investment hi ghlights• Anunparalleledopportunitytoacquirepremierhotel

spaceintheheartofSolvang

• AnIRRof14%andaROIof19%estimatedovera10yearhold

• AnattractiveAnnualPreferredReturnof5%growingto7%inyearthree

• Costtoacquireissubstantiallylowerthanthecosttobuild,limitingnewcompetitorsinthemarket

• Growingdemandforhotelspaceinthevalleyhaspushedannualizedoccupancyratesover70%

• Lowleaseandpurchasetermswithaneffectivecarrycostof3%

solvang The Petersen Village & Inn

ThePetersenVillageiscomprisedofanInnandanumberofuniqueretailshopsallnestledaroundatreelinedcourtyard.Thetraditionaltiledroofsandarchitecturalstyleaddtotheoverallcharmofthevillage.

ThehallmarkofthePetersenVillageisthe“PetersenInn”withitsspectacularthree-leveltower,Danishinspireddetailsandornatecustomwoodwork.TheInnboasts41oversizedguestrooms,apub,restaurant,severallargemeetingrooms,aprivatediningroom,twokitchens,andanabundanceofextrastorageroomsthatcouldeasilyberepurposedintoagymandspa.

InadditiontotheInn,therearenumberofcommercialcondominiumsmakingupthePetersenvillage.Thesecondominiumsmakeperfectretailshopsandpotentialfuturehotelsuites.ThePetersenInnisbeingsecuredbyatwenty-nine

yearleasewithanoptiontopurchaseafterthefifthyearoftheleasetermfor$7,050,000.Thedownpaymentof$1,300,000willbedeductedfromthepurchasepriceatthetimeofacquisition.Baseleasepaymentsstartat$250,000/year,increasingto$270,000/yearbythetenthleaseyear.Anadditionalcreditforleasepaymentswillaccrueovertenyears($590,000)andwillbeappliedtopurchasepriceattimeofacquisition.

InadditiontotheleaseoptionfortheInn,wehaveobtainedanoptiontopurchaseanadditional3700Sq.Ft.building,consistingoftworetailandtworesidentialcondominiumsandfouradditionalretailcondominiumsinthePetersenVillage.TheleaseoptionisexecutableinJanuary2014atapurchasepriceof$750,000.

Property description

Summary of investment

Duringthefirsttwoyears,aswearerenovatingandrepositioningtheInn,weintendtodistributea5percentannualPreferredReturn.ThisPreferredReturnwillincreaseto7percentinyearthree.Thisreturnwillbepayablemonthlyoninvestedcapital.Ascashflowsincrease,theManagerwillreinvestinthepropertyand/orincreaseinvestordividends.

annual yield of 5% growing to 7% in year three

TheNetOperatingCashFlowwillbeusedtopayfirsttheInvestorsa5%annualPreferredReturnoninvestedcapitalforthefirst2years,increasingto7%inyearthree.TheremainingNetOperatingCashFlowabovethepreferredreturn,willbedistributed50%totheInvestorsand50%totheManager.Thefirst100%ofNetRefinancingand/orNetSalesProceedswillbeusedfirsttopayanyunpaidPreferredReturnduetotheInvestors,andthensecondtotheInvestorsforpaymentofallunreturnedNetCapitalContributions.TheremainingNetRefinancingand/orNetSalesProceedsfundswillbedistributed75%toInvestors,25%totheManager.

distribution of cash flow

TheiconicPetersenVillageandInnisprominentlylocatedinthecenterofSolvangat1576MissionDriveinSolvang,California;approximately125milesnorthofLosAngelesand35milesnorthwestofSantaBarbara.

Solvang,whichmeans“sunnyfield”inDanish,wasfoundedin1911byDanishteachersandisnowknownastheDanishCapitalofAmerica.ThequaintcityislocatedintheheartoftheSantaYnezValley,alsoknownas“SantaBarbara’sWineCountry”.

Over2millionvisitorsaredrawntothevalleyannuallyandthisnumbercontinuestoincreaseeveryyear.Thecityishighlydependentupontravelandtourism.Transientoccupancytaxesaloneaccountfornearly20%ofthecity’srevenue.Theeverincreasingwineindustryhasal-lowedtheareatodiversifyitstouristbaseandcatertoamoreupscaleconsumer.Thispositivelyimpactstheaveragerevenueperguestvisitandcreatesademandforhigh-endaccommodations.

Forecastsonanationalandlocalbasisareimprovingashoteloccupancyin2012approachedhistoriclevels.HoteloccupancyinSolvang/SantaYnezValleyisupover6%to77%in2012.Withoccupancyaveragingjust45%atthePetersenInn,thereissignificantgrowthpotentialinbothoccupancyratesandaverageroomrates.

ThePetersenVillagehasbeenfamilyrunbythePetersenfamilyforover40yearsandisnamedafteritsdeveloper,EarlPetersen.Alackofinvestmentandfailingmanagementinthepastdecadehascreatedatremendousopportunitytorepositionthisbeautifullandmark.Ourrepositioningeffortswillinclude:

• Renovatingthe41guestrooms,lobbyandpublicspaces• RebrandingtheInnasfull-serviceupscaleboutiquehotel• Completingmuchneededdeferredmaintenanceprojects

suchasroofandair-conditioningrepairs• Hiringaseasonedgeneralmanagerandasalesand

marketingdirector• Updatingthewebsiteandreservationmanagementsystem

toincludereal-timeonlinebookingwithtravelagents• Creatingweekendgetawaypackagestoattractregional

drive-inbusiness–packagesforwinetours,biketours,arttoursandweddingpackages

• Enhancingmeetingspaceandincreasingsaleseffortstoattractsmallmeetingsaswellas,conferencebusinesslookingforauniquemeetingdestinations

Location &Surrounding market area

Repositioning opportunity

Terms of investment

OfferingDateJune April2013

AnticipatedClosingDate May2013

EquityRaise $4,650,000

ROI 19%

IRR 14%

SIMACorporation,foundedin1984,hasgrownsteadilyandprudentlyintoamultifacetedenterprisethatisabest-in-classoperatorinrealestateinvestmentmanagementandassetmanagement.Ourcurrentportfolioexceeds$400millionworthofassetsincludingresidential,commercial,hospitality,healthclubs,andmixed-usepropertiesinCalifornia,Oregon,Mississippi,Georgia,AlabamaandUtah.Theportfolioencompassesapproximately4.1millionsquarefeet,whichincludes2,340apartmentunitsandover394hotelrooms.

Asafull-servicerealestatefirm,SIMAprovidescomprehensiveinvestmentandmanagementservicesunderoneroof.Fromidentifyingandanalyzingtheopportunitytocreatingvaluethroughstrategicpropertymanagement,financing,and/orredevelopment;theteamatSIMAhandlesitallin-houseformaximumprofitability.

SIMA Corporation | www.sima.net1231-BStateStreet|SantaBarbara,CA,93101 Well Established asset manager