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Commercial Real Estate Investing Wilson Investment Properties Tom K Wilson, Steve Fithian

January 6, 2015 Santa Clara Biltmore

Agenda

•  Benefits of Commercial Real Estate

•  National Real Estate Market Overview

•  Advantages of Syndicating

•  Why Dallas / Ft. Worth

•  Burleson Retail Center

•  PPM & Investor Questionnaire

•  Resources •  How to Participate

Tom K. Wilson

www.tomwilsonproperties.com

•  BS in Electrical Engineering from University of Delaware.

•  30 years Silicon Valley high tech, manager & entrepreneur.

•  VP Two Start Up companies

•  40 years real estate investor:

•  >$100M transactions.

•  >2000 units.

•  7 multifamily props,

•  3 condo conversions

•  3 syndications.

•  Founded Wilson Investment Properties, Inc. 2006:

•  400 properties for investors.

Tom K. Wilson, President Wilson Investment Proper5es, Inc. [email protected] 408-‐867-‐1867 www.tomwilsonproper5es.com

Steve Fithian


•  Over 25 years of commercial real estate experience. •  Owns commercial brokerage company. •  Owns a property management company. •  General manager in multiple property partnerships.

•  Specializes in selling & overseeing investment property sales that include multifamily, mini-warehouse, office, retail, undeveloped land and finished lots.

•  Certified Commercial Investment Member (CCIM). •  Former Chairperson on the North Texas Chapter CCIM

Membership Committee.

•  Current member of the Texas Association of Realtors & past member of the California Association of Realtors.

•  Member of the 2004 Regulatory & Private Property Rights Tax Force.

•  Commercial Transaction of the Year Award, Texas Association of Realtors.

•  Commercial Realtor of the Year Award, Society of Commercial Realtors.

Steve Fithian, CCIM, CPM, SEC Senior Advisor and Managing Director Sperry Van Ness/Visions Commercial

National Real Estate Market Overview Volume and Pricing Trends Source: RCA

•  Volume through Nov 2014 totaled $365.9B, already surpassing the full-year

total of $361.3B in 2013 •  All property types are in positive territory year-to-date with retail and hotel

sectors recording the largest volume gains. •  Property prices have recently exceeded peak levels. Cap rates are also

near or below levels from the last peak, although interest rates are far lower than they were in 2006 and 2007.

National Real Estate Market Overview Interest Rate Risks and Cap Rates

WSJ consensus forecast for interest rates is an 85 BPS increase over 2015 which, if accurate, could easily be absorbed by compression of the spreads without putting much upward pressure on cap rates.

National Real Estate Market Overview Composition of Buyers

•  Foreign Investors are on track for nearly $50B of property acquisitions in the U.S. in 2014.

•  Capital Flowing from Asia – Asian buyers will account for at least $14.5B across 36 U.S. markets this year.

•  Emergence of Chinese buyers and the trend is in its early stages.

National Real Estate Market Overview

National Real Estate Market Overview Lenders: Aggressive and Competitive

National Real Estate Market Overview Impact of New Supply and Oversupply Risk

•  The apartment sector is furthest along with supply 20 percent above the

long-term levels.

•  Land is still relatively cheap and financing for new development is increasingly available and attractive.

•  Trends

National Real Estate Market Trends Window of Opportunity

•  Low Interest Rates

•  Availability of Financing to Quality Borrowers

•  Favorable markets within certain geographic areas

Difficulty in Finding Good Deals

•  Too much money chasing too few deals!

•  See references for quantitative data (Mark Dotzour, Ph.D. presentation)

Benefits of Commercial Real Estate •  Cash flow

•  Appreciation

•  Easier to deploy larger amounts of money

•  Tax shelter •  Typically higher returns than residential (single family homes)

•  Easier to manage than large numbers of scattered single family homes

•  Better inflation hedge •  Long term leases •  Renewal options •  Annual bumps in rent •  Percentage rent •  Reimbursement for expenses

Benefits of Commercial Real Estate

•  Enhanced management

•  Significant upside is often present. Many opportunities to raise value.

