Page 1

November 30, 2010

VALUATION REPORT ADDRESS:

Lot, part of Drax Hall Estate, St. Ann, Jamaica.

INSTRUCTIONS:

We have been instructed by Mr. Richard Salm to prepare a valuation of the open market value of the Lot for sale purposes.

CONFLICT OF INTEREST:

SOURCES OF INFORMATION:

We confirm that we consider that we have no conflict of interest in accepting these instructions. We have no financial or other interest in the property other than conducting valuation reports on various parts of the property in the past. The information in preparation of this report was obtained from Mr. Salm, the National Land Agency, the internet and our own records. We are reliant on the information received from these sources in completing this exercise.

PROFESSIONAL INDEMNITY INSURANCE: We confirm that we hold Professional Indemnity Insurance. The insurers are NEM Insurance, Kingston, Jamaica. Indemnity provided is for cover in Jamaica only. VALUER:

In accordance with the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Standards (6th Edition), we confirm that this valuation has been carried out by Gordon Langford MRICS who is a Chartered Valuation Surveyor and whose qualifications and experience satisfy the requirements of the RICS for valuations prepared in respect of this type of property.

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 1 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com


TITLE AND OTHER MATTERS: We assume that the interest in this property will be in all respects good and marketable. We have examined the Title documents as provided by the National Land Agency, and this document states that the interest is not subject to any onerous restrictions, to the payment of any unusual outgoing or any charges, easements or rights of way other than those mentioned herein. OWNER:

The Title available for inspection indicates that the owner of the property is Drax Hall Limited, a company registered in Nassau, Bahamas.

TITLE DETAILS:

The Lot is registered in the Book of Titles at the Office of the Registrar of Titles in Kingston at Volume 1302 Folio 747, with an area by survey of 18.88 acres (7.64 hectares).

LOCATION:

The Lot is located on the southern side of the beach known as Columbus Cove on the Drax Hall Property. Exact location can be obtained from the attached subdivision plan by JR Mais (below).

SERVICES:

The usual public amenities of electricity, telephone and water are available in the area. On the development approximately 40% of the land is serviced by electricity, sewage connections, cable television and telephone (i.e. Phase 1).

TOPOGRAPHY:

The land rises in a cliff from the sea on the western boundary. To the south the cliff is lower, and reducing in height above sea level towards the east. At Columbus Cove the land falls steeply towards the beach. Generally, the land is 30 - 36 ft (9-11 meters) above sea level.

SOILS:

The area comprises mainly limestone outcrops with heavy clay soils inland from the coastline. The soils are suitable for building construction.

CONTAMINATED LAND AND ENVIRONMENTAL FACTORS: We confirm that during our inspection we noted no obvious contaminating activity, nor any adverse environmental factors, on this or adjoining properties, which would materially affect the value of this site. Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 2 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com


AREA ANALYSIS:

This property is located west of Ocho Rios, which is the second tourist town in Jamaica to Montego Bay (generally, the resort development corridor stretches from Montego Bay to Ocho Rios), and St. Ann’s Bay is approximately 10 minutes’ drive from Ocho Rios. The area has been upgraded by the construction of the North Coast Highway. To the east of the Drax Hall development is Mammee Bay, which is an established development of villas within a gated community with prices in the US$400,000 to US$1,000,000 plus region. Immediately to the east of Mammee Bay the 1,000 room Riu Hotel. The adjacent hotel Sandals has recently changed operators. Further to the east are a number of large hotels and resort villas. In Ocho Rios the hotels are categorised as either, small, family owned EP properties, large mass market hotels (Jamaica Grande) or exclusive niche hotels (Jamaica Inn and Sans Souci). To the west of Drax Hall is Runaway Bay, which has a number of large, mainly “all inclusive” hotels. To the west of this is the new Harmony Cove development where the developers are planning four luxury hotels and a development on 1,400 acres (566 hectares) of land. Essentially, there are now very few large undeveloped tracts of land suitable for hotel development on the North Coast of Jamaica.

HISTORY:

Drax Hall was originally a 2,500 acre (1,000 ha) sugar property divided by the main coast road. The property also supported cattle but as agricultural pursuits in Jamaica became difficult (particularly in sugar and livestock), the land north of the main road was divided from the main section south of the road and the Drax Hall Development planned. The scheme was a unique development designed to mix hotels with residential accommodation, a marina and golf course. The project was planned to be eco-friendly with sewage treated on site and no waste water running into the sea. Much of this infrastructure for Phase 1 (of 3 Phases) was established in the mid 1990’s along with roads, electricity and water (the western section of the property). Most of the 176 villa lots were sold. Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 3 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com


However, the economic climate in Jamaica began to deteriorate, interest rates started to rise, and the terms of the required finance became so onerous that work had to be halted. Since this time, the economic situation in Jamaica suffered a severe crisis with most of the local banks becoming insolvent and in the property sector, many loans were called in. This situation resulted in a number of lenders, and other institutions and individuals, effectively having a legal interest in parts of the property. As a result of this, it became even more difficult to realise any of the Development’s assets and the project could not move forward. In early 2010, a local developer acquired the Marine Site at Lot 390 directly across the marina entrance to the subject property. This 9.07 acre (3.67 Ha) lot will be mainly apartments in a gated complex. DESCRIPTION:

The Development is entered via impressive stone walled gates with a security guard house. The main boulevard curves down past the family villa sites (mostly now sold) to the hotel site. To the east of this is the marina site and a second site, the subject property that is suitable for a hotel. The subject property is located across the marina inlet to the east of the development taking place on the Marina Site.

