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2015 MPAC T REPORT

INVESTMENT


OUR PURPOSE IS TO CREATE ENDURING INVESTMENTS AND REMARKABLE PLACES THAT ENRICH PEOPLE'S LIVES.


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TRANSFORMATIONAL INVESTMENT


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A MESSAGE TO OUR STAKEHOLDERS


WE ARE GRATEFUL TO THE EXTRAORDINARY PEOPLE WHO INVEST THEIR TIME, TALENTS AND TREASURE WITH US. THIS MPACT REPORT CELEBRATES THEIR ACCOMPLISHMENTS, AND WE THANK THEM. AS WE LOOK BACK ON 2015 AND AHEAD TO 2016, WE SEE TRANSFORMATIONAL OPPORTUNITIES UNFOLDING. WE ARE ENTERING NEW MARKETS, DIVERSIFYING, INVESTING IN OUR LEADERSHIP DEVELOPMENT, AND THOUGHTFULLY ADDING NEW TEAM MEMBERS. As we continue to cultivate and apply Midway’s disciplined, strategic investment approach, we remember our responsibility to challenge ourselves and continue to innovate. We can never be satisfied to rest on yesterday’s success, because we are called to serve a higher purpose. Some might think that weighing every decision against values such as integrity and generosity is fine for idealists and do-gooders, but not investors and developers. We have found no disconnect between doing what is right and making smart, strategic business decisions. In fact, we believe they are intrinsically one and the same. Far from making us less competitive, staying true to our purpose and values has helped Midway steer a course that avoids the pitfalls of commoditization, volatility and obsolescence in order to create transformational real estate investments. When we encounter headwinds, we recall the words of Henry Ford who said, “remember, the airplane takes off against the wind, not with it.” We are excited to continue this journey with you.


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TRANSFORMED FROM QUIET BACKWATER TO

FORCE OF NATURE


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AT THE INTERSECTION OF HOUSTON’S MOST TRAVELED LIGHT RAIL LINE AND THE CITY’S NEWLY REDESIGNED SIGNATURE RETAIL CORRIDOR, GREENSTREET DELIVERS A PREMIER MIX OF NATIONALLY-RECOGNIZED RESTAURANTS, RETAILERS AND ENTERTAINMENT VENUES. A CONTEMPORARY, ENERGIZING OFFICE ENVIRONMENT IN GREENSTREET POSITIONS COMPANIES ON THE DOORSTEP OF THREE PROFESSIONAL SPORTING ARENAS, DISCOVERY GREEN PARK AND ALL THE AMENITIES THAT DOWNTOWN HAS TO OFFER.


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CITYCENTRE THREE + FOUR REACHED FULL OCCUPANCY QUICKLY. DISCERNING OFFICE TENANTS EAGERLY LEASED UP 240,000 SQUARE FEET OF CLASS-A, SILVER LEED SPACE ABOVE GROUND-FLOOR FINE DINING AND ADJACENT TO HOTEL SORELLA, THE HOUSTON HOTEL PROPERTY RATED HIGHEST BY CONDÉ NAST. THE NEWEST ADDITION TO CITYCENTRE’S COVETED OFFICE COLLECTION NEARED COMPLETION AT THE END OF 2015, WITH CITYCENTRE FIVE RISING AT THE DISTRICT’S NORTHERN GATEWAY.


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TRANSFORMED FROM LOW DENSIT Y TO

NO VACANCY


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TRANSFORMED FROM OUT-OF-DATE TO

PRIME REAL ESTATE


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FROM 1929 TO 1963, THIS ART DECO TREASURE WAS HOUSTON’S TALLEST BUILDING. READYING NOW FOR ITS 2016 REINTRODUCTION, 712 MAIN AND 708 MAIN WILL MEET SURGING DEMAND FOR DOWNTOWN REDEVELOPMENT. HERE AND ACROSS THE COUNTRY, A NEW GENERATION OF COMPANY FOUNDERS HAS REDISCOVERED THE CONTEMPORARY APPEAL OF HISTORIC PROPERTIES.


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CITYCENTRE'S STRONG BRAND AND PROVEN PERFORMANCE CREATE POWERFUL RIPPLE EFFECTS. WHEN NEARBY DEVELOPMENTS OUTSIDE THE PROJECT MARKET THEIR PROPERTIES AS “AT CITYCENTRE” AND SURROUNDING NEIGHBORHOODS’ HOME LISTINGS EXTOLL THEIR PROXIMITY, THE REGIONAL DESTINATION HAS CONFIRMED ITS HALO EFFECT.


