PREFERRED EQUITY SUMMARY

Local Attractions

Tolleson 91st Hospitality, LLC (“Issuer”) is pleased to offer investors the opportunity to invest $4.75 million in Preferred Equity in a 116-key Fairfield Inn & Suites by Marriott in the city of Tolleson, AZ. The funds will be used to redeem all or a portion of the existing Class 1 membership interests. Constructed in 2019, the subject hotel is located in a mixed-use site with planned retail and multifamily developments and is situated on an elevated parcel adjacent to Interstate 10.

Location Highlights – The Fairfield Inn & Suites by Marriott hotel sits adjacent to I-10 with easy access to I-17 and Loop 101. It embraces numerous local demand generators, such as the Westgate Entertainment District (5 miles, a super-regional entertainment destination with over 22 million visitors annually1), the Gila River Arena (5 miles, 14 million visitors annually1), the State Farm Stadium (5.4 miles, 2023 Super Bowl host1). Due to its proximity to the entertainment district and downtown Phoenix, the hotel is well-positioned to benefit from both leisure and business travelers.

Demand Drivers – Tolleson’s unique location has made it a prominent distribution hub for companies that want to deliver products to the Southwestern markets. Tolleson’s business-friendly environment has attracted companies such as PepsiCo, Kroger, Staples, Albertson’s, and Home Depot. Leisure demand is driven by major sports and music events hosted in the entertainment district. Universities nearby include Arizona State University and Northern Arizona University.

Strong Market Fundamentals – Phoenix MSA is the 10th largest MSA by population in the U.S. and the 2nd fastest-growing metro nationwide in net migration in 2021.2 It ranked #7 in Best-Performing Cities3 in 2021. 4 Phoenix has outperformed the nation in employment growth since 2011.5 Phoenix hospitality market is more resilient than the national level during the pandemic (2021 KPIs: Occupancy – 61.70% vs. 57.40% nationwide; ADR – $130.59 vs. $121.61 nationwide; RevPAR – $80.59 vs. $69.81 nationwide).6 RevPAR is expected to recover to 2019 levels in 2023.6, 7

Leading Brand & Resilient Select Service Model – Fairfield is a proven performer with a 30+ year legacy of delivering strong results and the second largest Marriott brand based on the number of hotels.8 The select service sector has outperformed the full-service sector due to a simpler operating model and steady demand. Select service hotels have proved their resiliency during market declines. With inflation at a 40-year high, investing in the select service sector provides a better hedge against inflation as the risk of expense creep is decreased.

Synergistic Management Team – Hotel Equities is a best-in-class hotel operator managing a portfolio of 209 hotels and projects throughout the U.S. and Canada.14 Currently, Hotel Equities manages 3 hotels across Arizona and 24 Fairfield Inn & Suites by Marriott, benefiting the Property given their intimate market and brand knowledge. A majority of Hotel Equities’ management portfolio falls into the select-service hotel category.

Note: 1. Wikipedia, extracted on Dec. 17, 2021. 2. U.S. Census Bureau, extracted on Aug. 30, 2022. 3. Milken Institute, published on Apr. 21, 2021. 4. LaborIQ, published on Dec. 1, 2021. 5. Timeframe for the CAGR: Nov. 2011 – Nov. 2021. Seasonally adjusted. U.S. BLS, extracted on Dec. 22, 2021.  6. CBRE Appraisal, as of May 24, 2022.   7. On a nominal basis.   8. Marriott International, Q2 2022.   9. LW Hospitality Advisors Appraisal dated June 15, 2022.   10. Date of Value – Apr.  1, 2022. 11. Date of Value – Apr. 1, 2024. 12. TTM as of July 2022. 13. Subject to increase or decrease as determined by the Company Manager. 14. Including the hotels open, under construction, and in development as of June 2, 2022.

