Jernigan Capital — Investor Presentation (September 2018)
38 slides from Jernigan Capital's investor presentation, Sep 4, 2018
Slide 1: September 2018 Investor Presentation
September 2018 Investor Presentation INVESTOR PRESENTATION JERNIGAN CAPITAL 6410 Poplar Ave, Suite 650 Memphis, TN 38119
Slide 2: Safe Harbor Disclosure Regarding Forward-Looking Statements
September 2018 Investor Presentation SAFE HARBOR DISCLOSURE REGARDING FORWARD - LOOKING STATEMENTS This presentation includes "forward - looking statements" within the meaning of Section 27 A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934 and other federal secu
Slide 3: Introduction: Our Mission
September 2018 Investor Presentation INTRODUCTION September 2018 Investor Presentation OUR MISSION OUR TICKER SYMBOL Jernigan Capital provides debt and equity capital to private developers, owners and operators of self - storage facilities with a view to eventual outright ownership of facilities we
Slide 4: Significant Growth Opportunities and Compelling Investment Economics
September 2018 Investor Presentation ▪ $ 405 + million pipeline of investments in underwriting; $200 to $230 million new investments estimated for 2018 ▪ 2018 to date: ~$175 million loan commitments closed and additional $9 million invested in developer buyouts ▪ Additional earnings and balance shee
Slide 5: Experienced and Aligned Senior Management Team
September 2018 Investor Presentation EXPERIENCED AND ALIGNED SENIOR MANAGEMENT TEAM ~8.0% Management and Board Ownership Creates Significant Alignment of Interests ~8.0% MANAGEMENT AND BOARD OWNERSHIP CREATES SIGNIFICANT ALIGNMENT OF INTERESTS ▪ 32 + years in the self - storage industry ▪ Invested o
Slide 6: JCAP's Competitive Advantage
September 2018 Investor Presentation JCAP’S COMPETITIVE ADVANTAGE ACCESSIBLE JCAP CAPITAL vs. COMMERICAL BANKS’ RETREAT FROM SELF - STORAGE CONSTRUCTION LENDING ▪ Continued post - recession hangover of commercial banks diminishes appetite for self - storage construction loans ▪ Regulatory hurdles di
Slide 7: High ROI Business Model Executed in Top Self-Storage Markets
September 2018 Investor Presentation HIGH ROI BUSINESS MODEL EXECUTED IN TOP SELF - STORAGE MARKETS ATTRACTIVE RISK - ADJUSTED RETURNS THROUGH EQUITY PARTICIPATION DEVE L OP M ENT INVESTMENTS G r ound - up C onstruction | Major R e d eve lopm e nt ▪ Focus on programmatic self - storage development o
Slide 8: Development Project Investment Timeline
September 2018 Investor Presentation DEVELOPMENT PROJECT INVESTMENT TIMELINE (1) Projected IRR range assumes the following: 3 to 4 year lease - up period, a 9.0% development yield, a 5.5% exit cap rate and a sale at stabilization. | (2) Value at construction completion estimate based on a 150bp spre
Slide 9: Significant Unlocked Share Value in Fair Value Accretion
September 2018 Investor Presentation SIGNIFICANT UNLOCKED SHARE VALUE IN FAIR VALUE ACCRETION Source: Company estimates. | (1) Based on common shares outstanding and fair value estimates as of 6/30/2018 and closings as of 8/29/2018 . 2018 projected capital commitments per the midpoint of the Company
Slide 10: Value Accretion Sensitivities
September 2018 Investor Presentation Exit Cap Rate Development Yield $8.31 8.0% 8.5% 9.0% 9.5% 10.0% 10.5% 11.0% 5.00% $8.88 $9.86 $10.73 $11.51 $12.21 $12.85 $13.42 5.25% $7.61 $8.59 $9.46 $10.24 $10.94 $11.58 $12.15 5.50% $6.45 $7.43 $8.31 $9.09 $9.79 $10.42 $11.00 5.75% $5.40 $6.38 $7.25 $8.03 $8
Slide 11: Predictable Dividend That Tracks Value Creation
September 2018 Investor Presentation 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 adjuste d e arnings per share and a reconciliation against net loss attributable to
Slide 12: Selective Underwriting
September 2018 Investor Presentation SELECTIVE UNDERWRITING (1) Represents closed loan commitments and wholly - owned property investments as of 8/29/18 , including closed investments that have been repaid. STRINGENT UNDERWRITING PROCESS BASED ON MANAGEMENT’S EXTENSIVE EXPERIENCE AND SUCCESSFUL TRAC
Slide 13: Underwriting Track Record – Facilities Open >1 Year
