Market Leading, Mixed-Use & Transit-Oriented Portfolio in Washington, DC’s Dulles Corridor Comstock Holding Companies, Inc. Investor Presentation JUNE 30, 2019
DISCLOSURES This release includes “forward-looking” statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identifjed by use of words such as “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect,” “will,” “should,” “seeks” or other similar expressions. Forward-looking statements are based largely on our expectations and involve inherent risks and uncertainties, many of which are beyond our control. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made. Additional information concerning important risks and uncertainties can be found under the heading “Risk Factors” in our most recent Annual Report on Form 10-K, as fjled with the Securities and Exchange Commission. Our actual results could differ materially from these projected or suggested by the forward-looking statements. Comstock claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements contained herein. Comstock specifjcally disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. While every attempt has been made to ensure the accuracy of included measurements, all future development measurements are based on available information at the time of production of this Investor Presentation and therefore all square foot measurementsare subject to change without notice. JUNE 30, 2019 2
A DIVERSIFIED REAL ESTATE OPERATOR A PLATFORM FOR GROWTH THAT CREATES VALUE FOR ALL STAKEHOLDERS • Comstock is at the forefront of the • Comstock Holding Companies, Inc. • Comstock creates value for all urban transformation of one of the (NASDAQ: CHCI) is a diversifjed stakeholders through the thoughtful most dynamic real estate markets real estate developer and asset design, development and operation in the nations, Washington, DC’s manager with a 30+ year track of high-quality real estate assets, Dulles Corridor, where it controls a record of successfully investing in, with a focus on indenitfying unique stabilized portfolio and fully entitled developing, and operating residential, opportunities that are well positioned development pipeline that includes commercial, mixed-use, and to capitalize on emerging trends and ~7 million square feet of mixed-use transit-oriented real estate, delivering to produce above average returns and transit-oriented properties thousands of residential units and • Comstock participates in the value located adjacent to key Metro Stations millions of square feet of mixed-use created through its development and on the Silver Line (“Anchor Portfolio”) and transit-oriented assets while asset management services related earning its reputation as a premier • Comstock’s market leading position to the Anchor Portfolio in the Dulles real estate developer and operator in in the Dulles Corridor, coupled with Corridor where Metro’s new Silver the Washington, DC region its multiple revenue sources and its Line provides rail service connecting profjts interest in the Anchor Portfolio • Comstock acquires, develops, and Reston to Tysons and Washington, DC provide a platform for additional manages real estate for its own and is currently being expanded to growth and an opportunity to account, as fund sponsor, asset connect to Dulles International Airport enhance shareholder value manager, and as managing partner and Eastern Loudoun County of multiple Public-Private Partnerships (“P3”), aligning its interests with stakeholders by investing alongside in the real estate acquisitions and developments that it sources JUNE 30, 2019 3
RECAPITALIZATION PROVIDES CLEAN AND INVESTIBLE BALANCE SHEET IN APRIL 2019, COMSTOCK ANNOUNCED COMPLETION OF A SERIES OF TRANSACTIONS THAT ACCOMPLISHED: • Elimination of capital intensive, • Entry into a new asset management • The 2019 AMA covers a portfolio for-sale homebuilding unit, reducing agreement (“2019 AMA”) that of nearly 7 million square feet of exposure to highly volatile for-sale increases revenue opportunities investment-grade, transit-oriented market associated with anchor portfolio of and mixed-use assets encompassing assets under management more than 2,800 multi-family units, • Complete divestment of all liabilities Class A and Trophy offjce, destination associated with legacy homebuilding • The 2019 AMA replaces original asset retail, hotels, and commercial parking operation management agreement (“2018 garages located at two Metro stops AMA”) and its cost-plus revenue on the new Silver Line in the Dulles • Transfer to Company of cashfmow feature with a modifjed market rate Corridor resulting from ~$18.5M of prior fee structure that preserves the capital investments in homebuilding stability of the cost-plus feature but • Assets under management (“AUM”) assets removes the revenue cap element of have an estimated value of $2.5 to the 2018 AMA $3.0 Billion at full build out JUNE 30, 2019 4
ENHANCED OPERATING PLATFORM NEW STRATEGY GENERATES NEW REVENUE SOURCES • Asset light, fee-based revenue model • Asset management services • Providing development supply chain increases return on invested capital provided to family offjces, services, including; entitlement while generating multiple new institutional investors, lenders, management services, environmental revenue sources owners and municipalities with real consulting and environmental estate interests provides reliable remediation services provides • 2019 AMA covers signifjcant portfolio long-term revenue opportunities, additional high-margin revenue of irreplaceable stabilized assets and with “promote” providing upside opportunities development pipeline at key Metro participation stations in Washington, DC’s Dulles • Environmental remediation platform Corridor • Providing real estate related generates healthy gross margins and services, including; development is designed for growth with minimal • 10-year term of anchor asset services, property management, capital outlay while highly fractured management agreement provides loan originations, and fjnancial nature of industry provides potential reliable asset management fee-based consulting services enhance revenue acquisition opportunities revenue and upside participation opportunities while providing downside protection through cost-plus provision JUNE 30, 2019 5
ASSET MANAGEMENT REVENUE DETAILS ANCHOR PORTFOLIO PROVIDES GROWTH OPPORTUNITY Wholly owned subsidiary, Comstock Asset Management, LC, manages the anchor portfolio including ~7M square feet of institutional quality mixed-use and transit-oriented assets (stabilized, under construction, and scheduled to begin construction during the next several years) in the Dulles Corridor of the Washington, DC region. The term of the Anchor Asset Management Agreement runs through 2027 Asset management fees are calculated as the greater of the annual operating costs of Comstock Holding Companies, Inc, plus $1,000,000 or the aggregate of the market rates fees, including: • Asset management fee as a percentage of managed portfolio revenues • Construction management fee as a percentage of development costs • Property management fee as a percentage of revenue of managed properties • Property management oversight fee as a percentage of managed portfolio revenues • Acquisition fee as a percentage of the purchase price of any acquired asset • Disposition fee as a percentage of the sales price of the disposition asset In addition, a “Promote” incentive fee equal to a percentage of the free cashfmow generated by each managed asset above the applicable prescribed preferred return on invested capital JUNE 30, 2019 6
ASSET MANAGEMENT REVENUE DETAILS ANCHOR PORTFOLIO PROVIDES PLATFORM FOR GROWTH Wholly owned subsidiary, Comstock Real Estate Services, LC generates fee-based revenue from its various business interests, which include: • Equity Capital Investment origination fee equal to a percentage of equity capital raised from unrelated third parties to benefjt capital stack of managed assets • Debt Capital origination fee equal to a percentage of debt capital raised from unrelated third parties to benefjt capital stack of managed assets • Leasing fee based on the square feet of lease originations and lease renewals applicable to managed commercial assets • Fees for provision of environmental consulting and remediation services in the Washington, DC metropolitan area and in New Jersey and Pennsylvania • Fees related to title insurance services provided through a joint venture with Superior Title • Fees for fjnancial consulting services related to temporary employment services and recruiting services • Additional growth will be generated through acquisitions, third party asset management, and real estate services JUNE 30, 2019 7
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