Confidencial by Marco Klein

Strictly Confidential

Cabo Mixed Use Development Market Analysis & Investment Opportunity October 2019

A partnership led by George Pappas and Paul Geisler (together the “Developer”) are proud to present a mixed use development investment opportunity in Los Cabos, capitalizing on the extremely under-supplied local resident demand for affordable premium housing, as Los Cabos has ranked #2 in Mexico among the youngest and fastest growing metro areas, amidst breakneck growth in resorts, tourism, and employment. Market Opportunity −

High growth hospitality employment population

Los Cabos: A Mexican Economic Success Story

 Massive tourism & conference destination

 13% Economic Growth p.a.

 5000 new rooms, 29% growth by 2021

 6.5% Job Growth p.a.

 17 new hotels under development

 75% population growth 2005-2015

 3 million visitors annually, 70% international

 145,000+ population growth by 2030 (52%)

 500 weekly flights (173 international) to 39 cities

 $50 million invested in Security

 $60 million renovation to the Int’l Airport  New 72,000 Sqft Convention Center

−

Strong Real Estate Market in 1h 2019  $192 million total sales over 317 closed real estate sales (44% increase over 2018)  $92 million Condominium Sales over 205 closed sales (43% increase over 2018)  Average Condo price = $449k; Median Condo price = $250k

Project Profile −

Prime Location: Adjacent to New Intl Convention Centre, ~1 mile to the hotel zone, 17 mins drive to the airport road

− −

Mixed Use Hotel, Office, Residential, Retail Residential: 155,000 sqft

− − −

Hotel: 145 keys Office: 10 suites; total 32k+ sqft Retail: 6,500 sqft

II. Market Opportunity

Los Cabos is the municipality at the southern tip of the state of Baja California Sur, Mexico. It encompasses the two towns of Cabo San Lucas and San JosĂŠ del Cabo linked by a twenty-mile Resort Corridor of beach-front properties and championship golf courses.

II. Market Opportunity

Los Cabos International Airport (SJD), located at San JosĂŠ del Cabo inBaja California Sur, is the sixth-busiest airport in Mexico. It is also recognized as one the best 25 airports in the world as it is located just 8 miles north from San Jose del Cabo and 23 miles from Cabo San Lucas. Los Cabos has direct flights to the main cities of USA, Canada and Mexico with more than 500 flights per week on all major U.S. airlines.

II. Market Opportunity

Between San Jose del Cabo and Cabo San Lucas, Los Cabos consists of a 20-mile corridor and lined with over 17,000 world-class resort hotel rooms, 15 championship golf courses, and 129,000+ sqft of meeting space, and a new 72,000 sqft international convention centre (ICC).

II. Market Opportunity

Los Cabos today is a safe and secure destination. Security is and always has been our utmost priority. As a destination that welcomes more than 2.5 million international travelers from all over the world each year, we understand that a secure travel environment is critical to the continued success of Los Cabos as a thriving destination. In the past year alone, the public and private sector have invested close to $50 million to upgrade security infrastructure, equipment, and personnel. Los Cabos implemented a 5-point C-A-B-O-S security action plan that is working. Since launch, notable progress includes: Created a “Rapid Response Network”: Developed a real-time and ongoing communications “Rapid Response” network with local hoteliers and businesses to encourage information sharing of any suspicious activity or reported incidents and to alert appropriate authorities and law enforcement.

Accelerated the Security Surveillance System Expansion: Phase I is currently in progress, onboarding hotel cameras to the destination’s surveillance network. Today, security officials have an improved panoramic overview of the destination. Phase II will involve the installation of 200 new cameras along the corridor and in tourist hotspots. Building a New Marine Base: On schedule to open in Q2 2018, the new C3 intelligence center will feature state-of-the-art technology, empowering the Mexican marines to operate the surveillance system and manage emergency hurricane response – the first of its kind in Mexico.

