AN APPRAISAL OF REAL PROPERTY IN AN APPRAISAL REPORT · 2018. 9. 17. · EXECUTIVE SUMMARY LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV) EXECUTIVE SUMMARY EXECUTIVE SUMMARY Property

AN APPRAISAL OF REAL PROPERTY IN AN APPRAISAL REPORT LUCKY DRAGON HOTEL & CASINO 300 West Sahara Avenue Las Vegas, NV 89102 NKF Valuation and Advisory Job No.: ..................... 17-2685-0064 PERTINENT DATES: “As Is” Valuation Date: ....................................... October 11, 2017 “Upon Stabilization” Valuation Date: .................. October 11, 2019 Report Date: ..................................................... November 8, 2017 PREPARED FOR: Mr. Tony Petruccello, Director of Operations Silver Arch Capital Partners, LLC 433 Hackensack Avenue Hackensack, NJ 07601 PREPARED BY:

Newmark Knight Frank Valuation & Advisory Hospitality and Leisure Specialty Practice 891 Hillcrest Road, Suite 150 Mobile, AL 36695

LUCKY DRAGON HOTEL & CASINO 300 West Sahara Avenue

Las Vegas, NV 89102

Newmark Knight Frank Valuation & AdvisoryHospitality & Leisure Specialty Practice

891 Hillcrest Road, Suite 150 | Mobile, AL 36695Phone: 251.706.1500 | Web: www.newmarkkf.com

November 8, 2017

Mr. Tony Petruccello, Director of Operations Silver Arch Capital Partners, LLC 433 Hackensack Avenue Hackensack, NJ 07601 Re: An Appraisal of the 203-room Lucky Dragon Hotel & Casino (Las Vegas, NV) Dear Mr. Petruccello:

In accordance with your request, we have performed an appraisal of the 203-room Lucky Dragon Hotel & Casino (Las Vegas, NV). As agreed upon, this appraisal is the result of an analysis based on the described scope of work, and was written in a standard Appraisal Report format, based on analysis conducted during October 2017. This report complies with the reporting requirements set forth in Standards Rule 2-2 (a) of the Uniform Standards of Professional Appraisal Practice. This appraisal has been conducted to conform to the Federal Regulation 12 CFR (Part) 564, Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Foundation and as outlined within Title XI of FIRREA, federal regulations as stipulated by The Office of the Comptroller of the Currency (OCC) and in conformance with the requirements of Silver Arch Capital Partners, LLC.

The purpose of this appraisal report is to estimate the current Market Value - As Is of the fee simple interest in the hotel, and the Prospective Market Value - Upon Stabilization of the fee simple interest in the hotel at the date of stabilized operations. For the hotel, the legal interest appraised reflects the fee simple interest in the property as a going-concern, including the contributory value of furniture, fixtures and equipment. The Market Value - As Is date of value is October 11, 2017, the most recent date the property was inspected. The Prospective Market Value - Upon Stabilization date of value is October 11, 2019. All value conclusions are intended to reflect the expectations of the most probable buyer of the subject property, consistent with the property’s highest and best use, as discussed in this report. This report assumes that the subject property obtains and retains an affiliation with Best Western, or a similar national franchise, and that it is subject to competent management typically provided for similar hotels.

The intended use of this report is solely for mortgage financing purposes and no other use. The intended user(s) of this report are Silver Arch Capital Partners, LLC. This report may be used and relied upon only by Silver Arch Capital Partners, LLC, and no other party is permitted to use or rely on the report. Newmark Knight Frank Valuation and Advisory disclaims liability to any party other than an Intended User identified herein. The report is not intended to be distributed to any other third parties nor be used for other financing or investment purposes without Newmark Knight Frank Valuation & Advisory’s written permission.

The subject property consists of a 2.51-acre site that is improved with a 2-story casino building and a 9-story, interior-corridor hotel tower featuring 203 total guest rooms. Property amenities include a lobby with front desk and sitting area, multiple food and beverage outlets, casino space (27,500 SF), retail area, business center, fitness center, full spa, outdoor swimming pool and hot tub, guest pantry/gift shop, guest laundry, and wireless high-speed internet. Please refer to The Property section of this report for a more detailed description of the subject property.

Complete descriptions of the property, together with the sources of information and the bases of our estimates, are stated in the accompanying sections of this report. Your attention is called to the Certification, Standard Conditions, Special Conditions and Significant Issues that are a part of this report.

Newmark Knight Frank Valuation & AdvisoryHospitality & Leisure Specialty Practice

891 Hillcrest Road, Suite 150 | Mobile, AL 36695Phone: 251.706.1500 | Web: www.newmarkkf.com

In accordance with USPAP, we recognize that the final going-concern value estimate(s), if any, may include items of realty, personalty, and other components for the subject property.

All concluded values in this report reflect the fee simple interest of the going-concern value for the hotel. Based on the available data, prevailing conditions observed in October 2017, along with our analyses, opinions, and conclusions, we are of the opinion that the market values of the indicated interest in the indicated component(s) of the subject property, as described in the attached report, as of the indicated dates, are:

Reconciled Values

Market Value - As IsProspective Market Value -

Upon Stabilization

Date of Value October 11, 2017 October 11, 2019

Final Value Conclusion $143,000,000 $156,000,000

Subject to the Certification, Standard Conditions and Special Conditions

The accompanying prospective financial analyses are based on estimates and assumptions developed in connection with the appraisal. However, some assumptions inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our prospective financial analyses will vary from our estimates and the variations may be material.

This report, the final estimates of value and the prospective financial analyses are intended solely for your information and assistance for the function stated herein, and should not be relied upon for any other purpose. Neither our report nor any of its contents nor any reference to the appraisers or our firm may be included or quoted in any document, offering circular or registration statement, prospectus, sales brochure, other appraisal, loan or other agreement without Newmark Knight Frank Valuation & Advisory’s prior written approval of the form and context in which it will appear.

Respectfully submitted,

NEWMARK KNIGHT FRANK VALUATION & ADVISORY Evan Ranes, MAI, ASA First Vice President Nevada Certified General Appraiser License Number A.0001497-CG, expires 03/31/18

CERTIFICATION LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

CERTIFICATION

CERTIFICATION

Each of the undersigned certify that, to the best of my (our) knowledge and belief:

the statements of fact contained in this report are true and correct;

the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions;

I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved;

I have no bias with respect to any property that is the subject of this report or to the parties involved with this assignment;

My engagement in this assignment was not contingent upon developing or reporting predetermined results.

My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal;

My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Practice and the Appraisal Institute;

This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.

The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

The appraiser(s) has performed no other services, as an appraiser or in any other capacity regarding the subject property within the three year period immediately preceding the date of acceptance of this assignment;

Evan Ranes, MAI, ASA has made a personal inspection of the property that is the subject of this report.

Gregory P. Kendall, CRE, MAI, FRICS and John D. Hartman provided significant real property appraisal assistance to the person(s) signing this certification.

As of the date of this report, Evan Ranes, MAI, ASA and Gregory P. Kendall, CRE, MAI, FRICS, have completed the continuing education program of the Appraisal Institute.

Evan Ranes, MAI, ASA First Vice President Nevada Certified General Appraiser License Number A.0001497-CG, expires 03/31/18

SUBJECT PHOTOGRAPHS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

SUBJECT PHOTOGRAPHS

W. SAHARA AVENUE, FACING EAST HOTEL & CASINO EXTERIOR

HOTEL EXTERIOR PARKING GARAGE EXTERIOR

HOTEL MAIN ENTRANCE LOBBY (FRONT DESK)


SUBJECT PHOTOGRAPHS

GIFT SHOP/PANTRY HOTEL BAR

RESTAURANT/LOUNGE KITCHEN AREA

SOTHY’S SPA OUTDOOR SWIMMING POOL


SUBJECT PHOTOGRAPHS

UPPER LEVEL GUEST ROOM CORRIDOR KING BED GUEST ROOM

GUEST ROOM FURNISHINGS GUEST ROOM FURNISHINGS

GUEST ROOM BATHROOM VANITY GUEST ROOM BATHROOM


SUBJECT PHOTOGRAPHS

CASINO FLOOR VIEW CASINO FLOOR VIEW

CASINO FLOOR VIEW PRIVATE GAMING ROOM IN CASINO

RESTAURANT IN CASINO BUILDING BAR/LOUNGE IN CASINO BUILDING


SUBJECT PHOTOGRAPHS

AERIAL PHOTO

SUBJECT

EXECUTIVE SUMMARY LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

Property IdentificationName Lucky Dragon Hotel & CasinoAddress 300 West Sahara AvenueCity, State Las Vegas, Nevada

Location The subject site is located on the north side of W. Sahara Avenue just west of S.Las Vegas Boulevard, in the northern sector of the Las Vegas Strip, within the Cityof Las Vegas, NV. The site also backs up to the south border of W. CincinnatiAvenue. The site lies across the street from the Las Vegas Festival Grounds, andjust 0.5 mile east of the I-15/W. Sahara Avenue interchange. The site liesapproximately 2 miles southeast of the downtown sector of Las Vegas, andapproximately 4.5 miles north of the McCarron International Airport.

Site The site consists of 1 tax parcel totaling approximately 2.51 acres.

Flood Zone Zone XImprovements

Date of Construction 2016Date Opened November-16

Number of Stories Casino-2; Hotel-9; Garage-6

Gross Building Area (SF) 222,548

Total Guest Rooms 203Property Amenities The subject property consists of a 2.51-acre site that is improved with a 2-story

casino building and a 9-story, interior-corridor hotel tower featuring 203 total guest rooms. Property amenities include a lobby with front desk and sitting area, multiple food and beverage outlets, casino space (27,500 SF), retail area, business center, fitness center, full spa, outdoor swimming pool and hot tub, guest pantry, guest laundry, and wireless high-speed internet.

Parking 408 total parking spaces within the on-site parking garage, including adequatehandicap parking.

Property Rights Appraised Fee Simple Interest

Current Owner Lucky Dragon, LP

Assessor's Parcel Number 162-04-816-001

Zoning C-2 (General Commercial District)

Highest and Best UseAs vacant: Hotel/Casino developmentAs Improved (proposed): Continued operation of a full-service hotel/casino.

EXECUTIVE SUMMARY LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

EXECUTIVE SUMMARY

Date of Report November 8, 2017Inspection Date October 11, 2017Indication of Market Value:

Market Value - As Is

Prospective Market Value - Upon Stabilization


Cost Approach (Insurable Replacement Cost Only) $116,800,000 N/A

Sales Comparison Approach $141,400,000 $157,800,000

Income Capitalization Approach Direct Capitalization

Capitalization Rate 10.00% 10.00%Value Indication $146,600,000 $157,800,000

Yield CapitalizationDiscount Rate 13.00% 13.00%Holding Period (years) 10 10Terminal Capitalization Rate 10.50% 10.50%Selling Costs 2.0% 2.0%Value Indication $139,400,000 $155,600,000

Reconciled Income Capitalization Approach Estimate $143,000,000 $156,000,000

Final Value ConclusionTotal $143,000,000 $156,000,000

TABLE OF CONTENTS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

TABLE OF CONTENTS

TABLE OF CONTENTS

Transmittal Letter

APPRAISAL REPORT PAGE

INTRODUCTION ................................................................................................................................................... 1

MARKET AREA ANALYSIS .................................................................................................................................. 6

NEIGHBORHOOD ANALYSIS ............................................................................................................................ 19

LAS VEGAS STRIP HISTORICAL STATISTICS AND TRENDS ........................................................................ 23

LODGING MARKET ANALYSIS ......................................................................................................................... 32

AVERAGE DAILY RATE ANALYSIS ................................................................................................................... 39

THE PROPERTY ................................................................................................................................................. 42

HIGHEST AND BEST USE ANALYSIS ............................................................................................................... 49

VALUATION METHODOLOGY ........................................................................................................................... 51

COST APPROACH (INSURABLE REPLACEMENT COST ONLY) ................................................................... 52

SALES COMPARISON APPROACH .................................................................................................................. 55

INCOME APPROACH ......................................................................................................................................... 59

RECONCILIATION OF VALUE ESTIMATES ...................................................................................................... 89

ADDENDA ASSUMPTIONS AND LIMITING CONDITIONS................................................................................................... A

SUBJECT PROPERTY EXHIBITS ....................................................................................................................... D

LEGAL DESCRIPTION ......................................................................................................................................... E

FLOOD MAP DATA .............................................................................................................................................. F

TAX MAP .............................................................................................................................................................. G

ZONING MAP ....................................................................................................................................................... H

SUBDIVISION PLAT ............................................................................................................................................... I

SITE PLAN ............................................................................................................................................................ J

BUILDING PLANS – MASTER PLAN LEVEL 1 ................................................................................................... K

BUILDING PLANS – MASTER PLAN LEVEL 2 .................................................................................................... L

BUILDING PLANS – HOTEL LEVEL 1 ................................................................................................................. M

BUILDING PLANS – HOTEL TYPICAL UPPER LEVEL ...................................................................................... N

BUILDING PLANS – HOTEL NORTH & SOUTH ELEVATIONS ......................................................................... O

BUILDING PLANS – HOTEL EAST ELEVATION ................................................................................................ P

BUILDING PLANS – HOTEL WEST ELEVATION ............................................................................................... Q

BUILDING PLANS – CASINO LEVEL 1 ............................................................................................................... R

TABLE OF CONTENTS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

TABLE OF CONTENTS

BUILDING PLANS – CASINO & GARAGE LEVEL 2 ........................................................................................... S

BUILDING PLANS – GARAGE LEVEL 3 ............................................................................................................. T

BUILDING PLANS – CASINO & GARAGAE NORTH/SOUTH ELEVATIONS .................................................... U

BUILDING PLANS – CASINO & GARAGE EAST/WEST ELEVATIONS ............................................................ V

MOODY’S ECONOMY.COM PRECIS METRO REPORT .................................................................................. W

PROJECTED CASH FLOW “AS STABILIZED” (AS IF STABILIZED AS OF THE AS IS DATE OF VALUE) ..... Z

COMPARABLE PROPERTIES’ REVENUE AND EXPENSES .......................................................................... AA

ENGAGEMENT LETTER ................................................................................................................................... BB

STATE CERTIFICATION ................................................................................................................................... NN

QUALIFICATIONS .............................................................................................................................................. PP

INTRODUCTION LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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INTRODUCTION

NATURE AND SCOPE OF THE APPRAISAL

Standards Rule 2-2 of USPAP requires that "each written real property appraisal report must be prepared under one of the following options and prominently state which option is used: Appraisal Report or Restricted Appraisal Report." This report is an Appraisal Report that complies with the reporting requirements set forth in Standards Rule 2-2 (a) of the Uniform Standards of Professional Appraisal Practice. The intended use of this report is solely for mortgage financing purposes and no other use. The intended user(s) of this report are Silver Arch Capital Partners, LLC. This report may be used and relied upon only by Silver Arch Capital Partners, LLC, and no other party is permitted to use or rely on the report. Newmark Knight Frank Valuation and Advisory disclaims liability to any party other than an Intended User identified herein. The report is not intended to be distributed to any other third parties nor be used for other financing or investment purposes without Newmark Knight Frank Valuation & Advisory’s written permission.

ANALYSIS OVERVIEW

Data utilized in this report was obtained from the property owner or their representatives; local real estate professionals and investors; public officials in the planning, zoning and assessor's offices; and published industry data. The appraisal reflects the results of our analysis of specific market data relating to the subject property, comparable properties sold and leased, and an in depth study of the supply and demand characteristics of the market area affecting the subject property. The value estimate is based on the estimated current highest and best use of the subject property.

SCOPE OF WORK

The data used in this report has been confirmed to the extent possible, unless otherwise expressly noted. The general information used in this analysis was obtained via local governmental sources, secondary data contained in Newmark Knight Frank Valuation & Advisory’s files and interviews with local and regional real estate professionals. Specific information regarding the subject property, including physical descriptions, was obtained from the owner of the subject property. Market data was secured through interviews with real estate brokers, discussions with local appraisers and inspections of comparable properties. Additional data was collected via Newmark Knight Frank Valuation & Advisor’s in-house surveys.

There are four main aspects to the development and reporting of this appraisal. First, there are certain necessary procedures that were followed to arrive at a credible value estimate. Second, the report scope and content reflects the specific needs of the client. In other words, certain procedures and analyses may have been included or excluded to the extent that they were requested by the client and did not prevent a credible value estimate from being reported. Third, the development of the appraisal is limited to the extent that specific data items may not have been available. Lastly, there is the type of report, or level of detail, in which the appraisal has been communicated.

Procedures

The checklist below summarizes the procedures and analysis performed in conjunction with this appraisal assignment and deemed necessary in order to arrive at a credible value estimate for the appraised property.


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PROCEDURE/ANALYSIS YES NO N/A

Researched regional, city, and neighborhood data. Researched market trends (i.e. inventory, vacancy, absorption, new construction, etc.) for the subject property type. Considered relevant comparable improved sales and comparable site sales. Analyzed site data. Reviewed data regarding taxes, zoning, utilities, easements, and city services that impact the subject property. Analyzed information pertaining to any physical improvements located on the subject site. Physically inspected the subject property and its surrounding market area. Determined the Highest and Best Use of the site as vacant and as improved. Performed an Income Capitalization Approach. Performed a Sales Comparison Approach. Performed a Cost Approach Determined the approach or approaches to value that are most reliable and reconciled to a final value conclusion. Determined reasonable marketing and exposure times associated with the concluded value.

APPLICABILITY OF APPROACHES

All three traditional approaches to value, Income, Sales Comparison, and Cost, were considered in preparing this appraisal. Our analysis considered and dismissed the Cost Approach, for the following reason(s). The “classic” Cost Approach is not typically employed by sophisticated real estate investors when pricing properties of this type, which are typically purchased for their income potential. As such, we have not included a Cost Approach in this instance to further support our estimate of value. Such a determination is deemed reflective of market participant actions and does not adversely influence the findings of this report. We have, however, utilized the Cost Approach to determine the Insurable Replacement Cost only, at the request of the client.

This report should be read in its entirety for a complete understanding of the scope of the appraisal and the limiting conditions that apply to this valuation and report. Specific attention should be drawn to the Letter of Transmittal, Certification, Assumptions and Limiting Conditions, and Significant Issues and Special Conditions.

OBJECTIVE AND USE OF THE APPRAISAL

The purpose of this appraisal report is to estimate the current Market Value - As Is of the fee simple interest in the hotel, and the Prospective Market Value - Upon Stabilization of the fee simple interest in the hotel at the date of stabilized operations. For the hotel, the legal interest appraised reflects the fee simple interest in the property as a going-concern, including the contributory value of furniture, fixtures and equipment.

The intended use of this report is solely for mortgage financing purposes and no other use. The intended user(s) of this report are Silver Arch Capital Partners, LLC. This report may be used and relied upon only by Silver Arch Capital Partners, LLC, and no other party is permitted to use or rely on the report. Newmark Knight Frank Valuation


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and Advisory disclaims liability to any party other than an Intended User identified herein. The report is not intended to be distributed to any other third parties nor be used for other financing or investment purposes without Newmark Knight Frank Valuation & Advisory’s written permission.

LEGAL INTEREST APPRAISED

The legal interest valued herein is the Fee Simple Estate in the subject property. This interest is defined ((The Appraisal Institute, The Appraisal of Real Estate, 13th Ed, (Chicago: The Appraisal Institute, 2008), p. 114)) as:

Fee Simple Estate –Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

With respect to the subject property, the property rights valued include all items of personal property, including fixtures, furnishings and equipment, and licenses and agreements required to operate the Property and related facilities. The "business assets" or business component included as an integrated constituent of value includes "tangible and intangible resources that are employed by a business enterprise in its operations."

This category includes, but is not necessarily limited to all tangible property and documents evidencing trademarks, trade names, governmental operating rights, licenses, privileges, copyrights and goodwill as a going-concern.

DEFINITION OF VALUE

For the purpose of this appraisal report, "market value" is defined (Appraisal Standards for Federally Related Transactions, Federal Register, Vol. 55, No. 163, August 22, 1990, Pages 34228 and 34229) as follows:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of the specified date and the passing of title from seller to buyer under conditions whereby:

Buyer and seller are typically motivated;

Both parties are well informed or well advised, and acting in what they consider their own best interests;

A reasonable time is allowed for exposure in the open market;

Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

A prospective market value is a forecast of value expected to occur at a specific future date. A prospective market value estimate is most frequently utilized in connection with real estate projects that are proposed, under construction, under conversion to a new use, or that have otherwise not achieved sellout or a stabilized level of long-term occupancy at the time the appraisal report is written.


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EXPOSURE TIME AND MARKETING PERIOD

A distinction between marketing time and exposure time must be made. As defined by the Appraisal Standards Board of the Appraisal Foundation, the following definitions are used.

Marketing Time: An estimate of the amount of time it might take to sell a property interest in real estate at the estimated market value level during the period immediately after the effective date of an appraisal.

Exposure Time: The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market.

According to Real Estate Research Corporation's (RERC) second quarter 2017 survey, the expected marketing time for hotels averages 6 months, unchanged from the first quarter 2017 results of 6 months. Based on discussions with local real estate professionals, a reasonable exposure time for the subject site is estimated to be 12 months or less. Likewise, given expectations for economic conditions during the next year, a marketing period of 12 months or less is estimated. Based on this analysis and our discussions with sellers of hotel properties, we believe that an exposure period of less than 12 months is reasonable for the subject property. The marketing period, based on the same analysis is also estimated at less than 12 months.

To provide additional support to our estimate of exposure and marketing periods, we looked to survey responses of institutional investors, although not the most likely buyers and sellers of the subject property. According to RERC's second quarter 2017 survey, interviewees ranked hotels eighth of eleven in category investment ranking. The current rating for hotel of 5.2 (with 1 being poor and 10 being excellent) is down from the first quarter 2017 figure of 5.5. As has occurred for other real estate asset classes, the continued strength of the commercial real estate markets despite recent decreases in the capital being available for this asset type, suggests that relatively short holding periods may continue to be experienced in the near term. This decreased activity is consistent with our concluded exposure and marketing time estimates of less than 12 months. Finally, discussions with brokers familiar with this property type indicated a reasonable marketing time for a property like the subject property of approximately 12 months or less.

HISTORY OF THE SUBJECT PROPERTY

Current tax records indicate that the current fee simple owner of the subject property is Lucky Dragon, LP, who acquired fee simple title to the vacant subject site from Sahara Investments, LLC and Lucky Dragon, LLC on September 15, 2014 via Quit Claim Deed as recorded in Instrument #20140916-0001691. This transaction represents a non-arms length internal transfer among related entities. The current ownership subsequently developed the 203-room, subject Lucky Dragon Hotel and Casino on the site along with a 6-level parking garage. The hotel/casino opened in November 2016. According to a provided construction cost breakdown, the total project cost was $163,675,646. A copy of the development cost breakdown is contained in the Addenda section of this report. Ownership provided a pre-contract term sheet from Skybridge Trust who is offering to purchase the subject property for $160 million. However, following negotiations, Skybridge Trust and Lucky Dragon, LP have reportedly decided to enter into a Partnership Relationship based on a value of $175 million. Current ownership expects to close the Partnership Relationship by the end of 2017. There have been no other known transactions involving the subject property in the past three years, and the subject property is not currently listed for sale.


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EFFECTIVE DATES OF THE APPRAISAL

The Market Value - As Is date of value is October 11, 2017, the most recent date the property was inspected. The Prospective Market Value - Upon Stabilization date of value is October 11, 2020. All value conclusions are intended to reflect the expectations of the most probable buyer of the subject property, consistent with the property’s highest and best use, as discussed in this report.

DATE OF INSPECTION

The appraisal is based on property and market conditions observed as of our inspection date of the subject property. Evan Ranes, MAI, ASA last inspected the subject property on October 11, 2017.

USE PREMISE

The subject property is being valued herein based on its highest and best use. The implications relative to this premise on the highest and best use of the property “As-Is” and as improved are addressed in the Highest and Best Use Analysis section of this report.

COMPETENCY OF THE APPRAISERS

Gregory P. Kendall, MAI, CRE, FRICS is a designated member of the Appraisal Institute. Gregory P. Kendall, MAI, CRE, FRICS and John D. Hartman have extensive experience in the appraisal of hospitality properties and their expertise and competency is based on a strong analytical foundation that is well rounded with practical experience.

ASSUMPTIONS AND LIMITING CONDITIONS

This report is subject to general limiting conditions as well as the general and specific assumptions stated in this report. Your attention is also directed to the list of general and specific limiting conditions and assumptions found in the Addenda section of this report, as they are an integral part of the valuation process and value conclusion(s).

