soltis | investment advisors - debt strategies...1) last updated august 31, 2019 sundance bay |...

SUNDANCE BAYDEBT STRATEGIES

Contents

2

Introduction to Sundance Bay Team

Debt Strategies Overview

Focus on Asset Protection

Portfolio Assets and Performance

Opportunistic Investing

Overview

• Founded in 2012, Sundance Bay has more than 30 full-time team members headquartered in Salt Lake City, UT with a

satellite office in San Diego, CA and Indianapolis, IN.

• The team has invested more than $500M of equity in real assets and debt instruments with a total market value of more

than $800M.

High Quality Management Team with Public Company Experience

• The management team has over 130 years and $6B of combined acquisition and development experience.

• Many of the partners and team members come from top public and private companies, including Avalon Bay, Cottonwood

Residential, Equity Residential, Excel Trust (public REIT acquired by Blackstone), McKinsey and Company, Prudential

Real Estate Investors, Starwood Capital Group, The Related Companies and Toll Brothers.

• The principals have personally invested over $20M in the various Sundance Bay investment disciplines and invest

personally in each venture.

Investment Disciplines

• Value-add and Opportunistic Multifamily

• Debt Instruments

• Net Lease

Attractive Returns for Investors, Ranked in Top Quartile of U.S.

Real Estate Funds*

• Average realized net IRR of 26% for multifamily

• Average realized net IRR of 11% for the debt fund

• Average realized net IRR of 27% for net lease investmentsThe Haven | Kansas City

* According to Preqin Data 2019, Sundance Bay’s multifamily and net lease performance is ranked in the 94th percentile for N.

America real estate funds and its debt fund performance is ranked in the 75th percentile for N. America debt funds.

Note: Past performance is not a guarantee of future results. See disclaimer regarding historical investment performance on slide 2.

SUNDANCE BAY COMPANY OVERVIEW

3

DEBT STRATEGIES

EMILY BUNGE

Fund AccountantKARIN ANDERSON

Construction Draw

Manager

MIKE NIXON

Managing Director

STAN RICKS

Managing Director

REBECCA DEVRIES

Controller

ANDREW PETERSON

Director of Business

Development

DAVE SCHIESS

Asset Management &

Executive Advisor

DAVE YOUNG

Founder of Paragon Wealth

Management

GARY BAUGHMAN

Former CEO Fisher-Price &

CEO of Tyco Toys

MARK MAUGHAN

Head of Sundance Bay Net

Lease Investments

RYAN BAUGHMAN

Head of Operations for

Sundance Bay Multifamily

MATT ROMNEY

Head of Capital Markets for

Sundance Bay Multifamily

STEVE HORTIN

Financial Advisory, CPA

Sundance Debt Operations Team Sundance Debt Advisors

GLENN COSTA

Assistant ControllerDANNY KIRKPATRICK

Director

of Underwriting

Debt Strategies Team

Sundance Bay | CONFIDENTIAL 4

JOE DUNBAR

Senior Analyst

GARY PETERSON

Draw AccountantPHILOMENA KEYES

Executive Assistant

Contents

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1) Last Updated August 31, 20192) Inception March 2012Sundance Bay | CONFIDENTIAL

11.7% average annualized net return since inception2

90-month track record, audited

$218.6 million Members’ Equity

$503.0 million in loans funded to date

252 loans funded

Experienced management team with 50+ years in industry

Invest in strongly securitized and collateralized assets

Executive Summary PROVEN TRACK RECORD1

6

Conventional banks & other lending sources remain under fiscal and regulatory pressure

Traditional bridge/hard money lenders are localized, unstructured and carry exorbitant pricing and terms; very few institutional bridge/private lending funds exist

Higher implied default rates are manageable due to significant protective equity, property cash flows and adherence to stringent underwriting parameters

Limited Credit

Availability

Less Competition

and Regulation

ManageableDefault Risk

Sundance Bay | CONFIDENTIAL

Why Private Lending?DELIVER STRONG YIELDS ON REAL ASSETS

7

Assets Description LTC1 LTV2

Residential & Multi-Family Construction

Financing the construction of

single-family homes/multi-family

housing

70-80% 50-70%

NNN Construction

Construction financing for NNN

lease (mostly single tenant)

70-90% 50-75%

Commercial/Bridge Financing

Bridge financing for commercial projects

and existing residential properties

60-75% 50-80%


AIM TO ACHIEVE CONSISTENT RETURNS WITH CONTROLLED RISKWhat Do We Lend On?

1) Loan to Cost (LTC) represents the percentage of a property’s purchase price and renovation/construction costs that are financed by a loan

2) Loan to Value (LTV) is calculated based on recent market comparables, Broker Price Opinions and/or pre-sold contracts

Golf Lakes, Largo, FLAsset Type: Condominium

Cost: $8.8M

Loan Amount: $7.6M

LTC: 86%

LTV: 80%

Interest Rate: 12.00%

Origination Points: 3.00

NET LEASE INVESTMENTS

9

Ollie, San Diego, CAAsset Type: Multi-Family

Cost: $19.7M

Loan Amount: $15.7M

LTC: 80%

LTV: 68%



Denver Street, SLC, UTAsset Type: Town Homes

Cost: $4.5M

Loan Amount: $3.4M

LTC: 75%

LTV: 66%



Starbucks, Mammoth, CAAsset Type: NNN

Cost: $3.9M

Loan Amount: $3.5M

LTC: 91%

LTV: 69%



Freddy’s, Carbondale, ILAsset Type: NNN

Cost: $1.9M

Loan Amount: $1.4M

LTC: 73%

LTV: 68%



Empire, Park City, UTAsset Type: Condominium

Cost: $48.8M

Loan Amount: $33.8M

LTC: 69%

LTV: 55%



Recently Funded LoansREFLECTS SPECTRUM OF ASSET TYPES AND GEOGRAPHIC BREADTH

Contents

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- Accept a lower, risk- adjusted yield in return for higher quality loans backed by experienced borrowers

