<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14A of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Cheek the appropriate box:
/ / Preliminary Proxy Statement
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
STARWOOD FINANCIAL TRUST
TRINET CORPORATE REALTY TRUST, INC.
- --------------------------------------------------------------------------------
(Name of Registrants as Specified in their Charters)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
--------------------
STARWOOD * FINANCIAL
--------------------
THE LEADER IN STRUCTURED REAL ESTATE FINANCE
Transaction Summary
September 1999
This presentation and the accompanying audio portion are available at:
www.vcall.com/private
Call I.D.: Starwood
Password: Financial
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
DISCLAIMER
These materials contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934.
The words "except," "anticipate," "estimate" and other similar expressions which
are predictions of or indicate future events and trends and which do not relate
solely to historical matters, including information concerning the companies'
future earnings estimates, identify forward-looking statements. The companies
make no representations as to whether those estimates will be achieved. Reliance
should not be placed on forward-looking statements because they involve known
and unknown risks, uncertainties and other factors which are in some cases
beyond the control of the companies and may cause the actual results,
performance or achievements of the companies to differ materially from
anticipated future results, performance or achievements expressed or implied by
such forward-looking statements. The Companies have filed definitive proxy
materials regarding their pending merger with the Securities and Exchange
Commission. The proxy materials contain important information regarding the
merger and you are encouraged to review them. The materials are available to the
public at the SEC's web site at http://www.sec.gov.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
PREEMINENT REAL ESTATE FINANCE COMPANY
STARWOOD FINANCIAL AND TRINET CORPORATE REALTY HAVE AGREED TO A STOCK-FOR-STOCK
MERGER TO CREATE THE LARGEST COMMERCIAL REAL ESTATE FINANCE COMPANY IN THE
PUBLIC MARKETS.
|x| Merger combines two similar businesses focused on providing real estate
borrowers and corporate users with innovative, custom-tailored financing
solutions.
o Starwood's business of creating stable, long-term cash flows from
commercial real estate, and then financing them appropriately, is
fundamentally similar to TriNet's business.
|x| Dominant market positions in structured mortgage, mezzanine and lease
financing.
o Goal is to be #1 in each of a limited number of focused, proprietary
business lines.
|x| Capital resources and size comparable to other leading commercial finance
companies:
o $2 billion (book) tangible equity capital base.
o $4-$5 billion total capitalization.
|x| Fully-integrated finance company with national footprint and in-house
expertise in all key disciplines.
|x| Strong earnings growth prospects and attractive dividend yield--compelling
valuation relative to peer group.
<PAGE>
STARWOOD FINANCIAL
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TRANSACTION OVERVIEW
================================================================================
Structure: TriNet Corporate Realty ("TriNet") merges
into wholly-owned subsidiary of Starwood
Financial ("Starwood Financial").
Consideration: 1.15 shares of Starwood Financial for each
TriNet share.
Board of Directors: 10 Starwood Financial and 5 TriNet directors
(8 independent).
Management: Self-administered and self-advised. Starwood
Financial's external advisor merged into
combined company for 4.0 million shares.
Headquarters: New York; super-regional offices in San
Francisco, Atlanta and Hartford.
Dividend: Approximately $2.40/share (annualized) -->
$2.76/share for TriNet shareholders after
1.15 exchange ratio, beginning first full
quarter following merger.
Listing: NYSE: SFI (Starwood Financial A/B share
structure eliminated).
Basic Shares Outstanding: 86.6 million.
Share Repurchase: Up to 5.0 million shares following closing.