MARKET AREA ANALYSIS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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MARKET AREA ANALYSIS

The value of real property is influenced by the interaction of various basic forces including social trends and economic conditions. The purpose of this chapter is to identify factual data regarding these forces and to analyze their impacts on real property values - in particular, that of the subject property. Primary sources of data include Economy.com, ESRI, the U.S. Bureau of Census, U.S. Bureau of Labor, area Chambers of Commerce, area city and county governments, and others, as noted.

LAS VEGAS-HENDERSON-PARADISE, NV MSA MAP

OVERVIEW

The subject property is located in the City of Las Vegas, Clark County, in the west-central portion of the Las Vegas-Henderson-Paradise, NV MSA, which includes all of Clark County. Clark County makes up the entire MSA, and is in the southeast portion of the state. The City of Las Vegas is the 28th most populous city in the nation and the most populous city in Nevada. The Las Vegas-Henderson-Paradise, NV MSA is the 30th most populous MSA in the nation.

Clark County is bordered by Lincoln County to the north, Mojave, Inyo (CA), and San Bernardino (CA) Counties to the south, Mojave County to the east, and Nye County to the west. In Clark County, Las Vegas is located in the central portion of the county, and serves as the county seat. Carson City serves as the state capital and is located


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approximately 325 miles northwest of Las Vegas. Las Vegas is approximately 230 miles northeast of Los Angeles (CA), 255 miles northwest of Phoenix (AZ), 270 miles southwest of Salt Lake City (UT), and 390 miles southeast of Sacramento (CA).

ECONOMIC, DEMOGRAPHIC, AND EMPLOYMENT PROFILES

The following pages present key economic indicators for the subject property’s state, MSA, county, and city.

DEMOGRAPHIC ANALYSIS

Las Vegas Clark County

Las Vegas-Henderson-

Paradise, NV MSA Nevada United States

Population 2000 480,563 1,375,738 1,375,738 1,998,257 281,421,906

Population 2010 583,621 1,951,269 1,951,269 2,700,551 308,745,538

Population 2017 642,798 2,192,887 2,192,887 2,994,047 327,514,334

Population 2022 692,478 2,386,454 2,386,454 3,228,882 341,323,594

Population CAGR %, 2000-2010 4.0% 7.2% 7.2% 6.2% 1.9%

Population CAGR %, 2010-2017 2.0% 2.4% 2.4% 2.1% 1.2%

Population CAGR %, 2017-2022 1.5% 1.7% 1.7% 1.5% 0.8%

Households 2000 177,207 512,240 512,240 751,165 105,480,101

Households 2010 211,642 715,365 715,365 1,006,250 116,716,292

Households 2017 229,868 790,479 790,479 1,099,038 123,158,887

Households 2022 246,251 854,826 854,826 1,178,268 128,069,416

Households CAGR %, 2000-2010 3.6% 6.9% 6.9% 6.0% 2.0%

Households CAGR %, 2010-2017 1.7% 2.0% 2.0% 1.8% 1.1%

Households CAGR %, 2017-2022 1.4% 1.6% 1.6% 1.4% 0.8%

Median Household Income 2017 $51,572 $52,598 $52,598 $52,970 $56,124

Median Household Income 2022 $54,797 $55,973 $55,973 $56,915 $62,316

Median Household Income CAGR %, 2017-2022 1.2% 1.3% 1.3% 1.4% 2.1%Source: ESRI

The following gives an overview of the most pertinent Las Vegas-Henderson-Paradise, NV MSA (LAS), as presented by Moody’s (Economy.com).


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Las Vegas-Henderson-Paradise, NV MSA2011 2012 2013 2014 2015 2016 INDICATORS 2017 2018 2019 2020 2021 2022

81.8 81.8 82.1 85.9 88.9 91.2 Gross metro product (C09$ bil) 94.7 98.7 102.6 106.1 109.5 114.0

0.0 0.0 0.4 4.6 3.5 2.6 % change 3.8 4.2 4.0 3.4 3.2 4.1

808 825 849 883 919 950 Total employment (ths) 979 1,004 1,027 1,043 1,052 1,073

0.6 2.1 2.9 4.0 4.0 3.4 % change 3.1 2.6 2.3 1.6 0.8 2.1

13.2 11.2 9.5 7.9 6.8 6.0 Unemployment rate (%) 5.2 5.5 5.8 6.3 6.7 6.4

3.7 7.1 0.1 6.4 4.9 4.1 Personal income growth (%) 4.6 6.4 6.4 5.7 4.9 5.7

50.4 50.1 50.8 51.0 51.6 51.4 Median household income ($ ths) 52.3 54.3 56.0 57.3 58.5 59.9

1,966 1,996 2,025 2,065 2,109 2,156 Population (ths) 2,212 2,269 2,326 2,384 2,442 2,503

0.7 1.5 1.5 2.0 2.1 2.2 % change 2.6 2.6 2.5 2.5 2.4 2.5

0.2 17.1 16.8 26.5 32.0 34.3 Net migration (ths) 45.1 46.0 46.3 46.5 47.1 49.1

3,817 6,108 7,067 6,809 7,805 8,801 Single-family permits (#) 9,927 14,773 18,490 18,081 17,603 19,858

1,330 1,267 1,506 3,227 2,800 4,673 Multifamily permits (#) 4,995 6,858 7,529 7,186 7,379 8,489

104 103 123 146 159 171 FHFA house price (1995Q1=100) 182 189 189 188 190 193Source: Moody's Economy.com Precis Metro Report

The following Information supplements the data provided by Moody’s (Economy.com).


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The following paragraphs discuss and analyze various forces impacting the region.

SOCIAL FORCES

Social forces reflect trends that are exerted primarily through population characteristics. These reflect the impact of employment growth, transportation infrastructure, education quality, health care facilities, recreation outlets, etc. Population and employment changes and characteristics largely influence real property values.

Population and Employment

Population and employment statistics are especially pertinent to this analysis. The following highlights some of the data presented on the previous pages, as well as other information provided by other sources.

The City of Las Vegas is the 28th most populous city in the nation and the most populous city in Nevada. The Las Vegas-Henderson-Paradise, NV MSA is the 30th most populous MSA in the nation. The region's economy had been somewhat stagnant to declining from 2010 to 2012, displaying both high unemployment and little population growth. However, the regional economy has shown moderate to strong growth since 2012, generally at a pace above the state and nation. According to Moody's Analytics, employment and population are expected to increase moderately over the next 5 years.

Following moderate growth from 2000-2010, the population and households growth rates for the city have displayed slightly lower moderate increases from 2010-2017, at rates similar to the state, but below the county and MSA, and above the nation.

The population and households growth rates through 2022 for the city and county are projected to continue increasing, indicating rates somewhat below the previous 5 years, which is not considered a positive indicator for the subject's property type.

Total employment for the MSA increased at a moderate to strong pace from 2011-2016. This trend is anticipated to continue through 2022 at a slightly lower moderate pace, which is considered a positive indicator for the subject's property type.

The region includes all of Clark County, and offers a somewhat diversified economy. The region relies heavily on tourism, leisure/hospitality, gaming, consumer industries, and construction. Further discussion of employment characteristics and trends will be discussed in the following pages under the heading “Economic Forces.”

ECONOMIC FORCES

Economic forces are the fundamental relationships between current and anticipated supply and demand, and the economic activity of the population to satisfy its wants, needs, and demands through its purchasing power. Growth in the demand for real estate can reasonably be aligned with the economic growth of an area.

Income

From the information presented in the previous tables and other sources, we have identified these key points.

The median household income growth levels for the city have trended generally similar to that of the county, MSA, and state, but slightly below that of the nation.


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The City of Las Vegas is anticipated to experience continued modest to moderate growth in median household income through 2022, at rates similar to that of the county, MSA, and state, but below that of the nation.

The personal income growth rate for the larger MSA has fluctuated since 2011. However, the personal income growth rate for the MSA is anticipated to stabilize and remain above 5% through 2022.

Top Employers

The following table highlights the largest employers in the Las Vegas-Henderson-Paradise, NV MSA.

Largest EmployersLas Vegas-Henderson-Paradise, NV MSARank Company # of Employees

1 Station Casinos Inc. 13,000-13,499

2 Nellis Air Force Base 12,000-12,499

3 Boyd Gaming Corp. 9,000-9,499

4 Las Vegas Sands Corp. 8,500-8,999

5 Wynn Las Vegas LLC 8,000-8,499

6 MGM Resorts International 8,000-8,499

7 Bellagio LLC 8,000-8,499

8 Aria Resort & Casino 7,500-7,999

9 Mandalay Bay Resort & Casino 7,500-7,999

10 Wal-Mart Stores Inc. 6,000-6,499

11 Caesars Entertainment Corp. 5,000-5,499

12 The Valley Health System 5,000-5,499

13 University of Nevada-Las Vegas 5,000-5,499

14 Las Vegas Metropolitan Police Department 4,500-4,999

15 Mirage Casino-Hotel 4,500-4,999

16 The Venetian Casino Resort 4,500-4,999

17 SUPERVALU Inc. 4,000-4,499

18 Cosmopolitan of Las Vegas 4,000-4,499

19 The Palazzo Casino Resort 3,500-3,999

20 University Medical Center of S. Nevada 3,000-3,499

Source: Moodys

Commercial Real Estate Markets

One of the most relevant indicators of a market area's health for hotel development is the commercial real estate market. According to information provided in CoStar Group's Las Vegas Office Market report, Mid-Year 2017, the local office market has displayed positive performance patterns over the last four quarters. The market features just over 63.4 million square feet of inventory, and displayed an occupancy rate of approximately 85.7% during the second quarter of 2017. Within the market, the subject property is located in the "Northwest Las Vegas" submarket. The following table presents current information.


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Las Vegas Office Space Market Overview, 2Q 2017

Market Rentable Area Vacancy RateNet Absorption,

SF (YTD)Under

Construction, SF

Average Asking Lease Rate

$/SF/Yr

Submarkets

Central East Las Vegas 9,167,135 18.9% (17,356) 14,705 $18.67

Central North Las Vegas 2,358,191 5.2% 19,468 - $18.06

Downtown Las Vegas 5,219,826 8.3% 31,580 - $26.46

North Las Vegas 2,445,113 11.8% 22,039 - $15.63

Northwest Las Vegas 10,114,540 16.2% 121,974 67,629 $20.02

SE Las Vegas/Henderson 1,967,239 22.0% (16,386) 10,500 $18.25

South Las Vegas 12,746,433 13.7% 100,228 146,900 $17.75

Southwest Las Vegas 11,562,835 14.0% 293,230 142,278 $19.75

West Las Vegas 7,820,843 13.8% 110,499 6,665 $16.76

Totals 63,402,155 14.3% 665,276 388,677 $19.02

Note: Market data in bold reflects the locations most proximate to or including the subject property

Source: CoStar Group

As noted, the subject property is within the "Northwest Las Vegas" submarket, which supplies just under 16% of the Las Vegas market’s total office space. As of the 2nd quarter of 2017, the subject submarket displayed an occupancy rate of 83.8% and positive absorption of 121,974 square feet since the end of 2016. The net absorption figures for the subject submarket translate to a change in occupied square footage of +1.5%, since the end of 2016. Further, the "Northwest Las Vegas" submarket reports an additional 67,629 square feet of office space under construction. Tenant demand is expected to accelerate for the remainder of 2017, driving rates up and vacancy down. These trends lay the groundwork for new development projects. Therefore, the investment market will continue to show upward movement as financing becomes available and pricing points are established. These improving office market trends are considered a positive factor for the subject's property type.

Military

Nellis Air Force Base (NAFB) is located in the northeastern sector of Las Vegas, approximately 14 miles southeast of the subject site. NAFB is one of the largest employers in the region and is home to the US Air Force Warfare Center, which is considered the largest and most demanding advanced air combat training mission in the world. The following table presents military personnel data, as provided by the Department of Defense. Given the close proximity of Nellis Air Force Base and the impact of the military presence in this market, this data is considered pertinent and useful for this analysis.


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DoD Military and Civilian PersonnelNellis Air Force Base

As of Date To

tal S

po

nso

rs

To

tal D

epe

nde

nts

To

tal P

ers

on

ne

l

Sep-2009 8,863 11,351 20,214

Sep-2010 9,577 12,156 21,733

Sep-2011 9,975 12,904 22,879

Sep-2012 10,131 13,178 23,309

Sep-2013 10,276 13,519 23,795

Sep-2014 9,815 12,856 22,671

Sep-2015 9,169 12,008 21,177

Compound annual growth

2009 to 2015 0.6% 0.9% 0.8%

2011 to 2015 -2.1% -1.8% -1.9%

2013 to 2015 -5.5% -5.8% -5.7%

Source: Department of Defense

The data illustrates how the area’s military presence has generally increased since 2009, but has declined over the past several years. The previous Administration instituted policies which would reduce military spending and a decline of 21% in uniformed personnel from 2012 through 2017. The cutbacks include a reduction of 40,000 soldiers and 17,000 civilian personnel from 2015 through 2017. Many anticipate that the current Administration will halt this decrease and even increase military spending, so this trend may very likely reverse. Overall, current activity at Nellis Air Force Base and expectations for growth in the future are considered a positive factor for commercial properties in the area.

ENVIRONMENTAL FORCES

Environmental forces consist of both natural and man-made forces that influence real estate values. These can represent a myriad of items, some of which include climatic conditions, natural barriers to future development, and transportation systems.

Transportation

The availability of a good transportation network and an advanced infrastructure can contribute to an area’s ability to serve its various industries. The region is traversed by Interstate Highways (I-15 and I-215), US Highway (US-95), as well as numerous State Highways and secondary roadways. RTC Transit offers public transportation via bus service for Las Vegas, North Las Vegas, Henderson, and other areas in the valley. Inter-city bus service to and from Las Vegas is provided by Greyhound and several smaller carriers.

The most proximate major airport for the Las Vegas area is the McCarran International Airport (LAS), located approximately 4.5 miles south of the subject property. Currently, LAS is served by AeroMexico, Air Canada, Alaska


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Airlines, Allegiant Air, American Airlines, British Airways, Cal Jet, Condor, CopaAirlines, Delta Air Lines, Eurowings, Frontier, Haina Airlines, Hawaiian Airlines, InterJet, JetBlue, Korean Air, Norwegian, OAI, Southwest Airlines, Spirit, Sun Country, Thomas Cook Airlines, United Airlines, Virgin America, Virgin-Atlantic, Volaris, and WestJet. The following table presents historical data pertaining to the McCarran International Airport, as it is the most proximate major airport to the subject property.

Total Air Passengers and Total CargoMcCarran International Airport (LAS)

Period NumberAnnual Change Total Pounds

Annual Change Number

Annual Change

Fiscal Year

2002 17,483,007 -- 17,523,004 -- 35,006,011 --

2003 18,078,897 3.4% 18,187,035 3.8% 36,265,932 3.6%

2004 20,717,217 14.6% 20,724,314 14.0% 41,441,531 14.3%

2005 22,159,697 7.0% 22,107,665 6.7% 44,267,362 6.8%

2006 23,116,106 4.3% 23,077,223 4.4% 46,193,329 4.4%

2007 23,885,974 3.3% 23,842,440 3.3% 47,728,414 3.3%

2008 22,086,090 -7.5% 21,988,617 -7.8% 44,074,707 -7.7%

2009 20,266,294 -8.2% 20,202,718 -8.1% 40,469,012 -8.2%

2010 19,913,128 -1.7% 19,844,231 -1.8% 39,757,359 -1.8%

2011 20,754,703 4.2% 20,725,111 4.4% 41,479,814 4.3%

2012 20,866,781 0.5% 20,800,815 0.4% 41,667,596 0.5%

2013 20,956,518 0.4% 20,900,541 0.5% 41,857,059 0.5%

2014 21,496,802 2.6% 21,388,548 2.3% 42,885,350 2.5%

2015 22,730,859 5.7% 22,658,215 5.9% 45,389,074 5.8%

2016 23,754,059 4.5% 23,681,581 4.5% 47,435,640 4.5%Compounded annual growth rate

2002 - 2016 2.2% 2.2% 2.2%

2007 - 2016 -0.1% -0.1% -0.1%

2012 - 2016 3.3% 3.3% 3.3%

2014 - 2016 5.1% 5.2% 5.2%

YTD August

2016 15,807,158 -- 15,724,587 -- 31,531,745 --

2017 16,206,137 2.5% 16,141,489 2.7% 32,347,626 2.6%

Source: McCarran International Airport (LAS)

Enplanements Deplanements Total Passengers

Note: Data represents most recent data available.

As shown, total annual air passenger traffic at the most proximate McCarran International Airport (LAS) has increased since 2002. The most recent year-end 2016 and year-to-date August 2017 growth rates indicate a continued increase for LAS. The recent increase in passenger activity at LAS is considered a positive demand factor for the subject's property type in the area.


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Gaming

As noted, gaming is a major component of the Las Vegas economy, as well as the entire state of Nevada. The following tables present gaming revenues generated by the casinos located within Clark County, as well as for the larger state.

Gaming Revenue - Select Clark County Areas

Area

Year RevenueAnnual Change

RevenueAnnual Change



2005 6,033,595,000$ 654,152,000$ 891,019,000$ 7,578,766,000$

2006 6,688,903,000$ 10.9% 630,404,000$ -3.6% 929,692,000$ 4.3% 8,248,999,000$ 8.8%

2007 6,827,887,000$ 2.1% 632,929,000$ 0.4% 927,695,000$ -0.2% 8,388,511,000$ 1.7%

2008 6,126,292,000$ -10.3% 582,691,000$ -7.9% 839,419,000$ -9.5% 7,548,402,000$ -10.0%

2009 5,550,192,000$ -9.4% 523,827,000$ -10.1% 790,399,000$ -5.8% 6,864,418,000$ -9.1%

2010 5,776,570,000$ 4.1% 493,392,000$ -5.8% 756,897,000$ -4.2% 7,026,859,000$ 2.4%

2011 6,068,959,000$ 5.1% 496,678,000$ 0.7% 778,886,000$ 2.9% 7,344,523,000$ 4.5%

2012 6,207,230,000$ 2.3% 509,144,000$ 2.5% 796,671,000$ 2.3% 7,513,045,000$ 2.3%

2013 6,504,685,000$ 4.8% 500,964,000$ -1.6% 786,950,000$ -1.2% 7,792,599,000$

2014 6,372,500,000$ 2.7% 511,421,000$ 0.4% 772,707,000$ -3.0% 7,656,628,000$ 1.9%

2015 6,348,009,000$ -0.4% 541,800,000$ 5.9% 784,352,000$ 1.5% 7,674,161,000$ 0.2%

2016 6,376,256,000$ 0.4% 564,631,000$ 4.2% 787,976,000$ 0.5% 7,728,863,000$ 0.7%

Compounded annual growth rate

2005 - 2016 0.5% -1.3% -1.1% 0.2%

2014 - 2016 0.0% 5.1% 1.0% 0.5%Source: Nevade Gaming Control Board 2017

TotalDowntown Las Vegas Boulder StripLas Vegas Strip

As shown, gaming revenues for the most frequented areas within Clark County have generally fluctuated since 2005, consistent with economic performance across the country. However, the combined total gaming revenues for the Las Vegas Strip, Downtown Las Vegas, and Boulder Strip have increased slightly since 2005. Further, year-end 2016 figures show increasing gaming revenues for all 3 areas presented, which is considered a positive indicator for the area and the proposed subject property type.


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Gaming Revenue StatisticsNevada (Statewide)

Table Games Wins Other Games Win Slot Wins Card Games Win Total Gaming Wins

Years Am

ou

nt

($0

00

)

% C

ha

ng

e

Am

ou

nt

($0

00

)

% C

ha

ng

e

Am

ou

nt

($0

00

)

% C

ha

ng

e

Am

ou

nt

($0

00

)

% C

ha

ng

e

Am

ou

nt

($0

00

)

% C

ha

ng

e

2000 3,041,082 -- 307,956 -- 6,190,774 -- 63,063 -- 9,602,875 --

2001 2,920,392 -4.0% 289,792 -5.9% 6,198,553 0.1% 59,675 -5.4% 9,468,412 -1.4%

2002 2,839,282 -2.8% 277,692 -4.2% 6,273,522 1.2% 57,790 -3.2% 9,448,286 -0.2%

2003 2,797,916 -1.5% 282,217 1.6% 6,477,623 3.3% 68,275 18.1% 9,626,031 1.9%

2004 3,083,468 10.2% 281,405 -0.3% 7,097,097 9.6% 98,862 44.8% 10,560,832 9.7%

2005 3,444,653 11.7% 292,009 3.8% 7,764,783 9.4% 140,150 41.8% 11,641,595 10.2%

2006 3,810,086 10.6% 345,336 18.3% 8,305,072 7.0% 148,039 5.6% 12,608,533 8.3%

2007 3,911,994 2.7% 318,226 -7.9% 8,447,827 1.7% 167,989 13.5% 12,846,036 1.9%

2008 3,442,410 -12.0% 264,872 -16.8% 7,736,241 -8.4% 155,713 -7.3% 11,599,236 -9.7%

2009 3,176,462 -7.7% 247,449 -6.6% 6,816,581 -11.9% 145,580 -6.5% 10,386,072 -10.5%

2010 3,382,056 6.5% 250,890 1.4% 6,636,864 -2.6% 135,200 -7.1% 10,405,010 0.2%

2011 3,592,343 6.2% 239,080 -4.7% 6,737,873 1.5% 131,877 -2.5% 10,701,173 2.8%

2012 3,684,998 2.6% 267,521 11.9% 6,780,214 0.6% 123,251 -6.5% 10,855,984 1.4%

2013 4,115,410 11.7% 149,860 -44.0% 6,753,755 -0.4% 123,891 0.5% 11,142,916 2.6%

2014 3,993,773 -3.0% 158,176 5.5% 6,746,835 -0.1% 119,904 -3.2% 11,018,688 -1.1%

2015 3,814,770 -4.5% 177,804 12.4% 7,003,484 3.8% 118,023 -1.6% 11,114,081 0.9%

2016 3,783,153 -0.8% 193,085 8.6% 7,163,156 2.3% 117,753 -0.2% 11,257,147 1.3%Compound annual growth rate

2004 - 2016 1.7% -3.1% 0.1% 1.5% 0.5%

2009 - 2016 2.5% -3.5% 0.7% -3.0% 1.2%

2014 - 2016 -2.7% 10.5% 3.0% -0.9% 1.1%

Source: Nevada Gaming Control Board

Note: Win amounts are presented in Thousands ($000)

As shown, statewide gaming revenues have generally increased since 2000, and also in the most recent years. Overall, recent performance is considered a positive indicator for the Nevada gaming industry as well as the supporting lodging industry. Please refer to the subsequent Las Vegas Strip Historical Statistics and Trends section of this report for a more detailed analysis of the area gaming industry.


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Area Attractions

The following table highlights the significant attractions in the greater-Las Vegas, NV area.

Major AttractionsCultural Institutions Attractions/Notable Sites

Smith Center for the Performing Arts Downtown and Las Vegas Strip Casinos

Las Vegas Philharmonic Hoover Dam

Nevada Ballet Theatre Las Vegas Strip

Las Vegas Natural History Museum Downtown Arts District

Las Vegas Museum of Organized Crime & Law Enforcement Symphony Park

Neon Museum Wet 'n Wild Las Vegas

DISCOVERY Children's Museum Las Vegas Motor Speedway

Parks & Recreation Events / Festivals

Southern Nevada Zoological-Botanical Park Las Vegas Film Festival

Las Vegas Springs Preserve Park Life is Beautiful Festival

Clark County Wetlands Park Las Vegas Holiday Festival

Nevada Regional System of Trails and Open Spaces Las Vegas Artisan Craft Festival

Lake Mead DOGtober Beer & Music Festival

Mount Charleston Glittering Lights Las Vegas

Red Rock Canyon National Park Vegas American Pride Festival

Sloan Canyon National Conservation Area New Vista Wine Walk

Colleges & Universities Shopping

University of Nevada-Las Vegas Meadows Mall

College of Southern Nevada Las Vegas North Premium Outlets

Nevada State College Fashion Show Mall

Touro University Nevada The Shops at Crystals

University of Nevada School of Medicine Forum Shops at Caesars

Le Cordon Bleu College of Culinary Arts Grand Canal Shoppes at Venetian and Palazzo

Esplanades at Wynn and Encore

Source: Various

Meeting Facilities

Convention and meeting facilities can contribute significantly to an area's ability to attract lodging demand. Clark County offers numerous convention and meeting opportunities that exist through local convention facilities, venues, museums, and industry, as well as area hotels and meeting facilities. Additionally, annual festivals provide ample opportunity to attract regional convention demand.

