romspen revest homes lpjonathan's cove, west palm beach jonathan's cove estimated peak...

ROMSPEN REVEST HOMES LPReliable Rental Income Plus Significant Capital Appreciation

Overview

US recession and mortgage crisis drove houseprices in SE Florida down 70% from peak

Low prices plus strong rental market provideopportunity to build rental portfolio

Over the next 3-5 years, housing prices in SEFlorida will rise by 50%-100%

Romspen & Revest have formed a fund to takeadvantage of those opportunities

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Our Business Model

BUY RENOVATE RENT OUT HOLD SELL

3

Fund Investment Objectives

Use fund capital to build a portfolio of safe,secure rental properties

Provide strong annual return from reliablerental income

Create significant portfolio appreciation overnext 3-5 years

Generate potential investor returns of 15%-20%per year

4

Outline of Presentation

Opportunity

Execution

Sample Property

Potential Investment Return

Fund Terms

What To Do Next

5

US Mortgage Crisis

- 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000

2000 2002 2004 2006 2008 2010 2012

Existing Bank Inventory ForeclosuresDelinquent Mortgages

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Impact of Crisis on Housing Prices

50

100

150

200

250

300

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

National (-30%) Southern Florida (-50%)Las Vegas (-41%) Phoenix (-48%)National Trendline

Source: S/P Case-Shiller Housing Price Index7

2014 Update: Steady Improvement

- 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000

2007 2008 2009 2010 2011 2012 2013 2014

Existing Bank Inventory ForeclosuresDelinquent Mortgages

8

2014 Update: Steady Improvement

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

National (-30%) Southern Florida (-50%)Las Vegas (-41%) Phoenix (-48%)National Trendline

Source: S/P Case-Shiller Housing Price Index9

SE Florida Showing Strong Improvement

$94,900

$208,800

$62,200

$91,400

$-

$50,000

$100,000

$150,000

$200,000

$250,000

2002 2006 2011 2014 2020E

Palm Beach County Housing Prices

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Opportunity

Execution

Sample Property


Fund Terms

What To Do Next

11

Focus on Three Key Factors

Depth of Distress

Strength of Rental Market

Long Term Cap Appreciation

South East Florida(Palm Beach, Broward& Martin Counties)

Orlando(Orange County)

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Focus On Gated HOA Communities

• Gated Home Owner Association (HOA)communities located in SE Florida

• Our target communities:• “A-” and “B+” quality in good

neighbourhoods• Built 1995-2007• 250-500 units• Traditionally owner-occupied

• Monthly HOA fees of $200-$400/month

• HOA responsible for all structural maintenance(roofs, exterior walls, windows & foundations), aswell as insurance, maintenance, security andlandscaping

• Peak prices of $250,000-$450,000

• Currently selling for $80,000-$150,000

Metropolitan Area(County)

HomeownerAssociations (HOAs)

Total HOA HousingUnits (estimated)

Palm Beach 5,336 426,880

Orlando 2,681 214,480

Broward 5,505 440,400

Miami Dade 6,083 486,640

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Sample Community: Links at Emerald Dunes

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Sample Community: Jonathans Cove

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Sample Community: Boynton Landings

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Corporate Overview

Property Management

Brokerage

Renovations

Revest: Boots on the Ground

• Revest operational headquarters located in Delray Beach, Florida• Full time team of 16 manages all aspects of acquisition, renovation,

tenanting and management

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Opportunity

Execution

Sample Property


Fund Terms

What To Do Next

18

Jonathan’s Cove, West Palm Beach

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Attributes:

Built 2002

264 units

1,200 square feet (2/2) – 1,400 square feet (3/2)

“A-” quality in traditional “owner” community in decentneighbourhood

Gated, with swimming pool, community centre & otheramenities

21

Jonathan's Cove, West Palm Beach

Jonathan's Cove

Estimated Peak Price $260,000Purchase Price $108,000Closing Costs and Renovations $15,138Total Cost of Property $123,138Discount from Peak 63%

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Jonathan's Cove, West Palm Beach

Jonathan's Cove

Estimated Peak Price $260,000Purchase Price $108,000Closing Costs and Renovations $15,138Total Cost of Property $123,138Discount from Peak 63%

Gross Annual Rent ($1,425 per month) $17,100Operating Expenses $8,695Net Operating Income $8,405Annual Portfolio Yield 6.63%

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Plan of the Fund

Use fund capital to build portfolio of single familyhomes in gated communities in SE Florida

Provide strong annual return from reliable rentalincome

Create significant portfolio appreciation over next3-5 years

Generate potential investor returns of 15%-20% peryear

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Opportunity

Execution

Sample Property


Fund Terms

What To Do Next

24

Annual Return: Rental Market is Strong

Portfolio takes 12 months to stabilize (buy, renovate & rent out)

After that, portfolio will generate 7%-8% annual return toinvestors

Approximately half paid out in quarterly distributions; other halfgoes to pay down mortgage principal

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Housing Prices Will Rise in SE Florida

Over the next 3-5 years, five key factors will drive housingprices up significantly in SE Florida:

General Economic Recovery in SE Florida

End of Foreclosure Sales

Shortage of New Housing

Recovery of HOA Communities

Mortgage Financing & Inverted “Cost to Rent” vs “Cost to Own”Ratio

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Key Driver #1: Economic Recovery

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

1960 1970 1980 1990 2000 2010 2020 2030 2040

Projected Florida Population 1960-2040

200

400

600

800

1,000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Florida GDP, Actual & Projected($billions)

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Key Driver #2: End of Foreclosures

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Key Driver #3: Shortage of New Housing

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Needed Per Year Built Per Year

Housing Demand vs Housing Supply

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Key Driver #4: HOA Recovery

When owners default on their mortgages, they stop payingtheir HOA fees

HOA declines as it cannot pay for maintenance & repairs,security, landscaping, pool services, etc.

