not, in any case, be delayed until execution is had on any judgment rendered thereon,or else such delay shall be considered to be a monetary Event of Default hereunder. In the event of any such contest, Lessee shall protect and indemnify the City against all loss, expense and damage resulting therefrom as provided in Section 8.3. Section 8.3. Indemnification. (a) Lessee acknowledges and agrees that this Lease is not an agreement between City and any architect, engineer, general contractor, subcontractor, sub-subcontractor, or materialman or any combination thereof for the construction, alteration, repair, or demolition of a building, structure, appurtenance, or appliance on the Leased Property, and therefore that the limitations on indemnity provisions in Section 725.06, Florida Statutes, as such statute may be amended from time to time, do not apply to this Lease. Accordingly, to the fullest extent permitted by law, the Lessee shall defend, indemnify and hold harmless the City and its officers, employees, agents and instrumentalities from any and all liability, losses or damages, including reasonable attorneys' fees and costs of defense, which the City or its officers, employees, agents or instrumentalities may incur as a result of claims, demands, suits, causes of actions or proceedings of any kind or nature first arising following the Effective Date, and arising out of, relating to or resulting from any of the following occurrences or events, whether by the Lessee or its employees, agents, partners, principals, sub-lessees, or contractors: (i) [intentionally deleted]; (H) the use and operation of the Hotel Project or any part thereof which is not in compliance with the terms of this Lease, (Ili) the negligent acts or omissions of Lessee or its employees, agents, partners, principals, sub-lessees, or contractors; (iv) any challenge to the validity of any Transfer by a third party through legal proceedings or otherwise based on the action or inaction of Lessee or its employees, agents, partners, principals, sub-lessees or contractors, except to the extent any liability, losses or damages are caused by the gross negligence or willful misconduct of the City or its officers, employees,agents, or contractors. (b) Lessee shall investigate and defend all claims, suits, or actions of any kind or nature in the name of the City which are covered by this indemnity obligation, where applicable, including appellate proceedings, and shall pay reasonable costs,judgments,and reasonable attorney's fees which may issue thereon. 63 (c) Lessee expressly understands and agrees that any insurance protection required by this Lease or otherwise provided by Lessee shall in no way limit the responsibility to indemnify, keep and save harmless and defend the City or its officers, employees, agents and instrumentalities as herein provided. The City shall give to the Lessee reasonable notice of any such claims or actions. The provisions of this section shall survive the expiration or early termination of this Lease. (d) Lessee covenants and agrees that any contracts entered into by Lessee and the Hotel Project General Contractor or other contractors in privity with Lessee for the Work shall include the indemnities required by this Section 8.3 from the Hotel Project General Contractor or other contractors in privity with Lessee in favor of Lessee and the City. Section 8.4. Environmental Matters. (a) Defined Terms. (i) "Environmental Condition" means any set of physical circumstances in, on, under, or affecting the Hotel Project that may constitute a threat to or endangerment of health, or the environment, including: (1) The presence of any Hazardous Substance in violation of Environmental Laws which were introduced to the Hotel Site; (2) The violation, or alleged violation, of any Environmental Laws on the Leased Property; (3) Any underground storage tanks, as defined in Subtitle I of the Hazardous and Solid Waste Amendments of 1984,42 U.S.C. 6991 et.seq., or the regulations thereunder, for the storage of hazardous wastes,oil, petroleum products, or their byproducts; (4) The presence of any PCB, asbestos or any other substances specifically regulated under the Toxic Substances Control Act, 15 U.S.C. 2601 or regulations issued thereunder, in violation of Environmental Laws;and any open dump or system of refuse disposal for public use without a permit, as prohibited by 42 U.S.C. 6945 and/or Florida law equivalent, or the regulations issued thereunder. (ii) "Environmental Laws" means the Comprehensive Environmental Response, Compensation and Liability Act,42 U.S.C. 9601 et. seq.,the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et. seq.; the Toxic Substances Control Act 15 U.S.C. 2601 et. seq.; the Clean Water Act, 33 U.S.C. 1251 et seq.; the Clean Air Act, 42 U.S.C. 7401 et. seq.; the Oil Pollution Act, 33 U.S.C. 2701 et. seq., the Hazardous Materials Transportation Act, 49 U.S.C. 1801 et. seq.; the Refuse Act of 1989, 33 U.S.C. 407; as such laws have been amended or supplemented from time-to-time, and the regulations promulgated thereunder;and any equivalent state or local laws. (Hi) "Hazardous Substance" means any substances or materials presently or hereinafter identified to be toxic or hazardous according to any of the Environmental Laws, including any asbestos, PCB, radioactive substances, petroleum based products, and includes hazardous wastes, hazardous substances, extremely hazardous substances, hazardous materials, toxic substances, toxic chemicals, oil, petroleum products and their by-products,and pollutants or contaminants as those terms are defined in the Environmental Laws. 64 (iv) "Environmental Permit" means any Governmental Approval required under any Environmental Law in connection with the ownership, use or operation of the Hotel Project for the storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances, or the sale, transfer or conveyance of the Hotel Project, and all supporting documentation thereof. (v) "Environmental Claim" means any notice of violation, claim, demand, abatement or order or direction (conditional or otherwise) by any Governmental Authority or any person for personal injury (including sickness, disease, or death), property damage, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties, or restrictions, resulting from or based upon: (1) The existence or release, or continuation of any existence of a release of, or exposure to, any Hazardous Substance in, into or onto the environment (including the air,ground, water or any surface)at, in or from the Leased Property in violation of Environmental Laws; (2) The transportation, storage, treatment or disposal of any Hazardous Substance in connection with the activities on the Leased Property in violation of Environmental Laws; or (3) The violation, or alleged violation, of any Environmental Laws on the Leased Property; but excluding any of the foregoing to the extent arising from the negligent or intentional actions of the City and its agents after the execution of this Lease. (vi) "Corrective Action Work" means any and all activities of removal, response, investigation,testing,analysis, remediation taken to: (1) prevent, abate or correct an existing or threatened Environmental Condition at, about, or affecting the Leased Property but excluding those to the extent arising from the negligent or intentional actions of the City or its agents after the date of execution of this Lease;or (2) comply with all applicable Environmental Laws, excluding those to the extent arising from the negligent or intentional actions of the City or its agents after the date of execution of this Lease. (b) Environmental Indemnification. (i) Provided that that Possession Conditions are satisfied and the City delivers possession of the Leased Property to Lessee, Lessee covenants and agrees, at its sole cost and expense, to defend (with counsel selected by Lessee, after consulting with the City), indemnify and hold harmless the City, its successors, and assigns from and against, and shall reimburse the City, its successors and assigns, for any and all Environmental Claims, whether meritorious or not, brought against the City by any Governmental Authority; 65 (ii) the foregoing indemnity includes indemnification against all costs of removal, response, investigation, or remediation of any kind, and disposal of such Hazardous Substances as necessary to comply with Environmental Laws, all costs associated with any Corrective Action Work, all costs associated with claims for damages to persons, property, or natural resources, and the City's commercially reasonable attorneys' fees and consultants' fees, court costs and expenses incurred in connection therewith; (iii) this indemnification is in addition to all other rights of the City under this Lease; and (iv) payments by Lessee under this Section shall not reduce Lessee's obligations and liabilities under any other provision of this Lease. Notwithstanding anything to the contrary contained in this Lease, neither the Lessee nor Hotel Project General Contractor, or other contractor in privity with Lessee, has a duty to indemnify the City in connection with any Environmental Claims to the extent caused by the negligent or intentional conduct of the City or its agents,employees or contractors. Section 8.5. Limitation of City's Liability. (a) Any tort liability to which the City is exposed under this Lease shall be limited to the extent permitted by applicable law and subject to the provisions and monetary limitations of Section 768.28, Florida Statutes, as may be amended, which statutory limitations shall be applied as if the parties had not entered into this Lease, and City expressly does not waive any of its rights and immunities thereunder. (b) City will not in any event whatsoever be liable for any injury or damage to Lessee(unless caused by the gross negligence of City, its agents, contractors or employees) or to any other Person happening on, in or about the Leased Property and its appurtenances, nor for any injury or damage to the Leased Property or to any property belonging to Lessee (unless caused by the gross negligence of City, its agents, contractors or employees) or to any other Person which may be caused by any fire or breakage, or by the use, misuse or abuse of any of the Lessee Improvements (including any of the common areas within the buildings, equipment, elevators, hatches, openings, installations, stairways, hallways or other common facilities or the improvements to the land described in this Lease), or which may arise from any other cause whatsoever (unless caused by the gross negligence of City, its agents, contractors or employees). (c) City will not be liable to Lessee or to any other Person for any failure of telephone, computer system, cable TV, water supply, sewage disposal, gas or electric current, nor for any injury or damage to any property of Lessee or to any Person or to the Leased Property caused by or resulting from gasoline, oil, steam, gas, electricity, or hurricane, tornado, flood, wind or similar storms or disturbances, or water, rain or snow which may leak or flow from the street, sewer, gas mains or subsurface area or from any part of the Leased Property, or leakage of gasoline or oil from pipes, appliances, sewer or plumbing works therein, or from any other place, nor for interference with light or other incorporeal hereditaments by any Person (unless caused by the gross negligence of City, its agents,contractors or employees). 66 ARTICLE IX INSURANCE AND RECONSTRUCTION Section 9.1. General Insurance Provisions. Prior to any activity on the Leased Property, and at all times during the Term, Lessee at its sole cost and expense shall procure the insurance specified below. In addition, Lessee shall ensure its Hotel Project General Contractor and tenants maintain the insurance coverages set forth below. All policies must be executable in the State of Florida. All insurers must maintain an AM Best rating of A- or better. The terms and conditions of all policies may not be less restrictive than those contained in the most recent edition of the policy forms issued by the Insurance Services Office (ISO) or the National Council on Compensation Insurance (NCCI). If ISO or NCCI issues new policy forms during the policy term of the required insurance, complying with the new policy forms will be deferred until the expiration date of the subject policy. Said insurance policies shall be primary over any and all insurance available to the City whether purchased or not and shall be non-contributory. The Lessee, its Hotel Project General Contractor or tenants shall be solely responsible for all deductibles contained in their respective policies. All policies procured pursuant to this Article IX shall be subject to maximum deductibles reasonably acceptable to the City. The City of Miami Beach will be included as an "additional insured" on the commercial general liability, automobile liability (to the extent available), and pollution liability policies and as loss payee on the property insurance and builder's risk policy. Section 9.2. Evidence of Insurance. Prior to Lessee taking possession of the Leased Property, and annually thereafter, Lessee shall deliver satisfactory evidence of the required insurance to the City. Satisfactory evidence shall be: (a) a certificate of insurance for all required coverage; and (b) a copy of the actual insurance policy for builder's risk coverage.The City,at is sole option, may request a certified copy of any or all insurance policies required by this Lease, or the applicable portions thereof if insurance is provided through a master insurance program. All insurance policies must specify they are not subject to cancellation or non-renewal without a minimum of 30 days notification by the insurer to the City,the City's Risk Management Division and the First Leasehold Mortgagee, with a minimum of 10 days notification by the insurer to the City,the City's Risk Management Division and the First Leasehold Mortgagee prior to cancellation or non-renewal for non-payment of premium. The Lessee will deliver to the City, at least 30 days prior to the date of expiration of any insurance policy, a renewal policy replacing any policies expiring during the Term of this Lease, or a certificate thereof, together with evidence that the full premiums have been paid unless the premiums are being financed; provided that such financing shall be permitted only if such policy provides that the insurer will deliver to the City reasonable advance written notice prior to the cancellation of any coverage thereunder and a reasonable period of time within which the City has the right, but not the obligation, to pay any unpaid premiums to avoid any lapse in coverage. Premiums may be paid in annual installments. All certificates of insurance shall (1) be in a form acceptable to the City, (ii) name the types of policies provided, (iii) refer specifically to this Lease; (iv) evidence the waiver of subrogation in favor of the City as required by Section 9.11 below; and (v) evidence that coverage shall be primary and noncontributory, and that each policy includes a Cross Liability or Severability of Interests provision, with no requirement of premium payment by the City. Lessee shall deliver, together with each certificate of insurance, a letter from the agent or broker placing such insurance, certifying to the City that the coverage provided meets the coverage required under this Lease. The official title of the certificate holder is "City of Miami Beach, Florida." Additional insured certificates for the City shall read "City of Miami Beach, Florida", and shall be addressed to 1700 Convention Center Drive, Miami Beach, FL, 33139, Attn: Risk Management, 3rd Floor. 67 Section 9.3. Required Coverages. In addition to such insurance as may be required by law, the Lessee shall procure and maintain, or cause others to procure and maintain, without lapse or material change, for so long as it occupies the Leased Property,the following insurance, which may be provided through master blanket insurance policies and/or the insurance program of any applicable Approved Brand: (a) Commercial General Liability Insurance on a comprehensive basis, including contractual liability, to cover the Leased Property and Lessee's operations and indemnity obligations, in an amount not less than $5,000,000 combined single limit per occurrence for bodily injury and property damage. Such insurance may be provided through a combination of primary and excess/umbrella liability policies. (b) Automobile Liability Insurance covering all owned, non-owned and hired vehicles used by the Lessee in connection with its operations under this Lease in an amount not less than $1,000,000 combined single limit per occurrence for bodily injury and property damage. Coverage must be afforded on a form no more restrictive than the latest edition of the Business Automobile Liability policy,without restrictive endorsements, as filed by the Insurance Services Office(ISO). (c) Pollution Liability Insurance in an amount not less than $10,000,000 per claim, covering third party claims, remediation expenses, and legal defense expenses arising from on-site and off-site loss, or expense or claim related to the release of Hazardous Materials at the Leased Property. Such policy shall include an annual policy aggregate in the amount of$10,000,000. (d) Builders Risk Insurance during the course of construction, issued in the name of the Lessee, the Hotel Project General Contractor and the City as their interests may appear, in amount(s) not less than 100% of the insurable value of the Hotel Project completed structure(s), covering perils on an "All Risk" basis, including flood, earthquake, and windstorm. Policy(s) must clearly indicate that underground structures(if applicable) and materials being installed are covered. Any deductibles are the sole responsibility of the Lessee. (e) Commercial Property Insurance after Completion of Construction in an amount of 100% of the insurable value of all Lessee Improvements under an "all risk" form, including damage by water, flood, subsistence, tornado, hurricane and earthquake in an amount not less than the replacement cost value of the Hotel. (f) Business Interruption Insurance after the Opening Date coverage utilizing a gross earnings value form with limits equal to twelve (12) months of Lessee's projected Gross Operating Revenues and Gross Operating F&B Revenues less non-continuing expenses associated with the Leased Property. The City and Lessee shall jointly review Lessee's projected Gross Operating Revenues and Gross Operating F&B Revenues periodically and the limits of this policy shall be adjusted based on this review. (g) Workers' Compensation and Employers Liability Insurance with limits sufficient to respond to Florida Statute §440. In addition, the Lessee shall obtain Employers' Liability Insurance with limits of not less than: (i) $500,000 Bodily Injury by Accident, (ii) $500,000 Bodily Injury by Disease and (Hi)$500,000 Bodily Injury by Disease,each employee. (h) Professional Liability. Lessee shall cause any architects or engineers to maintain architects and engineers errors and omissions liability insurance specific to the activities or scope of 68 work such consultants will perform. If coverage is provided on a "claims made" basis, the policy shall provide for the reporting of claims for a period of five (5) years following the completion of all construction activities. The minimum limits acceptable shall be $1,000,000 per occurrence and $3,000,000 in the annual aggregate. (i) Terrorism Insurance. So long as the Terrorism Risk Insurance Program Reauthorization Act of 2015 ("TRIPRA") or a similar or subsequent statute is in effect, terrorism insurance for"certified" and "non-certified" acts (as such terms are used in TRIPRA or a similar or subsequent statute) in an amount equal to the full replacement cost of the Leased Property plus 12 months of business interruption coverage. If TRIPRA or a similar or subsequent statute is not in effect, then the "all risk" property insurance required pursuant to Section 9.3(e) of this Lease shall not exclude coverage for acts of terror or similar acts of sabotage unless terrorism insurance is not commercially available, in which case, Lessee shall obtain stand-alone coverage in commercially reasonable amounts (for purposes of this clause (i), commercially reasonable amounts shall mean amounts that would be (A) obtained by property owners or lessees of properties located in markets similar to that of the Hotel Project and similar in size and type to the Hotel Project and (B) required by prudent Institutional Lenders or landlords in such similar markets with similar properties). Section 9.4. Premiums and renewals. Lessee shall pay as the same become due all premiums for the insurance required by this Article IX, shall renew or replace each such policy and deliver to the City evidence of the payment of the full premium thereof prior to the expiration date of such policy, and shall promptly deliver to the City all original Certificates of Insurance and copies of all such renewal or replacement policies. Section 9.5. Adequacy Of Insurance Coverage. (a) The adequacy of the insurance coverage required by this Article IX may be reviewed periodically by the City in its sole discretion. Except with respect to "CCIP" and "OCIP" policies, the City reserves the right, but not the obligation, to review and reasonably revise the insurance requirements every three (3) years, (including but not limited to deductibles, limits, coverages and endorsements) provided such revisions are commercially reasonable, customary and commonly available regarding properties similar in type, size, use and location to the Leased Property and Lessee Improvements and further provided that such coverage is available at commercially reasonable rates (including fiduciary liability and directors and officers liability insurance); (b) Lessee agrees that City may, if it so elects, at City's expense, have the Lessee Improvements appraised for purposes of obtaining the proper amount of insurance hereunder. Any review by the City shall not constitute an approval or acceptance of the amount of insurance coverage. Section 9.6. City May Procure Insurance if Lessee Fails To Do So. If Lessee refuses, neglects or fails to secure and maintain in full force and effect any or all of the insurance required pursuant to this Lease within thirty (30) days after written notice from the City to Lessee and First Leasehold Mortgagee, the City, at its option, may procure or renew such insurance. In that event, all commercially reasonable amounts of money paid therefor by the City shall be treated as Additional Rent payable by Lessee to the City together with interest thereon at the Default Rate from the date the same were paid by the City to the date of payment thereof by Lessee. Such amounts, together with all interest accrued thereon, shall be paid by Lessee to the City within ten (10)days of written notice thereof. 69 Section 9.7. Effect of Loss or Damage. Any loss or damage by fire or other casualty of or to any of the Lessee Improvements on the Leased Property at any time shall not operate to terminate this Lease or to relieve or discharge Lessee from the payment of Rent, or from the payment of any money to be treated as Additional Rent in respect thereto, pursuant to this Lease, as the same may become due and payable, as provided in this Lease, or from the performance and fulfillment of any of Lessee's obligations pursuant to this Lease. No acceptance or approval of any insurance agreement or agreements by the City shall relieve or release or be construed to relieve or release Lessee from any liability, duty or obligation assumed by,or imposed upon it by the provisions of this Lease. Section 9.8. Proof of Loss. Whenever any Lessee Improvements, or any part thereof, constructed on the Leased Property (including any personal property furnished or installed in the premises) shall have been damaged or destroyed, Lessee shall promptly make proof of loss in accordance with the terms of the insurance policies and shall proceed promptly to collect or cause to be collected all valid claims which may have arisen against insurers or others based upon any such damage or destruction. Section 9.9. Insurance Proceeds. (a) Authorized Payment. All sums payable for loss and damage arising out of the casualties covered by the property insurance policies shall be payable: (i) directly to Lessee, if the total recovery is equal to or less than $10,000,000 (as adjusted for inflation over the Term pursuant to Section 14.20 hereof), except that if an Event of Default has occurred and is continuing hereunder, such proceeds, shall be paid over to the Insurance Trustee and disbursed in accordance with Section 9.9(a)(ii). After the completion of all Reconstruction Work in accordance herewith, any remaining proceeds shall be paid over to Lessee subject to its obligations to the First Leasehold Mortgagee. If proceeds are paid directly to Lessee and Lessee defaults in its obligations to reconstruct the Lessee Improvements as required hereunder, which default remains uncured after the expiration of any applicable grace and cure periods, and as a result City exercises its right to terminate this Lease under Section 7.2(a)(i), Lessee shall pay to City all such proceeds that have been paid directly to Lessee;and (A) to a commercial bank or trust company designated by Lessee and Approved by the City Manager, (B) any Leasehold Mortgagee, if required by such Leasehold Mortgagee pursuant to the terms of such Leasehold Mortgage, or (C) any Mezzanine Lender if required by such Mezzanine Lender pursuant to the terms of the Mezzanine Loan documents (but subject to any requirements of any Leasehold Mortgagee) (the "Insurance Trustee"), if the total recovery is in excess of $10,000,000 (as adjusted for inflation over the Term pursuant to Section 14.20 hereof)or is less than$10,000,000 but an Event of Default has occurred and is continuing hereunder, to be held by the Insurance Trustee pending establishment of reconstruction, repair or replacement costs and shall be disbursed to Lessee pursuant to the provisions of subparagraph (b)of this Section 9.9. (b) Disposition of Insurance Proceeds for Reconstruction. (i) Subject to the requirements of any First Leasehold Mortgage, all insurance proceeds shall be applied for the reconstruction, repair or replacement of Lessee Improvements and the FF&E and other personal property of Lessee located on the Leased Property, so that Lessee Improvements, FF&E and such other personal property shall be restored to a condition comparable to the condition prior to the loss or damage (except to the extent restricted or prohibited by then 70 applicable Governmental Requirements) but in all cases consistent with the Hotel Standards (hereinafter referred to as"Reconstruction Work"); (ii) From the insurance proceeds received by the Insurance Trustee, there shall be disbursed to Lessee such amounts as are required for the Reconstruction Work. Lessee shall submit invoices or proof of payment to the Insurance Trustee for payment or reimbursement according to an agreed schedule of values approved in advance by the City Manager and Lessee;and (iii) After the completion of the Reconstruction Work, any unused insurance proceeds shall be paid to Lessee subject to the rights of any First Leasehold Mortgagee pursuant to the First Leasehold Mortgage. Section 9.10. Reconstruction. (a) In the event of any loss or damage by fire or other casualty of or to any of the Lessee Improvements, FF&E and other personal property of Lessee located on the Leased Property having a value in excess of$2,500,000, Lessee shall give the City notice thereof within five (5) Business Days, and Lessee, at its sole cost and expense,whether or not such loss or damage has been insured and whether or not such loss or damage is to property having a value in excess of$2,500,000, covenants and agrees to commence the Reconstruction Work as soon as practicable, but in any event within three (3) months after the insurance proceeds in respect of the destroyed or damaged improvements or personal property have been received by or made available to Lessee, and to fully complete such Reconstruction Work as expeditiously as reasonably possible consistent with the nature and extent of the damage. Lessee shall comply in all respects with the provisions of Section 2.15 with respect to any Reconstruction Work. To the extent any First Leasehold Mortgagee exercises any right or option to retain and apply any portion of the proceeds of any insurance (or condemnation awards) toward payment of the sum secured by the First Leasehold Mortgage, Lessee shall diligently and expeditiously undertake to secure and close on Leasehold Mortgage loans and/or Mezzanine Loans to finance the Reconstruction Work, and thereafter, to commence and fully complete such Reconstruction Work as expeditiously as reasonably possible consistent with the nature and extent of the damage. (b) [Intentionally deleted.] (c) Notwithstanding the foregoing, if, during the last ten (10)years of the Term, the Lessee Improvements are totally destroyed or so damaged as to render them unusable, then (i) Lessee or the City may terminate this Lease by delivery of written notice of such termination to the other Party not later than sixty (60) days after the occurrence of such casualty, whereupon this Lease will terminate as of the date of such casualty. Upon such termination,the insurance proceeds shall be payable as follows: (i) first, to demolish the Lessee Improvements and clear the site of all Lessee Improvements and debris to the City's reasonable satisfaction, (ii) second to reimburse Lessee for the fair market value of the Lessee Improvements as of the date prior to such loss or destruction and (iii)third,the balance, if any,to the City. If neither the Lessee nor the City timely elect to terminate this Lease in accordance with this Section 9.10(c), Lessee shall restore the Lessee Improvements in accordance with Section 9.10(a)hereof. Section 9.11. Waiver of Subrogation. Where permitted by law, each Party hereby waives all rights of recovery by subrogation or otherwise (including, without limitation, claims related to deductible or self- insured retention clauses, inadequacy of limits of any insurance policy, insolvency of any insurer, 71 limitations or exclusions of coverage), against the other Party, and its respective officers, agents, or employees. Section 9.12. Inadequacy of Insurance Proceeds.Lessee's liability hereunder to timely commence and complete restoration of the damaged or destroyed Lessee Improvements shall be absolute, irrespective of whether the insurance proceeds received, if any, are adequate to pay for said restoration. Section 9.13. No City Obligation to Provide Property Insurance. Lessee acknowledges and agrees that City shall have no obligation to provide any property insurance on any Lessee Improvements or property of Lessee located on the Leased Property. If City does provide any property insurance coverage, Lessee acknowledges that such insurance shall be for the sole benefit of the City and Lessee shall have no right or claim to any such proceeds. Section 9.14. Compliance. Lessee's compliance with the requirements of this Article IX shall not relieve the Lessee of its liability, or be construed to relieve or limit, Lessee of any responsibility, liability, or obligation imposed under any other portion of this Lease, or by law, including, without limitation, any indemnification obligations which Lessee owes to City. Section 9.15. Right to Examine. The City reserves the right, upon reasonable notice, to examine the original or true copies of policies of insurance (including binders, amendments, exclusions, riders and applications), or applicable portions of any master insurance policy, to determine the true extent of coverage. The Lessee agrees to permit such inspection and make available such policies or portions thereof at the offices of the City. Section 9.16. Personal Property. Any personal property of the Lessee or of others placed in the Leased Property shall be at the sole risk of the Lessee or the owners thereof, and the City shall not be liable for any loss or damage thereto for any cause except as a result of the gross negligence or willful misconduct of the City or its employees, agents or contractors. ARTICLE X CONDEMNATION Section 10.1. Complete Condemnation. (a) If the entire Hotel Project shall be taken or condemned for any public or quasi-public use or purpose, by right of eminent domain or by purchase in lieu thereof(in each case, a 'Taking"),or if such Taking shall be for a portion of the Hotel Project such that the portion remaining is not sufficient and suitable, on a commercially reasonable basis, for the operation of the Hotel, then this Lease shall cease and terminate as of the date on which the condemning authority takes possession; and (b) If this Lease is so terminated, the entire award for the Hotel Project or the portion thereof so taken shall be apportioned among the City and the Lessee as of the day immediately prior to the vesting of title in the condemning authority, as follows: (i) First, Lessee shall be entitled to the then fair market value of its interest under this Lease and in the Lessee Improvements, less the discounted value of such Lessee Improvements as 72 allocated to the City, together with any and all business damages suffered by Lessee (subject, however, to the rights of the First Leasehold Mortgagee thereto); (li) Second, but only if the City is not the authority condemning the Hotel Project, the City shall receive the then fair market value of the Leased Property so taken or condemned considered as vacant, unimproved, and unencumbered, together with the value of the City's remainder interest in the Lessee Improvements which have been taken;and (iii) the City and Lessee shall each receive one-half(1/2) of any remaining balance of the award, except that the Lessee shall receive the entire remaining balance of the award if the City is the authority condemning the Hotel Project. Section 10.2. Partial Condemnation. (a) If there is a Taking of a portion of the Hotel Project, and the remaining portion can, on a commercially reasonable basis be adapted and used to operate the Hotel in the same manner it was previously operated,then this Lease shall continue in full force and effect; and (b) In such event,the award shall be apportioned as follows: CO First, to the Lessee to the extent required, pursuant to the terms of this Lease, for the restoration of the Hotel Project; (ii) Second, but only if the City is not the authority condemning the Hotel Project,to the City the portion of the award allocated to the fair market value of the Leased Property which is so taken,considered as vacant and unimproved; (iii) Third, to the Lessee the amount by which the value of Lessee's interest in the Lessee Improvements and the Leased Property were diminished by the taking or condemnation;and (iv) the City and Lessee shall each receive one-half(I/2) of any remaining balance of the award, except that the Lessee shall receive the entire remaining balance of the award if the City is the authority condemning the Hotel Project. Section 10.3. Restoration After Condemnation. If this Lease does not terminate due to a Taking,then: (a) Lessee shall, with commercially reasonable diligence and good-faith, restore the remaining portion of the Hotel Project in accordance with the provisions of Sections 9.10(a) hereof; (b) the entire proceeds of the award shall be deposited and treated in the same manner as insurance proceeds are to be treated under Article IX until the restoration has been completed and Lessee and the City have received their respective shares thereof pursuant to this Article X;and (c) if the award is insufficient to pay for the restoration, Lessee shall be responsible for the remaining cost and expense. 73 Section 10.4. Temporary Taking. If there is a Taking of the temporary use (but not title) of the Hotel Project, or any part thereof,this Lease shall, but only to the extent it is commercially reasonable, remain in full force and effect and there shall be no abatement of any amount or sum payable by or other obligation of Lessee hereunder. Lessee shall receive the entire award for any such temporary Taking to the extent it applies to the period prior to the end of the Term and the City shall receive the balance of the award. Section 10.5. Determinations. If the City and the Lessee cannot agree in respect of any matters to be determined under this Article, a determination shall be requested of the court having jurisdiction over the Taking. For purposes of this Article, any personal property taken or condemned shall be deemed to be a part of the Lessee Improvements, and the provisions hereof shall be applicable thereto. Section 10.6. Payment of Fees and Costs. All fees and costs incurred in connection with any condemnation proceeding described in Article X shall be paid in accordance with the law governing same, as determined by the court, if appropriate. ARTICLE XI QUIET ENJOYMENT AND OWNERSHIP OF IMPROVEMENTS Section 11.1. Quiet Enjoyment. (a) The City represents and warrants that Lessee, upon paying the Rent, Additional Rent and other monetary obligations pursuant to this Lease and observing and keeping the covenants and agreements of this Lease on its part to be kept and performed, shall lawfully and quietly hold, occupy and enjoy the Leased Property during the Term without hindrance or molestation by the City, acting in its proprietary capacity, or by any Person claiming under the City, acting in its proprietary capacity. The City shall, at its own cost and expense, through the City Attorney's office or other counsel selected by the City in its sole discretion, defend any suits or actions which may be brought challenging Lessee's right to lawfully and quietly hold, occupy and enjoy the Leased Property in accordance with the preceding sentence. Lessee shall have the right to retain its own counsel in connection with such proceedings,at Lessee's sole cost and expense. (b) However, if the City is acting in its governmental capacity,any liability under this Section shall only be to the extent permitted by applicable law and subject to the provisions and monetary limitations of Section 768.28, Florida Statutes, as may be amended, which statutory limitations shall be applied as if the parties had not entered into this Lease. Section 11.2. Waste. Lessee shall not knowingly permit, commit or suffer waste or material impairment of the Hotel Project, or any part thereof; provided, however, demolition of existing improvements on the Leased Property existing on the date hereof or redevelopment or reconstruction of the Hotel Project as permitted under this Lease shall not constitute waste. Section 11.3. Maintenance and Operation of Improvements. Without limiting the provisions of Article XII, Lessee shall at all times keep the Hotel Project in good and safe condition and repair in accordance with the Hotel Standards, commercially reasonable wear and tear and (subject to Lessee's restoration obligations hereunder) damage by casualty excepted. Regarding the occupancy, 74 maintenance and operation of the Hotel Project, the Lessee shall comply with all applicable Governmental Requirements. Section 11.4. Ownership of Improvements During Lease. (a) Prior to the expiration or termination of this Lease, title to the Lessee Improvements shall not vest in the City by reason of its ownership of fee simple title to the Leased Property, but title to the Lessee Improvements shall remain in Lessee. (b) If this Lease shall terminate, based on a mutual agreement between the parties or an final order from a court with jurisdiction from which the time for appeal has expired, prior to the expiration of the Term and if, at that time, the First Leasehold Mortgagee or Mezzanine Lender shall exercise its option to obtain a new lease for the remainder of the Term pursuant to Article VI, then title to the Lessee Improvements shall automatically pass to, vest in and belong to such First Leasehold Mortgagee or any designee or nominee of such First Leasehold Mortgagee (or Lessee, as owned by Mezzanine Lender or its designee or nominee) permitted hereunder, until the expiration or sooner termination of the term of such new lease. (c) The City and Lessee covenant that, to confirm the automatic vesting of title as provided in this paragraph, each will execute and deliver such further assurances and instruments of assignment and conveyance as may be commercially reasonably required by the other for that purpose. Section 11.5. Surrender of Leased Property. (a) Upon the expiration of the Term or earlier termination of this Lease (subject only to the rights of any First Leasehold Mortgagee), title to Lessee Improvements, free and clear of all debts, mortgages, encumbrances, and liens (which for this purpose shall include all personal property or equipment furnished or installed on the Hotel Project and owned or leased by Lessee), shall automatically pass to, vest in and belong to the City or its successor in ownership and it shall be lawful for the City or its successor in ownership to re-enter and repossess the Leased Property and Lessee Improvements thereon without process of law;and (b) The City and Lessee covenant that, to confirm the automatic vesting of title as provided in this Section, each will execute and deliver such further assurances and instruments of assignment and conveyance as may be reasonably required by the other for that purpose. ARTICLE XII MAINTENANCE AND REPAIRS Section 12.1. Standards Generally. The City and Lessee agree that the manner in which the Hotel Project is developed,operated and maintained is important to the City by reason of its interest in having a convention hotel facility for use by its residents and visitors to the City. Therefore, Lessee hereby agrees to develop, operate and maintain the Hotel Project and the Lessee Improvements thereon (including all FF&E) consistent with the Hotel Standards and in good order and repair, and will replace the same when necessary with items of similar utility and value in order to maintain such condition throughout the Term. 75 Section 12.2. Utilities. City will not be required to furnish any services, utilities or facilities whatsoever to the Leased Property pursuant to this Lease. Any services provided to the Leased Property shall be pursuant to the terms of a separate agreement. Section 12.3. Cleaning. Lessee shall, at its sole cost and expense, perform or cause to be performed, services which will at all times keep the Leased Property and the Lessee Improvements thereon, whether partially or fully constructed, in a clean, neat,orderly,sanitary and presentable condition. Section 12.4. Removal of Trash. Lessee shall, at its sole cost and expense, store, dispose of, and remove or cause to be removed from the Leased Property all trash and refuse which might accumulate and arise from its use of the Leased Property. Section 12.5. Maintenance and Repairs. (a) Lessee shall be exclusively responsible for maintenance and repair of the Leased Property and the Lessee Improvements, (except for the Off-Site Improvements or to the extent infrastructure maintenance has been transferred by Lessee to a utility company by means of a written contract),to the extent and at the times that are consistent with standard industry practice for each applicable Lessee Improvement. Maintenance and repairs by Lessee, including landscape maintenance, shall be in quality and class equal to or better than the original Work to preserve the Leased Property and Hotel Project in good condition and working order. (b) In no event shall City be responsible or liable for any maintenance or repair of any Lessee Improvement, fixture, equipment, structure, facility, alteration, or addition thereto on the Leased Property. (c) Lessee shall be responsible for complying at its cost with any Governmental Requirements, including construction re-certification of any Lessee Improvement on the Leased Property (other than the Off-Site Improvements), including the "40-year recertification" requirement under the current building code. (d) Maintenance and repair of the Hotel Project must he at a level that is in compliance with the Hotel Standards and that will cause the Hotel Project to be in a usable condition at the expiration or termination of this Lease, and with Lessee having expended sufficient funds that will cause each Lessee Improvement to be useful and functional and code compliant. During the Term of this Lease, Lessee shall (1) adequately and reasonably fund maintenance reserve accounts for each Lessee Improvement on the Leased Property in amounts that are consistent with standard industry practice applicable to each particular Lessee Improvement, (2) periodically expend funds from such accounts for maintenance purposes in an amount and at a time or times that are customary and ordinary for a sound maintenance program for the Leased Property and consistent with commercial development practices prevailing in South Florida and (3) comply at all times with the terms set forth in the Management Agreement and Franchise Agreement from time to time regarding accrual, maintenance and expenditure of reserves, including FF&E reserves. Section 12.6. Excavation of Land. Except in connection with the construction of the Hotel Project, or redevelopment or reconstruction of the Hotel Project as permitted under this Lease, no excavation of any of the land shall be made, no soil or earth shall be removed from the Leased Property, and no well of any nature shall be dug, constructed or drilled on the Leased Property,except as may be required for environmental monitoring purposes,without the prior written Approval by City Manager. 76 Section 12.7. Water and Sewerage System.The Lessee shall operate and maintain,at its sole cost and expense, all the components of the water, sanitary sewerage and storm drainage facilities constructed by Lessee as part of the Hotel Project within the boundaries of the Leased Property. Once constructed, Lessee shall not make any alterations or modifications to these facilities without the advance written Approval of the City Manager, which approval shall not be unreasonably withheld. Such consent shall be granted if any such alterations or modifications are required to comply with Governmental Requirements. Section 12.8. Industrial Waste Facilities. The Lessee shall be fully responsible for all industrial wastes on the Leased Property caused or produced by Lessee, its Subtenants or third-parties operating on the Leased Property and the proper disposal thereof, in accordance with applicable Governmental Requirements. Section 12.9. Inspections. City and/or its designated representatives shall have the right, during normal working hours, after prior reasonable notice to inspect the Leased Property and the Lessee Improvements to identify those items of maintenance, repair, replacement, modification and refurbishment reasonably required of Lessee to keep the Leased Property and the Lessee Improvements in good order and condition. If Lessee has failed to fulfill its maintenance and repair obligations under this Lease, City shall provide written notice and the Lessee shall perform all corrective work identified in such notice within thirty (30) days of receipt of the notice from City; provided, however that if such corrective work cannot be reasonably accomplished within a thirty (30)day period,then the Lessee shall commence the corrective work within that thirty (30) day period and diligently prosecute same to completion. Trash and debris maintenance shall be corrected within two (2) Business Days following receipt of written notice from City. Failure of City to inspect as aforementioned shall not impose any liability on the City. Nothing in this contractual provision relating to City's inspections shall preclude City from making inspections of the Leased Property in accordance with City's regulatory authority. Section 12.10. Failure of Lessee to Maintain. If Lessee has failed to properly clean, remove trash and debris, maintain, repair, replace and refurbish the Leased Property as required by this Article XII,the City shall provide to the Lessee a written list of deficiencies, reflecting the amount of time to be reasonably allowed for the Lessee to correct same. If the Lessee fails to correct or commence to correct such deficiencies within the time allowed and has not registered an objection as to its obligation to do so,the City, at its option, may elect to correct any or all of such deficiencies, in which case, the City shall give Lessee fifteen (15) days further written notice of its intention to do so, and if the Lessee has not corrected or commenced to correct the same within such additional fifteen (15) day period, the City may enter upon the Leased Property and perform all work, which, in the reasonable judgment of the City, is necessary and the City shall add the cost of such work, plus twenty-five percent (25%) for administrative costs,to the Rent due hereunder on the first day of the month following the date of such work, and such cost shall be and constitute a part of the Rent. If Lessee has not corrected or commenced to correct such deficiencies within such additional fifteen (15) day period, the Lessee shall not undertake performance of such repairs or cleanup without specific prior written authorization from the City. 77 ARTICLE XIII MANAGEMENT OF HOTEL Section 13.1. Hotel Standards. (a) Lessee covenants and agrees that it will utilize the Hotel Standards, as delineated in Exhibit "B", to maintain and operate the Hotel, and operate or cause for the Hotel to be operated in compliance with this Lease, Management Agreement, Franchise Agreement (as applicable) and Governmental Requirements; (b) Any commercial operations on the Hotel Project, whether conducted by Lessee, an Affiliate of Lessee or any concessionaire, involving any unreasonably noisy, dangerous or obnoxious activities or the leasing or rental of unreasonably noisy, dangerous or obnoxious equipment, shall require the prior written approval of the City and City may withhold such approval or require the termination of any such commercial operations then in existence on the Hotel Project in its commercially reasonable judgment;and (c) Lessee shall use commercially reasonable efforts to ensure that any concession, commercial activity,or other Hotel activity shall be generally consistent with the Hotel Standards. (d) Notwithstanding anything to the contrary contained herein, in the event that the Convention Center is not operated and maintained in accordance with the MBCC Standard of Operation for a period of more than one hundred eighty(180)days after written notice thereof from Lessee to City and City does not commence improvements to restore the Convention Center to the MBCC Standard of Operation within one hundred eighty(180) days after written notice thereof from Lessee and thereafter use commercially reasonable, diligent efforts to complete such cure as soon as reasonably practicable, then as Lessee's sole remedy, Lessee's obligations under the Room Block Agreement shall be suspended until such time as the MBCC Standard of Operation is restored, at which time, Lessee shall be required to comply with its obligations under the Room Block Agreement. Section 13.2. Covenant to Continuously Operate Hotel. (a) Subject to the need to make repairs and perform maintenance and any Force Majeure Event in accordance herewith, after the Opening Date, Lessee shall diligently and continuously operate (or cause to be operated)the Hotel for 365 days each year consistent with the Hotel Standards; (b) Subject to the need to make repairs and perform maintenance and subject to any Force Majeure Events in accordance herewith, after the Opening Date,for each day the Hotel is not operated continuously,the City, in addition to any other remedies available to it under this Lease,shall be entitled to receive a rental which shall be no less per day than the average of the Base Rent payable during the preceding three(3)full Lease Years;and Notwithstanding the foregoing, Lessee shall have the right from time-to-time to close the Hotel or parts thereof for such commercially reasonable periods of time to make repairs, alterations, remodeling and improvements, including, without limitation, any repairs, alterations, remodeling and improvements in connection with a Hotel brand change or refresh, or for any reconstruction after casualty or condemnation or any Force Majeure Event; provided that the Lessee is using commercially reasonable diligent efforts to repair and restore the Hotel or, as applicable, to mitigate the impact of such Force Majeure Events on its operations. 