2018 Annual Report

2018 YEAR-END REPORT

Mountains. Blue Sky. Sunshine. An abundance of opportunities for education, culture, and recreation.

We live in a region that holds great promise with a quality of life that appeals to 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 by incorporating the latest industry technology while understanding that our relationships with each other and our customers are still the most important thing.

When you work with a Group Realtor®, you are working with the owner of the company. It is one of the things that makes us different. The concept of equal ownership is not new for us — we started that way over 40 years ago — and it has allowed us to build a culture of excellence and cooperation.

We believe that working together and sharing information is the best way to get the job done. Our full-time professional Realtors® are experts in our real estate market and our area. And our entire team strives to create a smooth and worry-free transaction for our customers.

We have designed our company for our customers — we are the only real estate company in Northern Colorado that offers in-house mortgage services, a title company, a relocation department to assist both corporate and individual moves, a property management company, and dedicated staff to make sure details of every transaction from listing to closing are efficiently managed.

Based on data reported in 2018, The Group is ranked No. 2 in Colorado and No. 1 in Northern Colorado among privately owned real estate companies for number of transactions each year. In fact, it’s been the top producing company in Northern Colorado since 1976, the year it was founded. But what really matters is this: we know how to get the job done to help our customers get where they need to be on time.

Leadership

Doug Miller Chairman of the Board

Brandon Wells President The Group, Inc.

Troy Hiebsch President Group Financial Partners

2019 Board of Directors

Craig C. Hau Harmony Office

Seth Hanson Harmony Office

Sarah Hay-Arthur Horsetooth Office

Robert Jones Horsetooth Office

Diana Luthi Loveland Office

Christopher Reilly Mulberry Office

Our Board of Directors is made up of Group Partners. They are elected by their peers to serve a two-year term.

These people bring their business acumen and their vast experience and knowledge of the real estate business to guide the direction of The Group.

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2018 Market Overview As real estate goes, years are like snowflakes. No two are exactly alike, but sometimes it can be hard to tell the difference. True to form, 2018 didn’t provide any stark differences in market conditions from 2017, but it still took its own shape.

Let’s start with a look at housing inventory. After total listings dipped in 2016, availability across the region improved by 5 percent in 2017. Supply continued to pick up last year, but at a slightly slower pace of 2.4 percent. One new milestone to report: total listings across the region topped 13,000 for the first time at 13,005.

Housing prices, to no one’s surprise, continued on their long-standing upward trend. But the once-familiar double-digit growth rates from earlier in the decade have given way to more moderate rates of appreciation.

After a 9.1 percent increase in 2017, average sales prices moved up just 5.9 percent in 2018 to $388,200. The sub-market with the fastest appreciation was GreeleyEvans, at 8.5 percent.

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YEAR-END REPORT FOR 2018

Regional home sales inched up by only 1 percent last year – reaching 10,605 transactions – due in part to the modest growth in home inventory. On a community level, the Windsor-Severance sub-market stood out with a remarkable spike in sales. Buyers snapped up 1,457 homes in the Windsor-Severance area, an increase of 44.7 percent. It’s no coincidence that Windsor-Severance also experienced a 26.5 percent increase in listings for the year, thanks to a surge in new construction. By comparison, the Fort Collins area – including Wellington and Timnath – saw a 4.8 percent dip in sales during 2018 along with a 4.3 percent reduction in supply.

Another year also brought another round of kudos for the Northern Colorado market. For example, personal finance website WalletHub ranked Greeley No. 20, Longmont No. 23 and Fort Collins No. 25 among the best places for first-time homebuyers. At the same time Realtor.com found Greeley-area homeowners who bought a home in the first half of 2017 turned an average profit of 10.3 percent one year later. Longmont owners averaged 13.5 percent to the good, while Fort Collins and Loveland owners could expect 6.3 or 7.3 percent profit respectively.

The Northern Colorado area added nearly 11,000 jobs between November 2017 and November 2018 – all of which bodes well for financial health of both the private and public sectors.

Regional View It’s 2019 in Northern Colorado. And with the new year comes new answers to that persistent question: how will growth be a factor in how the region takes shape over the next 12 months?

One of those answers is already apparent. The continuing headache created by traffic on Interstate 25 is getting some long-awaited treatment. Last fall the Colorado Department of Transportation, with the financial help local communities, got started on a $300 million project that will add a lane to I-25 in each direction between Johnstown and Fort Collins. The targeted completion date is 2021.

