2012 Canadian Apartment Investment Conference

Transcription

1 2012 Canadian Apartment Investment Conference The US Multifamily Market: An Answer to Economic Pressure Greystar Real Estate Partners A Fully Integrated Multifamily Service Provider

2 Greystar Real Estate Partners Based in Charleston, South Carolina, Greystar has a presence in over 100 markets nationwide supported by 18 city offices. With multiple lines of business and over 200,000 units managed across the US, Greystar s vertically integrated business model leverages a national platform, expertise across multiple disciplines, and relationships with institutional capital. Since its inception in 1993, Greystar s focus has been solely on multifamily real estate, a focus that is maintained today. Executive Leadership Bob Faith Chairman & Chief Executive Officer Bill Maddux Chief Operating Officer Derek Ramsey Chief Financial Officer Wes Fuller Executive Director Investment Scott Wise Executive Director Development Andrew Livingstone Executive Director Property Mgmt.

3 National Footprint Integrated Platform Management, Investment, and Development businesses create platform synergies Management Platform 200,000 units under management Over 700 properties Principal Investment Platform $2.4B portfolio comprised of 57 assets across 26 markets Investment: $3.8B since firm inception; $1.1B acquired since January 2011 Development: $1.3B since 1995; $900mm closed since January 2011 Seattle Minneapolis Boston San Francisco Sacramento San Jose Ventura Los Angeles Fresno Las Vegas Inland Empire Phoenix Tucson Office Locations Boulder Denver Santa Fe Albuquerque 200,000 Units Managed Colorado Springs Dallas Austin San Antonio Kansas City Tulsa Oklahoma City Baton Rouge Houston Springfield Chicago St. Louis Louisville Memphis Indianapolis Johnson City Atlanta New Orleans Cincinnati Lexington Savannah Tampa Richmond Charlotte Raleigh Charleston Corporate Headquarters Jacksonville Orlando West Palm Beach Ft. Lauderdale Stamford Philadelphia Suburban MD Washington D.C. 9/21/ :26:5 4 AM

4 Firm Evolution The Evolution of Greystar Founded in 199 Founded in 1993 by Bob Faith Partner at the Trammell Crow Company ( ) Co-founder of Starwood Capital Partners, L.P. ( ) Greystar combines local operating presence with a national capital allocation strategy Investment Management Growth Consistent Growth: Units under Management 1993 Founding 1994 GEP I $30mm Discretionary Sep. Acct. JMI Investments 1996 GEP II $80mm Joint Venture Crow Family Holdings 2001 GEP III $30mm Discretionary Sep. Acct. JMI Investments $80mm Joint Venture Crow Family Holdings $300mm Discretionary Sep. Acct. Oregon Public Employees Retirement Fund $200mm Joint Venture GE Real Estate 2005 GEP IV $200mm Joint Venture GE Real Estate $100mm Joint Venture GE Real Estate 2007 GEP V $100mm Joint Venture GE Real Estate 200, , , , , ,000 80, GEP VI $140mm Joint Venture MetLife, Inc Separate Accounts $140mm Joint Venture MetLife, Inc. Over $350mm in in Separate Accounts & Coinvestment Equity managed by by Greystar 2011 GEP VII $600mm Discretionary Commingled Fund 60,000 40,000 20,

5 Evergreen Business Model Integrated Platform of Operating Businesses Holding Company: Services catering to the operating businesses (IT, HR, etc.) Property Management Manage properties for institutional clients Investment Development Create investment partnerships to invest in the acquisitions of properties Create investment joint ventures to develop and build new properties Businesses work together to provide full range of services for clients and offset the volatility of the notoriously cyclical real estate business

6 Sizing up the Opportunities US vs. Canada US apartment market larger with relatively newer vintage product 17.5MM units in the US versus 1.5MM in Canada New York apartment stock alone is larger than the entire apartment stock of Canada Over 60% of total Canadian stock is comprised of top five markets vs. less than 30% in US Top 5 Markets by Units US Units Canada Units New York 2,057,331 Montreal 449,826 Los Angeles 1,168,229 Toronto 307,171 Chicago 581,152 Vancouver 104,681 Dallas 513,200 Ottawa 60,413 Houston 431,537 Calgary 34,814 Top 5 4,751,449 Top 5 956,905 TOTAL 17.5MM TOTAL 1.5MM 120% 100% 80% 60% 40% 20% 0% Vintage of Apartment Stock 97% 81% 19% 3% < or newer Source: NMHC, 5+ units Canada US

