Investment Overview

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US Capital Investment Management

New Cities Investment Partners, LLC


US Capital Investment Management

INVESTMENT OPPORTUNITY


US Capital Global Securities (“USCGS”) is offering Membership Units in USCIM Fund XXIX New Cities, LLC (“Fund XXIX”, the “Issuer”), a pooled investment vehicle, on a “best efforts” basis. The Fund XXIX will be managed by San Francisco-based asset management firm US Capital Investment Management, LLC (“USCIM” or the “Manager”), investing in Limited Partner Interest of TBD, LP. (“TBD” or the “Company”). The financing along with $101M of municipal bond debt will be used for site preparation and construction, cash reserve, and working capital for the development of a mixed use affordable housing (“Maple & Main Project” or the “Project”).


US Capital Investment Management

OVERVIEW


New Cities Land Company, Inc. (“New Cities”) is a privately held corporation based in Walnut Creek, California, and formed in 1984. New Cities is active in land use entitlements, multifamily residential developments, and commercial investment grade properties in Northern and Central California. New Cities controls New Cities Investment Partners, LLC and Bay Area Property Developers, LLC. These entities are focused on the acquisition, entitlement and development of urban infill apartment sites in the greater San Francisco Bay Area, Sacramento and the Inland Empire.


Maple & Main Project


New Cities plans to build 240 market-rate and affordable apartments in Hayward, California on a 3.9-acre site bounded by A Street, Main Street, McKeever Avenue and Maple Court.  48 apartments are planned to be set aside for very low-income families. The project has been approved by the Hayward City Council and it is expected to be a catalyst for downtown revitalization. The project consists of a five-story complex, which includes 5,571 square feet of ground floor retail space, a 504-stall parking garage and a 50,000-square-foot existing medical office building. Other planned amenities include three open courtyards, a swimming pool, a 3,600-square-foot clubhouse and a 6,460-square-foot rooftop terrace.


US Capital Investment Management


US Capital Investment Management


US Capital Investment Management

* Multifamily Housing Bonds have been authorized for issuance by the California Statewide Communities Development Authority and the Project has been allocated $110,000,000 of California Multifamily Housing Bonds by the California Debt Limit Allocation Committee in July of 2017.


Track Record


The following are some of New Cities’ past real estate development projects. Please refer to the New Cities Investments website for a more comprehensive list of past and present projects.


Select Previous Projects:


  • Carriage Hills, Gilroy, CA
  • Vintage at the Almaden Winery, San Jose, CA
  • Napa Yacht Club, Napa, CA
  • Pasadera Country Club in Monterey, CA.
  • Ivy Hill Apartments, in Walnut Creek, CA.
  • Almaden Lake Village Apartments in San Jose, CA.
  • Plaza Club Apartments in Salinas, CA.

Current Development Projects by New Cities


US Capital Investment Management

Project Sources and Uses of Fund


New Cities plans to initially raise $16M in equity; developer equity contribution is planned to be equal to 10%. Subsequently, it plans to raise $101M in debt in two separate tranches.


US Capital Investment Management

Financial Projections


Pro Forma data are contingent upon successful and full completion of the proposed $16M equity offering, the first tranche $85M debt, second tranche of $16M of debt, and execution by management.


US Capital Investment Management

(a) Operating expenses include a 2.0% annual management fee.
(b) Operating reserves consist of Capex, replacement, and interest rate reserves.
(c) Other expenses consist of partnership accounting & legal and asset management fees.

Note: Key risks are listed at the end page 4 which may impede the achievement of the forecasts and valuation appearing herein.



Market


Fremont/Hayward is a largely blue-collar, low-rise suburban submarket consisting primarily of single-family homes. The submarket’s inventory accounts for nearly 30% of the total supply in the metro area. Fremont/Hayward benefits from population growth and demand spillover from San Francisco and Silicon Valley. Main employers in the area include Tesla Motors, Seagate Technology, and Amazon. Bay Area Rapid Transit (BART) serves Fremont/Hayward area and adds an affordable commuting option to job centers in San Francisco and Oakland. After six years of steadily increasing rent growth, gains have significantly slowed in the entire Bay Area; average rents in the submarket in 2016 were just above $2,000/month.1 The rental vacancy rate as of January 1, 2017, in the Oakland-Hayward-Berkeley Housing Market Area was 2.7%.2


1. Source: 2017 CoStar Group, ‘Overview‘, May 12th 2017
2. Source: U.S. Department of Housing and Urban Development, ‘Comprehensive Housing Market Analysis Oakland-Hayward-Berkeley, California’, January 1, 2017



MANAGEMENT TEAM


New Cities is led by industry veterans with extensive experience and a proven track record of successful real estate transactions. Through running their own real estate companies and holding senior financial and operational positions, Management has been directly involved with over 50 development projects in central and northern California/Nevada.


Lee Newell, Chief Executive Officer


Mr. Newell has been in the real estate business for over 35 years in the San Francisco Bay Area. After graduating from University of California, Los Angeles, Mr. Newell earned a J.D. Degree from the University Of San Francisco School of Law and a L.L.M. Masters in Taxation Degree from the New York University School of Law.


Blake Peters, Vice President – Development


Mr. Peters has worked in nearly every facet of real estate development over the past 20 years, including acquisition, entitlements, finance, site design, and construction management. He previously served as Director of Acquisitions at MidPen Housing, Director of Consulting Services at Prudential Land and Commercial, Project Developer at Eden Housing, and Land Acquisition Manager at John Laing Homes. Mr. Peters holds a BS Degree in Environmental Policy Analysis and Planning from University of California, Davis.


