INVESTMENT MEMORANDUM
U.S. Real Estate Opportunity Fund(Western Region)
in the amount of:
$100,000,000.00
Released: 02/2012
EXECUTIVE SUMMARYReleased: 02/2012
U.S. Real Estate Opportunity Fund
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Closing: May 31, 2012General Mgr.: MagnuM Opes Corporation
Returns: Internal Rate of Return ±15.5% Cash-On-Cash ±210%
Values: Equity ±$100,000,000 ±30%Mortgage ±$215,000,000 ±70%Acquisitions ±$315,000,000Disposition ±$450,000,000
Local: Western Region(WA, OR, CA & NV)
Assets: Segregated Portfolio(Office, Retail and Industrial)
Term: Dissolution is ±5 yearsUse: Formation of a Private REIT
Unit: $500,000.00Capitalization: $100,000,000.00
Type: Private Equity FundFund Entity: Western Region Fund, LLC
(Western Region)
FUND SYNOPSISReleased: 02/2012
Fund Description
The U.S. Real Estate Opportunity Fund is a group of private equity funds established for the acquisition and operation of income producing real estate for profit. The initial fund is established to acquire real estate in the U.S. western region. The U.S. Real Estate Opportunity Fund (Western Region) shall operate as an independent private equity investment company titled Western Region Fund, LLC. It is the intent of the U.S. Real Estate Opportunity Fund to make future offerings for other U.S. regions.
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Statement of Purpose
The purpose of the Fund is to acquire a portfolio of undervalued real estate in recovering metropolitan areas of the U.S. and to increase the value of that real estate with the intent to:
Reposition the portfolio as a Private Real Estate Investment Trust (Private REIT). In five years, convert the Private REIT to a Publicly Traded Real Estate Investment Trust (Public REIT). And provide the initial private equity Subscribers the option for
the return-on and of their investment, plus the option for retained shares in the Public REIT; or
Dispose of the portfolio assets in approximately 5 years and distribute principal and profits equivalent to a ±210% cash-on-cash return or higher.
FUND SYNOPSISReleased: 02/2012
REIT Description
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A REIT is a fairly unique entity in the world of tax law
Investors can achieve a variety of business/tax goals that cannot easily be achieved with any other entity
REITs can be combined with other types of entities
More Private and Public REITs are being formed today than ever before
REITs offer Private Equity Funds and Private Investors an opportunity to take advantage of unique planning opportunities
Private REITs provide many operational and return advantages
Private REITs are not publicly traded
Private REITs formed with pass through entities can avoid income tax
Private REITs provide diversification in assets, investment types and tax strategies
FUND SYNOPSISReleased: 02/2012
Dividends and Gains
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Private REITs are formed with pass through entities Approximately 95% of the net annual income is distributed to Shareholders The Western Region Fund will operate under these guidelines
Investment and Returns ±210% Cash-On-Cash Return ±15.5% Internal Rate of Return
Exit Strategies
Disposition by REIT acquisition Disposition by market sale Option to extend the operational term
Merger with other regional funds Place an Initial Public Offering (IPO) Cash distribution to Shareholders
Shareholders may option for Public REIT shares
FUND SYNOPSISReleased: 02/2012
The Market
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Most all major agencies are reporting recovery trends Historical bell curves illustrate value step-up
Typical Acquisition and diversification Office sector Retail sector Industrial sector
Preparation for acquisitions have commenced in Seattle Portland San Francisco Los Angeles Las Vegas San Diego
THE GLOBAL MARKETReleased: 02/2012
Key Global Highlights
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Economic risks in Europe while U.S. trends more favorable and Asia performs well Capital markets robust Major cities considered ‘safe haven’ Debt financing constrained Capital appreciation is slowing as yields flatten Office leasing markets show mixed pictures Overall global leasing volumes are likely to be stable Vacancies continue to edge downward The global office index grew in 2011 Technology, energy and commodity sectors are driving demand International retailer demand remains robust Warehousing momentum slow in Europe and Asia, but rebounding in U.S. Hotel transactions hold steady U.S. apartment market is high performer
THE GLOBAL MARKETReleased: 02/2012
Australia China France Germany India Japan UK USA
Oct 2011 3.2% 8.1% 0.4% 1.0% 7.5% 2.7% 0.9% 1.4%
January (Latest) 3.1% 7.9% -0.7% 0.2% 6.7% 2.9% 0.3% 2.0%
Change (bsp) -10 -20 -110 -80 -80 +20 -60 +60
GDP Projections 2012 in Major Economies – Recent Movements
Source: IHS Global Insight, January 2012
