European Distressed Real Estate Conf 20 March09

By: Scott L. Podvin, Managing Director
The Crest at Waterford Lakes, LLC
spodvin@post.harvard.edu
www.TheCrestLife.com
http://www.linkedin.com/in/sp0dvin
Tel: (305) 793-5762; Fax: (305) 665-3971

Scott L. Podvin: The European Distressed Real Estate Conference – 6-7 April 2009

PODVIN DEVELOPMENT GROUP
RAISING $$100mm FUND
TO PURCHASE REAL ESTATE, DISTRESSED/OPPORTUNISTIC
ASSETS
THIS FUND SHALL FOCUS ON PURCHASING THE FOLLOWING TYPES OF ASSETS:
Strategically located developments, located in the centre of a city,
being large-scale and multi-phase developments typically consisting
City-Core
Development of residential, office, retail, entertainment and cultural properties with
Projects a blend of historic restoration and modern architecture.

Large-scale multi-family residential communities in secondary and
tertiary markets located on main and main where we can implement
Integrated a capital improvement program to push the rents. We will be
Residential
prepared to purchase the asset on an all cash basis, but once the
Development
community has been stabilized, we shall lever it or dispose of the
Projects
asset, triggering a repayment event.

There will be tremendous opportunities in busted condos and conversions
Broken Condos &
while value add plays will also be easy to find. Likewise, there will be many
Conversions or
Partially projects with incomplete construction that we will be able to pick up on the
Constructed cheap, complete construction and reposition the asset to create a vibrant
Communities working, walkable (with bike paths and all), sustainable and living community
for working class people.

WE ARE NOW RAISING A Scott L. Podvin: IMN‘s European Distressed Real
Estate Conference
$100,000,000 FUND TO 6-7 April, 2009
PURCHASE DISTRESSED spodvin@post.harvard.edu

FUND RAISING CENTRAL

Scott L. Podvin: IMN‘s European Distressed Real Estate Conference
6-7 April 2009
spodvin@post.harvard.edu; http://www.linkedin.com/in/sp0dvin

PODVIN DEVELOPMENT GROUP
CORE BUSINESS FOCUS
Our core business focus is the:
1. Identification;
2. Acquisition;
3. Ownership; and
4. Operation of multi-family
residential and hospitality
real estate properties.
6-7 April 2009

Investors
1. Institutional Investors
2. Pension funds
Our Preferred
3. Insurance companies Shares pay
4. Endowments cumulative
preferential cash
5. Investment Banks
distributions at an
6. Commercial Banks
annual rate of 9%.
7. Fund of funds
8. High net worth individuals
9. Family offices
10. Sovereign wealth funds
6-7 April 2009

Investment Objectives
OBJECTIVES:
(1) acquire superior-located, middle-income, mutli-
family residential properties that have been
neglected or poorly managed; and
(2) increase profitability thru:
(a) providing superior on-site property mngmnt,
(b) improving physical appearance and living
environment of the properties;
(c) implementing renovation strategies in those
instances where rental rate increases justify the
costs; and,
(d) implementing business development
strategies to cross sell ancillary services

Scott L. Podvin
IMN‘s European Distressed Real Estate Conference, 6-7 April, 2009

OPPORTUNITIES IN DISTRESS
European surveys
reflect that
demand for real
estate debt in
general – and for
distressed debt in
particular – is at
an all time high

Scott L. Podvin
IMN‘s European Distressed Real Estate
Conference, 6-7 April, 2009
spodvin@post.harvard.edu;

BLUE HORESHOE
LOVES DISTRESS
 Consider the dramatic tilt in institutional
investors‘ (2007) allocations:
 $44.5 billion targeted to domestic real
estate
 $36.3 billion to private real estate
 $24.7 billion to non-core (i.e., value-
added and opportunistic),
 $11.6 billion to core (i.e., stabilized
apartment, industrial, office & retail)

Scott L. Podvin: IMN‘s European Distressed Real Estate Conference; April 6-7, 2009

