Florida Pandhandle 3Q 2022 Hotel Market Report

FLORIDA PANHANDLE HOTEL MARKET REPORT 3Q 2022

SpringHill Suites Panama City Beach: 2021 Sale Represented by Berkadia

MARKET OVERVIEW The Florida Panhandle is comprised of 43,000 hotel rooms across beach resort destinations Destin, Panama City Beach, and Pensacola along with the state capitol, Tallahassee in the northwest section of Florida. The market achieved the second-highest RevPAR increase from 2019-2021 in the state behind the Florida Keys and has maintained its strong performance through 2022. The Panhandle levered its greatest asset, award-winning beaches, to grow July 2022 TTM RevPAR by 7.1% year-over-year and 12.8% over year-end 2019 levels. The Florida Panhandle epitomizes what it means to be a highly accessible, drive-to destination. The South’s largest cities of Atlanta, Nashville, Dallas, Birmingham, and New Orleans make up some of the Panhandle’s primary out-of-state feeder markets.

FLORIDA PANHANDLE TOP FEEDER MARKETS

2011 - 2021 POPULATION GROWTH %

PROJ. 2021 - 2026 POPULATION GROWTH %

2021 POPULATION

PROJECTED 2026 POPULATION

PROJECTED POPULATION GAIN/LOSS

ATLANTA

13.38%

4.25%

4,392,919

4,579,780

186,860

CINCINNATI

5.24%

1.58%

2,239,169

2,274,599

35,430

DALLAS / FORT WORTH

18.24%

5.89%

6,793,941

7,193,861

399,920

HOUSTON

17.97%

7.19%

6,014,156

6,446,343

432,187

NASHVILLE

20.16%

5.08%

2,044,037

2,147,890

103,853

AVERAGE*

15.00%

4.80%

21,484,222

22,642,473

1,158,251

*Averages based on total population growth

43,000 ROOMS

63%

TTM OCCUPANCY

Source: Green Street

$155

TTM ADR

BERKADIA

TTM REVPAR TTM as of July 2022

Source: CoStar

2

$98

FLORIDA PANHANDLE MARKE T REPORT 2022

The Panhandle’s economy is barbelled by tourism and the military, and is home to Eglin Air Force Base (AFB), Tyndall AFB, and Naval Air Station Pensacola, which are among the nation’s most prominent defense facilities. Regional leadership recognizes the importance of a diversified economy, and as a result, the Panhandle is attracting skilled labor in other industries, including scientific research and development, aerospace engineering, and defense system development. To support this growth, infrastructure investments include airport expansion projects, destination sports venues, amphitheaters, new public beach access ways, and bike/ pedestrian pathways to enhance the lifestyle proposition the market can offer new residents.

FLORIDA PANHANDLE SUBMARKET PERFORMANCE OCCUPANCY SUBMARKET

ADR

REVPAR

TTM July '22

2021

2019

TTM July '22

2021

2019

TTM July '22

2021

2019

FORT WALTON BEACH

62%

64%

62%

$198

$201

$157

$122

$128

$97

PANAMA CITY

64%

67%

71%

$173

$182

$161

$111

$121

$114

PENSACOLA

68%

71%

68%

$148

$144

$118

$101

$103

$80

TALLAHASSEE

61%

57%

68%

$114

$104

$110

$70

$60

$75

OTHER - FLORIDA PANHANDLE

58%

60%

60%

$106

$102

$94

$62

$61

$56

FLORIDA PANHANDLE MSA

63%

64%

66%

$155

$156

$132

$98

$100

$87

Source: Smith Travel Research

PANHANDLE LODGING PERFORMANCE FloridaFLORIDA Panhandle Lodging Performance 59%

60%

63%

62%

80%

66%

64%

63% 60%

52%

$120 40% $80

2014

2015

2016

2017 ADR

2018 RevPAR

2019

2020

Occupancy

2021

$98

$155

$100

$156

$61

$119

$87

$132

$83

$126

$74

$119

$69

$113

$66

$110

$0

20% $62

$40

$104

ADR / RevPAR

$160

66%

TTM July 2022

Occupancy (%)

$200

0%

FLORIDA PANHANDLE MARKE T REPORT 2022 BERKADIA

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MARKET HIGHLIGHTS • 17.6% ADR Increase: July 2022 TTM vs. YE 2019 • 12.8% RevPAR Increase: July 2022 TTM vs. YE 2019 •P anama City Beach recorded its busiest March on record in 2022 generating almost $2.9 million in tourism development tax revenue, $400,000 more than March 2021, which previously held the title.

• In 2021, 7.5M tourists traveled to Destin, totaling $736M in tourist spending, 28% more than 2019.

