Investor Update December 20, 2018
1647 Sauget Business Blvd., Sauget, IL 62206 Royal Oak Realty Trust (“Royal Oak”) is pleased to announce the completion of our 26th acquisition, and second in Illinois. On December 19, 2018, we purchased the headquarters and sole manufacturing facility of Stellar Manufacturing Company (“Stellar”) of Sauget, IL, in a sale leaseback transaction. Sauget is part of the St. Louis, Missouri Metropolitan Statistical Area (“MSA”), the 21st largest MSA in the United States with approximately 2.8 million residents. Known as the “Gateway City” because of its access to transportation routes in all directions, St. Louis is an important center of commerce and culture for the Mississippi River Basin. The property is adjacent to the St. Louis Downtown Airport and is 5 miles from downtown St. Louis.
600 East Avenue | Suite 200 | Rochester, NY 14607 www.RoyalOakRealtyTrust.com
P: (585) 434-1660 | F: (585) 434-1670
Royal Oak acquired the land and building for $9,700,000. The site contains one building totaling 192,562 square feet on 15 acres. The facility was built in 1999 and was expanded in 2003 to meet Stellar’s growing production needs. Founded in 1990, as a contract manufacturer of pool and spa chemicals, Stellar has expanded its industry focus and offerings to become an integrated partner with clients. Stellar specializes in solid particle chemical processing and provides services to the water treatment, chemical, agrochemical, consumer product, oilfield, polymer, mineral, and pool & spa industries. Stellar provides compaction, granulation, briquetting, blending, tableting, filling, packaging and warehousing services for Fortune 500 and Global 500 companies. Some of its customers include Monsanto, Oxy Chemical Corporation, PPG Industries, The Clorox Company, and Ecolab.
The initial lease term for the property is 15 years, with two five-year options to extend the term. As an absolute net lease, the tenant is responsible for all costs of operating and maintaining the facilities including real property taxes, insurance, maintenance, repair and capital replacement costs. The initial annual base rent for the property is $779,876 ($4.05 psf) with 2.00% rental increases every year throughout the initial lease term and through both renewal option periods. The property has an appraised fair market value of $9,750,000 as of the date of acquisition and was acquired using a combination of Royal Oak cash equity and an advance from our credit facility. Following the close of this acquisition, Royal Oak now has a diversified portfolio of 26 investments located in 13 states totaling approximately 3.2 million square feet and an approximate value of $170 million. The Stellar acquisition adds strong geographic and industry diversification to Royal Oak’s portfolio, while also supporting the Royal Oak business strategy to provide consistent income for our shareholders. In addition to finalizing this transaction, we are pleased with our acquisition opportunities moving forward in 2019, with a strong pipeline of properties both under contract and moving towards closing, and under review and consideration. We continue to seek and secure additional equity to
600 East Avenue | Suite 200 | Rochester, NY 14607 www.RoyalOakRealtyTrust.com
P: (585) 434-1660 | F: (585) 434-1670
support our growth and encourage you to contact Mark Allen (mallen@royaloakrealtytrust.com; 585-471-5821) should you like to add to your position. In addition, please consider introducing us to other prospective investors. Thank you for your support of Royal Oak! Sincerely,
Daniel J. Goldstein, CPA President and Chief Executive Officer Royal Oak Realty Trust
600 East Avenue | Suite 200 | Rochester, NY 14607 www.RoyalOakRealtyTrust.com
P: (585) 434-1660 | F: (585) 434-1670