GP Multifamily Co-Investment2019.06.01
Confidential
Executive Summary
Who is Axe Capital Group?
Axe Capital Group is a platform for non-US
investors providing access to US real estate.
Since 2015 ACG has invested over $75M
equity on behalf of investors in US real estate
with a $600M+ gross development cost. Axe
has a history of partnerships with well-
established global institutions:
Value-add Multifamily Platform• Establishing a platform for Value-add and Ground-
up multifamily projects
• Raising $20M equity for AXE GP Multifamily Fund
• Investor is offered to participate $5-10M in AXE GP
Multifamily Fund capital with no promote being
charged by Fund Manager
• Top-tier US investment team – DVO Real Estate:
• 15 years average real estate and private
equity experience for team members with
$4.6Bn closed deal capitalization
• Track record of $1.5Bn+ of invested equity,
more than 18,000 multifamily units with
average deal level IRR 38.3% and 2.24x
multiple for realized investments
• Invests only in GP capital to maximize total returns:
AXE GP Multifamily Fund and DVO Real Estate
(DVO GP Co-Investment Fund) provides 30-80% of
total GP capital and local GP Partner provides
remaining part of GP capital
• Investment period: 24 months
• AXE GP Multifamily Fund target return:
• Net IRR to investors 17.6%; 1.8x Multiple;
Average cash yield 6-8%
Confidential 2
Partners
Tax & Legal Advisors
Financing Partners
Brokers & Market Advisors
Technical Consultants House Bank
About the Firm
Axe Capital Group is a real estate investment
platform with a proven ability to deploy capital across
a range of US submarkets on behalf of our non-US
corporate, family office, institutional investors and
hedge funds investors.
ACG co-invests on all investments because our
philosophy is that client-manager interests should
always be aligned. Investment strategies ranging
from core and value-add acquisitions to opportunistic
joint venture developments in residential and
commercial sectors.
Axe Capital Group provides a turnkey solution for US
investments by non-US investors and organizes all
tax and legal aspects of investments structuring
debt/equity capitalization, banking relations, asset
acquisition, investment management, fiscal
compliance and FIRPTA reporting by US-based
accountants, annual audits and regular NAV
calculations, sale and exit on investment.
Confidential 3
Leadership
Bogdan GubskyChairman
Bogdan Gubsky is a Ukrainian
investor with a global asset portfolio
across a range of sectors, including
several recent investments in the
US. During the 1990’s, while a
professor of International
Economics, he built and sold
several businesses, including a
major agro-business and energy
business. After selling these
business interests, he took a pause
from business and participated in a
variety non-business engagements.
In 2012, he saw opportunities in
real estate and decided to fully
focus on this and thereby he
returned to business. He
subsequently established a platform
for investment in US real estate.
Capital was successfully raised and
invested in single-asset investment
deals, and he is presently raising
capital for diverse US real estate
investments. Bogdan received BA &
PhD in Mathematics in Kiev
National University and Doctor of
Economic in Kiev National
Economic University
Charles BerginInvestments
Charles is an Irish investment
professional with 22 years of
investment banking and real
estate private equity experience
in Europe and the United States.
After studying to be a lawyer in
Ireland, Charles worked in
Central Europe in both
investment banking and PERE
roles including Head of
Corporate Finance at
Raiffeisenbank in Prague, and as
Managing Partner at two real
estate investment funds. Charles
has extensive cross-border
investment experience, having
worked on over $2.5 billion of
commercial, retail and residential
projects in Central & Eastern
Europe and in the US. Charles is
a member of the Royal Institute
of Chartered Surveyors, holds
certificates from the ACCA.
Charles earned a BA in
Economics and English
Literature from University
College Dublin.
Confidential 4
Hans KarnerDevelopment
Hailing from Austria, Hans
brings a 30-year track record in
project management from
Central Europe and Saudi
Arabia/UAE. He is experienced
in industrial, hospitality, and
mixed-use project
management. Hans led
projects of over 5 million sqft.
and has worked as the head of
development at major
multinationals and financial
institutions including Deloitte
(Saudi/UAE), Raiffeisen
Evolution, and UNIQA. Hans
was responsible for $1bn
projects working with
developers on delivering
flagship projects including
office developments in Balkan
countries. Hans received BA in
Building Technology from
University Pinkafeld Austria.
Colin BreezeInvestor Relations
Colin has specialized in alternative
investments for two decades. He has
invested in and designed different
holding structures for venture capital,
high yield debt, private equity,
disruptive technologies, and real
estate. He also advises fund sponsors
on investment and transaction-specific
tax and structuring, risk analysis,
securities law compliance, corporate
governance and fiduciary
responsibilities. Colin previously
served as Managing Director at Excel
Realty Holdings, a private US-based
real estate investor whose holdings
included multifamily, office, industrial,
retail and logistics assets both in the
US and internationally. In addition,
Colin has established, managed
and/or advised multiple alternative
investment sponsors across the
leading offshore jurisdictions, such as
Guernsey, BVI, Jersey, United
Kingdom, Cayman Islands, and the
United States. After graduating from
The University of Chicago Law
School, Colin practiced with
Cadwalader in New York and Wilson
Sonsini Goodrich & Rosati in the
Silicon Valley.
Leadership Track Record and Vision
• Most recently, ACG has raised $75M from
non-US corporate and institutional
investors.
• ACG successfully committed this capital
over 18 months to three ground-up
residential developments with gross
development cost of $600M+.
• After deploying this capital, ACG decided
to establish the platform for multifamily
value-add assets, partnering with a top-tier
US investment team and is raising $20M
capital for AXE GP Multifamily Fund.
Confidential 5
Investment Strategy
Balance High-yielding Development Deals with Cash-flowing Value-add Investments
• 50/50 allocation to existing property / development
• Focus on regions with strong and diverse job markets, favorable demographic trends featuring a
growing population of renters, and an undersupply of rental product with high barriers to entry
• Invests only in GP capital to maximize total returns, AXE GP Multifamily Fund and DVO GP Co-
Investment Fund provides 30-80% of total GP capital and local GP Partner provides remaining part of
GP equity.
• Co-invests with best in class local and regionally focused Partners with proven track records.
• Value-add deals: invest primarily in Class B/C assets (renter-by-necessity) in Class B/B+ locations,
where a value-add strategy yields 15-20%+ rent increases
• Development: invest in projects whose location, design, or amenities provide a competitive advantage
over competing assets within undersupplied or high growth submarkets
Confidential 6
Current return: 7-9% cash on cash
Fund term: 5+2 years prolongation
Holding period
Average equity: $2-7M
Investment period: 18 months
AXE GP Multifamily Fund Details
Capital stack (GP Equity)
Axe GP Multifamily Fund &
DVO GP Co-Investment Fund: 30-80%
Local GP Partner: 70-20%
Target Returns to Investors:
Net IRR: 17.6%; 1.8x Multiple
Average cash-on-cash: 6-8%
$1-3M
GP EquityAverage Investment Size
3-5 YearsHolding Period
Leverage:
Up to 75% at 1M Libor + 2%
without amortization
Investment period:
24 months
Investment Criteria
Criteria Description
Risk/Return Source Market risk and asset-specific risk
Target MarketsBoston, New York, Washington, Chicago, Austin, Denver, Salt Lake City, Northern & Sothern
California, Southern Florida, Phoenix, Dallas, Charlotte, Raleigh, Nashville
Types of Real Estate
1) Value-add assets:
• Multifamily with value creation potential
• Seek an untrended stabilized return on cost 125-150 bps greater than market cap rates
• Opportunity for repositioning and rebranding
• NOI increase potential by 20%+
2) Ground-up assets:
• Multifamily development in high growing target submarkets
• Seek a stabilized return on cost 150-200 bps greater than market cap rates for
comparable assets, with an all-in basis 15%+ below the projected stabilized value
Average equity deal size $1-3M total GP equity
Value-Add Target Returns Net IRR to Axe GP Multifamily Fund 15-18%, Multiple 1.7x, 6-8% cash-on-cash yield
Development Target Returns Net IRR to Axe GP Multifamily Fund 20%+, Multiple 2.0x
Leverage Up to 75% (65% average)
Confidential 7
DVO Real Estate Investment Team
David ValgerPresident and Founder
• 17+ years of investment experience. Closed more than
100 deals for total amount of $6Bn.
• Before founding DVO Real Estate was a partner in RCG
Longview Debt Funds responsible for mezzanine and
preferred equity structuring for more than 25 thousand
multifamily units.
• Pioneered and led exclusive FNMA mezzanine investment
programs (DUS Plus™ & CIMOD). Holds key access to
lenders, intermediaries, originators and local partners.
• Education: M.B.A. Real Estate & Entrepreneurial
Management at the Wharton School, University of
Pennsylvania, B.A. from Binghamton University
• David is Member of the President’s Advisory Council of
UJA/Federation of New York
Ryan ShoreVice President, Acquisitions
• 10+ years of investment experience, closed in excess of
$1Bn+ deals, transactional experience in 15+ states
• Before DVO Real Estate was responsible for $500M real
estate portfolio while at Bank of America, restructured
over $1billion in real estate debt and underperforming
assets, created new debt portfolio of $140M.
• Education: M.S. Real Estate Development from
Columbia University; B.A. in finance from Boston
University
Confidential 8
Nicholas NesiChief Financial Officer
• 25+ years of experience in private equity finance, audit and
taxation.
• Before DVO Nesi was a tax partner with BDO,USA, serving
a broad range of industries including real estate and
private equity.
• He is a past chairman of the NYSSCPA’s Multi-State Tax
Committee, as well as a member of the AICPA’s State and
Local Tax Committee.
• Education: J.D. New England School of Law; L.L.M.in Tax
and B.A. New York University
Michael SorochinskyPrincipal
• 17+ years of experience in multifamily operations,
investments and development, 150+ real estate
transactions, 9000+ apartments acquired and/or developed
on total amount above $5Bn
• Founder and Chief Executive Officer of Cypress Equity
Investments (CEI), a strategic partner of DVO Real Estate
• Prior to 2001, Michael practiced law at two international law
firms - Perkins Coie and Milbank Tweed – representing
creditors in distressed real estate debt and equity
reorganizations.
• Education: Michael received his JD from the UCLA School
of Law.
History of Success
• DVO Real Estate – an opportunity manager in multifamily real estate investments within US.
Located in New York City.
• Led by industry veterans with 100+ years of collective experience investing $600+ million of
preferred equity and mezzanine debt in commercial real estate, including 30,000+ apartments,
transactions totaling over $4.6 billion in deal capitalizations.
• Key team members working together more than 7 years.
• To date, the principals have invested in the acquisition or development of more than 18,000
multifamily units ($1.5Bn equity invested). Realized investments have generated an average
38.3% deal level IRR and 2.24x cash flow multiple.
• Total 29.0% deal level IRR including unrealized investments, significantly outperforming
projected pro-forma returns.
• Deep relationship with Fannie Mae and Freddie Mac which gives access to best financing
options for multifamily assets.
• Extensive national relationships with lenders, intermediaries and local partners within the
multifamily sector resulting from leading FNMA’s DUS Plus™ and CIMOD programs.
• Ready to go pipeline, unique access to consistent, off-market investment opportunities as well
as ‘first’ and ‘last’ looks.
Confidential 9
Why Multifamily?
Historically higher returns with a lower risk profile than other asset classes
• Current income component with potential upside from appreciation
• Hedge inflation via ability to raise rents annually
• Portfolio diversification due to lower correlation to public markets and reduced portfolio
volatility
Strong Market Fundamentals
• New household formations forecast to exceed long term average and home ownership
that has declined to historically low levels
• Priced out of Class A units, Class B/C tenants are renters by necessity
• Enduring demand as largest demographic groups are choosing renting over buying
• Continued economic growth and emergence of wage growth
Confidential 10
Investment Structure
Confidential 11
DVO Real Estate
(Manager)
Management
agreement
AXE GP
Multifamily Fund*
DVO GP Co-Investment
Fund II
Project Company
Multifamily Property
Multifamily Portfolio
Debt
LTV 60-75%
Dividends Investments
DVO-Axe GP Equity SPV
30-80% Equity 70-20% Equity
Investors
Axe Capital
Management
agreement
GP Equity
Local GP
Partner
LP Equity
10-25% Deal Equity 90-75% Deal Equity
*Axe GP Multifamily Fund investors receive
unpromoted deal level economics
AXE GP Multifamily Fund Investment Terms
Terms Description
Strategy Multifamily Value-add and Ground-up
AXE GP Multifamily Fund Size Up to $20M equity
Fees• Management fee 1% on committed capital, 1% on invested capital
• No promote
Deal Mix
DVO-Axe GP Equity will seek to invest 50% of capital, but no less than 35% of capital, in
value-add multifamily deals and 50% of capital, but not less than 35% of capital, in ground up
multifamily development deals
GP Equity Capital StructureDVO-Axe GP Equity will contribute up to 80% of required GP equity in any transaction, up to a
maximum of $7.5M
Distribution Timing Available cash flow will be distributed quarterly net of reserves and Fund expenses
Profit Distribution1. Return of capital to investors
2. Profit to investors pro-rata
Investment Period 24 months
Holding Period 3-5 years
Quality of OperationsUse of private equity best practice in deals structuring, compliance, corporate management
and investor relations
Confidential 12
DVO Real Estate Track Record Summary
Confidential 13
Realized Investments Have Generated a Deal Level 38.3% IRR or 2.24x Cash Flow Multiple
Contact UsAddress:
Revoluční 724/7, 4th floor, office 16
110 00, Praha 1, Czech Republic
Phone:
+7 (495) 150-93-00
Email: