Opportunity - Summit Capital, LLC

Report
Summit Capital, LLC
www.sc-im.net
Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.
Experience Matters In An
Uncertain Environment
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Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.
The Summit Capital Team
Principals Kevin McTavish, Subash Kolluru and Roger Greene have worked together for 20 years
Value Add & Distressed Debt Investment Expertise
 Extensive ‘in the trenches’ experience acquiring and resolving challenging real estate
assets, non-performing loans and bankruptcy assets
 Decades of third party relationships translate into access to the best local experts
 Extensive operating expertise including asset management, loan servicing,
construction & development, leasing and sales
Investment Management Expertise
 Significant institutional real estate fund experience - C level executives and Principals
at Lone Star Opportunity Fund, Colony Capital, Robert M. Bass Realty, Brazos Asset
Management and American Real Estate Group
Distinguished Track Record
 Invested over $3 Billion with Brazos Asset Management/Lone Star Opportunity Fund,
Colony Capital, American Real Estate Group and RMB Realty
 Decade long strategic relationship with Westport Capital Partners & Oaktree Capital
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Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.
Summit – Westport Capital Partners
Organizational Depth
 Summit & Westport have collaborated for 10 years to facilitate origination,
underwriting, asset management, loan servicing, accounting, tax, compliance and
reporting functions. This relationship creates organizational efficiencies and
eliminates the pursuit of deals consummated to support existing infrastructure.
 Westport was founded in 2005 by the management team responsible for building
Oaktree Capital’s Real Estate Group beginning in 1995. Westport currently manages
$1.2 billion with 24 people located in Wilton, CT and Los Angeles, CA .
 Westport was awarded 2010 Real Asset Money Manager of the Year by Foundation &
Endowment Money Management.
History
 Russel Bernard, Managing Principal of Westport and Kevin McTavish have a long
working relationship dating back to establishing Tokyo offices for Oaktree and Colony
Capital in the late 1990’s.
 At Oaktree, Mr. Bernard invested approximately $100 million in various Summit
opportunities. Our conservative approach focuses on programmatic, fundamental
underwriting and management to minimize or eliminate investment risk.
 All investments capitalized entirely with equity – eliminating default or foreclosure
risk. Each investment produced returns with equity multiples of 1.3 to 2.5 and IRR’s
as high as 30%. No losses on any investments.
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Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.
Value Add Through Expertise
Summit engages recognized experts to
search for unique opportunities
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Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.
Sources of Opportunity
Summit maintains relationships with a
variety of sources that provide access to
compelling opportunities
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Navigate Tough Terrain
With Time Tested
Processes
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Risk Mitigation
Systematically Eliminate Risk To Insure Preservation of Investor Capital
 Sparing and Judicious Use of Leverage
 Thorough Asset Underwriting
 Establish Goals and Track Progress Systematically
 Democratize Decision Making Process
 Engage ‘Best in Class’ Expertise for Due Diligence & Operations
 Alignment of Interests – Inclusive from Ownership through Operations
 Leverage NOT Utilized to Stretch for Minimum Hurdle Rates
 Accountability & Responsibility Clearly Defined
 Formalize Risk Management Process
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Asset Management
Each Stage in the Process Reduces Investment Risk
Pool or Single Asset
Acquisition
NonPerforming
Loans and
Real Estate
Loan
Restructure/Modification
Discounted
Payoff
Performing
Loans
Foreclosure/
Bankruptcy
Real Estate Owned
(REO)
Split
Equity/Debt
Sell REO or Loans
Sell REO Equity
Whole Loan
Sales
Securitization
Transactions
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Acquisition & Management
Established & Proven Processes
 Acquisition Identification
 Underwriting – Cash Flow, Replacement
Cost, Obsolescence, Loan Terms,
Borrower History
 Acquisition – Bid Strategy, Pricing
 Asset Management – Establish Goals &
Business Plan, Reporting
 Resolution, Restructuring or Disposition
Market
Dynamics
Investor
Goals
Achieved
Summit
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Disciplined Underwriting
Stage 2 - Due Diligence
Stage 2 - Detail
Asset Underwriting & Financial
Modeling
1.
2.
3.
4.
5.
