Madison Company Booklet 2011


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Madison Company Booklet 2011

  1. 1. Creating value and implementing solutions to real estate challenges.”
  2. 2. PROPERTY MANAGEMENT ASSET MANAGEMENT PROPERTY BANKING EB-5 VISA PROGRAMS COMMERCIAL REAL ESTATE INVESTING SINGLE FAMILY HOME INVESTING Madison Realty Equities has a partnership with the entity, Grandtag Financial Group, to purchase U.S. real estate. 3452 East Foothill Boulevard, Suite 200 Pasadena, CA 91107 626-796-8700 This material is designed for marketing purposes only, and does not constitute an offer to sell or a solicitation of an offer to buy any security. Such offers can be made only by the confidential private placement memorandum. Please be aware that this marketing material cannot and does not replace the memorandum. It is qualified in its entirety by the Memorandum. The Memorandum is the document that a potential investor must read and rely upon in its entirety in order to make an investment decision. All Copyrights Reserved.
  3. 3. 1 Welcome Madison Realty Equities, LLC (“Madison”) is a premier real estate advisor that has expertise in all aspects of real estate investments. The company specializes in resolving challenging real estate issues by increasing property values through various methods. The seasoned principals at Madison have experienced and prospered during several real estate cycles. Madison has expertise in the following areas: property acquisitions and dispositions, financing and debt restructuring, debt and equity investing, asset management, marketing and leasing, property management, asset management, due diligence, constructiondevelopment management and feasibility analysis. The Madison team has a track record of successfully managing over $6 billion of properties. The senior management at Madison have over 150 years of real estate experience and with their extensive relationships, are able to create tangible results and meet client’s expectations. Madison is known for solving problems and identifying opportunities. After operating hundreds of commercial properties in both strong and weak market cycles, we have the experience which allows us to recognize and realize the upside potential in a property. Whatever challenges a property may present, chances are that our experienced staff has handled similar problems. Madison manages properties to maximize operating results while positioning assets for sale, or refinance if necessary, and optimizing value. “At Madison, we maximize asset value for our clients.” Madison has a strong track record of managing properties that are distressed and turning them around to maximize value. We evaluate the property challenges then create a management solution to best maximize the cost/ benefit potential, while focusing on adding value.
  4. 4. 2 The Madison Team Key Personnel Madison has a very seasoned team of professionals including acquisition/disposition specialists, property managers, asset managers and legal professionals – with credentials including MBAs, JDs, CPAs and CPMs. The senior management average over 30 years of real estate management experience per person and they have managed all major property types nation wide through many real estate cycles and markets. GARY LANGENDOEN – SENIOR MANAGING DIRECTOR Mr. Langendoen has over 30 years of diversified national real estate experience actively involved in over $3 billion of real estate transactions. He has the valuable experience of being a real estate investor, lender and property manager with the wisdom learned from successfully maneuvering various real estate cycles. Previously Mr. Langendoen was Vice President of property management for a subsidiary of Wilshire Mortgage/Glendale Federal Savings where he managed apartments in several states including condo conversions and property rehabs. He was also Senior Vice President of a public REIT responsible for the management of commercial properties in southern California and he was Vice President of property acquisitions at Cal Fed Investments MLP fund. As Senior Vice President for Heron Financial he acquired, financed and performed due diligence on REO and troubled apartments from lenders. Mr. Langendoen was also President of an investment company that acquired, managed and financed 8,000 apartment units nationwide. Mr. Langendoen is a licensed real estate broker in California and he earned the Certified Property Manager (CPM) designation from the Institute of Real Estate Management. He earned a BBA from The University of Texas and an MBA from Pepperdine University. He is a past president of the Los Angeles chapter of IREM; he authored the article of the year “The Growing Field of Asset Management” and coauthored an IREM textbook on apartment management. LUKE MCCARTHY – SENIOR MANAGING DIRECTOR Mr. McCarthy is an attorney and a CPA with 30 years of real estate experience where he has acquired, syndicated and managed $3 billion of commercial real estate. Since 1987 he has been President of MacWest Capital and its affiliates, a real estate management, development, mortgage banking and investment firm which became the substitute general partner of 65 formerly bankrupt real estate partnerships and REITs. Mr. McCarthy has also been the director, President and Treasurer of various REITs, real estate investment and property management companies. Previously he was the chief executive officer of a real estate investment advisory firm that advised tax-exempt pensions on real estate and he was President of August Financial a real estate partnership investment and development company. Mr. McCarthy has a private law practice specializing in real estate, securities and corporate finance. Mr. McCarthy is a California Certified Public Accountant, has a BS degree in real estate, finance and marketing from Cal Poly University and holds a Juris Doctorate from University of Santa Clara School of Law. Madison Realty Equities, LLC | 3452 East Foothill Blvd., Suite 200 | Pasadena, CA 91107