The most prominent meeting venue in the region is the Las Vegas Convention Center, which is the second largest convention center in the nation, and features 3.2 million square feet of meeting and exhibit rooms, training rooms, open hall space, and a minor-league baseball stadium.

The Cashman Center is located on Las Vegas Boulevard next to the minor league baseball stadium, and contains 2 flexible exhibit halls totaling approximately 100,000 square feet, 14 breakout meeting rooms, and a 1,898-seat theater. Sands Expo & Convention Center features 1.2 million square feet of meeting space, including a 380,000-square foot hall, banquet space for 1,260 guests, and a theater capacity of 1,890 persons. This facility is located


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next to the Venetian and Palazzo resorts. The World Market Center is located on Grand Central Parkway, and features 450,000 square feet of meeting space, including a 165,750 space, banquet space for 11,050 guests, and theater capacity of 20,719 persons.

The region is home to numerous colleges and universities, including University of Nevada-Las Vegas, Touro University Nevada, College of Southern Nevada, and Nevada State College. These educational institutions each offer a multitude of meeting venues ranging in size from small boardrooms to stadiums and arenas.

In addition, there are numerous area hotels and casinos that provide additional meeting space. Hotel and casino properties offering over 100,000 square feet of meeting space include Paris Las Vegas, Wynn Las Vegas, Rio All Suite Hotel and Casino, Westgate Las Vegas Resort & Casino, Hard Rock Las Vegas Hotel & Casino, ARIA Resort & Casino, Caesars Palace Las Vegas, Mandalay Bay Resort, Bellagio Hotel & Casino, Delano Las Vegas, MGM Grand Hotel & Casino, and the Tropicana Las Vegas. Several other full-service hotels offer significant meeting space in the Las Vegas area.

CONCLUSION

The region has displayed relative moderate to strong growth in recent years, generally in-line with to above that of other urban areas in the state and nation. Following moderate growth from 2000-2010, the population and households growth rates for the city have displayed slightly lower moderate increases from 2010-2017, at rates similar to the state, but below the county and MSA, and above the nation. The population and households growth rates through 2022 for the city and county are projected to continue increasing, indicating rates somewhat below the previous 5 years, which is not considered a positive indicator for the subject's property type. Total employment for the MSA increased at a moderate to strong pace from 2011-2016. This trend is anticipated to continue through 2022 at a slightly lower moderate pace, which is considered a positive indicator for the subject's property type. Overall, economic and demographic trend projections suggest steady growth for the local lodging market.

NEIGHBORHOOD ANALYSIS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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NEIGHBORHOOD ANALYSIS

NEIGHBORHOOD BOUNDARIES

The subject site is located on the north side of W. Sahara Avenue just west of S. Las Vegas Boulevard, in the northern sector of the area referred to as the "Las Vegas Strip" or the "Strip," within the City of Las Vegas, NV. The site also backs up to the south border of W. Cincinnati Avenue. The site lies across the street from the Las Vegas Festival Grounds, and just 0.5 mile east of the I-15/W. Sahara Avenue interchange. The site lies approximately 2 miles southeast of the downtown sector of Las Vegas, and approximately 4.5 miles north of the McCarron International Airport.

The neighborhood boundaries are considered to be W. Wyoming Avenue to the north, E. Desert Inn Road to the south, Paradise Road to the east, and I-15 to the west. The following map illustrates the area considered to be the subject property's neighborhood.

NEIGHBORHOOD MAP


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ACCESS FACILITIES

Access to and through the neighborhood is excellent. The primary east-west traffic artery is W. Sahara Avenue, while the primary north-south traffic arteries are I-15 and S. Las Vegas Boulevard.

LAND USE

Las Vegas Boulevard is a major road in the Las Vegas Valley, best known for the Las Vegas Strip portion of the road and its casinos. Formerly carrying U.S. Route 91 (US 91), which had been the main highway between Los Angeles and Salt Lake City, it has been bypassed by Interstate 15, and serves mainly local traffic with some sections designated State Route 604.

The Boulevard leaves the city of Las Vegas at Sahara Avenue and assumes its unofficial name the Las Vegas Strip for the next 4 miles (6.4 km). This portion of Las Vegas Boulevard begins just to the northeast of the subject property and includes the Stratosphere (the only major Strip hotel/casino actually sited within the Las Vegas city limits) and runs past Mandalay Bay ending at Russell Road. This is the section of the road most people are familiar with; it is home to casino megaresorts with their world famous lights, huge video signs and other attractions. It is designated as an All-American Road. Just past the end of "The Strip", the road passes the Welcome to Fabulous Las Vegas sign (located in the median) as it abuts the western edge of the McCarran International Airport property. The "South Strip" is now used to describe the section of Las Vegas Boulevard between Russell Road and Blue Diamond Road (which was recently relocated to intersect at Windmill Lane). Along this stretch, development thins out except for newer shopping malls, hotels and condominiums as the Boulevard continues to travel south, just to the east of Interstate 15.

The subject is well located just off Las Vegas Boulevard, in close proximity to various employment centers.

The developers of the subject property developed the 41-story Allure High-rise which is adjacent to the Lucky Dragon and have a long-term plan to develop the surrounding area as an Asian tourist destination, a “New Chinatown” with retail and residential uses including additional hotel rooms, apartments, and condos. The plans include a Chinese Cultural Center and Chinese movie theaters. Reportedly, the City of Las Vegas is supporting the plans and will contribute tax rebates for the development, as they did for the adjacent Allure.

The $5 billion Resorts World development is located in the northwest quadrant of Las Vegas Boulevard and Desert Inn Road In the southern portion of the neighborhood and is scheduled to be finished in the next few years. This site is the former site of The Stardust, Westward Ho, and Budget Suites and was originally the Echelon development, a project planned for 5,000 rooms divided into five (partially separate) towers. Construction of the project was suspended in 2008 due to the recession. In 2013 the site was sold to the Genting Group for $350 million. Resorts World decided to use the construction structure of the Echelon instead of demolishing it. It was initially to break ground in 2014 and open in 2016. The groundbreaking ceremony took place on May 5, 2015, with an expected opening date of mid-2018. In February 2016, the resort's status was considered questionable, as little construction had occurred up to that point. Genting stated in May 2016 that construction would ramp up later in the year, for a projected opening in 2019. The company attributed the delays to the complex construction logistics of the project as well as a falling Malaysian Dollar which has decreased the company's purchasing power globally.

The $3 billion Fountainbleu development is located on the east side of Las Vegas Boulevard just south of Sahara Avenue.

Other major casino hotels located in close proximity to the subject include the Wynn and Encore which are both just south of the neighborhood boundaries, along the east side of Las Vegas Boulevard. Wynn, is a $2.7-billion luxury resort, named after casino developer Steve Wynn and is the flagship property of Wynn Resorts Limited. The 614-foot-high hotel has 49 floors, with the 2,716 rooms ranging in size from 640 sq ft to villas at 7,000 sq ft. The complex also includes an 111,000 sq ft casino, a convention center with 223,000 sq ft of space and 76,000 sq ft of retail


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space. Encore is connected to Wynn Las Vegas and features a 74,000-square-foot casino, 60,000 square feet of convention space, 27,000 sq ft of retail space in "The Esplanade", a spa and salon, five restaurants, seven bars, and a nightclub. The building is 631 feet in height and 93 feet in width, and has 63 floors, making it three floors higher than Wynn Las Vegas.

Further south of the neighborhood, also along the east side of Las Vegas Boulevard are the Venetian and Palazzo resorts. The Venetian Resort Hotel Casino is a five-diamond luxury hotel and casino resort, located on the site of the old Sands Hotel. The hotel tower contains 36 stories and rises 475 feet. Adjoining the Venetian, is its sister property, the Palazzo. The resort's 642-foot high hotel tower features 3,068 all-suite rooms and 375 concierge-level suites. Located along the west side of Las Vegas Boulevard, at the intersection with Spring Mountain Road, is the Treasure Island Hotel/ Casino. Treasure Island Hotel & Casino (also known as "TI") is a hotel and casino which includes 2,664 rooms and 220 suites, and is connected by tram to The Mirage as well as pedestrian bridge to the Fashion Show Mall shopping center. Since March 2009, TI is owned and operated by real estate investor Phil Ruffin. The Las Vegas Convention Center, is located on the north side of Desert Inn Road in the southern portion of the neighborhood and is proposed for a $2.3 billion expansion.

The Fashion Show Mall includes over 1.8 million square feet of space, with more than 250 stores and seven anchors, and hosts weekend fashion shows on a retractable runway in the mall's central atrium.

Adjacent east of the subject is the site of the former New Frontier Hotel Casino which was imploded in 2007. In 2015 it was announced that James Packer (an Australian billionaire) and former Wynn Resorts executive Andrew Pascal acquired the site with plans to develop it into a project known as Alon Las Vegas. Limited information is available regarding this project; however, reportedly the hotel will include 1,100 rooms over two towers and will provide a full complement of integrated resort offerings. A timeline for this project has not been released.

Overall, no land uses were observed during the inspection of the subject neighborhood that would have a negative impact on the marketability of real estate in the area.


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The following table presents statistics for the Las Vegas-Henderson-Paradise, NV MSA and several radii around the subject property’s location.

DEMOGRAPHIC ANALYSIS

1-Mile Radius 3-Mile Radius 5-Mile Radius

Las Vegas-Henderson-

Paradise, NV MSA

Population 2000 11,657 182,568 471,606 1,375,738

Population 2010 10,753 169,729 460,288 1,951,269

Population 2017 12,472 181,205 489,062 2,192,887

Population 2022 14,499 193,247 519,059 2,386,454

Population CAGR %, 2000-2010 -1.6% -1.4% -0.5% 7.2%

Population CAGR %, 2010-2017 3.0% 1.3% 1.2% 2.4%

Population CAGR %, 2017-2022 3.1% 1.3% 1.2% 1.7%

Households 2000 5,391 75,234 178,812 512,240

Households 2010 5,071 67,102 168,313 715,365

Households 2017 5,852 70,753 176,204 790,479

Households 2022 6,906 75,440 186,394 854,826

Households CAGR %, 2000-2010 -1.2% -2.3% -1.2% 6.9%

Households CAGR %, 2010-2017 2.9% 1.1% 0.9% 2.0%

Households CAGR %, 2017-2022 3.4% 1.3% 1.1% 1.6%

Median Household Income 2017 $31,506 $31,461 $35,162 $52,598

Median Household Income 2022 $34,347 $32,253 $35,872 $55,973

Median Household Income CAGR %, 2017-2022 1.7% 0.5% 0.4% 1.3%

Source: ESRI

As shown, population and household growth closest to the subject property decreased somewhat from 2000-2010, but has increased moderately from 2010-2017, at rates above the larger MSA. The relatively low population and number of households in the area closest to the subject property is indicative of the commercial orientation of the area. The areas closest to the subject property are forecasted to experience continued moderate positive growth for population and households through 2022, at rates above the larger MSA.

CONCLUSION

The subject neighborhood's location provides good accessibility and visibility for commercial properties. Overall, the neighborhood’s economic prospects are considered positive in the long term. In general, there are no long-term neighborhood factors that are expected to have a significant negative effect on the marketability of real estate.

LAS VEGAS STRIP HISTORICAL STATISTICS AND TRENDS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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LAS VEGAS STRIP HISTORICAL STATISTICS AND TRENDS

The subject property is located on the north end of the area commonly referred to as the “Las Vegas Strip” or simply the “Strip.” This section addresses historical statistics and trends for the Las Vegas Strip. Its purpose is to identify the background data necessary to understand the current operating environment on the Strip, as well as to provide supportive statistics for projections.

Over the past two-plus decades, the Strip has transformed itself from a gaming-centric market to a top-tier, multi-faceted destination resort market. Gambling used to be the primary driver of industry profitability, but hotel, dining, retail and entertainment now also provide strong contributions to the bottom line. In today’s operating environment, the most successful resorts tend to have solid performance from all departments.

The following analysis was excerpted from the September 2017 report published by CBRE’s Global Gaming Group and gives an overview of the current state of the Strip’s gaming industry.

SEPTEMBER 2017 LAS VEGAS STRIP ANALYSIS

September 2017 had an extra Saturday compared to September 2016, also giving it one more weekend day. It is likely that some collections from September 2017 will be pushed into October, however. The normal caveats about the event calendar apply.

Unadjusted for luck factors and calendar issues, according to the Nevada Gaming Control Board, September 2017 revenue was as follows:

Las Vegas Strip gaming revenue was $567.9 million, up 4.7% for the month, and up 3.6% YTD.

Table games revenue, excluding bacc/mini bacc, was $170.3 million, up 7.8% for the month, and up 6.2% YTD.

Bacc/mini bacc revenue was $98.7 million, up 1.8% for the month, and down -1.4% YTD.

Slot revenue was $271.9 million, up 4.1% for the month, and up 3.3% YTD.

Mass market table games (excluding bacc/mini bacc) hold was 18.02% in September 2017, 184 bps above the hold of 16.18% in September 2016 and 170 bps above the trailing twelve-month average. Bacc/mini bacc hold was 11.55%, 460 bps below September 2016, and 202 bps below the trailing twelve-month average. Baccarat volume was up 42.3% for the month, however.

Slot volume was up 3.6% for the month, and is up 2.2% YTD. Hold was 8.01% this month, versus the 7.97% hold of last September.


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The following graphs show the drop/handle and win percentage for the Las Vegas Strip for the trailing thirteen months.


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Source: NGCB; CBRE estimates

In the trailing twelve months ending September 2017, baccarat volume was down -2.2% over the TTM ending September 2016. Baccarat hold in the current TTM is slightly lower (down by -11 bps) over the previous TTM, and win is down by -3.0% in the period.



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Mass market table games volume was down by -2.5% in the TTM through September 2017. The hold percentage is up by 150 basis points, however, which pushes the TTM revenue increase to 7.3%.


Slot volumes are up 2.3% in the TTM comparison, and win is up by 3.3% in the period, due to a 8 bps increase in hold.

Downtown Las Vegas

Downtown gaming revenue was flat this month, but that appears to be from slot collection issues rather than a systemic problem. Table games drop was up significantly (+24.7%) and slot volume also increased (+4.8%), and table games hold was pretty even with last year (also possibly a collections issue).

The market is able to hold on to its positive trend in both the YTD (+12.8%) and TTM comparison (+11.3%).

Las Vegas Locals Market

The locals gaming market was down 2.5% this month versus September 2016, but the local market’s long-term trend is in positive territory (+2.5%) in the TTM comparison. It appears slot collection issues and perhaps a Megabucks jackpot skewed the local numbers. Both table games and slot volumes are up slightly in the TTM comparison (+1.4% and +1.6%, respectively).


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Nevada Statewide

Nevada was within shouting distance of $1.0 billion in gaming revenue this September, and was the best September the state has enjoyed since 2008. Every submarket is showing improvement in the TTM comparisons. Excluding the Strip, Nevada is up 3.7% in the TTM.

* Carson Valley Area includes Carson City, Gardnerville, Minden and all other areas of Douglas County except South Lake Tahoe.


As shown by the CBRE report data presented above, recent trends suggest continued growth in gaming revenues across all geographic areas. .


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GAMING AND LODGING PERFORMANCE - LAS VEGAS STRIP (REVENUES OVER $72 MILLION)

The following tables present more detailed information regarding the performance of gaming and lodging along the Las Vegas Strip for properties reporting revenues above $72 million per property, as compiled by the Nevada Gaming Control Board. These indicators are deemed most pertinent to the analysis and projections for the subject property.

Gaming Statistics

Las Vegas Strip (Revenues over $72MM)

FY ending June

Gaming Revenue

Annual Change

Number of Casinos

Annual Change

Average Gaming SF

Annual Change

Gaming Revenue Per SF

Annual Change

2007 $5,943,694,056 -- 23 -- 99,701 -- $2,592 --

2008 $5,760,434,033 -3.1% 23 0.0% 98,641 -1.1% $2,539 -2.0%

2009 $4,853,898,541 -15.7% 23 0.0% 101,123 2.5% $2,087 -17.8%

2010 $4,682,667,911 -3.5% 23 0.0% 107,834 6.6% $1,888 -9.5%

2011 $4,898,993,318 4.6% 22 -4.3% 107,319 -0.5% $2,075 9.9%

2012 $5,041,456,984 2.9% 23 4.5% 104,834 -2.3% $2,091 0.8%

2013 $5,293,675,063 5.0% 23 0.0% 106,737 1.8% $2,156 3.1%

2014 $5,516,364,066 9.4% 23 0.0% 105,358 0.5% $2,276 8.9%

2015 $5,293,838,707 -4.0% 23 0.0% 105,411 0.1% $2,184 -4.1%

2016 $5,396,667,042 1.9% 24 4.3% 102,589 -2.7% $2,192 0.4%


2007 - 2016 -1.1% 0.5% 0.3% -1.8%

2010 - 2016 2.4% 0.7% -0.8% 2.5%

2014 - 2016 -1.1% 2.2% -1.3% -1.9%

Source: Nevade Gaming Control Board

As shown, gaming revenue performance continues to remain strong following the recovery from the earlier recession. In particular, gaming revenue per square foot has remained above $2,000 since 2011, but has not yet recovered to the highs seen pre-recession.

The subject property is forecast to achieve gaming revenues of $969 per square foot of gaming area in 2017 (actual figures through September and projections through year-end), its first full year of operation. Ownership and management are proposing to refine their strategies and improve this performance and projects revenues to approach $2,000 per square foot of gaming area over the next several years. Based on the information presented above, a projected performance of around $1,500 per square foot of gaming area for the subject property appears reasonable and indicative of investor expectations. This level (2016 $s) is modeled to be reached by the third year of our cash flow projections.


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Lodging Statistics

Las Vegas Strip (over $72MM Revenues)FY ending

JuneARN

Annual Change

ORNAnnual Change

Room RevenueAnnual Change

Occ %Annual Change

ADRAnnual Change

2007 25,622,936 -- 24,504,276 -- $3,764,726,879 -- 95.6% -- $154 --

2008 25,529,460 -0.4% 24,277,794 -0.9% $3,797,326,096 0.9% 95.1% -0.6% $156 1.8%

2009 25,515,657 -0.1% 23,311,839 -4.0% $3,129,426,479 -17.6% 91.4% -3.9% $134 -14.2%

2010 25,935,123 1.6% 23,343,511 0.1% $2,850,908,047 -8.9% 90.0% -1.5% $122 -9.0%

2011 25,832,645 -0.4% 23,537,876 0.8% $3,073,509,916 7.8% 91.1% 1.2% $131 6.9%

2012 26,503,691 2.6% 24,417,248 3.7% $3,505,324,872 14.0% 92.1% 1.1% $144 9.9%

2013 26,617,238 0.4% 24,561,469 0.6% $3,591,335,679 2.5% 92.3% 0.2% $146 1.9%

2014 26,718,181 0.8% 24,751,147 1.4% $3,879,413,607 10.7% 92.6% 0.6% $157 9.2%

2015 26,910,099 0.7% 24,787,082 0.1% $4,048,595,183 4.4% 92.1% -0.6% $163 4.2%

2016 27,665,914 2.8% 25,756,783 3.9% $4,419,849,028 9.2% 93.1% 1.1% $172 5.1%


2007 - 2016 0.9% 0.6% 1.8% -0.3% 1.2%

2010 - 2016 1.1% 1.7% 7.6% 0.6% 5.8%

2014 - 2016 1.8% 2.0% 6.7% 0.2% 4.6%

Source: Nevade Gaming Control Board

Tracking generally with gaming revenues, lodging statistics also show continued strong performance even as new properties are added to the supply. In fact, since 2010, demand growth has outpaced supply growth, displaying compound annual growth rates of of 1.7% and 1.1%, respectively. Likewise, ADR statistics continue to show increases above inflation, another strong indication of the strong appeal of this market in general.

The subject property is forecast to achieve occupancy of 74% and an ADR of $77 in 2017 (actual figures through September and projections through year-end), its first full year of operation. Along with the natural ramp-up in performance expected for a newly opened property, ownership and management are proposing to affiliate with Best Western and improve this performance, projecting its occupancy to reach 90% and its ADR to reach $105 over the next several years. Based on the information presented above, this level of performance appears reasonable.

Additional discussion of the local lodging market follows.

LODGING MARKET ANALYSIS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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LODGING MARKET ANALYSIS

This section of the report illustrates the historical supply and demand trends for the local hotel/lodging market, and specifically those hotels/lodging facilities considered to be competitive with the subject property. Market information, estimates, and assumptions were derived through governmental agencies, conversations with the management of the subject property, as well as conversations with brokers, management, owners, and franchisors of the competitive properties in the area.

CURRENT COMPETITIVE SUPPLY

The following hotel market analysis involves a qualitative and quantitative review of supply and demand trends for lodging facilities in the subject property’s area. It includes a description of the existing supply of, and demand for, hotel rooms, identification of existing competitive properties, trends, major demand generators, proposed additions to supply (if any), and a discussion of the demand growth potential in the area. Based on a survey of lodging properties in the surrounding area and an evaluation of the local hotel market, the subject property’s primary competitive lodging market was defined.

The leading source for hotel and motel operating data is Smith Travel Research ("STR"), which tracks hotel occupancy and average daily rate ("ADR") data for most major chain hotels and many independent hotels participating in their monthly survey. In the case of Las Vegas, very few properties participate with STR. The Nevada Gaming Control Board, however, compiles information from area properties. The following table presents information gleaned from the Nevada Gaming Control Board, our property-level interviews, and sources with the respective hotel properties.


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Competitive Supply - Operational Performance

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Year Opened 2016 2000 2000 2000 2000

OccupancyYear Ending12/2012 N/A N/A N/A 92.1% 83.1% 90.1%12/2013 N/A N/A N/A 92.3% 79.4% 89.6%12/2014 N/A N/A 86.9% 92.6% 80.5% 90.1%12/2015 N/A N/A 85.2% 92.1% 81.4% 89.9%12/2016 47.6% 93.5% 85.3% 93.1% 83.6% 91.3%YTD 09/2017 73.9% N/A N/A N/A N/A 0.2%

ADRYear Ending12/2012 N/A N/A N/A $143.56 $70.91 $142.9212/2013 N/A N/A N/A $146.22 $70.08 $145.6212/2014 N/A N/A $274.00 $156.74 $76.38 $155.2712/2015 N/A N/A $285.00 $163.33 $88.09 $163.0412/2016 $75.34 $242.00 $296.00 $171.60 $95.62 $173.16YTD 09/2017 $78.16 N/A N/A N/A N/A $78.16

RevPARYear Ending12/2012 -- N/A N/A $132.26 $58.92 $128.7712/2013 -- N/A N/A $134.93 $55.62 $130.4812/2014 -- N/A $238.11 $145.20 $61.49 $139.9012/2015 -- N/A $242.82 $150.44 $71.72 $146.5712/2016 $35.84 $226.27 $252.49 $159.76 $79.94 $158.10YTD 09/2017 $57.77 N/A N/A N/A N/A $0.16

Overall Occupancy PenetrationYear Ending12/2012 -- N/A N/A 102.3% 92.2%12/2013 -- N/A N/A 103.0% 88.6%12/2014 -- N/A 96.4% 102.8% 89.3%12/2015 -- N/A 94.8% 102.5% 90.6%12/2016 52.0% 102.4% 93.4% 102.0% 91.6%Note:

Source: Newmark Knight Frank Valuation & Advisory; Smith Travel Research; individual properties concerned

2016 Total Available Rooms

The 2016 available room counts reflect the partial year of operation for the subject property (opened November 2016).

Totals and averages reflect actual figures.

Although we were able to confirm exact figures for individual properties, ranges are presented to protect the confidentiality of the individual properties.


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DEMAND ANALYSIS

Estimates of demand for lodging facilities within the defined market area included analysis of the following:

Identification of the demand segments currently generating demand for hotel rooms in the market;

Estimates of existing accommodated demand, for the competitive supply;

Identification of any daily and seasonal variations in lodging demand in the market area;

Determination of unaccommodated demand in the market area; and

Estimates of growth.

This information was obtained, to the extent possible, through personal or telephone interviews with representatives of all of the subject property’s competitors and other sources. Through the interviews conducted we were able to formulate an estimate of individual property performance.

