Jordan Wirsz - Investing in Commercial Real Estate

Confidential. Copyright 2015 Savant Investment Partners.
Real Estate Cycles & Secular Bull Market
Frontline commercial real estate investing with Jordan Wirsz

Disclosures
Savant Investment Partners is a publisher. All content published herein (collectively, the “Content”) is
strictly intended for general informational and entertainment purposes only and may not be relied upon for
any other purpose. Reproduction of the Content by any means is prohibited without prior written
permission of Savant Investment Partners.
The views expressed in the Content are the authors' own opinions only and do not necessarily reflect the
views of Savant Investment Partners. None of the Content constitutes a recommendation that any
particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any
specific person. Further, none of the creators or providers of our Content or their affiliates will advise
anyone personally concerning the nature, potential, value or suitability of any particular investment,
security, portfolio of securities, transaction, investment strategy or other matter. Accordingly, do not
attempt to contact them seeking personalized investment advice, which they cannot provide. To the
extent any of the Content may be deemed to be investment advice, such information is impersonal and
not tailored to the investment needs of any specific person.
Any performance data in the Content is supplied by sources believed to be reliable, that the calculations
therein are made using such data, and that such calculations are not guaranteed by these sources, the
information providers, or any other person or entity, and may not be complete. In addition, past
performance is not an indication of future results.

Disclosures
THIS IS NOT AN OFFERING OR THE SOLICITATION OF AN OFFER TO PURCHASE AN INTEREST IN SAVANT
SYNDICATED INVESTMENTS. ANY SUCH OFFER OR SOLICITATION WILL ONLY BE MADE TO QUALIFIED INVESTORS
BY MEANS OF A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM AND ONLY IN THOSE JURISDICTIONS WHERE
PERMITTED BY LAW.
AN INVESTMENT IN REAL ESTATE SYNDICATIONS ARE SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.
OPPORTUNITIES FOR WITHDRAWAL, REDEMPTION AND TRANSFERABILITY OF INTERESTS MAYRESTRICTED, SO
INVESTORS MAY NOT HAVE ACCESS TO CAPITAL WHEN IT IS NEEDED.
THE FEES AND EXPENSES CHARGED IN CONNECTION WITH AN INVESTMENT WITH SAVANT MAY BE HIGHER THAN
THE FEES AND EXPENSES OF OTHER INVESTMENT ALTERNATIVES AND MAY OFFSET PROFITS. NO ASSURANCE
CAN BE GIVEN THAT ANY SAVANT INVESTMENT OBJECTIVE WILL BE ACHIEVED OR THAT AN INVESTOR WILL
RECEIVE A RETURN OF ALL OR PART OF HIS OR HER INVESTMENT. INVESTMENT RESULTS MAY VARY
SUBSTANTIALLY OVER ANY GIVEN TIME PERIOD.
The investment case studies shown herein are presented for informational purposes only. The case studies shown are included
to illustrate the application of the investment methodology of Savant Investment Partners, LLC (the “Manager”) in practice in order
to demonstrate catalysts for investment and sale, among other things. These case studies were executed through the [personal
account(s)] of principals of the Manager, clients of the Manager, or affiliates of the Manager, and are not necessarily indicative of
typical investment positions of Savant or their investors. The returns referenced in the case studies shown do not include the
impact of advisory fees or other expenses, which would serve to decrease profits or otherwise increase losses. It should not be
assumed that investments made in the future will be profitable or will equal the performance results shown herein.
This material contains certain forward-looking statements and projections regarding the future performance and asset allocation of
our investors. These projections are included for illustrative purposes only. By their nature, forward-looking statements and
projections are inherently predictive, speculative, and involve risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to
differ materially from those expressed or implied by these forward-looking statements and projections. No assurances can be
given that the forward-looking statements in this document will be realized. It is not intended that these forward-looking
statements will be updated in the future.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
3

Confidential. Copyright 2015 Savant Investment Partners.4
Notes Before We Start
 Please ask questions and interact – we appreciate the participation
 Some of the data charts may be dated due to infrequent updates to some specific charts
 Please feel free to contact us after the presentation if you have any questions or would like to discuss the
topics.
 You may request a copy of these slides from us directly by calling or emailing us.

The Catalyst for Opportunity
The Commercial Real Estate Cycle is at the right place to take
advantage of the opportunities.

Why Commercial Real Estate?
 Commercial real estate has yet to see the strong recovery that housing has, thus it remains
undervalued in many markets. Why? Simple: Economic recovery and availability of capital has
only been apparent for about 24 months. Housing is consumer based, which leads recoveries.
 The commercial real estate cycle has only begun to turn bullish for the long-term. Investing at the
right time in the cycle is key – you want to swim with the current, not against it.
 Many commercial properties can be bought far below replacement cost. In a normal market,
properties will sell for more than replacement cost. Why? Developers need entrepreneurial
incentive to build, so comparable existing prices must support new development.
 Banks/Hedge Funds are still holding onto commercial foreclosure inventory, and it’s time for them
to sell their remaining assets, presenting opportunities for “value buyers” such as myself.
6

The Backdrop – Bullish Case for Real Estate
The real estate cycle is perhaps one of the most clear and consistent cycles to study.
Macro market will “peak” within 7 years.
7
2022

Markets and Cycles
Local markets vary.

Trends We Monitor By Area
 Job growth
 Population growth
 Occupancy rates
 Lease rates
 Sales prices
 New construction timing
 Business trends and potential area impact
9

The CAPITAL market cycle is very tightly correlated to the PRICE cycle. When more capital is
chasing less space, prices rise. When capital tightens and demand for space decreases, prices fall.
10

As rates rise, banks have more incentive to lend with bigger margins. This means availability of capital
to borrow/increasing sales volume will increase also driving the increase in prices. There is a
relationship between rates and real estate prices, but not a direct 1-for-1
correlation.
11
30-year U.S. Bond Interest Rates

The current interest rate cycle is allowing long term leverage at historically low interest rates!
12

Will higher interest rates mean “soft” real estate prices? No!
 A conviction amongst the general public (who are always late to the correct conclusion) that
interest rates have bottomed will lead to a spurt of buying activity, which will drive prices higher.
 Rising interest rates usually means rising inflation. Real estate usually does well in an
inflationary environment.
 Higher interest rates and inflation will mean growing rents, which is positive for the price of
commercial real estate.
 It is important to remember that we are at HISTORICAL LOWS in interest rates. A rise to 5%, 6%,
or even 6.5% is still relatively low, and real estate will have no problem continuing to thrive in that
type of rate environment.
13

 Credit “tightness” has declined, and loan demand is up!
14
The Lending Environment
Capital Markets Are Back!

 The relationship between money supply and inflation is largely misunderstood. The financial crisis
in 2008 created a debt deleveraging process, which is by nature deflationary. This debt that was
extinguished effectively netted out against any money that was printed.
 Up until the real estate crash, the adjusted monetary base and real estate prices in the U.S. were
highly correlated. The deleveraging process - concentrated mostly in real estate and consumer
debt - created a temporary disconnect that we believe will reverse. This means increasing real
estate prices.
15
The Backdrop – Inflationary Pressures
0%
1000%
2000%
3000%
4000%
5000%
Jan1975
Aug1976
Mar1978
Oct1979
May1981
Dec1982
Jul1984
Feb1986
Sep1987
Apr1989
Nov1990
Jun1992
Jan1994
Aug1995
Mar1997
Oct1998
May2000
Dec2001
Jul2003
Feb2005
Sep2006
Apr2008
Nov2009
Jun2011
Jan2013
Aug2014
U.S. Real Estate Prices vs Adjusted Monetary Base
U.S. Real Estate Price Index Adjusted Monetary Base

 Replacement costs rise during inflationary periods. Today, you can still buy commercial real estate
well below replacement cost. Thus, we expect to “double end” the gains with market conditions
recovering to replacement cost levels, in addition to the inflationary tailwinds which will raise rents.
16

