Year End Annual Report 2016

YEAR-END REPORT FOR 2016

2016 was a milestone year for The Group as we celebrated our 40th year. It was rewarding to review and share our many accomplishments—including a long list of industry firsts— achieved by our 100% employee-owned organization. We are equally grateful for the trust our customers put in us to handle their real estate transactions. The Group has thrived in Northern Colorado and we have been extremely fortunate to be part of an industry that helps people achieve their goal of homeownership.

Our region holds great promise with a quality of life that draws people who are active, intelligent, and innovative. We are attracting new talent to our company, people who reflect the youthfulness and bright future of our communities. We are leading the way with incorporating the latest industry technology—and developing new real estate tools—while understanding that our relationships with each other and our customers are still the most important thing. We are poised for the future and can’t wait to see what the next 40 years hold for The Group and our Northern Colorado home.

2017 Board of Directors

Our Board of Directors is made up of Group Partners.

They are elected by Larry Kendall Susie Ewing Chairman of the Board President

Brandon Wells Vice-President

their peers to serve a two-year term.

These people bring their business acumen and their

Kathy Arents

Craig C. Hau

Kelly McBartlett

vast experience and knowledge of the real estate business to guide the direction of The Group.

Doug Miller

Susan Orth

Diana Luthi

2016 Market Overview In Northern Colorado, 2016 was a year of real estate strides – double-digit increases in price appreciation for current homeowners, healthy housing growth in the region’s smaller towns, and big momentum in the development of new apartments.

We saw how factors such as lower housing prices or more elbow room were luring home buyers to communities such as Berthoud and Wellington in large numbers. In Berthoud, 1,870 home sites have been approved for construction and roughly 2,600 more were in the planning stages.

Last year brought double-digit growth in average home prices. The Fort Collins-Loveland, BoulderLongmont, and Greeley metro areas also each ranked in the top 15 in federal reports for average home price appreciation. Values for each metro area increased more than 10 percent. Even so, with the help of low interest rates and rising incomes, affordability – measured by the percentage of income spent on mortgage costs – remains historically strong.

And thanks to those low interest rates – combined with rapid appreciation in the lower price categories, and ample availability in the high-end category—2016 proved to be the best “move up” market for Northern Colorado in 40 years.

After several years of tight vacancy rates and hefty rental hikes, developers started to catch up to demand for apartments last year. Across the region, including Fort Collins, Greeley and Loveland, at least 4,000 units have been proposed.

Fort Collins-Loveland and Greeley metro areas were each ranked among the 10-fastest growing, and long-term projections tell us that Larimer and Weld counties can expect to add around 500,000 additional residents between 2015 and 2040.

Northern Colorado holds great promise as it continues to offer a quality of life that draws people who are active, intelligent, and innovative.

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YEAR-END REPORT FOR 2016

Regional View Northern Colorado is known for a vast array of opportunities – year-round recreation, a thriving business community, two nationally recognized universities, and a renowned arts community. With a sun-filled lifestyle and superior schools, we’re attracting newcomers and giving families reasons to stay for generations.

solid footing. Economic development agencies are working with over two dozen prospects for relocation or expansion.

At The Group, we continually gather information, follow national and local trends, and analyze statistics to anticipate how all of these will affect our customers. We make it our business to be THE source of real estate information for Northern Colorado.

Coun

Our future promises continued growth. The State Demography Office predicts Larimer County’s population will increase to 486,882 by July 2040, up from 332,832 in July 2015. And Weld County is projected to more than double to 601,305 by 2040, up 284,876! But we’re preparing for the growth. Our landscape is changing. Construction is omnipresent.

Colorado State University is completing a 5-year, $700 million construction effort, including a new stadium. And the University of Northern Colorado recently broke ground on a $74 million project.

County Road 90

Pierce

County Road 19

Terry Lake

85

d 27

Roa

TAFT AVE

Fort Collins Loveland Airport

un Co ty ad Ro

EISENHOWER BLVD

MAIN ST

Windsor

CROSSROADS BLVD

Boyd Lake Lake Loveland

Windsor Lake

85

392

Poudre River Ranch Natural Area

257

10TH ST

Greeley

34

20TH ST

29

11TH AVE

nty

Cou

Horseshoe Lake

County Road 13

WILSON AVE

27

287

Severance

35TH AVE

County Road 38E

oad yR

392

Eaton

County Road 74

County Road 37

25

Fossil Creek Reservoir County Road 32

Loveland

!

257

County Road 13

Fossil Creek Park TRILBY RD

Windsor Reservoir

County Road 38

59TH AVE

Timnath

!68

HARMONY RD

!14

Timnath Reservoir

71ST AVE

Warren Lake

County Road 23

TIMBERLINE RD

HORSETOOTH RD

LEMAY AVE

SHIELDS ST

COLLEGE AVE

oir

TAFTHILL RD

Reserv

Fort Collins

County Road 5

DRAKE RD

Horsetooth Mountain Park

Ault

14 County Road 33

thooth

PROSPECT ST

MULBERRY ST

County Road 17

City Park

County Road 5

Lee Martinez Park

Horse

nt Cou

34

County Road 29

County Road 56

25

Lory State Park

34

County Road 20

257

Boedecker Reservior

14TH ST

Evans

County Road 54

County Road 18

402

County Road 21

60

County Road 14

County Road 23

Johnstown Milliken

County Road 42

LaSalle

85

County Road 21

County Road 44

256 60

Gilcrest County Roa

County Road 13

25

County Road 11

287

County Road 7

County Road 21

County Road 4

!56

4

d 39

Roa

60

Berthoud

!56

nty

Cou

287

County Road 10

County Road 8E

County Road 50

County Road 17

31 County Road

Carter Lake

County Road 17

Larimer County Weld County

County Road 7

County Road 16

County Road 904

I-25 is Northern Colorado’s “Main Street.” A muchanticipated toll lane between Fort Collins and Loveland is on track to becoming a reality. Builders are looking east of I-25 for affordable lots. To the south, Berthoud plans for over 4,000 homes. New apartments abound. The regional economy makes us optimistic. Health care opportunities are everexpanding, including two leading-edge medical systems, UC Health and Banner Health. The state’s construction sector is strong, and energy is showing initial signs of recovery – a key to job growth in Weld County – and high-tech started the year on

Larimer County Weld County

!1

County Road 56

www.thegroupinc.com

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County Roa

Residential Statistics Residential home prices increased in 2016, but affordability means much more than price. Because of low interest rates and rising average income, our area is actually more affordable now than it was in years past. Northern Colorado remains relatively affordable and has a strong economy.

• The average sales price of $335,861 in Northern Colorado was up 10.07% from the previous year.

• The dollar volume of home sales in Northern Colorado for 2016 was $3,441,571,445, an increase of 10.26% from 2015.

• The Group, Inc. Real Estate was involved as the listing and/or selling brokerage in 29.51% of all residential transactions in Northern Colorado for 2016.

Area

2015 2016

Fort Collins, Wellington, Timnath

3,721

3,661

Loveland, Berthoud

2,100

2,050

$665,133,740

Greeley, Evans

2,450

2,480

824

1,021

Windsor, Severence Ault, Eaton, Johnstown, Kersey, LaSalle Mead, Milliken Totals

6

YEAR-END REPORT FOR 2016

Homes Sold

$ Volume 2015

Average Price 2016

$1,264,256,756 $1,368,126,689

2015

2016

$339,763

$373,703

$720,546,555

$316,730

$351,486

$550,163,302

$627,355,272

$224,556

$252,966

$311,164,717

$398,487,589

$377,627

$390,291

1,134 1,035 $330,482,439

$327,055,340 $291,431 $315,995

10,229 10,247 $3,121,200,954 $3,441,571,445

$305,132

$335,861

Commercial Market Northern Colorado’s commercial market is comprised of four sectors. These include land, retail, industrial and office, and when compared it is easy to see that the sectors experienced a wide range of outcomes during 2016.

