We are pioneering syndicated investments to take advantage of the exceptional low valuation of U.S. real properties, with a view to attaining high growth.

Why Property Banking?

• Historically, the real property outperforms most asset classes.
• Real property investment is an excellent stability hedge against economic uncertainty and inflation.
• Rental properties generate rental income to pay for costs of routine maintenance, insurance, property taxes, capital repairs and debt servicing.
• Rental Properties can be acquired by means of long term fixed rate mortgage financing, which permits refinancing as the property values increase due to inflation and/or favorable market demands for properties.
• In the event of leveraged property acquisition, the property owner stands to profit from leveraged growth.
• Real properties in diverse locations to reduce risk.
• There is no risk or uncertainty of zoning or conditional use.
• Acquiring real properties at a price below the replacement cost (cost of construction) gives the owner the benefit of property value growth in the future.

Opportunities in the US Property Banking

The perfect time to invest in America

• The U.S. population has grown 9.3% in the past 10 year, adding 3 million people and 1.2 million new households every year.
• 1.3 million jobs are created in 2010 ; adding 930,000 in the first months of 2011 with 1.5 being projected for this year.
• As the economy recovers, the real property value is increasing after dropping 40% in the last 4 years due to recession.
• Property values need to increase by 30% before any new construction can start.
• Financing rates are at historical lows.
• Cash flows are above historic levels.
• Corporations start to show good profits after downsizing in the last few years.
• Tenants, who downsized, are now in need of expansion in space.

Current Market Commentary – 10 August, 2011

The anticipated downgrade by Standard & Poor of U.S. Treasury bonds to AA+ has focused the world on the U.S. high debt levels and slow economic growth. This has heightened investor concerns but is unlikely to affect U.S. real estate investors directly, according to many experts. The downgrading has forced the U.S. government to deal with its high debt level and reduce spending which while painful now will be good for the U.S. economic stability in the long run. Nearly lost amid the news reports about the credit downgrade was the same day report that the U.S. economy added 930,000 jobs in the first seven months of 2011. Now, the U.S. Federal Reserve Bank announced that they would keep interest rates low for two years and the U.S. stock market rallied up over 400 points as a result and this will keep interest rates for real estate low for several years helping U.S. real estate values in the future.

Corporate America is investing in equipment and software and is generating significant profits again. While the U.S. economy gained 2 million new jobs during the past 18 months and its GDP continues to grow, the U.S. consumers remain cautious. For the ten year period from 1998 through 2007, single family home prices increased every year (like currently in Asia). During this time, the U.S. consumers were overly confident that they had stable jobs and increasing home values that they only saved 3-4% of their incomes each year. Now, as a result of lost equity in their homes due to decreased home values and adapting to an unstable job market, U.S. consumers have quickly tightened their spending and doubled their savings rate. At a time when real estate values are the most attractive to buy in U.S. history, many Americans are saving rather than investing. Meanwhile, groups of savvy investors (i.e. Donald Trump and Warren Buffet) are eagerly taking advantage of the current homes market by purchasing properties for all cash at steep discounts from banks for immediate cash flow and profit.

This shift in American thinking has created a very strong rental market, as many consumers are seeing that they can rent houses at half the former home ownership cost. These consumers are renting homes for $20,000 per year that five years ago cost $40,000 for annual home ownership costs. Because homes are now selling at prices far below the cost to build, there is little new home construction. Thus, with increasing demand to rent homes and apartments and with almost no new homes or apartments being built, both rents and occupancies are benefiting from strong demand and limited supply causing rents to increase at a 7% rate and vacancy rates falling below 6% nationally and 4% in Southern California. The investors who own homes can now rent them quickly with returns over 10% while buying the homes at half the cost of building them. These financial returns are three times higher than five years ago when home prices were three times higher, and rental rates should increase rapidly for the next several years until prices increase enough for new construction to begin.

Grandtag's property banking offering is an example of the product innovation on which we pride ourselves. Identifying the ability – with correct timing – to turn crisis into opportunity, we, with our joint venture partner, Madison Realty Equities have the capability on locating opportunities in U.S. properties while increasing cash flow and stability, offering solutions to enhance our clients' wealth on being a property owner.

For more details on how Grandtag Madison and our current offering property banking projects can be of your benefits, please contact your investment advisor for details or visit www.grandtagmadison.com