Aerial Map

The Fairfield Inn & Suites by Marriott hotel sits adjacent to I-10 with easy access to I-17 and Loop 101. It embraces numerous local demand generators, such as the Westgate Entertainment District (5 miles, a super-regional entertainment destination with over 22 million visitors annually1), the Gila River Arena (5 miles, 14 million visitors annually2), the State Farm Stadium (5.4 miles, 2023 Super Bowl host1), Phoenix Raceway (9.6 miles, host two NASCAR race weekends annually1), and the South Mountain Park (18 miles, the largest city park in the U.S.1). The hotel is 15.4 miles to the Phoenix Sky Harbor International Airport, Arizona’s largest and the United States 8th busiest airport (over 46.3 million passengers annually in 20191) and is within 8 miles to the Glendale Municipal Airport (90,144 aircraft operations annually3).

Local Map

The hotel is surrounded by a wide variety of industrial and commercial facilities, including the Home Depot Distribution Center (3 miles), Kroger Distribution Center (3.4 miles), and more than ten Amazon Fulfillment Centers & Warehouses (mostly within 8 miles). Additional demand drivers nearby include Banner Estrella Medical Center (1.3 miles, a full-service, top-performing hospital in west Phoenix, served over 1.5 million patients over the past 15 years3), Northern Arizona University (1.8 miles, 28,718 enrolled1), Western Regional Medical Center (7.1 miles, 163,000 annual patients4), Arizona Capitol Museum (10.2 miles, 70,000+ annual visitors5), and Grand Canyon University (13.0 miles, 23,500 enrolled2).

• The hotel retained a high level of occupancy during the Winter and Spring months last year despite the lockdown in
• COVID-19 concerns are waning as the state of Arizona declared a full re-opening.1
• The property is gearing up for a seasonal uptick in leisure travel.

Location

The West Valley region in Phoenix has achieved tremendous population growth over the past few decades, reaching 1.7 million residents in 2020, and is projected to grow at twice the national rate of growth over the next five years, reaching 2.1 million by 2030.1 This vibrant region serves as a gateway to the West Coast and global trade markets. Important infrastructure improvements such as Loop 101, Loop 202, Loop 303, and Interstate 10 position this region for great residential, commercial, and industrial growth opportunities.

During Q2 2021, of the more than 18 million square feet of new industrial product under construction in the Phoenix metro – a record high for a single quarter – about 75% occurred in the West Valley.2

The West Valley’s large talent pool, affordable cost of living, ease of doing business, and availability of land has attracted healthcare, distribution, and advanced manufacturing businesses to the region. Companies such as Nike, Amazon, Andersen Corporation, and Microsoft are bringing thousands of jobs to the area. Taiwan Semiconductor (TSMC), the world’s largest contract producer of silicon chips, is building a $12 billion semiconductor facility in the West Valley.3 The TSMC facility is projected to create over 1,600 high-tech professional jobs directly and thousands of indirect jobs in the semiconductor industry.1

Recently, the West Valley area has seen infrastructure improvements with the completion of the South Mountain Freeway. This will spur economic development opportunities along the 59th Street corridor and expand the workforce base for the West Valley. The capital improvements, talented workforce, and livability will attract businesses and talent alike for years to come.1

The Greater Phoenix region continues to grow in economic vitality. Stakeholders are dedicated to working in collaboration to further enhance a growing economy. Opportunities are boundless in the West Valley, as leaders remain vigilant in strategic planning focused on the long-term impacts. Dedicated to infrastructure, emphasis on placemaking, and producing talent will serve to elevate the West Valley’s profile to companies looking to expand.2 Note: 1. TSMC News Archives, May 15, 2020.  2. Phoenix Business Journal, published on Aug. 9, 2021.  3. Google Maps, extracted on Sept. 22, 2022.

