A compilation of speaker slides from the Dallas-Fort Worth Multifamily Forum

1. 9:45 AM –
Tipping Point: New
Development on the
Brink of Change

2. Surviving the Inevitable
•Property Differentiation
•By Design or Theme
•By Extended Services
•By Location
•By Amenities
•By Activities
•Flexible Budgeting
•Balancing Rents and Staffing Levels
•Resident Retention vs New Leases
•Cash Flow vs Valuation
•Plan from the Start
•Zeroscape Landscaping
•Energy Efficiency
•Project Positioning
Author: Rick Williamson

3. Author:
New Development on the Brink of Change
LYND
• 30,000+/- units in current portfolio
• $2B transacted
• 16 states/50 metros
• Over 800 employees
• New MF developments in Denver, Austin,
SA, Houston & Dallas
DALLAS MARKET
• Continual demand in both urban and suburban
locations
• Next income bracket renters
• Growth & Jobs – spread out employment hubs
across the metro
• Hot Dallas Submarkets – Plano, Frisco,
McKinney, Downtown, Uptown, Farmers Market
and Transformative Markets – Trinity Groves,
Victory, Bishop Arts
• The Bowie, Austin, Texas
• MFE Merit Award, High Rise of the Year, 2016
• Certified LEED Silver & Austin Energy Green
Building Program Three Star Rating
• Joule, Denver, Colorado
• LEED Certified
• Lynd at Industry, Denver, Colorado
• Coming Soon - 4Q 2017

4. Recent Financings
Construction, 124 Unit Apartments in Vancouver, WA
Term: 15 Months
Rate: 9.99% and 3.5 points
Construction, Mixed Use Project in Portland, OR
Term: 24 Months
Rate: 9.49% and 4.5 points
Construction, 55 Unit Apartments in Sacramento, CA
Term: 24 Monhts
Rate: 10.99% and 3.50 points
Author: Paul Rahimian, Parkview Financial

5. Twin Creeks Crossing-Phase 1
Land Area: 14.26 acres
Density: 24.35 DU/Acre
Avg. Unit sf.: 875 sf
Total Net leasing: 303,871 sf
Total Hard Costs: $30,205,000.00
Cost/Net SF:$100.00 sf Phase 1
Cost/Net SF:$109.00 sf Phase 2
Author: Erik Earnshaw

6. 11:00 AM – Track A
Runaway
Train: Managing Costs
of Construction
through Good
Management & Design

7. Case Study – Bridges of Cypress Creek
Property: Bridges of Cypress Creek
Location: Houston, TX
Vintage: 1980
# Units: 314
Purchase price: $9.0 million
Rehab Budget: $2.5 million
Investment Thesis: The Property was located in
a Houston submarket we knew well and was
deeply distressed. There were ~100 down units
and significant deferred maintenance.
Renovation: Upgraded the 100 down units with
modern finishes, Hardi siding replacement,
exterior paint, amenity enhancements, new
branding.
Outcome: Property is currently occupied at 93%
with rents increased >40%; we refinanced the
asset in month 18, returning ~40% of investment
capital.
Before & After - Exteriors Before & After - Interiors Notes

8. Page is a 500 person architecture and engineering firm that offers the
following services through multiple offices in the U.S. and abroad:
Architecture / Engineering / Interiors / Planning / Consulting /
Commissioning / Programming / Sustainability
Page has designed more than 3,300 multi-family units for AMLI over the
last 10 years.
Our award winning projects have received national recognition. One
recent example:
AMLI Mueller - Multi-Housing News Gold Award for
Low-rise Developments
Author: Talmadge Smith

9. 11:00 AM – Track B
Changing
Faces: Raising Capital
for Today’s Real Estate
Deals

10. Author:
Rastegar Equity Partners is a Value-Add Commercial Real
Estate firm investing in income-producing recession-
resilient assets throughout the United States.
Headquartered in Dallas, Texas, the firm offers high quality
real estate portfolios designed to mitigate downside risk
while generating substantial annual cash-flow and
maximizing upside exposure.
Ari Rastegar

11. Pennybacker Capital, LLC
DFW Case Study – Value Add Reposition – JV Equity
• Complex, situational opportunity to acquired 482-unit, Class B multifamily
property from distressed seller.
•Acquired for $38k/unit (3.5% cap rate), $20k/unit in capex, and $58k/unit
all-in (9.5% return on cost).
•Purchase price 25-35% discount to market value. Rents 25-40% below
market.
•Funded $19M to close all-cash in 17 days. Refinanced 34 days later with
bridge debt at 73% LTC, L+590, 3+1+1, 36 mo I/O, then 25-yr am.
•Cured extensive deferred maintenance, incentivized management, and
rehabbed 77% of units.
•Raised NOI by 354% over 24 months.
•SPE recapped in month 25 at $81k/unit valuation (5.9% cap rate). Fund
realized 46% IRR and 2.4x.
•New SPE: 92% LP/8% GP, 79% LTPP agency financing.
Author: Tim Berry

