October 2013 - Spire Capital

October 2013
SPIRE USA ROC II FUND (AUD)
MONTHLY INVESTMENT REPORT
New ROC II Program
acquisition, Aventerra
Apartments, Mesa,
Arizona - 576 unit
garden style
community with valueadd potential.
October Fund Update
Real Estate Opportunity Capital Fund II LP (“ROC II”), the underlying fund to Spire USA ROC II Fund
(AUD) (“the Fund”), held its Final Close at the end of September 2013, collectively raising capital
commitments of US$595.5 million from global institutional investors, endowments and family offices.
Having reached Final Close, the underlying fund is no longer open to new investment.
Spire USA ROC II Fund (AUD) as at Final Close has committed approximately U$35.5 million in total to
ROC II, making it one of the largest investors in ROC II.
The Spire USA ROC II Fund (AUD) remains open for applications to invest. At at the date of this
publication approximately A$3 million of units in the Fund remain available for application to invest.
Following allocation of these units the Fund will be permanently closed to new investment. Please refer
to the PDS.
Of the total capital committed to ROC II, approximately 66.5% has now been drawndown by the
General Partner for investment into the underlying ROC II portfolio. An update on the portfolio is
provided from page 2 of this report. In summary, as at 30 September 2013, Retail and Wholesale units
in the Fund collectively owned approximately 4.25% of each asset within a well diversified ROC II
portfolio comprising 32 multifamily apartment communities and 4 office buildings.
1
The Chief Investment Officer for ROC II, Mr Dan Stanger of Bridge Investment Group Partners, LLC on
a recent conference call indicated that the deal pipeline for ROC II remained very strong and that he
expected full deployment of the underlying fund’s capital by early 2014 - approximately one year ahead
of schedule.
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
Unit Prices
Unit Prices for the Fund as at 30 September 2013 accompany this update.
During this period the value of the Australian dollar in US dollar terms rose from US$0.89065 at 31
August 2013 to US$0.93505 at 30 September 2013. The Fund is unhedged to currency.
As the value of the Fund’s investment in the underlying fund is valued on a quarterly basis, there was
no change the the value of the Fund’s investment in US dollar terms during the month of September.
As such the September monthly performance is predominantly due to currency fluctuation. However
the underlying fund’s portfolio strategy and performance remains strong.
Portfolio Update
An update on each underlying investments is provided following. This information is based upon the
most recent performance update which has been provided by the Investment Manager, as at 30 June
2013. The performance data for the underlying fund as at 30 September 2013 is expected toward the
end of October.
Investors and advisors will note the difference in performance and valuation methodology for assets
acquired pre and post 31 December 2012.
This is because under the US GAAP accounting standard, assets which have been owned for more
than 6 months must be valued at Fair Market. Hence for the current 30 June 2013 performance figures,
assets acquired before 31 December 2012 move from a Cost valuation basis to a Fair Market Value
(please refer to table). Discounted Cash Flow analysis is the method of valuation used by the
Investment Manager to calculate the Fair Market value of these assets. Once a year (as at 31
December), the Manager’s assessment of Fair Market Value is opined on by the underlying fund’s US
auditor (Deloitte Touche), and adjusted if necessary.
For assets which have been owned greater than 6 months, there has been in each instance an increase
in the value of the equity invested. This is a direct result of the manager’s execution of the value-add
strategy for that asset and increased cash flows and Net Operating Income (NOI).
For those assets which have not yet been owned for 6 months, US GAAP requires that those assets be
valued at their cost of acquisition, less the transactional costs (due diligence, legal, duties, taxes, fees
etc), required to acquire the asset.
These assets will be valued at Fair Market once they have been owned for 6 months or greater.
However, all Limited Partners (including the Fund), regardless of at which Close they invested, buy into
each asset at the cost at which that asset was acquired, providing, Spire believes, a genuine arbitrage
opportunity.
Thus investors will note a typical J-curve effect in asset valuations as they record a “loss” during the
first 6 months of ownership then an expected and accelerating “gain” from 6 months as the value-add
strategies take affect and cash-flows and values approach stabilised market values, at which time the
asset will be prepared for sale.
An example of this final process is Andorra Apartments in Indio (near Palm Desert), California ,
acquired in May 2012. The value-add program has now been completed and cash-flows and market
value maxismised. The property has now been placed on the market with a leading brokerage with
bids due in September.
2
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
Underlying ROC II Program investments and performance as at 30 June 2013.
“DCF” = Discounted Cash Flow Analysis calculating the Net Present Value of forecast future cash flows and residual value, supported by 3rd party
sources. “Cost” = Acquisition cost less transaction costs.