Step #1: Find the right deal.
 BANKS: Still have foreclosure inventory that they are usually willing to sell at 20-25%
discounts to current market value.
 HEDGE FUNDS: Bought notes during the downturn for pennies on the dollar. They then
foreclosed on the assets, and now they are liquidating assets to capture liquidity and
profits. They have also mismanaged assets due to extreme workload and lack of motivation
to extract every ounce of value.
 DISTRESSED SELLERS: Many sellers have “hung on” during the tough times and are
now wanting to sell their assets. They have often mismanaged their properties, have high
vacancy rates and the properties are in need of fix-up or repairs, and the sellers simply
don’t have the funds to do that. Thus, they are selling a “value add” asset for less than
market.
17
“The Art of the Deal”

Understanding Commercial Valuations
CAP Rates & “N.O.I.” = Net Operating Income
N.O.I. Means
 Net Operating Income
 After Taxes
 After Insurance
 After Management Fees
 After other regular expenses
 But BEFORE Debt payments
Think of “NOI” as your cash on cash
return, prior to paying debt payments.
CAP rates are figured with NOI
NOI Purchase Price = CAP
Example:
$100,000 NOI
$1,000,000 Purchase price = 10% CAP
Rate
CAP rates in general range from 5% to
10% depending on the asset itself.
18

It is important to understand that VALUE in commercial real estate is in the income stream.
Commercial properties are often valued on “CAP” (capitalization rates).
For example:
123 Main Street, Las Vegas, Nevada
10,000 square foot retail center
5 tenants
Net Operating Income (NOI): $80,000
Value at a 7% CAP Rate: $1,145,000
Value at a 8% CAP Rate: $1,000,000
Value at a 9% CAP Rate: $890,000
Every property is worth what an investor is willing to accept as its yield.
 ****Commercial Property Owners Buy The Income Stream.
19
Commercial CAP Rate Valuations

CAP Rates – Commercial Real Estate Returns
“CAP Rate” = Capitalization Rate i.e. “ROI”
More Risk = Higher CAP
 Tertiary/smaller markets
 Older, less desirable property
 Uniqueness
 Un-favored asset type
 More complex property to manage or lease
 High vacancy potential
Both the PROPERTY and the AREA can be
classified as A, B, C, or D in grade.
Lower Risk = Lower CAP
 Mainstream markets (i.e. LA, San Fran.,
Phoenix, Chicago, etc.)
 Newer construction
 Easy to lease/manage
 Highly favored asset type
 Well-leased / low vacancy potential
20

My personal formula for evaluating the primary aspects of any deal are:
1. What is the price per foot to acquire and what is the price per foot to replace?
2. Is there room for growth in the rent rates?
3. What is the existing income and quality of tenants?
4. Is there room to create additional income by leasing vacant space?
5. What is the age/location grade of the property? A, B, or C?
***It is obviously a bit more complex than the above, but these points are where I start my evaluation
on every deal.
21
“The Art of the Deal”

Retail shopping center in Las Vegas, Nevada
22
200% Returns – Is It Possible???

 I was presented with an opportunity to buy an asset from a hedge fund that needed to liquidate
prior to the end of November, 2014 for unknown, but “firm” circumstances.
 The property was 81% leased at the time, and cash flowing a NOI of approx. $96,000.
 Due to closing time constraints, the buyer needed to act fast and be committed. Savant was able
to meet those requirements.
 We wrote an offer to purchase the property within 24 hours of touring it for the first time.
 Due to our reputation of performance, we were awarded the contract to purchase.
23
200% - My Deal

 Built in 2008
 Existing leases with 7 tenants
 81% Occupied
 $96,000 existing NOI
 Purchase price of $1,062,500 (9% CAP on existing income, better than market rate)
 11,668 square feet ($91/ft. acquisition price – estimated $200/ft. + replacement cost)
 $1,300,000 value estimate upon closing (almost $250k made day 1)
24
200% - The Property