78 Section 13.3. Hotel Name. Lessee may enter into a new Management Agreement or Franchise Agreement, or change the name or brand of the Hotel so long as such name or brand is an Approved Brand. In the event Lessee desires to operate the Hotel as a non-branded hotel (which shall be permitted only after the twentieth (20th) anniversary of the Opening Date), the Hotel shall be owned, operated and maintained in a manner consistent with the Hotel Standards and the name of the Hotel in such case shall be determined by Lessee in its sole but reasonable discretion. In determining whether or not to give any Approval of a brand that is not an Approved Brand, the City may consider, by way of example and not of limitation, the public image of the proposed name or flag, its compliance with Exhibit "8" or other quality classification and whether such image is commensurate with the public image the City desires to project. Provided that no Event of Default is then continuing, Lessee's request for approval shall be deemed approved if (i) the first correspondence from Lessee to City requesting such approval or consent is in an envelope marked "PRIORITY" and contains a bold-faced, conspicuous (in a font size that is not less than fourteen (14)) legend at the top of the first page thereof stating that "FIRST NOTICE: THIS IS A REQUEST FOR CONSENT UNDER SECTION 13.3 OF THE DEVELOPMENT AND GROUND LEASE AGREEMENT, DATED AS OF 201_, AND FAILURE TO RESPOND TO THIS REQUEST WITHIN TWENTY (20) DAYS MAY RESULT IN THE REQUEST BEING DEEMED GRANTED", and is accompanied by the information and documents required above, and any other information reasonably requested by City in writing prior to the expiration of such twenty (20)day period in order to adequately review the same has been delivered; and (li) if City fails to respond or to deny such request for approval in writing within the first fifteen (15) days of such twenty (20) day period, a second notice requesting approval is delivered to City from Lessee in an envelope marked "PRIORITY" containing a bold-faced, conspicuous (in a font size that is not less than fourteen (14)) legend at the top of the first page thereof stating that "SECOND AND FINAL NOTICE: THIS IS A REQUEST FOR CONSENT UNDER SECTION 13.3 OF THE DEVELOPMENT AND GROUND LEASE AGREEMENT, DATED AS OF 201_. IF YOU FAIL TO PROVIDE A SUBSTANTIVE RESPONSE (E.G., APPROVAL, DENIAL OR REQUEST FOR CLARIFICATION OR MORE INFORMATION) TO THIS REQUEST FOR APPROVAL IN WRITING WITHIN FIVE (5) DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN" and City fails to provide a substantive response to such request for approval within such final five(5)day period. ARTICLE XIV MISCELLANEOUS PROVISIONS Section 14.1. No Partnership or Joint Venture. It is mutually understood and agreed that nothing contained in this Lease is intended or shall be construed in any manner or under any circumstances whatsoever as creating or establishing the relationship of co-partners, or creating or establishing the relationship of a joint venture between the City and Lessee, or as constituting Lessee as the agent or representative of the City for any purpose or in any manner whatsoever. Section 14.2. Recording, Documentary Stamps. A memorandum of this Lease, in form mutually satisfactory to the parties, may be recorded by either Party among the Public Records of Miami-Dade County, Florida and the cost of any such recordation,the cost of any documentary stamps which legally must be attached to any or all of said documents shall be paid in full by Lessee. The Parties shall cooperate in structuring the transactions contemplated hereby in such a manner as to reduce such costs, provided such structure shall not have any adverse consequence for the City. 79 Section 14.3. Florida and Local Laws Prevail. This Lease shall be governed by the laws of the State of Florida. This Lease is subject to and shall comply with the City Code as the same is in existence as of the execution of this Lease and the ordinances of the City of Miami Beach. Any conflicts between this Lease and the City Code shall be resolved in favor of the latter. If any term, covenant,or condition of this Lease or the application thereof to any Person or circumstances shall to any extent, be illegal, invalid, or unenforceable because of present or future laws or any rule or regulation of any governmental body or entity or becomes unenforceable because of judicial construction, the remaining terms, covenants and conditions of this Lease, or application of such term, covenant or condition to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant, or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law. Any dispute arising out of or relating to this Lease that specifically provides for arbitration (and only such provisions) shall be subject to arbitration as expressly provided herein. In any such arbitration or in any legal action brought by either Party because of a breach of this Lease or to enforce any provision of this Lease, the prevailing Party shall be entitled to reasonable attorneys' fees and paralegals' fees and costs, including those incurred in subsequent actions to enforce or vacate an arbitration award and those incurred on appeal. Section 14.4. No Conflicts of Interest/City Representatives not Individually Liable. No member, official, representative,or employee of the City shall have any personal interest, direct or indirect, in this Lease, nor shall any such member, official, representative or employee participate in any decision relating to this Lease which affects his or her personal interest or the interest of any corporation, partnership or association in which he or she is, directly or indirectly, interested. No member, official, elected representative or employee of the City shall be personally liable to Lessee or any successor in interest in the event of any default or breach by the City or for any amount which may become due to Lessee or successor or on any obligations under the terms of this Lease. Section 14.5. Notice. A notice or communication, under this Lease by the City, on the one hand, to Lessee, or, on the other, by Lessee to the City shall be sufficiently given or delivered if in writing and dispatched by hand delivery, or by nationally recognized overnight courier providing receipts, or by registered or certified mail, postage prepaid, return receipt requested to: (a) Lessee. In the case of a notice or communication to Lessee if addressed as follows: To: MB MIXED USE INVESTMENT, LLC 2665 South Bayshore Drive Suite 1020 Coconut Grove,Florida 33133 Attention: David P. Martin and Ellen Buckley with a copy to: Greenberg Traurig, P.A. 333 S.E. 2n°Avenue Miami, Florida 33131 Attention: Laura Gangemi Vignola, Esq. and to: 80 TB MBCC Hotel Investment LLC 19950 West Country Club Drive, 10th Floor Aventura, FL 33180 Attention:Jackie Soffer with a copy to: TB MBCC Hotel Investment LLC 19950 West Country Club Drive, 10th Floor Aventura, FL 33180 Attention: Legal Department/Mario Romine (b) City. In the case of a notice or communication to the City,if addressed as follows: To: City Manager City of Miami Beach, Florida 1700 Convention Center Drive,4tb Floor Miami Beach, Florida 33139 With Copies To: City Attorney City of Miami Beach, Florida 1700 Convention Center Drive,4'h Floor Miami Beach, Florida 33139 or if such notice is addressed in such other way in respect to any of the foregoing Parties as that Party may,from time-to-time, designate in writing, dispatched as provided in this Section 14.5. Section 14.6. Estoppel Certificates. The City and Lessee shall, within thirty (30) days after written request by the other, execute,acknowledge and deliver to the Party which has requested the same or to any actual or prospective First Leasehold Mortgagee, Mezzanine Lender, or purchaser of the Hotel or any equity interest in Lessee, a certificate stating that: (a) this Lease is in full force and effect and has not been modified, supplemented or amended in any way, or, if there have been modifications, this Lease is in full force and effect as modified, identifying such modification agreement, and if this Lease is not in force and effect, the certificate shall so state; (b) this Lease as modified represents the entire agreement between the Parties as to this subject matter,or, if it does not,the certificate shall so state; (c) the dates on which the Term of this Lease commenced and will terminate; (d) to the knowledge of the certifying Party all conditions under this Lease to be performed up to that date by the City or Lessee, as the case may be, have been performed or satisfied and, as of 81 the date of such certificate, there are no existing defaults, defenses or offsets which the City or Lessee, as the case may be, has against the enforcement of this Lease by the other Party, or, if such conditions have not been satisfied or if there are any defaults, defenses or offsets,the certificate shall so state;and (e) the Rent due and payable for the year in which such certificate is delivered has been paid in full, or, if it has not been paid,the certificate shall so state; and (f) in connection with any request by a prospective First Leasehold Mortgagee or Mezzanine Lender, that such proposed First Leasehold Mortgagee or Mezzanine Lender (as applicable) and such proposed financing satisfy the requirements of Section 6.1, including the requirements of Section 6.1(g). The Party to whom any such certificate shall be issued may rely on the matters therein set forth; however, in delivering such certificate neither Lessee nor the City (nor any individual signing such certificate on such Party's behalf) shall be liable for the accuracy of the statements made therein, but rather shall be estopped from denying the veracity or accuracy of the same. Any certificate required to be made by the City or Lessee pursuant to this paragraph shall be deemed to have been made by the City or Lessee(as the case may be)and not by the person signing same. Section 14.7. Provisions not Merged with Deed. Unless otherwise expressed in the instrument of conveyance or transfer, none of the provisions of this Lease are intended to or shall be merged by reason of any deed: (a) transferring the Hotel Project or any part thereof from Lessee (or its successors or assigns)to the City(or its successors or assigns);or (b) transferring title to the Leased Property or any part thereof from the City to Lessee, its successors or assigns. Any such deed shall not be deemed to affect or impair the provisions and covenants of this Lease. Notwithstanding anything to the contrary contained herein, so long as there is a First Leasehold Mortgagee, the City and Lessee agree that the City shall not transfer any fee interest in the Leased Property to Lessee without such First Leasehold Mortgagee's prior written consent. Section 14.8. Titles of Articles and Sections. Any titles of the several parts, Articles and Sections of this Lease are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 14.9. Counterparts. This Lease may be executed in counterparts, each of which shall be deemed an original. Any such counterparts shall constitute one and the same instrument. This Lease shall become effective only upon execution and delivery of this Lease by the Parties hereto. Section 14.10. Successors and Assigns; No Third Party Beneficiaries. Except to the extent limited elsewhere in this Lease, all of the covenants conditions and obligations contained in this Lease shall be binding upon and inure to the benefit of the respective successors and assigns of the City and Lessee. Lessee and the City acknowledge and agree that except for a First Leasehold Mortgagee or a Mezzanine Lender, if any, each of which shall have the rights set forth in Article VI hereof, no third party shall have any rights or claims arising hereunder, nor is it intended that any third party shall be a third party beneficiary of any provisions hereof. Notwithstanding anything to the contrary contained in this Lease, 82 in the event of any assignment of this Lease by the City, including if all or any portion of the interest of the City in the Leased Property or this Lease shall be acquired by reason of foreclosure of any mortgage, security agreement, lien or other encumbrance or other proceedings brought to enforce the rights of the holder(s)thereof, by deed in lieu of foreclosure or by any other method, all references hereunder to the City Manager with respect to Approvals, consents, decisions, waivers, determinations, confirmations, submittals, notifications, communications and other matters shall be deemed to refer to the Person who is then the lessor under this Lease. Section 14.11. Entire Agreement. This Lease and its Exhibits constitute the sole and only agreement of the Parties hereto with respect to the subject matter hereof and correctly set forth the rights, duties, and obligations of each to the other as of its date. Any prior agreements, promises, negotiations, or representations not expressly set forth in this Lease are of no force or effect and are merged into this Lease. Section 14.12. Amendments. No amendments to this Lease shall he binding on either Party unless in writing and signed by both Parties. Solely to the limited extent as may be necessary to reasonably facilitate the initial Construction Loan to finance the Hotel Project and the first refinancing thereof and/or the initial Mezzanine Loan and the first refinancing thereof, the City Manager shall have the delegated authority(but not the obligation),after consultation with the City's Chief Financial Officer and City Attorney,to negotiate and execute modifications to Article 9, Article 10, Sections 6.1(a)(vi) through 6.1(a)(ix), and Sections 6.1(b) through 6.1(k) of this Lease; and to negotiate and execute the easements contemplated pursuant to Section 4.1(g) of this Lease. All other amendments must be approved by majority vote of the City Commission, subject to the requirements of the City Charter and applicable law, except that the provisions of Sections 4.2(b), 4.2(g), 4.5(a) through (e), and Section A.1 of Exhibit "A" hereto may not be modified except by approval of such modifications by at least sixty percent(60%) of the voters voting thereon in a City-wide referendum, in the same manner as required for approval of the initial Lease pursuant to Section 1.03(b)(3) of the City Charter, and the Base Rent and Minimum Fixed Rent set forth in Section 4.4(a) may not be modified except by approval of such modification by at least sixty percent (60%) of the voters voting thereon in a City-wide referendum, in the same manner as required for approval of the initial Lease pursuant to Section 1.03(6)(3)of the City Charter.The City shall not be obligated to expend any money or undertake any obligation connected with any such amendment proposed by Lessee, or otherwise connected with any action requested by or for the benefit of Lessee under this Lease, and shall be reimbursed by Lessee for all out of pocket expenses (including third party consultants and attorneys) incurred by the City. Prior to the City taking action regarding any such request, Lessee shall deposit with the City the estimated amount of such costs, as reasonably determined by the City. Section 14.13. Non-Subordination of City's Interest. The City's fee interest in and ownership of the Leased Property and the City's rights and interest in this Lease (including the rights to Rent, Public Charges and other monetary obligations of Lessee to the City under this Lease) shall not be subject or subordinate to or encumbered by any financing for the Hotel Project or lien or encumbrances affecting Lessee's interest in this Lease or Lessee Improvements or by any acts or omissions of Lessee or any Subtenant hereunder. In this regard, the Rent, Additional Rent, Public Charges and other monetary obligations of Lessee to the City under this Lease then payable at any point in time during the Term shall be paid by Lessee to the City and shall be superior in right to all claims or rights hereunder or described above in this Section, including all Hotel Project operating expenses, the payment of debt service, and any distributions of profits to Lessee or any of its Affiliates or owners. City acknowledges that this Lease shall not be subordinate to any future mortgage against the fee interest in the Leased Property. Notwithstanding anything to the contrary contained in this Lease, if all or any portion of the interest of 83 the City in the Leased Property or this Lease shall be acquired by reason of foreclosure of any mortgage, security agreement, lien or other encumbrance or other proceedings brought to enforce the rights of the holder(s)thereof, by deed in lieu of foreclosure or by any other method, and as a result any Person succeeds to such interests of City, this Lease and the rights of Lessee hereunder shall continue in full force and effect and shall not be terminated or disturbed except as otherwise expressly permitted by the terms of this Lease. Section 14.14. City Manager's Delegated Authority. Notwithstanding any provision to the contrary in this Lease, nothing herein shall preclude the City Manager from seeking direction from or electing to have the City Commission determine any matter arising out of or related to this Lease, including, without limitation, any Approval contemplated under this Lease (within the timeframe specified therefor as if the Approval was being determined by the City Manager), any proposed amendment or modification to this Lease or any separate agreement relating to the Hotel Project or otherwise referenced in this Lease. Section 14.15. Holidays. It is hereby agreed that whenever a notice or performance under the terms of this Lease is to be made or given on a Saturday or Sunday or on a legal holiday recognized by the City, it shall be postponed to the next following Business Day, not a Saturday, Sunday or legal holiday. Section 14.16. No Brokers. Lessee shall be responsible for, and shall hold the City harmless with respect to, the payment of any commission claimed by or owed to any real estate broker or other Person retained by Lessee and which is entitled to a commission as a result of the execution and delivery of this Lease. The City similarly shall be responsible for, and shall hold Lessee harmless with respect to, the payment of any commission claimed by or owed to any real estate broker or other Person retained by the City and which is entitled to a commission as a result of the execution and delivery of this Lease. Section 14.17. No Liability for Approvals and Inspections. Except as may be otherwise expressly provided herein, no approval to be made by the City in its capacity as landlord under this Lease or any inspection of the Work or the Hotel Project by the City under this Lease, shall render the City liable for its failure to discover any defects or nonconformance with any Governmental Requirement. Section 14.18. Radon. Radon is a naturally occurring radioactive gas that,when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from the county public health unit for Miami-Dade County. Section 14.19. Lessee Entity.On the date of execution hereof, Lessee is a limited liability company. In the event that at any time during the Term of this Lease and any extensions and renewals thereof, Lessee is a corporation or an entity other than a limited liability company,then any references herein to member, membership interest, manager and the like which are applicable to a limited liability company shall mean and be changed to the equivalent designation of such term which is appropriate to the nature of the new Lessee entity. Section 14.20. Inflation Adjustments. All adjustments for inflation required under this Lease shall be calculated utilizing the United States Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers; U.S. City average (1982-84=100). If the United States Department of Labor should no longer 84 compile and publish this index, the most similar index compiled and published by said Department or any other branch or department of the federal government shall be used for the purpose of computing the inflation adjustments provided for in this Lease. If no such index is compiled or published by any branch or department of the federal government, the statistics reflecting cost of living increases as compiled by any institution or organization or individual designated by the City and generally recognized as an authority by financial or insurance institutions shall be used as a basis for such adjustments. Section 14.21. Standard of Conduct. The implied covenant of good faith and fair dealing under Florida law is expressly adopted. Section 14.22. Waiver of Consequential Damages. Notwithstanding anything contained in this Lease to the contrary, in no event shall either Party be liable to the other for any consequential, exemplary or punitive damages. Section 1.4.23. Reservation of Rights. This Lease shall not affect any rights that may have accrued to any Party to this Lease under applicable laws and each Party hereto reserves any and all of such rights. [signature pages to follow] 85 IN WITNESS WHEREOF, Lessee has caused this Lease to be signed in its name, and the City of Miami Beach has caused this Lease to be signed in its name by the Mayor, and duly attested to by the City Clerk, and approved as to form and sufficiency by the City Attorney, on the day and year first above written. WITNESSED BY: i n CITY OF MIAMI BEACH,FLORIDA Tint Name: INT / -AI GvIV IW. drint Name: AL.;an CAantberlirl iillinad i By: � Print Name: Dan Gelber, Mayor „�* „ p �a ATTEST 3 ‘ O F Approved for form and legal sufficiency By: Citylerk ate ~ : * t City Attorney 0 1.INCORP ORATEDi c RAP (LCN 26Mv STATE OF FLORIDA N)° , ". �' COUNTY OF MIAMI-DADE ) The foregoing instrument was acknowledged before me this30'iay of 'U hi 2018, by Dan Gelber,as Mayor of the City of Miami Beach,who is eersonally known to me or who produced as identification. A-1- a\^\ w '/ ^ A Not ry Publ �/n • yMMnExmDRAO$ Co missio Number: E& 07/355 i....., NmanNam-stnemnaida Co • on Expires: ll /6y Z02I i. 7 Commission!66071355 awAI My Comm.Expires Mar 16,1021 pyyEMmgFNHmal Naury km. Signature page to Development and Ground Lease Agreement LESSEE MB MIXED USE INVESTMENT, LLC, a Florida limited liability company By: MB Mixed Use Investment Ho •ings Member, LLC, a /' it _0/,j1, / q_ Florida lim' ,I'sy co . •a y,as manager Print ame:Mlle[ C. LS�ncft_/Cvl By: `/ A� J r .V Ma in, an.:er Print Name: Lh uSCD kvc/N- By: TB MBCC Hotel Investment, LLC, a Florida limited liability company,as manager By: Print Name: Name: Title: Print Name: STATE OF FLORIDA COUNTY OF MIAMI-DADE The foregoing instrument was acknowledged before me this 2l day of tilt(( 2018 by David Martin, as a manager of MB Mixed Use Investment Holdings Member, LLC, a Flor1a limited liability company, which is a manager of MB Mixed Use Investment, LLC, a Florida limited liability company, on behalf of such company. Such person is personally known to me or produced as identification. \`sp111111111111Lr;; spx:�j ..........Os Notafµ bl c�� .i B 30, 9 *;a �aoc•.•ie. commission Number: GY%'/G 9dd _=z: a: commission Expires: 4/30/920dO • =9t 0, 9,,8922 STATE OF FLORIDA tr!s, ,,ive .; p;�� COUNTY OF �"xr�iq` .....'0\04 The foregoing instrument was acknowledged before me this day of 2018 by as of TB MBCC Hotel Investment, LLC, a Florida limited liability company,which is a manager of MB Mixed Use Investment, LLC,a Florida limited liability company,on behalf of such company. Such person is personally known to me or produced as identification. Notary Public Commission Number: Commission Expires: Signature page to Development and Ground Lease Agreement LESSEE MB MIXED USE INVESTMENT, LLC, a Florida limited liability company By: MB Mixed Use Investment Holdings Member, LLC, a Florida limited liability company,as manager Print Name: By: David Martin,Manager Print Name: By: TB MBCC Hotel Investment, LLC, a Florida limited liability compa a- anager P t NamBy:. Seri( 'Cass Tia ) a Title: I u l � Ca : _ ' _ - 5TNA STATE OF FLORIDA COUNTY OF MIAMI-DADE The foregoing instrument was acknowledged before me this_day of , 2018 by David Martin, as a manager of MB Mixed Use Investment Holdings Member, LLC, a Florida limited liability company, which is a manager of MB Mixed Use Investment, LLC, a Florida limited liability company, on behalf of such company. Such person is personally known to me or produced as identification. Notary Public Commission Number: Colcmd6 Commission Expires: STATE OF FLORIDA COUNTY OF p;-), f5r The foregoing instr ment was acknowledged before me this 3` day of 2018 by� Lq,AJ 1t SOC*-Yr as /j4 of TB MBCC Hotel Investment, LLC, a Florida limited I abilit company,which is a manager MB Mixed Use Investment, LLC, a Florida limited liability company,onbehalf of such company. Such person is personally known to m or produced DC id as identification. Public'KYLE STEWART ary Public NOTARY COLORADO Commission Number: Zol"74LD iti�1 o STATERIOFD COLORADO 11/0 /Zd i t NOTARY ID C20Novem b 196 Commission Expires: My Commission Expires November 1,2021 Signature page to Development and Ground Lease Agreement F CITY OF MIAMI BEACH NOTICE OF PUBLIC HEARING AND INTENT TO li CONSIDER A DEVELOPMENT AND GROUND LEASE AGREEMENT NOTICE IS HEREBY given N I a Second Reading/Fabric Hang will be hood d by Mu Mayors o Gay Comm ssion of the City of Miami Beach,Florida.in the Commission Chamber 3rd Floor,C y H1 00 Convention Center DJ ..Mom Beach Fmrida.tie Wednesday,July 25,2018 at 930 a.m.,oras soon thereafter as/lie metier can be heard.to consider the following Resolution (provided that the proposed Development and Ground Lease Agreement is approved by the Mayor and Oily Commission following first readingipubttc hearing err July 17.2018). A Resolution e Mayor d City Commission Af The e't Mem R Approving,Following II Ing Bec11tl 4 dnyPyldeSeg,oD16elo etAdGrouFdLdaseAgreementAs AuthzeRespectively, Be Seeker' Of TheMitt'Code.Sece 163.3220 3 e24e,Floridant uts,Ana Section 87Or UCity Code,Between The City And M MixedUse Invest0,00t,LLC.For The Dnemee OIA ConventionHotel Wrth Up to 800 Rooms ARelatedFaeroes,To Of IntnnuR 60.000ac e FeConference And Ballroom iehAHl2,000 Square Feet Of Accessory Retort Restaurant Facilities totreMceHotel Guests and IePublic(uneRtug), nAne Bleay2.CAcreBonCe The Northeast CornerOh 7 StreetAnd Convention Ce Drive.Bounded Roughly By The Miami Beach EastndContertoThenerth.Ir Street The SONh,The FiopMomrBeach AI The ConeGleasonTheater To Tha East And To re C Con A d Th onvention CeDrive To The West(The"Leased PrPererDne gTyeCendoneFr Design, stceaEquipping Operation Of The Hotel On Leased dopitry With No City Funding Therefor,Providing For A99-YerTerm Of The Leased PrOnce Certain CaTdibonsAreSatisfied; biting ambl Establishments The LeasedAmcedy:aiiFor Annual Base ent To The City. ter The Hotel Opens,0f The Greater of Minimum Fixed Rent 01A Percentage Of The Revenues Of The Hotel.Among Geier g n RRent. PROPERTY.The proposed Leased Property consists of a portion of Folio No 02-3227-000.0090.on on approximately 2.6 acre site en the northeast corner of 17"Street and Convention Center Drive,bounded roughly by the Miami Beach Convention Center to the North,17f Street to the South.the Filhmre Miami beach at the Jackie Gleason Theater to the East,and Convention Confer Dove to the West. '2—- PERMITTED USES:The current main permeted uses in the GaysCivic is Convention t Center(CCC) include t, parking garages,pedorad arts and cultural facilities:hotel,merchandise mot,an eroffice development, ds pe ope 'p osarnpany use that'scustomarilye etas th a centergovernmental kiogs and uses.Thproposed DeIp t and Ground LeAgreement wepermit a convention hotel5 up to0morns andrelatedyeetas,Including p to 60,00quare feet eeandadballroom facilities, duo o52,000square feet of accessory retail and eedumnl facilities to service hotel gees&and the public Under the City'sLand Development Regulationsthe maximum buildingintensity for this zoning district(Ike CCC Civic and Convention Center disoicl)is a floor areratio of 275,andth maximum idi.g height for a his 300 Met The scare of the hotel use is limited by setback,height,floor area ratio,minirnum room size,parking requirements of 4 spaces per room and other provision of the City's Land Development Regulations.The Gly's Land Development Regulations do not provide for population densities for this smga g dss3i t..1464 N Notwithstanding the maximum building height of 300 Wel permitted by the City's Land Development Regulations,the gig proposed Development and Ground Lease Agreement provides that the height of any habitable building of the Leased Properly shall not exceed 195 feet to the top of the roof.and architectural projections will comply with the terms of the Development and Ground Lease Agreement(and otherapplidble provisions of the City's Land Development Regulations). A ropy of the proposed Development and Ground Leese Agreement is evadable for public iospech'oe during normal business •its hours in Me Office of the City Clerk 17000 Convention Canter Drive.dsf Flooc City Half Mem/Beach,Florida.32 39 INTERESTED PARTIES are Invited to appear at this meetingor be represented by an agent,or to express their views in writing addressed to the City Commissron,do the City Clerk.1700 Convention Center Drive,t°Floor.City Hall,Miami Beach.Florida 33139.This item Is available for public inspection during normal business hours in the Office of the City Clerk,1700 Convention Center Drive,1'Floor,City Hall.Miami Beach,Florida 33139.This meetingor any item herein,may be continued,and under such circumstances,additional legal notice need not be provided. Pursuant to Section 286 0105,Fla.Stat.,the Cdy hereby advises the public that if a person decides to appeal any decision made by the City Commission with respect to any matter considered at Os meeting or its hearing,such person must ensure li that a verbatim record of bre proceedings is made,which record includes the testimony and evidence upon which the appeal s to be based.This notice does not conshlute consent by the City for the introduction or admission of otherwiseinadmissible or irrelevant evkfence,nor does it authorize challenges or appears not otherwise allowed by law To request thismaterial in alternate format. sign language interpreter(five-day notice required). information on access for persons with disabiibies,and/or any accommodation to review any document or participate in any City-sponsored proceedings, call 305.604 2489 and select option 6:TTY users may call via 711(Florida Relay Service). Rafael E.Granado,City Clerk Ad 072518-06 City of Miami Beach EXHIBIT"A" ACCEPTABLE OWNER DEFINITION A. "Acceptable Owner" means any individual, corporation or other entity which has, at a minimum,the following qualifications: 1. The proposed transferee must comply with Section 4.2(g)of the Lease. 2. The proposed transferee is not a Foreign Instrumentality other than a member country of the European Union or the Gulf Cooperation Council, each as existing on the Effective Date, United Kingdom, Canada, Mexico, countries located in South America (other than Venezuela), Japan, South Korea,Singapore and Australia,or a Person Controlled by any of the foregoing countries. 3. The proposed transferee must not be owned, or Controlled by entities or individuals who have been convicted, or are presently under indictment, for felonies under the laws of any foreign or United States of America jurisdiction. But the foregoing shall not apply to individuals or entities owning less than a twenty percent(20%)equity interest in the proposed transferee,other than officers,directors,managers or others who have the power to direct and control the business and affairs of the proposed transferee. 4. The proposed transferee must not in its charter or organizational documents (defined as the articles of incorporation and bylaws for any corporation,the partnership agreement and partnership certificate for any partnership, the articles of organization and limited liability company operating agreement for any limited liability company, the trust agreement for any trust and the constitution of the relevant government for any governmental entity, but expressly excluding any statements, positions, actions or allegations not contained in such charter organizational documents) expressly advocate or have as its stated purpose:(a)the violent overthrow of or armed resistance against, the U.S. government; or (b) genocide or violence against any persons; or (c) discrimination, hatred or animosity toward persons based solely on their race,creed,color,sex or national origin. 5. A proposed transferee of the entire Hotel Project or of a direct or indirect Controlling ownership interest in Lessee (each, a "Proposed Major Transferee"), or an Affiliate of such Proposed Major Transferee Controlling such Proposed Major Transferee or Person with an ownership interest in such Proposed Major Transferee Controlling such Proposed Major Transferee, must(a)either (i)not terminate any then existing Management Agreement or Franchise Agreement or(ii)retain or hire an Approved Brand and/or Approved Operator, as applicable, and (b) if any then existing Leasehold Mortgage loan and/or Mezzanine Loan is being re-financed, or any new Leasehold Mortgage and/or Mezzanine Loan is being entered into,then such Proposed Major Transferee must comply with the Debt Service Coverage Ratio required under Section 6.1(a)(vi)of the Lease and the loan-to-value requirement set forth in Section 6(a)(vii)of the Lease. 6. A Proposed Major Transferee shall have had no violations of any applicable law against such Proposed Major Transferee, or any hotel or other property owned or managed by such Proposed Major Transferee, within Florida, which have resulted in: (i) a prohibition from continuing to operate such hotel or other property for any period of time or(ii) a forfeiture of the Proposed Major Transferee's entire interest in such hotel or other property. ADSLLPIX063061 14 MIA 186559977v27 086 7. A Proposed Major Transferee must not(nor any of the individuals or entities who own at least a twenty percent(20%)equity interest in such Proposed Major Transferee or are officers, directors, managers or otherwise have the power to direct and control the business and affairs of such Proposed Major Transferee) have filed or been discharged from bankruptcy,or have been the subject of an involuntary bankruptcy, reorganization or insolvency proceedings within the past five (5) years (bankruptcy filings by Affiliates shall not disqualify a Proposed Major Transferee,unless such Affiliates are any of the individuals or entities described in the parenthetical immediately above). B. "Acceptable Owner Criteria": The foregoing categories of requirements set forth in paragraph A above are collectively defined as the"Acceptable Owner Criteria." C. Evaluation of the Acceptable Owner Criteria: Solely for the purpose of evaluating whether the proposed transferee has met the Acceptable Owner Criteria set forth in subparagraphs A.1—A.4,A.6 and A.7 of this Exhibit A,the proposed transferee shall provide the following information to the Lessee and certify that the information provided by the proposed transferee is true and correct and that the proposed transferee meets or exceeds the Acceptable Owner Criteria: 1. solely with respect to a Proposed Major Transferee,information sufficient for the City or any outside vendor engaged by the City to perform a due diligence investigation pursuant to paragraph D below,including copies of any applicable operating licenses; 2. solely with respect to a Proposed Major Transferee, identification and summary description of its principals and its major real estate or other investments; 3. solely with respect to a Proposed Major Transferee,a list of all bankruptcies filed by such Proposed Major Transferee or to which such Proposed Major Transferee was a party-bankrupt,if any;and 4. such other evidence as is commercially reasonably necessary as determined by Lessee to establish that the new entity proposed to be the Acceptable Owner meets the Acceptable Owner Criteria. D. With respect to any proposed Transfer to a Proposed Major Transferee,City may,at its sole discretion,engage an outside vendor to perform a due diligence investigation at the Lessee's or such Proposed Major Transferee's sole expense, which may include a search of civil, criminal, or bankruptcy proceedings in federal and state jurisdictions; regulatory filings; tax things; lien,judgment and Uniform Commercial Code searches; business registrations, and the like; provided, however, that City's right to conduct its own due diligence shall not expand or deemed to expand the Acceptable Owner Criteria or impose additional criteria with respect to whether a proposed transferee constitutes an Acceptable Owner. City shall be entitled to engage an independent accounting firm,the reasonable costs of which shall be borne by Lessee or such Proposed Major Transferee,to review the information upon which the Proposed Major Transferee's certifications were based, for the purpose of determining whether the certifications and/or information provided to the City is accurate and complete. Lessee shall, or shall cause such Proposed Major Transferee to, reimburse City, upon demand, for any reasonable costs incurred by City in connection with such Transferor proposed Transfer to a Proposed Major Transferee, including the reasonable out-of-pocket costs of making inquiries and investigations into the conformance ADSLLP 00063061 14 MIA 186559977v27 087 with the Acceptable Owner Criteria of such Proposed Major Transferee and the reasonable legal costs incurred,if any,in connection therewith. E. Confirmation/Approval Process for Proposed Transferees: Regarding the City's confirmation that a proposed transferee is an Acceptable Owner, or the City's approval of a Transfer that is not a Permitted Transfer,the parties hereby agree that: 1. The City Manager shall rely solely on the proposed transferee's certification that the proposed transferee meets the Acceptable Owner Criteria (if a Permitted Transfer), along with the information provided by the proposed transferee and with respect to any Proposed Major Transferee,the results of any due diligence investigation performed by the City. 2. The City Manager shall not unreasonably withhold the City's confirmation if the proposed transferee complies with the Acceptable Owner Criteria. 3. The City Manager shall not unreasonably withhold the City's Approval of a Transfer that is not a Permitted Transfer, except that with respect to a Transfer to a Foreign Instrumentality (other than a member country of the European Union or the Gulf Cooperation Council, each as existing on the Effective Date, United Kingdom, Canada, Mexico, countries located in South America(excluding Venezuela),Japan,South Korea,Singapore and Australia or Persons Controlled by any of the foregoing countries), such Transfer shall be subject to the prior written approval of the City Commission,which may be granted,conditioned or withheld by the City Commission in its sole discretion; and 4. If a proposed Transfer requires the City's confirmation or Approval, Lessee shall deliver written notice to the City,which shall include(i)the name and address of the proposed transferee; (ii) the name and address of the proposed transferor; (iii) information describing the nature of the transaction;(iv)the percentage interest being conveyed;and (iv)the materials described in paragraph C above. 5. The City Manager shall have up to forty-five(45) days after the delivery of such written notice and the information required under paragraph C above, to determine whether, on a commercially reasonable basis,the proposed transferee meets the Acceptable Owner Criteria set forth in subparagraphs A.1—A.4,A.6 and A.7 of this Exhibit A if a Permitted Transfer. The City Manager shall have up to sixty (60) days after the delivery of such written notice and the information required under paragraph[above whether to Approve in accordance herewith a Transfer that is not a Permitted Transfer. 6. Provided that no Event of Default is then continuing, Lessee's request for confirmation that the proposed transferee meets the Acceptable Owner Criteria set forth in subparagraphs A.1 — A.4, A.6 and A.7 of this Exhibit A shall be deemed confirmed if the first correspondence from Lessee to the City requesting such confirmation is in an envelope marked "PRIORITY"and contains a bold-faced,conspicuous(in a font size that is not less than fourteen(14))legend at the top of the first page thereof stating that"THIS IS A REQUEST FOR CONFIRMATION OF A PERMITTED TRANSFER UNDER SECTION 5.4 OF THE DEVELOPMENT AND GROUND LEASE AGREEMENT,DATED AS OF 2018,AND FAILURE TO RESPOND TO THIS REQUEST WITHIN FORTY-FIVE (45) DAYS WILL RESULT IN THE REQUEST BEING DEEMED CONFIRMED,"and is accompanied by the information and documents required above and City fails to respond or to deny such request for confirmation in writing ADSLIT 0006306114 MIA 186559977027 088 within such forty-five (45) day period Provided that no Event of Default is then continuing, Lessee's request far Approval of a Transfer that is not a Permitted Transfer shall be deemed Approved if the first correspondence from Lessee to the City requesting such Approval is in an envelope marked"PRIORITY" and contains a bald-faced,conspicuous(in a font size that is not less than fourteen(14))legend at the top of the first page thereof stating that"THIS IS A REQU EST FOR APPROVAL OF A TRANSFER UNDER SECTION 5.4 OF THE DEVELOPMENT AND GROUND LEASE AGREEMENT, DATED AS OF 2018, AND FAILURE TO RESPOND TO THIS REQUEST WITHIN SIXTY (60) DAYS WILL RESULT IN THE REQUEST BEING DEEMED APPROVED" and is accompanied by the information and documents required above and City fails to respond or to deny such request for Approval in writing within such sixty(60)day period. Any Transfer shall be subject to the deemed Approval provisions set forth above in this subparagraph E.6, provided,however,that the City Commission shall have sixty(60)days after receipt of written notice from Lessee of any proposed Transfer to a Foreign Instrumentality (other than a member country of the European Union or the Gulf Cooperation Council,each as existing on the Effective Date,United Kingdom, Canada,Mexico,countries located in South America(excluding Venezuela),Japan,South Korea,Singapore and Australia or Persons Controlled by any of the foregoing countries),to approve or disapprove of such proposed Transfer,and if the City has not notified Lessee,in writing,of the City Commission's approval of such Transfer within such sixty(60)day period,then such Transfer shall be deemed approved. 7. If the City notifies Lessee,in writing,within the first thirty(30)days of such forty- five (45) or sixty (60) day period, as applicable, that the information submitted is, on a commercially reasonable basis,incomplete or insufficient (and specifies in what ways it is incomplete or insufficient), then Lessee shall supplement such information,on a commercially reasonable basis,and the City Manager (or City Commission, with respect to Transfers to Foreign Instrumentalities requiring City Commission approval) shall have twenty (20) days after such supplemental information is provided to make its determination whether the proposed transferee meets the Acceptable Owner Criteria set forth in subparagraphs A.1—A.4, A.6 and A.7 of this Exhibit A or to Approve a Transfer that is not a Permitted Transfer. 8. If the City Manager does not confirm that the proposed transferee does not meet the Acceptable Owner Criteria set forth in subparagraphs Al.. —A.4, A.6 and A.7 of this Exhibit A or disapproves a Transfer that is not a Permitted Transfer,the City Manager shall provide to Lessee specific written,commercially reasonable reasons for such action.The failure to object to the proposed transferee or Transfer within the applicable time period set forth above shall be deemed to be the confirmation by the City of the proposed transferee as an Acceptable Owner(subject to compliance with the Acceptable Owner Criteria set forth in subparagraphs A.5 of this Exhibit A, if applicable, which shall be confirmed upon closing of the applicable Transfer) or Approval of the proposed Transfer,except with respect to a proposed Transfer to a Foreign Instrumentality(other than a member country of the European Union or the Gulf Cooperation Council, each as existing on the Effective Date, United Kingdom,Canada, Mexico, countries located in South America(excluding Venezuela),Japan,South Korea,Singapore and Australia or Persons Controlled by any of the foregoing countries),which the City Commission must expressly approve in writing,as provided above,in order for such Transfer to be effective. 9. No confirmation by the City of a proposed transferee as an Acceptable Owner or its meeting of the Acceptable Owner Criteria shall have the effect of waiving or estopping the City from later claiming that said Acceptable Owner is no longer operating or maintaining the Hotel Project according to the terms of this Lease. F Interpretation: ADSLP-00063063 14 WA 188559e77v27 089 1. All acts and omissions as well as rights and duties shall be done in a commercially reasonable manner,unless the standard of"sole discretion"is used. 2. The implied covenant of goad faith and fair dealing under Florida law is expressly adopted. AOSLLP 00063061 14 MM 186559977427 090 EXHIBIT"B" HOTEL STANDARDS DEFINITION The Lessee shall operate the Hotel, or cause for the Hotel to be operated, so that (with the requirements in paragraphs A,B and C being the"Hotel Standards'): A. If the Hotel is operated as a branded hotel other than an Approved Brand as defined in clause(i)or clause(iii)of the definition thereof,which shall only be permitted from and after the twentieth (20th)anniversary of the Opening Date,it must meet the level of service and quality comparable to other hotels in the "Upper Upscale" chain scale segment as then determined by Smith Travel Research and generally recognized in the hospitality industry as an experienced convention center hotel brand; B. If the Hotel is operated as a non-branded hotel, which shall be permitted only after the twentieth (20`h) anniversary of the Opening Date, it meets a sufficient number of the standards then required to be able to obtain a 3.5 diamond rating from the American Automobile Association("AAA"); If at any time during the Term of this Lease any such rating system described in paragraphs A or B above is discontinued or the standards for such rating system are materially changed,the Parties shall mutually and reasonably agree to substitute an alternate rating system that is most nearly equivalent to the discontinued or changed rating system. C. Notwithstanding the foregoing,in the case of either paragraph A or B above,Lessee shall be deemed to have satisfied the Hotel Standards as long as it is operating the Hotel Project(or causing the Hotel Project to be operated) in a manner substantially similar to the operation of the following convention center hotels as of the Effective Date: Hilton Americas-Houston, Hilton Orlando, Marriott Marquis Washington DC,San Francisco Marriott Marquis, Hyatt Regency Orlando, Hyatt Regency Denver at the Colorado Convention Center,The Westin Charlotte, and the Sheraton Chicago Hotel and Towers and the Loews Miami Beach or any convention center hotel of a similar size and purpose as the Hotel operated by an Approved Brand. For paragraph B above, the Lessee does not have to actually obtain the AAA 3.5-diamond or equivalent rating,but it must be able to meet the standards for obtaining it.If the Lessee elects,in its sole discretion, not to obtain that rating, the City shall have the right once every thirty-six (36) months to require the Lessee to retain a hotel consultant proficient in the AAA Diamond ratings and with at least ten (10)years'experience in the hotel industry to produce a report within sixty(60)days of the City's request that states the Hotel does or does not meet the Hotel Standards set forth in Paragraph B above. The City has the right to acceptor reject the report.If it rejects the report,the City shall retain its own hotel consultant proficient in the AAA Diamond ratings who shall also have at least ten (10)years' experience in the hotel industry. That consultant shall produce a report at any time explaining in commercially reasonable detail why the report by the Lessee's hotel consultant is or is not correct. After the City's hotel consultant's report is delivered to the Lessee,the City and Lessee shall not take any formal action for thirty(30) days.They may elect to discuss or mediate the matter during that period of thirty(30)days. ADsua.0096306114 MIA 166559977v27 091 At the end of that period of time, if the City does not agree that the Hotel is being operated in accordance with the Hotel Standards, then the matter may be resolved in accordance with Section 7.8, using a mediator with substantial experience in the hotel industry. In the event of a determination that the Hotel Standards are not being met,Lessee shall have six (6) months within which to take the necessary action to cause the Hotel to be operated in accordance with the Hotel Standards. A05LLP-0006306114 MIA 186559977v27 092 EXHIBIT"C" BUDGETED IMPROVEMENT COSTS Hotel Project Costs Preliminary Development Budget Description Total Per Room %Total Hard Costs (Including Contingency) $235,900,006 $297,103 65.1% Furniture, Fixtures & Equipment $27,790,000 $35,000 7.7% Architect& Engineering $14,346,305 $18,068 4.0% Pre-opening/Working Capital $7,000,000 $8,816 1.9% Development Fees $14,485,829 $18,244 4.0% Art in Public Places $3,205,078 $4,037 0.9% Other Soft Costs $42,561,312 $53,604 11.8% Contingency(HC &SC) $2,559,881 $3,224 0.7% Interest Reserve $12,259,348 $15,440 3.4% Closing Costs $2,000,000 $2.519 0.6% Total Development Budget $362,107,759 $456,055 100.0% ADSLLP-0®06306114 MIA 18655997N21 093 EXHIBIT"0" LEGAL DESCRIPTION OF HOTEL SITE [see attached[ ADSLLP 00063051 14 MIA 186559077v27 094 "H: -e° . a "iigrp'13/4t-i 9 9Qa1 :g aP a .e. Pi h 3 a$$¢ 3 E a61�! iB`I .y1 j1 igll 1lrI1 reef i30!} i9�1: _ e {a ; lalg . : e-e 11' .3 z St ells ,Ja -� a is! 1;€ii 1:1 1;09 93i=i9=; y, '1.1;10 P4 `I ' � ilapEpli;i1.a _tlilp 9 �11fi-$3 oiig1'I El:3 1 01 _ s ° LI3iffill lal3l!li,3iNhig VifiSRiki;i1""0 El !i s:n - I S rtatit — — Tolawaans lox �q '1! MI i 1 2 ' '� I f! I e 15; R 1 6 Wr.�. w..a ill H fc-_ --_ d--.-. ._ I i . !.199 I$ g i Ii Pti- II 0> R Stix - IgE p 6 a Fp ! �I o- la > a �— AA-1 fl • y : 3 i rk 9y 2sR^, til R 9E • -I 7- ' oig = 1 r""&.- - _� ' .t- 5l E; - — j. Ili sW% - e kg / •k: vasa sum it6 ra�wo��— :lir E a1 19 oamx®ne any 1 ! ilii1411 all! ; to.. •, 1 I �. 095 EXHIBIT"E" APPROVED PLANS (see attached pages) AOSLLP 00063061 14 MO 186559977V27 096 • I • 0 i ------, - E - r —I---I • . is. in ,......-- z • I 1 • . 0 • • 0 0 1 I I _ _ I 7 ' { 1111111111, , I II I L In 1 i I 111111111 - L1111111111 ,' , 1 N- I . —slits . 1 , . . a+ 40 - I . , § .1 ., ..,,.. .... i . . cn : I , , 1 _ v1 ..._ , , .. , . . . aIr. • •. • I • ir..• , 1 - ---- _ ,- .. [ 1 097 iZ T CC s- -- _ C_ 0- N 0 J W > W J - [1 -J I yt w 0 { to 1 • E J i. 098 o ----�L ---. ! oo 0 -J I Q I I1II cq 0 J Im lid 1 I , — J ! I I r - �`IIIII1111. L I1II1111' =IL _ la _moi , ® I , oce 1. ® ® II fi I o i = I , U m - 11 �1' �I - I 1 Tf —_ I - 1 1 ll i_ 099 _ I z W __ W 2 1 O 0 1 ,-, W i J -IIIIIIIIIII L _I - 11111111 � 'I I IIIIIIIL_ ,_ " • MEIN NM 1 I ! ' __! � LL x m 1 _ _ 1 � II C \ - I 1 I 1 I I I z 100 t U r � �, _ j I 0 � 0 - a I- 0 I J LU 1 W I - VR11111111 L___; _.. . nillllll1 1 = Th.h I II fir, ' o L _ _ .. .a --- ' i . lJ I u z 101 I IN V) W 2 i- LL \ ad a.N 0 J W W _- 1 J I '—; 11111 IS 0 1 -' U ,,.__ - — I � / N. I z 102 Imo , i r 0 (- w IN LU \moi I I I — I - I mum 1 MU F/-----"-/ w z - U . a r m - I' Al - . I j i N I 103 1 J i 1 L11 > I 1 N LLI \ —1 1 N. 1. 1 1 \ i 1 1 I I ---4MMITH I I 1 1 t 1 1 T L ' 1 i 11111111 , 1 1 1 c_l_L111111._\ _., , I Aim r 1 c 11101:1 117:11 1 ' I I ' + c , 1 NV UM , je 7 ' 1 IM iim I . ; / I .J vie . . „ / -J LIJ r _ _ 0 , a CO r I INN I= 1 IlMi MI ' I 1 1 1 IMI i 1 I Mb I 1 K-- , U \-- „,,.. / ---i I I i I [ I \ \ 7 1 1 I i 1 104 P ti g l - o 0 1-1 I � f 1 1/2 l + �. • T L.. 105 0< 6 , : f » ! ^. \^ .. \ \ °/ C` » / \ . . ; \ \ :�� ~ ` \� \ C.:, z : 3 2 d «l - - : t • . < \ % q ° : i } < wz • \ ! \ o f / r . \ \ � «1 t} \ °\��:4tt �<_ . i 4.40±p. 2. y § . : d k � � « \� \� E �26gk / ( ( \�\ tn 1.11, 2 \ . r § \ _ • \ ^ ( E t } f , « a G | aril k 2 : w; , } wit*1 \ \ } \ g ` } # « , • * }% \ 107 © q § w I ''t J ¥ fm: iti f } ■ : / i v >\\ _ i§ / , 1 { I - CO 5 ? } \ \ ƒ \« »v . » ? � ' - d \ J ƒ \� . /\ 3.;,11; . <y y � . \ 1 . \ » \ 108 In le 0 } \1, } § id 1.' ill \\I < / �d _ . \ . 3 \ \ / . j -J WI / < ; » y / \ / \- 1 / , \ j , \ \ \ J..., ..i:. l \ ..,.. , { \ / 17 Z 0 0 W y L ii 4 3 14 ' # 3 -- a w z x .{9 - m • 9 _I - 1i l- p . 