CITYOFSAINTPETER,MINNESOTA MarketFeasibilityStudyforaProposed MidscaleLimited-ServiceHoteltobelocatedin SaintPeter,Minnesota September2017

Patek Hospitality Consultants, Inc. N57 W27841 Walnut Grove Court

Sussex, Wisconsin 53089 (262) 538-0445

September19,2017Mr.RussWilleCommunityDevelopmentDirectorCityofSaintPeter227SouthFrontStreetSaintPeter,Minnesota56082DearMr.Wille:In accordance with our agreement, Patek Hospitality Consultants, Inc. has completed a study ofpotentialmarketdemandandhasprepareda statementof estimatedannualoperating results foraproposed60-roommidscalelimited-servicehoteltobelocatedinSaintPeter,Minnesota.Asinallstudiesofthistype,theestimatedresultsarebaseduponcompetentandefficientmanagementandaneffectivemarketingprogramandpresumenosignificantchangeinthecompetitivepositionofthehotelindustryfromthatsetforthinthisreport.WehavenoresponsibilitytoupdatethisreportforeventsandcircumstancesoccurringaftercompletionofourfieldworkconductedinlateOctober2016and subsequent research conducted in August 2017. These projections are based on estimates,assumptionsandotherinformationdevelopedfromourresearchandwedonotwarrantthattheywillbe attained. We did not consider the legal and regulatory requirements applicable to this project,includingzoning,permits,licensesandotherstateandlocalgovernmentregulations.Thisreporthasbeenprepared foryouruseandguidance indeterminingwhetherahotelshouldbepursuedinSaintPeter.Weunderstandthisdocumentcouldbeusedtoattractadeveloper,afranchiseormanagement agreement, and for financing and investment purposes. Neither our namenor thematerial submitted may be used in any prospectus or used in offerings or representations inconnection with the sale of securities or participation interests without our express writtenpermission.Pleasedonothesitatetocallifwemaybeoffurtherassistanceintheinterpretationandapplicationofour findings,recommendationsandconclusions. Weappreciatethecooperationyouextendedtousduringthecourseofourengagement.Sincerely,PatekHospitalityConsultants,Inc.

3 TABLEOFCONTENTS

EXECUTIVESUMMARY ..................................................................................................... 4

PROJECTCONCEPTANDRECOMMENDATIONS ................................................................ 5

SITEANALYSIS .................................................................................................................. 5

MARKETAREAOVERVIEW ............................................................................................. 11

HOTELSUPPLYANDDEMANDANALYSIS ....................................................................... 19

PROJECTEDMARKETPOSITIONANDPENETRATIONOFTHEPROPOSEDHOTEL ......... 26

CONCLUSION .................................................................................................................. 30

PROJECTIONSOFINCOMEANDEXPENSE ....................................................................... 31

ASSUMPTIONSANDLIMITINGCONDITIONS ................................................................. 38

4 EXECUTIVESUMMARYBrandName: TobedeterminedNumberofRooms: 60Occupancy(Stabilized): 65%AverageDailyRate(openingyear): $95.00StabilizedYear: ThirdyearofoperationSITEANALYSISWereviewedandevaluatedsixpotentialsitesinSaintPeterandconsideredaccess,visibility,proximity to demand sources, andproximity to support amenities of each one and rankedthemasexcellenttopoor.WeprovidedanoverallrankinginordertoassisttheCityofSaintPeterintheirassessmentofaproposedhotellocation.EXISTINGLODGINGSUPPLYINSAINTPETER AmericInnHotel&Suites 50rooms VikingJr. 20 St.PeterMotel 13 KonsbruckHotel 5 TotalRooms 88Thereare15 lodgingpropertieswith1,226rooms located inMankato,Minnesota,which isabout15milessouthofSaintPeter.Propertytypesrangefromeconomytoupscale.ESTIMATEDPERFORMANCE

Projections–ProposedMidscaleLimited-ServiceHotelSaintPeter,Minnesota

Year Occupancy ADR RevPAR*Year1 55.0% $95.00 $52.25Year2 60.0 98.00 58.80Year3 65.0 101.00 65.65Year4 65.0 104.00 67.60Year5 65.0 107.00 69.55

*RevPAR=RevenuePerAvailableRoom(occupancyxaveragedailyrate(ADR)) Source:PatekHospitalityConsultants,Inc.

5 PROJECTCONCEPTANDRECOMMENDATIONSIt is recommended the proposed midscale limited-service hotel be developed withapproximately60guestrooms.Asamidscalepropertytype,theproposedhotelshouldoffercomplimentary breakfast, free high speed Internet, business center, on-site conveniencestore,on-sitefitnesscenter,guestlaundry,indoorpoolandwhirlpool,andpossiblyanon-sitewine and beer bar. Some or all of the guest rooms should include refrigerator andmicrowave;flatpanelTVs,ironandironingboard,andhairdryerswouldbeofferedinallguest rooms. The guest rooms should include a mix of double queen and king beddedrooms. We also recommend four king suites and two suites that would include smallkitchen facilities that couldaccommodate thoseguests staying for anextendedperiodoftime or families needing extra space. We recommend the guest roombreakdown be asfollows:

GuestRoomBreakdownRoomType NumberofRooms PercenttoTotalDoubleQueen 36 60.0%

KingKingSuite

184

30.07.0

Suiteswithsmallkitchen 2 3.0Total 60 100.0%

Source:PatekHospitalityConsultants,Inc.In addition to the above-mentioned facilities and amenities, we recommend a boardroomseating10-12peopleaswellasameetingroomtoaccommodateupto30peoplethatcouldbeutilizedbythecommunityaswellashotelguests.Thiscouldbeusedforcorporatemeetings,training,receptions,reunions,andothersmallerevents.Adequateparkingper local zoning shouldbeprovided. Oversizedparkingmayneed tobeconsideredforguestswithlargervehicles/trailers.SITEANALYSISDuringourfieldworkandtourofthecommunity,wewereshownfivepotentialsitesforaproposedhotel.Duringourtelephonedemandinterviews,asixthsitewassuggestedtous.Weconsideredfactorssuchasaccess,visibility,andproximitytodemandgeneratorsandsupportamenitiesforeachofthesesitesaswellasthesizeoftheparcel.Wealsoreviewedinformationfromtheassessor’sofficethatwasprovidedbytheCityofSaintPeterforeachsite. We did not consider specific information about each site such as availability, cost,zoning, and infrastructure/utilities. Following is a list of the six locations followed by amoredetaileddescriptionofeach.

1. 4.4-acresiteonDoddAvenuejustwestofU.S.Highway1692. Hallett’sPond

6 3. TraverseMall4. BroadwayAvenueandSunriseDrive(nearGustavusAdolphusCollegeandthenew

highschool)5. OldKFCandAdamsHouseonMartinStreetinthesouthpartoftown6. ParkingLot#5indowntownSaintPeter

Therearetwositesthatwebelieveshouldno longerbeconsidered: theoldKFC/AdamsHouse site is too small and Parking Lot #5 is too small as well as being located in thedowntownhistoricdistrictthatmayposesomedevelopmentchallengestoahotelfranchisebasedonthehistoricdistrict’sbuildingrequirements.Weunderstandthisparkinglotisnolongeranoption,asitwillbeusedforparkingfortherenovatedArmoryeventspaceacrossthestreet.Adiscussionoftheremainingfoursitesfollows:Site1DoddAvenueSite–Locatedonthenorthendofthecity,this4.4-acrevacantsiteislocatedinthenorthwestquadrantofNorthDoddAvenueandOldMinnesotaAvenue,aboutoneblockwestofUSH169.Accessisgoodandvisibilityisfairtogoodasthesiteisslightlyelevated. Signage would be helpful on USH 169. The site is furthest from the majordemandgeneratorswith theexceptionofRiversEdgeHospital andClinic, that is locatedabout0.8mileswestofthesiteandSunriseIndustrialParktothesouth.Supportamenitiesin the immediate area are limited at the present time and the site is the furthest fromdowntownrestaurantsandretailoutletsandothermajordemandgenerators. Furthertothe south and closer to the following two sites is a McDonalds and GQ Grill & ChillRestaurant.Site2Hallett’sPondSite–This5.4-acrevacantsiteislocatedalongOldMinnesotaAvenuewith Hallett’s Pond providing its western border and Shopko Hometown forming itssouthern border. Accesswould be good from both directions on USH 169 via St. JulienStreetthatformsthesite’snorthernborder.Visibilityofthesitewouldbefairtogood,asitwould sit behind McDonalds and Dollar General however a three-story building wouldlikelybevisiblefornorthboundUSH169travelersalthoughforsouthboundtravelerstheywould have to turn on St. Julien Street prior to seeing the hotel. Aesthetically, it haspotential with the pond and surrounding trees and it is close to the Nicollet CountyFairgrounds,whichhostsweddingsandotherevents.Supportamenitiesandretailoutletsin thearea includeMcDonaldsandDQGrill&ChillRestaurant,aHolidayServiceStation,U.S. Bank ATM, Shopko and Dollar General. El Agave Restaurant, a sit-down MexicanrestaurantislocatedjustsouthofUnionStreetandthatformsthesouthernborderoftheNicolletCountyFairgrounds.Site 3 Traverse Mall Site – This4.9-acresitewouldhaveverygoodaccessandvisibilityoffofUSH169andthe specificsitewouldbejustnorthoftheHolidayServiceStation.Guestswould turn onto St. Julien Street and turn left or north to the site. This site is alsoproximate to the Nicollet County Fairgrounds and those restaurant and retail outlets

7 mentionedabove. Thesite iscurrentlywoodsandwouldhavetobecleared. Thesite ispartofalarger12-acreparcelthatwouldhavetobesub-divided.Onthenorthendofthislargerparcelisarundownmobilehomepark,whichisaneyesoreandthiswouldneedtobeaddressed,inouropinion,priortoanyhoteldevelopmentoccurringonthissite.Site4SunriseDriveandBroadwayAvenue - Wereviewed this intersectiononGooglemaps; it is adjacent toGustavusAdolphusCollegeandproximate to thenewhigh schoolathleticfields.AccesswouldbeconvenientoffofUSH169viaBroadwayAvenuealthoughthesiteisabout¾ofamilewestof169andwouldnotbevisiblefromthehighway.SunriseDrive provides direct north/south access from Rivers Edge Hospital and the SunriseIndustrialPark.Webelieveasiteinthevicinityofthisintersectioncouldbeconsideredasapossibility for the locationof theproposedhotel. As theCollege isprobablyoneof thelargerdemandgeneratorsinthemarket,itwouldbeconvenienttoservethisdemand.Weunderstand this location has been discussed for development of a fire station howeverthereappearstobelandavailablethatcouldalsoaccommodateahotel.Followingisatablethatshowsthefoursitesandthefactorsusedtoevaluateeachsiteastheycurrentlyexistwitharatingofexcellent topoor. Wealsorankedeachsitewith#1beingthemostfavorablesitefordevelopmentand#4beingtheleastfavorablesitebasedonthefactorsdiscussed.

EvaluationoftheFourPotentialHotelSitesSaintPeter,Minnesota

Site Access Visibility ProximitytoDemand

ProximitytoSupportAmenities

Intangibles* OverallEvaluationandRank

Site1DoddAve.

Good FairtoGood

Good Fair PrivatelyOwned

3.5Good

Site2Hallett’sPond

Good Good Good Good PrivatelyOwnedbyNorthernCon-Agg

1.5VeryGood

Site3TraverseMall

VeryGood VeryGood Good Good PrivatelyOwnedbyTraverseMall

1.5VeryGood

Site4Sunrise&Broadway

Fair Poor VeryGood Fair Notaspecificsiteidentified

3.5Good

*Intangiblesincludereadilyavailablesite,ownership,orissues/challengeswiththesiteSource:PatekHospitalityConsultants,Inc.Theoverallrankings1-4werebasedprimarilyonthefourfactors. Aswehavediscussedwith you, we are of the opinion that a site in downtown Saint Peter would provide aproposed hotel with a unique settingwith proximity (walkability factor) to restaurants,shops, and thenewly refurbishedArmoryCapitalRoom, awedding and event center. It

8 would also have very good access and visibility and being centrally located, itwould beconvenienttodemandgenerators locatedthroughoutthecity. WhileasiteonMinnesotaAvenuewouldbepreferable, sitesoffof themain thoroughfarecouldalsobeconsidered.AnotherreasontoconsiderdowntownisthatitoffersadifferentlocationfromtheexistingAmericInnlocatedonHighway169inthenorthernsectorofSaintPeter. Atthispoint intime, it was indicated to us that it was unlikely there would be an available site indowntownthatwouldbesuitableforhoteldevelopment. Therefore,ouranalysiscentersonthefoursitesdiscussedabove.Torecommendaspecificsitecanbedifficultasnoonesitemetallofthesitefactorsandeachsitehasitsstrengthsandweaknesses.Ifadowntownsitewerenotpossible,bothHallettPondandTraverseMallsiteswouldbeour recommendation as they are close to support amenities in the immediate area andwouldbeaccessibleandvisiblefromUSH169.HallettPondprovidessomeaesthetics(thepond and woods) while Traverse Mall is located immediately on 169. Both sites areconvenienttoaccessfromthroughoutSaintPeterandthosetravelingthroughonUSH169.The Dodd Avenue site has potential however at the present time, there are no supportamenities and it ismuchmore of a residential neighborhoodwith some industrial. TheSunriseDrivesiteoffersproximitytotheCollegeandthatisareasontoconsiderthissitehoweveraccessandvisibilityaremorechallengingtocapturethedrive-throughtrafficorfor those guests not familiar with Saint Peter; support amenities would be located indowntownSaintPeter(about¾mile)thatisaccessedfromBroadwayAvenue,alsoknownasSTH99.ThisroadextendstotheeastviaabridgeovertheMinnesotaRiver.Wedidnotconductresearchonanyofthesesitesotherthanreviewinformationthatwasprovidedtous. Additionalresearchwouldneedtobeconductedtochecktheparcels foravailability, size, zoning, cost, environmental issues, and infrastructure/utilities. Ourranking took into account a site thatwould attract andbe conveniently located for bothcorporateandleisuretravelers.AmapofthefourpotentialsiteswithinSaintPeterandasecondmapidentifyingthelocationofpotentialdemandgeneratorsfollow.

POTENTIALSITESFORPROPOSEDMIDSCALELIMITED-SERVICEHOTELSAINTPETER,MINNESOTA

POTENTIALDEMANDGENERATORSSAINTPETER,MINNESOTA

MARKETAREAOVERVIEWSaintPeter,MinnesotaandNicolletCountySaint Peter, Minnesota is located in the Minnesota River Valley 65 miles southwest ofMinneapolis/St.Pauland12milesnorthofMankatoonU.S.Highway169.Thecityservesasthe county seat forNicollet County and is home toGustavusAdolphus College, the secondlargestemployer. ThelargestemployeristheSt.PeterRegionalTreatmentCenter,thefirstpsychiatrichospital in thestateofMinnesota. Agribusiness isan important industryas thecityissurroundedby250,000acresoffarmland.ThecentralbusinessdistrictislistedontheNationalRegisterofHistoricPlacesandprovidesawidearrayofspecialtyshopsandeateries.Lightmanufacturingcompaniesarealsorepresentedinthecommunity. Demographics,BusinessandEconomicBaseAlthough there isnocorrelationbetween thesizeofanarea’spopulationand its leveloftransientvisitation,historicalandprojectedpopulation trendsoftenreflect theeconomicclimateofalocale.PopulationtrendsforthecitiesofSaintPeterandNorthMankato(over5,000 population), Nicollet County, and the state of Minnesota are presented in thefollowingtable. NicolletCounty includesthecommunitiesofSaintPeter,NorthMankato,Nicollet, Courtland, andLafayette, aswell as several townships. TheU.S. CensusBureauprovidesdataforcommunitieswithover5,000population.

PopulationEstimates

LocationCensus2010

Estimated2016

%Change2010-2016

SaintPeter 11,196 11,692 4.4%NorthMankato 13,394 13,619 1.7%NicolletCounty 32,727 33,575 2.6%

StateofMinnesota 5,303,925 5,519,952 4.1% Source:U.S.CensusBureauSaintPeter ispartof theMankato-NorthMankatoMetropolitanStatisticalArea (MSA).TheMSAhada2010populationof94,149andamorerecentpopulationofover98,000.Whilethecity of Mankato, the fifth largest city in the state of Minnesota outside of the Twin Citiesmetropolitanarea issituatedpartially inNicolletCounty, themajorityof thatcommunity islocatedinBlueEarthCountywithasmallportioninLeSueurCounty.According to theU.S. CensusBureau, themedianhousehold income in Saint Peter in 2015dollarswasestimatedtobe$55,280, inNorthMankatoitwas$55,440,inNicolletCountyitwasestimatedtobe$58,640,andinthestateofMinnesotaitwas$61,492.Labor forceestimates forNicolletCountyandtheMankato-NorthMankatoMSAfor2015and2016(annualaverage)and for themonthof June2017 ispresented in the followingtable:

12 LaborForceEstimates–2015,2016,andJune2017

NicolletCountyandMankato-NorthMankatoMSA,MinnesotaCategory AnnualAvg.2015 AnnualAvg.2016 MonthofJune2017

County MSA County MSA County MSALaborForce 20,151 59,808 20,337 59,230 20,159 59,384Employed 19,616 57,535 19,759 57,963 19,564 57,431Unemployed 535 1,695 578 1,845 595 1,953

Unemployment% 2.7% 2.9% 2.8% 3.1% 3.0% 3.3%Source:MinnesotaDepartmentofEmploymentandEconomicDevelopmentUnemployment rates for the state of Minnesota during these same time periods rangedfrom3.7percentto3.9percent.Severalcountiesfromthesouth-centralregionofthestateareamongthelowestunemploymentratesandareusuallyledbyNicolletandBlueEarthcounties. NicolletCounty’s lowunemploymentratecouldbesomecauseofconcernforanew business such as a hotel and may require employment to come from outside theCounty.The Current Employment Statistics (CES) for the month of June 2017 for the Mankato-NorthMankatoMSAispresentedinthefollowingtable.Abreakdownofindustrieswasnotavailable for the MSA on the Minnesota Department of Employment and EconomicDevelopmentnortheUSBureauofLaborStatisticswebsites.Wepresenttheinformationthatwasavailable.

