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to realize all of their dreams. How true. It is also widely known that more millionaires have been created in the medium of real estate investing than in any other. What is far less well known however, is that by participating in larger real estate deals rather than smaller ones, more money can be made, more quickly, and with nearly the same level of effortor, if one is truly wise, with no effort at all. A person in the business of creating large real estate developments has much to do: locate and investigate the property, conduct feasibility studies, consult with architects and tradesmen, design floor plans, visit city hall, meet with councillors to obtain special permission for variances to local by-laws, employ salesmen to offer the newly built or redeveloped properties, and a myriad of other tasks. -- Much to do for sure, but certainly not so much as to prevent an experienced professional, with a team of talented and able men and women, from accomplishing the goal and collecting the profits over and over again. On the other hand, a person who invests in large real estate developments can gain substantial returns on their money without doing one thing more than putting pen to paper. (Certainly, a wiser person than the first, some might say.) We at Pratten Properties are the first person, and we invite you to invest the next few moments of your time studying this material to determine if you are to be the second. That said, I am pleased to introduce you to our organization and our latest syndication opportunity: Namely, an exclusive investment offering between 15 to 25% R.O.I. with a range of unique tax-sheltering possibilities. In the accompanying booklet, we have been sure to include all the information that we would want to know were it our first time considering partnering in a venture such as this. It has been written plainly and with a minimum of distraction so that the investment opportunity described in its pages will be clearly understood, and stand on its own merits. When you are ready, click this link to download the Executive Summary for our current syndication project. When you have finished reading this informative manual in its entirety, please feel free to contact me personally to answer any questions and to provide you with specific details on our latest syndicated project.
Thank you for your consideration, and best wishes for your financial future.
Sincerely,
4520 West Saanich Road, Victoria, BC V8Z 3G4 www.PrattenProperties.com Tel: (250) 479-7732 Fax: (250) 380-7425
The
Blue Book
of
Pratten Properties
Copy #
________ of ________
IMPORTANT NOTE: The statements herein are based on information which we believe to be reliable at the time of publication, but we cannot represent that they are complete or accurate. This booklet is for informational purposes only and shall not constitute an offer to sell or a solicitation to buy any securities. Important and specific information about a particular investment will be set out in the applicable Offering Document. You should obtain and read the Offering Document before making your investment decision. No offering will be presented except in accordance with the governing securities laws.
All rights reserved including the right of reproduction in whole or in part in any form
No part of this publication or any derivation thereof may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system without the prior written permission of the publishers 2004 Pratten Properties All rights reserved and vigorously defended.
5.13.2005
When you have read this informational material in its entirety, just click this text to download the Executive Summary for our current syndication project.
TABLE OF CONTENTS
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 The Importance of Owning Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02 A Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02 Bigger Buildings Bigger Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03 Barriers? What Barriers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03 Smaller Investments Big Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04 Private Syndications: The Vehicle of Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04 Limited Partnerships: One Form of Group Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . 05 Tax Benefits for the Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06 Selling Your Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06 How to Choose the Right Syndicate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06 Why Consider Group Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07 Choosing Your Investment Leader . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08 8 Key Benefits of Private Syndications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09 4 Big Reasons to Syndicate with Pratten Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3 10 Things You Need to Know about Pratten Properties . . . . . . . . . . . . . . . . . . . . . . . . . 1 6 The Team LeadersProven Real Estate Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 The Game PlanHow we run our Syndications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 Our Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Our Corporate Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Our Acquisition Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Our Investment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Risks and Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Internal Control Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 7 Property Investment and Management Risk Controls . . . . . . . . . . . . . . . . . . . . . 38 Property Development Risk Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Taxation Risk Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Management Risk Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Financing Risk Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Prattens Investment Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1 Our CredoOur core values and beliefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 Performance & Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Investments Offered & Services Provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 7 Member-Partnership & Friendship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Our CommitmentEthical Standards and Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1 Knowledge & Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2 Conscientious Investing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 Frequently Asked Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5 Investment Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Speak with us. Personally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Dear fellow Investor, Not since the Second World War has mankind seen such uncertain and unstable times (I know, because Ive lived through them all). Today, the threat of global terrorism makes the economic instability caused by the recession of 1991, and the crash of the Japanese economy in 1999 look like a cakewalk. As if that werent enough, the tech-stock induced disintegration of the stock market left a trail of nervous investors in its wake. As for these skittish investors left still speculating in the markets; you wouldnt want to partner with such Nervous Nellies in your business, so why would discerning investors like you and I partner with them in our investment portfolios? It just doesnt make sense. There is a better way, and it certainly isnt new: It is an extensively documented fact that investments in Real Estate have made millionaires of more reasonable men and women than any other investment in history. In fact, if you examine any 10-year period in the last 100 years, you will witness something remarkable. Namely, a 10.8% increase in the value of Real Estate no matter where in that hundredyear period you choose to begin your 10-year examination.
