Company Overview & Investment Opportunities

Transcription

1 Company Overview & Investment Opportunities November 26, 2013 Mack Urban 1

2 Section I: Executive Summary Page 3 Company Overview/Target Markets Multifamily Fundamentals & Demographics Section II: Mack Urban, LLC Introduction Page 8 Section III: Pacific Northwest Investment Pipeline Page 16 Section IV: California Investment Pipeline Page 18 Section V: Recent Sales Page 20 Mack Urban 2

3 Mack Urban 3 I. Executive Summary

4 Company Overview Urban Partners, LLC, Harbor Urban, LLC and Mack Real Estate Group recently announced the formation of Mack Urban, LLC (the Company ) a premiere West Coast real estate investment and development company. Uniting top-tier development talent with outstanding capital relationships, Mack Urban aims to be the premiere longterm investment, development and ownership company with a focus on urban infill mixed-use multifamily and commercial development within target gateway markets. Target Gateway markets include California and the Pacific Northwest where Mack Urban focuses on investment and development primarily in Southern California, Seattle and Portland. The company has secured a first mover advantage in many of the strongest multi-family development markets on the West Coast by virtue of its ownership and/or control of 16+ multi-development sites. Our philosophy is centered on the belief that early investor/developers will achieve superior risk adjusted returns because of the strong demand for and limited availability of new multi-family products in West Coast Gateway markets. We are a proven development sponsor who is best in class with decades of investment and development experience. Our investment leadership is defined by the companies experienced principal involvement with integrated management of all company services, which creates superior investment results for our investors, partners and clients. Mack Urban 4

5 Sensible growth driven by favorable demographic demand and restrained supply Seattle Portland San Francisco Bay Area Los Angeles San Diego Common Attributes Desirable geographic location/climate High barriers to entry and/or strong economic growth Growth among key industries Improving job growth Urban cores showing recovery above National average Year to Year rental growth Existing Target Markets Potential & Opportunistic Markets Mack Urban 5

6 Fundamentals Continue to Support Investment in Multifamily Demographics Strong demographics Echo Boom (Gen Y + Boomer) effect Demand Bias towards renting due to constraints on home ownership Supply Supply increasing with high absorption rates for new supply Fundamentals Currently increasing occupancies and rents Multifamily Development Opportunities Mack Urban 6

7 Strong Demographic Trends Across the U.S. Support Multifamily Development 5, Demand vs. New Supply More than 4.3 million units of net demand created during the last 5 years Units / Households (Thousands) 4,000 3,000 2,000 1,000 0 Rental Households Formed Obsolescence Demand Apartment Completions New Supply Source(s): Green Street Advisors, additional data from U.S. Department of Housing and Urban Development and U.S. Census Bureau Apartment Occupancy and YOY Rent Growth 98.0% 10.0% Occupancy 97.0% 96.0% 95.0% 94.0% 93.0% 92.0% 91.0% 8.0% 6.0% 4.0% 2.0% 0.0% Effective Rent Growth 90.0% -2.0% Rent Growth Occupancy Source(s): REIS National Market Data as of October 18, 2013 Mack Urban 7 7

