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April 2012 For Accredited Investors1 Astrum Fund I.

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Presentation on theme: "April 2012 For Accredited Investors1 Astrum Fund I."— Presentation transcript:

1 April 2012 For Accredited Investors1 Astrum Fund I

2 This presentation is for informational purposes only, is subject to change, does not constitute investment advice or a recommendation, is not an advertisement, and is not intended for public use or distribution. This presentation does not constitute an offer to sell nor the solicitation of an offer to buy interests (the interests) in Astrum Fund I or Astrum Investment Management. Such offer or solicitation may only be made by means of delivery of a confidential private offering memorandum or other appropriate disclosure which contains a description of the material terms (including, without limitation, risk factors, conflicts of interest, fees and charges, and tax implications) relating to such investment and only in those jurisdictions where permitted by applicable law. An investment in Astrum Fund I is speculative and involves a high degree of risk. An investment in the Astrum Fund I should be considered only by persons who can afford to sustain a loss of their entire investment or to hold their interests indefinitely without the possibility for resale. There is no secondary market for the Interests and none is expected to develop. The fees and expenses charged in connection with this investment may be higher than the fees and expenses of other investment alternatives and may reduce profits, if any. Performance levels will be reduced by management fees and carried interest. Past performance of Astrum Investment Management or any of the separately managed accounts is not a guarantee nor is it indicative of future returns. Astrum Investment Management, Astrum Fund I, nor any of its Principals warrant the accuracy, adequacy or completeness of the information and data contained herein and expressly disclaims liability for errors or omissions in this information and data. No warranty of any kind, implied, expressed or statutory, is given in conjunction with the information and data. Astrum Investment Management, Astrum Fund I, Sanli, Pastore and Hill and its Principals expressly disclaims liability for any loss or damage arising out of the use or misuse of or reliance on the information provided herein, including, without limitation, any loss of profit or any other damage, direct or consequential. Sanli, Pastor and Hill is not associated with nor an investor or Principal in Astrum Investment Management or Astrum Fund I and disclaims any liability thereto. For Accredited Investors2

3 At Astrum Investment Management, we seek to: Produce moderate, absolute rates of return with current cash flow while both minimizing the risk of capital loss and maintaining consistent, non- correlation to the broad market indices Investing in commercial Sale, Lease-Back, Buy-Back (SLB3 SM ) opportunities from U.S. middle market companies impacted by limited credit markets Proprietary deal flow generated through affiliation with Sanli, Pastore, & Hill, Inc. (SP&H) with 20 years experience in valuing corporate entities Unique investment model – Sale, Lease-Back, Buy-Back (SLB3 SM ) Focus on operationally essential real estate Buy-Back is the key factor for purchasing at opportunistic prices Designed to deliver high current income and long-term capital appreciation with reduced risk Existing pipeline of transactions exceeds $300MM For Accredited Investors3

4 P/E funds and larger banks are providing capital at very low margins, but only to large companies (revenues > $500MM) Middle market companies (revenues $25MM - $200MM) are of no interest to P/E funds and larger banks due to special expertise required to underwrite P/E funds and smaller banks demand high cost of capital to serve this market segment ◦ 18% to 24% rates of return plus warrants from P/E funds and over 15% from banks with very stringent covenants Market segment has already shaken out; strong companies remain standing after 3 years of recession For Accredited Investors4 Lack of available capital is forcing companies to monetize assets to create liquidity Middle market loan issuance fell below $10 billion and has remained low Nearly $200B in middle market loans matured over the last three years

5 Basic real estate fundamentals are showing signs of improvement Positive net absorption; decreasing vacancy rates Limited new supply Rents bottoming with possible increases coming Rent upside is projected to exceed inflation Net Operating Income (NOI) gains likely in 2012 Prices for existing buildings are historically low Less risk and more potential for increasing value For Accredited Investors5

6 Astrum Investment Management was founded in 2009 Affiliation with Sanli, Pastore, & Hill, Inc., a premier valuation and financial consulting firm in the Western U.S. Key principals, management and advisory board have over 250 years of combined experience in real estate and middle market corporate underwriting ◦ $30B in corporate valuations, investment and underwritings ◦ $10B in real estate financings, developments and investments Significant network of clients and referral sources among middle market companies to access client owned real property Unique experience and skill set to underwrite both companies and real estate properties for SLB3 transactions Principals involved in all aspects of investment process: sourcing, underwriting, due diligence and asset management Commitment to transparency, reporting and risk management For Accredited Investors6

