125 years with the firm. If we had

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125 years with the firm. If we had
CWS Capital Partners has evolved from the company that
was founded in 1969. Its key principals and advisors,
Chief Executive Officer Steve Sherwood, President Gary
Carmell, Chief Investment Officer Mike Engels, and Bill
Williams, have a combined 125 years with the firm. If we had
to title ourselves, it would be “a fully-integrated real estate
investment management company.” We search throughout
America for real estate investment opportunities and
negotiate the purchase and sale of the properties. We
access debt and equity capital to finance both the purchase
and development of those properties. And finally, we
manage them. Throughout each project, we correspond
regularly with our investment partners and coordinate all
the necessary financial reporting and tax return generation.
Importantly, the CWS principals believe in these projects
strongly enough to personally invest in every single one.
mp et ito r be havio r
Fie ld co ndit ion s an d co
m wi ll prep are a
o ft en dic tat e ho w a t ea
o ffe nse, de fen se,
wi nning game pla n for
S Capit al
an d specia l t eams. At CW
we ll-pre pa re d
Pa r t ne rs, ou r t eam ha s
an d a wi nning
co ac he s, all-s tar at hle t es,
he fle xibilit y,
t radit ion to all ow for t
ion to creat e
creat ivi ty, an d prep arat
CWS’s in-de pt h
a succe ssful game pla n.
environme nt
an aly sis o f t he op erat ing
d wi t h deep
an d co mp et it ion, co mbine
nd er all co ndit ion s,
exp er ien ce op erat ing u
t he fie ld prep ared
all ow ou r t eam to ta ke
u to joi n us on
to succeed. We inv it e yo
to co mp et ing at
ou r co nt inu ou s jou rn ey
od uc ing succe ssful,
t he hig he s t level an d pr
er t he lon g t er m.
sus tai nable out co me s ov
APARTMENT PORTFOLIO PERFORMANCE SUMMARY
ACTUAL
TOTAL REVENUE
TOTAL OPERATING EXPENSES
NET OPERATING INCOME/(LOSS)
$
$
$
309,953,757
139,592,305
170,361,452
BUDGET
$
$
$
308,009,064
139,903,957
168,105,107
$
$
$
FROM JANUARY 1
TO DECEMBER 31, 2014
VARIANCE
PERCENT
1,944,693
311,652
2,256,345
0.63%
0.22%
1.34%
COMBINED
EQUITY
EXCHANGED
DEFERRED
GAIN ASSOCIATED
WITH THE EQUITY
1031 EXCHANGE HISTORY
YEAR
1985
1986
1989
1990
1991
1992
1993
1995
1996
1997
1998
1999
2000
2002
2003
2004
2006
2007
2008
2011
2012
2013
2014
GRAND TOTAL
PRIVATE TIC
EQUITY EXCHANGED
$
$
$
462,436
2,988,418
537,560
10,912,000
7,382,742
13,542,148
29,141,241
64,966,545
4,969,908 $
7,496,092
596,835
618,897
1,238,238
1,871,750
3,591,187
9,283,218
1,267,266
575,893
1,800,396
4,759,007
4,219,577
4,546,184
1,252,827
2,115,161
5,578,435
10,424,092
12,737,361
19,012,046
30,945,816
43,385,626
31,046,933
55,438,498
31,828,056
37,942,895
14,187,460
23,078,845
1,305,981
4,334,016
10,427,349
16,610,408
12,345,388
14,347,576
36,790,440
50,402,997
6,713,725
10,402,648
15,001,994
3,586,255
8,933,358
12,928,368
36,750,794
27,565,714
48,796,949
22,886,958
$ 322,326,273 $ 383,613,144
PROPERTIES REFINANCED IN 2014
PROPERTY
MONTH
REFINANCED
MARQUIS AT SUGAR LAND
THE MARQUIS AT GREAT HILLS
MARQUIS AT BELLAIRE RANCH
FAIRMONT AT WILLOWCREEK
MARQUIS AT CLEAR LAKE
REGENTS WEST AT 24TH
FEBRUARY
AUGUST
DECEMBER
DECEMBER
DECEMBER
DECEMBER
PROPERTIES SOLD IN 2014
PROPERTY
MARQUIS ROUND ROCK APARTMENTS
THE MARQUIS AT WILLOW LAKE
MARQUIS AT CANYON RIDGE
THE MARQUIS AT ROGERS RANCH
MONTH SOLD
MARCH
AUGUST
SEPTEMBER
SEPTEMBER
(1)
(1)
(1)
(1)
TRACK RECORD
PROPERTY
ASHBURY PARKE
THE MARQUIS AT LADERA VISTA 2
BARTON’S LODGE 3
PLAZA VILLA
THE MARQUIS OF CARMEL VALLEY 2
MARQUIS APARTMENTS
ARGONNE FOREST
EDGE CREEK
O’CONNOR RIDGE
WATERBURY PLACE
LAGUNA TERRACE
MONTCLAIR PARC
NORTHCREEK APARTMENTS
THE MARQUIS AT CASTLE HILLS
THE MARQUIS AT WALKER’S BLUFF
THE MARQUIS AT FRANKFORD SPRINGS
SHOAL CREEK
HUNTINGTON COVE
PAPILLON PARC
THE MARQUIS AT QUARRY
THE MARQUIS AT IRON ROCK RANCH
TALAVERA 4
THE MARQUIS AT DTC
TOWN LAKE OF COPPELL
THE MARQUIS AT CROSSROADS
MARQUIS AT LANTANA
THE MARQUIS ON MCKINNEY
PARK AT FOX TRAILS
THE MARQUIS AT BARTON CREEK
BLOCK PHASE I
BLOCK PHASE II
MARQUIS AT WEST VILLAGE
MARQUIS AT PARK CENTRAL
WINDSOR AT BARTON CREEK
MARQUIS AT GASTON
MARQUIS AT SILVER OAKS
MARQUIS AT SILVERTON
PARKWAY TOWERS
PARK AT SPRING CREEK
MARQUIS AT BELLAIRE
MARQUIS AT STONE BRIAR
MARQUIS AT RIVERCHASE
MARQUIS AT EDWARDS MILL
MARQUIS ON CARY PARKWAY
MARQUIS AT NORTHCROSS
MARQUIS ON ELDRIDGE
MARQUIS AT WESTCHASE
MARQUIS AT PIN OAK
MARQUIS ON WESTHEIMER
MARQUIS AT GREAT HILLS
MARQUIS ON MEMORIAL
MARQUIS ROUND ROCK APTS
THE MARQUIS AT WILLOW LAKE
MARQUIS AT CANYON RIDGE
THE MARQUIS AT ROGERS RANCH
PORTFOLIO WEIGHTED AVERAGE
PORTFOLIO SIMPLE AVERAGE
LOCATION
DATE ACQUIRED
SALE DATE
AUSTIN, TX
AUSTIN, TX
AUSTIN, TX
MONTCLAIR, CA
CHARLOTTE, NC
AUSTIN, TX
AUSTIN, TX
AUSTIN, TX
DALLAS, TX
ARLINGTON, TX
DALLAS, TX
CHARLOTTE, NC
DURHAM, NC
SAN ANTONIO, TX
AUSTIN, TX
DALLAS, TX
BEDFORD, TX
FARMERS BRANCH, TX
FORT WORTH, TX
SAN ANTONIO, TX
AUSTIN, TX
SAN ANTONIO, TX
DENVER, CO
COPPELL, TX
RALEIGH, NC
FLOWER MOUND, TX
DALLAS, TX
PLANO, TX
AUSTIN, TX
AUSTIN, TX
AUSTIN, TX
DALLAS, TX
DALLAS, TX
AUSTIN, TX
DALLAS, TX
DALLAS, TX
RALEIGH, NC
DENVER, CO
DALLAS, TX
HOUSTON, TX
DALLAS, TX
DALLAS, TX
RALEIGH, NC
RALEIGH, NC
CHARLOTTE, NC
HOUSTON, TX
HOUSTON, TX
HOUSTON, TX
HOUSTON, TX
AUSTIN, TX
HOUSTON, TX
ROUND ROCK, TX
FORT WORTH, TX
AUSTIN, TX
SAN ANTONIO, TX
JUL-93
NOV-94
DEC-90
FEB-95
JAN-97
NOV-92
DEC-91
AUG-93
NOV-95
JUN-90
JUL-96
JUL-97
JUL-97
JUN-03
OCT-98
SEP-04
NOV-97
DEC-89
MAR-89
JAN-04
DEC-04
APR-98
SEP-99
MAR-04
DEC-00
JUL-06
APR-02
DEC-06
JUL-00
MAR-06
OCT-06
JUN-04
FEB-05
APR-05
MAY-05
SEP-05
DEC-05
DEC-05
MAR-06
MAY-06
JUL-06
JUL-06
JUL-06
OCT-06
DEC-06
MAR-07
MAY-07
MAY-07
JUL-07
SEP-07
NOV-07
OCT-11
AUG-02
NOV-11
JUL-99
JUN-96
NOV-96
MAR-98
AUG-98
MAY-99
JUN-00
AUG-00
DEC-00
FEB-02
MAR-02
APR-03
OCT-04
OCT-04
MAR-06
APR-06
JUN-06
JUN-06
AUG-06
MAR-07
MAR-07
APR-07
JUN-07
JUL-07
SEP-07
SEP-08
DEC-08
JUN-11
DEC-11
MAY-12
DEC-12
DEC-12
JUL-13
AUG-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
SEP-13
MAR-14
AUG-14
SEP-14
SEP-14
INVESTOR RETURNS
NET OF FEES
MULTIPLE
NET OF FEES
22.36%
13.54%
20.10%
21.91%
28.78%
18.23%
19.65%
22.88%
10.12%
8.97%
9.58%
5.27%
9.50%
28.49%
8.15%
10.30%
9.38%
7.57%
11.35%
29.44%
38.03%
3.92%
9.29%
38.11%
7.37%
3.51%
9.63%
7.70%
7.41%
13.37%
12.14%
22.41%
12.22%
13.97%
11.70%
15.01%
11.15%
6.23%
7.52%
11.47%
8.03%
7.53%
9.59%
14.22%
5.69%
15.49%
11.31%
12.03%
14.98%
5.17%
14.76%
19.60%
15.85%
13.08%
10.24%
11.87%
13.31%
1.71
1.27
2.78
1.92
1.66
2.30
2.85
2.83
1.70
2.17
1.57
1.37
1.67
1.92
1.63
1.18
1.87
2.57
3.62
2.16
2.11
1.34
1.84
2.99
1.59
1.09
2.16
1.43
2.28
2.40
1.99
3.03
2.43
2.57
2.34
2.79
2.12
1.46
1.68
2.12
1.72
1.66
1.87
2.36
1.44
2.48
1.95
2.03
2.28
1.35
2.13
1.51
3.39
1.40
3.60
1.96
2.04
(1) Deferred gain from new 1031 exchange investor not included as the investor’s personal gain from non-CWS original properties was not
tracked by CWS. (2) These investments were recapitalized after the development was complete. These returns represent the IRRs produced
for investors exiting after the development phase. (3) A portion of the investment was set aside for investors completing a 1031 exchange.
Because their capital was invested later their IRR is higher than the initial investors. (4) This property investment IRR was calculated with the
inclusion of lender group investments and returns. These two lender groups produced IRRs of 18.97% and 8.04% respectively.
THE GAME PLAN
This year’s Super Bowl was one for the ages. Two extraordinarily well-coached teams with tremendous athletes and quarterbacks fought a gruelling battle to the last second. While it
can be a little dangerous to draw precise analogies between
sports and business, there are obviously some great lessons
to be learned. The basic rules of football and how to win the
game have not changed. What has changed dramatically is
how teams prepare and execute their game plans to win. What
used to be three yards and a cloud of dust, now emphasizes a
passing game and a quick moving, efficient offense.
Successful football teams have to be well-prepared, flexible,
strong, well-conditioned, and rarely off balance. Instincts are
highly valuable as well since plays move so quickly and opportunities are so fleeting because of the talent, strength, agility,
speed, and organization of the opposing players. When we
emerged from the Great Recession we saw that a big hole was
opening up, offering a once in a generation investment opportunity. The economy was starting to recover, jobs were forming,
households were being created, single-family housing was in
distress, the mortgage market was extraordinarily tight, the
regulatory environment was putting great pressure on lenders
to be very conservative, and very little new construction was
taking place. It’s one thing to see the hole opening up and it’s
another to be on the field and healthy to hit it hard with great
vigor, intensity, and focus. Fortunately at CWS we were in good
enough shape (bruised a bit but not seriously injured) to be
on the field to take advantage of the opportunities.
Since 2011 we have purchased 39 properties, broke ground
on seven new developments, and refinanced many of our
properties. The result has been a significant increase in cash
flow and assets that have appreciated in value. We could not
have done what we did without adequate preparation and
forethought. Just like every football team scouts their opponents and studies film intensely to identify patterns, tendencies, and reactions by their opponents, we could not have
recognized the opportunity without taking the time to reflect,
analyze, discuss, and debate how we could best add value
for our investors given the opportunity we could see unfolding.
Our instincts told us that this could be one of the great openings in our long and illustrious CWS history.
It is important that we do not get complacent and think that
the same game plan will produce the same favorable results
going forward. In the NFL the league is always evolving. Teams
innovate and others have to respond if they want to compete.
Pete Carroll saw the cornerback position differently than every
other coach and determined that the way to neutralize the
tall, big, fast receivers was to meet them head on with similarly built and skilled cornerbacks. Prior to this, virtually every
team manned that position with smaller, much more agile and
quicker players. When combined with a punishing pass rush,
it had become very difficult for opponents to pass against the
Seattle Seahawks. One of Newton’s laws is that for every action
— 5 —
there’s an equal and opposite reaction. Enter Bill Belichick,
coach of the New England Patriots, who knew he could not
take Seattle’s cornerbacks head on. He devised a game plan
of numerous short, timing routes and passes that would allow
New England’s smaller receivers to tuck under the less nimble cornerbacks while tiring out the pass rush with numerous
plays and quick throws. New England eventually prevailed in
one of the great Super Bowl games of all time.
Markets, values, and competition are always changing.
In 2012 we looked at various markets and determined that
Atlanta offered us one of the best opportunities to grow given
diminished supply, an improving economy, worn out sellers,
and a negative perception of the investment opportunity by
most investors, thus offering compelling values. Ten acquisitions later, Atlanta today is considered the strongest apartment
market by investors behind the Bay Area, and we are delighted we pursued that game plan aggressively. Yet, everything
changes. As Heraclitus said, “You can never step into the
same river twice.” The rapids and current keep it changing
in perpetuity. Atlanta, while still attractive, requires a bit more
discernment than it did two years ago when competition for
properties was less and valuations were very attractive.
We are four years into the recovery cycle, values are materially higher, and there is more competition. Since supply
has been insufficient to meet the strong demand, builders are
responding. Single-family is strengthening somewhat as lenders begin to loosen the credit reigns a bit. Home values have
gone up resulting in fewer owners with negative equity, and job
growth has given prospective buyers more economic horsepower and confidence to invest in a home. Yet, despite the
stronger defense we are facing, we are still quite excited about
the prospect for apartments and believe we have a well-trained
and prepared offense to address the challenges posed by the
defenses. The holes we see may be in different cities, narrower to go through, and may be different types of opportunities,
yet we see opportunities nonetheless. We still have favorable
demographics and social and economic trends supporting
continued rental demand, low interest rates, higher replacement costs due to elevated construction costs, and valuations
that can still offer compelling values.
Our team has greater depth, strength, and stamina so we
are well positioned to endure and compete to produce compelling results and investment opportunities. We have made
significant investments in our information technology infrastructure, asset management team, training, and risk management. In addition we have very strong relationships with the
industry’s two largest lenders, Fannie Mae and Freddie Mac,
which allow us to access some of the most cost competitive financing in the market. When you add in our top flight acquisitions team, investor relations, and human resources, we have
all three aspects of the game well covered: offense, defense,
and special teams.
Gary Carmell, CFA Partner--President
— 7 —
Flexibility
Earlier this year I had the opportunity to cross an item off my
bucket list. I traveled to Green Bay, Wisconsin’s Lambeau Field to
watch the Packers and Cowboys play in an NFL playo≠ game. Entering Lambeau Field all I could think about was the 1967 Ice Bowl
when these same teams struggled to a 21 to 17 Packer victory in –2
degree weather.
The dramatic changes in the NFL from then to now were very
apparent to me as I entered the field and the game unfolded. The
focus on passing, the sky cam, new rules, instant replay, and the
huge contemporary salaries — how could these teams still be on top
in such a di≠erent competitive environment? Then it struck me. It is
not that di≠erent from CWS and the dramatically changing apartment market.
The changes during the last 25 years in the apartment business
are quite extensive — the physical design, desire for urban living,
leasing by internet, shift away from home ownership, smaller units,
walkability, just to name a few. At CWS, we react to changing conditions a lot like a successful NFL team. We rely on our skills and
the experience of our strong team to come up with the appropriate
strategy and then execute that plan with discipline and excellence.
Reviewing 43 major apartment markets, we can see they are all
experiencing positive rent growth. Some are growing at 7% and
others at 1%, but they are all positive. This is because supply has not
caught up with demand since the major downturn in 2008. Going
forward, it is clear apartments will need to provide a larger portion
of the new housing starts since the desire for single family homes for
renter-age customers has subsided. The fact that young people are
getting married and starting families at a later age combined with
their need for flexibility means they are opting to rent longer. They
are drawn to the urban centers and cannot afford to buy in these
expensive locations even if they do not have student loans to pay off.
They choose to rent smaller units so they can afford the rent and live
where they want to live.
Given the demographic bulge of the renter-age cohort, we would
expect a very healthy demand for apartments during the next five
years. Markets will vary in health as supply and demand for each
individual market will define how robust it will be. CWS has been
excellent at entering markets at opportune times and seeking out
the best opportunities. We expect to find opportunities to apply our
skills and experience in several areas. The main four are listed:
•
•
•
•
Buy existing assets and renovate them
Buy new assets during lease-up at a discount
Develop assets from the ground up
Buy assets with existing non-prepayable debt at a discount
The team at CWS has an excellent track record of knowing when
to be aggressive and when to lay back. We are comfortable being
outbid four out of five times or even more and only want to buy on
terms we feel would make the opportunity an excellent investment.
The apartment business has a very bright future and we at CWS will
continue to thrive in our ever-changing environment by seeking out
the best investments in each new environment.
Ten years from now it would not surprise me if the Packers and
the Cowboys were still elite NFL football teams. I would also expect
CWS to be one of the top performing apartment investors and operators at that time, just as it has been for many years.
Steve Sherwood
Founder, Chief Executive Officer & Chairman of the Board
— 9 —
Conditioning
Football coaches always seek a competitive advantage
that hopefully provides the winning edge. Similarly, at
CWS our strong industry knowledge paired with tax-favored structures combine to provide a winning combination. This season, we are seeing CWS assets continue
to produce distributions in an environment characterized
by rising taxation coupled with difficulty in finding income producing investments. Now more than ever, the
tax aspects of investing in real estate are benefitting our
investors. One significant way that these tax benefits
occur is through depreciation.
Depreciation is an allowance for the decline in value
of a long-lived capital asset. In theory, it should equal
the cost of replacement when the asset ceases to have
value. The IRS currently allows for straight line depreciation on a 27.5-year schedule for residential real estate investments such as apartments. The buildings and
improvements can be depreciated, while the land has no
depreciation.
Depreciation deductions provide a powerful tool in
deferring taxable income for CWS investors. Below I
have outlined two examples of depreciation at work.
Depreciation
Example 1
Property Value
$
Land Value (15% of asset value)
Building and Improvements Value (85% of asset value)
Depreciation Term for Building and Improvements (years)
Annual Depreciation
50,000,000
Example 2
$
7,500,000
42,500,000
42,500,000
27.5
$
1,545,455
$
2,375,000
Yield on Cost (Cap Rate)
27.5
$
1,545,455
$
3,000,000
4.75%
Net Operating Income
Loan to Value
50,000,000
7,500,000
6.00%
65%
60%
Equity
17,500,000
20,000,000
Loan Amount
32,500,000
30,000,000
Interest Rate
2.00%
4.75%
Amortization
Interest Only
Annual Interest
$
Annual Principal Paid
650,000
Amortizing
$
—
Annual Capital Expenditures, 300 units at $800 per unit
1,425,000
(471,284)
$
240,000
$
$
2,375,000
$
240,000
Annual Free Cash Flow
Net Operating Income
Less Interest
(650,000)
Less Principal Paid
Less Capex
Annual Free Cash Flow
3,000,000
(1,425,000)
—
(471,284)
(240,000)
(240,000)
1,485,000
863,716
Free Cash Flow Yield On Equity*
8.49%
4.32%
Free Cash Flow plus Amortization Yield On Equity
8.49%
6.68%
Taxable Income
Net Operating Income
2,375,000
Less Interest
Less Depreciation
Taxable Income
(1,425,000)
(1,545,455)
(1,545,455)
179,545
Taxable Income as a % of Invested Capital
1.03%
*Cash flow available for distribution
— 11 —
3,000,000
(650,000)
29,545
0.15%
These examples are simplified versions of what a typical investor will actually experience, and each investor’s
tax situation varies (please consult your tax advisor for
specific guidance). The examples are meant to show the
gist of what an investor would experience under typical
investment parameters in the marketplace today.
EXAMPLE 1
Example 1 shows an asset worth $50M. It assumes the
land value is 15% of the asset value, with depreciable
buildings and improvements comprising the remaining
85% of the value. It assumes the asset has net operating income of $2.375M and was purchased at a cap rate
of 4.75%. It assumes the asset is funded by a variable­
rate loan at 65% of the asset value, typical of many of
the loans that we are placing on our assets today, with
interest-only payments at a current rate of 2%. Also,
the project is experiencing annual capital expenditures
of $240,000.
As Example 1 shows, this project will produce annual
free cash flow of $1.485M, an 8.49% yield on the invested equity. Finally, the last section of Example 1 shows
that on a taxable basis, only slightly over 1.00% of the
entire 8.49% distribution would be currently taxable.
EXAMPLE 2
Example 2 shows another asset worth $50M with a number of similarities with Example 1, although this project
has a fixed interest rate loan. CWS has bought several
assets such as this at a slightly higher cap rate (a 6.00%
example is shown here) in exchange for assuming a
“bad” loan (i.e. unfavorable loan terms), in this case a
loan with a fixed rate of 4.75%, currently amortizing,
with a loan to value of 60%. As a result, we have cash
flow available for distribution in the amount of 4.32%,
almost all of which is not currently taxable. (An additional 2.36% of the equity goes to paying down the loan,
which is not spendable but helpful nonetheless.)
Finally, when the time is right to sell the asset, CWS
typically offers the option to participate in a 1031 exchange into another asset, providing the ability to again
defer taxes versus paying taxes on any gain.
As real estate investors learned in the 1980’s, it is not
wise to invest in real estate exclusively for tax benefits.
At CWS, we invest based on solid fundamentals, such
as supply, demand, demographics, and replacement
cost. That said, over time investing with CWS also offers
important tax benefits that can make a significant difference over competitive investment options.
