Work Out Solution For Real Estate Development (presentation for financial institution)

Diagnostic Market AnalysisProject:Bosque Señorial 59 Single Family Detached UnitsPR 9936 - Ave. Las Americas Ponce, Puerto Rico

On the Request of:Executive Vice President Doral Financial CorporationP.O. Box 70308San Juan, Puerto Rico 00936-8308 Prepared by:Adam GreenfaderAXYON, INC. PMB 165 - 1750 Loiza Street - 1st Floor San Juan, Puerto Rico 00911(787)728-6715 (787) 667-8084 Date of report:Total Pages: 145

Doral Financial Corporation

Bosque Señorial

Key Slides

This key slide presentation is derived from the December 18, 2008, Diagnostic Market Analysis and compiled from the below noted sources:

1. Diagnostic Site Analysis – Bosque Señorial and Ponce Market Area2. Researching past sales - Luis Abreu Sales Data Report (December 2008)3. Interviews with local and national Real Estate experts4. Census 2000 & 2004 data 5. Planning Board JPU & ARPE (Puerto Rico)6. AXYON sales data dated from 2001-20087. Demand for Housing in Puerto Rico 2007-2012, Estudios Técnicos, Inc.8. Assorted Articles Caribbean Business 2004-20089. Architectural plans and drawings from development team 10. Sales materials from comparable projects 11. Data from The Center For The New Economy12. Homebuyer Interviews with Bosque Señorial Residents – December 200813. Classified Online and other real estate web sites14. 20 Minute drill sales scripts and training

Market Research Sources

The Project

Key FactsProject: Bosque Señorial Financial Institution: Doral Financial CorporationLocation: Municipality of Ponce (Ave. Las Americas). Site: 23.8 Cds.Project: 59 Single Family Units –DetachedUnit : 3,090 S.F.Avg. Lot Size: 644 M2 House: 4 Beds / 2.5 Baths & 2 Car Garage Sales Start: 05 / 2007 (19 months) Total Closings: 10 units (17% as of December 18, 2008) Total: $3,617,776Absorption Rate: .50 units per month Average Closing: $361,207 Price Per S.F. : $117

* Not arm length transaction. Sales by development group. Eliminated from average calculation.

Bosque Señorial Closing Record Unit M2 Price Price/M2 Price / S.F. Closing Date

1 315 $373,666 $1,186 $121 November 072 622 $360,208 $579 $117 August 074 523 $353,265 $675 $114 July 078 436 $366,911 $681 $114 November 08

25 * 901 $379,754 $421 $123 43 551 $355,183 $645 $115 August 0849 567 $356,303 $628 $115 February 0850 518 $352,937 $681 $114 September 07 56 585 $357,563 $611 $116 June 0859 648 $361,986 $559 $117 March 14, 08

Avg. 581 $361,207 $665 $117

Strengths + Weaknesses - Site•Access to Highway •Proximity to Major Urban Center•Large (Usable) Lots•Mature Trees•Project Maintenance•Customer Service •Development Team

Home •Design and Dimensions •Expandable Garage •Large (Efficient) Master Bedroom •½ Bath Location •Kitchen lay-out •Covered Terraces •Laundry Room Location•Intelli-Home System

Site•Recreational Facilities (Lighting, Fencing, Landscaping) •Project Signage

Home •Kitchen Door•Formica Bathroom Counter Tops

SWOT ANALYSIS

Site Strengths

House Strengths

Project Weakness

• U.S. economic crisis • Puerto Rico’s anemic growth -GNP• Significant living cost increases of

3.82% (Revised CPI 2007) • New sale tax 7%• -13.2% drop homes sales (2006-08) • 27,148 unsold home inventory (E.T.) • Tight credit – no more 100%.• Notary Law increases financing costs Bosque Señorial • Noise pollution from Road 500 • Perceived Air Pollution (Cemex) • Adjacent Auto Mechanic

Threats - Opportunities +

• 756 Billion Federal Stimulus Package Approved

• New governments

• Interest rates on 30 year conventional mortgages remain low (6.75%)

• New Ponce infrastructure

SWOT ANALYSIS

Project Threats

The Competition

New Home Project Graph

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Net Price Ponce Market Area

Net Price

NEW HOME PROJECT REPORTSingle Family Homes Ponce Market Area

Project NetPrice Discount Total

SFPrice /

SFBasicM2 Rm Bath Units

Paseo de Reyes $222,900 2% 2,465 $90 510 4 2.5 199

Estancias del Golf $245,000 2% 2,400 $102 325 3 3.5 51

Hacienda Juliana $258,000 2% 2,400 $108 400 4 2.5 81

Terra Señorial $295,000 8% 2,500 $118 400 4 2.5 96

Mansion del Lago $329,900 6% 2,295 $144 450 4 2.5 151

Bosque Señorial $346,000 4% 3,090 $112 644 4 2.5 59

Man. Puerto Galexda $440,000 4% 3,400 $129 1,400 4 2.5 46

Estancias del Monte $470,000 5% 2,700 $174 450 4 2.5 67

Average $325,850 4% 2,656 $122 572 4 2.5 94

Paseo ReyesOffers an inferior product and location. The price of the units, however, is very competitive. In a slow economy, Paseo de Reyes should be a challenging competitor because of its pricing.

Estancias del Golf Offers an attractive product in a slightly better location. The price of the unit is very affordable.

Hacienda Juliana Offers the residential consumer an inferior location and product. The price of the units is very competitive.

Terra Señorial Offers the upscale residential consumer an attractive product in a comparable or better location. The price of the units is competitive. Terra Señorial is Bosque Señorial’s principal competitors.

Mansión del Lago Offers an attractive product in a better location. The price of the units is competitive. Mansión del Lago is amongst Bosque Señorial’s principal competitors.

Mansiones Puerto Galexda Offers a very attractive product in a better location. The price of the unit is more expensive but reasonable for the product offering. Mansiones Puerto Galexda will be competition with Bosque Señorial.

Estancias del Monte Offers an attractive product in a better location. The price of the unit is extremely expensive. It appears that the project will need to make a significant price adjustments in order to be competitive.

Location Bosque Señorial’s location is generally inferior to the competition, particularly Terra Señorial, Mansión del Lago, Mansiones Puerto Galexda, Estancias del Monte. It is superior to Paseo Reyes and Hacienda Juliana.

Home The competition’s homes range in size from 2,295 S.F. to 3,400 S.F. The average size of the homes is 2,656 S.F. Bosque Señorial is amongst the largest with 3,090 S.F. and superior.

FinishingsThe finishings of the homes are equivalent. Bosque Señorial has no clear advantage or disadvantage.

LotThe lots range from 400 M2 to 1,400 M2. The average lot size is 572 M2. The Bosque Señorial lot is larger than the competition (644 M2) and thus superior.

FacilitiesThe competition’s facilities typically include a gazebo, pool (with showers), and children’s play area. Bosque Señorial’s recreational facilities do not include a pool. Bosque Señorial’s recreational facilities are inferior.

Competition Conclusion

Past Pricing & Future Demand

Supply & Absorption TablePonce Market Area *

Project

TotalUnits

Closed AvailableSupply

AvailablePct.

SalesStart

AbsorptionRate (1)

1 Paseo de Reyes 199 75 124 62% 6/1/07 4.17

2 Estancias del Golf 51 39 12 23% 2/1/06 1.15

3 Hacienda Juliana 81 0 81 100% Const. N/A

4 Terra Señorial 96 43 53 55% 3/1/06 1.305 Mansion del Lago 151 6 145 96% 6/1/08 1.006 Bosque Señorial 59 10 49 83% 6/1/07 0.507 Man. Puerto

Galexda46 18 28 60% 12/1/07 1.50

8 Estancias del Monte 67 0 67 100% Constr. N/A Total 750 191 559 75% 1.60

* The units accounted in the supply chain are only those units available as of the 4th quarter of 2008. (1) Data Source Estudios Tecnicos.

2003 2004 2005 2006 2007 2008$275,000

$280,000

$285,000

$290,000

$295,000

$300,000

$305,000

$310,000

$315,000

$320,000

$325,000

Appraisal

Sales Price

The past sales include both new and previously owned homes in the Ponce Market Area. The average price of a 4 bedroom and 2.5 bath home in 2003 was $297,670. In 2007, the price of the same home was $295,316. The prices of homes have decreased remained virtually flat and the trend looks downward.

Source: Luis Abreu Sales Reports 2003-2008.

Past Sales Ponce Market Area

Total Demand 5 years Per Year

Total Demand (Non-Subsidy) 49,887 Units 9,977 Units

Ponce Demand (11.8%) 5,886 Units 1,177 Units

Single Family Demand (71%) 4,175 Units 835 Units

$260,000 or more (14%) 584 Units 116 Units

Demand Table *

* Demand for Housing in Puerto Rico 2007-2012, Estudios Técnicos, Inc.

Total Bosque Señorial Inventory 49

Total Supply 559

New Units 32

Capture Rate * 9.9%

Total Units Sold Per Year ** 11.4 (.95 per month)

Total Project Sell Out 4.2 Years (50 months)

Projected Absorption Rates

* Capture rate calculation: 59 units of the proposed project / 559 assumed total available units + 32 new units.

** Based on the market demand of 116 units per year for the $260,000 and over market.

Pricing Strategy Pricing

Motivate individuals to close homes as quickly as possible. The most affordable homes should be those adjacent to Road 500.

The average market price is $325,850. Bosque Señorial’s pricing reveals a higher net price of $346,000 (6.2% higher).