Based on our research, the following observations were made:

The defined competitive supply achieved an annual occupancy rate of 91.3%, with an average daily room rate (ADR) of $173.16 for year-end 2016.

The average occupancy from 2012 through 2016 was 90.2%.

The reported high point in occupancy in recent history was 91.3% in 2016.

DEMAND GROWTH

Future growth in accommodated room nights is estimated based on an analysis of historic and projected lodging supply and demand growth, in conjunction with the impact of certain key economic and demographic indicators, as presented in the Market Area Analysis and Neighborhood Analysis sections of this report. These historical data are useful in estimating future lodging demand growth.

Based on the speculative nature of projecting growth in demand far into the future, we estimated demand growth primarily for the next three to five years. Thereafter, we assumed that the market would operate at a stabilized level.

Overall demand has increased from 2012 to 2016 at a compound annual rate of 1.1%, with growth reportedly shown in each year from 2012 through 2016. Even with the continued increases in supply, the competitive set's occupancy rate actually increased in each year since 2011, demonstrating the relative stability of this market and the strength of these new properties, in particular. For purposes of this analysis, we have modeled stabilized occupancy performance in the first year of our projections, reflecting that demand will continue to grow, but be accommodated by future increases to supply. Year-end 2016 statistics indicate a change in occupied room nights of 0.9% over that of the same period of the prior year. Again, the negative year-to-date movement in occupancy rates is attributed to the additions to supply.

As noted in the table below, total demand has increased over the past several years. Demand had reportedly increased from 2013 through 2016, reflecting improving market conditions, as well as the additions to supply, including the subject property (November 2016).


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As noted, after 2017, any further growth in demand is expected to be displaced to other markets or served by other additions to supply.

The following table presents our projected core rates of growth.

Competitive Supply's Historical and ProjectedCore Growth Rates

Year Ending Total DemandTotal Available

RoomsHistorical

12/2013 2.9% 3.5%12/2014 0.8% 0.2%12/2015 -0.3% 0.0%12/2016 0.9% -0.7%

Projections12/2017 0.0% -0.1%12/2018 0.0% 0.0%12/2019 0.0% 0.0%

Source: Newmark Knight Frank Valuation & Advisory

Notes: Newmark Knight Frank Valuation & Advisory projections are presented in bold type. Projected growth rates reflect core demand only.

Changes in available rooms reflect the opening of the subject property (November 2016). Additionally, small increases and decreases in supply reflect the additional day in leap years.

Competitive Supply's Historical and ProjectedSupply and Demand (Room Nights)

Year Ending Total DemandTotal Available

RoomsMarket

Occupancy

12/2012 28,478,000 31,591,100 90%12/2013 29,300,500 32,683,800 90%12/2014 29,528,900 32,763,300 90%12/2015 29,442,100 32,762,000 90%12/2016 29,699,200 32,536,600 91%12/2017 29,738,800 32,509,500 91%12/2018 29,738,800 32,509,500 91%12/2019 29,738,800 32,509,500 91%


Note: Totals may not add due to rounding. Newmark Knight Frank Valuation & Advisory projections are presented in bold type.

Changes in available rooms reflect the opening of the subject property (November 2016). Additionally, small increases and decreases in supply reflect the additional day in leap years.

PROJECTED OCCUPANCY FOR THE SUBJECT PROPERTY

To estimate future occupancy levels for the subject hotel, we analyzed historical penetration levels of the competitors, the anticipated changes in supply, and the subject property’s anticipated competitive position relative to the other facilities in the market. This report assumes that the subject property obtains and retains an affiliation with


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Best Western, or a similar national franchise, and that it is subject to competent management typically provided for similar hotels.

Penetration is the ratio of a particular property’s actual room nights captured over its fair share. Fair share represents the ratio of the property’s number of rooms to the total rooms in the defined competitive supply. The ratio is then applied to total market demand to measure the property’s actual room nights compared to its fair share of room nights. The subject property’s historic and projected fair share and penetration rates are presented in the following table.

Penetration is a relative, as opposed to an absolute, measure of performance. Accordingly, it tends to fluctuate based on the size and resultant fair share of the various competitors within a defined market. The subject hotel has a good location, with good accessibility and visibility in the area. Coupled with the strong name recognition associated with a national franchise such as Best Western or similar brand, the property should successfully penetrate market demand.

Fair Share

A property’s fair share is calculated by dividing its number of available room nights by the number of available room nights in the defined market. For example, in 2017, the subject property will have 74,095 available room nights (203 rooms x 365 days) of the market’s total 32,509,455 available room nights (89,067 rooms x 365 days), or a fair share of 0%.

Penetration Analysis

To estimate anticipated penetration rates for the subject property, we have considered the historic penetration rates of the subject property and the properties in the defined competitive supply. The following table summarizes historical penetration rates, as available, for the properties in the defined competitive set.


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Competitive Supply - Occupancy Performance

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Occupancy

Year Ending

12/2012 N/A N/A N/A 92.1% 83.1% 90.1%

12/2013 N/A N/A N/A 92.3% 79.4% 89.6%

12/2014 N/A N/A 86.9% 92.6% 80.5% 90.1%

12/2015 N/A N/A 85.2% 92.1% 81.4% 89.9%

12/2016 47.6% 93.5% 85.3% 93.1% 83.6% 91.3%

YTD 09/2017 73.9% N/A N/A N/A N/A 0.2%

Overall Occupancy Penetration

Year Ending

12/2012 -- N/A N/A 102.3% 92.2%

12/2013 -- N/A N/A 103.0% 88.6%

12/2014 -- N/A 96.4% 102.8% 89.3%

12/2015 -- N/A 94.8% 102.5% 90.6%

12/2016 52.0% 102.4% 93.4% 102.0% 91.6%Note:






The subject property's penetration rate was 52% in its first partial calendar year. Regarding occupancy penetration, and based on its condition, property-type, and price point relative to the properties in the defined competitive set, we consider the subject property's occupancy and pricing structure to improve to a level slightly above the market average. This also reflects the relatively small room count at the subject property. In general, it is easier to fill a small property than a larger one, all else being equal. The excellent condition of the subject property should help the property improve and maintain its competitive position within the market. We have reflected slightly increasing penetration rates through 2019 to reflect the ramp-up to stabilized performance levels.

Considering the strength of the Best Western reservation system, and the relative age, condition, and quality of the subject property, We anticipate the subject property’s overall penetration rate to approach and maintain a stabilized level of 101% over the next few years.


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Conclusion

This report assumes that the subject property obtains and retains an affiliation with Best Western, or a similar national franchise, and that it is subject to competent management typically provided for similar hotels.

These penetration levels, which are based on the subject property’s competitive strengths and weaknesses, the subject property’s and market’s historical performance levels, and our expectations of future market trends, result in our estimated calendar year occupancy levels. The following table presents the property’s estimated demand, fair share, market penetration, and occupancy through the year that stabilized occupancy is reached.

Projected Subject Property PerformanceOccupied Room

Nights Fair Share Penetration Occupancy Rate

Year Ending12/2016 5,890 0.0% 52.1% 47.6%YTD 09/2017 40,964 0.2% 44316.2% 73.9%12/2017 61,000 0.2% 90.0% 82.3%12/2018 64,390 0.2% 95.0% 86.9%12/2019 68,460 0.2% 101.0% 92.4%

Source: Newmark Knight Frank Valuation & AdvisoryNote: Landauer Valuation & Advisory projections are presented in bold type.

AVERAGE DAILY RATE ANALYSIS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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AVERAGE DAILY RATE ANALYSIS

The average daily room rates and RevPAR for the market and subject property are projected on the basis of historical trends, management’s room rate strategy, rates at competitive properties, and the relative quality levels of the competitive hotels.

As presented earlier, the market's ADR was $163.04 and $173.16 in 2015 and 2016, respectively, reflecting a change of 6.2%.

For 2017, the competitive set's average rate is expected to increase slightly, consistent with management interviews and the most recent performance. Following 2017, moderate and inflationary growth is modeled to reflect a return to more normalized demand levels.

To estimate an appropriate average daily rate penetration rate for the subject property, we have considered the historic average daily rates of the subject property and the properties in the defined competitive supply. The following table summarizes historical average daily rates and penetration, as available, for the properties in the defined competitive set.


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Competitive Supply - ADR Performance

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34 7,095 4,750 63,745 13,274 88,898

Year Opened 2016 2000 2000 2000 2000

ADR

Year Ending

12/2012 N/A N/A N/A $143.56 $70.91 $142.92

12/2013 N/A N/A N/A $146.22 $70.08 $145.62

12/2014 N/A N/A $274.00 $156.74 $76.38 $155.27

12/2015 N/A N/A $285.00 $163.33 $88.09 $163.04

12/2016 $75.34 $242.00 $296.00 $171.60 $95.62 $173.16

YTD 09/2017 $78.16 N/A N/A N/A N/A $78.16

ADR Penetration

Year Ending

12/2012 -- N/A N/A 100.4% 49.6% 100.0%

12/2013 -- N/A N/A 100.4% 48.1% 100.0%

12/2014 -- N/A 176.5% 100.9% 49.2% 100.0%

12/2015 -- N/A 174.8% 100.2% 54.0% 100.0%

12/2016 43.5% 139.8% 170.9% 99.1% 55.2% 100.0%Note:






Historically, the subject property's ADR penetration rate was 44%, however this reflects just two months of operation at the end of 2016. The excellent condition of the subject property following its recent opening in November 2016 should help the property achieve higher penetration rates as it ramps up to its stabilized performance. Considering the relative age and condition of the subject property, and its type of product, the subject property’s ADR is reasonably expected to be most similar to, but above that of, the most proximate properties, and well below that of the Venetian and Palazzo and Wynn & Encore, due to their superior quality and array of amenities. We have estimated an ADR of approximately $90 in 2016 dollars for the subject property in 2017, its first full year of operation. However, to reflect the typical practice of discounting rates in the initial months of operation for a new property, we have applied a discount to the rate in its first years of operation. As the property builds in occupancy base, the rates should increase above inflation. We anticipate that the subject property will be able to maintain a penetration rate of approximately 52% over the projected holding period. The subject property’s projected calendar year ADR, in inflated dollars, is presented in the following table.


Page | 41

Historical and Projected Average Daily RateMarket and Subject Property

Market Subject Property

Rate of Rate of Premium or Adjusted Rate of Subject ADR

Period ADR Change ADR Change Discount Rate Change Penetration

2012 $142.92 0.0% N/A 0.0% N/A 0.0% #VALUE!

2013 $145.62 1.9% N/A #VALUE! N/A #VALUE! #VALUE!



2016 $173.16 6.2% $75.34 #VALUE! $75.34 #VALUE! 44%

2017 $178.35 3.0% $92.70 23.0% -10.0% $83.43 10.7% 47%

2018 $183.71 3.0% $95.48 3.0% -5.0% $90.71 8.7% 49%

2019 $189.22 3.0% $98.35 3.0% 0.0% $98.35 8.4% 52%

2020 $194.89 3.0% $101.30 3.0% 0.0% $101.30 3.0% 52%

2021 $200.74 3.0% $104.33 3.0% 0.0% $104.33 3.0% 52%


Note: The subject property opened November 2016. Landauer Valuation & Advisory projections are presented in bold type.

Conversion from Calendar Year to Fiscal Year Projections

The following table presents a conversion of the previously discussed calendar year projections to fiscal years matching those of the projected cash flows.

Calendar to Fiscal Year Conversion - As IsCalendar Year Fiscal Year Ending October 31st

Year

Available Room Nights

Occupied Room Nights

Occupancy Rate ADR

Available Room Nights

Occupied Room Nights

Occupancy Rate ADR Room Revenue

2016 12,383 5,890 47.6% 75.34$ 0 0 #DIV/0! #VALUE! -$ 2017 74,095 61,000 82.3% 83.43$ 0 0 0.0% 82.08$ -$ 2018 74,095 64,390 86.9% 90.71$ 74,095 63,823 86.1% 89.49$ 5,711,612$ 2019 74,095 68,460 92.4% 98.35$ 74,095 67,780 91.5% 97.07$ 6,579,309$ 2020 74,298 68,460 92.1% 101.30$ 74,298 68,460 92.1% 100.80$ 6,901,046$ 2021 74,095 68,460 92.4% 104.33$ 74,095 68,460 92.4% 103.83$ 7,107,983$ 2022 74,095 68,460 92.4% 107.46$ 74,095 68,460 92.4% 106.94$ 7,321,222$


Note: Landauer Valuation & Advisory Service's projections are presented in bold type.

In this case, we estimate that the property's occupancy and ADR will each reach a stabilized level in the third year of the projection period, and maintain that level, on average, over the projection period, with occupancy remaining at that level and average daily rate increasing at the rate of inflation. This level of occupancy appears reasonable, considering the subject property’s location, condition, name recognition, product positioning, and market orientation, following the recent opening. In valuing the subject property using the sales comparison approach and direct capitalization approach, we use the projected performance, as if stabilized in the first year (FY2018). For that purpose, we have discounted the future ADR at the underlying rate of inflation (3%), resulting in a Year 1 ADR, as if stabilized, of $95.01.

THE PROPERTY LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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THE PROPERTY

SITE DESCRIPTION

The following table briefly describes the subject property’s site characteristics.

Land SummaryNumber of Parcels 1

Parcel ID 162-04-816-001

Land Area

Acres 2.51

SF 109,336

Legal Description Please refer to the Addenda section of this report.

Shape Irregular

Topo Generally level and equal to street grade

Accessibility Excellent from both fronting streets

Visibility Excellent from both fronting streets

Frontage

W. Sahara Avenue 339 feet

W. Cincinnati Avenue 372 feet

Adjacent Land Uses

North W. Cincinnati Avenue; vacant land beyond

South W. Sahara Avenue; Las Vegas Festival Grounds beyond

East Allure residential condominium high-rise; Fairfield Avenue beyond

West Multi-family apartment complex; vacant land beyond

Utilities

Electric Nevada Power Company

Water Las Vegas Valley Water District

Sewer City of Las Vegas Sanitation

Natural Gas: Southwest Gas Company

Telephone: Several Providers

Source: Property developers; tax records; various government sources; visual inspection


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Land Summary (cont')Soil Conditions We were not provided with a recent soil conditions report. The appraisers

are not experts on soil conditions; however, soil conditions are assumed to be adequate to support the development.In the event significant adverse soil conditions are discovered from any future study, Newmark Knight Frank Valuation & Advisory’s indicated market value estimate could require adjustment relative to any costs associated with such.

Seismic Zone / Flood Zone The entirety of the site is located in a Seismic Site Class C. All properties in Clark County could suffer damage from ground movement during seismic activity. If the client has further geotechnical concerns regarding the subject property, we recommend an assessment by a qualified engineer. The entirety of the site is located in Zone X, determined to be areas of minimal flooding (outside of the designated flood hazard areas). This is indicated by Flood Insurance Rate Map Number 32003C2170F (November 16, 2011), by the Federal Emergency Management Agency (FEMA).

Environmental We were not provided with an environmental site assessment. Based on our visual inspection and interview of property management, there are no apparent environmental issues regarding the site. In the event significant environmental expenditures are required based on findings from any future study, Newmark Knight Frank Valuation & Advisory’s indicated market value estimate could require adjustment relative to these costs.

Easements/Encumbrances The property is subject to typical easements for utilities and access. We are aware of no atypical easements that would adversely affect the site’s development to its highest and best use.

Zoning

Jurisdiction City of Las Vegas

Classification C-2 (General Commercial District)

Comments The subject site is located on the north side of W. Sahara Avenue just west of S. Las Vegas Boulevard, in the northern sector of the Las Vegas Strip, within the City of Las Vegas, NV. The site also backs up to the south border of W. Cincinnati Avenue. The site lies across the street from the Las Vegas Festival Grounds, and just 0.5 mile east of the I-15/W. Sahara Avenue interchange. The site lies approximately 2 miles southeast of the downtown sector of Las Vegas, and approximately 4.5 miles north of the McCarron International Airport.

Source: Property management; FEMA flood maps; local municipalities


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IMPROVEMENT DESCRIPTION

The following discussion presents physical, functional, and operational characteristics of the subject property.

Physical Characteristics

The following table highlights pertinent information regarding the subject property.

Building Summary - Overview

As Is

Date of Construction 2016

Date Opened November-16

Actual Age (years) 1

Effective Age (years) 1

Total Economic Life (years) 55

Remaining Economic Life (years) 54

Number of Stories Casino-2; Hotel-9; Garage-6

Gross Building Area (SF) 222,548

Guest Rooms Standard Accessible

King Room 72 0

Double/Double Room 116

Suite 15 0

Total Guest Rooms 203 0Property Amenities

Food and Beverage Outlets

Pearl Ocean 150

Bao Now 43

Phoenix 58

Dragon's Alley 280Cha Garden

Center Bar

VIP Bar

Meeting Space (SF) None

Parking Spaces

Comments

Source: Property owner/developer; Building Plans

The subject building improvements consist of a 2-story casino building and a 9-story, interior-corridor hotel tower containing 203 guest rooms. Associated site improvements include a 6-level parking garage, exterior signage, and landscaping.

408 total parking spaces within the on-site parking garage, including adequate handicap parking.

Property amenities include a lobby with front desk and sitting area, multiple food and beverage outlets, casino space (27,500 SF), retail area, business center, fitness center, full spa, outdoor swimming pool and hot tub, guest pantry, guest laundry, and wireless high-speed internet.


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The following table summarizes the general construction characteristics of the improvements. We have estimated certain items below including construction materials, based on our knowledge of other prototypical construction.

Building Summary - General Construction

Property Type Full-service hotel & casino

Guest Room Corridors Interior-corridor

Foundation Reinforced concrete footings and slab foundation

Structure/Exterior Walls Steel and glass façade over steel and metal frame construction

Roof Built-up, flat standing seam flat roof with a rubber membrane

Electrical Assumed to comply with City building codes

Plumbing Assumed to comply with City building codes

Windows Anodized aluminum with fixed insulated glazing

Exterior Doors Lobby entry doors are automatic bi-parting doors with anodized aluminum frame and single glazing. Guest room entry doors are solid core wood, set in painted metal frames, with electronic locks

Vertical Transport Three 3,500 lb. capacity guest elevator serving all floors of the hotel and one service elevator, serving all floors

Life Safety Systems The common areas and guest rooms are fully sprinklered, with hard-wired smoke and fire detection system

Ceilings

Common Areas Textured painted drywall or suspended acoustical tile.

Guest Rooms Painted texture over drywall

Floors

Common Areas The lobby and common areas have a combination of marble, stone or ceramic tile and carpet flooring

Guest Rooms Commercial grade carpet in living areas and stone or ceramic tile in entry way and bathrooms

Interior walls

Common Areas Combination of textured and painted drywall and some wallpaper

Guest Rooms Combination of textured and painted drywall and some wallpaperHVAC

Common Areas Zoned forced airGuest Rooms Individual through-wall units including wall thermostats with energy efficient control

systemGuest Room furnishings

Typical Typical guest room furnishings include one king or two queen beds, one or two bedside tables, one dresser, flat screen televisions, desk and chair, small table and chairs or one stuffed chair, high-speed wired or wireless internet, AM/FM radio/alarm clock, coffeemaker, iron and ironing board, hairdryer, and mini-refrigerator/honor bar.

Guest Room Bathrooms Typical guest room baths feature granite vanity countertops, porcelain sinks, porcelain toilets, and stone and ceramic tile bathtub/shower enclosures or walk-in shower

Overall Condition Excellent

Source: Building Plans and Property management; Newmark Knight Frank Valuation & Advisory


Page | 46

Quality and Condition Survey

The existing hotel and casino improvements appear to be of excellent quality construction and in excellent physical condition. The subject improvements were reportedly constructed in 2015-2016 at an overall project cost of approximately $163,675,646. This cost includes a $22 million land allocation amount, $104.470 million in hard and soft costs, $8.615 million in non-leased FF&E, $11.822 million in pre-opening and operating costs, and $15.277 million in leased equipment. The property opened in November 2016. As the improvements represent recent construction, all interior and exterior finishes, and all FF&E, including soft and case goods, are in excellent condition, with no need for capital expenditures in the near future. Therefore, no amount will be deducted for capital expenditures in the following valuation sections. Only a replacement reserve will be recognized for future replacement of soft and case goods, as is typical for hotel and casino properties. No significant deferred maintenance was noted during our inspection. No alternate uses of the subject site are apparent for the near or long term.

We have assumed that the condition of the property will remain good throughout the projection period. Furthermore, we have assumed that a market-level reserve for replacement of capital items, including furniture, fixtures and equipment will be maintained.

Functional Characteristics

Overall, the hotel is considered to be adequately designed and functional for its use as a hotel and casino facility.

Operational Characteristics

Management

The subject hotel is currently self-managed by the owner, with no known contractual obligation to a third-party management company. If any such agreement exists, it is assumed that such would be cancelable upon sale of the property.

Affiliation

The subject hotel is not currently affiliated with a national franchise, but ownership and management indicate their intent to affiliate with Best Western in the near term. It is an assumption of this report that a prudent buyer would seek to obtain and retain an affiliation with a national franchise such as Best Western or similar franchise. As such, it will benefit from the national reservation system. For purposes of this analysis, we have assumed that the subject property will obtain and retain an affiliation with Best Western, or a similar franchise, throughout the anticipated holding period.

ZONING

The subject property is zoned C-2 (General Commercial District) by the City of Las Vegas. This zoning classification allows for a broad range of commercial development, including the existing subject hotel improvements.

REAL ESTATE TAXES

The subject property is located within the taxing authority of Clark County. Real property and personal property are taxed by various taxing authorities based on the assessments of the county. The assessed values are released in October of each assessment year. The assessed values are estimated as of an effective date of November of the assessment year, which occurs every year. The most recent reassessment year was 2016 with the next reassessment year scheduled for 2017. Properties are currently assessed at 35% of the determined "appraised value". Taxes are payable in four installments, the first and second in August and October of the year of the stated


Page | 47

tax assessment, and the third and fourth in January and March of the year following the stated tax assessment. For example, the fiscal year 2017-2018 taxes are payable in four installments in August 2017, October 2017, January 2018, and March 2018.

The most recent assessments of comparable properties located in the subject property’s competitive market area were considered in this analysis and they are presented in the following table on a per guest room basis.

2018 Real & Personal Property Tax Assessments Per Room - Subject & Comparable PropertiesProperty Identification

Property Name Subject PropertyCasino Royale Hotel

& Casino Palms Casino ResortHooters Casino

HotelNumber of Rooms 203 152 711 696 Gaming Space (Casino SF) 27,500 22,000 94,136 27,528Gaming Space per Room (SF) 135 145 132 40

Real PropertyValues

"Appraised" ValueLand $16,158 $104,501 $31,894 $23,180Building $140,757 $89,791 $67,935 $44,031

Total Appraised Value $156,915 $194,292 $99,829 $67,212Assessment Ratio 35% 35% 35% 35%"Assessed" Value $54,920 $68,002 $34,940 $23,524

Personal PropertyValues

"Appraised" Value $0 $48,891 $0 $7,065Assessment Ratio 35% 35% 35% 35%"Assessed" Value $0 $17,112 $0 $2,473

TotalValues

Total Appraised Value $156,915 $243,183 $99,829 $74,277Assessment Ratio 35% 35% 35% 35%Total "Assessed Value" $54,920 $85,114 $34,940 $25,997

Source: Clark County Assessor's Office

The existing subject property has a real property assessment within the range indicated by the most comparable properties, which is considered reasonable, considering its current age, quality and condition, and location. The subject property opened in late-2016, and according to the Clark County Assessor's Office, has no personal property assessment yet. Considering the quality and condition of the subject personal property, compared to these properties, an estimated value just above the range of that indicated by the comparable properties is deemed reasonable.

The following table presents recent historical assessments and resulting taxes for the subject property, as well as our projections. In addition to the ad valorem taxes (estimated by multiplying the assessed value by the appropriate tax rate), a property can be subject to non-ad valorem taxes. In this case, there are no known non-ad valorem taxes.


