Midway 2015 annual report

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2015 MPAC T REPORT

INVESTMENT

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

TRANSFORMATIONAL INVESTMENT

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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.

A MESSAGE TO OUR STAKEHOLDERS

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

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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TRANSFORMED FROM LOW DENSIT Y TO

NO VACANCY

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 OUT-OF-DATE TO

PRIME REAL ESTATE

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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TRANSFORMED FROM FORGOTTEN CORNER TO

CORE DESTINATION

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 CONCRETE JUNGLE TO

GARDEN PARTY

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]

Creating transformational mixed-use

Admittedly, our team interviewing and MBark

environments requires transformational teams.

onboarding process are time-intensive, but

This happens when all of the team members are

investing time up front pays added benefits of

not only working toward a shared purpose, but

instilling Midway’s unique company culture,

they also are investing their time and energy to

purpose and values from the beginning.

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

When you build the right internal team, they

is the only way to ensure the best outcome for

work seamlessly to improve the community,

all of them.

create relationships of accountability based on solid performance, source expertise from

This year, Midway invested in building our bench

the best professional partners, and ultimately,

strength. We welcomed new capital partners and

deliver remarkable experiences that enrich

broke ground in College Station, a community

people’s lives.

MORAN LEGACY AWARD 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 Amegy Bank Advisors

Bob Brindley

Valencia Group

Capital Markets

Jones Lang LaSalle

UHY Advisors

Redevelopment Authority Management

L&B Realty

Upper Kirby

LaSalle Investment

BoyarMiller

2015 ADVISORY BOARD

that feels like home to most of us, yet is a new market expansion for Midway. We enlarged our

We forged significant new relationships in 2015

team of experienced professionals and advanced

that will bear fruit for decades to come. But

the next Class of 2015 MidwayU graduates who

we never forgot our beginnings and continued

successfully completed a comprehensive training

to honor those who set the foundation for

course taught by senior leaders.

everything that we have become.

Adam Finn D. Fort Flowers, Jr. James Furr David Gleeson Richard Haney Barksdale Hortenstine Christopher M. Job Brooks McGee Ron Nixon Dan Pickering

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OUR INVESTMENT STRATEGY AND APPROACH Q. WHAT TRANSFORMS AN

Q. WHAT MAKES THE DIFFERENCE

Q. WHAT CATAPULTS A BUSINESS

ACTIONS FOLLOW BELIEFS.

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

UNREMARKABLE SPACE INTO AN

BETWEEN BEING TRANSACTIONAL

FORWARD IN GOOD TIMES AND

Our values, and the remarkable

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

UNFORGETTABLE PLACE?

AND TRANSFORMATIONAL?

SUSTAINS IT THROUGH TOUGH TIMES?

people who share our

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

values, are the foundation

Riding in the calm eye of the storm of market volatility is a very specific

A. The way it makes people feel. In a sea of

A. Steadfast focus on the impact our decisions

A. Serving a purpose that engages, inspires and

upon which Midway is built.

type of asset, which meets the criteria to be transformational.

competition, emotional attachment to a place

make on people’s lives avoids the pitfalls of

energizes every stakeholder: team, partners,

creates loyal customers who are with you for

delivering yet another commodity or suffering

capital, community and customers.

the long haul.

the whiplash of volatility.

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

NEW TENANTS SIGNED ACROSS PROJECTS

acres

8.68

RETAIL

OFFICE

8 MODES OF TRANSPORTATION TO AND FROM OUR VARIOUS PROJECTS

3

New Midway offices in 2015

10

OF COMMUNIT Y SPACE DEVELOPED AND UNDERWAY

6

(106,000 SF)

(65,904 SF)

MIDWAY BY THE

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

CAPITAL GROW TH FROM 2014 TO 2015

MIXED USE PREMIUMS

OFFICE

UP TO 10%

491

Events managed across all projects

21%

35%

42%

RETAIL

UP TO 20%

LIGHT RAIL

BUS

BIKE

BOAT

WALKING

PEDICAB

RIDESHARE

1,335 Multi-family units managed and underway

NUMBERS

CAR

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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GREE N S TRE E T + HOTE L AL E S SAN 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.

“ 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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K I RB 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.

“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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CIT YCE 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.

“ 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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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, fullservice 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.

“ WE BELIEVE THIS PROJECT WILL IGNITE A FLURRY OF ECONOMIC ACTIVITY A N D N U M E R O U S E M P L O Y M E N T O P P O RT U N I T I E S B E N E F I T I N G T H E 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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MEM ORI AL 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 (PARTIAL LIST)

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WHERE ARE WE GOING NEX T Four new developments ushered in 2016, each of them creating potential

Since its founding in 1968, Midway has grown

for transformational investment. In September, we announced pre-leasing of

and evolved into a full-service real estate

One Parkside, an office project at I-10 and the 610 loop, one of Houston’s

development and investment firm, with wide-

Braeburn Village

busiest interchanges with daily exposure to nearly half a million cars. The

ranging expertise in design, finance, execution,

Cavalry Court

13-story tower with 225,000 square feet of Class-A office space, 10 floors

marketing and asset management. Our team

Century Square

of integrated garage parking and 2,000 square feet of ground-floor retail

is responsible for more than 45 million square

CITYCENTRE

perfect for a café is the first phase of development.

feet of projects completed or underway, and

[owned, managed and underway] 55 + 100 WAUGH 708 + 712 MAIN

The George GreenStreet

we have successfully financed more than $3 We finalized master planning the first phase of an integrated live, work and

billion of commercial and residential real estate

play environment in one of the region’s most desirable in-fill locations. Close

development projects. Much has changed over

Kings Harbor

to Downtown, Memorial Park and Neartown, this unique property affords

the years, but timeless values do not. With the

Kirby Grove

the rare opportunity to reinvent a community by delivering a healthy lifestyle

mindset of a long-term owner, we have a deep

Memorial Green

built around local fresh food, outdoor activity and signature green space.

appreciation for the importance of stewardship.

Hotel Alessandra Hotel Sorella

Memorial Heights Villa del Prado

What has been entrusted to us is only ours Surrounded by what the Houston Chronicle once named “the most

to nurture, cultivate and pass on to future

blighted block in Downtown Houston,” landmark properties at 712 and

generations better than we found it.

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.

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.

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 nonprofit 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 in 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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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

ï

MANY THANKS

LaSalle Investment Management Lionstone Investments Medvest Incorporated Municipal Employees’ Retirement System (of Michigan)

(Methodist)

RGA Reinsurance Company

Land

A&M University System

SG Interests

Stockbridge

TDHCA

Upper Kirby Redevelopment Authority

AIDS Foundation Houston, Inc.

Heart Association Ava’s Wish

12th Man

Avenue CDC

Inc.

Avondale House

Boys and Girls Club

Buffalo Bayou Partnership

Outreach

Alzheimer’s Association

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

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.

Foundation

Goodwill Industries of Houston

Halo House Foundation Foundation

Greater Houston Partnership, Inc.

His Grace Foundation

Houston Food Bank

Houston Hospice

Jessieville Fellowship Club

Women Donation

Houston Community College

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

Victory/American

Yellowstone Academy

YES Prep

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