2 nd quarter 2011 Asociación de Hospitales de

2 nd quarter 2011 Asociación de Hospitales de Puerto Rico UBS Financial Services Incorporated of Puerto Rico April 26, 2011 Private & Confidential

Important information This presentation does not commit UBS Financial Services Incorporated of Puerto Rico ("UBSFS PR"), either expressly or implicitly, to underwrite or purchase securities or to commit any capital, nor does it obligate UBSFS PR to enter into an underwriting agreement or similar commitment to finance. UBS Financial Services Incorporated of Puerto Rico’s participation in any financing will be subject to, among other things, (i) satisfactory completion of all documentation for the financing (including a Bond Purchase Agreement containing all provisions necessary to satisfy federal securities laws and the Rules of the Municipal Securities Rulemaking Board, and all other applicable rules and regulations); (ii) satisfactory completion of a customary due diligence review; (iii) in UBSFS PR’s determination, the absence of any material adverse change in the financial markets in the United States; (iv) receipt of all required governmental and other approvals and appropriate legal opinions, including a 10 b-5 disclosure opinion, from counsel acceptable to UBSFS PR; and (v) approval of UBS’s internal capital commitment committees. 1

Table of contents Section 1 Section 2 Section 3 Section 4 Section 5 Overview of UBS AG UBS International and Puerto Rico Local Investment Banking Division Local Investment Climate Local Financing Alternatives 2

SECTION 1 Overview of UBS AG

UBS – one of the leading financial firms · UBS draws on its 150 -year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. · We combine our wealth management, investment banking and asset management businesses with our Swiss operations to deliver superior financial solutions and manage CHF 2. 2 trillion in invested assets. · UBS is present in all major financial centers worldwide. It has offices in over 50 countries, with about 37% of its employees working in the Americas, 37% in Switzerland, 16% in the rest of Europe and 10% in Asia Pacific. UBS employs about 65, 000 people around the world. · Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE). 4

UBS facts and figures Know how Over 150 years experience in private banking About 64, 000 people in 50 countries Financials 1 Market capitalization of CHF 64 billion CHF 2, 180 billion in assets under management Well capitalized with a BIS Tier 1 capital ratio of 16. 7% and a FINMA leverage ratio of 4. 7% Accolades One of the largest wealth managers in the world One of the largest global institutional asset managers UBS Investment Bank ranked #1 nine years in a row in Institutional Investor's All-Europe Research survey 1 As of September 30, 2010; UBS quarterly report 5

Worldwide presence More than 65, 000 people in 50 countries 6

UBS league tables Investment Banking League Tables for FYE 2010 Source: Wall Street Journal and Thomson Reuters January 2011 7

SECTION 2 UBS International and Puerto Rico

SECTION 2 UBS International and Puerto Rico UBS Puerto Rico

UBS Puerto Rico Business structure Wealth Management Division · · · Asset Management · Fund Advisory · Fund Administration Investment Banking & Capital Markets · · · · Individual Client Group Consulting Group Financial Planning Retirement Planning Personal & Corporate Trust Wealth Management Business Development Investment Banking Corporate Advisory M&A Primary Market Underwriting & Secondary Market Trading Client Loan Book Institutional Sales Institutional Business Development 10

UBS Puerto Rico – local presence Commitment with Puerto Rico · UBS Financial Services Incorporated of Puerto Rico is the longest standing full-service investment firm with over 45 years in Puerto Rico · Leader in the full service securities industry with over $15. 4 billion in assets as of December 31, 2010 (48% market share) · Our affiliate, UBS Trust Company of Puerto Rico, provides trust, asset management, and investment consulting services · Five (5) branches located in Hato Rey, Condado, Caparra, Ponce, and Mayagüez · UBS PR including its affiliate, UBS Trust Company of Puerto Rico, employs over 380 professionals and support personnel Local Presence Local Market Share (Au. M) Source: Office of the Commissioner of Financial Institutions of Puerto Rico. Data as of December 31, 2010. 11

SECTION 2 UBS International and Puerto Rico UBS International

Our market coverage · 354 Financial Advisors overseeing more than $47 b in assets and servicing clients from 12 branches in the US and Puerto Rico 140 FAs (24. 4 b) Mexico 67 FAs (5. 5 b) Lat. Am North 44 FAs (5. 1 b) Asia 17 FAs (2. 3 b) Other UBS-I Markets 19 FAs (1. 6 b) Brazil 21 FAs (2 b) Lat. Am South 41 FAs (6. 9 b) Note: International FA classification based on market of priority as of July 31, 2010; 13 excludes Private Bank Solutions Group. PR data as of September 31, 2010.

