Private and Confidential

The Directors May 8, 2008
Carlton Savannah REIT (Jamaica) Limited
7 Stanton Terrace
Kingston 6

Ladies and Gentlemen,


Accountants report on prospectus to be issued by Carlton Savannah REIT (Jamaica) Limited
KPMG Advisory Services (“KPMG”) has been engaged by the Carlton Savannah REIT (Jamaica) Limited, to prepare this report for inclusion in the Prospectus issued by Carlton Savannah REIT (Jamaica) Limited dated May 8, 2008, in respect of the proposed offer by subscription of the ordinary shares under Section 40(2) of the Companies Act.


Expressions defined in the Prospectus have the same meaning in this report.


Projected financial information
KPMG has been requested to prepare a report covering the prospective financial information described below and disclosed in the Prospectus.


The directors' prospective financial information is set out on pages 52 to 62 of the Prospectus and comprises the projected consolidated balance sheet, projected consolidated income statement, projected statements of changes in consolidated stockholders' equity, projected statement of consolidated cash flows and the accompanying notes of Carlton Savannah REIT (Jamaica) Limited for the years ending May 31, 2009, May 31, 2010 and May 31, 2011.
The directors of Carlton Savannah REIT (Jamaica) Limited are responsible for the preparation and presentation of the directors’ prospective information, including the assumptions on which the directors’ projection is based.


The directors’ prospective information has been prepared by the directors to provide Applicants with a guide to Carlton Savannah REIT (Jamaica) Limited’s potential future financial performance based upon the achievement of certain economic, operating, developmental and trading assumptions about future events and actions that have not yet occurred and may not necessarily occur. The directors’ assumptions underlying the directors’ projections are set out in section 12 of the Prospectus.


There is a considerable degree of judgment involved in the preparation of any prospective information. Consequently, the actual results of Carlton Savannah REIT (Jamaica) Limited during the projected period may vary materially from the directors’ projections, and that variation may be materially positive or negative.


The directors’ projection is sensitive to changes in key assumptions set out in section 12 of the Prospectus and the risks to which the business of Carlton Savannah REIT (Jamaica) Limited is exposed are set out in section 10 of the Prospectus. Applicants should consider the Directors’ projection in conjunction with those sections.


The directors’ projection is presented in an abbreviated form and does not include all of the disclosures required by International Financial Reporting Standards applicable to annual financial reports prepared in accordance with the Companies Act.
Scope of examination of directors’ projection and directors’ hypothetical assumptions
We have been engaged to examine the directors’ prospective financial information under International Standard on Assurance Engagements 3400, The Examination of Prospective Financial Information.


We have examined the prospective financial information to be included in the Prospectus in accordance with International Standard on Assurance Engagements 3400. Our procedures have consisted primarily of enquiry and comparison and such other analytical review procedures as we consider necessary.


Our examination of the directors’ projection and hypothetical assumptions is substantially less in scope than an audit conducted in accordance with International Standards on Auditing. A review of this nature provides less assurance than an audit. We did not perform an audit and we do not express an audit opinion on the directors’ projection, or the directors’ hypothetical assumptions.


The directors are responsible for the preparation and presentation of the prospective financial information, including the assumptions on which the prospective financial information is based. As the Carlton Savannah REIT (Jamaica) Limited is in a start-up phase, the projection has been prepared using a set of assumptions including hypothetical assumptions about future events and management’s actions that are not necessarily expected to occur. Consequently readers are cautioned that this projection may not be appropriate for purposes other than that described.
Examination statement on the directors’ projections and the directors’ hypothetical assumptions


Based on our examination of evidence supporting the assumptions, which is not an audit, nothing has come to our attention which causes us to believe that:
· the directors’ assumptions, set out in section 12 of the Prospectus, when taken as a whole, do not provide a reasonable basis for the preparation of the directors’ projections; and that
· the directors’ projections, set out on pages 52 to 55 of the Prospectus, are not properly prepared on the basis of the directors’ assumptions or presented fairly in accordance with the recognition and measurement principles prescribed in International Financial Reporting Standards.


The underlying assumptions are subject to significant uncertainties and contingencies, often outside the control of Carlton Savannah REIT (Jamaica) Limited. Even if the events anticipated under the hypothetical assumptions described above occur, actual results are still likely to be different from the projections since other anticipated events frequently do not occur as expected and the variation may be material. Accordingly, we do not confirm or guarantee the achievement of the directors’ projections, as future events, by their very nature, are not capable of independent substantiation.

