Swf Brochure Fall 2009


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The US commerical real estate segment has 2.4 trillion US in loans aboout to reset in a financial market with close to zero liqudity. Want to capitalize on it? Go to: http://www.southwestfund.net/

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Swf Brochure Fall 2009

  1. 1. Southwest Fund, L.P. We are debt event driven real estate investors of mainly high credit tenanted income-producing commercial assets located in major metropolitan cities of the United States. 4808 North 24th Street Suite 227 Phoenix, AZ Tel. +1 760 631 4939 Fax +1 760 631 6939 Mobile +1 760 672 0293 www.southwestfund.net THESE MATERIALS DO NO CONSTITUTE AN OFFER OF INTERESTS IN THE INVESTMENT PARTNERSHIPS, NOR A SOLICITATION OF AN OFFER OF SUCH INTERESTS.
  2. 2. Disclaimer This document contains proprietary information regarding Southwest Fund, L.P. Neither this document nor said proprietary information shall be distributed, published, reproduced, copied, disclosed, or used for any purpose other than the use for which it is intended and Southwest Fund, L.P. will be held harmless of the results of any misapplication of this document. This document is intended for the company’s business planning purposes with a view to communicating a business opportunity to partners and investors. This document contains information concerning Southwest Fund, L.P. that is material non-public information and should be treated as confidential. Receipt of this document constitutes the recipient’s acknowledgement that the recipient will maintain the information contained herein in strict confidence. Many of the conclusions contained in this document are the opinion of the Principals and key employees of Southwest Fund, L.P. and are primarily based on over 25 years of experience in the commercial real estate market and on hundreds of hours of direct and private communication with hundreds of industry relationships. Southwest Fund, L.P. has made every effort to ensure the accurate portrayal of those communications. Notwithstanding the above, no liability is accepted nor warranties given for such correctness or completeness nor any action taken as a direct or indirect result of reading this document. The velocity of change currently evident in the global economy and in the commercial real estate industry and the lack of clarity and direction from the world’s governments are unprecedented and could render the information contained herein moot. 2 | October 2009 Southwest Fund, L.P.
  3. 3. About Southwest Fund (the “Fund”) The Fund partnership invests in mainly high credit tenanted income-producing commercial properties where the current owner (not the property) is in distress. Investments consist of retail, office, land, and industrial properties located in major metropolitan cities of the United States. The objective of the partnership is to maximize the total return on investors’ capital by seeking regular income distributions through operational cash flow, development, leasing, management fees and advisory fees. The Fund is debt-event driven and achieves these objectives mainly through acquiring performing properties where present ownership is overextended and face liquidity issues as a result of unattainable debt financing or refinancing requirements. The Fund’s management team of local experts has a strong 25+ years track record in delivering high returns on real estate investments. The Fund’s investor pool is limited to accredited investors (high-net-worth and institutional investors) who benefit from attractive, risk adjusted returns with low volatility and a low correlation to other traditional asset classes by adding real estate to a mix of other equities and fixed-income investments. The Fund’s management team is committed to a completely transparent business model, and offer investor collaboration should it be desired. 3 | October 2009 Southwest Fund, L.P.
  4. 4. Target Markets 4 | October 2009 Southwest Fund, L.P.
  5. 5. Fund Overview Distressed & Undervalued Real Estate Investment Partnership Maximum Offering Size: US$ 750,000,000 Minimum Investment: US$ 10,000,000 Anticipated Fund Life Cycle: 5 years + two possible 1 year extensions Preference: 6.5% annually Potential Liquidity Events: Quarterly Cash Flow Distributions Net Return Goal: 17% Management Fee: 1.25% annually Performance Fee: 18% Leverage: Maximum 65% 5 | October 2009 Southwest Fund, L.P.
  6. 6. Third-Party Service Providers In process of interviewing Independent Fund Administrator and Clearing/Transfer Agent CPA / Audit & Tax Legal Counsel Debt Financing (Primary) 6 | October 2009 Southwest Fund, L.P.
  7. 7. Safeguard of Capital & Commitment to Transparency Southwest Fund Investors (1) Investors U.S. Southwest Fund, LLC (Managers) Independent Fund Administrator (2) (3) Custodial Account (US Bank Trust Department) OUTFLOW INFLOW Real Estate Title Company (4) Southwest Fund, L.P. ($500 mm) (A Delaware State based LP) LLC Holdings A (5) LLC Holdings B (5) LLC Holdings C (5) Property A, LLC Property D, LLC Property G, LLC Property B, LLC Property E, LLC Property H, LLC Property C, LLC Property F, LLC Property I, LLC (1) Southwest Fund, L.P. managers will invest in the Fund with Investors. An industry renowned third-party independent fund administrator will oversee the Investor funds transfer to the Custodial Bank (i.e. US Bank). Fund administrator will oversee the management, (2) purchase and disposition of every property to ensure proper accounting of invested funds. Investor funds will only be released from Custodial Bank as per the Custodial Agreement between the Investor, US Bank, and Southwest Fund, L.P. While funds are being held in the Custodial (3) Account awaiting deployment, direct investments in U.S. guaranteed investments (i.e. U.S. Treasuries) will be made. Once a transfer is approved to purchase a specific property, the Investor funds will be wired to a title company as per the Custodial Agreement in exchange for direct ownership interest in a pre- (4) approved real estate investment which will be owned and titled in the name of Southwest Fund, L.P. (5) Single member limited liability companies owned by Southwest Fund, L.P. shall be formed to create liability diversification and prevent cross collateralization of the fund’s portfolio of assets. 7 | October 2009 Southwest Fund, L.P.
