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Investment Memorandum for Western Region Fund

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  • 1.INVESTMENT MEMORANDUM U.S. Real Estate Opportunity Fund(Western Region)in the amount of: $100,000,000.00Released: 02/2012

2. EXECUTIVE SUMMARYReleased: 02/2012U.S. Real Estate Opportunity Fund (Western Region) Fund Entity: Western Region Fund, LLC Type:Private Equity FundCapitalization: $100,000,000.00Unit:$500,000.00 Use: Formation of a Private REITTerm:Dissolution is 5 years Assets:Segregated Portfolio Local: Western Region(Office, Retail and Industrial) (WA, OR, CA & NV) Values:Equity $100,000,000 30%Returns: Internal Rate of Return 15.5%Mortgage $215,000,000 70% Cash-On-Cash210%Acquisitions $315,000,000Disposition$450,000,000 General Mgr.:MagnuM Opes CorporationClosing: May 31, 2012U.S. Real Estate Opportunity Fund HomeTable of Links Next Slide Previous SlidePage 2 3. FUND SYNOPSIS Released: 02/2012 Fund Description The U.S. Real Estate Opportunity Fund is a group of private equity funds established for the acquisition and operation of income producing real estate for profit. The initial fund is established to acquire real estate in the U.S. western region. The U.S. Real Estate Opportunity Fund (Western Region) shall operate as an independent private equity investment company titled Western Region Fund, LLC. It is the intent of the U.S. Real Estate Opportunity Fund to make future offerings for other U.S. regions. Statement of Purpose The purpose of the Fund is to acquire a portfolio of undervalued real estate in recovering metropolitan areas of the U.S. and to increase the value of that real estate with the intent to: Reposition the portfolio as a Private Real Estate Investment Trust (Private REIT). In five years, convert the Private REIT to a Publicly Traded Real Estate Investment Trust (Public REIT). And provide the initial private equity Subscribers the option for the return-on and of their investment, plus the option for retained shares in the Public REIT; or Dispose of the portfolio assets in approximately 5 years and distribute principal and profits equivalent to a 210% cash-on-cash return or higher.U.S. Real Estate Opportunity FundHomeTable of Links Next Slide Previous SlidePage 4 4. FUND SYNOPSIS Released: 02/2012REIT Description A REIT is a fairly unique entity in the world of tax law Investors can achieve a variety of business/tax goals that cannot easily be achieved with any other entity REITs can be combined with other types of entities More Private and Public REITs are being formed today than ever before REITs offer Private Equity Funds and Private Investors an opportunity to take advantage of unique planning opportunities Private REITs provide many operational and return advantages Private REITs are not publicly traded Private REITs formed with pass through entities can avoid income tax Private REITs provide diversification in assets, investment types and tax strategiesU.S. Real Estate Opportunity Fund HomeTable of LinksNext Slide Previous SlidePage 5 5. FUND SYNOPSIS Released: 02/2012Dividends and Gains Private REITs are formed with pass through entities Approximately 95% of the net annual income is distributed to Shareholders The Western Region Fund will operate under these guidelinesInvestment and Returns 210% Cash-On-Cash Return 15.5% Internal Rate of ReturnExit Strategies Merger with other regional funds Place an Initial Public Offering (IPO) Cash distribution to Shareholders Shareholders may option for Public REIT shares Disposition by REIT acquisition Disposition by market sale Option to extend the operational termU.S. Real Estate Opportunity Fund HomeTable of Links Next Slide Previous Slide Page 6 6. FUND SYNOPSIS Released: 02/2012The Market Most all major agencies are reporting recovery trends Historical bell curves illustrate value step-up Typical Acquisition and diversification Office sector Retail sector Industrial sector Preparation for acquisitions have commenced in Seattle Portland San Francisco Los Angeles Las Vegas San DiegoU.S. Real Estate Opportunity Fund HomeTable of Links Next Slide Previous Slide Page 7 7. THE GLOBAL MARKETReleased: 02/2012Key Global Highlights Economic risks in Europe while U.S. trends more favorable and Asia performs well Capital markets robust Major cities considered safe haven Debt financing constrained Capital appreciation is slowing as yields flatten Office leasing markets show mixed pictures Overall global leasing volumes are likely to be stable Vacancies continue to edge downward The global office index grew in 2011 Technology, energy and commodity sectors are driving demand International retailer demand remains robust Warehousing momentum slow in Europe and Asia, but rebounding in U.S. Hotel transactions hold steady U.S. apartment market is high performerU.