Property
Location
Date
Acquired
Equity
Invested at
Cost (US$)
Current
Equity Value
(US$)
Valuation
Method
West Town Court Apartments
Phoenix, AZ
Apr-12
7,125,000
9,719,158
DCF
La Jolla Champions Apartments
Houston, TX
May-12
5,505,000
7,477,608
DCF
Andorra Apartments
Indio, CA
May-12
3,375,000
4,470,091
DCF
Pinewood Apartments
Lynwood, WA
May-12
1,665,000
2,468,720
DCF
Autumn Lakes Apartments
Houston, TX
Jun-12
5,798,000
7,690,704
DCF
Autumn Chase Apartments
Houston, TX
Jun-12
5,552,000
9,027,800
DCF
Mission Falls Apartments
Houston, TX
Jul-12
1,715,000
2,053,329
DCF
La Entrada Apartments
Albuquerque, NM
Jul-12
731,132
817,953
DCF
Monterra Apartments
Albuquerque, NM
Jul-12
1,006,726
994,191
DCF
Stratford Apartments
San Antonio, TX
Oct-12
5,000,000
6,047,585
DCF
Surprise Lake Apartments
Milton, WA
Oct-12
9,600,000
11,053,244
DCF
Bradley Park Apartments
Puyallup, WA
Dec-12
5,550,468
6,729,506
DCF
Chestnut Hills Apartments
Puyallup, WA
Dec-12
3,987,743
4,438,805
DCF
Hamptons Apartments
Puyallup, WA
Dec-12
6,300,650
6,998,842
DCF
Forest Cove Apartments
Federal Way, WA
Dec-12
9,546,430
10,781,787
DCF
Kennedy Ridge Apartments
Denver, CO
Dec-12
19,831,250
27,362,980
DCF
Lodge on 84th Apartments
Federal Heights, CO
Jan-13
7,317,400
7,487,272
Cost
Pinnacle Grove Apartments
Tempe, AZ
Feb-13
6,400,000
6,240,752
Cost
Sonoma Pointe (The Ritz) Apts.
Las Vegas, NV
Feb-13
2,763,398
2,664,041
Cost
Timberlodge Apartments
Dallas, TX
Apr-13
3,782,016
3,687,233
Cost
Chandlers Bay Apartments
Kent, WA
Apr-13
10,563,000
10,281,570
Cost
Cameron Landing Apartments
Atlanta, GA
May-13
8,800,000
8,460,657
Cost
Enclave Apartments
Euless, TX
Jun-13
4,665,931
4,384,558
Cost
Overlook Apartments
Euless, TX
Jun-13
6,634,770
6,212,800
Cost
Mission Palms Apartments
Tuscon, AZ
Jun-13
9,000,000
8,515,666
Cost
152,215,914
176,066,852
Multifamily Investments
Total Equity
Office Investments
1700 West Loop Building
Houston, TX
Jun-12
18,400,000
21,691,330
DCF
LaSalle 29 Building
Chicago, IL
Apr-13
8,588,000
8,618,521
Cost
LaSalle 39 Building
Chicago, IL
Apr-13
10,412,000
10,688,731
Cost
37,400,000
40,998,582
Net Unrealised equity return on properties acquired pre-31 Dec 2012
124,176,583
149,545,894
1.21x
Net Unrealised equity return on properties acquired post-31 Dec 2012
88,543,482
79,420,725
0.90x
212,720,065
228,966,619
1.08x
Total Equity
3
Total Net Return & multiple (Equity)
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
New underlying ROC II Program investments made since 30 June 2013.
Property
Location
Spire USA ROC II
Fund (AUD) equity
invested (US$)
Multifamily Investments
Cameron Landing
Atlanta, GA
8,800,000
373,015.94
Villeta
Meza, AZ
7,250,000
307,314.26
The Retreat
Phoenix, AZ
17,975,000
761,927.45
Palmilla Villas
Anaheim, CA
9,525,000
403,747.37
Madison Park
Vancouver, WA
10,700,000
453,553.47
The Preserve
Webster, TX
16,250,000
688,807.84
Jasmine
Atlanta, GA
15,055,000
638,153.97
Meridian Pointe
Atlanta, GA
4,210,000
178,454.22
Aventerra
Meza, AZ
15,625,000
662,315.23
105,390,000
4,467,289.75
41,000,000
1,737,915.16
146,390,000
6,205,205
Total Equity
Office Investments
Biltmore Commerce Centre
Phoenix, AZ
Total equity invested since 30 June 2013
4
Total ROC II equity
invested at Cost (US$)
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
!
331IC
Equity Trustees Limited as Responsible Entity for Spire USA ROC II Fund (AUD)
575 Bourke Street, Level 2
Melbourne VIC 3000
Austrailia
Exhibit B
Allocation Detail (Continued)
!
Description!
La Jolla Champions - Houston, TX
Partner-Total!
$-
246,063.36-
ROC-II-Total!
$-
5,805,000.00!
!
La Jolla Champions is a 448 unit multi-family asset located in Houston, Texas. The property is positioned in
the northern part of the Houston metroplex just off the I-45, above the Sam Houston Beltway. The asset is
currently owned by Wrightwood Capital, who foreclosed on the property in October 2010. Current occupancy
is approximately 30%. The community consists of 17 rental buildings plus a leasing center/clubhouse. This
asset requires extensive physical improvements with over 300 down units, and substantial common area
amenity improvements planned. ROC believes that by completing these improvements, and providing strong
management and marketing, it can take advantage of its low purchase price ($15,350 per unit), and the
emerging Houston rental market driving strong returns for the Fund.
!
!
!
Andorra - Indio, CA
!
$-
143,060.09-
$-
3,375,000.00!
