LOUISVILLE2019 MARKET OVERVIEW

2019 MARKET OVERVIEW

• PRIME, CENTRALIZED LOCATION—within a one-day drive of two-thirds of the nation’s population

• STRONG CORPORATE BASE—numerous Fortune 500, Fortune 1000, regional, national and international corporations have headquarters or a large presence in the metro area

• GLOBAL LEADER IN AIR CARGO TRAFFIC— Louisville ranked #7 in the world by Airports Council International

• NATIONALLY RECOGNIZED BUSINESS SCHOOL—University of Louisville’s School of Business nationally recognized as one of the best business schools by U.S. News & World Report

• RICH CULTURE AND QUALITY OF LIFE—the city draws attention for being vibrant and sophisticated as well as culturally rich and hospitable. Louisville was ranked among the 20 most cultured cities by Travel & Leisure

• ECONOMIC DRIVERS—Louisville’s thriving economy is driven by five major sectors: Healthcare, Tourism, Higher Education, Manufacturing and Transportation

• GROWTH & DEVELOPMENT—Louisville is in the midst of an economic renaissance with $13B in new capital investment since 2014

2018 Population 1,304,874

2023 Population (Estimated) 1,351,952

Household Growth (2010-2018) 5.12%

Employment (Nov. 2018) 678,600

Employment Growth (2010-2018) 95,586

Unemployment Rate (Nov. 2018) 3.4%

Fortune 500 Headquarter Companies 3

LouisvilleRanked

#14 for millennial boomtowns

—Business Insider

TOP REASONS TO INVEST IN LOUISVILLE

Louisville has emerged as a “young Nashville” and represents the northern edge of the Southeast. It has developed an expanding base of increasingly diverse capital that recognizes this mid-sized city as a

growth pocket in the center of the U.S. and a diverse, riverfront city. Louisville’s recent recognition as a place of “Free-wheeling Innovation and Growth” (TIME Magazine), among the five “Surprising Places to Watch” (Site Selection

Magazine), one of “America’s Breakout Cities” (CNN Money) and a top 20 City with Economic Momentum” (Newgeography.com), are also helping to attract new jobs and unprecedented investor attention. Louisville is home to 13 Fortune 500 companies,

three of which are headquartered in the city. The metro is a nationally recognized regional distribution and warehousing hub serving major operations including Amazon, UPS, Ford Motor Company and General Electric. As a complement to Louisville’s economic expansion, the leading

healthcare companies, Humana and Kindred Healthcare—both of which are Fortune 500 companies headquartered in Louisville— hire a steady stream of information technology and healthcare professionals in high paying jobs.

LOUISVILLE: THE STAR OF THE SOUTHEAST

LOUISVILLE MSA “AT A GLANCE”

Source: Bureau of Labor Statistics; Environmental Systems Research Institute (ESRI)

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LOUISVILLE MSA TOP EMPLOYERSCOMPANY NAME # EMPLOYEES

UPS 21,233

JEFFERSON COUNTY PUBLIC SCHOOLS 14,476

FORD MOTOR COMPANY 12,600

NORTON HEALTHCARE 12,247

HUMANA, INC. 12,000

UNIVERSITY OF LOUISVILLE 6,933

LOUISVILLE METRO GOVERNMENT 7,000

BAPTIST HEALTHCARE 6,159

GE APPLIANCES 6,000

KROGER 3,079

SPECTRUM 2,400

MANNA, INC. 2,300

ARCHDIOCESE OF LOUISVILLE 2,252

RESCARE, INC. 1,948

A HAVEN FOR NOTABLE EMPLOYERS

LOUISVILLE IS HEADQUARTERS FORTHREE FORTUNE 500 COMPANIES

LOUISVILLE’S MAJOR CORPORATE HQCOMPANY NAME # EMPLOYEES

Humana | Fortune 100 12,000

GE Appliances 6,000

Manna, Inc. 2,300

Papa Johns 1,626

Kindred Healthcare | Fortune 500 1,571

Churchill Downs 1,515

Samtec Inc. 1,500

Texas Roadhouse 1,500

Rawlings Group 1,440

Brown-Forman Corp 1,300

Signature HealthCARE 900

Yum! Brands Inc. | Fortune 100 875

Republic Bank & Trust 849

Thornton's Inc. 774

Source: Business First, December 2018

Louisville ranked #1 City for

Manufacturing—Forbes

Source: Bureau of Labor Statistics; Environmental Systems Research Institute (ESRI)

2019 MARKET OVERVIEW

Jobs Created from Nov. 2010 to Nov. 2018 Average Home Value White Collar Employment

$220,801 59.2%

*In 2015 the U.S. Census Bureau changed “MSA” boundaries to “CBSA” boundaries.

