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Hotel Standards Definition and Legal Description 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. it meets a sufficient number of the standards then required to be able to obtain a four-diamond rating from the American Automobile Association ("AAA"); or B. if at any time during the Term of this Lease either such rating system is discontinued or the standards for such rating system is 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, 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. The Lessee does not have to actually obtain the AAA four-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. The City has the right to accept or 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. 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. 90 EXHIBIT "C" BUDGETED IMPROVEMENT COSTS Hotel Project Costs Soft Costs Design Architect $ 13,551,938 Landscape Architect $ Included Above Other Architectural $ Included Above Traffic Engineer $ Included Above Civil Engineer $ Included Above Misc. Consultants $ 1,033,500 Legal and Administrative $ 1,000,000 Real Estate Taxes $ 4,193,084 Developers Fee $ 22,424,772 Building Permits $ 11,120,197 Insurance - Builders Risk $ 3,545,741 Pre-Opening Expense $ 6,680,000 Working capital $ 800,000 Sewer/Water Hook Up $ 85,000 Art in Public Places - $ 3,643,386 Other $ 1,282,702 Soft Cost Contingency $ 20,272,520 Total Soft Cost $ 89,632,940 Financing Loan/Equity fees $ 11,344,436 Construction Period Interest $ 9,256,783 Operating Interest Reserve $ 11,503,442 $ 32,104,661 Construction Costs Construction Cost Hotel $ 235,880,136 Skybridge $ 1,800,000 Construction Contingency $ Included Above Payment & Performance Bonds $ 2,084,913 FF&E $ 24,683,024 OS&E $ 19,264,725 Total Construction Cost $ 283,712,798 Total Project Costs $ 405,450,398 91 1 EXHIBIT"D" LEGAL DESCRIPTION OF HOTEL SITE (see next two (2) pages) 92 I , tl .1 a F aaatntaens,cox O9'Ytf 3.95 ss.ws , 4,! 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NM ill:1 y i h Z tr 8t"g n G 4yb W i• g i • „�,• .� �.Q.. n;gay tii lag J::Z.<�a8 ■ £ V T HLYd 3:118 xs ID iii 1- 1 hi ,1 F— !! .s. li o Z = . sib i. _ ;mW p 1 rt- J CCC !! 3 x I , Y .. § ! i !ill — Zti li 1>!Ail!It6 6 lir"i CC iiii Iiif;XE (9 ' igV8,Xggiig§!..- g,_ D 8 , (63 Note re: Legal Description on Prior Page: If approved as part of the regulatory Design Review Board/development process, the cantilevered elements on the north property line, depicted in Appendix E of the Lease with respect to the 4th Level of the proposed Hotel, will be included within the legal description for the Leased Property. 94 I EXHIBIT"E" APPROVED PLANS (see attached pages) 95 is * .' i't t:I 41.1&*: • .• EMI' L r+ L . _ •,i.... ,,, , „ .•.it--...,...4: - �-x.- s.r s'c a q; I. ' S T . w ...F, ::::;-:-*---.--:7:1: ..: 1 iL„,,iii_ii � 1 'poril I a Ile 1:% r f- r0 / / ISM 1.,....3 'ta 1 Li�ic + '•// ' ll;g4 Am. 1 ` �. I F ��1,,•a. 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H I I illy 1 I�1��i���1°`� iii 'i =i= �i 1111111 .i�f1i�ii1i�� EH ' di , Min EINEM R III IC Ill , - 1111111 11111111111111w I III III Ill 111111111111111111111M I ilk 11` 111 NIUHIIIHIIIHIHII1 III IL In 1111111111111111111111" 1111.1111 1111 1111111111111111111111Flo L i!1 Ii 1111 IIHHIIIIIIIIIIIHII-=' III �� Inl�iii�ii1�1��i��inu�ixi 1 ! �� !l11Nl1�:iia#111liiiN1V I- II IIIMIIIIIIrandillifilliti 'ill IIIIIIHIIIIIHIIIIIHIHIei VIII 11111111111111111111111111111111*I/ .111111611111111111M1111111111111111111*F 123 I EXHIBIT "0" 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 Portman Miami Beach, LLC, a Delaware 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"); WHEREAS, pursuant to the Development and Ground Lease Agreement, the City has agreed to grant to the Lessee a non-exclusive 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 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, collectively, Easement Parcel 1 and Easement Parcel 2 shall be referred to herein as the "Easement Parcels"; 124 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 a non-exclusive 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 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 a non-exclusive access 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. 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 use of Easement Parcel 2 for the rights granted herein, including but not limited to granting other easements or licenses at the same location. 3. 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 "E" 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. 4. The Lessee shall maintain insurance on the Easement Parcels at all times as required by the Development and Ground Lease Agreement. 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 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 City's 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. 125 5.. 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. 6. Lessee shall not materially interfere with the use by and operation and activities of City Parties on the Easement Parcels, and Lessee shall use such routes and follow such procedures on the Easement Parcels as result in the least damage and inconvenience to City and its invitees, agents, employees, guests, lessees and/or licensees. 7. 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 its contractors, agents, officers, members, employees, invitees or licensees (collectively, 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. 8. 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. 9. 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. 10. 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: If to Lessee at: 126 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. 11. 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. 12. 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. 13. Time of Essence. Time shall be of the essence for each and every provision hereof. 14. 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 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. 127 F IN WITNESS WHEREOF, the undersigned has caused this Easement to be executed by execution of this instrument as of this day of , 201_. (Signature pages to follow) 128 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: 129 f ACKNOWLEDGED AND ACCEPTED this day of , 20_by • Witnesses: LESSEE 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: 130 Exhibit"A" [MBCC Parcel - Folio No. 02-3227-000-0090] 131 Exhibit"B" Hotel Site Legal Description [See Exhibit D to Development and Ground Lease Agreement] 132 • Exhibit"C" Easement Parcel 1 (Right-of-way) [exact description to be finalized as part of the development process pursuant to the Lease] 133 Exhibit"D" Easement Parcel 2 for Construction of Skybridge and Off-site Improvements and Maintenance of Skybridge [exact description to be finalized as part of the development process pursuant to the Lease] 134 • 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 shall 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. 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. 135 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, and the City of Miami Beach. 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. 136 EXHIBIT "J" PUBLIC RESERVATIONS AND DEDICATIONS None, except for any easements or reservations contemplated under Section 4.1(g). 137 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 118 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. All other local governmental approvals as may be applicable to the subject property from time to time pursuant to the terms of this Development Agreement, including but not limited to restrictive covenants in lieu of unity of title 138 EXHIBIT"L" ROOM BLOCK AGREEMENT by and between CITY OF MIAMI BEACH, FLORIDA and PORTMAN MIAMI BEACH, LLC 139 TABLE OF CONTENTS ARTICLE I DEFINED TERMS 1 1.01 "18-MONTH ROOM BLOCK REQUEST" 1 1.02 "ACTIVE NEGOTIATIONS" 1 1.03 "AGREEMENT" 2 1.04 "AMENDED OFFER" 2 1.05 "AVAILABLE GUEST ROOMS" 2 1.06 "BLOCK NOTICE" 2 1.07 "BLOCK RELEASE REQUEST NOTICE" 2 1.08 "BUSINESS DAY" 2 1.09 "CITY" 2 1.10 "CITY MANAGER" 2 1.11 "CITY-WIDE EVENT" 2 1.12 "CONVENTION CENTER" 2 1.13 "CURE PERIOD" 3 1.14 "DEVELOPMENT AND GROUND LEASE AGREEMENT" 3 1.15 "EFFECTIVE DATE" 3 1.16 "EVENT BLOCK MINIMUM RATE" 3 1.17 "EVENT OF DEFAULT" 3 1.18 "EVENT NIGHT" 3 1.19 "EVENT ROOM BLOCK" 3 1.20 "FORCE MAJEURE" 3 1.21 "GMCVB" 3 1.22 "HOTEL" 3 1.23 "HOTEL SITE" 3 1.24 "INITIAL OFFER" 4 1.25 "MANAGED HOTELS" 4 1.26 "MANAGEMENT AGREEMENT" 4 1.27 "MAXIMUM EVENT NIGHT CEILING" 4 1.28 "MAXIMUM EVENT ROOM BLOCK" 4 1.29 "MIDWEEK" 4 1.30 "NOTICE" 4 1.31 "OFFER EXPIRATION DATE" 4 1.32 "OPENING" 4 1.33 "OPERATOR" 4 1.34 "LESSEE" 4 1.35 "POTENTIAL CONVENTION CENTER CUSTOMER" 4 1.36 "PUBLIC RECORDS ACT" 4 1.37 "RATE QUOTE" 4 1.38 "INTENTIONALLY OMITTED". 4 1.39 "ROOM BLOCK CONTRACT" 4 1.40 "ROOM BLOCK REQUEST NOTICE" 4 1.41 "SALES REPRESENTATIVE" 5 1.42 "SPECIAL EVENT BLOCK MINIMUM RATE" 5 1.43 "STANDARD OF OPERATION" 5 1.44 "STANDARD OF OPERATION FAILURE NOTICE" 5 1.45 "SUSPENSION PERIOD" 5 1.46 "TERM" 5 1.47 "WEEKEND" 5 ARTICLE II TERM OF THIS LEASE 5 2.01 COMMENCEMENT OF THE TERM 5 2.02 EXPIRATION OF TERM;SUSPENSION PERIOD 5 140 1 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 13 4.01 EVENT BLOCK MINIMUM RATES;SPECIAL EVENT BLOCK MINIMUM RATES 13 4.02 GENERAL MATTERS REGARDING RATES 15 4.03 CONFIDENTIALITY 15 ARTICLE V STANDARDS OF HOTEL OPERATION 15 5.01 STANDARDS 15 ARTICLE VI 16 STANDARDS OF CENTER OPERATION 16 ARTICLE VII NO LIABILITY FOR PROPOSED CONVENTION CENTER CUSTOMER;LESSEE RESPONSIBILITY TO CAUSE OPERATOR TO PERFORM;INDEMNITY 16 7.01 No LIABILITY TO CITY 16 ARTICLE VIII EVENTS OF DEFAULT 17 8.01 DEFAULT 17 8.03 LESSEE'S RESERVATION OF RIGHTS 18 ARTICLE IX ADDITIONAL PROVISIONS 18 9.02 MISCELLANEOUS 18 9.03 ESTOPPEL CERTIFICATE 18 9.04 NOTICES 18 • 141 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 Portman Miami Beach, LLC ("Lessee"), a Delaware 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 1.12, 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 ("Lease"), as hereinafter defined in Section 1.14, 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 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 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 "Active Negotiations" means (x) for purposes of Section 3.01(b), 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 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(b), 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 142 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. 1.03 "Agreement" is defined in this Agreement's preamble. 1.04 "Amended Offer" is defined in Section 3.01(d). • 1.05 "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, 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. 1.06 "Block Notice"is defined in Section 3.01(d). 1.07 "Block Release Request Notice" is defined in Section 3.02(d). 1.08 "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. 1.09 "City" means the City of Miami Beach, Florida, a municipal corporation of the State of Florida. 1.10 "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). 1.11 "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 and (ii) in connection with such event, requests 1,500 or more guest rooms be made available in hotels in the City(including the Hotel) and surrounding metropolitan areas, in the aggregate, for one or more days while the event is held at the Convention Center (and, potentially, the day preceding the commencement of such event and the day following the conclusion of such event). 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). 1.12 "Convention Center" means the Miami Beach Convention Center located at 1900 Convention Center Drive, Miami Beach, Florida. 143 1.13 "Cure Period" is defined in Section 2.02(b). 1.14 "Development and Ground Lease Agreement" or "Lease" means that certain Development and Ground Lease Agreement between Lessee and City dated , 2015, as may be amended from time to time in accordance with its terms. 1.15 "Effective Date" is defined in this Agreement's preamble. 1.16 "Event Block Minimum Rate" means the lowest rate City may require the Lessee and Operator to quote or charge a Potential Convention Center Customer for a room during a City-Wide Event, as described and determined in accordance with Section 4.01. 1.17 "Event of Default" is defined in Section 8.01. 1.18 "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 (i) pursuant to a contract with the Potential Convention Center Customer or (ii) 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. 1.19 "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. 1.20 "Force Majeure" 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 emental laws o regulations; acts of war (whether declared or are , invasion, blockadegov, or rn sabotage la; terrorism r or threat thereof; riot, civil disturbance, insurrection undecl d)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. 1.21 "GMCVB" means the Greater Miami Convention & Visitors Bureau. 1.22 "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. 1.23 "Hotel Site" means the parcel of real property described on Exhibit A attached hereto and made part hereof. 144 1.24 "Initial Offer" is defined in Section 3.01(b). 1.25 "Managed Hotels" means full-service, convention center hotels within the United States of America operated as first-class hotels containing no less than 800 rentable guest rooms operated under the Operator's brand name and managed by the Operator or any entity controlled by, under common control with or that controls Operator, specifically excluding franchised hotels. 1.26 "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. 1.27 "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. 1.28 "Maximum Event Room Block" means eighty percent (80%) of all of the Hotel's • Available Guest Rooms. 1.29 "Midweek" means Sunday through Thursday, inclusive. 1.30 "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. 1.31 "Offer Expiration Date" is defined in Section 3.01(e). 1.32 "Opening"means the opening of the Hotel to the public for business. 1.33 "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. 1.34 "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. 1.35 "Potential Convention Center Customer" means a person, entity, group or association (or any combination thereof)that is planning a City-Wide Event. 1.36 "Public Records Act" is defined in Section 4.04. 1.37 "Rate Quote" is defined in Section 3.01(b). 1.38 Intentionally Omitted. 1.39 "Room Block Contract" is defined in Section 3.01(f). 1.40 "Room Block Request Notice" is defined in Section 3.01(a). 145 • 1.41 "Sales Representative" is defined in Section 3.01(a). 1.42 "Special Event Block Minimum Rate" means, for up to six (6) City-Wide Events per year as determined by City at its sole discretion, the lowest rate City may require the Lessee and Operator to quote or charge a Potential Convention Center Customer for a room for such City-Wide Events, as described and determined in accordance with Section 4.01. 1.43 "Standard of Operation" is defined in Section 6.01. 1.44 "Standard of Operation Failure Notice" is defined in Section 2.02(a)(ii). 1.45 "Suspension Period" is defined in Section 2.02(a). 1.46 "Term" is defined in Section 2.01. 1.47 "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 on 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; (ii) the date upon which the Convention Center is no longer operated and maintained substantially consistent with the Standard of Operation; provided, that, no expiration of the Term pursuant to this Section 2.02(a)(ii) shall be deemed to 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, Lessee's notice shall describe the deficiencies in maintenance with reasonable specificity), and (2) City has failed to remedy such failure within two hundred seventy (270) days following receipt of such Standard of Operation Failure Notice (such 270-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 270-day period, such 270-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 270-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 146 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; or (ii) the termination of this Agreement pursuant to Section 8.01 of the Lease. 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 9 uest 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 "move out" 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 will 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 147 • 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: 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 (15) Business Days following City's request to Operator under this clause (y), failing which, for 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 have either been accepted or are still outstanding) following the date such Maximum Event Ceiling Night had been reached and prior to such cancelations3, 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 3 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(1), 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). 148 • 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 3.01(b) or any other provision of this Agreement to the contrary: (i) the Operator shall offer the 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, blocked, 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 a Maximum Event Room Block to a Potential Convention Center Customer for City-Wide Events commencing between eighteen (18) and thirty (30) months of a potential Event Room Block. 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. (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 Offer"). (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 149 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 a new Room Block Request Notice for such City-Wide Event in accordance with, and subject to the provisions of, this Section 3.01. (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 3.01(1), 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 any rooms reservations for such month to accommodate a replacement block). City recognizes that the Lessee or Operator may be entitled to collect 150 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 later of (x) the date required under the Room Block Contract executed with such Potential Convention Center Customer and (y) the sixtieth (60th) day preceding the first scheduled day of the applicable event, 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. If within ninety (90) days prior to the applicable event, the number of rooms actually booked is less than the number of rooms blocked, then Operator may request City to release some or all unbooked rooms and City agrees not to unreasonably withhold such consent. Furthermore, if .the group history of the Potential Convention Center Customer (whether in respect of events at the Convention Center or elsewhere) reflects a pattern whereby the block of rooms reserved by such customer is greater than the actual number of rooms used, then the Operator, with the consent of City (which consent shall not unreasonably be withheld), shall have the right to block only such number of rooms which Operator, in the exercise of its professional judgment and based on such history of the customer, believes will be adequate to accommodate the number of rooms which will be actually used by such customer; provided, that such decision of the Operator shall not release or relieve Operator from providing other lodging (in accordance with industry standard for handling overbookings) if the number of rooms so blocked by Operator actually is not adequate to satisfy the actual use of rooms by the Potential Convention Center Customer q Y Y (up to the amount of rooms included in the Event Room Block pursuant to the contract between Operator and such customer). (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 a 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(c)(i)and 3.01(c)(ii). (j) 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 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 on any day which the Convention Center cannot accommodate a City-Wide Event because less than one hundred fifteen thousand (115,000) square feet of 151 • 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). (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 (ii) poor credit or a questionable payment history, then Operator shall have the right, at its option, to include in its Initial Offer to such Potential Convention Center Customer security, damage or other deposit requirements that, in Hotel Lessee's judgment exercised in good faith, would compensate Operator and Lessee for the damage, wear and tear or failure to pay (and, notwithstanding anything in Section 3.01(d)to the contrary, but subject to resolution of any dispute described below, City shall not have the right to require Operator to deliver an Amended Offer to such Potential Convention Center Customer that does not include such security, damage or other deposit requirements); provided that (1) Operator shall provide City notice that such Potential Convention Center Customer has a documented history of causing material property damage, unusually heavy wear and tear, poor credit or questionable payment history, as applicable, and also provide notice of its intention to include such (and provide a statement of the amount of the proposed) security, damage or other deposit requirements prior to issuance of such Initial Offer and (2) in such notice Operator shall set forth in reasonable detail the basis for the Operator's conclusions. City shall have the right to reasonably challenge Lessee's conclusion that such Potential Convention Center Customer is a customer described in clauses (i) or (ii) of the first sentence of this paragraph but, for the avoidance of doubt, Operator shall be entitled to deliver an Initial Offer with such additional security, damage or other deposit requirements prior to receipt of notice of any such challenge, and if the parties subsequently agree that such additional requirements are unnecessary, City shall be entitled, if such Initial Offer remains outstanding, to require Operator to issue an amended Initial Offer omitting such requirements. City shall, to the fullest extent permitted by law, keep such conclusions confidential in accordance with Section 4.04. In the event of any such challenge by City, the parties agree to meet and confer and attempt in good faith to reach agreement as to the additional deposit requirements will be placed on any offer given to such customer. 3.02 Release of Block (a) If the Operator desires 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, the Operator can request by Notice to City (a "Block Release Request Notice") that City release that block from this Agreement. Each Block Release Request Notice shall specify the dates as to which such request applies and the number of event night rooms to which such request applies. Within five (5) Business Days after receipt of such request, City shall deliver written notice to Operator either (i) approving such release of such requested block for such specific dates and rooms or (ii) disapproving such release. City shall be entitled to make such determination in its sole discretion, subject to Section 3.02(b) below; provided, that if the 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, City shall consider such request 152 for the release in light of the possible repeat nature of the proposed business. If City fails to either approve or disapprove such request in writing within such five (5) Business Day period, then such request shall, except as set forth in the last two (2) sentences of Section 3.02(b), be deemed denied (but such deemed denial shall not prevent Operator from making multiple requests for such release). (b) Notwithstanding the foregoing provisions of this paragraph, City shall release the block requested in a Block Release Request Notice 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 booking of such City-Wide Event. (iv) 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 be 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). Notwithstanding anything in Section 3.02(a)to the contrary, if City fails to either approve or disapprove a request Block Release Request Notice within the five (5) Business Day period described in Section 3.02(a), and Operator reasonably believes such release is required pursuant to this Section 3.02(b), then Operator shall have the right to send a second written notice to City(which second notice shall conspicuously include the following, in capital and bold print letters: "SECOND NOTICE FOR RELEASE OF BLOCK UNDER SECTION 3.02(b) OF ROOM BLOCK AGREEMENT; FAILURE TO RESPOND WITHIN FIVE BUSINESS DAYS SHALL BE DEEMED APPROVAL OF THE REQUESTED RELEASE") requesting that it be entitled to make such booking, setting forth in reasonable detail the reason such release complies with Section 3.02(b). If City fails to deliver to Operator written notice disapproving such request within five (5) Business Days of receipt of such second notice, then City shall be deemed to have approved such request. (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 153 subsequently requested covering any of the dates for which a release has been provided by City under this Section 3.02. 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. (ii) 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. (b) Concurrent with the execution hereof, Lessee has provided to City a schedule of the projected Event Block Minimum Rate and Special Event Block Minimum Rate for the first five (5) calendar years after the Opening (the "Lessee's 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 Rate and Special Event Block Minimum Rate for the ensuing five (5) calendar year period (each such schedule, an "Lessee's Subsequent Proiected 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 (1) 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. 154 (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 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. 155 4.02 General Matters Regarding Rates. All rates described are for single rooms. Double occupancy rooms may be quoted at a rate not greater than twenty percent(20%) above the single room rates. Triple and quad occupancy rooms may be quoted at rates with an increase of not greater than thirty percent (30%) above the single room rates. Suites may be quoted with an increase above standard room rates consistent with market practice, as reasonably determined by the Operator. 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 direct or 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. 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. 156 ARTICLE VI STANDARDS OF CENTER OPERATION 6.01. Standards. During the Term, City shall operate and maintain the Convention -Center to at least the 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"). 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. 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 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, 157 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 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 (i) 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 158 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 on 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 a 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 may be 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 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, if in 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 159 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 (3rd) 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, 4t" 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. 9.05 Transfer of Lessee's or Operator's Interest. (a) In the event of the sale, assignment or transfer by Lessee of its fee 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 160 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 contract or 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 be 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 contrary, (a) the City is an express, intended, third party beneficiary of the obligations, duties and covenants of the Lessee hereunder, (b) the City has the right to enforce all of the covenants, obligations and agreements of the Lessee hereunder, (c) City may at any time, without the need of prior notice to or consent from the 161 Lessee, assign this Agreement to the City or 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 the City expressly assumes all of the obligations of City hereunder and agrees to be bound by the terms and provisions of this Agreement) and (d) this Agreement shall automatically be deemed assigned and transferred to the City upon any dissolution of City (but only if the City expressly assumes all of the obligations of City arising hereunder from and after the date of such assignment [and not attributable to a default by City arising prior to the date of such assignment or transfer] and agrees to be bound by the terms and provisions of this Agreement). In addition, the Operator shall be an express third party beneficiary of the obligations, duties and covenants of City hereunder. (signature pages to follow) • 162 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: Portman Miami Beach, LLC By: Name: Title: CITY OF MIAMI BEACH, FLORIDA By: Philip Levine Mayor Approved for form and legal sufficiency By: City Attorney ATTEST By: City Clerk 163 EXHIBIT A HOTEL SITE See Exhibit D to Development and Ground Lease Agreement 164 EXHIBIT"M" OWNERSHIP INTERESTS IN LESSEE Portman Holdings, LLC 165 EXHIBIT "N" UNIFORM SYSTEM SUMMARY OF OPERATING STATEMENT (See attached pages) 166 -m i !Blip 2 n -1 O O -� o -I o >O ��a O �+ m '�I 1 c o K to N 11111-o -rr ad v2., m$07047 51mdfiL oo.� i u a A$ S o 1�1 O 3 n `�' � 3471 3g u 30 � mg aa> v � �. a � m <3 a �'� � if:I �.3" � ilia a 3� A'S '� m � .�I G'L n tin p n m A w r i i a o P as F A v 1c i m c ¢ e 3 m a lie E.7°:x Q r i 1 e o > F n m� uw A � 3 � Q � �<� �m°.:,_ iF � 11,01 Q° e N u A �. 47 A 01 m 01 N Qa C R y a 7 O A i m y VJ.. m 7 1.� R A g^ o 3 ; 3 a ° o as 2 Q oN o ra E° N CD A p as+1• 3 o m m o m w 2 m d u I o d a m d u x d n g o A 7 02 3 � 9 � / am A 3 Q ° 3 D 2 = m A u N R F A d 0 wm R A A N ^ C v �D S G :O q A r ;I , N N m W �i'r W _ N:A> N N N J r•• IJ O VI �+4i N N N N W W A N {A A N y P�Y] m N 0 b3 C A a V P N .D P m C.? 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N P t m v W 9 A J,., ^m N r NON 0 A P J O m N N r.C d p O ?,U1 O O V V WO O •1 W A V W A O W N W 0 O J O O r O A*r A h O O p P . a g °r� V1 V214 a eeeee 168 EXHIBIT"0" TRANSACTION RENT EXAMPLE OF TRANSACTION RENT CALCULATION The example of Transaction Rent in this Exhibit"0" is for illustrative purposes only. 1. Assuming that, for the first Transfer for which Transaction Rent would be payable, (i) Owner #1 sells a 51% Controlling interest in the Lessee to Owner #2 for a gross sales price (less typical closing adjustments and credits)of$250,000,000, then no Transaction Rent would be payable in connection with this first Transfer, as the gross sales price did not exceed $290,000,000 (50% of the $580 million hurdle applicable to the first Transfer pursuant to Section 4.4(b)). 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, 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, with Owner#3 selling a 38% interest in the Lessee to Owner#4 for a gross sales price (less typical closing adjustments and credits) of$200,000,000, and Owner#1 selling a 37% interest to Owner#4 for a gross sales price (less typical closing adjustments and credits) of$190,000,000, then the Transaction Rent payable to City would be calculated as follows: Owner#3 Transfer Gross sales price(less adjustments) $200,000,000.00 Transaction Rent: $500,000.00 (i.e., .25%of$200,000,000) Owner#1 Transfer Gross sales price(less adjustments) $190,000,000.00 Transaction Rent: $475,000 169 1 EXHIBIT"P" LOCATION OF GEOTHERMAL SYSTEM (See attached pages) 170 s uff , El —A] 9e--- cri 416. :44- .1'44 Afr:!.in 1 Elf, o. 5 f3p 8 As s _ J� _...-. u 3 `>' , F g • �1 - .. �! 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OM li I ii 1! il !1 nilj diri 1$b1 040 0 0 d 0 04 04 0 4 0 la \ \ \ 6- -.......41..., 180 r...maaaaboam,amaaaalawa aroawn.....o...•aagasoam,awas.spi-cs le.11"..I....o wpm a EXHIBIT"Q" RESERVED 181 EXHIBIT"R" SCHEDULE OF MINIMUM FIXED RENT Lease Amount Year $209,279* $492,545 2 $829,706 3�r $1,458,413 4 $1,487,581 $1,517,333 6 $1,547,679 $1,578,633 8 $1,610,206 9 $1,642,410 10 *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. 182 EXHIBIT "S" MANDATORY HOTEL PROJECT DESIGN ELEMENTS A full-service convention hotel of not-to-exceed 800 rooms, 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 72,000 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, 10,000 net square feet (+/- 5%)junior ballroom, and 42,000 net square feet(+1- 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 three hundred (300) 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 failed to include the Mandatory Hotel Project Design Elements as a result of the inclusion of such excess ballroom and meeting space). 183 EXHIBIT"T" LESSEE'S LLC DOCUMENTS (See attached pages) 184 Delaware PAGE 1 The First State Z, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF FORMATION OF "PORTMAN MIAMI BEACH, LLC", FILED IN THIS OFFICE ON THE SEVENTEENTH DAY OF JDNE, A.D. 2015, AT 10:43 O'CLOCK A.M. tr Jeffrey W.8utlock.Secretary of State 5768204 8100 \\ � ,w , �, / AUT:I- ION 2475278 150932145 = �►wa�� DATE: 06-17-15 You may verify this certificate online at carp.dolawaro.gov/authver.sbtml 185 State of Delaware re Secretary of State Division of Corporations Delivered 10:46 AM 06/17/2015 FE= 10:43 ASK 06/17/2015 SRV 150932145 - 5768204 FTLS CERTIFICATE OF FORMATION OF PORTMAN MIAMI BEACH,LLC THIS CERTIFICATE OF FORMATION of PORTMAN MIAMI BEACH, LLC(the"Company")is being executed by the undersigned for the purpose of forming a limited liability company pursuant to the Delaware Limited Liability Company Act. FIRST: The name of the Company is: Portman Miami Beach,LLC SECOND: The Company's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of Wilmington, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. IN WITNESS WHEREOF, the undersigned, bein authorized person of the Company,has executed this Certificate of Formation on this 02_, y of June,2015. Neal Kamin,Authorized Person 26t96746v1 186 EXHIBIT"U" FILLMORE THEATER PARKING (See attached page) 187 ---_______ ------- \ . - ' ; ; ; 1 • ' -1 ,1 ; ( !I 7 i 11I; , 1 -a-, , g, u. ; cn 1 . _ __. _ • c„,i —J r":.* , m ill- _ ail 11 i 1 1-"- ..... •• 11=1-1 ■ 1 i .I S.' d- oft 1 1 v - W , \ L 6 Jim ' , cc , I \ d 3 . as Elupued...NPz w --, , , • 1 I N 1'-...----4 I \ b. Ili r r-r r 1'l''''1 I tili ! , 1 1 1 `,-■ ----,,,, ' I Dal il! 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'. 7YC. r-r 1- - ' -- 4.../ •OM= anus.19W03 UNUE1A1100 ..13 •... 188 APPENDIX 2 • A f Q 12 A Appendix 2 . a a .3 5 r I° g 1- aaatniaens LoN� A g *1 , ' .09"91£ 3 9L 96 WS ° i ^ n g :a 4 � 1: 1111 f I § �� a = �'-- .ili e Yo, 9 t -.. 1 J Io CC f/ I n _ f/1� I W ri a c r °o' : 3 a 1 Qw N.m p 4 ti � 1 oe o 1 m w 1 . 9 vw L. a x ci 4 o� CG 0 8 6 i i " e . 3.LL 6L.C5 ; F B t' s }.2'..4,, 4: �it it'''. 4] Igmzu� aLL A gi t Si:""I'..i..i..-:i r':: t,::.::.'.',-....'''.., ..:' '. '-:' ' . :i M.ZZ 6L[N I W e u �� 1 hh � J I '• y 8 W IL_ J '� 8 Z anz iora,as az aaoaore '. O i d a 09 9£Z M.9Z,9S lON e ,a ` C N mimosa LW l•l 40 MIMI%LYNN=new N u P g 3ARIQ 83.LN33 NOLLN1ANO3 a 14,,,-,..4 i W I g i_3? ,...18 O ZS ' z° > LL 1 $ e ° ...w� Q301AIQH(1S ,LON H A v 8 0` y $ fn oW WI- Dg.= e !11;... 88 So pp �1 ya� n ° o. L. oz ° F° w a° age 17b W sii H °e W Z z_ O-e. i $; „!.I8aa § n° ° C FO üui:on o b bG-b Y gN ,j l6<Y = so 0. II ge 81: g.ig Ma z yj gi/$ $�3$a � y 6 ~� W /IN� e W1 � ,n >n '`-�.: b I li g : g,N g �11b-1IY ! :1'0,._ ., .Z b Ili• •_ 'Q ii b�§ � �� ?�3 tlb b� � � H1Yd3701b8 hb b $ � O !g a� 's III g Uwe ols . oo.J U b ig'sq 4 8 N b13b 1 $ g 3I Q 3 a0 W 1§i 7b�11a �3' a .. $ °I T gig t qr $ m11 Q v bb�!PV/� ggb gl i ›. '1(11 Z2A 7�bC+ 8�i „.,,g4R di. -eV 81 I.,„vX),ILLII b o s;-Se, o i68 �• Note re: Legal Description on Prior Page: If approved as part of the regulatory Design Review Board/development process, the cantilevered elements on the north property line, depicted in Appendix E of the Lease with respect to the 4th Level of the proposed Hotel, will be included within the legal description for the Leased Property. APPENDIX 3 Appendix 3 Schedule of Proposed Minimum Fixed Rent Minimum Variable Percentage Fixed Rent Growth Rent Growth Rent Growth 2016 - - - 2017 - - - 2018 - - - 1 2019 $209,279 $209,279 $418,557 2 2020 492,545 135.4% 492,545 135.4% 985,089 135.4% 3 2021 829,706 68.5% 829,706 68.5% 1,659,413 68.5% 4 2022 1,458,413 75.8% 1,458,413 75.8% 2,916,826 75.8% 5 2023 1,487,581 2.0% 1,517,403 4.0% 3,004,984 3.0% 6 2024 1,517,333 2.0% 1,577,800 4.0% 3,095,133 3.0% 7 2025 1,547,679 2.0% 1,640,308 4.0% 3,187,987 3.0% 8 2026 1,578,633 2.0% 1,704,994 3.9% 3,283,627 3.0% 9 2027 1,610,206 2.0% 1,771,930 3.9% 3,382,136 3.0% 10 2028 1,642,410 2.0% 1,841,190 3.9% 3,483,599 3.0% 11 2029 1,675,258 2.0% 1,878,013 2.0% 3,553,271 2.0% 12 2030 1,708,763 2.0% 1,915,574 2.0% 3,624,337 2.0% 13 2031 1,742,938 2.0% 1,953,885 2.0% 3,696,824 2.0% 14 2032 1,777,797 2.0% 1,992,963 2.0% 3,770,760 2.0% 15 2033 1,813,353 2.0% 2,032,822 2.0% 3,846,175 2.0% 16 2034 1,849,620 2.0% 2,073,479 2.0% 3,923,099 2.0% 17 2035 1,886,612 2.0% 2,114,948 2.0% 4,001,561 2.0% 18 2036 1,924,345 2.0% 2,157,247 2.0% 4,081,592 2.0% 19 2037 1,962,832 2.0% 2,200,392 2.0% 4,163,224 2.0% 20 2038 2,002,088 2.0% 2,244,400 2.0% 4,246,488 2.0% 21-99 385,946,474 432,657,370 818,603,844 Total $416,663,864 $466,264,660 $882,928,524 NPV @5% $35,209,343 $38,907,292 $74,116,635 Note: The minimum fixed rent adjusts up or down every 10 years to 55%of the prior five year's average total rent paid. APPENDIX 4 1. As requested by Commissioner Grieco, revise Section 4.2(b) as follows: Section 4.2. Restrictive Covenants (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) 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 - -- "A -e-e .- :- - -e- establishment (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); (iv) any Gaming Establishment (whether or not such use is permitted by applicable law), or (v) any use that constitutes a public nuisance of any kind. 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 I ownership, or to subject the same to any condominium regime. • 2. As requested by Commissioner Grieco, revise Section 4.2(f) as follows: Section 4.2(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. 3. As requested by Commissioner Weithorn, revise Section 4.5 as follows: Section 4.5 Covenants for Payment of Public Charges by Lessee (a) Payment of Public Charges. Payment of Public Charges includes: (i) Lessee, in addition to the Rent and all other payments due to City hereunder, covenants and agrees timely to pay and discharge, before any fine, penalty, interest or cost may be added, 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, and public assessments (including, without limitation, permit fees, impact fees and other public charges),; and (ii) 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. (collectively, "Public Charges"); (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 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. 4. As requested by Commissioners Grieco, Weithorn and Steinberg, add new section 4.5(e) as follows: (e) No Tax Abatements or Other Public Subsidies to Lessee. Lessee shall not receive any tax abatement, public subsidy or rebate with respect to any Public Charges (including, without limitation, City. Miami-Dade County, or State of Florida taxes of any kind), other than any tax benefits generally available or provided to other similarly situated or similarly sized hotels or businesses. 5. As requested by Commissioner Grieco, revise Section 14.12 as follows: Section 14.12. Amendments. No amendments to this Lease shall be binding on either Party unless in writing and signed by both Parties. Solely to the limited extent as may be necessary to reasonably facilitate lender financing for the Hotel Project, 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 restrictions provisions of ie 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 a 617th vote of the City Commission and 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(b)(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. • APPENDIX 5 • Appendix 5 • Planning Analysis MIAMI BEAC PLANNING DEPARTMENT COMMISSION MEMORANDUM TO: Jimmy L. Morales, City Manager FROM: Thomas R. Mooney, AICP Planning Director • DATE: June 25, 2015 SUBJECT: Analysis of Proposed Ground Lease Agreement for a Convention Hotel at the approximately 2.6 acre site located on the 1700 Block of Convention Center Drive. BACKGROUND 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 Portman Miami Beach LLC (lessee), for the development of a Convention Hotel at the approximately 2.6 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. 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. Analysis of Proposed Lease Agreement for Convention Hotel June 25, 2015 Page 2 of 3 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 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. 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 does keep with the 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. 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. 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 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. • We are committed to providing excellent public service and safety to all who live,work,and ploy in our vibrant,tropical,historic community. Analysis of Proposed Lease Agreement for Convention Hotel June 25, 2015 Page 3 of 3 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. Additional modifications will 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:IAGENDA120151July\Convention Hotel-Planning Analysis.docx We are committed to providing excellent public service and safety to oll who live,work,and ploy in our vibrant, tropical,historic community. APPENDIX 6 D- 9 IIC kThrt-CD • ,Z 4 APPRAISAL REPORT OF A PROPOSED GROUND LEASE ON REAL PROPERTY Miami Beach Convention Center Hotel Site Northeast corner of 17" Street and Convention Center Drive Miami Beach,Florida 33139 Report 201533 PREPARED FOR Ms. Maria Hernandez City of Miami Beach 1700 Convention Center Drive Miami Beach,FL 33139 PREPARED BY BLAZEJACK& COMPANY 172 W Flagler Street,Suite 340 Miami, Florida 33130 Phone: (305)372-0211 Fax: (305)374-1948 John @Blazejack.com Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 August 24,2015 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-201533 Miami Beach Convention Center Hotel site Comprised of 2.65 acres,located at the Northeast corner of 17th 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. 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. Based on the enclosed analysis,and considering the Assumptions and Limiting Conditions and the Extraordinary Assumptions set forth in this report,it is our opinion that the proposed terms of the ground lease described herein for the 2.65-acre Miami Beach Convention Center Hotel site would produce a stabilized base contract rent of approximately$2,515,700. Furthermore, this base rent amount,and the terms of this lease, appear to be synonymous with the market rent including the rental rate,terms and lease parameters as of July 27,2015. Respectfully submitted, BLAZEJACK&COMPANY John Digitally signed by John Blazejack DN:cn=John Blazejack,o,ou, email=John @Blazejack.com,c=US Blazejack Date:2015.08.2412:20:42-04'00' 1 John Blazejack,MAI,CRE,FRICS J Guthrie Mlinar,MAI,SRA Partner Consultant Cert Gen RZ-0093 Cert.Gen.RZ 1916 BLAZEJACK& COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SUMMARY OF FACTS AND CONCLUSIONS e w a ' liglit .1 ova: - --- f ' ` r • *§' t K' Feu i� J 'N { NINiag"Oil 7-7,771111r7.77" --"- "....".. F • Y v f ' _ % I, *, v Property Name: Miami Beach Convention Center Hotel Site Property Type: 2.65-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 Purpose of the Appraisal: To determine if the terms of proposed land leases on the subject property are synonymous with its market rent. Date of Appraisal: July 27,2015 Dates of Inspection: June 20,2015 Date of Report: August 24,2015 BLAZEJACK& COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Zoning: CCC,Convention Center District,City of Miami Beach Planned Development: Full-service, 800-room convention center hotel including multiple food and beverage outlets, extensive meeting room spaces, a recreational spa, parking garage and ancillary amenities consistent with a luxury/upscale 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(2014) Exempt Estimated Rent Terms Estimated Base Contract Rent: $2,515,700(at stabilization) Estimated Market Rental Rate: Synonymous with the Estimated Base Contract Rent stated above Exposure&Marketing Times: Less than 12 months BLAZEJACK& COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 TABLE OF CONTENTS CERTIFICATE OF VALUE 1 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 17 SECTION III DESCRIPTIVE DATA 29 SITE DESCRIPTION 30 DESCRIPTION OF IMPROVEMENTS 32 REAL PROPERTY TAXES AND ASSESSMENTS 32 ZONING 33 HIGHEST AND BEST USE 33 SECTION IV: LEASE ANALYSIS 37 GROUND LEASE ANALYSIS 38 ESTIMATE OF CURRENT GROUND LEASE PAYMENTS 42 MARKET VALUE OF THE SITE(IN FEE SIMPLE) 51 • ANALYSIS OF THE PROPOSED RENT FOR THE SITE 65 CONCLUSIONS 69 ADDENDA Exhibit A Engagement Letter Exhibit B Proposed Ground Lease&Neutrality Agreement to Subject Site Exhibit C Portman Holdings 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 201533 CERTIFICATE OF'VALUE Uwe certify that,to the best of my knowledge and belief, • the statements of fact contained in this report are true and correct. • the reported analyses,opinions,and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal,unbiased professional analyses,opinions,and conclusions. • we have no present or prospective interest in the property that is the subject of this report,and I have no personal interest or bias with respect to the parties involved. • we have performed no appraisal or other services regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. • we have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • our engagement in this assignment was not contingent upon developing or reporting predetermined results. • our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result,or the occurrence of subsequent event directly related to the intended use of this appraisal. • our analyses,opinions,and conclusions were developed,and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. • John Blazejack and J Guthrie Mlinar have made a personal inspection of the property that is the subject of this report. • 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 Institute relating to review by its duly authorized representative. • as the date of this report John Blazejack and J Guthrie Mlinar have completed the continuing education program of the Appraisal Institute. BLAZEJACK&COMPANY John . Digitally signed by John Blazejack ON:cn=John Blazejack.o,ou, / email=John @Blazejack.com,c=US Blazejack Date:2015.08.2412:21:52-04'00' 3/411, John Blazejack,MAI,CRE,FRICS J Guthrie Mlinar,MAI,SRA Partner Consultant Cert Gen RZ-0093 Cert.Gen.RZ 1916 BLAZEJACK&COMPANY 1 CERTIFICATE 1 Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201533 ASSUMPTIONS AND LIMITING CONDITIONS The appraisal is subject to the following assumptions and limiting conditions: 1. No survey of the subject property was undertaken. 2. The subject property is free 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 are 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. 2015-103-ME) 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 four major international hotel chains,and from the winning bidder on the RFP,Portman Holdings. 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 201533 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, if unencumbered. This hotel development will be comprised of an 800-room luxury hotel under a major international hotel chain affiliation. It will also include multiple food and beverage outlets, a health and beauty spa, substantial meeting room space, a rooftop pool over a parking garage structure, and ancillary amenities consistent with a luxury 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. 2015-103-ME) for this development, and in the proposed development outlined by the winning bidder of this RFP, Portman Holdings. 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(Portman Holdings). 3. It is an Extraordinary Assumption that the redevelopment of this property will result in a full-service luxury 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 are 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 use. 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 of a 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 LAZEJACK& COMPANY 3 ASSUMPTIONS AND LIMITING CONDITIONS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 201533 SECTION I INTRODUCTION BLAZEJACK& COMPANY 5 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 IDENTIFICATION OF THE PROPERTY The subject is a rectangular site with approximately 2.65 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, under economic conditions prevailing on July 27,2015, the date of the appraisal. 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 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, luxury convention center hotel operation at this site. This potential gross BLAZEJACK& COMPANY 6 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 revenue estimate was formulated from data of other similar hotel operations and from estimates provided by several major international hotel chains. 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 determine 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, which 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 Section IV of this report. No sales of this property 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: 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: BLAZEJACK& COMPANY 7 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 Appraisal of Real Estate, 13th 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 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. BLAZEJACK&COMPANY 8 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 63rd Street and is the area of resort hotels and high-rise condominiums. Commercial development in this area is principally served by Arthur Godfrey Road. North Beach extends from 63rd Street north to the city's limits at the Town of Surfside, and includes Normandy Isle and commercial areas centered around 71st 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 201533 City of Miami Beach coons North + Yf A Beach list Street Middle Beach 41st Street I Lincoln ' Road' - .R cans •s Avenue Alt Hotel Road Dst+ict Ocean �.' Washington ' l Drive South 4 Avenia x.',t • Beach 5th Street Assail Dratnct 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, 41St Street (Arthur Godfrey Road)in Mid-beach, and 71St 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 a major gentrification that has taken place BLAZEJACK& COMPANY 10 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 especially in the South and Central Beach areas, a trend that has continued to spread northward across the island community over time. 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 barrier 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 5th 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 condominium 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 201533 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, and has one million square feet of flexible space, including 500,000 square feet of exhibit space and 70 meeting rooms comprised of 127,000.square feet. The City announced a bid to re-vamp this facility and add an adjacent 800-room convention center hotel, subject to voter approval in November 2015. 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 22n1 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 16th 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, Lucky Brand, Loft/Ann Taylor, the Apple Store, Sunglass Hut, Pottery Barn, BCBG Max Azria, Williams-Sonoma, Sketchers and French Connection. Balan's, Yuca, Quattro, Rosinella, Segafredo, Rosa Mexicano, Meat Market and Sushi Samba Dromo are among the restaurants found along Lincoln Road. Rents for prime retail space along this pedestrian mall range from $250 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 Exchange, The Gap, Kenneth Cole, Nine West, Ralph Lauren, the Levi's Store, Tommy Hilfiger, Sephora and Victoria's Secret. Other retail areas include a new vertical shopping BLAZEJACK& COMPANY . 12 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 north/south 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 17th Streets along with Dade Boulevard and 23'''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, although the latter is undergoing rebuilding thus currently lacks a connection to the mainland. The MacArthur Causeway directly intersects with Interstate 95 (I- 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 I-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 subject property has a good location along the north side of 17th Street adjacent to this convention center and next door to the Fillmore Theater. 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 201533 SECTION II MARKET ANALYSIS BLAZEJACK& COMPANY 14 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201533 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 2015, published by PricewaterhouseCoopers,LLP,which is based on trends occurring prior to the start of that year: Ineeer■e.t rnyeds «� Wanking inionrial 1 altneb xne industrial CSI city nine t anie�ser�u1 ceAoPortmord- timited-sersice hotels higle inane Sheol dice moderate*came Medical eke shoos,coin 1111110111111 Ful holds Cannel era/lice high income , Pontoon- moderate IMAM Student hoot* Student housing • lO . R&D industrial Suburban ollica�� ; , . Poser aim 314IPPillin Re-= ; Insnuliand br Nat- Regional malls Subutaaat6we Power sealers i i i I Regional mes' I 1 1 2 3 4 5 1 2 3 4 Abysmal Pbor Far Good ballad Abysmal Poor Fair Good Fseient Exhiait 4-9 Hotel Investment Prospect Trends excellent I° Fut-sery ce hotels` .y poor 2005 2007 2009 2011 2013 2015 Source:Emerging Trends in Heat Estate surveys. BLAZEJACK& COMPANY 15 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 However, this includes investment and development attitudes for all lodging properties nationwide. This source indicates that the surveyed hotel investors recommended buying hotel properties in the Miami market more than any other hotel market nationwide: Exhibit 3-11 U.S.Hotel Property BuylHoldlSell Recommendations Mani Los Angeles Nasiwille New York--Brook*y 8cstcn j. . Oklahoma City Sass Francisco n Hcerstcn TT: . Seattle . _ .30.0 Detroit ,aj! m, T�`^•1 Indianapolis 57.5 y Austin • 31 New York—Manhattan ..: ... Charlotte Denver $2.5 Washington DC— Distnct cat Columt.a Dallas/Fort Werth Chicago Atlanta 51.E Baltimore 53.4 -11 0% 20% 40% 60% 80% 100% Jones Lang LaSalle also tracks sales and investment trends for hospitality properties nationwide. According to this source's 2015 Hotel Investment Outlook,global hotel investment is expected to rise to $68 billion, a 15% increase over the previous year, driven by$34.5 billion in transactions in the U.S. Leading these investments for mature hotel markets (such as North America) will be investment funds and private equity firms, followed by hotel operators and REITs: BLAZEJACK& COMPANY 16 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Acquisition volume by market type 100% Sovereign weath fund 93% ■ Deal estate investment eox rust 10% Investingird I 60% aver 50% 11 Hatel operator 40'111 �.3 � ... ■ High net earth indriial ' navvy Corporates a Bark Iretitulonal Mature Emerging s Source:IL Research 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 has shown steady improvement and investment since 2010, emerging as one of the top U.S. hotel property markets for investment and development. While unemployment rates remain higher than the national average, 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. BLAZEJACK& COMPANY 17 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 The Miami hotel market has experienced a corresponding improvement in its rate and occupancy performance since 2010, according to data from Smith Travel Research (STR), placing it among the top five markets in the U.S. in terms of ADR, occupancy and RevPAR (Revenues Per Available Room): Hotel Occupancy: U.S.Average 623%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 Miami 77.9% 76.596 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 4 Miami $176.66 $163,44 $16014' 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 4 Miami $137.60 $125.00 $114.35 5 Boston $120.26 $113.92 $102.14 BLAZEJACK& COMPANY 18 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201533 In 2014, STR reported that RevPAR for Miami hotels increased by 7% over the previous year, to $144.87. With occupancy growing by 0.4 percentage points in this market to 78.3% 2014, this RevPAR growth rate was also attained from a 5.8% increase in ADR (to $185.12) in 2014. RevPAR growth in Miami was also reported by Jones Lang LaSalle to be among the top five US hotel markets since the peak that preceded the Great Recession. Additionally, Miami hotels recorded the greatest nominal ADR growth(33%) over the past decade when compared to other major cities,with RevPAR growth reported by Jones Lang LaSalle among the top five US markets since the peak that preceded the Great Recession. This premium is driven by high-rated properties and the significant number of upper-tier hotel developments and conversions(including redevelopment)throughout the metropolitan area. Hotel market cycle 2014—North America New York RevPAR RevPAR / growth falling i' slowing i i Los Angeles RevPAR RevPAR Wan RevPAR decline Chicago ■ slowing r' San Francisco % Toronto f Source- Jones Lang LaSalle Washington,D.0 These improvements, along with the numerous development announcements and hotel site sales, have made hoteliers very bullish on Miami. According to the Greater Miami Convention&Visitors Bureau,as well as various news releases,new hotel development in 2014 was predominated by properties introduced in Miami Beach, totaling 2,651 new rooms. This included the Redbury, the Gale,the Hilton Cabana and the Marriott Edition in Miami Beach. A BLAZEJACK& COMPANY 19 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 lower number of new hotels are expected to open in this market in 2015, with several in the following list opening in June 2015. PLANNED HOTEL DEVELOPMENT-MILA_\II BEACH Hotel Name Location Rooms Status Coaspiedon Nautilus Hotel 1825 Collins Ave. 252 Under Renovation 2015 Riu Plaza 3101 Collins Ave. 284 Under Renovation 2015 AC Hotel by Marriott 2912 Collins Ave. 150 Under Construction 2015 Faena Hotel 3201 Collins Ave. 169 Under Construction 2015 Aloft Hotel 2360 Collins Ave. 239 Under Renovation 2015 One Hotel 2377 Collins Ave. 417 Under Renovation 2015 Berkeley Shore 1610 Collins Ave. 64 Under Renovation 2015 Hyatt South Beach 1600 Collins Ave. 105 Under Construction 2015 Jade Hotel James Ave.& 18th St. 70 Proposed 2016 Greystone 1920 Collins Ave. 97 Proposed 2017 Total . ,- ... ° X71; y �z. > �.igd7 . � :, This will be followed by a surge of new hotels slated for the Miami CBD and Brickell markets in mainland areas of Miami-Dade County in 2016 and 2017: PLANNU)HOTEL DEVILOPMINI'-DONN N 1OWW N MLt.MILBRICKELL Hotel Name Location Rooms Status Completion Langford Hotel 121 S.E. 1st St./CBD 132 Under Renovation 2015 EAST Hotel Brickell CityCentre 263 Mid-Construction 2016 SLS Brickell 1300 South Miami Ave. 133 Mid-Construction 2016 ME Melia Hotel Biscyane BL&NE 10 St. 135 Planned Renovation 2016 Atton Hotel 1500 S.W. 1st Ave. 270 Early Construction 2016 Homewood Suites 1750 S.W. 1st Ave. 103 Mid-Construction 2016 Met Square Marriott Met Square 188 Early Construction 2016 Canopy by Hilton 1001 S.W. 1st Ave. 247 Proposed 2017 Hotel Indigo 145 S.W. 11 Street 140 Proposed 2017 Marriott Marquis Miami World Center 1,800 Proposed 2017 Cambria Suites 165 S.W. 12 Street 110 proposed 2017 Panorama Hotel 1101 Brickell Avenue 250 Proposed 2017 SLS Lux 1300 South Miami Ave. 60 Proposed 2017 Hyatt One Brickell 200 Proposed 2018 Unnamed(Melo) N.E 14 St.&N.E 2nd Ave. 200 Proposed 2018 Total 4,231 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 14.2 million overnight visitors to Miami in 2013, an increase of 2.2% over the previous year, of which just over half BLAZEJACK&COMPANY 20 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 were international visitors. These figures increased 2.4% in 2014 to 14.6 million overnight visitors. Due to the strengthening U.S. dollar, the increase in visitation was primarily led by domestic visitors in 2014. Increased visitation has led to higher room night sales for area hotels. Overnight Visitors to Greater Miami and The Beaches Domestic and International Origins %Change 2010 2011 2012 2013 2014 2014 v. 2013 (000) (000) (000) (000) (000) Domestic Visitors 6,544.0 6,9485 7,074.9 7,087.2 7,303.2 3.05% International Visitors 6,060.1 6,495.7 6,833.7 7,131.7 7,260.0 1.80% Total Overnight Visitors 12,604.1 13,444.2 13,908.6 14,218.9 14,563.2 2.42% Domestic Visitors 5L9% 51.7% 50.9% 49.8% 50.1% International Visitors 48.1% 48.3% 49.1% 50.2% 49.9% Total Overnight Visitors 100.0% 100.0% 100.0% 100.0% 100.0% Source: Greater Miami Convention& Visitors Bureau BLAZEJACK& COMPANY 21 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Distribution of Total Overnight Visitors By Area of Lodging,20141 Coral Gables, South Miami Key Biscayne, Dade,3.9% 1.596 3.•�. Doral,3.3% Coconut. Grove,1.5% North Dade/Sunny Isles Beach, 8.8% Airport Area 12.81 MI The following chart shows passenger trends through Miami International Airport (MIA) from 2005 through 2014, 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. olunk I rend -NIhum \irport International Total Passengers %of Passengers Period (000s) 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% 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 BLAZEJACK& COMPANY 22 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 and economic sanctions targeting Russia took effect. This may explain the minor decline in international arrivals to Miami that year. Nonetheless, overall passengers handled at MIA continued to grow,supported by an increase in domestic passengers in 2014. 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 Convention Center (MBCC). This facility is located between Washington Avenue and Convention Center Drive in South Beach, to the north of 17th Street. It has one million square feet of flexible space, including 500,000 square feet of exhibit space and 70 meeting rooms comprised of 127,000 square feet. Historic trends in attendance and hotel room night sales from events at the MBCC are noted below: !MCC Events,Attendance and Room Nights Number of Room Events Attendance Nights FY 2009 94 632,700 229,000 FY 2010* 105 708,800 103,100 FY 2011 118 661,600 199,200 FY 2012 132 661,300 175,500 FY 2013 115 589,700 132,600 FY 2014 134 738,000 141,400 °Super Bowl in Miami. Source:MBCC and GMCVB. BLAZEJACK& COMPANY 23 SECTION II MARKET ANALYSIS • Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 The City of Miami Beach is planning a renovation and expansion of this facility, with a winning bid provided to plans submitted by Portman Holdings. The project will include renovation of the exhibit halls and meeting rooms, pre-function and support spaces including loading areas, kitchens, bathrooms, and exteriors. The expansion will provide 60,000 square feet of additional ballroom and meeting space, and the conversion of the MBCC's parking lot across Convention Center Drive into a 6.5-acre public park, with replacement parking moved to the roof of the convention center building. 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 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 have improved as additional room night BLAZEJACK& COMPANY 24 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 sales have 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 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 minimal, as the property will not offer significant event space to attract this market segment. 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 firm or its affiliates,and often consists of training groups. Miami Beach's corporate community features creative firms in the entertainment and fashion industries. Most of the regional business employment is centered in the Central Business Districts of Miami and Coral Gables,. in areas surrounding Miami International BLAZEJACK&COMPANY 25 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Airport,and areas between the Palmetto Expressway and Florida's Turnpike north of State Road 836. Commercial demand is expected to increase consistent with the ongoing recovery in 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 luxury 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 luxury hotels in this market, although these are primarily located along the city's beaches. These are summarized below: - Hotel Rooms MOSI Rack IZoziy Rack The Fontainebleau 1,440 $547 $204 Loews Miami Beach 790 $469 $267 Eden Roc 627 $384 $326 The James Royal Palm 393 $569 $243 W Hotel South Beach 349 $742 $449 Shore Club South Beach 308 $416 $239 The Palms Hotel& Spa 251 $362 $215 Marriott Stanton 224 $599 $199 Hilton Bentley 95 $599 $279 Total/Average 4,477 $521 $269 BLAZEJACK&COMPANY 26 SECTION.II MARKET ANALYSIS r Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201533 Eden R«Hotel lt a , a The Fontainebleau 1[Z a _ the Pains Hole!S.Spa a ........, _„„0, 4r4-, .f i a si w r' f �� -,1 rte s. al a f i---L.11-7,--: :f. Is'" II }-... W Hotel South Beach la ,,, 7" The Shore C1ab South Reach ,� - i,.�!! .11 a , t .. sew", '1�, ._ 7 ;--, , Loess Thaml Beach ` _ The James Rn.ai Palm tr Qv- # -j .' -tom. -r};f r �- fi y Marriott Saucoa P 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 November of that year(the most-recent data available for this set of hotels). Month F\I NOV. Month F F No`. Month FYI Nov. Year A -"' Year 2013 41 2014 No.Days 366 No.Days 365 No.Days 365 Room Nights Available 1,638,582 Room Nights Available 1,634,105 Room Nights Available 1;634,105 Occupancy 75,9% Occupancy 77.0% Occupancy 78.5% Room Night Sales 1,244,298 Room Night Sales 1,257,955 Room Night Sales 1,282,826 ADR $295.71 ADR $321.53 ADR S338.53 Total Revenues(000s) $367,947 Total Revenues(000s) $404,475 Total Revenues(000s) 5434,277 RevPAR $224.55 ReVPAR $247.52 RevPAR $265.76 In conclusion, the Miami-area and Miami Beach hotel markets are experiencing a favorable period for investment and revenue growth, with high levels of occupancy and healthy increases in ADR and RevPAR. Despite the introduction of several new and BLAZEJACK& COMPANY 27 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 redeveloped hotel properties that are expected to occur in this market in the near term, the long-term outlook for hotel performance and investment in this market remains quite positive. BLAZEJACK& COMPANY 28 SECTION II MARKET ANALYSIS • Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SECTION III DESCRIPTIVE DATA BLAZEJACK& COMPANY 29 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SITE DESCRIPTION EDGE O FI`I.MORf + e g M ! ! e K e 1 e 1 64 "r — : 144/6,A e► D 6 !