Cover Page. The following OM marketing materials relate to the Offering Memorandum of ICM (IX) Real Estate Trust dated May 9, 2017

Transcription

1 Cover Page The following OM marketing materials relate to the Offering Memorandum of ICM (IX) Real Estate Trust dated May 9, 2017

2 ICM (IX) REAL ESTATE TRUST May 9, 2017

3 Disclaimer Certain statements contained herein as they relate to ICM, the Trust and related parties and their respective views or predictions about the possible future events or conditions and their business operations and strategy, are forward-looking statements within the meaning of that phrase under applicable Canadian securities law. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as expects, does not expect, is expected, anticipates, does not anticipate, plans, estimates, believes, does not believe, or intends, or stating that certain actions, events or results may, could, would, might, or will be taken, occur or achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are based on the current expectations, estimates and projections of the management of ICM, the Trust and related parties at the time the statements are made. They involve a number of known risks and uncertainties which would cause actual results or events to differ materially from those presently anticipated. The forward-looking statements contained in this document are given as of the date hereof. Except as otherwise required by law, ICM does not intend to and assumes no obligation to update or revise these or other forward-looking statements it may provide, whether as a result of new information, plans or events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements as there can be no assurance that the condition, events, plans and assumptions on which they were based will occur. For information purposes only. Not for use in Quebec. 2

4 1. Overview, Experience, Track Record 2. Current offering: ICM (IX) Agenda 3

5 ICM Overview, Experience and Track Record

6 ICM Overview Real estate group focused on acquiring and managing properties on behalf of investors Founded in 2003 $550 million of assets under management Experienced management team Value oriented and disciplined investment philosophy Calgary based with offices in Atlanta, Delray Beach, Minneapolis, San Francisco and Munich The Oliver Edmonton, Alberta Midnapore Investments LP 5

7 ICM s Leadership Team Collectively have overseen the acquisition and management of over $7 billion of assets throughout their careers Bruce Timm Spencer Patton Andrew Webb Jon Leavitt John Courtliff Spencer Coupland President and CEO Managing Director U.S. Managing Director U.S. Director Asset Management Vice President General Counsel 25+ years of real estate investment management 20+ years of real estate investment management 15+ years of real estate investment management 25+ years of real estate investment management 10+ years of investment and fund management experience 15+ years of corporate and securities legal experience With ICM since inception 6 Years with ICM 5 Years with ICM 13 Years with ICM 6 Years with ICM 1 Year with ICM 6

8 Value Manager with proven track record* $ 7 Billion Real Estate Acquisitions and management 22 Projects Exited 15+% Historical IRR Returns to Investors on fully realized projects $550 Million Assets under management currently 0 buildings lost to foreclosure 0 Investor Losses 7 *Total direct experience across all management transactions inclusive of predecessor firms. Past performance is not an indicator of future results.

9 207 unit Multi-Family Edmonton, Alberta 280,244 sf Office Minneapolis, Minnesota Downtown Office New York, New York Acquired 2001: $390 Million Sold 2008: $800 Million 666 5th Ave* Newlands Building 6101 Carnegie 107,435 sf Office Charlotte, North Carolina 8 Chrysler Building* Oliver Residences International Plaza Notable Transactions 289,686 sf Office Bethesda, Maryland *Assets acquired by funds under Bruce Timm s leadership prior to forming ICM Downtown Office New York, New York Acquired 2000: $518 Million Sold 2008: $1.8 Billion

