Trade Area, Tenant Targeting. Sales Potential Productivity Analysis. American Place. Indianapolis, Indiana Indianapolis, IN MSA.

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1 RETAIL ANALYSIS

2 Trade Area, Tenant Targeting & Sales Potential Productivity Analysis American Place Indianapolis, Indiana Prepared for: Full House Resorts, Inc.

3 Report Prepared by: Strategic Geographic + Real Estate Advisory (570) Hartman Road Muncy, PA This report has been prepared for informational purposes only. Data provided are for general reference purposes and are based on various assumptions relating to the general economy, competition and other factors beyond the authors control and, therefore are subject to material verification.

4 Table of Contents I. Executive Summary... 2 II. Introduction III. Market Overview Population Single-Family Residential Building Permit Activity Employment Indianapolis Retail Landscape Indianapolis Fashion Retail Landscape Fashion Department Store Competition IV. Analog Market Analysis Analog Market Demographics Fashion Shopping Center Space Analysis Fashion Department Store Space Analysis Fashion-Oriented Retail Content V. American Place: Trade Area and Sales Potential Trade Area Sales Potential Casino-Related Retail Center Case Studies.47 Appendix: Introduction to Fashion/Lifestyle Retail Classification

5 I. Executive Summary v The purpose of this report is to assess the potential of the retail component of American Place on the near west side of the Indianapolis, IN metropolitan area. v The proposed location would be a new development project at the Sam Jones Expressway exit & I-465 on the west side of Indianapolis, IN. v American Place is planned to include a boutique hotel, casino, theater, multiscreen cinema, lifestyle-type retail and residential components. v Indianapolis is the capital of the state of Indiana and is centrally located within the state with a population approaching 2.0 million. This makes it the largest metropolitan area in the state and on par with other regional metropolitan areas like Cincinnati, Cleveland and Columbus, Ohio. v Within Indianapolis, fashion/lifestyle retailing is sectioned off into 6 submarkets: o North This is the strongest submarket, covering the north side of Marion County and Hamilton County. There are four major fashion/lifestyle shopping centers: Fashion Mall at Keystone (Nordstrom & Saks Fifth Avenue), Castleton Square (Macy s & Von Maur), Clay Terrace, and Hamilton Town Center. There are also five fashion department stores within this geographic area Saks Fifth Avenue, Nordstrom, Von Maur, and two Macy s. o South With Greenwood Park Mall straddling the Marion-Johnson County line, this is the second strongest submarket. The Greenwood Park Mall (Macy s & Von Maur and Macy s). o West with the decline of the Lafayette Square, The Shops at Perry Crossing has risen as the only quasi-fashion center on the west side of the Indianapolis region. This is an open-air lifestyle center that offers no regional access and is not well-leased. o East like Lafayette Square on the west side, Washington Square on the east side of Indianapolis has also fallen dramatically and is really more of a power center at this point. o Downtown Indianapolis offers a rather strong downtown business district with a major urban mall in Circle Centre (Carson s). Already located Downtown are such well-known eating & drinking establishments as: Bourbon Street Distillery, Buca di Beppo, Capital Grill, Hard Rock Café, Harry & Izzy s, Morton s Steakhouse, Prime 47, Rock bottom Brewery, St. Elmo s Steakhouse and Weber Grill & Bar. o Anderson The Mounds Mall (Carson s) offers a very weak small-tenant line-up and offers no real competition

6 v Comparatively, when examined against other regional markets as St. Louis, Pittsburgh, Cincinnati, Cleveland, Kansas City, Columbus, Nashville, Milwaukee, Louisville and Hartford the Indianapolis market is just about the norm of these others in terms of population, income (per capita, average household, and median household), and affluent target households. v When one examines the specific retailers that might be attracted to either enter the Indianapolis market, or add an additional units to their existing store location network, a rather impressive list is generated. In order to be placed on this list, a retailer had to either (a) be present in at least two of the three analog markets and not yet in Indianapolis, or, (b) have an existing unit within the subject MSA but also indicate the potential for the addition of another metro-wide unit. Highest Probability Better-Quality Retail Target Tenants A+ A B C Lacoste Aldo Accessories Abercrombie & Fitch Aeropostale Louis Vuitton Apple Abercrombie Kids American Apparel Omega bebe Aerie American Eagle Outfitters Brooks Bros. Aldo Ashcroft & Oak Jewelers Crabtree & Evelyn Ann Taylor Body Central Fossil Accessory Store Anthropologie Buckle Guess Banana Republic California Pizza Kitchen J. Crew BCBG MaxAzria Champs L'Occitane BRIO Tuscan Grill Charlotte Russe Pandora Express dakota watch company Ruum H&M Dillard's Sephora Hollister Frederick's of Hollywood J. Jill Gap Limited Lululemon Naturalizer Soma Tickner's Williams-Sonoma XXI Gymboree Hannoush Jewelers Hot Topic Icing by Claire's JB Robinson Journeys Kay Jewelers Lady Foot Locker Lids Littman Jewelers New York & Company Pac Sun Papaya Perfumania Rogers and Hollands Spencer's Things Remembered Torrid Victoria's Secret Wet Seal Source: Retailer & Property Web-sites and Gerney Research. v Because of the competitive forces found in the North, South and Downtown submarkets, the primary retail trade area (shaded in green on the map presented on the following page) for the proposed American Place is projected to be confined primarily to the Western Indianapolis submarket areas.

7 v Beyond this primary retail trade area, a secondary trade area has also been delineated that takes into account the enhanced attraction that this facility will generate due to its overall focus on entertainment, major events and gaming. American Place Projected Primary Retail & Secondary Trade Areas v The broad reach of the primary retail trade area will enable American Place to reach a population equivalent to nearly 25.0 percent of the total metropolitan area with the secondary trade area extending this geographic reach throughout the central and west-central portions of the state. v The total 2015 primary retail trade area was estimated to be home to a resident population of approximately 488,200 persons. The secondary trade area adds another 1.3+ million persons to this total. v This population is estimated to have increased at a pace that exceeded the metrowide norm over the period 2000 through 2015 at 22.5 vs percent

8 v Per Capita Incomes here are only slightly lower ($26,258 vs. $28,410) than the metropolitan area but are above the state average. v Using our database of nearly 1,800 shopping centers located throughout the nation, a list of five (5) that are considered to be the most comparable lifestyletype venues were selected. American Pace Analog Centers Based on 8-Mile Population & Income Characteristics Shopping Center Market Population Per Capita Income Avg. HH Income Median HH Income HH w/ Income >$100K American Place Indianapolis, IN 393,331 $ 22,434 $ 56,060 $ 45,369 37,309 Analog Average 359,289 $ 26,632 $ 67,097 $ 53,458 44,007 Variance 34,042 $ (4,198) $ (11,037) $ (8,089) (6,698) Index Value The Greene Dayton, OH 350,461 $ 29,278 $ 67,779 $ 53,729 47,200 Promenade at Saucon Valley Allentown, PA-NJ 351,043 $ 26,249 $ 66,981 $ 53,547 42,709 Uptown Village at Cedar Hill Dallas, TX 355,840 $ 25,176 $ 74,009 $ 61,983 45,428 Eastwood Towne Center Lansing, MI 281,728 $ 25,568 $ 60,970 $ 48,228 32,341 ABQ Uptown Albuquerque, NM 448,546 $ 29,534 $ 66,426 $ 50,075 55,549 Sources: Scan/US & Gerney Research American Pace Analog Centers Key Affluence MOSAIC Household Characteristics Shopping Center Market Power Elite HH's Flourishing Families Booming with Confidence Suburban Style Thriving Boomers Promising Families American Place Indianapolis, IN 897 6,531 6,402 7,315 6,620 7,673 Analog Average 5,434 5,207 13,532 13,677 7,000 2,538 Variance (4,537) 1,324 (7,130) (6,362) (380) 5,135 Index Value The Greene Dayton, OH 8,835 9,456 13,205 2,095 6,318 2,329 Promenade at Saucon Valley Allentown, PA-NJ 5,581 3,217 12,499 4,583 7,918 1,918 Uptown Village at Cedar Hill Dallas, TX 2,090 5,970 8,728 44,446 1,418 4,516 Eastwood Towne Center Lansing, MI 3,842 4,757 9,244 4,005 6,620 1,524 ABQ Uptown Albuquerque, NM 10,222 6,883 23,656 1,674 12,044 2,194 Sources: Scan/US & Gerney Research v Understanding that the subject location provides potential tenants with essentially equal surrounding market support as is enjoyed at these five analog locations brings one to the issue of what tenants might be anticipated to occupy space at this location. In order to provide some level of guidance to this question, tenant data were collected for each of the five analog properties. v From the above information, the following observations are provided in regards to the overall tenant/merchandise mix at these properties: Ø The average overall GLA of these retail/dining/entertainment venues comes in at approximately 525,000 square feet ranging from the smallest (ABQ Uptown) at 220,000 square feet to the largest (The Greene) at 800,000 square feet. Ø Of these five properties, two are anchored by fashion department stores those being The Greene (Von Muar) and Uptown Village at Cedar Hill (Dillard s). Of these two, Dillard s (estimated at approximately $27.5 million) at Cedar Hill far out-produces Von Muar at The Greene (+/-$17.5 million). Ø With the average total number of tenants at nearly forty-six (45.8), and these retailers, restaurants and entertainment tenants falling primarily - 5 -

9 within the B, C, D & E-classifications of tenants, it seems fair to suggest that the overall merchandise mix could be described as Moderate to slightly above Moderate. Ø Finally, one very real advantage that looks to be apparent when considering the American Place location is that it is located further from its nearest mall competitor (Circle Centre in Downtown Indianapolis is 8.00 miles straight-line distance) than is typical for these other analog properties which come in at an average distance of approximately 4.30 miles. v Seeing that only two of the five analog properties are anchored by fashion department stores begs the questions as to what types of other major tenants are included in the tenant mix at these centers to help create the necessary critical mass to attract both small shop tenant retailers as well as consumers. What was found was that there is quite a variety of mid-sized boxes to work on recruiting to American Place. On average, there are nearly five (4.8) of these retailers at the analog centers. Analog Center Mid-Sized Box Retail Content American Place Brand Barnes & Noble Analog Average The Greene The Promenade Shops at Saucon Valley Books & Co Dick's Sporting Goods DSW Ethan Allen Forever Funny Bones Comedy Club H & M LL Bean Multi-Screen Cinema Nordstrom RACK Old Navy Pier Schuler's Books & Music The Fresh Market Trader Joe's ULTA TOTALS Sources: Property Web-sites, Directory of Major Malls & Gerney Research v Of those identified, it becomes rather apparent that several specific sectors/retailers should be targeted quite seriously: Ø A Multi-screen cinema (located at The Greene, Saucon Valley and Eastwood) is likely first among this list as they not only attract consumers on evenings and weekends but are also a favored co-tenant for full0service restaurants. On the entertainment side of the equation, another use that might be worth consideration could be a comedy club such as Funny Bones that has been quite successful at The Greene (Dayton, OH). Uptown Village at Cedar Hill Eastwood Towne Center ABQ Uptown

