Exhibit
99.2  W2005 Kapalua/Gengate Hotel Holdings,
LLC Consolidated Financial Statements December 31, 2007


W2005 Kapalua/Gengate
Hotel Holdings, LLC Index  Page(s)Report of Independent Certified Public
  Accountants
  1Consolidated Financial StatementsBalance Sheet
  2Statement of Operations and Changes in Members
  Capital
  3Statement of Cash Flows
  4Notes to Consolidated Financial Statements
  5-13


Report of Independent Certified
Public Accountants  To the Members of
W2005 Kapalua/Gengate Hotel Holdings, LLC  In our opinion, the
accompanying consolidated balance sheet and the related consolidated statements
of operations and changes in members capital and cash flows present fairly, in
all material respects, the financial position of W2005 Kapalua/Gengate Hotel
Holdings, LLC and its subsidiariesat December 31,
2007, and the results of their operations and their cash flows for the year
then ended in conformity with accounting principles generally accepted in the
United States of America.  These
financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion
on these financial statements based on our audit.  We conducted our audit of these statements in
accordance with auditing standards generally accepted in the United States of
America.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.  We believe that our audit provides a
reasonable basis for our opinion.   /s/ PricewaterhouseCoopers
  LLPPricewaterhouseCoopers LLPFort Lauderdale, FloridaMarch 31, 2008  1


W2005 Kapalua/Gengate Hotel
Holdings, LLC Consolidated Balance Sheet December 31, 2007  AssetsCurrent
  assetsCash
  and cash equivalents
  
  $
  6,692,285Restricted
  cash
  
  3,142,378Accounts
  receivable, net of allowance for doubtful accounts of $197,820
  
  1,105,760Other
  receivable
  
  2,700,000Inventories
  
  361,009Prepaid
  expenses and other current assets
  
  147,321Total
  current assets
  
  14,148,753Property
  and equipment, net
  
  329,704,395Deferred
  financing costs, net
  
  2,569,972Total
  assets
  
  $
  346,423,120Liabilities and Members CapitalCurrent
  liabilitiesAccounts
  payable and accrued expenses
  
  $
  26,361,349Accrued
  construction in progress
  
  10,556,038Due
  to related parties
  
  747,775Due
  to hotel operator
  
  406,041Advance
  deposits
  
  7,029,153Interest
  on long-term debt
  
  4,086,363Other
  liabilities
  
  2,500,000Total
  current liabilities
  
  51,686,719Long-term
  liabilitiesLong-term
  debt
  
  288,635,963Commitments
  and contingencies (Note 7)Members
  capital
  
  6,100,438Total
  liabilities and members capital
  
  $
  346,423,120  The accompanying
notes are an integral part of these consolidated financial statements.  2


W2005 Kapalua/Gengate
Hotel Holdings, LLC Consolidated Statement
of Operations and Changes in Members Capital For the Year Ended
December 31, 2007  RevenuesRooms
  
  $
  23,245,341Food
  and beverage
  
  16,003,567Other
  hotel
  
  5,563,248Total
  revenues
  
  44,812,156Operating
  expensesHotel
  operations
  
  26,483,735General
  and administrative
  
  15,327,218Sales
  and marketing
  
  6,683,766Property
  operation and maintenance
  
  3,189,458Property
  taxes
  
  518,956Management
  fees
  
  1,792,486Ground
  lease
  
  542,381Building
  fire and casualty insurance
  
  1,184,647Depreciation
  
  3,051,077Loss
  on disposal of fixed assets
  
  3,832,473Total
  operating expenses
  
  62,606,197Loss
  from operations
  
  (17,794,041
  )Interest
  expense, net
  
  7,714,974Change
  in fair value of derivative financial instrument
  
  198,618Other
  expense
  
  56,764Net
  loss
  
  $
  (25,764,397
  )Members
  deficit, beginning of year
  
  $
  (1,883,767
  )Members
  contribution
  
  33,748,602Net
  Loss
  
  (25,764,397
  )Members
  capital, end of year
  
  $
  6,100,438  The accompanying
notes are an integral part of these consolidated financial statements.  3


W2005 Kapalua/Gengate Hotel
Holdings, LLC Consolidated Statement of Cash
Flows For the Year Ended December 31,
2007  Cash flows from operating activitiesNet
  loss
  