10 ICM s Realized Portfolio Name Property Type Country Year Sold Equity Investment Leverage Ratio Levered IRR Equity Multiple 1 Westbay Apartments Residential CAN , % 27.1% 18.8x 2 Bailey Square Office USA ,905, % 18.5% 5.6x 3 Presidio Apartments Residential USA ,152, % 19.5% 2.8x 4 Pinion Valley Industrial USA ,152, % 2.7% 1.4x 5 Lakeridge Square Office USA ,209, % 48.5% 2.3x 6 Frederick Circle Retail USA , % 4.1% 1.7x 7 Millcreek Industrial CAN ,350, % 14.0% 2.0x 8 Fed Ex Industrial USA , % 8.2% 5.2x 9 Wilson Way Industrial USA ,267, % 9.3% 2.3x 10 Aviation Parkway Industrial USA ,272, % 10.9% 2.7x 11 East 50th Industrial USA , % 9.4% 5.8x Riverside Parkway Industrial USA ,309, % 11.7% 2.5x 13 Northview Properties Residential USA , % 20.8% 1.5x 14 Park Abbey Office USA ,123, % 8.2% 9.8x 15 Oakbrook Parkway Industrial USA , % 9.3% 4.1x 16 Oxbridge Place Office CAN ,606, % 38.3% 1.8x 17 Upper Harbour Place Office CAN ,000, % 9.3% 1.2x Wellington Office CAN ,204, % 7.2% 1.7x 19 8 West Office CAN ,000, % 33.5% 2.1x 20 Philip Professional Office USA ,696, % 19.8% 1.6x 21 Gulfstream Plaza Retail USA ,247, % 29.0% 1.4x 9 22 Jones Bridge Retail USA ,313, % 6.7% 1.2x Total 129,341, % 2.1x *Total direct experience across all management transactions inclusive of predecessor firms. Past performance may not be indicative of future results.

11 Industry Recognition Commercial Real Estate Award 2016 PCMA Deal of the Year ICM (VII) U.S. Core Plus Realty Trust 10

12 Our Current Investment Platform Investors 2016 Entity Primary Investment Focus Vintage ICM (IX) Real Estate LP 2016 ICM (VIII) U.S. Realty Inc AUM Target of $100 M $14 M ICM (VII) U.S. Core Plus Realty Trust 2014 $130 M Lakeridge Land LP 1999 $100 M Midnapore Investments LP 1985 $139 M UVAG Realty LP 1979 $63 M 11

13 ICM VI Realty Trust Established in 2012 Dissolved in 2016 $14.5 M of equity raised 3 assets 200,000 sf Investor IRR*= 13.3% Investor Multiple 1.4x Quarterly cash distributions during hold period: 6.8% p.a. $20.3 M of gross distributions 150, , ,000 75,000 50,000 25,000 0 Cumulative Distributions* $100K initial investment Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 $139,000 Quarterly Distributions Special Distributions *Gross of U.S. withholding taxes. Net of all fees, costs and commissions.

14 ICM (VII) U.S. Core Plus Realty Trust Established in 2014 $63 M of equity raised 7 Assets to date 830,000 sf Value of real estate*: $100,027,000 (USD) Florida 42% Current quarterly cash distributions of approximately 6.0% p.a. Added 600,000 SF to portfolio in 2016 Current leasing activity outperforming underwriting Texas 26% Georgia 6% Minnesota 11% North Carolina 15% 13 *As at Dec. 31, 2016

15 ICM (VIII) U.S. Realty Inc. Established in 2015 $3 M of equity raised, single investor Single asset transaction 240,000 sf (237 units) Value of real estate*: $13,500,000 (USD) Completed $1.5 M capital program Increased occupancy from 82% to >90% Increased Net Operating Income (NOI) by approximately 250% South Carolina 100% 14 *As at Dec. 31, 2016

16 2008 Financial Crisis: Making decisions based on value, not sentiment From ICM felt that real estate prices were outpacing asset valuations ICM sold non-core assets (approximately 50% of its U.S. portfolio) in advance of the 2008 financial crisis Reduced management fees significantly De-leveraged and de-risked the portfolio Generated strong results for investors and positioned ICM for future growth 15

17 Case Study: International Plaza Location: Minneapolis, Minnesota Asset Type: Suburban Office building Size: 280,244 square feet Date of Investment: 2006 Total Investment: $45.0 M History Acquired a non-operating interest Financial crisis created significant unexpected vacancy At 65% occupancy, cash flow did not support the mortgage payment Value Creation ICM took over as operator in 2012 Negotiated complex mortgage restructuring Invested additional $5M in common areas, leasing commissions and tenant improvements Grew occupancy from 65% in 2012 to 90% in 2016 Increased Net Operating Income (NOI) by >50% 16

