R E P U B L I C. Republic Residential Fund III U.S. Real Estate Opportunity Fund. September Jeff Baryshnik

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1 Republic Residential Fund III U.S. Real Estate Opportunity Fund September 2015 Jeff Baryshnik President & Managing Partner

2 Important Disclosures Thispresentationdoesnotconstituteanoffertosellorasolicitationofanoffertobuyanysecuritiesorproperties,andmaynotberelieduponinconnectionwithany offer or sale of securities or properties. Products and services offered by the Company are not available for purchase except where explicitly permitted by law; any individual referenced herein does not function as a research analyst as defined under U.S. law and any report prepared by such individual is not a research report as defined under U.S. rules and regulations. Securities, properties, and financial instruments discussed in this report are not insured by any government agency. Investments in general, and those involving speculative techniques in particular such as leveraging and derivatives, involve a higher degree of risk. Any forwardlooking statement contained herein may not be realized; these statements are not projections of expected performance, nor guarantees of anticipated investment returns. An investor could lose a substantial amount of its investment; past performance is not indicative of future results. All material is compiled from sources believed to be reliable, but accuracy or completeness cannot be guaranteed and has not been independently verified. Thisreportexpressestheviewsoftheauthorasofthedateindicated;suchviewsaresubjecttochangewithoutnoticeanddonotnecessarilyreflecttheviewsof Republic Funds USA Inc., Republic Residential Corp., Republic Residential Fund II LLLP or any related or affiliated entity(collectively, the Company ). The Company is under no obligation to update this report. This report provides general and educational information only as of the date hereof, and should not be used for any other purpose. Nothing herein should be construed as investment, legal, or tax advice. The recipient of this report should make its own independent decisions or seek advice from qualified professionals regarding the appropriateness of implementing any strategy or investment that may be discussed herein. This report may not be redistributed, retransmitted, or disclosed in whole or in part without the express written consent of Republic Funds USA Inc. Certain statements in this presentation about the Fund and its business operations and strategy, and financial performance and condition may constitute forwardlooking information, future oriented financial information, or financial outlooks (collectively, forward-looking information ). The forward-looking information is statedasofthedateofthispresentationandisbasedonestimatesandassumptionsmadebythemanagementofthefundinlightofitsexperienceandperception of historical trends, current conditions, and expected future developments, as well as other factors that management of the Fund believes are appropriate and reasonable in the circumstances. There can be no assurance that such forward-looking information will prove to be accurate, as actual results, performance and future events could differ materially from those anticipated in such statements. Management of the Fund refers you to the offering memorandum once available, for information regarding this forward-looking information, including the assumptions made in preparing forward-looking information and management s expectations and the risk factors that could cause the Fund s actual results, yields, levels of activity, performance, or achievements or future events of developments to differ materially from those expressed or implied by the forward-looking information. In particular, the management of the Fund refers you to the offering memorandum, whenavailable,forinformationregardingthedetailsoftheofferingofunitsofthefund,internalrateofreturnthatthefundistargeting,thenatureofthefundand its affairs following the completion of the offering envisaged by the offering memorandum, once available, and the strategic partners of the Fund going forward. This material may not be distributed other than to the intended recipients. Unauthorized reproduction or distribution of any or all of this material is strictly prohibited. 2

3 Republic Funds Republic Funds acquires and improves under-performing apartment buildings in the Sunbelt States, targeting 20%+ IRRs Republic Funds has generated strong returns with low leverage 40%+ property-level IRR with no leverage for Fund II s first disposition 26.4% Fund II Net IRR in USD since inception, valued at 8% cap rate 18.8% Fund I Net IRR in USD, realized with no leverage Fund II owns 2M+ square feet of real estate including 2,000+ apartment units 11.8% realized cap rate on units owned longer than one year (9.4% to 15.7%) $29 per square foot paid to acquire the portfolio ($15 to $45 per SF) Significant alignment with limited partners Seven figure investment, vast majority of net worth 1.5 & 20 subject to an 8% Net IRR; or 0 & 40 subject to a 10% Net IRR 3