  $
  (25,764,397
  )Adjustments
  to reconcile net loss to net cash provided by operating activities:Depreciation
  
  3,051,077Amortization
  of deferred financing cost
  
  1,415,189Loss
  on disposal of fixed assets
  
  3,832,473Change
  in fair value of derivative financial instrument
  
  198,618Changes
  in assets and liabilitiesAccounts
  receivable, net
  
  6,399,552Inventories
  
  561,033Prepaid
  and other current assets
  
  (105,258
  )Accounts
  payable and accrued expenses
  
  15,445,780Due
  to related parties
  
  66,629Due
  to hotel operator
  
  (3,728,266
  )Advance
  deposits
  
  3,094,765Interest
  payable
  
  2,156,028Other
  liabilities
  
  2,500,000Net
  cash provided by operating activities
  
  9,123,223Cash flows from investing activitiesAdditions
  to property and equipment
  
  (141,216,279
  )Proceeds
  from the disposal of fixed assets
  
  586,365Use
  of restricted cash to purchase property and equipment
  
  2,060,254Net
  cash used in investing activities
  
  (138,569,660
  )Cash flows from financing activitiesCash
  contributions from members
  
  26,248,602Payment
  of financing costs
  
  (4,280,793
  )Payment
  to acquire interest rate cap
  
  (75,900
  )Payment
  on capital leases
  
  (193,774
  )Payment
  of long-term debt
  
  (160,500,000
  )Proceeds
  from borrowings under long-term debt
  
  268,635,963Net
  cash provided by financing activities
  
  129,834,098Net
  increase in cash and cash equivalents
  
  387,661Cash
  and cash equivalents, beginning of year
  
  6,304,624Cash
  and cash equivalents, end of year
  
  $
  6,692,285Supplemental disclosure of cash flow informationCash
  paid for interest
  
  $
  14,367,831Non-cash financing and investing activitiesIncrease
  in retainage payable used for funding construction activities
  
  $
  3,616,939Increase
  in accounts payable used for funding construction activities
  
  $
  7,067,983Land
  contributed by member
  
  $
  7,500,000  The accompanying notes
are an integral part of these consolidated financial statements.  4


W2005 Kapalua/Gengate
Hotel Holdings, LLC Notes
to Consolidated Financial Statements  1.Organization and Business  W2005 Kapalua/Gengate Hotel
Holdings, LLC, a Delaware limited liability company (the Company), was
formed on February 9, 2006 by and between Whitehall Street Global Real
Estate Limited Partnership 2005; 51.4% (Whitehall Street), Whitehall Street
Global Employee Fund 2005, LP; 13.6% (Whitehall Employee Fund), Gengate
Kapalua Holdings GP, LLC; 0% (GHGP) and Gengate Kapalua Holdings, LLC; 35% (GKH).  The Company was formed to
acquire and own The Ritz-Carlton Kapalua, (the Hotel) located on the Island
of Maui, Hawaii.  The Hotel is managed
through an operating agreement (the Management Agreement) with the
Ritz-Carlton Hotel Company, LLC (the Hotel Operator).  On
March 27, 2007, MLP RCK LLC, a wholly owned subsidiary of Maui Land &
Pineapple Company, Inc. (MLPC) acquired a 21.4286% interest in the Company.  As a consequence initial members interest
became the following:  Whitehall Street;
40.4234%, Whitehall Employee Fund; 10.648%, GKH; 27.5%, and GHGP; 0%.  Whitehall Street, Whitehall Employee Fund and
GKH are designated as the Managing Members of the Company (together with MLPC
and GHGP, the Members).  Major
decisions, as defined in the Second Amended and Restated Limited Liability
Company Agreement (the Company Agreement), require the consent of either
Whitehall Street or Whitehall Employee Fund, and either GKH or MLPC.  On
July 1, 2007, the Hotel was closed for a major renovation and conversion
of 250 hotel rooms into 107 condominium units. 
The Hotel was issued a temporary certificate of occupancy on December 28,
2007.  Allocation
of Net Profit and Loss Profits and losses are
allocated pro rata among all Members in proportion to their percentage
interests.  Distributions
to Members Distributions to Members are
made pro rata in accordance with their relative percentage interests in the
Company.  No distributions have been made
to the Members since inception of the Company.  2.Liquidity  The Hotel was closed on July 1,
2007 for an extensive renovation and residence conversion construction and
reopened on December 28, 2007.  For
the year ended December 31, 2007, the Company incurred a net loss of
$25,764,397 and had net cash inflows from operating activities of
$9,123,223.  At December 31, 2007,
the Company had a deficit of $37,537,966 in working capital.  Management believes that it will be able to continue
to fund the operating needs with cash currently on hand, operations, sale of
condominium units and additional debt or equity.  As of March 28, 2008, Whitehall Street,
Whitehall Employee Fund and GHGP have confirmed to the Company that they have
the ability and intent to fund, if required, through at least March 31,
2009, an amount necessary to meet the Companys obligations as they come
due.  The amount of cash to be funded is
dependent upon the profitability of the hotel and managements ability to close
on condominium sales.  MLPC has not
confirmed its intent to fund the Company.  5


