2 0 0 6 a n n u a l r e p o r t
Circulating Value CWS Capital Partners LLC
Learn how one real estate investment managementcompany is using one word to drive efforts for long-term value for its investors.
CWS
CWS Capital Partners LLC has evolved from a company that was founded in 1969. Its key principals and advisors,
CEO – Steve Sherwood, Bill Williams, and President – Gary Carmell, have a combined 75 years with the firm. If
we had to put a title on ourselves, it would be “a fully-integrated real estate investment management company.”
We search throughout America for real estate investment opportunities and negotiate the purchase and sale
of the properties. We access both debt and equity capital to finance both the purchase and development of
those properties. And finally, we manage them. Throughout each project, we correspond regularly with
our investment partners and coordinate all the necessary financial reporting and tax return generation.
Importantly, the CWS principals believe in these projects strongly enough to personally invest in every single one.
Circulation is life. Circulation of money and access to capital fuels economic growth
which, in turn, allows for the allocation of money to its highest and best use. With
very favorable financial and real estate markets, 2006 was a year of circulating value
at CWS. We refinanced eight properties and sold six resulting in the exchange
of over $10.5 million of equity into two new assets and the distribution of nearly
$10 million in sale proceeds to investors. Using institutional and private capital,
our portfolio expanded with the acquisition of ten new communities, half of which
are development or condo-conversion and two are in new markets (Atlanta and
Houston). Refinancing strengthens existing assets’ financial health, selling
provides new investment opportunities and the option to extract cash, and acquiring
assets in new ventures and new markets offers a fresh start from which to begin again
the bountiful process of circulating capital for creating value. CWS understands
the value of its resources — the discretionary dollars of our investment partners,
the much sought after capital supplied by institutions, the talent of our esteemed
employees. We treat these with our utmost respect and attention, adding value at every
opportunity and putting the financial health of our investors and CWS at the forefront
of our decisions to adapt to changing economic, social, and demographic trends.
P r o P e r t y L o c a t i o n D a t e a c q u i r e D S a L e D a t e L . P . i r r
Ashbury Parke Austin, TX Jul-93 Jun-96 21.51%
Marquis at Ladera Vista* Austin, TX Nov-94 Nov-96 16.39%
Barton’s Lodge** Austin, TX Dec-90 Mar-98 19.28%
Plaza Villa Montclair, CA Feb-95 Aug-98 24.26%
Marquis of Carmel Valley* Charlotte, NC Jan-97 May-99 29.35%
Marquis Apartments Austin, TX Nov-92 Jun-00 17.98%
Argonne Forest Austin, TX Dec-91 Aug-00 20.65%
Edge Creek Austin, TX Aug-93 Dec-00 23.34%
O’Connor Ridge Dallas, TX Nov-95 Feb-02 9.79%
Waterbury Place Arlington, TX Jun-90 Mar-02 11.04%
Laguna Terrace Dallas, TX Jul-96 Apr-03 9.89%
Montclair Parc Charlotte, NC Jul-97 Oct-04 5.29%
Northcreek Durham, NC Jul-97 Oct-04 9.61%
Castle Hills San Antonio, TX Jun-03 Mar-06 27.50%
Walkers Bluff Austin, TX Oct-98 Apr-06 8.11%
Swanson’s Crossing Austin, TX Jul-02 May-06 9.73%
Shoal Creek Bedford, TX Nov-97 Jun-06 9.02%
Huntington Cove Farmers Branch, TX Dec-89 Aug-06 7.34%
Average 15.56%
* These investments were recapitalized after the development was complete. These returns represent the IRRs produced for investors exiting after the development phase. ** A portion of the investment was set aside for investors completing a 1031 exchange. Because their capital was invested later their IRR is higher than the initial investors.
P r o P e r t ye q u i t y
e x c h a n g e D
D e f e r r e D g a i n
a S S o c i a t e D
w i t h t h e
e q u i t y
1985 $ 4,969,908 $ 7,496,092
1986 596,835 618,897
1989 1,238,238 1,871,750
1990 3,591,187 9,283,218
1991 1,267,266 575,893
1992 1,800,396 4,759,007
1993 4,219,577 4,546,184
1995 1,252,827 2,115,161
1996 5,578,435 10,424,092
1997 12,737,361 19,012,046
1998 30,945,816 43,385,626
1999 31,046,933 55,438,498
2000 31,828,056 37,942,895
2002 14,187,460 23,078,845
2003 1,305,981 4,334,016
2004 10,427,349 16,610,408
2006 12,345,388 15,532,451*
Total $ 169,339,013 $ 257,025,079
* Net of boot of $5,524,966
From January 1, to December 31,
a c t u a L B u D g e t V a r i a n c e P e r c e n t
Total Revenue $ 121,114,870 $ 119,601,465 $ 1,513,405 1.27%
Total Operating Expenses $ 57,463,295 $ 56,468,851 $ (994,444) (1.76%)
Net Operating Income/(Loss) $ 63,651,575 $ 63,132,614 $ 518,961 0.82%
Year
m o n t h
r e f i n a n c e D
The Marquis of Carmel Valley February
The Marquis at Deerfield March
The Marquis at DTC September
The Marquis at Ladera Vista March
The Marquis at Town Centre Loan Mod August
The Marquis at Waterview April
The Preserve at Ballantyne Commons August
West Village Lofts & Apartments May
Year
m o n t h S o L D
Huntington Cove Apartments August-06
Shoal Creek Apartments June-06
The Marquis at Castle Hills March-06
The Marquis at Frankford Springs June-06
The Marquis at Swanson’s Crossing May-06
The Marquis at Walkers Bluff April-06
Year
r e f i n a n c e S a L e L e n D e r g r o u P
Canada Manufactured Housing Communities 3
Fairmont at Willowcreek 3
Papillon Parc 3
Talavera/Legends* 3
The Marquis at Barton Creek 3
The Marquis at Carmel Commons 3
The Marquis at Crossroads 3
The Marquis at DTC (Deercreek) 3
The Marquis at Iron Rock 3
The Marquis at Quarry 3
The Marquis at Rogers Ranch 3
The Marquis at State Thomas 3
The Marquis at Town Centre 3
The Marquis at Willow Lake 3
The Marquis on McKinney 3
*In the event the property is not sold, then it will either be refinanced or re-capitalized with a Lender Group.
