Strategic Developments Summary

In December 2012, our ONE Ala Moana condominium development joint venture launched pre-sales and sold all 206 units after 29 hours of public sales for an average selling price of $1,170 per square foot. We expect to close on the first mortgage construction financing and to begin construction during the first half of 2013. Upon closing the construction loan, the venture will fully draw on the $40.0 million of committed mezzanine loans, and we will sell our condominium rights to the venture at a $47.5 million valuation.

During 2012, we sold 11.5 acres at Alameda Plaza consisting of 104,705 square feet of mostly vacant retail space for $4.5 million. Our net earnings recognized on the sale were $2.0 million. We are continuing to explore the sale of the remaining 10.5 acres consisting of 85,636 square feet of mostly vacant retail space.

Subsequent Event

On February 8, 2013, we closed on a $95.0 million non-recourse loan which refinanced the existing $36.1 million mortgage on The Woodlands Resort and Conference Center and will fund the majority of the costs of the $75.0 million redevelopment of the property. The new loan bears interest at LIBOR plus 3.50%, has a three-year initial term and contains three one-year extension options. We believe that the redevelopment will enable the property to meet increasing demand for world-class hospitality driven by the strength of the Houston economy. The redevelopment will replace 206 rooms originally built in the 1970s with 184 new guest rooms and suites, and will renovate 222 existing guest rooms and suites. The project also includes construction of a 1,000-foot lazy river amenity, a 120-seat prime steakhouse and restaurant and the renovation and expansion of the arrival areas and conference center space. The entire facility will continue to operate during the redevelopment, and the rooms being replaced will not be taken out of service until the new rooms are completed.

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