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<PAGE>
STARWOOD FINANCIAL
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TIMETABLE
|x| Record date for vote 9/17/99
|x| Proxy mailed to shareholders 9/24/99
|x| Shareholder vote 11/3/99
|x| Estimated closing date 11/4-11/11/99
<PAGE>
STARWOOD FINANCIAL
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BENEFITS OF THE MERGER
|x| Creates one of the largest publicly-traded real estate finance companies.
o Provides TriNet with the structured finance tools, origination
capabilities and capital resources to make its business more
valuable.
o Allows Starwood Financial to expand product line into large,
complementary financing market with attractive risk/return dynamics.
|x| Improves TriNet's growth prospects. In the six quarters that Starwood
Financial has been public (since March 1998), it has:
o Grown earnings per share by 67.5%.
o Increased its dividend every quarter.
o Grown its dividends per share by 22.9%.
o More than doubled its asset base.
|x| Increases dividend to an annualized rate equivalent to $2.76 per TriNet
share.
o 6.2% increase from the current annualized rate of $2.60 per share.
o Increase begins in first full quarter following the merger.
|x| Provides superior stability and security.
o Starwood Financial has made over $2.7 billion in investments in its
six-year history without a single loss.
o Starwood Financial provides capital to owners of high-quality
commercial properties in major metropolitan markets.
o Vast majority of Starwood Financial assets are secured mortgages,
not traditional "mezzanine" loans.
o Relative to other commercial finance companies, the combined company
will have significantly lower leverage and a larger equity capital
base.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
BENEFITS OF THE MERGER (CONT.)
|x| Enhances TriNet's access to a variety of capital sources.
o Opens up securitized financing structures for long-term leases.
o Broadens institutional equity relationships and support.
|x| Provides TriNet with the benefits of increased scale, including lower cost
of capital, better diversification, enhanced operating efficiencies and a
broader customer base.
|x| Provides a tax-free transaction.
o As a stock-for-stock exchange, the merger will be tax-free to
shareholders, unlike cash transactions that require shareholders to
pay capital gains taxes.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
STARWOOD FINANCIAL--LEADING STRUCTURED FINANCE COMPANY IN REAL ESTATE
|x| Starwood Financial originates and acquires structured mortgage and
mezzanine loans on commercial properties nationwide.
o Growing credit lease financing business--over $250 million invested
to date.
|x| Business founded in 1993 as part of Starwood private investment funds to
capitalize on market inefficiency.
o Over $2.7 billion of financing commitments closed since 1993.
|x| Capitalized by leading institutions and high net worth investors,
including six of the top pension funds in the nation.
|x| One of the earliest and largest structured finance players focused
exclusively on the real estate industry.
o Grew to $1.1 billion private business with superior track record.
|x| Merged into public entity March 1998; 99% of common stock owned by
continuing investors and management.
o 99% of common stock owned by Starwood investors and affiliates.
o Stock added to Russell 1000 and 3000 July 1998; stock price
volatility has since increased dramatically.
<PAGE>
STARWOOD FINANCIAL
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STARWOOD FINANCIAL--LEADING STRUCTURED FINANCE COMPANY IN REAL ESTATE
|x| More than doubled size of Company in past five quarters, completing over
$1.5 billion in new financing commitments.
o Acquired largest competitor's portfolio December 1998.
o 20%+ annual growth in EPS since going public.
o Increased dividend every quarter--dividend up 23% in five quarters.
|x| Seasoned portfolio built over six years.
o Primarily self-originated and call protected.
o Vast majority of assets are mortgages, not traditional "mezzanine"
loans.
o No losses.
|x| Proprietary deal flow and structuring designed to capture highest
risk-adjusted part of capital structure and create irreplaceable assets.
|x| Industry-leading management team.
|x| Now the largest independent, publicly-held provider of structured real
estate financing in U.S.
<PAGE>
STARWOOD FINANCIAL
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SENIOR MANAGEMENT TEAM
THE COMBINED COMPANY WILL DRAW ON A HIGHLY-EXPERIENCED SENIOR MANAGEMENT TEAM,
INTEGRATING KEY EXECUTIVES FROM BOTH ORGANIZATIONS:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-----------
SUGARMAN
CEO
-----------
|
|
------------------------------------------------------------------------------
| | | |
| | | |
| ------------- --------------- ----------
| HABER MATIS O'CONNOR
| EVP - Finance EVP - SVP-COO
| and CFO General Counsel
| ------------- --------------- ----------
| | | |
| | | |
| | | -------------
| | | | |
- ----------- ----------- ----------- ----------- ----------- ------------- | ----------- ----------
BLOMQUIST COZZI DIGEL IDA MULROY DITOMMASO | CHITTY RUBIN
SVP- SVP - SVP - SVP - SVP - SVP - Finance | SVP - Asset SVP - Loan
Investments Investments Investments Investments Investments and Treasurer | Management Servicing
- ----------- ----------- ----------- ----------- ----------- ------------- | ----------- ----------
| | | | | | | | |
| | | | | | --------------- | |
----------------------------------------------------- | DUGAN --------------
| | VP - Ast. |
| | General Counsel |
| | --------------- |
| | | |
| | | |
------------- ------------- --------------- -------------
9 18 1 45
Professionals Professionals Professionals Professionals
------------- ------------- --------------- -------------
</TABLE>
<PAGE>
STARWOOD FINANCIAL
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FINANCIAL PERFORMANCE(1)
STARWOOD FINANCIAL HAS GENERATED 20%+ ANNUAL GROWTH IN EPS AND DIVIDENDS SINCE
GOING PUBLIC.
<TABLE>
<CAPTION>
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
=================================================================================================================================
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------------
3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99
PRO FORMA(2) ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL % CHANGE
----------- ----------- ----------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Investment Income $ 19,456 $ 23,015 $ 25,770 $ 28,533 $ 33,953 $ 35,174 80.8%
Other Income 425 1,291 1,329 591 1,778 3,525
Non-Interest Expense (5,443) (4,417) (6,164) (6,170) (7,514) (8,816)
----------- ----------- ----------- ----------- ----------- -----------
Net Income $ 14,438 $ 19,889 $ 20,935 $ 22,010 $ 28,217 $ 29,883 107.0%
Per Basic Share $ 0.27 $ 0.38 $ 0.40 $ 0.42 $ 0.43 $ 0.46 70.4%
Funds From Operations $ 16,022 $ 21,263 $ 22,309 $ 24,298 $ 29,834 $ 31,418 96.1%
Per Basic Share $ 0.30 $ 0.40 $ 0.42 $ 0.44 $ 0.46 $ 0.49 63.3%
Weighted Average Basic Shares 52,390 52,390 52,408 52,408 52,471 52,471
Total Assets $ 1,135,916 $ 1,312,005 $ 1,796,622 $ 2,059,616 $ 2,178,776 $ 2,171,628
Total Debt 385,630 536,692 1,014,672 1,055,719 1,172,131 1,160,885
Total Liabilities 386,960 561,911 1,025,515 1,088,888 1,178,960 1,169,457
Shareholders' Equity 748,956 750,094 771,107 970,728 999,816 1,002,171
Book Debt/Equity 0.5x 0.7x 1.3x 1.1x 1.2x 1.2x
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Source: 10-Q or 10-K for the respective quarter end date.
(2) Pro forma information gives effect to the recapitalization of Starwood
Financial on March 18, 1998. For more information on the recapitalization,
please see Starwood Financial's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998.
<PAGE>
STARWOOD FINANCIAL
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INDUSTRY OVERVIEW--STRUCTURED REAL ESTATE FINANCE
<TABLE>
<CAPTION>
U.S. COMMERCIAL MORTGAGE MARKET
=====================================================================
Total Debt: $1.13 Trillion
<S> <C>
REITs 1.5%
Commercial Banks 41.0%
Life Companies 18.1%
Non-Gov't CMBS Issuers 12.7%
Savings Assoc. 10.8%
Foreign Investors 8.7%
Federally Regulated Mtg. Pools 3.6%
Pension Funds 2.6%
Other 1.0%
---------------------------------------------------------------------
</TABLE>
|x| The U.S. commercial real estate industry is approximately $4 trillion in
size.
o Single-user office and industrial properties represent approximately
$500 billion.
o Mortgage financing represents $1.1 trillion.
|x| Both the structured mortgage and credit tenant leasing businesses
represent substantial, defensible submarkets.
o Structured mortgage/mezzanine market is $50-$100 billion; Starwood
Financial is the largest and leading player.
o Office and industrial credit tenant lease market is up to $500
billion; TriNet is the largest and leading player.
|x| Competition is limited.
o Most capital providers offer inflexible, commodity structures
(conduit loans, 20+ year bondable leases).
o Bifurcation of commodity capital sources from structured finance
providers creates large, underserved niche.
|x| Demand driven by unique borrower needs which are not served by commodity
structures.
