Real Capital Session A1 Andrew Huntley Tuesday, February 26, 2013 - - PowerPoint PPT Presentation

To be among the best institutional investment managers and inspire the confidence of Albertans

Real Capital

Session A1

Andrew Huntley

Tuesday, February 26, 2013

Confidential - Internal Use Only 1

Guess the Broker…

Only job he’s ever had

Confidential - Internal Use Only 2

“The spread is so high, it’s up in the nosebleeds…” “If you squint, you can see the covenant” “Dear Lender” Thunder Bay is a major centre Doesn’t have an office in Toronto “I need an indicative quote” I used to work there Thinnest package on the street 100 years old Still thinks Winnipeg is the financial capital of Canada Will never have an office in Toronto Hosted breakfast Servicer Four kids and a 2-seater sports car?? , Lender, Broker

Illustrative Capital Stack

Confidential - Internal Use Only 3

Stabilized Canadian or U.S. Deal Non-Stabilized / Transitional U.S. Deal

First Mortgage First Mortgage

Loan-to-Value 60-65% Loan-to-Value 35-55% Government Benchmark Bond + Spread of 1.85-2.25% LIBOR + Spread of 2.00-3.50% All-in fixed rate 3.85-4.25% All-in floating rate 2.25-3.75% 5 to 10 year term 1 to 5 year term

Senior Mezzanine

Loan-to-Value 45-65% LIBOR + Spread of 6.00-9.00% All-in floating rate 6.25-9.25%

Equity Junior Mezzanine

35-40% Yields 10% +

Equity

Bonds vs. GICs

Corporate spreads have contracted significantly in 2012 DEX All Government Bond Index (Blue) returned 2.11% in 2012 DEX All Corporates Bond Index (Yellow) returned 6.22% in 2012 Typical bond funds yielded over 4.0%

Confidential - Internal Use Only 4

Pension Fund Composite Asset Mix

Shift from traditional to alternative investments…

Confidential - Internal Use Only 5 *Data from Pension Investment Association of Canada