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| 2016 |


A MESSAGE TO

our stakeholders


THE THEME OF THIS 10TH ANNIVERSARY

PACT REPORT, “ENDURING

INVESTMENTS,” ALSO RECOGNIZES THE IMPORTANCE OF EMBRACING CHANGE. THE PAST DECADE HAS BEEN A TIME OF TRANSFORMATION, AND WE APPRECIATE YOU TAKING THIS JOURNEY WITH US. THANKS TO YOUR ENCOURAGEMENT AND SUPPORT, MIDWAY HAS FLOURISHED. Reviewing the past year, the announcement of The Buffalo Heights District began a new legacy in the heart of Houston, with the first innovative urban H-E-B fully integrated into a luxury mixed-use office, residential and retail project. In College Station, Century Square is bringing an exciting urban, mixed-use district to life, and our third and fourth hotels with Valencia Group: Cavalry Court and The George will set new standards for Southern hospitality. In the Upper Kirby District, Kirby Grove is blossoming with Levy Park’s reintroduction, the Avenue Grove luxury lifestyle, and award-winning Class-A offices in One Grove Street. Memorial Green’s upscale urtban residential village is welcoming homeowners and leasing retail and office space briskly. Hotel Alessandra prepared for her debut as GreenStreet’s repositioning into a unique urban office and mixed-use environment revved up. The Jones on Main has a bright future, thanks to contemporary and cool updates. And, we launched East River, the revitalization and transformation of the former KBR campus on Houston’s historic waterfront. For playing your integral role in these and many more enduring investments, we thank you. Our investors, partners, communities, and teammates inspire and encourage us to keep challenging ourselves. We adapt and embrace change with transformational technologies and new ventures, expanding the breadth and depth of our team. At the same time, we recognize the only way to create enduring value is by remaining true to unchanging values. With God’s help and yours, Midway will continue to make a positive and lasting impact.

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O U R P U R P O S E is to

create enduring investments and remarkable places that enrich people’s lives.

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enduring INVESTMENTS

View of GreenStreet and Hotel Alessandra, in the center of downtown Houston

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enduring B E AU T Y

Buffalo Heights will offer a complete work + live + shop environment with outdoor recreation, healthy local food, and 1,500 acres of parkland on its doorstep. The region’s most desirable and accessible urban infill location plays up proximity to Buffalo Bayou Park, Memorial Park, The Heights, Downtown and Neartown. Phase one features the most innovative H-E-B to date, fully integrated with upscale multifamily residential, Class A office, retail and parking.

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Buffalo Heights

I N T H E H E A R T O F H O U S TO N

View of Buffalo Bayou Park near Buffalo Heights

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enduring

PA RT N E R S H I P Tradition says a marriage proposal under the branches of Texas A&M’s Century Tree means the marriage will endure forever. Midway partnered with the oldest public university in Texas to create Century Square, a place to welcome the next century of weddings and big game weekends, and a home for brilliant researchers and university staff, as well as their entrepreneurial ventures. Century Square gives College Station a remarkable place to shop, dine, work, gather and celebrate.

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Century Square

AMENITIZED, URBAN LIFESTYLE C O M E S TO T E X A S A & M U N I V E R S I T Y

View of Texas A&M Campus from a recently completed unit in Century Square

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Kirby Grove

T H E N E X T G R E AT U R B A N PA R K

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enduring

NAT U R A L ASS ETS Levy Park was an unpolished diamond in the rough, now replaced in a beautiful new setting within Kirby Grove. Class-A office, luxury multifamily residential, and curated restaurants integrate seamlessly with the green space that is set to become Houston’s most-beloved community park. Midway’s first-of-its-kind public + private partnership with the Upper Kirby Redevelopment Authority created a sustainable model of funding the park, an irreplaceable gem.

View of Levy Park from Avenue Grove

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enduring H I ST O RY

Reintroduced by Lionstone Investments and Midway in the Spring of 2016 as The Jones on Main, the JP Morgan Chase Bank Building at 712 Main + The Great Jones Building at 708 Main announced their historically hip alternative to the typical downtown office building. Upcoming upgrades include a bike valet, an elegant bespoke men’s tailor shop, and a food hall serving up some of the city’s best eats. These thoughtful renovations are reviving the property’s original Main Street retail presence with panache.

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The Jones on Main R E B O R N TO B E L E A D I N G E D G E

View of the ceiling in the JPMorgan Chase Building lobby at The Jones on Main

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East River

H O U S TO N ’ S N E X T G R E AT U P R I S I N G

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enduring VA LU E

The Greatest Generation forged Houston’s can-do spirit in iron and steel and ingenuity here. They rolled up their sleeves and built mighty deepwater drilling rigs and tanks to win the Great War. They helped the space program take flight. Even the Astrodome has roots here. Reimagined and repurposed for new generations, the East River redevelopment will transform the east side of the city into a remarkable place set among waterfront parks and trails. This breakthrough 147-acre mixed-use community greets the future with optimism and renewed energy.

View of downtown from East River

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Investment Strategy

Midway’s investment strategy focuses on Generational Real Estate. We seek places poised to benefit from exceptional man-made and natural amenities, proximity to vital infrastructure, desirable demographics, and scarcity, a rare combination. Then we invest time, talent and resources to differentiate and prevent commoditization. There is no shortcut and there is no cookie cutter. However, the reward is evident when remarkable places outperform the market in boom times and protect value in challenging times.

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MIDWAY INVESTS IN THREE AREAS:

DE V E LOP-TO-CORE

VA LUE-A D D

COVE R E D LA ND

CREATING CORE INVESTMENTS AT A WHOLESALE PRICE

REPOSITIONING UNDER PERFORMING ASSETS INTO CORE INVESTMENTS

HOLDING GENERATIONAL REAL ESTATE WITH CURRENT INCOME FOR FUTURE DEVELOP-TO-CORE INVESTMENTS

View of Main Street at GreenStreet

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View from 55 Waugh at Buffalo Heights

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THE OPPORTUNITIES THAT PURSUE US TODAY DEMAND SUPERIOR TEAMWORK, INITIATIVE AND ADAPTABILITY. THE REASON WE REFER TO MIDWAY AS AN investment AND REAL ESTATE DEVELOPMENT FIRM, PLACING INVESTMENT FIRST, IS THAT WE VIEW OUR BUSINESS THROUGH AN INVESTOR’S EYES. We have redesigned two key teams to reflect our emphasis. The Investment & Development Team creates stabilized investments, through development, acquisition and repositioning and the Investment & Capital Markets Team manages stabilized investments, through asset management, capitalization and investor relations. These teams are structured around a single point of contact, the Investment Manager. This streamlines communication, provides a clear path of accountability, and empowers team leaders to align internal and external teams to ensure successful execution of our real estate investments. As our chairman is known to say, “healthy things grow.” And Midway has grown. We wear many hats relative to each of our investments: Owner/General Partner, Limited Partner Investor, Real Estate Service Provider: Development, Leasing, Property Management and Marketing. Each role has its own unique requirements, legal and performance obligations. As we grow and our roles evolve, we continue to invest in our people, providing leading-edge technology and adding seasoned real estate leaders.

¿ Actions follow beliefs. Our values, and the remarkable people who share our values, are the foundation upon which Midway is built. Integrity. Passion. Adaptability. Quality. Initiative. Teamwork. Generosity.

