Loreto Bay Company, Citigroup Property Investors Announce Joint Venture Acquisition of Camino Real L

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. October 14, 2008

LORETO, Baja California Sur, December 12, 2005. Loreto Bay Company and Citigroup Property Investors announced today that through a joint venture they have purchased the 155-room Camino Real Resort, located near Baja's historic fishing village of Loreto. The hotel, which will be renamed the Inn at Loreto Bay, was purchased for $15.1 million from FONATUR, Mexico's tourism development agency.

The 530,000 sq. ft. resort, which opened in 2002, sits on a secluded beach, offering spectacular views of the Sea of Cort'es. Its location directly adjacent to The Villages of Loreto Bay will provide additional amenities to the resort community Loreto Bay is developing along this three miles of beachfront, located 700 miles south of San Diego along the Sea of Cort'es.

"We have been customers of the Camino Real for more than two years as we've launched Loreto Bay and started construction on our homes in the Founders' Village. The opportunity to now own this fine hotel adds tremendous resources and amenities to the owners and tourists who visit," said James J. Grogan, president and CEO of Loreto Bay Company. Loreto Bay's master plan calls for 6,000 homes built in walkable neighborhoods in a community designed to protect and enhance the natural, social and economic environment, a method called "sustainable development."

This focus on sustainable development impressed Citigroup and contributed to their decision to participate in the venture. "Citigroup wholeheartedly endorses Loreto Bay's sustainability initiatives and we are eager to see them employed at the Inn at Loreto Bay, said Etienne E. Locoh-Donou, Vice President, North America Capital Partners for Citigroup Property Investors. "In a very short time, Loreto Bay Company has established a tremendous home ownership and tourist destination. The natural beauty of the Loreto region, easy access from major U.S. cities and proximity to The Villages of Loreto Bay and the visitors they attract all combined to make our decision."

Thomas H. Nolan, Jr., Partner and Chief Financial Officer for Loreto Bay, says the relationship with Citigroup brings tremendous strength to the venture. "We are delighted to have the project associated with a financial firm of the caliber and name recognition of Citigroup," said Nolan. "They share our vision for establishing the Inn at Loreto Bay as a premier destination on the Baja Peninsula. With nonstop flights of less than 90 minutes from Los Angeles, we expect the Inn at Loreto Bay to benefit significantly from our major commitment to tourism efforts in the region."

Through a transition agreement with FONATUR, current hotel management will remain in place until January 1, 2006. The venture is confirming plans for room renovation, expansion of the common areas and investment in sustainability measures.

During this transition, the Inn at Loreto Bay is under the direction of Steve Ast, Executive Vice President of Hospitality for Loreto Bay. Ast brings 30 years of hospitality experience to Loreto Bay, most recently as Vice President and General Manager of the Arizona Biltmore Resort and Spa, and formerly with such prestigious properties as Maui's Grand Wailea Resort and Spa, and the Scottsdale Fairmont Princess. Ast will name the management team at a later date.

"Our goal is to position Loreto Bay as a world-class vacation destination," said Ast. "The unique combination of mountains, desert, islands and sea make Loreto Bay a wonderful destination for those who love the outdoors and who want to see this beautiful environment preserved for future generations." The Loreto region was named one of the top ten tourism destinations in Mexico by National Geographic Traveler this year. With the nearby Loreto International Airport and three weekly non-stop flights from Los Angeles on Alaska Airlines, travel to Loreto has increased steadily throughout 2004 and 2005; the destination also is served by AeroMexico and several additional Mexican airlines.