#1STRICTLY PRIVATE AND CONFIDENTIAL PROJECT PLATO Valuation discussion materials JPMorgan MARCH 20, 2006#2PROJECT PLATO This presentation was prepared exclusively for the benefit and internal use of the JPMorgan client to whom it is directly addressed and delivered (including such client's subsidiaries, the "Company") in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible transaction or transactions and does not carry any right of publication or disclosure, in whole or in part, to any other party. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by JPMorgan. Neither this presentation nor any of its contents may be disclosed or used for any other purpose without the prior written consent of JPMorgan. The information in this presentation is based upon any management forecasts supplied to us and reflects prevailing conditions and our views as of this date, all of which are accordingly subject to change. JPMorgan's opinions and estimates constitute JPMorgan's judgment and should be regarded as indicative, preliminary and for illustrative purposes only. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the assets, stock, or business of the Company or any other entity. JPMorgan makes no representations as to the actual value which may be received in connection with a transaction nor the legal, tax or accounting effects of consummating a transaction. 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JPMorgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan arranging, financial advisory and other investment banking activities are performed by a combination of J.P. Morgan Securities Inc., J.P. Morgan plc, J.P. Morgan Securities Ltd. and the appropriately licensed subsidiaries of JPMorgan Chase & Co. in Asia-Pacific, and lending, derivatives and other commercial banking activities are performed by JPMorgan Chase Bank, N.A. JPMorgan deal team members may be employees of any of the foregoing entities. JPMorgan PROJECT PLATO#3PROJECT PLATO Agenda JPMorgan Transaction overview Public market overview Valuation summary Appendix Page 1 4 8 18 PROJECT PLATO 1#4TRANSACTION OVERVIEW Transaction overview Transaction type Offer price per share Implied enterprise value of $3,623mm Acquirer total equity contribution of $1,400mm New funded debt financing of $2,363 mm JPMorgan 100% cash acquisition; management-led buyout (MBO) ■ Subject to 45 day go-shop period ■ $76.00 per share 8.0% premium to current share price of $70.36 11.4% premium to 30-day average share price of $68.25 12.9% premium to 60-day average share price of $67.35 16.9X EV/2006E EBITDA (based on upside case) ■ Contributor Istithmar Whitehall Colony Sol Kerzner Butch Kerzner The Related Companies Providence 65% of total transaction value ■ Max leverage of 78% total debt/ EBITDA in 2007 ■ (EBITDA-capex)/interest coverage less than 1x until 2008 Source New/Rollover New New Rollover Rollover New New PROJECT PLATO 2#5TRANSACTION OVERVIEW Illustrative 45-day go-shop timetable Sign a "superior" transaction or receive a proposal likely to result in a "superior" transaction March Announce transaction Negotiate CAS Data room access Distribute management presentation / in-person meetings with JPMorgan Management meetings Site visits Distribute contract Receive binding bids with contract markup Negotiate with select parties Expiration of 45-day go-shop period / announce altemate transaction, if any JPMorgan Week 1 Week 2 Week 3 20 21 22 23 24 27 28 29 30 31 3 4 5 6 Week 4 7 10 11 12 April Week 5 13 14 17 18 19 2 20 S Week 6 21 24 25 26 27 28 1 May Week 7 5 PROJECT PLATO 3#6PROJECT PLATO Agenda JPMorgan Transaction overview Public market overview Valuation summary Appendix Page 1 4 8 18 PROJECT PLATO 4#7PUBLIC MARKET OVERVIEW Public market overview Trading summary ($ millions, except per share data) Closing share price (3/17/06) 52-week intraday high (12/19/05) % of 52-week high 52-week intraday low (10/12/05) % over 52-week low Diluted shares (mm)¹ Equity value Plus: Debt (as of 6/30/06)² Less: Cash (as of 6/30/06) Firm value Based on closing share price Last 3 months 0.0% < $55 JPMorgan 0.0% 5.2% 92.6% 2.2% $55-60 $60-65 $65-70 $70+ $70.36 $70.69 99.5% 7.2% $52.49 34.0% 38.6 $2,717 697 Last 6 months $3,379 19.2% (35) Trading summary Firm value/EBITDA 2006E 2007E 2008E Price/Earnings 2006E 2007E 2008E Long-term growth 17.7% 55.0% 1.0% Street Metric ³ $229 293 NM $2.80 3.37 NM Multiple 5.2% 14.8x 11.5 41.6% Last 12 months 25.1x 20.9 < $55 $55-60 $60-65 $65-70 $70+ 1 $230 million of converts treated as debt, includes incremental in-the-money dilution treated as equity (net shares settled) 2 Does not include non-recourse Palmilla and Reethi Rah debt of $164 million 13 I/B/E/S median estimates as of 3/17/06 NM 20.0% < $55 $55-60 NM Upside Case