03a. Abatement hearing- Travelodge

Executive Summary iv IMPORTANT WARNING – MATERIAL VALUATION UNCERTAINTY FROM NOVEL CORONAVIRUS The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organization as a “Global Pandemic” on March 11, 2020, is causing heightened uncertainty in both local and global market conditions. Global financial markets have seen steep declines since late February largely on the back of the pandemic over concerns of trade disruptions and falling demand. Many countries globally have implemented strict travel restrictions and a range of quarantine and “social distancing” measures. Market activity is being impacted in most sectors. As at the valuation date, we consider that we can attach less weight to previous market evidence for comparison purposes, to inform opinions of value. Indeed, the current response to COVID-19 means that we are faced with an unprecedented set of circumstances on which to base a judgement. Our valuation is therefore reported on the basis of ‘material valuation uncertainty’. Consequently, less certainty – and a higher degree of caution – should be attached to our valuation than would normally be the case. Values may change more rapidly and significantly than during standard market conditions. Given the unknown future impact that COVID-19 might have on the real estate market, we recommend that you keep the valuation of the Quality Inn under frequent review. For the avoidance of doubt, the inclusion of the ‘material valuation uncertainty’ declaration above does not mean that the valuation cannot be relied upon. Rather, the declaration has been included to ensure transparency of the fact that – in the current extraordinary circumstances – less certainty can be attached to the valuation than would otherwise be the case. The material uncertainty clause is to serve as a precaution and does not invalidate the valuation. EXTRAORDINARY ASSUMPTIONS An extraordinary assumption is defined as “an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.” 1  The appraiser assumes ongoing operation and compliance with brand standards;  The appraiser assumes the property sells unencumbered with a management contract;  The appraiser asked ownership multiple times for a detailed list of planned capital expenditures and/or further details regarding items required for ongoing brand compliance but was denied any specific information. Ownership stated minor cosmetic items would be addressed in the coming months but would not elaborate any further. Additionally, no property condition report (PCA) or engineering report was provided. Our inspection of the property indicated various items of deferred maintenance including exterior repair, carpet, paint, damages to interior as a result of vandalism, etc.. In speaking with ownership representatives, no large-scale PIP is planned in the near-term however it is the appraiser’s judgement that some near-term capital will be required in order to remain competitive as well 1 The Appraisal Foundation, USPAP, 2018-2019