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GULF COAST OPPORTUNITIES FUND (GCOF)

Presented by Nathan Cox

ACRE EXECUTIVE EXCHANGE AUGUST 23, 2013

Gulf Coast Opportunities Fund, LP | 2

AGENDA

I. Introduction • Personal History • Battle Plan Capital • Formation of GCOF

II.Investment Strategy

III. Acquisition Summary

IV. What’s Next?


INTRODUCTION I. Nathan Cox

II. Battle Plan Capital

• Bellator Real Estate & Development (2008)

• Truland Homes (2011)

III. Formation of GCOF

• Investment Team

• Nathan Cox, Ralph Reynolds, Billy Stimpson, Cullen Thompson

• Bienville Capital Management (www.BienvilleCapital.com)

• Equity Raise


INVESTMENT STRATEGY

I. Why the Gulf Coast? • Intimate market knowledge

• Lack of liquidity in the region

• Heavily distressed prices

• Growth potential

II. Goals of GCOF


INVESTMENT STRATEGY

Sources: Baldwin County MLS; USA Mitchell College of Business; www.policom.com

Price History of Target Area • Despite economic growth across the region, real estate prices still fell 60-90% from their peak

valuations reached in 2006

• Many assets were priced below their replacement costs or at prices last seen in the mid 1990s

Location 1995 2005 2012 From 2005 From 1995

Fairhope, AL - Residential Lots $40,000 $95,000 $45,000 -53% 13%

Daphne, AL - Residential Lots $27,500 $75,000 $35,000 -53% 27%

Spanish Fort, AL - Residential Lots $30,000 $65,000 $40,000 -38% 33%

Gulf Shores, AL - Craft Farms Subdivision $35,000 $275,000 $20,000 -93% -43%

Location 1995 2005 2012 From 2005 From 1995

Ono Island, AL - Interior Lots $30,000 $240,000 $35,000 -85% 17%

Ono Island, AL - Ole River Lots $265,000 $1,500,000 $425,000 -72% 60%

Gulf Shores, AL - Residential Beach Front (pp/ff) $4,000 $24,000 $6,000 -75% 50%

Orange Beach, AL - Commercial Beach Front (pp/ff) $15,000 $125,000 $16,000 -87% 7%

Price Change

Price Change Beach Properties

Inland Residential

Since 1995, inflation nationwide (i.e., CPI) has risen by 51%, yet real estate in highly-desirable geographic areas is now priced below similar levels

http://www.policom.com/


1990 2000 2010

Mobile County, AL 378,643 399,843 412,992

Baldwin County, AL 98,280 140,415 182,265

Escambia County, FL 262,798 294,410 297,619

Santa Rosa County, FL 81,608 117,743 151,372

Oklaoosa County, FL 143,776 170,498 180,822

Total 965,105 1,122,909 1,225,070

Jackson County, MS 115,243 131,420 139,668Harrison County, MS 165,365 189,601 187,105

POPULATION GROWTH

INVESTMENT STRATEGY

Growing Population in the Gulf Coast Region

• Mobile, AL is the economic center of the region with a county population of 413,000 residents

• Baldwin County, AL is the largest and fastest growing county in terms of population in Alabama with 2010 population of 182,000

• Pensacola/Northwest Florida area has a population of 630,000 and the largest Air Force base in the world

• The beaches of the Gulf Coast, from Gulf Shores, AL to Destin, FL attract more than 10 million visitors per year

Sources: U.S. Census; www.mobilechamber.com; www.mobilebayregion.com; Pensacola Chamber of Commerce; Bloomberg

Since 1990, the population of Baldwin Country has nearly doubled

http://www.mobilechamber.com/

http://www.mobilebayregion.com/


INVESTMENT STRATEGY

Economic Growth in the Mobile Bay Area • The Port of Mobile is one of the largest ports by tonnage in the U.S. It is the largest break bulk forest

products port in the country and the second largest coal terminal in the U.S. Since 2000, the Alabama Port Authority has invested $700 million to fund infrastructure improvements

• The 2014 expansion of the Panama Canal will have a significant impact on Mobile as it is the closest direct port to the Canal and is the only regional port capable of significant expansion. Mobile’s transportation infrastructure is unique among Gulf Coast cities with five Class I railroads, two interstates and three major river systems converging at the Port