CurrentEmploymentStatistics–June2017Mankato-NorthMankatoMSAIndustryTitle EmploymentTotalNonfarm 57,407TotalPrivate 47,468

Goods-Producingexcl.Ag. 10,347Service-Providing 47,060

PrivateServiceProviding 37,121Government 9,939

Source:MinnesotaDepartmentofEmploymentandEconomicDevelopmentAccording to theSaintPeterChamberofCommerce, the largestemployers inSaintPeterareasfollows:

13 LargestEmployers

SaintPeter,MinnesotaEmployer Product/Service #Employees

St.PeterRegionalTreatmentCenterCampus PsychiatricHospitals 1,155GustavusAdolphusCollege Education 700St.PeterPublicSchools Education 330

NicolletCounty Government 255AlumacraftBoatCo. Manufacturing 200

RiversEdgeHospital&Clinic Healthcare 175BenedictineLivingCommunity Healthcare 163

FamilyFreshMarket Grocery/Retail 148CreationTechnologies Semiconductors 140

CityofSt.Peter Government 124ScholarshipAmerica EducationalServices 120

Source:SaintPeterChamberofCommerceResourceGuideandChamberMemberDirectory2016According toGreaterMankatoGrowth, Inc., the topemployers in theGreaterMankatoareawith 1,500+ employees include Taylor Companies, Mayo Clinic Health Systems, andMinnesotaStateUniversityMankato;with500-1,499employees,thecompaniesincludeMRCIWorkSource,GustavusAdolphusCollege,MonarchHealthcare,LeSueurInc.,MankatoClinic,Verizon Wireless, and Wal-Mart Distribution Center; and with 240-499 employees, thecompanies include Davisco Foods, MTU Onsite Energy, Coughlan Companies, KatoEngineering,MICO,ConsolidatedCommunications,andEIMicrocircuits. TransportationU.S.Highway169andStateHighways22and99servethecityofSaintPeter.U.S.Highway169isamajornorth-southhighwayinthestateofMinnesotathatconnectstheRiverValleywith theTwinCitiesand the IronRange in the farnortheast sectorof the state. For themostpart,U.S.169isbuilttoexpresswayorfreewaystandardsexceptthesectioninSaintPeterwhere it is themainstreetthroughtown. StateHighway22isahighwayinsouth-centralandcentralMinnesota;theroutecrossestheMinnesotaRiverbetweenSaintPeterandKasota.StateHighway99isonly44mileslongandpassesthroughthecitiesofSaintPeterandLeSueur.TheMinneapolis-St.PaulInternationalAirport,locatedabout65milesnorthwouldbetheprimaryairserviceprovidertothosevisitingSaintPeter.TheMankatoRegionalAirportisowned by the city ofMankato and is a general aviation airportwith about 74 airplanesbasedattheairportcurrently. EconomicDevelopmentSaintPeter isoneof theoldestcities in thestateofMinnesotaandwas founded in1853.LocatedinsouthcentralMinnesota,SaintPeterispartofthefastgrowingMankato-North

14 Mankato MSA. Saint Peter and Nicollet County are members of the Regional EconomicDevelopmentAlliance(REDA),agroupformedwhensevencitiesandtwocountiesjoinedwith GreaterMankatoGrowth. The region is located in theMinnesota River Valley thatprovidesrivers, lakes, ravines,bluffs,naturalprairies,and forestedareas. Thereare fivehighereducationalinstitutionsinthisregionwithtotalenrollmentofabout26,000andthatincludes Gustavus Adolphus College in Saint Peter. The region offers a general aviationairport thatprovidesa trainingprogram for futurepilots. Transportationroutes includeU.S.Highways14,60,and169thatcarrygoodsthroughouttheMidwestandU.S.markets.Highway169, themainthoroughfarethroughSaintPetermovestheequivalentof30,000tons of freight by truck per day and it carries the fifth heaviest freight volume of anyhighwayinMinnesotabehindI-94, I-90, I-35,andU.S.Highway52. Theregionis locatedaboutonehoursouthofMinneapolis-St.Paul.There are four industries that are very strong in the region, agriculture,manufacturing,healthcare, andeducation. Capital investmentof about $580million tookplaceover theperiod2012-2015(latest figuresavailable)witha recordnumberofprojectsanddollarsinvested and committed for 2016-2017. The region is comprisedof 33percent primaryeconomy, 57 percent professional/service economy, and 10 percent retail/consumereconomy.There are several large public and private tax-exempt institutions that serve as majoremployers inSaintPeter. TheSt.PeterRegionalTreatmentCenter(SPRTC)wasthe firstpsychiatric facility in the state and plays an important role in the city’s economy.Employing over 1,100 people, the complex is comprised of three sections housingapproximately570patients.A$56millionrenovationandconstructionofnewresidentialandprogrammingfacilitieswascompletedinJanuary2017thatincluded36bedsincrisisandacute residentialunitsplus48beds in less-restrictive settings. This firstphasealsoincluded a new campus center offering a number of services. The second phase of therenovation/constructionprojectwasendorsedbyMinnesota’sgovernorandcouldamountto $70million thatwould take about two years to complete andwould include buildingnew residential units, reconstructing current split level units into single story spaces,remodelingotherlivingspaces,andbringingallfacilitiesuptobuildingcodestandards.ThesecondlargestemployerisGustavusAdolphusCollege,aSwedishLutheranliberalartscollegewith an enrollment of about 2,200 students (fall 2016) from across the U.S. andinternational. The College participates in NCAA Division III athletics and the MinnesotaIntercollegiate Athletic Conference (MIAC) in 23 sports. The annual Nobel Conferencebrings about 5,000 guests to Saint Peter each fall for a two-day conference with wide-rangingcurrentandrelevanttopicsdiscussedeachyear;theCollegehashostedthisofficialconferencesince1965,whichhas theauthorizationofTheNobelFoundation,Stockholm.Christmas inChristChapelattractsabout1,200people foreachof the fiveperformancesheldinearlyDecemberasacelebrationoftheChristmasseason.Othernotablesignatureevents that could bring visitors to campus/Saint Peter include Artist Series, BuildingBridges,Commencement,TheFestivalofSt.Lucia,andMAYDAYPeaceConference.

15 Other education related employers include Scholarship America and Minnesota SchoolBoardsAssociation.The currentRiver’sEdgeHospital&Clinicopened in2004with17bedsas theSt. PeterCommunityHospital and changed its name in 2008 to River’s EdgeHospital. In 2009 a25,000squarefootmedicalofficebuildingopenedandisconnectedtothehospital;todaybothMankatoClinicandMayoClinicleasethespace.In2014,River’sEdgepartneredwiththe Orthopaedic & Fracture Clinic to form a knee and joint replacement program calledOrthoEdge. It is estimated that 20 knee surgeries are performed weekly. In 2016, apartnershipwiththeMankatoClinicbroughtadermatologyclinictoSaintPeter.ThereareseveralseniorhousingandcontinuumofcarefacilitieslocatedinSaintPeter.River’sEdgeHospitalhasdiscussedexpandingthenumberofbedsto25;nofurtherdetailsareavailableastothetimingofthisexpansion.There is a number of lightmanufacturing companies in Saint Peter located in theNorthIndustrial Park including Alumacraft Boat Co., Creation Technologies, GEO Boy/JaraffIndustries, andE.I.Microcircuits. Agriculture inNicolletCounty is a significant industry.Thecounty’scashreceiptsduetoagricultureareupwardsof$400millionaccordingtotheMinnesota Department of Agriculture. The county ranks 20th in the state in totalagriculturalproductionand34thincropproduction.Thetopagriculturalrankingisintheporkindustry,ranking4thinthestatein2015. TourismBounded by the Minnesota River and surrounded by scenic bluffs, Saint Peter has thenaturalresourcestooffertheoutdoorenthusiastaswellasthosevisitorsseekinghistoricandculturalstructure.EightmilestothewestofSaintPeteristheSwanLakeWildlifearea,whichisoneofthebestnaturalwildlifepreservesinthecountry.Thereareseveralnearbylakesofferingfishing,camping,boating,andhuntingaswellasotheryear-roundactivities.SaintPeterhas17parkswith the11-acreMinnesotaSquareParkhostingevents like theannualFourthofJulycelebration.Artsandentertainment isa largepartofSaintPeter. TheArtsCenterofSaintPeterandHillstromMuseumofArtontheCollege’scampusalongwiththeirtheater,musicanddancedepartmentsoffereventsandperformances.HistoricplacesincludetheTreatySiteHistoricalCentermuseum,theHistoricE.St. JulienCox House, and a number of other buildings on the historic tour. Approximately 37buildingsalongU.S.Highway169betweenBroadwayAvenueandGraceStreetarelocatedinthecommercialdistrictofdowntownSaintPeter.ThecommercialdistrictwasaddedtotheNationalRegisterofHistoricPlacesin2001.AnotherattractionisSaintPeter’sPearlyGatesthatisborderedbythehighriverbluffs.

