Commercial Property Investment Company in Bangalore | Strata

Investment Memo

Strata Industrial Opportunity I APRIL 2021 PRIVATE & CONFIDENTIAL

Investment Highlights This is an opportunity to invest in a Grade-A industrial space located in Hosur, Tamil Nadu. The asset spans 2,79,815 sqft. and is leased to a leading mattress & home furnishing brand. The opportunity is valued at Rs. 64.1 Cr. With a lucrative yield, long lease, marquee tenant, and healthy value appreciation, the asset is an ideal long-term investment opportunity.

9.4%

12.1%

Entry Yield

Targeted IRR*

10 yrs

5 yrs

Lease Period

Hosur (40 km from Blr) Major Industrial Hub

Tenant Lock-in

Leading furnishing brand Tenant

* Calculated with a value appreciation of 5% CAGR

PRIVATE & CONFIDENTIAL

2

Industry & Manufacturing In India The Indian industrial & manufacturing sector has seen tremendous growth over the past decade and is fast emerging as a major contender in the global manufacturing ecosystem. With a growing economy, increased investor interest, and government impetus, India stands at the pedestal of rapid industrialization.

$73.3 Billion

3rd Largest

Foreign Investments in FY2020

47.7

Consumer market by 2030

2.57

mn sqft

Times

Projected Industrial & warehousing absorption for 2021

Growth in GDP since 2005

Source: JLL - Invest India - Great places for manufacturing, Make in India, Savills India - Manufacturing & Warehousing PRIVATE & CONFIDENTIAL

3

Key Growth Drivers Fast growing consumer economy Production linked incentive scheme Emerging alternative to China Major infrastructure developments Make in India program Introduction of GST Low taxes for manufacturers Demand from e-commerce Source: JLL - Invest India - Great places for manufacturing, Make in India, Savills India - Manufacturing & Warehousing PRIVATE & CONFIDENTIAL

4

Tamil Nadu - A Manufacturing Powerhouse Long the industrial hub of India, Tamil Nadu is at the forefront of India’s push towards manufacturing. It has become one of the most sought-after investment destinations due to its strategic location, conducive business environment, state-ofthe-art infrastructure, proactive governance and favourable ecosystem.

37,220

41

50%

$30+ Bn

₹ 61,474 Cr

Highest no. of factories

Highest no. of SEZs

Of Garment units in India

Annual Exports

In investments (2020)

Source: JLL - Invest India - Great places for manufacturing, Make in India, Savills India - Manufacturing & Warehousing

PRIVATE & CONFIDENTIAL

5

Recent Developments Incentives announced for manufacturing of Electric vehicles Electronics

₹ 4,684 Cr

₹ 1,423 Cr

₹ 1,100 Cr

₹ 1,250 Cr

₹ 2,430 Cr

₹ 700 Cr

₹ 7,948 Cr

₹ 635 Cr

Aerospace Green energy Textiles

SGST reimbursement for goods made & sold in TN

Source: JLL - Invest India - Great places for manufacturing, Make in India, Savills India - Manufacturing & Warehousing PRIVATE & CONFIDENTIAL

6

LOCATION OVERVIEW

PRIVATE & CONFIDENTIAL

7

Hosur Industrial & Warehousing Market Strategically located between Bengaluru & Chennai, Hosur is a manufacturing hub and home to a wide array of manufacturers from automotives & electronics to consumer durables and packaged food.

1200+ acres Among the largest industrial complexes in India Part of the

Chennai-Bengaluru Industrial Corridor

KEY ADVANTAGES Strategic Location Excellent infrastructure Skilled labour pool Established Hub

Source: JLL, Colliers PRIVATE & CONFIDENTIAL

8

Recent News Snippets Of Hosur Market

Ola commences construction of mega factory on 500-acre site in Tamil Nadu

EV maker Ather Energy choses Hosur over Bengaluru for ₹635-cr plant

Feb 2021

Feb 2021

Tata Group to invest Rs 7,000 crore in building electronics manufacturing unit in Hosur

Delta Electronics eyes Krishnagiri for Rs 4,000 crore electronic plant

Jan 2021

Dec 2020

Embassy Industrial Parks to set up base in Hosur Aug 2020

PRIVATE & CONFIDENTIAL

9

Location Overview The asset is located in the industrial town of Hosur, Tamilnadu and lies next to a state highway. Both Bengaluru and Chennai are easily accessible through National Highway 44. The asset can also be reached via air from Hosur airport (5 Km), Bangalore airport (80 Km), and through rail from Hosur railway station (7 Km).

