MANAGEMENT PRESENTATION Canada’s only publicly traded vehicle which offers investors exclusive exposure to U.S. Multi ‐ family real estate assets. NOVEMBER 2012
FORWARD LOOKING STATEMENTS Forward looking statements are included in this Presentation, which involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. These forward looking statements are identified by the use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms and phrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. These statements reflect current expectations of management regarding future events and operating performance as of the date of this Presentation. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements, including, but not limited to, the following factors: financial health of Pure Multi ‐ Family and its related cash flows, competitive and economic environment, seasonality and fluctuations in results, expansion, interest rates and foreign exchange. Cash distributions are not guaranteed and will fluctuate with the performance of Pure Multi ‐ Family, nature of the Units, and the proposed changes to the Canadian federal income tax treatment of income trusts. Although the forward looking statements contained in this Presentation are based upon what Pure Multi ‐ Family’s management believes to be reasonable assumptions, Pure Multi ‐ Family cannot assure investors that actual results will be consistent with these forward looking statements. These forward looking statements reflect management’s current beliefs and are based on information currently available to Pure Multi ‐ Family. They reflect current assumptions regarding future events and operating performance including, without limitation, strong economies in the geographies in which the REIT LP operates, stable interest rates and continued strength in the multi ‐ family real estate sector, and speak only as of the date of this discussion. These forward looking statements are made as of the date of this Presentation and Pure Multi ‐ Family assumes no obligation to update or revise them to reflect new events or circumstances. 1
Dollar Amount References Please note all dollar amounts presented in this document are in U.S. dollars unless otherwise stated. 2
AGENDA 1. OVERVIEW & MANAGEMENT 2. THE MARKET OPPORTUNITY 3. THE INVESTMENT HIGHLIGHTS 4. THE PORTFOLIO 5. SUMMARY 6. CONTACT 7. APPENDIX
MANAGEMENT & EXPERIENCE 1. OVERVIEW 2. SENIOR MANAGEMENT TEAM 3. TRACK RECORD OF CREATING VALUE
OVERVIEW • Pure Multi ‐ Family REIT LP (“Pure Multi”) invests in multi ‐ family real estate properties in primary markets in the United States, with an initial focus on the U.S. Sunbelt. • Since inception, Pure Multi has raised over US$86.3 million in public offerings and has acquired six properties consisting of over 1,908 apartments located in the Dallas ‐ Fort Worth Metroplex area. 5
SENIOR MANAGEMENT TEAM • Pure Multi’s management team , The Sunstone Group, is experienced with a proven track record of value creation. Darren Latoski – Executive Chairman, Director Stephen Evans – Chief Executive Officer, Director 21 years of real estate experience in both Canada • 24 years of real estate experience in both Canada • and the U.S. and the U.S. Co ‐ CEO of Pure Industrial Real Estate Trust, a TSX • Co ‐ CEO of Pure Industrial Real Estate Trust, a TSX • listed industrial REIT (TSX ‐ AAR.UN) listed industrial REIT (TSX ‐ AAR.UN) CEO of WesternOne Equity Income Fund, a TSX • CEO of WesternOne Equity Income Fund, a TSX • listed company (TSX ‐ WEQ.UN) listed company (TSX ‐ WEQ.UN) Samantha Adams – Vice President Scott Shillington, C.A. – Chief Financial Officer • 12 years of real estate experience in 11 years of accounting experience • both Canada and the U.S. Controller of Sunstone Realty Advisors since 2010 • • VP of Sunstone Realty Advisors since 2003 VP of PIRET since 2007 •
