Michigan Hoteliers Do It Their Way, KSI Capital participates in a loan to help make it happen*

HACKENSACK, NJ, JULY 16, 2001 — When Susan and John Payne of the Dudley Corporation sought funding for construction of their unique concept of a Victorian hotel on the Muskegon Lake shorefront in Michigan, few banks would support their independent vision for the hotel. A $6.6 million loan from KSI Capital, a direct private lender based in Paramus , N.J. , is now providing the company with the resources to realize their vision.

Unable to locate a traditional lender willing to finance the construction of their 140-room Shoreline Inn & Suites, the Paynes invested more than $3 million in the project's development. Contractors put in another $3.5 million of unpaid Replica watches work into the project until work was halted in July 2000 due to financial problems. KSI Capital and the Paynes have now reached an agreement where KSI will provide a multimillion dollar loan to permit completion of the ten-story, $11 million building enabling the hotel to open by the end of the year.

According to the Paynes, traditional lenders pressured them to make their hotel a franchise or flag operation with a brand entity such as Holiday Inn or Sheraton. Susan Payne also indicated that many of the Michigan banks are being taken over by outside institutions who are following Wall Street's warning to stay clear of the hospitality and restaurant industries as investments.

"We did extensive research and competitive analysis of the hotel market in Michigan ," said Susan Payne, "and we wanted to remain independent because we want our hotel to have its own personality."

"After our investigation and assessment of the market, we saw the Shoreline Inn as a viable business opportunity with a strong niche in the Muskegon region that made it a good investment," says Henry Haskell, President of KSI Capital.

Haskell explained that KSI Capital has more flexibility than traditional lenders in configuring its loans and relies on its own staff of financial experts to evaluate risks and come up with creative lending solutions.

The Paynes' have a great deal of insight into the local Michigan hotel market and firmly believe that the flags or franchises are not a good fit for the Muskegon market as they cater more towards the economy and budget consumer or focus too heavily on convention and banquet business.

"Our only competitor in the Muskegon market is the Holiday Inn which is a rehabbed Hilton," says Susan Payne. Payne says that the Shoreline Inn & Suites can easily compete against the Holiday Inn's small rooms, unattractive pool, and existing rate structure.

The Paynes say they are extremely pleased with support of KSI Capital and their quick response to their funding needs. While the Paynes are paying above market rates to KSI, it is far less expensive and restrictive than acquiring a partner or becoming a franchisee.

"Mr. Haskell is Mulberry a good businessman and has tremendous integrity," says Susan Payne.

The average conventional lender looks for lending scenarios that safely fit into predetermined loan parameters. KSI’s ability to devise creative, innovative lending solutions for borrowers facing critical junctures due to financial constraints, legal issues, and time constraints stems from its vast experience with a broad spectrum of lending situations. Our solutions also safeguard the borrowers' desires to remain independent and not take on partners or other forms of restrictive co-investment that entail relinquishing control."

Upon completion, the Shoreline Inn & Suites will become Muskegon 's first waterfront accommodation and one of the tallest buildings in town. Designed as a unique Victorian style hotel, the Shoreline Inn will offer gracious charm coupled with extraordinary views of Muskegon Lake . The 140 suites, including ten penthouse suites, are all being decorated and furnished in various Victorian themes, yet will feature all of the latest amenities such as large color TVs, refrigerators, microwaves, coffee makers and small kitchen facilities.

Additional facilities will include a heated indoor pool, two hot tubs, an exercise room and gift shop. While the hotel is steeped in an elegant Victorian atmosphere, it will be electronically advanced and feature the latest communications connectivity, including voice mail, Internet, email and fax. The doors will be electronic and keyless.

Muskegon is only 40 minutes from Grand Rapids and has easy access to I-96 and is only 1.5 hours from Lansing or Kalamazoo . The area is a popular summer resort area and haven for summer festivals. Within a short drive of the hotel, there are numerous amusement parks, golf courses, and area recreational facilities.

"Its location and the strength of the Muskegon area as a resort destination are strong points in favor of the Shoreline Inn's success," says Haskell.

Although they are primarily a direct private lender in the commercial real estate arena, KSI Capital has a diverse lending history that includes successful loans to sports complexes, amusement parks, airlines, and land development companies. The firm provides loans covering an array of financial situations including successfully dealing with commercial property workouts, foreclosure situations, bankruptcies, and scenarios that require innovative financial strategies.

A key lender in commercial real estate projects nationwide, KSI Capital has also completed high profile commercial loans in the international arena, as well.

"More and more commercial borrowers are becoming frustrated by the lack of flexibility and shortsightedness of conventional lenders," says Haskell. "The other major issue is with responsiveness. To succeed today, entrepreneurs and businesses need to act in real time to respond to market conditions that change daily, sometimes hourly. The delays and red-tape prevalent in traditional lending processes present real obstacles to the success and survival of business projects."

KSI Capital's expertise in due diligence and risk assessment enable the lender to support commercial investments of virtually any type. Unlike conventional banks, KSI responds to loan requests rapidly and issues decisions immediately. The lender can provide up to $50 million in as little as two weeks and a commitment in just two days with an up to 75% loan-to-value ratio. In the past, KSI has issued multimillion dollar loan commitments in as little as 24 hours.

Direct private lenders, such as KSI, offer a quick response to loan requests, diverse experience, flexibility in loan configuration, and the ability to devise innovative solutions to a broad range of lending scenarios that traditional lenders cannot match.