10 Amenities Ø A large-format bookstore was identified in four of the five centers (Barnes & Noble in two, with Books & Co. and Schuler s Books & Music in one each) and they are well-regarded by both cinema s and restaurants as a cotenant. Ø A larger apparel offering is another retail type that is worthy of serious recruitment efforts. Within this sector the more common players include Forever 21, H&M and Old Navy. Retailers newer to inclusion in these types of properties are LL Bean and Nordstrom RACK. Ø Another retail sector that should be mentioned within this grouping of mid-sized boxes is the home-oriented retail group. Within the tenant rosters that were included in this analysis the two that were seen were Ethan Allen and Pier 1. However, although not technically mid-sized boxes, retailers such as Pottery Barn and Williams-Sonoma could also be included as smaller space users within this sector. In addition, other larger space users within this sector might be Arhaus, Container Store, Crate & Barrel and Restoration Hardware. Ø Finally, yet another use that looks to provide added consumer satisfaction, as well as strong co-tenancy, is a specialty grocery operator such as The Fresh Market or Trader Joe s. v The importance of the entertainment component, in regards to the tourist component of retail that is associated with either adjacent or a nearby casino as American Place will be, can t be overstated. v In the case of the four tourist/destination casinos that were examined in several previous analyses undertaken by our group, whether looking at spas, multi-screen cinemas, nightclubs or blowing alleys, these have all become common amenities within today s casino landscape. Ø Within the bowling concept realm, two potential players that come to mind as distinct possibilities might be Lucky Strikes and Pin Stripes. Ø When considering cinemas, those that are of the cine bistro-type format might prove of higher priority as they would match up well with the adjacent casino/tourist consumer traffic. Representative Casino-Related Amenity Entertainment Uses Spa Cinema Nightclub Bowling Sources: Property Web-sites and Gerney Research v Another critical sector for targeting is the full-service eating & drinking (Restaurants and bars) group of tenants. In examining the rosters of the analog Analog Average Mohegan Sun, CT Foxwoods, CT Viejas Casino, CA Turning Stone, NY

11 properties, it was calculated that the average number of these tenants is in the range of just over five. Analog Center Full-Service Eating & Drinking Content American Place Brand Bar Louie BD's Mongolian Grill Bravo! Cucina Italiana Brio Tuscan Grille California Pizza Kitchen Claddagh Irish Pub CRAVE Elephant Bar Fleming's Prime Steakhouse Marcello's Chophouse McCormick and Schmick Melt Mimi's Café Mitchell's Fish Market Noodle's & Co P.F. Chang's Panchero's Mexican Grill Panera Bread Razoo's Cajun Kitchen Red Robin Smokey Bones Bar & Grill The Cheesecake Factory The Melting Pot The Pub Analog Average TOTALS Sources: Property Web-sites, Directory of Major Malls & Gerney Research v As can be seen from this information, there are only two (Bar Louie and Bravo!/BRIO) that have been identified in at least two of the analog properties, suggesting more regionality in the leasing within this sector. However, national brands remain critical as such players as Fleming s Wine Bar & Steakhouse, McCormick & Schmick s and P.F. Chang s, etc. have all been identified. v Also of note is the inclusion of fast-casual players such as California Pizza Kitchen and Red Robin within this list, as well as a wide selection of pub-type operators e.g. Claddagh Irish Pub, Elephant Bar and the Pub. v In today s leasing world, it has become understood that a collection of four to six full-service restaurants and bars can provide as much, or more, consumer traffic than a traditional fashion department store. For example, while it is estimated that while it is estimated that Von Muar generates in the range of $17.5 million ($145 per square foot out of their 120,000 square foot box) at The Greene, based on data that we have been able to collect from various contacts, the estimated combined sales at this property for Bar Louie, BRIO, Cheesecake Factory, Fleming s and The Greene Promenade Shops at Saucon Valley Uptown Village at Cedar Hill Eastwood Towne Center ABQ Uptown

12 McCormick & Schmick, come in at approximately $22.5 million, or, over $550 per square foot out of just over 40,000 square feet. v With a collection of mid-sized anchors, full-service restaurants & pubs and entertainment venues that come close to approximating the composite created from the five analog properties, these analog properties also provide a list of forty-six (46) retailers that show up in at least two of the five analog centers and, therefore, provide guidance as to what might be anticipated as a merchandise offering at American Place. Highest Probability Small Shop Specialty Tenants Per Analog Centers A B C D E Apple Ann Taylor American Eagle Outfitters Aeropostale Christopher & Bank J. Crew Banana Republic Ann Taylor LOFT Buckle Claire's Lucky Brand Jeans Clarks Carter's Charming Charlie's Finish Line J. Jill Crazy 8 Justice GNC Lululemon Eddie Bauer Kay Jeweler's Jos. A. Bank Pandora Express Lane Bryant McAlister's Deli Pottery Barn Gap Oshkosh Sleep Number Sephora Gymboree Pac Sun Starbuck's Williams-Sonoma Journeys Stride Rite Sunglass Hut New York & Company Torrid Victoria's Secret Talbot's The Children's Place Yankee Candle White House Black Market Sources: Property Web-sites, Directory of Major Malls & Gerney Research Note: The categories (A through E) shown in the table above indicate the selectivity levels of retailers in where they (a) locate and (b) what other retailers they prefer to have as co-tenants. A full discussion of the methodology used in this analysis is provided in the Appendix. v On a very positive note, from a prospective tenant perspective, is the fact that of the retailers listed in the above table when cross-referenced with the results of the MSA-wide retail tenant analog analysis results from Table 24 it was found that twenty (20) were identified as being both one unit or more short of anticipated metro-wide coverage an well as being found on at least two of the five specific analog properties tenant rosters. Common Cross-Referenced Small Shop Specialty Tenants Per MSA & Analog Centers American Eagle Outfitters Express Journeys Pandora Ann Taylor Gap Kay Jewelers Sephora Apple Gymboree Lululemon Torrid Banana Republic J. Crew New York & Company Victoria's Secret Buckle J. Jill Pac Sun Williams-Sonoma Sources: Property Web-sites, Directory of Major Malls & Gerney Research v With the analysis that has been completed, as well as the data that has been collected, it has been determined that the American Place location provides very real potential for the development of a lifestyle-type retail/dining/entertainment venue as a component of its overall master plan which is to also include a major casino facility as well as residential and hospitality offerings.

