CAPITAL INVESTMENT GROUP

Rare Catalina Hotel Investment Opportunıty

229 Metropole, Avalon, CA 90704

Rare Catalina Hotel Investment Opportunıty

229 Metropole, Avalon, CA 90704

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Exclusively Marketed By:

JOHN CARPENTERPrincipal

M: 310.963.1414O: 949.682.3088

Lic. 01428910john@legacycig.com

LISA ZHOUPrincipal

M: 949.656.5518 O: 949.209.9951

Lic. 01924981 lisa@legacycig.com

LEGACY CAPITAL INVESTMENT GROUPOne Park Plaza Suite 600

Irvine, CA 92614Broker Lic. 02090120

www.legacycig.com

Confidentiality & ConditionsThe information contained in the following Offering Memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Broker and should not be made available to any other person or entity without the written consent of Broker.

This Offering Memorandum has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property.

The information contained herein is not a substitute for a thorough due diligence investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property.

The information contained in this Offering Memorandum has been obtained from sources we believe to be reliable; however, Broker has not verified, and will not verify, any of the information contained herein, nor has Broker conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

By receipt of this Memorandum, you agree that this Memorandum and its contents are of confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose its contents in any manner detrimental to the interest of the Owner. You also agree that by accepting this Memorandum you agree to release Broker (and its agents) and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this property.

CAPITAL INVESTMENT GROUP

Table of ContentsExecutive SummaryOffering Summary, About Hotel, Structure & Systems, Rooms

Location OverviewMaps & Aerials, City Overview, About Catalina, Catalina Hotels, Island Tourism, County Overview, Demographics

Financial SummaryIncome Statement, Profit & Loss Summary, Historical Figures

Financial Analysis & ProformaCompetitive Set, RevPar Comparison, 5 Year Cashflow Proforma, 5 Year IRR Analysis

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INVESTMENT SUMMARY

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Executive Summary We are proud to present the rare opportunity to acquire a 24-Unit Hotel Property located near the beach on Catalina Island in the touristy destination of Avalon, CA.

Catalina Island welcomes around 1 million visitors a year via Ferries, Helicopter or Private Boats and Planes. With limited opportunities for new development and rising visitor volume this value-add hotel investment opportunity provides high barriers to entry with potential for significant cash flow increase over the long term. The property is about 1/2 block to the Pacific Ocean and extremely close to shopping, restaurants, transportation, and activities. Vacant Lot (7,302 SF) next door may be available as well but is not part of this offering.

OFFERING SUMMARYPRICE $6,264,908NOI $478,373In-Place Cap 7.64%Proforma Cap 10.19%Avg. Daily Rate $233Occupancy 55.74%

PROPERTY SUMMARYHOTEL NAME Casa MariquitaADDRESS 229 Metropole

Avalon, Ca 90704NUMBER OF ROOMS 24 (22 Guestrooms + 2 Onsite Manager)SQUARE FEET 9,400LAND AREA (ACRES) 0.15BUILT 1990PARKING SPACES 2STRUCTURE 4 Stories, Exterior-CorridorPARCEL # 7480-018-014ZONING C1 INTEREST Fee SimpleMANAGEMENT Offered UnencumberedLABOR Non-Union

INVESTMENTSUMMARY

Executive Summary ContinuedTERMS

Estimated Financing Loan Amount 70% 4,385,436Interest Rate 5.50%Amortization 25Annual Payment 323,165

Property Tours Prospective purchasers are encouraged to visit the subject property prior to submitting offers. However, all property tours must be arranged with the listing agents. Please do not contact the tenants, on-site management or staff without prior approval.

TERMS INVESTOR INFORMATIONOffers Please direct all offers to John Carpenter at john@legacycig.com (949-682-

3088). All offers must include the following terms and investor information:Purchase Price Purchasing EntityEarnest Money Deposit Equity Sources/StructureDescription of any Contingencies Debt Sources/StructureInspection Period Proof of FundsClosing Period

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Structure & SystemsFOUNDATION Poured ConcreteFLOORS Lightweight Concrete over Wood Framing and JoistsFRAMING Wood FrameEXTERIOR WALLS StuccoINTERIOR WALLS Wood Framing with DrywallWINDOWS Single PaneROOF TBDWATER HEATING 4 BoilersHVAC Each Room Contains Individual HVAC Units & ControlsLAUNDRY Two Washers and Four DryersELEVATOR NoneGENERATOR Battery Powered EMG (40 minutes)FIRE/LIFE SAFETY Sprinklers

About Casa MariquitaCasa Mariquita is conveniently located on Catalina Island, in the heart of the small city of Avalon. This family owned and operated hotel is less than one block from the beach. A wonderful variety of shops and restaurants, the post office, local food market, massage services, golf-cart and bike rentals, scuba diving, boat services and much, much more are all within walking distance of our charming hotel. Whatever your vacation needs, you'll find them just within reach during your stay at Casa Mariquita.

Casa Mariquita's friendly and professional staff host a cozy atmosphere of clean and comfortably furnished rooms complete with Flat Screen TVs, Basic Cable access, refrigerator, hair dryer and much more. Their warm and welcoming Penthouse offers a panoramic view of the city of Avalon, the Bay and beyond to the ocean, a full kitchen, fireplace and two private balconies. Views of the ocean are also available from the Honeymoon Suite and some of the King and Queen sized rooms. Casa Mariquita's other rooms have a variety of views from the mountains to the town and our own lovely little courtyards, which are havens to some of the Santa Catalina local bird-life. Step out of your Casa Mariquita room – and in to the fresh Santa Catalina Island air!

