Trumbull Property Growth & Income Fund (TPG) Quarterly Update - TO JOIN THE TELECONFERENCE, please dial US toll-free: 1 800 219-3192 International ...
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Trumbull Property Growth & Income Fund (TPG) Quarterly Update TO JOIN THE TELECONFERENCE, please dial US toll-free: 1 800 219-3192 International direct: 1 617 597-5412 ID number: 340 477 27# November 18, 2020
Trumbull Property Growth Timothy Walsh
Managing Director
Peter Juliani
Executive Director
& Income Fund (TPG) Senior Portfolio
Manager
Portfolio Manager
22 years of industry experience, 14 with UBS 22 years of industry experience, 16 with UBS
Matt Johnson Rodney Chu Tiffany Gherlone Steven Kapiloff
Managing Director Managing Director Executive Director Executive Director
Head of Head of Head of Real Estate General Counsel,
Real Estate US Transactions Research and Real Estate US
Strategy – US
23 years of industry experience, 12 with UBS 28 years of industry experience, 16 with UBS 17 years of industry experience, 13 with UBS 31 years of industry experience, 15 with UBS
2020 Firm changes
Investment Committee and firm improvements
₋ Restructured Investment Committee to create greater alignment of interest amongst the IC members and our investment vehicles.
₋ Restructured IC recommendation papers to focus on the impact of proposed actions to the time-weighted returns for all vehicles and to make sure
investment recommendations are aligned with the IC Strategy Review for the vehicle.
₋ Changed annual budget review, property review, and buy-sell process so that there will now be a time-weighted return forecast for each property that will
roll up to create a fund-level time-weighted return forecast. Each individual property return forecast will be compared to its vehicle-level forecast to
determine whether the property is expected to be accretive to the vehicle’s returns which will drive our buy/sell decisions at the property level.
₋ Made changes to the Delegation of Authority document to give Asset Managers more autonomy to act at the property level freeing up Portfolio
Management to focus on getting top down allocations right.
Fund enhancements
₋ TPF investment focus on Fund objective of outperforming relative to ODCE over any full market cycle.
₋ Restructured TPF (Project Coral) to enable accelerated sales program without violating REIT rules.
₋ Identified 44 assets within TPF deemed as “non-strategic assets”. Named Mario Maturo as the PM of the Non-Strategic Asset portfolio with specific goals
tied to executing a successful and expedited sales schedule.
₋ Implemented quarterly Investment Committee Strategy Reviews for all funds and separate accounts to focus on top down allocation of the portfolios and
to approve expected future changes to portfolio allocations.
₋ Assigned a member of the Transactions team (Richard Lara) to focus exclusively on sourcing investment opportunities for TPI.
₋ TPG messaging changed from IRR focus to equity multiple focus highlighting TPG’s equity multiple over the last 3, 5, and 10-year periods.
₋ Hired Investment Analytics team headed by Kurt Edwards to focus on performance analytics and improving performance in all investment vehicles.
Diversity
₋ Changed composition of Management Committee to make committee representation more diverse and inclusive.
₋ Formed U.S. Real Estate Diversity & Inclusion Team: The three most recent U.S. Real Estate hires are all African American – one is also female.
Information Technology
₋ Project Sunset: Retiring legacy reporting systems by the end of this year and switching to new technology solutions (RealPage, View The Space and Deal
Path) giving Asset Management more time to focus on property performance.
Source: UBS Asset Management, RE-US.
2
Agenda
• TPG overview
• The US economy and real estate
markets
• Property and financing updates
• Transaction activity and 2021+
opportunities
• Board of Directors update
• Conclusion
The Moran, Oakland, CA
3
TPG overview
A proven track record of creating value for its investors
Gross asset value USD 1,475 million
Net asset value USD 778 million
Leverage ratio 46.7%
Number of investments 30
Income distribution option 3.1%
1-year / 5-year / 10-year gross return -0.5% / 9.5% / 14.2%
5-year / 7-year / 10-year net eq. multiples 1.5x / 2.0x / 3.2x
Encore Commons, Alpharetta, GA Alexan West Dallas, Dallas, TX Autobahn Industrial, Chicago, IL
Data as of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM). Notes: Distribution return provided is a one-year gross rolling return. Leverage is presented as the
percentage of gross asset value. See required notes page at the end of this section or presentation. Returns supplement the Firm’s Total Composite previously provided or included herein. Past performance is not
indicative of future results.
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 10202020 4
What is TPG?