Independence
KPMG does not have any interest in the outcome of this issue, other than in connection with the preparation of this report, and participation in due diligence procedures for which normal professional fees will be received. KPMG also provides the Carlton Savannah REIT (Jamaica) Limited with tax advisory services for which normal professional fees are received.


Responsibility
KPMG has consented to the inclusion of this Accountant’s Report in the Prospectus in the form and context in which it is so included, but has not authorised the issue of the Prospectus. Accordingly, KPMG makes no representation regarding, and takes no responsibility for, any other statements, or material in, or omissions from, the Prospectus.


General advice warning
This report has been prepared, and included in the Prospectus, to provide Applicants with general information only and does not take into account the objectives, financial situation or needs of any specific Applicant. It is not intended to take the place of professional advice and Applicants should not make specific investment decisions in reliance on the information contained in this report. Before acting or relying on any information, an Applicant should consider whether it is appropriate for their circumstances having regard to their objectives, financial situation or needs.


In this report, we provide general financial product advice, not personal financial product advice. It has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on any advice contained in this report.


Credentials of KPMG and Declaration of Relationship
KPMG Advisory Services is a Jamaican partnership which is part of KPMG, a Jamaican partnership and a member firm of KPMG, a global network of professional firms providing Audit, Tax and Advisory services. From time to time KPMG Advisory Services or KPMG’s Jamaican professional practice and/or KPMG related entities may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business. KPMG is a network of independent member firms affiliated with KPMG International, a Swiss cooperative. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International performs no professional services for clients nor, concomitantly, generates any revenue. Our partners may be partners in KPMG’s Jamaican partnership.
We will receive a fee as compensation for our services in providing this report. We are also acting as tax advisor in connection with the Transaction and will receive a fee for our tax advisory services. KPMG has not been involved as a financial advisor to the Carlton Savannah REIT (Jamaica) Limited and has been retained solely with respect to:
(i) the review of the Carlton Savannah REIT (Jamaica) Limited prospective financial information; and
(ii) assistance related to tax advisory services.


KPMG has been appointed as auditors of Carlton Savannah REIT (Jamaica) Limited.
KPMG has performed its examination of the prospective financial information in an independent manner with access to management information and reports.


Except for the fees referred to above, neither KPMG, nor its representative, or any of its employees, involved in the provision of the report, receive any pecuniary or other benefits, directly or indirectly, for or in connection with, the provision of the Accountant's Report.
All our employees receive a salary and our partners or employees may receive partnership distributions from KPMG or bonuses based on overall productivity, but not directly in connection with any engagement for the provision of a report.
We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we provide.
Yours faithfully,



ROC:MR:sd

Carlton Savannah REIT (Jamaica) Limited
Projected Consolidated Balance Sheet
As at May 31, 2009, 2010 and 2011


Notes 2009 2010 2011
($’000) ($’000) ($’000)

ASSETS
Non-current asset:
Investment property -
Carlton Savannah Hotel 4 17,948.9 18,487.4 19,042.0

Current assets:
Receivables - - 492.4
Cash and cash equivalents, 54.7 109.5 109.5
Total current assets 54.7 109.5 601.9
TOTAL ASSETS 18,003.6 18,596.9 19,643.9

STOCKHOLDERS’ EQUITY
Issued share capital 5 17,426.1 17,426.1 17,426.1
Retained earnings 577.5 1,170.8 2,217.8
TOTAL STOCKHOLDERS EQUITY 18,003.6 18,596.9 19,643.9









Carlton Savannah REIT (Jamaica) Limited
Projected Consolidated Income Statement
Years ending May 31, 2009, 2010 and 2011


Notes 2009 2010 2011
($’000) ($’000) ($’000)

INCOME

Investment property income: 6

Share of profits from Carlton
Savannah Hotel Apartments 939.2 939.2 984.9
Lease income from Health Club & Spa 235.0 242.1 249.1
Unrealized gain in fair value of
investment property 3(c) 522.8 538.5 554.6
TOTAL INCOME 1,697.0 1,719.8 1,788.6

EXPENSES

Administration expenses 3.9 4.3 4.6
Directors fees 20.6 22.4 24.4
Audit and accounting fees 16.7 18.2 19.8
Regulatory fees 11.0 12.0 13.1
Marketing, legal and miscellaneous 26.7 28.1 30.6
TOTAL EXPENSES 78.9 85.0 92.5

PROFIT FOR THE YEAR 1,618.1 1,634.8 1,696.1

EARNINGS PER STOCK UNIT 7 $ 0.01 0.01 0.01










Carlton Savannah REIT (Jamaica) Limited
Projected Statement of Changes in Consolidated Stockholders’ Equity
Years ending May 31, 2009, 2010 and 2011