Metric Multiple $214 251 330 $2.78 2.73 4.13 24.8% 27.8% $60-65 $65-70 15.8x 13.5 10.2 25.3x 25.8 17.0 0.5% $70+ PROJECT PLATO 5#8PUBLIC MARKET OVERVIEW Share price performance Historical price performance $80 70 60 50 40 30 20 10 0 1/1/01 Cumulative share price return Kerzner JPMorgan 3 month 6 month 1 year 2 year 5 year Full period 0.9% 22.2% 10.8% 51.9% 212.7% 196.3% 11/13/01 Peer group 13.5% 14.5% 9.1% 66.5% 137.4% 137.8% 9/26/02 Kerzner 8/9/03 Peer Index 6/21/04 5/4/05 Kerzner $70.36 +196.3% Peers +137.8% католик 3/17/06 Source: Tradeline as of 3/17/06 Note: Peer index (simple weighted) has been indexed to Kerzner price, includes MGM Mirage, Harrah's Entertainment, Wynn Resorts, Las Vegas Sands, Orient-Express Hotels, Gaylord Entertainment, Starwood Hotels & Resorts and Hilton Hotels PROJECT PLATO 6#9PUBLIC MARKET OVERVIEW Kerzner analyst commentary and stock price Wall Street estimates (I/B/E/S) Revision date 2/22/2006 2/20/2006 2/15/2006 2/13/2006 12/7/2005 Analyst (firm) Joseph Greff (Bear Steams) Lawrence Klatzkin (Jefferies & Co) JPMorgan Steven Kent (Goldman Sachs) William Schmitt (CIBC) Marc Falcone (Deutsche Bank) High Low Mean Median Source: Equity research, I/B/E/S Recommendation Buy Buy Hold Hold Buy EPS estimate 2006E $2.11 2.61 2.82 2.80 3.40 $3.40 $2.11 $2.75 $2.80 2007E $3.21 2.63 3.52 3.90 ΝΑ $3.90 $2.63 $3.32 $3.37 12-month target price $75.00 81.00 ΝΑ 71.00 79.00 $81.00 $71.00 $76.50 $77.00 PROJECT PLATO 7#10PROJECT PLATO Agenda JPMorgan Transaction overview Public market overview Valuation summary Appendix Page 1 4 8 18 PROJECT PLATO 8#11VALUATION SUMMARY Introduction We used the management Upside Case as the basis for our valuation analysis The Upside Case includes certain projects that management believes are likely to occur For the purpose of the negotiations with the buyer, JPMorgan also created an Adjusted Upside Case: 10% upside in 2006 on Atlantis, Paradise Island over management's Upside Case EBITDA projections JPMorgan Management's upside case EBITDA projections for 2006 and 2007 are below I/B/E/S consensus street estimates However, management has informed us that they may be below budget for Paradise Island for Q1 2006 PROJECT PLATO 9#12VALUATION SUMMARY Key operating assumptions Kerzner Base Case ■ Atlantis, Phase III ■ Opens in 2007 ■ Total capital expenditures of $730mm ■ Atlantis, Pl (incl. Phase III) performance from 2006 to 2007 (when Phase III opens) ■ Average room rate grows 6.2% to $298.76 ■ Occupancy rate drops 1.8% to 80.3% ■ F&B per occupied room grows approx. 5% to $270.90 = Win/table/day grows 12.7% to $3,172 ■Win/slot/day grows 14.6% to $238 ■ Atlantis, the Palm, Dubai ■Opens in 2009 ■ Total development/construction costs of $1.5bn ■Year 1 key assumptions Average room rate of $313 Occupancy of 78% 5,000 daily waterpark visitors 1,863 daily entertainment village visitors ■ Morocco ■ Opens in 2008 ■ Total development/construction costs of $300mm ■Year 1 key assumptions Average room rate of $140 Occupancy of 60% Win/table/day of $1,967 Win/slot/day of $131 JPMorgan Kerzner Upside Case ■ Kerzner Base Case plus the following: Condotel development cost of $400 million; 50/50 JV with Turnberry ■ $45mm development of golf course on Athol Island completed in 2007 Development of Harborside - Phase II Two villa expansion of Palmilla ■ Marginally more aggressive assumptions on casino revenues in Morocco ■ Cost synergy assumption of $5mm in LBO analysis Adjusted Upside Case (created by JPMorgan) Kerzner Upside Case plus the following: ■ 10% upside on Atlantis, Pl over management's Upside Case EBITDA projections in 2006 Based on analysis of Kerzner management budgets vs. actual property results in 2003, 2004 and 2005 Over the past three years, Kerzner has outperformed its 1-year forward budget by 12.4% Management's upside case EBITDA projections for 2006 and 2007 are below I/B/E/S consensus street estimates Kerzner Upside Case EBITDA growth in 2007 and thereafter Paradise Island land value ■ 64.1 acres of undeveloped land ■ Valued at $2-6mm/acre with a 5% annual appreciation PROJECT PLATO 10#13VALUATION SUMMARY Projection cases $ millions, except per share data Base Case EBITDA % growth EPS % growth Upside Case EBITDA % growth EPS % growth Adjusted Upside Case EBITDA % growth EPS % growth I/B/E/S median¹ EBITDA % growth EPS % growth 1 As of 3/17/06 JPMorgan 2006E $214 $2.78 2006E $214 $2.78 2006E $232 $3.26 2006E $229 $2.80 2007E $254 18.5% $2.79 0.2% 2007E $251 17.3% $2.73 (1.8%) 2007E $267 14.8% $3.13 (3.9%) 2007E $293 27.9% $3.37 20.4% 2008E $305 20.4% $3.52 26.3% 2008E $330 31.4% $4.13 51.0% 2008E $349 30.7% $4.59 46.7% 2008E 2009E $345 13.0% $4.52 28.5% 2009E $381 15.3% $5.47 32.5% 2009E $400 14.8% $5.96 29.7% 2009E 2010E $366 6.0% $5.20 14.9% 2010E $404 