Jernigan Capital — Investor Presentation (April 2018)
31 slides from Jernigan Capital's investor presentation, Apr 2, 2018
Slide 1: Investor Presentation April 2018
1 Investor Presentation April 2018
Slide 2: Safe Harbor Disclosure Regarding Forward-Looking Statements
2 Safe Harbor Disclosure Regarding Forward - Looking Statements This presentation includes "forward - looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Sect ion 21E of the Securities Exchange Act of 1934 and other federal securities laws, our future performance,
Slide 3: Company mission and self-storage capital provider
3 provides debt and equity capital to private developers, owners, and operators of self - storage facilities. Our mission is to be the preeminent capital partner for self - storage entrepreneurs nationwide by offering creative solutions through an experienced team demonstrating the highest levels of
Slide 4: Investment Highlights
4 ▪ $450+ million pipeline of investments in underwriting; $200 to $230 million new investments estimated for 2018 ▪ Q1 2018 to date: $108 million loan commitments closed and additional $9 million invested in developer buyouts ▪ Closed $409 million of new development investments in 2017 ▪ Near - to
Slide 5: Experienced and Aligned Senior Management Team
5 Experienced and Aligned Senior Management Team ~ 8.0% Management and Board Ownership Creates Significant Alignment of Interests Dean Jernigan Chairman of the Board & Chief Executive Officer John Good President & Chief Operating Officer Kelly Luttrell Senior Vice President & Chief Financial Officer
Slide 6: JCAP's Competitive Advantages
6 JCAP’s Competitive Advantages Limited Availability of Bank Financing ▪ Continued post - recession hangover of commercial banks ▪ Regulatory hurdles diminish the profitability of self storage loans for banks ▪ Dodd - Frank, Basel III and HVCRE reserve requirements ▪ Allocation p reference to stabil
Slide 7: High ROI Business Model Executed in Top Self-Storage Markets
7 High ROI Business Model Executed in Top Self - Storage Markets Providing Innovative Financing Solutions for the Self - Storage Industry Attractive Risk - Adjusted Returns Through Equity Participations Deve l op m ent Investments G r ound - up C onstruction Major R e d eve lopm e nt ▪ F ocus on pro
Slide 8: Development Project Investment Timeline
8 Development Project Investment Timeline ▪ Below is an example of a typical timeline for a typical 72,000 net rentable square feet development project ▪ Key assumptions include: ▪ 9.0 % yield on cost and a 5.5% cap rate at stabilization ▪ JCAP lends 90% of total cost and receives fixed interest rat
Slide 9: Significant Built-in Fair Value Accretion
9 Significant Built - in Fair Value Accretion Source: Company estimates (1) Based on fair value estimates as of 12/31/2017 and closings as of 3/30/2018. All amounts less Highland’s 25% share of book value accretion. Values are before consideration of changes in capital sources and the impact of futu
Slide 10: Value Accretion Sensitivities
10 Value Accretion Sensitivities (1) Closed loans as of 3/30/2018 (2) All amounts less Highland’s 25% share of book value accretion ▪ Tables display potential future fair market value (“FMV”) accretion and intrinsic value per common share ▪ Using current fair market value estimates for closed loans
Slide 11: Predictable Dividend That Tracks Value Creation
11 Predictable Dividend That Tracks Value Creation (1) Quarterly diluted net income per common share and diluted adjusted earnings per common share per filings. For the definition of adjusted earnings per share and a reconcili ati on against net loss attributable to common stockholders, see our Annu
Slide 12: Selective Underwriting
12 Selective Underwriting $10.2 billion Investments Reviewed $ 1.3 billion Term Sheets Issued $886 million Signed Term Sheets $819 million (~8% of Evaluated) Closed Investments* Stringent Underwriting Process Based on Management’s Extensive Experience and Successful Track Record Investing in Self -
Slide 13: Consistent Outperformance Relative to Underwriting
13 Austin Orlando 1 Atlanta 1 Atlanta 2 ▪ Faster lease - up – vast majority of projects exceeding occupancy projections ▪ Cost savings from faster lease - up Consistent Outperformance Relative to Underwriting (1) Months open and physical occupancy as of 3/25/18 (2) Orlando 1 (51,235 NRSF) was at 86.
Slide 14: Jacksonville, FL – Ground Up Development
14 Jacksonville, FL – Ground Up Development Initial Underwriting Current Expectations Est. Cost to Build $9,029,927 $9,029,927 Development Yield (2) 10.98% 12.58% Length to Stabilization 36 months 36 months Stabilized Cap Rate 5.75% 5.50% Stabilized Value $17,246,654 $ 20,646,708 Profit to Heitman J
Slide 15: Attractive Investment Portfolio
15 Attractive Investment Portfolio % On Balance Sheet / % Joint Venture Status of Development Investments ▪ C/O loan - to - value (“LTV”): 72% ▪ Stabilized LTV: 56% ▪ Development investments currently represent 80% of investment portfolio ▪ ~51% of development investments expecting C/O within the ne
Slide 16: High Quality Self-Storage Properties Located in Attractive Markets
16 High Quality Self - Storage Properties Located in Attractive Markets Notes: Percentages and Company’s market average are weighted based on committed total investment amounts (1) Source: Self - Storage Almanac (2) Other markets include Austin, Baltimore, Charlotte, Chicago , Columbia, Fort Lauderd
Slide 17: Supply / Demand Balance: Top MSAs
17 Supply / Demand Balance: Top 50 MSAs 26 42 53 66 199 254 352 400 - 440 390 - 430 190 - 230 132 134 135 136 138 139 141 142 143 145 - 50 100 150 200 250 300 350 400 450 2011 2012 2013 2014 2015 2016 2017 2018E 2019F 2020F Facility Count Facilities Delivered Generation V Deliveries Needed Source: C
Slide 18: Current Investment Pipeline
18 Current Investment Pipeline Note: Executed term sheets are non - binding and remain subject to entry into definitive agreements (1) As of March 30, 2018 Development Markets Executed Term Sheet Pipeline Executed Term Sheet and Pipeline ▪ E xecuted term sheets for investments in 6 separate self - s
Slide 19: Well-Positioned for Growth Following Record Investment Year
19 $42 $123 $123 $123 $81 $102 $511 $511 $200 - $230 $123 $225 $634 $844 - $874 14 24 56 0 15 30 45 60 75 $0 $200 $400 $600 $800 $1,000 $1,200 2015 2016 2017 2018E # of Investments Total Investments (3) $ Projected $ On Balance Sheet $ Heitman JV Cumulative # $1,743 $6,532 $12,191 $28,380 to $30,100
Slide 20: Bridge Loan Case Study: Miami Portfolio Investment
20 Bridge Loan Case Study: Miami Portfolio Investment Property Summary Investment Summary & Highlights ▪ Bridge financing provided to take out existing construction debt and certain equity capital partners on a portfolio comprised of three operating properties and two properties under construction ▪
Slide 21: Five Wholly-Owned Properties
21 Five Wholly - Owned Properties Summary & Highlights ▪ 100% resulting ownership of one Orlando, one Jacksonville, one Pittsburgh, and two Atlanta facilities ▪ ~ $12 million aggregate purchase price for the developer interests in the five properties ▪ 8%+ estimated weighted average investment yield
Slide 22: Guidance for Q1 2018 and FY 2018
22 Guidance for Q1 2018 and FY 2018 JCAP Guidance for Q1 2018 and FY 2018 ($ in thousands, except per share) Key Assumptions ▪ ~$ 200 to $230 million of new investment commitments during the full - year 2018 ▪ ~$ 300 to $340 million of fundings on closed and projected investment commitments during t
Slide 23: Appendix
23 Appendix
Slide 24: Portfolio Detail
24 Portfolio Detail Note: Represents portfolio as of 12/31/2017 (1) Represents principal balance of loan gross of origination fees (2) Facility had received certificate of occupancy as of 12/31/2017 (3) Facility had achieved at least 40% construction completion but had not received certificate of oc
Slide 25: Portfolio Detail - Continued
25 Portfolio Detail - Continued (1) Note: Represents portfolio as of 12/31/2017 (1) Represents principal balance of loan gross of origination fees (2) These investments contain a higher loan - to - cost ratio and a higher interest rate, some of which interest is payment - in - kind ("PI K") interest
Slide 26: Portfolio Detail - Continued
26 Portfolio Detail - Continued Note: Represents portfolio as of 12/31/2017 (1) Represents principal balance of loan gross of origination fees (2) Facility had received certificate of occupancy as of 12/31/2017 (3) Facility had achieved at least 40% construction completion but had not received certi
Slide 27: Not A Mortgage REIT
27 Not A Mortgage REIT Typical Mortgage REIT ▪ Higher corporate leverage, including leverage of junior debt ▪ No equity participation ▪ Structured finance arbitrage rather than property focus Jernigan Capital ▪ Low corporate leverage ▪ Equity participations that allow investors to participate in pro
Slide 28: Heitman Capital Management Joint Venture Overview
28 Heitman Capital Management Joint Venture Overview ▪ On March 7, 2016, JCAP, through its operating company, entered into a limited liability company agreement to form a real esta te venture (“JV”) partnership with an investment vehicle of Heitman Capital Management for an initial total commitment
Slide 29: Highland Capital Series A Preferred Overview
29 Highland Capital Series A Preferred Overview ▪ On July 27, 2016, JCAP entered into an agreement with NexPoint Advisors, L.P., an affiliate of Highland Capital Management, LP, to issue up to $125 million of Series A Preferred Stock Investor Funds managed by NexPoint Advisors, L.P. Structure of the
Slide 30: Credit Facility Overview
30 Credit Facility Overview Investor KeyBank Capital Markets, Inc. and Raymond James Bank, N.A. Structure of the Investment Senior secured revolving credit facility Investment Size Up to $100 million debt capital, e xpandable up to $200 million with accordion feature, upon satisfaction of certain co
Slide 31: Series B Preferred Stock Overview
31 Series B Preferred Stock Overview ▪ On January 26, 2018, JCAP issued $37.5 million of Series B cumulative redeemable perpetual preferred stock (“Series B Preferred Stock”) through a public offering ▪ On March 29, 2018, JCAP entered into a Distribution Agreement among JCAP, the Operating Company a
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