Cis Properties Llc Private Placement Info
- 1. CIS Properties LLC (USA) (A Delaware, USA Limited Liability Company) Private Placement Maximum Offering Amount: $1,000,000,000 Price: US$250,000 per Series-A Preferred LLC Interest Dividend Payment Rate of 7-15% per annum (Payable in each Calendar Quarter) 1
- 2. CIS Properties LLC (USA) (A Delaware, USA Limited Liability Company) Investment Targets Distressed And Under-Valued: Commercial real estate Commercial Whole Loans CMBS In Russia and CIS countries 2
- 3. CIS Properties LLC (USA) (A Delaware, USA Limited Liability Company) Market Overview The combination of a credit crunch, lower consumer confidence, increased consumer debt, and reduced consumer spending keep reducing occupancy levels and property values in the commercial real estate sector Sales of commercial properties has declined 58% globally And hotel sales declined the most : down 75% globally About US$10 billion of commercial property worldwide has been foreclosed upon or transferred back to lenders (Feb09) And US$72 billion was in default state (Feb09) Many real estate developers cannot refinance short-term construction loans More CMBS and commercial mortgages are likely to default Un-leveraged annual returns are about 22-34% for commercial properties in Russia/CIS compared to 6-12% in the US and Western Europe 3
- 4. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Market Forecast REAL ESTATE CREDITS & CMBS There will be more M&A deal between Low levels of the credit availability the financial instructions and developers Financial institutions will be willing to We expect a substantial discount for credit only nearly ready projects the properties of banks, developers and The mortgage market will not develop construction companies, as they will until years 2011-2012 struggle to raise cash or avoid More developers will have problems bankruptcy of default its credit obligation. The shortage of new properties and New construction market will return to development market that will happen the numbers of late 1990-s. during the year 2010 will evolve in new The restructuring of developers’ loans deficit of the properties in years 2011 – will end: shortage of liquid funds 2012. We expect financial institutions to The availability of empty rental spaces keep interest rates high in order to will increase the sub-rental market minimize risks 4
- 5. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Investment Strategies Sell the asset for a profit Re-position the asset Re-negotiate agreements/mortgages/leases Hold the asset and earn a cash-on-cash return Asset swaps Re-package and spin-off the asset 5
- 6. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Earning Revenues Returns on investments from: JVs with real estate developers (un-completed projects) Existing distressed institutional-grade commercial real estate Whole loans and commercial leases Commercial Mortgage Backed Securities And Fees for providing the equity (equity/mezzanine/bridge financing/senior debt) 6
- 7. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Investor’s Exit Expected holding period is 4-6 years Exit via: Redemption of Preferred LLC Interest Special Distributions to holders of Preferred LLC Interests Recoupment and Post-Recoupment Payments IPO Spin-off of assets into a public fund 7
- 8. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Team Strength Experience in commercial real estate and mortgages Experience in analyzing and managing commercial properties Knowledge of sophisticated financial transactions, joint ventures and alliances. Ability to identify under-valued assets Ability to identify sources of value Strategic Alliance with Colliers International for Due Diligence and deal-sourcing 8
- 9. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Strategic Alliance Partners CIS Properties outsources critical functions * to the experts: Colliers International will perform Due Diligence, handle property management; and assist in identifying assets for acquisition. RBR LLC is a highly reputable engineering, due diligence and consulting firm that is based in Russia. RBR LLC will perform due diligence and assist in identifying assets for acquisition. * Appraisals, property management, deal-sourcing 9
- 10. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Competitive Advantages Above-average Returns *: 7-15% per annum paid quarterly for at least 2 years. Minimal Re-Investment Risk For First Two Years: 7-15% per annum paid quarterly for at least 2 years. Professionalism: Experienced team and strategic alliances with Colliers International and RBR LLC. Tax-Free Asset Swaps: Opportunities to avoid the necessity of writing-down assets via asset swaps. Tax Benefits: Shield from bankruptcy proceedings and obtain tax benefits. * YTM for 3-YR US Treasury was 1.49%; 5YR UST at 2.37%; 30YR US Treasury was at 4.16%; YTM for 3-YR UK Gilt was 1,69%; 5YR at 2,74%; 30YR at 4,19% (Quotes as of 18th Sept 2009) http://markets.ft.com/markets/bonds.asp 10
- 11. CIS Properties LLC (USA) (Delaware, USA, Limited Liability Company) Offering Details Commencement Of Offering………….…September 25, 2009 Termination Of Offering………….…After November 30, 2010 Face Value…………………..US$250,000 per Preferred LLC Interest Dividend Rate ……………7-15% per annum paid quarterly (payable until the “Recoupment” is completed) Recoupment…………….Starts on the 2nd Anniversary of the Closing Date and pays pro-rata share of the quarterly Operating Income until the Face Value is paid back. Post-recoupment…..…..Starts after Recoupment and pays pro- rata share of quarterly Operating Income. Redemption………………Starts on the 5th Anniversary of the Closing Date. Eligible Investors……………Only “Accredited Investors” who sign the Subscription Agreement * Accrual Rate of 7% per annum ** Closing Date – Date of the purchase of Preferred LLC Interest 11
- 12. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Estimated Quarterly Cash-Flow Schedule For Series-A Preferred LLC Interests (one of several possible schedules of payments) 12
- 13. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Investment Criteria For Loans (sample criteria for whole loans) Minimum Loan Face Value is US$10 Million. Maximum purchase price as percentage of face Value shall be 60%. Underlying property should be investment-grade office, retail, industrial, multifamily, hotel or mixed-used property. Gross Leasable Area must exceed 1,000 Sq.M. At least 50% of GLA should be rented by tenants whose annual sales and operating income exceed US$3 Million and US$600,000 respectively. Positive NPV, and a minimum cash-flow-only-IRR of 25% over 2-4 year holding period. 3-year Average Occupancy Rate greater than 80% 13
- 14. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Risk Management & Governance Pre-acquisition third-party Due Diligence and asset appraisals. Annual or semi-annual third-party asset appraisals. Investment Committee. Audit Committee. Strategic plans and continuous risk evaluation. Compliance and Corporate Governance functions. May use derivatives to hedge any interest rate exposure and/or currency exposure that arises from purchases of CMBS and Whole Loans. Use of third-party credit enhancement: guarantees, insurance, etc. 14
- 15. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) Contact Details Mike Nwogugu Email: [email protected] Phone: 1-917-889-4716 Address: P O Box 996, Newark, New Jersey 07101, USA Alex Gordienko E-mail: [email protected] Phone +7-912-600-7016 Address: 96 Kosmonavtov Ave, office 33, Yekaterinburg, Russia, 620135 Olga Duka E-mail: [email protected] Phone: +7 903 618 92 84 Address: 85 Gagarin str., flat 24, Zhukovsky, Russia, 140160
- 16. CIS Properties LLC (USA) (A Delaware, USA, Limited Liability Company) THIS DOCUMENT IS NOT AN OFFERING IN ANY JURISDICTION. INVESTORS MUST REVIEW THE OFFERING MEMORANDUM, CONDUCT DUE DILIGENCE AND CONSULT THEIR LEGAL AND FINANCIAL ADVISORS BEFORE INVESTING. EACH INVESTOR WILL BE REQUIRED TO SIGN A SUBSCRIPTION AGREEMENT BEFORE INVESTING IN THIS VENTURE. 16