PRIVATE & CONFIDENTIAL

10

Tenants In The Vicinity Given its strategic location and excellent infrastructure, the Bengaluru-Hosur belt is home to a wide range of manufacturing units, warehouses, & logistics parks.

PRIVATE & CONFIDENTIAL

11

ASSET OVERVIEW

PRIVATE & CONFIDENTIAL

12

Asset Description Avigna Logistics & Industrial Park spans 79 acres, and is being built across two phases. The first phase is nearing completion and comprises of five

AVIGNA PHASE 1

Grade-A units which together measure over 10,67,000 sqft.

Unit B2 spans 2,53,296.09 sqft. of carpet area, 13,194.17 sqft. mezzanine

Warehouse - B1

area and 13,324.5 sqft. of utilities and operations area. It also has 21 loading bays. The structure is a Pre-Engineered Building (PEB) built to meet global manufacturing standards and comes with a 25 years warranty on steel structure and a 30-year warranty on roof stability.

Strata has previously invested in two units in the park under the Strata Avigna Warehousing Opportunities I & II.

Warehouse - B2

Warehouse - B3

Warehouse - B4

Source: Based on representations made by the developer, Avigna PRIVATE & CONFIDENTIAL

13

Site Images

Source: Avigna PRIVATE & CONFIDENTIAL

14

Site Images

Source: Avigna PRIVATE & CONFIDENTIAL

15

Tenant Overview The tenant is an Indian home furnishing startup headquartered in Bengaluru.

The company is popular for its mattresses and has recently branched out into furniture and fittings.

The company is backed by marquee VC’s to the tune of over ₹ 300 Crores.

The tenant is leasing the asset and the adjacent Unit B4 to consolidate & expand its manufacturing capabilities so that it can meet growing demand.

Founded: 2016 Staff: 500+ Annual Revenue: ₹197 Cr. (FY 2020) Valuation: ₹ 1,900 Cr PRIVATE & CONFIDENTIAL

16

TERMS AND FINANCIALS

PRIVATE & CONFIDENTIAL

19

Lease Overview The tenant has signed a lease for 10 years with a 5 year lock-in period and an annual rental escalation of 3%.

Lease Timeline Rent per sqft of BUA

INR 15.84/month

Escalation in rent

3% per annum

Security deposit

INR 1.89 CR

Lock-in Period

5 years

Lease Period

10 years

Property Tax

To be borne by the investors

November 2021 Lease Start Date

February 2027 Tenant Lock-in end date

February 2032 Lease end date

PRIVATE & CONFIDENTIAL

20

Rental Yield The entry yield for this opportunity is 9.4% (including the rental top-up). The rents escalate by 3% YoY.

11%

Rental Yield Rental top up

10.1%

9.4% 1% Rental Top up

Nov 2021

PRIVATE & CONFIDENTIAL

9.2%

Feb 2025

Feb 2028

Feb 2031

21

Investment Breakup

Par ticulars

Amount

Gross Purchase Price

Rs 61,41,69,055

Stamp Duty & Registration

Rs 60,66,704

Lease Stamp Duty

Rs 32,00,000

Acquisition Fee

Rs 1,53,54,226

Legal Fees

Rs 10,00,000

Reserves (refunded on sale)

Rs 12,10,015

Net Purchase Price

Rs 64,10,00,000

PRIVATE & CONFIDENTIAL

Gross Purchase Price/sqft Rs. 2,148

22

Financial Model

Day 0

Investment

Year 1-2

Year 3-4

Year 5-6

Year 7-8

10,79,69,995

Pre-Booking Offer

64,10,000

Interest on Deposit*

20,89,693

Management Fee

11,45,45,368

(8,39,444)

12,15,21,180

12,89,21,820

20,89,693

(8,39,444)

20,89,693

20,89,693

20,89,693

(1,28,20,000)

