Oaks of Cypress Station

PROPERTY DESCRIPTION
Oaks of Cypress Station Apartments, renamed to Copper Lodge, consisted of 294 units, located in North Houston, Texas and was built in 1978. Unit sizes averaged 835 square feet. Buildings were two story construction with a combination of wood framing, stucco, and cedar siding. The buildings feature pitched, composition shingled roofs. All units were individually metered for electricity, had individual HVAC units, and feature washer and dryer connections.

ACQUISITION PROCESS
Knightvest’s Houston Director of Acquisitions, Sean Clancy, pursued this property for 6 months prior to purchase. Capital expenditures had been inadequate which was evident in the poor condition of the exterior. Furthermore, the unit interiors feature dated flooring, fixtures, appliances, cabinets and countertops. The lack of capital reinvestment in the property was evident in the property’s rental rates, which were below average in the area, leaving room to implement a value-add program by upgrading the common areas, exteriors, and interiors to match its location and setting. The property was put under contract June 13, 2014, by Knightvest Capital of Dallas who has been Panther’s partner in a majority of our multifamily acquisitions. Panther FW Investments provided 90.00% of the acquisition total equity of $5,000,000.

PROPERTY HISTORY
Panther and Knightvest closed the acquisition on 1/8/2015. The portfolio was 89% occupied at time of purchase and had average in place rents of $674. The business plan included extensive interior and exterior capital improvements replacing cedar plank with hardi plank, exterior paint, new roofs, clubhouse remodel, pool renovations, landscaping improvements, covered parking repairs, and asphalt repairs. This was a value-add project with an anticipated hold period of 3 to 5 years.

EXECUTION AND SALE
The property sold in April 2018 exceeding economic projections.

This sale slightly exceeded our pro-forma projections providing a 1.77 multiple to Panther FW Investors and an annual average return on investment of approximately 20.62%.

River Ranch Apartments

PROPERTY DESCRIPTION
River Ranch Apartments, renamed to Chisolm Ranch, consisted of 272 units, located in Fort Worth, Texas (southeast quadrant of I-20 and River Valley Blvd adjacent to Hulen Mall in Southwest Fort Worth). River Ranch was constructed in 1980, and is comprised of 18 two story buildings situated on a 12-acre site (24 units per acre). The building exteriors featured brick and hardi plank siding. A roof replacement was included for all buildings in the capital expenditures. The unit interiors feature 100% full size washer/dryer connections with washer and dryer appliances furnished, fireplaces in all units, and vaulted ceilings on the top floors.

ACQUISITION PROCESS
Knightvest was awarded the purchase off-market from a long-term owner (20 years). The unit interiors, common areas and landscaping were very dated and in significant need of modernizing. The dated interiors and tired common areas were evident in the Property’s rental rates, which lagged behind submarket rents in competing properties. Current average effective rents at time of purchase at River Ranch were $706 ($0.78 PSF) with submarket average market rent of $850 ($1.09 PSF). The $100 market rent gap combined with average additional rent premiums of $150-200 for upgrades were targeted for year 4 pro-forma rents. The property was put under contract July 13, 2015. Panther FW Investments provided 79.00% of the acquisition equity of $7,050,000.

PROPERTY HISTORY
Panther and Knightvest closed the acquisition on 9/25/2015. The portfolio was 93% occupied at time of purchase. The business plan included extensive interior upgrades including new stainless-steel appliances, granite countertops and tile backsplash, 6” baseboards, front door replacements, upgraded fixtures, lighting, and cabinet fronts. Due to the success of the granite upgrades, an additional upgrade to Quartz countertops were tested and well received achieving as high as a $350 increase over prior rate. The exterior capital improvements included exterior paint, new roofs, clubhouse remodel, pool renovations, landscaping improvements, exterior windows, replace patio rails and balcony surrounds, and asphalt repairs. This was a value-add project with an anticipated hold period of 3 to 5 years.