PRESIDENTS INTRODUCTION
I have staked my career on this fact for the past 40 years. In my long career, first as a builder/contractor, then as a licensed real estate agent and private investor, I have quietly amassed my fortune in real estate all over Vancouver Island and Mainland BC. I have developed and built, bought and held, fixed and flipped, and renovated and redeveloped over 500 substantial properties. Currently, the property management division of my company profitably manages all of my own properties as well as hundreds of units for my select clientele. Now, in the 41st year of my career, I want to share an opportunity to invest in my latest development with you, my fellow sophisticated investor. An opportunity to partner with me, along with my personally-selected team, in large-scale, income-generating syndicated properties. We call them Pratten Properties. Id be pleased if you would take the next few moments to study this booklet and learn how I plan to partner with you and a tight circle of other like-minded men and women in a high-return, limited-risk investment, and offer you returns that are sure to make your accountant blush. When youre through, I invite you to speak with me personally to answer any further questions you may have. When you are ready, click this link to download the Executive Summary for our current syndication project. Each investment stands on its own merits and we encourage you, the investor-partner, to examine them for yourself. Our unique transparent disclosure method invites you to see the basis of our investment decisions for each of our syndications and become part of the process. In essence, you see what we see in every opportunity so you can make an informed investment decision. I am delighted to offer you an opportunity to invest with us in our latest real estate syndication project and the opportunity to gain entry into these highly lucrative investments. I look forward to meeting and speaking with you personally.
Sincerely,
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THE IMPORTANCE
OF OWNING
REAL ESTATE
It is no secret that the greatest wealth-builder in history has always been investment in real estate. Real estate is more than just a fallback investment during a bear market. And, unlike the paper investments of the stock and bond markets, carefully selected income properties have real long-term value secured by physical assets. Additionally, they are not subject to the wide fluctuations common to stock markets and, when properly managed, they can continue providing a steady return on investment of 15 to 20% per annum even when the real estate market is flat. With mortgage rates at historic lows and vacancy rates in prime areas hovering at 1.5% , investing in high-income properties has never made more sense. So, why isnt everyone investing in real estate? In a sense, most people already are: Tenants pay monthly rents or leases to the owners of income properties in exchange for the use of the space in which they live or conduct their business. In addition, the tenants may pay property management fees, financing fees, mortgage fees, and a multitude of other fees for services that the owners choose to provide in exchange for these fees. All of these tenants (and in the case of commercial properties, all of the tenants clients) are trickling their money up (in the form of monthly rent, lease payments, or maintenance and strata fees, etc.) to provide a return on the investments (R.O.I.) made by the owners of the property. So, although the tenants are receiving benefits from occupying the property, they are not realizing any residual income or tax-sheltering benefits from the ownership of the property itself.
this property to their franchisees at a price that produces a profit every month well in excess of their cost of financing and maintaining the property, but not so much as to make leasing the property unattractive to the occupier. These same franchisees not only paid for their rights to operate their store from McDonalds, in most cases their franchise fees also pay for the investment real estate that they are now leasing from McDonalds as well. Wisely, McDonalds doesnt stop there. They also receive profits from the wholesale sales of food to the franchisee, as well as a portion of the profits of each location in the form of franchising, advertising, and marketing fees. We should all be so smart.
A CASE STUDY
When asked what business McDonalds is in, most people would immediately answer selling hamburgers. And although its true that McDonalds has successfully sold billions of hamburgers for many many years, they are most definitely not in the hamburger business. The McDonalds Corporation owns a great deal of the most valuable and coveted income properties all over the world. They in turn lease
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larger projects, but what about the individual private investor? How can the individual investor with limited skills in real estate development, or less than a million dollars in cash, get in on such an attractive investment? Are these highly desirable opportunities reserved only for conglomerates, investment banks, and powerful old money families? Thankfully, the answer is No.
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put in the same investment as an investor who wants a tax shelter with little or no cash flow produced by the property. Obviously, one property cannot offer both. Select a knowledgeable individual to act as your General Partner. A good General Partner will know (or get to know) all of his investment partners personally, in order to group like-minded investors together with the investment and holding period that will best serve their needs. Make sure he also has a vested interest in the venture so that his profit is tied to the success of the investment. You should determine the guidelines as to the operation of the property at the time the group is founded. This includes basic management policies, optimum holding period, etc. Using this vehicle, investors with limited investment capital are able to join with others and share proportionately in the monthly profits from rent, periodic cash disbursements upon refinancing or sale of the property, and tax benefits offered by real estate investments. Without the group, many would not have sufficient capital to become a real estate investor. At the same time, since control is in the hands of the General Partner, the chance of painful disagreements among the investors is minimized, and the overall stability of the investment is enhanced.
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PRIVATE SYNDICATIONS
BENEFITS
How Syndicates Create Wealth for Investors
EIGHT KEY
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REASONS
to Syndicate with Pratten Properties
4 BIG
PRATTEN PROPERTIES?
Serious investing is best done with serious professionals shielding you from personal liability and exposure to taxation. So, with that said, if youre still looking for reasons to syndicate with Pratten, here are four big ones:
4. TAILOR-MADE INVESTMENTS
Are your current investments of the off-the-rack variety? Do they still fit you as snugly as they once did? Theres nothing more embarrassingor more costlythan finding out youre still sporting last-years investments. To remedy that situation, wed like to introduce you to our investment tailor: KPMG At your request, your Pratten Properties Syndication investment can be custom-tailored to suit your investment portfolio. The talented people at KPMG will work with you personally to put our unique profit-maximizing and tax-minimizing strategies to work for you. To ensure that you derive the maximum benefits from your investment, Pratten Properties will retain the services of our financial consultants at KPMG to custom-tailor an investment solution for every one of our qualified investors for a confidential, one-on-one consultation. During your private review engagement, your KPMG investment counsellor will present you with your best choices of investment positions that provide you with options with respect to priority of return, risk, and tax benefits. That means you can choose the balance of risk and return that best suits you.