•  Rehab

•  Development of additional improvements

•  Ancillary income – oil & gas, cell towers, antennas and billboards

Issues with Commercial Real Estate

•  More complicated issues (leases, tenant improvements)

•  Commercial financing can be challenging to obtain

•  Greater need for liquidity by owners

•  Sale of a commercial property can take longer

•  Economic conditions can have a greater impact

Product Types

Multi-family

Product Types

Self-Storage

Product Types

Industrial

Product Types

Office

Product Types

Retail

Multi-tenant

Product Types

Retail

Single Tenant Net Leased

Product Types

Land

Product Types

Special Purpose

Golf Course

Syndications Benefits:

•  Purchase a larger property than an investor could on his or her own •  Purchase a higher quality property than an investor could on his or her own

•  Experienced promoter can more easily deal with complex issues such as Tenant Improvements, Leasing Commissions, vacancy issues, negotiation of complex leases

•  Professional manager and professional management •  Possible benefits of lower insurance costs (master insurance policies) •  Easier to achieve a diversified portfolio

Syndications Benefits:

•  Better financing available than smaller properties •  The “Promoter” generally assumes financial or legal risk •  Investment is limited to original investment •  Does not require day to day management or oversight by the investor

•  Easier to get into market outside of one’s local area

Syndications When considering syndication, what is important?

•  The time horizon for the investment

•  The Promoter’s track record and integrity

•  The Economics of the region •  The specific investment


Selecting

Dallas/Ft.Worth

A Region

Texas Economy Overview

The Texas economy gained 436,700 nonagricultural jobs from Oct. 2013 to Oct. 2014, an annual growth rate of 3.9 percent compared with 2 percent for the United States


The seasonally adjusted unemployment rate fell to 5.1 percent in Texas in Oct. 2014 from 6.2 percent in Oct. 2013. Nation’s rate decreased from 7.2 percent to 5.8 percent.


Case Shiller : MSA Declines L.Vegas Worst

Dallas Best


Texas vs USA Employment Growth Employment Growth Rates for United States and Texas, 2008-‐2011


Texas vs USA Employment Growth Employment Growth Rates for United States and Texas, 2011-‐2014

Dallas Job Growth Leader


3.8

3.2 3.1

2.2 2.1 2 1.7

1.2 1.1 0.8

0.5 0.2

-‐0.3 -‐0.5

0

0.5

1

1.5

2

2.5

3

3.5

4

US Bureau of Labor Sta5s5cs

Over-‐the-‐Year Percent Change, United States & 12 Largest Metropolitan Areas, April 2014

Dallas-‐Fort Worth Employment Major Industry Sectors


Trade & Transporta5on 19.7% Business Services 18.7% Public Administra5on 13.7% Health Services 9.9% Leisure & Hospitality 9.6% Manufacturing 7.7% Financial Ac5vi5es 6.2% Other 6.2% Construc5ng 5.9% Informa5on 2.4

Trade & Transporta-on,

19.7%

Business Services, 18.7%

Health Services, 9.9% Financial Ac-vi-es,

6.2%

Leisure & Hospitality, 9.6%

Construc-on, 5.9%

Manufacturing, 7.7%

Informa-on, 2.4%

Public Administra-on,

13.7%

Other , 6.2%

Source: Dallas Regional Chamber


DFW Fortune 500 Companies

4th Busiest World Airport


•  4th busiest airport in the world, 1st in capacity •  Ranked “Best Airport in North America” for customer service by Premiere Travel magazine

•  58 million passengers travel through DFW yearly •  Served by 40 Carriers; 16 all-‐cargo, and 24 passenger carriers

More High Tech Jobs (>220,000) than AusKn/Houston Combined


Dallas, TX US Census Bureau’s Fastest Growing Metro

•  Median Income: $60,383 •  Annual Job Growth: 3.8% •  Top Metro in Job Growth •  Cost of Living Index: 95.7 •  38 Fortune 1000 Companies •  Fastest Growing Transporta5on System in U.S.

•  Texas is the largest U.S. exporter



State Government Financial Stability

Source: Federal Reserve, Natl Conference of State Legislatures


Cost of Living US Bureau of Labor Statistics: Q1 2014

85

95

105

115

125

135

Zip Realty – “Dallas Is the Most Affordable Major Metro Area to Live In the US”


Texas Population Growth Second Largest State Population

26

11

6 4

33

0

5

10

15

20

25

30

35

40

45

1900 1950 2000 2050

Millions

Historical Pop Projec5ons •  13.9: 1970-‐2010

•  1000/day •  14M: 2010-‐2030 •  2000/day

Source: US Census Bureau

Dallas/Fort Worth: Economic Oasis

• Business Capital of the South • Employment & Pop. Growth Leading US • High CAP Rates • Newer Quality Products • Lowest Risk Real Estate Market • Broad Based Economy • Government Fiscally Strong • Occupancies High


