COMPANY OVERVIEW | 2 021
WHO WE ARE SARA Investment Real Estate provides commercial real estate investment opportunities to investors within a select network of individual and institutional partners. With offices in Madison and St. Louis, we acquire, develop, and manage high-quality properties throughout the Midwest. Founded in 1997, SARA has established a property portfolio totaling more than 3.3 million square feet across 25 cities, valued at more than $350 million and growing.
Location of Current SARA Investment Real Estate Properties:
1
WISCONSIN
ST. LOUIS
1955 Atwood Avenue, Suite 201 Madison, WI 53704 608.852.8777 info@sarainvest.com
1610 Des Peres Road Suite 207 St. Louis, MO 63131 314.462.0406 info@sarainvest.com
OUR MISSION The mission of SARA is to provide value to our investors, tenants, employees and stakeholders through the development, acquisition and management of quality commercial real estate investments with an uncompromising commitment to the highest standards of service and integrity.
OUR VALUES Integrity, innovation, respect, sustainable partnerships, and hard work are the core values that guide all of what we do and how we do it. Our commitment to lasting relationships with our investors, tenants and vendors is how we realize success year after year. By performing detailed due diligence on the properties in our portfolio, we thoroughly understand each project, enabling us to make the best decisions to maximize the value of each investment property.
WHAT SETS US APART Direct Investment in Real Estate There are multiple avenues to investing in real estate, ranging from publicly-traded Real Estate Investment Trusts (REITs) to individually purchasing a property to manage and rent on your own. At SARA, our approach offers investors an alternative option that gives you the best of both worlds. As with a REIT, our investors benefit from the expertise of a professional real estate company, while avoiding the hassle of day-to-day property management. Unlike a REIT, our investors have the opportunity to be more selective about the specific properties in which they invest.
Key Benefits of Real Estate Investment
•P otential immediate income with an • Low-correlation with other asset attractive total return classes, offering diversification to an overall portfolio • Exposure to different sectors of the economy • The hard asset can become a hedge against inflation
38 Properties
3.3 Million Square Feet
$350 Million Valuation 2
BRINGING PROPERTIES AND INVESTORS TOGETHER SARA’s team of professionals conduct extensive due diligence on all properties under consideration for acquisition. From environmental studies to traffic counts, each property is thoroughly researched and vetted, providing a complete picture of existing conditions and opportunities that could impact project performance. Upon acquisition of each property, a new LLC is formed, in which each investor holds an ownership position. The LLC structure is beneficial because risk is confined to the specific project, mitigating liabilities against an investor’s portfolio. An investment strategy is developed for each real estate opportunity, tailored to the specific attributes, of the property as well as the opportunity we believe to exist within the marketplace. The investment is then modeled to reflect the strategy outlining to investors our core assumptions, projected investor distributions, timing of distributions, anticipated hold period and projected Internal Rate of Return (IRR) upon disposition of the asset.
2020 Property Portfolio Information
INDUSTRIAL 18% OFFICE 47%
FLEX 17%
RETAIL 18%
1 *
3
S ARA Investment Real Estate encourages all investors to evaluate their risk tolerance and create a balanced portfolio accordingly. Percentage calculated by square footage
OUR PROCESS
Find & Evaluate
• Leverage resources and relationships to find the best real estate investment opportunities in the current market environment
• Underwrite & Stress Test
Underwriting & Selection
• Determine optimal acquisition price required to deliver a reasonable risk adjusted return • Analyze tenants and their leases
Due Diligence & Acquisition Decision
Purchase & Raise Equity
• Full asset inspection and analysis • Secure financing • If underwriting, pricing and due diligence are all satisfactory to SARA's parameters, the opportunity is presented to investors and the asset is purchased • Quarterly distributions (ROI payments) are made to investors as outlined in each investment
Manage the Asset
Disposition & Return
• The property is transitioned to Operations for oversight during the hold period • Our team continually evaluates the market conditions for the appropriate disposition time in order to maximize the return to the investors
In a given year, SARA’s Analytics team will analyze hundreds of properties in well-established Midwestern metro areas. We perform thoughtful, thorough due diligence and ONLY if the property meets our rigorous criteria will we move forward with the acquisition. It is this extensive care and effort that allows us to create strong, long-standing relationships with our real estate partners—investors, tenants and vendors alike.