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TRANSFORMED FROM FORGOTTEN CORNER TO

CORE DESTINATION


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TRANSFORMED FROM CONCRETE JUNGLE TO

GARDEN PARTY


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AN UNDERAPPRECIATED URBAN PARK IN THE SWEET SPOT BETWEEN WEST UNIVERSITY AND RIVER OAKS. LESS THAN THREE MILES TO THE TEXAS MEDICAL CENTER AND LESS THAN FIVE TO DOWNTOWN, KIRBY GROVE WAS A TREASURE HIDDEN IN PLAIN SIGHT, WAITING FOR THE RIGHT PUBLIC + PRIVATE PARTNERSHIP TO TRANSFORM IT INTO THE NEXT GREAT URBAN DESTINATION.


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KEY INVESTMENT STAKEHOLDERS [TEAM] [COMMUNITY] [CAPITAL] [PROFESSIONAL PARTNERS] [CUSTOMERS]


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Creating transformational mixed-

Admittedly, our team interviewing

use environments requires

and MBark onboarding process are

transformational teams. This happens

time-intensive, but investing time

when all of the team members are

up front pays added benefits of

not only working toward a shared

instilling Midway’s unique company

purpose, but they also are investing

culture, purpose and values from the

their time and energy to produce a

beginning.

The James A. Moran Legacy Award is an annual honor given by Midway to an individual or organization that exemplifies a lifelong commitment to our core values.

RECIPIENTS

greater good. We are convinced that doing the right thing for each of our

When you build the right internal team,

stakeholders is the only way to ensure

they work seamlessly to improve

the best outcome for all of them.

the community, create relationships of accountability based on solid

This year, Midway invested in

performance, source expertise

building our bench strength. We

from the best professional partners,

welcomed new capital partners and

and ultimately, deliver remarkable

broke ground in College Station,

experiences that enrich people’s lives.

a community that feels like home to most of us, yet is a new market

We forged significant new

expansion for Midway. We enlarged

relationships in 2015 that will bear fruit

our team of experienced professionals

for decades to come. But we never

and advanced the next Class of 2015

forgot our beginnings and continued

MidwayU graduates who successfully

to honor those who set the foundation

completed a comprehensive training

for everything that we have become.

course taught by senior leaders.

MORAN LEGACY AWARD

Amegy Bank

Bob Brindley

Realty Advisors

L&B

Valencia Group

Jones Lang LaSalle Capital Markets UHY Advisors

Upper Kirby

Redevelopment Authority Investment Management

LaSalle BoyarMiller

2015 ADVISORY BOARD Adam Finn

D. Fort Flowers, Jr.

James Furr

David Gleeson

Richard Haney Barksdale Hortenstine Christopher M. Job Ron Nixon

Brooks McGee

Dan Pickering


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OUR INVESTMENT STRATEGY AND APPROACH

ACTIONS FOLLOW BELIEFS.

The pace of change continues to accelerate. Consumers access a world of

Our values, and the remarkable

choices and satisfy their whims on demand, instantly. The mobility of capital

people who share our

sends some on a race to the bottom, others in a flight to quality. Riding in the

values, are the foundation

calm eye of the storm of market volatility is a very specific type of asset, which

upon which Midway is built.

meets the criteria to be transformational.

Integrity. Passion. Adaptability. Quality. Initiative. Teamwork.

Midway creates enduring investments through a clear investment process,

Generosity.

focused investment strategies and an integrated investment team. We specifically seek to invest in and develop assets that are uniquely positioned to maximize demographic productivity, scarcity, differentiation and connectivity. Our Strategy. Midway invests in three types of assets—develop-to-core, value-add, and covered land. We take a disciplined approach to evaluate each opportunity. Our Approach. Before undertaking a new endeavor, Midway applies this assessment to determine whether an opportunity meets the criteria to be transformational.

STRATEGIC OPPORTUNITY

+

GENERATIONAL REAL ESTATE

+

REMARKABLE PLACE

+

INVESTMENT DISCIPLINE


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Q. WHAT TRANSFORMS AN

Q. WHAT MAKES THE

Q. WHAT CATAPULTS A

UNREMARKABLE SPACE

DIFFERENCE BETWEEN

BUSINESS FORWARD IN

INTO AN UNFORGETTABLE

BEING TRANSACTIONAL AND

GOOD TIMES AND SUSTAINS

PLACE?