<PAGE>
STARWOOD FINANCIAL
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PORTFOLIO OVERVIEW
STARWOOD FINANCIAL'S DIVERSIFIED PORTFOLIO PRIMARILY CONSISTS OF HIGHLY
STRUCTURED FIRST MORTGAGE LOANS AND CREDIT TENANT LEASES ORIGINATED BY STARWOOD
AND COLLATERALIZED BY HIGH QUALITY INSTITUTIONAL REAL ESTATE.
<TABLE>
<CAPTION>
PORTFOLIO AT 6/30/99
================================================================================
<S> <C>
Funded Amount $2.1 billion
# of Assets 45
# of Properties 193
Average Loan per Borrower $47 million
Average Loan per Property $11 million
Total Financing Commitments $2.2 billion
Average First $ LTV 21.3%
Average Last $ LTV 74.5%
Debt Service Coverage Ratio 1.4x
Weighted Average Maturity 6.2 years
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</TABLE>
<PAGE>
STARWOOD FINANCIAL
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PORTFOLIO OVERVIEW
STARWOOD FINANCIAL'S ASSETS ARE DIVERSIFIED BY ASSET TYPE, GEOGRAPHY AND
PROPERTY TYPE, AND PRIMARILY CONSIST OF FIRST MORTGAGES AND CREDIT TENANT
LEASES.
PORTFOLIO AT JUNE 30, 1999 (BY BOOK VALUE)
================================================================================
<TABLE>
<CAPTION>
ASSET TYPE
<S> <C>
Credit Lease Real Estate 9%
First Mortgages 47%
Second Mortgages 25%
Partnership Loans/Other 19%
</TABLE>
STRONG SECURITY & STABLE CASH FLOWS
<TABLE>
<CAPTION>
GEOGRAPHIC REGION PROPERTY TYPE
<S> <C> <C> <C>
West 38% Office 34%
Northeast 16% Hotel 19%
South 12% Retail 14%
Mid Atlantic 10% Mixed Use 11%
Southeast 10% Resort/Entertainment 8%
Northwest 7% Apartment/Residential 7%
Central 6% Homebuilder/Land 7%
North Central 1%
</TABLE>
BROAD DIVERSIFICATION TO MINIMIZE RISK
- --------------------------------------------------------------------------------
<PAGE>
STARWOOD FINANCIAL
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SELECTED FINANCING TRANSACTIONS
CHELSEA PIERS
NEW YORK, NY
[Picture]
================================================================================
COLLATERAL DESCRIPTION: Unique waterfront entertainment complex in
Manhattan; 1.2 million square feet of usable
building area and 500,000 square feet of
protected harbors (4 piers) housing 16
separate profit centers
YEAR BUILT/RENOVATED: 1995-1996 (built)
INVESTMENT STRUCTURE: 1st & 2nd mortgage with equity participation
LOAN AMOUNT: First: $45,000,000
Second: $5,800,000
MATURITY: June 2004
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<PAGE>
STARWOOD FINANCIAL
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SELECTED FINANCING TRANSACTIONS
CITY FRONT TERRACE
SAN DIEGO AND SAN FRANCISCO, CA
[Picture]
================================================================================
COLLATERAL DESCRIPTION: 320-unit, Class A multi-family apartment
building in San Diego; 98,000 square foot,
Class A commercial office condominium and
177-space parking facility in San Francisco;
additional guarantee from 5-star resort and
high end golf course complex in Phoenix
YEAR BUILT/RENOVATED: San Diego apartments--1995 (built)
San Francisco office--1986 (built)
INVESTMENT STRUCTURE: 1st mortgage
LOAN AMOUNT: $65,720,000
MATURITY: December 2002
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<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
SELECTED FINANCING TRANSACTIONS
COMERICA BUILDING
DETROIT, MI
[Picture]
================================================================================
COLLATERAL DESCRIPTION: 40-story, Class A office building with
957,000 net rentable square feet
YEAR BUILT/RENOVATED: 1992 (built)
INVESTMENT STRUCTURE: Partnership loan
LOAN AMOUNT: $13,585,000
MATURITY: May 2008
- --------------------------------------------------------------------------------
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
SELECTED FINANCING TRANSACTIONS
