Us Masters Residential Property Fund · ASX:URF
Us Masters Residential Property Fund — Investor Presentation (August 2016)
48 slides from Us Masters Residential Property Fund's investor presentation, Aug 22, 2016
Slide 1: Update and capital raising
For personal use only Update and capital raising Alan Dixon – CEO David Orr – COO Alex MacLachlan – Strategy
Slide 2: Disclaimer
Disclaimer For personal use only This presentation has been prepared by URF Investment Management Pty Limited (ABN 21 600 188 805), a corporate authorised representative (CAR No. 1009350) of Walsh & Company Asset Management Pty Ltd (ABN 89 159 902 708, AFSL 450 257), Investment Manager of US Masters
Slide 3: Agenda
Agenda For personal use only 1 The big picture 2 Portfolio review 3 Growth strategy and execution 4 Offer details 2016 roadshow presentation 3
Slide 4: The big picture
For personal use only The big picture Section 1 2016 roadshow presentation 4
Slide 5: URF five years ago
URF five years ago For personal use only First listed property trust focused on NYC properties - c.$70 million fund, mostly cash and handful of properties 2016 roadshow presentation 5
Slide 6: URF today
URF today For personal use only Largest institutional owner of townhouses in NYC metro - Over $1 billion in total assets, $600 million+ market cap, c.1,500 housing units 2016 roadshow presentation 6
Slide 7: Positioned for continued growth
Positioned for continued growth For personal use only Multiple levers to create value URF total cumulative return for unitholders 200 Total cumulative Unitholder Cumulative return since inception: 66.6% - Proprietary deal flow and access 180 Annualised return since inception: 10.5% to transactions r
Slide 8: Investing in the community
Investing in the community For personal use only - Committed to the betterment of local neighbourhoods and communities in which we operate - Highlights capabilities of Architectural Design and Project Management teams - Jersey City Landmarks Conservancy Awards - winner – Preservation Initiative Awar
Slide 9: Investment environment 2011
Investment environment 2011 For personal use only Launched at unique time Changes since 2011 - RBA commodity index reaches 120 record high of 189.4 in July 2011; -57% -31% -68% -53% 100 81.2 as at July 2016 Index 80 - Australian dollar reaches record US$1.10 in July 2011; 60 currently c$0.77 40 - RB
Slide 10: Investment environment 2016
Investment environment 2016 For personal use only Created a new listed asset class for Australian investors What hasn’t changed - Australian dollar adjustment not complete - US economy strongest of developed countries - New York housing represents quality store of long term value What has changed -
Slide 11: Portfolio review
For personal use only Portfolio review Section 2 2016 roadshow presentation 11
Slide 12: Investment focus
Investment focus For personal use only Fund has targeted four distinct investment markets Workforce: middle income housing markets in Hudson County Multi-family: apartment blocks, typically 20-100 units, in both NJ and NY New Jersey premium: higher-end housing stock in select Hudson County markets N
Slide 13: First investments
First investments For personal use only Greenville | Bayonne | West Bergen | The Heights | Journal Square Low acquisition costs Rent quickly Yield well Hudson County workforce 2016 roadshow presentation 13
Slide 14: Hudson County workforce portfolio
Hudson County workforce portfolio For personal use only High-yield properties in gentrifying areas Thorough evaluation process; highly selective purchasing Evaluated 1,946 Bid 1,086 56% Acquired 350 18% Sold 28 Portfolio 322 17%7% 0 500 1,000 1,500 2,000 2,500 Units Note: Values reflective of proper
Slide 15: Hudson County workforce portfolio
Hudson County workforce portfolio For personal use only Significant scale built with low acquisition costs Average cost and value per property Book value $500,000 Location Properties (US$m) $450,000 $400,000 Greenville 73 $24.2 Average US$ per property $350,000 Bayonne 57 $22.4 $300,000 West Bergen
Slide 16: Case Study: Spruce Street
Case Study: 7 Spruce Street For personal use only High-yield opportunity in improving JC Heights neighbourhood $600,000 $500,000 $400,000 US$ $300,000 $200,000 $100,000 $- Acquisition Renovation All in Cost Uplift 30 June Cost Costs Value - Fair value uplift of US$174,000 since 2013 acquisition - Gr
Slide 17: Multi-family joint ventures
Multi-family joint ventures For personal use only Strategy complements single family portfolio Attractive financing Expedited use of capital Immediately cash flowing 2016 roadshow presentation 17