W2005 Kapalua/Gengate Hotel Holdings, LLC Notes to Consolidated Financial Statements  3.Summary of Significant Accounting
Policies  Basis of Presentation The accompanying
consolidated financial statements include the accounts of W2005 Kapalua/Gengate
Hotel Holdings, LLC and its wholly owned subsidiaries, W2005 Kapalua/Gengate
Hotel Mezzanine, LLC (W2005 Mezzanine), and W2005 Kapalua/Gengate Hotel
Realty, LLC, each a Delaware limited liability company. All significant
intercompany transactions have been eliminated.  Use of Estimates The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the balance sheet date and the reported
amounts of revenues and expenses during the reporting period.  Actual results could differ from those
estimates.  Revenue Recognition Hotel operating revenues are
from room rentals, food and beverage sales, spa sales and retail merchandise
sales.  Revenues are recorded as services
are rendered or goods are provided. 
Additionally, the Company collects sales, use, occupancy and similar
taxes which are presented on a net basis (excluded from revenues) in the
accompanying consolidated statement of operations. Amounts received in advance
of guest stays are reflected as advance deposits in the accompanying balance
sheet.  These advance deposits are
recognized as revenue when the service is provided.  Interest expense is net of $474,337 of
interest income.  Fair Value of Financial Instruments Financial instruments
include cash and cash equivalents, restricted cash, accounts receivable,
accounts payable and accrued expenses, advance deposits and long-term
obligations.  The carrying amounts of
financial instruments other than long-term obligations approximate fair value
due to their short term nature.  The
Companys mortgage loan obligations at fair value is advantageous (LIBOR plus
220 basis points) when compared with the February 2008 recapitalization,
as described in Note 6, where variable rate debt increased to LIBOR plus 300
basis points. Such obligations approximate fair value. Other long term debt
approximates market value, based upon rates currently available for similar
instruments. The Company has an interest rate cap that is carried at fair
value.  Cash and Cash Equivalents The Company considers all
highly liquid investments purchased with an original maturity of three months
or less to be cash equivalents.  Restricted Cash Restricted cash represents
amounts reserved for payment of real estate taxes, repairs, insurance and
funding of furniture, fixture and equipment purchases.  These restrictions are required under the
Mortgage Loan and by the Management Agreement. 
In addition, and as part of the restricted cash balance, the Company has
on deposit, $2,895,700 to support an irrevocable standby letter of credit
expiring on July 26, 2008, which was used to obtain a building permit
application.  Accounts Receivable The Company records trade
accounts receivable in the normal course of business related to the sale of
products and services.  The Company does
not charge interest on past due accounts receivable.  6


