EFTA00803859.pdf

Integra Realty Resources Caribbean Appraisal of Going Concern IGY American Yacht Harbor Marina Mixed Use Property 18A-1, 18-B1,18-B and 18-W Remainder Estate Smith Bay East End Quarter, St. Thomas, Virgin Islands Client Reference: 23559 Prepared For: Banco Popular de Puerto Rico Effective Date of the Appraisal: November 25, 2015 Report Format: Appraisal Report —Standard Format IRR - Caribbean File Number: 172-2015-0181 irr EFTA00803859  GY American Yacht Harbor Marina 18A-1, 18-81,18.8 and 18-W Remainder Estate Smith Bay East End Quarter, St. Thomas, Virgin Islands EFTA00803860  Integra Realty Resources 6500 Red Hook Plaza Suite 201 T 340.714-7325 Caribbean St. Thomas, VI 00802 US. Virgin Islands www.irr.com irr® December 15, 2015 Roberto A. Soltero Vice President Banco Popular de Puerto Rico PO Box 362708 San Juan, PR 00936-2708 SUBJECT: Market Value Appraisal IGY American Yacht Harbor Marina 18A-1, 18-B1,18-B and 18-W Remainder Estate Smith Bay East End Quarter, St. Thomas, Virgin Islands Client Reference: 23559 IRR - Caribbean File No. 172-2015.0181 Dear Mr. Soltero: Integra Realty Resources —Caribbean is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value of the leased fee (going concern) interest in the property. The client for the assignment is Banco Popular de Puerto Rico, and the intended use is for Commercial credit administration. The appraisal is intended to conform with the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, the Principles of Appraisal Practice and Code of Ethics of the American Society of Appraisers, the RICS Valuation Professional Standards, the International Valuation Standards, applicable jurisdictional appraisal regulations, and the appraisal guidelines of Banco Popular de Puerto Rico. The appraisal is also prepared in accordance with the appraisal regulations issued in connection with the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). To report the assignment results, we use the Appraisal Report option of Standards Rule 2- 2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we EFTA00803861 Roberto A. Soltero Banco Popular de Puerto Rico December 15, 2015 Page 2 adhere to the Integra Realty Resources internal standards for an Appraisal Report — Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. The subject is an existing 250-slip marina with 5 commercial buildings containing a mixture of retail and office space types. The buildings contain 48,661 square feet of rentable area and were constructed in multiple stages; with the majority of the construction completed in 1993. The commercial space is 85% leased as of the effective appraisal date. The marina docks were constructed in multiple phases between 1991-1995 and are 52.8% occupied as of the effective appraisal date. The total site area is 2.76 acres or 120,226 square feet, which includes 0.64 acre or 27,878 square feet, that is re-claimed land. The property also includes 3.2 acres of seabed under the marina dock structures which is leased to the property owner from the Government of the Virgin Islands. Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value is as follows: Value Conclusion• Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value teased Fee (Going Concern) November 25, 2015 $24,360,000 'Values expressedin United States Dollars Allocation of Going Concern Value Amount % of Total Tangible Property land & Improvements $24,250,000 99.5% Tangible Personal Property (FF&E) $110,000 0.5% Total Tangible Property $24,360,000 100.0% I nta nal ble Assets $0 0.0% Market Value' $24,360,000 100.0% *Specificallyexcluded from the valuation are cash and equivalents and current liabilities. The allocation of value components is based on the going-concern premise, which holds that the value of a business as a going-concern is equal to the sum of the values of the tangible and intangible assets. The allocation assumes continued operation of the marina business. Were the marina business to cease operations, the values of the individual components would likely be different from the allocated values of the going concern. EFTA00803862 Roberto A. Soltero Banco Popular de Puerto Rico December 15, 2015 Page 3 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. Ni extraordinary assumption is uncertain information accepted as fact if the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. The subject property has a fueling dock and four fuel storage tanks located on site; including three diesel and one gasol i ne. There were no signs of contamination during our inspection and we have assumed that there is no adverse environmental impact in connection with the existing fuel equipment used on the subject property. 