Investors Presentation
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Disclaimer
THE INFORMATION CONTAINED IN THIS PRESENTATION IS NOT INTENDED TO BE A SOLICITATION OR OFFERING. THE INFORMATION CONTAINED IN THIS PRESENTATION MUST BE KEPT CONFIDENTIAL AND MUST NOT BE USED FOR ANY OTHER PURPOSE.
THE INFORMATION CONTAINED IN THIS PRESENTATION INVOLVES A SUBSTANTIAL DEGREE OF RISK AND IS NOT APPROPRIATE FOR ANY PERSON WHO CANNOT AFFORD TO INCUR A LOSS OF PRINCIPAL. THE STATEMENTS CONTAINED IN THIS PRESENTATION ARE BASED ON INFORMATION AND ESTIMATES BELIEVED TO BE RELIABLE. ANY PERSON REVIEWING THIS DOCUMENT SHOULD CONSULT WITH HIS OR HER OWN LEGAL COUNSEL, ACCOUNTANT OR OTHER PROFESSIONAL ADVISOR CONCERNING THEIR POSSIBLE PARTICIPATION.
ALL INFORMATION CONTAINED IN THIS PRESENTATION IS SUBJECT TO CHANGE RESULTING FROM FLUCTUATIONS IN NATIONAL AND WORLD MARKETS INCLUDING, BUT NOT LIMITED TO, REAL ESTATE AND FINANCIAL MARKETS. THUS, CHANGES IN MARKET CONDITIONS (EXPECTED OR NOT) MAY CHANGE ALL ASSUMPTIONS AND ESTIMATES SET FORTH HEREIN. THEREFORE, NO RATES OF RETURN, PRICING, PROFITS, EXAMPLES OR ESTIMATES SET FORTH HEREIN ARE IN ANY MANNER GUARANTEED.
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Table of Contents
I. History of Success
II. Opportunistic
III. Credit Facilities / JV
IV. Private Money Lending
V. Contact
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I. History of Success
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The Chinese use two brush strokes to write the word 'crisis.' One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger - but recognize the opportunity.
The unprecedented economic crisis over the past year has presented us with a rare opportunity. Private sector deleveraging is occurring throughout the real estate markets and we intend to take full advantage.
We have always strived to indentify trends and opportunities early on. Some 20 years ago, we began the Peak Corporate Network (“Peak”) and have successfully built a “one stop” network of real estate services and investment companies. This synergistic vision has enabled us to finance, acquire, develop, manage, market and exit investments using our own in-house resources.
Peak has the infrastructure, experience and know-how to take full advantage of this rare opportunity in the real estate markets.
History of Success
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Ove
rvie
wPeak focuses on the acquisition and financing of residential andcommercial real estate
Opportunistic - Stable and distressed assets (notes and REO) are acquired from crisis stricken owners and lenders. Recent focus has been on failed condominium projects
Credit Facility / JV - Provide financing through credit facilities to buyers of small pools or single home purchases. Returns are high yield on a short term basis (ability to JV with equity kicker)
Private Money Lending - Collateral-based real estate loans that fill a non-conventional need for funding. Returns are high yield on a short term basis
History of Success
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Peak manages assets in its portfolio as follows:
Use existing infrastructure and technology of Peak to support growth (MortgageServ, Doc Magic, RoboDocs, Calyx Point)
Experienced compliance team (best practices, reviews and ensures accuracy and monitors new regulations)
Complete investor/partner reporting system with weekly personal updates of all loans in the portfolio and their status
Servicing capabilities - our Fiserv platform is all done through lock boxes and also utilize Deutsche Bank as a custodian of valuable documents and City National bank for all banking
Use competent legal structuring and superior financial reporting (GAAP)
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History of Success
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Peak manages risk as follows:
All Peak lending is secured by a 1st Trust Deed on assets being purchased
Facilities and loans are secured by Personal Guarantees of the borrowers
In many cases, secondary collateral is brought to provide additional security
Peak underwrites at a conservative 50-65% LTV
Current distressed environment has lowered current market values and meant that LTVs are significantly less risky that in recent years - today's 50% LTV being equivalent in many cases to 25% of 2008 market value
Properties are insured and visited during loan term to assure occupancy and upkeep
Ris
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Expe
rienc
eHistory of Success
Purchase of Partially Completed Condo ProjectsSouthern California Completed the purchase of two notes secured by partially completed condominium projects
Purchase of Non-Performing LoansSouthern CaliforniaCompleted the purchase of five non-performing loans secured by high-end residential properties
Development of Outlet MallThe Outlet Shoppes at El PasoEl Paso, TXCompleted the development of a 450,000 sq. ft. retail outlet mall
REO Credit FacilitiesWestern United StatesCompleted the financing of credit facilities to buyers of small residential
Purchase of 16 SFR HomesSouthern CaliforniaCompleted the purchase of 16 new homes
Private Money FinancingWestern United StatesCompleted the financing of short-term high yield mortgage loans
Acquisition of Office BuildingEl Paso, TXCompleted the acquisition of a 80,000 sq. ft. office building (class A)
Acquisition of LandSouthern CaliforniaCompleted the purchase of a 400 acre development
Acquisition of Retail CenterReno, NVCompleted the acquisition and rehab of a retail center with a top brand name anchor tenant
Acquisition of Class A Office BuildingsAgoura and Encino, CACompleted the purchase of two notes secured by Class A office with over 38,000 sq. ft.
