MRC has the unique advantage of having its own balance sheet, as well as the use of 3 rd party capital.
Utilize the balance sheet to fund opportunistic transactions and to take advantage of market opportunities.
Aggregate investments prior to finalizing a long-term capital execution.
The balance sheet is not meant to be “long-term” money.
Structure and “slice & dice” transactions to provide investment opportunities to both MMA and 3 rd party clients.
Sample of Existing Programs Risk less more Actively sourcing and managing assets $100MM Participating debt TriSail/MMA Venture Fully invested with occasional reinvestment upon capital event $115 MM Multifamily preferred equity REIT MMA Equity REIT Actively sourcing and managing assets $4 B Permanent whole loans up to 80% LTV, MMA retains 1 st loss liability Fannie Mae & Freddie Mac Actively sourcing and managing assets $1.2 B Permanent and construction whole loans Insurance Company General Account Actively sourcing and managing assets $.7 B Leverage Company’s balance sheet position in first loss position Structured Finance Actively sourcing and managing assets $100MM Multifamily high yield joint venture PSP/MMA Capital Venture Invested and revolving. Being restructured to accommodate a broader mandate on all debt. Still in investment period, closed to new investors. Successor fund likely. Status Diversified mortgage investment vehicle Permanent subordinate mortgages Strategy $300 MM MMA Investment Fund AUM Product $234.5 MM equity commitments B-Note Fund
Funds in development Risk less more Closed 2 nd Quarter 2007 8% Single Account Public Pension Fund Unlimited High Yield Unlevered investments PSP Delivery Vehicle 11% - 13% Target InvestorYield (net fees) Target 1 st close 1Q’07 Status Diversified real estate trust invested in structured debt and equity Strategy Public Pension Funds $100 MM Balanced Fund Identified Investors Target Equity Raise Product
A key strategy is to place transactions with capital partners that have a unique insight or interest in a transaction.
Compass Bank Term Debt on Land Loan $30MM LaSalle & AmSouth Banks Participation of Construction Loan $60MM Wachovia Capital Markets Repurchase / CP Facility $300MM US Bank Permanent Warehouse $250MM Merrill Lynch Total Return Swap on Mezz Loan $30MM Bank of America Construction Loan Warehouse $140MM IXIS Financial Markets Total Return Swap on Land Loan $50MM
The Merchant Banking group posted strong results, as high yield opportunities generated both up front revenue and spread income, and asset management income continues to build.
Q1 Merchant Banking 10,916,165 Net Operating Income 3,780,835 G&A 14,696,999 Total Merchant Banking Revenue 792,026 Other Revenue 999,554 Gains on Sale 1,887,440 Exit Fees 3,679,020 Other Revenue 913,601 Equity Investment Revenue 1,345,453 Asset Management 705,194 Coinvest. & Promote Inc. 4,009,553 From Prior Year Activities 750,578 From Current Year Activities 5,465,325 Spread Income 3,293,600 Origination Fees Revenue 184,445,000 Production 1Q07(e) MRC Merchant Banking Activity - 2007
Q1 Merchant Banking Production Activity (All numbers in 000’s)
Q1 Merchant Banking Revenue Breakdown Other includes: gains on sale, equity investment, and misc.
The Agency business performed well in the first quarter, despite the distractions of a management change and an ongoing re-audit of their business, as legacy portfolio related revenue was strong .
Traditionally a 3 rd and 4 th quarter business, a good first quarter production has positioned them well for the balance of 2007.
Q1 Agency Results 3,410,974 Net Operating Income 2,400,020 G&A 5,810,993 Total Agency Revenue 840,436 Agency Late, Prepay & Misc. Fees 1,697,824 Earnings Credit on Deposits 159,613 Gain on Sale 172,006 Application Fees 2,869,879 Other Revenue 2,401,505 From Prior Year Activities 26,248 From Current Year Activities 2,427,753 Loan Servicing Fees 513,361 Origination Fees Revenue 100,839,400 Production 1Q07(e) MRC Agency Activity - 2007
In 2006 MRC aggressively and selectively moved into a soft market to capture high yielding transactions. This opportunistic origination produced a very successful year, but did not position MRC for maximum long term growth.