TripAdvisor Rating 229 Reviews

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HOTEL CASA MARIQUITA IS OUTLINED IN YELLOW. THE VACANT LOT NEXT DOOR (7,302 SF) MAY ALSO BE AVAILABLE FOR SALE BUT IS NOT PART OF THIS OFFERING.

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RoomsROOM TYPE STANDARD KING # Units 12

Standard King Rooms are rooms located on the second and third floors. They have views within the Hotel. Several of these rooms are adjoining rooms with King beds to rooms with two doubles, making a convenient stay for families.

One King Size bed Courtyard View Private bath and shower Air conditioning Refrigerator Flat screen TV

Size 21X13SqFt 273View Internal

ROOM TYPE KING PRIVATE BALCONY WITH PARTIAL OCEAN VIEW# Units 1

Standard King Rooms are rooms located on the second and third floors. They have views within the Hotel. Several of these rooms are adjoining rooms with King beds to rooms with two doubles, making a convenient stay for families.

One King Size bed Courtyard View Private bath and shower Air conditioning Refrigerator Flat screen TV

Size 21X17SqFt 357View Partial Ocean

ROOM TYPE OCEAN VIEW KING# Units 1

Full Ocean View King Room Located on the upper floors, this is a large room with great views overlooking Catalina Island, Town of Avalon and Avalon Bay.

Living room with fire place Bedroom with king size bed Private balcony Full Ocean View In-room Coffee Private bath and shower Air conditioning Refrigerator

Size 21X13SqFt 273View Full Ocean

ROOM TYPE QUEEN WITH PEEK A BOO VIEW# Units 2

Cozy room with a partial view of the Wrigley Mansion and Pacific Ocean and is located on third or fourth floor overlooking Avalon Harbor. A great room on Catalina Island for an economical price.

Partial view of the Wrigley Mansion and Pacific Ocean Private bath / shower Air conditioning Refrigerator Flat screen TV

Size 21X12SqFt 240View Partial Ocean

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ROOM TYPE STANDARD DOUBLE QUEEN# Units 6

Standard Two Double Queens are rooms located on the second and third floors. Several of these rooms are adjoining rooms with King beds to rooms with two double queen beds, Making a convenient stay for families.

Courtyard View Two Queen Beds Private bath / shower Air conditioning Refrigerator Flat screen TV

Size 21X13SqFt 273View Partial Ocean

ROOM TYPE THE PENTHOUSE# Units 1 Our Deluxe Penthouse features a beautiful

panoramic view of the Catalina Island, town of Avalon and Avalon Bay. Situated on a fifth floor by itself, the Penthouse enjoys a leisure and private setting. Comfortable furnishings and a cozy fireplace create a relaxing, romantic atmosphere – the Ultimate Catalina Vacation Getaway!

Living room Private bath and shower 42″ Plasma TV In-room Coffee Fireplace Full Ocean View Full Kitchen Two private balconies

Size 31X17SqFt 527

View Panoramic Ocean & Island

ROOM TYPE HONEYMOON SUITE# Units 1

Features a living room and a bedroom separated by a hallway. Both spacious rooms offer great views overlooking Catalina island, Town of Avalon and Avalon Bay. The relaxing private balcony is perfect for morning coffee time or afternoon relaxation.

Living room with fire place Bedroom with king size bed Private balcony Full Ocean View In-room Coffee Private bath and shower Air conditioning Refrigerator

Size 38X13SqFt 494View Full Ocean View

Disclaimer: The number of Standard King Rooms includes 2 onsite manager units. Converting onsite manager units to hotel rooms is subject to City Approval.

LOCATIONOVERVIEW

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City OverviewAvalon is situated on the easterly portion of Catalina Island, 22 miles off the coast of Southern California. Avalon is a little over 2 .8 square miles in size. Avalon is the only incorporated city on Santa Catalina Island of the California Channel Islands, and the southernmost city in Los Angeles County. The island itself is 76 square miles in area, 85% of which is an Open Space Conservancy. The picturesque and dynamic seaport village of Avalon has a permanent population of around 4,000, with annual visitors in excess of one million. Catalina Island is part of Los Angeles County. Avalon schools are part of the Long Beach Unified School District. The City and Island have a vibrant, tourist-based economy, a strong environmental protection philosophy, and a desire to create a model community based on sustainable principles.

Before European colonization, the island was inhabited by the Tongva people. From the late 19th century to the early 20th century, several different developers tried to develop Avalon into a resort destination community. In 1919, William Wrigley, Jr. gained control of Avalon. Wrigley oversaw much of the development of Avalon, including the construction of the landmark Catalina Casino.

The city remains primarily a resort community. Most of the waterfront is dominated by tourism-oriented businesses. The older parts of the town on the valley floor consist primarily of small houses and two and three-story buildings in various traditional architectural styles. Avalon attracts about 1 million visitors a year and is frequently visited by cruise ships.