W2005 Kapalua/Gengate
Hotel Holdings, LLC Notes to Consolidated
Financial Statements  The allowance for doubtful
accounts is based on review of specific accounts that have been identified as
at risk for non-collection and prior collection history.  Write-offs are evaluated on a case-by-case
basis.  Concentration of Credit Risk A significant portion of the
Companys cash and cash equivalents are maintained at various financial
institutions in amounts that exceed federally insured limits.  The Company has not experienced any losses
and believes it is not exposed to significant credit risk in this area.  Inventories Inventories consist
primarily of food, beverages and merchandise held for resale and operating
supplies.  Amounts are valued on a first
in first out basis.  Derivative Financial Instruments As of December 31, 2007, the
Company had an interest rate cap which is a derivative financial
instrument.  This derivative is $4,400
and is recorded on the consolidated balance sheet at fair value.  The interest rate cap was not designated as a
hedging instrument; therefore changes in the fair value of this instrument are
recognized in the results of operations in the period that the change occurs.  Property and Equipment Property and equipment are
carried at cost, net of accumulated depreciation.  Routine repairs and maintenance are expensed
as incurred.  Expenditures that improve
the functionality of the related equipment or extend its useful life are
capitalized.  When property and equipment
are retired or otherwise disposed, the related gain or loss is included in the
determination of income.  Depreciation is
calculated on the straight-line method based on the following useful lives:  Land improvements
  
  20 yearsBuildings and
  improvements
  
  39 yearsFurniture, fixtures and
  equipment
  
  3-7 years  Deferred Financing Costs Costs incurred in
conjunction with obtaining the debt instruments are included as deferred
financing costs.  Deferred financing
costs are amortized over the respective lives of the applicable debt issues on
a straight-line basis, which approximates the effective interest method as a
component of interest expense.  Long-lived Assets The Company evaluates
potential impairment of long-lived assets in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of
Long-Lived Assets, which requires the Company to (a) recognize
an impairment loss if the carrying amount of a long-lived asset is more than
the value of its undiscounted projected cash flows and (b) measure an
impairment loss as the difference between the carrying amount and fair value of
the asset.  No impairments of long-lived
assets occurred during the year ended December 31, 2007.  Income Taxes The Company has elected to
be a limited liability company for federal tax purposes.  Limited liability companies are not taxable
entities under provisions of the Internal Revenue Code and, accordingly, the
accompanying consolidated financial statements do not reflect a provision for  7


W2005 Kapalua/Gengate Hotel Holdings, LLC Notes to Consolidated Financial Statements  federal or state income
taxes.  The tax effects of the Companys
transactions are the responsibility of the Members.  4.Property
and Equipment  Property and equipment consist of the following at December 31,
2007:  Land
  
  $
  33,444,471Building and
  improvements
  
  164,971,293Furniture,
  fixtures and equipment
  
  2,130,635200,546,399Less accumulated
  depreciation
  
  (6,742,631
  )193,803,768Construction in
  progress
  
  135,900,627Net property and
  equipment
  
  $
  329,704,395  On March 27, 2007, the
Company purchased 49 acres of land (Hotel land) underlying the Hotel
condominium and amenities from MLPC for $32.5 million plus closing costs.  The acquisition was financed through a debt
facility provided by Lehman Brothers Holdings, Inc. The Company was, prior
to acquisition, the lessee under a long-term ground lease with MLPC.  During
2007, the Company began construction of 107 condominium units by renovating 250
hotel rooms in four low-rise clusters adjacent to the Hotel.  All condominiums will be offered for sale in
2008.  Construction in progress includes
capitalized interest costs of $10,521,768 and taxes of $518,956 for the year
ended December 31, 2007.  Included
in furniture, fixtures, and equipment is approximately $152,000 of equipment
under capital leases where payments are due through 2009.  Depreciation expense for the
year ended December 31, 2007 was $3,051,077.  8


W2005 Kapalua/Gengate Hotel Holdings, LLC Notes to Consolidated Financial Statements  5.Accounts
Payable and Accrued Expenses  Accounts
payable and accrued expenses consist of the following at December 31,
2007:  Accounts payable
  
  $
  19,459,590Accrued payroll,
  payroll taxes and benefits
  
  2,894,453Accrued real
  estate and personal property taxes
  
  114,407Accrued sales
  taxes
  
  13,805Accrued other -
  Hotel
  
  3,463,739Other
  
  415,354Total
  
  $
  26,361,349  6.Long-Term
Debt  Long-term debt at December 31,
2007 is as follows:  Luxury loan (a)
  
  $
  20,000,000Mortgage loan
  (b)
  
