Us Masters Residential Property Fund · ASX:URF
Us Masters Residential Property Fund — Investor Presentation (November 2013)
56 slides from Us Masters Residential Property Fund's investor presentation, Nov 25, 2013
Slide 1: For personal use only
For personal use only
Slide 2: URF Investor Day Presentation
URF Investor Day Presentation For personal use only 2013 Alex MacLachlan – CEO, Funds Management & Head of Strategy, Dixon Advisory USA Alan Dixon - CEO, Dixon Advisory USA 2
Slide 3: Disclaimer
Disclaimer For personal use only The information provided in this presentation is factual information or general advice and should not be considered personal advice. The presentation has been prepared without taking into account your objectives, financial situation or particular needs. Before acting
Slide 4: Agenda
Agenda For personal use only 1. Business and investment overview 2. Urban single-family housing 3. New York metro SFR opportunity 4. Finding value in NYC metro 5. Opportunity to invest 6. Operations and select property profiles 4
Slide 5: 1. Business and Investment Overview
For personal use only 1. BUSINESS AND INVESTMENT OVERVIEW
Slide 6: US Masters Residential Property Fund (URF)
US Masters Residential Property Fund (URF) For personal use only A leading provider of urban single-family home rentals − $390m REIT focused on NYC metropolitan area single-family housing − Invest in undervalued neighborhoods experiencing growth and gentrification − Hudson County, Brooklyn, Queens c
Slide 7: Core strategy
Core strategy For personal use only A sustainable and scalable business focused on high density markets − Eastern seaboard − Limited housing stock/no overbuilding − Deep value, strong growth, unconstrained upside − Judicial foreclosure states − Sustainable competitive advantage, proprietary deal flo
Slide 8: Investment portfolio
Investment portfolio For personal use only NUMBER TOTAL ESTIMATED ESTIMATED NET ACQUISITION AVE GROSS YIELD RANGE Properties Units COST (US$m) YIELD (%PA) (%PA) FREESTANDING Properties purchased 490 1,066 247.4 5.4% to 22.9% 3.4% to 14.1% Conditional acceptances 46 87 26.0 4.6% to 24.6% 3.4% to 13.1
Slide 9: Freestanding home locations
Freestanding home locations For personal use only % of No. of No. of Area Portfolio Houses Units $(m) Workforce 1 27% 343 720 $73.3 Hudson County Premium 2 29% 102 232 $80.5 Hudson County 3 Brooklyn 31% 68 136 $83.5 4 Manhattan 12% 16 52 $33.2 5 Queens 1% 7 13 $2.9 TOTAL 100% 536 1,153 $273.4 Note:
Slide 10: 2. Urban Single-Family Housing
For personal use only 2. URBAN SINGLE-FAMILY HOUSING
Slide 11: 'Traditional' SFR approach
‘Traditional’ SFR approach For personal use only Increasing number of institutional investors − Investment model − Buy distressed single-family housing, target South and West − Suburban neighborhoods − Operational model − Generate scale economies by owning thousands of homes across multiple markets
Slide 12: Urban SFR approach
Urban SFR approach For personal use only Limited/no institutional investors − Investment model − Buy distressed single-family housing, target Eastern Seaboard − Urban, high density markets − Operational model − Generate scale economies by owning thousands of units across targeted geographic footprin
Slide 13: Urban growth revival
Urban growth revival For personal use only Key drivers of urban growth revival − Demographic drivers − Residential preferences of young changing – 77% of millennials want to live in ‘urban core’ − Retiring baby boomers returning to urban lifestyle – adults aged 50+ will control 70% of US disposable
Slide 14: Urban America growing faster
Urban America growing faster For personal use only US cities have grown faster than suburbs since recession “With the bursting of the bubble, we may be discovering the pleasures of the city and the advantages of renting, investing our money not in a single house but in a diversified portfolio.” Robe