TRANSFORMATIONAL?

IT THROUGH TOUGH TIMES?

A. The way it makes people feel.

A. Steadfast focus on the impact our

A. Serving a purpose that engages,

In a sea of competition, emotional

decisions make on people's lives

inspires and energizes every

attachment to a place creates loyal

avoids the pitfalls of delivering yet

stakeholder: team, partners, capital,

customers who are with you for the

another commodity or suffering the

community and customers.

long haul.

whiplash of volatility.


8.68

acres

NEW TENANTS SIGNED ACROSS PROJECTS

OF COMMUNIT Y SPACE DEVELOPED AND UNDERWAY

RETAIL

OFFICE

10

6

(106,000 SF)

(65,904 SF)

MIDWAY BY THE

NUMBERS OUTPERFORMANCE OF THE MARKET BY HOTEL SORELLA

GROW TH OF NEW EMPLOYEES

versus their comp set

1,400,000 sf of office space within mixed use environments

21%

35%

42%

CAPITAL GROW TH FROM 2014 TO 2015

MIXED USE PREMIUMS

OFFICE

UP TO 10%

RETAIL

UP TO 20%


8 MODES OF TRANSPORTATION TO AND FROM OUR VARIOUS PROJECTS

3

New Midway offices in 2015

CAR

LIGHT RAIL

BUS

BIKE

BOAT

WALKING

PEDICAB

RIDESHARE

1,335 Multi-family units managed and underway

491

Events managed across all projects

3.18 YEARS

AVERAGE NUMBER OF PROJECT USES

worth of total volunteer time given to employees to give back to their communities

(THAT’S 12 DAYS PER EMPLOYEE)

28,000 PEOPLE/DAY COMING TO OUR PROJECTS ON AVERAGE


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“GREENSTREET IS WELL-POSITIONED TO CAPITALIZE ON THE EVOLUTION OF DOWNTOWN HOUSTON WITH THE SUBSTANTIAL NEW RESIDENTIAL AND HOTEL DEVELOPMENT.” JANE PAGE, CEO, LIONSTONE INVESTMENTS IN REALTY NEWS REPORT, OCT. 4, 2015


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G R E E N S TRE E T + H OTE L A LE S SA N DRA With Hotel Alessandra, Valencia Group and Midway take hospitality to a higher level in Downtown's shopping and entertainment district. Construction in 2015 revealed a tantalizing view of the 20-story, 223-room luxury hotel rising above the entertainment, retail, dining and creative office environment of GreenStreet.


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K I R B Y G ROVE Midway's thoughtful integration of Class-A office space, multifamily community, retail and restaurant components have transformed an 11-acre, mixed-use environment in the Upper Kirby District. In 2015, office tenants began moving into One Grove Street, and the Avenue Grove multifamily community neared completion. In the coming year, acclaimed chefdriven restaurant concepts, residents living in the community, and the park’s activation will heighten the project’s momentum.


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“IN ADDITION TO THE REPUTATION OF MIDWAY, BOYARMILLER CHOSE TO OFFICE AT ONE GROVE STREET BECAUSE THE LOCATION WAS CONVENIENT TO THE HOUSTON BUSINESS COMMUNITY AND WE VALUE OUR CLIENTS’ TIME. THE KIRBY GROVE COMPLEX ALSO INSPIRES CREATIVITY, SO WE CAN WORK HARD TO ACHIEVE PRACTICAL BUSINESS SOLUTIONS FOR OUR CLIENTS.” CHRIS HANSLIK, CHAIRMAN, BOYARMILLER


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"TEXAS HAS A LONG TRADITION OF CRAFTSMANSHIP AND ARTISTRY, AND HOUSTON IS HOME TO A BURGEONING CREATIVE SCENE. AT HOUSTON'S CITYCENTRE WE HAVE THE OPPORTUNITY TO CONNECT TEXAS ARTISANS TO OUR COMMUNITY OF 500 LOCAL DESIGNERS, ARTISTS AND MAKERS.” JIM BRETT, PRESIDENT, WEST ELM “MIDWAY HAS BEEN A TRUE PARTNER IN HELPING UNIVERSITY LANDS ESTABLISH OUR NEW BASE OF OPERATIONS. WE BELIEVE THIS ATMOSPHERE WILL FOSTER CREATIVITY, INNOVATION AND COLLABORATION.” MARK HOUSER, CEO, UNIVERSITY LANDS, THE UNIVERSITY OF TEXAS SYSTEM


