THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in KECK SENG INVESTMENTS (HONG KONG) LIMITED (the “ Company ”), you should at once hand this circular, together with the enclosed form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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KECK SENG INVESTMENTS (HONG KONG) LIMITED 激成投資（香港）有限公司

(Incorporated in Hong Kong with limited liability) (Stock Code: 184)

MAJOR TRANSACTION DISPOSAL OF HOTEL ASSETS

A letter from the Board is set out on page 3 to page 9 of this circular.

A notice convening the forthcoming GM of the Company to be held at 27/F Club Lusitano, 16 Ice House Street, Central, Hong Kong on Friday, 24 November 2023 at 11:00 a.m. is set out on pages 55 to 56. Whether or not you are able to attend the GM, you are requested to complete and sign the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s Share Registrar & Transfer Office, Tricor Tengis Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the GM (i.e. not later than 11:00 a.m. on Wednesday, 22 November 2023) or the adjourned meeting (as the case may be). A form of proxy is also published on the websites of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and the Company (www.keckseng.com.hk). Completion and return of the form of proxy will not preclude you from attending and voting in person at the GM should you so wish.

Note: Reference to time and dates in this circular are to Hong Kong time and dates unless stated otherwise.

7 November 2023

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Sale and Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Information on the Vendor and the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Information on the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reasons for and Benefits of the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Possible Financial Effects of the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Listing Rules Implication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . . . . 10
APPENDIX II – VALUATION REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
APPENDIX III – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
NOTICE OF EXTRAORDINARY GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	55

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

“Board” the board of Directors “Business Day(s)” any day other than a Saturday, Sunday or statutory holiday in Toronto, Ontario
“C$” Canadian dollars, the lawful currency of Canada
“Company” Keck Seng Investments (Hong Kong) Limited, a company incorporated in Hong Kong under the Companies Ordinance (Cap. 622), the shares of which are listed on the Stock Exchange
“Completion” completion of the Disposal in accordance with the terms and conditions of the Sale and Purchase Agreement
“connected person” has the meaning ascribed to it in the Listing Rules “Consideration” the consideration payable by the Purchaser to the Vendor for the Disposal in the amount of C$43,200,000 (equivalent to approximately HK$246,685,000), subject to adjustment in accordance with the terms and conditions of the Sale and Purchase Agreement
“Director(s)” the director(s) of the Company
“Disposal” the disposal of the Hotel Assets by the Vendor pursuant to the Sale and Purchase Agreement
“GM” the extraordinary general meeting of the Company to be convened on Friday, 24 November 2023 at 11:00 a.m. for the purpose of considering and, if thought fit, approving, among other things, the Disposal
“Group” the Company and its subsidiaries
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China
“Hotel Assets” the assets to be disposed of by the Vendor to the Purchaser pursuant to the Sale and Purchase Agreement, the details of which are set out in the paragraph headed “Subject Assets” in this circular
“Hotel Business” the business of the Vendor of offering and providing to the general public lodging and accommodation at the Hotel Property and other ancillary services thereto

DEFINITIONS

“Hotel Property” the Sheraton Ottawa Hotel located at 150 Albert Street, Ottawa, Ontario, the details of which are set out in the paragraph headed “Subject Assets” in this circular “Latest Practicable Date” 1 November 2023, being the latest practicable date prior to printing of this circular for the purpose of ascertaining certain information for inclusion in this circular “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Notice of Shareholders’ the notice to the Purchaser in relation to the obtainment of Approval” Shareholders’ approval in respect of the Disposal

“Purchaser” Sunray Group of Hotels Inc., a corporation incorporated under the laws of the Province of Ontario

“Sale and Purchase Agreement” the sale and purchase agreement dated 6 October 2023 (Toronto time) entered into between the Vendor and the Purchaser in respect of the Disposal “Shareholder(s)” holder(s) of share(s) of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited
“subsidiary(ies)” has the meaning ascribed to it in the Listing Rules

“Valuer” LW Hospitality Advisors, a property valuer which is a third party independent of the Group and its connected persons “Vendor” Chateau Ottawa Hotel Inc., a company with limited liability incorporated in British Columbia, Canada, and an indirect non-wholly owned subsidiary of the Group “%” per cent

For the purpose of illustration only and unless otherwise stated, conversion of C$ into HK$ in this circular is based on the exchange rate of C$1.00 to HK$5.7103. Such conversion should not be construed as a representation that any amount has been, could have been, or may be, exchanged at this or any other rate.

LETTER FROM THE BOARD

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KECK SENG INVESTMENTS (HONG KONG) LIMITED 激成投資（香港）有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 184)

Executive Directors:

HO Kim Swee@HO Kian Guan (Executive Chairman) HO Cheng Chong@HO Kian Hock (Deputy Executive Chairman) TSE See Fan Paul CHAN Lui Ming Ivan HO Chung Hui HO Chung Kain@HE Chongjing (Alternate to HO Chung Hui)

Registered office:

Room 2902 West Tower Shun Tak Centre 168-200 Connaught Road Central Hong Kong

Non-executive Directors:

HO Eng Chong@HO Kian Cheong HO Chung Kiat Sydney@HE Chongjie Sydney (Alternate to HO Kian Cheong)

Independent Non-executive Directors:

KWOK Chi Shun Arthur WANG Poey Foon Angela YU Hon To David Stephen TAN

7 November 2023

To the Shareholders

Dear Sir or Madam

MAJOR TRANSACTION DISPOSAL OF HOTEL ASSETS

INTRODUCTION

By an announcement dated 9 October 2023, the Board announced that the Vendor, an indirect non-wholly owned subsidiary of the Company, and the Purchaser, entered into the Sale and Purchase Agreement, pursuant to which, the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire the Hotel Assets at the Consideration of C$43,200,000 (equivalent to approximately HK$246,685,000).

The purpose of this circular is to provide you with further details of the Disposal, including certain financial and general information on the Group, together with the Valuation Report.

LETTER FROM THE BOARD

THE SALE AND PURCHASE AGREEMENT

Date

6 October 2023 (Toronto time)

Parties

(1) the Vendor, an indirect non-wholly owned subsidiary of the Company; and
(2) the Purchaser.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Purchaser and its ultimate beneficial owner(s) are third parties independent of the Company and its connected persons (as defined under the Listing Rules).

Subject Assets

Pursuant to the Sale and Purchase Agreement, the Vendor has conditionally agreed to dispose of, and the Purchaser has conditionally agreed to acquire, its interest in the Hotel Assets.

The Hotel Assets comprise the Hotel Property, and include (but not limited to) the land, all buildings, structures, improvements, fixtures on the land, all machinery, tools, chattels, movables, furniture, equipment and other tangible properties, inventories, consumables and operating supplies, assigned operating contracts and leases regarding the Hotel Property, licenses and permits, intellectual and industrial property rights, books and records, customer lists and accounts receivables immediately after the date of Completion in relation to the Hotel Property.

The Hotel Property is a full-service lodging facility with site area and gross building area of approximately 19,666 square feet and 233,390 square feet, respectively. It is located close to the Canadian Parliament in Ottawa. It opened in 1972. It has 236 guest rooms, a restaurant, a bar and lounge, a club lounge, approximately 10,000 square feet of meeting space, an indoor pool, a fitness room, a business center and 112 carpark spaces. The Hotel Property is owned by the Vendor and has experienced a range of fluctuating occupancy rates and room rates over the past few years.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, as at the Latest Practicable Date, there are no (i) encumbrances, liens, pledges, mortgages; (ii) environmental issues; and (iii) investigations notices, pending litigation, breaches of law or title defects of material importance against or in relation to the Hotel Property.

LETTER FROM THE BOARD

Certain financial information with respect to the operation of the Hotel Property, which is derived from the financial statements of the Vendor prepared in accordance with the International Financial Reporting Standards, is as follows:

	For the
	period ended	For the year ended
	30 June	31 December	31 December
	2023	2022	2021
	C$’000	C$’000	C$’000
	(unaudited)	(audited)	(audited)
(Loss)/profit before taxation	(86)	1,812	(3,809)
(Loss)/profit after taxation	(89)	1,329	(2,798)

The carrying value of the Hotel Assets as at 30 June 2023, 31 December 2022 and 31 December 2021 amounted to C$14,379,000, C$14,344,000 and C$15,392,000, respectively.

Consideration

The Consideration shall be in the amount of C$43,200,000 (equivalent to approximately HK$246,685,000). The Consideration is subject to adjustment in accordance with the terms of the Sale and Purchase Agreement and will be settled by the Purchaser in the following manner:

(i) prior to 5:00 p.m. (Toronto time) on the first Business Day following the date on which the Notice of Shareholders’ Approval is given by the Vendor, an initial deposit of C$500,000 (equivalent to approximately HK$2,855,000) by wire transfer to the Vendor’s solicitor in escrow, which shall be released and paid to the Vendor upon Completion;
(ii) prior to 5:00 p.m. (Toronto time) on the first Business Day following the day on which notice in respect of waiver or satisfaction of due diligence of the Hotel Assets and the titles thereto is given by the Purchaser, a further deposit of C$1,500,000 (equivalent to approximately HK$8,565,000) by wire transfer to the Vendor’s solicitor in escrow, which shall be released and paid to the Vendor upon Completion; and
(iii) the remaining balance of the Consideration, subject to adjustments set out in the section headed “Adjustment to Consideration” in this circular, shall be settled upon Completion by wire transfer to the Vendor.

The Consideration was arrived at after arm’s length negotiations between the Vendor and the Purchaser, with reference to the management accounts of the Vendor, in particular the unaudited carrying value of the Hotel Assets of approximately C$14,379,000 as at 30 June 2023, and the available prevailing market price of similar properties in the vicinity of the Hotel Property having regard to the market conditions of and recent transactions in the property market of Ottawa. In order to assess the potential fair value of the Hotel Property, the Vendor has continuously monitored relevant property transactions completed over the years and carried out internal assessment for the Hotel Property based on factors

LETTER FROM THE BOARD

including but not limited to location, product type, facilities/amenities, demand base, number of rooms, quality and infrastructure. In particular, the Vendor has considered the aggregate consideration of recent hotel property transactions in cities including Ottawa, Montreal and Kingston, involving hotel properties with an aggregate of 1,015 rooms, which was approximately C$195,250,000, with the price per room ranging from approximately C$170,000 to C$224,000. The Company considers that the consideration of C$43,200,000 for the disposal of the Hotel Property with 236 rooms, and with the price per room of approximately C$183,000, is in line with and within the range of the market prices in the referenced transactions. Furthermore, the Vendor has considered that (i) the Consideration represents a premium of approximately 300% over the carrying amount of the Hotel Assets as at 30 June 2023; and (ii) the Disposal is in line with the Group’s strategies of streamlining its portfolio and resources efficiency. To verify the internal assessment of the Hotel Property, the Valuer, being an independent property valuer, was engaged by the Group to conduct an external valuation of the Hotel Property. Based on the above and supported by the valuation of the Hotel Property as set out in the Valuation Report, the Directors are of the view that the Consideration is fair and reasonable.

Adjustment to Consideration

The Vendor shall deliver a proposed statement of Completion adjustment to the Consideration to the Purchaser no later than 4 Business Days prior to the date of Completion.

In respect of the Completion adjustment, the Consideration shall be adjusted to the effect that (i) the revenues, receivables and expenses with respect to the Hotel Assets and the business related thereof accrued prior to the night audit on the date of Completion; and (ii) the liabilities and obligations with respect to the Hotel Assets and the business related thereof accrued prior to the date immediately before the date of Completion shall belong to the Vendor, whereas those thereafter shall belong to the Purchaser.

Conditions precedent to the Sale and Purchase Agreement

The Disposal is conditional upon, among other things, the following conditions precedent:

(i) the Company having obtained the Shareholders’ approval in respect of the Disposal;
(ii) the due diligence of the Hotel Assets and the titles thereto being satisfied or waived by the Purchaser prior to the first Business Day after 30 days of the date on which the Notice of Shareholders’ Approval is given by the Vendor; and
(iii) the payment of the Consideration (subject to adjustment) by the Purchaser to the Vendor.

Completion

Completion shall take place on the first Business Day which is 45 days following the date on which the notice in respect of waiver or satisfaction of due diligence of the Hotel Assets and the titles thereto is given by the Purchaser, or at such other time as the parties may agree in writing.

LETTER FROM THE BOARD

INFORMATION ON THE VENDOR AND THE GROUP

The Vendor is currently owned as to 85% by the Group and 15% by KSC Enterprises Ltd, the latter being an indirect wholly-owned subsidiary of KS Ocean Inc.. The Vendor’s principal activity is operation of the Hotel Property, being its sole asset.

The principal activities of the Group are hotel and club operations, property investment and development and the provision of management services. The Company’s principal activity is investment holding.

INFORMATION ON THE PURCHASER

The Purchaser is a private company with limited liability incorporated under the laws of the Province of Ontario and is principally engaged in investment in hotels and acquisition of petroleum and retail properties. It is ultimately owned by Mr. Ray Gupta, the chairman of the Purchaser.

REASONS FOR AND BENEFITS OF THE DISPOSAL

Against the background of current economic climate and prevailing market conditions, the Group believes it is an opportune time to realise the profits from the Disposal, while allowing the Group to streamline its portfolio of investment properties to better align it with the Group’s investment objectives and parameters, whilst continuing to build a balanced and diversified portfolio of investment properties in key cities and locations where demand for high-quality hotel accommodation continues to grow, and where our expertise, experience and resources can better contribute to adding value and synergy.

The Valuer was engaged by the Group to conduct the valuation of the Hotel Property. The Valuer is certified with the relevant professional qualifications required to perform the valuation. Mr. Robert Van Laer, MAI, who was in charge of the inspection and valuation process, is a member of the Appraisal Institute, and has over 10 years of experience in valuation of hotel properties in North America. In view of the above, the Company considers that the Valuer is qualified and possesses sufficient relevant experience in performing the valuation of the Hotel Property. The valuation by the Valuer was performed under income capitalisation and sales comparison approaches. The methodology of, and the basis and assumptions adopted for, the valuation of the Hotel Property are summarised in the valuation report set out in Appendix II to this circular. The Directors have reviewed and considered the valuation report and the methodology, basis and assumptions of the valuation in particular, that (i) among various valuation approaches, the income capitalization approach is an appropriate and suitable approach to determining the market value of income generating properties in Ottawa, Ontario; (ii) the investigation and due diligence measures taken by the Valuer for conducting the valuation are to the satisfaction of the Company; and (iii) the assumptions and considerations made by the Valuer for the valuation are in line with industry practices. The Company has discussed with the Valuer on the methodology of and the basis and assumptions adopted for the valuation. The Directors are therefore of the view that they are fair and reasonable.

LETTER FROM THE BOARD

POSSIBLE FINANCIAL EFFECTS OF THE DISPOSAL

The Group will realise a gain on disposal of the Hotel Assets upon Completion, and 85% of the gain would be attributable to equity shareholders of the Company.

Based on the financial information as at 30 June 2023, the Group estimates to realise a gain before taxation and transaction costs on disposal of approximately C$28,821,000 (equivalent to approximately HK$164,576,000), being the difference between the estimated proceeds from the Disposal and the carrying value of the Hotel Assets.

Save as disclosed above, the Disposal will not have any material impact on the earnings, assets and liabilities of the Group.

The Shareholders shall note that the financial effect of the Disposal is subject to change upon Completion and final audit by the auditors of the Company.

The Directors (including the independent non-executive Directors) consider that the terms of the Sale and Purchase Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

USE OF PROCEEDS

As the Disposal is not driven by a need for funding, the net proceeds from the Disposal will be earmarked as working capital of the Group with no specific application timeline. Having regard to the overall macroeconomic conditions and investment environment in Asia and overseas, the Group may utilise the net proceeds from the Disposal towards seeking and investing in new business opportunities that have synergies with the Group’s existing businesses with a continuing focus on hotels and properties. Such opportunities may include, but are not limited to, acquisition of hotels and/or real estate in locations with market potential for growth. The Company will make announcements as and when appropriate in compliance with the requirements of the Listing Rules. Further, in light of the prevailing high interest rate environment, the Group will proactively monitor interest-rate levels and consider the possibility of reducing its debt in order to optimise net interest costs and optimise its debt-to-equity ratio.

LISTING RULES IMPLICATION

As one of the applicable percentage ratios (as defined in the Listing Rules) for the Disposal exceeds 25% but are all less than 75%, the Disposal constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement, and shareholders’ approval requirements under the Listing Rules.

LETTER FROM THE BOARD

A GM will be held to seek approval from the shareholders of the Company for the Disposal. As at the Latest Practicable Date, the Vendor is indirectly owned as to 85% by the Group and 15% by KS Ocean Inc., respectively. Goodland Limited and Kansas Holdings Limited, the two largest Shareholders holding 96,646,960 shares and 101,437,360 shares in the Company respectively, representing approximately 28.41% and 29.82% of the issued share capital of the Company, are wholly-owned subsidiaries of KS Ocean Inc., in which each of Mr. HO Kian Guan and Mr. HO Kian Hock had one-third interest in its issued shares respectively. Mr. TSE See Fan Paul is a director of KS Ocean Inc.. As such, Mr. HO Kian Guan, Mr. HO Kian Hock, Goodland Limited and Kansas Holdings Limited, Mr. TSE See Fan Paul and their close associates have a material interest in the Disposal and shall abstain from voting at the GM. Save for the above, to the best knowledge, information and belief of the Directors, having made all reasonable enquiries, no other Shareholder has a material interest in the Disposal and will be required to abstain from voting on the relevant resolution to approve the Disposal at the GM.

RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the terms of the Sale and Purchase Agreement are fair and reasonable and are in the interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend that all the Shareholders should vote in favour of the relevant resolution(s) to be proposed at the GM.

FURTHER INFORMATION

Your attention is also drawn to the financial information of the Group, the Valuation Report, and the additional information set out in the appendices to this circular.

Yours faithfully

For and on Behalf of the Board

Keck Seng Investments (Hong Kong) Limited HO Kian Guan Executive Chairman

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. INDEBTEDNESS

At the close of business on 30 September 2023, being the latest practicable date for the purpose of preparing the indebtedness statement, the Group had indebtedness as follows:

Borrowings

Note Secured and guaranteed Bank loans (i) Unsecured and unguaranteed Bank loans Loan from an associate (ii) Loans from non-controlling shareholders (iii) Total borrowings	HK$’000 1,362,577 38,481 464 111,109
	150,054
	1,512,631

(i) The bank loans were secured by hotel properties owned by the Group and guaranteed by the Company.
(ii) Loan from an associate was unsecured, interest-free and repayable on demand.
(iii) Loans from non-controlling shareholders were unsecured, interest-bearing on prime lending rate and repayable on demand except for amounts of HK$32,736,000 and HK$74,294,000 which were unsecured, interest-free and repayable on 30 April 2026 and 30 April 2025 respectively.

Commitments

At 30 September 2023, the Group had capital commitments of HK$35,392,000 which included the amount of HK$21,982,000 which was contracted for and the amount of HK$13,410,000 which was authorised but not contracted for.

Contingent liabilities

At 30 September 2023, there were outstanding counter indemnities relating to guarantees issued by the banks of a subsidiary in favour of the Macau Special Administrative Region Government in respect of properties held for sale amounted to HK$8,252,000.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as aforesaid and apart from intra-group liabilities and normal trade payables, the Group did not have any loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities issued and outstanding, and authorised or otherwise created but unissued and term loans or other borrowings, indebtedness in the nature of borrowings, liabilities under acceptance (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, finance lease or hire purchase commitments, which are either guaranteed, unguaranteed, secured or unsecured, guarantees or other contingent liabilities outstanding at the close of business on 30 September 2023.

2. WORKING CAPITAL

The Directors are of the opinion that, following completion of the Disposal, after taking into account the financial resources available to the Group, including internally generated funds and the available banking facilities, the Group has sufficient working capital for its present requirements for at least the next twelve months from the date of this circular, in the absence of unforeseeable circumstances.

3. FINANCIAL AND TRADING PROSPECTS

The global economy saw recovery of varying degrees in the first half of 2023. The notable exception was China which turned in a relatively strong performance in the first quarter, but began to slide into areas of uncertainty with declining external trade, weak capital investment, lacklustre property sales, and high unemployment figures amongst youth. Given the size and reach of the Chinese economy and its impact on global economic activity, the direction of the Chinese economy in the coming months will have a direct bearing on economic performance worldwide.

The continuing prospect of high interest rates is also casting a long shadow on global economic and investment activities. In addition, ongoing geopolitical tensions, trade conflicts, investment restrictions, and heightened macroeconomic volatility will continue to overshadow the prospects for growth.

Macau’s economy is expected to sustain its gradual post-pandemic recovery throughout the second half of 2023. However, the outlook for the real estate market remains uncertain due to potential adverse effects from global economic slowdown, China’s economic deceleration, and worldwide interest rate hikes, could also dampen the recovery of Macau’s real estate sector. However, the real estate market in Macau should remain stable due to limited new supply, especially in the luxury sector. Furthermore, the growing integration with the Greater Bay Area presents significant long-term growth prospects for both the local economy and the real estate market. During the second half of 2023, the focus of the Group will remain on enhancing occupancy rates and maximising tenant retention through the implementation of competitive leasing strategies.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The hospitality sector is expected to continue its recovery in the second half of 2023. However, it is important to remain vigilant as the pace of normalisation varies across regions. The Asian markets, with the exception of China, are expected to continue their recovery, while the rebound in our US and Canada markets may be slower due to potential economic slowdown, persistent inflationary pressure, and high interest rates. Given these degrees of uncertainties and with numerous hurdles and setbacks to overcome, the outlook for the hospitality sector remains uncertain, and a prolonged and arduous path to recovery is anticipated in the second half of 2023.

Approaching the second half of 2023, the Group remains committed to adopting conservative and responsible measures to maintain a strong and sustainable financial structure. The Group will maintain a cautious approach and prioritize the evaluation of potential investments that generate sustainable long-term value for shareholders. Additionally, the Group will adopt a disciplined and pragmatic approach when considering acquisitions, specifically targeting industries, countries, or regions where the Group possesses expertise and comparative advantages.

VALUATION REPORT

APPENDIX II

The following is the Valuation Report prepared for the purpose of incorporation in this circular and received from LW Hospitality Advisors, an independent professional property valuer, in connection with the valuation as of 2 October 2023 of the assets held by a subsidiary of Keck Seng Investments (Hong Kong) Limited.

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200 West 41st Street, Suite 602 New York, NY 10036 (212) 300-6684 www.lwhospitalityadvisors.com

November 7, 2023

The Directors

Keck Seng Investments (Hong Kong) Limited (KSI)

Re: Restricted Appraisal of the Sheraton Ottawa Hotel 150 Albert Street
Ottawa, Ontario K1P 5G2, Canada

To Whom It May Concern:

In accordance with the instructions from Keck Seng Investments (Hong Kong) Limited (KSI) (the “Company”) or its subsidiaries (hereafter together referred to as the “Group”), we are pleased to transmit our appraisal of the above-captioned property in the restricted appraisal report dated November 7, 2023.

The subject property consists of a 19,666 square foot site located along Albert Street in Ottawa, Ontario. The site is currently improved with an 18-story, 236-room full-service Sheraton by Marriott hotel that opened in 1972 as a Four Seasons hotel. Current amenities and facilities include the Carleton Grill, Sasha’s Lounge, indoor pool (currently closed), business center, fitness center, sundry shop, and 9,614 square feet of meeting space. The parking offering contains a total of 112 parking spaces. The property is owned by Chateau Ottawa Hotel Inc and operated by Keck Seng North America Group.

The purpose of this valuation is to estimate the “as is” market value of the fee simple estate in the above-referenced property as of October 2, 2023, the inspection date, for incorporation in a circular to the shareholders of the Company. The final opinions of value are summarized below:

Final Opinions of Value	Total Amount	Per Unit	Date of Value	*# Units*
As Is $39,500,000		$167,000	October 2, 2023	236 Keys

Unless otherwise stated, all money amounts stated in our report are in Canadian Dollars (CAD).

VALUATION REPORT

APPENDIX II

Our valuation of the property held by the Group is our opinion of its market value which we would define as “the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.”.

The scope of our work included an inspection of the subject, analysis of local economic and market conditions, examination of the historical operating performance of the subject, estimation of the subject’s future operating performance, and derivation of value using the Income Capitalization and Sales Comparison Approaches to valuation. The Cost Approach was not utilized as it is not considered to be a meaningful indicator of value for the subject.

To the best of our belief, this valuation conforms to requirements set forth in the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and the Valuation Standards on Properties published by the Hong Kong Institute of Surveyors. It is not the intent of this brief letter report to provide an extensive discussion of our research and analysis, but instead, to constitute a statement of final value. A complete discussion of our research and analysis is contained in our full narrative report of the subject prepared for the Company.

Sources of information for the valuation included interviews with local realtors and brokers. Financial statements for the subject were provided by the Company. Since these statements were not prepared by us, we do not take responsibility for their accuracy, but have assumed that they are correct. That being said, we have no reason to doubt the truth and accuracy of the information provided to us by the Company. We have also sought confirmation from the Company that no material facts have been omitted from the information provided.

No allowance has been made in our valuation for any charges, mortgages, local taxation or amounts owing on the subject. Unless otherwise stated, it is assumed that the subject is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its market value.

Neither the whole nor any part of this report or any reference thereto may be included in any published document, circular or statement nor published in any way without the appraiser’s written approval of the form and context in which it may appear.

We declare hereby that we are independent of the Group, and are not beneficially interested in the share capital of any member of the Group and do not have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

This appraisal report has been prepared in compliance with the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP) and Uniform Standards of Professional Appraisal Practice (USPAP).

Please note we take no responsibility for any events, conditions, or circumstances affecting the market or property that exists subsequent to the last day of our fieldwork, October 2, 2023.

The value opinions in this report are qualified by certain assumptions, limiting conditions, certifications, and definitions located in the full narrative appraisal.

VALUATION REPORT

APPENDIX II

Extraordinary Assumptions

Extraordinary Assumptions are assumptions which if found to be false could alter the resulting opinion or conclusion.

Given current brand standards and the subject’s current condition, this appraisal assumes that the subject property will complete a change of ownership renovation during Years 1 & 2 of the projection period. The total budgeted cost is estimated to be $22,420,000, or approximately $95,000 per key, which is based on a review of renovation cost comparables, Marshall & Swift valuation cost estimates, as well as discussions with industry professionals specializing in the development and review of PIP budgets. We have deducted this amount from the DCF analysis. We assume the budgeted amount to be sufficient to maintain brand standards. Further, we assume that following the completion of the anticipated renovation, reserves for replacement would cover all future required renovations. We reserve the right to amend our conclusions herein upon receipt of any additional information.

This appraisal assumes that the subject property could be sold unencumbered of a management agreement. For the purposes of this analysis, we have utilized a market-based management fee of 3.00% of total revenue.

We assume the subject property will continue to operate as a branded hotel affiliated with Sheraton by Marriott, or a similar brand/collection of equal quality and recognition. We were provided with a franchise agreement, which we reviewed and considered in compiling our projections.

If any of the aforementioned assumptions prove untrue, it may have an impact on our concluded opinion(s) of value. We reserve the right to amend our conclusions herein upon receipt of any additional information.

Hypothetical Conditions

Hypothetical Conditions are assumptions made contrary to fact, but which are assumed for the purpose of discussion, analysis, or formulation of opinions.

This appraisal employs no hypothetical conditions.

VALUATION REPORT

APPENDIX II

This letter is invalid as an opinion of value if detached from the report, which contains the text, exhibits, and Addenda.

Respectfully submitted,

LW Hospitality Advisors[®]

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Robert Van Laer, MAI Senior Vice President 200 West 41st Street, Suite 602 New York, NY 10036

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Jonathan Jaeger, MAI, ISHC Senior Managing Director 200 West 41st Street, Suite 602 New York, NY 10036

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Evan Weiss, MRICS COO, Principal 200 West 41st Street, Suite 602 New York, NY 10036

VALUATION REPORT

APPENDIX II

EXECUTIVE SUMMARY

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General Information
Property Name Sheraton Ottawa Hotel
Address 150 Albert Street
City Ottawa
Province Ontario
Zip Code K1P 5G2
Property Type Full-Service Upper Upscale Hotel
Legal Identification 0614.041.701.19700.0000
Interest Appraised Fee Simple Interest
Inspected By Robert Van Laer, MAI (in-person inspection; October 2,
2023)
Robert Van Laer, MAI has extensive experience in the
valuation of hotel properties in North America for over 10
years. He is a Member of the Appraisal Institute. He has
completed 1,200+ hotel valuation and advisory
assignments, totaling in excess of $10 billion in
valuations.
Site & Improvements
Subject Site Area 0.45 Acres; 19,666 Sq. Ft.
Zoning District MD-Mixed-Use Downtown
Flood Plain Zone No, FEMA Flood Panel No. , January 0, 1900
Year Built 1972
Year Opened as Hotel 1972
Number of Keys 236
Number of Buildings 1
Gross Building Area (GBA) 233,380± Square Feet
Corridor Type Interior
Property Condition Good
Recent Major Renovation 2015/2016
Meeting Space 9,614 Sq. Ft.
Food & Beverage Outlet(s) Two operated outlets
Retail Space(s) No retail spaces
Parking Spaces 112 Spaces
Franchise and Management Agreements
Franchisor Franchise and License (Canadian) OPS Limited
Partnership
Expiration Year 20 Years; Expiration: 2036
Management Company Keck Seng North America Group
Management Encumbrance No
Expiration Date (Fully Extended) N/A; Not encumbered
Highest and Best Use
As If Vacant Commercial Development
As Improved As Currently Improved
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VALUATION REPORT

APPENDIX II

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Operating Statistics
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Operating Statistics	Operating Statistics

Year End 2019 Year End 2020 Year End 2021 Year End 2022 Trailing12 Months (YE Aug2023)	Occupancy ADR
	76.82% $183.09 35.85% $179.14 19.90% $142.04 56.63% $199.43 68.52% $210.35
Projected Year One Projected Stabilized Year (Year 5) Year End 2019 – Adjusted Year End 2020 – Adjusted Year End 2021 – Adjusted Year End 2022 – Adjusted Trailing12 Months – Adjusted* (YE Aug2023)	61.00% $221.18 76.00% $268.82 Net Operating Income Overall Capitalization Rate
	$2,730,338 6.95% -$1,864,289 -4.74% -$1,217,084 -3.10% $2,849,538 7.25% $2,459,527 6.26%
Year One – Adjusted $1,568,947 3.99% Stabilized Year $5,849,258 14.88% Stabilized Year Deflated to Year One $5,045,621 12.84% Note, the implied cap rates are derived from the discounted cash flow conclusions Discount Rate Terminal/Residual Rate* Discounted Cash Flow – As Is 10.50% 8.50%
	10.50% 8.50%

Please note the historical ADR and Occupancy presented in the chart above are derived from the subject’s reported data per STR. The Net Operating Income figures have been derived from the subject financial statements.

* Going forward, we have projected a market-based Management Fee of 3.0% of Total Revenue and Reserves for Replacement at 4.0% of Total Revenue. Given the subject’s historical financials did not include 3.0% Management Fee and 4.0% Reserves, we have presented the adjusted Net Operating Income (NOI) above for comparison purposes.

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Value Indications Total Amount Per Unit Date of Value # Units
Income Capitalization Approach
As Is $39,300,000 $167,000 October 2, 2023 236 Keys
Sales Comparison Approach
As Is $37,300,000 – $159,000 – October 2, 2023 236 Keys
$41,300,000 $175,000
Final Opinions of Value Total Amount Per Unit Date of Value # Units
As Is $39,500,000 $167,000 October 2, 2023 236 Keys
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Please note the As Is value conclusion includes a deduction for renovation cost, equal to $22,420,000 or $95,000 per key. The renovation is taking place in Years 1 & 2 of the projection period.

VALUATION REPORT

APPENDIX II

ZONING DATA

The subject property is located within the MD-Mixed-Use Downtown zoning district, as determined by the City of Ottawa.

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Zoning Summary
Zoning Authority City of Ottawa
Zoning District MD-Mixed-Use Downtown
Primary Permitted Uses Permitted uses include office, retail, commercial, and hotels
Hotels Permitted Yes
Zoning Change Planned No
Legally Conforming Yes
Category Zoning Requirement
Comments The subject is a permitted use and conforms to zoning and parking
regulations.
Source: Zoning & Planning Department
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We know of no deed restrictions, private or public, that further limit the subject property’s use. The research required to determine whether or not such restrictions exist, however, is beyond the scope of this assignment. Deed restrictions are a legal matter and only a title examination by an attorney or Title Company can usually uncover such restrictive covenants. Thus, we recommend a title search to determine if any such restrictions do exist.

VALUATION REPORT

APPENDIX II

SALIENT FACTS

Intended User

Keck Seng Investments (Hong Kong) Limited (KSI)

Intended Use Scope of Work

The intended use of this report is for internal decision making purposes.

In preparing this appraisal, LWHA[®] : 1) Inspected the interior and exterior of the subject, including site improvements, public areas, a representative sample of guestrooms, and back of house areas; 2) Interviewed hotel management and representatives of its ownership; 3) Reviewed the subject’s historical operating and financial data, agreements, as well as industry statistics and the operating statistics of similar hotels; 4) Inspected competitive properties, researched occupancies, average rates, and segmentation, and performed fair share projections for the subject. Data was obtained through interviews with on-site management and LWHA[®] ’s internal database; 5) Prepared detailed projections of occupancy, average daily rate, and operating expenses; 6) Researched and analyzed recent comparable sales and offerings to determine capitalization and discount rates as well as indications of value per room; 7) Considered the subject’s replacement cost, accrued depreciation, and the relevancy to the subject valuation; 8) Reconciled the applicable techniques to develop an opinion of value.

