H I G H W A Y 1 1 P A I N T E R S P A T H

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1 H O T E L I N V E S T M E N T & D E V E L O P M E N T O P P O R T U N I T Y H I G H W A Y 1 1 P A I N T E R S P A T H CITY OF PALM DESERT CITY MANAGER S OFFICE FRED WARING DRIVE PALM DESERT, CA 92260

2 T A B L E O F C O N T E N T S 1 Property Description 2 Land Use + Development Concept 3 Market Profile: Coachella Valley + Palm Desert 4 Competitive Supply + Market Performance

3 H I G H W A Y 1 1 P A I N T E R S P A T H 1 Property Description

4 THE PROPERTY PROPERTY OVERVIEW The 2.63-acre subject property is located at and Highway 111, Palm Desert ( Property ). The Property consists of two parcels: (1) Parcel A, located at Highway 111 (APN ), is approximately 1.29 acres in size with an existing, vacant 10,500 SF restaurant building onsite; and (2) Parcel B, located at Highway 111 (APN ), is approximately 1.34 acres in size with an existing 15,959 SF building onsite, a vacant strip retail center. Parcel B is the northern portion of a larger 3.95-acre parcel that wraps around the existing Olive Garden restaurant. HIGHWAY PAINTERS PATH UNIQUE INVESTMENT OPPORTUNITY AT THE HIGHWAY 111 GATEWAY INTO THE DESERT!S PREMIER RETAIL + ENTERTAINMENT HUB The Property is located on the southwest corner of the signalized intersection of Highway 111 and Painters Path, which serves as the southbound gateway into Palm Desert s Highway 111 commercial corridor, including the exclusive El Paseo Shopping District, commonly referred to as the Rodeo Drive of the Desert, and the Westfield Palm Desert mall offering almost 500,000 square feet of specialty retail space. The prime location of the Property makes it a unique opportunity site for a mid-size boutique hotel with a wellness-centered focus and design. This opportunities booklet ( Booklet ) provides relevant information about the Property, the City s development standards, a proposed development concept for the site, and relevant market data. The City of Palm Desert ( City ) is actively promoting new hotel development opportunities in the El Paseo Shopping District and along the Highway 111 and I-10 Freeway commercial corridors. The City has assembled this booklet to engage prospective investors and development partners about prime hotel opportunity sites in the City. In preparation of this booklet, the City hired PKF Consulting USA ( PKF ) to conduct a Future Market Demand Analysis of the study area and Urban Futures, Inc. ( UFI ) to provide more site-specific market data that is relevant and important for prospective investors and developers.

5 P R O P E R T Y P R O F I L E

6 R E G I O N A L L O C A T I O N & A C C E S S

7 V I S I B I L I T Y & A C C E S S Fred Waring Drive VISIBILITY With direct access from Highway 111, the site has outstanding visibility from several vehicular corridors off of the I-10 freeway. Surrounding buildings are primarily single story. A multi-story hotel at the site would be highly visible from Highway 111, Bob Hope Drive, Monterey Avenue, and Fred Waring Drive. ACCESS The site is readily accessible from Highway 111 and the I-10 freeway via Bob Hope Drive and Monterey Avenue. The site s primary access point is from Painters Path.

8 LOCATION MAP!"#$%&')'!"#$%&'('

9 PARCEL MAP Fred Waring Drive

10 ECONOMIC DRIVERS: RETAIL SHOPPING Westfield Palm Desert Almost 500,000 square feet of specialty retail store space

11 Rodeo Drive of the Desert More than 300 world-class shops, clothing boutiques, art galleries, jewelers, restaurants, and more