The Andorra Apartments is a 186-unit multi-family asset located in Indio, California. This community is well
located, providing excellent “work force” housing, and is comprised of well designed, two-bedroom / two-bath
units, and excellent common areas. Andorra represents an opportunity for the Fund to acquire a lender-owned
property that offers substantial upside value through the rehab of 8 down units, completion of common area
improvements designed to enhance the lifestyle of the residents, and more effective management and
marketing. These improvements along with the strengthening market, and strong financing package will
provide above market cash flow and returns to the Fund.
!
!
!
!
West Town Court - Phoenix, AZ
!
$-
302,015.75-
$-
7,125,000.00!
West Towne Court Apartments is a 274 unit class “A” community located in west Phoenix, Arizona. This well
maintained, garden-style apartment community was developed in 2009 and is comprised of 29 residential
buildings situated on 16.03 acres of land resulting in a low density property, with only 17.09 units/acre. The
property offers an excellent amenity package and one, two and three-bedroom floor plans with spacious
layouts and modern-day features. The opportunity is to acquire West Town Court at cost well below market
value due to its construction loan coming due, enhancing common area amenities and select unit
improvements, and reducing expenses. These improvements combined with low interest Freddie Mac
financing will provide good cash flows and returns to the Fund as the Phoenix market continues to improve.
!
!
!
Pinewood - Lynnwood, WA
$-
70,576.31-
$-
1,665,000.00!
!
Pinewood Square Apartments is comprised of 180 and is located in Lynnwood, Washington along Interstate 5,
in the Seattle/Puget Sound area, one of the strongest apartment communities in the country. This garden style
community was built in 1977. The asset is being purchased out of receivership, providing the Fund an
excellent “value add” opportunity through common area and unit improvements, and better on site
management. The prior owner completed $2,250,000 in upgrades from 2007 – 2010 ($12,500 per unit)
including new carports, roofs, signage, double-pane windows, a complete clubhouse remodel, enhanced
landscaping, and a playground. These improvements, combined with excellent Freddie Mac financing will
provide the Fund with excellent cash flows and returns.
!
5
October 9, 2013 - Capital Call Notice
5295 S. Commerce Dr. Suite 100, Salt Lake City, UT 84107
Page 5 of 14
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
!
331IC
Equity Trustees Limited as Responsible Entity for Spire USA ROC II Fund (AUD)
575 Bourke Street, Level 2
Melbourne VIC 3000
Austrailia
Exhibit B
Allocation Detail (Continued)
!
Description!
Autumn Lakes - Houston, TX
Partner-Total!
$-
256,448.46-
ROC-II-Total!
$-
6,050,000.00!
!
Autumn Lakes and Autumn Chase are Class “B” assets located directly across the street from the Republic
Hollow Tree, the Class A luxury apartment community currently owned by ROC Fund I. The properties have
a total of 572 units and are located in north Houston, TX. The assets were foreclosed in December 2011, and
January 2012. The DUS lender currently has the right to acquire the assets for $12.7 million, and due to an
existing relationship inquired as to whether we would be interested in assuming their position. This off
market relationship provides us with the opportunity to purchase both properties significantly below
replacement cost, obtain economies of scale with our adjacent apartment community Republic Hollow, and to
add value through capital improvements and stabilizing occupancy, in a strengthening market.
!
!
!
Autumn Chase - Houston, TX
!
$-
235,339.15-
$-
5,552,000.00!
Autumn Lakes and Autumn Chase are Class “B” assets located directly across the street from the Republic
Hollow Tree, the Class A luxury apartment community currently owned by ROC Fund I. The properties have
a total of 572 units and are located in north Houston, TX. The assets were foreclosed in December 2011, and
January 2012. The DUS lender currently has the right to acquire the assets for $12.7 million, and due to an
existing relationship inquired as to whether we would be interested in assuming their position. This off
market relationship provides us with the opportunity to purchase both properties significantly below
replacement cost, obtain economies of scale with our adjacent apartment community Republic Hollow, and to
add value through capital improvements and stabilizing occupancy, in a strengthening market.
!
!
!
1700 West Loop - Houston, TX
!
$-
843,524.68-
$-
19,900,000.00!
1700 West Loop is a 15-story office tower in the Galleria submarket of Houston, Texas. This building was
built in 1976 and later renovated in 2000. Currently 79.9% leased with high-quality tenants – Christus Health
occupying 40.4% of the total building and Burns & McDonnell occupying 21.7%. Christus has exercised an
early “buyout” opportunity in their lease, which provides the building $4.5 million of cash and they retain
20,000 sf on one floor. Our lender has asked us to fund $1.45 million of additional cash for reserves and will
no longer be providing additional debt proceeds for capital improvements so we are calling for this capital to
complete additional improvements of $1,950,000 which will upgrade the common areas and systems, and
allow us to further reposition rents and increase occupancy. The Christus rents are 30% below market which
creates significant upside for the fund.
!
!
Monterra - Albuquerque, NM
$-
42,673.27-
$-
1,006,726.00!
!