13 v When considering the overall sales productivity potential for this development site from a small shop specialty tenant perspective it has been calculated that should the developer be successful in attracting a similar line-up of tenants as has been outlined in this analysis, a sales potential level of approximately $410 per square foot is projected as a 1 st Full-Year figure. Shopping Center Small Shop Specialty Tenant Merchandise Classification Allocation & Sales Potential Square Feet Fashion Department Stores Small Shop Fashion Tenants Total Fashion Tenants A+ A B C D E Distance to Mall v In addition, there looks to be a solid representation of home-oriented retailing as merchandise offerings at these properties e.g. Anthropologie, Brookstone, Estimated Average Small Shop Tenant Sales American Place 600, $ , $ ,386 (0.4) - (0.2) (0.4) (0.4) (0.4) 3.71 $ (10) The Greene 800, $ 415 Promenade at Saucon Valley 475, $ 410 Uptown Village at Cedar Hill 725, $ 365 Eastwood Towne Center 395, $ 420 ABQ Uptown 220, $ 490 Source: Gerney Research v Asa reality check in regards to major retailing that exists at casino facilities around the nation, data was collected for The District at Green Valley Ranch (Las Vegas) as well as Mohegan Sun and Foxwoods in Connecticut. Analog Casino-Related Retail Centers Location Est. Annual Visitors Square Footage Est Sales Sales/ SF Sales/Visitor Mohegan Sun, CT 9,700, ,000 $ 109,000,000 $ 700 $ Foxwoods 9,000, ,000 $ 150,000,000 $ 600 $ The District at Green Valley Ranch - 300,000 $ 150,000,000 $ 500 $ - Average 9,350, ,000 $ 136,333,333 $ 682 $ Source: Gerney Research v In terms of small shop tenancy and merchandise offerings in these properties looking at the full-price centers listed above (The District at Green Valley Ranch, Foxwoods and Mohegan Sun) it was found that the average number of national and large regional specialty tenants came in at twenty-six (26), ranging from a low of eighteen (18) at Mohegan Sun which also houses a 300,000 square foot outlet center to thirty-nine (39) at The District at Green Valley Ranch. v The retail sectors that appear the most often include apparel (Activa, American Eagle Outfitters, Anthropologie, Chico s, Columbia Sportswear, DownEast Basics, Gymboree, H&M, Hard Rock Store, Janie and Jack, Jos. A. Bank, Kate Spade, LOFT, Soma, Tommy Bahama, Under Armour, Vineyard Vines and White House Black Market), accessories and jewelry (Brighton, Bulgari, Charming Charlie, Chopard, Coach, Fossil, Francesca s, Landau, Lux bond & Green, Pandora, Swarovski and Tiffany & Co.) and cosmetics/fragrances (Aveda, bareminerals, Bath & Body Works, LUSH and Sephora).

14 Pottery Barn, West Elm and Williams-Sonoma. Finally, full-service national chain restaurants are clearly an integral part of the offering at these properties, with the likes of Johnny Rockets, King s Fish House, P.F. Chang s and The Cheesecake Factory, having been identified. v When cross-referenced against the retailers that have been identified as being potential candidates for American Place, through the metropolitan area and analog property investigations, this comparative data indicates that the tenant opportunities laid out earlier provide solid guideposts for retail tenant targeting. Full-Price Retailers at Casino Centers The District at Green Valley (39) Mohegan Sun (18) Foxwoods (21 Full-Price) Anthropologie bareminerals Activa Aveda Brewster s Trading Post Activa Kicks Balboa Pizza Brighton Collectibles American Eagle barre3 Brookstone Bath & Body Works Bath & Body Works Chico's Bulgari Brighton Collectibles Coach Carina Brookstone Godiva Chopard Charming Charlie Johnny Rockets Coach Chico's Landau Columbia Sportswear Color Me Mine LUSH Ecco DownEast Basics Lux Bond & Green Fossil Due & Proper Momentum Trading Post H&M Elephant Bar Robert Graham Hard Rock Store Francesca's Collections Sephora Kate Spade Gymboree Swarovski Misura Janie and Jack Tiffany & Co. Panache Jos. A. Bank Tommy Bahama Pandora King's Fish House Yankee Candle Sunglass Hut LOFT Lucille's Smokehouse BBQ Lyfe Kitchen Magnolia Lane Ninush Design Studio & Furniture Oil & Olive Food and Drink P.F. Chang's Panera Bread Parque Pottery Barn Red Rock Running Co. REI Soma The Cheesecake Factory The Coffee Bean & Tea Co. The Walking Co. Victoria's Secret West Elm White House Black Market Whole Foods William-Sonoma Under Armour Vineyard Vines White House Black Market

15 II. Introduction The purpose of this report is to determine the market feasibility for the development of a lifestyle center in the southwestern suburban portion of the Indianapolis MSA in the immediate vicinity of the newly redeveloped and expanded Indianapolis International Airport (Map 1). Proposed for this development site, in addition to the 700,000+/- square foot retail and entertainment component is a high-end boutique casino facility, as well as residential and office components. Map 1: American Place Location

