global economic chaos and the effects on us real estate - by jordan wirsz

© 2015 Savant Investment Partners.

Global Economic Chaos – Europe & ChinaWhat to expect in the U.S.

By Jordan Wirsz


Disclosures

Savant Investment Partners is a publisher. All content published herein (collectively, the “Content”) is strictly intended for general informational and entertainment purposes only and may not be relied upon for any other purpose. Reproduction of the Content by any means is prohibited without prior written permission of Savant Investment Partners.

The views expressed in the Content are the authors' own opinions only and do not necessarily reflect the views of Savant Investment Partners. None of the Content constitutes a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Further, none of the creators or providers of our Content or their affiliates will advise anyone personally concerning the nature, potential, value or suitability of any particular investment, security, portfolio of securities, transaction, investment strategy or other matter. Accordingly, do not attempt to contact them seeking personalized investment advice, which they cannot provide. To the extent any of the Content may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.

Any performance data in the Content is supplied by sources believed to be reliable, that the calculations therein are made using such data, and that such calculations are not guaranteed by these sources, the information providers, or any other person or entity, and may not be complete. In addition, past performance is not an indication of future results.

© 2015 Savant Investment Partners. 3

DisclosuresTHIS IS NOT AN OFFERING OR THE SOLICITATION OF AN OFFER TO PURCHASE AN INTEREST IN SAVANT SYNDICATED INVESTMENTS. ANY SUCH OFFER OR SOLICITATION WILL ONLY BE MADE TO QUALIFIED INVESTORS BY MEANS OF A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM AND ONLY IN THOSE JURISDICTIONS WHERE PERMITTED BY LAW.

AN INVESTMENT IN REAL ESTATE SYNDICATIONS ARE SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. OPPORTUNITIES FOR WITHDRAWAL, REDEMPTION AND TRANSFERABILITY OF INTERESTS MAYRESTRICTED, SO INVESTORS MAY NOT HAVE ACCESS TO CAPITAL WHEN IT IS NEEDED.

THE FEES AND EXPENSES CHARGED IN CONNECTION WITH AN INVESTMENT WITH SAVANT MAY BE HIGHER THAN THE FEES AND EXPENSES OF OTHER INVESTMENT ALTERNATIVES AND MAY OFFSET PROFITS. NO ASSURANCE CAN BE GIVEN THAT ANY SAVANT INVESTMENT OBJECTIVE WILL BE ACHIEVED OR THAT AN INVESTOR WILL RECEIVE A RETURN OF ALL OR PART OF HIS OR HER INVESTMENT. INVESTMENT RESULTS MAY VARY SUBSTANTIALLY OVER ANY GIVEN TIME PERIOD.

The investment case studies shown herein are presented for informational purposes only. The case studies shown are included to illustrate the application of the investment methodology of Savant Investment Partners, LLC (the “Manager”) in practice in order to demonstrate catalysts for investment and sale, among other things. These case studies were executed through the [personal account(s)] of principals of the Manager, clients of the Manager, or affiliates of the Manager, and are not necessarily indicative of typical investment positions of Savant or their investors. The returns referenced in the case studies shown do not include the impact of advisory fees or other expenses, which would serve to decrease profits or otherwise increase losses. It should not be assumed that investments made in the future will be profitable or will equal the performance results shown herein.

This material contains certain forward-looking statements and projections regarding the future performance and asset allocation of our investors. These projections are included for illustrative purposes only. By their nature, forward-looking statements and projections are inherently predictive, speculative, and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements and projections. No assurances can be given that the forward-looking statements in this document will be realized. It is not intended that these forward-looking statements will be updated in the future.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.


Notes before we start Please ask questions – My phone number and email are available at the end of this presentation.

Some of the data charts may be dated due to infrequent updates to some specific charts

You may request a copy of these slides from us directly by calling or emailing us.


Global economic chaos – Europe and China facing massive challenges…What does that mean for the U.S.?

How international markets may positively influence the U.S.


Eurozone debt crisis The Eurozone is plagued by countries with incredibly fickle, unstable economies that are

overburdened in debt, often due to entitlement programs

Greece, Portugal, Ireland, Spain, and Cypress were all unable to repay their debt. Italy is in bad shape!


Eurozone debt crisis


Eurozone debt crisis….Wait…Wasn’t the U.S. $ in the midst of a collapse???


Eurozone debt crisis….Wait…But now the US Dollar is rallying!!!???



Affects of the Eurozone Debt Crisis:

1. World governments and international institutions don’t trust Eurozone debt.

2. World Governments and international institutions still need yield.

3. Individual investors don’t trust Europe debt, the Euro currency, or the Euro leadership to resolve the issue.

So where are they putting their money for yield?



CAPITAL FLOW –

Europe – OUT

U.S. – IN



Will Greece exit the Eurozone?

Poll:



GDP? What GDP… It will likely be a slow crawl to growth.


Isn’t now a good time to buy in Greece and Europe?