12 ECONOMIC DRIVERS: RETAIL PERFORMANCE!"#$%&'($&")'*+,-%&"'.$/0"#'1/"$2'34+5'6$#$7 :1-1035& 910CE &A/,01. A/,01. F,,7&A10O4C1. &A/,01. &N A/,01. E4-8. &A/, C?&910CE &A/,01. ;51C/0,-4C. :3.,54-1&A/3/4, &93/10435.%& +,-. /,01&21/34510.!"#$%&'($&")'*+,-%&"'.$/0"#'1/"$2'3456'7$#$8!"!#$$%$$$%$$$&!'$$%$$$%$$$&!($$%$$$%$$$&!)$$%$$$%$$$&!*$$%$$$%$$$& A/,01. &A/,01. I,,7&A10O4C1. :1-1035& 910CH &A/,01. A/,01. &M H4-8. &A/, C?&910CH &A/,01. ;51C/0,-4C. :3.,54-1&A/3/4, &93/10435.%& +,-. /,01&21/34510.!"!#$$%$$$%$$$&!'$$%$$$%$$$&!($$%$$$%$$$&!)$$%$$$%$$$&!*$$%$$$%$$$& 1-mile Radius Retail Trade: 236 Businesses $566,229,612 Sales Food & Drink: 89 Businesses $105,213,003 Sales 3-mile Radius Retail Trade: 676 Businesses $1,216,773,175 Sales Food & Drink: 218 Businesses $199,162,509 Sales!"#$%&'($&")'*+,-%&"' -$./"#'0."$1'2345'6$#$7 5-mile Radius Retail Trade: 884 Businesses $1,895,293,809 Sales Food & Drink: 310 Businesses $264,103,661 Sales & ;10CH &7/,01. ;,/,0&O1H4C51&A&K30/. &N I,,9&A&81M103:1& 7/,01. I,,9&710M4C1. &A&N04-G4-:&K53C1. L5,/H4-:&A&L5,/H4-:&DCC1..,041. &7/,01. E135/H&A&K10.,-35&L301& 7/,01. I>0-4/>01&A&E,J1&I>0-4. H4-:. &7/,01. ;4. 1&7/,01. 7?,0/4-:&6,,9.%&E,FFB%&8,,G&A&;>.4C&7/,01. <51C/0,-4C. &A&D??543-C1&7/, :&;3/10435.%& 63.,54-1&7/3/4,-. +,-. /,01&21/34510.!" Source: ESRI Business Analyst Online (2015)!#$$%$$$%$$$&!'$$%$$$%$$$&!($$%$$$%$$$&!)$$%$$$%$$$&!*$$%$$$%$$$&

13 ECONOMIC DRIVERS: JOB CLUSTERS!"#$%&'()$*"'+,-'.&/0#")0'12'345&,6""0'784%&"'!$*%/09 H>362:- B//>0,?- 7-BAA,88*0F-<3*0,8 B53*-C,>?,08#- =>8-<3>36*28#-B53*-BD3,0+>0E,3 4**;-<3*0, ,-7-)*+, :8 )*+,-.+/0*1,+,23! "#!!! $#!!! %#!!! &#!!! '#!!! (#!!!!"#$%&'()*+,-.+/*$%&0'% *-600%+784(*0+ 9)#($%: 76-4'1.0'(6>21(0.)'.1;<?<+(-(-2 9:6);4,);<31,=; (0,'(631,-4561','(6+,-./,0'.1(-2 &'()('*! "!! #$!!! #$"!! %$!!! %$"!! 1-mile Radius 873 Businesses 9,349 Employees 3-mile Radius 3,562 Businesses 35,428 Employees!"#$%&&'#()*+,#-+.*/&0%"& *#6%%&+784'*%+9):'/&; E/+*1 2,3+3/$1 F;*0-(A$1G35/91=(B/,36/(31G..-)/, D;B/9(6/(3 5-mile Radius 5,300 Businesses 54,474 Employees :+(<,$17+B-(A,1?1C/(0-(A1=(,3-383-;(, 7/)89-3-/,1:9;</9, '()*+,,-.-/012,3+4*-,56/(3,!!"#$%&"'()*+(,-.'/"#'(01(234-*5""'(673%-"( 89:%.'; C*B/201/2.-3/4 A/78*B01/2.-3/4 9:)37*-+;0<;4*-*)*-+;40=05->272-/4 5/6780 1/2.-3/4 ()*+,+*-./01/2.-3/4! "#!!! Source: ESRI Business Analyst Online (2016) $#!!! %#!!! &#!!! '! #!!! "!! #$!!! #$"!! %$!!! %$"!! &$!!!

14 Bob Hope Drive 34,976 29,387 SR 111 W/O BOB HOPE MONTEREY N/O PARK VIEW 18,390 FRED WARING E/O SR 111 SR 111 N/O FRED WARING PORTOLA N/O FRED WARING FRED WARING W/O PORTOLA Town Center Way Fred Waring Drive 24,436 MONTEREY S/O FRED WARING 28,179 FRED WARING E/O MONTEREY 16,822 PORTOLA S/O FRED WARING Portola Avenue 39,330 SR 111 S/O FRED WARING 17,400 29,504 MONTEREY N/O FRED WARING FRED WARING W/O MONTEREY Monterey Avenue 43,004 29,387 24,290 San Pablo Avenue TRAFFIC COUNTS: AVERAGE DAILY TRIPS 18,091 BOB HOPE N/O SR ,001 FRED WARING E/O PORTOLA Highway 111 El Paseo 30,005 SR 111 W/O MONTEREY Source: Coachella Valley Association of Governments 2015 Traffic Census Report 35,340 SR 111 E/O MONTEREY 37,594 34,535 SR 111 W/O PORTOLA SR 111 E/O PORTOLA

15 H I G H W A Y 1 1 P A I N T E R S P A T H 2 Land Use + Development Concept

16 G E N E R A L P L A N : C O M M U N I T Y C O M M E R C I A L! SUBJECT PROPERTY Resort/Hotel Commercial (C-R/H)* The Resort/Hotel Commercial designation is assigned to lands planned for or already developed as resort uses, including hotels and associated uses, timeshare projects, and associated recreation and open space amenities, including golf courses, tennis courts, and pools and spas. These land uses are geared to the visiting tourist public and also provide important venues for community meetings and events. Mixed use development with professional office and residential may also be permitted through approval of an integrated master plan. *Please contact the City of Palm Desert s Planning Department to verify all land use policies and development standards.