FOUNTAIN PLACE
DALLAS, TX
[Picture]
================================================================================
COLLATERAL DESCRIPTION: 60-story, Class A office building with 1.2
million net rentable square feet
YEAR BUILT/RENOVATED: 1986 (built)
INVESTMENT STRUCTURE: 1st mortgage
LOAN AMOUNT: $97,123,000
MATURITY: September 2001
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<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
SELECTED FINANCING TRANSACTIONS
GENERAL MOTORS BUILDING
NEW YORK, NY
[Picture]
================================================================================
COLLATERAL DESCRIPTION: 50-story, Class A office with 1.6 million
net rentable square feet
YEAR BUILT/RENOVATED: 1968 (built)
INVESTMENT STRUCTURE: 2nd mortgage
LOAN AMOUNT: $100,000,000
MATURITY: July 2003
- --------------------------------------------------------------------------------
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
SELECTED FINANCING TRANSACTIONS
LONGWOOD GALLERIA
BOSTON, MA
[Picture]
================================================================================
COLLATERAL DESCRIPTION: 154-room hotel; 52,000 square feet of Class A
office; 104 parking spaces; 154 multi-family
apartment units; 23,000 square feet of retail
space
YEAR BUILT/RENOVATED: 1968 (built)/1987 (apartments remodeled;
retail, office, & hotel built)/1998
(renovated)
INVESTMENT STRUCTURE: 1st mortgage with equity participation
LOAN AMOUNT: $54,288,000
MATURITY: November 2007
- --------------------------------------------------------------------------------
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
SELECTED FINANCING TRANSACTIONS
PROMUS HOTEL PORTFOLIO
17 HOTELS LOCATED IN THE NORTHWESTERN U.S.
[Picture]
================================================================================
COLLATERAL DESCRIPTION: Cross-collateralized portfolio comprised of
17 full-service hotels with 3,989 total rooms
YEAR BUILT/RENOVATED: Various: built primarily in 1970's & 1980's
INVESTMENT STRUCTURE: Hotels owned by Starwood Financial and triple
net leased to Promus Hotels with bondable
corporate guarantee
CAPITAL INVESTMENT: $173,164,000
MATURITY: June 2020
- --------------------------------------------------------------------------------
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
SELECTED FINANCING TRANSACTIONS
SOUTHWEST VALUE PARTNERS
SAN DIEGO, CA
[Picture]
================================================================================
COLLATERAL DESCRIPTION: 1.1 million square feet of Class A office
space in three high rise office towers
YEAR BUILT/RENOVATED: 1990 (Emerald Plaza)
1969/1992 (Golden Eagle Plaza)
1974/1996 (Comerica Building)
INVESTMENT STRUCTURE: 1st & 2nd mortgage with equity participation
LOAN AMOUNT: First: $78,511,000
Second: $40,634,000
MATURITY: May 2002
- --------------------------------------------------------------------------------
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
SELECTED FINANCING TRANSACTIONS
SUN VALLEY MALL
CONCORD (SAN FRANCISCO), CA
[Picture]
================================================================================
COLLATERAL DESCRIPTION: Class A regional mall anchored by Macy's, JC
Penney, and Sears with 1.4 million square feet
of gross leasable area; 1.2 million square feet
of collateral area (collateral excludes Sears)
YEAR BUILT/RENOVATED: 1967 (built)/1981 (expansion)/
1991 (complete renovation)
INVESTMENT STRUCTURE: Cross-collateralized 1st, 2nd & 3rd mortgage
LOAN AMOUNT: $118,869,000
MATURITY: September-October 2000 ($108,684,000)
September 2009 ($10,185,000)
- --------------------------------------------------------------------------------
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
SELECTED FINANCING TRANSACTIONS
WASHINGTON CENTER
WASHINGTON, D.C.
