Prepared for Chapter of Appraisal Institute

CHICAGO MARKET OVERVIEW

Presenters: Keely Polczynski, CB Richard Ellis Eteri Zaslavsky, Next Realty, LLC May 28, 2014 Table of Contents

• Brief Introductions • Chicago Urban Retail Investment Sales Activity • Retail Submarkets and Demographic Trends • Investment Sales Activity by Submarket  Michigan Avenue & Gold Coast  Armitage & Halstead  Southport  Bucktown  Fulton Market • Chicago Grocery Industry Trends • Chicago Grocery Investment Sales Activity • Dominick’s Update • Investor’s Perspective and Closing Remarks

2 Chicago Urban Retail Investment Sales Activity

Investment Activity is Robust

# of Total Value Average Average Cap Period Transactions (Million) Price PSF Rate 1Q2013 29 $170 $472 6.28% 2Q2013 42 $143 $725 5.98% 3Q2013 46 $110 $338 6.75% 4Q2013 47 $822 $519 5.69% 1Q2014 29 $211 $449 5.45%

3 Retail Submarkets

4 Income and Population Trends

5 Employment Trends

6 Housing Trends

7 FDIC Growth

8 Investment Sales Activity: Michigan Avenue

9 Investment Sales Activity: Gold Coast

10 Investment Sales Activity: Armitage & Halstead

11 Investment Sales Activity: Southport

12 Investment Sales Activity: Bucktown

13 Investment Sales Activity: Fulton Market

14 Chicago Grocery Industry Trends

• Urban Markets are Stronger and Low Density Markets are Struggling

• Upscale/Specialty/Organic Grocers are Expanding in Urban and In-Fill Markets

 Whole Foods, Trader Joe’s, Mariano’s, , Plum Market, Heinen’s, Fresh Thyme, Spouts,

• Fewer National Chains in Traditional Grocery Category (-Osco)

• Other Retailers Filling Former Grocery Stores

 Home Furnishings: Art Van, HomeGoods, American Sale, Ashley Furniture

 Fashion Retailers: Ross, TJ Maxx, DSW, Nordstrom Rack

15 Chicago Grocery Investment Sales Activity

48 Transactions Completed Over the Last 6 Quarters

# of Total Value Average Average Period Notable Transactions Transactions (Million) Price PSF Cap Rate 4Q2012 5 $66 $205 7.68% Mariano’s, West Loop, 6.4% cap rate, $521 psf 1Q2013 6 $64 $265 6.42% 2Q2013 7 $115 $152 7.81% 3Q2013 9 $85 $100 8.86% 4Q2013 9 $92 $159 6.13% Trader Joe’s, Evanston, 5.0% cap rate, $846 psf 1Q2014 12 $178 $210 7.42% Mariano’s, South Loop, 5.8% cap rate, $618 psf

Grocer # of Transactions 14 Users (Pete’s, Tony’s, etc.) 10 Mariano’s 8 Jewel 5 Trader Joes 2 Dominick’s 2 Wal-Mart, Target, Whole Foods, ’s, 1 (Each) , Food for Less, Cub Foods,

16 Dominick’s Update

• 72 Stores Closed 4Q2013 Mariano’s 11 Jewel 9 • 4 Stores Previously on Whole Foods 7 • 76 Total Joe Caputo & Sons 4 Tony’s 2  42 Committed by Other Grocers Cermak Fresh Market 2  34 Remain on the Market Heinen’s 2 Pete’s 1 Garden Fresh 1 Butera/ 1 Shop & Save 1 Angelo Caputo 1 Total 42

17 Investor’s Perspective and Closing Remarks

• General Outlook is Positive • Investment Environment is Active • Plenty of Capital to Deploy • Search for Yield • Strong Capital Markets • Aggressive Valuations • What does the Future Hold?

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