Centurion Asset Management Inc.

Transcription

1 Centurion Asset Management Inc. Investing in Apartments for Income & Stability FOR ADVISOR USE ONLY

2 Centurion Asset Management Inc. A Real Estate Investment Solution Provider with a Strategic Approach to Investment Management Centurion Asset Management Inc. Investment, Asset, and Property Management Largest REIT owner of student housing in Canada Experienced at managing rental properties and student housing Offers customized solutions for mortgage financing needs Table of Contents Investor Needs, Suitability and Challenges Centurion Apartment REIT Centurion REOT Introduction Private REIT vs. Public REIT Objectives Performance Unique Advantage Investment Process Portfolio Introduction Objectives Why Invest Investment Strategy Portfolio Performance Investing with Centurion Advisor Summary The Executive & Operational Teams Questions 2

3 Investors Needs and Suitability Needs Income-oriented investors that are looking for: Monthly distributions Capital Preservation Growth potential Diversifying their portfolio Re-investment options Tax advantage income Suitability Qualified, long-term Investors who are looking to generate income and capital growth from their Investments. Moderate risk tolerance: There are certain risks inherent in an investment in Private Real Estate including risks related to real estate development, liquidity, debt financing and others. Please refer to the Offering Memorandum. 3

4 Challenge: Volatile Markets / Low Interest Rates Riskier asset classes volatile / GIC rates barely cover inflation S&P/TSX Composite Index / 5-year Personal Fixed Term Rates (as at September, ) 5.35% 4.60% 3.30% 3.80% 2.80% 2.53% 2.53% 2.68% 3.10% 2.23% 1.63% 1.85% 1.60% 1.80% 1.45% Sources: Standard & Poor s (S&P/TSX Index as December 31, 2013); Bank of Canada (5-year Personal Fixed Term Rates posted rates at Chartered Banks as at December 31 of each year) 4

5 Centurion Apartment REIT Objectives Provide investors with stable cash distributions, payable monthly, where reasonably possible, tax deferred, with the opportunity for long-term growth and a focus on preservation of capital. Investment assets make up a diversified portfolio of income-producing multi-unit residential apartments and student housing properties in Canada. Maximize Unit value through the active management of the Portfolio and through future acquisition of additional properties. Leverage the strategic relationships within Centurion Asset Management Inc. s network to increase investment opportunities and manage risk. 5

6 Private vs. Public REIT The two main categories of REITs in Canada are publicly traded REITs and private REITs. Differences between Public and Private REITs Publicly-Traded REIT: Trade on a public stock exchange (provide daily liquidity) Trading daily also means investors can potentially push price up or down, reflecting current market sentiment, regardless of actual market value of the asset Increased reporting costs due to requirements of a public listing History of more volatile pricing Tend to be more highly correlated to equity markets. Example during recent financial crisis: 2008: Public REIT Market*: -34.0% S&P/TSX*: -33.0% Private REIT: Not traded on a public stock exchange (generally offer 30-day liquidity) Value is based on the value of underlying real estate or equity / lending rate (not a market-traded price) No additional reporting costs related to a public listing Rational pricing with lower volatility Tend to be far less correlated to major equity markets 2008: Non Listed Property Ownership**: +3.7% Non Listed Apartment Property**: +6.4% * Source: Morningstar Research Inc. ** Source IPD (2008 Edition); Note: Non listed property ownership is similar to a Private REIT 6

7 Investment Process Centurion Apartment REIT always looks for opportunities with a strict due diligence process to ensure investments are responsible and beneficial for its valued investors. We concentrate on communities with low vacancy levels and strong population demographics. The primary strategies employed by Centurion: Purchasing undervalued properties with untapped potential, low vacancy and stable tenant base. Investing in newer, stabilized buildings, in desirable neighbourhoods, that do not require upgrades allows the REIT to realize maximum income quickly. Centurion Apartment REIT leverages its strategic relationship with Centurion Real Estate Opportunities Trust to proactively create a pipeline of new investment opportunities.. 7