2 3
CWS Capital Partners LLC
2006 Annual Repor t
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CWS Capital Partners LLC
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was in the checkout line in Barnes
& Noble and I noticed the discount
book bin as I was waiting. The first book to
catch my eye was about reflexology, a special
type of hand and foot massage. To pass the
time I picked up the book and started leaf-
ing through it. The first thing I saw when I
opened it up was a quote that said, “Circu-
lation is life.” It was such a simple statement
yet so profound in that it goes way beyond its
obvious application to health, and it caused
me to immediately think about it in the con-
text of investing and CWS.
What I’ve learned over the years in our
business is we always have to keep moving
forward and circulate our capital in ways
that ensure we are aligning our manage-
ment capabilities with the best opportu-
nities available. This does not necessarily
mean we always have to be buying and sell-
ing. On the contrary, it may mean sticking
with investments that we believe offer an
outstanding risk/reward relationship for a
long period of time. To ensure that we extract
the maximum value from the investment we
must make sure that we are circulating our
talent, capital, and residents so that we are
attracting the best customer base capable of
paying what we hope will be growing rents.
Since change is the one constant we can
rely on as a result of the shifting winds of eco-
nomic conditions, demographic forces, and
the risk appetite of investors, standing still is
not a viable option. These forces may require
us to make more significant changes by alter-
ing geographic emphasis or even the types of
properties we purchase or develop.
The history of CWS is one of a company
that has been nimble and flexible in making
significant strategic moves over the last 30-
plus years to make certain that we are cap-
turing the opportunities that we believe
offer the best risk/reward relationship.
The very first investment that CWS made
was an apartment building in Huntington
Beach and after that we gravitated to manu-
factured housing communities which were
known as mobile home parks back then.
We grew the mobile home park business
fairly aggressively over a 20-year period as
evidenced by CWS becoming one of the larg-
est owners and operators of mobile home
parks in the country. At our peak, we oper-
ated in nine states, including both coasts,
and in Canada.
As our sophistication grew and capa-
bilities strengthened, we shifted to more
value-added opportunities by developing,
expanding, and redeveloping communities
as well as turning around problem proper-
ties brought about by unprecedented eco-
nomic turmoil experienced in Texas after
the price of oil collapsed and large numbers
of S&Ls failed.
We realized that at the same time that we
were dealing with challenges in our mobile
home park portfolio, there were tremendous
opportunities developing in the tumultuous
apartment industry with the creation of the
Resolution Trust Corporation, or the RTC,
as it was better known.
We put together a team of focused peo-
ple to exploit the innumerable opportunities
to buy foreclosed properties from insurance
companies, the RTC, and banks because we
thought that the risk/reward was extraordi-
nary. To capitalize these opportunities, we
started recirculating money from our Cali-
fornia mobile home parks in the late 1980’s
because we saw that conditions in California
were top dead center in the sense that prices
were extremely high and the fundamentals
going forward were very much at risk as de-
fense spending was contracting and a large
number of high paying jobs were going to be
lost. When this was combined with California’s
high cost of living and relatively anti-business
climate, we were quite bearish on California
real estate, particularly housing prices.
We moved capital from mobile home
parks that we sold in California and reinvested
this money in depressed assets in Texas and
did quite well on our investments there.
In addition, once we saw that the apart-
ment industry was starting to gain traction
and many of the markets that we were in
were stopping new development because
money was not available, vacancy rates were
too high, and rents were too low to support
new construction, we realized that over time
there would be an opportunity to create
new apartment communities that would be in
high demand.
In the early 1990’s, we started developing
some of the modern class A apartment com-
munities which had far more amenities and
Name Title
CWS Capital Partners LLC
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CWS Capital Partners LLC
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were better designed than the apartments
that were built in the 1980’s. We were able
to produce attractive rates of return as these
proved to be in high demand among renters
willing to pay greater than projected rents.
As that market started to mature, we
gravitated towards older communities that
could be repositioned with some interior
upgrades and exterior improvements to
allow us to attract a higher paying resident
clientele. These also proved to be successful.
From repositioning properties, we shift-
ed to buying very high quality properties
in markets that we felt would grow at faster
rates than the average cities or economies
in the United States. These included Austin,
Dallas/Fort Worth, Charlotte, Raleigh, and
Denver. These were younger cities with a
tech-oriented workforce and a high degree
of education and the land and pro-business
environment to enable growth to occur at a
fairly rapid pace.
However, this strategy was not as suc-
cessful as we would have liked as we didn’t
count on the tech meltdown having such a
devastating economic impact. For the first
couple of years when we owned these as-
sets they performed well. But then, market
conditions changed greatly as the technol-
ogy downturn hit the US economy with
dramatic fashion. The NASDAQ dropped
80%, venture capital funding dried up, and
companies that were hiring were now laying
workers off and heavily focused on restruc-
turing and cutting costs.
Additionally, at the same time this hap-
pened, we were saddled with high-cost debt
that could not be repaid prior to maturity
given the extraordinary prepayment penal-
ties we would incur because interest rates
had dropped significantly. Lenders do not
like getting back their money early in a lower
interest rate environment and charge bor-
rowers penalties to compensate for their lost
yield. These penalties were astronomical as
borrowing rates dropped from 7%-8% to
3%-5%.