Phoenix MSA Economics Highlights

Robust Population and Migration Growth

• ~16.3% population growth from 2011 to 2021 (~1.5% CAGR) ~12.4% in Arizona (~1.2% CAGR) vs.~6.5% in the U.S. (~0.6% CAGR)1
• #10 largest MSA by population in the U.S. in 20211
• #2 in net migration growth in 2021 nationwide amongst MSAs with a population greater than 2 million (migration accounted for ~89.6% of population growth)1
• #3 most popular relocation destination for Millennials2

Strong Home Price & Rent Appreciation

• Phoenix has led the nation in home price growth for more than 5 years3, and by May, the median sale price grew to an all-time high of $470K (24.8% YoY growth)4
• Despite a slowdown in housing markets, affordability remains an issue as only 22.3% of homes sold in 2Q22 were affordable to families earning the median income, a sharp drop from 9% in 1Q225.
• Rent growth in Phoenix was up 22.0% YoY TTM as of Aug. 2022 vs. 15.4% nationally6,7

Booming Labor Market

• #4 Best-Performing City in 2022, improved from #7 in 2021 according to the Milken Institute8,9
• #3 Best-Performing Labor Market in November 2021 by LaborIQ Index10,11
• Employment growth has been outperforming the U.S. avg. since 2011 (2.6% CAGR vs. 1.1% nationally)12,13
• Unemployment rate ranged between 3.2% -13.5% during the pandemic vs. 4.3%-14.4% in the U.S.14
• Faster labor market recovery than the nation. Phoenix MSA nonfarm payroll surpassed its pre-COVID peak in Aug. 2021 vs. only 77.4% recovery nationally13,15

Note: 1. U.S. Census Bureau, extracted on Aug. 30, 2022. 2. Phoenix Business Journal, published on Apr. 6, 2021. 3. S&P Case Shiller Index, published on Apr. 26, 2022. 4. Redfin, extracted on Sept. 20, 2022. 5. NAHB / Wells Fargo Housing Opportunity Index, extracted on Sept. 20, 2022. 6. Zillow Rental Index, extracted on Sept. 20, 2022. 7. Compared to the average rent growth in the United States. 8. Milken Institute, published on Mar. 28, 2022. 9. Factors include jobs, wages, high-tech growth, and housing affordability. 10. LaborIQ, published on Dec. 1, 2021. 11. Indicators include population growth, net migration, job gains, and job growth. 12. Timeframe for the CAGR: Nov. 2011 – Nov. 2021. 13. Seasonally adjusted. U.S. BLS, extracted on Dec. 22, 2021.  14. Timeframe: Mar. 2020 – Oct. 2021. Source: U.S. BLS, not seasonally adjusted, extracted on Feb. 17, 2022. 15. The recovery rate is calculated using the total jobs added during Apr. 2020 – Aug. 2021 / total job losses in each region in Mar. 2020 & Apr. 2020.

Healthcare

The healthcare sector is the largest private-sector employer. Roughly 36%, or about 41,000 skilled healthcare workers, live in the West Valley area.2 Located only 1.3 miles from the subject property, Banner Estrella Hospital has 317 hospital beds and offers an array of medical services, including heart care, emergency services, general surgery, weight loss surgery, medical imaging, orthopedic surgery, and a comprehensive maternity services program.4 Banner Health, in total, employs approximately 3,360 people in the West Valley area.1

Information Technology & Data Centers

The West Valley has over 35,000 IT professionals and 20 IT startups currently.3 Organizations in the West Valley area developed a program to identify, mentor, scale, and bring investments into tech startups, ultimately increasing the West Valley workforce tech pipeline. Over the past few years, tech companies have also sought the West Valley land to build data centers. Companies like Microsoft, Stream, and Compass have purchased hundreds of acres of land in Goodyear. Phoenix has seen an increase in data center development largely due to its stable climate, competitive power, strong labor pool, and tax incentives.

