#1STRICTLY PRIVATE AND CONFIDENTIAL kerzner™ PRESENTATION TO SPECIAL COMMITTEE JPMorgan FEBRUARY 27, 2006#2PRESENTATION TO SPECIAL COMMITTEE 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 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. Unless expressly contemplated hereby, the information in this presentation does not take into account the effects of a possible transaction or transactions involving an actual or potential change of control, which may have significant valuation and other effects. Notwithstanding anything herein to the contrary, the Company and each of its employees, representatives or other agents may disclose to any and all persons, without limitation of any kind, the U.S. federal and state income tax treatment and the U.S. federal and state income tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such tax treatment and tax structure insofar as such treatment and/or structure relates to a U.S. federal or state income tax strategy provided to the Company by JPMorgan. JPMorgan's policies prohibit employees from offering, directly or indirectly, a favorable research rating or specific price target, or offering to change a rating or price target, to a subject company as consideration or inducement for the receipt of business or for compensation. JPMorgan also prohibits its research analysts from being compensated for involvement in investment banking transactions except to the extent that such participation is intended to benefit investors. 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. This presentation does not constitute a commitment by any JPMorgan entity to underwrite, subscribe for or place any securities or to extend or arrange credit or to provide any other services. JPMorgan KERZNER INTERNATIONAL#3PRESENTATION TO SPECIAL COMMITTEE Agenda JPMorgan Introduction Process considerations Key transaction considerations Preliminary valuation analysis Appendix Page 1 5 7 19 23 KERZNER INTERNATIONAL 1#4INTRODUCTION Situation overview JPMorgan ■ JPMorgan is pleased to review with the Special Committee the potential sale of Kerzner International We believe we can add significant value to the process and are uniquely positioned to act as financial advisor in this transaction ■ Experienced transaction team Leading M&A franchise Leading gaming and lodging franchise Strong relationship with potential acquirers Leading financial sponsor franchise Unique relationships and insights ■ Unique Company insight KERZNER INTERNATIONAL 2#5INTRODUCTION The JPMorgan team Mergers & Acquisitions Rob Kindler Managing Director Global Head of M&A (212) 622-1131 [email protected] Ben Lett Managing Director (212) 622-2439 [email protected] Aakash Bhasin Vice President (212) 622-2344 [email protected] Matthew Hodan Analyst (212) 622-1251 [email protected] JPMorgan Real Estate, Lodging & Gaming Glenn Carlin Managing Director Head of Lodging & Gaming (212) 622-4454 [email protected] Eric Tanjeloff Vice President (212) 622-4359 [email protected] John Witherspoon Associate (212) 622-4273 [email protected] John Saunders Analyst (212) 622-0248 [email protected] KERZNER INTERNATIONAL 3#6INTRODUCTION JPMorgan's role as financial advisor Review of process JPMorgan Review of proposals Negotiate alternatives Valuation Fairness opinion JPMorgan will review sale process and strategic alternatives/tactics to maximize value JPMorgan will evaluate any proposals submitted to the Special Committee JPMorgan will assist the Special Committee in negotiating any proposals JPMorgan will prepare a detailed valuation of Kerzner JPMorgan will evaluate the fairness of any offer received by the Kerzner shareholders from a financial point of view and will, if requested, render a fairness opinion KERZNER INTERNATIONAL 4#7PRESENTATION TO SPECIAL COMMITTEE Agenda JPMorgan Introduction Process considerations Key transaction considerations Preliminary valuation analysis Appendix Page 1 5 7 19 23 KERZNER INTERNATIONAL 5#8PROCESS CONSIDERATIONS Process considerations Special Committee process considerations Management team discussing potential buyout transaction with a select group of financial sponsors Management and the financial sponsors are subject to standstill agreements ■ Sponsors include Colony Capital, Providence, TPG and Whitehall Company to provide financial sponsors access to a data room Receive and negotiate definitive acquisition proposal JPMorgan Negotiate fully- committed financing with appropriate backstop bridge facility ■ Proposals should not be subject to any due diligence or other such contingency