EXECUTION AND SALE
As mentioned, the average in place rents at acquisition were $706 and at time of sale the property was achieving average in place rents of $1,042, a 48% increase. The latest Quartz upgrades at time of sale were averaging approximately a 30% premium over the prior lease rate. The property sold in June 2019 surpassing economic projections.

This sale exceeded our pro-forma projections providing a 1.76 multiple to Panther FW Investors and an annual average return on investment of 20.42%.

Regal Commons Apartments

PROPERTY DESCRIPTION
Regal Commons Apartments, renamed to Equinox, comprised of 444 units, located in Arlington, Texas directly across from General Motors Arlington Assembly Plant which was undergoing a $1.3 billion expansion at time of purchase. Regal Commons was constructed in 1966 and was comprised of 25 two story buildings situated on almost 20 acres. The building exteriors featured brick and were in overall average condition. The property was not typical for its vintage in that the roofs were pitched, individual HVAC units and each unit had an individual hot water heater.

ACQUISITION PROCESS
Knightvest was successful in contracting for the subject property on March 21, 2016. The property’s rental rates lagged behind market rent competition at time of purchase, current average effective rents were $673 ($0.87 PSF) with submarket average market rent of $822 ($1.05 PSF). The $149 market rent gap combined with average additional rent premiums of $75-$125 for upgrades provided an opportunity for achieving our targeted $1.23 PSF pro-forma rents within 5 years. The property had excellent value-add potential through completion of upgrading unit interiors, adding some washer and dryer connections in selected units, completing additional exterior improvements like paint and landscaping, along with implementing a new management team.

PROPERTY HISTORY
Panther and Knightvest closed the acquisition on 4/28/2016. The portfolio was 96% occupied at time of purchase. The business plan included extensive interior upgrades including new black appliances, countertop resurfacing, 6” baseboards, front door replacements, upgraded fixtures, lighting, cabinet fronts, and installing water saving devices. The exterior capital improvements included exterior paint, roof replacements as required, clubhouse remodel, pool renovations, landscaping improvements, electrical breaker replacement, replaced patio rails and balcony surrounds, and parking lot repairs. Knightvest’s Granite upgrades achieved up to a $350 premium over prior lease rate. This was a value-add project with an anticipated hold period of 3 to 5 years.

EXECUTION AND SALE
The business plan was successful with average rents increasing from $673 to $892 over the three-year hold period. The property sold in April 2019 surpassing economic projections.

This sale slightly exceeded our pro-forma projections providing a 1.69 multiple to Panther FW Investors and an annual average return on investment of approximately 22.68%.

Austin Industrial Portfolio

PROPERTY DESCRIPTION
This portfolio consists of 7 Class B institutional quality industrial assets containing 459,585 square feet built between years 1982-1997. The assets are situated in the North and Northeast industrial markets, near the intersection of I-35, the main north/south artery of Austin, and State Highway 183.

ACQUISITION PROCESS
The portfolio was acquired in July 2016. TA Associates, a Boston based company, was the seller. The portfolio had some near-term tenant rollover creating the value add opportunity for Panther.

PROPERTY HISTORY
The property was purchased in July 2016. As of the closing date, the project was 86% leased with 27 national, regional, and local tenants. The Portfolio was purchased with a going in cap rate of 6.33%. The current annual rate for the distribution space in the portfolio ranged from $4.40/SF to $7.20 SF NNN and flex space ranges from $8.50-$13.20 NNN. These were below market rates in the submarkets for comparable assets. FEMA had vacated a space of 50,000 SF and another 30,000 SF was vacating by year end 2016.

On August 25, 2017, Hurricane Harvey hit Houston and the coastline, flooding Houston and surrounding areas. FEMA released 90,000 square feet in Austin taking the occupancy back up to 98%, an attractive rent for a short-term, 18-month lease.

EXECUTION AND SALE
Panther received a Broker Opinion of Value which provided a potential sales price estimate between $48.7M and $51.9M. The property was officially marketed beginning October 2017 with over 95 Confidentiality Agreements signed. Call for offers was in November. Best and Final call was made in late November 21st. The property closed in March 2018.