LOCATIONOVERVIEW

Regional Map

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Local Map

ROOFTOP SKY LOUNGE

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Catalina Hotels HOTEL NAME ROOMSAtwater 92Aurora 18Avalon 15Buena Vista 8Canyon Resort 75Casa Mariquita 24Catalina Courtyard 40Catalina Lodging 16Edgewater 8El Terada 18Glenmore 50Hermosa 50Island Inn 39La Paloma 19Mac Rae 24Metropole 52Mt. Ada 6Pavillion 71Portofino 35Seacrest Inn 10Seaport Village 40Snug Harbor Inn 6St. Lauren 42Turner Inn 5Vista Del Mar 14TOTAL ROOMS IN AVALON 777

Catalina Island Tourism2010 2018 % CHNG

Hotel Occupancy Rate (annual avg) 46.2% 62.1% +34%

Ferry Passengers Arriving 491,268 703,173 +43%

Cruise Ship Passengers Arriving 169,442 260,430 +54%

ɝ Visitors spent a total of $166.7 million on Catalina Island in 2016.

ɝ Overall each visitor spent an average of $127 per day while here or $183 per-trip.

ɝ International visitors accounted for 1.70 days (length of stay) versus 1.44 days by Domestic visitors.

ɝ Hotel visitors, 24% of total volume, spent the highest total, $81.8 million, or 49% of total spending.

ɝ Day visitors spent $48.5 million, 29% of the total, while visitors staying in moored boats spent a total of $18.1 million, 11% of total spending.

ɝ Of all visitor spending on Catalina Island, the highest by category was $48.9 million for paid lodging, $39.2 million for meals out and $26.8 million on retail items/gifts.

SEASONLENGTH OF STAY

ALL VISITORS (DAYS) LENGTH OF STAY OVERNIGHT

VISITORS (DAYS)AVG DAILY PER

CAPITA SPENDING AVG GROUP SIZE (PERSONS)

Spring 1.40 2.08 $131 2.67

Summer 1.54 2.54 $137 3.03

Fall 1.39 2.16 $112 2.83

Overall 1.44 2.26 $127 2.84

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County OverviewMetro Los Angeles is the nation’s largest manufacturing area, and the ports of Los Angeles and Long Beach are second only to New York as the largest customs district in the United States, and the distribution hub of the west coast and a gateway to Asia.

ɝ Located on the southern coast of California, Los Angeles County covers 4,084 square miles and includes San Clemente and Santa Catalina islands. The county is comprised of approximately 88 vibrant and diverse cities hosting more than 244,000 business establishments—the highest concentration in the state.

ɝ The city’s expansive metropolitan area is the second-largest in the country, with over 18 million people spread over a land area the size of Maine. Thirty of LA’s suburbs have populations of 80,000 or more. Los Angeles is very diverse, with people from over 140 countries and the largest Latin-American and Asian- American populations of any US city.

ɝ The Los Angeles County region includes Los Angeles, Riverside, Ventura, Orange and San Bernardino Counties

ɝ Throughout recent decades, Los Angeles County developed a diverse economic base, supported by a number of Fortune 500 companies with headquarters in the area, including Walt Disney, Dole Food Company, Health Net, DirecTV Group, Mattel and many others.

ɝ Los Angeles County has a Gross Domestic Product (GDP) of approximately $544 billion, placing it among the top 20 economies in the world—higher than Switzerland, Sweden and Saudi Arabia.

LOS ANGELES DEMOGRAPHICS TOP EMPLOYERS BY REVENUE

2018 Estimated Population 10,288,937 The Walt Disney Co $48B

2023 Projected Population 10,568,450 Ingram Micro Inc. $44B

2018 Households 3,369,650 DirecTV $32B

2023 Households 3,451,604 Qualcomm Inc. $26B

2018 Average Housing Value $605,728 Amgen Inc. $19B

2018 Average Household Income $94,861

2023 Average Household Income $112,034

DemographicsPOPULATION 1 MILE 3 MILE 5 MILE2000 Population 3,132 3,276 3,4042010 Population 3,652 3,764 3,8632018 Population 3,791 3,907 4,010Population Growth 2000-2018 21% 19% 18%2023 Population 3,872 3,991 4,097Projected Growth 2018-2023 2% 2% 2%2018 African American 22 22 232018 American Indian 23 23 242018 Asian 51 55 592018 Hispanic 2,239 2,278 2,3122018 White 2,279 2,359 2,4302018 Other Race 1,225 1,247 1,2662018 Multiracial 179 188 1952018-2023: Population: Growth Rate 2.10% 2.15% 2.15%

HOUSEHOLDS 1 MILE 3 MILE 5 MILE2000 Total Housing 1,826 1,856 1,8782010 Total Households 1,456 1,493 1,5262018 Total Households 1,499 1,537 1,5712023 Total Households 1,523 1,562 1,5972018 Average Household Size 2.52 2.53 2.542018-2023: Households: Growth Rate 1.60% 1.60% 1.65%

2018 HOUSEHOLD INCOME 1 MILE 3 MILE 5 MILEAverage HH Income $83,143 $82,408 $81,777 Median HH Income $60,853 $60,267 $59,793

$200,000 or greater 90 91 91$150,000-$199,999 87 88 88$100,000-$149,999 203 206 209$75,000-$99,999 228 232 236$50,000-$74,999 302 310 318$35,000-$49,999 199 207 214$25,000-$34,999 146 152 156$15,000-$24,999 119 124 128less than $15,000 123 127 131

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Casa Mariquita Historical FiguresYEAR OCCUPANCY INCREASE ADR INCREASE REVPAR INCREASE2014 54.9% $171.90 $98.232015 49.6% -9.64% $197.15 14.69% $101.72 3.56%2016 49.8% 0.48% $227.35 15.32% $113.24 11.33%2017 51.4% 3.15% $231.27 1.72% $118.83 4.93%2018 55.7% 8.49% $233.06 0.77% $129.91 9.32%

