Jernigan Capital — Investor Presentation (September 2016)
22 slides from Jernigan Capital's investor presentation, Sep 20, 2016
Slide 1: Investor Presentation
1 Investor Presentation Exhibit 99.1
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 Section 21E of the Securities Exchange Act of 1934 and other federal securities laws, including statements r
Slide 3: Company Highlights
3 ▪ Dean Jernigan has 32 years of industry experience with over half as CEO of three public self - storage companies ▪ John Good has 28 years of public company legal experience, including 23 years representing REITs as lead counsel on over 200 equity and debt offerings ▪ Management has invested >$10
Slide 4: Typical Development Investment Structure
4 Typical Development Investment Structure $10 million Development Cost $9 million JCAP Investment (with ROFR) 6 year / 6.9% Interest Rate $1 million Developer Equity $3.15 million Retained B Note 12% - 13% Effective Yield Equity Participation 49.9% Cash flows, Refinancing, and Sale Proceeds $5.85 m
Slide 5: Potential Book Value Accretion
5 Potential Book Value Accretion ▪ Our primary value creation sensitivity is development profit (development yield vs. exit cap rate) ▪ Strong estimated profit potential (9%+ development yield and 5.5% exit cap rate), which may be exceeded based on early experience Note: Assumptions include the foll
Slide 6: Industry Leading Fundamentals
6 Industry Leading Fundamentals NOI Growth Occupancy ▪ Self - storage total returns during the last ten years have been 3 times greater than the RMS ▪ Industry is essentially full ( 91 - 93% occupied) and driving premium (8 - 10%) same store NOI growth ▪ Public REITs have p redominantly avoided deve
Slide 7: Pipeline Overview
7 Pipeline Overview ▪ We maintain a robust $600+ million pipeline of investments, including 95%+ development investments - Currently, we have 15 signed development investment term sheets totaling $146.7 million - Our pipeline contains investments in top 50 markets and is geographically diverse San F
Slide 8: Current Portfolio Overview
8 Development 77.8% Construction (C/O takeout) 15.8% Operating Property 6.4% C/O Achieved 21.5% C/O Expected 2016 10.9% C/O Expected 2017 67.6% Current Portfolio Overview Investments by Geography Investments by Type % Wholly Owned / % Joint Venture (2) Status of Development Investments (3) (1) Other
Slide 9: Underwriting Track Record
9 (1) Days open and occupancy as of September 18, 2016 Underwriting Track Record Tampa, FL Orlando, FL Atlanta, GA Atlanta, GA ▪ Faster lease - up ▪ Higher occupancy and income Consistent outperformance of underwriting Underwritten Origination Location # Days Occupancy After Date (MSA) Date Opened O
Slide 10: Orlando, FL Case Study – Ground Up Development
10 Orlando, FL Case Study – Ground Up Development Initial Underwriting Current Expectations Approximate Cost to Build $5,925,000 $5,969,198 Development Yield 9.2% 12.0% Length of Construction 14 months 12 months Length of Lease Up 36 months 30 months C/O Value $6,407,848 $10,025,043 Stabilized Cap R
Slide 11: Atlanta, GA Case Study – Conversion of Industrial Warehouse
11 Atlanta, GA Case Study – Conversion of Industrial Warehouse Initial Underwriting Current Expectations Approximate Cost to Build $6,722,222 $6,722,222 Development Yield 9.5% 12.2% Length of Construction 14 months 11 months Length of Lease Up 36 months 30 months C/O Value $7,510,935 $11,683,825 Sta
Slide 12: JCAP Investment Thesis
12 JCAP Investment Thesis Excellent Self - Storage Industry Fundamentals Strong Development Profits Fully Funded Accretive Growth Attractive Opportunity for JCAP
Slide 13: Appendix
13 Appendix
Slide 14: Current Portfolio Detail
14 Current Portfolio Detail $ in 000s (1) Excludes Sacramento loan repaid in May 2016 Drawn Closing Date Location (MSA) Investment Type Status 6/30/2016 Size REIT Level 4/21/2015 Orlando Development C/O achieved May 2016 $5,137 $5,372 6/10/2015 Atlanta Development C/O achieved May 2016 7,015 8,132 6
Slide 15: Value Creation from Recent Capital Initiatives
15 Value Creation from Recent Capital Initiatives Estimated Book Value per Share at Year - End 2019: $ 26.50 - $29.00 Note: $ in 000s except per share values (1) Assuming 9.00% - 9.50% development yield and 5.25% - 5.75% exit cap (2) After participating dividend to Highland Capital (3) Including amo
Slide 16: Selective Underwriting
16 Selective Underwriting $4.9 billion Investments reviewed $417 million Term sheets issued $385 million Signed Term Sheets $233.5 million (~5% of evaluated) Closed Investments Jernigan Capital uses a stringent underwriting process based on management’s extensive experience and successful track reco
Slide 17: Development Investment Opportunity
17 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 As % of Existing Supply New Square Footage (000s) New Square Footage Completions As a % of existing supply Development Investment Oppo
Slide 18: Experienced Management Team
18 2006 - 2013: CEO of CubeSmart 1995 - 2002: Member of NAREIT’s Board of Governors Experienced Management Team Key Members Background Dean Jernigan President and Chief Executive Officer ▪ 32 years of experience ▪ CEO of CubeSmart from 2006 to 2013 ▪ Chairman and CEO of Storage USA from 1984 to 2002
Slide 19: Underwriting Timeline
19 Underwriting Timeline Prospect to Closed Investment 4 months Facility Construction ($10 million total cost) 14 months Lease - up period 2.5 years Certificate of Occupancy (~$14.5 million estimated value) Investment Origination Stabilization (~$17 million estimated value) Construction Start Stabil
Slide 20: We Are Not A Typical Mortgage REIT
20 We Are 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 par
Slide 21: Conservative Underwriting and Expert Processing/Servicing
21 ▪ Underwriting performed by management team with many years of experience ▪ Significant operating and interest reserves built into each project ▪ Developer equity funded up front ▪ Significant input from third party managers on unit mix and projected operating results ▪ Conservative lease - up pr
Slide 22: Impressive Results Since IPO
22 Impressive Results Since IPO Key Metrics Considered at IPO Current Market Conditions Actual Results Better Than IPO Expectations Investment Opportunity Pipeline of attractive development investments s ignificantly greater than anticipated at IPO x Development Yields Higher than underwritten, with
Jernigan Capital — Investor Presentation (September 2016) on 6ix