The La Entrada and Monterra apartments consist of 528 total apartment units, located within a mile of each
other in the strong northeast submarket of Albuquerque, NM. Recent appraisals on each property provide a
total valuation of $37.1 million. Bridge Investment Group is the Sponsor of a partnership that has owned
these assets for several years. These assets have consistently been over 92% occupied, however their debt is
maturing. The partnership determined to refinance and upgrade these assets, however structural issues with
their joint venture partner precluded the ability to secure financing resulting in a forced sale of the assets.
This provided us with the opportunity to purchase these assets well below appraised value, with management
in place, and the ability to execute additional improvements driving further rent growth. These assets are
currently 94% occupied, providing significant, stable cash flows. These assets will be purchased with joint
venture equity, further enhancing returns to the Fund.
!
6
October 9, 2013 - Capital Call Notice
5295 S. Commerce Dr. Suite 100, Salt Lake City, UT 84107
Page 6 of 14
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
!
331IC
Equity Trustees Limited as Responsible Entity for Spire USA ROC II Fund (AUD)
575 Bourke Street, Level 2
Melbourne VIC 3000
Austrailia
Exhibit B
Allocation Detail (Continued)
!
Description!
La Entrada - Albuquerque, NM
Partner-Total!
$-
30,991.35-
ROC-II-Total!
$-
731,132.00!
!
The La Entrada and Monterra apartments consist of 528 total apartment units, located within a mile of each
other in the strong northeast submarket of Albuquerque, NM. Recent appraisals on each property provide a
total valuation of $37.1 million. Bridge Investment Group is the Sponsor of a partnership that has owned
these assets for several years. These assets have consistently been over 92% occupied, however their debt is
maturing. The partnership determined to refinance and upgrade these assets, however structural issues with
their joint venture partner precluded the ability to secure financing resulting in a forced sale of the assets.
This provided us with the opportunity to purchase these assets well below appraised value, with management
in place, and the ability to execute additional improvements driving further rent growth. These assets are
currently 94% occupied, providing significant, stable cash flows. These assets will be purchased with joint
venture equity, further enhancing returns to the Fund.
!
Mission Falls - Houston, TX
$-
72,695.72-
$-
1,715,000.00!
!
Mission Falls is a 228 unit, garden-style apartment community located on 11.24 acres in Houston, TX. The
asset was built in 1995 and has been operated as an affordable housing tax credit property with historic
occupancies in excess of 93%. Amenities include a swimming pool, secure access gating, barbecue and
picnic areas, basketball and volleyball courts, playground, and community resource center. ROC was able to
negotiate an “off market” transaction with a purchase price of $7,040,500. The business plan anticipates
converting this asset from “affordable” to market over the next 18 months, while completing strategic exterior
improvements, and substantial improvements to the interior of the units. The asset will be financed by Bank
of America, with a 5 year, non recourse debt package at 210 over 30-day Libor. The team anticipates “fixing”
the interest rate at approximately 3.25%. The total cash requirement to acquire and renovate the property is
$3,215,000. Of this amount ROC Fund I has committed $1,500,000.
!
Stratford - San Antonio, TX
!
$-
211,940.87-
$-
5,000,000.00!
Stratford is a 269-unit garden style apartment community at current occupancy of 94.3%. The Stratford's infill
location affords unmatched access to major employers and retail conveniences that are centered in Northwest
San Antonio. Completion of common area improvements designed to enhance the lifestyle of the residents,
interior unit upgrades, and more effective management and marketing, are expected to produce above average
cash flow and returns to the Partnership as the San Antonio market continues to improve.
!
!
!
!
!
!
Surprise Lake Village - Milton, WA
$-
414,556.35-
$-
9,780,000.00!
!
Surprise Lake Village is a unique 338 unit garden-style community situated along a 30 acre lake near the Port
of Tacoma. The property was developed in 1986 on 31.5 acres that provides a clean landscape on lakefront
setting. We anticipate reducing vacancy from the current 7.0% to market of about 5% by the fourth year of
ownership as a result of completing our capital improvements and upgrades, a more aggressive management
plan and an improving economy.
!
7
October 9, 2013 - Capital Call Notice
5295 S. Commerce Dr. Suite 100, Salt Lake City, UT 84107
Page 7 of 14
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
!
331IC
Equity Trustees Limited as Responsible Entity for Spire USA ROC II Fund (AUD)
575 Bourke Street, Level 2
Melbourne VIC 3000
Austrailia
Exhibit B
Allocation Detail (Continued)
!
Description!
Kennedy Ridge - Denver, CO
Partner-Total!
$-
840,610.49-
ROC-II-Total!
$-
19,831,250.00!
!
Kennedy Ridge is a sponsored opportunity to participate in the purchase of a 959 apartment units in the
southeast Denver submarket. Completed in stages from 1974 to 1980 the property features studios, one and
two-bedroom floor plans near the 27-hole John F. Kennedy Golf Course. The property is roughly 8 miles
southeast of downtown Denver and 2 miles north of the Denver Technological Center (DTC), positioning
residents near the two largest job centers in the state. The property will incur a total of about $5.95 million
($6,200/unit) in capex which includes constructing a new clubhouse and activity center, repairing the roofs,
painting, landscaping, improving the common areas and renovating 65% of the interior units.
!
!
!
!
Bradley Park - Puyallup, WA
$-
238,221.54-
$-
5,620,000.00!