[Picture]
================================================================================
COLLATERAL DESCRIPTION: 364,000 square foot Class A office building
and 889-room Grand Hyatt Hotel
YEAR BUILT/RENOVATED: 1987 (hotel built); 1990 (office built)
INVESTMENT STRUCTURE: 2nd mortgage
LOAN AMOUNT: $49,585,000
MATURITY: August 2005
- --------------------------------------------------------------------------------
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
STARWOOD FINANCIAL CTL EXAMPLE #1
|x| In 1997, Starwood Financial paid $171 million for a portfolio of 17 hotels
triple-net leased to a BBB credit. Portfolio cash flow was $35 million and
underlying value of assets was estimated at $350 million.
o Net lease provided for a $15 million payment per annum and 7.5%
participation in revenue increases over a base year.
o Lease was for 12 years with five 5-year extensions at tenant's
option.
|x| Acquisition was financed with $125 million of floating-rate, interim
financing. Interest rate hedges were put in place for permanent financing.
o First-year return on $50 million of equity was 13.1%.
|x| In order to capture imbedded value, Starwood Financial began proactively
reworking the lease:
o Starwood Financial offered the tenant $1.5 million to extend the
lease ten years, convert the payment stream to monthly pay, and
modify certain other lease provisions to make it bondable.
o Next, Starwood Financial paid an AAA-rated insurance company
$630,000 to wrap condemnation/casualty risk to eliminate remaining
"non-bondable" provisions in lease.
|x| Starwood Financial then placed $155 million, long-term financing to better
match fund its asset.
o Second-year return was 16.2% on $25 million of equity invested. This
return is fully guaranteed by a BBB-rated credit.
|x| Starwood Financial also benefits from a $180 million current residual
value (not reflected on its balance sheet), the depreciation benefits, and
the 7.5% revenue participation (acts as an inflation hedge).
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
STARWOOD FINANCIAL CTL EXAMPLE #2
|x| Starwood Financial provided $64 million in financing to the purchaser of a
renovated office and warehouse project which has recently signed several
long-term leases.
|x| 100% of office space leased for 15 years on a triple-net, bondable basis
to AAA-rated credit.
|x| 65% of warehouse space leased for eight years to two tenants. Remaining
space is under negotiation with one tenant.
|x| Based on the AAA lease, Starwood Financial obtained third-party,
non-recourse financing for $54 million at favorable rates, match funded to
Starwood Financial's $64 million investment.
|x| Starwood Financial investment of $10 million will earn a match-funded 31%
cash-on-cash return for the 18-month term of loan, with very low basis in
assets.
|x| Starwood Financial's investment captures best risk-adjusted return
available in asset's capital structure.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
STARWOOD FINANCIAL CTL RETURNS
================================================================================
<TABLE>
<CAPTION>
CASE STUDY #1
<S> <C> <C>
Equity (owned by Starwood Financial) $175 million
Starwood Financial - $25 million 16.2%
Third-Party Senior Loan $155 million 7.44%
<CAPTION>
<S> <C> <C>
CASE STUDY #2
Equity (owned by third party) $20 million
Starwood Financial - $10 million 31.1%
Third-Party Senior Loan $54 million 7.06%
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
MEDIA MISCONCEPTIONS
STARWOOD FINANCIAL'S BUSINESS IS RISKIER THAN TRINET'S.
|x| Starwood Financial has successfully executed a highly focused business
strategy over the past six years on behalf of leading corporate and
private investors.
|x| Starwood Financial's assets include 56% first mortgages and credit leased
real estate and 25% "hard" second mortgages--only 19% "mezzanine" loans.
|x| Starwood Financial's portfolio averages 21% to 75% LTV and 1.4x debt
service coverage.
|x| Starwood Financial has made over $2.7 billion in investments and never had
a loss.
|x| Starwood Financial finances institutional quality real estate collateral.
|x| Starwood Financial's portfolio is diversified geographically and
predominately located in major metropolitan markets.
