Annual Report 2018

2018 MPACT Report

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Built on purpose

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Our purpose is to create enduring investments and remarkable places that enrich people’s lives.

Actions follow beliefs, and our purpose and values guide every decision at Midway.

Our purpose drives us to invest, develop, operate and activate places that are relevant for today, while also anticipating the future.

In 2018, our 50th year, our properties achieved important milestones, while earning accolades and awards both locally and globally. We appreciate industry recognition of Midway’s vision, planning and diligent execution. However, one award stood above the others. In 2018, Midway was honored as one of Houston’s best workplaces by the Houston Chronicle. Speaking on behalf of the entire leadership team, we are honored and humbled to lead one of the best workplaces in the nation’s fourth-largest city. Midway’s team of caring, hardworking, gifted and innovative individuals made Midway a “best place to work,” and they are the ones who make our places remarkable.

Disruption and rapid change catalyze new opportunities. From the renaissance of downtowns to the new coworking economy, people want to be in remarkable places that deliver enriching experiences.

Greater transparency and speed, as well as omnipresent technologies that both empower and absorb us, are making human connection and face-to-face collaboration even more important. In a world where so many wants can be delivered on demand, we realize hospitality, authenticity and delight have never been more valuable.

And we have never been more excited about the future of our industry, or of Midway.

We appreciate the team who bring their best efforts to Midway every day. And we appreciate you for your enduring support during 2018 and over our first 50 years.

We look forward to what is to come.

Bradley R. Freels Chairman

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Jonathan Brinsden CEO

Midway is built on a defined set of core values.

Integrity Passion Adaptability Quality Initiative Teamwork Generosity Our actions follow our beliefs.

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Focused development Midway by the numbers

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2.6M

active investments

square feet of office space

1,345

8.6

multifamily units

acres of open greenspace

1.18M 963 square feet of retail and entertainment space

hotel keys

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At Midway, we focus on excellence and innovation in the pursuit of remarkable experiences. We invest in places where people want to be.

In the pipeline

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1.3M

remarkable places

square feet of office space

2,009 19.8 multifamily units

acres of open greenspace

450K

332

square feet of retail and entertainment space

hotel keys

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A future built to last

Our developments live, breathe and evolve along with the cities they call home.

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What we do We invest in differentiated, core infill real estate located in mixed-use communities, in ground-up new development, value-added repositioning and covered land opportunities.

In many cases, we own, develop, operate and market all of these assets. We also provide development, management and marketing services to owners who seek our unique expertise.

Midway curates a thoughtful blend of complementary uses, in locations that are likely to hold and increase in value. Over time, we have seen this focus and strategy validated with leasing and valuations that outpace and outperform the market. With partners who share our values and strategy, Midway creates quality environments that are not commodities. These places are exceptionally well positioned for enduring performance.

Office

Retail

Restaurant

Entertainment

Hospitality

Meeting & event

Greenspace

Single family

Multifamily

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No other place like it A mixed-use development including luxury apartments, offices, retail and a new urban prototype H-E-B

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1,500

minutes to downtown

acres of adjacent parkland

$233M+

232

invested in green space improvements within 2 miles of Buffalo Heights

upscale apartment residences

Buffalo Heights celebrated a topping out ceremony and key milestone for its first phase of development. The first four acres of the 26-acre Buffalo Heights District are home to the St. Andrie residences, One Buffalo Heights offices and H-E-B Washington Market. The Buffalo Heights District will unveil more good things to come in 2019, as it expands to the east and refines a stunning and sleek mixeduse development.

Russell Gordy, Houston native and owner of Buffalo Heights, sums it up: “There is no location like this one in Houston.�

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A grand renaissance

A state-of-the-art transformation for two historic addresses

Top 10

100%

Finn Hall, Best New Food Hall, USA Today 10Best Readers’ Choice

of Great Jones Building leased to WeWork

At the turn of the last century, the area around the 700 block of Main Street was the most prestigious in all of Houston. By century’s end, it was the most blighted. Now, thanks to the vision and partnership of Lionstone Investments and Midway, a second act is in full swing—and on track to be better than the first.