Open end, core plus fund with a proven track record
Existing portfolio Open end structure Fund characteristics
• Well located assets1 • Quarterly deposits and • Multifamily overweight
• Offering income and upside redemptions • Nimble and able to take
• Immediate diversification • Quarterly market value reset advantage of early cycle
• Infinite life vehicle opportunities
– Property type
• No "J curve" • Moderate leverage
– Region
• Full drawdown of capital2 • Multicycle resilience3
– Stage of value creation
• Immediate access • Fees only on invested capital
– Vintage year
• Immediate dividend option • Investing across the cycle
Delivering a balanced portfolio with growth and income
Transitioning properties create growth
Operating properties generate income
Data as of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM). Notes:1TPG provides quality properties in multiple major metros. 2Full drawdown
of capital may occur over multiple quarters. 3Additional performance information is included in this presentation.
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 04202020 5
TPG financial objective
Seek to exceed the NFI-ODCE Index by at least 200 bps per annum over any given market cycle
%
20
3Q20 gross returns
TPG NFI-ODCE
15 14.2
Income 0.70 0.95
12.1
10.3 Appreciation 1.36 -0.46
10 9.5
8.6 Total 2.06 0.48
6.8 6.6
5.2
5
Expansion Period Gross Returns
(4/1/10 – 12/31/19)
1.4
0 TPG NFI-ODCE
-0.5
Income 4.68 4.93
(5) Appreciation 11.41 6.46
1 Year 3 Years 5 Years 7 Years 10 Years
Total 16.47 11.67
TPG NFI-ODCE
Data as of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM) and NCREIF Notes: The inception date of TPG is June 6, 2006. Returns supplement the Firm’s
Total Composite previously provided or included herein. See required notes pages at the end of this section or presentation. Past performance is not indicative of future results.
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 10202020-009 6
TPG net equity multiples
A dollar invested in TPG would have more than tripled over the past ten years
3.50
10 year = 3.2
3.00
• USD 1,000,000 invested ten
years ago would be worth
2.50 USD 3,200,000 today
7 year = 2.0
• Unlike IRRs, equity multiples
2.00 not influenced by short
hold period
5 year = 1.5
1.50 • True measure of dollars
received and returned
to investors
1.00
9/2010 9/2011 9/2012 9/2013 9/2014 9/2015 9/2016 9/2017 9/2018 9/2019 9/2020
10 Years 7 Years 5 Years
Data as of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM). Notes: Returns supplement the Firm’s Total Composite previously provided or included herein. See
required notes pages at the end of this section or presentation. The chart show how USD 1.00 invested in TPG would have grown over time based on net returns. Past performance is not indicative of future
results. The strategy and risk profiles of the closed end funds varies.
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 10262020 7
TPG portfolio distribution
TPG has a strategic overweight to apartments and growth markets, but is diversified across property types and regions
Assets by property type Assets by geographic region
Land
Retail
Why US real estate?
Historically resilient asset class with opportunities in the apartment and industrial space
Market Characteristics
• Large scale (USD 5.6 trillion) • Diversified by property type Returns
• Active – USD 86B average quarterly and region (%)
transaction volume over past 10yrs • Historically resilient 16
Long term
• Relatively low volatility • Fundamentally sound going
• Few negative periods historically into pandemic
12
Investor Benefits
• Stable income from contracted rents • Attractive risk adjusted returns
• Historically low correlation to major • Diverse capital flows 8
asset classes
• Long term growth
4
Market Characteristics
• Employment rebounding • Uncertainty surrounds office, 0
• Retailers reopening retail, and hotels 1 Year 5 Years 10 Years 20 Years
• REITS repriced daily • Apartments and industrial have
• Most open end funds revalued clearer futures NCREIF Property Index (unlevered core)
• New normal emerging S&P 500 Stock Index
quarterly (TPG included)
Now
• Liquidity returning Barclay's Capital US Gov/Credit Bond Index
Consumer Price Index
UBS Real Estate Research Position
• Proceed cautiously on retail, office, • Pursue apartments and
and hotel industrial as post pandemic
beneficiaries and due to cash
flow predictability
Data as of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM).
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 08242020 9Hotel update
Sector most severely impacted by pandemic
One investment – 3% of gross real estate
Remodel completed and hotel opened to guests on July 1, 2020
Flagged under Curio Collection by Hilton on July 7, 2020
Before - Hayes Mansion, San Jose, CA
Hotel operating with limited capacity during 3Q-2020
Focus on near term operations and future bookings
Performance Income Apprec Total
6 months ending 6/30/2020 -19.15% -33.38% -48.51%
9 months ending 9/30/2020 -26.76% -57.97% -72.36% After - Hayes Mansion, San Jose, CA
As of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM).
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 10262020-056 10Retail update
Shopping significantly disrupted by pandemic, but operations improving as stores reopen
Four investments – 14% of gross real estate
Average 95.1% leased
Each center has at least one grocer or pharmacy in operation
Working with municipalities to increase outdoor restaurant seating
"Indoor seating opening with capacity restrictions
Monthly rental collections increased from lows in April and May
Performance Income Apprec Total
Pacific Pearl, Pleasanton, CA
6 months ending 6/30/2020 2.88% -12.70% -10.02%
9 months ending 9/30/2020 4.63% -15.13% -11.00%
As of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM).
