Multifamily Investments Overview · 2018-04-03 · Multifamily Investments Overview Stewart Hsu...
Transcript of Multifamily Investments Overview · 2018-04-03 · Multifamily Investments Overview Stewart Hsu...
4/23/2015
1
Multifamily Investments OverviewStewart Hsu
CONTI Organization, Principal / CFOHouston FPA March 3, 2015
This presentation contains statements about operating and financial plans, terms and performance of CONTI and other statements that may be deemed projections of future
results. Forward-looking statements may be identified by the use of words such as "expect," "anticipate," "intend," "plan," "assume," "will," "may" and similar
expressions. The forward-looking statements are based on various assumptions and these assumptions may prove to be incorrect. Accordingly, such forward-looking
statements might not accurately predict future events or the actual performance of an investment in the interests.
Thi t ti i f i f ti l l d h ll t tit t ff
Conti Organization - CONFIDENTIAL 2
This presentation is for informational purposes only and shall not constitute an offer to sell or solicitation to buy an offering. Such offers may only be made to qualified
investors by means of a private placement document or similar prospectus.
4/23/2015
2
• About CONTI / Biography• Commercial Property Types / What is Multifamily• What Impacts Values?
• Part 1: Macro Picture / Supply & Demand• Part 2: Net Operating Income / Value Add
• Multifamily Disadvantages & Advantages• Investment-Property Life Cycle
4 C St di
Conti Organization - CONFIDENTIAL 3
• 4 Case Studies• Q&A
STEWART HSU – Principal & CFO
Mr. Hsu is Principal & CFO of CONTI Organization, a multifamily real estate investment firm based in Dallas, TX.
Since 2008, CONTI has acquired over 4,100 units in Texas, and currently manages a portfolio of approx. 3,100 units. Stewart has been responsible for acquisitions & management of over $220M of multifamily real estate assets since 2003.
He was excited to team up with Carlos Vaz, his partner, in 2008 due to their complementary skills while sharing the same core values and vision.
Stewart attended Washington University in St. Louis and graduated magna cum laude with dual degrees in Finance and Accounting. He was formerly a Sr. P j t M f t ti Sili V ll t h l i f 7
Conti Organization - CONFIDENTIAL 4
Project Manager for top-tier Silicon Valley technology companies for over 7 years and worked as a consultant for Price Waterhouse.
He is a board member of National Multi Housing Council (NMHC), and a member of Urban Land Institute (ULI) and Entrepreneur’s Organization.
He lives in Dallas, TX and together with Xi Wang, his wife, they have two young children - Ethan & Sophie.
4/23/2015
3
11 196%11,196%vs.
751 113%
Conti Organization - CONFIDENTIAL 5
751,113%
• Retail• Office• Office• Industrial • Warehouse/Storage• Mixed Use
Conti Organization - CONFIDENTIAL 6
• Land• Multifamily (Apartments)
4/23/2015
4
Villa Ana176-unitsHouston
Villa Sierra336-unitsHouston
Champions Village256-units
Hunters Cove192-units
Houston
Conti Organization - CONFIDENTIAL 7
Houston Waxahachie(Dallas)
Enclave466-unitsDallas
Villa Siena256-unitsCarrollton
Santa Fe237-unitsDallas
Lakeside at Northpark424-units
Carrollton(Dallas)
Conti Organization - CONFIDENTIAL 8
Dallas
4/23/2015
5
S l & D d• Supply & Demand
• Net Operating Income (NOI) growth
Conti Organization - CONFIDENTIAL 9
Supply & Demand
Conti Organization - CONFIDENTIAL 10
4/23/2015
6
Conti Organization - CONFIDENTIAL 11
1. DFW 138,0002. NYC 129,4003. Houston 120,6004. Los Angeles 104,1005 Mi i 72 800
Conti Organization - CONFIDENTIAL 12
5. Miami 72,800Source: Steve Brown, Dallas Morning News, Fidelity Title Broker Presentation 2/26/15
4/23/2015
7
1. Houston 392,7022 DFW 384 7032. DFW 384,7033. NYC 383,0844. Los Angeles 302,5895. Miami 263,5346. Atlanta 236,210
Conti Organization - CONFIDENTIAL 13
6. Atlanta 236,2107. Phoenix 205,874
Source: Steve Brown, Dallas Morning News, Fidelity Title Broker Presentation 2/26/15
Conti Organization - CONFIDENTIAL 14
4/23/2015
8
Market #�of�Apt�Units�(1)
Units�Added�as�of�Jan�2015 (2)
%�Supply�Added
2014�Jobs�(3) 2015�Jobs
Ratio�of�2015�Jobs�/�New�Supply
S
2015�(2) Supply
Houston 578,651 13,992 2.40% 120,600 62,900�(4) 4.50�
Dallas�/�617,044 14,398 2.30% 138,000 105,800�(5) 7.35�
Ft�Worth
Conti Organization - CONFIDENTIAL 15
Sources:(1) ARA Houston Multifamily Overview June 2014(2) ALN Apartment Data Jan 2015 Reports – Units added last 12 months(3) Source: Steve Brown, Dallas Morning News, Fidelity Title Broker Presentation 2/26/15(4) 2015 Houston Employment Forecast 12/11/14(5) AXIOMetrics Inc - Apartment Market Performance Outlook for DFW 12/4/14
Conti Organization - CONFIDENTIAL 16
4/23/2015
9
Net Operating Income (NOI) Growth
Conti Organization - CONFIDENTIAL 17
Revenue: Gross Income (Rents & other income)
Less: Operating Expenses (Payroll, utilities, taxes,
maintenance, insurance, etc.)