Acquisition History As far as we are aware, there have been no sales of the subject property within the past three years. Reportedly, the subject property is under contract for sale. Although requested, we were not provided with additional information relating to the buyer, purchase price, or broker. However, it was reported that the transaction is considered to be offmarket. We reserve the right to amend our conclusions herein upon receipt of any additional information.
Property Rights Fee Simple estate, including the contributory value of the furniture, Appraised fixtures and equipment. The appraisers assume that the hotel will remain open and operational.
Marketing and Exposure Period
The PwC Real Estate Investor Survey, as well as our interviews with knowledgeable owners and brokers, are utilized in estimating the marketing and exposure period for our opinion of value. According to the most recent PwC Real Estate Investor Survey – Second Quarter 2023, 7.2 months is the average marketing time for luxury hotels, 6.5 months for full-service hotels, 8.1 months for limited-service hotels and 5.8 months for select-service hotels. Based on the preceding, we estimate the marketing time for the subject property to be approximately 6 to 12 months. The exposure period, or retrospective time to expose the property prior to sale, is estimated to be 6 to 12 months.

VALUATION REPORT

APPENDIX II

COMPETITIVE LODGING MARKET ANALYSIS

Considering the branding of the subject hotel, product-type offered, amenities, ADR-positioning, condition and location, the subject property competes predominately with other similar hotels in the surrounding area. We recognize that there are various other lodging facilities in the area, which may compete with the subject to a nominal degree; however, we do not believe they compete as directly or cater to the same clientele that would choose the subject property or the majority of the competitive set of hotels.

The subject’s competitive market consists of the Westin Ottawa, Marriott Ottawa Hotel, The Metcalfe Hotel, Arc The Hotel, Novotel Ottawa, Fairmont Chateau Laurier, Lord Elgin Hotel, and Delta Hotel Ottawa City Centre. The primary competitive set for the subject hotel consists of eight hotels, which range in size from 108 to 492 rooms, and collectively contain an aggregate of 2,675 rooms. The following tables present summary information on the competitive set. This information was assembled from market interviews, property inspections, and lodging directories. Market segmentation reflects the estimated share of room nights in each of the market segments: Commercial, Meeting & Group, and Leisure.

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APPENDIX II

VALUATION REPORT

Amenities	Restaurant Lounge Indoor Pool Outdoor Pool Fitness Center	X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X		Estimated 2022	RevPAR	56.6% $199.43 $112.95 55% – 60% $215 – $225 $115 – $125 55% – 60% $195 – $205 $105 – $115 55% – 60% $225 – $235 $130 – $140 55% – 60% $220 – $230 $125 – $135 55% – 60% $185 – $195 $105 – $115 55% – 60% $340 – $360 $190 – $200 55% – 60% $190 – $200 $100 – $110 55% – 60% $200 – $210 $110 – $120	*56%* *$226.34* *$126.38*
					Average Rate
					Occupancy
	Total Meeting Space (Sq. Ft.) Meeting Space per Key (Sq. Ft.)	9,614 41 48,700 99 36,162 74 3,000 28 2,717 24 6,300 22 36,000 85 12,669 36 38,596 94	193,758 *66.6*
				Estimated 2019	RevPAR	76.8% $183.09 $140.65 75% – 80% $195 – $205 $145 – $155 70% – 75% $175 – $185 $130 – $140 75% – 80% $180 – $190 $135 – $145 75% – 80% $180 – $190 $135 – $145 75% – 80% $175 – $185 $135 – $145 75% – 80% $280 – $300 $215 – $225 70% – 75% $185 – $195 $135 – $145 75% – 80% $170 – $180 $125 – $135	*75%* *$200.47* *$151.27*
Segmentation	Leisure	20% 20% 20% 55% 55% 35% 35% 45% 25%	*30%*		Average Rate
	Meeting & Group	25% 45% 40% 20% 20% 25% 35% 25% 35%	*33%*
					Occupancy
	Commercial	55% 35% 40% 25% 25% 40% 30% 30% 40%	*37%*
Primary Competitive Set Profile	Year Built No. of Rooms	1972 236 1983 492 1988 489 1965 108 1955 112 1988 283 1912 426 1941 355 1967 410	2,911
				Property Information	Competitive Rooms	236 236 492 492 489 489 108 108 112 112 283 283 426 426 355 355 410 410	2,911 2,911
	Hotel Location	Sheraton Ottawa Hotel (Subject) 150 Albert Street, Ottawa, Ontario Westin Ottawa 11 Colonel By Drive, Ottawa, ON Marriott Ottawa Hotel 100 Kent Street, Otawa, ON The Metcalfe Hotel 123 Metcalfe Street, Ottawa, ON Arc The Hotel 140 Slater Street, Otawa, ON Novotel Ottawa 33 Nicholas Street, Ottawa, ON Fairmont Chateau Laurier 1 Rideau Street, Ottawa, ON Lord Elgin Hotel 100 Elgin Street, Ottawa, ON Delta Hotel Ottawa City Centre 101 Lyon Street North, Ottawa, ON	*Totals/Averages*		No. of Keys
					Hotel	Sheraton Ottawa Hotel (Subject) Westin Ottawa Marriott Ottawa Hotel The Metcalfe Hotel Arc The Hotel Novotel Ottawa Fairmont Chateau Laurier Lord Elgin Hotel Delta Hotel Ottawa City Centre	*Totals/Averages*

VALUATION REPORT

APPENDIX II

Estimated 2022	RevPAR Penetration	101% 88% 89% 99% – 108% 95% – 100% 91% – 99% 99% – 108% 86% – 90% 84% – 91% 99% – 108% 100% – 104% 103% – 111% 99% – 108% 97% – 102% 99% – 107% 99% – 108% 82% – 86% 84% – 91% 99% – 108% 153% – 157% 151% – 159% 99% – 108% 84% – 88% 80% – 87% 99% – 108% 88% – 93% 87% – 95%	100% 100% 100%
	ADR Penetration
	Occupancy Penetration
Estimated 2019	RevPAR Penetration	102% 91% 93% 100% – 107% 97% – 102% 96% – 103% 93% – 100% 87% – 92% 86% – 93% 100% – 107% 89% – 94% 90% – 96% 100% – 107% 90% – 95% 90% – 96% 100% – 107% 87% – 92% 90% – 96% 100% – 107% 142% – 147% 143% – 149% 93% – 100% 92% – 97% 90% – 96% 100% – 107% 85% – 90% 83% – 90%	100% 100% 100%
	ADR Penetration
	Occupancy Penetration
Property Information	Competitive Rooms	236 236 492 492 489 489 108 108 112 112 283 283 426 426 355 355 410 410	2,911 2,911
	No. of Keys
	Hotel	Sheraton Ottawa Hotel (Subject) Westin Ottawa Marriott Ottawa Hotel The Metcalfe Hotel Arc The Hotel Novotel Ottawa Fairmont Chateau Laurier Lord Elgin Hotel Delta Hotel Ottawa City Centre	*Totals/Averages*

VALUATION REPORT

APPENDIX II

OCCUPANCY & AVERAGE DAILY RATE PROJECTIONS

Historical Supply and Demand Analysis

The following tables and charts present historical trends in the performance of the primary competitors.

STR Annual Report	STR Annual Report	STR Annual Report	STR Annual Report	STR Annual Report	STR Annual Report	STR Annual Report	STR Annual Report	STR Annual Report	STR Annual Report	STR Annual Report

Year	Supply	% Change	Demand	% Change	Occupancy	% Change	ADR	% Change	RevPAR	% Change
2016 2,909 0.0% 783,240 – 73.8% – $185.80 – $137.06 – 2017 2,909 0.0% 801,460 2.3% 75.5% 2.3% $207.75 11.8% $156.81 14.4% 2018 2,909 0.0% 786,533 –1.9% 74.1% –1.9% $205.10 –1.3% $151.93 –3.1% 2019 2,909 0.0% 801,198 1.9% 75.5% 1.9% $200.47 –2.3% $151.27 –0.4% 2020 2,144 –26.3% 219,148 –72.6% 28.0% –62.9% $176.16 –12.1% $49.33 –67.4% 2021 2,537 18.3% 256,808 17.2% 27.7% –1.0% $171.06 –2.9% $47.44 –3.8% 2022 2,911 14.8% 593,257 131.0% 55.8% 101.3% $226.34 32.3% $126.38 166.4%
CAGR		*0.0%*		*–4.5%*		*–4.5%*		*3.3%*		*–1.3%*
Aug23
YTD 2022 2,911 – 353,775 – 50.0% – $217.29 – $108.67 – YTD 2023 2,911 0.0% 466,031 31.7% 65.9% 31.7% $240.03 10.5% $158.14 45.5%
TTM 2022 2,786 – 481,462 – 47.3% – $206.04 – $97.56 – TTM 2023 2,911 4.5% 704,027 46.2% 66.3% 39.9% $239.77 16.4% $158.87 62.8%

Recently Opened/Proposed Supply

The competitive supply is summarized in the table below:

		Competitive New Supply	Competitive New Supply	Competitive New Supply	Competitive New Supply
											Opened/
					Number		Distance		Percent		Anticipated
	Name	Address			of Keys		(Miles)		Competitive		Opening
	*Recently Opened/Proposed New Supply*
	AC Hotels by Marriott Ottawa	201 Rideau Street			160		0.9		50%		Jan-24
	MOXY Ottawa	126 York Street			222		1.1		25%		Nov-24
	Renaissance Ottawa	295 Slater Street			230		0.5		100%		Jan-25
The phase-in of keys is calculated in the table below:
		Competitive New Supply Phase-In
	Fiscal Year Ending:	2023	2024			2025		2026		2027	2028
	AC Hotels by Marriott Ottawa	0		80			80	80		80	80
	MOXY Ottawa	0			9		56	56		56	56
	Renaissance Ottawa	0			0		230	230		230	230
	Total	0		89			366	366		366	366

The following tables summarize our projection of area-wide room night demand, supply, and occupancy rates.

APPENDIX II

VALUATION REPORT

		12/31/2033	0.0% 840.6 306,811 1,050 13,742 321,603	52,350	0.0% 764.9 279,192 886 7,004 287,082	26,682	0.0% 692.6 252,797 1,018 14,274 268,088	54,376	12/31/2033
		12/31/2032	0.0% 840.6 307,651 1,053 13,780 322,484	52,494	0.0% 764.9 279,956 889 7,023 287,868	26,755	0.0% 692.6 253,490 1,020 14,313 268,823	54,525	12/31/2032
		12/31/2031	0.0% 840.6 306,811 1,050 13,742 321,603	52,350	0.0% 764.9 279,192 886 7,004 287,082	26,682	0.0% 692.6 252,797 1,018 14,274 268,088	54,376	12/31/2031
		12/31/2030	0.0% 840.6 306,811 1,050 13,742 321,603	52,350	0.0% 764.9 279,192 886 7,004 287,082	26,682	0.0% 692.6 252,797 1,018 14,274 268,088	54,376	12/31/2030
		12/31/2029	0.0% 840.6 306,811 1,050 13,742 321,603	52,350	0.0% 764.9 279,192 886 7,004 287,082	26,682	0.0% 692.6 252,797 1,018 14,274 268,088	54,376	12/31/2029
		12/31/2028	0.0% 840.6 307,651 1,053 13,780 322,484	52,494	0.0% 764.9 279,956 889 7,023 287,868	26,755	0.0% 692.6 253,490 1,020 14,313 268,823	54,525	12/31/2028
		12/31/2027	0.0% 840.6 306,811 1,050 13,742 321,603	52,350	0.0% 764.9 279,192 886 7,004 287,082	26,682	0.0% 692.6 252,797 1,018 14,274 268,088	54,376	12/31/2027
		12/31/2026	0.0% 840.6 306,811 1,050 13,742 321,603	52,350	0.0% 764.9 279,192 886 7,004 287,082	26,682	0.0% 692.6 252,797 1,018 14,274 268,088	54,376	12/31/2026
		12/31/2025	6.0% 840.6 306,811 1,050 13,742 321,603	52,350	6.0% 764.9 279,192 886 7,004 287,082	26,682	6.0% 692.6 252,797 1,018 14,274 268,088	54,376	12/31/2025
		12/31/2024	8.0% 793.0 290,237 257 3,385 293,880	12,897	8.0% 721.6 264,110 217 1,715 266,042	6,533	8.0% 653.4 239,141 249 3,474 242,865	13,235	12/31/2024
		12/31/2023	24.0% 734.3 268,004 0 0 268,004	0	24.0% 668.2 243,878 0 0 243,878	0	24.0% 605.0 220,822 0 0 220,822	0	12/31/2023
		Base Year	592.1 216,132 216,132		538.8 196,676 196,676		487.9 178,082 178,082		Base Year
Projected Segmented Demand	Projected Segmented Demand	Segment	Commercial Annual Growth Base Demand Annual Room Nights Displaced Demand Induced Demand Total Segment Demand	Competitive New Supply	Meeting & Group Annual Growth Base Demand Annual Room Nights Displaced Demand Induced Demand Total Segment Demand	Competitive New Supply	Leisure Annual Growth Base Demand Annual Room Nights Displaced Demand Induced Demand Total Segment Demand	Competitive New Supply

VALUATION REPORT

APPENDIX II

Projected Occupancy and Average Daily Rate

A hotel’s ability to generate room revenue is determined by two operating statistics: annual occupancy rate and average daily room rate. In most markets, a room night analysis may be performed to quantify and forecast room night demand. The occupancy of a given hotel may be projected based on its relative competitiveness with other hotels and its penetration through the market. Individual lodging facilities may operate above or below the area-wide occupancy or average rate, depending upon the particular attributes of the property.

Review of Historical Operating Performance

The below table summarizes the subject’s occupancy, average daily rate, and revenue per available room over the past seven full operating year(s), as well as year to date (YTD) and trailing twelve month (TTM) through August 2023. Please note the data presented below is derived from the subject’s STR reports.

Subject Historical Operating Metrics	Subject Historical Operating Metrics	Subject Historical Operating Metrics	Subject Historical Operating Metrics	Subject Historical Operating Metrics	Subject Historical Operating Metrics	Subject Historical Operating Metrics
Year	Occ.%	%	ADR	%	RevPAR	%
2016 77.70% – $182.60 – $141.87 – 2017 72.21% –7.1% $191.63 4.9% $138.37 –2.5% 2018 77.48% 7.3% $190.35 –0.7% $147.49 6.6% 2019 76.82% –0.9% $183.09 –3.8% $140.65 –4.6% 2020 35.85% –53.3% $179.14 –2.2% $64.22 –54.3% 2021 19.90% –44.5% $142.04 –20.7% $28.26 –56.0% 2022 56.63% 184.6% $199.43 40.4% $112.95 299.7%
YTD Aug 2022 49.00% – $193.33 – $94.72 – YTD Aug2023 66.85% 36.4% $211.76 9.5% $141.56 49.5%
TTM Aug2023 68.52% $210.35 $144.13

The following table illustrates our estimated penetration rates over the projection period and resultant occupancy levels:

APPENDIX II

VALUATION REPORT

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12/31/2033 3,277 236 7.2% 7.2% 152.0% 10.9% 321,603 10.9% 35,210 7.2% 80.0% 5.8% 287,082 5.8% 16,542 7.2% 70.0% 5.0% 268,088 5.0% 13,517 65,269
12/31/2032 3,277 236 7.2% 7.2% 152.0% 10.9% 322,484 10.9% 35,306 7.2% 80.0% 5.8% 287,868 5.8% 16,588 7.2% 70.0% 5.0% 268,823 5.0% 13,554 65,448 65,448 86,376 76% 65,269 76% 7% 104%
12/31/2031 3,277 236 7.2% 7.2% 152.0% 10.9% 321,603 10.9% 35,210 7.2% 80.0% 5.8% 287,082 5.8% 16,542 7.2% 70.0% 5.0% 268,088 5.0% 13,517 65,269 65,269 86,140 76% 65,448 76% 7% 104%
12/31/2030 3,277 236 7.2% 7.2% 152.0% 10.9% 321,603 10.9% 35,210 7.2% 80.0% 5.8% 287,082 5.8% 16,542 7.2% 70.0% 5.0% 268,088 5.0% 13,517 65,269 65,269 86,140 76% 65,269 76% 7% 104%
12/31/2029 3,277 236 7.2% 7.2% 152.0% 10.9% 321,603 10.9% 35,210 7.2% 80.0% 5.8% 287,082 5.8% 16,542 7.2% 70.0% 5.0% 268,088 5.0% 13,517 65,269 65,269 86,140 76% 65,269 76% 7% 104%
12/31/2028 3,277 236 7.2% 7.2% 152.0% 10.9% 322,484 10.9% 35,306 7.2% 80.0% 5.8% 287,868 5.8% 16,588 7.2% 70.0% 5.0% 268,823 5.0% 13,554 65,448 65,448 86,376 76% 65,269 76% 7% 104%
12/31/2027 3,277 236 7.2% 7.2% 152.0% 10.9% 321,603 10.9% 35,210 7.2% 80.0% 5.8% 287,082 5.8% 16,542 7.2% 70.0% 5.0% 268,088 5.0% 13,517 65,269 65,269 86,140 76% 65,448 76% 7% 104%
12/31/2026 3,277 236 7.2% 7.2% 152.0% 10.9% 321,603 10.9% 35,210 7.2% 80.0% 5.8% 287,082 5.8% 16,542 7.2% 70.0% 5.0% 268,088 5.0% 13,517 65,269 65,269 86,140 76% 65,269 76% 7% 104%
12/31/2025 3,277 236 7.2% 7.2% 135.0% 9.7% 321,603 9.7% 31,272 7.2% 70.0% 5.0% 287,082 5.0% 14,475 7.2% 60.0% 4.3% 268,088 4.3% 11,586 57,333 57,333 86,140 67% 63,269 73% 7% 100%
12/31/2024 3,000 236 7.9% 7.9% 120.0% 9.4% 293,880 9.4% 27,740 7.9% 60.0% 4.7% 266,042 4.7% 12,556 7.9% 50.0% 3.9% 242,865 3.9% 9,552 49,848 49,848 86,376 58% 55,412 64% 7% 88%
12/31/2023 2,911 236 8.1% 8.1% 155.0% 12.6% 268,004 12.6% 33,678 8.1% 80.0% 6.5% 243,878 6.5% 15,817 8.1% 70.0% 5.7% 220,822 5.7% 12,532 62,027 62,027 86,140 72% 52,952 61% 7% 85%
Historical 2,911 236 8.1% 8.1% 153.1% 12.4% 216,132 12.4% 26,832 8.1% 76.5% 6.2% 196,676 6.2% 12,196 8.1% 67.6% 5.5% 178,082 5.5% 9,757 48,785 48,785 86,140 57% 48,785
We have utilized 2022 as the base year for our projections. Based on the subject’s actual year-to-date and trailing-twelve month 2023 data, we have reflected the subject’s change in penetration for 2023. Going forward, we have projected the subject’s penetration levels to decrease during the anticipated renovation, but subsequently increase and stabilize in line with historical figures. Prior to the global health crisis, subject occupancy ranged from 72% to 78%, averaging approximately 76%. Given the anticipated improved condition and performance following the completion of the renovation, we believe the subject will stabilize toward the upper end of the range at 76%.
Subject Property’s Fair Share Market Supply Room Subject Property Room Count Fair Share Room Nights Captured by Subject Commercial Fair Share Penetration Factor Market Share Demand Market Share Capture Meeting & Group Fair Share Penetration Factor Market Share Demand Market Share Capture Leisure Fair Share Penetration Factor Market Share Demand Market Share Capture Total Capture Subject Property Projected Occupancy Room Nights Captured Available Room Nights Occupancy Fiscal Year Adjusted Room Nights Captured Fiscal Year Occupancy Overall Market Share Overall Penetration

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VALUATION REPORT

APPENDIX II

Average Daily Rate Projection

We examined the rate structure and achieved average room rates and RevPARs of the competitive hotels in the market, in concluding the subject property’s average room rate. These are depicted in the following table.

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Estimated Competitive ADR – 2022
Property ADR RevPAR
Sheraton Ottawa Hotel (Subject) $199.43 $112.95
Westin Ottawa $215 – $225 $115 – $125
Marriott Ottawa Hotel $195 – $205 $105 – $115
The Metcalfe Hotel $225 – $235 $130 – $140
Arc The Hotel $220 – $230 $125 – $135
Novotel Ottawa $185 – $195 $105 – $115
Fairmont Chateau Laurier $340 – $360 $190 – $200
Lord Elgin Hotel $190 – $200 $100 – $110
Delta Hotel Ottawa City Centre $200 – $210 $110 – $120
Market Average $226.34 $126.38
Subject Actual ADR – 2022 $199.43
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We have utilized the subject’s year-end 2022 average daily rate (ADR) of $199.43 as the base for our analysis, and applied 7.50% growth for the first 9 month(s) of 2023 in consideration of the actual year-to-date performance, the trailing twelve-month average daily rate (ADR) of $210.35, and in order to align with the projection year.

The competitive market exhibited an ADR increase of 32.3% in 2022. The subject property exhibited an ADR increase of 40.4% in 2022. The competitive market exhibited an ADR increase of 10.5% year-to-date compared to the previous year. The subject property exhibited an ADR increase of 9.5% year-to-date compared to the previous year. Given the recent ADR growth, we believe there to be rate growth potential going forward. Additionally, we believe there to be rate growth potential following the completion of the subject’s $22,420,000, or approximately $95,000 per key renovation.

Going forward, average daily rate is forecasted to increase by 5.00% in Year 1 of the projection period. Thereafter, as demand continues to recover in the market, and taking into account the anticipated renovation and the lingering effects of the pandemic, we anticipate ADR to increase by 5.00% in Year 2. Subsequently, ADR is projected to increase by 6.00% in Year 3, increase by 5.00% in Year 4, and increase by 4.00% in Year 5 of the projection period. In the subsequent years, average daily rate is forecasted to increase at the underlying rate of inflation of 3.00% per year. A discussion of our inflation forecast is included in the Income Capitalization Approach section of this report. The projections are based on overall market trends and expectations of local operators, taking into account the subject’s location, projected occupancy levels, anticipated renovation, and Sheraton by Marriott brand affiliation.

The projections are considered reasonable given on a deflated basis the projections are in line with the 2022 market average.

VALUATION REPORT

APPENDIX II

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Subject Projected ADR
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Subject Projected ADR	Subject Projected ADR	Subject Projected ADR

Year	ADR Growth	Projected ADR
Actual ADR (2022) $199.43
TTM/Fiscal Year Adjustment 7.5% $210.65
10/1/2023 – 9/30/2024 5.0% $221.18 10/1/2024 – 9/30/2025 5.0% $232.24 10/1/2025 – 9/30/2026 6.0% $246.17 10/1/2026 – 9/30/2027 5.0% $258.48 10/1/2027 – 9/30/2028 4.0% $268.82
10/1/2028 – 9/30/2029 3.0% $276.89 10/1/2029 – 9/30/2030 3.0% $285.19 10/1/2030 – 9/30/2031 3.0% $293.75 10/1/2031 – 9/30/2032 3.0% $302.56 10/1/2032 – 9/30/2033 3.0% $311.64 10/1/2033 – 9/30/2034 3.0% $320.99 10/1/2034 – 9/30/2035 3.0% $330.62 10/1/2035 – 9/30/2036 3.0% $340.53 10/1/2036 – 9/30/2037 3.0% $350.75 10/1/2037 – 9/30/2038 3.0% $361.27

VALUATION REPORT

APPENDIX II

VALUATION PROCESS

Three approaches are generally used to estimate market value: the income capitalization, sales comparison, and cost approaches. These approaches may indicate different results that must be reconciled in deriving the final estimate. In estimating the value of the subject property, we attempted to re-create the thought processes and analyses that potential buyers of such a property would use. The most likely buyers for this property would rely primarily upon a discounted cash flow analysis of the anticipated income stream from the property. The sales comparison approach was employed as a secondary and supportive technique. Because the cost approach does not reflect these income-related considerations and requires a number of highly subjective depreciation estimates, in addition to the existence of the current improvement, this approach was omitted from the valuation process of this specific property.

Reconciliation

Reconciliation and correlation of value indications is the final step in the valuation process. Given the particular appraisal problem and purpose, the appraiser assesses the reliability of each approach and the quality of the data considered. Most weight is given to the approach that produces the most reliable solution and most closely reflects the behavior of typical investors. Based upon our experience in the lodging investment market, we believe that the Income Capitalization Approach produces the most supportable value opinion, and it has been given the greatest weight in developing our value conclusion.

APPENDIX II

VALUATION REPORT

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POR 74.52 21.09 18.45 –0.27 113.79 30.78 27.55 3.19 0.00 61.53 52.27 42.37 0.00 12.55 3.83 12.50 11.75 82.99 –30.73 1.17 15.94 5.57 0.00 22.68 –53.41 –60.21
PAR 9,778 2,767 2,421 (36) 14,931 4,039 3,615 419 – 8,073 6,858 5,560 – 1,647 502 1,640 1,541 10,889 (4,032) 153 2,091 731 – 2,976 (7,007) (7,900)
r End 2020
a
Gross % 65.5% 18.5% 16.2% –0.2% 100.0% 41.3% 130.7% 17.3% 0.0% 54.1% 45.9% 37.2% 0.0% 11.0% 3.4% 11.0% 10.3% 72.9% –27.0% 1.0% 14.0% 4.9% 0.00% 19.9% –46.9% –52.9%
Actual – Ye
2020 366 236 86,376 30,966 35.85% $74.52 $26.72 $ (000’s) 2,308 653 571 (8) 3,524 953 853 99 – 1,905 1,618 1,312 – 389 119 387 364 2,570 (951) 36 494 173 – 702 (1,654) (1,864)
POR 181.95 50.88 1.93 2.10 236.86 52.94 46.91 3.19 0.00 103.05 133.81 26.38 0.00 16.62 8.38 5.61 9.67 66.66 67.15 2.96 7.36 1.95 0.00% 12.27 54.88 41.26
PAR 51,018 14,266 542 589 66,414 14,845 13,155 896 – 28,895 37,519 7,396 – 4,661 2,348 1,573 2,712 18,690 18,829 830 2,064 547 – 3,441 15,388 11,569
r End 2019
a
Gross % 76.8% 21.5% 0.8% 0.9% 100.0% 29.1% 92.2% 165.3% 0.0% 43.5% 56.5% 11.1% 0.0% 7.0% 3.5% 2.4% 4.1% 28.1% 28.4% 1.2% 3.1% 0.8% 0.00% 5.2% 23.2% 17.4%
Actual – Ye
2019 365 236 86,140 66,173 76.82% $181.95 $139.77 $ (000’s) 12,040 3,367 128 139 15,674 3,503 3,104 211 – 6,819 8,854 1,745 – 1,100 554 371 640 4,411 4,444 196 487 129 – 812 3,632 2,730
POR 191.49 53.02 2.61 2.43 249.56 57.59 45.97 3.05 0.00 106.61 142.94 22.24 0.00 15.96 7.66 12.39 8.82 67.07 75.87 3.12 7.25 1.78 0.00% 12.15 63.72 49.37
PAR 54,155 14,996 739 688 70,578 16,288 13,000 863 – 30,151 40,426 6,289 – 4,513 2,166 3,505 2,495 18,968 21,458 882 2,051 503 – 3,437 18,022 13,964
r End 2018
a
Gross % 76.7% 21.2% 1.0% 1.0% 100.0% 30.1% 86.7% 116.8% 0.0% 42.7% 57.3% 8.9% 0.0% 6.4% 3.1% 5.0% 3.5% 26.9% 30.4% 1.3% 2.9% 0.7% 0.00% 4.9% 25.5% 19.8%
Actual – Ye
2018 365 236 86,140 66,744 77.48% $191.49 $148.37 $(000’s) 12,781 3,539 174 162 16,656 3,844 3,068 204 – 7,116 9,541 1,484 – 1,065 511 827 589 4,476 5,064 208 484 119 – 811 4,253 3,295
Going forward, we have projected a market-based Management Fee of 3.0% of Total Revenue and Reserves for Replacement at 4.0% of Total Revenue. Given the subject’s historical financials did not include 3.0% Management Fee and 4.0% Reserves, we have presented the adjusted Net Operating Income (NOI) above for comparison purposes.
Rooms Revenue Food & Beverage Revenue Other Operated Departments Revenue Parking Revenue Rooms Expense Food & Beverage Expense Other Operated Departments Expense Parking Expense Administrative & General Information & Telecommunications Systems Sales & Marketing Franchise Fees Utility Costs Property Operation & Maintenance Management Fee Property Taxes Insurance Reserve for Replacement
Year Ending December 31: Number of Days in Year: Number of Rooms: Annual Available Rooms: Occupied Rooms: Annual Occupancy: Average Rate: RevPAR: Revenue Total Revenue Departmental Expenses Total Departmental Expenses Departmental Income (Loss) Undistributed Operating Expenses Total Undistributed Operating Expenses Gross Operating Profit (GOP) Fixed Charges Total Fixed Charges Hotel Cash Flow NOI Adjusted for 3.00% of Total Revenue Management Fee and 4.00% of Total Revenue for Reserves for Replacement

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APPENDIX II

VALUATION REPORT

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POR 210.92 32.46 17.27 -6.38 254.26 62.13 33.60 3.18 0.00 98.91 155.35 29.84 0.00 18.78 10.56 11.17 13.02 83.38 71.97 0.00 9.29 3.14 0.00 12.43 59.54 41.74
(YE August 31) PAR 52,660 8,103 4,311 (1,594) 63,480 15,511 8,388 795 – 24,694 38,785 7,450 – 4,690 2,636 2,790 3,251 20,816 17,969 – 2,320 784 – 3,104 14,865 10,422
onth Actual
M
Trailing 12 Gross % 83.0% 12.8% 6.8% -2.5% 100.0% 29.5% 103.5% 18.4% 0.0% 38.9% 61.1% 11.7% 0.0% 7.4% 4.2% 4.4% 5.1% 32.8% 28.3% 0.0% 3.7% 1.2% 0.0% 4.9% 23.4% 16.4%
Trailing 12 Month 365 236 86,140 58,922 68.40% $210.92 $144.27 $ (000’s) 12,428 1,912 1,017 (376) 14,981 3,661 1,980 188 – 5,828 9,153 1,758 – 1,107 622 658 767 4,913 4,241 – 547 185 – 732 3,508 2,460
POR 199.69 29.91 26.76 -0.19 256.17 55.47 26.44 3.07 0.00 84.99 171.19 31.81 0.00 15.23 9.98 12.70 11.53 81.26 89.93 0.00 10.38 3.21 0.00 13.59 76.34 58.41
PAR 41,278 6,184 5,532 (39) 52,955 11,467 5,465 635 – 17,568 35,387 6,576 – 3,149 2,062 2,626 2,384 16,797 18,590 – 2,146 663 – 2,809 15,781 12,074
r End 2022
a
Gross % 77.9% 11.7% 10.4% -0.1% 100.0% 27.8% 88.4% 11.5% 0.0% 33.2% 66.8% 12.4% 0.0% 5.9% 3.9% 5.0% 4.5% 31.7% 35.1% 0.0% 4.1% 1.3% 0.0% 5.3% 29.8% 22.8%
Actual – Ye
2022 365 236 86,140 48,785 56.63% $199.69 $113.09 $ (000’s) 9,742 1,459 1,306 (9) 12,497 2,706 1,290 150 – 4,146 8,351 1,552 – 743 487 620 563 3,964 4,387 – 506 157 – 663 3,724 2,850
POR 142.02 0.08 46.70 0.00 188.81 66.40 1.01 4.84 0.00 72.25 116.56 59.44 0.00 20.51 7.06 25.69 24.39 137.09 -20.53 0.00 28.55 8.71 0.00 37.26 -57.80 -71.01
PAR 10,314 6 3,392 – 13,712 4,822 73 351 – 5,247 8,465 4,317 – 1,490 512 1,865 1,772 9,956 (1,491) – 2,073 633 – 2,706 (4,197) (5,157)
r End 2021
a
Gross % 75.2% 0.0% 24.7% 0.0% 100.0% 46.8% 1205.8% 10.4% 0.0% 38.3% 61.7% 31.5% 0.0% 10.9% 3.7% 13.6% 12.9% 72.6% -10.9% 0.0% 15.1% 4.6% 0.0% 19.7% -30.6% -37.6%
Actual – Ye
2021 365 236 86,140 17,139 19.90% $142.02 $28.26 $ (000’s) 2,434 1 800 – 3,236 1,138 17 83 – 1,238 1,998 1,019 – 352 121 440 418 2,350 (352) – 489 149 – 639 (991) (1,217)
Going forward, we have projected a market-based Management Fee of 3.0% of Total Revenue and Reserves for Replacement at 4.0% of Total Revenue. Given the subject’s historical financials did not include 3.0% Management Fee and 4.0% Reserves, we have presented the adjusted Net Operating Income (NOI) above for comparison purposes.
Rooms Revenue Food & Beverage Revenue Other Operated Departments Revenue Parking Revenue Rooms Expense Food & Beverage Expense Other Operated Departments Expense Parking Expense Administrative & General Information & Telecommunications Systems Sales & Marketing Franchise Fees Utility Costs Property Operation & Maintenance Management Fee Property Taxes Insurance Reserve for Replacement
Year Ending December 31: Number of Days in Year: Number of Rooms: Annual Available Rooms: Occupied Rooms: Annual Occupancy: Average Rate: RevPAR: Revenue Total Revenue Departmental Expenses Total Departmental Expenses Departmental Income (Loss) Undistributed Operating Expenses Total Undistributed Operating Expenses Gross Operating Profit (GOP) Fixed Charges Total Fixed Charges Hotel Cash Flow NOI Adjusted for 3.00% of Total Revenue Management Fee and 4.00% of Total Revenue for Reserves for Replacement