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PRESERVING + MOVING LEGAC Y TREES

NEW TENANTS SIGNED ACROSS PROJECTS

$1M OF VALUE KIRBY GROVE & CENTURY SQUARE

RETAIL

OFFICE

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MIDWAY BY THE

NUMBERS 18%

47% OUTPERFORMANCE OF THE MARKET BY HOTEL SORELLA

GROW TH OF TEAM MEMBERS

ASSETS UNDER MANAGEMENT GROW TH FROM 2015 TO 2016

versus their comp set

PUBLICIT Y VALUE EARNED ACROSS PROJECTS

15%

SOCIAL MEDIA GROW TH

730%

719%

1,690%

T W ITTER

INSTAGRAM

$22,758,295 FACEBOOK 18


ACCESS

AVERAGE NUMBER OF PROJECT USES

JONES ON MAIN

WALK SCORE - 98

GREENSTREET

RIDERS PARADISE SCORE - 100

3.91

CITYCENTRE

TOP UBER DESTINATION

YEARS

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

MARRIAGE PROPOSALS

12 DAYS PER TEAM MEMBER + 1 COMPANY-W IDE VOLUNTEER DAY

45,450 ATTENDEES

>1

per month

AT FEATURED PROJECT EVENTS

ACROSS OUR PROJECTS 19


Buffalo Heights On behalf of a Houston-based, privately held company of the Russell and Glenda Gordy family, Midway announced the Buffalo Heights District. The purpose of this unique development is to create a legacy for future generations, under the long-term ownership of the Gordy Family. The first phase includes an innovative H-E-B, fully integrated with One Buffalo Heights, 30,000 square feet of boutique office, The St. Andrie, upscale multifamily residential community, and additional ground-level retail. Never before have Houstonians had so much on their doorstep.

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“Work, live, eat, shop. I think this is the type of development that more of Houston is going to want.” — Scott McClelland, President, H-E-B

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“We are setting the tone for how people work. This is about placing the human back in the workplace.” — John Lewis, Vice President of Real Estate, WeWork at GreenStreet office broker event, “Work. Redefined.”

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GreenStreet GreenStreet took another bold step forward with the completion of Downtown’s signature streetscape on the project’s north edge. Adding creative, collaborative workplaces will draw innovative companies to this uniquely urban campus. We ended 2016 by prepping for a supersized showcase, with Super Bowl 51 to capitalize upon GreenStreet’s adaptability and location. The Houston Super Bowl Host Committee volunteer headquarters, Gatorade’s innovative performance gym, pop-up shops for active menswear line Mizzen+Main, lululemon, and NFL fan gear store found GreenStreet perfectly located in the center of everything.

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Hotel Alessandra The City of Houston’s $16 million makeover of Dallas Street was completed, enhancing the front-door experience of Hotel Alessandra. The 20-story, 223-room skyrise hotel designed by Gensler with interiors by Rottet Studios, has been thoughtfully designed to elevate executive and leisure travel to new heights. Executive Chef JosÊ Hernandez will helm Alessandra’s kitchen, bringing his magic from Hotel Sorella, Conde Nast #1 Hotel in Houston. As Hotel Alessandra prepares to make her grand entry later in 2017, the details are fitting into place to deliver luxury and delight at every turn.

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Century Square 100 PARK The ceremonial ribbon cutting on 100 Park ushered in a new, more urban way of life to College Station. Upscale multifamily homes with up-to-the-minute amenities will offer a wide variety of restaurant, shopping and lifestyle options steps from the front door. 100 Park answers an unmet demand for a carefree, lock & leave lifestyle to serve the booming Brazos Valley’s professionals.

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“This is going to be just a tremendous benefit to our community. We're excited about it. There’s much more to come.” — Phillip Ray, Vice Chancellor, Texas A&M System

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Century Square CAVALRY COURT Hospitality swung into high gear in Century Square with the grand opening of Cavalry Court, an inviting combination of nostalgia, with its retro military style motor court setting, and warm hospitality that leaves no detail overlooked. Relaxing around the fire pit, celebrating big game weekends, or hosting a conference in the meeting space, Cavalry Court is ready at your command.

