(415) 523-0393

www.ThePassportGroup.comEUREKACALIFORNIA

548 Market St #60420San Francisco, CA 94104-5401

Joe WoloszPrincipal

(415) 519-5639joe@thepassportgroup.com

(415) 523-0393www.ThePassportGroup.com

THE PASSPORT GROUP

LISTING TEAM

Property Overview 1

Executive Summary 3

About Fortuna 6

Lodging Market 8

Financial Summary 9

CONTENTS

Jeff DurhamBroker

(415) 706-6011jeff@thepassportgroup.com

Ŵḏ ḡŻůḏ njæṩŻĥł ḏĉ ṩḡḏ ĥł ʒnjplj Żṩĥnjł ĥł ṩḡĥṛ Çnjł ž ĉḏł ṩĥŻǩŎʒʒḏpĥł ǯNḏlj njpŻł ĉẗ lj ʒpnjlj ṛnjẗ pǽḏṛ ũḏ æḏǩĥḏůḏ ṩnjæḏ pḏǩĥŻæǩḏ⁶ Ĭṩ ĥṛ ṛẗ ǯ ǯḏṛṩḏĉẅnjẗ Żł ĉ2njẗ pŻĉůĥṛnjpṛ ṛḡnjẗ ǩĉ ǽnjł ĉẗ ǽṩ Ż ǽŻpḏʒẗ ǩ¹ĥł ĉḏṏḏł ĉḏł ṩĥł ůḏṛṩĥǯŻṩĥnjł njʒ ṩḡḏ ṏpnjṏḏpṩẅṩnjĉḏṩḏplj ĥł ḏ ṩnjẅnjẗ pṛŻṩĥṛʒŻǽṩĥnjł ṩḡḏṛẗ ĥṩŻæĥǩĥṩẅnjʒ ṩḡḏ ṏpnjṏḏpṩẅʒnjpẅnjẗ pł ḏḏĉṛ⁶Ȟnjũḏůḏp¹Ťḡḏ QŻṛṛṏnjpṩĜpnjẗ ṏ ḡŻṛ ł njṩ ůḏpĥžḏĉ ĥṩṛ Żǽǽẗ pŻǽẅŻł ĉ ũḏ lj Żȷ ḏ ł njǯ ẗ ŻpŻł ṩḏḏ¹ũ ŻppŻł ṩẅnjppḏṏpḏṛḏł ṩŻṩĥnjł Żænjẗ ṩ ĥṩ⁶

ABOUT THIS PROPERTY

Eureka is the largest city on the west coastbetween San Francisco, California andPortland, Oregon. As of the 2010 Census thepopulation of Humboldt County was 134,623.The County Seat is Eureka. It is located onCalifornia’s far north coast 250 miles north ofSan Francisco. The surrounding area coversthe Eureka-Arcata-Fortuna MicropolitanStatistical Area and is located in HumboldtCounty, California. The primary populationcenter is concentrated in Eureka, Arcata andFortuna.

GUEST ROOM BREAKDOWN

Property Clarion Hotel by Humboldt Bay

Address 2223 Fourth Street, Eureka, California

County Humboldt

Listing Price $5,800,000

Price Per Room $89,231

No. of Rooms 65 Guest Rooms

Year Built & Additions Approximately 1992 with additions approximately in 1995 and 2001

Parcel Number 002-132-008-000

Ownership Interest Fee-Simple

Site Area 1.3223 acres

Zoning CS (Commercial Service) District

Franchisee Choice Hotels

Floors / Layout Three buildings: one building with three floors and interiorcorridors; two buildings with two floors both with exterior corridors.

Food and Beverage Continental breakfast served in the lobby. Dinner and snacksavailable during the evening hours.

King 18

King ADA 3

Queen 28

Double Bedded 9

Suites 7

Total 65

PROPERTY OVERVIEW

1 / The Redwood

The Passport Group has been retained as exclusive broker tooffer the fee-simple interest in the 65 guest room ClarionHotel by Humboldt Bay (“Hotel” or “Property”) located at2223 Fourth Street, Eureka, California. The Hotel ispositioned on approximately 1.32 acres. The Hotel is locatedon iconic Hwy 101, visible from the north and southboundlanes. It is being offered unencumbered by managementand is in good physical condition.