4 Experienced Team Jeff Baryshnik MBA HBA CIM FCSI GA TX Ivo Hrosinkov MBA BSc AZ President & Managing Partner since 2009 Vice President, Global Investment Fund, Senior Analyst, Citadel and Magnetar, Financial Analyst (M&A), Morgan Stanley, MBA(Stern Scholar) from NYU Stern HBA (Ivey Scholar) from Ivey Business School Director, True North Commercial REIT Director, Arizona Region Previously, Associate at SmartCentres (47M sq ft) SmartCentres Leadership Rotation, Investment Analyst at AIG Real Estate (UK), 2008 Partner, Real Estate Developments (EU), MBA with distinction from UW Madison Acquisition, renovation, and leasing experience Nelson Kim MBA MEng BAScPDAM PMP NC Konrad Jakubowski CFA HBA FL Director, Carolinas Region Previously, Associate at Realstar($6Bn AUM) Analyzed $1B+ of multifamily property acquisitions Repositioned and refinanced $500M portfolio MBA, MEng and BAScfrom University of Toronto Acquisition and asset management experience Investment Associate, Florida Region Analyst at Minto Group (17,000 MF units), Lead financial analyst on $470M of acquisitions Head of financial modeling and analysis team HBA (Ivey Scholar) from Ivey Business School Acquisition and development experience 4

5 Why Apartments in the Sunbelt? High Growth + High Demand + Low Supply + Low Rates + Low Price = IRR High Growth: Sunbelt States have high population growth, net immigration, and strong legal protections for landlords and employers High Demand: Despite job market improvement, many renters do not qualify for mortgages, renting is more socially acceptable, and Millennials are a larger group than Low Supply: According to The Wall Street Journal in July 2015, virtually all new apartment construction [between was] targeted to high-end renters Low Rates: Mortgage rates are still at historic lows, providing additional opportunities to increase returns with non-recourse financing; our mortgages are all 10-year fixed rates Inflation Hedge:Apartments may offer an inflation hedge due to shorter lease terms, particularly combined with long-term financing at fixed interest rates 5

6 Value Creation Process Without relying on any real estate appreciation or economic growth, we seek several levers to increase value at our acquired properties 200% Illustrative Value Creation Goal Excluding Cash Flows, Rent Increases, and Inflation 175% 165% 165% 150% 125% 100% 100% 120% 135% 145% Value Creation 75% 50% Purchase Price 9-10% cap rate 10-11x cash flow Raise Occupancy 8-9% cap rate 11-12x cash flow Refinance Value uplift Return of capital Management Value uplift Ongoing Portfolio Sale 8.0% cap rate 12.5x cash flow Potential Value Excludes cash flow Disposition This example is hypothetical and illustrative only. Actual results will vary significantly. 6

7 Through Due Diligence Process For each property under contract, Republic conducts thorough due diligence on the neighborhood, building, operations and finances Physical due diligence maximizes our property knowledge Property Condition Assessment report: ASTM standards Phase I Environmental Site Assessment: Phase II if recommended Third party bids for energy retrofits and property improvements Physically inspect each unit to assess make-ready and improvement costs Operational and financial due diligence helps to ensure achievable projections Financial analysis of historical revenue, expense, and capital expenditure line items Rent roll analysis: Assessment of new leases and upcoming lease expirations Review of all tenant files and personnel reports Primary research: Nearby properties, fire marshal, police reports, community groups 7

8 Key Terms: Republic Residential Fund III Investment Size $250,000 USD minimum, funded in tranches Fund capped at $100 million Class A Units 1.5% management fee 8.0% cumulative preferred return to LP, net of all costs 20% allocation to GP at back end Class Z Units Zero management fee 10% cumulative preferred return to LP, net of all costs 40% allocation to GP at back end, with full catchup Fees & Expenses 0.5% acquisition fee to our analysts and any co-broker No financing fees, no capex fees, no divestiture fees Five-Year Term 3-year deployment: Reinvest and redeploy cash flows 2-year harvest: Two 12-month extensions if required Baryshnik Investment Seven figures, vast majority of investable net worth 8