1f j . _„„,_, ,2 ,, II. 1 s „ ..,..,,;(il r,1 1 , , „4 , I no o 0 w yl I u 11111®_®1 '® 41 ii, _ G '. MI M 4in i*11 111 EXHIBIT"F" RESERVED ADSLLP-00061061 14 WA 186559977x27 112 EXHIBIT"G" FORM OF EASEMENTS GRANT OF EASEMENT AND AGREEMENT THIS GRANT OF EASEMENT AND AGREEMENT(this"Easement")is made this_day of 20_,by the CITY OF MIAMI BEACH,a Florida municipal corporation(the"City"),having its principal place of business at 1700 Convention Center Drive, Miami Beach, Florida 33139 in favor of MB MIXED USE INVESTMENT, LLC,a Florida limited liability company("Lessee"), having its principal place of business at WHEREAS,the City owns that certain property situated, lying and being in Miami-Dade County, Florida,as more particularly described in Exhibit"A"attached hereto(the"Property"); WHEREAS, the City and the Lessee entered into that certain Development and Ground Lease Agreement dated as of _, 20_ , a memorandum of which is recorded in Official Records Book ,at Page of the Public Records of Miami-Dade County(the"Development and Ground Lease Agreement"), which constitutes a development agreement pursuant to the Florida Local Government Development Act, Section 163.3220, et. seq., Florida Statutes (the "Act") and which contemplates the development and ground lease of the portion of the Property depicted in Exhibit"B" (the "Leased Property') for an 800-room full-service convention hotel and related facilities, to be connected to the Miami Beach Convention Center located at 1901 Convention Center Drive,Miami Beach, Florida ("Convention Center") by an enclosed overhead pedestrian skybridge (the "Hotel Project"). Capitalized terms not defined herein shall have the meanings assigned such terms in the Development and Ground Lease Agreement; WHEREAS, pursuant to the Development and Ground Lease Agreement, the City has agreed to grant to the Lessee a non-exclusive, irrevocable access easement for the purpose of ingress and egress through, over,on, upon and across the right-of-way which is more particularly described in Exhibit "C" attached hereto("Easement Parcel 1")for the purpose of permitting Lessee to access the Leased Property including,without limitation,its parking,loading docks and/or service areas,and reserving unto City and its contractors, agents, employees, invitees and licensees (collectively, the "City Parties") the right to ingress and egress through, over,on, upon and across the Easement Parcel 1 for all purposes, including but not limited to providing pedestrian and vehicular access to the Convention Center and The Fillmore Theater located at 1700 Washington Avenue, Miami Beach, Florida ("Fillmore Theater"), and their respective loading docks and service areas; WHEREAS, pursuant to the Development and Ground Lease Agreement, the City has agreed to grant to the Lessee a non-exclusive, irrevocable access easement over the area more fully described in Exhibit"D"hereto("Easement Parcel 2"),for the purpose of permitting Lessee to construct the Skybridge and the Off-Site Improvements, as those terms are more particularly described in the Development and Ground Lease Agreement,and to maintain the Skybridge in accordance with the Development and Ground Lease Agreement;and WHEREAS, pursuant to the Development and Ground Lease Agreement, the City has agreed to grant to the Lessee a non-exclusive,irrevocable,temporary easement over the area more fully described ADSLLP-0036306114 MM 186559977v27 113 in Exhibit"E"hereto("Easement Parcel 3"),for construction staging purposes during Lessee's construction of the Lessee Improvements,as such term is more particularly described in the Development and Ground Lease Agreement,in accordance with the Development and Ground Lease Agreement;and WHEREAS, pursuant to the Development and Ground Lease Agreement, the City has agreed to grant to the Lessee a non-exclusive, irrevocable,temporary easement in, over, through and across the airspace above the City's properties located adjacent to the Leased Property,including,without limitation, the Fillmore Theatre,the Convention Center and City Hall (such airspace over such adjacent properties is referred to herein as"Easement Parcel 4")for crane swing purposes during Lessee's construction of the Lessee Improvements in accordance with the Development and Ground Lease Agreement;and WHEREAS,collectively, Easement Parcel 1, Easement Parcel 2, Easement Parcel 3 and Easement Parcel 4 shall be referred to herein as the"Easement Parcels"; WHEREAS, granting the foregoing easements is a condition of the effectiveness of the Development and Ground Lease Agreement and the issuance of development permits and approvals in order to develop the Hotel Project; NOW THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged,the City and Lessee agree as follows: 1.The City hereby grants to the Lessee and Lessee's employees, agents, contractors, subcontractors,vendors,guests, licensees,suppliers, laborers,visitors, invitees, Leasehold Mortgagees and Mezzanine Lenders(collectively,"Lessee Permittees")a non-exclusive,irrevocable access easement through,over,on,upon and across Easement Parcel 1 for the purpose of ingress and egress to and from the Leased Property and its parking, loading docks and/or service areas,for so long as Lessee uses the Leased Property in accordance with the terms of the Development and Ground Lease Agreement. The City hereby expressly reserves for itself, the other City Parties and their respective successors and/or assigns, the unrestricted right to use Easement Parcel 1 for purposes of providing pedestrian and vehicular access to the Convention Center and the Fillmore Theater,and their respective loading docks and service areas and for any and all other purposes that do not unreasonably interfere with the Lessee's and Lessee Permittees'use of Easement Parcel 1 for the rights granted herein,including but not limited to granting other easements or licenses at the same location. The City shall be responsible for the maintenance and operation of Easement Parcel 1 at the City's sole cost and expense. 2 The City hereby grants Lessee and Lessee's employees,contractors, subcontractors,laborers, suppliers,Leasehold Mortgagees and Mezzanine Lenders(collectively,"Lessee Construction Permittees," and collectively with the Lessee Permittees,the"Lessee Parties")a non-exclusive,irrevocable easement over,on,under, upon,and across Easement Parcel 2 to perform all acts necessary to ensure fulfillment of all requirements of (insert permit or order no.] with respect to the construction of the Skybridge and/or Off-Site Improvements referenced in the Development and Ground Lease Agreement and as reasonably necessary to maintain the Skybridge in accordance with Lessee's obligations under the Development and Ground Lease Agreement,including but not limited to pedestrian and vehicular ingress and egress to and from the Leased Property and Hotel Site through,over,and across Easement Parcel 2. The City hereby expressly reserves for itself,the other City Parties and their respective successors and/or assigns,the unrestricted right to use the Easement Parcel 2 for any and all other purposes that do not unreasonably interfere with the Lessee's and Lessee Construction Permittees'use of Easement Parcel 2 A9511800063061 14 MIA 186559977v27 114 for the rights granted herein, including but not limited to granting other easements or licenses at the same location. 3 The City hereby grants Lessee and Lessee Construction Permittees a non-exclusive,temporary irrevocable easement over,on,under,upon,and across Easement Parcel 3 for purposes of construction staging with respect to the construction of the Lessee Improvements referenced in the Development and Ground Lease Agreement (the "Temporary Construction Easement"), including but not limited to (i) erecting scaffolding,swing stages and other temporary structures in Easement Parcel 3,(li)temporarily staging construction equipment and materials in Easement Parcel 3, (iii) erecting a fence within Easement Parcel 3, (iv)the installation and removal of temporary sheet piles within Easement Parcel 3, (iv) site logistics,including but not limited to Lessee's and the Lessee Construction Permittees' ingress and egress to and from the Leased Property and Hotel Site through,over,and across Easement Parcel 3, and (v) performing other activities reasonably related to the construction of the Hotel Project and all improvements relating thereto in accordance with the Development and Ground Lease Agreement. The Temporary Construction Easement will expire upon the Opening Date. Although said termination is intended to be automatic and require no further action on the part of any party hereto,upon the request of either party, the City and Lessee will, no later than thirty (30) days after such request, execute a termination and release or partial release, as applicable, of the Temporary Construction Easement, in form and substance reasonably acceptable to the City and Lessee. 4 The City hereby grants Lessee and Lessee Construction Permittees a non-exclusive,temporary irrevocable easement in, over, through and across Easement Parcel 4 for the limited purpose of maintaining and swinging the arcs,booms,jib,counter-jib,counter-weights and other portions of one or more swinging tower cranes(collectively,the"Cranes"),from time to time,in,over,through and across Easement Parcel 4 and to encroach into Easement Parcel 4 for such purposes(the"Crane Easement"); provided however, Lessee must obtain,at its sole cost and expense,all required governmental permits and approvals with respect to such use, and the Crane Easement does not permit, and shall not be deemed to permit, Lessee or the Lessee Construction Permittees to place the Cranes on the ground located under Easement Parcel 4. The Crane Easement will expire upon the Opening Date. Although said termination is intended to be automatic and require no further action on the part of any party hereto,upon the request of either party,the City and Lessee will,no later than thirty(30)days after such request,execute a termination and release or partial release, as applicable, of the Crane Easement, in form and substance reasonably acceptable to the City and Lessee. 5 The Easement Parcels are subject to all liens, encumbrances, covenants, conditions, restrictions, reservations,contracts,leases and licenses,easements,and rights of way pertaining to the Property,whether or not of record,as identified on Exhibit"F" hereto (the "Encumbrances"). The use of the word "grant" shall not imply any warranty on the part of the City with respect to the Easement Parcels. 6 The Lessee shall maintain insurance on the Easement Parcels at all times as required by the Development and Ground Lease Agreement(for avoidance of doubt,the only insurance required with respect to Easement Parcel 4 shall be public liability insurance with respect to Lessee's and Lessee Construction Permittees' use and operation of the Cranes, and may be maintained by Lessee's general contractor or other applicable Lessee Construction Permittee). Such insurance policy shall name the City as an additional insured and loss payee(with respect to property coverage)thereunder;shall be written by insurance companies licensed to do business in Florida and with an AM Best rating of A-or better; and must specify it is not subject to cancellation or non-renewal without a minimum of 30 days ADSLLP-00063061 14 WA 186559077v27 115 notification by the insurer to the City with a copy to the attention of Risk Manager, 1700 Convention Center Drive,Miami Beach, Florida 33139 ("Risk Manager'),with a minimum of 10 days notification by the insurer to the City and the Citds Risk Manager prior to cancellation or non-renewal for non-payment of premium. The Lessee shall provide the City with a certificate of insurance evidencing said coverages. 7 City covenants,warrants and represents that it is the fee simple owner of the Leased Property and Easement Parcels, and has the right, title, and capacity to grant the easements granted herein, subject only to the Encumbrances. e Lessee shall not materially interfere with the use by and operation and activities of City Parties on the Easement Parcels,as applicable,and Lessee shall use such routes and follow such procedures an the Easement Parcels as result in the least damage and inconvenience to City and its invitees, agents, employees,guests,lessees and/or licensees. 9 Lessee shall be responsible for any damage to the Property or any property of third parties resulting from the exercise or use of the Easement Parcels by the Lessee or the Lessee Parties,including but not limited to soil erosion,subsidence or damage resulting therefrom. Lessee shall promptly repair and restore to its original condition any of the Property that may be altered, damaged or destroyed in connection with the exercise or use of the Easement Parcels by the Lessee Parties. This Easement is made on the express condition that City is to be free from all liability by reason of injury or death to persons or injury to property from whatever cause arising out of any of the Lessee Parties' exercise or use of the Easement Parcels, including any liability for injury or death to the person or property of any of the Lessee Parties or to any property under the control or custody of any of the Lessee Parties. Lessee hereby covenants and agrees to defend and indemnify the City Parties and save them harmless from any and all liability,loss,costs,or obligations on account of,or arising out of,any such injury or losses caused or claimed to be caused by the exercise or use of the Easement Parcels by the Lessee Parties,however occurring,except to the extent caused solely by the willful or grossly negligent acts or omissions of City or the City Parties. 10 This Easement shall inure to the benefit of and be binding upon the heirs, legal representatives,successors and assigns of the City and Lessee,as applicable. 11 Lessee alone shall pay any and all taxes,charges or use fee(s)levied by any governmental agency against Lessee's interest in the Easement Parcels. Lessee shall not cause liens of any kind to be placed against the Easement Parcels or any of the Property except in connection with a Leasehold Mortgage. 12 Any notices required or permitted to be given under this Easement shall be in writing and shall be deemed to have been given if delivered by hand,sent by recognized overnight courier(such as Federal Express) or mailed by certified or registered mail, return receipt requested, in a postage prepaid envelope,and addressed as follows: If to the City at: City of Miami Beach,City Hall 1700 Convention Center Drive Miami Beach, Florida 3313 Attn: City Manager,City Attorney With a copy to: ADSLLP 0%6306].14 WA 186559977x27 116 If to Lessee at: c/o Attn: With a copy to: Notices personally delivered or sent by overnight courier shall be deemed given on the date of delivery and notices mailed in accordance with the foregoing shall be deemed given five (5) days after deposit in the U.S.mails. The terms of this Section shall survive the termination of this Easement. 13 Construction. a This Easement shall be construed and governed in accordance with the laws of the State of Florida All of the parties to this Easement have participated fully in the negotiation and preparation hereof;and,accordingly,this Easement shall not be more strictly construed against any one of the parties hereto. b. In construing this Easement, the use of any gender shall include every other and all genders,and captions and section and paragraph headings shall be disregarded. c All of the exhibits attached to this Easement are incorporated in,and made a part of,this Easement. d. The recitals to this Easement set forth above are true and correct and are incorporated herein by this reference. e. The dominant estate is intended to be appurtenant to the Development and Ground Lease Agreement and is co-terminus with the Lessee's rights thereunder. 14 Severability. In the event any term or provision of this Easement be determined by appropriate judicial authority to be illegal or otherwise invalid, such provision shall be given its nearest legal meaning or construed as deleted as such authority determines,and the remainder of this Easement shall be construed to be in full force and effect. 15 Time of Essence.Time shall be of the essence for each and every provision hereof. 16 Entire Agreement. This Easement, together with the documents referenced herein, constitute the entire agreement and understanding among the parties with respect to the subject matter ADSLLP 00063061 14 MIA 1855599)]x27 117 hereof,and there are no other agreements,representations or warranties other than as set forth herein. This Easement may not be changed,altered or modified except by an instrument in writing signed by the party against whom enforcement of such change would be sought. (Signature pages to follow) ADSLLP 00063061 14 MIA 185559977v27 118 IN WITNESS WHEREOF, the undersigned have caused this Easement to be executed by execution of this instrument as of this day of 201_ Witnesses: CITY OF MIAMI BEACH, FLORIDA, a municipal corporation Sign Name: By: Mayor Print Name: Sign Name: Print Name: ATTEST: City Clerk STATE OF FLORIDA )SS: COUNTY OF DADE The foregoing instrument was acknowledged before me this_day of 20_ by as of . He is personally known to me or has produced as identification and who did (did not)take an oath. NOTARY PUBLIC Typed or Printed Name of Notary My Commission Expires: Serial No.if any: ADSLLP-O006306116 MIA 166559971v27 119 ACKNOWLEDGED AND ACCEPTED this day of ,20_by Witnesses: MB MIXED USE INVESTMENT,LLC Sign Name: Print Name: By: Print name: Sign Name: Print Name: STATE OF FLORIDA )SS: COUNTY OF DADE The foregoing instrument was acknowledged before me this_day of 20 by as of . He is personally known to me or has produced as identification and who did (did not)take an oath. NOTARY PUBLIC Typed or Printed Name of Notary My Commission Expires: Serial No.,if any: ADSLLP 00063061 14 MIA 185559977v27 120 Exhibit"A" [MBCC Parcel-Folio No.02-3227-000-0090] A1351.1)00063061 14 WA 186559977v27 • 121 Exhibit"B" Hotel Site Legal Description [see attached[ ADSLLVIX06306114 MM 188559977v27 122 !a a .9j'ei_Y f'. eI gg Pi i tl 9 . ga$�°1� t .n:01! f{1, ,i iP ag fff iiII!1 0 A,7 } $1 i 1 1 w $�! {}�,��1 t I aaa; } !a` ;$Illi o SioO 11 -ppdE. iji ,a•gi } MI! it Ie 3 Il a �.' 0 0,9 0@ is li;.1 30 49 w p O i} S S }_'f }ha 1 }aili E 9a-}' W '.$,e$raeti`Pg°e3'855� !AIL 1 3.q i. rcj$} O'j10:41 01il� P }:}p•!'- s'2_,,x cl � y ae�:0,. 1 q. 9 G s. 9} of}�f fj.gl�. f $IPglIi''si} iflf4f''i°3} 9'-9f ;ilIiig ett—`� t �ifllieigdilf{$6§;6P0i;}:$39go' . . . . _ 1 F f Ell —— _ /A,—aaiiP— I I• 1119 ice=. Ii- �� I'� } i �s.w e- a d� s6 a}a }. -12 II � /__ "= s E, Iiiii } i h� I ya ii , 2. w = hi i I: -i- s —i IIs $- v (,E( I tri R8. -1 : 3 T W I II 98: i -r- ,,,,4 o ., b 0a y� , i------_ I s It r BR 9A 9gItl i }8 N0c6iW9a PbWnwoa� i I i li I lYi aemuuenc Lox IIA •] gg f Fil1! I 4 !!a ie 9$ 1n mi' }}y _ _ f � � Al�ii'sfy9ff :." F_m� C 123 Exhibit"C" Easement Parcel 1(Right-of-way) exact description to be finalized as part of the development process pursuant to the Leasel ADSLLG-0036396114 MIA 186559977v27 124 Exhibit"D Easement Parcel 2 for Construction of Skybridge and Off-site Improvements and Maintenance of Skyhridge [exact description to be finalized as part of the development process pursuant to the Lease[ ADSUPO005306114 MIA 185559977v2? 125 Exhibit"E" Easement Parcel 3(Temporary Construction Easement) [See attached depiction of construction staging area. Exact description to be finalized as part of the development process pursuant to the Lease] ADSLLP 00063061M MIA 186559977v27 126 �: i0 CC O ' J u- 0 0 Z I I �I■ ■`\' C O 1 r_HI re 0 ISIII �®Ir., _:: i_11 ,r w ! i• o " F'� U : 1 U I. �, i ita-isassaw,,ipw-- - (7-,_ - O I I 1 1 ' 1_ - 127 Exhibit"F Encumbrances [see attached] ADSLLP-00063061 14 WA 186559977v27 128 EXHIBIT"H" PRESENTLY PERMITTED DEVELOPMENT (a} Permitted Development and Uses. The Leased Property is in the CCC Civic and Convention Center District,a zoning district created to accommodate the facilities necessary to support the Convention Center. The main permitted uses in the CCC Civic and Convention Center District are parking lots,garages,performing arts and cultural facilities;hotel;merchandise mart;commercial or office development; landscape open space; parks. Property located in the CCC Civic and Convention Center District may be used for the purposes permitted and regulated in these land use designations and zoning districts, as further limited by the City's Land Development Regulations, provided, however, that the Leased Property may only be used in accordance with the terms and conditions of this Lease. (b) Density,Building Heights,Setbacks and Intensities.The maximum density,heights, setbacks and intensities for any development on the Leased Property shah be regulated by the City's Land Development Regulations,Comprehensive Plan and any Governmental Requirements.The development regulations in the CCC Civic and Convention Center District are as follows:(1)maximum floor area ratio of 2.75. There are no lot area,lot width,population densities or unit size requirements for the CCC Civic and Convention Center District.Building height and story requirements are as follows:(1) Maximum building height for hotels:300 feet;for all other uses: 100 feet.(2)Maximum number of stories for hotels:30;for all other uses:11 stories.The development regulations(setbacks,floor area ratio,signs,parking,etc.)shall be the average of the requirements contained in the surrounding zoning districts as determined by the City's Planning and Zoning Director. Notwithstanding the foregoing,the permitted height for the Hotel Project shall not exceed 185 feet,measured from Base Flood Elevation plus maximum Freeboard(BFE+5 feet),and further,as provided in the City's Land Development Regulations,including,without limitation, Section 142-1161 of the City Code. THIS EXHIBIT DESCRIBES THE PRESENTLY PERMITTED DEVELOPMENT FOR PURPOSES OF THE ACT ONLY. THE PROJECT SHALL CONFORM TO THE DESCRIPTION,TERMS AND CONDITIONS SET FORTH IN THIS LEASE. ADSLV 00063061 14 MIA 186559977v27 129 EXHIBIT"I" PUBLIC FACILITIES The proposed development will be serviced by those roadway transportation facilities currently in existence as provided by state, county, and local roadways. The proposed development will also be serviced by public transportation facilities currently in existence,as provided by Miami-Dade County,the City of Miami Beach,and such other governmental entities as may presently operate public transportation services within the City of Miami Beach. Sanitary sewer,solid waste,drainage,and potable water services for the proposed development shall be those services currently in existence and owned or operated by Miami-Dade County, the Miami-Dade County Water and Sewer Department, the City of Miami Beach, and State of Florida. The proposed development shall be serviced by those existing educational facilities owned or operated by the Miami-Dade Public Schools District,if applicable. The proposed development shall be serviced by those existing parks and recreational facilities owned or operated by the United States Government within Miami Dade County,by the State of Florida, by Miami-Dade County,and by the City of Miami Beach. The proposed development shall be serviced by those existing health systems and facilities operated by the United States Government within Miami-Dade County, by the State of Florida, by Miami-Dade County,and by the City of Miami Beach. The proposed development will also be serviced by any and all public facilities,as such are defined in Section 163.3221(12)of the Act,that are described in the Comprehensive Plan, specifically including those facilities described in the Infrastructure Element and the Capital Improvements Element therein,a copy of which is available for public inspection in the offices of the City Clerk of the City of Miami Beach. Notwithstanding the foregoing,the Hotel Project may be required to provide for some of its own services, including solid waste removal and stormwater drainage. ADSLLP-0006306114 MIA 180559977v27 130 EXHIBIT"1" PUBLIC RESERVATIONS AND DEDICATIONS None,except for any easements or reservations contemplated under Section 4.1(g), ADS LLP-W]6306114 WA 186559977v27 131 EXHIBIT"K" REQUIRED DEVELOPMENT PERMITS AND VARIANCES The following constitutes a generalized list of local permits anticipated as necessary to be approved by the terms of this Lease: 1. Design Review Board,Planning Board,and/or Board of Adjustment approvals,pursuant to Chapter 11.8 of the City of Miami Beach Code. 2. Utility Permits 3. Demolition Permits 4. Building Permits 5. Environmental Permits 6. Hazardous Materials Removal Permit,if removal of hazardous materials is found necessary. 7. Public Works Permit,Paving and Drainage 8. Public Works Permit,Water and Sewer 9. Public Works Revocable Permits 10. Certificates of Use and/or Occupancy 11. Any variances or waivers that may be required pursuant to Chapters 114 through 142 of the City of Miami Beach Code 12. Ad other local governmental approvals as may be applicable to the subject property from time to time pursuant to the terms of this Development and Ground Lease Agreement, including but not limited to restrictive covenants in lieu of unity of title ADsuv 00063061 14 MM 186559977027 - 132 EXHIBIT"L" ROOM BLOCK AGREEMENT between CITY OF MIAMI BEACH,FLORIDA and MB MIXED USE INVESTMENT,LLC ADSLLP 00063061 14 MM 186559977v27 133 TABLE OF CONTENTS ARTICLE I DEFINED TERMS 1 1.01 "18-Month Roam Block Request 1 1.02 "Acceleration Notice"is defined in Section 3.01(e) 1 1.03 "Active Negotiations 1 1.05 "Agreement 2 1.06 "Amended Offer 2 1.07 "Available Guest Rooms 2 1.08 "Block Notice 2 1.09 "Block Release Request Notice 2 1.10 "Business Day 2 1.11 "City 2 1.12 "City Manager 2 1.13 "City-Wide Event 2 1.14 (Intentionally deleted] 3 1.1S "Convention Center 3 1.16 "Cure Period 3 1.17 "Development and Ground Lease Agreement.. 3 1.18 "Effective Date 3 1.19 "Event Block Minimum Rate 3 1.20 "Event of Default 3 1.21 "Event Night 3 1.22 "Event Room Block.. 3 1.23 "Force Majeure 3 1.24 "GMCVB 4 1.25 "Hotel 4 1.26 "Hotel Site 4 1.27 "Initial Offer 4 1.28 "Known Release Dates"is defined in Section 3.02(d) 4 1.29 "Lessee's Initial Projected Event Block Rate Schedule"is defined in Section 4.01(b). 4 1.30 "Lessee's Subsequent Projected Event Block Rate Schedule" is defined in Section 4.01(c) 4 1.31 "Managed Hotels 4 1.32 "Management Agreement 4 1.33 "Maximum Event Night Ceiling 4 1.34 "Maximum Event Room Block 4 1.35 "Midweek 4 1.36 "Notice 4 1.37 "Offer Expiration Date 4 1.38 "Opening 4 1.39 "Operator 4 1.40 "Lessee 5 1.41 "Potential Convention Center Customer 5 1.42 "Public Records Act 5 1.43 "Rate Quote 5 1.44 Intentionally Omitted 5 1.45 "Room Block Contract 5 ADSLLP'0005306114 MA 186559977v27 134 1.46 "Room Block Request Notice 5 1.47 "Sales Representative 5 1.48 "Special Event Block Minimum Rate 5 1.49 "Standard of Operation..... . . . . . . . . . ... . . ... . . 5 1.50 "Standard of Operation Failure Notice 5 1.51 "Suspension Period"is defined in Section 2.02(b)..... 5 1.52 "Term 5 1.53 "Weekend 5 ARTICLE II TERM OF THIS AGREEMENT 5 2.01 Commencement of the Term 5 2.02 Expiration of Term;Suspension Period 5 ARTICLE III ROOM BLOCK COMMITMENT;RELEASE OF BLOCK 6 3.01 Room Block 6 3.02 Release of Block 11 ARTICLE IV ROOM BLOCK PRICING 12 4.01 Event Block Minimum Rates;Special Event Black Minimum Rates 12 4.02 Intentionally Omitted 14 4.03 Confidentiality 14 ARTICLE V STANDARDS OF HOTEL OPERATION 15 5.01 Standards 15 ARTICLE VI 15 STANDARDS OF CENTER OPERATION AND OTHER CITY COVENANTS 15 ARTICLE VII NO LIABILITY FOR PROPOSED CONVENTION CENTER CUSTOMER;LESSEE RESPONSIBILITY TO CAUSE OPERATOR TO PERFORM;INDEMNITY 15 7.01 No Liability to City 15 ARTICLE VIII EVENTS OF DEFAULT 16 8.01 Default 16 8.03 Lessee's Reservation of Rights 17 ARTICLE IX ADDITIONAL PROVISIONS 17 9.02 Miscellaneous 17 9.03 Estoppel Certificate 17 9.04 Notices 18 ADSLLP aw63o61 14 MM 188559977v27 135 ROOM BLOCK AGREEMENT THIS ROOM BLOCK AGREEMENT ("Agreement") made and entered into as of the day of 201_ (the "Effective Date") by and between City of Miami Beach, Florida ("City"), a Florida municipal corporation, and MB Mixed Use Investment, LLC("Lessee"), a Florida limited liability company,recites and provides as follows. RECITALS The City has a material interest in maximizing the quality and performance of convention business attracted to the Convention Center, as hereinafter defined in Section 1.15 and encouraging convention and tourism business in the City. In furtherance of those goals,and to facilitate the development of a full service convention center hotel connected to the Convention Center,the City has entered into the Development and Ground Lease Agreement(as hereinafter defined in Section 1.171 with Lessee, under which the parties have agreed, among other things,to enter into a room block agreement pursuant to which specific percentages of the Hotel's guest rooms will be reserved for specific periods of time for attendees,participants and planners of conventions and trade shows at the Convention Center. City and Lessee agree that the room block agreement described in the Lease (and, accordingly, this Agreement) constitutes a contract for the provision of services by Lessee to and for the benefit of City,which services are being provided in exchange for the covenants and agreements of City set forth in the Lease. City and Lessee intend that this Agreement satisfy such room block agreement requirement in the Lease. Lessee has or will execute and enter into a Management Agreement(as hereinafter defined)with the Initial Hotel Operator(as defined in the Lease) pursuant to which,among other things, Lessee shall require, and the Initial Hotel Operator must agree,to perform the obligations assigned to Lessee and/or Operator (as hereinafter defined) herein during the term of such Management Agreement and to otherwise operate the Hotel in a manner which complies with this Agreement. In consideration of the mutual covenants and agreements herein contained and other good and valuable consideration,the receipt and legal sufficiency of which are hereby acknowledged and confessed by the parties hereto,City and Lessee hereby covenant and agree with each other as follows: ARTICLE I DEFINED TERMS In this Agreement,these terms shall have the following meanings: 1.01 "18-Month Room Block Request"is defined in Section 3.01(c). 1.02 "Acceleration Notice"is defined in Section 3.01(e). 1.03 "Active Negotiations" means (x) for purposes of Section 3.01(b) and (c), that Lessee or Operator, on the one hand, and a bona fide potential Hotel guest, on the other hand, have exchanged written correspondence between them that reflects an indication of mutual interest/for consummating a transaction whereby such Hotel contracts to block or books guest rooms at the Hotel,and neither Lessee AD5I.LP a3Osc 14 MIA 1&8559977v27 136 or Operator,on the one hand,nor such bona fide potential Hotel guest on the other hand,has indicated that it no longer has any interest in pursuing such negotiations and (y)for purposes of Section 3.02(a), that the GMCVB or the City or its representatives, on the one hand, and a Potential Convention Center Customer,on the other hand, have exchanged written correspondence between them that reflects an indication of mutual interest for consummating a City-Wide Event and neither the GMCVB or the City,on the one hand, nor such Potential Convention Center Customer,on the other hand, has indicated that it no longer has any interest in pursuing such negotiations. 104 "Adjusted Maximum Event Room Block"is defined in Section 3.01(b)(i). 1.05 "Agreement" is defined in this Agreement's preamble. 1.06 "Amended Offer"Es defined in Section 3.01(d). 1.07 "Available Guest Rooms"means,as of any date in question,all of the Hotel's guest rooms (including suites),excluding any guest rooms that are reasonably projected to be unavailable on the dates in question due to scheduled renovations(including,without limitation,renovations as a result of a hotel brand change or brand refresh), repairs(including, without limitation, repairs due to events of casualty that have occurred), or maintenance, and excluding any of the Hotel's guest rooms that have been condemned in a taking and as to which physical possession is projected to have been taken by the condemnor prior to the date in question. 1.08 "Block Notice"is defined in Section 3.01(d). 1.09 "Block Release Request Notice" is defined in Section 3.02(b). 1.10 "Business Day' means a day other than a Saturday,a Sunday or a day on which national banks in Miami-Dade County, Florida are closed for business. If any action is required to be performed, or if any notice, consent or other communication is given, on a day that is not a Business Day, such performance shall be deemed to be required,and such notice,consent or other communication shall be deemed to be given, on the first Business Day following such non-Business Day. Unless otherwise specified herein,all references herein to a "day"or"days"shall refer to calendar days and not Business Days. 1.11 "City" means the City of Miami Beach, Florida, a municipal corporation of the State of Florida. 1.12 "City Manager"means the Chief Administrative Officer of the City. The City Manager shall be construed to include any duly authorized representatives designated in writing with respect to any specific matter(s)concerning the Room Block Agreement(exclusive of those authorizations reserved to the City Commission or regulatory or administrative bodies having jurisdiction over any matter(s)related to the Lease). 1.13 "City-Wide Event" means a convention, trade show or other event requiring a three (3) night stay, during which a Potential Convention Center Customer(i) needs to use a minimum of 115,000 gross square feet of exhibit or meeting space in the Convention Center for not less than three (3) days (including the day preceding the commencement of and the day following the conclusion of such event) and(ii)in connection with such event,requests 1500 or more guest rooms on the peak night and 4,000 or more guest rooms in the aggregate be made available in hotels in the City (including the Hotel) and nostv-a00630e114 MM 186559977v27 137 surrounding metropolitan areas. A City-Wide Event shall also include the annual Orange Bowl football game hosted by the Orange Bowl Committee and any Super Bowl football game that may take place in Miami-Dade County or Broward County(without regard to whether either event utilizes the Convention Center in any way). 1.14 (Intentionally deleted' 1.15 "Convention Center" means the Miami Beach Convention Center located at 1900 Convention Center Drive,Miami Beach, Florida. 1.16 "Cure Period"is defined in Section 2.02(b). 1.17 "Development and Ground Lease Agreement" or "Lease" means that certain Development and Ground Lease Agreement between Lessee and City dated 201_,as may be amended from time to time in accordance with its terms. 1.18 "Effective Date"is defined in this Agreement's preamble. 1.19 "Event Block Minimum Rate"is defined in Section 4.01(e). 1.20 "Event of Default"is defined in Section 8.01. 1.21 "Event Night"means any night during a City-Wide Event(including the day preceding the commencement of and the day following the conclusion of such event,as contemplated in the definition thereof)for which (i)City has exercised its rights under Section 3 01(a) by giving a Room Block Request Notice to the Operator and(ii)in response to such Room Block Request Notice,250 or more rooms have been booked, blocked or reserved by the Operator either (x) pursuant to a contract with the Potential Convention Center Customer or(y)pursuant to Initial Offers or Amended Offers that have been accepted or are still outstanding (and, if such contracts are terminated or any of such offers are subsequently terminated or rejected, then any of the blocked rooms that were subject thereto shall no longer be considered blocked for purposes of this definition). If rooms are blocked under this Agreement for multiple City-Wide Events on the same night,that night will be considered to be a single Event Night for purposes of the Maximum Event Night Ceiling but in no event shall any night during a City-Wide Event be considered an Event Night for purposes of the Maximum Event Night Ceiling if City has not given a Room Block Request Notice for that night to the Operator. 1.22 "Event Room Block"means a block of guest rooms(including suites)at the Hotel offered to or reserved for the attendees of a City-Wide Event in response to a Room Block Request Notice. 1.23 "Force Maieure" means and includes causes without fault and beyond the control of a party, whether or not foreseeable, including, without limitation, fire, explosion, accident, flood, windstorm, earthquake, or other disaster or calamity, disruption of utility service; restrictive new governmental laws or regulations;acts of war(whether declared or undeclared), invasion, blockade,or sabotage;terrorism or threat thereof; riot,civil disturbance,insurrection or acts of public enemies;and strike, lockout or other labor action and inability to procure materials; provided that neither a material disruption of or material adverse change in financial,banking or capital market conditions or a material adverse change in the business,financial condition, operations, assets, liabilities or prospects of either party shall excuse any failure or delay in performance under this Agreement. ADSLLP 0006306114 MIA 186559977v27 138 1.24 "GMCVB"means the Greater Miami Convention&Visitors Bureau. 1.25 "Hotel" means the hotel to be constructed by Lessee on the Hotel Site pursuant to the Lease,together with all supporting hotel facilities and amenities. 1.26 "Hotel Site"means the parcel of real property described on Exhibit A attached hereto and made part hereof. 1.27 "Initial Offer"is defined in Section 3.01(b). 1.28 "Known Release Dates"is defined in Section 3.02(d). 1.29 "Lessee's Initial Proiected Event Block Rate Schedule"is defined in Section 4.01(b). 1.30 "Lessee's Subsequent Projected Event Block Rate Schedule"is defined in Section 4.01(c). 1.31 "Managed Hotels" means full-service,convention center hotels within the United States of America operated as first-class hotels containing no less than 400 rentable guest rooms operated under a brand name and managed by the Operator or any entity controlled by,under common control with or that controls Operator. 1.32 "Management Agreement" means the hotel operating or management agreement between Lessee and the Operator that exists from time to time,as it may be amended or replaced from time to time. 1.33 "Maximum Event Night Ceiling" means the maximum number of Event Nights in any calendar month during which Lessee or Operator shall be obligated to provide Event Room Blocks pursuant to this Agreement. The Maximum Event Night Ceiling is fourteen(14)Event Nights per calendar month. 1.34 "Maximum Event Room Block"means eighty percent(80%)of all of the Hotel's Available Guest Rooms. 1.35 "Midweek"means Sunday through Thursday,inclusive. 1.36 "Notice" or "notice" means each and every communication, request, reply, or advice required or permitted to be given,made or accepted by any party to this Agreement to any other party to this Agreement,each of which shall be given in writing,and deemed received by the intended recipient, in accordance with Section 9.04. 1.37 "Offer Expiration Date"is defined in Section 3.01(e). 1.38 "Opening" means the opening of the Hotel to the public for business. 1.39 "Operator' means the entity responsible for overseeing the day to day management of the Hotel. The initial Operator (sometimes herein called the "Initial Hotel Operator') of the Hotel is ,a corporation. ADS1.19-0006306114 MM 166559977v27 139 1.40 "Lessee" means the entity defined as "Lessee" in this Agreement's preamble and each subsequent Lessee of all or any part of the Hotel Site. An entity shall be deemed to be the "Lessee" hereunder only during the term of its leasehold of the Hotel Site. 1.41 "Potential Convention Center Customer"means a person,entity,group or association(or any combination thereof)that is planning a City-Wide Event. 1.42 "Public Records Act'is defined in Section 4.04. 1.43 "Rate Quote"is defined in Section 3.01(b). 1.44 Intentionally Omitted. 1.45 "Room Block Contract" is defined in Section 3.01(f). 1.46 "Room Block Request Notice" is defined in Section 3.01(a). 1.47 "Sales Representative"is defined in Section 3.01(a). 1.48 "Special Event Block Minimum Rate"is defined in Section 4.01(e). 149 "Standard of Operation"is defined in Section 6.01. 1.50 "Standard of Operation Failure Notice"is defined in Section 2.02(a)(ii). 1.51 "Suspension Period" is defined in Section 2.02(b). 1.52 "Term" is defined in Section 2.01. 1.53 "Weekend"means Friday and Saturday. ARTICLE II TERM OF THIS AGREEMENT 2.01 Commencement of the Term.The term of this Agreement(the"Term") shall commence an the Effective Date. 2.02 Expiration of Term;Suspension Period. (a) The Term shall continue until the earlier to occur of: (i) the date upon which the Convention Center is no longer designated by the City as the City's principal convention center;and (ii) the termination of this Agreement pursuant to Section 8.01 of this Agreement. (b) The Term shall be suspended for so long as the Convention Center is no longer operated and maintained substantially consistent with the Standard of Operation (the "Suspension Period");provided,that, no suspension of the Term pursuant to this Section 2.02(b) shall be deemed to PDSLLP 00063061 14 MA 186558W7M1 140 have occurred unless and until(1)Lessee has provided to City written notice(the"Standard of Operation Failure Notice")of any alleged failure by City to operate and maintain the Convention Center in a manner substantially consistent with the Standard of Operation,which notice(to be effective as such)must state with reasonable specificity the reasons why Lessee believes that the Convention Center is no longer being operated or maintained substantially consistent with the Standard of Operation (e.g.,if Lessee believes the Convention Center is not being maintained in substantial accordance with the Standard of Operation, Lessees notice shall describe the deficiencies in maintenance with reasonable specificity),and(2)City has failed to remedy such failure within one hundred eighty(180) days following receipt of such Standard of Operation Failure Notice (such 180-day cure period to be extended for delays resulting from Force Majeure and,if the nature of the failure is such that the same cannot reasonably be expected to be cured within said 180-day period, such 180-day period shall be extended such period of time as is reasonably necessary to effect such cure so long as City commences the cure promptly and uses commercially reasonable, diligent efforts to complete such cure as soon as reasonably practicable; the 180-day cure period, as the same may be extended as provided for in this clause, is herein called the "Cure Period"). Notwithstanding the foregoing, City shall have the right to contest Lessee's determination that the Convention Center is not being operated or maintained substantially in accordance with the Standard of Operation by giving Lessee notice of such contest within thirty(30)days following receipt of the Standard of Operation Failure Notice. If City elects to contest Lessee's determination,then the commencement of the Cure Period shall be delayed until the date of determination by a court of competent jurisdiction that the Convention Center was not being operated and maintained substantially consistent with the Standard of Operation. At such time as the Convention Center is operated and maintained substantially consistent with the Standard of Operations,the Suspension Period shall terminate and the parties shall operate in accordance with the terms hereof. ARTICLE III ROOM BLOCK COMMITMENT;RELEASE OF BLOCK 3.01. Room Block. During the Term,City may from time to time require the Operator to offer an Event Room Block to Potential Convention Center Customers in connection with a City-Wide Event in accordance with, and subject to the limitations set forth in,this Agreement. Notwithstanding anything herein to the contrary,City shall not have the right to require the Operator to offer an Event Room Block to Potential Convention Center Customers if(a)the number of Event Nights requested in the Room Block Request Notice for such Event Room Block would cause the Maximum Event Night Ceiling to be exceeded, or(b)the total number of rooms requested to be blocked in such Room Block Request Notice on any Event Night exceeds the number of rooms Operator is required to offer to block pursuant to Section 3.01(b)(i(. Subject to the limitations set forth in the preceding sentence and elsewhere in this Article III,the right to require that the Operator so offer the Event Room Block will be exercised in accordance with the following procedures: (a) A management,sales or booking representative of City or,if authorized by City, the GMCVB (the "Sales Representative"), will notify the Operator that a Potential Convention Center Customer is seeking offers from local hotels to accommodate,among other needs,the guest room needs of the Potential Convention Center Customer for a City-Wide Event(the "Room Block Request Notice"). The Room Block Request Notice will(i)identify the Potential Convention Center Hotel Customer,(ii)if the same is generally available to City,set forth a documented history of the group's room block events for the most recent three year period including a comparison of the number of rooms blocked and the actual number of rooms actually used,(iii)specify each specific date for which the Potential Convention Center Customer will require blocks of guest rooms (including those dates commonly known as"move in" and AOSLLP-00063061 14 MIA 185559977v27 141 "move our dates), and (iv) specify the number of guest rooms in the Hotel the Potential Convention Center Customer is seeking to block on each of the specific dates. Notwithstanding the provisions of Section 9.04 or the definition of "Notice" set forth above, the Room Block Request Notice wilt be communicated to the Operator in the same manner as such notifications are customarily communicated by the Sales Representative to other hotels in the City. However, a copy of all Notices required or permitted to be provided by the Sales Representative or City under this Article III shall be delivered to Lessee, and such notices to Operator shall not be effective unless and until a copy of such notices are delivered to Lessee. (b) Unless such deadline is extended in writing by the Sales Representative,within five(5) Business Days after Operator's receipt of a Room Block Request Notice for a City-Wide Event that is no sooner than thirty (30) months from the date of such notice (or, if applicable by the operation of Section 3.01(c)below,eighteen(18)months from receipt of such notice),the Operator will deliver to the Potential Convention Center Hotel Customer(with a copy to the Sales Representative and City)an initial written offer in response to the Room Block Request Notice (the"Initial Offer''). In the Initial Offer the Operator will: (i) offer to the Potential Convention Center Customer to block, on each specific date that the Potential Convention Center Customer requires a block of guest rooms as specified in the Room Block Request Notice,the lesser of(A)the actual number of the guest rooms in the Room Block Request Notice for each specific date,or(B)the Maximum Event Room Block after deducting from the Maximum Event Room Block the following (which amount shall be referred to as the "Adjusted Maximum Event Room Block"): 1. any previously offered room blocks under this Agreement for other City-Wide Events covering such dates, which offers have either been accepted or are still outstanding; 2. any guest rooms released by City pursuant to Section 3.01(i)or Section 3.02 and that have actually been booked by Operator or are the subject of Active Negotiations. If such guest rooms are the subject of Active Negotiations,then at the request of City Lessee and Operator shall (x)attempt to cause such proposed Hotel guest with whom such Active Negotiations are being held to select other dates for the use thereof that would permit Operator to accommodate the room block set forth in the Room Block Request Notice or(y) require that Operator accelerate negotiations with such potential Hotel guest by requiring such potential Hotel guest to execute a contract to block or book such rooms that are the subject of such Active Negotiations within the fifteen (IB) Business Days following City's request to Operator under this clause (y), failing which, far purposes hereof, such rooms shall no longer be considered under Active Negotiations;and 3. in the case where the Maximum Event Night Ceiling for such month to which such block relates had previously been reached but,due to subsequent cancelations of bookings there remain, as of the date of request for the Initial Offer, available Event Nights for such month, then less the number of rooms booked, blocked or reserved by Operator(i.e., rooms that were booked or reserved, or were offered by Operator to be booked, blocked or reserved under offers that ADSLLP N]63O6114 MIA 18655997741 142 have either been accepted or are still outstanding)following the date such Maximum Event Ceiling Night had been reached and prior to such cancelations',and (ii) quote a specific room rate for a standard single and double room and suites(the"Rate Quote"). In making the Rate Quote,the Operator will take into account seasonality(i.e., using group event guest room rates received in a calendar month as the basis for quotes for the same month in subsequent calendar years), Midweek versus Weekend rates, and special events that occur regularly during the applicable period); provided, that,the Rate Quote shall not take into account non- recurring special events that occur in a particular month which inflate group event room rates(such as Super Bowls, NCAA Men's or Women's basketball tournaments, Major League Baseball playoffs and similar sporting or entertainment events). In addition, rates for groups whose stay consists of both Midweek and Weekend days shall be determined in accordance with Operator's booking policies described in Section 3.01(f). The amount of the Rate Quote in the Initial Offer will be at the sole,but good faith,discretion of the Operator (c) Notwithstanding anything to the contrary set forth in Section 3 Ol1b1 or any other provision of this Agreement to the contrary: (i) the Operator shall offer the Adjusted Maximum Event Room Block to a Potential Convention Center Customer for a City-Wide Event that will commence between eighteen(18) and thirty(30)months from the date of such notice(a "18-Month Room Block Request"), and Operator shall be obligated to issue an Initial Offer(and otherwise perform its obligations hereunder)for such a City-Wide Event only if the number of rooms requested in such 18-Month Room Block Request are available as of the date of receipt of such Room Block Request Notice(i.e., rooms that(x) have not been booked,blacked,or reserved,(y)are not the subject of Active Negotiations regarding same,and (z)have not been previously offered by Operator to be booked,blocked or reserved under offers that have either been accepted or are still outstanding)on the Event Nights for which rooms are requested in such Room Block Request Notice;provided,however,that (ii) the Operator shall designate one consecutive four (4) day period each calendar month to be able to offer the Adjusted Maximum Event Room Block to a Potential Convention Center Customer for City-Wide Events commencing not less than eighteen(18)months and not more than thirty(30)months from the first day of such calendar month. Operator shall determine the consecutive four(4)day periods for each respective month during the applicable period and shall notify City of the schedule on a monthly basis. 