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Real Property and Personal Property Tax Projections - Subject PropertyFiscal Year (ending June) 2017 2018 2019 2020 2021 2022 2023

Real PropertyValues

"Appraised" ValueLand $1,093,360 $3,280,080 $3,365,362 $3,452,861 $3,542,636 $3,634,744 $3,729,248Building $28,348,574 $28,573,697 $29,316,613 $30,078,845 $30,860,895 $31,663,278 $32,486,524

Total Appraised Value $29,441,934 $31,853,777 $32,681,975 $33,531,707 $34,403,531 $35,298,023 $36,215,771Assessment Ratio 35% 35% 35% 35% 35% 35% 35%"Assessed" Value $10,304,677 $11,148,822 $11,438,691 $11,736,097 $12,041,236 $12,354,308 $12,675,520Annual Change N/A 8.2% 2.6% 2.6% 2.6% 2.6% 2.6%

TaxesTotal Tax Amount $337,808 $356,582 $374,983 $384,733 $394,736 $404,999 $415,529Annual Change N/A 5.6% 5.2% 2.6% 2.6% 2.6% 2.6%Effective Tax rate $0.03278 $0.03278 $0.03278 $0.03278 $0.03278 $0.03278 $0.03278Annual Change N/A N/A 0.0% 0.0% 0.0% 0.0% 0.0%

Personal PropertyValues

"Appraised" Value $0 $0 $10,768,135 $11,048,107 $11,335,357 $11,630,077 $11,932,459Assessment Ratio 35% 35% 35% 35% 35% 35% 35%Assessed Value $0 $0 $3,768,847 $3,866,837 $3,967,375 $4,070,527 $4,176,360Annual Change N/A N/A N/A 2.6% 2.6% 2.6% 2.6%"Taxable" Value $0 $0 $0 $0 $0 $0 $0

TaxesTotal Tax Amount $0 $0 $123,543 $126,755 $130,051 $133,432 $136,901Annual Change N/A N/A N/A 2.6% 2.6% 2.6% 2.6%Effective Tax rate $0.03278 $0.03278 $0.03278 $0.03278 $0.03278 $0.03278 $0.03278Annual Change N/A N/A 0.0% 0.0% 0.0% 0.0% 0.0%

TotalValues

"Appraised" Value $29,441,934 $31,853,777 $43,450,110 $44,579,813 $45,738,888 $46,928,099 $48,148,230Assessment Ratio 35% 35% 35% 35% 35% 35% 35%Assessed Value $10,304,677 $11,148,822 $15,207,539 $15,602,935 $16,008,611 $16,424,835 $16,851,881Annual Change N/A N/A 36.4% 2.6% 2.6% 2.6% 2.6%

TaxesTotal Ad-Valorem Tax Amount $337,808 $356,582 $498,526 $511,488 $524,786 $538,431 $552,430Annual Change N/A N/A 39.8% 2.6% 2.6% 2.6% 2.6%Effective Tax rate $0.03278 $0.03198 $0.03278 $0.03278 $0.03278 $0.03278 $0.03278

Annual Change N/A N/A 2.5% 0.0% 0.0% 0.0% 0.0%

Note: Newmark Knight Frank Valuation & Advisory projections/estimates are presented in bold type

Source: Clark County Assessor's Office

We have utilized the subject property's 2018 real property tax assessments inflated at the 2.6% capped rate of inflation set by the county for purposes of our cash flow projections. For the personal property taxes, it is noted that no personal property tax assessments were reported by the Clark County Assessor's Office. To estimate a reasonable personal property tax expense for the subject property, we assumed an approximate tax assessor's “appraised value” of $50,000 per room in 2017 dollars, which is just above the range presented by the comparables. We have modelled this personal property assessment to begin in fiscal year 2019, as the fiscal year 2018 personal property assessments have already been released and the subject property is currently assessed at $0. We have utilized the 2017 tax rate in all years, utilizing the modeled increases in assessed value rather than increases in the tax rate to mirror typical practice.

HIGHEST AND BEST USE ANALYSIS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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HIGHEST AND BEST USE ANALYSIS

Highest and best use is defined (The Appraisal Institute, The Appraisal of Real Estate, 13th Ed, (Chicago: The Appraisal Institute, 2008), p. 278) as follows:

The reasonably probable and legal use of vacant land or an improved property that is legally permissible, physically possible, appropriately supported, financially feasible, and that results in the highest value.

It is that reasonable and probable use that supports the highest present value, as defined, as of the effective date of the appraisal. The appraiser considers from the various reasonably probable and legal alternative uses which are physically possible, appropriately supported, and financially feasible that which results in the highest land value or the highest value of the property as improved. The estimated market value of the property is based upon the highest and best use. Implied within this definition is the recognition of the contribution that a specific use may make to the community environment or the community development, such as a park, school or other public uses, in addition to wealth maximization of individual property owners. It must be legal and probable, not speculative or conjectural. Effective demand for the use must exist and it must yield the highest net return to the land for the longest time period.

To estimate the highest and best use, four factors are considered:

1) The use must be physically possible.

2) The use must be legally permissible.

3) The use must be financially feasible.

4) The use must produce the highest return to the property, i.e. maximally productive.

The highest and best use of the site, if vacant and available for use, may be different from the highest and best use of the property as improved. For example, this might be true when the improvement is not an appropriate use, but it continues to make a contribution to the overall value of the property in excess of the value of the site, less the cost of demolition.

HIGHEST AND BEST USE - ASSUMING A VACANT SITE

PHYSICALLY POSSIBLE USE

The first constraint on the possible use of the property is dictated by the physical aspects of the site. The physical characteristics of the site, its location and zoning and the utilities available are the most important determinants of value.

The physical attributes of the property and its neighborhood are described in detail in previous sections of this report. Given the site's size and locational attributes, a variety of uses are physically possible on the site, including a wide variety of commercial development.

PERMISSIBLE USE

The legal restrictions that may apply to the subject are private restrictions and the public restrictions of zoning. The current zoning of the subject was discussed previously. The subject site is zoned C-2 (General Commercial District)

HIGHEST AND BEST USE ANALYSIS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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by the City of Las Vegas. The existing subject hotel and casino improvements are in accordance with the aforementioned zoning. No known private restrictions affect the property title, but Newmark Knight Frank Valuation & Advisory has not made a title search. The other restrictions that exist are utility easements that do not adversely affect the development of the subject property.

FEASIBLE USE

Financial feasibility is concerned with the ability of any improvement to produce a sufficient return to attract development capital. Based on the subject site’s location, including good accessibility and visibility, medium- to high-density commercial development would be feasible at this time, including retail, office, lodging, casino, and service-oriented uses. Multi-family residential would also be a feasible use for the site. Further, there are numerous other lodging/casino facilities in the immediate vicinity of the subject property. This report supports that income levels are at levels that are adequate to justify hotel/casino development. Hotel/casino use is deemed the most productive use of the site, as conditions are expected to be positive in the long term.

MAXIMALLY PRODUCTIVE: HIGHEST AND BEST USE, AS IF VACANT

Several factors must be analyzed to determine which feasible use is the highest and best use. Given the current zoning of the subject site, as well as the character of the surrounding development, some form of hotel/casino development appears to be the appropriate use. Assuming the subject were vacant and available for use today, it is our opinion that the highest and best use would be for some type of hotel/casino development. Some other forms of commercial use, such as retail, office, or service-oriented building development, may also be appropriate, as well as multi-family residential. The subject location fronting W. Sahara Avenue just west of Las Vegas Boulevard, and just east of an I-15 likely excludes single-family residential development as a feasible use for the subject site. However, multi-family use is considered an alternative use as a residential condominium tower (Allure) lies east and adjacent to the subject.

HIGHEST AND BEST USE – “AS IMPROVED”

The subject property consists of a 2.51-acre site that is improved with a 2-story casino building and a 9-story, interior-corridor hotel tower featuring 203 total guest rooms. Property amenities include a lobby with front desk and sitting area, multiple food and beverage outlets, casino space (27,500 SF), retail area, business center, fitness center, full spa, outdoor swimming pool and hot tub, guest pantry, guest laundry, and wireless high-speed internet. As concluded above, the estimated highest and best use of the subject, as vacant, is consistent with the existing improvement type. Taking all of the foregoing into consideration, it is our opinion that the present use generates a significant return to the land, and therefore represents a form of the highest and best use of the site as improved.

VALUATION METHODOLOGY LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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VALUATION METHODOLOGY

APPROACHES TO VALUE

The Cost Approach, as defined by The Appraisal of Real Estate, 13th Edition, is based on a comparison between the cost to develop a property and the value of the existing property, or the idea of substitution. The improvements’ replacement cost is estimated and a deduction is made for accrued depreciation. The concluded land value is added to reach an indication of value by the Cost Approach.

The Sales Comparison Approach is based on the principle of substitution. To quote The Appraisal of Real Estate, 13th Edition, a major premise of the sales comparison approach is that the market value of a property is directly related to the prices of comparable, competitive properties. The sales prices of the comparable properties are usually on a per unit basis (e.g., such as the price per room for hotels) or a comparison is made based on income levels.

The Income Capitalization Approach is predicated on the assumption that there is a direct relationship between the quantity, quality, and durability of cash flow a property may generate and its value. The anticipated annual cash flow of the subject is processed to produce an indication of value. For the present analysis, direct capitalization and yield capitalization procedures are used. In direct capitalization, prospective stabilized cash flow is divided by a capitalization rate to provide an indication of market value. In the yield capitalization, or discounted cash flow technique, the annual cash flow and sale proceeds over a typical holding period are converted into a value estimate using current market-derived yield rates.

A final step in the appraisal is the reconciliation of the value indications. In the reconciliation, the appraiser considers the relative applicability of each of the three approaches used, examines the range between the value indications, and places major emphasis on the approach that appears to produce the most reliable solution to the specific appraisal problem. The purpose of the appraisal, the type of property, and the adequacy and reliability of the data are analyzed; these considerations influence the weight given to each of the approaches to value.

All three traditional approaches to value, Income, Sales Comparison, and Cost, were considered in preparing this appraisal. Our analysis considered and dismissed the Cost Approach, for the following reason(s). The “classic” Cost Approach is not typically employed by sophisticated real estate investors when pricing properties of this type, which are typically purchased for their income potential. As such, we have not included a Cost Approach in this instance to further support our estimate of value. Such a determination is deemed reflective of market participant actions and does not adversely influence the findings of this report. We have, however, utilized the Cost Approach to determine the Insurable Replacement Cost only, at the request of the client.

COST APPROACH (INSURABLE REPLACEMENT COST ONLY) LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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COST APPROACH (INSURABLE REPLACEMENT COST ONLY)

IMPROVEMENT COST ANALYSIS

Comparison of the current price with the replacement cost of the asset is an important part of many investors' purchase decisions. The principle of substitution affirms that no prudent buyer would pay more for a property than the cost to replace it with another property of equal desirability and utility without undue delay. The Cost Analysis provides the basis for this comparison.

REPLACEMENT COST NEW

The Replacement Cost New was estimated using construction cost information provided by the owner/developer, as well as information published in the Marshall and Swift handbook. The basic cost figures for the hotel structure were taken from Section 11, Page 25 of the Marshall Valuation Service for full-service hotels; Class A. The basic cost figures for the casino structure were taken from Section 16, Page 17 of the Marshall Valuation Service for casinos; Class C. The basic cost figures for the parking garage structure were taken from Section 14, Page 34 of the Marshall Valuation Service for parking structures; Class A. Site improvements were taken from Section 66. Current cost (October 2017) and local multipliers (Las Vegas, NV) were taken from Section 99. The direct and indirect cost estimates include materials, labor, normal interest on building funds and processing fees during the period of construction, sales tax on materials, utilities from structure to lot line, professional fees, contractor's overhead and profit including job supervision, workmen's compensation, fire and liability insurance, unemployment insurance, etc. In this instance, the construction cost breakdown provided by the developer is significantly higher than the upper end of the range provided in Marshall Valuation Service. The total cost provided by the developer includes hard costs, soft costs, FF&E, and pre-opening and working capital, and amounts to approximately $124,907,000. A copy of the construction cost breakdown is included in the Addenda section of this report. Our estimate of replacement costs for the subject's type and quality building is weighted more heavily towards the developer's provided costs, but we have also considered information contained in Marshall Valuation Service.

Site Improvements

These costs include those for sidewalks, landscaping, outdoor lighting and any other improvements that are not included in the building costs.


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Cost Approach SummaryBuilding Replacement Cost New (RCN)

Building Hotel Tower Casino Building Parking Garage x Totals

Cost/SF of Building Area $300.00 $300.00 $75.00 $ 1

Cost/Parking Space

MVS Class Class A Class C Class A

MVS Type Excellent Excellent Excellent

Sprinklers $2.50 $0.00 $0.00

Total Base Cost/Unit $302.50 $300.00 $75.00 $ 1

Cost Multipliers

local multiplier 1.130 1.130 1.130

current cost multiplier 1.011 1.011 1.051

area multiplier 1.000 1.000 1.000

number of stories multiplier 1.030 1.000 1.015

indirect costs 1.070 1.070 1.070

Adjusted cost/unit $380.87 $366.72 $95.31 -$

Building square footage 125,185 97,363 138,349

Total RCN $47,679,125 $35,704,962 $13,185,671 -$ $96,569,758

Site Improvements

Paving / Landscaping

Pool, Hot tub, and Decking Signage Lighting

Site Size (SF) 109,336

Building foot prints (SF) (70,143)

Area applicable (SF) 39,193 5,000

MVS improvements cost ($/SF) $10.00 $50.00

Total $391,926 $250,000 $500,000 $100,000 $1,241,926

Preopening and Working Capital

Per room $58,000

Guest Rooms 203

Total $11,774,000 $11,774,000

FF&E Replacement Cost New (RCN)

RCN per unit $43,000 (All non-leased for hotel & casino)

Number of rooms 203

RCN $8,729,000

$8,729,000

Total RCN of Improvements (before Entrepreneurial Profit) $118,314,684

Source: Marshall Valuation Service; Newmark Knight Frank Valuation & Advisory

INSURABLE VALUE

Insurable Value is based on the replacement and/or reproduction cost of physical items that are subject to loss from hazards. The Dictionary of Real Estate Appraisal, 5th Edition defines Insurable Value as…

1. “The value of an asset or asset group that is covered by an insurance policy; can be estimated by deducting costs of non-insurable items (e.g., land value) from market value acknowledged or recognized under the provisions of an applicable loss insurance policy.”

2. Value used by insurance companies as the basis for insurance. Often considered to be replacement


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or reproduction cost plus allowances for debris removal or demolition less deterioration and non-insurable items. Sometimes cash value or market value, but often entirely a cost concept.

We have calculated Insurable Value to be Replacement Cost New of the building improvements, less insurance exclusions. Our estimate of Insurable Value does not include land value, entrepreneurial profit, depreciation, site improvements, and/or the costs to demolish damaged structures. We further note that we were not provided with, nor have we reviewed a policy associated with the subject improvements. Given the variance in insurable value calculation methodologies, reliance in our estimate should only be made when the estimates made herein are consistent with the in-place policy.

As real estate appraisers, we are not professionally qualified to render an estimate of Insurable Replacement Costs pertaining to the real estate we analyze for valuation purposes. As such, this document should be relied upon only as an estimate of replacement cost. For questions concerning insurable value, which is often a negotiated amount, we recommend the services of a reputable insurance company representative. We assume no responsibility for any costs or consequences arising from the reliance of the provided information for insurance purposes.

The purpose of the following analysis is to estimate the current insurable value of the subject property. The basis for this estimation is the current replacement cost new of the subject property. From this estimate (which excludes land value), developer’s profit is deducted in order to estimate the insurable value.

Insurable ValueLucky Dragon Hotel & CasinoReal Property (Structures)

Replacement Cost New, before Entrepreneurial Profit, Excluding Land Value $109,585,684

Less Exclusions

Excavation, Site Work ($39,193)

Paving / Landscaping ($391,926)

Pool, Hot tub, and Decking ($250,000)

Signage ($500,000)

Lighting ($100,000)

Foundation ($280,572)

Total Exclusions ($1,561,691)

Total Insurable Value $108,023,993

Personal Property (FF&E)

Replacement Cost New, before Entrepreneurial Profit $8,729,000

Total Insurable Value $116,752,993

(rounded) $116,800,000Source: Newmark Knight Frank Valuation & Advisory

SALES COMPARISON APPROACH LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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SALES COMPARISON APPROACH

The Sales Comparison Approach to value is based on the principal of substitution. That is, when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, assuming no costly delay occurs in making the substitution. Traditional appraisal techniques for estimating value by means of substitution involve the collection and analysis of sale and listing data on properties that have as many characteristics as possible similar to those of the property being evaluated. The validity of findings by this approach depends on the quantity and quality of available data and the appraiser's experience and judgment.

Because no two properties are ever truly identical, particularly income-producing properties, the prices of market indicators must be adjusted to reflect the value of the property being appraised. Typically, adjustments reflect significant differences for such factors as the terms of the sale, market conditions changes, age and condition of the property, location, and quality.

Properties such as the subject property are clearly classified as income producing real estate. As such, their value is generally established by the net income that they can be expected to generate. In this case, the Sales Comparison Approach will serve as a secondary indicator of value and it should measure and discuss the reasonableness of the value estimate as indicated by the Income Approach, as supported by the best comparable sales data available. Ideally, the sales data utilized in the analysis should come from the same area as the property being appraised. Characteristics such as differing room rate structures, occupancy levels, expense amounts, and levels of supply and demand for existing and new facilities can materially skew the indicated sales price and warrant sizable adjustments. As such, hotel comparisons may be required beyond the immediate area due to the relative homogeneity of product type within the universe of hotel projects and, moreover, the income and cash flow objective behind most casino and hotel transactions.

Gaming properties are usually acquired on the basis of their income (EBITDA) and a multiple of EBITDA rather than physical units of comparison. Market participants do not, for example, purchase gaming properties based on a price per room, per square foot of gaming area, or win per position. While these various points may be considered, the unique nature of both the physical and economical attributes in gaming properties yields no consistency among the sales data. Because of these disparities, the best information obtained from the transaction data is the EBITDA multiples.

The Sales Comparison has limited use to derive a single point estimate of value for several reasons. Casinos are typically purchased by owner/operators who tend to hold the property for extended periods of time. As a result, casinos typically change hands infrequently and when they do transfer, owners are often under duress. The casino industry is rather new throughout most of the country and has relatively few arms-length transactions. Many of the sales have occurred as a result of bankruptcy. Sales data for gaming facilities often represent transfer of a minority or limited-partnership interest instead of a sale of the entire facility as a going concern. Many casinos sell as part of a corporate acquisition and the allocation of the sale price of the going concern of an individual casino are often difficult to reliably determine. Finally, transactions also have taken place that occurs as a result of transfer from debt to equity or public to private entities.

MARKET DATA

Newmark Knight Frank Valuation & Advisory collected information on sales of hotels with similar qualities to the subject property. These sales are summarized on the following page, showing Las Vegas sales above $50 million. Throughout time, these acquisitions have generally led to greater consolidation. The consolidation phenomenon has been, at least in part, spurred by larger players looking to gain economies of scale, so that they can leverage that scale to increase the earnings of the acquired properties.


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Las Vegas Casino Sales over $50 Million

Hotel Name

Date of Sale Buyer (Grantee) Sale Price RO

EBITDAx (trailing)

EBITDAx (forward looking)

Rio Hotel & Casino 1999 Harrah's Entertainment, Inc. $888,000,000 10.4% 9.6 N/A

Desert Inn (currently Wynn Resort) 2000 Steve Wynn $270,000,000 N/A NA NA

Las Vegas Hilton (currently the LHV-Las Vegas Hotel & Casino)

2004 Colony Capital, LLC $280,000,000 4.3% NA NA

Mandalay Resort Group 2004 MGM MIRAGE $7,900,000,000 N/A 10.9 NA

Caesars Entertainment 2004 Harrah's Entertainment $9,440,000,000 N/A 8.6 NA

Aladdin Casino LV 2004 Opbiz LLC $653,000,000 N/A 12.4 NA

Imperial Palace LV 2005 Harrah's Entertainment $370,000,000 N/A NA NA

Hard Rock Las Vegas 2006 Morgans Hotels $770,000,000 N/A 19.3 NA

Harrah's Entertainment 2007 Apollo Management $27,725,000,000 N/A 11.3 NA

Stratosphere LV, AZ Charlies Boulder, AZ Charlies Decatu

2007 Whitehall Street Real Estate $1,200,000,000 N/A 13.9 NA

New Frontier 2007 Elad Group $1,240,000,000 N/A NA NA

Treasure Island Hotel & Casino 2009 Ruffin Cos $775,000,000 14.3% 7.0 N/A

Planet Hollywood Resort & Casino 2010 Harrah's Entertainment, Inc. $624,340,000 N/A N/A N/A

M Resort 2011 Penn National Gaming, Inc. $230,500,000 N/A NA NA

Westgate Las Vegas Resort & Casino 2014 Westgate Resorts OBO Central Florida Investments Inc

$160,000,000 N/A N/A N/A

The Cosmopolitan 2015 Blackstone Real Estate Partners VII

$1,700,000,000 6.8% 14.8 8.3

Hooters Hotel & Casino 2015 HILV Fee LLC $53,800,000 N/A N/A N/A

Hooters Casino Hotel 2015 Trinity Hotel Investors $53,800,000 N/A N/A N/A

Aliante Casino Hotel and Spa 2016 Boyd Gaming Corporation $380,000,000 10.5% N/A 9.5

Cannery Casino Hote and Eastside Cannery Casino and Hotel

2016 Boyd Gaming Corporation $230,000,000 13.9% N/A 7.2

1) Stratosphere Casino, Hotel & Tower (Las Vegas), 2-3) Arizona Charlie’s Casinos (Las Vegas), and 4) Aquarius Casino Resort (Laughlin, NM)

2017 Golden Entertainment Inc. $822,000,000 14.7% 8.0 6.8

Palms Casino Resort 2016 Red Rock Resorts $312,500,000 11.2% 8.9 N/A

Partially Completed Fontainebleau Las Vegas Hotel/Casino

2017 The Witkoff Group $600,000,000 N/A N/A N/A

Averages 10.8% 11.3 8.0


It is important to point out that each transaction had its own unique set of circumstances. Some transactions involved the sale of companies with casinos in various jurisdictions, some included casinos under development, some involved single assets, some were purchased as turnaround opportunities, and some were purchased for their


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land value. With all of these varied circumstances, it is difficult to derive blanket valuation metrics for every casino or gaming entity on the Strip.

ECONOMIC UNITS OF COMPARISON – EBITDA MULTIPLIER

The principal advantage of an economic unit of comparison is that the reflection of income is direct. Therefore, differences between properties that could involve adjustments, based on judgment estimates, have been resolved by the free action of the rental market. If the comparable properties have some advantage over the subject property in age, condition, accessibility, location or physical characteristics, the difference in actual income presumably reflects the extent of this advantage. However, poor property management prior to the date of improved sale or large differences in expense ratios or potential appreciation may obscure this relationship.

The most relevant information from historical transactions is the EBITDA multiplier. The compiled transaction data indicate EBITDA multiples before any consideration of capital expenditure reserves. Confidentiality issues and/or incomplete data mean that we are unable to adjust EBITDA to reflect post-reserves multipliers. For the purposes of this analysis, it is sufficient to understand that the post reserve EBITDA multiplier would be higher. This multiplier is typically applied to trailing twelve months of data or most recent trailing twelve months data as of the date of sale or announcement of sale. Some investors utilize a forward multiple on proforma Year 1 EBITDA and apply a discount factor to arrive at the terminal capitalization rate or “going out” cap rate. Finally, based upon discussions with major lenders, operators, asset managers and consultants, an average of the next five years EBITDA is also utilized when applying a forward multiple. Most market based quotes report transactions on the trailing EBITDA approach for established properties and on forward looking projections for new or turnaround properties.

As can be seen in the transaction data, the transactions show a wide range of actual trailing and forward-looking multiples. It must also be noted that a large portion of these sales do not have a multiple or are skewed due to the transaction including property(s) being taken from public to private or a transfer of debt to equity interest. In addition, some sales include multiple property portfolios that do not typically represent single property transaction pricing.

Based upon discussions with market participants, the Subject would most likely trade at a higher EBITDA multiple than the historical Las Vegas average of 11.3x and the forward-looking average of 8.0x, in large part in reflecting the improving economy and outlook for increased performance levels at this time, as well as the excellent condition of the subject property and significant upside as it approaches stabilized performance levels.

In our selection of the appropriate EBITDA multiple for the Subject, we considered the following factors:

The subject property is expected to penetrate both gaming and non-gaming revenue at least at its fair share.

The subject property offers an appropriate and market-leading amenities package for the market.

The subject property is in excellent condition.

There is an abundance of competition in the immediate area, but there is very little (or no) new supply expected in the near future. New supply continues to be absorbed quickly in the market.

Barring any economic shocks, the overall market is expected to continue a gradual increase over the next few years.

The concluded values are shown in the following table.


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Sales Comparison ApproachEBITDA Multiplier Analysis, Market Value - As IsAs Stabilized (AS IF Stabilized, Year 1)

Date of Value October 11, 2017

Year 1 EBITDA (As Stabilized) $14,889,000

EBITDA Multiplier 9.5

Value Before Adjustments $141,445,500

Market Value - As Is $141,445,500

$141,400,000


Sales Comparison ApproachEBITDA Multiplier Analysis, Prospective Market Value - Upon StabilizationProspective Market Value - Upon Stabilization


EBITDA (Prospective Stabilized Year) $15,780,000

EBITDA Multiplier 9.5

Prospective Market Value - Upon Stabilization $157,800,000

$157,800,000


CONCLUSION

The preceding analysis provides a comparison of the subject to properties deemed to have similar competitive attributes that appeal to similar investor profiles. After considering a comparison of net revenues (EBITDA), we have estimated the value of the subject.

Sales Comparison ApproachConclusion of Value


Upon Stabilization


Reconciled Conclusion $141,400,000 $157,800,000


INCOME APPROACH LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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INCOME APPROACH

INTRODUCTION

The following analysis presents the methodology used to value the subject property via the income approach to value. We have considered the two most commonly accepted valuation methods, using both a discounted cash flow analysis and a direct capitalization analysis.

The following pages present a discussion of the bases for the revenue and expense projections. Income and expense comparisons and estimates are made based upon an appropriate unit of measure, such as percent of revenue, amount per available room (PAR), or amount per occupied room (POR). Unless otherwise noted, all operating ratios are relative to total revenues with the following exceptions: 1) departmental expenses are presented as a percentage of the corresponding departmental revenues, and 2) franchise fees are presented as a percentage of room revenue.

All account classifications used in this report generally conform to the definitions prescribed in the American Hotel and Motel Association in the Uniform System of Accounts for Hotels (USAH). Some reorganization of the subject’s operating statements was necessitated. Detailed statements were provided and adjusted as necessary.

PROSPECTIVE FINANCIAL PERFORMANCE

Estimates of future operating results for the subject property have been prepared for the 11 fiscal years 2018 to 2028. In this case, the fiscal years begin November 1 and end the last day of October. The final year of this analysis is used to calculate the reversionary value in the discounted cash flow analysis.

Our projections utilize fiscal 2018 as the base year in the analysis, with emphasis placed upon the subject property's operating history as well as data from comparable properties and industry averages. Projections are made relative to the performance in that year. Changes in occupancy rates in prospective years will affect the resultant income and expense estimates, based on our fixed and variable analysis.

Historical Income and Expense Data

Data from the following sources has been used as the basis for the income and expense assumptions in our financial projection for the subject property.

The provided historical operating performance for the subject property.

Information from several comparable properties including aggregated information compiled by the Nevada Gaming Control Board

The following pages contain summaries of the comparable financial information used as a frame of reference in formulating the assumptions for the subject property’s prospective revenues and expenses. At the request of the data sources, the identifications of the individual hotel comparables are not shown to protect the identity of this confidential material. Cash flows have been prepared on the basis of this revenue and expense review, and within the context of certain market-based assumptions about occupancy, average length of stay, and labor costs.


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Base Inflation Rate Estimate

Of the various indices, we are of the opinion that the following are the most relevant indicators of the basic inflation rate for the purpose of this report.

Consumer Price Index

Year West Urban United States

Year-end % Change % Change

1995 153.5 -- 152.4 --

1996 157.6 2.7% 156.9 2.9%

1997 161.4 2.4% 160.5 2.3%

1998 164.4 1.9% 163.0 1.6%

1999 168.9 2.7% 166.6 2.2%

2000 174.8 3.5% 172.2 3.4%

2001 181.2 3.6% 177.1 2.8%

2002 184.7 2.0% 179.9 1.6%

2003 188.6 2.1% 184.0 2.3%

2004 193.0 2.3% 188.9 2.7%

2005 198.9 3.1% 195.3 3.4%

2006 205.7 3.4% 201.6 3.2%

2007 212.2 3.2% 207.3 2.9%

2008 219.6 3.5% 215.3 3.8%

2009 218.8 -0.4% 214.5 -0.4%

2010 221.2 1.1% 218.1 1.6%

2011 227.5 2.8% 224.9 3.2%

2012 232.4 2.1% 229.6 2.1%

2013 235.8 1.5% 233.0 1.5%

2014 240.2 1.9% 236.7 1.6%

2015 243.0 1.2% 237.0 0.1%

2016 247.7 1.9% 240.0 1.3%Compound annual growth

1995 to 2016 2.3% 2.2%

2007 to 2016 1.7% 1.6%

2012 to 2016 2.4% 2.1%

2014 to 2016 1.5% 0.7%

YTD August

2016 246.8 239.3

2017 253.6 2.7% 244.3 2.1%

Note: Reflects most recent data available.

Source: US Department of Labor

Because of the cyclical nature of business cycles, we feel that the longer-term historical trends are most appropriate.

The United States’ CPI shows an annual compounded change of 2.2% from 1995 to 2016, 1.6% from 2007 to 2016, and 0.7% for 2014 to 2016.


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The South Urban’s CPI shows an annual compounded change of 2.1% from 1995 to 2016, 1.7% from 2007 to 2016, and 0.5% for 2014 to 2016.

RERC’s 2nd quarter 2017 survey indicated that investors in hotel properties anticipated revenue increases averaging 2.60% while expenses are expected to increase at an average rate of 2.90%.

PwC's 3rd quarter 2017 survey indicated that investors in limited-service midscale and economy hotel properties anticipated revenue increases averaging 2.30% while expenses are expected to increase at an average of 2.95%.

PwC's 3rd quarter 2017 survey indicated that investors in select-service hotel properties anticipated revenue increases averaging 2.80% while expenses are expected to increase at an average of 2.70%.

Based on this information, we have utilized an average inflation rate of 3.0% per annum over the 10-year period.

In the following presentation, all comparable property operating performance figures have been adjusted to reflect constant dollars (fiscal year 2018), using the indicated inflation rate. Likewise, all revenue and expense conclusions for the subject are stated in constant fiscal year 2018 dollars, unless otherwise stated.

The following page presents the subject property’s historical and budgeted operating performance, as available, in the table entitled “Subject Property – Historical Operating Performance.” This table presents detailed operating statistics for the subject property’s history and budget, as available. These figures are presented in the stated years’ inflated dollars.

Please refer to the following table entitled “Bases for Financial Projections” for a presentation of all income and expense estimates, as compared to the subject property’s history and budget and individual comparable properties’ data. Unless otherwise noted, we have given most weight to the historical and pro forma performance of the subject property, with some weight given to the individual comparable properties.


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Subject Property - Historical and Pro Forma Operating PerformanceForecast (actual through September) Pro Forma Pro Forma

Operating Year Ending Sep-17 Dec-18 Dec-22Occupancy Percentage 73.9% 85.0% 90.0%ADR $103.25 $91.76 $105.02RevPAR $76.32 $78.00 $94.52Number of Rooms 195 203 203Months of Operating Data 9 12 12Available Rooms (Daily) 201 203 203Available Rooms (Annual) 54,905 74,095 74,095Occupied Rooms (Annual) 40,584 62,981 66,686

Amount ($000s) % PAR POR



RevenuesCasino $26,653 69.5% $177,186 $656.74 $53,614 78.6% $264,111 $851.28 $63,834 77.7% $314,451 $957.23Rooms $4,190 10.9% $27,857 $103.25 $5,779 8.5% $28,470 $91.76 $7,003 8.5% $34,500 $105.02Food & Beverage (F&B) $6,471 16.9 43,021 159.46 $7,908 11.6 38,955 125.56 $9,415 11.5 46,378 141.18Spa $0 0.0 0 0.00 $0 0.0 0 0.00 $0 0.0 0 0.00MOD $1,055 2.7 7,010 25.98 $881 1.3 4,340 13.99 $1,910 2.3 9,410 28.64Other Operatring Dep. $0 0.0 0 0.00 $0 0.0 0 0.00 $0 0.0 0 0.00Rentals & Other Inc. (Net) $0 0.0 0 0.00 $0 0.0 0 0.00 $0 0.0 0 0.00

Total revenues $38,370 100.0 255,075 945.43 $68,183 100.0 335,876 1,082.60 $82,162 100.0 404,739 1,232.08Departmental expenses

Casino Department $33,486 125.6 222,611 825.11 $25,724 48.0 126,721 408.45 $28,250 44.3 139,165 423.64Rooms Department $3,956 94.4 26,299 97.48 $3,814 66.0 18,786 60.55 $4,313 61.6 21,245 64.67F&B Expense $8,997 139.0 59,811 221.69 $7,460 94.3 36,749 118.45 $7,748 82.3 38,167 116.19Spa $0 0.0 0 0.00 $0 0.0 0 0.00 $0 0.0 0 0.00MOD $36 3.4 241 0.89 $0 0.0 0 0.00 $0 0.0 0 0.00

Total departmental exp. $46,475 121.1 308,962 1,145.17 $36,998 54.3 182,256 587.45 $40,311 49.1 198,576 604.49Departmental profit ($8,106) -21.1 (53,887) (199.73) $31,185 45.7 153,620 495.15 $41,851 50.9 206,162 627.59Undist. operating exp.

A&G $6,580 17.1 43,745 162.14 $5,093 7.5 25,091 80.87 $6,371 7.8 31,387 95.55Total Undist. Op. Exp. $8,298 21.6 55,166 204.47 $6,710 9.8 33,055 106.54 $7,929 9.7 39,061 118.91Inc. before fixed charges ($16,404) -42.8 (109,054) (404.21) $24,475 35.9 120,565 388.61 $33,922 41.3 167,101 508.68Fixed charges

Management Fees $0 0.0 0 0.00 $0 0.0 0 0.00 $0 0.0 0 0.00Property Taxes $0 0.0 0 0.00 $0 0.0 0 0.00 $0 0.0 0 0.00Insurance $0 0.0 0 0.00 $0 0.0 0 0.00 $0 0.0 0 0.00

Replacement Reserve $0 0.0 0 0.00 $0 0.0 0 0.00 $0 0.0 0 0.00Total fixed charges 0 0.0 0 0.00 0 0.0 0 0.00 0 0.0 0 0.00NOI ($16,404) -42.8% ($81,566) ($404.21) $24,475 35.9% $120,565 $388.61 $33,922 41.3% $167,101 $508.68Sources: Property management.


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Bases for Financial Projections - Constant Dollars (Fiscal Year 2018, Ending October 31)

Individual Comparable PropertiesProperty History

Property Las Vegas Sands Corp (Venetian and

Palazzo)

Ceasars (8 in Las Vegas, 1 each in

Atlantic City, Laughlin, New Orleans, and

Baltimore)

Downtown Las Vegas With Gaming

Revenue of $12,000,000 and

Over (12 Locations)

Las Vegas Strip With Gaming Revenue of

$1,000,000 to $72,000,000 (22

Locations)

Las Vegas Strip With Gaming Revenue of

$72,000,000 and over (24 Locations)

Forecast (actual through

September)

Pro Forma Pro Forma Subject Property

Property Type CAS CAS CAS CAS CAS LS LS LS LS LS

General Location/Category W U.S. W W W Las Vegas,

NV Las Vegas,

NVLas Vegas,

NVLas Vegas,

NVLas Vegas,

NV

Operating Year Ending (1) Dec-16 Dec-16 Dec-16 Dec-16 Dec-16 Sep-17 Dec-18 Dec-22 Oct-18 Oct-20Occupancy 93.6% N/A 89.1% 84% 93% 73.9% 85.0% 90.0% 86.0% 92.0%Average Daily Room Rate $254.23 N/A $73.36 $100.94 $181.15 $106.61 $91.31 $92.85 $90.27 $95.01RevPAR $237.89 N/A $65.40 $84.39 $168.65 $78.81 $77.62 $83.57 $77.65 $87.43Number of Rooms (average) 3,550 1,144 738 605 3,150 195 203 203 203 203 Gaming SF / Hotel Room 20 76 53 42 33 135 135 Available Rooms (Daily) 2,591,500 N/A 3,241,905 4,870,905 27,665,914 54,905 74,095 74,095 74,095 74,298 Occupied Rooms (Annual) 2,424,955 N/A 2,889,972 4,072,253 25,756,783 40,584 62,981 66,686 63,743 68,370 Revenues

Casino, Per SF of Gaming Area $3,517 $2,213 $1,204 $865 $2,314 $1,001 $1,940 $2,052 $1,165 $1,607Rooms, PAR $86,830 $70,771 $23,936 $30,886 $61,724 $28,764 $28,330 $30,502 $28,344 $32,001Food & Bev. Rev., POR $131.47 #VALUE! $92.73 $79.50 $149.74 $164.65 $124.94 $124.82 $127.27 $125.00Food & Bev. Rev., % RR 51.7% 85.4% 126.4% 78.8% 82.7% 154.4% 136.8% 134.4% 141.0% 131.6%Minor Operated Departments (MOD), POR $153.67 #VALUE! $27.83 $36.63 $95.70 $26.83 $13.92 $25.32 $25.45 $25.00Rental & Other Income (Net), POR $0.00 #VALUE! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Total Revenues, POR $871.95 #VALUE! $481.24 $336.23 $647.76 $976.22 $1,077.27 $1,089.30 $745.77 $891.40Departmental expenses

Casino, % Dept. Revenue 15.9% 180.5% 130.9% 73.6% 78.6% 125.6% 48.0% 44.3% 46.8% 45.0%Rooms Expense, POR $0.00 #VALUE! $39.45 $48.85 $63.34 $100.65 $60.25 $57.18 $57.20 $55.00Rooms Expense, % Dept. Revenue 0.0% 27.0% 53.8% 48.4% 35.0% 94.4% 66.0% 61.6% 63.4% 57.9%Food and Beverage Expense, % Dept. Rev. 0.0% 48.6% 84.9% 89.1% 73.5% 139.0% 94.3% 82.3% 86.2% 85.0%Minor Operating Department, % Dept. Rev. 0.0% 0.0% 42.3% 53.7% 45.7% 0.0% 0.0% 0.0% 0.0% 0.0%

Total Departmental Expenses, %TR 4.6% 51.5% 65.8% 63.6% 55.5% 121.0% 54.3% 49.1% 53.9% 50.7%

Gross Operating Income, %TR 95.4% 48.5% 34.2% 36.4% 44.5% -21.0% 45.7% 50.9% 46.1% 49.3%Undistributed expenses

Administrative & General (A&G), PAR $0 $108,955 $29,197 $30,553 $41,672 $45,418 $24,967 $27,749 $34,763 $34,999Administrative & General (A&G), % TR 0.0% 27.3% 18.6% 29.7% 18.9% 17.2% 7.5% 7.8% 14.8% 11.7%Marketing

Royalty Fees, % rooms revenue 0.0% 0.0% 0.0% 0.0% 0.0% 0.00% 0.00% 0.00% 0.00% 0.00%Other, PAR $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Marketing, PAR $390,436 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Marketing, % TR 65.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Property Operations & Maintenance, PAR $0 $0 $0 $0 $0 $6,045 $3,509 $2,861 $2,898 $3,000Utilities, POR $0.00 #VALUE! $9.08 $9.62 $10.17 $21.31 $14.24 $11.95 $13.31 $12.62

Total Undistributed Operating Expenses, %TR 65.6% 27.3% 20.5% 32.6% 20.5% 21.7% 9.8% 9.7% 17.9% 14.1%

Income before fixed charges, %TR 19.4% 13.4% 13.3% 3.9% 24.0% -42.8% 35.9% 41.3% 28.2% 35.2%Fixed charges

Management fee, %TR 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 5.0% 5.0%Real and Personal Property Taxes, PAR $0 $0 $517 $675 $2,039 $0 $0 $0 $2,106 $2,406Insurance, PAR $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Replacement Reserve, %TR 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 5.0% 5.0%

Total Fixed Charges, %TR 0.0% 0.0% 0.0% 0.7% 0.9% 0.0% 0.0% 0.0% 10.9% 10.8%

Income after fixed charges, %TR 0.0% 0.0% 0.3% 3.2% 23.1% -42.8% 35.9% 41.3% 17.3% 24.4%Notes: (1) All numbers are stated in constant fiscal year (FY) 2018 dollars by inflating (deflating) at the underlying rate of inflation.

Source: Subject property management; Individual properties; Nevada Gaming Control Board; Newmark Knight Frank Valuation & Advisory

Newmark Knight Frank ProjectionsSubject Pro Forma


Page | 64

REVENUES

Our analysis of projected revenues for the subject property addresses individual departmental revenues and other miscellaneous revenue items.

Casino Revenue

As supported by the earlier market analysis, casino revenue is projected to increase to levels commensurate with the market over the next several years, corresponding with continued economic recovery.

Casino Department Revenue Analysis

Individual Comparables Subject HistoryLocation PAR TTM PAR

W $3,517 Sep-17 $1,001U.S. $2,213 Dec-18 $1,940W $1,204 Dec-22 $2,052W $865W $2,314

PKF Trends NKF H&L ProjectionsFS PAR YE PAR

Mountain and Pacific $0 Oct-18 $1,165$125.00 to $250.00 $0 Oct-20 $1,607150 to 300 Rooms $0

Notes: All numbers are stated in constant fiscal year (FY) 2018 dollars by inflating (deflating) at the underlying rate of inflation.


Page | 65

Rooms Revenue

A detailed analysis of our projected occupancy and average daily rate is included in the Lodging Market Analysis and Average Daily Rate Analysis sections of this report. The following table illustrates the room revenues per available room from all sources considered in this analysis, along with our concluded projections.

Room Department Revenue Analysis

Individual Comparables Subject HistoryLocation POR RevPAR TTM POR RevPAR

W $254.23 $237.89 Sep-17 $106.61 $78.81U.S. N/A N/A Dec-18 $91.31 $77.62W $73.36 $65.40 Dec-22 $92.85 $83.57W $100.94 $84.39W $181.15 $168.65

PKF Trends NKF ProjectionsFS POR RevPAR YE POR RevPAR

Mountain and Pacific $218.26 $173.73 Oct-18 $90.27 $77.65$125.00 to $250.00 $182.07 $137.64 Oct-20 $95.01 $87.43150 to 300 Rooms $199.08 $148.52


Food & Beverage Revenue

Food and beverage revenues are those attributed to the restaurant and lounge, room service, and that associated with the meeting rooms and catering, if not a part of the Conference Center department. The following table illustrates the food and beverage revenues per occupied room from all sources considered in this analysis, along with our concluded projections.

Food & Beverage Department Revenue Analysis

Individual Comparables Subject HistoryLocation POR % RR TTM POR % RR

W $131.47 51.7% Sep-17 $164.65 154.4%U.S. #VALUE! 85.4% Dec-18 $124.94 136.8%W $92.73 126.4% Dec-22 $124.82 134.4%W $79.50 78.8%W $149.74 82.7%

PKF Trends NKF ProjectionsFS POR % RR YE POR % RR

Mountain and Pacific $0.00 0.0% Oct-18 $127.27 141.0%$125.00 to $250.00 $0.00 0.0% Oct-20 $125.00 131.6%150 to 300 Rooms $0.00 0.0%



Page | 66

As noted, we have given primary weight to the historical and pro forma performance of the subject property in determining our projections.

Minor Operating Department Revenue

This department includes revenues from sources not previously included. In this case, this department consists of revenues associated with resort fees, valet parking, valet laundry, internet usage, and local and long distance telephone charges, and other miscellaneous items. The following table illustrates the minor operating department revenues per occupied room from all sources considered in this analysis, along with our concluded projections.

Minor Operating Department Revenue Analysis

Location POR TTM PORW $153.67 Sep-17 $26.83

U.S. #VALUE! Dec-18 $13.92W $27.83 Dec-22 $25.32W $36.63W $95.70

PKF TrendsFS POR YE POR

Mountain and Pacific $10.92 Oct-18 $25.45$125.00 to $250.00 $6.95 Oct-20 $25.00150 to 300 Rooms $8.28


Individual Comparables Subject History

NKF Projections

As noted, we have given primary weight to the historical and pro forma performance of the subject property and the individual comparable properties in determining our projections.


Page | 67

DEPARTMENTAL EXPENSES

Departmental expenses are directly related to a corresponding departmental revenue category. These are discussed in the following sections.

Casino Expense

Room expenses includes charges associated with the occupancy of the guest rooms such as staffing of the front office and housekeeping (housekeepers and laundry staff), reservations fees, travel agent commissions, credit card bank fees, guest room and cleaning supplies, laundry expenses, and front office supplies. The following table illustrates the room expenses per occupied room and as a percentage of room revenue from all sources considered in this analysis, along with our concluded projections.

Casino Department Expense Analysis

Individual Comparables Subject HistoryLocation POR % TTM POR %


PKF Trends NKF ProjectionsFS POR % YE POR %




Page | 68

Rooms Expense

Room expenses includes charges associated with the occupancy of the guest rooms such as staffing of the front office and housekeeping (housekeepers and laundry staff), reservations fees, travel agent commissions, credit card bank fees, guest room and cleaning supplies, laundry expenses, and front office supplies. The following table illustrates the room expenses per occupied room and as a percentage of room revenue from all sources considered in this analysis, along with our concluded projections.

Room Department Expense Analysis

Individual Comparables Subject HistoryLocation POR % TTM POR %


PKF Trends NKF ProjectionsFS POR % YE POR %



The subject property's recent historical figures are generally within the range of that indicated by the comparable data, on both a per occupied room and percentage of revenue basis. We have modeled an expense similar to that of its recent history. On a POR and percentage of total revenue basis, this expense category is expected to step down to stabilized levels as the RevPAR level increases and stabilizes in the fourth year of our projection period.


Page | 69

Food & Beverage Expense

Food and beverage expenses include cost of goods, payroll, and operating expenses related to the generation of food and beverage revenues. The following table illustrates the food and beverage expenses per occupied room and as a percentage of food and beverage revenue from all sources considered in this analysis, along with our concluded projections.

Food & Beverage Department Expense Analysis

Location % TTM %W 0.0% Sep-17 139.0%

U.S. 48.6% Dec-18 94.3%W 84.9% Dec-22 82.3%W 89.1%W 73.5%

PKF TrendsFS % YE %

Mountain and Pacific #DIV/0! Oct-18 86.2%$125.00 to $250.00 #DIV/0! Oct-20 85.0%150 to 300 Rooms #DIV/0!


NKF Projections


On a percentage of total revenue basis, this expense category is expected to step down to stabilized levels as the RevPAR level increases and stabilizes in the third year of our projection period. As noted, we have given primary weight to the historical and pro forma performance of the subject property in determining our projections.


Page | 70

Minor Operating Department Expense

This department includes expenses derived from the sources of Minor Operating Departmental revenues. The following table illustrates the Minor Operating Departmental expenses as a percentage of total revenues from all sources considered in this analysis, along with our concluded projections.

Minor Operating Department Expense Analysis

Location % TTM %W 0.0% Sep-17 0.0%

U.S. 0.0% Dec-18 0.0%W 42.3% Dec-22 0.0%W 53.7%W 45.7%

PKF TrendsFS % YE %

Mountain and Pacific 57.7% Oct-18 0.0%$125.00 to $250.00 48.5% Oct-20 0.0%150 to 300 Rooms 64.7%


NKF Projections


It appears that any expenses associated with this department have historically been reflected in other departments, most likely in the rooms or administrative and general departments. Since we have modeled a rooms expense and administrative and general expense consistent with its historical performance, we have done the same in this department.


Page | 71

UNDISTRIBUTED EXPENSES

Undistributed expenses are expenses that are not related to any specific departmental revenue. These are discussed below.

Administrative and General Expenses

Administrative and general expenses (A&G) include salaries and benefits of the general manager and staff, credit card commissions, professional fees, bad debt, data processing, general liability insurance, accounting audits, and executive office expenses. In the reporting of these expenses, casinos generally also include marketing, real estate taxes, and property insurance in this category. Of note, our projection of A&G expenses reflect that we have we have projected real estate taxes separately. The following table illustrates the A&G expenses per available room and as a percentage of total revenues from all sources considered in this analysis, along with our concluded projections.

Administrative & General Expense Analysis

Individual Comparables Subject HistoryLocation PAR % TTM PAR %

W $0 0.0% Sep-17 $45,418 17.2%U.S. $108,955 27.3% Dec-18 $24,967 7.5%W $29,197 18.6% Dec-22 $27,749 7.8%W $30,553 29.7%W $41,672 18.9%

PKF Trends NKF ProjectionsFS PAR % YE PAR %

Mountain and Pacific $8,134 9.0% Oct-18 $34,763 14.8%$125.00 to $250.00 $6,490 9.1% Oct-20 $34,999 11.7%150 to 300 Rooms $7,194 9.6%


The subject property's recent historical and pro forma expense is generally at or below the low end of the range of that of the individual comparable data on a PAR basis. Since the subject property did not report a market level management fee, we assume that certain management functions are reflected in this expense category. Since we have modeled a higher management fee than displayed historically, a projected administrative and general expense below that of its history would appear reasonable. However, we have projected a PAR expense slightly below recent history and above its pro forma based on comparison to the individual comparable properties. As a percentage of total revenue, this expense is expected to step down to its stabilized level as the occupancy level increases and stabilizes in the third year of our projection period. As noted, we have given primary weight to the historical performance of the subject property and the individual comparable properties in determining our projections.


Page | 72

Property Operation and Maintenance

Property operations and maintenance is comprised of wages, contract services, and supplies associated with the maintenance of the building, its mechanical systems, and its grounds. Repair and maintenance expenses are considered relatively "fixed" and do not vary significantly with changes in occupancy. The following table illustrates the property operation and maintenance expenses per available room from all sources considered in this analysis, along with our concluded projections.

Property Operation and Maintenance Expense Analysis


W $0 Sep-17 $6,045U.S. $0 Dec-18 $3,509W $0 Dec-22 $2,861W $0W $0

PKF Trends NKF ProjectionsFS PAR YE PAR

Mountain and Pacific $3,391 Oct-18 $2,898$125.00 to $250.00 $2,816 Oct-20 $3,000150 to 300 Rooms $3,036


As noted, we have given primary weight to the historical and pro forma performance of the subject property in determining our projections.


Page | 73

Utilities

The utilities expense includes electricity, gas, water, and sewer charges. This expense is considered to be highly variable, based on occupancy. The following table illustrates the utility expenses per occupied room from all sources considered in this analysis, along with our concluded projections.

Utilities Expense Analysis

Individual Comparables Subject HistoryLocation POR TTM POR

W $0.00 Sep-17 $21.31U.S. #VALUE! Dec-18 $14.24W $9.08 Dec-22 $11.95W $9.62W $10.17

PKF Trends NKF ProjectionsFS POR YE POR

Mountain and Pacific $7.75 Oct-18 $13.31$125.00 to $250.00 $7.89 Oct-20 $12.62150 to 300 Rooms $8.42


As occupancy levels increase and stabilize in the third year of our projection period, the POR expense is expected to decrease to its stabilized level. As noted, we have given primary weight to the historical performance of the subject property in determining our projections.


Page | 74

FIXED CHARGES

Base Management Fee

Base management fees are typically paid to a third party management firm. In this case, the property is managed by the Owner, with the historical operating statements indicating no fee. We have modeled a management fee typical of properties of this type. The following table illustrates the management expenses, as a percent of total revenue, from all sources considered in this analysis, along with our concluded projections.

Management Expense Analysis

Individual Comparables Subject HistoryLocation % TTM %

W 0.0% Sep-17 0.0%U.S. 0.0% Dec-18 0.0%W 0.0% Dec-22 0.0%W 0.0%W 0.0%

PKF Trends NKF ProjectionsFS % YE %

Mountain and Pacific 3.7% Oct-18 5.0%$125.00 to $250.00 3.7% Oct-20 5.0%150 to 300 Rooms 3.6%


Real and Personal Property Taxes

We have projected real estate taxes, as presented in the Property Taxes section of this report. We estimate taxes to increase at the rate of inflation throughout the projection period. The following table illustrates the real estate tax expenses per available room from all sources considered in this analysis, along with our concluded projections.

Real Estate Tax Expense Analysis


W $0 Sep-17 $0U.S. $0 Dec-18 $0W $517 Dec-22 $0W $675W $2,039

PKF Trends NKF ProjectionsFS PAR YE PAR

Mountain and Pacific $2,171 Oct-18 $2,106$125.00 to $250.00 $2,353 Oct-20 $2,406



Page | 75

Other Fixed Expenses

Reserve for Replacement

This expense represents the creation of a reserve account that is set aside to provide for the periodic replacement of capital items including furniture, fixtures, and equipment during the life of the building. The following table illustrates the replacement reserve expenses, as a percent of total revenue, from all sources considered in this analysis, along with our concluded projections.

Replacement Reserve Expense Analysis

Individual Comparables Subject HistoryLocation % TTM %

W 0.0% Sep-17 0.0%U.S. 0.0% Dec-18 0.0%W 0.0% Dec-22 0.0%W 0.0%W 0.0%

PKF Trends NKF ProjectionsFS % YE %

Mountain and Pacific 0.0% Oct-18 5.0%$125.00 to $250.00 0.0% Oct-20 5.0%


Despite the lack of a reported replacement reserve expense historically for the subject property, we have modeled 4.0% for this expense category. This is deemed reasonable and typical for this property type.


Page | 76

Fixed and Variable Analysis

As noted, our projections reflect estimates of fixed and variable components of certain expenses. The table below presents the estimated allocation of the various income and expense categories.

Fixed and Variable InputsCategory Percent Fixed Varies with

Departmental Revenues

Casino 0.0% Occupied Room Nights

Rooms 25.0% Occupied Room Nights

Food and Beverage 25.0% Occupied Room Nights

Minor Operated Depts 25.0% Occupied Room Nights

Departmental Expenses

Casino 55.0% Occupied Room Nights

Rooms 55.0% Occupied Room Nights

Food and Beverage 45.0% Occupied Room Nights

Minor Operated Depts 50.0% Occupied Room Nights

Non-Departmental Expenses

Administrative and General 90.0% Occupied Room Nights

Marketing 50.0% Occupied Room Nights

POM 50.0% Occupied Room Nights

Utilities 75.0% Occupied Room Nights

Fixed Expenses

Management 0.0% Occupied Room Nights

Real & Personal Taxes 0.0% Occupied Room Nights

Reserve for Replacement 0.0% Occupied Room Nights


Conclusion

Our revenue and expense projections are presented in the following tables, labeled as follows:

"Schedule of Projected "As Is" Cash Flows" These pages present our projections of operating performance over the projected holding period, including 11 years past both the “As Is” and prospective “at stabilization” dates of value. These figures are presented in the stated years’ inflated dollars.

“Year 1 Projected Cash Flow “As Stabilized” (As If Stabilized as of the “As Is” Date of Value).” This page presents our projections of operating performance for the subject property, as if stabilized as of the “As Is” date of value. These figures are presented in the stated years’ inflated dollars and are used in the direct capitalization and sales comparison approaches to determine an “as stabilized” value to which appropriate deductions are made to arrive at “As Is” value indications. Additionally, presented in the Addenda section of this report, is the table “Schedule of Projected Cash Flow “As Stabilized” (As If Stabilized as of the “As Is” Date of Value)” This page presents our projections of operating performance over a projected 10-year holding period, AS IF stabilized as of the “As Is” date of value. These figures are presented in the stated years’ inflated dollars.


Page | 77

Projected "As Is" Cash FlowFiscal Year 2018 2019 2020 2021Number of roomsOccupancyOccupied RoomsAverage Daily Room Rate

($000) % PAR POR ($000) % PAR POR ($000) % PAR POR ($000) % PAR PORRevenues

Casino $32,049 67.4% $157,876 $502.78 $42,064 71.2% $207,214 $621.41 $46,886 72.5% $230,968 $685.78 $48,293 72.5% $237,897 $706.35Rooms $5,754 12.1% $28,344 $90.27 $6,571 11.1% $32,368 $97.07 $6,892 10.7% $33,951 $100.80 $7,099 10.7% $34,969 $103.83Food and Beverage 8,113 17.1 39,963 127.27 8,737 14.8 43,040 129.07 9,067 14.0 44,664 132.61 9,339 14.0 46,004 136.59Minor Operated Depts 1,623 3.4 7,993 25.45 1,747 3.0 8,608 25.81 1,813 2.8 8,933 26.52 1,868 2.8 9,201 27.32

Total revenues 47,538 100.0 234,176 745.77 59,120 100.0 291,230 873.37 64,659 100.0 318,515 945.71 66,598 100.0 328,070 974.08

Departmental expensesCasino 14,998 46.8 73,880 235.28 19,033 45.2 93,760 281.18 21,099 45.0 103,936 308.60 21,732 45.0 107,054 317.86Rooms 3,646 63.4 17,960 57.20 3,856 58.7 18,994 56.96 3,989 57.9 19,652 58.35 4,109 57.9 20,242 60.10Food and Beverage 6,994 86.2 34,453 109.72 7,441 85.2 36,657 109.93 7,707 85.0 37,964 112.72 7,938 85.0 39,103 116.10Minor Operated Depts 0 0.0 0 0.00 0 0.0 0 0.00 0 0.0 0 0.00 0 0.0 0 0.00

Total departmental expenses 25,637 53.9 126,293 402.20 30,331 51.3 149,412 448.07 32,795 50.7 161,552 479.67 33,779 50.7 166,398 494.06

Departmental profit 21,900 46.1 107,883 343.57 28,789 48.7 141,818 425.30 31,864 49.3 156,963 466.05 32,819 49.3 161,672 480.03

Undistributed operating expensesAdministrative and General 7,057 14.8 34,763 110.71 7,311 12.4 36,014 108.00 7,538 11.7 37,132 110.25 7,764 11.7 38,245 113.56POM 588 1.2 2,898 9.23 624 1.1 3,075 9.22 646 1.0 3,183 9.45 665 1.0 3,278 9.73Utilities 848 1.8 4,178 13.31 886 1.5 4,367 13.10 915 1.4 4,509 13.39 943 1.4 4,644 13.79

Total Undis. Op. Exp. 8,493 17.9 41,840 133.24 8,821 14.9 43,456 130.32 9,099 14.1 44,823 133.09 9,372 14.1 46,168 137.08

Income before fixed charges 13,407 28.2 66,043 210.32 19,968 33.8 98,363 294.98 22,764 35.2 112,140 332.96 23,447 35.2 115,504 342.95

Fixed chargesManagement 2,377 5.0 11,709 37.29 2,956 5.0 14,562 43.67 3,233 5.0 15,926 47.29 3,330 5.0 16,403 48.70Real & Personal Taxes 428 0.9 2,106 6.71 505 0.9 2,488 7.46 518 0.8 2,552 7.58 532 0.8 2,619 7.78Reserve for Replacement 2,377 5.0 11,709 37.29 2,956 5.0 14,562 43.67 3,233 5.0 15,926 47.29 3,330 5.0 16,403 48.70

Total fixed charges 5,181 10.9 25,524 81.28 6,417 10.9 31,611 94.80 6,984 10.8 34,404 102.15 7,191 10.8 35,426 105.18

Pre-tax net income before debt service $8,225 17.3% $40,519 129.04 $13,551 22.9% $66,752 200.18 $15,780 24.4% $77,736 230.81 $16,256 24.4% $80,078 237.76

Notes: Totals may not add due to rounding.

Dept expenses are presented as % of corresponding dept revenue.

20386.0%63,743$90.27

20391.4%67,691$97.07

20392.0%68,370

$100.80

20392.3%68,370

$103.83


Page | 78




Total revenues 68,596 100.0 337,912 1,003.31 70,654 100.0 348,049 1,033.41 72,774 100.0 358,491 1,064.41 74,957 100.0 369,245 1,096.34




Undistributed operating expensesAdministrative and General 7,997 11.7 39,393 116.96 8,237 11.7 40,575 120.47 8,484 11.7 41,792 124.09 8,738 11.7 43,046 127.81POM 685 1.0 3,377 10.03 706 1.0 3,478 10.33 727 1.0 3,582 10.64 749 1.0 3,690 10.95Utilities 971 1.4 4,783 14.20 1,000 1.4 4,927 14.63 1,030 1.4 5,075 15.07 1,061 1.4 5,227 15.52








20392.3%68,370

$106.94

20392.3%68,370

$110.15

20392.0%68,370

$113.46

20392.3%68,370

$116.86


Page | 79




Total revenues 77,206 100.0 380,323 1,129.23 79,522 100.0 391,733 1,163.11 81,907 100.0 403,485 1,198.00 84,365 100.0 415,589 1,233.94




Undistributed operating expensesAdministrative and General 9,000 11.7 44,337 131.64 9,270 11.7 45,667 135.59 9,549 11.7 47,037 139.66 9,835 11.7 48,448 143.85POM 771 1.0 3,800 11.28 795 1.0 3,914 11.62 818 1.0 4,032 11.97 843 1.0 4,153 12.33Utilities 1,093 1.4 5,384 15.99 1,126 1.4 5,545 16.46 1,159 1.4 5,712 16.96 1,194 1.4 5,883 17.47








20392.3%68,370$120.36

20392.3%

68,370$123.97

20392.0%68,370$127.70

20392.3%

68,370$131.52


Page | 80

Projected "As Is" Cash FlowFiscal Year 2030Number of roomsOccupancyOccupied RoomsAverage Daily Room Rate

($000) % PAR PORRevenues

Casino $63,012 72.5% $310,402 $921.63Rooms $9,262 10.7% $45,626 $135.47Food and Beverage 12,185 14.0 60,024 178.22Minor Operated Depts 2,437 2.8 12,005 35.64

Total revenues 86,896 100.0 428,057 1,270.96

Departmental expensesCasino 28,355 45.0 139,681 414.73Rooms 5,361 57.9 26,411 78.42Food and Beverage 10,357 85.0 51,021 151.49Minor Operated Depts 0 0.0 0 0.00

Total departmental expenses 44,074 50.7 217,112 644.64

Departmental profit 42,822 49.3 210,945 626.32

Undistributed operating expensesAdministrative and General 10,130 11.7 49,902 148.16POM 868 1.0 4,277 12.70Utilities 1,230 1.4 6,059 17.99

Total Undis. Op. Exp. 12,228 14.1 60,238 178.86

Income before fixed charges 30,593 35.2 150,706 447.47

Fixed chargesManagement 4,345 5.0 21,403 63.55Real & Personal Taxes 670 0.8 3,299 9.80Reserve for Replacement 4,345 5.0 21,403 63.55

Total fixed charges 9,359 10.8 46,105 136.89

Pre-tax net income before debt service $21,234 24.4% $104,602 310.58



20392.3%

68,370$135.47


Page | 81

Year 1 Prospective Cash Flow“As Stabilized” (As If Stabilized as of the Market Value - As Is Date of Value)In Inflated Dollars for the Fiscal Year Ending October 31, 2018

Fiscal Year 2018Number of rooms 203Occupancy 92%Occupied Rooms 68,370 Average Daily Room Rate $95.01

($000) % PAR PORRevenues

Casino $44,193 72.5% $217,701 $646.38Rooms $6,496 10.7% $32,000 $95.01Food and Beverage $8,546 14.0 42,098 124.99Minor Operated Depts $1,709 2.8 8,420 25.00

Total revenues 60,944 100.0 300,219 891.39

Departmental expensesCasino 19,887 45.0 97,965 290.87Rooms 3,760 57.9 18,523 55.00Food and Beverage 7,264 85.0 35,783 106.25Minor Operated Depts 0 0.0 0 0.00

Total departmental expenses 30,911 50.7 152,272 452.12

Departmental profit 30,033 49.3 147,947 439.27

Undistributed operating expensesAdministrative and General 7,105 11.7 34,999 103.92POM 609 1.0 3,000 8.91Utilities 863 1.4 4,250 12.62

Total undistributed operating expenses 8,576 14.1 42,248 125.44

Income before fixed charges 21,457 35.2 105,699 313.83

Fixed chargesManagement 3,047 5.0 15,011 44.57Real & Personal Taxes 473 0.8 2,332 6.92Reserve for Replacement 3,047 5.0 15,011 44.57

Total fixed charges 6,568 10.8 32,354 96.06

Pre-tax net income before debt service $14,889 24.4% $73,345 217.77

Notes: Please refer to the Addenda section of this report for a presentation of the “As Stabilized” cash flows.

Totals may not add due to rounding.


In general, we have assumed that revenues and expenses would grow at 3.0 percent, the anticipated level of inflation over the 10-year projection period.


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DISCOUNT AND CAPITALIZATION RATE SELECTION

In valuing the property, we must determine appropriate rates of return. In developing the discount and capitalization rates to be utilized in our analysis, we relied upon the following sources:

Real Estate Research Corporation’s Institutional Investment Survey

PricewaterhouseCoopers’s Korpacz Real Estate Investor Survey

Discussions with market participants

The following table provides a synopsis of our findings within the various surveys reviewed.

Investor Survey - Discount and Capitalization Rates

Publication Property Type Discount RatesTerminal

Capitalization Rates

Overall Capitalization

Rates 1

PwC Real Estate Investor Survey Full-service Hotels 2 10.19% 8.44% 7.85%

(3rd Qtr 2017) 8.00% to 13.00% 7.00% to 10.00% 6.00% to 10.00%

PwC Real Estate Investor Survey Luxury / Upper Upscale Hotels 2 9.53% 7.18% 7.03%

(3rd Qtr 2017) 6.50% to 12.00% 5.50% to 9.50% 4.00% to 9.00%

RERC - Real Estate Report Hotels-National 9.90% 8.50% 7.70%

(2nd Qtr 2017) 9.0% to 11.0% 8.0% to 9.0% 7.5% to 8.0%

RERC - Real Estate Report Hotels-National (First Tier)4 10.00% 8.90% 8.20%

(2nd Qtr 2017) 9.0% to 12.0% 8.0% to 10.5% 7.5% to 9.0%

RERC - Real Estate Report Hotels-West3 (First Tier)4 9.90% 8.60% 7.90%

(2nd Qtr 2017) 9.0% to 12.0% 8.0% to 10.0% 7.5% to 8.0%

RERC - Real Estate Report Hotels-West3 (Second Tier)4 10.60% 9.20% 8.50%

(2nd Qtr 2017) 9.0% to 13.0% 8.5% to 10.8% 7.8% to 10.0%

RERC - Real Estate Report Hotels-West3 (Third Tier)4 11.40% 9.80% 9.00%

(2nd Qtr 2017) 10.0% to 13.0% 8.5% to 11.3% 7.8% to 10.0%

RERC - Real Estate Report Hotels-Las Vegas (First Tier)4 8.30% 7.00% 6.60%

(2nd Qtr 2017)

Notes: 1

2

3

4

Source: Respective publications

First Tier properties are defined as new or newer quality construction in prime to good locations. Second Tier properties are defined as aging, formerly first tier properties, in good to average locations. Third Tier properties are defined as older properties with functional inadequacies and/or in marginal locations.

Full-service Hotels: Lodging with restaurant and lounge facilities, meeting space, and a minimum service and amenities level; moderate to lower upper-tier pricing; corresponds to STR’s full-service hotels in the upscale, upper midscale, and midscale chain scales; includes brands such as Doubletree, Radisson, and Ramada. Luxury / Upper Upscale Hotels: High-quality lodging offering personalized guest services, typically with extensive amenities, and upper-tier pricing; corresponds to STR’s luxury and upper-upscale chain scales; includes brands such as Ritz Carlton, Four Seasons, and Hyatt.

Based on a stabilized NOI.

West region includes WA, OR, CA, ID, MT, WY, NV, UT, CO, AZ, NM, and HI.

In our analysis of the market, we focused on certain factors that influence the risk associated with the subject hotel. These factors include:

The local hotel market had reportedly experienced decreasing performance through 2009, due to worsening economic conditions throughout the country, but has seen improvement in the most recent years and months, although a decline was seen in 2017 due to additions to supply outside the defined competitive set.

Sales presented in the Sales Comparison Approach Section of this report, indicated overall capitalization rates ranging from 4.3% to 14.3%, averaging 10.5%.


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The subject property's location along W. Sahara Avenue just east of I-15 and just west of Las Vegas Boulevard in the northern sector of the Las Vegas Strip provides good accessibility and visibility.

The subject property is in excellent condition, which should allow it to be able to take advantage of improving market conditions in the future.

The subject hotel is proposed to have an affiliation with Best Western. It is assumed the subject hotel will obtain and retain an affiliation with Best Western or similar brand and will benefit from its reservation system and sales efforts.

The relative lack of significant barriers to entry exposes the property somewhat to potential new additions to supply.

Recent investment activity suggests that market conditions have changed slightly over the past several quarters, showing the first declines in required rates of return in some time. In general, required returns may be slightly below that indicated in these surveys, which are anywhere from one to two quarters old, as of the date of our analysis.

Discount Rate Selection

The discount rate is the rate of return that equals the sum of the real return anticipated in the investment, plus a change in value and any risk premiums associated with the specific investment when compared to alternative investments. It is the average annual rate of return necessary to attract capital based upon the overall investment characteristics.

The discount rate selection requires the appraiser to interpret the attitudes and expectations of market participants. Discount rates are partly a function of perceived risks. Risk is a function of general economic conditions and characteristics of the investment. The critical elements of an investment include the quantity and certainty of gross income, operating expenses, and resultant net income over some future time period. Value is a reflection of future income expectations, and such elements are risky.

The aforementioned surveys presented and utilized herein deal with hotels of varying quality and investment attractiveness as indicated by the extremes of several of the investment parameter categories.

Given the full consideration of all factors influencing risk in this instance, we are of the opinion that the likely purchaser of the subject hotel would assign average risk to the investment prospects associated with the subject property. While several positive and negative factors were specifically cited, it is not our intention to represent such as the entire universe of risk factors, nor are they to be considered equal in weight. We therefore have estimated a discount rate of 13.00% for the subject property.

Direct Capitalization Rate Selection

Our selection of 10.00% is directly influenced by the long-term prospects for property performance improvement.

Terminal Capitalization Rate Selection

Our selection of 10.50% is directly influenced by the long-term prospects for property performance improvement.


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DIRECT CAPITALIZATION

Prospective Market Value – Upon Stabilization

The direct capitalization technique divides the pretax net income before depreciation by an overall capitalization rate to produce an indication of value. The following table presents the calculation of value via the direct capitalization method for the Prospective Market Value – Upon Stabilization date of value, estimated by capitalizing the cash flow in that year.

Income ApproachDirect Capitalization Analysis, Prospective Market Value - Upon StabilizationProspective Market Value - Upon Stabilization

Date of Value October 11, 2019NOI $15,780,000Cap. Rate 10.00%Prospective Market Value - Upon Stabilization $157,800,000

Rounded $157,800,000Source: Newmark Knight Frank Valuation & Advisory

Market Value – As Is

To determine the “Market Value - As Is” value, we have divided the Year 1 “As Stabilized” net operating income by the overall rate previously selected, yielding a hypothetical current value as if the property is stabilized in year one of our projection.

Since the property’s occupancy is not stabilized in year one, consideration must be given to any implied income deficit or overage that will occur until the property achieves stabilized occupancy. The adjustment is determined by calculating the variance in net operating income (loss) between an imputed stabilized operation and the actual operations as they are estimated to occur. The resulting difference in net operating income is then discounted to reflect a present value of the income (loss). This adjustment can be applied to any indication of a hypothetical current value as if the property is stabilized in year one of our projection, such as here and in the Sales Comparison Approach.

The difference between the net operating income assuming stabilized occupancy as of the date of the “Market Value - As Is” valuation and the actual net operating income estimated for the “Market Value - As Is” valuation is discounted to a present value and is demonstrated in the following table.

Income ApproachValue Loss (Gain) Prior to Stabilization, Market Value - As Is

Year 1 Year 2

As Stabilized Cash Flow $10,516,000 $13,953,000

Actual Cash Flow $8,225,000 $13,551,000

Annual Cash Flow Loss (Gain) $2,291,000 $402,000

Present Value Per Period $2,027,434 $314,825

Cumulative Present Value $2,342,259Value Loss (Gain) Prior to Stabilization $2,300,000

The “As Stabilized” NOI presented in the stabilized statement results in a stabilized value estimate as of the Market Value - As Is date of value, and should not be confused with the “Prospective Market Value - Upon Stabilization,” which is based on the stabilized NOI in that year. By adjusting the Year 1 “As Stabilized” value by the value gain (or


Page | 85

loss) attributable to the period during which the subject is operating at greater than (or less than) stabilized occupancy, a “Market Value - As Is” value of the subject is determined.

The capitalization of the as stabilized NOI by the capitalization rate determined in our previous analysis, with the appropriate adjustment for non-stabilized conditions and a deduction for deferred maintenance, if any, results in the following value estimate:

Income ApproachDirect Capitalization Analysis, Market Value - As Is


Year 1 NOI (As Stabilized) $14,889,000

Cap. Rate 10.00%

Value Before Adjustments $148,890,000As Is


Value "As Stabilized" $148,900,000

Adjustments:

Gain (Loss) Due to Stabilization ($2,300,000)

Market Value - As Is $146,600,000

$146,600,000


YIELD CAPITALIZATION

Based on the prospective cash flows presented and the selection of an appropriate discount rate, we have determined an estimate of value.

Selling Costs

These expenses are forecast to be 2.00% of residual proceeds.


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Conclusion

Based on the previous analysis, the estimated market value of the subject property is presented in the following table(s).

Income Approach - DCF Analysis, Market Value - As Is

Present Value of Annual Cash FlowsCash Flow Available for

Fiscal Debt Service and Discount Rate at PresentYear Ending Income Tax 13.00% Value

Oct-18 $8,225,416 0.8850 $7,279,129Oct-19 $13,550,669 0.7831 $10,612,161Oct-20 $15,780,472 0.6931 $10,936,659Oct-21 $16,255,875 0.6133 $9,970,033Oct-22 $16,745,685 0.5428 $9,088,887Oct-23 $17,250,245 0.4803 $8,285,612Oct-24 $17,770,066 0.4251 $7,553,356Oct-25 $18,305,372 0.3762 $6,885,746Oct-26 $18,856,897 0.3329 $6,277,175Oct-27 $19,425,030 0.2946 $5,722,388

Total Present Value of Cash Flows $82,611,146Ratio to total value 59%

Present Value of Reversion

Fiscal Year Ending Oct-2028 Cash Flow (before taxes) $20,646,589.71Reversionary Capitalization Rate (loaded for tax rate) 10.50%Indicated Sale Price $196,634,188Less Closing Costs 2.0% ($3,932,684)Net reversionary value $192,701,504Present value factor 0.2946Total Present Value of Reversion $56,767,618Ratio to total value 41%

Total Present Market Value - As Is $139,378,764Rounded $139,400,000

Per Room $686,700


October 11, 2017


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Income Approach - DCF Analysis, Prospective Value - Upon Stabilization

Present Value of Annual Cash FlowsCash Flow Available for

Fiscal Debt Service and Discount Rate at Present

Year Ending Income Tax 13.00% Value

Oct-20 $15,780,472 0.8850 $13,965,019Oct-21 $16,255,875 0.7831 $12,730,735Oct-22 $16,745,685 0.6931 $11,605,600Oct-23 $17,250,245 0.6133 $10,579,898Oct-24 $17,770,066 0.5428 $9,644,880Oct-25 $18,305,372 0.4803 $8,792,409Oct-26 $18,856,897 0.4251 $8,015,325Oct-27 $19,425,030 0.3762 $7,306,917Oct-28 $20,010,346 0.3329 $6,661,141Oct-29 $20,613,097 0.2946 $6,072,378

Total Present Value of Cash Flows $95,374,302Ratio to total value 61%

Present Value of Reversion

Fiscal Year Ending Oct-30 Cash Flow (before taxes) $21,903,869Reversionary Capitalization Rate (loaded for tax rate) 10.50%Indicated Sale Price $208,608,273Less Closing Costs 2.0% ($4,172,165)Net reversionary value $204,436,108Present value factor 0.2946Total Present Value of Reversion $60,224,495Ratio to total value 39%

Total Prospective Market Value - Upon Stabilization $155,598,797Rounded $155,600,000

Per Room $766,502


October 11, 2019


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INCOME CAPITALIZATION APPROACH CONCLUSION

The following value estimates are indicated by the previous analysis.

Income ApproachValue Indications

Market Value - As Is Prospective Market Value -

Upon Stabilization


Direct Capitalization $146,600,000 $157,800,000

Yield Capitalization $139,400,000 $155,600,000

Reconciled Conclusions $143,000,000 $156,000,000


As noted previously, investors indicate greater reliance on DCF analysis, especially when valuing non-stabilized properties, as well as those with revenues and expenses that vary dramatically. In this case, more weight is given to this method in reaching a value conclusion by the Income Capitalization Approach.

RECONCILIATION OF VALUE ESTIMATES LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

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RECONCILIATION OF VALUE ESTIMATES

The applicable approaches to value indicate the following value conclusions.

Value Conclusions


Upon Stabilization


Value Conclusions

Cost Approach (Insurable Replacement Cost Only) $116,800,000 N/A

Sales Comparison Approach $141,400,000 $157,800,000Income Capitalization Approach $143,000,000 $156,000,000

Greatest weight has been placed on the income approach when estimating market value for the subject property. Because income-producing properties are generally purchased on the basis of their net income generation, this approach reflects the expectations of typical purchasers of investment-grade real estate. It has been concluded that the income approach most accurately reflects the specific financial characteristics of this property.

The sales comparison approach has been given secondary emphasis when estimating the market value of the subject property. Because of the great importance future income expectation has on sale prices for this type of property, unit sale prices of physically similar properties revealed a relatively wide range. These differences were a consequence of each property's unique combination of physical, locational, and financial characteristics.

As noted, we have excluded the cost approach for purposes of determining market values. Since the typical purchaser does not make decisions based heavily on replacement cost criteria, the exclusion of this approach is not considered to reduce the reliability of the value estimates in this report. A typical potential purchaser of the property will be more concerned with the property's location, amenities, and ability to generate an investor's required cash flow than with its replacement cost.

Subject to all conditions and explanations contained in this report, and based upon our analyses of the subject property and the market, together with our experience and knowledge of the market gained in appraising similar properties, our opinion of the market value of the Fee Simple estate, expressed in terms of financial arrangement equivalent to cash (including contributory value of furniture, fixtures and equipment; and the integral business value), as of the indicated valuation dates, is presented below:

Reconciled Values


Upon Stabilization


Final Value Conclusion $143,000,000 $156,000,000

Subject to the Certification, Standard Conditions and Special Conditions

The accompanying prospective financial analyses are based on estimates and assumptions developed in connection with the appraisal. However, some assumptions inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our prospective financial analyses will vary from our estimates and the variations may be material.

ADDENDA

ADDENDA

ASSUMPTIONS AND LIMITING CONDITIONS ....................................................................................................... A

SUBJECT PROPERTY EXHIBITS ............................................................................................................................ D

LEGAL DESCRIPTION .......................................................................................................................................... E

FLOOD MAP DATA ............................................................................................................................................... F

TAX MAP ............................................................................................................................................................... G

ZONING MAP ........................................................................................................................................................ H

SUBDIVISION PLAT ................................................................................................................................................ I

SITE PLAN.............................................................................................................................................................. J

BUILDING PLANS – MASTER PLAN LEVEL 1 .................................................................................................... K

BUILDING PLANS – MASTER PLAN LEVEL 2 ..................................................................................................... L

BUILDING PLANS – HOTEL LEVEL 1 .................................................................................................................. M

BUILDING PLANS – HOTEL TYPICAL UPPER LEVEL ....................................................................................... N

BUILDING PLANS – HOTEL NORTH & SOUTH ELEVATIONS .......................................................................... O

BUILDING PLANS – HOTEL EAST ELEVATION ................................................................................................. P

BUILDING PLANS – HOTEL WEST ELEVATION ................................................................................................ Q

BUILDING PLANS – CASINO LEVEL 1 ................................................................................................................ R

BUILDING PLANS – CASINO & GARAGE LEVEL 2 ............................................................................................ S

BUILDING PLANS – GARAGE LEVEL 3 .............................................................................................................. T

BUILDING PLANS – CASINO & GARAGAE NORTH/SOUTH ELEVATIONS ..................................................... U

BUILDING PLANS – CASINO & GARAGE EAST/WEST ELEVATIONS ............................................................. V

MOODY’S ECONOMY.COM PRECIS METRO REPORT ................................................................................... W

ADDENDA

PROJECTED CASH FLOW “AS STABILIZED” (AS IF STABILIZED AS OF THE AS IS DATE OF VALUE) ...... Z

COMPARABLE PROPERTIES’ REVENUE AND EXPENSES ........................................................................... AA

ENGAGEMENT LETTER ........................................................................................................................................ BB

STATE CERTIFICATION ....................................................................................................................................... NN

QUALIFICATIONS ................................................................................................................................................... PP

Page | A

ASSUMPTIONS AND LIMITING CONDITIONS

ASSUMPTIONS AND LIMITING CONDITIONS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

Page | B

ASSUMPTIONS AND LIMITING CONDITIONS The following Standard Conditions apply to real estate appraisals by Landauer Valuation & Advisory. Special conditions are added as required.

1. The general assumptions and limiting conditions pertaining to the market study and its conclusion(s) stated in this report are summarized below. If applicable, "special assumptions" are cited elsewhere in this report.

2. To the best of our knowledge and belief, the statements of facts contained in the report, upon which the analysis and conclusion(s) expressed are based, are true and correct. Information, estimates and opinions furnished to us and contained in the report or utilized in the formation of the conclusion(s) were obtained from sources considered reliable and believed to be true and correct. However, no representation, liability or warranty for the accuracy of such items is assumed by or imposed on us, and is subject to corrections, errors, omissions and withdrawals without notice.

3. No change of any item in any of the report shall be made by anyone other than Landauer Valuation & Advisory and we shall have no responsibility for any such unauthorized change.

4. We are not required to give testimony or be in attendance at any court or administrative proceeding with reference to the report unless additional compensation is agreed to and prior arrangements have been made.

5. The working papers for this engagement are being retained in our files and are available for your reference. We would be available to support our conclusion(s) should this be required. Those services would be performed for an additional fee.

6. All maps, plats, building diagrams, site plans, floor plans, photographs, etc., incorporated into the report are for illustrative purposes only, to assist the reader in visualizing the Property, but are not guaranteed to be exact. Dimensions and descriptions are based on public records and/or information furnished by others and is not meant to be used as a reference in legal matters of survey.

7. Management is assumed to be competent, and the ownership to be in responsible hands. The quality of property management can have a direct effect on a property's economic viability. The financial analyses, if any, contained in the report assume both responsible ownership and competent management unless noted otherwise. Any variance from this assumption could have a significant impact on the final conclusions.

8. The Appraisal is made for valuation purposes only. It is not intended nor to be construed to be an engineering report. We are not qualified as structural or environmental engineers; therefore, we are not qualified to judge the structural or environmental integrity of the improvements, if any. Consequently, no warranty or representation is made nor any liability assumed for the structural soundness, quality, adequacy or capacities of said improvements and utility services, including construction materials, particularly the roof, foundations, and equipment, including the HVAC systems, if applicable. Should there be any question concerning same, it is strongly recommended that an engineering, construction and/or environmental inspection be obtained. The value estimate(s) stated in this Appraisal, unless noted otherwise, is predicated on the assumption that all improvements, equipment and building services, if any, are structurally sound and suffer no concealed or latent defects or inadequacies other than those noted in the Appraisal. We will call to your attention any apparent defects or material adverse conditions that come to our attention.

9. Any proposed construction or rehabilitation referred to in the Appraisal report is assumed to be completed within a reasonable time and in a workmanlike manner according to or exceeding currently accepted standards of design and methods of construction.

10. Any inaccessible portions of the Property or improvements not inspected are assumed to be as reported or similar to the areas that are inspected.

11. Unless specifically stated in the report, we found no obvious evidence of insect infestation or damage, dry or wet rot. Since a thorough inspection by a competent inspector was not performed for us, the subject

ASSUMPTIONS AND LIMITING CONDITIONS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

Page | C

improvements are assumed to be free of insect infestation, wet rot, dry rot, and any structural damage which may have been caused by preexisting infestation or rot which was subsequently treated.

12. In the Appraisal assignment, the existence of potentially hazardous material used in the construction, maintenance or servicing of the improvements, such as the presence of urea formaldehyde foam insulation, asbestos, lead paint, toxic waste, underground tanks, radon and/or any other prohibited material or chemical which may or may not be present on or in the Property, was, unless specifically indicated in the report, not observed by us, nor do we have any knowledge of the existence of such materials on or in the Property. We, however, are not qualified to detect such substances. The existence of these potentially hazardous materials may have a significant impact on the value of the Property. The client is urged to retain an expert in this field, if desired.

In addition to the general assumptions and limiting conditions listed above, the following items outline several special assumptions.

13. No environmental audit of the property was performed by Newmark Knight Frank Valuation & Advisory. For this reason, and as noted in the contingent and limiting conditions section of this appraisal report, Newmark Knight Frank Valuation & Advisory assumes that no conditions or contaminants exist that would adversely affect the property's existing or potential use. We recommend that qualified environmental and construction engineers be employed to better determine any actual damage and related costs to cure, and reserve the right to amend our findings if such estimates are made available.

14. It is assumed that the subject property will be under prudent and competent management throughout the projection period. The value set forth in this report includes the integral business component of the hotel as a going-concern. The analysis in the accompanying report reflects the operating ratios achieved which are unique to the subject considering its position in the market.

15. This report assumes that the subject property obtains and retains an affiliation with Best Western, or a similar national franchise, and that it is subject to competent management typically provided for similar hotels.

16. Furniture, Fixtures, and Equipment (FF&E), certain personal property that is necessary for the successful operation of the hotel, has been included in the conclusion of value contained in this report. Included in FF&E is any and all personal property which is necessary for the day-to-day operation of the guest rooms, and any other functions of the subject.

Page | D

SUBJECT PROPERTY EXHIBITS

SUBJECT PROPERTY EXHIBITS LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

Page | E

LEGAL DESCRIPTION


Page | F

FLOOD MAP DATA

SUBJECT


Page | G

TAX MAP

SUBJECT


Page | H

ZONING MAP

SUBJECT


Page | I

SUBDIVISION PLAT


Page | J

SITE PLAN


Page | K

BUILDING PLANS – MASTER PLAN LEVEL 1


Page | L

BUILDING PLANS – MASTER PLAN LEVEL 2


Page | M

BUILDING PLANS – HOTEL LEVEL 1


Page | N

BUILDING PLANS – HOTEL TYPICAL UPPER LEVEL


Page | O

BUILDING PLANS – HOTEL NORTH & SOUTH ELEVATIONS


Page | P

BUILDING PLANS – HOTEL EAST ELEVATION


Page | Q

BUILDING PLANS – HOTEL WEST ELEVATION


Page | R

BUILDING PLANS – CASINO LEVEL 1


Page | S

BUILDING PLANS – CASINO & GARAGE LEVEL 2


Page | T

BUILDING PLANS – GARAGE LEVEL 3


Page | U

BUILDING PLANS – CASINO & GARAGAE NORTH/SOUTH ELEVATIONS


Page | V

BUILDING PLANS – CASINO & GARAGE EAST/WEST ELEVATIONS


Page | W

MOODY’S ECONOMY.COM PRECIS METRO REPORT


Page | X


Page | Y

PROJECTED CASH FLOW “AS STABILIZED” (AS IF STABILIZED AS OF THE AS IS DATE OF VALUE) LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

Page | Z

PROJECTED CASH FLOW “AS STABILIZED” (AS IF STABILIZED AS OF THE AS IS DATE OF VALUE) Lucky Dragon Hotel & CasinoLas Vegas, NVProjected Cash Flow "As Stabilized" (As If Stabilized as of the “As Is” Date of Value)Fiscal Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028Number of rooms 203 203 203 203 203 203 203 203 203 203 203Occupancy 92.3% 92.3% 92.0% 92.3% 92.3% 92.3% 92.0% 92.3% 92.3% 92.3% 92.0%Occupied rooms 68,370 68,370 68,370 68,370 68,370 68,370 68,370 68,370 68,370 68,370 68,370Average daily room rate 95.01 97.86 100.80 103.83 106.94 110.14 113.46 116.86 120.36 123.97 127.70

RevenuesCasino 34,375 42,486 46,886 48,293 49,742 51,234 52,771 54,354 55,985 57,664 59,394 Rooms $6,496 $6,691 $6,892 $7,099 $7,311 $7,531 $7,757 $7,990 $8,229 $8,476 $8,731Food and Beverage 8,546 8,803 9,067 9,339 9,619 9,907 10,205 10,511 10,826 11,151 11,485Minor Operated Depts 1,709 1,761 1,813 1,868 1,924 1,981 2,041 2,102 2,165 2,230 2,297

Total revenues 51,127 59,740 64,659 66,598 68,596 70,654 72,774 74,957 77,205 79,521 81,907

Departmental expenses

Casino 15,469 19,119 21,099 21,732 22,384 23,055 23,747 24,459 25,193 25,949 26,727Rooms 3,760 3,873 3,989 4,109 4,232 4,359 4,490 4,625 4,763 4,906 5,054Food and Beverage 7,264 7,482 7,707 7,938 8,176 8,421 8,674 8,934 9,202 9,478 9,763 Minor Operated Depts - - - - - - - - - - -

Total departmental expenses 26,493 30,474 32,795 33,779 34,792 35,836 36,911 38,018 39,159 40,334 41,544

Departmental profit 24,633 29,266 31,864 32,819 33,804 34,818 35,863 36,938 38,046 39,188 40,364

Undistributed operating expenses

Administrative and General 7,105 7,318 7,538 7,764 7,997 8,237 8,484 8,738 9,000 9,270 9,549 Marketing - - - - - - - - - - - POM 609 627 646 665 685 706 727 749 771 795 818 Utilities 863 889 915 943 971 1,000 1,030 1,061 1,093 1,126 1,159

Total Undist. Op. Exp. 8,577 8,834 9,099 9,372 9,653 9,943 10,241 10,548 10,865 11,191 11,526

Income before fixed charges 16,056 20,432 22,764 23,447 24,151 24,875 25,622 26,390 27,182 27,997 28,837

Fixed charges

Management 2,556 2,987 3,233 3,330 3,430 3,533 3,639 3,748 3,860 3,976 4,095 Real & Personal Taxes 428 505 518 532 545 560 574 589 604 620 636 Insurance - - - - - - - - - - - Reserve for Replacement 2,556 2,987 3,233 3,330 3,430 3,533 3,639 3,748 3,860 3,976 4,095

Total fixed charges 5,540 6,479 6,984 7,191 7,405 7,625 7,852 8,085 8,325 8,572 8,827

Income after fixed charges 10,516 13,953 15,780 16,256 16,745 17,250 17,770 18,305 18,857 19,425 20,010

COMPARABLE PROPERTIES’ REVENUES AND EXPENSES LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV)

Page | AA

COMPARABLE PROPERTIES’ REVENUE AND EXPENSES Income Approach - Comparable Properties' Revenues and ExpensesConstant Dollars (Fiscal Year 2018, Ending October 31)

Individual Comparable Properties

Property NameLas Vegas Sands Corp (Venetian and Palazzo)

Ceasars (8 in Las Vegas, 1 each in Atlantic City, Laughlin, New

Orleans, and Baltimore)

Downtown Las Vegas With Gaming Revenue of

$12,000,000 and Over (12 Locations)

Las Vegas Strip With Gaming Revenue of $1,000,000 to

$72,000,000 (22 Locations)

Las Vegas Strip With Gaming Revenue of $72,000,000 and

over (24 Locations)Property Type CAS CAS CAS CAS CASGeneral Location W U.S. W W WOperating Year Ending (1) Dec-16 Dec-16 Dec-16 Dec-16 Dec-16Occupancy Percentage 93.6% N/A 89.1% 83.6% 93.1%Average Daily Rate (ADR) $254.23 #VALUE! $73.36 $100.94 $181.15RevPAR $237.89 #VALUE! $65.40 $84.39 $168.65Number of Rooms (average) 3,550 1,144 738 605 3,150

Percent PAR ($) POR ($) Percent PAR ($) POR ($) Percent PAR ($) POR ($) Percent PAR ($) POR ($) Percent PAR ($) POR ($)

RevenueCasino 23.1% 68,690 201.12 41.8% 166,922 #VALUE! 40.4% 63,488 194.59 35.4% 36,461 119.16 34.1% 75,366 221.18Rooms 29.2% 86,830 254.23 17.7% 70,771 #VALUE! 15.2% 23,936 73.36 30.0% 30,886 100.94 28.0% 61,724 181.15Food and Beverage 51.7% 44,902 131.47 85.4% 60,420 #VALUE! 126.4% 30,255 92.73 78.8% 24,327 79.50 82.7% 51,022 149.74Minor Operating Departments 17.6% 52,484 153.67 10.1% 40,408 #VALUE! 5.8% 9,079 27.83 10.9% 11,209 36.63 14.8% 32,609 95.70

Total Revenues 100.0% 297,807 871.95 100.0% 398,940 #VALUE! 100.0% 157,015 481.24 100.0% 102,883 336.23 100.0% 220,721 647.76Departmental Expenses

Casino Department 15.9% 13,827 40.48 180.5% 127,741 #VALUE! 130.9% 31,327 96.01 73.6% 22,743 74.33 78.6% 48,534 142.44Rooms 0.0% - 0.00 27.0% 19,092 #VALUE! 53.8% 12,873 39.45 48.4% 14,949 48.85 35.0% 21,583 63.34Food and Beverage Expense 0.0% - 0.00 48.6% 29,367 #VALUE! 84.9% 25,701 78.77 89.1% 21,673 70.83 73.5% 37,497 110.04Minor Operating Departments 0.0% - 0.00 0.0% - #VALUE! 42.3% 3,841 11.77 53.7% 6,020 19.67 45.7% 14,901 43.73

Total Departmental Expenses 4.6% 13,827 40.48 51.5% 205,566 #VALUE! 65.8% 103,283 316.56 63.6% 65,384 213.68 55.5% 122,516 359.56Gross Operating Income 95.4% 283,980 831.46 48.5% 193,375 #VALUE! 34.2% 53,732 164.69 36.4% 37,499 122.55 44.5% 98,205 288.21Undistributed Operating Expenses

Administrative & General (A&G) 0.0% 0 0.00 27.3% 108,955 #VALUE! 18.6% 29,197 89.49 29.7% 30,553 99.85 18.9% 41,672 122.30Marketing 65.6% 390,436 571.58 0.0% 0 #VALUE! 0.0% 0 0.00 0.0% 0 0.00 0.0% 0 0.00Property Operations & Maintenance (POM) 0.0% 0 0.00 0.0% 0 #VALUE! 0.0% 0 0.00 0.0% 0 0.00 0.0% 0 0.00Utilities 0.0% 0 0.00 0.0% 0 #VALUE! 1.9% 2,962 9.08 2.9% 2,943 9.62 1.6% 3,466 10.17

Total Undistributed Operating Expenses 65.6% 195,218 571.58 27.3% 108,955 #VALUE! 20.5% 32,159 98.57 32.6% 33,497 109.47 20.5% 45,138 132.47Income Before Fixed Charges 19.4% 57,688 168.90 13.4% 53,366 #VALUE! 13.3% 20,859 63.93 3.9% 4,003 13.08 24.0% 53,067 155.74

Fixed ChargesManagement Fees 0.0% 0 0.00 0.0% 0 #VALUE! 0.0% 0 0.00 0.0% 0 0.00 0.0% 0 0.00Property Taxes 0.0% 0 0.00 0.0% 0 #VALUE! 0.3% 517 1.58 0.7% 675 2.21 0.9% 2,039 5.98Building and Contents Insurance 0.0% 0 0.00 0.0% 0 #VALUE! 0.0% 0 0.00 0.0% 0 0.00 0.0% 0 0.00Replacement Reserve 0.0% 0 0.00 0.0% 0 #VALUE! 0.0% 0 0.00 0.0% 0 0.00 0.0% 0 0.00

Total Fixed Charges 0.0% 0 0.00 0.0% 0 #VALUE! 0.0% 0 0.00 0.7% 675 2.21 0.9% 2,039 5.98

Income After Fixed Charges 0.0% -$ -$ 0.0% -$ #VALUE! 0.3% 517$ 1.58$ 3.2% 3,328$ 10.87$ 23.1% 51,028$ 149.76$ Income (Loss) Before Debt and Income Taxes 19.4% 57,688 168.90 13.4% 53,366 #VALUE! 13.0% 20,343 62.35 3.2% 3,328 10.87 23.1% 51,028 149.76Source: Individual Comparable Properties

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AN APPRAISAL OF REAL PROPERTY IN AN APPRAISAL REPORT · 2018. 9. 17. · EXECUTIVE SUMMARY LUCKY DRAGON HOTEL & CASINO (LAS VEGAS, NV) EXECUTIVE SUMMARY EXECUTIVE SUMMARY Property