Panther FW investors achieved an annual average return on their investment of 18.61% in 22 months.

Dallas 35/75 Industrial Portfolio

PROPERTY DESCRIPTION

ACQUISITION PROCESS
Panther and ATCAP acquired DFW 35/75 on July 10, 2015. The portfolio was a collection of shallow bay warehouse and flex industrial properties located in the Northeast and Northwest Industrial submarkets of Dallas, TX (specifically Richardson, TX and Carrollton, TX). The portfolio was ideally situated along major Dallas thoroughfares including I-35E, Central Expressway (Hwy 75), and I-635. The buildings were constructed between 1978 and 1985 and consist of 700,790 square feet in 49 suites with an average size of 14,300 SF. We acquired the portfolio for $42,000,000, or $59.93 PSF. The original operating plan called for 5-year hold with a projected sale at $52,972,000 or $74.16 PSF, applying a 7.00% cap rate.

PROPERTY HISTORY
As a result of its strong performance leading up to, throughout, and subsequent to, the first COVID pandemic, the industrial category has become a very popular segment in which to invest, attracting both large institutions and local sponsors. 35/75’s strategic location in the heart of the strongest industrial market in the United States (DFW) positions it as an attractive portfolio for acquisition. Panther and ATCAP agreed that in order to maximize investor returns, the property should be included as part of a larger industrial portfolio to be marketed to institutional investors, who have the ability to pay premium valuations given they possess the lowest cost of capital.

35/75 was packaged for sale with 3 other investment portfolios by East Dil in July 2021. Panther was a part owner of 2 of the 3 other properties, specifically Denver Industrial (535,703 SF, Denver, CO) and ATCAP Fund I (2,110,005 SF – Dallas, Houston and Oklahoma City). The 4th property in the portfolio was a 181,688 SF property based in Austin and Houston known as Market Street where Panther was not involved. The total square footage of the offering was 3,529,423 SF. Prior to marketing the property for sale, we received Broker Opinions of Value (BOV) from East Dil along with ATCAP’s internal valuations on each of the underlying properties. The midpoint of the BOV for 35/75 was $83,00,000 or $118 PSF.

EXECUTION AND SALE

Panther investors achieved an average annual return of 24.1% and a multiple on invested capital (MOIC) of 2.53x over the 6.4-year holding period. These returns compare to our original underwriting of 13-15% average annual return over a 3-5 year holding period. At closing, Panther LP’s received a distribution equivalent to 2.02x of their original investment (previous distributions amount to .51x original investment – thus the total of 2.53x).

This sale exceeded our pro-forma projections albeit held longer than anticipated by providing a 2.53x multiple to Panther FW Investors and an annual average return on investment of 24.1% over the 6.4 year holding period.

Denver Industrial Portfolio

PROPERTY DESCRIPTION

ACQUISITION PROCESS
Panther and ATCAP acquired Park 12 Hundred (aka Denver Industrial) on December 22, 2016. The property was a collection of bulk warehouses (32’ clear height), light and flex industrial, distribution, and office facilities located in the Westminster Industrial submarket of Denver. The portfolio was ideally situated along I-25 and West 120^th Avenue in north Denver. The buildings were constructed in the 1960’s and consist of 535,703 square feet in suite sizes ranging from 20,000 SF to 150,000 SF. We acquired the portfolio for $41,500,000, or $77.47 PSF. The original operating plan called for 5- to 7-year hold with a projected sale at $62,517,000 or $116.70 PSF, applying a 7.00% cap rate.

PROPERTY HISTORY
As a result of its strong performance leading up to, throughout, and subsequent to, the first COVID pandemic, the industrial category has become a very popular segment in which to invest, attracting both large institutions and local sponsors. After experiencing four consecutive quarters of negative employment growth due to COVID, the Denver Industrial Market rebounded strongly in the 2nd quarter of 2021 with a 31.8% increase in leasing volume Y/Y and an 84.3% increase in sales volume Q/Q according to Cushman & Wakefield. Panther and ATCAP agreed that in order to maximize investor returns, the property should be included as part of a larger industrial portfolio to be marketed to institutional investors, who have the ability to pay premium valuations given they possess the lowest cost of capital.

