Co-Investment Joint Ventures

One of AMLI’s primary business strategies is the formation of joint ventures, primarily with institutional partners, for the purpose of acquiring and developing upscale multifamily apartment communities in the markets in which AMLI operates.

Since AMLI invests substantial equity capital with each of its partners in each transaction, AMLI refers to its activities in this area as "co-investment."

Prior to coming public in 1994, AMLI was in the institutional investment management business and viewed its new public platform as a way to enhance and expand its activities in this area. Today, co-investing is one of AMLI’s core corporate competencies, and AMLI is positively regarded for its ability to structure joint venture transactions and service the needs of its partners.

The benefits to AMLI from co-investing are primarily to:

• Increase earnings on invested capital – AMLI receives fees, reimbursements and other compensation from its partners and/or from its co-investment partnerships. The amount and nature of the compensation earned by AMLI may differ depending on the type of transaction or the level of services provided by AMLI to the partner or partnership.
• Diversify AMLI’s access to equity capital – the ability to attract capital is critical to the growth of any real estate investment company. AMLI believes that there will be times when either public or private equity capital will be more or less available, and more or less costly, relative to the other.
• "Leverage" invested capital to promote the AMLI brand and increase market share – through joint ventures, AMLI is able to acquire and develop more properties than it would for the same amount of invested capital, if it were to own 100% of every investment. Each of AMLI’s co-investments is branded and managed in the same manner as each of the company’s wholly owned investments.
• Obtain the participation of sophisticated partners in certain real estate decisions – AMLI’s partners are knowledgeable and sophisticated real estate investors. Their participation with AMLI in the acquisition or development of a community provides one more set of eyes and ears, one more check and balance and a validation of the decision making process.

Some of the benefits from co-investing with AMLI include the following:

• Strong alignment of interests – AMLI’s seeks to align the economic and strategic interests of the partners. AMLI accomplishes this through prescreening of potential partners and deal structure. Importantly, AMLI invests significant equity capital along side its partners in each transaction.
• AMLI is a good partner – AMLI has a long track record of open, fair and honest dealings with its partners. AMLI encourages open lines of communication and benefits from the business perspectives and experiences of its partners in both the real estate and capital markets.
• AMLI is a public company – as such AMLI is subject to regulation governing its organization and behavior and, through its public reporting, its business activities and decisions are transparent.
• Outsource services – AMLI has full-time experienced professionals on staff organized to provide services to those partners who do not have the internal resources or expertise available. Such services include acquisition and disposition, development and construction, property and asset management and capital markets.
• AMLI possesses the financial strength to honor its obligations
• AMLI is an expert in each of the markets in which it operates

In a typical transaction, AMLI and its partner, on a para passu basis, will fund the partnership’s required equity. Historically, AMLI’s share of an individual investment has ranged between 10% and 50% and has averaged approximately 30% across its entire co-investment portfolio. Some partnership investments are levered, typically in the 50% to 65% range, and some are owned without any debt.

Typically, each partner will be entitled to receive its pro rata share of distributable cash flows from operations, sale or refinancing until certain financial return thresholds are achieved. At such time, AMLI will be then entitled to receive an additional share of distributable cash, thereby earning a "promote" or "promoted interest."

Generally, normal operating decisions are the responsibility of AMLI with AMLI’s partners participating in the annual budget process as well as in all major decisions, such as sale, financing or investment of significant capital expenditures.

A simple "buy/sell" provision typically governs unresolved "major decision" items between the partners, and it can be "triggered" by either partner anytime (normally after completion and stabilization of a development transaction).

AMLI’s partners are institutional investors, such as pension funds and insurance companies, which have the same longer-term "core" or "value-added core" strategy as AMLI. They include:

• AFL-CIO Building Investment Trust
• Allstate Insurance Company
• BPMT (Stichting Bedrijfspensioenfonds voor de Metaal en Technische Bedrijfstakken)
• Capri Capital Advisors
• Erie Insurance Group
• New York Common Retirement Fund/Heitman Capital Management
• National Electric Benefit Fund
• Northwestern Mutual Life Insurance Company
• Ohio State Teachers Retirement System
• Prudential Real Estate Investors
• The Common Fund/Endowment Realty Investors
• The Rockefeller Foundation
• Western & Southern Life Insurance Company
• Three Private Capital Investors

AMLI has formed over 50 co-investment joint ventures acquiring and developing approximately $1.6 billion of real estate, at cost.

Please direct inquiries concerning AMLI’s co-investment activities to: