Hilton grand offering memorandum 2013 1 clients eb5 by LUXURY REAL ESTATE

Los Angeles, California

Confidential Offering Memor andum 1 Confidential Offering Memor andum

Los Angeles, Califor nia

CONDITIONS OF OFFERING This confidential offering memorandum and other, ancillary offering materials provided (collectively, the “Offering Materials”) are intended solely for the limited use by a potential investor (“Potential Investor”) in considering whether to participate in the capitalization and development of The Hilton 1000 Grand Hotel (the “Property” or, alternatively, the “Hotel”) in Los Angeles, California. The Hotel is owned by Development on Grand Avenue, LLC. For purposes of these conditions of offering (the “Conditions of Offering”), HFF, L.P. (“HFF”) is an agent of the Owner. The Offering Materials, which are provided subject to these Conditions of Offering, contain brief, select information pertaining to the business and affairs of the Hotel, and detail a possible investment of the Hotel (the “Investment Opportunity”). They do not, however, purport to be all-inclusive or to contain all of the information which a Potential Investor may desire or require. Any party in possession of the Offering Materials is bound by the Conditions of Offering. The Offering Materials contain certain documents, such as, but not limited to, pro forma financial statements, management agreements, and leases that are described in summary form. The summaries do not purport to be complete nor necessarily accurate descriptions of the full documents involved. The Potential Investor must rely solely on its own review of the full documents. All financial projections are provided for general reference purposes only in that they are based on assumptions relating to the general economy, competition, and other factors beyond the control of the Owner and HFF. Any graphics or drawings included in the Offering Materials are included to assist the reader in visualizing the Hotel. HFF has made no survey of the Hotel, and assumes no responsibility in connection with such matters. HFF has had neither a legal review of title or development rights of the Hotel nor an engineering review with regard to the environmental, physical, and mechanical integrity of the Hotel, and no representations with respect to such matters are made hereby. Neither Owner nor any of its partners, officers, employees, or agents make any representation or warranty, express or implied, as to the accuracy or completeness of this information, and no liability of any kind whatsoever is assumed by Owner with respect thereto.

Confidential Offering Memor andum

The Offering Materials shall continue to be the property of the Owner and HFF. The Offering Materials will be used by the Potential Investor and the Related Parties (as hereinafter defined) solely for the purpose of evaluating the Investment Opportunity and not for any other purpose unrelated to the Investment Opportunity, and may not be copied or duplicated without the Owner’s or HFF’s prior written consent and must be returned to HFF immediately upon request or when the Potential Investor decides not to pursue, or terminates discussion or negotiations with respect to, the Investment Opportunity or the Hotel. The Potential Investor acknowledges that the Investment Opportunity and the Offering Materials are considered confidential and proprietary information of Owner and HFF, and will not disclose the Investment Opportunity, make any Offering Materials available, or disclose any of the contents thereof, to any person without Owner’s or HFF’s prior written consent; provided, however, that the Investment Opportunity and the Offering Materials may be disclosed to the Potential Investor’s employees, legal counsel, and advisors (collectively, the “Related Parties”) as required for an evaluation of the Investment Opportunity and/or the Hotel, provided such Related Parties are (a) informed by the Potential Investor of the confidential nature of the Investment Opportunity and the Offering Materials and these Conditions of Offering and (b) directed by the Potential Investor to keep the Investment Opportunity, the Offering Materials, and related information strictly confidential in accordance with these Conditions of Offering. The Potential Investor shall be responsible for any violation of this provision by any of the Related Parties. OWNER EXPRESSLY RESERVES THE RIGHT AT OWNER’S SOLE, SINGULAR, EXCLUSIVE AND ARBITRARY DISCRETION TO REJECT ANY OR ALL PROPOSALS OR EXPRESSIONS OF INTEREST IN THIS INVESTMENT OPPORTUNITY AND TO TERMINATE DISCUSSIONS WITH ANY PARTY IN CONNECTION THEREWITH AT ANY TIME WITHOUT NOTICE. THE OFFERING MATERIALS SHALL NOT BE DEEMED TO REPRESENT THE STATE OF AFFAIRS OF THE INVESTMENT OPPORTUNITY OR THE PROPERTY, OR CONSTITUTE AN INDICATION THAT THERE HAS BEEN NO CHANGE IN THE BUSINESS OR AFFAIRS OF THE INVESTMENT OPPORTUNITY OR THE PROPERTY SINCE THE DATE OF PREPARATION OF THIS INFORMATION.

THE INFORMATION PROVIDED HAS BEEN GATHERED FROM SOURCES DEEMED RELIABLE, BUT THE OWNER AND HFF DO NOT WARRANT OR REPRESENT THAT THE INFORMATION IS TRUE OR CORRECT. YOU ARE ADVISED TO VERIFY INFORMATION INDEPENDENTLY. The Owner reserves the right to make any change, to add, delete, or modify the information or to withdraw the Investment Opportunity from consideration at any time, without notice. Furthermore, the inclusion or exclusion of information relating to asbestos or any other hazardous, toxic or dangerous item, waste or substance (hereinafter collectively referred to as “Waste”) relating to the Hotel shall in no way be construed as creating any warranties or representations, expressed or implied, by the Owner or its agents as to the existence or nonexistence of Waste of any kind or nature in, under, or on the Hotel, or to create legal and/or economic obligations upon the Owner, lessee, and/or other holders of any interest in the Hotel or a part thereof. Should you require additional information regarding the Investment Opportunity, please contact HFF at the following address:

DANIEL PEEK Senior Managing Director dpeek@hfflp.com 813.387.9901

JOHN BOURRET Managing Director jbourret@hfflp.com 469.232.1962

JAMES FOWLER Managing Director jmfowler@hfflp.com 949.798.4102 CA License #01014854

CYRUS VAZIFDAR Hospitality Analyst cvazifdar@hfflp.com 305.448.1333

BILL STADLER Senior Managing Director bstadler@hfflp.com 949.253.8800 CA License #01920388

Confidential Offering Memor andum

TAMPA 101 East Kennedy Boulevard Suite 3905 Tampa, FL 33602 T: 813.387.9900 F: 813.387.9940 DALLAS One Lincoln Park 8401 North Central Expressway Suite 700 Dallas, TX 75225 T: 469.232.1962 F: 214.265.9564 ORANGE COUNTY 18300 Von Karman Avenue Suite 900 Irvine, CA 92612 T: 949.798.4102 F: 949.253.8810

MIAMI 1450 Brickell Avenue Suite 2950 Miami, FL 33131 T: 305.448.1333 F: 305.448.6767

Los Angeles, Califor nia

Confidential Offering Memor andum

Table of Contents

Confidential Offering Memor andum

Executive Summary

Project Overview

Market Overview

Area Overview

Financial Overview

Appendix

EXECUTIVE SUMMARY Los Angeles, Califor nia

Los Angeles, Califor nia

The Offering HFF, L.P. (“HFF”), on behalf of Development on Grand Avenue, LLC, the Owner, is pleased to present a generational opportunity to provide joint-venture equity for the development of the Hilton 1000 Grand Hotel (the “Property” or the “Hotel”). The Hotel, scheduled for completion in Q1 2016, will be located in one of the most exciting lodging submarkets in the country, the South Park neighborhood of downtown Los Angeles, home to the Staples Center arena, the Los Angeles Convention Center, the brand new LA Live Entertainment district, and the future home of the 72,000-seat Farmer’s Field which is anticipated to host a permanent NFL team in 2017. The project, a joint development between Gatehouse Capital and site owner, James Myron and a team of experienced professionals, is located at 1000 Grand Avenue, at the corner of Grand Avenue and Olympic Boulevard. Upon completion, the Property will be comprised of a 28-story, vertically-integrated hotel tower offering 535 Hilton branded hotel keys, with 50,000 square feet of meeting space, several F&B outlets and various luxury amenities to cater to the prevalent corporate and group demand that frequents the area. In addition, the development will include nearly 13,000 square feet of rentable retail space.

Confidential Offering Memor andum

The Owner has solved for over 80% of the capital stack, 72.5% of which represents non-recourse EB-5 construction financing at terms significantly more attractive than market. As such, the Hotel presents a new investor with an unrivaled opportunity to participate in a high profile hotel development project located in a dynamic and growing submarket of one of the most desirable and vibrant lodging markets in the country. The incredible in-place financing will allow for above market returns at below market rates.

DEVELOPMENT HIGHLIGHTS Projected Opening

2016

Brand

Hilton

Guestrooms

535 Rooms 5% Suite Mix

Meeting Space

50,000 SF (76 SF/Room)

Amenities

Outdoor Pool Deck 5,000 SF indoor/outdoor lounge Three meal indoor/outdoor restaurant 2,000 SF guest-only fitness center 298 parking spaces

Retail Component

8,000 SF leasable full-service restaurant 4,680 SF of divisible street-front space Metered street parking

Site

58,499 SF (1.34 Acres)

Gross Building SF

616,770 Gross SF hotel and retail space

EXECUTIVE SUMMARY Los Angeles, Califor nia

Investment Highlights Impressive Lodging Market Fundamentals. Los Angeles is one of the strongest and most vibrant lodging markets in the country, buoyed by a base of demand generators to rival any metro area. On the strength of the third largest city economy in the world, the lodging market has shown huge growth, with a 10.6% increase in RevPAR year over year through October 2012, the majority of which is comprised of rate growth, suggesting that Los Angeles is experiencing real, organic fundamental growth. Further, PKF reports the upper-priced hotel segment, which the Property would fall into, is forecasted to finish 2012 with RevPAR of $135, representing an increase of 9.3% over 2011. Incredible In-Place Financing. While debt terms for properties with inplace cash flow have become very attractive, construction financing in the lodging space has lagged as lenders continue to become comfortable with the strengthening fundamentals of the greater lodging market. As such, construction financing is only available for high-profile CBD market developments at fairly high rates and low leverage. The current in-place financing for the Hotel sourced through the use of EB-5 funding offers overwhelmingly attractive rates and leverage in excess of 70%, offering the opportunity to drastically increase returns and limiting the equity necessary to deliver the project.

Growing South Park Submarket. The South Park submarket of downtown Los Angeles is one of the most exciting and fastest growing developments in the country. Los Angeles has commenced a major redevelopment of its downtown community, supporting the creation of the nearly complete LA Live project, including the 878 room JW Marriott and the 123 room Ritz-Carlton, centrally located adjacent to the Los Angeles Convention Center, the Staples Center, and the Nokia theater, all just a few blocks from the Property. With future additions such as Farmerâ&#x20AC;&#x2122;s Field, a 72,000-seat football stadium targeted as the new home to an NFL franchise, a growing downtown residential base, and an explosion of retail, the South Park neighborhood is arguably the most enviable new lodging submarket in the country.

Experienced Development Team. Gatehouse Capital, the developer on the project, has assembled a team of extremely experienced professionals with a track record of executing similar high profile development projects. Specializing in distinctive upscale mixed-use development and hotels, Gatehouse Capital has developed approximately $1B of hotel product, including the W San Diego, W Silicon Valley, W Dallas Victory Hotel and Residences, W Hollywood Hotel and Residences, Hyatt Regency Islandia in San Diego and the Joule Hotel in Dallas. With tremendous experience in the development of similar hotel product within the Los Angeles market, Gatehouse Capital is the ideal partner and development team to execute the project.

Confidential Offering Memor andum

EXECUTIVE SUMMARY Los Angeles, Califor nia

Investment Highlights Trophy Asset Development. The Hotel will be the newest lodging property in downtown Los Angeles, offering a brand new, institutionally developed asset in a desirable high-barrier market. The opportunity to participate in ownership and development of a hotel of this quality in a top 5 market represents a generational opportunity for a new investor. Due to the prestige and eventual success of the Hotel, the ownership group will have various exit strategies due to the immense desirability of the Property and market. Dominant Brand and Distribution System. Hilton is one of the largest and most recognizable hotel brands in the world today. With the second largest portfolio of lodging assets in the world, Hilton offers incredible access to highrated group and transient corporate business through its reservations system and global marketing platform. Boasting an award-winning loyalty program with over 15 million Hilton Honors Members, the Hilton flag gives the Property a competitive edge as well as a high perception of quality and value for repeat guests and investors. EB-5 Financing Precedent. A 23-story, dual-branded Courtyard Marriott and Residence Inn hotel concept has been approved and is under construction adjacent to the Ritz-Carlton, Los Angeles and JW Marriott LA Live. This limited service project has a higher development fee, higher per key cost, and higher per square foot land cost than the Property. The development is secured by EB-5 equity funding, placed by Henry Liebman of American Life. The successful placement of EB-5 funding by Henry Liebman in the same market with similar branded product suggests that this new source of funding affords a high likelihood of execution due to Henry Globalâ&#x20AC;&#x2122;s experience, and the precedent set based on job creation for EB-5 funding. Experienced EB-5 Distributor. Henry Global, the EB-5 agent handling the fund raising for the Property, is one of the largest immigration consulting firms in China, and has tremendous experience placing EB-5 financing, raising $50M per month for similar projects. Henry Global has executed 35 EB-5 financing projects over the past several years, and is the best suited EB-5 placement agent to execute the funding for the Property.

Confidential Offering Memor Summary andum

EXECUTIVE SUMMARY

RELEVANT OPER ATING PRO FOR M A METRICS (2016 - 2020) 2016

2017

2018

2019

2020

Guestrooms

535

Occupancy

69.0%

74.0%

76.0%

Average Daily Rate

$248.00

$255.00

$263.00

$271.00

$279.00

Revenue per Available Room

$171.12

$188.70

$199.88

$205.96

$212.04

Total Revenues

60,546,000

66,816,000

70,732,000

72,871,000

75,037,000

Gross Operating Profit

21,320,000

25,198,000

27,364,000

28,202,000

29,028,000

EBITDA

17,541,000

20,800,000

22,453,000

23,165,000

23,863,000

NOI

16,936,000

19,464,000

20,331,000

20,250,000

20,862,000

28.0%

29.1%

28.7%

27.8%

NOI Margin (%)

PROJECT DEVELOPMENT BUDGET Total

Per Key

$32,500,000

$60,748

$133,489,500

$249,513

FF&E

$11,456,600

$21,414

OS&E

$7,057,500

$13,192

$31,702,925

$59,258

$9,000,000

$16,822

$225,206,525

$420,947

$220,206,525

$411,601

Land Purchase & Closing Costs Hard Costs (Including 6% Contingency)

Other Soft Costs (Including Contingency and EB-5) Development Fee (5%) Total Project Cost Hotel Only Third Party Retail

Confidential Offering Memor andum

$5,000,000

Per Gross SF

$216

$365 $391

EXECUTIVE SUMMARY Los Angeles, Califor nia

Project Development Master Schedule 2013 Q1 Q2 Jan Feb Mar Apr May Jun

2014 2015 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Entitlements Prepare/Review Screencheck MND Lead Agency Review Comments/Response/Pub Final MND City Approvals Design/Documentation/Review Concept/Schematic Design SD Architectural Package Design Review and Approvals Design Development (Arch/Interiors) DD Review and Approvals Construction Documents Foundation (Structural) Package Core and Shell (Arch/Structural) Interiors Package Final CD/Interior Rev & Approval Parallel Permit/Struct Review Process SPRP - Structural Review Select and Initial Struct Design SPRP Kick-off Meeting SPRP Progress Mtgs. (4 Cycles) SPRP Foundation Appr. Ltr. SPRP Approval LADBS Parallel Review Process Permits Excavation/Shoring Foundation Core and Shell Interiors Design/Build, Cost, Construction Costing & GMP's ROM Pricing 50% SD ROM Pricing 100% SD ROM Pricing 50% DD GMP1: 100% DD/ 75% CD Struct ROM Pricing approx. 50% CD GMP2: 100% CD </= GMP1 Construction Excavation and Shoring Foundation Core & Shell Interiors Punch/Close/Comm

