Jernigan Capital — Investor Presentation (November 2017)
30 slides from Jernigan Capital's investor presentation, Nov 13, 2017
Slide 1: Investor Presentation November 2017
1 Investor Presentation November 2017
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, including statements re
Slide 3: Company overview and mission
3 March 2017 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 highes
Slide 4: Investment Highlights
4 ▪ $700+ million pipeline of development investments in underwriting; $200 to $230 million preliminary guidance for 2018 development investments ▪ Closed $330.3 million of new development investments in 2017 as of November 10, 2017 ▪ Maturing portfolio of developed assets provides near to medium -
Slide 5: Experienced and Aligned Senior Management Team
5 Experienced and Aligned Senior Management Team ~8.5% Management and Board Ownership Creates Significant Alignment of Interests Dean Jernigan Chairman of the Board & Chief Executive Officer John Good President & Chief Operating Officer Kelly Luttrell Senior Vice President & Chief Financial Officer
Slide 6: Attractive Investment Thesis
6 Experienced Senior Management Team with Significant Ownership Significant Identified and Potential Growth Opportunities Compelling Investment Economics Flexible Capital Structure and Attractive Valuation High Quality Platform with Demonstrated Expertise Attractive Investment Thesis High ROI Invest
Slide 7: Development Project Investment Timeline
7 Development Project Investment Timeline Prospect to Closed Investment Facility Construction ($ 10.0 million total cost; $9.0 million JCAP commitment) Lease - up P eriod Certificate of Occupancy (“C/O”) (~$ 12.9 million estimated value r eflected in fair value of investment) Investment Origination
Slide 8: Significant Built-in Fair Value Accretion
8 Significant Built - in Fair Value Accretion Source: Company estimates (1) Based on fair market value estimates as of 9/30/2017 ▪ As of 11/10/2017, only 15% of estimated fair value accretion has been recognized on $422 million of outstanding, on balance s hee t development property investment commi
Slide 9: Potential FMV Accretion
9 Potential FMV Accretion (1) Assumptions include the following: - Capital available includes $55 million cash, $115 million Highland preferred and $200 million LOC - ~$220 million of available capital used to fund remaining cash portion of closed investments and ~$140 million remaining capi tal use
Slide 10: Predictable Dividend That Tracks Value Creation
10 Predictable Dividend That Tracks Value Creation (1) Quarterly diluted net income per common share per filings ▪ Stable quarterly dividend of $0.35 per share vs. lumpy dividend dependent on cash sales of financial development projects sup por ts ROFR exercises / equity buyouts and long - term valu
Slide 11: Selective Underwriting
11 Selective Underwriting $9.1 billion Investments Reviewed $1.1 billion Term Sheets Issued $821 million Signed Term Sheets $623 million (~7% of Evaluated) Closed Investments* Stringent Underwriting Process Based on Management’s Extensive Experience and Successful Track Record Investing in Self - St
Slide 12: Attractive Investment Portfolio
12 Attractive Investment Portfolio % Wholly - Owned / % Joint Venture Status of Development Investments (3) ▪ Development investments: C/O LTV 69%, Stabilized LTV 54% ▪ Development investments currently represent 96% of investment portfolio ▪ Wholly - owned portfolio will continue to grow as the Hei
Slide 13: High Quality Self-Storage Properties in Attractive Markets
13 High Quality Self - Storage Properties Located in Attractive Markets Geographic Diversification Notes: Percentages and Company’s market average are weighted based on committed total investment amounts (1) Other markets include Austin, Chicago, Columbia, Houston , Louisville , Milwaukee, New Haven
Slide 14: Consistent Outperformance Relative to Underwriting
14 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 11/9/17 (2) Orlando 1 (51,235 NRSF) was at 86.
Slide 15: Jacksonville, FL Ground Up Development
15 Jacksonville, FL – Ground Up Development Initial Underwriting Current Expectations Est. Cost to Build $9,029,927 $9,029,927 Development Yield 10.98% 12.58% Length to Stabilization 36 months 36 months C/O Value $13,678,381 $16,228,888 Stabilized Cap Rate 5.75% 5.50% Stabilized Value $17,246,654 $2
Slide 16: Current Investment Pipeline
16 Current Investment Pipeline Note: Executed term sheets are non - binding and remain subject to entry into definitive agreements Atlanta Denver Boston Miami New Orleans New York City Orlando Seattle Los Angeles Richmond Tampa / St . Petersburg Development Markets Executed Term Sheet Pipeline Execu
Slide 17: Recent Investments
17 Recent Investments Closed Investments Since September 30, 2017 Fort Lauderdale 2 ▪ $ 9.4 million investment in Oakland Park/North Fort Lauderdale, Florida in October 2017 ▪ Five - story, climate controlled facility with approximately 58,000 net rentable square feet (“NRSF”) ▪ Ground - up project
Slide 18: Orlando, FL Acquisition Case Study
18 Orlando, FL Acquisition Case Study Investment Highlights ▪ Multi - story climate controlled, non climate, and covered RV space facility totaling 93,965 NRSF ▪ Phase 1 of facility received C/O in May 2016; P hase 2 received C/O in June 2017 ▪ Although facility opened in two stages; current occupan
Slide 19: Recent Financial Highlights
19 Recent Financial Highlights ▪ Reported Q3 2017 EPS of $0.29 per share and Adjusted EPS of $0.35 per share ▪ Closed on $330.3 million of new development investments with profits interests comprising 26 projects between January 1, 2017 and November 10, 2017; updated full - year 2017 projected closi
Slide 20: Appendix
20 Appendix
Slide 21: Portfolio Detail
21 Portfolio Detail Note: Represents portfolio as of 9 /30/2017 (1) Represents principal balance of loan gross of origination fees (2) Facility had achieved at least 40% construction completion but had not received certificate of occupancy as of 9/30/2017 (3) Estimated C/O dates represent the Compan
Slide 22: Portfolio Detail - Continued
22 Portfolio Detail - Continued (1) Note: Represents portfolio as of 9/30/2017 (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 23: Portfolio Detail - Continued
23 Portfolio Detail - Continued Note: Represents portfolio as of 9/30/2017 (1) Represents principal balance of loan gross of origination fees (2) Total represents portfolio as of 9/30/17 plus investments closed from 10/1/2017 - 11/10/2017 (3) Estimated C/O dates represent the Company’s best estimate
Slide 24: Not A Typical Mortgage REIT
24 Not A Typical 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 participat
Slide 25: High ROI Business Model Executed in Top Self-Storage Markets
25 ▪ Primary focus on programmatic self - storage development in top - tier markets ▪ Seek experienced developers looking for a reliable and fair capital partner – High character, financial stability and proven track record for picking great sites – Known to JCAP management – Loyalty High ROI Busine
Slide 26: Conservative Underwriting, Expert Processing / Servicing
26 Conservative Underwriting, Expert Processing / Servicing ▪ Underwriting performed by management team with many years of experience using data - driven, submarket focused approach ▪ Significant operating and interest reserves built into each project and portion of developer fee deferred ▪ Signific
Slide 27: Business Plan and Investments Even More Attractive Than at IPO
27 Business Plan and Investments are Even More Attractive Today than at the Time of IPO Impressive Results Since IPO Key Metrics Considered at IPO Current Market Conditions Investment Opportunity Pipeline of attractive development investments s ignificantly greater than anticipated at IPO Developmen
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 estate venture (“JV”) partnership with an investment vehicle of Heitman Capital Management for an initial total commitment b
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
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