Page 1

December 7, 2010

VALUATION REPORT ADDRESS:

Land, 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 property as outlined in Phase 2 and 3, for financing purposes.

CONFLICT OF INTEREST:

SOURCES OF INFORMATION:

VALUER:

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. 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.

TITLE AND OTHER MATTERS: We assume that the Title will be in all respects good and marketable. We have examined the Title document as provided, 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. Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 1 of 13 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


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 land is registered in the Book of Titles at the Office of the Registrar of Titles in Kingston at Volume 1267 Folio 991. Updated Title details should be verified by any lender/buyer. The size of the section of the Title to be valued is approximately 804 acres (325 ha).

LOCATION:

The land is located on the north side of the Highway from Montego Bay to Ocho Rios, 0.85 miles (1.36 km) east of St. Ann’s Bay.

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). The rest of the land has the availability of being connected to the already constructed sewage treatment facility.

TOPOGRAPHY:

The land is mainly flat with some areas rising slightly above the surrounding land. The land has been intensively upgraded so that the natural drainage from the two small rivers passing through the land will not pollute the sea but be accommodated in filtration ponds and lakes for further use in irrigation of public areas and the 36 hole golf course that is planned.

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 use of this site. 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.

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 2 of 13 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


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$1,500,000 plus region. Immediately to the east of Mammee Bay a new 850 room hotel has been constructed by RIU, a Spanish hotel group that currently owns and operates three other large hotels in Jamaica. Beyond this is another large hotel, and Dunns River Falls, the major attraction in Ocho Rios. 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 (Sunset Jamaica Grande) or exclusive niche hotels (Jamaica Inn, Sandals Royal Plantation 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 (a quasi Government body) 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). The subject of this valuation is the land that is contained in what is known as Phase 2 and 3 - See JR Mais (Land Surveyor) See Lot layout page 5. Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 3 of 13 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


DESCRIPTION:

The Development is currently entered via impressive stone walled gates with a security guard house. The main boulevard enters Phase 1 and curves down past the family villa sites (mostly now sold) to the hotel site. To the east of this is the marina site where construction has commenced for townhouses and apartments. Another site (Lots 159 & 160) is to be sold as a hotel site. Phase 1, or approximately 40% of the overall development, already has full infrastructure including paved roads, underground electricity, cable, telephone and connection to the sewage mains. Phases 2 and 3, the balance of the development land, is ready for connection to these services.

APPROVALS:

The following approvals have been granted. It will be necessary, however, to reactivate 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). • 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 the 308 room hotel. Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 4 of 13 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


PROPOSED DEVELOPMENT SCHEME PHASES 2 & 3 The development scheme planned allowed for the layout below:

To be Dredged

Windsor Estate

Adapted from site survey by J. R. Mais

Phases 2 & 3 and the Golf Course outlined in red

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 5 of 13 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


Phase 2 & 3 summary Lot: 99 143 144 157 159 160 260 261 262 264 265 271 273 1-142 145-155 161-170 173-259 266-270

10 156 158 171 172 263 272 430 431

Lot Size (acres) (hectares)

Polo Villas Santa Maria Villas Ocean Villas Drax Hall Point Spanish Lookout (Separate Title: not included) Keelhaul Villas (Separate Title: not included) Tennis Villas Tennis Centre Tennis Centre Little Drax Drax Hall Great House site Golf Villas Golf Villas Residential Lots East Section (Phase 2&3) Ocean Frontage Large Lots Marine Frontage Eastern side Residential Lots North Eastern Section Golf Course Residential Lots

7.52 12.40 17.90 10.14 6.88 11.65 8.28 8.73 7.33 9.41 7.17 4.88 4.69 85.90 19.10 9.00 53.10 2.70 286.79

3.05 5.02 7.25 4.10 2.78 4.71 3.35 3.53 2.97 3.81 2.90 1.98 1.90 34.76 7.73 3.64 21.49 1.09 116.06

63.86 3.53 6.88 7.04 8.53 10.65 4.70 154.45 14.80 274.43

25.84 1.43 2.78 2.85 3.45 4.31 1.90 62.51 5.99 111.06

56.90

23.03

Phases 2 & 3 and Golf Course Total

618.13

250.15

Original Titled Acreage (including Phase 1)

804.78

325.69

Community Lands Sports Complex Restaurant Site Colombus Cove Theme Park Shopping Arcade Coconut Park Golf Club 27-hole Golf Course Sewage Pond Roadways etc.

