MARKET UPDATE - 2nd QUARTER
                                                    Months of January - June 2009

                                                                                                                  Increase
                                            2009                           2008                         <Decrease>
SALES VOLUME:


Entire Island
Condominium                  $26,000,000               $  81,000,000                <   67%   >
Residential                       $96,000,000               $133,000,000                <   27%   >
Vacant Land                    $13,000,000               $  60,000,000                <   77%   >

Region
Poipu/Koloa
Condominium                  $  4,000,000               $13,000,000                  <   66%   >
Residential                       $20,000,000               $35,000,000                  <   40%   >
Vacant Land                    $  5,000,000               $26,000,000                  <   79%   >

MEDIAN
SALES PRICE:

Poipu/Koloa
Condominium                   $415,000                    $515,000                      <   19%   >
Residential                        $520,000                    $925,000                      <   43%   >
Vacant Land                     $265,000                    $786,000                      <   66%   >

NUMBER 
OF SALES:

Poipu/Koloa
Condominium                        9                                  25                            <   64%   >
Residential                           29                                 29                                   -0-
Vacant Land                        13                                 28                             <   53%   >



              Island wide sales volume and number of transactions in the first six months of 2009 are off more than 50% when compared with the same six month period in 2008. This downward trend comes on top of the nearly 50% decline which occurred in sales and transactions from 2007 to 2008. Clearly, the lingering effects of the recent recession continue to affect our market.

              Kauai’s market typically mirrors the U.S. West Coast market because it is home of most of our Buyers. The dramatic run-up in prices which started in 2002 peaked on Kauai in 2006. The median sales price of a residence on Kauai was $680,000 in 2006, which compares to $479,000 in June 2009 – a 29% decline. 

              Prices on Kauai have generally held up better than most resort markets because the majority of sales on Kauai are re-sales of existing properties which because of the large distribution of ownership are not as volatile as areas which have large concentrations of new development inventory. Kauai’s steady increase in days on the market and reduced transaction volume indicates continued downward pressure on prices. We continue to have a positive outlook on Kauai’s real estate market and believe this is a great time to purchase property on our island paradise.