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View Enterprise Community Investment Presentation

  1. 1. Maryland Regional Workforce Housing Fund Leadership Forum June 7, 2006
  2. 2. MARYLAND REGIONAL WORKFORCE HOUSING FUND (“MRWH”) <ul><li>Enterprise: Background and Expertise </li></ul><ul><li>MRWH Fund: Opportunity and Need </li></ul><ul><li>MRWH Fund: Investment </li></ul><ul><li>MRWH Fund: Investment Process </li></ul><ul><li>MRWH Fund: Investment Benefits </li></ul><ul><li>MRWH Fund: Management Team </li></ul><ul><li>Next Steps </li></ul><ul><li>Example of an “Award Winning Community” </li></ul><ul><li>Contact Information </li></ul>PRESENTATION AGENDA
  3. 3. <ul><li>Chosen by the 9 funders of the Phase I Market Assessment to oversee the creation and implementation of the Fund </li></ul><ul><li>Headquartered in Maryland, with extensive investment, development, and lending expertise in the local region </li></ul><ul><li>Products and services that address all needs related to affordable housing and community development </li></ul><ul><ul><li>capital and funding </li></ul></ul><ul><ul><ul><li>tax-credit equity </li></ul></ul></ul><ul><ul><ul><li>senior debt </li></ul></ul></ul><ul><ul><ul><li>mezzanine debt </li></ul></ul></ul><ul><ul><ul><li>grants </li></ul></ul></ul><ul><ul><li>programmatic models and expertise </li></ul></ul><ul><li>Works closely with local, state and federal elected officials and policymakers </li></ul>ENTERPRISE: BACKGROUND AND EXPERIENCE
  4. 4. <ul><li>One of the leading advocates for policy in support of affordable and workforce housing and community development </li></ul><ul><li>Will ensure: </li></ul><ul><ul><li>continued community input </li></ul></ul><ul><ul><li>deal outreach/sourcing in Fund’s footprint </li></ul></ul><ul><ul><li>necessary “tools” for challenging deals </li></ul></ul><ul><li>Investing in communities at the rate of approximately $1 billion a year </li></ul><ul><li>$6 billion invested in communities over the past 23 years, yielding more than 175,000 affordable homes </li></ul><ul><li>Catalyst for LIHTC legislation - the public-private model for affordable housing financing that is responsible for virtually all affordable multifamily housing being created today </li></ul><ul><li>Created/presently developing more than 4,500 homeownership and rental residences for individuals and families of diverse income, age and culture </li></ul>ENTERPRISE: BACKGROUND AND EXPERIENCE
  5. 5. <ul><li>2003, Governor Ehrlich created the Governor’s Commission on Housing Policy to address housing issues </li></ul><ul><ul><li>shortage of workforce housing </li></ul></ul><ul><ul><li>need for initiatives to create sustainable communities </li></ul></ul><ul><li>2004, Final report supported the creation of an equity Family of Funds </li></ul><ul><ul><li>workforce housing for people who cannot afford to live in the cities and counties in which they work </li></ul></ul><ul><ul><li>community revitalization initiatives to address the overwhelming need in Maryland, Washington, D.C. and Northern Virginia </li></ul></ul><ul><li>Low levels of supply and high levels of demand for new housing affordable to “working families” </li></ul><ul><ul><li>households earning 80% to 120% of the AMI </li></ul></ul><ul><ul><li>high project costs faced by developers </li></ul></ul><ul><ul><li>growing population </li></ul></ul><ul><ul><li>upward pressure on housing prices and rents </li></ul></ul><ul><ul><li>lack of innovative financing sources for developers </li></ul></ul>FUND OPPORTUNITY AND NEED
