Jernigan Capital — Investor Presentation (March 2018)
32 slides from Jernigan Capital's investor presentation, Mar 2, 2018
Slide 1: Investor Presentation March 2018
1 Investor Presentation March 2018 Exhibit 99.1
Slide 2: Safe Harbor Disclosure Regarding Forward-Looking Statements
2 Safe Harbor Disclosure Regarding Forward - Looking Statements This presentation includes "forward - looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Sect ion 21E of the Securities Exchange Act of 1934 and other federal securities laws, our future performance,
Slide 3: Company overview and mission
3 provides debt and equity capital to private developers, owners, and operators of self - storage facilities. Our mission is to be the preeminent capital partner for self - storage entrepreneurs nationwide by offering creative solutions through an experienced team demonstrating the highest levels of
Slide 4: Investment Highlights
4 ▪ $500+ million pipeline of investments in underwriting; $200 to $230 million new investments estimated for 2018 ▪ Q1 2018 to date (2 months): $94 million loan commitments closed and additional $9 million invested in developer buyouts ▪ Closed $409 million of new development investments in 2017 ▪
Slide 5: Experienced and Aligned Senior Management Team
5 Experienced and Aligned Senior Management Team ~ 8.0% Management and Board Ownership Creates Significant Alignment of Interests Dean Jernigan Chairman of the Board & Chief Executive Officer John Good President & Chief Operating Officer Kelly Luttrell Senior Vice President & Chief Financial Officer
Slide 6: Attractive Investment Thesis
6 Experienced Senior Management Team with Significant Ownership Significant Identified and Potential Growth Opportunities Compelling Investment Economics and Attractive Valuation Flexible Capital Structure Supports Strong Future Growth High Quality Platform with Demonstrated Expertise Attractive Inv
Slide 7: High ROI Business Model Executed in Top Self-Storage Markets
7 High ROI Business Model Executed in Top Self - Storage Markets Providing Innovative Financing Solutions for the Self - Storage Industry Attractive Risk - Adjusted Returns Through Equity Participations Deve l op m ent Investments G r ound - up C onstruction Major R e d eve lopm e nt ▪ F ocus on pro
Slide 8: Development Project Investment Timeline
8 Development Project Investment Timeline ▪ Below is an example of a typical timeline for a typical 72,000 net rentable square feet development project ▪ Key assumptions include: ▪ 9.0 % yield on cost and a 5.5% cap rate at stabilization ▪ JCAP lends 90% of total cost and receives fixed interest rat
Slide 9: Significant Built-in Fair Value Accretion
9 Significant Built - in Fair Value Accretion Source: Company estimates (1) Based on fair market value estimates as of 12/31/17 ▪ As of 3/2/2018, only ~13% of estimated fair value accretion (~$30 million) has been recognized on ~$568 million of committed, on - balance sheet development property and
Slide 10: Potential FMV Accretion
10 Potential FMV Accretion (1) Closed loans as of 3/2/2018 (2) All amounts less Highland’s 25% share of book value accretion Potential Future FMV Accretion Per Common Share (2) ▪ The table below displays potential future fair market value (“FMV”) accretion per common share ▪ Using current fair marke
Slide 11: Predictable Dividend That Tracks Value Creation
11 Predictable Dividend That Tracks Value Creation (1) Quarterly diluted net income per common share and diluted adjusted earnings per common share per filings ▪ Stable quarterly dividend of $0.35 per share supports ROFR exercises / equity buyouts and long - term value creation versus unpredictable
Slide 12: Selective Underwriting
12 Selective Underwriting $10.0 billion Investments Reviewed $ 1.2 billion Term Sheets Issued $937 million Signed Term Sheets $805 million (~8% of Evaluated) Closed Investments* Stringent Underwriting Process Based on Management’s Extensive Experience and Successful Track Record Investing in Self -
Slide 13: Attractive Investment Portfolio
13 C/O Expected 2018 46% C/O Expected 2019 30% C/O Expected 2020 5% C/O Achieved 20% Attractive Investment Portfolio % On Balance Sheet / % Joint Venture Status of Development Investments ▪ Development investments: ▪ C/O loan - to - value (“LTV”) 71% ▪ Stabilized LTV 56% ▪ Currently represent 80% of
Slide 14: High Quality Self-Storage Properties Located in Attractive Markets
14 High Quality Self - Storage Properties Located in Attractive Markets Geographic Diversification Notes: Percentages and Company’s market average are weighted based on committed total investment amounts (1) Other markets include Austin, Baltimore, Charlotte, Chicago , Columbia, Fort Lauderdale, Hou
Slide 15: Consistent Outperformance Relative to Underwriting
15 Austin Orlando 1 Atlanta 1 Atlanta 2 ▪ Faster lease - up – vast majority of projects exceeding occupancy projections ▪ Cost savings from faster lease - up Consistent Outperformance Relative to Underwriting (1) Months open and physical occupancy as of 2/27/18 (2) Orlando 1 (51,235 NRSF) was at 86.