When foreclosures are completed, outstanding HOA fees getpaid from proceeds of foreclosure

As outstanding dues are paid, HOA regains financial health,completes maintenance and repairs, security, landscaping,etc

Values in HOA can “pop” by 20-30% when this happens

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Key Driver #5: Mortgage Financing

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

US Mortgage Originations 2000-2014

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%Worsened Improved

Credit Score Trends

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Key Driver #5: Inverted Rent vs Own Ratio

Community FundTotal Cost

MonthlyCost to

Rent

MonthlyCost to

Own

FMV if Costto Own =

Cost to Rent

EmbeddedCapital

Appreciation

%Embedded

CapitalAppreciation

Sandalwood $124,500 $1,350 $935 $230,570 $106,070 85%

Cove at Briar Bay $95,000 $1,150 $798 $184,002 $89,002 94%

Chateau Wood $161,000 $1,650 $1,121 $296,447 $135,447 84%

Unhealthy real estate market: “cost to rent” is higher than “cost to own”

Healthy real estate market: “cost to own” is higher than “cost to rent”

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Exit Strategy

Option 1: list portfolio on MLS & sell toowner/occupiers (12-18 months)

Option 2: sell portfolio to larger aggregator (6months)

Option 3: roll portfolio into public REIT (6-9 months)

Predicted life of investment: 3-5 years

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Aggregate Return Over 5 years ($100,000)

2% AnnualAppreciation

(5 years)


(5 years)


(5 years)

Annual Distributions $16,000 $16,000 $16,000

Mortgage PrincipalPayments

$16,440 $16,440 $16,440

Investor Share ofProfits (70%)

$21,857 $58,019 $128,207

Total InvestorPayments

$54,297 $90,459 $160,647

% Return 54%(11% per year)

90%(18% per year)

160%(32% per year)

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Opportunity

Execution

Sample Property


Fund Terms

What To Do Next

35

Proposed Investment Terms

Romspen/Revest raise $25 million over next 9 months

Minimum investment US$100,000 (must pay in US$)

Closings: April 30, June 30, Sep 30 & Dec 15 (or until sold out)

Management contributing US$2.5 million to first closing

Accredited investors only

Five year investment term with two one year extensions

Limited redemption rights during investment period

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Proposed Investment Terms

7% annual priority return to investors

2% annual management fee (on equity)

100% of profits paid to investors until capital repaid

Thereafter, 70% to investors and 30% to management

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Why invest?

Experienced professional management team with significantequity investment

Investing in a hard asset at less than replacement cost

Positive annual cash flow secured by reliable rental income

Potential 50%-100% gain through housing price appreciation

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What to do next

Review presentation, term sheet & subscription agreement

Contact Greg Coleman or Dianna Price for questions aboutthe investment

Contact Lisa Calandra or Victoria Moayedi for questionsabout how to complete your subscription

Next closing date is June 30

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Final Word: What Would Warren Do?

If I had a way of buying … single-family homes… I would load up onthem… it's a very attractive asset classnow. I could buy them at distressedprices and find renters and … [take a]mortgage, it’s a leveraged way ofowning a very cheap asset and I thinkthat’s as attractive of an investment asyou can make.” Warren Buffett onCNBC's Squawk Box, Monday,February 27, 2012

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Appendix A: Where are we in the cycle?

SE Florida housing price index still off 36% from peak (179 vs 279)

Housing starts still down 60% from peak (800,000 vs 2,000,000)

Acquisition cost still 20% below replacement cost ($76 psf vs $95 psf)

Household formation still down 33% from long term average (0.91% vs1.36%)

Houses still 67% more affordable than at peak (affordability index: 167 vs101)

Mortgage originations still down 62% from peak ($8.8 billion vs. $23.1billion)

National foreclosure rates still more than double long term average(43,000 per month vs 21,000 per month)

Market metrics confirm ongoing opportunity:

Sources: Case Schiller HPI, National Builders Association, HUD, Mortgage Bankers Association,CoreLogic 01/15 Foreclosure Report41

Appendix B: Cdn/US Exchange Rates

Q4/2014(actual)

Q1/2015(actual)

Q4/2015(forecast)

Q4/2016(forecast)

Scotia Bank $0.86 $0.79 $0.75 $0.77Bank of Montreal $0.86 $0.79 $0.79 $0.83Royal Bank $0.86 $0.79 $0.75 $0.78CIBC $0.86 $0.79 $0.77 $0.81Toronto Dominion $0.86 $0.79 $0.77 $0.85Morgan Stanley $0.86 $0.79 $0.71 $0.74Average $0.86 $0.79 $0.76 $0.80

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romspen revest homes lpjonathan's cove, west palm beach jonathan's cove estimated peak...

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