News

For Immediate Release

Media Inquires:
Sharon Finley
Public Relations Initiatives
928.717.1880
sharon@pr-initiatives.com

Ratel Investments Featured Speaker in Pensco Trust Educational Webinar
How to Use Self Directed IRAs to Invest in Commercial Real Estate

Tiburon, Calif. – January 8, 2009 - Ratel Investments, a real estate investment firm, today announced it was selected by Pensco Trust Company, a leading special asset custodian for self-directed IRAs, as a featured speaker on its educational webinar, “Hands-Free Income Producing Investing with IRAs and Smart Strategies for 2009” which was held on January 7, 2009. Other featured speakers included Eric Scaff and Rocco Cortese of Presidio Exchange Advisors. An archived copy of the webinar (slides and recorded audio) can be accessed at http://www.penscotrust.com/education/webandaudioconferences.asp.

In his remarks, Ron Sann, the Founder of Ratel Investments address educational topics including the impact of commercial real estate on an investment portfolio, options for investing in commercial real estate using self-directed IRA funds and some of the commonly asked questions by individual investors when considering the use of self-directed IRA funds when making commercial real estate investments. “We are pleased to be working with Pensco as well as other leading self-directed IRA custodians to provide investors with educational information regarding options for diversifying their retirement accounts.”

About Ratel Investments (www.ratelinvestments.com)
Ratel Investments, LP is a real estate private investment firm that works with experienced joint venture partners to acquire income producing commercial real estate assets on behalf of high net worth individuals, families and trusts. Ratel provides investors with the benefits of real estate ownership, including tax preferred cash flow, long-term capital appreciation and financial diversification without the burden of direct property management responsibility. Ratel’s real estate portfolio encompasses an equity investment in more than twenty properties with a combined market value of over $300 million.

About Pensco Trust (www.penscotrust.com)
For more than 18 years, PENSCO, with offices in New Hampshire, New Jersey, Florida, Texas and California, and with more than $2.1 billion in assets under administration, has helped investors take control of their retirement portfolios. For more information visit www.penscotrust.com

Many financial advisors recommend that their clients hold approximately 20% of their financial assets, excluding their primary residence, in income producing real estate in order to have a well balanced investment portfolio.  Direct ownership of commercial real estate has historically provided investors with both capital preservation and wealth creation.  These benefits include:

Capital Preservation through Financial Diversification:
Both modern portfolio theory and empirical evidence suggest that asset diversification is critical to the preservation of capital and, ultimately, the long-term performance of an investment portfolio.  Diversification through proper asset allocation is the single most important step in creating a top performing investment portfolio; studies attribute almost 90% of a portfolio’s return strictly to asset allocation.1     For diversification to be effective, the performance of various asset classes must have low correlation.  Public equity and fixed income investments historically have been impacted by similar macro economic cycles: changes in global interest rates and volatility in world financial markets.  In contrast, the performance of real estate markets has been driven by more regional, less directly correlated variables such as local job creation and population growth, zoning laws and the supply/demand balance of competing properties.  Further, real estate revenue streams are less correlated to the returns provided by equity and fixed income investments because they are tied to leases whose expiration is typically staggered over months and years; thus the leases reflect a weighted moving average of historical and current market rents. 

The National Council of Real Estate Investment Fiduciaries (NCREIF) is an organization that represents private real estate owners.  NCREIF conducted a study of private real estate as compared to most major equity and debt markets.  As illustrated below, the low correlation of the NCREIF Index to other market indices indicates that real estate provides capital preservation through diversification.  For example, a one point move in the Standard & Poor 500 (SP500) results in a small 8.4% movement in the NCREIF Index:  thus, private real estate appears almost uncorrelated with the SP500.

Return Correlation: Stocks, Bonds and Real Estate

(January 1983 - December 2006)

Increased Return with Lower Volatility
Numerous studies support the benefit of real estate assets in an investment portfolio.  For example, as illustrated below, a National Council of Real Estate Investment Fiduciaries (NCREIF) study found that an investment portfolio that includes 20% real estate assets delivered superior returns with lower risk when compared to the same portfolio without real estate.

Note:  Assumes investment of $100,000 on January 1, 1997 in each portfolio depicted above.  All investment proceeds and earned interest are reinvested annually.  Stock returns are based on SP500 results provided by Standard & Poors, cash investments assume the average three month government T-bill rate based on information from the U.S. Federal Reserve, bond returns are based on the Lehman Aggregate Bond Index and private real estate returns are based on data provided by NPI – NCREIF.