(1,28,20,000)

(1,28,20,000)

(8,39,444)

(8,39,444)

(8,39,444)

Sale Value** (64,10,00,000) 10,28,10,243

13,67,73,159

60,97,31,522 64,10,000

(1,28,20,000) (1,28,20,000)

Estimated Property Tax

Total (64,10,00,000)

(64,10,00,000)

Rental Income

Cash Flow

Year 9-10

10,29,75,616

10,99,51,429

11,73,52,069

1,04,48,464 (6,41,00,000) (41,97,221)

1,04,41,21,456

1,04,41,21,456

1,16,93,24,863

96,98,08,663

*Assumed at 5.5% p.a. **Calculated with a value appreciation of 5% CAGR

PRIVATE & CONFIDENTIAL

23

Growth Sensitivity We are targeting a 5% annual capital appreciation on the asset, giving a targeted return of 12.1% IRR.

Annual Growth

Targeted IRR

PRIVATE & CONFIDENTIAL

3.0%

4.0%

5.0%

6.0%

7.0%

10.6%

11.3%

12.1%

12.7%

13.3%

24

Investment Thesis

9.4% yield Fast growing hub

Marquee Tenant Excellent Connectivity

Robust infrastructure

12.1% IRR*

10 year lease & 5 year lock-in

* Calculated with a value appreciation of 5% CAGR

PRIVATE & CONFIDENTIAL

25

Terms for Investors

Management Fee

Performance Fee

1%

20%

over hurdle rate of 8% CAGR

Upfront Commitment

Year 1 Rental Top-up*

10%

1%

*Pre-booking offer ends on 11th April 2021

PRIVATE & CONFIDENTIAL

26

ABOUT STRATA

PRIVATE & CONFIDENTIAL

27

Redefining CRE Investments & creating a new asset class Strata is a tech-enabled real estate investment platform that allows investors to own, earn from, and sell fractions of Grade-A commercial properties.

Asset Selection

Fractionalized Buying

0

360

Asset Management

Liquidation

PRIVATE & CONFIDENTIAL

28

CRE vs. Other Asset Classes Stable

Commercial Real Estate

Residential

Lower Returns

Higher Returns Stocks & Mutual Funds

Gold

Volatile PRIVATE & CONFIDENTIAL

29

The Strata Platform Strata is data enabled, fully online platform for fractional investments in Premium Commercial Real Estate.

Data Driven

Liquidity

Convenience

Data driven investment approach

Liquidate your holdings

Invest at a click of a button. Get

with insights on properties,

with multiple exit options

real-time data and 24*7 portfolio access

locations, pricing and building specifications

Transparency

Professional Edge

With 360 due diligence and

Transparent investment

Strata handles the entire life

exhaustive selection criteria we

process, access to detailed

cycle of the property including

mitigate asset related risk

reporting and fair pricing,

asset management and eventual

declared upfront

sale

Risk Management 0

PRIVATE & CONFIDENTIAL

30

Asset Management Services

Asset Purchase

Asset Management

Investor Services

•

Property tour & review

•

Lease negotiation

•

Dedicated Investment Manager

•

Asset due diligence

•

Tenancy management

•

Online Dashboard

• Tenant due diligence

•

Asset upkeep

•

Market updates & Reports

•

•

Half yearly valuation

•

Rent Disbursal

report

•

Resale/Purchase Facilitation

Asset Sale negotiation

•

Tax Center

Asset Registration

•

PRIVATE & CONFIDENTIAL

31

Structure

Escrow agent/ Trustee manages all fund flows

Escrow Agent /Trustee

Investor Securities of SPV issued to investors

SPV *

Manages the SPV and the asset

*Special Purpose Vehicle / Asset Holding Company

PRIVATE & CONFIDENTIAL

Asset

32

33

34

35

36

Snapshot Of Metrics Current investor base

₹ 270 CR

8.27 Lakhs

Assets under

Total sqft

Management

Managed

Business Owners Family Offices

18% 10.6%

20.4%

5.5%

Professionals Tenants In our Portfolio

NRIs

45.5%

CXOs & Senior Executives

PRIVATE & CONFIDENTIAL

37 11

Strata’s Leadership

Sudarshan Lodha

Priyanka Rathore

Nihar Shah

Praveen Nair

Ankit Shah

CEO

Co-Founder

Head of Investments

Acquisitions Lead

Head of Marketing

A successful lawyer, Sudarshan brings over 9 years of leadership experience in real estate & private equity law.

