www.colliershotels.

com

2011 Canadian Hotel Investment Report Canadian Hotel Real Estate Industry Ripe for Increased Cross-Border Ownership
Over the past decade the Canadian hotel real estate sector has been dominated by investment from domestic sources that totaled 92% of total transaction volume. Canadian institutional capital sources acquired the majority of the country’s prized urban assets largely by way of portfolio transactions, with foreign investors selectively acquiring key single assets in major markets.
Of the over 850 hotel sales that occurred between 2001 and 2010, foreign investors participated in a small portion – just 8% – of the decade’s $13.3 billion total deal volume. About two-thirds of the $1 billion cross-border capital flow occurred in the first half of the decade, with the appetite by foreigners tapering in the latter period. Canada’s hotel landscape is limited in terms of both size and scope on an international scale, given the relatively scarce availability of strategic product. Cross-border investors prefer city-centre hotels that are large enough to represent a significant investment for their portfolio, and the lack of foreign inflow to Canada to date reflects the relatively small size of the market. Of the acquisitions foreigners made in the past decade, about 60% were full service hotels in Canada’s major cities, averaging over $40 million in deal size. Almost all were branded with first tier international brands. Notable acquisitions by foreign capital in the past ten years included the Sheraton Centre Toronto by US-based Starwood Hotels & Resorts (50% interest) in 2001 and Hotel Georgia in Vancouver by an Indonesian development group in 2005. The largest foreign investment since 2001 was the Four Seasons Hotel Toronto, acquired by Kingdom Hotel Investments (Middle Eastern), also in 2005. Significant transactions in the last half of the decade included: the sale of the Ritz-Carlton Montréal to a consortium of international joint venture partners in 2006; the InterContinental Montréal to Pandox AB (Swedish); and the Hyatt Regency Montréal acquisition by Ashford Hospitality Trust (US) in 2007, which was subsequently sold to Pandox AB in 2008. The Hilton Vancouver Metrotown also sold twice, both times to Korean companies, in 2007 and then again in 2010. The Canadian transaction market witnessed significant portfolio sales, representing 46% of the decade’s total transaction universe. Notwithstanding having placed interest in many of the largest multi-property transactions that occurred between 2005 and 2007, foreign investors were overshadowed by Canadian institutional investors and REITs that were eager to diversify their holdings and snapped up 98% of the total portfolio volume. Portfolio sales during this time included the likes of the five-property Hilton Hotels Portfolio (2006), seven-asset Fairmont Canadian Resort Portfolio (2006) and the privatization of both Legacy Hotels REIT and CHIP REIT (2007). More modest portfolios sold through the years, but for the most part these were a better fit for hands-on, domestic private investors or regional hotel investment companies that underwrote higher values to upside potential. The rising Canadian dollar over the decade (with the exception of downward volatility during the recent recession) also had an impact on inbound capital. The Canadian dollar rose some 35% between 2003 and 2010, ending near parity to the US dollar. This upward shift influenced non-domestic firms from investing in Canada and in some cases was an impetus for profit-taking, resulting in the departure of foreign investors from the market. Asian hotel investors, who were notable buyers from the late 1980s through the mid-1990s, became net sellers in the past ten years. Dispositions of key strategic assets including the Pan Pacific Hotel Vancouver & World Trade Centre, Delta Bow Valley Calgary and Delta Victoria Ocean Pointe Resort & Spa, were examples where Asian investors timed the market, or in some cases sold for non-market related reasons including corporate restructuring or to concentrate their efforts in homeland markets.

The ability to attract foreign investment will be a validation of the appeal of the Canadian economy and we are starting to see increased competition from foreign investors as market conditions in Canada continue to improve.
The industry witnessed a sharply improved transaction environment in 2010. Several capable US and international investors took a strong look at Canada and expressed notable interest, in some cases placing multiple bids on hotel assets. Part of this was driven by what occurred in the US hotel market, which underwent profound changes with the formation of new lodging REITs and IPOs in 2010. With their low cost of

_ | 2011 Canadian Hotel Investment Report 1

Notable Canadian Acquisitions by Foreigners

Sheraton Centre Toronto Hotel 1,377-rooms Sold Apr. 2001 for $75M* $108,900 per room Buyer: American
*

Four Seasons Hotel Toronto 380-rooms Sold Apr. 2005 for $115M $302,600 per room Buyer: Saudi

50% leasehold interest acquired

Hyatt Regency Montréal 605-rooms Sold Apr. 2007* & May 2008 $58.5M, $97,900 per room Buyers: American & Swedish
*

InterContinental Montréal 357-rooms Sold Jul. 2007 for $49M $137,300 per room Buyer: Swedish

Hilton Vancouver Metrotown 283-rooms Sold Mar. 2007 & Oct. 2010 $41.2M & $44M $145,600 & $155,500 per room Buyer: Korean (both)

2007 sale details n/a

Ritz-Carlton Montréal 229-rooms Sold Dec. 2006 for $50M $218,300 per room Buyer: American with International Partners
*

