E XETER I NDUSTRIAL V ALUE F UND IV, L.P. Presentation to New Mexico State Investment Council February 28, 2017
Introduction Exeter - who we are Prior funds’ execution and performance What we will do in Fund IV Industrial fundamentals and opportunities Q & A 2
Who We Are: Team Experienced and cohesive operator with repeatedly proven track record Expert team of 90 professionals has managed over $14 billion in properties Management team has an average of 15 years working together and 25 years of experience through multiple market cycles since 1980’s Track record of Top 5 th percentile outperformance in value-add industrial real estate acquisitions, development, renovations, leasing and dispositions Strong alignment of interest, as firm is 100% owned by Exeter professionals who personally contribute 100% of GP co-investment 3
Exeter Organization: Deep, Vertically Integrated Organization Ward Fitzgerald Tim Weber Kevin Shea James Hoeland CEO CFO Rob Jones Steve Pron Paul Rubincam Ryan Roberts Matt Brodnik Kim Villani John Toukatly Mark Cunneen U.S. Value Add Division U.S. Managed Europe Division U.S. Core Division Account Regional Offices Northeast /Mid-Atlantic Southeast Midwest/Mid-South Southwest /West Europe Henry Steinberg Scott Dougherty Ralph Kittrell Todd Carter Jason DeFilippis Steve Stein Barney Sinclair Tom Wang Patrick Rebel Mark Nolan Tom Allman (D) Jeff Grabowski Mike Yocco Adam Duerr (D) Andy Brown Bryan Lamb John Warren (D) Rich Poolis (D) Niko Gedaze Waldemar Grabka Ben Hoog Sander Smith Tim Hazelwood Jessica Dodson Tom Theobald (D) Eric Hussey Fred Knapp Craig Cosgrove Roniek Bannink Rhodri Davis (D) John McCormick Ken Iriana Adrienne Davis Kelly Miller Andy Taylor Doug Randol Frank Fallon Jr. Dan Davila Kim Farley Greg Ivancich Antoine Dennard Tracy Johnson Tim Kaylor Blake Ezell Eric Deo Jonathan Mackie Investments/Asset Mgmt Investments/Asset Mgmt Investments/Asset Mgmt Investments/Asset Mgmt Investments/Asset Mgmt Brad Reed Jason Borrelli Jason Honesty (NE) Rayenne Chen Brian Fogarty Dan O’Neill Jim Daywalt Regional Project Greg Nicotera Barry Breen Controller/Treasure r Lisa Bianchini Managers marked “(D)” Jamie Lee Sokohna Roeun Laurel Phillips Sarah Spivack National Property Due Development and Investor Relations Head of Property Diligence and Management Construction and Reporting Legal, Compliance & HR Accounting Amy Rusavage Genise Coursey Kelley Black Dennis Durkin Bob Waitkus Brian Ford Beth DeGeorge Mark Johann Stephen Mellet Cristina Virgilio Brian Serpico Courtney O’Donnell Andy Albeck Darlene Stecklein Mike Miller Heather Ong Justin Burns Jason Kushner Rahul Jaggi Debt Procurement Officers Debra O’Donnell John Kelly Lisa Messner Acquisition Associates National Client Accounts Kevin Farley Angela Nigro Lisa Grace Ryan Gallagher and Marketing Dispositions Officer Property Accountants 4
National Operator Platform & Local Expertise With 13 offices, national and local deal sourcing maximizes investment selection Direct influence on investment results through in-house asset management, property management and construction Create profitable portfolios due to keen insights into building design and global tenant relationships Renovate and redevelop: “Bricks and Sticks” Leasing and asset management: “Fill the Seats” Dispositions: “Manufacture” core portfolios Acquire through one-off transactions Realize pricing premium when investments are stabilized, aggregated, and sold as large portfolios of complementary assets 5
Global Flow of Goods and Tenants 6
Industrial Specialist with Proven Track Record Series U.S. Investment Vehicles Status Equity Trans- Net Net Gross Gross (and investment period) actions Leveraged Equity Leveraged Equity IRR Multiple IRR Multiple Industrial Value Fund IV Investing $1,275 M target target target target Value Add 13%-15% 1.8x 16%-20% 2.0x Funds Value Fund III (2014-2016)* Fully Invested $832 M 107 14.7% 1.8x 18.9% 2.0x Value Fund II (2011-2014)* Realized $615 M 72 31.0% 2.0x 39.0% 2.3x Value Fund I (2007-2010)* Realized $357 M 59 10.7% 1.7x 13.6% 1.9x Co-Invest Co-Invest, Value Fund III (2015) Fully Invested $102 M 22 16.0% 1.8x and JVs Co-Invest, Value Fund III (2015) Fully Invested $58 M 51 17.8% 2.0x Co-Invest, Value Fund I (2011) Realized $72 M 22 25.1% 2.2x Co-Invest, Value Fund I (2010) Realized $25 M 15 34.4% 2.6x Industrial Core Club Fund II (2016-2018) Investing $575 M 8 target target target target Core Club 8%-10% 1.9x 9%-11% 2.0x Funds Core Club Fund I (2012-2015) Realized $404 M 23 22.3% 1.5x 25.2% 1.6x