Denver Industrial was a great performing asset out of the gates, quickly reaching 100% occupancy and making >9% distributions beginning with the first full quarter of ownership. Then, in September 2019, Frictionless World, a tenant in a 150,000 SF suite, filed for bankruptcy. Even though Frictionless World continued paying rent until it ultimately vacated in July 2020, its bankruptcy triggered a cash sweep provision with our lender and distributions have been suspended ever since. During this period, cash flow had been accruing in an escrow account that was released and distributed to investors at the time of sale (the accrued, unpaid preferred balance as a percentage of original investment projected at closing is 23.3%).

Denver Industrial was packaged for sale with 3 other investment portfolios by East Dil in July 2021. Panther is a part owner of 2 of the 3 other properties, specifically DFW 35/75 (700,790 SF, Dallas, TX) and ATCAP Fund I (2,110,005 SF – Dallas, Houston and Oklahoma City). The 4th property in the portfolio is a 181,688 SF property based in Houston and Austin known as Market Street where Panther is not involved. The total square footage of the offering was 3,529,423 SF. Prior to marketing the property for sale, we received Broker Opinions of Value (BOV) from East Dil on each of the underlying properties. The midpoint of the BOV for Denver Industrial was $77,500,000 or $145 PSF.

EXECUTION AND SALE

Panther investorsachieved an average annual return of 24.9% and a multiple on invested capital (MOIC) of 2.21x over the 4.9-year holding period. These returns compare to our original underwriting of 13-15% average annual return over a 5-7 year holding period. At closing, Panther LP’s received a distribution equivalent to 1.96x of their original investment (previous distributions amount to .25x original investment – thus the total of 2.21x).

This sale exceeded our pro-forma projections providing a 2.21x multiple to Panther FW Investors and an annual average return on investment of 24.9% over the 4.9 year holding period.

ATCAP FUND I

PROPERTY DESCRIPTION

ACQUISITION PROCESS

Panther and ATCAP closed the acquisition of the underlying properties in ATCAP Fund I on November 15, 2017. The portfolio was a collection of 35 industrial warehouse buildings located in Dallas, TX (504,155 SF), Oklahoma City, OK (568,607 SF), and Houston, TX (1,038,243 SF) totaling 2,111,005 SF. We acquired the portfolio for $127,207,000, or $60.26 PSF and the original operating plan called for a 5-year hold with a projected sale at $169,357,000 or $80.23 PSF, applying a 6.60% cap rate. Projected LP returns at the time of acquisition were a 15-17% average annual return and a 1.80x multiple on invested capital (MOIC).

PROPERTY HISTORY

As a result of its strong performance leading up to, throughout, and subsequent to, the first COVID pandemic, the industrial category has become a very popular segment in which to invest, attracting both large institutions and local sponsors. Fund I’s presence in two leading industrial markets (DFW and Houston) along with a strong secondary market (Oklahoma City) positions it well for institutional capital looking to expend their presence in fast growing American Southwest. Panther and ATCAP agreed that in order to maximize investor returns, the property should be included as part of a larger industrial portfolio to be marketed to institutional investors, who have the ability to pay premium valuations given they possess the lowest cost of capital.

ATCAP Fund I Industrial was packaged for sale with 3 other investment portfolios by East Dil in July 2021. Panther is a part owner of 2 of the 3 other properties, specifically DFW 35/75 (700,790 SF, Dallas, TX) and Denver Industrial (535,703 SF). The 4th property in the portfolio is a 181,688 SF property based in Austin and Houston known as Market Street where Panther was not involved. The total square footage of the offering was 3,529,423 SF. Prior to marketing the property for sale, we received Broker Opinions of Value (BOV) from East Dil along with ATCAP’s internal valuations on each of the underlying properties. The midpoint of the BOV for ATCAP Fund I was $213,000,000 or $100.89 PSF.