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1 0 THINGS
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sometimes they are calls for advice (Can I get permission to make some alterations? or, Im thinking of taking more space). Whatever the nature of the enquiry, our helpdeskand the Customer Service Teams dedicated to each propertycan either supply the answers or put our occupiers in touch with someone who can help.
We provide our investors with a complete picture of how their syndication investment is performing via comprehensive monthly or quarterly statements, and what were doing to further enhance that performance, through timely newsletters. As expected, our management teams are also available to discuss any issues with our member-partners and occupiers.
When you have read this informational material in its entirety, just click this text to download the Executive Summary for our current syndication project.
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A TEAM OF EXPERTS
Real Estate Syndication is a superior investment vehicle than can only be made more profitable with the right team of investment leaders at the helm. When you participate in a syndicated real estate investment in partnership with Pratten Properties, you can be sure that your investment is in experienced hands. Want proof? Read on.
Career History
Alan Pratten lends over 40 years experience as an entrepreneur of real estate business. His areas of expertise include sales and leasing, construction, property development and re-development, and property management. As a successful realtor and owner of investment income property, one of Prattens main talents is finding, delivering, and enhancing winning investment opportunities. He has a proven track record of implementing effective management strategies to increase the value of the properties in his companys care. Pratten began accumulating his wealth of experience and expertise in all facets of the Real Estate Industry in 1963. He gained his handson experience in the planning and construction of residential and commercial properties as the owner of his own construction company in Bristol, England. In 1978 he moved to Victoria, BC to begin his various private investment and entrepreneurial pursuits in Canada. In 1994, he opened his property management office, Abacus Properties, and then added his real estate sales office, Exit Realty Abacus, to his array of services in order to enhance the other operations as well as his personal real estate holdings. Currently, he continues to invest privately, both on his own and in partnership with other private investors in real estate projects all over Canada. Today, Pratten provides complete residential and commercial accommodation and property services to a wide range of occupiers across Canada. His objective is to create long-term and sustainable returns for his investors through activities which include property investment, development and total property management.
Career History
In his first year of University, Gant launched his first real estate related business: a residential contracting franchise. As a 1st-year rookie in this business, Gant achieved the highest productivity level ever recorded by the 25-year-old organization, and earned his first of two Leader of the Year awards. In his second year of businessnow with staff totalling 23 men and womenhe gained entry into the prestigious Presidents Club in recognition for his outstanding achievements in both gross sales and net profits. It was in this business that he cut his teeth in all areas of sales and marketing, accounting, interviewing and staffing, negotiating, training, and management. Later, being ever mindful of his civic responsibilities, Gant put his business to work in support of various charities including the Big Sisters chapter in Vancouver who honoured him with a Gold Patron Award for his companys contributions to the organization. In his first year of real estate investing, Gant acquired 1.1 Million in properties using his own creative negotiating and financing techniques. (Since then, he has acquired several times that amount.) As V.P. of Finance for Pratten Properties, he is responsible for assessing and controlling risk for each syndication, as well as the administration of our rigorous due-diligence processes. In his role as Director of Capital Development, he employs his own mathematical models to detect the opportunities in the numbers, quantify them, and ensure appropriate action is taken until their hidden profits materialize.
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A. GRANT DIXON
Senior Assessor for Pratten Properties
Grant Dixon is an expert assessor, developer and a licensed realtor specializing in commercial and residential land development. Dixons talents are expressed in his ability to quickly determine precisely what can and should be done with a certain property, assess its viability as any one of a number of possible types of development forms that could be considered, and the profit-generation potential for each type. As Senior Assessor, hes responsible for managing our meticulous duediligence processes for every property we develop and syndicate.
Career History
Upon completing his undergraduate studies at the University of Toronto in 1991, Emanuel Arruda opened his own design and marketing firm in the heart of the city. As President of Absolute Advertising in Toronto, Arruda provided marketing and communication tools to clients in Canada, the U.S., and as far away as Iceland, Italy, and Japan. In 1999, he sold his firm, and for a brief time, provided consulting services to a competitor. Within six weeks, he streamlined their production and reduced re-work by 87%. Having discovered his talent for consulting, Arruda was quickly snapped up by one of the worlds oldest and largest management consulting firms, and remained there for nearly four years. During his tenure with the firm, Arrudas talent for one-on-one communications, and rapport building came to the fore. Garnering literally hundreds of major business clients in that short time, Arrudas talent was to quickly get to the nitty-gritty of the problems and impediments to growth facing these small to medium-sized businesses, and assign specialists to implement custom solutions for them. He quickly became the top associate in his territory, which spanned from Toronto to Windsor, and as far north as the French River. Capitalizing on his profits from the sale of his business, and the travel afforded him by his consulting work, Arruda began investing privately in real estate in 1995 and continues to do so to this day. As an investor in real estate himself, Arruda appreciates the unique nature of property management and marketing, and uses his skills to develop and maintain vital systems for communications within our organization, and without.
Career History
For more than 10 years, Grant Dixon has demonstrated a talent for producing consistent property development success. As a Developer, he can take the right property and bring it to the desired end result be that children playing in their backyard, a commercial franchise operation on the main strip in town, or a medical office in the suburbs. Creating something from nothing is one of Dixons best talents. Over the span of his career, Dixon has built much more than just residential and commercial subdivisions in Eastern and Western Canada, hes also built valuable business relationships throughout the development industryall of them built on trust, reliability, and mutual respect. In a business as competitive as real estate development, having a skillful liaison like Grant Dixon on your team is an enormous advantage. Feasibility and viability are everything. It takes a keen eye to see the opportunity in seemingly unrelated events. For instance, knowing that a certain municipality is upgrading or expanding the sewer service in a certain area means that occupancy allowances will likely increase in the area, and with that comes the opportunities for new developments to be created in the surrounding area. Recognizing how, when, and where to capitalize on events such as these, results in significantly more opportunities in areas where no one else is looking. Dixons talent for recognizing and acting upon these subtle signals means we get there first.
