Transcript Smart Growth Fund - University of Oxford

Prudent Investment in
Urban Revitalization
Belden Hull Daniels, CEO
Economic Innovation International, Inc
Deborah La Franchi, CEO
Strategic Development Solutions
Pension Funds & Urban Revitalization
Baltimore, MD
June 7, 2006
Double Bottom Line (DBL)
Private Equity Funds
1st Bottom line: Superior Risk-Adjusted Market Returns
2nd Bottom Line: Measurable Urban Revitalization
 Rapidly growing $6.5 billion industry: “doing well & doing good”
 Targets investment in low-income communities
 Managed by proven private equity fund managers
 Creates superior risk-adjusted market returns for investors
 Creates jobs and economic opportunity
 Provides flexible, responsive, value-added capital
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Market Discipline; Accountability
 Private-sector discipline is central
 Risk-adjusted market rate returns (mid- to high-teens)
 Fund Sponsor sets the second bottom line goals
 Fund Managers chosen in national competitive process
 Fund Sponsor makes Fund Manager selection
 Investors must approve Fund Manager
 Fund Managers protected by firewall & at risk
 Accountability to Fund Sponsor & community stakeholders
 Fund Sponsor participates in financial returns
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Repeat Institutional Investors
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Commercial Banks:
B of A, Chase, Citibank, Union, USBank,
Wachovia, WaMu, Wells and others
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Insurance Companies:
AAA, Axa, Hancock, Liberty, Mass Mutual,
Mercury, Met Life, NY Life, Northwestern,
Pacific Life, PMI, Prudential and others
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Foundations:
California Community; Annie E Casey, Danforth, Ford,
Jacobs, Heron, Knight, MacArthur, McCune, McDonnell,
Sand Hill and others
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Public Pension Funds:
CalPERS, CalSTRS, Contra Costa County,
Connecticut, Illinois, LACERA, LACERS, MassPRIM,
NYCERS, NY Common and others
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Union Pension Funds:
AFL-CIO Housing & Building Trusts, SEIU and others
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University Endowments: Washington University and others
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High-Net-Worth Persons: Bay Area, Northwest Louisiana and others
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Proven Fund Managers
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Access Capital
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Ironwood Equity Fund
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Boston Capital
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Kennedy Wilson
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Canyon/Johnson
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Landmark Equity
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Cityscape Capital
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MacFarlane Partners
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Community Preservation Corp.
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Massachusetts Capital
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Equibase Capital Group
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Pacific Coast Capital Partners
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Phoenix Realty
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The Reinvestment Fund
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Shamrock Holdings
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Urban America
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Enterprise Community Investment
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Fidelity Partners
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Hanover Financial
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Hunter Chase
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III. Case Study: Genesis Family of Funds
$450 million capital
$1.5 billion deals in LMI areas
Genesis LA
100% Self-sufficient not-for-profit
Not-for-Profit
8 staff &
Board of Directors
Continues to create Funds
Works with small – medium sized developers
Genesis Real
Estate
Fund I
Genesis Real
Estate
Fund II
$85 Million
$102 Million
Genesis
Workforce
Housing Fund I
Genesis
Growth Fund I
Genesis NMTC
Fund
$103 Million
$30 Million
$120 Million
Mgr: Fulcrum Capital
Mgr: Genesis LA
2003
2005
Mgr: Shamrock
Mgr: Shamrock
Mgr: Phoenix
Realty Group
2000
2005
2004
Genesis
Community
Investment Fund
$1 Million
Mgr: Genesis LA
2000
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Case Study: Genesis Workforce
Housing Fund I
Managed by: Phoenix Realty Group

For-Sale Housing: Single Family Detached, Townhouses and Condo

S. California’s Underserved Communities (LMI)
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$102 million: Financing for Real Estate Development
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Investment of $2 to $20 million
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Fund to Provide Institutional Capital to Local Developers
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Income of Buyers: 80% - 150% AMI, flexible to 200% AMI
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Nurses, Teachers, Firefighters, Police, Office Workers
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Case Study: Genesis Workforce
Housing Fund I
Avenue 26 Condominiums

City of Los Angeles, Lincoln
Heights
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New construction of old factory site
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Adjacent to Gold Line Metro station
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Not-for-profit Developer
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165 for-sale residential units
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Child care center
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Community arts center
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Retail/office component
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Senior affordable and tax-credit
units to be built on adjacent site
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Case Study: Bay Area 2nd Bottom Line

Soon: Four funds, $300 million capital, $1 billion in deals
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First Fund: $66 million Bay Area Smart Growth Fund I
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First 3 Years: $51 million invested in 10 projects:
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100% of projects are smart growth & “Three E”
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1121 permanent & construction jobs created & retained
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633 units of affordable for-sale homes developed
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1.2 million sq. ft. of commercial space developed
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1.6 million sq. ft. of affordable housing developed
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IV. Creating a Maryland Regional
Workforce Housing Fund I
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$60 - $90 Million Maryland Fund generates $$180-270 Million in deals
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100% Smart and Sustainable Growth projects
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Preservation and conservation of open and recreational space
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Revitalization of downtowns with mixed-income and mixed-use projects
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Family housing for firemen, school teachers, policemen, nurses etc.
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Transit-oriented development for livable & walkable communities.
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Maryland Enterprise Fund Sponsor oversees Fund.
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Enterprise Community Investment, Inc. Fund Manager brings track record.
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National pool of repeat institutional investors have high interest
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Now More Across Country: New England Workforce Housing Fund I
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Maryland Regional Workforce Housing Fund I
Enterprise Community Investing, Inc. is creating a Maryland Workforce Housing risk-adjusted market-rate-of-return private equity fund.
This $100 million Fund will target housing for families that are at 80% - 150% of average median income.
1. Not-for-Profit Sponsor: Enterprise Maryland
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Manages creation of the Fund
Receives seed funding back once Fund is closed
Hires staff - regional economic development
assistance
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Shares in Fund Manager’s fee annually
Financially self-sustaining from Fund Manager’s fee
Helps develop early stage projects
3. Investors
$3M – 20M each
2. Maryland Regional Workforce Housing Fund I
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Raises $100M from Investors
Private-Sector Fund Manager
Makes investment decisions
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Provides capacity to developers
Receives 2% annual management fee
Invests the $100M ($1M – 20M in each project)
$100M investment plus profit is returned to investors
(target net returns to investors of 12% to 16%)
$100 M Investment
$100 M Investment +
Profit
$100 Million
Investments
4. Real Estate Projects
$100 Million
+ Profit
Project sizes range from $15 – 30 Million
Projects return invested capital plus profit
Project A
Project B
Project C
Project D
Single Family Detached Homes
affordable to the workforce
Converting dilapidated buildings to
new attractive workforce
Condominiums
Re-position abandoned buildings
for new workforce housing
developments
Other Similar Housing
Investments
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Commercial Banks
Pension Funds
Insurance Companies
Corporate Investors
High-Net Worth Individuals