!
Bradley Park is a 155 unit multifamily apartment community built in 1998 as a condominium project with a
very low density of only 15.2 units to the acre. Located in a dynamic market, vacancy in the Tacoma metro
ended the latest quarter at 4.6%. The property will receive a total of $428k ($2,700/unit) in capex which
include upgraded door and cabinet hardware, plumbing fixtures, floor coverings, appliances, lighting
packages, and resurfaced countertops in a select number of units. The amenity expansion and capital
improvements are expected to create substantial rent growth in the first three years. The strong employment
growth and low overall market vacancy makes this investment opportunity a valuable addition to the
Seattle/Tacoma assets. This asset was financed by Wells/FNMA at 3.6% fixed rate, providing substantial
positive arbitrage our investors.
!
!
Chestnut Hills - Puyallup, WA
$-
169,001.65-
$-
3,987,000.00!
!
Chestnut Hills is a 157 unit is a garden-style community, built in 1991, with a density of 21.5 units to the
acre. The property offers spacious floor plans featuring full size washer/dryers. Community amenities include
a clubroom, outdoor pool and spa. The business plan calls for interior upgrades to 30% of the units along with
exterior of the clubhouse to provide a business center, and full fitness center, along with a revitalized
community club area which is expected to drive strong rent growth. The strong employment growth and low
overall market vacancy makes this investment opportunity a valuable addition to the Seattle/Tacoma assets.
This asset was financed by Wells/FNMA at 3.6% fixed rate, providing substantial positive arbitrage our
investors.
!
!
!
The Hamptons - Puyallup, WA
$-
267,045.50-
$-
6,300,000.00!
!
The Hamptons is a 230 unit garden style apartment community, built in 1991, is a garden-style community
with a density of 21.6 units to the acre. The property offers spacious floor plans featuring full size
washer/dryers. Community amenities include a clubroom, outdoor pool, and spa. The business plan calls for
interior upgrades to 30% of the units along with exterior of the clubhouse to provide a business center, and
full fitness center, along with a revitalized community club area which is expected to drive strong rent growth.
The strong employment growth and low overall market vacancy makes this investment opportunity a valuable
addition to the Seattle/Tacoma assets. This asset was financed by Wells/FNMA at 3.6% fixed rate, providing
substantial positive arbitrage our investors.
!
8
October 9, 2013 - Capital Call Notice
5295 S. Commerce Dr. Suite 100, Salt Lake City, UT 84107
Page 8 of 14
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
!
331IC
Equity Trustees Limited as Responsible Entity for Spire USA ROC II Fund (AUD)
575 Bourke Street, Level 2
Melbourne VIC 3000
Austrailia
Exhibit B
Allocation Detail (Continued)
!
Description!
Partner-Total!
$-
Forest Cove - Federal Way, WA
404,655.75-
ROC-II-Total!
$-
9,546,430.00!
!
Forest Cove is a 388 unit asset located in Federal Way, Washington which is in the Seattle MSA located
approximately 23 miles south of downtown Seattle. Completion of common area improvements and a new
clubhouse designed to enhance the lifestyle of the residents, interior unit upgrades, and more effective
management and marketing, are expected to produce above average cash flow and returns to the Partnership
as the Federal Way market continues to improve. This distressed asset was financed by Key Bank at 220 over
LIBOR (Currently 2.41%), providing substantial positive arbitrage to our investors.
!
!
!
!
!
$-
Lodge on 84th - Federal Heights, CO
!
310,281.44-
$-
7,320,000.00!
Lodges at 84th is a 300 unit apartment community located in Federal Heights, Colorado just 5 minutes from I25 and Highway 36. Affiliates of the Investment manager have owned and managed both multi-family and
commercial properties in the Denver area for the past 9 years and currently owns more than 3,300 units in 8
properties in that market. The property is currently operating at 95% occupancy. We project growth in
effective income of 5.11% annually over the 5 year holding period generated by market rent growth combined
with interior unit rehab. In addition to the interior rehabs, the partnership plans to enhance common area
amenities while reducing expenses. These improvements combined with low interest FNMA financing are
expected to provide good cash flows and returns as the Denver rental market continues to strengthen.
!
!
!
$-
Pinnacle Grove - Tempe, AZ
!
271,284.32-
$-
6,400,000.00!
Pinnacle Grove is a 247 unit walk-up garden style apartment in located in south Tempe, AZ. The opportunity
in this deal lies in acquiring an asset constructed in 1987 at a discount to cost. Value-add opportunities will
come through Bridge Property Management’s improvements designed to enhance the lifestyle of the residents,
interior unit upgrades, and more effective management and marketing, are expected to produce above average
cash flow and returns to the Partnership as the Tucson market continues to improve.
!
!
!
!
!
!
Sonoma Pointe (fka The Ritz) - Las Vegas, NV
$-
117,203.30-
$-
2,765,000.00!
!
The Ritz is a garden-style apartment consisting of 198 units constructed in 1990, and is built on 9.20 acres of
land located at 4250 S. Jones Blvd in Las Vegas, Nevada. Completion of common area improvements,
interior unit upgrades, more effective management and marketing, and a strong financing package are
expected to produce above average cash flow and returns to the Partnership as the Las Vegas rental market
and economy begin to reemerge.