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RUBY NISHI
Property Manager for Pratten Properties
Ruby Nishi is an experienced property manager, administrator, and realtor with a talent for maintaining effective relationships with the myriad of people occupying the properties in her care. Ms. Nishi currently holds an unrestricted real estate license which she received in 1979. In addition, she has earned a diploma in Marketing and Business Administration, and has a background in real estate office management, conveyance and administration.
Career History
Since beginning his career in investment real estate in 1999, Wanstall has accumulated nearly $2.3 million in investment real estate. Hes a remarkably versatile real estate investor with a talent for creative thinking and deal-making. Finding and fixing properties with latent potential is Wanstalls specialty and, as a rule, he employs a strict buy and hold investment philosophy. Wanstall believes that consistent financial performance over the life of a property comes from ensuring its current and future appeal. He also believes that this appeal translates directly to the rents he can demand as well as the appreciating value of the property itself. To that end, Wanstall applies his comprehensive maintenance and enhancement programs to all his investment properties. With 12 properties currently in his portfolio, his results are unmistakable. Each produces the positive cash flows for himself and his partnersjust as they were intended to do. Thats a track record that speaks for itself. Guiding people to opportunities is nothing new to Wanstall. Prior to entering the field of private real estate investing, he rubbed elbows with a myriad of high profile celebrities, business moguls, and private citizens while working as an adventure guide at various exclusive resorts. Keeping his clients safe and happy is just a matter of course for this highly trained sherpa, and its exactly this kind of experience that makes Wanstall such an important member of our team. Hes an experienced world traveller, entrepreneur, and investor who is always at the ready to travel any distance necessary to explore new opportunities for our investment portfolio.
Career History
Now totalling 25 years in the real estate industry Ruby Nishi brings with her a wealth of knowledge and experience in residential and commercial sales, as well as property management. For the past eight years, she has worked in strata property management, managing numerous buildings in both residential and commercial strata units. Nishi is a talented administrator, coordinator, and communicator. She is responsible for her crews coordination and completion of the countless property management needs for a wide variety of properties including individual condos, townhouses and houses, as well as duplexes, multi-unit apartment blocks and large strata corporations. (That means Nishi is on call 24-hours a day, every day.) So, how does she manage to keep everybody so happy? If you can sense the difference between a Complaints Department and a Customer Help Desk, then you have some idea of the value Nishi adds to the property management division of our organization. One of the ways she proactively minimizes her workload, is by making it her business to personally interview every perspective applicant as they do an on-site inspection of the property. By carefully matching the right tenant with the right property beforehand, she increases the likelihood that our occupants stay put longer. Nishi knows that tenants will continue to occupy our properties just as long as their needs are being met consistently and swiftlyso she makes that happen everyday. Thats not just a skillits a bona-fide talent.
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Career History
Gait first joined Alan Prattens team of specialists as the controller for the company in 1995. Prior to that, she worked independently for her own roster of clients and adapted her talents for precision, accuracy, and timeliness according to the needs of her clients. This included acting as conveyancer and bookkeeper for a prominent notary public; and bookkeeper for the Canadian Iron and Steel Industrial Workers Union Local #1 in Victoria, BC. Between 1996 and 2000, Gait worked for two well-respected law firmsfurther enhancing her degree of expertise in the areas of bookkeeping and conveyancing in both real estate and law services fields. In Edmonton, she was a legal assistant and commissioner of oath for the Province of Alberta, and she supplied the backbone for the day-to-day operation of the business. As the conveyancer and bookkeeper for Pratten Properties, Gait keeps track of the multitude of details that come part and parcel with handling rents paid by hundreds of occupants; posting expenses; and preparing disbursements from the trust accounts of the owners of the 1100-plus units that are currently owned and/or managed by the company. For the property management portfolio, she also manages payables and receivables, and as conveyancer, she prepares and monitors all real estate listings and deal files, ensures all contracts are accurate and complete, and that all information is forwarded to the relevant parties in a timely manner.
Career History
Jennifer Cousins has garnered extensive management experience in the arenas of accounting for the property management and construction industries. From 1992 to 1999, she got her introduction to the basics of bookkeeping and accounting while under the employ of a mediumsized building and construction supply depot in Port Alice, BC.. As it was the family business, keeping track of every transaction efficiently and accurately developed into both a personal and professional habit. Since that time, she has reached even greater levels of proficiency while working independently for a number of businesses in the real estate development sector, providing services in the areas of overall office management, budgeting, bookkeeping, and development of integral record-keeping procedures and control systems. In 2000, Cousins joined Alan Prattens organization, and she now manages and administrates his group of companies exclusively. These include Exit Realty Abacus, Abacus Properties and various related businesses and investments. Her responsibilities include: office administration, budgeting, preparation of corporate financial statements, as well as supervising the preparation of financial statements for the property management portfolio. In addition, she also manages corporate payables, receivables, and monthly bank reconciliations for the corporate and real estate trust accounts, and prepares for the annual audit.