Additionally, a 2007 NCREIF study, shown below, illustrates that real estate lowers volatility without adding incremental risk to an investment portfolio.  Private real estate has the highest Sharpe ratio; this implies that private real estate provides higher return than the other assets examined for the same risk.

Real Estate Returns & Volatility Compared to Stocks and Bonds (1Q 1982 - 4Q 2006)

Volatility (Std.Dev.) Sharpe Ratio PRIVATE REAL ESTATE: NCREIF Property Index 6.0% 0.604   S&P 500 15.5% 0.579 STOCKS: Russell 2000 Stock Index 17.9% 0.435   NAREIT - Equity REIT 15.2% 0.684 BONDS: Lehman Gov’t Bond Index 7.2% 0.514 Source: National Association of Real Estate Investment Trust, National Council of Real Estate Investment Fiduciaries, Standard & Poor’s. Index returns do not reflect the fees and expenses of an actual investment and do not represent actual investment daims.

The dynamics underlying the superior returns associated with ownership of commercial real estate assets is based on the inefficiency of real estate markets, in particular for properties requiring value add, when compared to the public equity and bond markets.  There are fewer participants, and both the search costs and transaction costs are high.  Additionally, real estate assets are individual and unique: pricing tends to be imprecise and based on asymmetry of information.  These inefficiencies, in part, are why private real estate assets have been shown to increase the return of an investment portfolio.  Further, the presence of real estate assets has the additional benefit of lowering an investment portfolio’s volatility. 

Current Income and Tax Benefits
Private commercial real estate investments offer the potential for not only capital appreciation, but also current income in the form of recurring cash flow.  As illustrated below, the income yields for directly owned commercial real estate investments have historically performed favorably when compared to the current income yields for equity and fixed income investments. 

Today’s current low interest rate environment has even further reduced the current yields of fixed-income securities.  In contrast, the majority of Ratel’s investments generate recurring cash flow of 7-11%; see the Performance section of this web site for details on Ratel’s returns.

Non-Cash Tax Benefits:  In addition to higher yielding cash flow, real estate investments also generate non-cash tax depreciation benefits that can be used to offset the taxes associated with a property’s cash flow.  Because of the legal structure Ratel utilizes when investing in a property, we are able to pass through 100% of the depreciation benefits to our investors on a pro rata basis.  This depreciation can generate approximately 3-5% in annual, non-cash tax benefits for each dollar invested in a commercial real estate investment.   Thus, the cash flow that is distributed to an investor on a recurring basis is typically partially tax sheltered. 

Directly Held Real Estate versus a Real Estate Investment Trust (REIT)

While the underlying assets of a REIT are commercial real estate properties, these publicly traded securities are often used by investors as as a substitute for directly held commercial real estate assets in a financial portfolio.  Unfortunately, REITS do not provide many of the benefits of directly owned commercial real estate.

Diversification:  Similar to most publicly traded securities, REITS demonstrate a historic correlation to other public debt and equity markets.  As illustrated in the chart below, the NAREIT Index, a grouping of REIT stocks, has a 25% correlation with the SP500.  In contrast, directly owned real estate, represented as the NCREIF Index, demonstrates a low, 8.4% correlation to the same public debt and equity markets.  

Return Correlation: Stocks, Bonds and Real Estate

(January 1983 - December 2006)

Tax Impact:  Directly held real estate investments, such as those provided by Ratel, typically generate recurring cash flow that is often partially tax sheltered by the depreciation generated by the property and shared with investors.  Additionally, the gain on sale for real estate assets, after depreciation recapture, is currently taxed at the lower long-term capital gain tax rate of 15% (Federal rate), assuming the property is held for at least one year.  Further, one can periodically refinance a directly held real estate investment and return capital appreciation on a tax sheltered basis.  In contrast, a REIT is legally considered a security for tax purposes.  An investor in a REIT cannot use depreciation to shelter the dividend income.

Volatility:  Bailard, an institutional investment advisor, examined 24 years of REIT returns and compared the results to NCREIF returns (institutionally held private real estate).  As shown in the chart below, REITs have experienced three times as many negative years as private real estate; further, the magnitude of REIT’s volatility is greater than directly owned private real estate which offers far greater return consistency.

Yield:  Bailard also compared 24 years of REIT returns to institutionally held private real estate.  NCREIF, the private real estate index, reports their performance without the benefit of leverage while REIT returns used in the study included the actual in-place debt.  To adjust for this material discrepancy leverage, Bailard assumed a very conservative 35% debt level for NCREIF assets.  Bailard concluded that from 1978 to 2002 REIT returns were virtually identical to NCREIF returns at 13% annually.  If one were to assume a more traditional level of leverage, say 60% for the NCREIF portfolio, then directly held real estate would materially out perform REITs for the period in question.