While we would have liked to have re-
circulated capital from those investments,
we really couldn’t so we had to focus on im-
proving our operations by re-circulating our
talent. This required us to be much more
focused on operational excellence and more
defensive in terms of working with lenders
and our investors to recapitalize many of our
properties. We also had to make sure we had
the strongest players on the field to ensure
our properties would not lose their com-
petitive edge. Fortunately, we have worked
through many of those issues.
We are very happy with the portfolio
we have in place. And now, we have circu-
lated some of our money and talent to more
of an urban focus. As commuting times in-
crease and people become more interested
in the cultural aspects of city life — the fine
dining, the lifestyle, and the ability to walk
or take public transportation to these places,
there is more of a premium put on urban
assets among consumers and investors. We
entered this arena somewhat early with the
development of The Marquis at McKinney
in Dallas in 2001 and then followed up with
the purchase of The Marquis at Turtle Creek
and other urban assets in Denver and Austin.
We now have a very good urban foot-
print that has allowed us to capitalize nicely
on the resurgence of urban living and the
demand among institutional investors for
urban assets. We also have strong manage-
ment and the acquisition capabilities to
evaluate new investment opportunities, in-
tegrate them into our portfolio, and run
them effectively.
Today, we are focused on taking advan-
tage of the combination of improving fun-
damentals in the apartment market and the
increasing costs of construction. We have
seen an opportunity to improve well-located
assets with nice amenities and good floor
plans that lack the modern interiors of new
construction properties. We see a terrific
opportunity to upgrade these communities
and interiors and to position these proper-
ties to offer a competitive alternative to the
higher priced new construction properties
but at lower rents.
The point of all this is that one really
can never remain complacent or stand still
because so many variables are always chang-
ing, particularly in the capital markets.
Certain types of assets that were the dar-
lings of investors become out of favor and
vice versa; those that are out of favor become
much more in demand. And right now, every-
thing seems to be in demand, quite frankly,
because there is an enormous supply of capi-
tal and a voracious appetite among investors
worldwide to capture yield that is available
from real estate investments.
It’s hard to believe that what I have
written was inspired by a book about foot
massage. Yet, it really is true that “circula-
tion is life”. Our blood needs to be flowing,
our people growing, and our capital consis-
tently monitored and optimized to ensure
that it is invested in opportunities offering
the best risk/reward relationship. We look
forward to doing our best in the years ahead
to ensure that much of this capital circula-
tion is flowing back to you in the form of
increased dividends, refinance distribu-
tions, and sale proceeds from value that has
been created over the last few years.
The reality in investing is we only have the vagu-
est idea how the stock, bond, and real estate
markets will fare in the years ahead. Layered
on top of that is a heap of personal uncertainty,
including what will happen with our jobs or
businesses, what surprise expenses we might
face and how long we each might live. Make
no mistake: managing risk — in all of its many
facets — is critical to managing money. So it
is important to follow time tested investment
principles and focus on key issues like diversi-
fying broadly, saving regularly, limiting taxes,
and clamping down on investment costs. Your
investment portfolio is driven by how you divide
or diversify your money. With CWS this means
owning several different properties in several
different markets.
Most CWS investors begin investing in real
estate beyond their homes between the ages of
40 and 50 and are convinced that it gives them
four major long-term benefits:
1. Appreciation due to inflation driving up
the value of real estate over 5 to 7 years.
2. Cash flow on an annual basis that is par-
tially sheltered from taxes by deprecia-
tion accounting.
3. Exchange options that allow an investor
to keep improving by trading a real
estate position for a better one without
paying tax at the time of the exchange.
4. The security of dealing with a well
known organization like CWS that has a
good long-term track record.
The USA is now the world’s largest debtor na-
tion at approximately $40 trillion dollars and
we are adding to our debt at the rate of $500
billion per year. To pay off this debt we could
slowdown our economy, raise taxes, and start
paying down the debt — which is a very unpop-
ular move that the American public would vote
down. The alternative is to inflate our way out,
i.e. reduce the value of the US dollar through
inflation. Inflation at the rate of 3.5% per year
would reduce the purchasing power of the US
dollar to approximately zero in 20 years.
Because of the potential for inflation to re-
duce the purchasing power of your savings, a
hedge against inflation is very important and
real estate is one of the best because rents can
be adjusted to maintain income growth to ex-
ceed inflation. Investors need a “real” return of
4.5% — that means to cover inflation of 3.5%
plus an added 4.5% real return for an overall
return of 8.0% every year. This is commonly
called an 8% IRR (internal rate of return).
The CWS goal for 2007 is an overall cash dis-
tribution of 5% on our apartment portfolio. In
addition we should see inflation moving up the
value of our real estate portfolio in the range of
3.5% or more due to the influx of money from
around the world that is continuing to push
up apartment prices. With sub-prime lenders
backing away from zero-down, interest-only
loans, there will be many more apartment rent-
ers. We are seeing improved occupancy levels
in 2007 and indications that it will be a good
year for CWS investors. The management team
at CWS invests in every property along with you
and we are driven to maximize the return on all
investments. We are off to a good start in 2007.
It has been 30 years since I had the good for-
tune of joining Bill Williams and Jim Clayton
to become the “S” in CWS. I began investing
in CWS projects at the same time, when we
purchased only Texas mobile home parks.
I have learned a lot in these 30 years and
would like to share some of my thoughts with
you. But before I do, I would like to make it
clear that the reason that CWS has been so
successful is because of our group of inves-
tor partners whom we have also enjoyed as
friends. CWS made it through the mid-eight-
ies and then the 2001 “tech-wreck” without
losing any investor capital. This is largely be-
cause of the staying power provided by our
loyal investors. I would like to take this op-
portunity to thank all of you one more time.
As we enter 2007, the apartment market,
as well as office, retail, and industrial mar-
kets are all at a place they have not been be-
fore. All of the real estate products are be-
ing sold at record low cap rates; which means
higher prices. These prices are based on the
net operating income (NOI) being pro-
duced by the property at the time of closing.