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eLOUISVILLE MSA ECONOMIC STATISTICS

Louisville ranked #8 Best City for

New College Grads—Smart Asset

EMPLOYMENT GROWTH* HOUSEHOLD

POPULATION GROWTH*MEDIAN HOUSEHOLD INCOME*

73,066

Sources: U.S. Census Bureau, American Community Surveys; Bureau of Labor Statistics

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

570,000

580,000

590,000

600,000

610,000

620,000

630,000

640,000

650,000

2011 2012 2013 2014 2015 2016 2017

Employment Growth

Employed Unemployment Rate485,000

490,000

495,000

500,000

505,000

510,000

515,000

2011 2012 2013 2014 2015 2016 2017

Household Growth

Empl

oyee

s

$45,000

$46,000$47,000$48,000

$49,000$50,000$51,000$52,000

$53,000$54,000$55,000

$56,000

2011 2012 2013 2014 2015 2016 2017

Median Household Income

1,240,000

1,250,000

1,260,000

1,270,000

1,280,000

1,290,000

1,300,000

1,310,000

2011 2012 2013 2014 2015 2016 2017

Total Population

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LOUISVILLE MSA MULTIFAMILY STATISTICS

TOTAL MARKET RENT AND OCCUPANCY

A-GRADE CAP RATES

TOP-20 RENT AND OCCUPANCY

4.38%4.81% 4.79%

6.31%

3.10%2.66%

1.84%2.49% 2.54%

2.16%1.58%

2.27%2.84%

92110 132

342 427480 393 357

381440

359 257

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

20052006

2007

2008-20092010

20112012

20132014

20152016

2017

2018 YTD

Cap

Rate

/10-

year

UST

10-Year UST Risk Premium

Louisville ranked 7th among the “

Top 15 Cities” for affordable living

—Forbes

$1,020$1,043

$1,116

$1,161$1,143 $1,148 $1,137 $1,144

86%

88%

90%

92%

94%

96%

98%

100%

$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200

Q1 15 Q3 15 Q1 16 Q3 16 Q1 17 Q3 17 Q1 18 Q3 18

Avg. Quoted Rent Occupancy Rate

7.28%

6.66% 6.75%

5.81%5.69%

5.35%5.61%

4.64%

3%

4%

5%

6%

7%

8%

2011 2012 2013 2014 2015 2016 2017 2018

Cap

Rate

Cap

Rate

$625$639 $641

$656$669

$699

$734$760

$791

$826

$858 $867

86%

88%

90%

92%

94%

96%

98%

100%

$600

$650

$700

$750

$800

$850

$900

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Q3 2018

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INVESTMENTS DRIVE DEVELOPMENT

COMPUTERSHARE—a global leader in transfer agency, employee equity plans, mortgage servicing and more with more than 600 employees in the CBD. The company has filed plans to hire an additional 500 in coming years.

HUMANA—approximately 12,000 employees in Louisville with the vast majority located in the CBD.

KINDRED HEALTH—a Fortune 500 company with over 1,500 employees headquarted in Louisville.

LOUISVILLE INTERNATIONAL AIRPORT—is home to the largest fully

“#1 City for Manufacturing Job Growth”—Forbes,

2017

THE CBD IS ANCHORED BY

MAJOR DEVELOPMENTS (Partial List)NAME STATUS PRICE

Old Brownsboro Crossings MOB Under Construction $20M

Paristown Point Arts District Proposed $28M

Louisville FC Stadium Under Construction $65M

Kindred Healthcare HQ Expansion Complete $39.5M

Parklands of Floyds Fork Complete $120M

UPS Worldport Centennial Hub  Complete $300M

Nucleus Building I Complete $425M

The Novak Center for Children’s Complete $475M

Convention Center Expansion Complete $720M

Omni Multi-Use Development Complete $754M

KFC Yum! Center Complete $1.38B

Ohio River Bridges Project Complete $2.6B

Louisville, the state’s largest metropolitan area, is a vibrant riverfront city with a rapidly growing population, diversification of employment and attractive multifamily supply/demand balance. Louisville is home to 13 Fortune 500 companies, three of which are headquartered in the city. The metro is a nationally recognized regional distribution and warehousing hub serving major operations including Amazon, UPS, Ford Motor Company and General Electric, among many others. With a highly successful series of major distribution facilities now open and future capital investments in distribution parks planned, Louisville continues to be the focus of institutional investment. Leading this remarkable transformation from a city known mostly for horse racing, to a logistics giant is the development and expansion of UPS Worldport, the corporation’s main global air hub for its distribution business across the US. The series of substantial improvements has steadily boosted UPS employment in the Louisville metro. The additional logistics jobs created over the past five years have had a multiplier effect in several areas including retail and office support positions.

With 20 employers in the healthcare sector, Louisville is at the forefront of the nation’s healthcare trends. Nationally-recognized Fortune 500 companies, Humana and Kindred Healthcare, are headquartered in Louisville and hire a steady stream of information technology and healthcare professionals in high-paying positions. Yum! Brands (Fortune 500), one of the world’s largest restaurant holding companies, is also headquartered in Louisville. These employers’ presence in the Louisville metro brings stable demand for apartment housing and is an immeasurable economic driver for the success of the multifamily market. Building upon the city’s healthcare, research and life sciences industry, the University of Louisville Foundation initiated a project to foster economic development and innovation for Louisville’s downtown community, called Nucleus Innovation Park, a nine-acre urban life science research park located along the eastern edge of downtown Louisville.

Louisville is in the midst of an economic renaissance with $13B in new capital investment since 2014. Louisville Forward, the city’s organization for economic development, focuses on making Louisville a premier destination through business attraction, retention and expansion.

automated package handling facility in the world, turning over an average of 130 aircrafts and processing an average of 1.6M.

THE UNIVERSITY OF LOUISVILLE—Nearly 21,000 students and 7,000+ employees.

BROWN FORMAN— headquartered in Louisville with 1,300 employees

2019 MARKET OVERVIEW

THE MSA BAR CONTINUES TO RISELouisville among “top cities where millennials are

moving” —SmartAsset

NEW CBD DEVELOPMENTS ARE RAISING THE BAR

THE RESIDENCES AT OMNI, a 30-story, mixed-use, 226-unit, residential building, towers over the city of Louisville. A first-of-its-kind in the CBD, The Residences at Omni has raised the bar on luxury and convenience shattering Louisville metro’s prior rent ceiling. Units feature floor-to-ceiling glass with panoramic city views, LVT flooring, stainless steel appliances and granite countertops. Residents enjoy a 24-hour state-of-the-art fitness center, resort-style pool, pet spa, controlled access parking garage and direct access to an on-site market and plaza level retail.

Total Number of Multifamily Units

Average Occupancy

95%52,354Average

Square Feet

939Average

Rent

$863Average Rent PSF

$0.92

Multifamily demand in Louisville is at an all-time high, driving new housing and mixed-use developments that are attracting highly educated, highly compensated residents and adding to the MSA’s growth and vibrancy.

Strong demand in the CBD, fueled largely by “suburban to urban“ preferences, continues to drive low vacancy rates and all-time high rental rates (see Residences at the Omni to right). Properties delivered to the market in the last 12 months have achieved an average asking rate of $1,414 per unit, $1.48 PSF, which is 60% above average rents at existing properties. Today’s levels of new multifamily supply are challenged to satisfy the growing demand to live in the Louisville MSA.

Louisville, with a growing metro population of over 1.3M, has emerged as a shining star in the northern edge of the Southeast. A dazzling array of national accolades crown this city on the move. The city has become widely recognized for its diverse business and corporate base, highly educated workforce, world-class sports, cultural attractions, shopping and premier dining and entertainment options.