16 Festivalsandeventsinclude:

• St.Patrick’sParade–March• KeyCityKennelClubDogShow–May• MNHighSchoolRodeoChampionship–June• AmbassadorsBlues–June• BendoftheRiverFestival–June• OldFashionedFourthofJulyCelebration• NicolletCountyFair–August• RockBendFolkFestival–September–12,000attendeesovertwodays• AutoRestorer’sCarShow/SwapMeet–September• ChristmasinChristChapel–December

The Nicollet County Fairgrounds host the annual county fair each August and featuresagricultural exhibits, animals, rodeo, demolition derby, tractor pull, and carnival rides.Other events held at the fairgrounds includeWinter Slam, theAutoRestorers Car Show,dog shows in May and September, horse shows in August and September, and theMinnesotahighschool rodeochampionships in June. On thegrounds is JohnsonHall, anenclosedlarge,openspaceforseatingofupto500peopleanditisdivisibletoholdsmallergroups. There is a catering kitchen and plenty of parking. This is a popular venue forweddingsyear-roundandChristmasparties.“New”eventspaceisbeingplannedfortheoldSt.PeterArmoryindowntownSaintPeter.Thebuilding,whichopenedin1913,islistedontheNationalRegisterofHistoricPlacesandhasbeen renamedTheCapitolRoom. Themainballroomwill contain4,100 square feetandcouldaccommodateupto300people.Asecondspaceofabout3,000squarefeetwillalsobeavailable. ThefirsteventisscheduledforthelatterpartofSeptember2017. Thevenuewill focusonweddingsalthough thevenuewillbeable tohostavarietyofeventsbasedonitssize.VenuesforweddingsandsocialgatheringsalsoincludetheShorelandGolfCourse.This18-holesemi-privategolfcourseissituatedonLakeEmilyandoffersbanquetfacilitiesfor25-250people. TheSt.PeterCommunityCentercanalsoaccommodatemeetingsandsocialgatheringssuchasbridalshowers,graduationparties,andopenhouses.OutsideofSaintPeter,inKasota,istheChankaskaCreekRanch&Winery.Thiswineryanddistillery offers six venues for weddings and other events such as receptions, birthdayparties, showers, corporate functions, and others. This facility is located south of SaintPeteralongHighway22andisapotentialsourceofdemandforanewhotel,astherearenohotelslocatedinKasota.Thenearby communities of Cleveland andKasota feature festivals and events that couldgenerate demand for a hotel. The greaterMankato area generates tourist demand fromattractions,events,andfestivalsincludingtheMinnesotaVikingstrainingcampheldinJuly

17 and August at Minnesota State University. The Verizon Center in downtown MankatoopenedinSeptember2016withabout75,000squarefeetofmeetingspaceincludingeventspaceandanarena.Overall,SaintPeter,NicolletCounty,andthesurroundingareaofferanumberofattractionsand events for tourists. The strength of the economy in Saint Peter and the greaterMankatoregionincludingnearbycommunitiesbodeswellforfuturehoteldevelopment.SaintPeter'slocationwithinthestateofMinnesotaisshownonthefollowingmap.

REGIONALLOCATION–75MILERADIUSSAINTPETER,MINNESOTA

HOTELSUPPLYANDDEMANDANALYSIS LodgingSupplyAtthepresenttime,therearefourlodgingpropertieslocatedinSaintPeterasshowninthefollowingtable.

ExistingLodgingSupplySaintPeter,Minnesota

Property PropertyType NumberofRooms

YearOpened/Changed

RackRates*Weekday/Weekend

AmericInnHotel&Suites

Midscale 50 1988 $92.90/$114.90

VikingJr.Motel Economy 20 1998 $60.00/$60.00St.PeterMotel Economy 13 NA $50.00/$50.00KonsbruckHotel Boutique 5 1895/2013 $159.00/$159.00

Total 88 *Rackratesarebasedonratespostedontheproperty’swebsiteonaparticulardayforafuturedate.WeconductedresearchonAugust10,2017forTuesday,August22andSaturdaySeptember9Source:PatekHospitalityConsultants,Inc.andpropertywebsitesAsthetableshows,thereisawiderangeofpropertytypesandrackratesintheSaintPetermarket,rangingfromeconomytoahigherendboutiquehotelofferingonlyfiveguestrooms.In our opinion, theAmericInnHotel& Suiteswould be themost direct competitor for theproposed hotel based on its facilities and amenities offered, its chain affiliation, productquality, and rack rates. The Viking Jr. and St. Peter Motels would not be consideredcompetitiveduetotheirlowerratestructureandmarketorientationtowardthemorepriceconscioustravelerincludinglowerratedcontractbusiness.TheKonsbruckHotelwouldoffersomecompetitionas it isauniqueproperty type,offersaqualityproduct,and is located indowntownSaintPeter.Withonlyfiveguestrooms,thesizeofthepropertywouldminimizecompetitiontoanewhotel.Mankato and North Mankato offer 15 hotels with 1,226 guest rooms. For informationalpurposesonly,weprovideatableidentifyingthehotelpropertiesinthesetwomarkets.Allofthehotelsare located inMankatowith theexceptionof theBestWestern that is located inNorthMankato.

20 LodgingSupply

MankatoandNorthMankato,MinnesotaProperty ParentCompany PropertyType Numberof

RoomsYear

Open/ChangeCountryInn&

SuitesCarlson UpperMidscale 101 1998

MicrotelInn&Suites

Wyndham Economy 59 2005

MankatoCityCenter Independent Midscale 150 1979/2009HolidayInnExpress

&SuitesIHG UpperMidscale 88 2009

RiversHillsHotel&Suites

Independent Midscale 53 2003/2015

FairfieldInn Marriott UpperMidscale 61 1997HiltonGardenInn Hilton Upscale 118 2007

DaysInn Wyndham Economy 50 1989RiversideSuites Independent Economy 60 1991/2013

Super8 Wyndham Economy 60 1976BaymontInn Wyndham Midscale 56 1994/2015Courtyard Marriott Upscale 93 2012BudgetHost BudgetHost Economy 52 2000

AmericInnHotel&ConferenceCenter

AmericInn/Wyndham* Midscale 80 1997

BestWesternNorthMankato

BestWestern Midscale 145 1969/1987

Total 1226 *Note:AmericInnisintheprocessofbeingacquiredbyWyndhamHotelsInternationalSource:STR,Inc.andPatekHospitalityConsultants,Inc.The Mankato hotel market ranges from economy to upscale properties. Three of theproperties are independent while the remaining 12 properties are affiliated with nationalhotelchains.Wyndhamhotelbrandsarewellrepresentedinthismarketwithfourandsoontobefivehotelsunderthisparentcompany.MuchofthehotelproductintheMankatomarketareaisolderwiththenewesthotelbuiltin2012,theCourtyardbyMarriott.TherehavebeensomeconversionsofpropertiesinrecentyearsliketheBaymontInnthatwaspreviouslytheQualityInn,aChoiceHotelbrand.Inouropinion,MankatohotelsarecapturingdemandfromSaintPeterduetothe limitedsupply of quality hotel rooms that corporate and leisure guests visiting the communitydesire. Both the AmericInn Hotel & Suites and the Konsbruck Hotel offer qualityaccommodations. The Viking Jr. Motel and St. Peter Motel offer accommodations that,whileclean,aremoresuitedtothepriceconsciousandcontracttraveler. Becausetwoofthe four lodging properties are notmeeting the needs of themajority of the Saint Petervisitors,webelievethatanewhotelofabout60guestroomsinSaintPeterwouldinducedemand that is now staying inMankato. Webelieve theMankatomarket could provideoverflowdemandforanewhotelinSaintPeterandthisisdiscussedinalatersection.

21 We have prepared a competitive property profile describing the features of the existinglodgingsupplyinSaintPeter,followedbyalocationmap.

LODGINGSUPPLYSAINTPETER,MINNESOTA

AdditionstoSupplyDuringthecourseofourresearch,welearnedofnootherhotelsproposedfortheSaintPetermarket.AreaRoomDemandHotelroomdemandiscategorizedas“demonstrated”demand,orthatdemandwhichcanbequantifiedbyexaminingoccupanciesatexistinghotels;“unsatisfied”demand,orthatdemandwhich is turned away or denied at existing hotels because of capacity limits and findingaccommodationsoutsidethedefinedcompetitivemarket;and“induced”demand,definedasthatdemandwhichdoesnotnowseekaccommodationsinthemarketbutwhichwould,givenanacceptablequalityhotel, thepropersaleseffortsandtheavailabilityofadditionalroomssupply.Inthismarket,allthreetypesofdemandhavebeenevaluated.Thedemandgeneratorinterviewsandphonecallsthatwereconductedduringourfieldworkandsubsequentresearchwereutilizedinestimatingourdemandfortheproposedhotel.Inconducting market research for a project such as the subject property, we believe it isimportanttoconductdemandinterviewswithcompaniesandorganizationsthatarepotentialgeneratorsofhotelroomdemand. These interviewsprovideuswith insight intothetravelvolume,needs,hotelpreferences,desiredroomrates,andtypesoftravelers(i.e.executives,salesreps,vendors,etc.)foreachorganizationandnotnecessarilythenumberofroomnightsthatacompanycouldgenerate. This isaverydifficultnumbertoquantifybecausethereisusually more than one person that makes reservations for out-of-town visitors or thecompany/organizationdoesnottrackthisinformation.Theinterviewsalsohelpusgaugetheprospective interest in the proposed hotel and provide helpful input for the facilities,amenities,andservicesdesiredfortheproperty.Our demand interviews were conducted upon completion of our fieldwork and prior toissuing ourPhase I letter. The companies/institutionswe spokewith includedAlumacraftBoats, E.I. Microcircuits, Creation Technologies, Gustavus Adolphus College, River’s EdgeHospital & Clinic, Saint Peter School District, Nicollet County Fairgrounds, ScholarshipAmerica,andCambriaUniversity. MessageswereleftwithJaraff IndustriesandSaintPeterRegionalTreatmentCenter(SPRTC).OurdemandinterviewsindicatedthatthemajorityofthehotelusersarepleasedwiththeAmericInnHotel&Suitesasahoteloption inSaintPeteralthoughtheywould liketoseeadditionalchoicesfor lodging. Theyalso indicatedduringpeakperiodsofdemand,therearenoroomsavailableatthis50-roompropertyandtheyareforcedtotraveltoMankato.Demand is generated by weekday corporate, College graduation, the Nobel Conference,SynodConvention,Homecoming,sportscamps,weddings,collegeandhighschoolathletics,orthopedicsurgeries,recruiting,training,eventsandfestivalssuchasNicolletCountyFair,Winter Slam, auto restorers, dog and horse shows, construction workers, and potentialoverflowfromMankato.Thesearejustsomeofthepotentialdemandgeneratorsthatwerementioned during our interviews (not an all inclusive list). While the local industrygeneratessomeweekdaydemand,CambriaUniversity,RiversEdgeHospital&Clinic,and