Share Retained
capital earnings Total
($’000) ($’000) ($’000)
(note 5)

Balance at June 1, 2008 17,426.1 - 17,426.1

Profit for the year - 1,618.1 1,618.1
Dividends paid - (1,040.6) ( 1,040.6)
Balance at May 31, 2009 17,426.1 577.5 18,003.6

Profit for the year - 1,634.8 1,634.8
Dividends paid - (1,041.5) ( 1,041.5)
Balance at May 31, 2010 17,426.1 1170.8 18,596.9

Profit for the year - 1696.1 1,696.1
Dividends paid - ( 649.1) ( 649.1)
Balance at May 31, 2011 17,426.1 2,217.8 19,643.9







Carlton Savannah REIT (Jamaica) Limited
Projected Statement of Consolidated Cash Flows
Years ending May 31, 2009, 2010 and 2011


Notes 2009 2010 2011
($’000) ($’000) ($’000)

CASH FLOWS FROM OPERATING
ACTIVITIES

Profit for the year 1,618.1 1,634.8 1,696.1
Adjustment for unrealized gain in fair
value of investment property ( 522.8) ( 538.5) ( 554.6)
1,095.3 1,096.3 1,141.5
Change in current assets:
– receivables - - 492.4
Net cash provided by
operating activities 1095.3 1,096.3 649.1

CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisition of subsidiary, CSRSL, being
net cash used in investing activities (17,426.1) - -

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds of issue of ordinary shares 8 17,426.1 - -
Dividends paid to shareholders 9 ( 1,040.6) (1,041.5) ( 649.1)
Net cash provided by/(used in)
financing activities 16,385.5 (1,041.5) ( 649.1)

Net increase in cash and cash equivalents 54.7 54.8 -
Cash and cash equivalents at
beginning of year - 54.7 109.5
Cash and cash equivalents at end of year 54.7 109.5 109.5





Carlton Savannah REIT (Jamaica) Limited
Notes to the projected consolidated financial statements
Years ended May 31, 2009 – 2011

1. Identification and principal activity

Carlton Savannah REIT (Jamaica) Limited (“the company”) was incorporated in Jamaica on April 21, 2008. The company is domiciled in Jamaica with its registered office at 7 Stanton Terrace, Kingston 6, Jamaica. It intends to acquire by June 2008 a wholly-owned subsidiary, Carlton Savannah REIT (St. Lucia) Limited (“CSRSL”) , incorporated in St. Lucia, the projected principal activity of which will be the beneficial ownership of 16 Hotel Apartments and Health Club & Spa in the Carlton Savannah Hotel in Trinidad.

2. Basis of preparation

(a) Statement of compliance:

The consolidated projected financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and the relevant provisions of the Jamaican Companies Act (“the Act”).

(b) Basis of measurement:

The consolidated projected financial statements are presented on the historical cost basis except as modified for investment property carried at fair value.

(c) Functional and presentation currency:

The consolidated projected financial statements are presented in United States dollars ($), which is the functional currency of the company, and are stated in thousands, unless otherwise stated. The projected financial statements of other entities included in the consolidated financial statements that have different functional currencies are translated in the manner set out in note 3(d).
Carlton Savannah REIT (Jamaica) Limited
Notes to the projected consolidated financial statements (cont’d)
Years ended May31, 2009 – 2011

2. Basis of preparation (Cont’d)

(d) Assumptions

The projected financial statements have been prepared on the basis of hypothetical assumptions made by the directors and management about future economic, operating, developmental and trading conditions, events and actions that have not yet occurred and may not occur. The assumptions regarded by management as most critical are set out in section 12 of this Prospectus.

3. Significant accounting policies

(a) Basis of consolidation:

The consolidated projected financial statements combine the financial position, results of operations and cash flows of the company and its subsidiary after eliminating all material intra- group balances and any unrealised gains and losses and income and expenses arising from intra-group transactions.

(b) Financial instruments:

(i) General
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.

The only financial asset projected to be held by the Group is cash and cash equivalents, and no financial liabilities are projected to be held by the Group at the end of each year of the projection.
Carlton Savannah REIT (Jamaica) Limited
Notes to the projected consolidated financial statements (cont’d)
Years ended May 31, 2009 – 2011


3. Significant accounting policies

(b) Financial instruments (cont’d):

(i) General (cont’d)

Fair values:

Fair value amounts represent estimates of the arm’s length consideration that would be currently agreed between knowledgeable, willing parties who are under no compulsion to act and is best evidenced by a quoted market price, if one exists. Where quoted market prices are not available, the fair values of these instruments have been determined using a generally accepted alternative method. However, considerable judgement is required in interpreting market data to develop estimates of fair value.