The price 5 years ago was 12 to 14 times the
NOI. It is now 20 times the NOI! This has
been extremely beneficial to all of us, as the
properties we own have appreciated dramat-
ically without growth in NOI. We are now ex-
periencing a significant upward movement
in rents that is translating into growing NOI
and therefore, values. It is a very good time
to be an apartment owner.
Looking into the future, we do not see
the cap rates going up significantly in the
near term. CWS is currently buying exist-
ing apartment communities at lower prices
than it would cost to build a similar commu-
nity. As the scheduled rent increases con-
tinue during 2007, the values should in-
crease to a level approaching replacement
cost. As this occurs, it will be interesting to
see if the cap rates move up during the next
couple of years. I believe that the cap rates
will not expand as rapidly as the NOI, which
should result in still higher prices in most of
our markets.
The demand should continue to shift
away from home ownership to renting, as a
result of the higher prices and the tighten-
ing of credit, especially for first-time buyers.
The level of new apartment construction is
such that 2007 and 2008 should be very good
years for apartment owners.
The future of well-located apartment com-
munities looks quite good; therefore, the fu-
ture looks good for CWS. We have been lis-
tening to our investors and have heard that
our investors are happy to pass along a large
estate to their kids, but want to have cash
flow to spend on themselves until then. Our
goal is to have the average distribution from
our portfolio at or above five percent. We are
seeing things in the markets that allow us to
feel good about accomplishing this goal. I
look forward to celebrating this accomplish-
ment together.
CWS Capital Partners LLC
2006 Annual Repor t
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CWS Capital Partners LLC
2006 Annual Repor t
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Name Title
Name TitleS
te
v e S h e r wo
od b
i l l w i l l i a mS
13
Our 2006 focus continues to be directed to-
wards adding value to your investments through
revenue increases and income generation. To
make this happen requires focused people and
making value-added capital improvements to
our properties.
People We made key personnel and orga-
nizational changes in 2006 that have greatly
increased our ability to add value to your assets.
In July, we reorganized our operations, promot-
ing Marcellus Mosley to Director of Operations,
a role in which he will supervise our Regional
Managers and strongly focus on training and
developing our on-site employees. We also ex-
panded the number of Regional Managers from
five to seven in order to reduce the portfolio
size each one oversees and allow more intense
focus on property operations, enhancing asset
value, and increasing revenue, which should
increase net income and get us closer to our
goal of an overall portfolio cash distribution
of 5%. The average portfolio size under each
Regional Manager decreased approximately
33% from nine properties to six greatly increas-
ing management guidance and supervision of
each asset. Of these new Regional Managers,
four are graduates of the CWS Executive Intern
Program. The result is that Regional Managers
are spending more time on site training employ-
ees to attract and retain our target residents
while also pricing our product to capture the
highest rents.
Former Dallas Regional Manager, Shellie
McDaniel, has been promoted to fill the newly
created role of Director of Training and
Marketing. The newly restructured
training department will deliver
exemplary new hire orientations and employees
to our properties with optimum job skills, keen
sales training and excellent customer service
skills. At the company, regional, and site levels,
the training department will provide marketing
expertise and programs designed to fill the
communities with desirable residents willing to
pay the highest market rents.
Promoting outstanding employees who can
in turn develop other employees to serve our
residents well, grow the value of our assets
through rent growth and disciplined expense
management, and maintain highly desirable
communities, are all critical to achieving pro-
forma distributions and commanding target
sale prices to hit our projected internal rates
of return.
Capital Improvements We see great potential
to enhance asset value at certain CWS commu-
nities through interior improvements such as
countertop, fixture, and flooring replacements,
cabinetry upgrades, and paint in order to raise
rents that might otherwise be stagnant due to
age or newly constructed competitors. In 2007,
investors should expect to see Lender Group
opportunities on currently owned assets with
targeted returns in excess of 20%. This repre-
sents a very real circulation of value as we not
only offer targeted returns on newly invested
dollars in current assets but we also increase
the overall value of originally invested dollars
through increased revenues.
Again, I thank you for the opportunity to
serve your investment needs. The operations
team remains committed to achieving
your proforma distributions on both
new and existing assets.
Name Title
Name Title
CWS Capital Partners LLC
2006 Annual Repor t
CWS Capital Partners LLC
2006 Annual Repor t
12
Be consoled if you are having a hard time finding
adequate yields on your cash; investors around
the world are similarly frustrated. Capital is
chasing cash flow, and the macro global demo-
graphic drivers of this situation show no signs of
changing any time soon. What are the implica-
tions of this condition for CWS and its investors?
1. There is strong demand in the marketplace for
low cash flow or even non-cash flow producing as-
sets. CWS is in the process of selling a number of
assets in various markets. The demand for each
of these assets has been strong at historically
high asset values, and CWS is working hard to
come up with the highest possible price for each.
While the quest for the very best price sometimes
lengthens the sale process, we believe that this
additional time and effort is in the investor’s best
interest and will result in a satisfactory outcome.
2. The margin for error in purchasing is very
slim, and above average revenue growth will be
well rewarded. Most assets purchased in this era
will have minimal initial yields. From an invest-
ment perspective, these purchases can work out
well to the extent that solid revenue growth can
soon grow the cash flow. However, should the rev-
enue growth not occur, or even decline, these as-
sets will quickly be in trouble. The counter to this
scenario is that even a small amount of growth
will quickly be rewarded in terms of monetiza-
tion of those cash flows into asset value.
3. Focus on the fundamentals of loca-
tion, supply, demand, and replace-
ment cost are essential in this cycle. Returns for
real estate investments initiated since 2002 have
been strong. Most CWS investments initiated in
that time period have not yet been sold, so CWS
investors have not yet tangibly seen the strong
results. Rising commodity prices resulting in
higher replacement costs and lower interest rates
translating to lower cap rates have helped pro-
vide attractive returns to numerous real estate
investors in this most recent cycle. These high
returns have opened the capital spigots to ad-
ditional real estate investment, and as a result
a number of marginal investments are being
made. This time, there is no certainty that falling
cap rates or rising replacement cost will bail out
these investments. For these reasons, it is more
imperative than ever to focus on the fundamen-
tals and to act accordingly.