Slide 16: Jacksonville, FL – Ground Up Development
16 Jacksonville, FL – Ground Up Development Initial Underwriting Current Expectations Est. Cost to Build $9,029,927 $9,029,927 Development Yield (2) 10.98% 12.58% Length to Stabilization 36 months 36 months Stabilized Cap Rate 5.75% 5.50% Stabilized Value $17,246,654 $ 20,646,708 Profit to Heitman J
Slide 17: Well-Positioned for Growth Following Record Investment Year
17 $42 $123 $123 $123 $81 $102 $511 $511 $200 - $230 $123 $225 $634 $844 - $874 14 24 56 0 15 30 45 60 75 $0 $200 $400 $600 $800 $1,000 $1,200 2015 2016 2017 2018E # of Investments Total Investments (3) $ Projected $ On Balance Sheet $ Heitman JV Cumulative # $1,743 $6,532 $12,191 $28,380 to $30,100
Slide 18: Current Investment Pipeline
18 Current Investment Pipeline Note: Executed term sheets are non - binding and remain subject to entry into definitive agreements (1) As of March 2, 2018 Atlanta Boston Miami New Orleans New York City Orlando Los Angeles Richmond Tampa / St . Petersburg Development Markets Executed Term Sheet Pipel
Slide 19: Bridge Loan Case Study: Miami Portfolio Investment
19 Bridge Loan Case Study: Miami Portfolio Investment Property Summary Investment Summary & Highlights ▪ Bridge financing provided to take out existing construction debt and certain equity capital partners on a portfolio comprised of three operating properties and two properties under construction w
Slide 20: Orlando, FL Acquisition Case Study
20 Orlando, FL Acquisition Case Study Investment Highlights ▪ Multi - story climate controlled, non climate, and covered RV space facility totaling 93,965 NRSF ▪ Phase 1 of facility received C/O in May 2016; Phase 2 received C/O in June 2017 ▪ Although facility opened in two stages; current occupanc
Slide 21: Four Recent Acquisitions
21 Four Recent Acquisitions Atlanta, GA 2 ▪ 71,743 NRSF ▪ C/O received in May 2016 ▪ ~70% current occupancy ▪ Branded and managed by CubeSmart Jacksonville, FL ▪ 59,848 NRSF ▪ C/O received in August 2016 ▪ ~83% current occupancy ▪ Branded and managed by CubeSmart Summary & Highlights 100 % resulting
Slide 22: Recent Financial Highlights
22 Recent Financial Highlights ▪ Reported 2017 EPS of $1.10 per share and Adjusted EPS of $1.31 per share ▪ Reported Q4 2017 EPS of $0.19 per share and Adjusted EPS of $0.23 per share ▪ Closed $ 409 million of development investments during 2017 covered by committed capital sources ▪ A cquired four
Slide 23: Appendix
23 Appendix
Slide 24: Portfolio Detail
24 Portfolio Detail Note: Represents portfolio as of 12/31/2017 (1) Represents principal balance of loan gross of origination fees (2) Facility had received certificate of occupancy as of 12/31/2017 (3) Facility had achieved at least 40% construction completion but had not received certificate of oc
Slide 25: Portfolio Detail - Continued
25 Portfolio Detail - Continued (1) Note: Represents portfolio as of 12/31/2017 (1) Represents principal balance of loan gross of origination fees (2) These investments contain a higher loan - to - cost ratio and a higher interest rate, some of which interest is payment - in - kind ("PI K") interest
Slide 26: Portfolio Detail - Continued
26 Portfolio Detail - Continued Note: Represents portfolio as of 12/31/2017 (1) Represents principal balance of loan gross of origination fees (2) Facility had received certificate of occupancy as of 12/31/2017 (3) Facility had achieved at least 40% construction completion but had not received certi
Slide 27: Not A Typical Mortgage REIT
27 Not A Typical Mortgage REIT Typical Mortgage REIT ▪ Higher corporate leverage, including leverage of junior debt ▪ No equity participation ▪ Structured finance arbitrage rather than property focus Jernigan Capital ▪ Low corporate leverage ▪ Equity participations that allow investors to participat
Slide 28: Business Plan and Investments are Even More Attractive Today than at IPO
28 Business Plan and Investments are Even More Attractive Today than at the Time of IPO Impressive Results Since IPO Key Metrics Considered at IPO Current Market Conditions Investment Opportunity Pipeline of attractive development investments s ignificantly greater than anticipated at IPO Developmen
Slide 29: Heitman Capital Management Joint Venture Overview
29 Heitman Capital Management Joint Venture Overview ▪ On March 7, 2016, JCAP, through its operating company, entered into a limited liability company agreement to form a real esta te venture (“JV”) partnership with an investment vehicle of Heitman Capital Management for an initial total commitment
Slide 30: Highland Capital Series A Preferred Overview
30 Highland Capital Series A Preferred Overview ▪ On July 27, 2016, JCAP entered into an agreement with NexPoint Advisors, L.P., an affiliate of Highland Capital Management, LP, to issue up to $125 million of Series A Preferred Stock Investor Funds managed by NexPoint Advisors, L.P. Structure of the
Slide 31: Credit Facility Overview
31 Credit Facility Overview Investor KeyBank Capital Markets, Inc. and Raymond James Bank, N.A. Structure of the Investment Senior secured revolving credit facility Investment Size Up to $100 million debt capital, e xpandable up to $200 million with accordion feature, upon satisfaction of certain co
Slide 32: Series B Preferred Stock Overview
32 Series B Preferred Stock Overview ▪ On January 26, 2018, JCAP issued $37.5 million of Series B cumulative redeemable preferred stock through a public offering NYSE Symbol JCAP - PB Structure of the Investment Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share with
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