25 GustavusAdolphusCollegehavethepotentialtogenerateweekdaydemandthroughouttheyear. While we did not speak with SPRTC, we would estimate that they have medicalprofessionalsandothersvisitingonaweeklyornearlyweeklybasisaswellasvisitorsofthepatientsthatmaycomeonweekends.There isseasonalityofdemand inSaintPeterwiththesummermonthsandweekends ingeneralgeneratinghigheroccupancy. TheslowerperiodsofdemandarefromNovemberto March and that is typical for Midwest hotels. It is always a challenge for lodgingpropertiesduringthistimeandthatiswhyafranchisewithagoodreputationandasolidmarketing plan, reservation system, and frequent guest program is so important. Inaddition,apropertywithgoodmanagementisalsoessential.Wewereprovidedlodgingtaxinformationfortheyears2014-2016andyear-to-datethroughJune2017forthefourpropertiesinSaintPeter.Thefollowingtableshowstotalreceiptsforthefourpropertiesbymonth,whichshowstheseasonalityofdemandinthismarket.

LodgingTaxReceiptsMonth 2014 2015 2016 2017January $69,770 $62,566 $65,717 $90,654February 88,843 81,237 80,907 76,390March 83,683 81,182 80,818 96,404April 93,065 100,740 100,667 117,454May 110,395 107,924 113,349 120,091June 124,547 125,062 136,341 135,141

YTDJune $571,303 $558,711 $577,799 $636,134%Change -- (2.2%) 3.4% 10.1%

July 131,548 140,012 134,421

August 127,950 135,212 132,133 September 122,150 121,114 124,212 October 132,039 123,750 129,467 November 77,806 73,120 102,239 December 66,853 70,580 97,025

Total $1,228,649 $1,222,501 $1,297,296

%Change -- (0.5%) 6.1% --

RevPAR $38.25 $38.06 $40.39 RevPAR=RevenuePerAvailableRoom(occupancyxaveragedailyrateADR) Source:CityofSaintPeter,MNThe months of April through October are consistently stronger in this hotel market ascompared to the months of November to March. Total receipts were up in 2016 by 6.1percentover thesame12-monthperiod in2015. Year-to-date through June2017,receiptswereup10.1percent over the same six-monthperiod in2016. It is estimated theoverallmarketperformsinthelowtomid50spercentrangeinoccupancy.Itshouldbenotedthat

26 this estimate includes all four properties thatwe described earlier in this section. One ofthese properties we estimate performs much better than the estimated market averageoccupancyandthiswasconfirmedduringourtelephoneconversationwiththisproperty.PROJECTEDMARKETPOSITIONANDPENETRATIONOFTHEPROPOSEDHOTELMethodologyandAssumptionsWe assessed the prospective competitive status of the Subject hotel as compared to thedefined competitive lodging supply and as it will be affected by such factors as location,setting,natureandqualityoffacilities.Themethodologyusedinthisanalysisconsideredthefactors that we believe could influence the prospective success of the proposed midscalelimited-servicehotel.

• Saint Peter is locatedwithin south centralMinnesotawithin the growingMankato-NorthMankatoMSA.

• Thehotelwillbeaffiliatedwithanationalhotelbrandwithagoodreservationsystem

andguestloyaltyprogram.Thebrandistobedeterminedandthiswillbediscussedinaseparatelettershouldyourequireit.

• ThehotelproductinSaintPeterisamixofpropertytypeswithtwooftheproperties

servingthepriceconsciousandcontractdemand.Webelievethereisdemandthatisleaving the market and staying in Mankato or choosing not to stay in Saint Peterbecausethecurrentpropertiesarenotmeetingtheirneeds(eitherduetoavailabilityorproducttype).Withabrandnewhotelofferingqualityfacilitiesandamenities,webelievealargeportionofthisdemandwouldlikelyreturntostayinSaintPeter.

• Wediscussed foursites for thecityofSaintPeter toconsider forhoteldevelopment

and all have their strengths and weaknesses. We also believe that considerationshouldbegivenforalocationindowntownSaintPeter.

To project occupancy for the proposed hotel we considered the property’s recommendedfacilities, services, and amenities; the site’s location; the competitive properties and thecompetitiveenvironmentinwhichthehotelwilloperate.Theadvantagesanddisadvantagesof thesitewerediscussed in theSiteAnalysissectionof thisreport. Otheradvantagesanddisadvantages, aswell as other factors thatwill influence the property’s ability to capturemarketdemand(andthereforeachievetheprojectedoccupancyandADRlevels)are:1. TheSubjectHotelwillbeopenwithin18-24monthsofthedateofthisstudy.Ifthehotel

openingisdelayed,ourestimatesregardingfutureperformancecouldbeaffected. Ourestimateswerebasedonacalendaryear.

27 2. TheSubjectHotelwillfeature60guestroomsandsuitesandwillincludetheamenities

andfacilitiesdiscussedintheProjectConceptsectionofthisreport.3. Areputableandexperiencedhotelmanagementcompanywilloperatethehotelandthe

propertywillbeaffiliatedwithanationalhotelcompany.4. TherearenootheradditionstosupplythatweareawareofforSaintPeter.Ifadditional

hotelsenterthemarketduringourprojectionperiod,ouroccupancyandaveragedailyrateestimatesfortheproposedhotelcouldbeimpacted.

EstimatesofMarketMixMarket mix discusses the segments of demand that the proposed hotel could capture.Typically,thesesegmentsarebrokenoutintothreecategoriesincludingCorporateIndividual,Group/SMERF, andTourist/Other. The followingparagraphsdiscuss these three segmentsand our estimate of room nights captured in each segment. The number of room nightscaptured in each segment is calculatedbasedon thenumberof roomnights occupied in astabilizedoccupancy (which is estimated tooccur in the thirdyearofoperation) times theestimatedpercentageofeachsegment.Forexample,thehotelwillhave21,900roomnightsavailable in a year (60 rooms x 365 days = 21,900). We estimate the hotel to achieve 65percent occupancy in the third year of operation so 21,900 x .65 =14,235 room nightsoccupied.WeestimatethesegmentationofdemandfortheSubjecthotelinastabilizedyeartobeasfollows:

EstimatedMarketMixandRoomNights–StabilizedYearProposedMidscaleLimited-ServiceHotel

SaintPeter,MinnesotaSegment PercentofTotal RoomNights

CorporateIndividual 38.0% 5,409Group/SMERF 7.0 997Tourist/Other 55.0 7,829

Total 100.0% 14,235 Numbershavebeenrounded Source:PatekHospitalityConsultants,Inc.Corporate Individual –Corporate individual isdefinedas those individual travelersdoingbusinesswiththelocalcompaniesinamarketincludingthosecompaniesthatwediscussedearlierinthissection.WebelievethatanewhotelinSaintPetercouldalsoinducecorporatedemand from the surrounding communities due to either no lodging available in thosecommunitiesor theexistingproductdoesnotmeet theneedsof thecorporatebase. Ourprojections for this demand segment are for approximately 5,409 room nights to beaccommodated at the Subject hotel in the stabilized year of operation (third year), whichrepresentsapproximately38.0percentofthehotel’soverallcapturedroomnights.