8 Mack Urban 8 II. Mack Urban Introduction

9 Mack Urban, LLC Investment, Development, Planning, Advisory & Management Firm Mack Urban is a premier full service real estate investment, development, planning, advisory and management firm. The company pursues select market niches where complexity or innovation create exceptional potential for its partners and clients. With highly-specialized expertise in urban infill entitlement processes, complex private and/or public financial structures and sustainable construction methods, Mack Urban identifies opportunities which are not widely followed or understood, resulting in competitive quality and marketing advantages and superior financial performance. Mack Urban s business model includes two fundamental investment types: development and value-add. Current equity projects include residential and mixed-use developments in urban core and high population growth areas of the western United States and major land development projects requiring detailed planning and entitlement strategies. Mack Urban s asset portfolio includes: land development, mixed-use development, apartment and condominium homes, transit-oriented development, student housing, financial restructurings, build-to-suit development and the adaptive reuse of historic structures. The privately held company was founded in 2000 as Urban Partners, LLC. In 2011 Urban Partners and AREA Property Partners acquired Harbor Properties in Seattle, WA and created Harbor Urban, LLC. In Q Urban Partners, Harbor Urban and Mack Real Estate Group partnered to create Mack Urban, LLC. Ownership of the company is held by William Mack, Richard Mack, Paul Keller, and Matthew Burton. Paul Keller serves as CEO, Matthew Burton serves as President and CIO and Jim Atkins and John Gunn are Managing Directors for the Seattle and Los Angeles offices. Today, Mack Urban consists of more than 20 real estate professionals. The Principals of Mack Urban are personally involved in day-to-day management of all investments. Company headquarters are in downtown Los Angeles. Mack Urban 9

10 Mack Urban, LLC Mack Urban 10

11 Pacifica Capital Investments, LLC Mack Real Estate Group Urban Partners, LLC Historic Timeline 1980 Keller Construction builds commercial office building for Leonard Family Pacifica evolves into full service real estate company 1990 Pacifica opens real estate investment office in Denver, CO 1993 Apollo Real Estate Advisors founded in collaboration with William Mack to seek U.S. property opportunities 1995 Apollo expands as global real estate advisor 1999 Pacifica, Apollo and Keller Construction build Arboretum Office Building in Santa Monica, CA Sells in Urban Partners LLC, founded in Los Angeles, CA 2005 Urban opens Seattle, WA office 2009 Rebranding of Apollo Real Estate Advisors to AREA Property Partners 2011 Pacifica investment in Urban 2012 Harbor Urban, LLC formed as full service real estate company Seattle, WA 2013 Mack Real Estate Group, Urban Partners & Harbor Urban announce new Partnership Mack Urban, LLC 1981 Pacifica Holdings Company founded to own real estate in Los Angeles County 1984 Pacifica and Paul Keller purchase Southern California retail center Pacifica acquires and develops 8 million square feet of Denver properties and develops 1995 Pacifica and Apollo form partnership to invest in and develop commercial properties in greater Denver 1998 Pacifica sells Denver real estate holdings for $750 million 2000 Pacifica and Apollo invest in industrial building and achieve subsequent disposition in Madrid Spain 2002 Pacifica and Apollo start commercial land development project in Madrid Spain 2007 Urban and Real Estate Capital Partners, LP form coinvestment GP Capital Fund 2010 AREA investment vehicles exceed $13 billion 2011 Urban and AREA reach agreement to purchase Harbor Properties, Inc. Seattle, WA 2013 AREA sold to ARES Mack Real Estate Group formed Mack Urban 11

12 Key Team Members William Mack (New York) William Mack founded Apollo Real Estate Advisors in 1993, which later became known as AREA Property Partners in With nearly 50 years of experience in the U.S. real estate industry he is recognized as one of its leading figures. William is also a Senior Partner of the Mack Organization, a national owner of industrial buildings and other income producing real estate investments. He serves as Chairman of the Board of Directors of Mack-Cali Realty Corporation and has been a Director of Mack-Cali since the 1997 merger of the Mack Organization s office portfolio into Mack-Cali, one of the largest publicly traded real estate investments trusts in the United States. Mr. Mack also serves as Chairman of the Board of the Guggenheim Foundation, as Vice Chairman Emeritus of the University of Pennsylvania Board of Trustees, as Vice Chairman Emeritus of the University of Pennsylvania s Wharton School of Business, and as Vice Chairman of the North Shore Long Island Jewish Health System. Richard Mack (New York) Richard Mack was one of the founding principals of AREA in 1993 and was a member of the firm s Investment Committee in the U.S. and Europe. Since 1993, Mr. Mack has been involved with the investment of over $13 billion in more than 550 transactions on behalf of AREA s institutional investors and was responsible for the creation of new business lines to capitalize on evolving market trends. Previously he had been a member of the Real Estate Investment Banking Department at Shearson Lehman Hutton. Richard serves as President of the non-profit HES Community Center, which serves the residents of Canarsie, Brooklyn, as Vice President and Board Member of the 92 nd Street Y, and is a Board Member of both the Wharton School of Business Undergraduate Executive Board and the Randall s Island Sports Foundation Board of Trustees. Mack Urban 12