Slide 15: 3. New York Metro SFR Opportunity
For personal use only 3. NEW YORK METRO SFR OPPORTUNITY
Slide 16: Current state of NYC metro market
Current state of NYC metro market For personal use only − Fastest growing US city, added as many people since 2010 as previous 10 years − GDP ($1tn+), equivalent to Australia − Ranked most competitive city in the world by EIU − Safest US big city, lowest homicide rate since 1963 − Creating jobs at r
Slide 17: Rapidly transforming city landscape
Rapidly transforming city landscape For personal use only − Manhattan − Midtown: Silicon Alley 2nd largest VC in world, West Chelsea highest office rents, Far West development − Downtown: 24/7 neighborhood, fastest growing in country − Brooklyn − Double digit YoY rent increases; hyper-gentrification
Slide 18: Supply constrained by recession
Supply constrained by recession For personal use only Real estate development in NYC nearly ground to a halt during crisis; while recovering, still historically low Units Authorised by New Residential Building Permits Units Issued New Certificates of Occupancy Sources: New York City Department of Ci
Slide 19: Lending for home purchases stalled
Lending for home purchases stalled For personal use only − Home loan purchase Home loan purchase originations rates have been stagnant for past several years − While below peak levels, 15% of mortgages remain underwater Sources: Home Mortgage Disclosure Act, Furman Center 19
Slide 20: 4. Finding Value in NYC Metro
For personal use only 4. FINDING VALUE IN NYC METRO
Slide 21: Finding value by neighbourhood and structure
Finding value by neighbourhood and structure For personal use only Opportunity to invest in areas impacted by crisis 300 260 280 240 260 220 240 220 200 200 180 180 160 160 140 140 120 120 100 100 2000Q1 2000Q4 2001Q3 2002Q2 2003Q1 2003Q4 2004Q3 2005Q2 2006Q1 2006Q4 2007Q3 2008Q2 2009Q1 2009Q4 2010Q
Slide 22: Rent has consistently increased throughout crisis
Rent has consistently increased throughout crisis For personal use only Lower housing prices combined % change in median monthly rent with steadily rising rents results (recent movers) 2006 to 2011 in significantly higher yields to 12.0% investors 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% New York Brooklyn Man
Slide 23: Current value opportunities
Current value opportunities For personal use only Multiple avenues to add significant value − Special situation & cash − Construction vs. rent-ready − Banks still not lending if significant construction required − Premium/single-family rentals vs. multi-family − On acquisition basis, single-family t
Slide 24: 5. Opportunity to Invest
For personal use only 5. OPPORTUNITY TO INVEST
Slide 25: Capturing unique opportunity
Capturing unique opportunity For personal use only Only REIT focused on NYC metro SFR opportunity − Necessary scale to drive operational efficiencies − c.$330m properties secured, 1,800+ housing units across NYC − Sustainable competitive advantage − Vertically integrated, expert local team, propriet
Slide 26: Australian dollar 'uncomfortably high'
Australian dollar “uncomfortably high” For personal use only A$ and manufacturing jobs − Employment flat between 2001-2008 despite rising A$ − Post 2008, fall in employment rapid and ongoing − Significant and sustained fall in A$ needed before jobs return Source: CBA 26
Slide 27: 6. Operations and Select Property Profiles
For personal use only 6. OPERATIONS AND SELECT PROPERTY PROFILES
Slide 28: Complete property lifecycle management
Complete property lifecycle management For personal use only Proprietary CONSTRUCTION Dan Bailey Premium deal flow DUE DILIGENCE Kirk Mitchell LEASING & CLOSINGS Priscilla Lebron design & technology Lisa Gozza ACQUISITIONS ANALYSIS PORTFOLIO MANAGERS PROPERTY Alan Dixon – CEO, Dixon USA MANAGEMENT Z
Slide 29: Sherman Ave, Jersey City