Warehouse & Distribution

Warehouse & Distribution comprised more than 91% of the new industrial constructions (16.4 million sq ft out of 18 million sq ft) in the Phoenix metro during Q2 2021.6 United Parcel Service is one of the largest distribution employers and has approximately 1,860 employees in the area.1 UPS Supply Chain Solutions also announced to add 1,200 jobs to its new and existing facilities in the area in Oct. 2021.5

Aerospace and Defense

The West Valley’s available land, accessibility to several aviation facilities, and connectivity to neighboring markets such as California and Texas have attracted companies like Lockheed Martin and Honeywell. Luke Air Force Base, located in the West Valley, is a major economic driver in the region, with an economic impact of $2.2 billion in the state of Arizona.3

Note 1. Maricopa Association of Governments, extracted on Aug. 30, 2022. 2. WestMARC, extracted on Dec 22, 2021. 3. CBRE & Westmarc, extracted on Dec 22, 2021. 4. Banner Health, extracted on Dec 22, 2021. 5. Phoenix Business Journal, published on Oct 15, 2021. 6. Phoenix Business Journal, published on Aug. 9, 2021.

Westgate Entertainment District

Westgate Entertainment District is one of North America’s largest mixed-use entertainment districts. The entertainment district is home to Gila River Arena, and State Farm Stadium offers more than 7 million square feet of space for retailers and event venues. With the National Football League and events such as music festivals, the district attracts over 22 million visitors annually. The entertainment district is located 5 miles north of Fairfield Inn.1

Gila River Arena

Located 5 miles north of Fairfield Inn, Gila River Arena is a spectacular multi-purpose facility that towers over the Westgate Entertainment District. The 223-acre arena is well-equipped to host world-class concerts and events with a 19,300 seating capacity, plus 400 club seats and 87 luxury suites. 2 The arena attracts over 14 million visitors annually. 3

State Farm Stadium

Home to NFL’s Arizona Cardinals, State Farm Stadium is just 5.4 miles north of Fairfield Inn. The 1.7 million square feet stadium offers a world-class experience for fans with a retractable roof, 63,400 seats, and 88 luxury suites. Voted as NFL’s best playing surface in 2008, the stadium has hosted two Super Bowls (2008, 2015) and has been chosen for the 2023 Super Bowl. According to a study from Arizona State University, the 2015 Super Bowl held at Glendale produced an economic impact of $719.4 million to Arizona. 4

Camelback Ranch Stadium

The Camelback Ranch Stadium is 4.5 miles from Fairfield Inn and a spring training ground for Los Angeles Dodgers and Chicago White Sox. Camelback Ranch is one of the ten stadiums that form the Cactus League, which hosts more than 200 games in the spring and has average seasonal spending of $644 million. The complex includes more than 118,000 square feet of clubhouse space, a seating capacity of 10,000, 8 full suites, and 4 mini-suites.5

South Mountain Park

Located 18 miles southeast of Fairfield Inn, South Mountain Park is one of the largest municipal parks with more than 16,000 acres, 50 miles of hiking trails, and three mountain ranges. Dobbins Lookout, the highest point of the park at 2,330 feet, is a popular spot for tourists and locals who want an unobstructed view of the valley. 6

Note: 1. Cushman & Wakefield, extracted on Dec.17, 2021. 2. https://www.asmglobal.com/p/our-portfolio/arenas/gila-river-arena, extracted on Dec. 23, 2021. 3. https://www.gilariverarena.com/arena-info/about, extracted on Dec. 17, 2021. 4.https://www.cnbc.com/2016/01/29/super-bowl-benefits-host-city-but-by-how-much.html, extracted on Dec. 17, 2021. 5. https://www.mlb.com/camelback-ranch/about, extracted on Dec. 17, 2021. 6. https://www.phoenix.gov/parks/trails/locations/south-mountain, extracted on Dec. 17, 2021.

