CAPITAL REAL ESTATE 1700 Broadway, Suite 620 Denver, Colorado Telephone: (303) Fax: (303) Web site:

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1 CAPITAL REAL ESTATE 1700 Broadway, Suite 620 Denver, Colorado Telephone: (303) Fax: (303) Web site:

2 TABLE OF CONTENTS ABOUT CRE INVESTMENT STRATEGY TRACK RECORD INVESTMENT CASE STUDIES MEET THE TEAM For more information please contact: DEREK AVERY CEO davery@cre-usa.com 1700 Broadway, Suite 620 Denver, Colorado Phone: (303)

3 ABOUT CRE ABOUT CRE Capital Real Estate, LLC (CRE) is a Denver, Colorado based real estate investment firm specializing in the acquisition, management and disposition of multi-family real estate investments. CRE leverages unique expertise in market intelligence, deal sourcing and asset management to optimize investment yields and investor returns. Since its formation in 2005, CRE has purchased 33 properties representing a total capitalization of approximately $720 million, including approximately $190 million in equity. Our portfolio currently consists of 26 properties with 5,624 units. CRE s management team brings to the table a wealth of experience in the multihousing industry. Derek Avery s 26 years of real estate experience includes valuation, corporate real estate, property management, rehabs/ development and acquisition analysis. Doug Andrews is a leading apartment broker, and has been a distinguished industry veteran for over 3 decades. The CRE team offers extensive experience in sourcing acquisitions and due diligence, as well as providing effective asset management and accounting to optimize the upside potential on each individual property. We believe that the current economic environment presents a window of opportunity to acquire apartments at very attractive prices with compelling IRRs and cash-on-cash returns. Our strategy is to purchase apartments with strong fundamentals of location and design in recovering markets with solid prospects for cash flow and appreciation. Our focus is on the markets we know, including Colorado and the Phoenix metropolitan area. At CRE, we believe that the current economic environment presents a window of opportunity to acquire apartments with exceptional returns to our investors. CAPITAL REAL ESTATE 3

4 INVESTMENT STRATEGY Why Apartments? Apartments differ from other commercial asset classes because they are fundamentally a cash flow business. By contrast, in the case of commercial assets like office buildings and retail centers, investors typically make their returns or fail to make them upon disposition. Tenant improvements and leasing commissions can soak up cash flow and, as we have recently observed in the last cycle, even credit tenants can fail. Apartments fundamentally present lower risk. There are no tenant improvements or large leasing commissions and a single tenant can t create a vacancy problem. As long as debt service is well covered, it is unlikely that either vacancy or dropping rents will result in any significant investment stress. Our strategy is based on utilizing our market knowledge and management expertise to identify special opportunities and situations that are generally overlooked as a result of the rigid parameters set by institutional purchasers. The Apartment industry has enjoyed an unprecedented decade long surge in demand. In mid-2015, 43 million families and individuals lived in rental housing, up nearly 9 million from 2005 the largest gain in any 10-year period on record. In addition, the share of all US households that rent rose from 31 percent to 37 percent, its highest level since the mid-1960s even as the economy has recovered. A recent Harvard Kennedy School study concluded the industry will have to build 4.6 million new apartment homes between now and the end of 2030 to keep up with growing demand or risk exacerbating today s existing housing shortage. That means delivering an average of 325,000 net new units each year, compared to just 225,000 completions per year over the past five years. Conclusion As demographic trends have continued to shift toward rental housing the apartment industry has been on firm footing. The combination of continued low interest rates from Fannie Mae and Freddie Mac, strong rental demand and low suburban construction volume allow for the purchase of multifamily assets at prices that are well below replacement cost. CAPITAL REAL ESTATE 4

5 INVESTMENT STRATEGY These current market conditions are perfect for multifamily acquisitions in both Colorado and Arizona. CAPITAL REAL ESTATE 5

6 CITY SQUARE Denver, CO 131 units YOC: 1973 Acquired June 2012 Value-add program Long-term financing at 3.92% Supplemental loan in 2015; 56% of equity returned to investors 2018 cash yield to investors on remaining equity projected at 12.0% CAPITAL REAL ESTATE 6

7 COPPER RIDGE Louisville, CO 129 units YOC: 1994 Acquired March 2013 Premier boutique property with excellent location and drive-by traffic Long-term financing at 3.84% 2018 cash yield to investors projected at 8.0% CAPITAL REAL ESTATE 7

8 VILLAS AT MOUNTAIN VISTA RANCH Surprise, AZ 256 units YOC: 2003 Acquired April 2013 Class-A product Excellent location, proximate to I-303 corridor, currently under construction Long-term financing at 3.82% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 8