• s pommy. =I;t aRE • Fi.# TO el .'RE kilaiED , ema4 SIT• e •e 10555S ' td" . 4 i • ��.. ..,... •,.., SE vtCE EASEMENT ° +3,i 4 SOLDINO 10 BE ! FOAMED •4 0 q- 9 CDGL CI MOCC AREA WITHIN › NEW HOTEL SITE CONCLCTOR a 2.65 ACRES I EASEMENT = ,.. 115,265S �. FT x611;25' # a 111611111pq , y 1 , { C P NEW s.: ' Mit NMI. Location: Northeast corner of 17'h 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): 02-3227-0000-0090 Site Area: 2.65 acres(approximately)or 115,265 square feet Shape: Generally rectangular Topography: Generally level and at road grade Zoning Designation: CCC,Convention Center District,City of Miami Beach. Future Land Use Designation: PF(CCC),Public Facility,Convention Center,City of Miami Beach BLAZEJACK& COMPANY 30 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 Phone: Available Access: 17th Street,Convention Center Drive Land Use Restrictions: If fully approved,the proposed lease for the site also places it 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 11 2009, the property appears to be within the Zone AE (EL-8). Insurance requirements applies, however, a qualified insurance agent should verify and render a final opinion. Current Improvements: Parking lot,ancillary buildings 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. 1 / W`as wAva"ue '* „ .+ S x” Farb ` •+ `iQ1k' 1°- I\ imossweromw 4.. '. CtAhii l ZZ"_ trt �. 4111114. Czri Fmk rt; Zarue BLAZEJACK& COMPANY 31 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 DESCRIPTION OF IMPROVEMENTS The subject is currently improved with a parking lot and low-rise ancillary buildings for 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 luxury 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 property must also contain a parking structure with a minimum ratio of 0.4 spaces per guest room, and the total building cannot have a height exceeding 300 feet (which is approximately 30 stories). 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 further description of the proposed redevelopment of this property by its awarded bidder(Portman Holdings) is presented in the Addenda of this report. Also, the owner of these 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 1st 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. 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 2014 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 BLAZEJACK&COMPANY 32 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida • REPORT 201533 convention center and the Fillmore Theater. The total assessment for this parent tract was $171,976,229. 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: 1 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 2.65-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 BLAZEJACK& COMPANY 33 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 subject site is located at the northeast corner of 17th 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 luxury convention center hotel with up to 800 rooms that includes meeting space, food and beverage outlets, and other amenities, in a building whose height does not exceed 300 feet (about 30 stories). 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 as developers and investors take advantage of favorable market conditions for this property type. Rates are climbing and occupancies are strong,with the Miami-area market among the strongest hotel markets in the nation. The timing of any development to this property, if vacant, would depend on the type of hotel and its amenities. Such a development appears to be feasible in the current market,provided costs for a luxury 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 luxury hotel with expansive meeting space and food and beverage outlets in a building whose height does not exceed 300 feet. This hotel would serve as the headquarters for meetings, trade shows and other events held at the adjacent Miami Beach Convention Center, which has a total of one million square feet of meeting and exhibit space. 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 765,000 square feet of retail space. This convention facility at Miami World Center will be served by a much-larger headquarters hotel that will have a total of 1,800 guest rooms. This appears to suggest that a larger headquarters convention hotel may be supported by the BLAZEJACK&COMPANY 34 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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. 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 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 luxury, full-service convention center hotel with 800 guest rooms, meeting space, food and beverage outlets, a parking structure, and other amenities consistent with a four-diamond, AAA-rated 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 which are part of the adjacent Fillmore Theater to the immediate west. 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 Luxury Full-Service Convention Center Hotel Timing Current User Upscale Hotel Guests Buyer Hotel Developer/Investor The subject property is improved with a parking lot and low-rise ancillary buildings 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 BLAZEJACK& COMPANY 35 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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. • BLAZEJACK& COMPANY 36 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SECTION IV: LEASE ANALYSIS BLAZEJACK& COMPANY 37 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site,Miami Beach, Florida REPORT 201533 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 with healthy increases in average daily rates(ADR),strong occupancy 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 10% 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 201533 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 property, 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). 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 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 201533 ,Lessor City of Miami Beach Lessee _ — To be determined — – _ _ ---- ----�_ Leased Property 2.65-acre hotel site Property Delivery Condition As is Term 99 Years Effective Date of Lease .At City's acceptance of voter referendum approving the lease Possession Date Date when the site is delivered to the lessee Commencement Date Financial Closing Date Rent Commencent Date At Hotel Opening Date Rent Calculation Periods Year 1 Through end of 1st calendar year after Rent Commencement) Subsequent Years Based on calendar years for rent calculations Outside Completion Date September 30,2019 Base Rent 2.5%of Gross Operating Revenues Minimum Base Rent Year 1 $209,279 Year 2 $492,545 Year 3 $892,706 Year 4 $1,458,413 Years 5 through 99 Increases at 2.0%per year above the Year 4 minimum base Additional Percentage Rent Begins in Year 4 1st Stage 1.5%of Gross Revenues above 110%projected for that Year 2nd Stage 2.5%of Gross Revenues above 125%projected for that Year Initial Rent Concessions Year 1 -the Greater of: Minimum Base Rent or 0.5%of Gross Revenues Year 2-the Greater of: Minimum Base Rent or 1.0%of Gross Revenues Year 3 -the Greater of: Minimum Base Rent or 1.5%of Gross Revenues Gross Operating Revenues All income of any nature from the hotel including room sales,food&beverage sales,catering receipts, telecommunication services,parking/valet services, vending,gross receipts,gift shop revenues,business center revenues,&rents from third-party concessions. Additional Rent at Sale of Hotel The lesser of$2 million or 0.25%of the sale price (less closing costs)of the hotel,but only if the first sale of the property is at a price exceeding $580 million Lease Terms Fully Net Other Terms Voter approval of lease required(on Nov.3,2015) Approved hotel operator Marriott, Westin,Omni, Hyatt Regency, La Meridien,or Hilton 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 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 BLAZEJACK& COMPANY 40 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 generation, upon which rent payments will be made. The lease is fully triple net, with a 99-year term, with a minimum fixed rent included for the landlord's protection in case of a market downturn or other unforeseen events. Instead of basing the annual rent from this proposed lease on a return on the site's value, these annual payments are based on a percent (2.5%) of the gross revenues generated by the hotel once it is completed and commences operations. This amount is reduced in the first three 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: - Facility Site Size Stablized-Base Percentage Location Use Lessor Term Annual Rent Rent Parrot Jungle 19 Acres City of 60 Years $502,000 Plus 5%to 6%of Revenues Watson Island,Miami Attraction Miami Bayside Marketplace 5-10 Acres City of 75 Years $1,000,000 Or 3.5%of Net(2012 rent Downtown Miami Retail Miami was 5.75%of rental income) The Palace 1.6 Acres City of 99 Years $237,500 Plus 2%of Gross Revenue Downtown Coral Gables ACLF Coral Gables Gables Grand 2.5Acres City of 99 Years $200,000 Plus 3%of Gross Revenue Downtown Coral Gables Apartments Coral Gables Dadeland Marriott 1.0 Acre Miami-Dade 90 Years $280,000 Or 2.0%of Gross Revenue KendallIDadeland Area Hotel County Dadeland Station 7.5 Acres Miami-Dade 90 Years $400,000 Or 5.0%-5.5%of Gross Revenue Kendall/Dadeland Area Retail County Convention Hotel 4.4 Acres Broward County 99 Years $250,000 Plus 2.0%of Revenue Fort Lauderdale Hotel Grove Key Marina 5.2 Acres City of 2 Years $516,600 Or 10.3%of Revenue Coconut Grove Marina Miami Village of Merrick Park 8.4 Acres City of 90 Years $550,000 Plus 20%of Net Income Coral Gables Retail Coral Gables after 11%Preferred Return Bayshore Landing N/A City of 50 Years $277,500 Or 5.0%-10.0%of Gross Revenue Coconut Grove Restaurants Miami Rusty Pelican N/A City of 99 Years $360,000 2.0%-5.8%of Revenue over Virginia Key Restaurant Miami S12.000,000 These leases 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 10.3% of Revenues, with a stated minimal base amount. This appears to support the percentage rent of 2.5%Gross Revenues proposed as the lease rate for the subject as reasonable. BLAZEJACK& COMPANY 41 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 However, 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 luxury convention center hotel at the property is capable of generating, if it were complete and generating a stabilized level of occupancy and revenues; 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 2.5%of the Gross Revenues from all of the hotel's operations. In order to estimate this 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 income from other departments including the gift shop,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 BLAZEJACK& COMPANY 42 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 large international hotel chain affiliations that are similar to those proposed for the subject hotel. These are summarized below: Hotel Rooms High Rack Low Rack. The Fontainebleau 1,440 $547 $204 Loews Miami Beach 790 $469 $267 Eden Roc 627 $384 $326 The James Royal Palm 393 $569 $243 W Hotel South Beach 349 $742 $449 Shore Club South Beach 308 $416 $239 The Palms Hotel&Spa 251 $362 $215 Marriott Stanton 224 $599 $199 Hilton Bentley 95 $599 $279 Total/Average 4,477 $521 $269 The High Rack rate for each hotel was obtained for a standard double-occupancy room at each property during for the period of January 14 through 17,2016(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,or from September 1.0 through 13, 2015. 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 November of that year(the most-recent data available for this set of hotels). Month EYE NOV. Month FYENov., Month .FY:E.Nov. Year 2012 Year 2013 Year 2014 No.Days 366 No.Days 365 No.Days 365 Room Nights Available 1,638,582 Room Nights Available 1,634,105 Room Nights Available 1,634,105 Occupancy 75.9% Occupancy 77.0% Occupancy 78.5% Room Night Sales 1.244.298 Room Night Sales 1,257,955 Room Night Sales 1,282,826 ADR $295.71 ADR $321.53 ADR $338.53 Total Revenues(000s) $367,947 Total Revenues(000s) $404,475 Total Revenues(000s) $434,277 RevPAR $224.55 Rev PAR $247.52 Rev PAR $265.76 These hotels exhibited an average High Rack rate of$521 per night, with an average Low Rack rate of$269. However, 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. BLAZEJACK& COMPANY 43 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 The Miami Beach market has few larger luxury hotels with chain affiliations situated on landlocked sites. Therefore, in order to gauge this rate differential due to these two locations, data on a different set of hotels was obtained. These include luxury 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 Luxur Bouti•ue Hotels [Hotel Rooms High Rack Low Rack The Setai 135 $1,025 $525 Hotel Victor 91 $347 $225 SLS Hotel South Beach 140 $282 $235 The Delano 193 $399 $279 W Hotel South Beach 349 $742 $449 Soho Beach House 50 $658 $365 Total--�------------- 958 J---�-$575 $346 Landlocked Luxu Bouti s ue Hotels Hotel Rooms High Rack Low Rack,; Kimpton The Angler's 44 $598 $298 The Gale South Beach 112 $247 $146 Crowne Plaza Z Hotel 79 $566 $286 Dream Hotel South Beach 107 $348 $220 The Betsy Hotel 61 $463 $224 Total 403 $444 $235 As evident in the two tables above, lower average rack rates are observed for the landlocked hotels; the High Rack rate of$575 among the oceanfront luxury boutique hotels above is skewed somewhat by the substantially-greater rate of $1,025 at The Setai. Nonetheless, this overall trend translated to a higher ADR and RevPAR for oceanfront boutique hotels compared to their landlocked counterparts, for the fiscal year ending November 2014 according to Smith Travel Research: BLAZEJACK& COMPANY 44 SECTION IV:LEASE ANALYSIS r Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Oceanfront Luxu Bouti ue Hotels Landlocked Luxur Bouti a ue Hotels Period - - E:Nov. %C ha u ge• .Period E E Nov: to C b a.n ge; Year 2014 Year 2014 No.Days 365 No.Days 365 Room Night s Available 349,670 Room Nights Available 147,095 Occupancy 71.9% Occupancy 86.5% Room Night Sales 251,413 2.3% Room Night Sales 127,237 2.5% ADR $577.08 -0.8% ADR $280.1 S 2.0% Total Revenues(000s) $145,085 Total Revenues(000s) $35,649 RevPAR $414.92 1.4% RevPAR $24236 4.6% From this analysis, the trends of occupancy, rates and RevPAR among these three sets of hotels can be summarized below. It includes the nine oceanfront hotels noted in the previous Hotel Market Analysis section of this report, and the comparison among the two sets of luxury boutique hotels from this market. 9 Large 6 Boutique 5'Landlocked Oceanfront/ Oceanfront Boutique Chain:Hotels Hotels Hotels FYE Nov.2012 Occcupancy 75.9% 68.5% 79.6% ADR $295.71 $549.47 $278.65 RevPAR $224.55 $376.39 $221.81 FYE Nov.2013 Occcupancy 77.0% 70.3% 84.4% ADR $321.53 $581.94 $274.58 • RevPAR $247.52 $409.10 $231.75 FYE Nov.2014 Occcupancy 78.5% 71.9% 86.5% ADR $338.53 $577.08 $280.18 RevPAR $265.76 $414.92 $242.36 Average High Rack $521 $575 $444 Average Low Rack $269 $346 $235 The subject will be a larger, luxury chain-affiliated hotel with a landlocked location adjacent to the Miami Beach Convention Center. As such, it has physical commonalities with the nine larger oceanfront hotels, whose most-recent occupancy performance indicated that 78.5% 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 benefit them by allowing for a higher occupancy performance. From this analysis, the occupancy for the subject's 800-room convention center hotel, if completed and operating at stabilization, is estimated to be 80.0%. BLAZEJACK&COMPANY 45 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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. These landlocked hotels had an ADR of$280.18 in the fiscal year ending November 2014. Rates have been rising in this market; however, the subject will 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. For this reason, the subject's ADR is estimated to be $280.00 if currently operating at stabilization, or similar to the rate obtained last year among other luxury hotels with landlocked locations in this market. This produces a stabilized RevPAR for the property, if completed and operating at a stabilized level as of the current valuation date,of$224.00. 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, meeting space rentals,garage parking fees, spa services, 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 luxury 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), and are among the approved hoteliers listed in the lease proposed by the City. 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 Portman Holdings, the winning bidder of the Miami Beach Convention Center redevelopment proposal, along with data from a larger luxury hotel with meeting space in downtown Miami. BLAZEJACK& COMPANY 46 SECTION IV:LEASE ANALYSIS r • • Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201533 Camp.so: - ---,-- i - -r _ _ 2 f 3 1 - -4 -r 5 1 6 Location MBCC • MBCC MBCC MBCC MBCC Miami CBD Total Rooms 800 800 800 800 800 411 Hotel Type Full-Service Full Service Full Service Full Service Full Service Full Service Food&Beverage* Unspecified 4 Outlets 5 Outlets 3 Outlets 5 Outlets 3 Outlets_ Meeting Space(SF) Unspecified 100,000 85,000 80,000 84,210 15,248 Meeting Space SF/Room Unspecified . _ .125 106 100. 105 37 Spa Unspecified 10,000 SF 7,500 SF 10,250 SF 17,476 SF 13,628 SF Parking Garage Garage Garage Garage Garage Garage Expected Year Built 2018 2019 2019 2018 2018 2007 StabilizedPro,jections _ f. I E I Stabilized Year 2021 2021 2022 2021 2022 2014 Annual Room Nights 292,000 292,000 292,000 292,000 292,000 150,015 Occupancy 80.0%_._. - 78.0% 80.0% 76.0% 79.5% 74.7% . Room Night Sales 233,600 227,850 233,600 221,920 232,140 112,035 %Group Sales N/A 65.0% N/A -N/A N/A N/A - Average Daily Rate $325.71 $299.29 $384.03 $398.00 5324.08 $241.10 -__Thal(000s) %of Total Total(000s) %of Total Total(000s)%of Total Total(000s) %of Total Total(000s) %of Total Total(000s) %of Total Room Revenues 876,086 65.2% 863,193 63.6% 889,709 66.8% S88,324 65.9% $75,232 64.5% $27,012 57.2% Food&Beverage Revenue 535,595 30.5% _533,934 31.7%° $40,361 30.1% $41,361 30.9% $35,401 30.3% 515,384 32.6% Food&Beverage Outlets $11,853 10.2% 88,613 8.0% $14,959 11.1% $12,004 9.0% In F&B In F&B $12,550 26.6% Meeting/Banquets $23,742 20.3% $17,992 16.8% 825,402 18.9% $29,357 21.9% In F&B In F&B $1,123 2.4% Other F&B In Outlets_- to Outlets. 57,329 .6.8% In Outlets In Outlets In Outlets .In Outlets . In F&B -In F&B $1,706 3.6% Telecommunications $658 0.6% In Other In Other $203 0.2% In Other In Other $659 0.6% $160 0.3% Spa $1,464 1.3% In Other In Other $323 0.6% $1,307 1.0% $1,451 1.2% $2,201 4.7% Parking $1,423 1.2% In Other In Other $1,346 1.0% In Other In Other $2,397 2.1% 51,790 3.8% Other Operating Depts. $854 0.7% $4,329 4.0% $678 0.5% $1,856 1.4% $843 0.7% $186 0.4% Rent&Other Income $697 0.6% $634 0.6% $1,091 0.8% $1.078 0.8% $689 0.6% S485 1.0% Total Revenue S 1 16,777 100.0% $107,140 100.0% $134,211 100.0% .5133,926 100.0% $116,673 100.0% $47,218 100.0% BLAZEJACK&COMPANY 47 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 In the preceding table, Comparables 1 through 4 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 6 is from a larger luxury hotel in downtown Miami,with data as of 2014. Finally,Comparable 5 represents the projected hotel revenues for the subject's hotel development by Portman Holdings, the awarded bidder for the redevelopment of the property and the adjacent Miami Beach Convention Center. In the case of Comparables 1 through 5, these represent projections of revenues at stabilization several years from now, after completion of construction of the subject convention center hotel and its attainment of a stabilized level of occupancy and income generation. As such, the dollar amounts for each represent inflation-adjusted totals in the future, rather than amounts reflective of currently-achievable levels in the market. However, each 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 the following estimates of departmental revenues for the subject hotel, if it were completed and operating at stabilization as of the current valuation date. Room Revenues: Previously, we projected an ADR of$280.00 for the subject 800-room hotel, with an occupancy rate of 80.0%, 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$65,408,000. The spreadsheets from the data sources above indicate a range of proportions of Room Revenues to Total(Gross)Revenues from 57.2%to 66.8%,with a mean of 63.9% and a median of 64.9%. However,the low end of this range is noted from the actual 2014 performance of Comparable 6, which has a lower rate structure than the other properties resulting in a lower ratio of Room Revenues to Total Revenues. Thus,Room Revenues at the subject hotel are estimated to be 65.0%of Total Revenues. Food&Beverage 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. 6) also has multiple food and beverage outlets. In this category,revenues will be derived from these restaurants and bars,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 Comparables 1 through 4, most Other F&B Revenues are reported with those from Food & Beverage Outlets(restaurants and bars), with a combined range from 9.0%to 14.8%of Total (Gross) Revenues. Revenues from providing food and beverages for meetings and banquets BLAZEJACK& COMPANY 48 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 exhibited a range from 16.8%to 21.9%of Total Revenues,an indication of the substantial meeting and event space planned for the subject's hotel operations. The combined Food & Beverage Revenues from all sources at these six comparable properties ranged from 30.1% to 32.6%; the high end of this range is exhibited by Comparable 6,which has a lower rate structure(thus a lower proportion of Room Revenues to Total Revenues), with the other five comparables exhibiting a range of Food&Beverage Revenues that are from 30.1%to 31.7%of Total Revenues. From this analysis, Total Food & Beverage Revenues are expected to be 30.5% of Total Revenues. This breaks down to a proportion of Total Revenues that is 19.5% attributed to Food & Beverage Revenues from meetings and banquets, with 6.0%attributed to the property's food and beverage outlets and the remaining 5.0%derived from other food and beverage sources. Telecommunications Revenues: These costs include charges from in-room phones and interne access charges, and range from 0.2% to 0.6% of Total Revenues. Thus, Telecommunications Revenues at the subject are estimated to be 0.4%of Total Revenues. Spa Revenues: The subject hotel will have a recreational spa providing massages and treatments to guests. Revenues for these services were estimated to range from 0.6% to 4.7% of Total Revenues,but with a median indication from the comparables of 1.2%. Thus, Spa Revenues are projected to be 1.2%of Total Revenues. Parking Revenues: This category will derive income from parking charges at the hotel's garage. The comparable indications of revenues in this department range from 1.0% to 3.8% of Total Revenues,from which an estimate of 1.5%of Total Revenues is derived. Other Operated Departments Revenue: This category includes miscellaneous revenues from other departments that may include a gift shop, business center, or other hotel amenities. The comparable properties indicated a range of revenues in this department from 0.4% to 4.0% of Total Revenues, but with a median indication of 0.7%. Revenues from Other Operated Departments are forecast from this analysis to be 0.8%of Total Revenues. Rent & Other Income: Income from this line item includes meeting and banquet space rents, and miscellaneous income. Among the comparable properties, a range of revenues from this category from 0.6%to 1.0%of Total Revenues is evident,but with mean and median indications near the low end of this range. Thus,Rent&Other Income at the subject hotel is estimated to be 0.6%of Total Revenue. Estimate of Contract Rent The proposed ground lease for the subject projects that the rent on the site will be 2.5% of the Gross (Total) Revenues generated by its hotel operation. This will occur in fourth year after the hotel's opening, at which time its operations are expected to be stabilized. As such, this represents the base rent for the property, not including any concessions during the initial years of the lease term. Previously, we estimated the Room Revenues that the subject appears capable of generating 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. Using the results of this analysis, the BLAZEJACK& COMPANY 49 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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. :Prope;rty Subject Location MBCC Total Rooms 800 Hotel Type Full-Service Food&Beverage* 4 to 5 Outlets Meeting Space(SF) 80,000-100,000 Meeting Space SF/Room 100 to 125 Spa Full Service Parking Garage Expected Year Built 2019 Stabilized.Projections Current Year 2015 Annual Room Nights _ 292,000 Occupancy 80.0% Room Night Sales 233,600 Average Daily Rate $280.00 Total (000s) %of Total Room Revenues $65,408 65.0% Food& Beverage Revenue $30,692 30.5% Food&Beverage Outlets $6,038 6.0% Meeting/Banquets $19,622 19.5% Other F& B $5,031 5.0% Telecommunications $403 0.4% Spa $1,208 1.2% Parking $1,509 1.5% Other Operating Depts. $805 0.8% Rent&Other Income $604 0.6% Total Revenue $100,628 100.0% Estimate of Base Rent The previous estimate of Total (Gross) Revenue of$100,628,000 is multiplied by 2.5% to provide an estimate of the base contract rent for the proposed ground lease at the subject site. This produced an estimated base rent of$2,515,700, assuming the property is operating at a stabilized level of occupancy and operations as of the current valuation date. 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. BLAZEJACK& COMPANY 50 SECTION IV:LEASE ANALYSIS • Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 triple-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 luxury, full-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 virtually no 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 BLAZEJACK& COMPANY 51 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 four sales of this type from the subject's Miami Beach market,along with three sales of hotel development sites in Miami across Biscayne Bay to the west. Each was purchased for development for redevelopment with a luxury 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. 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 developers regarding cost and, hence, feasibility of development. The price per square foot of site area is also used, 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 52 SECTION IV:LEASE ANALYSIS [ 1 • Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201533 • Property Location . Ssile Date „Size,SF Zoning. Sale Property Name O.R.Book/Page (Acres) Condition Sae.Price• Price/Unit No. Folio No. • or.Instrument No.•Rooms Fron "c'e Price/SF. Rooms/Acre Comments 1 3450 Biscayne Blvd.,Miami Nov-14 36,240 T6-36a-0 $4,500,000 $29,801 New mid-scale hotel development Hampton Inn Midtown Site 29417/1605 (0.83) Comm!.Bldg. $124.17 181.5 with 4,435 SF of ground floor retail 01-3230-003-0350&0390 151 _ Biscayne Blvd. space 2 N.Miami Ave.&NE 36 St.,Miami Jun-14 44,783 16-12-0 $12,250,000 $41,246 Hotel/mixed-use project also with Tryptich Hotel/Mixed-Use Site 29222/2553 (1.03) Vacant $273.54 288.9 40k SF of retail,46k SF of offices,6k 01-3124-026-0010 et.al. _ .297. . 1-195 frontage SF gallery,&500 space garage: 3 1610 Colllins Ave.Miami Beach Sep-13 18,075 CD-3 $6,500,000 $67,010 Old 64-room Art Deco hotel at end o Berkeley Shore Hotel 28823/4022 (0.41) Old Hotel $359.61 233.8 its economic life,to be renovated& 02-3234-019-0790 " 97 Collins Ave. expanded to 97 rooms. 4 1500 Collins Ave.,Miami Beach Jul-13 60,445 MXEICD-2 $34,475,000 $206,437 Old Haddon Hall Art Deco hotel& Haddon Hall Hotel&Campton Apts. 28730/3186 (1.39) Old Hotel/Apts: $570.35 120.3 Campton Apts.;50,000 SF in 02-3234-019-1190,1191&1200 28732/2164 167 Collins&Wash. additional development possible. 5 700 North Miami Ave.,Miami May-13 205,353 T6-60a-0 $35,000,000 $19,444 Planned hotel&600k SF convention MDM Marriott Hotel 2830W1569 (4.71) Vacant $170.44 381.8 center at west end of Miami World 01-3137-025-0011 1,800 NW 1st St. Center mixed-use project. 6 1920 Collins Ave.,Miami Beach May-12 9,375 CD-2 $7,500,000 $125,000 Boarded-up Art Deco hotel to be Greys tone Hotel 28129/1240 (0.22) Vacant Hotel $800.00 278.8 combined with apts.behind to create - 02-3226-001-0100 60 Collins Ave. a 97-room hotel redevelopment._" 7 3720 Collins Ave.,Miami Beach Mar-I2 14,000 RM-2 $6,750,000 $67,500 Abandoned apt-hotel in central Croydon Ames Hotel 28039/1898 (0.32) Vacant Hotel $482.14 311.1 Miami Beach to be renovated with 02-3226-001-1710 100 Collins Ave. 100 rooms. Subj. 17th St.&.Conv.Center Dr. 115,265 PD Planned hotel site adjacent to the NGami Beach Cony.Ctr.Hotel Site (2.65) Mostly Vacant 301.9 NEami Beach Convention Center& Part of 02-3227-000-0090 800 17th Street Fillmore Theater BLAZEJACK&COMPANY 53 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Sale::No. Hain Ave.&'t 36 Si. � .:, 57- _ Sate 7:3720 e. 0 Collins Ar . Sale 1:310 Biscacor BL w y 0 c { , Atipak c a Ocean - • NE 2arm 57 Sale 6:into Collins Are.j + ' SUBJECT PROPER T\' .•t ' 7 'r Sale 3:1610 Collins.3re.1 NE E:-Tr+ 1 Sale 1:(500 Collins Ae e . `Y len NE CAE-2 ; r .' a r Ah•i., -OTtp. -'MA'w� -• Sale S:700 North Sliami Ave. _ a o "Vi=a SiJ7�IdO a 4 LE S1-- ,A tfIEF sf 0- W It is worth noting that Sale 5 represents the site of a proposed 1,800-room Marriott convention center hotel that will anchor the west end of the proposed Miami World Center project in downtown Miami. This hotel will also include a convention facility with 600,000 square feet of meeting space that will be a direct competitor with the Miami Beach Convention Center.- The remainder of Miami World Center will include 765,000 square feet of vertical retail space and at least two residential towers spread along several city blocks at the north end of the city's Central Business District. Another similar retail project, Brickell CityCentre, is under development across the Miami River to the south, and will have 490,000 square feet of retail space, a new East Hotel,two residential towers and two office buildings. Other sales of redevelopment properties were noted in Miami Beach, but these featured alternative highest and best uses (rather than hotel) thus were not included in this analysis. This includes a redevelopment property located in the 600 block of Washington Avenue that was purchased for$36 million in June 2015. Land Sales Adjustments Each of the properties sold with a fee simple interest, with terms equivalent to cash. The local hotel market has improved over the time period in which these sales have occurred, with rising ADR and RevPAR levels and strong occupancy. Hotel investment and development is BLAZEJACK& COMPANY 54 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 actively occurring in this market, demonstrating demand for properties suitable for this activity. As such, an upward adjustment was applied to the less-recent sales due to improving market conditions over the period in which these sales occurred. In the case of Sale 4, 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 4 due to the presence of substantial development rights that were also obtained as part of the price paid. Sales 1, 2 and 5 are located in Miami, rather than in Miami Beach. However, two of these properties represent vacant hotel sites, while the third was sold with a small commercial building (similar to the subject) but with a similar highest and best use for high-density hotel development. These three Miami sales exhibit a range of prices per room from $19,444 to $41,246. The other four 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. The four Miami Beach sales have much-higher prices per room (from $67,010 to $206,437). Thus, a substantial upward adjustment is appropriate to the prices paid for Miami Sales 1, 2 and 5 for location compared to the subject's location in South Beach. This adjustment is greater for Sale 5 since it is located in the northwest end of downtown Miami in an area that is going through the early stages of redevelopment. By contrast, Sales 1 and 2 are adjacent to the Design District, Midtown Miami and Wynwood whose stages of redevelopment and gentrification were much further along at the time of sale. Currently, the subject is improved with small, low-rise buildings that are part of 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 luxury, full-service, 800-room convention center hotel facility). This is similar to the condition under which Sale 1 occurred, but Sales 2 and 5 sold in superior condition as vacant and ready for development. For this reason, a BLAZEJACK& COMPANY 55 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 downward adjustment was applied to the prices paid for Sales 2 and 5 for superior site condition at the time of sale. Miami Beach Sales 3,4, 6 and 7 sold with existing hotel and/or apartment improvements in place. However, these improvements were near the end of their economic life. While historic preservation ordinances prohibited their total demolition, 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, the presence of existing improvements that must be partially preserved potentially reduces some of the costs of redevelopment for the buyers of Sales 3, 4, 6 and 7. As such, a downward adjustment for the potential of reduced costs of redevelopment is applied to the prices paid for these four 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: BLAZEJACK& COMPANY 56 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Sale No. ] 2 3 4;'- 5:. 6 7 Sale Data:_ i Cash Equiv.Sale Price 54,500,000 $12,250,000 $6,500,000 $34,475,000 $35,000,000 57,500,000 $6,750,000 ' Sale Price/SF` - $124.17 $273.54 , $359.61 $570.35 $170.44 $800.00 $482.14 - Sale Price/Unit:. .. $29,801 . $41,246 S67,010 $206,437. $19,444 $125,000 $67,500 ADUSTMENTS: Property Rights 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Financing 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Conditions of Sale 0.0% 0.0% 0.0% -48.0% 0.0% 0.0% 0.0% Market Conditions 0.0% 4.0% 7.0% 8.0% _ 8.0% 10.0% _ 10.0% Preliminary,Adjustment - 0.0% ' 4.0% 7.0% -40.0% ,' 8.0% 10.0% 10.0% Adjusted Price/SF • $124.17 - $284.48 $384.79 $342.21 $184.07 $880.00 $530.36 Adjusted.Price/Unit $29,801 $42,896 571,701 $123,862 $21,000 :5137;500 574,250 ADDITIONAL ADJUSTlDrIS: Location 200.0% 200.0% 0.0% 0.0% 300.0% 0.0% 25.0% Water Frontage 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Site Condition 0.0% -5.0% -20.0% -20.0% -5.0% -20.0% -20.0% Topography 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% • Site Configuration 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Road Access 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Zonin g 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Additional Adjustment 200.0% - 195.0%_ i =20.0% -20 0% 295.0/ -20 00/ 5.0% ' Adjusted Price/SF $372.52 $839.22, 5307:83 $273.77 5727.09 $704.00 $556.88 Adjusted Price/Acre $89,404 $126,542 - $57,36 t $99,090 -.582,950 $1 10,000 $77,963 Price/Unit' High $126,542 Low $57,361 Median 589,404 Mean $91,901_ Overall,these adjustments provided a range of indications from$57,361 to $126,542 per planned guest room, with a median of $89,404 per room and a mean of $91,901 per room. Based on this analysis from sales comparison, the subject site appears to have a current"as is" Market Value of$90,000 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 luxury, full-service, 800-room convention center hotel. With a site size of 2.65 acres, this equates to a planned development density of 301.9 rooms per acre. This development density is most similar to that of Sales 2, 6 and 7, with substantially higher or lower densities proposed in the development of the other four sales. 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 sales with BLAZEJACK& COMPANY 57 SECTION IV: LEASE ANALYSIS • Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 relatively-similar planned development densities is important in the analysis of properties' sale prices per square foot of site area. Among Sales 2, 6 and 7, the adjusted sale prices per square foot ranged from $556.88 to $839.22. From this range, an "as is" Market Value for the Fee Simple interest in the appraised v property is estimated at approximately$700.00 per square foot of land. However, the previous analysis has not considered 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 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: BLAZEJACK& COMPANY 58 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 four experienced international hotel operators, along with those from the subject's hotel developer and from a similar larger hotel in Miami. Among these sources, two of the major international hotel operators provided estimated pro formas of the financial performance of the subject property considering both Union and Non-Union workforces. These are included below, along with a summary of the conclusions from an STR Analytics study: BLAZEJACK& COMPANY 59 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 comp_No. I ) 2 STR Analytics • Location MBCC MBCC MBCC MBCC MBCC MBCC Total Rooms 800 800 800 800 332 523 Hotel Type Full-Sery ice Full Sery ice Full Service Full Service Full Service Full Service Employee Type Non-Unioin Union Non-Union Union Non-Union Union Food&Beverage• 4 Outlets 4 Outlets 5 Outlets 5 Outlets 5 Outlets 5 Outlets Meeting Space(SF) 100,000 100,000 85,000 85.000 .. N/A N/A<.,' Meeting Space SF/Room 125 125 106 106 N/A - . N/A; Spa 10,000 SF 10,000 SF 7.500 SF 7.500 SF N/A N/A Parking Garage Garage Garage Garage N/A N/A Expected Year Built 2019 2019 2019 2019 1983 1970 Stabilized Projections %Diff.y %Di ff.: %Diff. Annual Room Nights 292.000 292.000 292.000 292.000 (21,180 190,895 Occupancy 78.0% 78.0% N/A N/A . 78.8%_ 81;9%' Room Night Sales 227.850 227.850 N/A N/A 95.490 156.343 Group Sales 68.0% 68.0% N/A N/A N/A N/A Average Daily Rate $307.50- . $307.50 0.0% N/A N/A S203.78 $263.05 29.1% Departmental Revenues Total 1000s)_Total(000s) %A Total(000s) Total(000s),J %A Per S1 Per SI %A Room Revenues S70.064 $70.064 0.0% 584,588 $84,588 0.0% Food&Beverage Revenue S35.I27 $35,127 0.0% $42.101 $42.101 0.0% Restaurants&Bars $8,272 S8.272 0.0% N/A N/A . Banquets&Meetings $19.121 S19,121 0.0% N/A N/A • Other F&B $7,734 S7,734 0.0% N/A N/A . Telecommunications In Other In Other In Other S189 $189 0.0% Spa In Other In Other In Other S944 S944 0.0% Parking In Other In Other In Other S1.213 $1.213 0.0% i Other Operating Depts. 54,430 S4.430 0.0% $629 $629 0.0% Rent&Other Income S680 $680 0.0°/s 51.045 SI.045 0.0% Gross Revenue $110.301 S110.301 0.0% S 130.709 S130.709 0.0% Departmental Expenses - ' Rooms S14,102 $1 5,072 6.9% $16,103 517,069 6.0% Food&Beverage S20.337 $21.738 6.9% $27,559 $29,461 6.9% Telecommunications In Other In Other In Other S604 $616 2.0% Spa In Other In Other In Other 5755 S755 0.0% Parkin,/ In Other lit Other In Other SO SO 0.0% Other Operating Depts. $2.873 S2.949 2.6% 5734 5734 0.0% Rent&Other Income SO SO 0.0% SO SO 0.0% Departmental Expenses 537.312 S39.759 6.6% S45.755 S48.635 6.3% 50.427 $0.473 10.8% Departmental Profit $72.989 $70.542 -3.4% $84,954 $82,074 -3.4% Undistributed Expenses, T Admin.&General $6,759 $6,818 0.9% 57.604 $7.604 0.0% Sales&Marketing $5,670 55,687 0.3% $8,466 $8.466 0.0% Property Maintenance $3.352 $3,827 14.2% S3.521 $3,521 0.0% Utilities $3,203 53,203 0.0% 52.747 $2.747 0.0% Undistributed Expenses 518.984 $19.535 2.9% 522,338 $22.338 0.0% S0.217 50.213 -1.8% Profit Before Fixed Costs •554,005 $51,007 -5:6% 562.616 $59.736 -4.6% $0.321 S0.292 . -9.9% 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 in this market. 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 BLAZEJACK& COMPANY 60 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida • REPORT 201533 since these were compared to 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 Gross Revenues was$100,628,000 in cun-ent dollars; since the subject is anticipated to be completed and achieving a stabilized occupancy and revenue generation by 2022, we have inflated this amount at 3.0% per year which results in an estimate of Gross Revenues at stabilization of .$123,760,000. 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$60,024,000 at stabilization. A breakdown of the additional fixed costs estimated from the two international hotel • operators is summarized below: Comp No. 1 2 Employee Type Non-Union Union Non-Union Union Total(000s) Total(000s) %A;' Total(000s) Total(000s) %A Gross 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 Gross Revenues 49.0% • 46.2%' . • 47.9% 45.7% _ Less: Fixed Costs Management Fee: 3% $3,309 $3,309 $3,921 $3,92I Property Taxes $3,905 $3,905 $3,560 $3,560 Insurance $1,044 $I,044 $2,876 $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 $17,185 Net Operating Income $36,923 $35,579 -3.6% $43,471 $42,551 -i.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. When these fixed costs are deducted from the subject estimated Profit Before Fixed Costs, a stabilized net operating income of$41,524,000 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 and operating at stabilization, from 5.50% to 6.00%. Applying those rates to the estimated net BLAZEJACK&COMPANY 61 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 operating income produces a value range at stabilization from $692,067,000 to $754,982,000. With 800 rooms, this equates to a stabilized value range from $865,000 to $944,000 per guest room. These calculations for the subject's proposed hotel (at stabilization)are presented below: -Annual Inflation 3.0% Current Stabilized 2022. • 2915 High Low Non-Union Hotel Return Analysis (S in 000s) - (S in 000s) ($ in 000s) Projected Gross Revenues: Non-Union Hotel $100,628 $123,760 $123,760 Proportion of Profit Before Fixed Costs 48.5% 48.5% Estimated Profit Before Fixed Costs $60,024 $60,024 Fixed Costs at Stabilization $18,500 $18,500 Net Operating Income $41,524 $41,524 Overall Capitalizatio Rate 5.50% 6.00% Value at Stabilization $754,982 $692,067 No. of Rooms 800 800 Stabilized Value per Room $944 $865 Building Cost per Room $5.07 $507 Developer's Profit on.Costs 86.19% 70.61%. Compounded Annual Profit Rate 9.29°% 7.93% The developer, Portman Holdings, has forecast a construction cost for the hotel of $405,450,398, which equates to approximately $507,000 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 at Stabilization of$18,500,000. When deducted from the value per room indications, this provides a potential profit range from 70.61% to 86.19% 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 7.93% to 9.29%over this seven-year period. When compared to the overall capitalization rates that are applicable to this hotel property (at stabilization) of 5.50% to 6.00%, this appears to be an attractive project for a developer to undertake. 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 BLAZEJACK& COMPANY 62 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 workforces at the proposed subject. Profit Before Fixed Costs fell by 4.6% to 5.6% in these estimates when a Union workforce was in place, along with a drop in net income ranging from 2.1%to 3.6%. Comp No. 1 2_. Employee Type Non-Union Union Non-Union Union Total(000s) Total(000s) -. %AAt Total(000s) Total(000s) %L Gross Revenues $110,301 $110,301 $130,709 $130,709 Profit Before Fixed Costs $54,005 $51,007 =5.6% $62,6 16 $59,736 -4.6%. Asa%of Gross Revenues 49.0% 46.2% 47:9%' 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 $2,876 $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 $17,185 Net Operating Income $36,923 $35,579 -3.6% $43,471- ~$4275-5-1 -2.1% However, the STR 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 5.50% and 6.00%, 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 $830,000 to $906,000. When compared to the cost of construction of$507,000 per room, the following profit margins are • noted: Stabilized 2022 High Low' Union Hotel Return Analysis _ .___. _._ ' (S in 000s) (S in 000s) Stabilized Value per Room: Non-Union Hotel $944 $865 Adjustment for Union Operation -4.00% -4.00% Stabilized Value per room with Union Operation $906 $830 Building Cost per room $507 $507 Developer's Profit on Costs 78.70% 63.71% Compounded Annual Profit Rate 8.65% . 7.30% Over the seven-year period to complete the proposed hotel's construction and bring its operations to stabilization, an annual profit rate of 7.30% to 8.65% on costs is estimated if BLAZEJACK& COMPANY 63 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 5.50% At 6.00% Total Profit: Non-Union Workforce Hotel 86.19% 70.61% Total Profit: Union Workforce Hotel 78.70% 63.71% Difference -8.70% -9.78% With greater elasticity to the value of land (compared to building costs), this range is rounded upward to a land value adjustment of 18.0%,or approximately double the amount from the range of differences in the preceding table. This adjustment is applied to the value of the subject site since this estimate assumes that a use encumbrance is in place(per the Extraordinary Assumptions section of this report). This equates to an estimated Market Value if encumbered with this use restriction of$74,000 per planned room or$574.00 per square foot of site area, or 18.0% less than the values previously estimated if unencumbered. Using these estimated values per room and value per square foot of land provides the following Market Value estimates for the subject site "as is" and considering a Fee Simple interest as of the current valuation date. These value estimates assume that the development of the property can occur BLAZEJACK& COMPANY 64 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 to its stated highest and best use, and are subject to the Assumptions and Limiting Conditions and Extraordinary Assumptions set forth in this report: i Value Conclus ion Value/Room x No.Rooms = Total Value $74,000 x 800 = $59,200,000 Rounded = $59,200,000 Value Conclusion Val ue/SF .x Site SF = Total Value S574.00 x 115,265 = $66,162,110 Rounded = S66,200.000 ANALYSIS OF THE PROPOSED RENT FOR THE SITE The proposed lease for the subject has triple-net terms, whereby the land tenant pays all of the property's taxes, insurance, maintenance and operational costs. We have previously estimated the contract rent on the subject site to be approximately$2,515,700 under the terms of the lease proposed for the property. 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; this value was estimated at$66,200,000 using a price per square foot of land area comparison. Considering the estimated contract rent of the site,this produces the following returns on the value(equity)of the site, which also represents an overall capitalization rate to the land: Land Value Land Value per Land Value Unit of Comparison Per Room SF of Land Estimated Contract Rent on the Site $2,515,700 $2,515,700 Estimated Land Value in Fee Simple $59,200,000 $66,200,000 Return,(Overall Rate to the Land) 4.25% 3.80% The indicated return of the contract rent on the property's value ranges from about 3.80% to 4.25%, which is reconciled at 4.00%. In order to determine if this is 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. BLAZEJACK& COMPANY 65 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 10-Year U.S.Treasury Yields July 2015 2.19%to 2.46% Corporate BBB Bond Yields July 2015 3.81%to 3.96% Corporate BBB Bond Yields Long-Term Average 5.88% 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 corporate bonds carrying a BBB rating are viewed as carrying risk that is more-similar to that on a ground lease for commercial properties. The range of most-recent yield rates for these bonds has ranged from 3.81% to 3.96%; however, the long-term average yield rate on corporate bonds is much higher, at 5.88%. The Federal Reserve has held a zero interest rate policy since 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 are at their lowest levels in many years. Although the Federal Reserve has not changed this policy since then, recent business media reports have indicated that rates may be hiked upward before the end of this year in response to improving economic conditions. 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 skew higher than the most-recent corporate BBB 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 and other net-leased commercial property investments, and was obtained from recent surveys of national investors cited in the table below: Property Average Source Type/Class Range of OARs OAR RERC National Hotels 5.00% to 8.50% 6.80% 4th Qtr.2014 Integra Viewpoint Miami Class"A" 6.70% Year-End 2014 Full-Service Hotels Korpacz/PWC National Net Leased 6.98% • 4th Qtr.2014 Properties CBRE US Luxury Hotels 6.60% 2nd Half 2014 Miami Luxury Hotels 5.00% to 6.00% BLAZEJACK& COMPANY 66 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 These surveys indicate a range of overall capitalization rates applicable to national hotel property investments from 5.00% to 8.50%, with the best-quality, Class "A" hotel investments trading on overall capitalization rates from 5.00% to 6.70%. The Integra 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 5.00%to 6.70%. When completed, the proposed subject hotel will be a full-service luxury hospitality facility with 800 rooms, a new age of 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 near or below the middle of the range of indications for luxury or Class"A" Miami hotels. This range is estimated to be from about 5.50%to 6.00%. 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 luxury 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 subject (if stabilized) ranging from a low of 5.50% to a high of 6.00%, this compares to the 4.00%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 150 to 200 basis points below those estimated for the property if occupied by an 800-room luxury 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. BLAZEJACK& COMPANY 67 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 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 a luxury 800- room convention center hotel. Those overall rates for this property, if completed and operating at stabilization, were previously estimated to be from 5.50% to 6.00%. 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 5.50%to 6.00%to the improvements, are presented below: %of Overall %of Overall Total X Rate to = Total X Rate to = Component Value Component Component Value Component Land 15% X ^_ 4.08%. j = 0.61% Land 20% X L 4.50%. j = 0.90% Improvements 85% X 5.75% = 4.89% Iin.rovements 80% X 5.75% = 4.60% Overall Rate Indication: 5.50% Overall Rate Indication:- 5.50% Land 15% X 1 2.67°,6J = 0.40% Land 20% X , 3.50% = 0.70% lin.rovetnents 85% X 6.00% = 5.10% Improvements 80% X 6.00% = 4.80% Overall Rate Indication:" . , ' - 5.50% Overall Rate Indication: 5.50% Land 15% X __1.25% j = 0.19% Land 20% X 2.50%0 _._J = 0.50% Itn.rovements 85% X 6.25% = 5.31% Improvements 80% X 6.25% = 5.00% • Overall Rate Indication: - • 5.50% Overall Rate Indication: 5.50% °A of Overall %of Overall Total .X - Rate to = Total X Rate to = Component Value Component ! Component Value Component Land 15% X ! 4.558% J = 0.69% Land 20% X ? 5.00% j = 1.00% Itn.rovements 85% X 6.25% = 5.31% lin.rovements 80% X 6.25% = 5.00% Overall Rate Indication: • 6.00% Overall Rate Indication: 6.00% Land 15% X 3.,17% I = 0.48% Land 20% X ;y__4.00% __j = 0.80% lin.rovements 85% X 6.50% = 5.53% Improvements 80% X 6.50% = 5.20% Overall Rate Indication: 6.00% Overall Rate Indication: 6.00% Land 15% X 1.75% _1 = 0.26% Land 20% X T.00% ! = 0.60% Itn.rovements 85% X 6.75% = 5.74% Improvements 80% X 6.75% = 5.40% Overall Rate Indication: 6.00% Overall Rate Indication: . 6.00% 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 15% to 20% is supported in the band of investment analysis. Altogether, this analysis produces a range of overall rate (return) indications to the land from BLAZEJACK& COMPANY 68 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 1.25% to 4.58% at a 15% land-to-value ratio. At a higher land-to-value value ratio of 20%, this range of overall rates to the land is from 2.50%to 5.00%. These ranges are generally supportive of the returns forecast from the subject's proposed ground lease on its value of approximately 4.00%. With a 99-year ground lease term, prudent investors would also seek a long-term return on the subject that exceed the current yields on BBB-rated corporate bonds, and also exceed the range of returns on safer U.S. Treasuries. This provides a hedge against future periods when higher interest rates and yields may be present. CONCLUSIONS We have estimated the rent for the subject site,based on the terms of its proposed ground ■ lease. This stabilized amount, if applied to the estimated value of the site owner's equity as of the current valuation date, provides a return on the site of approximately 4.00%; this estimate considers the Assumptions and Limiting Conditions and the Extraordinary Assumptions set forth in this report. This is a modest return on the site and would be viewed as reasonable for a typical owner of the subject would seek under these terms for the long-term ground lease of the site, Therefore, it is our opinion that the proposed terms of the ground lease described herein for the 2.65-acre Miami Beach Convention Center Hotel site would produce a stabilized base contract rent of approximately $2,515,700. This base rent amount,and the terms of this lease,appear to be synonymous with its market rent including the rental rate, terms and lease parameters as of July 27,2015. BLAZEJACK& COMPANY 69 SECTION IV: LEASE ANALYSIS ADDENDA Exhibit A Engagement Letter EXHIBIT A BLAZEJACK & COMPANY REAL ESTATE COUNSELORS May 27,2015 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 Mari aHernandez @,miamibeachfl.gov RE.: PROPOSAL Appraisal of Market Rent for a Ground Lease 2.65-Acre Site along 176 Street proposed for development with An 800-room Convention Center Hotel,adjacent to the Miami Beach Convention Center Miami Beach,Florida Dear Ms.Hernandez: This letter will serve as our proposal to appraise the above referenced property. Our estimated date of completion is no later than June 30, 2015. 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 previously received the Request For Proposal (RFP)No. 2015-103-ME by the City of Miami Beach, which describes the subject property and its proposed development with an 800-room convention center hotel, from Mr. Jeff Sachs of Strategic Advisory Group of Duluth, Georgia. Mr. Sachs has also provided us the Proposal for the Development of a Convention Headquarters Hotel by Portman Holdings, dated April 10, 2015. 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 will be $10,500. Our fee for court testimony is based on $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. We thank you for calling on us and we look forward to working with you. Respectfully submitted, Agreed: d Accepte, Jim • L. Mor.les, City Manager John A.Blazejack,CRE,MAI —. Partner Date: ( y I .. State-Certified Appraiser • License No.RZ093 172 W Flagler Street Suite 340,Miami,FL 33130 Ph(305)372-0211. www.blazejack.com ® MIAMI B EAC H PURCHASE ORDER!CHANGE ORDER MAIL INVOICE TO:"SHIP TO"ADDRESS Procurement Division 1700 Convention Center Drive Miami Beach FL 33139 Telephone:(305)673-7490 PO!BPO NUMBER PAGE 027671 CO#0 1 of 1 VENDOR ID: DATE DATE REQUIRED: 007308 6/15/2015 VENDOR SHIP TO BLAZEJACK AND COMPANY MIAMI BEACH CONVENTION CENTER 655 SOUTH WEST MIAMI PLACE 1901 CONVENTION CENTER DRIVE MIAMI , FLORIDA 33130-3008 MIAMI BEACH, FL 33139 , FL 33130 REQUESTED BY PHONE E-MAIL PAYMENT TERMS AMY MEHU AmyMehu @miamibeachfl.gov A/P Net 30 Days REQUESTING DEPARTMENT CONTRACT AUTHORITY PURCHASE AUTHORITY F.O.B. CONVENTION CENTER ITYWIDE PRCEDURES PO 16.t (WIDE PRCEDURES PO 1 DESTINATION SPECIAL INSTRUCTIONS: Quantity Unit Description Unit Price Ext.Price APPRAISAL OF MARKET RENT FOR A GROUND 10,500.00 LEASE,2.65-ACRE SITE ALONG 17th STREET PROPOSED TO DEVELOPMENT WITH AN 800-ROOM CONVENTION CENTER HOTEL, ADJACENT TO THE MIAMI BEACH CONVENTION CENTER,MIAMI BEACH,FLORIDA. . • PROPOSAL BY BLAZEJACK AND COMPANY TO UPDATE PREVIOUSLY COMPLETED APPRAISAL OF THE PROPOSED SITE FOR THE CONVENTION CENTER HEADQUARTER HOTEL.LOWEST OF TWO BIDDERS OF ITO 223-2013TC. TOTAL FEE • AMOUNT OF$10,500. FEE FOR COURT TESTIMONY IS BASED ON$250.00 PER HOUR. COMMENTS:THE PURCHASE ORDER NUMBER MUST APPEAR ON ALL INVOICES AND SHIPPING SUBTOTAL 10,500.00 DOCUMENTS.YOU MUST ALSO STATE YOUR PROMPT PAYMENT TERMS ON YOUR INVOICE(I.E.2%10). FAILURE TO SUBMIT INVOICES AS STATED HEREIN WILL RESULT IN A DELAY IN THE PAYMENT PROCESS. TOTAL 10,500.00 SEE ADDITIONAL TERMS AND CONDITIONS CONTAINED HEREIN. U.S.TREASURY DEPT.TAX EXEMPTION UNDER REG.NO.F59-6000372,STATE OF FLORIDA TAX EXEMPTION CERTIFICATE 85-80126216390-9 Signature VENDOR COPY TERMS AND CONDITIONS 1. This purchase.blanket,or change order form properly signed by the Procurement Director or designee constitutes the entire agreement. Terms stated by Vendor in accepting or acknowledging this order shall not be binding unless accepted in writing by the City of Miami Beach(the'City"). Vendor may not transfer or assign this order without the City's prior written consent. The provisions of the Uniform Commercial Code-Article 2 Sales will govern this contract and at right duties of the Vendor and the City.Chapter 627.Florida Statues and the Municipal Code of the City. 2. Vendor shall suitably pack,mark,and ship in accordance with any instruction from the City and the requirements of common carriers to secure the lowest transportation costs. Vendor shall be liable for any difference in freight charge or damage to the materials by its failure to comply therewith.Vendor will send the City a"Notice of Shipment"giving the number of the order,kind and amount of materials and route at or prior to time of shipment. 3. INVOICES. Render invoices as instructed on the face hereof immediately upon shipment or completion of order. Separate invoices must be rendered in duplicate for each order. All invoices must show our purchase or blanket order number. 4. The City may return any materials which are defective,unsatisfactory,or of inferior quality or workmanship,or fail to meet specification or other requirements of this order. Such materials shall,unless by the City,remain the property of Vendor and may be returned at Vendor's risk and expense,and Vendor shall reimburse the City for all prior payments therefor and/or costs incurred in connection with delivery or return of such materials. 5. Vendor warrants the materials will conform to the description and applicable specifications,shall be of good merchantable quality and fit for the known purpose for which sold,that the materials are free clear of all liens and encumbrances,and that Vendor has good merchantable title. This is in addition to any warranty or service guarantee given by Vendor to the City as provided by law. 6. Vendor shall comply.and has complied with all State,Federal and Local laws,regulations or order applicable to the purchase,manufacture,processing and delivery of materials, including but not limited to the Fair Labor Standards Act.of 1938,as amended. The provisions of Executive Order 10925.11114,and 11246,as amended,and any subsequent executive order relating to equal opportunity for employment on government contracts and all Rules and Regulations of the President's Committee on Equal Opportunity are incorporated by reference. The nondiscrimination clause contained in Section 202.Executive Order 11246,as amended by Executive Order 11375,relative to Equal Employment Opportunity for all persons without regard to race,color,religion.sex or national origin,and the implementing rules and regulations prescribed by Secretary of Labor,are incorporated herein. 7. If Vendor shall default in any respect,or become insolvent,or if a petition in bankruptcy or insolvency is filed by or against Vendor under any State or Federal law,the City in addition to other rights or remedies,may terminate and cancel this order. A waiver of breach of any provision shall not be a waiver of any other breach of such provision or of any other provisions. The City shall not,in any event,be liable to Vendor for special,contingent,or consequential damages. 8. DELIVERY:Delivery must be made within the time specified in this order. If the material is not delivered within such specified time,the City reserves the right to cancel the order or any part thereof. When terms of delivery are FOB Destination,Vendor shall pay all transportation charges,when terms of delivery are FOB shipping point,freight charges shall be prepaid and added to invoice. All prices considered FOB Miami Beach,Florida,unless otherwise indicated.The City will not be responsible for merchandise delivered to any destination other than that specified herein.Deliveries accepted 8:30 am to 4:30 PM.Monday through Fridays,except for holidays. Perishable material will be shipped so as to arrive at destination on Monday through Friday. 9. All communications and acknowledgements concerning this order must show this purchase or blanket order number and be directed to: The City of Miami Beach City Hall—Procurement Division 1700 Convention Center Drive Miami Beach,FL 33139. 10. Vendor shall defend any suit or proceeding brought against the City,its officers,agents,and/or employees based on a claim that the manufacture or sale or the City intended use or resale of any of the materials covered constitutes infringement of any United States Letters Patent,now or hereafter issued,or violates any other proprietary interest(including copyrights, trademarks and trade secrets),if notified promptly in writing and given authority.information.and assistance(at Vendor's expense)for the defense of same:and Vendor shall pay all damages and costs,including attorney's fees,awarded against the City in such suit or proceeding. In the event the City is enjoined from use and/or resale of any of the materials covered by this order as a result of said suit or proceeding. Vendor shall(at its expense)expend all reasonable efforts to procure for the City the right to use and/or resell said materials. If Vendor cannot so procure the aforementioned right within a reasonable time. Vendor shall then promptly(at Vendor's expense): (1)modify said materials so as to avoid infringement of any patent or other proprietary interest,or(2)reinstallation costs in connection therewith,or (3)remove said materials and refund the purchase price and reimburse the City for the transportation and installation costs thereof. Vendor shall have the same obligations with respect to any claim for infringement of foreign patents or violation of other foreign proprietary interests if the City purchases hereunder for shipment to and for the use or resale in a foreign country and Vendor is so advised.The paragraph 10 shall constitute the sole agreement relating to liability for infringement or violation of proprietary rights unless expressly revised or revoked in writing. 11. Buyer's remedies,in the event of default by Vendor,shall be as provided by law,except as otherwise provided herein. • 12. PACKING LISTS: Must accompany each case or parcel,showing the City's order number and complete description of contents, All barrels,boxes,bags,crates or other packages must be labeled with tag(linen tag preferred)securely fastened to packages,showing shipper's name and our order number.If not possible to attach tags,information must be printed on packages. Drop shipments and partials must be treated similarly. 13. Vendor must submit Material Safety Data Sheets with shipments for substances found on the current Florida Toxic Substances List.In accordance with Florida Statues-Chapter442. Section 6(1) 14. If bid or contract terms,conditions and/or specification differ from those of this purchase or blanket order,the bid,contract or agreement shall take precedence. 15. Vendor shall not offer any gratuities,favors,or anything of monetary value to any official,employee,or agent of the City,for the purpose of influencing consideration of this order. 16. Call 305-673-7490NOICE to request material in accessible format or information on access for persons with disabilities. For more information on ADA compliance please call 305- 673-7080. BLAZEJACK & COMPANY REAL ESTATE COUNSELORS July 21,2015 Mr.Jimmy L. Morales City Manager 1700 Convention-Center-Drive,4`h Floor - — Miami Beach,Florida 33139 Tel:305-673-7000 Ext.2584 MariaHernandez @m i amibeach fl.gov RE.: SUBJECT PROPERTY: A 2.65-acre site along 17`h Street proposed for development with An 800-room Convention Center Hotel,adjacent to the Miami Beach Convention Center Miami Beach,Florida Dear Mr.Morales: Previously,we have provided you,the client,an appraisal and analysis of the Market Rent under the terms of a proposed Ground Lease on the above-referenced property. Per your request, we shall provide additional appraisal and consulting services on this property, which includes an estimate of the Market Rent under an alternative Ground Lease for the subject property in which certain site restrictions apply;these site restrictions for this alternative analysis will be stated in the report. This additional work to be performed by us shall also include an analysis as to whether the rent on the site under this alternative ground lease and accompanying site restrictions provides a reasonable return to the fee simple owner of the subject property(the City of Miami Beach). Our estimated date of completion of the written report is no later than August 30, 2015, with a verbal and/or summary version of our conclusions provided by July 30, 2015. 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 previously received the Request For Proposal (RFP) No. 2015-103-ME by the City of Miami Beach, which describes the subject property and its proposed development with an 800-room convention center hotel, from Mr. Jeff Sachs of Strategic Advisory Group of Duluth, Georgia. Mr. Sachs has also provided us the Proposal for the Development of a Convention Headquarters Hotel by Portman Holdings,dated April 10,2015,and with the terms of this alternative ground lease on the property covered under this engagement letter for this additional assignment. 