MARINA GRAND RESORT CONDOMINIUM OWNERSHIP FREQUENTLY ASKED QUESTIONS

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1 MARINA GRAND RESORT CONDOMINIUM OWNERSHIP FREQUENTLY ASKED QUESTIONS 1. Describe the condo-hotel concept. Condo-hotel properties are typically resort hotels in vacation destination areas operated by either independent hospitality management companies or large global hospitality brands. In a condohotel property, condominium units are sold to individual investors but, unlike a traditional condominium development, the condo-hotel property is operated exactly like a full-service hotel, offering services and amenities one would expect from a resort. Unit owners may use their units for personal use and/or participate in a rental program operated by the hospitality management company. 2. What are the benefits of owning a condo-hotel unit at Marina Grand Resort? Carefree second homeownership; Maintenance, housekeeping and landscaping are handled by the operator; Monthly recurring bills are paid in a single monthly assessment (Property tax, mortgage payments, upgrades or significant repairs are paid outside of the monthly assessment) Access to resort services and amenities, including: o Waterfront restaurant and bar o Full-service marina with direct access to Lake Michigan o Coffee market o Event and meeting spaces o Rooftop deck o 24-hour reception desk o Indoor and outdoor pools o Fitness center o Game room o Bicycle rentals o Beach towel and chair service o Guest laundry o Casino shuttle Resort amenities enhance the appeal of the unit to potential buyers for resale. The opportunity to participate in the resort s rental management program, which generates income to defray expenses associated with ownership.

2 3. How do condo-hotel owners at Marina Grand Resort benefit from participating in the rental management program? Enhanced financial returns. The revenue generated from rentals defrays expenses and increases value to potential buyers. Potential rental income is generally greater at a condo-hotel property versus a traditional vacation rental because rentals are managed, maintained and marketed by a recognized professional operator. Resort amenities enhance the condo-hotel unit s appeal to potential renters. Rental revenue is disbursed to unit owners monthly accompanied by rental statements indicating day-by-day revenue performance. Monthly assessments are deducted from each month s rental revenue disbursement. Unit upgrades are periodically designed and implemented in all rental program units. These upgrades are funded with a 2.5% deduction from rental revenue placed in a refurbishment escrow account which caps at $2,500. This keeps the resort in like new condition, competitive regionally, and maintains long-term value. 4. Is rental guaranteed for owners who participate in the rental management program? It is unlawful according to federal and state securities agencies to guarantee rental revenue. However, the hospitality management company can provide revenue history for specific units and similar unit averages. It is best to consider purchase of a condo-hotel unit in the same way one would a vacation home. Rental revenue is unlikely to pay the mortgage, but depending upon how often the unit is available for rental, expenses associated with ownership can be defrayed. 5. Do condo-hotel owners have to participate in the rental management program? No, the rental program is voluntary. Owners may choose to participate in the hospitality management company s rental program, use a third-party vacation rental company, or not rent the unit at all. 6. Describe the financial arrangement between Marina Grand Resort condo-hotel owners in the rental program and the hospitality management company. 50/50 split on rental revenue. 2.5% owner revenue deduction ($2,500 ceiling) placed in escrow for furniture, fixture and equipment reserve. The hospitality management company pays all operating, administrative and marketing expenses, commissions, and employer liability insurance. It also pays monthly assessments related to commercial condo parcels required to operate the resort. All condo-hotel unit owners pay individual real estate taxes and debt service, optional additional personal insurance policies above and beyond the HOA/property policy, and major capital improvements.

3 7. How do owners who participate in the rental management program reserve their unit for personal use? Owners make reservations, check in and check out just as one would at a hotel. Owners in the rental program receive an annual calendar to reserve their unit for personal use in advance. Last minute reservations can also be accommodated as long as the unit is not occupied or an existing reservation can be moved. There is no limit to how often owners in the rental program may use their unit. 8. How do owners who do not participate in the rental management program occupy their unit? Owners obtain an electronic key from the Front Desk on each day of arrival. 9. Is a boat slip included with purchase of a condo-hotel unit? No. Marina Grand Resort is situated on Oselka Marina. Oselka Marina offers seasonal slip rental to both condo-hotel unit owners and non-owners. The marina also offers aqua docks, wave runner rentals, valet and winter boat storage. 10. Who is the hospitality management company? Toast Hotel Group is a boutique hospitality management and development company with hotels and restaurants in southwest Michigan. In addition to Marina Grand Resort, Toast also operates The Harbor Grand in New Buffalo. Senior management brings over 30 years of hospitality, management, development, marketing, acquisition and strategic planning experience working with large hospitality companies as well as boutique luxury and vacation club brands. Toast Hotel Group has been developing and operating hotels and restaurants in New Buffalo since It owns all commercial condominium property in Marina Grand Resort. 11. What does the hospitality management company do? All resort operations including housekeeping, maintenance, reservations, registration, guest services, food and beverage, human resources and accounting. Management and administration of the rental management program. Regional and national marketing of the resort to renters, buyers, corporate groups and social event planners.

4 12. What is the current common area reserve balance? The HOA Board has made it a priority to maintain a minimum balance of $50,000. Common area improvements completed or in progress for 2016 include: WIFI system upgrades Hallways and stairwells painted and repaired on an as-needed basis New coils for unit air conditioners/heater for units that are beyond repair Water line valve replacement for building Phone switch upgrade to accommodate fiber optic service Replacement of Adirondack chairs as needed; 60 chairs in 2016 Several building windows were replaced as seals had failed Replaced chlorinators for pool and hot tub 13. What does the monthly assessment cover? Common area reserve Insurance Hospitality management fee Utilities (electric, gas, water) Landscaping Disposal service Pool supplies and maintenance Pest control Elevator maintenance Fire/security/surveillance HVAC repairs Cable TV Telephone/data Common area cleaning and maintenance Maintenance supplies (e.g., light bulbs) Fitness room maintenance. 14. What is the current monthly assessment for each condo-hotel unit type? One bedroom/one bath $ One bedroom/one and a half baths $ One bedroom/one bath/loft $ Two bedroom/two and a half bath $ Two bedroom/two and a half bath/loft $ Where are most of the owners from? Chicago and Northern Indiana. 16. How many owners own multiple condo-hotel units at Marina Grand Resort? Five current condo-hotel unit owners own two units each.

5 17. How many units remain developer-owned? Two residential units are owned by the developer. 18. What makes a condo-hotel property successful? Location Attractive amenities Good management Strong financial results Strategic planning for long-term value 19. Are pets or smoking allowed? Pets belonging to unit owners are allowed while owners are in residence with approval of the HOA Board of Directors. Marina Grand Resort is a non-smoking facility. At this time, owners and hotel guests may smoke only on outdoor patios and balconies. 20. When did Marina Grand Resort open? July How many condo-hotel units are in Marina Grand Resort? 44 residential units 15 commercial units 22. Which units are currently for sale? Please see the available units menu in the right hand side bar of the ownership page on our website.