Organized a Hotel Security Committee: Working with the Hotel Association, the Committee meets biweekly to address concerns, share best practices and ensure security protocols at all area hotels. Set New Training and Security Protocols: Working closely with the U.S. State Department, Los Cabos implemented new security training programs and protocols in area hotels and businesses aligned with OSAC (Overseas Security Advisory Council) standards

II. Market Opportunity

The maturity of the Los Cabos market as a tourist destination and new pipeline of hotel and resorts, have spurred annually 13% economic growth, 6% employment growth, and massive 75% population growth between 2005 and 2015, the highest in Mexico.

II. Market Opportunity

Population growth is expected to increase from the current 288,671 to over 435,000 (55% growth) by 2030, due to labor shortages in the fast growth hospitality industry.

II. Market Opportunity

The Los Cabos market for luxury condominiums and villas is thriving, alongside the growth in tourist demand evidenced in the hotel and resort development boom. Condos averaged $472,120 and 509,797 in San Jose del Cabo and Cabo San Lucas respectively in 2019 Q2.

(source: Coldwell Banker Riveras)

II. Market Opportunity

The Los Cabos market for luxury condominiums and villas is thriving, alongside the growth in tourist demand evidenced in the hotel and resort development boom. Total sales increased 19.7% yoy in San Jose del Cabo and 61.2% yoy in Cabo San Lucas in 2019 Q2.

(source: Coldwell Banker Riveras)

*Inventory months = Active Listings / 12 month average monthly sales abr.-20

mar.-20

feb.-20

ene.-20

dic.-19

nov.-19

oct.-19

sep.-19

ago.-19

jul.-19

jun.-19

may.-19

abr.-19

mar.-19

feb.-19

ene.-19

dic.-18

nov.-18

oct.-18

sep.-18

ago.-18

jul.-18

jun.-18

may.-18

abr.-18

mar.-18

feb.-18

ene.-18

dic.-17

nov.-17

oct.-17

sep.-17

ago.-17

jul.-17

jun.-17

may.-17

Inv. Months

II. Market Opportunity

Los Cabos Residential Inventory

20 Houses Inventory Months

Condos Inventory Months

15 Houses (U1m) inventory months

Condos (u1m) inventory months

II. Market Opportunity

Across the Los Cabos region, condominiums priced below $1M on average cost ~$2,500/m2 ($232/ft2), whereas in San Jose Corridor the price point has averaged nearly $3,500/m2 ($325/ft2), representing a ~40% premium on $PSF basis

3,500

3,000

2,500

2,000

1,500

Units

Price per sqm

4,000

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

Condos

Houses Avg Price per Sqm

jul.-19

ago.-19

jun.-19

abr.-19

may.-19

mar.-19

feb.-19

dic.-18

ene.-19

oct.-18

nov.-18

sep.-18

jul.-18

ago.-18

jun.-18

abr.-18

Houses

may.-18

mar.-18

Units

Condos Avg Price per Sqm

Houses

Condos

Houses Avg Price per Sqm

Condos Avg Price per Sqm

Price per sqm

Sales - San Jose Corridor

Sales - Los Cabos

II. Market Opportunity

While the condominium market in Los Cabos continues to grow and outperform, the vast majority of new development is built and marketed to the vacation buyer group, at $250,00 to $450,000 average prices, while there are no new developments marketed to the growing 17% of Los Cabos citizens who can afford homes in the $140-175k price point

Strong Real Estate Market in 1h 2019 − $192 million total sales over 317 closed real estate sales (44% increase over 2018) − $92 million Condominium Sales over 205 closed sales (43% increase over 2018) − Average Condo price = $449k; Median Condo price = $250k

Los Cabos Local Citizens Buying Power Avg Monthly Income +++

%National

%BCS

%Cabos

# of Homes

Home Affordability

21,362

$308,166.41 -

+++

Segment

$25,680.59

Premium

`$5,649.72

- $25,680.53

21,362

$143,810.99 - $308,166.41

$2,054.49

$5,649.72

11%

15%

12%

56,192

$56,497.18

- $143,810.99 Residential

$719.11

$2,054.44

13%

18%

27%

123,530

$25,680.53

- $56,497.18

Middle

$410.94

$719.05

29%

31%

41%

189,474

$15,408.32

- $25,680.53

Economic

$0.00

$410.89

41%

27%

16%

73,839

$0.00

- $15,408.32

Social

Res Plus

III. Project Introduction

Our unmatched team of highly trained, connected, and experienced development partners, are thrilled to present an opportunity to take part in a Los Cabos development project like no other. The Project Site, Strategy, and Design all capitalize on unmet demand in the local market across each aspect of this mixed use development, including: (1) Affordable Premium Condos for affluent locals, investors, snow birds and companies for extended-stay executives, (2) Creative Office Space for rent to businesses catering to the adjacent International Convention Center (ICC), (3) Serviced Apartments for ICC executives and dignitaries, (4) Limited Service Business Hotel for ICC event accommodations, and (5) Retail to cater to ICC events, all tied together in modern design with shared green space.

Project Profile − Prime Location adjacent to New Intl. Convention Center − ~1 mile to the hotel zone, 17 mins drive to the airport road − Mixed Use Hotel, Office, Residential, Retail − Residential: 155,000 sqft − Hotel + Serviced Apartments: 145 keys − Office: 10 suites; total 32k+ sqft − Retail: 6,500 sqft

Investment Projections − − − −

Equity Investment = US$11.5M Investment Profit = US$9.6M (99% ROE) Equity Multiple = 1.8x IRR = 35% (2 yrs)

Investment Terms − 95% Equity Contribution − 35% Sponsor Promote after Hurdle w/ Sponsor Catch-up (TBD)

III. Project Introduction

PROJECT REVENUE # of Units 21 10 25 120 50 50 50 30

US$ / sqm $1,600.00 $1,300.00 $1,050.00 $1,100.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00

US$ / Sqft $148.65 $120.77 $97.55 $102.19 $185.81 $185.81 $185.81 $185.81

Total sqm 1,260.0 3,000.0 3,000.0 4,800.0 3,600.0 3,600.0 3,600.0 3,600.0

Total sqft 13,562.5 32,291.7 32,291.7 51,666.7 38,750.0 38,750.0 38,750.0 38,750.0

356

$1,580.33

$151.49

26,460.0

284,812.79

Total Hard Cost

US$ / sqm $891.09

US$ / sqft $82.78

% of Sales 48.1%

% of Cost 64.5%

Total Soft Cost

$275.98

$25.64

14.9%

20.0%

$91.03 $1,226.02

$8.46 $113.90

3.2% 66.1%

4.3% 88.8%

1.0% 7.1% 0.3% 8.5%

1.3% 9.6% 0.4% 11.2%

$ $ $ $

74.5% 134% 25.5%

100.0% 100% 34.2%

$ 36,550,122.93 $ 49,046,000.00 $ 12,495,877.07

Deveopment Area Ground Floor Plaza Tower A 1 Tower A 2 Tower A 3 Condos B1 Condos B2 Condos B3 Condos B4

Description Comercial Space Office Space 3 Bed Serv Apts Hotel Condo Unit Condo Unit Condo Unit Condo Unit

sqm 60 300 120 40 95 90 90 120

Total Sales

Price/Unit $ 96,000.00 $ 390,000.00 $ 126,000.00 $ 44,000.00 $190,000.00 $180,000.00 $180,000.00 $240,000.00

Total Revenue $2,016,000.00 $3,900,000.00 $3,150,000.00 $5,280,000.00 $9,500,000.00 $9,000,000.00 $9,000,000.00 $7,200,000.00 $49,046,000.00

PROJECT COSTS MX$ / sqm

Land Acquisition Cost (land area) Total Direct Costs Debt + Equity Origination Interest Pre-sale Condo Comms Indirect Costs Total Costs Total Sales Net Profit / Return on Cost