Mike Engels
Partner –– Chief Investment Officer
m gi ve s u s.
h e o t h er t ea
t
t
ha
w
ke
d en Fry,
W e’ll ta
it ch es. — Hay
it
e
er
h
w
W e’ll sc rat ch
79–1998
ead Coach, 19
H
a
w
Io
f
o
U niver si ty
— 13 —
Most of you already do some or all of these things, but it’s always good to
review a checklist each time you make an investment. By taking a closer
study of each investment playbook, you will build strength in your investment knowledge as well as provide a safety position on the defensive-side,
in case the play call on the field is different than you anticipated.
LIQUIDITY Is your capital on hand and income adequate to handle your
anticipated needs until you reach the goal line, within 7–10 years?
RISK Real estate has up and down cycles with a long-term trend towards
rising values. Having organizational strength can make the difference in
powering through the holes to keep the offensive drive moving forward.
This means you may need to have some capital available in case the property
needs an infusion at the bottom of a cycle or Black Swan event. You want a
General Partner that is well-funded and resourceful. Fortitude, knowledge,
and conviction are required for successful scoring drives.
DIVERSIFICATION Having a number of different plays in the playbook can
provide safety and diversification. Reviewing the property’s location, market,
city, and state will serve you well, knowing that if the defense decides to blitz,
you have other offensive players who can get open to score a touchdown.
ORGANIZATION Have well-regarded “coaches” in the General Partnership
or Company, someone you can call for answers to your questions about
the property, financial reports, and market conditions. Having two or three
coaches to call is even better.
MANAGEMENT Know the top three people who will be responsible for
quarterbacking the property acquisition and who will guide it successfully
to meet or exceed the pro forma you used when making the investment. The
goal is to be in a good investment with a great General Partner who has an
excellent reputation for winning investment championships.
RECORD MANAGEMENT Have a safe place to keep your records of each
investment. You can do this by keeping them in a safe at home, accessing an
electronic version on a secure investor portal, or asking your accountant to
keep a digital record for you in his office.
TAX At the end of each year you will get your K-1 to review and forward
to your accountant. It is important to understand the benefits of property
depreciation which can delay some of your distribution tax liability. It is
also important to know the benefits of a 1031 exchange when your property
sells, which will allow your gains to be deferred when exchanged into a
like-kind property.
ACCOUNTANT It is important to have an accountant on the sidelines who
is knowledgeable in real estate limited partnerships and the applicable tax
laws. The items outlined in the Tax Check of depreciation, 1031 exchanges, and how you can use the tax shelter benefits can have substantial dollar
benefits to you. Your accountant should be able to assure you that you are
paying only the taxes you owe and not any more.
ESTATE PLAN There are several very good estate planning attorneys that
can set up your wills and trusts and other sophisticated legal structures to
guide you to the most effective way to organize and “hand off” your wealth
to your family, charities, or institutions as you desire. You will want an attorney that knows the playbook of estate planning and the tax rules that apply.
FINAL CHECK In allocating your capital, consider most carefully your
knowledge and conviction about the investment playbook, the people you
must trust, the property, and the location. You are making a long-term commitment that may or may not be smooth in getting to a desired return, but
the probable outcome is that you will be getting the return outlined to you at
the time of investment. Since investment results are not guaranteed, the best
investment advice is to pick good head coaches who have a great reputation
for success.
Many happy returns on your investment!
Bill Williams
Founder & Advisory Board Member
— 15 —
I f what yo u di d
ye s t erday seem s
big,
t he n yo u have n’
t
do ne an yt hi ng to
day.
— Lo u Ho lt z
Austin
PROPERT Y NAME
LOCATION
UNITS
THE MARQUIS AT LADERA VISTA
AUSTIN
224
THE MARQUIS AT CAPROCK CANYON
AUSTIN
336
WINDSOR AT BARTON CREEK
AUSTIN
134
NORTHWEST HILLS APARTMENTS
AUSTIN
314
SOCO ON THE LAKE
AUSTIN
100
THE MARQUIS AT GREAT HILLS
AUSTIN
406
THE MARQUIS AT TREE TOPS
AUSTIN
240
AUSTIN MIDTOWN APARTMENTS
AUSTIN
276
THE MARQUIS AT VOLENTE
AUSTIN
208
THE MARQUIS AT CENTER RIDGE
AUSTIN
348
THE MARQUIS AT TECH RIDGE
AUSTIN
294
MARQUIS SHORELINE
AUSTIN
280
THE MARQUIS AT BARTON TRAILS
AUSTIN
150
REGENTS WEST AT 26TH
AUSTIN
139
MARQUIS AT BRUSHY CREEK
AUSTIN
360
SoNA
AUSTIN
164
MARQUIS AT CANYON RIDGE
AUSTIN
264
REGENTS WEST AT 24TH
AUSTIN
TOTAL
93
4,330
The Austin-San Marcos, TX MSA is
home to over 1.8 million people and is
one of the fastest growing MSA’s in the
country. According to the U.S Bureau of
Labor Statistics (BLS), total annual average non-farm employment increased
by 29,600 jobs, or by 3.4% from October
2013 to October 2014, far above the U.S.
pace of 2.0%. The job market is expected
to continue to accelerate in 2015 producing gains of nearly 40,000, or 4.5%
growth. As of September, according to
the BLS, the unemployment rate had
fallen to just 4.5%, far below the national
average of 6.2%.
Entering 2015, Austin is facing another
year of increased development with over
10,000 units expected for the second year
in a row. The glut of supply delivered in
2014 resulted in a slight increase in vacancy
moving from 4.5% in 2013 to 5.2% in 2014.
Vacancies are expected to remain at 5.2%
throughout 2015 as a steady amount of supply hits the market. The new supply will
slow rents slightly in 2015 to a forecasted
increase of 3.5%, down from an increase of
4.0% experienced in 2014. We will be keeping a close eye on the glut of new supply
hitting the market in 2015, but overall we
anticipate a strong year for Austin.
— 17 —
Dallas/Ft. Worth
PROPERT Y NAME
LOCATION
UNITS
THE MARQUIS AT TURTLE CREEK
DALLAS
98
THE MARQUIS ON GASTON
DALLAS
480
THE MARQUIS ON CEDAR SPRINGS
DALLAS
165
THE MARQUIS AT TEXAS STREET
DALLAS
302
THE MARQUIS OF STATE THOMAS
DALLAS
211
MARQUIS WEST END
DALLAS
146
L2 AT UPTOWN
DALLAS
321
THE MARQUIS AT LANTANA
FLOWER MOUND
248
THE PARK AT FLOWER MOUND
FLOWER MOUND
352
THE MARQUIS AT STONEGATE
FORT WORTH
308
THE MARQUIS AT BELLAIRE RANCH
FORT WORTH
316
FIRESTONE WEST 7TH
FORT WORTH
350
THE MARQUIS AT SILVER OAKS
GRAPEVINE
480
BROOKS ON PRESTON
PLANO
342
THE PARK ON SPRING CREEK
PLANO
278
MARQUIS AT LEGACY
PLANO
268
THE MARQUIS AT WATERVIEW
RICHARDSON
TOTAL
528
5,193
According to the US Bureau of Labor Statistics, the Dallas/Fort Worth (DFW)
metro boasted an increase in employment
growth in 2014 equal to 136,900 additional
jobs (4.4% year over year). Professional
and business services saw the largest job
growth of all the employment fields. In
total there were seven different major
industry sectors that saw an increase of at
least 10,000 jobs in 2014, illustrating the
metro’s economic diversity. The DFW area
saw the unemployment rate fall from 5.5%
in December 2013 to 4.0% in December
2014. The metro is expected to see continued growth in 2015, having recently lured
several major employers like State Farm,
Toyota and Liberty Mutual.
The DFW apartment market continues to
perform well above average norms. Despite
the addition of 13,423 new units in 2014, the
apartment metro posted its lowest vacancy
rate since 2000 at 4.9% and saw effective
rent growth of 4.1% (well above its 10-year
average of 2.2%). An additional 14,168 new
units are expected in 2015, with vacancy
rates forecasted to increase slightly to 6.0%
(still below the metro’s 10-year average
of 8.0%) and effective rents projected to
increase by an additional 3.5% again year
over year. Overall, the DFW apartment
market is poised for another strong year
— with a diverse economy, consistent job
growth, and a continued multifamily housing shortage as the major contributors.
