HomeMy WebLinkAbout2010 08 09 Consent 203 Rebalance Pension Fund COMMISSION AGENDA
CONSENT X
INFORMATIONAL
ITEM 203
PUBLIC HEARING
REGULAR
August 9, 2010 MGR /DEPT 63
Meeting Authorization
REQUEST: The City Manager and Finance Department requests that the City Commission
consider a rebalancing of the pension fund to increase the Real Estate investments
from 5% to 10% of the total City of Winter Springs Retirement System Fund and
approve the addition of Intercontinental Real Estate Corporation as a new fund
manager.
SYSNOPSIS:
The Bogdahn Group has recommended and the Board of Trustees has unanimously voted to bring before the
Commission a proposal to rebalance the pension funds and add a second real estate manager. On July 28` the
Board of Trustees voted to increase the level of funding in real estate from $595,761 (3.1 %) i to $1,995,761
(10 %). The additional $1.4 million would be managed by Intercontinental Real Estate Corporation.
CONSIDERATIONS:
In March of 2010, The Bogdahn Group made a recommendation to start transitioning monies out of the Bond
market, due to the threat of rising interest rates (there is an inverse relationship between bond yields and
interest rates). This recommendation further stated that the real estate sector was a prime target for these
monies. The theory behind the transition is that real estate is selling at historic lows and is generating
historically high levels of income as more consumers are compelled to rent. Furthermore, the under lying
assets, that generate income in the form of rent, are undervalued and selling at a discount. The Board of
Trustees believes that real estate represents an opportunity to generate current high levels of fixed income and
long term capital appreciation.
The Board of Trustees agreed with the Bogdahn rebalancing recommendation and proceeded to interview
three Real Estate fund managers: Intercontinental Real Estate Corporation, American Realty Advisors and
Cornerstone Patriot Fund. Intercontinental Real Estate Corporation emerged the best fit for the Winter
Springs Pension Fund primarily due to their high- income track record and superior long -term gain potential.
1) Bogdahn March 31, 2010 quarterly investment report
If the Commission approves this rebalancing, the following chart will reflect the new distribution of funds.
Value as of Current Rebalancin
3/31/2010 Target g $ Change Policy
Domestic Large Cap Value Equity $ 4,968,701.00 25.0% 25.0% 20 % -30%
Domestic Broad Cap Growth Equity 4,887,399 25.0% 25.0% 20 % -30%
Foreign Equity 2,910,875 15.0% 15.0% 10 % -20%
Broad Market Fixed income 4,865,111 25.0% 20.0% - $1,400,000 20 % -30% _
TIPS 916,171 5.0% 5.0% 0 % -10% _
Real Estate 595,761 5.0% 10.0 %* +$1,400,00 0 % -10%
Other 129,024 0.0% 0.0% 0 % -10%
Total $19,273,042 100.0% 100.0% 100%
*10% is within the current allowable allocation for real estate
Facts about Intercontinental Real Estate Corporation:
1) Established in 1959 with a primary focus on general contracting and engineering
2) 1990 - Present -, Intercontinental's core business is private equity real estate investment management
and advisory services
3) SEC Registered Advisor
4) Qualified Professional Asset Manager (QPAM)
5) $2.1 billion in assets under management
FISCAL IMPACT:
The target return for this rebalancing ($1.4 Million) is 10% annually; 6 % -8% cash yield and 2% asset
appreciation. Intercontinental Real Estate Corporation charges 1.10% or approximately $15,000 a year in fees
for this size investment.
COMMUNICATION EFFORTS:
The Board of Trustees will be notified via email that the Commission has approved the rebalancing. City
Manager and Finance Director will work with The Bogdahn Group to write and execute the investment
contract between Winter Springs and Intercontinental Real Estate Corporation. Once the contract has been
signed the Finance Director will direct 5/3` Bank to release funds for investing.
