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Copy of Embrey Corporate Presentation

John's CS Presentation 4/15

John Kirk

on 16 April 2013

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Transcript of Copy of Embrey Corporate Presentation

Embrey's History Walter Embrey Jr. founded the company in 1974
First Multi-family development in San Antonio 1978
In 1985 first multi-family development outside of Texas
In 1989 was the opening of the 50th multi-family project
In 2000 Embrey Management Services was created
Embrey Completed over 4 million square feet of commerical projects in 2001
In 2002 Embrey was ranked one of the Top 50 Privately Held Companies by San Antonio Business Journal
In 2007 was the opening of the 100th multi-family project and the first mixed-use development in San Antonio (Quarry Village)
In 2011 the next generation of Embrey joined the ranks and Trey Embrey was named President. Embrey Development Market Coverage Embrey has developments in Texas (San Antonio, Houston and Dallas), Arizona (Phoenix), Colorado (Denver, Colorado Springs), Kansas (Lenexa), Tennessee, and Arkansas (Little Rock). Embrey Development Embrey Development Teams Executive Vice President-Development
John Kirk Current Development Projects Park at West Ave
San Antonio, TX GreenVue
Richardson, TX (Dallas Area) Cypresswood
Tomball, TX (Houston) 35+ Years of Successful Development Projects along with 40,000,000 of Multi-Family and Commercial Square Feet Developed Real Estate Development
Texas A&M University-Dr. Peterson FINC 371
John Kirk 03'
April 15, 2013 Background Information Class of 03'
Construction Science (Dec 02')
LERE (May 04')
4yr Letterman
32 yrs old, married with 2 kids
2001-2003 TAMU Facilities Planning & Construction
2003-2004 Caldwell Companies (Internship)
2004-2009 The Hanover Company
2009-2012 Skanska
2012-Present Embrey Executive Vice President
Oversee every aspect of the development process
Market Analysis, site pursuits/selection, financial modeling, raising capital/business plan, site planning, consultants, leasing, divestment Experience Development Process Site Selection

Pro-Forma (Back of the Envelope)
Land Cost, Size, Project (Office, Residential, etc.), Density, Comps, Rents, Construction Price, Cap Rates, Interest, Returns, etc.

Land Control
Letter of Intent (LOI), Entitlements, Purchase and Sale Agreement (PSA)

Feasibility Period
Indentify risks AND manage risks; fine tune underwriting, architects and engineer, investors on board, green light, going "hard" on earnest money, land closing timing

Entitlement Process, Design Process (SD, DD, CD's)

Construction Loan, equity, debt, capital market issues

GMP, buyout, start construction, close out

Lease Up

Sale Asset vs. Long Term Hold Value Creation Hypothetical Deal Structure Total Capitalization $100,000,000 Project (Includes Land Costs, Hard Costs and Development Soft Costs Finance Structure Debt and Equity (Debt is the Construction Loan; Equity is the private capital)
Typical Scenario:
70% Debt ($70,000,000 for our example)
30% Equity ($30,000,000 for our example)
- Of the equity, private developers usually have "equity partners"
- Equity partners provide only capital and play a small role in the actual development process
- Institutional (credit companies, life companies pension fund advisors, private equity funds, banks, Wall Street)
- Private Money (friends and family, money managers, and high-net worth individuals)
- Mezzanine debt-banks, life companies-Wells Fargo, Bank of America, MetLife, PacLife Developer has a Joint Venture equity agreement with a Partner
Partner provides 90% of the equity; Developer provides 10% (could be 85/15 or 95/5 or 100)
For the example, Partner would provide $27,000,000 and developer would provide $3,000,000
Of the $3,000,000 half is cash and half is deferred fees
Equity has a "pref" (preferred return) of 10% , with profits split of 70%/30% after this return hurdle up to a mid teen IRR (waterfall)
- 10% pref on equity
- Waterfall/splits (promote structure)
- 70/30 to a 15%
- 60/40 to a 18%
- 50/50 thereafter (developer wants to get to here ASAP) IRR (Internal Rate of Return)= return from an investment based on today's value of future cash flows and the timing of the cash flows compared to the initial investment
Typical IRR requirements are in the 15 to 20% range for the equity partner (targets)
Time can work for or against IRR (use of multiples) Take Away... Develop must wear multiple hats…. Attorney, planner, contractor, analyst, broker, architect, banker, engineer, politician Emerging Trends What's been helpful to me? How to achieve development success? LEED/sustainability , social media, smaller units, efficiency, amenities, construction costs, rent vs own, financial word/underwriting Under promise, over deliver
Read daily news of your respective industry (Twitter is great!)
Always be willing to learn something new (listen well, collaborate, take criticism, learn how to fail)
It’s not about the money starting your career Learning Potential NOT Earning Potential
Passion – know what motivates yourself (promotion vs. prevention; offense vs. defense)
Understand the role of your position and how if effects others and understand the roles of others and how it effects you!
Be willing to help others
Manners/dress the part
Network effectively (get out of your comfort zone)
Focus on long term goals and work toward them
Analysis Paralysis (gut instincts)
Morals/responsibility Leadership/ownership
Understand local market
Know the numbers
Assemble the right team
Coordinate effectively
Provide great direction
Understand all the risks and how they will be mitigated
Be prepared to walk away
Don’t get complacent – stay fresh, understand competition
Play to win!
Have fun!
Full transcript