Carlyle Apartment Homes 436 Unit Value-Add in Shawnee (Kansas City), - - PowerPoint PPT Presentation
Carlyle Apartment Homes 436 Unit Value-Add in Shawnee (Kansas City), KS www.AgileRealtyCapital.com www.SummitRoadCapital.com Craig Berger, CFA CPA David Cummings, CFP Dallas Bligh Mark Kuster Scott Rosenthal February 13, 2017 Summit Road
www.AgileRealtyCapital.com www.SummitRoadCapital.com Craig Berger, CFA CPA David Cummings, CFP Dallas Bligh Mark Kuster Scott Rosenthal February 13, 2017
Summit Road Capital LLC: Confidential, Do Not Forward
This presentation has been prepared by Summit Road Capital LLC. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Past performance is no guarantee of future performance. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. A number of statements in this presentation have been based on internal estimates by Summit Road Capital LLC and have not been independently verified. To the maximum extent permitted by law, none of Summit Road Capital LLC or its directors, employees, managers, members, or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this presentation. In particular, no representation or warranty, express or implied, is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in this presentation. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies. Actual future events may vary from these forecasts and you are cautioned not to place undue reliance on any forward looking statement. The statements in this presentation are made only as at the date of this presentation unless otherwise stated and remain subject to change without notice. None of Summit Road Capital LLC or its directors, employees, managers, members, or agents, nor any other person accepts any obligation to correct or update information in this presentation.
Summit Road Capital LLC: Confidential, Do Not Forward
Summit Road Capital LLC: Confidential, Do Not Forward
Summit Road Capital LLC: Confidential, Do Not Forward
scale, in an attractive MSA.
substantially reduce operating expense.
Unit Type Unit Count Square Feet Total Rentable
Mix %
STUDIO 10 517 5,170 2.29% 1BR/1BA 133 626 83,258 30.50% 2BR/1BA 132 835 110,220 30.28% 2BR/1.5BA 76 879 66,804 17.43% 2BR/2BA 60 934 56,040 13.76% 2BR/2BA 1 1,143 1,143 0.23% 3BR/2BA 24 1,124 26,976 5.50% TOTAL/AVG 436 802 349,611 100%
Summit Road Capital LLC: Confidential, Do Not Forward
Summit Road Capital, LLC: Confidential, Do Not Forward
Summit Road Capital, LLC: Confidential, Do Not Forward
Broker Notes:
market; good schools w/ middle school across the street
four roofs; Paint job is due since painted 5 years ago; Clubhouse could use some modernizing
with no Renovations, and by $140 per unit with Renos, maybe more.
is week of 2/20.
this has no frontage so maybe $5K per
given good schools across the Street; Add off leash dog park or frisbee park; land zoned cb2 = 17-19 units per acre.
Summit Road Capital LLC: Confidential, Do Not Forward
2016
LinkedIn, 2015
Magazine, 2014
Brookings Institution, 2014
Insider, 2013
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Source: http://www.city-data.com/city/Shawnee-Kansas.html
Summit Road Capital, LLC: Confidential, Do Not Forward
Source: http://www.city-data.com/city/Shawnee-Kansas.html
Summit Road Capital, LLC: Confidential, Do Not Forward
Source: http://www.city-data.com/city/Shawnee-Kansas.html
Summit Road Capital, LLC: Confidential, Do Not Forward
Source: Summit Road Capital Property Year Built Size
Average Market Rent Market Rent per Sq Ft
Arbor Square 1971 808 668 $ 0.83 $ Lenexa Pointe 1972 720 640 $ 0.89 $ Louisburg Square 1965 818 751 $ 0.92 $ The Meadows 1979 748 687 $ 0.92 $ Fox Run 1972 711 668 $ 0.94 $ Carlyle 1971 626 587 $ 0.94 $ TOTAL/AVG 1972 739 683 $ 0.90 $
One Bedroom Rental Comps.
Property Year Built Size
Average Market Rent Market Rent per Sq Ft
Arbor Square 1971 1,000 785 $ 0.79 $ Lenexa Pointe 1972 928 705 $ 0.76 $ Louisburg Square 1965 1,078 957 $ 0.89 $ The Meadows 1979 911 731 $ 0.80 $ Fox Run 1972 1,029 775 $ 0.75 $ Carlyle 1971 871 670 $ 0.77 $ TOTAL/AVG 1972 970 791 $ 0.80 $
Two Bedroom Rental Comps.
Property Year Built Size
Average Market Rent Market Rent per Sq Ft
Arbor Square 1971 1,200 925 $ 0.77 $ Louisburg Square 1965 1,528 1,164 $ 0.76 $ The Meadows 1979 1,273 984 $ 0.77 $ Carlyle 1971 1,124 803 $ 0.71 $ TOTAL/AVG 436 1,281 1,024 $ 0.77 $
Three Bedroom Rental Comps.
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Acquisition Assumptions
rising to $907per Unit in 2021 Debt Assumptions
This deal meets our 18% total project IRR hurdle with reasonable resale price and exit cap-rate assumptions.
Source: Summit Road Capital
Transaction Summary ($US) - Carlyle Apartments Project Debt & Equity Details:
Lot Square Footage 31.74 acres Preferred Equity Interest Rate Paid 8.0% Number of Keys / Rooms 436 GP/Sponsor Promote 30.0% Average Square Feet Per Room 802 sq. ft. Equity Investor Economics 70.0% Total Livable Square Footage 349,672 sq. ft.