RECOMMENDATION:
City Manager and Board of Trustees recommend the Commission approve the addition of Intercontinental
Real Estate Corporation as a Real Estate Fund Manager and transfer $1,400,000 from the Galliard Core
Fixed Income Fund to the Intercontinental Real Estate Corporation to invest on behalf of the City of
Winter Springs General Employees' Retirement System. Additionally, to allow the City Manager and City
Attorney to coordinate and execute any and all documents needed to facilitate these transactions.
ATTACHMENTS:
U.S. Real Estate Investment Fund, LLC brochure
Firm Overview
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
The Firm's History
1960s
Established in 1959 with a primary focus on general contracting and engineering
Founder Petros A. Palandjian undertook large -scale public -bid construction projects
that ranged from road construction, airports and hotels to churches, libraries and
elderly and college housing projects.
1970s
Evolved from a large -scale construction company to a regional real estate
development firm with the competitive advantage of superior in -house construction
capability. In this era, Intercontinental solidified its position as one of the region's
premier construction companies, while embarking on an investment program that
focused on complex development and value -added real estate opportunities.
1980s
Vertically integrated into asset management, construction management, property
management, finance, brokerage and consulting services. On its foundation of
construction and development expertise, Intercontinental undertook projects for its
own portfolio and for third party investors. Applied value -added skills to a diverse
range of property types; office, residential, hotel and resort, industrial,
leisure /entertainment, retail and mixed -use properties.
1990s- Present
Intercontinental's core business is private equity real estate investment management
and advisory services.
• SEC Registered Investment Adviser
• Developed, built, managed and owned more than $6 billion of commercial
real estate
• Offices in Boston, Chicago and Los Angeles
• Qualified Professional Asset Manager (QPAM)
• 100% Union Execution
• $2.1 Billion in Assets Under Management
1270 Soldiers Field Road - Boston - Massachusetts - 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
Executive Conm
Peter Palandjian
Chairman & CEO
Investment Committee Member
Peter Palandjian oversees Intercontinental's affiliated operating companies,
with primary responsibility for Investment Strategy and Institutional
Relationships.
'\Ir. Palandjian earned his B. A. from Harvard College and his i\IBA from the
Harvard Business School.
Pau1J. Nasser
Chief Financial Oflrcer & Chief Operating Officer
Investment Committee Member
Paul j Nasser manages the firms resources across investment and operating
disciplines. As CFO and COO, he oversees Accounting, Finance, Investor
Relations, Performance Reporting, Marketing, Human Resources and
Administration.
1r. Nasser received his B.A. in Urban Planning from the University of
Rhode Island and his i\1B A, from Suffolk University.
Thomas Taranto
Director of Acquisitions, Asset and Portfolio Management
Investment Committee Member
Tom Taranto manages and directs all aspects of Intercontinental's acquisitions,
asset and portfolio management business. He also directs Intercontinental's
disposition program and oversees the property management division.
1r. Taranto received his B.S. in Business Management from Bentley College.
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
Key Professionals
Devin Sullivan
Director, Institutional Services
Devin is responsible for developing and
servicing Intercontinental's client and
consultant relationships with a primary
focus on the Public Fund sector.
B.A. in Government from Hamilton
College.
Joanna Keller
Assistant Director Institutional Services
Joanna is responsible for developing and
servicing Intercontinental's client and
consultant relationships with aprimary
focus on the West Coast
B.A. in Communication from New York
University.
Judy Chien
Fund Controller
Judy Chien is the Controller for
Intercontinental's U.S. Real Estate
Investment Fund, LLC. She produces
financial statements for fund reporting
oversees external audit services, and
implements and maintains proper
internal controls.
BB A in Accounting from University of
Georgia.
Thomas N litchell
Senior Officer Institutional Services
Thomas Mitchell is responsible for
consultant relations and client service and
is Intercontinental's main contact for the
investment consultant community.
B.A. in Communication from Purdue
University.
Series 7 and 66 securities licenses with
FINRA.
David Carella
Director of Finance
Dave Carellais responsible for producing
financial statements for fund reporting
computing real estate investment fund
returns, maintaining development budgets,
preparing year -end work papers for third
party audits and tax returns.