4. Selectively utilize value-add techniques such
as rehabs and change of use from rental to for-
sale product. CWS has purchased older assets in
outstanding locations and is upgrading the in-
teriors to provide residents with the modern fin-
ish out they desire in exchange for significantly
higher rent. Additionally, there continues to be
a strong desire in select markets for residents to
own rather than rent. As such, some rental resi-
dential and even office buildings have a higher
and better use as for-sale residential product in
the form of condominiums. CWS will continue
to look for opportunities similar to the ones
it has seized in Austin and Dallas to find
value in underutilized assets through
a change of use.
mi k e e n g e l S
j a c k S i p e S
CWS Capital Partners LLC
2006 Annual Repor t
16
01t o t a L u n i t S : 1,803
Austin Region Property Total: 8
P r o P e r t y n a m e L o c a t i o n u n i t S
The Marquis at Barton Creek Austin 250
The Marquis at Caprock Canyon Austin 336
The Marquis at Iron Rock Ranch Austin 300
The Marquis at Ladera Vista Austin 224
Northwest Hills Apartments Austin 314
Riverside Place Austin 145
Riverside Square Austin 100
Windsor at Barton Creek Austin 134
S o u r c e S :
CNNMoney.com, Money Magazine Online Editionwww.austin-chamber.org
The Austin-San Marcos, TX MSA economy experienced expansion during 2006 as job growth
averaged 2.77%. Apartment demand was slightly elevated from last year, resulting in modest
rent growth. Austin was ranked #2 in “Best Big Cities”, Money Magazine, July 2006. Austin’s high
quality of living, highly educated work force and availability of office space resulted in corporate
relocations and expansion of Austin area companies. The long-term fundamentals look favorable
for Austin as employment is projected to grow by approximately 25% through 2015.
CWS Capital Partners LLC
2006 Annual Repor t
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t o t a L u n i t S : 5,534
Dallas / Ft. Worth Region Property Total: 20
The Dallas - Fort Worth, TX MSA (“D/FW”) has one of the most diverse economies in the nation.
The Fort Worth area has one of the lowest downtown office vacancy rates in the nation at 6%, as
evidenced by downtown redevelopment such as Sundance Square which boasts two Class A office
towers consisting of 1.5 million square feet of office space and the conversion of former Bank
One towers to apartments. The growth of the high-tech industries in the Dallas area suggests
that many jobs will be created by area tech companies as they expand. Companies flock to the
Dallas/Fort Worth area because of the region’s transportation infrastructure, cost of living, and
tax advantages. Multi-family permits remained steady at slightly over 4,000 units. We anticipate
the apartment market will continue to experience modest rent growth between 3%-4% and falling
vacancy rates in 2007.
S o u r c e S : Federal Reserve Bank of Dallas Online, Dallas Business Journal and Real Estate Center, Dallas-Fort Worth-Arlington: Multifamily Market News
02
P r o P e r t y n a m e L o c a t i o n u n i t S
Brooks on Preston Plano 342
The Estates of Highland Park Highland Park 55
The Marquis at Bellaire Ranch Fort Worth 316
The Marquis on Cedar Springs Dallas 165
The Marquis on Gaston Dallas 480
The Marquis at Lantana Flower Mound 248
The Marquis on McKinney Dallas 144
The Marquis at Park Central Dallas 308
The Marquis at Riverchase Coppell 360
The Marquis at Silver Oaks Grapevine 480
The Park on Spring Creek Plano 278
The Marquis at Stonebriar Frisco 347
The Marquis at Stonegate Fort Worth 308
The Marquis at Turtle Creek Dallas 98
The Marquis at Waterview Richardson 528
The Marquis at West Village Dallas 179
The Marquis at Willow Lake Fort Worth 138
Papillon Parc Fort Worth 76
The Park at Fox Trails Plano 286
Townlake of Coppell Coppell 398
CWS Capital Partners LLC
2006 Annual Repor t
20
t o t a L u n i t S : 1,452
San Antonio Region Property Total: 503
The San Antonio, TX MSA experienced quality expansion during 2006 with job growth remaining
strong at 2 percent with the creation of 15,600 jobs. The opening of the Toyota Motors plant in
November 2006 was a major economic event in San Antonio, and will create more than 4,000 jobs in
the area. Other major employers in San Antonio include AT&T (formerly SBC Communications),
H.E.B. Food Stores, United Services Automobile Association, and Baptist Health system and
the United States Military. San Antonio’s low cost of living, quality work force, and government
incentives make it very appealing for corporate expansion. Multi-family permits were down 6% for
the first three quarters of 2006, resulting in a tighter supply of apartment homes. We anticipate the
record creation of jobs in the metro area will help to stabilize the weakness the apartment sector
has been experiencing as a result of a large number of new communities being built.
S o u r c e S :
San Antonio Business Journal and Toyota Motors
P r o P e r t y n a m e L o c a t i o n u n i t S
The Marquis at Deerfield San Antonio 340
The Marquis at Legends San Antonio 306
The Marquis at Quarry San Antonio 224
The Marquis at Rogers Ranch San Antonio 246
Talavera San Antonio 336
CWS Capital Partners LLC
2006 Annual Repor t
23
t o t a L u n i t S : 104
Atlanta Region Property Total: 1
The metro Atlanta, GA MSA economy experienced tremendous expansion during 2006 as 69,000
net new jobs were added, making it fifth in the nation for job creation. Each year for the last ten
years, metro Atlanta has led the nation in new housing permits, indicating high demand for all
types of housing. Atlanta’s quality of life, highly educated work force and availability of office space
resulted in corporate relocations and internal growth of Atlanta area companies, as evidenced by
its #3 ranking in Expansion Management Magazine’s “America’s 50 Hottest Cities for Business
Expansion and Relocation”. We should continue to experience great apartment supply/demand
fundamentals as employment growth is anticipated to grow 18.8% in the next 10 years.