  5. 5. Key Personnel | The Madison Team 3 FORBES BURDETTE – DIRECTOR Mr. Burdette has over 40 years of national real estate experience and has successfully experienced numerous real estate cycles and is an expert in property management and asset management activities. Since 1992, Mr. Burdette has been Executive Vice President and Chief Operating Officer for CMC Residential., a firm engaged in the sale and management of residential housing through a Coldwell Banker franchise. He was also an independent director of a privately held REIT that contained 15 self storage complexes, student apartments, and assisted living facilities. He was also Vice President of Carlsberg Management Company, in connection with its commercial real estate activities, a position he assumed after serving for a number of years as a consultant and Assistant to the President of Carlsberg Management Company. He was Executive Vice President and Chief Operating Officer of Trust Realty Advisors and was the Executive Vice President and Chief Operating Officer of August Financial Corporation. Mr. Burdette was also was Vice President of August Property Management, Inc. and Executive Vice President of University Real Estate Trust. He is a graduate of the University of Pittsburg and is the owner of Willard Contracting Company, a licensed California general contractor. BYRON MEO – DIRECTOR Byron Meo has been in the investment business since 1985 as Vice President and Financial Advisor in the Brokerage industry. As a commercial agent, Mr. Meo has worked with Luke and Gary for over 8 years in acquiring apartments, senior living facilities, retail shopping centers and storage properties. In March 2009, he took advantage of what he calls a “oncein-a-lifetime buying opportunity” and launched the California Distress Asset Fund, which specializes in buying single family residences in Southern California. Mr. Meo’s responsibilities include due diligence, acquisitions and property management. Mr. Meo earned his business degree from the University of California at Berkeley in 1984. MATT ARNOLD – DIRECTOR Mr. Arnold has over 15 years of real estate and construction experience. He worked in Colorado performing all facets of construction: laborer, estimating, production and project management. In addition to his construction experience, Mr. Arnold has spent the past several years in commercial real estate acquisition and syndication. Mr. Arnold performed all acquisition functions from initial underwriting and due diligence, through arranging and securing financing, and the closing of escrow and asset management. In addition to procuring traditional bank and CMBS lending, he has worked with HUD on mark-to-market and Green Initiative financing. Mr. Arnold has done the due diligence on and acquired 40 apartment, student apartment, office, self storage and assisted living properties nationwide for REITs and private real estate investment companies. Mr. Arnold received dual BS degrees in Chemical Engineering and Economics from the Colorado School of Mines. In addition, he received his MBA from the Marshall School of Business at the University of Southern California with an emphasis on real estate finance. EDDIE SIU – CHIEF ACCOUNTANT Mr. Siu has over 30 years of experience in all areas of accounting in the real estate investment, development, construction and management business. Mr. Siu started out with Boise Cascade Corporation in the 1970’s when Boise Cascade was still in the residential real estate business. Later on, Mr. Siu has held the position of Controller and Accounting manager with various real estate companies, overseeing the accounting functions of real estate investment, development and management. During the last 10 years Mr. Siu was an accounting manager with Carlsberg Management Company, overseeing its residential brokerage and property management operations. Mr. Siu has a BS degree in accounting from Cal Poly University. Madison Realty Equities, LLC | 3452 East Foothill Blvd., Suite 200 | Pasadena, CA 91107
  6. 6. Madison Services 4 Madison is a real estate advisory company with the credibility and experience to provide custom strategic solutions to maximize the investment return of a property. Madison reacts quickly to the rapidly changing market conditions that impact properties. Madison will tailor an acquisition and management strategy that integrates proactive property management with marketing and leasing. Madison has the capability of solving any real estate issue. The following shows the range of services that Madison provides: + Asset Management + Property Repositioning + Property Management and Financial Reporting + Loan Workouts and Modifications + Syndication Structuring + Commercial Properties and Single Family Homes + Budgeting and Financial Reporting + Due Diligence and Underwriting + Acquisitions and Dispositions + Consulting and Property Rehab
  7. 7. Madison Realty Equities, LLC | Management Over the past five years, Madison Realty Advisors and its alliances managed more than 20,000,000 square feet of real estate comprised of 120 properties located in 22 states throughout the US. 5 MANAGEMENT OFFICES Pasadena, CA Phoenix, AZ Houston, TX San Antonio, TX Nashville, TN Columbus, OH Kansas City, KS Indianapolis, IN Madison Realty Equities, LLC | 3452 East Foothill Blvd., Suite 200 | Pasadena, CA 91107
  8. 8. 6 Property Types TYPES Property Types Assisted Living/Memory Care (400,000 sf/800 units) Collegiate Living (4,000,000 sf/9,000 beds) Multifamily (2,300,000 sf/3,000 units) Office/Industrial/Retail (11,000,000 sf/60 properties) Self Storage (1,800,000 sf/12,000 units) figures are approximate Madison Realty Equities alliances include Madison Realty Advisors and MacWest Capital, and shows properties managed during the past five years.
