Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only. Summit Capital,...

Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only.

Summit Capital, LLC

www.sc-im.net


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Experience Matters In An Uncertain Environment


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The Summit Capital TeamPrincipals 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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Summit – Westport Capital PartnersOrganizational 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.


Themes and

Targets

Corporate Dispositions

NPL Portfolios

Rescue Capital

Secondary Markets

Value Add Real Estate

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Summit engages recognized experts to search for unique opportunities

Value Add Through Expertise

Private REITS

FDIC

REO Liquidations

Recaps


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Summit maintains relationships with a variety of sources that provide access to compelling opportunities

Sources of Opportunity

Attorneys &

ColleaguesFDIC

REO Liquidations

Recaps

Summit Capital

Local and Regional

Banks

CourtReceivers

PelotonDonohoe

Secondary Markets

National & InternationalProfessional

Network


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Navigate Tough Terrain With Time Tested Processes


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Risk MitigationSystematically 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

Split Equity/Debt

Pool or Single Asset Acquisition

Non-Performing Loans and Real Estate

DiscountedPayoff

Foreclosure/ Bankruptcy

Foreclosure/ Bankruptcy

Real Estate Owned (REO)

Sell REO or Loans Sell REO EquitySell REO Equity

PerformingLoans

Whole LoanSales

SecuritizationTransactions

Loan Restructure/Modification

Each Stage in the Process Reduces Investment Risk


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Summit

Market Dynamics

Investor Goals Achieved

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


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Disciplined Underwriting1)

Opp

ortu

nity

In

trodu

ctio

n

Stage 2 - Due Diligence

Asset Underwriting & Financial Modeling

Stage 2 - Detail

1. Asset and Loan Document Review (loan agreements, rent rolls, legal, title, leases, environmental, credit reports, BOV, comparables, engineering)

2. Portfolio/Pool/Asset Analytics3. Projected Portfolio/Pool/Loan Economics4. Identify and Underwrite Key Assets & Borrowers5. Review Transaction Purchase & Sale Documents6. Roll Up

2) In

itial

Und

erw

ritin

g

&

Due

Dili

genc

e

3) C

ompl

ete

Und

erw

ritin

g

4) B

id S

trate

gy/C

ontra

ct

Neg

otia

tion

5) M

anag

emen

t & R

esol

utio

n


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Select Investment Results


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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

Hospitality Loan Portfolio

Days Inn Graceland, Memphis, TN


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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

Brazos Partners, L.P.Lone Star Opportunity Fund, L.P.


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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

12404 Park Central Drive


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Princeton WindrowsOpportunity 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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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

Resolution Summit & Oaktree Capital offer to purchase

Wilshire. Meetings with CEO and other executives unproductive. Company responds by hiring an investment banker and adopting a poison pill

As other investors accumulate stock, Summit & Oaktree liquidate their holdings at $6.00 - $7.00 per share

Equity Multiple of 1.4 x and IRR = 19.7%

As a small cap company, Wilshire ‘flew under the radar’ for years. Over a 20 year period WOC became the depository for non-performing real estate loans transferred by the family controlled bank. SEC filings were inadequate to determine company’s true value. We were not successful to take control of the company but profited from recognizing pricing disparity of the common shares and the underlying value of the real estate assets.


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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)

Kevin McTavishWestport Capital Partners – Operating PartnerInstitutional Real Estate, Inc. – Board MemberColony Capital – Principal; Investment & Mgmt CommitteeColony Advisors - Chief Operating Officer Brazos Fund (now Lone Star Opportunity Fund) - Founder MBA Wharton School of Business, University of PennsylvaniaBS US Naval Academy – Superintendant’s List

Kevin McTavishWestport Capital Partners – Operating PartnerInstitutional Real Estate, Inc. – Board MemberColony Capital – Principal; Investment & Mgmt CommitteeColony Advisors - Chief Operating Officer Brazos Fund (now Lone Star Opportunity Fund) - Founder MBA Wharton School of Business, University of PennsylvaniaBS US Naval Academy – Superintendant’s List

Roger Greene (20 years)Marquette AdvisorsLone Star Opportunity Fund – General Council, PrincipalJD Harvard Law School – Cum LaudeBA Harvard College - Magna Cum Laude, Phi Beta Kappa

Roger Greene (20 years)Marquette AdvisorsLone Star Opportunity Fund – General Council, PrincipalJD Harvard Law School – Cum LaudeBA Harvard College - Magna Cum Laude, Phi Beta Kappa

RMB Realty / Keystone, Inc.

Cerina Chou (20 years)Controller – Orbis Real Estate, LLCSenior Financial Analyst – Hudson Advisors, LLCAccounting Department Supervisor – American S & LMBA Lamar UniversityBA Feng Chia University, Taiwan – Business Admin

Cerina Chou (20 years)Controller – Orbis Real Estate, LLCSenior Financial Analyst – Hudson Advisors, LLCAccounting Department Supervisor – American S & LMBA Lamar UniversityBA Feng Chia University, Taiwan – Business Admin


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Specific Expertise

Drew McCarney (15 years)Quorum Hotels – Principal & EVP DevelopmentAmfac Hotels - Director Human Resource PlanningHyatt Hotels - Director of Industrial RelationsBA Bellarmine University

Drew McCarney (15 years)Quorum Hotels – Principal & EVP DevelopmentAmfac Hotels - Director Human Resource PlanningHyatt Hotels - Director of Industrial RelationsBA Bellarmine University

Amit Kaluskar (4 years)Forest City Enterprises – Senior Development AssociatePrescott Realty Group - Senior AnalystBA Southern Methodist University – Economics

Amit Kaluskar (4 years)Forest City Enterprises – Senior Development AssociatePrescott Realty Group - Senior AnalystBA Southern Methodist University – Economics

RMB Realty / Keystone, Inc.

Alice WangEricsson Inc. – Business AnalystInstitute for Economic Development - Research AssistantBoston University – Master in Economic PolicyHuazhong Univ of Science & Tech (China) - BS Economics

Alice WangEricsson Inc. – Business AnalystInstitute for Economic Development - Research AssistantBoston University – Master in Economic PolicyHuazhong Univ of Science & Tech (China) - BS Economics

Mathew NoackPrescott Realty Group – Director Retail GroupDirect Development – VP Acquisitions & DevelopmentOrix Capital Markets – Acquisitions & Distressed AssetsUniversity of Texas at Arlington – MS Real Estate FinanceUniversity of Texas at Austin – BA Liberal Arts

Mathew NoackPrescott Realty Group – Director Retail GroupDirect Development – VP Acquisitions & DevelopmentOrix Capital Markets – Acquisitions & Distressed AssetsUniversity of Texas at Arlington – MS Real Estate FinanceUniversity of Texas at Austin – BA Liberal Arts


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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.

Summit Capital Offices

Dallas, Texas 2805 North Dallas Parkway, Ste 325Plano, TX 75093972.265.1890 Office214.662.4578 Mobile972.265.7598 [email protected]

Web Sitewww.sc-im.net

Irvine, CA15707 Rockfield Blvd., Ste. 200Irvine, CA 92618949.242.0344 Office949.439.3613 Mobile949.713.3310 [email protected]

mailto:[email protected]

http://www.sc-im.net/

mailto:[email protected]

Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only. Summit Capital,...

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Transcript of Copyright © Summit Capital 2010. Confidential. Proprietary. For internal use only. Summit Capital,...