Separate Historic Track Record (1996-2006) Concluded 100+ assets for industrial/office public REIT; $1.2 B gross real estate Accounts Colorado PERA (2002-2006) Concluded Industrial real estate JV relationships; $125 M gross real estate Prior to Exeter Ohio STRS (1987-1997) Concluded Office real estate separate account; $300 M gross real estate * Returns are estimated as of September 30, 2016. As of this date, Value Funds I and II are substantially realized, as Fund I has realized 52 out of 59 investments amd Fund II has realized 62 out of 72 investments. Additional information is available upon request. The Fund will make investments in different economic conditions than those prevailing in the past, thus no guarantee is made that the Fund will have the same types or diversity of investment opportunities as prior funds. Past performance is not indicative of future results. 7
What We Will Do: Fund IV Investment Focus Anticipated Allocation Class A, big box and last mile warehouses Emphasize Top Primary markets and e-commerce hubs Building Profiles 20 Markets Invest across risk-return spectrum to create balanced portfolio: Other Select Markets Well-occupied, short term leased assets 20% Last Mile Big Box Top 5 DC 35% Warehouse 50% Pricing discounts due to lease rollover E-Commerce 60% Hubs Flex/Office Anchor the fund portfolio with high 30% 5% immediate cash flow Strategy Under-leased assets High returns for lease up risk Redevelop/ Develop Renew/ Development 25% Re-Let 50% Own best product in submarket Lease Up without exceeding replacement cost 25% Enhance and protect equity with prudent debt management 8
Strategy Execution EIVF III Case Study: Remington Lakes Location: Chicago, Illinois Status : Acquired June 2014, Realized July 2016 Size: 219,040 SF Strategy : Develop Opportunity Acquired land parcel in high-demand I-55 Corridor west of Chicago CBD Market to deep pool of 200,000 to 250,000 SF users who are under-served for modern product Execution Designed and speculatively developed best-in- class asset, on time and within budget Leased to 100% to full-building user on 7.5 year lease shortly after building completion 7.9% stabilized yield on cost 9
Strategy Execution EIVF III Case Study: 4800 Highlands Parkway Location: Atlanta, GA Acquired : October 2015 Size: 129,878 SF Strategy : Lease Up Opportunity : “Last mile” Smyrna submarket Uniquely cross docked + trailer storage; Expandable by 60,000 SF Sourced through relationships with local leasing broker and corporate seller Value Add Strategy: Lease up 100% vacancy; Renovate & modernize Execution: Immediately signed 7-year lease with major e-commerce retailer for 100% of building Stabilized yield on cost of 8.6 % 10
Why Industrial Real Estate? Sustainable Long Term Tenant Demand 1. U.S. population expected to add 25 million people in 10 U.S. GDP vs. Trade in Goods Compounded Annual Growth Rate years 1 , expanding baseline demand for goods 6.0% 5.09% 2. Trade, which drives growth in warehousing demand 5.0% 4.14% 4.0% across national logistics hubs, has been outpacing overall 3.0% 2.45% economic growth on historic and projected basis 2 2.16% 2.0% 3. Obsolescence due to logistics innovations decreases 1.0% supply and drives migration to “Big and New” product 0.0% 1994-2014 Forecast 2015-2024 GDP Trade Distribution of U.S. Population 1 dot = 1,000 people A GE OF U.S. I NDUSTRIAL S TOCK 3 (13 B ILLION S QUARE F EET ) Modern 2000-2016 18% Obsolete Modern Pre-1979 1990-1999 50% 14% Vintage 1980-1989 18% Exeter regional offices Sources: (1) and map: U.S. Census Bureau; (2) historic data by U.S. Bureau of Economic Analysis; forecasts 11 by U.S. Bureau of Labor Statistics; (3) CBRE 1Q 2016
Why Industrial Now: Real Estate Fundamentals Drive NOI Growth Demand U.S. Industrial Absorption and Occupancy 200 M SF annual absorption, strong across all 95.0% 80 markets 93.5% Net Absorption (Mil SF) 60 92.0% Occupancy 93+% after 26 quarters of Occupancy 90.5% 40 demand outpacing supply 89.0% 20 Supply 87.5% 86.0% 0 Growing, after extreme drought 84.5% -20 83.0% Approaching prior peaks, but increased 81.5% permitting barriers -40 80.0% 78.5% Obsolescence deducts supply -60 Rising rental rates Drives growth in income and capital values U.S. Industrial Rental Rates (% growth) Source: CBRE Econometrics, Forecast as of 4Q 2015 5.6 5.3 4.9 4.8 4.6 3.6 3.3 3.3 2.8 2.4 1.5 1.0 0.3 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -0.6 Source: CoStar Market Analytics, 3Q2016 -6.7 12 -10.2
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