Achieve superior risk-adjusted returns through an all equity investment acquiring opportunistic land sites. Investment Strategy
Texas is the fastest growing state in the nation.
Texas is the 11 th largest economy in the world.
Texas did not experience over appreciation in housing prices.
Texas did not experience overbuilding in real estate.
Texas offers a unique opportunity to buy properties at distressed prices due to illiquidity in an otherwise healthy market. The Texas Story
91%+ of the population and economic activity centers in or around the Texas “Triangle”.
In 2009, Texas ranked #1 as home to the most Fortune 500 headquarters in the nation.
Diverse Economic Drivers:
Houston - Energy, Medical and Port
Dallas/Forth Worth - Finance and Distribution
Austin - Government and Technology
San Antonio – Tourism and Military
The Texas Triangle
The population growth rate of Texas has consistently exceeded that of the U.S. since 1870 and the U.S. Census Bureau projects it continue to do so through 2040.
By 2040, Texas is projected to have approximately 46 million people, which is double the population living in Texas in 2000 .
Population Growth Exceeds Nation
Source: US Census Bureau Fastest Growing State State 2000 Population 2009 Population Increase Texas 20,851,820 24,782,302 3,930,482 California 33,871,648 36,961,664 3,090,016 Florida 15,982,378 18,537,969 2,555,591 Georgia 8,186,453 9,829,211 1,642,758 Arizona 5,130,632 6,595,778 1,465,146 North Carolina 8,049,313 9,380,884 1,331,571 Virginia 7,078,515 7,882,590 804,075 Washington 5,894,121 6,664,195 770,074 Nevada 1,998,257 2,643,085 644,828 Colorado 4,301,261 5,024,748 723,487
Elements Were in Place for a Texas Bubble:
Sub-prime financing available in Texas, too.
Strong economies…new jobs and households.
Strong housing demand.
But…No Price Bubble:
No ‘flipper’ investors….could not make money.
So Why did Texas Escape the Bubble and Eventual Collapse?
Rational approval process for new developments.
Ample and timely new housing supply to meet demand.
Source: Metrostudy Texas Escaped the “Bubble”
Texas Leads Nation in New Home Closings Source: Metrostudy New Home Closings – Q1 ’10
Source: Metrostudy Lot Delivery vs. Absorption - Houston Texas housing supply and demand factors remain very favorable to land investment Shortage of Lots
Source: Metrostudy National Comparison – New Home Inventory – Months Q1 ’10 Low New Home Inventory
• Capital raising
• Investor reporting
• Fund management
• 300+ unique investors
• 6 funds - $230M raised to date
• Fund No. 7 - $100M
• Strategic market research • Deal sourcing with in-house acquisition team • Due diligence • Closing • Value-add asset management • Disposition with in-house sales team Rockspring Capital McAlister Co. Real Estate Vertically Integrated
Our sourcing process takes advantage of an inefficient private market.
Current illiquidity of capital markets limits number of buyers.
Direct sourcing through banks, financial institutions, consultants, tax advisors, developers, builders, brokers, etc.
FDIC model of strategic joint ventures.
Loan database identifies delinquent borrowers in advance of default.
Monitor and attend property auctions.
Continually communicate with market that we are buyer of choice.
Diligent Deal Sourcing
Land Sites – Entitlement Process*
Design site plan
Create utility district plan
Secure surface control through designation of drill sites
Plan drainage improvement
Mitigate flood plain and potential wetlands
Establish access plan for optimal ingress/egress
* Entitlements – Rights and permits granted to a land owner by a municipality, county or other authority to use land or development resources in a particular way. Selection Value Add Disposition
Post acquisition, the land is quickly prepared to be developer-ready.
Experienced team works closely with government agencies to acquire permits, resolve traffic issues and make utilities and other services available.
Value Add Enhancements
Selection Value Add Disposition
Full time in-house brokerage team utilizing its direct relationships with
Value Add activities favorably affect the timing of sale and the value of property
Property is in a favorable marketing position vs. other alternatives because the end-user can immediately focus on development on day one.
Focus on Land
Investment in real estate without debt preserves capital with very low risk.
Real estate investments with low basis and low holdings costs maximize return.
Land is a tangible asset that always holds value in our investment model.
Investment in real estate is a hedge against inflation.
“ Buy land. They ain’t making any more of the stuff”… Will Rogers
Preserve capital through maintaining low holding costs and by acquiring investments without debt.
Low holding cost - Holding and improvement costs rarely exceed 5% of initial cost.
No debt - Purchasing real estate without debt eliminates risk of foreclosure, keeps carrying costs low and helps to retain value while substantially reducing capital risk.
Typical real estate deal structure Fund all equity structure Equity Equity Debt “ Cash is the only way to operate and only the most liquid can take advantage of the ton of emerging opportunities….” — Urban Land Institute, 2010 Emerging Trends in Real Estate Report