THIS CONFIDENTIAL LOAN SUBMISSIONmarketing.joneslanglasalle.com/Dallas/HT/Virgin.pdf ·...

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THIS CONFIDENTIAL LOAN SUBMISSION (the “Loan Submission”) is being furnished to the recipient (the “Recipient”) solely for the Recipient’s own limited use in considering whether to provide to Dunhill Partners, Vinculum Partners, The Crosland Group and Virgin Hotels collectively (the “Borrowers” or the “Sponsors”) all or a portion of a loan (the “Loan”) which will be secured by, among other collateral, a first-priority mortgage lien and a first-priority assignment of rents, leases and profits of the Virgin Hotel & Residences, Dallas, Texas (the “Property” or the “Subject”).

Jones Lang LaSalle (“JLL”) has prepared this confidential Loan Submission, which contains brief, selected information pertaining to the business and affairs of the Property. This confidential information does not purport to be all-inclusive nor does it purport to contain all the information, which a prospective lender may desire. Neither the Borrower, nor the Owner, nor JLL nor any of their respective partners, officers, employees or agents makes any representation or warranty, expressed or implied, as to the accuracy or completeness of this Loan Submission or any of its contents and no legal liability is assumed or shall be implied with respect thereto.

The Recipient agrees that (a) the Loan Submission and its contents are Confidential Information, except for such information contained in the Loan Submission, which is a matter of public record, (b) the Recipient, the Recipient’s employees, agents and consultants (collectively, the “need to know parties”) will hold and treat it in the strictest of confidence, and the Recipient and the need to know parties will not, directly or indirectly, disclose or permit anyone else to disclose its contents to any other person, firm, or entity without the prior written authorization of JLL and the Borrower, and (c) the Recipient and the need to know parties will not use or permit to be used this Loan Submission or its contents in any fashion or manner detrimental to the interest of the Borrower, the Owner or JLL or for any purpose other than use in considering whether to provide all or a portion of the Loan. The Recipient and the need to know parties agree to keep this Loan Submission and all Confidential Information contained herein permanently confidential and further agree to use this Loan Submission for the purpose set forth above.

PHOTOCOPYING OR OTHER DUPLICATION IS STRICTLY PROHIBITED.

THE BORROWER EXPRESSLY RESERVES THE RIGHT, AT ITS SOLE DISCRETION, TO REJECT ANY OR ALL PROPOSALS OR EXPRESSIONS OF INTEREST IN THE PROPOSED UNDERLYING LOAN AND TO TERMINATE DISCUSSIONS WITH ANY PARTY, AT ANY TIME, WITH OR WITHOUT NOTICE.

THE CONFIDENTIAL LOAN SUBMISSION SHALL NOT BE DEEMED TO BE A REPRESENTATION OF THE STATE OF AFFAIRS OF THE PROPERTY OR CONSTITUTE AN INDICATION THAT THERE HAS BEEN NO CHANGE IN THE BUSINESS OR AFFAIRS OF THE PROPERTY SINCE THE DATE OF PREPARATION OF THIS LOAN SUBMISSION.

If either party does not wish to pursue negotiations leading to the placement of the Loan, or if in the future the Lender or Borrower discontinues such negotiations, you agree to return this Confidential Loan Submission to JLL.

Environmental/Hazardous WasteWhereas JLL has no knowledge of asbestos, hazardous waste or other toxic materials on the Property, we recommend an environmental survey be conducted prior to funding.

STAYAWHILEDINE / RELAX / SIP / MEET

DINE / RELAX / SIP / MEET TABLE OF CONTENTSEXECUTIVE SUMMARY///////////////////// 4

FINANCIAL ANALYISIS///////////////////// 13• Property Overview• Financial Overview• Development Budget• Draw / Cash Flow Schedule• Residences Analysis• Hotel Analysis

PROJECT DETAILS/////////////////////////// 18• Property Detail• Site Plan• Property Renderings

THE DALLAS DESIGN DISTRICT////// 30• Overview• Location Map• Aerial Photographs

MARKET INFORMATION////////////////// 42• Hotel Market Summary

• Market Summary - Per Source Strategies• HVS Feasibility Study Overview• Hotel Sale Comparables

• Condominium Market Summary• Meyers Research Report• Condominium Comparables

• Land Sale Comparables

SPONSORSHIP//////////////////////////////////60

EXECUTIVE SUMMARY///////////////////// 6

FINANCIAL ANALYISIS///////////////////// 18• Property Overview• Financial Overview• Development Budget• Draw / Cash Flow Schedule• Residences Analysis• Hotel Analysis

PROJECT DETAILS/////////////////////////// 32• Property Detail• Site Plan• Property Renderings

THE DALLAS DESIGN DISTRICT////// 46• Overview• Location Map• Aerial Photographs

MARKET INFORMATION////////////////// 60• Hotel Market Summary

• Market Summary - Per Source Strategies• HVS Feasibility Study Overview• Hotel Sale Comparables

• Condominium Market Summary• Meyers Research Report• Condominium Comparables

• Land Sale Comparables

SPONSORSHIP//////////////////////////////////78

CONTACTS

RANDY FLEISHERManaging Director

[email protected]

HUTTON LUNSFORDAssociate

[email protected]

BEVERLY WOODALLVice President 214.438.6349

[email protected]

EXECUTIVE SUMMARY

VIRGIN HOTEL & RESIDENCES

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E X E C U T I V E S U M M A R Y

OVERVIEWThe Virgin Hotel & Residences is an iconic project that will change the Dallas skyline and provide a unique hospitality and residential experience. Jones Lang LaSalle (“JLL”) has been exclusively engaged to secure $80,123,700 of non-recourse construction financing for the The Virgin Hotel & Residences (“The Property”), a best-in-class high-rise offering 214 premium hotel rooms and 70 exclusive condominium units. The Property’s 18 floors and ideal location along I-35 provide high visibility and unparalleled views. The Property will serve as one of the anchors to the Design District and provides residents/guests with a sought-after, walkable community and easy accessibility to all areas of Dallas.

The Design District provides a diversified mix of shops, boutiques, bistros, design showrooms and galleries.The Design District has evolved from a “trade only” warehouse district to a hip, blossoming “live-work-play” community that has acted as a catalyst for both commercial and residential growth. With critical mass under single ownership, the neighborhood’s transformation is visible and gaining momentum. Dunhill Partners, one of the Virgin Hotel & Residences’ development sponsors, currently owns approximately 700,000 square feet across 15 sites within the Design District with plans to construct an additional 16-story office building, 200 multifamily units and a 125-room boutique hotel.

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The Virgin Hotel & Residences – Dallas Design District The Virgin Hotel & Residences will be the most innovative, cutting edge hotel in Dallas/Fort Worth (D/FW). The 18-floor high-rise will contain 214 of the highest quality hotel rooms in Dallas as well as 70 elite, unparalleled condominium units. The Property will be the crown jewel of the Design District, which is quickly becoming the most sought-after and fastest growing area in greater D/FW. Upon entering the hotel, visitor’s eyes will be drawn to the highly popularized Common’s Club which serves as a dramatic meeting point amongst guests and residents to enjoy fine dining, cocktails and after-hour fun. The Virgin Hotel & Residences’ design, ambiance and service will be the first of many luxuries that guests will experience during their time spent at what will be the most highly-sought-after hotel in D/FW.

The Property will bring an unprecedented level of style, luxury and playful sophistication to Dallas’ DesignDistrict. The Virgin Hotel fuses a passion for food and beverage with music and culture, providing a vibrantand inclusive environment for travelers and locals alike, all presented with a nuanced sophistication that has been mastered in every service offering offered by Virgin. The experience begins even before a guest checks in with a series of personalized choices, services, and pre-arrival check in, thus creating an uncluttered and stress-free lobby space showcasing the Virgin brand’s convergence of style and dedication to world-classservice. The approach to design is delivering memorable, fun, sexy and smart spaces, each truly authenticand reflective of the city’s local character, bringing a one-of-a-kind residential quality to the design. For example, adjacent to the lobby, the Commons Club defines the Virgin brand upon arrival. It is the social center and heart of each Virgin Hotel, presenting a fun and dynamic hybrid of hotel lobby, reception,

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lounge, and restaurant/bar with heartfelt service at its core. It will combine an irreverent impulse to dazzleand delight with an atmosphere of intimacy and refinement, serving as a dramatic meeting point amongstguests and residents, thus dramatically enhancing the lobby experience, making it less transient and a space to experience, all while adding revenue opportunities for the property.

The Virgin Hotel & Residences’ design team combines global exposure with local roots; 5G Architects and Duncan Miller Ullman, both based in Dallas, bring together a global portfolio with a deep understanding of Texas, thus delivering a refreshing fusion of sensory experiences with an energetic atmosphere to create a lasting impression for travelers and residents.

Notable highlights of The Virgin Hotel include five star F&B venues, a dedicated and exclusive music venue and cocktail bar, a state-of-the-art business center, ballroom and meeting space, an expansive gym featuring Internet-equipped Technogym cardio machines and a saline luxury swimming pool with tanning deck and outdoor pool bar. The pool experience is enhanced with a large welcoming outdoor area with sophisticated cabanas, as well as a covered outdoor bar with access to the dynamic and much sought after Cerise bar concept on the same level. Cerise, a seamless indoor-outdoor bar and lounge concept is a highly popular destination and will be the highlighted F&B venue at the property, along with the Commons Club and restaurant in the lobby and a cocktails themed music venue and bar.

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The Virgin Hotel in Dallas will provide state-of-the-art meeting and event space integrating the latest technology offering with a mix of style, service and convenience that customers have come to expect from Virgin. With over 4,000 square feet of Ballroom space, and 2,500 square feet of meetingspace, the meeting venues are supported by a full service F&B offering and spacious pre-function area. We believe the Virgin Hotel will provide the destination for the Dallas area’s most notable events.

Beyond the world-class amenities that the Propertyprovides, the hotel’s signature Chambers concept will take the guests’ experience to a level unseen in the Dallas market. The development team channeled thoughtfulness, creativity and technology into the Chambers, not only focused on how the rooms will look, but also how they will work. The layout of the Chambers will consist of a dressing room and sleeping lounge separated by sliding privacy doors.

The Virgin Hotel & Residences’ groundbreaking Chambers design combines the hallway, closet and bathroom into one luxurious dressing room area, while privacy doors close to create a personal sleeping lounge, ideal for working, recharging and playing.

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The Virgin brand’s Lucy App allows guests to ring guest services, order room service, control the thermostat, make reservations, valet their car and more. The rooms will feature a makeup vanity with over-sized mirror and Virgin’s one-of-a-kind, custom-designed hybrid bed (patent pending) featuring an ergonomic headboard and erectable footboard. The one-of-a-kind design rooms will be fitted with products through partnerships with key vendors such as Kohler (plumbing), Poliform (furniture), Poltrona Frau Chair, SMEG (mini-refrigerator), and Jamison Bedding (mattress).

More details on the room, design and brand standards will be provided upon request.

The Residences

The Residences will bring a new era of exclusive high rise living to Dallas. The 70 condominiums and four penthouses with private terraces are built to blend in with the design and style of the hotel, managed efficiently to keep HOA fees competitive, provide access to the Strand trail for outdoor activities, and deliver access to the Virgin Hotel’s A-grade offerings and venues. The residents will enjoy the best that Dallas has to offer in finishes and amenities. The Residences, totaling 70 units, completes the offering to

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our target ‘psychographic’ and captures the growing demand for luxury urban living in Dallas. The Residences will include white oak solid hardwood flooring throughout (excluding bathrooms and utility areas). Residents will enjoy vast, open living and kitchen areas with built-in appliances, contemporary cabinets, natural stone countertops, gas ranges and double ovens. Additionally, the residences call for spacious bathrooms with natural stone tops and generous bathtubs and showers. The grand penthouse units provide an impeccable downtown view, cavernous living areas, and exclusive, private rooftop terraces divided and covered by trellis rims.

The Residences’ rooftop amenities and common areas include a state-of-the-art fitness center with pilates reformer(s), a large pool and hot tub, clubhouse with a full kitchen and entertainment area, a spacious outdoor kitchen & grilling area to entertain residents and their guests and a terrace. There are 176 condominium parking spaces planned for 70 units, including shared parking on the ground level and access-controlled resident parking on Level 5. Residents will have the option of utilizing the residences’ exclusive valet service. Residents will receive best-in-class concierge services and will have dedicated elevator access to residential floors. The Residences will also enjoy room service and can access restaurants and bars at the Level 6 pool deck/amenity area in the hotel, including the Cerise Bar & Lounge, large pool area, tanning area, outdoor pool bar, private fitness center and can also utilize the Hotel’s fitness facilities.