Contract terms to provide for a market shop period and break- up fees (as low as possible) Market shop transaction Publicly announce: The Company will seek better offers for its shareholders¹ Management will stay with the Company for one year post acquisition ■ The Kerzner's and the acquiring shareholders will support a superior offer Negotiate superior proposal; existing contract to form basis for negotiations 1 There will need to be equality of corporate data shared with bidders and information shared with management/ sponsors Announce final transaction JPMorgan recommends that the Special Committee not determine the final process until after receiving initial bids from management/sponsors KERZNER INTERNATIONAL 6#9PRESENTATION TO SPECIAL COMMITTEE Agenda JPMorgan Introduction Process considerations Key transaction considerations Valuation drivers Review of potential buyers Preliminary valuation analysis Appendix Page 1 5 7 19 23 KERZNER INTERNATIONAL 7#10KEY TRANSACTION CONSIDERATIONS Key drivers of value for a potential buyer Cost and revenue synergy opportunities Capital structure and leveragability View of development pipeline Ability to maintain existing partnerships Ability to retain Kerzner's existing tax status JPMorgan A strategic buyer could realize at least $25 million of cost synergies, implying a minimum of $9.00 of equity value per share ■ JPMorgan believes a strategic buyer can improve Kerzner's casino revenue by 20-30%, approximately $20 million of EBITDA, implying $6.50 of equity value per share ■ Cost of capital and financial leverage will drive a buyer's ability to pay ■ Kerzner's pipeline of international development opportunities will require capital expenditure and expertise ■ A change in control could have an impact on valuation ■ The ability to keep Kerzner's Bahamian incorporation should allow a buyer to avoid paying corporate income tax KERZNER INTERNATIONAL 8#11KEY TRANSACTION CONSIDERATIONS A strategic buyer could realize at least $25 million of cost synergies, implying approximately $9.00 of equity value per share Cost Reduction Kerzner is expected to have corporate overhead of approximately $50 million, or 6.5% of revenues in 2006 Executive compensation and benefits were $6 million in 2004 Kerzner incurs an estimated $10 million in public company costs The balance is assumed to encompass travel and entertainment expenses, new project pursuit costs and legal costs Corporate expenses as a % of revenue (2006E) 6.5% KZL¹ Source: Equity research 1 JPMorgan estimate JPMorgan 4.9% STN 3.5% GET 2.8% WYNN Potential synergy impact ($ millions except per share amounts) Cost synergies Present value¹ Implied value / share² 1 Assumes a 9.5% discount rate and 2% perpetuity growth z Based on 38.7mm diluted shares outstanding 1.8% MGM 1.8% $25 $340 $8.78 BYD 1.7% LVS $30 $408 $10.54 $35 $476 $12.29 1.4% HET KERZNER INTERNATIONAL 9#12KEY TRANSACTION CONSIDERATIONS JPMorgan believes a strategic buyer can recognize revenue synergies of approximately $20mm, or $6.50 of equity value per share Revenue Enhancement Kerzner currently avoids high-roller business An opportunity exists to target premium player business and drive gaming revenue profitability Integration of Atlantis customer base into an existing loyalty program could also generate incremental revenue JPMorgan Value estimate ($ millions except per share amounts) KZL estimated 2006 casino revenue Up-lift 20% $30.0 50% $15.0 $204.0 $5.27 Incremental revenue Margin on incremental revenue Incremental EBITDA Discounted value¹ Implied value / share² 1 Assumes a 9.5 % discount rate and 2% perpetuity growth 2 Based on 38.7mm diluted shares outstanding $150 25% 30% $37.5 $45.0 50% 50% $18.8 $22.5 $255.0 $306.0 $6.59 $7.90 KERZNER INTERNATIONAL 10#13KEY TRANSACTION CONSIDERATIONS Cost of capital and leverage will drive buyers' ability to pay Strategic buyer 2006E break-even EPS analysis MGM Mirage Harrah's Las Vegas Sands Wynn Resorts MGM Mirage (100% cash) Harrah's (100% cash) Las Vegas Sands (100% cash) Wynn Resorts (50% cash)² Cost of capital Potential synergies¹ 7.25% $45mm JPMorgan 6.25% 8.00% 15.0% IRR No synergies $78.50 $90.50 $71.50 $89.00 $40mm $35mm $30mm Full synergies $100.50 $113.00 $87.00 $96.00 ¹ Does not include any tax synergies related to Kerzner's U.S. NOLS 2 100% cash to the seller; based on an IRR hurdle rate; 50% pro forma debt to total capitalization, 15% IRR hurdle, 3.00% perpetuity Financial buyer analysis ■ 70% pro forma leverage on capital structure ■ $2.6bn of new debt 9.0% interest rate on new debt ■ Existing net debt of $557mm refinanced ■ $100mm of total transaction costs, including cost of new debt and $37mm of bond tender costs ■ 3/31/06 entry, 12/31/10 exit Perpetuity growth rate 2.75% 3.00% 3.25% 20.0% $82.65 85.34 88.27 Cost of capital 22.5% $79.86 82.30 84.95 Factors other than attractive capital markets and accretion/dilution will also affect buyers' willingness to pay 25.0% $77.38 79.60 82.01 KERZNER INTERNATIONAL 11#14KEY TRANSACTION CONSIDERATIONS A change in control could have a meaningful impact on valuation A study of Kerzner's partnership agreements will be needed to determine any change in control consequences for new acquirer JPMorgan Sentosa - 60% interest in JV with CapitaLand Dubai - 25% interest in JV with Istithmar The Residences at Atlantis - 50% interest in JV with Turnberry Associates BLB Investors - 37.5% interest in JV with Starwood Capital and Waterford Gaming Cape Town - Agreement with Victoria & Alfred Waterfront (Pty) Limited Second phase of Harborside at Atlantis - timeshare JV with Starwood Hotels & Resorts One & Only Kanuhura, Maldives - 18.75% interest Palmilla, Cabo, Mexico -50% interest Reethi Rah, Maldives - Variable interest entity owned by Reethi Rah Resorts Royal Mirage, Dubai - Management only Le Saint Géran, Mauritius - 20.4% interest Le Touessrok, Mauritius - 20.4% interest Sugar Beach, Mauritius - 20.4% interest La Pirogue - 20.4% interest Le Coco Beach - 20.4% interest Ocean Club Residences & Marina KERZNER INTERNATIONAL 12#15KEY TRANSACTION CONSIDERATIONS The ability to maintain Kerzner's Bahamian corporate structure should allow a buyer to not pay tax on Kerzner's income Issue ■ U.S. companies (e.g., acquirer) are taxed on worldwide income Kerzner would pay approximately $43 million in tax in 2006 if taxed as a U.S. company¹ Depending on arrangement between US parent and Bahamian subsidiary, earnings could be subject to Subpart F rules GAAP requires U.S. acquirer to report book taxes on worldwide income APB 23 allows an exception if the cash (income) is never expected to be repatriated 1 Based on $122.8 million of estimated pre-tax net income and on the US tax rate of 35% 2 Could represent an addition sources of value to a buyer; this value is not quantified in our analysis JPMorgan Potential responses ■ Do not repatriate cash No tax if acquirer maintains Kerzner's existing Bahamian incorporation Use excess cash flow from off-shore operations for additional off-shore investments Potentially utilize target's $300 million of U.S. NOLS to offset taxable income from repatriation² ■ Prohibit repatriation Use NOLS to offset acquirers existing taxable income, subject to limitation² KERZNER INTERNATIONAL 13#16PRESENTATION TO SPECIAL COMMITTEE Agenda JPMorgan Introduction Process considerations Key transaction considerations Valuation drivers ■ Review of potential buyers Preliminary valuation analysis Appendix Page 1 5 7 19 23 KERZNER INTERNATIONAL 14#17KEY TRANSACTION CONSIDERATIONS Potential buyer universe Strategic buyer universe Boyd Gaming ■ Harrah's ■ Hyatt ■ Genting ■ Las Vegas Sands ■ MGM Mirage Financial buyer universe Blackstone ■ Cerberus ■ Hilton ■ InterContinental ■ Loews ■Mandarin Oriental ■ Mohegan Tribal Gaming Authority Sandals JPMorgan ■ Wynn ■Cascade ■ CVC ■ Elad Group ■ KSL Resorts ■ Lehman Brothers ■Maloof family ■ Morgan Stanley Operating partner candidates ■ MSD Capital ■ Prince Alwaleed (Kingdom Holdings) ■ Richard Branson ☐RREEF ■ Starwood Capital Walton Street ■ Other hedge funds ■ Marriott ■ Shangri-La Starwood Hotels Top strategic candidates MGM Mirage ■Harrah's ■ Las Vegas Sands ■ Wynn ■ Genting Hyatt Top financial candidates Blackstone KSL Resorts ■ Cerberus ■ Starwood Capital KERZNER INTERNATIONAL 15#18KEY TRANSACTION CONSIDERATIONS Top strategic candidates Strategic rationale JPMorgan relationship Assessment of actionability ■ Most logical strategic buyer based on portfolio of high-end destination gaming resorts ■ Diversify outside Las Vegas ■ Focus on international expansion MGM MIRAGE ■ May view as hedge on Singapore project Excellent cost and revenue synergy opportunities Have grown through acquisitions III Direct access to senior management including Kirk Kerkorian, Terry Lanni, and Jim Murren Co-advisor on $7.9bn acquisition of Mandalay Joint-book runner on $7bn credit facility Joint-book runner on two unsecured note offerings totaling $1.1bn ■Will seriously evaluate opportunity independently (i.e. no partner) ■Will understand hidden value (e.g. excess land, condo opportunities, brand, etc) Have ample financial