FINANCIAL SUMMARY

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FINANCIAL SUMMARY

Income Statement - 3 YearsINCOME ADJUSTMENTS TOTAL 2016 % OF GR ADJUSTMENTS TOTAL 2017 % OF GR 2018 ADJUSTMENTS TOTAL 2018 % OF GR OM COMMENTS CODE Guest Room $(106,450.80) $887,364.35 89.1% $(110,773.36) $922,937.72 91.6% $1,128,981.69 $(116,462.94) $1,012,518.75 92.9% Remove TOT RM

Tour Revenue $25,954.16 2.6% $13,056.14 1.3% $5,232.04 $5,232.04 0.5% OT Transportation $43,786.57 4.4% $27,867.75 2.8% $23,920.98 $23,920.98 2.2% OT Cancellation/Change Fees $26,246.67 2.6% $29,917.90 3.0% $28,149.57 $28,149.57 2.6% RM Additional Charges $17,331.06 1.7% $12,531.37 1.2% $17,777.77 $17,777.77 1.6% OT Credit Card Chargebacks $(2,554.22) -0.3% $(1,737.72) -0.2% $(1,775.89) $(1,775.89) -0.2% RM Advanced Deposits $(1,701.10) -0.2% $3,066.30 0.3% $4,265.02 $4,265.02 0.4% RM

TOTAL INCOME $996,427.49 100.0%

$1,007,639.46 100.0% $1,090,088.24 100.0%

ANNUAL GROWTH 1.11% 7.56%1105650 1115326 1218924

EXPENSES ADJUSTMENTS TOTAL 2016 % OF GR ADJUSTMENTS TOTAL 2017 % OF GR 2018 ADJUSTMENTS TOTAL 2018 % OF GR OM COMMENTS CODE Advertising-Promotional $19,173.99 1.9% $10,519.48 1.0% $16,994.87 $(1,678.90) $15,315.97 1.4% SM Auto/Vehicle Expenses $(6,132.00) $- 0.0% $(5,122.66) $- 0.0% $4,770.83 $(4,770.83) $- 0.0% Owner Expense AG Commission & Fee $- $96,919.55 9.7% $- $106,511.26 10.6% $123,039.69 $- $123,039.69 11.3% RM Computer Service $- $1,493.27 0.1% $- $2,050.71 0.2% $2,223.09 $- $2,223.09 0.2% AG Dues & subscription $- $4,480.00 0.4% $- $6,117.00 0.6% $800.00 $- $800.00 0.1% TripAdvisor removed in 2018 AG Finance Cost - Bank/Merchant/Transaction Fee $- $31,198.28 3.1% $- $26,526.69 2.6% $29,859.42 $- $29,859.42 2.7% AG Insurance-Blue Shield $(26,435.70) $- 0.0% $(38,899.04) $- 0.0% $41,795.49 $(41,795.49) $- 0.0% Owner Expense IN Insurance-Farmers $(76.76) $- 0.0% $(76.76) $- 0.0% $76.76 $(76.76) $- 0.0% Owner Expense IN Insurance-Property $- $19,062.00 1.9% $- $13,109.00 1.3% $12,545.00 $- $12,545.00 1.2% IN Insurance-State Farm $(749.73) $- 0.0% $(877.08) $- 0.0% $1,461.87 $(1,461.87) $- 0.0% Owner Expense IN Insurance-Worker's Comp $- $13,716.00 1.4% $- $10,582.00 1.1% $9,316.00 $- $9,316.00 0.9% IN Internet Exp. $- $4,057.82 0.4% $- $4,289.28 0.4% $3,931.84 $- $3,931.84 0.4% IT Labor Cost/Salaries $(43,800.00) $122,828.36 12.3% $(53,800.00) $144,892.09 14.4% $229,586.02 $(146,200.00) $83,386.02 7.6% Owners Salary RM Lease Expense - Seller Entity Rent $(249,200.00) $- 0.0% $(232,200.00) $- 0.0% $294,000.00 $(294,000.00) $- 0.0% Seller Entity Rent AG Legal & Professional $- $8,730.00 0.9% $(4,250.00) $13,375.00 1.3% $10,450.00 $(4,800.00) $5,650.00 0.5% Owner Expense AG License Fee $- $688.00 0.1% $- $530.00 0.1% $932.00 $- $932.00 0.1% AG Office Expenses $(10,324.37) $4,878.20 0.5% $(10,304.83) $2,934.97 0.3% $8,478.67 $(6,954.25) $1,524.42 0.1% Non Recurring Temp Work AG Payroll Service $- $3,595.40 0.4% $- $3,745.40 0.4% $4,327.82 $- $4,327.82 0.4% AG Repair & Maintenance $(5,961.28) $7,808.27 0.8% $(6,410.50) $3,449.17 0.3% $8,295.87 $(3,747.49) $4,548.38 0.4% Non Recurring Temp Work PM Subcontract Renovation/Maintenance $(28,532.24) $948.00 0.1% $(15,150.00) $814.00 0.1% $30,047.39 $(29,373.39) $674.00 0.1% Non Recurring - replace doors/knobs PM

Supplies-Subcontractor Tour Services $- $50,793.31 5.1% $- $35,909.40 3.6% $19,156.30 $- $19,156.30 1.8% Decrease - less time spent on bookings SM

Supplies-Breakfast $(18,492.24) $6,000.00 0.6% $(16,754.66) $6,000.00 0.6% $21,110.69 $(15,110.69) $6,000.00 0.6% Owner Expense/ Cont Bkfst $6,000 RM Supplies-Cleaning $(3,644.47) $6,421.62 0.6% $(3,580.75) $5,260.91 0.5% $9,660.95 $(4,048.26) $5,612.69 0.5% Non Recurring Expense RM Supplies-Furniture $5,635.17 0.6% $1,854.38 0.2% $5,840.54 $(2,820.75) $3,019.79 0.3% New Washer - Non Recurring RM Supplies-Linens(Rooms) $- $5,456.39 0.5% $- $7,169.65 0.7% $8,937.05 $(575.00) $8,362.05 0.8% Non Recurring Expense RM Tax-Payroll $- $58,851.66 5.9% $- $86,863.13 8.6% $89,787.84 $- $89,787.84 8.2% RM Tax-Property $38,306.44 3.8% $40,672.80 4.0% $41,450.99 $27,463.00 $68,913.99 6.3% Adjusted for CA RE Tax Sale TX Tax-Sales $(106,450.80) $- 0.0% $(110,773.36) $- 0.0% $116,462.94 $(116,462.94) $- 0.0% Remove TOT RMTax-State Income $(800.00) $- 0.0% $(800.00) $- 0.0% $800.00 $(800.00) $- 0.0% Accounting Adjustment

Telephone $(2,899.54) $4,872.42 0.5% $(3,311.95) $4,620.52 0.5% $7,645.87 $(2,661.38) $4,984.49 0.5% Owner Expense IT Travel $(4,452.96) $- 0.0% $(3,119.85) $- 0.0% $1,720.50 $(1,720.50) $- 0.0% Owner Expense AG Utilities (Total Includes Items Below) $- $26,552.58 2.7% $- $30,999.74 3.1% $31,498.70 $- $31,498.70 2.9% UTManagement (Estimated) 0.0% 0.0% $32,702.65 $32,702.65 3.0% Add Management MRFF&E $39,857.10 $39,857.10 4.0% $40,305.58 $40,305.58 4.0% $43,603.53 $43,603.53 4.0% Added FF&E Reserves FF

Annual Expenses $(468,094.99) $582,323.83 58.4% $(465,125.86) $609,102.16 60.4% $1,187,005.00 $(575,289.33) $611,715.67 56.1%Adjustments Total 2016 Adjustments Total 2017 2018 Adjustments Total 2018

TOTAL NET INCOME $414,104 41.6% $398,537 39.6% $(96,916.76) $478,373 43.9%

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Profit & Loss Summary2018 SUMMARY 2016 2017 2018Guest Rooms 22 22 22Rooms Available 8,030 8,030 8,030Occupied Rooms 4,000 4,126 4,476Occupancy % 49.8% 51.4% 55.7%ADR $227.35 $231.27 $233.06RevPAR $113.24 $118.83 $129.91P&L SUMMARY CODERoom Revenue $909,356 91.3% $954,184 94.7% $1,043,157 95.7% RMOther Operated Departments $87,072 8.7% $53,455 5.3% $46,931 4.3% OTTotal Income $996,427 100% $1,007,639 100% $1,090,088 100%Distributed ExpensesRoom Expenses $302,113 30.3% $358,551 35.6% $319,208 29.3% RMUndistributed ExpensesAdmin & General $55,063 5.5% $55,280 5.5% $45,317 4.2% AGInformation & Telcomm Systems $8,930 0.9% $8,910 0.9% $8,916 0.8% ITSales & Marketing $69,967 7.0% $46,429 4.6% $34,472 3.2% SMUtilities $26,553 2.7% $31,000 3.1% $31,499 2.9% UTProperty Operations & Maintenance $8,756 0.9% $4,263 0.4% $5,222 0.5% PMManagement Fee $0 0.0% $0 0.0% $32,703 3.0% MRTaxes $38,306 3.8% $40,673 4.0% $68,914 6.3% TXInsurance $32,778 3.3% $23,691 2.4% $21,861 2.0% INTotal Expenses $542,467 54.4% $568,797 56.4% $568,112 52.1%

EBITDA $453,961 46% $438,843 44% $521,976 48%FF&E Reserves $39,857 4.0% $40,306 4.0% $43,604 4.0% FFNOI $414,104 41.6% $398,537 39.6% $478,373 43.9%

Sale Comp ComparisonSUBJECT COMP SUBJECT COMP

CASA MARIQUITA CATALINA ISLAND INN CASA MARIQUITA ZANE GREY

Scale Upscale Upscale Upscale UpscaleRooms 24 39 24 16Built 1990 / 2016 1907 / 2017 1990 / 2015 1930Building Size (SF) 9,400 14,254 9,400 8,761Land Size (Acres) 0.15 0.15 0.15 0.57Land Size (SF) 6,534 6,534 6,534 24,828

Occupancy 55.7% 68.3% 55.7%ADR $233.06 $211.23 $233.06RevPAR $129.91 $144.28 $129.91

Income $1,090,088 $2,065,767 $1,090,088Expense $568,112 $1,161,020 $568,112T12 NOI $478,373 $822,116 $478,373Cap Rate 8.65% 8.65%Price $5,527,857 $9,500,000

Price Per Room $243,590 $243,590 $343,750 $343,750Price $5,846,154 $9,500,000 $8,250,000 $5,500,000 Price Per SF $666.48 $666.48 $627.78 $627.78 Price $6,264,908 $9,500,000 $5,901,153 $5,500,000

** Price comparisons based on same Current Cap Rate, Price Per Room, and Price/SF as Comp

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HOTEL NAME ROOMS BUILT ADR REVPARRACK RATES

(LOW)RACK RATES

(HIGH)RACK RATES

(AVG)MARKET

AVGAAA

RATING BRAND

RANKING GUEST RANKING AMENITY #1 AMENITY #2 AMENITY #3 AMENITY #4

Casa Mariquita Hotel 22 1990 233 130 167 389 216 235 2.5 Stars Upscale 13 of 20 Acclaimed Breakfast Spacious Rooms Deluxe Suites. Penthouse with Full Kitchen Exquisite Hilltop & Ocean Views

Catalina Island Inn 39 1907 211 144 151 276 210 235 4 Stars Upscale 9 of 20 Nirvana Boutique Spa Continental Breakfast Flat Screen TV's Fireplaces (Some)

Aurora Hotel 19 1964 247 168 212 396 245 235 3 Diamonds Upper Upscale 6 of 20 Rooftop Deck Wine & Cheese Reception Complimentary Breakfast Modern Contemporary Design

Pavilion Hotel 71 1958 262 178 208 413 260 235 3 Stars Upper Upscale 4 of 20 Hot Breakfast Wine & Cheese Reception Courtyard w/ Fire Pit Luggage Service from Ferry

Portofino Hotel 35 1922 230 157 169 412 230 235 2 Diamonds Upscale 7 of 20 Patio Deck w/ Seating Continental Breakfast Ocean Views Fireplaces in Rooms

Holiday Inn Resort 75 1986 222 151 216 369 220 235 3 Stars Upper Midscale 19 of 20 Heated Outdoor Pool & Spa Fitness Center & Ping Pong Spa Facilities Two Meeting Rooms

The Avalon Hotel 15 1925 256 174 262 399 255 235 3 Stars Upper Upscale 2 of 20 Rooftop Deck with Views Garden Patio with Fire Pit Continental Breakfast High Speed Internet

Hotel Metropole 52 1989 215 146 176 362 215 235 4 Stars Upper Upscale 9 of 20 Spa Facilities Rooftop Jacuzzi Complimentary Continental Breakfast Free Wifi

0 50 100 150 200 250 300

CASA MARIQUITA HOTEL (SUBJECT)

CATALINA ISLAND INN

AURORA HOTEL

PAVILION HOTEL

PORTOFINO HOTEL

HOLIDAY INN RESORT

THE AVALON HOTEL

HOTEL METROPOLE

Average Rack Rates

167

151

212

208

169

216

262

176

389

276

396

413

412

369

399

362

0 50 100 150 200 250 300 350 400 450

CASA MARIQUITA HOTEL (SUBJECT)

CATALINA ISLAND INN

AURORA HOTEL

PAVILION HOTEL

PORTOFINO HOTEL

HOLIDAY INN RESORT

THE AVALON HOTEL

HOTEL METROPOLE

High & Low Rack Rates

35

HOTEL NAME ROOMS BUILT ADR REVPARRACK RATES

(LOW)RACK RATES

(HIGH)RACK RATES

(AVG)MARKET

AVGAAA

RATING BRAND

RANKING GUEST RANKING AMENITY #1 AMENITY #2 AMENITY #3 AMENITY #4

Casa Mariquita Hotel 22 1990 233 130 167 389 216 235 2.5 Stars Upscale 13 of 20 Acclaimed Breakfast Spacious Rooms Deluxe Suites. Penthouse with Full Kitchen Exquisite Hilltop & Ocean Views

Catalina Island Inn 39 1907 211 144 151 276 210 235 4 Stars Upscale 9 of 20 Nirvana Boutique Spa Continental Breakfast Flat Screen TV's Fireplaces (Some)

Aurora Hotel 19 1964 247 168 212 396 245 235 3 Diamonds Upper Upscale 6 of 20 Rooftop Deck Wine & Cheese Reception Complimentary Breakfast Modern Contemporary Design

Pavilion Hotel 71 1958 262 178 208 413 260 235 3 Stars Upper Upscale 4 of 20 Hot Breakfast Wine & Cheese Reception Courtyard w/ Fire Pit Luggage Service from Ferry

Portofino Hotel 35 1922 230 157 169 412 230 235 2 Diamonds Upscale 7 of 20 Patio Deck w/ Seating Continental Breakfast Ocean Views Fireplaces in Rooms

Holiday Inn Resort 75 1986 222 151 216 369 220 235 3 Stars Upper Midscale 19 of 20 Heated Outdoor Pool & Spa Fitness Center & Ping Pong Spa Facilities Two Meeting Rooms

The Avalon Hotel 15 1925 256 174 262 399 255 235 3 Stars Upper Upscale 2 of 20 Rooftop Deck with Views Garden Patio with Fire Pit Continental Breakfast High Speed Internet

Hotel Metropole 52 1989 215 146 176 362 215 235 4 Stars Upper Upscale 9 of 20 Spa Facilities Rooftop Jacuzzi Complimentary Continental Breakfast Free Wifi

0 50 100 150 200 250 300

CASA MARIQUITA HOTEL (SUBJECT)

CATALINA ISLAND INN

AURORA HOTEL

PAVILION HOTEL

PORTOFINO HOTEL

HOLIDAY INN RESORT

THE AVALON HOTEL

HOTEL METROPOLE

Average Rack Rates

167

151

212

208

169

216

262

176

389

276

396

413

412

369

399

362

0 50 100 150 200 250 300 350 400 450

CASA MARIQUITA HOTEL (SUBJECT)

CATALINA ISLAND INN

AURORA HOTEL

PAVILION HOTEL

PORTOFINO HOTEL

HOLIDAY INN RESORT

THE AVALON HOTEL

HOTEL METROPOLE

High & Low Rack Rates

RevPAR Comparison

PROPERTY CHAIN SCALE ROOMS BUILT

MONTHLY ADR 2018

OCC ADR REVPARJAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Casa Mariquita Hotel Upscale 24 1990 $155 $156 $178 $180 $243 $248 $287 $272 $216 $249 $208 $182 55.74% $233.06 $129.91

RACK RATE SURVEYEST. OCC

EST. ADR EST. REVPAR

1 Catalina Island Inn Upscale 39 1907 $242 $190 $191 $207 $207 $207 $207 $207 $207 $176 $151 $160 65.00% $211.23 $144.28

2 Aurora Hotel Upper Upscale 19 1964 $300 $300 $300 $300 $300 $300 $300 $300 $300 $212 $396 $212 65.00% $247.35 $168.20

3 Pavilion Hotel Upper Upscale 71 1958 $208 $208 $252 $280 $280 $280 $280 $280 $280 $413 $293 $267 65.00% $262.01 $178.17

4 Portofino Hotel Upscale 35 1922 $169 $192 $236 $262 $262 $262 $262 $262 $262 $335 $285 $202 65.00% $230.28 $156.59

5 Holiday Inn Resort Upper Midscale 75 1986 $219 $219 $228 $219 $219 $219 $219 $219 $219 $216 $225 $219 65.00% $221.85 $150.86

6 The Avalon Hotel Upper Upscale 15 1925 $272 $272 $272 $272 $272 $272 $272 $272 $272 $262 $262 $262 65.00% $256.06 $174.12

7 Hotel Metropole Upper Upscale 52 1989 $176 $182 $182 $182 $182 $182 $182 $182 $182 $255 $292 $202 65.00% $214.63 $145.95

Averages 44 1950 $227 $223 $237 $246 $246 $246 $246 $246 $246 $267 $272 $218 65.00% $234.77 $159.74

Estimated RevPAR Gap $29.83

Potential Annual Revenue Increase $261,319.94

37

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3

4

5

★

7

6

2

5 Year Cashflow Proforma2018 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Guest Rooms 22 24 24 24 24 24Rooms Available 8,030 8,760 8,760 8,760 8,760 8,760Occupied Rooms 4,476 5,759 5,934 6,022 6,109 6,197Occupancy % 55.7% 65.7% 67.7% 68.7% 69.7% 70.7%ADR $233.06 $232.53 $233.56 $234.76 $236.03 $237.34RevPAR $129.91 $159.74 $165.33 $168.64 $172.01 $175.45

Change in Occupancy 10.0% 2.0% 1.0% 1.0% 1.0%Change in ADR -0.2% 0.4% 0.5% 0.5% 0.6%Change in RevPAR 23.0% 3.5% 2.0% 2.0% 2.0%Change in Expenses 18.5% 2.8% 1.8% 1.8% 1.8%Change in Taxes 1.0% 1.0% 1.0% 1.0% 1.0%Change in Insurance 2.0% 2.0% 2.0% 2.0% 2.0%

REVENUE $ % CPOR PAR $ % CPOR PAR $ % $ % $ % $ %Room 1,043,157 95.7% 233.06 129.91 1,339,078 95.7% 232.53 152.86 1,385,946 95.7% 1,413,665 95.7% 1,441,938 95.7% 1,470,777 95.7%Other Operated Departments 46,931 4.3% 10.49 5.84 60,244 4.3% 10.46 6.88 62,353 4.3% 63,600 4.3% 64,872 4.3% 66,169 4.3%Total Revenue 1,090,088 100.0% 243.54 135.75 1,399,322 100.0% 242.99 159.74 1,448,299 100.0% 1,477,265 100.0% 1,506,810 100.0% 1,536,946 100.0%Departmental ExpensesRoom Expenses 319,208 29.3% 71.32 39.75 409,760 29.3% 71.15 46.78 424,102 29.3% 432,584 29.3% 441,236 29.3% 450,060 29.3%Total Departmental 319,208 29.3% 71.32 39.75 409,760 29.3% 71.15 46.78 424,102 29.3% 432,584 29.3% 441,236 29.3% 450,060 29.3%