The sponsors are currently working with a team of talented brokers at Allie Beth Allman to finalize a sale/marketing plan and agreements to offer units for pre-sale shortly after zoning approval.

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Other Investment MeritsEXCELLENT SPONSORSHIPThe following is a summary of the project’s Sponsorship.

• Dunhill Partners Dunhill Partners acquired approximately 700,000 square feet of property (34 acres) within the Design District in late 2014 and is the driving force behind the Design District’s development and opportunistic future. The company is a nationally recognized and widely successful owner/operator and has bought and sold over $3 Billion worth of commercial product throughout the last 10 years.

• Vinculum Partners Vinculum Partners is a Dallas-based hospitality owner and asset manager. The partners of Vinculum bring decades of experience in construction, capitalization, asset management, and development of hospitality properties. The partners have collectively handled transactions worth over $4 Billion, and have been involved in construction of marquee projects like The Joule Hotel, The Lumen and The Ritz Carlton and currently own and manage a portfolio of hotels through their affiliated entities.

• The Crosland Group is a full-service real estate development and investment company based in Dallas. Crosland, through its affiliated entities including Redwood Residential Properties and Sapphire Properties, has completed investment and development activity in excess of 12 million square feet of property value exceeding $2 Billion.

• Virgin Hotels is a lifestyle hospitality brand that combines heartfelt service, straightforward value and a seamless, personalized hotel experience with the track record of innovation and smart disruption that Sir Richard Branson’s global Virgin Group has pioneered for over 40 years. Each property will intermix a passion for food and beverage with music and culture, fusing with the local landscape and providing a vibrant and inclusive environment for travelers and locals alike. Virgin Hotels Chicago is now open, with Nashville, New York and others to follow. Virgin plans to open 25 hotels in major U.S. and European destination gateways by 2025.

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UNMATCHED ACCESSIBILITYThe Property benefits from its centralized location in the Design District, providing easy access to and from the Dallas North Tollway, including on and off ramps at Oak Lawn Avenue, as well as Stemmons Freeway (I-35) and Woodall Rodgers Freeway, which also connects the area to Central Expressway (US-75).

ATTRACTIVE BASISAfter allocating costs to the condominium project, the Hotel is being built at a basis of just over $300,000/key. Net of condo profits, the hotel will have a basis of under $260,000/key. For a Class A lifestyle hotel, the basis significantly diminishes risk.

SIGNIFICANT REVENUE BOOST FROM F&BVirgin Hotels has proven that its F&B offerings have an ability to generate substantial revenues, and this should be especially well captured in Dallas due to a weak set of high quality hotel bars and restaurants.

LIMITED COMPETING INVENTORYDallas has a substantial inventory of limited service rooms, but upscale boutiques are a handful. We believe the Virgin Hotel will be on top of the boutique pyramid in Dallas when complete, and capture adequate premiums in the category.

STRONG AND DIVERSIFIED EMPLOYMENT GROWTH IN DALLASThe demographic growth and corporate relocation wave to Dallas has now been well publicized. We believe the diversity of industries relocating to Dallas, and the quality of tenants making CBD Dallas their home will create sustained demand for a globally desirable hospitality product like the Virgin Hotel.

LIVE-WORK-PLAY ENVIRONMENTThe highest and best use of the Design District has progressed from its historical “trade” business climate to a mix of uses including one-of-a-kind restaurants, showrooms, office and residential.

PROXIMITY TO UPTOWN, VICTORY PARK AND THE CBDThe Design District is proximate to the primary employment and entertainment districts of Dallas including Victory Park, Uptown, the Dallas CBD/Arts District and the Trinity River Corridor.

PROXIMITY TO LOVE FIELD AIRPORTThe Virgin Airlines has steadily increased their capture of customers flying out of Dallas Love Field, and customers will eventually be driven to the hotel through the various loyalty offerings that Virgin is currently designing.

HOTEL AND CONDOMINIUM FEASIBILITY REPORTSComprehensive feasibility reports have been conducted by HVS Consulting and Meyers Research for the hotel and condominium portions of the Property, respectively. Both reports conclude that there is high demand for a luxury, state-of-the-art The Virgin Hotel & Residences that will serve the needs of the Design District. Additional information on the feasibility studies can be found in the Market Information section of the Financing Memorandum.

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PROPERTY SUMMARY

UNITS GSF NSF

Hotel Rooms, Lobby &

Amenities

214 171,158 138,565

Residences, Rooftop Bar

& Amenities

70 123,241 102,885

Parking Structure 165,636 165,636

Total 284 460,035 407,086

CONSTRUCTION TIMELINE

Architects Begin Design Process June-16

GMP Set November-16

100% CD Issuance January-17

Construction/Demo Start October-16

Construction Period 24 Months

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The RequestSOURCES AND USES

PER GSF TOTAL

Construction Loan: 65% $174.17 $80,123,700 Equity: 35% $93.78 $43,143,463

TOTAL SOURCES 100% $267.95 $123,267,163

Land: 5% $13.13 $6,042,010

Hard Costs: 72% $194.07 $89,277,074

FF&E & Finishes: 9% $23.26 $10,700,000

Soft Costs: 14% $37.49 $17,248,079

TOTAL USES 100% $267.95 $123,267,163

CONSTRUCTION LOAN REQUEST

Loan Amount $80,123,700

Term Length 5 Years

Maximum Loan-to-Cost 65%

Average Loan-to-Cost 53%

Current Interest Rate* 4.43%

Interest Only Term 5 years

*Note that the analysis uses the 30-day forward Libor Curve to calculate interest throughout the loan term

FINANCIAL ANALYSIS


PROJECT DETAILS


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P R O J E C T D E T A I L S

Property Information

Property Address: 1909 Hi Line DrDallas, TX 75207

Location: West of the intersection of Hi Line Dr and Turtle Creek Blvd

Development Team: Sponsor: Dunhill Partners, Vinculum Partners, The Crosland Group

Architect: 5G | Studio Collaborative

Interior Design: Duncan Miller Ullmann

General Contractor: Andres Construction

Site Area: 45,738 SF; ±1.05 Acres

Number of Rooms: 214

Hotel Room Mix:

CHAMBER TYPE NUMBER OF ROOMS % OF PROPERTY AVG. ROOM SIZE

King Chamber 127 rooms 59.4% 325 SF

Double Chamber 44 rooms 20.5% 350 SF

Deluxe King Chamber 30 rooms 14.0% 450 SF

One-Bedroom Suites 11 rooms 5.1% 650 SF

Celebrity Suite 2 rooms 1.0% 1,000 SF

Total Rooms 214 rooms 100.0%

Condo Units

UNITS AVERAGE SF AVG. PRICE PER UNIT AVG. PRICE PER SF

70 1,470 $1,050,312 $715

Unit information is provided in the Financial Analysis section included herein.

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Stories: 18 storiesFloor 1: Parking garage, hotel street lobby, commons club, and back-of-house servicesFloors 2-5: Parking garageFloor 6: Amenity levelFloors: 7-12: Hotel guest roomsFloors: 13-17: Residential condominiumsFloor 18: Penthouse CondominiumsRooftop: Condo clubhouse, fitness center, pool, private

terraces for penthouse units and other amenities

Number of Buildings: 1

Parking: 425 total garage parking spaces on the first 5 floors of the building as follows:

Level 1: 45; Level 2: 92; Level 3: 108; Level 4: 108; Level 5: 99 Parking dedicated to Hotel: 276 Parking dedicated to Residences: 176 Parking dedicated to bar/dining for ground floor: 28 Parking dedicated to meeting space: 34

Room Amenities: • Sliding privacy doors between the

sitting and sleeping areas

• Lucy, the Personal Comfort

Assistant mobile app, allows

visitors to ring guest services,

order room service, control the

climate, make dinner reservations,

valet their car and live chat with

the hotel’s concierge from the

convenience of their smartphone.

• Minibars stocked with drinks and

snacks at street prices

• Makeup vanity featuring an over-

sized mirror and flattering lights

• Custom-designed hybrid bed

(patent pending) features an

ergonomic headboard and

erectable footboard that allow for

a multitude of lounge positions.

• Smart closets by Poliform® provide

ample shelving, hanging space,

shoe storage, drawers and a full-

length mirror in an elevated design.

• Dog-friendly chambers equipped

with dog beds as comfortable as

the human ones.

• The Know, the Virgin Hotel’s

guest preference program, allows

guests to personalize their stay

to their likings, such as having

their favorite beverage stocked in

the mini-fridge, a pillow to match

guests sleeping styles, or having

their puppy’s favorite treat on

hand.

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Property Amenities:• Fitness Center featuring

Technogym® cardio machines• Revival Lounge• Storage Areas• Men’s/Women’s Locker Rooms • Spa• Media Room • Pantry

• Swimming Pool with Tanning Deck and Outdoor Pool Bar

• Gift Shop• The Commons Club provides

guests with eclectic dining options and a sleek, modern bar in a glamorous setting.

• The Social Hour, hosted nightly from 7 to 8 pm, offers guests a full bar of cocktails on the house.

• Business center complete with mac computer stations and printers.

• A curated collection of publications will include local, global and journals.

Traffic Counts: Oak Lawn Ave at

Hi Line Dr 9,755 vehicles

per day

Oak Lawn Ave at N Stemmons Fwy42,140 vehicles

per day

Market Center Blvd at Oak Lawn Ave 17,361 vehicles

per day

Meeting Space: Three flexible spaces provide options for creative interchanges. Without fixed chairs and no tables (1 person per 7 net SF):

VENUE SEATING CAPACITY ROOM SIZE

Ballroom Seats up to 601 4,230 SF

Meeting Room Seats up to 291 2,040 SF

Board Room Seats up to 64 450 SF

Total Rooms Maximum 959 6,720 SF

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Construction DetailsStructure: Flat plate post-tensioned (PT) deck, in general with minimal drops and beam except at 5th floor amenity deck and 18th floor roof top deck.

Foundation: Concrete pier.

Roof: Thermoplastic polyolefin (TPO) membrane.

Building Exterior: Unitized curtain wall and window wall system curtain with low-e insulated glass, metal panel, wood or wood-look product, brick, extruded metal profiles on curtain wall.

Fenestration: Glazed doors integrated into curtain wall at condos for access to balconies. Multi-slide door units at Cerise bar. Double-glazed insulated units with opening restricted to address guest safety concerns.

Landscaping: The site will be accented with drought tolerant, native and adaptive species. Season plantings will be employed near the entryways and outdoor seating areas, both to soften edges and to encourage a lush atmosphere. Decorative paving will highlight the path from vehicular

drop-off to the main entry doorway.

Elevators: 7 total elevators (6 standard passenger and 1 oversized). Passenger elevators will be 2,500 – 3,000 lbs MRL and oversized will be 4,500 lbs MRL.

HVAC: The building will be served by a centralized water-based system with a heat pump. Guestrooms will have individually controlled units with 3-speed fans that are adjustable by guests.

Data: CAT-6 and WiFi throughout lobby, amenities and guestrooms with optical fiber backbone. Condos will have access to optical fiber backbone, CAT-6 wiring and phone.

Generator: As required for life safety.

Security: Yes. Keycard access and CCTV camera coverage.

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Utilities:UTILITY PROVIDER

Water/Sewer City of Dallas

Phone AT&T

Electricity TXU Energy

Natural Gas Atmos Energy

LEED Certification: The building will be designed to meet LEED Silver certification.

Zoning: PD-621

Property Renderings

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Floor 1 – Entry & Parking Garage

Floor 1 – Parking Garage and Mezzanine

N40 ft

level 01 - mezz

Dallas, Texas

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Design District Hotel +Condos5Gstudio_collaborative, llc. 800 Jackson St. #500. Dallas, Tx 75202 05.13.20160

Floorplans

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Floor 2 – Parking Garage

N40 ft

levels 02 | garage

Dallas, Texas

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Floor 3-4 – Parking Garage

N40 ft

levels 03-04 | garage

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Floor 5 – Parking Garage

Floor 6 – Hotel Amenities

N40 ft

levels 05 | garage

Dallas, Texas

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N40 ft

level 06 | amenity

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Floor 7-11 – Hotel

N40 ft

levels 07-11 | hotel

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Floor 12 – Hotel

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levels 12 | hotel

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Floor 13-14 - Condo

Floor 15-17 – Condo

N40 ft

levels 13-14 | condo

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DOWNTOWN VIEWS

TURTLE CREEK BLVD.