This is an opportunity to acquire a northern California,coastal, franchise hotel with small restaurant. The Hotel is acash flowing asset. The Property is two buildings,constructed in 1992 and 2001.

EXECUTIVE SUMMARY

INVESTMENT HIGHLIGHTS

Strong Revenues and Cash FlowThe Hotel continues to show significant signs of revenue growth,with 2019 out performing 2018.

�

Discount to Replacement CostThe Hotel is being offered at a discount to current replacementcost.

�

Capital ImprovementsHotel has completed Choice Hotels PIP list within the past 12months including a new roof.

Additional Improvements:

▷ New Roof

▷ All furniture

▷ All carpet

▷ All paint interior and exterior

▷ All newmattress

▷ All tiles in bathrooms and entrance and breakfast and walkways

▷ All new drapes

▷ All new sinks and vanities in bathrooms

▷ All newWiFi system

�

Excellent US 101 Location and VisibilityThe Hotel has excellent visibility and is located on southbound US101. It is the first hotel coming into the densely populated Eurekamarket where US 101 becomes city surface streets. The hotel isvisible from both the southbound and northbound lanes.

3 / The Redwood

MURRAY FIELDAIRPORT NORTHERN AIR

ST. JOSEPHHOSPITAL EUREKA

REDWOODACRES RACEWAY

AVENUE OF THE GIANTSHUMBOLDT REDWOODS

STATE PARK

HUMBOLDT BAYNATIONAL WILDLIFE

REFUGE

VICTORIAN SEAPORTOF HISTORIC DOWNTOWN

EUREKA

Humboldt Redwoods State ParkLocated at the southern end of Humboldt County, this is California’slargest redwood state park. It contains the largest remaining contiguousold growth coastal redwoods in the world within its 53,000 acres. Withover 250 developed camp sites the park brings people from all over theworld to camp, hike, swim, fish, raft, bike ride and picnic.

Avenue of the GiantsSurrounded by Humboldt Redwoods State Park, this world famousscenic drive is a 31 mile portion of old Highway 101. It is said to be themost outstanding display of giant trees in the California redwood belt.

Humboldt Bay Wildlife RefugeLocated on the Humboldt Bay, this refuge was created to protect andenhance wetland habitats for migratory water birds and is currently thehome of hundreds of bird species including four endangered species.Recreational opportunities include hiking, observation, boating, hunting,fishing and wildlife education.

Victorian Seaport of Historic Downtown EurekaThe Victorian Seaport with its waterfront boardwalk invites visitors to seehundreds of Victorian homes and is home to the magnificent CarsonMansion which is perhaps the most spectacular Victorian in the Nation.

Shelter CoveThis hidden stretch of beautiful California has an interesting history. Thebuilders constructing the Pacific Coast Highway decided it was toodifficult to build the highway along a stretch of what is now called theLost Coast. As a result, the small fishing village of Shelter Cove remainedvery secluded from the rest of the booming state and is now a popularreprieve for those seeking a quite vacation.

EXECUTIVE SUMMARY

DEMAND GENERATORS

Redwood National and State ParksThe Redwood National and State Parks are old-growth temperaterainforests located in the United States, along the coast of northernCalifornia.

Carson MansionThe Carson Mansion is a large Victorian house located in Old Town,Eureka, California. Regarded as one of the highest executions ofAmerican Queen Anne Style architecture, the house is “considered themost grand Victorian home in America.”

Blue Lake CasinoA 20-minute drive from the hotel, this modern casino hotel is a 15-minute drive from the beach.

