NOT OPEN TO GENERAL SOLICITATION

The Opportunity

Sage is pleased to present another opportunity to partner with Company of Merchants (“Merchants”). This is the 6th property Sage has acquired alongside Merchants and its 4th industrial portfolio of real estate. This will be Sage’s 3rd scrap metal recycling yard investment located Houston.

• Merchants is acquiring C&D Scrap Metal (“C&D”), and closing is set for mid-November.
• The acquisition of C&D is coupled with 7.5 acres of owner-occupied real estate, and approximately 21,000 sf of office space and 38,000 sf of warehouse space.
• C&D is a fully mature scrap metal recycling yard that processes and treats both ferrous and non-ferrous materials.
• C&D is the scrap business with extensive brand awareness and marketing throughout Houston. Their slogan is “We Pay You In $2 Bills!”
• C&D does not deal in liquids, mitigating some of the environmental risk with the land that is typically associated with these types of transactions. (such as gas stations or dry cleaners)
• C&D will be the primary tenant on the real estate and Merchants, the general partners of C&D, will guaranty the lease.
• Sage will provide the equity, together with Merchants, to purchase the real estate.
• Merchants and its partners will invest 10% of total equity pari passu with Sage LPs.
• Amegy will finance the real estate.

Key Highlights

Strong Cash Flow

• The 5-year average cash-on-cash is modeled at 11.37%
• The first distribution is anticipated to occur immediately after the first full quarter of ownership due to the tenant in-place.
• Sage will have control over the real estate decisions.
• Accelerated depreciation is passed through to LPs and should offset a portion, if not all, of the ordinary income on the first few tax returns. None of these tax benefits are taken into consideration in the returns analyzed.
• This acquisition allows us to increase operational efficiencies and reduce expenses, which drops the bottom line, through vertical Intergration within our existing portfolio.

Great Real Estate & Locations

• The property is located in a great market in Houston.
• The improvements are a great industrial building that us extremely well located, built and maintained for this type of asset.
• The previous owner has taken great care and invested a significant amount of money into the real estate and improvements.
• The rent will be paid from the tenant to the real estate NNN, ensuring consistent rental income cash flow to our investors.
• C&D will be the primary tenant on the real estate and Merchants, the general partners of C&D, will guaranty the lease.

Experienced Managment Team in Place

• This is the 6th industrial property, and 3rd scrap metal recycling yard investment, Sage will acquire alongside Beau Landry, the CEO of Company of Merchants.
• Beau Landry is an LSU and Duke graduate as well as a CPA/MBA with 8 years consulting experience at KPMG, and hands on experience in the industrial space running FBR for the past year.
• Beau has successfully implemented a similar business plan with the previous acquisition of FBR in November 2021. Consolidated revenue for the first year of ownership is approximately $30.9mm with an EBITA of 3.1mm.
• His management had proven to be very successful, and the previous acquisition continues to perform exceptionally well.
• Cash-on-cash distributions since the acquisition of FBR last November equate to approximately 20% net to Sage LPs.

Clear Exit Strategy

• The built-in buyer for the real estate is C&D and/or Merchants.
• There are multiple liquidation and/or exit options to ensure good returns.
• Industrial real estate assets are trading every day at competitive cap rates.
• The various forms of cash-on-cash returns allow management to hold the asset until the best exit time, generating the most benefit for our LPs.

Project Summary

The Asset

Business Plan