S o u r c e S :
Metro Atlanta Chamber of Commerce - Economic Development: Vital Statistics
04
P r o P e r t y n a m e L o c a t i o n u n i t S
The Marquis at Briarcliff Atlanta 104
*CWS Developments
m u L t i - f a m i L ya P a r t m e n t S c o m m u n i t i e S
y e a rB u i L t
y e a ra c q u i r e D P r o P e r t y n a m e c i t y
S t a t e a n Dc o u n t r y
u n i t S
P o t e n t i a LB u i L D o u t
t o t a L P o t e n t i a L
u n i t S
California 2001 2002 Fairmont at Willow Creek* Folsom California 260 0 260
Colorado 1998 1999 The Marquis at DTC Denver Colorado 238 0 238
1983 2005 Marquis at the Parkway Denver Colorado 460 0 460
2000 2000 The Marquis at Town Centre Broomfield Colorado 283 0 283
Georgia 1995 2006 The Marquis at Briarcliff Atlanta Georgia 104 0 104
North Carolina 2001 1999 The Marquis at Carmel Commons* Charlotte North Carolina 312 0 312
1998 1997 The Marquis of Carmel Valley* Charlotte North Carolina 424 0 424
1998 2006 The Marquis on Cary Parkway Raleigh North Carolina 388 0 388
2000 2000 The Marquis at Crossroads Raleigh North Carolina 296 0 296
1996 2006 The Marquis on Edwards Mill Raleigh North Carolina 352 0 352
1996 2006 The Marquis at Northcross Huntersville North Carolina 312 0 312
1996 2000 The Marquis at Preston Cary North Carolina 292 0 292
1996 2005 The Marquis at Silverton Cary North Carolina 216 0 216
1998 1999 The Preserve at Ballantyne Commons Charlotte North Carolina 270 0 270
Texas 1998 1998 Brooks on Preston Plano Texas 342 0 342
2001 2007 The Estates of Highland Park Highland Park Texas 55 0 55
2000 2000 The Marquis at Barton Creek Austin Texas 250 0 250
1990 2006 The Marquis at Bellaire Houston Texas 581 0 581
1997 2003 The Marquis at Bellaire Ranch Fort Worth Texas 316 0 316
1994 2000 The Marquis at Caprock Canyon Austin Texas 336 0 336
1996 1996 The Marquis at Deerfield* San Antonio Texas 340 0 340
2002 2004 The Marquis at Iron Rock Ranch Austin Texas 300 0 300
1996 1996 The Marquis at Ladera Vista* Austin Texas 224 0 224
2000 2006 The Marquis at Lantana Flower Mound Texas 248 0 248
1998 1998 The Marquis at Legends San Antonio Texas 306 0 306
1999 2005 The Marquis at Park Central Dallas Texas 308 0 308
1994 2004 The Marquis at Quarry San Antonio Texas 224 0 224
1999 2006 The Marquis at Riverchase Coppell Texas 360 0 360
2001 1999 The Marquis at Rogers Ranch* San Antonio Texas 246 0 246
2002 2005 The Marquis at Silver Oaks Grapevine Texas 480 0 480
1998 2006 The Marquis at Stonebriar Frisco Texas 347 0 347
1996 2002 The Marquis at Stonegate Fort Worth Texas 308 0 308
1998 2002 The Marquis at Turtle Creek Dallas Texas 98 0 98
1998 1999 The Marquis at Waterview Richardson Texas 528 0 528
2002 2004 The Marquis at West Village Dallas Texas 179 0 179
1996 2002 The Marquis at Willow Lake Fort Worth Texas 138 0 138
2002 2006 The Marquis on Cedar Springs Dallas Texas 165 0 165
1996 2005 The Marquis on Gaston Dallas Texas 480 0 480
2002 2003 The Marquis on McKinney* Dallas Texas 144 0 144
1978/79 2005 Northwest Hills Apartments Austin Texas 314 0 314
1985 1990 Papillon Parc Fort Worth Texas 76 0 76
1981 2006 The Park at Fox Trails Plano Texas 286 0 286
1984 2006 The Park on Spring Creek Plano Texas 278 0 278
1969 2006 Riverside Place Austin Texas 145 0 145
1973 2006 Riverside Square Austin Texas 100 0 100
1996 1998 Talavera San Antonio Texas 336 0 336
1985/86 2004 Townlake of Coppell Coppell Texas 398 0 398
1978 2005 Windsor at Barton Creek Austin Texas 134 0 134
Apartment Totals 13,577 0 13,577
Current Developments The Marquis at State Thomas Dallas Texas 0 127 127
The Marquis Uptown Dallas Texas 0 300 300
The Block on Campus Phase I Austin Texas 0 330 330
The Block on Campus Phase II Austin Texas 0 360 360
Downtown Austin Condos Austin Texas 0 80 80
Development Totals 0 1,197 1,197
Manufactured Housing Communities 2005 Chateau at Onion Creek Austin Texas 350 0 350
1988 Canadian Properties Surrey British Columbia, Canada 664 0 664
Manufactured Housing Communities Totals 1,014 0 1,014
CWS Portfolio Totals 14,591 1,197 15,788
24 25
L o c a t i o n u n i t S P e r c .
