Update Presentation - Timbercreek Asset Management

Timbercreek
U.S. Multi-Residential
Opportunity Fund #1
December 2013 - Update
FORWARD LOOKING STATEMENT
Certain statements in this presentation about Timbercreek U.S. Multi-Residential Opportunity Fund #1 (the
“Fund”) and its business operations and strategy, and financial performance and condition may constitute
forward-looking information, future oriented financial information, or financial outlooks (collectively, “forwardlooking statements”). The forward-looking statements may be found in this presentation, among other
places, under “Objectives”, “Current Market Fundamentals” and “Portfolio Summary”. The forward-looking
statements are stated as of the date of this presentation and are based on estimates and assumptions
made by the management of the Fund in light of its experience and perception 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 statements 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
Amended and Restated Prospectus of the Fund, dated May 15, 2013 (the “Prospectus”), for information
regarding these forward-looking statements, including the assumptions made in preparing forward-looking
statements 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 or developments to differ materially
from those expressed or implied by the forward-looking statements.
In particular, the management of the Fund refers you to the Fund’s Prospectus for information regarding the
details of the internal rate of return of the Fund that Timbercreek Asset Management Inc. is targeting, the
nature of the Fund and its affairs described in the Prospectus, and the strategic partners of the Fund going
forward.
Capitalized terms not otherwise defined herein shall have the meanings set forth in the Prospectus.
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AGENDA
• Fund Overview/Objectives
• Current Market Fundamentals
• Portfolio Update
• Assets Update
• Q&A
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FUND OVERVIEW
About the Fund:
•
Timbercreek U.S. Multi-Residential Opportunity Fund #1 has been designed to take advantage
of value opportunities stemming from the correction in the United States market and to capitalize
on strong economic and demographic trends in the multi-residential real estate industry,
particularly in the South Eastern United States.
•
The Fund’s strategy is to:
– Acquire multi-residential real estate assets that are mispriced and/or undermanaged
– Enhance value through active management and a stabilization and improvement program
– Sell the repositioned/stabilized assets to generate significant gains for investors
•
The Fund targets a return of 15% net IRR on a pre-tax basis inclusive of a 4-5% pre-tax
quarterly distribution yield paid from free cash flow.
•
In it’s first 12 months, the Fund has acquired eight properties at an aggregate purchase price of
approximately $186 million diversified across four states.
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KEY PERFORMANCE DRIVERS
TIMBERCREEK ASSET MANAGEMENT
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CURRENT MARKET FUNDAMENTALS
The Manager believes that current market fundamentals provide continued
opportunity for the Fund:
•
Valuations continue to be very strong in the target market and asset class
•
Renter demographics continue to look very positive across the U.S.
•
Strong rental demand expected through immigration
•
Housing demand continues to outpace supply
•
Long-term debt continues to be available at historically low interest rates
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The Portfolio
FINANCIAL HIGHLIGHTS
Q3 Financial Highlights
Average Occupancy
Weighted Average
93.2%
Average in-place rent on acquisition
$691
Average in-place rent as at September 30, 2013
$738
Average market rent on acquisition
$750
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PORTFOLIO SUMMARY
(AS AT DECEMBER 10, 2013)
By State
By Property
Florida
18.4%
Blanding Place
Apartments
8.5%
Lynden Square
15.5%
Bella Lake
Apartments
10.0%
North Carolina
55.4%
Chelsea Commons
9.6%
Virginia
17.3%
Watercrest
13.8%
Saratoga Ridge
9.1%
Texas
8.9%
Eagle Landing
16.2%
Granite Park
17.3%
Portfolio Summary
Location
Units
Purchase Price1
Charlotte, North Carolina
476
$29,084,000
68.4%
Dec. 20, 2012
Chapel Hill, North Carolina
250
$18,091,000
68.1%
Dec. 20, 2012
Name
Landmark at Lynden Square
Landmark at Chelsea Commons
Loan-to-Value2 Acquisition Date
Austin, Texas
229
$16,584,000
72.7%
Dec. 20, 2012
Charlottesville, Virginia
425
$32,163,000
69.4%
Dec. 20, 2012
Landmark at Watercrest
Cary, North Carolina
344
$25,706,000
67.1%
May 6, 2013
Landmark at Eagle Landing
Cary, North Carolina
444
$30,219,000
68.6%
May 6, 2013
Orlando, Florida
296
$18,500,000
70.1%
Nov. 26, 2013
Jacksonville, Florida
232
$15,800,000
70.6%
Dec 10, 2013
2,696
$186,147,000
Landmark at Saratoga Ridge
Landmark at Granite Park
Bella Lake Apartments
Blanding Place Apartments
Total
1
Excludes closing costs
2 Includes capital expenditures
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LANDMARK AT LYNDEN SQUARE
Property Details:
•
Acquired in December 2012
•
Consists of 35, walk‐up, two and three‐story apartment buildings with
pitched composition roofs; total net rental area is 437,819± sf
Property Update:
•
Rehabilitation program is nearly completed
•
Majority of amenity upgrades originally planned have been completed
including renovations to exterior finishes of the complex
•
Majority of in-suite renovations are completed which have assisted in
successful repositioning of the property within its local submarket
Avg. In-Place Rent
In-Place at Acquisition
•
Anticipated to generate a net operating income which will outperform
the initial underwriting expectations
$700
Budget
•
Average in-place rents are closely aligned with initial underwriting
expectations
$660
Actual
$680
$640
$620
$600
$580
Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13
Investment Update
Date of acquisition
Number of suites
Purchase price
Current occupancy as at September 30, 2013
Renovation and Repositioning Program
YTD
Total Budget
December 20, 2012
In-suite upgrades
$1,654
$1,973
476
Exterior upgrades
$121
$141
Common area upgrades
$230
$258
$–
$22
$284
$364
$2,289
$2,758
$29,084
95.1%
Building systems upgrades
Average in-place rent on acquisition
$625
Structural upgrades
Average in-place rent as at September 30, 2013
$658
Total
Market rent on acquisition
$685
TIMBERCREEK ASSET MANAGEMENT
Jul 13 Aug 13 Sep 13
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LANDMARK AT CHELSEA COMMONS
Property Details:
•
Acquired in December 2012
•
Consists of 19 walk-up, two storey apartment buildings with pitched
composition roofs; total net rentable area is approximately 262,626± sf
Property Update:
•
Repositioning program is nearly complete with majority of capital
improvements finished and consistent with original underwriting
•
Completed renovations include new signage, renovated leasing office
and clubhouse, upgraded fitness center, addition of kid’s room,
renovated sports court and addition of a dog park
Avg. In-Place Rent
In-Place at Acquisition
•
Exterior renovations include siding repair and painting, garbage facility
enclosures, plumbing repairs and HVAC upgrades
$820
Budget
Actual
In-suite program is completed with renovations focused on kitchen
and bathroom areas
$800
•
Anticipated to generate a net operating income in Year 1 of operations
that will slightly exceed the initial underwriting target
$760
•
Average in-place rents are exceeding initial underwriting expectations
•
$780
$740
$720
$700
Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13
Renovation and Repositioning Program
YTD
Total Budget
December 20, 2012
In-suite upgrades
$920
$1,151
250
Exterior upgrades
$225
$190
Common area upgrades
$248
$210
$21
$34
$149
$225
$1,563
$1,810
Investment Update
Date of acquisition
Number of suites
Purchase price
Current occupancy as at September 30, 2013
$18,091
87.1%
Building systems upgrades
Average in-place rent on acquisition
$741
Structural upgrades
Average in-place rent as at September 30, 2013
$808
Total
Market rent on acquisition
$801
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LANDMARK AT SARATOGA RIDGE
Property Details:
•
Acquired in December 2012
•
Consists of 229 units throughout two‐storey buildings in addition to
the clubhouse
Property Update:
•