18 Case Study: Gulfstream Plaza Location: West Palm Beach, Florida Asset Type: Suburban Retail centre Size: 80,167 square feet Date of Investment: 2014 Total Investment: $10.4 million Date of Disposition: 2016 Sale Price: $13.1 million Equity Investment Result: 29.0% IRR Investment Thesis Anchor tenant representing 50% of centre had vacated Well located property in need of significant renovation Absentee owner and under-managed property Value Creation Acquired property off-market Identified national credit tenants to backfill anchor space prior to closing acquisition Undertook significant renovation to reposition property, stabilize income through lease renewals and extensions 17

19 New Offering: ICM (IX) REAL ESTATE TRUST

20 ICM (IX) Real Estate Trust Established in 2016 Targeting $100 M of equity Varying interests in 16 assets* Total of 1,661,170 sf* (gross) Value of real estate (as at December 31, 2016): $33,550,000 (USD) Investment Highlights Distributions Preferred Return Profit Sharing Tax Efficient Availability Expected Time Horizon Tax efficient quarterly distributions of approximately 5.5% to 6.0% p.a. (Return of Capital) 8% per annum on investments made by the partnership After cumulative Preferred Return and ROC on each investment: 60/40 (60% to investors) until the GP has earned 20% of total profits 70/30 (70% to investors) thereafter Quarterly Distributions: Return of Capital (ROC) Upon asset dispositions: Capital gains + Income All registered fund plans and non-registered units, CAD and USD options 5-6 Years 19 *Assumes closing of Initial Acquisitions.

21 Objective: Capitalize on investment opportunities primarily in the United States commercial real estate market. 20

22 Our Strategy BUY Acquire properties using ICM s value-oriented and disciplined approach Focus on acquiring assets: At a discount to replacement cost Off-market or through lightly marketed transactions Using conservative underwriting to protect downside risk and allow upside return potential FIX SELL Realize Increase operating income generated by the properties through repositioning and enhancing tenant relationships using ICM s active asset management philosophy value through sale of properties Repositioning and enhancement can include: Modest to significant renovations Changing tenant roster Reducing operating costs Hold vs. sell decision driven by: Completion of business plan Value maximization through attaining property stabilization (typically greater than 90% occupancy with a strong tenant base) Market rates where no anchor tenant s lease expires within the next months 21

23 Where ICM (IX) is Focused Markets where we have a competitive advantage and can outperform Markets with demographic profiles that support growth 1. Intimate market knowledge 2. Intimate partner relationships 3. Boots on the ground 1. Multiple economic drivers 2. Population growth: Net migration 3. Rising median household incomes 22

24 ICM (IX) Real Estate Trust Projected Trust Allocation Core Core Plus Value Added Opportunistic Type of Assets Projected Trust Allocation Stable, fullyleased multitenant properties in strong, diversified metropolitan centres. Core properties requiring modest enhancement or value added elements. Core or non-core properties requiring significant enhancement or value added elements. Tactical investments in properties requiring a high-degree of enhancement, including development, entitled or raw land, distressed mortgage notes etc. 0-10% 70%+ 0-20% Risk-Return Expectations Low risk Low return Moderate risk Moderate return Medium risk Medium return High risk High return 23

25 Investment Restrictions Investment Restriction Max % 1 Contribution towards any single investment 25% of Gross Subscription Proceeds Publicly traded real estate investments (to fulfill redemption requirements)* Investments other than U.S. real estate assets Investments other than core plus and value added categories 15% of Gross Subscription Proceeds 20% of Gross Subscription Proceeds 15% 5 Single market (metropolitan statistical area) 35% Commercial real estate sector cap (Office, Industrial, Retail, Multi-family and niche) Portfolio Level: Leverage ratio of the Trust s portfolio of assets shall not exceed: Asset Level: Leverage ratio of any specific asset shall not exceed: 70% 65% of the total independently appraised market value of the trust s assets 85% loan-to-value on any given investment 24 *The Trust will retain the services of a registered portfolio manager should it invest into pools of publicly traded real estate based securities