Hotel Georgia Vancouver 313-rooms Sold Sep. 2005 for $62.8M* per room n/a Buyer: Indonesian
* includes significant development potential

currently being redeveloped as a 130room hotel and 50 residences

Foreign Transaction Volume - 2001 to 2010
$5,000 4,000 MILLIONS 3,000 2,000 1,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total Transaction Volume Foreign Volume

capital and aggressive underwriting, paired with an abundance of private equity raised and now moving off the sidelines, second tier US hotel companies are finding it difficult to compete for transactions as the investment environment has quickly accelerated, and are therefore looking outside of the country for opportunities. Foreign ownership will likely accelerate as quality, well located assets, along with a reemergence of portfolio deals, are expected to be brought to market in Canada. Sellers, who were reluctant to put their properties up for sale 12 months ago, are motivated by increasing buy-side demand that has vastly improved the bid-ask gap. This is further supported by investors underwriting a robust recovery in 2011-2013 that will enhance both top- and bottom-line performance comparing favourably to past levels.

The country’s healthy fiscal position and solid banking sector, combined with employment hitting an all-time high and the economy outperforming other industrialized nations with amongst the highest GDP growth in 2010, all contribute to a favourable investment climate. Canada also does not put restrictions on the repatriation of capital or profit by foreign investors and corporate tax rates are amongst the lowest of industrialized nations. As we enter a new era, Canada’s economic promise and market dynamics should attract strong interest from foreign capital sources seeking long-term growth with minimal risk. The country’s compelling economic backbone, outlook for continued strength in the Canadian dollar and enviable fiscal position will offer security to investors.

Colliers International Hotels | _ 2

2011 Canadian Hotel Investment Report Transaction Analysis
Transaction activity in the hotel sector has perked up since the cyclical lows of 2009. Positive indicators include the rise in average transaction size and the balancing of east/west asset pricing and volume, supported by improving macro-economic conditions, the return of credit and improvement in hotel operating fundamentals.
Hotel investment activity demonstrated encouraging yearover-year progress in 2010. Nationally, 86 hotels were reported sold, with transaction volume coming in at approximately $720 million, up 73% from the cyclical lows of 2009. While the number of trades grew modestly (up from 74 in 2009), the average deal size increased to $8.3 million, up from $5.6 million the year before, indicating the return of liquidity to the sector. The growing transaction environment supported average per room pricing of $83,000, an upward move of 27% from the $65,500 recorded in 2009. Approximately 31% of volume was attributed to 15 hotels selling for redevelopment or conversion to alternate uses, reflective of the evolving highest and best use of real estate in markets where assets have reached their economic life as hotels, or require significant repositioning for a more profitable use. The year started with the sale of the Clarion Hotel & Suites Centreville in Montréal ($17.1 million or $64,300 per room) and Le Meridien King Edward Hotel in Toronto ($48.0 million or $161,000 per room), the former of which has since been converted to rental apartments and the latter acquired to rehabilitate three vacant floors into residential condominiums, among other planned capital projects. This theme continued in the second quarter with the Courtyard by Marriott in downtown Montréal ($12.3 million or $68,000 per room) – Transaction Analysis by Market Segment
VoluMe ($ MIllIonS) Full SeRVICe lIMITeD SeRVICe ToTAl $493.4 $224.0 $717.4 nuMbeR oF HoTelS 21 65 86 PRICe PeR RooM ($) $111,000 $55,000 $83,000 AVeRAGe DeAl SIZe AVeRAGe nuMbeR ($ MIllIonS) oF keyS $23.5 $3.4 $8.3 200 62 96

conversion to student residences; Hotel Gouverneur Ste-Foy ($17.4 million or $54,400 per room) – sold for redevelopment; and Pacific Palisades Hotel in Vancouver ($47.0 million or $201,600 per room) – conversion to rental apartments. The third quarter represented about one-third of the year’s volume, with the largest transactions of 2010 occurring in September, namely the Sheraton Fallsview Hotel & Conference Centre ($70.0 million or $172,000 per room) and Marriott Niagara Falls Hotel Fallsview & Spa ($76.4 million or $176,900 per room). Also transacting that quarter was the Crowne Plaza Chateau Lacombe in Edmonton selling for $47.8 million ($155,700 per room) – the first time since 2005 that a single asset had sold in downtown Edmonton over the $10 million threshold. Significant transactions in the fourth quarter included the Hilton Vancouver Metrotown in Burnaby which sold to a Korean based real estate company for $44.0 million ($155,500 per room) and the Four Points by Sheraton Mississauga Meadowvale selling for $17.2 million ($83,900 per room). Full service hotel deal size averaged $23.5 million in value compared to $3.4 million for limited service hotels and comprised 69% and 31% of total volume respectively (full service transactions represented only 19% of total volume last year). A total of four strategic sales (definition on page 6) occurred during the year, making up 31% of the total transaction volume and averaging $55 million in deal size (no strategic trades occurred in 2009). In another context, 15 hotels sold over the $10 million threshold (one more than 2009) and represented 66% of the total transaction market (vs. 52% in 2009). These key liquidity metrics provide solid evidence of improved sentiment in the sector.

The majority of trades (76%) were limited service, although comprised just 31% of the year’s total transaction volume.

The average size of a full service hotel trade increased 194% year-over-year, up from $8.0 million in 2009.