16 III. Market Overview 3.1 Population The eleven county Indianapolis metropolitan statistical area (MSA) is centrally located within the state of Indiana. As the state capital, it is well-connected with the rest of the region by a radial network of interstate highways. The location of American Place is in western part of Marion County close to the Hendricks County line. Marion County is the core of the Indianapolis MSA and encompasses all of the City of Indianapolis. In terms of population, adjacent Hendricks County is the third most populous within the MSA, with just under 153,000 residents (Table 1). Marion County is the most populated with 936,000 inhabitants while Hamilton County (north/northeast of Marion) is second with nearly 300,000. Table 1 Population of Counties within MSA Population Avg. Annual Growth Rate County Marion 860, , , , % 0.73% 0.62% Hamilton 182, , , , % 1.82% 1.81% Hendricks 104, , , , % 1.00% 1.13% Johnson 115, , , , % 0.88% 1.06% Madison 133, , , , % 0.15% 0.24% Hancock 55,391 70,002 71,029 73, % 0.29% 0.59% Morgan 46,107 56,640 63,301 70, % 2.35% 2.13% Boone 66,689 68,894 68,695 69, % -0.06% 0.37% Shelby 43,445 44,436 44,860 45, % 0.19% 0.38% Putnam 36,019 37,963 37,869 38, % -0.05% 0.34% Brown 14,957 15,242 15,722 16, % 0.63% 0.68% Indianapolis MSA 1,658,463 1,887,877 1,968,542 2,054, % 0.85% 0.87% Source: US Census Bureau & Scan/US The western counties (Hendricks, Morgan and Boone) combined for a total population of approximately 285,000 for 2015, with that figure projected to exceed just over 300,000 during Both Hendricks and Morgan counties have shown strong population growth since Census 2000 as well as being projected to continue that trend through Morgan County has had the highest annual growth for 2010 through 2015 (at 2.35 percent) and is projected to continue to have the highest annual growth through 2020 with its annual growth projected to equal 2.13 percent per year. Overall population growth in the Indianapolis MSA has been fairly steady since 2000 (Table 2). The total population in 2014 was nearly 2.0 million people, a little over 300,000 more than at year-end 2000 representing an 18.9 percent total increase over the Census of The majority of this growth has been fueled by Indianapolis natural increase (Births - Deaths). However, being the economic and governmental hub of

17 Indiana, the region has also able to maintain steady inflows of domestic (migration) and international (immigration) persons over that time. Net Domestic Migration has been consistently positive throughout this time period. International Immigration has also brought in close to 4,000 in each of the past four years. Table 2 Historic Population Change % Change Total Change Birth Deaths Components of Change International Immigration Net Domestic Migration Year Population ,658, ,687, % 28,747 26,162 14,162 3,639 8, ,708, % 20,809 26,003 13,980 3,467 5, ,729, % 21,279 26,220 13,733 3,054 5, ,750, % 21,342 27,146 14,136 3,054 6, ,772, % 22,320 26,688 14,360 3,210 7, ,800, % 27,765 27,360 14,022 3,277 11, ,826, % 25,791 28,157 14,254 2,974 8, ,850, % 23,806 28,061 13,958 2,878 6, ,873, % 23,139 27,742 14,433 2,888 6, ,887, % 14,417 6,556 3, ,910, % 22,329 26,912 14,974 4,007 1, ,928, % 18,577 26,472 15,279 3,966 3, ,953, % 24,363 26,557 15,145 4,340 8, ,971, % 18,128 26,630 15,200 4,370 2,234 Source: U.S. Bureau of Census The nearly 2.0 million residents of Indianapolis easily make it the largest metropolitan area within the state as well as a strong economic center within the greater region (Table 3). While Chicago dwarfs all the other metropolitan areas in this region, Indianapolis sits nicely among other solid middle markets such as: St. Louis, Cincinnati, Columbus and Louisville. Furthermore, with the exception of Columbus, Indianapolis is growing at a faster rate than all of the other metropolitan areas. Looking forward to 2020, Indianapolis is projected to see its population increase by an additional 0.9 percent per year pushing it to over 2.0 million persons. Table 3 Population Growth of Major Regional MSAs Population Avg. Annual Growth Rate MSA Chicago 9,098,317 9,461,105 9,574,951 9,739, % 0.24% 0.34% St. Louis 2,675,342 2,787,701 2,808,563 2,842, % 0.15% 0.24% Cincinnati 1,994,831 2,114,580 2,142,597 2,172, % 0.26% 0.28% Columbus 1,675,011 1,901,974 1,993,805 2,109, % 0.97% 1.16% Indianapolis 1,658,463 1,887,877 1,968,542 2,054, % 0.85% 0.87% Louisville 1,121,114 1,235,708 1,263,126 1,293, % 0.44% 0.48% Indiana State 6,080,485 6,596,855 6,618,162 6,803, % 0.06% 0.56% Source: Scan/US

18 3.2 Single-Family Residential Building Permit Activity As had occurred throughout the country, the Indianapolis single-family residential construction market plummeted from its peak in 2005 (Table 4). Prior to this plunge, there were six strong years of growth from 2000 through The number of permits filed annually, during this earlier period, remained relatively steady averaging over 13,000 per year. By 2009, there were nearly 10,000 fewer than that average. Production has rebounded slightly, averaging around 5,000 over the past two years. Of course, this trend has not been local to only Indianapolis. Indiana and the United States as a whole have experienced the very same decline and gradual recovery. The average construction cost for these proposed homes within Indianapolis rose gradually from 2000 through There was a minor setback from 2008 through Pricing picked up substantially from the year 2012 onward, with the average cost in 2014 reaching a level that was some 30.0 percent higher than that in Table 4 Historic Single-Family Residential Building Permit Activity Indianapolis MSA Number of Dwelling Units Average Value Per Unit Year Units % Change Value ($) % Change ,860 $145, , % $150, % , % $156, % , % $163, % , % $172, % , % $176, % , % $189, % , % $190, % , % $189, % , % $179, % , % $181, % , % $193, % , % $221, % , % $229, % , % $247, % Source: U.S. Bureau of Census Within this overall single-family residential development landscape, it has been found that the Hendricks County portion of the metropolitan area has maintained a relatively stable market share of the permits issued annually throughout the period of study ranging from a low of 11.4 percent (2001) to a high of 16.8 percent (2009) and averaging 14.2 percent (Table 5). From a product pricing perspective, it appears that this part of the metropolitan area has continued to offer consumers a slightly better-priced alternative to metro-wide norms throughout the period 2000 through 2014, with having been only one year (2010) in which the average value of singlefamily permits exceeded the metro-wide norm