capacity JPMorgan Harrah's Acquisition of Caesars added high end platform to mid-market portfolio Atlantis, Paradise Island provides much desired resort destination for Total Rewards loyalty program customers Potentially replaces Baha Mar project in Nassau Excellent cost and revenue synergy opportunities ■ Collector of strong industry brands Direct access to senior management including Gary Loveman and Chuck Atwood Co-advisor on acquisition of Horseshoe Gaming Sole bookrunner on $750mm bond issuance Joint-book runner of Caesar's $375mm convertible bond offering ■Will seriously evaluate opportunity independently (i.e. no partner) ■ May struggle on valuation ■Have ample financial capacity ■ May look to sell One&Only business WYNN RESORTA ■Asset quality and international focus fits with Wynn strategy ■ Potential synergies in bringing high roller business to Bahamas ■One&Only collection of assets represents excellent branding opportunity (Wynn) for ultra high end resorts Direct access to senior management including Steve Wynn and Ron Kramer Co-lead on $492mm IPO Joint-book runner on $1.1bn credit facility Joint-book runner on $1.3bn senior notes ■ Will seriously evaluate opportunity but may look for partner ■Will likely need to raise equity ■ Not concerned with accretion/dilution, given lack of earnings KERZNER INTERNATIONAL 16#19KEY TRANSACTION CONSIDERATIONS Top strategic candidates (cont'd) Strategic rationale JPMorgan relationship Assessment of actionability Sands LAS VEGAS SANDS CORPORATION Asset quality and international focus fits with LVS strategy ■ Potential synergies in bringing high roller business to Bahamas May see opportunities to add convention component to portfolio of projects Direct access to Sheldon Adelson Co-lead in $794mm IPO Significant credit relationship through corporate credit facility and recent Macau financing Will seriously evaluate opportunity independently (i.e. no partner) ■ Prefers development over acquisition but will focus on future development opportunities Financially capable ■ Not concerned with accretion/dilution, given lack of earnings JPMorgan HYATT Owner and operator of large resort destinations around the world Hyatt Gaming operates destination casinos in four countries including the Carribean Currently building out a full lodging platform (e.g. Hyatt Place, Summerfield) ■ Direct access to Pritzker family Sole bookrunner on $325mm unsecured bond offering Financially capable but sensitive to valuation May look for a partner GENTING ■ Large Malaysian conglomerate that owns a $3bn destination resort and gaming business ■Owns Star Cruises, the 3rd largest cruise operator in the world ■Kerzner portfolio represents good strategic fit and expands resort platform worldwide ■ Provides hedge for Singapore casino on Sentosa Island Direct access to KT Lim Sole bookrunner on $180mm senior convertible notes (Star Cruises) Sole bookrunner on $100mm equity rights offering (Star Cruises) Joint-bookrunner $300mm senior convertible notes ■Will seriously evaluate opportunity independently (i.e. no partner) KERZNER INTERNATIONAL 17#20KEY TRANSACTION CONSIDERATIONS Top financial candidates Strategic rationale JPMorgan relationship Assessment of actionability The Blackstone Group Have created large resort platform / good asset fit Bullish on lodging and leisure industry Took five hotel companies private in last 12-18 months Understand theme park element, given ownership stake in Universal, Orlando Direct access to Steve Schwartzman, John Schrieber and Jonathan Gray Known John Schrieber since he was at JMB Realty and worked with him in our capacity as financial advisor to Summit Properties where he was a key Board Member Will aggressively look at opportunity Not afraid to "pay up" for irreplaceable assets ■ Unlikely to need operating partner JPMorgan CERBERUS CAPITAL MANAGEMENT, L.P. Have previously owned Carribean hotel assets Will be attracted to growth pipeline Recently acquired resort portfolio from Japanese investor as well as making a strategic investment in Seibu Railways which includes Prince Hotels Direct access to Steve Feinberg Advised Cerberus on $351mm acquisition of Fila Holding and acted as joint coordinating arranger for $135mm senior secured credit facility $16bn fund, looking for attractive investments Will be attracted to destination resort opportunity KSL RESORTS Experienced in acquiring large resort and leisure assets Have operating expertise in resort properties Direct access to Mike Shannon and Eric Resnick Provided $275mm bridge loan on Grand Wailea