Kuwait Financial Centre KPSC · KSE:MARKAZ
Kuwait Financial Centre KPSC — Markaz U.S. Multifamily Fund IV — Investor Presentation (December 2007)
49 slides from Kuwait Financial Centre KPSC's investor presentation, December 2007
Slide 1: US$67.2 million Offering in Markaz U.S. Multifamily Fund IV
US $ 67.2 million Offering to Participate in the Investment in Markaz U.S. Multifamily Fund IV Investor Presentation December 2007 Asset Management | Investment Banking Centred around your success
Slide 2: Disclaimer
Disclaimer The information in this document is in draft form and is subject to updating, completion, revision, verification and amendment. Recipients of this document who intend to subscribe for Units following publication of the final document relating to the Fund are reminded that any issue will b
Slide 3: The Fund
The Fund US$ 67.2 Million Offering in M k U.S. Markaz U S Multifamily M ltif il Fund F d IV Investment Period of 5 years, extendable by 4 additional one-year periods Minimum Subscription: S b 10 0 units Class A Units Class B Units Price per Unit US$ 13,200 per Unit US$ 11,200 per Unit Annual Cash Yi
Slide 4: Outline
OUTLINE Investment Highlights Investment Overview Portfolio Overview Management Summary A Appendices di 4
Slide 5: Investment Highlights
Investment Highlights js,—_____4]l | MARKAZ|
Slide 6: Investment Highlights
Investment Highlights The Offering: Markaz U.S. Multifamily Fund IV (the “Fund”) seeks to raise US$ 67.2 million to selectively invest in the development of apartment properties in the US. The investments will be made in a manner consistent with the principles of Islamic Shari’ah. The Objective: The
Slide 7: Investment Overview
Investment Overview js,—____]l | MARKAZ|
Slide 8: Investment Overview: The Opportunity
Investment Overview The Opportunity Real Estate Fundamentals Capital Market Environment Real estate fundamentals support the multi-family sector: Capital markets support the development and subsequent sale of The sector is poised for substantial NOI growth. apartment properties: Yield arbitrage betw
Slide 9: Real Estate Fundamentals: High House Prices and Mortgage Crisis
Balance tilting towards renting Investment Overview due to affordability and sub- The Opportunity: Real Estate Fundamentals Fundamentals… prime woes… p High House Prices and Mortgage Crisis • Choices for households: (a) Purchase homes; • The on-going sub-prime mortgage crisis and rising or (b) Rent
Slide 10: Demographics, Immigration and Employment
… Rental pool also expands due Investment Overview to demographics, immigration The Opportunity: Real Estate Fundamentals Fundamentals… and employment… p y Demographics, Immigration and Employment • 20 – 29 age group displays low home • Immigration is expected to further increase ownership rates (33
Slide 11: Declining Vacancy Rates and Solid Rent Growth
… Resulting in sustained rent Investment Overview growth and occupancy gains. The Opportunity: Real Estate Fundamentals Fundamentals… Results: Declining Vacancy Rates and Solid Rent Growth • Nationwide apartment vacancy rates have declined and rents have risen: Multifamily Rent Growth and Vacancy Ra
Slide 12: Capital Market Environment: Yield Arbitrage
… Yield arbitrage. Investment Overview The Opportunity: Capital Market Environment Environment… Strong investor activity and competitive bidding Capital markets have driven valuations higher. It is for apartment properties: now substantially cheaper to develop apartment • In 2006, total sales volume
Slide 13: Investment Objectives and Investment Guidelines
Investment Overview Investment Objectives and Investment Guidelines Investment Objective The Fund’s objective is to capitalize on the market risk premium assigned to new construction investments versus those in completed, occupied assets. The Fund will attempt to capture the yield arbitrage between
Slide 14: Investment Process
Investment Overview Investment Process Investment Boston Capital will identify investment opportunities. In doing so, Boston Capital will S l ti Selection leverage its relationships with developers, brokers and other market participants. Investment The Fund Manager will analyze investment opportunit
Slide 15: Portfolio Overview
Portfolio Overview js,—___4]l | MARKAZ|
Slide 16: Portfolio Overview
Portfolio Overview The Fund is expected to be approximately 50% invested in high quality transactions at closing. Two Seed Transactions: The Fund has already invested US$ 22.2 million (37% of its anticipated investment amount) in two seed transactions involving the construction of 584 units: • Beaum
Slide 17: Seed Transaction: Beaumont Apartments
Portfolio Overview Seed Transaction: Beaumont Apartments High Barrier Market with Sound Fundamentals 17 Source: Google Earth
Slide 18: Seed Transaction: Beaumont Apartments
Portfolio Overview Seed Transaction: Beaumont Apartments The Project: Summary Statistics: • A 344-unit Class A apartment development • Build Rate : 7.58% located in Woodinville, Washington, 14 miles • Current Market Cap Rate : 5.50% northeast of downtown Seattle. • Expected Sale Cap Rate : 6.00% • T
Slide 19: Seed Transaction: Alta Ravenwood
Portfolio Overview Seed Transaction: Alta Ravenwood Very High Growth Market 19 Source: Google Earth
Slide 20: Seed Transaction: Alta Ravenwood
Portfolio Overview Seed Transaction: Alta Ravenwood The Project: Summary Statistics: • A 240-unit Class A apartment development • Build Rate : 7.36% located in Tempe, Arizona, 10 miles northwest of • Current Market Cap Rate : 5.30% downtown Phoenix. • Expected Sale Cap Rate : 5.70% • The Project wil
Slide 21: Strong Pipeline
Portfolio Overview Strong Pipeline The Fund is currently examining numerous development opportunities which may turn into potential investments by the Fund: • Denver, Colorado [Currently under due diligence] 212 unit Class A development located in Denver Expected spread between build rates and c
Slide 22: Management
Management js,—___4]l | MARKAZ|
Slide 23: Management: Markaz Overview
Our experience in the US includes over US$ Management: Markaz 725 million in transactions spanning Overview developments p and acquisitions q across all asset classes… Markaz has been active in the US real estate market since 1978; Since 1988, we have been operating through our fully owned subsidiar
Slide 24: Markaz Location
… We have been consistent in our investment Management: Markaz philosophy: focusing not only on location… Location Markaz has executed real estate transactions across 17 states: Arizona New York Locations of Projects California Ohio Florida Oregon G Georgia i S th Carolina South C li Illinois Tennes
Slide 25: Market Timing
… but also on timing the market… Management: Markaz Market Timing Our strategy is focused on timing the market: • We develop p when the spreads between cap Timing the Market rates and 10-year treasury 6% Focused on Focused on Focus is on asury rates are low; development & acquisitions and disposals
Slide 26: Sector Selection
… and on carefully selecting sectors… Management: Markaz Sector Selection Our strategy is focused on carefully selecting sectors: • We identify sectors based on the prevailing real estate fundamentals and capital market conditions; • In the past, we’ve been able to identify in advance and invest in
Slide 27: Returns
… which has translated into consistent Management: Markaz returns and preservation of capital… Returns Throughout our history, we have consistently delivered high returns across real estate sectors: Returns delivered on sample transactions Project Name Type Location Cost Initiated Ended IRR 1 Corban
Slide 28: Markaz Middle East
… And we can leverage our capabilities Management: Markaz developed in the Middle East… Middle East Markaz started its real estate activity in Kuwait in 1998 with the launch of Markaz Real Estate Advisory Services: • The service consisted initially of advising our clients on issues related to real e
Slide 29: The Team
… and the experience of our team members. Management: Markaz The Team Ali H. Khalil – Executive Vice President, Finance, Markaz Mr. Khalil has over 20 years of extensive experience in Corporate Finance and related services and transaction structuring across various legal jurisdictions including the
Slide 30: The Team
Management: Markaz The Team Sami Shabshab – President, MarGulf Management Mr. Sami Shabshab has been active in the real estate and construction field for 20 years. His experience ranges from structural engineering, general contracting and construction management, to real estate portfolio acquisition
Slide 31: The Team
Management: Markaz The Team Bassam N Al-Othman – Senior Vice President, Real Estate, Markaz Mr. Al-Othman has joined Markaz in January 2005. He has over 20 years of experience in managing and executing government grants and loans for various infrastructure projects in the Middle East, Africa and Asi
Slide 32: The Team
Management: Markaz The Team Ani Soghomonian – Treasurer, MarGulf Management Ms. Ani Soghomonian is the Treasurer of Mar-Gulf Management and responsible for all financial reporting. She is in charge of corporate affairs, preparing financial statements, tax planning and compliance, investor relations
Slide 33: The Team