Strategy Overview Properties: We target existing properties that will generate income immediately upon acquisition. Projects: Our conservative modeling targets a 65%–70% leverage ratio on project costs; with an average projected hold period of 5–10 years.
Leases: We seek out mid- to long-term leases with annual rent escalations and staggered expirations among multiple tenants. Tenant financials are underwritten to the fullest extent, resulting in our ability to collect more than 97% of the annual rent due.
4
OUR TRACK RECORD Our income-producing projects are comprised of credit worthy tenants, strong
Disposition
Property Name
Purchased
Sold
lease terms and a focused approach to asset management.
2020
Income Stability • Since 2010, SARA has collected greater
Total Return
Wright Rd
12/20/2010
2/21/2020
13.8%
Mukwonago
2/19/2015
9/30/2020
10.77%
JROM
8/13/2014
8/28/2020
13.99%
Lincoln Center
5/5/2017
6/22/2020
12.50%
Enerprise Drive
9/8/2014
12/14/2020
10.80%
than 97% of rent from its tenants2
2019
Progress Point
5/31/2017
1/16/2019
15.8%
• SARA continues to add value to our
2018
Cherry St
4/15/2008
11/30/2018
NA
Currell Ave
7/2/2015
11/1/2018
11.9%
Tannery Bus. Ctr.
6/15/2016
10/3/2018
7.3%
properties through new leases
Sampling of Current Tenants • Wells Fargo
• Spartech
• Anytime Fitness
• Fresh Tyme
• Nortek
• Caribou Coffee
•D ohmen Life Science Services
• Charter
• Tyco SimplexGrinnell
2017
• Poblocki Signs •G reen Bay Packaging
• WindLogics • Hobby Lobby 1
2
2016
P ast performance and historical returns are not a guarantee of future results. D ata is based on average(s) of SARA–managed properties and does not include lease renewal(s) that Lessor terminated.
2015
2014
Crown Center
6/1/2015
10/3/2018
17.9%
Breezewood Lane
10/12/2012
10/1/2018
10.2%
Bradley Road
1/21/2014
6/29/2018
14.1%
Diehl Rd
6/28/2013
5/17/2018
-55.9%
Franklin St.
10/15/2010
5/1/2018
11.0%
Madison Lake Edge
11/26/2014
3/1/2018
18.5%
Wright Road II
9/13/2013
1/16/2018
14.1%
TT–Syene Road
7/16/2012
3/21/2017
13.8%
Wellington Place
12/31/2012
7/17/2017
4.9%
Midland Ct
8/10/2009
7/20/2017
11.4%
Edina
6/30/2014
8/3/2017
14.0%
MNO Milwaukee
10/12/2012
12/29/2017
10.2%
MNO Oak Creek
10/12/2012
12/29/2017
10.2%
Shawano Prop. Group
8/26/2010
2/26/2016
12.2%
Tannery
10/31/2014
6/15/2016
25.7%
Meridian Drive
8/31/2010
8/26/2016
21.4%
Minnetonka
3/2/2012
11/8/2016
8.7%
Progressive Parkway
9/1/2010
12/29/2016
13.6%
Beloit Avenue
6/26/2013
11/19/2015
29.2%
Ramada Way
11/27/2007
11/18/2015
NA
Miller Park Way
12/15/2011
11/4/2015
11.2%
McKee Road
10/17/2011
6/22/2015
13.0%
Capitol Drive
5/3/2011
4/24/2015
10.2%
Perkins Drive
9/21/2011
4/14/2015
16.2%
Beltine Hwy*
6/15/2010
3/15/2015
17.8%
Ernie Drive
9/12/2008
4/30/2014
9.9%
Junction Road
11/13/2012
8/27/2014
22.1%
Riverwood Dr*
10/16/2013
12/31/2014
18.6%
* Property return calculated as a Annualized Rate of Return. All other returns are shown as IRR.
