Centurion Apartment REIT Investor Presentation

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Centurion Apartment REIT Investor Presentation

  1. 1. Investing for Income & Stability Certainty in uncertain times Overview of Centurion Apartment REIT
  2. 2. Disclaimer Statement IMPORTANT INFORMATION: This communication is for information purposes only and is not, and under no circumstances is to be construed as, an invitation to make an investment in Centurion Apartment REIT. Investing in the REIT Units involves significant risks. There is currently no secondary market through which the REIT Units may be sold and there can be no assurance that any such market will develop. A return on an investment in REIT Units of Centurion Apartment REIT is not comparable to the return on an investment in a fixed-income security. The recovery of an initial investment is at risk, and the anticipated return on such an investment is based on many performance assumptions. Although Centurion Apartment REIT intends to make regular distributions of its available cash to Unitholders, such distributions may be reduced or suspended. The actual amount distributed will depend on numerous factors, including Centurion Apartment REIT’s financial performance, debt covenants and obligations, interest rates, the occupancy rates of Centurion Apartment REIT’s properties, working capital requirements and future capital requirements. In addition, the market value of the REIT Units may decline if Centurion Apartment REIT is unable to meet its cash distribution targets in the future, and that decline may be material. It is important for an investor to consider the particular risk factors that may affect the industry in which it is investing and therefore the stability of the distributions that it receives. There can be no assurance that income tax laws and the treatment of mutual fund trusts will not be changed in a manner which adversely affects Centurion. PAST PERFORMANCE MAY NOT BE REPEATED. Investing in REIT Units can involve significant risks and the value of an investment may go down as well as up. There is no guarantee of performance. An investment in a REIT is not intended as a complete investment program and should only be made after consultation with independent investment and tax advisors. Only investors who do not require immediate liquidity of their investment should consider a potential purchase of Units. The risks involved in this type of investment may be greater than those normally associated with other types of investments. Please refer to the REIT Offering Memorandum for a further discussion of the risks of investing in a REIT. The REIT Units are not “deposits” within the meaning of the Canadian Deposit Insurance Corporation Act (Canada) and are not insured under the provisions of that act or any other legislation. Centurion Apartment REIT 95 Mural Street Suite 306 Richmond Hill, ON L4B 3G2 Toll Free: 1-888-737-REIT www.centurionapartmentreit.com Page 1
  3. 3. Additional Information Centurion Apartment An unincorporated open-end investment trust created by declaration of a trust made REIT: as of August 31, 2009. For the purposes of the Income Tax Act it is a mutual fund trust. Legal Advisors: Cassels Brock and Blackwell LLP Legal advisers of the Centurion Apartment REIT Auditor: BDO Dunwoody LLP (for Centurion Apartment REIT) Centurion Apartment REIT Management Inc. will act as the transfer agent and registrar of the REIT Units. Legal Entity: Centurion Apartment Real Estate Investment Trust Asset Manager: Centurion Apartment REIT Management Inc. Property Manager: Centurion Property Associates Inc. Page 2
  4. 4. Table of Contents Investing for Income & Stability – certainty in uncertain times 1) Introduction: Challenge, Need & Solution 2) Benefits of Investing in Real Estate 3) Who we are: Centurion Property Associates Inc. 4) Overview: Centurion Apartment REIT 5) Summary & Helpful Resources Appendix - Includes purchase information Page 3
  5. 5. Challenge: Volatile Markets / Low Interest Rates Riskier asset classes volatile / GIC rates barely cover inflation S&P/TSX Composite Index / 5-year GIC Rates (10 calendar years to December 31, 2009) 16,000 15,073 15,000 Jun 18-08 14,000 13,000 11,389 12,000 Sep 1-00 11,746 Dec 31-09 11,000 10,000 9,000 8,000 7,000 6,000 5.60% 5,813 Oct 10-02 7,567 Mar 9-09 ? 2010 4.45% 3.40% 3.35% 2.88% 5,000 2.50% 2.63% 2.53% 2.68% 1.95% 4,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Sources: Standard & Poor’s (S&P/TSX Index as at December 31, 2009); Bank of Canada (GIC rates – “posted rates” at Chartered Banks as at January 31 of each year) Page 4
  6. 6. Need: Income from Investments / Portfolio Stability Important considerations for many investors Income-oriented investors (retirees) Conservative investors (pre-retirees) looking for: looking for:  Regular income distributions  Moderate growth  Tax-advantaged income  Capital preservation  Capital preservation  Tax-advantaged income The tax factor Your lifestyle is based on your “after-tax” income Page 5
  7. 7. Solution: Consider an Apartment REIT Investing for Income & Stability – certainty in uncertain times A timely opportunity to invest in one of the safest sectors within the real estate market – income producing apartment properties in Canada 1 REITs: “Core” Income Solution Not “going corporate” in the popular Income Trust Category 2 Consider an Apartment REIT One of the safest sectors in Real Estate and Income Trusts Generally provides more stable, 3 “Private” REIT advantages rational pricing with lower volatility Meeting investor needs Regular Income / moderate growth / capital preservation Page 6
  8. 8. Solution: Centurion Apartment REIT Investing for Income & Stability – certainty in uncertain times A timely opportunity to invest in one of the safest sectors within the real estate market – income producing apartment properties in Canada Key Features Key Benefits:  8% annual distributions  Steady, reliable income to meet clients’ (paid monthly) financial needs  More “after tax” income (vs. other income  “Tax-advantaged” income sources) to afford a better lifestyle  Potential for capital growth  Moderate capital growth potential to help offset inflationary concerns  “Private” apartment REIT  Stable, rational pricing. Lower volatility  Low correlation to other income  Better diversified portfolio + less volatility sectors and asset classes = “sleep at night portfolio” Proven expertise Dependable income solution plus adds stability to portfolios Page 7
  9. 9. Benefits of Investing in Real Estate Advantages of Real Estate Income: Tenant base provides the foundation for stable and 1 predictable income 2 Investment growth: A “hard asset” that appreciates over time Lower volatility: Not impacted by as many short-term market 3 forces as other asset classes 4 Capital preservation: For several usages a “fundamental staple” with downside protection (varies by sub sector) Inflation hedge: Real estate has a history of protecting 5 against the destruction of wealth caused by inflation Page 8
  10. 10. Quick Overview Real Estate Sub Sectors  Commercial  Services  Industrial  Apartments  Retail  Single Family Homes/ Condominiums Real Estate sub sectors do not perform the same Above sub sectors will react differently to various market forces (i.e., economic boom/bust, financial crisis, interest rates, currency, unemployment rates, etc.) Real Estate Investment Real Estate Investment Trusts (REITs): REITs are income-producing, diversified real estate investments. All REITs operate like mutual funds. They are one of the most popular options to add the benefits of real estate into an investor’s portfolio. Consider Apartment REITs: The most conservative REITs invest only in apartments. Proven over time to be the least volatile mainly because they do not suffer from “anchor tenant risk”, namely that no individual tenant leaving an apartment building can materially affect rents in the same way that a big box chain could in, say, a shopping centre REIT.* *Source: Centurion Apartment REIT Page 9
  11. 11. REITs: Key Sector in the Income Trust Market Concern: Income Trusts “going corporate” . . . but REITs set to grow in 2010 Number and market cap (at end of year except 2006; as at June 2009) *REIT IPOs worth about $500 MM being introduced Q2-10 Income Trust Oct 2006 June 2009 Change 254 Number of Sectors Number Number # Change % Change income trusts 250 234 Business 173 110 -63 -36% $218 212 Pipeline & Power 23 14 -9 -39% 195 200 Oil & Gas Royalty 31 22 -9 -41% 175 $184 REITs 27 25 -2 -8% $191 $187 171 Total Income Trusts 254 171 -83 -33% 150 Source: TD Newcrest, June 2009 136 101 Drop in value after $121 Fed announcement 100 $115 October 2006 to $106 57 58 62 November 2006 51 52 $83 50 Aggregate $44 market value ($billions) $28 0 $15 $16 $18 $20 Most Canadian REITs are exempt from the new rules regarding income trusts and will continue as is beyond 2011 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Data Source: PricewaterhouseCoopers, June 2009; *REIT IPO source: Financial Post, February 22, 2010 Page 10
  12. 12. “Private” REITs: An Important Consideration All REITs are governed by boards of trustees and produce audited financial statements. The two main categories of REITs in Canada are “public” REITs and “private” REITs Differences between Public and Private REITs Publicly-Traded REITs: Private REITs:  Trade on a public stock exchange (provide  Not traded on a public stock exchange instant liquidity as they buy & sell units every day) (generally offering only 30-day liquidity)  Trading daily also means investors can push  Value of REIT is based on the value price up or down, reflecting current market of underlying real estate (not a “traded” sentiment and regardless of actual market market price) helping avoid volatile movements value in the stock market enhanced by sentiment  Increased costs due to requirements of a  No additional “public listing” related publically listed stock regulatory costs  History of more volatile pricing  Stable, rational pricing = lower volatility  Tend to be more highly correlated to stock  Tend to be far less correlated to major prices equity markets 2008: Public REIT Market*: -34.0% S&P/TSX: -33.0% 2008: Non Listed Property Ownership**: +3.7% * Source: IPD ** Source IPD; Note: Non listed property ownership is similar to a Private REIT Page 11
  13. 13. Comparing Asset Class Performance Publicly-traded REITs tend to exhibit Stock Market volatility & may be correlated Growth of $10,000 invested (past 25-year period as at December 31, 2009) $125,000 1987 1997 1998 2000/02 2008/09 Black Asian Russian Internet Bubble Global Monday Financial & LTCM Bursts Financial Crash Crisis bailout & 9/11 Crisis $100,000 S&P/TSX Composite Index TR $84,532 Value of $10,000 $75,000 $50,000 $25,000 S&P/TSX Capped REITs Index TR* For Directional Purposes Only (the starting points of the two indices cannot be the same for the period shown*) $10,000 invested (Dec 31-1984) $10,000 invested (Dec 31-1997) $0 Calendar Returns (%) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 S&P/TSX Composite Index TR (%) 25.1 9.0 5.9 11.1 21.4 -14.8 12.0 -1.4 32.5 -0.2 14.5 28.3 15.0 -1.6 31.7 7.4 -12.6 -12.4 26.7 14.5 24.1 17.3 9.8 -33.0 35.1 S&P/TSX Capped REITs Index TR (%)* – – – – – – – – – – – – – -8.5 14.8 21.4 29.9 7.4 25.9 14.0 25.3 24.7 -5.7 -38.3 55.3 *Inception date for the S&P/TSX Capped REITs Index was Oct.15, 2002, however, the back calculation pricing is available starting Dec.31,1997 Source: Morningstar Research Inc. as at Dec. 31, 2009; REITs are not guaranteed, their values can change frequently and past performance is no guarantee of future results. Page 12
  14. 14. Comparing Asset Class Performance Private Apartment Property Index exhibits steady growth Growth of $10,000 invested (past 25-year period as at December 31, 2009) $150,000 1987 1997 1998 2000/02 2008/09 Black Asian Russian Internet Bubble Global Financial Monday Financial & LTCM Bursts Crisis $125,000 Crash Crisis bailout & 9/11 $141,300 $100,000 ICREIM / IPD Canada Residential Value of $10,000 "Apartment" Property Index (TR) “Consistently positive growth over the past 25 years” $75,000 $50,000 $25,000 $10,000 invested (Dec 31-1984) $0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 25% Total Return (avg. 11.3%)* “Positive calendar year Total Returns 20% Income Return (avg. 7.4%)* every year over past 25 years” 15% Capital Growth (avg. 3.7%)* 10% 5% 0% -5% * Average is calculated over the 25-year period of ICREIM / IPD Index Source: ICREIM / IPD Canada Annual Property Index as at Dec. 31, 2009 REITs are not guaranteed, their values can change frequently and past performance is no guarantee of future results. Above ICREAM / IPD Index only available with annual data points versus indices on previous slide shown with quarterly data. Page 13
  15. 15. Recap: Why an Apartment REIT? An ideal investment choice for many investors Investor Needs  Need for stable & consistent income  Moderate growth to help offset inflation  Stable investments and capital preservation “Private” Apartment REIT Benefits  Proven history of regular “tax advantaged” income distributions  Capital growth in addition to regular income  Low volatility and low correlation to other asset classes Investor Suitability - Long-term investors focusing on regular income and have a moderate risk tolerance - There are certain risks inherent in an investment in a REIT including risks related to liquidity / timing of redemptions and general real estate property ownership - Please read the Offering Memorandum / Prospectus of all REIT-based investments Page 14