6.1% $6.21 13.5% 2010E $424 6.0% $6.71 12.6% 2010E PROJECT PLATO 11#14VALUATION SUMMARY Valuation summary Equity value per share Key: Publicly-traded comparables 20.0x-23.0x 2008E EPS¹ (Implies 15.8x-18.2x 2008E EPS for upside case) Precedent transactions 12.0x-14.0x 2008E EBITDA¹,² Discounted cash flow analysis³ 9.5-10.5% WACC 3.0-3.5% perpetuity growth rate $2-6mm per acre land value Sum of the parts LBO analysis³ 18-22% return threshold 11.5-13.5x exit FV/EBITDA 8.25-8.75% cost of LBO debt $2-6mm per acre land values Upside Case JPMorgan Current price: $70.36 $65.00 $66.50 $60.50 $71.00 I 1 1 $75.00 I I 1 1 I I I I I I I $73.00! I I 1 Offer price: $76.00 1 I I I 1 T I I I I I $179.50 I I H I I 1 I I I T I I I I I $80.50 1 I I I $83.50 Adjusted Upside Case4 $84.50 $92.50 $92.50 $84.00 Franchise value could potentially provide ~$6 per share of additional value $99.50 $97.50 $20 $40 $60 $80 Note: Valuation based on the Upside Case projections provided by management, sensitized for valuation assumptions ¹ Implied equity value discounted to 2006 using an estimated equity cost of capital of 12.5 % (midpoint of sensitivity range) 2 Assumes full consolidation of Palmilla & Reethi Rah EBITDA and debt; based on "GAAP EBITDA" as detailed in the EBITDA build-up in the appendix 3 Based on "Adjusted cash EBITDA" as detailed in the EBITDA build-up in the appendix $100 4 Represents the incremental value potential of the Adjusted Upside Case 5 Assumed land value appreciation of 5% per year until sold in exit year * Represents additional value potential from two additional large development projects over 10 years (see detail in appendix) $120 $140 PROJECT PLATO 12#15VALUATION SUMMARY Leveraged buyout analysis Assumptions Max leverage assumed to be 67% of transaction value ■ Five-year hold period ■ $5 million of annual cost synergies ■ Sponsor IRR threshold range of 18.0%-22.0% ■Management promote of 10% of terminal equity value in excess of initial equity contribution in the Upside Case; Promote level rises to 15% in the Adjusted Upside Case Summary results (equity value per share) Upside Case, 67% leverage High Case¹ Low Case² IRR: IRR: JPMorgan 18.0% 20.0% 22.0% 18.0% 20.0% Exit FV/EBITDA multiple 11.5× 12.5× 22.0% $72.01 68.59 65.21 $67.02 63.83 $76.32 Exit FV/EBITDA multiple 11.5× 12.5× 72.74 60.67 69.20 $71.28 67.93 13.5× $80.63 76.88 73.18 $75.53 72.02 8.25-8.75% cost of LBO debt ■ Exit FV/EBITDA range of 11.5-13.5x on 2011 E EBITDA ■ $140 million of transaction fees, including bond breakage costs as per Kerzner management guidance ■ $76mm Reethi Rah notes receivable monetized in 2008 ☐ 64.1 acres of undeveloped land valued at $2-6 million per acre with 5% annual value appreciation 13.5× IRR: Adjusted Upside Case, 67% leverage 68.55 IRR: 18.0% 20.0% 22.0% 18.0% 20.0% Exit FV/EBITDA multiple 11.5× 12.5× 22.0% $75.11 71.46 67.87 64.61 Note: Analysis based on "Adjusted cash EBITDA" as detailed in the EBITDA build-up in the appendix 1 "High Case" assumes high end of land value sensitivity range ($6mm per acre) and low end of cost of LBO debt range (8.25 %) z "Low Case" assumes low end of land value sensitivity range ($2mm per acre) and high end of cost of LBO debt range (8.75%) $70.22 66.82 Exit FV/EBITDA multiple 11.5× 12.5× $79.56 63.45 75.74 71.98 $74.62 71.04 67.51 13.5× $84.02 80.03 76.09 13.5× $79.02 75.27 71.57 PROJECT PLATO 13#16VALUATION SUMMARY Discounted cash flow analysis Assumptions ■ EBITDA margin improvement of 0.25% assumed in each year after 2010 until 2015 ■ No synergies $76mm Reethi Rah notes receivable monetized in 2008 Ten year projection period ■ 3% revenue growth assumed each year after 2010 until 2015 Summary results (equity value per share) Upside Case High Case¹ Low Case² WACC: WACC: JPMorgan 9.50% 10.00% 10.50% 9.50% 10.00% Terminal growth rate 3.25% 3.00% $88.62 82.46 77.09 3.00% $82.70 Terminal growth rate 3.25% $84.59 76.54 $90.51 84.02 71.16 78.39 78.10 3.50% 72.47 $92.56 85.70 79.78 ■ Estimate of developable Paradise Island land value added to enterprise value to derive implied equity value 64.1 acres of undeveloped land valued at $2-6 million per acre 79.78 ■ Perpetuity growth rate of 3.0%-3.5% on terminal year free cash flow ■WACC of 9.5-10.5% Adjusted Upside Case WACC: 3.50% WACC: $86.64 9.50% 10.00% 10.50% 9.50% 10.50% 73.86 Note: Analysis based on "Adjusted cash EBITDA" as detailed in the EBITDA build-up in the appendix 1 "High Case" assumes high end of land value sensitivity range ($6mm per acre) z "Low Case" assumes low end of land value sensitivity range ($2mm per acre) 10.00% 10.50% Terminal growth rate 3.25% $97.39 3.00% $95.34 88.70 82.92 3.00% $89.42 Terminal growth rate 3.25% $91.47 82.78 90.39 77.00 84.33 84.47 78.41 3.50% $99.61 92.21 85.84 3.50% $93.69 