Source: Hotel Vertu: Financing the Venture in the Boutique Hotel Industry; by Howard STEVENSON & Michel ROB

Key Lodging Statsistics in Savannah Market

Savannah (Overall) Market Data

Demand
Year Supply Change (%) Change (%) Occupancy(%) ADR ($)

2011 6.20 2.60 70.10 130.87

2012 9.00 3.90 66.80 131.36
2013 2.30 10.90 72.60 130.16
2014 0.00 0.10 72.70 136.54
2015* 0.00 1.80 73.90 140.73

Savannah Competition: 9 key competitors

Room rate
Property Type Rooms (website)
Andaz Boutique 151 200/260
Autograph Mansion Boutique 125 290/420
Bohemian Hotel Boutique 75 320/400
Residence Inn National Chain 109 220
Marshall House Boutique 68 210/300
Planters Inn Boutique 60 NA
Hyatt Regency National Chain 351 150/320
Marriott National Chain 387 150/320
River Street Inn Boutique 86 140/180

Specific Stats for Savannah competitive set (9 hotels above)

2009 2010 2011 2012
ADR 145.33 151.88 153.67 157.74
Occupancy 74.3% 75.4% 74.3% 73.6%
ward STEVENSON & Michel ROBERTS; Case number 9-917-505

RevPAR ($)

91.74
87.75
94.50
99.26
104.00

2014 Occupancy
80.2%
68.4%
88.2%
87.4%
NA
NA
80.9%
65.9%
NA

2013 2014 2015*

161.03 163.29 167.33
72.4% 73.5% 74.3%
Source: Hotel Vertu: Financing the Venture in the Boutique Hotel Industry; by Howard STEVENSON & Michel ROB
Peach Tree Inn - Historical Performance

2010 2011 2012

# rooms 145 145 145
Rooms sold 35597 35879 36028
Occupancy 67.3% 67.8% 68.1%
ADR (1) 130.34 132.22 137.65
ADR % Change 1.4% 4.1%
RevPAR (2) 87.67 89.63 93.70
RevPAR % Change 2.2% 4.5%
Howard STEVENSON & Michel ROBERTS; Case number 9-917-505

2013 2014 2015*

145 145 145
36148 35553 35670
68.3% 67.2% 67.4%
139.27 140.65 142.21
1.2% 1.0% 1.1%
95.12 94.48 95.85
1.5% -0.7% 1.4%
Peach Tree Inn Financials 2013 2014
$(000) % Per Rm $(000)
Commercial Performance
# rooms 145
Rooms sold 36148
Occupancy 68.3%
ADR (1) 139.27
RevPAR (2) 95.12
2014 2015*
% Per Rm $(000)

145
35553
67.2%
140.65
94.48
Peach Tree Inn Financials 2013 2014
$(000) % Per Rm $(000)
Commercial Performance
# rooms 145
Rooms sold 36148
Occupancy 68.3%
ADR (1) 139.27
RevPAR (2) 95.12
Departmental Revenues
Rooms 5,034 82.0% 139.27 5,001
Food & Bev 950 15.5% 26.28 1,020
Telephone 2 0.0% 0.06 2
Parking - 0.0% - 90
Other 152 2.5% 4.20 23
TOTAL 6,138 100.0% 169.81 6,136

Departmental Expenses
Rooms 981 16.0% 27.14 1,178
Food & Bev 786 12.8% 21.74 812
Telephone 39 0.6% 1.08 42
Parking
Other 83 1.4% 2.30 17
TOTAL 1,889 30.8% 52.26 2,049

Total Operating Profit 4,249 69.2% 117.55 4,087

Unallocated Operating Expenses

General & Admin 502 8.2% 13.89 575
Sales & Marketing 182 3.0% 5.03 303
Property Operations 307 5.0% 8.49 237
Energy 202 3.3% 5.59 214
TOTAL 1,193 19.4% 33.00 1,329

Gross Operating Profit 3,056 49.8% 84.55 2,758

Fixed Expenses
Property Taxes 339 5.5% 9.38 311
Insurance 91 1.5% 2.52 83
Management Fee 234 3.8% 6.47 248
Franchise Fee 565 9.2% 15.63 382
 Other Fixed 16 0.3% 0.44
TOTAL 1,245 20.3% 34.44 1,024

Income before Reserve 1,811 29.5% 50.11 1,734

Reserve for Replacement (3) 243 4.0% 6.72 247

Net Operating Income / Cash Flow 1,568 25.5% 43.39 1,487

*Note 2015 is actual for first 6 months and forecast for remainder of year (i.e., through Dec 31, 2015)
Darcy and Whiting believed the forecast to be accurate
2014 2015*
% Per Rm $(000) % Per Rm s.

145 145
35553 35670
67.2% 67.4%
140.65 142.21
94.48 95.85

81.5% 140.65 5,073 81.4% 142.21

16.6% 28.69 1,012 16.2% 28.37
0.0% 0.06 1 0.0% 0.03
1.5% 2.53 93 1.5% 2.61
0.4% 0.65 56 0.9% 1.57
100.0% 172.57 6,235 100.0% 174.79

19.2% 33.13 1,214 19.5% 34.03

13.2% 22.84 870 14.0% 24.39
0.7% 1.18 44 0.7% 1.23

0.3% 0.48 4 0.1% 0.11

33.4% 57.63 2,132 34.2% 59.77

66.6% 114.94 4,103 65.8% 115.02

9.4% 16.17 556 8.9% 15.59

4.9% 8.52 298 4.8% 8.35
3.9% 6.67 289 4.6% 8.10
3.5% 6.02 195 3.1% 5.47
21.7% 37.38 1,338 21.5% 37.51