7 Transaction Volume Volumes Reflective of Larger US Market 6.5 Apartment REIT Purchase Activity in Canada vs. US (Billions) H Q1 Canada Apartment Sales Volume US REIT Sales Volume Source: PPR;SNL (NOTE: includes properties purchased by both U.S. and Canadian based publicly traded companies)

8 US Economic Backdrop Choppy Economic Recovery, Heightened Uncertainty Modest economic recovery since the downturn Consumer confidence remains low, weighing on GDP growth 8.00% % 120 US GDP Growth 4.00% 2.00% 0.00% -2.00% Consumer Confiden nce -4.00% -6.00% % % US GDP Growth Consumer Confidence Source: Bureau of Economic Analysis, Conference Board

9 US Multifamily: A Bright Spot of the Economy Strong, Sustained Recovery in Apartments Multifamily has performed exceptionally well over the last two years Vacancy continuing to decline while rent growth remains strong Rent Growth 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 Vacancy 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 Rent Growth Vacancy Source: PPR

10 Demand: Secular Shifts in Demographics Renting is the New Owning Continued decline in the homeownership rate coupled with positive household formation Echo-Boomers entering prime rental age Rental Population Growing Demographic Tailwinds 116,000 70% Households 114, , , , , , , ,000 98, Households Homeownership Rate 69% 69% 68% 68% 67% 67% 66% 66% 65% 65% Homeownership Rate 140, , ,000 80,000 60,000 40,000 20,000 0 Under years years 65 and older Owners Renters Source: US Census, NMHC

11 Muted Supply Growth Deliveries Well-Below Historic Average Development capital difficult to raise Permitting activity increasing though still below average Unit Completion ns New Supply Average Source: US Department of Commerce

12 The Landscape: Looking Ahead Demand Expected to Outpace Supply New supply expected to be absorbed over the next five years Should result in continued pricing power for landlords 100,000 80,000 + Demand 60,000 40,000 20,000 0 Forecasted Excess Demand -20,000-40,000-60,000-80,000 -Supply -100, , Source: PPR

13 Seizing the Opportunity Positive Yield to Financing Costs Cap rates declining due to growth projections, low interest rates, and capital inflows Positive spread to financing costs results in accretion for leveraged buyers 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Spread (bps) Spread (bps) 10Yr Apartment Cap Rates Source: Bloomberg, Green Street, Greystar

14 Operational Insights Demographics Should Drive Operational Practices Housing Hangover Smaller, more efficient uses of space Apartment renters are younger with less people per household Byproduct of housing bust Mitigate against future move-outs Be Near the Action Trend towards urbanization Closer to job centers and entertainment hubs Less commuting, lower gas costs Differentiate Yourself More efficiency in apartment pricing = renters can t distinguish on price alone Service becomes paramount Amenities are expected Online marketing presence should cater to tech-savvy renters

15 Institutional Advantages Institutional Nature of US Multifamily Generates Efficiencies Liquidity Large Investment Opportunity Set Liquid Transaction Environment Deep and Diverse Network of Investors and Operators Technology & Data Pricing Optimization Software Robust Data Sets Analytics and Trends Economies of Scale Vendor Relationships Bulk Purchase Agreements Programmatic Insurance Savings

16 Greystar Real Estate Partners Based in Charleston, South Carolina, Greystar has a presence in over 100 markets nationwide supported by 18 city offices. With multiple lines of business and over 200,000 units managed across the US, Greystar s vertically integrated business model leverages a national platform, expertise across multiple disciplines, and relationships with institutional capital. Since its inception in 1993, Greystar s focus has been solely on multifamily real estate, a focus that is maintained today. Executive Leadership Bob Faith Chairman & Chief Executive Officer Bill Maddux Chief Operating Officer Derek Ramsey Chief Financial Officer Wes Fuller Executive Director Investment Scott Wise Executive Director Development Andrew Livingstone Executive Director Property Mgmt.