86.29 79.92 PROJECT PLATO 14#17Sum-of-the-parts analysis VALUATION SUMMARY $ per share Contribution to equity value per share Equity value per share $51.81 JPMorgan Existing operations The Palm mgmt. fees +$6.23 The Palm + $0.85 Phase III +$6.99 CondoTel +$5.91 Morocco +$2.56 BLB +$0.98 Development projects Note: Detailed analysis located in the appendix; all metrics represent the midpoint of the assumed valuation range OC Condos +$0.85 Land +$6.52 Equity value per share $82.68 Upside Case Equity value per share $87.23 Adjusted Upside Case PROJECT PLATO 15#18VALUATION SUMMARY Franchise opportunities Brand Design Development expertise JPMorgan Growth opportunities Ability to develop and operate more Atlantis properties worldwide PROJECT PLATO 16#19VALUATION SUMMARY Key business risks Hurricane New supply Atlantis Phase III JPMorgan Construction costs Political Terrorism ■ A material disruption in operations on Paradise Island would have a severe negative impact on Kerzner's operating performance Impact of proposed Baha Mar development on Cable Beach may be significant ■ Demand for Atlantis, the Palm in light of plans for an additional 30 hotels on the Palm ■ Impact of proposed new supply in Massachusetts may be significant on Lincoln Park Uncertainty around feasibility of projected casino and F&B revenue per occupied room Uncertainty around success of dolphin attraction ■ Uncertainty around demand for condotel units at projected prices ■ Condotel financing gets renegotiated in light of degradation of credit from LBO Risks associated with escalating building materials and labor costs Vast majority of development budget in Dubai is not at fixed cost ■ Potential cost overruns at Lincoln Park and in Morocco Future cooperation of Dubai government and other foreign jurisdictions where development is expected Terrorist event in the U.S. could significantly impact leisure travel ■ Large destination resorts could be targets for terrorist organizations PROJECT PLATO 17#20PROJECT PLATO Agenda JPMorgan Transaction overview Public market overview Valuation summary Appendix Page 1 4 8 18 PROJECT PLATO 18#21APPENDIX Selected public market comparables Market information Company Las Vegas Sands Corp Starwood Hotels & Resorts' Harrah's Entertainment MGM Mirage Hilton Hotels Wynn Resorts Ltd' Gaylord Entertainment Orient Express Hotels Average Median Gaming - median 3/17/2006 share price $50.50 67.02 74.77 39.29 23.94 71.73 45.33 35.33 % of 52-week high 87.0% 99.8% JPMorgan 93.8% 84.0% 91.9% 95.3% 92.6% 97.0% Equity Market value¹ $17,885.1 16,361.1 13,741.1 11,184.3 10,013.6 7,138.8 1,900.9 1,408.1 $9,954.1 $10,599.0 $12,462.7 Total market cap² $19,478.7 19,541.1 24,337.5 23,455.7 18,206.6 9,237.5 2,482.5 1,966.4 $14,838.3 $18,842.7 $21,467.2 2006E NM 30.7 20.4 21.1 22.8 NM NM 27.2 $10,344.6 24.4x 22.8x 20.7x Lodging - median $5,957.2 ¹ Includes common shares, common share equivalents (excluding options) 2 Equals the sum of equity market value, minority interests, debt outstanding and preferred stock at liquidation preference Price/EPS³ 27.2x 2007E NM 25.0 17.6 17.2 18.6 NM NM 20.4 19.8x 18.6x 17.4x 20.4x Aggregate value/ EBITDA¹ 2006E 2007E NM NM 15.1 13.5 8.7 9.0 10.4 NM 13.2 11.8 9.4 9.9 11.9 NM 16.3 14.4 12.8x 13.2x 3 Estimates for EPS are from equity research 4 Aggregate value is total market capitalization less cash and cash equivalents. EBITDA estimates from analyst reports 5 Starwood Hotels pro forma for announced transaction with Host Marriott * Hilton Hotels pro forma for announced acquisition of Hilton plc assets 7Wynn Resorts pro forma for $900 million sale of Macau casino rights * Total debt as of 9/30/05 for Gaylord Entertainment excludes $613 million associated with the Company's secured forward exchange contract 9.6x 14.7x 11.1x 11.1x 8.8x 12.5x PROJECT PLATO 19#22APPENDIX Selected public market comparables (cont'd) Credit information Company Las Vegas Sands Corp Starwood Hotels & Resorts Harrah's Entertainment MGM Mirage Hilton Hotels Wynn Resorts Ltd Gaylord Entertainment Orient Express Hotels Average Median 3/17/2006 share price JPMorgan $50.50 67.02 74.77 39.29 23.94 71.73 45.33 35.33 Equity market value¹ $17,885.1 16,361.1 13,741.1 11,184.3 10,013.6 7,138.8 1,900.9 1,408.1 Debt-to- Total total market market cap² capitalization $19,478.7 19,541.1 24,337.5 23,455.7 18,206.6 9,237.5 2,482.5 1,966.4 8.2% 16.3% 43.4% 52.3% 45.0% 22.7% 23.4% 28.2% 29.9% 25.8% Debt+prfd/ total market capitalization 8.2% 16.3% 43.4% 52.3% 45.0% 22.7% 23.4% 28.2% 29.9% 25.8% Debt-to- total book capitalization³ 51.6% 36.8% 44.5% 52.9% 75.1% 57.2% 40.3% 44.8% 50.4% 48.2% Debt/ LTM EBITDA 3.8x 2.4 3.8 4.3 9.0 NA 5.5 5.2 4.9x 4.3x LTM EBITDA/ interest 3.7x 5.4 4.0 2.7 3.5 NA 1.5 3.9 3.5x 3.7x ¹ Includes common shares, common