Invest Like the Big

Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

Invest like the big players in real estate:

Institutions (Pensions, Endowments and Corporations)

To truly diversify your portfolio, you need to invest in a broad array of assets not just publicly traded

stocks and bonds, but real assets particularly real estate. Real estate, as an asset class, has historically
had a very low correlation to other investments. It provides protection against inflation, since its income
generally rises as the general price level does. And real estate generates steady income, much like a bond,
except that you may also participate in the capital appreciation as the buildings grow in value.

Invest like the Biggest Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)
Most individuals obtain their exposure to real
estate through real estate investment trusts
(REITs). For many investors, especially wealthier
individuals, this is far from ideal. REITs are publicly
traded portfolios of real estate properties whose
prices are listed each day on the New York Stock
Exchange and other exchanges. But because they
trade like stocks, they are sometimes influenced
by stock market movements. Their performance
is a good deal more correlated with stocks than
direct investment in real estate. Moreover, many
REITs have been badly managed, charging high
fees for subpar performance, and not providing
transparent, necessary details about their holdings
or portfolio strategy to investors.

Invest Like the Big Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

Thus, high end institutional investors have

historically preferred direct investment into real
estate, through private equity partnerships
managed by seasoned professionals in the real
estate space. These big investors include pension
funds, endowments and corporations.
At The ODonnell Group, we provide you
with the opportunity to invest directly in
a specific sector of the real estate market
industrial real estate which we believe
offers especially attractive investment
characteristics to the discerning investor.
In this investment guide, well illustrate
why you should consider investing directly
in private equity real estate, what makes
industrial real estate compelling and how
The ODonnell Groups vast experience
adds value.

1.

The Benefits of Direct Investment

When you invest directly as a limited partner in private equity real estate like the one offered by The ODonnell
Group, you benefit from a number of advantages over REITs, including:

Attractive risk and reward

Over time, private equity real estate funds have generated higher
risk-adjusted returns than REITs even though their absolute
performance, when not adjusted for risk, has been slightly lower.
Consider that over the last five years the NCREIF Fund Index
returned 13.5% per year, on average, versus 15.6% for the
FTSE NAREIT All Equity Index. However, for that additional
200 basis points of return, investors took on four times as
much volatility. Also remember that the most successful private
equity managers may significantly outperform their index. Top
quartile performers in the NCREIF Fund Index returned 15.9%
over the last five years easily beating the REIT managers.

Key Benefits of Private

Equity Real Estate
Low correlation to traditional asset classes
including REITs
Pure real estate investment vehicle
Targeted exposure to industrial real estate
Invest directly with the manager
Manager has skin in the same game you do
Fee transparency
Disclosed in offering documents

Tax benefits
Most of the return generated by private equity real estate funds
is taxed at the capital gains rate, at top rates of 20%. By contrast,
distributions from REITs is taxed as ordinary income at the top
marginal rate of 39.5%. Depreciation can offset annual rental
income as well.

Low correlation to other asset classes

REITs trade in public stock markets, so they can be affected by
broad market movements. Private equity investments in real
estate, by contrast, are not tied to stock market performance.
One study, performed at the Cass Business School in London
found that from 1972 to 2007, Private Equity Real Estate,
as measured by the NCREIF Property Index, had only a 0.06
correlation to large-cap stocks, while REITs had a correlation

Stronger valuation standards

Annual valuation by Independent
Third Party Appraisers
Vehicle structured to outperform over
investment cycles
Direct investment, with no middlemen
or placement agents in private equity
real estate have fewer layers of fees and
payouts, increasing transparency, and
potentially returns.

of 0.50.

Invest Like the Big Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

2.

Industrial Real Estate is Boring

and We Believe that is Really Good
Industrial real estate, that is, warehouses and distribution centers, has always been viewed as the least sexy
asset class of the commercial real estate world. And, while its true that other sectors are more glamorous think of
glittering hotels, architecturally significant office towers and opulent shopping centers industrial real estate
has generated steady, predictable income, with far less of the volatility that more fashionable sectors bring.
30

INSTITUTIONAL INDUSTRIAL RETURNS FOR MAJOR MARKETS

Returns for Year Ending Q2 2015 (%)

25

20

15

10

Income Return

Source: NCREIF, Q2 2015. All returns are reported on an unlevered basis.