VULTURES CIRCLING –
EYEING THEIR PREY
 In 2008, $87Bn was  $56.25Bn raised in 2006
raised by 87  $73.75Bn raised in 2007
opportunistic or debt
and distressed debt
focused funds.
 Of the $87Bn, U.S.
accounted for $47MM
and Europe for
$15.8MM

Scott L. Podvin

SPATE OF RECORD FUND RAISINGS
FOR DISTRESSED DEBT BY
1. Carlyle
2. MGPA
3. Blackstone
4. Area Property Partners
5. Palmer Capital – recently launched an
opportunity fund with GVA Grimley
6. Schroders lookling to raise up to £1bn in
new equity

Scott L. Podvin: IMN‘s European Distressed Real Estate Conference; April 6-7, 2009

OTHERS ARE WAITING
ON THE SIDELINES
COMPELLING STORY
Consider the explosive growth of RE-oriented private equity:
 Apollo
 Blackstone
 Colony Capital
 Ramius
 Bain Capital
 SAC Capital
 Recent Deals
 London Opportunity Fund
 Stamford‘s Opportunity Fund

Source: Kingsley Associates and Institutional Real Estate, Inc


6-7 April 2009

Opportunity Knocks
There will be more ways to earn opportunistic
Goldman Sachs is •
returns going forward.
asking investors in
its $15bn private
Collier capital - get inundated
equity fund for
approval to shift
• Harbourvest - with calls w/
much of its
• Goldman Sachs - cash strapped inv
remaining
• Paul Capital - selling private
uninvested money
into distressed
• Pantheon and - equity assets
debt in a stark
• Lexington partners –
indication of just
how dysfunctional
RBS hires UBS to sell its almost £500mm of
•
the buy-out
investments in private equity funds
business has
become amid the
$134Bn of private equity assets just on the
•
meltdown in credit
balance sheet of 6 big money banks and AIG
markets.
Source: super return conference Berlin, Germany
•

6-7 April 2009
12

SMART MONEY
GOES TO FLORIDA
 Terra Firma Capital
Partners, increases
assets under mngmnt fr
€2bn to €11bn, w/ about
80% of its portfolio biz
revenues from U.S.

 SMART MONEY GOES
TO THE U.S.

6-7 April 2009

CDS CLEANING SERVICE

Scott L. Podvin: European Distressed Real Estate Conference 6-7 April 09

HEDGE FUND LIQUIDATIONS--
“THE GREAT LIQUIDATION”
 - Industry size

 The industry Managed approx. $2.5T
at its peak in the summer of 2008.[1]
 Global credit crunch has caused
assets under management (AUM) to
fall sharply through a combination of
trading losses and the withdrawal of
assets from funds by investors.[2]

6-7 April 09

OFFSHORE HEDGE FUNDS
 At end-2007, 52% of the
number of hedge funds were
registered offshore.
 Most popular offshore
locations:
 Cayman Islands (57%);
 British Virgin Islands (16%)
and;
 Bermuda (11%).
 The other offshore centers
are the Isle of Man and
Mauritius.

6-7 April 09
spodvin@post.harvard.edu; http://www.linkedin

ONSHORE HEDGE FUNDS
 The US was the most popular
onshore location (with funds
mostly registered in
Delaware) accounting for
65% of the number of
onshore funds, followed by
Europe with 31%.[3]
 HUGE OUTFLOWS, NO
INFLOW
 OPPORTUNITY IS HIDDEN
IN THE OUTFLOW!

6-7 April 09

HEDGE FUND
LIQUIDATION SALES
 Now large numbers of funds are
accelerating or preparing plans to hand
back cash to investors.
These funds include:


 Drake Management, the New York manager,
 Centaurus Capital in London,
 London Diversified Fund Management and
many convertible bond specialists, including
Howard Fischer‘s Basso Capital in Stamford,
Connecticut, and Jeremy Herrmann‘s Ferox
Capital Management in London.