- Deploy capital on affordable housing and income generating assets

Cash Reserves and Liquidity5

- Target 10% AUM in liquid funds- Maintain sufficient reserves to fund draws- Preserve opportunity to make loans at attractive rates

during a market correction

No Leverage1

- Refrain from using leverage to enhance yield- Position the Fund to be in primary control of assets- Enable Fund to employ a patient strategy in the

event of a major market

Geographic and Asset Diversification2

- Focus on growth markets- Continue investment in Mtn West, Texas and Florida- Strive for healthy mix of residential and commercial

1st Trust Deeds3

- Maintain 1st Trust Deed positions- Wind down existing mezzanine loans on multifamily

product

4

11

Ability to Think and Act like Equity6

- Utilize significant operating experience of team- Leverage knowledge and resources of Sundance

Bay Multifamily and Net Lease Investments

Operating PrinciplesRISK AVERSE INVESMENT STRATEGY TO MITIGATE IMPACT OF MARKET CORRECTION

Competitive Pricing for High Quality Loans

Asset

Starbucks, 7-11,

Freddy’s, Denny’s, etc.

8% Use contracted lease rate that goes into

effect upon construction completion and

tenant commences operationsNNN

Apartments, condos

and townhomes

59%

Hospitality, warehouse,

office, medical office,

etc.

8%

Single Family

Residential, multiphase

developments

11%

14%

Example

projects

Multifamily

Commercial

SFR

A&D

Horizontal

improvements and

finished lots

Rent/lease assumptions

Portfolio

concentration

Apply current market comps for rents on

similar product types. Assume 20-30%

reduction in rents and 30% operating costs

Derived from projected net operating

income. Assume 25% reduction on net

operating income.

Apply current market comps for rents on

similar product types. Assume 20-30%

reduction in rents and 30% operating costs

Not yield producing asset. Sundance would

need to hold asset until market improves

and it is feasible to go vertical

8-16%

5-12%

12-17%

6-9%

0%

Anticipated

Yield

Anticipated yield for

distribution

0 - 6%

Expected yield upon construction completion and stabilization

5-8%Weighted average

yield

12

Portfolio Performance During CorrectionFUND ASSETS ARE WELL POSITIONED TO GENERATE INCOME

Contents

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Portfolio DiversificationCOMMITTED CAPITAL BY ASSET TYPE

14

SFR – Single-Family ResidentialNNN – Triple-Net LeaseCondos/TH – Condominiums or Townhomes

Total Committed Capital - $293.9M

41


Portfolio DiversificationCOMMITTED CAPITAL BY STATE

15

Geographic SpreadWe work with strategic borrowers in states outside of our core markets.


Portfolio Summary

Q3-to-Date Return Year-to-Date Return Annualized Return

1.76% 7.33% 10.99%

Quarterly Returns (%)

Cumulative Return Since Inception(March 2012) 88.13%

Portfolio Summary

3.53.2

3.7

3.23.1

2.6

3.1

2.7

3.0 2.9 2.93.2 3.3 3.1 3.2

2.62.8 2.9 2.9 2.8 2.8 2.8

2.62.9 2.9

2.7

1.8

Q1'13

Q2'13

Q3'13

Q4'13

Q1'14

Q2'14

Q3'14

Q4'14

Q1'15

Q2'15

Q3'15

Q4'15

Q1'16

Q2'16

Q3'16

Q4'16

Q1'17

Q2'17

Q3'17

Q4'17

Q1'18

Q2'18

Q3'18

Q4'18

Q1'19

Q2'19

Q3'19

VOLATILTY IS REDUCED BY DIVERSITY OF LOAN PORTFOLIO

Contents

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DEBT STRATEGIES


Funding Pipeline

$229.3M Sum of Potential Loan

Commitment

Total Initial Outlay: $53.5MTotal Loan Amount: $229.3M

Loans in Pipeline (as of 9/1/19) Current Funding Pipeline

SIGNIFICANT DEMAND EXISTS IN THE MARKET

• 15 days after closing 36/46 lots were under contract for

$45,000/lot

• Remaining 10 lots: used to develop 10 twin homes

• Rented twin homes for 40 months waiting for market to

recover

• Centennial Bank foreclosed on 46 lots in Springville, UT and

sold at auction in 2009• Auction occurred 3 days after the notification of the auction was

received

• Winning bid: $18,000/lot, 1 day to close

Context and Returns

Background

Acquisition & Development Costs

Acquisition Cost $850,000

Development Costs $1,000,000

Total Costs $1,850,000

Sales Proceeds/Rental Income

Sale of 36 Lots $1,620,000

Sale of Twin Homes $2,300,000

Rental Income $200,000

Gross Proceeds $4,120,000

Net Profit $2,270,000

Multiple 3X

IRR ~60%

19

RECESSIONARY ENVIRONMENTS OPEN DOOR TO OPPORTUNITIES


soltis | investment advisors - debt strategies...1) last updated august 31, 2019 sundance bay |...

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