news BANKING AND PROPERTY GROUP NORTH AMERICA Issue Five Winter 2006 Contents: 01 the group 02 real estate funds management 03 real estate finance 04 residential mortgages 05 real estate investment banking joint venture 06 residential community development joint venture Macquarie on track to exceed 2005 full year profit Speaking at a briefing on Macquarie s operations to investors and analysts on 1 February, Macquarie Managing Director and CEO Allan Moss announced that he expects Macquarie s full year profit for the year ended 31 March 2006 to be slightly up on the record profit of $A823 million for the prior corresponding period, despite the fact that last year s profit included a $A91 million one off gain from the formation of the Macquarie Goodman Group. Macquarie staff now total more than 7,600, up 16% on March 2005, while our staff numbers in international locations have increased 32% to more than 2,300. Today we have over over 450 staff in 14 US locations. Macquarie s approach is to expand selectively, seeking only to enter markets and business areas where there is a genuine opportunity to add real value. Our North American activities clearly reflect this philosophy, where we provide specialist services and innovative solutions in a range of chosen market segments. Notable achievements in The Americas since the interim result include: Indiana Toll Road MIG-Cintra Consortium announced preferred bidder for the $US3.85b US highway Smarte Carte acquired $US270m baggage cart, locker and stroller business operating predominantly in US Macquarie CountryWide increases exposure to US real estate and expands stake in First Washington portfolio to 75% Macquarie Office settlement on $A1.6b JV with leading SoCal landlord, Maguire Properties Icon Parking $US634m Manhattan car park company acquired by Macquarie-led consortium Canadian healthcare acquired 81% interest in 2 healthcare projects in British Columbia Cook Inlet acquired 100% of a Los Angeles based energy trading and marketing company serving North America s energy players Acquisition of specialist maritime port team small team based in North America and Australia, focus on acquisition and management of port investments * The Macquarie group (Macquarie) refers to Macquarie Bank Limited (MBL) and its subsidiaries and affiliates worldwide. MBL is not licensed to conduct banking business in the US. MBL maintains a Representative Office in California, New York, Texas, and Washington. With respect to matters which may be subject to US securities law, and to the extent required by such laws, MBL and its worldwide subsidiaries consult with, and act through, one of their affiliated US registered broker-dealers. Any Macquarie subsidiary noted on this page is not an authorized deposit-taking institution for the purposes of the Banking Act (Cwth) 1959. That subsidiary s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of that subsidiary, unless noted otherwise. This newsletter is intended only to provide general information, is not an offer or invitation to make any investment, and should not be relied upon as the basis of any investment decision. You should carry out your own investigations and obtain your own independent professional advice before proceeding with any investment or project. No part of this newsletter may be reproduced, in whole or in part, without the specific written permission. All trade marks appearing within this brochure are owned by their respective owners. Marketing & Communications Enquiries: Judy Warren (312) 499 8660 judy.warren@macquarie.com www.macquarie.com
real estate investment funds management banking 03/Macquarie 02/Macquarie Capital Real Estate Partners Inc. LLC Mark Baillie, Head of Real Estate North America & Europe MCW increases US exposure Macquarie CountryWide Trust (ASX: MCW) announced it is reweighting its portfolio to historically strong US growth markets by increasing its exposure to the First Washington portfolio and selling a range of non-core properties. Investors are expected to benefit from the First Washington portfolio s higher net operating income growth and greater rental rate growth. Joint venture partner Regency Centers Corporation (NYSE:REG) agreed to sell 10% of the First Washington portfolio to CountryWide on the same terms as the original purchase agreement, reflecting a purchase price of $269.8 million. MDT settles on final Mervyns property Macquarie DDR Trust (ASX:MDT) announced it has settled on the final Mervyns asset, bringing the total number of Mervyns properties purchased to 37. The Mervyns property is located