Arizona State University

Located 12 miles east of Fairfield Inn, Arizona State University (“ASU”) is a public research university that was founded in 1885. ASU offers more than 400+ undergraduate and 590+ graduate degree programs and had an enrollment of 135,729 in fall 2021 across all campuses. According to U.S. News & World Report, ASU is ranked the top school of innovation and raised $356.6 million in research funding for 2021. ASU is estimated to contribute about $4.48 billion in FY21 in economic impact to the State of Arizona.1

Northern Arizona University

Founded in 1899, Northern Arizona University is a public research university that offers over 270 undergraduate and graduate degree programs. 28,718 undergraduates were enrolled as of fall 2021. Northern Arizona University ranked 57th for innovation and 153rd for social mobility by U.S. News & World Report.2 Northern Arizona University’s Tolleson campus is 1.8 miles west of Fairfield Inn.

Grand Canyon University

Founded in 1949, Grand Canyon University is a private institution that offers over 200 undergraduate and graduate degree programs. 23,500 undergraduates were enrolled as of fall 2021. Grand Canyon University ranked 78th for social mobility and 166th for best engineering programs by U.S. News & World Report.3 Grand Canyon University is 13 miles northeast of Fairfield Inn.

St. Joseph’s Hospital and Medical Center

Founded in 1895, St. Joseph’s Hospital was the first hospital in Phoenix. It has achieved national recognition in medical education and research. It is classified as a Level 1 Trauma Center, which provides specialization in cancer treatment, orthopedics, neurology, and women’s health. St. Joseph Hospital is a non-profit hospital that treats over 33,000 patients annually. The hospital is located 12.1 miles northeast of Fairfield Inn.4

Phoenix Sky Harbor International Airport

Opened in 1929, Phoenix Sky Harbor International Airport (“PHX”) is 5.2 miles southeast of downtown Phoenix and 15.4 miles from Fairfield Inn. A news report by USA Today in 2016 ranked PHX as the best airport in the United States and among the nation’s busiest airports. 5 It serves more than 120,000 passengers daily, with more than 1,200 flights per day, 39 million passengers walked through its terminals in 2021. PHX’s annual economic impact is estimated at $38 billion.6

Note: 1. https://www.asu.edu/about, extracted on Aug. 30, 2022. 2. https://www.usnews.com/best-colleges/northern-arizona-university-1082, extracted on Dec. 23, 2021. 3. https://www.usnews.com/best-colleges/grand-canyon-university-1074, extracted on Dec. 23, 2021. 4. https://www.dignityhealth.org/arizona/locations/stjosephs/about-us, extracted on Dec. 23, 2021. 5.https://www.usatoday.com/story/travel/flights/todayinthesky/2016/11/03/ranking-the-usas-30-busiest-airports/93228668/, extracted on Dec. 23, 2021. 6. https://www.skyharbor.com/about/development, extracted on Aug. 30, 2022.

Faster Recovery Than the Country

• 2021 Market KPIs: Occupancy – 2% vs. 74.9% in 2019; ADR – $123.40 vs. $127.11 in 2019; RevPAR – $95.22 vs. $95.15 in 2019
• 2021 S. KPIs: Occupancy – 57.6% vs. 66.2% in 2019; ADR – $125.00 vs. $131.21 in 2019; RevPAR – $72.00 vs. $86.79 in 2019

Diverse Traveler Profiles

The Tolleson market benefits from a combination of commercial, leisure, and group.

• Commercial (53.6% of Guests) – Commercial is the largest demand generator for the market as Tolleson serves as a major warehouse/distribution hub with a variety of companies operating in the area, including Home Depot, Kroger’s, Fry’s, and Amazon.
• Leisure (34.5% of Guests) – Sports events are a major driver of leisure demand. Camelback Ranch Stadium is the Spring Training home for the Los Angeles Dodgers and Chicago White Sox, contributing to increased demand in the months of February. State Farm Stadium (NFL Arizona Cardinals) also attracts leisure guests. Additionally, growth in travel along the interstate 10 and 101 loop has driven travelers toward the Tolleson market over the past few years.
• Meeting (11.9% of Guests) – Meeting demand is typically concentrated amongst training programs, seminars, and product launches held by neighboring distribution centers.