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THE GLOBAL MARKETReleased: 02/2012
Economy Real Estate Investment Markets Real Estate Occupier Markets
Country CityNational
GDP
OECD Leading
Indicator
National Investment
VolumesCapital Value
Change Prime Yield Yield GapRental Change
Net Absorption
Vacancy Rate
Supply Pipeline
Germany Frankfurt 0.2% -5.5% 35% 2.1% 4.8% 297 0.0% 0.9% 13.9% 3.6%
Hong Kong Hong Kong 3.8% na 31% 20.7% 3.4% 188 10.2% 3.3% 4.2% 3.1%
UK London 0.3% -5.6% 6% 7.4% 4.0% 202 7.4% 0.9% 5.8% 3.8%
Russia Moscow 3.7% 1.3% 118% 49.0% 9.0% 50 41.2% 3.8% 16.0% 14.8%
US New York 2.0% -0.2% 63% 27.6% 4.3% 243 7.6% 0.5% 10.4% 0.9%
France Paris -0.7% -6.6% 37% 10.7% 4.8% 158 10.7% 1.3% 6.9% 3.3%
Brazil Sao Paulo 3.2% -7.6% 48% 12.7% 10.0% na 18.6% 5.0% 10.5% 35.9%
China Shanghai 7.9% 12.0% 3% 19.1% 5.9% 233 17.5% 23.8% 12.5% 35.5%
Singapore Singapore 2.0% na 25% 10.5% 3.8% 222 4.8% 10.1% 7.7% 21.3%
Australia Sydney 3.1% 0.4% -5% 8.3% 6.9% 307 15.2% 2.0% 8.7% 2.2%
Japan Tokyo 2.9% -2.2% -21% -2.1% 3.6% 261 -2.1% 3.8% 3.6% 14.0%
Global Real Estate Health Monitor
Real Estate data end Q4 2011
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THE GLOBAL MARKETReleased: 02/2012
Prime Offices – Rental Clock, Q4 2011
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THE GLOBAL MARKETReleased: 02/2012
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THE GLOBAL MARKETReleased: 02/2012
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THE U.S. MARKETReleased: 02/2012
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THE U.S. MARKETReleased: 02/2012
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THE U.S. MARKETReleased: 02/2012
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THE U.S. MARKETReleased: 02/2012
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THE U.S. MARKETReleased: 02/2012
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THE U.S. MARKETReleased: 02/2012
U.S. Market – Economy Clock, Q4 2011
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U.S. WESTERN REGIONReleased: 02/2012
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Target Cities● Seattle
Portland ●
San Francisco●
● Las VegasLos Angeles ●
San Diego ●
Washington
Oregon
Nevada
California
Seattle Portland San Francisco
Los Angeles Las Vegas San Diego
U.S. WESTERN REGIONReleased: 02/2012
Seattle – Leasing activity rebounds, led by Class A deals
Key Indicators, Q4 2011 Property Clock
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U.S. WESTERN REGIONReleased: 02/2012
Portland – Driven by logistics and high tech
Key Indicators, Q4 2011 Property Clock
Vacancy
Leasing Activity
Rents
Employment
Unemployment
New Construction
Personal Income
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U.S. WESTERN REGIONReleased: 02/2012
San Francisco – Tech demand produces highest rent and net absorption growth
Key Indicators, Q4 2011 Property Clock
Vacancy
Leasing Activity
Rents
Employment
Unemployment
New Construction
Personal Income
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U.S. WESTERN REGIONReleased: 02/2012
Los Angeles – Recovery mixed across submarkets
Key Indicators, Q4 2011 Property Clock
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U.S. WESTERN REGIONReleased: 02/2012
Las Vegas – A quiet come back
Key Indicators, Q4 2011 Property Clock
Visitor Volume
Gaming Revenues
Population
Employment
Unemployment
New Construction
Personal Income
Peakingmarket
Fallingmarket
Risingmarket
Bottomingmarket
Las Vegas
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U.S. WESTERN REGIONReleased: 02/2012
San Diego – driven by high-tech, biopharma, retail and healthcare
Key Indicators, Q4 2011 Property Clock
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TYPICAL ACQUISITIONReleased: 02/2012
Financial District San Francisco
Spring ValleyLas Vegas
DowntownLos Angeles
DowntownSan Diego
Mid-WilshireLos Angeles
Potential Acquisition
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TYPICAL ACQUISITIONReleased: 02/2012
Concluded Acquisition Characteristics
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±$10,000,000.00 Market Value
65% to 75% Occupancy Performing Leases Well maintained – less then 1% of value for capital improvements Market value equivalent to an ±8.0% capitalization of in place income
Submarket illustrates positive demand and growth trends
The asset is projected to reach ±90% occupancy in by the fifth year
The projected income curve illustrates ±10% annual appreciation
FINANCIAL PERFORMANCE FORECAST Released: 02/2012
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● $315 Million
● $458 Million
FINANCIAL PERFORMANCE FORECAST Released: 02/2012
Cash-On-Cash Return: ±210%
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Performance Based of the following Assumptions
Fund Deployed at over 5 quarter (20% of fund per quarter).
Mortgage Debt is equivalent 70% loan-to-value and 6.5% fixed interest amortized over 25 years.