!
9
October 9, 2013 - Capital Call Notice
5295 S. Commerce Dr. Suite 100, Salt Lake City, UT 84107
Page 9 of 14
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
!
331IC
Equity Trustees Limited as Responsible Entity for Spire USA ROC II Fund (AUD)
575 Bourke Street, Level 2
Melbourne VIC 3000
Austrailia
Exhibit B
Allocation Detail (Continued)
!
Description!
Partner-Total!
$-
Timberlodge - Dallas, TX
160,439.24-
ROC-II-Total!
$-
3,785,000.00!
!
Timberlodge is a 216-unit, 1981 multi-family asset located in North Dallas, Texas. The property is located in
the same submarket as ROC I investment properties, Indigo and Providence Apartment communities. The
asset is distressed, and has been severely mismanaged providing the partnership with significant upside
potential. Although current occupancy is approximately 85%, the tenant quality and current rents are very
low. The partnership has a large capital improvement budget to extensively upgrade the common areas,
amenities, complete all deferred maintenance items, and upgrade the interior units. The partnership believes
that by completing these improvements, and providing strong management and marketing, it can take
advantage of its low purchase price and emerging submarket conditions.
!
!
!
$-
Enclave at Bear Creek - Dallas, TX
!
205,370.70-
$-
4,845,000.00!
Enclave at Bear Creek is a 308-unit, 1985 multi-family asset located just west of the Dallas/Fort Worth
airport. We intend to purchase this asset as part of a portfolio with Overlook at Bear Creek, another apartment
community directly across the street. Current occupancy is approximately 93%. The business plan includes
expanding and upgrading the amenity package, upgrading many of the interior units to drive revenue, and
reducing expenses, further enhancing NOI. Due to the existing debt structure the partnership has been able to
secure this asset for below market pricing at approximately 60% of replacement cost, providing strong
potential returns to the partners.
!
!
!
!
Overlook at Bear Creek - Dallas, TX
!
$-
253,057.40-
$-
5,970,000.00!
Overlook at Bear Creek is a 350-unit, 1984 multi-family asset located in just west of the Dallas/Fort Worth
airport. We intend to purchase this asset as part of a portfolio with Enclave at Bear Creek, another apartment
community directly across the street. Current occupancy is approximately 93%. The partnership expects to
drive revenue and NOI by significantly improving the amenity package, upgrading many of the interior units
and reducing expenses. Due to the existing debt structure, the partnership has been able to secure this asset
for below market pricing at approximately 60% of replacement cost.
!
!
!
!
!
Chandler's Bay - Kent, WA
$-
446,135.54-
$-
10,525,000.00!
!
Chandler’s Bay, a 293-unit garden-style community built in 1990, is located in Kent, Washington. Kent is a
highly desirable submarket located 20 minutes south of downtown Seattle, and 25 minutes north of Tacoma.
The asset was developed in two phases on an elongated 36-acre lot, nearly one mile from end to end, creating
an extremely low density of only 8 units to the acre. Chandler’s Bay offers a compelling opportunity to addvalue and drive revenue through interior unit renovations, enhancing and adding community amenities. NOI
will be further driven through expense reductions. Cash flow is expected to be further enhanced through the
placement of low interest, fixed rate debt at or below 4.25%.
!
10
October 9, 2013 - Capital Call Notice
5295 S. Commerce Dr. Suite 100, Salt Lake City, UT 84107
Page 10 of 14
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
!
331IC
Equity Trustees Limited as Responsible Entity for Spire USA ROC II Fund (AUD)
575 Bourke Street, Level 2
Melbourne VIC 3000
Austrailia
Exhibit B
Allocation Detail (Continued)
!
Description!
Partner-Total!
$-
Mission Palms - Tucson, AZ
387,427.92-
ROC-II-Total!
$-
9,140,000.00!
!
Built in 1978, Mission Palms consists of 360-units located in northwest Tucson, AZ. Due to the location and
position of the asset, this community has substantial potential to increase rents by renovating the interior
units, expanding the amenities, and performing general exterior and common area improvements. Current
amenities include a clubhouse, billiards, two swimming pools, spa, putting green and two tennis courts, all of
which are dated and under-amenitized. The property has an existing FHMA loan that will be assumed at
5.06% that matures in July of 2015. The total capital commitment is $9M.
!
!
!
!
!
$-
LaSalle - Chicago, IL
!
805,375.32-
$-
19,000,000.00!
LaSalle consists of two office buildings with retail (a combined 382,492 square feet) located in the “heart” of
downtown Chicago’s Central Loop District at the Northeast corner of South LaSalle and West Monroe Streets.
We are acquiring the first position loan at a significant discount and obtaining a deed-in-lieu immediately
from borrower. We have underwritten a base case business plan that calls for a renovation of the office
buildings and leasing up the remaining vacant space. During The first 90 days of ownership we will be
evaluating the possibility of selling one of the buildings to a hospitality operator, which may have significant
upside beyond our base underwrite. We are working to secure debt package that would reduce the total equity
to $15M within 60 days from closing. The total initial cash commitment to acquire the property is $19M.
!
!