44.9% 77.56 2,765 44.3% 77.51

5.1% 8.75 276 4.4% 7.74

1.4% 2.33 102 1.6% 2.86
4.0% 6.98 252 4.0% 7.06
6.2% 10.74 370 5.9% 10.37
 16.7% 28.80 1,000 16.0% 28.03

28.3% 48.76 1,765 28.3% 49.47

4.0% 6.95 250 4.0% 7.01

24.2% 41.81 1,515 24.3% 42.46

e., through Dec 31, 2015) 13.20 purchase multiple

0.076 Cap rate
 in '$000
Property Acquisition $ 20,000

Construction / renovation $ 7,770

Other Fees & Expenses

Architects, designers $ 519
Hotel & Rest F&F $ 3,348
Information Technology $ 584
Operating supplies / Equipment $ 1,081
Pre-opening & Marketing $ 858
Property Taxes & Insurance $ 62
Financing Fees & Expenses $ 233
Construction Period Debt Payment $ 2,029
Accounting & Legal $ 123
Reserve / Working capital $ 250
Contingency $ 1,000
Total "other" $ 10,087

Grand Project Total $ 37,857

Vertu - Pro Forma Projected Performance
GUIDANCE for simulation / hypotheses
FOR ROOM RATES FOR ABS. VALUE IN COSTS
Income multiplier (m1) 3 Cost multiplier (abs. Val. m3) 2
Cost multiplier (m2) 1.5 Cost multiplier (abs. Val. m3) 1.5
Yearly growth (g1) 0% Yearly growth (g2) 4%

SIMULATION
2015 2016 2017 2018
# rooms 145 NA 145 145
Rooms sold 35,671 NA - -
- -

Occupancy 67.4% NA
ADR $ 142.2 NA
RevPAR $ 95.8 NA
RATIO
 2015 2017 2018
$(000) Per Rm $(000) Per Rm $(000)
DIRECT Revenues
Rooms Follow specific table $ 5,072.84 $ 95.85 - -
Food & Bev 25% of room rate $ 1,012.00 $ 19.12 - -
plus resto starting 700 +20%
Telephone Reach 1$/room $ 1.00 $ 0.02 - -
Parking m1 - x3 $ 93.00 $ 1.76 - -
Other m1 - x3 $ 56.00 $ 1.06 - -
TOTAL (1) $ 6,234.84 $ 174.79 - -

DIRECT Expenses
Rooms m2 - x1,5 $ 1,214.00 $ 22.94 - -
Food & Bev 70% cost of sales $ 870.00 $ 16.44 - -
Telephone Stable $ 44.00 $ 0.83 - -
Parking Reach 3$/room $ - $ - - -
Other m2 - x1,5 $ 4.00 $ 0.08 - -
TOTAL (2) $ 2,132.00 $ 59.77 - -

Total Operating Profit (1-2) $ 4,102.84 $ 115.02 - -

Unallocated Operating Expenses

General & Admin m3 - x2 $ 556.00 $ 10.51 -
Sales & Marketing m3 - x2 $ 298.00 $ 5.63 -
Property Operations m4 - x1,5 $ 289.00 $ 5.46 -
Energy m4 - x1,5 $ 195.00 $ 3.68 -
TOTAL (3) $ 1,338.00 - -

Gross Operating Profit (1-2-3) $ 2,764.84 $ 77.51 - -

Fixed Expenses
Property Taxes m4 - x1,5 $ 276.00 $ 5.21 -
Insurance m4 - x1,5 $ 102.00 $ 1.93 -
Management Fee none $ 252.00 $ 4.76 -
Franchise Fee none $ 370.00 $ 6.99 -
Other none $ - $ - -
TOTAL (4) $ 1,000.00 $ 28.03 - -

Income before Reserve (1-2-3-4) $ 1,764.84 $ 49.47 - -

CapEx/ Reserve for replacement 15years flat amo $ 250.00 $ 4.72

2018 2019
Per Rm $(000) Per Rm

-
-

-
-
-
-

-
-
-
-
-
-

- -
- -
- -
- -
-

- -
- -
- -
- -
- -
-

-
 in '$000
Grand Project Total $ 37,857
in '$000
Financing Structure
Debt Capacity 65%
Total Debt $ 24,607
Total Equity $ 13,250
Project Capital Requirements Debt Service
Total capital requirement #DIV/0! Loan Amount - Interest Rate
Total Debt #DIV/0! Term (years) 10 Assumed cap rate at sale
Total Equity #DIV/0! Amortization period (years) 20 equivalent multiple of cash flow

Calculation of annual debt payments

year (calendar) 2016* 2017 2018 2019 2020 2021 2022 2023
year (sequence) 1 2 3 4 5 6 7 8
Annual Payment
Interest Portion
Principal Portion
Remaining Balance

Project Cash Flow and IRR

2016* 2017 2018 2019 2020
Net Operating Income / Cash Flow
Interest
Principal payments
Cash Flow after Financing - € - € - € - € - €
Sale at Cap Rate
Debt outstanding
Net cash flow (for IRR calc) - - € - € - € - € - €
Project IRR

Deal Structure Alternatives

Financing Assumptions
Equity
Principals 1.00% $ -
Investors 99.00% $ -

Scenario A
80 / 20 split with investors Year 1 2 3 4 5
Investors 80% IRR
Principals 20% IRR
Total cash flow - - - - - -

Scenario B
Capital back back plus 5% return
Cash Flow allocation for Investors
Year 1 2 3 4 5
Required return (for capital back + 5%)
Achieved return
Deficit
Required priority share of exit proceeds

Remaining exit proceeds

Split of remaining exit proceeds

Investors 70.00%
Principals 30.00%

Net Cash flow to parties

Investors IRR
Principals IRR
Total cash Flows - - - - - -