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APPENDIX II

VALUATION REPORT

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POR 292.50 73.53 129.95 37.03 459.49 76.45 87.37 11.13 174.95 284.54 38.21 5.80 30.99 6.95 15.49 20.34 117.79 166.74 16.53 150.21 14.76 5.60 11.31 118.54
564 PAR 67,004 16,844 29,768 8,483 17,512 20,014 2,550 40,076 65,180 8,754 1,330 7,100 1,592 3,548 4,660 26,983 38,197 3,787 34,410 3,382 1,283 2,591 27,153
63.11% $292.50 105,256
Full-Service Upper Upscale Ratio to Sales 63.7% 16.0% 28.3% 8.1% 136.8% 26.1% 67.2% 73.2% 38.1% 61.9% 8.3% 1.7% 6.7% 1.5% 3.4% 4.4% 25.6% 36.3% 3.6% 32.7% 3.2% 1.2% 2.5% 25.8%
POR 316.16 68.97 122.73 29.07 467.97 87.43 90.19 9.01 186.63 281.34 42.24 6.59 33.06 5.94 15.72 21.61 125.17 156.17 15.87 140.29 19.37 5.78 10.79 104.35
PAR 6,461 2,003 9,388 1,466 7,349 1,321 3,494 4,804 3,529 4,306 1,286 2,399
60.94% 510 $316.16 70,277 15,331 27,282 104,020 19,433 20,048 41,484 62,535 27,822 34,713 31,185 23,194
Full-Service Urban
Ratio to Sales 67.6% 14.7% 26.2% 6.2% 100.0% 27.7% 73.5% 63.7% 39.9% 60.1% 9.0% 1.4% 7.1% 1.3% 3.4% 4.6% 26.7% 33.4% 3.4% 30.0% 4.1% 1.2% 2.3% 22.3%
POR 253.56 55.07 99.30 17.40 370.25 72.97 70.17 6.04 149.18 221.07 34.19 5.47 27.94 7.18 12.43 19.64 106.84 114.23 12.16 102.08 17.44 3.71 0.00 80.93
415 PAR 52,460 11,394 20,544 3,599 76,603 15,098 14,518 1,249 30,865 45,738 7,073 1,131 5,780 1,485 2,572 4,063 22,104 23,634 2,515 21,119 3,607 769 0 16,743
56.77% $253.56
Ratio to Sales 68.5% 14.9% 26.8% 4.7% 100.0% 28.8% 70.7% 71.6% 55.1% 81.7% 9.2% 1.5% 7.5% 1.9% 3.4% 5.3% 39.5% 30.9% 4.5% 27.6% 4.7% 1.0% 0.0% 21.9%
Full-Service East North Central
POR 312.21 73.50 129.44 39.27 480.92 81.47 92.99 14.81 189.28 291.64 41.54 5.97 32.47 7.35 15.66 21.38 124.36 167.28 17.64 149.63 16.00 6.09 10.80 116.74
PAR 9,072 3,422 9,596 1,379 7,502 1,697 3,617 4,939 4,076 3,696 1,408 2,496
63.64% 410 $312.21 72,127 16,980 29,903 111,102 18,822 21,484 43,727 67,374 28,729 38,645 34,569 26,969
Full-Service Chain-Affiliated Ratio to Sales 64.9% 15.3% 26.9% 8.2% 100.0% 26.1% 71.8% 75.1% 53.8% 82.9% 8.6% 1.2% 6.8% 1.5% 3.3% 4.4% 25.9% 34.8% 3.7% 31.1% 3.3% 1.3% 2.2% 24.3%
POR 295.37 68.57 121.70 31.43 448.50 79.81 85.90 10.36 176.07 272.43 39.22 5.98 31.26 6.82 14.97 20.77 119.02 153.41 15.72 137.69 16.81 5.38 8.77 106.73
PAR 7,086 2,336 8,772 1,337 6,989 1,522 3,352 4,640 3,525 3,745 1,208 1,994
61.26% 475 $295.37 66,085 15,367 27,267 100,438 17,831 19,240 39,407 61,031 26,612 34,419 30,894 23,947
Host Weighted Average Ratio to Sales 66.0% 15.3% 27.1% 6.9% 111.3% 27.1% 70.6% 70.8% 45.5% 70.1% 8.8% 1.5% 7.0% 1.5% 3.3% 4.7% 28.8% 34.1% 3.7% 30.6% 3.8% 1.2% 1.9% 23.7%
Systems Expenses
Rooms Revenue Food Revenue Food & Beverage Revenue Other Operated Departments Revenue Rooms Expense Food & Beverage Expense Other Operated Departments Expense EXPENSES Administrative & General Information & Telecommunications Sales & Marketing Franchise Fees Utility Costs Property Operation & Maintenance Total Undistributed Operating Management Fee Property Taxes Insurance Reserve For Replacement
Sheraton Ottawa Hotel STR 2023 Hotel Profitability Review Category Occupancy (of Sample) Average Size Of Property (Rooms) Average Daily Rate REVENUE Total Revenue DEPARTMENTAL EXPENSES Total Departmental Expenses Total Departmental Profit UNDISTRIBUTED OPERATING Gross Operating Profit (GOP) Income Before Fixed Charges Selected Fixed Charges Hotel Cash Flow
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APPENDIX II

VALUATION REPORT

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POR 205.79 95.93 3.02 0.00 304.74 48.79 57.04 1.20 0.00 107.03 197.71 23.29 3.26 26.76 22.49 10.38 11.63 97.82 99.89 10.67 10.73 1.24 12.19 34.83 65.07 66.59
68% 275-305 $206 PAR 51,114 23,827 750 0 75,691 12,119 14,167 299 0 26,585 49,106 5,786 808 6,647 5,587 2,579 2,888 24,295 24,811 2,650 2,664 308 3,028 8,650 16,161 16,541
Comp Hotel 5
Ratio to Sales 67.5% 31.5% 1.0% 0.0% 100.0% 23.7% 59.5% 39.9% 0.0% 35.1% 64.9% 7.6% 1.1% 8.8% 7.4% 3.4% 3.8% 32.1% 32.8% 3.5% 3.5% 0.4% 4.0% 11.4% 21.4% 21.9%
POR 305.11 120.20 8.60 17.30 451.21 65.52 85.46 0.03 22.66 173.66 277.55 47.69 10.48 43.17 0.00 10.11 17.33 128.78 148.76 13.54 10.76 2.76 18.05 54.02 94.75 94.75
78% 430-475 $305 PAR 86,416 34,044 2,435 4,900 127,795 18,557 24,205 7 6,417 49,186 78,609 13,508 2,968 12,225 0 2,864 4,909 36,475 42,134 3,834 3,049 782 5,112 15,299 26,835 26,835
Comp Hotel 4
Ratio to Sales 67.6% 26.6% 1.9% 3.8% 100.0% 21.5% 71.1% 0.3% 131.0% 38.5% 61.5% 10.6% 2.3% 9.6% 0.0% 2.2% 3.8% 28.5% 33.0% 3.0% 2.4% 0.6% 4.0% 12.0% 21.0% 21.0%
POR 202.55 118.12 3.90 0.00 324.56 38.97 53.06 0.00 0.00 92.03 232.53 28.30 1.65 21.38 17.72 8.49 10.59 88.13 144.40 9.82 12.62 3.55 0.00 25.99 118.16 105.26
68% 340-375 $203 PAR 50,316 29,343 969 0 80,628 9,681 13,181 0 0 22,862 57,766 7,029 409 5,312 4,402 2,110 2,631 21,894 35,873 2,438 3,134 883 – 6,456 29,355 26,149
Comp Hotel 3
Ratio to Sales 62.4% 36.4% 1.2% 0.0% 100.0% 19.2% 44.9% 0.0% 0.0% 28.4% 71.6% 8.7% 0.5% 6.6% 5.5% 2.6% 3.3% 27.2% 44.5% 3.0% 3.9% 1.1% 0.0% 8.0% 36.4% 32.4%
POR 196.84 70.97 3.01 9.33 280.15 45.98 48.78 0.31 10.72 105.79 174.36 18.95 2.59 22.39 14.25 12.07 14.81 85.07 89.29 8.23 10.21 1.80 11.19 31.43 57.86 57.67
73% 385-425 $197 PAR 52,561 18,950 804 2,491 74,805 12,279 13,024 83 2,861 28,247 46,558 5,059 693 5,979 3,806 3,223 3,956 22,716 23,842 2,197 2,727 480 2,988 8,392 15,449 15,398
Comp Hotel 2
Ratio to Sales 70.3% 25.3% 1.1% 3.3% 100.0% 23.4% 68.7% 10.3% 114.9% 37.8% 62.2% 6.8% 0.9% 8.0% 5.1% 4.3% 5.3% 30.4% 31.9% 2.9% 3.6% 0.6% 4.0% 11.2% 20.7% 20.6%
POR 219.95 137.83 21.89 0.00 379.66 60.42 102.37 10.97 0.00 173.76 205.91 36.54 7.05 28.47 23.65 13.49 13.95 123.16 82.75 7.40 14.80 2.72 8.80 33.71 49.04 38.66
64% 460-510 $220 PAR 51,056 31,993 5,081 0 88,130 14,025 23,762 2,546 0 40,334 47,796 8,482 1,635 6,610 5,490 3,132 3,238 28,588 19,209 1,717 3,436 630 2,042 7,825 11,383 8,974
Comp Hotel 1
Ratio to Sales 57.9% 36.3% 5.8% 0.0% 100.0% 27.5% 74.3% 50.1% 0.0% 45.8% 54.2% 9.6% 1.9% 7.5% 6.2% 3.6% 3.7% 32.4% 21.8% 1.9% 3.9% 0.7% 2.3% 8.9% 12.9% 10.2%
POR 231.47 109.89 8.74 6.33 356.43 53.26 71.75 2.66 7.97 135.64 220.79 32.32 5.49 29.41 14.51 11.03 14.07 106.82 113.97 10.00 11.86 2.47 10.57 37.15 76.78 72.41
70% 398 $231 PAR 60,157 28,136 2,179 1,760 92,233 13,768 18,397 623 2,220 35,008 57,225 8,389 1,440 7,669 3,575 2,827 3,655 27,555 29,670 2,610 3,027 636 2,797 9,704 19,955 18,905
Comp Weighted Average Ratio to Sales 65.1% 30.9% 2.3% 1.7% 100.0% 23.1% 65.1% 18.9% 57.2% 37.7% 62.3% 8.8% 1.4% 8.1% 4.4% 3.2% 4.0% 30.0% 32.3% 2.8% 3.4% 0.7% 2.9% 10.4% 21.9% 20.6%
Category
Systems
Rooms Revenue Food & Beverage Revenue Other Operated Departments Revenue Parking Revenue Rooms Expense Food & Beverage Expense Other Operated Departments Expense Parking Expense Administrative & General Information & Telecommunications Sales & Marketing Franchise Fees Utility Costs Property Operation & Maintenance Management Fee Property Taxes Insurance Reserve for Replacement
Sheraton Ottawa Hotel Competitive Review Annual Occupancy: Number of Rooms: Average Daily Rate: Revenue Total Revenue Departmental Expenses Total Departmental Expenses Departmental Income (Loss) Undistributed Operating Expenses Total Undistributed Operating Expenses Gross Operating Profit (GOP) Fixed Charges Total Fixed Charges Hotel Cash Flow NOI Adjusted for 3.00% Management and 4.00% Reserves
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APPENDIX II

VALUATION REPORT

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Gross % 77.0% 18.8% 1.0% 3.3% 100% 23.8% 79.4% 18.0% 60.0% 35.3% 64.7% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.1% 37.6% 3.0% 34.6% 4.5% 1.0% 4.0% 25.1%
11 2034 365 236 86,140 65,466 76.00% 320.99 .95324 $ (000’s) 21,014 5,131 264 893 27,302 4,992 4,073 47 536 9,649 17,653 2,091 344 1,576 1,261 951 1,166 7,390 10,263 819 9,444 1,232 262 1,092 6,859
Gross % 77.0% 18.8% 1.0% 3.3% 100% 23.8% 79.4% 18.0% 60.0% 35.3% 64.7% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.1% 37.6% 3.0% 34.6% 4.5% 1.0% 4.0% 25.1%
10 2033 365 236 86,140 65,466 76.00% 311.64 6.8423 $ (000’s) 20,402 4,982 256 867 26,507 4,847 3,955 46 520 9,368 17,139 2,030 334 1,530 1,224 924 1,132 7,174 9,964 795 9,169 1,196 254 1,060 6,659
Gross % 77.0% 18.8% 1.0% 3.3% 100% 23.7% 79.4% 18.0% 60.0% 35.3% 64.7% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.1% 37.6% 3.0% 34.6% 4.5% 1.0% 4.0% 25.2%
9 2032 366 236 86,376 65,646 76.00% 302.56 .95922 $ (000’s) 19,862 4,840 249 844 25,795 4,711 3,843 45 506 9,105 16,690 1,976 326 1,490 1,192 899 1,101 6,984 9,706 774 8,933 1,161 247 1,032 6,492
Gross % 77.0% 18.8% 1.0% 3.3% 100% 23.8% 79.4% 18.0% 60.0% 35.3% 64.7% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.1% 37.6% 3.0% 34.6% 4.5% 1.0% 4.0% 25.1%
8 2031 365 236 86,140 65,466 76.00% 293.75 .25322 $ (000’s) 19,231 4,696 242 817 24,985 4,569 3,728 43 490 8,830 16,155 1,914 315 1,442 1,154 871 1,067 6,763 9,393 750 8,643 1,127 240 999 6,277
Gross % 77.0% 18.8% 1.0% 3.3% 100% 23.8% 79.4% 18.0% 60.0% 35.3% 64.7% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.1% 37.6% 3.0% 34.6% 4.5% 1.0% 4.0% 25.1%
7 2030 365 236 86,140 65,466 76.00% 285.19 .75621 $ (000’s) 18,670 4,559 235 793 24,257 4,436 3,619 42 476 8,573 15,684 1,858 306 1,400 1,120 845 1,036 6,566 9,119 728 8,391 1,094 233 970 6,094
Gross % 77.0% 18.8% 1.0% 3.3% 100% 23.8% 79.4% 18.0% 60.0% 35.3% 64.7% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.1% 37.6% 3.0% 34.6% 4.5% 1.0% 4.0% 25.1%
6 2029 365 236 86,140 65,466 76.00% 276.89 .43021 $ (000’s) 18,127 4,426 228 770 23,551 4,307 3,514 41 462 8,323 15,228 1,804 297 1,360 1,088 821 1,005 6,374 8,853 707 8,147 1,062 226 942 5,916
Gross % 77.0% 18.8% 1.0% 3.3% 100% 23.7% 79.4% 18.0% 60.0% 35.3% 64.7% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.1% 37.6% 3.0% 34.6% 4.1% 1.0% 4.0% 25.5%
5 2028 366 236 86,376 65,646 76.00% 268.82 204.30 $ (000’s) 17,647 4,300 221 750 22,918 4,185 3,414 40 450 8,089 14,829 1,756 289 1,323 1,059 799 979 6,205 8,624 688 7,936 951 220 917 5,849
Gross % 76.8% 18.9% 1.0% 3.3% 100% 24.0% 79.4% 18.0% 60.0% 35.6% 64.4% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.2% 37.2% 3.0% 34.2% 2.9% 1.0% 4.0% 26.4%
4 2027 365 236 86,140 65,466 76.00% 258.48 .45619 $ (000’s) 16,922 4,172 215 726 22,035 4,059 3,312 39 436 7,845 14,189 1,697 280 1,278 1,015 773 945 5,988 8,201 661 7,540 637 213 881 5,809
Gross % 76.3% 19.4% 1.0% 3.3% 100% 24.8% 79.6% 18.1% 60.0% 36.5% 63.5% 8.0% 1.3% 6.0% 4.6% 3.7% 4.4% 28.0% 35.4% 3.0% 32.4% 3.1% 1.0% 4.0% 24.3%
3 2026 365 236 86,140 62,882 73.00% 246.17 .71917 $ (000’s) 15,480 3,927 204 677 20,289 3,844 3,127 37 406 7,414 12,875 1,623 269 1,219 929 746 899 5,685 7,190 609 6,581 631 207 812 4,932
Gross % 81.4% 14.8% 1.2% 2.6% 100% 28.4% 90.5% 18.7% 70.0% 38.5% 61.5% 9.6% 1.6% 7.2% 4.9% 4.5% 5.2% 33.1% 28.4% 3.0% 25.4% 4.0% 1.3% 0.0% 20.1%
2 2025 365 236 86,140 55,130 64.00% 232.24 .63814 $ (000’s) 12,803 2,320 186 412 15,720 3,633 2,098 35 288 6,054 9,666 1,514 255 1,128 768 712 825 5,203 4,463 472 3,991 624 201 – 3,166
Gross % 88.5% 8.4% 1.3% 1.7% 100% 31.0% 100.9% 19.0% 80.0% 37.6% 62.4% 11.0% 1.9% 8.2% 5.3% 5.2% 6.0% 37.5% 24.9% 3.0% 21.9% 4.5% 1.5% 0.0% 15.9%
1 2024 366 236 86,376 52,689 61.00% 221.18 134.92 $ (000’s) 11,654 1,111 176 229 13,170 3,609 1,121 33 183 4,947 8,224 1,448 246 1,076 699 689 784 4,942 3,282 395 2,887 596 195 – 2,096
The following ten-year projection of income and expense reflects the subject property’s anticipated performance on a fiscal basis beginning
Revenue Systems
Rooms Revenue Food & Beverage Revenue Other Operated Departments Parking Revenue Rooms Expense Food & Beverage Expense Other Operated Departments Expense Parking Expense Total Departmental Expenses EXPENSES Administrative & General Information & Telecommunications Sales & Marketing Franchise Fees Utility Costs Property Operation & Maintenance CHARGES Property Taxes Insurance Reserve for Replacement
Sheraton Ottawa Hotel 10 Year Summary Projection Year Fiscal Year Ending September 30: Days in Year Number of Rooms Rooms Available Occupied Rooms Occupancy Average Rate RevPAR REVENUE Total Revenue DEPARTMENTAL EXPENSES Total Departmental Profit UNDISTRIBUTED OPERATING Total Undistributed Operating Expenses GROSS OPERATING PROFIT Management Fee INCOME BEFORE FIXED Selected Fixed Charges Net Operating Income
October 1, 2023. Stabilization is anticipated to occur in year five of the projection period. The statements are expressed in inflated dollars for each projection year.
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APPENDIX II