International branch locations 214 Advisors with total Au. M of USD 23 billion San Francisco New York Financial advisors 12 Au. M USDb 2. 0 Markets Asia / Mex Financial Advisors 45 Au. M USDb 4. 8 Markets Lat. Am N / Lat. Am S / Br / Mex / Asia / EMEA San Diego Miami Financial advisors 28 Au. M USDb 2. 7 Markets Asia / Br / Mex Financial Advisors 38 Au. M USDb 3. 7 Markets Lat. Am N / Lat. Am S/ Br / Mex Mc. Allen Financial Advisors 4 Au. M USDb 0. 7 Market Mexico Houston Coral Gables Financial Advisors 31 Au. M USDb 2. 5 Market Mexico Financial Advisors 48 Au. M USDb 6. 2 Markets Lat. Am N / Lat. Am S / Br / Mex Notes: 1) 214 Advisors, comprised of 206 Financial Advisors in the Branches, 7 CAs at the PBSG, 1 FA in the Mass Affluent Desk. 2) Figures as of Sep 30, 2010, including international Bank Services Desks, exclude RIS Assets 3) Blue dots depict Satellite Offices Beverly Hills, Pasadena and San Antonio. 14

Our integrated business model · UBS International & Puerto Rico Open Architecture UBS Global UBS Wealth Management Americas UBS-I & PR Advisor Group Solutions Partnerships Financial Advisor UBS Investment Banking UBS Clients Asset Global Asset Management Financial Advisor Open Architecture Wealth Management / WM Consulting Capital Markets & Lending Open Architecture 15

SECTION 3 Local Investment Banking Division

Local Investment Banking Objectives and Structure · Provide Puerto Rico based clients with a full range of investment banking solutions, and leveraging, as necessary, the global resources of the Firm · Develop innovative products benefiting from tax advantages provided under Puerto Rico law to provide superior solutions for both issuers and investors in the Island · Enhance the reputation and credibility of the Firm in Puerto Rico by providing the top corporate and governmental clients with superior service focused on long-term relationships 17

Local Investment Banking Scopes of services and products · Municipal transactions – US Municipals (103) – Alliance with Goldman Sachs – Local Municipals – Public-Private Partnerships · Corporate transactions – Equity Capital Raise-Ups – Follow-On Offerings – Exchange Offerings – Corporate Debt Offerings – AFICA's – Mergers & Acquisitions Advisory Services – Large Transactions – through UBS-IB – Small to Mid-Size Transactions – through the Corporate Advisory Group-PR and UBS International · Mutual funds – Fund Origination – Leverage Products 18

Local Investment Banking Municipal Finance · Ranked first in volume of negotiated senior managed transactions for the Commonwealth of Puerto Rico since 2009 · Led five (5) billion plus bond financings in the local market since 2009: – $1. 18 bn – Government Development Bank Senior Notes Series C&D (8/10) – $1. 60 bn – Government Development Bank Senior Notes Series A&B (7/10) – $1. 36 bn – Government Development Bank Senior Notes Series C&D (12/09 and 1/10) – $1. 22 bn – Puerto Rico Sales Tax Financing Corporation (COFINA 2), Series 2009 B (6/09) – $1. 48 bn – Government Development Bank Senior Notes Series A&B (1/09) · Led the largest Build America Bond transaction executed in the local market: – $355. 7 mm – PR Electric Power Authority: Power Revenue Bonds, Series EEE (12/10) · Led the largest AFICA transaction executed in the local market in over 10 years – $59. 65 mm – Industrial Revenue Refunding Bonds, 2011 Series A (Galeria Tower at San Patricio Project) · Co-Manager to over $12 billion in 103 Muni Bonds to the Commonwealth of PR and its Agencies or Corporations since 2009 · UBS acted as Lead Manager in 67. 0% of all local transactions since 2009 (94. 4% if credited by issue size)1 Local Municipal Financings Since 2009 19 1 Assumes full credit to the lead managing underwriter or placement agent.

Local Investment Banking Corporate Finance · Lead Dealer Manager to First Bank's Exchange Offer of $487 mm (8/10) · Placement Agent to the DBR Dorado Beach Hotel issuance of notes totaling $166 mm (7/10) · Lead Dealer Manager to Doral's Exchange Offer of $52 mm (12/09) · Sole Manager for the PR Housing & Human Dev. Trust (FIDEVI) issuance of Notes totaling $210 mm (9/09) · Lead Dealer Manager to Popular, Inc's Exchange Offer of $934 mm (8/09) · Sole Manager for the Punto Verde Grantor Trust issuance of Secured Notes totaling $35 mm (11/08) · Sole Manager for the Puerto Rico Conservation Trust Fund issuance of Notes totaling $81. 5 mm (8/08) · Completed the largest local Preferred Stock Issuance for Popular, Inc. in the amount of $400 mm (5/08) Fund products · Issued over $1. 2 bn in structured products for the Fund’s leverage program since 2006 – Structured range, fixed, bullet, spread range, absolute barrier, and index-linked notes · Raised a total of $413. 6 mm in Equity for the UBS Family of Funds since 2006 – Raised over $29 mm for the Puerto Rico Fixed Income Fund VI (9/08 – 12/08) – Raised over $36 mm for the Puerto Rico AAA Bond Fund II (9/08 – 12/08) – Raised over $345 mm for the Puerto Rico Fixed Income Fund V (1/07 – 4/08) 20

