Slide 1

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 2

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 3

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 4

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 5

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 6

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 7

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 8

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 9

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 10

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 11

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 12

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 13

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 14

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 15

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 16

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 17

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 18

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 19

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 20

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 21

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 22

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 23

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 24

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 25

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 26

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 27

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 28

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 29

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 30

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 31

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 32

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 33

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 34

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 35

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 36

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 37

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 38

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 39

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 40

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 41

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 42

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 43

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 44

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 45

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 46

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 47

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 48

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 49

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 50

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets


Slide 51

Welcome to America 2030™ Equity
An American Private Equity
Sponsor of Institutional Grade U.S. Real Estate Investments

Understanding and Investing in American Multifamily
Apartment Buildings, The Greatest Asset Type of the
Real Estate Asset Class

Why Buy American Real Estate?
• Diversification. U.S. real estate’s stability offers mitigation against
rapid but non-sustainable markets.
• Openness, Size and Selection. The U.S. contains one-third of the
world’s institution-grade real estate and has no barriers to foreign
investment.
• Higher Yields. Current U.S. Cap rates average 40% higher than
current European and Asian rates.
• Inflation Hedge. U.S. real estate has historically outpaced U.S.
inflation.

What is a Representative Chicago Multifamily Investment?

Chicago, Illinois
Cook County
Property Type:
Multifamily
Property Class: A
Sub Type: High-Rise
No. Units: 306
Building Size: 204,185 SF
Occupancy: 95%
Year Built: 1989
Sale Price: $91,250,000
Price/Unit: $298,000

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Southwest U.S. Multifamily Investment?

Chandler, AZ
Maricopa County
Property Type: Multifamily
Property Class: A
Sub Type: Garden/Low-Rise
No. Units: 352
Year Built: 2005
Sold Price: $58,000,000
Price/Unit: $164,773
Occupancy: 94%

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives
were involved in the transactions listed herein. These are examples of the investments which America 2030* will purchase
but no guarantee is made that a building identical or similar to this building will be purchased.

What is a Representative Texas U.S. Multifamily Investment?

Neither America 2030*, nor any related parties, affiliates, officers, employees, shareholders, partners or representatives were involved in the transactions
listed herein. These are examples of the investments which America 2030* will purchase but no guarantee is made that a building identical or similar to this
building will be purchased.

289-Unit Class A Community – Houston, Texas

356-Unit Class AAA Garden Style Multifamily - Naples, Florida

241 Unit Multifamily--Arlington, Virginia (Metropolitan DC)

The Economy, The Economy, The Economy . . .
•
•
•
•
•

Slow-Going Economy? Necessary to Call it a Recession?
America is a Country we Love to Hate, So Let’s Bash It!
America is the 800 pound Gorilla.
Subprime is Limited to 1% of Housing . . . Soooooo What?
HUD Predicts that Oversupply of Housing to be Absorbed in next
Twenty-Four to Thirty-Six Months . . .
• America Receives over 1,000,000 New Immigrants, Per Year, Most
of Whom Enter the Workforce and Stimulate the GDP
• Echoboomers (in their twenties) Having Children Close to Boomer’s
Parent’s Rates!
• Eastern European Population is Falling and EU Steady only Because
of Immigration

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•

US Exports Are Up Year over Year, Three Years in a Row (2005-2007)
U.S. is the World’s Most Diversified Economy and Still the Largest
American Families Still Averaging 2.0 Children Per Family
GDP is Predicted to Grow at 1.5% to 2% for 2008
Consumer Spending Remains Robust
Hotels, Airplanes, Restaurants and Vacation Destinations Remain
Full!
• Unemployment Expected to Go From 5.0% to 5.3% . . . Sooooo . . .
• Americans Not Concerned with the World Economy, EU or
Elsewhere
• Foreign Newspapers Cannot Stop Writing About the U.S. Economy

The Economy, The Economy, The Economy . . .
•
•
•
•
•
•
•
•

Where’s the Recession?
Mortgage Rates are at Forty-Seven Year Lows . . .
Commercial Real Estate Market is Still a Seller’s Market
CMBS was Small Portion of Commercial Lending; Most Commercial
Lending Still Done by Banks
Banks Have Experienced Little to No Write Off’s
Bank Debt Stands at 5.5% to 6.5% on Three to Ten Year Money
Banks Depend on Real Estate Lending as the Majority of Their
Lending
China, Japan and the Middle East Have a Savings Glut and Love
American Real Estate