Difficult to find good deals in the best economy metros like DFW

Burleson Retail Center

Burleson Retail Center – Trade Area

Burleson Retail Center Trade Area

Burleson Retail Center City of Burleson

•  Since 2000, more than 33% of housing stock was built representing 3,500 new homes valued at $420M

•  Since 2000, more than 13,000 new residents

•  Average household income of more than $69,000 •  Retail sales have doubled since 2002 and are over $1.2B annually

Burleson Retail Center Property

Burleson Retail Center Tenants

Burleson Retail Center Financials

Burleson Retail Center Market Analysis

Burleson Retail Center Due Diligence Property Condition Assessment

Burleson Retail Center Due Diligence Environmental Report

Burleson Retail Center Survey & Title Commitment

Burleson Retail Center Private Placement Memorandum Suitability Standards – pages 1 - 2

Accredited Investor Non-Accredited Investor

Summary of the Investment – pages 3 – 5 Business Plan – pages 6 – 7 Estimated Source and Use of Proceeds – page 8 Compensation and Fees – page 9 Management – pages 10 – 13 Risk Factors – pages 16 – 18 Terms of the Offering – pages 23 – 24 Participation in Costs and Revenues For the Fund – page 25 Additional Assessments – page 26

Burleson Retail Center Private Placement Memorandum Accounting Reports – page 27

Monthly Profit & Loss Statement Monthly P & L Comparison to Budget Monthly Balance Sheet Monthly Rent Roll Annual Form 1054 Schedule K-1 Annual Business Plan Update Annual Budget

LLC Company Agreement – Appendix I, pages 1 – 36 Subscription Agreement – Appendix II, pages 1 – 5 Purchaser Questionnaire – Appendix III Pro Forma Projections – Appendix V

Investor Questionnaire Please take a moment to complete this questionnaire.

Resources Public Resources

Real Estate Center, Texas A & M University http://recenter.tamu.edu

Federal Deposit Insurance Corporation https://www.fdic.gov

North Central Council of Governments http://www.nctcog.dst.tx.us

Resources Private Resources

CoStar M/PF ALN O’Connor CCIM Site to Do Business Real Capital Analytics (RCA) REIS NTREIS Trade Tracker

Resources Additional Resources

Presentation by Mark Dotzour, PhD on Economy and Commercial Real Estate http://scr-fw.org/wp-content/uploads/12-3-14-Fort-Worth-SCR.pdf

Overview of Dallas Commercial Real Estate Market in 2014 http://www.dallasnews.com/business/commercial-real-estate/headlines/20141225-2014-north-texas-real-estate-market-is-one-for-the-records.ece

Monthly Review of the Texas Economy by the Real Estate Center. http://recenter.tamu.edu/pdf/1862.pdf

Outlook for the Texas Economy by the Real Estate Center. http://recenter.tamu.edu/pdf/2046.pdf

Population Stats by the Real Estate Center http://recenter.tamu.edu/data/pop/popm/cbsa19100.asp


Historical Unemployment Stats by the Real Estate Center http://recenter.tamu.edu/data/emp/empm/msamt481910.asp

Texas Population Projection by the Real Estate Center http://recenter.tamu.edu/news/pdf/NewsRel16-0813.pdf

Texas exports more goods than any other State in U.S. http://recenter.tamu.edu/news/pdf/NewsRel07-0413.pdf


Impact of lower oil prices on Texas •  Star Telegram

http://www.star-telegram.com/news/business/article4431538.ht •  CBRE You Tube Video

https://www.youtube.com/watch?v=RIrPqeLeDIY •  Fort Worth Business Press

http://fwbusinesspress.com/fwbp/article/1/8225/Breaking-News/Oil-plunge-sparks-concern-of-real-estate-slowdown-in-U.S.-energy-centers-including-Texas.aspx

Wilson Investment ProperKes Take Aways….

• Realis5c Cash Flow Now is King • Inves5ng for Apprecia5on is Risky • Best Cash Flow is Out of State • Get an Expert Team to Get the Best Products



“A crisis is a terrible thing to waste.”

Paul Romer, Senior Fellow at Stanford University

Don’t Miss this Window of Opportunity!

Now is the Time to Plan for Your Re-rement Income

www.tomwilsonproper5es.com

Get Up Snoopy!!

Maybe I’ll think about it for awhile…..

Wilson Investment ProperKes

www.tomwilsonproperKes.com

Next Stress Free Real Estate Inves1ng Presenta1on:

Jan 7, Thurs, Biltmore Santa Clara 6:30-‐8:30pm

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