  268,635,963288,635,963Less current
  maturities
  
  $
  288,635,963  
 (a)On March 13, 2006, the Company entered into a
$20,000,000 term loan agreement (the Luxury Loan) maturing April 13,
2011 with Luxury Finance LLC.  The Luxury
Loan bears interest at an annual rate equal to prime rate plus 350 basis points
(8.53% at December 31, 2007).  (b)On March 13, 2006, the Company entered into a
$180,500,000 term loan agreement (the Lehman Loan) initially maturing April 1,
2008 with Lehman Brothers Holdings Inc. (Lehman).  The Lehman Loan provided for two (2) extensions
of one (1) year each, at the Companys option. Monthly payments of
interest commenced on May 9, 2006. 
The loan was collateralized by the first deed of trust on the
Hotel.  On March 27, 2007, this loan
was repaid.  On March 27, 2007,
the Company entered into a $271,700,000 mortgage loan (the Mortgage Loan)
with Lehman to, among other matters,: (i) refinance the outstanding
balance of the Lehman Loan, (ii) acquire the Hotel land, which was subject
to a long-term ground lease, (iii) finance the Hotel renovation and
condominium conversion, (iv) make deposits into reserve fund accounts for
renovation holdbacks, condominium conversion holdbacks, operating deficit
holdbacks, marketing cost holdbacks, interest holdbacks and tax holdbacks; and (v) construct
the condominium units.  The Mortgage Loan
initially matures on February 27, 2009 (the Maturity Date).  The term of the Mortgage Loan may be extended
for three additional periods of one (1) year each at the Companys
option.  Interest is payable monthly at
an  9


W2005 Kapalua/Gengate Hotel Holdings, LLC Notes to Consolidated Financial Statements  annual rate equal to
prime plus 220 basis points (7.23% at December 31, 2007).  The Company has assigned to Lehman all of its
rights, title and interest to receive any and all payments under an interest
cap of 6% with a notional amount equal to the outstanding principal.  The Company has granted Lehman first priority
security interest in its equity interest in the Company.  On February 21,
2008, the Company, Whitehall Street, MLPC and Karim Alibhai, Manager-GHGP and
GKH, entered into a Consent and First Amendment to the Mortgage Loan, (the First
Amendment Agreement) with Lehman to evidence a$5,000,000
loan from Marriott International Corporation to the Company.  In addition, the Company received $6,850,000
as a short term loan from Whitehall Street and Whitehall Employee Fund and
deposited these funds in the equity reserve account as required by the First
Amendment Agreement.  The Company is
required to deposit $10,000,000 in reserve accounts with Lehman to fund
construction or deficits in operating the Hotel.  As part of the First Amendment Agreement the
interest rate was increased to LIBOR plus 300 basis points and principal
payments in addition to monthly interest-only payments are required as follows:  An amount equal to the greater of the net sale proceeds
per sold condominium unit or the release price of the unit stipulated in the
First Amendment Agreement is to be used to increase certain loan reserves to
$55,000,000, then to reduce the principal balance on the Mortgage Loan to
$150,000,000.  Subsequent proceeds of
approximately $15,000,000 are to be used to repay all or defined amounts of
other indebtedness and then the remainder to the Company.  7.Commitments
and Contingencies  The Company may, from
time-to-time, be a party to various lawsuits arising in the ordinary course of
business.  Management believes the
Company has adequate insurance coverage for all such matters and that, although
the ultimate outcome of such claims cannot be ascertained, current pending and
threatened claims are not expected to have a material adverse impact on the
Companys financial position, results of operations or cash flows.  8.Indemnifications
and Guarantees  The Company has entered into
certain indemnification agreements under which it could be required to make
payments to third parties upon the occurrence or non-occurrence of certain
future events.  These indemnities
primarily include 1) the indemnification of Members and officers of the Company
for certain events or occurrences while a Member or officer is, or was serving,
at the Companys request in such capacity and 2) all claims and demands which
may be asserted against the lenders under the Companys loans for obligations
to be performed by the Company.  The
duration of these indemnities generally is for the length of the
contracts.  These indemnifications
generally do no limit the future payments the Company could be obligated to
make.  The Company has not recorded any
liabilities for these indemnities in the accompanying financial statements,
based upon the current facts and circumstances that would trigger a payment.  10


