MONTREAL, September 16th, 2015 — ROI Land Investments Ltd. (OTCQB: ROII) (“ROI” or the “Company”), a diversified real estate land development investment company, issued today the following letter to shareholders:
Dear Fellow Shareholders & Bondholders:
The first half of 2015 has been an exciting time at ROI as we commenced work on multiple new real estate development projects, strengthened our senior management and operational teams and launched an effort to increase visibility among investors. As we head into the second half of the year, we want to take this opportunity to highlight the most relevant developments at the Company and share with you our plans for the future.
As you know, ROI fills an underserved niche in the commercial/residential real estate development process. Specifically, we focus on purchasing attractive land free of zoning restrictions; securing the proper development permits and putting into place the necessary infrastructure. We believe this is the most profitable of the four primary stages of real estate development (raw land acquisition, pre-development and entitlement approval, infrastructure construction and income generation).
We have successfully positioned ROI to actively participate in the development of residential and mixed-use projects, targeting areas simultaneously experiencing strong economic growth but a shortage of housing stock to keep up with demand. This includes the Liquefied Natural Gas (“LNG”) pipeline development in British Columbia, Canada, which is driven by LNG Canada Development Inc. (“LNG Canada”), among other companies. The total development cost for each of these projects is expected to be approximately $10-$20 million, with a total sellable area of not less than 50% of the parcel. With each project, we partner with an established local developer to help us navigate the intricacies of each market. We aim to secure clear and binding exit strategies before our development work is completed, and then sell our remaining interests in the projects to local developers, who will continue construction work.
This approach offers a number of advantages:
- Provides ROI with local expertise
- Secures a clear exit strategy for each investment
- Enables us to generate proprietary deal flow
- Helps us reduce operating costs
The unique strategy underlying ROI’s operating platform allows us to maximize our returns on investment for each project while reducing risk. Currently, ROI is the leading U.S.-listed public company that adheres to this strategy, which we believe will position us as an attractive opportunity for equity investors looking to gain exposure to the real estate market.
Capital Raising and Liquidity
Overall, the appetite for investing in ROI and our developments remains strong and we have made meaningful progress raising debt and equity to fund individual projects and corporate growth. As we continue to develop existing projects and acquire new ones, we intend to finance our growth in a way that provides the lowest possible cost of capital. To that end, we have engaged two New York-based investment banking firms to help us raise additional capital and debt and cultivate relationships with institutional investors in the U.S.
ROI has built a robust, diversified project portfolio that is currently comprised of 6 projects in various stages of development across the United States, Canada and Dubai. Based on our projections, we believe we can achieve low- to mid-triple digit returns on investment for each project, with exit times ranging from 22-74 months.
Below is a table summarizing each project:
|Country||City||Status||Square feet||Units||Type||Expected Completion Dates|
|Canada||Beauport||Acquired||1,971,000||211||Mix of single family homes, townhomes and semi-detached||Jul. 2018|
|Canada||Kenney and Park, Terrace||Acquired||180,624||144||Apartments||Oct. 2018|
|Canada||Grahame Avenue, Terrace||Acquired||62,197||56||Apartments||Dec. 2016|
|Canada||Kitimat||Acquired||170,000||93||Apartments and town-homes||Dec. 2017|
|USA||Evans||Acquired||10,323,720||1,200||Mix of single family homes, townhomes, semi-detached and condominiums||Jan. 2021|
|UAE||MBR City, Dubai||MOU signed||431,125||300||Luxury apartments||Aug. 2017|
Acquisition Date: October 2014
Size: 1,971,000 square feet
Project Description: The project consists in a mix of single family homes, townhomes and semi-detached
Economic Catalyst: The project is located in the last qualified, low-density construction area permitted in Quebec City for the next 10 years. Given the scarcity of land in the area, we believe that housing inventory will be constrained.
Project Status: The project, which is fully funded, is in its preliminary stages. In the first quarter of 2016, we will begin putting together a comprehensive development plan in collaboration with the town planner and officials from Quebec. We expect development work to begin in the first quarter of 2017.
Terrace, British Columbia
Acquisition Date: December 2014
Size: 180,624 square feet Kenney Street & Park Avenue & 62,197 square feet in Graham Avenue.
Project Description: Two properties with 200 units being developed in collaboration with Coast to Coast Holdings, Ltd. (“Coast to Coast”), a leading Calgary-based construction and land development company with a focus on commercial and residential construction for some of the largest projects in Canada.
Economic Catalyst: British Columbia is experiencing significant economic and demographic growth as a result of the emerging LNG industry. This has led to higher demand for quality housing, which bodes well for the real estate development industry.
Project Status: In December 2014, we completed our first project in Terrace, selling 20,000 square feet of land and generating a return of over 50% from the initial investment. Our investment’s success provided us a strong introduction to the market and helped us broaden our expertise for analyzing future prospective projects in the area. With 30 mining projects having been announced in North Western British Columbia, we are confident that there is a significant opportunity to work with Coast to Coast to successfully develop additional projects in this part of Canada.
At Graham Avenue, we are currently developing a project plan. Once the plan is complete and financing is secured, Coast to Coast is expected to begin construction in the fall of 2016. We are also in early negotiations to rent or sell the apartments as an alternative strategy.
At Kenny Street and Park Avenue, the project plan is complete and we are currently working to secure financing. Coast to Coast plans to start construction in the fall of 2016. We are also in early negotiations to rent or sell the apartments.