The Economy, The Economy, The Economy . . .
• US Has Not Had a Property Meltdown Since the Early 1990’s
• Current Mortgage Issues Due to Bad Underwriting, High Leverage
(110%+), and Economy Slowdown
• Banking Regulators Have Changed Lending Criteria to 70% to 80%
• U.S. Multifamily Results Vary by Region and City
• Multifamily is Historically the Highest Returning Asset Type
• Multifamily Provides Inflation Protection Since Leases Renew
Annually
• Barriers To Entry are Higher with Apartments than Any Other Asset
Type
• US Institutions Love Apartments

The Economy, The Economy, The Economy . . .
• Apartment Supply is Restricted in Many Markets
• U.S. Real Estate Has Higher Cap and Yield Rates in the U.S. than
Most of Asia and Western Europe
• Multifamily Has Predictable Returns and Steady Growth with No
Lease Roll Backs
• Reliable Long Term Hold Periods of Ten to Twenty Years
• Supply Versus Demand Issues in Different Markets Based on Cycles
• Condominium Crisis in Chicago, A Case in Point
• Apartments Offer Diversification Through Many Markets
• Apartments Can Be a Sector Play; I.E. Buy in Florida; Buy in Arizona

U.S. Dollar Discrepancy . . .

Why is Multifamily the Best Asset Type?
Mitigation of Lease Rollover Risk Apartment Buildings targeted by America 2030 range from
100 to 1,000 occupants working in varied industries. At any one time only 3% to 12% of the
building will ever be vacant, in the assets we target.
Lower Taxes. Owning 100 units in a 100 unit condominium building may seem like the same
thing as owning a 100 unit apartment building. It is not for several reasons, not the least of
which is having one tax parcel identification number rather than 101 tax identification
numbers.
Barriers to Entry. Apartment building zoning is the most difficult to obtain of the four asset
types because it has the largest negative impact on school budgets. High barrier to entry
equals difficulty on competition.
Rent Growth. Office, retail and industrial rents have not kept pace with replacement costs, nor
construction costs. There are only two ways that real estate prices increase, artificially
through cap rate compression (more dollars chasing less assets), and fundamentally through
rent growth.
American Mobile Lifestyle. Eighteen percent of all American move annually; One third of all
Americans live in Apartment Buildings.
Shelter—Economic Condition Resilience. When people cannot afford anything else they still
spend on two things—Food and Shelter.

How Prolific is the Foreign Acquisition of American Assets?
"US Fears Overseas Funds Could Buy Up America. Money is naturally going to
gravitate toward dollar-based assets because of the strength of our economy.”
U.S. Treasury Secretary Henry Paulson Jr.

Morgan Stanley predicts foreign funds will own $17.5 trillion of US assets, up
from $2.5 trillion in 2007, in only the next 10 years. August 21, 2007, International Herald
Tribune

Foreign investors poured $163 billion into U.S. commercial real estate in the first
half of 2007, a 37% increase over the first half of 2006. Jones Lang LaSalle

Morgan Stanley, in a widely cited study, projects that foreign investment funds
investing in the United States could grow from $2.5 trillion in 2007, to a
staggering $17.5 trillion, in 2017.

What is the Trend for Foreign Purchase of U.S. Real Estate?
Chinese Government Purchases $3 Billion stake in
Blackstone Group.
BBC, May 27, 2007.

Why are Foreigners Buying Trillions of U.S. Assets?
Weak Dollar Makes U.S. World's Bargain Bazaar, New York Times,
September 5, 2007. Pound Trades at Twenty-Five Year Premium to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
Ruble at Five Year High to the Dollar

Why are Foreigners Buying Trillions of U.S. Assets?
US Dollar – Historical Chart – 6.5 Year Average Cycles

Dollar versus Euro
U.S. real estate is selling at a 30% to 40% discount
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
00
20

an
-J

00
20

ul

l
l
l
l
l
l
n
an
an
an
an
an
an
Ju
Ju
Ju
Ju
Ju
Ju
J
J
J
J
J
J
Ja
01
02
03
04
05
06
01
02
03
04
05
06
07
20
20
20
20
20
20
20
20
20
20
20
20
20

-J

Source: Bureau of Labor and Statistics

Population Stagnation and Declines Across EU
200

150
100
2000

2050

50

Source: U.S. Census, Brugesgroup, The Economist

R
us
sia

pa
n
Ja

d
la
n
Po

in
Sp
a

ly
It
a

an
y
G

er
m

ce
Fr
an

U
.K

.