6-7 April 09

TARGET PRACTICE
HIT THE HEDGE
DE SHAW – LARGEST US HEDGE
FUND -- APPOINTS INDEPENDENT Funds without independent

ADMINISTRATOR administrators:
1) ESL Investments, run by

Eddie Lampert
MILLENIUM MNGMNT, 2) Renaissance Technologies,

$11Bn NY HEDGE FUND, run by billionaire Jim Simons
APPTS LONDON‘S
3) Chicago Citadel,
GLOBEOP, AS IND. run by Ken Griffin
ADMIN 4) SAC CAPITAL, run by
billionaire Steven Cohen
5) Cerberus
6) HBK Capital, Dallas, Tx
7) Caxton Associates, run
by billionaire Bruce
UNION BANCAIRE PRIVEE, The 2d Kovner
Biggest Inv. in Hedge Funds (& a These are the targets!!!
major loser from Madoff), warns
others to appoint indep. admins
These guys should be selling soon!

6-7 April 09

TIME FOR A
MARKET STABILITY REGULATOR

6-7 April 09

PRIV. EQUITY FIRMS MAKE THE BEST
SELLERS/JV PARTNERS
1 The Carlyle Group Washington DC $ 32.5 16 Hellman & Friedman San Fran $ 12.0
2 Kohlberg Kravis Roberts New York $ 31.1 17 CCMP Capital NY $ 11.7
3 Goldman Sachs Princ Invmt Area NY $ 31.0 18 Gen. Atlantic Greenwich, CT $ 11.4
4 The Blackstone Group New York $ 28.36 19 Silver Lake Prtnrs Menlo Park, CA $ 11.0
5 TPG Capital Fort Worth $ 23.5 20 Teachers' Priv Capital Toronto $ 10.78
6 Permira London $ 21.47 21 EQT Partners Stockholm $ 10.28
7 Apax Partners London $ 18.85 22 1st Reserve Corp Greenwich, CT$ 10.1
8 Bain Capital Boston $ 17.3 23 American Capital Bethesda, MD $ 9.57
9 Providence Equity Partners Prov, RI $ 16.36 24 Charterhouse Cap Prtnrs London $ 9.0
10 CVC Capital Partners London $ 15.65 25 Lehman Bros Priv. Eq. NY $ 8.5
11 Cinven London $ 15.07 26 Candover London $ 8.29
12 Apollo Management New York $ 13.9 27 Fortress Invstmnt Group NY $ 8.26
13 3i Group London $ 13.37 28 Sun Cap. Prtnrs Boca Raton, FL $ 8.0
14 Warburg Pincus New York $ 13.3 29 BC Partners London $ 7.9
15 Terra Firma Capital Partners London $ 12.9 30 Thomas H. Lee Partners Boston $ 7.5

Scott L. Podvin
IMN‘s European Distressed Real Estate Conference: 6-7 April 09

Private Equity Fund
Diagram

Scott L. Podvin

MATURING & ROBUST 2DRY MARKET
FOR SELLERS OF PRIVATE EQUITY ASSETS
 Driven by strong
 Types of Secondary Transactions
demand for private
equity exposure, a
sig. amount of
2.1
capital has been
Sale of
committed to
LP Ints
dedicated
secondary market
funds from investors
2.2
Sale looking to increase
of and diversify their
Direct private equity
Ints exposure

6-7 April 2009

FOUR POCKETS OF DEMAND
London-based private 1.Opportunity Funds that have been
equity house Benson
established to buy real estate
Elliot Capital
Management has equity
closed Benson Elliot
2.Newer Opp. Funds that have been
Real Estate Partners
III, a pan-European
created as dedicated debt
distressed real estate
investors
fund. The fund had a
target size of €500
3.Private Equity looking at real
million at its 2008:Q3
launch, and has estate debt
managed to raise
4.Real Estate Companies buy back
around €510 million,
officials at the firm
their own debt or debt of others
said.

Scott L. Podvin

What Should An Investor Do?
• Core funds, particularly newer vintage funds, will begin
to see more attractive pricing for acquisitions.

• Existing core assets will begin to see the benefit of
slowing development as we move into 2009-10.