September 2018 Investor Presentation UNDERWRITING TRACK RECORD – FACILITIES OPEN >1 YEAR Note: (H) denotes a facility that is part of our Heitman JV . | (1) Months open and physical occupancy as of 8/29/18. | (2) Orlando 1 (51,235 NRSF) was at 86.2% physical occupancy on 7/18/17. On 7/19/17 a 42,730
Slide 14: Underwriting Track Record – Facilities Open <1 Year
September 2018 Investor Presentation UNDERWRITING TRACK RECORD – FACILITIES OPEN <1 YEAR Note : (H ) denotes a facility that is part of our Heitman JV . | (1) Months open and physical occupancy as of 8/29/18. COMMITMENT DATE MSA DATE OPENED MONTHS OPEN (1) CURRENT PHYSICAL OCCUPANCY (1) VS. UW OCCUP
Slide 15: Attractive Investment Portfolio
September 2018 Investor Presentation ATTRACTIVE INVESTMENT PORTFOLIO $ 835 MILLION COMMITTED (1) / 70 INVESTMENTS (1) INVESTMENTS BY TYPE (2) % ON BALANCE SHEET / % JOINT VENTURE STATUS OF DEVELOPMENT INVESTMENTS ▪ Open and Operating LTV: 72% ▪ Stabilized LTV: 56% ▪ Development investments currently
Slide 16: High Quality Self-Storage Properties in Attractive Markets
September 2018 Investor Presentation HIGH QUALITY SELF - STORAGE PROPERTIES LOCATED IN ATTRACTIVE MARKETS Note: Percentages and Company’s market average are weighted based on committed total investment amounts. | (1) Source: Census Bureau. | (2) Other markets include Austin, Baltimore, Charlotte, Ch
Slide 17: Current Portfolio and Investment Pipeline
September 2018 Investor Presentation 17 CURRENT PORTFOLIO AND INVESTMENT PIPELINE Note: As of 8/29/2018. Boston Los Angeles Development Markets Existing Markets Existing Markets & Pipeline Pipeline Washington, DC Kansas City New Haven - Bridgeport Seattle New York City – Northern NJ Philadelphia Tam
Slide 18: Business Model Proven from Origination to Acquisition
September 2018 Investor Presentation BUSINESS MODEL PROVEN FROM ORIGINATION TO ACQUISITION (1) F unded principal balance of the loan (net of unamortized origination fees ) as of the date of acquisition. | (2) Represents cash consideration (inclusive of transaction costs), assumed liabilities, and ne
Slide 19: Five Wholly-Owned Properties
September 2018 Investor Presentation FIVE WHOLLY - OWNED PROPERTIES (1) Based on aggregate estimated stabilized NOI of ~$4.1 million and the Company’s aggregate $ 47.6 million cash investment in the five properties, which includes the sum of the funded principal balance of the loan (net of un amo rt
Slide 20: Bridge Recapitalization
September 2018 Investor Presentation BRIDGE RECAPITALIZATION (1) The two projects under construction will each also pay a $1 million preferred return to the developer after payment to JCAP of th e P IK interest and before the 49.9% profits interest split. | (2) Physical occupancy as of 8/29/2018 . I
Slide 21: Supply / Demand Balance: Top MSAs
September 2018 Investor Presentation SUPPLY / DEMAND BALANCE: TOP 50 MSAs Source: Census Bureau and Yardi ® Matrix as of August 2018. | Note : Average Facility Size 75,000 NRSF, expansions excluded. 26 42 53 66 199 254 352 450 - 500 270 - 320 190 - 230 200 200 200 200 200 200 200 200 200 200 - 100 2
Slide 22: Well-Positioned for Growth Following Record Investment Year
September 2018 Investor Presentation WELL - POSITIONED FOR GROWTH FOLLOWING RECORD INVESTMENT YEAR ▪ Top - line growth driven by 32 new investments in 2017, more than doubling JCAP’s portfolio of high - quality self - storage investmen ts ▪ Continued availability of high - returning development oppo
Slide 23: JCAP Capital Sources and Investment Uses
September 2018 Investor Presentation JCAP CAPITAL SOURCES AND INVESTMENT USES (1) Does not include financing spend, positive operating cash flow or any additional purchases of developers’ interest. | ( 2) 2018 projected capital commitments per the midpoint of the Company’s 2018 guidance range . ▪ $3
Slide 24: Recent Developments
September 2018 Investor Presentation 24 RECENT DEVELOPMENTS ▪ On August 17, 2018, JCAP obtained term loans in the aggregate principal amount of $24.9 million from one of its credit facili ty participating banks, which loans are secured by three of the Company's wholly - owned self - storage faciliti
Slide 25: Contact Jernigan Capital
