“Drinking from the Fire Hose Investment Basics from A to Z” Wifi password : spacematters

Why Todd? Analyzed thousands of deals totaling over 11,000 units and $2.5B Teach these concepts for CCIM institute Over 4,000 students in a dozen countries I use these techniques on my properties and for my clients www.toddclarke.com www.nmapartment.com

Do investors own commercial real estate?

1. Your name 2. Specialty 3. Trade area 4. Hope to get from today Are you here today? 1. Your name 2. Specialty 3. Trade area 4. Hope to get from today

Goals for today: Discover major investment benchmarks GRM (Gross Rent Multiplier) CAP Rate (Capitalization rate) Cash on Cash IRR unleveraged IRR with leverage IRR after tax Look at real estate the same way investors, wall street, lenders and capital markets Understand relationship between risk and return Match investor needs with deal parameters

Major benchmarks for measuring investment real estate GRM (Price/Annual Rents) CAP Rate (NOI / Price) Cash on Cash (CBFT / Down payment) IRR (NPV) Effective Tax Rate Better than stock market (cash on cash and leverage) Cash flow (vs. other investments) Depreciation / tax benefits Principal reduction on loan Appreciation

What do we tell out clients As to why they should own investment real estate? Cash flow Potential for Appreciation Tax benefit Leveraged benefit Leveraged tax benefit

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Citadel Apartments

5 years of operations

+ Sale opportunity at EOY 5

Announcing…the results Investors tax rate drops from 25% to 21%

Source for inputs: ULI NM – Annual CAP rate survey Apartment Association of NM – rent survey IREM National – Annual expense survey Attend industry events (like AANM annual outlook)

Have you heard? Walking is in Last season Raised profile Fictitious ?

The first Apartment Association nationally Rent Survey with walk score summary

Results by Walk Score – 24% premium for walkability

Results by Bike Score – 24% premium

Results by Transit Score – 26% premium in rents per sf

Rents by Submarket

Millennial Market Leaders Brand new one bedroom units - $1,195 – highest one bedroom rents in ABQ Tour – 9/4/2014

Millennial Market Leaders Silvermoon Lodge – 1 parking space per 4 units – under construction, prelease ahead of schedule

Market Leaders - Downtown $1.38-$1.83/sf Amenities: - Location - no parking - mixed use NEC 6th/Silver - small community - recent renovations 700 2nd SW - $1.63-$1.93sf - New community - small units - lots of communal space Friendly

Why is $1.35 to $1.85 sf good? At $2.00/sf we can afford steel construction Steel = high rise development (high for ABQ is mid in most cities) We finally have the zoning (downtown, uptown) to support high rise (and new UDO)

Interested in more? Sign up for CCIM Masters degree in commercial real estate www.ccim.com Online and in classroom courses 160 hours of training to designation