JZ Capital Partners Limited · LSE:JZCP
JZ Capital Partners — FY2019 Earnings Presentation
36 slides from JZ Capital Partners's earnings presentation, May 7, 2019
Slide 1: 2019 Annual Results Presentation
2019 Annual 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 Strategic Initiatives: Return of Capital and Repayment of Debt 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 • Total NAV return per share of 0.6%, from $9.98 (28/02/18) to $10.04 (28/02/19) per share • NAV of $810.3m (28/02/18: $837.6m) • JZCP’s board will be seeking shareholder approval to return appx. $100m in capital to shareholders via a series of tender offers at
Slide 6: Share price and NAV per share performance
Share price and NAV per share performance Cumulative NAV total returns* Cumulative total shareholder returns* 7.6% 14.0% 13.1% 1.9% 1 year 3 year 5 year 0.6% -3.5% 1 year 3 year 5 year NAV to market price discount 46% 42% 38% 27% 2/28/14 2/29/16 2/28/18 2/28/19 *All performance figures assume re-inv
Slide 7: Net asset value
Net asset value 12 11.5 11 $0.71 $0.33 $0.05 $0.28 10.5 $0.01 $0.23 $0.16 $10.04 $9.98 $0.03 10 9.5 9 NAV per US and Real Estate Other interest Change in CULS Expenses and Finance Costs Net Foreign Appreciation NAV per Ordinary Share European Micro- Investments Fair Value Taxation Exchange Effects f
Slide 8: Balance sheet summary
Balance sheet summary $000 $000 Investments 28/02/19 28/02/18 US Microcap Investments 478,970 488,258 $000 $000 Investments 28/02/19 28/02/18 European Microcap 128,698 103,457 Total Assets 1,124,608 1,156,472 Investments - Liabilities (196,234) (196,086) Real Estate Investments 443,044 463,391 - ZDP
Slide 9: Portfolio breakdown
Portfolio breakdown Portfolio by Investment Type Portfolio by Industry 9
Slide 10: NAV Validation
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Slide 11: Discount of NAV carrying value to actual exit value
Discount of NAV carrying value to actual exit value JZCP has seen significant valuation uplift relative to historical carrying values Discount of NAV Carrying Value to Actual Exit Value (All US & European Microcap Exits 2014-2019)* % NAV Discount 30% 28.3% 25.6% 25% 21.2% 19.2% 20% 15% 10% 5% 0% Fou
Slide 12: Gross MOIC on exits
Gross MOIC on exits Gross MOIC on Exits (All US & European Microcap Exits 2014-2019)* Multiple 4.0x 3.5x 3.5x 3.0x 3.0x 2.8x 2.4x 2.5x 2.0x 1.8x 1.6x 1.5x 1.0x 0.5x 0.0x 2014 2015 2016 2017 2018 2019 Multiple of Invested Capital * As of 7 May 2019. Analysis includes full exits of US & European micro
Slide 13: Successful realizations and refinancings
Successful realizations and refinancings • Bolder Healthcare Solutions (BHS) – March 2018 • BHS was acquired by a subsidiary of Cognizant, one of the world's leading professional services companies. • BHS offers a full suite of healthcare revenue cycle management services to the hospital and physici
Slide 14: Successful realizations and refinancings, continued
Successful realizations and refinancings, continued • Fulton Mall Assemblage – December 2018 • In December 2018, JZCP and HomeFed, a real estate investor and developer of mixed-use projects in the United States, announced they have become joint venture partners with regards to JZCP’s Fulton Mall ass
Slide 15: Strategic Initiatives: Return of Capital and Repayment of Debt
Strategic Initiatives: Return of Capital and Repayment of Debt
Slide 16: Strategic initiatives: return of capital and repayment of debt
Strategic initiatives: return of capital and repayment of debt • JZCP’s board will be seeking shareholder approval to return appx. $100m in capital to shareholders via a series of tender offers at a price no more than a 5% discount to NAV • First tender offer of appx. $30m in July 2019, subject to s
Slide 17: Portfolio Review – Microcap
ee JZ CAPITAL PARTNERS LIMITED NY = sts. “s ~ c 3 : Portfolio Review - Microcap an JZ CAPITAL PARTNERS LIMITED
Slide 18: US microcap
US microcap Strategy: Verticals • Identify and purchase businesses in “verticals” where an industry executive can add value via organic growth and cross company synergies • Sell vertical companies as one entity for a multiple expansion Strategy: Co-investments • Co-invest with known private equity g
Slide 19: US microcap verticals
US microcap verticals Industry sector driven “build-ups” created to add value through operational synergies across businesses and exit multiple expansion Industrial Flexible Testing Services Flow Controls Solutions (ISS) Packaging Services Industrial Acquisition Flow handling Environmental equipment
Slide 20: Significant US microcap co-investments
Significant US microcap co-investments Deflecto Peaceable Street ABTB K2 Towers II George Industries Capital Diversified, global Acquirer of fast Private cell phone Manufacturer of Platform providing manufacturer and casual and quick tower company highly engineered preferred equity to distribution b
Slide 21: Significant US microcap investments
Significant US microcap investments Felix Storch Avante Orizon Priority Provider of compact Build-up of healthcare Platform established Provider of same day and specialty equipment, service & to invest in aerospace express courier refrigerators and installation companies and defence services other a
Slide 22: European microcap
European microcap Strategy • Value-oriented investment approach targeting microcap companies in Western Europe • Diversified investment focus: portfolio companies in seven countries across five industries Management • Strategy coordinated by an experienced management team, which has invested in Euro
Slide 23: Fund III – significant portfolio companies
Fund III – significant portfolio companies Alianzas en Fincontinuo S.A.C Collingwood My Lender ERSI Aceros Italian salary- Operational van Niche UK-based Independent Steel Reinforced steel backed consumer leasing (lease & motor insurance consumer transformation business lending platform service) com
Slide 24: Portfolio Review – Real Estate
Portfolio Review – Real Estate
Slide 25: Real estate
Real estate Strategy • Value-added investment strategy analogous to microcap 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 26: JZCP’s current real estate portfolio: Brooklyn, NY
JZCP’s current real estate portfolio: Brooklyn, NY • Williamsburg: Epicenter of positive shifting demographics in North Brooklyn • 13 mixed-use properties, located on most trafficked retail corridors • More than 225,000 sq. ft. retail and 10,000 sq. ft. residential • Two development sites situated a
Slide 27: Williamsburg Retail Collection
Williamsburg Retail Collection Current Basis (2019) Total Purchase Price1 $249.1m Total Capitalization at $257.6m Acquisition Total Development & $143.1m Carry Costs Current Basis $400.7m Future Capitalization (at stabilization) Future Acquisition, Construction, Leasing & Carry Costs2 $91.6m Total C
Slide 28: Williamsburg Retail Collection
Williamsburg Retail Collection • With over 225,000 SF of leasable area and a well curated collection of high profile tenants, a retail portfolio of this size and scale having a common ownership is unprecedented in the submarket and very unique in NYC • With the recent lease signing of Warby Parker,
Slide 29: JZCP’s current real estate portfolio: South Florida
JZCP’s current real estate portfolio: South Florida • Wynwood (Miami): rapidly increasing retail rents amid a thriving arts scene • Three prime retail assets • Three top development sites with substantial air rights • 90,000 sq. ft. office over retail building delivered in Jan 2019: 33% leased curre
Slide 30: CUBE Wynwood Development
CUBE Wynwood Development Current Basis (2019) Total Purchase Price $5.9m Total Capitalization at $6.2m Acquisition Total Development & $33.5m Carry Costs Total Costs $39.7m Projected NOI at $3.5m Stabilization Stabilized Cap Rate 8.7% Base Case Exit Cap Rate 5.50% Base Case Valuation $62.7m • Constr
Slide 31: Esperante Corporate Center
Esperante Corporate Center Current Basis (2019) Total Peak Equity $35.0m Distributed Proceeds to ($14.0)m Date Current Equity $21.0m Current Debt $115.0m Current Basis $136.0m Projected NOI at $9.9m Stabilization Stabilized Cap Rate 7.3% Base Case Exit Cap Rate 6.0% Base Case Valuation $165m • Renov
Slide 32: Summary & outlook
Summary & outlook First tender offer of appx. $30m in July Objective to return $100m 2019 subject to shareholder approval in capital to shareholders via a series of tender offers and de-risk JZCP by retiring The $200m of cash required to support these initiatives will be generated from appx. $10
Slide 33: Appendix
Appendix Z CAPITAL PARTNERS LIMITED
Slide 34: Major holdings
Major holdings Cost ($ 000) Value ($ 000) % of gross Company Type (28/02/2019) (28/02/2019) assets Design District Assemblage Real estate 135,456 98,495 8.8 Industrial Services Solutions vertical US microcap 48,250 94,646 8.4 Williamsburg Retail Assemblage Real estate 68,180 67,633 6.0 JZI Fund III,
Slide 35: JZCP investment activity
JZCP investment activity Since 28 February 2018 ($ millions) Real Estate Investments 55.8 Deflecto 39.1 European Investments 17.5 Industrial Services Solutions 15.1 Flow Controls 14.0 Testing Services 11.3 Flexible Packaging Vertical 10.0 Avante 5.3 Orizon 4.8 K2 Towers II 4.2 Nationwide Studios 2.7
Slide 36: JZCP realisation activity
JZCP realisation activity Since 28 February 2018 Gross Proceeds ($ millions) Bolder Healthcare Solutions – Sale 105.7 Fulton Mall – Joint Venture 40.7 TWH Water Treatment Industries – Sale 31.3 Paragon Water Systems – Sale 16.1 Esperante – Refinancing 8.3 Other 5.1 Total* 207.2 (*) Numbers subject t