ATCAP Fund was a strong performing asset since acquisition. It began paying an 8% annualized distribution in its first full quarter of ownership and had regularly maintained strong occupancy (90%+) throughout most of Panther’s holding period. It missed one distribution payment during COVID-19 (1Q 2020) but has otherwise been a very consistent payer. At the time of acquisition, the accrued, unpaid preferred return as a percent of original investment was expected to be only 7.3%.

EXECUTION AND SALE
Panther investors achieved an average annual return of 28.1% and a multiple on invested capital (MOIC) of 2.13x over the 4.0-year holding period. These returns compare to our original underwriting of 15-17% average annual return over a 5-year holding period. At closing, Panther LP’s received a distribution equivalent to 1.82x of their original investment (previous distributions amount to .31x original investment – thus the total of 2.13x).

This sale exceeded our pro-forma projections providing a 2.13x multiple to Panther FW Investors and an annual average return on investment of 28.1% over the 4-year holding period.

Arlington Industrial Portfolio

PROPERTY DESCRIPTION

ACQUISITION PROCESS
We acquired Arlington Industrial with Fort Capital in an off-market transaction on November 21, 2019, for $23,500,000 ($51.61 PSF), or an all-in acquisition price of $61.21 PSF. Our plan was to grow its below market rents and maintain occupancy (96% at takeover) with a planned disposition at the end of year 5 at $81.49 PSF (6.25% cap rate). This investment was underwritten to deliver a 16-20% average annual return and a 1.85x multiple on invested capital (MOIC).

PROPERTY HISTORY
Panther, with the sponsor, Fort Capital, acquiredthe 22.5-acre, 455,331 square-foot infill business park located within the core of Great Southwest submarket in DFW, TX. Within GSW, the property is located in the Lower GSW area (south of Interstate 30) where vacancy rates were 2.7% with only 155,000 SF of current construction. Lower GSW sits directly east acrossSH 360 from the Arlington Entertainment District which includes Six Flags Over Texas, Texas Live!, Globe Life Park (Texas Rangers) and AT&T Stadium (Dallas Cowboys). The Portfolio consisted of ten buildings with a total of 20 units ranging from 5,520 SF to 75,545 SF, and averaging 22,757 SF of core light industrial space situated on 20 contiguous acres of land (and 2.5 additional acres one block to the west). This submarket is one of the highest performing submarkets in DFW as evidenced by the historically low vacancy of 3.7%. Total square footage is 455,331.Then, in mid-2020, we were able to acquire a 35,000 SF neighboring property, Avenue E Industrial, for $53.57 PSF, using additional loan proceeds from our lender. This acquisition brought our total square footage up to 489,742 SF.

EXECUTION AND SALE
In early March of 2021 we received a BOV from Jones Lang LaSalle (JLL) which estimated that our Arlington Industrial Portfolio (which also included an additional Panther/Fort Capital property: 109th Street Industrial), was worth an estimated $84 PSF at the midpoint estimate of the BOV. The dramatic increase in price in such a condensed period was the result of a large amount of institutional capital looking to invest in the DFW industrial market combined with a limited amount of supply on the market and material absorption. The bid of $92.06 PSF after a 1.66-year holding period exceeded Panther’s original underwriting which called for a sale at the end of year 5 at $81.49 PSF.

This sale exceeded our pro-forma projections providing a 1.66 multiple to Panther FW Investors and an annual average return on investment of 40.14% over the 1.66 year holding period.

Enclave at Cornerstone Apartments

PROPERTY DESCRIPTION

ACQUISITION PROCESS
Panther and ComCapp acquired Enclave on May 1, 2014, for an all-in purchase price of $77,898 per unit. The Enclave was built in 2000 with 232 multifamily units located in Champions area of Houston, Texas. The plan for the property was to upgrade tohardwood-style flooring, new appliance packages, and upgraded common amenities. Original underwriting projected a 17.2% average annual return over a 5-year holding period.

