REPRESENTATIVE INVESTMENT OPPORTUNITY

Transcription

1 Income-Producing Commercial Real Estate Partnerships REPRESENTATIVE INVESTMENT OPPORTUNITY [Insert Property Address Here]

2 OVERVIEW OF THE COMPANY AND OPPORTUNITY What We Do [Company Name] places capital from private, individual lenders ( Private Lenders ) into opportunities at the local level that are stabilized commercial assets that may or may not have existing debt financing in place. These are income-producing commercial assets that do not require rehabilitation. Require experienced, local, and knowledgeable real estate operators ( Operators ) to properly manage. Some assets may have existing financing already in place that can easily be assumed without recourse to the individual lenders or operator [Company Name] and its established network of property managers are well equipped operationally to manage what we feel will be a meaningful volume of similar types of situations for the foreseeable future. 2

3 OVERVIEW OF THE COMPANY AND OPPORTUNITY What We Do (Continued) Most current owners are weak, inexperienced operators who either have mismanaged the property or are most commonly located out of state. Private Lenders are able to capitalize by lending capital alongside experienced operators and benefit from their unique ability to source income-producing opportunities from distressed and fatigued owners who have personally guaranteed their loans and are looking to get taken out. Property management companies are seasoned and experienced companies (as evidenced by track record) who have been thoroughly vetted by the operator, and have a verified track record managing similar asset types. 3

4 TRANSACTIONAL FUNDAMENTALS Targeted Sub-Asset Classes [Company Name] employs as fundamental investment philosophy focused on making direct first mortgage loans secured by quality real estate that has been re-priced due to unavailability of capital and the current foreclosure environment. Mobile Home Parks Student Housing Suburban Office Land Leases Usually trade at much higher cap rates than larger multi-family buildings. Only large, well known NCAA schools where there is a fanatic alumni base, not for-profit schools where stronger students do not gravitate towards. Smaller, professional offices where dentists, lawyers, accountants, financial advisors, insurance salesmen, that are most immune to economic slowdowns. Longer duration land leases that have at least 40 years left on their term. Must have quality assets that are desirable and marketable. Self-Storage Facilities Retail Multifamily Hotel/Lodging Minimum Size of 100 units to be economically viable. Later construction Grocery-anchored or pharmacyanchored, broadline retail. Minimum size of 8 units to be economically viable (Minimum C+ Class or Higher) Must be currently flagged. If managed correctly, great longterm play 4

5 MARKET OPPORTUNITY AND HISTORY CMBS loan issuance, $Bn Navigating Opportunity Through The Cycle New debt issuance peaks; CMBS loan restrictions are covenant lite. This allows the weakest and inexperienced operators to bid up assets. Most have 10 year terms Credit market dislocation creates opportunity to purchase commercial assets at a very low basis from lenders and servicers holding legacy assets on their balance sheets. Mostly defaulted, not product Private capital returns. Most distressed assets are fixed. New worry are loans originated between that are coming due. Not enough new debt to refinance those balloons Most technical defaults or maturity defaults will occur here. Those experienced operators with access to nonbank private capital will prosper. 5

6 MARKET OPPORTUNITY AND HISTORY How We Got Here The current dislocation in the credit markets has created the opportunity to purchase residential real estate assets at a very low basis from lenders and special servicers holding legacy assets on their balance sheets; these are usually but are not limited to foreclosures (REOs) and defaulted mortgages. Values have peaked in certain real estate asset classes, presenting the Private Lenders with ongoing opportunities in the market place current market conditions are a result of lack of funding and forced liquidations. This is a credit market dislocation, not just a real estate dislocation. Real estate capital markets are more closely interconnected and are a larger percentage of the global capital markets than in past cycles. 6

7 MARKET OPPORTUNITY AND HISTORY What s Next We are in the midst of a significant cycle of defaults due to job loss, lower valuations, higher LTVs, and mortgage resets that have triggered a tighter regulatory environment for newly originated CMBS loans. Using the current credit cycle as a proxy to determine the expected window of opportunity, we expect that there are approximately four to six years in the current lifecycle for [Company Name] and its Private Lenders to capture the opportunities that exist. 7

8 OUR EDGE How We Structure Risk Away From Our Private Lenders [Company Name] has years of experience in the residential real estate market, which provides them with a strong understanding of the possible issues that may arise and they have formulated a comprehensive plan for risk mitigation. Low LTV s - Loans and purchases will be made at very low LTV s which provides a solid equity cushion on every transaction 1st Position Notes Private Lenders will always maintain a 1st position lien on all properties Title/Lender s Insurance - The highest level of title/lender s insurance will be purchased on each and every property Concentration [Company Name] will only do business in markets we know intimately, where we have an established infrastructure for managing these assets, and where we have the proper support and industry contacts to control a deal from beginning to end 8

9 PRESSURE POINTS Identifying Where These Opportunities Come From Overleveraged commercial buildings where the asset value is less than the mortgage owed and an opportunity presents itself to buy the asset at a discount to its loan balance ( DPOs ) Negotiated transactions from sellers who have aggressively depreciated their assets and are facing a large tax bill Owners who have been forced to sell because they have been locked out of the refinancing market due to stricter underwriting guidelines Weak, inexperienced operators who are fatigued and motivated to sell as they are facing personal liquidity challenges 9