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SELECT INSTITUTIONAL EQUITY SOURCES

ACRE Real Estate

Almanac/Mount Auburn

American Campus Communities

Argosy

Blackstone

Continental Realty Advisors

Eagle Realty

Goldman

Harrison Street

Independence Realty Trust

Inland

MAA REIT

PAC

Pride Rock

Public REIT

Sentinel

The John Buck Company

Varia US Properties

Average Rent PSF

Louisville named“top 15 city for

affordable living”—Forbes

2019 MARKET OVERVIEW

WORLD-CLASS EVENTS DRIVE VISITORS & SPENDING:

• KENTUCKY DERBY• KENTUCKY OAKS• PGA CHAMPIONSHIP• LOUISVILLE FC• CHAMPIONSHIP BOXING• FORECASTLE FESTIVAL• IRONMAN TRIATHLON• MID-AMERICA TRUCKING SHOW• NCAA CHAMPIONSHIPS• NSRA STREET ROD NATIONALS• RED BULL FLUGTAG• RED BULL GLOBAL RALLYCROSS• ST. JAMES COURT ART SHOW• THUNDER OVER LOUISVILLE• VEX ROBOTICS WORLD CHAMPIONSHIP

“For the first time,we will benefit from all

the revenue streams associated with professional

soccer, which means sustainability for our business

model long into the future”—Brad Estes,

LouCity President

WORLD-CLASS SPORTING AND EVENTS

Sports is a catalyst for development and positive change throughout the region. Louisville has rich history of hosting professional and amateur sporting events, most notably the Kentucky Derby, often referred to as “the most exciting two minutes in sports”.

Louisville Parks:12,000 Acres

120 Parks70 Miles

of Hiking Trails60 Miles

of Paved Paths

LOUISVILLE FC SOCCER STADIUM

Set to open in 2020, Lou City’s $65M, 11,300-seat world-class stadium is currently under construction in Louisville’s 35-acre Butchertown Development District.

1 1

CULTURE DRIVES TOURISM

THE MARKET

LOUISVILLE RANKED 3RD ON THE LIST OF “MID-SIZED

CITIES WITH THE MOST ENERGY STAR BUILDINGS —Environmental Protection

Agency, 2018

LOUISVILLE RANKED 10TH ON THE LIST OF THE

“25 BEST CITIES FOR JOBS” —Glassdoor, 2017

#1 “BEST DESTINATIONEXPERIENCE

—World Food Travel Association, 2017

LOUISVILLE RANKED A “TOP CITY FOR WOMEN

IN TECHNOLOGY“ —SmartAsset, 2018

LOUISVILLE RANKED #1 ON THE LIST OF THE

“BEST PLACES TO TRAVEL” —Travel & Leisure, 2017

LOUISVILLE NAMED A “GOOGLE FIBER CITY”

—Google, 2017

LOUISVILLE RANKED 9TH “BEST CITY FOR JOB SEEKERS

—ZipRecruiter 2017

LOUISVILLE NAMED #1 “CITY FOR

MANUFACTURING JOB GROWTH” —Forbes, 2017

LOUISVILLE NAMED A TOP 15 CITY FOR

AFFORDABLE LIVING” —Forbes, 2018

LOUISVILLE NAMED TO LIST OF “TOP CITIES WITH THE HAPPIEST WORKERS”

—CNBC, 2019

LOUISVILLE LISTED AMONG THE WORLDS “TOP 1O BEER DESTINATIONS”

—VinePair, 2018

LOUISVILLE NAMED THE “#1 BEST FOOD CITY

IN THE WORLD” —National Geographic, 2017

©2019 CBRE, Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market.

CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks and photos displayed on this document are the property of their respective owners.

Sources: Business Insider, CBRE, Inc., Chief Executive, Downtown Indy, Inc., Environmental Systems Research Institute (ESRI), Fast Reports, Food & Wine, Forbes, Indianapolis Business Journal (IBJ), Indy Chamber of Commerce, Kiplinger, Money Magazine, Niche.com, Nielsen, Patch.com, Software.org, Time Magazine, Travel & Leisure, U.S. Bureau of Labor Statistics, U.S. Census Bureau, U.S. News & World Report.

ALEX POSSICKAssociate+1 317 269 1141alex.possick@cbre.com

BRYAN FLAHERTYSenior Associate+1 502 412 7649bryan.flaherty@cbre.com

STEVE LAMOTTE JR.Executive Vice President+1 317 269 1018steve.lamotte@cbre.com

DANE WILSONSenior Vice President+1 317 269 1057dane.wilson@cbre.com