VALUATION REPORT

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POR 268.82 65.50 3.37 11.42 349.12 63.76 52.01 0.61 6.85 123.23 225.89 26.75 4.41 20.16 16.13 12.17 14.91 94.52 131.37 10.47 14.48 3.35 13.96 42.27 89.10
PAR 74,775 18,220 938 3,178 97,111 17,735 14,466 169 1,907 34,276 62,835 7,441 1,226 5,608 4,487 3,385 4,147 26,292 36,542 2,913 4,028 932 3,884 11,757 24,785
Stabilized DCF Year 5 Gross % 77.0% 18.8% 1.0% 3.3% 100.0% 23.7% 79.4% 18.0% 60.0% 35.3% 64.7% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.1% 37.6% 3.0% 4.1% 1.0% 4.0% 12.1% 25.5%
2028 366 236 86,376 65,646 76.00% 268.82 204.30 Amount 17,646,959 4,299,845 221,440 749,937 22,918,181 4,185,359 3,414,094 39,789 449,962 8,089,204 14,828,977 1,756,028 289,281 1,323,430 1,058,818 798,818 978,633 6,205,007 8,623,970 687,545 950,552 219,888 916,727 2,774,712 5,849,258
POR 258.48 63.73 3.28 11.09 336.58 62.01 50.59 0.59 6.65 119.84 216.74 25.92 4.27 19.53 15.51 11.80 14.43 91.47 125.28 10.10 9.73 3.25 13.46 36.54 88.73
PAR 71,703 17,678 910 3,077 93,367 17,200 14,034 163 1,846 33,243 60,124 7,190 1,185 5,417 4,302 3,275 4,004 25,372 34,752 2,801 2,699 902 3,735 10,137 24,615
DCF Year 4 Gross % 76.8% 18.9% 1.0% 3.3% 100.0% 24.0% 79.4% 18.0% 60.0% 35.6% 64.4% 7.7% 1.3% 5.8% 4.6% 3.5% 4.3% 27.2% 37.2% 3.0% 2.9% 1.0% 4.0% 10.9% 26.4%
2027 365 236 86,140 65,466 76.00% 258.48 196.45 Amount 16,921,886 4,171,979 214,712 726,121 22,034,697 4,059,294 3,311,919 38,553 435,672 7,845,438 14,189,259 1,696,811 279,744 1,278,317 1,015,313 772,793 944,922 5,987,901 8,201,359 661,041 636,976 212,900 881,388 2,392,305 5,809,054
POR 246.17 62.46 3.25 10.77 322.65 61.13 49.73 0.59 6.46 117.90 204.74 25.81 4.28 19.39 14.77 11.86 14.29 90.41 114.34 9.68 10.03 3.29 12.91 35.90 78.44
PAR 65,593 16,642 865 2,870 85,969 16,287 13,250 157 1,722 31,416 54,554 6,877 1,140 5,167 3,936 3,160 3,809 24,088 30,465 2,579 2,672 876 3,439 9,566 20,899
DCF Year 3 Gross % 76.3% 19.4% 1.0% 3.3% 100.0% 24.8% 79.6% 18.1% 60.0% 36.5% 63.5% 8.0% 1.3% 6.0% 4.6% 3.7% 4.4% 28.0% 35.4% 3.0% 3.1% 1.0% 4.0% 11.1% 24.3%
2026 365 236 86,140 62,882 73.00% 246.17 179.71 Amount 15,479,900 3,927,467 204,127 677,210 20,288,703 3,843,824 3,126,895 37,031 406,326 7,414,076 12,874,627 1,623,086 269,145 1,219,321 928,794 745,726 898,808 5,684,880 7,189,747 608,661 630,669 206,699 811,548 2,257,577 4,932,170
POR 232.24 42.08 3.37 7.47 285.15 65.90 38.06 0.63 5.23 109.82 175.33 27.46 4.63 20.47 13.93 12.92 14.97 94.38 80.95 8.55 11.33 3.64 0.00 23.52 57.43 46.02
PAR 54,251 9,829 786 1,744 66,611 15,394 8,891 147 1,221 25,654 40,957 6,415 1,081 4,781 3,255 3,019 3,497 22,047 18,910 1,998 2,646 850 – 5,495 13,415 10,751
DCF Year 2 Gross % 81.4% 14.8% 1.2% 2.6% 100.0% 28.4% 90.5% 18.7% 70.0% 38.5% 61.5% 9.6% 1.6% 7.2% 4.9% 4.5% 5.2% 33.1% 28.4% 3.0% 4.0% 1.3% 0.0% 8.2% 20.1% 16.1%
2025 365 236 86,140 55,130 64.00% 232.24 148.63 Amount 12,803,243 2,319,691 185,568 411,680 15,720,182 3,633,015 2,098,311 34,789 288,176 6,054,291 9,665,891 1,513,892 255,062 1,128,358 768,195 712,393 825,258 5,203,157 4,462,734 471,605 624,425 200,679 – 1,296,709 3,166,025 2,537,217
POR 221.18 21.09 3.35 4.35 249.96 68.49 21.28 0.64 3.48 93.89 156.08 27.49 4.66 20.41 13.27 13.07 14.88 93.79 62.29 7.50 11.31 3.71 0.00 22.51 39.78 29.78
PAR 49,381 4,708 747 971 55,807 15,292 4,751 142 777 20,962 34,845 6,137 1,041 4,558 2,963 2,918 3,322 20,939 13,907 1,674 2,524 828 – 5,026 8,880 6,648
DCF Year 1 Gross % 88.5% 8.4% 1.3% 1.7% 100.0% 31.0% 100.9% 19.0% 80.0% 37.6% 62.4% 11.0% 1.9% 8.2% 5.3% 5.2% 6.0% 37.5% 24.9% 3.0% 4.5% 1.5% 0.0% 9.0% 15.9% 11.9%
2024 366 236 86,376 52,689 61.00% 221.18 134.92 Amount 11,653,833 1,111,107 176,336 229,199 13,170,475 3,608,956 1,121,163 33,470 183,359 4,946,948 8,223,526 1,448,288 245,736 1,075,626 699,230 688,751 783,879 4,941,511 3,282,015 395,114 595,766 195,368 – 1,186,249 2,095,766 1,568,947
During the anticipated renovation, we projected Net Operating Income (NOI) to decrease from current levels. Following the completion of the anticipated renovation, we believe it to be reasonable that subject performance will improve. As such, we have projected occupancy to stabilize in line with historical levels and Average Daily Rate (ADR) to exhibit moderate growth. Expenses were projected in line with industry averages, comparable properties, and the subject’s actual historical performance. Overall, we believe our cash flow projections to be reasonable and well-supported.
September 30: Rooms Revenue Food & Beverage Revenue Other Operated Departments Revenue Parking Revenue Departmental Expenses Rooms Expense Food & Beverage Expense Other Operated Departments Expense Parking Expense Systems Expenses
Sheraton Ottawa Hotel Cash Flow Detail Projected Fiscal Year Ending Number of Days in Year: Number of Rooms: Annual Available Rooms: Occupied Rooms: Annual Occupancy: Average Rate: RevPAR: Revenue Total Revenue Total Departmental Expenses Departmental Income (Loss) Undistributed Operating Expenses Administrative & General Information & Telecommunications Sales & Marketing Franchise Fees Utility Costs Property Operation & Maintenance Total Undistributed Operating Gross Operating Profit (GOP) Fixed Charges Management Fee Property Taxes Insurance Reserve for Replacement Total Fixed Charges Hotel Cash Flow NOI Adjusted for 3.00% Management and 4.00% Reserves

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VALUATION REPORT

APPENDIX II

DISCOUNTED CASH FLOW ANALYSIS

Capitalization and Discount Rates

Capitalization is defined as the process of converting a series of anticipated future periodic installments of net income into present value. The anticipated net income stream is converted into a value opinion by a rate that attracts capital to purchase investments with similar characteristics, such as risk, terms and liquidity. The capitalization process takes into consideration the quantity, quality and durability of the income stream in determining which rates are appropriate for valuing the subject hotel.

Discounted cash flow analysis can be used to develop an opinion of present value of an income stream. Periodic cash flows and the projected reversion amount at the end of a holding period are discounted at an appropriate rate. Our analysis refers to an all-cash purchase. The following text details our analysis.

Based upon our knowledge of current investment returns required by typical hotel investors, along with factors affecting investment risk specific to the subject property, we employed a reversionary capitalization rate of 8.50% for the subject property.

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

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

A determination of the proper discount and terminal capitalization rate(s) for the subject involved speaking with investors and brokers of hotel properties throughout the country, discussing investment parameters with other hospitality industry experts, and considering the results of several published investment surveys.

The investor surveys summarized in the following table have been used in our selection of the appropriate discount and terminal capitalization rate(s) for the subject hotel. It should be noted that the surveys often lag the market and are not always a true representation of current return requirements. This is especially true in the current landscape as there are very few recent transactions to gauge. While the data is not perfect, it is generally relied upon by investors in the market and will be used in this analysis.

VALUATION REPORT

APPENDIX II

Hotel InvestorSurvey	Hotel InvestorSurvey	Hotel InvestorSurvey	Hotel InvestorSurvey
	Discount Rate	OverallCap Rate	ResidualCap Rate
Type	Range Average	Range _Average _	Range Average
*PwC Hotels* Luxury/Upper-Upscale Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Full Service Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Limited Service Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Select Service* Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022	6.75% – 12.00% 9.50% 6.75% – 12.00% 9.45% 6.50% – 11.00% 9.33% 6.50% – 11.00% 9.33% 6.50% – 11.00% 9.27% 7.50% – 12.00% 10.05% 7.50% – 12.00% 10.10% 8.00% – 12.00% 9.98% 8.00% – 12.00% 9.98% 8.00% – 11.00% 9.88% 10.00% – 15.00% 11.60% 10.00% – 15.00% 11.50% 10.00% – 14.00% 11.40% 9.00% – 13.00% 10.70% 9.00% – 12.00% 9.95% 9.00% – 15.00% 11.70% 9.00% – 15.00% 11.60% 10.00% – 14.00% 11.40% 9.00% – 13.50% 11.00% 9.00% – 12.00% 10.55%	4.00% – 10.00% 7.70% 4.00% – 10.00% 7.45% 4.00% – 9.50% 7.13% 4.00% – 9.50% 6.92% 4.00% – 9.50% 6.77% 4.50% – 10.00% 8.00% 4.50% – 10.00% 8.05% 5.00% – 9.00% 7.25% 5.00% – 9.00% 7.25% 5.50% – 9.00% 7.35% 8.00% – 11.50% 9.75% 8.00% – 11.50% 9.65% 8.00% – 11.50% 9.75% 8.00% – 11.50% 9.68% 8.00% – 10.50% 9.18% 7.50% – 10.00% 8.80% 7.25% – 10.00% 8.75% 7.00% – 10.00% 8.50% 7.00% – 10.00% 8.40% 7.00% –9.50% 8.10%	6.00% – 9.50% 7.80% 6.00% – 9.50% 7.80% 5.75% – 9.50% 7.67% 5.75% – 9.50% 7.38% 5.00% – 9.50% 7.34% 4.50% – 10.00% 8.20% 4.50% – 10.00% 8.15% 5.00% – 10.00% 8.05% 5.00% – 10.00% 8.05% 5.50% – 10.00% 8.10% 8.00% – 12.50% 10.20% 8.00% – 12.50% 10.10% 8.00% – 12.50% 10.10% 8.00% – 12.50% 9.85% 8.00% – 12.00% 9.45% 7.50% – 11.50% 9.17% 7.50% – 11.50% 9.25% 7.50% – 11.50% 9.05% 7.50% – 11.50% 8.95% 7.00% – 10.00% 8.25%
Limited Service includes midscale and economy lodging with rooms only_ _* Select Service includes upscale and upper-midscale lodging with rooms only
Source: PwC Real Estate Investor Survey –Q2 2023
Hotel InvestorSurvey
	Discount Rate	OverallCap Rate	ResidualCap Rate
Type	Range Average	Range Average	Range Average
*RERC* First-Tier Properties West Midwest South East Second-Tier Properties West Midwest South East Third-Tier Properties** West Midwest South East	8.5% – 12.0% 10.4% 9.0% – 10.0% 9.6% 7.5% – 12.0% 9.9% 9.2% – 10.8% 10.1% 9.5% – 13.5% 11.3% 10.0% – 13.0% 11.3% 10.5% – 13.0% 11.2% 9.9% – 12.0% 11.3% 10.5% – 14.0% 12.1% 11.0% – 12.5% 11.8% 11.0% – 14.0% 12.3% 11.0% – 14.0% 12.3%	6.5% – 9.8% 8.1% 8.0% – 9.0% 8.4% 6.0% – 9.0% 8.2% 7.9% – 9.0% 8.4% 7.5% – 11.3% 9.0% 9.0% – 10.0% 9.7% 7.0% – 10.0% 9.1% 8.6% – 11.0% 9.7% 8.0% – 11.8% 9.7% 10.0% – 11.5% 10.6% 9.5% – 11.5% 10.5% 9.7% – 13.0% 10.7%	7.5% – 10.3% 8.8% 8.3% – 10.0% 9.1% 6.5% – 9.5% 8.8% 8.8% – 9.5% 9.1% 8.5% – 11.8% 9.7% 10.0% – 11.3% 10.4% 7.5% – 10.5% 9.7% 9.7% – 11.5% 10.4% 9.3% – 12.3% 10.5% 11.0% – 11.8% 11.3% 10.0% – 12.0% 11.1% 10.3% – 13.5% 11.4%
First-tier investment properties are defined as new or newer quality construction in prime to good locations_ _ Second-tier investment properties are defined as aging, former first-tier properties, in good to average locations_ _** Third-tier investmentproperties are defined as olderproperties withfunction inadequacies and/or in marginal locations
Source: Situs RERC Real Estate Report –Q1 2023

VALUATION REPORT

APPENDIX II

The discount and terminal rate selections are applied in conjunction with all discounted cash flow assumptions. In addition to the available investor surveys, numerous market participants were interviewed and consulted to gather applicable information. While the impacts from the COVID-19 pandemic have largely subsided and overall operating metrics for hotels have continued to improve, a substantial increase in interest rates ensued in 2022 which is putting pressure on the capital markets.

Our analysis of applicable terminal capitalization and discount rates for the subject property specifically considered the building type and condition, the current local hotel market conditions, estimated future trends in the local and national market and current investor considerations and required returns on investment for similar investments in comparable hotels where the equivalent interest is being conveyed.

The following factors have been considered in the overall discount and terminal capitalization rate(s) selection for the subject property.

Factors suggesting a lower rate of risk include:

The subject has good access within the urban center, proximate to various modes of transportation;
The subject is located within close proximity of numerous corporate offices such as Deloitte, Accenture, General Dynamics, EY, and Nav Canada;
The subject property benefits from several leisure demand generators such as Parliament Hill, Canadian War Museum, Rideau Canal, National Gallery, and Canadian Museum of Nature;
The subject is affiliated with the Sheraton by Marriott brand and benefits from its reservation system and guest loyalty program.

Factors suggesting a higher rate of risk include:

The actual age of the property is 51 years; additionally, the subject operations are unionized;
There is risk associated with successful execution of the $22,420,000, or approximately $95,000 per key renovation;
The subject hotel market has relatively low barriers to entry with ease of construction for new supply;
Any unforeseen events (i.e. supply additions and weak economy) could alter our cash flow and valuation assumptions;
There is uncertainty surrounding the full impact and recovery from the COVID-19 pandemic, as well as the increased challenges investors are facing regarding the debt markets and rising interest rates.

VALUATION REPORT

APPENDIX II

In the PwC Hotel Investor Survey presented previously, discount rates for luxury/upper-upscale hotels ranged from 6.75% to 12.00% with an average of 9.50%. In the RERC Real Estate Survey presented previously, discount rates for Second-Tier – East hotels ranged from 9.90% to 12.00% with an average of 11.30%. Based on the aforementioned factors, we believe a discount rate of 10.50% is appropriate.

In the PwC Hotel Investor Survey, residual capitalization rates for luxury/upper-upscale hotels ranged from 6.00% to 9.50% with an average of 7.80%. In the RERC Real Estate Survey presented previously, residual capitalization rates for Second-Tier - East hotels ranged from 9.70% to 11.50% with an average of 10.40%. We used a terminal capitalization rate of 8.50% considering the location and condition of the subject, outlook of economic conditions, and investor sentiment.

VALUATION REPORT

APPENDIX II

Salient Income Capitalization Approach Assumptions

Subject Property:

$22,420,000 , or approximately $95,000 per room renovation in 2024/2025. Deducted in Years 1 and 2 of the projection period.
Stabilized Year: Year 5 or FY 2027/2028
*Anticipated increased performance following the completion of the anticipated renovation.

Occupancy/Demand Assumptions:

Stabilized Market Occupancy: 73.0%
Stabilized Subject Occupancy: 76.0%

Average Daily Rate (ADR) Assumptions:

Year 1 Projection: 5.0%
Year 2 Projection: 5.0%
– Year 3 Projection: 6.0%
Year 4 Projection: 5.0%
Year 5 Projection: 4.0%
Remaining Years: 3.0%

Expense Projections:

Supported by industry averages, comparable properties, and actual property historical performance.
Subject Property Stabilized Gross Operating Profit margin: 37.6%
Subject Property Stabilized Net Operating Income margin: 25.5%

Discounted Cash Flow Assumptions: * Selected based industry standards, investor surveys, professional experience, and discussions with market participants.

Hold Period: 10 Years
Reversionary Year: Year 11
Stabilized Year: Year 5
Discount Rate: 10.50%
Residual/Terminal Capitalization Rate: 8.5%
Cost of Sale: 3.0%

Conclusion:

Discounted Cash Flow Conclusion: $39,300,000

VALUATION REPORT

APPENDIX II

Discounted Cash Flow – As Is as of October 2, 2023

Sheraton Ottawa Hotel DCF Analysis – As Is Assumptions Discount Rate 10.50% Residual Cap Rate 8.50% Cost of Sale 3.0% Hold Period (Years) 10 Reversion Year + 1	Sheraton Ottawa Hotel DCF Analysis – As Is Assumptions Discount Rate 10.50% Residual Cap Rate 8.50% Cost of Sale 3.0% Hold Period (Years) 10 Reversion Year + 1	Reversion Calculation (10Y) Year 11 CF: $6,858,792 Gross Reversion: $80,691,666 Cost of Sale: ($2,420,750) Net Reversion: $78,270,916 Stabilized Year: 5	Reversion Calculation (10Y) Year 11 CF: $6,858,792 Gross Reversion: $80,691,666 Cost of Sale: ($2,420,750) Net Reversion: $78,270,916 Stabilized Year: 5	Reversion Calculation (10Y) Year 11 CF: $6,858,792 Gross Reversion: $80,691,666 Cost of Sale: ($2,420,750) Net Reversion: $78,270,916 Stabilized Year: 5	Reversion Calculation (10Y) Year 11 CF: $6,858,792 Gross Reversion: $80,691,666 Cost of Sale: ($2,420,750) Net Reversion: $78,270,916 Stabilized Year: 5
						Returns (10Y)
						PV of Cash: $10,466,340 PV of Reversion: $28,838,830 Avg Annual Cash on Cash 7.86% CF% of Yield: 26.63% Reversion%of Yield: 73.38%

Analysis Year Year Fiscal Year End	NetCash Flow	Net Reversion	Adjustments	UndiscountedCF	Discount Factor	DiscountedCF	% of Yield	Annual Cash onCash Return
0 2023 9/30/2023 – 1 2024 9/30/2024 $2,095,766 2 2025 9/30/2025 $3,166,025 3 2026 9/30/2026 $4,932,170 4 2027 9/30/2027 $5,809,054 5 2028 9/30/2028 $5,849,258 6 2029 9/30/2029 $5,916,471 7 2030 9/30/2030 $6,093,913 8 2031 9/30/2031 $6,276,776 9 2032 9/30/2032 $6,492,275 10 2033 9/30/2033 $6,658,985		– – – 1.00000 – (11,210,000) -$9,114,234 0.90498 – (11,210,000) -$8,043,975 0.81898 – – $4,932,170 0.74116 – – $5,809,054 0.67073 – – $5,849,258 0.60700 – – $5,916,471 0.54932 – – $6,093,913 0.49712 – – $6,276,776 0.44989 – – $6,492,275 0.40714 78,270,916 – $84,929,902 0.36845				– 0.00% NA -$8,248,175 -20.99% -23.19% -$6,587,887 -16.76% -20.47% $3,655,537 9.30% 12.55% $3,896,335 9.91% 14.78% $3,550,499 9.03% 14.88% $3,250,043 8.27% 15.05% $3,029,426 7.71% 15.51% $2,823,829 7.19% 15.97% $2,643,239 6.73% 16.52% $31,292,326 79.62% 216.11%
Reversion NOI: $6,858,792		Total: $109,141,609				$39,300,000	100.00%
						$167,000	Per Key (236 Keys)

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Value, Overall Rate, Value per Room
Exit Cap Rate
8.00% 8.25% 8.50% 8.75% 9.00%
10.00% $43,150,183 $42,178,581 $41,264,131 $40,401,936 $39,587,641
4.86% 4.97% 5.08% 5.19% 5.29%
$182,840 $178,723 $174,848 $171,195 $167,744
10.25% $42,116,912 $41,167,118 $40,273,194 $39,430,352 $38,634,334
4.98% 5.09% 5.20% 5.32% 5.42%
$178,461 $174,437 $170,649 $167,078 $163,705
10.50% $41,107,597 $40,179,074 $39,305,170 $38,481,203 $37,703,013
5.10% 5.22% 5.33% 5.45% 5.56%
$174,185 $170,250 $166,547 $163,056 $159,759
10.75% $40,121,624 $39,213,850 $38,359,474 $37,553,919 $36,793,117
5.22% 5.34% 5.46% 5.58% 5.70%
$170,007 $166,160 $162,540 $159,127 $155,903
11.00% $39,158,399 $38,270,864 $37,435,536 $36,647,942 $35,904,103
5.35% 5.48% 5.60% 5.72% 5.84%
$165,925 $162,165 $158,625 $155,288 $152,136
Discount Rate
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Given the nature of operating hotels and how investors typically analyze and underwrite hotel investments, we believe a sensitivity analysis reflecting the change in risk rates to be best suited for the subject property.

VALUATION REPORT

APPENDIX II

SALES COMPARISON APPROACH

The Sales Comparison Approach is used to estimate the value of real estate by comparing recent sales of similar properties in the surrounding or competing area to the subject property. Inherent in this approach is the principle of substitution. The approach is applicable when an active market provides sufficient quantities of reliable data that can be verified from authoritative sources. The comparative process involves judgment as to the similarity of the subject and the comparable sales.

In the case of hotel properties, comparisons among hotels can be very difficult given the unique characteristics of each property. Hotels represent not only real estate but are also businesses that are often difficult to compare. Hotels can differ by physical characteristics, market orientation, management affiliation, reputation, operating characteristics, locality, and other factors. As such direct comparison of hotel sales is usually considered a secondary approach. Additionally, different investors perceive hotels as valuable for different reasons; for example, they may look for:

1. An immediate return of cash flow through re-flagging or new management;

2. The establishment of a long-term presence in a market where they are under-represented;

3. Upscale/Trophy hotel ownership to establish a high profile;

4. A perceived bargain relative to cost; and,

5. Management fees in addition to cash flow.

In the case of the subject, the direct sales comparison approach is utilized as a guide to suggest a reasonable range of values of the subject hotel. The value of the subject hotel development is derived primarily from the Income Capitalization Approach.

Methodology

In the Sales Comparison Approach, the value of a hotel is developed by comparing it with similar, recently sold hotel properties in the surrounding or competing area. Inherent in this approach is the principle of substitution, which holds that when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, assuming that no costly delay is encountered in making the substitution. The Sales Comparison Approach to value emphasizes the physical elements of the subject in conjunction with income. For hotels, price per room is the most common unit of comparison. We researched and identified sales we believe to be relevant to the subject property.

Hotel transaction volume experienced a dramatic decline in March 2020 as the response to the COVID-19 outbreak resulted in travel restrictions and stay-at-home orders across the country, creating uncertainly in the lodging markets. New transactions during the second quarter of 2020 were extremely limited. Once the initial shock of the pandemic subsided, transaction volume began to pick up in the second half of 2020 and into 2021. 2021 was considered to be a very strong year for hotel transaction volume. Debt markets were relatively open, especially for well location properties geared towards leisure travel. Beginning in the second half of 2022, interest rates began to increase dramatically causing another shock to the hotel transaction market. As of Q4 2022, transactions have slowed dramatically as many hotel lenders have moved to the sidelines. In reviewing the transactions presented below, it is important to consider the timing of the sale, as market conditions pre-COVID, at the onset of the pandemic in 2020, and later into the pandemic were notably different. Inherently, the Sales Comparison Approach analyzes historical data, which may not always be fully reflective of the current market.

VALUATION REPORT

APPENDIX II

The best available transaction data for the subject property is presented below. The relevant transactions were reportedly single asset, arms-length sales, unless otherwise indicated.

		Select Hotel Sales
					Year
Date	Property Name	City Province		Rooms	Built	Price	Per Room
Jul-23	Ottawa Marriott Hotel	Ottawa	ON	489	1972	$86,500,000	$176,892
Jun-23	Best Western Premier Toronto Airport
	Carlingview Hotel	Toronto	ON	119	1990	$13,000,000	$109,244
Feb-23	Hotel Le Crystal	Montréal	QC	131	2008	$36,500,000	$278,626
Jan-23	InterContinental Hotel Montreal	Montréal	QC	357	1998	$80,000,000	$224,090
Nov-22	Hotel 2170 Lincoln	Montréal	QC	219	1973	$61,000,000	$278,539
Sep-22	Radisson Blu Toronto Downtown	Toronto	ON	157	1985	$25,000,000	$159,236
Jul-22	Four Points by Sheraton Kingston	Kingston	ON	169	2000	$28,750,000	$170,118
Dec-21	Sheraton Hotel Le Centre Montreal	Montréal	QC	825	1982	$206,250,000	$250,000

Analysis of Comparable Sales

The sales utilized represent the best data available for comparison with the subject. They were selected from our research of comparable improved sales. These sales were chosen based upon similar segmentation, markets and branding. All sales were considered an arm’s-length transaction and required no adjustments for financing terms or conditions of sale. We have identified and described the following relevant sales in further detail. However, it is important to note that there have been limited comparable sales in Ottawa and as such we have not presented any adjustments. Further, we believe the Ottawa Marriott Hotel to be the most applicable sales comparable; however, we have discussed two additional sales below (InterContinental Hotel Montreal and Four Points by Sheraton Kingston) for informational purposes only.

In July 2023, the 489-room Ottawa Marriott Hotel located in Ottawa, ON was purchased for approximately $86,500,000, or $176,892 per key. The buyer was Manga Hotels. The hotel was built in 1988. The sale is considered comparable given its location, product type, branding, facility/amenities, and demand base. Please note that this property is included within the subject’s competitive set.
In January 2023, the 357-room InterContinental Hotel Montreal located in Montreal, QC was purchased for approximately $80,000,000, or $224,090 per key. The buyer was Groupe Mach. The hotel was built in 1998. The sale is considered comparable given its location, product type, facility/amenities, and demand base.
In July 2022, the 169-room Four Points by Sheraton Kingston in Kingston, ON was purchased for approximately $28,750,000, or $170,118 per key. The buyer was Easton’s Group of Hotels. The hotel was built in 2000. The sale is considered comparable given its location, product type, facility/amenities, and demand base.

APPENDIX II

VALUATION REPORT

The Sales Comparison Approach is difficult to apply in the case of complex hotel properties because of the numerous differences between the subject and comparable sales. Some of the differences between the comparable sales and the subject property can often include location and accessibility, size, services and facilities offered, market conditions, chain affiliation, market orientation, management, rate structure, age, physical condition, date of sale, the highest and best use of the land, and the anticipated profitability of the operation. Circumstances surrounding a sale, including financing terms, tax considerations, income guarantees, sales of partial interests, duress on the part of the buyer or seller, or a particular deal structure, result in disparities between the actual sales price and pure market value. Additionally, it is usually very difficult to obtain the marketing period, and an accurate capitalization rate, for the comparable sales. In practice, it is virtually impossible to quantify the appropriate adjustment factors accurately because of their number and complexity, as well as the difficulty in obtaining specific, detailed information. Any attempt to manipulate the necessary adjustments is insupportable and purely speculative.

Because an appraiser is expected to reflect the analytical processes and actions of typical buyers and sellers rather than to create an insupportable and highly subjective valuation approach, the investment rationale of hotel owners is an essential consideration. As specialists in the valuation of hotels, we find that typical buyers and sellers purchase properties based upon a thorough analysis of anticipated future economic benefits of property ownership rather than on historical sales data. The Sales Comparison Approach should therefore be used to provide a general range of values that will serve as a check against the value indicated by the Income Capitalization Approach.

In appraising lodging facilities, it is often difficult to find an adequate number of recent sales that are truly comparable to the subject property. Although it is often necessary to consider comparable sales outside the subject property’s market area, the resulting adjustments greatly diminish the reliability of the conclusions. Most observers of hotel transactions are unable to determine the true motivations of the buyers and sellers. Acquiring a hotel often represents a highly ego-driven process where many external, non-market factors influence the purchase price. Unless the appraiser can quantify these influences, there is no way of knowing whether the purchase price paid actually reflects market value.

Finally, when appraising hotels, the degree of comparability between the subject property and a comparable sale is usually so diverse that many subjective and unsubstantiated adjustments are required. Each adjustment represents a potential for error and thereby diminishes the reliability of this approach. As a result of these shortcomings, the use of the Sales Comparison Approach in valuing hotels is primarily limited to checking the value indicated by the Income Capitalization Approach.

Conclusion via Sales Comparison Approach

Given the limited applicability of the Sale Comparison Approach to hotels and limited comparable sales in Ottawa, we have given the majority of the weight of our analysis to the Income Capitalization Approach and primarily utilized the sales comparison approach as a check of reasonableness. As such, we have concluded a reasonable sales comparison approach range to be approximately 5.0% above and below the Income Capitalization Approach conclusion of $39,300,000, or approximately $167,000 per key. LWHA projects that the value via Sales Comparison Approach ranges from approximately $159,000 - $175,000 per key, for a total consideration ranging from $37,300,000 – $41,300,000.

VALUATION REPORT

APPENDIX II

The primary methodology relied upon in this analysis was the Discounted Cash Flow Analysis. Additionally, we have relied upon the Sales Comparison Approach as a secondary approach. The results are as follows:

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Value Indications Total Amount Per Unit Date of Value # Units
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*Value Indications*	*Total Amount*	*Per Unit*	*Date of Value*	*# Units*

Income Capitalization Approach As Is $39,300,000 Sales Comparison Approach As Is $37,300,000 – $41,300,000		$167,000 $159,000 – $175,000	October 2, 2023 October 2, 2023	236 Keys 236 Keys

Please note the As Is value conclusion includes a deduction for renovation cost, equal to $22,420,000 or $95,000 per key. The renovation is taking place in Years 1 & 2 of the projection period.

In our Income Capitalization Approach to value, the subject property has been valued by analyzing the local market for transient accommodations and developing a projection of income and expense that reflects the current and future anticipated income and expense trends over a ten-year holding period. The net income is then capitalized and discounted to the date of value by an appropriate internal rate of return through a discounted cash flow analysis. Implied direct capitalization rates were also illustrated.

The Sales Comparison Approach reflects an opinion of value as indicated by the actual sales of hotels. In this approach, we searched the regional and national market for transactions of similar property types. Several sales of major hotels were examined, and this approach was useful in providing value parameters to bracket the value concluded to by the Income Capitalization Approach.

The Cost Approach estimates market value by computing the cost of replacing the property and subtracting any depreciation resulting from physical deterioration, functional obsolescence, and external (or economic) obsolescence. The value of the land, as if vacant and available, is then added to the depreciated value of the improvements for a total value estimate. The Cost Approach is most reliable for estimating the value of new properties; however, as the improvements deteriorate, and market conditions change, the resultant loss in value becomes increasingly difficult to quantify accurately. Moreover, our experience with hotel investors shows that this group of buyers and sellers relies upon the methods of the income approach (as well as a review of sales data) when making decisions; the cost approach generally does not play a significant role. Considering such factors, we do not consider the Cost Approach to be appropriate for the valuation of the subject property.

Careful consideration has been given to the strengths and weaknesses of the three approaches to value discussed above. In recognition of the purpose of this appraisal, we have given primary weight to the value indicated by the Income Capitalization Approach and utilized the Sales Comparison Approach as a check for reasonableness.

VALUATION REPORT

APPENDIX II

CERTIFICATION OF THE APPRAISAL

We certify to the best of our knowledge and belief:

The statements of fact contained in this report are true and correct.
The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.
We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.
We have not performed services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.
We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
Our engagement in this assignment was not contingent upon developing or reporting predetermined results.
Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Canadian Uniform Standards of Professional Appraisal Practice and Uniform Standards of Professional Appraisal Practice.
Robert Van Laer, MAI (in-person inspection; October 2, 2023) has made an in-person inspection of the property that is the subject of this report. Jonathan Jaeger, MAI, ISHC; and Evan Weiss, MRICS did not inspect the subject property.
No one else provided significant real property appraisal assistance to the person(s) signing this certification.

