Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DC Industrial Liquidating Trust | d857604d8k.htm |
| EX-4.2 - EX-4.2 - DC Industrial Liquidating Trust | d857604dex42.htm |
| EX-4.1 - EX-4.1 - DC Industrial Liquidating Trust | d857604dex41.htm |
| EX-99.1 - EX-99.1 - DC Industrial Liquidating Trust | d857604dex991.htm |
| EX-99.2 - EX-99.2 - DC Industrial Liquidating Trust | d857604dex992.htm |
 Industrial Income Trust Inc.
Portfolio Update and Estimated Net Asset Value Summary
January 23, 2015
Exhibit 99.3 |
 2
The information contained herein should be read in conjunction with, and is qualified by, the
information in the Industrial Income Trust Inc. (the “Company”
or “IIT”) Annual Report on Form 10-K for the year ended December 31, 2013 (the
“Annual Report”) and in the Company’s Quarterly Report on Form 10-Q
for the period ended September 30, 2014, as filed with the Securities and Exchange
Commission (the “SEC”), including the “Risk Factors”
contained therein. This presentation should also be read in conjunction with, and is
qualified by, the Company’s Current Report on Form 8-K filed with the SEC on
January 23, 2015 (the “Valuation 8-K”). Please read the Valuation
8-K for a more complete description of the limitations of and the methodologies and assumptions used to determine the
Company’s estimated net asset value per share.
The estimated NAV per share was calculated as of a moment in time, and, although the value of
the Company’s common shares will fluctuate over time as a result of, among other
things, developments related to individual assets, changes in the real estate and capital
markets, sales of assets and payment of disposition fees and expenses in connection therewith,
the distribution of sales proceeds to the Company’s stockholders and changes in
corporate policies such as the Company’s distribution level relative to earnings, the Company does
not undertake to update the estimated NAV per share on a regular
basis. As a result, stockholders should not rely on the estimated NAV
per share as being an accurate measure of the then-current value of shares of the
Company’s common stock in making a decision to buy or sell shares of the
Company’s common stock, including whether to reinvest distributions by participating in the distribution reinvestment
plan and whether to request redemption under the Company’s share redemption
program. This presentation contains forward-looking statements that are based on the
Company’s current expectations, plans, estimates, assumptions and beliefs that
involve numerous risks and uncertainties, including, without limitation, the Company’s ability to maintain
occupancy levels and lease rates at its properties, the Company’s ability to repay or
successfully refinance its debt obligations, the future operating performance of
IIT’s investments, the level of participation in the Company’s distribution reinvestment plan, and those risks set
forth in the Annual Report on Form 10-K for the year ended December 31, 2013, as amended
or supplemented by the Company’s other filings with the SEC. Any of these
statements could be inaccurate, and actual events or the Company’s investments and results of
operations could differ materially from those expressed or implied. To the extent that the
Company’s assumptions differ from actual results, the Company’s ability to
meet such forward-looking statements may be significantly hindered. You are cautioned not to place
undue reliance on any forward-looking statements.
Forward-Looking Statements |
 3
IIT Offerings and Pricing Overview
Initial Offering:
•
Broke escrow March 2010, terminated April 2012
•
Raised approximately $1.0 billion, including DRP
•
Offering price of $10.00 per share
Follow-on Offering:
•
Commenced April 2012, terminated July 2013
•
Raised approximately $1.2 billion, including DRP
•
Offering price of $10.40 per share
Distribution Reinvestment Plan (“DRP”)
1
:
•
Initial
Offering
–
DRP
price
of
$9.50
per
share
(95%
of
initial
offering
price)
•
Follow-On
Offering
and
Subsequent
Offering
of
DRP
shares
–
DRP
price
of
$9.88
per
share
(95%
of
follow-on
offering
price)
1
Please
see
disclosure
later
in
this
presentation
concerning
the
new
DRP
price,
effective
as
of
March
1,
2015 |
 4
IIT Portfolio and Capital Overview
Estimated as of December 31, 2014
Portfolio Summary Data:
•
First acquisition in June 2010
•
115 transactions, including two to be acquired assets described below
•
300 assets, 60.4 million square feet, 19 markets, more than 500 tenants
•
283 wholly-owned buildings
•
2 buildings owned in joint ventures
•
2 assets that are to be acquired upon anticipated building completion in the first half of
2015 pursuant to executed purchase contracts
•
6 buildings under development consisting of approximately 0.6 million square feet
•
7 undeveloped land assets consisting of approximately 75.4 acres
•
Gross book basis, including pro rata share of investments in unconsolidated
affiliates of $3.85 billion
Distribution Data
1
:
•
Have declared distributions in the amount of $0.15625 per share per quarter since
breaking escrow in the initial offering, which is equal to approximately $333.4
million in declared distributions through December 31, 2014
•
6.25% annualized distribution rate on $10.00 per share initial offering price
•
6.01% annualized distribution rate on $10.40 per share follow-on offering price
1
The
annualized
distribution
rate
based
on
the
estimated
NAV
per
share
of
$11.04
as
of
December
31,
2014
is
5.66% |
 5
IIT Balance Sheet Overview
Estimated as of December 31, 2014
Leverage:
•
Principal outstanding of approximately $2.0 billion, including approximately $1.13
billion of mortgage debt, $500.0 million of term loans and $343.0 million of line of
credit borrowings
•
Equates to approximately 52% of gross purchase price
•
Weighted average remaining term (including extension options) of
5.1 years
•
Weighted average annualized interest rate of 3.6%, adjusted for swaps
Other Assets / Liabilities:
•
Other assets include primarily acquisition deposits, pre-paid expenses and cash
•
Other liabilities include primarily tenant pre-paid rents, accounts payable and dividends
payable
Total Shares Outstanding of approximately 211.6 million |
 6
Estimated Net Asset Value (NAV) Process
1
Engaged Duff & Phelps, LLC (“Duff & Phelps”), an independent global
valuation advisory and corporate finance
consulting
firm,
to
provide
a
positive
assurance
opinion
as
to
the
reasonableness
of
the
Company’s methodologies, assumptions and valuation conclusions used in determining an
estimated net asset value (NAV) per share as of December 31, 2014 (the “Valuation
Date”) The
Company
utilized
the
following
asset
and
liability
valuation
methods:
•
293
assets
2
,
including
six
buildings
under
development
–
discounted
cash
flow,
assuming
the
rates
below, and sales comparison methodologies
•
Seven undeveloped land assets –
discounted cash flow approach for those assets intended to be
developed in the near term and the sales comparison approach otherwise
•
Fixed rate debt –
fair value method (“mark to market”)
3
•
Other assets and other liabilities –
carrying or book value
•
Estimated
disposition
fee
and
incentive
fee
adjustments
–
based
on
hypothetical
liquidation
of
the
Company and its assets on the Valuation Date
1
This presentation should be read in conjunction with, and is qualified by, the Company’s
Current Report on Form 8-K filed with the SEC on January 23, 2015 2
Includes two investments in unconsolidated affiliates and two assets that are to be acquired
upon anticipated building completion in the first half of 2015 pursuant to
executed
purchase
contracts
3