Management: Markaz The Team Kumar Srinivasan – Vice President, Real Estate, Markaz Mr. Srinivasan received his Bachelors degree in Computer Science and his MBA with specialization in Finance from Poona University, India. After obtaining his MBA in 1994, he worked as an Analyst (Equity Research) for
Slide 34: The Team
Management: Markaz The Team Hadi O. Salame – Assistant Manager, Corporate Finance & Real Estate, Markaz Mr. Salame joined Markaz in July 2001. Since joining Markaz, Mr. Salame has been active in executing a variety of investment banking transactions and, over the last three years, he has focused pri
Slide 35: General Partner: Boston Capital and BCRE Fund IV GP
General Partner Boston Capital and BCRE Fund IV GP
Slide 36: Boston Capital and BCRE Fund IV GP Overview
Management: Boston Capital and BCRE Fund IV GP Overview Founded in 1974 by Jack Manning and Herb Collins, Boston Capital offers a comprehensive range of services including tax credit and REIT investments, equity for market rate multifamily housing development, and equity and debt for affordable mult
Slide 37: Boston Capital and BCRE Fund IV GP Track Record
Management: Boston Capital and BCRE Fund IV GP Track Record Hypothetical Gross Hypothetical Gross Hypothetical Net Hypothetical Net Investment (Development Deals Only) Gross IRR (1) Gross Multiple (1) IRR (2) Multiple (2) IRR (3) Multiple (3) Realized Villas at Galleria, L.P. Tranche A 21.5% 1.56x 2
Slide 38: The Team
Management: Boston Capital and BCRE Fund IV GP The Team Mark W. Dunne – Senior Vice President, Managing Director of Boston Capital Real Estate Partners Mr. Dunne oversees Boston Capital's market rate housing initiatives and is responsible for developing the group's investment strategy. Mr. Dunne and
Slide 39: The Team
Management: Boston Capital and BCRE Fund IV GP The Team Ted Trivers – Senior Vice President, Director of Underwriting Mr. Trivers is responsible for the underwriting and coordination of due diligence of all BCRE investments. From 1993 to 2006, Mr. Trivers served as the Director of Due Diligence and
Slide 40: The Team
Management: Boston Capital and BCRE Fund IV GP The Team Richard D. Mazzocchi – Vice President, Acquisitions Mr. Mazzocchi is responsible for evaluating, negotiating and closing the acquisition and development of new and existing multifamily properties for BCRE. Mr. Mazzocchi concentrates on identify
Slide 41: The Team
Management: Boston Capital and BCRE Fund IV GP The Team Dan Hartley – Vice President, Acquisitions Mr. Hartley serves as an Assistant Vice President for BCRE and is responsible for evaluating potential property investments, negotiating purchase/investment terms, coordinating and conducting due dilig
Slide 42: The Team
Management: Boston Capital and BCRE Fund IV GP The Team Stephen P. Rourke – Assistant Vice President Mr. Rourke is responsible for analyzing, underwriting and presenting potential multifamily development and acquisition opportunities for investment purposes, as well as assisting in the closing and a
Slide 43: Summary
Summary js,—____4l | MARKAZ|
Slide 44: Summary: Why Invest?
Summary Why Invest? Improving multifamily fundamentals: • Supported by low affordability, mortgage crisis, favorable demographics and employment growth; and • Positive excess spread (arbitrage) between build rates and cap rates. Strong development pipeline and quality seeded assets; Track record: •
Slide 45: Appendices
Appendices js,—____4l | MARKAZ|
Slide 46: Appendix A: Why Real Estate?
Appendix A: Why Real Estate? Investing in Real Estate: Superior Risk-Adjusted Risk Adjusted Returns and Diversification On a risk adjusted basis, the Real Estate sector has Cumulative Returns of Asset Classes 450 NAREIT outperformed the major equity and bond indices: 400 NCREIF • Over the past 10 ye
Slide 47: Appendix B: Why Multifamily?
Appendix B: Why Multifamily? Investing in Multifamily Real Estate: Attractive Investment Attributes Multifamily has historically delivered higher returns and greater stability among the real estate asset classes. NCREIF INDICES ALL MULTIFAMILY INDUSTRIAL OFFICE RETAIL 20-Year History Average Returns
Slide 48: Appendix C: Multifamily Returns vs GDP Growth
Appendix C: Multifamily Returns vs GDP Growth? Low Correlation with GDP Growth Multifamily returns have historically exhibited very low correlations with GDP growth: over the past 15 years the correlation has been less than 0.14; Furthermore, the Fund will continue to invest in opportunities that ar
Slide 49: Kuwait Financial Centre S.A.K. "Markaz"
Kuwait Financial Centre S.A.K. "Markaz" P.O. Box 23444, Safat 13095 State of Kuwait Tel: +965 224 8000 Fax: +965 241 4499 Email: [email protected] markaz.com
Markaz U.S. Multifamily Fund IV — Investor Presentation (December 2007) on 6ix