Hotel Development Pipeline

• The hotel development pipeline is moderate in 2021, and no proposed hotels are anticipated to enter the immediate area in the near future that are considered to be directly competitive with the subject property.1 The Glendale City Council has approved a development to bring Crystal Lagoons Island Resort to Westgate Entertainment District. The resort will consist of a water park, retail spaces, entertainment centers, and more than 600 hotel rooms. The single-phased development is expected to complete in 2022 and bring 1,800 jobs to Glendale.

*These are summarized financial projections. There will be differences between the projected and actual results because events and circumstances frequently do not occur as expected and those differences may be material.

 

COVID-19: The extent to which COVID-19 will continue to impact the real estate industry will depend on future developments which are highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of COVID-19, the actions taken to contain COVID-19 or mitigate its impact, and the direct and indirect economic effects of COVID-19 and the related containment measures.

Recession: An economic recession or a slowdown in the real estate industry would impact our financial results and growth.

Real Estate Risks:

The Project’s business is subject to all of the risks associated with the real estate industry.

• Investments in real estate are speculative in nature.
• Many of these risks are not within the Project’s control and could adversely impact the value of the investments. These risks include, but are not limited to:
  • downturns in worldwide, national, regional, and local economic conditions
  • conditions affecting real estate in specific markets in which the Project may invest, such as oversupply or reduction in demand for real estate;
  • changes in interest rates and availability of attractive financing;
  • changes in real estate and zoning laws;
  • environmental and/or engineering issues unforeseen in due diligence and changes in environmental legislation and related costs of compliance;
  • condemnation and other taking of property by the government;
  • changes in real estate taxes and any other operating expenses; and
  • the potential for uninsured or underinsured property losses.

For a more detailed description of these risks, please see the Project’s Private Placement Memorandum, as amended and supplemented.

PLEASE READ – IMPORTANT NOTICES

Disclaimer: This information is not intended to be, nor should it be construed or used as, investment or financial advice, any recommendation, an offer to sell, or a solicitation of any
offer to buy, an interest in any security or in any other investment or project managed or advised by Tolleson 91st Hospitality, LLC, an Arizona limited liability company, or
its affiliates (collectively, “Tolleson”). Any offer or solicitation of an investment may be made only by delivery of the offering documents, including the private placement
memorandum, operating agreement, and subscription agreement (the “Offering Documents”). Prospective investors should review carefully and rely solely on the
Offering Documents in making any investment decision. Investors should consult their own financial professionals for advice specific to them.

Information provided is as of November 8, 2022, has not been audited and is subject to change. Past performance is not necessarily indicative of future results, and there is no assurance that the Project will achieve its objectives or avoid significant losses. Any statements regarding future events constitute only subjective views, are based upon expectations or beliefs, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond Tolleson’s control. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying these statements.

FINANCIAL PROJECTIONS

The above includes summarized financial projections. They are based on assumptions that reflect management’s judgment regarding expected courses of action
and future financial and market conditions. There usually will be differences between projected and actual results because events and circumstances frequently do
not occur as expected, and those differences may be material.

NO INDEPENDENT ACCOUNTANTS HAVE EXAMINED OR COMPILED THE FORWARD-LOOKING STATEMENTS SET FORTH ABOVE.

ALTHOUGH TOLLESON’S MANAGEMENT BELIEVES THAT THE ASSUMPTIONS ON WHICH PROJECTIONS ARE BASED ARE REASONABLE, NO REPRESENTATION IS MADE OR SHOULD BE INFERRED WITH RESPECT TO THE LIKELIHOOD THAT THE PROJECTIONS SET FORTH CAN OR WILL BE ACHIEVED. TOLLESON’s MANAGEMENT DOES NOT INTEND TO UPDATE PROJECTIONS INCLUDED ABOVE.