Financial advisor on Boca Resorts sale of Arizona Biltmore Resort & Spa to KSL Resorts Will be attracted to lodging play; may look for partner ■ Recently raised $1bn hotel fund STARWOOD CAPITAL GROUP Aggressively acquiring lodging, gaming and leisure assets ■Barry Sternlicht knows Company well through relationship with Butch and Harborside timeshare project which is operated by Starwood Vacation Club ■Will recognize value in various real estate components Extensive relationship with Barry Sternlicht ■ Sole advisor on $455mm acquisition of Wembley Inc in 2004 Various lead assignments with Starwood Hotels when Sternlicht was CEO Will look at opportunity, but may call Butch and try and join his consortium ■ Unlikely to compete against Kerzners KERZNER INTERNATIONAL 18#21PRESENTATION TO SPECIAL COMMITTEE Agenda JPMorgan Introduction Process considerations Key transaction considerations Preliminary valuation analysis Appendix Page 1 5 7 19 23 KERZNER INTERNATIONAL 19#22PRELIMINARY VALUATION ANALYSIS Preliminary valuation summary Equity value per share 52-week trading range Analyst price targets Publicly-traded comparables Precedent transactions Sum of the parts Discounted cash flow analysis Strategic buyer/ break-even accretion LBO analysis $52.49 $35 Current price: $67.37 $71.00 $55 $74.00 I $70.28 I $80.00 I ↓ I 1 $77.50 $87.00 $81.00 $92.50 $84.00 $91.00 $75 $95.00 $88.50 $95 $102.50 $109.50 $113.00 $115 $135 Valuation comments ■ Current market values do not reflect future value potential of the business ■ Value of non-cash flow generating assets (i.e. undeveloped land) is not reflected in valuation metrics other than sum of the parts EBITDA multiple approach is less relevant in valuing KZL due to low corporate tax rate and significant JV equity earnings contribution Lack of good comparable precedent transactions ■ DCF, LBO, and sum of the parts metrics best reflect future growth of company Note: Valuation based on equity analyst projections and JPMorgan assumptions; Current price and 52-week trading range are as of 2/16/06; Publicly-traded comps valuation range based on 22-25x 2006E EPS of $3.36; Precedent transactions range based on 11.5-13.5x 2006E EBITDA pro forma for 35% tax impact ($330mm); Sum of the parts detail in appendix; Discounted cash flow range based on 9-10% WACC, 3% perpetuity growth rate, detail in appendix; Strategic buyer range includes MGM Mirage, Harrah's, Las Vegas Sands, and Wynn Resorts based on ability to pay at breakeven accretion/dilution with full synergies; LBO analysis range based on 20-25% required return, 2.75-3.25 % exit perpe tuity growth rate on $397mm of terminal free cash flow in 2011, 70% pro forma debt to total capitalization assumption; does not include any tax synergies related to Kerzner's U.S. NOLS JPMorgan KERZNER INTERNATIONAL 20#23PRELIMINARY VALUATION ANALYSIS Analysis at various prices $ million, except per share data Share price % premium Diluted shares (mm) Equity value Plus: Total debt¹ Less: Cash Plus: Minority interest Firm value Without synergies: FV/2006E EBITDA FV/2007E EBITDA FV/2008E EBITDA P/2006E EPS P/2007E EPS P/2008E EPS With synergies: FV/2006E EBITDA FV/2007E EBITDA FV/2008E EBITDA P/2006E EPS P/2007E EPS P/2008E EPS JPMorgan Metric 1,2 $236 319 382 $3.41 4.13 5.95 Metric 1,2 $271 354 417 $4.30 5.02 6.83 Current (2/16/06) $67.37 0.0% 38.7 $2,608 832 (198) 4 $3,247 13.7x 11.7 10.0 19.8x 16.3 11.3 12.0x 10.5 9.1 15.7x 13.4 9.9 $75.00 11.3% 39.2 $2,942 832 (198) 4 $3,580 15.1x 12.7 10.9 22.0x 18.2 12.6 13.2x 11.5 9.9 17.4x 14.9 11.0 $80.00 18.7% 39.5 $3,160 832 (198) 4 $3,798 16.1x 13.4 11.4 23.5x 19.4 13.5 14.0x 12.1 10.5 18.6x 15.9 11.7 $85.00 26.2% 39.7 $3,378 832 (198) 4 $4,017 17.0x 14.1 12.0 24.9x 20.6 14.3 14.8x 12.7 11.0 19.8x 16.9 12.4 Note: Synergy case assumes $35mm run-rate synergies 1 As of 12/31/05, assumes full consolidation of Palmilla and Reethi Rah debt, EBITDA, and earnings 2 2007E assumes increased leverage by 2006E expansion capex; 2008E assumes increased leverage by 2006E & 2007E expansion capex $90.00 33.6% 40.0 $3,597 832 (198) 4 $4,235 17.9x 14.8 12.6 26.4x 21.8 15.1 15.6x 13.3 11.5 20.9x 17.9 13.2 KERZNER INTERNATIONAL 21#24PRELIMINARY VALUATION ANALYSIS Illustrative LBO analysis Assumptions Transaction assumptions Transaction date Pro forma debt to total capital 2006E full-year EBITDA Sources and uses of funds ($ millions) Uses - Assuming entry at 20% premium Equity purchase price Refinanced net debt Transaction fees Total uses Sources New debt Roll-over equity New sponsor equity Total sources IRR Implied