— 19 —
San Antonio
PROPERT Y NAME
LOCATION
UNITS
THE MARQUIS AT DEERFIELD
SAN ANTONIO
340
THE PARK AT WALKER'S RANCH
SAN ANTONIO
300
MARQUIS 5655 (FORMERLY MARQUIS LA CANTERA)
SAN ANTONIO
208
THE MARQUIS AT STONE OAK
SAN ANTONIO
TOTAL
332
1,180
San Antonio is the seventh-largest city in
the United States. Famous for its Riverwalk, the Alamo, the Tejano culture, and
home to world-class theme parks, the city
of San Antonio is a haven for corporate
and residential relocations. Currently,
USAA, H-E-B, Rackspace, Valero Energy,
Tesoro, and Clear Channel Communications, among others, call this city home.
After a relatively slow 2014, San Antonio’s apartment fundamentals should
strengthen in 2015 as increased job
creation and population growth drive
demand for housing. The San Antonio
metropolitan area experienced slower
than expected growth in 2014 largely in
part to a glut of new supply delivered in
the 1st and 2nd quarter. Through October
of 2014, San Antonio created 21,400 new
jobs, an increase of 5,000 jobs over the
previous year. The increase in job growth
should help to fill approximately the
4,400 units expected to deliver in 2015.
Witten Advisors projects all of the new
supply to be absorbed in 2015 and projects occupancy to increase to 93.5%, an
increase of slightly less than 1%. Witten
Advisors expects effective rent growth at
a modest 2.0% for 2015. The main drivers in San Antonio continue to be health
care, tourism, and the Eagle Ford Shale
drilling activity.
— 21 —
Houston
PROPERT Y NAME
LOCATION
UNITS
THE MARQUIS AT PIN OAK PARK
HOUSTON
474
THE MARQUIS AT WESTCHASE
HOUSTON
216
THE MARQUIS ON WESTHEIMER
HOUSTON
288
THE MARQUIS ON MEMORIAL
HOUSTON
104
THE MARQUIS ON BRIAR FOREST
HOUSTON
396
244
MARQUIS DOWNTOWN LOFTS
HOUSTON
THE MARQ ON VOSS
HOUSTON
307
MARQUIS LOFTS AT HERMANN PARK
HOUSTON
380
MARQUIS LOFTS ON SABINE
HOUSTON
198
MARQUIS ON PARK ROW
HOUSTON
400
M5250
HOUSTON
298
MARQUIS AT TANGLEWOOD
HOUSTON
162
KATY
258
THE MARQUIS AT KATY
MARQUIS AT CINCO RANCH
MARQUIS AT KINGWOOD
THE MARQUIS AT THE WOODLANDS
KATY
180
KINGWOOD
320
SPRING
280
THE MARQUIS AT SUGAR LAND
SUGAR LAND
312
THE MARQUIS AT CLEAR LAKE
WEBSTER
364
TOTAL
5,181
Houston is one of the fastest growing
metropolitan areas in the United States
and has a population of roughly 6.3 million people. In 2014, Houston’s economy
had another strong year of employment
growth with 120,600 jobs added equating to a 4.2% job growth figure based
on December 2014 versus December
2013. As a result of the recent drop in the
price of oil, many economists predict job
growth to slow in 2015. For example the
Greater Houston Partnership is predicting Houston will add 62,900 jobs in 2015,
which is still a healthy growth rate at
2.1%. Houston’s economic drivers include
the energy industry, international trade
through the Port of Houston, and the
Texas Medical Center, which is the largest medical complex in the nation. These
industries have helped to shield Houston’s unemployment rate at levels that
are lower than the national average. For
example, as of December 2014, Houston’s
unemployment rate was at 4.1% which is
down from 5.0% in 2013.
The combination of the factors listed
above has fueled apartment rental
demand not seen since 2005. Over the
past 12 months, Houston added 12,046
units and absorbed 9,880 units, which
increased vacancy slightly from 6.0% to
6.2% over 2014. While Houston added
more units than it absorbed, the rent
growth was still positive at 5.2% for 2014.
— 23 —
STATE
20 CITY
ARIZONA
TEMPE
CALIFORNIA FOLSOM
COLORADO BROOMFIELD
DENVER
LONE TREE
ATLANTA
GEORGIA
ATLANTA
ATLANTA
ATLANTA
ATLANTA
DULUTH
DULUTH
ATLANTA
ATLANTA
SANDY SPRINGS
CHARLOTTE
NORTH
CAROLINA CHARLOTTE
CHARLOTTE
CARY
CARY
AUSTIN
TEXAS
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
AUSTIN
DALLAS
DALLAS
DALLAS
DALLAS
DALLAS
DALLAS
PROPERTY NAME
REGENTS ON UNIVERSITY
FAIRMONT AT WILLOW CREEK
THE MARQUIS AT TOWN CENTRE
MARQUIS AT THE PARKWAY
THE MARQ AT RIDGEGATE
THE MARQUIS AT BRIARCLIFF
THE MARQUIS AT PERIMETER CENTER
MARQUIS OF NORTH DRUID HILLS
MARQUIS MIDTOWN WEST
MARQUIS 2200
MARQUIS AT SUGARLOAF
MARQUIS ON BERKELEY
MARQUIS MIDTOWN DISTRICT
THE MARQ AT BROOKHAVEN
M789
THE MARQUIS OF CARMEL VALLEY
THE PRE. AT BALLANTYNE COMMONS
THE MARQUIS AT CARMEL COMMONS
THE MARQUIS AT PRESTON
THE MARQUIS AT SILVERTON
THE MARQUIS AT LADERA VISTA
THE MARQUIS AT CAPROCK CANYON
WINDSOR AT BARTON CREEK
NORTHWEST HILLS APARTMENTS
SOCO ON THE LAKE
THE MARQUIS AT GREAT HILLS
THE MARQUIS AT TREE TOPS
AUSTIN MIDTOWN APARTMENTS
THE MARQUIS AT VOLENTE
THE MARQUIS AT CENTER RIDGE
THE MARQUIS AT TECH RIDGE
MARQUIS SHORELINE
THE MARQUIS AT BARTON TRAILS
REGENTS WEST AT 26TH
MARQUIS AT BRUSHY CREEK
SoNA
MARQUIS AT CANYON RIDGE
REGENTS WEST AT 24TH
THE MARQUIS AT TURTLE CREEK
THE MARQUIS ON GASTON
THE MARQUIS ON CEDAR SPRINGS
THE MARQUIS AT TEXAS STREET
THE MARQUIS OF STATE THOMAS
MARQUIS WEST END
YEAR
ACQRD.
YEAR
BUILT
2014
2001
2000
2005
2014
2006
2012
2013
2013
2013
2013
2013
2014
2014
2014
1998
1999
1999
2000
2005
1996
2000
2005
2005
2006
2007
2007
2011
2011
2012
2012
2012
2012
2013
2013
2013
2014
2014
2002
2005
2006
2007
2010
2012
2010
2001
2000
1983
2010
1995
1980
1994
1997
2010
1995
2002
2008
1998
1999
1998
1998
1999
1996
1996
1996
1994
1978
78/79
1973
1995
1997
1978
1999
2008
2007
2001
1998
2013
2009
1985
2007
2014
1998
1996
2002
2003
2010
2008
14 POTENTIAL
UNITS BUILD-OUT
225
260
283
460
243
104
204
182
156
399
303
323
372
480
300
424
270
312
292
216
224
336
134
314
100
406
240
276
208
348
294
280
150
139
360
164
264
93
98
480
165
302
211
146
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
157
0
0
0
0
0
0
0
0
0
0
0
POT.