  16. 16. Who we are . . . Centurion Properties Associates Inc. Focused, Experienced & Proven Focused  Dedicated to investing and managing multi-unit residential properties primarily apartments Experienced  Established in 2003  Mr. Romundt, President and the Board of Trustees (5) have significant depth of real estate investment and management experience Disciplined  Proven, process-driven investment methodology to manage risk and uncover opportunities to maximize “steady income” from properties Executive Ownership  Mr. Romundt and Trustees of Centurion Apartment REIT have a substantial investment stake in the REIT Clients  Predominately institutional (new REIT open to individual investors) Page 15
  17. 17. At-a-Glance: Our History & Growth Corporate milestones and portfolio growth since 2003 Centurion Apartment Portfolio Growth 1600 30 2009: Centurion Apartment REIT Apartment Units 1400 formed from CAPLP and began Apartment Complexes distributions to investors 25 Number of Apartment Complexes 23 23 23 1200 22 Number of Apartment Units 1179 1179 1179 20 1000 800 2006: Centurion establishes 819 15 Centurion Apartment Properties LP (CAPLP) a “total return” investment 600 10 2003: Initial units 400 (15 town homes) 7 purchased in Barrie 6 5 200 4 235 2 188 128 62 0 0 2003 2004 2005 2006 2007 2008 2009 YTD-10 Source: Centurion Apartment REIT Management Inc. as at February 28, 2010 Page 16
  18. 18. Overview: Executive & Operational Teams Depth of experience & expertise Five Trustees are responsible for the general control and direction of Centurion Apartment REIT Greg Romundt Adrian Wong Ross Amos Martin Bernholtz John Mills HBA Operations Manager MBA, ICD.D BBA, CA MBA, ICD.D President & Trustee * & Trustee * Independent Trustee Independent Trustee Independent Trustee Operational Teams Property Management Accounting Call Center & Site Staff Investor Relations  Marjorie Hunter  Brian Wong  Susan Yang  Alice Wong  Catherine Perry Northern Portfolio CGA Property Accountant  Daisy Grande  Myles Kranovich  Mariana Baciu  Petya Georgieva Over 30 dedicated resident SW Ontario Portfolio Property Accountant site staff Property Accountant  Marcela Peana Kitchener Portfolio * Responsible for the day-to-day Executive Management of Centurion Apartment REIT. Please see Appendix for detailed biographies of the five Trustees Page 17
  19. 19. Overview: Centurion Apartment REIT Investing for Income – certainty in uncertain times A timely opportunity to invest in one of the safest sectors within the real estate market – income producing apartment properties in Canada Key Features:  8% annual distributions  Potential for capital growth (paid monthly)  “Tax-advantaged” income  Low correlation to other income sectors and asset classes Our Focus is Our Advantage:  Multi-unit residential properties for stable & consistent income  Canada (smaller communities) for stability, value & growth Plus, benefit by a “Private” REIT for portfolio stability / lower volatility Page 18
  20. 20. What gives our REIT a unique advantage? Three fundamental strategies working together Focus on Apartments 1 Apartments have proven to be the least risky asset class of real estate investment (apartments are a “basic needs” industry and tend not to be as impacted by “anchor tenant risk” as other real estate investments) Focus on Canada 2 Solid economy, stable and fiscally responsible government, strong banking and resource sectors = a stable and growing environment to invest in Benefit of a “Private” REIT 3 Stable, rational pricing with lower volatility and lower correlation to major equity markets Please see Centurion website for more details Page 19
  21. 21. Overview: Centurion Apartment REIT Description Asset Class REIT Centurion Apartment REIT is an Type of REIT Private REIT (not listed on a stock exchange) unincorporated open-end investment trust with objectives of Inception Date REIT: September 2009/ CAPLP: March 2006 (rolling into the REIT) 1) providing Unitholders with stable and growing cash distributions, Asset Manager Greg Romundt (since inception); 19 years industry experience payable monthly and, to the extent reasonably possible, tax deferred, Sector Focus Multi-unit residential properties (primarily apartment complexes) from investments in a diversified portfolio of income-producing Geo Exposure Canada focused multi-unit residential properties located in Canada and, Value investment style using a top down / bottom up research Style 2) maximizing REIT Unit value process in investment selection through the ongoing management of Centurion Apartment REIT’s Portfolio Groups Capital Allocation assets and through the future Focused Strategy  Apartments 100% acquisition of additional multi-unit but Diversified  Canada 100% residential properties. within Strategy  Cities 14  Apartment complexes 23 Portfolio* 23 apartment complexes / 1,179 apartment units C.A. Bancorp Front Street Capital Institutional MacNicol & Assoc. Asset Management Morguard Financial Investors include Polar Securities Inc. * as at February 28, 2009 Page 20