8 Centurion Apartment REIT 47 Suite Apartment Building Oshawa, Ontario Value Opportunity Rents significantly under market Building was poorly run and under maintained Purchase Price: $2.115 million (March 2006) Upgrade Program Renovation & repositioning program (Lighting retro-fits, new windows, elevator cab upgrades, improved security, common area renovations and in-suite upgrades) 4 month period, investment cost of $350,000 Income: Increased from $160,000 per annum to $250,000 (+56%) Refinanced: Refinanced after 4 months at $3.2 million Value at December 31, 2013: $5.03 million 9 Property Background Centurion funded the 2 nd mortgage on this property with the option to purchase. The developer approached Centurion to exercise our purchase option. 176 Bed Student Housing Building Waterloo, Ontario After due diligence Centurion Apartment REIT chose to exercise the purchase option. 8

9 Student Housing Property at a glance: Student Housing properties are consistent with our philosophy of seizing upon strategic opportunities. Steady, predictable cash flows with low vacancy rates. Large, untapped market with no dominant player Centurion Apartment REIT is striving to be the leader in this space. Acquisition of 386 unit student residence in Waterloo, ON (July 18, 2013) Purpose built new construction student residence serving Wilfred Laurier University in Waterloo, Ontario. In close proximity to Wilfred Laurier University Campus, transportation, services, shopping, dining and entertainment venues. Centurion Apartment REIT is the only REIT in Canada engaged in the student residence business and the only investment grade vehicle available to investors wanting to participate in student housing. Centurion Apartment REIT is the second largest (non-university) owner of student housing in Canada. 9

10 Performance: Centurion Apartment REIT Growth of $10,000 invested (since inception of REIT August 31, 2009) $18,000 $17,433 September $16,000 Value of $10,000 $14,000 $12,000 $10,000 Invested $10, Sep 31-Dec31-Mar 30-Jun 30-Sep 31-Dec31-Mar 30-Jun 30-Sep 31-Dec31-Mar 30-Jun 30-Sep 31-Dec31-Mar 30-Jun 30-Sep 31-Dec31-Mar 30-Jun 30-Sep Calendar Returns (%) 2009 (10) YTD Compounded Returns (%) 1-Year 2-Year 3-Year 5-Year Since Inception Centurion REIT TR Centurion REIT (%) TR (%) REITs are not guaranteed, their values can change frequently and past performance is no guarantee of future results. PAST PERFORMANCE MAY NOT BE REPEATED. 10

11 Comparing Asset Class Performance Private Apartment Property Index exhibits steady growth 1987 Black Monday Crash Growth of $10,000 invested: past 28-year period as at December 31, 2013 (annual update) 1997 Asian Financial Crisis 1998 Russian & LTCM bailout 2000/02 Internet Bubble Bursts & 9/ /09 Global Financial Crisis $219,074 ICREIM / IPD Canada Residential "Apartment" Property Index (TR) Consistently positive growth over the past 28 years $10,000 invested (Dec ) Positive calendar year Total Returns every year over past 28 years * Annualized return over the 28-year period of above ICREIM / IPD Index REITs are not guaranteed, their values can change frequently and past performance is no guarantee of future results. Above ICREAM / IPD Index only available with annual data points versus indices on previous slide shown with quarterly data. It is an unleveraged index. PAST PERFORMANCE MAY NOT BE REPEATED. 11

12 Centurion Apartment REIT Portfolio Centurion Apartment REIT owns and operates 42 multi-residential rental properties in 16 Canadian communities. Huntsville Gravenhurst Acton Barrie Mississauga Brighton Cambridge Montreal Kitchener Oshawa Waterloo Whitby London Toronto Tillsonburg Hamilton 12

13 Centurion Real Estate Opportunities Trust The Centurion Real Estate Opportunities Trust (Centurion REOT) is an income & capital growth oriented investment trust that allows qualified investors to invest in a diversified portfolio of mortgages and opportunistic real estate developments and investments. Simply put, investors pool their money together to invest in mortgage and growth oriented real estate opportunities. The net profits are distributed back to investors. Highlights Expected Total Return: 7% - 12% Expected Mortgages Returns of 7%-12%, and Real Estate Development Returns of 15%-25% 1 Monthly Distributions Growth Potential RRSP, RESP, TFSA Eligible Diversified Portfolio Qualified Investors Only Investment Investments Mortgages (income) Investor Distributions & Capital Growth Centurion REOT Income & Capital Growth Growth Oriented Investments (capital growth) 13