What happened to industrial real estate managed by The ODonnell Group in 2008?
Founded in 1972, we have managed and profited through many market environments.
The global financial crisis of 2008 created havoc in the stock and bond market, as well as many sectors of the real estate
market. Still, industrial real estate emerged relatively unscathed. Across The ODonnell Group funds, dividends continued
to be paid as always. There were no loan bankruptcies in our portfolios none. Our commitment to low leverage of 0% to
55% paid off with stability. For our investors in The ODonnell Group funds, 2008 and 2009 were business as usual.

Invest Like the Big Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

3.

Miami

Phoenix

Houston

Seattle

New York / No. N.J.

Total Return
Appreciation Return

San Diego

Chicago

Dallas

Orange County

Fort Worth

Orlando

Los Angeles

Austin

San Jose

Inland Empire

Atlanta

Portland

Denver

Memphis

Nashville

Oakland

Las Vegas

Five Reasons to Include Industrial

Real Estate in Your Portfolio
Everything goes through a warehouse.
Think about it. Warehouses are not an option! Everything you wear, everything you eat, everything you buy, use or touch has
probably spent time in a warehouse. Every other real estate sector has alternatives, and are subject to fluctuations in demand.
Companies can use remote workers so they dont have to lease office space, people can stay at an Airbnb or home instead of
going to a hotel, apartments lose their luster when home ownership become affordable, retail can be replaced by ecommerce, and
products can be sent directly from warehouses. But the demand for warehouses and distribution centers is constant.

Predictable returns in all kinds of markets.

Total returns on industrial real estate investments have been far less volatile than on other types of properties.
The chart below, for instance, shows how industrial total returns have mostly fluctuated in the 10-20% range
and have avoided most of the losses in years like 2008.
60%

U.S. INDUSTRIAL PROPERTY TOTAL RETURNS

40%
20%
0%

1994

1996

1998

2000

2002

2004

2006

2008

2010

-20%

2012

2014
YTD

-40%
-60%
-80%

NAREIT
NCREIF
Sources: NCREIF Fund Index Open-End Diversified Core (ODCE) NAREIT Equity REIT Index.
*Returns as of June 30,2014.

Tax advantages.
Our funds generate very modest tax liabilities, since dividend payments are often offset by
depreciation, and appreciation is taxed at Capital Gains rate.

Steady cash flows.

Industrial real estate investment has historically generated reliable income, month
after month, as well as the potential for capital appreciation.

Low leverage.
The ODonnell Group doesnt need to amplify returns with heavy
use of leverage. Our funds, on average, have 50%-65% leverage.
Leverage is simply a mortgage. The real estate industry refers to
the percent of the purchase price borrowed as leverage. With low
leverage, your returns are less vulnerable to wild swings in value,
when interest rates change or market sentiment shifts.

Invest Like the Big Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

4.

Why Invest Now?

Expanding Demand for Industrial Properties
Industrial real estate is always a sound investment, but recent trends make it
even more compelling.

Space is tight and rents are rising. Vacancy rates for industrial properties are
below 10% nationally and lower than that in selected markets. Vacancies are
under 6% in 13 U.S. markets and below 5% in four others. Rents have risen
an average of 5.4% since last year, and by double that in selected markets.

Etail is driving growth. E-commerce is projected to grow from $263 billion in

2013 to $414 billion in 2018, creating demand for vast new warehouse and
distribution centers across the U.S.

The economy is improving. The U.S. industrial economy has strengthened

significantly since the 2008 recession, and many industrial companies are finally
beginning to expand after years of caution.

For all these reasons, more and more institutional investors are increasing
their allocations to industrial real estate. Now you can invest alongside them
with one of the industrial sectors most experienced teams.
Source:
An Industrial Real Estate Revolution, by John Gates, National Real Estate Investor, May 2015
http://nreionline.com/industrial/industrial-real-estate-revolution
U.S. online retail sales will grow 57% by 2018; projected growth by Allison Enright, Internet Retailer, May 12, 2014.
https://www.internetretailer.com/2014/05/12/us-online-retail-sales-will-grow-57-2018
North American Industrial Forecast,2014-2017 Cushman & Wakefield

The direction of the market, The Fed,

geopolitical events or the rising or falling
fortunes of hot stocks are all noise to The
ODonnell Group. Their perspective is
on industrial private equity real estate,
which provides income, a hedge against
inflation and interest rate movement,
and capital appreciation.

Invest Like the Big Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

5.

CASE STUDY #1

Every building has a story:

Crescent Corporate Center, Anaheim, California
The ODonnell Group acquired the Crescent Corporate Center, in 1999,
and sold off the buildings from 2003 to 2004. The project was comprised
of 11 buildings. The ODonnell Group had the buildings repainted, slurry
sealed the parking lots, completely retrofitted the landscaping, and
replaced building windows and doors. The buildings were then restructured
as separate parcels and sold individually to both professional trade
buyers in a 401 exchange, and existing tenants.
The project was akin to buying a pizza for $10 dollars and selling the
individual slices for $15.
The ODonnell Group purchased the Crescent Corporate Center for
$18.5 million, and sold it for $29.1 million, in 5 years.
The Crescent Corporate Center brought a $10.6 million total profit.

CASE STUDY #2

Every building has a story:

Cedars Sinai Building, Torrance, California
The area around Los Angeles is the largest and
strongest market for industrial real estate, with a vast
population, crowded ports and vibrant retail and
manufacturing sectors. In 2000, The ODonnell Group
purchased a warehouse space in Torrance, California
for $13.4 million.
The property was leased for six months at the time
of purchase, which allowed The ODonnell Group
time to create a plan and budget, to bring the building
from Class B to Class A standards. Upgrades included
painting the interior and exterior of the building, new grading and asphalt in the parking lot, improvements
to building entrances and dock space, landscaping around the building and interior enhancements. Altogether,
The ODonnell Group invested $4.4 million on retrofitting the property. The refurbished building met Class A
standards, which substantially increased its value. The first year provided a tax deduction, due to depreciation.
Although there was a loss of money, it was covered by the budget and did not have capital calls. The ODonnell
Group sold the building in 2003 for $33.9 million. The Cedars Sinai Building brought a $16.3 million total profit.

Invest Like the Big Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

6.

A Proven Player in Industrial Real Estate

The ODonnell Group has the experience, specialized knowledge and market presence to give you access to
the most compelling deals in the industrial real estate space.

Experience.

A tested process.

We have 43 years of experience in this space. The first ODonnell

development partnership was created in 1972, and since then,
The ODonnell Group has developed or acquired over 22 million
square feet of industrial and office business parks across the
U.S.. Over the years, we have successfully managed through
economic cycles, and The ODonnell Group has consistently
been ranked among the top developers in the State of California.

We have proven success as a niche investment buyer,

manager and seller. Before we acquire a property, we
make sure that it offers compelling value by asking
questions including:

Scale.
The company currently owns and manages over 1,000,000
square feet and 85 acres of land for the development of industrial
buildings. We have a full suite of real estate capabilities, including
property management, asset management, construction
management, leasing, and accounting.

Relationships.
The ODonnell Group is uniquely positioned with the brokerage
community and private and institutional buyers to maximize
exposure of the investment to ensure the highest possible
proceeds on an individual property or portfolio sale.

Invest Like the Big Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

Is the acquisition cost below replacement cost?

Is the asset leased at below market rents?
Do current cash flows yield returns in excess of
market returns?
Is the asset poorly managed?
If there are multiple buildings, can they be sold
individually to users and investors?
Does the property have functional obsolescence that
can be rectified?
Does the property have significant and immediate
upside potential?
The ODonnell Group employs timing and knowledge of the
real estate market cycle to maximize value for clients. The
ODonnell Group has consistently demonstrated its ability
to predict and interpret the real estate market in order to
maximize the benefits to our clients.

7.