Speaking of driving, Northern Colorado’s economic engine keeps motoring right along. In its latest ranking of “Best Performing Cities,” the Milken Institute listed the Fort Collins-Loveland area at No. 5, a salute to steady job growth and the ongoing impact of the high-tech industry here. And when you combine Larimer and Weld counties, the Northern Colorado area added nearly 11,000 jobs between November 2017 and November 2018—all of which bodes well for financial health of both the private and public sectors. Job growth is always a positive sign for the real estate market in the near future, because it typically leads to housing demand 12-18 months later.

Of course, job growth goes hand in hand with population growth. Both Larimer County and Weld County have been on the fast track in that department. Colorado’s State Demography Office estimates that Weld County grew by 3.2 percent last year, added nearly 10,000 new residents in 2018, and stands to increase by another 9,400 people this year. Larimer County grew by an estimated 1.5 percent, with about 5,200 new residents in 2018. And state officials project just about 5,000 more people this year.

Low inventories will continue to be a limiting factor in the overall number of sales across Northern Colorado— which has been a major hurdle this past decade. For the year, all sales in 2018 were up just 1 percent.

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The Windsor-Severance market was a star in 2018, seeing an additional 450 sales, an increase of 44.7 percent over 2017.

+5.88% AVERAGE SALES PRICE IN NORTHERN COLORADO FROM 2017 TO 2018

+6.98% INCREASE IN DOLLAR VOLUME OF HOME SALES FROM 2017 TO 2018

Residential Statistics Residential home prices increased in 2018, but affordability means much more than price. Because of low interest rates and rising average incomes, 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 $388,200 in Northern Colorado was up 5.88% from the previous year.

• The dollar volume of home sales in Northern Colorado for 2018 was $4,116,855,872, an increase of 6.98% from 2017.

+26.26% THE GROUP INC. WAS INVOLVED IN RESIDENTIAL TRANSACTIONS IN NORTHERN COLORADO

• Homes sold throughout Northern Colorado totalled 10,605 in 2018 compared to 10,496 in 2017.

AREA

2017 2018

Fort Collins/Wellington/Timnath

3,826

Loveland/Berthoud

2,275 2,076 $866,955,606 $827,626,036 $381,079 $398,664

Greeley/Evans

2,162

2,207

$600,752,248

$665,638,003

$277,869

$301,603

Windsor/Severence

1,007

1,457

$437,281,979

$612,132,404

$434,242

$420,132

Ault/Eaton/Johnstown/ Kersey/LaSalle/Mead/Milliken

1,226 1,224

TOTALS

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• The Group, Inc. Real Estate was involved as the listing and/or selling brokerage in 26.26% of all residential transactions in Northern Colorado for 2018.

YEAR-END REPORT FOR 2018

Homes Sold

$ Volume 2017

Average Price 2018

3,642 $1,519,178,696 $1,560,927,986

2017 $397,067

2018 $428,709

$424,002,610 $450,531,443 $345,842 $368,081

10,496 10,605 $3,848,171,139 $4,116,855,872

$366,632

$388,200

Commercial Market Northern Colorado’s five commercial sectors – office, industrial, retail, land, and multifamily – moved in different directions during 2018.

The office market is split between leasing and sales.

Despite a low vacancy rate, there was less than 125,000 SF of office absorbed, and there is virtually no demand for office leasing. Some possible reasons: 1.) The large number of leases signed three to five years ago that continue to renew, and 2.) More people are commuting from their bedroom down the hall to their home office.

A completely different story: the office sales market is strong due to demand from owner-users, evidenced by the largest year-over-year increase among all five sectors at $116M, up from $67M in 2017.

Industrial sales and leasing continue to be strong with sales volume reaching a five-year high of $95M in 2018. The leasing market – with a vacancy rate of less than 3 percent – continues to show strength even as it became more expensive for tenants. Case in point: triple net base rents are just over $10/SF across the region for the first time.

Municipalities continue to be madly in love with brick and mortar, but this is likely financial in nature, due to the attractive sales taxes that municipalities capture.

Retail has become all about customer experience – not what you sell, but how you sell it – unless it’s really

cheap. The vacancy rate has been stabilizing at just over 4 percent, and asking rents continue to climb.

Retail sales volume was strong with $166M in 2018.

Will “Build it and they will come” work for those in the middle? Stay tuned.

Land sales were significantly down last year to $119M. Perhaps the sticker shock of water and sewer costs might be starting to cool the land fever that we saw in 2016 ($177M) and 2017 ($130M).

Multifamily continues to thrive, with average rents increasing to $1,140 per unit regionally. With over 2,000 units under construction, and vacancy rates up to 6.2 percent, demand appears to have slowed. The decadelong shortage in new home construction (both singlefamily and attached) has helped to fuel this boom.