Total Project Equity Invested 7,600,000
Deal Sponsor Equity % 2.2%
Total Project Debt Taken On 23,150,000
Institutional Equity % 22.6% As of 18-Jan-17 Senior Debt % 75.3%
Acquisition Details: Carlyle Apartments Disposition Details:
Net Cash Flow at Purchase (w/ Capex) 1,414,332 Net Cash Flow at Sale (w/ Capex) 2,724,237 Baseline Purchase Cap Rate 5.3% Project Exit Cap Rate 7.5%
Purchase Price 26,500,000 Sale Price
36,323,166 Fees, Diligence Costs, Loan Origination 1,192,500 Selling Costs (1,271,311) All Renovations 2,600,000 Safety Capital & Cushion 457,500
Total Uses of Funds 30,750,000 Gross Sale Proceeds 35,051,855
First & Second Lien Debt Taken On (23,150,000) Pay Off Debt Principal (20,865,520)
Net Equity Brought to Project 7,600,000 Net Project Sale Proceeds 14,186,335 Purchase Price Per Key $60,780 Sale Price Per Key $83,310 Total Project Cost Per Key $69,478 Net Proceeds Per Key $32,537
Investor Return Metrics: Carlyle Apartments
Baseline Scenario Downside #1 Scenario
Project Exit Cap Rate 7.5% Project Exit Cap Rate 8.0% Cash on Cash Return: Equity Investors 2.21 x Cash on Cash Return: Equity Investors 1.50 x Cash on Cash Return: Total Project (w/ Spon 2.52 x Cash on Cash Return: Total Project (w/ Sp 1.50 x IRR: Equity Investors 16.2% IRR: Equity Investors 8.2% IRR: Total Project (w/ Sponsor Equity) 18.9% IRR: Total Project (w/ Sponsor Equity) 8.3%
Summit Road Capital LLC: Confidential, Do Not Forward
Source: Summit Road Capital
Sources and Uses of Cash ($) - Carlyle Apartments
Sources of Funds Amount Percent Uses of Funds Amount Percent
GP/Sponsor Equity 662,500 2.2% Purchase Price 26,500,000 86.2% Investor Equity 8,262,500 26.9% Closing Costs: Legal, Fees, Taxes 530,000 1.7% Senior Debt 21,825,000 71.0% Financing & Loan Fees 662,500 2.2% Mezzanine 0.0% Room Renovation Spends 1,744,000 5.7% Other 0.0% Property Renovation Spends 856,000 2.8% Working Capital / Safety Cushion 457,500 1.5%
Total Sources 30,750,000 100.0% Total Uses 30,750,000 100.0%
Debt Service Test
Loan Amount 23,150,000 Amortization 30 Rate 5.25% Payment Annual (1,549,127) Dec-15 Actual DSCR 1.01 2016 DSCR Projected 1.18 2017 DSCR Projected 1.34 2018 DSCR Projected 1.51 2019 DSCR Projected 1.69 2020 DSCR Projected 1.80 2021 DSCR Projected 1.89
Summit Road Capital LLC: Confidential, Do Not Forward
land that can be developed, sold off to (slightly) reduce Equity Requirements after purchase, or turned into other uses.
per Acre, or roughly 165 units. We think new construction aimed at Families is appropriate given this sub-market has strong schools (including across the Street) and is a desirable sub-market. At 1200 square feet per unit, this could support another 198,000 of net leasable feet.
leash dog park, an Frisbee park, or Selling it off (for probably for about $900K).
Summit Road Capital LLC: Confidential, Do Not Forward
Place Rents Rates are below market rates by about 8%-10%.
exists
collection.
make these units nice, so we think this forecast has easy upside!
Source: Summit Road Capital
Income Statement ($ US)
Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 2017-2022
Carlyle Apartments
Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast
Doors / Keys 436 436 436 436 436 436 436 436 Average Sq Ft per Room 802 802 802 802 802 802 802 802 Total Livable Apartment Sq Ft 349,672 349,672 349,672 349,672 349,672 349,672 349,672 349,672 Market Rental Rate per Sq Ft $0.87 $0.90 $0.92 $0.95 $0.98 $1.01 $1.04 $0.97 YOY % 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 2.0% Monthly Market Rental Rate $698 $719 $740 $762 $785 $809 $833 $775 Actual Rental Rate per Sq Ft $0.79 $0.84 $0.90 $0.97 $1.04 $1.09 $1.13 $0.99 YOY % 6.0% 8.0% 7.0% 7.0% 5.0% 4.0% 6.2% Monthly Actual Rental Rate $634 $672 $725 $776 $830 $872 $907 $797
Market Rate Rental Income 3,650,576 3,760,093 3,872,896 3,989,083 4,108,755 4,232,018 4,358,978 24,321,822
Loss: Discount to Market (335,685) (246,309) (78,009) 71,446 236,011 329,986 385,506 698,631 Loss: Discount to Market %
1.8% 5.7% 7.8% 8.8% 2.6%
Actual Rate Rent Revenues before Losses3,314,891 3,513,784 3,794,887 4,060,529 4,344,766 4,562,004 4,744,484 25,020,454
Loss: Concessions (8,287) (35,138) (37,949) (20,303) (21,724) (22,810) (23,722) (161,646) Loss: Concessions %
Loss: Vacancy (174,032) (281,103) (265,642) (243,632) (217,238) (228,100) (237,224) (1,472,939) Loss: Vacancy %