Although the Company currently intends to retain its fixed-rate debt at least through the
dates on which the Company is able to repay such debt without penalty, FMV of the
Company’s
fixed-rate
debt
assumes
such
debt
was
theoretically
replaced
on
the
Valuation
Date,
thus
resulting
in
a
negative
non-cash
mark
to
market
adjustment
Range of
Rates
Exit capitalization rate
5.50% to 8.00%
6.15%
Discount rate
5.75% to 9.00%
6.67%
Weighted-
Average Rate |
 7
Estimated Net Asset Value (NAV) Process
1
Duff
&
Phelps
reviewed
Company
and
3
rd
party
data,
including
but
not
limited
to
the
following:
•
Financial and operating information provided by the Company
•
Estimates
regarding
capitalization
rates,
discount
rates,
market
rents
and
associated
growth
rates
•
Market
publications
and
other
resources,
including
local
Duff
&
Phelps
market
expert
information,
to
measure
current
market
conditions,
comparable
property
and
lease
data,
supply
and
demand
factors,
growth
patterns
and
their
effect
on
subject
properties
•
Methodologies
for
each
property
level
valuation
completed
by
the
Company
•
Mark to market assumptions for each of the Company’s mortgage and credit facilities
•
Estimated disposition fee and incentive fee adjustments
•
Fully diluted common stock calculations
Duff
&
Phelps
representatives
performed
physical
inspections
of
approximately
23%
and
24%
of
the
Company’s
properties
based
on
total
square
footage
and
property
values,
respectively
Based
on
its
review,
Duff
&
Phelps
concluded
that
the
following
were
reasonable
and
provided
a
positive
assurance
opinion
on
the
Company
estimated
valuations:
•
Estimated
value
of
real
estate,
inclusive
of
underlying
property
assumptions
such
as
market
rents,
market
rent
growth,
exit
cap
rates
and
discount
rates
•
Estimated fair market value of fixed rate debt
•
Estimated value of other assets and liabilities
•
Estimated
disposition
and
incentive
fees
payable
to
the
Company’s
advisor
and
sponsor,
respectively
•
Total
shares
outstanding
as
of
the
Valuation
Date
1
This presentation should be read in conjunction with, and is qualified by, the Company’s
Current Report on Form 8-K filed with the SEC on January 23, 2015 |
 8
Estimated Net Asset Value (NAV) Summary
1
Estimated as of December 31, 2014
On January 22, 2015, the Company’s board of directors (the “Board”) determined
the estimated gross asset value, based on information as of the Valuation Date,
of approximately $2.459 billion or $11.62 per share
•
Determined
by
estimating
the
current
value
of
the
Company’s
assets
and
subtracting
the
estimated
market
value
of
its
liabilities
in
accordance
with
the
methodologies
and
assumptions
described
in
this
presentation
Estimated gross asset value was determined in accordance with the Investment Program
Association Practice Guideline 2013-01 titled “Valuations of Publicly Registered
Non-Listed REITs,”
issued April 29, 2013 (the “IPA Guideline”)
On January 22, 2015, the Board determined the estimated NAV as of the Valuation Date of
approximately $2.336 billion or $11.04 per share
•
Determined by taking the gross asset value determined in accordance with the IPA Guideline
and subtracting estimated disposition fees and incentive fees payable to the
Company’s advisor and sponsor, respectively
Duff & Phelps opined that the valuation methodologies used by the Company and the
estimated NAV per share determined by the Board are reasonable
1
This presentation should be read in conjunction with, and is qualified by, the Company’s
Current Report on Form 8-K filed with the SEC on January 23, 2015 |
 9
Estimated Net Asset Value (NAV) Summary
1
Estimated as of December 31, 2014
1
This presentation should be read in conjunction with, and is qualified by, the Company’s
Current Report on Form 8-K filed with the SEC on January 23, 2015 2
Includes two assets that are to be acquired upon anticipated building completion in the first
half of 2015 pursuant to executed purchase contracts Total In 000’s
Per Share
$4,544,868
$21.48
($1,984,695)
($9.38)
(52,839)
(0.25)
($2,085,979)
($9.86)
$2,458,889
$11.62
($90,897)
($0.43)
(31,743)
(0.15)
($122,640)
($0.58)
$2,336,249
$11.04
211,573
Real Property Assets
300 Total Real Property Assets
2
Liabilities
Debt Obligations