28 Group/SMERF - SMERF (social, military, educational, religious, fraternal) groups are thelikelydemandgeneratorsinthissegmentandtheseroomnightsaremostlygeneratedduringthe summermonths or onweekends. Weddings, reunions, and other social eventswheregroupsofpeoplearebookingablockofroomswouldmakeupthelargestpercentageofthissegment. This segment also includes corporate groupmeetings althoughwe estimate thiswouldaccountforasmallernumberofroomnights.Someofthecompaniesindicatedtheydohostannual/quarterlymeetingsorwouldbringpeopleinfortrainingandthistypeofdemandwould be included in this category. Our projections for this demand segment are for 997roomnightstobeaccommodatedattheSubjecthotelinthestabilizedyearofoperationandrepresentsapproximately7.0percentofthehotel’soverallcapturedroomnights.Tourist/Other-thissegmentiscomprisedofindividualtravelersthatarevisitingforsocialreasonswhetherforsportingevents,festivals,visitingfamily,fairgroundevents,orattendingfunctions such as weddings or funerals. Commencement and other events discussedpreviouslyatGustavusAdolphusCollegewouldcreatetouristdemand.Orthopaedicsurgeriesconductedatthehospitalareincludedinthissegmentasarefamilyandfriendsvisitinglocalresidents.U.S.Highway169isawell-traveledhighwaythatcouldbringwalk-intrafficaswellas visitors thatmake reservations aheadof timeas they travelnorthor south through thestateofMinnesotaandconnectwithothermajorhighways. The indoorpool couldalsobeusedtomarketthehoteltothelocalresidentsforweekendgetawaysandothersocialeventssuch as birthday parties, reunions, etc. The proposed hotel is expected to accommodateapproximately 7,829 room nights in the stabilized year of operation that representapproximately55percentoftotaldemand.Extended-Stay–Wedidnotbreakoutextended-staydemandbutrather includedit inourcorporate individual or tourist/other segments, aswe don’t believe it will be a significantsourceofdemandfortheproposedhotel.Extended-stayisgenerallydefinedasstaysoffivenightsormore.ProjectedOccupancyandAverageDailyRate(ADR)We have chosen to use a stabilized occupancy of 65 percent, which we believe will beachieved in the thirdyearofoperation. Thestabilizedoccupancy is intended toreflect theanticipatedresultsofthepropertyoveritsremainingeconomiclife,givenanyandallchangesinthelifecycleofthehotel.Therefore,thestabilizedoccupancyexcludesfromconsiderationanyabnormal relationof supplyanddemandaswell as any favorableorunfavorablenon-recurring conditions that may result in unusually high or low occupancies. Although theSubject hotelmay operate at occupancies above this stabilized level, we believe it equallypossible for new competition and temporary economic downturns to force the occupancybelowthisanticipatedstabilizedlevel.Based on the rate structures at the competitive facilities and their locations, quality levels,chain affiliations, services and facilities offered in comparison to the proposed hotel, weestimatetheproposedmidscalelimited-servicehotelwillbeabletoachieveanaveragedaily

29 roomrateof$95.00inthefirstyearofoperation.Itisouropiniontheproposedhotelwillbeable to compete very favorablywith theotherhotels in themarket aswell as someof thequalityhotelslocatedinMankatobecauseitwillbeabrandnewhotel.The projected rate takes into account rack rates, discounted rates offered to preferredcustomers,transientdiscountedrates,andfranchisecorporaterates.Italsoconsidersthemixof demand and achievable rate by market segment. The proposed hotel’s ADR will beinfluencedbythemixofdemandandcanbemaximizedbycarefulbalanceofroomavailabilityand corporate individual, group, and tourist/leisure demand. Rack rates for the proposedhotelareestimatedtorangefrom$79.00-$139.00dependingonthedemandsegment,timeofyear,androomtype.Inordertoestimateanoccupancyandaveragedailyratetrendfortheproposedmidscalelimited-service hotel over the first five years of operation, we estimated monthlyoccupancyandADRtrendsbasedonourknowledgeoftheSaintPetermarket,thelodgingtax information provided to us, the demand segments discussed in this report and thepatternsofdemandbasedonourdemand interviews, aswell asourexperience inotherMidwest markets. The following table presents occupancy, ADR, and revenue for thestabilizedyear(thirdyearofoperation)fortheproposedhotel. Theinformationisbasedon60rooms,365days,65.0percentstabilizedoccupancy,anda$95.00ADRinthehotel’sfirstyearofoperation,inflated3.0percentannuallyandrounded.

ProposedMidscaleLimited-ServiceHotel–SaintPeter,MinnesotaPerformanceEstimatesinaStabilizedYear(thirdyearofoperation)

Month RoomsAvailable

Occupancy RoomsOccupied

AverageDailyRate

Revenue

January 1860 50.0% 930 $91.00 $84,630February 1680 50.0 840 91.00 76,440March 1860 55.0 1023 96.00 98,208April 1800 55.0 990 96.00 95,040May 1860 70.0 1302 111.00 144,522June 1800 85.0 1530 115.00 175,950July 1860 85.0 1581 115.00 181,815

August 1860 85.0 1581 111.00 175,491September 1800 75.0 1350 96.00 129,600October 1860 65.0 1209 95.00 114,855November 1800 50.0 900 85.00 76,500December 1860 50.0 930 85.00 79,050

Total/Average 21900 65.0% 14166* $101.00 $1,432,101**NumbersmaynotaddduetoroundingSource:PatekHospitalityConsultants,Inc.

30 The following occupancy, average daily rate, and RevPAR are projected for the proposedmidscalelimited-servicehotelbasedona12-monthperiod.

Projections–ProposedMidscaleLimited-ServiceHotelSaintPeter,Minnesota

Year Occupancy ADR RevPAR*Year1 55.0% $95.00 $52.25Year2 60.0 98.00 58.80Year3 65.0 101.00 65.65Year4 65.0 104.00 67.60Year5 65.0 107.00 69.55

*RevPAR=RevenuePerAvailableRoom(occupancyxADR) Source:PatekHospitalityConsultants,Inc. CONCLUSION Based on our market research and the information presented in this report, it is ouropinion thatdevelopmentofa60-roommidscale limited-servicehotel ismarket justifiedandwouldbewellsuitedfortheSaintPeter,Minnesotamarket.Ourassumptionsarebasedonthehotelbeingaffiliatedwithanationalhotelcompanywithastrongreservationsystemandguest loyaltyprogramaswellasanaggressivesalesandmarketing effort in place prior to the hotel’s opening and aggressive and competentmanagement once the hotel is open. We have assumed that the local economy willcontinuetoexperiencesteadyandhealthygrowththatwillcontinuetobringcorporateandleisure visitors to Saint Peter, Nicollet County, and the MSA. Should any of theseassumptions not occur as projected or if unforeseen circumstances occur locally or on anationallevel,ourestimatescouldbenegativelyaffected.

31 PROJECTIONSOFINCOMEANDEXPENSEMethodologyInordertoprojectfinancialoperatingresultsfortheproposedmidscalelimited-servicehotel,wehaveinourfilesacustomHOSTReportprovidedbySTRAnalytics,aSTR,Inc.company.Ourcriteriaincludedlimited-servicehotelslocatedintheMidwestwith60roomsorlesswithorwithout a national franchise. Themajority of the propertieswere chain affiliated. TheHOST Report included 15 hotels with 873 rooms located in the Upper Midwest states ofIllinois, Indiana, Iowa, Michigan, Minnesota, and Wisconsin. The custom HOST Reportpropertiesachievedoccupancyof66.5percentandanADRof$99.58in2016ascomparedto68.0percentand$96.60in2015.Theaveragesizepropertyforthecontributingpropertieswas58rooms.Wealsousedthe2017(2016data)HOSTAlmanacbySTRAnalyticsforlimited-servicehotelsthroughouttheU.S.ThecategorieswereferencedincludedtheWestNorthCentralregionofthecountry(thatincludesthestateofMinnesota),aSmallMetro/TownLocation,andUpperMidscaleandMidscale/Economyclass(basedonaveragedailyrate).Inadditionwereferredtoactualfinancialoperatingstatementsinourfiles.The following paragraphs provide a brief explanation of the basis used to prepare theprojectionforeachlineitem.DataispresentedasvariousinputformssuchasPerAvailableRoom (PAR), Per Occupied Room (POR), or Ratio to Sales. Critical factors for the variousproperties were taken into consideration when reviewing the comparable data andadjustmentsforthesubjecthotelweremadebasedonlocation,facility,occupancyandrate,andotherrelevantoperationalissues.Allamountshavebeenroundedtothenearestthousanddollarsandaccountclassificationsforthehotelcomponentconformtothedefinitionsprescribedbythe11threvisededitionoftheUniformSystemofAccountsfortheLodgingIndustry.InflationandGrowthinRevenuesandExpensesOur projections incorporate an estimate of general price inflationbasedupon econometricprojections fromvarioussources, temperedbyourobservationsandexpectationsbasedonhistoricalperspectivesbothlocallyandnationally.Toportraypricelevelchanges,wehaveassumedaninflationrateof3.0percentthroughoutour projection period. Overall, the 3.0 percent rate reflects our long-term outlook for thefuturemovementofpricesintheareaandisintendedonlytoportrayanexpectedlong-termtrendinpricemovements,ratherthanforaspecificintervalintime.Ourgrowthassumptionsfor average rate have been presented previously in this report, and all other line itemexpensesareprojectedtoincreaseatthelevelofgeneralinflation.

32 On the following pages, we provided information for various categories from the customHOSTReport for2015and2016aswellas fromthe2017HOSTAlmanac. For thesesamecategories, we provided our estimate in a stabilized year (third year of operation) for theproposedhotel.DepartmentalRevenuesandExpensesRoomsDepartment: Roomrevenueisestimatedbymultiplyingtheoccupancyratebytheaveragedailyrate(ADR)projectedintheHotelSupplyandDemandsectionofthereport.Theoccupancies, average daily rates and resulting room revenue projected for the hotel aresummarizedasfollows:

ProjectedPerformanceProposedMidscaleLimited-ServiceHotel

SaintPeter,MinnesotaYear Occupancy ADR RevPAR RoomRevenueYear1 55.0% $95.00 $52.25 $1,144,300Year2 60.0 98.00 58.80 1,287,700Year3 65.0 101.00 65.65 1,437,700Year4 65.0 104.00 67.60 1,480,400Year5 65.0 107.00 69.55 1,523,100

*Estimatedopeningassumedwithin18monthsofthedateofthisstudy Source:PatekHospitalityConsultants,Inc.RoomsDepartment expenses include payroll and related costs associatedwith the frontdesk and housekeeping, operating supplies, laundry, linens, guest supplies, complimentarybreakfast,cabletelevision,andotheritemsnecessarytomaintainguestrooms.