10 PREEMINENT CAPITAL ADVISORY Leveraging Our Resources And Experience Experienced Management Team Extensive deal analysis and structuring expertise. Team has bought and sold more than $ in distressed residential properties over the last five years $ MM (approximately) of loans currently under review Dedicated property management network who has field experience implementing tactical strategies at the asset level to create value Seasoned team of attorneys closing over real estate transactions each month, with vast knowledge and ability in clearing title and foreclosure defect issues 10

11 PREEMINENT CAPITAL ADVISORY Leveraging Our Resources And Experience Detailed and Proven System for Processing Transactions Extensive network of contacts with expansive market reach to source meaningful deal flow [Company Name] has an intimate knowledge of the market in which we transact. Deals that come into our funnel are initially sifted through based upon location, price range, and asset quality. Deals that qualify then move through the process with strict adherence to multiple checklist reviews in every phase of the process, including initial evaluation, due diligence, and closing. At the initial evaluation, exit strategy options are discussed and defined, with contingency plans in place. 11

12 PREEMINENT CAPITAL ADVISORY Leveraging Our Resources And Experience Focus on the Exit: Extensive Buyer Network Database of active investor buyers at the local level. Established marketing process to present specific properties to prospective buyers interested in a particular segment and/or market should management decide to exit assets. 12

13 INVESTMENT APPROACH What We Will Do [Company Name] employs a conservative investment strategy driven by management s highly successful experience in residential real estate. Will invest exclusively in stabilized, smaller-balance commercial properties with a strong current yield that falls below the radar of traditional players in this space. Seek opportunities to purchase these assets at a strong basis as compared to current market value. Provide a direct alignment of interests with [Company Name] s by structuring the risk away in each transaction. 13

14 INVESTMENT PROCESS How We Do It SOURCING UNDERWRITING FUNDAMENTAL ANALYSIS INVESTMENT DISCIPLINE RISK MANAGEMENT ONGOING MONITORING 14

15 STRICT UNDERWRITING Our Principles In Practice [Company Name] will adhere to strict underwriting criteria including: SOURCING UNDERWRITING Proprietary network of industry contacts A "bottoms up" approach focused on real estate fundamentals Experienced team in acquisitions Creative and experienced approach to solutions Exclusive "first looks," off market funding opportunities Target investments with an identifiable exit strategy Seek investments where the team can capitalize on its expertise in the local market with an intimate understanding of the area opportunities FUNDAMENTAL ANALYSIS Employ an assessment of opportunity focusing on understanding the asset, the debt, the equity, and property level cash flow analysis INVESTMENT DISCIPLINE Utilize informational, operational, and relationship competitive advantages RISK MANAGEMENT Committee approval process provides objectivity on vetting new investments Ongoing monitoring of assets and markets Legal team ensures marketable and insurable title to each property Review of holding period and exit strategy ONGOING MONITORING Emphasize downside protection by providing low loan to value first position liens on assets with good fundamentals Portfolio reviews held weekly, monthly, and quarterly Hands on management to safeguard returns 15

16 DEAL FLOW MANAGEMENT First Call To Funding Prequalification Offer LOI Due Diligence Drawing Up Documents Closing Post-Closing Management 16

17 TRANSACTIONAL LIFECYCLE How The Money Moves Deal Qualification DEAL FLOW NOI ($) Individual Property or Asset [Company Name] Security Investment Note TRUST DEED/MORTGAGE TITLED IN THE NAME OF PRIVATE LENDER $ Investment Funds From Private Lenders Private Lender Principal & Interest Payment (%) DEAL/INVESTMENT/PROJECT 17

18 STRICT UNDERWRITING Our Principles In Practice [Company Name] will adhere to strict underwriting criteria including: WELL COLLATERALIZED FUNDED TRANSACTIONS NEGOTIATED TRANSACTIONS Focus on making first position loans that are made at a discount to the intrinsic value of the underlying real estate Capitalize on [Company Name] s existing business relationship network and infrastructure to provide a meaningful flow of qualified and negotiated transactions, avoiding bidding situations CONTROL Seek investments where we can control the events necessary to create value and minimize downside risk through structure EXTENSIVE DUE DILIGENCE Seek transactions where the team can capitalize on its expertise in finance, development, construction, and property management if needed EXIT STRATEGY Target investments that have an identifiable exit strategy 18

19 THIRD PARTY SERVICE PROVIDERS Our Preferred Vendors Listed By Specialty Legal Tax Consultant [Insert Law Firm Here] [Insert Accountant Here] Master Servicer Real Estate Appraisal/Evaluation [Insert Servicer Here] [Insert BPO Firm Here] 19

20 Representative Investment Opportunity [Insert Property Address Here] 20

21 DEAL-LEVEL POINTS [Insert Property Address Here] THE OPPORTUNITY: [Multifamily, Retail, Office, Warehouse] In The Highly Desirable Suburb of Purchase Price Sale Price Est. Net Profit $ $ $ TRANSACTION DETAILS: Property purchased via [bank discounted note, tax deed sale, bank foreclosure] Average Market Value Price Per Unit : [Has, Does Not Have] existing financing in place that can be assumed INVESTMENT THESIS: Highly attractive asset and geographic desirability 21

22 DEAL-LEVEL ECONOMICS AND SENSITIVITY ANALYSIS [Insert Property Address Here] [Insert/Paste BMP screenshot of Excel spreadsheet from Offering Memorandum] 22

23 CONTACT INFORMATION [First Name] [Last Name] [Title] [Company Name] Website: Phone: 23