• ThyssenKrupp invested $4.7 billion in 2007 to construct one of the largest steel mills in the U.S. in northern Mobile County. It will employ 2,700 people when fully operational in 2014

• Austal USA headquartered in Mobile in 2000 and is a world leader in the construction of aluminum defense and commercial naval vessels. The United States Navy has contracted in excess of $3.5 billion for the construction of the Littoral Combat Ship and Joint High Speed Vessel in Mobile

• EADS (Airbus) has an engineering, training and production facility at Brookley Aeroplex, a 1,700 acre airport and industrial park with a 9,600 foot runway and over 100 businesses. It is widely speculated EADS will begin building commercial and/or military aircraft in Mobile within the next 18 months

• The Mitchell Cancer Institute at the University of South Alabama is rapidly distinguishing itself as a peer to MD Anderson, Memorial Sloan-Kettering, Johns Hopkins and the Mayo Clinic. MCI is the only cancer research and treatment center serving the area from Houston to Tampa

• The South Alabama Mega Site is a 3,000 acre commercially zoned site ideally positioned for an automobile manufacturing plant

Sources: Wikipedia; ThyssenKrupp; Mitchell Cancer Institute; Mobile Chamber of Commerce; www.mobilebayregion.com

http://www.mobilebayregion.com/


INVESTMENT STRATEGY

II. Goals of GCOF • To raise $50 million of capital

• Closed the fund out to new investment in less than 90 days at just over $61 million

• To purchase distressed real estate in “A” locations to sell off to developers with a focus on residential properties

• To implement a buy and hold strategy with a target harvest period of 3-5 years

• To generate 2 to 3 times cash-on-cash returns net of fees over the term of the fund


ACQUISITION SUMMARY

I. Geographic Area • Panama City, FL to Baldwin County, AL

II. Asset Breakdown Gulf Front Land

• 5 acquisitions totaling approximately $26.5 million

• 43.5% allocation

Developed Residential Lots

• 8 acquisitions totaling approximately $9 million


Undeveloped Residential Land



Raw Land (multiple potential uses)



Commercial Property

• 2 acquisitions totaling approximately $2.5 million

• 3.9% allocation

SUMMARY OF GCOF ACQUISITIONS


ACQUISITION SUMMARY

Source: David Diehl; Bienville Capital

BEACH FRONT 1. Orange Beach Gulf

Front 6. Orange Beach West

Gulf Front 13. Panama City Gulf Front (see p.18 for details) RESIDENTIAL 2. Retreat at Tiawasee 4. Valamour 5. Reserve at Daphne 7. Fairhope Falls 10. Crimson Ridge 11. Arborwalk 12. Bon Secour 14. Pace, FL 81 acres 16. Gulf Shores 395 acres COMMERCIAL 3. 8301 N. Hickory St. 8. Golden Triangle 9. Daphne Commercial

Site 15. Bon Secour Marina *Listed in order of acquisition

1 6

2 4

3

8

5

7

9

12

11

10

14

15 16

GCOF PROPERTY MAP


ACQUISITION SUMMARY

Type: Beachfront; 3 contiguous Gulf front parcels totaling 1,005 front feet (10.54 acres) in Orange Beach, AL Purchase Price: $11,494,058 or $11,400 per front foot

Analysis: In 2005, the total debt on these properties exceeded $100 million with prices exceeding $125,000 per front foot In 2010, Hampton Inn purchased their property (241 front feet) for $8.2 million, or $34,000 per front foot (versus GCOF’s purchase price of $11,400 per front foot)

Property A

Property B

Property C

1 Estimated total cost assuming all improvements are made. This number could change over time.

ORANGE BEACH GULF FRONT EXAMPLE


WHAT’S NEXT? I. Minimal buying opportunities still remain

• Very few quality distressed deals remain in the pipeline

• Prices are up 15-20% over the last year, making it difficult to purchase property today and earn above average returns by implementing a buy and hold strategy

II. Next Opportunity… Development • Investors need to have the ability to add value by developing

horizontally, vertically or both

• Credit is available, but significant equity is required

• Many people have the idea and desire, but lack the capital needed to get projects out of the ground

• Cash is going to remain king

• For those that are willing to inject equity into development deals in the coming year they will have the ability to name the terms

GULF COAST OPPORTUNITIES FUND (GCOF)

Presented by Nathan Cox

ACRE EXECUTIVE EXCHANGE AUGUST 23, 2013

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