Debt Mark To Market Adjustments
Estimated Net Asset Value
Estimated Gross Asset Value
Total Liabilities
Shares Outstanding
(0.23)
Other Liabilities Net of Cash & Other Assets
Estimated Disposition Fee Adjustments
Estimated Incentive Fee Adjustments
Total Adjustments
(48,445) |
  10
Estimated Net Asset Value (NAV) Summary
1
Estimated as of December 31, 2014
The following factors, which could result in a premium or discount to NAV, were among the
factors not taken into consideration when determining estimated NAV:
•
Significant size and management of the Company’s portfolio
•
Synergies,
cost
savings
or
other
attributes
that
some
buyers
may
ascribe
•
Services provided by the Company’s advisor
•
The Company’s shares could trade at a premium or discount to NAV if the Company were to
list its shares on a national securities exchange
Sensitivity analysis of the estimated NAV was performed based on
+/-
25 basis point
movements in the following, holding all else constant:
•
Exit cap rates (estimated NAV assumes 6.15% weighted average exit cap rate)
•
Discount rates (estimated NAV assumes 6.67% weighted average discount rate)
•
Fair market value of fixed rate debt effective rate (estimated NAV assumes 3.27% versus 4.25%
contractual)
1
This presentation should be read in conjunction with, and is qualified by, the Company’s
Current Report on Form 8-K filed with the SEC on January 23, 2015 Decrease of
Decrease of
Increase of
Increase of
Sensitivity
25 basis points
25 basis points
25 basis points
25 basis points
(In Thousands)
(Per Share)
(In Thousands)
(Per Share)
Exit capitalization rate
$104,421
$0.49
($96,307)
($0.46)
Discount rate
$75,761
$0.36
($73,963)
($0.35)
Fair market value of debt effective rate
($15,804)
($0.07)
$15,540
$0.07
Increase (Decrease) to the Estimated NAV due to: |
 11
Summary of Estimated NAV
1
The
estimated
NAV
as
of
the
Valuation
Date
is
equal
to
approximately
$2.336 billion or $11.04 per share
The estimated NAV does not represent the fair value of the Company’s
assets less liabilities in accordance with U.S. generally accepted accounting
principles
The estimated NAV per share is not a representation, warranty or
guarantee that:
•
A stockholder would be able to realize the estimated NAV per share if such
stockholder attempts to sell his or her shares
•
A stockholder would ultimately realize distributions per share equal to the
estimated NAV per share upon the Company’s liquidation or sale
•
Shares of the Company’s common stock would trade at the estimated NAV per
share on a national securities exchange
•
A third party would offer the estimated NAV per share in an arm’s-length
transaction to purchase all or substantially all of the Company’s shares of common
stock
1
This presentation should be read in conjunction with, and is qualified by, the Company’s
Current Report on Form 8-K filed with the SEC on January 23, 2015 |
 12
Summary of Amendments to
Distribution Reinvestment Plan and Share Redemption Plan
1,2
Under the amended distribution reinvestment plan and the amended
share redemption
program, which take effect on March 1, 2015, shares will be reinvested and redeemed,
respectively, at a price equal to 95% of the estimated NAV per share most recently
announced by the Company in a public filing with the SEC as of the date of the applicable
reinvestment or redemption
Participants in the Company’s distribution reinvestment plan may acquire shares at a
price equal to $10.49 per share, or 95% of the estimated NAV per share
beginning with
distributions declared for the first quarter of 2015, which are expected to be paid on or
before April 15, 2015
Beginning March 31, 2015, shares redeemed under the Company’s share redemption
program will be redeemed at a price of $10.49 per share
1
This presentation should be read in conjunction with, and is qualified by, the Company’s
Current Report on Form 8-K filed with the SEC on January 23, 2015 2
Stockholders’
ability to have their shares redeemed under the Company’s share redemption program is
limited and the Board may, in its sole discretion, amend, suspend or terminate the
Company’s share redemption program and the Company’s distribution reinvestment plan |