Trinidad Memorial Lighthouse/ Trinidad Head Lighthouse TrinidadHead, a large domed prominence rising to a height of 380 feet, isconnected to the mainland only on its northern end, thus forming thebeautiful and natural Trinidad Bay on its eastern side. On the bluffsoverlooking the bay, Trinidad, the oldest town on the northern Californiacoast, was founded on April 8, 1850. Early on, the town was a vital linkbetween ships anchored in the bay andminers testing their luck in theKlamath, Trinity, Salmon River, and Gold Bluff Mines. As the gold rushslowed, Trinidad Bay, like most bays along the Redwood Coast, becamehome to multiple sawmills. To aid vessels engaged in the lumber trade, alighthouse was proposed for the ocean-facing side of the headland in1854.

Humboldt State UniversityHumboldt State University or Humboldt State, also occasionally referredto as Humboldt, is the northernmost campus of the 23-school CaliforniaState University system, located in Arcata, Humboldt County, California,United States. College of the Redwoods - College of the Redwoods is apublic two-year community college with its main campus ofapproximately 270 acres located on the southernmost edge of Eureka inHumboldt County, California.

Downtown Eureka / Victorian SeafrontThis meticulously preserved and restored district of unique shops,restaurants, galleries and museums on Humboldt Bay, is a must stop onyour visit to the redwoods. The Old Town/Downtown district includestheaters, pubs, antique shops and local coffee houses. Follow this link fora Walking tour of the historic buildings in Old Town. Or view it from theseat of a horse drawn carriage.

Bayshore MallThe Bayshore Mall is an indoor shopping mall located in Eureka,California owned andmanaged by Rouse Properties, a former division ofGeneral Growth Properties, one of the largest mall owners in the UnitedStates.

Arcata-Eureka AirportLocated in McKinleyville, just north, just north of the property.Commercial flights are available. Fly-Humboldt is currently working withthe FAA to get an additional air carrier to accommodate the airport. Thegeneral aviation airport, Murray Field, is located steps from the hotel.

Other general aviation airports are located in Dismore, Garberville,Kneeland, Samoa Field, Rohnerville and Shelter Cove.

DEMAND GENERATORS CONTINUED

The greater market surrounding the subject property offers 45 lodgingproperties with 2,113 guest rooms. The Clarion Hotel by Humboldt Baycompetes with a smaller set of hotels based on various factors includinglocation, rate, quality, and brand among others. Having reviewed theseattributes the Clarion Hotel by Humboldt Bay offers an equal to orhigher quality experience compared to the smaller competitive set.

The Eureka market is currently and historically strong. Many demandgenerators support the hotel and local economies making this an arealess susceptible to economic downturns and attractive to investors.Metrics associated with the recent economic recession are goodindicators. According to the California STR report of year-end 2008, thefirst year of the recession, the Eureka/Crescent City segment dipped onlyslightly at -0.7 from 2007 in revenue per available room (RevPAR), faringbetter than 11 out of the 14 segments. To note, the two that outperformed the Eureka/Crescent City segment were Merced andBakersfield who were riding the last of the construction wave but fell in2009. In comparison many markets were down in double digits of -17, -16.6, -15.8, and -13.1; Santa Rosa, Monterey/Salinas MSA, Oxnard/VenturaMSA, and Santa Barbara/Santa Maria MSA respectively.

