Investors

Strong and Experienced Management Team with a Proven Track Record

Fisher Property Group is a fully integrated, privately held real estate operating company that is focused on delivering superior risk-adjusted investor returns through the development, redevelopment, repositioning, acquisition, ownership, and asset management of premium-branded upscale extended-stay and premium select service hotels in the top 25 to 50 MSAs and major coastal markets in the United States. Prior to the formation of Fisher Property Group, the Company’s principals served as the executive management team of Innkeepers USA Trust (“Innkeepers”) a publicly traded hotel real estate investment trust (NYSE: KPA) that became the 17th largest hotel company worldwide (National Real Estate Investor, July 2007) prior to its sale in June 2007.

Industry Leader in Targeted Segments

Fisher Property Group will continue to invest primarily in the upscale extended stay and premium select service segments, which tend to have stable cash flows with less susceptibility to industry downturns and stronger operating performance with higher operating margins relative to other lodging segments. These segments will continue to offer compelling investment returns for the Joint Venture based on the following market trends:

Historical Institutional Sponsorship as a Public REIT

The executive management team believes that it is uniquely positioned as one of the few hotel investment and asset management platforms that has a demonstrated, highly successful history of institutional sponsorship as measured by:

Superior total shareholder return relative to its peer group and the broader stock market
Significant institutional ownership of Innkeepers stock
The ability to access the public equity markets

Since 1994, Innkeepers stock significantly outperformed industry benchmarks, generating a total return of 323% compared with its lodging peer group and the S&P 500, which generated total returns of 267% and 220%, respectively.

Since 1994, Innkeepers raised over $700 million in public equity and preferred offerings with institutional ownership of the common stock reaching 83% at the time of its sale, highlighting institutional investors’ confidence in the company’s ability to generate long-term shareholder value. The leading institutional investors included JP Morgan Investment Management, Vanguard Group, Barclays Global Investors, T. Rowe Price and State Street Global Advisors.

Focus on Markets with High Barriers to Entry and Multiple Demand Drivers

During his career, Mr. Fisher demonstrated his ability to anticipate market fundamentals and strategically position the company to capitalize on these market conditions. Fisher Property Group will focus on underserved submarkets within the top 25 to 50 MSAs and major coastal markets that are typically characterized by the following barriers to entry that limit new supply:

Scarcity of high cost of available land for new developments
Long development lead times
Extensive permit approval requirements
Restrictive zoning
Stringent local development laws
Superior, irreplaceable locations with strong visibility and convenient access

Fisher Property Group will target the top 25 to 50 MSAs and major coastal markets to a create more diversified and dynamic portfolio that will help drive RevPAR while limiting the Joint Venture’s risk in the event of a downturn in a particular geographic area.

In order to create a multi-dimensional portfolio with multiple demand drivers, business customers will be a primary focus by targeting growth markets that are characterized by favorable long-term business growth and economic stability, or markets that have a significant corporate training/professional education or government presence. The Company will also target resort, recreation and leisure customers by offering hotels that have long-term sustainable demand drivers such as proximity to tourist attractions. By targeting a diverse customer base, the Company is able to consistently generate 70%+ occupancy in many of its properties by targeting business travelers during the work week and resort/recreation/leisure travelers on the weekends. The Company will focus on locations that demonstrate the following multiple demand drivers:

Business

CBD or suburban or regional headquarters
Major corporate training and professional education facilities
Favorable long-term business growth and economic stability

Governmental

Federal, state, or local agency headquarters or regional headquarters
Major government contractors

Resort/Recreation/Leisure

Vacation destinations
Tourist and entertainment attractions
Favorable long-term demographics as baby boomers and international travelers increase their travel in the coming years

Major Colleges/Universities

Locations of major universities or colleges

Stability of Cash Flows and High Margins Drive Valuations

Based on recent transactions in the Company’s targeted markets, institutional quality, premium branded, upscale extended stay and select service hotels have traded at comparable capitalization rates as full service and luxury hotels. The executive management team believes that this trend will continue based on the stability to cash flows and margin premiums that these hotels generate due to the following factors:

More consistent revenue stream as 90%+ of revenues are generated from ADR compared with 60% to 70% of a full service or luxury hotels, which are more dependent on ancillary services
Higher margins resulting from lower labor and overhead costs through the elimination of food and beverage outlets and banquet facilities, and controllable costs in housekeeping, front desk, and laundry departments
An employee/room ratio of [1:#] compared with a ratio [1:1] for full service and luxury hotels, which further reduces labor and overhead costs

Corporate Travel Moving Away From Luxury Brands

Travel patterns indicate that companies are moving away from full service and boutique hotels due to high daily rates. While there has been downward pressure on full service and luxury brands to lower their rates, the limited service upscale segment continues to gain share. Amenities such as complimentary breakfast and high-speed Internet at many limited service brands are helping to fuel this trend. Even though some shift to economy brands from upscale limited service has occurred, having a middle price point product allows these properties to replace guests moving to economy chains with those down-shifting from full service and luxury brands.

Fully Integrated Hotel Operating and Management Platform

With over two decades as a premier industry leader, Island Hospitality ranks as the 13th largest hotel management company globally (Hotel Business, April 2007). Fisher Property Group’s affiliation with the management company provides a significant competitive advantage for the Joint Venture by providing direct property and asset management services, instead of relying on third-party hotel management or franchisors, to ensure that the interests of the executive management team and its Joint Venture partner are closely aligned. Given its independence from any specific brand affiliation or public ownership, Island Hospitality can maximize the long-term value of every asset in its portfolio without the conflict of interest that arises with multiple objectives or priorities.

Island Hospitality’s focus is to achieve premium market share and investment returns throughout all market cycles while providing the highest possible satisfaction for its guests and employees. Island Hospitality’s hotels under management have consistently achieved significant RevPAR premiums in varying market situations, enhancing the management company’s standing as an industry leader in creating long-term sustainable value.

Currently, Island Hospitality manages 78 hotels and has over 3,000 employees, including 55 corporate employees and six regional directors.