•5 2%: Walton County (Miramar Beach, Santa Rosa Beach, DeFuniak Springs) population growth since 2010 Around 4 million people are expected to move to Florida between 2030 and 2035. Walton County is projected to gain the 4th most new residents out of any county in the State of Florida over this period. (University of Florida Bureau of Economic and Business Research) • 2 3%: Okaloosa County (Destin, Fort Walton Beach) population growth since 2010 • 2 .0% Unemployment Rate: Crestview-Fort Walton Beach-Destin, FL (May 2022, U.S. Bureau of Labor Statistics) • D estin is a Top Three Summer Destination Nationwide for check-in dates in June, July, and August 2022 (Vacasa.com) TRAVELER’S CHOICE 2022 BEST BEACHES IN THE U.S. RANKINGS

#11

Pensacola Beach

4

#14

Henderson Beach State Park

BERKADIA FLORIDA PANHANDLE MARKE T REPORT 2022

#21

Panama City Beach

ATTRACTIVE GROWTH IN HIGHLY SKILLED AND OFFICEDWELLING JOBS BOLSTER HOTEL FUNDAMENTALS Between 2015 and 2020, the Crestview-Fort Walton Beach-Destin metro area ranked third nationally for employment growth in hightech industries, climbing 39.4%, or 2,399 jobs, compared to 8.9% nationwide.

Best Western Fort Walton Beachfront

This growth is led by surging employment in the scientific research and development services industries, which reported 77.7% job growth during this period. The average salary for these jobs is $185,011. (The Capitolist, March 2022)

Employment in the Panhandle is increasing at a rate of 3.0% YoY, or a gain of about 20,000 jobs.

Office-using employment has increased at an average annual rate of 3.3% over the past decade—more than a full percentage point per year above the national average. (CoStar) - A ssuming outsized office employment growth remains the norm, hotels near existing and planned office hubs stand to benefit.

Hilton Garden Inn Destin Miramar Beach

In Q1 of 2022, the Okaloosa Economic Development Council announced Boeing Global Services is embarking on a $2.5 million, 20,000-square foot expansion to the company’s existing facility in Fort Walton Beach. o Fort Walton Beach is currently home to two Boeing facilities employing more than 500 individuals.

FLORIDA PANHANDLE MARKE T REPORT 2022 BERKADIA

5

CORPORATE RELOCATIONS ATTRACT 630 JOBS TOTALING $145 MILLION IN CAPITAL INVESTMENT TO THE PANHANDLE

edEx is building a 251,000 SF regional headquarters in Panama City that is scheduled F to open at the beginning of 2023. The project will create more than 200 jobs with a capital investment of $55 million.

Central Moloney, an Arkansas-based manufacturer that distributes electrical transformers, is relocating to Panama City adjacent to the Northwest Florida Beaches International Airport creating 200 jobs with a capital investment of $25 million.

6

BERKADIA FLORIDA PANHANDLE MARKE T REPORT 2022

Resia, a Miami-based real estate company that develops, builds, and manages multifamily communities is developing a facility scheduled to open at the beginning of 2024 at the VentureCrossings Enterprise Centre. It will create about 200 jobs with a capital investment of $45 million.

Southern Sky Aviation, an Alabama-based aircraft maintenance company, is planning to build a terminal for private and corporate airplanes at the Northwest Florida Beaches International Airport. The facility is scheduled to open at the end of 2023 and will create about 30 jobs with a capital investment of $20 million.

FLORIDA PANHANDLE MARKE T REPORT 2022 BERKADIA

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MILITARY PROVIDES THE PANHANDLE WITH A RESILIENT, STABLE DEMAND BASE

Eglin Air Force Base • The Largest Air Force Base in the World: Eglin Air Force Base covers 640 square miles in Okaloosa and neighboring counties.

• $2.0B: 2020 fiscal year federal spending on military personnel in Okaloosa County Federal government spending on defense personnel was higher in Okaloosa o County than any other county in Florida.

Top Defense Personnel Spending Locations

8

BERKADIA FLORIDA PANHANDLE MARKE T REPORT 2022

• $1.8B: 2020 fiscal year, Department of Defense (DoD) spending on defense contracts in Okaloosa County, 4th-highest level of military contract spending in Florida. (Office of Local Defense Community Cooperation) • 79,000: Defense industry jobs in Okaloosa County.

• T he Air Force is halfway through its five-year initiative to move hypersonic missile research and development to Northwest Florida bringing 2,000 new families to the area. (Northwest Florida Daily News) RECENT DEPARTMENT OF DEFENSE CONTRACT AWARDS • $95M: Contract for electronic security work awarded to Williams Electric Co. Inc., an electrical contractor in Fort Walton Beach.

• $ 13.9M: Contract for work at a U.S. Marine Corps facility in North Carolina awarded to Reasor-Asturian JV LLC, a joint-venture construction contractor in Pensacola.