9 HEIGHTS ON HURON Northglenn, CO 252 units YOC: 1970 Acquired November 2013 Value-add program Long-term financing at 4.70% Supplemental loan in 2016; 100% of initial equity returned to investors 2018 cash yield on initial equity amount to investors projected at 7.25% CAPITAL REAL ESTATE 9

10 THE FLATS AT PINECLIFF Colorado Springs, CO 196 units YOC: 1971 Acquired May 2014 Excellent location and visibility proximate to I-25 corridor Long-term financing at 4.56% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 10

11 SKY AT BEAR CREEK Colorado Springs, CO 148 units YOC: 1970 Acquired January 2015 Located in prestigious Broadmoor area Value-add program Long-term financing 4.31% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 11

12 FALLS AT LAKEWOOD Lakewood, CO 96 units YOC: 1969 Acquired February 2015 Turn-key renovated property Located proximate to Denver Federal Center Long-term financing 4.38% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 12

13 HIGHLAND WAY Northglenn, CO 230 units YOC: 1973 Acquired February 2015 Great location with proximity to major arterials Value-add program Long-term financing at 4.69% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 13

14 BELLAIRE RANCH Colorado Springs, CO 240 units YOC: 2003 Acquired April 2015 Premier community in strong Colorado Springs trade area Long-term financing at 4.35% 2018 cash yield to investors projected at 7.5% CAPITAL REAL ESTATE 14

15 AURA AT MIDTOWN Phoenix, AZ 96 units YOC: 1959 Acquired May 2015 Proximate to light rail corridor, major arterials and newly opened cafes, restaurants and shops Value-add program Long-term financing at 4.08% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 15

16 SUNSET PEAK Thornton, CO 184 units YOC: 1977 Acquired June 2015 Unique asset with 85% townhome-style living Located proximate to I-25 corridor Long-term financing at 4.60% 2018 cash yield to investors projected at 8.0% CAPITAL REAL ESTATE 16

17 MONACO SOUTH Denver, CO 220 units YOC: 1971 Acquired July 2015 Great drive-by visibility and convenient access to southeast Denver business parks Value-add program Long-term financing at 4.24% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 17

18 PONDEROSA RANCH Tempe, AZ 272 units YOC: 1983 Acquired September 2015 Located in one of the strongest submarkets in the metro area Long-term financing 4.47% 2018 cash yield to investors projected at 8.0% CAPITAL REAL ESTATE 18

19 THE SPRINGS AT ALTA MESA Mesa, AZ 200 units YOC: 1999 Acquired September 2015 Located in the heart of Falcon Field Employment Center Long-term financing 4.39% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 19

20 ALTURAS AT BELLAIRE RANCH Colorado Springs, CO 60 units YOC: 2013 Acquired October 2015 Brand new, turn-key Class A asset Long-term financing 4.76% 2018 cash yield to investors projected at 8.0% CAPITAL REAL ESTATE 20

21 OMNIA MCCLINTOCK Tempe, AZ 181 units YOC: 1971 Acquired December 2015 Located in one of the strongest submarkets in the metro area Long-term financing 4.61% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 21

22 PAVILIONS AT ARROWHEAD Phoenix, AZ 248 units YOC: 1997 Acquired February 2016 Located within a 4,200-acre master-planned golf course community. Long-term financing 4.29% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 22

23 CIELO ON GILBERT Mesa, AZ 432 Units l YOC 1985 Acquired July 2016 Minutes from the rapidly developing Heritage District in downtown Gilbert. Long-term financing 5.11% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 23

24 OMNIA ON 8TH Tempe, AZ 188 Units l YOC 1985 Acquired August 2016 Located just east of Arizona State University in the University Heights Neighborhood Long-term financing 3.60% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 24

25 PALM TRAILS Chandler, AZ 205 units YOC: 2002 Acquired March 2017 One of the most desirable cities in entire valley with strong technology employment growth and top rated public school Long-term financing 4.68% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 25

26 SEVILLA Tempe, AZ 169 units YOC: 1982 Acquired March 2017 Conveniently located Class B Community Significant reposition value add opportunity Long-term financing 4.5% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 26

27 MANDARINA Phoenix, AZ 180 units YOC: 2002 Acquired March 2017 Development momentum has results in rents that are 40% or more higher in surrounding newly developed apartment communities Long-term financing 4.35% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 27

28 LATITUDE Phoenix, AZ 672 units YOC: 1979 Acquired July 2017 Robust employment corridors feature industry leaders and elevated regional prominence Long-term financing 4.31% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 28