September 2018 Investor Presentation CONTACT JERNIGAN CAPITAL JERNIGAN CAPITAL, INC [email protected] 6410 Poplar Ave, Suite 650 Memphis, TN 38119 www.jernigancapital.com September 2018 Investor Presentation 25
Slide 26: Appendix
September 2018 Investor Presentation APPENDIX
Slide 27: Portfolio Detail
September 2018 Investor Presentation Current Portfolio $ in 000s Fair Value Date Acquired Location (MSA) Investment Type Date Opened Cash Investment (1) Recognized Through Date Acquired Gross Basis (2) Projected Stabilized NOI (3) REIT Level Investments - as of 6/30/2018 8/9/2017 Orlando 1/2 Wholly-
Slide 28: Portfolio Detail - Continued
September 2018 Investor Presentation PORTFOLIO DETAIL - CONTINUED September 2018 Investor Presentation 28 Current Portfolio $ in 000s Remaining Unfunded Closing Date Location (MSA) Investment Type Status (4) Commitment Funded Investment (1) Commitment Fair Value REIT Level Investments - as of 6/30/2
Slide 29: Portfolio Detail - Continued
September 2018 Investor Presentation PORTFOLIO DETAIL - CONTINUED September 2018 Investor Presentation 29 Note: Represents portfolio as of 6/30/2018. | (1) Represents principal balance of loan gross of origination fees. | (2) C ons truction at the facility was substantially complete and/or certifica
Slide 30: Portfolio Detail - Continued
September 2018 Investor Presentation PORTFOLIO DETAIL - CONTINUED September 2018 Investor Presentation 30 Current Portfolio $ in 000s Remaining Unfunded Closing Date Location (MSA) Investment Type Status (4) Commitment Funded Investment (1) Commitment Fair Value REIT Level Investments - as of 6/30/2
Slide 31: Portfolio Detail - Continued
September 2018 Investor Presentation PORTFOLIO DETAIL - CONTINUED September 2018 Investor Presentation Note: Represents portfolio as of 6/30/2018. | (1) Represents principal balance of loan gross of origination fees. | (2) Construction at the facility was substantially complete and/or certificate of
Slide 32: JCAP Is an Equity REIT, Not a Mortgage REIT
September 2018 Investor Presentation JCAP IS AN EQUITY REIT, NOT A MORTGAGE REIT September 2018 Investor Presentation TYPICAL MORTGAGE REIT ▪ Higher corporate leverage, including leverage of junior debt ▪ No equity participation ▪ Structured finance arbitrage rather than property focus ▪ Communicati
Slide 33: Heitman Capital Management Joint Venture Overview
September 2018 Investor Presentation HEITMAN CAPITAL MANAGEMENT JOINT VENTURE OVERVIEW September 2018 Investor Presentation HEITMAN JOINT VENTURE IS FULLY COMMITTED JV Partner Heitman Capital Management LLC Initial Investment Structure 90% Heitman / 10% JCAP Maximum and Current JV Commitment $123.3
Slide 34: Highland Capital Series A Preferred Overview
September 2018 Investor Presentation HIGHLAND CAPITAL SERIES A PREFERRED OVERVIEW September 2018 Investor Presentation Investor Funds managed by NexPoint Advisors, L.P. Structure of the Investment Series A Preferred Stock Investment Size Up to $125 million of equity capital through September 2018 Cu
Slide 35: Credit Facility Overview
September 2018 Investor Presentation CREDIT FACILITY OVERVIEW September 2018 Investor Presentation Lead Lenders / Arrangers 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,
Slide 36: Term Loans Overview
September 2018 Investor Presentation TERM LOANS OVERVIEW September 2018 Investor Presentation Lender FirstBank Structure of the Investment Secured by first mortgages on three of JCAP’s wholly - owned self - storage facilities Investment Size $24.9 million Term Three years, expiring August 1, 2021 Co
Slide 37: Series B Preferred Stock Overview
September 2018 Investor Presentation SERIES B PREFERRED STOCK OVERVIEW September 2018 Investor Presentation NYSE Symbol JCAP - PB Structure of the Investment Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share with a liquidation preference of $25.00 per share; current
Slide 38: June 2018 Follow-On Offering
September 2018 Investor Presentation JUNE 2018 FOLLOW - ON OFFERING September 2018 Investor Presentation Structure of the Investment Common shares of $18.50 per share; current market price of $19.89 per share Offering Size $81.3 million ne t proceeds or 4,600,000 shares Use of Proceeds To pay down o
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