Kitimat, British Columbia
Acquisition Date: December 2014
Size: 170,000 square feet
Project Description: The project consists of 84 apartments and 9 townhomes.
Economic Catalyst: Similar to Terrace, the area around Kitimat is facing a noteworthy housing shortage due to the tremendous economic and population growth related to the construction of a number of LNG facilities in British Columbia.
Project Status: We have completed demolition work on the site and are finalizing a construction loan. We anticipate beginning construction in September 2015.
Additionally, in May, we entered into an agreement with LNG Canada to develop apartment and townhouse units in Kitimat. LNG Canada is a joint venture between Shell Canada Energy, affiliates of PetroChina, Korea Gas Corporation and Mitsubishi Corporation. LNG Canada intends to lease these units for its workforce over a five year period. The first phase of the project, which calls for 36 apartments and nine townhouses, is expected to be completed in May 2016.
LNG has executed long term leases for 35 apartments.
We view this agreement with LNG Canada as a positive step toward raising the Company’s profile and paving the way for larger opportunities.
Acquisition Date: June 2015
Size: 9,583,200 square feet
Project Description: The project consists of over 1,200 lots, featuring a mix of single family homes, town homes, duplexes, triplexes and condos. The Company also plans to build a park as well as commercial and retail areas.
Economic Catalyst: Northeastern Colorado has a diverse economy, which has benefitted from higher job growth rates relative to the rest of the United States. This, combined with low property taxes, has resulted in a shortage of high-quality, affordable housing and led to an increase in housing prices in the area.
Project Status: We acquired the project in June 2015 and are working diligently to raise $7.5 million in debt to finance development work. We have also entered into a preliminary agreement to sell approximately one-third of the development to Baessler Homes, a well-established and renowned local contractor that has been in operation since 1968.
Project Update: We recently hired a seasoned project manager to oversee our interests in Evans. This is a major step in this project and a practice we plan to replicate for each of our other projects. In addition, we have agreed to acquire an additional 1 million square feet of land in Evans. We are currently in the process of completing our due diligence and expect to close on this parcel during the third quarter 2015.
Acquisition Date: September 2015
Size: 431,125 square feet
Project Description: The project consists of over 300 apartments across three high rises in the Sobha Hartland mixed-use development in Mohammed Bin Rashid Al Maktoum City. The project is located just three kilometers from the world’s tallest building, Burj Khalifa, the largest shopping mall, The Dubai Mall, and is in the vicinity of multiple other recognizable landmarks. ROI’s plots are extremely well located within Sobha Hartland, with full views of the world famous Dubai skyline, overlooking lush, green parkland.
Economic Catalyst: Dubai continues to exhibit strong job growth, particularly in banking, tourism and real estate. Preparations for the 2020 World Expo are also helping to drive economic growth. With the country having some of the highest average disposable incomes in the world, there is a demand for mid-level and luxury housing. As a result, we are seeing a number of sophisticated and successful real estate developers embarking on projects in Dubai, including Donald Trump, whose Trump Estate luxury villa complex has already seen strong interest from buyers, yet is located over 15 Kilometers away from downtown Dubai.
Project Status: We are currently in the design phase, conducting market analysis, site analysis, conceptualization and material use. Our initial market analysis was well received by our local development partners. We intend to draft a comprehensive design brief, which will lay the groundwork to begin construction. Once we have a design brief, we will identify a contractor.
* * *
As we grow, it is crucial that we establish a solid corporate infrastructure and strengthen our management team. Antonio Treminio, one of the Company’s founders, was recently named Vice President, Strategic Planning. In addition, we recently appointed Martin Scholz, Peter Hoffman and Andreas Brand, all of whom will help to build out our investor relations capabilities in Europe. We are excited to welcome this group of talented and passionate individuals to the ROI family. Each brings a unique set of skills and professional experience that should prove invaluable. Looking ahead, we intend to continue adding exceptional individuals to our ranks, across all roles, at both the board and corporate levels.
We remain committed to the continued execution of our operating strategy and expansion of our project portfolio. We have identified additional opportunities in Texas, where we are in the due diligence phase, as well as targets in Florida and Canada. We are excited about the direction of our business and expect to continue to make progress in the second half of 2015 and beyond.
We thank our shareholders and bondholders for their continued support. And as always, if you have any questions or comments, feel free to reach out to management.
President & Co-Founder
About ROI Land Investments Ltd.
ROI Land Investments, Ltd. (“ROI”) is a diversified real estate investment company specializing in land development. ROI’s business model consists of acquiring attractive land developments free of zoning restrictions, obtaining the necessary development permits, outsourcing the development of the infrastructure and profiting from the sale of the subdivided land units to known large regional developers.
SAFE HARBOR AND INFORMATIONAL STATEMENT
This press release may contain forward-looking information within the meaning of Section 21E of the Security Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statement of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company’s financing plans; (ii) trends affecting the company’s financial conditions or results of operations; (iii): the company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words “may”, “would”, “will”, “expect”, “estimate”, “anticipate”, “believe”, “intend”, and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not a guarantee of future of future performance and involve risks and uncertainties, many of which are beyond the company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements, as a result of various factors including the risk disclosed in the company’s statements and reports filed with the US Securities & Exchange Commission. The Company claims the safe harbor provided by Section 21E(c) of the Exchange Act for all forward-looking statements.
For more information please visit our website: www.ROILandInvestments.com
Investor / Media Contacts:
KCSA Strategic Communications
Brad Nelson / Elizabeth Barker
212-896-1249 / 212-896-1203
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