Confidential Offering Memor andum

EXECUTIVE SUMMARY

Confidential Offering Memor andum

Bro ok sA ve

Bake r St

Barr

Alb ion St Gibbo ns St

Ave te S t

Echandia St

Gill et

Echa ndia St

Baile

Ave Baile y St

N Bo yle Bodie St

Gertrude St

Via Nicola

S Clarence St

N St

er nB Sa

Pro gre ss Pl

Paseo Los Ali sos Pase o La Zanja Via Lo sS an tos St S Utah St

S Myers St

S Anderson St

SC S State St

Lak

e S Rio St

S Anderson St

kP ark bec

Wilson St

Lin de nS t

E 8t h St

E Olympic Blvd

E 11th St E 11 th St

Mateo Pl

E 16 th St

Short St

Vis ta

E 14th St E 15 th St

E 12 th St

Modoc St

Butte St

W Caldwell St Harriett St

Minerva St

E Ad ams Bl

E 27th St

Long Beach Ave E

Long Beach Ave W

E 27 th St

E 28th St

Harriet St

E 24th St

E 25th St

Av e

E 16th St

E Washington Blvd

cket t S Fi

E 11 th St E 11 th St

E 12 th St

Rio

E 12th St

Camulos

Hos tette r St

Orm e Av e

Rio Vista Ave

S Santa Fe Ave

St Santa Clara St

Imperial St

E 14th

Mateo St

Wilson St

Elwood St

E 10th St

E 11th St

E8 th S t Glenn Ave

Greyhound East Los Angeles Station

Hunter St

Porter St

Rio Vista Ave

Channing St E 11 th St E 10th St

mp Fr Ra

Pomona Frwy

S Soto St

Lawrence St

pr Enter

Porter St

Imperial St

Hoo per Ave

Mcg arry

Mcgarry St

Long Beach Ave

Staunton Ave

Ave

ise St

rise St Enterp

Hunter St

ica Fr

Mon

St Hunter

Mcgarry St

Staunton Ave

S Alameda St

Compton Ave Compto n Ave

Ho ope rA ve Compton Ave

on St Tarl et

ica Mon

Santa

W Glencoe St

Lugo St

Leta St

Gera ldine

Garne t St

Opal St

E 8th St Damon St

E 25th St

Nevin Ave

Stansb ury Wa y

Loui s S St

eed St

E 7t h St

Bay St

E 23rd St

Ave

llen Ho

S Boyle Ave

S Pecan St

Hollin s St

S Br

E 7th Pl

E 23rd St

Morgan

Ave

E 7th St

E Atlantic Ct

E 7th Pl

Ter

Rog ers St Sunrise

E 8th St

Co mp ton

Pl Ho op er

Boaz St

Echa ndia St

y Fr w

Richmond St

din o na

Gallar do

Kel ler St N My ers St

Mission Eastway St

St N Vignes St

Lawrence St

E 7th St Decatur St

Channing St

Mar ket Ct

Term inal St

War ehou se

S Myers St

S Alameda St

St Mer chan t

S Santa Fe Ave

Avery St

SH ew itt S t

ck Mer ri

Mill St

Ave Cer es

Ko hle rS t

Ave Ctr

Prod uce Ct

Clove r St

Ric hm

Avila St

Ly on St

E Ramirez St

St Rose St

S Central Ave Ave Gla dys

Ave

To wn eA ve

Sta nfo rd

Gla dys Ave Cer es

Koh ler St

Gla dys Ave

Pro duce

SC en tra lA ve

Na om iA ve

Nao mi Ave

Lam ar St

N Alame da St

N Hewitt St

N Vignes

St N Garey

N Alameda St

N Central Ave

Jud ge Joh nA iso Ct St Woo dw orth

St Azu sa

St Om ar

Wal l St

lian SS St an Pe dro St

San

Esse xS t

Ave Gri ffith

Pal om aS t

St Ess ex

Ave ith Griff

S Ce ntral Ave

Center St

NM ain

NS pri ng St St

nP l N Lo sA ng eles

We rdin

Ro sa be ll S t Da te St

gh St New Hi

N Sp ring St

New High St

Olv era

N Grand Ave

St SS pri ng Pl Har lem

Wer di Pl

Pl Har lem Cro cker St Stan ford

Ave

Tow ne

Ave

Julia nS t San

San

Ped ro S t

Julia nS t San

Stan ford Ave Palo ma St

Moult on

Pru dent St

St N Fi guer oa Av e

NG ran d

NH op eS t Fran kC t

St Sa nJ ulia n

Map le A ve

Wal l

Myr tle

St Adai r

St Adai r Stan ford Ave

Ave ith Griff Paloma St

Elysia n Pa rk Dr

Brooks Ave Stad ium Way

Hom eS t Cot tage

Sun Mun Way

Chun g Ki ng Rd Mei Ling Way

Adob e St

Yale St

ll St N Hi

Figue roa Ter

Clev eland St

Cust er Av e Av e

Be au dry N

SH op eS t

Cla yS t

Lin dle yP l

St Vin cen tP l

Pl Ha rle m

NA lam ed aS t

Ave

N Be audr y

Cent enni al

Ever ett St

Mar view Ave Whi te Kn oll Dr

E Kensington Rd

Rd N Ke nsin gton

NB oyl sto nS t

Vic tor St

St on N Bo ylst

SF igu ero aS t

Ct Mer cu ry St Vin cen tC t

Broadwa y Pl

San tee St

Sai nt St Wal l St Trin ity

St Sant ee Map le Av e Wal l St Wal l St St

Stan ford Ave Ave

S Avenue 19

St N Bo ylst on

St Dou glas

xel St Firm in St

N Bi

SH op eS t

SG ran dA ve

Chav ez R avin e

St Dou glas

N Ea st Ed gew are Rd

Rd E Ed gew are

SO live St

Mid way

Bla ckst on eC t

Jose phs Pl

SO live St

SB roa dw ay Trin ity

Ped ro S t SS an

Griffith

St Trin ity

Adai r St

Wal l St

Craw ford St

Woo dlaw n Ct

N Bo ylst on

St Dou glas

Quin tero St

Suth erla nd

Mcd uff St

Ter St on

SG ran dA ve Ln

Mid way

Mar go St

St S Ho pe

Cat esby

S Pe mbr oke Ln

SH ILL ST Map le Av e

SH ill St

Stadiu

Porti a

Pl Fairb anks

St Porti a St

Mcd uff

Ave

Lave ta Te r

Ech oP ark Park Ave Echo

Lagu Cro na Av sby e Ln St Dou glas

N To luca St Rd Edge war e

Bixe l St S Bo ylst

St S Bo ylst on Ave SB eau dry

em on tA ve

St Leb an on

Fran cisc Cotta o St ge Pl

Pem bro ke

SF igu ero aS t

SO live St

Lavet a

Rd Lave ta Te r

W Ke nsing ton

Ter Echo Par k Echo Park Ave

Lave ta Te r

Patto n St

S To luca St

xel St S Bi

S Fr

Be au dry

Av e

St Pa ul Av e

St Pa ul Pl

Fran cisc oS t

a St

Geor gi

xel St

Geor gia St Otta wa Ct

St Byr am

S Bi

S Pe mbr oke Ln

SH op eS t

SG ran dA ve

Palm Dr SH ope St

SH ope St

Lave ta Te r

Libe r

Glendal

Glen dale Blvd

St do

ae St N Bo nnie Br

ae St N Bo nnie Br N Bo nnie Brae St

Belmont Ave

N Bu rling ton Ave

Belm ont Av e

Lom a Dr

Pl Witm er P l Witm er St Col um bia

xel St S Bi

St Sun bury

Ove rton

SF igu ero aS t

Gol den Ave

Gar land

Ave

Witm er St

Blai ne

Leba non St S Fl ower St

Geo rgia St

Ave Love Lace

la Av e Estr el

Figueroa Way

Ches ter Pl

ower St S Fl

SH ope St

and Ave S Gr

Bro adw ay P l

oadw ay S Br

Har tfor dA ve

Witm er St

Witm er St Hartf ord Ave

Ave

Gree n Av e

Colu mbi a

Alba ny St St ne Blai Sent ous St

St Cher ry

Bond St

Oak St

St Che rry

Ave

Bons allo

Nor woo d St Park Grov e Av e

St Ja mes Pl

guer oa St ow er St S Fl

S Fi Flower Dr

Luca s Av e

Ave Colu mbi a

Lo ma Dr

Vale ncia St

Littl e St

Ave

Beac on

SU nion

Gra ttan St

Vale ncia St

Alba ny St

Ave SU nion SAvU enion

Tobe rman

Cons tanc e

Oak St

Roya l St

Shrin e Pl

Univ ersi ty Av e

Roy al St

Hollenbeck Dr

Jesse St

Perrino Pl

S Figueroa St

Park Ave

Ave

Ave NW estla ke

S Bu rling ton Ave Ave

SU nion

Ave SU nion

Unio n Dr

SA lvar ado St ae St S Bu rling ton Ave

S Bo nnie Br

SW estla ke Av e

Tobe rman St Tobe rman

St Port land

Scar ff St St Ja mes Park

Seve ranc e St

St Port land

N Bu rling ton Ave

NU nion

Ave

SW estla ke Av e

ae St S Bo nnie Br

and View

S La ke

S Gr

Mohawk St

Moh awk St

Ave

Wat erlo o St

Rose mon t

N La ke St

Zalv idea St

NM ount ain View NW Ave estla ke Ave

Ave SM ount ain View

S La ke St

ew S Pa rk Vi

N Bo nnie Brae St

Ave Rose mon t

Rose lake Ave N La ke St

St S Pa rk Vi ew

S Ca rond elet St St

SC aron dele ew St t

S Pa rk Vi St

et St

Zalv idea

Coro nado Ter Ros enel l Te r

N Ca rond elet St

Ave

N Pa rk Vi

Rose mon t

Faye tte Pa rk Pl

N La

N R ryden Pl am part Blv d St N Co rona do

Way N Be nton

Blv d SR am par t St S Co rona do S Ca rond el

Rose mon t

Ter Coro nado

Park man Ave

NO ccid enta l Bl

NR eno St

NO ccid enta l Bl

Way S Be nton St

S Ca rond elet

S Pa rk Vi

St View SG rand

S La ke St Bra eS t SB onni e

Alv arad o Te r

ae St

S Bu rling ton Ave

S Un ion Ave

St Jam es

West Adams Gdns

Monmouth Ave

Inez St

Conway Pl

Industrial St

Blvd

Wynglen Ln

Pkw y

Lanfranco St

S Riv les Ange Los

Trou sdal e

NA lvara

Coro nado Ter

Blv d NR am par t

Mer win St

Park man Ave

NR eno St

N Oc cide ntal Blvd N La faye tte Park Pl

N Ve ndom

Robin son St

NR eno St

N Ve ndom e St

St St

N Hoover

Robi nson

N Di llon St

St SD illon

S Ve ndom e St

S Re no

Blvd S Oc cide ntal Park Pl S La faye tte

Park Pl Faye tte Blvd

S La

S Ra mpa rt

St S Co rona do

S Ca rond elet St

St S Pa rk Vi ew Orchard Ave

St Mal vern Ave

S Bo nnie Br

Cour tland Arapahoe St

S Bu rling ton Ave

Wilmot St Arapah oe St

Wilmot St

Magnolia Ave

101

Way

E 3rd St

S Mission

Wat ts

E 5th St

S Gless St

Whitti er

Way

E 2n d St

E 3rd St E 3rd St S Pecan St

Via Los Santos St

Menlo Ave

nel Coro

E 6th St

S Mission

Orchard Ave

nt Ave Pleasa

E 6th E 6th St

E 4th St

ers St S My

Orchard Ave

21 enue S Av

n St Warre

Ave lvania Pennsy

Factory Pl

White Mem Medical Ce

E 5th St

Mesquit St

Wat ts

Ave

Menlo Ave

enue S Av

s Via Las Santo

S Clarence St

S Westmoreland Ave

21 enue S Av

vi Fair

o El Pase

St tah NU

S Mission

Ellendale Pl

16 enue S Av

Menlo Ave

enue S Av

om Blo

y St Lero

Ellendale Pl

23 enue S Av

20 enue S Av

ardt Wilh

her Kin g Jr Blv d

23 enue N Av

Ramp

tello So

E Ma rtin Lut

ue ven NA

Golden St Frwy

18 enue S Av

19 enue S Av

20 enue S Av

rora Au

St ers nag Mes

Menlo Ave

21 enue N Av

Rd 18 enue N Av

ova St Casan

e o Av Solan

Pecan Playground

Brid ge

Kolster St

E 5th

Lemon St

McC linto ck Av e

do rnan n Fe N Sa

19 enue N Av

Dr Park ian Elys

ova St Casan

St Boyd

Jers ey

Mic higa n Av e

an Ave Michig

Prospe Park

Chav ez A ve

New

as St Las Veg

E 3rd St

Palmetto St

Mateo St

E 32 nd St

E 33rd

EC esar E

4th St

E 4th Pl

Imperial St

E 33r

d St

Mitchell Pl

Eagle St

E 22nd St

E 34th St

E 35th St

E 21st

E 24 th St E 25 th St

E 32nd St

E 35th St

St Kearney

Via Francisca

E 2nd St

us St Artem

E 20th St

E 33rd St

Via Portola

Via Las Vegas

Mono St

Mateo St

E 37th St

E 38th St

E 32nd St

E 33rd St

Via Portola

E 7th St

S Alameda St

E Martin Luther King Jr Blvd

E 36th St

E 38th St

E 35th St

E 38 th St

Via Nico la St

Summit Ave

ola Nic Via

St Azusa

Pl th E 4 Molino St

E 37th St W 37th Pl

E 31 st St

Mc ga rry

E 16th St

E Ad am s Bl

E 29 th St

a Sant

E 25 th S t

E 27 th St

S Vignes St

E 36 th St

W 38th St

W 39 th St

E 35 th St

E 32 nd

E 28 th St

St ez mir Ra

E 33 rd St

E 36 th Pl

E 23 rd

E 31 st St

W 36 th Pl

W 38 th St

E 22 nd

Newt on St

E 21 st S t

E 14 th St

E 20 th

E 24 th St

N Vignes

yra lm EE

Wal nu tS t

Reina

Via Pimen Los teros Kearne y St

Via Francisca

Mit ch ell

Sacramento St ve iA om Na

St ch Bir

E 23 rd St E 25 th St

E 20 Th

t nS An

E1 5th

E 17 th

Kearney St

Ave

Via La

Willow

E6 th

Villa

Violet St

th St

E 32 nd

E 18 Th

Willow St

Produce St

Clo ck

Ro w

St ck mlo He

EW ash ing ton Blv d E 20

101

E 1st St

Trac tio nA ve

Bay St

E 14 th P l E 15 th St

E 17 th St

E 25 th St

E 31 st St

E Je ffer son Blv d

E 33 rd St

Pro du ce

E1 6th St

E 24 th St

E 29 th St

E 10 th E 11 th St

Naomi Ave

Confidential Offering Memor andum

Frw

Wadsworth Ave

Menlo Ave

Los Angeles Sports Arena

ica

E 22 nd

E Ad am s Bl

Mettler Ave

m eu olis SC South Park Dr

E 25 th St

W 36 th St

S Garey St

W 37 th Pl

110

E 12 th S t

EP ico Blv d

E 27 th St

E 28 th St

W 35 th St

N Coliseum Dr

E 25 th St

W 37 th St

Los Angeles Memorial Coliseum

E 21 st St

E 22 nd

W 29 th Pl

W 32 nd

E 14 th St

E 30 th St

W 39th St

Leighton Ave

E 20 th St

E 23 rd St

W 28 th St

Natural History Museum State Dr

W 24 th St

W 27 th St

llege E Co

35th

San ta M

St St lyn wel Lle N Roundout St

E 21 st St

W 25 th St

Wholesale St

E1 0th

yra Elm

W 36 th St

W 37 th Pl

E 17 th S t

W 33 rd St

Exposition Blvd

W 31 st St

W 33 rd St

W 35 th Pl

Child sW ay

E 18 th St

W 33 rd St

14 th

W 22 nd

d pR ho Bis

W 34 th St

37th Pl

W 21 st St

Ag ath aS t

EM acy St

Palmetto St

Mcgarry St

W 35 th St

W 31 st St

Ven ice Blv d

E 24 th St

W 28 th St

14 th

E 15 th

W 23 rd St

E 2nd St

E 5th St

d Blv

University of Southern California

W 29 th St

ili Cec

et St Bauch

E 3Rd St

E4 th

W 37 th St

W 34 th St

22nd

ta an NS E 1st

art Moz

Darwin Ave

Plaza San Anton io

Cardinal St

Ducommun St

pic lym EO

Chi lds Way

35th St

W 30 th St

W 32 nd

Hoover Blvd

18th

110

son Blv d

W 36 th Pl

E7 th

t aS

Cardi nal St

Jackson St

Banning St

Little Tokyo

0th E1

W Je ffer

W 27 th St

W 31st St

Trade Tech Junior College

W 21st W 21 St St W 22 nd St

Orthopaedic Hospital

W 28 th St

E1 1th

Aliso

E TEMPLE ST

Turner St

Seaton St

W 20 th St

Mount Saint Marys College

30th Pl W 32nd St

EW ash ing ton Blv d

E Commerc ial St

Japanese American National Museum

Colyton St

St Ja mes Park

18th St

es gel An os SL

N Main

St James Park

l nP

di Wer

DOWNTOWN LOS ANGELES

California Hospital W 15th Medical Center S

W 17 th St

W 20 th St

W 27 th St

W 30th St

Downey Playground

St Clara

Union Station

De La Plz

Ducommu n St

t eS ild W

W 29th St

12 th

d St Nau

th E8

W 28th St

WP ico Blv d

W 17 th St

E3 rd S t

Manitou Ave

g prin NS

Los Angeles County Main Jail

t St Bauche

E 4th St

Orchard Ave

Ellendale Pl

W 27th St

Hoover Rec Ctr

W Ad am s Bl

Bole ro Ln

es St

E Ce sar E Chav ez Av e

Pas eo

E5 th S t

th E9

W 21 st St

W 24 th St

W 25 th St

W 25th PL

Cam eron

Convention Center

Win ston

E2 nd St

ca ran Bar

anca Barr

Market St

Boy dS t

th E9

W 24th St

Pershing Square

10Th Nokia Pl Center Staples Center

Harbor Frwy Ramp

20th St

9th

th E8

W 22 nd

7th

Rep ub lic

Au gu sta

Children's Museum Post Office

City Hall

d Blv

W 21 st St

W 25th St

Arc adia St

Way

pic lym EO

W 20 th St

W 23 rd St

W Adams Blvd

15Th

8th Pl

d Blv

Toberman Playground

Cor ydon

El Pueblo De Los Angeles State Park

na dale Mag

SR ou nd ou tS t

S Hewitt St

W 14 Th

Ven ice Blv d

W 17 th St

W 18 th St

110

ida St

8th

JW Marriott LA Live

pic lym EO

W 22nd St

Magnolia Ave

Amey St

W 21st St

S Hoover St

New England St

Magnolia Ave

Washington St

Orchard Ave

S Vermont Ave

W 20th St

18th

Central Library Park

EC om mer cial

Court House

2n dS t

Ko sciu szko

Pico Union Park

W 14 th St

Flor

Th ad

Museum of Contemporary Art

W 8th St

Bru no

Ch ave zA ve

l Hil

Civic Center

th E8

S New England St

W 18th St

W 17 th St

WP ico Blv d

8th

3rd

Gen

esa rE

St nca Barra

St anca Barr

St se Wey t dS Nau

Los Angeles Amtrak N Station Vign

S Hewitt St

W 17th St

W 11 th Pl

W 12 th Pl

5th

Pow ers

Venice Blvd

W 17th Pl

W 10 th Pl Conn ectic ut St W 11 th St

Ingr aham

Ord

Sun set B C l

Music Center

1s tS t

tis Cur

W 14th St

W 15th St

Linw ood Ave

4th

3rd

ne St

d Blv

W 11 th Pl

W Pico Blvd

Woodbury College

Loyola University

Way

Alpi

Arapahoe St

Elden Ave

Magnolia Ave

Blv d

W 5t h St

Chinatown

S Onizuka St Astronaut E

Menlo Ave

WO lym pic

W 12 th St

W 12th St

8th

Mir am ar St W

Gin Li

Pacific Alliance Medical Center

ple em ET

W 10 th St

Cam bria

ap Dew

3rd St

and St

h St

Good Samaritan Hospital

Diam ond St

110

Alpine Park

w Ro

Sa vo yS t

Berna rd St Bam boo Ln

set un ES

h St

Mar yl

W 5t

t Dr Lookou

W 4t

W 6th St

10th St

Huntley Dr Mir am ar

ve tA on Frem

rk Pa

ay N Broadw

Jung Jin Lei Mi g Rd nW ay

N Hill Pl

e ll Av

St so Ali

Ingr aham

Dia mon d St

e Doyl

Way

Chun g Ki

Hi nker N Bu

ett

Stad ium

Way

dium Sta

New Depot

Bar tl

Hope St

S Hoover St

Menlo Ave

San Mar ino St

Mig none tte

dS t

De po tS t

t nS sto Bo

San Marino St

Em eral

Ne w

St Alpine

4th

ay W

Shat to

Emer ald

Lila c Te r

Bern ard St Coro nel St

W Co llege St

e ry Av eaud N BB artl ett St

Ange lina St

Vis ta V iew Dr

Elysian Park

L cP Lila

St ine Alp

W 5T h St

Blv d

W 2Nd

Mira mar St

Pur

Dodger Stadium

t rt S ou NC

W6 th S t

Wils hire

Marion Ave

Sunvue Pl

Pl ma Lo

and St

Ange lina St

Colto n St

t dS 2n

h St

Mar yl W 5t h St

Cort ez St

Elysian Park Bue na

Pl ador Am

Aqua a Ave

l tt P ere Ev

W 4t

and St

W 2Nd

Ave

Magnolia Ave

MacArther Lake

Mar yl

Mira mar St

W3 rd S t

Roc kwoo d St Daw son St

Pl ion Un

Kella m Av e

St ple Tem

Miramar St

Rd are gew Ed W Ca rrol l Av e

t is S Jarv

Ave Elysian Park Innes Ave

Bo sto nS t

Ter

W 2N d St

c La

110

tt St Boue

Barlow Hospital

Mon tana St

Ave ace Wall

arro Piz

Ave

Lila c Te r

Ridg eW ay

Belle vue Ave

Council St

Roc kwoo d

Hill Crown

Magnolia Ave

Francis Ave

W 9th St

St Vincent Medical Ctr

Macarthur Park

W 7t h St

Valle y St

Cortez

Ave

W Ke nsin gt

Calu met Ave

Lake Shore

h St

Coun cil St

Blv d

t dS 2N

Wilshire Pl

S Westmoreland Ave

Shatto Pl

Sunset Pl

W 8th St

W 5t

Ocean View Ave

Lafayette Park

Leeward Ave

W 4t h St

o St

S Commonwealth Ave

S Virgil Ave

S Westmoreland Ave

Shatto Pl

W 4t h St

Palo Alt

City of Angeles Medical Center

Welcome St

W 5th St

Lond on St

Cros by

Echo Park

Belle vue Ave

W Co urt

Bev erly

St dall Cran Valle y St

Mira mar St

Ynez St

Scot t

Shriners Hospital for Children

W 2N d St

Sant a

Clin ton St

Dawson St

Location Overview The site, located in downtown Los Angeles’ South Park neighborhood, is a 1.34 acre space at the intersection of Grand Avenue and Olympic Boulevard. The Hotel will be among the most centrally located properties in Los Angeles, just blocks from LA Live, the Staples Center, the Convention Center, and a variety of other demand generators existing or under development in Los Angeles’ growing downtown district. Addtionally, the Hotel will be located blocks from the Disney Concert Hall and the $150M Eli Broad museum, both located on Grand Avenue. The location offers incredible connectivity to greater Los Angeles, immediately adjacent to Highway 110, and just five minutes’ drive from I-5, the West Coasts major north-south thoroughfare, connecting north through Canada and south through Mexico. The site also sits amidst a growing inventory of highend condominium product, creating yet another base of demand and further solidifying downtown Los Angeles as the newest and hottest submarket in the city.

Geneva St

Shatto Rec Center

2nd St

Kent St

Allis on

le Blvd Glenda

N Te mpl e St

Ave

2nd St

Diana St

101 Scou tW ay

Par k

Dr Shoreland

m diu Sta

Coun cil St

Mon trose St

Ynez St

Clin ton St

Sant a

Elysian Park

Mac beth St

Galve ston St

Pl ac Lil

Glas sell St

Clin ton St

E Edgeware

S Hoover St

Ave

S Westmoreland Ave

S Juanita

W 2nd St

Los Angeles, Califor nia

Blv d

Lond on

Pla ta S t

t wS Vie

Bimini Pl W 2nd St

ark NP

Bev erly

Hya ns Coun cil St

nore St

St or ad Am

Temple Community Hospital

Elsi

ve oA lan So

S Virgil Ave

S Westmoreland Ave

S Madison Ave

N Commonwealth Ave

Council St

W Su nset Bl

on Lond

alth Pl onwe Comm St Council

Council St

White House Pl

London St

Kent St

St ce ru Sp

N Westmoreland Ave

N Madison Ave

John St

W Temple St Smilax St

Cosmopolitan St

Ave

N Juanita Ave

N Madison

PROJECT OVERVIEW

Belle vue Ave

e Av ott Sc

a St

St ton oyls NB

Plat

PROJECT OVERVIEW Property Overview

Guestrooms. The Hotel will offer 535 Hilton branded guestrooms, complete with furnishings and fixtures generally provided by the Hilton program. Of the 535 units, at least 5% will be suite product. Food & Beverage. There will be numerous F&B outlets throughout the Property, including poolside dining on the sixth floor outdoor pool deck, a three-meal concept indoor-outdoor restaurant, and 8,000 square feet of leasable fullservice restaurant space in the Property’s retail component.

SUMM ARY OF SQUARE FOOTAGES Guestroom Floors

317,983 SF

Public Areas

21,451 SF

Meeting Space (Net, Enclosed)

28,682 SF

Meeting Space (Net, Including Outdoor)

7,947 SF

Back of House

154,983 SF

Mech/Electrical

54,454 SF

Amenities

22,004 SF

Third Party Retail

12,780 SF

No. of Parking Spaces REGION

Meeting Space. The Hotel will offer significant indoor and outdoor meeting space, totaling approximately 50,000 square feet. The Property will offer a large, 10,000 square foot ballroom, large enough to accommodate city-wide business from the convention center, as well as various smaller ballrooms and meeting spaces. The Hotel will offer a 10,000 square foot outdoor event space, as well as approximately 5,000 square feet of convertible indoor-outdoor function space, completely unique to the downtown market. The unique outdoor function spaces allow the project to capture higher-end event business and compete with the luxury hotel segment, at no significant cost increase to the project.

298 Units Punchbowl Natural Area

126

Valencia

Santa Clarita

Newhall

Wrightwood

Placerita Canyon SP

118

Canoga Park

210

Tujunga

Sun Valley

405

Kratka Ski Area

Jarvi Bighorn Sheep Vista

170

S a n

La Crescenta

l G a b r i e

M t s

Mt San Antonio 10,064’

Rose Bowl Kidspace Children’s Museum Altadena

San Gabriel La Cañada Reservoir 39 Flintridge Pasadena Universal City 2 Monrovia Arcadia 134 210 Toluca Lake Agoura Azusa Los Encinos Sherman Studio Glendale Hills Universal Huntington Library 30 Oaks City SHP Autry National Center 27 101 Calabasas Studios 210 Claremont San Dimas San Marino Hollywood 605 405 66 110 Temple City Hollywood Bowl Malibu Creek 80 miles to Palm Springs Hollywood Topanga 210 Baldwin La Verne San Gabriel Arcangel 170 SP and Lagoon Covina The Getty Dodger Lincoln SP Topanga Park Center San Gabriel Stadium El Monte UCLA West Hollywood Will Rogers Heights 10 Pomona SANTA MONICA MOUNTAINS NRA Beverly SHP Alhambra Whittier Narrows West Covina 2 Westwood Hills Los Angeles 10 Pacific Palisades Nature Center 71 Village West Los Angeles Malibu 60 101 60 City of Montebello Diamond 1 19 Industry USC 10 Culver City 605 La Puente Bar Santa Monica Vernon Crenshaw Commerce Pacific Park on the Santa Monica Pier Los 187 Pio Pico SHP 60 Angeles Maywood 39 Pico INLAND Venice 57 Bell 5 C oliseum Rivera Whittier M on i c a B a Westchester Inglewood South Gate EMPIRE Sa n ta y Hornblower Cruises 72 42 Marina Del Rey Downey Watts Towers REGION 110 Los Angeles Int’l Airport of Simon Rodia SHP La Mirada 105 Imperial Hwy Hawthorne Lynwood 105 El Segundo Norwalk Compton N 1 Gardena Paramount 19 Bellflower 0 10 mi Manhattan Beach 91 Artesia Lakewood Hermosa Beach 605 Cerritos Torrance Long 710 ORANGE Redondo Beach Beach Carson 405 85 miles 107 Airport COUNTY to San Signal Hill Palos Verdes Estates Harbor City Diego Reseda Tarzana Encino

Westlake Village

101

Van Nuys

Burbank Airport

Burbank

North Hollywood

Western Ave

Pacoima

Mission Hills

Van Nuys Airport

Mt Waterman Ski Area

San Fernando

San Fernando Rey Chatsworth Northridge

Chilao Visitor Ctr

ANGELES

Sylmar

Amenities. The Hotel’s amenities package will be among the most impressive in the Los Angeles market, with a full plate of luxury offerings. The Property will include a pool deck on the sixth floor, offering views of the city, as well as a 2,000 square foot, state-of-the-art fitness center for the exclusive use of Hotel guests. For increased efficiencies, the Property provides a covered off-street three-lane motorcourt entrance to accommodate the influx of expected group business. Additionally, the Property will offer 298 valet parking spaces.

Palos Verdes Dr Palos Verdes Point

Lomita

Rancho Palos Verdes Point Vincente

Wilmington

213

Rolling Hills

Abalone Cove Eco Res

P a

Retail. In addition to the hotel offering, the Property will offer street front retail on Olympic Boulevard and Grand Avenue. The retail component will total just under 13,000 square feet, of which 8,000 square feet will be comprised of a leasable full-service restaurant, and 4,680 square feet will be divisible space that can lend itself to a variety of uses. Metered street parking will be available outside the retail space as well.

San Pedro Point Fermin

Confidential Offering Memor andum

40,680 SF

Administration

C a t a l i n a E x pr es s

The Property will offer the newest and most impressive hotel asset in Los Angeles, with an amenity base capable of supporting high-rate transient corporate business as well as the tremendous group segment generated by the nearby convention center. The Hotel will provide a luxury setting for guests as well as an extension of the burgeoning LA Live Entertainment district, attracting locals to its various F&B outlets and retail offerings.

Long Beach

Aquarium The of the Queen Pacific Mary

Sa n P edro B a y

Angel’s Gate Lighthouse

REGION

22 405

Park National Forest BLM Land Military Land State Park Natural Area Attraction Main Street City California Welcome Center Major Airport Rest Area California Mission Ski Area Lighthouse

PROJECT OVERVIEW Los Angeles, Califor nia

DESIGN & CONSTRUCTION Drawing from the location’s entertainment legacy, the bifurcated, shifted form of the 28-story tower was inspired by the image of Fred Astaire and Ginger Rogers. The design team chose to rotate the mass approximately 45 degrees to address the Grand Avenue and Olympic Boulevard intersection, however, rather than twisting the volume and creating massive cantilevers and overly complicated structural requirements, the rotated shape is achieved by splaying a “skirt” outward from the main tower massing, giving the structure a wide base and decreased slenderness ratio. This allows the tower to have vertical structures and blend with the hotel and parking podium. The development takes advantage of the Southern California climate with a strong indoor/outdoor relationship, strategically accomplished with the use of public and private hotel terraces. Recessed glass lines act as sun shades protecting the interior during the summer months and passive solar heating during the winter. The outdoor environment extends the confines of the interiors in terms of visual distance allowing the hotel public spaces to seem much larger. Storm water will be filtered using green roofs and bio-swales along the perimeter of the sidewalks. The Property will achieve a minimum of LEED Silver certification, meeting or exceeding any and all city and brand requirements. The assembly of the construction and development team will be done with the intent of generating collaborative input on the construction process between the owner, architect, and contractor. The team will seek input from all parties relative to design, pricing, and constructability to meet financial goals and constraints. This methodology results in the team arriving at a Guaranteed Maximum Price (GMP) for the project prior to breaking ground, a proven method to avoid delays, contain costs, and deliver the project as intended. The team assembled for the execution of the project, including all professionals and consultants, have extensive experience working together on previous complex buildings within, and outside Los Angeles. This includes the entitlement professionals who have consistently obtained the requested concessions in a timely manner on other projects. In addition, the contractor will bond to not only guarantee on-time, and on-budget delivery of the constructed building, but the FF&E and OS&E as well. This exceeds standard practices and offers more security to a potential investor

Confidential Offering Memor andum

PROJECT OVERVIEW The following is the design and construction team assembled for the execution of the project. LIST OF ANTICIPATED CITY APPROVALS DEPARTMENT OF CITY PLANNING

DEVELOPMENT AND CONSTRUCTION TEAM Team Member

RTKL & Associates DCI Engineers Webcor Builders

Role

Project Architect Structural Engineer General Contractor

DEVELOPMENT AND ENTITLEMENTS OVERVIEW The current ownership has assembled a team of entitlement and land use professionals with extensive experience in processing approvals for similar highprofile development projects. Typically, projects within the City of Los Angeles require project approvals from multiple jurisdictions and agencies which include the City of Los Angeles Department of City Planning, the City of Los Angeles City Planning Commission and City Council, and the Community Redevelopment Agency of the City of Los Angeles (CRA/LA). In addition, all development projects within the State of California must be reviewed for environmental compliance in accordance with the California Environmental Quality Act, the State CEQA Guidelines, and the City of Los Angeles Department of City Planning’s policies for implementing CEQA. As ownership has invested significant time ensuring the above approvals will be satisfied, the entitlement process is anticipated to require approximately ten months to complete, with a targeted completion date of November 30, 2013. The critical path for the entitlement process is predicated on preparation and review of the project’s CEQA environmental compliance. Ownership is satisfying CEQA by processing a Mitigated Negative Declaration (“MND”) with an expanded Initial Study which will expedite the process by approximately six months.

Confidential Offering Memor andum

Environmental Review - Mitigated Negative Declaration with Expanded Initial Study;

Planning Director - Transfer of Floor Area Rights (TFAR) Less than 50,000 SF = Planning Director’s Determination;

Zoning Administrator - CUP for the Hotel (Hotels allowed by the [Q] Condition - CUP may be necessary due to proximity to residential zone);

Planning Director - Adjustments from Downtown Design Guidelines;

Minor variations from Downtown Street Standards;

Zoning Administrator (Not Expediting) - Master Alcohol CUB - alcohol sales & service in hotel restaurants, room service, minibars, nightclub, live entertainment, dancing (ABC Approvals necessary);

Zoning Administrator - Other requests (Variances or Adjustments) relating to setbacks, parking space design standards, open space requirements, outdoor dining, etc.;

Compliance with “Q” Conditions and “D” Limitation;

The team assembled for the execution of the project, including all professionals and consultants, have extensive experience working together on previous complex buildings within, and outside Los Angeles. This includes the entitlement professionals who have consistently obtained the requested concessions in a timely manner on other projects.

PROJECT OVERVIEW Los Angeles, Califor nia

Upon finalization of the MND, the City will conduct a Joint Hearing to approve the entitlements for the project. This process following completion of the MND will take approximately four months. Below is an outline of the anticipated city approval process. TENTATIVE MITIGATED NEGATIVE DECLAR ATION SCHEDULE Task

Start Date

Duration

Estimated Completion

10/1/2012

18 weeks

2/1/2013

Task 1

Data Collection & Review

Task 2

Prepare Project Description

2/1/2013

4 weeks

3/1/2013

Task 3

Prepare Screencheck IS/MND

3/1/2013

10 weeks

5/17/2013

Task 4

Team Review of Screencheck MND

5/17/2013

2 weeks

5/31/2013

Revise MND per Team Comments

5/31/2013

2 weeks

6/17/2013

Lead Agency Review

6/17/2013

3-4 weeks

7/12/2013

Revised MND Per City Comments

7/15/2013

2 weeks

7/30/2013

Print and Publish MND for 30-Day Review

8/1/2013

1 week

8/8/2013

30-Day Review Period

8/8/2013

30 days

9/10/2013

9/11/2013

3-4 weeks

10/25/2013

Public Hearing

11/13/2013

Letter of Determination Issued

11/14/2013

4-5 weeks

12/20/2013

Letter of Determination Appeal Period

12/23/2013

2 weeks

1/8/2014

Task 5

Task 6

Prepare Responses to Comments (if necessary)

TRANSIENT OCCUPANCY TAX REFUND The Transient Occupancy Tax (“TOT”) Rebate is a relief package recently granted by the city of Los Angeles to a nearby underway development that will include a split Courtyard by Marriott and Residence Inn concept. The relief represents a partial refund (13% of 14%) on a 14% travel and occupancy tax levied on rooms revenues. The proposed rebate will be a separate request to the City of Los Angeles and will require negotiation with the Chief Legislative Analyst. The negotiated Subvention Agreement, which will afford the tax rebate to the Property, carries a high likelihood of passing due to its use in the area with comparable hotel developments, and the city’s intent to spur hotel growth in the downtown area. Early discussions with the city of Los Angeles, political consultants, and counsel have suggested that there will be no issues securing the rebate, which will generate huge value for the Property.

Confidential Offering Memor andum

PROJECT OVERVIEW Sponsorship Overview GATEHOUSE CAPITAL

HILTON HOTELS

Gatehouse Capital is the lead Developer for the Property. Gatehouse Capital Corporation, founded in 1995, is a national real estate investment and development firm based in Dallas, Texas specializing in distinctive upscale mixed-use developments and hotels. By placing great importance on the style and surroundings of each development, Gatehouse delivers on its primary goal - to create extraordinary developments in every sense, including economic yield. The approximately $1 billion of Gatehouse developments to date include W San Diego, W Silicon Valley, W Dallas Victory Hotel and Residences, W Hollywood Hotel and Residences, Hyatt Regency Islandia in San Diego, and the Joule hotel in Dallas.

With over 540 hotels in 78 countries, Hilton Hotels and Resorts has recently spearheaded a global initiative to take the Hilton name far beyond the boundaries of the United States, ensuring that the brand is as ubiquitous abroad as it is in the United States. Their recent expansion into China serves as a powerful marketing opportunity in creating investment demand for the 1000 Grand project from an EB-5 perspective. The Hilton brand is far underrepresented in downtown Los Angeles, with only the presence of the aging 188-room Checkers hotel to serve as a full-service offering. Hilton was chosen due to their favorable operating and branding terms and the ability to offer substantive savings in development cost while not sacrificing returns through room rates, occupancy, and group F&B business.

DANIEL C. HALES, ASSOCIATE DEVELOPER (Associate Developer) For nearly twenty years, Daniel C. Hales has been involved in the development and design of commercial and residential real estate projects throughout Southern California. Dan obtained his MBA from the Marriott School of Business Management, and his B.A. and J.D. from Brigham Young University. Dan has also been a practicing attorney in the State of California since 1990, is the acting senior legal counsel at Citadel Law Corporation, and specializes in the formation of business entities, real estate partnerships, corporations, limited liability companies, trusts, private foundations, and in preparing contracts and agreements that define the relationships between those entities and their members and shareholders. Dan has lived in Asia, speaks fluent Mandarin Chinese and is also actively involved in the formation and organization of EB-5 financing programs for commercial, retail and hospitality development projects.