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 10262020-054 11Office update
Diversified portfolio in sector facing uncertain future
Six investments – 22% of gross real estate
63% suburban, 20% urban, 17% medical
Average 79.1% leased
Long term leases and Q1-2020 leasing success adding stability
One development progressing, building topped out in September Encore Commons, Alpharetta, GA
One sale in due diligence
Performance Income Apprec Total
6 months ending 6/30/2020 0.01% -8.97% -8.96%
9 months ending 9/30/2020 0.33% -8.21% -7.90%
As of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM).
450 B Street, San Diego, CA (construction progress)
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 10262020-054 12Industrial update
Industrial responding well with promising future
Two investments – 4% of gross real estate
100% leased
New development in Frederick, MD closed in November
Autobahn Industrial, Chicago, IL
Park 480 sale expected in Q4-2020
Performance Income Apprec Total
6 months ending 6/30/2020 2.90% -2.57% 0.30%
9 months ending 9/30/2020 4.64% 2.09% 6.79%
Park 480, Louisville, KY
As of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM).
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 10262020-055 13Apartments update
Continued resilience providing stability to portfolio
• 16 investments – 57% of gross real estate
• Management focus on tenant assistance and retention
• Stable income and progress in value creation
Stabilized/Core • Thirteen investments – 45% of gross real estate &Pico, Los Angeles, CA
• Averaged 93.6% leased
Lease-up/Core-Plus • Three investments moved to stabilized YTD
• Increased leasing from 60.1% at year end to 92.1%
Q3-2020
Telegraph Arts, Oakland, CA
Development/Value-added • Three investments – 13% of gross real estate
• Construction currently progressing on all three
• Pre-leasing beginning at Modera Reynoldstown
Performance Income Apprec Total
6 months ending 6/30/2020 1.31% -2.40% -1.10% Modera Reynoldstown, Atlanta, GA
9 months ending 9/30/2020 2.40% 0.77% 3.18%
As of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM).
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 10262020-057 14Monthly collections by property type
Apartments consistent strength highlights benefit of overweight
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
TPG total Apartments Office Industrial Retail
April May June
July August September
% of Q3 gross real estate
Saddleback Valley Medical Center, Laguna Hills, CA
Sources: UBS Asset Management, Real Estate & Private Markets (REPM)
Notes: Data as of September 29, 2020. Past performance is not indicative of future results.
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPI 10262020-058 15Debt update
Actively managing debt to enhance fund performance
Fund LTV 46.7% at 9/30 – comfortably below 60% guideline
3.3% average interest rate at 9/30 – 90 bps lower than year end
8 extended or modified loans & 3 new loans year-to-date, including: Veridian on Sheridan, Chicago, IL
Veridian on Sheridan – reduced spread 125 bps, swapped to 2.14% fixed
rate for two years
340 Mason Street – reduced fixed rate 65 bps and increased proceeds
Moran & Telegraph – secured long-term agency financing to replace
construction loan
The Moran, Oakland, CA
Working on two upcoming retail loans; one extension and one maturity
Undrawn Fund line of credit – up to USD 100 million of liquidity
Telegraph Arts, Oakland, CA
As of October 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM).
16TPG transaction activity
As the transaction markets reopened, we improved the quality of our portfolio while creating liquidity for our investors
Sales Acquisitions
Modera First Hill Alexan West Dallas Victory Place Frederick Industrial
Apartments Apartments Apartments Industrial
Seattle, WA Dallas, TX Dallas, TX Frederick, MD
Sold – September 9, 2020 Sold – October 23, 2020 Closed – September 17, 2020 Closed – November 5, 2020
Hold period – 2.4 years Hold period – 6.0 years Strategy – Levered core Strategy – JV development
Sales price – USD 125.0 million Sales price – USD 59.5 million Acquisition price – USD 83 million Development cost – USD 25.8 million
IRR – 23.5% IRR – 11.5% 4 Year IRR – 12.2%* 5.5 Year IRR – 12.1%*
Equity multiple – 1.6x Equity multiple – 1.8x Cap rate – 3.7%* Return on cost – 6.4%*
Data as of November 5, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM). This slide is provided for information purposes only and does not constitute investment advice, a
recommendation, or an offer of solicitation. It is based on market conditions at the time of the sale, and there is no guarantee that these conditions will remain the same. Sale price and cost basis amounts
represent 100% property level before joint venture splits. Past performance is no guarantee of future results. * Based on acquisition underwriting.