in the College Grove Shopping Center in San Diego, CA and is valued at $11.1 million. Co-tenants with Mervyns at College Grove include Walmart, Target, Sam s Club and Staples. The Mervyns property was purchased in a 50:50 joint venture with partner Developers Diversified Realty (NYSE:DDR), making the Trust s share $5.05 million. MOF acquires Indy s Chase Tower Macquarie Office Trust (ASX: MOF) announced it has acquired the remaining 25% interest in the recently renamed Chase Tower (formerly known as Bank One Center) in Indianapolis from Equity Office (NYSE:EOP) for $45 million on a 7.75% yield. Chase Tower is a landmark 48 story A class property in the centre of Indianapolis with 1,027 parking spaces. Building occupancy is 92% with JP Morgan Chase (previously known as Bank One) anchoring the building until 2020. EOP, as a key partner for MOF in the US, will continue to manage the property and relationships with customers. Chase Tower MOF s landmark 48 story A class property in Downtown Indianapolis MPR reports leasing success Macquarie ProLogis Trust (ASX: MPR) announced two significant lease renewals that reduce MPR s exposure to near-term lease expiry and highlight the potential for Macquarie Real Estate Inc. (312) 499 8600 mrei@macquarie.com www.macquarie.com rental growth within its portfolio. At Memphis Distribution Center F in Tennessee, MPR has signed a ten year lease renewal with one of its largest customers - Cummins Engine Company (Cummins). Cummins 654,750 sq ft lease, which was due to expire in July 2006, has been renewed through to July 2016. In addition, MPR has signed a three year lease renewal with Exel Logistics at Blalock Distribution Center #3, in Houston, Texas. Exel, ProLogis third largest customer globally, has renewed its 401,280 sq ft lease through to December 2009. It was due to expire in December 2006. Key Partnerships Macquarie Real Estate has joint ventures with a range of leading US real estate companies including: In addition, Macquarie Real Estate has a strategic alliance with Archstone-Smith, a leading apartment REIT in the US.
real estate investment finance banking 03/Macquarie Capital Bank Limited Partners LLC Arthur Porter, Head of Property Finance USA New markets Continuing with our success in the major western US markets of Washington, Oregon and California, Macquarie Bank Limited (MBL) has recognized the opportunities available in smaller developing markets. Our Seattle Representative Office has discovered retail opportunities in the rapidly growing city of Coeur d Alene in neighbouring Idaho and to the south the college city of Eugene, Oregon. Our Los Angeles and Irvine Representative Offices have gone inland to the retail market of Ontario, California for retail projects and to the booming suburbs of Phoenix, Arizona to pursue condominium conversion opportunities. We believe these smaller cities align with our business focus because they are growth oriented and concentrate on developing the city core by supporting urban infill development for both their retail and housing sectors. Condominium conversions The condominium conversion market continues its popularity with developers and buyers and Macquarie is actively lending in this sector. Developers benefit from the typically fast project turnaround with the ability to sell product in today s market rather than post-completion markets. The less intensive and in many cases less risky permitting process and the diminished construction risk are two more factors leading to the popularity of the condominium conversion for developers. Buyers, on the other hand, benefit from the affordable price points associated with refurbished and converted units. These price points are positioned between new and old market stock and provide the buyers with a greater selection of product. MBL has funded several conversion projects up and down the west coast from Seattle to San Diego and east to the expanding Phoenix market. Macquarie provides highly leveraged acquisition and construction funding to clients looking to convert existing structures to condominium. Some examples of such projects are: $104,360,000 loan for the acquisition and conversion of an existing 303 unit apartment complex in Downtown Los Angeles Approval of an $18,500,000 loan for the acquisition and conversion of a 160 unit apartment complex in Gilbert Arizona $23,822,000 loan for the acquisition and conversion of a 120 unit apartment complex in Lake Oswego, Oregon $31,000,000 loan for the acquisition and conversion of a vintage office building to a 77 unit condominium complex in San Diego, California $27,600,000 loan for the acquisition and conversion of a 140 unit apartment complex in Newcastle, Washington Savoy Associates, LLC $104 million senior financing for 303 unit condominium conversion in Downtown Los Angeles Macquarie Bank Limited Representative Office Seattle - (206) 674 3382 Los Angeles - (310) 789 5600 Irvine - (949) 225 4429 www.macquarie.com