 Paid $1,062,500 on November 24, 2014
 Financed $800,000
 Down payment of $262,500 + closing costs (my equity investment)
 At closing, I bought a 9% net investment that was also $250k below market value.
Immediately after closing, I approached the strongest of the existing tenants and determined if
any of them were interested in additional space. Indeed, the best and strongest tenant was
interested.
25
200% - How I Did It

We negotiated the following terms on a new lease
with an existing tenant to expand their business:
 7 year lease on the vacant 2,165 s.f. (now 100% occupied).
 Renewed the tenant’s original space for a new 7 year term.
 $1.25/s.f. lease rate + CAM Expenses ($.30/ft.).
 3% annual increases in rent for the 7 year term.
 Landlord (me) to pay $30k in tenant improvements.
26
200% - How I Did It

Purchase Price:
Tenant Improvements:
Total Basis:
Down Payment + TI’s:
New NOI:
Debt Service:
Cash Return:
Property Value based on 7.75% CAP rate with $140,000 of NOI =
$1,800,000
-$1,092,500 invested
-6% sales costs (I’m realistic)
= $599,500 Equity Profit (roughly 200%)
+ 29% annualized (leveraged) cash return on current income
27
200% - How the Math Works Out
$1,062,500
$30,000
$1,092,500
$292,500
$140,000
$52,800 annually
$87,200 / 29.8% on my cash investment

***I can’t give you the “Savant Secret Sauce” but I can give you some pointers.
 Contact small and large local commercial brokers and get on their email list for available
deals. Tell them you’re looking for “opportunistic” assets with “upside.”
 Contact local banks/lenders and ask if they have any foreclosure inventory they want to sell.
 Be on the lookout for distressed, tired, or undercapitalized sellers.
Finding the right opportunities requires having your ear to the ground, strategic relationships,
a keen and discerning eye, as well as a lot of persistence.
We “earn our keep” by finding the good deals and MAKING our deals exceptional.
28
200% - How Do You Find These Kinds of 200% Deals?

***NOTE:
The example I just gave is an extraordinarily “Good Deal.” Not all commercial real estate investments
turn out as well, and this math example is not “typical” of commercial real estate investing.
We were able to achieve this extraordinary return by being aggressive in our acquisition negotiations,
our leasing negotiations, and utilizing our unique abilities to maximize property performance.
Are these results typical? No.
Are they possible from time to time? Absolutely.
As Warren Buffet says, “You can’t go broke making a profit.”
We strive to make every deal profitable…Some are better than others.
29
200% - Typical? Definitely Not.

We strive to hit home runs on all of our acquisitions. However, the notorious story of the tortious and
the hare proves that slow and steady wins the race.
31
Under Promise…Over Deliver.

The Savant Opportunity
What we do and how we do it.

Investments in:
Geography:
Est. Avg. Cash Return:
Target Capital Appreciation:
Combined Targeted Return:
Hold Period:
Minimum Investment:
Qualifications:
33
Over $100 Million in Transactions Since 2012
Commercial Real Estate Throughout The U.S.
(Office, Medical, Retail/Shopping, Industrial, Multi-Family)
Nationwide with emphasis on the S.W. region
7-10%
7% compounded annually (or better)
15% +
3-7 Years
$100,000
Must be an *accredited investor.
Introducing:
Savant Commercial Real Estate Syndications

Why Savant CRE Investments?
 We align our interests with yours by taking a reduced management fees in exchange for profit
participation with you.
 We are aggressive, active and experienced managers. We thoroughly understand “the art of the
deal.”
 We pride ourselves on 100% transparency to investors, quarterly reporting, and annual investor
meetings.
34
The Savant Difference

Confidential. Copyright 2015 Savant Investment Partners. 35
Investor Capital Sources
*Usually 10 – 20% of investable assets are placed with us over time.
 Dedicated Investment Capital
 Self Directed IRA
 Shift former employer 401k to Self-Directed IRA