12. ReadyCap Commercial
ReadyCap Commercial
• Non-bank lender
• Offering small-balance commercial real estate financing
• Nationwide
• Products include
 Commercial and Multifamily
 Freddie Mac SBL Seller / Servicer
 Bridge
 SBA 7(a)
• Subsidiary of Sutherland Asset Management, a publicly traded REIT
• Operation Centers in
 Dallas, Texas
 New Providence, New Jersey
 New York, New York
Author: Jim Going

13. Northwestern Mutual Apartment Portfolio
• Portfolio size: $4.1 billion (46.1% of equity portfolio)
• Total Apartment Units: 17,500
• Property Count: 59
• Stable units: 13,900 (46 properties)
• Average occupancy: 94.7%
• Average age: 6.6 years
• Units under development or in lease-up: 3,600 (13 properties)
• Assets located in 20 states
• Largest exposure: CA (25.6% of apt portfolio on MV basis)
• Examples of Dallas Regional Apartment Projects:
• Dallas, TX: Knox Heights (Trammel Crow-Partner)
• Denver, CO: To be Announced (Embrey-Partner)
• Houston, TX: Gables West Ave (Gables-Partner)
• Kansas City, MO: Summit Fair (Northpoint-Partner)
• Dallas, TX: L2 (JLB-Partner)
• Chicago Sinclair (Fifield-Partner)
Author: Roger Davis

14. 11:00 AM – Track C
The Art of
Underwriting a Value-
Add Acquisition

15. The Bascom Group
2014 MFE 25 Renovators
Ranked #1
5,925 Units Renovated

16. Nevada 16 $45,184,856
Arizona 3 $8,804,817
California 4 $11,030,036
Tennessee 2 $6,928,163
Texas 3 $10,256,588
28 $82,204,461
Nevada 4 $8,210,024
California 5 $20,216,040
Texas 2 $9,160,000
Colorado 2 $11,836,740
13 $49,422,804
Renovation dollarsNew Properties
Renovation dollars
2015 Bascom New Acquisitions
TX 2 NV 4 CA 5 CO 2
New Properties
2016 Bascom New Acquisitions
NV 16 AZ 2 CA 4 TN 2 TX 2
13 New Properties
28 New Properties
22
5
4
16
2
2
2
4

17. PROJECT SELECTION: Feasibility assessments, due diligence, creation of the
"vision" for the property, and quick turnaround enable our clients to select and
move quickly on the best projects for maximum ROI.
PROJECT ACCOUNTING: Progress draws, accounts payable and working
capital management, contractor and vendor on boarding, direct purchasing,
detailed budget tracking/reporting and project close out services keep
projects on budget.
PROJECT MANAGEMENT: Our Construction Managers follow sound
communication policies and hands-on construction management
methodologies and processes that hold everyone accountable for project
success with regard to SCOPE, BUDGET and SCHEDULE.

18. Landscape
Architect-
Design-
Engineering
AppliancesFlooring
Primary
General
Contractor
Interiors Exteriors Amenities
Pass-through fee only Pass-through fee only
Sponsor

19. 11:50 AM – Track A
Under the
Radar: Value-Add
Redevelopment
Strategies & Emerging
Markets across DFW

20. The Element, 5124 Live Oak, Dallas, TX
BEFORE AFTER
East Dallas Apartment Building: 23 units
Purchase Price: $950,000
Equity Invested: $500,000
Renovation Cost: $650,000 / $28k per unit
Stabilized Basis: $1,600,000
Sale Price: $2,300,000
Total Profit: $700,000
Rents: Before: $500/mo, all bills pd / After: $1,000/mo + electric
Rent Post Remodel: $1.50/sf
Author: Grant Guest, Perry Guest Companies

21. Richard Hoffmann Anterra Management
Clubhouse After
Interior After
Clubhouse Before

22. 11:50 AM - Track B
Growing the Pie:
Revenue Growing and
Cost Saving Strategies
for Multifamily Owners
and Operators

23. Appraisal Process

24. Texas Important Property Tax Dates
If a deadline falls on a weekend or legal holiday, the last day to file is automatically extended to the next business day:
May 1 Real Property Notices of Appraised Value typically mailed.
May 31 Deadline for filing written protests to the Appraisal Review Board (or by the 30th day after a notice of appraised
value is mailed to the property owner, whichever is later.)
July 25 Chief Appraiser certifies Appraisal Rolls.
August The taxing districts hold public hearings on their budget.
September The taxing districts adopt their budget and tax rates.
October Property tax statements are usually mailed the first week in October.
December 31 Mortgage companies generally pay by December 31.
January 31 Last day to pay property taxes without penalty and interest of following year.
January 1 Date that determines taxable and exemption status.
January 31 Current year property taxes due by January 31.
February 1 All unpaid property taxes become delinquent. The schedule for penalty and interest is as follows:
February 7%
March 9%
April 11%
May 13%
June 15%
April 30 Deadline to make application for many types of total exemptions, including Agricultural or “Ag” exemption.