Beginning now, MRC will complement our high yield origination with a focus on higher quality assets. This action will produce more consistent earnings and allow MRC to play a more central role in the market place
MRC Senior Management Executive Charlie Pinckney Commercial Cap Markets Richard Katzenstein Risk Mgmt Tom Cornett Capital Greg Longoria Proprietary Rhett Miller Agency Mike Rulf Commercial Investing Bill Swackhamer Operations Mark Johnson Business Development Mark Begeny
Charles M. Pinckney Executive Vice President, Head of MRC
Charles M. Pinckney is Executive Vice President of MuniMae and head of MRC. MRC houses the market rate investing activities of the company and has three distinct business groups; Agency Investing, Proprietary Capital, and Investment Management. Agency Investing is the Fannie Mae, Freddie Mac and HUD mortgage banking operations for market rate multifamily housing. Proprietary Capital is the balance sheet investing activity for the company. The Investment Management business invests in all forms of commercial real estate on behalf of institution clients. Mr. Pinckney joined the Company in 2000 when MuniMae purchased Whitehawk Capital, a business Mr. Pinckney co-founded and that was engaged in structured finance activities. Mr. Pinckney received his undergraduate degree from The Citadel and a Master’s in Business Administration from Duke University’s Fuqua School of Business. He has been a frequent speaker at housing and rating agency conferences on topics of risk based pricing.
Thomas P. Cornett Senior Vice President, Head of Risk and Portfolio Management
Thomas P. Cornett has been with MMA Financial, Inc. since 2005 and is a member of the senior leadership team of the MRC business group as well as the Senior Management Committee for MMA Financial. Mr. Cornett is head of the MRC Risk and Portfolio Management team and serves as the Chairman of the MRC Investment Committee. He is responsible for credit policy, investment approval process, asset management (including construction risk management), portfolio management, and workouts for all market rate multifamily and commercial property types originated in MMA’s Agency, Proprietary Capital, and Investment Management businesses that make up the MRC Group. Prior to joining MMA in 2005, Mr. Cornett was at Bank of America for 19 years, serving in a variety of capacities, including a number of assignments as Chief Credit Officer in Commercial Real Estate (construction, CMBS, and REIT and National CRE lending) as well as Commercial Banking. Mr. Cornett received a MBA from the Fuqua School of Business at Duke University and a B.A. degree in Management Science from Duke University. He is a member of the Board of Trustees of the University of Tampa and is on the Board of Directors of Metropolitan Ministries in Tampa.
Richard Katzenstein Senior Managing Director, Debt Investment Management
Richard Katzenstein is a Senior Managing Director and a member of MRC’s Executive Committee. Mr. Katzenstein oversees MRC’s debt investment management business which includes: production, capital market activities, purchase and sale of subordinate debt in secondary markets, loan participations/syndications and asset level financing. Under Mr. Katzenstein’s leadership, MRC raised $235 million for the B-Note Value Fund, LP; a platform he oversees fund management for, deal sourcing, capital raising and investment financing. Prior to joining MRC, Mr. Katzenstein was the Managing Director at MONY Realty Capital, Inc. While at MONY, Mr. Katzenstein was personally responsible for real estate transactions totaling in excess of $2 billion. Prior to joining MONY, Mr. Katzenstein was involved in loan advisory work on performing and non-performing asset portfolios with various financial institutions. Mr. Katzenstein has expertise in business development, origination, structured finance, loan acquisition, loan syndication, pricing, asset management and debt and equity dispositions. Mr. Katzenstein received his MBA from Long Island University and B.S. degree in Finance from the State University of New York at Albany. He is a member of the Real Estate Board of New York, Young Mortgage Bankers Association, Real Estate Lenders Association, Real Estate Committee of New York and ULI, New York University’s Real Estate Institute Advisory Board, and Vice chair for The Kids Foundation for Development Diseases.