17 Z O N I N G : G E N E R A L C O M M E R C I A L + M U L T I - F A M I L Y SUBJECT PROPERTY PC-4 Planned Commercial - Resort Center* The resort center concept is to provide for the development of hotel, entertainment, and restaurant facilities with related commercial uses, particularly for the area along Highway 111, westerly of the Palm Valley Channel. *Please contact the City of Palm Desert s Planning Department to verify all land use policies and development standards.

18 Z O N I N G : D E V E L O P M E N T S T A N D A R D S! PC-4* Lot Dimensions Lot size, min 4 ac Lot size, max None Lot width, min None Lot depth, min None Setbacks Front yard, min 30 Side yard, min 15 Street side yard, min None Rear yard, min 20 Coverage Lot coverage, max percent of lot area None Building Measurements Height, max 35" Building size, max None Specific Use Standards* Hotel units per gross acre, max None Hotel landscape coverage, min 25% Hotel parking stalls, min 1 per guest unit Restaurant parking stalls, min 8 per 1,000 sf Retail parking stalls, min 3 per 1,000 sf Common development agreement and CUP conditions in Palm Desert include, but are not limited to: ADA Compliance for sidewalk and other ADA compliant infrastructure deemed necessary by the City Art in Public Places Requirements Building Compliance as necessary to comply with the California Building, Plumbing, Mechanical, Electrical, Energy, Fire and Green Building Standards Codes, and Title 24, California Code of Regulations CEQA Mitigation Compliance Density Requirements Development Access Requirements Drainage fee requirements in accordance with Section of Palm Desert Municipal Code and Palm Desert Ordinance Number 653 Fire Departments Requirements Height Requirements Hotel is required to ensure that the development retains its character LEED Requirements Parking Requirements Signalization fee requirements in accordance with City of Palm Desert Resolution Nos and The applicant may be required to install high block walls to provide screening and noise attenuation from surrounding properties The applicant shall provide an emergency backup generator onsite; the hotel will be used as a "cooling station" in the event of a power outage in the City of Palm Desert

19 D E V E L O P M E N T C O N C E P T Project Scope Lot size Product type 2.63 ac or 114,563 sf Boutique or lifestyle hotel with focus on health/wellness and outdoor activities congruent with adjacent desert landscape. Rooms 130 Building size Building height 120,000 sf 3 stories Parking stalls 130 Hotel Performance* Project stabilization 68% occupancy Projected stabilization $268/nt (2016$) City Approvals Required Zone Change, Precise Plan, Development Agreement, CEQA Review, Architectural Review * 2016 PKF Consulting USA: Future Market Demand Analysis Sample Rendering: El Paseo Hotel Project

20 S I T E C H A R A C T E R I S T I C S + U T I L I T Y P R O V I D E R S! Site Characteristics Terrain Erosion Earthquake Fault Zone Liquefaction On-site Improvements Access to City- Maintained Roads Shallow topographic gradient; significantly flat Low No major fault zones Low susceptibility Paved parking lot; restaurant building space; sidewalk; landscaped with shrubs, rocks and palm trees Painters Path and Fred Waring Drive!! Existing Street Improvements Right-of-Way Sidewalk Curb & Gutter Storm Drain Traffic Signal Highway 111!!!! Painters Path!!!! Utility Providers Water Sewer Electric Gas Cable Phone Coachella Valley Water District Highway 111: 24 Casing Fred Waring Drive: 48 Casing Coachella Valley Water District Fred Waring Drive: 12 V.C.P. Highway 111: 8 V.C.P. Southern California Edison Southern California Gas Company Time Warner Cable (City franchise) Verizon

21 H I G H W A Y 1 1 P A I N T E R S P A T H 3 Market Profile: Coachella Valley + Palm Desert

22 C O A C H E L L A V A L L E Y + P A L M D E S E R T

23 M A R K E T P R O F I L E : C O A C H E L L A V A L L E Y Source: ESRI Business Analyst Online (2015)

24 C O A C H E L L A V A L L E Y T O U R I S M : A I R T R A V E L PALM SPRINGS INTERNATIONAL AIRPORT ANNUAL PASSENGER TRAFFIC Year Total Passengers Percent Change ,110, ,246, % ,367, % ,419, % ,529, % ,610, % ,542, % ,465, % ,495, % ,511, % ,727, % ,752, % ,914, % Compound Annual Growth Rate 4.6% - YTD 11/14 1,725,594 - YTD 11/15 1,710, % Source: Palm Springs International Airport!