MARKET

LODING MARKET OVERVIEWCOMPETITIVE SET

10 / The Redwood

FINANCIAL SUMMARYHISTORICAL MONTHLY OPERATING PERFORMANCE

2020 2019 2018

ADR Occ Rev RevPar ADR Occ Rev RevPar ADR Occ Rev RevPar

JAN $70.05 72.03% $92,747.75 $50.46 $72.66 45.30% $64,089.20 $32.92 $75.51 62.18% $71,508.66 $46.95

FEB $68.26 69.01% $86,961.05 $47.11 $76.56 51.15% $69,669.58 $39.16 $74.43 56.15% $67,584.11 $41.80

MAR $68.97 48.05% $56,208.40 $33.14 $77.95 59.53% $90,113.05 $46.40 $76.58 74.14% $104,530.80 $56.78

APR $64.82 31.54% $36,430.36 $20.44 $79.36 73.11% $109,829.75 $58.02 $82.99 66.97% $104,314.89 $55.58

MAY $74.04 45.54% $59,006.82 $33.72 $97.83 75.95% $145,177.88 $74.30 $98.96 73.26% $139,330.77 $72.49

JUN $85.08 65.54% $100,995.86 $55.77 $95.96 80.05% $142,507.42 $76.82 $96.83 78.01% $142,249.53 $75.54

JUL $111.73 77.56% $161,778.96 $86.65 $109.92 84.48% $179,503.85 $92.86 $105.20 85.52% $178,937.15 $89.96

AUG $109.25 89.53% $179,286.74 $97.81 $106.04 86.10% $177,943.35 $91.30 $104.86 73.84% $153,626.69 $77.43

SEP $98.67 85.49% 153,438.45 $84.35 $93.71 75.98% $131,286.46 $71.20 $92.61 70.96% $126,037.03 $65.71

OCT $79.96 89.64% 135,528.95 $71.67 $78.45 57.99% $84,800 $45.49 $80.50 62.47% $96,757.69 $50.29

NOV - - - - $70.87 64.00% $88,443 $48.84 $76.32 48.23% $70,598.80 $36.81

DEC - - - - $71.51 57.00% $82,361 $42.57 $72.60 47.08% $67,805.27 $34.18

Other Rev $14,332.17 $26,736

Total Rev $1,076,715.51 T12* $1,392,460.54 $1,323,281.39

11 / The Redwood

CONFIDENTIAL OFFERING MEMORANDUM

12 / The Redwood

This Confidential Investment Offering Memorandum (“Memorandum”), which isintended solely for your limited use and benefit in determining whether you desire toex- press any further interest in participating in the acquisition of the Redwood Hotel(the “Property” or “Hotel”) in Fortuna, CA. By accepting this Memorandum, therecipient agrees to comply strictly with the terns and conditions of the ConfidentialityAgreement previously executed and delivered to The Passport Group by the Recipientwith respect to this Memorandum and all information contained herein, and to usethis Memorandum only for the purpose of evaluating the offering made hereby.

This Memorandumwas prepared by The Passport Group and has been reviewed bythe Owner. It contains select information pertaining to the Property and does notpurport to be all-inclusive or to contain all of the information, which prospectiveinvestors may desire. It should be noted that all the market analysis projections areprovided for general reference purposes and are based on assumptions relating to thegeneral economy, competition and other factors beyond our control and, therefore, aresubject to material variation. The material contained in this Memorandum is providedsolely to assist the Recipient in determining whether it is interested in making aninvestigation or evaluation concerning a potential purchase of the Property.

More detailed information and an opportunity to inspect material related to theProperty will be made available to interested and qualified prospective investors.Neither the Owner nor The Passport Group nor any of their respective officers havemade any representation or warranty, expressed or implied, as to the accuracy orcompleteness of this Memorandum or any of its contents, and no legal commitmentsor obligations shall arise by reason of this Memorandum or its contents. The Agent,Owner, and the Manager reserve the right to engage in discussions or negotiationswith one or more recipients or other perspective investors at any time withoutnotification to, or other obligation to, any other Recipient or prospective investor. Theoffering is subject to change in terms or termination without notice. The Owner andthe Manager will remain free to operate the Property in their sole and absolutediscretion during the evaluation and offering process, including the taking of suchactions, whether within or outside of the ordinary course of business, which the Owneror the Manager shall deem necessary, prudent or desirable.

The Agent reserves the right to require the return of this Memorandum and any othermaterial provided to the Recipient at any time. Photocopying or other duplication ofthe Investment Offering Memorandum in part or entirety is not authorized.

PROPERTY TOURS

All inquiries, requests for information and property toursare to be made solely directly through The PassportGroup. Prospective purchasers are instructed NOT todisrupt operation of the hotel and NOT to contact the staffor management of the The Redwood, Fortuna, CA. Toschedule a tour of this Hotel please contact Jeff Durhamdirectly at (415) 706-6011.

THE

PASSPORTHospitality Real EstateGROUP

(415) 523-0393

www.ThePassportGroup.com