  8. 8. The Perfect Storm Southwest Fund is Event Driven 1. Record job losses 2. National unemployment rate expected to exceed 10.0% 3. Volatile fuel and food prices 4. Low consumer confidence 5. Record inventories due to speculative building 6. Tighter underwriting standards creating slower inventory absorption 7. Falling home prices (PMI expects a 15-30% correction in late 2009 - 2010) 8 | October 2009 Southwest Fund, L.P.
  9. 9. Storm Moves Beyond Housing Southwest Fund is Event Driven 9 | October 2009 Southwest Fund, L.P.
  10. 10. Southwest Fund’s Competitive Edge Over 120 years of combined real estate experience with a 25+ year track We are local market experts record of investment Team is made up of professionals from all concentrations of the industry (construction, finance, brokerage, and property management) Fund principals have local knowledge of the target investment markets (Fund is not managed from long distance) Deal Specialists Leveraging its extensive local real estate expertise, the Fund is able to quickly understand, underwrite and obtain financing (if necessary) through our in-house team of experts on even the most complex deals. Past construction and management of several $100 million dollars in private wealth equity. We have proprietary access First look at potential transactions and access to proprietary information not immediately marketed to other companies to deal flow Vast Local Network The Fund has early knowledge of potential transactions through its vast network of local industry providers with which the Fund has long-term relationships, formed as a result of Fund principals’ solid track record of professionalism and ability to respond quickly to deal flow originators. 10 | October 2009 Southwest Fund, L.P.
  11. 11. Debt Event Driven Real Estate Bubble Burst Profit Driven To curb inflation, interest rates As the economy rebounds, rose in an overheated and properties will be redeveloped overvalued market, causing and/or repositioned, then sold at heavily leveraged owners to begin up to 500-700 basis points lower defaulting. Distressed Real Estate Historically High Land Values Healthy economy and historically Financing or refinancing is low interest rates spur hyper unattainable. Real estate is growth and heavily leveraged sold at lower prices as transactions are commonplace. distressed owners exit. Debt Event Driven Investment opportunities Property Valuation available due to market inefficiencies and illiquidity. Fund to purchase at favorable capitalization rates. Time 11 | October 2009 Southwest Fund, L.P.
  12. 12. Debt Event Driven Commercial real estate market typically lags the residential real estate market. Southwest Fund has identified and underwritten performing properties tenanted by solid credit tenants yielding 10-14% cash-on-cash returns due to debt driven events where current ownership is overextended and unable to refinance their properties. Home price decline 2008 - 2009 < 15 % 15-20% 20-25% 25-30% > 30 % 12 | October 2009 Southwest Fund, L.P.
  13. 13. Investment Methodology Debt event driven Replacement cost estimate used for valuation tools Manage risk (asset class diversification) Multiple layered due-diligence (in-house and outside resources) Vast local network of real estate and professional service advisors for strategic consulting Regional and local government relationships Utilization of financial modeling and underwriting software 13 | October 2009 Southwest Fund, L.P.
  14. 14. Marc Makebakken Chief Investment Officer 25 years experience in U.S. construction and real estate investments Constructed over 500 hundred commercial buildings and several million square feet Returned an average ROI of 192 percent versus an industry average of 118.4 percent. Returned an average IRR of 17 – 32 percent versus an industry average of 10.7 percent Offers a construction oriented approach to the real estate development process: a contractor’s logical approach, a developer’s creative deal-structuring ability combined with a portfolio manager’s discipline 14 | October 2009 Southwest Fund, L.P.
  15. 15. Chief Investment Officer Partial Track Record of Core Business Project Name Year(s) IRR Savon 2 20% Creekside Market Place 2 32% McDonald’s 1 22% Northern Retail Center 2 31% Mesa Town Center 2 32% Pinnacle Peak Plaza 1 30% Prescott Valley Town Center 2 35% Recker Plaza 2 30% Broadway Center 1 24% Jack in The Box 2 31% Woodland Plaza 1 27% Coors Plaza 3 19% Kmart Center 2 27% 99th & Thunderbird Road 1 29% 75th & McDowell 1 28% Lindsay & Warner (land sale) 1 16% 15 | October 2009 Southwest Fund, L.P.