2. The parking garage at the subject slightly encroaches on the neighboring property to the Immediate northwest This land Is owned by the Government of the Vi rgin Islands and we have assumed that no claim will arise from the encroachments. 3. For this analysis, we have valued the going concern Interest in the subject property and have allocated the value of the personal property from the value of the real property. We were provided with financial statments from ownership that indicates the depreciated book value of these assets. It is beyond our scope to value these assets in use; therefore, we have assumed that the book values of teh personal property items shown in the statments provided by ownership are reasonably accurate for the purpose of this allocation exercise. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition Is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. No hypothetical conditions were employed in this analysis. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and subject to considerable risk and uncertainty. Events may occur that could cause the performance of the property to differ materially from our estimates, such as changes in the economy, interest rates, capitalization rates, financial strength of tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based partly on data obtained from interviews and third party sources, which are not always completely reliable. Although we are of the opinion that our findings are reasonable based on available evidence, we are not responsible for the effects of future occurrences that cannot reasonably be foreseen at this time. EFTA00803863 Roberto A. Soltero Banco Popular de Puerto Rico December 15, 2015 Page 4 If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service. Respectfully submitted, Integra Realty Resources - Caribbean Mark J. Weathers James V. Andrews, MAI, CRE, FRICS, ASA, CVA Certified General Real Estate Appraiser Certified General Real Estate Appraiser VI Certificate # 1-21738-1B VI Certificate # 0-14194-1B Telephone: 340-714-7325 Telephone: 345-746-3110 Email: Email: EFTA00803864 Table of Contents Summary of Salient Facts and Conclusions 1 Income Capitalization Approach 57 General Information Market Rent Analysis — General Retail 3 Identification of Subject Space 59 3 Sale History Market Rent Analysis — General Office 3 Pending Transactions Space 65 3 Purpose of the Appraisal Market Rent Analysis — Restaurant Space 71 4 Basis of Value Market Rent Analysis — Marina Slip Rentals78 4 Definition of Property Rights Appraised Reconciliation and Conclusion of Value 106 4 Definition of Going-Concern Premise Exposure Time 107 4 Intended Use and User Marketing Period 107 5 Applicable Requirements Allocation of Going-Concern Value 108 Prior Services Value of Furniture, Fixtures and Equipment Competency (FF&E) 108 5 Independence Value of Intangible Assets 109 6 RICS Valuer Registration Allocation of Going-Concern Value 109 6 Currency Insurable Replacement Cost 110 6 Scope of Work 6 Certification 111 Economic Analysis 8 Assumptions and Limiting Conditions 113 Area Analysis 8 Addenda Surrounding Area Analysis 22 A. Appraiser Qualifications Marina Market Analysis 25 B. Financials and Property Information Property Analysis 36 C. Comparable Data Land Description and Analysis 36 D. DCF Reports Improvements Description and Analysis 42 E. Engagement Letter Real Estate Taxes 52 Highest and Best Use 54 Valuation 56 Valuation Methodology 56 ICY American Yacht Harbor Marina EFTA00803865 Summary of Salient Facts and Conclusions 1 Summary of Salient Facts and Conclusions Property Name IGY American Yacht Harbor Marina Address 18A-1, 1841,18.8 and 18-W Remainder Estate Smith Bay East End Quarter, St. Thomas, Virgin Islands Property Type Mixed Use - Marina Owner of Record IGY-AYH St Thomas Holdings, LLC Parcel ID 1-07702-0135-00, 1-07702.0134.00, 1-07702-0133-00, and 1-07702-0198-00 Legal Description Parcel Nos. 18A-1 Remainder, 18B-1 Remainder, 18B Remainder Estate and 18-W Estate Smith Bay, Nos. 1, 2 and 3 East End Quarter, St. Thomas, U.S. Virgin Islands land Area 2.76 acres; 120,226 SF Number of Units 105 Gross Building Area 72,808 SF Rentable Area 48,652 SF Percent Leased 85% Year Built; Year Renovated 1992; N/A Zoning Designation W-1, Waterfront - Pleasure Highest and Best Use -As if Vacant Marina oriented commercial use Highest and Best Use - As Improved Continued marina and commercial use Exposure Time; Marketing