• REITs in US, Europe and Asia take a beating during
2007-08. So, we are approaching the time for pension
funds, endowments, REITS, and other qualified investors
to rebalance/add to real estate positions.


April 6-7, 2009



Capital Market Conditions
Drive Outlook

• Capital Markets are closed
• European Recession Deepening and UE
rising
• Europe's recession risks lasting into
2010
• US deals dropped from 154 to • IMF is expected to
99 while UK deals fell from 74 to • European Central Bank's decision last borrow $100Bn from
50 week to revise downwards its 2010 Japan and may even
growth forecast for eurozone countries
• Securitization trusts hold $1.5T issue bonds, an
from 1 per cent to zero. unprecedented step in
of subprime and alt-A loans,
• Since the world financial crisis exploded its 64-yr history
$400B of which are delinquent
in September, three European • Russia to supervise a
• 5 Canadian Banks –RBC, governments have fallen - in Belgium, consolidation plan
Toronto-Dominion Bank, Bank Latvia and Iceland, which is not a EU that would see the
member but could soon apply to join.
of Nova Scotia, Canadian number of banks cut
Imperial Bank and Bank of from 1,100 to 500.
• Europe risks being the last region to pull
Montreal –put investment banks
itself out of recession unless it can • Global financial
under same umbrella present a unified front on the economic tsunami batters Hong
crisis.
Scott L. Podvin: IMN‘s European Kong, as it falls into
Distressed Real Estate Conference recession
• Germany sees sharp (20.7% (Jan – Jan))
6-7 April 09 drop in exports, the driver for the region’s
largest economy.
26

2009 is Going to be Painful for Many

Source: Cartoonbank.com

Scott L. Podvin: IMN‘s European Distressed Real Estate Conference,
6-7 April 2009: www.TheCrestLife.com

BALKANIZATION OF EUROPEAN FINANCE?
• Growth slows and region may
Recession is here.
fall into recession
• European CDS market
• Is it different this time or
is overrun by PIIGS –
How deep and how long?
is Asia in denial?
Portugal, Ireland, Italy,
Greece and Spain
• Warnings signs from Hong
Kong & Vietnam, slower
growth showing in Australia
and Japan, although China
and India forge ahead

• IMF bails out Eastern Europe –
Romania, Bulgaria and Croatia --
• FDIC had $18.8Bn in depo ins fund at
and Ukraine, Latvia, Hungary &
end of 4 th qtr to protect about $4.8T of
Serbia
ins deposits
• Economic risks spike for Germany,
• 14 banks have failed this yr, bringing
Spain, UK, Ireland & certain
total to 35 since Jly
―emerging‖ states
• At end of 4th qtr, 252 banks and thrifts
• Spain‘s Unemployment reaches
on govt‘s problem list (534 banks
Sovereign
15%
failed in 1989)
Defaults: about ¼
• Banks are charging fees of 2.5 to 3.5%• Spain‘s economic miracle is a
if S&Ps rated
mirage‖ : 1mm unsold new homes.
on ave for a solid issuer n the current
sovereigns are on
market. • RBS reports £24.1bn loss for 2008--
negative outlook –
largest in British corporate history –
• Unemployment ____________
the highest
after suffering heavy losses from
hostile takeover of ABN AMRO, the
• Banks are syndicating more risk proportion ever
Dutch lender
(laying off 50 to 75%)
Scott L. Podvin: European Distressed Real Estate Conference 6-7 April 09
28

CRISIS STARTS IN U.S. BUT TURNS
INTO CATASTROPHE IN & AROUND
EUROPE
Russian Public and private institutions need to
refinance $117.1Bn in bank loans and bonds
this year