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 6 of 13 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


THE EXISTING SCHEME:

The site layout above is a layout of the original approved (now expired) Plan. The smaller residential lots in Phase 1 are mostly sold, with other sections of land effectively belonging to other owners. The most recent purchase was of the Marina Villas Lot 390 that was acquired in early 2010 by a local developer under foreclosure conditions. Apartments are planned. This site has no access to any beach. On the plan Lots 159 and 160, both under a single title have not been included in the valuation. A new owner of the Phase 2 & 3 section of the property may wish to not use the current layout. However, the land value rates used would apply to most types of planning scenarios.

CURRENT ASSESSMENT:

There are now very few 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 (the National Environment and Planning Agency) 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. This property has the advantage of already having most of the approvals necessary in place, save for updating and readjustment. For Drax Hall, after the permissions are reactivated, the main task is to proceed from subdivision approval to obtaining titles for the lots by the subdivision of Phases 2 and 3.

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 charges overall on the sale price of a property. Consequently, it may be unreliable to check actual sales at the Titles Office in Kingston. Transfer and associated taxes have in 2010 been reduced, bringing the costs to under 7%. Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 7 of 13 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


Our information indicates that coastal land 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, this value will firm. At Drax Hall, as most of the permissions were in place at one time, and the infrastructure is completed for Phase 1 and partly completed for Phases 2 and 3 (sewage, but not roads). Although there is adequate water availability in the area, Phases 2 and 3 have not yet been supplied by the National Water Commission. This partly developed infrastructure enhances land value significantly. Further to the west, at Discovery Bay, land values for one acre lots can reach $1,500,000 per acre. In Kingston, and also in resort areas, land without infrastructure for luxury development sells for US $300,000 to US $1,000,000 per acre. In Montego Bay, a few minutes drive from the international airport a development company offering 20 acre lots is asking US$1,000,000US$1,500,000 per acre. Close to the Ritz Hotel at the Palmyra, now virtually completed, has apartments and townhouses in the $500,000 $2,000,000 range (one bedroom to three bedrooms). At James Bond Beach in Oracabessa (to the east of Ocho Rios) the developer of “Goldeneye” 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 (5th 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:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 8 of 13 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


VALUATION:

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

US$70,000,000 (Seventy Million United States Dollars), FORCED SALE:

Assuming that the property has to be sold under foreclosure conditions, and assuming that it were necessary to sell within a period of say 6 to 9 months, we are of the opinion that the Estimated Realisation Price (forced sale) would be $55,000,000.

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 9 of 13 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

Location of Drax Hall

Phase 2

Phase 3 Polo Fld

East and west boundaries of the Drax Hall property in Red Approximate boundary of Phases 2 & 3 in Yellow. Photo 2009

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 10 of 13 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


Windsor Phase 2

Phase 1

Sewage

Phase 3

Part of Drax Hall - View north west

Water treatment ponds (in Phase 1)

View of Colombus Cove from Lot 391 (Phase 1)

Valuation:

Ruin of the old sugar factory in Phase 3

View east along the Phase 2 coast frrom Lot 155

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 11 of 13 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


Colombus Cove

Colombus Cove

Typical Cove along the coast (Lots 154-144). These coves can be upgraded to form small beaches Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 12 of 13 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

View west - Riu Hotel at Mammee Bay. Drax Hall is located in the background

Recent new apartment and townhousedevelopment at Drax Hall on Lot 390 in Phase 1

Valuation:

Resort Development land at Drax Hall, St. Ann, Jamaica. Page 13 of 13 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 Development Land  

Resort Development Land near Ocho Rios