Period 12-24 months; 12.24 months Effective Date of the Appraisal November 25,2015 Date of the Report December 15,2015 Property Interest Appraised Leased Fee (Going Concern) Market Value Indications Cost Approach Not Used Sales Comparison Approach Not Used Income Capitalization Approach $24,360,000 Market ValueConclusion• 524,360,000 •Values expressed in United States Dollars She values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary Is a part. No pa rty other than Banco Popular de Puerto Rico may use or rely on the Information, opinions, and conclusions contained In the report. It Is assumed that the users of the report have read the entire report, Including all of the definitions, assumptions, and limiting conditions contained therein. IGY American Yacht Harbor Marina EFTA00803866 Summary of Salient Facts and Conclusions 2 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. The subject property has a fueling dock and four fuel storage tanks located on site; including three diesel and one gasoline. There were no signs of contamination during our inspection and we have assumed that there is no adverse environmental impact in connection with the existing fuel equipment used on the subject property. 2. The parking garage at the subject slightly encroaches on the neighboring property to the immediate northwest This land is owned by the Government of the Virgin Islands and we have assumed that no claim will arise from the encroachments. 3. For this analysis, we have valued the going concern interest in the subject property and have allocated the value of the personal property from the value of the real property. We were provided with financial statments from ownership that indicates the depreciated book value of these assets. It is beyond our scope to value these assets in use; therefore, we have assumed that the book values of teh personal property items shown in the statments provided by ownership are reasonably accurate for the purpose of this allocation exercise. The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. No hypothetical conditions were employed in this analysis. IGY American Yacht Harbor Marina EFTA00803867 General Information 3 General Information Identification of Subject The subject is an existing 250-slip marina with 5 commercial buildings containing a mixture of retail and office space types. The buildings contain 48,661 square feet of rentable area and were constructed in multiple stages; with the majority of the construction completed in 1993. The commercial space is 85% leased as of the effective appraisal date. The marina docks were constructed in multiple phases between 1991-1995 and are 52.8% occupied as of the effective appraisal date. The total site area is 2.76 acres or 120,226 square feet, which includes 0.64 acre or 27,878 square feet, that is re-claimed land. The property also includes 3.2 acres of seabed under the marina dock structures which is leased to the property owner from the Government of the Virgin Islands. The legal description of the property is shown below. Property Identification Property Name IGY American Yacht Harbor Marina Address 18A-1, 18-61,18-B and 18-W Remainder Estate Smith Bay East End Quarter, St. Thomas, Virgin Islands Parcel ID 1-07702-0135-00, 1-07702-0134.00, 1.07702-0133-00, and 1-07702.0198.00 Owner of Record IGY-AYH ST. Thomas Holdings, LLC Legal Description Parcel Nos. 18A-1 Remainder, 188-1 Remainder, 186 Remainder Estate and 18-W Estate Smith Bay, Nos. 1, 2 and 3 East End Quarter, St. Thomas, U.S. Virgin Islands Sale History The most recent closed sale of the subject is summarized as follows: Sale Date January 19, 2007 Seller MOF VI Limited Partnership Buyer IGY-AYH ST. Thomas Holdings, Ur Sale Price $25,500,000 Recording Instrument Number document number 2007000531 Expenditures Since Purchase Unknown The sale price is consistent with our market value conclusion considering the date of the transaction and the market fluctuation since that time. To the best of our knowledge, no sale or transfer of ownership has taken place within a three-year period prior to the effective appraisal date. Pending Transactions To the best of our knowledge, the property is not subject to an agreement of sale or an option to buy, nor is it listed for sale, as of the effective appraisal date. IGY American Yacht Harbor Marina EFTA00803868 General Information 4 Purpose of the Appraisal The purpose of the appraisal is to develop an opinion of the market value of the leased fee (going concern) interest in the property as of the effective date of the