29 TEMPE VISTA Tempe, AZ 186 units YOC: 1972 Acquired October 2017 Just minutes away from two other CRE acquisitions Spacious floorplans that on average are 20% larger than competitors in the submarket Long-term financing 4.42% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 29

30 PALM VALLEY Goodyear, AZ 264 units YOC: 1997 Acquired December 2017 The most visible apartment community in the entire submarket and the only community with an abundance of walkable, adjacent retail. Long-term financing 4.14% 2018 cash yield to investors projected at 7.0% CAPITAL REAL ESTATE 30

31 INVESTMENT CASE STUDY HIGHLAND WAY Northglenn, Colorado 230 Units Built in 1973 Date Acquired: September-10 Date Recapitalized: March-15 Purchase Price: $10,600,000 Recapitalization Price: $22,050,000 Price Per Unit: $46,087 Price Per Unit: $95,870 NOI at Purchase: $786,877 NOI at Recapitalization: $1,345,711 Cap Rate: 7.42% Cap Rate: 6.10% Total Equity Raised: $3,000,000 Total Distributions: $11,988,237 INVESTOR IRR: 38.98% INVESTOR EQUITY MULTIPLE: 4.0x TERM OF HOLD: 4.6 Years INVESTOR AVERAGE ANNUAL CASH RETURNS: 9.00% CAPITAL REAL ESTATE 31

32 INVESTMENT CASE STUDY BELLAIRE RANCH APARTMENTS Colorado Springs, Colorado 240 Units Built in 2003 Date Acquired: June-10 Date Recapitalized: April-15 Purchase Price: $19,000,000 Recapitalization Price: $28,500,000 Price Per Unit: $79,167 Price Per Unit: $118,750 NOI at Purchase: $1,137,155 NOI at Recapitalization: $1,560,707 Cap Rate: 5.99% Cap Rate: 5.48% Total Equity Raised: $3,300,000 Total Distributions: $10,462,350 INVESTOR IRR: 25.96% INVESTOR EQUITY MULTIPLE: 3.2x TERM OF HOLD: 5 Years INVESTOR AVERAGE ANNUAL CASH RETURNS: 8.92% CAPITAL REAL ESTATE 32

33 INVESTMENT CASE STUDY MONACO SOUTH Denver, Colorado 216 Units Built in 1971 Date Acquired: February-12 Date Recapitalized: June-15 Purchase Price: $13,400,000 Recapitalization Price: $19,500,000 Price Per Unit: $62,037 Price Per Unit: $90,278 NOI at Purchase: $824,964 NOI at Recapitalization: $1,237,217 Cap Rate: 6.16% Cap Rate: 6.34% Total Equity Raised: $4,509,000 Total Distributions: $9,036,454 INVESTOR IRR: 26.37% INVESTOR EQUITY MULTIPLE: 2.0x TERM OF HOLD: 3.3 Years INVESTOR AVERAGE ANNUAL CASH RETURNS: 8.00% CAPITAL REAL ESTATE 33

34 INVESTMENT CASE STUDY THE BUTTES Loveland, Colorado 111 Units Built in 1997 Date Acquired: July-11 Date Sold: July-17 Purchase Price: $12,225,000 Sale Price: $21,200,000 Price Per Unit: $110,135 Price Per Unit: $190,991 NOI at Purchase: $738,390 NOI at Sale: $1,221,120 Cap Rate: 6.04% Cap Rate: 5.76% Total Equity Raised: $1,291,000 Total Distributions: $4,449,185 INVESTOR IRR: 26.31% INVESTOR EQUITY MULTIPLE: 3.5x TERM OF HOLD: 6.0 Years INVESTOR AVERAGE ANNUAL CASH RETURNS: 10.96% CAPITAL REAL ESTATE 34

35 INVESTMENT CASE STUDY VISTA PARK Aurora, Colorado 283 Units Built in 1973 Date Acquired: August-14 Date Sold: January-18 Purchase Price: $17,200,000 Sale Price: $31,500,000 Price Per Unit: $60,777 Price Per Unit: $111,307 NOI at Purchase: $1,130,040 NOI at Sale: $1,633,267 Cap Rate: 6.57% Cap Rate: 5.18% Total Equity Raised: $6,650,000 Total Distributions: $13,266,132 INVESTOR IRR: 31.78% INVESTOR EQUITY MULTIPLE: 2.0x TERM OF HOLD: 2.4 Years INVESTOR AVERAGE ANNUAL CASH RETURNS: 7.25% CAPITAL REAL ESTATE 35

36 CAPITAL REAL ESTATE TEAM DEREK AVERY CEO Derek Avery serves as CEO where his duties include the oversight of community acquisitions, asset management, investor relations, and the corporate obligations associated with the management of CRE. Mr. Avery s 26 years of real estate experience includes valuation, corporate real estate, property management, rehabs/development and acquisition analysis. Prior to joining CRE Mr. Avery held the position of Senior Vice President of Legacy Partners Residential headquartered in Foster City, CA where his responsibilities included the direct management of over 6,500 multifamily units located throughout the eastern half of the US. The portfolio was comprised of properties in which Mr. Avery represented the principalowner, third party owners and homeowner associations. His duties included the oversight of on-site management teams, financial analysis of operations, budgeting, marketing, acquisition analysis, and client relations. Prior to joining Legacy, Mr. Avery served as Regional Vice President of AIMCO, a national multifamily REIT headquartered in Denver, CO. His responsibilities included the management of an 8,000 unit multifamily portfolio stretching from Colorado to the Pacific Northwest. In addition to Legacy and AIMCO, Mr. Avery s clients have included other institutional investors such as KBS, AIG, UBS, GE, LaSalle, and TIAA-CREF. Mr. Avery received MBA and BS degrees from the University of Florida. He has served on the Board of the Colorado Apartment Association and as President of the Apartment Association of Metro Denver where he remains active in local economic issues. CRE professionals have been involved in the acquisition, disposition or brokerage of over $5.0 billion in multifamily properties. CAPITAL REAL ESTATE 36

37 CAPITAL REAL ESTATE TEAM DOUG ANDREWS Principal Doug Andrews has worked in commercial real estate in Colorado since 1983 and has specialized in apartments and multifamily land since In the last ten years, with his partner Jeff Hawks, he has closed more than $7.4 billion in multifamily transactions, representing a list of clients that includes JPI, Equity Residential Properties Trust, AMLI Residential Trust, Blackrock, The Carmel Companies, Embrey Partners, The Morgan Group, Archstone/Smith, TIAA/CREF, Wellsford Real Properties, First Pacific, Rocky Mountain Mutual Housing, Griffis Blessing, Waterton Associates LLC, Pauls Corporation, Baron Properties, CAN Insurance, Sentinel Real Estate, Lincoln Property Company, Columbia Savings, John Hancock, Henderson Global Investors, Prudential Real Estate Investors, Goldman Sachs, RREEF, Allied Realty Services, PaineWebber Properties, Principal Insurance and Simpson Housing. Mr. Andrews has been a member of the portfolio disposition teams for Balcor/American Express ($600 million), Archstone Communities ($650 million), Mitsui Real Estate ($225 million), and Jupiter Realty Corp. ($65.5 million). In 2005, Doug co-founded Capital Real Estate. He is also a partner in ARA Newmark s Denver office. ARA Newmark is a full-service investment advisory brokerage firm that focuses exclusively on the multifamily industry. He was honored as the Denver Realtor s Investment Broker of the Year in 2000 and has been the #1 multi-housing specialist in Denver for 20 of the last 21 years. Jeff and Doug have sold more Colorado apartments than any other broker in Colorado s history. Prior to 1991, Mr. Andrews was president of Andrews & Company, a family held commercial real estate investment and development firm with more than $30 million in assets, including apartments, office and retail properties. Mr. Andrews is a native of Denver and a graduate of The Colorado College in Colorado Springs. He is a past president of the Rotary Club of Denver Southeast, currently serves as a director on the board of the Colorado I Have A Dream Foundation and has served as president of Apartment Realty Advisors, Inc. CAPITAL REAL ESTATE 37

38 CAPITAL REAL ESTATE TEAM DAVE OSBORNE Director of Private Equity Mr. Osborne serves as Capital Real Estate s Director of Private Equity. His responsibilities include procurement of equity through high net worth individuals, wealth managers, family offices and institutional capital firms. He also assists with investor relationships and fulfilling the needs of current and future investors as well as sourcing new investment opportunities. Previously, Mr. Osborne procured over 6.5 million square feet of agency business and negotiated leases and sales in excess of 2 million square feet during his 10 years with Cushman & Wakefield. He oversaw hundreds of transactions totaling over $1 billion in asset value during his 10 years as Director of Management Services/ Sales Manager with Grubb & Ellis and as Regional Manager with Marcus & Millichap. As Director of SV Capital, Mr. Osborne was responsible for procurement of over $100 million in equity and $200 million in debt financing. This capital has been distributed through a number of SV resort projects totaling over $1.5 billion in asset value. Mr. Osborne is a licensed Colorado Real Estate Managing Broker and a member of NAIOP, ULI, and NACOR. He is also involved with the Denver Chamber of Commerce Business Leaders & CEO Exchange, as well as the Mile High Unit of the American Cancer Society Board of Directors. CAPITAL REAL ESTATE 38