Meet Our Team

Douglas ODonnell, Chief Executive Officer
In 1992, Douglas ODonnell started his career in commercial real estate by joining ODonnell Property Services, and
later Insignia Commercial Group, Inc. He worked his way up through the companies, from Leasing Coordinator
to eventually overseeing the leasing and sales activities, for the 25 million square foot portfolio. He has developed
over 4 million square feet of industrial buildings.

John ODonnell, Board Member

John is the principal partner in various partnerships involved in the development of industrial real estate in Southern
California, Northern California, Seattle, Washington and Anchorage, Alaska. These partnerships operated from
1972 to 1989 while developing over 18 million square feet of industrial space.

Shahab Taleghani, Controller

As Controller for The ODonnell Group, Mr. Taleghani serves as an executive manager in which he
oversees all accounting for all assets and property management within The ODonnell Group and ODonnell Management
Company.
Mr. Taleghani has twenty years of progressive experience in both Real Estate Development and Property Management
Accounting. Prior to joining The ODonnell Group, he served as Corporate Controller for Southern California regional
offices of Trammell Crow Company. He was responsible for managing the accounting department and administrating the
books for the regional company as well as projects under development and property management. Mr. Taleghanis
past work experience also includes tenure with Jones Lang LaSalle, COMPASS Management and Leasing and The Brinderson Corporation.
Mr. Taleghani holds a Bachelor of Science Degree in Accounting from the University of San Francisco.

Jennifer Carroll, Head of Property Management

As Director of Property Management for The ODonnell Group, Ms. Carroll oversees all property management, tenant
improvement, construction and leasing for The ODonnell Group.
Ms. Carroll has fifteen years of progressive experience in both Real Estate Sales and Property Management. Prior
to joining The ODonnell Group, she was in the Commercial Property Management Department of River Rock Real Estate
Group. She was responsible for tenant management and financial reporting. Ms. Carrolls past work experience
also includes tenure with Prudential California Realty, First Team Real Estate, as well as Culbertson, Adams &
Associates in Urban Planning and Development.
Ms. Carroll holds a Bachelor of Arts Degree in Social Sciences from the University of California, Irvine. She also has a California Real Estate license.

Katherine Morrison
Ms. Morrison serves as Acquisitions Manager within The ODonnell Group. She is responsible for researching and
reviewing potential acquisitions. She provides critical financial data analysis in pursuit of future investments. She
also oversees underwriting special projects. Prior to joining The ODonnell Group, she was a Project Specialist at WM Financial
Services. Ms. Morrisons past work experience also includes tenure with Triconex Corporation and McKibben Engineering
Company.
Ms. Morrison holds a Bachelor of Arts Degree in Speech Communications from the University of California, Long Beach.

Becky Cranford
Ms. Cranford oversees the property management for The ODonnell Groups Northern California properties. Ms. Cranford
has twenty-two years of property management experience through her own company, McAvoy Management which
specializes in full service property asset management. McAvoy Management continues to oversee and manage the
following mixed use properties: Bay View Business Park, Shoreline Center, The Doyle and Marilyn Buildings, The Stewart Title
Building, Safety-Kleen Buildings, McPhail Buildings, among others. Ms. Cranford attended Bowling Green University,
Ohio for two years, and completed Real Estate License and Broker courses at College of Marin in Kentfield, CA.

Invest Like the Big Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

8.

Benefit from the Stable, Predictable

Returns of Industrial Real Estate
Real estate makes up an integral part of any diversified portfolio, and for sophisticated investors, theres no
better way to gain exposure than through institutionally managed real estate private equity partnerships.
The ODonnell Group has specialized for more than 40 years managing private equity partnerships that
invest in an often overlooked segment of the marketplace, industrial real estate, a sector that has delivered
steady cash flows, strong capital appreciation, and protection from inflation and volatility. For more information
about how industrial real estate private equity can add value in your portfolio, contact us today at:

Invest Now
ODonnellGroup.Wealthforge.com
For more information:

ODonnellGroup.com/OpportunityFundV

567 San Nicolas Drive

Suite 450
Newport Beach, CA 92660
909-718-9898
info@odonnellgroup.com

Invest Like the Big Players in Real Estate:

Institutions (Pensions, Endowments and Corporations)

9.