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C I T YC E N TRE Opened in 2009 on the site of an obsolete indoor mall, the 2 million square-foot, mixeduse CITYCENTRE capped off 2015 with six new retail leases, including top national brands west elm, H&M and Madewell. With more than 98 percent of the existing office space occupied, CITYCENTRE’s fifth office building neared completion. The Urban Land Institute, a global educational research institute dedicated to providing leadership in the responsible use of land, published a case study on CITYCENTRE, an example of best practices in mixed-use development.


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CENTURY SQUARE The first phase of the 60-acre mixed-use regional destination is rising in Bryan-College Station, Texas. Century Square debuted two new, full-service hospitality concepts, The George and Cavalry Court, and announced a dynamic mix of regional eateries and lifestyle services. In Q1 2016, additional signature dining, shopping and desirable services traditionally not seen in the area will be announced. Upscale apartment homes at 100 Park and Class-A office space complement attractive outdoor amenities and connection to Texas A&M University walking and bike paths. Enticing gathering places warmly welcome residents, office tenants, shoppers and guests.


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“WE BELIEVE THIS PROJECT WILL IGNITE A FLURRY OF ECONOMIC ACTIVITY AND NUMEROUS EMPLOYMENT OPPORTUNITIES BENEFITING THE COMMUNITY AS A WHOLE. WE APPLAUD MIDWAY FOR BRINGING A PROJECT OF THIS MAGNITUDE FOR OUR CITIZENS TO ENJOY.” NANCY BERRY, MAYOR, COLLEGE STATION


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M E MORI A L G RE E N Memorial Green is transforming an underutilized property on Memorial Drive into a place of tranquil urbanity. In 2015, infrastructure construction commenced in preparation for a trio of respected homebuilders to create upscale residences encircling the central park. Brisk retail and office leasing activity have confirmed the strong appeal of the location and its thoughtful design. Memorial Green marries luxury living with boutique office, shops, eateries and services within a custombuilt community.


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£ PORTFOLIO [owned, managed and underway] 55 + 100 WAUGH 708 + 712 MAIN Braeburn Village Century Square 100 Park Cavalry Court The George CITYCENTRE CITYCENTRE ONE CITYCENTRE TWO CITYCENTRE THREE CITYCENTRE FOUR CITYCENTRE FIVE CITYCENTRE TOWERS Four Points by Sheraton Hotel Sorella GreenStreet Hotel Alessandra Kings Harbor Kirby Grove Avenue Grove One Grove Street Memorial Green

WHERE ARE WE GOING NEX T Four new developments ushered in 2016, each of them creating potential for transformational investment. In September, we announced pre-leasing of One Parkside, an office project at I-10 and the 610 loop, one of Houston’s busiest interchanges with daily exposure to nearly half a million cars. The 13-story tower with 225,000 square feet of Class-A office space, 10 floors of integrated garage parking and 2,000 square feet of ground-floor retail perfect for a café is the first phase of development. We finalized master planning the first phase of an integrated live, work and play environment in one of the region’s most desirable in-fill locations. Close to Downtown, Memorial Park and Neartown, this unique property affords the rare opportunity to reinvent a community by delivering a healthy lifestyle built around local fresh food, outdoor activity and signature green space. Surrounded by what the Houston Chronicle once named “the most blighted block in Downtown Houston,” landmark properties at 712 and 708 Main were jewels in a tarnished setting. Now at the epicenter of an epic turnaround, they marry historic renovations with adaptive new uses. In 2016 the property debuts anew, to combine timeless appeal with contemporary sensibility and unparalleled access to two rail lines and downtown amenities.

Memorial Heights Villa del Prado

We closed 2015 by forging a new joint venture which brings lasting and farranging ripple effects, including stewardship of an extraordinary mixed-use environment on Houston’s historic riverfront. The market-defining project requires us to carefully and thoughtfully curate an exceptional mix of uses, enlivening the property while it evolves over time.