25. COMMERCIAL REAPPRAISAL
• Undertaken January 15th – April 15th
• Insure accurate and equitable values
• By law each property must be reappraised at least once every
three years.

26. REAPPRAISAL
• Mass appraisal is the systematic appraisal of groups of
properties as of a given date using standardized procedures and
statistical testing.
• Texas Property Tax Code requires appraisal districts assign a
January 1 value to all property.
• Mass appraisal provides the ability to accomplish such a large
task.
• Annual reappraisal effort is where the mass appraisal process
occurs.

27. COMMERCIAL
APPROACHES TO VALUE
• Three approaches to value
 Income Approach
 Cost Approach
 Sales Approach

28. The impact of these assumptions on
the resulting value indication plays a
crucial role in understanding the
appraisal district’s value position. For
this reason, Cantrell McCulloch obtains
a digital version of the appraisal
district’s commercial worksheets and
exports the data to a proprietary
software application for comparison to
the subject’s actual operating history.
The unique insight gained from this
data provides a benchmark from which
all negotiations begin. It not only
identifies inaccuracies relative to the
subject’s actual operating performance,
but also allows us to seek common
ground on any appraisal district
assumptions deemed favorable to our
client’s tax position.
Income Capitalization Approach – This is the
most common valuation approach utilized by
appraisal districts in a mass appraisal of multi-
family properties. The basic elements of this
approach include: estimating the potential gross
income on a stabilized basis; estimating a proper
allowance for vacancy and collection loss;
estimating anticipated fixed and variable
operating expenses (including a reserve for
replacement of depreciable components); and
capitalizing the income stream into an indication
of value by using market-derived capitalization
rates.
The data necessary to complete the preceding
steps is delineated on the appraisal district’s
commercial worksheet as follows:
• Potential Gross Income (PGI)
• Vacancy Allowance (%)
• Operating Expense Ratio (%)
• Net Operating Income (NOI)
• Capitalization Rate (OAR)

29. Remedy for
Unequal
Appraisal

30. • Uniform and Equal Protest – Allows for value corrections to be made “if the appraised value of
the property exceeds the median appraised value of a reasonable number of comparable
properties appropriately adjusted.” When a recent sale has occurred, this often is the only
line of defense in the appeal process. If a conflict exists between taxation at market value and
equal and uniform taxation, equal and uniform taxation prevails. The uniform and equal protest
puts taxpayers on equal footing regardless of market value or sale price.

31. 3 Steps to the
Appeal Process

32. 3 Steps to the Appeal Process
1. Informal Hearing. Where Consultants attempt to settle “informally”. Most
appraisal districts make a good faith effort to reduce many protests at the informal
meeting. This step is successful the majority of the time. Approximate timeframe:
May 1 – July 1.
2. Formally. Through the Appraisal Review Board (ARB). Typically the more
respected consultants have hearing dates that are usually later in the process
allowing them to compare “settled” values vs. comparing to “notice” vales.
Results can vary depending on the board members at your hearing. Approximate
timeframe: July 1 – July 15.
3(a) Judicially. With a lawsuit. You must file within 60 days of receipt of ARB value.
Appraisal Districts are highly reluctant to take a market value or an equity case to
court. Almost all cases that end up in court are a result of a law or a procedural
situation. Success rate is high when settling a value during this process.
Approximate timeframe: Typically October – January (but for Harris County,
could take until the following tax year values are debated and/or a two year
lawsuit becomes necessary).
3(b)Arbitration. Must file within 45 days of receipt of ARB value and overall value
must be less than $3 million. Results are binding and if taxpayer is successful,
minimal cost involved. This appeal process has not been used often but with
recent changes to the law, will become more prevalent.