DFW 5534 40.7%Austin 1803 13.3%San Antonio 1452 10.7%Raleigh 1544 11.4%Charlotte 1318 9.7%Denver 981 7.2%Houston 581 4.3%Sacramento 260 1.9%Atlanta 104 0.8%
CWS Capital Partners LLC
2006 Annual Repor t
28
t o t a L u n i t S : 1,318
Charlotte Region Property Total: 4
S o u r c e S :
UNC Public Relations & Marketing News Releaseand the Red Capital Group Market Overview
05
Charlotte, NC experienced strong employment growth during 2006 as the construction, financial,
and government sectors continued to expand, resulting in new job growth of approximately 2%.
Multi-family permits have declined from their annualized high in 2001 and are expected to keep
declining throughout 2007. The combination of lower multi-family supply and accelerated job
growth resulted in improved apartment market fundamentals in 2006. This was evidenced by
physical vacancy rates falling to its lowest rate of 7.6%, since 2001. With higher interest rates, strong
job growth, and limited new supply, we project the apartment market will continue to improve
resulting in even lower vacancy rates and stronger rent growth.
P r o P e r t y n a m e L o c a t i o n u n i t S
The Marquis at Carmel Commons Charlotte 312
The Marquis of Carmel Valley Charlotte 424
The Marquis of Northcross Charlotte 312
The Preserve at Ballantyne Commons Charlotte 270
CWS Capital Partners LLC
2006 Annual Repor t
31
t o t a L u n i t S : 1,544
Raleigh Region Property Total: 5
S o u r c e S : Headway Corporation, Red Capital Group Market Overview, Raleigh/Durham BizSpace and the Triangle Business Journal
06
The Raleigh, NC MSA has a diverse employment base consisting primarily of technology, govern-
ment, biotechnology, and education. Raleigh’s economy has gradually improved during the past
three years and is currently experiencing improving 3.8% job growth as of 3Q06. The Raleigh area
is consistently ranked among the nation’s best places to live, work and earn a world class education.
Headway Corporate Resources Inc., a human capital management company, is planning to move its
corporate headquarters and central offices from New York City to Raleigh, North Carolina, creating
new full-time jobs in the state of North Carolina over the next five years. Raleigh was ranked #4 “Best
Places to Live” by Money Magazine, July 2006. Multi-family permits have decreased by thirty percent
when compared to 2005, with only 374 permits issued in 2006, compared to 535 permits issued in
2005. With steady job growth and a very low supply of new apartments, Raleigh’s apartment market
should experience improvement and falling vacancy rates during 2007.
P r o P e r t y n a m e L o c a t i o n u n i t S
The Marquis on Cary Parkway Morrisville 388
The Marquis at Crossroads Commons Raleigh 296
The Marquis on Edwards Mill Raleigh 352
The Marquis at Preston Cary 292
The Marquis at Silverton Cary 216
CWS Capital Partners LLC
2006 Annual Repor t
32
t o t a L u n i t S : 981
Denver Region Property Total: 3
S o u r c e S :
Metro Denver Economic Development Corporation
07
Denver is an attractive investment market and is viewed as one of the best places to live and to do
business in America. This is evidenced by the fact that eight of the Fortune Top 1000 companies are
located in Denver. Multi-family permits decreased from a September high of 1,314 to 944, the lowest
monthly level since 1992. Denver recently reported positive job growth of 1.6% as of January 2007.
Due to strong absorption and the lack of new construction, apartment vacancy rates have decreased
from 6.9% to 6.7%, the lowest level since 2001. Average monthly apartment rents have also increased
from the second to third quarter of 2006, ending with an average rent of $875. We believe the Denver
market has seen its worst days, and should see a return to robust rental growth rates.
P r o P e r t y n a m e L o c a t i o n u n i t S
The Marquis at DTC Denver 238
Marquis at the Parkway Denver 460
The Marquis at Town Centre Broomfield 283
CWS Capital Partners LLC
2006 Annual Repor t
35
The economic trends in Surrey and the White Rock area of British Columbia, B.C. continue to
show positive growth. The British Columbia gross domestic product (GDP) is forecasted to grow
3.5% during 2007 with employment growth of 2.3%. Prices for Fraser Valley Homes increased on
average 19.3% for single-family, 17% for townhouses, and 9.6% for condominiums over last year.
Demand for housing in the area should remain high by historical standards and occupancy rates at
the communities should remain stable in 2007. The property management team will continue new
home sales efforts and will seek to acquire desirable for-sale homes in the communities to preserve
curb appeal. A 3.9% rent increase is being implemented in 2007.
t o t a L u n i t S : 656
Canada Region Property Total: 3
S o u r c e S :
Canadian National and British Columbia, BC Stats
08
P r o P e r t y n a m e L o c a t i o n u n i t S
Breakaway Bays British Columbia 345
Crestway Bays British Columbia 119
Crispen Bays British Columbia 192
CWS Capital Partners LLC
2006 Annual Repor t
38
CWS Capital Partners LLC
2006 Annual Repor t
39
BRIDGE is a CWS Capital Partners LLC program designed to encourage individuals to provide community service and volunteer work, as well as, provide a company sponsored pool of money for various community needs.
Corporate Officers
irving Police assoc. golf classic Oct. 25, 2006
CWS participated in the Irving Police Associa-
tion benefit golf classic, benefiting the Make
A Wish foundation. CWS volunteers were sta-
tioned at designated holes raffling tickets for
give a ways and handing out goodies to all the
golfers. We successfully helped Make A Wish
collect enough money to send another child on
their wish. Make A Wish is a wonderful organi-
zation that grants children wishes from the ages
of 2-18 living with a life threatening illness. It is
wonderful feeling knowing that we are helping
raise money for a child to get their wish granted
and for them to forget for awhile about all the
fear and pain of the illness they live with.
Surrey food Bank Drive Oct. 27, 2006
Once a month, the Surrey Food Bank in Brit-
ish Columbia opens its warehouse after hours
for CWS volunteers to come in for two hours
to organize food donations. The CWS group
consists of both CWS employees and Crestway
Bays residents. We help the organization by
carefully sorting all of the items received into
specific categories such as baby food, diapers,
pet food, vegetables, instant foods, etc… to
make it easier for the food bank to assemble
boxes to meet the specific needs of recipients.