UNITS
225
260
283
460
243
104
204
182
156
399
303
323
372
480
300
424
270
312
292
216
224
336
134
314
100
406
240
276
208
348
294
280
307
139
360
164
264
93
98
480
165
302
211
146
STATE
CITY
PROPERTY NAME
TEXAS
DALLAS
FLOWER MOUND
FLOWER MOUND
FORT WORTH
FORT WORTH
FORT WORTH
GRAPEVINE
HOUSTON
HOUSTON
HOUSTON
HOUSTON
HOUSTON
HOUSTON
HOUSTON
HOUSTON
HOUSTON
HOUSTON
HOUSTON
HOUSTON
KATY
KATY
KINGWOOD
PLANO
PLANO
PLANO
RICHARDSON
SAN ANTONIO
SAN ANTONIO
SAN ANTONIO
SAN ANTONIO
SPRING
SUGAR LAND
WEBSTER
L2 AT UPTOWN
THE MARQUIS AT LANTANA
THE PARK AT FLOWER MOUND
THE MARQUIS AT STONEGATE
THE MARQUIS AT BELLAIRE RANCH
FIRESTONE WEST 7TH
THE MARQUIS AT SILVER OAKS
THE MARQUIS AT PIN OAK PARK
THE MARQUIS AT WESTCHASE
THE MARQUIS ON WESTHEIMER
THE MARQUIS ON MEMORIAL
THE MARQUIS ON BRIAR FOREST
MARQUIS DOWNTOWN LOFTS
THE MARQ ON VOSS
MARQUIS LOFTS AT HERMANN PARK
MARQUIS LOFTS ON SABINE
MARQUIS ON PARK ROW
M5250
MARQUIS AT TANGLEWOOD
THE MARQUIS AT KATY
MARQUIS AT CINCO RANCH
MARQUIS AT KINGWOOD
BROOKS ON PRESTON
THE PARK ON SPRING CREEK
MARQUIS AT LEGACY
THE MARQUIS AT WATERVIEW
THE MARQUIS AT DEERFIELD
THE PARK AT WALKER’S RANCH
MARQUIS 5655
THE MARQUIS AT STONE OAK
THE MARQUIS AT THE WOODLANDS
THE MARQUIS AT SUGAR LAND
THE MARQUIS AT CLEAR LAKE
YEAR
ACQRD.
YEAR
BUILT
POTENTIAL
UNITS BUILD-OUT
2013
2013
321
2008
2000
248
2011 84/98
352
2002
1996
308
2003
1997
316
2012
1999
350
2005
2002
480
2007
1992
474
2007
1995
216
2007 98/99
288
2007
1992
104
2007
2004
396
2010
2002
244
2012
2009
307
2012
2005
380
2013
2002
198
2013
1999
400
2014
2013
298
2014
1994
162
2012
2008
258
2014
2011
180
2014
1998
320
1998
1998
342
2006
1984
278
2014
1991
268
1999
1998
528
1996
1996
340
2007
1995
300
2012
2000
208
2012
2000
332
2012
2007
280
2012
2009
312
2012
2006
364
APARTMENT TOTALS 21,692
POT.
UNITS
0
321
0
248
0
352
0
308
0
316
0
350
0
480
0
474
0
216
0
288
0
104
0
396
0
244
0
307
0
380
0
198
0
400
0
298
0
162
0
258
80
260
0
320
0
342
0
278
0
268
0
528
0
340
0
300
0
208
0
332
0
280
0
312
0
364
237 21,929
CURRENT DEVELOPMENTS
AUSTIN
SOCO ON THE LAKE — PHASE 1 REDEVELOPMENT
TEXAS
AUSTIN
7 RIO
HOUSTON
MARQUIS AT GREENWAY GARDENS
HOUSTON
BROADSTONE FOUNTAIN VIEW
DEVELOPMENT TOTALS
0
0
0
0
0
260
220
453
281
1,214
260
220
453
281
1,214
MANUFACTURED HOUSING COMMUNITIES
DALLAS
HARSTON WOODS
TEXAS
MANUFACTURED HOUSING COMMUNITY TOTALS
411
411
O
O
411
411
CWS DEVELOPMENTS
22,103
1,451 23,554
Atlanta
PROPERT Y NAME
LOCATION
THE MARQUIS AT BRIARCLIFF
ATLANTA
104
THE MARQUIS AT PERIMETER CENTER
ATLANTA
204
MARQUIS OF NORTH DRUID HILLS
ATLANTA
182
MARQUIS MIDTOWN WEST
ATLANTA
156
MARQUIS 2200
ATLANTA
399
MARQUIS MIDTOWN DISTRICT
ATLANTA
372
THE MARQ AT BROOKHAVEN
ATLANTA
480
MARQUIS AT SUGARLOAF
DULUTH
303
MARQUIS ON BERKELEY
DULUTH
323
SANDY SPRINGS
300
M789
TOTAL
UNITS
2,823
With a metro population estimated at
5.61 million as of the end of 2014, the
Atlanta MSA is the ninth largest in the
nation. Over the next five years, the population is projected to total 6.1 million,
translating into average annual population growth of approximately 100,000
per annum over this period.
Employment numbers continue to
climb as Atlanta has now posted employment gains in each of the last five years.
Almost 59,000 jobs were added in the
metro over the 12 months ending November 2014; this is an increase of 2.4% which
is above the national average of 2.0%.
Industries with the greatest increase in
jobs include trade, transportation, and
utilities, increasing by 24,200 or 4.4%,
followed by professional and business
services increasing by 13,300 or 3.0%. The
outlook is for employment growth to con-
tinue at a similar pace in 2015, with a projected 63,000 jobs being added.
Construction activity is picking up
from the minimal levels over the past few
years but remains much lower than the
levels posted between 2000 and 2009.
During that period, single-family and
multi-family permits averaged 54,000
units (22% multi-family) per annum; the
number of permits issued in 2014 totaled
only 26,400 units (36% multi-family),
almost 51% below the 10-year average.
The limited amount of new units being
added to supply bodes well for both multifamily rent growth and occupancy.
Over the past 12 months, effective rental
rates have climbed by 3.8% while occupancy increased by 0.4%. Effective rents
are projected to increase by another 3.8%
in 2015 while occupancy is expected to
rise by 0.5%.
— 27 —
Charlotte
PROPERT Y NAME
LOCATION
UNITS
THE MARQUIS OF CARMEL VALLEY
CHARLOTTE
424
THE PRESERVE AT BALLANTYNE COMMONS
CHARLOTTE
270
THE MARQUIS AT CARMEL COMMONS
CHARLOTTE
TOTAL
312
1,006
The Charlotte MSA is a six-county area
with a current population of approximately 1.92 million. Over the next five
years, the population is expected to
exceed 2.16 million, indicating annual
growth upwards of 48,000 per annum.
Local employment grew by 24,400 jobs
or 2.8% during 2014, well ahead of the
national average of 2.0%. The relatively
strong pace of employment growth is
expected to continue through 2016 with
the addition of an estimated 27,000 to
29,000 new jobs annually.
Multi-family permits rose to over 6,500
units in 2014, the highest level posted
since 1999. The number of units permitted in 2014 was about 56% above the
average since 2000. This pace of develop-
ment could pose a challenge to the health
of the apartment market. Occupancy has
remained strong so far, currently standing at 94.9%. Although some decline in
occupancy is expected over the next few
years, occupancy is expected to remain at
92% or higher through 2019 despite these
anticipated additions to inventory.
Demand for apartments in the Charlotte MSA should remain strong due to
the area’s favorable rental demographic
and home ownership not being as competitive as in many other metros. Effective rents climbed 4.0% in 2014, but
some moderation in this growth rate is
expected in 2015 and beyond. The growth
expected for 2015 is pegged at 3.8%, followed by 3.0% in 2016.
— 29 —
Raleigh
PROPERT Y NAME
LOCATION
UNITS
THE MARQUIS AT PRESTON
CARY
292
THE MARQUIS AT SILVERTON
CARY
TOTAL
216
508
The Raleigh-Durham Cary CSA (or
Raleigh/Durham) currently has a population of nearly 1.8 million people, with
an expansion of 32,000 in 2014. Over the
next five years, Raleigh/Durham’s population is expected to increase to approximately 2.0 million, equating to an average
increase of nearly 40,000 per annum.