With an influx of high-end, amenity-based apartments, incentive offers to reduce vacancies are prevalent.

Apartments that have not been updated competing against new units with high-end finishes will see stiff competition.

Some questions do remain about the region’s ability to absorb all these new multifamily projects, though so far this decade we have done well absorbing the increase in multifamily projects. We are paying close attention to these trends.

COMMERCIAL VACANCY RATES

Fort Collins Loveland Greeley Longmont Area Area Area Area 12/18 12/17 12/18 12/17 12/18 12/17 12/18 12/17

Industrial

3.0% 2.4% 3.0% 14.6% 3.0% 2.4% 2.9% 3.9%

Retail

5.6% 4.3% 4.7% 3.3% 5.6% 4.7% 5.8% 4.0%

Office

7.2% 5.2% 9.0% 9.5% 9.3% 4.1% 7.5% 8.6%

Source: CoStar.

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Residential Sales 5-Year History

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

Wellington/ Timnath

Loveland/

Berthoud

Greeley/

Evans

Windsor/

Severence

Ault / Eaton/

Johnstown/ Kersey/

Milliken/

Mead / LaSalle

2014 3,816 -2% $1,146,193,050 +6% 2015 3,721 -2% $1,264,256,756 +10% 2016 3,661 -2% $1,368,126,689 +8% 2017 3,826 +5% $1,519,178,696 +11% 2018 3,642 -5% $1,560,927,986 +3% 2014 1,977 -1% $556,336,704 +8% 2015 2,100 +6% $665,133,740 +20% 2016 2,050 -2% $720,546,555 +8% 2017 2,275 +11% $866,955,606 +20% 2018 2,076 -9% $827,626,036 -5% 2014 2,280 +17% $461,049,659 +34% 2015 2,450 +7% $550,163,302 +19% 2016 2,480 +1% $627,355,272 +14% 2017 2,162 -13% $600,752,248 -4% 2018 2,207 +2% $665,638,003 +11% 2014 787 -4% $273,390,928 +5% 2015 824 +5% $311,164,717 +14% 2016 1,021 +24% $398,487,589 +28% 2017 1,007 -1% $437,281,979 +10% 2018 1,457 +45% $612,132,404 +40% 2014 1,279 +21% $334,731,851 +36% 2015 1,134 -11% $330,482,439 -1% 2016 1,035 -9% $327,055,340 -1% 2017 1,226 +18% $424,002,610 +30% 2018 1,224 0% $450,531,443 +6%

% Change

$300,365 +8% $339,763 +13% $373,703 +10% $397,067 +6% $428,709 +8% $281,405 +9% $316,730 +13% $351,486 +11% $381,079 +8% $398,664 +5% $202,215 +14% $224,556 +11% $252,966 +13% $277,869 +10% $301,603 +9% $347,384 +9% $377,627 +9% $390,291 +3% $434,242 +11% $420,132 -3% $261,714 +12% $291,431 +11% $315,995 +8% $345,842 +9% $368,081 +6%

Source: MLS, residential and attached homes only.

In-Depth View

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

Fort Collins/

Timnath

Loveland

Berthoud

Wellington

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Average % Change % Change Sales Price 2014 3,452 +34% $1,059,889,851 +60% $307,036 +19% 2015 3,344 -3% $1,160,600,885 +10% $347,070 +13% 2016 3,180 -5% $1,220,532,280 +5% $383,815 +11% 2017 3,327 -1% $1,361,042,265 +17% $409,090 +18% 2018 3,337 +5% $1,455,058,991 +19% $436,038 +14% 2014 1,749 +40% $477,770,230 +67% $273,168 +19% 2015 1,839 +5% $564,841,770 +18% $307,146 +12% 2016 1,836 0% $631,911,601 +12% $344,178 +12% 2017 1,827 0% $687,260,608 +9% $376,169 +9% 2018 1,725 -6% $670,267,946 -2% $388,561 +3% 2014 230 +76% $79,380,974 +122% $345,135 +26% 2015 267 +16% $101,999,792 +28% $382,022 +11% 2016 218 -18% $89,865,069 -12% $412,225 +8% 2017 451 +107% $180,738,898 +101% $400,751 -3% 2018 351 -22% $157,358,090 -13% $448,314 +12% 2014 371 +125% $88,945,655 +176% $239,746 +23% 2015 392 +6% $108,869,343 +22% $277,728 +16% 2016 481 +23% $147,594,409 +36% $306,849 +10% 2017 499 +4% $158,136,431 +7% $316,907 +3% 2018 304 -39% $105,868,995 -33% $348,253 +10% Year