Local Investment Banking Execution of Over $22 billion in Transactions Historical Transactions Since 2008 Popular Inc. 8. 25% Non-cumulative PFD Stock Series B $400, 000 Joint Bookrunners May 2008 Puerto Rico Conservation Trust Secured Notes Due 2018 $81, 500, 000 Sole Manager August 2008 Commonwealth of Puerto Rico Public Improvement Refunding Bond Series 2008 $190, 135, 000 Co-Manager May 2008 Commonwealth of Puerto Rico Employees Retirement System Series A, B & C $2, 947, 648, 343 Lead Manager Jan-June 2008 Commonwealth of Puerto Rico Public Improvement Bonds of 2008, Series A $250, 000 Co-Senior September 2008 Punto Verde Grantor Trust 2008 -2 Tax Exempt Notes $35, 000 Sole Manager November 2008 Puerto Rico Fixed Income Fund VI Common Shares Fund $29, 297, 520 Sole Manager December 2008 Government Development Bank of Puerto Rico Senior Notes Offering, Series A&B $1, 480, 000 Lead Manager December-January 2008 -2009 Puerto Rico Sales Tax Financing Corporation Sales Tax Revenue Bonds, Series 2009 B $1, 217, 915, 799. 2 Co-Lead Manager June 2009 Doral Financial Corporation Exchange Offer to Common Stock $52, 000 Lead Dealer Manager December 2009 Puerto Rico AAA Portfolio Bond Fund II Common Shares Fund $36, 069, 089 Sole Manager December 2008 Popular Inc. Exchange Offer to Common Stock $934, 000 Lead Dealer Manager August 2009 Dorado Beach FIDEVI Puerto Rico Housing and Human Development Trust Fund Secured Notes 2009, Series A-D $210, 000 Sole Placement Agent September 2009 Puerto Rico Sales Tax Financing Corporation Sales Tax Revenue Bonds, Series 2008 A $737, 046, 992 Lead -Manager July 200 8 Government Development Bank of Puerto Rico Senior Notes Offering, Series C&D $1, 356, 076, 000 Lead Manager December-January 2009 -2010 DBR Dorado Owner (Dorado Beach) Senior Notes Offering $166, 132, 814 Placement Agent July 2010 Caparra Hills, Inc. Government Development Bank of Puerto Rico Senior Notes Offering, 2010 Series A&B $2, 782, 889, 000 Lead Manager July / August 2010 First Ban. Corp Exchange Offer to Common Stock $487, 053, 200 Lead Dealer Manager August 2010 Puerto Rico Industrial, Tourist, Educational, Medical Puerto Rico Electric Power Authority And Environmental Control Facilities Financing Authority Industrial Revenue Ref. Bonds, 2011 Series A Power Revenue Bonds, Series EEE $59, 649, 744. 50 $355, 730, 000 Joint-Lead Dealer Manager Lead Manager December 2010 March 2011 21

UBS Healthcare Credentials. ppt UBS Healthcare Group – Selected Marquee Transactions Since 2009, UBS has maintained its position as a leading investment bank to the healthcare industry Mergers and Acquisitions · Advised clients on over $25 billion of M&A assignments · Equity Financing Executed over $15 billion of equity financing for our clients March 2011 February 2011 $123 million Initial Public Offering Lead Bookrunner February 2011 $300 million Block Trade of Common Stock December 2010 $1. 5 billion Follow-on Offering December 2010 $2. 3 billion Initial Public Offering Sole Bookrunner Joint Bookrunner December 2010 $363 million Sale to Leonard Green & Partners December 2010 $61 million Follow-on Offering December 2010 $503 million Follow-on Offering October 2010 $852 million Initial Public Offering Sole Financial Advisor Sole Bookrunner Joint Bookrunner Pending $2. 4 billion Acquisition of Capsugel Pending $420 million Sale to CSC Financial Advisor Pending $3. 2 billion Acquisition of Emergency Medical Services Financial Advisor Pending $720 million Merger with Abbott India Limited Sole Financial Advisor April 2011 $2. 4 billion Acquisition of Real Estate Assets of Genesis Sole Financial Advisor April 2011 $6. 1 billion Acquisition of Real Estate Assets of HCR Manor. Care Financial Advisor March 2011 $1. 5 billion Acquisition of Priory Healthcare March 2011 $675 million Acquisition of Sterigenics Financial Advisor Joint Financial Advisor April 2011 $208 million Initial Public Offering Concurrent $1. 42 billion Common Stock Offering and $719 million Cumulative Convertible Perpetual Preferred Stock · Debt Financing Executed over $150 billion of debt financing for our clients Pending $1. 1 billion Senior Secured Credit Facility Lead Left Bookrunner $460 million Senior Unsecured Notes Joint Bookrunner March 2011 $525 million Senior Secured Facilities to Finance Acquisition of Sterigenics Joint Lead Arranger / Joint Bookrunner February 2011 $250 million Senior Notes Offering Lead Bookrunner $605 million Senior Secured Credit Facilities Lead Arranger / Lead Bookrunner Pending $2. 7 billion Senior Debt Facilities to Finance Acquisition of Ems Joint Lead Arranger/ Joint Bookrunner March 2011 $1. 4 billion Senior Notes Offering Lead Bookrunner February 2011 $400 million Bridge Loan Sole Lead Arranger April 2011 $2. 4 billion Bridge Loan to Finance Acquisition of Real Estate Assets of Genesis Lead Left Arranger February 2011 $750 million Bond Offering Joint Bookrunner January 2011 $2. 4 billion Senior Notes Offering March 2010 $4. 4 billion Bond Offering Lead Bookrunner Joint Bookrunner March 2010 $3. 0 billion Notes Offering June 2009 $4. 5 billion Senior Unsecured Notes Offering November 2010 $545 million Sale to Health. Spring, Inc October 2010 Sale to Leonard Green & Partners October 2010 $810 million Sale of Arizant August 2010 $529 million Follow-on Offering April 2010 $400 million Initial Public Offering Sole Financial Advisor Joint Financial Advisor Sole Financial Advisor Joint Bookrunner Co-Manager Joint Bookrunner May 2009 $7. 0 billion Bridge Loan to Finance the Acquisition of Schering-Plough Corporation Co-Arranger November 2009 $8. 0 billion Merger of Glaxo’s HIV Division with the HIV Division of Pfizer, Inc. Joint Financial Advisor September 2009 $1. 3 billion Sale of Injectables Business to Novartis AG September 2009 $950 million Initial Public Offering September 2009 $1. 3 billion Initial Public Offering August 2009 $367 million Initial Public Offering March 2009 $13. 5 billion Notes Offering Sole Financial Advisor Co-Manager Joint Bookrunner March 2009 $27. 5 billion Credit Facilities to Finance the Acquisition of Wyeth Joint Lead Arranger February 2009 $14. 1 billion Euro Bond Offering $16. 5 billion US Bond Offering Joint Bookrunner August 2010 $1. 3 billion Acquisition of Eclipsys Corp Joint Financial Advisor November 2009 $512 million Follow-on Offering 22