Confidential Offering Memor andum

PROJECT OVERVIEW Los Angeles, Califor nia

Capital Stack Overview Arguably the most attractive component of the development, currently ownership has secured approximately $183M of the necessary $227M in capital commitments for the development of the Property. Most impressively, construction will be financed through EB-5 funding at terms unseen anywhere in the domestic market. The joint-venture equity commitment requested is approximately $43M. The below sources and uses outlines the proposed capital structure of the development. PROJECT SOURCES AND USES

Sources of Capital EB-5 Debt

72.50%

$163,274,731

Land Equity (net of prior liens)

6.06%

$15,155,000

Hilton Key Money

1.79%

$4,000,000

Incurred and Paid Expenses

0.80%

$1,781,586

Third Party Equity

18.83%

$40,995,208

Total

100.00%

$225,206,525

97.75%

$220,206,525

2.25%

$5,000,000

100.00%

$225,206,525

Uses of Capital Hilton Hotel Third Party Retail Total

EB-5 FINANCING The majority of the project will be financed through an EB-5 capital raise, in which foreign investors seeking American visas pay $500,000 each to fund projects in geographic areas that demonstrate 1.5 times the national unemployment average. The proposed program of the Hotel is anticipated to produce the requisite job creation to secure these funds. The development team has executed a term sheet with Henry Global, an EB-5 placement agency, to receive 72.5% LTC in the form of EB-5 debt. The term sheet can be found in the appendix, as well as an overview of the EB-5 Funding Program. Below is a brief summary of the terms. INDICATIVE EB-5 FINANCING TER MS

Proceeds

$163,000,000 for Project Company (the “Loan”), or an amount determined by calculating the number of EB-5 qualified jobs as determined by an EB-5 compliant economic analysis, dividing thrrt number by 1.15, dividing the quotient by 10; rounding that number to thLe next lowest whole number and multiplying it by $500,000.

Term

5 years

Rate

5.50%

Origination Fee

0.50%

Job Creation Guarantee

“For each investor whose I-829 petition is denied solely due to shortage of job creation, the Project Company will pay $50,000 to Distributor and the investor.”

Upon approval of a building permit for the project, the funds, which will be raised in 2013, will be transferred to an escrow account to fund the construction. In the interim, the third party equity source of $41M will be necessary to fund the balance of the predevelopment period.

Confidential Offering Memor andum

PROJECT OVERVIEW CURRENT EQUITY Thus far, project costs have been funded by James Myron, the site owner. Recent land appraisals valued the site at $32.5M, with a $16.2M first trust deed. Additionally, the Hilton operating agreement allows for a total LTV of 80%. As such, if desired, a mezzanine piece of approximately 7.5% LTC may be used, however this is not reflected in the current capital stack as ownership assumes it will not be necessary. The balance of current equity will be contributed in the form of land equity from James Myron, previously committed development capital, Hilton key money, and the eventual 3rd party equity commitment.

KEY MONEY The selection of Hilton as the operator of the project is conditioned upon its commitment of $4M in key money to the Hotel, payable upon opening. This commitment will help fund the project on behalf of the project ownership entity, thereby increasing the value to all equity investors pro rata.

Confidential Offering Memor andum

MARKET OVERVIEW TOP TEN DOMESTIC HOTEL M ARKETS (NOVEMBER 2012 YEAR-TO-DATE)

Los Angeles, Califor nia

Los Angeles Hotel Market Overview The Los Angeles hotel market is among the strongest and most diversified in the country, continually ranking toward the top from a RevPAR and growth standpoint. The market offers an enormous base of demand generators, ranging from the ubiquitous entertainment industry in Hollywood, to the huge collection of major corporate employers, as well as a generator of significant convention business. The numerous drivers of the Los Angeles market have created a burgeoning lodging industry with multiple submarkets. Continued recovery and new developments have spurred Los Angeles’ lodging market, driving it towards the top of the country’s major domestic markets. Strong Top-Line Performance Metrics. Los Angeles routinely produces among the highest top-line metrics in the lodging industry. Through November 2012, the Los Angeles market ranked seventh in the country in RevPAR at $100.07, and seventh in the country in terms of year over year RevPAR growth, at 11.1% through November 2012. This trend of RevPAR growth is beginning to accelerate in Los Angeles, as November 2012 RevPAR is up 16.3% over November 2011, ranking second in the country. While the greater Los Angeles lodging market has shown incredible performance, per PKF, the Downtown submarket is the top market in the city. Through Q2 2012, the greater Los Angeles market produced RevPAR of $96, compared to the upper-priced Downtown submarket which registered RevPAR of $128, an enormous performance delta of 33.0%. Huge Appetite for LA Market. Transaction volume in Los Angeles has been among the most significant in the country, with a slew of high profile transactions in the past 24 months, showing that in the eyes of institutional capital Los Angeles is a very safe bet. Recent high-profile trades include the W Los Angeles-Westwood, at $485,000 per key, the Mondrian Hotel at $578,000 per key, and the Viceroy Santa Monica at $494,000 per key. The significant per key values has driven the transaction market in Los Angeles to the extent that basis’s exceeding $500,000 per key will become the new norm as more product becomes available. The Property development cost allocable to the hotel component is just $415,000, an incredibly attractive basis for a brand new hotel asset, providing for an impressive exit.

Rank City

Occupancy

ADR ($)

RevPAR ($) (2012)

RevPAR ($) (2011)

2011 to 2012 % Change YTD

1 2 3 4

New York Oahu San Francisco Miami

83.4% 84.9% 81.4% 76.5%

247.22 206.3 181.57 154.14 173.62 141.36 160.51 122.83

195.79 131.68 125.4 114.91

5.4% 17.1% 12.7% 6.9%

Boston

73.7%

160.62 118.44

109.42

8.2%

Washington, DC

69.1%

145.15 100.35

100.95

-0.6%

Los Angeles

76.4%

130.96 100.07

90.07

11.1%

San Diego

72.1%

133.32

96.16

88.38

8.8%

New Orleans

68.9%

133.8

92.22

79.55

15.9%

73.7%

120.6

88.88

81.36

9.2%

10 Anaheim

Tremendous Value Appreciation. Los Angeles hotel product is projected to achieve amongst the highest per key value appreciation over the next several years. HVS’ most recent hotel valuation index ranked the greater Los Angeles hotel market fourth in value appreciation in the country, with an aggregate per key value increase of $84,441, having already experienced the fifth largest aggregate per key value increase in the country at $40,918 between 2011 and 2012. While the majority of major gateway cities are beginning to level off from a valuation standpoint, Los Angeles growth projections are such that continued value increases are expected for the foreseeable future, making LA among the best investments in the country. TOP FIVE ESTIM ATED HOTEL VALUE CHANGES BY M ARKET Market

Increase 2010 - 2011

Projected Increase 2011 - 2016

New York Oahu West Palm Beach Los Angeles

$63,493 $32,412 $35,244 $40,918

$277,142 $106,433 $89,902 $84,441

Boca Raton

$22,933

$79,692

Los Angeles hotel values are projected to grow $84,411 between 2011 and 2016, trailing only New York, Oahu and West Palm Beach.

Confidential Offering Memor andum

MARKET OVERVIEW Established Hotel Product Infrastructure. The product offering in Los Angeles is second-to-none, with new luxury brands entering the market, and major developments taking place. With high profile openings such as the RitzCarlton, Los Angeles, the JW Marriott Los Angeles LA Live, and The Standard, a new rate structure has been established, allowing Los Angeles hotels to charge higher ADR premiums than what was historically supported in the market. As more high profile developments come on line, especially in the burgeoning downtown submarket, this trend of rate growth will continue, attracting a more discerning and affluent clientele willing to pay premium pricing for a luxury experience. International Appeal. On par with most any international destination, Los Angeles attracts investment and visitation from around the world. Historically, the Los Angeles hotel market has attracted a variety of foreign capital, including Asian, Middle Eastern and European investment vehicles acquiring high-profile properties due to the incredible fundamentals of the lodging market, significant presence of international inhabitants, and trophy nature of many of the areas hotels. The business friendly atmosphere and tremendous access and proximity to foreign markets has made Los Angeles a target for foreign capital, while new plans such as the EB-5 visa-waiver program are encouraging even further investment and visitation, creating larger investments and visitation numbers to Los Angeles from international markets. LA Live Entertainment Complex. The LA Live entertainment complex, located in downtown Los Angeles, has created a boon for the market, completely revitalizing the area with a variety of new entertainment, lodging, retail, and residential options. Once completed, the project will cost approximately $2.5B, with 5.6M square feet of apartments, ballrooms, bars, concert theaters, restaurants, and hotels. Home to the Los Angeles Kings, Los Angeles Clippers, Los Angeles Lakers, less than five minutesâ&#x20AC;&#x2122; drive from Chavez Ravine and the home of the Los Angeles Dodgers, and the future home to Farmers Field, a 72,000-seat stadium to accommodate a new NFL team, as well as the Nokia Theater and Grammy Museum, the development is the most exciting creation in any major market nationwide, targeted to be the â&#x20AC;&#x153;Times Square of the West.â&#x20AC;? In addition, LA Live is adjacent to the convention center, revitalizing the convention center and making Los Angeles a top choice to host major city-wide events. New high-profile lodging product has already been developed and deemed a huge success, such as the Ritz-Carlton, Los Angeles, and the JW Marriott LA Live.

Confidential Offering Memor andum

AREA OVERVIEW Los Angeles, Califor nia

Los Angeles Economic Profile

Los Angeles represents one of the largest metropolitan population centers in the country and is ranked the third largest city economy in the world in terms of GDP, behind New York and Tokyo. The region maintains a diversified economy composed of smaller entrepreneurial companies, which belies the impact of a concentration of activity in entertainment, aerospace, business services and several key nondurable goods manufacturing sectors. With its natural deepwater harbor, large-scale logistics industry and export-oriented manufacturing, Los Angeles is well positioned to benefit from a trade-based expansion and is expected to recover more rapidly than the State of California. Considering Los Angeles’ major trade ports and its housing market, evidence is building that a recovery is underway. In 2010, exports turned the tide first and will provide the most natural impetus for recovery. The region’s strength in the professional and business services sector will also contribute to continued long term growth. For example, professional services jobs are forecast to grow 3.1 percent annually in Los Angeles between 2011 and 2013. In addition, nearly one third of the U.S.’ motion picture and video-rental employment is in Los Angeles. This sector posted 18,000 new jobs in year-over-year job growth. Based on Los Angeles’ historic population growth and job creation performance, signs of improved employment bode well for the future performance of commercial real estate.

Confidential Offering Memor andum

LOS ANGELES WORKFORCE STATISTICS Occupation

Total Employment

% of Total Employment

Trade, Transportation & Utilities Government Professional Services Education & Health Services

2,647,642 2,380,061 2,140,646 1,830,816

18.8% 16.9% 15.2% 13.0%

Leisure & Hospitality

1,563,235

11.1%

Manufacturing

1,253,405

8.9%

Financial Activities

746,410

5.3%

Construction

563,328

4.0%

Other Services

478,829

3.4%

Information

450,662

3.2%

Mining and Logging

28,166

0.2%

14,083,200

100.0%

Total Employment

AREA OVERVIEW DOWNTOWN LOS ANGELES Downtown Los Angeles is central to Los Angeles County, and is the hub of the freeway and rail transit systems. Following a model set forth by other cities, Los Angeles has commenced a major redevelopment of its Downtown community, successfully improving its image, and attracting residents and consumers. The LA Live project is entirely complete, with the opening of the 14-screen Regal Cinemas last year and the Ritz-Carlton and JW Marriott in early 2010. The second phase was completed in the spring of 2010 with the opening of ROCK’N FISH, Wolfgang Puck Bar & Grill, Trader Vic’s, Rosa Mexicano and Katsuya. The 1,001 guestrooms comprised of the 878 room JW Marriott and the 123 room Ritz-Carlton, opened on February 15, 2010 and April 2, 2010, respectively. With the Sports and Entertainment district coming on-line and other cultural icons being constructed, Downtown Los Angeles is able to draw visitors from all across Southern California and the world. Coupled with the creation of a viable residential base, Downtown Los Angeles is steadily becoming a submarket sustaining entirely its own tourism segment.