'The following is an example of the intended operation of this clause(3). Assume that on January 1,2020, the Maximum Event Night Ceiling was achieved for the month of January 2024. Then assume that, in accordance with its right to do so pursuant to Section 3.01(11, during the month of January 2020 the Operator books 200 room nights for the month of January 2024. Then assume that a block for 400 rooms booked for January 2024 and that comprised part of the Maximum Event Night Ceiling was canceled on February 1, 2020. Then assume that a Room Block Request is delivered on March 1,2020 for a block in January 2024. The 200 rooms booked by Operator in January 2020 would be deducted from the calculation of the Maximum Event Room Block under clause(3). A05LLP-0006306114 MIA 186559977v27 143 (d) The Rate Quote included by Operator in the Initial Offer shall be determined in Operator's sole,but good faith,discretion,and in determining such rate,Operator shall be entitled to take into account, among other considerations, the level of food and beverage services that the Operator anticipates the Potential Convention Center Customer will purchase in the Hotel. After reviewing the Initial Offer,the Sales Representative may consult with the Operator regarding the Rate Quote contained in the Initial Offer. If prior to acceptance of the Initial Offer(or any amendment thereto voluntarily offered by the Operator to the Potential Convention Center Customer),City reasonably and in good faith believes that it might be in City's or the City's best interest to compel the Lessee to offer the Potential Convention Center Customer an alternative rate structure,City may,after consultation with the Operator and within thirty (30) days following receipt of the Initial Offer, elect to require (which election shall be communicated by Notice from City to the Operator) the Operator to offer to the Potential Convention Center Customer a rate lower than the rate in the Initial Offer,but in no event lower than the Event Block Minimum Rate or,for up to six(6)City-Wide Events annually as determined at the City's sole discretion, the Special Event Block Minimum Rate, as applicable (such written election being the "Block Notice"). Upon receipt of the Block Notice,Operator shall,within two(2)Business Days thereafter,amend the Initial Offer by substituting the rate specified by City,which shall be no lower than the Event Block Minimum Rate,as the Rate Quote(the"Amended Offe/'). (e) Subject to the remaining provisions of this Section 3.01(e),the Initial Offer or the Amended Offer (if applicable) shall remain open for acceptance by the Potential Convention Customer until the sixtieth (60th)day following the date of the Initial Offer or Amended Offer,as the case may be; provided, that in the case of an Initial Offer or Amended Offer given in response to a 18-Month Room Block Request, then Operator may at any time provide the Potential Convention Center Customer with written notice (the "Acceleration Notice") that such Initial Offer or Amended Offer will expire on the fifteenth (15th) Business Day following the date of such Acceleration Notice unless the Potential Convention Center Customer executes and returns the Room Block Contract to the Operator. If such customer fails to execute and return the Room Block Contract within such fifteen (15)-Business Day period,the offer shall expire,and the Operator shall have no further obligation to City or the Potential Convention Center Customer in regard to such City-Wide Event under the Initial Offer or the Amended Offer, as the case may be. The date of expiration of the Initial Offer or Amended Offer,as the case may be,determined pursuant to this Section 3.01(e)is herein referred to as the"Offer Expiration Date". (f) If either the Initial Offer or the Amended Offer is accepted by the Potential Convention Center Customer prior to the Offer Expiration Date, Operator shall endeavor to negotiate a binding contract with the Potential Convention Center Customer applying Operator's customary booking policies to the Event Room Block (the "Room Block Contract"), including policies relating to contracts, advance deposits and cancellation,provided that these policies shall adhere in all material respects to the general customs employed by the Operator at its Managed Hotels,if any. Lessee will use its good faith efforts to cause Operator to consider changes to Operator's customary booking policies to the extent necessary to accommodate any prevalent and material local booking customs or practices. If a Potential Convention Center Customer has not for any reason(other than Operator's breach of its obligations set forth in the preceding sentence)signed a contract with the Operator with respect to such Initial Offer or Amended Offer,as the case may be,on or before the Offer Expiration Date,then such offer will expire, whereupon the Lessee shall have no further obligation to City or the Potential Convention Center Customer in regard to such City-Wide Event under the Initial Offer or the Amended Offer,as the case may be. However, if such offer expires at a time when there are more than thirty (30) months(or, by the operation of Section 3.01(c) eighteen (18) months) prior to the first Event Night of the Potential Convention Center Customer's City-Wide Event,nothing in this Agreement shall prohibit City from issuing Po5LLP-'.nnm.06114 MM 186559977v27 144 a new Room Block Request Notice for such City-Wide Event in accordance with, and subject to the provisions of,this Section 3.01 provided that Lessee shall have no obligation to include the same terms as were included in the Initial Offeror the Amended Offer,as the case may be,that had previously expired for such City-Wide Event in the Initial Offer Lessee delivers to City in connection with such new Room Block Request Notice. (g) If a Potential Convention Center Customer signs a Room Block Contract with the Operator but later provides written notice to the Operator that it is terminating such contract, the Operator,after Notice to City from the Lessee or Operator,will have no further obligation to City in regard to the Event Nights covered by the Room Block Request Notice(which shall be deemed released from the obligations hereunder), but only if such written termination notice is given by the Potential Convention Center Customer on a date less than thirty (30) months before the first Event Night. If such notice of termination is given on a date more than thirty (30) months before the first Event Night, then, unless rooms are blocked under this Agreement for such Event Nights for another City-Wide Event,the Event Nights covered by the Room Block Request Notice for such City-Wide Event will not be included in calculating the Maximum Event Night Ceiling,and City may again deliver a Room Block Request Notice in accordance with,and subject to the limitations set forth in,this Section 3.01;provided,however,Operator will have no obligation to cancel any bookings to accommodate such subsequent request(for example,as provided in Section 3010) once the Maximum Event Night Ceiling has been reached the Operator is free to book rooms hereunder for such month and Operator shall not be obligated to cancel arty rooms reservations for such month to accommodate a replacement block). City recognizes that the Lessee or Operator may be entitled to collect cancellation fees from such Potential Convention Center Customer and City hereby consents thereto and agrees that City shall have no right or claim to all or any portion of such fees except as provided in the Lease. Similarly, the Lessee recognizes that City may be entitled to collect cancellation fees from such Potential Convention Center Customer pursuant to the contract between City and the Potential Convention Center Customer, if any, and the Lessee hereby consents thereto and agrees that Lessee shall have no right or claim to all or any portion of such fees. (h) If a Potential Convention Center Customer signs a Room Block Contract with the Operator, then Operator will reserve rooms included in an Event Room Block for such customer for purchase by the persons attending the applicable event until the date required under the Room Block Contract executed with such Potential Convention Center Customer, after which time any unbooked rooms shall be released from such Event Room Block and may be rented for the dates covered by such Event Room Block at any rate to any person Operator selects without restrictions imposed by this Agreement. (i) Operator shall have the unrestricted right to commit up to twenty(20%)of the Available Guest Rooms on any given date(and any other rooms that are not subject to being blocked by City pursuant to this Agreement)to the Hotel's commercial or group guests. In addition, Operator shall have the unrestricted right to commit any and all rooms not subject to a room block commitment pursuant to this Agreement for any date that is less than thirty(30)months in advance;provided, however, if an 18-Month Room Block Request is delivered to Operator,Operator shall issue an Initial Offer with respect to such request only to the extent required pursuant to Sections 3.01(dli1 and 3.01(c)(ii). Q) If Operator has a potential booking that would not be permitted under the terms of this Agreement, Operator may by notice to City(with a copy to Lessee) request that it be entitled to make such booking. City shall have five(5) Business Days in which to respond to such request by notice AosLLP 00163061.14 MIA 186559977v27 145 to the Operator;provided,that a failure to respond shall be deemed a rejection of such request(but such deemed rejection shall not prevent Operator from making multiple requests for such release). (k) For the avoidance of doubt,the Operator shall have the right to freely book all rooms within the Hotel for any day on which the Convention Center cannot accommodate a City-Wide Event because less than one hundred fifteen thousand(115,000)square feet of meeting or exhibit space is available on such day for use by a Potential Convention Center Customer(such determination to be made as of the time Operator makes or extends an offer to make such booking) or(ii) that is an Event Night during a calendar month in which the Maximum Event Night Ceiling has been reached. (I) Once the Maximum Event Night Ceiling is reached for a month, the Operator shall have the right to freely book the available rooms at the Hotel for that month,regardless of when the booking is made(e.g.,it may be more than thirty(30)months in advance). (m) Notwithstanding the foregoing, if a Potential Convention Center Customer has (i) a documented history of causing material property damage or unusually heavy wear and tear in connection with group events or(iii poor creditor a questionable payment history,then Operator shall have the right,at its option,to decline to accommodate such Potential Convention Center Customer upon notice to the City given within five(S)days following the date of the Room Block Request Notice;provided, that such notice to the City under this paragraph shall set forth with particularity the basis for the Operator's conclusions. In the event the City disagrees with the Operator's conclusions,the parties agree to meet and confer and attempt in good faith to reach agreement as to whether to acceptor decline the Potential Convention Center Customer 3.02 Release of Block (a) Notwithstanding anything to the contrary set forth in this Agreement,but subject to Section 3.02(b1 below, Operator shall have the right to commit a block of more than twenty percent (20%) of the Available Guest Rooms to non-Potential Convention Center Customer business for a date more than thirty (30) months in the future, and the rooms in excess of twenty percent (20%) shall be released from the terms of this Agreement for such dates,unless any of the following are true: (i) A Room Block Request Notice satisfying the requirements set forth herein has been delivered that covers any of the dates reflected in the Block Release Request Notice,unless any Initial Offer or Amended Offer delivered by Operator in response thereto has expired without the execution by the Potential Convention Center Customer of a Room Block Contract with Operator or, if such a contract was executed,the same has been terminated by the customer; (ii) The GMCVB or the City is in Active Negotiations with a Potential Convention Center Customer for a City-Wide Event that includes any of the dates covered by the Block Release Request Notice;or (iii) The dates covered by the Block Release Request Notice have historically been booked in hotels in the City for a City-Wide Event and City reasonably concludes that the release of the block in the Hotel will jeopardize the booking of such City-Wide Event. (h) If Operator desires to commit a block of more than twenty percent (20%) of Available Guest Rooms pursuant to Section 3.02(a1 above,Operator shall send a Notice to City(a "Block Release Request Notice")specifying(i)the dates as to which such request applies,(ii)the number of event ADSLLP 0006306114 MIA 166559977v27 146 night rooms to which such request applies,and (iii)either that(x)to Operator's knowledge,none of the items in clauses(i)through(fii)of Section 3.02(a)are true or(y)even though one or more of the items in clauses(i)through(iii)are true,such Block Release Request Notice describes a group that is proposing to contract for regularly recurring events(including on a rotating basis with other municipalities)at the Hotel and/or the Convention Center,and City should consider such request for the release in light of the possible repeat nature of the proposed business. Within five (5) Business Days after receipt of a Block Release Request,City shall deliver written notice to Operator either 0) confirming the release of the requested rooms for the specific dates set forth in such Block Receipt Request or(ii)disapproving such release with an explanation as to which item in clause(i)through(iii)of Section 3.02(al permits City to disapprove. If City fads to either(x)confirm the release of rooms in a Block Release Request Notice or(y)disapprove the release of rooms in a Block Release Request, in each case of(x) and (y), in writing within such five (5) Business Day period,then such release shall be confirmed. (c) Operator shall, upon request by City following any release made pursuant to this Section 3.02 use its good faith efforts to accommodate any Event Room Block subsequently requested covering any of the dates for which a release has been provided by City under this Section 3.02. (d) City will provide Operator a list of known release dates on a periodic basis(not less than semi-annual)identifying all future dates the Convention Center cannot he utilized for City-Wide Events due to maintenance, move in/out periods,or any other reason ("Known Release Dates'). If the City subsequently eliminates such dates from a subsequent list of Known Release Dates,such date(s)shall be subject to all applicable provisions of this Agreement, unless rooms have been booked, blocked or reserved by the Operator pursuant to a contract with a hotel customer or group (and, if such contracts are terminated,then any of the blocked rooms that were subject thereto shall no longer be considered blocked for purposes herein). ARTICLE IV ROOM BLOCK PRICING 4.01 Event Block Minimum Rates;Special Event Block Minimum Rates. (a) The Event Block Minimum Rates and Special Event Block Minimum Rates shall be as follows: (i) The Event Block Minimum Rate shall be an amount equal to 105%of the average group rate for the applicable period reflected in the Lessee's Initial Projected Event Block Rate Schedule or Lessee's Subsequent Projected Event Block Rate Schedule (each as defined below), as applicable,as further described in Section 4.01(4 (U) The Special Event Block Minimum Rate shall be an amount equal to 100% of the average group rate for the applicable period reflected in the Lessee's Initial Projected Event Block Rate Schedule or Lessee's Subsequent Projected Event Block Rate Schedule(each as defined below),as applicable,as further described in Section 4.01(e).. (b) Concurrent with the Commencement of Construction,Lessee shall have provided to City and the City shall have approved a schedule of the projected Event Block Minimum Rates and Special Event Block Minimum Rates for the first five (5)calendar years after the Opening(the"Lessee's ADSLLr.00o6306114 MIA I&6559977V2> 147 Initial Projected Event Block Rate Schedule). The Lessee's Initial Projected Event Block Rate Schedule shall include a schedule for both Event Block Minimum Rates and Special Event Block Minimum Rates,and will include varying rates for room type and for periods within each applicable calendar year to account for seasonality and day of the week(e.g., Midweek,Weekend). The rates for each such year included in Lessee's Initial Projected Event Block Rate Schedule shall represent Lessee's good faith forecast of the rates that will be included in the pro forma budget for the operation of the Hotel for such year and are the projections and forecasts being used by Lessee in making its decisions,and planning for,bookings in the operation of the Hotel and the conduct of Lessee's business generally. (c) By no later than January 1 of each year commencing after the date hereof,Lessee shall provide City a schedule of the projected Event Block Minimum Rates and Special Event Block Minimum Rates for the ensuing five(5)calendar year period(each such schedule,an"Lessee's Subsequent Projected Event Block Rate Schedule"). The rates (x) for the first twelve (12) months covered by the Lessee's Subsequent Projected Event Block Rate Schedule shall be those set forth in the pro forma operating budget for the Hotel for such 12-month period that has been approved by Lessee and Operator, and (y) for each other year covered thereby shall represent Lessee's and Operator's then-current good faith forecast of the rates that Lessee and Operator project will be included in the actual pro forma budget adopted for the operation of the Hotel for such years and are the forecasts and projections being used by Lessee in making its decisions,and planning for,bookings in the operation of the Hotel and the conduct of Lessee's business generally. For each year, subsequent to January 1, Lessee may deliver one (I) updated Lessee's Subsequent Projected Event Block Rate Schedule, which will replace the Lessee's Subsequent Projected Event Block Rate Schedule previously delivered for such year. (d) Each of the Lessee's Initial Projected Event Block Rate Schedule and each Lessee's Subsequent Projected Rate Schedule shall, when delivered to City, be accompanied by (i) reasonable evidence that the same has been approved by both Lessee and Operator, and (ii) a certification from Lessee to City indicating that the Event Block Minimum Rate and Special Event Block Minimum Rate for each year set forth therein represents(x)for the first twelve(12)months covered thereby those set forth in the Lessee's pro forma operating budget for such 12-month period that has been approved by Lessee and Operator,and(y)for each other year covered thereby,Lessee's and Operator's good faith forecast of the rates that Lessee and Operator project will be included in the actual pro forma budget adopted for the operation of the Hotel for such year and are the forecasts and projections actually being used by Lessee in making its decisions, and planning for, bookings in the operation of the Hotel and the conduct of Lessee's business generally. (e) The rates reflected in the Lessee's Initial Projected Event Block Rate Schedule and each of the Lessee's Subsequent Projected Event Block Rate Schedules,as increased up to one hundred and five percent (105%)of such rates, shall be the"Event Block Minimum Rate"for each of the five (5) years covered by, as applicable, the Lessee's Initial Projected Event Block Rate Schedule or the then current Lessee's Subsequent Projected Event Block Rate Schedule. The rates reflected in the Lessee's Initial Projected Event Block Rate Schedule and each of the Lessee's Subsequent Projected Event Block Rate Schedules,at one hundred percent(100%)of such rates,shall be the"Special Event Block Minimum Rate" for each of the five (5)years covered by,as applicable, the Lessee's Initial Projected Event Block Rate Schedule or the then current Lessee's Subsequent Projected Event Block Rate Schedule. (i) The parties recognize that the Event Block Minimum Rate and Special Event Block Minimum Rate may change each year(but only once per year and then only with the issuance of the Lessee's Subsequent Projected Event Block Rate Schedule), it being understood that each Lessee's ADSLLP-0006306114 MIA I8655997N27 148 Subsequent Projected Event Block Rate Schedule (and the rates reflected therein) shall supersede all previously issued Lessee's Subsequent Projected Event Block Rate Schedules even though the same relate to the same years(the following is an example of the"rolling" nature of the determination of the Event Block Minimum Rate: assume that the Lessee issues, on December 1, 2020, an Lessee's Subsequent Projected Event Block Rate Schedule. That schedule will cover the period commencing January 1, 2021 and ending December 31, 2025 [the"2021 Schedule") Then assume that on December 1,2021, Lessee issues a Lessee's Subsequent Projected Event Block Rate Schedule. That schedule will cover the period commencing January 1, 2022 and ending on December 31, 2026 [the "2022 Schedule"]. The 2022 Schedule will,as to any Block Notice issued on or after January 1,2022,supersede the 2021 Schedule and all prior schedules covering the years 2022, 2023,2024 and 2025 and shall govern the determination of the Event Block Rate with respect to such Block Notice). (ii) If a Block Notice is issued for a City-Wide Event where the first Event Night will occur on a date in a calendar year that is not covered by the then current Lessee's Subsequent Projected Event Block Rate Schedule (i.e., the date of such first Event Night is beyond the five (5)year period covered by the then current Lessee's Subsequent Projected Event Block Rate Schedule),the Event Block Rate reflected in the then current Lessee's Subsequent Projected Event Block Rate Schedule shall be used but shall be adjusted by an usual and customary industry inflation factor as reasonably agreed upon by Lessee,Operator and City. 4.02 Intentionally Omitted. 4.03 Confidentiality. Subject to its obligations under the Florida Public Records Act(the"Public Records Act") in force in the State of Florida from time to time, City will not disclose any Initial Offer or Amended Offer, any information provided by Operator under Section 3.01(m) or any information obtained pursuant to Section 4.01 to any person or entity other than (i) its employees, accountants, counsel and other consultants who have a need to know such information,(ii)the Lessee and its officers, directors,employees,accountants,counsel and other consultants,(iii)the Lessee's existing and proposed lenders, (iv)Operator and its officers, directors,employees,accountants, counsel and other consultants, (v) prospective purchasers of the Hotel or (vi) in connection with any legal proceeding (or alternative dispute resolution procedure) between City and Lessee and/or Operator, provided that City shall use reasonable efforts to obtain confidential treatment of same. Neither Lessee nor Operator will disclose any information provided by City to Lessee or Operator hereunder to any person or entity other than(1) their respective affiliates, and the employees, accountants, counsel and other consultants of Lessee, Operator and their respective affiliates who have a need to know such information and their respective partners,members,shareholders,and other holders of director indirect beneficial interests in Lessee or Operator, (2) the Lessee's existing and proposed lenders and investors and any proposed replacement Operator, (3) prospective purchasers of the Hotel or (4) in connection with any legal proceeding (or alternative dispute resolution procedure)between City and Lessee and/or Operator,provided that Lessee and Operator shall use reasonable efforts to obtain confidential treatment of same. (a) Subject to City's obligations under the Public Records Act,City shall use its good faith efforts to provide timely written notice to Lessee and Operator of any request received by City pursuant to the Public Records Act requesting information held by City to which Lessee or Operator may assert"confidential business information" or"trade secret" status under the Public Records Act,all for the purpose of providing Lessee and Operator an opportunity to seek to protect such information from disclosure by timely filing an appropriate action in a court of competent jurisdiction seeking non- disclosure of the requested information. ADSLLP 00063O6114 MIA 185559977v27 149 ARTICLE V STANDARDS OF HOTEL OPERATION 5.01 Standards. At all times during the term of this Agreement,the Lessee shall,to the extent the Hotel is being operated (or, pursuant to the Lease, required to be operated),cause the Operator to operate and manage the Hotel in accordance with the Management Agreement and (to the extent the Hotel is required to be operated pursuant to the Lease)the applicable provisions of the Lease. At all times when there is no Management Agreement, Lessee shall, to the extent the Hotel is being operated, operate, or cause an Operator to operate,the Hotel in a manner generally consistent with the general physical and service standards applicable to other upscale convention center hotels and(to the extent the Hotel is required to be operated pursuant to the Lease) in accordance with the applicable provisions of the Lease. ARTICLE VI STANDARDS OF CENTER OPERATION AND OTHER CITY COVENANTS 6.01 Standards. During the Term,City shall operate and maintain the Convention Center to at least the average standard of quality consistent with the principal convention centers operated in Orlando, Atlanta, New Orleans, Dallas, Houston, Boston, Chicago, San Francisco, San Diego and Los Angeles,as of the Effective Date(the"Standard of Operation"). 6.02 Restrictive Covenant, At all times during the term of this Agreement,the City shall comply with the restrictive covenant set forth in Section 4.2(e)of the Lease. ARTICLE VII NO LIABILITY FOR PROPOSED CONVENTION CENTER CUSTOMER' LESSEE RESPONSIBILITY TO CAUSE OPERATOR TO PERFORM;INDEMNITY 7.01 No Liability to City. In no event shall City be in any way responsible or liable for the performance by any Potential Convention Center Customer of its obligations under its contract with the Lessee or Operator or for any charges, liabilities or other sums owed by, or liabilities of, such Potential Convention Center Customer(or for those for whom it blocks rooms)to either Lessee or Operator. 7.02 Lessee and Operator Responsibility; Authority to Grant Consents and Make Decisions. Lessee shall cause Operator to perform all of the covenants and agreements of the Operator under this Agreement, and to cause the Operator to observe all of the covenants and agreements of Operator hereunder,and by entering into a Management Agreement Operator shall,notwithstanding any contrary provision of its Management Agreement, be directly responsible to City for the performance of the Operator's obligations hereunder. Furthermore, all actions, consents, decisions, elections, offers, and determinations made hereunder by the Operator with respect to covenants and obligations of the Operator under this Agreement shall be binding upon both Lessee and Operator for purposes of this Agreement. As of the Effective Date,Lessee has delegated the performance of the obligations and rights assigned to the Operator hereunder to the Initial Hotel Operator under a Management Agreement(for so long as the same remains in effect) and, upon its termination, shall delegate any or all of such responsibilities hereunder to any subsequent Operator pursuant to a subsequent Management Agreement,but no such delegation shall release or relieve Lessee from its obligation to perform,or cause to be performed,all of its covenants and agreements set forth herein. ADSILPLC06306114 AMA 186559977v27 150 All consents,decisions,waivers,and determinations to be made or given hereunder by City may be made and given by the City Manager(or any person designated from time to time by the City Manager by Notice to Lessee and Operator) and no inference to the contrary shall be made because the defined term"City'is used in some places in this Agreement and the phrase"City Manager" is used in others. 7.03. Indemnification. The Lessee shall indemnify, defend and hold harmless the City and its officers, employees,agents and instrumentalities from any and all liability, losses or damages, including attorney's fees and costs of defense,which the City or its officers,employees,agents or instrumentalities may incur as a result of any third party claims, demands,suits, causes of actions or proceedings of any kind or nature arising out of,relating to or resulting from the performance of the Room Block Agreement by the Lessee, Operator, or their respective employees, agents, partners, principals or subcontractors. The Lessee shall pay all claims and losses in connection therewith, and shall investigate and defend all claims,suits or actions of any kind or nature in the name of the City,where applicable,including appellate proceedings,and shall pay all costs,judgments,and attorney's fees which may be incurred thereon.The above indemnification provisions shall survive the expiration or termination of this Agreement. ARTICLE VIII EVENTS OF DEFAULT 8.01 Default. A default under the terms of this Agreement shall occur if any party hereto shall default in the performance of any of the terms,conditions or covenants contained in this Agreement to be performed or observed by it,and such party does not remedy such default within thirty(30)days after Notice or, if the default is of such character as to require more than thirty (30)days to remedy,then if such party fails to commence to cure and correct the default within said thirty (30) day period and thereafter prosecute such corrective action diligently and without interruption and complete the cure thereof within ninety (90) days following the original Notice of such default (an "Event of Default"). Notwithstanding the foregoing,the failure of Lessee or Operator to comply with the provisions of Article III hereof within the time frames set forth therein shall, if not cured within three (3) Business Days following written notice from City to Lessee and Operator, constitute an Event of Default by Lessee hereunder without the need of any additional Notice and without any further opportunity to cure such Event of Default.All Notices of default shall be provided to Lessee and to Operator and shall also be given to Lessee's mortgagee (provided such mortgagee has provided Notice to City of its name and address where Notices to it hereunder are to be sent). 8.02 Remedies. If an Event of Default shall have occurred because of a breach of any provision hereof by City,on the one hand,or Lessee on the other hand then the nondefaulting party shall have the right,at any time after the occurrence of said Event of Default to(i)initiate and thereafter prosecute an action in equity for the specific performance of any covenants or obligations to be performed by the defaulting party hereunder (City shall also have the right to seek and obtain an order of specific performance against the Operator so as to compel Operator, in its capacity as such under the Management Agreement,to comply herewith)or(ii)exercise such other rights as shall be available at law or in equity. In no event, however, shall this Agreement be terminated due to an Event of Default (provided that the foregoing shall not limit the provisions of Section 2.02). Each party acknowledges and agrees that its covenants, obligations and agreements set forth in this Agreement are a material and fundamental inducement to the City in executing and delivering the Lease and any other agreements referenced therein,such that actual damages may not be an adequate An$LLP0006306114 MM 186559977v27 151 remedy at law for the breach hereof by City,the Lessee or the Operator.Accordingly,any party shall be entitled to seek relief mandating action by City,the Lessee and/or Operator hereunder in accordance with this Agreement. In addition, each party recognizes and agrees that monetary damages could not be calculated to compensate the other party for any breach by the defaulting party of the covenants and agreements contained in this Agreement. Each party may restrain and enjoin any breach or threatened breach of any covenant, duty or obligation of the other party contained in this Agreement without the necessity of(j) posting a bond or other security,(ii) any showing of Irreparable harm, balance of harms, consideration of public interest or the inadequacy of monetary damages as a remedy, or (iii) that the administration of an order for injunctive relief would be impracticable. In the event of any breach or threatened breach of any covenant,duty or obligation contained in this Agreement,the party breaching (or threatening breach) stipulates and agrees that the balance of hardships which weigh in favor of injunctive relief and that non-breaching party may seek and obtain injunctive or other form of ancillary relief from a court of competent jurisdiction in order to maintain the status quo and enforce the terms of this Agreement an an interim basis pending the outcome of the dispute or controversy hereunder. Lessee agrees to include in each Management Agreement a provision similar to the foregoing whereby the Operator makes such agreements to Lessee with respect hereto and specifically agrees that City shall have the right to specifically enforce against the Operator the provisions of this Agreement. 8.03 Lessee's Reservation of Rights. Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall in no way limit Lessee's or Operator's rights and remedies against a Potential Convention Center Customer resulting from such Potential Convention Center Customer's default under any contract,including any Roam Block Contract,with Lessee or Operator. ARTICLE IX ADDITIONAL PROVISIONS 9.01 Exculpation. The liability of Lessee(and of any successor"Lessee")under this Agreement shall be limited to its interest in the Hotel. City agrees that none of the Lessee's or Operator's direct or indirect partners, members, managers, joint venturers, shareholders, directors, officers, agents and employees shall have any personal liability with respect to,or arising out of,this Agreement. In no event shall any officer,director,agent,or consultant of City,nor any employee or public official of the City,ever have any personal liability with respect to or arising out of this Agreement. Nothing within this Section 9.01 shall limit the right of any party to seek specific performance of the terms and provisions of this Agreement as provided in Article VIII. 9.02 Miscellaneous. If any term of this Agreement or any application thereof shall be invalid or unenforceable,the remainder of this Agreement and any other application of such term shall not be affected thereby. This Agreement may be changed, waived, modified or supplemented only by an instrument in writing signed by Lessee and City. The headings in this Agreement are for purposes of reference only and shall not limit or define the meaning hereof. This Agreement maybe executed in any number of counterparts,each of which shall be an original,but all of which shall together constitute one and the same instrument. 9.03 Estoppel Certificate. Within ten (10) Business Days after request therefor by any party hereto or by Operator or by the holder of any loan made to Lessee or Operator,the other party(ies)and Operator shall execute and deliver to the requesting party a statement in writing and reasonably satisfactory to the requesting party and directed to the requesting party(and,if requested,to the holder ADSLLPC006306114 MIA 186559077v27 152 of any loan made to Lessee or Operator)certifying to such factual matters as may be reasonably requested by such requesting party, including without limitation (if such be the case) that (a) this Agreement is unmodified and in full force and effect,(b)to the certifying party's knowledge the requesting party is not in default hereunder or,din default,the nature thereof in reasonable detail,and(c)there are no defenses or offsets to the Agreement claimed by the other party. 9.04 Notices. Each Notice to be provided or given hereunder must be in writing (in some instances in this Agreement the words"written Notice"or"notice in writing" may be used and in others simply the word "Notice"or"notice" may be used;no inference is to be drawn therefrom as all Notices must be in writing)and must be delivered or provided in one of the following methods:(a)certified mail, return receipt requested,postage pre-paid and addressed to the party to whom such Notice is intended to be delivered; or (b) personal delivery to the addressee by courier or other means of hand delivery. Notice delivered by certified mail pursuant hereto shall be effectively given and received on the third(3'9 business day following deposit of the same in the United States Mail, postage pre-paid, addressed properly to the party to whom such notice intended. Notice by personal delivery shall be effectively given and received upon acceptance thereof by the addressee as confirmed in writing by a receipt executed by and retained by the party delivering such Notice. to City: City of Miami Beach 1700 Convention Center Drive Miami Beach, Florida 33139 Attention: with a copy to: City Attorney's Office City of Miami Beach 1700 Convention Center Drive,476 Floor Miami Beach, Florida 33139 to the Lessee: with a copy to: to the Operator: Any mortgagee,trustee or beneficiary under any mortgage or deed of trust on the Hotel may by Notice to the parties set forth hereinabove designate an address to which Notices to it hereunder shall be sent. Any such party may from time to time by Notice as herein provided,designate a different address to which Notices to it shall be sent. AOSLLP 0.3063061 14 MIA 186559977v27 153 9.05 Transfer of Lessee's or Operator's Interest. (a) In the event of the sale,assignment or transfer by Lessee of its leasehold interest in the Hotel Site(other than a collateral assignment to secure a debt of Lessee)to a successor in interest (who shall, upon acceptance of title to or an interest in the Hotel Site or any part thereof,be deemed to have assumed the obligations of Lessee hereunder arising from and after the date of such acceptance), the transferring Lessee shall be released or discharged from all of its covenants and obligations hereunder, except such obligations as shall have accrued prior to any such sale, assignment or transfer; and City agrees to look solely to such successor in interest of Lessee for performance of such subsequently occurring obligations. Notwithstanding the provisions of the preceding sentence, any successor Lessee hereunder shall in all respects be obligated to honor any contractor agreement previously executed with a Potential Convention Center Customer in accordance with its terms and shall be bound by any outstanding Initial Offers or Amended Offers,each Room Block Request Notice and the Event Rate then in effect subject to and in accordance with the provisions of Article III. (b) In the event that the Management Agreement with any Operator shall expire or terminate for any reason then the Operator under such Management Agreement shall be relieved from any obligations arising hereunder from and after the date upon which,as a consequence thereof, such Operator is no longer operating the Hotel. Lessee shall be obligated to secure the written consent and agreement of any replacement third-party Operator to comply with all of the terms, provisions and conditions set forth herein;provided,that,a failure by the Lessee to do so shall in no way release or relieve Lessee or any such third-party replacement Operator from performing the obligations of the Lessee and Operator hereunder. 9.06 Superiority of Agreement;Covenant Running with the Hotel Site. The provisions of this Agreement shall constitute a restrictive covenant running with the Hotel Site binding upon each Lessee thereof,and any and all operators or managers of the improvements thereon,and each and every other person or entity claiming or holding any interest in the Hotel Site, shall inure to the benefit of the City, and shall apply to any hotel now or hereafter located on the Hotel Site,or any portion thereof. 9,07 Gender;Singular and Plural. As used herein,the neuter gender includes the feminine and masculine,the masculine includes the feminine and neuter,and the feminine includes the masculine and neuter,and each includes a corporation, partnership or other legal entity when the context so requires. The singular number includes the plural,and vice versa,whenever the context so requires. 9.08 Nature and Extent of Agreement. This Agreement contains the complete agreement of the parties regarding the terms and conditions of the Agreement. There are no oral or written conditions, terms, understandings or other agreements pertaining to the room block arrangements which have not been incorporated herein. 9.09 Governing Law.This Agreement shall be governed as to performance,interpretation and jurisdiction by the laws of the State of Florida,without regard to conflicts of law rules. This Agreement shall he enforceable in Miami-Dade County, Florida,and if legal action is necessary by either party with respect to the enforcement of any or all of the terms or conditions herein, exclusive venue for the enforcement of same shall be in Miami-Dade County,Florida. 9.10 Binding Effect. Subject to express provisions hereof to the contrary,this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs,successors and assigns during the Term hereof. Furthermore, and notwithstanding any provision hereof to the AMU-00063061 14 MM 188 59977627 154 contrary,City may at any time,without the need of prior notice to or consent from the Lessee,assign this Agreement to any other entity designated by the City(provided that no such assignment shall be effective against Lessee until Notice thereof is provided to Lessee, and provided further that such assignee expressly assumes all of the obligations of City hereunder and agrees to be bound by the terms and provisions of this Agreement. In addition,the Operator shall bean express third party beneficiary of the obligations,duties and covenants of City hereunder. In the event of any assignment of this Agreement by the City, all references hereunder to the City Manager with respect to Approvals, consents, decisions, waivers, determinations, confirmations, submittals, notifications, communications and other matters shall be deemed to refer to the Person who is then the lessor under the Lease. (signature pages to follow) A05LLP 00063061 14 WA 18655997707 155 Each of the parties hereto have caused this Agreement to be duly executed by their lawfully authorized representatives effective as of the Effective Date. Lessee: MB MIXED USE INVESTMENT,LLC,a Florida limited liability company By: Name: Title: CITY OF MIAMI BEACH,FLORIDA By: Dan Gelber Mayor Approved for form and legal sufficiency By: City Attorney ATTEST By: City Clerk ADSLLP-00063061 14 MIA 186559977v27 156 EXHIBIT A HOTEL SITE [see attached] Ao51LP 00063061 10 MIA 186559977v27 157 II Th t�� F9p6lt�tsEati l°°�lyi= !°!' ;9 a• g a . I iii 9 !r ! 1 I n. _ .° .8E3 ' ! t!°§ a ill g I. - !jig ,!`, _ w l�tfa'!te`vitet llEA :i93 li 1e til! i II e :lige 1 _ -.H„ =14-.!g!llil.� E` l'i;3a;4 s '0 4 , to ilia j i s .-tIli `a 9 9y3Ess9la1/4/81 ill3lt°4 t3l9i id !t i; EXHIBIT"M" OWNERSHIP INTERESTS IN LESSEE [attached] ADSLLP00063O6114 MM 186559977v27 159 MB MIXED USE INVESTMENT,LLC PEDRO A MARTIN DAVID P MARTIN 50%•-•• 50% MB MIXED USE INVESTMENT HOLDINGS MEMBER OWNER, LLC 100% MB MIXED USE INVESTMENT HOLDINGS MEMBER PARENT, LLC 100% MB MIXED USE INVESTMENT TB MBCC HOTEL HOLDINGS MEMBER,LLC INVESTMENT,LLC MB MIXED USE INVESTMENT HOLDINGS,LLC 100% MB MIXED USE INVESTEMENT,LLC 160 in E L2 rje > 1 t 1/1 iu \ \ \ } ; \ ` -2 N a. «. xm o « ( k . \ 2 ` zilnul / ) � . . : \^ / ) ! d EXHIBIT"N" [RESERVED] AOSLLP 00063061/4 MIA 18655997707 162 EXHIBIT"0" TRANSACTION RENT EXAMPLE OF TRANSACTION RENT CALCULATION The example of Transaction Rent in this Exhibit"0"is for illustrative purposes only,and assumes Improvement Costs Iwith Improvement Costs paid to Affiliates of Lessee included up to but not exceeding fair market value for the services provided by such Affiliates)of$450,000,000.00 for a hurdle of$540,000,000.00. 1. Assuming that,for the first Transfer for which Transaction Rent would be payable,(i)Owner sells a 51% Controlling interest in the Lessee to Owner#2 fora gross sales price(less typical closing adjustments and credits)of $250,000000,then no Transaction Rent would be payable in connection with this first Transfer,as the gross sales price did not exceed$270,000,000 00(50%of the$540,000,000 00 hurdle). 2. Assuming that,for the second Transfer for which Transaction Rent would be payable,(i)Owner#2 sells a 51%Controlling interest in the Lessee to Owner#3 for a gross sales price(less typical closing adjustments and credits) of$300,000,000 00, then the Transaction Rent payable in connection with such Transfer would be calculated as follows: Gross sales price(less adjustments) $300,000,000 00 Transaction Rent. $750,000 00(i e,.25%of$300,000,000) 3 Assuming that,for the third Transfer for which Transaction Rent would be payable, a 75%interest in the Lessee is sold for an aggregate of$450,000,000 00,with Owner#3 selling a 40% interest in the Lessee to Owner#4 for a gross sales price(less typical closing adjustments and credits)of$240,000,000,and Owner#1 selling a 35% interest to Owner#4 for a gross sales price(less typical closing adjustments and credits)of$210,000,000, then the Transaction Rent payable to City would be calculated as follows Owner k3 Transfer Gross sales price(less adjustments) $240,000,000 00 Transaction Rent: 5600,000 00(l e, 25%of$240,000,000) Owner#1 Transfer Gross sales pnce(less adjustments) $210,000,000.00 Transaction Rent $525,000(i e, 25%of$210,000,000) ADSLLP 0006306114 MIA 186559977v27 163 EXHIBIT"r [RESERVED] ADSU P-00 0 630 61 14 MM 186554977427 164 EXHIBIT"Q" [RESERVED] ADSLLW 00063061 14 MIA 186558877v27 165 EXHIBIT"I? 2 SCHEDULE OF MINIMUM FIXED RENT [UPDATE BASED ON FINAL NEGOTIATED AMOUNTS[ rear tease Amount 1 $400,000 z $800,000 3 $1200,000 4 51,600,000 s $2,000,000 6 $2,040,000 _ ] $2,080,800 8 $2,122,416 9 $2,164,864 10 ' $2,208,162 'As provided in Section 4 4(a),this amount shall apply from the Rent Commencement Date to December 31 of the year in which the first anniversary of the Rent Commencement Date occurs,prorated for any partial months and partial calendar years. AOSLLP 00063061.14 MIA 78855997-v27 166 EXHIBIT"S" MANDATORY HOTEL PROJECT DESIGN ELEMENTS A full-service convention hotel,including: 1 approximately(but not to exceed)800 rooms(with a breakdown between kings,double/double or double/queen rooms and suites necessary to obtain the Brand Approval by the Initial Hotel Operator); 2. if required by the Initial Hotel Operator,a club lounge; 3. a minimum of approximately 59,000 net square feet (+/- 5%) of hotel conference space for meetings or other events,including a minimum of 20,000 net square feet(+/-5%)grand ballroom, 16,000 net square feet(+1-5%)junior ballroom,and 23,000 net square feet(+/-5%)of breakout meeting space; 4. appropriate space for kitchen facilities,used for room service and serving conference and meeting rooms; 5. food and beverage locations of a total square footage size that Is not greater than the square footage size of food and beverage locations that are consistent with the size and number of rooms in comparable 4 Diamond hotels in comparable locations, not less than 600 seats, in the aggregate, contained within a three-meal restaurant, specialty restaurant, pool bar and grill, lounge and lobby bar (such restaurants and bars are to be developed primarily along the perimeter of the ground floor of the Hotel Project) and as necessary to obtain Brand Approval from the Initial Hotel Operator; 6. a non-specialty retail facility which may consist of a sundry and/or coffee shop(s)selling products such as news, coffee, overnight supplies, and travel necessities as necessary to obtain Brand Approval from the Initial Hotel Operator; 7. a pool,fitness center and spa; 8. the exterior elements depicted in Exhibit E subject to a height restriction of a maximum one hundred and eighty five (185) feet, in accordance with the provisions of the City's Land Development Regulations; 9. a minimum of.40 parking spaces per room on-site,in accordance with the provisions of the City's Land Development Regulations;and 10. the Skybridge. For the avoidance of doubt,the Lessee may elect to include in the Hotel Project ballroom and meeting space of a size that is greater than the 5%variances provided for above without City's Approval (and Lessee shall not be deemed to have made a Prohibited Hotel Project Change or to have faded to include the Mandatory Hotel Project Design Elements as a result of the inclusion of such excess ballroom and meeting space). ADSLLP 000E3061 16 MM 186559077v27 167 EXHIBIT"T" LESSEE'S ARTICLES OF ORGANIZATION ADSLLP-00063061 14 WA 186559977v27 168 I To Page 2o15171114' . 4f11 •- y13 1' ''•.08-45 From Ranee MG raw u U� von al lwm y 'lium '' � J •, `et '- Pride Departmen of ate Division of Corporations Electronic Filing Cover Sheet Note: Please print this page and rase it as a Loser sheet. type the fax audit number(shown below) on the top and bottom of all pages of the document (1(1 1 1 30001 64779 3))) DIM 11111IIIIIIIIIIII11111111111111111lIIIIIIB11111NCH IIII111111IIIIHI11111IIIIIII ht10000184779ZIABCA Note: DO NOT hit the REFRESH/RELOAD button on your browser from rhts page Doing so will generate another cover sheet. To Otais1On of corporations Fax Number : 18501611-638L From Account Name ' C S CORPCMtION el3TEY. Account Sumner ' FCA000000023 Poona • 1614)90-1118 Fear Number . (959)2202-0045 **Enter the email address for this hus:neas enrlty to be used for future annual repolc railings. Enter Only One email adorers please •• Tamil Address .rip a =Lice' LORIDA LIMITED LIABILITY CO. LLi s 'fir_' MB MIXED USE INVESTMENT,LLC a- o ECertificata of Status _ _ _ u I i Certified Copy rt, Ltj s — a - -- Cr m Estimated Charge ____ 5125.00 I ;\/. = OI - o•n Electronic Filing Menu Corporate Filing Menu Help • hop•.Ceno Boob/orahenpisAOkart oxdY30.]OiS 3 16 4 PMI 169 To Pape 3 of 201605-30132040 CST 195420IX845 From Ronne McGrew ARTICLES OF ORGANIZATION MD MIMED IISP.INVESTMENT,LLC, a Florida limited liability company ' ARTICLE 1 NAME The business and affairs of the Limited Liability Company shall be conducted under the name of. MB MIXED USE INVESTMENT,LLC ARTICLE II PRINCIPAL OFnC1:AND MAILING ADDRESS The sleet address of the principal place of business of the Limited Liability Company within the • State of Florida shall be: 2665 South Bayshore Drive Suite 1020 Coconut Grove,Florida 33133 and,the mailing address of the Limited Liability Company shall be. P.O.Box 330609 Miami,Florida 33233 ARTICLE IB INITIAL REGISTERED AGENT/OFFICE The registered office of the Limited liability Company and Its initial registered agent shall Mr n, o NRAI Services,Inc. zr y` 4 1200 South Pine Island Rood >: Plantation,Florida 33324 rNi,i =, .1.1)±,' Fri LIP ARTICLE IV OE = MANAMENT r v. I I 0 mn The Company is a tager-managed limited liability company for pupoew of the floridarr Revised Limited Liability Company Act and its manager(s) shell be appointed and serve ina accordance with the terms and conditions ant fonh in the Company's operating agreement,as the same may be emended fmm time to time. SUE s,usssseat I 170 To Page 4 01 5 2018 05-30 13 28 40 CST 19542080845 From RaneeMG Ir These Articks of°rgeazauat have been execu/tedd as of die 30th day of Kitty,201 S 11.Maag (e/f"AMU7HORIZED REPRESENTATIVE' 1 rrxii.a 1454n40. 171 To Page5 of 5 2018-05-30 13 28 40 CST 19542090845 Fran Rana°M,w 1 CERTIFICATE.OF DESIGNATION OF REGISTERED AGENT/REGISTERED OFFICE Pursuant to the provisions of Section 605.0203 of the Florida Statutes, the undersigned Limited Liability Company submits the following statement to designate a rogistorod office and registered agent in the State of Florida. 1. The name of the Limited Liability Company is: MB MIXED USE INVESTMENT,LW 2. The name and the Florida street address of the registered agent ore NRAI Services,Inc. 1200 South Pine Island Road Plantation,Florida 33324 Having been named to accept service of process for the above stated Limited Liability Company at the place designated in Nu certificate,t hereby accept the appointment as registered agent and agree to an in this capacity. I further agree to comply with the provisions of all statute relative to the pmper and complete performance of my duties.and I am familiar with and accept the obligations of my position as registered agent. Seniors,Inc. Date:May 30,2016 By: � r �R��.aamnY' Assistant Secretary • •51x_eaae4w2.6.I 172 To P e2o15 303 Ra wet ogOUQZj33 Division of Cumulations Elcclronh.Filing Cover Shccl Note: Phone print(hi%page and u c it as a cover sheet.T)pe the In audit number (shown below)oil the it and bottom u1 all pintos of dm docummnt (((4118000175324 31)) iiiaI1111iiiiiiiiiiuiiiiiiiiiiiii1111IIIIIIuiiiiii 1111Iiiiiiiiiiiiiiia111111IIIIIN HI93001753241ABC• NOW: UO NOT hit the RECRESI PRELO4U honor on.oil hi mi an from this page Doing sow III generate another cover sheet Tc Division of Corporations • y Fax Number ' (X52)(27•6383 NA 'Tin from O Account Numb ' C T SISiEN „ Account[ Number (614)0900080-33323 Z Phone 054)118-614$ - Fax Number (9541308-)815 ^Enter the emelt. address for this business entity to be used for future annual report mations. Enter only one email address please.•' Email Address -----LLC AMNINRES ATE/COIUtECl'OR AI/MG RESIGN MR MIXED USE INVESTMENT, IS.0 Ccmhcmc ul 5^uvea _ _ ____ L..__ __. S - - Cahhed Copy. _ n e = - Page Count _pi 04 ' L6uma4d __ . C'hargv —__ 523.UU.J z 7l. U.; •Llecuumc Filing Menu Commute Filing Menu Help SAI v mu,neCk+nnht mdrtmrpi).hkm r eta WN i 3 ZU18 173 to Page 3 d 5 2018-06 11 15 21 10 CST 195:2030.543 From Ranee McGrew F<<ED ARTICLES OF AMENDMENT /9 j), I. TO . rr;0. 4s ARTICI,FS OF ORGANIZATION OF MR MIXED USE INVESTMENT.LLC nr'a nmle „u lemmrq Thu Arbutus olOrg4nba0un for Ibc.Isaolul lnnhl ay Company were filed on May 30.2018 and eesigtwl Florida document number 113000133765 Phis anandmelg is subedited to-send she following A. It amending nine,pater the new name of Ire him YM health'company here: IP new name mry k enttwabsbls cod woun M:wank lrnutef bamlity Company."he destyutnn'LLC or the atilarniatoft'L.ll" Knier new prinCpal Once addrea,If applicable; (Prior/nal otfke whiten h/ILCT RF A.STREETAMR FVVI Eater teen nulling addrel<,it eroticahle: Wartime cadres,MAY BEI el POSTOFFICE Bag H. I1 ar vuding the registered agent andiur regbtcred tam. address on our regards. enter the new of the new registered scalp end/Of he new rtplatertd Of n;dikes<beret b,nuO of Now Rev gel rd Await. Pew Keels:crud Office Addret3. Filler knit sin.!adhm FhRWa On YPCo&& Nen Perish red Aimee Signature,If ehnnelne R MStered Amu /hereby eweepr the appamaerrr at rrgicrerrd agent and agree to act an Ihi'canocay Ifurther agree to Comply,nrh the imnrvumns a(all matrass rermae to rhe proper and complete performance of my dunes, and I mit famine with and orpr the ebligeran,toy pennon ay regsared agent as prawded for an Chaplet 605 6S Or,ifthis ducwentis hemg/iied m merely ripen a change in the registered office addreer.I thereby confirms that the limited liability Cl'IMAM) has been writ/led in wr mg ofrlm clnn.ge. if enmities Reentered Atcnl Shumpert Neat MAVIS SOMI Page hof) 174 • To Pape 4 a5 2018.08.11152110 CST 19542080845 Froin Ranee McGraw If umendlag cul harieed I'ennu(s)euthorl¢d to menage,enter the titter name,end uddress or ouch person hem Rlldvd ,$r rrmnvcll trout our r ernrue' M1OR- alarngcr AMBR- Au0mve4 Manner • rma Pmne A(Wi pee pnc of Action MOR David P Mahn 2585 South Bayshore Drive la Add Sante 1020 ❑Remove Coconut Oreve,Florida 33133 O Cheep MGR Jackie Soifer 19950 W Country Glut}Dr Add Aventure,Fiords 33180 ONnm.4 ❑(Lane OAa T r ORmmv>i, �1 0 CYangcO o Add o Remove O flange ndd o Remove ❑change ❑Add ❑Remoter 0 Chvlee Page 2 ur3 175 To Page 5o15 2018-0611152110 CST 19542080845 FPM Ranee McGraw I). If amending any other Intone Minn.enter change(1)here: (Attach additional deedr.r/state aary) v, r )1\ O 0 F. 6i Mediae dole if other than the dale 01 Ming: (optional) Of en errennt axe n 11[1<0.111:ate nue lc ycc'tc rM enter be primm dale ut Olmry en More Arm%t aau Ming)punitll Co 6050101010) tetek lithe Sax mimed m the block doe,net meet the applicable collutory li bug resentenced,this date'kiil not be listed as the documem:dmcmc doh ue ilia Up,nmun of SIeie s maolde It the record specifies a delayed erective date,but not an effective Ome, at 12'0t a m on the earlier of (b) The 90th cay after the record Is filed. Dated June 11 /201y81� A/f/ t S,g,t pJafamemhror eut)an rd cop Mime afamenber JaJt M Maag.Authorize Representitive anal or prvucd vine ofalpnee Page 3 n(3 Filing Fee: 525.00 176 EXHIBIT"U" FILLMORE THEATER PARKING (See attached page) AollLP 0006306114 MIA 188558077v27 177 Io J z I ix 0 i I I ' I 'LULU 1 1 1 111 III • � , Uv 03 pip. ^� I II III _J 1 1 I la_ 178 z 0 N X E2 D U Z (I) W w a 0 Q a U-1 J .s a �m a n,rA .. 1%'. 0—a e:a f,§1.,f41 „ g 5q III:.! air Sir £ §B 9Rgagk g vp El� f e 1 aI I �1 <,7 ii - i g ga�ka.! 1' ° !'i--i ii ' €iei . o-t� k9,ka 5 - 11 ` Ella u a. gp'31e£11£k Fiagea €i53 sm t £ek; p 1 , pl T£#� : 1 9 § p 9 £ t./ — p S "3 a 9e g @Y .,a ° 3 t3a [ k I • 7Y`/FF £a1 p� 2. vi a { £Ela bpey -IA .„,': ¢3.i a i£1Fj {i 151155ll”�" a'lI 5 .1 - - 0 15$165:55,115-55g;55$- gi $rk :v gs !e a,a i311,1 a: .s se co 1� 6 § a rek ikas; sig pay¢ 0 p £519p1 4 ut s 5554 5$ p a 3H pial E m $pl!£prta .,0 re 55'561g-05 k H I$ €3 i F£ a 4a 93 $ C g ,e 9 9 ` -II El' i o q tgik:plFi ps ac aa; 1p755gy3 Sia < E!..,i,sf Eg„3kae, i; 'e°s. !'Y pa' S4'Y '..+9££ S 8(3 P:lasegli !6gSV.sh a pE:aiss- 0E.3p III— y i 1 4 E ..L — — /lumw®ne 1°11 �,.,..— s I n,� I -7 i ;s 15 Q `5 99 g r bpi15 4 ; x /5191 � FEa. . a ' I £ a, i4 ! II ft- I • 6£. palI.i a �ii 1. , I g8 g . � 0 - E iia 1 gg o .