13 Key Team Members Paul Keller CEO (Los Angeles, California & Seattle, Washington) Paul Keller has over thirty years of experience in the real estate and construction industries, formerly leading Keller Equity Group, Inc., Keller CMS, Inc. and Keller Construction Company, LTD. Mr. Keller and Keller-related entities have been responsible for over 2,000 projects in the continental United States and Hawaii and have provided program development and project and construction management oversight services to a variety of clients on projects valued in excess of $7 billion dollars. Mr. Keller is highly regarded in the industry for his comprehensive grasp of asset and project management details and his ability to match leasing, construction and financing requirements. Among his activities, Mr. Keller is a member of the ULI Los Angeles Advisory Board and ULI Los Angeles Land Use Leadership Committee. He was previously the Chairman of Eimago (formerly Union Rescue Mission Foundation) and former Chairman of the Board of Directors, Seven Arrows Elementary School, Pacific Palisades, CA. Matthew Burton President & CIO (Los Angeles, California & Seattle, Washington) Matt Burton is responsible for all equity and debt relationships and joint ventures at Urban. He also assumes senior project management responsibilities on key transactions. Mr. Burton has been actively engaged in the planning, development, marketing and lease-up of over 2,000 multi-family units and has sourced over $1 billion of debt and equity capital over the past nine years at Urban. Prior to joining Urban Partners and becoming a Principal in 2005, Mr. Burton served as Vice President with American International Group (AIG) and SunAmerica in Los Angeles. In these capacities he placed and managed hundreds of loans that amounted to billions of dollars. During his career, Mr. Burton has created and maintained strong personal relationships with key players in the capital markets. Mr. Burton is active in a range of civic, community and educational organizations. Mack Urban 13

14 Jim Atkins, P.E. Managing Director (Seattle, Washington) Jim Atkins serves as Managing Director of Mack Urban s Seattle office, which oversees investment and development within the Pacific Northwest. Previously, Mr. Atkins served as the Managing Director for two highly recognized Southern California based development companies: Merlone Geier Partners and The South Group. Mr. Atkins directly led and managed teams that acquired, entitled and designed sites for nearly 3,500 mixed-use residential homes and completed the construction, sale and turnover of over 1,000 (LEED silver+) for-sale and for-rent homes. This effort required the successful placement of nearly $1B of capital investment from a variety of public/private sources and the hands-on, day-to-day management of teams comprised of employees, consultants, and contractors. Mr. Atkins also served as the Site Development Manager for the South Waterfront Project in Portland, OR. In the past 10 years, this project has to-date resulted in the redevelopment of a 40-acre brownfield site into a highly acclaimed, LEED-certified, mixed use community comprised of nearly 3 million square feet of homes, retail and medical office/education facilities, over six acres of park and riverfront restoration, a streetcar extension, and a 3,500 urban aerial tram. Among his activities, Mr. Atkins is a Registered Civil Engineer in Oregon and Washington. He has practiced eight years as a consulting engineer on many residential and commercial development projects in Oregon and Washington and served three years as a US Army Corps of Engineers Officer (RA), including service in the First Gulf War as a Combat Construction Platoon Leader and the Company Executive Officer. John Gunn Managing Director (Los Angeles, California) John Gunn serves as Managing Director of Mack Urban s Los Angeles office, which oversees investment and development primarily within Southern California. Mr. Gunn is responsible for the planning, development, and execution of Mack Urban investment initiatives. During Mr. Gunn's previous tenure with Urban Partners ( ), he oversaw real estate acquisition, strategic planning, project feasibility, design, construction, delivery, marketing and disposition of development projects and assets in the greater Los Angeles area and Seattle. In his current role, John will be responsible for expanding the company's platform throughout the state of California and will be directly involved with the day-to-day management of all investment initiatives. Mr. Gunn has served as owner of Gunn Property Group, Vice President at Pierce Educational Properties and Executive Vice President of The Hapsmith Company, a retail development company in Los Angeles. Among his activities, John is an active member in ULI (Urban Land Institute) and ICSC (International Council of Shopping Centers). Mack Urban 14

15 Martha Barkman Director of Design and Construction (Seattle, Washington) Martha Barkman has over 25 years of development and retail leasing experience. She is responsible for pre-development, construction management and retail targeting and leasing for all Mack Urban projects. She is directly involved with all day-to-day development activities including conceptual and architectural development, entitlement, construction oversight and management, and cost control. In addition to her development role, she serves as Mack Urban s lead retail leasing manager. She excels at working with small local businesses to not only support their long-term success, but to create a memorable retail experience for Harbor s developments. Ms. Barkman fully investigates the viability of each retailer to ensure they are positioned for growth before negotiating on behalf of Mack Urban. She has completed more than 13 mixed-use developments totaling over 2,500,000 square feet and leasing of 150,000 square feet of retail in conjunction with these projects. Ms. Barkman is deeply involved in the real estate community and serves as an advisor to the city of Seattle on improving development regulation and public benefit requirements. She also serves on several Urban League Initiative taskforce committees. Del Morais, CPA Vice President of Finance (Los Angeles, California & Seattle, Washington) Del Morais is responsible for the oversight of the company s finance, accounting and tax departments. He manages the partnership and project teams responsible for the day-to-day accounting, forecasting and reporting. Prior to joining Urban Partners in 2011, Mr. Morais was the Director of Finance at Countdown to Buy, a start-up internet real estate broker in Bethel, CT. There he managed the finance department responsible for capital raises, accounting and entity reporting. Prior to CTB he was a Vice President of Goldman Sachs Equities Division in London. Mr. Morais has also worked for Deloitte in New York City as an Audit Senior in charge of SEC financial statement audits for many Fortune 500 companies. Mr. Morais is a licensed CPA with series 7, 3 and 63 licenses and has been working in finance and real estate since Mack Urban 15

16 Mack Urban 16 III. Pacific Northwest Investment Pipeline

17 Project Pipeline - Pacific Northwest Revision: August 30, 2013 Development Projects Pipeline: Washington - Oregon Name/ Construction Description Total Project Total Cost/ Total Trended Ownership Location Start Cost Unit Equity ROC Status Velo Q units $38,400,000 $224,461 $11,634, % JV Owner 1321 N. 45th Avenue, Seattle WA Q units, 6K SF retail $38,500,000 $260,135 $13,500, % under contract Western & University, Seattle WA Q2/Q units, 8.4K SF retail Type 1-16 Stories $56,257,000 $340,952 $19,890, % under tri-party agreement 68th & 8th, Seattle WA Q units $63,400,000 $241,985 $22,600, % under contract Block 37, Portland OR Q units, 6.5K SF retail $63,640,000 $226,477 $22,274, % under contract Bakery Blocks, Portland OR Q units, 13K SF retail 5 story podium & pedestal $42,300,000 $205,340 $14,800, % under LOI Ray Q units $35,168,000 $256,701 $11,000, % under contract Pacific Northwest Total 1,366 units / 33.9K SF retail $337,665,000 $250,864 $115,698, % Mack Urban 17