Raleigh/Durham has a diverse employment base consisting primarily of technology, government, biotechnology, and
education. This diversity has enabled the
local economy to fare better than most
through the recent economic challenges.
In 2014, approximately 24,100 jobs were
added in Raleigh/Durham, equating to a
2.9% gain and exceeding the national average of 2.0%. This pace is expected to accelerate moderately in 2015 with a projected
27,400 new jobs being added.
Multi-family development activity
remains at above average levels with
almost 4,900 units permitted in 2014.
However, this is a reduction from 2013
activity levels when permits totaled
approximately 6,300 units. Due to this
level of construction activity, the occupancy rate ended 2014 at 93.3%, a drop
of 1.7% during the year. Occupancy is
expected to slide a little bit more, bottoming at 91.5% in 2017 and beginning a
modest recovery from there. With regard
to effective rents, they climbed by 4.8% in
2014. Rental growth is projected at 3.4%
in 2015 and then is expected to moderate at annual rates between 2% and 3%
through 2019. With strong job growth
expected to continue through 2019, the
outlook for multi-family performance
remains favorable.
— 31 —
Denver
PROPERT Y NAME
LOCATION
THE MARQUIS AT TOWN CENTRE
MARQUIS AT THE PARKWAY
THE MARQ AT RIDGEGATE
283
DENVER
460
LONE TREE
TOTAL
UNITS
BROOMFIELD
243
986
Metro Denver, with a population of over
2.8 million people, has achieved a growth
rate that is consistently above that of the
nation. Over the next five years, Metro
Denver’s population is anticipated to
increase to almost 3.0 million, equating to
average annual increases of slightly more
than 40,000.
Metro Denver has an enviable quality
of life that makes it one of the best places
in the United States to live and work. In
2014, employment in Denver grew with
the addition of 37,600 jobs, equating to a
2.3% increase, above the national average
of 2.0%. This pace is expected to continue
in 2015 as 35,000 new jobs are projected.
Although vacancy increased from 3.5%
at the end of 2013 to 4.2% as 2014 ended,
anything under 5% vacancy is considered
to be indicative of a very strong market.
Effective rents climbed by an exceptionally strong 7.9%. With a large percentage of younger workers (below age 30),
recent declines in the home ownership
percentage, and construction of new
housing units continuing at very moderate levels, market conditions continue
to improve. Apartment completions in
2014 climbed to 6,810 units, but this is
only 3.7% of total inventory. Apartment
construction deliveries are expected to
increase by 14,600 units through 2016
with absorption expected to increase to
5.7%. Average vacancy at this level is still
indicative of strong market conditions.
Furthermore, rental rate growth in the
Denver apartment market is expected to
climb at a very strong 5.3% in 2015.
— 33 —
Phoenix
PROPERT Y NAME
REGENTS ON UNIVERSITY
LOCATION
TEMPE
TOTAL
UNITS
225
225
Greater Phoenix continues to be among
the fastest growing metropolitans in
the nation with a metro population of
roughly 4.2 million people. Forbes listed
Phoenix as number three on their 2014
list of America’s fastest growing cities.
Although Phoenix was hit particularly
hard by the Great Recession it has continued to slowly rebound. Greater Phoenix
is estimated to have added over 40,000
new jobs in 2014, giving it a job growth
rate of 2.3% compared to US job growth of
2.0%. Preliminary estimates for 2015 predict a job growth rate of about 3.5%. Fortune 500 companies headquartered in the
greater Phoenix area include PetSmart,
Avent, Republic Services, and Insight
Enterprises. Top employers in metro
Phoenix include Bank of America, Banner
Health, the State of Arizona, Wells Fargo,
City of Phoenix, JP Morgan Chase, Intel,
and Arizona State University.
Arizona State University is located in
the metro Phoenix submarket of Tempe,
Arizona. ASU is one of the largest tier one
universities in the United States, enrolling more than 65,000 undergraduate and
graduate students at its Tempe campus
alone as of fall 2014. Total enrollment
at Tempe has increased over 20% since
2006, due in large part to the University’s
2006 master plan which heavily emphasized enrollment growth goals through
2020. On-campus University owned or
operated student housing supply is limited to approximately 12,500 beds which,
based on current enrollment, leaves a
potentially sizable number of students in
need of off-campus housing alternatives.
The gap between on-campus student
beds and overall enrollment should place
upward pressure on off-campus student
housing demand, particularly if the university continues its pattern of growth.
— 35 —
B.R.I.D.G.E. Program
B.R.I.D.G.E. is a corporate volunteer program designed to encourage employees to give back to their
community through volunteer work. B.R.I.D.G.E.
contributes $20 for each hour of community service
an employee completes up to a maximum of 12 hours
($240). An employee may volunteer time at any type
of institution, agency, or community service program,
except activities that directly relate to a political party
or office. An employee can decide where half of the
annual contribution goes at any time during the year.
The remaining half of an employee’s contribution is
put into a company-wide pool and distributed based
on employee nominations taken at the end of the year.
Since its inception in 1996, B.R.I.D.G.E. has become an
integral part of CWS culture and a means to demonstrate our company values on a daily basis. From 2001
to 2014, over $675,000 was donated to hundreds of organizations and donation recipients.
B.R.I.D.G.E. SERVICE ORGANIZATIONS & DONATION RECIPIENTS
(nominated in 2014, paid in 2015)
AIDS Healthcare Foundation
Alameda Youth Sports
All About Developmental Disabilities
ALS Association
Alzheimer’s Association, Chicaco
Alzheimer’s Association, Dallas
American Heart Association
Angel House Soup Kitchen
Arni Foundation
ASPCA
ASPCA Austin - Town Lake Animal Center
Austin Dog Alliance - Hounds for Heroes
Austin Dog Rescue
Austin Pets Alive
Austin Sunshine Camps
Burke Center for Youth
Care Possible
Cedar Ridge Tennis Booster Club
Celebration of Love/Solidiers of America
Charitable Ventures of Orange County
Child Safe
Children’s Clinic
Children’s Shelter
Christ Community Church
Christ the Incarnate Word Catholic Church
Christi Center
Citizens for Animal Protection
Community Partners of Dallas
Coppell Grapevine Police Charitable Assoc.
Crossmen Productions
Crosswalk Church
Cystic Fibrosis Foundation
Davis Magnet School Education Foundation
Dogs on Deployment
Dress for Success
Erin Krielow Lahr Memorial Scholarship
Evergreen MBC
First United Methodist Church
Florence Head Start
Founders Classical Academy
Gateway Church
Girl Scouts Troop 1450
Give Kids the World Village
Greater St. Matthew Baptist Church
Hearts & Hands at North Davis Church of Christ
Hope Alliance
Hosea House
Houston SPCA
Humane Society of Charlotte
Iglesia Gran Comision
Jim Plain Elementary PTA
Kraus Children’s Center
Lake Norman Pirates
Leap
March of Dimes
Maria Romero Medical Bills
Matos Pshychiatry
MD Anderson
Mike’s Place
Mildred Osborne Charter School
Mision Vida Cristiana
Mothers Against Drunk Drivers
National MS Society
North Texas SNAP
Northwest Fellowship
Operation Liberty Hill
Pack 820 - Cubscouts
Pats Place Child Advocacy Center
Pennies for Posho
Phyllis Cobb
Primera Iglesia Bautista
Pug Rescue of Austin
Rainbow Village
RCBA Athletic Booster Club
Ronald McDonald House
Salvation Army Kroc Community Center
Service Dogs Inc.