|x| Starwood Financial has consistently increased both EPS and dividends every
quarter since going public.
|x| Starwood Financial's conservative underwriting uses static and downside
scenarios.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
MEDIA MISCONCEPTIONS
IF TRINET DOES NOT MERGE WITH STARWOOD FINANCIAL, A HIGHER CASH PROPOSAL WILL
COME ALONG.
|x| As detailed in the 8-K and Proxy, TriNet and Greenhill explored numerous
alternative transactions to the Starwood Financial merger.
|x| Alternative proposals were highly conditional and produced unattractive
valuations, well below sell-side research "NAV" estimates.
|x| Certain alternative bidders communicated to Greenhill that they were
unable to provide more attractive offers because of the short-term nature
of a number of TriNet's leases and its lease rollover risk, as well as the
high debt refinancing and transaction costs described below.
|x| TriNet's corporate debt structure impedes a "going private" transaction
and debt prepayment penalties and restructuring costs would reduce
shareholder proceeds by over $3/share.
|x| Net leased assets do not generally produce returns sufficient to entice
likely group of cash buyers (e.g., opportunity funds) without on-going
structured finance platform.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
MEDIA MISCONCEPTIONS
THE ADVISOR TRANSACTION IS UNFAVORABLE TO SHAREHOLDERS.
|x| Internalizes industry-leading business franchise and management team.
|x| Consideration is 100% restricted stock.
|x| Highly accretive to combined company.
o Advisor 1999E EBITDA is $15 million.
o At $25-$30 stock price, advisor valued at 6.7x-8.0x multiple and
12%-15% yield to the public company.
o Multiple compares favorably to 9.0x average EBITDA multiple in 11
recent comparable real estate advisor transactions.
o This assumes no growth in advisory fees, despite Starwood
Financial's track record of consistently growing the business over
six years.
|x| Increases economies of scale as combined company grows.
|x| Public equity investors and analysts strongly prefer self-advised
companies.
|x| Starwood Financial's large institutional shareholders and disinterested
directors have thoroughly reviewed and approved the advisor transaction.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
MEDIA MISCONCEPTIONS
TRINET SHOULD HAVE GOTTEN A "COLLAR" ON STARWOOD FINANCIAL'S STOCK PRICE.
|x| A typical collar would allow for the 1.15 exchange ratio to be adjusted up
(down) based on decreases (increases) in Starwood Financial's stock price.
|x| While a collar might also allow TriNet to call off the merger if Starwood
Financial's stock price fell below a "floor" level, Starwood Financial's
limited float and volatile stock price made a collar arrangement
inappropriate.
|x| As a result, the parties determined that the appropriate basis for the
exchange ratio was both companies' relative contribution to the combined
company's earnings and cash flow stream, not the companies' relative stock
prices.
|x| Of the 11 REIT mergers and acquisitions over $500 million announced or
completed this year, ten had no collar arrangements.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
MEDIA MISCONCEPTIONS
THE $50 MILLION "BREAK-UP" FEE IS TOO HIGH.
|x| The $50 million break-up fee equals 3.0% of the merger value of $1.7
billion(1).
|x| Of the 11 REIT mergers and acquisitions over $500 million announced or
completed this year, all eleven provided for break-up fees.
|x| These fees averaged 2.6% of the targets' enterprise value.
|x| Break-up fee is reciprocal.
|x| Starwood Financial shareholders representing 99% of the Company's voting
power have irrevocably agreed to vote in favor of the merger.
- ----------
(1) Based on enterprise value using TriNet/Greenhill valuation range for
Starwood Financial.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
FINANCING STRATEGY
THE COMBINED COMPANY HAS ACCESS TO A VARIETY OF SOURCES OF SHORT-TERM LIQUIDITY
AND LONG-TERM CAPITAL.
|x| $1.5 billion of committed credit facilities (approximately $800 million
drawn).
o $675 million secured facility from major commercial bank.
o $500 million secured facility from major investment bank
o $350 million unsecured facility led by major commercial bank.
|x| Additional $100+ million unsecured facility under consideration.
|x| Access to variety of secured term loans funding.