appraisal, November 25, 2015. The date of the report is December 15, 2015. The appraisal is valid only as of the stated effective date or dates. Basis of Value Market value is defined as: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: • Buyer and seller are typically motivated; • Both parties are well informed or well advised, and acting in what they consider their own best interests; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." (Source: Code ofFederal Regulations, Title 12, Chapter I, Part 34.42(g); also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Definition of Property Rights Appraised Leased fee interest is defined as, "A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord-tenant relationship (i.e., a lease)." Lease is defined as, "A contract in which rights to use and occupy land or structures are transferred by the owner to another for a specified period of time in return for a specified rent." (Source: The Dictionary ofReal Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois, 2010) Definition of Going-Concern Premise Going-Concern Premise is defined as, "one of the premises under which the total assets of a business can be valued; the assumption that a company is expected to continue operating well into the future (usually indefinitely). Under the going-concern premise, the value of a business as a going concern is equal to the sum of the value of the tangible assets and the value of the intangible assets, which may IGY American Yacht Harbor Marina EFTA00803869 General Information S include the value of excess profit, where asset values are derived consistently with the going-concern premise." (Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois, 2010) Intended Use and User The intended use of the appraisal is for Commercial credit administration. The client and intended user is Banco Popular de Puerto Rico. The appraisal is not intended for any other use or user. No party or parties other than Banco Popular de Puerto Rico may use or rely on the information, opinions, and conclusions contained in this report. Applicable Requirements This appraisal is intended to conform to the requirements of the following: • Uniform Standards of Professional Appraisal Practice (USPAP); • Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute; • The Principles of Appraisal Practice and Code of Ethics of the American Society of Appraisers • The RICS Valuation Professional Standards; • The International Valuation Standards of the IVSC; • Applicable jurisdictional regulations; • Appraisal requirements of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), revised June 7, 1994; • Interagency Appraisal and Evaluation Guidelines issued December 10, 2010; • Appraisal guidelines of Banco Popular de Puerto Rico. Prior Services USPAP requires appraisers to disclose to the client any other services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. The RICS Red Book also contains requirements for valuers to disclose previous involvement with the subject property within twelve months. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Competency We hereby confirm that we possess adequate knowledge and skills to perform the assignment competently, including an understanding area/regional market conditions, and factors which pertain to the property type in question. IGY American Yacht Harbor Marina EFTA00803870 General Information 6 Independence We hereby confirm that we have no conflicts of interest or material involvement in the property which is the subject of this valuation; and that we are acting as unbiased, independent, external valuers. RICS Valuer Registration We confirm that we are in compliance with the RICS Valuer Registration program, which is mandatory for RICS members in the Caribbean region. Currency Unless otherwise stated, all financial figures in this report are expressed in United States Dollars. Scope of Work To determine the appropriate scope of work for the assignment, we considered the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors. Our concluded scope of work is described below. Valuation Methodology Appraisers usually consider the use of three approaches to value when developing a market value opinion for real property. These are the cost approach, sales comparison approach, and income capitalization approach. Use of the approaches in this assignment is summarized as follows: Approaches to Value Approach Applicability to Subject Use in Assignment Cost Approach Not Applicable Not Utilized Sales Comparison Approach Not Applicable Not Utilized Income