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Since its founding in 1968, Midway has grown and evolved into a fullservice real estate development and investment firm, with wideranging expertise in design, finance, execution, marketing and asset management. Our team is responsible for more than 45 million square feet of projects completed or underway, and we have successfully financed more than $3 billion of commercial and residential real estate development projects. Much has changed over the years, but timeless values do not. With the mindset of a long-term owner, we have a deep appreciation for the importance of stewardship. What has been entrusted to us is only ours to nurture, cultivate and pass on to future generations better than we found it.

MIDWAY FOUNDATION In 2015, Midway Foundation surpassed $2.6 million in total giving to organizations that support health, education and the underprivileged. Midway also encourages personal involvement in volunteer activities by giving employees one workday per month to volunteer. As our team grew to almost 100 people by the end of 2015, we looked forward to providing a cumulative total exceeding three years of volunteer support to worthwhile non-profit organizations. In 2010, Midway Advanced Products developed b4 ® hand sanitizer to change lives through charitable giving. b4 ® is committed to giving 50 percent of the profits to children-focused causes through the sale of its unique line of wellness products.

"Philanthropy is not just what we do, it's who we are. Midway’s purpose of enriching people’s lives isn’t just a company slogan, it’s who they are. By supporting Brighter Bites, Midway helps us reach children and families underserved minority communities where we build healthy habits that become healthy lifestyles.” Lisa Helfman, Director, Real Estate, H-E-B Grocery Company, and Founder, Brighter Bites


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ï

MANY THANKS A SPECIAL THANK YOU TO OUR PARTNERS AND CLIENTS, AND MOST IMPORTANTLY, TO OUR TEAM MEMBERS, FOR THEIR DEDICATION AND LEADERSHIP IN CREATING REMARKABLE PLACES THAT ENRICH PEOPLE’S LIVES.


P_33 PARTNERS & CLIENTS (PARTIAL LIST)

Alaska Permanent Fund Corporation

Amay Inamdar - AAI Affordable Housing

Brownstone Group

Canyon Capital

Advisors Cathexis Holdings City of Houston Cornerbrook Development Dallas Police & Fire Pension System-

Harrison Street Real Estate Capital LLC

Hudson

Housing Capital JPMorgan Chase L&B Realty Advisors Landover Development LaSalle Investment Management Lionstone Investments Medvest Incorporated (Methodist) Land

Municipal Employees’ Retirement System (of Michigan)

RGA Reinsurance Company

A&M University System

SG Interests

Stockbridge

TDHCA

Upper Kirby Redevelopment Authority

AIDS Foundation Houston, Inc.

Heart Association Ava's Wish

Avenue CDC

Inc.

Alzheimer's Association

Avondale House

Boys and Girls Club

Buffalo Bayou Partnership

Outreach

12th Man American

Association for the Advancement of Mexican Americans

Scouts of America Bites

Texas

Valencia Group

2015 MIDWAY FOUNDATION RECIPIENTS (PARTIAL LIST) Donations

Raimon

Brazos Christian School

Casa de Esperanza

Child Advocates, Inc.

Boy

Brighter

Camp Ozark Foundation, Inc.

Canstruction Houston, Inc.

Challenging Autism

Big Brothers Big Sisters

Campus

Central Houston,

Children at Heart Foundation

College Hills PTO Covenant House Texas FAMM Freedom Place George Bush Foundation

Goodwill Industries of Houston

Halo House Foundation Foundation

His Grace Foundation

Houston Food Bank

Women Donation

Greater Houston Partnership, Inc. Houston Community College

Houston Hospice

Jessieville Fellowship Club

Jimmy Pappas Sporting Clay Shoot

Houston Zoo, Inc.

JH Ranch

Interfaith Ministries

Lavaca Assistance Ministry Body

Water International

Memorial Hermann Foundation

New Hope Housing

Palmer Home for Children

Inspire Living

Nepal Earthquake Relief

PanCan Donation

Rice School

of Architecture Rice University Robert Garner Firefighters Foundation SEARCH Sight into Sound Texas House

Soles for Hope

Souper Bowl of Caring

Spring Branch Education Foundation St. Jude Children's Hospital, Inc.

Foundation

& Lymphoma Society

SpringSpirit Baseball

Star of Hope Mission

Susan G. Komen for the Cure

The Center for Opportunity Urbanism

Special Olympics Stoney Creek

Texas A&M Foundation

The Harbor Light Choir

The Methodist Hospital Foundation

Cancer Society

West Houston Association

Public Schools

Young Texans Against Cancer

St. James The Center

The Leukemia

Victroy/American

Yellowstone Academy

YES Prep


‘15

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