  9. 9. Current Management Success Stories 7 • A 90 bed assisted living property in Phoenix where we replaced the property management company and doubled the size of the memory care section of the property; which was the area with the highest leasing demand. Within six months, the occupancy more than doubled filling up more than 30 memory care beds and the property went from $90K of revenue to $210K of revenue per month, increasing the property value from $4 million to $9 million within less than a year of our property plan implementation. • A property in California had little cash flow due to low occupancy. We modified the loan lowering the interest rate to the current market rate and we are changing the marketing program at the property. These adjustments have generated positive cash flow of over $100,000 per year increasing the value of the property by $1.5 million. We are also working on getting the zoning changed to expand the property adding the most desired unit types which will greatly improve the property value. • A 265 unit self storage property in San Antonio had a large unused parcel of land. We covered this area with asphalt and added 275 parking spaces for RVs, boats and vehicles. In addition to the parking, we added 35 portable units as we didn’t need building permits to install portable units. We also added and relocated a rental trailer to increase marketing exposure. These changes increased the monthly cash collected at the property from $27,000. We also added an agricultural section to the parcel so the property would qualify for an agriculture exemption which reduced property taxes by $50,000 per year. These activities increased the annual cash flow by $300,000 increasing the property value by $4 million. • A 1,350 bed student apartment property in Raleigh was not meeting cash flow projections because rental revenue was decreasing due to increased competition. We negotiated with the property management company, getting them to reduce their management fee by 25% and changed the rental structure which increased the property cash flow by over $200,000 increasing the property value by $3 million. • A 300 unit self storage property in Houston was 95% occupied and we decided to expand the property. We arranged $1 million of construction financing and provided the construction management which doubled the size of the property. From the original design to the certificate of occupancy, the work was completed in just 8 months. When the property completes lease up the property value will increase from $4 million to $8 million and investor equity will increase from $2 million to $5 million. “increasing the property value from $4 million to $9 million within less than a year”
  10. 10. Madison Realty Equities, LLC Commercial Real Estate Business Plan CompanyObjectives Acquire assets that will generate significant cash flows within three months of acquisition. Leverage the acquisitions with up to 50% financing. Acquire properties at distressed prices then rehab, reposition or add strong management to increase the cash flows and values. Mission By acquiring properties at current low prices and then solving any property problems, Madison will be in position to generate strong cash flows for investors and sell or refinance the assets when there is a better commercial real estate market which will generate significant profits.
  11. 11. 9 Market Target Market Analysis Summary Segment Summary Tight credit markets combined with high The company will acquire properties national unemployment numbers has impacted that can be purchased at distressed prices and can generate cash returns the owners of commercial properties and the of over 7% within three months after tenants that occupy them. The end result is that being purchased. Properties will be targeted nation wide and while all there is an abundance of properties with owners property types will be considered, having had to deal with lower occupancies management will first focus on and with lenders who are tightening credit memory care, assisted living, self storage and multifamily properties guidelines. The combination of these factors in the West, Southwest, Midwest and has caused owners to reduce normal repairs and Southeast. Management has extensive experience in these property types maintenance and in many cases stop paying the and these geographical markets. With mortgages allowing lenders to foreclose on the the baby boomers starting to turn 65 properties. The lower occupancies have caused next year, memory care and assisted living will have strong demand for most properties in the country to have lower beds; self storage has many value cash flows than three years ago with operating added opportunities and multi family expenses either increasing or remaining the properties have many repositioning situations. Each of these property same. This has reduced property values. types can be purchased in today’s With financing tightening most buyers went environment with significant cash flow and strong upside by completing and to the side lines further depressing property working value added factors. values. As a result of these factors many properties today can be purchased for 20 to 50% less than they were valued at three years ago and can be purchased for far less than replacement costs. ManagementStrategy The company’s management has extensive experience in curing weak management situations and re-mediating physical problems - all of which are common factors associated with distressed properties. The company will look to identify “added value” opportunities whereby properties can be expanded in the right market conditions or repositioned through marketing and lease-up to create value. Curing property problems and buying the properties at the right price plus expanding space when possible will all enhance cash flow and value. Financing of 50% to 60% of property values will also be used to enhance property cash flows. Madison Realty Equities, LLC | 3452 East Foothill Blvd., Suite 200 | Pasadena, CA 91107
  12. 12. 10 Lenders Lenders who have made loans to entities sponsored by Luke McCarthy and Gary Langendoen since 2003. Citi Group (has loans on 16 properties) Morgan Stanley John Hancock Royal Bank of Canada Prudential Bear Stearns Bank of America GE Health Care (General Electric) HUD (U.S. Housing and Urban Development) Deutsche Bank GMAC (General Motors) Artesia Mortgage Wells Fargo Bank (has 9 loans) PNC Bank Wachovia La Salle Bank Column Financial City National Bank Imperial Capital Bank Lehman Brothers Citizens First Bank The Private Bank Sterling Bank Natixis Sterling Bank & Trust First Fidelity Bank National Bank of Southwest Florida Reliance Bank Key Bank These loan amounts exceed $1 Billion USD. Madison Realty Equities, LLC | 3452 East Foothill Blvd., Suite 200 | Pasadena, CA 91107
  13. 13. 3452 East Foothill Blvd., Suite 200 Pasadena, CA 91107 Office: 626-796-8700 Attn: Gary Langendoen Thank you