_ | 2011 Canadian Hotel Investment Report 3

Transaction Volume by Region
nuMbeR VoluMe MIX (%) oF HoTelS ($ MIllIonS) WESTERN CANADA BRITISH COLUMBIA ALBERTA SASkATCHEWAN MANITOBA EASTERN CANADA ONTARIO QUéBEC NEW BRUNSWICk ToTAl 30 12 11 2 5 56 38 17 1 86 294.6 147.7 122.6 7.7 16.6 422.8 318.9 102.7 1.2 717.4 41 50 42 3 6 59 75 24 1 100% PRICe PeR RooM ($) $105,000 $131,000 $94,000 $89,000 $49,000 $74,000 $80,000 $62,000 $18,500 $83,000

Regional Analysis An improvement in geographic diversity of transactions occurred in 2010. Trade volume west of Ontario rose to comprise 41% of the national total (vs. 24% in 2009), recovering from a hangover that slowed transactions in 2009 as owners were hesitant to sell into lower valuations after the recession set in. This rising activity in the west was most pronounced in British Columbia (50% of the west’s volume) and Alberta (42%). The average price per room in Western Canada was 27% greater than the national average at $105,000, led by British Columbia ($131,000) and Alberta ($94,000) with an average deal size of $9.8 million in Western Canada, which was 18% higher than the national average. Results for Eastern Canada were not as robust with average price per room 11% below the national average, at $74,000. Ontario, with three-quarters of the east’s volume, ended with average per room pricing of $80,000, while Québec was lower at $62,000. The average deal size in the east was $7.5 million, 10% below the national average. There was only one hotel transaction reported east of Québec in 2010, a region of Canada that has only seen 18 trades in the past five years.

No Data Under No Data million $100 Under to million $100 million $100$250 millio n $100 million to $250 million Over $250 million Over $250 million

Lenders acted to resolve troubled loans in 2010 with an estimated 12% of the total hotel transaction market comprised of distressed sales. An uptick in lender-driven trades was predicted in the market as lenders were left with no choice but to liquidate their security position on troubled hotel loans. Compared to the early 1990s, however, any recent rise in delinquency has not looked anything like the fire sales that occurred just under two decades ago. Hotel industry fundamentals were supported by a rebounding economic landscape over the past 12 months. As other countries struggled to move the unemployment needle, Canadian employment reached an all time high in 2010. What’s more, the value of the country’s real GDP output reached $1.3 trillion making it the only G8 country to have regained all employment and economic activity lost during the recession. Canada’s federal government did not engage in hefty stimulus measures in comparison to other industrialized countries and increasing confidence by the international business community has distinguished the country from the likes of the United States, France and Japan.

Cap Rates for Traditional Hotels
PeRIoD 2010 - 2011F 2008 - 2009 2005 - 2007 2003 - 2004 2001 - 2002 CAP RATe TRenDS 8.0% - 9.0% 10.0% - 12.0% 10.0% - 13.0% 12.0% - 14.0% 10.0% - 12.0%

Capitalization Rates Capitalization (“cap”) rates for traditional hotel sales decreased to generally range between 8.0% and 9.0% nationally, approximately 200 to 300 basis points lower than the 2008 - 2009 average as increasingly aggressive buyers are applying cap rates on NOI that reflect a view that operating results will improve. The spread between transactions in primary and secondary markets typically averaged around 200 basis points.

Colliers International Hotels | _ 4

2011 Canadian Hotel Investment Report
Buyer Profile A cross-section of capital sources acquired assets in 2010. Hotel investment companies and private investors were the largest acquirers, each representing 34% of total transaction volume. Private investors purchased 63 hotels, or 73% of the hotels sold, while hotel investment companies purchased just eight hotels or 9% of the total number of hotels sold. Real estate companies represented 17% of volume with five trades, for the most part acquiring for redevelopment/alternate use plays. Government institutions selectively acquired to convert to alternate use (for example student or social housing) – a similar trend to last year. REITs were inactive except for one purchase by a non-hotel REIT as a real estate play for long-term redevelopment to alternate use. The only cross border transaction to occur in 2010 was the Hilton Vancouver Metrotown. There were four portfolio transactions recorded As a result, debt for hotel acquisitions returned with proven borrowers able to achieve attractive rates that averaged between 4% and 7%. Colliers’ Canadian Hotel Investment Sentiment Survey released in January 2011 demonstrates this dichotomy in the spread in rates with 38% of respondents feeling debt had become more expensive in the past 12 months while about

Hotel investors are moving “off the sidelines” to take advantage of cyclical buying opportunities.
the same amount responded the opposite; reflecting a market where pricing is driven by the quality of the borrower, level of debt and overall security. Lenders are increasingly focusing on in-place cashflow, and a debt yield of 12% to 15% to determine proceeds. In addition to debt service coverage ratios and loanto-value metrics, many lenders are taking proactive steps in underwriting to perform proper upfront due diligence on the local market, sponsor, brand and management as well as growth potential in order to measure risk and size the loan proceeds. While acquisition financing has returned to the hotel sector, debt for construction financing remains scarce and likely will not return for another 12 to 18 months. Operating Fundamentals and Supply Growth Operating metrics bottomed in January 2010 and most major markets have since trended consistently positive, helping fuel the transaction market. According to PKF Consulting, occupancy and rates improved in the largest downtown markets: Vancouver, Toronto and Montréal, with RevPAR advances strongest in Vancouver (+20%) with heavy lift attributed to the Olympics related demand in the first quarter. Toronto (+17%) and Montréal (+15%) bounced back with support from local events including the G-8/20 meetings in Toronto in Strongest Supply Growth Markets
loCATIon RICHMOND/VANCOUVER AIRpORT VANCOUVER DOWNTOWN MONTRéAL AIRpORT CALgARy TORONTO AIRpORT % CHAnGe ‘09-’10 10.9% 5.3% 5.2% 3.9% 3.4%

