Kerzner and Istithmar agree to expand Atlantis, The Palm, Dubai to 2,000 rooms

This agreement is expected to allow the joint venture project between Kerzner and Istithmar to capitalize on the strong demand to the destination and the Government's focus on creating tourist attractions in Dubai.

The revised development plan is expected to utilize most of the 120-acre site that lies on The Palm, Jumeirah. The marine and entertainment attractions will be increased and a second 800-room hotel tower will be added, bringing the total number of rooms to 2,000. The development costs are expected to increase from the previously announced $650 million to $1.1 billion.

Sultan Ahmed Bin Sulayem, Chairman of Istithmar commented, "Dubai's tourism industry has shown excellent growth over recent years and with the advent of such iconic projects as The Palm Jumeirah, there is every reason for this growth to continue. The increase of our investment in Atlantis, The Palm reflects our overwhelming confidence in the success this unique project will bring and is truly the realization of the full potential of Atlantis, The Palm. This development is clear example of Istithmar's overall commitment to pursuing the opportunities within high growth sectors, such as real-estate and hospitality, and we will continue to augment our portfolio with investments made in these areas."

Butch Kerzner, Chief Executive Officer of Kerzner commented, "Dubai is a thriving tourist destination and it is because of the strength of tourism in Dubai that we are accelerating the scope of development of Atlantis, The Palm. The Government of Dubai has shown great commitment to the development of the tourism sector while at the same time focusing on major infrastructure initiatives, including the expansion of Dubai International Airport and growing its airline, Emirates Airlines. The infrastructure on the Palm is also being improved with the addition of a monorail that will have its final stop at the entrance to Atlantis. We are really excited with some of the concepts that we have designed for our second Atlantis product, which will continue to build on what we have learned and developed at Atlantis, Paradise Island."

Atlantis, The Palm is a proposed destination resort development to be located on The Palm, Jumeirah, a multi-billion dollar, leisure and residential man-made island in Dubai that is currently undergoing infrastructure development in anticipation of future projects. Once completed, Atlantis, The Palm will become Kerzner's second-branded Atlantis resort and will be positioned to serve as the anchor for The Palm, Jumeirah as well as a leading attraction in Dubai. The increased project scope of Atlantis, The Palm will include the following:

• The planned number of rooms will be increased from 1,000 rooms to 2,000 rooms, developed in two towers: The Royal Towers will consist of 1,200 rooms that will target luxury travelers and a second tower of 800 rooms aimed towards the middle market.

• The resort will have some unusual and distinctive archeological marine exhibits. The design will be based on the myth of Atlantis and will maintain the iconic design elements of the Royal Towers in Atlantis, Paradise Island, incorporating traditional Arabic design themes.

• An extensive water-theme park, which at approximately 40 acres will be the largest in the region, will feature unique water attractions, one of the world's largest marine habitats, a snorkel trail, a swim with the dolphins encounter program, an array of water slides and The Dig, an Atlantis-themed "archeological" experience. The water-theme park will have capacity for over 6,000 daily visitors.

• The expansion will also include significant facilities directed towards Dubai's strong business travel and budding convention market, including a two-story conference center wing with a total of over 86,000 square feet of function space and a main ballroom of approximately 21,000 square feet, the largest such room in Dubai outside of the Dubai Convention Center.

• The expansion includes an Entertainment Village that will feature 20,000 square feet of retail space within an 80,000 square feet area hosting restaurants and food and beverage establishments.

• Hotel and water park visitors will be transported through a monorail system, to be developed by Nakheel, which is expected to begin at the "trunk" of The Palm, Jumeirah and will end at Atlantis, The Palm.

Development planning is underway in anticipation of the start of construction, which is projected to commence in 2005 and is expected to be completed by late 2007. Financing is expected to include an equity component of $400 million to be funded by Istithmar and Kerzner. The remaining financing requirement is expected to be secured through a limited recourse financing via commercial banks prior to the start of construction.

This transaction is subject to various closing conditions, including obtaining all requisite governmental consents and binding commitments for the necessary financing.