14 Centurion REOT Objectives Provide investors with cash distributions, payable monthly with the opportunity for long-term growth and a focus on preservation of capital. Investment assets make up a diversified portfolio of mortgage investments, growth oriented real estate investments and ancillary real estate ventures. Maximize Unit value through the active management of the Portfolio. Leverage the strategic relationships within Centurion Asset Management Inc. s network to increase investment opportunities and manage risk. 14

15 Centurion REOT Investment Strategy Centurion REOT intends to use a barbell strategy composed of mortgages for income on one side and other growth oriented real estate investments for capital growth on the other. Goal: Portfolio Balance Mortgages (Income) Growth Oriented Investments (Capital Growth) The following targeted investments categories are where Centurion sees growth opportunities in the real estate market: 1) Income: Mortgage Investments Construction loans for purpose built rental apartments & student housing buildings Multi-family residential, investment properties & commercial mortgages Developer and builder pre-construction loans Mezzanine and subordinated debt financing Residential mortgages 15

16 Centurion REOT Portfolio Summary of Portfolio Committed # of Investments Funded # of Investments Loans $70,402, $57,648, Joint arrangements $12,783,655 5 $1,471,687 1 Total $83,186, $59,120, Participating and Non-Participating Investments 2 Loans # of Investments Funded Non- Participating 10 $25,712,748 Participating 9 $31,935,907 Total 19 $57,648,656 16

17 Centurion REOT Portfolio Loans by Mortgage Type Loan Maturity by Year Loans Funded by Geographical Allocation Commercial 30% % % Alberta 13% Residential 70% % % Ontario 87% 17

18 Centurion REOT Portfolio Year Historical Loan Information At End of Quarter Committed ($M) Advanced ($M) Number of Investments Int. Rate Wtd Avg LTV Wtd Avg Term to Maturity (Years) 2013 Q2 $22.34 $ % 74.1% 2.10 Q3 $48.03 $ % 56.7% 1.87 Q4 $48.77 $ % 56.3% Q1 $66.97 $ % 56.0% 1.83 Q2 $62.54 $ % 64.1% 1.84 * As of August 31,

19 Example 1 Transaction Project Details 100 Units in Western Canada Single 6 Storey Apartment Building with Ground Floor Retail Surface & Underground Parking Loan Structure $21.7M construction cost 1 st Mortgage: $16.3M funded by a third party lender 2 nd Mortgage: $2.5M funded by Centurion Equity Financing: $3M in total, (2/3 or $2M funded by Centurion) Mortgage Loan Interest Rate: 11% Preferred Return to Centurion REOT: 10% with a 50/50 split of profits beyond the 10% between the developer and Centurion REOT. Right of First Refusal to acquire the development project upon completion. 19

20 Example 2 Transaction South Western Ontario Background: Centurion funded the 2 nd mortgage on this property with the option to purchase. The borrower approached Centurion to exercise our purchase option. After due diligence Centurion chose to exercise its option to purchase the property. Loan & Purchase Details: Purchase Price of the Property: $15M 2 nd Mortgage Amount: $1M Additional Funds used for Purchase: $3M 20

21 Executives & Board of Trustees - REIT Depth of experience & expertise A Board of Trustees is responsible for the general control and direction of Centurion Apartment REIT: Greg Romundt President & Trustee * Wayne Tuck VP of Operations, COO & Trustee * Robert Orr CFO/CCO ** Ross Amos Independent Trustee Martin Bernholtz Independent Trustee*** John Mills Independent Trustee Chairmen of the Board of Trustees: Ross Amos *Responsible for the day-to-day Executive Management of Centurion Apartment REIT. Please see Appendix for detailed biographies of the Executives & Trustees ** Not a member of the Board of Trustees *** Independent Board Member on both Centurion REOT and Centurion Apartment REIT Board of Trustees 21

22 Executives & Board of Trustees - REOT Depth of experience & expertise A Board of Trustees is responsible for the general control and direction of Centurion REOT: Greg Romundt President & Trustee * Wayne Tuck VP of Operations, COO & Trustee * Robert Orr CFO/CCO ** Stephen Stewart Director of Mortgage Investments & Trustee * Charles Dillingham Independent Trustee Martin Bernholtz Independent Trustee*** Ken Miller Independent Trustee Peter Smith Independent Trustee Chairmen of the Board of Trustees: Martin Bernholtz Chairmen of the Investment Committee: Ken Miller *Responsible for the day-to-day Executive Management of Centurion REOT. Please see Appendix for detailed biographies of the Executives & Trustees ** Not a member of the Board of Trustees *** Independent Board Member on both Centurion REOT and Centurion Apartment REIT Board of Trustees 22

23 Centurion Properties - Apartments 23

24 Centurion Properties Student Housing 24

25 Summary The Investment Solution Two separate trusts that allows qualified investors to invest into real estate opportunities. Mortgage Lending & Financing A diversified portfolio of apartments and student housing properties Benefits for Investors Generates monthly income Potential for growth Has a focus on capital preservation Is tax efficient 1 Diversifies investor s portfolio Provides re-investment options Centurion Strength Experience, Expertise, Infrastructure & Financial Resources to deliver an: End-to-End Real Estate Solution Sourcing / Attracting Development Deals Offering Financing Real Estate Investment Opportunities Property Management Centurion has the: People Experienced & dedicated team Processes Value-oriented strategy A majority independent Board of Trustees provides oversight Performance Track record of strong total returns since 2006 Portfolio Helps to diversify portfolios overweight in equities with its low correlation 4 to major asset classes and lower volatility 3 25

26 Centurion Apartment REIT Advisor Summary Investment Minimum Centurion Apartment Real Estate Investment Trust $5,000 (qualified investor) Terms & Conditions Purchases: Redemptions: Valuations: Monthly (any day of the month) Monthly (30 days notice before redemption date) Monthly Fees Management Fees: Class A: 2.5% Class F: 1.5% Performance Fees: 5% Carried Interest* Upfront Commission Fee: (annual rate %) Deferred Sales Charge (DSC) 5% Low Load (LL) 3% Front-end (FE) 0-5% (negotiated with client) F Class (F) n/a Advisor Compensation Trailer Fee: (annual rate %) Redemption Schedule: 50 bps 75 bps 100 bps n/a In year 1: 6.0% 2: 5.5% 3: 5.0% 4: 4.0% 5: 3.0% After year 5: 0% First 18 months: 3.5% Second 18 months: 3.0% After 36 months: 0% Short-term trading fee: 3.0% if redeemed within 6 months Short-term trading fee: 3.0% if redeemed within 6 months FundSERV Codes Fund Company Code: CEN100 CEN101 CEN102 CEN105 * Please refer to the Offering Memorandum 26

27 Centurion Real Estate Opportunities Trust Advisor Summary Investment Minimum Centurion Real Estate Opportunities Trust $5,000 (qualified investor) Terms & Conditions Purchases: Redemptions: Valuations: Monthly (any day of the month) Monthly (30 days notice before redemption date) Monthly Fees Management Fees: Class A: 2.0% Class F: 1.0% Performance Fees: 5% Carried Interest* Upfront Commission Fee: (annual rate %) Deferred Sales Charge (DSC) 5% Low Load (LL) 3% Front-end (FE) 0-5% (negotiated with client) F Class (F) n/a Advisor Compensation Trailer Fee: (annual rate %) Redemption Schedule: 50 bps 75 bps 100 bps n/a In year 1: 6.0% 2: 5.5% 3: 5.0% 4: 4.0% 5: 3.0% After year 5: 0% First 18 months: 3.5% Second 18 months: 3.0% After 36 months: 0% Short-term trading fee: 3.0% if redeemed within 6 months Short-term trading fee: 3.0% if redeemed within 6 months FundSERV Codes Fund Company Code: CEN200 CEN201 CEN202 CEN205 * Please refer to the Offering Memorandum 27

28 Centurion Asset Management Inc. Questions? 28