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MA
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Gil Priel
30+ years of experienceFounder of the Peak Corporate NetworkPreviously President of Priel Investment Properties, Inc. and Managing Director of Peak Capital Group, LLC, a fund in partnership with MSD CapitalSpecializes in equity-based joint ventures, acquisition of residential and commercial real estate and debt and equity financing J.D. from Southwestern University of Law and B.A. in Political Science from California State University, Northridge
Eli Tene
30+ years of experienceFounder of the Peak Corporate NetworkSpecializes in equity-based joint ventures, foreclosures, residential and commercial real estate, debt and equity financing and loss mitigation.Negotiated 1,000+ short sale transactions and managed various real estate portfoliosB.S. in Finance from California State University, Northridge
History of Success
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History of Success
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II. Opportunistic
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Opportunistic
Peak focuses on the acquisition of the following types of assets:
Acquisition of commercial properties (condominiums, office, retail, industrial)
Acquisition of REO residential properties
Acquisition of performing and non-performing notes (commercial and residential), ultimately leading to direct property ownership
Recent focus has been on acquiring failed condominium projects (incomplete projects where lender stopped funding)ASS
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Peak handles the deal flow and acquisition process as follows:
Use existing relationships of Peak to evaluate assets and portfolios
Direct negotiations with the owners and/or lenders prior to competitive bid
Offer aggressive, low price bids and negotiate for best value
Focus has been on quickly concluding one or two initial acquisitions to hit the ground running in order to develop further opportunities
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Opportunistic
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Peak acquires assets located primarily in the Western U.S.
Peak management has significant experience in these markets
Other states will be considered for investment opportunities
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CALIFORNIALos AngelesOrange CountySacramentoSan BernardinoSan DiegoSan Fernando ValleySan JoseEast Bay (SF)
NEVADALas VegasReno
ARIZONATucsonPhoenixScottsdale
TEXASEl PasoDallasAustinHouston
FLORIDAMiamiFt. LauderdaleNaplesWest Palm BeachOrlando
CALIFORNIALos AngelesOrange CountySacramentoSan BernardinoSan DiegoSan Fernando ValleySan JoseEast Bay (SF)
NEVADALas VegasReno
ARIZONATucsonPhoenixScottsdale
TEXASEl PasoDallasAustinHouston
FLORIDAMiamiFt. LauderdaleNaplesWest Palm BeachOrlando
Opportunistic
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Cas
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14 unit failed condominium project in Southern California
Purchase of note from lender at a substantial discount (builder is in default)
Partner with the builder to complete the building (in exchange builder receives 20% of profits after preferred return)
Average square feet per unit is 1,800
Current value is approximately $6.45 million (avg. of $460,000 per unit)
Purchase price and holding costs are approximately $4.5 million
Exit strategy is 12 month sale of the units
Overall IRR of 37.5%
Opportunistic
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Opportunistic
Breakdown: Structure - Peak/Investor and Builder# of Units 14 Net Profit (After Pref) - Peak/Investor 80.0%Peak Current Value1 $6,450,000 Net Profit (After Pref) - Builder 20.0%
Avg Current Price Per Property $460,714Purchase Price of Note $4,200,000 Overall Internal Rate of Return2 37.5%
Additional Construction Costs $150,000Buyout - Partner $100,000Commissions (on purchase) $63,000
Total Purchase Price & Holding Costs $4,513,000Avg Purchase Price Per Property $322,357
Expense Assumptions:Property Taxes (% of Current Value) 1.25%Insurance (% of Current Value) 0.50%Closing Costs (% of Sales Price) 7.00%Foreclosure & Legal Fees $20,000
Footnotes:1. Based on Peak's internal assessment.2. Includes the net profit of 80% (after pref).
THIS MODELS ARE COMPLETED FOR ANALYSIS PURPOSES ONLY AND ARE IN NO WAY A GUARANTEE OF ANY RETURN OR EXPECTATIONS FROM PEAK.
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III. Credit Facilities / JV
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Provide financing through credit facilities to buyers of small pools or single home purchases
Typical facilities size range from $1 to $2 million (currently financing five facilities)
Predominate focus in the tri-state area of California, Nevada and Arizona
High yield returns on a short term basis (ability to JV with equity kicker)
Exposes investor to the current REO market in the safest possible position
Peak handles the due diligence and approval process in-house
Credit Facility / JVO
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Peak completes a thorough background check on the borrower (track record, pricing, repairs)
Peak uses its in-house “independent” valuation team to review all potential REO purchases by borrower
Borrower pays for all expenses (repairs, maintenance, sale) and manages the entire purchase
Peak inspects and re-visits properties if they stay on the books over 4 months
Peak has the capability to handle all aspects of the default process using its FISERV platform and foreclosure services
Due
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eCredit Facility / JV
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Key terms of the facility will include:
Facility Amount: $2 million to $10 million
Finance Charge: 12.0% to 14.0% annual rate fixed
Commitment Fee: 1.0% of the max facility amount
Draw Fee: 1.0% to 2.5% per draw
Exit Fee: 0.50%
Advance Rate: lesser of (a) 50% of our in-house valuation, or (b) 65% of the purchase price
Position: 1st TD
Term: One year from with a 1.0% renewal fee
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SCredit Facility / JV
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Key terms (cont’d):
Payments: Payment of 150% of the amount allocated to that property or 70% of the selling prices, whichever is greater
Assures that investor is taken-out well before it reaches the least desirable, hard to move assets
Non-Use Fee: Balance must exceed 50% of the maximum amount of the facility within 90 days or the facility amount will be reduced and a fee of 1.0% applies to the reduction
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SCredit Facility / JV
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Cas
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Credit Facility / JV
$2 million facility
Interest rate of 12.99%
Commitment fee of 1.0%
Draw fee of 1.50%
Exit fee of 0.50%
Servicing fee of 0.50% and transaction fee of $250 (paid to Bridgelock Servicing)
Borrower had 20 draws totaling $2.3 million
Average draw was $115,000
Average line outstanding was $402,000
Overall IRR of 22.7%
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Credit Facility / JVC
ase
Stud
yAssumptions: Cash Flow Totals
Line of Credit Facility $2,000,000 Interest Income 52,285Advance Rate1 65.0% Draw Fee Income 34,500Average Home Market Value $176,923 Commitment & Exit Fee2 30,925Average Loan Size $115,000 Servicing & Transaction Fee3 (29,150)Note Rate - Borrower 12.99% Total Income Generated 88,560
Fees: Internal Rate of Return - Overall 22.7%
Draw Fee 1.50%Committment Fee 1.00%Exit Fee2 0.50%Transaction Fee3 $250Servicing Fee3 0.50%Term 1 Year
Line Overview:
# of Draws 20Total Draws $2,300,000Average Draw Amount $115,000Average Line Outstanding $402,500
Footnotes:1. Advance rate is 65% of market value based on Peak's estimate of value.2. Paid to Investor and Peak.3. Paid to Bridgelock Servicing.
THIS MODELS ARE COMPLETED FOR ANALYSIS PURPOSES ONLY AND ARE IN NO WAY A GUARANTEE OF ANY RETURN OR EXPECTATIONSFROM PEAK.
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IV. Private Money Lending
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Private Money LendingO
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Peak provides private money collateral-based real estate loans that fill a non-conventional need for funding
Borrowers come to Peak due to a need to obtain capital in a short time span and/or traditional lending sources are not a good fit for the borrower
Peak is not encumbered by prohibitive policies and procedures that institutional lenders must follows
In exchange for the ease of obtaining a loan, Peak is able to charge a premium for its services
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Private Money LendingC
hara
cter
istic
sSpecific characteristics of private money loans include:
Quick funding for time-sensitive loans
Short-term bridge loans
Larger loans with more flexible terms than institutions
Funding of investments by pledging equity in other real estate as collateral
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Private Money LendingPa
ram
eter
sTARGET INVESTMENT PARAMETERS
Asset Type Private money loans secured by real estate
Geography National, with a focus on Southern California
Property Types All residential and commercial property types will be considered
Loan Purpose Any legal purpose/no construction loans
Loan Size Target loan commitment of $100,000 to $5,000,000 with average of between $500,000 and $1,000,000
Loan Term Terms of 6 to 12 months, excluding extensions
Loan-to-Value An average LTV of 65%
Pricing Fixed annual interest rates ranging from 12.0% to 15.00% and a 4% to 8% origination fee
Amortization All loans will be interest only
Other Collateral/Guarantees Loans will often include secondary collateral and personal guarantees
Prepayment Typically open to prepayment without penalty
Extension Fees Typically 3% for each 6-month period
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V. Contact
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Contact
Corporate Headquarters: Woodland HillsPeak Financial Plaza22837 Ventura Blvd. Suite 300Woodland Hills, CA 91364818-591-3300
Beverly Hills Office:Escrow of the West / Peak Finance Co.9440 Santa Monica Blvd., Suite 310Beverly Hills, CA 90210310-402-5555
Georgia Office:Asset Foreclosure Services (East Coast) 1280 Thistle Gate PathLawrenceville, GA 30045888-312-7738
Sherman Oaks Office:Escrow of the West13949 Ventura Blvd Ste 300Sherman Oaks CA 91423(888) 822-3689