Downtown Los Angeles office vacancy rates seem to have bottomed, ending Q1 2012 at 20 percent. Downtown Los Angeles will continue to offer a centralized regional location at rental rates as much as 15 to 20 percent lower on average than the Westside. As office market fundamentals continue to grow and leasing activity increases, the downtown market will establish and sustain a strong base of corporate demand. The substantial discount in office rents offered in downtown Los Angeles as compared to West LA will continue to allow the submarket to attract new tenants, simultaneously increasing its attractiveness as a residential neighborhood.

Downtown Los Angeles is building towards a residential core to create a 24hour activity zone in the central city. A combination of new residential, marketrate units and redevelopment of existing historic buildings into loftstyle units is creating an attractive place to live for many people who previously commuted. According to the Downtown Center Business Improvement District, there were 28,861 residential units that existed in Downtown Los Angeles in 2011. Marketrate units comprise approximately 61.5 percent of the total units. Of the 1,533 units under construction or near completion, all but approximately 213 are market-rate units. Of the estimated future total of 30,277 units of housing in Downtown Los Angeles, 62.8 percent of these residential units would be offered at market rates. The downtown area will continue to grow as an urban residential neighborhood, ultimately resembling various other urban redevelopments, such as San Francisco’s Mission Bay district and Miami’s Brickell financial district.

Confidential Offering Memor andum

AREA OVERVIEW Los Angeles, Califor nia

LOS ANGELES CONVENTION CENTER CURRENT AND PROJECTED ACTIVITY Year

Definite

1999

349,325

2000

390,564

2001

274,212

2002

205,824

2003

214,110

2004

226,414

2005

187,225

2006

171,463

2007

112,876

2008

231,695

2009

178,376

CONVENTION CENTER

2010

207,320

The Los Angeles Convention Center offers 720,000 square feet of exhibit hall space and 150,000 square feet of meeting space split between its two halls. As one of the largest convention centers in the country, surrounded by a constantly growing base of demand generators, the center generates huge demand for local hotels with significant meeting space such as the Property. The nature of the Los Angeles market as a corporate, tourist, and group destination has made the city a huge player in attracting city-wide convention business. The below chart shows historical and projected convention activity for the center. Of note, the most recent information provided by the convention center is mid-year 2011, which projects a 40.5% increase in room nights from 2012 to 2016.

2011

258,489

19,750

2,475

280,714

2012

220,754

84,115

6,320

311,189

2013

102,535

70,400

171,680

344,615

2014

8,255

144,666

157,532

310,453

2015

72,515

166,538

128,213

367,266

2016

52,872

179,402

204,750

437,024

Confidential Offering Memor andum

Tentative

Prospect

Total Room Nights

AREA OVERVIEW TRANSPORTATION Los Angeles is one of the most accessible cities in the world, with tremendous connectivity throughout the country. As a major economic and tourist center, Los Angeles benefits from strong lift both domestically and internationally, with several major highways crossing through offering regional access as well. Air Los Angeles International Airport. Los Angeles International Airport (“LAX”) is the primary airport serving the greater Los Angeles MSA. LAX handles more origin and destination passengers than any airport in the world, and is the fifth busiest airport by passenger traffic in the world as of 2011. LAX ranks third domestically in terms of receiving international travelers behind JFK and Miami International Airport, and is home to over 60 airline carriers. Los Angeles World Airports (“LAWA”) has several plans to modernize LAX, including a new crossfield taxiway, new large aircraft gates, core improvements, new midfield satellite concourse, and replacement of the central utility plant. LAWA is also planning to build and operate an LAX Automated People Mover, a train which would connect passengers between the central terminal area and the Metro Green Line, the future Metro Crenshaw Line, and regional and local bus lines. HISTORICAL LA X PASSENGER TR AFFIC AND AIRCR AFT MOVEMENT Year

Passengers

% Change Year-Over-Year

Aircraft Movements

% Change Year-Over-Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD Nov 2011 YTD Nov 2012

67,303,182 61,606,204 56,223,843 54,982,838 60,704,568 61,489,398 61,041,066 62,438,583 59,815,646 56,520,843 59,069,409 61,862,052 56,866,408 58,409,572

4.7% -8.5% -8.7% -2.2% 10.4% 1.3% -0.7% 2.3% -4.2% -5.5% 4.5% 4.7% NA 2.7%

783,433 738,433 645,424 622,378 655,097 650,629 656,842 680,945 622,506 544,833 575,835 603,912 553,034 556,083

0.5% -5.7% -12.6% -3.6% 5.3% -0.7% 1.0% 3.7% -8.6% -12.5% 5.7% 4.9% NA 0.6%

Confidential Offering Memor andum

LA/Ontario International Airport. LA/Ontario International Airport (“ONT”) is located approximately 40 miles from Los Angeles primarily serving the Inland Empire; Riverside, San Bernadino, and Ontario. ONT is served by eleven airline carriers, including Southwest Airlines, responsible for over 50% of passenger traffic, Delta Airlines, and United Airlines. Road Los Angeles is served by an extensive network of freeways and highways. Los Angeles is afforded excellent connectivity regionally through California and nationally via several interstates. Interstate 5 connects Los Angeles throughout the western seaboard, north through the Canadian border, and south to Tijuana, Mexico. Interstate 10 provides east-west, coast-to-coast access, running west from the California coast to Jacksonville, Florida to the east. Sea The Port of Los Angeles is located approximately 20 miles from downtown Los Angeles, occupying 7,500 acres of land and water along 43 miles of waterfront, adjoining the Port of Long Beach to the south. Together, the Port of Los Angeles and Port of Long Beach make up the Los Angeles/Long Beach Harbor, representing the fifth busiest container port in the world, with a trade volume of over 14M twenty foot equivalent units. In 2011, nearly 610,000 cruise passengers came through the port. The port directly employees approximately 1,000 people, with 3.6M of indirect employment throughout the country, and a 20% nationwide market share in total TEUs.

Los Angeles, Califor nia

Confidential Offering Memor andum

FINANCIAL OVERVIEW On the following page, please find a pro forma income statement for the Hotel upon its opening in 2016, prepared in conjunction with the Owner and PKF Consulting. Analysis of historical trends for the Los Angeles lodging market, competitive landscapes, future development, and brand guidance has been considered in creating this pro forma. We anticipate that the overall performance will emanate from effective asset and property management, the continued growth of the Downtown Los Angeles market, and the growing rate structure provided by new luxury hotel assets. Below is a summary of the hotel’s projected performance. For in depth discussion of the pro forma assumptions, please reference the PKF report available on the HFF due diligence website. RELEVANT OPER ATING PRO FOR M A METRICS (2016 - 2020) 2016

2017

2018

2019

2020

Guestrooms

535

Occupancy

69.0%

74.0%

76.0%

Average Daily Rate

$248.00

$255.00

$263.00

$271.00

$279.00

Revenue per Available Room

$171.12

$188.70

$199.88

$205.96

$212.04

Total Revenues

60,546,000

66,816,000

70,732,000

72,871,000

75,037,000

Gross Operating Profit

21,320,000

25,198,000

27,364,000

28,202,000

29,028,000

EBITDA

17,541,000

20,800,000

22,453,000

23,165,000

23,863,000

NOI

16,936,000

19,464,000

20,331,000

20,250,000

20,862,000

28.0%

29.1%

28.7%

27.8%

NOI Margin (%)

To supplement the hotel operation, ownership has projected additional sources of income, including rental of the ground floor retail space, parking income, and the transient occupancy tax relief stream. Retail Rent. Ownership projects $52 per square foot in retail rent in 2016, growing at 2.0% thereafter. The Property will offer a total of 12,680 square feet of rentable retail space. Parking Income. Parking income is projected at $20,000 in 2016, growing at 4.0% thereafter. Transient Occupancy Tax Relief. The Transient Occupancy Tax, per Los Angeles’ City Municipal Code (“LAMC”), is 14.0% of rooms revenue. The TOT Subvention Agreement allows for the creation of a special tax district, which in turn allows for a recovery of 13.0% of rooms revenue. The total recovery is $4,475,000 in 2016, fixed at 13.0% of rooms revenue for the projection period.

FINANCIAL OVERVIEW PRO-FORMA INCOME STATEMENT Los Angeles, Califor nia

# of Rooms Rooms Available Room Nights Occupancy % ADR RevPAR YoY RevPAR Growth Revenues Rooms Food & Beverage Other Operated Departments Rentals & Other Income Total Departmental Expenses Rooms Food & Beverage Other Operated Departments Total Gross Operating Income Undistributed Expenses Administrative & General Marketing Property Operation & Maintenance Utility Costs Total Gross Operating Profit Management Fees Total Fixed Charges Property Taxes Insurance Total

EBITDA FF&E Reserve Net Operating Income Non-Hotel Income Retail Rent Parking Income TOT Relief Stream* Total CFBDS

2016 535 195,275 134,740 69.0% $248.00 $171.12 NA

$33,416,000 20,601,000 5,078,000 1,451,000 $60,546,000

55.2% 34.0% 8.4% 2.4% 100.0%

$8,079,000 16,292,000 3,047,000 $27,418,000 $33,128,000

2017 535 195,275 144,500 74.0% $255.00 $188.70 10.3%

$36,848,000 22,756,000 5,609,000 1,603,000 $66,816,000

55.1% 34.1% 8.4% 2.4% 100.0%

24.2% 79.1% 60.0% 45.3% 54.7%

$8,608,000 17,481,000 3,365,000 $29,454,000 $37,362,000

$4,263,000 3,744,000 2,419,000 1,382,000 $11,808,000 $21,320,000 $1,211,000 $1,211,000

7.0% 6.2% 4.0% 2.3% 19.5% 35.2% 2.0% 2.0%

$2,006,000 562,000 $2,568,000

2018 535 195,275 148,410 76.0% $263.00 $199.88 5.9%

$39,032,000 24,072,000 5,933,000 1,695,000 $70,732,000

55.2% 34.0% 8.4% 2.4% 100.0%

23.4% 76.8% 60.0% 44.1% 55.9%

$8,985,000 18,295,000 3,560,000 $30,840,000 $39,892,000

$4,391,000 3,857,000 2,492,000 1,424,000 $12,164,000 $25,198,000 $1,670,000 $1,670,000

6.6% 5.8% 3.7% 2.1% 18.2% 37.7% 2.5% 2.5%

3.3% 0.9% 4.2%

$2,150,000 578,000 $2,728,000

$17,541,000 $605,000 $16,936,000

29.0% 1.0% 28.0%

$659,000 20,000 4,475,000 $5,154,000 $22,090,000

1.1% 0.0% 7.4% 8.5% 36.5%

2019 535 195,275 148,410 76.0% $271.00 $205.96 3.0%

2020 535 195,275 148,410 76.0% $279.00 $212.04 3.0%

$40,219,000 24,795,000 6,111,000 1,746,000 $72,871,000

55.2% 34.0% 8.4% 2.4% 100.0%

$41,406,000 25,538,000 6,295,000 1,798,000 $75,037,000

55.2% 34.0% 8.4% 2.4% 100.0%

23.0% 76.0% 60.0% 43.6% 56.4%

$9,254,000 18,844,000 3,667,000 $31,765,000 $41,106,000

23.0% 76.0% 60.0% 43.6% 56.4%

$9,532,000 19,409,000 3,777,000 $32,718,000 $42,319,000

23.0% 76.0% 60.0% 43.6% 56.4%

$4,522,000 3,972,000 2,567,000 1,467,000 $12,528,000 $27,364,000 $2,122,000 $2,122,000