S

HI LINE DR.

C

FIREVEST. FSE

FSE

HS

C

B72BR/2.5BTH

1,950 SF187 SF BALCONY

A11BR/1.5BTH

830 SF75 SF BALCONY

B62BR/2BTH1,957 SF

201 SF BALCONY

A11BR/1.5BTH

830 SF75 SF BALCONY

A11BR/1.5BTH

830 SF75 SF BALCONY

A11BR/1.5BTH

830 SF75 SF BALCONY

A61BR/1.5BTH + STUDY


B32BR/2.5BTH


A31BR/1.5BTH

870 SF92 SF BALCONY

B12BR/2.5BTH


KEY SECTION

B42BR/2.5BTH + STUDY


A11BR/1.5BTH

830 SF75 SF BALCONY

A11BR/1.5BTH

830 SF75 SF BALCONY

LEASABLESTORAGE

232 SF

MEP

A4.51BR/1.5BTH


A51BR/1.5BTH


N40 ft

levels 15-17 | condo

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DOWNTOWN VIEWS

TURTLE CREEK BLVD.

S

HI LINE DR.

C

FIREVEST. FSE

FSE

HS

C

LEASABLESTORAGE

232 SF

B52BR/2.5BTH


A4.51BR/1.5BTH


A51BR/1.5BTH


KEY SECTION

MEP

B72BR/2.5BTH


B62BR/2BTH1,957 SF

201 SF BALCONY

A61BR/1.5BTH + STUDY


B32BR/2.5BTH


A31BR/1.5BTH

870 SF92 SF BALCONY

B12BR/2.5BTH


B42BR/2.5BTH + STUDY


B52BR/2.5BTH


B52BR/2.5BTH


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Floor 18 – Condo Clubhouse & Condo Penthouses

Building Section

N40 ft

level 18 | condo clubhouse & condo penthouses

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DOWNTOWN VIEWS

POOL

TURTLE CREEK BLVD.

HI LINE DR.

TERRACE

HS

FITNESS

RR217 SF

1,890 SF

FSE

FSEFIREVEST.

C

C

MEP

CLUBHOUSE

1,564 SF

GRILLING +OUTDOOR LIVING

C42BR/2.5BTH + STUDY


C22BR/2.5BTH


C32BR/2.5BTH


C12BR/2.5BTH


KEY SECTION

50 ft

building section

THE DALLAS DESIGN DISTRICT


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T H E D A L L A S D E S I G N D I S T R I C T

HistoryTrammell Crow recognized this critical region and began construction on several warehouses in the area between the Trinity River and I-35 in the late 1940s and early 1950s. Then, in 1953, a group of decorators and salesmen, representing fine furniture, gifts, carpet and wall covering companies scattered throughout downtown Dallas approached Trammel Crow to come up with a solution; a consolidated, single venue to show their merchandise and hold large conventions. Two days later, Crow presented them with preliminary plans for what would be the Dallas Decorative Center. The facility eventually opened its doors in 1955 marking the first wholesale dedicated building in the present day Design District.

For several decades the Design District had been relatively isolated from the rest of the city and general public due to a lack of easy access and its collection of design showrooms (and the several art galleries located on Dragon Street) that were frequented almost exclusively by credentialed interior designers. In the early 2000’s, Crow Holdings along with the Jim Lake Companies developed a master plan for the area and created a Tax Increment Financing (TIF) District to assist in defraying infrastructure costs for the plan, which called for residential, dining, retail and hotel uses and an improved streetscape.

The Design District TIF District is located approximately 2.5 miles northwest of downtown Dallas, adjacent to Stemmons Freeway with close proximity to the dynamic Uptown and Victory Park areas. The 186-acre TIF District was created in June 2005 to allow the City to invest public funds to assist in redeveloping the industrial and warehouse district to promote transit oriented development, improve access to the Trinity River and the quality of development adjacent to the Trinity Corridor. The TIF District is well on its way to improving the neighborhoods and blending old and new, with a timeline that progresses through 2027.

In February 2009, the TIF Board adopted a “Design District TIF Strategic Implementation Plan” to guide the next phases of development and improvements in the Design District. As of 2014, the Design District TIF had grown to include over 1,500 apartments, new restaurants, new and upgraded showrooms/retailers in the home goods market, as well as performance space and art galleries. Approximately $263 million in new investment has been completed with new projects underway or planned. The overall tax base of the district is approximately $543,748,244 based on Dallas County reported 2014 final values, an increase of 93% over the base years (2005 and 2013) and an increase of 8% over the prior year’s final value.

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AccessibilityThe Design District is ideally located with highway frontage and access to I-35 (Stemmons Freeway) on the north, as well as access on the south to Riverfront Boulevard and the Trinity River. The Dallas North Tollway includes on and off access at Oak Lawn Avenue making this the front door to the Design District. This allows Dallas employers located in Las Colinas and Far North Dallas simple access to exciting places to meet and catch up on social or investment opportunities in the Design District. I-35 also connects the Design District to the Woodall Rodgers Freeway which connects to Central Expressway/US-75 heading north and I-45 providing southbound access to Houston.

The Dallas Love Field Airport, located just two and a half miles north of the Design District, also serves a critical role in attracting upscale clientele as they can fly to Dallas in private jet accommodations and be at the Design Center within minutes. The Addison Airport, which is one of the busiest private aviation airports, is just 12 miles north of the Design District with direct access via the Dallas North Tollway.

TenancyEven with the recent residential, dining and entertainment development in the Design District, the showroom tenant base still maintains a strong presence. The “Design District” has evolved from a “to the trade only” warehouse district to a thriving and eclectic community that offers residents many boutiques, bistros and access to over 300 shops and art/design showrooms. Interior design and home furnishings are still king in the Design District. World-famous fabric houses, stone galleries and lifestyle designers all call the Design District home which allows the area to boast of its status as the fourth largest consolidated portfolio of designer showroom space in the country. The merchandise mix or the way certain industries within the wholesale trade are segmented drives tenancy and the consolidated presence brings people here for a single destination shopping experience. A sampling of the designer showrooms and shops within the Design District include:

Ann Saks Tile bulthaup Cory Pope

Dahlgren Duck Scott + Cooner Walter Lee Culp

Miele Adriana Hoyos David Sutherland

Poggenpohl Waterworks E.C. Dicken, Inc.

Herman Miller Schumacher George Cameron Nash

Roche Bobois Quadrille, Inc. BoConcept

Bauhaus Ebanista F. is for Frank

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Art galleries have been migrating to Dragon Street and the farthest corners of the Design District for nearly a decade, making the area the epicenter of the gallery scene in the city and a place for art lovers to find everything from French Impressionism painting to contemporary installation art.

Slocum Street, sandwiched between Dragon Street to the west and Hi Line Drive to the east, is internationally renowned for its antique shops which still define the street. However, Slocum too has diversified in recent years away from predominantly French and classical antiques to also include mid-century modern furniture and just steps away on Howell Street, some of the coolest vintage and thrift shops in the city.

The players of the Design District are constantly evolving, many of which are creating their own playground. Recently, the billionaire Karpidas family purchased 1532 Hi Line Drive and recently completed renovation of the building as their family office and a venue to display their private art collection. Site131 on Payne Street was newly opened by Joan Davidow as a nonprofit gallery that will pair local contemporary artists with artists from the national and international art scene. Capera Ryan, a Dallas trendsetter and senior vice president and managing director of Christie’s, purchased the warehouse building at 171 Oak Lawn for hosting private art shows and events. Just north of Oak Lawn Avenue, along Turtle Creek Boulevard, Don Henley purchased an empty industrial building with a brick facade and has converted it into his personal recording studio. Their buildings blend in from the outside and yet the cool factor in the neighborhood brings them here. They want to be a part of something special. They look forward with respect for the past.

ResidentsWithin a 1-mile radius of the site for the Virgin Hotel – Dallas, the population is comprised of mostly single, highly mobile and educated young professionals. The median age is 33 years and the average household size is 1 person. Only about 13% of the households have children, which means that the vast majority of the neighborhood’s population has a larger proportion of additional disposable income to use for entertainment, shopping, dining and travel. These individuals are educated and diverse, willing to relocate for work or to be in the latest hip development.

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Multi Family DevelopmentsThe Dallas Design District offers moderate and upscale living with a great atmosphere in a trendy and urban lifestyle. Today, there are six completed multifamily developments in the Design District with over 1,500 units. Residents of the Design District enjoy walkability to over 370 shops, a variety of dining options ranging from unique fast casual concepts to trendy dive bars to award winning fine dining, and nightlife in their own neighborhood. While they are proximate to Victory Park, Uptown, the Dallas CBD/Arts District and soon the Trinity River Corridor, the established yet still evolving Design District is an equal and great alternative to all of these neighborhoods.

Additional multifamily communities are underway in the Dallas Design District. Trammell Crow Residential is under construction on Alexan Riveredge, a 309-unit six-story development at 120 Turtle Creek Blvd. that will be completed by year-end 2016. Wood Partners broke ground in October 2015 on Alta Strand, a 400-unit five-story project at 1931 Market Center Blvd. Alta Strand is scheduled to begin leasing in spring 2017. Harwood International is in the planning stages and expected to break ground in early 2016 on District 1444, a 224-unit five-story multifamily community at 1444 Oak Lawn Avenue. District 1444 will also include almost 47,000 square feet of retail space for an eclectic variety of shops and restaurants.

Office MarketThere are 20 office buildings totaling approximately 925,000 square feet that are located within the Design District in the area bound by the Trinity River, IH-35E (Stemmons Freeway), Woodall Rogers Freeway and Medical District Drive. About one-half of this office inventory is comprised of Class B buildings and the remainder are Class C buildings. As of 3Q 2015, these office buildings were 98.1% occupied. Most of the available vacant space in the Design District is located in 1825 Market Center Blvd. which has an asking rent of $25.00 per square foot, full-service.

The lack of quality office space options offering amenities has enticed Dunhill Partners to consider building an office structure within the Design District. Dunhill Partners is in the planning stage for The Design District Tower, a 243,100-square-foot Class A structure at 1640 Edison Street. The 16-story tower will be located next door to the recently completed 1400 Hi Line apartment tower and across Stemmons Freeway from Victory Park. Asking rents for the proposed building are $32.00 - $34.00 PSF NNN. Construction is expected to begin in spring 2016.

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FT 33Chef Matt McCallister has been creating a buzz around Dallas with his new fresh, seasonally-inspired restaurant. Menu items include uni and chive pancakes, scallops with piquillo chile, grapes and capers, and desserts that feature combinations like “blue cheese, pomegranate, walnut and olive oil.”

Eating and Drinking The restaurants and bars found in the Design District have each established a dedicated following, and, while they could stand alone, are an integral part of the fabric of the Design District. The unique vibe of each establishment combined with great food and location have made the area a destination rather than a stop. Renowned restaurateur Shannon Wynne was the first to really “get” the Design District and the opportunity it provided. He specifically positioned his restaurant, Meddlesome Moth, to be off of Hi Line Drive, knowing that the location was the heart of the District and the growth would fan out from there. His instincts were correct as the intersection of Hi Line and Oak Lawn resonates with pedestrians and vehicles alike from all points in the district and far away.

The 100 Best Restaurants in Dallas

- D Magazine, March 2013#4 – Oak#5 – FT33

#29 – Meddlesome Moth#38 – Off-Site Kitchen

OakTwo-time James Beard “Best Southwest Chef” semifinalist and “Top Chef” contestant, James Tesar is the creator of Oak. Tesar is known for his stylish, modern American cuisine prepared with classic European techniques. Oak serves up international cuisine, creative cocktails and seasoned wine lists in an elegant space.

Meddlesome MothKnown as “the Moth” among locals. A great bar with great food! They have a full bar featuring 40 draught beers, two live ales and more than 85 bottles providing the city’s best beer menu. Plus, a knockout menu featuring small plates.

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Ascension - Centered around incredible, high-quality, farmer-focused coffee from all over the world. The folks at Ascension spend most of their time sourcing the world’s best coffee, roasting it to perfection and brewing them with love for the customer. Ascension also serves wine as well as a full menu.

