ST. LOUIS CAPITAL MARKETS · $15 $20 $25 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20 Office Industrial Retail Multihousing 2% 4% 6% 8% 10% 12% 14% 16% 1Q10 1Q11 1Q12 1Q13

ST. LOUIS CAPITAL MARETS REPORT 1Q20

ST. LOUISCAPITAL MARKETS

RESEARCH 1Q 2020

© Newmark Grubb Zimmer 2020

EXECUTIVE SUMMARYNewmark Grubb Zimmer (NGZ) is constantly monitoring market indicators, tracking and analyzing supply and demand drivers, cyclical patterns and industry trends. The following quarterly research report examines the multifaceted St. Louis investment market.

NGZ research and analytics has established a system of data flow unique in our industry. Rather than rely on third-party data sources, our data acquisition efforts involve inputs from advisors in the field, analysts and brokers executing transactions. NGZ research converts market data and analysis into knowledge that creates value for our clients.

Our clients include market-leading investors and distinguished institutions in and around the St. Louis area and the Midwest. Our market knowledge continues to expand as the market progresses and evolves.

SIGNIFICANT MARKETTRANSACTIONS

480 UNITS – SOLD FOR $42,261,000 ($88,040/UNIT)Mid County | 10304 Oxford Hill Drive

MULTIHOUSING | OXFORD HILLS

107,000 SF GLA – SOLD FOR $40,800,000 ($381/SF)Downtown | 3700 Forest Park Avenue

OFFICE | 3700 FOREST PARK AVENUE

401,630 SF GLA – SOLD FOR $35,000,000 ($87/SF)Downtown | 701 Market Street

OFFICE | 701 MARKET STREET

180 UNITS – SOLD FOR $28,400,000 ($157,780/UNIT)St. Charles County | 2000 Styling Ridge Drive

MULTIHOUSING | MEADOWRIDGE APARTMENTS

540,000 SF GLA – SOLD FOR $27,450,000 ($51/SF)Metro East | 3971 Lakeview Corporate Drive

INDUSTRIAL | 3971 LAKEVIEW CORPORATE DRIVE


CAPITAL MARKETSST. LOUIS MARKET OVERVIEW

The pace of investment activity decreased in the St. Louis market, realiz-ing a decline of 11.4% in total sales when compared to a year prior. As a leading second-tier market, the St. Louis metropolitan area ranked sixth out of the largest nine Midwest markets in total sales volume during the past twelve months. Capitalization rates decreased 11 basis points (bps) compared to the past 12 months, registering 7.09% in first-quarter 2020. Total net absorption across the industrial, office, and retail sectors com-bined, increased 1.8 million square feet year-over-year, registering 168,274 square feet of negative absorption in first-quarter 2020. The multihousing sector realized 2,346 units of net absorption during the past four quarters. Vacancy increased 40 bps and 30 bps for the office and industrial sectors respectively, over the past year. Vacancy decreased 60 bps and 20 bps for the multihousing and retail sectors during the same period. Over the last 12 months, the sales volume for all property types registered $2.5 billion.

Industrial and multihousing assets led the way over the last 12 months accounting for 53.4% of total sales volume.

While COVID-19 has slowed deal flow, the NGZ Investment Sales and Capi-tal Markets Team has successfully assisted clients in closing transactions despite current short-term market conditions. Commercial real estate as an asset class remains a safe investment that historically outperforms other investment alternatives over the long term. Market fundamentals remain strong and the debt markets remain attractive for well capitalized buyers.

We anticipate an active second half of the year as market uncertainty from the COVID-19 pandemic wanes and investors with dry powder pursue opportunities resulting from current market distress.

Source: Newmark Grubb Zimmer Research, CoStar, Real Capital Analytics

5%

6%

7%

8%

9%

10%

11%

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20

Office Industrial Retail Multihousing

ST. LOUIS CAP RATESINCLUDES PROPERTY OR PORTFOLIO SALES $2.5 MILLION OR GREATER

MARKET ANALYSIS


1Q20 ST. LOUIS

AVERAGE ASKING RENT (PER/SF)

NET ABSORPTION

VACANCY RATE

$0

$5

$10

$15

$20

$25

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20


2%

4%

6%

8%

10%

12%

14%

16%

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20


-500

0

500

1,000

1,500

2,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Units

Squa

re F

eet



SIGNIFICANT SALES TRANSACTIONS

SELECT SALES TRANSACTONS | FIRST QUARTER OF 2020

SectorSector BuildingBuilding SubmarketSubmarket Sale PriceSale Price Price¹Price¹ SF/Units²SF/Units²