PROPERTY HISTORY
The property performed well with average rents growing from $914 at acquisition to $1,108 by the end of 2021. The property was initially marketed for sale and under contract prior to COVID, but the buyer terminated the contract, lost significant earnest money which prompted ComCapp to refinance the loan and postpone a sale. At the time of the refi, Panther investors received the equivalent of 69% of their original investment which caught them up on their accrued, unpaid preferred return balances (30%) and reduced their capital account balances by 39% (30% + 39% = 69%).

The property continued to perform well, maintaining >95% occupancy and paying a 10% annualized coupon based on original investment (16% based on current capital balances).

EXECUTION AND SALE
We were previously under contract to sell Enclave in March 2020 for $24.3 million or $104,741 per door, but the Purchase and Sale Agreement was terminated by the buyer due to COVID. Panther ultimately received $318,000 in earnest money for the canceled traction and refinanced the loan on the property on November 1, 2020.

The property was ultimately remarketed at the end of the new loan lock out period and awarded to Lone Star Capital atthe agreed upon purchase price of $30.5 million which was equivalent to $131,466 per door and compared favorably to our original acquisition price of $77,898 per door on May 1, 2014, and the projected 5-year exit price of $104,897. In addition, there was an estimated $800,000 in cash on the balance sheet at closing that was part of the sale distribution.

Panther LP’s received a 18.5% average annual return or a 2.44x multiple on invested capital (MOIC) over the 7.8 year holding period. These returns compare to our original underwriting which projected a 17.2% average annual return over a 5 year holding period. Panther LP’s received an initial distribution equivalent to 1.13x of their original investment (having already received 1.31x, thus the total of 2.44X).

This sale exceeded our pro-forma projections providing a 2.44x multiple to Panther FW Investors and an annual average return on investment of 18.5% over the 7.5 year holding period.

Wilshire Place Apartments

PROPERTY DESCRIPTION

ACQUISITION PROCESS
Panther and ComCapp acquired Wilshire Place on February 16, 2016, for an all-in purchase price of $73,137 per unit. The property was built in 1982 and is located in northwest Houston along Highway 290. The plan for the property was to upgrade the common areas and a large percentage of the units in order to drive rent and NOI growth before ultimately selling the property in 5 years at a price of $92,551 per unit.

PROPERTY HISTORY
The property was able to pay distributions as planned, beginning in month 4 at a 6% couponin spite of a fire destroying one building shortly after takeover. That building was eventually replaced, enabling us to deliver newly upgraded units funded with insurance proceeds. Over the first 3.5 years of the hold period in-place rents grew from $764 to $917 (20%) while occupancy averaged 91-95%. Then, in late 2019, the property experienced significant tenant turnover and both the property manager and the regional manager overseeing the property were replaced. New management started in the spring of 2020 at the beginning of the COVID pandemic with occupancy at 83%. The new team worked diligently throughout the pandemic with a focus on collections, renewals, and new tenants. By the summer of 2020, occupancy began to improve, and rental rates began to slowly stabilize.

As a result of the disruption in late 2019, distributions at Wilshire Place were suspended since March 2020 and while operating results lag proforma, the momentum at the property improved in 2021.We witnessed significant investor interest for multifamily properties in the Houston area, where occupancy and rental growth across the MSA grew stronger than anticipated coming out of the pandemic.

EXECUTION AND SALE
Encouraged by the market strength and investor appetite in Houston, Panther and ComCapp marketed the property for sale on May 17, 2021, with a call for offers on June 23, 2021. The property received very strong interest and was ultimately awarded to El Ad Group, LTD for $104,478 per unit ($56,000,000). This price exceeded our original underwritten exit price of $92,251 per unit in year 5 but did not include a prepayment penalty (defeasance penalty) of $3.86 million ($7,207 per unit) for the early termination of the loan on the property, which offset some of the upside for this investment. At the time of sale, the property was 97% occupied and rental growth had resumed.

This sale exceeded our pro-forma projections providing a 2.0x multiple to Panther FW Investors and an annual average return on investment of 17.5% over the 5.7-year holding period.