  22. 22. Investment Process (2-step approach) Focused, disciplined & proven 1. Value investment style  Generally outside of major cities (avoids Toronto, Montreal, Calgary, Vancouver)  Buildings with fewer than 200 apartment units  Previous owners relatively unsophisticated business operators  “off the radar” of large institutional investors because of size, condition and location Greg Romundt 2. Upgrade to maximize income President & Asset Manager  Invest in energy efficiency and utility conservation upgrades  Upgrade apartment suites and tenant profile to increase rents  Perform ongoing property management maintenance to keep fees in-house  Refinance at lower rates (leverage scale) to minimize costs  Wrap enterprise class management, service and technology systems around investment to maximize income Page 21
  23. 23. We Ain’t Sexy . . . . . . but have a proven record of consistency & steady growth What we look for: What other REITs often find attractive  Unrecognized value “For Centurion Apartment REIT we  Untapped income potential concentrate on smaller communities with low vacancy levels and strong  Low vacancy and stable tenant population demographics. These plain base but hidden gems are far more appealing  Strong population demographics when we do the financial analysis” Page 22
  24. 24. 2 Examples of Investment Process Value Opportunity Upgrade Program  Rents significantly under  Renovation & repositioning program market (Lighting retro-fits, new windows, elevator cab upgrades, improved security, common area renovations and in-suite  Building was poorly run upgrades) 4 month period, investment cost of $350,000 and under maintained Income: Purchase Price: Increased from $160,000 per annum to $250,000 (+56%) $2.115 million (March 2006) Refinanced: 47 Suite Apartment Building Refinanced after 4 months at $3.2 million 277 Anderson Avenue Oshawa Current Valuation: $3.55 million (+68%) Value Opportunity Upgrade Program  Excellent location and  Renovation & repositioning program physical infrastructure (Centurion invested in common area renovations and in-suite upgrades to reposition property as a “quality” rental building)  But, under capitalized Income: Purchase Price: Increasing building income as older units are turned into $4.57 million (July 2007) renovated units Refinanced: 96 Suite Apartment Building Recently refinanced 356-360 Hoffman Street Kitchener Current Valuation: $6.35 million (+39%) in 18 months Page 23
  25. 25. Performance: Centurion Asset Management* Growth of $10,000 invested (since inception of CAPLP March 2006)* $24,000 $22,078 $22,000 Mar 7-10 CAPLP / REIT $20,000 “Preserved investor capital through recent market correction” $18,000 Value of $10,000 $16,000 Centurion CAPLP/REIT* $14,000 S&P/TSX Composite Index $12,823 May-08 $12,000 $10,723 $10,000 Feb 28-10 $10,000 TSX Mar 7-06 Mar 31-06 For Directional Purposes Only (the starting and end points of CAPLP/REIT $8,000 CAPLP TSX and TSX index lines are not precisely the same in this illustration*) $7,265 -43% or -$5,558 from peak Feb-09 $6,000 2006 2007 2008 2009 2010 Since Incept. Calendar Returns (%) 2007 2008 2009 YTD-10 Compound Returns (%) 1-Year 2-Year 3-Year 4-Year of CAPLP Centurion CAPLP/ REIT* TR (%) 41.9 -0.7 -0.8 1.3 Centurion* -0.4 3.9 9.8 21.9 21.9 S&P/TSX Capped REITs Index TR (%) -5.7 -38.3 55.3 3.5 S&P/TSX Capped REITs 73.4 2.7 -5.3 2.5 n/a S&P/TSX Comp Index TR (%) 8.8 -33.0 35.1 -0.6 S&P/TSX 47.6 -4.5 -0.9 2.7 n/a Sources: Centurion Asset Management for CAPLP / REIT as at March 7, 2010 and Morningstar Research Inc. for S&P/TSX Indices as at February 28, 2010. *The above chart is shown only to demonstrate the Manager’s track record and experience with managing apartments. The chart is a composite of the performance of CAPLP and Centurion Apartment REIT (the "REIT"). CAPLP was formed on 7 March 2006. The REIT was formed on 31 August 2009. It is important to note that there are a number of material differences between CAPLP and the REIT which include, but are not limited to: 1) CAPLP used higher degrees of leverage than the REIT intends to use which will, in general have the effect of lowering overall returns but also risk in the REIT relative to CAPLP; 2) CAPLP had a different business and operating strategy than the REIT. CAPLP was designed primarily as a capital growth vehicle and didn't distribute cash