JZ Capital Partners Limited · LSE:JZCP
JZ Capital Partners — HY2016 Earnings Presentation
35 slides from JZ Capital Partners's earnings presentation, November 2016
Slide 1: 2016 Interim Results Presentation
2016 Interim Results Presentation
Slide 2: Disclaimer
This Document and the presentation to which it relates (‘Presentation’) do not constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite or otherwise acquire or dispose of any securities o
Slide 3: Contents
Contents About us Financial Highlights NAV Validation Portfolio Review Outlook Appendix 3
Slide 4: About us
About us JZCP is one of the oldest closed-end Adviser is Jordan/Zalaznick Advisers, Inc. – investment companies listed on the Specialist founded in 1986 Fund Segment of the London Stock Exchange Led by Jay Jordan and David Zalaznick – invested together for more than 35 years Gordon Nelson (C
Slide 5: Financial highlights
Financial highlights Total NAV return per • NAV of $873m (29/02/16: $851.7m) – after paying $12.6 million in dividends share of +3.9%* • Total NAV return per share of 3.9%* per share • Strong six-month shareholder return of 17.3%* Strong shareholder • Interim dividend of 15.5 cents per share declare
Slide 6: Share price and NAV per share performance
Share price and NAV per share performance Cumulative NAV total returns* Cumulative total shareholder returns* 33.1% 51.3% 15.8% 10.0% 9.8% 0.4% 1 year 3 year 5 year 1 year 3 year 5 year NAV to market price discount 43% 37% 33% 26% 8/31/11 8/31/13 8/31/15 8/31/16 *Calculated on a dividends re-investe
Slide 7: Net asset value
Net asset value 11.5 11 $0.03 $0.62 $0.10 $10.55 $10.40 10.5 $(0.26) $(0.09) $(0.15) $10.15 10 9.5 9 NAV per Ordinary Capital Gains and Change in CULS Expenses and Finance Costs Other Foreign NAV per Ordinary Dividends Paid NAV per Ordinary Share as of 29 Accrued Income on fair value Taxation Exchan
Slide 8: Balance sheet summary
Balance sheet summary $ 000 $ 000 Investments 31/08/16 29/02/16 US Micro-cap Investments 438,188 386,173 $ 000 $ 000 Investments 31/08/16 29/02/16 European Micro-cap 158,159 168,798 Total Assets 1,133,159 1,139,580 Investments - Liabilities (147,829) (126,198) Real Estate Investments 435,144 366,158
Slide 9: Major holdings
Major holdings Cost ($ 000) Value ($ 000) % of gross Company Type (31/8/2016) (31/8/2016) assets Industrial Services Solutions vertical US micro-cap 33,256 84,045 7.4 Factor Energia European micro-cap 402 64,341 5.7 Fulton Real estate 33,268 63,637 5.6 Greenpoint Real estate 34,871 56,890 5.0 Health
Slide 10: Portfolio breakdown
Portfolio breakdown Portfolio by Vintage Portfolio by Investment Type Portfolio by Industry 10
Slide 11: NAV Validation
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Slide 12: NAV Validation
NAV Validation • JZCP completes the secondary sale of six assets at NAV (announced in Feb. 16) • Winn - JZCP sold its stake in Winn (the sixth asset) following regulatory approval, receiving net sale proceeds of $20.7 million* plus an interest distribution of $1.2 million post-period in September 20
Slide 13: Portfolio Review – micro-cap
Portfolio Review – micro-cap
Slide 14: US micro-cap
US micro-cap Strategy: Verticals • Identify and purchase smaller businesses in “verticals” where an industry executive can add value via organic growth and cross company synergies • Sell vertical platform companies as one entity for a multiple expansion Strategy: Co-investments • Co-invest with know
Slide 15: US micro-cap verticals
US micro-cap verticals Industry sector driven “build-ups” created to add value through operational synergies across businesses and exit multiple expansion Industrial Healthcare Testing Services Revenue Cycle Water Services Solutions (ISS) Services Management Industrial Revenue cycle Environmental In
Slide 16: Significant US micro-cap co-investments
Significant US micro-cap co-investments George Industries Peaceable Street Tech Industries K2 Towers Capital Manufacturer of New platform Platform established One of the largest highly engineered providing preferred to invest in aerospace private cell phone components for equity to commercial and de
Slide 17: European micro-cap
European micro-cap Strategy • Value-oriented investment approach targeting micro-cap companies • Investment focus on financial services outsourcing, including non-bank lending Management • Strategy coordinated by an experienced management team, which has invested in European micro-cap deals (UK, Ita
Slide 18: European micro-cap
European micro-cap Recent Events: • Winn: JZCP completes second step of secondary sale announced in February 2016 • JZCP sold its stake in Winn following regulatory approval: net sale proceeds of $20.7 million* plus further interest distribution of $1.2 million post-period in Sept. 2016 (total proce
Slide 19: Fund III – Portfolio Companies