Fees:  REITs carry significant transaction costs, typically between 6% and up to 12% of an investor’s original investment is often lost to fees.  In contrast, Ratel’s fees are lower and largely performance based.  Ratel’s fees which are not performance-based are generally less than .5% per year.

Footnote 1:
  • Source: “Determinants of Portfolio Performance II: An Update” by Gary P. Brinson, Brian D. Singer and Gilbert L. Beebower, Financial Analysts Journal May/June 1991

Ratel’s primary investment focus is multi–tenant assets in strong local markets that have correctable cosmetic, operational or marketing flaws at the time of acquisition.  We target investments that have the potential to deliver to our investors a minimum 18% internal rate of return as well as non-cash tax depreciation benefits while providing recurring cash flow during the life of the investment. 

Realized Investments2
Since our founding in 2001, Ratel has sold eight investments which delivered to our investors, net of all fees, expenses and profit sharing:

• 24.40% return on equity (ROE). 
Or, if measured as a multiple of original invested equity, Ratel has returned on
average 1.4x our investors’ original equity.
• 14.06% internal rate of return (IRR).

Additional Investments
Selectively, Ratel has invested in properties that fall outside of our primary asset class focus.  These properties were targeted for their strong appreciation potential; by design they do not generate interim cash flow for our investors.  They include ground-up developments and land entitlement projects.  None of these non-core investments have been sold and, therefore, no financial performance data is yet available.

Footnote 1:
  • The returns listed above are net of all fees, expenses and profit sharing to Ratel as of September 2009.
  • While Ratel believes these figures to be accurate, the aforementioned performance figures are unaudited.
  • Tax analysis assumes a 38% effective Federal tax rate for an individual investor and a 9% effective State tax rate.
  • Past performance is not predictive of future returns.
  • No investment decision should be made based on these figures.
  • No two real estate investments are the same.  The merits and risks of each investment opportunity should be evaluated
    independently.
  • Ratel’s investment opportunities are available only to accredited investors.  Investors must request and thoroughly read the
    Private Placement Memorandum Ratel creates for each investment prior to investing.

Footnote 2:
  • ROE and IRR return figures do not include the non-cash tax depreciation tax benefits Ratel’s investors received during the life
    of their investments.

Footnote 3:
  • Ratel accountant’s estimate of the average depreciation benefit that flows to each investor per annum.

  ]]> http://ratelinvestments.com/performance/feed/ http://ratelinvestments.com/portfolio/ http://ratelinvestments.com/portfolio/#comments Sun, 17 May 2009 10:23:16 +0000 admin http://rtl.com/?p=73 Portfolio

Since our founding, Ratel has invested approximately $60 million of private equity in more than 26 real estate assets whose combined value exceeds $400 million.  Ratel’s primary investment focus is multi–tenant properties in strong local markets that have correctable physical, operational or marketing flaws at the time of acquisition.  To date we have provided equity for more than 2,000 rental units in multi-family apartment complexes and senior housing communities.  Further, we have invested in approximately one million square feet of retail and light industrial real estate assets.  

We invite you to learn more about our firm’s financial performance or about investing or partnering with Ratel. ]]> http://ratelinvestments.com/portfolio/feed/ http://ratelinvestments.com/news-sullivan_05192006/ http://ratelinvestments.com/news-sullivan_05192006/#comments Sun, 17 May 2009 07:41:15 +0000 admin http://rtl.com/?p=171

News

For Immediate Release

Media Inquires:
Sharon Finley
Public Relations Initiatives
928.717.1880
sharon@pr-initiatives.com

Ratel Investments Provides Private
Equity Investment for Three
San Francisco Condominium Developments

Tiburon, Calif.— May 16, 2006 – Ratel Investments, a real estate private equity firm, today announced an equity investment in the development of approximately 100 new urban infill condominiums in San Francisco, California.

When completed, these developments will consist of three separate buildings with residential units featuring high end amenities such as granite counter tops, stainless steel appliances and underground parking. All three
properties are located in central San Francisco and are being targeted at first time homeowners. The value of this development when ready for occupancy will be approximately $65 million.

About Ratel Investments (www.ratelinvestments.com)
Ratel Investments is a real estate private equity firm that acquires, improves and manages commercial real estate on behalf of high net worth individuals, family trusts and institutions. Ratel purchases its real estate assets both directly and indirectly with qualified partners. Based in Tiburon, California, Ratel’s portfolio includes more than 1,500,000 square feet of income-producing real estate assets throughout the western United States.