share equivalents (excluding options) z Equals the sum of equity market value, minority interests, debt outstanding and preferred stock at liquidation preference. Does not include restricted cash 3 Book capitalization equals the sum of debt outstanding, preferred stock at liquidation preference, minority interests and shareholders' equity Senior debt ratings Moody's/S&P B2/BB- Baa3/BBB- Ba2/BB NR/NR B2/B+ B3/B Ba1/BB+ Baa3/BBB- PROJECT PLATO 20#23APPENDIX Comparable precedent transactions Private and public - target transactions Date announced 1/30/2006 6/14/2005 10/24/2004 7/15/2004 6/4/2004 2/12/2004 Observations Acquirer / Target Colony Capital & Kingdom Hotels/ Faimont Hotels & Resorts Blackstone/Wyndham JPMorgan Blackstone/Boca Resorts Harrah's Entertainment/ Caesars Entertainment MGM Mirage/Mandalay Resort Group CNL Hospitality/KSL Recreation Corporation Lodging - median Gaming -median Description of target Fairmont is a leading owner/operator of luxury hotels and resorts. Fairmont's managed portfolio consists of 87 luxury and first-class properties Wyndham Intemational offers upscale and luxury hotel and resort accommodations in the U.S., Canada, Mexico, the Caribbean, and Europe Boca Resorts owns 5 luxury resorts and 4 golf clubs located in South Florida Caesars Entertainment owns 22 properties on three continents, more than 25,000 hotel rooms, two million square feet of casino space and 50,000 employees. Mandalay Resort Group owns and operates 11 properties in Nevada as well as casino's in Mississippi, Illinois and Michigan KSL's portfolio consists of leading resorts in Hawaii, Arizona and other vacation destinations ■ Kerzner is a blend of lodging and gaming Kerzner has a lower tax rate than most of its peers Size Forward EBITDA (mm) multiple 15.8x 3,900 3,240 1,184 9,440 7,750 2,160 12.6x 11.8x 8.5x 9.5x 13.1x 12.9x 9.0x PROJECT PLATO 21#24APPENDIX Sum-of-the-parts analysis - Upside Case $ millions, except per share data Existing operations Paradise Island (excl. Phase III) 2006 E EBITDA Multiple Enterprise value Ocean Club 2006 E EBITDA Multiple Enterprise value Mohegan PV of annuity Less: CT tax @ 7% Enterprise value One & Only Gross 080 fees Less: Expenses Net 080 fees Multiple Enterprise value Harborside Fees Multiple Enterprise value Corporate 2006 E adj. corp. expense Multiple Enterprise value Equity earnings Equity income Less: Palmilla equity earnings Adjusted equity eamings Multiple Enterprise value Enterprise value Less: Net debt Plus: Equity value of Palmilla Equity value Diluted shares¹ Equity value per share Plus: Un developed land Plus: Development projects Equity value per share JPMorgan Low $170 10.0x $1,701 $13 14.0x $176 $211 (15) $196 $24 (13) $11 18.0x $200 $4 8.0x $33 ($38) 9.0x ($344) $14 (3) $11 20.0x $218 $2,181 (355) 85 $1,911 39.3 $48.60 3.26 21.08 $72.94 High $170 11.0x $1,872 $13 15.0x $189 $225 (16) $210 20.0x $222 $4 10.0x $41 ($38) 10.0x ($382) $24 (13) $11 Low High $14 (3) $11 25.0x $272 $2,423 (355) 95 Development projects $2,163 39.3 $55.03 9.78 27.76 $92.56 First stabilized year EBITDA Multiple Enterprise value Less: Project net debt Equity value Discount years Discount rate Present value of equity Percentage ownership Pro rata equity value PV of remaining funding Net equity value Diluted shares Equity value per share (midpoint) 2006E EBITDA Multiple Enterprise value Less: Net debt Equity value % ownership Equity value Acres (mm) $mm per acre Total value Palmilla Diluted shares Equity value per share $75 BLB 2007 $597 8.0x (433) $164 0.5 12.5% $154 Low 38% $58 $38 39.3 $0.98 (19) $0.64 $1.32 Undeveloped land Low 20 14.0x 280 (110) $170 50.0% $85 64.1 $2 $128 39.3 $3.26 Phase III 2009 $103 10.5x $1,080 (711) $369 2.5 12.5% $275 $275 0 $275 39.3 $6.99 High 100% $5.89 $8.15 20 15.0x 300 (110) $190 50.0% $95 High 64.1 $6 $385 39.3 $9.78 Morocco 2008 $34 8.5x $290 (152) $138 1.5 12.5% $116 50% $58 (24) $34 39.3 $0.85 $0.66 $1.05 Morocco Fees 2008 $6 14.0x $80 0 $80 1.5 12.5% $67 100% $67 0 $67 39.3 $1.70 $1.56 $1.85 Mohegan BLB Phase III Morocco Morocco Fees The Palm 2009 The Palm The Palm Fees OC Condos Condo Tel Condo Tel Fees Land ($ per acre) $141 10.0x $1,413 (1,124) $289 2.5 12.5% $215 50% $108 (74) $33 39.3 $0.85 $0.14 $1.59 Note: Development projects valuation multiples represents the midpoint of each project's assumed valuation range 1 Based on the midpoint of the valuation range The Palm Fees 2009 Low High $329 $24 14.0x 0 $329 2.5 12.5% $245 100% $245 Development project valuation ranges 0 $245 39.3 $6.23 $5.66 $6.82 Development projects total Low EBITDA multiple 7.5x 10.0x 8.0x 13.0x 9.5x 13.0x 50% of OC Condos 9.5x $2.0 $33 100% $33 0 $33 39.3 $0.85 $0.84 $0.85 High 8.5x 11.0x 9.0x 15.0x 10.5x 15.0x 10.0x $6.0 50% of Condo Tel $75 