Office 100 N Broadway Downtown $19,900,000 $39 510,200

Office 1050 Old Des Peres Road West County $19,900,000 $354 56,160

Office Envision Portfolio (4) | 8, 16 Executive Drive & 331, 333 Salem Place Metro East $17,100,000 $110 155,760

Industrial 13860 Corporate Woods Trail North County $12,745,000 $53 241,050

Industrial 420 E Carrie Avenue St. Louis City $12,500,000 $223 56,020

Industrial 4465 Manchester Avenue St. Louis City $8,000,000 $134 59,750

Industrial 3850 Millstone Parkway St. Charles County $6,300,000 $65 96,830

Retail Ladue Market Place Mid County $6,050,000 $633 9,565

Retail Walgreens | 100 Admiral Weinel Boulevard Metro East $3,164,000 $226 14,020

Retail Jack in the Box | 31 Junction Drive Metro East $2,400,000 $973 2,470

1The price per unit/room is displayed for the Multihousing and Hospitality sectors. 2The number of total units/rooms is displayed for the Multihousing and Hospitality sectors.

MARKET ANALYSIS


1Q20 ST. LOUIS

5.5%DEN

6.1%HOU

6.0%DFW

6.1%MIA

6.2%ATL

5.8%DC

6.2%PHI

5.2%NYC

5.5%BOS

6.3%CHI

6.2%KC5.0%

SF

5.1%LA

5.4%POR

5.1%SEA

6.0%MSP

5.0%-5.5%

5.6%-6.1%6.2%+

7.1%STL

6.4%ORL

5.9%SLC

5.8%LAS

5.8%PHX

6.1%NASH

6.9%IND

$129,954,400$85,893,422

$73,050,000

$79,975,000

$14,875,000

$93,350,000

$50,580,341

$29,850,000

$71,500,000

$8,000,000

$40,800,000

$48,500,000

$20,875,000

$62,630,000

$6,700,000

$35,000,000

$42,040,465$19,800,000

$50,000,000$4,600,000

$32,900,000 $37,475,694 $17,938,782 $44,000,000 $4,131,600

Office Industrial Retail Multihousing Hospitality

• BurkHill RE LLC/Gershman Commercial RE

• Lingerfelt CommonWealth Prtnrs

• CapStone Holdings

• Briar Meads Capital

• Larson Capital Management

• Blackstone

• DRA Advisors

• Exeter

• ILPT REIT

• Guggenheim Partners

• The Staenberg Group

• First National Realty Prtnrs

• Select Strategies Realty

• RH Johnson Co

• Service Properties Trust

MOST ACTIVE BUYERS IN THE ST. LOUIS MARKET BY ASSET TYPE 12-MONTH TOTALS (IN MILLIONS)

CAP RATES | ALL PROPERTY TYPES12-MONTH AVERAGE

• Investcorp

• Goldenrod Cap Prtnrs

• Timberland Prtnrs

• Emerald Equity Group

• Hamilton Zanze & Co

• Lodging Hospitality

• St. Charles Hotel Group, LLC

• Double Star, Inc.

• Om Sai Hospitality, LLC

• Welcome Hospitality, LLC


SIGNIFICANT SALES TRANSACTIONS

DRY POWDER

DEBT FUND DRY POWDER

Source: NKF Research, Preqin

$0$1

$3 $3$5

$6$7

$11

$16 $16

$12$14

$8

$20$21

$18

$25

$34

$45

$38$40

0%

5%

10%

15%

20%

25%

$0

$10

$20

$30

$40

$50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Debt

Fun

d Dr

y Pow

der a

s %

of T

otal

Billi

ons

Aggregate Financing % Debt Fund

Note: Excluding Debt and Distressed Funds Source: NKF Research, Preqin

$86$94

$79

$92

$79

$113

$102

$134$145

$170

$202$196 $197

37.2%39.4%

35.4%

30.4%

27.8%30.1% 29.4% 29.9% 30.3% 30.0% 30.2% 29.6%

31.0%

38.4%

35.1%

36.7% 38.0%

44.3%

32.7% 34.3%

42.5%

33.8%32.4% 33.2%

38.3%35.5%

4.7%3.2%

6.3% 6.5%

8.9% 8.8%10.8% 10.4% 10.3% 10.6%

7.9% 7.7% 8.1%

0%

10%

20%

30%

40%

50%

$0

$40

$80

$120

$160

$200

$240

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Univested Equity Value-add Opportunistic Core & Core Plus