Equals: Net Operating Income (NOI)
Excludes: Capital Expenditures (major rehab, etc.)
Conti Organization - CONFIDENTIAL 18
Excludes: Capital Expenditures (major rehab, etc.)
4/23/2015
10
1. Illiquid asset
2. Inefficient Market (compared to stock mkt)
3. Lender Risk (Hard money)
4. Over Supply
Conti Organization - CONFIDENTIAL 19
5. Property Taxes
1. Value Add / “Forced” Appreciation Opportunities - Properties bought forless than market value due to poor management, deferred maintenance, etc.offer a great opportunity to increase value by “fixing” these problems.
1. Cash Flow - When bought right, multifamily can generate positive cash flowg g y g pday one.
1. Tax Benefits – Cash distributions during holding years may be sheltered dueto IRS approved depreciation expenses. (Heads-up: there is a depreciationrecapture at sale.) 1031 Exchanges allow tax deferral of capital gains.
1. Leverage: Time & Capital – Compared to buying a single family house (SFH),it does not take 100x more time to buy a 100-unit apartment vs. 1 SFH. Ingeneral, of all the commercial real estate asset types, the best loan terms areavailable for multifamily properties. Typically can get loans at 70%-80% LTV.
Conti Organization - CONFIDENTIAL 20
1. Maintenance & Operational Efficiency – Compared with SFHs, since all units are in one location, it is easier to manage an apartment community than a vast number of single family homes. A 150+ unit community is easier to manage than a 20-unit property.
1. Less Risk - Compared with SFHs, different from a single family home rental that loses 100% of its income when a resident moves out, multifamily properties lose a small fraction of its income when a single resident moves out.
4/23/2015
11
Conti Organization - CONFIDENTIAL 21
1. Identification / Finding Deals2. Evaluation3. Due Diligence & Contract Negotiations4. Capital Stack & Funding Projects5. Post Closing
• Value AddA t M t
Conti Organization - CONFIDENTIAL 22
• Asset Management• Reporting
6. Sale / Disposition
4/23/2015
12
1. Prior Name: Eastfield Village2. 1969 YOC, 232 units, central chiller3. Foreclosed Oct 20074. Loan Servicer Relationship5. Prior Loan $6.8M6. Occupancy at takeover: 77%7. Acquired Mar 20098. Purchase $1.7M, Rehab $2.3M+9. Hard money debt
1. Lender risk
Conti Organization - CONFIDENTIAL 23
10. Challenging tenant profile due to location
1. Rehab & unit turn costs2. Property Stabilization
11. Sold Aug 2013
1. Prior Name: Lenox Court2. 1979 YOC, 266 units, individual HVAC3. Seller AIG4. Off-market Broker Relationship5. Prior Loan $6.2M6. Occupancy at takeover: 43%7. Acquired Sept 20098. Purchase price $2.8M, Rehab $2.7M+9. Weatherization Funds $1.1M+10. Hard money debt
Conti Organization - CONFIDENTIAL 24
11. Challenging tenant profile due to location
12. Sold March 2013
4/23/2015
13
1. Prior Name: Euless Square2. 1971 YOC, 150 units, central chiller3 Foreclosed Oct 20073. Foreclosed Oct 20074. Loan Servicer Relationship5. Asking Price $4.35M6. Occupancy at takeover: 88%7. Acquired Dec 20088. Purchase price $2.35M9. Rehab $500K+10. Hard money debt
Conti Organization - CONFIDENTIAL 25
0 a d o ey deb11. Year 5 projected cash on cash: 10%12. Year 5 actual cash on cash: 15.3%13. Holding for Cash Flow
1. 1978 YOC, 466 units, indiv. HVACs2. Limited off market relationship3. Occupancy at takeover: 90%4 Acquired April 20144. Acquired April 20145. Acquisition Cap Rate 6.07% (T6 inc)6. Purchase price $28.45M ($61K/unit)7. Rehab $1.2M+8. CMBS 10 Year 4.95% fixed loan9. Year 1 projected & actual (CoC): 7%10. Since acquisition, NOI ahead of pro-
forma ($100K+)
Conti Organization - CONFIDENTIAL 26
forma ($100K+)11. Value Add
1. Operations2. Exteriors – Paint, Signage3. Interiors – Kitchens, Lighting
12. 5 Year Exit $74K/unit
4/23/2015
14
“…Charlie and I have always considered a “bet” on ever-rising U.S. prosperity to be very close to a sure thing.
…In my lifetime alone, real per-capita U.S. output has sextupled.
…The dynamism embedded in our market economy will continue to work its magic. Gains won’t come in a smooth or uninterrupted manner; they never have. And we will
Conti Organization - CONFIDENTIAL 27
uninterrupted manner; they never have. And we will regularly grumble about our government. But, most assuredly, America’s best days lie ahead.”
-Warren Buffett 2014 Berkshire Hathaway Letter to Shareholders
• Q&A
Contact Information
Stewart Hsu, CONTI Organization
Email: [email protected]
Direct: (972) 331-6883
Conti Organization - CONFIDENTIAL 28
Address: 5080 Spectrum Dr Suite 1050W
Addison, TX 75001