W2005 Kapalua/Gengate Hotel Holdings, LLC Notes to Consolidated Financial Statements  9.Related Party Transactions  The following related party
transactions between the Company and various related entities could have a
different financial statement impact had they occurred in arms length
transactions between unrelated entities.  Services Agreement On March 13, 2006, the
Company entered into an Asset Management Agreement (Services Agreement) with
Gencom Asset Management Company, LP, (Gencom), an affiliate of GHGP and
GKH.  The Company engaged Gencom to
perform services related to the asset management and development of the Hotel.
Under the terms of the Services Agreement, the Company is charged an asset
management fee of one percent (1.00%) of hotel gross revenues payable monthly
in arrears, during each fiscal year plus all out of pocket expenses (including
reasonable travel expenses), disbursements and advances incurred by Gencom in
connection with its duties under the Services Agreement.  The Company incurred $448,121 in asset
management fees for the year ended December 31, 2007 and this amount is
included as a component of Management fees in the accompanying consolidated
statement of operations.  At December 31,
2007, there were no unpaid asset management fees.  Gencom receives a
Development Management Fee in an amount equal to four percent (4%) of the
aggregate hard and soft costs of renovation, exclusive of land costs.  The Development Management Fee is payable
monthly in arrears on the tenth business day following the month during the
time in which the property is undergoing renovations.  The Company incurred $1,467,371 in
Development Management Fee for the year ended December 31, 2007 and this
amount is included in construction in progress as a component of Property and
Equipment, net in the accompanying consolidated balance sheet.  At December 31, 2007, Development
Management Fees of $896,101 were unpaid and were included as a component of Due
to related parties in the accompanying consolidated balance sheet.  In addition, during 2007 Gencom charged the
Company approximately $787,000 for payroll and out of pocket expenses related
to Gencom employees involvement in the Hotel renovation.  Gencom is also entitled to a
Residential Unit Sales Fee upon the closing of the sale of a residential unit
by the Company or one of its subsidiaries to any third party purchaser.  The Residential Unit Sales Fee is equal to
one percent (1%) of sales price paid and is payable when there is available
cash flow or available capital event with proceeds sufficient to pay the
fee.  As of December 31, 2007 no
residential unit sales have closed and thus the Company has not incurred any
Residential Unit Sales Fees for the year ended December 31, 2007.  In addition, Gencom charged the Company a monthly
accounting fee of $4,000 per month.  The
Company incurred $48,000 in accounting fees for the year ended December 31,
2007 and this amount is included as a component of General and Administrative
expenses in the accompanying consolidated statement of operations.  At December 31, 2007, $16,000 in
accounting fees was unpaid and is included as a component of Due to related
parties in the accompanying consolidated balance sheet.  Credit
Enhancement and Other Fees  In accordance with the
Company Agreement the Company pays a fee in connection with a loan guaranty or
other recourse obligation provided or incurred by a Member (or an affiliate of
a Member) to a lender providing financing to the Company.  The Member providing or incurring a guaranty
or other recourse obligation is paid by the Company a fee equal to two percent
(2%) per  11