100% $75 (41) $34 39.3 $0.85 $0.84 $0.87 Low Discount rate Condotel Fees 2008 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% $24 9.8x $238 0 $238 1.5 12.5% $199 100% $199 0 $199 39.3 $5.06 $4.86 $5.26 $21.08 $27.76 High 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% PROJECT PLATO 22#25APPENDIX Sum-of-the-parts analysis - Adjusted Upside Case $ millions, except per share data Existing operations Paradise Island (excl. Phase III) 2006 E EBITDA Multiple Enterprise value Ocean Club 2006 E EBITDA Multiple Enterprise value Mohegan PV of annuity Less: CT tax @ 7% Enterprise value One & Only Gross 080 fees Less: Expenses Net 080 fees Multiple Enterprise value Harborside Fees Multiple Enterprise value Corporate 2006 E adj. corp. expense Multiple Enterprise value Equity earnings Equity income Less: Palmilla equity earnings Adjusted equity earings Multiple Enterprise value Enterprise value Less: Net debt Plus: Equity value of Palmilla Equity value Diluted shares¹ Equity value per share Plus: Unde ve loped land Plus: Development projects Equity value per share JPMorgan Low $187 10.0x $1,872 $14 14.0x $194 $211 (15) $196 $24 (13) $11 18.0x $200 $4 8.0x $33 ($38) 9.0x ($344) $14 (3) $11 20.0x $218 $2,368 (355) 85 $2,098 39.5 $53.09 3.24 20.97 $77.31 High $187 11.0x $2,059 $14 15.0x $208 $225 (16) $210 20.0x $222 $4 10.0x $41 ($38) 10.0x ($382) $24 (13) $11 Low High $14 (3) $11 25.0x $272 $2,629 (355) 95 Development projects $2,369 39.5 $59.95 9.73 27.61 $97.29 First stabilized year EBITDA Multiple Enterprise value Less: Project net debt Equity value Discount years Discount rate Present value of equity Percentage ownership Pro rata equity value PV of remaining funding Net equity value Diluted shares Equity value per share (midpoint) 2006E EBITDA Multiple Enterprise value Less: Net debt Equity value % ownership Equity value Acres (mm) $mm per acre Total value Palmilla Diluted shares Equity value per share BLB 2007 $75 $597 8.0x (433) $164 0.5 12.5% Low $154 $58 (19) $38 39.5 $0.97 38% $0.63 $1.31 20 14.0x 280 Undeveloped land Low (110) $170 50.0% $85 64.1 $2 $128 39.5 $3.24 Phase III 2009 $103 10.5x $1,080 (711) $369 2.5 12.5% $275 $275 100% 0 $275 39.5 $6.96 High $5.86 $8.10 20 15.0x 300 (110) $190 50.0% $95 High 64.1 $6 $385 39.5 $9.73 Morocco 2008 $34 8.5x $290 (152) $138 1.5 12.5% $116 50% $58 (24) $34 39.5 $0.85 $0.66 $1.05 Morocco Fees 2008 $6 14.0x $80 0 $80 1.5 12.5% $67 100% $67 0 $67 39.5 $1.70 $1.55 $1.84 Mohegan BLB Phase III Morocco Morocco Fees The Palm 2009 The Palm The Palm Fees OC Condos Condo Tel Condo Tel Fees Land ($ per acre) $141 10.0x $1,413 (1,124) $289 2.5 12.5% $215 50% $108 (74) $33 39.5 $0.84 $0.13 $1.58 Note: Development projects valuation multiples represents the midpoint of each project's assumed valuation range 1 Based on the midpoint of the valuation range The Palm Fees 2009 Low High $329 Development project valuation ranges $24 14.0x 0 $329 2.5 12.5% $245 100% $245 0 $245 39.5 $6.19 $5.63 $6.79 Development projects total Low EBITDA multiple 7.5x 10.0x 8.0x 13.0x 9.5x 13.0x 50% of OC Condos 9.5x $2.0 $33 100% $33 0 $33 39.5 $0.84 $0.84 $0.85 High 8.5x 11.0x 9.0x 15.0x 10.5x 15.0x 10.0x $6.0 50% of Condo Tel $75 100% $75 (41) $34 39.5 $0.85 $0.83 $0.86 Low Condotel Fees 2008 Discount rate 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% $24 9.8x $238 0 $238 1.5 12.5% $199 100% $199 0 $199 39.5 $5.03 $4.84 $5.23 $20.97 $27.61 High 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% PROJECT PLATO 23#26APPENDIX Financial buyer cost synergy analysis Cost synergies opportunities ($ thousands) Corporate salaries Corporate Executive bonus plan Finance, accounting and legal Public relations Human resources Additional Total 1 Source: Kerzner management JPMorgan 2006E budget¹ $4,860 3,750 5,463 1,902 1,860 $17,835 Synergies % (100.0%) (33.0%) Synergies - $ (3,750) (628) (945) $5,000 PROJECT PLATO 24#27APPENDIX Paradise Island land Kerzner's total usable, undeveloped land on Paradise Island Main Club Med (including Option land) Lot 1 (Hart House) Lot 2,3 + (Mcweeney House) West of Phase III (formerly Club Med) South of Phase III (Trailer park and Helipad) Hurricane Hole (excluding Marina) East of Riu on Beach (Parcels F & E) PI Colony Lot East of Car Park structure Total acreage Source: Kerzner management JPMorgan Acres 39.4 0.5 1.8 41.7 8.5 7.1 6 0.8 64.1 Comparable transactions Melk Property - beachfront, adjacent to Ocean Club Estates Hurricane Hole Marina Ocean Club Condo Property Club Med (adjacent to Phase III) Acres 7.5 7.0 9.0 41.0 $mm$mm/acre $15.0 14.0 18.0 40.0 $2.0 2.0¹ 2.0 1.0 Weighted average Source: Kerzner management ¹ Hurricane Hole transaction included a marina with $1mm of annual EBITDA. Total transaction value of $24mm assumes a 10x purchase