5
DETAILED DISPOSITION RETAIL PROJECT — SOLD 2015 Contract Sales Price:
$7,900,000
Transaction Cost: Disposition Fee (1.25%) Brokerage (6.0%) Legal Fees Accounting Fees Transfer Register of Deeds (0.03%) Title & Closing Costs
$98,750 $474,00 $7,800 $5,050 $23,700 $125 $609,425
Assets at the Property Property Assets
$0.00
Liabilities at the Property Bank Loan Balance
$5,050,652
Net Proceeds:
$2,239,923
Operating Cash: Checking Rent/CAM Prorations Accounts Payable
$435,164 ($140,586) ($10,813)
Total Operating Cash:
$283,765
Net Proceeds Distribution
Net Proceeds:
Unpaid Development Reimbursables Accrued Investor Return Payments SARA Deferred PMDS Payments Return of Investors Initial Capital
Hold Time: 4.75 Years Total IRR: 17.8%
Cash Distribution
$2,239,923 $0.00 ($72,532) $0.00 $1,600,001 $712,454
Remainder to be Split Cash Distribution
Operating Cash:
Unpaid Development Reimbursables Accrued Investor Return Payments SARA Deferred PMDS Payments Return of Investors Initial Capital
$283,765 $0.00 $0,00 $0.00 $0.00 $283,765
Remainder to be Split
RETAIL PROJECT — SOLD 2015
Investor Group: 75% SARA: 25%
Capital Contribution(s)
Accrued ROIs
Paid ROIs
Net Proceeds
Operating Cash
Total Cash to Investor
$1,600,000.00
$608,789
($681,321)
$534,341
$212,824
$2,274,633
$1.00
$0.00
$0.00
$178,113
$70,941
$249,056
$1,600,001
$608,789
($681,321)
$712,454
$283,765
$2,523,689
6
PROJECT EXAMPLE
RIVER PARK PLAZA
10 River Park Plaza ST PAUL, MN
Tenants • St. Paul Pioneer Press • Comcast •G illette Children’s Hospital •M innesota School Employee Association
•M ahoney Ulbrich Christiansen & Russ P.A. • Child Care Aware of Minnesota •M innesota Management & Budget
• WindLogics
Project Detail • 328,947 SF multi-tenant office building •L ocated on the Mississippi River on the south edge of the south edge of the St. Paul CBD • 88.3% occupancy
Timeline • Acquired in 2016 •R OI paid quarterly beginning first full quarter after acquisition • Projected 5–8 year hold
Investment • $46.9M Total Project Cost • 7% Annual ROI • 12% Projected IRR 7
GEARBOX EXPRESS
PROJECT EXAMPLE
155 West Dewey Drive MUKWONAGO, WI
Tenant • Gearbox Express
Project Detail •8 2,500 SF single-tenant build-to-suit for tenant expansion •C entrally located in Mukwonago’s Gateway Business Park • 100% occupied
Timeline • Construction began March 2015 •R OI paid monthly, beginning first full quarter after completion • Projected 5-year hold
Investment • $9.3M Total Project Cost • 7% Annual ROI • 10.1% Projected IRR
8
PROJECT EXAMPLE
PHOENIX PARKWAY
8000 Phoenix Parkway O’FALLON, MO
Tenant: • Nortek Global HVAC
Project Detail • 69,377 SF Office/Flex •L ocated in O’Fallon’s prominent Winghaven Development • 100% occupancy rate
Timeline • Acquired July 2015 •R OI paid monthly beginning first full month after acquisition • Projected 8 year hold
Investment • $8.92M Total Project Cost • 8.0% Annual ROI • 10.8% Projected IRR
9
PENN AMERICAN
PROJECT EXAMPLE
2100 W. 80th ½ Street BLOOMINGTON, MN
Tenants • Fresh Thyme Farmers’ Market • Red Robin International, Inc. • AT&T
Project Detail •5 8,531 SF grocery anchored retail center •L ocated 10 miles south of the Minneapolis Central Business District •9 7% occupied
Timeline • Acquired in July 2018 • ROI paid quarterly beginning first full quarter after acquisition • Projected 8 year hold
Investment • $20.1M Total Project Cost • 7% Annual ROI • 10.1% Projected IRR 10
EXECUTIVE LEADERSHIP TEAM
ERIC SCHWARTZ
Chairman & CEO Eric brings a holistic, dedicated approach to maintaining a diverse portfolio of commercial real estate properties, in addition to personally nurturing relationships with SARA Investment Real Estate’s partners. It is this innovation and a dedication to integrity that guides practical and wise investment and development opportunities. His experience and skill has led to the completion of new office, retail and industrial centers in Madison and throughout the Midwest. Guided by his entrepreneurial spirit, Eric Schwartz has comfortably positioned SARA with select contractors, architects and real estate professionals— a trusted, innovative team that provides the best solutions to fit each investor’s goals.