  6. 6. <ul><li>Maryland ranks second nationally in commuting times </li></ul><ul><li>More than one million new Marylanders are expected in the next 25 years </li></ul><ul><li>From 2000 to 2005: </li></ul><ul><ul><li>median home price in Maryland increased 102% to $363,125 </li></ul></ul><ul><ul><li>median household income for four person families increased 17% to $77,938 </li></ul></ul><ul><li>From 1998 to 2005: </li></ul><ul><ul><li>MD average weekly earnings increased 4.1% annually (U.S. average - 3.9%) </li></ul></ul><ul><ul><li>MD average house price increased 23.8% annually (U.S. average - 14.1%) </li></ul></ul><ul><li>Maryland needs to increase net supply of housing by at least 27,500 units by 2010 to cover shortage in housing units projected </li></ul><ul><li>Statistics cited from: “Why Housing May Replace Healthcare as Our Region’s Leading Affordability Issue,” Anirban Basu, Sage Policy Group, Inc., March 15, 2006 and the U.S. Census Bureau website, </li></ul>FUND OPPORTUNITY AND NEED
  7. 7. <ul><li>Developments that achieve double bottom line objectives: </li></ul><ul><ul><li>risk-adjusted market rates-of-return for investors (the first bottom line) </li></ul></ul><ul><ul><li>measurable job and wealth creation, and community revitalization for community stakeholders (the second bottom line) </li></ul></ul><ul><li>Fund Size: $100 million </li></ul><ul><li>Individual Investment : $2 million to $20 million </li></ul><ul><li>Total Development Cost: $10 million to $50 million </li></ul><ul><li>Development Type: </li></ul><ul><ul><li>For-sale and rental housing targeted at working residents </li></ul></ul><ul><ul><li>Household incomes in the 80%-120% range of AMI </li></ul></ul><ul><ul><ul><li>single family homes </li></ul></ul></ul><ul><ul><ul><li>condominiums </li></ul></ul></ul><ul><ul><ul><li>town homes </li></ul></ul></ul><ul><ul><ul><li>live/work lofts </li></ul></ul></ul><ul><ul><ul><li>apartments </li></ul></ul></ul><ul><ul><li>New construction, rehabilitation, and adaptive reuse </li></ul></ul>THE INVESTMENT
  8. 8. <ul><li>Location: </li></ul><ul><ul><li>Low-moderate and mixed-income communities </li></ul></ul><ul><ul><li>Urban, suburban, and rural areas </li></ul></ul><ul><ul><li>Maryland, Washington D.C. and Northern Virginia </li></ul></ul><ul><li>Structure: </li></ul><ul><ul><li>Equity, preferred equity, and mezzanine debt </li></ul></ul><ul><ul><li>Targeted internal rate of return in the mid-teens </li></ul></ul><ul><ul><li>Preferred distributions to Investors </li></ul></ul><ul><ul><li>Significant percentage of the “at risk” capital required in qualifying developments </li></ul></ul><ul><ul><li>Projected term of 3 to 5 years </li></ul></ul>THE INVESTMENT
  9. 9. <ul><li>Investment Sourcing: </li></ul><ul><ul><li>Enterprise offices in Baltimore, Columbia and Washington, D.C. </li></ul></ul><ul><ul><li>Substantial Developer Relationships </li></ul></ul><ul><ul><li>Vast Lender Network </li></ul></ul><ul><ul><li>Industry Association Memberships </li></ul></ul><ul><ul><li>Investor Referrals </li></ul></ul><ul><li>Rigorous Investment Underwriting: </li></ul><ul><ul><li>Executive Summary </li></ul></ul><ul><ul><li>Economic/Social Impact Analysis </li></ul></ul><ul><ul><li>Development Feasibility/Risk Analysis </li></ul></ul><ul><ul><li>Market and Demographic Analysis </li></ul></ul><ul><ul><li>Key Party Analysis – Credit and Experience </li></ul></ul><ul><ul><li>Consistency with Fund Underwriting Guidelines </li></ul></ul><ul><ul><li>Conclusions/Recommendations </li></ul></ul>INVESTMENT PROCESS
  10. 10. <ul><li>Investment Approval and Performance Monitoring </li></ul><ul><li>Committee comprised of 6 Enterprise senior executives: </li></ul><ul><ul><li>Development Feasibility </li></ul></ul><ul><ul><li>Consistency with Fund Mission </li></ul></ul><ul><ul><li>Minimum Yield Thresholds </li></ul></ul><ul><ul><li>Community Impact </li></ul></ul><ul><ul><li>LMI Investment Area </li></ul></ul><ul><ul><li>Community Support </li></ul></ul><ul><li>Exception Approval and Performance Review </li></ul><ul><li>Committee comprised of investors holding $10 million or greater: </li></ul><ul><ul><li>Compliance with Overall Fund Parameters </li></ul></ul><ul><ul><li>Compliance with Investment Parameter Targets </li></ul></ul><ul><ul><li>Periodic Reporting and Review </li></ul></ul>INVESTMENT PROCESS