multiple for marina $1.4 PROJECT PLATO 25#28APPENDIX Potential value from additional development projects (value not reflected in valuation analyses on page 12) Additional Atlantis developments (Analysis assumes 100% probability of success) Assumed opening day EBITDA Multiple Enterprise value Less: Net debt held at project Equity value Discount period Equity cost of capital PV of Equity Percentage ownership Owned equity value Less: Present value of remaining funding Net equity value at 6/30/06 Total equity value at 6/30/06 Equity value¹ 6/30/06E $278 Discount period Equity cost of capital Present value of Atlantis projects JPMorgan Atlantis Management resort 1/1/09 $141 10.0x 1,413 (1,124) $289 2.5 12.5% 215 50% $108 (74) $33 2013E $347 Total additional equity value Diluted shares (current) Total additional equity value per share ¹ Equity value of additional Atlantis resorts grown by inflation 7.5 12.5% $143 fees 1/1/09 $24 14.0x 329 0 $329 2.5 12.5% 245 100% $245 0 $245 $278 2017E $391 11.5 12.5% $101 $244 38.6 $6.33 Proposed Singapore development (Analysis assumes 25% probability of success) Assumed opening day EBITDA Multiple Enterprise value Less: project cost Equity value Discount period Equity cost of capital PV of Equity Probability of success Prob. weighted PV of Equity Percentage ownership Net equity value at 6/30/06 Diluted shares (current) Total additional equity value per share Singapore resort 1/1/09 $375 10.0x $3,750 (3,000) $750 2.5 12.5% $559 25% $140 60% $84 38.6 $2.17 PROJECT PLATO 26#29APPENDIX EBITDA build-up – Upside Case - $ millions EBITDA: Paradise Island Ocean Club Phase III Paradise Island CondoTel CondoTel Fees Harborside Fees The Palm Dome UK Gaming Mohegan Catskills Morocco 080 Management Fees o&o Development Fees Total Segment EBITDA Corporate Expenses New Project Expenses Corp. Stock Comp Amort. 080 Expenses Corporate and 080 Expenses Minority Interest Adjusted consolidated EBITDA EBITDA adjustments' Adjusted cash EBITDA Plus: Corp. Stock Comp. Amort. Plus: Equity earnings, Net Cash EBITDA Plus: Non-recurring adjustments Plus: Land sales Adjusted cash EBITDA GAAP EBITDA Plus: Corp. Stock Comp. Amort. Plus: Equity earnings, Net Plus: Palmilla EBITDA Plus: Reethi Rah EBITDA Less: Palmilla equity earnings Less: Reethi Rah equity earnings GAAP EBITDA 2004A JPMorgan 144 10 156 40 28 00300@zoou1 20 THND) 17 18 ~226 00400580080 33 793 10 24 179 SHOOTOONGOON €¢ HANGOO ITONGOODOONIMO A NOOT-Ogoomo ONIMO € * 14 (29) (4) (2) (14) (49) (2) 160 2 2 163 (15) 0 148 2 2 0 0 6 2005A 0 169 12 176 (5) 18 (0) (27) (9) (3) (13) (52) (2) 3245020 3207070 12 194 (75) 12 ¹ Adjustments made to "Adjusted consolidated EBITDA" '0601 57 5 2 64 0 0 (2) 0 8 (0) 80 (8) (2) (4) (3) (18) (1) 62 4 6 72 (6) 0 66 4 6 5 2 (2) '06Q2 77 55 4 2 61 0 0 1 1 0 0 0 74 (8) (2) (4) (3) (18) (0) 56 423902 63 72 WAENGNA (1) '06Q3 73 34 2 2 37 0 0 1 1 0 3 0 52 (8) (2) (4) (3) (18) (0) 34 4 0 39 11 0 50 4 0 5 2 1 4 51 '0604 25 2 2 29 0 0 1 1 0 0 0 8 0 47 M BEIDD 三 (8)! (1) (4) (16) 31 ! 4 5 40 12 0 52 4 5 2 1 48 2006E 1.70 13 9 191 0 0 4 2 0 (7) 39 0 0 24 0 254 (31) (7) (18) (13) (69) (2) 183 18 14 214 26 0 240 18 14 20 9 (3) 9 249 00 IBA 300440470 0 Zug 810340980161 31 459195 15 13 2007E 143 13 74 231 1 23 1 296 (33) (5) (16) (14) (68) (4) 225 16 10 251 34 5 290 16 10 21 10 (3) 8 288 2008E 172 14 93 278 21 (2) 26 (34) (5) (19) (15) (73) (5) 294 19 17 330 11 5 347 19 17 22 11 (5) 7 365 2009E 182 14 103 299 23 0 4 24 0 0 39 0 7 29 0 425 (40) (5) (17) (16) (77) (6) 341 17 22 381 (3) 0 378 17 22 23 12 (5) 6 416 2010E 191 15 107 312 24 0 4 26 0 0 40 0 9 30 0 446 (42) (5) (17) (16) (80) (7) 359 17 27 404 0 0 404 17 27 24 13 (8) 5 437 PROJECT PLATO 27#30APPENDIX EBITDA build-up - Adjusted Upside Case 10% upside on Atlantis, Paradise Island and Ocean Club over management's Upside Case EBITDA projections $ millions EBITDA: Paradise Island Ocean Club Phase III Paradise Island CondoTel CondoTel Fees Harborside Fees The Palm Dome UK Gaming Mohegan Catskills Morocco 080 Management Fees o&o Development Fees Total Segment EBITDA Corporate Expenses New Project Expenses Corp. Stock Comp Amort. 080 Expenses Corporate and 080 Expenses Minority Interest Adjusted consolidated EBITDA EBITDA adjustments' Adjusted cash EBITDA Plus: Corp. Stock Comp. Amort. Plus: Equity earnings, Net Cash EBITDA Plus: Non-recurring adjustments Plus: Land sales Adjusted cash EBITDA GAAP EBITDA Plus: Corp. Stock Comp. Amort. Plus: Equity earnings, Net Plus: Palmilla EBITDA Plus: Reethi Rah EBITDA Less: Palmilla equity earnings Less: Reethi Rah equity earnings GAAP EBITDA 2004A JPMorgan 40 28 00300@zoou1 20 THND) 17 18 144 10 156 14 (29) (4) (2) (14) (49) (2) 160 2 2 179 (15) 0 163 2 2 0 0 6 0 184 2005A HEN...AOONR 233 (27) (13) (52) 179 32 12 四) 0 27 32070711 12 (75) 137 (0) ¹ Adjustments made to "Adjusted consolidated EBITDA" '06Q1 63 BENROOTOONGO NIM € g 85NOOITONGOODONTOON 5 2 70 0 0 0 (2) 0 0 8 (0) 86 (8) (2) (4) (3) (18) (1) 68 4 6 78 (6) 0 72 4 6 5 2 (2) 0 '0602 84 60 2 0 0 1 1 0 0 0 80 (8) (2) (4) (3) (18) (0) 62 69 78 SAENGNA (1) '06Q3 79 37 NO -- Ogoom. 