UBS Healthcare Credentials. ppt UBS is a Top Ranked Healthcare M&A Advisor Advised clients on over $25 billion of M&A assignments since 2009 Pending $2. 4 billion Acquisition of Capsugel Pending $420 million Sale to CSC Pending $277 million Acquisition of Tomo. Therapy Pending $3. 2 billion Acquisition of Emergency Medical Services Pending $720 million Merger with Abbott India Limited April 2011 Sale to Acadia Healthcare April 2011 $2. 4 billion Acquisition of Real Estate Assets of Genesis Financial Advisor Sole Financial Advisor April 2011 $6. 1 billion Acquisition of Real Estate Assets of HCR Manor. Care March 2011 $1. 5 billion Acquisition of Priory Healthcare March 2011 $675 million Acquisition of Sterigenics January 2011 $860 million Acquisition of Senior Living Communities December 2010 $363 million Sale to Leonard Green Partners November 2010 $545 million Sale To Health. Spring, Inc October 2010 Sale to Leonard Green Partners Financial Advisor Joint Financial Advisor Sole Financial Advisor Joint Financial Advisor / / October 2010 $810 million Sale of Arizant October 2010 $288 million Acquisition of Creganna Tactx Medical September 2010 $2. 4 billion Acquisition of Healthscope September 2010 Re-Licensing Of rights for Omacor/Lovaza to Abott September 2010 Investment in Med. Express August 2010 $410 million Acqusition of Vanbreda August 2010 Sale to Ingenix Sole Financial Advisor Joint Lead Financial Advisor Sole Financial Advisor Joint Financial Advisor August 2010 $1. 3 billion Acquisition of Eclipsys Corp August 2010 $98 million Sale of Biofuel division to BP July 2010 $380 million Acquisition of Alnara Pharmaceuticals July 2010 $150 million Sale to Hospira June 2010 $186 million MOE w/ Accelyrs March 2010 Sale to BC Partners Joint Financial Advisor Sole Financial Advisor Sole Financial Advisor February 2010 $668 million Sale of 49% interest in portfolio of Life Sciences buildings Sole Financial Advisor 23

UBS Healthcare Credentials. ppt UBS is a Top Ranked Healthcare Common Stock Bookrunner UBS has been a bookrunner of choice in turbulent markets, having bookrun 45 common stock offerings since 2009 February 2011 $123 million Initial Public Offering February 2011 $300 million Block Trade of Common Stock December 2010 $1. 5 billion Follow-on Offering December 2010 $61 million Follow-on Offering Sole Bookrunner March 2011 Concurrent $1. 42 billion Common Stock Offering and $719 million Cumulative Convertible Perpetual Preferred Stock Lead Bookrunner Sole Bookrunner Joint Bookrunner Sole Bookrunner December 2010 $2. 3 billion Initial Public Offering December 2010 $503 million Follow-on Offering November 2010 $54 million Initial Public Offering October 2010 $852 million Initial Public Offering September 2010 $263 million Follow-on Offering September 2010 $146 million Initial Public Offering August 2010 $124 million Follow-on Offering Joint Bookrunner Lead Bookrunner Joint Bookrunner Sole Bookrunner Co-Manager August 2010 $529 million Follow-on Offering June 2010 $109 million Initial Public Offering June 2010 $445 million Follow-on Offering June 2010 $152 million Convertible Bond Offering April 2010 $400 million Initial Public Offering April 2010 $198 million Follow-on Offering April 2010 $292 million Follow-on Offering Joint Bookrunner Sole Bookrunner Joint Bookrunner Joint Lead Manager March 2010 $342 million Convertible Bond Offering March 2010 $68 million Follow-on Offering January 2010 $58 million Follow-On Offering January 2010 $180 million Convertible Bond Offering December 2009 $184 million Initial Public Offering October 2009 $45 million Initial Public Offering September 2009 $1. 3 billion Initial Public Offering Joint Bookrunner Co-Manager Sole Bookrunner Joint Bookrunner April 2011 $208 million Initial Public Offering March 2011 $40 million Block Trade of Common Stock Lead Bookrunner 24

UBS Healthcare Credentials. ppt UBS is a Leading Provider of Debt Financing UBS has executed over $150 billion of debt financing for our clients since 2009 Pending $1. 1 billion Senior Secured Credit Facility Lead Left Bookrunner $460 million Senior Unsecured Notes Joint Bookrunner February 2011 $250 million Senior Notes Offering Lead Bookrunner $605 million Senior Secured Credit Facilities Lead Arranger / Lead Bookrunner Pending $2. 7 billion Senior Debt Facilities to Finance Acquisition of EMS Joint Lead Arranger/ Joint Bookrunner April 2011 March 2011 April 2011 $3. 3 billion $525 million $2. 4 billion Bridge Loan to Finance Senior Secured Facilities Bridge Loan to Finance Acquisition of Real Estate to Finance Acquisition of Assets of HCR Manor. Care Sterigenics Assets of Genesis Joint Lead Arranger / Joint Lead Arranger Lead Left Arranger Joint Bookrunner January 2011 $2. 4 billion Senior Notes Offering January 2011 $674 million Senior Notes Offering $169 million RCF/Acquisition Facility Lead Bookrunner Joint Bookrunner January 2011 $250 million Senior Notes Offering April 2010 $200 million Senior Notes Offering Joint Bookrunner March 2011 $37 million Amend, Extend & Add-on to Existing Credit Facility Lead Arranger / Sole Bookrunner March 2011 $195 million Loan Repricing March 2011 $1. 4 billion Senior Notes Offering Lead Bookrunner February 2011 $750 million Bond Offering Lead Left Arranger February 2011 $400 million Bridge Loan Sole Lead Arranger Joint Bookrunner December 2010 $200 million Senior Notes Offering May 2010 $335 million Senior Secured Credit Facility Joint Bookrunner December 2010 $200 million Notes Offering Joint Bookrunner December 2010 $500 million Bond Offering December 2010 $400 million Senior Notes Offering November 2010 $215 million Senior Secured Facilities to Finance Acquisition of Excelitas Technologies Joint Bookrunner Joint Lead Arranger / / November 2010 $350 million Senior Notes Offering October 2010 $384 million Consent Solicitation of Millipore’s Senior Notes October 2010 $315 million Senior Notes Offering October 2010 Senior Debt Facilities to Finance Acquisition of Aspen Dental September 2010 $1. 3 billion Senior Debt Facilities to Finance Acquisition of Healthscope August 2010 $750 million Bond Offering August 2010 $1. 0 billion Bond Offering August 2010 $2. 3 billion Leveraged Re. Capitalization August 2010 $720 million Loan to Finance Acquisition of Eclipsys Joint Bookrunner Sole Solicitation Agent Joint Bookrunner Joint Lead Arranger Joint Bookrunner Co-Manager Joint Lead Arranger May 2010 $300 million Bond Offering May 2010 $360 million Bond Offering April 2010 $160 million Term Loan $22 million DD Term Loan $20 million Revolver April 2010 $280 million Bond Offering March 2010 $4. 4 billion Bond Offering March 2010 $3. 0 billion Notes Offering March 2010 $1. 0 billion Notes Offering March 2010 $5. 0 billion Bond Offering March 2010 $300 million Notes Offering Joint Bookrunner Joint Bookrunner Co-Manager 25

SECTION 3 Local Investment Banking Division Corporate Advisory Group

Investment Banking Corporate Advisory Group · The Corporate Advisory Group (CAG) of UBS Financial Services Incorporated of Puerto Rico offers broad corporate finance services to private companies and their owners, in identifying and resolving corporate finance related issues as part of a comprehensive approach to wealth management that integrates business, personal and family needs and objectives. · Provides services to companies in the following products: – M&A: Sell-Side Advisory – M&A: Buy-Side Advisory – Tax Credit Advisory – Debt Financing Advisory – Equity Financing Advisory – General Financial Advisory · Over the years our bankers have had experience covering corporate finance transactions in the following industries – Financial Institutions & Insurance – Commercial Real Estate (Incl. Hotels) – Industrials – Retail & Consumer Products – Privatization & Public Private Partnerships – Food Distribution & Services – Healthcare & Pharmaceuticals 27

Investment Banking Corporate Advisory Group · Representative Engagements Marpor Corporation Williams Hospitality Hotels 28

SECTION 4 Local Investment Climate

Local Investment Climate - Economic Overview Economic Events vs. Gross National Product 1 st PR Credit Downgrade from A- to BBB Local Bank Consolidation S&P PR Credit Upgrade from BBB- to BBB PR Government Shutdown 2 nd PR Credit Downgrade from BBB to BBB- PR Economic & Reconstruction Plan US Recovery & Reinvestment Act Moody's Recalibration of PR Credit from Baa 3 to A 3 Puerto Rico Stock Index Low – 1, 245 Puerto Rico Stock Index High – 20, 208 Fitch Initiates PR Credit Rating at BBB+ Global Financial Crisis & Credit Crunch PR Budget Deficit Crisis - $3. 3 mm Sources: Puerto Rico Planning Board & IHS-Global Insight. Commonwealth Report March 2011. Note: 2012 figures are estimates from the PR Planning Board and IHS-Global Insight as of March 2011. PR Fiscal and Government Reforms S&P Outlook Change from Stable to Positive Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice. 30

Local Investment Climate - Economic Overview Gross National Product: USA vs. Puerto Rico – A growing divergence… Average difference from 2001 to 2005: 1. 0% Average difference from 2006 to 2011: 3. 2% Sources: Puerto Rico Planning Board & IHS-Global Insight. Commonwealth Report March 2011. Note: 2012 figures are estimates from the PR Planning Board and IHS-Global Insight as of March 2011. Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice. 31