Fund III – Portfolio Companies Petrocorner Fincontinuo S.A.C Collingwood Strategic build-up to Independent salary- Operational van Niche UK-based acquire 2-3% of backed consumer leasing (lease & motor insurance Spain’s petrol station lending platform in service) company in company market Italy Denma
Slide 20: Portfolio Review – Real Estate
Portfolio Review – Real Estate
Slide 21: Real estate
Real estate Strategy • Value-added investment strategy analogous to micro-cap investing • Developing and repositioning retail, residential and office properties in Brooklyn and South Florida neighborhoods with strong growth demographics Value Add • Reposition: Vacate under-market units through lease
Slide 22: Real estate: portfolio by neighbourhood (Brooklyn)
Real estate: portfolio by neighbourhood (Brooklyn) 22
Slide 23: JZCP’s current real estate portfolio: Brooklyn, NY
JZCP’s current real estate portfolio: Brooklyn, NY What we’ve purchased: • Williamsburg: Epicenter of positive shifting demographics in North Brooklyn • 12 mixed-use properties, located on most trafficked retail corridors • 57,000 sq. ft. residential / 275,000 sq. ft. retail • Two development sites
Slide 24: Redbridge Bedford Value Creation (Acquisition Underwriting)
Redbridge Bedford Value Creation (Acquisition Underwriting) Total Purchase Price $64.0m Total Capitalization at $83.0m Acquisition NOI at Purchase $2.1m Projected NOI at $6.7m Stabilization Projected Exit Cap 4.25% Projected Value at $157.0m Stabilization • We purchased a prime retail asset in north
Slide 25: Redbridge Bedford Value Creation (Apple Store - Business Plan Execution)
Redbridge Bedford Value Creation (Apple Store - Business Plan Execution) 247 Bedford at Acquisition Actual Delivered Apple Space Buyouts of 13 loft law tenants on the second floor of 247 Bedford Negotiated buyout with retail tenant Kings Pharmacy to make room for Apple signs for Apple 247 Bedford Op
Slide 26: Redbridge Bedford Value Creation (North 4th St. - Business Plan Execution)
Redbridge Bedford Value Creation (North 4th St. - Business Plan Execution) • Negotiated retail tenant buyout of The Backer Group (see left), making room for retail tenants on North 4th Street • Negotiated several more loft law tenant buyouts and finalizing negotiations with others to build second fl
Slide 27: Redbridge Bedford Value Creation (Current Capitalisation)
Redbridge Bedford Value Creation (Current Capitalisation) Total Purchase Price $64.0m Closing & Financing $19.0m Costs Construction Costs $38.1m Total Costs $121.1m Total Projected NOI $11.3m Total Projected $121.1m Capitalization Stabilized Yield 9.3% • Current market ground floor retail Base Case
Slide 28: Real estate: portfolio by neighbourhood (Miami)
Real estate: portfolio by neighbourhood (Miami) Rising retail rents amidst thriving arts scene Vibrant shopping and cultural scene; home to world’s most prestigious brands 28
Slide 29: JZCP’s current real estate portfolio: South Florida
JZCP’s current real estate portfolio: South Florida What we’ve purchased: • Wynwood (Miami): rapidly increasing retail rents amid a thriving arts scene • Two top development sites: each with 60,000 sq. ft. buildable • Cash flowing Class-A retail property with substantial air rights • Prime retail re
Slide 30: Esperante Corporate Center (Summary of Opportunity)
Esperante Corporate Center (Summary of Opportunity) • Esperante Corporate Center is a trophy office • West Palm Beach is a market with strong building in the West Palm Beach central fundamentals poised to dramatically improve due business district, at the gateway of Palm Beach to the influx of hedge
Slide 31: Esperante Corporate Center (Valuation)
Esperante Corporate Center (Valuation) Total Purchase Price $125.8m Reserves, Closing & $9.3m Financing Costs Total Costs $135.0m Year 7 Projected NOI $11.0m Total Projected $135.0m Capitalization Stabilized Yield 8.14% Base Case Exit Cap Rate 5.50% Base Case Valuation $199.9m Current base case stab
Slide 32: Summary & Outlook
Summary & Outlook Strong balance sheet to take Strong pipeline of opportunities in the advantage of opportunities US, Europe and real estate portfolios Positive total NAV return per share in Long-term track record of NAV 26 of past 30 quarters growth & consistent dividend 3% of NAV paid annual
Slide 33: Appendix
Appendix JZ CAPITAL PARTNERS LIMITED
Slide 34: JZCP investment activity
JZCP investment activity Since 29 February 2016 ($ millions) Jordan Healthcare Products 8.7 PPS (healthcare revenue cycle management vertical) 1.4 George Industries 12.6 Peaceable Street Capital 13.8 Tech Industries 2.5 Shannon Safety (testing vertical) 0.5 Southern Petroleum Laboratories 0.4 Real E
Slide 35: JZCP realisation activity
JZCP realisation activity Since 29 February 2016 Gross Proceeds ($ millions) Bright Spruce Fund – Partial Realisation 39.7 Suzo Happ – Distribution 1.3 K2 Towers – Partial Buy Down 1.1 Dental Services – Escrow 3.1 Amptek – Escrow 1.6 Galson – Escrow 0.5 JZ International – Sale (Various) 0.9 Winn – S