THE LOT:

The Lot forms part of the development in what was Phase 2. However, as the situation changed, these phases have now ben abandoned and the complete property is planned for development.

APPROVALS:

The following approvals have been granted. It will be necessary, however, to re-activate these approvals and some may have expired. The exact status of each approval should be verified by any lender. • April 1990: Sub division approval granted by the St. Ann Parish Council of the 800 acre property. • October 1991: Approval of the sewage treatment plant by the Environmental Control Division of the Ministry of Health. • January 1992: Approval of the construction of the marina by the Natural Resources Conservation Authority (now called National Environmental Planning Agency - NEPA).

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 4 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com


• April 1992: Licence to construct and operate a marina granted by the Beach Control Authority. • November 1993: Approval of the Environmental Impact Assessment report by the Ministry of Health. • March 1996: Planning approval granted for the development of a 350 room hotel on Lot 392 by the Town and Country Planning Authority (now within NEPA). • December 1997: Planning approval for a 308 room hotel (the second) overlooking Columbus Cove - by the Town and Country Planning Authority (now within NEPA). • April 1998: Building approval for the 308 room hotel by the St. Ann Parish Council. • July 1998: Application to JAMPRO for Hotel Incentives for a 308 room hotel. CURRENT ASSESSMENT:

There are now very few suitable coastal areas along the North Coast, between Negril and Ocho Rios, suitable for large Hotel Development. Many of these sites will, or are, having problems with NEPA on environmental grounds as the Authority becomes increasingly protective of the coastal environment. For a greenfield site, all permissions and approvals can take one to two years before construction can start. In addition, many investors are wary of the task of having to deal with the Government and the myriad of Agencies necessary to gain approval.

PRICE COMPARISON:

In Jamaica the reported sales figures of properties sold may not correspond to the actual value passing. This is because of the approximate 16% of taxes the Government used to charge on a transaction. Within the last year, this has been reduced to 6%. Consequently, it may be unreliable to check actual sales as reported to the Titles Office in Kingston. However, our information indicates that beach land for hotel development sells for US $100,000 to US $500,000 per acre, without permissions (planning, building control or the essential Environmental Impact Assessment). As the available resort land reduces, these values will firm. Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 5 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com


Many of the parcels of land that are available for development are large. Generally these have been in the 200 acre (80 hectare) plus size, with prices being in the US$9,000,000 to $15,000,000 category. These acreages are effectively a larger parcel of land than the 10-20 acre size (4-8 Ha) a hotel needs. At Drax Hall, both the sites are fully serviced and, thus, no extra land needs to be purchased. In addition, with the planned 27 hole golf course and the marina adjacent, this effectively gives the hotel the availability of the attractions without having to pay for the land and develop them. In Kingston, and also in resort areas, land without infrastructure for luxury development sells for US $500,000 to US $1,000,000 per acre. In Montego Bay, The Ritz is selling one acre house lots on the coast for around US $1,000,000 per acre. The Ritz plans an adjacent condominium development where the units will be offered from US$400,000 up to over $1,000,000. At James Bond Beach in Oracabessa (to the east of Ocho Rios) a developer has commenced a resort development with similar prices. MARKET VALUE:

The property has been valued at the Market Value in accordance with the requirements contained within the current edition of the Appraisal and Valuation Standards (6th edition) published by the Royal Institution of Chartered Surveyors. Market Value is defined as the ‘estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion’.

VALUATION:

We are of the opinion that the open market value of the property is

US$ 4,500,000 (Four Million, Five Hundred Thousand Dollars),

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 6 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com


FORCED SALE VALUE:

FUTURE VALUE:

REPLACEMENT COST:

We are of the opinion that the forced sale value for foreclosure purposes is $3,600,000. This property should continue to reflect the general resort property market in the area. There are no permanent buildings on the site of any value.

MARKETABILITY AND SUITABILITY FOR LOAN SECURITY PURPOSES: We are of the opinion that the property is suitable for loan security purposes, subject to the liens as described on the Title. DISCLOSURE:

Neither the whole nor any part of this report, nor any reference thereto may be included in any document, circular or statement without our prior approval of the form and context of which it will appear. This valuation is provided for the stated purpose and is for use only of the party for whom it is addressed, or their appointees,and no responsibility is accepted to any other party.

Gordon Langford MRICS Chartered Valuation Surveyor

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 7 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com


Location of Drax Hall

Entrance

East and west boundaries of the Drax Hall property in Red Lot boundary in Yellow. Photo 2009

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 8 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com


Lot 17

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 9 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com


View north - Approximate boundary in Yellow. Photo : 2009

New Era Site

View south- Approximate boundary in Yellow. Photo: 2009

Lot New Era Dev.

Colombus Cove - Adjacent to the Lot Valuation:

Photo: October 2010. New Era homes Development Resort Development land at Drax Hall, St. Ann, Jamaica. Page 10 31 Upper Waterloo Road Kingston 10 JAMAICA

Build on the power of our network. Over 300 offices worldwide. www.naiglobal.com

tel: 876-925-7861 fax: 876-969-3198 www.langford-brown.com

Drax Hall Resort Lot  

Resort Development land at Drax Hall, St. Ann Jamaica. Suitable for small hotel, apartments of resort villas.

Advertisement