What are the opportunities in front of us?
 Collateralized Mortgage Backed Securities (CMBS) loan maturities are facing a “cliff” over
the next few years. This will provide strategic opportunities to acquire properties from
owners under pressure from banks to pay them off.
 Banks/lenders still have foreclosure inventory that they are willing to sell at discounted
prices.
 Commercial property owning baby boomers are looking for liquidity.
 Hedge funds who acquired distressed assets are looking to divest and obtain liquidity.
 Inexperienced real estate investors with poor management and inadequate capital to
upgrade the property need to sell.
38
The Savant Opportunities Ahead

Savant Notable Deals
 $44.5 Million Multi-Family
 $22.5 Million Multi-Family
 $7.5 Million Development Land
 $8.7 Million SFR Portfolio
 $4.3 Million Luxury Portfolio
 $2.0 Million Office Acquisition
 $1.1 Million Retail Acquisition
 $3.2 Million Industrial build-2-suit
Small or large, sexy or not.
 Multi-Family
 Office
 Medical
 Industrial
 Retail/Shopping
 Land Development
39

Interested in learning more about how to invest with us?
Call or e-mail us for:
 A discussion of whether we are the right fit for your portfolio
 A complete and detailed investor presentation about Savant and the CRE opportunities
 A call with myself or one of our investment relations representatives
Inquire@SavantInvestments.com
(702) 474-3003
www.SavantInvestments.com
5586 S. Fort Apache Rd. Suite 120
Las Vegas, NV 89148
*Email me personally at: Jordan@SavantInvestments.com
40
Commercial Real Estate Investments

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41

Disclosures
THIS IS NOT AN OFFERING OR THE SOLICITATION OF AN OFFER TO PURCHASE AN INTEREST IN SAVANT
SYNDICATED INVESTMENTS. ANY SUCH OFFER OR SOLICITATION WILL ONLY BE MADE TO QUALIFIED INVESTORS
BY MEANS OF A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM AND ONLY IN THOSE JURISDICTIONS WHERE
PERMITTED BY LAW.
AN INVESTMENT IN REAL ESTATE SYNDICATIONS ARE SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.
OPPORTUNITIES FOR WITHDRAWAL, REDEMPTION AND TRANSFERABILITY OF INTERESTS MAYRESTRICTED, SO
INVESTORS MAY NOT HAVE ACCESS TO CAPITAL WHEN IT IS NEEDED.
THE FEES AND EXPENSES CHARGED IN CONNECTION WITH AN INVESTMENT WITH SAVANT MAY BE HIGHER THAN
THE FEES AND EXPENSES OF OTHER INVESTMENT ALTERNATIVES AND MAY OFFSET PROFITS. NO ASSURANCE
CAN BE GIVEN THAT ANY SAVANT INVESTMENT OBJECTIVE WILL BE ACHIEVED OR THAT AN INVESTOR WILL
RECEIVE A RETURN OF ALL OR PART OF HIS OR HER INVESTMENT. INVESTMENT RESULTS MAY VARY
SUBSTANTIALLY OVER ANY GIVEN TIME PERIOD.
The investment case studies shown herein are presented for informational purposes only. The case studies shown are included
to illustrate the application of the investment methodology of Savant Investment Partners, LLC (the “Manager”) in practice in order
to demonstrate catalysts for investment and sale, among other things. These case studies were executed through the [personal
account(s)] of principals of the Manager, clients of the Manager, or affiliates of the Manager, and are not necessarily indicative of
typical investment positions of Savant or their investors. The returns referenced in the case studies shown do not include the
impact of advisory fees or other expenses, which would serve to decrease profits or otherwise increase losses. It should not be
assumed that investments made in the future will be profitable or will equal the performance results shown herein.
This material contains certain forward-looking statements and projections regarding the future performance and asset allocation of
our investors. These projections are included for illustrative purposes only. By their nature, forward-looking statements and
projections are inherently predictive, speculative, and involve risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to
differ materially from those expressed or implied by these forward-looking statements and projections. No assurances can be
given that the forward-looking statements in this document will be realized. It is not intended that these forward-looking
statements will be updated in the future.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
43

Jordan Wirsz - Investing in Commercial Real Estate

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