  11. 11. <ul><li>Economic Benefits </li></ul><ul><ul><li>Deliver market rates of return in the mid-teens </li></ul></ul><ul><ul><li>Priority return to investors </li></ul></ul><ul><ul><li>Diversified portfolio within a well-capitalized fund </li></ul></ul><ul><ul><li>Partnerships with experienced real estate underwriters and developers </li></ul></ul><ul><li>Social Benefits </li></ul><ul><ul><li>Foster vibrant and healthy communities by increasing the jobs/workforce housing balance </li></ul></ul><ul><ul><li>Effectuate economically viable developments to address the overwhelming need for workforce housing and bolster community revitalization and stabilization </li></ul></ul><ul><ul><li>Encourage the integration of mixed-income and mixed-use neighborhoods </li></ul></ul><ul><li>Positive Public Relations </li></ul><ul><ul><li>Public recognition of participation in prominent regional investment vehicle </li></ul></ul><ul><ul><li>Maximize the use of existing resources and reduce development pressure on less urbanized areas </li></ul></ul><ul><ul><li>Significant public-private partnerships </li></ul></ul><ul><ul><li>Positive Community Reinvestment Act consideration </li></ul></ul>INVESTMENT BENEFITS
  12. 12. <ul><li>Charlie Werhane, Vice Chairman and Chief Operations Officer </li></ul><ul><li>Enterprise Community Investment </li></ul><ul><li>Capital Raising, Fund Oversight </li></ul><ul><li>Chickie Grayson, President </li></ul><ul><li>Enterprise Homes, Inc. </li></ul><ul><li>Capital Raising, Development Expertise </li></ul><ul><li>Joe Wesolowski, Senior Vice President </li></ul><ul><li>Enterprise Community Investment </li></ul><ul><li>Capital Raising, Asset Management, Operations </li></ul><ul><li>Christine Madigan, Vice President </li></ul><ul><li>Enterprise Homes, Inc. </li></ul><ul><li>Capital Raising, Fund Strategy, Deal Structuring, Oversight </li></ul><ul><li>Edie Loughlin, Director </li></ul><ul><li>Enterprise Community Investment </li></ul><ul><li>Deal Sourcing, Deal Structuring, Deal Closing </li></ul>ENTERPRISE FUND MANAGEMENT TEAM
  13. 13. <ul><li>Finalize MRWH Fund legal documents </li></ul><ul><li>Finalize MRWH Fund marketing materials </li></ul><ul><li>Develop investment pipeline </li></ul><ul><li>Obtain investor commitments </li></ul><ul><li>First close of MRWH Fund </li></ul><ul><li>Close of initial workforce housing development investments </li></ul>NEXT STEPS
  14. 14. WATERVIEW <ul><li>Developed by a partnership between Enterprise Homes, Inc. and a private, local builder </li></ul><ul><li>Located in Middle River, Baltimore County, MD, on a 63 acre site that was a former failed FHA apartment project razed by the County </li></ul><ul><li>New urbanist street plan; 175 detached, homeownership units; 100,000 sf. community shopping center, community green space </li></ul><ul><li>$48 million Total Development Cost </li></ul><ul><li>Equity/Mezzanine: $1 million </li></ul><ul><li>Greater than 15% ROE realized to date </li></ul><ul><li>The Results: </li></ul><ul><ul><li>Recognized by Baltimore Magazine as one of the “Best Places To Live” in 2005 </li></ul></ul><ul><ul><li>Homebuilders Association of Maryland, Award of Excellence, Project of the Year (2003) </li></ul></ul><ul><ul><li>Strong catalyst for redevelopment in the area </li></ul></ul><ul><ul><li>Homeownership for the County’s Workforce offering units affordable to those in the 80% - 150% AMI range, with the majority in the 80% - 115% range. </li></ul></ul>AWARD WINNING COMMUNITY EXAMPLE
  15. 15. THANK YOU <ul><li>Christine Madigan </li></ul><ul><li>Vice President </li></ul><ul><li>Enterprise </li></ul><ul><li>410-332-7400 </li></ul><ul><li>[email_address] </li></ul><ul><li>Joe Wesolowski </li></ul><ul><li>Senior Vice President </li></ul><ul><li>Enterprise </li></ul><ul><li>410-772-2512 </li></ul><ul><li>[email_address] </li></ul>