investing in student housing and multifamily communities › wp-content › uploads › 2016 › 10...
TRANSCRIPT
Investing in Student Housing and Multifamily Communities
1
Private & Confidential. Past Performance Is Not Indicative of Future Results.
See Important Disclosures Enclosed.
Important Disclosures
This is neither an offer to sell nor a solicitation of an offer to buy the units in the company. An offering may be made only by means of the private placement memorandum. This sales literature must be accompanied or preceded by that memorandum and read in conjunction therewith to fully understand the implications and risks of the securities to which it relates.
An investment in the Company’s units is illiquid and involves significant risks and therefore is suitable only for those persons who understand those risks and the consequences of their investment and who are able to bear the risk of loss of their entire investment. See the “Risk Factors” section of the PPM for a discussion of the material risks that should be considered before an investment in the units is made.
2
Ernest Johnson ApexOne Investment Partners 2603 Augusta Drive, Suite 400,
Houston, TX 77057
713-231-1421 (direct) 713-417-6666 (cell) 713-784-8101 (fax)
www.ApexOneIP.com
Investing in Student Housing
3 “The Fab 14”
About ApexOne Investment Partners
ApexOne Investment Partners, LLC is a dedicated real estate investment firm with a specialty in student housing and multifamily properties.
ApexOne is headquartered in Houston with additional offices in Chicago, West Palm Beach and Phoenix.
The ApexOne senior partners have more than 130 years and $10B of combined multifamily and other real estate sector expertise.
The partners were former executives with JMB Realty, Heitman, Trammel Crow, PM Realty Group, Adams LaSalle, Hendricks & Partners, and JPI.
4
About ApexOne Investment Partners
ApexOne has purchased more than 25 assets nationwide since 2011.
JV partners have included:
Balfour Beatty
Crow Holdings
Paravest Capital
Behringer/Harvard
5
Hudson Capital Partners
Rockstreet Partners
First Capital Advisors
About ApexOne Investment Partners
ApexOne Fund I Results:
13 properties
Nationwide real estate footprint
2,352 units / 3,442 beds
8 Joint Venture partners
Current annualized yield to investors over 12% on invested capital (6/30/16)
Unrealized IRR of 23.09% (Audited) as of 12/31/15
6
7
Student Housing and Value-Add Multifamily Strategy
1. Preserve and Protect Investor Capital
2. Stable Cash Flow to Investors paid Monthly
3. Capture Capital Appreciation
4. Ordinary Income Tax Deferral, Possible Reclassification to Capital Gains and Offsets against other Passive Income
5. Use Joint Ventures to Boost Fund Returns
8
Joint Venture Transaction Structure Brook Place-Sam Houston State University
9
Joint Venture Transaction Structure Brook Place – Sam Houston State University
$15,750,000 Deal Including Improvements (7/14)
$5,000,000 Equity $4,500,000 JV Partner (90%) $ 500,000 Fund Equity (10%)
Waterfall Per JV Agreement Pari Passu to a 9% IRR 75/25 to a 15% IRR 65/35 to a 17% IRR 50/50 over a 17% IRR
10
Joint Venture Transaction Results Brook Place – Sam Houston State University
12.21% yield during hold period
$24,250,000 Disposition Price (10/13/16)
34.16% Project Level IRR
127.89% Fund Level IRR
$3,000,000 (6x) Distribution to Fund Investors
11
Which One of These Can We Know For Sure?
12
Job Growth
Technology Advancements
Medical Advancements
Economic Growth
Retail Models
Birth Rates
Impact of Birth Rates in the United States
13,700 per day turn 21
5,000,000 per year will enter the housing market for the next 21 years
26,000,000 still living at home after college
Occupancy in stabilized multifamily is over 96%
Supply and Demand remain in balance
Sources: AXIOMetrics, Pew Research Center, U.S. Census
13
14
U.S. Apartments: Supply and Demand Fundamentals
The Housing Crisis in Four Numbers
$54,462 real median family income in 2015
$240,200 median home price in August 2016
4.6 Month supply of available homes
1,000,000 shortage of apartments to get back to 92.5%
Sources: AXIOMetrics, National Realtors Association, U.S. Census, Dr. Peter Linneman
15
What do Parents Most Want for Their Children?
Travel Around the World Endlessly
Work at the Local Convenience Store
Go to Jail
Go into Politics
Go to College
16
What do Parents Most Want for Their Children?
17
What do Parents Most Want for Their Children?
Benefits of a College Degree (when compared to a person with only a high school diploma)
$1,000,000 more in earnings
25% less likely to be unemployed in their lifetime
18
The Challenge of Higher Education to Provide For Future Students
While all universities have worked to find efficiencies and cost savings, no institution can sustain, much less enhance, its commitment to excellence without revenue growth.
Serving these students properly requires significant investments, new organizational models, and cultural change on campus. But it can be done in a financially sustainable way—fulfilling the university’s mission to serve a diverse range of students while providing financial resources to support the core.
The easiest way to reduce costs per student is to grow the number of students while holding costs relatively stable.
Source: Educational Advisory Board Spring 2016 Research Briefing
19
Who Drives Student Housing
20
35%
Who Drives Student Housing
21
>35% Transfer & Dropout Rate for
Freshmen
Who Drives Student Housing
22
<10% Transfer & Dropout Rate for
Freshmen Living ON CAMPUS
Higher Education Enrollment Trends
23
13.2
17.3 19.8
2000 2014 2025
Enrollment (millions)
Myth Busting Student Housing
Competition from University-owned facilities
Destructive tendencies of the 18-22 year old residents
Students forget or don’t pay their rent
Smaller Capital Investment requirements
Lease rollover exposure
24
Why Student Housing
Long Term Increasing Enrollment U.S. & Worldwide
Schools need a classroom before they need a bedroom
Cap rates are 75bps to 200bps higher than conventional
Identical Debt Terms from GSE’s (Fannie/Freddie)
Known Market; Universities do the Recruiting
25
Who Drives Student Housing
26
56%
Who Drives Student Housing
27
56% 2016/17 Female
Enrollment
Who Drives Student Housing
28
60% Projected 2025 Female
Enrollment
Who Drives Student Housing
29 “The Fab 14”
30
31
32
33
34
35
36
37
38
Who Drives the Student Housing Market
39
Investing in Student Housing and Multifamily Communities
40
Private & Confidential. Past Performance Is Not Indicative of Future Results.
See Important Disclosures Enclosed.