Investment in The Coconut Industry by Nancy Cheruiyot
Multifamily -mike kelly
1. Green Pearl
Chicago Distressed Real Estate Summit
May 2010
May 2010 Confidential & Proprietary
2. Questions
1. Are the spike in values justified ?
• What kind of deals and related cap rates are in the market ?
• Are you seeing a V-shaped recovery at your properties ? Is the revenue increase
driven by occupancy gains or real rent increases ?
2. Debt ?
• What type of deals are out there to buy from servicers and constr. lenders ?
• What are the pitfalls ?
• How are buyers, sellers, or lenders reacting to terms in the market ?
• Are banks or servicers going to get more aggressive in foreclosures /DPOs ?
• Is buying loans getting played out or is there more room to run ?
• Current lending environment and terms for Agencies, or mezz, or hard money
investors ?
• What is the outlook for Fannie /Freddie ? Will they merge, shrink ?
3. Have we forgotten the impact of the debt bubble still ahead of us ?
• How will the large amount of construction debts play out ?
• How will the maturing CMBS products get refinanced, or flushed through ?
• Who are the buyers going to be for the “non–A” grade products ?
Confidential & Proprietary Page 2
3. Questions
4. Legal side
• Any major changes in players, deal terms, client sentiments ?
5. Development of apartment/condos going forward
• What is the time frame to start building again ?
• What type of terms will investors get on equity and construction debt ?
• Any new ways to look at this model ?
Looking ahead
• Where does the new equity come from for acquisitions when the supply of
assets gets larger ? What type of returns would investors expect ?
• What have we learned in the past 24 months ?
• NOI – Buyers are all underwriting significant growth due to recovery and
lack of new construction – What are your thoughts on this assumption ?
• Where do new jobs come from ?
• Wrap up
Confidential & Proprietary Page 3
4. Apartment transactions
Apartment Transaction Volume through April 2010
$120 B 5,000
3,795
3,814 3,871
Number of Transactions
$100 B
$99.6 4,000
Total $ Amount
$88.8 $91.7
$80 B
2,462 3,000
$60 B
$51.0 2,055
1,649
2,000
$40 B 1,251 $37.3
1,169 $30.3 975
$22.7 868
$20.4 1,000
$20 B $14.1
$17.3
$0 B 0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Annualized
Garden Mid/highrise Total Price Transactions
Source: Real Capital Analytics
Confidential & Proprietary Page 4
5. Detailed Multifamily Maturities
$ billions Multifamily Maturities - by Investor Types: 2010 to 2017
(Does not include commercial lenders/ thrifts or savings institutions)
$60
$50.8
$47.2
$50
$39.9 $7.9
$40.5
Average- $37 billion $33.8 $1.8
$5.6
$40 $1.7
$7.5 $6.0
$28.1 $29.3 $1.8
$23.6 $3.2
$30 $6.5 $21.1
$25.3
$1.6 $5.1
$5.9 $16.0
$12.8 $7.1 $1.6
$4.5 $4.0
$20 $8.3
$7.4
$10.7
$10 $17.0 $18.6 $18.8
$7.4 $14.3 $16.1 $15.8
$7.5
$4.3
$0
2010 2011 2012 2013 2014 2015 2016 2017
Fannie, Freddie, FHA and Ginnie Mae CMBS, CDO or other ABS
Credit Companies, Warehouse, and Other Life Insurance Companies
Source: Mortgage Bankers Association (“MBA”).
Note: Does not include commercial banks which have over The December 2009 MBA Survey covered most multifamily
$200 billion in apartment debt O/S loans outstanding from the investor pool except for Commercial
Banks/Thrifts.
Confidential & Proprietary Page 5
6. Current Apartment Mortgage Holders
$400
Commercial Banks Can the Agencies
$379
Savings institutions continue to deploy capital
$357
$350
Life Insurance
to make up for the lack of
Private mtg Cond uits
CMBS and Life
$300 $302 Insurance originations ?
Total Gov't backed
entities
$250
$244
$229
$215
$210 Increase from 2005
$200 (billions) $ %
$168 Fannie/Freddie $140 77.5%
$158
Gov't entities (non Fannie
$150 $139 & Freddie) $9 4.1%
$125
$114
$108
$103 Commercial Banks $71 51.3%
$98
$100 $93
$89
$96 Savings Institutions ($38) -39.1%
$65
$60
Life Companies $7 17.7%
$50
$52 $52 $50
$46
$42 Conduits $19 21.2%
$0
12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 Source: Federal Reserve
Confidential & Proprietary Page 6
9. Non-current Multifamily C&D loans
Percentage of Multifamily- non current
(90 days past due or non accrual status) Multifamily
Non $ o/s
current % (billions)
5.00% Dec-05 0.25% $188
4.44% Mar-06 0.28% $191
4.50% $192
Jun-06 0.29%
Sep-06 0.31% $193
4.00%
3.58% Dec-06 0.41% $193
3.50% Mar-07 0.60% $192
3.13%
Jun-07 0.66% $190
3.00% Sep-07 0.68% $193
2.45% Dec-07 0.76% $202
2.50%
Mar-08 0.98% $207
2.00% 1.74% Jun-08 1.20% $211
1.47% Sep-08 1.47% $205
1.50% 1.20% Dec-08 1.74% $206
0.98% Mar-09 2.45% $211
1.00% 0.68% 0.76%
0.60% 0.66% Jun-09 3.13% $213 $ NC
0.41%
0.50% 0.25% 0.28% 0.29% 0.31% Sep-09 3.58% $216 $7.73
Dec-09 4.44% $211 $9.39
0.00%
Note: In the past 6 quarters the
amount of outstanding apt loans has
remained virtually the same.
Source: Federal Reserve However, total C&D for all real
estate has dropped $170 billion .
Confidential & Proprietary Page 9
10. Conclusion
1. Should we jump back into the pool now ?
• Will NOI increases offset any increases in interest rates and cap rates ?
• Has the market been too conservative over the past 24 months ?
• What type of returns (IRR or COC) for apartment acquisitions ?
2. Debt
• Will Fannie/Freddie continue to fuel the market ?
• Is there a real risk that Fannie/Freddie will slow down, or even consolidate ?
• Will CMBS come back to save B and C grade properties market ?
3. What is ahead of us ?
• What keeps you up at night ?
Confidential & Proprietary Page 10
11. Caldera Asset Management
Caldera Asset Management is a turnaround and restructuring consulting working
exclusively with multifamily assets. We offer lenders, equity investors, developers and
lawyers the convenience and efficiency of one-stop shopping. We provide solutions that fit
their individual needs.
Caldera brings a wealth of experience that covers virtually all aspects of
apartments:
– Asset management
– Restructuring and recapitalization of portfolios as well as one-off assets
– Executive experience
• Public REITS
• Private REITS
• Pension fund advisors
• Entrepreneurial firms
– Experience in direct ownership of all classes of apartment assets (A,B and C)
– Financing
– Accounting
– Brokerage
– Portfolio acquisition / disposition
www.CalderaAssetManagement.com
Confidential & Proprietary Page 11