• Ireland bails out two
largest lenders, Allied
Irish Banks and Bank of
• Regulators will continue to
Ireland, after it
require that banks maintain
nationalized Anglo Irish
a min. 6% Tier 1 capital • China‘s Export‘s
Bank, the 3rd largest bank.
ratio, 3% of which should Plunge 17.5%,
come from common stock. • Belgium‘s Fortis gets but remains
nationalized and sold to resilient, as
• Emergency Economic
BNP Paribas of France trade surplus
Stabilization Act of 2008
hovers at
• Britain in deep recession
• One in 4 banks not $39.1Bn
and could shrink by as
profitable in 2008, highest • Japan shows its
much as 4% in 1st ½ yr –
level in 25 yrs economy
pound sank as much as
contracted
• Dollar index rises 3% vs. the dollar
12.7% on a
• Poland‘s Zloty falls 14% seasonally
vs. euro adjusted
annualized basis
in the 4th Qtr
6-7 April 09 29

RECOVERY CHECKLIST:
● Bank guarantees –
In the works: Among EU initiatives

to combat the crisis are:
€2,500bn
● A recovery plan costing
● Aid for central and
€200bn ($263m, £188bn), of
eastern Europe – a
which €170bn stems from
€25bn facility, of which
national governments
€6.5bn is already being
● Spending by means of
disbursed to Hungary
―automatic stabilisers‖
(unemployment benefits and and €3.1bn to Latvia
other social security
● Support for the car
payments) worth about
industry – €7bn in loans
€200bn
expected from the
 Recapitalising banks –
European Investment
€300bn
Bank
6-7 April 09

UNITED KINGDOM
1. London is Europe‘s leading centre for
hedge fund managers, with three-
quarters of European hedge fund
investments, about $400bn (£200bn), at
the end of 2007.
2. Unemployment has soared to above 2m
for the first time since 1997.
3. London won market share from
continental exchanges and remained
the most successful market in Europe
for initial pubic offerings in 2008.
4. Britain is set to have the longest
recession of all the major economies.

6-7 April 09

UNITED KINGDOM
5. Britain will invest $73 Bn in its banks;
6. Britain decided that the Royal Bank of Scotland, Northern
Rock and Bradford & Bingley are, in effect, public
corporations because the gov‘t has sig. control over their
operations.
7.Ave. UK home is now £195,724, down more than £25,000 in
the last year, according to DCLG.
8. House prices down:
Ireland down 14.3%
England down 11.8%.
West Midlands down 14.1%
London down 13.9%.

6-7 April 09

OPPORTUNITY LIES
BENEATH THE SURFACE
RBS reports £24.1bn loss for 2008--
largest in British corporate history –
after suffering heavy losses from
hostile takeover of ABN AMRO, the
Dutch lender
Lloyds– including HBOS -- in worse
shape than RBS after purchasing
Halifax Bank of Scotland – UK govt‘s
stake NOW reaches 77%
6-7 April 09

Angela Merkel Backs Germany‘s Banks
GERMANY OPTS FOR LOAN GUARANTEES, NOT DIRECT STAKE IN BANKS

 In Berlin, German leaders unveiled a 480
billion package consisting mostly of loan
guarantees, but no stimulus plan
 Unlike the British blueprint, however, the
plan announced by Ms. Merkel does not call
for Berlin to acquire direct stakes in
German banks.
 Instead, the German approach offers
€400Bn in guarantees for inter-bank loans
and another €80Bn for direct injections of
capital to restore weakened balance sheets
and purchase the toxic, illiquid assets.
 Reichmuth & Co are shutting Madoff-hit
funds of hedge funds.

Scott L. Podvin: IMN‘s European Distressed Real Estate
Conference
6-7 April 09
In 2002 Germany introduced the single
European currency, the euro.

GERMANY UPS THE ANTE TOO
 The German gov‘t has done a lot with a
€50Bn stimulus for consumption, €115Bn
for stability to the real economy, and
€400Bn in stabilizing financial institutions.
 Many funds of hedge funds are already on
the block or are being shut down with
Deutsche Bank Closing its Topiary unit and
Spain‘s BBVA closing its Altitude JV.