]]> http://ratelinvestments.com/news-sullivan_05192006/feed/ http://ratelinvestments.com/news-stockton_1219007/ http://ratelinvestments.com/news-stockton_1219007/#comments Sun, 17 May 2009 07:40:38 +0000 admin http://rtl.com/?p=169

News

For Immediate Release

Media Inquires:
Sharon Finley
Public Relations Initiatives
928.717.1880
sharon@pr-initiatives.com

Ratel Investments Sells Stockton, CA Multi-Family Investment

Tiburon, Calif. – December 19, 2007 – Ratel Investments, a real estate private investment firm, today announced the successful sale of The Cypress (formerly named Rose Garden), a 126-unit garden-style apartment community located in Stockton, California.

Purchased in August, 2004, Ratel extensively repositioned the property, including renovating unit interiors, upgrading landscaping, installing a new gated-entrance and changing the name of the property from Rose Garden to The Cypress. The property received the “Best Community Renovation of a 1-199 Unit Property” award for 2005 from For Rent Magazine.

About Ratel Investments (www.ratelinvestments.com)
Ratel Investments LP is a real estate investment firm that helps create and preserve wealth for private investors through well structured commercial real estate investments. Ratel’s clients are high net worth individuals, family offices and trusts who enjoy the financial benefits of commercial real estate ownership without the burden of having to directly identify, purchase and manage complex commercial properties. For operating partners, Ratel provides flexible private equity for the joint purchase of value-add commercial properties. Founded in 2001, Ratel has deployed more than $50 million of equity in more than 20 investments whose combined value exceeds $300 million. We have delivered a 28.6% internal rate of return and provided a 1.53x return on investor’s original equity for realized investments, net of all fees.

News

For Immediate Release

Media Inquires:
Sharon Finley
Public Relations Initiatives
928.717.1880
sharon@pr-initiatives.com

Ratel Investments Purchases Lake
County California
Industrial Properties
Kelseyville and Lower Lake
Self Storage Facilities Newest Additions to Ratel
Portfolio

San Francisco, Calif.— December 1, 2002 – Ratel Investments, a Bay Area-based real estate private equity firm, today announced it has completed the purchase of two industrial properties located in Northern California: TNT Mini Storage and Spruce Grove Storage. Both properties are located approximately 2.5 hours north of San Francisco in Lake County and provide self storage rental units to local consumer and business users.

TNT Mini Storage (www.tntstorage.com), located in Kelseyville, California, is a 264-unit self storage complex with approximately 42,000 square feet of rentable space. The facility also includes a 7 acre parcel of land which Ratel will use for future expansion of the property. In addition, TNT is located across the street from a site that is planned as the new home of Kelseyville Lumber, the largest building
supply store in Lake County.

Spruce Grove Storage (www.sprucegrovestorage.com), located in Lower Lake, California, is a 414-unit self storage complex with approximately 60,000 square feet of net rentable space. The facility is approximately 1 mile from Hidden Valley, the fastest growing planned
housing community in Lake County.

Both properties offer on-site management, 24 hour security and locked gate access, a wide variety of unit sizes and weather-resistant metal buildings. Both properties will be under the management of Ratel Investments’ property management team.

“Lake County has experienced some of the fastest population growth in California,” said Ron Sann, Principal of Ratel Investments. “The proximity to the Bay Area, the attraction of the largest freshwater lake in the state, and the availability of reasonably priced housing is helping drive the market for self storage in this area.”

About Ratel Investments (www.ratelinvestments.com)
Ratel Investments is a real estate private equity firm that purchases real estate assets both directly and indirectly with partners. Based in San Francisco, California, Ratel’s portfolio includes more than 1,000,000 square feet of income-producing real estate assets throughout the western United States.

TnT Mini Storage

Spruce Grove Storage

News

For Immediate Release

Media Inquires:
Sharon Finley
Public Relations Initiatives
928.717.1880
sharon@pr-initiatives.com

Ratel Refinances San Francisco Senior Housing Community

Ratel Investors Receive Strong Cash Flow Plus 100% Return of Original Equity

Tiburon, Calif. — July 23, 2007— Ratel Investments, a real estate investment firm, today announced the refinancing of Coventry Park, an assisted living facility located in the Pacific Heights neighborhood of San Francisco. Opened in 1998, Coventry Park is a 5-story, 169-unit senior living community consisting of 145 independent and assisted living rental apartments, as well as 24 special-care rental units designed for residents with Alzheimer’s disease and other forms of dementia.

