1. IRMA The Bowden – Johnson Group 1 March 2006 Fractional Interests Friend or Foe? The Bowden – Johnson Group

2. IRMA The Bowden – Johnson Group 2 March 2006 What is it?  Deeded, undivided interest –In a specific unit, or –In a group of units, –In an entirety of units  Structured Access & Use Privileges –Priority Use & Additional Use –Sophisticated Advance Reservations  Reciprocal Use across all units

3. IRMA The Bowden – Johnson Group 3 March 2006 What else is it?  Club Membership Overlay –Amenity access structure –Rental Program (optional)  Private Residence Club –Term of art for a subset of fractional structures –Timeshare vs Quartershare vs PRC –Typically PRC = 6 to 12 Members / Unit

4. IRMA The Bowden – Johnson Group 4 March 2006 Historical Overview  In the beginning… –Melrose Club on Daufuskie –Jumby Bay in Antigua, and copycats  Stage II - Rocky Mountains –Deer valley Club –Franz Klamer, Austria House, Roaring Fork Club, Timbers Club, Snowmass Club

5. IRMA The Bowden – Johnson Group 5 March 2006 Historical Overview (Cont’d)  Stage III – The Heady Years –ARDA Discovers PRC’s –Crescent Club –The Owners Club by Club Corp –Four Seasons Resort Club System –Ritz Carlton Club System –Hyatt Mountain Lodges –Esperanza – Los Cabos

6. IRMA The Bowden – Johnson Group 6 March 2006 Historical Overview (Cont’d)  Stage IV – Market Acceptance –170 Fractional Resorts (142 in the US) –Stratification by Price Point 37 PRCs, $1000+ PSF, $247,000 Avg 40 HFIs, $500 to $999 PSF, $165,800 93 TFIs at $500 or less, $99,200 Avg –Over $1.0 Billion in Sales Worldwide

7. IRMA The Bowden – Johnson Group 7 March 2006 Buyer Rationale  Smart Way to Own Second Home –Buy only what you use –Turn-key acquisition –No ownership Hassles –Luxury living at an affordable price –Full resort services and amenities –Retains value in resale

8. IRMA The Bowden – Johnson Group 8 March 2006 Pricing Formula  Start with market value in whole – ownership…  Multiply by 1.75 (1.5 to 2.0)…  Divide by the number of fractions per physical unit…  Example: –$1.25 Million home x 1.75 = $2.2 Million –$2.2 Million / 10 Members = $220,000

9. IRMA The Bowden – Johnson Group 9 March 2006 How Many Interests per Unit?  Number of Days in Peak Season  Divide by Average Days of Use per Member  Example: –120 Days Peak Season –Divide by 14 Days Priority Time –Equals 8 Members per Unit

10. IRMA The Bowden – Johnson Group 10 March 2006 Economic Comparison

11. IRMA The Bowden – Johnson Group 11 March 2006 Four Seasons Vacation Club Suite 380 SF 1 BR 1150 SF Total1530 SF

12. IRMA The Bowden – Johnson Group 12 March 2006 Calistoga Ranch

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17. IRMA The Bowden – Johnson Group 17 March 2006 Esperanza

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22. IRMA The Bowden – Johnson Group 22 March 2006 Under Air1600 SF Outside Area 800 SF Total2400 SF

23. IRMA The Bowden – Johnson Group 23 March 2006 Under Air2200 SF Outside Area 800 SF Total3000 SF

24. IRMA The Bowden – Johnson Group 24 March 2006 Ritz Carlton Lodge

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29. IRMA The Bowden – Johnson Group 29 March 2006 Hotels & Fractionals  Development profits reduce hotel basis, enhancing yield.  High occupancy drives ancillary revenues… F&B, Golf, Spa  Dues contribution to overhead  Management Fees to operate PRC  Enhanced Market Image

30. IRMA The Bowden – Johnson Group 30 March 2006 Critical Issues  Keep the PRC element small –20 to 40 residential units. –That’s 200 to 400 Sales –Get out before resales start  Brand it... Two elements of Value –Buyer security of professional management –Pride of ownership

31. IRMA The Bowden – Johnson Group 31 March 2006 Critical Issues (Cont’d)  Amenitize it… That’s the difference –Club membership overlay –Resort wide amenities –Pricing & access preferences  Sell it right… It’s real estate –Find prospects… not hotel guests. –Second home + club membership –Emotional… not logical