6-7 April 09

VIVA LATO €360Bn FOR BAIL-
FRANCE
FRANCE AGREES
OUTS

 1MM French demonstrators
staged W. Europe‘s
biggest public protest
 French gov‘t creates fund
to guarantee debt for up
to 5yrs
 To obtain these funds,
Banks pledge collateral,
including debt currently
not accepted as collateral
by the ECB.
Scott L. Podvin: IMN‘s European Distressed Real Estate
Conference
6-7 April 09

SARKOZY VOTES AGAINST
ADDITIONAL STIMULUS
 In addition, a 2d French state-
sponsored company will
provide up to €40 Bn in direct
capital injections to banks
that request it, in exchange for
handing over equity stakes in
the debtor.
 No short term stimulus plan.
 The combined budget deficit
of the eurozone‘s four biggest
countries – Germany, France,
Italy and Spain – will hit 6.4%
of GDP in 2010, up from 5.8%
in 2009.

Scott L. Podvin: IMN‘s European Distressed
Real Estate Conference
6-7 April 09

EURO-FACTS
 The bailout packages are roughly similar in
economic impact:

percent of GDP in
1.3.3
Germany,
2.2.1 percent in France, and
3.2.9 percent in Britain,
according to Capital Economics in London

6-7 April 09

EURO-FACTS CONT-
 While Europe‘s biggest economies led the
way:
 Austria makes €100Bn available for
recapitalizations and loan guarantees;
 Spain insures up to €100Bn in bank
debt; &
 Netherlands threw €220Bn into the
mix.

6-7 April 09

BIG DEBT
 By 2012, the ratio of gross public debt to
gross domestic product could be:
117% in Italy;

97% in the US;

80% in France;

79% in Germany; &

75% in the UK.

224% in Japan


Scott L. Podvin: IMN‘s European
Distressed Real Estate Conference
6-7 April 09

ALL IN
 For Germany, France, the Netherlands and
Austria — countries whose combined
economies are just over half the size of the
United States‘ — state guarantees and
capital injections reach 1.3 trillion euros,
according to Holger Schmieding, chief
European economist for Bank of America in
London.

6-7 April 09

WHO HAS THE MOST DEBT
1. Ukraine- $40Bn in loans with $28.8Bn in
reserve
2. Hungary-$35Bn in loans with $31Bn in
reserve
3. Turkey— $100Bn in loans with $70Bn in
reserve
4. Asia—$775Bn in loans (highest external
debt to roll over)

6-7 April 09

NOT MUCH BETTER IN THE U.S.

6-7 April 09

Public Law 110-343/HR
1424
SON OF TARP IS BORNE
 Effective October 3, 2008, this
169-page law created a $700
billion dollar Troubled Assets
Relief Program under the
Emergency Economic
Stabilization Act of 2008
(division A), and also enacted
the Energy Improvement and
Extension Act of 2008
(division B), Tax Extenders
and Alternative Minimum Tax
Relief Act of 2008 (division C)

6-7 April 09

Expenditures and
Commitments
1. As of February 9, 2009, $388 billion had been
allotted, and $296 billion spent, according to the
Committee for a Responsible Federal Budget.
Among the money committed, includes:[26]
2. $250 billion to purchase bank equity shares
through the Capital Purchase Program ($195
billion spent);
3. $40 billion to purchase preferred shares of
American International Group (AIG, Fortune 500)
through the program for Systemically Significant
Failing Institutions ($40 billion spent);
4. $20 billion to back any losses that the Federal
Reserve Bank of New York might incur under the
Term Asset-Backed Securities Loan Facility (none
spent);

6-7 April 09

Expenditures and Commitments
Cont.
4. $40Bn in stock purchases
of Citigroup and Bank of
America ($20Bn each)
through the Targeted
Investment Program
($40Bn spent)
5. $12.5Bn in loan guarantees
for Citigroup ($5Bn) and
Bank of America ($7.5Bn)
through the Asset
Guarantee Program (none
spent);
6. $25Bn in loans to autos
and their financing
arms through the
Automotive Industry
Financing Program ($21
Scott L. Podvin: IMN‘s European Distressed Real
Estate Conference
billion spent)
6-7 April 09

TARP TIMELINE
On Nov. 12, 2008, Sec. of the Treasury Hank Paulson indicates
reviving the securitization market for consumer credit is a
new priority
On Dec. 19, 2008, President Bush, declares TARP funds may be
spent on any program he deems necessary; and requests
TARP funds to support the auto industry.
On Jan. 15, 2009, Treasury issues interim final rules for
reporting and record keeping.