“Ratel saw Coventry Park as a classic value-added opportunity. The property is exceptionally well located, yet was valued materially below replacement cost because of correctable management, marketing and cosmetic challenges,” said Ron Sann, founder and principal of Ratel Investments. “Coventry was quickly returned to profitability and has consistently achieved over 95% occupancy and generated strong cash flow for our investors. With today’s refinancing our investors received the 100% return of their original equity plus a strong profit participation. Further, we will continue to own the asset and enjoy on-going cash flow plus appreciation, now all on a risk-free basis. “

“I invested in Coventry Park with Ratel three years ago and have been extremely pleased with the returns I have earned and with Ratel’s oversight of this asset,” said Mark Fletcher, former CEO of the high technology firms ONElist and Bloglines.“ With this refinancing I received the return of my original capital, have earned a 40% return on my investment and, most importantly, continue to own a stake in the property equal to my original investment with zero capital at risk. I wish every investment in my portfolio did equally well.”

About Ratel Investments (www.ratelinvestments.com)
Ratel Investments LP is a real estate investment firm that helps create and preserve wealth for private investors through commercial real estate investments. Ratel’s clients are high net worth individuals, family offices and trusts who enjoy the financial benefits of commercial real estate ownership without the burden of having to directly identify, purchase and manage complex commercial properties. For our operating partners, Ratel provides private equity for the joint venture acquisition of value-add commercial properties. Founded in 2001, Ratel has deployed more than $50 million of equity in more than 20 investments whose combined value exceeds $300 million. We have delivered a 28.6% internal rate of return and provided a 1.53x return on investor’s original equity for realized investments, net of all fees.

]]> http://ratelinvestments.com/news-sf_07232007/feed/ http://ratelinvestments.com/news-sanjose_08022005/ http://ratelinvestments.com/news-sanjose_08022005/#comments Sun, 17 May 2009 07:38:08 +0000 admin http://rtl.com/?p=162

News

For Immediate Release

Media Inquires:
Sharon Finley
Public Relations Initiatives
928.717.1880
sharon@pr-initiatives.com

Ratel Investments Provides Private
Equity Investment for Three
San Francisco Condominium Developments

Tiburon, Calif.— May 16, 2006 – Ratel Investments, a real estate private equity firm, today announced an equity investment in the development of approximately 100 new urban infill condominiums in San Francisco, California.

When completed, these developments will consist of three separate buildings with residential units featuring high end amenities such as granite counter tops, stainless steel appliances and underground parking. All three properties are located in central San Francisco and are being targeted at first time homeowners. The value of this development when ready for occupancy will be approximately $65 million.

About Ratel Investments (www.ratelinvestments.com)
Ratel Investments is a real estate private equity firm that acquires, improves and manages commercial real estate on behalf of high net worth individuals, family trusts and institutions. Ratel purchases its real estate assets both directly and indirectly with qualified partners. Based in Tiburon, California, Ratel’s portfolio includes more than 1,500,000 square feet of income-producing real estate assets throughout the western United States.

News

For Immediate Release

Media Inquires:
Sharon Finley
Public Relations Initiatives
928.717.1880
sharon@pr-initiatives.com

Ratel Successfully Disposes of Northern California
Senior Housing Community

Tiburon, Calif. – September 12, 2008 - Ratel Investments, a real estate investment firm, today announced the successful sale of its equity investment in Cortona Park, a 120 unit senior independent and assisted living community located in Brentwood, CA. The buyer was a legal entity controlled by Northwestern Mutual Life.

“Despite the general economic slowdown in the local Brentwood economy, Ratel was able to exit this investment at a net price that was very close to our original pro forma target,” said Ron Sann, founder and Principal of Ratel Investments. “We are an opportunistic seller and always place priority on protecting investor capital and achieving solid rather than stretch returns. Therefore, we took advantage of a selling window to deliver an attractive, risk adjusted return to our investors.”

About Ratel Investments (www.ratelinvestments.com)
Ratel Investments, LP is a real estate investment firm that works with experienced joint venture
partners to acquire income producing commercial real estate assets on behalf of high net worth individuals,
families and trusts. Ratel provides investors with the benefits of real estate ownership, including tax
preferred cash flow, long-term capital appreciation and financial diversification without the burden of direct
property management responsibility. Ratel’s real estate portfolio encompasses an equity investment in 26
properties which includes approximately 2,500 apartment units with a combined market value of over $400
million.

About Northwestern Mutual Life (www.nmfm.com)
Northwestern Mutual Life is based in Milwaukee, WI, and is the nation’s largest direct provider of individual life insurance. The company, its subsidiaries and affiliates are also providers of annuities, mutual funds, long-term care insurance, disability income insurance and employee benefit services to the group employee and executive markets.

]]> http://ratelinvestments.com/news-salebrentwood_091708/feed/