26 Summary of Initial Acquisitions* Property Market Type SF Net % Interest 1 Jones Bridge Square Atlanta Retail 83, % Carnegie Charlotte Office 107,435 50% 3 One Corporate Centre Minneapolis Office 112, % Midpark Way Calgary Office 31,207 5% 5 Hastings Crescent Calgary Industrial 69,906 5% 6 Zimmer Building Toronto Industrial 51,194 5% 7 Randol Mill Dallas Industrial 96,124 5% 8 Millway Avenue Toronto Industrial 102,093 5% th Avenue SW Calgary Office 83,833 5% 10 Courtney Park Toronto Industrial 147,242 5% 11 Newlands Building Washington Office 289, % 12 International Plaza Minneapolis Office 280,244 5% 13 Cecil Place Edmonton Office 61,817 5% 14 Oliver Edmonton Residential 144,900 5% 15 Place Chaleureuse Edmonton Residential n/a 5% 16 Flager Landing Miami Residential n/a 5% Acquired assets Real estate assets to be acquired 25 *Assumes closing of Initial Acquisitions.

27 Acquired Initial Acquisitions: ICM (IX) Jones Bridge Square* Location: Atlanta, Georgia Asset Type: Neighbourhood retail plaza (Class B+) Size: 83,363 square feet (5 buildings) Date of Investment: 2016 Total Investment: $10.3 million Investment Thesis Off-market transaction, from a related party* 97.5% occupancy (as of May 2017) Grocer anchored property in a strengthening market Anchor tenant recently renewed, total of 12 years of lease term remaining Contracted rent growth Value Creation Generate stable cash flow during hold period Increase NOI through leasing vacancy, contracted rent growth and operating efficiencies Capture value created as loan prepayment penalty expires 26 *Acquisition price based on the average of two independent appraisals from national appraisal firms.

28 Acquired Initial Acquisitions: ICM (IX) 6101 Carnegie Location: Charlotte, North Carolina Asset Type: Suburban Office building (Class A) Size: 107,435 square feet Date of Investment: 2016 Total Investment: $14.3 million* Investment Thesis Acquire asset well-below replacement cost 82.4% occupied at time of acquisition 43% of property occupied by credit tenants (Morgan Stanley, United Health Care, Zurich Insurance) Located in the strongest performing submarket in metro Average rents 23% below current market Value Creation Lease up vacancy over three-year horizon Renew existing tenants at market rates Invest $1.0 million in property improvements focused on common area upgrades, roof and improved signage 27 *Based on the acquisition of a 50% interest in 6101 Carnegie in partnership with a related party.

29 Acquired Initial Acquisitions: ICM (IX) One Corporate Center Location: Minneapolis, Minnesota Asset Type: Suburban Office building (Class B+) Size: 112,085 square feet Date of Investment: 2016 Total Investment: $12.1 million Investment Thesis Acquire asset well-below replacement cost 75.7% occupancy (May 2017) Leases representing 28.5% of total square footage expire within 18 months Average rents 13% below current market Value Creation Lease up vacancy over three-year horizon Renew near-term lease expiries at market rates Increase NOI through leasing activity, contracted rent growth and reduction of operating costs 28

30 Diversification* (by location, product type and investment theme) Initial Acquisitions represent interests in 16 properties totalling over 1.6 million square feet Diversification by Location Diversification by Product Type Diversification by Investment Theme Alberta 11% Ontario 2% Georgia 21% Minnesota 30% Industrial 3% Retail 21% Residential 6% Core 11% Value Add 34% North Carolina 28% Maryland 8% Office 70% Core Plus 54% Opportunistic 1% 29 *Assumes closing of Initial Acquisitions.