Notwithstanding the larger house and lot, a price adjustment value should be considered because of its weaker location and to compensate for the perceived safety risk, neighborhood and industrial environment (Cemex plant).

Base price should be adjusted to $305,000 or $99 per square foot. This would provide a total project sell out of $15,706,190. Note: Hide price discounts through special closing bonuses, incentives, or aggressive interest rate deductions. The competition offers cash incentives, interest rate reductions, and “furniture packages.” The furniture packages include air conditioning units, garage doors, landscaping, etc…

Sales Price $365,0000 $305,000

Down payment $36,500 10% $30,500 10%

Mortgage $328,500 90% $274,500 90%Closing Costs $11,497 3.5% $9,607 3.5%Total Investment (Cash) $47,997 $40,107 Monthly Payment Interest 6.5% Rate 6.5% RateTerm 30 Years 30 YearsPayment & Principal $2,076 Mthly $1,735 MthlyHazard Insurance * $70 Mthly $70 MthlyTaxes * $50 Mthly $50 MthlyMaintenance **Total Payment

$140$2,346

MthlyMthly

$140

$1,995MthlyMthly

Qualification Income To Qualify $7,038 Mthly $5,985 Mthly

$84,456 Yearly $71,820 Yearly

Sensitivity Analysis

Note: With a $60,000 price adjustment, the monthly payment falls below the $2,000 psychological barrier.

Sales and Marketing

In December 2008, 80% of the residents of Bosque Señorial were interviewed via a formal questionnaire. Most of the home buyers were happy with their decision to buy at B.S and would recommend the project to friends.

In terms of the home, the residents were content with the design but generally disappointed with the finishings (40% “Met with my expectations”, 60% “Did not meet with my expectations.” )

Most of the residents mentioned that the cement plant was the project’s least attractive attribute. It seems that the cement plant represents both a pollution (noise and air) issue and perceived security threat.

Resident Questionnaire

45% moved to Bosque Señorial because of its location3 out of 4 searched outside of Ponce for new home communities 85% were motivated to buy because of the house designThe majority of residents claim that the recreational facilities were a “very important or important part” of their home purchase decision 100% of the residents were either “satisfied “ or ”very satisfied” with the project maintenance

Unique Selling Proposition A very accessible location, well designed home , and large home lots.

Product Hot ButtonsLarge master closet, expandable garage, granite kitchen, open floor plan, and flat lots .

Brand AnalysisThe name of the project is Bosque Señorial (Majestic Forest). The brand can build off the forest theme, especially if more trees are planted on the streets and recreational facilities.

Tag Line The tag line reads “Vive a todo gusto”, which roughly means to live life to its fullest. This tag line is not consistent with the unique selling proposition.

LanguageThe name of the project is in Spanish (the principal language for this market segment). It is also consistent with the competition.

Marketing Strategy

Product Merchandizing Signs – Add permanent signs , recreational facility, project entrance, and model house.

Technology – Turn on T.V. with commercial loop of project’s highlights, and activate the Intelli-home system with security cameras.

Kitchen – remove sales materials from counters and cabinets. Hide sales inventory.

Windows (Light) – Open all curtains. Use plastic screens to maintain a/c. Cover picture window at stairs with laminated frosted screen for privacy.

Backyard – landscape, add deck and pool. Add swing to mature tree and lounge chairs – get clients to enjoy the yards.

Balcony and terrace – add chairs and tables.

Fencing – Raise wall (PVC) on Road 500, secure drains, and cover AEE junction boxes.

Club House – Add furniture or gym equipment.

Public RelationsDedicate a substantial amount of resources to a comprehensive public relations plan to mitigate the negative impact of the Cemex plant.

Have sales team participate in multiple direct marketing activities ( in-house and in local community) throughout the year.

Sales TeamThere are multiple brokers from the same company selling the project. The brokers are from Ponce and the sales office is open everyday from 10:00 A.M. - 7:00 P.M. • Train sales team to handle key objections regarding Cemex plant• Develop a standard sales script • Remove inventory from client’s line of sight • Pay all brokers if a sale is made regardless of who registers the client

Direct Marketing

Marketing Materials - The marketing materials are not with consistent the upscale image that the project warrants. A. Brochure The brochure has not been updated since the project’s inception and still has the model drawings instead of the actual house facades. B. Aluminum SignsThe aluminum signs on the project’s exterior are worn out and do not convey the quality of life images that are normally associated with a high end development.

C. Model House Signs There are no model house signs that have the project logo and name, including smart tags on key amenities such as the Intelli-home system, and N.I.C. on appliances(not included) signs. Include large directional and points of interest maps.

D. Newspaper Ad The newspaper advertising is attractive and the colors are bright and clear (as seen in original). While attractive, the ad does not clearly convey a unique selling proposition. Is it the location, home size, or financing being emphasized?

Marketing Materials

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