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPG 10282020 17TPG redemption pool and future positioning
Sales provide liquidity and capital to execute strategic objectives
TPG Redemption Pool
Date Amount (USD MM) Event
September 2020 114 Outstanding redemptions
October 2020 (25) Redemption payment
November 2020 92 Outstanding redemptions
January 2021 (40) Anticipated payment
January 2021 52 Approximate remaining pool
Property Type Positioning Comments
Transaction activity will be focused on
Apartments
improving quality and positioning.
Two sales in process. Execution uncertainty
Office
remains.
Improve portfolio with Park 480 sale and
Industrial
grow with new investments.
Retail Focus remains on managing existing assets.
Any growth anticipated to come from
Hotel
rebound of existing asset.
18US real estate outlook
Disruption creates opportunities in a post-COVID environment
US Real Estate Market Characteristics
Before – stability: fundamentally sound, supply restrained, occupancy high, leverage moderate
During – disruption: staggering unemployment claims, entire components of the economy shut down
After – recovery: thematic investment opportunities available for nimble funds with access to capital
Property level impacts
Property type Disruption Future Investment horizon
Multifamily Minimal Clear Thematic investment
Industrial Modest Clear
opportunities
Office Moderate Uncertain Property specific
Retail Significant Uncertain distressed opportunities
Hotel Significant Uncertain
As of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM).
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPI 10262020 19TPG investing for the future
Change in consumer mindset and behavior leads to change in real estate demand
Multifamily Industrial
Performance during • Strong performing sector in terms of • Tenants supporting ecommerce thrived, others
pandemic occupancy and tenant retention as housing is supporting softer components of economy
an essential product initially struggled
Existing trends accelerated • Population migration from high tax to low tax states as dense urban cities with already high taxes
faced the largest outbreaks and biggest revenue disruptions
• Population migration to cities with warmer climates or nature as a lifestyle amenity
• Gravitation to online shopping
Future prospects • Shifts in migration and changes in renter • Continued growth in ecommerce and renewed
priorities will lead to compelling opportunities. interest in near shoring should drive positive
net demand in space
Investment focus • Low tax, less dense tech and banking hubs • Well located properties
• Lifestyle cities with access to nature • Functional design
• Commutable suburbs with sense of place • Tenant credit
• Stable income
• Mission critical
Data as of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM).
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPI 10272020 20Regulatory conversion
UBS subject to Bank Holding Company Act (BHCA)
• BHCA restricts UBS' ability to "control" private funds, including TPG
• TPG must be “de-controlled” under the BHCA by June 2021
• “De-control” is accomplished by establishing and independent Board
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
TPG operates under Private Equity Fund Exception
June 2021
De-control project BHCA required de-
commences control of TPG
June 2006
TPG Launched
Independent Board established
Formal notice provided to
investors.
Process is the “Regulatory Conversion” contemplated in TPG’s organizational
documents
Source: UBS Asset Management, Real Estate & Private Markets (REPM)
21Board Responsibilities
Responsibility for directing and overseeing the management of the LLC and its business and
affairs, including:
• oversight of the advisor
• election of officers;
• distributions (quarterly and otherwise);
• approval of annual investment plan;
• changes to investment guidelines;
• change of auditor;
• review and approval of annual audited financial statements;
• amendment or termination of advisory agreement;
• compensation of affiliates of advisor;
• waiver of conflicts of interest (in addition to investor advisory board);
• amendment of LPA/LLCA, as applicable.
22Benefits of TPG versus a closed end fund
TPG's open end format offers lower fees, more flexibility, and a greater alignment of interests
TPG Closed end format
• Competitive fee structure • Generally higher fees than TPG
• Proven track record • Performance varies by fund and vintage
• Incentivized to grow investor capital over the long term • Incentivized to maximize IRR for GP benefit
• Full deployment of investor capital • Often peak capital deployment at 80%
• Quarterly redemption process • Capital returned at GP discretion
• Immediate diversification • Diversification varies with fund stage
• Income distribution option • Often no income available to distribute
• Core plus risk profile • Varying, often higher, risk profiles
• Uses line of credit to reduce risk • Uses line of credit to increase IRR at LP expense
As of September 30, 2020. Source: UBS Asset Management, Real Estate & Private Markets (REPM). Statements are based on the fee structures and general practices of closed end funds but individual results
can differ.
23Why TPG 2021+
Positioned for rebound of existing assets and new early cycle investment opportunities
Experienced teams in place Quarterly valuation process
Deep market knowledge Current pricing and market data
Relationships with top tier operators Real time data from operating portfolio
Ability to respond to early cycle opportunities
Multifamily Industrial Distressed
opportunities
AT, BE, CA, DE, DK, ES, FI, FR, IT, LU, NL, NO, SE, UK, US-I TPI 08242020 24You can also read