RoomsExpenseCategory Limited-ServiceHotels

POR RatiotoSales

WestNorthCentralRegion $22.41 23.8%SmallMetro/TownLocation $24.31 23.9%

UpperMidscaleClass $30.58 25.0%Midscale/EconomyClass $14.43 20.1%

CustomHOST2015 $28.15 29.1%CustomHOST2016 $29.33 29.5%

PHCEstimate(Stabilized) $22.22 22.0% Source:HOSTAlmanac,STR,Inc.,PatekHospitalityConsultants,Inc.FoodandBeverage:Theproposedmidscalelimited-servicehotelwillnotofferarestaurant.ExpensesassociatedwiththecomplimentarybreakfastareincludedintheRoomsExpense.

33 MiscellaneousIncomeandExpense:Thiscategoryiscomprisedofpantrysales(foodandsundry),interestincome,vendingmachinecommissions,guestlaundry,meetingroomrental,telephone, and other miscellaneous income. We estimated Miscellaneous Income to be$20,000 in the first year, which equates to $1.66 per occupied room. The correspondingexpenseof40.0percentisreflectedthroughouttheprojectionperiod.UndistributedOperatingExpensesOperating expenses that are not chargeable to a particular operating department arepresentedasundistributedoperatingexpensesinaccordancewiththe11thRevisedEditionoftheUniformSystemofAccountsfortheLodgingIndustry.Theseexpensesarediscussedinthefollowingparagraphs.Administrative andGeneral (A&G): This category covers expenses such as salaries andwagesformanagementstaff,bookkeeping,creditcardcommissions,dataprocessingcharges,property management system, corporate office charges, office supplies, legal, accounting,allowanceforbaddebts,travelexpenses,licensesandpermits,andsimilaritems.

A&GExpenseCategory Limited-ServiceHotels

PAR RatiotoSales

WestNorthCentralRegion $2,443 9.6%SmallMetro/TownLocation $2,282 8.7%

UpperMidscaleClass $2,869 8.5%Midscale/EconomyClass $1,923 9.9%

CustomHOST2015 $2,620 10.8%CustomHOST2016 $2,639 10.7%

PHCEstimate(Stabilized) $2,758 11.3% Source:HOSTAlmanac,STR,Inc.,PatekHospitalityConsultants,Inc.Information and Telecommunication Systems: This category includes the cost ofmanagement informationsystemservices, supplies,andequipmentaswellas theexpensesassociated with the maintaining these systems. These systems also includetelecommunicationsystemssuchaslocal,longdistance,andInternetcommunications.Inthethirdyearofoperation,thisexpensewasestimatedtobe$20,400or$340peravailableroom.Marketing: Marketing expenses include local advertising, the cost of printing brochures,salaries, entertainment, dues and subscriptions and other related items. This expenseexcludesFranchiseFees.

34 MarketingExpense

Category Limited-ServiceHotels PAR Ratioto

SalesWestNorthCentralRegion $1,313 5.1%SmallMetro/TownLocation $1,112 5.2%

UpperMidscaleClass $1,686 5.0%Midscale/EconomyClass $717 3.7%

CustomHOST2015 $687 2.8%CustomHOST2016 $702 2.9%

PHCEstimate(Stabilized) $884 3.6% Source:HOSTAlmanac,STR,Inc.,PatekHospitalityConsultants,Inc.FranchiseFees: Franchisefeeswereestimatedtobe5.5percentofroomsalesthroughouttheprojectionperiod,whichequatesto$63,000.Sinceabrandhasnotbeenidentifiedfortheproposedhotel,weusedanaverageof5.5percentbasedonvarioushotelbrands.Franchisefees include royalty fees and advertising assessments charged by franchise companies.According to HVS International, “all franchisors collect a royalty fee, which representscompensation for the use of the brand’s trade name; service marks and associated logos;goodwill;andotherfranchiseservices.Royaltyfeesrepresentamajorsourceofrevenueforafranchisorandarecalculatedbasedonapercentageofroomsrevenue”.UtilityCosts:Utilitycoststendtofluctuatebasedonlocation,weather,sizeofhotel,facilitiesandamenitiesoffered,andotherfactors.

UtilityCostsCategory Limited-ServiceHotels

PAR RatiotoSales

WestNorthCentralRegion $1,091 4.3%SmallMetro/TownLocation $1,137 4.3%

UpperMidscaleClass $1,251 3.7%Midscale/EconomyClass $997 5.1%

CustomHOST2015 $1,059 4.4%CustomHOST2016 $1,067 4.3%

PHCEstimate(Stabilized) $1,167 4.8% Source:HOSTAlmanac,STR,Inc.PatekHospitalityConsultants,Inc.Property Operations andMaintenance: Property operations and maintenance expensesincludesalariesandwages,employeebenefits,normalmaintenanceofthebuilding,pool,andgroundsincludingelectricalandmechanicalequipment,landscaping,andwasteremoval.

35 PropertyOperations&MaintenanceExpense

Category Limited-ServiceHotels PAR Ratioto

SalesWestNorthCentralRegion $1,291 5.1%SmallMetro/TownLocation $1,298 5.0%

UpperMidscaleClass $1,536 4.6%Midscale/EconomyClass $1,088 5.6%

CustomHOST2015 $1,271 5.2%CustomHOST2016 $1,227 5.0%

PHCEstimate(Stabilized) $1,379 5.7% Source:HOSTAlmanac,STR,Inc.,PatekHospitalityConsultants,Inc.Management Fees: A management fee of 4.0 percent of gross sales has been deductedthroughout the projection period based on the hotel being operated by a third partymanagementcompany. Managementfeestypicallyrangebetweenthreeandfivepercentoftotalrevenue.FixedChargesProperty Taxes: Property taxes have been estimated based on assessment and taxinformationforcomparablehotelsinSaintPeterthatincludedtheAmericInnHotel&Suites.Taxes paid in 2016 for this hotel were $41,714 or $834 per available room; in 2017, theAmericInn’staxeswillbe$41,912or$838peravailableroom.Basedonthisinformation,weestimated taxes for the proposed hotel, as a brand new hotel, to be $36,000 in Year 1increasing to $56,700 in the third year of operation (stabilized year). By the fifth year ofoperation,taxesareestimatedtobe$60,100.Insurance:Thisinsurancecategorycoversonlythecostofbuildingandcontentsinsurance.TheliabilityinsuranceisincludedintheA&Gexpenseandisestimatedtobe$18,000inthethirdyearofoperation.

InsuranceExpenseCategory Limited-ServiceHotels

PAR RatiotoSales

WestNorthCentralRegion $235 0.9%SmallMetro/TownLocation $298 1.1%

UpperMidscaleClass $317 0.9%Midscale/EconomyClass $244 1.3%

CustomHOST2015 $222 0.9%CustomHOST2016 $263 1.1%

PHCEstimate(Stabilized) $301 1.2% Source:HOSTAlmanac,STR,Inc.,PatekHospitalityConsultants,Inc.

36 Reserve for Capital Replacement: As is standard for income-producing propertiesprovision has beenmade for a reserve for capital replacement for furniture, fixtures, andequipment,aswellasotherlong-liveditems.Thereserveforreplacementexpensehasbeenestimatedona“step-up”basisforthefirstyearofoperationat1.0percent;2.0percentinYear2andbeginninginthethirdyearandfortheremainderoftheprojectionperiod,4.0percentoftotalrevenuesisestimatedtoprovidesufficientfundsforfuturecapitalimprovements.CashFlowProjectionsOur projections for the subject property, before deductions for interest, income taxes,depreciation,andamortizationbutafterReserveforCapitalReplacement,arepresentedinthetableonthefollowingpage.Weprojectthat,afterreserveforreplacement,thesubjecthotel would have a net operating income equal to 33.5 percent of total sales in thestabilizedyearofoperation;theNOIrangesbetween29.7percentand33.6percentoftotalsalesthroughouttheprojectionperiod.

NetOperatingIncome(NOI)Category Limited-ServiceHotels

PAR POR RatiotoSales

WestNorthCentralRegion $8,708 $33.08 34.2%SmallMetro/TownLocation $9,588 $37.89 36.6%

UpperMidscaleClass $11,599 $42.99 34.3%Midscale/EconomyClass $8,366 $31.65 43.2%

CustomHOST2015 $7,222 $29.12 29.7%CustomHOST2016 $7,231 $29.68 29.4%

PHCEstimate(ThirdYear) $8,134 $34.28 33.5% Source:HOSTAlmanac,STR,Inc.PatekHospitalityConsultants,Inc.TheStatementofEstimatedAnnualOperatingResults for theproposedmidscale limited-servicehotelforthefirstfiveyearsofoperationisshownonthefollowingpage.