33. Property Tax Binding Arbitration for Property Owners
Tax Code Chapter 41A gives property owners meeting certain criteria the option to request binding arbitration as an alternative to filing an
appeal of an ARB decision to district court. In binding arbitration, an independent, neutral arbitrator hears and examines the facts of an appeal
and makes a decision that is binding on all parties.
To qualify for binding arbitration, a property owner must file a Request for Binding Arbitration, together with the required deposit payable to the
Comptroller’s office, with the appraisal district within 45 days of receiving an ARB order of determination.
The chart below indicates the amount of property owner deposit required and the amount of arbitrator fee allowed based on the type of property
and the ARB’s determination of the property’s market or appraised value.
Arbitration Deposit and Arbitrator Fee Schedule
(Effective Sept. 1, 2015)
If the property owner wins the dispute (the arbitrator sets a value for the property nearer to the owner’s opinion of value than the ARB’s determination as shown
on the request form), the property owner will be refunded his or her deposit less the Comptroller’s $50 fee for administrative costs. The appraisal district is then
required to pay the arbitrator’s fees. If the arbitrator’s assigned value is not nearer to the owner’s opinion of value than the appraisal district’s value, the
arbitrator is paid from the property owner’s deposit. If the arbitrator charges less than the full deposit, any remainder will be refunded to the property owner.
Regardless of the outcome, including withdrawal of your request or denial of your request, the Comptroller’s office retains $50 of the deposit for administrative
costs.
Property Type Appraised or Market Value Deposit Arbitrator Fee
Not residence homestead $1 million or less $500 $450
Not residence homestead More than $1 million but not more than $2 million $800 $750
Not residence homestead More than $2 million but not more than $3 million $1,050 $1,000

34. Why Use A Tax
Consultant?

35. Reasons To Thoroughly Evaluate
Your Property Tax Assessments
Everyone in the industry has a basic
understanding of the traditional approaches to
market value. However, it’s the nuances of
these techniques and how they are utilized to
formulate the most effective property tax
appeal strategy

36. Benefits of Using a Consultant
• Timing of presentation to Appraisal District.
• Comparing Final values versus Notice values.
• Understanding of how the process works and knowing the
Appraisers on more of a personal level.
• Working with Senior Appraisers that have more decision making
authority versus less experienced Appraisers.

37. Aggregate Tax Rates for
Select Texas Cities
All but Harris County tax rates for 2016 have been finalized with all other owners having
received their tax bills with taxes due January 31, 2017. Tax rates for the DFW area and across
Texas have generally remained stable the past two years.
Although most rates remain flat, property tax assessments continue to rise as cap rates and
interest rates both remain at or near historic lows coupled with stronger NOI’s across all classes.
Sales for 2016 continue at high levels pushing appraisal districts to try and keep pace with
values. For Dallas County same store multifamily, overall 2016 notice values increased
25.4% and after protests, certified final values settled in at 13.9% above 2015 values. This
same increase in assessment values is typical for 2016 across most all Texas’ counties.
Cantrell McCulloch, Inc. (CMI) specializes in the representation of multifamily properties
across Texas and nationally. Currently, CMI represents multifamily properties consisting
of 200,000 +/- units at a value in excess of $11 billion. CMI also represents property
owners on all types of real estate and business personal property taxes across 35 states.

38. Select Texas City Aggregate Rates
CITY
2007
RATE
2008
RATE
2009
RATE
2010
RATE
2011
RATE
2012
RATE
2013
RATE
2014
RATE
2015
RATE
2016
RATE
Arlington 2.562277 2.549857 2.549567 2.612537 2.594367 2.589867 2.581567 2.637507 2.702349 2.661507
Austin 2.153100 2.178700 2.206400 2.316900 2.382300 2.419046 2.463200 2.379800 2.296081 2.230141
Corpus Christi 2.462445 2.482138 2.552628 2.595309 2.583598 2.583597 2.566544 2.543272 2.538328 2.524600
Dallas 2.514757 2.507730 2.621455 2.658141 2.711117 2.730759 2.7325885 2.742960 2.741835 2.719289
Frisco 2.131984 2.148993 2.183800 2.181300 2.208210 2.248209 2.243053 2.236960 2.226960 2.199617
Ft Worth 2.710277 2.761857 2.826567 2.826567 2.837867 2.837867 2.838397 2.838397 2.868397 2.833027
Houston 2.528716 2.523700 2.523700 2.524231 2.529233 2.529220 2.558961 2.570649 2.535164 2.528563
Lubbock 2.120748 2.136210 2.139638 2.149288 2.166938 2.200317 2.211260 2.223584 2.254214 2.250733
Plano 2.073884 2.105893 2.145800 2.168300 2.188300 2.188299 2.262743 2.253560 2.234560 2.207217
San Antonio 2.536775 2.556534 2.560295 2.606766 2.635384 2.692911 2.693339 2.705675 2.698045 2.822495
Tyler 1.830109 1.830109 2.004890 2.080731 2.089981 2.106198 2.118490 2.124926 2.124926 2.134926
Waco 2.566484 2.761215 2.773614 2.771546 2.764311 2.777200 2.817855 2.814295 2.781249 2.850423
Cantrell McCulloch, Inc. (CMI) represents property owners on all types of real estate and business personal property taxes across
Texas with total value under representation for 2016 in excess of $18 billion.