Land sales led all market segments, totaling $155 million. Notably, numerous land transactions included land that had been on the market for 10 years or more.

Retail came in a close second with $150 million in sales.

By the end of the third quarter of 2016, the total square footage of retail space available for sale was reduced by 91,000 square feet.

in 2016, the largest for any segment. That means there was less space available at the end of Q3 when compared to the beginning of the year. While the office segment reflects the lowest dollar volume, it experienced the largest swing in availability. Even so, vacancy percentage rates were surprisingly high throughout the region.

CAP rates (the ratio of net operating income to property asset value) also varied on improved property sales. Office represented the highest CAP rate at 8.2%, followed by industrial at 7.69%, and retail at 6.43%.

On balance, the increase in demand for land and office space, coupled with the low vacancy rate for retail space, point to a healthy overall market for commercial real estate.

In third place is industrial at $87 million. More space came on the market than could be utilized or absorbed.

Available square footage in the industrial sector increased by 211,000 square feet from the beginning Source: SVN / Denver CommercialÂŽ. of 2016 to the end of the third quarter. This increase in inventory reflects the downsizing Fort Collins Loveland Greeley Longmont Area Area Area Area here in Northern Colorado of the oil and VACANCY RATES

12/15 12/16 12/15 12/16 12/15 12/16 12/15 12/16 gas industry.

The office category is last with $49 million in gross sales. However, 212,000 square feet of office space was absorbed

Industrial

4%

Retail

4% 4.8% 4%

Office

3% 4.8% 6% 8.1% 4% 3.6% 9.5% 7.5%

3.8% 11% 11.6% 3%

3%

3.8% 10.8% 8%

5% 4.9% 5.4% 7.4%

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Residential Sales History

Average Area Year # of Homes % Change Dollar Value % Change Sales Price

% Change

Fort Collins,

Wellington, Timnath

2012 2013 2014 2015 2016

3,374 +23% $879,448,133 +27% 3,878 +15% $1,082,392,812 +23% 3,816 -2% $1,146,193,050 +6% 3,721 -2% $1,264,256,756 +10% 3,661 -2% $1,368,126,689 +8%

$260,654 +3% $279,111 +7% $300,365 +8% $339,763 +13% $373,703 +10%

Loveland, Berthoud

2012 2013 2014 2015 2016

1,681 +22% 2,002 +19% 1,977 -1% 2,100 +6% 2,050 -2%

$412,216,976 +28% $517,210,506 +25% $556,076,804 +8% $665,133,740 +20% $720,546,555 +8%

$245,221 +5% $258,347 +5% $281,405 +9% $316,730 +13% $351,486 +11%

Greeley,

Evans

2012 2013 2014 2015 2016

1,493 1,944 2,280 2,450 2,480

$241,807,019 +16% $344,461,436 +42% $461,049,659 +34% $550,163,302 +19% $627,355,272 +14%

$161,960 $177,192 $202,215 $224,556 $252,966

Windsor,

Severence

2012 728 +31% 2013 819 +13% 2014 787 -4% 2015 824 +5% 2016 1,021 +24%

$218,991,979 +35% $260,621,098 +19% $273,390,928 +5% $311,164,717 +14% $398,487,589 +28%

$300,813 $318,219 $347,384 $377,627 $390,291

Ault, Eaton,

Johnstown,

Kersey, Milliken,

Mead, LaSalle

2012 896 2013 1,053 2014 1,279 2015 1,134 2016 1,035

$187,164,073 +39% $245,284,496 +31% $334,731,851 +36% $330,482,439 -1% $327,055,340 -1%

$208,888 +8% $232,939 +12% $261,714 +12% $291,431 +11% $315,995 +8%

+2% +30% +17% +7% +1%

+28% +18% +21% -11% -9%

+14% +9% +14% +11% +13% +3% +6% +9% +9% +3%

Source: MLS, Residential and attached homes only.