current equity value per share 20.0% 22.5% JPMorgan 2.75% 3/31/06 70% $228mm $82.65 79.86 $mm $3,197 557 100 $3,853 $mm $2,627 746 480 $3,853 $85.34 1 Pro rata owned interest, does not include synergies z Three quarters of 2006E EBITDA & interest expense Financial summary and credit statistics ($ millions) 2006E² $171 (198) 0 82.30 EBITDA¹ Less: Net interest expense Less: Taxes @ 0.0% Less: Capex Less: Increases in NWC Cash flow for debt service Exit perpetuity growth rate: 3.00% Credit ratios Total debt/EBITDA EBITDA/interest expense 25.0% 77.38 79.60 Source: Based on public filings, equity research, and JPMorgan assumptions Note: Assumes a 2010 exit Kerzner family % equity roll-over: Istithmar Kerzner family Additional equity needed Total equity needed 3.25% $88.27 84.95 82.01 (560) 0 ($587) IRR 2006E 14.2x 0.9x 20.0% 22.5% Shares 4.5mm 4.0mm 25.0% 2007E $309 (296) 0 (140) 0 ($127) Implied 2006E FV/EBITDA multiple 10.9x 1.0x 2007E 2.75% 16.3 16.8x 15.8 2008E $368 (302) 0 (65) 0 $1 2008E 9.1x 1.2x 100% 75% 50% $395 $395 $395 351 263 175 480 568 655 $1,226 $1,226 $1,226 3.00% 17.3x 2009E $413 (300) 0 Exit perpetuity growth rate: 16.8 16.2 (70) 0 $43 2009E 8.0x 1.4x 17.9x 3.25% 17.3 2010E $436 (295) 0 (72) 0 $69 16.7 2010E 7.4x 1.5x KERZNER INTERNATIONAL 22#25PRESENTATION TO SPECIAL COMMITTEE Agenda JPMorgan Introduction Process considerations Key transaction considerations Preliminary valuation analysis Appendix Page 1 5 7 19 23 KERZNER INTERNATIONAL 23#26APPENDIX Selected public market comparables Market information Company MGM Mirage Harrah's Entertainment Wynn Resorts Las Vegas Sands Orient Express Hotels Gaylord Entertainment' Starwood Hotels & Resorts Hilton Hotels? Marriott Inte mational Average Median 2/17/2006 share price $39.04 73.26 JPMorgan 65.72 53.71 34.99 44.05 63.65 24.30 69.44 % of 52-week high 83.5% 91.9% 86.0% 98.2% 96.0% 90.0% 97.2% 93.3% 98.1% Equity Market value¹ $11,113.2 13,463.6 6,540.6 19,022.0 1,394.4 1,844.6 15,479.7 10,168.4 15,618.4 Total market cap² $23,384.6 24,060.0 8,639.4 20,615.6 1,952.8 2,426.3 18,659.7 18,361.4 17,446.4 $15,060.7 $18,361.4 $5,666.8 $2,189.5 2006E 20.4x 19.3 NM NM 21.9 NA 29.2 23.6 22.5 22.5x 22. 2x 18.3x Price/EPS³ $10,516.1 $11,113.2 All Gaming - median $3,371.6 All Lodging - median $1,619.5 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 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 Total debt as of 9/30/05 for Gaylord Entertainment excludes $613 million associated with the Company's secured forward exchange contract Pro forma for announced transaction with Host Marriott 7 Hilton Hotels pro forma for announced acquisition of Hilton plc assets 22.7x 2007E 16.6x 16.3 NM NM 18.8 46.4 23.4 18.7 19.5 22.8x 18.8x 16.4x Aggregate value/ EBITDA¹ 2006E 2007E 9.9x 9.3 21.7 25.5 13.5 14.6 14.0 12.1 12.8 18.8x 14.8x 13.5x 9.7x 14.3x 8.9x 8.6 13.2 17.0 ΝΑ 10.8 12.1 10.7 11.5 11.6x 11.1x 8.7x 10.8x KERZNER INTERNATIONAL 24#27APPENDIX 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 JPMorgan Acquirer / Target Colony Capital & Kingdom Hotels/ Fairmont Hotels & Resorts Blackstone/Wyndham 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 Size Forward EBITDA (mm) multiple 17.0x 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 KERZNER INTERNATIONAL 25#28APPENDIX Sum of the parts valuation $ per share Contribution to equity value per share Equity value per share $61.62 JPMorgan Existing operations Phase III +$8.71 Singapore (probability weighted) +$4.61 The Palm +$2.68 Note: Based on equity research and JPMorgan estimates; analysis on following page BLB +$2.09 Morocco (probability weighted) +$1.79 Development projects OC Condos +$0.75 UK (probability weighted) +$0.27 Land +$15.10 Equity value per share $97.63 Existing operations, development projects and land KERZNER INTERNATIONAL 26#29APPENDIX Sum of the parts valuation (cont'd) $ millions, except per share data Paradise Island EBITDA (excl. Phase III) Multiple Enterprise value Annuity Income Mohegan income (DCF value) 080 management fees Fees Multiple Enterprise value Equity earnings Equity earnings Multiple Enterprise value Corporate expenses Corporate expense Multiple Enterprise value Existing operations Enterprise value Less: Net debt² Less: Minority interest Equity value Plus: Equity value of Palmilla (50%) Equity value (w/ Palmilla) KZL shares outstanding (mm) Equity value per share Plus: Development projects Plus: Undeveloped land Equity value per share (w/ dev. projects) JPMorgan $185 11.0x $2,035 $309 $25 20.0x $500 $13 25.0x $320 ($50) 6.0x ($300) $2,864 (479) (4) $2,381 