Mike Carlson, SIOR, CCIMExecutive Managing Director, [email protected]

Kevin McLaughlin, SIORExecutive Managing Director, [email protected]

Andrew GartenDirector, [email protected]

By using any report or information provided by Newmark Grubb Zimmer (“Newmark”), the recipient hereby acknowledges and agrees that: (a) Newmark makes no express or implied representations or warranties with respect to the information and guarantees no particular outcome or result; (b) Newmark does not provide legal advice and does not represent or guarantee that any particular course of conduct, strategy, or action suggested by it conforms to any applicable law or regulation; (c) While Newmark has used its commercially diligent efforts to verify any underlying assumptions used in the report, some assumptions may not transpire and unforeseen events and circumstances may arise which may affect any such projections; (d) Although all information furnished in the report are from sources Newmark deems as reliable, such information has not been verified and no express representation is made nor is any to be implied as to the accuracy thereof and it is submitted subject to errors, omissions, change of price, rental or other conditions; (e) All proprietary information, which may include ideas, concepts, frameworks, know-how, methodologies, analytical approaches, databases, business insights, products, software, and descriptions thereof developed by Newmark shall be the property of Newmark; the ownership of the report does not include any rights of electronic data processing files, programs or models completed for research, unless specifically agreed to in writing by Newmark; (f) Such report shall be used for the sole purpose for which it is prepared and no other parties shall be deemed third party beneficiaries of such report; and (g) Any report may not be published, resold, distributed or communicated to the public without the prior written consent of Newmark Grubb Zimmer.™ Newmark Grubb Zimmer is a trademark of their respective owners

Newmark Grubb Zimmer research reports are also available at www.ngzimmer.com

Terms and DefinitionsGross Leasable Area (GLA) – Expressed in square feet. It is the total floor area designed for the occupancy and exclusive use of tenants, including basements and mezzanines. It is the standard measure for determining the size of retail spaces, specifically shopping centers, where rent is calculated based on GLA occupied. There is no real difference between RBA (Rentable Building Area) and GLA except that GLA is used when referring to retail properties while RBA is used for other commercial properties.

Vacancy Rate – The vacancy rate is the amount of physically vacant space divided by the inventory and includes direct and sublease vacant.

Net Absorption – The net change in physically occupied space over a period of time.

Average Asking Rent – The dollar amount asked by landlords for available space expressed in dollars per square foot per year. Retail rents are expressed as triple net where all costs including, but not limited to, real estate taxes, insurance and common area maintenance are borne by the tenant on a pro rata basis. The asking rent for each building in the market is weighed by the amount of available space in the building.

Reproduction in whole or part is permitted only with the written consent of Newmark Grubb Zimmer. Some of the data in this report has been gathered from third-party sources and has not been independently verified by Newmark Grubb Zimmer. Newmark Grubb Zimmer makes no warranties or representations as to the completeness or accuracy thereof.

ST. LOUIS, MO8235 Forsyth Boulevard, Suite 200Clayton, MO 63105314.254.4600

KANSAS CITY, MO1220 Washington Street, Suite 300Kansas City, MO 64105816.474.2000 EASTERN JACKSON COUNTY1485 SW Market StreetLee’s Summit, MO 64081816.474.2000

North AmericaCanadaUnited States

EuropeAustriaBelgiumCzech RepublicFranceGermanyIrelandItalyNetherlandsPolandPortugalRomaniaRussiaSpainSwitzerlandUnited Kingdom

Latin AmericaArgentinaBrazilChileColombiaCosta RicaDominican RepublicMexicoPeruPuerto Rico

Asia-PacificAustraliaCambodiaChinaHong KongIndiaIndonesiaJapanMalaysiaNew ZealandSingapore

South KoreaTaiwanThailand

AfricaBotswanaKenyaMalawiNigeriaSouth AfricaTanzaniaUgandaZambiaZimbabweUgandaZambiaZimbabwe

Middle EastSaudi ArabiaUnited Arab Emirates

Documents

ST. LOUIS CAPITAL MARKETS · $15 $20 $25 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20 Office Industrial Retail Multihousing 2% 4% 6% 8% 10% 12% 14% 16% 1Q10 1Q11 1Q12 1Q13