18 Mack Urban 18 IV. California Investment Pipeline

19 Project Pipeline - California Revision: August 30, 2013 Development Projects Pipeline: California Name/ Construction Description Total Project Total Cost/ Total Trended Ownership Location Start Cost Unit Equity ROC Status Vivere Phase I, Anaheim CA* Completed 92 units, 1K SF retail Type 3A - 4 stories $30,000,000 $326,087 $13,800, % JV Owner Anaheim Apartments Community, Anaheim CA** Q units Type 3A - 5 stories $60,200,000 $246,721 $21,000, % JV Owner Union Village, Pasadena CA Q units, 10K SF retail $48,500,000 $411,000 $16,975, % JV Owner Oxnard Sr. Living, Oxnard CA Q units $42,000,000 $254,000 $14,700, % JV Owner Grand Q Pico Q units, 8K SF retail Type 1-38 stories $193,362,000 $415,832 $67,677, % under contract 356 units, 7.5K SF retail Type 3A - 5 stories $111,448,000 $313,056 $39,007, % under contract 11th/Olive ATT Olive TBD TBD 238 units, 14.6K SF retail Type 1-15 stories $100,147,000 $420,786 $49,300, % under contract 323 units, 7.5K sf retail Type 1-38 stories $129,052,000 $399,542 $45,168, % under contract South Olive TBD 118 units Type 3A - 5 stories TBD TBD TBD TBD under contract California Totals 2,119 units / 56.1K SF retail $714,709,000 $337,286 $267,627, % Mack Urban 19

20 Mack Urban 20 V. Recent Sales

21 Recent Sales - Seattle Revision: September 9, 2013 Recent Project Sales # Name/ Description Total Project Total Actual Sales Price Equity Net Location Cost Equity Return IRR Per Unit Multiple Profit 1 Link (1) 195 units $56,645,000 (N/A) (N/A) $321,538 (N/A) $6,055,000 2 Mural (1) 136 units $33,300,000 (N/A) (N/A) $311,029 (N/A) $9,000,000 3 Nova (2) 62 units $13,075,000 $2,300, % $283, x $2,837,671 4 Alto (3) 184 units $40,500,000 $5,000, % $338, x $5,230,398 5 Greenhouse 124 units $20,590,000 $8,734, % $252, x $9,049,000 Total Recent Completed Transactions 701 units $164,110,000 $16,034, % $301, (4) $32,172,069 (1) Both projects were flipped at Harbor closing therefore, no equity investment was required (2) Harbor Urban owned 50% of the project (3) Harbor Urban owned 20% of the project in a JV and earned promote to 40% (4) 3.01x multiple on Habor Properties multifamily acquisition from 2012 Mack Urban 21

22 Recent Sales Southern California Revision: July 26, 2013 Recent Project Sales # Name/ Description Total Project Total Actual Sales Price Net Location Cost Equity Return IRR Per Unit Profit 1 Aspira Apartments, Seattle WA 325 units $142,000,000 38,000, % $501,538 $24,000,000 2 University Gateway Apartments Los Angeles, CA 421 units $190,000,000 75,000, % $507,246 $20,000,000 3 Santee Village Lofts, Los Angeles CA 94 units $29,000,000 $11,000, % $425,532 $11,000,000 4 NoHo14, North Hollywood CA 180 units $59,000,000 $21,000, % $412,806 $15,305,000 5 Mosaic, Oxnard CA 224 units N/A N/A 29.00% $45,000 $5,000,000 6 Tempo Apartments, Oxnard CA 235 units N/A N/A N/A $44,539 $5,200,000 7 Sonata Apartments, Oxnard CA Affordable Housing N/A N/A N/A $26,887 $700,000 TOTAL 1,479 units $420,000,000 $145,000, % $280,507 $81,205,000 Mack Urban 22