At 708 Main, WeWork launched its Houston market entry, with a thorough update of the “good bones” of the Great Jones Building. Finn Hall, on the ground floor, blended

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10 independent food establishments and two bars into a foodie haven— where the city now gathers to eat morning to night and on weekends.

Lionstone Investments then relocated its corporate headquarters to the JPMorgan Chase & Co. Building next door. These new moves, combined with the 90-year continuing legacy of JPMorgan Chase at 712 Main, weave a compelling story of tradition and innovation and point to a flourishing future for these magnificent old buildings.

Rich in history, rich in potential 12

A thriving, complete community will rise on more than a mile of riverfront, just minutes from downtown

150

1+

<5,000

total acres

miles of waterfront

feet to downtown Houston

As an investor and the master developer of East River in the historic Fifth Ward, Midway takes stewardship of this unique asset seriously.

It’s why Midway spends more time listening and learning than talking about East River.

It’s also why we traveled coast-to-coast researching dozens of successful waterfront redevelopments.

An undertaking this large, and the “heavy lifting” to reach East River’s full potential, require a diverse, multidisciplinary and growing array of public, private and philanthropic

partners. Important milestones in 2018 included: Federal Opportunity Zone designation of the census tract including East River; City approval of pedestrian- and bike-friendly street plans for a truly walkable place; cementing relationships with cultural institutions; demolition and site preparation for the 26-acre Phase One development; and the first OctoBREW Fest street party on Clinton Drive, complete with the Vice Mayor Pro-Tem in lederhosen and East River’s iconic 12-story tower ablaze with “BREW.”

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Dawn of a new Century Sixty acres of walkable, urban community, featuring retail and restaurants, office space, luxury apartments and an active gathering space

966

94.6%

5-star reviews

good or excellent rating

Century Square is buzzing morning to night, 24/7. Serving up everything from breakfast to night caps, a growing host of local favorites and popular national brands create an everchanging scene for living, dining, shopping, working, celebrating, congregating and making memories. In next-gen offices, innovative businesses range from architecture, to healthcare technology, to wealth management and more.

A regional destination welcoming university visitors home, a favorite place for locals and a new hospitality headquarters for tourists, Century Square is building the Brazos Valleyâ&#x20AC;&#x2122;s future.

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World-class hospitality, southern style

The George has won a special place in the hearts of travelers and locals, with its flair for Texas design flourishes and warm hospitality. In 2018, The Georgeâ&#x20AC;&#x2122;s unique art installation, a Lone Star flag created out of more than 10,000 books, was dedicated in memory of Barbara Bush.

#1

10,000+

607

ranking in College Station on Luxury Hotel Guides

books in the Lone Star flag art installation

5-star reviews

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Social and business calendars still revolve around Texas A&M University in Bryan-College Station, but the college town is evolving, too. Century Square’s world-class hospitality with two award-winning hotels earn industry and guest honors, worldwide.

Cavalry Court’s retro-nostalgic décor, generous amenities and down-home hospitality earned it the #1 rating on TripAdvisor.

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#1

Finalist

rating on TripAdvisor

in Hospitality Design magazine’s annual HD Awards along with hotels in London, New York City, Singapore and Washington, D.C.

Brazos Valley, redefined The 100 Park community created a lifestyle that was all new for the Brazos Valley: upscale apartment living steps away from signature shopping, dining, entertainment, health and beauty, and all of this on the doorstep of the Texas A&M University main campus.

4.6

249

stars, compared to an average of 3.3 for competitors

upscale homes

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Century Square continued As Century Square’s mixed-use community welcomed a widening array of restaurants, shops, offices, lifestyle and entertainment in 2018, Midway prepared for Phase Two. In 2019, construction will commence on new spaces, adding opportunities for locally owned businesses and national brands—extending Century Square’s excitement and energy up to the street front.