VALUATION REPORT

APPENDIX II

The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.
The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
As of the date of this report, Robert Van Laer, MAI; and Jonathan Jaeger, MAI, ISHC have completed the continuing education program for Designated Members of the Appraisal Institute.

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Robert Van Laer, MAI Senior Vice President

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Jonathan Jaeger, MAI, ISHC Senior Managing Director

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Evan Weiss, MRICS COO, Principal

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DIRECTORS’ INTERESTS AND SHORT POSITIONS IN SHARES

As at the Latest Practicable Date, the interests and short positions of the Directors in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “ SFO ”)) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were deemed or taken to have under such provisions of the SFO), or which were recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules (“ Model Code ”) were as follows:

Number of ordinary shares (unless otherwise specified)

Long positions:

			Corporate/
		Personal	Other
Name of Company	Name of Directors	Interests(1)	Interests	Total	% Interest
Keck Seng Investments	HO Kian Guan	496,480	198,084,320(2)	198,580,800	58.37
(Hong Kong) Limited	HO Kian Hock	20,480	198,084,320(2)	198,104,800	58.23
	HO Kian Cheong	55,160,480	–	55,160,480	16.21
	TSE See Fan Paul	288,720	–	288,720	0.08
	Stephen TAN	–	900,000(3)	900,000	0.26
Lam Ho Investments	HO Kian Guan	–	32,410,774(4)	32,410,774	99.70
Pte Ltd	HO Kian Hock	–	32,410,774(4)	32,410,774	99.70
	HO Kian Cheong	96,525	–	96,525	0.30
Shun Seng International	HO Kian Guan	–	83,052(5)	83,052	83.05
Limited	HO Kian Hock	–	83,052(5)	83,052	83.05
	HO Kian Cheong	1,948	–	1,948	1.95
Hubei Qing Chuan Hotel	HO Kian Guan	–	13,163,880(6)	13,163,880	80.76

GENERAL INFORMATION

APPENDIX III

			Corporate/
		Personal	Other
Name of Company	Name of Directors	Interests(1)	Interests	Total	% Interest
Company Limited – paid in	HO Kian Hock	–	13,163,880(6)	13,163,880	80.76
registered capital in US$	HO Kian Cheong	1,017,120	–	1,017,120	6.24
	KWOK Chi Shun
	Arthur	–	489,000(7)	489,000	3.00
Golden Crown Development	HO Kian Guan	–	56,675,000(8)	56,675,000	80.96
Ltd – common shares	HO Kian Hock	–	56,675,000(8)	56,675,000	80.96
	HO Kian Cheong	1,755,000	–	1,755,000	2.51
	TSE See Fan Paul	50,000	–	50,000	0.07
Ocean Gardens Management	HO Kian Guan	–	1,000,000(9)	1,000,000	100.00
Company Limited	HO Kian Hock	–	1,000,000(9)	1,000,000	100.00
Shun Cheong International	HO Kian Guan	–	4,305(10)	4,305	43.05
Limited	HO Kian Hock	–	4,305(10)	4,305	43.05
	HO Kian Cheong	195	–	195	1.95
	KWOK Chi Shun
	Arthur	–	5,500(11)	5,500	55.00
KSF Enterprises Sdn Bhd	HO Kian Guan	–	31,705,000(12)	31,705,000	100.00
– ordinary shares	HO Kian Hock	–	31,705,000(12)	31,705,000	100.00
KSF Enterprises Sdn Bhd	HO Kian Guan	–	24,000,000(13)	24,000,000	100.00
– redeemable convertible	HO Kian Hock	–	24,000,000(13)	24,000,000	100.00
preferred shares
Chateau Ottawa Hotel Inc	HO Kian Guan	–	9,000,000(14)	9,000,000	100.00
– common shares	HO Kian Hock	–	9,000,000(14)	9,000,000	100.00
Chateau Ottawa Hotel Inc	HO Kian Guan	–	2,700,000(15)	2,700,000	100.00
– preferred shares	HO Kian Hock	–	2,700,000(15)	2,700,000	100.00

Notes:

(1) This represents interests held by the relevant Directors as beneficial owners.
(2) This represents 101,437,360 shares held by Kansas Holdings Limited and 96,646,960 shares held by Goodland Limited. Both companies are subsidiaries of KS Ocean Inc., the controlling shareholder of the Company, in which each of HO Kian Guan and HO Kian Hock had 1/3 interest in its ordinary share and preference share, respectively.
(3) This represents 180,000 shares held by Stephen Tan as one of the joint executors/administrators of the estate of Chan Yau Hing, Robin and 720,000 shares held by United Asia Enterprises Inc which is controlled corporation of Stephen Tan.

GENERAL INFORMATION

APPENDIX III

(4) This represents 29,776,951 shares (91.60%) indirectly held by the Company and 2,633,823 shares (8.10%) held by Kansas Holdings Limited in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly.
(5) This represents 75,010 shares (75.01%) indirectly held by the Company and 8,042 shares (8.04%) held by Kansas Holdings Limited in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly.
(6) This represents US$8,965,000 (55.00%) indirectly contributed by the Company and US$4,198,880 (25.76%) contributed by Kansas Holdings Limited in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly.
(7) This represents interests held by AKAA Project Management International Limited which was wholly owned by KWOK Chi Shun Arthur.
(8) This represents 49,430,000 shares (70.61%) indirectly held by the Company and 7,245,000 shares (10.35%) held by Goodland Limited in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly.
(9) This represents 1 quota of Ptc999,000 (99.90%) indirectly held by the Company and 1 quota of Ptc1,000 (0.10%) held by Goodland Limited in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly.
(10) This represents 3,501 shares (35.01%) indirectly held by the Company and 804 shares (8.04%) held by Kansas Holdings Limited in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly.
(11) This represents interests held by Ample Star Enterprise Limited in which KWOK Chi Shun Arthur had a controlling interest.
(12) This represents 7,926,250 ordinary shares (25.00%) directly held by the Company, 7,926,249 ordinary shares (25.00%) held by Kansas Holdings Limited in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly and 15,852,501 ordinary shares (50.00%) held by Keck Seng (Malaysia) Berhad in which each of HO Kian Guan and HO Kian Hock was a substantial shareholder and a director.
(13) This represents 6,000,000 redeemable convertible preference shares (25.00%) directly held by the Company, 6,000,000 redeemable convertible preference shares (25.00%) held by Kansas Holdings Limited in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly and 12,000,000 redeemable convertible preference shares (50.00%) held by Keck Seng (Malaysia) Berhad in which each of HO Kian Guan and HO Kian Hock was a substantial shareholder and a director.
(14) This represents 7,650,000 common shares (85.00%) indirectly held by the Company; 1,350,000 common shares (15.00%) held by KSC Enterprises Ltd. in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly.
(15) This represents 2,295,000 preferred shares (85.00%) indirectly held by the Company; 405,000 preferred shares (15.00%) held by KSC Enterprises Ltd. in which each of HO Kian Guan and HO Kian Hock had 1/3 interest indirectly.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

GENERAL INFORMATION

APPENDIX III

3. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS OF THE GROUP

As at the Latest Practicable Date, there existed the following arrangements:

(a) Goodland Limited (“ Goodland ”) acts as the project manager of Golden Crown Development Limited for its Ocean Gardens development in Taipa Island, Macau for a management fee and is also responsible for marketing the development.
(b) Goodland provides management services to Ocean Incorporation Ltd in return for a management fee.

Messrs Ho Kian Guan and Ho Kian Hock were interested in the above arrangements as substantial shareholders and directors of Goodland.

Save as disclosed above, as at the Latest Practicable Date,

(a) none of the Directors was materially interested in any contract or arrangement subsisting and which was significant in relation to the business of the Group; and
(b) none of the Directors had any interest, direct or indirect, in any assets which had been acquired or disposed of by or leased to any member of the Group or were proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2022, being the date to which the latest published audited financial statements of the Company were made up.

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or their respective close associates was considered to have any interest in businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Group, other than those businesses where the Directors or their respective close associates were appointed to represent the interests of the Company and/or the Group.

5. SERVICE CONTRACTS

As at the Latest Practicable Date, there was no existing or proposed service contract between any Director and any member of the Group which is not determinable within one year without payment of compensation other than by statutory compensation.

GENERAL INFORMATION

APPENDIX III

6. MATERIAL CONTRACTS

Save and except the Sale and Purchase Agreement, details of which are disclosed in the letter from the Board set out in this circular, no contracts, not being contracts entered in the ordinary course of business of the Group, have been entered into by members of the Group within two years immediately preceding the date of this circular and up to and including the Latest Practicable Date which are or may be material.

7. MATERIAL ADVERSE CHANGE

The Company is not aware of any material adverse change in the financial or trading position of the Group since 31 December 2022, being the date to which the latest published audited financial statements of the Company were made up.

8. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

9. EXPERT’S QUALIFICATION AND CONSENT

The following is the qualification of the expert who has given its opinion or advice which is contained in this circular:

Name Qualification LW Hospitality Advisors Independent professional property valuer

As at the Latest Practicable Date, the above expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter, report and/or opinion and reference to its name in the form and context in which it appears.

As at the Latest Practicable Date, the above expert did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, the above expert did not have any interest, direct or indirect, in any assets which had been acquired or disposed of by or leased to any member of the Group, or which were proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2022, being the date to which the latest published audited financial statements of the Company were made up.

GENERAL INFORMATION

APPENDIX III

10. GENERAL

(a) The English text of this circular shall prevail over the Chinese text.
(b) The company secretary of the Company is Mr. Cheng Ka Kit, who is an associate member of both of The Hong Kong Chartered Governance Institute and The Chartered Governance Institute in the United Kingdom.
(c) The registered office of the Company is at Room 2902 West Tower, Shun Tak Centre, 168200 Connaught Road Central, Hong Kong.
(d) The Share Registrar & Transfer Office of the Company is Tricor Tengis Limited of 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong.

11. DOCUMENTS ON DISPLAY

Copies of the following documents will be published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (www.keckseng.com.hk) for a period of 14 days from the date of this circular (both days inclusive):

(a) the Sale and Purchase Agreement;
(b) the valuation report issued by LW Hospitality Advisors, the text of which is set out in Appendix II to this circular; and
(c) the written consents referred to in the paragraph headed “9. EXPERT’S QUALIFICATION AND CONSENT” of this appendix.

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [48 x 64] intentionally omitted <==

KECK SENG INVESTMENTS (HONG KONG) LIMITED 激成投資（香港）有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 184)

NOTICE IS HEREBY GIVEN that the extraordinary general meeting of the Company (the “ GM ”) will be held at 27/F Club Lusitano, 16 Ice House Street, Central, Hong Kong on Friday, 24 November 2023 at 11:00 a.m. to consider and, if thought fit, pass with or without amendments the following resolution as ordinary resolution:

ORDINARY RESOLUTION

“ THAT :
(a) the sale and purchase agreement dated 6 October 2023 (Toronto Time) (the “ Sale and Purchase Agreement ”, details of which are disclosed in the circular of the Company dated 7 November 2023 (the “ Circular ”)) entered into between Chateau Ottawa Hotel Inc. (the “ Vendor ”), an indirect non-wholly owned subsidiary of the Company, as vendor, and Sunray Group of Hotels Inc. (the “ Purchaser ”), as purchaser, pursuant to which the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Hotel Assets, as defined in the Circular, at the consideration of C$43,200,000 (equivalent to approximately HK$246,685,000) and the transactions contemplated thereunder be and are hereby ratified, confirmed and approved; and
(b) any one or more director(s) (the “ Director(s) ”) of the Company be and are hereby generally and unconditionally authorised to do all such acts and things, to sign and execute all such documents for and on behalf of the Company as they may consider necessary, appropriate, desirable or expedient to give effect to or in connection with the Sale and Purchase Agreement and the transactions contemplated thereunder, and to make and agree to make such variations of the terms of the Sale and Purchase Agreement as they may in their discretion consider to be appropriate, necessary or desirable and in the interests of the Company and its shareholders as a whole.”

On Behalf of the Board

Keck Seng Investments (Hong Kong) Limited HO Kian Guan Executive Chairman

Hong Kong, 7 November 2023

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

(a) For the purpose of determining shareholders who are entitled to attend and vote at the forthcoming GM to be held on Friday, 24 November 2023, the Register of Members of the Company will be closed from Tuesday, 21 November 2023 to Friday, 24 November 2023, both days inclusive. In order to qualify for attending and voting at the GM, all transfer documents should be lodged for registration with the Company’s Share Registrar & Transfer Office, Tricor Tengis Limited, 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong for registration not later than 4:30 p.m. (Hong Kong time) on Monday, 20 November 2023, being the last share registration date.
(b) A member entitled to attend and vote at the above meeting may appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed. To be valid, a proxy form together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney or authority, must be deposited at the Company’s Share Registrar & Transfer Office, Tricor Tengis Limited, 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong not less than 48 hours before the time appointed for the above meeting (i.e. not later than 11:00 a.m. on Wednesday, 22 November 2023 (Hong Kong time)) or the adjourned meeting (as the case may be).
(c) In accordance with the relevant requirements under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and for good corporate governance practice, the resolution(s) set out in this notice will be voted on by poll.
(d) A member who is a corporation may by resolution of its directors or other governing body authorize any of its officials or any other person to act as its representative at the meeting and exercise the same powers on its behalf as if he had been an individual member of the Company and such corporation shall be deemed to be present in person at any such meeting if a person so authorized is present thereat.
(e) Unless the context requires otherwise, references to time and dates in this notice are to Hong Kong time and dates.
(f) As at the date of this announcement, the Board of the Company comprises Mr. HO Kian Guan, Mr. HO Kian Hock, Mr. TSE See Fan Paul, Mr. CHAN Lui Ming Ivan and Mr. HO Chung Hui (whose alternate is Mr. HO Chung Kain) as executive directors, Mr. HO Kian Cheong (whose alternate is Mr. HO Chung Kiat Sydney) as non-executive director, and Mr. KWOK Chi Shun Arthur, Ms. WANG Poey Foon Angela, Mr. YU Hon To David and Mr. Stephen TAN as independent non-executive directors.

AI assistant

Alco Holdings Limited — Proxy Solicitation & Information Statement 2023

49130_rns_2023-11-06_4d0fa00b-f976-46d8-8b21-6a19f8b1c4f0.pdf

KECK SENG INVESTMENTS (HONG KONG) LIMITED 激成投資（香港）有限公司

MAJOR TRANSACTION DISPOSAL OF HOTEL ASSETS

CONTENTS

DEFINITIONS

KECK SENG INVESTMENTS (HONG KONG) LIMITED 激成投資（香港）有限公司

Executive Directors:

To the Shareholders

MAJOR TRANSACTION DISPOSAL OF HOTEL ASSETS

INTRODUCTION

THE SALE AND PURCHASE AGREEMENT

Date

Parties

Subject Assets

Consideration

LETTER FROM THE BOARD

Adjustment to Consideration

Conditions precedent to the Sale and Purchase Agreement

Completion

INFORMATION ON THE VENDOR AND THE GROUP

INFORMATION ON THE PURCHASER

REASONS FOR AND BENEFITS OF THE DISPOSAL

POSSIBLE FINANCIAL EFFECTS OF THE DISPOSAL

USE OF PROCEEDS

LISTING RULES IMPLICATION

LETTER FROM THE BOARD

RECOMMENDATION

FURTHER INFORMATION

1. INDEBTEDNESS

Borrowings

Commitments

Contingent liabilities

APPENDIX I

2. WORKING CAPITAL

3. FINANCIAL AND TRADING PROSPECTS

APPENDIX I

APPENDIX II

The Directors

Keck Seng Investments (Hong Kong) Limited (KSI)

Extraordinary Assumptions

Hypothetical Conditions

LW Hospitality Advisors[®]

EXECUTIVE SUMMARY

ZONING DATA

SALIENT FACTS

COMPETITIVE LODGING MARKET ANALYSIS

APPENDIX II

VALUATION REPORT

APPENDIX II

OCCUPANCY & AVERAGE DAILY RATE PROJECTIONS

Historical Supply and Demand Analysis

Recently Opened/Proposed Supply

APPENDIX II

VALUATION REPORT

Projected Occupancy and Average Daily Rate

Review of Historical Operating Performance

APPENDIX II

VALUATION REPORT

Average Daily Rate Projection

VALUATION PROCESS

Reconciliation

APPENDIX II

VALUATION REPORT

APPENDIX II

VALUATION REPORT

APPENDIX II

VALUATION REPORT

APPENDIX II

VALUATION REPORT

APPENDIX II

VALUATION REPORT

APPENDIX II

VALUATION REPORT

DISCOUNTED CASH FLOW ANALYSIS

Capitalization and Discount Rates

APPENDIX II

APPENDIX II

Salient Income Capitalization Approach Assumptions

Alco Holdings Limited Proxy Solicitation & Information Statement 2023