Stuart Browne, Vice President – Capital Markets


Mr. Browne has over 25 years of experience in capital markets. Prior to New Cities, Mr. Browne served as Chief Executive Officer of Kastle Capital, a consolidator of hedge funds, Senior Vice President of Institutional Sales for Good Harbor Financial, and Vice President of Investments at Pinnacle Realty, Americas. Mr. Browne holds a bachelor’s degree in Management from Maryville University of Saint Louis.


Travers Newell, Project Manager


Prior to joining New Cities, Mr. Newell worked in the marketing division of Sierra Instruments, a high-tech manufacturing company based in Monterey. Mr. Newell holds a degree in business management with a minor in marketing from Loyola Marymount University.



INVESTMENT OPPORTUNITY


The Fund shall issue membership units through a private placement to raise $16.0 million.

US Capital Investment Management

LIMITED PARTNER INTEREST TERMS


The Company’s limited partner interest that the Issuer will invest its proceeds of the investment into is expected to have the following terms:

US Capital Investment Management

RISK FACTORS


You should be aware that an investment in Units of the Issuer, and the Issuer's investment in Company Securities, involves considerable risks, including the possible loss of all or a material portion of your investment. Securities sold through private placements are not publicly traded and are intended for investors who do not have a need for a liquid investment. The abbreviated risks set forth below, as well as the detailed risk factors set forth in the Confidential Offering Memorandum and Supplement, are not the only risks facing investors.

New Cities plans to build 240 market-rate and affordable apartments, and remodel a medical office building in Hayward, California. The Company is subject to a number of significant risks that could result in a reduction in its value and the value of the Company Securities, potentially including, but not limited to:

  • The Company’s performance is dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect the Company’s performance and prospects.
  • Management track record consists of the development and managing of leased and owned projects and properties, not of managing fund investment.
  • Interest rate increases, short or long term, may have material impact to secure debt and/or net operating income.
  • Substantial income tax reforms may affect the projected tax credits.
  • Building material shortages may result in price increases.
  • Manpower shortages are already prevalent in the industry and may increase by stricter immigration laws and enforcement.
  • Construction schedule is subject to the risk of delays out of the control of Company.
  • Reduced technology demand locally and/or worldwide may adversely affect the economy of California and consequently the housing industry.
  • Investment in real estate entails valuation risk.
  • Real estate investments generally lack liquidity.

Investors must understand that by purchasing Units they are voluntarily assuming all of the risks of the investment, including any and all risks relating to the Company and Company Securities, whether disclosed in this Fund Summary, Offering Memorandum and Supplement or not.



CONFLICT OF INTEREST DISCLOSURES


The Manager and USCGS are affiliated entities. Charles Towle is Co-Managing Partner of the Manager, the Division Head and licensed principal of USCGS, and an indirect stockholder and Co-Managing of an affiliate company of the Manager and USCGS. Jeffrey Sweeney is Co-Managing Partner of the Manager and an indirect controlling stockholder of the Manager and USCGS. Conflicts of interest may arise in connection with Mr. Towle’s and Mr. Sweeney’s indirect control of both the Manager and USCGS. Investors should be aware that these conflicts of interest, and a number of other conflicts of interest relating to the Manager and its affiliates, are permitted under the terms of the Fund’s offering documents. You should not invest in the Fund unless you are willing to accept these conflicts of interest and the associated risk.



DISCLOSURES


This presentation does not constitute an offer to sell or a solicitation of an offer to buy any security and may not be relied upon in connection with the purchase or sale of any security. Any offer would only be made by means of a formal offering memorandum. No offer or solicitation will be made prior to delivery of a confidential information memorandum, private placement memorandum, or similar offering documents (“Offering Documents”). Offers and sales will be made only in accordance with applicable security laws and pursuant to the Offering Documents, operating agreement, subscription agreement, and other definitive documentation.

This presentation does not purport to be all-inclusive or to contain all of the information that the recipient may require and is qualified in its entirety by reference to the Offering Documents. This presentation is not a part of or supplemental to the Offering Documents or such definitive documentation. The Offering Documents and any supplements will supersede this presentation in its entirety. Projections and other forward-looking information as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based on information provided by the Fund and other publicly available information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. The recipient should not rely on any information contained herein. No investment, divestment or other financial decisions or actions should be based solely on the information in this presentation. Actual results will vary from any projections in this presentation, and such variations may be material, including the possibility that an investor may lose some or all of its invested capital.

This presentation is confidential. By acceptance hereof, you agree that (i) the information must not be used, reproduced, or distributed to others without prior written consent; (ii) you will maintain the confidentiality of all information herein that is not already in the public domain; and (iii) you will use the information contained herein solely for preliminary informational purposes.

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Securities offered through US Capital Global Securities, LLC, member FINRA, SIPC.

IMPORTANT: All investing is risky, and no investor should decide to commit funds without first consulting with a competent professional adviser. Some or all invested funds can be lost. The past performance of any investment, investment strategy or investment style is not indicative of future performance. Future results may vary, and are not guaranteed. The value of investments and their income may increase or decrease, and a loss of principal – including all principal – may occur.

For more investor information or support please call 415-889-1010 or email support@uscgs.com