Mama’s Daughter’s Diner – Started in 1958 by “Mama” to be a home away from home for all those who entered. Mamas’ employees are her family and they help serve the same traditional home cookin’ and the best breakfast in the whole world! All patrons can feel the powerful woman who took care of so many with simple recipes and undying love for everyone who walks in her doors. The walls are filled with all the things Mama said to her daughters for many years. Mama said…“eat your peas and get dessert!” Desserts to write home about, such as coconut meringue, chocolate pie, peach cobbler, to name a few.

Royal Sixty – A new restaurant in the Dallas Design District located at the International Design Center on Turtle Creek Blvd. Serving a menu focused on Paleo-inspired New American cuisine. All their dishes are healthy and delicious! The bistro offers a variety of options, including Paleo dishes and gluten free items. Royal Sixty has a seasonal menu to ensure that every ingredient is always fresh and of the highest quality. Full-service catering after hours can provide catering services for all occasions.

Buck’s Prime - Buck’s looks and feels like a country burger shack and is far better than its forlorn location would indicate. A great place to grab some inexpensive BBQ, an old fashioned burger or a steak in the Design District– casual and family friendly.

Los Lupes - In the Spring of 1972, Los Lupes opened its doors in the present day Design District bringing traditional Mexican food to Dallas. Authentic Mexican food is a lost concept held by few restaurants today because it is so difficult to prepare. The recipes used today have been passed down from the owner’s ancestors through three generations. In all three generations, there was a child named “Lupe”. Hence, the “Los Lupes®” (many Lupes). For over 40 years, Los Lupes® has remained family owned and operated.

Margaux’s Bridge Bistro – Veteran restaurateur Kay Agnew first moved to the Design District in 2009, well ahead of the area’s recent gentrification. Margaux’s serves upscale Cajun/Creole classics, from shrimp and grits to crawfish étouffée. Also on the menu are salads, such as garden greens with fried chicken tenders, which are big enough for a meal.

Pakpao Thai Restaurant – A sister restaurant to Oak, Pakpao Thai serves beautiful dishes with a French-style of presentation with authentic Thai flavors. Compliment your meal with a cocktail or Asian beer. Diners’ experience is elevated with interiors as elegant and nuanced as the dishes. Kites hang from the ceiling, and smoky glass pendants softly illuminate everything below. Crispy fish, duck, young chicken and prawns are celebrated with delectable sauces, curries, bird’s-eye chiles, Thai basil and authentic veggies from the homeland.

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BowlingFurther enhancing the entertainment options in the Design District is Bowlounge which moved from East Texas to the Design District. Bowlounge has 12 regulation length maple and pine wood bowling lanes, Brunswick A2 pinsetters, and cool vintage scoring that’s not perfect but perfectly complements the neighborhood. Patrons enjoy a 75-foot bar with 40 taps, food by Twisted Root, retro videos, 2 brand new pool tables, and a 60” golden tee and Silver Strike Bowling.

ArtThe Dallas Contemporary is a non-collecting art museum presenting new and challenging ideas from regional, national and international artists. Located at Glass Street and Riverfront Boulevard, a few blocks west from the core of the Design District at Hi Line Drive and Oak Lawn Avenue, the Dallas Contemporary features quarterly exhibits that engage the public and offers creativity stimulating lectures, educational programs and events.Katy Trail extension

Entertainment Entertainment options have diversified with the recent addition of a bowling alley, micro breweries, special event venues, and plans for a large outdoor entertainment facility at Riverfront Boulevard at Oak Lawn Avenue. Long term plans include a boutique hotel, an equestrian center and a plethora of recreational activities along the new Trinity River Corridor.

Breweries Ever since city council voted to allow breweries to open within industrial and other non-residential areas, they have been springing up all over Dallas, including three in the Design District. In 2012, the Design District welcomed its first brewery, Peticolas, followed soon after by Community Beer Company and Texas Ale Project (formerly Reunion Brewing Company).

Runners, bikers and roller bladers will soon be able to take the Katy Trail through Highland Park across the Design District (steps from the Moth’s front door) and all the way to Kessler Park in Oak Cliff. The Katy Trail will be extended from the trail’s Victory Overlook and travel over Houston Street, through Stemmons Park and underneath Stemmons Freeway and Oak Lawn Avenue, connecting with the concrete spine of Trinity Strand Trail on the old Trinity River channel. When complete, this trail will join Uptown, downtown, the Dallas Design District, Southwestern Medical District, the Infomart, Stemmons Corridor business and hotels in the area. The Katy and Trinity Strand Trails will total nearly 12 miles of continuous outdoor entertainment and fun.

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Margaret Hunt Hill BridgeThe Margaret Hunt Hill Bridge, completed in March 2012, is spurring economic development in West Dallas and helping to bring people down to the river while also fostering unity beween the north and south divide in the City. The Margaret Hunt Hill Bridge is one of three Santiago Calatrava-designed bridges being built over the Trinity River as part of the Trinity River Project. Construction on the bridge began in spring 2007 with the steel being manufactured in an Italian steel factory often used by Calatrava to manufacture his designs. This stunning bridge with a 400-foot center arch connects Woodall Rodgers Freeway seamlessly to Singleton Boulevard in West Dallas.

Continental Pedestrian BridgeThe Continental Pedestrian Bridge is a fully funded $12 million park that is ½ mile long and spanning the Trinity River. The bridge was closed to vehicular traffic in 2013 and reopened in June 2014 as a new outdoor destination with recreational amenities, parking at the West Dallas Gateway and non-motorized vehicular access across the Trinity River. Features of the new park include a playground with colorful, geometric climbing blocks on a safe, soft surface; lounge chairs; spans of tall, white cloth that act as shade structures to block the sun; other spans of rope mesh that will shade visitors when vines grow and curl over them. There’s also a meditation labyrinth, bocce court and a spray fountain.

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Trinity River Corridor“The Trinity River Project will have more impact on commercial real estate and development than any other project in Dallas’ history. There are also endless educational opportunities; the corridor will become one very large outdoor classroom. And of course, recreational opportunities abound: biking, hiking, kayaking, canoeing, horseback riding and walking.” – Dallas Mayor Mike Rawlings

The Trinity River Corridor Project is a multi-faceted project spanning many neighborhoods across the West and East Dallas and benefitting the entire city. The goal of the Trinity River Corridor Project is to redevelop the Trinity River and the area around it by turning the river’s path into a collection of sports fields, trails, nature centers, recreational and economic opportunities. It is well on its way to becoming a world-class destination that all North Texans will be able to recreate in and take pride in. It will be a waterway abundant with natural vegetation and diverse water species and an adventure spot for hikers, kayakers, bird-watchers and people watchers. Uniting those neighborhoods in Dallas it once divided, the Trinity River will serve as an exciting venue for special events with the spectacular skyline of downtown Dallas as its backdrop. The Trinity River Corridor Project promises to transform one of the city’s most prominent – but under-utilized – features. Its potential for changing the city’s culture is limitless.

The Trinity River Corridor Project promises to change Dallas’ image and redirect development patterns in North Texas. Through almost $2.0 billion in investment, including $270 million in city bond funds, the Trinity River will be transformed into Dallas’ greatest park. The entire corridor, including commercial and residential opportunity areas outside the park greenbelt, includes over 40,000 acres with recreation activities within the river’s levees and redevelopment areas outside the levees.One of the primary entry points to The Trinity River Corridor will be by way of Oak Lawn Avenue which bisects the Design District. With a direct route to and from the river, whether you come from I-35 (Stem-mons Freeway) or Dallas North Tollway, the Design District is a central part of the fabric bringing people to the growing region of Dallas.

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DALLAS DESIGN DISTRICT

ANTIQUES, FURNITURE AND VINTAGE RETAILERS PRODUCTS OFFERED

International on Turtle Creek Designer showrooms

Art of Old India, Inc. High quality antiques, jewelry and textiles from India,

Afghanistan, Iran, Turkey and E. Africa

Anteks Home Furnishings Rustic-style home accessories, carpets/rugs and furniture

Antique Floors Inc. Over 70 ceramic, stone and glass manufacturers

Big Mango Trading Co. Home furnishings, distinctive outdoor & architectural

pieces, exotic accessories with an Asian influence

Ceylon et Cie Timeless and inspirational design, antiques, fabrics,

furniture and lighting

Dallas Market Center World's most complete wholesale marketplace

Highgate House Selling unique antiques from England and America

The Mews More than 90 dealers filling 25,000 square feet across two

buildings

Jones Walker Home Sleek meets cozy combination of furniture and accessories

Hermitage Antiques European art and antiques for the discriminating collector

Inessa Stewart's Antiques & Interiors French, Italian & Continental European antiques, from rustic

to refined

White Elephant Antiques Merchandise from 120 vendors

Whimsey Shoppe Antique furniture and accessories from the Provinces of

France

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2015 HOUSEHOLD INCOME

1/4-MILE 1/2-MILE 1-MILE

$200,000+ 4.6% 4.5% 11.3%$150,000 - $199,999 9.0% 9.0% 6.4%$100,000 - $149,999 26.1% 26.1% 14.4%$75,000 - $99,999 15.1% 15.1% 12.4%$50,000 - $74,999 11.9% 12.0% 17.0%$35,000 - $49,999 14.8% 15.0% 13.3%$25,000 - $34,999 0.0% 0.2% 6.8%$15,000 - $24,999 10.1% 10.3% 8.8%Less than $15,000 7.8% 7.8% 9.7%

2015 POPULATION 25+ BY EDUCATIONAL ATTAINMENT

1/4-MILE 1/2-MILE 1-MILELess than 9th Grade 6.4% 6.5% 11.6%9th-12th grade, no diploma 23.0% 23.1% 8.6%High School Graduate 15.0% 15.0% 8.8%GED/Alternative Credential 17.6% 17.5% 2.3%Some College, No Degree 23.3% 23.1% 12.6%Associate Degree 3.5% 3.5% 4.9%Bachelor's Degree 7.8% 7.7% 31.1%Graduate/Professional Degree 3.5% 3.5% 20.2%

2015 RETAIL SPENDING POTENTIAL

1-MILE

Current Daytime Employment 50,304Food & Beverage Spending $89,272,466 Retail Spending $113,531,846 Services & Entertainment Spending $251,119,384

VIRGIN HOTEL DEMOGRAPHICS

CATEGORIES 1/4-MILE 1/2-MILE 1-MILEPopulation 2010 400 827 10,907Population 2015 488 862 12,100Population 2020 489 864 13,158% Growth 2010 - 2015 22.00% 4.20% 10.90%% Growth 2015 - 2020 0.50% 0.20% 8.70%Households 2000 2 7 3,455Households 2015 345 575 6,470Households 2020 351 585 7,106% Growth 2000 - 2015 17450.00% 8114.30% 87.30%% Growth 2010 - 2015 1.70% 1.70% 9.80%Average Persons Per Household 1 1 1.71Total Housing Units 445 760 7,412Median Household Income 2015 $81,807 $81,353 $64,733 Median Household Income 2020 $94,798 $94,245 $77,397 Annual % Change 3.20% 3.20% 3.90%Median Age 33 33 322015 Median Home Value $300,000 $375,000 $387,200

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DALLAS DESIGN DISTRICTEXISTING MULTIFAMILY INVENTORY

PROPERTY ADDRESSYEAR BUILT # UNITS OCCUPANCY

EFFECTIVE RENTS PSF

1400 Hi Line 1400 Hi Line Dr 2012 314 95.0% $2.34

Alta Design District 1531 Inspiration Dr 2009 309 96.0% $1.44

Avant on Market Center 1955 Market Center Blvd 2013 301 91.0% $1.60

Bell Design District 1900 Hi Line Dr 2009 214 95.0% $1.61

Camden Design District 1551 Oak Lawn Ave 2009 355 97.0% $1.48

Trinity Loft 1403 Slocum St 2006 92 93.0% $1.43

Totals/Averages 2010 1,585 94.8% $1.68

DALLAS DESIGN DISTRICTMULTIFAMILY UNDER CONSTRUCTION

PROPERTY ADDRESS DEVELOPER # UNITS START FINISH

Alexan Riveredge 120 Turtle Creek Blvd Trammell Crow Residential 309 Apr-15 Dec-16

Alta Strand 1931 Market Center Blvd Wood Partners 400 Oct-15 Jun-17

DALLAS DESIGN DISTRICTMULTIFAMILY PLANNED/ANNOUNCED PROJECTS

PROPERTY ADDRESS DEVELOPER # UNITS START FINISH

District 1444 1444 Oak Lawn Ave Harwood International 224 Jan-16 Jan-18DE

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MARKET INFORMATION


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M A R K E T I N F O R M A T I O N

Dallas-Fort Worth Hotel Market Summary(Per Source Strategies)The Dallas-Fort Worth (DFW) hotel market is a vibrant market offering a wide array of hotel properties, from extended-stay/economy options to full-service, luxury accommodations. According to Source Strategies, the DFW hotel market spanned 107,940 rooms as of first quarter 2016. The majority of these rooms (74,659) are located in the Dallas-Plano Metropolitan Division (Dallas MD). Measured by total room revenues, the DFW hotel market is the largest market in Texas accounting for 29.1% of the state’s total room revenues.