!
$-
Cameron Landing - Stockbridge, GA
!
Villetta - Mesa, AZ
!
11
$-
8,800,000.00!
Cameron Landing is a garden-style community located in Stockbridge, Georgia in southeast Atlanta. The
community benefits from excellent drive-by exposure along Mount Zion Road at the intersection of Highway
138, providing residents quick access to I-75 and I-675. The property was constructed in 1998 and comprises
368 units in 16 three-story residential buildings, a large leasing center/clubhouse, and 12 garage structures.
Developed on 42.85 acres, the community offers an extremely low density of only 9 units to the acre.
Cameron Landing provides our fund the opportunity to take advantage of the strengthening Atlanta
marketplace while implementing our unique value-add strategy comprising both amenity/common area
upgrades and interior unit renovations that will drive revenues. In addition, excellent fixed rate financing will
provide solid cash flow to the fund during the ownership period.
!
!
!
373,015.94-
$-
307,314.26-
$-
7,250,000.00!
Villetta Apartments is a 352 unit apartment community located in Mesa, Arizona. This garden-style
community was built in 1983 and is positioned on 13.5 acres. The property is currently encumbered with
$22M in bonds which will be retired at closing, making this asset easier to lease in the future. This leasing
adjustment, combined with our unique value add strategy, including amenity/common area and interior unit
improvements, along with the strengthening Phoenix marketplace should drive increasing revenues to this
asset. In addition, excellent floating rate financing will provide our fund with strong cash flow during the
ownership period.
October 9, 2013 - Capital Call Notice
5295 S. Commerce Dr. Suite 100, Salt Lake City, UT 84107
Page 11 of 14
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
!
331IC
Equity Trustees Limited as Responsible Entity for Spire USA ROC II Fund (AUD)
575 Bourke Street, Level 2
Melbourne VIC 3000
Austrailia
Exhibit B
Allocation Detail (Continued)
!
Description!
Partner-Total!
$-
The Retreat - Phoenix, AZ
761,927.45-
ROC-II-Total!
$-
17,975,000.00!
!
The Retreat is a 480 unit multi-family property located in Phoenix, Arizona. This asset, built in 1997, is
situated on 25.75 acres (19 units/acre) in a great location within the North Phoenix metroplex. The Retreat is
currently over 95% occupied. While the property is in excellent condition with very little deferred
maintenance, and has a high quality amenity package, there is ample “value-add” opportunity to both expand
the amenities to the current market and complete interior unit upgrades, which will drive revenues. In
addition, attractive floating rate financing will provide excellent cash flow throughout the ownership period.
!
!
!
!
!
$-
Palmilla Villas - Anaheim, CA
403,747.37-
$-
9,525,000.00!
!
Palmilla Villas is a 169 unit apartment community located in Anaheim, California one mile from Interstate 5,
three miles from Highway 91 and only a few blocks from Disneyland. This garden-style community,
constructed in 1983, is comprised of 10 three-story residential buildings, built on 5.20 acres. At acquisition,
the property is operating at 95%+ occupancy. This property is located on a long-term leasehold, increasing
cash flow due to a higher cap rate. We anticipate driving revenues through amenity improvements and
additions, along with substantial interior unit upgrades. Cash flow will be enhanced by a strong floating-rate
debt package.
!
!
!
!
Biltmore Commerce Center - Phoenix, AZ
!
$-
1,737,915.16-
$-
41,000,000.00!
Biltmore Commerce Center is a 258,348 square foot Class “A” office building located within the Camelback
corridor in Phoenix, AZ. The asset is approximately 75% leased with high quality tenants. The Camelback
corridor is the premier office submarket in Phoenix with a well-known and respected tenant base. ROC will
acquire the asset in a joint venture with DPC Development – our partner at Cherry Creek and Logan Tower.
We plan a major upgrade and repositioning of the asset which includes a $1.6 million renovation of the
common areas including; an exterior landscaping upgrade with a major entry feature, complete renovation of
interior lobbies, the major atrium area and the other common areas throughout. In-place rents are currently
much lower than market rents, giving ROC the opportunity to lease the additional space at higher market
rates. ROC will purchase the property all cash and we anticipate placing $29 million in financing shortly after
closing which will create strong positive cash flow on a leveraged basis.
!
Madison Park - Vancouver, WA
!
$-
453,553.47-
$-
10,700,000.00!
Madison Park is a 1999 vintage 336-unit apartment community located in Vancouver, Washington.
Vancouver sits on the north bank of the Columbia River, and is part of the Portland, Oregon MSA. Vancouver
enjoys beneficial tax treatment over the rest of the MSA due to no personal income tax in Washington State.
The property is conveniently located just east of I-205 and south of the SR 500, eight miles east of downtown
Vancouver and seventeen miles northeast of downtown Portland. The community is currently well maintained
but will benefit dramatically from ROC’s ability to upgrade interior finishes, provide more robust and
improved amenities, and improve the general curb appeal. With a budget over $2 million for these renovations
to create an attractive and appealing community for current and prospective residents, we anticipate driving
significant rent increases as a result. ROC will place a floating rate debt package which will further enhance
cash flow during the ownership period, with the protection of a rate cap.
!