Capitalization Approach Applicable Utilized The income capitalization approach is the most reliable valuation method for the subject due to the following: • The probable buyer of the subject would base a purchase price decision primarily on the income generating potential of the property and an anticipated rate of return. • Sufficient market data regarding income, expenses, and rates of return, is available for analysis. The sales comparison approach is not applicable to the subject because: • This approach does not reflect the primary analysis undertaken by a typical investor- purchaser. • There are insufficient sales of comparable properties in this market from which to derive a credible value conclusion. The cost approach is not applicable to the subject considering the following: IGY American Yacht Harbor Marina EFTA00803871 General Information 7 • The age of the property makes estimates of accrued depreciation very subjective. • This approach is not typically used by market participants, except for new properties. Research and Analysis The type and extent of our research and analysis is detailed in individual sections of the report. This includes the steps we took to verify comparable sales, which are disclosed in the comparable sale profile sheets in the addenda to the report. Although we make an effort to confirm the arms-length nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary verification from sources deemed reliable. Inspection Mark!. Weathers conducted an interior and exterior inspection of the property on November 25, 2015. James V. Andrews, MAI, CRE, FRICS, ASA, CVA, also conducted an interior and exterior inspection on November 25, 2015. IGY American Yacht Harbor Marina EFTA00803872 Area Analysis 8 Economic Analysis Area Analysis Location The U.S. Virgin Islands are located in the Caribbean Sea and the Atlantic Ocean, about 90 miles (140 km) east of Puerto Rico and immediately west of the British Virgin Islands. The territory consists of four main islands: Saint Thomas, Saint John, Saint Croix, and Water Island, as well as several dozen smaller islands. The combined land area of the islands is roughly twice the size of Washington, ■. IGY American Yacht Harbor Marina EFTA00803873 Area Analysis 9 A mild tropical climate, scenic beauty, and status as a U.S. territory make Virgin Islands appealing for vacationers from United States and Europe. The islands host over 2.5 million visitors per year, most of whom arrive by cruise ship, and tourism is the dominant economic engine of the islands, accounting for roughly 70 percent of the total gross territorial product. Each district has its own distinct landscape, mix and intensity of land uses, cultural identity, and prospects for future development. St Thomas is home to the capital and the territory's largest city, Charlotte Amalie, which has an estimated population of roughly 19,000 persons. St Thomas is the primary center for resort tourism, government, finance, trade, and commerce, but its rugged landscape limits the land available for agriculture and other types of land-intensive development. Charlotte Amalie is also home to a major deepwater harbor that is along major shipping routes to the Panama Canal, and it is just east of the Cyril E King International Airport —one of the busiest airports in Caribbean. St. Thomas has two cruise ship docks, and is the most frequented cruise ship port in the Caribbean. The island of St John is just under 3 miles to the east of St Thomas. Cruz Bay is located on the western coast of the island and serves as its primary port and link to St Thomas. Nearly two thirds of St John is owned by the National Park Service and is off-limits to commercial development. St Croix is largest of the three islands, in both land area and population. It is roughly 45 miles to the south of St Thomas. Its primary towns are Christiansted and Frederiksted. Overall the island is flatter and has more land available for additional agricultural, commercial and residential development than St Thomas. St Croix is also the primary manufacturing center for the Virgin Islands, with rum distilleries, a major watch-assembly plant, and; until February 2012, one of the world's largest petroleum refineries (which recently ceased refining operations). History The Virgin Islands were originally settled by the Ciboney, Carib, and Arawaks. The islands were named by Christopher Columbus on his second voyage in 1493 for Saint Ursula and her virgin followers. Over the next three hundred years, the islands were held by many European powers, including