0

International Home Price Growth (1997-2005)

• U.S. price growth 74%
--------------------------------• Spain 140%

RISKIER
MORTGAGE

• U.K. 150%

PRODUCTS

• Ireland 180%
Source: National Association of Realtors

Funds and Private Investors Leading Buyers of All Properties in 2007

Buyer Composition by Property Type

% of Overall Transaction Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apartment
* Properties of at Least $5 Million

Foreign

Industrial

Fund

Office

Institutional

Retail

Private

REIT

All Properties

User/Other/Unknown

Source: Jones Lang LaSalle, Real Capital Analytics

 While funds have enjoyed dominance as buyers of office, the buyer profile has been much different for
other property types
 Private investors were leading buyers of apartments, while industrial and retail properties enjoyed highly
diverse buyer profiles in 2007
24

Source: Institutional Real Estate, Inc.

10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%

Apartment

Industrial

Office

Retail

Overall

 With the debt market correction, cap rates for all property types have bottomed out and are facing upward
pressure; trend to continue throughout 2008; Prior to debt market correction, office in particular had seen
cap rates continue to decline during the 1st half of 2007. Source: Institutional Real Estate, Inc.
25

De c-0
7

7
Sep-0

7
Jun -0

Mar-0
7

De c-0
6

6
Sep-0

6
Jun -0

Mar-0
6

De c-0
5

5
Sep-0

5
Jun -0

Mar-0
5

De c-0
4

4
Sep-0

4
Jun -0

Mar-0
4

De c-0
3

3
Sep-0

3
Jun -0

Mar-0
3

De c-0
2

Sep-0

Jun -0

2

5.0%

2

Avg. Cap Rate (6-mo. moving avg.)

Upward
on Rates Cap
is Currently
Developing
Extended Period
of Pressure
Downward
Rates
Has Finally Ended

Growth in Property Values Slowing

200
180
160
140
120
100
80

Apartment

Industrial

Office

Dec- 0
7

Sep- 0
7

Jun- 0
7

7
Mar- 0

Dec- 0
6

Sep- 0
6

Jun- 0
6

6
Mar- 0

Dec- 0
5

Sep- 0
5

Jun- 0
5

5
Mar- 0

Dec- 0
4

Sep- 0
4

Jun- 0
4

4
Mar- 0

Dec- 0
3

Sep- 0
3

Jun- 0
3

3
Mar- 0

Dec- 0
2

Sep- 0
2

Jun- 0
2

2
Mar- 0

Dec- 0
1

Sep- 0
1

60

Jun- 0
1

Avg. Price Per SF/Unit(6-mo. moving avg.),
Indexed Jun 01=100

Further Increases to be Much More Dependent on Continuing Strong NOI Growth

Retail

 Overall prices paid per square foot are up by more than 70% over last 6 years
 As the most highly-leveraged private buyers will be forced to the sidelines, growth in values will moderate
significantly and be increasingly driven by underlying property fundamentals and cash flows. Source:
26
Institutional
Real Estate, Inc.

U.S. REALTORS Engagement (April 2006 to April 2007)
18% or 243,000 NAR members

14%
65% of FL
REALTORS had
foreign clients

68%

Closings

Prospects Only

Source: National Association of Realtors

None

International Home Buyers in Florida
15%

85%

Foreign

Domestic

Source: 2005 NAR Profile of International Home Buyers in Florida

81,900
Home Sales

International Homebuyer Trend in Florida, Over 5 Years
60%
50%

49%

45%

40%
30%
20%
6%

10%
0%
Increased

Source: NAR

About the
Same

Decreased

International Buyers’ Origin by Country in Florida
33%

U.K.
Germany

7%

Canada

7%

Venezuela

7%
5%

Colombia
Brazil

3%

France

3%
35%

All Others

0
Source: NAR

0.1

0.2

0.3

0.4

International Buyers’ Destination in the U.S.
NC
GA
OH
IL
CO
NY

2%
2%
2%
2%
3%
4%

AZ
TX

6%
10%
16%

CA

26%

FL

0%
Source: NAR

10%

20%

30%

Downtown Resurgence?
– Downtown Population Trending Up (Examples from 1990
to 2000)
• Houston
up 69%
• Seattle
67%
• Chicago
51%
• Denver
51%
• Portland
35%
• Cleveland
32%
– Central cities holding up better than before
• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
U.S. Census Bureau

The World’s Largest Economies . . .
15

10

5

0
U.S.

Japan

Germany

China

In $US Trillions. Source: International Monetary Fund

U.K.

Economic Expansion Rates . . .

12
9
6
3
0
U.S.

Japan

Germany

China

U.K.

Source: International Monetary Fund

World Economies in 2037 . . .
U.S.

Japan

Germany

China

U.K.

60
50
40
30
20
10
0
2007

Source: NAR

2017

2027

2037

What is a Megapolitan?
Brookings Institution researchers estimate that the massive
American build-out will constitute a $25 trillion development
market by 2030, more than twice the size of the entire U.S.
economy today. The bulk of that money will flow into ten major
metro regions called "megapolitans."
The ten metro areas are:
Seattle/Portland
Sacramento/San Francisco
Phoenix/Tucson
San Antonio/Dallas/Kansas City
Boston/New York/D.C. Raleigh-Durham/Atlanta
Chicago/Detroit/Pittsburgh

Los Angeles/Las Vegas
Houston/New Orleans
Miami/Tampa

By 2040, two of every three Americans will live in one these regions.

U.S. Multi-Family Market & The Subprime Conundrum?

“Single Family Home Late Payments, Foreclosures Hit AllTime High in First Quarter" causing apartment rental
increases. Associated Press, Thursday, June 14, 2007

"What's good for homebuilders is bad for apartments and
vice versa,'' said James Corl, head of real estate
investment at New York-based Cohen & Steers Inc. In the
apartment market, ``demand is going to be swamping
supply for the next few years."

U.S. Commercial Real Estate . . . The Sky Isn’t Falling?
“Spending on commercial real estate maintained a record
pace year to date through July, at $257 billion, a hearty 75%
increase over the same period in 2006, according to the
National Association of Realtors.”
“A strong economy and job growth over the past few years
support the solid commercial market fundamentals being
seen, including rising lease and rental rates and low vacancies,
and that is what maintained the flow of property transactions
at higher levels, said the industry group in its latest
Commercial Real Estate Outlook.”
“Defying Credit Crunch, Commercial Real Estate Boomed Through July”
September 19, 2007, Corporate Finance Financial Week.

Is There a Forty-Six Percent Off Sale in the U.S.?
• The weak dollar represents two opportunities for foreign
capital. First, the weak dollar allows more property
purchased per foreign currency unit. Second, when the
dollar rebounds, the investment value increases again,
making the real estate investment doubly attractive to
foreigners.
• Current currency prices avail the foreign investor a fifty
percent discount for U.S. assets compared to foreign
markets including Europe and Asia.

Top Five Countries of Origin of International Home Buyers
Top Five Countries of Origin of International Home Buyers Purchasing U.S.

14%

12%

13%
12%

10%

11%

8%

6%
6%
5%

4%

2%

0%
Mexico

United Kingdom

Canada

National Association of Realtors

India

China

Locations of Homes Purchased in America by UK Buyers
Location of Homes Purchased by Foreign Buyers from the United Kingdom
Percentage Distribution

70%

60%

64%

50%

40%

30%
26%
20%
10%
5%

5%

0%
Northeast

Midwest

National Association of Realtors

South

West

Primary Reason for Purchasing the Home in America
Primary Purpose for Purchasing Home
Percentage distribution of international buyers

Vacation home for family and
friends, 47%

Both as vacation home and
as rental property for
investment, 31%

Rental property for
investment, 22%

National Association of Realtors

Powerful Demographics Fuel U.S. Apartment Demand
•

A child is born every seven seconds

•

A person dies every thirteen seconds

•

A migrant enters the country every thirty—one seconds

•

That’s a net gain of one person every 11 seconds

275 % or 25% and the Dow Makes the News!

Source: FTSE/NAREIT, Bloomberg

Real Estate Offers Attractive Returns
Total Returning Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Apartment Returns Ending September 30th

Source: National Council of Real Estate Investment Fiduciaries

Actually, Apartments Look Really Good!
IRR Rank of all One-Year Periods – 1991:4 to 2006:3

Source: National Council of Real Estate Investment Fiduciaries

Percentage of Apartments Offering Concessions

Source: Axiometrics

America’s 30 Fastest Growing Cities 2006-2020

Multifamily Performs the Best . . .

America 2030 Summary
• America’s Population will increase by 70 million, from 300 to
370 million, over the next twenty-three years
• Our Founder’s 10 year track record is 46.5% IRR

• The United States holds one-third of the world’s institutional
grade real estate
• $80 Billion foreign capital will flow to U.S. real estate in the
next two years
• The weak dollar currently represents upwards of fifty (50%)
percent discount off U.S. assets