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THE GAME
PLAN
Focusing on prime assets in the residential and commercial sectors; Creating exceptional long-term investments with strong covenants, long lease terms, and growth potential; Enhancing property returns through active management and development; and Maximizing equity returns through optimal financing and private syndications. By exploiting the strong local market knowledge of our experienced team, and through our strategic alliances and partnerships with various professionals and private individuals, Pratten Properties is able to acquire, maintain, and dispose of strategic assets optimally. This practice enables us to maintain a consistently profitable portfolio, which is carefully balanced by sector and by geography.
OUR OBJECTIVE
Our primary objective is to create long-term and sustainable returns for our investment partners and our company through our property investment, development and total property management activities. Through our proven system of total property management (i.e. the Pratten Closed-Loop Management program), both the cash flow and the assessed values of these properties will be improved and maximized. The aim of our investment strategy is to generate and continually increase the net income from the properties for distribution to the member-partners. This net income will be distributed back to our investors via monthly payments and periodic disbursements from refinancing on an ongoing basis.
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USE OF PROCEEDS
Regardless of the specific business line, Pratten Properties acquires and develops properties primarily to actively manage and operate them as income producing, ongoing businesses. Concurrently, we are regularly exploring new opportunities for income growth from new acquisitions or development, as well as from providing incomeproducing leasing or tenant services. With a very diverse profile, Pratten Properties offers investors many alternatives across a broad range of real estate sub-sectors, including: Apartment communities; Seniors Housing; Shopping centres and malls; Industrial parks and warehouses; Lodging facilities, including hotels, motels and resorts; Medical Centres; and Renewable Energy Power Production Centres (water or wind power).
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Principal controls
These include regular monitoring of legislative proposals and participation in discussions with Government directly and through trade bodies to understand and, if possible, mitigate the impact of changes.
When you have read this informational material in its entirety, just click this text to download the Executive Summary for our current syndication project.
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PRATTENS
INVESTMENT
GUARANTEE
How We Earn Our Share
PRATTENS
INVESTMENT
GUARANTEE
Youve probably heard of one-off syndicates that demand an automatic 15 to 25% ownership stake in the property (on top of their acquisition and management fees) as one of the up-front perks for the General Partner. Pratten Properties syndications are structured very differently than that. Typically, syndicators will do things like pad the purchase price and/or take a substantial ownership bite out of the property as compensation for putting together the investment. They do this to secure their up-side on the front end of the deal and to eliminate their risk almost completely. If you call them on it, theyll tell you that this is simply the cost of doing business with them. As we see it, these are the tell-tale signs of inexperienced or short-sighted General Partners with a poorly designed syndication plan. There are a number of reasons we feel this waythe two most important being that this dilutes the investors unit value, and also results in the lack of built-in motivation for the General Partner to continuously improve the investment. To begin with, since the investors slice of the pie is now 15 to 25% smaller, so are the monthly profit payouts. Which means, all of the participating investors experience an immediate dilution of their unit value, and this in turn reduces their overall return on investment. Even worse, the rate at which the value of their investment appreciates is also stunted by the same 15 to 25%. (In contrast, Pratten Properties syndications are specially selected and structured to double in value every 3-4 years.) The real danger for investors involved in this sort of syndication, however, is that there is no built-in motivation for the General Partner to aggressively manage and continuously enhance the property after the deal is done. So, rather than continuously working to increase the value of their investment beyond the expected appreciation of real estate values, and aggressively maximizing the investment returns for the investors, the General Partner remains content with the status quo. So, from day one, the investment is hobbled and the syndicators relationship with the investors is irreversibly souredand thats why theyre called one-offs: nobody would be foolish enough to invest with them more than once.
YOUR R.O.I.
How does this affect your return on investment? Depending on the investment, our way of doing things can translate to a savings (and therefore, additional profits for distribution) of 15 to 20% of the initial monthly profit payouts, as well as an additional 15 to 20% of the increase in equity compounded annually from the first day the investment is purchasedso your investment grows bigger, faster. So, whats to keep us from inflating the value of the property or its income? The check and balance that prevents this from happening is built into our unique investment philosophy, and it simultaneously creates liquidity for your investment too.
YOUR LIQUIDITY
We understand that unforeseen personal situations can sometimes force one or more of our investors to liquidate their shares sooner than they had originally planned. To provide assistance in such instances, Pratten Properties maintains a waiting list of member-partners and prospective members. So, if you need to sell some or all of your units, we can help you in the same way a Realtor would help you sell your home. To ensure that you are receiving the most honest and accurate value for your units, we use a third-party appraisal to determine fair market value, and are audited yearly by KPMG Canadas largest and most respected professional services firm. These mechanisms keeps the syndicate honest, and your investment secure, accurately priced, and remarkably liquidyou wont find that anywhere else.
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OUR CREDO
Our Core Values and Beliefs
OUR
WE BELIEVE that our word is our bond; it can be trusted. Any person who does not keep their word, even though they have given it only by telephone; one who seeks to evade a contract because of some technicality; or who willfully misrepresents or outright lies, is reprobate and should be shunned. Such persons will not be tolerated, and once found out, we will have nothing more to do with them. WE BELIEVE that it is our ethical obligation as well as our lawful duty to protect our interests and the investments we administer. We will prosecute to the fullest extent of the law any whos willful lies, misrepresentations, acts of omission, or misconduct cause harm to our member-partners, our company and its associates, or the investments in our care. We will vigorously defend our concerns on behalf of all those who depend on us, and when doing so, we will retain the best-qualified professional counsel and legal representation required to guarantee a just result.
CREDO
A concise statement of our core values and beliefs.
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WE BELIEVE that every investment project we initiate must succeed. Accordingly, we will not engage in any activities that lie outside the professional competence of the acquisition and management teams we assemble, nor will we begin acquisition procedures until we are fully confident in our abilities to negotiate, acquire, and continuously manage the property profitably. WE BELIEVE that in the sphere of professional investing there is no place for speculation. Ever mindful of our fiduciary duty to our lenders and to our many member-partners who have committed significantly large portions of their net worth to our care, we shall never risk losing either their invested capital, or their confidence in us. WE BELIEVE that a fair compensation structure is one that is linked to the results achieved. To mark our continued commitment to extraordinary leadership, wherever possible, we will utilize fair monetary incentivesalong with an appropriate system of checks and balancesto ensure that we remain committed to succeeding to the maximum degree. We will measure the level of our remuneration against: the value of the labour we invest in the project prior to acquisition; the increase in profit and value we create (relative to the values established at the time of acquisition); the level of risk we endure or alleviate from our member-partners by our active participation, management and administration of the investment; as well as the expertise we supply throughout.
WE BELIEVE that investing together with a harmonious group of experts and friends, makes our investments all the more stable, secure, andjust as importantlyenjoyable. As long as we remain a private institution, we shall reserve the right to select, accept and retain only like-minded, like-tempered, and well-reputed individuals into our group, whose characters and ideals harmonize with our own. We will do this with the aim of constantly cultivating a harmonious environment in which to achieve, while avoiding distractions or interruptions to our ongoing business operations. When making our selections we shall not discriminate against any person because of age, race, gender, disability, religious or spiritual beliefs, familial status, or national origin. WE BELIEVE our membership is comprised of extra-ordinary individuals who are deserving of respect. We respect them foremost for the effort, care, and constraint it took to produce, accumulate, and save their investment capital. Having their capital entrusted to our care, we will manage it with exceptional ability on their behalf. If the day ever comes that we cannot find a profitable place to invest their free capital, we shall pay those member-partners out and let them deploy their funds as best they can. When the time once again comes that suitable opportunities present themselves, they shall have the first option to invest, ahead of all others.
When you have read this informational material in its entirety, just click this text to download the Executive Summary for our current syndication project.
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COMMITMENT
Fulfilling Our Mission Through Ethical Standards and Practices.
OUR
OUR
CONSCIENTIOUS INVESTING
WE BELIEVE that an honest profit should rest as comfortably on the conscience as it does on the pocketbook. Remembering always that our standards and desires are those of leaders, we are committed to positively affect the communities in which we operate, and the environment in which we all co-exist. WE BELIEVE that having safe and pleasant places to live, work, shop, and relax are a form of wealth that no human being should be denied. It is the very foundation of a vibrant, healthy society, and nothing could be more worthy of our attention. Therefore we will continually strive to make the properties under our care, rate best in their class. It is our aim to create long-term, compounding enhancements on the properties we develop and transform, in the lives and businesses of our clients who occupy our properties, in the surrounding communities, and on the environment in which these communities co-exist. WE BELIEVE that there is a task that no conscientious investor may shirk: We must endeavour gradually to bring about such a reconstruction of society that poverty and its attendant evils shall cease to exist. We must do our part to ensure that future generations of humanity inherit from us a world that is cleaner, safer, and happier the one we know now. To this end, we are committed to set aside a fixed portion of our profits as an investment in the future of human civilization by providing continuing financial support to select humanitarian organizations whose core values reflect those in our credo, whos financial administrative practices are sound, and whose mission is to positively and sustainably affect societies around the world. We will invite our member-partners to do the same.
COMMITMENT
A brief statement of our standards and practices.
When you have read this informational material in its entirety, just click this text to download the Executive Summary for our current syndication project.
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QUESTIONS
FREQUENTLY ASKED
FREQUENTLY ASKED
Do you ever require a minimum investment? No. We have never set minimum investment requirements for any of our syndications, nor do we intend to do so in the foreseeable future. Pratten Properties was founded on the belief that our relationship with our member-partners is much more important than any principal amount they choose to invest with us in any one project. How can you afford to consistently offer such high returns? We have constructed our organization from the ground up to do the following things better than anyone else: To find, qualify, acquire, and manage the most profitable real estate properties and syndications anywhere.
upside before, think of it as diamonds lying buried and hidden under layers of grime and stoneour crew mines, cuts and polishes them to realize the full potential of their value.
Why do you set maximums for your investments? The reasons are twofold: Before anything else, we want to encourage even our most ardent investors to always use prudent moneymanagement techniques and diversify their holdings. Secondly, it is important to keep in mind that we set out to make new friends not new friend. If we allowed one or two deep-pocketed investors to acquire all the units in our syndications, it would take us much longer to cultivate the number of member-partners we need to achieve our goals. Can I invest directly from my RRSP? No. However, even though you may not invest from your RRSP directly, some Pratten Properties member-partners have used the services of bond underwriters to access their RRSP money without paying the withdrawl tax. How it works: A bond underwriter will issue you an RRSP-eligible bond, and then provides you with a loan (outside your RRSP, and at a reasonable rate) that is secured against the bondall without having to pay withdrawal tax. Their bond earns you a slightly lower rate of return than the loan they provide, but you can use this freed up cash to invest in any of our syndications and leverage your invested funds over and above the interest rate paid on the loan. As a nice bonus, since the interest paid on the loan is tax-deductible, it provides another opportunity to significantly enhance your overall after-tax return on investment. Working with a bond underwriter allows member-partners to: convert their under-performing RRSP funds to Limited Partnership units in any Pratten Properties syndication in as little as 7 days; eliminate the 10% RRSP withdrawal tax and avoid paying income tax on the withdrawn funds; enjoy a 4% tax credit that they can apply to other personal income every year; realize a tax-efficient return on their newly liberated capital. If you wish to wish to use your RRSP contributions to enlarge your ownership position, you are invited to contact us any time.
