MANAGEMENT PRESENTATION Canadas only publicly traded vehicle which - - PowerPoint PPT Presentation

MANAGEMENT PRESENTATION

NOVEMBER 2012

Canada’s only publicly traded vehicle which offers investors exclusive exposure to U.S. Multi‐family real estate assets.

Forward looking statements are included in this Presentation, which involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance

• r achievements expressed or implied by such forward looking statements. These forward looking statements are identified by the use of

terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms and phrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. These statements reflect current expectations of management regarding future events and operating performance as of the date of this

• Presentation. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future

performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements, including, but not limited to, the following factors: financial health of Pure Multi‐Family and its related cash flows, competitive and economic environment, seasonality and fluctuations in results, expansion, interest rates and foreign exchange. Cash distributions are not guaranteed and will fluctuate with the performance of Pure Multi‐Family, nature of the Units, and the proposed changes to the Canadian federal income tax treatment of income trusts. Although the forward looking statements contained in this Presentation are based upon what Pure Multi‐Family’s management believes to be reasonable assumptions, Pure Multi‐Family cannot assure investors that actual results will be consistent with these forward looking

• statements. These forward looking statements reflect management’s current beliefs and are based on information currently available to

Pure Multi‐Family. They reflect current assumptions regarding future events and operating performance including, without limitation, strong economies in the geographies in which the REIT LP operates, stable interest rates and continued strength in the multi‐family real estate sector, and speak only as of the date of this discussion. These forward looking statements are made as of the date of this Presentation and Pure Multi‐Family assumes no obligation to update or revise them to reflect new events or circumstances.

1

FORWARD LOOKING STATEMENTS

Please note all dollar amounts presented in this document are in U.S. dollars unless

• therwise stated.

2

Dollar Amount References

AGENDA

1. OVERVIEW & MANAGEMENT 2. THE MARKET OPPORTUNITY 3. THE INVESTMENT HIGHLIGHTS 4. THE PORTFOLIO 5. SUMMARY 6. CONTACT 7. APPENDIX

MANAGEMENT & EXPERIENCE

1. OVERVIEW 2. SENIOR MANAGEMENT TEAM 3. TRACK RECORD OF CREATING VALUE

5

OVERVIEW

• Pure Multi‐Family REIT LP (“Pure Multi”) invests in multi‐family real estate properties in

primary markets in the United States, with an initial focus on the U.S. Sunbelt.

• Since inception, Pure Multi has raised over US$86.3 million in public offerings and has

acquired six properties consisting of over 1,908 apartments located in the Dallas‐Fort Worth Metroplex area.

SENIOR MANAGEMENT TEAM

Darren Latoski – Executive Chairman, Director

• 21 years of real estate experience in both Canada

and the U.S.

• Co‐CEO of Pure Industrial Real Estate Trust, a TSX

listed industrial REIT (TSX‐AAR.UN)

• CEO of WesternOne Equity Income Fund, a TSX

listed company (TSX‐WEQ.UN)

Samantha Adams – Vice President

• 12 years of real estate experience in

both Canada and the U.S.

• VP of Sunstone Realty Advisors since 2003
• VP of PIRET since 2007

Stephen Evans – Chief Executive Officer, Director

• 24 years of real estate experience in both Canada

and the U.S.

• Co‐CEO of Pure Industrial Real Estate Trust, a TSX

listed industrial REIT (TSX‐AAR.UN)

• CEO of WesternOne Equity Income Fund, a TSX

listed company (TSX‐WEQ.UN)

Scott Shillington, C.A. – Chief Financial Officer

• 11 years of accounting experience
• Controller of Sunstone Realty Advisors since 2010
• Pure Multi’s management team, The Sunstone Group, is experienced with a proven

track record of value creation.

7

TRACK RECORD OF CREATING VALUE

The Sunstone Group

• Created 11 opportunity funds since 2003
• Consistently raised capital regardless of economic conditions
• Initial 2 Canadian funds (launched in 2004) have generated 18% and 36% annualised returns
• The 4 US funds have raised US$137 million in equity and have acquired 12 US properties including 9 multi‐family

apartment communities for over US$288 million

• Pure Industrial Real Estate Trust

(AAR.UN), one of Canada’s largest pure‐play publicly traded industrial property REIT, completed its IPO in 2007 and has returned significant value to investors since.

• Created in 2012
• Raised US$86.3 million and acquired 6 apartment communities in the Dallas Metroplex to date for
• ver $171 million

CAD CAD CAD CAD CAD

SUNSTONE & PURE MULTI ACQUISITIONS BY GEOGRAPHY ($MM) 2004 ‐ 2012

PIRET TOTAL RETURNS

$171 Pure Multi

THE MARKET OPPORTUNITY

1. HIGH RETURNS FOR MULTI‐FAMILY 2. U.S. FINANCIAL CRISIS 3. U.S. ECONOMIC RECOVERY VS. SUNBELT 4. SUNBELT LEADING THE RECOVERY 5. IMPACT ON SUNBELT MULTI‐FAMILY 6. THE CANADIAN ADVANTAGE

9.7% 9.7% 8.7% 8.1% 8.7% All Asset Classes = 8.4% Multi-Family Hotel Retail Industrial Office

9

• U.S. multi‐family real estate has

generated strong investor returns

• ver the last 20 years driven by:
• Diverse income streams
• Low operating costs
• Manageable capital expenditure

requirements

• Favorable debt financing terms

U.S. Returns by Real Estate Class (1992 – 2011)

HIGH RETURNS FOR MULTI-FAMILY

Source: NCREIF, represents average annualized returns.

Strong Multi‐Family returns

94,439 99,421 75,086 24,792 26,671 40,803 17.0% 17.5% 22.8% 23.8% 20.5% 19.6% 40,000 80,000 120,000 160,000 200,000 2006 2007 2008 2009 2010 2011 Total "Sunbelt" Multi-Family Units Authorized 0.0% 10.0% 20.0% 30.0% "Sunbelt" as a % of Total Authorized Multi- Family Units in the U.S.

10

• The recent financial crisis has resulted in a significant reduction in the construction of new homes,

including multi‐family properties

• Pure Multi‐Family believes that the lack of new supply should increase demand for existing rental

properties and result in continued occupancy and rental rate increases

• Authorized building permits for multi‐family residential properties in the “Sunbelt” regions

have steadily declined since 2006

US FINANCIAL CRISIS HAMPERS SUPPLY OF NEW APARTMENTS

Multi‐Family Units by Authorized Building Permits ‐ Sunbelt

Source: Bureau of Economic Analysis- Sunbelt includes: TX, AZ, NV, GA.

Decreasing number of building permits

11

• Since 2009, the economic recovery is much more evident in the Sunbelt region

U.S. ECONOMIC RECOVERY VS. SUNBELT

U.S. Real GDP Growth

Source: U.S. Bureau of Economic Analysis.

1.7% 3.8% 3.9% 3.8% 2.5% 2.3% 0.4% 1.3% 1.8% 3.0% 2.2% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 9 2010 2011 2012

Increasing US GDP trend

Source: JP. Morgan Chase, 4Q seasonally adjusted annual rates.

“Sunbelt” Real GDP Growth Rate

(1.9%) 2.0% 2.3% 3.7% 2009 2010 2011F 2012F 200

Increasing US Sunbelt GDP trend

12

SUNBELT LEADING THE RECOVERY

Markets with Highest 2012F Absorption

Source: Marcus & Millichap, 2012 National Apartment Report.

Units in 000's 8.5 8.3 6.8 6.3 5.6 Dallas-Fort Worth Houston NYC D.C. L.A.

Source: Source: U.S. Census Bureau, Population Division.

Sunbelt Population Growth Rates

13% 13% 15% 11% 5% 8% 9% 17% 13% 9% 5% 6% 4% 4% 4% 2005A - 2010A 2011F - 2015F 2016F - 2020F Nevada Texas Arizona Georgia United States

1. The “Sunbelt” regions (Texas, Arizona, Nevada and Georgia) have experienced strong population growth rates well above the national average and declining vacancy rates, trends which are expected to continue in the future 2. The Dallas‐Fort Worth Metroplex in particular is benefiting from broad‐based job growth

• For the 12 months ended January 31,

2012, nonfarm employment rose 2.4% in the Dallas‐Fort Worth area compared to 1.5% nationwide

13

• Pure Multi‐Family expects that many

new residents in the “Sunbelt” regions will first seek out rental housing rather than buying homes, increasing demand for rental housing and supporting a continued increase in rental rates

• At the same time, there is a trend of

decreasing vacancy rates that compounds the effect of increasing rental rates.

IMPACT ON SUNBELT MULTI‐FAMILY

Declining Vacancy Rates

Source: Marcus & Millichap, 2012 National Apartment Report.

11.2% 11.0% 11.7% 12.3% 12.3% 8.0% 6.0% 7.0% 7.9% 7.0% Dallas- Fort Worth Houston Phoenix Atlanta Las Vegas 2009 2010 2011 2012F

Increasing Asking Rents

Source: Marcus & Millichap, 2012 National Apartment Report.

$765 $746 $751 $825 $821 $832 $822 $793 $871 $815 Dallas- Fort Worth Houston Phoenix Atlanta Las Vegas 2009 2010 2011 2012F

14

• With the Canadian dollar trading near its

40 year high in relation to the U.S. dollar, Pure Multi‐Family believes it is an

• pportune time to invest the strong

Canadian dollar in to under‐valued U.S. hard assets

THE CANADIAN ADVANTAGE

Historical CAD/USD Exchange Rate

• Pure Multi‐Family believes there is significant

value potential in the U.S. multi‐family market, particularly as compared to the Canadian market

1.6% 2.8% 3.8% 2.0% 2.2% 2.8% 2010 2011 2012F United States Canada 8.2% 4.5% 6.7% 5.3% 2.0% 2.1% 2.7% 3.1% 2009 2010 2011 2012F United States Canada

Multi‐Family Vacancy Rates (2009 – 2012F) Multi‐Family Rent Growth (2010 – 2012F)

Source: RREEF, CBRE. Source: Marcus & Millichap Real Estate, CBRE.

More rapid decrease in USA Steeper growth in US Multi‐Family

Source: Bloomberg Financial Markets

INVESTMENT HIGHLIGHTS

15

• 1. SUSTAINABLE YIELD & CONSERVATIVE LEVERAGE
• 2. GROWTH STRATEGY
• 3. COMPARABLE REIT ANALYSIS

16

SUSTAINABLE YIELD & CONSERVATIVE LEVERAGE

*As at September 30th, 2012.

• Pure Multi‐Family pays a stable monthly cash

distribution of US$0.36 per annum

• Current yield of 7.1% (as at Nov. 5, 2012)
• AFFO payout of 85% (estimated 2013 run rate)
• Portfolio employs only property level debt*
• Target

loan to gross book value range: 55% to 65% (to a maximum of 70%)

• Loan to Gross Book Value (mortgages of total

assets): 44.1%

• Loan to Property Value: 63.1%
• Weighted average interest rate of 3.48%
• Weighted average mortgage term to maturity of

8.6 years

GROWTH STRATEGY

RECAP

• IPO closed July 2012 for $57.5 m
• Secondary bought deal offering closed October 2012 for

$28.8 M

• Acquired six multi‐family communities in Dallas totaling

$171 M in value GROWTH STRATEGY – NEXT 12 MONTHS

• Assemble high‐quality apartment portfolio (unparalleled

in Canadian apartment REIT peers)

• Targeting Texas primary markets initially
• Establish beach‐head portfolio holdings in major

strong‐growth cities providing economies of scale

• n managing assets in each location. Houston; San

Antonio; Austin

• Then look to Phoenix & other major SW “Sunbelt”

cities

• Implement value add capital improvement programs

18

COMPARABLE REIT ANALYSIS

Market Current 2012E Fully AFFO Cap TEV Debt/ Equity Distributed Price / AFFO (1) Payout Ratio (1) Company ($MM) ($MM) GBV Yield Yield 2012E 2013E 2012E 2013E Boardwalk REIT $3,319 $5,498 43.0% 3.0% 4.0% 25.1x 23.2x 75.9% 70.3% Canadian Apartment Properties REIT $2,179 $4,629 53.1% 4.7% 5.1% 19.5x 18.5x 91.3% 86.8% Northern Property REIT $1,011 $1,444 38.3% 4.8% 6.3% 15.9x 15.7x 76.9% 76.3% Killam Properties Inc. $637 $1,376 54.7% 4.6% 4.7% 21.3x 18.5x 97.8% 84.9% Morguard North American Residential REIT (2) $442 $762 41.9% 5.2% 5.4% 18.4x NA 95.2% NA Mainstreet Equity $351 $910 52.8% NA 3.8% 26.4x 20.3x NA NA InterRent REIT $246 $505 48.4% 2.9% 4.5% 22.0x 18.5x 63.8% 53.6% True North Apartment REIT $155 $330 61.2% 6.8% NA NA NA NA NA Average 49.2% 4.6% 4.8% 21.2x 19.1x 83.5% 74.4% Average (Excl. High/Low) 49.0% 4.5% 4.8% 21.3x 18.9x 84.8% 77.2% Pure Multi-Family REIT LP (3) $89 $188 59.9% 7.2% 7.5% 13.4x NA 96.9% NA

Source: Bloomberg and company filings as at November 6, 2012. (1) Based on 2012E consensus research estimates, except for Morguard North American Residential REIT and Pure Multi-Family REIT LP. (2) P/AFFO and AFFO Payout Ratio based on 2011A results. (3) 2012E based on FOFI pro forma for acquisitions; market cap assumes conversion of 5% carried interest. (4) 2013E run-rate based on management expectations

85%

PORTFOLIO

• 1. PORTFOLIO SUMMARY
• 2. STONELEIGH AT VALLEY RANCH
• 3. OAKCHASE
• 4. WINDSCAPE
• 5. SUNSET POINT
• 6. PRAIRIE CREEK VILLAS
• 7. BEAR CREEK

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PORTFOLIO PROVIDES PLATFORM FOR ACCRETIVE GROWTH

Property Name: Stoneleigh at Valley Ranch Oakchase Apartments Windscape Apartments Sunset Point (2) Prairie Creek Bear Creek Location Irving, TX Arlington, TX Grand Prairie, TX Arlington, TX Richardson, TX Euless, TX Current Occupancy (1): 95.0% 95.8% 99.4% 95.3% 97% 98% Total Units: 210 236 154 408 464 436 Purchase Price (US$MM): $22.6 $13.6 $8.4 $24.6 $52.5 $49.4 Cap Rate (1): 6.9% 7.6% 7.6% 7% 7.4% 6.5% Price / Unit (US$): $107,619 $57,543 $54,408 $60,218 $113,147 $113,188 Debt Assumed (US$MM): $13.68 $8.94 $5.09 $15.97 $32.61 $32.08 Interest Rate /Term (Years): 3.51% /10 3.28%/ 5 3.52% /7 3.54% /10 6.02% /6.5 3.45%/7

BUILDING DETAILS

(1) Based on information found in October 12, 2012 Final Short Form Prospectus (2) Sunset Point and Springmist were acquired as two properties but operate as a single asset

• US$171 million total

portfolio purchase price

• 97% weighted average
• ccupancy rate
• US$109 million total debt

assumed

• 7.0% weighted average

cap rate

• 4.16% weighted average

interest rate

• 7.5 year weighted average

mortgage term

Portfolio Financial Facts

21

VALLEY RANCH

Irving, Texas

• Valley Ranch (210 units) was acquired on July 18, 2012 for

US$22,600,000 with a cap rate of 6.9%.

22

OAKCHASE

Dallas Fort Worth, TX

• Oakchase

(236 units) was acquired

• n

July 12, 2012 for US$13,580,133 with a cap rate of 7.6%.

23

WINDSCAPE

Grand Prairie, TX

• Windscape (154 units) was acquired on July 12, 2012 for

US$8,378,785 with a cap rate of 7.6%.

24

SUNSET POINT

Arlington, TX

• Sunset Point(1) (408 units) was acquired on September 26, 2012 for

US$24,569,000 with a cap rate of 7%.

(1) Sunset Point and Springmist were acquired as two properties but operate as a single asset

25

PRAIRIE CREEK

Richardson, TX

• Prairie Creek (464 units) was acquired on October 11, 2012 for

US$52,500,000 with a cap rate of 7.4%.

26

BEAR CREEK

Euless, TX

• Stoneleigh at Bear Creek Apartments (436 units) was acquired on

October 31, 2012 for US$49,350,000 with a cap rate of 6.5%.

• Focused on the highly stable multi‐family asset class

– Portfolio occupancy rate at 97% with minimal capex requirements

• Targeting accretive acquisitions in primary markets across the U.S.

– Strong economic and market indicators across the U.S. “Sunbelt” regions

• Attractive, sustainable yield for this asset class and quality

– Distribution of US$0.36 per annum – Yield of 7.1% at $5.10 (as at November 5, 2012) – Conservative AFFO payout ratio of 85% (2013 run‐rate estimate) – Tax efficient structure

• Experienced and fully aligned management team with a proven track record of creating value

for investors

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IN SUMMARY – A SMART INVESTMENT CHOICE

CONTACT US

Andrew Greig Director of Investor Relations Phone: 604‐681‐5959 Fax: 604‐681‐5969 Email: Agreig@PureMultiFamily.com 910‐925 West Georgia Street Vancouver, BC V6C 3L2

APPENDIX

• 1. WITHHOLDING TAX INFORMATION

30 Summary of US Withholding on REIT LP Dividends to the Unitholders The following summarizes the US withholding rates applicable to Canadian Unitholders who receive Pure Multi dividends . All Unitholders should consult with their own tax advisors.

WITHHOLDING TAX SUMMARY

INVESTOR TYPE WITHHOLDING TAX NOTES Individuals 15% RRSP’S and RRIF’S 0% TFSA’s 15% RSDSP’s, RESP’s and Other Plans 0% ‐ 30% Note 1 Non‐individual investors eligible for benefits under the Canada‐US Treaty 30% Note 2 Investors eligible for benefits under a US treaty other than the Canada‐US Treaty Please consult your tax advisor

The above chart assumes the Unitholder is a qualified resident under the Canada/US Treaty. The chart above is applicable only to 5% or less

• Unitholders. Greater than 5% Unitholders should consult with their own tax advisors.

Note 1: Whether a plan is entitled to a reduced treaty rate depends on the specific terms of the plan. Investors investing through RDSP’s, RESP’s and other similar plans should consult with their own tax advisors to determine whether a reduced treaty rate (ie. 0% or 15%) is available to them. Note 2: Non‐individual investors may be entitled to a 15% reduced treaty rate if at the time of the dividend the REIT is "diversified". Very generally, a REIT is diversified if the gross value of no single interest in real property held by the REIT exceeds 10% of the gross value of the REIT's total interest in real property.

• INDIVIDUAL INVESTORS THAT ALREADY PAY US TAXES SHOULD CONSULT A TAX ADVISOR
• CORPORATE INVESTORS SHOULD SEEK TAX ADVICE