Loss: Non-Collection of Rent (9,423) (48,490) (52,939) (57,253) (61,913) (65,009) (67,609) (353,213) Loss: Non-Collection of Rent %
Net Rental Revenues 3,123,149 3,149,053 3,438,357 3,739,341 4,043,891 4,246,085 4,415,929 23,032,656 Additional Revenues:
Utility Revenues 344,262 340,956 351,555 362,442 373,623 381,096 388,718 2,198,390 Resident Fee Revenues 116,343 115,226 118,808 122,487 126,266 128,791 131,367 742,944 All Other Revenues 90,395 89,527 92,310 95,169 98,105 100,067 102,068 577,245
Total Net Revenues 3,674,149 3,694,761 4,001,030 4,319,438 4,641,885 4,856,039 5,038,081 26,551,234
YoY% 0.6% 8.3% 8.0% 7.5% 4.6% 3.7% 5.4%
Summit Road Capital LLC: Confidential, Do Not Forward
Source: Summit Road Capital
Income Statement ($ US)
Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 2017-2022
Carlyle Apartments
Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Gross Revenues 3,674,149 3,694,761 4,001,030 4,319,438 4,641,885 4,856,039 5,038,081 26,551,234
Monthly Actual Rental Rate $702 $706 $765 $826 $887 $928 $963 $846
Expenses:
Total Utilities (467,155) (476,498) (447,908) (456,866) (466,004) (475,324) (484,830) (2,807,430) Maintenance Supplies (105,000) (94,500) (96,390) (101,210) (103,234) (105,298) (107,404) (608,036) Maintenance Labor, Benefits and Taxes (76,237) (77,762) (79,317) (80,903) (82,521) (84,172) (85,855) (490,530) Manager & Office Staff Labor, Benefits, Taxe (515,610) (412,488) (422,800) (433,370) (444,204) (455,310) (466,692) (2,634,865) Other Employees Labor, Benefits and Taxes (240,000) (144,000) (146,880) (149,818) (152,814) (155,870) (158,988) (908,369) Property Taxes (287,000) (292,740) (339,578) (346,370) (353,297) (356,830) (360,399) (2,049,215) Property Management Fee (128,668) (120,080) (130,033) (140,382) (150,861) (157,821) (163,738) (862,915) Advertising (19,000) (31,491) (34,384) (37,393) (40,439) (42,461) (44,159) (230,327) Other Corporate Overhead (132,181) (92,527) (94,377) (96,265) (98,190) (100,154) (102,157) (583,670) Insurance (104,000) (106,080) (108,202) (110,366) (112,573) (114,824) (117,121) (669,165)
Total Expenses (2,112,851) (1,867,165) (1,919,250) (1,972,710) (2,024,301) (2,068,631) (2,112,321) (11,964,377) EBITDA 1,561,298 1,827,596 2,081,780 2,346,728 2,617,584 2,787,408 2,925,761 14,586,857
EBITDA Margin % 42.5% 49.5% 52.0% 54.3% 56.4% 57.4% 58.1% 54.6%
Capex Spends
(146,966) (172,778) (185,675) (194,242) (201,523) (754,218)
Total Property Cash Net Income
1,414,332 1,827,596 2,081,780 2,173,950 2,431,908 2,593,167 2,724,237 13,832,640
Net Property Sale Proceeds
18,754,284 18,754,284
Total Debt Service Payments
(1,587,565) (1,587,565) (1,587,565) (1,587,565) (1,587,565) (1,587,565) (1,587,565) (9,525,389)
Net Income after Debt Service (for Equity(173,233)
240,032 494,215 586,386 844,344 1,005,602 19,890,957 23,061,535
Summit Road Capital LLC: Confidential, Do Not Forward
Source: Summit Road Capital
Income Summary % of sales
Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 2017-2022
Carlyle Apartments
Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Gross Revenues 3,674,149 3,694,761 4,001,030 4,319,438 4,641,885 4,856,039 5,038,081 26,551,234
YoY % 0.6% 8.3% 8.0% 7.5% 4.6% 3.7%
Expenses:
Total Utilities
Maintenance Supplies
Maintenance Labor, Benefits and Taxes
Manager & Office Staff Labor, Benefits, T -14.0%
Other Employees Labor, Benefits and Tax -6.5%
Property Taxes
Legal & Accounting 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Property Management Fee
Advertising
Other Marketing
Office Supplies 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Other Corporate Overhead
Insurance
Total Expenses
EBITDA 42.5% 49.5% 52.0% 54.3% 56.4% 57.4% 58.1% 54.9%
EBITDA Margin %
Capex Spends
0.0% 0.0%
Total Property Cash Net Income
38.5% 49.5% 52.0% 50.3% 52.4% 53.4% 54.1% 52.1%
Net Property Sale Proceeds
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 359.4% 68.2%
Total Debt Service Payments
Net Income after Debt Service (for Equ -6.2%
5.0% 11.0% 12.3% 17.0% 19.6% 380.9% 83.2%
Summit Road Capital LLC: Confidential, Do Not Forward
Source: Summit Road Capital
Income Statement ($ US)
Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 2017-2022
Base Case Scenario
Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Gross Revenues 3,674,149 3,694,761 4,001,030 4,319,438 4,641,885 4,856,039 5,038,081
26,551,234
Total Property Cash Net Income