Is it cheap relative to where its been?

Yes. However, there are no long term solutions on the horizon that would spur economic growth.

Is Greece a buy?

I don’t think so right now....



CONCLUSIONS:

A good part of the Eurozone is unstable economically.

Investor’s trust in Europe is far less than it was 7 years ago.

The only way to solve the Eurozone debt crisis is with MASSIVE write downs on their debt.

Putting band aids on the problem with bailouts doesn’t fix the problem…The problem is spending and entitlement programs – poor leadership without economic expertise = disaster.

Whether Greece exits or not, it is a black eye on the Eurozone.

Greece is not the only problem – its just the focus right now. Portugal, Spain, Italy…All have problems ahead.


CHINA – what about the elephant in the room?

I have predicted that China is a bubble for years.


CHINA – what about the elephant in the room? China is perhaps the greatest bubble that this generation will ever see. The

speculation of real estate, equities, and lending are beyond anything that could be comprehended without seeing the visual charts of what is happening.


CHINA – A real estate bubble that makes the U.S. real estate collapse look like child's play



The TV Show “60 Minutes” aired a segment on the China real estate and lending bubble.

https://www.youtube.com/watch?v=uxjwhk1ktNw

YouTube search “60 minutes China real estate”




CHINA – What about the Chinese stock market?


CHINA Dynamics

China economic numbers have long been suspected “cooked”.

Government control of news and economic data is “suspicious” at best.

Chinese public companies listed on their equity market have little financial oversight to verify their earnings numbers.


China’s bottom line?

China has a real estate bubble.

China has a stock market bubble.

China still has a MASSIVE population, but wealth creation has been artificially inflated, and that is about to come to an end.


How China affects the rest of the world

China is a major consumer of commodities. Expect agricultural product prices to remain soft due to lessened demand by China.

China buyers have been propping up the prices of international real estate, such as Australia which is incredibly overpriced!

Global growth, and specifically Asia growth will be much slower now.


So where do global investors put their money?

Easy….The U.S.


The net-net result of Eurozone problems and China’s bubble deflating will be to the benefit of the U.S.

The U.S. will experience greater international capital flows into:

1. U.S. real estate (inflation protected assets)

2. U.S. Equities (the best of the worst)

3. U.S. Bonds (keeping rates relatively low)


The perfect storm for U.S. real estate

The real estate cycle is perhaps one of the most clear and consistent cycles to study.

Macro market will “peak” within 7 years.

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2022


Markets and cycles

Local markets vary.


The backdrop – bullish case for real estate

The CAPITAL market cycle is very tightly correlated to the PRICE cycle. When more capital is chasing less space, prices rise. When capital tightens and demand for space decreases, prices fall.

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As rates rise, banks have more incentive to lend with bigger margins. This means availability of

capital to borrow/increasing sales volume will increase also driving the increase in prices. There is a relationship between rates and real estate prices, but not a direct 1-for-1 correlation.

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30-year U.S. Bond Interest Rates


The current interest rate cycle is allowing long term leverage at historically low interest rates!

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Will higher interest rates mean “soft” real estate prices? No!

A conviction amongst the general public (who are always late to the correct conclusion) that interest rates have bottomed will lead to a spurt of buying activity, which will drive prices higher.

Rising interest rates usually means rising inflation. Real estate usually does well in an inflationary environment.

Higher interest rates and inflation will mean growing rents, which is positive for the price of commercial real estate.

It is important to remember that we are at HISTORICAL LOWS in interest rates. A rise to 5%, 6%, or even 6.5% is still relatively low, and real estate will have no problem continuing to thrive in that type of rate environment.

When interest rates rise above 5%, there will be a giant sucking sound as investors MASSIVELY exit REITs.

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The relationship between money supply and inflation is largely misunderstood. The financial crisis in 2008 created a debt deleveraging process, which is by nature deflationary. This debt that was extinguished effectively netted out against any money that was printed.

Up until the real estate crash, the adjusted monetary base and real estate prices in the U.S. were highly correlated. The deleveraging process - concentrated mostly in real estate and consumer debt - created a temporary disconnect that we believe will reverse. This means increasing real estate prices.

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The backdrop – inflationary pressures

0%

1000%

2000%

3000%

4000%

5000%

U.S. Real Estate Prices vs Adjusted Monetary Base

U.S. Real Estate Price Index Adjusted Monetary Base


Replacement costs rise during inflationary periods. Today, you can still buy commercial real estate well below replacement cost. Thus, we expect to “double end” the gains with market conditions recovering to replacement cost levels, in addition to the inflationary tailwinds which will raise rents.

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The Savant opportunityWhat we do and how we do it.


Investments in:

Geography:

Est. Avg. Cash Return:

Target Capital Appreciation:

Combined Targeted Return:

Hold Period:

Minimum Investment:

Qualifications:

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Over $100 million in transactions since 2012

Commercial Real Estate Throughout The U.S.