THE GEORGE The elegant George hotel harkens back to College Station’s railroad heritage, with the perfect combination of modern and heirloom finishes. An unforgettable guest experience is taking shape at the 1791 Whiskey Bar by Yellow Rose Distillery and Poppy Restaurant. Completing the menu of hospitality and chef-driven dining, Porters, a steak restaurant and butcher shop, will delight diners who can feel right at home in suit-and-tie or jeans and ropers.

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“Levy Park is set to become a prime outdoor destination akin to Discovery Green, which has been a national model for well-activated public space since it opened about nine years ago. Levy Park’s new look is going to make you smile.” — Molly Glentzer, Houston Chronicle

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Kirby Grove Luxury park living takes on new meaning in Avenue Grove, the ultimate in ease and elegance. With 270 units, including brownstones and flats, the Upper Kirby District lifestyle offers more than ample appeal. The commute from Avenue Grove can be a stroll under the leafy canopy of Levy Park to arrive at One Grove Street just steps away. The addition of Kiran’s brings Chef Kiran Verma’s loyal and passionate following to her fine dining Indian restaurant. MidiCi, The Neapolitan Pizza Company brings a fresh, healthy spin on the traditional pie, with certified pizzialos (pizza makers) practicing their art. With Levy Park readying its grand opening, Kirby Grove re-blossoming as a highly livable place.

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“We felt Memorial Green was ideal for our new store, because the urban village design also is timeless. We are pleased to offer our clientele a beautiful, high quality and comfortable environment at our new location.” — Patrick Lam, owner, Lam Bespoke

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Memorial Green The Memorial Green village lifestyle of 91 upscale homes, 25,000 square feet of retail and 50,000 square feet of boutique office on a central green appeals to homeowners and commercial tenants alike. The rare opportunity to find all of this with a prestigious Memorial address proves irresistible. Tenants signed in 2016 include Dish Society, Lam Bespoke, Define Body & Mind, Minuti Coffee, The Lash Lounge, Isle Pedi Spa, and Vine Wine Room, and office tenants Heritage Texas Properties and Old Republic Title.

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DEVELOPMENT OF

the decade award As a fitting way to cap the last 10 years, CITYCENTRE was honored as The People’s Choice for “Development of the Decade” by ULI Houston, recognizing its widespread and lasting impact.

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PORTFOLIO BRAEBURN VILLAGE BUFFALO HEIGHTS

LO OKING

forward

55 + 100 Waugh

Now looking ahead to Midway’s fifth decade, our portfolio has grown Memorial Heights CENTURY SQUARE 100 Park

substantially in breadth, depth and complexity. We remain committed to our strategic focus on investing in generational real estate, locations where we create remarkable places that resist commoditization. Adapting is key to building an organization that will last, but the things that matter

Cavalry Court

most to us will never change.

The George

After announcing our joint venture with Cathexis on the East River

CITYCENTRE

redevelopment, Midway returned to its roots as a learning organization. As we had done before embarking on CITYCENTRE more than a decade

Hotel Sorella EAST RIVER GREENSTREET Hotel Alessandra

earlier, we made research trips to more than two dozen developments in five states. To create a place that feels authentic in Houston, we will not imitate, but we aim to distill best practices and lessons we could apply here. All of our projects benefit from onging learning. To create what endures, we must anticipate change yet resist fads.

KINGS HARBOR

What creates lasting value in a world where so much seems disposable?

KIRBY GROVE

Interestingly, we found that enriching people’s lives by creating places that promote wellbeing and social interaction, fostering authentic

Avenue Grove

community, also gives places critical competitive advantage.

One Grove Street MEMORIAL GREEN THE JONES ON MAIN VILLA DEL PRADO (Partial List) owned, managed and underway

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MIDWAY

foundation What has always been true is still true and always will be. We have been given much, and we express our gratitude by investing the time, talent and treasure entrusted to us to be a blessing to others. Midway Foundation annually distributes a share of our pre-tax profits to charitable organizations that support health, education and the underprivileged. Every Midway team member receives 12 days a year to volunteer for charitable service, in addition to a company-wide volunteer service day. And Midway Advanced Products continues to advance the mission of health and wellness with b4® hand sanitizer while simultaneously benefiting children focused causes. Midway invests in our community, by devoting thousands of work hours in service at all levels of leadership in Buffalo Bayou Partnership, Casa de Esperanza de los Niños, Dress for Success, SEARCH Homeless Services, Urban Land Institute, Halo House, NAIOP and a wide range of other nonprofit organizations.