{ y J r .; & W N "I til 1 Op s .. R k0. rlp ','g R` k gee1. ➢ '. oils _ � y `-? I. a e h » x r r; wxe•-- moat y� td ea I, 88 ppQ b $ 7 SM1ftI1 8Z43J N0}IMdANW cc. •••••1188"&18888888888 _ pr o £ �_ ; & w41 aamuvass Sox ^ E � £ apk3 — : 1ra $ - ,31 o iiiksg ell .,� `st Appendix 3 Summary of Proposed Minimum Fixed Rent Minimum Percentage Fixed Rent Growth Variable Rent Growth Rent Growth 1 2023 $400,000 $1,529,201 $1,929,201 2 2024 800,000 100.0% 1,415,486 -7.4% 2,215,486 14.8% 3 2025 1,200,000 50.0% 1,232,084 -13.0% 2,432,084 9.8% 4 2026 1,600,000 33.3% 939,221 -23.8% 2,539,221 4.4% 5 2027 2,000,000 25.0% 634,398 -32.5% 2,634,398 3.7% 6 2028 2,040,000 2.0% 673,430 6.2% 2,713,430 3.0% 7 2029 2,080,800 2.0% 714,033 6.0% 2,794,833 3.0% 8 2030 2,122,416 2.0% 761,752 63% 2,884,168 3.2% 9 2031 2,164,864 2.0% 800,174 5.0% 2,965,039 2.8% 10 2032 2,208,162 2.0% 845,828 5.7% 3,053,990 3.0% 11 2033 2,252,325 2.0% 862,745 2.0% 3,115,070 2.0% 12 2034 2,297,371 2.0% 880,000 2.0% 3,177,371 2.0% 13 2035 2,343,319 2.0% 897,600 2.0% 3,240,918 2.0% 14 2036 2,390,185 2.0% 915,552 2.0% 3,305,737 2.0% 15 2037 2,437,989 2.0% 933,863 2.0% 3,371,852 2.0% 16 2038 2,486,749 2.0% 952,540 2.0% 3,439,289 2.0% 17 2039 2,536,484 2004 971,591 2.0% 3,508,074 2.0% 18 2040 2,587,213 2.0% 991,023 2.0% 3,578,236 2.0% 19 2041 2,638,958 2.0% 1,010,843 2.0% 3,649,801 2.0% 20 2042 2,691,737 2.0% 1,031,060 2.0% 3,722,797 2.0% r 21-99 518,891,349 198,759,426 717,650,775 Total $560,169,920 $217,751,849 $777,921,769 NPV @5% $45,095,161 $19,705,417 $64,800,578 Note:Following the 101h anniversary of the Hotel Opening,the Minimum Fixed Rent shall be reset to the greater of(a)the existing Minimum Fixed Rent,or(b)60%of the average of the actual rent paid during the past5 years. Every 10 years thereafter,the Minimum Fixed Rent shall be reset to(a)the existing Minimum Fixed Rent,or(b)60%of the average of the actual rent paid during the prior 10 year period." APPRAISAL REPORT OF A PROPOSED GROUND LEASE ON REAL PROPERTY Miami Beach Convention Center Hotel Site Northeast corner of 17`h Street and Convention Center Drive Miami Beach,Florida 33139 Report 201823 PREPARED FOR Ms. Maria Hernandez City of Miami Beach 1700 Convention Center Drive Miami Beach,FL 33139 PREPARED BY BLAZEJACK& COMPANY 5890 S.W. 100 Terrace Miami,Florida 33156 Phone: (305)372-0211 www.blazejack.com Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201823 July 18,2018 Ms.Maria Hernandez City of Miami Beach 1700 Convention Center Drive Miami Beach,FL 33139 Re: Appraisal of Proposed Ground Lease Terms on Real Property-201823 Miami Beach Convention Center Hotel site Comprised of 2.55 acres,located at the northeast corner Of l7`°Street and Convention Center Drive Miami Beach,Florida 33139 Dear Ms. Hernandez: At your request,we have completed an appraisal of proposed ground lease terms for the above referenced real property. The purpose of the appraisal is to estimate whether or not the terms of the proposed ground lease on this property reflect the market rent that it is capable of generating given its highest and best use, and whether that rental amount would provide a reasonable return to the current fee simple owner of the property. The intended use of this appraisal is for the Client's internal use in negotiating a land lease for the site of a hotel serving the adjacent Miami Beach Convention Center, and to conform with Section 82-39 of the Miami Beach City Code. This appraisal is subject to various Assumptions and Limiting Conditions and Extraordinary Assumptions set forth in this report. The physical inspection and analysis that form the basis of the report have been conducted by the undersigned. Our analyses have been prepared in compliance with the standards and regulations of the Uniform Standards of Professional Practice(USPAP). The accompanying report includes pertinent data secured in our investigation, exhibits and the details of the processes used to arrive at our conclusion of value. We have estimated the rent for the subject site based on the terms of its proposed ground lease 99-year ground lease. This lease calls for rents that are based on a percentage of total gross revenues generated by the hotel, including all of its departments(rooms, food&beverage,parking,spa/fitness areas, etc.). Based on the enclosed analysis, and considering the Assumptions and Limiting Conditions and the Extraordinary Assumptions set forth in this report,it is the appraiser's opinion that: 1. The subject's 2.55-acre site, if valued in Fee Simple and unencumbered by a lease, would have a hypothetical Market Value of$59,200,000 as of June 29,2018,assuming it has approvals and a highest and best use for development with a full-service convention center hotel with a maximum of 800 guest rooms. 2. To an investor, a reasonable return on land in this location, assuming a highest and best use of the subject property for development with a full-service hotel with up to 800 guest moms, would range from 4.00%to 5.00%of its land value(in Fee Simple). 3. Considering its estimated Fee Simple land value and this range of reasonable returns,an annual rental amount from S2,368,000 to $2,960,000(at stabilization of the proposed hotel's revenue stream) would produce a reasonable return on the subject site as of the current valuation date. BLAZEJACK& COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 4. Administrators with the City of Miami Beach have estimated a stabilized contract rent of$2,634,398 for the subject based on the terms of the lease proposed for this property. Based on the proposed terms of this land lease,the appraisers have estimated these stabilized rental rates to be$2,427,000 if the hotel has a unionized workforce,and$2,890,000 if the hotel's workforce is non-union. Ml of these estimated stabilized rents for the property fall within the range that provides a reasonable return on the subject site. 5. As a proportion of the anticipated total revenues from the proposed 800-room hotel, the percentage rates proposed for the land lease of the subject property fall within the lower half of the range that is typically observed for hotel land leases nationwide. Offsetting this situation is the minimum fixed rent of$2,000,000 proposed for this land lease on the subject, an amount which escalates over the term of this proposed lease; this minimum fixed rent is higher than those observed elsewhere in the market, which effectively reduces the risk of reduced lease payments during temporary periods of recessionary conditions that may affect the proposed hotel's financial performance. Respectfully submitted, BLAZEJACK&COMPANY J 7 1 1 Guthrie Mlinar,MAI,SRA Consultant Cert.Gen.RZ 1916 BLAZEJACK& COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 SUMMARY OF FACTS AND CONCLUSIONS I • • . 8, . w ti'' :t :, a is ..'i ',qt.. , t�i slr S ' i. . r Property Name: Miami Beach Convention Center Hotel Site Property Type: 2.55-acre hotel development site Location: Northeast corner of 17th Street and Convention Center Drive in Miami Beach,Florida 33139 Interest Appraised: Leased Fee Client: City of Miami Beach Intended Use- For the Client's internal use in negotiating a land lease for the site of a hotel serving the adjacent Miami Beach Convention Center,and to conform with Section 82-39 of the Miami Beach City Code. Purpose of the Appraisal: To determine if the tens of proposed land lease on the subject property is synonymous with its market rent,and to determine if that amount would provide a reasonable return to the current fee simple owner of the property. Date of Valuation: June 29,2018 Dates of Inspection: June 29,2018 BLAZEJACK& COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Date of Report: July 18,2018 Zoning: CCC,Convention Center District,City of Miami Beach Planned Development: Full-service, 800-room convention center hotel including multiple food and beverage outlets, meeting room spaces, a recreational spa and fitness facility, ground floor retail space, a parking garage and ancillary amenities consistent with an upper-scale chain hotel operation Highest and Best Use: As Vacant: Consistent with its planned development As Improved—Redevelopment consistent with its planned use Real Estate Taxes(2017) Exempt Estimated Contract Rent With Non-Union Workforce: 82,890,000(rounded)—at stabilization With Union Workforce: $2,427,000(rounded)—at stabilization Effective Returns on Land: 4.10%to 4.88%of hypothetical value of site in Fee Simple Reasonable Returns on Land: 4.00%to 5.00%of site value in Fee Simple Exposure&Marketing Times: Less than 12 months BLAZEJACK & COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach,Florida REPORT 201823 TABLE OF CONTENTS CERTIFICATE OF VALUE I ASSUMPTIONS AND LIMITING CONDITIONS 2 SECTION I INTRODUCTION 5 IDENTIFICATION OF THE PROPERTY 6 INTEREST APPRAISED AND DATE OF THE APPRAISAL 6 INTENDED USE AND INTENDER USER OF THE APPRAISAL 6 SCOPE AND PURPOSE OF THE APPRAISAL 6 HISTORY OF THE SUBJECT 7 DEFINITIONS OF VALUE AND INTEREST APPRAISED 7 LEGAL DESCRIPTION 8 SECTION II MARKET ANALYSIS 14 INVESTMENT CRITERIA&FINANCING AVAILABILITY 15 HOTEL MARKET ANALYSIS 18 SECTION III DESCRIPTIVE DATA 28 SITE DESCRIPTION 29 DESCRIPTION OF IMPROVEMENTS 31 REAL PROPERTY TAXES AND ASSESSMENTS 33 ZONING 33 HIGHEST AND BEST USE 33 SECTION IV: LEASE ANALYSIS 37 GROUND LEASE ANALYSIS 38 ESTIMATE OF CURRENT GROUND LEASE PAYMENTS 43 MARKET VALUE OF THE SITE(IN FEE SIMPLE) 55 ANALYSIS OF THE PROPOSED RENT FOR THE SITE 69 CONCLUSIONS 74 ADDENDA Exhibit A Engagement Letter Exhibit B Proposed Ground Lease to the Subject Site Exhibit C Tumbcrry/Terra Hotel Development Description&Plan Exhibit D Description of Land Sales Exhibit E Miami-Dade County Regional Analysis Summary Exhibit F Qualifications of the Appraisers BLAZEJACK& COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 CERTIFICATE OF VALUE Uwe certify that,to the best of my knowledge and belief, • the statements of fact contained in this report arc true and correct. • the reported analyses,opinions,and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal,impartial,and unbiased professional analyses,opinions,and conclusions. • 1 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. • 1 Guthrie Mlinar provided appraisal services on the property that is the subject of this report in July 2018. No other appraisal or other services have been performed on this subject property by the undersigned within the three-year period immediately preceding acceptance of this assignment. • I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • the engagement in this assignment was not contingent upon developing or reporting predetermined results. • the 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 subsequent event directly related to the intended use of this appraisal. • the analyses,opinions,and conclusions were developed,and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. • 1 Guthrie Mlinar made a visual inspection of the exterior of the property that is the subject of this report on lune 29, 2018. • no one provided significant real property appraisal assistance to the persons signing this certification. • the reported analyses, opinions,and conclusions were developed,and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. • the use of this report is subject to the requirements of the Appraisal Istitute relating to review by its duly authorized representative. • as the date of this report Thomas J.Blazejack and l Guthrie Mlinar have completed the continuing education program of the Appraisal Institute. BLAZEJACK&COMPANY 4 1 Guthrie Mlinar,MAI,SRA Consultant Cert.Gen.RZ 1916 BLAZEJACK& COMPANY 1 CERTIFICATE Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 ASSUMPTIONS AND LIMITING CONDITIONS The appraisal is subject to the following assumptions and limiting conditions: No survey of the subject property was undertaken. 2. The subject property is Bee and clear of all liens except as herein described. No responsibility is assumed by the appraiser for matters which are of a legal nature, nor is any opinion on the title rendered herewith. Good and marketable title is assumed. 3. The information contained herein has been gathered from sources deemed to be reliable. No responsibility can be taken by the appraiser for its accuracy.Correctness of estimates,opinions,dimensions,sketches and other exhibits,which have been furnished and have been used in this report are not guaranteed. The value estimates rendered herein aro considered reliable and valid only as of the date of the appraisal.due to rapid changes in the external factors that can significantly affect the property value. 4. This study is to be used in whole and not in part. No part of it shall be used in conjunction with any other appraisal. Publication of this report or any portion thereof without the written consent of the appraiser is not permitted. 5. The appraisers,herein,by reason of this report,are not required to give testimony in court with reference to the property appraised unless notice and proper arrangements have been previously made therefore. 6. The value estimate assumes responsible ownership and competent management. The appraiser assumes no responsibility for any hidden or unapparent conditions of the property, subsoil, or structures,which would render it more or less valuable. No responsibility is assumed for engineering, which might be required to discover such factors. 7. Neither all nor any part of the contents of this report shall be conveyed to the general public through advertising, public relations, news, sales or other media without the written consent and approval of the author, particularly as to valuation conclusions, the identity of the appraiser or firm with which he is connected,or any reference to the Appraisal Institute. 8. The existence of potentially hazardous material used in the construction or maintenance of the site or its improvements, such as the presence of urea formaldehyde foam insulation, and/or the existence of toxic waste which may or may not be present on the property,was not observed by the appraiser;nor does the appraiser have any knowledge of the existence of urea-formaldehyde foam insulation or other potentially hazardous waste material of the improvements and the site may have an effect on the value of the property. We urge the client to retain an expert in this field if needed. 9. Building floor plans, hotel room counts, capacities of food and beverage outlets, and other details of the proposed development of the subject property were obtained from the client's Request for Proposals(RFP No. 2018-238-KB) for the development of a convention headquarter hotel adjacent to the Miami Beach Convention Center. This RFP also contains the proposed terms of the land lease on the subject property, and was reviewed by the appraisers. The data contained therein was assumed to be correct for the purposes of this valuation study. Other information was also obtained from hotel operation proposals from the proposed developer,Turnberry?erra. These were also relied upon by the appraisers and are assumed to be correct for the purposes of this report 10. The Americans with Disabilities Act (ADA) became effective January 26, 1992 sets strict and specific standards for handicapped access to and within most commercial and industrial buildings. For purposes of this appraisal. we are assuming the building is in compliance; however, we recommend an architectural inspection of the building to determine compliance or requirements for compliance. We assume no BLAZEJACK& COMPANY 2 ASSUMPTIONS AND LIMITING CONDITIONS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 responsibility for the cost of such determination and our appraisal is subject to revision if the building is not in compliance. Extraordinary Assumptions The proposed lease for the subject site,which is presented in the Addenda of this report,calls for an annual base contract rent this is comprised of a percentage of the gross revenues generated by the hotel operations which will occur on the site,with a lower base minimum rent. This hotel development will be comprised of an 800-room hotel under a major international hotel chain affiliation. It will also include multiple food and beverage outlets, a spa and fitness facility, meeting mom space, a garage rooftop pool and pool deck, ground floor retail space, and ancillary amenities consistent with a convention center hotel operation in a major North American market. The description of this redevelopment and expansion to the existing subject property is provided in the client's Request for Proposals (RFP No. 2018-238-KB) for this development, and in the proposed development outlined by the bidder of this RFP, Tumbwr y/Terra. Therefore, it is an Extraordinary Assumption that the proposed development of this property will occur at a level that is consistent with these proposals. Any deviation from this proposed redevelopment and expansion plan for the appraised property may result in a variance from the market rent that the property is capable of generating. 2. The estimate of market rent assumes responsible ownership and competent management, as noted in the preceding Assumptions and Limited Conditions. This is particularly true for hospitality properties such as that outlined in the development of the hotel that is proposed for the subject site. Therefore, it is also an Extraordinary Assumption that the estimate of market rent contained herein assumes proper management providing operations to the hotel, that are both consistent with the RFP from the client and that of the winning bidder(Tumberry/Terra). 3. It is an Extraordinary Assumption that the redevelopment of this property will result in a full-service hotel property that is comparable to the competitive set of hotels that are described in the Hotel Market Analysis section of this report. The degree to which this redeveloped hotel product is comparable to these sets of hotels is outlined in this report,with its occupancy and rate penetration relative to this and other competitive hotel sets,is assumed to be reasonable for the purposes of this report. 4. The proposed ground lease for the property requires approval from the citizens (registered voters) of the City of Miami Beach. For the purposes of this analysis, it is an extraordinary assumption that the proposed convention center hotel development to the subject site, detailed in this report,has already been approved by all necessary parties as of the valuation date. If this or other approvals do not occur, the estimates of market rent and values contained herein and its applicability to the subject site axe null and void. 5. The estimate of base contract rents and market rents contained herein assume that the development of this proposed 800-room convention center hotel to this site(as described in this report) has been completed and is generating a stabilized level of gross revenues from its hotel operations as of the current date of valuation, with no rent concessions in place. Furthermore, it also an extraordinary assumption that this development plan for the subject property,as proposed.represents its highest and best usc. 6. A use restriction in the form of a Neutrality Agreement has been proposed for the subject site. This Neutrality Agreement,which would be between the eventual operator of the hotel(the hotel user)and labor unions, allows for the right of a labor union ("Union") to recruit union members from the hotel's employees. Under this Agreement, the Union would be allowed to recruit during non-business hours in order to obtain a membership of a majority of certain categories of qualified employees of the subject hoteL This agreement does not mandate union membership by these hotel employees, but allows for the enforcement ofa neutral environment by the hotel and its operator if a labor union wishes to recruit various categories of hotel employees to join the Union as members.This Agreement would effectively encumber the site by restricting its hotel operator from actively opposing any such recruitment by a labor union of BLAZEJACK& COMPANY 3 ASSUMPTIONS AND LIMITING CONDITIONS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 these qualified hotel employees. If a majority of the qualified hotel employees decide to join a Union, the Union may be allowed to bargain collectively for those employees regarding their employment terms including pay, benefits, hours worked, etc. A description of the basic terms of the proposed Neutrality Agreement that would encumber the site's use is presented in the Addenda of this report. For the purposes of this analysis of the subject property, it is an Extraordinary Assumption that this Agreement is assumed to be in effect as an encumbrance to the use of the site as of the appraisal and valuation dates. 7. Implicit in the estimates of value is the presumption of good quality construction, competent management, aggressive marketing, and economic stability. The value estimates are subject to unforeseeable events that could alter market conditions prior to the effective date of the opinion. BLAZEJACK& COMPANY 4 ASSUMPTIONS AND LIMITING CONDITIONS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 SECTION I INTRODUCTION BLAZEJACK& COMPANY 5 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 IDENTIFICATION OF THE PROPERTY The subject is a rectangular site with approximately 2.55 acres located at the northeast corner of 17th Street and Convention Center Drive in the South Beach neighborhood of Miami Beach, Miami-Dade County, Florida. This location is immediately south of the Miami Beach Convention Center,and west of the Fillmore(Jackie Gleason)performing arts theater. INTEREST APPRAISED AND DATE OF THE APPRAISAL The purpose of this appraisal is to analyze the terms of a proposed ground lease for this property in order to determine if these terms represent a market lease rate and structure, and a reasonable return on the land, under economic conditions prevailing on June 29, 2018, the date of valuation. A leased fee interest in this property is considered in this valuation as of this current valuation date,along with a Fee Simple interest in the value of the underlying site. INTENDED USE AND INTENDER USER OF THE APPRAISAL It is understood that the intended use of this report is for asset management by the client, the City of Miami Beach,in negotiating a ground lease for this property. SCOPE AND PURPOSE OF THE APPRAISAL This appraisal is presented in a narrative format that is consistent with USPAP and the client's requirements for research and analysis in this assignment. Its purpose is to estimate whether the terms of the proposed ground lease terms reflect a rental rate that is similar to that which could be obtained in the market (synonymous with market rent). This includes an analysis of the estimated base contract rent for the subject to determine if that amount is synonymous with the Market Rent for the site,and the site's value in fee simple,considering the Assumptions and Limiting Conditions and the Extraordinary Assumptions set forth in this report. As part of this appraisal, a number of independent investigations and analyses were required. The scope of this analysis was to inspect the property,consider market characteristics and trends, collect and analyze pertinent data, develop a conclusion and estimate the property's ground rent. This includes an analysis of the potential gross revenue generation from an 800- room, full-service, convention center hotel operation at this site. This potential gross revenue BLAZEJACK& COMPANY 6 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 estimate was formulated from data of other similar hotel operations from previous estimates provided by several major international hotel chains, and from a review of the revenues estimated by Tumberry/Terra, the proposed developer and operator of this convention center hotel facility. The extent of verification consisted of assembling and analyzing raw data gathered from a variety of sources including public records data services, news periodicals and in-house files. Where possible, transactions were verified through discussions with buyers, sellers,brokers and knowledgeable third parties. A Sales Comparison Approach was used to estimate the value of the subject site in fee simple;returns on an investment in that site were analyzed to detennine if the terms of the proposed lease on the site were consistent with its rent-producing capabilities in the open market. Finally, all assumptions and limiting conditions that affect the analyses, opinions and conclusions were set forth. Data sources included four major international hotel chains (which are not identified in order to conform to their confidentiality requirements), Smith Travel Research,various investor surveys, press releases and interviews from buyers and sellers of hotel (re)development sites in the market,public records,and other outlets. HISTORY OF THE SUBJECT The subject is owned by the City of Miami Beach. The site is part of the City's convention center property, and is proposed for lease as the site of the convention center's headquarters hotel. A lease abstract describing the primary terms of the proposed lease on the subject site is presented in the Addenda of this report. No sales of this property or ownership transfers were observed by the appraisers during the last five years,and the property is not listed for sale. DEFINITIONS OF VALUE AND INTEREST APPRAISED According to the Code of Federal Regulations, Title XI of the Financial Institutions Reform,Recovery and Enforcement Act of 1989("FIRREA"), and according to the 12th Edition of The Appraisal of Real Estate,market value is defined as follows: BLAZEJACK& COMPANY 7 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach,Florida REPORT 201823 Market Value The most probable price, which a property should bring in 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 on 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 a normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Fee Simple Interest Absolute ownership unencumbered by any other interest or estate,subject only to the limitations imposed governmental powers of taxation,eminent domain,police power,and escheat. Leased Fee Interest An ownership interest held by a landlord with the right to use and occupancy conveyed by a lease to others; usually consists of the right to receive rent and the right to possession at termination of the lease. Market Rent The rental income that a property would most probably command on the open market;indicated by current rents paid and asked for comparable space as of the date of the appraisal. Source: Appraisal Institute,The Ar,nraisal of Real Estate, I3t Edition,(Chicago,2008) LEGAL DESCRIPTION Not available; the property is part of the larger site of the Miami Beach Convention Center,which has a total of approximately 37 acres. EXPOSURE TIME AND MARKETING PERIOD Exposure time is that time the property is assumed to have been on the market before the sale assumed on the date of appraisal. It is our opinion that with a reasonable listing price and aggressive marketing, the subject exposure time for finding a qualified land tenant would be less than 12 months under the described leasing scenario, and the Assumptions and Limiting Conditions and Extraordinary Assumptions outlined in this report. Marketing time is that time, at any price, that the property would take to sell from the date of appraisal forward, i.e., after the date of appraisal. The relationship between price and BLAZEJACK& COMPANY 8 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 marketing time is straightforward and normally, the lower the price, the less time to market. Based on investor expectations and marketing times for similar properties, both the exposure and marketing periods for leasing the subject property are estimated to be less than 12 months. REGIONAL ANALYSIS The subject is located in Miami-Dade County, the southernmost of three counties comprising the South Florida regional market. A summary of economic trends found in this regional market is presented in the Addenda of this report. NEIGHBORHOOD ANALYSIS According to the Appraisal of Real Estate, 12th Edition, a neighborhood is a group of complimentary land uses. Social, economic, governmental and environmental forces influence property values in the vicinity of the subject property,which,in turn,directly affect the value of the subject property itself. The area of influence is the area within which the forces affect all surrounding properties in the same way. The boundaries of the neighborhood are drawn by observing the extent to which the four forces affect all properties in the same way. Miami Beach Overview The subject property is in the city of Miami Beach in Miami-Dade County, Florida. This municipality is on a barrier island across Biscayne Bay from the mainland areas of Miami- Dade County, whose developed areas are anchored by city of Miami. Miami Beach is geographically divided into three sections. South Beach, extending from Government Cut north to the Collins Canal along Dade Boulevard (as far north as 24th Street), has the city's world- famous Art Deco district along with the Miami Beach Convention Center, the Lincoln Road retail/entertainment area, and cultural attractions. Mid-beach or Central Miami Beach extends to the north of South Beach to 63`1 Street and is the area of resort hotels and high-rise condominiums with single-family residential and golf course uses to the west of Indian Creek. Commercial development in this area is principally served by Arthur Godfrey Road. North Beach extends from 63`1 Street north to the city's limits at the Town of Surfside, and includes Normandy Isle and commercial areas centered around 70 Street and along Collins Avenue between 69th and 74th Streets. BLAZEJACK& COMPANY 9 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 City of Miami Beach r Solana 8 North Harding Avenues Beach 71st Sneet Middle Beach a,st srreoter -. Uocco / Road ores Cvenua HOW Alton DSPic+ Road Ocean Wasningwn Drwe South AVerUe ; Beach Cosns Avenue Retar Si*,street n5+'+a "3/4M Land use in the area is predominantly residential with hotels scattered along the city's oceanfront and along Collins and Washington Avenues. Supporting retail uses can be found along these two streets, along with Alton Road in South Beach, 4161 Street (Arthur Godfrey Road) in Mid-beach,and 7151 Street in North Beach. Miami Beach is internationally recognized as a prime beach resort destination. Since the early 1990s it has experienced a rebirth due to major gentrification activity that has taken place BLAZEJACK & COMPANY 10 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 especially in the South and Central Beach areas, a trend that has continued to spread northward across the island community. Once known as a moderate-income retirement community, gentrification made Miami Beach, and particularly South Beach, a world-famous leisure destination for visitors from around the globe. A wide range of amenities including white-sand beaches, favorable weather (particularly during the winter months), world-famous Art Deco architecture, and shops, restaurants and hotels catering to every budget are available for attracting leisure visitors to this market, and innumerable residential condominium projects catering to part-and fulltime residents. South-Beach Overview The boundaries of the subject's South Beach neighborhood in Miami Beach are formed by natural boundaries including the Atlantic Ocean to the east, Biscayne Bay to the west and Government Cut to the south. Its north boundary is generally formed by the Collins Canal along the southeast side of Dade Boulevard, reaching as far north as 24th Street between Indian Creek and the Atlantic Ocean. It also includes the Sunset Harbour neighborhood across Dade Boulevard to the north, between Biscayne Bay to the west of Alton Road and Sunset Drive. This neighborhood comprises the southern part of a bather island that connects with the mainland areas of Miami-Dade County via two causeways — the MacArthur Causeway (Interstate 395) which connects northern portions of downtown Miami with 51" Street in South Beach, and the Venetian Causeway which continues west from the west end of Dade Boulevard and 17th Street across the Venetian islands in Biscayne Bay to a connection at Biscayne Boulevard/U.S. Highway 1 in Miami. Over the past 25 years, South Beach has undergone an enormous revival —transforming from a run-down retirement community to an ultra-chic oceanfront tourist destination. It includes four- and five-star resort hotels along the oceanfront, many within renovated existing Art Deco buildings, along with popular retail districts and top-drawer restaurants that have received world-wide accolades. Land uses in South Beach are generally comprised of low- to mid-rise hotels along Ocean Drive, a mixture of low- to mid-rise hotels and apartment buildings on Collins Avenue and Washington Avenue to the immediate west, and low-rise apartment buildings on streets between Washington Avenue and West Avenue. High-rise residential towers dominate the immediate Biscayne Bay frontage of the community to the west of West Avenue and Bay Road BLAZEJACK& COMPANY 11 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 in South Beach. North of 15th Street along Collins Avenue in South Beach is the Collins Avenue Hotel District,which includes high-rise luxury hotels along the oceanfront and low-to mid-rise hotels and apartments to the west of Collins Avenue. This beachfront neighborhood offers numerous amenities for attracting tourists and visitors beyond its wide sandy beaches and balmy weather. The Miami Beach Convention Center is located along the west side of Washington Avenue in South Beach. A $620 million renovation and expansion of this facility is underway by the City of Miami Beach,designed by Fentress Architects, Arquitectonica and West 8. The renovated center will house 1.4 million square feet when completed, including 500,000 square feet of exhibit space, a 60,000-square foot grand ballroom, a 20,000-square foot glassed rooftop junior ballroom, additional meeting rooms and state-of--the art technology support. Completion is expected later this year. Immediately south of the convention center is the Fillmore Miami Beach (a.k.a. Jackie Gleason)Theater, a performing arts facility in a classic Art Deco building. Across 17th Street to the south is the New World Center, the home of the New World Symphony orchestral academy. Designed by Frank Gehry, this 756-seat facility opened in 2011 accompanied by an outdoor projection wall and a 2.5-acre public park. Other cultural attractions are centered around Collins Park to the west of Collins Avenue at 22"d Street, and include the Bass Museum and the headquarters for the Miami City Ballet. Lincoln Road is an open-air, pedestrian-only retail/entertainment area running east/west between I6t and 17th Streets from Alton Road to Washington Avenue. The mall is well landscaped with shelters, greenery and seating. Lincoln Road now features over 200 shops including designer boutiques, national retailers, sidewalk cafes and restaurants, the Colony Theater and a multi-screen movie theater. Major retailers include the Gap, Banana Republic, Zara, H&M, lululemon, Diesel Store, the Nike Store, the Apple Store, and Sunglass Hut. Balan's, Yuca, Quattro, Rosinella, Segafredo, and Pizza Rustica arc among the restaurants found along Lincoln Road. Several big-box retailers have recently leased new spaces on side streets just off Lincoln Road including Marshall's, Anthropologic and Ross Dress for Less. Rents for prime retail space along this pedestrian mall range up to $300 per square foot, triple net,or among the highest in South Florida. Older Art Deco hotels along Collins Avenue between 5th and 8th Streets have been gutted and remodeled for single-tenant retail store use,and now include tenants such as Armani BLAZEJACK& COMPANY 12 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Exchange,Guess,The Gap, Steve Madden, Tommy Hilfiger, Victoria's Secret, and Zara. Other retail areas include a new vertical shopping center at 5th Street and Alton Road featuring Best Buy, TJ Maxx, Staples and Ross Dress for Less. Additional supporting retail uses are found along 5th Street and Alton Road in this market. The subject property is located along 17th Street at Convention Center Drive, immediately south of the Miami Beach Convention Center and west of the Fillmore Theater. The New World Center is located across 17th Street to the south. Accessibility The main nortWsouth arteries in the South Beach area include Alton Road on the western side, Collins Avenue on the east side and Meridian and Washington Avenues in between. Major east/west cross streets include 5th, 16th and 17`h Streets along with Dade Boulevard and 23r1 Street. The accessibility throughout the neighborhood is good. Access to the mainland is provided by the MacArthur Causeway (Interstate 395) at 5th Street and the Venetian Causeway at 17th Street/Dade Boulevard. The MacArthur Causeway directly intersects with Interstate 95 (1-95) at the northern edge of downtown Miami and continues westward as State Road 836 to connect with Miami International Airport, State Road 826 (the Palmetto Expressway) and Florida's Turnpike. Miami International Airport is located approximately 10 miles west of the subject property, just north of State Road 836 and west of N.W. 42 Avenue. Fort Lauderdale/Hollywood International Airport is about 22 miles to the north along 1-95 just south of Interstate 595. This neighborhood is also proximate to Port Miami, the world's busiest cruise ship terminal, which is just east of downtown Miami on Dodge Island. Conclusion The immediate area of the subject reflects a mix of cultural uses and the Miami Beach Convention Center. The Lincoln Road retail/entertainment area is located one block to the south, and South Beach's attractive Atlantic Ocean beaches are located approximately four blocks to the east. The subject offers excellent access to the abundant recreational, shopping, dining and cultural attractions in its South Beach neighborhood, with good accessibility to Miami International Airport and the cruise port at Port Miami. BLAZEJACK& COMPANY 13 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201823 SECTION II MARKET ANALYSIS BLAZEJACK& COMPANY 14 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 INVESTMENT CRITERIA&FINANCING AVAILABILITY Nationwide, investment and development prospects for hotel properties are expected to fall near the middle of the range among various other commercial property types. This is illustrated by the tables below, which are obtained from Emerging Trends 2018, published by the Urban Land Institute,which is based on trends occurring prior to the start of that year: Inndment Fairies Development prapant Fulfilment Fumnmen Wankuuse Warehouse Senahcutrad e" ` • SenIwti Sip : , a„n Moderate-twat! F „{q}y�'L Mc era@-IlcumM i I• ebfo uka aperients •• ” Norktreewadm its •Sc �+F Atap raNastmet • y' Medical ofke x' • Medical alike ;41, • Affordable apadmenk I • N-1. Certral-ely office • Stdedhausnp _ 1 $ hu'A� ShdenlhoLL4np • Central-0dyoltlee IL- • h�1V Research and delelepmela s` • UNaryllgn-sNwlrerdp " • :, s Midscale helot • MMSwM eek • Restart and dewindmilt • Flex b • 5 Flex • c.., UNanm9b-sheet retail • Upscale halts 3,1 • x+ rr Upscale Intek " •.: High-MmmuepatmeKS • *+ ManWaclaep '.- • it Ewrur noteb • 'ar,i Eemoniy loth * ..: • Ln Slryk-tmly rentaly • 4; Nth-Income apartments • NelpnkaMod/wmmanNy • Single-lanly rule i. • fati shoppkgcenten NNphbaAwdicwanmIY fk. s ManuIaath1 q B}r'.. • snwglgcanen ,• • LNa5lyWadertklmentcwbrr5 a' • .jc,,_i Lt ksMO'enteatanmadcenlers s, • g'4* Suburban OM • ' y k Lucay Me .,,. • '..%3254 s Lauryhaek .a:.;, • h' .. Madel center • "*S Outlet centers ' • Nit f Suburban alike • y Pow centers ', ,• PoAeceer5 c•. e. » , 5 * Hamot mak !II= • FLL Abysmal Far Etaalenl Abysmal Falr Emden! BLAZEJACK& COMPANY 15 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Exhibtt 4-14 Hotel Investment ProspectTrends 9o• poor 2005 2005 2010 2012 2014 2018 2018 sovics:FnennTried'6HWby.weereye. However, this includes investment and development attitudes for all lodging properties nationwide. This source indicates that the Miami market has the third-highest percentage of surveyed hotel investors recommending buying hotel properties in this market, with almost 80% of respondents recommended to either buy or hold hotel investments in this market: BLAZEJACK& COMPANY 16 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201823 Exhibit 3-10 US.Hotel Property Buy/Hold/Sell Recommendations Orange Camp San Jose Miami -47.7C.".; Suite OaklandWEast Bay " ,: *' •" ' ' LosAhgPAes PorOanQOR rh fix, gtr Washln0oq DC-Nattem VA 1111.1.111111MU t:r 4 f . Dallas/Fort Worth ,."�^ ..P. Charleston .r RaleilvDtuttam Charlotte i San Francisco J Denver Atlanta t4. e ;" *mow,:, Washington,DC-District Mrla. rrr4_.," "° - San Antonio Fniladelptua -: firki Aoshn 111111111r. Nashville t= _, t ::%:;111:::P7 0% 20% 40% 50% 80% 100% Source Emergev'g Trends In Real Estae 20t8 away Jones Lang LaSalle also tracks sales and investment trends for hospitality properties nationwide. According to this source's first quarter 2018 Investment Quick Look, U.S. hotel investment was up in the first three months of this year compared to last year, although transaction activity has generally decreased since a peak in 2015. Leading these investments were U.S. West Coast markets,resort properties and portfolios of full-service hotels: BLAZEJACK& COMPANY 17 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 G $50.0 0 '^ $45.0 c ■Ql ■Q2 Q3 ®Q4 o 540.0 $35.0 1 $30.0 $25.0 t U $200 I c $15.0 ■■$10.0 $5.G ■ II II $0.0 `s m o .-, N rc Ln .o r w N (V N N N (V (V N N N N N Financing sources for hotels nationwide include CMBS, financial institutions, insurance companies, pension and debt funds, and REITs. Terms and pricing vary by source, and are dependent on current cash flow performance. HOTEL MARKET ANALYSIS Economic Trends Affecting Hotel Demand Amid measureable improvements across most commercial sectors of the economy, the Miami-Dade hotel industry exhibited steady improvement and investment during the first half of this decade, emerging as one of the top U.S. hotel property markets for investment and development. While local unemployment rates remain higher than the national average, they remain below 5.0% and labor markets have posted consistent growth with a decline in this rate over time. Long term, Miami's infrastructure expansion (ongoing port, air and rail projects which tie into each other and mass transit), strong ties to international trade and the area's market position as an international tourist hot-spot position the city's hotel market to outperform much of the rest of the U.S.,competing favorably with other major hotel markets in the country during the near term. According to data from Smith Travel Research (STR), the Miami hotel market regularly appeared as one of the nation's top five hotel markets regarding average daily rate BLAZEJACK& COMPANY 18 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 (ADR), occupancy and revenues per available room. An example of this status is shown from STR's 2013 report on these hotel benchmarks during 2013: Hotel Occupancy: U.S.Average 62.3%in 2013(Smith Travel Research) 2013 Rank City 2013 2012 2011 1 New York 84.6% 83.7% 81.9% 2 Oahu Island 83.7% 84.7% 75.0% 3 San Francisco 83.0% 80.3% 75.3% 4 Mi3Yn142 t '' 1'A46' 5 Los Angeles 76.8% 75.4% 71.1% Hotel ADR: U.S.Average$110.50 in 2013(per Smith Travel Research) 2013 Rank City 2013 2012 2011 1 New York $258.57 $251.15 $275.04 2 Oahu Island $209.01 $183.57 $169.44 3 San Francisco $187.79 $171.80 $156.13 ., 176.66 ;�, 316344 $160.14% 5 Boston $164.34 $158.89 $153.70 Hotel RevPAR: U.S.Average$68.69 in 2013(per Smith Travel Research) 2013 Rank City 2013 2012 2011 1 New York $218.65 $210.11 $225.24 2 Oahu Island $174.89 $155.42 $127.01 3 San Francisco $155.83 $137.98 $117.54 e 40 *' . 4 " 7 1 .41414,144.5" " 5 Boston $120.26 $113.92 $102.14 During the last two calendar years, however, several factors and events provided significant headwinds against growth in these areas, including the local appearance of the Zika BLAZEJACK& COMPANY 19 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201823 virus affecting visitation in 2016, and the closing of significant areas of the Miami Beach Convention Center to make way for a $620 million refurbishment and expansion. A strengthening U.S. dollar made vacations in Miami more expensive for foreigners, affecting the number of international visitor arrivals. A surge in new hotel construction occurred in Miami that peaked in tate 2016; in 2015, 2,866 hotel rooms were under construction, a figure that expanded to 3,579 rooms under construction at the end of 2016. The expanded supply of hotel rooms in this market was also impacted by additional accommodations provided by AirBnb and other hotel alternatives. The last two hurricane seasons were also very active,including a direct hit by Hurricane Irma in September 2017. However, the effects of Hurricane Irma were short- lived; the hurricane drove domestic visitation downward last year, but its impact was more than offset by an increase in international visitors. The recent ADR, occupancy and RevPAR performance for the Miami hotel market is exhibited below from data gathered from the Greater Miami and the Beaches travel and tourism organization: Year ADR Occupancy Rate I2evPAR 2013 $176.66 77.9% $137.60 2014 $185.12 78.3% $144.87 2015 $193.32 78.6% S151.95 2016 $189.98 75.6% $143.59 2017 ] $188.81 76.7% $144.78 Although the ADR for the Miami hotel market fell slightly last year, an increase in occupancy resulted in a slight increase in RevPAR for this market. During the first quarter of 2018, an acceleration of this recovery appears to be occurring, as STR reports that the ADR, occupancy and RevPAR for hotels in this region recorded strong gains over the same period in 2017: Period ADR Occupancy Rate RevPAR 1"Qtr. 2017 $190.85 80.9% $154.36 l"Qtr.2018 $201.98 83.3% $168.26 As of March 2018, STR reports 54,909 total hotel rooms in 429 properties in Miami- Dade County,with 19,208 rooms in 171 hotel properties in Miami Beach. The 3,579 rooms that BLAZEJACK& COMPANY 20 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 were noted by STR to be under development at the end of 2016 fell to a volume of new supply of 2,982 rooms under construction in this market at the end of 2017. The Miami area is a popular destination for domestic tourism, in addition to being an international crossroads that functions as the "Gateway to the Americas"connecting the Central and South American economies with North America. According to statistics compiled by the Greater Miami Convention and Visitors Bureau, there were more than 15.86 million overnight visitors to Miami in 2017, an increase of 0.9% over the previous year. Just under half of that total was international visitors. Origins of Overnight Visitors to Greater Miami %Change 2013 2014 2015 2016 2017 2016 v. 2017 (000) (000) (000) (000) (000) Domestic Visitors 7,0872 7,303.2 7,990.1 8,1004 : 8,061.8 4.5% International Visitors 7,131.7 7,260.0 7,506.0 7,624.2 7,7982 2.3% Total Overnight Visitors 14218.9. 14,563.2 15p96.1 15,724.3 15,860.0 0.9% Area of Lodging 2013 2014 2015>. 2016<. 2017 Total Visitors Miami Beach 473% 57.8% -.54.7% 55.6% :58.5% Downtown Miami 12.1% 13.2% 14.3% 15.0% 14.9% Airport Area 165% 122% 11.6% -. 8.3% 10.9% North Dade/Sunny Isles Beach 13.9% 11.8% 9.8% 11.7% 8.1% South Miami-Dade 6.8% '<3.9% 41% 3.8% 2.4% Coconut Grove 0.5% 1.5% 1.2% 1.7% 2.0% Coral Gables 1.7% L4% 14% 13% 1.9% Doral 1.2% 3.3% 4.4% 2.9% L7% Key Biscayne 1.3% 1.5% " 2.1% 2.4% 1.5% Source: Greater Miami Convention& Visitors Bureau Miami Beach continues to be a growing and dominant choice for hotel lodging for visitors to this market. In 2017, over 96% of visitors arrived by air travel. The following BLAZEJACK& COMPANY 21 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 chart shows passenger trends through Miami International Airport (MIA) from 2005 through 2017, a gauge of visitation trends in this market. After the impact of the Great Recession during the last decade,passenger traffic regained its previous growth pattern. Passenger Y plume Trends- Miami International kirporl International Total Passengers - %of Passengers a % Period (000s)I'. Total '. (000s) !Change. 2005 14,241 45.9% 31,008 2006 14,728 45.3% 32,534 4.9% 2007 15,541 46.1% 33,740 3.7% 2008 16,147 47.4% 34,064 1.0% 2009 15,970 47.1% 33,890 -0.5% 2010 16,892 47.3% 35,698 5.3% 2011 18,418 48.1% 38,314 7.3% 2012 19,372 49.1% 39,467 3.0% 2013 20,202 49.8% 40,563 2.8% 2014 20,097 49.1% 40,942 0.9% 2015 21,207 47.8% 44,350 8.3% 2016 21,380 48.0% 44,584 0.5% 2017 21,473 48.7% 44,071 -1.2% Source: Miami-Dade County Aviation Dept. Miami's role as an important international destination shows in the increasing share of total travel by international passengers which increased from 45.3%in 2006 to almost 50.0% in 2013. The weakening of the U.S. dollar, coupled with robust economic performance in the Latin America region, helped fuel continued growth of international visitation during that period. In 2014, the dollar began to strengthen, while some European economies weakened, causing a drop in the proportion of international travelers and their growth in visitation in this market. Nonetheless, overall passengers handled at MR continued to grow, although interruptions to flight and basic services caused by Hurricane Irma in September 2017 caused a minor downturn in passengers handled that year. Hotel Demand—South Beach Hotels in the subject's South Beach market primarily accommodate leisure demand from vacationers visiting this resort market. Demand from the group segment of the market is secondary, and is primarily influenced by events and trade shows staged at the Miami Beach BLAZEJACK& COMPANY 22 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Convention Center (MBCC). This facility is located between Washington Avenue and Convention Center Drive in South Beach, to the north of l7`" Street. It is undergoing a $620 million renovation and expansion that will result in 1.4 million square feet of space, including 500,000 square feet of exhibit space, a 60,000-square foot grand ballroom,junior ballroom and meeting rooms. Most hotels in this market have minimal meeting space as this market segment is a secondary demand generator for room night sales due to the neighborhood's beachfront/resort location. A secondary amount of corporate/business guest demand is also present. Most of the demand from the leisure market segment peaks in the winter season, when the entire Miami area enjoys peak occupancies and average rates, and during special event weekends such as the Miami International Boat Show, the Coconut Grove Arts Festival, Art Basel and Art Week Miami, and college football bowl games. Additional leisure demand is generated by the South American and European tourist markets during July and August. Leisure Segment The leisure market segment consists of individuals and families who are spending time vacationing in the area. Their travel purposes may include recreational activities such as lounging on the region's numerous beaches or at hotel pools, playing golf or tennis, spa/fitness and health, swimming and relaxation. Other activities include shopping, touring, dining, nightclubbing, sightseeing, etc. Leisure demand is strongest Friday and Saturday nights,and all week during holiday periods. Peak periods occur from November through March, when Miami's balmy weather attracts visitors escaping the winter chill in other areas of North America. Future leisure demand is related to the overall economic health of the national and global markets; this is evident from the data on passenger traffic at Miami International Airport, which is roughly half domestic and half international. Trends showing changes in state and regional unemployment and disposable personal income often have a strong impact on leisure visitation. As the national and global economies have recovered from the effects of the Great Recession, hotel occupancies and rates in this market improved as additional room night sales occurred from the leisure segment of this market. South Beach is a premier vacation destination with a worldwide appeal, offering wide sandy beaches, shopping, dining, nightlife and BLAZEJACK& COMPANY 23 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 recreational amenities for attracting visitors and room night demand in this market segment; these were outlined in the Neighborhood Analysis section of this report. Group Segment The meeting and group market includes meetings, seminars, conventions, trade association shows, and similar gatherings of ten or more people. Peak convention demand typically occurs in the spring and fall. Because of vacations, the summer months represent the slowest period for this market segment; winter demand varies. Due to the dominant demand from the leisure segment, most hotels in this market feature limited meeting space. Most demand for room night sales from the group segment is generated by activity at the Miami Beach Convention Center in this market. Primary group demand sources include corporate groups, associations, and SMERF (social,military, educational,religious, and fraternal)groups. Corporate groups take the form of training programs, sales meetings, division conferences, and similar events with a business purpose. Association group demand includes national, regional, and state associations. Professional associations and/or those supported by members' employers. The SMERF market consists of groups that are social, military, educational, religious, or fraternal in nature. Group guests at the subject property are anticipated to be higher than average for a hotel in the subject's South Beach market as the property will offer significant event space to attract this market segment,along with its direct connection to the Miami Beach Convention Center. Business/Commercial Segment The commercial segment incorporates demand derived from the local businesses. Commercial demand is relatively constant throughout the year, although some declines are noticeable in late December and during other holiday periods. The commercial segment includes individual business travelers and corporate accounts. Corporate accounts are generated by local companies; demand in this sub-segment may include employees of the fine or its affiliates,and often consists of training groups. Miami Beach's corporate community features firms in the entertainment and creative industries. Most of the regional business employment is centered in the Central Business Districts of Miami and Coral Gables, in areas surrounding Miami International Airport, and areas between the Palmetto Expressway and Florida's Turnpike north of State Road 836. BLAZEJACK& COMPANY 24 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Commercial demand is expected to increase consistent with the relative health of the local and national economies. Existing Competitive Supply Once the proposed development is completed,the subject will be among the largest full- service hotels in Miami Beach, with a major international hotel chain affiliation. It will be located several blocks from the city's attractive Atlantic Ocean beaches, but will be adjacent to its convention center and one block north of the popular Lincoln Road pedestrian retail/entertainment area. The primary competition for the subject is anticipated similar larger and/or chain-affiliated hotels in this market, although these are primarily located along the city's beachfront. These are summarized below: Hotel 12aoms High Rack Lott Rack The Fontainebleau 1,440 5829 5226 Loesss Miami Beach 790 $749 $249 Eden Roc 624 $653 $221 Tnbute Portfolioi Royal Palm 393 $699 $247 W Hotel South Beach 347 $1,658 $359 Shore Club South Beach 305 5449 $164 Sixty Hotels Nautilus 250 5804 $202 Edition Miami Beach 294 $1,266 $284 Total Rooms 4,446 LowRate. $449 $164 High Rate $1,658 $359 Median Rate $777 $237 Mean Rate $888 $244 BLAZEJACK& COMPANY 25 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 _ till ►' ,atm rr{I'itw ±.rt *, 6 + .. � 1 wits* / -� 1- . r ' "1 op t Lt,s 7 : t, . v s Tr; Ot i� i (u ,1 t.; t'3 , , l' Rini 1 f r- y an �g ' `w Howl South Beach Y4 ' t{i2r'./J �. • sh CA4 warn HewL t� €t k" S r 801•118001111181;11'1" r,' K II aSrartcrrxowxn II gat Y'' ! IMIl 1l11 �ir6at BertrWOH alsPvlm .2,140114411, :1 _rit { .. Ar t amu" I`Y 5 xr k P aM z The rack rates shown for each property represent the quoted and undiscounted room rate for each night's occupancy of a standard room with a king-sized bed; the high rack rate is for the peak period from December 27, 2018 through January 2, 2019, while the low rack rate is for a sample slow period from August 9 through 13, 2017. The following table summarizes the historical occupancy, ADR, and RevPAR performance of this set of competitive hotels based on data compiled by STR for each trailing 12-month period ending in May of the last six years. Fl E. 2013 2014 2015 2016 2017 22018 Supply of Rooms 1,472,740 1,420,277 1,488,203 1,591,070 1,621,086 1,619,962 Room Nights Sold 1,137,979 1,115,394 1,158,366 1,187,425 1,143,597 1,220,762 Occupeney Rate 773% 78.5% 77.8% 74.6% 70,5%. .... 