Asset Income is based on net leases with net operating income equivalent to an ±8.0% capitalization rate.
Asset disposition is based on an ±8.0% capitalization of the forecasted income stream.
Renovation/Capital Improvements are equivalent to ±1.0% of the acquisition price or less.
Operational expenses are typical for the asset sector and location. All net income/gains are first applied to the return-of equity/principal
and then to the return-on investment.
Internal Rate of Return: ±15.5%
STRUCTURE AND MANAGEMENT Released: 02/2012
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Mortgage Lender70%Re
tire
mor
tgag
e
Equity Source
WRF, LLCMagnuM Opes
3
STRUCTURE AND MANAGEMENT Released: 02/2012
The General Manager: MagnuM Opes Corporation
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Core Competencies include, but are not limited to: Fund, Portfolio & Asset Management Investment & Real Estate Consulting Real Estate Development & Construction
STRUCTURE AND MANAGEMENT Released: 02/2012
The General Manager: MagnuM Opes Corporation Historical Performance
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MOC
NAREITNCREIF-ONCREIF-I
20 consecutive years of history and cohesive leadership. 20 consecutive years of proven returns consistently out-performing the
NAREIT, NCREIF Office and NCREIF Industrial indexes.
STRUCTURE AND MANAGEMENT Released: 02/2012
Key Management
Michael A. Panciro , Chief Executive Officer
Background:Mr. Panciro is one of the founding Officers of MagnuM Opes Corporation. Prior to the formation of the company, he served as the Chief Operations Officer for Chenco International Investment Corp. He is an experienced entrepreneur with managerial strengths in fund management, real estate operations and development, business structuring and strategic planning.
Education: Designations & Awards:B.A. Sciences – University of Pennsylvania Certified Commercial Investment Manager (CCIM)Real Estate Management – Harvard University Urban Land Institute (ULI) – Real Estate FinanceBoard Certified Instructor – Lincoln Graduate Center Senior Asset Manager (SAM)
Business Law Master Senior Appraiser (MSA)Real Estate & Asset Management National Association of Industrial and OfficeReal Estate Analyses and Valuation Properties (NAIOP) – Development Awards
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STRUCTURE AND MANAGEMENT Released: 02/2012
Key Management
Maranda S.J. Chen , Chief Financial Officer
Background:Ms. Chen is one of the founding Officers of MagnuM Opes Corporation. Prior to the formation of the company, she served as the Vice President of Chenco International Investment Corp. Ms. Chen still retains her Cofounder and Directorship with Chenco International Investment Corp., but is a full time Manager and Chief Financial Officer of MagnuM Opes Corporation.
Education: Designations & Awards:
B.A. Marketing – Fu-Jen University, Taipei, Taiwan Certified Commercial Investment Manager (CCIM)
M.B.A. Real Estate – Eastern Michigan University National Association of Industrial and Office
Properties (NAIOP) – Development Awards
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STRUCTURE AND MANAGEMENT Released: 02/2012
Key Management
Sherry Wang , Managing Director of Real Estate
Background:Ms. Wang is a member of the Board of Directors for MagnuM Opes Corporation and has taken an active role as Managing Director of Real Estate. Her prior experience includes debt finance and new resort development for Sands Corp., Las Vegas; investment banking and acquisitions advisory at Citigroup Inc., New York; and retail real estate strategy and execution at Gap Inc., San Francisco.
Education: Designations & Awards:B.A. Economics – Northwestern University Urban Land Institute – San Francisco, CaliforniaM.B.A. Real Estate, Finance – Wharton Corporate Officer for Wharton Women in Business
Business School, University of Pennsylvania Northwestern University Alumni Admissions Committee
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STRUCTURE AND MANAGEMENT Released: 02/2012
Key Management
Anthony R. Castrignano , Managing Director of Finance
Background:Mr. Castrignano serves as the Managing Director of Finance for MagnuM Opes Corporation. Prior to his appointment, he was the Broker/Owner of Sky Mesa Capital, a mortgage and real estate brokerage firm. Mr. Castrignano is an experienced entrepreneur with managerial strengths in mortgage finance and real estate consulting.
Education: Licenses:B.A. – Lycoming College, Pennsylvania Nevada Real Estate Broker
California Real Estate BrokerMortgage Broker
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STRUCTURE AND MANAGEMENT Released: 02/2012
Key Management
Dean Willmore , Managing Director of Acquisitions
Background:Mr. Willmore has conducted more than $168 million in real estate transactions for MagnuM Opes Corporation. Prior to accepting his position with the firm, he was Senior Director of Commerce | Cushman Wakefield and Senior Vice President of Prudential CRES. Mr. Willmore is the founder of IPG, “Industrial Property Group” which was purchased by Prudential CRES.
Education: Designations & Licenses:B.A. Business – University of Arizona Society of Industrial and Office Realtors (SIOR)
Nevada Real Estate Broker
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Released: 02/2012
Relationships, Partners and Associates
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