Chicago Real Estate & Residential Market Overview US Capital Markets May 2016
AGENDA Why Invest in Chicago? Lakeshore East Neighborhood Amenities Residential Market Overview Conclusions 2
CHICAGO IS A MASSIVE ECONOMIC CONCENTRATION $561B Economy Rivals Nations Source: World Bank (2015), Moody s (2014), WBC (2016) 3
CHICAGO ECONOMIC STANDING 9 th largest city GDP in the world City Rankings By Gross Domestic Product $1,800 B $1,600 B $1,400 B $1,200 B $1,000 B $800 B $600 B $400 B $200 B $0 B 4
ECONOMIC POWERHOUSE Chicago scores in the top 10 in independent reviews of economic strength #1 Metro for New & Expanding Companies - Site Selection magazine, 2014 and 2015 4 th most economically powerful city in the world - Global Economic Power Index, R. Florida and Martin Prosperity Institute, 2011 Top 10 Economic Development Group - Site Selection magazine, 2015 Top 10 global business hotspots of 2025 The Economist Intelligence Unit, 2013 2 nd most powerful global city in the United States - Global city rankings from The Economist, A.T. Kearney, McKinsey, Global Financial Centres Index Home to President Barack Obama and Secretary of Commerce Penny Pritzker 4 th best foreign direct investment strategy - Among 422 major North/South American Cities of the Future, surpassing all US cities Among the top 10 Cities of Opportunity - PwC, 2014 5
CAPITAL OF THE MIDWEST Chicago is the premier city of the central United States Chicago MSA Chicago Central Business District Lakeshore East San Francisco Los Angeles Chicago Boston New York City Washington DC Chicago is the 3 rd most populated city in the United States And the 24th most populated in the world 6
LAKESHORE EAST A modern neighborhood surrounded by parks and water 7
ACCESSIBILITY: NATIONAL AND INTERNATIONAL HUB Direct flights between major Asian cities and Chicago Beijing / PEK Seoul / ICN Duration - 16 hrs (direct) Duration - 15 hrs (direct) Shanghai / PVG Duration - 15 hrs (direct) Duration - 15 hrs (direct) Hong Kong / HKG Chicago / ORD Duration 20+ hrs (1 stop) Kuala Lumpur / KUL Duration 20+ hrs (1 stop) Weekly Number of Flights Singapore / SIN 1,460 daily departures from Chicago Hong Kong to Chicago: 14 (Direct) Singapore to Chicago: Multiple flights daily with 1-2 stops Source: www.flightstats.com Non-stop service to 200+ global destinations Kuala Lumpur to Chicago: Multiple flights daily with 1-2 stops 8
CHICAGO ECONOMIC HIGHLIGHTS Large, stable population base. Employment growth, post-recession Chicago MSA Population 10.0M 9.5M 9.0M 8.5M 8.0M 7.5M 7.0M 6.5M 6.0M 5.5M 5.0M 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 All Employees Within the Chicago MSA 3.8M 3.7M 3.6M 3.5M 3.4M 3.3M 3.2M 3.1M 3.0M 2.9M 1990 1990 1991 1991 1992 1992 1993 1994 1994 1995 1995 1996 1997 1997 1998 1998 1999 1999 2000 2001 2001 2002 2002 2003 2004 2004 2005 2005 2006 2006 2007 2008 2008 2009 2009 2010 2011 2011 2012 2012 2013 2013 2014 2015 2015 9
INTERNATIONAL BUSINESS DESTINATION Chicago is globally connected and an important player in the world economy International trade increased from $159 to $208 billion from 2010 to 2014 Top 5 Global Destination City 1,800 Foreign Based Companies $100 Billion Foreign Direct Investment 80 + Consulates / Trade Offices Malaysian Trade Organization Indonesian Consulate Singaporean Consulate Chinese Consulate Hong Kong Trade Organization 10
STRONG INTEREST BY ASIAN INSTITUTIONAL INVESTORS Recent purchases in Chicago demonstrate attractiveness of market Notable Transactions China Hotel Portfolio Fairmont Hotel $497M InterContiental Hotel $569M Asia Pacific Investments by Country (Since 2011) South Korea Office Tower Three First National $344M $2.50B $2.0B $1.50B $1.0B Singapore Industrial Hub LogistiCenter $53M $0.50B $0.0B China South Korea Singapore Japan Australia Other Source: Real Capital Analytics 11
EXCELLENT BUSINESS ENVIRONMENT Numerous Relocations to Downtown for Quality of Life and Employee Recruitment 176M Square feet of office within downtown Chicago. 37 Companies have relocated their headquarters to Chicago since 2011 385 Number of projects with either more than $1 million investment, gain of 20 jobs, or 20,000 sf of space added. 12,000 Jobs added to downtown Chicago in 2015 #1 Top US Metro for Corporate Expansions and Relocations 12