Gregory G. Longoria Managing Director, Capital
Gregory G. Longoria is the Chief Capital Officer of MMA Realty Capital. Prior to joining MuniMae, he served as Managing Director for a private real estate investment banking/financial advisory firm, where he was involved in capital raising and merger & acquisition work within the investment management and real estate finance industries. Mr. Longoria also has extensive experience in corporate and real estate finance, having spent time with the General Electric Company and The Balcor Company. Mr. Longoria earned a BBA from the University of Iowa and an MBA from Northwestern University’s Kellogg School of Management.
Mr. Rulf currently heads the national market rate agency lending group for MRC. Mr. Rulf has been with MuniMae for eight years and has served the company in a variety of roles, ranging from operations, loan originations to capital markets to mergers & acquisitions. Prior to joining MRC in January of 2006, Mr. Rulf served as Vice Chair of MuniMae’s Credit Committee and managed both the corporate capital markets department, as well as the investor relations function. Mr. Rulf received a BS in Finance from George Mason University.
William J. Swackhamer Managing Director, Investment Management William J. Swackhamer is a Managing Director of MRC, and is responsible for all loan origination activity, including investment origination and underwriting activity for the West Coast and Rocky Mountain Regions. Prior to joining MONY Realty Capital (MMA Realty Capital’s predecessor) in 1987, Mr. Swackhamer’s career included extensive experience in the engineering and construction fields. Mr. Swackhamer earned a Master of Business Administration degree from the University of Colorado and holds a Bachelor of Science degree in Civil and Structural Engineering from Cal Poly State University in San Luis Obispo, California. He is a member of the Urban Land Institute (ULI) and the National Association of Industrial and Office Properties (NAIOP).
Mark Johnson Principal, Strategic Planning and Operations
Mark Johnson is head of MRC’s Business Planning and Operations. In this role he is responsible for managing the day to day operations of the MRC platform as well assessing business opportunities as they relate to the future direction of MRC. Prior to joining MMA in March 2005, Mr. Johnson was employed by Trinsic Technologies, a national voice and data technology enterprise as the company’s Secretary and Treasurer. During his tenure, the company completed its successful initial public offering in 1999 and subsequently raised funds through both debt and equity transactions. Mr. Johnson has 26 years of experience in real estate lending and corporate finance, primarily in banking. At the time of his departure from banking in 1998 Mr. Johnson was in charge of real estate credit policy for Wachovia in the Washington Baltimore area, responsible for commercial real estate loan structuring and approval for the Capital
Mark S. Begeny Managing Director
Mark S. Begeny is responsible for investments associated with public-private partnerships, including military housing and infrastructure related real estate development. He specializes in real estate capital markets activities, which include asset securitization and mezzanine capital lending. Mr. Begeny joined the Company in 2000 when MuniMae purchased WhiteHawk Capital, a business Mr. Begeny co-founded in 1997 and that was engaged in structured finance activities. Mr. Begeny received his undergraduate degree in Civil Engineering from Virginia Tech and a MBA from The Kellogg School of Management at Northwestern University.
Rhett A. Miller, III Senior Vice President, Proprietary Capital
Rhett A. Miller, III, is primarily responsible for MRC’s proprietary investing activities. Prior to joining MRC, he served as Executive Vice President of a private real estate company, responsible for all debt & equity capital for the company's 4 million square foot portfolio of commercial, retail and industrial properties. Mr. Miller has extensive real estate capital markets and tax exempt bond experience having served for 13 years at Citicorp Securities, Inc. Mr. Miller earned a BS degree from Florida State University and a MBA from the University of Dallas.