real residential estate mortgages investment banking 03/Macquarie 04/Macquarie Capital Mortgages Partners USA LLC Inc. Linda Henley, CEO, MMUSA 2006 Direction Macquarie Mortgages USA Inc. (MMUSA) is positioning to become a driving force in the US Mortgage industry. The focus for 2006 is to raise visibility about the innovative mortgage products MMUSA is transporting from Australia to the shores of the US and to continue to recruit top industry talent to represent the business. Macquarie Mortgage ChoiceTM offers a flexible first-mortgage home equity line of credit with built-in security The Macquarie Mortgage Choice (MMC) lets borrowers cap their interest rate for an initial period at the level they choose. MMC, the latest product from Macquarie Mortgages USA Inc. is a mortgage loan designed to help build assets, reduce monthly payments, save interest and accelerate principal payoff. Macquarie Mortgage Choice combines a home equity line of credit (HELOC) with an interest-only (first 10 years), variable rate loan with initial periodic interest rate cap options that offers both flexibility and security against rate increases, plus the potential to benefit from rate decreases. Borrowers have the option to cap their interest rate at a level they are comfortable with for a defined period of time. This means that if interest rates rise during the period of time chosen, the borrower knows what their maximum rate will be. However, if interest rates go down the borrower has the advantage of their interest rate also going down, as they are not locked into a fixed rate. Correspondent Regional Sales Manager appointed Macquarie Mortgages USA is pleased to announce the addition of Barbara E. Burton (F.K.A. Barbara LaFond) as Correspondent Regional Sales Manager. Ms Burton is responsible for building and managing relationships with correspondent lenders. Her immediate goal is to introduce lenders here in the United States to Macquarie Mortgages USA s innovative mortgage products that were first marketed successfully in Australia. Macquarie Mortgages USA is pleased to be able to offer our correspondent lending partners the support of a seasoned professional of Barbara s caliber. Her experience and track record are well known in the mortgage industry, said Jim Wilson, National Production Manager. Prior to joining Macquarie Mortgages USA, Ms. Burton was an account executive with JPMorgan Chase Correspondent Division where she was responsible for generating volume in southern California markets. In addition, Ms Burton has held positions with First Union Mortgage and Home Owners Marketing Services. Barbara E. Burton, Correspondent Regional Sales Manager * Conditions apply. HELOC = Home Equity Line of Credit. The Macquarie Mortgage Choice is offered by Macquarie Mortgages USA Inc. This information is provided as general information for Mortgage Professionals only and is not for retail distribution or as an advertisement to extend credit as defined by Reg Z, sec 226.2. Please refer to the current Macquarie rate sheet for full information on rates and states of availability. Full loan terms and conditions are set out in the relevant loan agreement, and fees and charges apply. All loans subject to credit approval and additional qualification criteria apply. Rates, fees, products and processes may change without notice. Please refer to the information contained in the Terms and Conditions at www.macquariemortgages.com for more important product and licensing information. In California: Loans will be made or arranged pursuant to Department of Corporations California Finance Lender and Broker License #603 9470. Georgia Residential Mortgage Licensee #19033. Macquarie Mortgages USA Inc. (888) 260 4390 www.macquariemortgages.com
real estate investment banking joint venture 05/Macquarie Capital Partners LLC Delivering real estate investment banking expertise Macquarie Capital Partners LLC (MCP) is a global real estate investment banking and advisory firm that specializes in raising private equity for public and private real estate operating companies and funds, and delivering strategic financial advisory services to its clients around the world. MCP s objective is to match providers and users of real estate capital in the most efficient way possible. A team of committed capital specialists and investment banking professionals use a disciplined approach to develop market-driven transactions, providing investment opportunities that are attractive to investors and operators alike. Investors benefit from a wide spectrum of joint venture and multi-investor fund opportunities by partnering with the leading product-focused operating companies in core as well as alternative real estate sectors. Headquartered in Chicago, with offices in New York and London, MCP has completed 163 transactions totaling $39.2 billion since its inception in 1991. In 2005, MCP closed 27 transactions totaling $6.7 billion. Recent transactions include: Macquarie Office Trust/ Maguire Properties Joint Venture $1,950,000,000 January 2006 Macquarie DDR Trust Portfolio Acquisition $407,200,000 September 2005 Development JV $200,000,000 September 2005 Joint Venture 62,500,000 December 2005 Macquarie Global Property Advisors Macquarie Global Property Fund II $1,290,000,000 September 2005 MACQUARIE CAPITAL PARTNERS LTD Joint Venture $167,000,000 July 2005 1 Through February 19, 2006. Macquarie Capital Partners and MCP refers to Macquarie Capital Partners LLC, a broker-dealer based in the United States that is registered with the US Securities and Exchange Commission and is a member of the National Association of Securities Dealers, Inc. and SIPC, and its wholly owned subsidiary based in the United Kingdom, Macquarie Capital Partners Limited, which is authorized and regulated by the UK Financial Services Authority. Macquarie Capital Partners LLC (312) 499 8500 inquiry@mcp-llc.com www.mcp-llc.com
real residential estate community investment banking development joint venture 03/Macquarie 06/Medallist Developments Capital Partners Inc. LLC Frank Weed, President and Chief Operating Officer North America Savannah Quarters Pooler, Georgia: Savannah Quarters is the second Medallist community that has been selected as a 2005-2006 Premier Property by the editors of LINKS Magazine. Only 140 communities in North America are chosen each year by the magazine. This prestigious award from LINKS Magazine places us in the esteemed company of some of the most outstanding golf communities in the United States and Canada, said Cotter Christian, Vice President and General Manger of Savannah Quarters. Savannah Quarters is located 15 minutes west of historic Savannah, GA. A new Greg Normandesigned golf course will formally open to members in the Summer of 2006. Tennessee National Loudon, Tennessee: Tennessee National is pleased to announce that the community has been named as one of the Best New Communities of 2006 by Pinnacle Living/Mountain Homes magazine. The recognition was featured in the winter 2006 edition of the Best of the Mountains. We are honored to be named as one of our region s best new communities, said Scott Pasolli, Tennessee National General Manager. We believe the community amenities and the Greg Norman-designed golf course position Tennessee National as one of the premier residential properties in the area. We are very excited about this recognition. In 2005, Tennessee National surpassed the $15 million mark for properties sold. Charter Memberships are currently being offered to purchase for $30,000 as well as a variety of home sites and residential properties. Exploring new markets Medallist Developments is continuing its expansion strategy of regional growth into the southeastern and south-western United States markets. We have a targeted and focused strategy and are aggressively looking for new residential opportunities, states Frank Weed, Chief Operating Officer of Medallist Developments. Building upon the tradition and success of Medallist s Savannah Quarters and Wild Heron communities, Florida, Georgia, Tennessee and the Carolinas are the primary targets for expansion. We have several people on the ground actively looking at opportunities and we are extremely excited about the potential in these areas. The selected markets are showing strong in-migration, housing starts, economic stability and strong employment. We expect to grow our portfolio with 2-3 new communities per year over the next 5 years. In order to achieve these high expectations, we are focused, committed and seeking unique opportunities. Tennessee National One of the Best New Communities of 2006 Savannah Quarters Hole 15 of the new Greg Norman-designed Savannah Quarters Country Club Medallist Developments Inc. (561) 743 9062 frank.weed@medallist.com.au www.medallist.com.au