o Approximately $830 million currently outstanding under 19 loans from
13 lenders.
o Large number of commercial and investment bank relationships.
|x| "STARS" branded, proprietary securitization program - provides
competitively-priced match funding for Starwood Financial assets.
o First $700-$800 million transaction in progress.
|x| Long-term corporate debt.
|x| Public and private preferred equity.
o Both Starwood Financial and TriNet have accessed the public and
private markets for perpetual preferred stock.
|x| Public and private common equity.
o Starwood Financial's extensive private equity relationships
complement TriNet's public money manager and retail investors.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
PRO FORMA BALANCE SHEET AT 6/30/99(1)
<TABLE>
<CAPTION>
($ IN MILLIONS)
===================================================================================================
STARWOOD FINANCIAL TRINET COMBINED COMPANY(2)
------------------ -------- -------------------
<S> <C> <C> <C>
Loans and Related, Net $1,929.5 $45.7 $1,975.2
Operating Leases 187.2 1,375.6 1,715.8
Cash/Marketable Securities 27.9 15.7 43.6
Other Assets 27.0 58.0 43.3
-------- -------- --------
TOTAL ASSETS $2,171.6 $1,495.0 $3,777.9
======== ======== ========
Secured Debt $1,160.9 $84.3 $1,245.2
Unsecured Debt - 538.0 570.5
Other Liabilities 8.5 62.1 69.3
-------- -------- --------
Total Liabilities 1,169.4 684.4 1,885.0
-------- -------- --------
Minority Interest - 2.6 2.6
Preferred Equity 220.0 182.5 402.5
Common Equity 782.2 625.5 1,487.9
-------- -------- --------
Total Stockholders' Equity 1,002.2 808.0 1,890.4
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,171.6 $1,495.0 $3,777.9
======== ======== ========
BOOK DEBT/EQUITY 1.2x 0.8x 1.0x
- ---------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Per Proxy statement.
(2) Includes purchase accounting adjustments, the effects of internalizing
Starwood Financial's advisor and transaction fees.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
COMBINED COMPANY PORTFOLIO SUMMARY
THE COMBINED COMPANY'S ASSET BASE IS HIGHLY DIVERSIFIED AND SECURE, INCLUDING
APPROXIMATELY:
|x| 190 assets.
|x| 340 underlying properties.
|x| 240 borrowers and tenants.
================================================================================
<TABLE>
<CAPTION>
ASSET TYPE
<S> <C>
Credit Tenant Leases 51%
First Mortgages 25%
Second Mortgages 14%
Partnership Loans / Other 10%
</TABLE>
STRONG SECURITY & STABLE CASH FLOWS
<TABLE>
<CAPTION>
GEOGRAPHY PROPERTY TYPE
<S> <C> <C> <C>
West 39% Office 48%
Northeast 15% Hotel 10%
South 14% Retail 8%
Southeast 12% Industrial 8%
Mid Atlantic 9% Mixed Use 6%
Central 6% R&D 6%
Northwest 4% Apartment / Residential 4%
North Central 1% Resort / Entertainment 4%
Homebuilder / Land 3%
Other 3%
</TABLE>
BROAD DIVERSIFICATION TO MINIMIZE RISK
- --------------------------------------------------------------------------------
- ----------
Note: Based on fair market value of leased real estate (assuming a 9.5% cap
rate) and book value of loans. As of June 30, 1999.
<PAGE>
STARWOOD FINANCIAL
- --------------------------------------------------------------------------------
PRO FORMA ASSET AND REVENUE MIX
================================================================================
<TABLE>
<CAPTION>
ASSET MIX (1)
TOTAL: $3.8B
<S> <C>
Loans and Related 52%
Net Lease R.E. 45%
Other Investments 3%
</TABLE>
<TABLE>
<CAPTION>
REVENUE MIX (2)
TOTAL: $404M
<S> <C>
Interest Income 52%
Operating Lease Income 43%
Other Income 5%
</TABLE>
- --------------------------------------------------------------------------------
- ----------
(1) Pro forma at 6/30/99.
(2) Pro forma six months ended 6/30/99, annualized.