152 Sherman Ave, Jersey City For personal use only Region Heights Property type 2-family detached Apartment 1 4 bedroom / 2 bathroom Apartment 2 2 bedroom / 1 bathroom Purchase price US$169,000 Renovation cost US$62,940 Ancillary costs US$7,995 Total US$239,935 acquisition cost 29
Slide 30: Before – needing cosmetic upgrades
Before – needing cosmetic upgrades For personal use only 30
Slide 31: After – bright and attractive
After – bright and attractive For personal use only 31
Slide 32: Before – stuck in the 60's
Before – stuck in the 60’s For personal use only 32
Slide 33: After – modern and practical
After – modern and practical For personal use only 33
Slide 34: Sherman Ave, Jersey City
152 Sherman Ave, Jersey City For personal use only Total US$239,935 acquisition cost Appraisal valuation US$285,000 % increase 18.78% Monthly rent US$3,190 Net yield 10.03% 34
Slide 35: Astor Pl, Jersey City
30 Astor Pl, Jersey City For personal use only Region Bergen-Lafayette Property type 2-family semi-attached Apartment 1 1 bedroom / 1 bathroom Apartment 2 3 bedroom / 2 bathroom Purchase price US$130,000 Renovation cost US$89,901 Ancillary costs US$16,361 Total acquisition cost US$236,262 35
Slide 36: Before – unusable kitchen
Before – unusable kitchen For personal use only 36
Slide 37: After – completely redesigned
After – completely redesigned For personal use only 37
Slide 38: Before – dated and dreary
Before – dated and dreary For personal use only 38
Slide 39: After – rent-ready and fresh
After – rent-ready and fresh For personal use only 39
Slide 40: Astor Pl, Jersey City
30 Astor Pl, Jersey City For personal use only Total US$236,262 acquisition cost Appraisal valuation US$250,000 % increase 5.81% Monthly rent* US$2,600 Net yield* 8.87% *Monthly rent and yield estimated 40
Slide 41: 1st St, Jersey City
385 1st St, Jersey City For personal use only 41
Slide 42: 1st St, Jersey City
385 1st St, Jersey City For personal use only Region Downtown Property type 2-family attached Apartment 1 2 bedroom / 2 bathroom Apartment 2 3.5 bedroom / 3 bathroom Purchase price US$300,000 Renovation cost US$395,285 Ancillary costs US$18,605 Total US$713,890 acquisition cost 42
Slide 43: Before – uninhabitable
Before – uninhabitable For personal use only 43
Slide 44: After – premium rental units
After – premium rental units For personal use only 44
Slide 45: Before – decrepit bathroom
Before – decrepit bathroom For personal use only 45
Slide 46: After – modern and refreshed
After – modern and refreshed For personal use only 46
Slide 47: Before – neglected backyard
Before – neglected backyard For personal use only 47
Slide 48: After – beautiful outdoor space
After – beautiful outdoor space For personal use only 48
Slide 49: 1st St, Jersey City
385 1st St, Jersey City For personal use only Total acquisition cost US$713,890 Appraisal valuation US$1,100,000 % increase 54.09% Monthly rent* $6,290 Net yield* 7.25% *Monthly rent and yield estimated 49
Slide 50: Boyd Ave, Jersey City
156 Boyd Ave, Jersey City For personal use only Region West Bergen Property type 2-family semi-attached Apartment 1 2 bedroom / 1 bathroom Apartment 2 2 bedroom / 1 bathroom Purchase price US$142,500 Renovation cost US$76,597 Ancillary costs US$9,075 Total US$228,172 acquisition cost 50
Slide 51: Before – in need of minor upgrades
Before – in need of minor upgrades For personal use only 51
Slide 52: After – ready for tenants
After – ready for tenants For personal use only 52
Slide 53: Before – dated and old
Before – dated and old For personal use only 53
Slide 54: After – sleek and contemporary
After – sleek and contemporary For personal use only 54
Slide 55: Boyd Ave, Jersey City
156 Boyd Ave, Jersey City For personal use only Total acquisition cost US$228,172 Appraisal valuation US$275,000 % increase 20.52% Monthly rent $2,590 Net yield 7.06% 55
Slide 56: For personal use only
For personal use only
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