12
October 9, 2013 - Capital Call Notice
5295 S. Commerce Dr. Suite 100, Salt Lake City, UT 84107
Page 12 of 14
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
!
331IC
Equity Trustees Limited as Responsible Entity for Spire USA ROC II Fund (AUD)
575 Bourke Street, Level 2
Melbourne VIC 3000
Austrailia
Exhibit B
Allocation Detail (Continued)
!
Description!
The Preserve - Webster, TX
Partner-Total!
$-
688,807.84-
ROC-II-Total!
$-
16,250,000.00!
!
The Preserve is a 530 unit multi-family asset located in Webster, TX, which is located just outside of
Houston. The property is currently 95% occupied and is well located with high-quality businesses and
retailers nearby. The asset is also in great condition, making it a Class B property in a Class A- location. The
seller needs a quick closing due to the fallout of a previous buyer and a pending loan maturity. ROCs strength
and ability to close quickly has created a tremendous opportunity. The substantial discount to replacement
cost, plus the ability to drive revenues through unit and amenity upgrades will provide the Fund strong cash
flows and value appreciation. A strong floating debt rate package will enhance the returns to the Fund.
!
!
!
!
Jasmine - Atlanta, GA
$-
638,153.97-
$-
15,055,000.00!
!
Jasmine at Winters Chapel is a 592 unit garden-style apartment community located just north of Atlanta in an
attractive neighborhood. The property is well maintained and provides exceptional common area space and
amenities which we will expand to better service the resident base. The property provides spacious one, two,
and three bedroom units, amid a park like setting. Interior unit upgrades will allow us to drive revenues,
while expense management enhances operating cash flow. The Fund was able to secure this asset at below
market pricing due to its ability to assume the underlying fixed rate financing at 4.38%.
!
!
!
!
!
Meridian Pointe - Atlanta, GA
!
$-
178,454.22-
$-
4,210,000.00!
Meridian Pointe Apartments is a 162 unit garden-style community located north of Atlanta. The community is
strategically positioned only a few miles from the area’s primary retail district, Gwinnett Place. The property
is comprised of 13 two and three-story buildings and has an extremely low density of only 8 units to the acre.
Meridian Pointe offers large three-bedroom (82%) and unique four-bedroom (18%) units with an above
average square footage of 1,379. The Fund foresees a tremendous “value add” opportunity with both interior
unit, and “family style” amenity upgrades available to drive revenues. In addition, a new floating rate debt
package with Freddie Mac will provide strong cash flow to the Fund during its ownership period.
!
!
!
!
Aventerra - Mesa, AZ
!
$-
662,315.23-
$-
15,625,000.00!
Aventerra at Dobson Ranch is a 576 unit garden style community located in Mesa, AZ and more specifically
in the Dobson Ranch master planned community. The property is also well located in an infill location with
close accessibility to downtown Tempe, Mesa, Chandler, Gilbert, and Phoenix via Loop 101 and US-60
Freeways. The unit mix consists of one and two bedroom units with an average unit size of 780 square feet.
Aventerra provides the Fund a strong “value add” opportunity due to the ability to complete interior unit
upgrades, along with an amenity package expansion that will further enhance its positioning in the market..
The Fund was able to secure the asset at a price below market comparables, on a per unit basis, due to our
ability to assume the underlying debt instrument with a fixed interest rate of 4.9%. An additional
supplemental loan will be secured from FNMA as well, enhancing the overall returns to the Fund.
!
13
October 9, 2013 - Capital Call Notice
5295 S. Commerce Dr. Suite 100, Salt Lake City, UT 84107
Page 13 of 14
SPIRE USA ROCII FUND (AUD) MONTHLY UPDATE October 2013
Spire USA ROC II Fund (AUD) remains open for investment. Please refer to the PDS for
further details.
For a copy of the PDS or queries please contact Spire Capital at [email protected].
Important Information
Issued by Spire Capital Pty Ltd Pty Limited ABN 21 141 096 120 AFSL 344365 (“Spire”). Data as at 15 July 2013. This document is not an offer of securities or financial products, nor is it
financial product advice. As this document has been prepared without taking account of any investors’ particular objectives, financial situation and needs, you should consider its
appropriateness having regard to your objectives, financial situation and needs. The Fund referred to is issued by the Responsible Entity, Equity Trustees Ltd ABN 46 004 031 298 AFSL
240975. To acquire units in the Fund, complete the application form that accompanies the current PDS, which you can obtain from www.spirecapital.com.au or by calling client services
on 02 9377 0755. You should consider the PDS in deciding to acquire or to continue to hold the Fund. Although specific information has been prepared from sources believed to be
reliable, we offer no guarantees as to its accuracy or completeness. The information stated, opinions expressed and estimates given constitute best judgement at the time of publication
and are subject to change without notice to you. This document describes some current internal investment guidelines and processes. These are constantly under review, and may
change over time. Consequently, although this document is provided in good faith, it is not intended to create any legal liability on the part of Ironbark or any other entity and does not
vary the terms of a relevant disclosure statement. Past performance is not an indicator of future results. All dollars are Australian dollars unless otherwise specified.
Contact details
+612 9377 0755
www.spirecapital.com.au
14