Since the subject hotel project has not yet been developed and is currently in the planning stages, income and expenses required projection from existing facilities, published statistics from the Nevada State Gaming Control Board, and inter-statement ratio is comparing the published statistics and the basic income expenses from the existing facilities to the subject property as proposed for construction.

GROSS INCOME ESTIMATE:

Gaming Income Estimate: The estimate of the gross gaming income is based upon the annual income per gaming device as reported on the Las Vegas “Strip” and comparison of income from existing facilities on the “Strip” to the subject. While this appraiser has in his files actual operating statements from existing facilities on the “Strip”, these cannot be revealed as  to exact numbers or facilities since this information was provided this appraiser in confidence. Most of the income estimates shown in this report are the average between 1973 upper quartile incomes and the 1973 median quartile incomes averaged with the average 1974 upper and median incomes. There are substantial room increases for 1975 projected with substantially less casino expansion, indicating income per-device increasing again in 1975. While the subject design could produce an income similar to the upper quartile average with excellent management, a change in management could cause the income to drop somewhat. In addition, this is considered to be a safety factor for a lender considering financing the project. Since “Big 6" and poker are not reported in Nevada Abstracts, the income per device for these units is estimated from income received on facilities located on the “Strip” with consideration given to the t,@Re of facilities as compared to the subject. The baccarat income as shown in the projection is substantially above the average for the “Strip” but is in line with baccarat tables in facilities similar to the subject. No upper quartile was shown in the Nevada Gaming Abstracts for baccarat except for 1974 is similar to that projected for the subject. The average is derived from cross statement analysis. Race book is from existing clubs.

By reason of the expansion in the number of rooms over the previous report, the keno income is estimated-at at upper quartile which is considered to be reasonable estimate.

In summary,  the projections of gross income from gaming on the following summary to the Income Approach to value are considered to be realistic. With an excellent quality of management, the incomes as projected could be conservative.

The following is a summary of the annual income per gaming device for the years 1971, 1972, 1973 and 1974 as reported in the Nevada Gaming Abstracts.