2015 annual investor meeting - twinrock partners · 2018-12-18 · 2015 annual investor meeting 180...

2015 Annual Investor Meeting

180 Newport Center Drive, Suite 230, Newport Beach, CA 92660 - P: 949-640-0600 - F: 949-640-0642 - W: www.twinrockpartners.com

TWINROCK PARTNERS

Agenda

Opening Remarks

Economic Presentation by Richard Peiser, Michael D. Spear

Professor of Real Estate Development at Harvard University

TwinRock Overview

TRP Fund I

TRP Fund II

TRP Fund III

TRP Fund IV

TRP Fund V

Apartment Partnerships

Q & A 2

OPENING REMARKS

3

ECONOMIC PRESENTATION

4

Richard Peiser, Michael D. Spear Professor of Real Estate Development at Harvard University

TWINROCK OVERVIEW

5

TWINROCK PARTNERS

Appreciation in TRP Housing Markets

6

Source: OCAR

Appreciation YOY Selected Cities

Median Home Price

County 2012 2013 2014 Appreciation in 2014

Orange $520,000 $627,000 $670,000 7%

Newport Beach $1,400,000 $1,650,000 $1,805,000 9%

Irvine $737,000 $880,000 $915,000 4%

Los Angeles $360,000 $450,000 $500,000 11%

Lancaster $135,219 $170,000 $186,000 9%

Palmdale $150,000 $181,000 $220,000 22%

Riverside $210,000 $265,500 $300,000 13%

Corona $314,950 $370,000 $405,000 9%

Hemet $124,500 $160,000 $185,000 16%

Moreno Valley $160,000 $206,000 $240,000 17%

Palm Desert $294,000 $332,000 $365,000 10%

Palm Springs $370,000 $425,000 $515,000 21%

Riverside $206,000 $265,000 $300,000 13%

Temecula $292,500 $365,000 $388,636 6%

San Bernardino $185,000 $230,000 $260,000 13%

Rialto $171,000 $220,000 $250,000 14%

Redlands $238,500 $303,000 $334,500 10%

San Bernardino $120,900 $155,000 $189,000 22%

Victorville $119,550 $150,000 $175,123 17%

TWINROCK PARTNERS

Appreciation West vs. East of the I-15

7

14%

15%

13%

17%

16%

7%

15%

12%

12%

9%

15%

22%

E of I-15

Fontana 15%

Hemet 16%

Moreno Valley 17%

San Bernardino 22%

Riverside 13%

W of I-15

Rancho

Cucamonga 7%

Ontario 15%

Chino 12%

Chino Hills 12%

Corona 9%

Source: OCAR

TWINROCK PARTNERS

TRP Fund Appreciation vs. Market Rent

Appreciation

8

Source: Market Rent Data gathered from Berkadia for Inland Empire

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014

Fund I Fund II Fund III w/ HOA Foreclosures Fund III w/o HOA Foreclosures Market Rent

TWINROCK PARTNERS

Heat Map of Institutional Investors Purchasing Single Family

Homes

9

TWINROCK PARTNERS

Major Residential Investors

10

2014

Securitized

Non-Securitized

$25 billion invested in SFR Rentals

30%

2013

Securitized

Non-Securitized

Less than $20 billion invested in SFR Rentals

3.5%

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Blackstone American

Homes

Colony Capital Starwood

Waypoint

Silver Bay American

Residential

Properties

Major Residential Investors by No. of Homes

2014 2013

TWINROCK PARTNERS

Home Affordability

County Median Home Value Median Household Income Ratio of Housing Cost /Income

Los Angeles $448,400 $57,200 58%

Orange $695,400 $75,500 67%

San Bernardino $198,000 $54,090 29%

Riverside $295,000 $56,529 39%

Clark $186,600 $58,225 25%

11

TRP FUNDS TRP Homes Est.

Value 12/31/14

Median Household Income

SB, SD, R, LA, OC, C Counties

Ratio of Housing Cost

/Income

Fund I $269,133 $55,879 37%

Fund II $251,520 $55,539 35%

Fund III $257,324 $55,810 35%

Sources: Median Home Values gathered from OCAR Data. Median Household Inc. gathered from US Census Bureau

Assumptions: Interest Rate of 4.00% , Average Tax Percentage of 1.05%, Repairs of $500 Insurance of $500, PMI of $500

Fund I, II, III includes all homes. Median Household Inc. derived from weighted avg. for respective counties.

TWINROCK PARTNERS

Affordability Chart for TRP Funds

Fund I Estimated Value Mortgage Rates Median Income w/ 3%

inflation


/ Income Adjusted

YE 2013 $235,608 4.46% $55,767 31%

YE 2014 $256,412 3.86% $55,879 37%

2015 $277,951 4.6% $57,555 35%

12

Fund II Estimated Value Mortgage Rates Median Income w/ 3%

inflation


/ Income Adjusted

YE 2013 $241,570 4.46% $55,428 32%

YE 2014 $270,469 3.86% $55,539 35%

2015 $293,188 4.6% $57,205 37%

Fund III Estimated Value Mortgage Rates Median Income w/ 3%

inflation


/ Income Adjusted

YE 2013 $188,344 4.46% $55,698 25%

YE 2014 $204,258 3.86% $55,810 35%

2015 $221,416 4.6% $57,484 29%

2016 $240,015 5.3% $59,209 30%

2017 $260,176 6.3% $60,985 31%

Sources: Price appreciation forecast from Beacon Economics.

Assumptions: Interest Rate of 4.6% in 2015, Average Tax Percentage of 1.05%, Repairs of $500 Insurance of $500, PMI of $500

Fund I, II, III includes CA homes only. Median Household Inc. derived from weighted avg. for respective counties.

TWINROCK PARTNERS 13

2014 Job Growth in Our Housing Markets

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Las Vegas, NV Riverside San Bernardino California Orange County San Diego Los Angeles

Source: Bureau of Labor Statistics

TWINROCK PARTNERS

Housing Supply Shortage – Are Builders

Keeping Up?

14

• Pent-up demand is expected to speed up the housing market over the next two years; permits should advance more quickly, with a jump of 33% expected in 2015 followed by a gain of 23.3% in 2016.

• Even with these large percentage gains, permit levels during the next two to three years will remain well below peak levels of the last decade.

• Current housing deficit of 600,000 units in Southern California. At current building rates, it will take more than a decade to fill this deficit. Expectation of pop. growth and rising prices to compensate for this shortage into the foreseeable future.

TWINROCK PARTNERS

Impact of Lower Oil Prices on Housing

15

Since mid-2014, crude oil prices have dropped precipitously. After averaging more than $100 per barrel in the first half of the year, West Texas Intermediate has plunged to less than $55 per barrel at year’s end, about a 50% drop. This ranks as one of the largest oil price declines in history. And though it will result in economic winners and losers, on net it will be a significant positive for the economy.

- Moody’s Analytics

TRP Housing Markets

For economies like the Inland Empire, where 22.5% of households earn less than $25,000 and where their propensity to consume is likely 100%, this means an increase in the standard of living of numerous families as they will be able to spend more on non-fuel goods and services. This should increase local consumer optimism which is a key factor for an economic recovery. Low oil prices further enhances the home price advantage for Inland commuters.

- John Husing Quarterly Economic Report

TWINROCK PARTNERS

Impact of Lower Oil Prices in OK

16

•Oklahoma’s diverse economy as well as the local economies of Tulsa and Oklahoma City appear to be cushioned from the

precipitous drop based on the most current indices.

•While the job growth rate may slow in Oklahoma City and Tulsa, it should not slow to the extent you see in Houston.

•Statewide, according to the Bureau of Labor Statistics, Oklahoma’s unemployment rate in December was still one of the lowest in

the nation at 4.2%, dropping from 4.4% in November, 2014. According to the BLS, the unemployment rate in Tulsa is even lower at

4.0%, dropping from 4.4% in November, 2014.

TWINROCK PARTNERS

Impact of Lower Oil Prices in OK

17

According to the Oklahoma Economics Indicator Report published November, 2014, the largest generator of the state’s GDP as

of the 4th quarter, 2013 was trade, transportation and utilities at 17.9%, followed by government at 15.5% and financial

activities at 13.6%. The energy industry only generated 6.0% of the state’s GDP in 2013.

TWINROCK PARTNERS

HOA Legal Update

Timeline of Events 2013 - TRP Fund III begins purchasing HOA Foreclosure homes for the Fund

Early 2014 -TRP Fund IV is formed to implement HOA Foreclosure strategy exclusively as it

acquires homes at HOA Foreclosure Auctions

September, 2014 - Nevada Supreme Court determined that an HOA super priority lien is a true

priority lien and that foreclosure of an HOA lien extinguishes a first deed of trust and that an

HOA does not need to file a judicial action to foreclose on its lien, instead approving of the non-

judicial process used in our cases

September, 2014 - Following the Nevada Supreme Court decision, a Federal Court Judge

issued two decisions that have no precedential value but could affect clean title to HOA

foreclosure homes owned by HUD or have FHA insured loans

Late 2014-TRP Fund V is formed to implement HOA Foreclosure strategy exclusively;

however the primary mode of acquisition will be through third parties (prior successful bidders

at auction before the Nevada Supreme Court decision )

December, 2014 - FHFA and Fannie Mae filed an action in federal court in Nevada, seeking a

determination that a HOA’s foreclosure sale is invalid and contrary to federal law to the extent

that it purports to extinguish Fannie Mae’s property rights

18

TWINROCK PARTNERS

Portfolio Map of TRP Funds I, II, and III

19

TRP FUND I UPDATE

20

TWINROCK PARTNERS

Portfolio Map of TRP Fund I

21

TWINROCK PARTNERS

TRP Fund I Key Metrics

Key Metrics 2013 2014

Eviction Rate 0.8% 0.0%

Collection Loss 2.6% 1.2%

Turnover Rate 7.5% 8.9%

Occupancy Rate 94.2% 95.7%

22

Portfolio Comparison to Public Single-Family REIT’s:

American Residential

Properties Inc. (ARPI) Silver Bay Realty Trust

Corp (SBY) Starwood Waypoint

Residential Trust (SWAY) TRP FUND I, LLC

Tenant Turnover (1) 26% 30% 30% 36%

Occupancy (2) 93% 94% 94% 100%

Annual Dividend (3) 0.0% 1.0% 1.1% 8.0%

1. Tenant Turnover statistics are annualized as of 1st and 2nd Quarter 2014 statistics.

2. Percentages are Occupancy statistics for ARPI, SBY, and SWAY as of 4th Quarter-end and for “stabilized” units

3. SBY is the Forward Annual Dividend Rate as reported by Morningstar, Inc and TRP Fund I, LLC is 2014 Actual.

TRP FUND II UPDATE

23

TWINROCK PARTNERS

Portfolio Map of TRP Fund II

*Excludes 2 properties located in Las Vegas, NV

TWINROCK PARTNERS

TRP Fund II Key Metrics






25





Residential Trust (SWAY) TRP FUND II, LLC


Occupancy (2) 93% 94% 94% 98%

Annual Dividend (3) 0.0% 1.0% 1.1% 10.0%



3. SBY is the Forward Annual Dividend Rate as reported by Morningstar, Inc and TRP Fund II, LLC is 2014 Actual.

TRP FUND III UPDATE

26

TWINROCK PARTNERS

Portfolio Map of TRP Fund III

27

TWINROCK PARTNERS

Portfolio Map of III Las Vegas

28

TWINROCK PARTNERS

TRP Fund III Key Metrics

29





Turnover Rate N/A 8.4%





Residential Trust (SWAY) TRP FUND III, LLC


Occupancy (2) 93% 94% 94% 97%

Annual Dividend (3) 0.0% 1.0% 1.1% 6.0%



3. SBY is the Forward Annual Dividend Rate as reported by Morningstar, Inc and TRP Fund III, LLC is 2014 Actual.

TRP FUND IV UPDATE

30

TWINROCK PARTNERS

Portfolio Map of TRP Fund IV

31

TWINROCK PARTNERS

TRP Fund IV Key Metrics

Key Metrics Q1 Q2 Q3 Q4

Eviction Rate 0.0% 0.0% 4.3% 3.9%

Collection Loss 0.0% 0.0% 3.3% 0.6%

Occupancy Rate 64.3% 73.2% 88.6% 91.0%

32

TRP FUND V UPDATE

33

TWINROCK PARTNERS

Portfolio Map of TRP Fund V

34

TWINROCK PARTNERS

TRP Fund V Strategy • The Fund has successfully acquired 5 homes at 56% of FMV;

• The primary mode of acquisition for the Fund will be through third party sources

(prior successful bidders at HOA auctions before the Nevada Supreme Court

ruling);

• Buying from third parties allows Management the ability to conduct the due

diligence necessary;

• Our process involves reviewing title for proper noticing, viewing document

history to verify loans and deeds, reviewing CC&R’s recorded to ensure HOA

had property authority to collect, reviewing court records for pending litigation,

contacting HOA collection agency, and researching the seller;

35

TWINROCK PARTNERS

Apartment Partnerships

36

TWINROCK PARTNERS

OK SilverFern, LLC (Southern Elms)

37

TWINROCK PARTNERS


38

Key Metrics First Half Second Half





TWINROCK PARTNERS


39

TWINROCK PARTNERS

OK Wallabies, LLC (Yaletowne)

40

TWINROCK PARTNERS

OK Wallabies, LLC (Yaletowne)

41

Key Metrics Q4 Q3





TWINROCK PARTNERS

Highlights • Major progress has been made on planned capital improvements;

• Asphalt Repavement is complete;

• Veneer Rock Siding installation is gaining velocity as weather continues to

improve;

• Perimeter Fencing is complete around the perimeter with security gates currently

being installed;

• Clubhouse renovations and Fitness Center are in the final stages of completion;

• BBQ deck/gazebo construction has begun along with pool area renovations;

• Unit interior upgrades are being completed on turnover and include granite

counters, new wood vinyl plank and carpet flooring, new appliances, new light

fixtures, new faucets and plumbing fixtures, and new paint throughout including

cabinets and accent walls;

42

TWINROCK PARTNERS

OK Wallabies, LLC

43

Before Renovation After Renovation

TWINROCK PARTNERS

OK Wallabies, LLC

44


TWINROCK PARTNERS

OK Wallabies, LLC

45


TWINROCK PARTNERS

OK Wallabies, LLC

46


TWINROCK PARTNERS

OK Springboks, LLC (The Chelsea)

47

TWINROCK PARTNERS

OK Springboks, LLC (The Chelsea)

48

Key Metrics Q4

Eviction Rate 1.9%

Collection Loss 3.6%

Turnover Rate 8.2%

Occupancy Rate 85.0%

• Management rebranded Artisan Ridge to The Chelsea Apartments shortly after acquisition;

• Many of the planned exterior capital improvements are in progress including exterior renovations, clubhouse, new pool, playground, repaving/restriping parking areas, new outdoor kitchen;

• Unit interior upgrades have begun on select units on turnover and include upgraded counters, new wood vinyl and carpet flooring, new appliances, new light fixtures, new faucets and plumbing fixtures, new paint throughout, laundry hookups;

• Improving the tenant base of the property and utilizing tighter tenant selection criteria is a major priority with a year-end goal of tenants reliant on Section 8 housing to be below 30%; a decline in occupancy is expected as a result;

TWINROCK PARTNERS

OK Springboks, LLC

49


TWINROCK PARTNERS

OK Springboks, LLC

50


TWINROCK PARTNERS

OK Springboks, LLC

51


TWINROCK PARTNERS

OK Springboks, LLC

52


TWINROCK PARTNERS

OK Los Pumas, LLC (The Esperanza)

53

TWINROCK PARTNERS

OK Los Pumas, LLC (The Esperanza)

54

Key Metrics Q4

Eviction Rate 0.0%

Collection Loss 3.9%

Turnover Rate 2.0%

Occupancy Rate 92.9%

• On March 6th, Management completed the acquisition of Tuscan Villas, the adjacent complex to The Esperanza and will begin the process of combining both properties to achieve economies of scale;

• Management is in the process if rebranding the complex The Esperanza apartments, and conversion of all existing monuments and ancillary signage is almost complete;

• Many of the planned capital improvements are in progress including select exterior renovations, clubhouse and office remodel, and pool area upgrades;

• The focus will also be to improve the tenant base of the property through narrowing of tenant selection criteria;

TWINROCK PARTNERS

Save the Date – September 11th, 2015 TwinRock Partners is gearing up for our second annual philanthropic event, taking place on September 11th, 2015.

Every year we select and honor a different public service to support, and this year we have chosen the Orange

County Sheriff Department's K-9 Unit. Initiated in 1985, this program has reduced the manpower needed to search

large buildings and open rural areas by over 50%. The use of canines has decreased the number of injuries to

deputies, and multiplied the number of arrests. These valuable canines are purchased entirely through public

donations, so please mark your calendars for Friday, September 11th, at the Newport Beach Vineyards and Winery.

We will enjoy exceptional locally-grown wines as we assist in help the K-9 Unit continue to grow and thrive.

Date: 9/11/2015

Time: 6:00 - 9:00PM

Location: Newport Beach Vineyards & Winery

55

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2015 annual investor meeting - twinrock partners · 2018-12-18 · 2015 annual investor meeting 180...

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