The Forest & the Trees: The Forest & the Trees: Striking a - PowerPoint PPT Presentation

The Forest & the Trees: The Forest & the Trees: Striking a Balance Between Portfolios and Striking a Balance Between Portfolios and Properties Properties

Presenters Todd Sears, Executive Vice President Brendt Rusten, Senior Vice President

Herman & Kittle Overview ~130+ ¡assets ¡in ¡portfolio • – ~15 ¡states – Midwest ¡through ¡South – Combination ¡of ¡9% ¡tax ¡credit, ¡tax-­‑exempt ¡bonds, ¡market ¡rate, ¡and ¡ self-­‑storage – Actively ¡growing ¡(3 rd largest ¡affordable ¡housing ¡developer) Based ¡in ¡Indianapolis • – ~450 ¡employees ~325 ¡site ¡staff • ~125 ¡home ¡office • – 5 ¡team ¡members ¡in ¡asset ¡management ¡function Revenue ¡Management • Utility ¡Management • Portfolio ¡Analyst • Director ¡of ¡Portfolio ¡Management • EVP/Portfolio ¡Management ¡& ¡Analysis •

Dominium Overview Portfolio Properties Units # of Properties Owned for Owned 198 24,029 0-4 yrs: 5-9 yrs: 10-14 yrs: 15+ yrs Fee - Interim: 0 0 37 53 50 58 Fee - Permanent: 18 1,337 216 25,366 Employment S ite: 713 Corporate: Property Management 50 Corporate Services 76 Development 39 Asset Mgmt 23 901 • Data last updated on 5/2016

Portfolio vs Property Perspective • Our core philosophy: Long–term ownership of real estate • It starts at the property perspective and moves to a portfolio perspective as soon as you have two assets • We all combine both approaches as we run our businesses

Portfolio vs Property Perspective • Most developers build a portfolio one asset at a time (i.e. think at the property level) • Decision making often differs if viewed from portfolio perspective versus property perspective

Examples • Volume discounting • Diversification – Risk – Partners – Documents • Resource allocation • Market segmentation

Examples • Portfolio examples – Budgeting: Target numbers set for the portfolio regarding Income, Expenses and Capitals. – Corporate functions: Common portfolio services including HR, IT, Marketing, Asset Management, Compliance, etc.

Examples • Property examples – Eventually individual budgets – Individual contracts at the site level – Debt – Services at the property level The need for property specific detail is driven because they are single asset entity's

Systems • Workfront – A centralized database to track all active development opportunities. • Property Database – Dominium developed, easily accessible system that includes vital information on every owned and managed property. • Monthly Performance Reporting – A system to rank Regional Managers on their portfolio performance and adherence to company policies and procedures. • Stress Test the Portfolio – A test that allows us to rank each property with a specific risk rating.

Workfront

Property Database

Monthly Performance Reporting

Stress Test the Portfolio

Discussion • Other examples? • Things to consider: – Concentration risks that need to be diversified? – Economies of scale in the marketplace? – Market participants that differentiate by size, dollars, or geography? – More effective way to allocate resources than “per unit” or “per property”? – Issues are more complex than “the addition of the components”? Does your team need macro-level/comprehensive tools? – Benchmarks have shifted from “absolute” (i.e. a property in isolation) to “relative” (i.e. properties in comparison to one another)? – Portfolio is of size/scale where no one property will make/break the company by itself? – Has focus shifted from building “properties” to building a company or portfolio?

Wrap-up/Take Aways

Contact Information Herman & Kittle Properties, Inc. Herman & Kittle Properties, Inc. 500 East 96 th Street, Suite 300 500 East 96 th Street, Suite 300 Indianapolis, IN 46240 Indianapolis, IN 46240 www.hermankittle.com www.hermankittle.com Todd Sears, Executive Vice President Todd Sears, Executive Vice President W: (317) 663-6850 W: (317) 663-6850 tsears@hermankittle.com tsears@hermankittle.com Dominium Dominium 2905 Northwest Blvd. Ste 150 2905 Northwest Blvd. Ste 150 Plymouth, MN 55441 Plymouth, MN 55441 www.dominiumapartments.com www.dominiumapartments.com Brendt Rusten, Senior Vice President Brendt Rusten, Senior Vice President W: (763) 354-5517 W: (763) 354-5517 brusten@dominiuminc.com brusten@dominiuminc.com