(Office, Medical, Retail/Shopping, Industrial, Multi-Family)

Nationwide with emphasis on the S.W. region

7-10%

7% compounded annually (or better)

15% +

3-7 Years

$100,000

Must be an *accredited investor.

Introducing:

Savant Commercial Real Estate Syndications


Why Savant CRE Investments?

We align our interests with yours by taking a reduced management fees in exchange for profit participation with you.

We are aggressive, active and experienced managers. We thoroughly understand “the art of the deal.”

We pride ourselves on 100% transparency to investors, quarterly reporting, and annual investor meetings.

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The Savant difference


Savant Notable Deals

$44.5 Million Multi-Family $22.5 Million Multi-Family $7.5 Million Development Land $8.7 Million SFR Portfolio $4.3 Million Luxury Portfolio $2.0 Million Office Acquisition $1.1 Million Retail Acquisition $3.2 Million Industrial build-2-suit

Small or large, sexy or not.

Multi-Family Office Medical Industrial Retail/Shopping Land Development


Interested in learning more about how to invest with us?

Call or e-mail us for:

A discussion of whether we are the right fit for your portfolio A complete and detailed investor presentation about Savant and the CRE opportunities A call with myself or one of our investment relations representatives

[email protected]

5586 S. Fort Apache Rd. Suite 120

Las Vegas, NV 89148

(702) 474-3003

www.SavantInvestments.com

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Commercial real estate investments

mailto:[email protected]

http://www.savantinvestments.com/


Disclosures

Savant Investment Partners is a publisher. All content published herein (collectively, the “Content”) is strictly intended for general informational and entertainment purposes only and may not be relied upon for any other purpose. Reproduction of the Content by any means is prohibited without prior written permission of Savant Investment Partners.

The views expressed in the Content are the authors' own opinions only and do not necessarily reflect the views of Savant Investment Partners. None of the Content constitutes a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Further, none of the creators or providers of our Content or their affiliates will advise anyone personally concerning the nature, potential, value or suitability of any particular investment, security, portfolio of securities, transaction, investment strategy or other matter. Accordingly, do not attempt to contact them seeking personalized investment advice, which they cannot provide. To the extent any of the Content may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.

Any performance data in the Content is supplied by sources believed to be reliable, that the calculations therein are made using such data, and that such calculations are not guaranteed by these sources, the information providers, or any other person or entity, and may not be complete. In addition, past performance is not an indication of future results.


DisclosuresTHIS IS NOT AN OFFERING OR THE SOLICITATION OF AN OFFER TO PURCHASE AN INTEREST IN SAVANT SYNDICATED INVESTMENTS. ANY SUCH OFFER OR SOLICITATION WILL ONLY BE MADE TO QUALIFIED INVESTORS BY MEANS OF A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM AND ONLY IN THOSE JURISDICTIONS WHERE PERMITTED BY LAW.

AN INVESTMENT IN REAL ESTATE SYNDICATIONS ARE SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. OPPORTUNITIES FOR WITHDRAWAL, REDEMPTION AND TRANSFERABILITY OF INTERESTS MAYRESTRICTED, SO INVESTORS MAY NOT HAVE ACCESS TO CAPITAL WHEN IT IS NEEDED.

THE FEES AND EXPENSES CHARGED IN CONNECTION WITH AN INVESTMENT WITH SAVANT MAY BE HIGHER THAN THE FEES AND EXPENSES OF OTHER INVESTMENT ALTERNATIVES AND MAY OFFSET PROFITS. NO ASSURANCE CAN BE GIVEN THAT ANY SAVANT INVESTMENT OBJECTIVE WILL BE ACHIEVED OR THAT AN INVESTOR WILL RECEIVE A RETURN OF ALL OR PART OF HIS OR HER INVESTMENT. INVESTMENT RESULTS MAY VARY SUBSTANTIALLY OVER ANY GIVEN TIME PERIOD.

The investment case studies shown herein are presented for informational purposes only. The case studies shown are included to illustrate the application of the investment methodology of Savant Investment Partners, LLC (the “Manager”) in practice in order to demonstrate catalysts for investment and sale, among other things. These case studies were executed through the [personal account(s)] of principals of the Manager, clients of the Manager, or affiliates of the Manager, and are not necessarily indicative of typical investment positions of Savant or their investors. The returns referenced in the case studies shown do not include the impact of advisory fees or other expenses, which would serve to decrease profits or otherwise increase losses. It should not be assumed that investments made in the future will be profitable or will equal the performance results shown herein.

This material contains certain forward-looking statements and projections regarding the future performance and asset allocation of our investors. These projections are included for illustrative purposes only. By their nature, forward-looking statements and projections are inherently predictive, speculative, and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements and projections. No assurances can be given that the forward-looking statements in this document will be realized. It is not intended that these forward-looking statements will be updated in the future.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

global economic chaos and the effects on us real estate - by jordan wirsz

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