2% 7.5% 4.0%

$1,381.33 $1,853.59

$128.33 $172.20

sqm

Total Cost $ 23,578,183.20 $

17,137.86

7,302,411.00

$ 1,560,000.00 $ 32,440,594.20 467,144.56 3,503,584.17 138,800.00 4,109,528.73

III. Project Introduction

CAPITALIZATION Total Capital Uses

$ 36,550,122.93

Total Funding (Sources)

100%

$ 36,550,122.93

Debt

64%

$ 23,357,227.82

Equity

33%

$ 12,151,895.11

Presales Deposits

1,041,000.00

INVESTOR RETURN ANALYSIS Investor Equity

$ 11,544,300.35

Investor Profit

9,621,825.34

Equity Multiple

1.8 x

ROI

83%

IRR

35%

III. Project Introduction

ASSUMPTIONS Debt + Equity Hold (Years) 2.00 Total % of Units Pre-sold 10% Total Deposit % of Pre-sales 30% Promote % 18% Promote $ $2,249,257.87 Investor % of Equity 95% Sponsor % of Equity 5% Sponsor Co-invest $607,594.76

PLANNING & ZONING COMPLIANCE

Total Residential Total Res + Commercial Total Development Capacity Net Unused Capacity

Units 180 197 17

Sqm 14,400.0 26,460.0 47,986.0 21,526.0

PARKING REGULATION COMPLIANCE Parking Commercial

Regulation 1 x 25 sqm

Residencial

1 per unit

Build sqm Total Spaces 12,060 482.4

9,500

380

III. Project Introduction

Located in Cerro Colorado in San Jose del Cabo, Ladera is a new exclusive residential project developed with a deep respect for the environment and natural resources. It consists of 86 houses and 214 condos that are being built strategically within a planned community. The condos, preselling at $225,000 USD on average, cater to an upscale local and international clientele, focusing on families and tourists 300 Units: 214 condos and 86 houses Condo Pricing: − − −

2 bedroom 2 bathroom 225,000 USD ($170/sqft) 1322 Sq .Ft.

House Pricing: − −

2 bedroom 2 bathroom 410,000 USD (est.)

Completion in 2022: Phase 1 of 4 completed Amenities: Club house, walking trail, contemplation deck, viewpoints. Location: 10 minutes by car to Hotel District Close to Private schools, upscale malls & hospitals. Hotels are also nearby. Located in the midst of top tourist attractions such as Palmilla beach http://ladera.mx

III. Project Introduction

The new Velamar Los Cabos development is located about 10 miles from Cabo San Lucas. The 40 condos overlooking the Sea of Cortez were constructed by Grupo Velas who are well respected developers with over 40 years of experience in building residences and luxury resorts throughout Mexico. All of these 3 bedroom condos have great floor plans and range from 2324 sq ft to 3840 sq ft top floor penthouses. 40 Units Condominium Pricing: − − −

3 bedroom 3 bathroom Starting from 444.000 USD ($191/sqft) 2324 Sqft

Completed in 2018 Amenities: − − − −

10 year VIP membership to Gran Velas Los Cabos Swimming pool, bars and restaurants and shops. 5 minutes to the beach Located in the midst of top tourist attractions

http://velamarloscabos.com

III. Project Introduction

Los Cabos are on the southern tip of the Baja California Peninsula in Mexico. Within the Los Cabos municipality, San Jose del Cabos is the Northeastern of the two cities, closer to the international airport

San Jose del Cabo

Cabo San Lucas Los Cabos Peninsula, Project Site & Airport

III. Project Introduction

Within San Jose del Cabos, the Project Site is directly adjacent to the new International Convention Center, is 1 mile from the beach and hotel zone, and is a 17 minute drive to the international airport servicing San Jose and Cabo San Lucas

IV. Development Team

George Pappas

B.S. Economics - UCLA

MBA – USC Partner – Keely Partners LP Former President – Sunterra Golf and Resorts Mr. Pappas is a real estate business development executive specializing Real Estate Development in California. Achieved IRR between 15%-22% IRR’s by acquiring and repositioning multi-family projects sourced from foreclosures and off-market opportunities. Co-invested with existing client base and implemented the valueadded business plan unique to each project.