19 Table 5 SF Residential Building Permit Activity Hendricks County Hendricks County, IN Indianapolis MSA Year Number % of MSA Change Percent Average Value % of MSA Number Average Value , % - - $125, % 12,860 $145, , % % $137, % 14,956 $150, , % % $137, % 13,412 $156, , % % $145, % 13,228 $163, , % % $155, % 12,822 $172, , % % $161, % 13,054 $176, , % % $185, % 9,634 $189, % % $185, % 7,332 $190, % % $185, % 4,469 $189, % % $179, % 3,662 $179, % % $189, % 3,869 $181, % % $185, % 3,687 $193, % % $198, % 4,070 $221, % % $215, % 5,107 $229, % % $219, % 4,965 $247,700 Source: U.S. Bureau of Census In Tables 6, 7 and 8, the combined western counties of the MSA are shown along with Morgan and Boone counties individually. The combined counties account for 25.0 percent of the building permits each year since 2009 which is an increase from the 21.0 to 22.0 percent in 2008 and prior. Table 6 SF Residential Building Permit Activity Hendricks, Morgan & Boone Counties Hendricks. Morgan and Boone Counties, IN Indianapolis MSA Year Number % of MSA Change Percent Average Value % of MSA Number Average Value , % - - $134, % 12,860 $145, , % % $147, % 14,956 $150, , % % $147, % 13,412 $156, , % % $154, % 13,228 $163, , % % $166, % 12,822 $172, , % % $175, % 13,054 $176, , % % $197, % 9,634 $189, % % $193, % 7,332 $190, % % $195, % 4,469 $189, % % $184, % 3,662 $179, % % $178, % 3,869 $181, % % $177, % 3,687 $193, % % $205, % 4,070 $221, % % $221, % 5,107 $229, % % $234, % 4,965 $247,700 Source: U.S. Bureau of Census

20 Table 7 SF Residential Building Permit Activity Morgan County Morgan County, IN Indianapolis MSA Year Number % of MSA Change Percent Average Value % of MSA Number Average Value % - - $112, % 12,860 $145, % % $124, % 14,956 $150, % % $137, % 13,412 $156, % % $153, % 13,228 $163, % % $160, % 12,822 $172, % % $169, % 13,054 $176, % % $184, % 9,634 $189, % % $173, % 7,332 $190, % % $152, % 4,469 $189, % % $177, % 3,662 $179, % % $166, % 3,869 $181, % % $145, % 3,687 $193, % % $162, % 4,070 $221, % % $171, % 5,107 $229, % % $188, % 4,965 $247,700 Source: U.S. Bureau of Census Table 8 SF Residential Building Permit Activity Boone County Boone County, IN Indianapolis MSA Year Number % of MSA Change Percent Average Value % of MSA Number Average Value % - - $203, % 12,860 $145, % % $210, % 14,956 $150, % % $205, % 13,412 $156, % % $197, % 13,228 $163, % % $202, % 12,822 $172, % % $226, % 13,054 $176, % % $237, % 9,634 $189, % % $218, % 7,332 $190, % % $232, % 4,469 $189, % % $196, % 3,662 $179, % % $164, % 3,869 $181, % % $171, % 3,687 $193, % % $229, % 4,070 $221, % % $240, % 5,107 $229, % % $273, % 4,965 $247,700 Source: U.S. Bureau of Census

21 3.3 Employment Along with a total population growth of almost 300,000 inhabitants since the year 2000, the total employed population has also grown by 80,000 (Table 9). In 2000, the total employed population of Indianapolis stood at 856,000 with an unemployment rate of only 2.6 percent. The total employment grew steadily through With the coming of the recession, Indianapolis lost about 6.6 percent of its employed population by The unemployment rate also peaked at 9.6 percent in Fortunately, things looked much brighter by 2014 with total employment rising by more than 77,000 to an all-time high of and employment dropping back to 5.7 percent, well below the national rate of 6.2 percent. Table 9 Indianapolis MSA Historic Employment Data Un-Employment Hendricks County, IN County as Year Total Change Percent MSA IN US Total Change Percent Un-Employment % of MSA , % 3.11% 4.00% 56, % 6.58% ,196 8, % 3.47% 4.25% 4.70% 58,470 2, % 2.68% 6.76% ,098 4, % 4.70% 5.18% 5.80% 60,699 2, % 3.78% 6.98% ,370 14, % 4.83% 5.29% 6.00% 62,833 2, % 4.13% 7.10% ,289-1, % 4.89% 5.36% 5.50% 64,617 1, % 3.88% 7.32% ,668 10, % 5.05% 5.47% 5.10% 66,604 1, % 4.07% 7.45% ,885 19, % 4.53% 5.04% 4.60% 69,080 2, % 3.66% 7.57% ,391 3, % 4.17% 4.57% 4.60% 70, % 3.27% 7.64% ,709 3, % 5.23% 5.89% 5.80% 70, % 4.31% 7.70% ,985-41, % 8.78% 10.30% 9.30% 68,044-2, % 7.63% 7.75% ,152-18, % 9.60% 10.38% 9.60% 68, % 7.85% 8.01% ,379 15, % 8.74% 9.12% 8.90% 70,720 1, % 7.00% 8.09% ,267 11, % 8.00% 8.33% 8.10% 72,044 1, % 6.39% 8.13% ,042 19, % 7.33% 7.67% 7.40% 74,173 2, % 5.85% 8.19% ,347 30, % 5.73% 6.03% 6.20% 76,644 2, % 4.67% 8.19% Source: US Bureau of Labor Statistics As was presented when offering information on the regions single-family residential landscape, employment data were broken down to the Hendricks County level as well in order to determine if this geographic portion of the metropolitan area has evolved over time as more than just a bedroom community and into an area that also is home to a growing percentage of metro-wide employment. From the above data that is indeed what appears to have occurred, with Hendricks County s share of metro-wide employment having grown form 6.6 percent in 2000 to the latest year-end figure of 8.2 percent an increase in its share of employment of 24.5 percent. This growth in employment has right in-line with the county s population growth/share level, which grew from 6.3 to 7.9 percent, or, 26.1 percent of overall metro-wide population. Table 10 provides the historical employment data for Morgan and Boone Counties. The three western counties compare well from an unemployment rate standpoint versus the MSA. Both Hendricks and Boone have been consistently better than the MSA since the year