Slide 18: Urban American JV
Urban American JV For personal use only Fund’s first entry into multi-family investments; Hudson County Fund Purchase Valuation Location Buildings Units Share (US$m) (US$m) West New York 7 250 67.5% $23.5 $35.2 Union City 5 119 67.5% $11.2 $12.2 North Bergen 1 31 67.5% $2.9 $2.3 Total 13 400 67.5% $
Slide 19: Case Study: Excelsior JV
Case Study: Excelsior JV For personal use only Entry to Brooklyn multi-family; highly successful exit Fund Purchase Sale Location Buildings Units Share (US$m) (US$m) Union City (NJ) 6 261 92.5% $23.6 $29.3 West New York (NJ) 2 68 92.5% $7.9 $10.0 Brooklyn (NY) 6 202 92.5% $40.8 $54.7 Total 14 531 92
Slide 20: Premium New Jersey
Premium New Jersey For personal use only Downtown Jersey City | Hoboken | Weehawken Classic architecture Exceptional location Excellent neighborhoods The Fund’s purchasing in Downtown, JC has coincided with the development boom in the area 2016 roadshow presentation 20
Slide 21: Hudson County premium portfolio
Hudson County premium portfolio For personal use only Lower volume of actively marketed properties; Fund maintains selective approach Evaluated 719 Bid 385 54% Acquired 146 20% Sold 13 Portfolio 133 18% 0 200 400 600 800 Units 2016 roadshow presentation 21
Slide 22: Hudson County premium portfolio
Hudson County premium portfolio For personal use only Premium portfolio at attractive valuations Average cost and value per property Book value $2,000,000 Location Properties ($USm) $1,800,000 $1,600,000 Downtown JC 101 $178.0 Average US$ per property $1,400,000 Hoboken 16 $38.2 $1,200,000 $1,000,00
Slide 23: Case Study: West Hamilton Pl
Case Study: 22 West Hamilton Pl For personal use only Picturesque townhouse in Downtown JC’s Hamilton Park section $2,500,000 $2,000,000 US$ $1,500,000 $1,000,000 $500,000 $- Acquisition Renovation All in Cost Uplift 30 June Cost Costs Value - 30 June 2016 independent valuation of US$1.925 million;
Slide 24: Premium New York
Premium New York For personal use only Brownstone Brooklyn | Harlem | Queens | Lower Manhattan Unreplaceable assets Highly sought after locations Opportunistic acquisitions “…‘New Brooklyn’ has become a global brand.” New York Times 2016 roadshow presentation 24
Slide 25: New York portfolio
New York portfolio For personal use only Undervalued assets in gentrifying neighbourhoods Wide array of properties evaluated across the three boroughs; lowest purchasing rate Evaluated 1,873 MANHATTAN Bid 712 38% QUEENS Acquired 140 8% Sold 8 BROOKLYN 7% Portfolio 132 0 500 1,000 1,500 2,000 Units 2
Slide 26: New York portfolio
New York portfolio For personal use only Core holdings of hard-to-find, prime New York properties Book value Average cost and value per property $3,000,000 Location Properties ($USm) US$ per property Brooklyn 101 $253.0 $2,500,000 Manhattan 23 $78.3 $2,000,000 Queens 8 $11.5 $1,500,000 TOTAL 132 $34
Slide 27: Case Study: Hancock Street
Case Study: 196 Hancock Street For personal use only Beautiful townhouse in prime Bedford-Stuyvesant location $3,500,000 $3,000,000 $2,500,000 US$ $2,000,000 $1,500,000 $1,000,000 $500,000 $- Acquisition Renovation All in Cost Uplift 30 June Cost Costs Value - 30 June independent valuation of US$3.0
Slide 28: Current portfolio – five years in the making
Current portfolio – five years in the making For personal use only High-quality, unique, and diversified portfolio of New York metropolitan area residential housing Property distribution by value Value Weighting Properties Units (US$m) (%) 4% 18% New York Premium 132 178 $342.8 46 46% New Jersey Pre
Slide 29: Progress since December 2014
Progress since December 2014 For personal use only Fund had continued to make excellent progress across acquisitions, renovations, leasing, and property management since December 2014 - 1,246 properties evaluated in target areas of investment - 76 properties (6% of all evaluations) purchased - 278 r
Slide 30: Investment Property Rental Income
Investment Property Rental Income For personal use only $19.8 $20.0 $16.0 $13.5 $12.0 $11.3 US$m $8.0 $7.2 $4.0 $- Jun-13 Jun-14 Jun-15 Jun-16 - 12 months to 30 June 2016 gross revenue of US$19.8m represented a 47% increase over 12 months to 30 June 2015 and a 75% increase over 12 months to 30 June
Slide 31: Growth strategy and execution
For personal use only Growth strategy and execution Section 3 2016 roadshow presentation 31
Slide 32: Expanding the portfolio
Expanding the portfolio For personal use only Fund continues to see excellent opportunities to continue to grow and make selective acquisitions Workforce: Multi-family: Heights Opportunistic Bergen Lafayette New Jersey Premium: New York Premium: Downtown Jersey City Harlem, Brooklyn 2016 roadshow pr
Slide 33: Expanding the portfolio
Expanding the portfolio For personal use only Value accretive growth will benefit both existing and new unitholders Benefits to existing investors - Value accretive opportunities - Increased scale and efficiency - Increased liquidity and potential for index inclusion Benefits to new investors - Esta
Slide 34: Creating value through lifecycle management
Creating value through lifecycle management For personal use only Architecture, Proprietary Design Due Diligence, and deal flow Legal Construction Leasing Premium and and Closings design technology Portfolio Managers Acquisition and Alan Dixon – CEO, Dixon Advisory USA Property Analysis Alex MacLach
Slide 35: Acquisition process
Acquisition process For personal use only Highly efficient and comprehensive process – opportunities can be turned around in 24 hours - Sourcing – strong network of contacts, around half of properties purchased in off-market, private deals - Screening – leads screened by acquisition and analysis tea
Slide 36: Design and construction
Design and construction For personal use only Specialising in all aspects of high-end townhouse design and construction - Single subcontract - tenants often in occupancy; roofing, boilers, façade, foundations - Cosmetic refurbishment - in-house design, multiple contractors - Major renovation - same
Slide 37: Leasing and management
Leasing and management For personal use only Achieved record rents in most areas 2016 roadshow presentation 37
Slide 38: Renovation example
Renovation example For personal use only 29 Lincoln Place, Park Slope, Brooklyn Luxury renovation catering to high-end Park Slope market; recently rented for US$17,990 p/m In disrepair, far below area standard Amenity-filled, renovation high-end 2016 roadshow presentation 38
Slide 39: Offer details
For personal use only Offer details Section 4 2016 roadshow presentation 39
Slide 40: Capital raising overview
Capital raising overview For personal use only Fund will undertake simultaneous unit placement and unit purchase plan at $1.95 per Unit to fund further growth in the portfolio - Offer rationale: attractive market conditions, fund further acquisitions and renovations, and for general business purpose
Slide 41: UPP and placement details
UPP and placement details For personal use only Unit Purchase Plan Placement Offer price $1.95 per Unit $1.95 per Unit Discount to 10 day VWAP 7.6% 7.6% Offer size Up to $15k per Unitholder Up to 43.9m Units Offer open 22 August 2016 22 August 2016 Offer close 2 September 2016 2 September 2016 Expec
Slide 42: UPP and Placement details
UPP and Placement details For personal use only UPP Placement Offer costs* Structuring and arranging fee Nil 1.5675% Handling fee Nil 1.5675% Ongoing management and responsible entity fee* Investment management fee 1.24% 1.24% Responsible entity fee 0.34% 0.34% Note: Fees are inclusive of GST and ne
Slide 43: Risks
Risks For personal use only Like all investments, an investment in the Fund carries risks which may result in the loss of income or principal invested. In addition to the general risks of investing, specific risks associated with investing in the Fund include, but are not limited to, property market
Slide 44: Strategy and outlook
Strategy and outlook For personal use only Uniquely placed to generate value by proactively capturing investment opportunities Target best neighbourhoods and create unique product Active portfolio and capital management Evolution from alternative to mainstream asset class 2016 roadshow presentation
Slide 45: US Focused Investment Conference New York 2018
US Focused Investment Conference For personal use only New York 2018 A showcase of our residential property investments in the New York metropolitan region and US private investments Tuesday 22 May to Thursday 24 May 2018 - Hear expert insights into the US economy, US residential property and US pri
Slide 46: Questions?
For personal use only Questions? Section 5 2016 roadshow presentation 46
Slide 47: Capital structure
For personal use only Capital structure Appendix 1 2016 roadshow presentation 47
Slide 48: Capital structure
Capital structure For personal use only Equity market A$612m1 Approximately 10.5%² p.a. total capitalisation unitholder returns since inception URF Notes A$150m Interest rate 7.75% p.a. URF Notes II A$90m Interest rate 7.75% p.a. Revolving facility US$131m across 3 facilities Interest rate approxima
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