flow whereas the REIT is designed to be an income vehicle with modest long term growth; 3) CAPLP bought properties that generally needed higher degrees of capital investment than properties the REIT will likely buy and thus CAPLP may have had outsized opportunities for gains relative to opportunities the REIT may pursue in the future; 4) Because the REIT is designed as an income generating vehicle, the REIT will not be as aggressive in repositioning properties on as large a scale as may have been done in CAPLP; and 5) The Manager is targeting a more conservative risk profile with the REIT than it had done with a capital growth oriented vehicle like CAPLP and thus anticipates that the returns of the REIT will be lower than have been achieved by CAPLP. These differences and others will mean that the performance and risk characteristics of CAPLP and the REIT will be different and potentially materially different. Potential investors should not look upon the performance of CAPLP as indicative of potential performance of the REIT. Page 24 PAST PERFORMANCE MAY NOT BE REPEATED.
  26. 26. Portfolio Diversification Well diversified by 14 cities / 23 apartment units Huntsville (1) Gravenhurst (1) Halton Hills (1) Orillia (1) Fergus (1) Barrie (2) Milverton (1) Brighton (2) Kitchener (5) Oshawa (2) London (1) Whitby (1) Tillsonburg (1) Hamilton (3) Source: Centurion Apartment REIT as at February 28, 2010 Page 25
  27. 27. Portfolio Composition 14 Cities / 23 apartment complexes / 1,179 apartment units Portfolio Breakdown Portfolio Breakdown # of apartment units by city 22 19 City Apt. Complexes # of Apt. Units 33 25 36 39 Kitchener 5 apts 588 units 43 Hamilton 3 89 47 Oshawa 2 71 48 588 units Brighton 2 58 58 Barrie 2 43 Tillsonburg 1 61 61 Orillia 1 48 71 89 London 1 47 Gravenhurst 1 39 Kitchener (588) Barrie (43) Whitby 1 36 Hamilton (89) Gravenhurst (39) Halton Hills 1 33 Oshawa (71) Whitby (36) Tillsonburg (61) Halton Hills (33) Huntsville 1 25 Brighton (58) Huntsville (25) Milverton 1 22 Orillia (48) Milverton (22) London (47) Fergus (19) Fergus 1 19 14 Cities 23 apts 1,179 units Source: Centurion Apartment REIT as at February 28, 2010 Page 26
  28. 28. Summary: Centurion Apartment REIT People  Greg Romundt, President, has been the President and Asset Manager since the inception of CAPLP in March 2006  Experienced & dedicated staff Process  Proven, value-oriented 2-step strategy managed to deliver regular income, low volatility, moderate capital growth and capital preservation  An independent Board of Trustees provides oversight Performance  Proven track record of strong “total return” since 2006 with strategy now focused on providing regular income distributions to investors Portfolio  Centurion Apartment REIT can help diversify portfolios overweight in equities with its low correlation to major asset classes and lower volatility Key Benefits REIT for yield  Apartment Focused for stable income  Private REIT for lower volatility Page 27
  29. 29. Helpful Resources For Investors Web: Centurion Overview & Advantages Real Estate Investment Videos, Articles & Resources www.centurionapartmentreit.com Page 28
  30. 30. Appendix  When Industry Needs Info . . . Who Gets the Call?  Purchase Info: Terms, Fees, Compensation & Codes  Biographies of Trustees Page 29
  31. 31. When Industry Needs Info . . . Who Gets the Call? Text excerpts from article. . . while stock markets have been anything but stable, apartment buildings generally held their value through the recession because of steady financing, low vacancy rates and a supply constrained environment created by government regulations. All the water cooler talk may be about the red-hot housing market, but as apartment owners are quick to point out, about one-third of Canadians still don't own. Apartment vacancy rates across the country remain relatively low – 2.7% in April 2009, according to Canada Mortgage and Housing Corp. The rate was slightly up from the 2.6% of apartments that were vacant a year earlier. . . . buying on an individual basis always comes with risks which is one of the reasons privately-run REITs are beginning to take off. You get all of the tax advantages of REIT status with none of the exposure to capital markets. Greg Romundt, president of Centurion Apartments, a private REIT, says his 1,200 apartments have an asset value of $90-million, with mostly institutional investors backing him. But now he's taking aim at individual investors. Each province has different rules on who can invest in a private fund based on wealth or income. The upside to investing in a private REIT versus buying a building is there are none of the headaches of building management. Mr. Romundt said his fund delivers an 8% cash return and 3% to 5% long-term capital growth annually. Management does take 5% of profits and charges a 1.5% fee on the assets under management – in range with any mutual fund. “I remember after the last stock market crash there was a very large influx into the apartment building [market] because people threw their hands down and said. ‘I'm done with stocks.' There has been like three Apartments on Isabella Street in Toronto, Ont. Apartment buildings generally held their value crashes in 10 years,” said Mr. Romundt, who sees it happening again after through the recession. Brett Gundlock/National Post this crash. "We're seeing investors like professionals, dentists, teachers. They're looking for stability and we can offer that." Sources: Financial Post, November 23, 2009 Page 30
  32. 32. Purchase Info: Terms & Conditions / Fees Centurion Apartment REIT Investment Minimum $5,000 (qualified investor) Purchases: Monthly (any day of the month) Terms & Conditions Redemptions: Monthly (30 days notice before redemption date) Valuations: Monthly Management Fees: 2.5% Fees Performance Fees: 5% Carried Interest * * See Offering Memorandum for full details Page 31
  33. 33. Biographies of Trustees Greg Romundt, HBA President Mr. Romundt is the founder and President of the Asset Manager, the Property Manager and Centurion Apartment REIT. He has been engaged in investment in residential real estate since 1997 and investments and financial markets since 1991. He has real estate investment experience in Singapore, Britain, Australia, China and Canada. From 1991 to 1997, he worked for Citibank in Toronto, New York and Singapore as a financial derivatives trader in interest rate derivatives, major and emerging currencies and exotic derivatives. From 1997 to 2001, he worked for AIG International Group in Hong Kong, Britain and Singapore as head of emerging market derivatives and then as Senior Vice President and Partner (Emerging Markets). He was the group risk manager, overseeing all of the firms positions in emerging markets and was a member of the risk management committee. He graduated from the Richard Ivey School of Business at the University of Western Ontario with an HBA in 1991 Adrian Wong Operations Manager Bringing over 16 years of experience to his role, Mr. Wong is Centurion Property Associates Project Manager. He has overall responsibility for daily project management and field operations, tendering of projects and regular inspections with all site Property Managers. He is directly involved in the coordination of trades, scheduling and cost control and leads the value analysis of potential projects. His extensive knowledge of construction technology and innovative approach often lead to significant cost savings and time for the client. Prior to joining Centurion, he was a Quantity Surveyor and Construction Manager in a general contracting firm in Toronto where he led teams that completed a number of large-scale projects for Property Management companies such as Brookfield, and Cadillac Fairview. He also worked as the lead Project Co-ordinator for a disaster relief and restoration company in Bolton with clients such as Aviva and Royal Sun Alliance. Adrian earned his Construction Estimator Certification in 2002 and a member of the OIQS. Ross Amos, MBA, ICD.D Independent Trustee Since 2000, Mr. Amos has been President of Everest Canadian Properties Company, a subsidiary of a California based Real estate investment Bank. In addition, since 2002 he has been an independent trustee of Contrans Income fund and a member of its audit committee, compensation committee and the nominating and governance committee. Since 2006 he has also been a trustee of Drive Products income fund where he chairs the compensation nominating and governance committee and is a member of the audit committee. Both companies are listed on the Toronto Stock exchange. He has also served as a Director on a number of privately owned companies, both in Canada and the United States. From 1996 to 2000 Mr. Amos was President of the General partner company for 65 hotel limited partnerships, reporting to the Advisory Board of Limited Partners who had previously invested in Journey´s End hotels. Mr. Amos received an honors degree in Business Administration from the Ivey School of Business at the University of Western Ontario, a Master of Business Administration York University and is one of the first recipients of the ICD.D designation, from the Rotman School of Business and the Institute of Corporate Directors-Corporate Governance College. Page 32