22 Table 10 Morgan & Boone Counties Historic Employment Data Morgan County, IN County as Boone County, IN County as Year Total Change Percent Un-Employment % of MSA Total Change Percent Un-Employment % of MSA , % 4.05% 23, % 2.77% , % 3.34% 4.01% 24, % 2.82% 2.78% , % 4.68% 4.00% 24, % 3.81% 2.82% , % 4.80% 3.98% 25, % 4.03% 2.84% , % 4.69% 3.98% 25, % 3.95% 2.88% , % 4.98% 3.96% 26, % 4.13% 2.92% , % 4.55% 3.93% 26, % 3.74% 2.96% , % 4.18% 3.85% 26, % 3.45% 2.95% , % 5.76% 3.84% 27, % 4.33% 2.96% ,260-2, % 9.18% 3.79% 26,091-1, % 7.74% 2.97% , % 10.37% 3.65% 27, % 7.60% 3.16% , % 9.33% 3.62% 27, % 6.74% 3.18% , % 8.37% 3.59% 28, % 6.15% 3.20% , % 7.57% 3.56% 29, % 5.76% 3.24% ,319 1, % 5.84% 3.56% 30,346 1, % 4.49% 3.24% Source: US Bureau of Labor Statistics 3.4 Indianapolis Retail Landscape According to the most recent quarterly report published by the local office of CBRE, the Indianapolis retail market presents the following summary characteristics: Ø Demand remains strong for newer properties within the metropolitan regions major trade areas, while older buildings in less desirable areas keep overall market fundamentals in check, Ø The market-wide availability rate declined by an impressive 140 basis points from the previous quarter as a result of robust leasing activity. There is some level of caution as speculative building although less than in the past cycle continues to elevate vacancy rates. Ø Geographically, several sub-markets have vacancy levels that have dropped below 4.0 percent. These include Fishers, Noblesville and Greenwood. Ø Net absorption increased slightly to almost 190,000 square feet during this past quarter, which is nearly double the five-year quarterly average. Ø Among product types, lifestyle centers and malls (which this report will analyze in detail) posted a decline of almost 30 basis points while power, neighborhood, community and strip centers remained relatively unchanged (Table 11). Table 11 Indianapolis MSA Lifestyle Center & Mall Inventory Statistics Property Total Vacant Vacancy 2nd Quarter Year-To-Date Average Direct Type GLA GLA Rate Net Absorption Net Absorption Asking Rent/SF Lifestyle/Mall 11,640, , % 41,734 46,707 $ Source: CBRE Ø Completions were up at approximately 317,500 square feet, while new square footage under construction fell slightly to in the range of 350,000 square feet

23 Ø Sales of existing retail properties increased in terms of the number of deals and square footage; however, the average price per square foot fell as fewer deals were focused on credit tenant net leased assets. Geographic Sub-Market Summaries North The North sub-market continues to see a substantial portion of the metro-wide leasing activity, with thirty-five (35) of the ninety (90), or 38.9 percent, lease deals that occurred north of 86 th Street during this past quarter (Table 12). While construction activity is up this year, it isn t nearly as high as it was seen during the pre-recession years. This is causing some notable supply restraints, particularly in the Fishers/Noblesville sub-market area where vacancy rates have declined to only 3.2 percent. The sub-market also saw several significant build-to-suit deliveries during this past Quarter with the completion of Cabela s in Noblesville, Market District by Giant Eagle in Carmel and Fresh Thyme in both Carmel and Fishers. Table 12 Indianapolis MSA Geographic Retail Sub-Market Inventory Summary Geographic Total Vacant Vacancy 2nd Quarter Year-To-Date Average Direct Sub-Market GLA GLA Rate Net Absorption Net Absorption Asking Rent/SF Central 18,428,528 1,298, % 119,265 87,150 $ North 17,497,246 1,011, % 88, ,334 $ South 6,020, , % (21,142) (21,131) $ East 2,157, , % 1,569 (4,692) $ 8.45 West 6,872, , % (5,773) 130,746 $ TOTAL 50,976,658 3,184, % 182, ,407 $ Source: CBRE South This sub-market area is also proving to be an area of strong activity. The Southport- Greenwood trade area has seen more than 260,000 square feet of positive net absorption this year and just saw the delivery of a new Kroger Marketplace this quarter. In addition to several new grocery stores and a Costco in the works, this quarter also saw the announcement of a planned major retail development in the SE quadrant of County Line Road & I-65 called Greenwood Town Center proposed to include a cinema, boxes, restaurants and specialty retailing that will encompass approximately 580,000 square feet. Downtown (Central) The Downtown trade area (which is imbedded within the larger Central sub-market), although suffering from a 12.0 percent vacancy rate, is considered to be a bright spot, as in less than two years this figure has dropped by 140 basis points. Meanwhile average asking rents have increased by up to 32.0 percent during this same timeframe to nearly $17.00 NNN per square foot annually. Restaurants, brew pubs and personal services are taking advantage of new residents and employees within the central business district and adjacent neighborhoods. With more than 1,300 new housing units currently under construction and an increase in office occupancies, this trend is anticipated to continue into the foreseeable future