Hired by an S.E.C Receiverships to asset manage assets resulting from a major fraud case and worked with family offices with specific focusing on managing unique real estate related problems and challenges.

IV. Development Team

Paul Geisler

Broker with over 20 years of Los Cabos Real Estate experience

Member of National Association of Realtors Member of Real Estate Brainstormers A.M.P.I. Member of Los Cabos Chapter Board of Ethics Committee Founder

Home Owner Association Member of Los Cabos Land Planning and Development Consultant In-House Closing Department exclusively supporting the closings of real estate transactions Robust Rolodex and Relationship Management Highly Respected Relations with Los Cabos and B.C.S Realtors Cast of Respected Relationships with Notaries, Attorneys, Escrow, Etc.

IV. Development Team

Gerardo Mendoza

Bachelor in Architecture – National Autonomous University of Mexico (#1 in Latin America; “UNAM”) Master in Architecture – UNAM Diploma DRO – UNAM Diploma – Project Management & Planning Member: Project Management Institute (PMI) Member: Architects Association, Baja California Sur Hospitality Project Portfolio: −

Los Cabos: Rivera Maya

−

Caribbean: Camino Real, Royal Solaris, Radisson, Ritz Carlton and

Atlantis − Bahamas: Crow/Jones-Bufete JV Project Management Portfolio: − −

Residential Project Manager – Chileno Bay Golf & Beach Club Office Fit-out Superintendent – Bovis Lend Lease; HSBC Tower, Mexico City

IV. Development Team

Jacobo Micha Mizrahi

Degree in Architecture – Universidad Anáhuac (Mexico City 1996) ARCHETONIC – Founder (1991) Designed, developed, and built more than 80 projects including: − − − −

Housing Retail Hospitality Office

Expertise: Master Planning Design, Real Estate Development, Architectural Design, Interior Design, Construction. Awards: − −

1st place in the hotel “Marquis Los Cabos”competition, 1st place in “Premio Obras Cemex” in the category of Construction of Housing Compound for 2 consecutive years

− Work of the year award for Multifamily Residential Compound by magazine “Obras”, − Nominated 2 consecutive years in the World Architectural Festival (WAF) − Multiple award for the construction and design of the hotel “Marquis Los Cabos” Published by editorial Arquine in “Archetonic / Jacobo Micha Mizrahi” showing the first 10 years of architectural production by his frim. Published in many specialized medias, both national and international, and invited as a speaker in multiple Mexican universities.

IV. Development Team

Marco Klein

Bachelors Degree in Graphic Arts & Marketing – Autonomous University of Guadalajara (1989 – 2003) Real Estate Mgt Certificate – Tecnologico de Monterrey (Guadalajara; 2008) Honorable Member of AMPI and Local MLS Certified at FIABCI and NAR In-depth real-estate market analysis expert Years of experience in government relations and obtaining permits for real estate developments. Led development of key projects including: Las Villas de Mexico − −

October 2007 to October 2008 266 units total, including luxurious Villas,Townhouses and Condominiums. It is divided into 8 stages with pool, BBQ, bathroom and fire pit in common areas in each cluster.

Las Mañanitas − −

February 1999 to August 2003 Most sought after contemporary Spanish-Mediterranean style condos in Cabos; built to the finest specs & offering spacious floor plans, our condominiums, villas and spectacular penthouses create a property of unsurpassed value.

Plaza El Cardon − −

February 2004 to Present Built and sold 19 commercial Spaces, formed the Administration and the Condominium Association.

George Pappas – Partner Gmpappas1@gmail.com

Paul Geisler – Partner Paul@CaboDreamHomes.com