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. Due to the additional scope of work required under this assignment, the total fee will be $5,500. Additional fees for any required court testimony are 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. We thank you for calling on us and we look forward to working with you. 172 W Flagler Street Suite 340,Miami,FL 33130 Ph(305)372-0211. www.blazejack.com BLAZEJACK & COMPANY REAL ESTATE COUNSELORS Respectfully submitted, . greed and Iccepted �.mmy [orales, ity Manager John A.Blazejack,CRE,MA1 �'ty of Miami Beach Partner n State-Certified Appraiser Dite: / �i 1 License No.RZ093 • 172 W Flagler Street Suite 340,Miami,FL 33130 Ph(305)372-0211. www.blazejack.com Exhibit B Proposed Ground Lease to Subject Site EXHIBIT B [EXHIBIT B COPY OF PROPOSED LEASE OMITTED AS REPETITIVE OF LEASE ATTACHED HERETO AS APPENDIX 1 TO THIS AGENDA ITEM R7A] • 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 26296844v3 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 threate n any Employee p y ee 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 affiliates' 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 26296844v3 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 [fill in company name] By: By: Its: Its: Date: Date: 26296844v3 • 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. • 26296844v3 Exhibit C Portman Holdings Hotel Development Description & Plan EXHIBIT C, � ' ' t•.. • n` j''s- :ehz t 1 EA ,s.c-='.v..�_t...._l ..5•'-..i. , _' - � c ` ;§:Sp^. x1zN a . �tEi -r cri '4. q' 1i_ * t, R'> . „ emu a_V - .;".", .,;, ._,},r _..• " ? ...:, �s-,.:, y_Y�} r,'. g :d �i.;E w.s F • ..-.i.,!-:---- - -"` >Fy..E:.S.-'-a. 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Hilton Portman Holdings intends to consider national hotel operators with an established and consistently HOTELS&RESORTS maintained reputation for quality and quality of operation.Brands meeting these criteria include Marriott,Marriott Marquis,JW Marriott,Westin,Omni,Hyatt Regency and Hilton.We would consider working with any of these brands,or any other hotel operator approved by the City of Miami Beach. HyALT 0 We intend to work with the city to determine the best fit for this hotel. JW MARRIOTT. •��� ) arriott • OMNI HOTELS &RESORTS' WESTIN HOTELS&RESORTS e!D- J C oa t a: - i. 2 �� a -o �-I'�i � :J,( :T1,.�7t��,.JLJ D�s.�r1 x Fir Iri'Ir18r+j De��l�-om rii SLd�..t 5 5.3 P:eii,.ri..,r j Budget Provide a summary of the development budget,including estimated construction hard costs,architecture/engineering,furniture,fixtures and equipment(FF&E),development fee, other soft costs and required fees,pre-opening/working capital,art in public places(1.5% of construction costs per City Code Section 82-537),contingency and escalation,financing costs,and any other unique project costs. Soft Costs Design Architect $13,551,938 Construction Costs Landscape Architect $Included Above Construction Cost Hotel $235,880,136 Other Architectural $Included Above Existing Structure Demolition Included Above Traffic Engineer $Included Above Construction Contingency Included Above Civil Engineer $Included Above Skybridge $ 1,800,000 Nlise-Consultants $ 1,033,500 Payment&Performance Bonds $2,084,913 Legal and Administrative S 1,000,000 FF&E $24,683,024 Real Estate Taxes $4,193,084 OS&E $19,264,725 Developers Fee S 22,424,772 Building Permits/Fees' $11,120 197 Total Construction Cost $283,712,798 Insurance-Builders Risk $3,545,741 Total Project Costs $405,450,398 Pre-Opening Expense $6,680,000 Working capital $800,000 '$25,000 Referendum Fee Sewer/Water Hook Up $85,000 included in Building Permits/Fees • Art in Public Places $3,643,386 Other $1,282,702 Soft Cost Contingency $20,272,520 Total Soft Cost $89,632,940 Financing Loan/Equity fees $11,344,436 Construction Period Interest $9,256,783 Operating Interest Reserve $11,503,442 $32,104,661 • • ... 87 I i 5.4 Provide conceptual architectural diagrams of floor plans,elevations,and renderings of the proposed Hotel Project.It is expected that the conceptual design for the Hotel Project will further the City's design standards,and continue the City's legacy as a home to many architecturally significant buildings designed by nationally and internationally-recognized architects.It is further expected that the conceptual design of the Hotel Project will be architecturally harmonious with the surrounding area,including the design for the MBCC Renovation and Expansion Project(including its public park components),New World Symphony,SoundScape Park,and Lincoln Road. Floor plans,elevations and renderings for the Hotel Project can be found on the following pages. t 4., .:,` !h.': ,, —, -,-r--- cressiownwsi . r4c..... .1 .. .. - vik 16 ..._, ll11h1UU , .* . , till...%. 7 p r d •'7, -• -Alf 4 Liis,„,c ,A, s 1.._,..,__ „ .-fs'.‘f a - , ..,... .---, . .',k .. 7,41 ii ., „raw 4-4...., 4 ' ''. 1- ... .. . i.e. ! ,,,,- , I N., ___ , .1. ,_ ._ , ,. I '; 4., 1 of it .44" ' . ..: ..„--,......,...,,, „. i„ ' .74. :I I1#HII1HHIIt1 i i - 5.4 :r --.-. y _ - .. - ,.. THE SITE: The site represents an important opportunity—the chance to provide a strong connection between the Miami Beach Convention Center,the Gleason Theater,the Miami Beach • Convention Center park and SoundScape Park.The challenge is to create a design for a new _, . convention headquarters hotel that becomes an icon that expresses the character and spirit of Miami Beach while embracing and integrating all the components of the Miami Beach Convention • Center district.The proposed design succeeds by fulfilling three goals: . II it • CONNECT the parks—take advantage of and expand on the existing traffic patterns to connect ? the two parks and lead people from Lincoln Road into the MBCC district. } • SHAPE the experience—open up the intersections of 17th Street with Convention Center Drive and Pennsylvania Avenue to create a grand pedestrian experience. ( ' i , i i. • EXPAND the natural environment—wrap the curved streetscape in greenery to join the two j parks,then carry the park-like environment up and through the hotel. CONNECT _ 1 THE CURVE: The curved hotel façade provides a strong visual connection to Lincoln Road, 1 especially when dramatically lit at night.By curving the hotel's layout and wrapping the green i III streetscape around the corner between SoundScape Park and the new(vIBCC Park,a feeling of _- cohesiveness unites the entire area.The hotel is designed to be compatible with the revitalized and expanded convention center and provide a connection between it,Gleason Theater,the surrounding P , greenspace and Lincoln Road,creating a robust synergy 5etween the area's components.The ----------— i • hotel's ballrooms and expanse of outdoor event spaces augment the convention center's offerings 1 i and expand on the type of events that Miami Beach could host.A skybridge offers convenient, �. i SHAPE direct access between the hotel and MBCC,while the ground-level arcade activates the streetscape and serves as a pleasing,curving path between the parks. THE EXPERIENCE: The concept for the hotel is centered on delivering a sensory experience.The ! j project humanizes the built environment and creates an abundance of interplay with nature.The I I landscaping doesn't stop at the building's edge;it continues on throughout.Following the tone first set by SoundScape Park,greenery rises up through the hotel onto the rooftop deck of the 1 1 porte cochere building,flows through the hotel tower and around to the level-seven terrace behind, "'i h creating a completely public experience at ground level and a semi-private enclave primarily for i�=� guests atop the hotel's park-like terrace and deck.The roof of the hotel tower also incorporates . EXPAND open terraces for outdoor functions as well as a restaurant and bar featuring an infinity pool edging the terrace and mirroring the ocean beyond The design is motivated by the desire to create experiential spaces for human enjoyment. , The hotel's gently curving facade embraces the site while at the same time creating dynamic pp i _ :c= , 5 panoramas for the 800 guestrooms.The guestroom floors begin at the eighth level,uplifted to allow views over the MBCC,again maximizing views to the water on one side and to the city on the other The height of the guestroom tower is 300 feet to the roof level. • THE ENERGY: Lifting the guestrooms up allows for an open and inviting colonnade at street level that welcomes people to stroll through or stop and linger.The entire area is energized as the more public functions of the hotel follow the curve at street level.Here,one finds a grab-and-go market, • sundry shop,the lively lobby lounge and a three-meal dining experience.Colorful banners stir • excitement for ongoing events,such as Miami Beach's famed Art Basel,and dancing water features add pleasant white noise and lively sparkle. • The cylindrical porte cochere building,a glass-enclosed"drum,"holds a spectacular circular junior ballroom featuring stunning views of area.Above that,the spa and fitness center raise the rooftop deck up to the seventh level where it is joined to the podium terrace by a grand portal through the guestroom tower.The sunny deck with its own intimate pool will be a very special place for hotel guests. The sprawling terrace on the southwest side provides a varied guest experience with multiple pools,cabanas,bars and restaurants,green lawn space,a grove of swaying palms,a sculpture garden-there is room to roam and a place to accommodate every mood. THE SOUL: Throughout the project,art contributes to the uniqueness of the experience Even the night lighting for the project is handled in an elegant and artful way.The unifying abstract pattern of the sunscreens wrapping the porte cochere and rising up through the center of the guest room tower is also found in the pavers through the arcade and atop the terrace and deck.The pattern - I even carries through in the landscaping,carpeting,upholstery and drapes.A sculpture garden on * " 41 the terrace,paintings and ceramics throughout the hotel,all these elements establish this as a hotel unlike any other. With its prime location,the site presents a tremendous opportunity for the Miami Beach Convention - - Center Hotel to have significant impact on the visual identity for the entire MBCC redevelopment area.Inspired by its setting,the new Miami Beach Convention Center draws inspiration from the rhythm of ocean waves.The form,a gentle arc,recalls traces of a lapping wave left behind on the sandy shore.The wave motif is found again in the rolling guestroom balconies across the face of the hotel.The unique design is quintessential Miami Beach. ._ 91 sogramommrsorm..•••••■•••• k, P.t mom) I ,, .".• *- • ',.'.* 11. 0 ......i= lummi . i Pima I - .... •. .• .,, .. ..... = . I , ...._ 1.. . .. .. . .. , ..... i , ....... 4 4;7 --7*-; 4 . , ,.. -`...' i t• t' ' - is, ..• • ti ..re 1 a IMMOMENNI . ... ..... • • 4 *,......... ,.- f. -- , • ..... .. ._.r____- 7 h,..i.At ti Jr .1■I 1 I. 4,.. —re-", l' . .—.•-t,A 4. - . -,„6 tei _ - , . - tAliill ,.: " 1101*.i. 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T y 4 ,111,1_411 x , 4 i 1 — . , I _ - ._ Lil i 1 _ _. ., _ I ! 1 i i ._, , . 109 Elevation Facing East I I 101011111.1.11111111.1111/ 4i. iii i) ..,-r. __ - - -- -+-^_.1 d t ,I„ a i. r, . _.- _ a Ja _ P -,4 1 , 1 3 t 1 A.4 .-, 'I kst..1-__ _ M -4 f 1,.. r' , i •y• l 1� it i ' .. `'` 147 t r ti ---t___— -- {t; t r .....1 J o 1 i -• I pi i Hi t i i itJ Elevation Facing South d /i. „' F-t a, � � � �s ,1 4 8 .,—r _i. _ o � � � ► " w , ' � � � ( / �'�� � 2_ . i n.• w�? r .��', . _ _� 7----1-----.-ilk-7—'7 F-------H______-;1.1 y+ 1 I------1— --- -__ - . I I °u ,. 11' i 'I 11'. 11. I! I II■ aastep.,,i.,_ I 0, fir. fI■ ami — — . • I , . ,, i 1 r 5 „ _ • .. ", Elevation Facing West _ • • J•,..— ,Fri. ,,, ,:, :. - F�_ 1 1 _ �. t: .ry4 i "�� �x,� �y ';• xs k 1 11,1 ' 1 }I!. :I - 4 �� ..�_ ¢' , }yid f �F ,� �u,' .. � .'>.4 ea 4,44 i 41 R ' . .• ■ r F -44 ' ..:c a fs 13.x, , , ) 1. 1 .,s'"?.•P;l�N.' &5 i L .«•..ate y , ., . 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I s, : vo T*rrr te! ` /' i it r .%. -.,% ‘-"".:.-- __,- r ' / ''', A ' gt , __. ��'e 6N A. �1 a d'3a' r; ♦• ,, " }Pp .: . p.r w 6 6, r; `F k/f `mow. .•E .,'. '''' .4t4L il,-.`,....- w �Y tis Bird's Eye View ' . • •• , . .. . . • - . . , . . 1 . . ' ..._ _ _,..7...:,ki,,.:.=„,.:.:. . . .. . _ . . , . • , .. ., • 111?." :,..0.0°."'' 1 . IN . . , e I , f 1 /.- .:,:' ''••-•:, ' • 1, ,,,,, ,+-z";,j,.±':'..".', ' , e. , ..,,v ,•,..'" ' . .-/l'f'.7".":„.■-: , ','' •LI.,7,: '. .. . • . '' ' • , . -• ..•. ", . • -!:.1.'•• .,.-,,'". ?'e?et-,-- = . . ,,:Jib*, .' --'' '1'.. ,'it — - ' ' 7 :41;-• ', . .- . .,..- e •.°, ).•,.,-,... .. -'• • i; , ......,. , 1. .1V' , , . i„.-,,,T,,--,\ 4, I ' .,-., -'),--.„:1,,,.. ti-1-.: .,•_:, rim_ '1,,,,..7 ... i - , , t._ -- , . ...,, x,. .... . v . eT •, .6;4,7x ,.., i , - ------- , '411114. . '-'7' 41";\- -•"•'.::. •••! -, , '......--- -•-• -1'44,,,. •.-...,„ . 1 it , ' . r,,-, E.' -4- :AN? • • .',.... ' ',L." ._..., , _ ._ ...4 Vr.‘ i.3-- * • . .;,. .---• • r-.' .... - - 1,, *.* ,:: ,.. 4....A.z,ii , ; .......• 1-..z - - • -s •-. I: -, i -, -15. --% '-- : ' _' '.• ".-.,:tr,,-: .-'S ,• ' ' '*, ..1'''''-‘. tt.t, - -i. .-..- s'.. 4 t'.--•-4, * ,, ' .,, ' -- • . ...,1 -.N.....-. "--f •.:".• '^ .'- t r a- '0• „.. . ••• - f: . -- ' • I ' -4 ' -. ' _. is, .,,, .., ri - .... . • _ • .„.. .... , . ,..„. ., i ., , 1 'i . .~.,-...-,-.., I , --: .____.-- • 111 It,: 1 ,,_ Ii,.':.%, 1111 1 1 I_ I .-- -. . . ,_•_...... . . z .__. .._ , --.1.....zt *- .,4 t - , , __- --1/4...-.-7,---.,-..,......"-.,..-, ,..-----1,,••_-...-i.; .4.....r._.,,,,...z.* . , • „- -I. View at 17th Street showing Pedestrian Arcade r ,•- r , '''clit". . (I" f - ,,,„„,..i-r...- , i'-'.' 40iiii 100?-r"' `"s. ..,r S)$ ;: •`4 i as re � t 1. } 3 �, 1 ✓ . Ian-; �ett.'tL -.:.. � 1 , '�- C! .r./ ~i.- t 1-„pt �r,,i� ..,--'!.7.1.• ( 4, !? ,...i.,. 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Property Identification Record ID 2067 Property Type Hotel,Hotel Property Name Hampton Inn Midtown Hotel Site Address 3450 Biscayne Blvd.,Miami,Miami Dade County,Florida 33137 Location SW corner Biscayne Bl.&NE 35 St. Tax ID 01-3230-003-0350&0390 MSA Miami-Ft. Lauderdale Sale Data Grantor Arti Hersi, Inc. Grantee Midtown Lodging LLC Sale Date November 24,2014 Deed Book/Page 29417/1605 Recorded Plat 3/83 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Sale Price $4,500,000 Cash Equivalent $4,500,000 Adjusted Price $4,500,000 Land Sale No. 1 (Cont.) Land Data Zoning T6-36a-O,Commercial High Intensity Topography Level Utilities All available Shape Rectangular Land Size Information Gross Land Size 0.832 Acres or 36,240 SF No.Rooms Planned 151 Indicators Sale Price/Gross Acre $5,408,940 Sale Price/Gross SF $124.17 Sale Price/Unit $29,801 Remarks The seller retained a JV position in the property's development by 3H Hotels Group out of Tennessee. The property is planned for development with a 151-room Hampton Inn,which will also have 4,435 square feet of ground floor retail space along its busy Biscayne Boulevard frontage. The location is in the Edgewater area of Miami just east of Midtown and southeast of the Design District. Land Sale No.2 / ..- --1 _,_ w- 7 I/.' ' ,� rI i / R saw IAas s.w •_f ,y acs Sri _� i + ,y., :, � fry-. . .. tt- _I ry a *'. y La.. b : --� • I _ - 1, i' - ate, ti �,. .a..--. 7 Property Identification Record ID 2068 Property Type Mixed-use,Hotel Property Name Tryptich hotel and mixed-use site Address 3601 North Miami Avenue, Miami, Miami-Dade County, Florida 33137 Location NE corner No. Miami Ave. &NE 36 St. Tax ID 01-3124-026-0010 et.al. MSA Miami-Ft. Lauderdale Sale Data Grantor Fifteen Midtown Properties LLC Grantee Aventura Hotel Properties LLC Sale Date June 27,2014 Deed Book/Page 29222/2553 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Sale Price $12,250,000 Cash Equivalent $12,250,000 Adjusted Price $12,250,000 Land Sale No.2(Cont.) Land Data Zoning T6-12-0,Commercial High Intensity Topography Level Utilities All Available Shape Rectangular Land Size Information Gross Land Size 1.028 Acres or 44,783 SF No.Rooms Planned 297 Indicators Sale Price/Gross Acre $11,915,459 Sale Price/Gross SF $273.54 Sale Price/Unit $41,246 Remarks This is the former Electra condo site that was purchased by an affiliate of HES Group for high- rise mixed uses that include a full-service,297-room hotel,40,500 square feet of retail space, 46,000 square feet of office space,a 6,000-square foot gallery,and a 500-space parking garage. The property enjoys an excellent location at the crossroads between Midtown Miami to the south, the Design District to the north,and the Wynwood Arts District to the west. It also has excellent visibility with frontage to Interstate 195 at its exit ramps to North Miami Avenue. I Land Sale No.3 T _ t 7.S".'wT'.w� -... w � Y. c , n« ' 4--- {.r T r a ,___ a' - 1 ! _ . , r _ _ w r _ 1 . Eis, - ___. _ .• , _.. ..._ ... _ , i . ; -4'4! i a s IN Ir v i! a -„, 1"11;-e". _ f 'rpPiss A �.., �F rs A -. Aro :-.A 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 BooWPage 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.3(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.4 s.. ,,,. 4.• e -.eaten• • i s r� N • ot 4., -414 1 l a- .' - ., t+ &. . t_; -1 i a ► i : z ay a 1� .l . ii I . �i .1 , „• ,... ,,, ,,„..„. ,. ..,, .....4 .,. 3 ■■_ i.. ..- 3 — , -. p 0, ii f,,,,., ,,,_ ...,- _, 1 i _ ., >_ ' - L.. – l' r II all ally[ t el., •MEW r •4 ir. - 46' \ 7,„_• *o Ili"' It, a � '4 ►• ,t --______— ' mss. y`. `- a,k �.,.Tr .1 " *'- - -,,,, ., &at_ '-'r-- ,- - %:—.tni;,,*'*---- 4" 2' mares • i.,, 41. i L ..+ 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.4(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. r Land Sale No.5 . -a .� � ,.,...:,,,,_t__-______ fir.r-„a �1��._ .... rzEti, in-; ...4 — .. , 1,- 1 , - - ,..., - zif4 t_ __ iv i ti r. P :r'y I — : .n rj _ .._,pis ' *IC •_ 1 '44:.:_',.;;;At-...,; ...... _. ''•'1 ell ,-. ovER1• • iii-- 11 1 • :" • - Per-; a'i` `y !,i ` .. NE 51H S1„ ■...a. - 3 1.7MAFM`' MW St's ST Property Identification Record ID 1882 Property Type Vacant Land,Commercial, Vacant Property Name Old Arena Site Address 700 N Miami Avenue, Miami,Miami-Dade County, Florida 33130 Location West side of N Miami Avenue between NW 7th and NW 8th Avenue Tax ID 01 3137 025 0011 MSA Miami-Ft. Lauderdale Market Type Commercial Land Sale Data Grantor Old Arena, LLC Grantee MDM Ricardo Glass Sale Date May 15, 2013 contract Property Rights Fee Simple Sale History $35 MM 10/12 $28.1MM 12/04 Verification Miami Herald; Mo Saraiya,November 07,2013; Other sources: DBR Article Sale Price $40,000,000 Cash Equivalent $40,000,000 Adjusted Price $40,000,000 Land Sale No.5(Cont.) Land Data Zoning T6-60A-O Topography Level Utilities Available Shape Slightly Irregular Land Size Information Gross Land Size 4.714 Acres or 205,353 SF Front Footage N Miami Avenue;NW 8th Street Actual/Planned Building SF 2,258,883 No.Rooms Planned 1,800 Indicators Sale Price/Gross Acre $8,484,902 Sale Price/Gross SF $194.79 Sale Price/Planned Bldg.SF $17.71 Remarks Sale of the Old Arena Site,which was previously sold in Oct.2012 for$35MM. Ricardo Glass (MDM)has announced development plans for a 600,000 SF convention center including a 500,000 exhibition hall on various levels a 1500 seat theatre,an 80,000 SF outdoor event deck,a 2,300 car garage topped by an 1800 room Marriott hotel in 58 stories. Project plans have not been submitted to the city. The convention center project will tie into the Miami World Center retail/resort project and be physically connected to the First Coast RR project for rail service to Orlando and local points of interest. The site is just west of the AA arena and south of the Museum/Performing Arts centers and Design District retail areas. Expected to cost upwards of$1 billion,the site is currently under lease to a civic group which is using it for a public park. Development money is stated to be all private but the Park West Area has some tax incentives in place for development. MDM Ricardo Glass,the buyer,has developed several Marriot Hotels in the past including the JW Marriot located in Brickell,and the JW Marriot located in downtown Miami. The convention center space will effectively change the landscape of downtown Miami.The seller owns close to 30 acres adjacent to the site,and will benefit from the construction of the new convention center, and therefore did not charge a price increase from their October 2012 purchase of the site. r Land Sale No.6 `4 ir4 '1 rr f[ � _ 41:I _ 4.4 t , / y, 1 r iii. - i /t 5:c a .' ei• • Voir :7* " - -A - ' :41". e „.: I�7/ , '� Y `fro,i � �i+•: . � .P • .,, �.:*.. A - i s r0 r9 :fi r ' y it 1•11111. 1111, J. Property Identification Record ID 2071 Property Type Hotel,Hotel Property Name Greystone Hotel(Vacant) Address 1920 Collins Avenue,Miami Beach, Miami-Dade County, Florida 33139 Location SW corner Collins Ave.&20th Street Tax ID 01-3137-025-0011 MSA Miami-Ft. Lauderdale Sale Data Grantor 1920 Collins Realty LLC Grantee Greystone Terra Firma LLC Sale Date May 17,2012 Deed Book/Page 28129/1240 Recorded Plat 5/7 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification January 12,2015 Sale Price $7,500,000 Cash Equivalent $7,500,000 Adjusted Price $7,500,000 Land Sale No.6(Cont.) Land Data Zoning CD-2,Commercial Topography Level Utilities All available Shape Rectangular Land Size Information Gross Land Size 0.215 Acres or 9,375 SF No. Rooms Planned 60 Indicators Sale Price/Gross Acre $34,848,000 Sale Price/Gross SF $800.00 Sale Price/Unit $125,000 Remarks This is the acquisition of the vacant and boarded-up Greystone Hotel property by an affiliate of Vos Hospitality. In January 2014,this buyer acquired the adjacent Santa Barbara apartments to the immediate west,and plans to combine these two properties in a redevelopment that would result in a 97-room luxury boutique hotel. The property was vacant and abandoned at the time of sale,thus the improvements were at the end of their economic viability. This provides a sale price in this instance that reflects its site and development value. r Land Sale No.7 z x — 1w*2ft - r„ *l -. 114110 :11 f Ilk&I'' 8 ailm. ' rail " t •■ RR r.�I a aril t dT r RR RR Y F `rail rra Jam' < {' rcr r rrr asr A...., ■ t .1m'a. rr a ai I acr �r rail p_ 5 :'r,... o UP _Iilf n J ilea ear rs rw P :III RR ,, / ....... rail A " },: }�"'' : /1, 1 i� Ill i1 .. 1. '4 I, t Cr ,i T ��rr �'$!.f!1 ('s"--t.Z:7,„`," ,;.r-"'a..�' T%`.�t ,... .. ¢ $t.. i -,-.:f•. „j 0 st`i. - *----- p . ;,-,,. \ 4 ' t. s , .1 A'''`V .!.i - .74166.,14) Property Identification Record ID 2072 Property Type Hotel,Hotel Property Name Croydon Arms Apartment-Hotel(Vacant) Address 3720 Collins Avenue,Miami Beach,Miami-Dade County, Florida 33140 Location SW corner Collins Ave.