6.4% 5.6% 3.6% 2.1% 17.7% 38.7% 3.0% 3.0%

$4,658,000 4,091,000 2,644,000 1,511,000 $12,904,000 $28,202,000 $2,186,000 $2,186,000

6.4% 5.6% 3.6% 2.1% 17.7% 38.7% 3.0% 3.0%

$4,798,000 4,214,000 2,723,000 1,556,000 $13,291,000 $29,028,000 $2,251,000 $2,251,000

6.4% 5.6% 3.6% 2.1% 17.7% 38.7% 3.0% 3.0%

3.2% 0.9% 4.1%

$2,193,000 596,000 $2,789,000

3.1% 0.8% 3.9%

$2,282,000 632,000 $2,914,000

3.0% 0.8% 3.9%

$20,800,000 $1,336,000 $19,464,000

31.1% 2.0% 29.1%

$22,453,000 $2,122,000 $20,331,000

31.7% 3.0% 28.7%

$2,237,000 614,000 $2,851,000 $23,165,000 $2,915,000 $20,250,000

31.8% 4.0% 27.8%

$23,863,000 $3,001,000 $20,862,000

31.8% 4.0% 27.8%

$673,000 21,000 4,942,000 $5,636,000 $25,100,000

1.0% 0.0% 7.4% 8.4% 37.6%

$686,000 22,000 5,093,000 $5,801,000 $26,132,000

1.0% 0.0% 7.2% 8.2% 36.9%

$700,000 22,000 5,244,000 $5,966,000 $26,216,000

1.0% 0.0% 7.2% 8.2% 36.0%

$714,000 23,000 5,396,000 $6,133,000 $26,995,000

1.0% 0.0% 7.2% 8.2% 36.0%

*13.0% of Rooms Revenue for years 1 through 5

Confidential Offering Memor andum

FINANCIAL OVERVIEW

EB-5 Indicative Financing Term Sheet The following are indicative terms for the proposed EB-5 construction financing for the project. A more comprehensive term sheet can be found on the HFF due diligence website.

INDICATIVE TER M SHEET FOR PLACEMENT SERVICE AGREEMENT

Entities Regional Center Agent Lender Borrower Developer Distributor Project Loan Terms Total EB-5 Financing Amount Use of Loan Funds Loan Term Total Cost of Loan Origination Fee

Home Paradise Grand Millennium Los Angeles, LLC Development on Grand Avenue, LLC, or entity designated by Project Company Gatehouse Capital (Gatehouse Grand Ave, LLC) Sino-US Investment and Management Consulting Limited A 28-story C, vertically-integrated luxury hotel tower with 535 hotel rooms $163,000,000 for Project Company (the â&#x20AC;&#x153;Loanâ&#x20AC;?), or an amount determined by calculating the number of EB-5 qualified jobs as determined by an EB-5 compliant economic analysis, dividing that number by 1.15, dividing the quotient by 10; rounding that number to the next lowest whole number and multiplying it by $500,000 The project comprises a 28-story, vertically integrated luxury hotel tower with approximately 535 Hilton branded guestrooms. 7 years During the 7-year term, 5.50% per annum, on distributed EB-5 proceeds, calculated actual/360, simple accrued interest payable upon the earlier of principal repayment or maturity. Henry Global has agreed to allow 2.0% of the 5.50% rate to be accrued, rather than paid current. 0.5% of the Loan

Confidential Offering Memor andum

APPENDIX Los Angeles, Califor nia

The following is a description and requirements of the EB-5 Investor Visa Program. What is an EB-5 Visa? EB-5 is an immigrant investor visa category created in 1990 for foreign nationals who invest in a new commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs. The name comes from the fact that this visa is the 5th category of employment based (EB) visas. Ten thousand visas are set aside annually for investors and their immediate family members under the EB-5 visa program. An EB-5 applicant will receive a visa for himself or herself, his or her spouse, and all of their children under the age of 21. The U.S. Citizenship and Immigration Services ("USCIS") will issue a conditional visa within about five months of application by an EB-5 investor, as long as the investor and the project they invest in are qualified. If the investment project fulfills the job creation criteria after two years, the investor can obtain permanent resident status, and can apply for U.S. citizenship in five years. This makes the EB-5 program a very attractive means of obtaining a U.S. visa for foreign investors. What Are the Basic Criteria Required for an EB-5 Visa? In order to qualify for an EB-5 Visa, an investor must invest at least $1,000,000, or $500,000 for a project in a "targeted employment area" (as discussed below), in an enterprise that will create at least 10 new full-time jobs for U.S. citizens and legal residents. The entire amount invested by the EB-5 investor must be invested in the business within two years, and all fees must be paid from other funds of the investor.

How Are Jobs Counted for the EB-5 Visa? The jobs requirement must be met by the direct employment of at least 10 full-time employees for each EB-5 investor, unless the project is part of an approved Regional Center, in which case both direct and indirect job creation within the designated geographic area of the Regional Center will be counted. Approximately 90% to 95% of all EB-5 visa investments are made through Regional Centers. Any business owner can create their own Regional Center for one or more projects within a designated geographic area, but it currently takes at least nine months for the USCIS to approve each application. However, the USCIS has issued a proposal to provide "premium processing" for Regional Centers for "shovel-ready" projects, and we anticipate that this proposal will be approved relatively soon. What is a Regional Center? A Regional Center is an entity created by either a public or private group to sponsor projects for EB-5 investors. There are currently about 150 approved Regional Centers, but many more applications are pending with the USCIS and are expected to be approved if their business plans are considered feasible and meet the job creation criteria. According to the trade association IIUSA, Regional Centers have invested over $2.0 billion of foreign capital, creating over 50,000 jobs in the U.S.

If the project is an existing business, the 10 new jobs have to be in addition to the existing jobs in the business. The investor usually purchases a limited partnership interest in a limited partnership made up of multiple investors seeking EB-5 visas. Limited partnerships are almost always used, because EB-5 regulations require the EB-5 investor to control the business, unless the investor is a limited partner in the business. Each limited partnership generally invests in a single project, either as an equity investor in or a lender to a special purpose entity established for the project controlled by the developer.

Confidential Offering Memor andum

APPENDIX

How Do You Find EB-5 Investors? EB-5 investors can come from any country outside the U.S., and can even include people who are in the U.S. legally under a temporary visa. In the first three quarters of fiscal 2011, over 70% of all EB-5 investors have come from mainland China. There is a well developed network of brokers and licensed emigration agents in China who work with U.S. business owners to raise financing for EB-5 projects, usually through seminars attended by individual Chinese investors in cities throughout China. What Are EB-5 Investors Looking for in an EB-5 Investment? Most importantly, EB-5 investors are looking for assurance that the project they invest in will qualify them for a permanent U.S. visa, which means that the project must be able to prove that it created the number of jobs promised in the business plan. For a Regional Center, rather than counting the actual direct and indirect jobs that have been created, the USCIS requires evidence that the Regional Center actually carried out all of the material aspects of the business program it proposed in its approved application. The second most important feature of an investment for the EB-5 investor is a reasonable likelihood of receiving a return of his or her original investment within a period of about five years. EB-5 investors are not looking for high returns on their investmentâ&#x20AC;&#x201D;some investments offer only a 1% return on the investment but rather, the return of their original capital.

What is a Targeted Employment Area? A targeted employment area is any city, county, census tract or other geographical area accepted by the USCIS that has an unemployment rate over 150% of the national average rate, or a "rural area." A rural area is an area outside a metropolitan statistical area or outer boundary of any city or town having a population of 20,000 or more. Since most EB-5 investors are looking for investments at the $500,000 level, this means that for purposes of finding investors, a project will generally need to be located in one of these targeted employment areas. What is the maximum size of the EB-5 investment available for your hotel? While most investors want to make the minimum $500,000 investment required to get their green card, that is too small an investment to be of much use for most hotel developments, acquisitions, or renovations. Fortunately, there is no limit on the number of investors who can be aggregated into a limited partnership or other appropriate investment vehicle in order to make a bigger investment. And as a result there is no limit on the size of the EB-5 investment that can be made, as long as solid deal structuring and documentation are prepared, and as long as 10 jobs are created for every EB-5 individual investor. The W Hotel and Residences project was able to raise $20 million in EB-5 financing, and even bigger EB-5 financing projects have been done and are now underway.

Almost all EB-5 investors will want to invest at the $500,000 level, which means that a hotel owner or developer will have to have a project in a "targeted employment area."

Confidential Offering Memor andum

APPENDIX Los Angeles, Califor nia

HILTON OPER ATOR TER M SHEET

Manager Brand Name Technical Services Fee Pre-opening Services Fee Development Services Fee Initial Term and Extension Base Fee Incentive Fee Key Money Brand Services Fee Pre-Opening Services FF&E Replacement

Manager Pre-Opening Termination Rights

Performance Termination

Initial Competitive Set

Hilton Management LLC Hilton $250,000 $350,000 (Included in pre-opening budget, noted below) $100,000 20 year term First Operating Year: 2.0% of Total Revenue Second Operating Year: 2.5% of Total Revenue Third and thereafter: 3.0% of Total Revenue 1.0% of Total Revenue for each operating year in which Adjusted Net Operating Income equals or exceeds $15,000,000. Manager shall provide to Owner $4,000,000 in connection with the development and construction of the Hotel. 4.0% of Rooms Revenue The pre-opening budget will be approximately $3,500,000 “First Operating Year: 1.0% Second Operating Year: 2.0% Third Operating Year: 3.0% Fourth and thereafter: 4.0%” Manager may terminate agreement if; (a) Owner has not obtained all entitlements by July 31, 2014, (b) Owner has not closed on construction financing by November 30, 2013, (c ) Owner has not commenced significant excavation by May 31, 2015, (d) Owner has not diligently pursued the development and construction after commencement of construction has occurred, or (e) Hotel has not opened to public by May 31, 2018. Owner may terminate Manager if, for two consecutive operating years, both of which occur after the 4th full operating year; (a) Adjusted Net Operating Income is less than 7.5% of Owner’s Total Investment for both operating years; and (b) the RevPAR Index is less than 90% for both operating years. J.W. Marriott Standard Los Angeles Westin Bonaventure Omni Downtown LA Hilton Checkers Los Angeles Hyatt Regency Millennium Biltmore

Confidential Offering Memor andum

APPENDIX

Confidential Offering Memor andum

Los Angeles, Califor nia

www.hfflp.com Please contact any of the following for additional information.

DANIEL PEEK Senior Managing Director dpeek@hfflp.com 813.387.9901

JOHN BOURRET Managing Director jbourret@hfflp.com 469.232.1962

JAMES FOWLER Managing Director jmfowler@hfflp.com 949.798.4102 CA License #01014854

CYRUS VAZIFDAR Hospitality Analyst cvazifdar@hfflp.com 305.448.1333

BILL STADLER Senior Managing Director bstadler@hfflp.com 949.253.8800 CA License #01920388

No warranties or representations, expressed or implied, are made as to the accuracy of the information contained herein. The Property is offered subject to errors, omissions, change of price, rental or other conditions including withdrawal without notice, and will be subject to any special conditions, which may be imposed or made by the owner or Holliday Fenoglio Fowler, L.P. The owner and Holliday Fenoglio Fowler, L.P. reserve the right to accept or reject or withdraw any and all offers. ©2013 Holliday Fenoglio Fowler, LP (“HFF”) and HFF Securities LP (“HFFS”) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 21 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, advisory services, structured finance, private equity, loan sales, Offering and commercial loan servicing. andum Confidential Memor 30