TRACK RECORD OF CREATING VALUE The Sunstone Group • Created 11 opportunity funds since 2003 • Consistently raised capital regardless of economic conditions • Initial 2 Canadian funds (launched in 2004) have generated 18% and 36% annualised returns • The 4 US funds have raised US$137 million in equity and have acquired 12 US properties including 9 multi ‐ family apartment communities for over US$288 million • Created in 2012 • Raised US$86.3 million and acquired 6 apartment communities in the Dallas Metroplex to date for over $171 million SUNSTONE & PURE MULTI ACQUISITIONS BY GEOGRAPHY ($MM) 2004 ‐ 2012 $171 CAD CAD CAD Pure CAD CAD Multi PIRET TOTAL RETURNS • Pure Industrial Real Estate Trust (AAR.UN), one of Canada’s largest pure ‐ play publicly traded industrial property REIT, completed its IPO in 2007 and has returned significant value to investors since. 7
THE MARKET OPPORTUNITY 1. HIGH RETURNS FOR MULTI ‐ FAMILY 2. U.S. FINANCIAL CRISIS 3. U.S. ECONOMIC RECOVERY VS. SUNBELT 4. SUNBELT LEADING THE RECOVERY 5. IMPACT ON SUNBELT MULTI ‐ FAMILY 6. THE CANADIAN ADVANTAGE
HIGH RETURNS FOR MULTI-FAMILY U.S. Returns by Real Estate Class (1992 – 2011) • U.S. multi ‐ family real estate has generated strong investor returns Strong Multi ‐ Family returns All Asset over the last 20 years driven by: Classes = 9.7% 9.7% • Diverse income streams 8.4% 8.7% 8.7% 8.1% • Low operating costs • Manageable capital expenditure requirements • Favorable debt financing terms Multi-Family Hotel Retail Industrial Office Source: NCREIF, represents average annualized returns. 9
US FINANCIAL CRISIS HAMPERS SUPPLY OF NEW APARTMENTS • The recent financial crisis has resulted in a significant reduction in the construction of new homes, including multi ‐ family properties • Pure Multi ‐ Family believes that the lack of new supply should increase demand for existing rental properties and result in continued occupancy and rental rate increases • Authorized building permits for multi ‐ family residential properties in the “Sunbelt” regions have steadily declined since 2006 Multi ‐ Family Units by Authorized Building Permits ‐ Sunbelt 200,000 30.0% Decreasing number of building permits "Sunbelt" as a % of Total Authorized Multi- 23.8% Total "Sunbelt" Multi-Family Units 22.8% 160,000 20.5% Family Units in the U.S. 19.6% 20.0% 17.5% 17.0% Authorized 120,000 99,421 94,439 75,086 80,000 10.0% 40,803 40,000 26,671 24,792 0 0.0% 2006 2007 2008 2009 2010 2011 Source: Bureau of Economic Analysis- Sunbelt includes: TX, AZ, NV, GA. 10
U.S. ECONOMIC RECOVERY VS. SUNBELT • Since 2009, the economic recovery is much more evident in the Sunbelt region U.S. Real GDP Growth “Sunbelt” Real GDP Growth Rate Increasing US GDP trend Increasing US Sunbelt GDP trend 3.8% 3.9% 3.8% 0.4% 1.3% 1.8% 3.0% 2.2% 3.7% 2.5% 2.3% 1.7% 2.3% 2.0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 (1.9%) 2009 2010 2011F 2012F 200 9 2010 2011 2012 Source: JP. Morgan Chase, 4Q seasonally adjusted annual rates. Source: U.S. Bureau of Economic Analysis. 11
SUNBELT LEADING THE RECOVERY Sunbelt Population Growth Rates 1. The “Sunbelt” regions (Texas, Arizona, Nevada and Georgia) have experienced 17% 15% 13% strong population growth rates well above 13% 13% 11% the national average and declining vacancy 9% 9% 8% 6% rates, trends which are expected to continue 5% 5% 4% 4% 4% in the future 2. The Dallas ‐ Fort Worth Metroplex in 2005A - 2010A 2011F - 2015F 2016F - 2020F particular is benefiting from broad ‐ based job Nevada Texas Arizona Georgia United States growth Source: Source: U.S. Census Bureau, Population Division. • For the 12 months ended January 31, 2012, nonfarm employment rose 2.4% in Markets with Highest 2012F Absorption the Dallas ‐ Fort Worth area compared to 1.5% nationwide Units in 000's 8.5 8.3 6.8 6.3 5.6 Dallas-Fort Houston NYC D.C. L.A. Worth Source: Marcus & Millichap, 2012 National Apartment Report. 12
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