6.
Asset and Loan Document Review (loan agreements,
rent rolls, legal, title, leases, environmental, credit
reports, BOV, comparables, engineering)
Portfolio/Pool/Asset Analytics
Projected Portfolio/Pool/Loan Economics
Identify and Underwrite Key Assets & Borrowers
Review Transaction Purchase & Sale Documents
Roll Up
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Select
Investment Results
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Hospitality Loan Portfolio
Opportunity
 Loan portfolio of 21 Non-Performing loans in
14 different states
 $32 million Outstanding Principal Balance
Resolution
 Summit performing loan & special servicing,
accounting and reporting functions in addition
to asset management
 Westport & Summit working together to
resolve the portfolio
 Aggressive collection efforts result in 2/3 of
loans back to performing status
 Collections at 11% annualized
 Six loans resold to a bank as performing loans
within 8 months of purchase - returned
approximately 40% of investor equity
Days Inn Graceland, Memphis, TN
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Brazos Partners, L.P.
Lone Star Opportunity Fund, L.P.
Opportunity
 Founding Member of Brazos Partners,
(now known as Lone Star Opportunity Fund)
 Brazos formed to purchase and liquidate the
‘bad bank’ assets of American Savings Bank
which had been purchased from the RTC
 Initial portfolio - $2.7 billion OPB, 1,293 assets
and 10 property types located in 32 states
Resolution
 Aggressive portfolio management results in a
$150 million profit, 423.2% IRR and
6.5 x Equity Multiple
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12404 Park Central Drive
Opportunity
 REIT pressured to liquidate vacant
239,000 sf, Class A office building
 Insufficient Parking, Vacant Building
 Deal Source – Crescent RE & Cushman
Wakefield
 Initial Asking Price - $25 million
 Dallas BOMA office building of the year
 Purchase - $9.5 million, ($40 psf & 20%
of replacement cost)
Resolution
 Reconfigure building for multi-tenant
occupancy, add 100 parking spaces
 Improve efficiency & decrease expenses
 11.7% current yield on all-in-costs
 $2.5 million current annual income
 Current Value - $30 million
 Equity Multiple – 2.09 x
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Princeton Windrows
Opportunity
 Meditrust (NYSE:MT) defaults on 294 unit
senior housing residential project on land
purchased from Princeton University
 Pending $5 million construction lawsuit
 98 sold at $360,000/unit prior to default
 Sourced - Bank of America
 Initial asking price - $45 million
 Purchase price - $23 million (under 50% of
original cost)
Resolution
 Established relationship with existing
homeowners and settle lawsuit
 Created new marketing plan, 2/3 of
residences now sold
 Total sales estimated $70 – 75 million
 Equity Multiple 2.0 - 2.5 x
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1616 Woodall Rodgers
Opportunity
 Public utility company consolidates offices
and sells non-essential real estate
 265,000 SF Class A office building purchased
in advance of dramatic Dallas Arts District
growth, $10 million park built next to building
 Deal sourced by establishing relationship
with utility company facilities manager
 Initial asking price- $42 million
 Purchase Price - $7.5 million (14.5% of costs)
Resolution
 Bought prior to rapid growth of Arts District
which transforms the location
 Sold building as corporate headquarters for
$10 million
 Equity Multiple – 1.5 x
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Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.
Hyatt Dulles Hotel
Opportunity




Hotel available due to partnership dissolution
Privately negotiated off market transaction
317 keys located at entrance to Dulles airport
Purchase Price - $51 million (50% of
replacement costs)
 Seller financing at 80% LTV at 5.0% interest
 Purchase at 10.0% Cap Rate TTM
Resolution
 Sold to Major Hotel REIT for $72.5 million
($230,000 / key & 7.5% cap rate)
 Equity Multiple – 2.0 x
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Wilshire Enterprises
Opportunity
 Wilshire Enterprises (AMEX:WOC) is
controlled by a prominent family
 Shares trading at 20% of underlying value
of real estate ($9 – 10 per share)
 Sourced through personal relationship
within the industry
 Purchase 5% of shares outstanding at $2.00
– 3.00 per share
As a small cap company, Wilshire ‘flew under
Resolution
the radar’ for years. Over a 20 year period
 Summit & Oaktree Capital offer to purchase WOC became the depository for nonperforming real estate loans transferred by
Wilshire. Meetings with CEO and other
the family controlled bank. SEC filings were
executives unproductive. Company
inadequate to determine company’s true
responds by hiring an investment banker
value. We were not successful to take
and adopting a poison pill
control of the company but profited from
 As other investors accumulate stock,
recognizing pricing disparity of the common
Summit & Oaktree liquidate their holdings shares and the underlying value of the real
estate assets.