QUESTIONS
In combining the unique skills and experiences of our team leaders and staff, we have spared no expense to build (from scratch where necessary) whatever software, hardware, knowledge-base, and human resource infrastructure requirement needed to capture the best of our experience and skills, and breathe them systematically into our business. With this backbone supporting our efforts, we are able to accomplish greater results faster than any other investment group. But perhaps the simplest reason is that, unlike most syndicators who specialize in acquiring shelf properties that can be managed right out of the box, we at Pratten Properties are devoted to rolling up our sleeves and getting our hands dirty rejuvenating tired properties that have unrealized potentialalso known as upside. (See: Prattens Investment Guarantee). If youve never heard the term
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Why do you call your investors, member-partners? We invite new friends to become our members, and we in turn partner with alongside them by investing our capital alongside theirs in Limited Partnership units just like theirs. Any ownership of units held by directors or staff of Pratten Properties are in the form of personally held Limited Partnership units having the same rights and restrictions as any of our member-partners. What are your criteria for membership? Because syndications are by nature group investments, we believe that the more our group members have in common and the more their interests align, the more stable and predictable the investment will be. So, before we take you on as a new member-partner, we want to speak to you personally and even meet with you face-to-face if possible. If things proceed from there, we will next speak with the references you supply. If we all agree that theres a good fit, you will be accepted as a new member-partner of Pratten Properties. It may seem a little out of the ordinary when compared to the common investment houses, but ours is a private investment firm, and being so allows us the freedom to be as old-fashioned (and cautious) as we wish to be. As a Limited Partner, what do I actually own? In a Limited Partnership form of syndication, your interest in the property is an indirect one. (This legal structure protects every Limited Partner from liability). Title to the property is registered at the Land Titles office in the region in which the property is located, in the name of the General Partner who holds title in trust for the Partnership. The Limited Partnership Agreement and the names of the participants are registered with the BC Securities Commission. Upon successful closing of the property, our lawyers provide each member-partner with a copy of the title for their records along with their unit certificate. Do Alumni Members get the first look at new offerings? Yes. One of the greatest advantages of having an established relationship with Pratten Properties is that our Alumni Members get a 48-hour advance notice at all new investment opportunities. During this period they (and any close friends and business associates that our members may wish to introduce to us) are offered the opportunity to participate prior to public notice being given. Once this period expires, we next offer the units remaining un-subscribed (if any) to pre-qualified prospective members.
(Note: Currently, the average decision time for members to participate in a newly offered syndication group is less than 5 days from the time they first receive their Executive Summary to the time we receive their Notice of Interest. This time is likely to drop as it becomes more difficult to find good deals and as we have more distributable cash from refinancings that we must re-invest for our current member-partners.)
How large is your territory? For the time being (or until a particularly good opportunity presents itself) we prefer to focus on real estate within Canada. We believe that Canadas strong economy, stable political system, and its abundance of natural resources, make it the best place in the world to invest in real estate. In addition, by investing in our own country, we eliminate any risk that could result from exposure to currency fluctuations. What are your criteria for choosing which properties to syndicate? Every prospective syndication projects must share all of these traits in common: The property must pass our rigorous due-diligence process that not only discloses all manner or potential risks, but also determines the maximum price we can offer and still achieve the 15%-25% ROI our member-partners have come to expect. There must be no risk of loss of our member-partners capital. The property must provide our member-partners a tax-efficient investment. In particular, we aim to achieve regular income that is partially or completely sheltered from taxation, provides taxefficient disbursements during refinance periods, as well as preferential tax treatment on investment income and unit value increase. Prior to making an offer to purchase, the property must already show a positive cashflow that achieves a net income yield that is a minimum of 3% greater than the monthly payments for the first mortgage. The property must demonstrate the potential for increase in value by at least 10% annually. This increase potential is must be directly attributable to factors controllable by our management teamnot speculative market factors. The property must have un-realized potential (commonly called, Upside). This potential can take many forms. For example: zoning that allows for further development or redevelopment; room for rent increases; aesthetic or structural improvements which upon completion and reappraisal would add immediate value; and, improvements in management systems or personnel.