• $12.3M: Contract awarded to EMR Inc., a Niceville construction contractor, to design and construct an entry control facility for privately owned vehicles at Patrick Space Force Base in Florida’s Brevard County. (U.S. Department of Defense, May 2022) Henderson Beach Resort & Spa

FLORIDA PANHANDLE MARKE T REPORT 2022 BERKADIA

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THE PANHANDLE IS A REGIONAL SPORTS DESTINATION

Publix Sports Park - Panama City Beach, FL Publix Sports Park • T he Publix Sports Park, built in 2019, represents an impactful new demand generator for sports tourism in Panama City Beach. The facility has already contributed $170.4M of economic impact in its first year of operations.

• In 2019, the park hosted 80,000 visitors and was responsible for the booking of 120,000 local hotel rooms.

• A s of July 2022, the complex has events booked on 50 of the 52 weekends in 2022.

Some of these events include: oG rand Slam World Series of Baseball: 210 teams will attend the tournament attracting roughly 11,970 total attendees. oU nited States Fastpitch Association: Yearly event that brings in roughly $16 million for PCB. • A new $2 million skatepark in the Publix Sports Park recently broke ground and will deliver in spring of 2023.

10

BERKADIA FLORIDA PANHANDLE MARKE T REPORT 2022

Rendering of New PCB Athletic Facility Recently Approved, $41M Indoor Sports Complex - Panama City Beach, FL • T he new, 112,000 SF indoor sports facility will be the third major athletic facility in the Panama City Beach area. Groundbreaking is expected towards the end of 2022 and construction will take about 18 months.

• W ith its ability to generate shoulder and off-season visitation through sports tournaments and technical conferences, this facility will help strengthen and diversify the local economy.

Morgan Sports Complex - Destin, FL

Morgan Sports Complex • T he Morgan Sports Complex features four softball fields, two baseball fields, and three soccer fields located across the street from Destin’s beaches. Prior to the pandemic, the facility hosted 175,000 participants and 15-20 tournaments per year, generating $4M of direct annual revenue for the City of Destin.

• T he venue hosts the United States Specialty Sports Association (USSSA) Global World Series, which draws as many as 100 teams from across the U.S. each summer.

FLORIDA PANHANDLE MARKE T REPORT 2022 BERKADIA

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NEW HOTEL CONSTRUCTION IN THE FLORIDA PANHANDLE The highly active construction pipeline currently includes 2,700 hotel rooms representing a 6.3% expansion of the existing hotel inventory. In the past three years, 28 projects containing roughly 3,100 rooms delivered to Panhandle markets exemplifying the growing demand base.