75,4774 ADR $309.59 $334.83 $350.36 $334.84 $324.16' $351.24 RevPAR $239.22 .$262.96 $272.71.. $249.90 $228.68 $264.68 The recent trends in occupancy and revenues for this competitive set of hotels mirrors the recent performance of Miami-area hotel market. Occupancy was more than 77%in 2013, with strong gains in ADR and RevPAR stabilizing in 2015. A decrease in occupancy and BLAZEJACK& COMPANY 26 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 rates was observed during the next two years, followed by a recovery that was under way during fiscal year ending May 2018. In conclusion, the Miami-area and Miami Beach hotel markets are experiencing a favorable period for investment and revenue growth. This hotel market recent experienced a downtown in ADR, occupancy and RevPAR due to several events including the Zika outbreak, the closing of much of the Miami Beach Convention Center for major renovations and expansion, a strengthening U.S. dollar, additional new hotel room supply, and Hurricane Irma. As of the start of 2018, however, a recovery appears to be underway with a strong rebound in ADR and RevPAR and improving occupancies. Overall, the long-term outlook for hotel performance and investment in this market remains quite positive. BLAZEJACK& COMPANY 27 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 SECTION III DESCRIPTIVE DATA BLAZEJACK& COMPANY 28 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 SITE DESCRIPTION t q ft - • Cil®fM wM :/a � V • i M 1 I , w- .y++" -tr ... _� 1 »rte z ? rasa am.. r' 4 t i. fanini _ m � r_a t� ;,, -ar . . .� _Jr— Wi Location: Northeast corner of 17"Street and Convention Center Drive,Miami Beach, Florida,33139. The property is west of the Fillmore(Jackie Gleason)Theater and south of the Miami Beach Convention Center. Parcel Folio No.(Parent Tract): 02-3227-000-0090 Site Area: 2.55 acres(approximately)or 111,078 square feet Shape: Generally rectangular Topography: Generally level and at road grade BLAZEJACK& COMPANY 29 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 Zoning Designation: CCC,Convention Center District,City of Miami Beach. Future Land Use Designation: PF(CCC),Public Facility,Convention Center,City of Miami Beach Historic District Designation: None Soil Conditions: No soil report of the subject parcel has been reviewed;however,it is assumed the soil is of sufficient load-bearing capacity to support the structure. No evidence to the contrary was observed upon our physical inspection of the site. Utilities: Water: Miami-Dade County Sewer: Miami-Dade County Electric: FPL Telecommunications: Available-Private Provider Access: 17"Street,Convention Center Drive Land Use Restrictions: If filly approved,the proposed lease for the site would also place the site under a restrictive covenant, limiting the site's use to an 800- room convention center hotel with related meeting/banquet space, food and beverage operations,and amenities. Flood Insurance: According to the Federal Emergency Management Agency's Flood Emergency Management Agency's Flood Insurance Map, Community Panel No. 12086 CO 317L, dated Sep I1 2009, the property appears to be within the Zone AE (EL-8). Insurance requirements applies, however, a qualified engineer, surveyor and insurance agent should verify and render a final opinion. Current Improvements: Parking lot, ancillary municipal office buildings and areas related to the neighboring Fillmore Theater Comments: The site appears to have an adequate width and depth to support its proposed highest and best use. It will be leased under"as is"terms with its current improvements and conditions in place. BLAZEJACK& COMPANY 30 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 t, 1is11rerY`. .1!.-4.:11 , ; !4.a �.ar gra.at U^waet mss"_& ctty 'nog It I I / i , Ititit A I . , DESCRIPTION OF IMPROVEMENTS The subject is currently improved with a parking lot and low-rise ancillary buildings housing municipal offices and areas supporting operations of the adjacent Fillmore (Jackie Gleason) Theater to the immediate east. If the proposed redevelopment and ground lease are approved,however, this does not represent the property's highest and best use. The City has sought bids to develop the subject with an 800-room hotel that will serve as the headquarters hotel facility for the adjacent Miami Beach Convention Center. The City requires that this hotel will also offer meeting space and food and beverage facilities that are comparable to other North American convention center hotels that maintain a four-diamond rating by AAA. The developer will also be provided an easement to construct an enclosed pedestrian skybridge connecting the hotel directly to the Miami Beach Convention Center. A breakdown of the improved space within the proposed convention center hotel facility is exhibited below,based on the bid submitted by Tumberry/Terra: BLAZEJACK& COMPANY 31 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Proposed Hotel Program Areas Form Units Square Feet Average Size Guest Rooms Standard 735 N 257,250 SF 350 SF Stites 55 # 33,310 SF 606 SF Fbspitakty Suites 10 it 6,830 SF 1,708 SF Guest Support Areas 88,860 SF Subtotal I 800 # 386,250 SF 375 SF Meeting Facilities Balloom 20,000 SF Jr.Ballroom 16,300 SF BreakoutMeeting 23,118 SF Total Leasable 59,418 SF Su4Port 37,120' SF Subtotal 96,538 SF Food&Beverage Outlet 1tRestmsantClu 400 Seats 12,000 SF Outlet2:AI Bey 150 Seats 8,000 SF Cutlet 3:GdI 65 Seats 3,000 SF Outlet 4:LothyBar 100 Seats 6,000 SF Parking 320 Spaces 98,620 SF Ground Floor Retail 0 Spaces 24,600 SF Lobby 2,600" SF Office N/A SF Pool 61,487 SF SPa 8,000 SF Fness 5,000 SF Other 110,803 SF Subtotal 187,890 SF TOTAL SF 820,898 SF A further description of the proposed redevelopment of this property by its awarded bidder (Tumberry/Terra) is presented in the Addenda of this report. Also, the owner of these BLAZEJACK& COMPANY 32 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 improvements that have been proposed are assumed to be subject to a Neutrality Agreement described in the Extraordinary Assumptions presented elsewhere in this report. REAL PROPERTY TAXES AND ASSESSMENTS The subject property is assessed under the jurisdiction of Miami-Dade County, Florida. The assessment for the property is established each year as of January 1" by the County Property Appraiser's Office at 100 percent of "Just Value". Just Value has been equated to Market Value less closing costs. While the State of Florida requires real estate to be assessed at 100 percent of Just Value, in reality, the ratio of the assessed value to sales price is generally below 100 percent. The tax due is computed according to annual millage rates established by the city, county and state. Millage rates are the amount paid per $1,000 of assessed value. The 2017 calendar year is the most recent year for which assessed valuation information is available. The subject is part of the larger, 37-acre Miami Beach Convention Center tract, which includes the convention center and the Fillmore Theater. The total assessment for this parent tract, identified as Folio No. 02-3227-000-0090 by the county assessor, was $196,907,353, with an identical market value identified by this source. As the property is owned by a municipality(the City of Miami Beach),it is fully exempt from property taxes. ZONING The subject property is zoned CCC, Convention Center District, by the City of Miami Beach. This facilitates the use of the site with the Miami Beach Convention Center which is located to the immediate north. The City has proposed a lease of the site for a convention center hotel development. Thus, if this lease is approved, the site is zoned for the specific convention center hotel development outlined in the Description of Improvement section of this report. HIGHEST AND BEST USE According to The Dictionary of Real Estate Appraisal, published by the American Institute of Real Estate Appraisers,the highest and best use may be defined as: BLAZEJACK& COMPANY 33 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 I That reasonable and probable use that supports the highest present value of vacant land or improved property,as defined,as of the date of appraisal. 2 The reasonably probable and legal use of land or sites as though vacant, found to be physically possible, appropriately supported,financially feasible,and that results in the highest present land value. 3 The most profitable use. Implied in these definitions is that the determination of highest and best use takes into account the contribution of a specific use to the community and community development goals as well as the benefits of that use to individual property owners. Hence, in certain situations the highest and best use of land may be for parks,green belts, preservation, conservation, wildlife habitats,and the like." Highest and best use(H&BU) is analyzed under two separate applications or scenarios: (1) highest and best use of the site as though vacant and (2)highest and best use of the property as improved. The highest and best use of the site as though vacant is based on the theory that land will be put to its maximally productive use and this use will determine the highest site value. It is the basis for valuing the site. Highest and Best Use as if Vacant The first test is what is physically possible. The subject's 2.55-acre site does not impose physical development restrictions. All utilities are available to the property, whose topography is level and at road grade with its abutting streets which are both bi-directional roadways. The subject site is located at the northeast corner of 170 Street and Convention Center Drive, immediately south of the Miami Beach Convention Center in South Beach. The second test concerns permitted uses. Assuming that the ground lease proposed for the property has been approved and is in place, the site may be improved with a convention center hotel with up to 800 rooms that includes meeting space, food and beverage outlets, a spa and fitness facility, meeting space, ground floor retail areas, and other amenities commensurate with a full-service upper-scale hotel. This hotel would serve as the headquarters hotel for meetings,trade shows and other events held at the adjacent Miami Beach Convention Center. The third and fourth tests are, respectively, which uses are financially feasible and what use will produce the highest (maximally productive) net return. Hotel development and redevelopment is actively occurring in Miami Beach. Although rate and RevPAR slumped in recent years due to outside events, a hurricane and a temporary surge in supply, these appear to be rebounding as of 2018. The Miami-area market is among the strongest hotel markets in the nation with regard to investment, rates and income generation. The timing of any development to this property, if vacant, would depend on the type of hotel and its amenities. Such a BLAZEJACK& COMPANY 34 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 development appears to be feasible in the current market, provided costs for a this type of hotel development(including, direct and indirect costs,FF&E,pre-opening and working capital costs) are budgeted properly. The maximally productive use represents the development that would provide the greatest return on the land. The proposed lease on the subject site that requires approval from the City of Miami Beach and its registered voters calls for the development of an 800-room hotel with several food and beverage outlets, a spa and fitness facility, meeting space, ground floor retail and other amenities. This hotel would serve as the headquarters for meetings, trade shows and other events held at the adjacent Miami Beach Convention Center, which will offer a total of 1.4 million square feet of meeting and exhibit space once its current expansion and renovations are completed later this year. It is worth noting that on the opposite side of Biscayne Bay, a new 600,000-square foot convention center and meeting venue is planned as part of the proposed Miami World Center project in downtown Miami,which will also include a 1,800-room headquarters hotel adjacent to mixed uses including apartments and condominiums over ground-level retail space. This appears to suggest that a larger headquarters convention hotel may be supported by the Miami Beach Convention Center, given its larger size. This would provide a higher density of development at the subject site, enhancing its value to an owner and developer. However, an alternative development of a larger convention center hotel at the subject site would require an expanded analysis of the impact on such a project on the existing hotel market in Miami Beach, and on the surrounding South Beach market. Such a study is beyond the scope of this appraisal assignment. Furthermore, a referendum on a previous plan for an 800-room convention hotel facility did not reach the threshold of voters required for approval in November 2015. Among those voting against this proposal,some cited the size and scale of this proposal at 300 feet high to be out of scale with the surrounding neighborhood. The lower, 17- story height of the current proposal by Turnberry/Terra may be more palatable to those voters, along with its design that places the high-rise portions of the building largely away from its street frontages. For the purposes of this appraisal, it is an assumption that the 800-room convention center hotel development proposed for the subject site represents its highest and best use, given BLAZEJACK& COMPANY 35 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 the impact of such a facility on the surrounding market in South Beach and the possibility of gaining approval for such a development from the City of Miami Beach and its registered voters. Based on the above-cited factors, it is our opinion that the highest and best use of the property, as if vacant is consistent with its proposed development into a full-service convention center hotel with 800 guest rooms, food and beverage outlets, spa and fitness facility, meeting space, ground floor retail areas and other amenities consistent with an upper-scale convention center hotel in North America. Highest and Best Use as improved The subject property is improved with a parking lot and low-rise ancillary buildings housing offices for city workers, and others which are part of the adjacent Fillmore Theater to the immediate east. If the ground lease is approved, the subject site would be restricted to a convention center hotel use in a structure with a much-higher density. It is likely that these existing ancillary buildings would no longer contribute to the property's value, with a much- greater value realized if developed to its highest and best use if vacant. From this analysis, the subject's highest and best use "as improved" is synonymous with its highest and best use as if vacant. Highest and Best Use Conclusions Use _ Full-Service Convention Center Hotel Timing Current User Upscale Hotel Guests Buyer -_ Hotel Developer/Investor BLAZEJACK& COMPANY 36 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 SECTION IV: LEASE ANALYSIS BLAZEJACK& COMPANY 37 SECTION IV LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 GROUND LEASE ANALYSIS Ground Lease Analysis Most examples of ground leases for convention hotels involve inducements by the local government to attract developers to build. An example of this is the Loews Hotel on South Beach in Miami Beach. This hotel's ground lease was set at a minimal rate, and included a purchase option of the land by the developer. This type of option would not be included during periods when the market is strong and land prices are high. Land prices in Miami Beach are quite high today compared to other markets in South Florida as this neighborhood has undergone an unprecedented period of gentrification and renewal over the past 25 years. In addition, the hotel market is also doing good business over the long term with healthy increases in average daily rates (ADR), improving occupancies and substantial interest in investment and (re)development. A ground lease reduces the amount of cash a developer has to pay up front in order to build a major project. The typical ratio of land to project cost ranges from 15% to 25%, depending on location and size. Ground lease payments are deductible, while land is not depreciable. Another important consideration is that the ground lease must have terms that are attractive for lenders seeking to provide financing. These lending sources typically prefer leases with the following provisions: • Longer lease terms,preferably 99 years; • Leases with at least 20 to 30 years remaining after loan maturity; • Language allowing for the lender's takeover of the mortgage in the event of default by the land tenant; • Language allowing the tenant to obtain a leasehold mortgage without the landlord's consent; • Assignment provisions that are sufficiently liberal in order to allow the lease to be assumed by a lender or other purchaser in a foreclosure sale, or by a party who may thereafter wish to purchase the hotel from such lender or purchaser; • Rights to control insurance proceeds to allow the tenant to rebuild after a casualty, to demand a new lease in the event the original lease is terminated due to bankruptcy of a tenant or an incurable default, to receive notice of and to cure the default of the tenant, and to approve any lease amendments. BLAZEJACK& COMPANY 38 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201823 Aside from lender protections, rent provisions are also important. Typically,the amount of annual rent paid under a ground lease should reflect a percentage of the value of the land; this percentage should also represent a reasonable return to the fee simple owner of the site compared to other investments. Some rent provisions also require the payment of a percentage rent of gross revenues once a certain level has been reached, or if a sale of the leasehold interest exceeds a certain dollar amount(usually at an amount that provides a fair return to the leasehold party to the site's ownership interest). In some instances, the rent paid may be tied to the income produced by the improvements that are developed on this site, in the form of rent as a percentage of revenues realized by the improvements through leasing or other means. However, this should only be undertaken on properties whose uses are tightly restricted, such as for a full-service convention center hotel use only. Over a 99-year term, a land lease on a property whose zoning may allow several different uses will likely outlive the economic life of any improvements initially placed on that property. Should the property's highest and best use change over time,the resulting rent calculating using the income generated by the improvements may no longer provide an adequate return on the land to the lessor. There are many related issues involved in calculating the amount paid in rent under a ground lease agreement. A landowner will want to avoid subordinating its fee to a construction loan,which would put it at risk of losing the land to the developer's lender. The landowner may also want approval rights over the hotel operator in order to insure a quality project; this is particularly true in the case of ground leases for convention hotels, in which the local municipality would prefer the best possible hotel operation to maximize room taxes and expenditures from guests visiting the area. Finally, most ground leases are purely triple net, where the tenant is fully responsible for all operating costs to the site including property taxes to the land,insurance,maintenance,management and any capital improvements. The initial terms of the proposed ground lease for the subject convention center hotel site is summarized in the following lease abstract. BLAZEJACK& COMPANY 39 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Lessor City of Miami Beach): Lessee To he determined Leased Property 2 55-acre hotel site Property Delivery Condition As is Term 99 Years Effective Date of Lease At City's acceptance of voter referenbmm approvingthe lease PQSSeSSIOU Date Date when the site is delivered tO the lessee Rent Commencent Date The fist year following the completion of the hotel develpoment Percentage(Bast) Rent 2.5%of Goss Operating Revenues Minimum Fixed Rent $2,000,000 Minimum Fixed Rent Escalation 2.0 o per year,with an adjustment every 5 years Initial Rent Concessions Year 1 -the Greater of: Minimum Fixed Rent of 5400,000 or Percentage Rent Year 2-the Greater of: Minimum Fixed Rent of 5800,000 or Percentage Rent Year 3 -the Greater of: Minimum Fixed Rent of S1,200,000 or Percentage Rent Year 4-the Greater of Minimum Fixed Rent of 51,600,000 or Percentage Rent Gross Operating Revenues :All income of any naltre derived directly or indirectly . from the use or operation of the hotel or barite, consistent with the Uniform System ofAccoums for the Lodginig Indust Pith Revised Edition Additional Rent at Sale of Hotel The lesser of 82 million or 0.25%of the sate price of the hotel,applicable to the first 3 sale transactions of the hotel. Lease Terms Fully Net Other Terms Voter approval of lease required Approved hotel operator Not vet determined This proposed land lease defines Gross Operating Revenues according to the Uniform System of Accounts for Hotels, but excludes any room revenues received from guest loyalty stays (affinity or points programs), and provides that revenues generated by Online Travel Agencies (OTAs) shall be net of commissions paid to those OTAs. According to hotel operators, such costs to OTAs and from guest loyalty programs are minimal as a proportion of total room revenues. Since these initial terms were proposed, a modification has been made whereby the Percentage Base Rent, as a percentage of total revenues to the hotel, may be altered if the operations of the hotel are staffed with a unionized workforce. In that case, the Percentage Base Rent would remain at 2.5% of gross revenues for most hotel revenue departments (rooms, parking, spa/fitness, etc.) but would fall to 1.25% of gross revenues generated by the Food & Beverage department at the hotel. As can be seen in the table above, the proposed ground lease for the subject property contains terms and conditions that are typical for the market, with provisions that would be BLAZEJACK& COMPANY 40 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 favorable for allowing for financing its potential development by the land tenant to its highest and best use(a large, full-service convention center hotel). Provisions also include City(the site owner) approval of the hotel operator at a level of quality that maximizes its potential revenue generation, upon which rent payments will be made. The lease is filly net with a 99-year term and a minimum fixed rent included for the landlord's protection in case of a market downturn or other unforeseen events. Otherwise, rent is expected to be based on a percentage of gross revenues from the hotel operations; since the property is tightly restricted for use as a full- service convention center hotel. This is a reasonable arrangement that also provides for an interest by the landlord in the hotel's financial success. The minimum fixed rent is reduced in the first four years of the 99-year lease term in order to allow the land tenant's hotel operation to reach a stabilized level of occupancy and revenue generation, once the hotel improvements are completed and opened to guests. This is compared to the terms of leases from municipalities on other commercial properties that have occurred in South Florida, summarized below: Parrot Jungle 19 Acres City of 60 Years 5502,000 Plus 5%to 6%of Revenues Watson Island Miami At racrmn Miaml Chalk's Airlines 2:9 Acres City of 30 Years a: 5500,000 Only if exceeds minimal vent Watson Island Miami Transportation Miami (tensely tmless hotel is bolt) Hayside Marketplace 5-10 Acres City of 75 Years $1,000000 Or 3.5%of Net(2012 rent Down town Mum, Retail Miami was 575%of rental income) The Palace '' 1.6 Acres City of 99 Years $237,500 Plus 2% Gross Revenue Downtown Coral Gables ACLF Coral Gables Gables Grand 2.5Acres City of 99 Year $200.000 Plus 3%of Cross Revenue Dotntonn Coral Gables Apartments Coral Gables Dadeland Mario¢ 1.0 Acre Miami-Dade 90 Years $280,000 Or 20%of Goss Revenue Kendall/Dadeland Area Hotel I' County Dadeland Dation 7.5 Acres Miami.Dade 90 Years 5400.000 Or 5.0°x-5.5%or Goss Revenue KendalLDa&land Area Retail County Convention Hotel:: 4.4 Acres Brovard Comfy 99 Years 1250,000 -' Pbs20%ofRevenue Fon Lauderdale Hotel _ (Rove Key Marina 5.2 Acrm City of 2 Years 5516,600 Or 10 3%of Revenue Coconut Gruae Marina Miami Linage of Merrick.Park 8.4 Acres City of 90 Years 1550,000 I Plus 20%or Net Income Coral Gables Retail Coral Gables ::after l t%Preferred Return Biltmore Hotel II 4 Acres City of 99 Years None 3.5%of net hotel revenues Coral Gables Hotel Coral Gables Heysham Landing N/A Cnyof 50 Mean 1277;500 Or50Y 100%of Gross Revenue Coconut(love Restamiabs i Miami Rusty Pelican N/A City of 99 Years $360.000 2.0%-5.8%of Revenue over Nirrdruia Key Restaurant Miaml 512.000.000 BLAZEJACK& COMPANY 41 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 These teases generally call for a stated base rent plus a percentage of Gross Revenues from the improved operations at the property, ranging from 2.0% to 6.0%. Other tenants pay a percentage rent from 2.0% to 103% of Revenues, with a stated minimal base amount. At the Biltmore Hotel in Coral Gables,the land tenant has no fixed minimum rent; in exchange for this added risk, a slightly-higher percentage rent of 3.5% of gross revenues is due from this land tenant. This is consistent with the rents paid on ground leases for hotels, which range from about 2.0% to 4.0% nationwide. Hotel operators also prefer this type of arrangement as it allows them to budget for this line-item expense each year without incurring a shock from a changing rent that is based on factors that are unrelated to the hotel's cash flow. Altogether, this appears to support the percentage rent of 2.50% Gross Revenues proposed as the lease rate for the subject as reasonable, if the subject, if its hotel is staffed by a non-union workforce. As previously noted, this percentage applied to revenues from the hotel's Food & Beverage department would fall to 1.25% if the hotel employs a unionized workforce. In subsequent sections of this report, it is estimated that the Food& Beverage department would generate 32% of total revenues at the hotel at stabilization, with the balance of 68% of total revenues generated by all other revenue departments. Using a weighted average, the effective contract rent for this proposed hotel with a unionized workforce would be 2.10% of total revenues. This range of potential rents at the subject's proposed hotel, from 2.10%to 2.50% of total revenues, falls within the range of land rents noted for hotels nationwide. Although these percentages for the subject fall near the lower end of that range nationwide, the subject's fixed minimum base rent of$2,000,000 (at stabilization) is higher than the minimum fixed rent from the comparable properties noted in the previous chart, decreasing risk of the rent falling to a substantial degree during temporary periods of recession for the subject hotel's financial performance. In order to determine if this amount generated as a proportion of gross revenue from the hotel is consistent with a reasonable return on the value of the land, we have conducted the following analysis: 1) Estimate the Gross Revenues that a proposed 800-room convention center hotel at the property is capable of generating, if it were complete and generating a stabilized level of occupancy and revenues; BLAZEJACK& COMPANY 42 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach,Florida REPORT 201823 2) Calculate the estimated stabilized rent payments on the land by multiplying 2.5%by this estimate of Gross Revenues from the hotel; 3) Estimate the value of the subject site in fee simple, as of the current valuation date; 4) Determine if the rent payment for the subject, if the hotel were complete and operating at a stabilized level of occupancy and revenue generation as of the current valuation date, represents a reasonable return for an investor/fee simple owner in the subject site. If so,then the current proposed rent structure for the ground lease on the subject property is considered to be synonymous with its market rent. ESTIMATE OF CURRENT GROUND LEASE PAYMENTS Analysis of Stabilized Gross Revenues The annual rent due on the proposed ground lease to the subject site is a percentage of the Gross Revenues from all of the hotel's operations. In order to estimate the total rental amount, if the hotel were complete and operating at a stabilized level of occupancy and revenue generation,the Gross Revenues of the 800-room convention center hotel that is proposed for the property must be projected. These Gross Revenues include income from room night sales to hotel guests, income from food and beverage sales at the property's bars and restaurants,income from food and beverage charged to persons attending meetings at the hotel's meeting spaces, income from the selling of services at the property's spa and fitness facility, and income from other departments including the retail space, meeting space rentals, the parking garage, and miscellaneous sources. Estimate of Room Revenues In order to estimate these amounts for the proposed subject hotel, we first estimated revenues from room night sales. In the previous Hotel Market Analysis, we noted the ADR, RevPAR and occupancy performance of similar large Miami Beach hotels, many of which have large international hotel chain affiliations that are similar to those proposed for the subject hotel. These are summarized below: BLAZEJACK& COMPANY 43 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Hotel Rooms High Rack I.ms Rack The Fontainebleau 1,440 $829 $226 Locws Miami Beach 790 $749 $249 Eden Roc 624 $653 $221 Tribute Portfolioi Royal Palm 393 $699 5247 W Hotel South Beach 347 $1,658 $359 Shore Club South Beach 308 $449 $164 Sixty Hotels Nautilus 250 $804 $202 Edition Miami Beach 294 $1,266 $284 Totataooms "' 4,446 LoufRat•v 5449. . $164. Highgate. $1.45$ $359 Median Rate $777 $237 Mean Rate $886 $244 The High Rack rate for each hotel was obtained for a standard double-occupancy room with a king-sized bed at each property during for the period of December 27, 2018 through January 2, 2019 (during the peak season in this market). The Low Rack rate for each was obtained for a similar occupancy during this market's low season, with a sample period for similar double-occupancy of a King room from August 9 through 13,2018. The following table summarizes the historical occupancy, ADR, and RevPAR performance of this set of competitive hotels based on data compiled by STR, for each trailing 12-month period ending in May of the past six years. Ell. las 2013 2014 2015 2016 2017 2018 &pply of Rooms 1472,740 1,420277 1,488,203 1,591,070 1,621,086 1,619,962 Room Nights Sold 1,137,979 1,115394 1 158,366 1,187,425 1,143,597 1,220,762 Occupancy Rate 77.3% 783% 77.8% 74.6% 70.5% .75.4% ADR $30939 $334,83 $35036 $334.84 "'.$32416 $351.24 RevPAR '$23922 $262.96 $272.71 $24990 $228.68 $264.68 These hotels exhibited an average High Rack rate of$888 per night, with an average Low Rack rate of$244. The High Rack median rate among these hotels was$777, with a Low Rate median of$237. Each has a prime location directly along the oceanfront in Miami Beach. The subject hotel will be several blocks to the west on a landlocked site. The rate that hotels along the oceanfront are able to charge is significantly greater than those on landlocked locations due to this locational difference. The Miami Beach market has few larger hotels with chain affiliations situated on landlocked sites. Most hotels with this locational attribute are smaller (less than 150 rooms) BLAZEJACK& COMPANY 44 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 boutique hotels. Therefore, in order to gauge this rate differential due to these two locations, data on a different set of hotels was obtained. These include boutique hotels in the South Beach, some with direct beach frontage and others located just off the beach and primarily along Collins and Washington Avenues. The identity of each of these two sets of boutique hotels, separated by location(oceanfront vs. landlocked),is presented below,along with High Rack and Low Rack rate information. Oceanfront Bouti tie Hotels The Setai 135 $1,600 $496 Hotel Victor 91 $636 $252 SLS Hotel South Beach 140 $638 $214 The Delano 194 $946 $247 The National 152 $573 $325 Total 712 '' Low Rale $573 $214 High Rate $1,600 I .$496 Memen Rate` $638 $252 Mean Rate $8791. $307 Landlocked Bouti I ue Hotels Rote l Ration high Rack Lon Ruck The Cade South Beach 86 $697 $159 The Redbury South Beach 69 $657 5197 Courtyard South Beach 90 $426 S210 Marriott AC Hotel 150 5453 $169 Kimpton Angler's 45 $499 $182 Total 440 Low Rate $426 d SI59 High.Rate $697 $210 Median Rate $499 $182 Mean Rate $546 $183 As evident in the two tables above, lower average rack rates are observed for the landlocked hotels; the average High Rack rate of$879 among the oceanfront boutique hotels above is skewed somewhat by the substantially-greater rate of$1,600 at The Setai. Despite this, the overall trend in differences between High- and Low-Season rack rates attributable to these three competitive sets of hotels are analyzed below. The difference in rack rates noted between the five boutique oceanfront hotels and the five boutique hotels lacking an oceanfront location area summarized in the next table: BLAZEJACK& COMPANY 45 SECTION IV'.LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 IAM Scasnn Loss High \le(Ilan Mean Oceanfront Boutique Hotels $214 $496 $252 $307 Non-Oceanfront Boutique Hotels $159 $214 $182 $183 Rate Discount from Oceanfront 26% 57% 28% 40% Peak Season Los' Hieb Median Alean Oceanfront Boutique Hotels $573 $1,600 5638 $879 Non-Oceanfront Boutique Hotels $426 $697 $499 5546 Rotet)iselan from Oceanfront 26% 56% 22% '38% The range in rates attributable to non-oceanfront locations represents a discount from 22% to 57% from the rates at oceanfront boutique hotels in this market. The median and average discounts provide a narrower range from the rates at oceanfront properties,or from 22% to 40%. The subject will be a larger, chain-affiliated hotel with a landlocked location adjacent to the Miami Beach Convention Center. As such, it has physical commonalities with the eight larger oceanfront hotels, whose most-recent occupancy performance indicated that 75.4% of its available annual room nights were sold. The subject's landlocked location is also common with the five landlocked boutique hotels, whose lower rate structures typically benefit them by allowing for a higher occupancy performance. However, in the Hotel Market Analysis section of this report, it was noted that the local Miami regional hotel market peaked in 2015 before experiencing a drop in demand due to various events including the effects from the local appearance of Zika virus, a strengthening U.S. dollar inhibiting foreign visitation, two active hurricane seasons culminating in Hurricane Irma striking the region in September 2017, and an influx of new supply. Prior to the start of 2016, the STR report for these eight larger oceanfront hotels exhibited an occupancy rate of 78.5% as of the fiscal year ending (FYE) May 2014, with a 77.8% occupancy rate noted during the subsequent 12-month period. These periods exhibit the performance of this hotel set before the adverse effects from these forces began to affect the performance of these properties during 2016 and 2017. These conditions caused the occupancy rate for this set of large oceanfront hotels to fall to 74.6% in FYE May 2016, and 70.5% in FYE May 2017. However, an improvement in occupancy was noted in the most-recent fiscal year period (FYE May 2018), to 75.4%. This indicates that the temporary downturn in the regional hotel market also affected the performance of this set of hotels,but that a recovery is now underway. In the estimate of Market Rent for the BLAZEJACK& COMPANY 46 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 subject, it is assumed that a stabilized level of occupancy and revenue generation is occurring, with the base minimum rent(at a base level of$2 million)providing a"floor"below which the contract rent cannot fall. During a long-term holding period for a hotel investment, a property may experience several stages in a typical period for an open-market economy. These include Expansion, Stability, Recession and Recovery. During the past six fiscal years ending in May, this competitive set of hotels experienced all four of these stages, with Expansion (from FYE May 2013 to 2014), Stability (FYE May 2014 through 2015), Recession (FYE 2016 through 2017) and recovered (the most-recent FYE May 2018). An illustration of the effects on revenue for each of these economic stages is presented in the next table: FAL.NlaN 2013 2014 2015 2016 2017 2018 ADR $309.59 $334.83 $350.36 $334.84 $324.16 $351.24 %Change. 82% 4.6% -0.4% -32% 8.4% RevPAR $239.22 $262.96 5272.71 $249.90 $228.68 $264.68 %Chan•- - 9.9% 33% -84% -8.5% -'153% RevPAR for this competitive set rose by 9.9%over the previous fiscal year in FYE May 2014, exhibiting a period of Expansion. During the subsequent 12-month period, this increase leveled off to a 3.7% increase in RevPAR, exhibiting Stability. The following two 12-month periods showed declines in RevPAR of 8.4% and 8.5% and added supply and other factors negatively impacted this set of hotels, following by a recovery in FYE 2018 with a rebound in RevPAR of 15.7%. From this analysis, the period of Stability in EYE May 2014 and 2015 should be the basis for estimating the stabilized occupancy level for the property over the long term. During subsequent fiscal-year periods, the local hotel market was undergoing periods of Recession and Recovery. In FYE May 2014 and 2015, this hotel set exhibited a range of occupancy levels from 77.8%to 78.5%, for an estimate of stabilized occupancy of approximately78.0%. It was previously illustrated that oceanfront hotels have historically been able to charge higher rates to hotel guests than hotels with non-oceanfront locations in Miami Beach. hi exchange, however, non-oceanfront hotels have typically experienced a higher occupancy rate since their lower room rate structure caters to a larger pool of potential hotel guests. During periods of stability in the hotel market, these non-oceanfront hotels can exhibit occupancy rates BLAZEJACK& COMPANY 47 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 that are more than 10 percentage points higher than oceanfront hotels. During the FYE November 2014, a period of stability in the local hotel market, STR reported the following difference in occupancy rates when comparing oceanfront boutique hotels to non-oceanfront boutique properties in Miami Beach: Occaaft ont Non-Oceanfront Boutique I lotels Boutique Hotels Hotel Name(No.Rooms) The Setai (135) Kimpton Angler's(44) Hotel Victor(9l) The Gale(112) SLS Hotel(140) Crowne Plaza Z Hotel (79) The Delano(193) Dream Hotel(107) W Hotel(349) The Betsy(61) Soho Beach House(50) Occupancy Rate 71.9% 86.5% FYE Nov. 2014 This is a difference in stabilized occupancy rates of more than 14 percentage points for a non-oceanfront location in Miami Beach due to lower rate structures. However, this may be higher than that which the subject could attain given its size (800 rooms); in addition, the occupancy rate noted among the eight larger oceanfront hotels in FYE May 2014 and 2015 was approximately 78.0%, or more than six percentage points above the six hotels for FYE November 2014 noted in the preceding table. From this analysis, the occupancy for the subject's 800-room convention center hotel, if completed and operating at stabilization is estimated to be 82.0%. This amount is reasonable and conservative at approximately four percentage points above the stabilized occupancy noted for the eight Larger oceanfront hotels in FYE May 2014 and 2015. The subject's landlocked location will dictate a lower rate structure than those with a preferred oceanfront location in this market. Thus, the rate indications among the landlocked boutique hotels reflect the market in which the subject's rate structure will be situated. Depending on the season in a given annual period,these landlocked boutique hotels have a rate structure that is 22% to 57% lower than that of the oceanfront boutique hotels, with mean and median indications that provide for a discount from the oceanfront hotels' rate structure from 22% to 40%. Rates have stagnated over the past two calendar years due to challenges in the market cited in the Hotel Market Analysis section of this appraisal report. The subject will BLAZEJACK& COMPANY 48 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 operate as the headquarters hotel for the Miami Beach Convention Center. The operator's room night sales will be influenced by the group segment attending shows and events at this convention facility, and at the subject hotel's meeting space. Attendees comprising this group business often book in advance, and may obtain an advantageous rate through blocks of rooms purchased at a discount. As such, the ADR of the subject is expected to slightly lag those of other landlocked hotels in this market whose business is primarily generated from leisure guests visiting Miami Beach. During the most-recent period of stability in the local hotel market (during FYE May 2015), the ADR from the competitive set of eight oceanfront hotels reached$35036. The local hotel market experienced recessionary economic conditions during the next 24 months, after which a recovery began to occur. The ADR for EYE May 2015 was 4.6%greater than the ADR during the preceding 12-month period, with RevPAR growth of 3.7% during the same period. With occupancy remaining relatively stable during that period,this provides an indication of the level of growth in rates during a normal period of stability for this hotel market. From this analysis, a range of annual ADR growth rates from 3.00% to 3.50% is estimated. Using a rounded 3.25% rate of growth in rates, and assuming a stabilized hotel market since 2015, the ADR in FYE May 2015 of $350.36 for this set of larger oceanfront hotels would have increased to approximately $385.64 as of the current valuation date; this assumes that the local hotel market had remained stable during the past three years. In the preceding analysis, it was observed that a discount from 22% to 57% is noted in the rate structure for hotels with non-oceanfront locations, with mean and median indications that provide for a discount from the oceanfront hotels' rate structure from 22% to 40%. Using this analysis,the subject's current stabilized ADR is estimated to be$280.00 if currently operating at stabilization; this amount represents a discount of approximately 27% from the estimate of the stabilized ADR for the set of oceanfront hotels as of the current valuation date. This produces a stabilized RevPAR for the property, if completed and operating at a stabilized level as of the current valuation date,of$229.60. Estimate of Revenues from Other Hotel Departments Gross Revenues at the proposed subject convention center hotel will also be generated from food and beverage sales from its bars, restaurants and from banquets in its meeting spaces, BLAZEJACK& COMPANY 49 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 meeting space rentals, garage parking fees, spa services, retail space rentals and other sources. In order to estimate the Gross Revenues from these sources,we obtained financial data provided from four major international hotel chains illustrating the stabilized Gross Revenues that could be generated from an 800-room full-service convention center hotel at the subject. Each assumes an operation that is similar to the type and quality sought by the landlord (the City of Miami Beach). These are highly-sophisticated and knowledgeable hotel operators with experience in running thousands of hotels worldwide; as such, the data provided from each is considered to present a reasonable level of revenues from each departmental category that can be expected. We also included the pro forma hotel operating data from Tumberry/Term, the submitter of the Miami Beach Convention Center hotel proposal, for the first year of anticipated operations (2022) and their estimates at stabilization five years later(2027). Data from a larger hotels with meeting space in downtown Miami was also included, along with ratios of departmental revenues to total revenues for convention hotels from CBRE's Trends in the U.S. Hotel Industry report(CBRE Trends)from 2018. BLAZEJACK& COMPANY 50 SECTION IV: LEASE ANALYSIS m en 2 : 8 a < < < < < P e ^ d � 3 e : 00 c a e "02 E E Z Z z z Z Z - 5 a - w .a c e e a c t b d05. 05• . „ O 0 y . *X-0a m• K_ E x to 5 m .^, S - a, S • - N E Ji O - w J • _ _ w • c w w w p N 2 i g a. 0 g � tPo yI = - N x sry mm ii 5a a 4mw - c - Y c w .. .29 w �.. .,, • - O - _ S o-, C F=: - 0 Se: aXX - L O a c o mem _ m Ce _ ` _ - K oa 2 ffi _ g ry ry ZZ,- www • - 6 „ x ,, g X — o a , a e 9 =s �- „, , , , ,N „ . „ „ . a oww 3 „ x X S v a e C = o_ ai Z x0; c :: 88th ' 842c < s „ i - ww Qn .o CO_ -; �www Z r. gin co 9 0 = 4 W n.71 ? U 1, ; tl g e a d3E >2 Illihtfi g� r - ' m3 � .� 5..