Rehabilitation program is nearly complete
•
Amenity upgrade completed with renovations focused on the
clubhouse and leasing center, outdoor grill and gazebo, and outdoor
pools and dog park
•
Exterior renovations primarily focused on upgrades to landscaping
and site signage
•
Anticipated to generate a net operating income in Year 1 of
operations consistent with initial underwriting expectations
Avg. In-Place Rent
In-Place at Acquisition
$810
Budget
$800
Actual
$790
•
Actual average in-place rental levels have improved significantly since
acquisition and are aligned with initial underwriting expectations
$780
•
Anticipated to continue to generate strong growth in rental rate levels,
while occupancy levels remain strong
$760
$770
$750
$740
Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13
Investment Update
Date of acquisition
Number of suites
Purchase price
Current occupancy as at September 30, 2013
Renovation and Repositioning Program
Total Budget
December 20, 2012
In-suite upgrades
$57
$159
229
Exterior upgrades
$89
$139
$169
$164
Building systems upgrades
$22
$22
$40
$40
$377
$524
$16,584
97.0%
Common area upgrades
Average in-place rent on acquisition
$702
Structural upgrades
Average in-place rent as at September 30, 2013
$795
Total
Market rent on acquisition
$762
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YTD
12
LANDMARK AT GRANITE PARK
Property Details:
•
Acquired in December 2012
•
Consists of a 26-building, garden style apartment comprising of 425
units and was built in 1970
Property Update:
•
Rehabilitation program is substantially complete
•
Completed renovations include the leasing office, clubhouse, fitness
center, and dog park
•
Majority of exterior renovations are completed, notably landscaping,
site signage and parking lot repairs
•
In-suite renovation program is complete, further repositioning the
property
$760
•
Anticipated to generate a net operating income in Year 1 of operations
that is consistent with initial underwriting expectations
$720
•
Although average in-place rental rates and occupancy lagged initial
forecast during the first two quarters of 2013 due to temporary effects
of the repositioning program, the property has begun to stabilize and
average in-place rental rates and occupancy significantly improved in
Q3 2013
Investment Update
Date of acquisition
Number of suites
Purchase price
Current occupancy as at September 30, 2013
Avg. In-Place Rent
Budget
Actual
$740
$700
$680
$660
$640
Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13
Renovation and Repositioning Program
YTD
Total Budget
December 20, 2012
In-suite upgrades
$1,475
$1,972
425
Exterior upgrades
$183
$182
Common area upgrades
$187
$217
$32,163
92.6%
Building systems upgrades
Average in-place rent on acquisition
$706
Structural upgrades
Average in-place rent as at September 30, 2013
$737
Total
Market rent on acquisition
$761
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In-Place at Acquisition
$32
$90
$118
$128
$1,995
$2,589
13
LANDMARK AT WATERCREST
Property Details:
•
Acquired in May 2013, originally built as condominiums
•
Completed in two phases in 1992 and 1995; located close to downtown,
Research Triangle Park, Cary Towne Centre and the Triangle Factory
Shops
•
Consists of one, two and three bedroom apartment suites situated in a
garden-style complex
Property Update:
•
Rehabilitation program is underway, with upgrades nearly completed to
amenity areas, club-house and leasing center, landscaping and signage
•
Upgrades to the interior finishes are approximately 50% complete
•
Rehabilitation program to be completed by the end of Q2 2014 and in
accordance with the initial underwriting budget
•
Generated net operating income consistent with underwriting projections
•
Average in-place rent levels are exceeding anticipated levels as new
leases are being completed at the forecasted rent levels and renewals
are exceeding original expectations
$850
$800
$750
$700
$650
$600
$550
May 13
Investment Update
Date of acquisition
Number of suites
Purchase price
Current occupancy as at September 30, 2013
Jun 13
Jul 13
Aug 13
Sep 13
Renovation and Repositioning Program
YTD
Total Budget
May 6, 2013
In-suite upgrades
$756
$1,573
344
Exterior upgrades
$34
$110
Common area upgrades
$71
$261
Building systems upgrades
$10
$13
$173
$316
$1,044
$2,273
$25,706
91.9%
Average in-place rent on acquisition
$736
Structural upgrades
Average in-place rent as at September 30, 2013
$794
Total
Market rent on acquisition
$801
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In-Place at Acquisition
Budget
Actual
Avg. In-Place Rent
14
LANDMARK AT EAGLE LANDING
Property Details:
•
Acquired in May 2013
•
Constructed in 1986; located minutes from the Weston Business
District, Umstead State Park, and the Cary Town Centre
•
Consists of one, two and three bedroom apartment suites situated in a
garden-style complex
Property Update:
•
Rehabilitation program is currently underway, with upgrades nearly
completed to amenity areas, club-house, leasing center, landscaping
and signage
•
Upgrades to interior finishes are approximately 50% complete
•
Rehabilitation program to be completed by end of Q2 2014 and in
accordance with the initial underwriting budget
•
Has generated net operating income consistent with underwriting
projections
•
Average in-place rent levels are currently exceeding anticipated levels,
as new leases are being completed at the forecasted rent levels and
renewals are exceeding original expectations
Avg. In-Place Rent
$720
$700
$680
$660
$640
$620
May 13
Investment Update
Date of acquisition
Number of suites
Purchase price
Current occupancy as at September 30, 2013
Jun 13
Jul 13
Aug 13
Sep 13
Renovation and Repositioning Program
YTD
Total Budget
May 6, 2013
In-suite upgrades
$691
$2,004
444
Exterior upgrades
$88
$124
$30,219
92.4%
Common area upgrades
$109
$216
Building systems upgrades
$24
$127
$61
$110
$973
$2,581
Average in-place rent on acquisition
$677
Structural upgrades
Average in-place rent as at September 30, 2013
$712
Total
Market rent on acquisition
$737
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In-Place at Acquisition
Budget
Actual
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BELLA LAKE APARTMENTS
Property Details:
•
Acquired in November 2013
•
296 suite complex contains one, two and three bedroom apartment
suites situated in a garden-style complex
•
Amenities include a centralized clubhouse, two swimming pools,
fitness center and barbeque area
Property Update:
•
Repositioning strategy will focus on upgrades to amenity areas and
in-suite finishes
•
Improved property management will drive growth in rental revenues
and improve operating margins
•
Capital investments made for the repositioning program are
anticipated to take approximately one year to complete
Bella Lakes Apartments
Date of acquisition
Location
Year Built
Number of Units
November 26, 2013
Orlando, FL
1973
296
Purchase Price
$18,500,000
Initial Debt
$13,875,000
Capital Budget
$1,296,880
Loan-to-Value
70.1%
Anticipated Return (pre-tax)
16.8%
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BLANDING PLACE APARTMENTS
Property Details:
•
Acquired in December 2013
•
232 suite complex contains one, two and three bedroom apartment
suites situated in a garden-style complex
•
Amenities include a centralized clubhouse, two swimming pools,
fitness center, and tennis courts
Property Update:
•
Repositioning strategy will focus on upgrades to amenity areas, and insuite finishes
•
Improved property management will drive growth in rental revenues
and improve operating margins
•
Capital investments made for the repositioning program are anticipated
to take approximately one year to complete
Blanding Place Apartments
Date of acquisition
Location
Year Built
Number of Units
December 10, 2013
Jacksonville, FL
1986
232
Purchase Price
$15,800,000
Initial Debt
$11,850,000
Capital Budget
$972,850
Loan-to-Value
70.6%
Anticipated Return (pre-tax)
14.8%
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For more information on how to invest,
please contact:
Blair Tamblyn
Managing Director/CEO
[email protected]
Carrie Morris, MBA
Managing Director, Capital Markets &
Corporate Communications
[email protected]
416.800.1552
TORONTO
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Toronto, Ontario
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New York, NY
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