(ii) Specific instruments - Cash and cash equivalents

Cash comprises cash in hand and demand and call deposits with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

(c) Investment property:

Investment property is property held for long-term rental yields and/or capital gains, and is not occupied by the Group. Investment property is carried at fair value, based on open market values determined annually by independent qualified valuers or another generally accepted alternative method. Fair value is based on current prices in an active market for similar properties in the same location and condition. Any gain or loss arising from a change in fair value is recognized in the income statement.
Carlton Savannah REIT (Jamaica) Limited
Notes to the projected consolidated financial statements (cont’d)
Years ended May 31, 2009 – 2011

3. Significant accounting policies

(d) Foreign currency:

Transactions in foreign currencies are translated to the respective functional currencies of the Company and its subsidiary at the exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at balance sheet date are translated to the functional currency at the foreign exchange rates ruling at that date.

(e) Taxation:
Income tax on the profit or loss for the year comprises current and deferred tax. Under current provisions of the CARICOM Tax Treaty, CSRSL will only pay tax, at 1%, on its non-CARICOM income.
Projected withholding tax of 15% of the income due to CSRSL is paid to the tax authorities in Trinidad & Tobago prior to receipt of the income by CSRSL. This income suffers no further tax.
(f) Revenue:
(i) Share of rent

The Group’s share of the owners’ share of rent earned from rental of the apartments is recognised when due from the hotel operating company (note 4).

(ii) Lease rental income

Lease rental earned from the rental of the Health Club & Spa is recognised when due from the hotel operating company in monthly amounts in accordance with the annual rates set out in the lease agreement.
Carlton Savannah REIT (Jamaica) Limited
Notes to the projected consolidated financial statements (cont’d)
Years ended May 31, 2009 – 2011

4. Investment property

Investment property consists of 16 Hotel Apartments and the Health Club & Spa, part of the Carlton Savannah Hotel. The proportionate share of Owner’s Share of Rent generated annually by Carlton Savannah Limited, the hotel management company, is received by CSRSL, which will be a 100% owned subsidiary of the company.

5. Share capital

Year Ending May 31, 2009 2010 2011
Number of authorized shares 500,000,000 500,000,000 500,000,000
Number of Issued
and fully paid shares 212,330,270 212,330,270 212,330,270
Stated capital (US$000) 17,426.1 17,426.1 17,426.1

6. Investment income

Investment income is subject to various risks:

(a) Performance risk is the risk that the hotel operating company will not live up to its contractual obligations. CSRSL is dependent on the contractual performance of Carlton Savannah Limited in its management of the Carlton Savannah Hotel and Health Club & Spa.

(b) Market risk is the risk that the value of an investment fluctuates as a result of changes in market prices, whether those changes are caused by factors specific to the individual investment or general business sector or macro-economic factors.

(c) Foreign currency risk
The company is exposed to foreign currency risk on transactions that it undertakes in foreign currencies that give rise to the net currency gains and losses recognized during the year. Such exposures comprise the assets and liabilities of the Company that are not denominated in its functional currency.
Carlton Savannah REIT (Jamaica) Limited
Notes to the projected consolidated financial statements (cont’d)
Years ended May 31, 2009 – 2011

7. Earnings per stock unit

Earnings per stock unit (“EPS”) is computed by dividing profit attributable to equity holders of the parent by the weighted average number of stock units in issue during the period.

8. Proceeds of Issue of ordinary shares

The company will use the net proceeds from this offering to acquire all of the issued shares of CSRSL, which, in turn, will acquire the beneficial interest in 16 of the Apartments and the Health Club & Spa of the Carlton Savannah Hotel. The Hotel is targeted to be opened in June 2008 and will be managed by the Carlton Savannah Limited.

9. Dividends
The dividends projected to be paid represent substantially all of the amounts projected to be received by the Company from the hotel operating company for the rental of the apartments and the lease of the Health Club & Spa.
In relation to the rental of the apartments, in Year 3 and thereafter, the portion representing the owner's share of rent to be received from the hotel operating company for each operating year will be paid to the Company as follows:
· one-half of the amount which the operating company calculates to be the owner's share of rent in respect of the preceding month will be monthly in arrears; and
· the balance within 30 days after the receipt of the audited financial statements for each operating year.
In relation to the lease income for the Health Club & Spa, the amounts are received as set out in note 3(f)(ii).