�,. fEsrS s r . os > a' tly Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 In the preceding table, the subject's estimates from Tumberry/Terra are presented as of completion of construction in four years and at a stabilized level of occupancy and income generation five years later. Comparables 1 through 3 represent data from the four major international hotel operators; their identities remain confidential due to the proprietary nature of this information, but each represents data from an international hotel chain that is widely experienced in projecting the revenues and expenses that can be generated at a wide variety of convention center hotels using highly-sophisticated financial models. Considering the estimates of stabilized occupancy and inflation-enhanced ADRs from these sources, this provides further support for the occupancy and rate structure estimated for the subject. Comparable 4 is from a larger hotel in downtown Miami with substantial meeting room space and food and beverage outlets. Finally, Comparable 5 represents ratios to total revenues for convention hotels nationwide from the CBRE's Trends report. Although the subject estimates and those from the comparable properties and the Trends report represent projections of revenues at stabilization at different points in time, each also provides a ratio of departmental revenues to total Gross Revenues once the property is operating at stabilization. As such, these ratios are relied upon to provide estimates of departmental revenues for the subject hotel, if it were completed and operating at stabilization as of the current valuation date. A summary of the high, low, median and mean(average)ratios to total revenues for each major department (Rooms and Food & Beverage) from the subject's estimates,the four comparable properties and the Trends report is summarized below: Low Mean Median j High Projection Room Revenues 57 2% 61.8% 59.6% 66 8% 58.0% Food&Beverage Revenue 30.1% 32.0% 32.4% 34.4% 32.5% Food&Beverage Outlets 9.0% > 144% 111% 26.6% 12.5%x: Meeting/Banquets 6.0% I7.4% 18.9% 219% 20.0%o Other F&B In Outlets S hi Outlets. In Outlets In Outlets In Outlets Ratios projected for the subject in these departmental revenue categories are summarized in the right-hand column labeled "Projections" in the table above. These were based on the range of indications for each,with further analysis presented below. Room Revenues: Previously, we projected an ADR of$280.00 for the subject 800-room hotel, with an occupancy rate of 82.0%, if it were completed and operating at a stabilized level of occupancy and revenue generation as of the current valuation date. This equates to an annual Room Revenue total of$67,043,000. The spreadsheets from the data sources above indicate a BLAZEJACK& COMPANY 52 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 range of proportions of Room Revenues to Total(Gross)Revenues from 57.2%to 66.8%,with a mean of 61.8%and a median of 59.6%. However, the low end of this range is noted from the actual performance of Comparable 4. Furthermore, the subject will have 24,600 square feet of retail space in a market where such commercial areas lease at a premium, or from $50.00 to SI00.00 per square foot,triple net. This may generate up to$2.4 million in additional revenues to the property. This supports a ratio of Room Revenues at the subject hotel that are near the lower end of the range of indications from these comparable property,or 58.0%of Total Revenues. Food&Beveraee Revenues: With 800 guest rooms,the subject hotel will operate multiple food and beverage outlets as projected by each of the forecasts of Gross Revenues from the international hotel chains. The existing hotel (Comp. 4) also has multiple food and beverage outlets. In this category, revenues will be derived from these restaurants and bars (food & beverage outlets), as well as from food and beverages provided to attendees of meetings, events and banquets held in the property's substantial meeting spaces,and other outlets that include room service and provisions in minibars. Among the estimates for the subject and Comparables 1,2 and 4, revenues from food & beverage outlets, with a ranee from 9.0% to 26.6% of Total (Gross) Revenues, with the median and mean indications ranging from 11.7% to 14.4%. However, a predominant range of 9.0% to 13.7% of Total Revenues is also observed. Revenues from providing food and beverages for meetings and banquets exhibited a range from 6.0%to 21.9%of Total Revenues, with the median and mean indications ranging from 17.4% to 18.9%. These ranges support the estimates for the subject from its developer, including a range of revenues from food and beverage outlets from 11.7% to 13.7% of total revenues, and from food and beverage sales from its meeting facilities and other operations at a range from 18.7% to 21.3% of total revenues. From this analysis,revenues from food and beverage outlets at the subject are projected to be 12.5%of total revenues,while food and beverage revenues from other sources are estimated to be 19.5%of total revenues. Together, the total food and beverage revenues are expected to be 32.0% of total revenues; this figure is supported by the range of combined food and beverage revenues from the comparable sales,the Trends report,and those estimated for the subject. Other Operated Departments Revenue: A breakdown of figures from various other revenue departments was not available for the subject or from the CBRE Trends report. Altogether,total revenues from other departments estimated for the subject, from the four comparable properties and the trends report, range from 3.1%to 10.2% of total revenues, with the subject's developer estimating these other departments contributing 7.8%to 8.3%of total revenues. However, it was previously noted that the subject will have 24,600 square feet of retail space in a market where prime rents from$50.00 to$100.00 per square could be charged for this space on a triple-net basis. This could create additional revenues in the form of rental income from this retail space of$2.4 million or more. Based on this analysis, revenues from all Other Operated Departments arc forecast from this analysis to be 10.0% of total revenues. This includes all other revenue- generating departments including meeting room rentals, spa services, the retail space, parking garage income,etc Estimate of Contract Rent The proposed ground lease for the subject projects that the rent on the site will be a percentage of the Gross (Total) Revenues generated by its hotel operation. The percentage will be 2.50% of total revenues if the hotel has a non-union workforce; if the hotel's workforce is unionized,the same percentage of total revenues will apply to most departments except for Food & Beverage, in which case the rent is 1.25% of that department's revenues. The property's income generation is forecast by the developer to be stabilized in the fifth year after the hotel's BLAZEJACK& COMPANY 53 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 opening. As such, this represents the base rent for the property, not including any concessions during the initial years of the lease term. Previously, Room Revenues that the subject appears capable of generating were estimated, and its ratio to the Total (Gross) Revenues that will likely be realized; this estimate assumes that the subject hotel is complete and operating at a stabilized level of occupancy and income generation as of the current valuation date. Other departmental revenues were also projected based on their ratios to Total Revenues., and considering the other areas of the proposed hotel that will generate gross income to the property. Using the results of this analysis, the following table is our summary of the estimated Gross Revenue for the subject hotel, if completed and operating at stabilization as of the current valuation date. Location MBCC Total Rooms 800 Hotel Type Full-Service Food&Beverage• 4 Outlets Meeting:Space(SF) 59,418 Meeting.Space SF/Room 13,000 Spa Full Scry ice Ground Floor Retail Space 24,600 Parking Garage Current Year 2018 Annual Room Nights 292,000 Occupancy 82.0% Room Night Sales 239,440 Average Daily Rate $280.00 Total(000s) %of Total Room Revenues $67,043 58.0% Food&Beverage Revenue $37,567 32.5% Food&Beverage Outlets "$14,449 12.5% Meeting/Banquets '$23,118 20.0% Other F&B In Outlets<. In Outlets Other Operating Depts. $10,981 9.5% Total Revenue 5115,592 100.0% Estimate of Base Rent The previous estimate of revenues from each of the departments at the hotel is multiplied by a percentage to provide an estimate of the base contract rent for the proposed ground lease at the subject site. The proposed lease for the property indicates that this percentage will vary based on whether the hotel's workforce is non-union or unionized. BLAZEJACK& COMPANY 54 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Von-t moo lural Llllnn lilol IOTA11111s1 ':S 01loral i.oi Roe nues Rent OOOa1 „,nr rte scants Ruu1WIth Room Revenues $67.043 58.0% 2.50% 51,676 2.50% 51,676 Food&Beverage Revenue $36,989 32.0% 2.50% $925 1.25% $462 _.. ... ... flood&Revenge OuOutlets $I44d,A49 125% Meetmfangoet$ $22,540 19.5% OtherF&B In Outlets la Outlets Other O•eratin_De•ts. $11,559 10.0% 250% 5289 2.50% 5289 'Ibta1 ' $115,592 100.0% $2490 $2,427 This provides for an estimate of current stabilized rent for the property, if improved with its 800-room convention center hotel facility, of $2,890,000 (rounded) if staffed with a non- union workforce, or$2,427,000(rounded) if the hotel's employees are unionized. The following sections provide analyses of this proposed contract rent to determine if that amount reflects the market rent that the property would be capable of generating under this scenario. MARKET VALUE OF THE SITE (IN FEE SIMPLE) The purpose of this analysis is to estimate whether the terms of the proposed ground lease to the site reflect a rental rate that is similar to that which could be obtained in the market (synonymous with market rent). The subject will be leased under terms that are fully net, whereby the land tenant is responsible for all operating costs,taxes and insurance to the property during the term of the lease. As such, if the rental rate for the ground lease provides a reasonable return on the equity (value) in the site, it represents the market rent that the site is capable of generating. The Sales Comparison Approach was used to estimate the value of the subject site in fee simple; returns on an investment in that site were analyzed to determine if the terms of the proposed lease on the site were consistent with its rent-producing capabilities in the open market. The methodology that is applied is necessary to evaluate factors such as time of sale (market conditions), location, size, density, frontage and other factors when making the comparison. The subject site is located at the northeast corner of 17th Street and Convention Center Drive,immediately south of the Miami Beach Convention Center. This is a landlocked location in the city's South Beach market, with a highest and best use for the development of a full- BLAZEJACK& COMPANY 55 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 service, 800-room convention center hotel (if approvals for such development were in place as of the current valuation date). Similar sites suitable for new development of large-scale hotels in this market are non-existent. Miami Beach has been primarily built-out since the 1950s and '60s. Much of the subject's South Beach market is subject to historic preservation zones which protect the existing architecture to many properties, prohibiting demolition and redevelopment of these properties when the economic lives of their existing improvements come to an end. As such, there are very few sales of similar sites suitable for large-scale hotel development in this market. However, other older hotel properties in this market periodically reach an end to their economic lives. Recently,buyers have purchased these properties for substantial redevelopment and/or expansion. This is allowed, even in historic preservation areas, provided that the architectural features of the existing buildings (often their exterior facades, at a minimum) remain intact. These buyers purchase these older hotels, gut the interiors then substantially renovate them. If additional building areas are allowed by zoning, an additional expansion may also be undertaken, provided that the resulting development conforms to historic preservation ordinances. In this situation,the buyer is effectively purchasing a hotel at a price that is nearest to its "land value" for this market. The requirement to keep at least some of the older buildings' structures may provide some cost savings in redevelopment, however, in comparison with properties that could be purchased vacant with no preservation restrictions in place. We have selected two sales of this type from the subject's Miami Beach market, along with two sales of hotel development sites in Miami across Biscayne Bay to the west. Each was purchased for development or redevelopment with a full-service hotel. The sales had some inherent differences with the subject property which required adjustments to their respective sale prices. The rationale behind the adjustment process is to reflect the differences in behavior of buyers and sellers based upon certain characteristics inherent in the site. A fifth sale represents a commercial property at a prime intersection in the South Beach market that the buyer indicated would be redeveloped with a 150-room hotel and ground floor commercial space. Typically, the most useful unit of comparison in land sales suitable for hotel (re)development is the sale price per (planned) guest room, as this provides a benchmark for BLAZEJACK& COMPANY 56 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 developers regarding cost and, hence, feasibility of development. The price per square foot of site area is also considered, but has limited applicability in the case of sale properties with wide variances in planned density (expressed in rooms per acre). A summary of the details of each property sale is presented below, followed by a location map. A detailed description of each sale is presented in the Addenda of this report. BLAZEJACK& COMPANY 57 SECTION IV:LEASE ANALYSIS A N o Q V2 �g 3 = c 4 n y u O '`S . c u °4 °' S9a` a ^c d u. }- L Q m °2 3 > . s S F U o .5 use, O C O 9 p o “. „ 0 - m a 'a'n ; " a3 O2 0 R F �ma m x o a i Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 tz �. . (' i ..p 4_4, I. Tian nis :a „4, a i3;••••4,..- ▪ III•�.d".i ! i riarla� „t s(` . sua¢crP own Y =wi ilf ..Fa A Y ar=• "I • 2 �lll. .nit, . • I;._ �1 ..•A•mi iii wk1S P 6 cc a Y z• uli OI��� rd'- y r�l t i nR e ,i. ttkin* 11►A fb • u 1111 Holt! P 1 I... T +z ,iiiti..* J: "eft,** xrr .},t ,'; `L1, nth "10 0 ii: ;Aw �.l..w. '' lit ai , o � �yr'� es . s nn• 6m ,- m . 10 � - w fSII •�iiwrs ',► m a Fa . cos•aorhi a �rl � cm �nn� 411"-W'-:1L- � 1dr I aw "" .'?s Il ,l Fa p1 \ . � allsr.11 ' l €i Silllbai• . -aa�(� Miami y k - NX 1. t A • N . w J Other sales of redevelopment properties were noted in Miami Beach, but these featured mixed uses that include a smaller hotel development where the price paid for the hotel element could not be segregated from the amounts allocated in exchange for developing other uses to the property. Land Sales Adjustments Each of the properties sold with a fee simple interest, with terms equivalent to cash. Conditions affecting the local hotel market have fluctuated over the time period in which these sales have occurred. When Sales 4 and 5 were acquired, rising ADR and RevPAR levels and strong occupancy were observed, supporting new development. Sales t through 3 occurred during the past 12 months, as the hotel market began to reach the bottom of a minor recent downturn in demand and upswing in new supply, followed by indications that a strong recovery may have recently begun. Over the long term, hotel investment and development continues to occur in this market, demonstrating long-term demand for properties suitable for this activity. As such, no adjustment was supported for less-recent sales due to superior market conditions over the period in which these sales occurred. BLAZEJACK& COMPANY 59 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 In the case of Sale 5, the buyer purchased a property with approximately 56,000 square feet of existing building area for redevelopment. This was a 167-unit facility housing the historic Haddon Hall hotel along Collins Avenue, and the abutting Campton Apartments to its immediate west. However, the purchase also carried property rights that allow the buyer to expand the property by another 50,000 square feet, nearly doubling its size. For this reason, a substantial downward adjustment for conditions of sale was made to the price paid for Sale 5 due to the presence of substantial development rights that were also obtained as part of the price paid. Sales I and 2 are located in Miami, rather than in Miami Beach. However, Sale 1 represents a vacant hotel site, while Sale 2 sold with a small commercial building(similar to the subject) but with a similar highest and best use for high-density hotel development. These two Miami sales exhibit a range of prices per room from $59,694 to$64,800. The other three sales are from the subject's Miami Beach market,proximate to the Atlantic Ocean beaches, that city's convention facility, and other major attractions in this market such as the Lincoln Road retail/entertainment area and the city's Art Deco District. These three Miami Beach sales have much-higher prices per room, ranging from $t67,010 to $128,000 once the adjustment for additional potential development activity is applied to the price paid for Sale 5. This supports an upward adjustment is appropriate to the prices paid for Miami Sales 1 and 2 compared to the subject's location in South Beach. Currently, the subject is improved with small, low-rise buildings that including municipal offices and support areas for the adjacent Fillmore Theater. These buildings must be demolished and removed before the subject can be developed to its highest and best use (as a, full-service, 800-room convention center hotel facility). This is similar to the condition under which Sale 2 occurred, but Sale I sold in superior condition as vacant and ready for development. For this reason, a downward adjustment was applied to the price paid for Sale 1 at the time of sale. Miami Beach Sales 3 through 5 sold with existing hotel or commercial improvements in place. However, these improvements were near the end of their economic life. While historic preservation ordinances prohibited total demolition to the improvements to Sales 4 and 5, each property was purchased for substantial redevelopment (and, in some cases, expansion). This reflects the nearest similarity to a sale of a property at its land value in this market; nonetheless, BLAZEJACK& COMPANY 60 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 the presence of existing improvements that must be partially preserved potentially reduces some of the costs of redevelopment for the buyers of Sales 4 and 5. As such, a downward adjustment for the potential of reduced costs of redevelopment is applied to the prices paid for these two Miami Beach sales in comparison to the subject. A price adjustment for these differences between the subject and the comparable sales would ideally be based on any quantifiable differences between these properties. In some cases, the price per room differentials between the sales provided clues regarding the appropriateness of an adjustment to sale price for locational differences and conditions of sale. In any case, the derivation of an accurate adjustment typically requires a larger array of indications from numerous recent sales,a situation that is not usually available. Nonetheless, we have attempted to quantify approximate adjustments to the prices of the comparable properties for varying differences between each and the subject property. These adjustments are summarized below: an No. I _ 3 4 5 Sale Deta: Cash Equiv.Sale Price $5,850,000[$16,200,000 $19,200,000 $6,500,000 $34,475,000' 5th Price/SF. $396.61.:. $1,478.64 " $64000 $35961" $570.35 Sak Price/Unit $59,694 $64,800 $128,000 $67,010 $206,437 ADUSTMEN'TS: Property Rights 00% 0.0% 0.0% 0.0% 00% Financing 0.0% 00% 0.0% 0.0% 0.0% Conditions of Sale 0.0% 0.0% 0.0% 0.0% -48.0% Market Conditions 0.0% 0.0% 0.0% 0.0% 0.0 u Preliminary Adjustment 0.0% 0.0% 00% 00% -48:.0% Adjusted Priee/SF $396.61 $1,478.64 $64000: $35961 $296.58 Adjusted Price/Unit $59,694 " $64,800 -$328,000 $67,010 $107,347 ADDITIONAL ADJUSTMENTS: Location 35.0% 35.0% 0.0% 0.0% 0.0% Water Frontage 0.0% 0.0% 0.0% 0.0% 000 Site Condition -5.0% 0.0% 0.0% -15.0% -15.0% Topogaphy 0.0% 0.0% 0.0% 00% 0.0% Site Configuration 0.0% 0.0% 0.0% 0.0% 0.0% Road Access 0.0% 0.0% 0.0% 0.0% 0.0% Additional Adjustment 30.0% ` 35.0% 0.0% 15.0% -15.0% Adjusted Price/SF $515.59 $1,996.17 $64000 $305.67. $252.10 tstedPncefAere..:( T;."$87,480 :':$128,000 $56,959 $91,245 High $128,000 Low $56,959 Median 587,480 Mean $88,257 BLAZEJACK& COMPANY 61 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Overall, these adjustments provided a range of indications from $56,959 to$128,000 per planned guest room, with a median of $87,480 per room and a mean of $88,257 per room. Based on this analysis from sales comparison, the subject site appears to have a current "as is" Market Value of$88,000 per planned room, considering a Fee Simple interest in the property and assuming approvals are in place to allow for development at its highest and best use. This highest and best use of this property is for development of a, full-service, 800-room convention center hotel. With a site size of 2.55 acres, this equates to a planned development density of 301.9 rooms per acre. This development density is not similar to any of the three Miami Beach sales used in this analysis, with substantially higher or lower densities observed for those sale properties. The price per square foot of land among properties can skew significantly when potential development densities are increased or decreased. As such,the use of a sale price per square foot of land was considered in this analysis,but was not applied. However, the previous analysis has not considered the substantially larger size of development that is planned for the subject, with 800 total guest rooms. By comparison,the five sales ranged in (proposed) size from 97 to 250 rooms. This greater potential size for the subject places greater limits the pool of potential buyers that may be capable of purchasing the site in fee simple. Furthermore,the size of proposed development,at 800 rooms substantially increases the development period and the risks associated with an expanded development period, which is inferior to that of the comparable sales. Another consideration is the Extraordinary Assumption that the subject site is encumbered by a Neutrality Agreement that has been proposed for the property. This Agreement, between a hotel operator and labor unions, will prevent the eventual user of the site (a hotel operator) from opposing efforts of labor unions to recruit new members from qualified personnel working at the hotel. This is an added encumbrance to the site that the previous value estimates per room and per square foot of land did not consider. Any encumbrance to a property, whether physical (such as an easement) or legal (such as a deed restriction), creates greater limits on a property's development and/or use. The subject site has a highly-unique landlocked location in South Beach, with a unique development density proposed for this location. There are no sales of similar properties with similar use encumbrances from which to extract an adjustment for this factor. Therefore, we BLAZEJACK& COMPANY 62 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 have applied other methods in order to provide adjustments to the value indications of the property with this added use encumbrance. Test of Development Feasibility The value of the subject site is directly tied to its marketability. A potential purchaser will be attracted to the property if the price of acquisition is reasonable for its intended use. A buyer of a development site is attracted by the property's potential to provide a return on their investment relative of other alternatives in the market. This return is also referred to as the property's entrepreneurial profit. Profit from a development is measured using a simple formula: Market Value at Stabilization Less: Total Building Cost Less: Total Land Acquisition Cost Equals: Profit In order to estimate the proposed hotel's Market Value at Stabilization, we will use direct capitalization of its stabilized net operating income. The site's proposed use encumbrance would require the eventual hotel operator to maintain a neutral stance if labor unions wished to recruit members from among various qualified employees at the hotel. It does not mandate a union workforce at the hotel, but if a majority of qualified employees vote to join a labor union, it may have effects on the hotel's income generation. The previous estimate of Gross Revenues for the property was obtained from financial information from experienced international hotel operators, along with those from the subject's hotel developer, from a similar larger hotel in Miami, and indications for convention center hotels published in CBRE's Trends report. Two major international hotel operators, including one of those providing comparable data that was previously used, provided estimated pro formas of the financial performance of a similar convention center hotel facility considering both unionized and non-union workforces. These are included below; along with a summary of the conclusions from a similar study of all types of hotels, including those with union vs. non-union workforces, was published within an STR Analytics study: BLAZEJACK& COMPANY 63 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 t Loot mn MBCC MBCC MBCC MBCC MBCC MBCC Total Rooms 800 800 800 800 332 523 Hotel Type Ful-Service Full Sm ice Full Service Full Service Full Service Full Sen'ee Employee Type Non-Duran Union Non-Union Union Non-Union Union Food&Bveng' 4 Otlets 4 Outlets 5 Outlets 5 Outlets 50WIar 5 Outlets Mating Space(*) .. 100.000 • 100,000 8000 85,000 WA WA Meeting Space SEAWom 1 12$ 125 DM 106 WA ' WA S?a 10,000 SF 10,0005 7,5005 1,500 SF Wq 2+4 Parking Garage forage Cr mg Coag N/A N/A Expected Year Built 2019 2019 2019 2019 1981 1970 Annual Room Nights 292,000 292,000 292,000 292,000 121,180 190,895 Occupancy 78.0% 78.0% WA : N/A - 785eq 81:9% Boom Night Sala 227,850 227850 N.A NA 95,490 156,343 %GroupSles 680% 68 0% F'A WA N'A FlA Average Daily Rue 5307,50 5307.50 0.0% NIA WA $20378 .:5262.05 29.1% Departmental RBaenaea T%MI(0000 Total(0100 %A Total(010s) TMaI(90&) %A ter SI iSer$I %A Room Ret antes 510,064 570,064 0.0% $84588 584,588 0,0% Food&Dewng Revente $35,127 $35.127 0.0% $42101 542.101 O0% Re9aancts&Ban $8,272 $8,272 11.0% NIA NIA Banquets&MWinp :519,121 $19,121 00% N/A N/A Wes F&B 57,734 $7,734 0.0% N/A N/A Telecommunications In Other In Other In Other $189 5189 0 0% Spa In Other In Other In Other $944 5944 0 0% Parking In Other In Other In Other $1213 51,211 00% Other Operating Depu 54430 54,430 00% 5629 5629 00% Rent&Other Income $680 5680 00% 51.045 51 045 00% Goss Re,.nit 5110,301 5110.301 00% 5130,709 5130-709 00% Deparmental&penes: Rooms 514,102 515,072 6.9% $16,103 517.069 6.0% Food S.Bcvcray 520,337 $21,738 69% $21,559 529 461 69°% Telecommunications In Other In Other In Other 56114 5616 20% $a In Other In Other In Other 5755 5155 00% Parking In Other In Other In Other $0 50 00% Other Operating Depts 52,873 $2,949 26% 5734 5734 00% Rent&Oma Income 50 50 0.0% $0 SO 0.0% Departmental Expenses 537.312 $39,759 66% 54'755 548.635 6 3% 50417 50413 III 8% Departmental Profit 572,989 570,542 d4% 584,954 582.074 -3A% Uapetn6olid4 peum Admin 8c General 56,759 56,818 0 57,604 57,604 0 0% Sale.&Marketing 55,610 55,681 03% 58,466 58,466 0.0°% Property Maintenance 53.352 53,827 142% 53421 S3.521 0.0% Clilttier I3,303 53.203 0A% 52,747 53.747 0.0% Undistributed Expenets $18,984 SI 9.535 2 9% $222,338 $22.338 0.0% 50.217 50.213 -I.8% PTOs Beloit Dien Coats 554,005- -551:007 -5.6% 562616x" 559,736 -46% w 50321- $0192- .99% Among the hotel operators cited in the table above,no effect on the revenues from hotel workforce unionization could be supported from independent sources. RevPAR among the unionized hotels from the STR Analytics study was almost $55.00 higher than those of Non- Union hotels. This indicates that the Gross Revenues at the union hotels surveyed by this source were greater than their non-union counterparts. However, STR Analytics noted that the unionized hotels surveyed tended to be larger and convention hotels located in central business districts with higher rate structures compared to their non-union counterparts. It also may skew the trends in expenses noted by this source, but to a lesser degree since these were compared to BLAZEJACK& COMPANY 64 SECTION Iv: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 hotels located in similar city-wide markets where similar costs for labor, good and supplies, etc. would occur. Nonetheless, it does not provide a clear "apples-to-apples" comparison with regard to any impact on the Gross Revenues for the subject hotel if unionization of its workforce were to occur. Among the pro formas for non-union operations, the Profit Before Fixed Costs ranged from 47.9% to 49.0% of Gross Revenues. Our estimate of stabilized Gross Revenues was $115,592,000 in cwlent dollars; since the subject is anticipated to be completed and achieving a stabilized occupancy and revenue generation in 2027, we have inflated this amount at 3.0% per year which results in an estimate of Gross Revenues at stabilization of.$150,821,000. From the comparable indications, the estimated Profit Before Fixed Costs at the subject is estimated to be 48.5%of Gross Revenues under this scenario, or$73,148,000 at stabilization. A breakdown of the additional fixed costs estimated for a convention center hotel, obtained from the two international hotel operators, is summarized below: Comp No. 1 2 Em.loyce Type Non-Union Union Non-Union Union fatal 11100s) 'Fatal 10003) %s Tnlal (0011x1 Iota) titlUV '9 Gross Revenues $110,301 5110,301 $130,709 $130,709 Profit Before Fixed Costs $54,00$ $51,007: -5,6% $62,616 '.$59,736 !4.6% Asa%of Goss Revenues49.0% 46.2% 47:9% 45.7% Less: FixedCosts Management Fee: 3% $3,309 $3,309 $3,921 $3.921 Property Taxes $3905 $3,905 $3,560 $3,560 Insirance $1,044 $1,044 $2,816 $2,876 Land Rent $4.412 $2,758 $5,228 $3,268 FF&E Reserves $4,412 $4.412 $3,560 $3,560 Total Fixed costs $17,082 $15,428 $19,145 517.185 Net Operatioglncome 536,923 $35,579 -3.6% $43,471 $42,551 1.2.1% Land rent was calculated at 2.5%of Gross Revenues. From the range of indications for a non-union hotel in the preceding table, total fixed costs at the subject are estimated to be $18,500,000. At the time of stabilization, this figure is expected to climb to $24,138,000 at a 3.0% annual inflation rate. When these fixed costs arc deducted from the subject estimated Profit Before Fixed Costs, a stabilized net operating income of$49,010,000 is estimated. In a subsequent analysis of the appropriate (market) returns on the subject site, we will provide support for an applicable overall capitalization rate for the subject hotel, if completed BLAZEJACK& COMPANY 65 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201623 and operating at stabilization, from 6.00% to 7.00%. Applying those rates to the estimated net operating income produces a value range at stabilization from $700,143,000 to $816,833,000. With 800 moms, this equates to a stabilized value range from $875,000 to $1,021,000 per guest room in 2027. These calculations for the subject's proposed hotel (at stabilization)are presented below: Annual inl7stlou 3,0% Current Stabilized 2927 21118 High 1 o Non-Union Hotel Return Anal so $in 000s) (S in 000s) (S in 000s) Projected Gross Revenues: Non-Union Hotel $115,592 $150,821 $150,821 Proportion of Profit Before Fixed Costs 48.5% 48.5% Estimated Profit Before Fixed Costs $73,148 $73.148 Fixed Costs at Stabilization $24,138 $24,138 Net Operating Income $49,010 $49,010 Overall Capitalizatio Rate 6.00% 7.00% Value at Stabilization $816,833 $700,143 No. of Rooms 800 800 Stabilized Value per Room $1,021 $875 Building Cost per Room $456 $456 Developer's Profit on Costs -.. 123.90% 91.89% Compounded Annual Profit Rate 9.37% 7.51% The developer, Ttunberry/Terra, has forecast a construction cost for the hotel of $362,107,759 which equates to approximately$456,000 per room. There are no costs to acquire the land, which will be leased from the City of Miami Beach. These land lease costs were previously included in the Fixed Costs of $18,500,000, which were inflated to provide an indication of these Fixed Costs at Stabilization. When deducted from the value per room indications, this provides a potential profit range from 91.89% to 123.90% over costs over the seven-year period in which the hotel will be construction then brought to a stabilized level of occupancy and operations and assuming a Non-Union workforce at the subject. This is a compounded annual return rate of 7.51% to 9.37% over this nine-year period. When compared to the overall capitalization rates that are applicable to this hotel property (at stabilization) of 6.00% to 7.00%, this appears to be an attractive project for a developer to undertake. BLAZEJACK& COMPANY 66 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Next,we have analyzed the impact on feasibility if the qualified employees at the subject hotel were to join a labor union. The two international hotel operators provided a comparison of Profit Before Fixed Costs and net operating income considering both union and non-union workforces at the proposed subject. Profit Before Fixed Costs fell by 4.6% to 5.6% in these estimates when a unionized workforce was in place, along with a drop in net income ranging from 2.1%to 3.6%. Comp No. I 2 Employee Type Non-Union Union Non-Union Union Goss Revenues $110,301 $110,301 $130,709 $130,709 Profit Before Fixed Costs $54,005 $51,007 -5.6% $62,616 $59,736 -4.6% Asa%of Cross Revenues 49.0% 46.2% 47.9% 457% Less Fixed Costs Management Fee: 3% $3,309 $3,309 $3,921 $3,921 Property Taxes $3,905 $3,905 $3,560 $3,560 Insurance $1,044 $1.044 $2,676 $2,876 Land Rent $4,412 $2,758 $5,228 $3,268 FF&E Reserves $4,412 $4,412 $3,560 $3,560 Tot al Fixed Costs $17,062 $15,428 $19,145 $17,185 Net Operating Income - $36,923 '$35,579 .3.6% $43,471 $42,551 -2.1% However, the STA Analytics study indicated a greater decline of 9.9% in Profit Before Fixed Costs due to the impact of a unionized workforce on a typical hotel property. Therefore, we have estimated that the implementation of a unionized workforce will cause a decrease of 4.0% in the net income that the subject property will generate at stabilization. In applying similar overall capitalization rates of 6.00% and 7.00%, this will cause a similar 4.0% drop in the stabilized value of the proposed hotel with a Union workforce. This equates to an adjusted value per room range from $840,000 to $980,000. When compared to the cost of construction of$456,000 per room, the following profit margins are noted: BLAZEJACK& COMPANY 67 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 Annual Inflation .. 10%.+ ,. c trent stabilized 21127 21118 High I.ow Union Dote Retain Analysis (S in 000s) (S in 000s) Stabilized Value per Room: Non-Union Hotel $1321 $875 Adjustment for Union Operation -4.00% -4.00% . .................... Stabilized Value per room with Union Operation, $960 $840 Building Cost per room $456 $456 Developer's Profit on Costs 114.91% 8421% Compounded Annual Profit Rate 8.87% 7.02% Over the nine-year period to complete the proposed hotel's construction and bring its operations to stabilization, an annual profit rate of 7.02% to 8.87% on costs is estimated if unionization of the hotel's qualified employees is assumed. As such, the subject remains an attractive and highly-feasible development in this market compared to the overall rate for a similar existing hotel property in this market. Although the return to the developer (via profit) remains attractive, it is nonetheless reduced if the hotel's qualified workers were unionized,posing the potential for reduced returns to a developer caused by this use restriction that is assumed to be in place at the property. Both the building improvement and land to this property contribute to the profit that can be achieved in these scenarios since feasibility remains under both a union and non-union workforce application to the property. Feasibility for development disappears if a property's value falls or if costs rise to levels that do not provide for an adequate return to the developer. Once that situation occurs, it is often the land value that falls before building costs, and to a greater degree, since the building costs are based on many factors that include various materials and labor whose levels are typically less elastic. The difference in profit levels between the union vs. non-union workforce scenarios above provide the following range of downward adjustments to the land value: Overall Capitalization Rate At 6.00'x, At 7.00'x, Total Profit: Non-Union Workforce Hotel 123.90% 91.89% Total Profit: Union Workforce Hotel 114.91% 84.21% Difference -7.26% -8.36% BLAZEJACK& COMPANY 68 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 With greater elasticity to the value of land (compared to building costs), this range should be rounded upward. When combined with an adjustment for the larger size of the subject's proposed development and the greater degree of risk compared to the site sales in this analysis,a downward adjustment of 16.0% is applied to the preliminary value of the subject site. This adjustment assumes that a use encumbrance is in place(per the Extraordinary Assumptions section of this report), and considers the substantially greater size of development of the subject compared to the sales noted in this analysis. This equates to an estimated Market Value if encumbered with this use restriction of S74,000 per planned room (rounded), or approximately 16.0%less than the value per room that was previously estimated if unencumbered. Using these estimated values per room and value per square foot of land provides the following Market Value estimate for the subject site "as is" and considering a Fee Simple interest as of the current valuation date. This value estimate assumes that the development of the property can occur to its stated highest and best use, and is subject to the Assumptions and Limiting Conditions and Extraordinary Assumptions set forth in this report: Vclue Conclus ion Value Ik="1 o.Rooun) 's_=72olat ° ":.. $74,000 x 800 = $59,200,000 Rounded = $59,200,000 ANALYSIS OF THE PROPOSED RENT FOR THE SITE The proposed lease for the subject includes terms that are fully net, whereby the land tenant pays all of the property's taxes, insurance, maintenance and operational costs. Under the terms of the proposed land lease to the property, the stabilized contract rent on the subject site was estimated to be $2,890,000 (rounded) if the proposed hotel's workforce was non-union, or $2,427,000 (rounded) if that workforce was unionized.. If this amount represents a reasonable return on the site's current value (equity), then this current contract rent it is synonymous with its market rent. In the previous section of this report, we estimated the current Market Value of the site in Fee Simple at $59,200,000, using a price per room unit of comparison. Considering the estimated contract rents of the site, considering both union and non-union workforces at the BLAZEJACK& COMPANY 69 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 proposed hotel, this produces the following returns on the value (equity) of the site, which also represents an overall capitalization rate to the land: Non-L ninn 1 n ion urate I Hotel Estimated Contract Rent on the Site S2,890,000 $2,427,000 Estimated Land Value in Fee Simple $59,700,000 $59,200,000 Return Overai Rarete the Land) 4.88% 4.10% The indicated return of the contract rent on the property's value is ranges from 4.10% to 4.88% depending on whether the proposed hotel's workforce is unionized or not. In order to determine if these amounts represent a reasonable return on the Fee Simple owner's equity, we have obtained similar return rates on alternative investments and compared them to this estimated return rate to the subject based on risk and other factors. 10-Year U.S. Treasury Yields July2018 2.83% Investment-Grade Corporate Bond Yields July 2018 4.29% U.S.Treasuries are considered to carry reduced risk compared to real estate investments, thus reflect a range of rates below those that would be sought on a ground lease. The yield rates on investment-grade corporate bonds are viewed as carrying risk that is more-similar to that on a ground lease for commercial properties. The current yield rates for these bonds was recently noted at 4.29% The Federal Reserve held a zero interest rate policy after December 2008 in an effort to reverse the effects caused by the economic downturn that began that year, affecting a downward pull on all debt rates and yields including those of governmental agencies and corporations. As such, rates and yields on these instruments were at their lowest levels in many years. Over the past two years, the Federal Reserve has begun small but incremental upward hikes in its base rates,pushing treasuries and corporate bond rates upward. With a 99-year lease at the subject, its fee simple owner would take the long-term outlook for rates and returns into consideration when seeking a yield rate on the site. As such, the long-term return sought from a triple-net lease on the subject site would be near the most- recent investment-grade corporate bond yields noted above. Another source of returns is provided from overall capitalization rates (OARs) on sales of operating hotels in this market. This rate reflects the proportion of net income (return) on improved hotel property investments BLAZEJACK& COMPANY 70 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 and other net-leased commercial property investments, and was obtained from recent surveys of national investors cited in the table below: Piape rt. .',crape source npc:( lass Ran ae o 0 alts 0 a RERC Miami Hotels 7 20% 1st Qtr.2018 US.Hotels 7.50% Jones Len0LaSslle National Hotels " 6.60% lst Qtt.2018 Natl.Overall)ltt J Pd 16.30%. Korpacz/PWC National Net Leased 6.80% 4th Qtr.2017 Properties CBRB USLuxmy Hotels 7.01% 2114Hatf2017 Miami Lot Hotels 6.00% to 7.00% These surveys indicate a range of overall capitalization rates applicable to national hotel property investments from 6.60% to 7.50%. The RERC and CBRE surveys provide overall rates for the best-quality(Class"A")hotel property investments in the local Miami-area market, with a range from 6.00%to 7.20%. When completed, the proposed subject hotel will be a full-service hospitality facility with 800 rooms, newly-built improvements and containing substantial meeting space. It will be located in the prime South Beach resort market of Miami Beach. Conversely, this property will be situation several blocks west of this community's prime location, which lines the attractive Atlantic Ocean beaches. In addition, the subject hotel owner will be leasing the site from the City of Miami Beach under a 99-year term, thus will not have full fee-simple control of the property. Thus, the overall capitalization rate produced by a sale of this improved property, if completed and operating at a stabilized level of occupancy and generation as of the current valuation date, would likely fall within the range of indications for Class "A" Miami hotels. This range is estimated to be from about 6.00%to 700""%. As a vacant site, the return that would be accepted on the subject carries less risk than if it were improved to its highest and best use (with an 800-room full-service hotel). Over the long-term, the improved hotel property carries greater risk in its revenue stream during the ups and downs of various economic cycles. It is also subject to greater risk from unforeseen events such as hurricanes that may temporarily interrupt hotel operations, and from the process of development and investment. With reduced risk to the return on the site (via a ground lease, the expected return on the subject site is likely to be lower than that for an improved hotel investment. With an overall capitalization rate (return) for the proposed hotel operation to the BLAZEJACK& COMPANY 71 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 subject (if stabilized) ranging from a low of 6.00% to a high of 7.00%, this compares to the 4.88%return which the subject's forecast ground lease rent appears to generate in relation to the property's equity(value). This return that is estimated from the subject's proposed ground lease is at least 100 basis points below those estimated for the property if occupied by an 800-room full-service hotel that was operating at a stabilized level of occupancy and revenue generation. This is reasonable, considering the reduced risk in a vacant site compared to that for a hotel operation at the property. A band of investment technique is employed as an additional analysis. This technique provides ratios of the contributory value between the land and improvements, then assigning a rate of return to each; this results in a weighted average indication of the overall capitalization rate an improved property (including land and improvements), which would be an 800-room convention center hotel. Those overall rates for this property, if completed and operating at stabilization, were previously estimated to be from 6.00% to 7.00%. The overall rate to the improvements is typically greater than that for the land due to the added risk in the development and investment. With this portion of the equation providing a higher overall rate to the building, a lower corresponding overall rate to the land typically results. Examples of how this equation might appear in relation to the subject with its proposed improvements,based on variable overall rates of 6.00%to 7.00%to the improvements,are presented below: BLAZEJACK& COMPANY 72 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201823 ..nal . ,II i. , Lodlmeni cvwe <n 4.00ry u ,dv.mvn, , u. lai Land 80% X 650% - 5.20% Land 75% X y:. 4.50%- % Tmro.emew 80% X 651i = 520YIm.rovemoms 75% X i50% = 4 88% Land 20% X 3.00% J. - 060% Land Im.rovemenu 80% X 6.]5°e - 5.40% Im.mvemanh 75% X 695% - 5 06% Land 20% X # % = 040% Land 25% X Z00%. - 075% Ir.rwunvvrs 80% X 700% - 560% Ira m.emea,s 75% X 700% = 525% mean i o. ..11 landn e1 Sew.. m5°nvni LamO.nvni tamn Land 20% X 430% w 0.90% Land Ira rovemen,e 80% X 700% = 5 Imrtovemenu700%75% X ].0 Land 20% X 3.50% 0 70% Land Im.roecmvn„ 80% X 725% = 5.80% In, rmemems 75% X 725% 5 44% Land 20% X 250% - 0 Land 2s% x 9.SIMrk n.9]v. Im.rovemema 80% X 7 50% - 6 00% Im.rovemen,s 75% X 750% = 563% oo( nu rillml ..0ill 1,7 II ] It Iry to - n , A �I<am i11 rn, cdn, 401111.^run, c 110111^111111 mm1n.ni Lm, ,,,,. Sane < Land 20% X 5.50% - 6.00% Land 25% X 750%. - I Ira rnvements 80% X 750%. - 600°/. Im.mvemm6 75% X 7 50% - 5 Land 20% X 4.00% = 080% Land Ira.rmemems 80% X 7 75% - 6 20% In, revemm,z 75% % 7 75% 5 81% Land 20% % < 300% - 0.60% Land 25% X 4.00% - I 00% In, rovcmcnts 80°% % 8,00% - 640% Ern.rovemenra 75% X 8.00% - 600% With greater risk to the improvements, a greater return for this component is forecast; in each case, this provides for an overall capitalization rate to the land that falls below the overall rates estimated for the property with its proposed improvements. The proposed use encumbrance that is assumed to be in place at the site further diminishes its value. As such, a lower land-to-value ratio from 20% to 25% is supported in the band of investment analysis. Altogether, this analysis produces a range of overall rate (return) indications to the land from 2.00%to 5.00% at a 20% land-to-value ratio. At a higher land-to-value value ratio of 25%,this range of overall rates to the land is from 3.0%to 5.50%. These ranges are generally supportive of the returns forecast from the subject's proposed ground lease on its value,which could range from 4.10%to 4.88%. With a 99-year ground lease term, prudent investors would also seek a long-term return on the subject that is similar to the current yields on investment-grade corporate bonds, and also exceed the range of returns on BLAZEJACK& COMPANY 73 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 safer U.S. Treasuries. This provides a hedge against future periods when higher interest rates and yields may be present. CONCLUSIONS The stabilized rents for the subject site, based on the terms of its proposed ground lease, were estimated. These amounts,if applied to the estimated value of the site owner's equity as of the current valuation date, provide a return on the site that ranges from 4.10% to 4.88% depending on whether the proposed hotel's workforce is unionized or not. These estimates consider the Assumptions and Limiting Conditions and the Extraordinary Assumptions set forth in this report. Therefore,it is the appraiser's opinion that: 1. The subject's 2.55-acre site, if valued in Fee Simple and unencumbered by a lease, would have a hypothetical Market Value of$59,200,000 as of June 29,2018, assuming it has approvals and a highest and best use for development with a full-service convention center hotel with a maximum of 800 guest rooms. 2. To an investor, a reasonable return on land in this location, assuming a highest and best use of the subject property for development with a full-service hotel with up to 800 guest rooms,would range from 4.00% to 5.00% of its land value(in Fee Simple). 3. Considering its estimated Fee Simple land value and this range of reasonable returns, an annual rental amount from $2,368,000 to $2,960,000 (at stabilization of the proposed hotel's revenue stream) would produce a reasonable return on the subject site as of the current valuation date. 4. Administrators with the City of Miami Beach have estimated a stabilized contract rent of$2,634,398 for the subject based on the terms of the lease proposed for this property. Based on the proposed terms of this land lease, the appraisers have estimated these stabilized rental rates to be $2,427,000 if the hotel has a unionized workforce, and $2,890,000 if the hotel's workforce is non-union. All of these estimated stabilized rents for the property provide a reasonable return on the subject site. 5. As a proportion of the anticipated total revenues from the proposed 800-room hotel, the percentage rates proposed for the land lease of the subject property fall within the lower half of the range that is typically observed for hotel land leases nationwide. Offsetting this situation is the minimum fixed rent of $2,000,000 proposed for this land lease on the subject, an amount which escalates over the term of this proposed lease; this minimum fixed rent is higher than those observed elsewhere in the market, BLAZEJACK& COMPANY 74 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201823 which effectively reduces the risk of reduced lease payments during temporary periods of recessionary conditions that may affect the proposed hotel's financial performance.. BLAZEJACK& COMPANY 75 SECTION IV: LEASE ANALYSIS ADDENDA Exhibit A Engagement Letter EXHIBIT A BLAZEJACK & COMPANY REAL ESTATE COUNSELORS lune 29,2018 Ms.Maria Hernandez Capital Projects Advisor to the City Manager Office of the City Manager 1700 Convention Center Drive,4th Floor Miami Beach,Florida 33139 Tel:305-673-7000 Ext.2584 MariaHemandez@miarnibeachll.gov RE.: SUBJECT PROPERTY: A 2.55-acre site at the northeast corner of 171"Street and Convention Center Drive, Proposed for development with an 800-room Convention Center Hotel that will be adjacent to the Miami Beach Convention Center Miami Beach,Florida Dear Ms.Hernandez: This letter will serve as our proposal to provide appraisal and consulting services on the above referenced property. These services will include the following: 1. An estimate of the Market Rent for this property under its proposed 800-room convention center use,and an analysis as to whether or not the proposed rent on the site provides a reasonable return to the fee simple owner of the subject property. 2. An alternative estimate of the Market Rent for this property under its proposed 800-room convention center use in which certain site restrictions apply,these site restrictions for this alternative analysis will be stated in the report. Our estimated date of completion of the written report is no later than July 16, 2018,with a verbal and/or summary version of our conclusions provided earlier as needed. We will prepare a PDF version of an appraisal report setting forth a detailed description of our methodologies, research, analyses and conclusions. Our analysis will consider the physical aspects of the property and assess its competitive position in the market. We will employ all techniques that are considered to be appropriate to this valuation estimate. Our analyses and report will conform to the Uniform Standards of Professional Appraisal Practice (USPAP), the Supplemental Standards issued by the Appraisal Institute,and the requirements of the client(the City Manager's Office of the City of Miami Beach). We have received the Request For Proposal (RFP)No. 2018-238-KB by the City of Miami Beach, which describes the subject property and its proposed development with an 800-room convention center hotel. More information may be required as we progress with this assignment. If there is any other information you believe we would need in order to complete this assignment,please forward it to us. The total fee for this assignment is $10,500, under the scope of work outlined above, plus reimbursable expenses for research data not to exceed an additional$2,000. Additional fees for any required court testimony is based on a rate of$250 per hour. This proposal is submitted based on our current schedule of commitments. It may be necessary to alter the completion date unless the assignment is authorized in the near future. You may authorize this assignment by signing and returning a copy of this letter. 5890 S.W. 100 Terrace,Miami,Fl 33156 (305)372-0211. www.blazejack.com BLAZEJACK & COMPANY REAL ESTATE COUNSELORS We thank you for calling on us and we look forward to working with you. Respectfully submitted, gAg1 ed and Accep d 1 Ji my L.Mo :les,City Manager Thomas J.Blazejack,MM,AJ-GRS,CCIM Ci of Miami Beach President LN 1015 Date: tt License (.01V4I ' State-Cenified o.R2 Appraiser 5890 S.W. 100 Terrace,Miami,FL 33156 (305)372-0211. www.hlazejack.com Exhibit B Proposed Ground Lease to Subject Site EXHIBIT B a le6pne__.__6upueUU . 2 { \ \ 5555. \ '4555 \ \ 2122 \ \ \ \ \ \ 4449 \ \ \ \ \ \ 4943 \ \ \ } } 3 W2 \ ) \ } \ \ \ } \ } } } \ƒ 3333333232222 CO | \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ / \ \ \ \ \ C CD 1 . , , . _ to4 4 „ ; , , ; z = „ _ „ > , : 1 , , , , , , 0 aiiii ; ; \ ii ; ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ) 000 < III § \ : } § ; r (00 ! / 4 § ! I \ !i0004000004, § § \ \ \ 4 § ! � � ; ; § ; } } } \ } } ! I ; } ; lj§ ! }} ; } \ \ } ; � ! ll ; ; ; ; ; ; ; ; Z ; ; : : ; ; ; ; ; : ° ; : ; ; ; ; ; ! ! ! ! ; : ! !> „ , , , , , , , , , , , , , , , , , , , : , , , , , , , ! ! , , \ { \E. \ ) 3 lac \ \•/ - - - - d J // { : : : : £ / \) // _ 222 { m _ : \ ! © « / / } ( \ § 1 ; \ — (! ; \; : ! / ) i) i ! ! - _ Cr as \ / / p/ ; �_ _ / « , . , , _ , / \ W °. % i) \o {c / ) ) | i ) ) 1 ) k \ : - : - a ) | ) ) \ | ge \ \ \( " / ) .1 2 z . , ! 3332 ! b a _ , _ , MEMORANDUM OF AGREEMENT THIS AGREEMENT is made and entered into by and between Portman Miami Beach, LLC("Developer")and UNITE HERE Local 355 (the "Union"). 1. Developer is engaged in the development of a hotel project to be located at or near the Miami Beach Convention Center in Miami Beach, FL(hereinafter referred to as the "Hotel"). The Developer has not yet selected an operator for the Hotel and does not currently have in effect management agreements or other agreements with an operator for the Hotel or its various operations. This Hotel, once in operation,will create numerous jobs, including positions for hotel service workers and related positions in the Hotel's operations. The Union is interested in organizing the employees of the Hotel. This Agreement shall cover all employees employed in classifications as set forth in Exhibit A hereto, or in classifications called by different names but performing similar duties (referred to hereinafter as "Employees"), at the Hotel which during the term of this Agreement is operated by or substantially under the control of the yet to be determined operator(hereinafter referred to as"Operator/Employer"). The term "Operator/Employer" shall be deemed to include only the entity ultimately engaged by Developer to operate the Hotel, and then only with respect to"Employees"(as defined herein)at the Hotel. This Agreement shall not apply to: (i)any location other than the Hotel where the Operator/Employer has employees; (ii) any employees of the Operator/Employer other than those Employees specifically defined herein; (iii)any person, firm,partnership,corporation,joint venture or other legal entity under the control of the Operator/Employer; (iv)any subsidiary of the Operator/Employer; or(v) any person, firm, partnership, corporation,joint venture, or other legal entity which controls the Operator/Employer, except,as to any Person described in clauses (iii),(iv) or(v), to the extent any such person, firm, partnership,corporation,joint venture, or other legal entity described in clauses(iii), (iv)or(v) is acting in the place and stead of the Operator/Employer with respect to the Employees at the Hotel. In selecting the Operator/Employer, Developer will include the applicable terms of this Agreement in the operating agreement with such selected Operator/Employer. Operator/Employer shall not include the Developer or any other entity that is the owner of the Hotel,any municipality or county, any convention center authority or any subsequent owner of the Hotel, except as otherwise provided herein. 2. The parties hereby establish the following procedure for the purpose of ensuring an orderly environment for the exercise by the Employees of their rights under Section 7 of the National Labor Relations Act(the"Act")and to avoid handbilling, picketing,and/or other economic action directed at the Developer, Operator/Employer, owner of the Hotel,the City of Miami Beach and/or the Miami Beach Convention Center in the event the Union decides to conduct an organizing campaign among Employees. 3. The parties mutually recognize that national labor law guarantees employees the right to form or select any labor organization to act as their exclusive representative for the purpose of collective bargaining with their employer, or to refrain from such activity. 4. The Developer will take an approach of neutrality to the unionization or organizing of Employees at the Hotel by the Union. The Developer will not take any action nor make any statement that will directly or indirectly state or imply any support for, or opposition to 26296s44v3 the selection by such Employees of a collective bargaining agent, or preference for or opposition to any particular union as a bargaining agent. 5. The Union and its representatives will not coerce or threaten any Employee in an effort to obtain authorization cards or otherwise to obtain any Employee's support for the Union. Likewise,the Developer and its representatives will not coerce or threaten any Employee in connection with his/her decision regarding whether the Employee signs an authorization card or otherwise supports the Union. 