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Who manages the properties that are under Pratten Properties administration? You wouldn't leave your baby in the care of a stranger, and neither would we. No matter the distance from our headquarters, every property we acquire on our member-partners behalf is under the managerial direction of Pratten Properties at all times. After all, our compensation depends on it. (See: Prattens Investment Guarantee) What is the Closed-Loop Management system? Our proprietary method of management and control is our little secret. It keeps our employees and contractors honest, efficient, and on their toes! When and how should I cash out? It depends on the deal. For every new syndication project, we publish an Executive Summary. In it we include details of the various events we plan that will trigger the re-appraisal and re-financing of the property. (See, Prattens Investment Guarantee). It is recommended that you plan your strategy around these events. You may wish to discuss your options during your complimentary planning session with KPMG. How liquid is my investment? Unforeseen personal situations can sometimes force one or more of our investors to liquidate their holdings sooner than they had originally planned for. To remedy this, Pratten Properties has in place a unique buy-back program to help investors cash out of their positions when unforeseen circumstances arise. For more information on this, see Prattens Investment Guarantee Who decides the value of the unit when a Limited Partner wants out? To ensure that you are receiving the most honest and accurate value for your units, we use a third-party appraisal to determine fair market value. This mechanism keeps the syndicate honest, and keeps your investment secure, accurately priced, and remarkably liquid. If an investor is forced to liquidate their holdings in between refinancing periods, the current value is assessed based on the change between the net incomes of the property on day the units are sold, from the day the units were purchased. What percentage of ownership does the GP take up front? Zero. We believe we must add value to an investment property in
order to earn our share in ownership. For more information on this, see Prattens Investment Guarantee. Can the GP buy up more and more units and become more powerful? The General Partner will never own units in any syndication. Any ownership of units held by directors or staff of Pratten Properties will be in the form of personally held Limited Partnership units having the same rights and restrictions as any of our member-partners. How much of my investment is taken out in fees? How much is left working for me? Pratten Properties does not take any ownership up front so all of your money is working for you from day one, and your units are not diluted by even a single penny. We are committed to maintaining transparency for our member-partners, so we disclose individual fees, disbursements, commissions, etc., in every Offering Memorandum for every syndication we initiate. Do you ever demand cash-calls that require that the Limited Partners invest more money? No. There will be no cash-calls. If project requires additional funds at a later stage, we will offer a new block of Limited Partnership units. Our alumni members would be offered the first option to purchase the newly offered units at the current value, then any new units left unsubscribed would be offered to members of other Pratten Properties syndication groups, and finally to qualified prospective members. What happens to my income if the property burns down and the zoning changes? All our properties have income insurance coveragepaid for by the tenantsthat will continue to provide you your income until such time as the building is replaced and the income stream is recovered. Do you ever suspend distribution of cashflow to the Limited Partners? No. We have a contingency fund in place to prevent such an occurrence. Each month we distribute 90% (depending on certain factorslike the size of the largest tenant) of the net cashflow of the property to our investors. The 10% not distributed is put into a reserve fund to smooth out any inconsistencies in cashflow disbursements that may come up if a tenant leaves and is not immediately replaced. When a level deemed appropriate is reached, the balance once again is added to the member-partners monthly disbursements.
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How often do you keep in touch with your member-partners? First of all Thank you for the compliment! It is our custom to proactively keep members informed of important new developments pertaining to their investment, so that they are never left wondering whats going on at your investment property. By means of general newsletters, as well as timely letters and announcements, we actively take it upon ourselves to keep you abreast of the significant events that affect your investment as they happen. We do this proactively so that we can continue to focus on one important thing: managing the investment rather than the investor. What will my accountant need to know? For some of you, this will be your first experience with a privately offered investment and thus your first exposure to an offering memorandum and risk acknowledgement form. Private investments offering profit potential such as ours have historically been reserved for individuals classified as Accredited investors. This accreditation refers not only to the level of their wealth, but also to their ability to acknowledge the risks and benefits associated with private investments. Pratten Properties believes that it is important for each of our new members to become familiar with the language and structure of a private offering document. By educating yourself in these matters you qualify yourself to participate in other exceptional private investment offerings when they become available. You may require professional counsel to explain certain elements of these documents. It should be noted however, that not all lawyers or accountants have the experience or qualifications required to advise you adequately. If you are unsure about the level of sophistication of your legal and accounting representation, we have taken steps to assist you. Our Lawyer will make himself available to discuss any questions that your lawyer may have regarding these documents. In addition we have asked our accountants at the Victoria branch of KPMG (the Largest Public accounting firm in Canada) to make select members of their team available to advise you at your request. (This consultation will be at the expense of Pratten Properties.) They are uniquely able to provide you (or your accountant) with specific strategies on maximizing the tax efficiency of this investment in your portfolio that your accountant may not by privy to. It sounds too good to be true. Although this is technically not a Frequently Asked Question, we hear this comment from prospective members often enough that it makes sense to address it here Our teams of experts have all worked diligently to make our organization just as good on the inside as it seems on the surface. Everyone in Pratten Properties organization, from the founding partners to the resident managers, as well as our legal team and their counterparts at KPMG, were invited to work with us because they share the same passion for perfection in their work, as we do in ours. If that sounds old-fashioned to you, again we thank you.
When you have read this informational material in its entirety, just click this text to download the Executive Summary for our current syndication project.
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INVESTMENT HIGHLIGHTS
PROVIDES A CONSISTENT AND REGULAR QUARTERLY CASH DISTRIBUTION
Attractive yield relative to other income funds with a targeted annual cash yield of 8 to 15%. Distributed cash is paid monthly and is expected to increase every year. Overall return on investment in the neighbourhood of 15% plus..
TAX SAVINGS
Investments can be RRSP eligible. Profit disbursements can be paid out in a form which is not taxed as highly as regular income
or gains from interest or dividends. Due to the tax-efficient nature of a Limited Partnership Syndication, a 10% Pratten Properties return will out-perform a 15% stock-market return after tax. Investors are able to write off a proportionate share of the expenses and depreciation of the property to further reduce their taxable income. This can mean significant tax benefits for the investor.
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Thank you.
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