As the table below illustrates, the DFW hotel market experienced strong revenue growth in the 12 months ending March 31, 2016, resulting in year-over-year revenue growth of 5.2%. DFW hotels were 72.3% occupied with ADR of $102.70 and RevPAR of $74.25 for the year ending March 2016.

Dallas-Fort Worth Hotel Market

12 Months Ending March 31, 2015 Compared to 12 Months Ending March 31, 2016

METRO AREA

# ROOMS 2016

ROOM REVENUES ADR EST% OCCUPANCY REVPAR

2015 2016 % Chg 2016 Est % Chg 2015 2016 Pt. Chg. 2015 2016 Chg

Dallas MD 74,659 $1,744,297,195 $1,913,012,202 9.7% $100.29 5.7% 69.5% 70.8% 1.3 $65.98 $70.95 $4.97

Ft W-Arl MD 33,281 $793,812,740 $840,176,797 5.8% $104.26 1.6% 64.8% 67.1% 2.3 $66.52 $69.99 $3.47

Total DFW 107,940 $2,538,109,935 $2,753,188,999 8.5% $101.51 4.4% 68.1% 69.7% 1.6 $66.15 $70.65 $4.51

Source: Source Strategies 1Q 2016, JLL

Competing Hotel Properties The following four hotels are the primary competitors for the Virgin Hotel – Dallas:

• W Dallas Victory • Le Meridien Dallas, The Stoneleigh

• Hotel ZaZa Dallas • Joule Dallas

Trinity River

Medical

District

Dr Wycliff A

ve

Oak L

awn A

ve

University Blvd

Empire Central

Hillc

rest

Ave

N Henderson Ave

McKi

nney

Ave

Cole

Ave

Blackburn St

N Hall St

Hall St

McKi

nney

Ave

Carlis

le St

Bryan St

Market Center Blvd

Inwood Rd

Denton Dr

Denton Dr

Burbank

St

Irving BlvdCommonweal

th

Dr

Lemmon Ave

Pres

ton

Rd

Inwo

od R

d

Lemmon Ave

Mockingbird Ln

Gree

nville

Ave

Ross Ave

Canton St

Cedar Springs Rd

Live Oak

St

Gaston Ave

Canada Dr

Maple Ave

Victory AveN Houston St

Ross Ave Main

St

Thurston St

Canada Dr

W Commerce St

Vilbig Rd

Remond Drive

W Colorado Blvd

Grand A

ve

Malcolm X Blvd

Lindsl

ey Ave

E Mockingbird Ln

Skillm

an S

t

Abra

ms R

d

W Lovers Ln E Lovers Ln

Walnut Hill Ln

Park Ln

Walnut Hill Ln

Royal Ln Royal Ln

Forest Ln

Webb Chapel Rd

Marsh Ln

Midway Rd

Inwo

od R

d

Hillcrest Rd

Forest Ln

Park Ln

Abra

ms R

d

Skillm

an St

Gaston Ave

Martin L

uther

King Jr

Blvd

Hatcher S

t

Singleton Blvd

North Westm

oreland Rd

Sylva

n Ave

Sylvan Ave

Maple Ave

Lombardy LnOak

Lawn Ave

S Central Expy

S Ervay St

S Lamar St

Hous

ton Vi

aduc

t

Jeffe

rson V

iaduc

t

W M

ockin

gbird

LnGr

eenvil

le Av

e Royal Ln

Walnut Hill Ln

Columbia Ave

S Munger Blvd

S Fitzh

ugh Ave

North

Cen

tral E

xpy

Cedar Springs

W Mockingbird

Ln

W Mockingbird Ln

Commerce St

N Pearl St

N Griffin St

McKinnon St

Harry Hines Blvd

Lemmon Ave E

Lemmon Ave

N Haskell Ave

N Peak St

E Northwest HwyPreston Rd

S Haskell Ave

S Lamar St

S Riverfront Blvd

North

Ham

pton

Rd

Lemmon Ave

W Commerce St

Fort Worth Ave

Corinth St

Robert B Cullum Blvd

E Grand A

ve

Elm St

Harry Hines BlvdHarry Hines Blvd

Irving Blvd

W Northwest

Hwy

Dalla

s Nor

th To

llway

Stemmons Fwy

R L Thornton Fwy

Woodall Rogers

Fwy

Trinity RiverGreenbelt


ReverchonPark

RobertE. LeePark

WilliamB. Dean

Park

GlencoePark

ColePark

DavisPark

LakesidePark

TietzePark

Samuell-GrandPark

GarrettPark

GriggsPark

ExallPark

BucknerPark

RandallPark

WeichselPark

GrauwylerPark

ArlingtonPark

Nash/DavisPark

BenitoJuarez Park

KesslerParkway Park

Stevens GC

City Park

Fair Park

OpportunityCemetery

Martin LutherKing Jr

Park

CraddockPark

Dal las LoveFie ld A i rpor tDal las Love

Fie ld A i rpor t

Baylor UniversityMedical Center

ParklandMemorial Hospital

SouthwesternMedical Center

Southern MethodistUniversity

DallasCountry Club

Royal OaksCountry Club

LakewoodCountry Club

Children's MedicalCenter - Dallas

Brook HollowCountry Club

Methodist DallasMedical Ctr

Texas HealthPresbyterian

Hospital - Dallas

Harry S. MossPark

Fair Oaks

Medical CityDallas Hosp

Forest ParkMedical Ctr

Trinity StrandTrail

Katy T

rail

UptownUptownArts

Dist r ic tAr ts

Dist r ic t

WestEnd

WestEnd

Centra lBusinessDist r ic t

Centra lBusinessDist r ic t

OaklawnOaklawn

Medica l D ist r ic tMedica l D ist r ic t

DesignDist r ic tDesignDist r ic t

V ic toryPark

VictoryPark

Tr in i ty GrovesTr in i ty Groves

Preston Hol low

Preston Hol low

Univers i tyPark

HighlandPark

289

12

12

12

356

183

35

78

352

75

75

75

77

77

77

67

35E

35E

30

30

30

45

35E

35E

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These luxury hotels are expected to be competitive to some degree with the Virgin Hotel – Dallas due to their comparable offering of upscale amenities, quality of customer service and price point.

Virgin Hotel - Dallas, Primary Competitors

12 Months Ending March 31, 2015 Compared to 12 Months Ending March 31, 2016

# Rooms Room Revenues ADR Est % Occupancy RevPAR

Competitor 2016 2015 2016 % Chg 2016 Est % Chg 2015 2016 Pt. Chg. 2015 2016 Chg

Le Méridien Dallas, The Stoneleigh

170 $9,843,518 $9,955,693 1.1% $217.31 4.1% 76.0% 73.8% -2.2 $158.64 $160.45 $1.81

Joule Dallas 160 $11,514,715 $11,995,871 4.2% $273.78 6.5% 76.7% 75.0% -1.7 $197.17 $205.41 $8.24

Hotel ZaZa Dallas 167 $13,182,296 $13,611,350 3.3% $301.30 1.8% 73.1% 74.1% 1.0 $216.26 $223.30 $7.04

W Dallas Victory 252 $17,039,055 $17,710,903 3.9% $261.55 2.6% 72.7% 73.6% 0.9 $185.25 $192.55 $7.30

Totals/Averages 749 $51,579,584 $53,273,817 3.3% $262.98 3.6% 74.4% 74.1% -0.3 $188.67 $194.87 $6.20

Source: Source Strategies 1Q 2016, HVS, JLL

Occupancy – The competing hotels had a weighted average occupancy of 74.1% during the 12 months ending March 2016. In comparison, the Sponsor has conservatively estimated a stabilized occupancy of 70.0% beginning in Year 3 of operations for the Virgin Hotel – Dallas. To further illustrate the conservative stabilized occupancy for the Virgin Hotel - Dallas, we can compare the projections to the chain’s actual performance of its operating location in Chicago. The Virgin Hotel - Chicago opened in May 2015 and by December 2015 achieved an occupancy rate of 79.15%, or an index of 94.2 when compared to its competitive set. Virgin Hotels anticipates the Virgin Hotel - Dallas will reach an occupancy rate of about 67% in the hotel’s first year of operations, which would equate to an index of 93.0 when compared to the Virgin Hotel - Chicago.

ADR – The competing hotels had a weighted average ADR of $262.98, up 3.6% over the previous year. The ADR of the Virgin Hotel – Dallas is projected at $292.78 in its first year of operations. While the Virgin Hotel’s initial ADR is approximately 11% higher than the competitors average ADR as of first quarter 2016, the opening date of the Virgin Hotel - Dallas is more than two years away. Assuming the average ADR of the competitors continues to grow 3.6% annually, the competitors’ ADR will be approximately $292.42 by early 2019, in-line with the projected initial ADR for the Virgin Hotel - Dallas. A comparison with the ADR achieved by the Virgin Hotel - Chicago further illustrates that the ADR projected for Virgin Hotel - Dallas is achievable. As of December 2015, the Virgin Hotel - Chicago realized an ADR at a strong index of 108.0 compared to its competitors. In comparison, in its first year of operation the Virgin Hotel - Dallas is expected to achieve an ADR index of 103.0 compared to the Virgin Hotel - Chicago.

RevPAR – These competing hotels achieved a weighted average RevPAR during the year ending March 2016 of $194.87, an increase of $6.20 from the prior year. In comparison, the projected RevPAR for the Virgin Hotel - Dallas in its first year of operation is conservatively estimated at $180.97. In comparison, only the Le Méridien Dallas, The Stoneleigh had a lower RevPAR during the year ending March 2016 than the Virgin Hotel - Dallas is projected to achieve in its first year of operation. A comparison can also be made between the RevPAR achieved by the Virgin Hotel - Chicago and the RevPAR projected for the Virgin Hotel - Dallas. The Virgin Hotel - Chicago realized a RevPAR index of 101.8 compared to its competitors. However, the Virgin Hotel - Dallas is anticipated to achieve a conservative RevPAR index of only 95.8 compared to the Virgin Hotel - Chicago.

/ 64


Room Revenues – The competing hotel properties experienced a 3.3% increase in room revenues during the 12 months ending March 2016. While the rooms revenue for the Virgin Hotel – Dallas are projected to increase approximately 18.5% between its first and second year of operations, this is due to the hotel’s ramp up in occupancy during its initial two years of operations. By the third year of operations, the Sponsor has projected that rooms revenue will grow about 9%, followed by a conservative average growth of 3% annually thereafter.

Hotel Flag – Virgin Hotels is a lifestyle hospitality brand that combines heartfelt service, straightforward value and a seamless, personalized hotel experience with the track record of innovation and smart disruption that Sir Richard Branson’s global Virgin Group has pioneered for over 40 years. Each property will intermix a passion for food and beverage with music and culture, fusing with the local landscape and providing a vibrant and inclusive environment for travelers and locals alike. Virgin Hotels Chicago opened its doors in January 2015. Virgin Hotels New York City broke ground in September 2015 and is expected to open in 2019. Additional locations are planned in Nashville (opening 2018), Dallas (opening 2019), Palm Springs (opening 2019) and others to follow.

New Hotel SupplySeveral upscale hotel projects are either planned or underway in and near the city’s central urban core.

VIRGIN HOTEL - DALLAS, NEW HOTEL SUPPLY

PLANNED FULL-SERVICE HOTELS

PROPERTY # ROOMS ESTIMATED OPENING DATE

DEVELOPMENT STAGE

DEVELOPER

Virgin Hotel - Dallas 214 Oct-19 Announced Vinculum Partners

Dream Hotel 128 Unknown AnnouncedMcKinney Hotel Developers

Saint Elm Hotel 150 Dec-17 Under Construction Kirtland Realty GroupStatler Hotel Curio - A Collection by Hilton

161 Dec-16 Under ConstructionCenturion American Development

AC by Marriott Mercantile Commerce Building

112 Unknown Announced NewcrestImage

Butler Brothers Building Marriott 238 Jan-17 Under Construction Alto WestThe Spire 500 Unknown Announced Spire Realty Group, LPHall Arts Hotel 218 Unknown Announced Hall Financial Group

Canopy by Hilton in West Village 150 Early 2018 AnnouncedForest City and Cityplace Co.

Totals/Averages 1,871

Source: HVS, CoStar, JLL

A 128-unit Dream Hotel is proposed for Uptown and amenities are expected to include an outdoor pool and club on the third floor, four food and beverage venues, and a rooftop nightclub. The Tower Petroleum Building is being converted to the 159-room Saint Elm Hotel. The former Statler Hilton building is in the process of redevelopment into 219 luxury apartments and 161 hotel rooms. The Mercantile Commerce building and adjacent 1700 Commerce building are slated to be converted to a dual-branded Residence Inn and AC Hotel by Marriott. Alto West is under construction on the Butler Brothers mixed-use development that will include a 238-room extended stay Marriott Hotel and 274 apartment units. Spire Realty Group has added plans plans for the 500-room Spire Hotel to its 12-acre mixed-use development in downtown’s northeast sector. Craig Hall announced plans to construct a 15-story condominium and hotel tower across from the Meyerson Symphony Center. The Hall Arts Hotel will encompass a 218-room boutique hotel

/ 65


and 44 super-luxury residential units. A development partnership between Cityplace Co., The Javelin Group and Forest City Realty Trust Inc. plan to build a Canopy by Hilton hotel near the West Village. The nine-story, 150-room hotel is slated to open in early 2018 and will be connected to a 24-story, 389-unit residential tower.

Recently completed hotel projects include the Westin One Main Place, a 323-room property located in 19 floors of the One Main Place tower. Guests at the Westin One Main Place enjoy amenities that include approximately 31,000 square feet of meeting space, an indoor pool on the tower’s 32nd floor and a fitness studio. The Westin One Main Place began serving guests on January 18, 2016. Hampton Inn, a 176-room hotel at 1700 Commerce Street, was completed in the first quarter of 2016. The numerous revitalization efforts and rehabilitation projects should allow Dallas’ central urban core to continue to evolve, with hoteliers benefitting from improved market fundamentals.

According to the draft feasibility study by HVS for the Virgin Hotel – Dallas, there is sufficient market support for a luxury, full-service hotel property in the Dallas Design District. The HVS conclusion is based on the long-term strength of the DFW hotel market. The projected long-term growth of demand and average market rate indicates that the DFW hotel market should successfully absorb the new supply from the proposed hotels in the area, including the proposed Virgin Hotel – Dallas.

Land Sale ComparablesThe Sponsor is contributing a 1.05-acre land tract to the development project at an estimated value of $6,042,010 ($132.10 per square foot). The land purchase price is in line with recent land sales that ranged from about $125.00 to $200.89 per square foot, with a weighted average of $134.73 per square foot. The most recent transaction occurring in the Design District is Mark Cuban’s purchase of a approximately 13 acres at Stemmons Freeway and Inspiration Drive, directly across Interstate 35E from Victory Park. The Mavericks will repurpose one of the buildings into temporary practice facilities and eventually redevelop the site into a mixed-use complex. The nearest comparable land sale is a 3.0-acre tract about ½-mile west of the subject site at 3333 Harry Hines Blvd. and referred to locally as “Goat Hill.” The site sold in August 2013 for $126.26 per square foot to Trammell Crow Residential, which recently completed building Alexan Skyline, a 365-unit multifamily community. However, the most recent comparable land sale was a 5.50-acre tract at 2727 Turtle Creek Blvd. (approximately 1 mile from the subject site) purchased by Prescott Group in November 2014 for $125.00 per square foot. Prescott Group plans to build a 14-story, 402,000-square-foot office project.

/ 66


LAND SALE COMPARABLES SUMMARY

Location Zoning Acreage Sale PriceSale Price PSF

Sale Date Buyer Seller Planned

Use Comment

SUB-JECT

Virgin Hotel - Dallas

Planned Develop-ment District 621 (PD-621)

1.050 acres $6,042,010 $132.10 Nov-14 Dunhill Partners Lionstone

Investments Hotel

1

2

3

4

5

6

3333 Harry Hines Blvd


3.00 acres $16,500,000 $126.26 Aug-13 Trammell Crow Residential

Crow Hold-ings

Multi-family

Alexan Sky-line Apart-ments

2727 Turtle Creek Blvd


5.50 acres $29,947,500 $125.00 Nov-14 Republic Tower Property LP

First Texas Homes Inc. Office

2212 McKinney Ave


0.90 acres $7,875,648 $200.89 May-14 Streetlights Resi-dential

ALH Proper-ties

Multi-family The Jordan

2619 McKinney Ave


0.84 acres $4,833,608 $132.10 Jul-13Stoneleigh Co's. and Cheng Invest-ments

XL Capital LLC

Multi-family

Former Hard Rock Café site

505 N Good Latimer Expy

Central Area Dis-trict 2 (CA-2(A)) 0.25 acres $1,700,000 $156.11 Sep-14 Robert F & Shawn

R MillerEMB Man-agement LLC Unknown

2320 N Hous-ton St


1.74 acres $10,918,350 $144.05 Aug-13 Post Properties, Inc.Estein & Associates USA

Multi-family

Totals/Averages $55,711,571 $346,958

Trinity River

W Mocking

bird Ln

N Munger Blvd

Columbia

Ave

E Mockingbird Ln

Inwood

Rd

Barry Ave

McKi

nney

Ave

Oak Law

n Ave

Maple Ave

Oak L

awn A

ve

Armstrong Ave

Preston Rd

Inwoo

d Rd

Mockingbird Ln

Denton Dr

Empire Central Dr

W Mockingbird Ln

Record Crossing Rd

Medical

District

Dr

Market Center Blvd

Hous

ton Vi

aduc

tJe

fferso

n Viad

uct

S Lamar St

Main St

S Houston StS Market St

Young St

Canton

StCadi

z St

S Harwood St

N Saint Paul St

Ross Ave

Pearl St

San Jac

into St

N Akard St

Ross Ave

Bryan S

t

Live O

ak St

Gaston

Ave

Good Latimer Expwy

Lindsl

ey Ave

Gaston

Ave

Live O

ak St

N Henderson Ave

Greenville Ave

Skillman St

Abrams Rd

Gaston Ave

Abra

ms R

d

S Akard St

S Ervay St

Cole

Ave

Knox St

Hillc

rest

Aven

ue

La Vista Drive

North Hall Street

Carlis

le St

Victory Ave

1st Ave

2nd Ave

Cedar Springs Rd

N Houston St

Thurston Street

Burbank

St

Wyc

liff A

ve

Oak L

awn A

ve

S Lamar St

Canton St

Cedar Springs Rd

Harry Hines Blvd

Harry Hines Blvd

Lemmon Ave

N Peak StN Haskell Ave

Inwoo

d Rd

Irving Blvd

Commerce St Viaduct

Elm St

Elm St

Commerce St

Commerce St

S Griffin St

S Riverfront Blvd Corinth S

t

S Haskell Ave

E Grand A

ve

Parry

Ave

Exposition Ave

N Riverfront Blvd

McKinnon St

Dalla

s Nor

th To

llway

N Ce

ntral

Expw

y

Woodall

Rodgers

Fwy

N Stemmons Fwy

Thornton Fwy

Thornton Fwy

Tom Landry Fwy



ReverchonPark

Robert E. LeePark

William B. DeanPark

GlencoePark

ColePark

DavisPark

LakesidePark

TietzePark

GarrettPark

GriggsPark

ExallPark

BucknerPark

RandallPark

WeichselPark

GrauwylerPark

ArlingtonPark

Nash/DavisPark

BenitoJuarez Park

KesslerParkway Park

Stevens GC

City Park

Fair Park

OpportunityCemetery

Martin Luther King JrPark

PikePark

PegasusPark

CraddockPark

Dallas LoveField Airport


WestVillage

CityplaceMarket




DallasCountry Club




356

35

78

352

75

75

77

77

77

67

35E

30

30

30

4535E

35EVICTORYPARKVICTORYPARK

DESIGNDISTRICTDESIGN

DISTRICT

UPTOWNUPTOWN

ARTSDISTRICT

ARTSDISTRICT

MAIN STDISTRICTMAIN STDISTRICT

GOVERNMENTDISTRICT

GOVERNMENTDISTRICT

WEST ENDWEST END

CONVENTIONCENTER

CONVENTIONCENTER

FARMERS MARKETDISTRICT


CENTRALBUSINESSDISTRICT


1

2

3

4

6 5

Land Sale Comparables

/ 67


Hotel Sale ComparablesSales transactions of upscale, luxury hotel properties in the DFW area have been curtailed in recent years. In addition, the Virgin Hotel brand is a new hotel concept with one property in Chicago open about a year. Given the lack of comparable sales within the local market, it was necessary to include sales data for comparable upscale and boutique properties in other markets.

The Sponsor has projected the cost of the hotel portion of the Virgin Hotel – Dallas at $70,698,298 or $330,366 per key. The cost of the hotel portion of the project is in line with the recent sale prices for upscale, boutique properties. Recent comparable hotel sales have a weighted average sale price of about $346,958 per key. These sales range from $303,237/key for the 88-room Citizen Hotel in Sacramento, California, to $397,727/key for the 176-room Le Meridien Dallas, The Stoneleigh Hotel in Dallas. In addition to the recent comparable sales, the Hotel ZaZa in Dallas was refinanced in November 2015. The appraised value for the Hotel ZaZa was $71 million, or $482,993 per key. The recent appraised value of Hotel ZaZa and the sales price of the Le Meridien Hotel The Stoneleigh, which exceeded the project cost of the Virgin Hotel by more than 10%, are evidence of the strength of the Dallas hotel market in terms of investor demand for high quality hotel properties.

HOTEL SALE COMPARABLES SUMMARY

Property Name

Hotel Brand Affiliation

Address Sale PriceSale PricePer Room

Sale Price Per SF

Cap Rate

Sale Date

Occupancy at Sale

Buyer SellerYear Built

Year Reno-vated

# of Rooms

Total Square

Footage

SUBJECT Virgin Hotel - Dallas

Virgin Hotels

1909 Hi Line Dr Dallas, TX 75207

N/A N/A N/A N/A NA 0.0% N/A N/A 2017 N/A 214 407,086

1

2

3

4

5

6

7

Hotel La Jolla

Hilton Curio Col-lection

7955 La Jolla Shores Drive La Jolla, CA 92037

$40,000,000 $363,636 $641 N/A Feb-16 N/AKhanna Enterprises, Ltd.

Westport Capital Partners

1973 2012 110 62,365

Le Méridi-en Dallas, The Stone-leigh

Starwood Hotels & Resorts

2927 Maple Avenue Dallas, TX 75201

$70,000,000 $397,727 $555 N/A Nov-15 N/A

Carey Watermark Investors Inc.

HEI Hospi-tality

1923 2008 176 126,159

The Citizen Hotel

Marriott Autograph Collection Hotels

926 J St Sacramento, CA 95814

$60,041,000 $303,237 $409 N/A Sep-15 N/APlatinum Equity

Rubicon Partners, Inc.

1925 2005 198 146,790

The St. Gregory Hotel

Independent Collection

2033 M St NW Washington, DC 20036

$57,000,000 $367,742 $551 7.00% Jun-15 89.5%Hersha Hospitality Trust

Lipnick Construc-tion

1964 2014 155 103,450

Clinton Hotel

Independent825 Washington Ave Miami Beach, FL 33139

$28,500,000 $323,864 $873 N/A Jun-15 N/AThink Hotel Group

East Coast Realty Ventures

1934 2003 88 32,662

Loews Minneapo-lis Hotel

Loews Hotels & Resorts

601 1st Ave N Minneapolis, MN 55403

$87,440,000 $342,902 $345 N/A Jul-14 N/ALoews Cor-poration

Graves Hos-pitality

2001 N/A 255 253,760

Latham George-town Hotel

Independent3000 M St NW Washington, DC 20007

$47,000,000 $330,986 $371 2.60% Nov-13 N/ASB-Urban, LLC

Lone Star Funds

1981 N/A 142 126,555

Totals/Averages

$55,711,571 $346,958 1957 2008 161

/ 68


Virgin Hotel HVS Feasibility StudyA feasibility study for the Virgin Hotel - Dallas was completed in July 2015. The following information is a summary of the details in the feasibility study.

Market Area AnalysisDallas is experiencing a period of economic strength and expansion, led by the financial, technology, trade, and healthcare sectors. Revitalization efforts and new construction projects are evident throughout Dallas, including the expansion of medical facilities, as well as new residential and commercial projects. Moreover, with the termination of the Wright Agreement in October of 2014, an increase in airport traffic is anticipated at Dallas Love Field Airport in the near term. The market also benefits from a variety of significant government institutions despite some short-term reductions in activity associated with the budget sequestration in 2013. Office vacancy is diminishing throughout the city and the unemployment rate continues to improve. Given the city’s many employers, tourism attractions, special event venues, and convention center, the outlook for the market area is positive.

SupplyThe supply of proposed full-service hotels has changed since HVS completed its feasibility study last year. As mentioned in the previous section of this financing memorandum, there are currently seven full-service hotels, including the Virgin Hotel - Dallas, which are planned or under construction in the city’s central core. The seven hotels total 1,492 rooms. Only two of the aforementioned hotels are under construction with known project completion dates. The Statler Hilton Hotel will have 161 rooms when construction wraps up by year end 2016. The Tower Petroleum Building is being converted to the Saint Elm Hotel with completion slated for December 2017. The remaining announced hotel projects, Dream Hotel, AC by Marriott, The Spire Hotel and Hall Arts District Hotel, have not yet announced start dates.

/ 69

FIN

AN

CIA

L A

NA

LY

SIS

Totals

2014

2015

2016

2017

2018

2019

2020

2021

2022

Base D

eman

d3

66

,99

8379

,83

03

92,172

40

2,9

574

14,0

42

422,772

427,5

99

43

2,48

44

37,427

Un

accom

mo

dated

Dem

and

66

,94

06

9,178

71,14

573

,168

74,8

1375

,63

376

,46

277,3

01

Total D

eman

d4

46

,7704

61,3

50

474

,102

48

7,2104

97,5

85

50

3,23

25

08

,94

65

14,728

less: Resid

ual D

eman

d74

,230

61,579

31,274

7,95

10

04

56

1,08

8To

tal Acco

mm

od

ated D

eman

d372,5

40

39

9,77

14

42

,829

479

,259

49

7,58

55

03

,232

50

8,4

91

513

,64

0O

verall Dem

and G

row

th 1.5

%7.3

%10

.8%

8.2%

3.8

%1.1%

1.0%

1.0%

Market M

ixC

om

mercial

49

.6 %

52.7%

52.8

%5

2.9

%5

3.1%

53

.3%

53

.2%

53

.1%5

3.0

%M

eeting

and

Gro

up

21.519

.919

.919

.819

.819

.819

.719

.719

.7L

eisure

28.9

27.427.3

27.227.2

27.027.1

27.227.3

Existing

Ho

tel Sup

ply

1,420

1,420

1,42

11,4

20

1,42

01,4

20

1,42

01,4

201,4

20P

rop

osed

Ho

tels P

rop

osed

Fu

ll-Service B

ou

tiqu

e Lu

xury H

otel D

allas Desig

n D

istrict1

151

201

201

201

201

Pro

po

sed D

ream H

otel

275

90

90

90

90

90

90

Pro

po

sed S

aint E

lm H

otel

33

0119

119119

119119

119 P

rop

osed

Statler H

otel C

urio

- A C

ollectio

n b

y Hilto

n 4

2610

510

510

510

510

510

5 P

rop

osed

AC

by M

arriott M

ercantile C

om

merce B

uild

ing

5

42

7373

7373

7373

Pro

po

sed U

pp

er Up

scale Ho

tel Desig

n D

istrict 6

7710

210

210

210

2

Availab

le Ro

om

s per N

igh

t5

18,3

00

518

,30

05

81,8

96

65

9,3

00

742,6

25

769

,89

576

9,8

95

769

,89

576

9,8

95

Nig

hts p

er Year

36

53

65

36

53

65

36

53

65

36

53

65

36

5To

tal Sup

ply

1,420

1,420

1,594

1,806

2,035

2,109

2,109

2,109

2,109

Ro

om

s Su

pp

ly Gro

wth

0.0

%12.3

%13

.3%

12.6

%3

.7%0

.0%

0.0

%0

.0%

Marketw

ide O

ccupancy

70.8%

71.9%

68.7%

67.2%

64

.5%6

4.6

%6

5.4%

66

.0%

66

.7%

* The fo

llow

ing o

pening

dates refl

ect HV

S estim

ates in the July 2015 feasib

ility study.

1 Op

enin

g in

Ap

ril 20

18 o

f the 10

0%

com

petitive, 2

01-ro

om

Pro

po

sed F

ull-S

ervice Bo

utiq

ue L

uxu

ry Ho

tel Dallas D

esign

District

2 O

pen

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in M

arch 2

016

of th

e 70%

com

petitive, 12

8-ro

om

Pro

po

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ream H

otel

3 O

pen

ing

in O

ctob

er 20

16 o

f the 75

% co

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etitive, 159

-roo

m P

rop

osed

Sain

t Elm

Ho

tel

4 O

pen

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in O

ctob

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f the 6

5%

com

petitive, 16

1-roo

m P

rop

osed

Statler H

otel C

urio

-A C

ollectio

n b

y Hilto

n

5 O

pen

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in Ju

ne 2

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of th

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% co

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om

Pro

po

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C b

y Marrio

t Mercan

tile CO

mm

erce Bu

ildin

g

6 O

pen

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in A

pril 2

018

of th

e 85

% co

mp

etitive, 129

-roo

m P

rop

osed

Up

per U

pscale H

otel D

esign

District

/ 70


/ 71


DemandAccording to HVS, the available room nights per year in the market will reach almost 770,000 room nights in 2019, the year the Virgin Hotel - Dallas is expected to reach stabilization, based on projections for 2,109 total rooms. In 2019, HVS expects the marketwide occupancy to be 64.6%.

Forecast of Occupancy, Average Daily Rate and RevPARHVS utilized the following occupancies and average daily rates to project their estimates for the Virgin Hotel - Dallas’ rooms revenues. The time periods forecast reflect years beginning on April 1, 2018 and correspond with HVS’ financial projections.

FORECAST OF OCCUPANCY, AVERAGE RATE, AND REVPARYear Occupancy Average Rate

Before DiscountDiscount Average Rate

After DiscountRevPAR

2018/19 57% $308.19 0.0% $308.19 $175.67

2019/20 61 318.98 0.0 318.19 194.58

2020/21 67 330.14 0.0 330.14 221.20

2021/22 70 341.70 0.0 341.70 239.19

Terminal Capitalization Rate – 8.5%HVS reviewed several investor surveys to determine the appropriate capitalizaiton rate for its analysis. Based on the investor surveys, HVS utilized a terminal capitalization rate of 8.5% in its analysis.

TERMINAL CAPITALIZATION RATES DERIVED FROM INVESTOR SURVEYSSource Data Point Range Average

PWC Real Estate Investor Survey - 1st Quarter 2015

Select-Service Hotels 6.0%-11.0% 8.7%

Full-Service Hotels 6.5%-10.0% 8.3%

Luxury Hotels 5.75%-10.0% 7.4%

USRC Hotel Investment Survey - WInter 2015 8.2%

Full-Service Hotels 6.5%-10.0%

Sitis RERC Real Estate Report - Spring 2015 8.7%

First Tier Hotels 6.0%-11.0%

ConclusionThe proposed subject hotel has an opportunity to serve an unrepresented niche in the Design District and Market Center neighborhood. While other Downtown Dallas submarkets offer a complement of luxury hotels, the immediate area near the subject site remains underserved by high-class lodging facilities. Based on the market analysis, there is sufficient market support for a luxury, full-service property. The

/ 72


conclusions are based primarily on the long-term strength of this hotel market. The projected long-term growth of demand and average rate indicates that the market should successfully absorb the new supply from the proposed hotels in the area, including the proposed subject hotel. Based on these parameters, the feasibility of the subject project is confirmed. The full version of the feasibility study can be provided upon request.

Condominium MarketMeyers Research Condominium ReportThe following pages are excerpts from the meyers report focusing on the market surrounding the virgin condominiums. the full report can be provided upon request.

Meyers compiled data on existing, high-rise condominium projects located within the Intown Dallas submarket. Descriptions of these projects are as follows.

Single Family HomesSales of existing inventory in the subject’s zip code (75207) peaked in 2014 at 8 homes sold and is on pace to surpass that figure in 2015. The year-to-date sales for 2015 are already at the historical high of 8 units sold. Due to the shortage of for-sale housing in the Design District, the 13-year average is 3 units.

In comparison, the adjoining 75201 zip code peaked in home sales in 2014 at 178 and currently has 168 sales for year-to-date 2015. The 20-year average for the 75201 zip code is 74 units.

As of August 25, 2015 (Zonda iPad application), the median single family home prices in the 75207 and 75201 zip codes are as follows:

• $383,906 for SFA Existing Home – 75207• $590,229 for SFA Existing Home – 75201

Existing Condo Market

The W Residences – The W Dallas Residences are located at Victory Park across the street from American Airlines Center. The 32-story tower was built in 2006 and has 50 residential units. One, two and three bedroom floor plans are offered with hotel amenities such as a Spa and Fitness facility, two pools and a resident lounge. Prices range from $340,000 to $10,950,000. According to the Dallas Central Appraisal District, three of the units are owned by VPL 2408 LLC. The average resale price over the past twelve months is $431 per square foot (MLS). Factoring in an age adjustment (7%), the median price increases to $461 per square foot.

Tower Residences at The Ritz Carlton – The 23-story tower was built in 2009 and includes 165 residential units with a mix of one, two and three bedroom floor plans along with the Regency Row townhomes. Amenities include a wine-tasting room, resort-style pool and garden, private fitness facility and a pet park. The tower is connected by way of an air-conditioned skyway to The Ritz-Carlton Hotel which features a five star restaurant. Prices range from $950,000 to $9,000,000. According to the Dallas Central Appraisal District, there is no inventory of developer owned condos. MLS indicates the overall average resale price

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over the past twelve months to be $784 per square foot. Factoring in an age adjustment (5%), the median price increases to $823 per square foot.

Museum Tower – The 42-story tower was built in 2013 and is the second-tallest all-residential building in Dallas. Located in the Arts District, the tower is adjacent to the Nasher Sculpture Center, Meyerson Symphony Center, Winspear Opera House, and the Wyly Theater. The building consists of 115 residential units which each feature direct-access elevators and private balconies. Museum Tower’s large site features a ground-level outdoor pool and public gardens. Prices range from $1,000,000 to $24,000,000. According to the Dallas Central Appraisal District, 72 of the total units are owned by Museum Tower LP. The average resale price is $766 per square foot over the past twelve months. Factoring in an age adjustment (2%), the median price increases to $781 per square foot.

One Arts Plaza – Built in 2005, the 24-story tower is a mixed-use building that features 65 residential units, 425,000 square feet of class A office space and 30,000 square feet of retail space. The tower is located in the Dallas Arts District and includes amenities such as a fitness room, 20th floor pool, and a resident social room. Prices range from $730,000 to $1,800,000. According to the Dallas Central Appraisal District, there is no inventory of developer owned condos. MLS indicates the average resale price to be $576 per square foot over the past twelve months. Factoring in an age adjustment (8%), the median price increases to $622 per square foot.

Bleu Ciel – The 33-story tower is currently under construction and will feature 158 residential units and 12,000 square feet of ground floor retail. Units will range in size from 1,300 square feet to 7,000 square feet. The tower is located in the Harwood District and includes two junior Olympic-size pools, cabanas, and an outdoor kitchen. According to MLS, listing prices range from $879,000 to $4,585,000 with unit sizes ranging from 1,373 to 5,835 square feet.