Departmental Profit 770,880 70.7% 172.23 96.00 989,562 70.7% 171.83 112.96 1,024,197 70.7% 1,044,681 70.7% 1,065,574 70.7% 1,086,886 70.7%Undistributed ExpensesAdministrative & General 45,317 4.2% 10.12 5.64 58,172 4.2% 10.10 6.64 60,208 4.2% 61,412 4.2% 62,641 4.2% 63,893 4.2%Info & Telcomm Systems 8,916 0.8% 1.99 1.11 11,446 0.8% 1.99 1.31 11,846 0.8% 12,083 0.8% 12,325 0.8% 12,571 0.8%Sales & Marketing 34,472 3.2% 7.70 4.29 44,251 3.2% 7.68 5.05 45,800 3.2% 46,716 3.2% 47,650 3.2% 48,603 3.2%Utilities 31,499 2.9% 7.04 3.92 40,434 2.9% 7.02 4.62 41,849 2.9% 42,686 2.9% 43,540 2.9% 44,411 2.9%Property Operations & Maintenance 5,222 0.5% 1.17 0.65 6,704 0.5% 1.16 0.77 6,938 0.5% 7,077 0.5% 7,219 0.5% 7,363 0.5%Total Undistributed 125,426 11.5% 28.02 15.62 161,007 11.5% 27.96 18.38 166,642 11.5% 169,975 11.5% 173,375 11.5% 176,842 11.5%Fixed ExpensesManagement Fees 32,703 3.0% 7.31 4.07 41,980 3.0% 7.29 4.79 43,449 3.0% 44,318 3.0% 45,204 3.0% 46,108 3.0%Taxes (1) 68,914 6.3% 15.40 8.58 69,603 6.4% 12.09 7.95 70,299 6.4% 71,002 6.5% 71,712 6.6% 72,429 6.6%Insurance (2) 21,861 2.0% 4.88 2.72 22,298 2.0% 3.87 2.55 22,744 2.1% 23,199 2.1% 23,663 2.2% 24,136 2.2%Total Fixed 123,478 11.3% 27.59 15.38 133,881 11.4% 23.25 15.28 136,492 11.5% 138,519 11.6% 140,580 11.7% 142,674 11.9%

EBITDA 521,976 47.9% 116.62 65.00 694,674 49.6% 120.63 79.30 721,062 49.8% 736,186 49.8% 751,620 49.9% 767,369 49.9%Reserve for Capital Replacement 43,604 4.0% 9.74 5.43 55,973 4.0% 9.72 6.39 57,932 4.0% 59,091 4.0% 60,272 4.0% 61,478 4.0%NOI (Market RevPAR/OCC) 478,373 43.9% 106.88 59.57 638,701 45.6% 110.91 72.91 663,130 45.8% 677,096 45.8% 691,348 45.9% 705,892 45.9%

NOI (Same RevPAR/OCC) 478,373 43.9% 106.88 59.57 502,256 44.1% 102.86 57.34

** Proforma undistributed expenses are based on current ratios** Year 1 Room Count Increase (from 22 to 24) assumes buyer obtains approval from City of Avalon to convert manager units to hotel rooms.

39

5 Year Irr ProformaPurchase Price 6,264,908PIP 0Total Investment 6,264,908Down Payment 1,879,472 30%

Number of Rooms 24Cost per Room (Sale Price/Total Investment) 261,038Room Revenue Multiple 5.7Sale Price Cap Rate 7.6% 10.2% 10.6% 10.8% 11.0% 11.3%Total Investment Cap Rate (Current & Pro Forma) 7.6% 10.2% 10.6% 10.8% 11.0% 11.3%FIRST MORTGAGEMortgage Amount 4,385,436Interest Rate 5.50%Amortization Period (years) 25YEARLY CASH FLOW SUMMARY 2018 2019 2020 2021 2022 2023Net Operating Income 478,373 638,701 663,130 677,096 691,348 705,892First Mortgage Annual Payment (323,165) (323,165) (323,165) (323,165) (323,165) (323,165)Cash Flow after Debt Service 155,208 315,536 339,965 353,931 368,183 382,727Debt Coverage Ratio 1.98 2.05 2.10 2.14 2.18Debt Yield 10.9% 14.6% 15.1% 15.4% 15.8% 16.1%CAPITAL GAIN CALCULATIONTerminal Cap Rate 8.0%Property Value 8,823,645Selling Costs 5.0%Net Proceeds 8,382,463Price per Room 349,269LEVERAGED IRR ANALYSIS 2018 2019 2020 2021 2022 2023Equity (1,879,472)Cash Flow after Debt Service 315,536 339,965 353,931 368,183 382,727Sale Proceeds 8,382,463Remaining First Mortgage Balance 3,914,945Net Cash Flow (1,879,472) 315,536 339,965 353,931 368,183 4,850,244 Cash on Cash Return 16.8% 18.1% 18.8% 19.6% 20.4%Cash plus Debt Reduction Return 12.3% 13.6% 14.4% 15.1% 15.9%Five-Year Leveraged IRR 32.7%

Average Cash on Cash Return 18.7%

3

Exclusively Marketed By:

JOHN CARPENTERPrincipal

M: 310.963.1414O: 949.682.3088

Lic. 01428910john@legacycig.com

LISA ZHOUPrincipal

M: 949.656.5518 O: 949.209.9951

Lic. 01924981 lisa@legacycig.com

LEGACY CAPITAL INVESTMENT GROUPOne Park Plaza Suite 600

Irvine, CA 92614Broker Lic. 02090120

www.legacycig.com

Confidentiality & ConditionsThe information contained in the following Offering Memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Broker and should not be made available to any other person or entity without the written consent of Broker.

This Offering Memorandum has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property.

The information contained herein is not a substitute for a thorough due diligence investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property.

The information contained in this Offering Memorandum has been obtained from sources we believe to be reliable; however, Broker has not verified, and will not verify, any of the information contained herein, nor has Broker conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

By receipt of this Memorandum, you agree that this Memorandum and its contents are of confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose its contents in any manner detrimental to the interest of the Owner. You also agree that by accepting this Memorandum you agree to release Broker (and its agents) and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this property.

CAPITAL INVESTMENT GROUP