  34. 34. Biographies of Trustees (continued) Martin Bernholtz, BBA, CA Independent Trustee Mr. Martin Bernholtz, BBA, CA became a Chartered Accountant in 1983 and has held the position of Chief Financial Officer of Kerbel Group Inc. an integrated real estate developer and property owner since 1988. He has served as a Director and Officer of public, private, not for profit and condominium corporations over the last 25 years. Mr Bernholtz previously spent six years with Laventhol & Horwath in the Litigation Support and Business Valuation areas. Mr. Bernholtz graduated with a Bachelor of Business Administration degree from York University in 1981. John Mills, MBA, ICD.D Independent Trustee Mr. Mills is the president of the Mills Group Inc. which he founded in 1978 to manage Burger King franchises, real estate and a consulting practice specializing in strategic planning. Mr. Mills holds an MBA from Richard Ivey and is a certified member of the Institute of Corporate Directors (ICD.D). Mr. Mills is a director of a number of private and public corporations including the advisory board for Burger King Corporation (N.A.), Park Lawn Company Limited, Centurion Apartment REIT and is chairman of Lone Star Texas Grill. Page 33
  35. 35. Disclaimer Statement IMPORTANT INFORMATION: This communication is for information purposes only and is not, and under no circumstances is to be construed as, an invitation to make an investment in Centurion Apartment REIT. Investing in the REIT Units involves significant risks. There is currently no secondary market through which the REIT Units may be sold and there can be no assurance that any such market will develop. A return on an investment in REIT Units of Centurion Apartment REIT is not comparable to the return on an investment in a fixed-income security. The recovery of an initial investment is at risk, and the anticipated return on such an investment is based on many performance assumptions. Although Centurion Apartment REIT intends to make regular distributions of its available cash to Unitholders, such distributions may be reduced or suspended. The actual amount distributed will depend on numerous factors, including Centurion Apartment REIT’s financial performance, debt covenants and obligations, interest rates, the occupancy rates of Centurion Apartment REIT’s properties, working capital requirements and future capital requirements. In addition, the market value of the REIT Units may decline if Centurion Apartment REIT is unable to meet its cash distribution targets in the future, and that decline may be material. It is important for an investor to consider the particular risk factors that may affect the industry in which it is investing and therefore the stability of the distributions that it receives. There can be no assurance that income tax laws and the treatment of mutual fund trusts will not be changed in a manner which adversely affects Centurion. PAST PERFORMANCE MAY NOT BE REPEATED. Investing in REIT Units can involve significant risks and the value of an investment may go down as well as up. There is no guarantee of performance. An investment in a REIT is not intended as a complete investment program and should only be made after consultation with independent investment and tax advisors. Only investors who do not require immediate liquidity of their investment should consider a potential purchase of Units. The risks involved in this type of investment may be greater than those normally associated with other types of investments. Please refer to the REIT Offering Memorandum for a further discussion of the risks of investing in a REIT. The REIT Units are not “deposits” within the meaning of the Canadian Deposit Insurance Corporation Act (Canada) and are not insured under the provisions of that act or any other legislation. Morningstar Research Inc. is an independent research firm. Except to the extent otherwise specifically required by law, neither Morningstar nor its affiliates nor their third party content providers shall be responsible for any trading decisions, damages or other losses resulting from, or related to, this information, data, analyses or opinions or their use. Past performance is no guarantee of future results. Centurion Apartment REIT 95 Mural Street Suite 306 Richmond Hill, ON L4B 3G2 Toll Free: 1-888-737-REIT www.centurionapartmentreit.com Page 34
  36. 36. Investing for Income & Stability Certainty in uncertain times Not available for reproduction Centurion Apartment REIT Thank you!

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