31 Tenant Diversification* (by industry) Business Consulting Services 17% Tourism, Recreation & Entertainment 1% Telecom & IT 3% Construction & Related Services 1% Manufacturing & Related Services 15% Education 3% Financial, Insurance & Related Services 9% Retail - Non-Discretionary 34% Vacant Space Healthcare 6% Real Estate & Related Services 6% 2% Retail - Discretionary 2% 30 *Assumes closing of Initial Acquisitions.

32 Geographic & Product Type Diversity* 31 *Assumes closing of Initial Acquisitions.

33 Advisory Committee At least three members appointed by ICM Management Members expected to include representatives of significant investors that invest alongside the Trust Majority of the Advisory Committee will be unrelated to the Manager Advisory Committee members will not be compensated Advisory Committee shall be appointed no later than Dec. 31/17 32

34 Independent Review Committee Independent Review Committee shall be established by August 1, 2017 Unanimous approval of the Independent Review Committee shall be required: Any conflict of interest matter The reallocation of the use of proceeds for any purpose that is materially different than the set out in the Offering Memorandum 33

35 Investment Highlights Investment Characteristics Asset Class Quarterly Distribution Target Preferred Return Profit Sharing Income & Growth Commercial Real Estate Tax efficient quarterly distributions of approximately 5.5% to 6.0% per annum (Return of Capital) 8% per annum After cumulative Preferred Return and ROC on each investment: 60/40 (60% to investors) until the GP has earned 20% of total profits Maximum Raise Minimum Investment Expected Time Horizon Unit Options Advisory Committee Independent Review Committee $100 M 500 units 5-6 years No U.S. tax filing required Class A Class B Class U (USD) U.S. tax filing required Class A1 Class B1 Class U1 (USD) acquisition/disposition decisionmaking process review annual plans and budgets overall asset allocation Resolve any conflict of interest matters Rule on any reallocation of the use of proceeds materially different than those set out in the Offering Memorandum Distribution Reinvestment Availability 70/30 (70% to investors) thereafter Optional quarterly reinvestments All registered fund plans and non-registered units, CAD and USD options Auditor Redemption Option Tax efficient MNP LLP See Offering Memorandum Quarterly distributions: Return of Capital Upon asset disposition: Capital gains + Income 34

36 Redemption of Trust Units Investment Period until the end of the first year following the investment purchase in the second and third years following the investment purchase 90% 95% Redemption Price of Net Asset Value (NAV) of Net Asset Value (NAV) any time thereafter 100% of Net Asset Value (NAV) The maximum aggregate number of Trust Units that may be redeemed by the Trust shall not exceed ten percent (10%) of the total number of Trust Units issued and outstanding at the beginning of such fiscal quarter. Redemptions are done quarterly. 35 *subject to conditions as stated in the offering memorandum

37 Trust Unit Options Currency Class A & B Units Canadian Dollar Class A1 & B1 Units Canadian Dollar Class U U.S. Dollar Class U1 U.S. Dollar Unit Price $10.00 $10.00 $10.00 $10.00 Minimum Purchase 500 units 2,000 units 500 units 2,000 units U.S. Tax filing NO YES NO YES DRIP Available YES YES YES YES Redemption Available YES YES YES YES Registered Plan Eligible YES YES NO NO 36

38 Why Invest Now Proven Manager Zero investor losses on past projects 15+% historical IRR returns to investors on fully realized projects Initial Acquisitions* ICM (IX) will have varying interests in 16 assets Total of 1,661,170 sf* (gross) Portfolio Diversification As a result of the acquired assets to date plus the Initial Acquisitions*, ICM (IX) investors benefit from a diverse portfolio of assets in different locations, different property types and different property categories Tax Efficient Quarterly Distributions Investors benefit from receiving quarterly distributions deemed return of capital (ROC) from the start of the offering period 37 *Assumes closing of Initial Acquisitions.

39 Contact Information ICM Realty Group #225, 280 Midpark Way SE Calgary, AB T2X 1J6 Canada Tel: Fax: Web: 38