6. The Union will take all appropriate actions to support the public approval of the referendum currently scheduled for November 3, 2015 that is necessary for the Hotel to be developed. The Union and its representatives shall refrain from making any negative statements about or taking any actions against or that raise questions of its/their support for the public approval for the referendum. Should the referendum fail to receive the necessary public approval, this Agreement shall thereupon become null and void. 7. Once an Operator/Employer is selected by Developer, if the Union provides written notice to this selected Operator/Employer of the Union's intent to organize Employees covered by this Agreement,the Operator/Employer shall provide reasonable access to its premises and to such Employees by the Union consistent with the provisions of the Act. The Union may engage in communications with Employees in the cafeteria,break rooms and locker rooms of the Hotel during Employees' non-working times(before work,after work,and during meals and breaks) and/or during such other periods as the parties may mutually agree upon. 8. Within ten(10) days following its receipt of written notice of intent from the Union to organize Employees at the Hotel,the Operator/Employer will furnish the Union with a complete list of such Employees, including both full and part-time Employees, showing their job classifications,departments,phone numbers, and home addresses, subject to applicable laws including laws regarding privacy of employee or individual information. Thereafter,the Operator/Employer will provide the Union with updated lists of all such Employee information on a quarterly basis. 9. Developer and the Union agree that the Union's majority status and representation of any Employees as defined by this Agreement shall be solely determined and verified by a secret ballot election conducted by the National Labor Relations Board(NLRB)pursuant to the NLRB's rules,policies and procedures, and all applicable provisions of the Act, following the filing of an appropriate petition for representation election by the Union. 10. During the term of this Agreement,the Union will not engage in handbilling, picketing or other economic activity at the Hotel or at any of Developer's or Operator's/Employer's or their respective affilliates' offices or other property locations, or at the residences of the management, directors, officers or employees of any of the foregoing entities, and will not make disparaging or other adverse statements about the Hotel or the Developer or Operator/Employer, or their respective affiliates,or the management, directors,officers or employees of any of the foregoing entities. The Union also agrees to comply with any lawful "no solicitation/no distribution"policies of the Operator/Employer,consistent with the requirements of the Act. Operator/Employer will not engage in a lockout of the Employees during the term of this Agreement. Notwithstanding the termination provision above, if the 262968440 Operator/Employer voluntarily recognizes any union besides Union as the exclusive collective bargaining representative of Employees,or any of them, this paragraph shall terminate immediately and without notice. 11. In the event that the Developer sells, transfers, or assigns all or any part of its right, title, or interest in the Hotel or substantially all of the assets used in the development of the Hotel, or in the event there is a change in the form of ownership of the Developer, the Developer shall give the Union reasonable advance notice thereof in writing, subject to any confidentiality restrictions to which the Developer may be subject, and the Developer further agrees that as a condition to any such sale,assignment,or transfer, the Developer will obtain from its successor or successors in interest a written assumption of this Agreement and furnish a copy thereof to the Union, in which event the assignor shall be relieved of its obligations hereunder to the extent that the assignor has fully transferred its right,title, or interest. 12. In the event that the selected Operator/Employer sells, transfers,or assigns all or any part of its right, title, or interest in the management of the Hotel, or in the event there is a change in the form of ownership of the Operator/Employer, the Operator/Employer shall give the Union reasonable advance notice thereof in writing, subject to any confidentiality restrictions to which the Operator/Employer may be subject, and the Operator/Employer further agrees that as a condition to any such sale,assignment, or transfer,the Operator/Employer will obtain from its successor or successors in interest a written assumption of this Agreement and furnish a copy thereof to the Union, in which event the assignor shall be relieved of its obligations hereunder to the extent that the assignor has fully transferred its right,title,or interest. 13. The Developer and Operator/Employer shall incorporate the entirety of paragraphs 4, 7, 8, and 9 of this of Agreement in any contract, subcontract, lease,sublease, operating agreement, franchise agreement or any other agreement or instrument giving a right to any person to operate any enterprise in the Hotel employing employees as set forth as included Employee Classifications in Exhibit A,or in classifications called by different names but performing similar duties, and shall obligate any person taking such interest, and any and all successors and assigns of such person,to in turn incorporate said paragraphs in any further agreement or instrument giving a right as described above. The Operator/Employer shall exert commercially reasonable efforts to enforce such provisions against those parties with which the Operator/Employer has a direct contractual relationship. The Developer and/or the Operator/Employer shall give the Union written notice of the execution of such agreement or instrument and identify the other party(ies)to the transaction within 15 days after the agreement or instrument is signed. The terms"Developer", "Operator", "Employer"and"Hotel"shall be modified in such agreement or instrument to conform to the terminology in such agreement or instrument but retain the same meaning as in this Agreement, and the terms "Operator/Employer"and"Employees"as used herein shall be modified to refer, respectively, to the person or persons receiving a right to operate an enterprise in the Hotel and the employees of such person or persons. This paragraph only applies to included"Employees"as defined in this Agreement and particularly in Exhibit A hereto. 14. The parties agree that any disputes over the interpretation or application of this Agreement shall be submitted to expedited and binding arbitration in or near Miami,Florida, with a mutually agreed upon neutral serving as the arbitrator. If within thirty(30) calendar days of such submission, the parties are not able to agree upon a mutually acceptable person to serve 26296844v3 as the arbitrator, they shall request from the Federal Mediation and Conciliation Service a list of seven arbitrators who are members of the National Academy of Arbitrators and who reside in Florida. The parties shall, within ten (10)days of receiving the list, select the arbitrator by alternately striking names from the list. The party to strike first shall be determined by coin toss. The last name remaining on the list after each party has stricken three names shall be the arbitrator. The arbitration shall be conducted in accordance with the Federal Rules of Civil Procedure. The arbitrator shall also have the authority to order the non-compliant party to comply with this Agreement. The cost of the arbitrator shall be split equally by the parties to this Agreement. The parties hereto agree to comply with any order of the arbitrator,which shall be final and binding, and agree that judgment may be entered upon it in accordance with applicable law in the United States District Court for the Southern District of Florida,which shall have exclusive jurisdiction in any action concerning the arbitration under this Agreement. 15. In the event a party breaches the terms of this Agreement,the other party(ies), in addition to all other remedies available, and without initiating arbitration proceedings, shall be entitled to seek and obtain injunctive relieve or other equitable remedies in any court of competent jurisdiction. 16. This Agreement shall be in full force and effect from the date it is fully executed on behalf of the Developer and the Union until eighteen (18)months after the full public opening of the hotel,or sooner upon execution of a collective bargaining agreement between the Union and the Operator/Employer, which explicitly supersedes this document. IN WITNESS WHEREOF, the parties hereto by their duly designated representatives have hereunto set their hands. FOR THE DEVELOPER: FOR THE UNION: UNITE HERE Local 355 [/111 in company name] By: By: Its: Its: Date: Date: 26296844.3 EXHIBIT A Employee Classifications included under this Memorandum of Agreement: All regular full- time and regular part-time hotel service,housekeeping, food and beverage,and on-site laundry employees (including room cleaners, housepersons, bell persons, telephone operators, kitchen employees, servers,bussers, bartenders, cashiers, and hosts,)employed by the Employer at the Hotel. Employee Classifications and others excluded under this Memorandum of Agreement: All reservations employees, including on-site and/or centralized or off-site reservation employees; sous chefs; concierges, business center and front desk employees; employees of third-party or themed or gourmet restaurants or bars located in the Hotel; recreational employees; spa/health club employees (with the exception of housekeeping employees providing cleaning or linen services to the spa/health club); off-site laundry; secretarial, office clerical, gift shop,retail and sales employees; audio-visual employees;parking employees; landscaping employees; and maintenance employees; as well as all managers, supervisors,and guards as defined by the National Labor Relations Act. 26296844'3 Exhibit C Turnberry/Terra Hotel Development Description&Plan • EXHIBIT C p3 lebpngdieuwgaidpueswa16uioueuid Ci SCM d !1 1I ,., nn. , 11. 1. 9iill Moe•!: MUM ;II I t 9_ ILI i el fig ;;;;;E f Ifl 5.:515:!!: ii=ii in :11f.1; ii°1 f11i= Mi. ryI 511 !„ a 55 Il e'elieele Rene II"HIN Ain OW IIIHIIII RI Ili 1:::51: ., > leee,Illie 1W, el 111 ieeee' ,. "tee eIgIIIII lira VW 1l.aeli F! !rne ikfli !uv, ...,. -, nee -,“ .ni:LH MP 311,1 lei3ai±ij 111;! i1e d ) !!5;!'!'; e+! 11 I II PI 111 *ieeIee Hell $;;F:5!' . .. Yi:."al A ei _Y ai ,.... 1 P etJ 3d ,, Pl ESS LR a. .. ,. ._, ,. +'iff fl f e teae= IW:1 ea15if1 ¢,i? 3ypS yaic:le: ilHl WO! 55!5 5 PI a f 5151; .,-.,. .3_.. . R .. .. 5:1“ C I'41:1 a g e :MIL 1 PO! i .- LL k1.2;;;; . ;: te'Aelee, ,ele, 151s 1 ;5551 OI i '9i ed 1 z1 !es ee 1. X131, sc W 1'.:i5: :115:! .'11!:11:' 555e5 r;) 0 1% lii5i5 e._.. :1555.55, 5.555 igg,z' HMI: Y51+ O ti i' , a d } 8 II N `111f9 11111 �i1l i lil ,1 ��11'y' N 11!1!1! 1511.= 1)10a kin aR al a L9Z / 993 Ca ® gmm pue sway BupuethA , n� Ltd " 'nig zi ; / d\ * 4 \ \ / i \ , \. , . w : a . a \ \ t / \\Q /( ga \ F. } .; • ; ! J , \ \ I , , > : . - -$9: 9sg •\ ; / ) � \ / • I ! \ / } A °L \ \AA / / \ \ C•! U . \ / . ■ 2 . I o 12 ` C - ° 1.22A ! ir. \ / PA I -\ / • �o Q ! | , g ! ; 1 ` ) \ \ \ » , cn \ dp a! ! ] HI \\ \ \ ! iriu a _ , _ , lizg le6pn8 tiewwgaJd pue swJai 6waueuid z c I 5 B o E d - rz. S m p '3 c d m I - ,ri cco 2 m m o E `m c O • a N C T. N C Ng § 0 M U •C 7 U E n E — U 2 'm 0 E .c v c88 "k), C tG N �4 0 N i0 2 0 o N C U, 0 m a`) o` 'E -2 'A S' d a `.° c2 2 E ca N C C o't rna = N , 2 > 2 c o, - E u 2 o d g 22 i a 2 d 3 m ,) o a' ° t v u a C a y ., E c a oS Eo ' 9 s°O) °' = 5C L Nva a c ou o `° m E ac — 1- o `, c E o, cm m E 2 10 N O To O U Y 3 o 3 > N O m a 0 g, 1 o co _ 2 a H , c , p v _ d Ca Y 4 d -8 W N (O $ N `o a E vQ o ca ct « ¢ E o e m a 'a . 0 O U @ > 3 OICN — R dSE ° Tf oc a .2c �c m o U x 6. vy .aE o v m `o •N c E ‘,-,) f o `° Rt d IZ o « v mUcN � TS o u) ) 0 � D Lo nE NayWv N7 6 2 a c ~ 8 E ) .s m 2 N a •EC .0 t 0 L D a, !n NmNo m C « L c ?:, = C . . _ .. 2 o d 0' o 76 C N 2 r L m L O d ) a, 2 g N N E a o o o A C ao d = if – 'm T° g 2' o ocoIm , F. E a, E X – Vmgwod c = 4,, a d O `o 'E C V c, 0..0 o `5 O o N N o d w 1- a.a .0 2 O Q .0 al 0 r o 0. o 0 m v o o $ a n o v o — 0 vi o 00 ae (1 0 a) co V N- V V 0 0) IC 0 0 c0 . V CO 0 N C N •fir d O O Co N O W N R !n O W y N. `!) CJ aD C] M N N NOM CC Uva or coW O O O a) N N — 00 0 0) O O O 0 N N 00 V 0 in }! O O a) O CO O CI CO M O ti C ' 0 0)) V O coo• 0 c0 (4) UOo 0 O a) Q) n M O V N c0 c() N O EH N t• ti M N N N b N M N N V M ^ 0 a)> T C O y v C O c o. a >1 o Y.. j o) W c 0) N 2- ..c. M N Y cti fe .2c N It <d C C o 0 a, 8 N 0 0 c 5, LL m m 2 y> $•E -,sL C Ca o f N l ,) c a — 2 o o 15 oy C EEa o ¢ U > — U '5 v ao a0rn m O O 0 C o p . V CL 2 ti 4 a 0 Q O U 5 U F I. 1.0 lLZ / OLZ Oi i 6 =gem aCO M i 1 i I F 7::71: :1-1 11 1111 1111 1 10 i u z G 12- . 1 11 11111 I II i l N • i 1111 ! 111111111111111111111 1. iw 1:: 1111111• C 2 i :.; 11111111111111111111111111111111111111111i 7P 1-.' •••••••••••••••••••••••••••••••••••••• _II _ • 5 S C EE3 t4 v u I • jul11 = ; 3 2. 8 ^u A b ^` z T a u 5 9_ N c E E , N > V/ s b u g ' o 8 8 s -1;-°. c n E a t 73 flulEifli hI1I!IIH ° iI d E a o a. : . a z t t c Wo 0Av u° N S s 8 31E2 E2 E 2 . i 1 c s 0 - r. LL _—__, (e4 4 i.- r1lo . N lel.- .. .it? '417-1.TI•21^.112 :LIR 421M S r4Ixljloslmla 1r, x1 iRI.AixiAivi�-7 v 7 .i 1 a 68Z / e8Z $ 4-• 0 itouemsau pue u6!saa ienIdaouo3 0 co i.,, :: r• vi.,, ,,,--• : •t',L - ; __._,... ,,.,4"' 44:••=-1--.,....,_ _, — .7-----...-4 •- i mC 7, ..W N. \...I •/ ', ;;;;•••,:';.',' 1 i e, -4.'4 A • :-'''-•...., ... •. --;'.',;•;''..-.•'-•••• -.'"'" 4'-'••'-',"'";',,, ':;.:-..-:••r•••,1 f, ' ....ii......-.! . - . - f / ) , i'• 14,:..-0:14' ..,..,,,,:-.. . • ; .. .;., .. • ,i',.. ,., % , $ . k c '-:"..?::,('K...• -.— g r- -eel", ;-;•;:y.;,,,:,-.:,, ..,4: If' 7 -:•....!"'-a%-r.,....,.r...... •-',1. "*;4-' '., ; r•,, -- fii ...•,, ."••• v‘••• •t PI ti b. i',14,,, . `'.', •....'' , .,, , ,,ilig-47•N`a:•'ti-'''''''-:"1•=.'•:. ''• • . ....,,,. .• . ,•... .. ..„, . —,,—. .......ar., •N i.', — . . •Att•.,a_1111' -,,,. ie. • , , '-:: . i I .I'• ..0111:111111; ".Wt"'"4111111 i .- I ,,".-'i 'e ., , '',• h',', .--- -:-:'-'-'At.4,re.,aL."-• -11-;:. 4 ' ., '','''' .• -:'441;..4,-_.A-4-..'7,4' ••.117-g.''' -"' - ,•',:;..1.- • ."-*2k1;.•- • • "L-11'- ..-.4 -.. '• • '. i.-±7-1,, eA,,e-r i 4., ,`•'',,,, ,f . . . 111---• ......: it . '' El 1"4i114 .if :1- '• 'III ' ......,- .. ..._... ,,,,.....• ,Ak...z....14411 .•./-,„-r, . . . . . .. „ .. .0 ', .. . A-- •! i .: 'it 1 ,..,,:,,I '.. , ••.,..,-)..v . 4 • ' 111111 , 7 gr."('a ' 4 ,...,-; I ' •ql --,,,,* .„,;' . ''''''': :.-:'''''. • ' A ' 1°' "T11111111 ' 11 ' . i:A , , if1111' 4r', 91 Pcf ' , • ikAt....-..r , . . . . . A ,.),,f. f• ,- ,iimilo.;1 , \ .4ii-, ..._,-._-.•---- , , ,f ;,fd. - - - _ .:.„1 , 4 •,„ '' el' Vi;1' ' -.' - ., • •,/ V,-;* 'S 'C '7,' • . f- — i '\ •ftil -*V s , ..,.7. .— \ ...." . nog 1 4 i Ilial ..... ° I‘ . . , AN i .id1 *Ir ' '. .. • '4 ';•• i.• -, - .. • ....1. I 41111P i , .. - . 11110„ - - Attli ,;11' / 0 AP'ii .-,i ':-.1-'01 Fa ..•__ . -.k-c . . :-..:=z4, :5 _ -. -,' .4 • .. ....... 4.:, .i..,.4. .* , .mis I III:.-4.1.. i', i if'...: ' - . '4** • ?Of , 2mpir 4 71.7 . ,• — t .. . ; jr,i1 . ,, li ... '1 !=s*:41V• , • .. •..,z4, , v./. i , i., - .- ...•i%0',‘I .4ittt i i i ,. ; .vo7 /7 i .J • , . :.. 4.4 !-",., ,•,• •t,." if •' Csif..1 4 s - •,4,4- ••,, . /' , , . / 1 , 1 Cti LOS / 00£ ei el Aauanisaa pue u6isaQ ienIdaauo3 T; I tr If 4 - / .4* ...1 '. ' V - / § k . ;. i . z I , 11 r - - .i. ' • - 1,0 . ' / .1k ilk • 1 ,16. . , . . _ . , t j - , A "111, ,i,. , ar „,' .1 ''s' . ,ii"A4',.), i ' ''' V'' .. \ \ , ,,.. - - . „..., . .„...3., ,,1,_,. ., )z, ., . ...‘ . f` // \ ::.: 0 Aouailisab pue u6!saa len;daouo3 0 r I JI ji —, i j s j 11 x Il s_ ,.� .NEW PROPOSED Au FY i ''. C/( P. X0.0:4ø !r ill .1!^ I 7 1 .}f es El ' '\ , Zj x d 3iv • Ni x II " �' 1'1 i4. * -4.a -- ---PENNSYLVANIA— -A-V pA r ,` �lR. j 1,-.' 4,, . JONI . 1-_.. . -_-CONVENTION CENTER DRIVE . I ...***\ //:::- 0 F .2 1, i ii / i i — i i i I i v i i i ; n 0 0 ILL -0 C 0 0 0 9Z£ / t'Z£ eii A3uauisaa pue u6isaa ien;da3uoO r I N- I I J -' I: 3 I 1 3 ! L —1 NEW PROPOSED ALLEY • 1 '1 !(iiji i t :"N lii 111 II11IjiTI _ . i" ,� d PENNSYLVANIA AV mi I j jiji:,„ _ ,- R.-11'cl 1 i, __ ,... --- -_1 ,_ ...., $i I— -_ ii018 i ft I I �(�LL - +CONVENTION CENTER ORNE TI \ � � • I i I _ \.. \ .. r 0) C a 0 0 C) J el La / 9Z£ " 001111111111111111111111- e Aauamsaa pue u6isap lenidaauo3 a r I I j jI ` f i I' Ili 1 = ` J I ' J 4 NEW PROPOSED ALLEY i ri �!{. i I I ® 'l 14I j I ='-' gig 1 `,, W v, o; iK , 4 1 r F t -.- o opp 88m r I .iS2; s o PENNSYLVANIAAV b , i . W y= i j f 4J ------CONVENTION CENTER DRIVE _ ____J- - I I i j O ` j j 1 j I / i I I j I i I j I 1 I j II I \\\> 1/4., j j i I 1. I i I j E 0 0 MI CO 0 CI) a) RI 6ZE / 8ZE 1. i y Aoua!psa}i pue u6isac len;daouo3 is 7-; I N- i 1 4 I i i l =_ J 4 YEW PROPOSED ALLEY r. ` d I- I 4 CIV41 - I d:- ecit III i —1` cii I 14 IK E i, r - - 000 000 I~ sr I I 000000 000 000 l r i aFA �r 000000 2 °4 s 000 0 • s PENNSYLVANIA AV I . I .F.-.-=Z ,== 000000 - - -- - 1 .. �� �= 000000 I16 I ..=I.. ! 1-W23 := 000 000 i �''_1 _ �� 000000 i=, = =a 000 00J I i 'F k tt f ,:ii 2 I: "a IF -� .{ — CONVENTION CENTER DRIVE (----- , 0 i fi i i i [1 i i I i i I I i i —L_ i i i 1 i i a o a$ _ CD CO CO CO p CO E O 0 CD O > 0 ,,L13 —11.0 0 LEE / OEE et 011111116 0 Aoua! saa pue u6isaa tenudaouo3 eiT- ti 1 I a1 — i \. _ - 2 . NEW PROPOSED RILEY of 3=2= IK 1.It H... Fe.IMI I El E MI •••,=....•te. WA ,• I.' :m = M 000 000 / 000 000 i 000000 000 000 s 6, `� PENNSY LVANIA AV t ' 00000 •- 000 000 I i; r---0--.—.— _._.=rte= 1 ;-, MEM 11111111 4 0, j ,r L — 111111_11J 1 � � `� O 4�tt : CONVENTION CENTER DRIVE i i f /2ri i 1 I i i - \ —L_ I i — CO o co cc: co coco b- E O O O J CO Cla a CCC i ZCC a 0 Aauapisaa pue u6!saa pen;daauoZ 0 17 I I: I I L---=J NEW PROPOSED A,IEY 71( I , ' W W i " :: a 0.WI \\ i I aI ;/ I I as vI I ° i, J/ \\ CE IntfAl' k AV EN I , i, , , . 0 \ LI�i- _ _ %.1 tt [� 7 .pv + .C1'�••••• 111 I 4+.0\ s� < - =�+�a / i Lily; CONVENTION CENTER DRIVE I li � 2 i 1 / i I LH i i i —L- i �. i i t n cm c a) a) 2 0 a) > a) tai S££ / b££ a Rouagisaa pue u6isaa ien;daauoa a T � I ' ' ` I J ` II NEW PROPOSED ALLEY L i3I'Ii • IN I i / ' - arrifrrn jilik I- f 4 f i -. i..... . *,:z._ ,,,,,.>.,. , ,, . . , ...._ PENNSYLVANIA AV y. - 1, _ .. m F a I /� i 1 ® r i ----! 11114.1111-t-11.II IIILIM I.II}1 ICN11.11 OP t ICO NVENTION CENTER DRIVE T- I i � 1 i j /7 -, I j i j i j j i I I j ij j y j I r I 4 it Fl v cu0 0 0 a 0 0 a) J L££ / 9££ e Aouall!sald pue u6!saci lenIdapuop sl, 1 i . 1 1 - -, 1 : i 1 . 1 l .1 l . ,.i. • NEW PROPOSED ALLEY 47- „,„. ., .-7. . I. . I ... • •i§• • tok 0 0 0 !fr. I j -- " , i- ' t '‘ ce , t7, I.. ''Ira : tl., 10 4' jag . .. t 1 I : ! ..A f ' 1 ..,.- ,•JO' ii , \,... . . PE NNSYLVANIA AV i. tt. 1 ,i, i -.IF ,,„,..+„, ,:jf, ' ' ----- 4,+;'''- I 1: ' .. r -- , t _ . .i.., . .CONVENTION CENTER DRIVE = ...., _ —L_ '`...... \ 1 i 1 n cn (,) as c ...... ..... ca as (I) (.0 (......) 0..) -.I fat 6E / BCE 0 Fouaillsa}j pue u5isaO len}daouo0 , r I N- I —i jII i - - I; NEW PROPOSED%..i =• �� ITTIII 11I j 1 :'.00,0_ =1 1® 1. 111111 3 j ® �t of -, I ON 3 `.t _ i^ 1 k j i,Tlriij•-! t T� Eli rift!' 4 ti r,,,, - L PENNSYLVANIA AV ® , 11 ; r 0 k � ` `i ---f- fa® �I ,,v ; . � ®I rsill � t CONVENTION CENTER DRIVE i i / -\I 0 (I' \ /*; i f / R� I � I I I I I _ I I I 1 1 n ,..r 0 Cl) w > w —J s lti£ / Ob£ 0 S Aouapisaj pue u6isaa len;daouo3 0 T- I j Il ) `/ y NEW PROPOSE)ALLEY lii ®* 4► M r M ;i ' I 15 cl:l og40 s i 31 el iiia ti o} ql el el el zl _ . i Ili+ ii; I I ¢ 1;1- f• i®�� i I.j lt,,,,t, /� IND N � } • i !>Q 's Eli;IN Es � t I .,rte 4.,, i__. GENNSYlVAN1A AV ' * 14 I ,: m. g, .. ...ais. ,, , ,....14. ,...I ---4, I 1 \ J,/ d 1114111831PNI 1' CONVENTION CENTER DRIVE I _.r._. � -1 0 C —\i / i f I - 2[1 I ILi — N. r a) a) —J res Eve / ave 0 ki A uawsaa pue u6isaa len;da3uo0 ,,, rI IT,:::: o ,t ,i, Li � �m---;,-,-3 � i m m b m-7—A—�—a A _ _ I ^ --b— mss—b J � ��" r r S r lui,l j z ZC N N N N cc NNC cNc N N N u 4 OI. O O O O O O O O O O O O Tc i a. 4 ."g- . N 4, LW IL W W - H1.... - H H F- F- F- 1- H O O O O O O O O O O O CI) u. 2 2 2 S S S S = 2 •• ,..,:.,.. 1 7. f:.i Q ill ,- ._ ; ti _ o m ,f 1Z z� - gi., O A i c - Z IM a w tikii- E yr4 Z .4 J O a I -4 .: _ ; , a T 4Vir. 1 T C V a) 0 Lb£ / 9t7£ %, z Aouamsaj pue u6isaa ien4daouo3 zir I N- ,i n r T e� ��bTbTL 1�bTbTb i I. 1 6,i bTVu�b- a--_ 2 2 ZO O K x C K W CC CC ,• 'N _'i N N N N N N N /) IU- N N 2 2 G 2 2 2 2 2 2 2 2 2 Y s s Z v c 3 0 0 0 0 0 0 8 0 0 W Z ., Q z z c z w m s z . ¢ . a Q I O , '_' , - U u' O O 0 O O O O O O m w Z OJ ,....,,,,,-.2 2 S S = x 2 2 x Y. S O m w LL /� co ? d 041 — i ".. p Q o 1ht: - -;ke ' PI q u, :... 1 t:* h ,,, 0 - .... 7,:,:,. It 10 1 1 .i, ' 1 f', ......- : •i s .... 1 1 a 4 , :. i 0 , . t , , ___ ... , a m 'r• PfA, O '' • 1'. z r o ' / N U I,/, i q 1r E 0 o z U • L, Z i'' rU -TTI/Ti Cs,I1 N 3 ! E,� C 0IP .7-N J . ,V a) co c 6t'£ / 8tE e$ Exhibit D Description of Land Sales EXHIBIT D Land Sale No. 1 w_ , rte► 1 --1-ATA' .y , , , vie.ini VW* 'A., , . 71 ,„4,1r,,r„lliiii,t ir ,. t .4._ +6 yL. cf •� itsfv1 ',,•.i.v,o. r .n. .:v-- 1 rr= „1 .. - • H ts- ' w tt+� • .,•'THE /.(•lt+ `'fie .. ;B1ILO _[ ,li `.. a iP-rmw:17. mend L., _ 14 241/1 Property Identification Record ID Property Type Hotel, Hotel Property Name Future Wynwood Hotel Address 269-285 N.W.27 Terrace, Miami,Miami Dade County,Florida 33127 Location Between NW 27 Terrace&NW 28 Street east of NW 3`' Avenue Tax ID 01-3125-031-0080,0090&0100 MSA Miami-Ft. Lauderdale Sale Data Grantor Thor Week Owner,LLC Grantee RRR Wynwood LLC Sale Date March 30,2018 Deed Book/Page 30925/772 Recorded Plat 3/57 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification June 26,2018 Sale Price $5,850,000 Cash Equivalent $5,850,000 Adjusted Price $5,850,000 Land Sale No. 1 (Cont.) Land Data Zoning T5-O,Commercial High Intensity Topography Level Utilities All available Shape Rectangular Land Size Information Gross Land Size 0.34 Acres or 14,750 SF No.Rooms Planned 98 Indicators Sale Price/Gross Acre $17,276,339 Sale Price/Gross SF $391.61 Sale Price/Unit $59,694 Remarks Thor Equities sold off this parking lot property,which was part of their overall holdings in Wynwood near N.W. 2nd Avenue and N.W. 29 Street,to a developer intending to build a 98-room hotel and ground floor retail space. Land Sale No.2 i wR cf9�, a .,,. € ..r..„„i„ . * 4 -. - - , r via. - :7 i r Ali i§ Co i* i • . . *.d,- i 6 , t'err,COre s i% Imkrtplacr t;C:;`, r Iil% I � /11 " 0 v Yo., f 44- 'lit' .- ---.7.:,„ i ! , ' i. . s E R . ! Property Identification Record ID Property Type Hotel Property Name Perricone's market&restaurant site Address 15 S.E. 10th Street& 855 South Miami Avenue,Miami,Miami- Dade County, Florida 33131 Location NE corner So. Miami Ave. & SE 10t St. Tax ID 01-0207-020-1060& 1080 MSA Miami-Ft. Lauderdale Sale Data Grantor Marketplace Investment Group,Ltd. Grantee CitizenM Miami Brickell Properties,LLC Sale Date September 28,2017 Deed Book/Page 30701/401 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification October 4,2017 Sale Price $16,200,000 Cash Equivalent $16,200,000 Adjusted Price $16,200,000 Land Sale No.2 (Cont.) Land Data Zoning T6-48b-O,Commercial High Intensity Topography Level Utilities All Available Shape Rectangular Land Size Information Gross Land Size 0.25 Acres or 10,956 SF No.Rooms Planned 250 Indicators Sale Price/Gross Acre $64,409,639 Sale Price/Gross SF $1,478.64 Sale Price/Unit $64,800 Remarks This is the Perricone's restaurant and market property along the north side of S.E. 10th Street at South Miami Avenue in the Brickell Financial District of Miami. Perricone's sold the property to a hotel developer,who will lease back the property to the seller for an interim period. Land Sale No.3 K ' ._nl_; f, • d.• .44., 4,:74 a+ <; . 4JI A = _ A ra` - .to4V ,. , \-71 * . . 4 ' - II _ ,„,, 4 , . ._ . .... , A t fir- a Property Identification Record ID Property Type Hotel Property Name CitiBank branch site Address 1685 Washington Avenue,Miami Beach,Miami-Dade County, Florida 33139 Location SE corner Washington Ave. & 17th Street Tax ID 02-3234-019-0730 MSA Miami-Ft. Lauderdale Sale Data Grantor Citibank,N.A. Grantee SoBe Center,LLC Sale Date August 16,2017 Deed Book/Page 30658/1799 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification August 17,2017 Sale Price $19,200,000 Cash Equivalent $19,200,000 Adjusted Price $19,200,000 Land Sale No.3(Cont.) Land Data Zoning CD-3,Commercial High Intensity Topography Level Utilities All Available Shape Rectangular Land Size Information Gross Land Size 0.69 Acres or 30,000 SF No.Rooms Planned 150 Indicators Sale Price/Gross Acre $27,878,400 Sale Price/Gross SF $640.00 Sale Price/Unit $128,000 Remarks CitiBank sold its branch bank facility at the busy southeast corner of 17th Street and Washington Avenue in South Beach. The property will be developed with a hotel,and CitiBank will lease back ground floor commercial space at this new development.petty to a hotel developer,who will lease back the property to the seller for an interim period. Land Sale No.4 '.IMILIZPATIZORAIG4F4; _ � erwrs ter. ;� 1 trikTIA'g7 r-' " ,•. + c ,, a --c }I. it ''^A"� 'r*.i .,-kii.:___- - ..... .. ,,,.. .,,. .:,.....z.v.,..--- t.4., ,„--,74, rra 44 - � ; I < 1 .. {s p a^. ani AS al Property Identification Record ID 2069 Property Type Hotel,Hotel Property Name Berkeley Shore Hotel Address 1610 Collins Avenue,Miami Beach,Miami Dade County, Florida 33139 Tax ID 02-3234-019-0790 MSA Miami-Ft.Lauderdale Sale Data Grantor Guesch, Inc. Grantee Berkeley Shore LLC Sale Date September 10,2013 Deed Book/Page 28823/4022 Recorded Plat 2/77 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Sale Price $6,500,000 Cash Equivalent $6,500,000 Adjusted Price $6,500,000 Land Sale No.4(Cont.) Land Data Zoning CD-3,Commercial Topography Level Utilities All available Shape Rectangular Land Size Information • Gross Land Size 0.415 Acres or 18,075 SF No.Rooms Planned 97 Indicators Sale Price/Gross Acre $15,664,730 Sale Price/Gross SF $359.61 Sale Price/Unit $67,010 Remarks This is the sale of the Berkeley Shore Hotel property,an Art Deco hotel along the west side of Collins Avenue south of 17th Street. The property was in below-average condition at the time of sale,with the improvements near the end of their economic viability. The buyer purchased the hotel property for redevelopment and an expansion to 97 rooms. Historic preservation ordinances require this redevelopment to retain the building's important architectural features, including its facade. However, considering the extent of redevelopment that was planned and required,this provides a sale price in this instance that reflects its site and development value. Land Sale No.5 i •a r rI t i!,, 7 ,+ $ f . ienv` gI 4 a1 d • R C14 t 1►+-• --"' �J1• tel: :- .. _ R4.-,� .. _ . � 5 _ µ in ..gt_._ 4 ,. Vi� - -.- � INV IMF AL-- ll. _ Iwo - I{ - - t � J- Y x Sr • 4. 1!e f.. 0 rill' _ Ail • Property Identification Record ID 2070 Property Type Hotel,Hotel Property Name Haddon Hall Hotel&Campton Apartments Address 1500 Collins Ave. & 1455 Washington Ave., Miami Beach, Miami-Dade County,Florida 33137 Tax ID 02-3234-019-1190, 1191 & 1200 MSA Miami-Ft. Lauderdale Sale Data Grantor Haddon Hall Associates Ltd. Grantee Haddon Hall Hotel Owner LLC Sale Date July 17,2013 Deed Book/Page See Remarks Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Land Sale No.5(Cont.) Sale Price $5,995,000 Haddon Hall Hotel Cash Equivalent $5,995,000 Upward Adjustment $28,480,000 Campton Apts. Adjusted Price $34,475,000 Land Data Zoning MXE&CD-2,Commercial Topography Level Utilities All available Shape Irregular Land Size Information Gross Land Size 1.388 Acres or 60,445 SF No.Rooms Planned 167 Indicators Sale Price/Gross Acre $24,844,586 Adjusted Sale Price/Gross SF $570.35 Adjusted Sale Price/Unit $206,437 Adjusted Remarks This is the nearly-simultaneous acquisition of the 122-room Haddon Hall Hotel property at 1500 Collins Avenue and the 45-unit Campton Apartments property to the immediate west at 1455 Washington Avenue in South Beach. The total combined square footage was 56,815,but the same include rights to expand the property by up to 50,000 which would nearly double its current size. The property was in below-average condition at the time of sale,with the improvements near the end of their economic viability. The buyer purchased the hotel property for redevelopment. Historic preservation ordinances require this redevelopment to retain the important architectural features of the building,particularly for the classic Art Deco design of the Haddon Hall. However,considering the extent of redevelopment that was planned and required, this provides a sale price in this instance that reflects its site value. Exhibit E Miami-Dade County Regional Analysis Summary EXHIBIT E REGIONAL ANALYSIS MIAMI-DADE COUNTY REGIONAL ANALYSIS 4: 4�0 6.4 PI 4111124 AridaMIL Overview Miami-Dade County,Florida is located in the southeast corner of the state along the Atlantic Ocean. The major city and county seat is Miami,but there are 29 total municipalities in the county including Hialeah, Miami Beach,North Miami,Miami Gardens and Coral Gables. The county encompasses 1,946 square miles with a population of just over 2.75 million people, with a density of 1,414 people per square mile. When combined with Fort Lauderdale, the Miami-Fort Lauderdale-West Palm Beach consolidated metropolitan area("South Florida") is the eighth largest metropolitan statistical area in the country,with a total combined population exceeding six million as of 2016. The main population is concentrated close to the Atlantic coast as most of the western portion of the county, with approximately 416,000 acres or 650 square miles, is within the Everglades National Park or in environmentally-protected areas associated with the "river of grass". Since Miami is the closest major US metropolitan area to Latin America,and has a large population of Spanish-and Portuguese speaking people, Miami has become a leader in Latin American trade, finance, insurance, manufacturing, telecommunication and warehousing. Tourism and its offshoots,shopping and entertainment,are main draws of the county. With 84 miles of Atlantic coastline and a sub-tropical climate, its beaches are favorite destination for tourists from Europe and Latin America, as well as the rest of the US. Miami Beach, especially South Beach, has become a premiere modeling and film spot in the world. It attracts a cosmopolitan tourist business different from other competing Florida cities such as Orlando and Tampa. BLAZEJACK & COMPANY 1 REAL ESTATE COUNSELORS REGIONAL ANALYSIS The environment is a crucial underlying thread that ties Florida to its future. Essentially dependent on its climate and natural resources, unaddressed issues concerning sustainable growth are becoming urgent concerns of all Florida industries. As the impact of past decisions effects the current economic situation, future economic potential is dependent on how these issues are handled today. Employment and Income Miami Dade's labor force kept pace with the rise in population from 1990- 2006. The subsequent Great Recession, and its accompanying housing market crash, hit the county very hard and unemployment rates hovered 2 to 4 percentage points over the national average through 2012. Statistics since 2012 show significant improvement with rates dropping to 5.0%by the end of 2015,its lowest level since October 2008. The decline came despite an increase in job seekers as the long term unemployed rejoin the ranks. More than 95,000 new positions were added since the start of 2015,with approximately 38,000 new jobs over the 12-month period ending in May 2018. The historic jobs picture from the U.S. Bureau of Labor Statistics is illustrated below. unemployment rate 12.5- 10- 7.5 5- 01/08 01;09 01%10 01/11 01/12 01/13 01/14 01%15 01116 01%17 01%18 Month BLAZEJACK& COMPANY 2 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Percent of total .pterin United Major occupational group States Warn! Total,ail occupations 100.0 100.0 Management 5.1 4.2' Business and financial operation 5.2 5.4 Computer and mslhamsticai 3.0 1.8' Architecture and engineering 1.8 0.9' Ufa,physleai,and social science 0.8 0.3' Corranunity and social service 1.5 1.1" Legal 0.8 1.6' Education,training,and library 6.1 5.0 AAs,design,entertainment,sports,and media 1.4 1.5' Healthcare practitioners and technical 6.0 6.0 Heakhcare support 2.9 2.7 Protective service 2.4 3.7' Food preparation and serving related 9.3 9.6 Building and grounds cleaning and maintenance 3.1 3.5" Personal care and service 3.6 2.3' Sales and rotated 102 12.8' Office and administrative support 15.4 18.2' Fanning,fishing,and forestry 0.3 0.2' Constriction and extraction 4.0 3.2' According to these sources,the unemployment rate has fallen to 4.0% for the regional market as of May 2018; this is slightly higher than the national unemployment rate of 3.8%or the South Florida regional unemployment rate of 3.5%,but remains quite healthy nonetheless. A recovering housing market bolstered construction employment over the past several years. Most recently, however, this trend appears to be slowing as new housing demand as the market's large number of foreign buyers diminishes due to a strengthening U.S. dollar and more-restrictive policies affecting foreign buyers of real estate in Miami. Job- growth leaders in Miami-Dade are primarily white-collar industries including office and administrative support,management,business services and sales and related services. The Florida Agency for Workforce Innovation, Labor Market Statistics Center notes that the traditional employment industries in the county are shifting. Waning industries in the county are agriculture, mining, and manufacturing while the top three growth industries are expected to be healthcare, waste management and remediation services, and professional, scientific and technical services. Long term estimates are for a service based economy. BLAZEJACK& COMPANY 3 REAL ESTATE COUNSELORS imminimmemiusumemmimumminmim REGIONAL ANALYSIS Shared Total Employment by Sector Miam4Dade Carry 2008 and 2030 Other Government Manufacturing Man fact ring Information Wtholesals Real fstan N. / Transportation Finance 2030 Rotel 2008 Septal Morn 40 We County OeperYnenlo4Planning end Zoning.%semen 6sc$on 2010. Median household income continues to rise, although cost of living estimates suggest most increases will be offset by rising household expenditures. Cost of living increases have a major influence on the rise in household income. TRANSPORTATION Miami International Airport(MIA) Miami International Airport is the primary connecting point for air travel between the Americas,the Caribbean and a major gateway to Europe. Approximately 1,100 flights arrive and depart MIA each day, with 106 airlines covering 161 destinations (108 international) worldwide. MIA has a nearly S30.9 billion impact on the South Florida economy and ranks as the second-busiest U.S. airport for international passengers and the nation's busiest for international cargo handling. The following chart shows passenger trends through MIA from 2005 through 2017. Between 2006 and 2007,passenger traffic increased a robust 3.5%to 5.0%per year then gradually declined throughout the recession to a mere 0.5% increase in 2009. By 2010, however, traffic regained its previous growth pattern, and surged by 8.3% in 2015 over the previous year's figures. Hurricane Irma, which struck the region in September 2017, caused a temporary downturn in total passengers handled that year, particularly affecting domestic arrivals. BLAZEJACK& COMPANY 4 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Passenger Volume Trends -Miami International Airport International `' Total Passengers %of Passengers Period (000s) Total (000s) Change 2005 14,241 45.9% 31,008 2006 14,728 453% 32,534 4.9% 2007 15,541 46.1% 33,740 3.7% 2008 16,147 47.4% 34,064 1.0% 2009 15,970 47.1% 33,890 -0.5% 2010 16,892 47.3% 35,698 5.3% 2011 18,418 48.1% 38,314 7.3% 2012 19,372 49.1% 39,467 3.0% 2013 20,202 49.8% 40,563 2.8% 2014 20,097 49.1% 40,942 0.9% 2015 21,207 47.8% 44,350 8.3% 2016 21,380 48.0% 44,584 0.5% 2017 21,473 48.7% 44,071 -1.2% Source: Miami-Dade County Aviation Dept. The Miami-Dade Aviation Department (MDAD) is in the final stages of a $6.4 billion Capital Improvement Program designed to meet the passenger and cargo traffic growth at Miami International Airport. The program encompasses all aspects of airport operations, from terminals, roadways, cargo facilities, to the airfield. The new Miami Intermodal Center opened in 2011 across Le Jeune Road from MIA, connected by a people-mover. It contains rental car operations and connections to mass transit including the county's Metrorail Orange Line. The Tri-Rail connection to the intermodal opened in 2015. The N.W. 25 Street Viaduct sub-project opened last year with an elevated/roadway between MIA over S.R. 826, and out to N.W. 82 Avenue. This elevated roadway is expected to improve connections between the Airport West industrial market,the Florida Interstate and Federal Highway System for ground transportation of air cargo. MIA handles more tons of international freight cargo by far than any other US airport, and nearly 50%more than the second-ranking airfield. In 2017,MIA handled more than 2.45 million tons of cargo,up a modest 1%from the previous year. Port Miami Port Miami,the county's seaport,contributes over$41.4 billion annually to South Florida's economy and directly or indirectly provides nearly 325,000 jobs. Miami's Port is the world's busiest cruise port,with 22 cruise lines berthing 55 vessels. It has the largest year-round cruise fleet in the world including the "Megaships" capable of transporting more than 19,000 guests. In 2016, 1,081 cargo ships docked at Port BLAZEJACK & COMPANY 5 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Miami,which has approximately 40 shipping lines calling on more than 100 countries and 250 ports,serving markets in the Far East and Europe,as well as Central and South America. An ambitious capital improvement program of over$581 million has recently been completed at the port. It included deepening PortMiami's south channel to a depth of 50 feet from the existing 42 feet, to accommodate mega container vessels that began traveling through the expanded Panama Canal in 2015. A new tunnel opened in 2014 under the ship channel which directly connects the sea port to Interstate 395/MacArthur Causeway and the region's highway network. Royal Caribbean is building a new 170,000- square foot cruise ship terminal(Terminal A),while Terminal J is undergoing a$3 million refurbishment. Miami-Dade County, Florida Seaport Department Schedule of Annual Total Tonnage(Unaudited) Last Ten Fiscal Years(In thousands) Year Total Difference %Change 2008 7,430 - 0.0% 2009 6,831 (599) -8.1% 2010 7,389 558 8.2% 2011 8,222 833 11.3% 2012 8,108 (114) -1.4% 2013 7,981 (127) -1.6% 2014 7,700 (281) -3.5% 2015 8,614 914 11.9% 2016 8,778 164 1.9% 2017 9,162 384 4.4% Miami-Dade Seaport Department Schedule of Annual Total Passengers(Unaudited) Last Ten Fiscal Years(In thousands) Year Total Difference %Change 2008 4,138 - 0.0% 2009 4,110 (28) -0.7% 2010 4,145 35 0.8% 2011 4,018 (127) -3.1% 2012 3,774 (244) -5.9% 2013 4,079 305 8.1% 2014 4,939 860 21.1% 2015 4,916 (23) -0.5% 2016 4,980 64 1.3% 2017 5,340 360 7.2% Rail Systems The Florida East Coast Railway and CSX are the major rail freight carriers serving Miami-Dade County. Miami-Dade Transit provides all public transit services in the county. The integrated transportation system covers four major components: the Metrobus fleet, connecting most areas of Miami-Dade County; BLAZEJACK& COMPANY 6 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Metrorail, an electrically-powered, elevated rapid-transit system stretching 25 miles from Dadeland/Kendall to Medley,with a recently-added spur to Miami International Airport's internodal center on the Orange Line. Metromover, a 4.4-mile elevated people mover that serves the downtown central business district of Miami, and Special Transportation Service (STS), designed to meet the needs of people with disabilities unable to use regular transit services. Currently,Miami-Dade Transit records over 353,000 daily(weekday)boardings. The City of Miami also offers a free trolley service with 10 routes, while Coral Gables offers a trolley connection between its Central Business District and the Douglas Road Metrorail station. Metrorail Stations Metrotmovar Stations *chool Board Adrianne Arsnt OM 04 Center Bicentennial F Park(Closed) lab haw IMO • Eleventh tstrset ;1l.-!.„rr*aW:, ' 4,,... Iliesidir , Park Visa% KB[Jrs:ovenco 1fti AMT•' '+' P ;l l�"/"�' L''. trot”- A1I.l N4eY skit Y.0 *fie . Freedom Tower {{"" ttxtT CF . . HOI l� i• MlMkfs Q. MtltAt OMMAl tl fraraasor.,Jr. Calette/Bayslde TNiEn Government •linanwil CederCenter First Street •MoldMImI Avenue 1111111.1.11151 Soyfront 'Illaaa Third T . Street Riverwalk ,,.,, int ' Fifth SW ACIP MON lei Stro•t owl, .��tso 'rakilItiti Eighth , Jeri VS fetal Street xeri t WUt/LU P • - zeal dr Miami cntcrct.t. It Tenth w we'll oa/rbd lath I start cke m I Promenade hest 0,00/ Saga OUlt 1K tIIA/��tt Plnencla" oi �t'i r Aim wintotat Florida East Coast Industries has started the Brightline, a high-speed rail service along its rail right- of-way with connections that will eventually carry passengers between Miami and Orlando in just over three hours. The route and stations are now operating between the downtown areas Miami and West Palm Beach, with a stop in downtown Fort Lauderdale. BLAZEJACK & COMPANY 7 REAL ESTATE COUNSELORS • REGIONAL ANALYSIS Tri-Rail, the region's commuter rail line,runs along the CSX railroad tracks to the west of Interstate 95,connecting Miami International Airport to the south(in 2015)with West Palm Beach to the north. It has five stations in Miami-Dade County, seven in Broward, and six stations in Palm Beach County. It connects to Metrorail's Green Line at a transfer station in eastern Hialeah, and connects to the Orange Line of Metrorail at Miami International Airport. Future plans call for Tri-Rail to run a new line along the All Aboard Florida tracks, with a near-term plan to connect to the Brightline station in downtown Miami via existing rail lines between the current Metrorail transfer station near N.W.72nd Street that connect to the FEC line to the east. Miami Intermodal Center(MIC) The Miami Intermodal Center (MIC) project just east of the Miami International Airport was sponsored by the Florida Department of Transportation (FDOT). The first phase, which opened in 2011, included the new, 3.4-million square foot rental car center serving MIA, with a people mover connecting riders to the airport terminal. The next stage, the Miami Central Station, opened in 2012 with a Metrorail, Metrobus and Greyhound stations, followed by a connection to the Tri-Rail commuter rail line in 2015. An Amtrack station at this facility has been built but has yet to open due to a dispute in the length of trains between Amtrack and the FDOT. Major Roads The major interstate highways serving Miami-Dade County are I-95, on the east, and I-75, on the west, both generally running north/south through the region. Florida's Turnpike is a six-lane toll road running from Homestead at the south end of the county to Wildwood Florida just south Ocala. The Turnpike forms an outer beltway around developed areas of Miami-Dade County. State Road 826 (the Palmetto Expressway) forms an inner beltway, while State Road 836 (the Dolphin Expressway) is the primary east/west axis connecting the Miami CBD with the county's western suburbs. Summary Miami-Dade County is the most-populous of a three-county regional market whose population reached six million in 2016. Employment and income growth are continuing in this market after the recovered from the effects of the Great Recession from 2008-2009, with rising visitation in this popular tourist destination. All are fueling demand for different types of real estate in this market including residential, commercial, industrial and hospitality. Barring any unforeseen events, these trends are expected to continue over the near term. BLAZEJACK& COMPANY 8 REAL ESTATE COUNSELORS Exhibit F Appraiser's Qualifications EXHIBIT F QUALIFICATIONS J GUTHRIE(JAY)MLINAR,MAI,SRA Blazejack& Company Academic B.B.A.,Southern Methodist University,Dallas,Texas, 1983 Experience 2012-Present: Consultant,Blazejack&Company,Miami,Florida. 1995-2012: Appraiser,Clobus,McLemore&Duke,Inc., Fort Lauderdale,Florida. 1994-1995: Appraiser,Investors Research Associates,Miami,Florida. 1993-1994: Appraiser,Cushman&Wakefield,Miami,Florida. 1991-1993: Appraiser,Bach Thoreen McDermott,Inc.,Houston,Texas. 1988-1991: Appraiser,Georgia Federal Bank,Atlanta,Georgia. 1983-1988: Appraiser,Porcher,Bond,Wilk,Allison,Inc.,Dallas Texas. 1982-1983: Salesperson,Helena Underwood Realtors,Dallas,Texas. Mr Mlinar has been active as a real estate appraiser/analyst on a full-time basis since 1983. During this period, his real estate experience included highest and best use and market rent analyses, market studies, consulting and evaluation of professional and medical office buildings, hotels/motels, apartments, residential and commercial condominiums, warehouses, vacant land, single-family homes, retail stores, restaurants, shopping centers, mixed-use projects, golf courses, self-storage facilities and special purpose properties. Since 1993, these assignments were primarily concentrated in South Florida, but with extensive work also completed on properties located throughout the state and across the U.S. During his career, Mr. Mlinar has completed appraisals, analyses and consulting on properties located in 21 states and in Uruguay. Designations and Licenses MAI Member,Appraisal Institute,currently certified SRA Member,Appraisal Institute,currently certified Florida State-Certified General Real Estate Appraiser RZ1916 Florida Licensed Real Estate Salesperson SL654868 r • n 4 APPENDIX 5 MIAMI BEACH PLANNING DEPARTMENT COMMISSION MEMORANDUM TO: Jimmy L. Morales, City Manager FROM: Thomas R_ Mooney, AICP•, Planning Director 1 i DATE: July 6, 2018 SUBJECT: Analysis of Proposed Ground Lease Agreement for a Convention Hotel at the approximately 2.55 acre site located on the 1700 Block of Convention Center Drive. BACKGROUND 4 Section 82-38 of the Code of the City of Miami Beach requires that any proposed sale or lease of City-owned land be analyzed from a planning perspective so that the City Commission and the public are fully apprised of all conditions relating to the proposed sale or lease. The proposal is to execute a lease agreement between the City of Miami Beach (landlord) and MB Mixed Use Investment, LLC, a joint venture between local Miami Beach companies Turnberry and Terra Group, with a registered operating name Miami Beach Connect ("MB Connect") (lessee), for the development of a Convention Hotel at the approximately 2.55 acre site located on the 1700 Block of Convention Center Drive. The following is an analysis based on the criteria delineated in the Code. ANALYSIS 1. Whether or not the proposed use is in keeping with city goals and objectives and conforms to the city comprehensive plan. Consistent — The future land use designation of the site is Public Facility: Convention Center Facilities (PF-CCC). The proposed Convention Hotel use is consistent with the purpose of the PF-CCC designation which permits the following: Public Facility: Convention Center Facilities (PF-CCC) Purpose: To provide development opportunities for existing convention center and facilities necessary to support the convention center. Uses which may be permitted: Convention facilities. Planning Analysis of Proposed Lease Agreement for Convention Hotel July 6, 2018 Page 2 of 3 Intensity Limits: Intensity may be limited by such set back, height, floor area ratio and/or other restrictions as the City Commission acting in a legislative capacity determines can effectuate the purpose of this land use category and otherwise implement complementary public policy. However, in no case shall the intensity exceed a floor area ratio of 2.75. 2. The impact on adjacent property, including the potential positive or negative impacts such as diminution of open space, increased traffic, noise level or enhanced property values, improved development patterns and provision of necessary services. Based on the proposed use of the property, the city shall determine the potential impact of the project on city utilities and other infrastructure needs and the magnitude of costs associated with needed infrastructure improvements. Should it become apparent that further evaluation of traffic impact is needed, the proponent shall be responsible for obtaining a traffic impact analysis from a reputable traffic engineer. Consistent — No negative impacts are anticipated by the proposed use of the property. A preliminary traffic analysis indicates that there will be a net reduction of peak hour trips in the area as a result of the proposal, since it will encourage conventions where guests arrive to the area by shuttles or other means rather than by single occupancy vehicles. Additionally, guests will arrive throughout the day, as opposed to trade shows, which generate most traffic impacts during peak-hours when roadways are most congested. However, additional reviews will take place as the project develops further. The site is currently used as a paved, surface parking lot; therefore there will be no diminution of public open space. The use should enhance commercial property values, because it will provide additional patrons for the area's businesses. 3. A determination as to whether or not the proposed use is in keeping with a public purpose and community needs, such as expanding the city's revenue base, creating jobs, creating a significant revenue stream, and improving the community's overall quality of life. Consistent— This proposed use is in keeping with a public purpose and community needs. The lease agreement expands the City's revenue base. It is expected that the convention hotel will improve the quality of conventions drawn to the convention center, which will generate jobs and encourage economic development, and reduce peak-hour traffic congestion. 4. A determination as to whether or not the development is in keeping with the surrounding neighborhood, will block views or create environmental intrusions, and evaluation of the design and aesthetic considerations of the project. We are committed to providing excellent public service and safety to all who live, work,and play in our vibrant tropical,historic community. Planning Analysis of Proposed Lease Agreement for Convention Hotel July 6, 2018 Page 3 of 3 Consistent — The surrounding area consists of civic uses, including the Convention Center, City Hall, and public parking garages. Therefore, the development will not block views for other property owners or create environmental intrusions. The proposed height of the hotel will be limited to 185 feet, as opposed to the maximum allowable height of 300 feet in the underlying zoning district, in order to better conform to the surrounding urban fabric. The design and aesthetic considerations will be further analyzed as part of the Design Review process that is required of new development pursuant to the Land Development Regulations. 5. The impact on adjacent properties, whether or not there is adequate parking, street and infrastructure needs. Consistent — The convention hotel will be providing adequate parking on-site pursuant to the requirements of the Land Development Regulations. Vehicle loading and queuing will take place entirely within the property so as to minimally impact surrounding streets. Additional modifications may be made to the surrounding streets and infrastructure as the project is developed further. 6. Such other issues as the city manager or his authorized designee, who shall be the city's planning director, may deem appropriate in analysis of the proposed disposition. Not applicable — The Planning Department has no other issues it deems appropriate to analyze for this proposal. CONCLUSION The proposed use for the site is consistent with the Goals, Objectives, and Policies. The use will generate no negative impacts for the surrounding area. The property would continue to serve the public interest. TRM/RAM T:WGENDA\2018\07 July\Planning\Convention Hotel-Planning Analysis.docx We are committed to providing excellent public service and safety to all who live,work,and play in our vibrant,tropical,historic community. Appendix 6 Summary of Public Revenue Impact Over 30 years Over 99 years 2027(Yr 5) Total NPV @ 5% Total NPV @ 5% CITY Minimum Fixed Rent $2.0m $71m $27m $560m $45m Variable Rent 0.6m 31m 13m 218m 20m ! Lease Payments $2.6m $102m $39m $778m $65m Voluntary 1% Surcharge* 0.7m 27m 10m 206m 17m l Taxes CRA City(thru 3/2044) 0.9m 21m 10m 21m 10m CRA County(thru 3/2044) 0.7m 16m 8m 16m 8m Resort Tax(Hotel 4%, F&B 2%) 3..9m 152m 59m 1,163m 97m CDT Allocation(thru 2044) 1.5m 32m 15m 32m 15m Property Taxes** 0.1m 15m 4m 250m 13m Subtotal 7.0m 236m 96m 1,482m 143m CITY TOTAL $10.4m $365m $146m $2,465m $225m COUNTY 2.1m 117m 41m 1,210m 82m Convention Devl. Tax(3%) 0.8m 58m 20m 654m 42m Local Option Sales Tax(1%) 1.2m 46m 18m 353m 29m Property Taxes* 0.1m 13m 4m 203m urn Subtotal County SCHOOLS (Property Tax) 1.2m 45m 18m 340m 29m OTHER PROPERTY** 0.1m 5m 2m 41m 3m STATE SALES TAX (6%) 7.2m 278m 107m 2,120m 177m TOTAL $21.0m $810m $314m $6,177m $516m 95%of general property taxes allocated to CRA through 3/2044 **Regional property tax and Children's Trust property tax Key Assumptions: All analysis completed on a calendar year basis Year 1 through 10 based on developer proforma Assumed 2%growth rate beginning in year 11 and beyond NPV to 2019 $1.5m of County CDT allocated to City beginning in third year of hotel opening through 2044 Sources:Developer,City of Miami Beach,JLL