G REYSTAR Rocky Mountain Commercial Real Estate Expo & DU Fall Forecast November 12, 2004.

GREYSTAR

Rocky Mountain Commercial Real Estate Expo & DU Fall Forecast

November 12, 2004

Regional Offices

Regional in PracticeNational in Presence

Greystar Offices

Regional Offices

Greystar Presence (Management, Construction or Investment)

Charleston, SC (Headquarters)

Jacksonville, FL

Tampa, FLFt. Lauderdale, FLHouston, TX

Dallas, TX

Austin, TX

Phoenix, AZ

Denver, CO

Four Lines of BusinessFour Lines of Business

GreystarGreystar

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Development

Investment

Construction

Property Management

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DEVELOPMENTDEVELOPMENTDevelop with a national perspective and local expertise

Over $800 million of real estate developed over the last ten years

Product types include multifamily housing, office, industrial, retail and hotels

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INVESTMENTINVESTMENTGreystar sponsored investments approaching $2 Billion

One-stop shopping for investors, bypassing traditional investment advisors

Opportunistic. Create value at all stages of investment cycle and execute with in-house capabilities

Investment partners include Crow Holdings, JMI, Oregon Pension Fund, Goldman Sachs, Prudential, Recap, FNMA and Morgan Stanley

GREYSTAR

PROPERTY PROPERTY MANAGEMENTMANAGEMENT

Manage over 60,000 units

12th largest property manager in nation (Source: NMHC)

3rd largest third-party multifamily manager

1,850 team members in 30 markets

5 largest clients: Sendera, Invesco, Fannie Mae, Investment Associates, and Merrill Lynch

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CONSTRUCTIONCONSTRUCTIONConstruction Volume: $150M

90% 3rd party business

10 % construction services for Greystar projects

Diverse product types: multifamily, senior living, hotels, and retail

$100 million in Bonding Capacity

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Growth of the Real Estate Investment Market

•Amount of Money in the Market

•Stability of the Market

•Historical Real Estate Returns

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Cap Rate and Interest Rate Relationship

•National

•Denver

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Investment Analysis Case Study

•Yesterday’s Investment

•Today’s Reality

•Tomorrow’s Bet

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The Future

•The Rising Tide

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Growth of the Real Estate Investment Market

•Amount of Money in the Market

•Stability of the Market

•Historical Real Estate Returns

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May 17, 1993 June 7, 2004

NAREIT Equity Total Return Index

1,493 5,030

Morgan Stanley Index Not yet invented; would have been 178

601

REIT Industry Total Equity Market Cap

$16 Billion $240 Billion

Largest Equity REIT (Market Cap)

New Plan Realty Trust - $1.1 Billion

SimonPropertyGroup - $14.0 Billion

Dedicated REIT Securities Managers

Cohen & Steers - $500 MillionFidelity RE - $417 Million

Cohen & Steers - $15 BillionFidelity RE - $3 Billion

Standard & Poor’s Indices REITs not included 22 RE Companies Included

REITS – 1993 Vs. 2004

Source: ULI’s Real Estate Capital Markets Update

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3,5004,0004,5005,0005,5006,0006,500

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

+63.2%

Since January 97, the money supply has risen from $3.8 to $6.2 Trillion.

Billions

Capital Chasing Deals

Source: Federal Reserve Board – M2

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Public Securities And Real Estate PerformancePublic Securities And Real Estate Performance

S&P S&P 500 500

Stock Stock IndexIndex

NASDAQ NASDAQ Comp. Comp. IndexIndex

NAREIT NAREIT REIT REIT IndexIndex

NCREIF NCREIF Property Property

IndexIndex

1994 1% -3% 3% 6%

1995 38% 40% 15% 8%

1996 23% 23% 35% 10%

1997 33% 22% 20% 14%

1998 29% 40% -18% 16%

1999 21% 86% -5% 11%


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Public Securities And Real Estate PerformancePublic Securities And Real Estate Performance

S&P S&P 500 500

Stock Stock IndexIndex

NASDAQ NASDAQ Comp. Comp. IndexIndex

NAREIT NAREIT REIT REIT IndexIndex

NCREIF NCREIF Property Property

IndexIndex

2000 -9% -39% 26% 11%

2001 -13% -21% 14% 10%

2002 -21% -28% 5% 7%

2003 26% 50% 39% 9%

2004 -1% -2% 13% 10%


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$100

$200

$300

$400

$500

$600

93 94 95 96 97 98 99 00 01 02 03 04

S&P 500 NASDAQ NAREIT NCREIF


$100 Investment Performance - 1994 - 2004

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0123456789

94 95 96 97 98 99 00 01 02 03 04

10 - Year Treasury

10 – Year Treasury Yield

Source: Federal Reserve

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$20

$32

$14

$23

$41

$12

$29

$46

$15

$34

$53

$15

$0

$10

$20

$30

$40

$50

$60

2001 2002 2003 2004

Apartment Office Industrial

Total U.S Sales Volume By Property Type

(Billions)