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2

2

46,800

new buildings

floors with rooftop terrace

square feet

Downtown steps up Houston’s Innovation Corridor begins at GreenStreet

600,000

3

square feet of mixeduse space

blocks of urban campus

GreenStreet is stepping up as downtown’s “new model of urban lifestyle, fitness and workplace.”

As proof, the three city-block urban campus leased approximately 93,000 square feet of new collaborative, creative office spaces in 2018.

Also in 2018, GreenStreet unveiled the Houston Sports Walk of Fame with three world-class gentlemen sharing #34 on their jerseys: Nolan Ryan, Earl Campbell and Hakeem Olajuwon.

Social media influencers made the GreenStreet scene one of Houston’s most-Instagrammed spots, at the Sugar and Cloth Color Wall, with retail pop-up shops and a series of art installations by Alex Arzú on The Lawn.

In 2019, Life Time®, the nation’s only Healthy Way of Life brand, will create Life Time Work at GreenStreet. Creating a high-performance way to live and work, Life Time Work integrates premier coworking with Life Time’s luxury Diamond All-Club Access Membership.

GreenStreet also will welcome global creative workspace pioneer, Spaces, and MassChallenge, strengthening the global innovation ecosystem by accelerating high-potential startups across all industries, from anywhere in the world.

Additional exciting new tenant announcements will be revealed throughout the year.

Signaling more good things to come, reconstruction of a soaring, three-story office tower lobby began. The airy, welcoming and exciting space invites bold businesses, innovators, entrepreneurs and established companies alike to keep looking up.

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Hotel Alessandra brings elegance, opulence and acclaim to GreenStreet, downtown and Houston, winning top honors from industry taste-makers for its elevated spaces.

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223

Top 10

elegantly appointed guest rooms and suites

hotels in Texas, Texas Monthly Magazine

Won

Awarded

Five-Star Best Hotel Interior Texas

Best Hotel Interior USA

A community of achievers A vibrant, centrally located community of lofts, offices and restaurants surrounding award-winning green space

7 months

94%

for Spaces to be 95% committed

of office space leased

Kirby Grove Office, flanked by the awardwinning Levy Park, is not your fatherâ&#x20AC;&#x2122;s office park. Its new-fashioned approach to doing business weaves 16 floors of class-A, LEED Gold-certified office space with unmatched outdoor space. Expansive floor plates, groundlevel dining amenities, immediate access to US 69 and a Walk Score of 91 boost productivity for todayâ&#x20AC;&#x2122;s most discerning professionals.

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A winning combination Named “World’s Best Urban Open Space” by international experts

Walkable lifestyle combined with bestin-class coworking, dining, fitness and entertainment

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7,000+

270

84

major design excellence and community impact awards in 2018

visitors a week

modern, upscale apartment homes and two-story walkup brownstones

Walk Score (Houston’s average is 49)

In the heart of the Upper Kirby District, in the center of Midway’s Kirby Grove mixed-use development, people have discovered one of the best urban parks in the world.

In 2018, Kirby Grove’s Levy Park was honored with the Urban Land Institute’s Global Award for Excellence, bringing international acclaim to a place that delights young and old.

designer finishes, resident amenities and state-of-the-art fitness center, the friendly, attentive concierge services and an active program of resident events combine with a robust daily roster of Levy Park programming to create a sense of community rarely found in the middle of the city.

With award-winning Levy Park as their centerpiece, Midway’s Kirby Grove Office and Avenue Grove apartments attest to the power of place.

Avenue Grove raised the standard for contemporary urban living in the Upper Kirby District. Beyond the

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Memorial modernized Commercial — Where the world’s finest are neighborhood favorites

150+ fashion magazine covers styled by Cerón

Neighborhood Gem rating for Jonathan’s the Rub on OpenTable

In 2018, Memorial Green’s commercial properties grew into a community of dynamic businesses, with Methodist Primary Care Group and BBVA Compass among the newest additions. From all-day farm-to-table dining at Dish Society, to pampering and primping with the city’s finest health and beauty practitioners, to grand openings for Clean Juice, Jonathan’s the Rub, Lam Bespoke and Vine Wine Room, Memorial Green creates a whole new way of life for residents, guests and business owners.