The Journey
Turning Point Church
Village Bicycle Project
Warrior Foundation Freedom Station
Wounded Warriors Project
XRC Crossroads Church
— 37 —
Team Roster
FOUNDERS
CAPITAL PARTNERS
INVESTMENTS
STEVE SHERWOOD
GARY CARMELL
MIKE ENGELS
Founding Partner, CEO, &
Chairman of the Board
Since 1977
Partner -- President
Since 1987
Partner -Chief Investment Officer
Since 1998
BRIAN ROSE
BILL WILLIAMS
Founding Partner &
Advisory Board Member
Since 1969
JIM CLAYTON
Founder
Since 1969
CORPORATE HOUSING
TRACY HAYES
President,
Corporate Housing
Since 1994
Chief Financial Officer
Since 1997
LINDA LILES
Vice President,
Director of
Human Resources
Since 2004
MARY ELLEN BARLOW
Director,
Transaction Services
Since 1995
TREVOR DALLAS
MANUFACTURED HOUSING
Managing Director,
CWS Strategic
Apartment Fund
Since 2005
JOE SHERWOOD
MARCUS LAM
Senior Vice President,
Manufactured Housing
Since 1986
Director of Investments
Since 2005
ALBERT STEIN
Performance Analyst
Since 2009
DANIEL EBNER
Senior Vice President,
Investments
Dallas/Fort Worth, TX
Since 2004
MIKE BRITTINGHAM
Vice President, Investments
Austin & San Antonio, TX
Since 2006
GREGG KANTAK
Investments
Denver, CO, Charlotte/
Raleigh, NC & Atlanta, GA
Since 2007
JUSTIN LEAHY
Vice President, Investments
Houston, TX & Atlanta, GA
Since 2011
CAPITAL PARTNERS
OPERATIONS (CONT.)
OPERATIONS (CONT.)
LAURETTA ANDERSON
SARAH COLANDRA
AMBER COX
Vice President,
Investor Relations
Since 1986
Due Diligence &
Integrations Manager
Since 2007
Regional Director
Fort Worth, TX
Since 1998
SUNNIE JUAREZ-MILLS
CAREY MCDONALD
RICH FAGAN
Investor Services
Relationship Manager
Since 1997
Director of Revenue
Management
Since 2012
Director of Due
Diligence & Integration
Since 2001
SUSAN RAYSHELL
JANIS T. COWEY
PAIGE GUTIERREZ
Director, Investor Relations
Information Systems
Since 2008
Director of Operational
Excellence
Since 1997
Regional Director
Austin, TX
Since 1998
MARK RUGGLES
CHRISTINE DONEGAN
BRETT MCDANIEL
Compliance Officer
Since 2012
Operations/Development
Director
Since 2013
Regional Director
Dallas & San Antonio, TX
Since 2001
OPERATIONS
DEVELOPMENT
JOE KRUMREY
Senior Vice President,
Director of Operations
Since 2002
GREG MILLER
Regional Director
Dallas, TX
Since 2004
Vice President, Development
Since 1994
LINDSAY NYLANDER
SHELLIE ALBOSTA
BRAD BRAKHAGE
Vice President, Marketing
Since 2001
Vice President, Construction
Since 2000
HOLYCE CALDWELL
JEFF LAHR
Regional
Marketing Director
Since 2013
Vice President, Development
Since 2012
JACK BIEHUNKO
OPERATIONS
Regional
Marketing Director
Since 2014
GINA ROBERTS
Regional Director
North Carolina
Since 2013
Regional Vice President
Since 1997
TELISIA AMANING
MARCELLUS MOSLEY
Regional Director
Denver, CO & Austin, TX
Since 2009
CHRISTINA SHAMBRO
MATT BAKER
Regional
Marketing Director
Since 2014
DEBRA BUCK
Regional Vice President
Since 2007
— 39 —
Regional Director
Houston, TX
Since 2015
TRACEY GLOVER
Regional Director
Houston, TX
Since 2015
EPMS Customer Experience Best in Class Award
Ellis Partners in Management Services (EPMS) awarded CWS the
honor of having 34 CWS properties named “Best in Class” among the
75 properties they surveyed. Focusing their surveys on customer loyalty instead of just customer service measures the customer experience a
company consistently provides. More information can be found on the
EPMS website at www.epmsonline.com.
Top Workplace of Greater Austin
The Austin American-Statesman hosts an annual survey program
wherein local area associates rank companies in a number of workplace categories and provide their feedback. CWS has made the Top
Places to Work list in 2011, 2012, 2013 and 2014. More information can
be found on the Statesman website at www.statesman.com.
Top Workplace of Houston
In 2014, CWS ranked fifth among small employers on the local Top
Workplaces list compiled for the Houston Chronicle by WorkplaceDynamics. More information can be found on the Houston Chronicle
website at www.chron.com.
Top Places to Work in Dallas/Fort Worth
The Dallas Morning News issued its Top 100 Places to Work for 2014
and CWS ranked number six among the top mid-size companies in the
Dallas/Fort Worth area. More information can be found on the Dallas
Morning News website at www.res.dallasnews.com.
Years in Operation 46
Operating States 6
Operating Cities 24
Total Employees 763
Corporate Divisions 6
Number of Partners 3
PERFORMANCE
TOTAL REV.
OPERATING
EXPENSES
NET OPERATING
INCOME/(LOSS)
1031 EXCHANGE
HISTORY
TRACK RECORD
SIMPLE AVERAGE
Actual $310.0M
Budget $308.0M
Variance $2.0M
Percent +.63
Actual $139.6M
Budget $139.9M
Variance $.3M
Percent +.22
Actual $170.4M
Budget $168.1M
Variance $2.3M
Percent +1.34
Private TIC $65M
Comb. Equity $322M
Deferr. Gain Assoc.
with Equity $384M
Investor Return
Net of Fees 13.31%
Multiple Net
of Fees 2.04
PROPERTIES 77
Austin 18
Dallas/Ft. Worth 17
San Antonio 4
Houston 18
Atlanta 10
Charlotte 3
Raleigh 2
Denver 3
Tempe 1
Folsom 1
UNITS 21,692
Capito l
Austin 4,330
o f Cali.
Dallas/Ft. Worth 5,193
San Antonio 1,180
Houston 5,181
Atlanta 2,823
Charlotte 1,006
Hom e
Raleigh 508
Field
Denver 986
Tempe 225
Folsom 260
POPULATION
BY CITY (MIL.)
Austin 1.9
Dallas/Ft. Worth 6.8
San Antonio 2.3
Houston 6.3
Atlanta 5.6
Charlotte 1.9
Raleigh 1.8
Denver 2.8
CONTACT INFO.
TF 800.466.0020
T 949.640.4200
F 949.640.4931
W cwscapital.com
CA HEADQUARTERS
Street 14 Corporate Plaza
Suite Number 210
City Newport Beach
State & Zip CA 92660
New
Locat ion
in Tempe
Great
Sn owba rding
TX
Head qu ar t er s
POPULATION
BY STATE (MIL.)
TX 26.9 CO 5.4
GA 10.1 AZ 6.7
NC 9.9 CA 38.8
Old es t Stat e
Uni ver sity in U.S.
— Chapel Hill
Good crab
ca ke s &
Co ca-Cola
INVESTOR INFO. Limited partners, financial
advisors, investment advisors, or CPAs seeking
additional information about CWS Investments or
1031 Exchange candidate investments should contact:
Marcus Lam, Director of Investments
800.466.0020 | [email protected]
TX HEADQUARTERS
Street 9606 N. Mopac Exp.
Suite Number 500
City Austin
State & Zip TX 78759
Investment Opportunities offered
by CWS Capital Partners LLC are
through an affiliated entity, CWS
Investments. CWS Investments
is a registered Broker Dealer and
member of FINRA, SIPC.
SUPPLEMENTAL INFORMATION An electronic file of the Supplemental Report is available behind our
Investor Portal for all existing investors and potential investors that have registered with our office. To view
detailed earnings overviews for each of our properties and submarket discussions for each of our regions, please
visit www.cwscapital.com and log in to your account by clicking on the “My Account” link. If you have trouble
accessing your account, please call Investor Relations at 800.466.0020.

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