&38th Street Tax ID 02-3226-001-1710 MSA Miami-Ft.Lauderdale Sale Data Grantor CIG Acquisitions Group LLC Grantee 3720 Croydon LLC Sale Date March 16,2012 Deed Book/Page 28039/1898 Recorded Plat 5/7 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Sale Price $6,750,000 Cash Equivalent $6,750,000 Adjusted Price $6,750,000 Land Sale No.7(Cont.) Land Data Zoning RM-2, MFR& Hotels Topography Level Utilities All available Shape Rectangular Land Size Information Gross Land Size 0.321 Acres or 14,000 SF No.Rooms Planned 100 Indicators Sale Price/Gross Acre $21,002,143 Sale Price/Gross SF $482.14 Sale Price/Unit $67,500 Remarks This is the sale of the Croydon Arms,an apartment-hotel that was vacant and abandoned at the time of sale. The buyer planned a redevelopment of this property into a 100-room hotel. The building was vacant and abandoned at the time of sale,thus the improvements were at the end of their economic viability. This provides a sale price in this instance that reflects its site and redevelopment value. Exhibit E Miami-Dade County Regional Analysis Summary EXHIBIT E REGIONAL ANALYSIS MIAMI-DADE COUNTY REGIONAL ANALYSIS 112114e.liair. ..r Aug lit Timm 41.01 Overview Miami-Dade County,Florida is located in the southeast corner of the state along the Atlantic Ocean. The major city is Miami,but there are 29 total municipalities in the county including Hialeah,Miami Beach, North Miami, Coconut Grove and Coral Gables. The county encompasses 1,946 square miles with a population of just over 2.6 million people,with a density of 1,206 people per square mile. When combined with Fort Lauderdale, the Miami-Fort Lauderdale-West Palm Beach consolidated metropolitan area("South Florida") is the eleventh largest metropolitan area in the country, with a total combined population approaching 5.8 million. The main population is concentrated close to the Atlantic coast as most of the western portion of the county, approximately 416,000 acres or 650 square miles, lies in 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 REAL ESTATE COUNSELORS _y .fii_ • ti • .. .. • 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. . esri fle N.srrr-Eade Couwq,/t Oemegrapluice SIC. Ikani-wdu Cauner.FL(1=09G Geoyrap r:County Census 2010 an ime it 2,4%.435 2.601.014 2.743.11111 MOA,ah__ 867 332 902.272 Fad 604911 422.319 6 ,111 - **age HeaseiwMd Size 2.03 3.SA 2.14 • Ova*.Occupied 14ousr+4 tines 4113,074 464317 454340 Seem Occupied Housing than 313,475 437.755 467.750 Medan Age 35.1 329 39.2 3 4-2020 Neural Rate Am Rate National 140% 1.QS% 0.75% 160111111161 1.11% L0% a.> , release 101% 0.954 0.69!x, Oilliii 0b 0.sqii 0.91% 0.70% Media_____ddTurn* 344% 29% ZZ.66% �.� ., 2020 ,r .m Fecaa *5;00' 5,O 719 I S9.A113 16.190 _$,5511-134.992 MUG 12.5% 17.51$ 9.1% . 4241,11110-2,34.996 24404 103% 1242• an Man-$42399 131„021 14.5% 130,637 u8% $74.999 152537 16.9% 154,.37441 19.3% -X000•299.295 59.401 9.9% 111.105 113% $14,000 $141.994 06150 13 104.139 109% $150,000-$199,929 22.166 3.6% 43 43% 5204,000* 42.617 4.7% 49.3117 5.2% • Nedaellloeerelvid Income $43.427 $514429 Away!HouscAold Income 3r4743 874.461 Par tills Income $22,910 $26,047 w �. I 1,_ IV AtItiii Poem* '.., 1lrewlt 1011$Mss Put cant 0-4 149337 6.0% 199.215 5.7% 157,463 5.7% 5-9 145,253 5.1% 134.191 5.9% 154.701 5.6% 10-14 132.341 6.1% 151.46 18% 164.223 6.0% 15-19 165514 6.1P% Mass 1 0% 196A74 5.'1t 21.24 1711123 7.1% 174494 6.9% 163,49 6.0% as•34 140457 13.6% 310,1151 14.6% 413.344 15.1% 35-44 372.47 14.9% 353.9711 13.6% 366.377 *3.4% 45-54 365.617 143% 377.214 14.5% 363.47'2 13.3% 55-64 271.873 10.9% 301,217 11.8% 340,991 12.7% 65.7444 136.976 7.5% 213.172 4.3% 251.407 9.2% 75-94 119,171 4.1% 123.250 4.8% 142413 3.2% 0. 45.866 1,9% 52.241 2.0% 57.0033 2.1% Gees weer eeooao is emonnra e name aura Ommeir u.s.Como er...cams 2110 frnemut Mb 1. Err immerar brad 01.10:11 lam 19.2015 BLAZEJACK& COMPANY 2 REAL ESTATE COUNSELORS . , Ali t 21 h _ • „ .._, _. REGIONAL ANALYSIS Employment and Income Miami Dade's labor force kept pace with the rise in population from 1990- 2006. The subsequent recession hit the county very hard and unemployment rates hovered 2 to 4 percentage points over the national average through 2012. Statistics and forecasts from the first quarter of 2015 show significant improvement with rates dropping to 6.0% range, the lowest level. .since October, 2008. The decline.same despite an increase in job seekers as the long term unemployed rejoin the ranks. A separate survey showed employers added more than 25,000 new non-farm payroll positions over the last year in each quarter of 2013. Analysis of the jobs picture reveals that the broad gains outlined in the year end employment report mesh with forecasts more hiring in 2015. Labor Force,Employment a Unemployment (In Thousands, Seasonally Adjusted) US) Labor Forge • L250 14% LIS0 10% `- t mployed _r, • 1,000 Unemployment Rata . (rigid axis) eel a • s i s sits t $ . ► t r �,. ;a.: C2Q3 Q401 02O304 a1O'243 04 *1as-as 04 as a2 as q4 as 20011 2012 2013 2014 20L3 Dahl Sources durCali of tabor Statistics.*fl Plastriog Research&Esonontic AnAisrs Section. BLAZEJACK& COMPANY 3 REAL ESTATE COUNSELORS �4 , REGIONAL ANALYSIS Unemployment Rate (Seasonally Adjusted) u% __ f .- • I 416 ........ lit— — _ S !Miami-Dade ._.!S►__-___., 3% i 1 kor 1 1 I I , - 1 _ I t,, t. 01 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2012 2013 2014 20155 Average Weekly Wages 12014 US Deus) .,limb / V.LakyLi___Iisadi 090 .....s / .,........._... )4 .. ._,.....,_ ._ ______ _ . . . ..., . A , s*oe iii --\- us . . „„..1.-----„„,r---- . , maws: _ __ ..."/ ..._,r,_- d ,„„r, -------.. • 411"" Florida 11.1 14141. woe ill• ="0 w■ iid %sib ow. fine . . _ , . .. ass wwaas eras amaroeoswaawao saaasa cis wa+w tit cuwQom NOS - no Mt few *1 t000 74K Ms Snow t'1140i00414ibeer zarstin Os Oloomeift#Irlsra a hosaiir mat**sets A recovering housing market has bolstered;,construction employment over the past year. Most recently,however,this trend appears to be slowing as new housing demand as the market's large number of BLAZEJACK& COMPANY 4 REAL ESTATE COUNSELORS M1 J I REGIONAL ANALYSIS foreign buyers diminishes due to a strengthening U.S. dollar. Job-growth leaders in Miami-Dade include information technology,financial activities,education and health services,and leisure/hospitality. Miami-Dade Nonfarm Payroll Employment ('000s) %Chg from %Chg from ,15.41 ,. . 2014414 _ 'Feud Nosdams 1.111.1 ,0.� _... Private 972.8 0.7% 3.6% Goods Prod. 75.5 -1.3% 5.6% Construction 376 -2.5% 10.7% actwi g 38.2 -0.1% 10'16 Private Service 897.0 03% 3.5% 'Wholesale Trade 74.6 21% 2.2%i Retail Trade 146.4 0.3% 1.6% Transp.-Wrsg-Uti. 663 -0.6% 2.2% nfo rmation 19.1 1.7% 5.7% Financial Activities I 77,1 0.6% 5.5% Prof., Bus. Seri 1553 0.2% 3.0% Educ./Health Seri. 172.6 1, 1.2% 4.046 Leisure/Hosp. 134.4 i 2.2% 4.6% Other Serr. 513 I 0.4% 52% Total Govt 1383 1 -0.4% . 'Coto Source:MO t9 `f"roriO! cord y. •. 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 Y 5 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Share d Total Employment by Sector M iam+-Dade County 2008 and Other Cenit uci at Government Manufacturing Information Viboiesaie Real Estate Transportation FCC® 111V 4 ^ 2030 Retail 2008 Services Miami Dade County Departmentof Planning andZonng,Research Sedion2010 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) lJ 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 over 100 airlines covering 150 destinations worldwide. MIA has a nearly $33.7 billion impact on the South Florida economy while contributing 282,724 jobs, and ranks as the second-busiest U.S. airport for international passengers. The following chart shows passenger trends through MIA from 2005 through 2014. 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. BLAZEJACK& COMPANY 6 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Passen2 rends-Miami International Airport International Total Passengers °'o of Passengers °o Period (000s) 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 53% 2011 18,418 48.1% 38,314 73% 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% 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 center is anticipated to open later this year. The NW 25d' Street Viaduct sub-project will improve connections between the Florida Interstate and Federal Highway System for ground transportation of air cargo, and construct an { elevated viaduct/roadway between MIA over SR 826,and out to NW 82`"Avenue with the assistance of the FDOT. BLAZEJACK& COMPANY 7 REAL ESTATE COUNSELORS • �'. REGIONAL ANALYSIS Air Cargo (tons) 2,500.000 2.000.000 _ 3 � 1,500,000 1A00.000 soa0oo 2006 2006 2007 2000 2009 2010 2011 2012 2013 2014 PortMiami PortMiami, the county's seaport, contributes over$27 billion annually to South Florida's economy and directly or indirectly provides over 207,000 jobs. Miami's Port is the world's busiest cruise port,with a fleet operated by 12 cruise lines. It has the largest year-round cruise fleet in the world including the "Megaships" capable of transporting more than 19,000 guests. PortMiami has approximately 40 shipping lines calling on more than 100 countries and 253 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 is underway at the port. The Miami Harbor Project calls for deepening PortMiami's south channel to a depth of 50 feet from the existing 42 feet, to accommodate mega container vessels that will begin traveling through the expanded Panama Canal in 2015. Additionally,redevelopment of 80 acres of cargo terminal area will enhance cargo terminal operations. 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. BLAZEJACK & COMPANY 8 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Miami-Dade County, Florida Seaport Department Schedule of Annual Total Tonnage (Unaudited) Last Ten Fiscal Years(ht thousands) Year Tate, Difference % Change 2005 904 0.096 2006 8,$54 (820) 8.7% 2007 7,838 (819) 4.5% 2008 7,430 (405) -5.2% 2009 4,831 (599) 4.1% 2010 7.389 558 8.2% 2011 ; 8222 833 11.3% 2012 8,108 (114) -1.4% 2013 7,981 (127) -l.6% 2014 7.700 (261) -3.5% Miami-Dade Seaport Department Schedule of Annual Total Passengers(Unaudited) Last Ten Fiscal Years(in thousands) Year Total Difference Change 2005 3.805 0.0% 2006 3,741 128 3.5% 2007 3.787 58 1.5% 2008 .4.138 351 9.3% 2009 4.110 (28) -0.7% 2010 4.145 35 0.8% 2011 4.018 (127) 4.1'1 2012 3.774 (244) -5.9% 2013 4.079 305 8.1% 2014 4,939 860 21.1% 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; 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 intermodal 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 seven routes, while Coral Gables offers a trolley connection between its Central Business District and the Douglas Road Metrorail station. BLAZEJACK & COMPANY 9 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Metrorail Stations Metromover Stations School Booed le , Ageism?/lrsht Center Pings Nse lids Bicentennial► imp i F -7, Park(Closed) V ��(�/ k • Eleventh Streit i >> :.y,c hisgullillis ) Pork * . --,1 P +�> College FreedOett'Tower pool Kt. ' Al t Wil kEe D sA .. .„,. ilmilimi rergtreon.Jr College/: : ' ' AkIlert • Mar w � rfo+0ermment •fiwnei M Gala cantor cent: Street. Mr Mlew+t Avenue y' "Third Om street httverwelk Pith N Street X11 :+01! Eighth MSS. ; Street s ' P • T toll WPM a ran o ttttt. 'Tooth; �. ,t ■ Street is- '/ Un Prone : r 01ltr1C11 1, Florida East Coast Industries has announced plans to start high-speed rail service along its rail right- .' of-way,with a connection that would carry passengers between Miami and Orlando in just over three hours. Stations are also planned for downtown Miami,Fort Lauderdale and West Palm Beach,with a starting date of 2015 for the tri-county line and the expansion to Orlando in the following two to three years. BLAZEJACK & COMPANY 10 REAL ESTATE COUNSELORS I 7 REGIONAL ANALYSIS 1 r' K. i ALL ABOARD FLORIDA I I ALL MOAN FLORIDA'S roots tree pack to Ronda trailblazer perry Hagler.fouroer)f tl'e,lo,,da East Coast i galfwdy and t'ne v'escs tart:o'oat'les that',ave crowded tail ierv'ce for ore{a;:entu^i 1146 1 'his J+:vately Cv+^2C.Operated and !`' ttairtan'ed paste:,er rat e'vlce will ..�► ,A.a be,ur ry n 2C'».jt rc•lsK to -w,Sri,:rir;.,y.,. OR L,f`4 DC 6,000 CONSTRUCTION JOBS FOR FLORIDIANS TAMP A Ar addtbanar'.COC;obs wit be needed gil 50 MILLION ',..:V,., TRAVELERS F.• , ..t •`.a ...i� Ark The numoec of annual` sseng r-: wt,o can benefit',off:rails. `AYE S F PA L:' ,,,EACH travel between cwt!,Piond,,. um C,o'r nt nteais ar-. v p�ndo it apomxlmately t"rye"do, ^gage service -,,f 4- ,��o-•- $6+BILLION Rberted+ FORT LAUDERDALE The amca'tatmore, rsrr: :cja:h aewlci* congestion costs Flcnda traveien each par due to 274 neon hours .4 _ MIAMI a` 1 nntrdtret delays and lib'ndhcn ` , aces gallons at fuel coast wl - ilia "Naseeolow..--, rte., n y `' F,` k - .__.. 3 MILLION CARS /1.1 Ali R ;„.` l I OFF THE ROAD A < . ,,, mats taxpart -*k � „ •�?e- .igt#tair � t: • 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 will connect to the Orange Line of Metrorail at Miami International Airport later in 2015. 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 All Aboard station in downtown Miami via existing rail lines between the current Metrorail transfer station near N.W. 72'Street that connect to to 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, 1 BLAZEJACK&COMPANY REAL ESTATE COUNSELORS REGIONAL ANALYSIS 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 and Metrobus station. By 2015, Amtrak and Tri-Rail, South Florida's commuter rail service, are expected to connect to Miami Central Station. Major Roads The major interstate highways serving Miami-Dade County are 1-95, on the east, and 1-75, 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. BLAZEJACK & COMPANY 12 REAL ESTATE COUNSELORS I Exhibit F I Appraiser's Qualifications EXHIBIT F QUALIFICATIONS JOHN A.BLAZEJACK,MM,CRE,FRICS Partner Blazejack&Company Academic Florida State University,B.A. Florida International University-M.S.M.Real Estate Most Recent Courses 1992-Level II Course 520-Highest and Best Use and Market Analysis 2000-Level II Course 530-Advanced Sales Comparison and Cost Approaches 2008-Member of review team for revised course on Market Analysis&Highest&Best Use 2008-Member of the review team for new course on Advanced Market Analysis&HBU 2010—Valuation for Financial Reporting 2012—Member of review team for Marketability Studies and Advanced Marketability Studies seminars Experience Mr.Blazejack,President of Blazejack&Company,has been active as a real estate counselor since 1970. His experience includes residential and income property appraisals,market and feasibility studies,and acquisition and disposition reports. The work has been for a wide range of property types including office,industrial,commercial and special use properties,hotels and recreational facilities. These assignments have been conducted-in over twenty states and extensively throughout Florida. Mr. Blazejack is a qualified expert witness who has testified in Federal district and lower courts.He is an approved instructor of both the Appraisal Institute(AI)and the American Bankers Association. Mr. Blazejack is a past president of the Greater Miami Chapter of the Society of Real Estate Appraisers and was the 1992 President of the South Florida Chapter of the Al.. Designations and Licenses MAI Member,Appraisal Institute,Certificate Number 6089,currently certified. CRE Member,American Society of Real Estate Counselors,Certificate Number 1131. FRICS Fellow of the Royal Institute of Chartered Surveyors Number 1250175 Registered Florida Real Estate Broker State-Certified General Real Estate Appraiser,License Number RZ93. Affiliations Mr.Blazejack is the past President of the Real Estate Counseling Group of America(RECGA). Published Articles The Appraisal Journal,Spring,2011 Price versus Fundamentals—From Bubbles to distressed Markets By Stephen F.Fanning,MAI John A.Blazejack,MAI and George R.Mann,MAI Real Estate Issues,Volume 34,Number 1.2009 When Will the Miami Condominium Market Recover? By Richard Langhorne,CRE,FRICS and John A.Blazejack,MAI,CRE,FRICS QUALIFICATIONS J GUTHRIE(JAY)MLINAR,MAI,SRA Blazejack&Company Academic B.B.A., Southern Methodist University, 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 analyses, market studies, consulting and evaluation of office buildings, hotels/motels, apartments, condominiums, warehouses, vacant land, single-family homes, retail stores, restaurants, shopping centers, mixed-use projects, golf courses 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. Throughout his career,Mr. Mlinar has completed appraisals,analyses and consulting on properties located in 20 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 APPENDIX 7 Appendix 7 Summary of Public Revenue Impact Over 30 years Over 99 years 2022(Yr 4) Total NPV @ 5% Total NPV @ 5% CITY Hotel Lease Minimum Fixed Rent $1.5m $53m $21m $417m $35m Variable Rent 1.5m 59m 23m 466m 39m Percentage Rent (4%Gross) $2.9m 112m 44m 883m 74m Taxes CRA City(thru 3/2044) 1.1m 34m 16m 34m 16m CRA County (thru 3/2044) 0.8m 26m 12m 26m 12m New Resort Tax (Hotel 1%) 0.8m 30m 12m 229m 20m Resort Tax (Hotel 3%, F&B 2%) 3.0m 118m 48m 902m 79m CDT Allocation (thru 2044) 1.5m 36m 16m 36m 16m Property Taxes* 0.1m 13m 4m 326m 16m Subtotal 7.2m 258m 108m 1,553m 159m CITY TOTAL $1O.lm $369m $151m $2,436m $233m COUNTY Convention Devl.Tax (3%) 0.8m 54m 20m 650m 44m Local Option Sales Tax (1%) 1.1m 44m 18m 336m 29m Property Taxes* 0.1m 12m 4m 266m 14m Subtotal County 2.0m 110m 42m 1,252m 87m SCHOOLS (Property Tax) 1.5m 60m 24m 453m 40m OTHER PROPERTY** 0.2m 7m 3m 55m Sm STATE SALES TAX (6%) 6.6m 264m 107m 2,019m 176m TOTAL • 520.4m $810m S327m 56,215m $540m 1 *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 2016 $1.5m of County CDT allocated to City beginning in third year of hotel opening through 2044 Sources:Portman,City of Miami Beach,SAG. I 28 I SATURDAY.AUGUST 22.2015 ti1 LOCAL&STATE Miamiliereld.corn I MIAMI HERALD. — — hv.s-2c15 MIA/Y\IBEACH CITY OF MIAMI BEACH NOTICE OF PUBLIC HEARING AND INTENT TO CONSIDER A DEVELOPMENT AND GROUND LEASE AGREEMENT NOTICE IS HEREBY given that a Second Reading/Public Hearing will be heard by the Mayor and City Commission of the City of Miami Beach,Florida,in the Commission Chambers,3rd Floor,City Hall, 1700 Convention Center Drive,Miami Beach,Florida,on Wednesday,September 2,2015 at 11:0D a.m, or as soon thereafter as the matter can be heard,to consider, A Resolution Of The Mayor And City Commission Of The City Of Miami Beach,Approving, Following Second Reading/Public Hearing.A Development And Ground Lease Agreement.As Authorized,Respectively,Under Section 118.4 Of The City Code,Sections 163.3220-161324.3, Florida Statutes,And Section 82-37 Of The City Code, Between The City And Portman Miami Beach,LLC("Portman"),For The Development Of An 800-Room Convention Headquarter Hotel And Related Facilities,Including UpTo 35,000 Square Feet Of Conference And Ballroom Facilities. And Up To 3/,4UU Square Feet Of Restaurant Facilities(The"Hotel"),On An Approximately 2.t$b Acre Site OnThe Northeast Corner Of 17°'Street And Convention Center Drive,Bourded Roughly RyThe Miami Reach C'.nnventinnC:entarToThe North,17"StmetTAThe Smith,The Fillmnre Miami Beach AtThe Jackie GleasonTheaterToThe East,And Convention Center DriveToThe Wiest(The 'Leased Property"i; Delineating The Conditions For The Design,Construction, Equipping And Operation OfThe Hotel OnThe Leased Property With No City Funding Therefor;Providing For A 99-Year Term OfThe Leased Property Once Certain Conditions Are Satisfied;Prohibiting Gambling Establishments OnThe Leased Property;And Providing For Annual Base RerttToThe City,AfterThe Hotel Opens,OfThe Greater of Minimtan Fxed Rent Or A Percentage OfThe Gross Revenues Of The Hotel,Among Other Rent. PROPERTY The proposed Leased Property consists of a portion of Folio No.02-3227-000-0090, on an approximately 2.65 acre site on the northeast corner of 17"Street and 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 GleasonTheaterto the East,and Convention Center Drive to the West PFRMITTFD IKFS:The proposed nevelnpment and Gmunrl I Race Agreement does not amend the main permitted uses under the City's Land Development Regulations,which include parking lots,garages,performing arts and cultural facilities;hotel;merchandise mart;commercial or office development;landscape open spats;parks and any use that is customarily associated with a convention center or governmental buildings and uses. 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.The maximum building height for a hotel is 300 feetThe scale of the hotel use is limited by setbadt,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 this zoning district. The height of any habitable building on the Leased Property shall not exceed;100 feet to the top of the roof,and architectural projections will comply with the terms of the City's Land Development Regulations. A ppy of the proposed Development and Ground Lease Agreement is available for public inspection during normal business hours in the Office of the City Clerk 1700 Convention Center Drive,1st Floor, City Hall,Miami Beach,Florida 33134.Inquiries may be directed to the Office of the City Attorney at 3055673.7470. 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,do the City Clerk,1700 Convention Center Drive,1'Room,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 meeting,or any itern therein,may be continued,and under such circumstances,additional legal notice need not be provided Pursuant to Section 288.0105,Fla.Stet.,the City 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 its meeting or its lredriuy,wadi persuir must ensure Ural d veuValirrr record of die pruutietfmys is tirade,hnAhikth 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 this material in alternate format, sign language interpreter(five-day notice required), information on access for persons with disabilities,and/or arty accommodation to review any document or participate in any City-sponsored proceedings,call 30b.6042489 and select 1 for English or 2 for Spanish,than option 6;TTY users may call via 711(Florida Relay Service). Rafael E_Granado,City Cleric Ad 1059 City of Miami Beach 1 •O l:m m .E O r E 2 .- «NC Y u N ..-U m H N C r Z O m m m-L N C m- 0m C _j c m C C N m L t mQ 22 c n U o m m m-t a«.1 m C off •« >-'C m U m EQ'•2W m .~ c m ' c c o O c E >- a~ m> . 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