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Thrive time Homes — Walkable luxury

175

5 time

steps from Memorial Green residence to Vine Wine Room on average

recipient of Houston’s Best Customer Builder PRISM award, Jeff Paul

Longtime area residents prize being near friends and things they’ve always loved about their community. Add the freedom to walk from a beautiful new custom home to chef-driven restaurants, the neighborhood wine bar, daily workouts and even their worldclass workplace, and it’s easy to see why Memorial Green provides one of the city’s most desirable lifestyles.

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Remarkable resilience The community’s favorite place is reborn

1,000+

1,000+

attendees at Turn Kings Harbor Blue

attendees at New Year’s Eve

69%

Industry leader

increase in web traffic

local brand visibility score

A year after Hurricane Harvey, Kings Harbor lit up the skies over Lake Houston with a fireworks display to celebrate a remarkable recovery. In 2018, demolition cleared the way for reconstruction, rebuilding and a grand reopening. New tenants joined Kings Harbor’s roster of community favorites, adding fitness, paint & sip parties and expanded options for waterfront dining. Even before businesses reopened, we resumed signature live music and free fun community events. Midway’s first mixed-use development not only bounced back after Harvey, it leapt forward.

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Tomorrowâ&#x20AC;&#x2122;s city

—and beyond Our purpose is built on unchanging values, while our strategic focus empowers us to adapt, deliver and maximize enduring returns.

In 2018, 55 percent of the world’s population lived in cities, a number expected to grow to 68 percent by 2050. This migration creates challenges for mobility, infrastructure, housing and environmental sustainability.

These challenges also can create opportunity for Midway.

We create mixed-use developments to free people from car-dependent lives. We design resilient places, similar to Houston’s Buffalo Bayou Park. After Hurricane Harvey’s historic flood, the park flooded again with hikers, joggers, baby strollers, dog walkers and cyclists after a remarkably short period of recovery. We create healthy, complete communities, developing around the urban parks that are “the living room of the city.”

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Our investment approach Midway invests in generational real estate, special places uniquely positioned to hold and increase value for generations.

These places are on the doorstep of a University and research institution with the nation’s second-highest enrollment. Another is on a mile of historic riverfront that birthed the nation’s fourth-largest city. We are at the crossroads of technology and energy, in a location traveled daily by more than 300,000 vehicles. And we put down roots in a mixed-use development that hugs a city park honored as the one of world’s best urban green spaces.

We select ideal locations for our expertise and leadership in creating mixed-use destinations. Then, we carefully curate the brand, design, tenant synergy, operations and experience to create a remarkable, unforgettable place. Midway’s approach to investing in places and people delivers a differentiated asset, better positioned to return long-term value through market cycles.

Generational Real Estate + Remarkable Places

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Our design philosophy We create communities, not commodities.

We design places to inspire and delight.

It takes more work to execute these developments, but their resilience through market fluctuations delivers dividends well worth the effort.

Mixed use

Experience

Connectivity

Integrated, comprehensive experience

Unique, urban, natural, authentic public place

Multi-modal, walkable, social community

Innovation

Differentiation

Design

Healthy, sustainable, flexible product

Thoughtful, unique branded services

Timeless quality

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The Midway value creation process Purposeful investment This targeted process codifies the Midway approach to choosing, vetting and executing our investment and development opportunities. Whether it is covered land, repositioning to add value or ground-up development, the Midway process equips our growing team to move further, faster and is critical to success.

Focus Although we have developed in 26 states and Northern Mexico during our tenure, our focus today is on Texas and all that this great state has to offer.