Local Investment Climate - General Obligation Bonds Rating Upgrade from Standard & Poor's to "BBB" from "BBB-" Rating Upgrade · On March 7, 2011 Standard & Poor's increased the credit rating of the Commonwealth of Puerto Rico – General Obligation bonds to "BBB" from "BBB-" – 1 st credit upgrade by Standard & Poor's in Puerto Rico history – 1 st Positive rating action after six consecutive downgrades or "negative" outlooks since 2000 – 1 st Upgrade to any US state since 2009 (Louisiana) – S&P also assigns a "stable" outlook to the Commonwealth debt Outlook Reflection · The Rating Upgrade reflects the following: 1. 17% reduction in Government payroll expenditures 2. Recently approved tax measures to help reduce the current budget deficit 3. Recent implementation of Revenue enhancement measures 4. Strong ties to US economy "The upgrade is based on our view of the commonwealth's recent revenue performance and continued efforts to achieve fiscal and budgetary balance. We believe that the collections from the recently enacted excise tax, which have exceeded the government's expectations, will provide the commonwealth with additional flexibility to continue to narrow the budget gap and achieve structurally balanced budgets in the next two years" Standard & Poor's Commentary Source: Standard & Poor's, Credit Rating Upgrade to "BBB" (March 7, 2010). Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice. 32

Local Investment Climate - Evolution of Capital Markets $9. 28 billion Phase II (Government Bonds, Corporate Debt, and AFICA Bonds) Preferreds and Funds) Funds Common Stock $5. 22 billion Corporate Debt & Preferreds $21. 17 billion Government Bonds $2. 97 billion AFICA Bonds Includes: Local market AFICAs and Puerto Rico Government bonds, (ii) corporate notes and preferred stocks (except equity-linked notes issued by local banks and securities related to the funds’ leverage program), and (iii) closed-end and open-end funds that invest in fixed income securities. Source: GDB, UBS, Santander, and Popular (4/1/11). Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice. 33

Local Investment Climate – Investor Profile of Local Investors (individuals and corporations) Seeks yield High Credit Quality (Munis) Principal Protection Retail Investors Primary Buy and Hold Long Term Well Known Names 34

Local Investment Climate - Municipal Market Over $8. 1 billion in local municipal financing since 2009 · Five (5) billion plus issuances have been financed in the local market since 2009: – – – $1. 18 bn – Government Development Bank Senior Notes Series C&D (8/10) $1. 60 bn – Government Development Bank Senior Notes Series A&B (7/10) $1. 36 bn – Government Development Bank Senior Notes Series C&D (12/09 and 1/10) $1. 22 bn – Puerto Rico Sales Tax Financing Corporation (COFINA 2), Series 2009 B (6/09) $1. 48 bn – Government Development Bank Senior Notes Series A&B (1/09) · Three (3) Build America Bond transactions were executed in the local market: – $355. 7 mm – PR Electric Power Authority: Power Revenue Bonds, Series EEE (12/10) – $182. 2 mm - Puerto Rico Sales Tax Financing Corporation (COFINA 2), Series 2010 D&E (6/10) – $320. 2 mm - PR Electric Power Authority: Power Revenue Bonds, Series YY (4/10) · Three (3) AFICA transactions have been executed in the local market since 2009, including the largest in over 10 years: – $59. 65 mm – Industrial Revenue Refunding Bonds, 2011 Series A (Galeria Tower at San Patricio Project) Local Municipal Financings Since 2009 35

Local Investment Climate – Capital Market Liquidity Funding and liquidity provided at peak of financial crisis and during the ongoing recession… GDB 2008 Notes Series A&B $1, 230 million GDB 2009 Notes Series A&B $250 million GDB 2010 Notes Series A&B $1, 356 million COFINA Sub. Bonds Series 2009 B $1, 218 million PREPA Series EEE $1, 600 million GDB 2009 Notes Series C&D $356 million PREPA Series YY GDB 2010 Notes Series C&D $320 million $1, 180 million 36 Source: Official Statements and Bloomberg data. 30 Year MMA Muni Index vs. US 30 Year Treasuries for the period 9/5/08 -3/31/10.

Local Investment Climate - Private Issuers / Transactions The local capital market has the ability to provide significant funding to private sector entities AEELA Senior Notes Offering $55, 520, 000 August 2005 Popular North America EDB Notes – Private Placement $275, 000 December 2007 Doral Financial. Exchange Offer to Common Stock $105, 600, 000 May 2009 First Ban. Corp Exchange Offer to Common Stock $487, 053, 200 August 2010 Universal 7. 15% Pfd. Stock Class B $115, 000 December 2005 Triple-S Initial Public Offering $203, 000 December 2007 Popular Inc. Exchange Offer to Common Stock $934, 000 August 2009 Triple-S Senior Notes Offering $95, 000 January 2006 Popular Inc. 8. 25% Pfd. Stock Series B $400, 000 May 2008 Doral Financial. Exchange Offer to Common Stock $52, 200, 000 October 2009 Dorado Beach DBR Dorado Owner (Dorado Beach) Senior Notes $166, 132, 814 July 2010 Source: UBS Financial Services Inc. of Puerto Rico and transaction Prospectus. AEELA Private Sale of Portfolio $69, 424, 737 December 2010 37