Source: Real Capital Analytics

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$0$200$400$600$800

$1,000$1,200$1,400

94 95 96 97 98 99 00 01 02 03 04

Multifamily Office Industrial

Source: CoStar Group and Apartment Appraisers

Metro Denver Historical Real Estate Investment

(millions)

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$0

$20

$40

$60

$80

$100

$120

$140

94 95 96 97 98 99 00 01 02 03 04



Metro Denver Historical Price per Square Foot

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$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

94 95 96 97 98 99 00 01 02 03

Source: Federal Reserve

Historical Commercial Mortgage Flow

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•National

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7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

Multifamily Office - CBD Office - Suburban Industrial - Warehouse

National Cap Rates By Property Type


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3.03.54.04.55.05.56.06.57.07.58.08.59.09.5

10.010.5

Industrial - Warehouse 10-Year Treasury Yield

National Multifamily Cap Rate Vs. 10-Year Treasury Yield

Source: ULI’s Real Estate Capital Markets Update and Federal Reserve

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3.03.54.04.55.05.56.06.57.07.58.08.59.09.5

10.010.5

2Q98

4Q98

2Q99

4Q99

2Q00

4Q00

2Q01

4Q01

2Q02

4Q02

2Q03

4Q03

2Q04

Multifamily 10-Year Treasury Yield

National Multifamily Cap Rate Vs. 10-Year Treasury Yield


Spread 3.0 2.9 2.8 3.2 3.64.5

2.6

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3.03.54.04.55.05.56.06.57.07.58.08.59.09.5

10.010.5

Office - CBD 10-Year Treasury Yield

National Office - CBD Cap Rate Vs. 10-Year Treasury Yield


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3.03.54.04.55.05.56.06.57.07.58.08.59.09.5

10.010.5

Office - CBD 10-Year Treasury Yield

National Office - CBD Cap Rate Vs. 10-Year Treasury Yield


Spread 3.0 2.9 2.64.4

5.4 3.5

2.8

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3.03.54.04.55.05.56.06.57.07.58.08.59.09.5

10.010.5


National Industrial Cap Rate Vs. 10-Year Treasury Yield


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3.03.54.04.55.05.56.06.57.07.58.08.59.09.5

10.010.5


National Industrial Cap Rate Vs. 10-Year Treasury Yield


Spread3.2 3.1 2.9 3.5

4.1 5.2 3.4

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•National

•Denver

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5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

94 95 96 97 98 99 00 01 02 03 04



Metro Denver Historical Cap Rates

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Investment Analysis Case Study

•Yesterday’s Investment

•Today’s Reality

•Tomorrow’s Bet

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The Summit at Flatirons

Total Projected Costs:

$61,500,000

Debt at 75%: $46,125,000

Equity: $15,375,000

•500 Units

•481,569 Total Square Feet

•Average Unit: 963 Sq.Ft.

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2000 Proforma

Gross Potential Rent $8,032,571 $1.39 PSF

Vacancy ($401,629) 5.0%

Effective Gross Rent $7,630,942

Expenses ($2,056,500) $4,113

NOI $5,574,442

Debt Service (8.25%) ($3,805,313)

Net Cash flow $1,769,130

Yield 9.06%

IRR 26.35%

Yield to Equity 11.51%

Reversion Cap Rate 8.0%

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Today’s Reality


Vacancy ($1,386,919) 20%


Expenses ($2,095,500) $4,191

NOI $3,452,175

Debt Service (4.25%) ($1,960,313)


Yield 5.61%

IRR 6.68%



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Tomorrow’s projection


Vacancy ($693,459) 10%


Expenses ($2,158,365) $4,317

NOI $4,082,769

Debt Service (6.00%) ($2,767,500)


Yield 6.64%

IRR 14.2%



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Rising Tide

•Interest Rates

•Delinquency Rates

•Cap Rates

•Employment

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Rising Tide

•Interest Rates

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One Month LIBOR Forecast

0

1

2

3

4

5

6

05 06 07 08 09 10 11

1-Month LIBOR Projection

Source: Morgan Stanley

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Rising Tide

•Interest Rates


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0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

94 95 96 97 98 99 00 01 02 03 04

Single Family Multifamily

Mortgage Delinquency Rates

Source: Freddie Mac

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Rising Tide

•Interest Rates


•Cap Rates

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Rising Tide

•Interest Rates


•Cap Rates

•Employment

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-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

94 95 96 97 98 99 00 01 02 03

Metro Denver Employment Growth 1994 - 2003

Source: Metro Denver EDC

GREYSTAR

Rocky Mountain Commercial Real Estate Expo & DU Fall Forecast

November 12, 2004

G REYSTAR Rocky Mountain Commercial Real Estate Expo & DU Fall Forecast November 12, 2004.

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Transcript of G REYSTAR Rocky Mountain Commercial Real Estate Expo & DU Fall Forecast November 12, 2004.