B.S. in Accounting from Bridgewater State
College.
Christopher Boehm
Director of Researcb C.,' Chi f Co )Vliance Officer
Christopher responsible for financial
analysis, research and due diligence and
Intercontinental's compliance with the
Investment Advisers Act of 1940 and all
related SEC regulations.
B.A. from Northwestern University and an
MBA in Real Estate and Entrepreneurship
from Indiana University.
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
Funds Sununary
1996
■ Enhanced Core
investment strategy
■ Closed -end
commingled fund
■ 28 Investors
■ Total Equity: $10
million
■ Total
Capitalization:
$50 million
■ Union Labor
■ Five (5) portfolio
investments
1998
■ Value —Added
investment
strategy
■ Closed -end
commingled fund
■ 28 Investors
■ Total Equity: $80
million
■ $10 million side -
by- side investment
■ Total
Capitalization:
$250 million
■ Union Labor
■ Five (5) portfolio
investments
2000
■ Enhanced Core
investment strategy
■ Closed -end
commingled fund
■ 74 Investors
■ Structure: Real
Estate Operating
Company (REOC)
investment in full
compliance with
ERIS A,
■ Total equity: $348.1
million
■ Total capitalization:
$1.0 billion
■ Union labor
■ Twenty -seven (27)
portfolio
investments
■ Comprised of 65
total assets
■ Ten (10) year term
■ Value —Added
investment strategy
■ Closed -end
commingled fund
■ 39 Investors
■ Total equity:
—$200 million
■ $500 + /- million in
total capitalization
■ New England
mandate
• Union labor
■ Six (6) portfolio
investments to date
■ Seven (7) year term
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
2002
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
5
Institutional Clients martiai uSt>
ALN- Lithographic Industry (NY) ■
City of Anrn Arbor Employees' (NT ■
Barnstable Comity Ret. Sys. (MA) ■
Beltia Corporation (C.R) ■
Boston Plasterers & Cement iMasonns Local •
#534 (MA)
City of Boynton Beach Firefighters (FL)
Bricklayer & Trowel Trades hnfl (DC)
Brockton Contributory (MA)
BCIP Associates II (MA) ■
Carpenters of Illinois (IL)
Catholic Foreignn Mission Society (NY)
Chicago District Comnsel of Laborers (IL)
Construction Industry Laborers (KS) •
Deerfield Beach Fire (FL) ■
City of Detroit Police & Fire (NH) ■
Essex Regional Ret. Sys. (MA) •
City of Flint Employees (MI) ■
Flint Phunbinng & Piping Industry (NT •
City of Fort Worth Employees (IN ■
City of Garden City Employees M ■
Hanpshire County Ret. Sys. (NIA) •
Haverhill Ret. Sys. (MA) ■
City of Hialeah Police Officers (FL) ■
Hollywood Firefighters (FL)
City of Holyoke Contributory (MA)
Hospital and Healthcare Employees (PA)
Howard University (DC)
IBEW Local #25 (NY)
IBEW Local #99 (RI)
IBEW Local #103 (MA)
IFEBP (WI)
8 District Electrical (CO)
Indian River State College (FL)
hater -Local GCIU (OH)
Iron Workers' Mid - America (IL) ■
Iron Workers of New England (yL-�) •
Iron Workers St. Loins District Counsel (MO) ■
1. U.0.E. Eastern Pennsylvania and Delaware ■
Laborers Local #1289 (NY) ■
Lowell Ret. Sys. (MA) ■
1\lacomb Comity Employees (1 11) ■
Mass. Bay Transportation Authority (MA) ■
Massachusetts Laborers (MA) ■
The 1\ leijer Foundation M •
11\Iiddlesex Ret. Sys. (NLA) ■
IVEnneapolis Retail Meat Cutters & Food •
Handlers (NIN) ■
Miramar Police Officers (FL)
Town of Natick Contributory (MA)
National Elevator Industry (PA)
NECA -IBEW (IL)
New England Carpenters (MA)
City of New Haven Police & Fire (CT)
New Jersey Carpenters (Nn
New Orleans Firefighters (LA)
New York Carpenters (NY)
Norfolk County Ret. Sys. (NL,)
Northern New England Benefit Trust (NH)
Oakland Comity Ennyloyees (CA) .