A skilled analyst, Priyanka has over 8 years of experience in real estate financial modelling.

Over 13 years of experience across private equity and wealth management.

12 years of experience in property acquisitions advisory, investment analytics and capital structuring.

Over 15 years of marketing and brand comm experience.

Solicitor General of India

DE Shaw | WeWork India

Piramal Capital | Anand Rathi | HSBC Private Banking

Aditya Birla Capital | JLL | Colliers

OLA | Avail Finance

38

Our Recent Investments E-Zone Investment Opportunity Goregaon (E), Mumbai

Rs. 33.6 Crores

9.6%

Investment Amount

Avg. Rental Yield

120

13.4%

No. Of Investors

ed d n fu y 0% 1 da 0 1 in

Target IRR*

*Calculated at 7% growth rate

Financial District Opportunity Financial District, Hyderabad

Rs. 46.6 Crores

8.9%

Investment Amount

Avg. Rental Yield

152

13.5%

No. Of Investors

d e nd u f ys % a 0 d 10 4 in

Target IRR*

*Calculated at 7% growth rate

PRIVATE & CONFIDENTIAL

39

Our Backers Previously:

Elevation (previously SAIF Partners) is one of Asia’s largest VC firms with investments in over 100 companies and $3 Billion in AUM. SAIF’s portfolio includes PayTM, Swiggy, PropTiger, JustDial, ClearTax, and MakeMyTrip

US based Mayfield is an active investor in early stage startups and has over $2.5 Billion in AUM. The firm’s portfolio includes IndiaProperty, LendingKart, Lyft, matrimony.com, and Amagi.

Propstack is India’s leading source of real estate data and market intelligence. Its clients include the likes of KKR, Blackstone, Goldman Sachs, BNP Paribas, Morgan Stanley, Ascendas etc.

PRIVATE & CONFIDENTIAL

40

Our Partners

Banker & Custodian

Escrow Par tner

Payment Solutions

Market Data & Intelligence

Growth

PRIVATE & CONFIDENTIAL

41

18

Media Coverage “Tech-enabled real estate investment platform Strata has raised Rs 140 crore for investments in its warehouses amid the lockdown. - Times Of India Fractional real estate investment is a new way to invest in commercial realestate. - Financial Express

PRIVATE & CONFIDENTIAL

42

Contact Us

BENGALURU Galaxy Building, 43 Residency Road, Ashok Nagar, Bengaluru - 560025

MUMBAI Parinee Crescenzo, 10th Floor - B Wing Bandra Kurla Complex Mumbai - 400025 Web: /strataprop.com PRIVATE & CONFIDENTIAL

43

Deck Disclaimer

Nothing stated in this memo is meant to be exhaustive and may not contain adequate disclosure of all the risks associated with the opportunity, and should not be construed as investment, business, legal, or tax advice. The content contained herein does not constitute an offer or an invitation to offer in relation to the opportunity, or by Strata to sell securities or an offer to buy or sell any property. Direct and indirect purchase of real property involves significant risk and investments may lose value and are not insured by any Governmental Agency nor are they guaranteed by Strata. The information stated herein is presented only for general informational purposes and no specific securities or services are being promoted or offered. Any historical returns, expected returns, future liquidity, or probability projections may not reflect actual future performance. The cost of acquisition of the asset, administrative costs, legal fees, government charges, assumptions relating to income, etc., provided are approximate values. Such approximations involve known and unknown risks, liabilities, and uncertainties in projected outcomes as well. Investors must seek their own legal or other professional advice. Investors must be able to afford to bear losses on the investment made and have the ability to bear the risk of illiquidity. All information presented herein is proprietary and based on independent research not meant for reliance, circulation, or reproduction by any third party without the express consent of Strata. All images and illustrations are subject to copyright, and all logos are owned by their respective copyright holders.

PRIVATE & CONFIDENTIAL

44