  16. 16. Tor B. Langoy Managing Partner Founder of BD Globe Consulting B.V. an international consultancy firm which specializes in brokering deals in oil & gas, renewable energy and larger real estate assets (portfolios valued at 15-260 million Euros) Over 15 years of diverse international business focusing on strategic business development and sales for multinationals in U.S., Asia, Middle East and Europe Expert at green field projects, reorganization and management of sales focused organizations while working with executives at all levels Previously a management consultant for Innovation Norway, the commercial arm of the Norwegian Ministry of Trade and Commerce 16 | October 2009 Southwest Fund, L.P.
  17. 17. Key Team Members Tim Donmoyer – Chief Financial Officer and Chief Operating Officer Over 20 years experience in the financial services industry, including 14 years as Chief Financial Officer at major outdoor media companies Principal innovator and CFO of Equity Office Media Network, a startup subsidiary of Equity Office Properties (EOP – NYSE), the real estate investment trust founded by Sam Zell Negotiated and structured over US$ 1 billion in credit facilities with major U.S. banks and bank syndicates Reed Larson – Investment Analyst Over 35 years of experience in real estate development K-Mart’s Regional Director of Real Estate Associated Food Stores Director of Development Expertise in the development and leasing processes Caroline De Luca –VP Market and Development Analyst Managed both commercial and residential properties Commercial broker representing HSBC, Sovereign Bank and Capital One exclusively in New York City Residential & commercial development project management experience 17 | October 2009 Southwest Fund, L.P.
  18. 18. Key Team Members Paul Pietsch – VP Development and Construction 26-year construction and real estate industry veteran Constructed millions of square feet of all property types, valued in excess of US$ 100 million Deep understanding of the entire development process Highly proficient at completing projects on time and within budget Bruce Stirling – Debt Provider and Servicing Specialist Owns and manages San Diego office of Pathfinder Mortgage Corporation Currently servicing over US$ 500 million of income-producing commercial real estate Direct correspondent to life insurance companies Career representing high net worth institutional entities and private individuals 18 | October 2009 Southwest Fund, L.P.
  19. 19. Lead Advisory Board Member Corporate Governance & Government Liaisons Dr. Mark J. Riedy Founder and Executive Director of the Burnham-Moores Center for Real Estate at the University of San Diego Chairman of the Board of Neighborhood Bancorp Former Executive Vice President and COO of Mortgage Bankers Association of America Former VP and Chief Economist of the Federal Home Loan Bank of San Francisco Served as Senior Staff Economist for the President’s Council of Economic Advisors Former President and COO of J.E. Robert Companies (leading U.S. real estate workout firm) Former board member and former Chairman of the Audit Committee of BioMed Realty Trust (REIT – NYSE) Former board member, Chairman of the Audit Committee, and member of the Compensation and Corporate Governance Committees of Pan Pacific Retail Properties (PNP – NYSE) Former chairman of the Audit Committee of American Mortgage Network (NASDAQ) Former board member of various private banks and for St. Vincent de Paul Village, a not for-profit organization sheltering San Diego’s homeless Listed in Who’s Who in America since 1982 Listed in Who’s Who in the World since 2005 19 | October 2009 Southwest Fund, L.P.
  20. 20. Board Members Corporate Governance & Government Liaisons Larry Sheffield Founder and Chairman Goldwater Bank (one of the fastest growing private banks in Southwest U.S.) Entrepreneur and real estate investor Former New Mexico State Representative Member of President’s White House Conference on Small Business U.S. Secretary of Defense Joint Civilian Orientation Conference Aaron Smith President and designated Principal of Superfund Asset Management, Inc. Developed distribution and marketing for Superfund throughout Europe, the Middle East & Africa Member of Managed Funds Association Commodity Trading Advisory Committee Holds Series 3, 7, 24, 31 & 66 licenses Former financial advisor at Morgan Stanley Private Client Group 20 | October 2009 Southwest Fund, L.P.
  21. 21. Investors Communications www.SouthwestFund.net 21 | October 2009 Southwest Fund, L.P.
  22. 22. Event Driven Press Releases Investors and developers expect capitalization rates to rise and risk to be repriced, with the harshest effects being felt by those who have relied on debt strategies. Emerging Trends in Real Estate 2008 Report, Urban Land Institute “Depending on what happens with the U.S. economy as a whole, it could be painful for some, but overall, a correction could be good for the industry keeping supply and demand in balance, curbing overdevelopment and flushing out low-quality investors.” - Tim Conlon, Partner PricewaterhouseCoopers “Financial shocks or disruptions are a fact of life, and our [U.S.] markets seem to experience them every 6 – 8 years.” - Henry Paulson, U.S. Treasury Secretary 22 | October 2009 Southwest Fund, L.P.