Onnalna Construction Industry (NE) •
Oregon Sheet Metal Workers (OR) •
Outstate Nfnchigan Trowel Trades (NT •
Painters Local #35 (VIA) •
Pipefntters Local #537 (MA) •
Phunbens Local #12 (NIA) •
Phunbers & Pipefitters Local #138 (NY) •
Plymouth County Ret. Sys. (NIA) •
Plymouth Contributory Ret. Sys. (NL,) •
PRIT Core Realty Holdings (kM) •
Public School Teachers of Qnicago (IL)
Roofers mud Waterproofers Local #33 (UA)
San Antonio Police & Fire ("fX)
Sheet Metal Workers Local #17 (MA)
So. Nev. Ciilinnary Workers & Bartenders (NV)
Sovereign Bancorp (MA)
St. Lucie County Fire (FL)
St. Lucie County General (FL)
City of Sterling Heights Police & Fire (MI)
City of Tal ntou Contributory (NIA)
City of Taylor Police & Fire (NII)
TDT Capital, Inc (MA)
Chicago Area LB of T. (IL)
N.E. Teamsters & Trucking Industry (MA)
Teansters Local #237 (NY)
Teamsters Local #653 (MA)
Teansters Local #705 (IL)
Teansters Local #710 (IL)
Teansters Local #805 (NY)
Transit Emloyees (DC)
United Brotherhood of Carpenters (DC)
Utility Board of the City of Key West (FL)
Wachovia Investors, hnc. (CA)
Walthan Contributory Ret. Brd. (MA)
Waterford Township Police & Fire (NII)
Watertown Ret. Sys. (MA)
West Virginia Laborers (VV\V
West Pahn Beach Police (FL)
City of Westland Police & Fire (N
Weymouth Ret. Brd. (MA)
Wichita Falls Firemen (fX)
Wob,Lmi Ret. Sys. (MA)
City of Westland Police & Fire (1VIl)
City of Worcester Ret. Sys. (NL,)
Worcester Regional Contributory (MA)
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
6
Advisory Board
■ William W. Bain, Jr. is the founder of Bain & Company, a world -wide consulting
firm; the extraordinarily successful Bain Capital, a venture capital firm; and Bain,
Willard Companies, a private equity firm.
■ Warren A. Henderson is the founder and CEO of Mosaic, a global equity
investment advisory firm. Mr. Henderson is a former principal and head of Public
Fund Services at State Street Global Advisors.
■ Thomas R O'Neill, III is the Chairman of O'Neill & Associates, a large
government relations and public affairs firm. Mr. O'Neill is the former Lieutenant
Governor of Massachusetts and a member of the Board of Trustees of Boston
College.
■ Ira Stepanian is the former chairman and chief executive officer of Bank of
Boston Corporation and its principal subsidiary, the First National Bank of Boston,
as well as a member of the Board of Trustees of Tufts University, The Museum of
Science and The Massachusetts General Hospital.
■ Joseph Nolan is a Senior Vice President for NSTAR Mr. Nolan serves on the
boards of directors of the New England Council and the Massachusetts State
Archives Commission. He also serves on the board of overseers at Children's
Hospital and is also active in the communications and government relations
committees of the Edison Electric Institute and the American Gas Association.
Peter Aylward is the founder of Strategic Property Advisers, Inc., an independent,
registered investment advisory firm that provides real estate asset management
services and financial investment advisory services to institutional clients (including
16 Taft - Hartley and Union related plans).
Paul Donahue is a Senior Vice President for CB Richard Ellis, leading the
Multifamily Capital Markets team in Boston. Including his prior roles as managing
director at Holiday Fenoglio Fowler and The Berkshire Group, Mr. Donahue has
over 20 years of experience selling financing and buying multifamily properties in
every major market throughout the country.