at $6.00 - $7.00 per share
 Equity Multiple of 1.4 x and IRR = 19.7%
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Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.
iStar Financial
Opportunity
 iStar Financial (NYSE:SFI) paying 8%
dividend – 300 bp above US Treasuries and
discount to liquidation value
 Purchased $10 million of equity on open
market
 Company paying high dividend rate and
owning high interest rate assets in a
declining interest rate environment
Resolution
 Sold shares for $20 million
 Equity Multiple = 2.0 x
 IRR = 30%
As a direct competitor to iStar in many
situations, we were in a unique position
to understand the composition of the
company’s portfolio and true valuation.
We recognized the discount between the
market price and underlying value of the
assets. We bought in at a discount and
liquidated when incremental value was
no longer achievable.
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Results Driven
Management Team
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Principals (years working together)
RMB Realty / Keystone, Inc.
Kevin McTavish
Westport Capital Partners – Operating Partner
Institutional Real Estate, Inc. – Board Member
Colony Capital – Principal; Investment & Mgmt Committee
Colony Advisors - Chief Operating Officer
Brazos Fund (now Lone Star Opportunity Fund) - Founder
MBA Wharton School of Business, University of Pennsylvania
BS US Naval Academy – Superintendant’s List
Roger Greene (20 years)
Marquette Advisors
Lone Star Opportunity Fund – General Council, Principal
JD Harvard Law School – Cum Laude
BA Harvard College - Magna Cum Laude, Phi Beta Kappa
Cerina Chou (20 years)
Controller – Orbis Real Estate, LLC
Senior Financial Analyst – Hudson Advisors, LLC
Accounting Department Supervisor – American S & L
MBA Lamar University
BA Feng Chia University, Taiwan – Business Admin
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Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.
Specific Expertise
RMB Realty / Keystone, Inc.
Drew McCarney (15 years)
Quorum Hotels – Principal & EVP Development
Amfac Hotels - Director Human Resource Planning
Hyatt Hotels - Director of Industrial Relations
BA Bellarmine University
Amit Kaluskar (4 years)
Forest City Enterprises – Senior Development Associate
Prescott Realty Group - Senior Analyst
BA Southern Methodist University – Economics
Mathew Noack
Prescott Realty Group – Director Retail Group
Direct Development – VP Acquisitions & Development
Orix Capital Markets – Acquisitions & Distressed Assets
University of Texas at Arlington – MS Real Estate Finance
University of Texas at Austin – BA Liberal Arts
Alice Wang
Ericsson Inc. – Business Analyst
Institute for Economic Development - Research Assistant
Boston University – Master in Economic Policy
Huazhong Univ of Science & Tech (China) - BS Economics
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Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.
Summit Capital Offices
Dallas, Texas
2805 North Dallas Parkway, Ste 325
Plano, TX 75093
972.265.1890 Office
214.662.4578 Mobile
972.265.7598 Fax
[email protected]
Irvine, CA
15707 Rockfield Blvd., Ste. 200
Irvine, CA 92618
949.242.0344 Office
949.439.3613 Mobile
949.713.3310 Fax
[email protected]
Web Site
www.sc-im.net
All corporate trademarks and/or images represented or used herein are the property of their respective owners
and usage herein is solely for the purpose of illustrating business concepts independent of those businesses.
Summit Capital LLC makes no representations regarding the businesses referenced herein nor makes any claims of
ownership regarding any trademarks found herein other than for Summit Capital’s proprietary trademark.
All other subject matter found herein, not subject to external trademark is copy written and the property of
Summit Capital LLC. This document is solely for demonstration purposes.
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Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.

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