100 $2,481 40.3 $61.62 20.90 15.10 $97.63 First stabilized year EBITDA Multiple Enterprise value 3 Represents 80% of equity research Less: Project net debt Equity value Discount years Discount rate Probability Present value (PV) Prob. Weighted PV Percentage ownership KZL equity value KZL shares outstanding Equity value per share Source: Based on public filings, equity research, and JPMorgan assumptions ¹ EBITDA represents pro-rata owned interest 2 Excludes Palmilla and Reethi Rah debt Undeveloped land Acres (mm) $mm per acre Total value KZL shares outstanding Equity value per share BLB 2007 75.0 8.5x 637.5 (370.0) $267.5 1.25 15.0% 100.0% 224.6 224.6 37.5% $84.2 40.3 $2.09 76.0 $8.0 $608.0 40.3 $15.10 Development projects Phase III 2008 110.0 11.0x 1,210.0 (730.0) $480.0 2.25 15.0% 100.0% 350.5 350.5 100.0% $350.5 40.3 $8.71 Morocco 2009 40.0 9.0x 360.0 (150.0) $210.0 3.25 15.0% 90.0% 133.3 120.0 60.0% $72.0 40.3 $1.79 The Palm¹ 2009 72.0 10.0x 720.0 (550.0) $170.0 3.25 15.0% 100.0% 107.9 107.9 100.0% $107.9 40.3 $2.68 OC condos Singapore 2007 2009 2.0 375.0 15.0x 11.0x 30.0 4,125.0 0.0 (2,500.0) $30.0 $1,625.0 0.00 3.25 15.0% 15.0% 100.0% 30.0% 30.0 1,031.8 30.0 100.0% $30.0 40.3 309.5 60.0% $0.75 Development projects total $185.7 40.3 $4.61 UK 2010 200.0 9.0x 1,800.0 (1,400.0) $400.0 4.25 15.0% 10.0% 220.8 22.1 50.0% $11.0 40.3 $0.27 $20.90 KERZNER INTERNATIONAL 27#30APPENDIX Discounted cash flow Free cash flow ($ millions) EBIT DA² Less: D&A EBIT Add: D&A Less: Capital expenditures Free cash flow Equity value per share Discount rate 9.00% 9.50% JPMorgan Terminal growth rate 3.00% 2.75% $106.35 96.95 $109.47 88.86 2006E¹ $171 (63) $108 63 (560) ($389) 99.51 2007E $309 (108) $201 108 (140) $169 3.25% $112.86 102.27 2008E $368 (111) $257 111 (65) $303 Discount rate 9.00% 2009E $413 (115) $299 115 (70) $343 9.50% Implied terminal FV/EBITDA multiple Terminal growth rate 3.00% 2.75% 14.5× 2010E $436 (118) $318 118 (72) $364 13.4 15.1x 10.00% 90.98 93.26 10.00% 12.5 Note: Assumes valuation date of 3/31/06; utilizes the mid year convention; net debt of $557mm 1 Three quarters of full-year 2006E EBITDA of $228mm 2 Pro rata owned interest 14.0 2011E $459 (122) $338 122 13.0 (74) $385 3.25% 15.8x 14.6 2012E $473 (125) $348 125 (76) $397 13.5 2013E $487 (129) $358 129 (79) $409 Discount rate 9.00% 2014E $502 (133) $369 133 (81) $421 Implied 2006E FV/EBITDA multiple Terminal growth rate 3.00% 22.0x 9.50% 10.00% 2.75% 21.4x 19.6 2015E $517 (137) $380 137 (84) $433 18.0 2016E $533 (141) $392 141 (86) $446 20.1 18.4 Terminal $549 (78) $470 78 (86) $462 3.25% 22.6x 20.6 18.9 KERZNER INTERNATIONAL 28#31APPENDIX Rob Kindler Managing Director, New York Global Head of Mergers & Acquisitions Rob was born in New York in 1954. He received a B.A. from Colgate University in 1976 and a J.D. from New York University School of Law in 1980. He is on the Board of Trustees of Colgate University, the Board of Directors of March of Dimes (NY Div), and the Board of Directors of the Knight-Bagehot Fellowship Program at Columbia University Graduate School of Journalism. Prior to joining JP Morgan, Rob was a senior partner at the law firm of Cravath, Swaine & Moore, where he specialized in mergers and acquisitions for over 20 years. ■ Cendant in its proposed separation into four companies ■ Nextel in its $42 billion merger with Sprint ■ Comcast in its $72 billion successful unsolicited bid for AT&T Broadband ■ CenturyTel in its successful defense against a $9 billion unsolicited offer by Alltel ■ DreamWorks in its $4 billion spin-off of DreamWorks Animation ■ Johnson Controls in its $3.2 billion acquisition of York International ■ MCI in its $9 billion sale to Verizon ■ GenCorp in its successful defense against a $1.3 billion bid by steel Partners ■ Grey Global in its $1.5 billion acquisition by WPP Group ■AMLI Properties in its proposed $2 billion sale to Prime Property Fund ■ Summit Properties in its $2 billion acquisition by Camden ■ Pechiney in its hostile defense and its $7.1 billion acquisition by Alcan ■ A private equity group in the $7 billion acquisition of the Qwest directories business ■ PCCW in the $1.0 billion investment by China Netcom ■ Avaya in its $635 million acquisition of Tenovis GmbH ■ Citizens Communications in its recapitalization ■ Panamerican Beverages in its $3.5 billion acquisition by Coca-Cola Femsa ■ Lycos in its $12.5 billion merger with Terra Networks ■ Corning in the $850 million sale of its precision lens business to 3M ■ Houghton Mifflin in its $2.2 billion acquisition by Vivendi ■ Bristol-Myers