The W Residences 6% Owned

Museum Tower63% Investor Owned

One Arts Plaza0% Investor Owned

Tower Residences at The Ritz-Carlton

0% Investor Owned

Bleu Ciel - Under Construction

100% Investor Owned

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Condominium Sale Comparables

ExecutiveCondominium Market StudyVirgin Hotel - Dallas | JLL

Virgin Hotel - Dallas

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Map # Property # Stories # UnitsYear

CompleteAvg Unit Size of Units

Sold (Prev. 12 mo)Avg Sale Price (Prev. 12 mo)

Avg Sale Price PSF (Prev. 12 mo)

Avg Unit Size of Listings

Avg List PriceAvg List

Price PSFAverage HOA

Fee% Investor

OwnedSubject Virgin Hotel & Condos 16 35 2018 N/A N/A N/A 2,162 $1,590,655 $736 N/A N/A

1 Bleu Ciel 33 158 2016 N/A N/A N/A 2,724 $2,311,667 $849 $1,385 100%2 Museum Tower 42 115 2013 3,503 $2,683,832 $766 2,332 $1,924,000 $825 $3,190 63%3 Tower Residences at The Ritz Carlton 23 165 2009 2,342 $1,835,111 $784 2,643 $2,876,333 $1,088 $1,782 0%4 The W Residences 33 50 2006 2,811 $1,211,182 $431 1,426 $641,989 $450 $2,042 6%5 One Arts Plaza 24 65 2005 2,136 $1,230,625 $576 2,847 $1,783,000 $626 $1,324 0%

Total / Average 31 553 2009.8 2,698 $1,740,188 $645 2,515 $1,907,398 $758 $1,945 42%

CONDOMINIUM COMPARABLES SUMMARY

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M A R K E T I N F O R M A T I O NExecutiveCondominium Market Study

Virgin Hotel - Dallas | JLL

Recent Sales Transactions – Price Per Unit

The one bedroom sales range in size from 825 to 1,466 square feet, with an average of 1,252 square feet. The average sales price is $641,542.

In regards to two and three bedrooms, the sales range in size from 1,736 to 5,131 square feet, with an overall average of 2,821 square feet. The average sales price is $1,735,284.

The highest average sale price $3,434,695 is indicated at Museum Tower.

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M A R K E T I N F O R M A T I O NExecutiveCondominium Market Study

Virgin Hotel - Dallas | JLL

Recent Sales Transactions – Price Per SF

The one bedroom sales at the nearby condominium communities range in price from $318 to $673 per square foot, with an average of $513 per square foot. The individual sales occurred within the last 12 months.

The two and three bedroom sales range in price from $374 to $867, with an average of $615 per square foot. The individual sales occurred within the last 12 months.

The highest average sales price per square foot ($673) is indicated at Tower Residences at The Ritz-Carlton.

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Hotel Component Brings Condo PremiumsMeyers compiled data on the most comparable condominium projects with and without hotel components. The Tower Residences at The Ritz-Carlton is compared, on a price per square foot basis, to Museum Tower and Bleu Ciel (the two most recent condominium developments). The tables below illustrate the premium that a hotel component is achieving in the Intown Dallas submarket at the highest-end condominium projects.

Considering the subject development will be branded a Virgin Hotel and will offer an overall amenities and services package that is currently unmatched in the market, Meyers concludes a 10% premium above the existing condominium product to be appropriate.

The concluded 10% premium for Crosland-Virgin Hotel is in line with the premium being achieved at the Tower Residences at The Ritz-Carlton compared to the most recently developed condominium projects without hotel components (Museum Tower and Bleu Ciel).

PROPERTY #UNITS AVG. SIZE AVG. SALE PRICE AVG. SALE PRICE PSFTower Residences at The Ritz-Carlton

15 2,462 $2,251,600 $914

Museum Tower 8 2,771 $2,208,937 $797

Total/Wtd. Avg. 23 2,570 $2,236,761 $870

PROPERTY #UNITS AVG. SIZE AVG. SALE PRICE AVG. SALE PRICE PSFTower Residences at The Ritz-Carlton

15 2,462 $2,251,600 $914

Bleu Ciel 6 2,724 $2,311,667 $849

Total/Wtd. Avg. 21 2,537 $2,268,762 $894Premium 8%

SPONSORSHIP


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S P O N S O R S H I P

OverviewThe Sponsor will be a to-be-formed entity led by Dunhill Partners, Vinculum Partners and The Crosland Group (collectively “The Borrower”).

Dunhill PartnersDunhill Partners specializes in the sale, acquisition, leasing and management of retail shopping centers from Texas to Hawaii. Dunhill, Inc. was originally established by Mr. William L. Hutchinson on January 23, 1984 to focus on commercial real estate in the Dallas area. Since that time, Dunhill has grown to become one of the leading commercial real estate firms in the southwest focusing on retail shopping centers. Dunhill has bought and sold $3 billion worth of shopping centers in the last 10 years.

Through many years of real estate experience, Dunhill has built up an impressive roster of key network contacts, including highly-qualified principals, brokers, lenders, contractors, title associates and legal advisors. Their vast array of contacts enables Dunhill to stay abreast of active buyers and sellers, market conditions, business trends, tenant requirements, new construction sites, newly foreclosed properties, investor priorities and financing availability. This in-place network is one of the primary reasons for the many successes of the organization.

Dunhill currently manages more than 4.5 million square feet of retail shopping centers in Texas with a staff of 25. Dunhill’s management and accounting staff are capable of generating financial information in various forms for their local and institutional investors. Dunhill’s property managers are trained to meet all the needs of the property, including accounting and collection of rents, approving expenditures, budgets, audits, public relations, construction, space management, landscaping, leasing and marketing.

LeadershipDunhill maintains a loyal group of the industry’s experienced professionals, each of whom are leaders in their respective fields of expertise.

William L. Hutchinson PresidentMr. Hutchinson founded Dunhill Partners, Inc. in 1984. In addition to leading Dunhill’s platform, Mr. Hutchinson is involved in a substantial number of investments other than real estate, including: oil and gas ventures and restaurants. Mr. Hutchinson received his B.B.A. from Southern Methodist University. Mr. Hutchinson began his career as a real estate broker and worked his way to the top of his profession, owning one of the 100 largest retail real estate companies in the United States.

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Micah AshfordPartnerMicah Ashford brings to Dunhill a diversified career in commercial real estate, encompassing all facets of transactional activities, finance and acquisitions. On a daily basis she directs acquisitions, asset management, financing and dispositions of Dunhill’s extensive real estate portfolio. She originates new property opportunities, negotiates partnerships and loan documents, and oversees the physical and financial due diligence on those acquisitions. Ms. Ashford received her B.B.A from Hawaii Pacific University.

Tim Denker Executive Vice President and General CounselTim Denker serves as the Executive Vice President and General Counsel of Dunhill Partners, Inc. and its affiliates. In addition to serving as Dunhill’s in-house attorney, Mr. Denker oversees the day-to-day operations of Dunhill and its affiliates. His primary responsibilities include the following: overall responsibility for monitoring and improving the operational and financial performance of Dunhill’s existing commercial real estate holdings; oversight of all personnel in the company; managing operational aspects of transactions; and developing and implementing strategic objectives for the company in coordination with the other members of the executive team. Mr. Denker received his B.S. from Oklahoma State University and his J.D. from the University of Houston.

Andy Crosland Executive Vice President and Director of LeasingAndy Crosland serves as Executive Vice President and Director of Leasing for Dunhill Partners, Inc. For the past 9 years, Mr. Crosland has executed over 300 retail leases throughout Texas and is currently leasing 4.5 million square feet of retail property for the company. He has built strong relationships in the brokerage and development community which enable him to successfully execute transactions on behalf of Dunhill. Mr. Crosland received his B.B.A from the University of Miami.

Dunhill Management & LeasingManagement: Dunhill currently manages more than 4.5 million square feet of retail shopping centers in Texas with a staff of 25. Dunhill’s management and accounting staff are capable of generating financial information in various forms for their local and institutional investors. Dunhill’s property managers are trained to meet all the needs of the property, including accounting and collection of rents, approving expenditures, budgets, audits, public relations, construction, space management, landscaping, leasing and marketing.

Leasing: Dunhill has developed strong relationships with active commercial brokers and brokerage firms in a number of markets. Dunhill encourages outside broker participation. Unlike many leasing companies Dunhill believes in and works with smaller operators (mom and pops) and has a track record of providing opportunities for successful smaller operators to grow into multiple locations within the Dunhill portfolio.

Current Equity Partners: A partial list of Dunhill’s current capital partners are Kimco Realty, RioCan Real Estate Investment Trust, Pacific Coast Capital Partners, LLC along with a group of private high net worth individuals. Additionally, Dunhill’s key employees invest in every Dunhill deal.

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Dunhill is currently working to acquire assets from Texas to California. Since the beginning of the economic downturn, investments in Texas real estate have outperformed the rest of the nation because of Texas’ diverse economy and moderate prices, making investments attractive for investors. On the West Coast Dunhill is bullish that the market is seeing economic improvement and Dunhill will be at the forefront of this resurgence in appreciation and growth. With Dunhill’s extensive network of relationships and knowledge, they are the ideal operating partner for large equity partners that need to rely on the firm’s strength and experience in the marketplace.

Vinculum PartnersVinculum Partners is a dedicated hospitality focused developer and asset manager. The partners of Vinculum bring decades of experience in construction, capitalization, asset management, and development of hospitality properties. The partners have collectively handled transactions worth over $4 Billion, and have been involved in construction of marquee projects like The Joule Hotel, The Lumen and The Ritz Carlton, and currently own limited service hotels through affiliate entities.

The Crosland GroupThe Crosland Group (“Crosland”) is a full service real estate development and investment company based in Dallas, Texas. Since its inception The Crosland Group has successfully executed multiple projects throughout the Southwest, Southeast, and Western regions of the United States in markets including Tennessee, Maryland, South Carolina, North Carolina, Texas, Arizona, Colorado, California and Florida. Crosland’s project experience includes luxury apartment and mixed use development, condominiums, residential subdivisions, free standing retail facilities, regional shopping centers, office buildings, warehouses and industrial parks. This comprehensive experience in a wide variety of product sectors and markets enables Crosland to identify and execute attractive development opportunities driving superior performance and returns for its investment partners. Crosland, through its affiliated entities including Redwood Residential Properties and Sapphire Properties has completed investment and development activity in excess of 12,000,000 square feet of properties with value exceeding $2 billion USD. Most recently, the company has completed the development of ilume and ilume Park (see ilume.com), a mixed use development comprised of 556 class A multifamily residential apartments and 22,500 square feet of ground floor retail. ilume is the first certified Green Built Texas mixed used property in the city of Dallas and demonstrates Crosland’s unique ability to create highly desirable lifestyle destinations and dynamic market locations which capitalize on underserved demand.The company has investment holdings in Dallas’ Preston Center submarket including retail and office facilities, in other markets in the DFW area and nationally. The Company is pursuing opportunistic investment and development activity in markets across the country.

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LeadershipThe leadership team at The Crosland Group is comprised of seasoned real estate experts whose combined experience totals over 80 years.

Lucien B. (Luke) CroslandChairman and CEOLuke Crosland is the Chairman and CEO of The Crosland Group and has over 30 years’ experience in the real estate industry involving the acquisition and development of properties in virtually all product sectors across multiple markets throughout the United States. Luke has led successful real estate investment and development production in excess of $2 billion USD. These projects have included free standing retail facilities, warehouses, regional shopping centers, industrial parks, office buildings, luxury and mixed use apartment projects, condominium towers, and residential sub-divisions.

Virgin HotelsVirgin Hotels is a lifestyle hospitality brand that combines heartfelt service, straightforward value and a seamless, personalized hotel experience with the track record of innovation and smart disruption that Sir Richard Branson’s global Virgin Group has pioneered for over 40 years. Each property will intermix a passion for food and beverage with music and culture, fusing with the local landscape and providing a vibrant and inclusive environment for travelers and locals alike. Virgin Hotels Chicago is now open, with Nashville, New York and others to follow. Virgin plans to open 25 hotels in major U.S. and European destination gateways by 2025.

8343 Douglas Avenue, Suite 100Dallas, Texas 75225www.jll.com/Dallas

JLL (NYSE: JLL) is a professional services and investment management firm o�ering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate o�ces, operates in 80 countries and has a global workforce of approximately 58,000. When you partner with JLL as your real estate services provider, you get a dedicated, experienced, savvy team. To learn more about how the JLL Dallas team can provide you real value in a changing world, please contact any of the professional below.

Virgin Hotel & Residences Dallas

RANDY FLEISHERManaging Director

[email protected]

HUTTON LUNSFORDAssociate

[email protected]

BEVERLY WOODALLVice President214.438.6349

[email protected]

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