7 Nevin Sanli | Founder and Managing Director President and Founder, Sanli Pastore & Hill, Inc. 25 years of experience in financial consultancy, valuation, investment, and accounting analysis with total transaction and valuation opinions exceeding $30B Experienced in real estate acquisition support, diligence analysis and research Member of Board of Directors of Atlantic Legal Foundation; Chairman of Dubnoff Center for Child Development; and, actively involved in associations such as Barrington Group, Vistage International, California Redevelopment Association BA with Honors in Economics, University of California Irvine, Accredited Senior Appraiser in Business Valuation Discipline Fluent in English, French, Turkish, and conversational in Spanish For Accredited Investors 7 John Hartman| Managing Director  Twenty years of commercial real estate development, leasing, due diligence, acquisition and dispositions covering all commercial asset classes  Fifteen plus years of capital markets, institutional and private fund raising expertise with a particular focus on raising discretionary institutional capital for private equity real estate funds.  Ten years of C-level management experience with proven skills and accomplishments in increased operational efficiencies, leadership/team building, business development, sales management, strategy and investment  Deep contacts in capital raising with experience managing investor relations, capital allocation, equity/debt placement, compliance, corporate governance and environmental credit and tax credit syndication.  A highly accomplished Senior Executive with a successful track record in finance and capital markets (debt and equity) including authoring memorandums and Reg D, offerings, cash flow/forecasting, and analysis, HR systems, tax and creative deal structuring.  MBA from California Coast University, Santa Ana, California

8 For Accredited Investors8 Glenn Golenberg | Senior Advisor and Shareholder Over 44 years of investment and merchant banking experience Served as financial advisor in over 200 transactions including M&As, IPOs, LBOs, venture capital financing, and financial restructurings Arranged financing in excess of $1B Recognized as one of the "29 Top Los Angeles Area Investors” CPA experience with Arthur Andersen & Co. Managing Director of merchant banks Golenberg & Company, The Bellwether Group, and University Equity Capital Has held executive and board positions at numerous financial institutions and other private and public companies Extensive leadership roles in a number of local, national, and international philanthropic organizations MBA from Wharton Graduate School Larry Kosmont, CRE | Chief Investment Officer and Shareholder Nationally recognized specialist in public and private real estate transactions President and CEO of Kosmont Companies and Kosmont Realty Corporation 36-year career with expertise in creating and managing real estate transactions, structured financing using public and private sources of equity and project implementation with RE transactions exceeding $10B Assisted hundreds of government agencies and guided over 1,000 private sector projects Served as City Manager, Community Development Director, and Redevelopment Director for multiple cities Created the Kosmont-Rose Institute Cost of Doing Business Survey© State Commissioner California Economic Development and LA City Commissioner Industrial Development Authority Registered Municipal Advisor with U.S. SEC, Licensed Real Estate Broker in California, Board member of California Redevelopment Association (CRA) & USC Lusk Center for Real Estate

9 For Accredited Investors9 Lawrence Hurwitz | Vice President of Finance and Shareholder 20 years of working with Mr. Sanli CEO of Lawrence Financial Group Over 40 years of experience in financing for real estate and mergers and acquisitions in a wide range of industries with a total transaction volume of over $7B Established California Capital Summit Founder and group leader of Provisors Capital Markets Affinity Group MBA with Distinction, Harvard Business School David Kauffman | Vice President 20 years of investment management and investor relations experience for high net worth families, foundations and family run companies. Extensive knowledge of banking, SEC reporting, disclosures, financial markets, and financial instruments. Co-founder of “One-Less-Putt”, a golf training device company. Accountable for all strategic development from incubation to current phase FINRA Dispute Resolution Arbitrator - Member of 3 person panels as a securities industry expert to assist in the resolution of monetary and business disputes between investors, securities firms and individual registered representatives Numerous awards from private REIT’s and private funds for sales and marketing

10 For Accredited Investors10 Mark Griffin | Vice President 20 Years experience in financial markets 20 Years of market development and management experience Developed deep relationships advising very high net worth individuals and family offices 8 years experience with complex project management 6 years portfolio and program management experience Background in high level consultative and executive level selling, gained through experience and extensive training

11 Execute Sale, Lease-Back, Buy-Backs (SLB3 SM ) by purchasing, managing, improving and reselling core and value-add commercial properties to generate consistent, absolute returns with high current cash flow Target companies ($20MM - $200MM) that are of no interest to P/E funds and larger banks due to required special underwriting expertise Filter 300 target companies from existing corporate relationships, analyze 60 opportunities and invest in 10 real estate transactions Purchase properties directly from corporate sellers in Sale, Lease-Back, Buy-Back (SLB3 SM ) transactions that will create high current income and long-term capital appreciation Structure long-term (20 year) leasebacks with personal/corporate repurchase guarantees at a predetermined “buyback” price at end of five year hold period Use moderate leverage Target investments projected to return over 20% gross per annum For Accredited Investors11 SLB3 SM enables companies to generate medium term liquidity without corporate leverage

12 For Accredited Investors12 I. Acquisitions Astrum purchases buildings direct from the Company via relationships developed over the last 20 years via Sanli, Pastore & Hill, Inc. Deal flow is proprietary and off market. Extensive due diligence is conducted on the Company and on the property. II. Income The property is leased back to the Company for 20 years with reasonable rental increases over the first 5 years. III. Capital Gains The Company has the right to purchase the property back at the end of year 5 at a predetermined purchase price.

13 For Accredited Investors13 Companies with revenues of $25MM to $200MM Profitable, stable or growth oriented SLB3 must fuel growth, cost savings or both By Equity Investment: $4 million to $6 million By Total Capitalization: $16 million to $25 million Target Companies Transaction Size Light Industrial Warehouse Research & Development Special Situation Office Property Type Income producing investment properties Operationally essential, owner occupied real estate 50,000 SF to 150,000 SF (typically) Single tenant NNN lease Property Characteristics

14 For Accredited Investors14 Tenant/user as the right to repurchase the property(s) at a predetermined price If tenant/user does not execute their repurchase option, rents increase, the property(s) is sold to 3 rd party investors Exit Strategy No sites with heavy manufacturing or hazardous materials No investments in major renovations or rehab situations, raw land or distressed properties with high vacancies and/or cash flow problems Exclusions Los Angeles (or within 1 hour flight) Orange County San Diego Silicon Valley Sacramento Geographic Location Going-in cap rate of 10% Long-term fixed asset level financing at 60% Income Return: 5% unlevered / 12% levered Total Return: 20% Gross IRR / 2.5x Gross EM Return Characteristics & Targets

15 Astrum Investment Management recognizes the importance of transparency and accurate reporting to its investors as such the fund uses Deutsche Bank as its third party administrator in the U.S. and Vistra in the Netherlands for foreign investors Diversification by property type, industry type and geography Quarterly property inspections (or more often as required) Quarterly financial statements and balance sheets by tenants Transparency to risk exposures, leverage, liquidity of underlying investments, and investment processes Disaster recovery systems and procedures Varying levels of disclosure available to large or strategic investors at manager’s discretion For Accredited Investors15

16 For Accredited Investors16 ObjectiveExecute Sale Lease-Back Buy-Back (SLB3 SM ) transactions on office, warehouse, light industrial and R&D properties, purchased directly from corporate sellers Suitability RequirementsAccredited Investor Fund Size$50,000,000 First Closing$5,000,000 Term5 Years Manager FeesManagement fee of 1.5% per annum on capital committed - Incentive fee allocation equal to 35% with claw back provision Organization & Offering CostsReimbursement of actual costs incurred -not to exceed 3% of total capital raised LeverageThe Fund will use moderate leverage, to the extent it is possible to obtain, up to a maximum of 60% at the property level as a means to increase investor returns

17 Broad based relationships with middle market corporate sellers Proprietary deal flow which provides pool of investment opportunities which are all off- market Ability to evaluate the component transaction parts of a Sale Lease-Back Buy-Back (property fundamentals & corporate credit) Seasoned team with experience through multiple market cycles Proprietary valuation and underwriting model developed over a 20 year period Leverages significant long-term development of infrastructure, technology and relationships No legacy Issues For Accredited Investors17

18 1990 S. Bundy Drive, Suite 800 Los Angeles, CA 90025 (310) 571-3400 Mr. Nevin Sanli Mr. John Hartman For Accredited Investors18

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