1,414,332 1,827,596 2,081,780 2,173,950 2,431,908 2,593,167 2,724,237 13,832,640
Total Debt Service Payments
(1,549,127) (1,549,127) (1,549,127) (1,549,127) (1,549,127) (1,549,127) (1,549,127) (9,294,762)
Net Income after Debt Service (for Equity Investors) (134,795)
278,469 532,653 624,823 882,781 1,044,040 15,361,445 18,724,212
Schedule of Investor Cash Flows:
Property Sale Net Proceeds 14,186,335 14,186,335 Net Income after Debt Service (for Equity Investors) 278,469 532,653 624,823 882,781 1,044,040 15,361,445 3,120,702 Cash in the Bank Available for Equity Investors 457,500 735,969 660,622 677,446 952,227 1,388,267 15,681,320 3,349,309 Less Preferred Interest Payments to Equity Investors 8.0% (608,000) (608,000) (608,000) (608,000) (608,000) (571,169) (3,611,169) Cash In the Bank after Preferred Interest Payments 127,969 52,622 69,446 344,227 780,267 15,110,152 2,747,447 Return of Equity Capital to Investors & Sponsors (460,392) (15,110,152) (15,570,544) Cash in the Bank after Return of Equity Capital 127,969 52,622 69,446 344,227 319,875 152,357 Equity Capital Balance Outstanding 7,600,000 7,600,000 7,600,000 7,600,000 7,600,000 7,139,608 6,256,601 Upside Cash Flow Payments Equity Investor Upside Payments 70.0% 5,579,381 5,579,381 GP Sponsor Upside Payments 30.0% 2,391,163 2,391,163
Total Cash Flows:
Equity Investors: Acquisition of Property (7,600,000) Equity Investors: Preferred Interest Payments 608,000 608,000 608,000 608,000 608,000 571,169 3,611,169 Equity Investors: Principal Return 460,392 7,139,608 7,600,000 Equity Investors: Upside Cash Flows 5,579,381 5,579,381 Total Equity Investor Cash Flows (7,600,000) 608,000 608,000 608,000 608,000 1,068,392 13,290,157 16,790,549 GP/Sponsor: Upside Cash Flows 2,391,163 2,391,163
Total Investor Cash Flows (7,600,000) 608,000 608,000 608,000 608,000 1,068,392 15,681,320
19,181,712 Equity Investor Cash on Cash Returns 8.0% 8.0% 8.0% 8.0% 14.1% 174.9%
2.21 x
Total Cash on Cash Returns (w/ Sponsor Equity) 8.0% 8.0% 8.0% 8.0% 14.1% 206.3%
2.52 x IRR: Equity Investors 16.2% IRR: Total Project 18.9%
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Downside Scenario Sensitivities ($ US)
Base Case Downside Scenario #1 Downside Scenario #2
Carlyle Apartments
2017 - 2022 2017 - 2022 2017 - 2022 Total Revenue 26,551,234 25,223,672 23,896,111
Revenue YoY % (Avg) 5.4% 4.6% 3.8% Monthly Actual Rental Rate (Avg) $803 $757 $717 Total Expenses & Capex (12,718,594) (12,539,241) (12,359,888)
Total Property Cash Net Income 13,832,640 12,684,431 11,536,223 Property Net Margin % 52.1% 50.3% 48.3%
Total Debt Service (9,294,762) (9,294,762) (9,294,762)
Net Income after Debt Service (for Equity Investors) 4,537,877 3,389,669 2,241,460
Exit Cap Rate 7.50% 8.00% 8.50%
Net Sale Proceeds 14,186,335 7,587,893 5,113,198 Total Project Cost Purchase Price Per Door 69,478 69,478 69,478 Gross Sale Price Per Door 83,310 71,854 61,745 Total Equity Investment (7,600,000) (7,600,000) (7,600,000) Total Investor & GP Cash Flows 19,181,712 11,435,062 7,812,159 Cash on Cash Return: Equity Investors 2.21 x 1.50 x 1.03 x Cash on Cash Return: Total Project (w/ Sponsor Equity) 2.52 x 1.50 x 1.03 x IRR: Equity Investors 16.2% 8.2% 0.6% IRR: Total Project (w/ Sponsor Equity) 18.9% 8.3% 0.6%
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Source: Summit Road Capital
Still yields strong Cash
return metrics;
Scenarios include lower revenues, lower income, and a worse Cap-Rate at exit
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Summit Road Capital LLC: Confidential, Do Not Forward
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Summit Road Capital LLC: Confidential, Do Not Forward
We prefer Value-Add in Class B/C (and often times Class C) to maximize yields.
Source: CBRE
Average 5.50% 6.00% 7.00% 6.75% 8.00% 9.00% 10.25%
Tier II Markets yield 100bps better than Tier I Markets; Class B Assets yield 150bps better than Class A Assets; Class C yields 350bps better than Class A Assets. Average 4.50% 5.25% 6.75% 6.25% 7.00% 8.00% 9.00%
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Source: CBRE
Average 6.75% 7.50% 8.25% 8.00% 9.25% 10.25% 11.00% Tier III Markets yield 325-425bps better than Tier I markets. Class B Assets yield 150bps better than Class A Assets; Class C yields 350bps better than Class A Assets.
We prefer Value-Add in Class B/C (and often times Class C) to maximize yields.
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Population Rank MSA: Greater than 750,000 People State 2015 Estimate 2010 Census Change Encompassing Statistical Area
33 Austin-Round Rock TX 2,000,860 1,716,289 16.58% 44 Raleigh NC 1,273,568 1,130,490 12.66% Raleigh-Durham-Chapel Hill, NC MSA 5 Houston- Woodlands-Sugar Land TX 6,656,947 5,920,416 12.44% Houston-The Woodlands, TX MSA 24 Orlando-Kissimmee-Sanford FL 2,387,138 2,134,411 11.84% Orlando-Deltona-Daytona Beach, FL MSA 25 San Antonio-New Braunfels TX 2,384,075 2,142,508 11.27% 19 Denver-Aurora-Lakewood CO 2,814,330 2,543,482 10.65% Denver-Aurora-Lakewood, CO Metropolitan MSA 4 Dallas-Fort Worth-Arlington TX 7,102,796 6,426,214 10.53% Dallas-Fort Worth, TX-OK MSA 36 Nashville-Davidson–Murfreesboro–Franklin TN 1,830,345 1,670,890 9.54% Nashville-Davidson–Murfreesboro, TN MSA 73 North Port-Sarasota-Bradenton FL 768,918 702,281 9.49% North Port-Sarasota, FL MSA 22 Charlotte-Concord-Gastonia NC, SC 2,426,363 2,217,012 9.44% Charlotte-Concord, NC-SC MSA 12 Phoenix-Mesa-Scottsdale AZ 4,574,531 4,192,887 9.10% 67 McAllen-Edinburg-Mission TX 842,304 774,769 8.72% McAllen-Edinburg, TX MSA 15 Seattle-Tacoma-Bellevue WA 3,733,580 3,439,809 8.54% Seattle-Tacoma, WA MSA 41 Oklahoma City OK 1,358,452 1,252,987 8.42% Oklahoma City-Shawnee, OK MSA 29 Las Vegas-Henderson-Paradise NV 2,114,801 1,951,269 8.38% Las Vegas-Henderson, NV-AZ MSA 6 Washington-Arlington-Alexandria DC, VA, MD, W6,097,684 5,636,232 8.19% Washington-Baltimore-Arlington, DC-MD-VA-WV 8 Miami-Fort Lauderdale-West Palm FL 6,012,331 5,564,635 8.05% Miami-Fort Lauderdale-Port St. Lucie, FL MSA 9 Atlanta-Sandy Springs-Roswell GA 5,710,795 5,286,728 8.02% Atlanta-Sandy Springs, GA MSA 40 Jacksonville FL 1,449,481 1,345,596 7.72% Jacksonville-St. Marys-Palatka, FL-GA MSA 35 San Jose-Sunnyvale-Santa Clara CA 1,976,836 1,836,911 7.62% San Jose-San Francisco-Oakland, CA MSA 48 Salt Lake City UT 1,170,266 1,087,873 7.57% Salt Lake City-Provo-Orem, UT MSA 11 San Francisco–Oakland–Hayward CA 4,656,132 4,335,391 7.40% San Jose-San Francisco-Oakland, CA MSA 23 Portland-Vancouver-Hillsboro OR, WA 2,389,228 2,226,009 7.33% Portland-Vancouver-Salem, OR-WA MSA 18 Tampa-St. Petersburg-Clearwater FL 2,975,225 2,783,243 6.90% 17 San Diego-Carlsbad CA 3,299,521 3,095,313 6.60% 32 Columbus OH 2,021,632 1,901,974 6.29% Columbus-Marion-Zanesville, OH MSA 13 Riverside-San Bernardino-Ontario CA 4,489,159 4,224,851 6.26% Los Angeles-Long Beach, CA MSA 63 Greenville-Anderson-Mauldin SC 874,869 824,112 6.16% Greenville-Spartanburg-Anderson, SC MSA 46 New Orleans-Metairie LA 1,262,888 1,189,866 6.14% New Orleans-Metairie-Hammond, LA-MS MSA 27 Sacramento–Roseville–Arden-Arcade CA 2,274,194 2,149,127 5.82% Sacramento-Roseville, CA MSA 59 Omaha-Council Bluffs NE, IA 915,312 865,350 5.77% Omaha-Council Bluffs-Fremont, NE-IA MSA 71 Columbia SC 810,068 767,598 5.53% Columbia-Orangeburg-Newberry, SC MSA 34 Indianapolis-Carmel-Anderson IN 1,988,817 1,887,877 5.35% Indianapolis-Carmel-Muncie, IN MSA 16 Minneapolis-St. Paul-Bloomington MN, WI 3,524,583 3,348,859 5.25% Minneapolis-St. Paul, MN-WI MSA 45 Richmond VA 1,271,334 1,208,101 5.23% 61 Bakersfield CA 882,176 839,631 5.07% 52 Grand Rapids-Wyoming MI 1,038,583 988,938 5.02% Grand Rapids-Wyoming-Muskegon, MI MSA
in Houston, Dallas, Phoenix, Atlanta, Raleigh, Charlotte, San Antonio, Austin, Jacksonville, Columbus, Tampa, and more
markets
but with Poor Value are found in San Francisco, Miami, Denver, Seattle
in these markets (we are always selective but particularly wary here)
Source: Wikipedia, Summit Road Capital
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Population Rank MSA: 100,000 - 750,000 People State 2015 Estimate 2010 Census Growth % Encompassing Statistical Area
113 Port St. Lucie FL 454,846 424,107 7.25% Miami-Fort Lauderdale-Port St. Lucie, FL MSA 282 Sebastian-Vero Beach FL 147,919 138,028 7.17% Miami-Fort Lauderdale-Port St. Lucie, FL MSA 154 Lincoln NE 323,578 302,157 7.09% Lincoln-Beatrice, NE MSA 285 Rapid City SD 144,134 134,598 7.08% Rapid City-Spearfish, SD MSA 323 San Angelo TX 119,659 111,823 7.01% 161 Lubbock TX 311,154 290,805 7.00% Lubbock-Levelland, TX MSA 220 Panama City FL 197,506 184,715 6.92% 237 Dover DE 173,533 162,310 6.91% Philadelphia-Reading-Camden, PA-NJ-DE-MD MS 177 Olympia-Tumwater WA 269,536 252,264 6.85% Seattle-Tacoma, WA MSA 299 Logan UT, ID 133,857 125,442 6.71% 292 Morgantown WV 138,176 129,709 6.53% Morgantown-Fairmont, WV MSA 326 Lawrence KS 118,053 110,826 6.52% Kansas City-Overland Park-Kansas City, MO-KS M 118 Huntsville AL 444,752 417,593 6.50% Huntsville-Decatur-Albertville, AL MSA 109 Pensacola-Ferry Pass-Brent FL 478,043 448,991 6.47% 160 Columbus GA, AL 313,749 294,865 6.40% Columbus-Auburn-Opelika, GA-AL MSA 124 Killeen-Temple TX 431,032 405,300 6.35% 253 Kahului-Wailuku-Lahaina HI 164,726 154,924 6.33% 305 Hammond LA 128,755 121,097 6.32% New Orleans-Metairie-Hammond, LA-MS MSA 198 Tyler TX 222,936 209,714 6.30% Tyler-Jacksonville, TX MSA 203 Lafayette-West Lafayette IN 214,363 201,789 6.23% Lafayette-West Lafayette-Frankfort, IN MSA 246 Bowling Green KY 168,436 158,599 6.20% Bowling Green-Glasgow, KY MSA 306 Jonesboro AR 128,394 121,026 6.09% Jonesboro-Paragould, AR MSA 107 Lexington-Fayette KY 500,535 472,099 6.02% Lexington-Fayette–Richmond–Frankfort, KY MSA 115 Reno NV 450,890 425,417 5.99% Reno-Carson City-Fernley, NV MSA 337 California-Lexington Park MD 111,413 105,151 5.96% Washington-Baltimore-Arlington, DC-MD-VA-WV 77 Stockton-Lodi CA 726,106 685,306 5.95% San Jose-San Francisco-Oakland, CA MSA 88 Madison WI 641,385 605,435 5.94% Madison-Janesville-Beloit, WI MSA 247 Billings MT 168,283 158,934 5.88% 135 Salisbury MD, DE 395,300 373,802 5.75% 114 Corpus Christi TX 452,422 428,185 5.66% Corpus Christi-Kingsville-Alice, TX MSA 90 Deltona-Daytona Beach-Ormond Be FL 623,279 590,289 5.59% Orlando-Deltona-Daytona Beach, FL MSA 209 Bellingham WA 212,284 201,140 5.54% 218 Athens-Clarke County GA 203,189 192,541 5.53% Atlanta–Athens-Clarke County–Sandy Springs, GA MSA 121 Vallejo-Fairfield CA 436,092 413,344 5.50% San Jose-San Francisco-Oakland, CA MSA 199 Prescott AZ 222,255 211,033 5.32% 116 Asheville NC 446,840 424,858 5.17% Asheville-Brevard, NC MSA 108 Lafayette LA 490,488 466,750 5.09% Lafayette-Opelousas-Morgan City, LA MSA 136 Gulfport-Biloxi-Pascagoula MS 389,255 370,702 5.00% Population Rank MSA: 100,000 - 750,000 People State 2015 Estimate 2010 Census Growth % Encompassing Statistical Area 324 The Villages FL 118,891 93,420 27.27% Orlando-Deltona-Daytona Beach, FL MSA 248 Midland TX 166,718 141,671 17.68% Midland-Odessa, TX MSA 258 Odessa TX 159,436 137,130 16.27% Midland-Odessa, TX MSA 123 Myrtle Beach-Conway SC, NC 431,964 376,722 14.66% Myrtle Beach-Conway, SC-NC MSA 79 Cape Coral-Fort Myers FL 701,982 618,754 13.45% Cape Coral-Fort Myers-Naples, FL MSA 304 Bismarck ND 129,517 114,778 12.84% 164 Greeley CO 285,174 252,825 12.80% Denver-Aurora, CO MSA 262
UT 155,602 138,115 12.66% 75 Charleston-North Charleston SC 744,526 664,607 12.03% 192 Fargo ND, MN 233,836 208,777 12.00% Fargo-Wahpeton, ND-MN MSA 260 Auburn-Opelika AL 156,993 140,247 11.94% Columbus-Auburn-Opelika, GA-AL MSA 216 Daphne-Fairhope-Foley AL 203,709 182,265 11.77% Mobile-Daphne-Fairhope, AL MSA 152 Fort Collins CO 333,577 299,630 11.33% 93 Provo-Orem UT 585,799 526,810 11.20% Salt Lake City-Provo-Orem, UT MSA 181 Crestview-Fort Walton Beach-Desti FL 262,172 235,865 11.15% 148 Naples-Immokalee-Marco Island FL 357,305 321,520 11.13% Cape Coral-Fort Myers-Naples, FL MSA 235 Bend-Redmond OR 175,268 157,733 11.12% Bend-Redmond-Prineville, OR MSA 211 Hilton Head Island-Bluffton-Beaufo SC 207,413 187,010 10.91% 105 Fayetteville-Springdale-Rogers AR, MO 513,559 463,204 10.87% 186 Sioux Falls SD 251,854 228,261 10.34% 169 Kennewick-Richland WA 279,116 253,340 10.17% 81 Boise City ID 676,909 616,561 9.79% Boise City-Mountain Home-Ontario, ID-OR MSA 98 Durham-Chapel Hill NC 552,493 504,357 9.54% Raleigh-Durham-Chapel Hill, NC MSA 91 Des Moines-West Des Moines IA 622,899 569,633 9.35% Des Moines-Ames-West Des Moines, IA MSA 249 Iowa City IA 166,498 152,586 9.12% Cedar Rapids-Iowa City, IA MSA 138 Savannah GA 379,199 347,611 9.09% Savannah-Hinesville-Statesboro, GA MSA 171 Wilmington NC 277,969 254,884 9.06% 187 College Station-Bryan TX 249,156 228,660 8.96% 273 Coeur d'Alene ID 150,346 138,494 8.56% Spokane-Spokane Valley-Coeur d'Alene, WA-ID M 156 Boulder CO 319,372 294,567 8.42% Denver-Aurora, CO MSA 238 Punta Gorda FL 173,115 159,978 8.21% North Port-Sarasota, FL MSA 80 Colorado Springs CO 697,856 645,613 8.09% 84 Lakeland-Winter Haven FL 650,092 602,095 7.97% 166 Clarksville TN, KY 281,021 260,625 7.83% 176 Laredo TX 269,721 250,304 7.76% 223 Gainesville GA 193,535 179,684 7.71% Atlanta–Athens-Clarke County–Sandy Springs, GA MSA 87 Ogden-Clearfield UT 642,850 597,159 7.65% Salt Lake City-Provo-Orem, UT MSA 236 Columbia MO 174,974 162,642 7.58% Columbia-Moberly-Mexico, MO MSA
Source: Wikipedia, Summit Road Capital Source: Wikipedia, Summit Road Capital
The Dallas-Fort Worth MSA is one of our top targets because of:
1) Tremendous job growth in the area and many strong educational institutions; 2) Strong population growth over many decades; 3) Attractive cash flow yield opportunities exist in many strong sub-markets like Irvine, Grapevine, Lewisville, Plano, and more.
Dallas Rental Rate gains have been very strong; This is both a positive (indicating market strength) and a negative (we are buying with higher NOIs in place).
Source: Berkadia Source: Berkadia Source: Wikipedia
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Source: Berkadia
The Atlanta GA MSA is one of our top targets because of:
1) Tremendous job growth in the area and many strong educational institutions; 2) Strong population growth over many decades; 3) Attractive cash flow yield opportunities exist in many strong sub-markets like Northeast Cobb/Woodstock, Kenesaw and Acworth.
Source: Wikipedia Source: Wikipedia Source: Marcus & Millichap Source: Marcus & Millichap
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The Tampa FL MSA is one of our top targets because of:
1) Tremendous job growth in the area and many strong educational institutions; 2) Strong population growth over many decades; 3) Attractive cash flow yield opportunities exist in many strong sub-markets like Northeast and South Tampa.
Source: Wikipedia Source: Wikipedia Source: Marcus & Millichap
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Source: Marcus & Millichap
The Columbus OH MSA is one of our top targets because of:
1) Tremendous job growth in the area and many strong educational institutions; 2) Strong population growth
many decades; 3) Attractive cash flow yield opportunities exist in many strong sub-markets like Dublin/Hillard, Upper Arlington, New Albany Westerville, and Delaware.
Source: Marcus & Millichap Source: Wikipedia Source: ARAnewmark
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The Phoenix AZ MSA is one of our top targets because of:
1) Tremendous job growth in the area and many strong educational institutions; 2) Strong population growth over many decades; 3) Attractive cash flow yield opportunities exist in many strong sub-markets like Peoria, Sun City and Tempe.
Source: Marcus & Millichap Source: Wikipedia Source: Greater Phoenix Economic Council
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Source: Marcus & Millichap
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At Summit Road Capital, we combine our deep rolodex of Capital Relationships with our desire to build new Development Projects, or reposition existing Assets, to create fantastic Customer
individual wealthy Investors. These relationships have been built over time, and if they support the given project at hand, can go extremely deep on any given Project (i.e. Billions of Dollars).
Repositioning in growth markets around the country. Our Team has built many different projects over the years, with much experience in Hospitality in particular, but also MFU Apartments and Condos, Retail, and Office Space. We tend to focus on Growth Markets, and Colorado certainly fits the bill, per many Demographic metrics.
we live by, but we want to take pride in the Quality of Projects we develop, with the Customer Experience always at the forefront of everything we do. When we show people our projects 20 or 30 years from now we want to see these Assets highly utilized, standing up to the test of time, and still looking great!
fashion, from Delivering Investor Returns, to serving the Community we are building in, to supporting our Employees growth and development, to recognizing that the Environment (Mother Earth) is a key Stakeholder in
projects, and we also work together on projects and developments, on a case by case basis. We work together because we want to, not because we have to, and often it is because of the tremendous Projects that are brought to the table. This cooperative way of working together has allowed us to scale more projects faster, and with more hands on deck than most other Development firms.
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Agile Realty Capital and Summit Road Capital to deploy capital intelligently across MFU Apartments, Hotels, and other Commercial Realty assets. Most recently, he co-founded Westminster Hospitality to build a Starwood Aloft Hotel in
and upgrades, while pursuing marketing enhancements, operational initiatives, & cost reduction efforts. Previous to that, Craig acquired a 95-unit apartment building in St. Louis MO. The team has improved the property, repositioned this asset, and ramped cash flow. Summit Road Capital continues to make competitive offers on MFU Apartment and Hotel assets in attractive markets, and expects to acquire additional properties in coming months. Craig leads all property Sourcing and Underwriting activities, and is the lead sponsor on many existing deals implement Operational Improvements.
analyst for firms like Smith Barney Citigroup and FBR Capital Markets. Here, he serviced leading hedge and mutual fund clients, won several awards, and was one of CNBC's go-to semiconductor market experts with over 75 TV appearances.
technology startups in market strategy, outsourced CFO, and capital raising roles. He has been an Angel Investor in various startups like Thirstie.com, BioIQ, and Revenue.com. Craig worked at Intel Corp. (1999-2002) in the CPU and capital spending finance groups, closing the books, helping drive the forecasting cycles, and working to maximize cash return metrics. Here, Craig garnered industry perspective and learned how large corporations are run from the inside.
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with partner Craig Berger, Co-Founded Agile Realty Capital (ARC) in 2014. Agile Realty Capital is carefully deploying capital into MFU Apartment and Hotel opportunities.
interfacing with top Family Office and Private Equity firms around the world. His Wall Street M&A background prove invaluable here.
development Projects, further developing his skillset and expertise in Commercial Realty.
since 1998, and has over 20 years of corporate finance experience in mergers and acquisitions, equity/debt financing, and real estate activities. Mr. Cummings has successfully completed over one-hundred M&A transaction with several billion dollars of enterprise value for both privately held and large multinational public companies. He has authored numerous corporate finance articles for professional journals, magazines and periodicals. Before co-founding Agile Equity, Mr. Cummings spent seven years as a Vice President with Fleet Financial Group (now Bank of America) where he developed
acquisition and divestiture strategies. Mr. Cummings began his career with State Street Research & Management as an equity analyst specializing in technology.
Miami Real Estate market for over many years, acquiring, renovating and selling residential Properties. He has completed a number of transactions in the Miami area, leading deal sourcing, property selection, project management, property marketing, and other critical facets of this local business.
firm that owns and operates Hotels. Mr. Bligh has transformed many properties over the years and offers a wealth of Hotel Management and Ownership experience. In 2001, Mr. Bligh built a brand new La Quinta Inn in Grand Junction, CO. By 2012, Lizanatay owned five hotels, four restaurants, and had another eight properties under receivership or with outside management contracts. Most recently, Dallas co-founded Westminster Hospitality LLC and is helping lead the Planning & Development of this property, a Starwood Aloft in North Denver.
properties with: Hilton, IHG, Choice, Wyndham, Hampton Inn, Best Western, La Quinta Inn, Crowne Plaza, Holiday Inn (Express), Comfort Inn, Quality Inn, Ramada, Super 8, ValueStay, and various restaurants like Hoot & Howl, Sal’s Street Food, Crossroads Barbeque and La Crocevia. Mr. Bligh and Lizanatay has provided services for Private Equity Funds, Banks, Independent Hotel Owners, Hotel Brokers, Hospitality Management Companies and Court Appointed Receiverships.
Mountain Chapters of the Turnaround Management Association, after joining in 2011. As a turnaround manager, Mr. Bligh quickly brings value to distressed assets. Often as a court appointed Receiver, Mr. Bligh has been effective in implementing Lizanatay’s systems and protocols, rapid staff training, and cost effective improvement plans. These efforts have proven successful in increasing the value of properties by as much as 300% in 18 months.
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Quality Inn and Suites: Rawlins, WY – Acquisition, Turnaround, Management
mpton Inn - Pueblo, CO – Management Agreement
InnVite Hospitality : Columbus, OH – Management Services for Portfolio of 10 Properties
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Mark Kuster is a Managing Director, Property Renovations at Summit Road Capital (SRC) and Agile Realty Capital (ARC), both of which are Commercial Realty firms focusing on Hotels, MFU Apartment buildings, and New Development. Mark began buying Single Family Homes and Apartment Buildings on the Courthouse steps in 1980 and built up a respectable portfolio of rental properties that he self managed for over twenty years.
many property renovations as part of his fix and flip business. Mark brings 35-years of renovation and construction experience to our team, where he helps the firm achieve tremendous value-add renovations without over-spending along the way. Mark is also a licensed Tool and Die Maker, and has added significant value to his Agile Realty Capital projects with the firm to date.
accomplished MFU Apartment deal underwriter and contributes to our Sourcing and Underwriting efforts on a regular basis.
Bread Franchisee. Scott joined Breads of the World in 2006 as the Director of Real Estate
and evaluation. Scott has developed a quantitative process that assesses any site across multiple metrics including demographics, competition, financial outcomes, site feasibility, and more. Scott also is responsible for evaluating existing sites to determine a long term position strategy, and to assess the potential for drive thru cafe conversions. As part of this, Scott also works to coordinate development plan approval, entitlement process, and construction permit process, construction management and more.
selection, evaluation, and ongoing assessments, Scott also oversees the process of land acquisition and long term lease negotiations. Here he works closely with Sellers, other brokers, attorneys, and more to create positive Outcomes for Breads of the World, and for the Sellers. Scott has helped negotiate and close over 40 commercial transactions in the past 10 years.
with a degree in Marketing from Metropolitan State University of Denver. He has an active Colorado Brokers Real Estate license.
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We have some Competitive Advantages versus other big New York City firms:
Returns are Stronger here. Returns are much stronger in Secondary & Tertiary cities, and in Class B and Class C properties. We have teams of people in these locations that are capable of helping us Ramp and Scale the business to at least 500 units in each chosen market (economies of scale engage at that point).
and are less Costly than many others that have been doing this for decades already.
with, while delivering Concierge-Level Services. We always operate with the highest in Ethics and Integrity, and are trustworthy and reliable for our Partners. We try to win, have fun, engage our Staff, and all while creating memorable and positive customer experiences.
many different Risk Mitigation techniques. Also, we actively manage our Properties and Staff. Yes, we do hire 3rd Party Management for all of our properties, but we still work to maximize the effectiveness
adding value to a variety of projects. We very likely work cheaper
mitigation strategy – we Do Not Overpay for our Properties. Also, we want to buy reasonably decent quality in good locations so we can easily exit the asset in the future.
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Secret Sauce: Metrics Based Operations
success in apartment investing. We live by the maxim ‘If you cannot measure, you cannot manage’. Our apartment complexes are managed through a metric driven reporting system called an MMR (Monday Morning Report), which includes metrics for
leasing, delinquency, financials, marketing, renewals and
best-in-class apartment reporting metrics from larger, more scaled competitors, and allows us to track performance and take remedial action much faster.
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Risk Management is so important that we embed it in every level of the organization, from Managing staff on site at our Properties, to over-capitalizing each project to ensure success through economic Upcycles and Downcycles. For Existing Assets:
apartments; If a recession comes, our properties are supply limited and some portion of Renters will downsize into
For All Projects, Including New Development:
8.5%-9.0% Cap-Rates), leaving us some downside protection;
This is a key component to our risk mitigation strategy. Also, we want to buy reasonably decent quality in good locations so we can easily exit the asset in the future.
Craig Berger, CFA CPA (Craig@ARealtyCap.com)