FLORIDA PANHANDLE HOTEL SUPPLY PIPELINE PROPERTY NAME

CITY

1

Homewood Suites Panama City Beach

Panama City Beach

2

Homewood Suites Destin

Destin

3

Embassy Suites Panama City Beach Pier Park

Panama City Beach

4

Hilton Garden Inn Pensacola Downtown

Pensacola

5

Hyatt Place Panama City Beach/Beachfront

Panama City Beach

6

Margaritaville Beach Cottage Resort

Panama City Beach

7

TownePlace Suites Pensacola

Pensacola

8

Hotel Indigo Panama City Marina

9

Tru by Hilton Destin

10 11 12

12

# KEYS

STATUS

EST. DELIVERY DATE

131

OPEN

MAR 2022

95

OPEN

MAY 2022

255

UNDER CONSTRUCTION

2022/Q3

102

UNDER CONSTRUCTION

2022/Q3

224

UNDER CONSTRUCTION

2022/Q3

201

UNDER CONSTRUCTION

2022/Q4

112

UNDER CONSTRUCTION

2022/Q4

Panama City

124

UNDER CONSTRUCTION

2023/Q1

Destin

117

UNDER CONSTRUCTION

2023/Q1

Staybridge Suites Pensacola

Pensacola

100

UNDER CONSTRUCTION

2023/Q2

Home2 Suites Santa Rosa Beach

Santa Rosa Beach

107

UNDER CONSTRUCTION

2023/Q3

Fairfield Inn & Suites Resort Pensacola Beach

Pensacola Beach

209

UNDER CONSTRUCTION

2023/Q4

BERKADIA FLORIDA PANHANDLE MARKE T REPORT 2022

10.0%

2,400

5.7%

1,800

5.2%

2,380

2,222

2,765

4.0%

1,640

1.7%

8.0% 6.0%

4.0%

1,200 600

6.4%

2018

2019

2020

2021

TTM July 2022

-

2.0% 0.0%

Rooms Under Construction

% of Total Rooms Inventory

3,000

699

Rooms Under Construction

Florida Panhandle Lodging Construction

% of Total Rooms Inventory

NOTABLE FLORIDA PANHANDLE HOTEL TRANSACTIONS PAST 12 MONTHS SALE DATE

# KEYS

YEAR BUILT/RENO

Hilton Garden Inn Destin Miramar Beach

Mar-22

111

2020

$31,000,000 $279,279 Chatham Lodging Trust

InterMountain Management

Best Western Fort Walton Beachfront

Feb-22

100

1998

$23,600,000 $236,000 OTO Development

Ft. Walton Beach Hotel Group

The Henderson Beach Resort & Spa

Dec-21

170

2016

$112,500,000 $661,765 DiamondRock Hospitality

Dunavant Enterprises

SpringHill Suites Panama City Beach Beachfront Nov-21

200

2018/2019

$85,500,000 $427,500 OTO Development

Peachtree Hotel Group

Henderson Park Inn

Aug-21

37

1992/2000

$27,500,000 $743,243 DiamondRock Hospitality

Dunavant Enterprises

SpringHill Suites by Marriott Navarre Beach*

Jun-21

161

2017

$54,000,000 $335,404 KSL Capital Partners

Peachtree Hotel Group

PROPERTY NAME

SALE PRICE

PRICE PER KEY

BUYER

SELLER

*Hotel is on a ground lease with 99 years remaining.

FLORIDA PANHANDLE MARKE T REPORT 2022 BERKADIA

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MAJOR AIRPORTS Destin-Fort Walton Beach Airport (VPS) • YTD June 2022 passenger traffic is up 20.6% over same period 2019.

• Named the Fastest-Growing Airport in 2018 by Bloomberg, the Destin-Fort Walton Beach Airport totaled two million passengers in 2021, nearly tripling the number of total passengers recorded in 2015.

• T his year, VPS inked a joint venture agreement through 2063 with Eglin AFB where the airport can utilize space on Eglin’s property allowing for the daily “cap” on commercial flights to be increased exponentially.

• T he record growth at VPS is also attributed to the addition of Southwest, which began serving the airport in May of 2021 and is now offering direct flights to Chicago, Nashville, Dallas, and Baltimore, which are major target markets for the City of Destin.

• A new additional terminal is under construction and will be completed this year, and soon visitors will be able to use a new state-of-the-art baggage handling system. Eight hundred parking spaces have also been added to the airport.

DESTIN-FORT WALTON BEACH AIRPORT PASSENGERS (VPS) 2,000,000 1,500,000

-

14

2,132,683

500,000

1,998,763

1,000,000 1,673,226

Annual Passengers

2,500,000

2019

2021

June 202 2 TTM

BERKADIA FLORIDA PANHANDLE MARKE T REPORT 2022

Northwest Florida Beaches International Airport (ECP) • YTD June 2022 passenger traffic is up 24.1% over same period 2019.

• ECP landed the #4 spot on Simple Flying’s 2021 list of airports in the U.S. that have grown the most — with a 2021 capacity increase of 58.2% over the summer of 2019.

• A $5.8 million, 7,000 SF terminal expansion was completed in 2020 adding two gates and about 250 more seats, providing additional room for growth.

• In 2021, the St. Joe Company opened a 143-key Hilton Garden Inn at ECP and is underway with the 3,500 unit Latitude Margaritaville Watersound community adjacent to ECP located along State Road 79 near its intersection with State Road 388.

2,000,000

1,500,000

-

1,610,001

500,000

1,598,492

1,000,000

1,275,488

Annual Passengers

NORTHWEST FLORIDA BEACHES INTERNATIONAL AIRPORT PASSENGERS (ECP)

2019

2021

June 202 2 TTM

FLORIDA PANHANDLE MARKE T REPORT 2022 BERKADIA

15

FLORIDA PANHANDLE HOTEL MARKET REPORT 3Q 2022

Panama City Beach, Florida

Preston Reid

Kyle Stevenson

Michael Weinberg

Wyatt Krapf

Mabelle Perez

813.675.0113 preston.reid@berkadia.com

786.646.2591 kyle.stevenson@berkadia.com

321.319.1419 michael.weinberg@berkadia.com

813.675.0467 wyatt.krapf@berkadia.com

786.646.2587 mabelle.perez@berkadia.com

Kyle Sahlsten

Edmund Aramayo

Dylan Jones

Harry Mancera

813.574.1398 kyle.sahlsten@berkadia.com

786.543.3349 727.409.2791 edmond.aramayo@berkadia.com dylan.jones@berkadia.com

Managing Director

Senior Real Estate Analyst

Managing Director

Real Estate Analyst

Managing Director

Real Estate Analyst

Director

Senior Director

Financial Analyst

404.452.1110 harry.mancera@berkadia.com

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