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Identify Evaluate Create Refine Produce Activate Monetize

Room

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to grow Looking forward Midway celebrated its 40th anniversary in 2008 by launching CITYCENTRE, a transformational redevelopment that changed our company’s trajectory. Ten years later, not only was CITYCENTRE named the Development of the Decade by ULI, Midway celebrated its 50th anniversary by transforming CITYCENTRE, preparing the district’s northern gateway to welcome over 2,000 more daily visitors. We also readied CITYCENTRE SIX, a mixed-use development of office and ground-floor retail with Midway’s signature greenspace and walkability.

Changing the trajectory of Midway again, East River’s 150 acres present a canvas large enough to create a complete community.

The impact of East River on Houston’s urban core cannot be overstated. The impact of GreenStreet on Houston’s ability to attract and nurture the brightest entrepreneurs and most innovative firms will be exponential.

From Houston’s urban core to Buffalo Heights on the Washington Corridor, to Century Square in the Brazos Valley, and reaching major markets across the great state of Texas, Midway is growing. We will keep challenging ourselves and weigh the impact we have on people’s lives and future generations each time we invest, develop, operate and market assets.

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A solid foundation Gratitude in action Values are the unchanging bedrock Midway’s foundation is built upon, and our values begin with Integrity and end with Generosity.

The Midway Foundation was formed in 2003 as a means to give back to local and national organizations. Midway Foundation’s mission is to empower Midway Team Members to become leaders in the markets in which we operate by serving the underprivileged, supporting education, improving health and strengthening our communities.

Midway team members receive one day every month of paid time off to volunteer for the charity of their choice—a commitment that equals four years of volunteer service to our communities every year. Midway honors team members with annual leadership awards, recognizing our frontline team who exemplify Midway’s values. Leadership honorees receive a $500 cash prize and $500 to donate to the charity of their choice. We match team members’ charitable gifts and we support a wide array of causes. We have been blessed to be a blessing.

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Representative sample of some 2018 beneficiaries 12th Man Foundation

Covenant House Texas

Jimmy Pappas Memorial Shoot

Alpha Houston

Leukemia & Lymphoma Society

Alzheimerâ&#x20AC;&#x2122;s Association

Cristo Rey Corporate Work Study Program

American Heart Association

Dress for Success Houston

Memorial Assistance Ministries, Inc.

Art on the Avenue

Friends of Avondale House

Rice University

Astros Foundation

Gamma Psi Kappa Alpha Theta

Rummel Creek PTA

AugustHeart

Gracewood, Inc.

SEARCH

Avondale House

Greater Houston Community Foundation

SpringSpirit Baseball

Boys & Girls Club of Greater Houston

Greater Houston Partnership, Inc.

Life Time Foundation

Star of Hope Mission Susan G. Komen for the Cure

Braeburn Village

Halo House Foundation

Brighter Branches

His Grace Foundation

Buffalo Bayou Partnership

HISD Education Foundation

Building New Foundations

Holocaust Museum Houston

Camp Aranzazu

Houston Livestock Show & Rodeo

Casa de Esperanza

Houston Parks Board, Inc.

Central Houston

Houston Sports

Champions Kids Camp

Houston Wilderness

West Houston Assistance Ministries Inc.

Child Advocates, Inc.

Houstonians for Great Public Schools

Wounded Warrior Project

Club Outreach Ministries Inc.

JH Ranch

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Texas A&M Foundation The Center The Methodist Hospital Foundation The WorkFaith Connection University of Houston Victory/American Cancer Society

Yellowstone Academy

Thank you for joining us on this journey.

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Moran Award Recipients 2007 Amegy Bank 2008 Bob Brindley 2009 L&B Realty Advisors 2010 Valencia Group 2011 Jones Lang LaSalle Capital Partners 2012 UHY Advisors 2013 Upper Kirby Redevelopment Authority 2014 LaSalle Investment Management 2015 BoyarMiller 2016 Colvill Office Properties 2017 Cadence Bank 2018 Lionstone Investments

2018 Advisory Board Adam Finn D. Fort Flowers, Jr. James Furr James F. Jackson, Jr. Christopher M. Job Ron Nixon Dan Pickering

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