25 C O A C H E L L A V A L L E Y C O N V E N T I O N A C T I V I T Y PALM SPRINGS CONVENTION CENTER HISTORICAL CONVENTION CENTER BOOKINGS Year Number of Events Room Nights Consumed Percent Change Average Room Nights Per Booking Total Attendance , % , , , , , , , , , , , , N/A 130,460 Source: Palm Springs Convention Center! PALM SPRINGS CONVENTION &VISITORS BUREAU FUTURE BOOKINGS AS OF NOVEMBER 2015 Year Number of Events Definite Room Nights Booked Average Room Nights Per Booking Room Night Target Pace Pace Percentage , , % , ,999 94% ,376 1,280 88, % ,837 1,713 49, % ,384 2,027 29,266 97% ,436 1,633 15,360 74% ,328 2,082 5, % ,900 1,900 3,254 58% Source: Greater Palm Springs Convention & Visitors Bureau!

26 M A R K E T P R O F I L E : P A L M D E S E R T Source: ESRI Business Analyst Online (2015)

27 HOSPITALITY GROWTH: PIPELINE PROJECTS EL PASEO HOTEL, PALM DESERT QUICKSILVER RESORT, PALM DESERT 80-acre site surrounded by Desert Willow Golf Course 450 rooms Highest quality fullservice hotel in Palm Desert Restaurants Targeted Opening: 2019 High-end boutique hotel by Marriott 156 rooms Targeted Opening: Early 2017 ANDAZ HOTEL, PALM SPRINGS KIMPTON HOTEL, PALM SPRINGS Luxury lifestyle hotel by Hyatt 150 rooms Full-service with amenities, facilities, retail shops, and restaurant Targeted Opening: Early 2017 High-end boutique hotel by Kimpton 155 rooms Rooftop bar and pool Chef-driven destination restaurant Targeted Opening: Late 2016

28 H I G H W A Y 1 1 P A I N T E R S P A T H 4 Competitive Supply + Market Performance

29 COMPETITIVE SUPPLY Triada Palm Springs 640 N. Indian Canyon Road, Palm Springs 56 rooms, 2 stories 12.1 miles from subject site Colony Palms Hotel 572 N. Indian Canyon Road, Palm Springs 56 rooms, 2 stories 12.0 miles from subject site Andaz Hotel 400 N. Palm Canyon Drive, Palm Springs 150 rooms, 3 stories 11.9 miles from subject site Avalon Hotel 415 S. Belardo Road, Palm Springs 67 rooms, 2 stories stories 11.6 miles from subject site Parker Palm Springs 4200 E. Palm Canyon Drive, Palm Springs 144 rooms, 2 stories 8.5 miles from subject site Ace Hotel 751 E. Palm Canyon Drive, Palm Springs 176 rooms, 2 stories 10.5 miles from subject site Existing Competitive Properties Future Competitive Properties Ritz-Carlton Rancho Mirage Frank Sinatra Drive, Rancho Mirage 260 rooms, 3 stories 5.3 miles from subject site Kimpton Hotel 123 N. Palm Canyon Drive, Palm Springs 155 rooms, 6 stories 11.7 miles from subject site El Paseo Hotel 123 N. Palm Canyon Drive, Palm Springs 156 rooms, 3 stories 1.2 miles from subject site Opportunity Site Highway 111, Palm Desert 130 rooms, 3 stories

30 F U T U R E L O D G I N G S U P P L Y & D E M A N D (!!#!!! '!!#!!! &!!#!!! %!!#!!! $!!#!!! "!!#!!!!"#$%&'&'(%)*+$$,-.))/0&'#1&%2)3+&+4%)54"6&7 '8)9"2:'8:)*+$$,-);)<%#182,--./ ,--./ :4/-;! $!"% $!"& $!"' $!"( $!") $!"* $!"+ $!$! $!$" $!$$ $!$%!"#$%&'(()#*#$&(+,$-&*(.&/,01(20,34565(789:;<'(=",%>&33,(?,33&4(@(A,3/(.&5&$*(B"1C60C(+,$-&*5(D( =EFG(H"*&35(I(AJ)(="05#3*60C(K!2(

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

33 CITY OF PALM DESERT CITY MANAGER S OFFICE FRED WARING DRIVE PALM DESERT, CA 92260