SECTION 5 Local Financing Alternatives

Financing Alternatives - US and Local Capital Markets Puerto Rico has access to various capital markets that provide lower costs of financing · The use of proceeds for public purpose will determine the market available to issue debt – US tax-exempt market provides the lowest costs for financing – If the financing doe not qualify for the US tax-exempt market, the local tax-exempt market provides lower costs than the US Taxable market · Credit of the Issuer is very Important in the local market – Investment Grade: BBB- / Baa 3 or better US Taxable Market FIN Puerto Rico Tax. Exempt Market AN CI N G CO ST S US Tax-Exempt Market Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice. 39

Financing Alternatives - Local Financing Alternatives The local market provides attractive financing alternatives for infrastructure projects · Local commercial banking market – Large historic banking market on-island but limited history of large scale project lending – International lenders with a major on-island presence include: Ø BBVA Ø Santander Ø Scotia Bank – Many of the on-island lenders are still recovering from the credit crisis and are currently not lending but capacity may return – Some infrastructure lenders do not consider Puerto Rico to be the US market and will not lend to the local market · Issuance through Government Entities – Interest is tax-exempt – Special / Limited Purpose Obligations issued by: Ø Ø AFICA – Industrial Developments FHA Section 242 Program (HUD Guarantee) Special Facility Revenue Bonds Local Public Corporations • PR Highways and Transportation Authority • PR Aqueduct and Sewer Authority • PR Electric Power Authority Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice. 40

SECTION 5 Local Financing Alternatives AFICA Financing

Financing Alternatives - AFICA Overview · The Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority (AFICA), was established in 1977 as a public corporation affiliated to the Government Development Bank for Puerto Rico to provide access to tax-exempt financing for economic development projects. · Qualified private projects, in a wide range of industrial, tourism, commercial, medical, and educational related areas, have access to borrow low-cost funds at tax-exempt fixed rates for up to 30 years · Interest paid on AFICA Bonds (“AFICA Bonds” or the “Bonds”) is exempt from Federal and Puerto Rico income taxes for bona fide residents of Puerto Rico and local corporations · The Puerto Rico tax-exempt market, accessed through the issuance of AFICA Bonds, is one of the lowest cost dollar sources of capital in the world · The primary investors for AFICA Bonds issued in Puerto Rico include individuals, local mutual funds, local corporations, and financial institutions · The AFICA market generally requires an investment grade rating on the Bonds Source: The Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority (AFICA) and UBS Financial Services Inc. of Puerto Rico. Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice. 42

Financing Alternatives - AFICA Benefits and Considerations of AFICA Financings Advantages • Tax-exempt 30 -year fixed rate debt provides maximum interest rate protection • Maximum annual debt service is usually lower than commercial loans • Provides for a 30 -year amortization schedule • Financing funded at issuance for all the projects Disadvantages • Higher interest cost than current floating rate based loans • Timing: potentially longer process • Disclosure requirements • Annual rating agency maintenance fees Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice. 43

Historical AFICA Transactions with UBS Participation AFICA allows financing to a broad spectrum of industries and sectors including Universities, Shopping Centers, Hotels, Industrials, Office Buildings, Hospitals… Caparra Hills, Inc. $59, 649, 744. 50 - AFICA Industrial Revenue Refunding Bonds, 2011 Series A (Galeria Tower at San Patricio Project)` Lead. Manager Caparra Hills, Inc. $52, 230, 680 - AFICA Industrial Revenue Bonds, 2002 Series A (Galeria Tower at San Patricio Project) Lead. Manager $130, 000, 694 - AFICA Industrial Revenue Bonds, 2001 Series A and B (El Nuevo Dia Project) Lead Manager (University of the Sacred Heart Project) Lead Manager $38, 335, 000 - AFICA Tourism Revenue Bonds, 2000 Series A (Costa Sur Golf & CC and Ponce Hilton Project) Co-Manager $19, 000 - AFICA Tourism Revenue Refunding Bonds, 1998 Series A (The Hampton Inn & Suites Project) Co-Manager $86, 290, 000 - AFICA Tourism Revenue Bonds, 2000 Series A (Paradisus Coco Beach Resort Project) Joint Lead Manager $38, 400, 000 - AFICA Tourism Revenue Bonds, 2000 Series A and Series B (Embassy Suites Hotel & Casino San Juan Project) Co-Manager $37, 615, 000 - AFICA Industrial Revenue Bonds, 2002 Series A (Humacao Judicial Center Project) Joint Lead Manager $26, 225, 000 - AFICA Industrial Revenue Bonds, 1998 Series A (Edificio Corp. del Fondo del Seguro Carolina Project) Joint Lead Manager $25, 130, 000 - AFICA Higher Education Revenue Bonds, Series 2001 $75, 330, 000 - AFICA Tourism Revenue Bonds, 1999 Series A (Cayo Largo Inter -Continental Beach Resort Project) Co-Senior Manager $30, 000 - AFICA Tourism Revenue Bonds, 2000 Series A (Palmas del Mar Country Club Project) Lead Manager Ashford Presbyterian Hospital $146, 584, 370 - AFICA Tourism Revenue Refunding Bonds, 1998 Series A (The Westin Rio Mar Beach Resort Project) Joint Lead Manager $27, 130, 000 - AFICA Tourism Revenue Refunding Bonds, 1998 Series A (Martineau Bay Resort Project) Co-Manager $26, 225, 000 - AFICA Industrial Revenue Bonds, 1997 Series A (Ashford Presbyterian Hospital Parking Project) Lead Manager 44

Case Study – AFICA Financing Sample Example of a $300 million AFICA Bond Financing Sources & Uses AFICA Structure Bond Components Bond Summary Statistics 45 Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.