“For I know the plans I have for you,” declares the LORD, “plans to prosper you and not to harm you, plans to give you hope and a future.”

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In 2016, Midway offered our team members a total of 11,232 hours to volunteer for charity.


THANK YOU

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| 2016 | PARTNERS & CLIENTS (PARTIAL LIST)

Alaska Permanent Fund

Corporation Amay Inamdar - AAI Affordable Housing Brownstone Group Cathexis Holdings City of Houston Cornerbrook Development Dallas Police & Fire Pension System Harrison Street Real Estate Capital LLC Advisors

Hudson Housing Capital

Landover Development

JPMorgan Chase

LaSalle Investment Management

Medvest Incorporated (Methodist)

L&B Realty

Lionstone Investments

Municipal Employees’ Retirement System (of Michigan)

Raimon Land RGA Reinsurance Company SG Interests Stockbridge TDHCA Texas A&M University System Upper Kirby Redevelopment Authority Valencia Group

MORAN LEGACY AWARD

| 2016 | ADVISORY BOARD James Furr Richard Haney

Cydney Donnell

Adam Finn

D. Fort Flowers, Jr.

James F. Jackson, Jr. Barksdale Hortenstine Christopher M.

Job Brooks McGee Ron Nixon Dan Pickering

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.

| 2016 | MIDWAY FOUNDATION RECIPIENTS (PARTIAL LIST) Families of Houston Association Big Sisters

American Heart Association Boys and Girls Club

Bayou Partnership Esperanza

African Wildlife Foundation

Aids Foundation Houston, Inc

Avenue CDC

Braeburn Scholarship Recipient

Camp Ozark Foundation Inc.

Challenging Autism

Avondale House

Adoptive Alzheimer's

Big Brothers

Brighter Bites

Canstruction Houston, Inc.

Child Advocates, Inc.

Covenant House Texas

Buffalo Casa de

Cristo Rey

Corporate Work Study Program Dress for Success Freedom Place Friends For Life Animal Shelter George Bush Foundation Goodwill Industries of Houston Halo House Foundation Houston Community College Foundation Public Media Foundation Ministries

JH Ranch

Houston Food Bank

Houston Zoo, Inc.

MORAN AWARD RECIPIENTS Amegy Bank

Houston Hospice

Houston

Bob Brindley

Humble ISD Education Foundation

Interfaith

L&B Realty Advisors

Jimmy Pappas Sporting Clay Shoot

KIPP Academy

LiveBeyond

Valencia Group Jones Lang LaSalle Capital Markets

Living Water International Lucky Dog Rescue, Inc. Memorial Hermann Foundation Multiple

UHY Advisors

Myeloma Research Foundation Nepal Earthquake Relief New Hope Housing Palmer Home

Upper Kirby Redevelopment Authority

for Children

SEARCH

Souper Bowl of Caring

Special Olympics Texas

Spring Branch

Education Foundation Spring Spirit Baseball Star of Hope Mission Stoney Creek Foundation Susan G. Komen for the Cure

Texas A&M Foundation

Texas A&M Health Science Center

The Center The Leukemia & Lymphoma Society The Methodist Hospital Foundation The Museum of Fine Arts, Houston United States Fund for UNICEF University of Houston World Wildlife Fund, Inc.

Yellowstone Academy

YES Prep Public Schools

Texans Against Cancer

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Young Life

Young

LaSalle Investment Management BoyarMiller Colvill Office Properties


View of Avenue Grove from Levy Park, courtesy of dabfoto creative


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