39 CAPITAL REAL ESTATE TEAM JASON WINE Director of Acquisitions Jason Wine serves Capital Real Estate as Director of Acquisitions. In this capacity he is responsible for asset acquisitions, market underwriting, transaction / due diligence management and business development. His 21-year multifamily career has given him extensive experience and a broad perspective including property management, development, investment and multi-family brokerage. Mr. Wine came to CRE after serving as Associate Broker with an institutional sales team on a national brokerage platform. In this capacity Mr. Wine worked on a broad range of apartment sale transactions including institutional income, value-add, development equity raises, construction project / pre-lease sales, HUD and/or bond financing, broken condo deals, GP buy outs and ownership entity transfers. Total deal volume during this 7 year period was approximately $2.5 billion in investment sales and transaction management. Jason graduated from the University of Colorado with a Bachelor s Degree in Economics and in 2006 received a Master s of Science from Denver University s Real Estate and Construction Management program. Jason is a licensed Colorado Real Estate Broker and a fourth generation Colorado Native. CAPITAL REAL ESTATE 39

40 CAPITAL REAL ESTATE TEAM PATRICK MACALIK Vice President of Asset Management Patrick Macalik serves as Capital Real Estate, LLC s Vice President of Asset Management. He works closely with CRE s property management companies, identifying opportunities to achieve maximum financial returns for each asset. Patrick s 17 years of experience gives him keen insight into market trends and operational strategies on a diverse range of asset types. His abilities to train and develop teams, his viable financial acumen, and his innovative marketing strategies have served him well in operational capacities. These strengths give him a distinct edge in the Denver market and make him a valuable addition to the CRE team. Prior to joining CRE Patrick managed properties for Carmel, Alliance Residential, Echelon Property Group, Zocalo, The Pauls Corporation, and AIMCO. While at Echelon Patrick achieved one of his most notable successes. He completed a $2 million renovation and repositioning of a 280-unit community in Denver. This community was recognized at the Apartment Association of Metro Denver s Tribute Awards, winning the award for Most Outstanding Renovated Property in Patrick studied mechanical engineering and landscape architecture at Colorado State University. CAPITAL REAL ESTATE 40

41 CAPITAL REAL ESTATE TEAM KATIE VANDERVEEN Vice President of Asset Management Katie Vanderveen joined Capital Real Estate, LLC as Vice President of Asset Management in the beginning of She brings to the role 15 years of diverse experience in property management including onsite management, multi-site management, renovations at value-add properties, condo conversions, acquisitions and due diligence, client relations, home owners association management and property accounting. She has a proven record of building strong onsite management teams and creating operational efficiencies. Prior to joining CRE, Katie was a Regional Manager for Laramar Group overseeing a portfolio of units in the Denver market. Her other roles with Laramar included Property Accountant and Yardi Specialist and Trainer. She started her career on-site in 2001 and has managed properties for Windsor Communities and East West Urban Management with experience in the Denver, Chicago and Houston markets. Katie holds a Bachelor of Business Administration in Finance from Grand Valley State University in Allendale, Michigan. CAPITAL REAL ESTATE 41

42 CAPITAL REAL ESTATE TEAM JEFF CARVER Controller Jeff Carver joined Capital Real Estate, LLC as Controller in early He works closely with the CRE management team to ensure the timely and accurate completion of all accounting processes and functions related to CRE s multifamily property portfolio. Jeff maintains oversight of both the corporate and property level accounting, and he serves as a key contact for the company s investor relations. Jeff brings over ten years of accounting experience in commercial real estate to CRE s team. Prior to joining CRE, Jeff served as Controller for four years at Johnson Capital Group, Inc., a national commercial mortgage real estate firm. During his time with Johnson Capital, Jeff was responsible for managing and performing the corporate accounting for the firm s nationwide offices and affiliated companies. Before his appointment as Controller, Jeff gained valuable experience as a Senior Accountant with the firm. Preceding his time at Johnson Capital in 2006, Jeff worked in the budget office for the University of Colorado at Boulder School of Arts & Sciences serving as a Financial Service Center Supervisor. Jeff graduated from the University of Colorado at Boulder with a Bachelor of Science in Business Administration. CAPITAL REAL ESTATE 42

43 CAPITAL REAL ESTATE 1700 Broadway, Suite 620 Denver, Colorado Telephone: (303) Fax: (303) Web site: