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- 1. Astrum Fund I April 2012 Strictly Confidential 1
- 2. This presentation is for informational purposes only, is subject to change, does not constitute investment advice or a recommendation, is not an advertisement, and is not intended for public use or distribution. This presentation does not constitute an offer to sell nor the solicitation of an offer to buy interests (the interests) in Astrum Fund I or Astrum Investment Management. Such offer or solicitation may only be made by means of delivery of a confidential private offering memorandum or other appropriate disclosure which contains a description of the material terms (including, without limitation, risk factors, conflicts of interest, fees and charges, and tax implications) relating to such investment and only in those jurisdictions where permitted by applicable law. An investment in Astrum Fund I is speculative and involves a high degree of risk. An investment in the Astrum Fund I should be considered only by persons who can afford to sustain a loss of their entire investment or to hold their interests indefinitely without the possibility for resale. There is no secondary market for the Interests and none is expected to develop. The fees and expenses charged in connection with this investment may be higher than the fees and expenses of other investment alternatives and may reduce profits, if any. Performance levels will be reduced by management fees and carried interest. Past performance of Astrum Investment Management or any of the separately managed accounts is not a guarantee nor is it indicative of future returns. Astrum Investment Management, Astrum Fund I, nor any of its Principals warrant the accuracy, adequacy or completeness of the information and data contained herein and expressly disclaims liability for errors or omissions in this information and data. No warranty of any kind, implied, expressed or statutory, is given in conjunction with the information and data. Astrum Investment Management, Astrum Fund I, Sanli, Pastore and Hill and its Principals expressly disclaims liability for any loss or damage arising out of the use or misuse of or reliance on the information provided herein, including, without limitation, any loss of profit or any other damage, direct or consequential. Sanli, Pastor and Hill is not associated with nor an investor or Principal in Astrum Investment Management or Astrum Fund I and disclaims any liability thereto. Strictly Confidential 2
- 3. • Produce moderate, absolute rates of return with current cash flow while both minimizing the risk of capital loss and maintaining consistent, non- correlation to the broad market indices • Investing in commercial Sale, Lease-Back, Buy-Back (SLB3SM) opportunities from U.S. middle market companies impacted by limited credit markets • Proprietary deal flow generated through affiliation with Sanli, Pastore, & Hill, Inc. (SP&H) with 20 years experience in valuing corporate entities • Unique investment model – Sale, Lease-Back, Buy-Back (SLB3SM) • Focus on operationally essential real estate • Buy-Back is the key factor for purchasing at opportunistic prices • Designed to deliver high current income and long-term capital appreciation with reduced risk • Existing pipeline of transactions exceeds $300MM Strictly Confidential 3
- 4. • P/E funds and larger banks are providing capital at very low margins, but only to large companies (revenues > $500MM) • Middle market companies (revenues $25MM - $200MM) are of no interest to P/E funds and larger banks due to special expertise required to underwrite Middle market loan issuance fell below $10 billion and has remained low • P/E funds and smaller banks demand high cost of capital to serve this market segment ◦ 18% to 24% rates of return plus warrants from P/E funds and over 15% from banks with very stringent covenants • Market segment has already shaken out; strong companies remain standing after 3 years of recession Nearly $200B in middle market loans matured over the last three years Lack of available capital is forcing companies to monetize assets to create liquidity Strictly Confidential 4
- 5. • Basic real estate fundamentals are showing signs of improvement • Positive net absorption; decreasing vacancy rates • Limited new supply • Rents bottoming with possible increases coming • Rent upside is projected to exceed inflation • Net Operating Income (NOI) gains likely in 2012 • Prices for existing buildings are historically low • Less risk and more potential for increasing value Strictly Confidential 5
- 6. • Astrum Investment Management was founded in 2009 • Affiliation with Sanli, Pastore, & Hill, Inc., a premier valuation and financial consulting firm in the Western U.S. • Key principals, management and advisory board have over 250 years of combined experience in real estate and middle market corporate underwriting ◦ $30B in corporate valuations, investment and underwritings ◦ $10B in real estate financings, developments and investments • Significant network of clients and referral sources among middle market companies to access client owned real property • Unique experience and skill set to underwrite both companies and real estate properties for SLB3 transactions • Principals involved in all aspects of investment process: sourcing, underwriting, due diligence and asset management • Commitment to transparency, reporting and risk management Strictly Confidential 6
- 7. Nevin Sanli | Founder and Managing Director • President and Founder, Sanli Pastore & Hill, Inc. • 25 years of experience in financial consultancy, valuation, investment, and accounting analysis with total transaction and valuation opinions exceeding $30B • Experienced in real estate acquisition support, diligence analysis and research • Member of Board of Directors of Atlantic Legal Foundation; Chairman of Dubnoff Center for Child Development; and, actively involved in associations such as Barrington Group, Vistage International, California Redevelopment Association • BA with Honors in Economics, University of California Irvine, Accredited Senior Appraiser in Business Valuation Discipline • Fluent in English, French, Turkish, and conversational in Spanish John Hartman| Managing Director Twenty years of commercial real estate development, leasing, due diligence, acquisition and dispositions covering all commercial asset classes Fifteen plus years of capital markets, institutional and private fund raising expertise with a particular focus on raising discretionary institutional capital for private equity real estate funds. Ten years of C-level management experience with proven skills and accomplishments in increased operational efficiencies, leadership/team building, business development, sales management, strategy and investment Deep contacts in capital raising with experience managing investor relations, capital allocation, equity/debt placement, compliance, corporate governance and environmental credit and tax credit syndication. A highly accomplished Senior Executive with a successful track record in finance and capital markets (debt and equity) including authoring memorandums and Reg D, offerings, cash flow/forecasting, and analysis, HR systems, tax and creative deal structuring. MBA from California Coast University, Santa Ana, California Strictly Confidential 7
- 8. Glenn Golenberg | Senior Advisor and Shareholder • Over 44 years of investment and merchant banking experience • Served as financial advisor in over 200 transactions including M&As, IPOs, LBOs, venture capital financing, and financial restructurings • Arranged financing in excess of $1B • Recognized as one of the "29 Top Los Angeles Area Investors” • CPA experience with Arthur Andersen & Co. • Managing Director of merchant banks Golenberg & Company, The Bellwether Group, and University Equity Capital • Has held executive and board positions at numerous financial institutions and other private and public companies • Extensive leadership roles in a number of local, national, and international philanthropic organizations • MBA from Wharton Graduate School Larry Kosmont, CRE | Chief Investment Officer and Shareholder • Nationally recognized specialist in public and private real estate transactions • President and CEO of Kosmont Companies and Kosmont Realty Corporation • 36-year career with expertise in creating and managing real estate transactions, structured financing using public and private sources of equity and project implementation with RE transactions exceeding $10B • Assisted hundreds of government agencies and guided over 1,000 private sector projects • Served as City Manager, Community Development Director, and Redevelopment Director for multiple cities • Created the Kosmont-Rose Institute Cost of Doing Business Survey© • State Commissioner California Economic Development and LA City Commissioner Industrial Development Authority • Registered Municipal Advisor with U.S. SEC, Licensed Real Estate Broker in California, • Board member of California Redevelopment Association (CRA) & USC Lusk Center for Real Estate Strictly Confidential 8
- 9. Lawrence Hurwitz | Vice President of Finance and Shareholder • 20 years of working with Mr. Sanli • CEO of Lawrence Financial Group • Over 40 years of experience in financing for real estate and mergers and acquisitions in a wide range of industries with a total transaction volume of over $7B • Established California Capital Summit • Founder and group leader of Provisors Capital Markets Affinity Group • MBA with Distinction, Harvard Business School David Kauffman | Vice President • 20 years of investment management and investor relations experience for high net worth families, foundations and family run companies. • Extensive knowledge of banking, SEC reporting, disclosures, financial markets, and financial instruments. • Co-founder of “One-Less-Putt”, a golf training device company. Accountable for all strategic development from incubation to current phase • FINRA Dispute Resolution Arbitrator - Member of 3 person panels as a securities industry expert to assist in the resolution of monetary and business disputes between investors, securities firms and individual registered representatives • Numerous awards from private REIT’s and private funds for sales and marketing Strictly Confidential 9
- 10. Mark Griffin | Vice President • 15 Years of market development and management experience • Developed deep relationships advising very high net worth individuals and family offices • 8 years experience with complex project management • 6 years portfolio and program management experience • Background in high level consultative and executive level selling, gained through experience and extensive training Strictly Confidential 10
- 11. • Execute Sale, Lease-Back, Buy-Backs (SLB3SM) by purchasing, managing, improving and reselling core and value-add commercial properties to generate consistent, absolute returns with high current cash flow • Target companies ($20MM - $200MM) that are of no interest to P/E funds and larger banks due to required special underwriting expertise • Filter 300 target companies from existing corporate relationships, analyze 60 opportunities and invest in 10 real estate transactions • Purchase properties directly from corporate sellers in Sale, Lease-Back, Buy-Back (SLB3SM) transactions that will create high current income and long-term capital appreciation • Structure long-term (20 year) leasebacks with personal/corporate repurchase guarantees at a predetermined “buyback” price at end of five year hold period • Use moderate leverage • Target investments projected to return over 20% gross per annum SLB3SM enables companies to generate medium term liquidity without corporate leverage Strictly Confidential 11
- 12. I. Acquisitions Astrum purchases buildings direct from the Company via relationships developed over the last 20 years via Sanli, Pastore & Hill, Inc. Deal flow is proprietary and off market. Extensive due diligence is conducted on the Company and on the property. II. Income The property is leased back to the Company for 20 years with reasonable rental increases over the first 5 years. III. Capital Gains The Company has the right to purchase the property back at the end of year 5 at a predetermined purchase price. Strictly Confidential 12
- 13. Target Companies Property Type • Companies with revenues of $25MM to $200MM • Light Industrial • Profitable, stable or growth oriented • Warehouse • SLB3 must fuel growth, cost savings or both • Research & Development • Special Situation Office Transaction Size Property Characteristics • By Equity Investment: $4 million to $6 million • Income producing investment properties • By Total Capitalization: $16 million to $25 million • Operationally essential, owner occupied real estate • 50,000 SF to 150,000 SF (typically) • Single tenant NNN lease Strictly Confidential 13
- 14. • Geographic Location Exclusions • Los Angeles (or within 1 hour flight) • No sites with heavy manufacturing or hazardous • Orange County materials • San Diego • No investments in major renovations or rehab • Silicon Valley situations, raw land or distressed properties with • Sacramento high vacancies and/or cash flow problems Exit Strategy Return Characteristics & Targets • Tenant/user as the right to repurchase the • Going-in cap rate of 10% property(s) at a predetermined price • Long-term fixed asset level financing at 60% • If tenant/user does not execute their repurchase • Income Return: 5% unlevered / 12% levered option, rents increase, the property(s) is sold to 3rd • Total Return: 20% Gross IRR / 2.5x Gross EM party investors Strictly Confidential 14
- 15. • Astrum Investment Management recognizes the importance of transparency and accurate reporting to its investors as such the fund uses • Deutsche Bank as its third party administrator in the U.S. and • Vistra in the Netherlands for foreign investors • Diversification by property type, industry type and geography • Quarterly property inspections (or more often as required) • Quarterly financial statements and balance sheets by tenants • Transparency to risk exposures, leverage, liquidity of underlying investments, and investment processes • Disaster recovery systems and procedures • Varying levels of disclosure available to large or strategic investors at manager’s discretion Strictly Confidential 15
- 16. Objective Execute Sale Lease-Back Buy-Back (SLB3SM) transactions on office, warehouse, light industrial and R&D properties, purchased directly from corporate sellers Suitability Requirements Accredited Investor Fund Size $50,000,000 First Closing $5,000,000 Term 5 Years Manager Fees Management fee of 1.5% per annum on capital committed - Incentive fee allocation equal to 35% with claw back provision Organization & Offering Costs Reimbursement of actual costs incurred -not to exceed 3% of total capital raised Leverage The Fund will use moderate leverage, to the extent it is possible to obtain, up to a maximum of 60% at the property level as a means to increase investor returns Target Return 20% Gross IRR Strictly Confidential 16
- 17. • Broad based relationships with middle market corporate sellers • Proprietary deal flow which provides pool of investment opportunities which are all off- market • Ability to evaluate the component transaction parts of a Sale Lease-Back Buy-Back (property fundamentals & corporate credit) • Seasoned team with experience through multiple market cycles • Proprietary valuation and underwriting model developed over a 20 year period • Leverages significant long-term development of infrastructure, technology and relationships • No legacy Issues Strictly Confidential 17
- 18. 1990 S. Bundy Drive, Suite 800 Los Angeles, CA 90025 (310) 571-3400 www.astruminvest.com Mr. Nevin Sanli Mr. John Hartman nsanli@astruminvest.com jhartman@astruminvest.com Strictly Confidential 18