429908 40 2 11 0 3 41 0 55 (8) (2) (4) (3) (18) (0) 38 42 53 4 0 5 2 1 4 55 NNNOO -- ª000+N° Eg°*° 5525 ~ 440H70131 12 350 份 4 0 08 195991034080161 38 459 19 0 15 12 °°°SE '0604 27 2 2 31 0 0 1 1 0 0 0 8 0 50 (8)! (1) (4) (3) (16) (1) 33 453205 12 4 5 2 50 2006E 1.87 14 9 210 4 2 (7) 39 0 0 24 0 272 (31) (7) (18) (13) (69) (2) 201 18 14 232 26 0 258 18 14 20 9 (3) 9 268 2007E 157 14 74 246 0 0 23 (33) (5) (16) (14) (68) (4) 240 16 10 267 34 5 306 16 10 21 10 (3) 8 303 2008E 297 21 (2) 26 390 (34) (5) (19) (15) (73) (5) 19 17 349 11 5 365 19 17 22 11 (5) 7 384 2009E 200 16 103 319 23 0 4 24 0 0 39 0 7 29 0 445 (40) (5) (17) (16) (77) (6) 361 17 22 400 (3) 0 397 17 22 23 12 (5) 6 436 ୨ 2010E 210 16 107 333 24 0 4 26 0 0 40 0 9 30 0 467 (42) (5) (17) (16) (80) (7) 380 17 27 424 0 0 424 17 27 24 13 (8) 5 457 PROJECT PLATO 28#31APPENDIX WACC analysis WACC calculation Risk free rate Unlevered Beta Levered Beta Equity risk premium Cost of equity (Re) Pre-tax cost of debt (YTW) (Rd) Effective tax rate Post-tax cost of debt Target debt/total capital Target debt/equity WACC WACC (rounded) Leverage (% of TMC) Debt Equity Debt/equity JPMorgan 4.67% 1.30 1.75 4.24% 12.09% 6.55% 0.0% 6.55% 35.0% 53.8% 10. 15% 10.20% 35.0% 35.0 65.0 53.8% Estimated peer beta analysis Company MGM Mirage Harrah's Entertainment Wynn Resorts Las Vegas Sands Gaylord Entertainment Orient Express Hotels Starwood Hotels & Resorts Hilton Hotels Mean Median Beta 1.50 Predicted beta 1.50 1.25 1.75 1.60 1.50 1.50 1.25 1.25 1.75 WACC sensitivity by beta and cost of debt 2.00 6.05% 9.29% 9.98% 1.45 1.50 10.67% Total Equity debt mkt. cap $12,271 11,184 10,596 13,741 NM NM NM NM 582 1,901 558 3,180 1,408 16,361 10,014 8,193 6.30% 9.37% 10.06% 5,897 5,687 10.75% Cost of debt 6.55% 9,102 35% 10,599 36% 9.46% 10.15% Debt/ capital 52% 44% NM 10.84% NM 23% 28% 16% 45% 6.80% 9.55% 10.24% 10.93% Tax rate 35% 35% NM NM 35% 35% 35% 35% 35% 35% Unlevered beta 1.12 0.97 NM NM 1.30 1.27 1.13 0.97 1.13 1.12 7.05% 9.64% 10.33% 11.02% PROJECT PLATO 29#32APPENDIX Value of NOLS Kerzner has $279.8mm of U.S. NOLS outstanding in its Kerzner International North America, Inc. ("KINA") subsidiary $0.5mm are restricted in use $279.3mm are unrestricted In a change of control transaction, Kerzner's NOLS will be subject to certain restrictions Limit on using more than (4.36% * equity value of KINA) of NOLS in any given year Only exception is that if Kerzner sells any assets within KINA where the sale price is greater than the basis, Kerzner may be able to utilize the NOLS without limitation to shield any capital gains JPMorgan PROJECT PLATO 30#33APPENDIX Kerzner model Room Margin % growth Rev PAR % growth ADR % growth Occupancy % growth Phase I # of Rooms Phase II # of Rooms Phase III # of Rooms Total Rooms Win/Table/Day % growth Slot Win/Day % growth % of revenue Food Beverage Food COGS Beverage COGS Payrol & related Telephone expense F&B margin % growth F&B/ occupied room night % growth Food/occupied room night % growth - - Key drivers Beverage/occupied room night % growth Telephone/occupied room night JPMorgan 2004A 78.1% 0.2% $207.00 2.9% $257.06 2.1% 80.5% 0.7% 1,116 1,201 2,317 $2,636 (12.0%) $177 8.4% 72.4% 26.2% 27.9% 19.8% 32.3% 40.6% 29.9% 10.9% $189.33 6.6% $137.03 6.9% $49.52 5.1% $13.18 2005A 79.0% 0.8% $221.09 6.8% $271.52 5.6% 81.4% 0.9% 1,116 1,201 2,317 $2,788 5.8% $213 20.6% 71.5% 26.9% 27.8% 18.9% 31.8% 32.3% 29.7% (0.5%) $207.71 9.7% $148.54 8.4% $55.79 12.7% $10.86 2006E 78.8% (0.2%) $230.76 4.4% $281.20 3.6% 82.1% 0.6% 1,116 1,201 2,317 $2,814 0.9% $208 (2.5%) 72.2% 26.8% 27.7% 18.9% 31.7% 33.7% 30.9% 4.1% $257.93 24.2% $186.10 25.3% $69.01 23.7% $11.17 2007 E 78.6% (0.1%) $239.89 4.0% $298.76 6.2% 80.3% (1.8%) 1,116 1,201 600 2,917 $3,172 12.7% $238 14.6% 72.2% 26.7% 27.8% 18.9% 31.7% 40.9% 30.9% (0.3%) $270.90 5.0% $195.60 5.1% $72.35 4.8% $11.39 2008 E 78.8% 0.1% $255.67 6.6% $316.32 5.9% 80.8% 0.5% 1,116 1,201 600 2,917 $3,452 8.8% $258 8.2% 72.2% 26.8% 27.7% 18.9% 31.7% 40.6% 30.9% 0.3% $284.38 5.0% $205.18 4.9% $76.09 5.2% $11.85 2009E 78.8% (0.0%) $269.02 5.2% $328.80 3.9% 81.8% 1.0% 1,116 1,201 600 2,917 $3,587 3.9% $268 4.0% 72.2% 26.8% 27.7% 18.9% 31.7% 40.7% 30.9% (0.0%) $298.60 5.0% $215.45 5.0% $79.89 5.0% $12.20 2010E 78.8% 0.0% $279.77 4.0% $341.94 4.0% 81.8% 0.0% 1,116 1,201 600 2,917 $3,694 3.0% $276 3.0% 72.2% 26.8% 27.7% 18.9% 31.7% 40.7% 30.9% 0.0% $313.53 5.0% $226.22 5.0% $83.88 5.0% $12.56 PROJECT PLATO 31