The Wellington and Berthoud markets have changed considerably in the past few years. In the past we have included them with Fort Collins and Loveland. Below you will see the date broken out for these communities to present an in-depth view of our different areas.

Area

Year

# of Homes

% Change

Dollar Value

Average % Change Sales Price

% Change

Fort Collins,

Timnath

2015 3,344 2016 3,180

-3% $1,160,600,885 +10% $347,070 +13% -5% $1,220,532,280 +5% $383,815 +11%

Loveland

2015 1,839 2016 1,832

+5% 0%

$564,841,770 +18% $630,681,486 +12%

$307,146 +12% $344,258 +12%

Berthoud

2015 2016

267 +16% 218 -18%

$101,999,792 +28% $89,865,069 -12%

$382,022 +11% $412,225 +8%

Wellington

2015 2016

392 481

$108,869,343 +22% $147,594,409 +36%

$277,728 +16% $306,849 +10%

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YEAR-END REPORT FOR 2016

+6% +23%

4176 3374

4528

4419

4431

4223

3878

3816

3721

3661

’13

’14

’15

’16

Homes Listed

Homes Sold

2442

2582

2347

2506

2465

1795

2121

1977

2100

2050

’12

’13

’14

’15

’16

Greeley Area

Homes Listed

3095 2389 ’12

3689 2997

Homes Sold

4153

4230

4097

3559

3584

3515

Single-Family

Fort Collins

Homes Sold

’14

’15

565

’13

’14

440

’12

509

522

’15

’16

Single-Family

361

243

233

’12

’13

’14

465 329

’15

449 292

’12

’16

’16

Single-Family

55 ’13

555

Loveland

Homes Listed

’12

Loveland, Berthoud

Single-Family Building Permit History

Greeley, Evans

Fort Collins, Wellington, Timnath

Residential Inventory History

231

155 ’13

’14

’15

’16

*Greeley, Evans, Ault, Eaton, Johnstown, Kersey, LaSalle, Mead, Milliken Homes Sold

Single-Family

Windsor

Windsor, Severance

Homes Listed

631 356

981 728

’12

1068 819 ’13

997 787

’14

1056 824

Includes all listing types, except mobile/manufactured.

Source: MLS, residential and attached homes only.

’15

1311

451 265

241

1021 ’16

’12

’13

’14

’15

’16

www.thegroupinc.com

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Our Commitment to Innovation The Group utilizes the most current technology available to promote our listings and make the real estate process easier for our customers and our REALTORS®. Our skilled, dedicated staff provides training on the most current technology for our partners, integrates new systems — to make the process easier, faster, and more convenient for our customers — and makes sure our listings receive maximum exposure. We’re particularly proud of our custom-designed, internal technology that allows our staff to efficiently track the details of every contract. The Group is committed to bringing the best real estate experience to our customers and we continually look to the future to improve that experience.

Our Commitment to Our Industry Several Group Partners are currently serving The Fort Collins Board of Realtors®, the Loveland/Berthoud Association of Realtors®, and the Colorado Association of Realtors® as directors, chairmen, and committee members.

In 2016, our Board Chairman and co-founder, Larry Kendall, published his book, “Ninja Selling.” Ten years in the making, the book chronicles the Ninja Selling system created by Kendall and based on systems developed by Group Partners. The Ninja Selling system has been presented to over 50,000 Realtors throughout the United States, Canada, Spain, and Australia. The book is available on Amazon.com and is being carried by 175 bookstores in airports around the United States.

Our Commitment to Our Customers

GROUPMortgage, LLC

Our mission since 1976 has been to ‘help people get where they want to go on time’ – closing on time is one of the top priorities for both buyers and sellers. A high performance team - Realtor, lender, title company – is required to accomplish this goal.

The Group’s family of companies, critical in the real estate purchase process, helps us bring unmatched convenience to our customers who choose to use our affiliated businesses. By partnering with industry leaders – Cornerstone Home Lending, Inc. and Stewart Title – The Group brings a high level of accountability to each phase of the real estate transaction.

Our affiliation with Leading Real Estate Companies of the World (LRE) provides The Group with a network of 500 leading independent real estate companies throughout the United States. These high-quality companies stand ready to assist our customers who are relocating outside of Northern Colorado, and assure that they receive an excellent level of service. The LRE Military on the Move program gives us the opportunity to help active servicemen and women and veterans. Luxury Portfolio, another program through LRE, offers state-of-the-art marketing for homes over $1,000,000, that provides exposure to potential buyers throughout the U.S. and globally.

The Group’s Relocation Department helps companies relocate employees both into and out of the area, assuring that complete information and expert area tours are available to assist with the process.

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YEAR-END REPORT FOR 2016

Our Commitment to Our Communities At its annual State of the Community event, The United Way honored The Group Real Estate as the 2016 Corporate Champion. The United Way said this about The Group, “Each year, The Group team members go above and beyond in giving back to the Larimer County community in meaningful ways. Since the organization was founded in 1976, employees have contributed more than $3.4 million to our community through United Way employee giving campaigns.”

We were recognized as the United Way of Larimer County’s Top Employee Giving Campaign in 2015 and have exceeded that level of giving in 2016.

Philanthropy is a core value at The Group. More than 50 Group employees currently serve on nonprofit boards of directors in Northern Colorado, and each employee contributes an average of 108 volunteer service hours a year.

We are a sponsor of Downtown Fort Collins, Sculpture in the Park in Loveland, Everitt Real Estate Center at Colorado State University, Museum of Discovery, WomenGive, Colorado State University Athletic Department, and Respite Care.

Christmas on Wheels, an annual project funded primarily by Group Partners, gave 20 new bicycles to children of Project Self-Sufficiency clients.

The 2016 Group Real Estate Scholarship was awarded to Mark Thiebaut, a 2016 graduate of Rocky Mountain High School. The full-tuition scholarship is awarded annually to a Northern Colorado high school senior who will be entering the Colorado State University College of Business as a freshman.

Fundraisers in October raised dollars for UC Health Cancer Center and the Lydia Dody Hope Lives Foundation.

GroupGives, funded by Group Partners, is a donor-advised fund managed by the Community Foundation of Northern Colorado. In 2016, GroupGives awarded $94,500 to 15 local nonprofit organizations that are working to provide housing for men, women and children in Northern Colorado.

Organizations that received grants in 2016 include: Our Center Project Self-Sufficiency, Neighbor to Neighbor Room4Hope Crossroads Safe House Homelessness Prevention Initiative Disabled Resource Services Alternatives to Violence Loveland Rotary Paint Our Town Fort Collins Habitat for Humanity and Loveland High School Geometry in Construction Project Faith Family Hospitality Be The Gift House of Neighborly Services Since its inception in 2013 the fund has awarded $223,500 to area organizations.

Over 100 Group Realtors and staff gathered for the Second Annual GroupGives Back Day. Seven area organizations benefited from hands on assistance from the volunteers: Fort Collins Habitat for Humanity, Faith Family Hospitality, Elderhaus, Respite Care, Career Closet, Be The Gift, and Weld RSVP. www.thegroupinc.com

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Leaders in Real Estate

© January 2017 The Group, Inc.

Harmony Office 2803 E. Harmony Road Fort Collins, CO 80528 970.229.0700

Horsetooth Office 375 E. Horsetooth Road Fort Collins, CO 80525 970.223.0700

Centerra Office 5401 Stone Creek Circle Loveland, CO 80538 970.613.0700

Mulberry Office 401 W. Mulberry Street Fort Collins, CO 80521 970.221.0700

Old Town Fort Collins Office 121 E. Mountain Avenue Fort Collins, CO 80524 970.493.0700

Loveland Office 1401 W. 29th Street Loveland, CO 80537 970.663.0700

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