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous Slide Page 8 8. THE GLOBAL MARKETReleased: 02/2012 GDP Projections 2012 in Major Economies Recent MovementsAustralia ChinaFrance Germany IndiaJapan UK USA Oct 20113.2%8.1% 0.4% 1.0% 7.5% 2.7%0.9% 1.4% January (Latest)3.1%7.9%-0.7% 0.2% 6.7% 2.9%0.3% 2.0% Change (bsp) -10 -20 -110 -80-80 +20-60+60Source: IHS Global Insight, January 2012U.S. Real Estate Opportunity FundHome Table of Links Next Slide Previous SlidePage 9 9. THE GLOBAL MARKET Released: 02/2012 Global Real Estate Health Monitor Economy Real Estate Investment MarketsReal Estate Occupier Markets OECDNationalNationalLeadingInvestment Capital Value RentalNet VacancySupply Country CityGDP Indicator VolumesChangePrime Yield Yield Gap Change AbsorptionRate PipelineGermanyFrankfurt 0.2% -5.5%35% 2.1% 4.8%297 0.0% 0.9% 13.9% 3.6%Hong KongHong Kong 3.8% na 31% 20.7%3.4%188 10.2%3.3%4.2% 3.1%UK London0.3% -5.6%6%7.4% 4.0%202 7.4% 0.9%5.8% 3.8%Russia Moscow3.7% 1.3% 118%49.0%9.0% 50 41.2%3.8% 16.0% 14.8%US New York2.0% -0.2%63% 27.6%4.3%243 7.6% 0.5% 10.4% 0.9%France Paris -0.7%-6.6%37% 10.7%4.8%158 10.7%1.3%6.9% 3.3%Brazil Sao Paulo 3.2% -7.6%48% 12.7%10.0%na 18.6%5.0% 10.5% 35.9%ChinaShanghai7.9% 12.0%3%19.1%5.9%233 17.5%23.8%12.5% 35.5%SingaporeSingapore 2.0% na 25% 10.5%3.8%222 4.8% 10.1% 7.7% 21.3%AustraliaSydney3.1% 0.4% -5% 8.3% 6.9%307 15.2%2.0%8.7% 2.2%JapanTokyo 2.9% -2.2%-21%-2.1%3.6%261 -2.1%3.8%3.6% 14.0% Real Estate data end Q4 2011U.S. Real Estate Opportunity Fund HomeTable of LinksNext SlidePrevious SlidePage 10 10. THE GLOBAL MARKETReleased: 02/2012 Prime Offices Rental Clock, Q4 2011U.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 11 11. THE GLOBAL MARKETReleased: 02/2012U.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 12 12. THE GLOBAL MARKETReleased: 02/2012U.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 13 13. THE U.S. MARKETReleased: 02/2012U.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 14 14. THE U.S. MARKETReleased: 02/2012U.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 15 15. THE U.S. MARKETReleased: 02/2012U.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 16 16. THE U.S. MARKETReleased: 02/2012U.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 17 17. THE U.S. MARKETReleased: 02/2012U.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 18 18. THE U.S. MARKET Released: 02/2012 U.S. Market Economy Clock, Q4 2011U.S. Real Estate Opportunity Fund HomeTable of Links Next Slide Previous SlidePage 19 19. U.S. WESTERN REGIONReleased: 02/2012Target Cities Seattle SeattlePortland San FranciscoWashingtonPortland Oregon San Francisco Nevada California Las VegasLos AngelesSan Diego Los Angeles Las Vegas San DiegoU.S. Real Estate Opportunity Fund HomeTable of Links Next Slide Previous Slide Page 20 20. U.S. WESTERN REGIONReleased: 02/2012Seattle Leasing activity rebounds, led by Class A dealsKey Indicators, Q4 2011Property ClockU.S. Real Estate Opportunity FundHomeTable of Links Next Slide Previous SlidePage 21 21. U.S. WESTERN REGIONReleased: 02/2012Portland Driven by logistics and high techKey Indicators, Q4 2011Property Clock VacancyLeasing Activity Rents EmploymentUnemploymentNew ConstructionPersonal IncomeU.S. Real Estate Opportunity FundHomeTable of Links Next Slide Previous SlidePage 22 22. U.S. WESTERN REGIONReleased: 02/2012San Francisco Tech demand produces highest rent and net absorption growthKey Indicators, Q4 2011Property Clock VacancyLeasing Activity Rents EmploymentUnemploymentNew ConstructionPersonal IncomeU.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 23 23. U.S. WESTERN REGIONReleased: 02/2012Los Angeles Recovery mixed across submarketsKey Indicators, Q4 2011Property ClockU.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 24 24. U.S. WESTERN REGIONReleased: 02/2012Las Vegas A quiet come backKey Indicators, Q4 2011Property Clock Visitor VolumeGaming Revenues Population PeakingFalling market marketEmployment Rising Bottoming UnemploymentmarketmarketNew Construction Las VegasPersonal IncomeU.S. Real Estate Opportunity Fund Home Table of Links Next SlidePrevious Slide Page 25 25. U.S. WESTERN REGION Released: 02/2012San Diego driven by high-tech, biopharma, retail and healthcareKey Indicators, Q4 2011 Property ClockU.S. Real Estate Opportunity Fund HomeTable of Links Next Slide Previous SlidePage 26 26. TYPICAL ACQUISITIONReleased: 02/2012 Potential AcquisitionU.S. Real Estate Opportunity Fund Home Table of Links Next Slide Previous SlidePage 27 27. TYPICAL ACQUISITIONReleased: 02/2012Concluded Acquisition Characteristics $10,000,000.00 Market Value 65% to 75% Occupancy Performing Leases Well maintained less then 1% of value for capital improvements Market value equivalent to an 8.0% capitalization of in place income Submarket illustrates positive demand and growth trends The asset is projected to reach 90% occupancy in by the fifth year The proj