Transaction Volume by Buyer Profile
5% 7% 2%

34% 17%

Hotel Investment Company Private Investors Real Estate Company High Net Worth Institutional REIT

34%

in 2010, including a five-property Super 8 portfolio in Québec, and the two-property Niagara Falls Portfolio consisting of the full service Marriott and Sheraton. There was a combination of new private investors entering the hotel sector in 2010 and existing owner-operators expanding their portfolio in markets where they see upside potential and asset synergies with their existing properties. Financing Environment Credit returned to the market after a deep freeze in 2009. Historically low interest rates, supported by the 5-year Government of Canada bond yield that ranged between 1.9% and 2.5% in the last quarter of 2010 (all-time low of 1.5% in January 2009), greatly improved liquidity once lenders regained their appetite for hotel real estate in early 2010.

_ | 2011 Canadian Hotel Investment Report 5

2011 FORECAST

June and return of the Grand Prix event to Montréal in July. On a national basis, RevPAR advances averaged 5.5% across the board, with occupancy rates up 3.4% and average rates up 2.1%. National supply levels are estimated to have increased by approximately 1.5% in 2010. Notwithstanding the tempered level of supply, various cities exhibited above-average growth in 2010 including Richmond/Vancouver Airport and Downtown Vancouver (on the completion of hotel construction projects for the Olympics) and Montréal Airport, Calgary, and Toronto Airport. Supply is expected to remain constrained in the nearterm, which should further assist in the recovery of RevPAR across Canada.

• Strong demand for hotel investment properties will intensify competition and more owners will place their properties on the market; transaction volume should increase 20-30% from 2010 levels. • As larger assets come to market, private investors will have to compete with capital laden REITs, private equity funds and hotel investment companies. • Foreign interest will grow over the next 12 months, with international buyers attracted to Canada’s enviable economic profile as a suitable environment to grow capital. • Compression on cap rates will continue with investors underwriting a robust recovery and attributing values more in line with stabilized operating results. • Financing availability, along with historically low interest rates will facilitate growth in the average transaction size. • Distressed property sales will taper as lenders have largely acted on bad loans.

Canadian Hotel Investment Trends
yeAR VoluMe ($ MIllIonS) PeRCenT CHAnGe nuMbeR oF HoTelS PeRCenT CHAnGe PRICe PeR RooM ($) PeRCenT CHAnGe

TOTAL TRANSACTION VOLUME
2010 2009 2008 2007 2006 1 2005 2 2004 3 2003 2002 4 2001 2000 $717 414 1,072 4,580 2,950 1,706 360 469 540 642 443 73.3% -61.4 -76.6 55.3 72.9 373.9 -23.2 -13.1 -15.9 44.9 86 74 92 168 141 104 50 51 49 42 49 16.2% -19.6 -45.2 19.1 35.6 108.0 -2.0 4.1 16.7 -14.3 $83,000 65,500 116,500 154,200 162,000 108,800 67,000 62,200 81,800 111,300 80,900 26.7% -43.8 -24.4 -4.8 48.9 62.4 7.7 -24.0 -26.5 37.6 -

TRANSACTION VOLUME EXCLUDING STRATEGIC SALES*
2010 2009 2008 2007 2006 1 2005 2 2004 3 2003 $498 414 571 986 1,092 688 343 384 20.2% -27.5 -42.1 -9.7 58.7 100.6 -10.7 82 74 81 100 131 91 49 49 10.8% -8.6 -19.0 -23.7 44.0 85.7 0.0 $69,000 65,500 84,300 97,000 77,000 70,200 63,900 61,300 5.3% -22.3 -13.1 26.0 9.7 9.9 4.2 -

* Strategic transactions typically involve at least two of the following conditions: 1) a pricing premium is paid; 2) the asset is located in a high barrier to entry market or within a geographic hub of an owner’s principal business; or 3) the opportunity allows for an extension of the company’s brand or portfolio. Excludes the sale of eight hotels owned by Westmont/Whitehall partnership to Westmont/kimco for $100 million as well as three hotels owned by pacrim Hospitality to Holloway Lodging REIT for $28.5 million. Excludes the sale of seven hotels owned by the Westmont/Whitehall patrnership to InnVest REIT for $85.3 million. 3 Excludes the sale of nine hotels owned by Westmont/Whitehall partnership to InnVest REIT for a total of $111 million. 4 Excludes the sale of 114 hotels owned by the Westmont/Whitehall partnership to InnVest REIT for approximately $865 million.
1 2

Note: Trends are based on hotel transactions of at least $1 million. Source: Colliers International Hotels

Colliers International Hotels | _ 6

2011 Canadian Hotel Investment Report Colliers Hotel Value Index
The Colliers Hotel Value Index monitors the annual rate of change in hotel values, based on the operating performance of a market and industry trends, as well as the return expectations of investors.
Nationally, hotel values grew an estimated 3.0% in 2010, led by Toronto Downtown (6.3%), Regina/Saskatoon (5.4%) and Montréal Downtown (5.2%). The overall improvement in the macro-economy should push national hotel values up by about 5.3% in 2011, primarily represented by major urban cities including Vancouver Downtown (9.0%), Toronto Downtown (8.3%) and Montréal Downtown (7.0%). Presented below is a long-run visual for each of the 17 markets covered in the Colliers Hotel Value Index. Hotel Value Index Performance Since 2000
550

The Index illustrates the volatility in hotel values due to shifts in supply and demand, top-line operating performance and investor attitudes. For select markets, the high and low values are highlighted for comparison purposes. Canada’s major urban centres, including Toronto Downtown and Montréal Downtown have seen the most dramatic shifts, given their size, influence and underlying dependence on the strength or weakness of the macroeconomic environment. Many of Canada’s secondary markets, such as Regina/Saskatoon and Winnipeg, saw only moderate and steady ebbs and flows over the decade, a reflection of their stable local economies that are not impacted as much by global events and enjoy relative consistency in market fundamentals.

Toronto Downtown Montréal Downtown

> >

500

>

450

>

Canadian National Average Victoria Vancouver Downtown Vancouver Airport Whistler Calgary Edmonton Alberta Mountain Resorts

400

350

>

300

Toronto Airport West

Regina/Saskatoon Winnipeg

250

>

Canadian National Average Toronto North/Parklands Regina/Saskatoon
Niagara Falls Ottawa Toronto Downtown Toronto Airport West

200

>

>

150

Winnipeg

Montreal Downtown Montreal Airport

100

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011F

Base year 1992=100

_ | 2011 Canadian Hotel Investment Report 7

Colliers Hotel Value Index 2000-2011F
MARkeT AReA 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011F

Base year 1992=100 CpI Index1 Annual % Change Canadian National Avg. % Change Victoria % Change Vancouver Downtown % Change Vancouver Airport % Change Whistler % Change Calgary % Change Edmonton % Change Alberta Mountain Resorts % Change Regina/Saskatoon % Change Winnipeg % Change Toronto North/East % Change Toronto Downtown % Change Toronto Airport West % Change Niagara Falls % Change Ottawa % Change Montréal Downtown % Change Montréal Airport % Change Halifax/Dartmouth % Change

2.7% 205.5 1.6% 149.4 -6.8% 155.1 -4.3% 90.9 -17.5% 140.2 6.3% 173.0 -2.5% 140.9 1.0% 183.2 3.2% 152.0 0.0% 141.3 -9.2% 279.3 6.9% 325.9 1.2% 300.7 3.0% 199.5 2.6% 207.5 9.4% 295.5 6.7% 248.2 8.3% 197.5 2.4%

2.5% 199.4 -3.0% 136.1 -8.9% 144.7 -6.7% 83.4 -8.2% 143.6 2.4% 167.6 -3.1% 145.5 3.3% 188.0 2.6% 149.3 -1.8% 133.7 -5.4% 254.7 -8.8% 312.2 -4.2% 255.0 -15.2% 198.5 -0.5% 210.8 1.6% 307.9 4.2% 261.6 5.4% 198.3 0.4%

2.2% 196.0 -1.7% 140.5 3.2% 147.0 1.6% 80.6 -3.4% 148.1 3.1% 169.7 1.3% 151.7 4.2% 197.5 5.1% 149.1 -0.1% 127.0 -5.0% 223.1 -12.4% 305.3 -2.2% 221.6 -13.1% 202.7 2.1% 197.8 -6.2% 324.2 5.3% 266.3 1.8% 201.7 1.7%

2.8% 183.4 -6.4% 141.6 0.8% 149.9 2.0% 78.2 -3.0% 149.7 1.1% 168.0 -1.0% 147.1 -3.0% 197.5 0.0% 154.2 3.4% 122.2 -3.8% 183.8 -17.6% 274.8 -10.0% 181.7 -18.0% 168.8 -16.7% 198.0 0.1% 328.1 1.2% 266.8 0.2% 208.0 3.1%

1.8% 193.3 5.4% 148.0 4.5% 161.6 7.8% 81.0 3.6% 153.8 2.7% 176.9 5.3% 152.0 3.3% 201.5 2.0% 156.8 1.7% 123.9 1.4% 199.5 8.5% 309.4 12.6% 196.6 8.2% 189.3 12.1% 202.2 2.1% 345.5 5.3% 275.1 3.1% 212.5 2.2%

2.2% 214.4 11.0% 159.5 7.8% 184.6 14.2% 87.0 7.4% 164.2 6.8% 201.7 14.0% 165.5 8.9% 220.0 9.2% 166.5 6.2% 128.6 3.8% 225.8 13.2% 367.2 18.7% 228.3 16.1% 214.8 13.5% 219.7 8.7% 392.8 13.7% 293.8 6.8% 225.1 5.9%

2.0% 240.8 12.3% 172.9 8.4% 218.2 18.2% 95.2 9.4% 177.7 8.2% 234.3 16.2% 186.9 12.9% 247.0 12.3% 178.3 7.1% 134.3 4.4% 258.1 14.3% 437.4 19.1% 267.8 17.3% 245.3 14.2% 242.8 10.5% 450.2 14.6% 307.0 4.5% 239.7 6.5%

2.1% 271.4 12.7% 188.9 9.2% 263.3 20.7% 104.8 10.1% 191.9 8.0% 274.2 17.0% 209.3 12.0% 284.6 15.2% 193.3 8.4% 141.7 5.5% 289.0 12.0% 536.2 22.6% 316.0 18.0% 280.4 14.3% 267.1 10.0% 504.2 12.0% 319.3 4.0% 249.3 4.0%

2.4% 267.7 -1.4% 178.7 -5.4% 268.3 1.9% 105.8 1.0% 184.2 -4.0% 282.7 3.1% 213.1 1.8% 277.8 -2.4% 205.3 6.2% 146.3 3.3% 282.1 -2.4% 530.9 -1.0% 310.6 -1.7% 274.0 -2.3% 270.8 1.4% 477.0 -5.4% 293.1 -8.2% 249.8 0.2%

0.3% 248.1 -7.3% 156.7 -12.3% 246.3 -8.2% 98.2 -7.2% 166.9 -9.4% 259.2 -8.3% 198.4 -6.9% 252.5 -9.1% 212.5 3.5% 148.7 1.6% 257.0 -8.9% 476.7 -10.2% 264.9 -14.7% 254.5 -7.1% 265.4 -2.0% 450.2 -5.6% 267.6 -8.7% 242.5 -2.9%

2.2% 255.6 3.0% 159.8 2.0% 255.7 3.8% 100.1 1.9% 167.2 0.2% 261.3 0.8% 204.7 3.2% 250.0 -1.0% 224.0 5.4% 154.6 4.0% 263.2 2.4% 506.8 6.3% 276.8 4.5% 256.8 0.9% 274.7 3.5% 473.7 5.2% 271.4 1.4% 245.2 1.1%

2.7% 269.3 5.3% 166.5 4.2% 278.7 9.0% 105.9 5.8% 170.4 1.9% 271.0 3.7% 218.4 6.7% 255.0 2.0% 237.6 6.1% 163.3 5.6% 278.2 5.7% 548.8 8.3% 294.6 6.4% 262.5 2.2% 287.3 4.6% 506.8 7.0% 279.8 3.1% 252.6 3.0%

The Hotel Value Index measures the rate of change in hotel values on a year over year basis. Rates of change are influenced by investor yield expectations, market performance, changes to supply and the overall economic health of the market. 2011F = Forecast 1 CpI Index: Conference Board of Canada Source: Colliers International Hotels

Colliers International Hotels | _ 8

2011 Canadian Hotel Investment Report
2010 Canadian Hotel Transactions
nAMe
Hotel Royal William Quality Champlain Hotel Waterfront Super 8 Hotel Swift Current Canada Motel Clarion Hotel & Suites Centreville1 Riverbend Inn & Vineyard2 ∆ 7389 & 7429 Lundy’s Lane (formerly Ramada Niagara Falls)3 ∆ Celebrity Hotel & Suites Downtown Montréal gloucester Square Inn Hotel of the Rockies4 Le Meridien king Edward Hotel*5 Maple Ridge Travelodge Nita Lake Lodge6 ∆ Okotoks Willingdon Inn Quality Niagara Falls Hotel and Conference Centre The york Hotel7 Burrard Inn8 Carriage House Motel Comfort Inn Sturgeon Falls Courtyard by Marriott Montréal9 Hotel gouverneur10 Innoka Resort11 ∆ Lantern Inn & Suites Montréal Hotel gault Traveller's Hotel Travelodge Toronto North12 Motel Rio13 Ocean Village Beach Resort14 pacific palisades Hotel15 Super 8 Hotel Lachenaie/Terrebonne16 Super 8 Hotel Sainte Agathe16 Super 8 Hotel St. Jerome16 Super 8 Hotel Ste-Foy16 Super 8 Hotel Trois Rivieres16 Travelodge Silver Bridge Inn 8068 & 8128 Mountain Road (former Regency Motor Hotel) ∆ Banff Rocky Mountain House Best Western Country Squire Resort Best Western Europa Downtown17 Holiday Inn Express & Suites Woodstock18 ∆ Solara Canmore Resort*19 ∆ Super 8 Athabasca The Advantage Motel The pointe Inn yorkland Hotel20 ∆ Comfort Inn Windsor21 Days Inn Winnipeg22 Fairway Motor Inn Forest golf & Country Hotel23 The Empress Hotel Auberge du Mont Orford24 Crowne plaza Chateau Lacombe Edmonton25 Howard Johnson kemptville park Inn & Suites Miramichi26

loCATIon
Québec City, QC Orillia, ON Swift Current, Sk greenfield park, QC Montréal, QC Niagara-on-the-Lake, ON Niagara Falls, ON Montréal, QC Toronto, ON Canmore, AB Toronto, ON Maple Ridge, BC Whistler, BC Okotoks, AB Niagara Falls, ON Edmonton, AB Vancouver, BC Niagara Falls, ON Sturgeon Falls, ON Montréal, QC Ste Foy, QC Canmore, AB port Hope, ON Montréal, QC parry Sound, ON Toronto, ON Abbotsford, BC Tofino, BC Vancouver, BC Terrebonne, QC Sainte-Agathe, QC St. Jerome, QC Sainte-Foy, QC Trois-Rivieres, QC Duncan, BC Niagara Falls, ON Banff, AB gananoque, ON Montréal, QC Woodstock, ON Canmore, AB Athabasca, AB Edmonton, AB Calgary, AB Toronto, ON Windsor, ON Winnipeg, MB Niagara Falls, ON Forest, ON Chilliwack, BC Magog, QC Edmonton, AB kemptville, ON Miramichi, NB

RooMS
44 57 63 52 266 21 202 26 22 99 298 58 51 15 144 45 72 122 60 181 320 20 16 30 20 183 23 51 233 81 74 81 79 78 33 23 171 68 174 87 106 48 50 150 290 100 66 49 75 50 22 307 47 65

DATe
Jan Jan Jan Feb Feb Feb Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr May May May May May May May May May Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jul Jul Jul Jul Jul Aug Aug Aug Aug

PRICe ($)
$4,100,000 $2,825,000 $6,500,000 $3,050,000 $17,100,000 $4,175,000 $2,500,000 $1,600,000 $4,200,000 $8,150,000 $48,000,000 $3,650,000 $19,000,000 $1,300,000 $7,500,000 $3,039,000 $8,200,000 $2,500,000 $4,000,000 $12,300,000 $17,400,000 $3,000,000 $1,300,000 $4,200,000 $1,485,000 $5,500,000 $1,935,000 $7,400,000 $46,975,000 $7,300,000 $4,219,600 $5,201,000 $5,075,000 $5,400,000 $6,300,000 $1,200,000 Undisclosed $3,500,000 $10,000,000 Undisclosed $25,500,000 $4,900,000 $3,000,000 $6,750,000 $12,200,000 $6,031,000 $6,300,000 $1,505,000 $1,650,000 $1,270,000 $1,400,000 $47,800,000 $1,640,000 $1,200,000

PRICe/ RooM ($)

CAP RATe (%)
n/a n/a 13.2 n/a n/a 6.6 n/a n/a n/a n/a 2.6 n/a n/a n/a 5.3 7.0 3.0 n/a n/a n/a n/a n/a n/a n/a n/a n/a 8.5 10.0 n/a n/a n/a n/a n/a n/a 11.0 n/a n/a n/a n/a n/a n/a 11.5 n/a n/a n/a 3.3 n/a n/a n/a n/a n/a 5.7 n/a n/a

$93,200 $49,600 $103,200 $58,700 $64,300 n/a $12,400 $61,500 $190,900 $82,300 $161,100 $62,900 n/a $86,700 $52,100 $67,500 $113,900 $20,500 $66,700 $68,000 $54,400 $150,000 $81,300 $140,000 $74,300 $30,100 $84,100 $145,100 $201,600 $90,100 $57,000 $64,200 $64,200 $69,200 $190,900 $52,200 n/a $51,500 $115,000 n/a n/a $102,100 $60,000 $45,000 $42,100 $60,300 $95,500 $30,700 $22,000 $25,400 $63,600 $155,700 $34,900 $18,500

_ | 2011 Canadian Hotel Investment Report 9

nAMe
parkway Motel Town and Country Motel Travelodge Barrie Days Inn Hotel Levesque kawartha Lakes Inn Lindsay Inn Marriott Niagara Falls Hotel Fallsview & Spa*27 Ramada guildford Surrey Hotel (now Coast Surrey guildford Hotel) Sheraton Fallsview Hotel & Conference Centre*27 Town and Country Motel Travelodge Amabassador Bridge Windsor (now Comfort Inn & Suites Ambassador Bridge) Wander Inn Best Western St. Jacobs Country Inn28 Days Inn & Suites Strathmore (previously Holiday Inn Express & Suites Strathmore) Destination Inn & Suites Minaki on the River ∆ Niagara Inn Superior Inn & Conference Centre Airliner Hotel ∆ Lionheads Lakefront Resort29 Orangeville Inn30 Sleep Inn The Elora Mill Inn ∆ Traveller's Inn (gorge Road)31 ∆ Traveller's Inn (Queens Avenue)31 ∆ Chalet Hotel Winnipeg Four points by Sheraton Mississauga Meadowvale Lincoln Motor Hotel Motel Rimouski Viamede Resort and Conference Centre32
28

loCATIon
London, ON Woodstock, ON Barrie, ON Riviere-du-Loup, QC Riviere-du-Loup, QC Lindsay, ON Lindsay, ON Niagara Falls, ON Surrey, BC Niagara Falls, ON Burlington, ON Windsor, ON Esterhazy , Sk Waterloo, ON Strathmore, AB Waterloo, ON Burnaby, BC kenora, ON Niagara Falls, ON Beausejour, MB Winnipeg, MB georgina, ON Orangeville, ON Oshawa, ON Elora, ON Victoria, BC Victoria, BC Winnipeg, MB Mississauga, ON Winnipeg, MB Rimouski, QC kawarthas, ON
19