# of Homes

YEAR-END REPORT FOR 2018

% Change

Dollar Value

Residential Inventory 5-Year History

Building Permit 5-Year History Single-Family (Attached and Detached)

FORT COLLINS WELLINGTON / TIMNATH 4419 3816

4431 3721

4223 3661

4625 3826

3642

’14 ’15 ’16 ’17 ’18

Homes Listed

FORT COLLINS

4433 565

509

522

583 415

’14 ’15 ’16 ’17 ’18

Homes Sold

LOVELAND LOVELAND / BERTHOUD 2347 1977

2506

2465

2100

2050

2716 2275

361

465

369

2608 2076

285

237*

’14 ’15 ’16 ’17 ’18

GREELEY ’14 ’15 ’16 ’17 ’18

Homes Listed

Homes Sold

449 292

244 111

338

’14 ’15 ’16 ’17 ’18

GREELEY AREA 4153 3559

4230 3584

4097 3515

3851

4060

3388

3431

WINDSOR 631 516

451 265

’14 ’15 ’16 ’17 ’18

Homes Listed

Homes Sold

Greeley, Evans, Ault, Eaton, Johnstown, Kersey, LaSalle, Mead, Milliken

WINDSOR / SEVERANCE

485*

’14 ’15 ’16 ’17 ’18

Building Permit 3-Year History Single-Family (Attached and Detached)

BERTHOUD

154

435

426

1904 997

787

1056 824

1311

1505

1021

1007

1457

’16 ’17 ’18

WELLINGTON

’14 ’15 ’16 ’17 ’18

Homes Listed

Homes Sold

Includes all listing types, except mobile/manufactured.

Source: MLS, residential and attached homes only. * Numbers through November only.

273

188

101

’16 ’17 ’18

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Community service and philanthropy is an important piece of The Group’s cultural fabric.

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. We have partnered with industry leaders — Cornerstone Home Lending, Inc. and Stewart Title — to bring a high level of accountability to each phase of the real estate transaction.

We are happy to report that over the first 2 years of operation The Source Property Management is responsible for helping manage more than 240 properties. The Source PM employs a highly motivated and experienced team of people committed to providing a superior level of property management services and convenience to our investor clients.

Our affiliation with Leading Real Estate Companies of the World (LRE) provides The Group with a network of high quality companies standing ready to assist our customers who are relocating outside of Northern Colorado.

Luxury Portfolio offers state-of-the-art marketing for our luxury listings by providing exposure to potential buyers throughout the world.

The Group’s Relocation Department provides information, area tours, and other services to corporate employees relocating into and out of the area.

The Group has six convenient locations to serve our customers throughout Northern Colorado. Our Old Town Fort Collins Office doubles as an information center for visitors to the Old Town area. Our Centerra Office, located adjacent to the Loveland Visitors Center, serves as a regional office for our Greeley, Berthoud, Johnstown, and Longmont customers.

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YEAR-END REPORT FOR 2018

Our Commitment to Our Communities The welfare of our communities continues to be a priority for our company and all individuals at The Group.

Philanthropy is a core value at The Group. Our employees serve on nonprofit boards of directors and contribute an average of over 100 volunteer service hours each year.

The Group was recognized as the United Way of Larimer County’s Top Employee Giving Campaign for the fourth consecutive year. Individuals increased their giving in 2018 from the previous year.

The Group Scholarship is a full-tuition scholarship awarded annually to a Northern Colorado high school senior who will be entering Colorado State University’s College of Business. The 2018 scholarship was awarded to Courtney Stone, a graduate of Fossil Ridge High School.

A fundraiser in October held by the administrative staff raised dollars for UC Health Cancer Center.

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

GroupGives, funded by Group Partners, is a donor-advised fund managed by the Community Foundation of Northern Colorado. In 2018, GroupGives awarded $118,000 to local nonprofit organizations working to provide housing for men, women and children in Northern Colorado.

Organizations that received grants from GroupGives in 2018 include: House of Neighborly Service Faith Family Hospitality Habitat for Humanity – Fort Collins Harmony Cottages Mountain States Children’s Home Room 4 Hope RSVP of Weld County Habitat for Humanity of Estes Valley Pathways Hospice CASA of Larimer County Alternatives to Violence Since its inception in 2013, the GroupGives fund has awarded $520,000 to area organizations.

Over 130 Group Realtors and staff gathered for the annual GroupGives Back Day. Eight area organizations benefited from hands-on assistance from the volunteers: Fort Collins and Loveland Habitat for Humanity, Be The Gift, REStore, Career Closet, Neighbor to Neighbor, House of Neighborly Services and Angel House.

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Leaders in Real Estate

© January 2019 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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