PRESTIGIOUS EDUCATIONAL INSTITUTIONS 22 highly regarded universities, easily accessible 65,000 college/university students located in the CBD alone Home to world-leading educational institutions: - University of Chicago, Booth School of Business (ranked 2 th best globally) - Northwestern University Kellogg Graduate School of Management (ranked 5 th best globally) Northwestern University In Asia: Beijing, Singapore, Hong Kong University of Illinois at Chicago 27,563 students DePaul University 23,799 students Northwestern University 21,108 students In Asia: Beijing, Singapore, Hong Kong Loyola University Chicago 16,437 students University of Chicago 15,312 students University of Chicago Columbia College Chicago Roosevelt University 9,442 students 6,113 students 13
WORLD-CLASS PARKS AND CULTURAL AMENITIES Award-winning amenities Outdoor Amenities 26 miles of lakefront with an 18-mile lakefront trail 580 parks and 27 beaches; Millennium Park is nationally celebrated (winner of Travel and Leisure Best Public Space award, among others) Over 225 miles of bike lanes Arts & Culture 60 museums and numerous art galleries 30 film festivals 200 theater companies and 220 dance companies 14
ART INSTITUTE OF CHICAGO TripAdvisor: Best Museum in the World 15
SHOPPING, NIGHTLIFE, ENTERTAINMENT Regional destination for weekend shopping and entertainment trips Nightlife & Entertainment Over 225 music venues Homes of the Blues 15 citywide and 50 neighborhood music festivals Second City Comedy Troupe World-Class Dining, Hotels, & Shopping Over 100 hotels with 37,000 hotel rooms Over 4,700 restaurants; 22 Michelin starred restaurants Prominent retailers along Michigan Ave. and State St. 16
AGENDA Why Invest in Chicago? Lakeshore East Neighborhood Amenities Residential Market Overview Conclusions 17
LAKESHORE EAST AMENITIES Within walking distance of world-class parks, shopping, and sports venues WATER TOWER MICHIGAN AVENUE JOHN HANCOCK BLDG NAVY PIER MAGGIE DALEY PARK MILLENIUM PARK GRANT PARK WILLIS TOWER ART INSTITUTE ADLER PLANETARIUM SHEDD AQUARIUM SOLIDER FIELD UNITED CENTER WRIGLEY FIELD US CELLUAR FIELD TOYOTA PARK FIELD MUSEUM MCCORMICK PLACE 18
IMMEDIATE ACCESS TO TRAINS AND BUSES Extensive public transport system (light rail, train, bus, ferry) EAST LOOP CHICAGO TRAIN LINES 23 min MIDWAY AIRPORT 26 min O HARE AIRPORT 1.7 Million Ridership Total 8 Train Lines 19
WALK TO MAJOR UNIVERSITIES Graduate and Undergraduate Programs 20
LAKESHORE EAST DEMOGRAPHICS Growing, increasingly wealthy population Household Income Comparison Almost 2x National Lakeshore East Median Household Income $102,420 National Median Household Income $53,217 21
PREMIER RETAIL NODES WITHIN WALKING DISTANCE A major shopping destination North Michigan Avenue Oak Street State Street 22
AGENDA Why Invest in Chicago? Lakeshore East Neighborhood Amenities Residential Market Overview Conclusions 23
NATIONAL COUNCIL OF REAL ESTATE INVESTMENT Investment real estate annual growth averages approx.10% over 22 years NCREIF Real Estates Index Returns 30.0% Apprasial Based Transaction Based 25.0% 20.0% 15.0% Percent Change 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 24
CHICAGO REAL ESTATE MARKET Streeterville and Lakeshore East are the hottest rental markets Gold Coast & Near North River North South Streeterville West Loop & River West Central Loop Lakeshore East Highest Rent South Loop 25
PRICE APPRECIATION Substantial recovery within the Chicago market. Prices have not yet peaked. Chicago Metro Case-Shiller Price Appreciation 200.00 175.00 150.00 125.00 Index Value 100.00 75.00 50.00 25.00 0.00 26
DOWNTOWN CONDOMINIUM PRICING Resale pricing increased on average 5.5% over 2011-2015 Year Over Year Price Change 10.0% 9.30% 8.0% 6.0% 5.51% 4.41% Percent Change 4.0% 2.0% 0.0% 2.84% -2.0% -4.0% -3.41% -6.0% 2011 2012 2013 2014 2015 Source: Appraisal Research Counselors 27