RooMS
29 20 96 42 83 38 44 432 77 407 30 134 24 118 124 104 283 120 40 36 152 88 36 25 32 64 36 22 205 26 27 52

DATe
Aug Aug Aug Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Oct Oct Oct Oct Oct Oct Oct Nov Nov Nov Nov Nov Nov Nov Dec Dec Dec Dec Dec

PRICe ($)
$1,400,000 $1,070,000 $3,800,000 $1,950,000 $1,350,000 $1,992,500 $1,500,000 $76,400,000 Undisclosed $70,000,000 $2,130,000 $2,600,000 $1,240,000 Undisclosed $8,000,000 Undisclosed $44,000,000 $1,200,000 $1,120,000 $1,200,000 $4,900,000 $3,100,000 $3,200,000 $1,690,000 $1,850,000 $3,362,600 $1,887,400 $1,650,000 $17,200,000 $2,500,000 $1,100,000 $2,835,000

PRICe/ RooM ($)

CAP RATe (%)
n/a n/a 5.7 n/a n/a n/a n/a 7.9 n/a n/a n/a n/a 15.6 n/a n/a n/a 8.5 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 7.0 n/a n/a n/a

$48,000 $53,500 $39,600 $46,400 $16,300 $52,400 $34,100 $176,900 n/a $172,000 $71,000 $19,400 $51,700 n/a $64,500 n/a $155,500 $10,000 $28,000 $33,300 $32,200 $35,200 $88,900 $67,600 $57,800 $52,500 $52,400 n/a $83,900 n/a $40,700 $54,500

Hilton Vancouver Metrotown

Footnotes: 1 purchased for conversion to rental apartments. 2 The property is located on 16.7 acres and includes a 12 acre vineyard and restaurant. 3 Formerly the 129-room Ramada Coral Inn Resort (Closed Q4, 2008) and 73-room Ramada Suites Niagara & Conference Centre (closed Q1 2009). 4 Included excess land. 5 Three vacant floors will be converted to residential uses. 6 Includes 51 of 77 strata lots, train station and land for additional strata lots. price per room not applicable. 7 purchased by the City of Edmonton for urban renewal. 8 The property was purchased for future re-development. 9 purchased for conversion to student residences. 10 The site includes significant excess density. The purchaser plans on developing 299,000 SF of office space. 11 The property is improved by a partially completed townhouse complex. 12 The transaction was structured under a lease agreement with a guaranteed buy-out. 13 Sold for conversion to non-profit housing. 14 The Resort includes 51 units within 40 strata lots. The purchaser plans to add additional units. 15 The hotel was previously operated by kimpton Hotels and was shut down effective April 2010. Converting to rental apartments. 16 part of a five-property portfolio sale. 17 50% share sale. 18 Transfer of security on a new hotel under construction.

The sale included 106 units that were unsold from the 214 unit strata-titled development. The property includes approximately 38,000 SF of “warm” shell amenity space, which is being used to construct a spa, pools, restaurant among other amenities. 20 At the time of sale, 96 units were out of inventory. 21 The property sold by expropriation from the Ontario provincial government. 22 Includes two acres of land and has since been closed for redevelopment. 23 Includes a 27 hole golf course. 24 purchased for alternate use. 25 The Vendor will continue to manage the hotel in the short-term. Alternate use anticipated. 26 The transaction was structured under a lease agreement with a guaranteed buy-out. 27 part of a two property portfolio. The allocation of price may not be accurate. 28 Share sale. part of a two property portfolio. 29 The property was vacant at the time of sale. New ownership intends to refurbish and reopen as a resort facility. 30 Improvements will be torn down for redevelopment to alternate use. 31 Converting to affordable housing. part of a two property portfolio. 32 Includes 33 rooms and 19 cottages.
∆ Distress sale sold under power of sale or receivership. * Strategic sale.

Source: Colliers International Hotels

Colliers International Hotels | _ 10

CollIeRS InTeRnATIonAl HoTelS
Alam Pirani +1 416 643 3414 alam.pirani@colliers.com Tom Andrews +1 604 661 0846 tom.andrews@colliers.com Robin McLuskie +1 416 643 3456 robin.mcluskie@colliers.com Russell Beaudry +1 416 643 3761 russell.beaudry@colliers.com Amy Kwan +1 416 643 3497 amy.kwan@colliers.com One Queen Street East Suite 2200 Toronto, ON M5C 2Z2 TEL +1 416 777 2200 FAX +1 416 777 9232 200 Granville Street Suite 1900 Vancouver, BC V6C 2R6 TEL +1 604 681 4111 FAX +1 604 661 0849 www.colliershotels.com

140 hotel professionals in over 20 offices worldwide, including: Auckland Hong Kong London Mexico City Miami Moscow Oslo San Francisco San Jose Shanghai Sydney Tokyo Toronto Vancouver Warsaw

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.