Case Study - Dorado Beach Resort $342 million Note Purchase and Credit Agreement Asset Overview · · Financing Structure The issuer DBR Dorado Member, LLC is a company formed in Puerto Rico effectively controlled by D. E. Shaw and Caribbean Property Group – Organized for the sole purpose of acquiring, developing, constructing and operating the property Dorado Beach is expected to be a 347 acre ocean-front resort in Dorado, Puerto Rico – Hotel Component: 110 -rooms, a 18, 000 sq ft reception building with a restaurant and spa facilities – Club Component: full restoration of the Dorado Beach Golf Club (36 -holes in the aggregate) – Condo-Hotel Component: 13 “Ritz-Carlton Reserve”-branded units Transaction Overview · · TDF Guarantee Senior Credit Facility Senior Notes $166 mm Equity Contributions $110 mm $65 mm DBR Dorado Member, LLC Construction / Operation D. E. Shaw 75% CPG 25% Dorado Beach Resort Sources and Uses of Funds $342 million Project delivered on July 14, 2010 $231, 132, 813 Note Purchase and Credit Agreement, guaranteed by the Tourism Development Fund (TDF) structured as follows: – $166, 132, 813 Senior Notes acquired by UBS Funds (forward commitment purchase of investment grade notes) – Rate: 3 -Month LIBOR plus 4. 50%, (min. 6. 25% per annum) – $65, 000 Senior Credit Facility acquired by First. Bank and Government Development Bank for Puerto Rico (GDB) $110, 571, 256 in Equity contributions structured as follows: – $69, 839, 250 in land cash contributions – $15, 000 in capital contributed by Hotel Development Corp. – $25, 642, 006 in local tax credits UBS Financial Services Incorporated of Puerto Rico acted as sole placement agent of the $166 million Notes 46 Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.

SECTION 5 Local Financing Alternatives FHA Section 242 Program (HUD Guarantee)

FHA Section 242 Program (HUD Guarantee) Overview · The Federal Housing Administration ("FHA") was created in 1934 in response to the effects of the Great Depression – – – The housing market was flat on its back 2 million construction workers were unemployed Home mortgages were limited to 50% of the market value Amortization was three to five years with a balloon payment Only 40% of US families owned their own homes · FHA contributed significantly to the US recovery and gave the financial markets some key features we have become accustomed to – – 25 to 30 year loan amortization Level annuity debt service payments without balloon Very little, or no down payment Flexibility in calculating household income and payment ratios · World’s largest mortgage insurer with 33 million properties insured · FHA was merged into the newly created Department of Housing and Urban Development ("HUD") in 1965 · FHA is administered by the Assistant Secretary for Housing: The FHA Commissioner · The FHA insurance multi-family programs are self sufficient, paying for their operation from mortgage insurance receipts and maintaining their own default reserves 48

FHA Section 242 Program (HUD Guarantee) Overview · The FHA hospital mortgage insurance program began in 1968 · The program has insured over 325 hospital mortgages for a total value of over $9. 8 billion · Mortgagors range from small, stand-alone Critical Access Providers, to major teaching institutions such as Columbia Presbyterian and New York Cornell Medical Center in New York City, to governmental institutions such as the Medical University of South Carolina, and University of New Mexico · Uses for FHA insured mortgages: – – – Construction financing, to include Expansion Modernization Replacement Equipment · Refinancing (tax-exempt or taxable) of existing debt – Current refunding of taxable and tax-exempt loans – Advance refunding of prior bonds – Tender or Exchange of prior debt instruments 49

FHA Section 242 Program (HUD Guarantee) HUD Guarantee Program · HUD has operated since the mid-1970’s as a mortgage insurance program for acute care hospital, both public and private · The HUD insurance program is non-recourse to the sponsor · HUD can insure up to 90% of the replacement cost of the project Bond Issuing Authority Mortgage/ Leasehold Hospital Project Bond Investor 50

FHA Section 242 Program (HUD Guarantee) Historical Local FHA (242) Hospital Transactions Hospital Santo Asilo de Damas Hato Rey Communnity Hospital Hermanos Melendez Hospital San Pablo Hospital Auxilio Mutuo Hospital Dr. Pila Turabo Medical Center Mennonite General Hospital Total Date City Mortgage Amount 8/14/1973 1/31/1974 6/27/1979 1/19/1982 5/27/1983 2/14/1985 4/12/1985 12/21/2009 Ponce, PR San Juan, PR Bayamon, PR San Juan, PR Ponce, PR Caguas, PR Cayey, PR $ 6, 000 12, 459, 100 12, 708, 100 16, 879, 055 3, 175, 000 16, 816, 570 41, 100, 000 130, 000 $ 239, 137, 825 Source: Federal Housing Administration website – 9/14/09: http: //portal. hud. gov/portal/page/portal/FHA_Home/lenders_health_care_facilities/about_clients. 51