23 CONFIDENTIAL AND PROPRIETARY INFORMATION THIS PRESENTATION IS PRESENTED SOLELY FOR DISCUSSION PURPOSES, CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND HAS BEEN PREPARED FOR, AND IS BEING PRESENTED ON A CONFIDENTIAL BASIS. THIS PRESENTATION DOES NOT PURPORT TO BE ALL-INCLUSIVE AND IS MERELY A SUMMARY FOR INFORMATIONAL PURPOSES ONLY. BY ACCEPTING THIS PRESENTATION, THE RECIPIENT AGREES NOT TO COPY, DISTRIBUTE, DISCUSS OR OTHERWISE DISCLOSE THIS PRESENTATION OR THE CONTENTS HEREOF TO ANY PERSON OTHER THAN EMPLOYEES OF RECIPIENT, WITHOUT THE PRIOR WRITTEN CONSENT OF MACK URBAN. RECIPIENT HAS SIGNED OR WILL SIGN A CONFIDENTIALITY AGREEMENT RELATING TO THE MATTERS DESCRIBED IN THIS PRESENTATION. THIS PRESENTATION IS SUBJECT TO THE CONFIDENTIALITY AGREEMENT AND MACK URBAN IS RELYING ON THE COVENANTS, REPRESENTATIONS AND WARRANTIES CONTAINED IN THE CONFIDENTIALITY AGREEMENT IN PROVIDING THIS PRESENTATION TO RECIPIENT. NEITHER THE DELIVERY OF THIS PRESENTATION NOR ANY PART OF ITS CONTENTS CONSTITUTES AN OFFER TO SELL OR INVITATION TO PURCHASE ANY SECURITIES, WHICH WILL ONLY BE MADE PURSUANT TO DEFINITIVE SUBSCRIPTION AND LIMITED PARTNERSHIP AGREEMENTS. THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS. THESE FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS, EXPRESS OR IMPLIED, REGARDING THE CURRENT EXPECTATIONS, ESTIMATES, PROJECTIONS, OPINIONS AND BELIEFS OF AREA, AS WELL AS THE ASSUMPTIONS ON WHICH THOSE STATEMENTS ARE BASED. WORDS SUCH AS BELIEVES, EXPECTS, ENDEAVORS, ANTICIPATES, INTENDS, PLANS, ESTIMATES, PROJECTS, SHOULD AND OBJECTIVE AND VARIATIONS OF SUCH WORDS AND SIMILAR WORDS ALSO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE FORWARD-LOOKING IN NATURE AND INVOLVE A NUMBER OF KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS, INCLUDING THOSE DESCRIBED IN THIS PRESENTATION, AND ACCORDINGLY, ACTUAL RESULTS MAY DIFFER MATERIALLY AND NO ASSURANCE CAN BE GIVEN THAT AREA WILL ACHIEVE THE RETURNS FROM ITS INVESTMENTS THAT IT IS TARGETING. RECIPIENT IS CAUTIONED NOT TO PLACE UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS OR EXAMPLES INCLUDED HEREIN, AREA ASSUMES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, SUBSEQUENT EVENTS OR ANY OTHER CIRCUMSTANCES. SUCH STATEMENTS SPEAK ONLY AS OF THE DATE THAT THEY WERE ORIGINALLY MADE. IN ADDITION, THERE CAN BE NO ASSURANCE THAT UNREALIZED INVESTMENTS WILL BE REALIZED AT THE VALUATIONS SHOWN, AS ACTUAL REALIZED RETURNS WILL DEPEND ON, AMONG OTHER FACTORS, FUTURE OPERATING RESULTS, THE VALUE OF THE ASSETS AND MARKET CONDITIONS AT THE TIME OF DISPOSITION, ANY RELATED TRANSACTION COSTS, AND THE TIMING AND MANNER OF SALE, ALL OF WHICH MAY DIFFER FROM THE ASSUMPTIONS ON WHICH THE VALUATIONS CONTAINED HEREIN ARE BASED. NOTHING CONTAINED HEREIN SHOULD BE DEEMED TO BE A PREDICTION OR PROJECTION OF FUTURE PERFORMANCE. Mack Urban 23