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
U.S. Real Estate Investment Fund, LLC
(US REIF)
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
US REIF: Fund Summary
Structure:
• Delaware, limited liability company
■ Open -ended commingled investment vehicle
■ Multi- disciplinary investment strategy targeting an average annual
Strategy:
cash yield of 6 -8% and a total return of 10%
■ Foundation of "yield driven" property assets
■ Portfolio will be diversified geographically
■ North America — all major U.S. markets
■ All property types (office, multi - family, industrial, retail, etc.)
Key Criteria:
- Liquidity — redemption available on a quarterly basis
■ Portfolio leverage target of 50%
■ 25% of Fund's assets appraised each quarter (independent appraisal
by PWC)
■ Debt is marked to market (Derivative Advisors, LLC)
■ No lock -out period
Current Status:
- $595.7 million in capital commitments
■ 54 Institutional Investors
■ Investment by IREC employees
■ 28 Acquisitions to date
■ $66.8 million in undrawn commitments
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
US REIF: Debt Summary
Top US REIF Lenders
• Dells Fargo U. S Bang
• Bang ofAmenca • Sovereign Bank
• TD Bank • Cititiens Bank
• Capital One • HSBC
■ 99% of all debt in U.S. REIF is fixed rate
■ Leverage as of 6/30/10: 68.0%
Debt Maturity Schedule
Year Total % Maturing
2010 2.36 %(
2011 24.84 %(
2012 21.26 %(
(1) 100% of which has extension options.
(2) 62% of which has extension options.
Weighted Average Cost of Debt 5.8%
Weighted Average Cost of Fixcd -Rate Debt 5.8%
Weighted Average Cost of Floating -Rate Debt 3.7%
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
10
US REIF: Portfolio Research
Lease Expiration Schedule
Year Total % Expiring (so
2010 8.7 0 /o( 1 )
2011 15.3%
2012 14.4%
(1) Represents remaining calendar year
Note: Multi family, Assisted Long, Hotel, and Operating Center assets
are not included in the above figures
Weighted Average Portfolio Occupancy
Property
ype
Office
Retail
Industrial
Multi - Family
% Occupied
84.0%
90.5%
90.9%
89.3%
Senior Living 85.0%
Total
86.9%
Note: The abovepercentages are weighted by market zalue.
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
11
US REIF: Investment Process
INTERCONTINENTAL DYNAMIC INVESTMENT PROCESS
maximize ($)
value
og Harvest Asset
Do Optimize Performance
Acquire Asset
o6 Investment Committee Approval
os Create Detailed Investment Memo
04 Negotiate Purchase
c3 Perform Due Diligence
02 Review Fit with Investment Strategy
of Identify Opportunity
process
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
12
US REIF Fund Performance
US REIF Levered US REIF Un- Levered NCREIF ODCE
Income 7.68% 6.88% 6.58%
Appreciation - 12.09% -5.24% - 23.33%
Total -5.18% 1.37% - 18.01%
US REIF Levered US REIF Un- Levered NCREIF ODCE
Income 1.55% 1.55% 1.70%
Appreciation 0.26% 0.85% -0.95%
Total 1.81% 2.40% 0.75%
US REIF Levered US REIF Un- Levered NCREIF ODCE
Income 1.33% 1.51% 1.61%
Appreciation - 14.17% -5.51% -5.07%
Total - 12.84% -4.00% -3.48%
3
US REIF Levered US REIF Un- Levered NCREIF ODCE
Income 1.97% 1.73% 1.58%
Appreciation 0.62% -0.16% -8.86%
Total 2.59% 1.57% -7.32%
US REIF Levered US REIF Un- Levered NCREIF ODCE
Income 2.63% 1.93% 1.53%
Appreciation 1.54% -0.41% - 10.53%
Total 4.17% 1.52% -9.03%
US REIF returizr are lever gedgrarr off Thr
-d-td that invert t of the type de Iry
-11_ the an & taZ>ratz lefall°„ -v� th f arrr. � - ac ror,.r
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
13
US REIF: Portfolio Diversification
Market Value by Property Type
Housing
2%
Market Value by Region
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
Silicon Valley Industrial_
Portfolio l
Silicon Valley, CA,
�1
GON IDAHO
b'
325 North Old Woodward
BimmngJtatti, MI
Riverview at Upper Landing Oak Pazk City
St. Paul, MN Oak Park IL Central Plaza
Cambridge, MA
International Pill age
Bloomington, MN One Lane Centre
Park Place
WYOMING Palatine, IL
t Cordia Senior Residence
-- Westmont, IL
Lake Forest Village
Lake Forest, CA '«
Louis Joliet Pointe
J O�RAID Joliet, IL
Golden Town Center
Golden CO
I Parkway Shopping Center
I� Bloomington, IL
Santa Barbara Portfolio NEWMEXICO
Santa Barbara, CA
■ Tucson Tech & Industrial
Parker Ranch Center Tucson, AZ
Waimea, HI
Northbrook, IL Locke Drive Tech Center
Marlborough, MA
East Village Place
E. L.ongtteadow, MA
Westport Plaza
St. Louis, MO
Northpoint Centre
Aus* TX
Blue Bell Place
Blue Bell, PA
Rose Tree Place
Media, PA
NESS..
ALABAMA
Lakeside Commons
Atlanta, GA
Somerset Court '
Waltham, MA
Marine Lumber
Nantucket, MA
400 Capital
Boulevard
Rocky Hill, CT
k Rockland Place
Wilmington, DE
Virginia Crosst
& Conference Center
Glen Allen, VA
4700 Falls
Rzlei� NC
Capitol Center
Columbia, SC
Independence Corporate Park
Greenville, SC
INTERCONTINENTAL
RE Al. ]IS FATE CORPORATION
US REIF: Portfoli Highlights
0
Park Place, Palatine, IL 400 Capital Boulezavrd, Rock Hill, CT
Golden To" Center, Golden, CO
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
16
Type: Retail
Size: 230,000 sf
Closed: January 30, 2007
Purchase Price: $24,000,000
Type: Class A Office
Size: 103,124 sf
Closed: April 2, 2007
Purchase Price: $15,450,000
Type: Retail
Size: 237,734 sf
Closed: June 21, 2007
Purchase Price: $32,600,000
Type: Retail
Size: 117,882 sf
Closed: June 28, 2007
Purchase Price: $19,450,000
US REIF: Portfolio Ffighhghts
One Tane Center, Northbrook, TL 281 Somevrset Court, Ilaltham, MA
Pavkwj Shopping Center, Bloomington, TL
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
17
Type: Office
Size: 80,811 sf
Closed: August 15, 2007
Purchase Price: $15,000,000
Type: Office
Size: 67,743 sf
Closed: August 16, 2007
Purchase Price: $13,575,000
Type: Office
Size: 173,831 sf
Closed: September 13, 2007
Purchase Price: $33,000,000
Type: Retail
Size: 213,060 sf
Closed: September 13, 2007
Purchase Price: $24,000,000
US REIF: Portfoli Highlights
Parker Ranch Center, Tlaimea, HI
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
18
Type: Office / Retail
Size: 698,698 sf
Closed: November 6, 2007
Purchase Price: $86,000,000
Type: Office / Retail
Size: 102,533 sf
Closed: December 19, 2007
Purchase Price: $38,160,000
Type: Office
Size: 151,126 sf
Closed: January 8, 2008
Purchase Price: $31,700,000
Type: Retail
Size: 146,719 sf
Closed: December 20, 2007
Purchase Price: $47,500,000
US REIF: Portfolio Highlights
Locke Dive Tech Center; Mavlbovough, MA T- akesi& Commons, Manta , GA
Uivginia Crossings Hotel &
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
19
Type: Office
Size: 514,730 sf
Closed: February 21, 2008
Purchase Price: $103,000,000
Type: Office /Flex
Size: 295,700 sf
Closed: February 1, 2008
Purchase Price: $29,100,000
Type: Apartments
Size: 353 Units
Closed: August 7, 2008
Purchase Price: $30,750,000
Type: Hotel
Size: 183 rooms
Closed: May 6, 2008
Purchase Price: $2000,000
US REIF: Portfoli Highlights
I �
Manne Lumber Company, Nantucket, AL4
Lake Forrest Village , Lemke Forest, CA
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
Bay North SeniorTinlig Portfolio,
Closed: IL: Alay 19, 2008; DE, MA, PA: August 26, 2008
Purchase Price: $114,500,000
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
20
Type: Office
Size: 460,000 sf
Closed: September 5, 2008
Purchase Price: $54,500,000
Type: Diversified Retail
Closed: August 22, 2008
Purchase Price: $43,000,000
Type: Senior Living
Size: 500 units
Type: Retail
Size: 119,549 sf
Closed: October 20, 2008
Purchase Price: $38,600,000
US REIF: Portfolio Ffighhghts
Ce ntral P .Za , Cambridge, M A Tucson Technolp u- Industual Por#oliq
A�
m4i I I A
Type: Office
Size: 166,458 sf
Closed: October 30, 2008
Purchase Price: $31,000,000
Silicon Valley Industrial PTIfoliq
Independence Corporate Park, Gvreenzilk, SC
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
21
Type: Industrial
Size: 796,329 sf
Closed: November 19, 2008
Purchase Price: $ 67,888,000
Type: Industrial
Size: 606,027 sf
Closed: November 10, 2008
Purchase Price: $48,000,000
Type: Office
Size: 296,246 sf
Closed: January 22, 2009
Purchase Price: $ 35,000,000
US REIF: Portfo Highlights
Kivertien) at Up ev Lending,
St. Paul, MN
Oak Park City Apartments,
Oak Park. IL
P ,
F;t
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
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22
Size: 344 units
Closed: March 18, 2009
Purchase Price: $43,500,000
Type: Apartments
Size: 125 units
Closed: December 17, 2009
Purchase Price: $20,000,000
US REIF: Santa Barbara Portfolio
PrQVerjy Data
Projected Returns
Type: Apartments
5 Year Avg Leverage Cash Return: 6.9%
Size: 151 units
10 Year Avg Leverage Cash Return: 8.1%
Closed: :lay 17, 2010
IRR 10.4%
Purchase Price: $42,500,000
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
23
US REIF: Santa Barbara Portfolio
Type: Apartments — Student Housing
Size: 55 units
Closed: May 17, 2010
Purchase Price: $15,025,000
Type: Apartments — Student Housing
Size: 96 units
Closed: Alay 17, 2010
Purchase Price: $27,475,000
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
24
Coronado Apartments
Breakpointe Apartments
Professional Services &Fees
■ Legal Counsel
• Mayer, Brown, Rowe & N1aw LLP (Chicago)
• Wilmer Cutler Pickering Hale and Dorf, LLP (Boston, Washington D.C)
• Bradley & Associates (Boston)
■ Valuation Manager
• PricewaterhouseCoopers
• All Fund Investments appraised every 12 months
• Twenty -five percent of Fund's investments appraised each quarter
• All new investments will be valued at cost plus capital expenditures prior to
joining the valuation cycle
■ Fee Structure
• Management Fee
• 1.10% on investments up to $25 million
• 1.00% on investments from $25 million up to $50 million
• 0.85% in investments from $50 million up to $100 million
• 0.75% on investments of $100 million and above
• Annual management fee is paid on drawn capital only
• Performance Fee
• Members will receive a preferred return of 8% per annum, thereafter, 80% to the
member and 20% to the manager
• Performance fee shall be calculated and adjusted on an annual basis, subject to a
reserve /clawback
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
25
Appendix
"Why Real Estate Now ?"
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
26
Investing Opportunities Increasing
with Distress
• Increasing distress creating ■ REO and distressed
increasing opportunities properties likely to continue
• Relatively low amount of to increase over next several
distressed properties which quarters, allowing for
have become "Real Estate increasing investment
Owned" or "REO" (owned
opportunities
by bank real estate groups)
or resolved
ALL CORE ♦ HOTEL DISTRESS VOLUME Source: Real Capital Analytics
CUMULATIVE DISTRESS MONTHLY ADDITIONS TO DISTRESS
$250 billion $25 billion
200
■Resolved
20
■ Restructured
Lender REU
■Trouble
150
15
100
10
50
5
0
JFMAMJJASONDJFMAMJJASONDJFM
1 08 1 09 1 10
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
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0
JFMAMJJASONDJFMAMJJASONDJFM
'08 1 09 '10
H istorical NCREIF Returns
NCREIF PROPERTY INDEX
TOTAL RETURN
As of 3/31/10
20.5
20.1
16.9
'79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
YTD
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
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Returns — Appreciation Only
NCREIF PROPERTY MEX
COMPONENTRET URN— APPRECIATION ONLY
As of 3/31/10
12.7
0
0
C)
U
N
1
-22.0
'79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '(110 YTD
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
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Histo of Capitalization Rates
Fed easing following 9111 & Tech
Bust combined with global
equihj influx: 250 -300 bps
reduction in can rates
10.00%
9.50%
9.00%
8.50%
8.00%
7.50% 8.2% longterfu average cap rate
7.00%
6.50% NCREIF Cap Rate —RCA Cap Rate
6.00%
Housing Bust, Credit Crunch,
5.50% "Great" Recession: 260 bps rise
in cap rates so far
5.00%
M W 0) 0 h W W W O N N M'1 W W 0 h W W W O - - N M V 1 1 W 0 h h W W
W W 00 W W 00 W W W 01 0) 01 01 01 W 01 01 01 01 01 01 01 O O O O O O O O O O O O O
- -- - - - - N N N N N N N N N N N N N
NCREIF Cap Rate is four quarter moving average of NCREIF transaction cap rates (equal weighted).
Data through 3/31/10.
Sources: NCREIF, RCA (Real Capital Analytics), Intercontinental
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
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30
Total Dollar Volume of Sales
Transactions
$140
$120
$100
y $80
0
M $60
$40
$20
$0
Source: Real Capital Analytics
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
www..intercontinental.net
31
2001 2002 2003 2004 2006 2006 2007 2008 2009 2010
Credit Conditions Improving
Net Percentage of Domestic Respondents Tightening Standards for Corn rnercialand Industrial Loans
Percent
n.. 100
?(I
41
21'1
a
-20
I.
1990 1992 1994 1996 1998 20CC 2002 2004 2006 20M 2010
Source: Federal Reserve
■ Tightening credit standards were a major contributor to lack of
transaction volume throughout the recession.
Continued easing is helping to stimulate transaction volume
somewhat.
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
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32
Loan Refinancing Demand
400
350
a V
m
rA 350
200
,
� 150
i
7
1-
0
2008 2010
■ ■ M ■
2013 2016 2017 2018
Source: Holliday Fenoglio Fowler
■ High transaction and loan volume preceding recession has created a tsunami of
loan maturities coming due: $1.2 trillion over next four years
■ Distressed property sales likely to continue over this period, creating investment
opportunities due to:
■ CMRSfiARai?
• Sheer volume of refinancing demand relative to likely future
origination volume
• Property values lower than at origination
• Tighter future underwriting standards vs. origination, e.g, lower loan
to value, higher debt service coverage, greater amortization, etc.
1270 Soldiers Field Road • Boston • Massachusetts • 02135 -1003
Tel: 617.782.2600 Fax 617.782.9442
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■ CN - Floating Rate ■ Inswim Rank{ihrifl
33
2011 2012 2018 2014