The Residence at Biltmore

• Introduction to Sundog• Introduction to Southern Resorts, LLC• Southern Resorts Philosophy -Holistic and Facilitative

Approach to Property Management• The Residence at Biltmore- A Resort Condominium• The Residence at Biltmore-Hotel Operating model• The 100 day plan

A Resort Real Estate CompanyBased in Cullowhee NC

About Sundog Places Founded by Joel Sowers in 2007, located in Cullowhee, North Carolina

Past-Executive Vice President- 23 Year Career-Fortune 200 Company – Real Estate President -Resort Real Estate Operation in the United States.

Present- Sundog Places-Specialize in Western North Carolina Real Estate. We are a boutique specialized shop and very selective of who we choose to work for and represent. Biltmore Farms-The Ramble Sundrops on Caney Fork, a Sundog Development Bear Lake Reserve (select group of 35 to 40 owners) Serrus Capital Partners The Board of Directors of The Residences at Biltmore for at least the next 20 minutes

We are; NC Real Estate Brokers, NC General Contractors- Unlimited license, Lifetime Students of Real Estate and Real Estate Junkies

Southern Resorts Partnership

• Sundog and Serrus are 50/50 partners in Southern Resorts, LLC.

• Steve Mudge and Joel Sowers worked together at Centex Destination Properties and have had a long standing professional relationship.

• Centex Destination Properties, planned, designed, built and operated many resort and lifestyle properties that included condominiums, condo-hotels and resort properties and clubs.

Southern ResortsCondominiums and Condo Hotels

We know Condo’s

We have designed, built, marketed, sold, owned and operated thousands of Condominiums in North Carolina, Florida, California, Las Vegas, New Hampshire, Texas, Hawaii

We have designed, built, marketed, sold, owned and operated Hotels and Condo-Hotels; some more notable are: Palm Coast Florida (Ocean Hammock- Hotel) Palm Springs (La Quinta) Oahu Hawaii- (Ko’ Olina) Horseshoe Bay Resort, Texas

We have worked on resort properties w/ Disney, Ritz Carlton, Universal Studios, Intrawest, American Ski, Intercontinental Hotels, The Resort Group (HI).

Southern Resorts Philosophy- We bring a Holistic Approach to Managing Real Estate

Balancing Rental Incomes and……

Real Estate Values in the community

Why a balanced approach - rental incomes vs. real estate values?

Real Estate Values vs. Rental IncomeOwners

Real Estate Value• $1- Owners keep 100%

• Property Manager -0%

• LTCG Tax- 15%

Rental Income• $1- Owners keep 50-65%

• Property Manager- 35-50%

• Income tax rate-max 39+%

As Real Estate Brokers- we have an agency relationship with owners and are programmed to work for the best interest of the owner.

First Question

We were curious how The Residence at Biltmore condominiums compared in value today to similar sized condominiums in downtown Asheville?

So we looked at downtown condominium closings in 2013 (thru September) that were between 700-1400 square feet

Market Values today The Residence of Biltmore

1$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

Downtown Con-dominiums price per sq ft

Biltmore Residences price per sq ft

Address List Price Sales Price Sq. Ft. Price sell Date DOM per ft.

12 South Lexington Ave; unit 301 $419,000 $422,000 1310 $322 29-Aug 22752 Biltmore $353,000 $340,000 1344 $253 15-Apr 1012 South Lexington Ave; unit 206 $530,000 $500,000 1400 $357 10-May 2512 South Lexington Ave; unit 409 $500,000 $460,000 1250 $368 3-Jun 32100 Coxe Ave, 409 $499,000 $475,000 1306 $364 20-Sep 9312 South Lexington Ave; unit 409 $465,000 $441,000 1133 $389 30-Aug 85155 S. Lexington 202B $200,000 $193,000 730 $264 7-Aug 28155 S. Lexington 307B $209,000 $201,000 817 $246 30-Aug 6459-c College St $395,000 $385,000 973 $396 10-Sep 62

2013 Asheville Condo Value$3,570,00

0$3,417,00

0 10,263 $332.94 Average size 1140

205 Bowling Park Rd $268,900 $269,900 1026 $263 9-Sep $0115 Bowling Park Rd $249,000 $249,000 1026 $243 9-Sep $0 2013 closed sale average $517,900 $518,900 $2,052 $252.88

Residence at Biltmore Direct Market Comps

The Residence at Biltmore approximateValuation as a Condominium on 9/30/13

Valuations using Downtown closings between

$200,000 and $750,000 or $333 per foot $168,498 $254,079 $340,659 $461,538 $35.118,180

Difference in Market Value today $8,542,260

Valuations using $333 dollars per square foot

Downtown Asheville ValuationsUnit Configuration Studio 1 Br 2 Br 3 Br Total Square footage from condo plan 506 763 1023 1386 104918 Number of Units 11 42 46 15 114

Todays Values using valuations sq. ft. $, 2013 closings) The Residence at Biltmore $252 per square foot $127,512 $192,276 $257,796 $349,272 $26,575,920

Why do The Residences sell at a 24% market discount today?

We looked at the following attributes that we consider primary drivers of value of residential real estate and could not come up with any deficiencies that we felt justified this discount…..

Real Estate Value-The Residences at Biltmore

We believe the community has all the attributes necessary to be among the premier condominium properties in Asheville

A. Located in a well known upscale location B. Near boutique shops and restaurantsC. Close to major tourist destinationsD. Quality healthcare nearbyE. Outdoor pool and onsite fitness centerF. Resident and guest parking is easily accessibleG. Floor plans are comfortableH. Building design is attractive

The Hotel Market

How do the service attributes at The Residence at Biltmore compare to other Biltmore Village Hotel attributes?

Hotel Services

• Hotel Services available today at Biltmore Residences:

– Housekeeping– Concierge service

• Hotel Services typically found in luxury Residence marketed

with a Hotel Brand:

– Valet Parking– Bell Service - Concierge– Room Service– Restaurant on site– Lobby Bar on site– Banquet or Group facility– Full Service Spa– Housekeeping

Hotel Services

• Hotel Services available today at Biltmore Residences:

– Housekeeping– Concierge service

• Hotel Services typically found in limited service Hotel Brands:

– Lobby – Business Center– Breakfast in the morning– Evening cocktail hour– Concierge Services– Housekeeping

Hotel – Conclusions

The property has some strategic opportunities to address in order to compete head to head with the area hotels.

There are multiple options in how to position the property going forward.

The Southern Resorts Process:

Have the Board of Directors assist our team develop a Strategic Marketing Plan for The Residences at Biltmore.

Date- TBD ( First 30 days of being hired)Participants- The Board of Directors of the Residence at Biltmore Southern Resorts Officers (non property employee)Facilitator- Southern Resorts EmployeeAgendaReal Estate Values- Key Drivers - Positioning choices, Goals, Action planRental Incomes- Determine Marketing Positioning, Goals, Action planTrip Advisor- Understand Ranking, Current Issues, Weighting, Action Plan

Quarterly Updates with the Board

Southern Resorts Property-Highlights of Rental Terms

• We are NC Brokers and have the Legal standing required by the state of NC to legally manage this property.

• We are currently in the vacation-resort rental management business in Jackson County North Carolina ( 45 minutes west of Asheville)

• Revenue Split to Owners – 65% of Gross Rental Income• Property Manager to retain all processing fees and convenience fees

collected from tenants• Exclusive property managements agreements (24 months) that

automatically renew for an additional 12 months if not cancelled 90 day prior to anniversary date

• All incomes disbursed to owners monthly, within 20 days of month end.• Use of back of house and closets once control is seized by board

Residence at Biltmore – Resort Rental Model Project Staffing

GMOwners

Rep

Front DeskMgr..

Front Desk staff;

Concierge.

HKMgr.

HK Staff

MaintenanceDept.

ReservationCall Center

Condo Association Management

• 24 Month Term- 90 day notice to terminate agreement or automatic one year extension

• $15/unit/month plus $1,000 per month for accounting, monthly accounting

• Manage all board and association meetings• Proposed budget by 10/1 of each year

The Rental Income?• We believe income levels will be determined by the goals

established in the Strategic Marketing, which are unknown as of this projection.

• Gross revenues across the property, using todays data, could be in the range of $4,000,000 to $5,000,000 dollars annually. This can vary greatly depending on the overall economy, number of units in the program ,the use patterns of current and future owners and owners level of commitment to position property to compete with all current and future area hotels .

• 2014 Income projections will be subject to any collateral damage caused by any current and or future litigation with the existing management company.