W2005 Kapalua/Gengate Hotel Holdings, LLC Notes to Consolidated Financial Statements  annum of the $15 million
guaranty or other recourse obligation. For the year ended December 31,
2007, the Company paid to Whitehall Street a credit enhancement fee of $300,000
which is reflected as a component of interest expense.  In conjunction with the
land acquisition and debt modification on March 27, 2007, the Company paid
to Gencom $686,165 for a transaction fee and paid Whitehall and its parent
$1,169,880 as a loan origination fee. 
These amounts have been capitalized as deferred financing costs.  Operating
Revenues At December 31,
2007, $194,869 is included as a component of accounts receivable, net of
allowance for doubtful accounts in the accompanying consolidated balance sheet
for amounts that are due to the Company for unpaid room rentals as a result of
various affiliates of the Company renting hotel rooms throughout the year.  10.Agreements with Hotel Manager  Hotel Management Agreement The Hotel Operator manages
the Hotels day to day operations.  The
Management Agreement with the Hotel Operator extends through December 31,
2041 and may be extended for an additional ten years (up to a total of three
additional ten-year periods). Under the Management Agreement, the Company is
required to pay the Hotel Operator a base management fee of 3.00% of hotel
gross revenues during each fiscal year plus an incentive fee based on the
operating profit of the Hotel, distributed to the Company and the Hotel
Operator after 1) first, to the Company, until the Company has received an
amount equal to the First Owners Priority (FOP) (FOP shall mean the sum of (i) seventeen
million dollars ($17,000,000) plus (ii) ten and three-quarters percent
(10.75%) of Total Capital Investment (calculated as of the last day of such
fiscal year); 2) second, to the Hotel Operator and Company, on a pari passu
basis, as follows: (a) eighty percent (80%) of First Available Cash Flow (FACF)
(FACF shall mean an amount, with respect to each fiscal year or portion thereof
during the term, equal to the excess, if any, of operating profit (up to an
amount equal to Second Owners Priority (SOP) (SOP shall mean the sum of (i) nineteen
million dollars ($19,000,000) plus (ii) ten and three-quarters percent
(10.75%) of Total Capital Investment (calculated as of the last day of such
fiscal year)) to Company and (b) twenty percent (20%) of FACF to the Hotel
Operator, until the Company shall have received an amount equal to SOP; and 3)
third, to the Hotel Operator and Company, on a pari passu basis, as
follows:   (a) seventy-five percent
(75%) of Second Available Cash Flow (SACF) (SACF shall mean an amount, with
respect to each fiscal year or portion thereof during the term, equal to the
excess, if any, of operating profit over SOP) to Company and (b) twenty-five
percent (25%) of SACF to the Hotel Operator.  The Company incurred
$1,344,365 in base management fees for the year ended December 31, 2007,
and this amount is included as a component of Management fees in the
accompanying consolidated statement of operations.  No incentive fees were incurred during this
year.  As of December 31, 2007, base
management fees of $15,941 were unpaid and are included as a component of Due
to hotel operator in the accompanying consolidated balance sheet.  Under the terms of the
Management Agreement, the Hotel Operator employs and provides all employees for
the Companys hotel operations. While these employees are employees of the
Hotel Operator and not legally employees of the Company, the Company pays the
payroll costs and related taxes and benefits for these employees.  The Company records the associated expense as
an operating expense in the accompanying consolidated statement of operations.  12


W2005 Kapalua/Gengate Hotel Holdings, LLC Notes to Consolidated Financial Statements  Throughout the term of the
Management Agreement, the Company is to have $22,500,000 in net worth
calculated in accordance with generally accepted accounting principles.  Accordingly, the Hotel Operator has the right
to terminate the Management Agreement by written notice and seek other remedies
permitted by law.  To date, the Hotel Operator
has not provided written or constructive notice to the Company.  Marketing Agreement The Company is required to
pay a group marketing services fee of 1.00% of hotel gross revenues during each
fiscal year.  The Company incurred
$448,122 in group marketing services fees for the period ended December 31,
2007, and this amount is included as a component of Sales and marketing in
the accompanying consolidated statement of operations.  As of December 31, 2007, $5,101 in group
marketing services fees was unpaid and is included as a component of Due to
hotel operator in the accompanying consolidated balance sheet.  Shared
Expenses The Hotel Operator has
billed the Company for its share of certain goods and services acquired on
group basis with other hotels managed by the Hotel Operator.  11.Subsequent Events  On December 15,
2007, the Company made a $12,000,000 capital call request pursuant to the
Company Agreement.  One of the Members, MLPC, declined to fund its
$2,571,432 pro rata share (the MLPC Share).  In connection with the acquisition of the Hotel in 2006,
a dispute arose regarding the amount of the closing date adjustment, between
the Company and RCK Hawaii, LLC ( the Seller) &  BCM/CHI Kapalua, INC. (the Option Seller),
(collectively, the Sellers). On February 14, 2008, a settlement
agreement was reached and as a result, the Sellers paid the Company $2,700,000
on February 19, 2008, in full satisfaction of the closing date
adjustment.  This amount is included in Other
receivable in the accompanying balance sheet.  On February 21,
2008, the Company entered into a $5,000,000 loan agreement (the FF&E loan)
maturing on February 21, 2011 with Marriott International Capital
Corporation.  The FF&E loan bears
interest at LIBOR plus 350 basis points. 
The FF&E loan is collaterized by: (a) FF&E reserves, (b) all
funds, money and other items of payment held or deposited in the FF&E
reserves, (c) FF&E Records, and (d) to the extent not otherwise
included above, all proceeds, products and profits of or in respect of any of
the foregoing.  13