Hurricane Dolly Damage Status

Update: Week Ending August 8, 2008

Good morning all,

The following is the update received from Steve Meadows -

Sheraton Team:

1. Continued work on landscaping around pool area
2. Nearly all landscaping damaged, palm trees should survive and we are trimming them again
3. Pool drained, acid washed and refilled
4. Jacuzzi work awarded to pool company to refinish
5. In process of painting retaining walls around landscape beds
6. Finished rebuilding pool pump housing around pools and painted
7. Continue cleanup of debris

Interstate Team:

1. Nearing completion of phase 1 cleanup
2. All wall covering has been removed throughout the hotel including corridors and meeting rooms
3. All damaged drywall has been removed
4. All carpets removed from property
5. Roof over beach services building removed
6. Roof over Palapa Bar in process of removal
7. Generators removed as permanent power has been stabilized

David Regenbaum, CEO
Association Management, Inc.

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HURRICANE UPDATE – WEEK ENDING AUGUST 1, 2008

Sheraton:

1. Unfortunately, we had to layoff over 140 employees on Tuesday. Most have found work with Interstate, the company doing the remediation work.
2. Advised Starwood that we were looking at a projected reopening date of November 1, 2008 and that it may be an aggressive date. Everyone is working diligently to do everything possible to reopen as soon as possible.
3. Started the setup of a new location for the administrative offices in the restaurant
1. A total of nine computers were placed in the restaurant
2. Our computer technician connected us into a network in order to share files and documents
3. The new office was outfitted with several printers and scanners
4. Administrative internet capability is limited but functioning
4. Repaired broken curbs on poolside.
5. Remove Beach debris.
6. Remove paint on outside stairs.
7. Removed Damaged A/C sleeves.
8. Cleaned debris out of pools.
9. Removed paint from Jaccuzzi.
10. Clean up on north side of building continued.
11. More cleaning in the Lobby, public restrooms.
12. Continued with the clean up of the commercial laundry.
13. Worked on bringing more linen down for River Linen to pick up.
14. Established a wristband policy along with security and South Padre Island Beach Resort management in order to control access to the lunch room.
15. Picked up and threw away all trash from kitchen and bathrooms.

Interstate:

1. Continued removing carpet and wall vinyl from room corridors
2. Carpet removed from second floor.
3. Drywall being cut from rooms and back offices.
4. Worked on rooftop HVAC's for condo's
5. Continue drying out the building with heaters and dehumidifiers.
6. All administrative offices packed up and emptied and drying out process continued
7. Effective around noon on Friday, August 01, 2008, transitioned from generator power to regular power.

David Regenbaum, CEO
Association Management, Inc.

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Update: July 28, 2008

Good morning all,

I have had a number of requests from Owners regarding their personnel possessions and whether they should travel to the island. We certainly cannot prevent you from doing so, but would sincerely discourage you from traveling to the island at this time. Power has not yet been restored, car rental and accommodation is extremely limited, and the hotel staff and restoration crews are very busy removing carpeting and stabilizing the building.

If you have any valuables in your Unit you need to arrange for their removal and safekeeping. If you have not already done so please contact your insurance company as soon as possible. I have spoken with a representative of Interstate Restoration who advises that very few Units had water penetration other than wind driven rain. As a result the contents of most of the Units is undamaged except for the effects of humidity. Interstate Restoration has offered to mitigate damage to your personnel possessions. After being authorized by you they will enter your Unit, wipe down the furniture and effects, wrap them and place them in the center of the Unit. They will not remove your property from the Unit. The form of authorization is attached. Please print, sign and fax the form to 817-293-0283 Attention: Kris. They will not access the Owners' lock-up closets, most of which appear to be intact.

I have asked Interstate Restoration to take and send photos of the individual Units and send the photos to us for distribution to the Owners. I am awaiting confirmation from them that they will do so. We are in the process of setting up a website for you on which we will post updated information as it becomes available. Until this is accomplished we will continue to send you email updates as information becomes available.

David Regenbaum, CEO
Association Management, Inc.

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Update: July 26, 2008

Dear Condominium Unit Owners,

I have just spoken with Keith Evans and Steve Meadows. They advise that the ground floor of the hotel was significantly impacted by the hurricane and that the Condominium Units suffered wind driven rain damage. There was some water infiltration but most windows appear to have held. A lot of the furniture is wet due to the humidity and will need to be dried out and cleaned (or replaced, depending on your insurance).

Although there is still no power, they have a large generator providing temporary power for operations and they are trying to hook up temporary power for the units' rooftop AC units to speed up the dehumidification process. They are hoping to have fully restored power by mid week.

The Hotel has employed a restoration firm to mop up and dehumidify the building. They are in the process of doing so and will be placing your personal property in the center of your Unit and will cover your personal property with a plastic sheet.

You are urged to contact your insurance carriers as soon as possible and arrange for removal and safekeeping of your furniture and all personal items so the restoration work can proceed. Your contact for access to the building will be Jeff Hammill (956-433-9082).

It is obviously necessary that the Semi-Annual Meeting of Owners scheduled for August 16, 2008 will need to be postponed. We will communicate with you to advise you of the new date for the meeting as soon as it is re-scheduled.

David Regenbaum, CEO
Association Management, Inc.