Squibb in its $6 billion spin-off of its Zimmer surgical products business JPMorgan KERZNER INTERNATIONAL 29#32APPENDIX Ben Lett Managing Director, New York Mergers & Acquisitions Mr. Lett has been a member of the Mergers & Acquisitions group since 1997 in a broad variety of M&A roles. He has had responsibility for supervising merger and acquisitions and related strategic advisory work in a number of different sectors including real estate, technology and oil and gas. He also has substantial experience on numerous financing transactions. For six years Mr. Lett managed a retail start-up funded by Cardinal Capital of Dallas Texas. Mr. Lett graduated from Vanderbilt University (1986-1990) with an B.A. Degree in Political Science and Northwestern's Kellogg School of Management (1995-1997) with an MBA. ■ Silver Lake Partners on its $10.8bn acquisition of SunGard Data Systems ■ Investcorp on its acquisition of CCC Information Services Group ■ Computer Associates on its acquisition of Netegrity Avaya on its acquisition of Tenovis ■ EMC on its acquisition of SMARTS ■IBM its $2.1B divestiture of HHD ■Lucent on its $600 million divestiture of Kenan Systems ■Avaya on its acquisition of Expanets ■ Sungard on the acquisition of Comdisco ■Agere on its divestiture of its WiFi Systems division ■Network Associates on its $1.0bn dollar acquisition of McAffe.com ■ Network Associates on its acquisition of Entercept Software ■ Network Associates on its sale of Magic Software ■ Network Associates on its sale of Sniffer (Network General) ■Motorola on its acquisition of Next Level Communications ■Mercator Software its successful defense of an unsolicited bid from SSH ■ Conoco Inc. on its $6.3 bn acquisition of Gulf Canada Resources ■ Conoco Inc. on its acquisition of Gulf Indonesia Resources ■ Phillips Petroleum Company in its $36 bn merger-of-equals with Conoco Inc. ■ Exxon on its $86 billion merger with Mobil ■ Pioneer on its acquisition of Evergreen ■ Plains Resources on its acquisition of Nuevo ■ Ocean Energy's $1.3 billion merger with Seagull Energy ■ Telecom Italia (SEAT Pagine Gialle) on its unsolicited offer for NetCreations ■ Bethlehem Steel on its successful defense of an unsolicited bid JPMorgan KERZNER INTERNATIONAL 30#33APPENDIX Glenn Carlin Managing Director, New York Head of Lodging & Gaming Mr. Carlin is a Managing Director in the Real Estate, Lodging & Gaming Investment Banking group at JPMorgan, where he is the Global Head of all lodging and gaming company coverage. Glenn advises these clients on mergers acquisitions as well as provides access to a range of capital market products including bank, bonds, equity, and risk management. Most recently, Glenn advised Colony Capital and Kingdom Holdings on its pending $3.9 billion acquisition of Fairmont Hotels & Resorts. In 2005, Glenn advised Wyndham International on its $3.24 billion sale to Blackstone as well as BLB Investors (a consortium of Kerzner International, Starwood Capital, and Waterford Gaming) in its $455 million acquisition of Wembley Inc. Glenn was also co-financial advisor to Harrah's on its acquisition of Horseshoe and MGM Mirage on its acquisition of Mandalay. Glenn has completed lead capital markets transactions for Caesars ($375 million convert), Kerzner ($400 million high yield bonds), Harrah's ($750 million bonds), Wynn Resorts ($1.3 billion high yield bonds), Scientific Games ($200 million high yield bonds and $275 million convertible) and Gaylord Entertainment ($223 million common equity). JPMorgan was also a co-lead in Wynn Resorts' $492 million IPO and Las Vegas Sands' $794 million IPO. Glenn also advised the management of Sunburst Hospitality in a management-led buy-out as well as Boca Resorts in the $335 million sale of the Arizona Biltmore to KSL Enterprises. In 1999, Glenn advised Wyndham's review of strategic alternatives, which led to a $1 billion convertible preferred investment by an investor group led by Apollo and Thomas H. Lee and $2.45 billion in new credit facilities. Glenn led JPMorgan's lodging team in its advisory and financing roles in Starwood's acquisition of ITT Corporation. Glenn has been with JPMorgan, or its predecessor firms, for 13 years which follows four years at Morgan Stanley Realty and nearly two years at HVS Financial Services, a hospitality investment banking firm which he co-founded. Glenn received an MBA in Real Estate Finance from Columbia Business School and a BS in Economics from the Wharton School of Business. Glenn is also a Certified Public Accountant. JPMorgan KERZNER INTERNATIONAL 31