America s Parking REIT

Transcription

1 * America s Parking REIT November *Name change assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

2 Disclaimers Cautionary Note on Forward-looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "project," "should," "will," and other similar terms and phrases, including references to assumptions and forecasts of future results. Forwardlooking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: volatility in the debt or equity markets affecting our ability to acquire or sell real estate assets; national and local economic, business and real estate market conditions; the ability to maintain sufficient liquidity and our access to capital markets; our ability to identify, successfully compete for and complete acquisitions; the performance of real estate assets and investments after they are acquired; our ability to consummate our pending merger with MVP REIT, Inc. and successfully integrate the companies after the merger; litigation and environmental risks; our ability to execute our investment strategies; and the other risk factors discussed in the Company s and MVP REIT, Inc. s Form 10-K for the fiscal year ended December 31, 2016 and other reports filed by the Company and MVP REIT, Inc. with the U.S. Securities and Exchange Commission. Although we believes the expectation reflected in such forward-looking statements are based upon reasonable assumptions, they can give no assurance that the expectations will be attained or that any deviation will not be material. We do not undertake any obligation to update any forwardlooking statement contained herein to conform the statement to actual results or changes in expectations. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy securities. 2

3 The Parking REIT Leadership Team Michael Shustek CEO Founder. 26-year career as a real estate executive. Dan Huberty President Parking expert. 25-year career as parking executive in operations and acquisitions. Ed Bentzen CFO 14 years accounting experience, including SEC reporting. Ira Levine COO General Counsel JD, LLM. Practicing since Brandon Welch VP of Operations MBA. 11 years as marketing, securities, and management executive. Andrew Fenton Director of Capital Markets Career REIT buyside/sellside investment professional. 3

4 The Parking REIT Opportunity 1. Revenues resilient across market cycles Consistent cash flow 2. A large and fragmented industry Ripe for consolidation Favorable lease structures Combines stability with growth potential Imbedded NOI growth Automation leads to increased NOI 5. Favorable supply / demand fundamentals Leads to upward pricing pressure 6. Capital appreciation opportunity Central Business District land with air rights 4

5 The Parking REIT Company Snapshot $ 261 M Gross Assets $ 142 M Debt 45 Properties 21 Cities 10,366 Parking Spaces 5 Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

6 Portfolio Overview Portfolio Breakdown by State As a % of total parking spaces IN 6% Other 14% OH 20% Height Restrictions / Air Rights Acres of Land 29 MN 7% CT 9% TX 19% ' 50-99' ' ' 500' - Unlimited MO 12% MI 13% Development Height Lease Expiration As a % of total base rent Revenue Sharing % By acquisition value, US$mm 49% $134 3% 1% 8% 15% 24% $15 $45 $ Thereafter 0% 50% 51-75% % (NNN) 6 Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

7 Parking Industry Overview Industry Outlook 1 Parking revenue is projected to grow from approximately $25 billion in 2015 to nearly $29 billion by 2018, a 16% increase over 3 years The primary driver of parking revenue growth is population expansion, which is projected to increase from 320M in 2015 to 400M by 2050 Approximately 120M Americans drive to work (2013 U.S. Census) 86% of U.S. commuters indicate driving and parking their vehicle is their dominant mode of transportation Large and Fragmented Industry Consolidation Unlocks Substantial Growth Opportunities 40,000 paid parking lots & garages in the U.S. 2 65% of all owners own one parking property 3 Owners With Multiple Properties Owners With Single Properties 7 1. Source: National Parking Association, NPA Parking Demand Report, Source: National Parking Association, The Size and Scope of Parking in America, Source: United States Census, 2015 County Business Patterns, NAICS Code , Average ownership of 1.02 assets per company.

8 Parking Revenues Resilient Through Recession Commercial Property Price Index Recession Performance C u m u l a t i v e P e r c e n t a g e C h a n g e Q Q Parking Market Revenues Recession Performance C u m u l a t i v e P e r c e n t a g e C h a n g e Q Q Recession +3.6% From , commercial real estate values on average dropped 44% 8 Source: Real Capital Analytics. Source: National Parking Association. From , parking market revenues increased 3.6%

9 Favorable Lease Structure Stability and growth: Base net lease + revenue participation above a threshold (NNN & NN lease structures) Operator becomes tenant Leases shift legal liability and economic risk to the operator Revenue participation ranges from 50%/50% to 80%/20% in favor of The Parking REIT Leases are generally terminable by buyer upon sale. Termination allows for the true NOI of the property or higher and better use to influence the sale value 9

10 Align with Top-Tier Operators to Maximize Value Credit worthy national and regional operators Operator Annual Base Rent ($,000) % of Total Rent 10 SP + $10,492 60% ipark Services $2,604 15% Premier Parking $907 5% ABM $855 5% Interstate Parking $535 3% Denison $470 3% Lanier Parking $450 3% St. Louis Parking $405 2% PCAM, LLC $280 2% Best Park $262 1% Riverside Parking $200 1% Denver School $30 <1% Secure $20 <1% Total $17, % Nasdaq: SP Mkt Cap $898M Operators compete for leases NYSE: ABM Mkt Cap $2.77B Operators benefit from local economies of scale, reducing incremental expense per location added Operator defaults are rare Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc. The Parking REIT has never had an operator default or miss a payment In the event of an operator default, alternative operators generally are available to replace defaulting operator

11 Ability to Drive NOI Lease Renegotiation Parking leases generally terminable on sale to a third party NOI can grow substantially upon purchase by terminating the previous lease and negotiating better terms Optimizing the Operating Process Automation reduces cash theft and operating costs, driving NOI growth More efficient parking layout or valet nesting can increase inventory Pricing Power Rising demand parking demand driven primarily by rising population 1 Upward pricing pressure and demand-based variable pricing maximizes revenues Source: National Parking Association.

12 Case Study Houston Lease Improvement Changed operators upon purchase Signed a new 10 year contract with Ipark Compared to prior owner base rent, 2018 contractual base rent increase of 113%* ($,000s) Base Rent Percentage Rent Revenue to Operator $1,179 $407 $208 $564 $1,200 Purchased for $16.5M on 06/27/2017 Spaces: 501 Spaces Previous owner s lease: $564K base rent + 55% of revenue over $800K Guaranteed rent increased by 112%: $1,200K base rent (Prior Owner) 2018 Contractual Base Rent Percentage rent: 70% of revenues over $1,425K/yr *Rent increase is based on terms of new lease compared to prior lease Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

13 Case Study Indianapolis Automation & Operations Previous operator had poor revenue control Canceled contract with operator upon acquisition Negotiated new lease with Denison Parking Installed equipment to maximize collections Revenues up 43% yr/yr in 2016 Base Rent Percentage Rent Revenue to Operator ($,000s) $708 $494 $494 $190 $143 $375 Purchased for $4,995,000 on 10/29/2015 Spaces: 149 space surface lot Guaranteed Rent: $375,000 per year Percentage Rent: 70% of revenue over $515,000/yr (Prior Owner) 2016 (Post Purchase) New rent is greater than prior total revenue *Rent increase is based on terms of new lease compared to prior lease Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

14 Case Study Source and Execute Sizeable Transactions Purchased for $55,000,000 on 01/10/2017 Spaces: 1,275 Guaranteed Rent: $3,427,500 Per Year Percentage Rent: 80% of revenues over $5,000,000/yr Initial Improvements: $350,000 of capex spent on energy efficient lighting and cosmetic improvements Property Highlights Garage located near major demand drivers that exceed supply including: Renaissance Center GM headquarters and 73-story Marriott Cobo Center Detroit s largest convention center Coleman A. Young Municipal Center Government office and courthouse Local offices and hotels No public parking at GM-owned lots which are slated for potential redevelopment Opportunity for meaningful price increases under new operator Potential upside from redevelopment given no height restrictions 14 Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

15 Case Study Houston Sale for Redevelopment Lot located in desirable location Received unsolicited offer from developer Sold for 2.8x purchase price Purchased for $700,000 on 11/22/2016 Spaces: 76 Property was part of a 3-property portfolio June 2017: Received unsolicited offer by developer for $2,000,000 September 2017: Sale closed for $2,000, Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

16 Strategically Located with Consistent Demand Drivers We seek targeted geographies with five key demand drivers Government & Courthouses Sporting & Event Venues Hotels Downtown Core Hospitals Government activity and courthouse usage is uncorrelated with economic conditions These locations offer multiple demand drivers with price elasticity in addition to daily demand Hotels generally offer stable revenue streams at above average rates Downtown core locations provide population density and are often sought after by developers for higher-and-better uses Health care facilities experience steady demand from patients, visitors, and staff 16

17 Specialized Approach Designed to Deliver High Returns Acquisition Strategy Identify target properties through industry relationships Near consistent demand drivers, focusing on Central Business Districts Zoned with air rights and in the path of development Identify opportunities for NOI growth Underwrite through extensive due diligence process Secure lease with top-tier operators 5 to 10 year net leases with revenue participation Purchase properties Actively manage to grow revenues 17

18 The Parking REIT Capital Structure Balance Sheet Data* ( $, ) $300 $250 $ in millions $ $200 $ $150 $100 $79.05 $ $ $50 $48.04 $- Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Total Long Term Debt & Lines of Credit Net Preferred Stock Sales Common Equity Net of Operations Total Assets 18 Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

19 The Parking REIT Rental Income & Property Revenue Rental Income & Property Revenue G r owth* ($,000) $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Rent Paid to MVP (Base & %) Gross Property Revenue 19 Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

20 The Parking REIT Debt Schedule As of June 30, 2017 US$mm $120 $100 $ in millions 100% 120% 100% $80 80% $60 $102 60% $40 $20 $0 25% 27% 29% 17% 21% $24 $6 $6 $2 $ Thereafter Debt Maturity Cumulative % 40% 20% 0% 20 Data as of June 30, 2017, on a pro forma basis assuming the closing of the merger between MVP REIT, Inc. and MVP REIT II, Inc.

21 The Parking REIT Opportunity 1. Revenues resilient across market cycles Consistent cash flow 2. A large and fragmented industry Ripe for consolidation Favorable lease structures Combines stability with growth potential Imbedded NOI growth Automation leads to increased NOI 5. Favorable supply / demand fundamentals Leads to upward pricing pressure 6. Capital appreciation opportunity Central Business District land with air rights 21

22 An asset class with resilient income and NOI growth The Parking REIT provides a compelling consolidation opportunity Focused on growing NAV to drive shareholder returns 22