In addition to our monthly volunteer hours,
Surrey Food Bank executive Marilyn Hermann
was delighted, to receive a $1,240 check from
CWS. The food bank really appreciates our do-
nation of time and money and the Canadian
group of volunteers has a great time helping
out the organization.
operation christmas child Dec. 5, 2006
CWS Apartment Homes corporate emloyees
along with CWS Corporate Housing employees
assembled and collected 30 shoe boxes filled
with goodies and toys to be shipped overseas
as part of Operation Christmas Child. This is
the 4th consecutive year that both companies
have participated.
the caring Place Dec. 11, 2006
On Tuesday, December 11th the Women In
Leadership Group volunteered at The Caring
Place in Georgetown Texas. The group invento-
ried, sorted and stocked food in the warehouse.
B.R.I.D.G.E. 2006 Events (partial list)
Steve Sherwood
Founding Partner, CEO, & Chairman of the BoardJoined CWS in 1977Newport Beach, California
Bill williams
Advisory Board MemberFounding Partner 1969Newport Beach, California
tracy hayes
President, CWS Corporate HousingJoined CWS in 1994Austin, Texas
Joe Sherwood
Senior Vice President, Manufactured HousingJoined CWS in 1986Longwood, Florida
Brian rose
Chief Financial OfficerJoined CWS in 1997Austin, Texas
Sue mills
Vice President, Human ResourcesJoined CWS in 1991Austin, Texas
Shellie mcDaniel
Director of Training& MarketingJoined CWS in 2001Dallas, Texas
gary carmell
Partner & PresidentJoined CWS in 1987Newport Beach, California
Lauretta anderson
Vice President, Investor RelationsJoined CWS in 1986Newport Beach, California
Sunnie Juarez-mills
Manager, Investor Services Joined CWS in 1997Newport Beach, California
marcus Lam
Investor Relations,Development AssociateJoined CWS in 2005Newport Beach, California
Jeriann Price
Investor Relations SpecialistJoined CWS in 2007Newport Beach, California
Jill carlisle
Vice PresidentJoined CWS in 1996Newport Beach, California
mike engels
Partner &Chief Investment OfficerJoined CWS in 1998Austin, Texas
greg miller
Vice President, DevelopmentJoined CWS in 1994Austin, Texas
Daniel ebner
Vice President, InvestmentsJoined CWS in 2004Dallas, Texas
Brad Brakhage
Vice President of ConstructionJoined CWS in 2006Austin, Texas
rich fagan
Director of Due DiligenceJoined CWS in 2001 Dallas, Texas
gina roberts
Region ManagerAustin, TexasJoined CWS in 1997Austin, Texas
cali wood
Region ManagerSan Antonio, HoustonJoined CWS in 2002Austin, Texas
Jack Sipes
Partner & Chief Operating OfficerJoined CWS in 1996Austin, Texas
marcellus mosley
Director of OperationsJoined CWS in 2002Austin, Texas
amber cox
Region Manager, Fort WorthJoined CWS in 1998Fort Worth, Texas
charlotte eaker
Region Manager, North CarolinaJoined CWS in 1998Charlotte, North Carolina
tori hill
Region Manager, Colorado/CaliforniaJoined CWS in 2004Denver, Colorado
Brett mcDaniel
Region Manager, DallasJoined CWS in 2001Dallas, Texas
2006 Annual Report
ethics in america honoree
CWS Capital Partners LLC was selected in 2005 to
receive this award because of its success by excep-
tional commitment to ethical excellence. CWS is
proud to share this distinguished recognition with
the National Honoree Guest Speaker, Coach John R.
Wooden, a man who has long been associated with
outstanding character and leadership. We are espe-
cially proud of all of our employees and we thank
them for continuing to stand by our stated values. In
addition, we thank all of our investors, vendors and
associates for their continued business and support.
additional information
For additional information on CWS and its affiliated
companies, please see the following websites:
cwscapital.com, cwsapartments.com,
cwshousing.com, or cwsbridge.com.
investor information
Limited partners, financial advisors, investment
advisors, or CPAs seeking additional information
about CWS Investments or 1031 Exchange
candidate investments should contact:
Marcus Lam, Investor Relations,
Development Associate, (800) 466-0020, ext. 297
or via email to [email protected].
Clayton Williams & Sherwood Investments is a member of the NASD and SIPC.
Corporate Information
CWS Capital Partners LLC
2006 Annual Repor t
40
winner of ceL’s year 2004
& 2005 real estate award
CWS was honored for the second year in a row with CEL’s
prestigious award for achieving the highest level of cus-
tomer service excellence out of any multi-family operator
managing 30-50 communities. CEL & Associates, Inc.
is the nation’s largest surveyor of resident satisfaction
within the multi-family industry. Go to
www.celassociates.com for more information.
congratulations to cwS’ year 2006
Community Director of the Year, Grace Phelps-Verkler
Community of the Year, Marquis at Bellaire Ranch
Maintenance Director of the Year, Mark Moore
Best Renewal Probability, Marquis at Deerfield
Best Response Rate, Preserve at Ballantyne Commons
Best Leasing Property, Marquis at Iron Rock Ranch
Best Leasing Individual, Jennifer Vasquez
Best Property NOI Growth, Marquis at Iron Rock Ranch
Best Property Delinquency, Marquis at Barton Creek
Best Customer Service
Office Team, Marquis at Stonegate
Property Team, Marquis at Iron Rock Ranch
Maintenance Team, Marquis at Bellaire Ranch
appendix
Sources may be found in the Appendix on the accompany-
ing Supplemental Report Disk included with this report
c w s c a p i ta l.co m
TEL8004660020
CWS Capital Partners LLC800 Newport Center Drive, Suite 400
Newport Beach, CA 92660