Spain, England, the Netherlands, France, and Denmark-Norway. The Danes developed the islands with plantation estates, and the estates boundaries are still used in legal descriptions for land to this day. The U.S. took possession of the islands on March 31, 1917 and the territory was renamed the Virgin Islands of the United States. U.S. citizenship was granted to the inhabitants of the islands in 1927. Government The U.S. Virgin Islands are an organized, unincorporated United States territory. Even though they are U.S. citizens, Virgin Islands residents cannot vote in presidential elections. Virgin Islands residents, however, are able to vote in presidential primary elections for delegates to the Democratic National Convention and the Republican National Convention. The main political parties in the U.S. Virgin Islands are the Democratic Party of the Virgin Islands, the Independent Citizens Movement, and the Republican Party of the Virgin Islands. Additional candidates run as independents. IGY American Yacht Harbor Marina EFTA00803874 Area Analysis 10 At the national level, the U.S. Virgin Islands elects a delegate to Congress from its at-large congressional district. However, the elected delegate, while able to vote in committee, cannot participate in floor votes. At the territorial level, 15 senators—seven from the district of Saint Croix, seven from the district of Saint Thomas and Saint John, and one senator at-large who must be a resident of Saint John—are elected for two-year terms to the unicameral Virgin Islands Legislature. The U.S. Virgin Islands has elected a territorial governor every four years since 1970. Previous governors were appointed by the President of the United States. Population and Employment In 2008, the residential population of the Virgin Islands peaked at an estimated 115,852 persons. This follows five years of slow but steady growth of 1.0%, slightly slower than the U.S. annual average of 1.15%. Since 2008, population levels have fallen each year, to the 2014 estimated population of 103,961 persons. Among the three islands, St Croix and St Thomas are nearly equally populous with St John having less than 4 percent of the total population of the Virgin Islands. USVI Eanumic Indicators SY( Ann 200$ 2006 2007 2001 2009 2010 2011 2012 2013 2014 Growth 009ulatIon 111.470 111,619 114.74$ 115.152 107,$49 106,405 105,714 105.169 104,563 103,961 -0.6% StOolir 54.635 55,723 56,239 56.763 52.612 50,601 50,247 50.005 49,93* 49,656 H. Moss 52,5213 53.574 54,070 54,592 50,513 $1434 51,266 51,051 50,610 $0,316 43.1% aloha 4,307 4,393 4,434 4,477 4.246 4,170 4,134 4,113 4,015 3,9.9 43% Chaim lebet Nato 51.159 51,159 52,670 52,630 52)61 51,424 50,729 50,577 47.5511 46,714 Oven ompbyroent 47,301 16,640 49,547 49469 45,143 47,272 46,121 14,659 41,207 40,617 Une9 010119• 04rM4 Meow) 7.1% 6.2% 5.9% 51% 7.6% 5.1% 5.9% 11/6 13.4% 13.0% 14.2% Grossroultorld ProciattIGTP.Millonsi $4,457 54.655 54,1343 54,151 54.510 54,660 $4,351 53,771 $3,791 .44% GM Per Capita 539,984 540,769 $12,146 541,172 542,695 $43,795 541,131 535,923 536265 Penang income Pe 52.723 $2,177 52,964 52.606 $2,602 52,704 52,661 52,516 52,233 Per Gotta personal Worse 1$) 520.620 521,711 522.168 522.641 $23,931 525.603 525)314 $23,313 521.353 Total 0tports GAMbns 945) 510,476 $11,627 512,962 517,249 59,726 511,930 513,314 $2,263 51,216 51671 .16.6% Reined petroleum 59,376 510.463 511.242 513,592 56,327 59,759 $10.446 5932 532 57 -10,0% VS* of canstnctIon pownIts(MIllows$1 5330.20 5442.70 $266.10 527330 516160 $18720 $179.10 514140 5156,60 510160 4.6% Thoress/St John 5274.30 5217.70 $17290 511330 $7300 580.60 07.90 $85.10 $11420 $142.20 16.0% St Crole $21530 5725.00 59220 549.50 $175.90 510650 $92.10 $5620 541.113 559.20 -133% unroo. lime el tense Research The territory's Labor Force has also declined slightly, and there has been a steady increase in the unemployment rate; which was further affected by the closure of the Hovensa oil and gas refinery in 2012. Note that there was a slight dip in unemployement in 2014. IGY American Yacht Harbor Marina EFTA00803875 Area Analysis 11 Population and Employment 125,000 16.0% 115,000 14.0% 105,000 12.0% 95,000 85,000 - 10.0% 75,000 8.0% 65,000 - 6.0% 55,000 - 4.0% 45,000 35,000 - 2.0% 25,000 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 —Population Civilian employment —*— Unemployment Rate Industry The territory relies heavily on tourism for economic stability. Additional industries include the production and export of rum; and until early 2012, the production of refined petroleum products (the Hovensa Refinery in St. Croix closed in early 2012). The Gross Domestic Product peaked in 2007 at $4.85 million, and declined to $4.14 million in 2012, and further declined to $3.79 million for 2013. Personal income per capita is also in decline from over $25,000 in 2010 and 2011 to just over $21,000 in 2013. irr. IGY American Yacht Harbor Marina EFTA00803876 Area Analysis 12 Economic Indicators $45,000 $5,000 $4,500 $40,000 $4,000 $35,000 $3,500 $30,000 $3,000 $25,000 $2,500 $20,000 • $2,000 2007 2008 2009 2010 2011 2012 2013 2014 —GTP Per Capita Per capita personal income ($) —*—Gross Territorial Product (GTP, Millions) The closure of the Hovensa refinery, which was one of the territory's largest employers, also had a significant impact on exports which were prevously dominated by petrolium products. Otherwise, the territory predominently relies on the tourism industry to support the economy. Commerce and Trade (Millions of $Gess Otherwise Noted) 5-Yr Annual 2007 2008 2009 2010_ 3011 3012 2013 2014 Growth Total exports 512,96111 517.249.4 59,7283 5119293 513,3133 52,263.3 51,28.4.8 $1,671.4 -16.6% To U.S. 512,182.2 514,496.3 58.4953 59092.5 510.9948 51,377.7 5265.4 $2258 -19.5% Relined petroleum $11,242.1 $13,591.9 58,3273 59.759.4 $10.41161 $932.4 $61.6 $6.5 011w' $940.1 $904.4 $1680 $233.1 $508.7 $4453 $2333 $2193 6.1% To foreign $7796 52.753.1 51,2330 51.937A $2.316.7 $385.5 5141195 51,445.6 3.4% Tote' Impor ts 512.251.0 517.861.3 510489.9 512453.9 513.972.7 52.966.7 52,590.1 53.3918 -13.4% From U.S. 51.2614 51.214.6 51.1393 51.5483 51.767.6 51,719.4 $2,119.2 $2.144.5 17.6% Crude petroleum 500 50.0 504 504 $00 $0.0 50.0 50.0 Otree 51.261.0 51.214.6 $1.139.3 51,548.9 51,767.6 51.7194 $2,119.2 52,1445 17.6% From lorriRn 510.9900 516546.7 594505 $1030541 512.205.1 51.2473 $470.9 51.2473 .17.3% Crude petroleum $8.204.7 512.045.4 57.085.9 $7,721.7 510.3409 56603 $0.0 56603 .18.1% Other 52.7853 $4,600.9 $2064.7 $2813.3 $1.864.2 $587.0 $4709 51.2473 Rum exports to U.S.(theus. of.3 528,725.1 $31918.7 538,4453 140.045.1 515,0011 $62,570.0 569335.4 559,4183 10.9% Watch upon. to U3. (thousands) $251.4 $1113.6 $750 $524 $52.7 555.6 560.0 5763 0.5% Oar freight Imports (thousands of taps) 1,092A 1,080.0 10650 1,0910 1,157.0 1,975.0 931.0 866.0 To St.lhoenes/St./ohn 6510 774.0 6859 612A 720.0 13990 564.0 5311.0 To St. Croix (.eluding petroleum' 241.0 306.0 3800 479.0 4360 7760 367.0 308.0 Sowfat:VI Wens elkaaamk Rasesrd. IGY American Yacht Harbor Marina EFTA00803877 Area Analysis 13 USVI Commerce $20,000.0 $18,000.0 $16,000.0 $14,000.0 $12,000.0 $10,000.0 $8,000.0 $6,000.0 $4,000.0 $2,000.0 $0.0 2007 2008 2009 2010 2011 —Total Exports (Millions $) Total Imports (Millions $) —*—GTP (Millions $) Over ninety percent of non-farm jobs are in the service providing industries, with the remaining jobs being in goods producing industries. Government, trade, transportation and utilities, and leisure and hospitality remain the industries with the largest number of jobs. These three sectors account for 69 percent of all jobs. Professional and business services, construction and financial activities account for approximately 9 percent, 4 percent and 6 percent respectively. Manufacturing and information sectors account for about 2 percent each, while educational and health services account for 6 percent. Other services account for the remainder of jobs. Tourism The total number of visitor arrivals to the territory reached over 2.8 million in 2014, including both air and cruise ship arrivals. This represents 4.2% growth over the prior year. Total visitor expenditures are also growing, with annual growth in excess of 6% each of the last three years. USVI visitor Expenditures 200$ 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total visitors (Thousands) 2,601.9 2,570.7 2,606.2 2,435.2 2,245.0 2,548.7 2,687.9 2,642.1 2,701.5 2,814.2 Growth -1.2% 1.4% •6.6% -7.8% 13.5% 5.5% -1.7% 2.2% 4.2% Total visitor Expenditures $1,431.6 $1467.6 $1,512.6 $1,157.1 $1,021.3 $1,012.5 $1,085.3 $1,152.8 $1,232.2 Growth 2.5% 3.1% -23.5% -11.7% 4.9% 7.2% 6.2% 6.9% From Stopover Tourists $863.8 $883.2 $929.8 $686.4 $687.4 $678.2 $740.6 $784.7 $851.0 Day Trip Excursionists $27.2 525.6 $27.7 $29.7 $28.6 $28.0 $35.4 $35.4 $36.1 From Cruise Ship Passengers 5540.6 $558.8 $555.2 $441.0 $305.3 $306.3 $311.8 $332.7 $345.1 $04ItCe: Vi Sunau of Economic Rematch IGY American Yacht Harbor Marina EFTA00803878 Area Analysis 14 USVI Visitor Expenditures $1,000.0 4,000.0 3,800.0 $900.0 3,600.0 $800.0 3,400.0 C $700.0 3,200.0 8 $600.0 3,000.0 g 3 $500.0 2,800.0 g