24 West This is the geographic sub-market in which the proposed American Place will be located. The dominant retail trade area within the West sub-market is centered on the community of Plainfield which his located about 5.00 miles to the west of the subject development site where the west sides premier lifestyle-type fashion-oriented property (The Shops at Perry Crossing) is situated. With a total retail center inventory of nearly 6.9 million square feet (13.5 percent of the metro-wide total), this sub-market enjoys a vacancy level that is below the metro-wide norm at 5.2 vs. 6.2 percent. 3.5 Indianapolis Fashion Retail Landscape The fashion retail scene in Indianapolis can easily be divided into four main submarkets along with two minor submarkets (Map 2). The four main submarkets are North, South, West and Downtown. The east side of the Indianapolis market is insignificant when it comes to fashion retailing while the city of Anderson also offers very little fashion content and is rather distant from everything else in the region (about 35 miles from downtown Indianapolis). The North Submarket is the clear-cut dominant fashion submarket. Over half of the market s fashion/lifestyle brand stores are found within this submarket (Table 13). Table 13 Submarket Fashion/Lifestyle Retail Summary Submarket Stores A+ A B C D E North South West Downtown East Anderson Market Total Source: Gerney Research Group Indiana s most upscale fashion shopping center is located in the heart of this northern submarket. The Fashion Mall at Keystone is anchored by Saks Fifth Avenue and Nordstrom and is the only site for the most upscale A+ fashion brands (Table 14). These include Burberry, Cole Haan, Michael Kors and Tiffany & Company. Castleton Square, also located within this North Submarket, is in close competition with Greenwood Park Mall (from the South Submarket) as the metropolitan areas second most fashionable shopping mall, and more reasonably as the most main-stream regional mall. Despite being just over two miles east of the Fashion Mall at Keystone, Castleton Square still attracts a decent number of Class A-classification tenants (Pandora, Skechers, Teavana etc.) along with an abundant supply of Class B & C-class retailers (Fossil, Aeropostale, American Eagle Outfitters, Forever 21, H&M, Limited and many other mall regulars). This property achieves the ability to provide this level of fashion content on the backs of a strong fashion anchor line up of Von Maur and Macy s

25 Map 2: Indianapolis Fashion Table 14 Major Fashion/Lifestyle Shopping Centers Submarket Project Name Stores A+ A B C D E North Castleton Square North Clay Terrace North Fashion Square at Keystone North Hamilton Town Center South Greenwood Park West Lafayette Square The Shops at Perry Crossing (formerly West Metropolis) Downtown Circle Centre East Washington Square Anderson Mounds Mall of Anderson Market Total Source: Gerney Research Group Two of the more recent fashion-oriented property additions to the market are the open-air lifestyle centers Clay Terrace and Hamilton Town Center. Both of these are found further north of Keystone and Castleton in suburban Hamilton County. Clay Terrace is

26 about 6.00 miles due north of the Fashion Mall at Keystone. Following in the mold of early lifestyle centers, it has no major department store anchors but features Whole Foods Market and Dick's Sporting Goods. Hamilton Town Center is the newest fashion shopping center in the greater Indianapolis region. Like Clay Terrace, it has no fashion department store but does offer JCPenney to go along with Dick s Sporting Goods, Stein Mart and an Imax Theater. Because of the relative affluence of this northern submarket, both of these shopping centers have been able to attract a good number of Class B & C tenants. The South fashion/lifestyle submarket has just one fashion shopping center: Greenwood Park Mall. With no competition anywhere within the southern half of the Indianapolis MSA, this mall has remained quite strong, particularly after adding Von Maur as an anchor several years ago. It is now home to the likes of The Cheesecake Factory, Coach, Express, Forever 21, Hollister, White House Black Market, Chico s, Francesca s Collections, Charming Charlie and Carhartt. The West fashion submarket is the third largest submarket, but it is quite a ways behind the South. While it was once an adequate shopping mall, Lafayette Square has fallen onto hard times. It lost Macy s as an anchor in 2008 and now has just Burlington Coat Factory as its major anchor. This has allowed The Shops at Perry Crossing to rise as the only fashion shopping center on the west side of the Indianapolis market. Like the other lifestyle shopping centers developed a decade ago, The Shops at Perry Crossing has no fashion department store anchor. It has, however, offered surrounding consumers a very strong JCPenney, as well as Carmike Cinemas, Dick s Sporting Goods and Barnes & Noble, as its primary anchors. Within the mid-sized box category are such players as DSW Shoes, Old Navy and ULTA Cosmetics. In addition, this property is home to several other key retail tenants that include: American Eagle Ann Taylor LOFT, Outfitters, Bath & Body Works, Charlotte Russe, The Children s Place, Jos. A. Bank, Kirkland s, Lane Bryant and Victoria s Secret. Finally, within the full-service restaurant sector there are such players as Claddagh Irish Pub, Panera Bread and Stone Creek Dinning Company. The fashion/lifestyle content of Downtown Indianapolis is similar in size to the West submarket. However, the quality is somewhat higher being driven in large part to he added sales dollars being spent here by the markets large tourist (professional sports and convention) and office markets. Despite losing Nordstrom as an anchor, the Circle Centre remains a fairly successful downtown fashion shopping center. This is a relatively rare feat for a city the size of Indianapolis. The strength of the downtown scene is best illustrated by the list of national restaurant chains that have located there. These include Buca di Beppo, Hard Rock Café, McCormick & Schmick, Morton s Steakhouse, Shula s Steak House, The Capital Grille, Champs Americana, P.F. Chang s, Palomino and Ruth s Chris Steak House. The West Submarket (Hendricks, Morgan, Boone counties) is more populous than the South submarket (Johnson, Shelby) with a 2020 projection of 300,000 residents versus 200,000. The West is also projected to grow at 1.2 percent per year through 2020 as