LUXURY RESIDENTIAL PRICING Pricing exceeds $1,000 per square foot Access to hotel amenities drives higher pricing No Hotel Component Included Hotel Component Included 28
LIMITED SUPPLY Few new condominiums delivered to the market since the 2009 recession New properties delivered to the market are almost immediately absorbed due to limited supply and pent up demand For Sale Unit Deliveries 4,500 4,000 3,500 3,000 Units 2,500 2,000 1,500 1,000 500 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 est. 2017 est. 2018 est. 2019 est. Source: Appraisal Research Counselors 29
LIMITED SUPPLY Shortage of new condominiums delivered to the market since the recession Land along the lakefront is increasingly scarce, so development must move inland. Premium paid for lakefront properties. 860 Units Proposed new construction condominium units 1 7 8 3 4 9 283 Units Condominiums currently under construction 14 15 5 11 6 12 13 10 2 20 2,500 Units Average condominium units absorbed annually 2000-2010 16 18 19 17 43% Source: Appraisal Research Counselors Of under-construction condominiums are already under contract Recently Delivered Under Construction Proposed 20% Sold 30
CHICAGO LUXURY RENTAL Achieve $3-$6 per square foot per month, and 4.8% ROI Employment growth and re-gentrifying urban core drives demand Annual Rent $48 / SF Unit Size 2,000 SF ROI Superior amenity packages lead to higher 4.8% rental rates Sale Price $1,000 / SF Unit Size 2,000 SF Rental Rate by Unit Size $6.00 1-Bed 2-Bed 3-Bed $5.00 $4.00 Rent / SF $3.00 $2.00 $1.00 $0.00 Walton on the Park 500 N Lake Shore Drive 1225 Old Town Hubbard Place 73 E Lake Aqua OneEleven Optima Chicago Center 343 W Wolf Point 31
LAKESHORE EAST RENTAL MARKET 5.3% average annual rental growth rate Class A properties consistently lease successfully Occupancy exceeded 90% throughout the recession Loop & Lakeshore East Occupancy & Rental Rates (For the Year Ended) 100.0% Occupancy Class A Rent $3.60 98.0% $3.40 96.0% $3.20 Occupancy 94.0% 92.0% 90.0% $3.00 $2.80 $2.60 Rental Rate 88.0% $2.40 86.0% $2.20 84.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 $2.00 Source: Appraisal Research Counselors 32
AGENDA Why Invest in Chicago? Lakeshore East Neighborhood Amenities Residential Market Overview Conclusions 33
EXCELLENT INVESTMENT FUNDAMENTALS Central location and premier amenity packages drive premium pricing Proximity to world-class universities and urban amenities Massive employment growth and housing demand to Chicago s CBD Wealthy neighborhoods: incomes twice the national median Stunning views of Lake Michigan, Grant Park, and downtown Chicago Strong real estate fundamentals: Limited supply and untapped demand Upward pressure on prices and rental rates High occupancy rates We project continued growth: Premier amenities: Waterfront, parks, cultural attractions, shopping Business hub: Continued economic vitality and concentration in the CBD Global universities: Attract students, employers, and research funding 34
THANK YOU The material in this Market Overview is furnished solely for the purpose of considering a residential sale transaction at Vista Tower ( Property ), located in Chicago, Illinois. The information is not to be used for any other purpose. It is based, in part upon information obtained by JLL from sources they deem to be reliable. Summaries contained herein of any legal documents are not intended to be comprehensive statements of the terms of such documents, but rather only outlines of some of the principal provisions contained therein. No warranty or representation, expressed or implied, is made by Seller or JLL or any of their respective related agents or entities as to the accuracy or completeness of the information contained herein. Prospective buyers should make their own investigations, projections and conclusions regarding the Property. It is expected that prospective buyers will conduct their own independent due diligence concerning the Property. No representations, expressed or implied, are made as to the foregoing matters by the Seller, JLL or any of their respective officers, employees, affiliates and/or agents. 35