STATEMENT OF ESTIMATED ANNUAL OPERATING RESULTS

RevPAR RevPAR RevPAR RevPAR RevPARTOTAL ROOMS/YEAR 21,900 Year 1 $52.25 21,900 Year 2 $58.80 21,900 Year 3 $65.65 21,900 Year 4 $67.60 21,900 Year 5 $69.55OCC. ROOMS/OCCUPANCY/ADR 12,045 55.0% $95.00 13,140 60.0% $98.00 14,235 65.0% $101.00 14,235 65.0% $104.00 14,235 65.0% $107.00

60 ROOMS Current % of POR's Current % of POR's Current % of POR's Current % of POR's Current % of POR'sDollars Sales or Dollars Sales or Dollars Sales or Dollars Sales or Dollars Sales or

(000's) Ratio PAR's (000's) Ratio PAR's (000's) Ratio PAR's (000's) Ratio PAR's (000's) Ratio PAR'sREVENUES

Rooms $1,144.3 98.3% $95.00 $1,287.7 98.4% $98.00 $1,437.7 98.5% $101.00 $1,480.4 98.5% $104.00 $1,523.1 98.5% $107.00Food & Beverage 0.0 0.0% 0.00 $0.0 0.0% 0.00 $0.0 0.0% 0.00 0.0 0.0% 0.00 0.0 0.0% 0.00Other Operated Income 0.0 0.0% 0.00 0.0 0.0% 0.00 0.0 0.0% 0.00 0.0 0.0% 0.00 0.0 0.0% 0.00Miscellaneous Income $20.0 1.7% $1.66 $20.6 1.6% $1.57 $21.2 1.5% $1.49 $21.9 1.5% $1.54 $22.5 1.5% $1.58

TOTAL REVENUES $1,164.3 100.0% $96.66 $1,308.3 100.0% $99.57 $1,459.0 100.0% $102.49 $1,502.3 100.0% $105.54 $1,545.7 100.0% $108.58

DEPARTMENTAL EXPENSESRooms $263.2 23.0% $21.85 $283.3 22.0% $21.56 $316.3 22.0% $22.22 $325.7 22.0% $22.88 $335.1 22.0% $23.54Food & Beverage 0.0 0.0% 0.00 0.0 0.0% 0.00 0.0 0.0% 0.00 0.0 0.0% 0.00 0.0 0.0% 0.00Miscellaneous Expense $15.0 40.0% $1.25 $8.2 40.0% $0.63 $8.5 40.0% $0.60 $8.7 40.0% $0.61 $9.0 40.0% $0.63

TOTAL DEPARTMENTAL EXPENSES $278.2 23.9% $23.10 $291.5 22.3% $22.19 $324.8 22.3% $22.82 $334.4 22.3% $23.49 $344.1 22.3% $24.17DEPARTMENTAL PROFIT $886.1 76.1% $73.57 $1,016.8 77.7% $77.38 $1,134.2 77.7% $79.67 $1,167.9 77.7% $82.04 $1,201.6 77.7% $84.41

UNDISTRIBUTED OPERATING EXPENSESAdministrative & General $156.0 13.4% $2,600 $160.7 12.3% $2,678 $165.5 11.3% $2,758 $170.5 11.3% $2,841 $175.6 11.3% $2,926Information & Telecomm. Systems $16.3 1.4% $272 $18.3 1.4% $305 $20.4 1.4% $340 $21.0 1.4% $351 $21.6 1.4% $361Marketing $50.0 4.3% $833 $51.5 3.9% $858 $53.0 3.6% $884 $54.6 3.6% $911 $56.3 3.6% $938Franchise Fee $63.0 5.4% $1,050 $63.0 4.8% $1,050 $63.0 4.3% $1,050 $63.0 4.2% $1,050 $63.0 4.1% $1,050Utility Costs $66.0 5.7% $1,100 $68.0 5.2% $1,133 $70.0 4.8% $1,167 $72.1 4.8% $1,202 $74.3 4.8% $1,238Property Operations & Maintenance $78.0 6.7% $1,300 $80.3 6.1% $1,339 $82.8 5.7% $1,379 $85.2 5.7% $1,421 $87.8 5.7% $1,463

TOTAL UNDISTRIBUTEDOPERATING EXPENSES $429.3 36.9% $7,155 $441.8 33.8% $7,364 $454.7 31.2% $7,579 $466.5 31.1% $7,775 $478.6 31.0% $7,976

GROSS OPERATING PROFIT $456.8 39.2% $7,613 $575.0 43.9% $9,583 $679.4 46.6% $11,324 $701.4 46.7% $11,689 $723.0 46.8% $12,050

Management Fee $46.6 4.0% $776 $52.3 4.0% $872 $58.4 4.0% $973 $60.1 4.0% $1,002 $61.8 4.0% $1,030

INCOME BEFORE FIXED CHARGES $410.2 35.2% $6,837 $522.6 39.9% $8,711 $621.1 42.6% $10,351 $641.3 42.7% $10,688 $661.2 42.8% $11,019

FIXED CHARGESReal Estate Taxes $36.0 3.1% $600 $55.0 4.2% $917 $56.7 3.9% $944 $58.3 3.9% $972 $60.1 3.9% $1,002Insurance $17.0 1.5% $283 $17.5 1.3% $292 $18.0 1.2% $301 $18.6 1.2% $310 $19.1 1.2% $319

TOTAL FIXED CHARGES $53.0 4.6% $883 $72.5 5.5% $1,209 $74.7 5.1% $1,245 $76.9 5.1% $1,282 $79.2 5.1% $1,321

EBITDA* $357.2 30.7% $5,954 $450.1 34.4% $7,502 $546.4 37.5% $9,106 $564.4 37.6% $9,406 $581.9 37.6% $9,699

Reserve for Capital Replacement $11.6 1.0% $194 $26.2 2.0% $436 $58.4 4.0% $973 $60.1 4.0% $1,002 $61.8 4.0% $1,030

INCOME AVAILABLE FOR DEBT SERVICE $345.6 29.7% $5,760 $424.0 32.4% $7,066 $488.0 33.5% $8,134 $504.3 33.6% $8,404 $520.1 33.6% $8,668

*EBITDA - Earnings before Interest, Taxes, Depreciation and AmortizationNUMBERS MAY NOT ADD DUE TO ROUNDINGSOURCE: PATEK HOSPITALITY CONSULTANTS, INC.

PROPOSED MIDSCALE LIMITED-SERVICE HOTEL - SAINT PETER, MINNESOTA

ASSUMPTIONSANDLIMITINGCONDITIONS1. Thisdocumentistobeusedinwholeandnotinpart.2. Ourconclusionsareexplicitlybasedupon theassumption that theproposedhotelwill be developed and constructed to competitive standards, operated in a mannertypicalofahigh-qualityhotel,and include theassumed facilitiesandamenitiesassetforth in this report. It is expressly understood that the conclusions of this analysiscouldchangeuponanydeviationfromthisassumption.Furthermore,thechangesthatmightarisecouldbematerial. Forthepurposesofthisengagementwehaveassumedthattheproposedfacilitywillopenwithinareasonabletimeframe(18-24months)fromthedateofthisreport,andcontainapproximately60guestroomsandsuites.Thehotelwilloperateasachainaffiliatedhotel,beoperatedbycompetentmanagement,andbeeffectivelymarketedtotheappropriatedemandsegmentsidentifiedinthisreport.Wehave no obligation to update our findings regarding changes to the scope of theproposed development including (but not limited to) changes in the guestroominventory,ancillaryfacilitiesprogram,andlodgingproductconcept.3. As inall studiesof this type, theestimatedresultsarebaseduponcompetentandefficientmanagementandeffectivemarketing.4. Estimatedresultsarealsobasedonanevaluationofthepresentgeneraleconomyoftheareaanddonot take intoaccount,ormakeprovisions for, theeffectofanysharpriseordeclineinlocalorgeneraleconomicconditions,whichmayoccur.Thereusuallywill be differences between the estimated and actual results, because events andcircumstancesfrequentlydonotoccurasexpected.Suchdifferencesmaybematerial.5. Itisexpresslyunderstoodthatthescopeofourstudyandreportthereondoesnotinclude the possible impact of zoning or environmental regulations, licensingrequirements or other such restrictions concerning the project except where suchmattershavebeenbroughttoourattentionanddisclosedinthereport.6. Wehavenoobligationtoupdateourfindingsregardingchangestothescopeoftheproposeddevelopmentorchangesinmarketconditionssubsequenttothecompletionofourfieldwork.Theinformationgatheredduringthecourseofthefieldworkandusedinthisanalysisisassumedtobeaccurate,althoughwecannotguaranteeitsaccuracy.7. Neitherallnorpartofthecontentsofthisreportshallbedisseminatedtothepublicthrough advertising media, news media, sales media, or any public means ofcommunicationwithout the prior written consent and approval of Patek HospitalityConsultants, Inc. The City of Saint Peter has the permission of Patek HospitalityConsultants,Inc.topublishthereportbasedontheMinnesotaDataPracticesAct.

39 8. No liability is assumed formatters legal innature. PatekHospitalityConsultants,Inc. cannot be held liable in any cause of action concerning this assignment for anycompensatory dollar amount over and above the total fees collected from thisengagement.9. Any and all legal expenses incurred in the defense or representation of PatekHospitalityConsultants,Inc.,itsprincipals,anditsemployeeswillbetheresponsibilityoftheclient.10.We are not required to give testimony or attendance in court by reason of thisassignment,withreferencetothepropertyinquestion,unlesspriorarrangementshavebeenmadeandagreedtoinwriting.11.Patek Hospitality Consultants, Inc. is not obligated, or qualified, to predict futurepolitical,economicorsocialtrendsthatmayormaynotoccurasaresult.Additionally,PatekHospitalityConsultants, Inc.reservestherighttomakesuchadjustmentstotheanalyses, opinions and conclusions set forth in this report as may be required byconsideration of additional data or more reliable data that may become availableoutsideofthescopeofthisinitialengagement.