6-7 April 09

TARP TIMELINE CONT-
 On 21/Jan/09, Treasury announced new
regulations regarding disclosure and
mitigation of conflicts of interest in
TARP contracting.
 On 5/Feb/09, U.S. Sen. approves changes
to TARP, prohibiting firms receiving TARP
funds from paying bonuses to their 25
highest-paid employees.
 On 10/feb/09, Sec. Treasury Timothy
Geithner outlined his plan to use $300Bn
of which $50 billion for foreclosure
mitigation and the rest to fund private
investors to buy toxic assets from banks.
Scott L. Podvin
IMN‘s European Distressed Real Estate Conference, 6-7 April 2009

BUY A TOASTER, GET A FREE BANK

Scott L. Podvin
IMN‘s European Distressed Real Estate Conference, 6-7 April 2009

NATIONALIZING THE BANKING SYSTEM

Total losses now exceed impact of RTC

Scott L. Podvin: IMN’s European Distressed Real Estate Conference
6-7 April 09

Lender’s Brace for Global Cooling
PRE-CREDIT CRISIS TODAY 2008

MAX LOAN TO VALUE/
70%-75% 60%
LOAN TO COST

MIN DEBT SERVICE COVERAGE
1.05x 1.20x
RATIO

Borrowers Pro forma NOI Current in-Place NOI
NOI UNDERWRITING

85-125 bps 250-350 bps
SPREADS

Sized using
Sized using Amortizing DSCR
LOAN PROCEEDS
I/O DSCR

3 Years I/O on
10 Years I/O
AMORTIZATION
10 Year Loan

Requires Structuring (holdbacks,
Minimal
LOAN REQUIREMENTS
earn outs, TI escrows)

SYNDICATION RISK (Large
Underwritten, Lead Bank Lender Best Efforts, Borrower
Loans)

Scott L. Podvin

NOW THAT I‘VE FOUND MY
PEARL, THE UNIVERSE IS MY
OYSTER

So, How Should I
Price Non-Core Real Estate:
 Identify components of asset-level
returns,
 Understand impact of financial
leverage,
 Examine effects of transaction
costs; and
 Examine effects of JV structures.

April 6-7, 2009

REAL
ESTATE
FUNDS –
THE
ANATOMY
OF THE
DEAL
Scott L. Podvin: IMN’s
European Distressed Real
Estate Conference
April 6-7, 2009
http://www.linkedin.com/in/sp0dv
in

What to Look for in a
REAL ESTATE FUND
 Experience
 Skills
 Contacts
 Practical problem solving
 Reputation
 Team
 Capacity
 $$ Balance Sheet $$

April 6-7, 2009

THE CHEMISTRY COUNTS
Alignment of Interests:
FUND & REAL ESTATE COMPANY
 Fund Objectives
 Fund Life
 Leverage and Financing
 Guarantees
 Management Style and Control
 Tax Considerations
 Dealing with Unexpected Issues

April 6-7, 2009

BUSINESS PLAN
 We will acquire, own & operate multi-family
residential properties.
We plan to own five (5) multi-family residential

properties.
We will acquire additional properties meeting

certain objectives described in our prospectus in
the section entitled ‗‗Investment Guidelines.‘‘
We plan to finance the acquisition of these add‘l

properties mostly through banks
No commitments from any lenders with respect to

a credit facility at this time.
April 6-7, 2009

 Scott L. Podvin, Managing Director of
The Crest at Waterford Lakes, LLC
www.TheCrestLife.com

spodvin@post.harvard.edu

Cell: (305) 793-5762

Fax: (305) 665-3971


European Distressed Real Estate Conf 20 March09

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