JOHN VAN NOTE
General Counsel and Vice President of Strategy John brings proven experience in real estate, business and contract law. His depth and breadth of understanding has been key to effectively navigating projects from acquisition to disposition. Since 2009, John has been listed in Best Lawyers in America under the specialty of real estate law, and was listed in Wisconsin Super Lawyers as a “Wisconsin Rising Star” among top Wisconsin lawyers in 2006 and 2007. After graduating from Drake University Law School, John became a partner at the law firm Mohs, MacDonald, Widder, Paradise & Van Note, LLC.
CHRISTINA PODOLL BALLWEG
Executive Vice President Christina provides strategic leadership for the company, and assists in establishing long-range goals, strategies, plans and policies for SARA. She oversees and facilitates the interdepartmental operations that drive SARA’s real estate acquisitions, developments, and corporate business initiatives. Christina provides guidance to the teams responsible for the oversight and performance of SARA’s investment properties and takes an active role leading the investor relations team, developing, maintaining, and enhancing relationships with SARA’s select pool of investors and members of the investment community. Prior to joining SARA in March of 2012, Christina worked for a woman-owned, boutique investment firm where she marketed the firm’s proprietary investment strategies to the institutional marketplace.
CHRISTINE LANDES
Vice President of Finance Christine Landes is Vice President of Finance, overseeing the property accounting, corporate accounting and treasury functions. Christine and her accounting team manage accounting functions and processes to ensure accurate financial reporting and provide extensive analysis of budgets and financial reports of the portfolio. Christine joined SARA Investment Real Estate in 2016. She is a Certified Public Accountant with a Bachelors’ degree in Accounting and Management from Upper Iowa University.
11
1955 Atwood Avenue, Madison, WI 53704 | p 608.852.8777 | f 608.237.7695 | www.sarainvest.com
The information presented in this brochure is for marketing purposes only. The opinions expressed within are those of SARA Investment Real Estate LLC, and are subject to change. This material does not constitute investment, tax and/or legal advice and is not intended as an endorsement of any specific investment. It should not serve as the basis or rationale for any actions or inactions contemplated by the recipient. Each prospective investor should consult his or her own personal financial advisor regarding any financial, tax or legal matter prior to purchasing any interest in a project. No representations, warranties or assurances of any kind are intended or should be inferred with respect to the economic return or potential tax advantages which may accrue to any investor. No assurance can be given that existing tax laws will not be changed or interpreted adversely, either of which may deny prospective investors all or a portion of any benefits from any investment with SARA Investment Real Estate LLC. The information contained in this brochure and/or marketing packet is based on current information in the possession of SARA Investment Real Estate LLC as of the date hereof and is subject to change without notice, and the delivery of this brochure shall not create any implication that the information contained herein is correct as of any time subsequent to the date hereof. Past performance and historical returns are not a guarantee of future results.