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Sage oak lc_business_plan_10.3
1. SAGE OAK ASSISTED LIVING &
MEMORY CARE OF LAKE CHARLES
BUSINESS PLAN – PHASE 2
BROUGHT TO YOU BY
Revised 10/3/18
2. CONFIDENTIAL MEMORANDUM & DISCLAIMER
This executive summary contains privileged and confidential information and unauthorized use of this information in any manner is strictly
prohibited. If you are not the intended recipient, please notify the sender immediately. This executive summary is for informational
purposes and not intended to be a general solicitation or a securities offering of any kind. Prior to making any decision to contribute
capital, all investors must review and execute all private offering documents.
Potential investors and other readers are cautioned that these forward-looking statements are predictions only based on current
information, assumptions and expectations that are inherently subject to risks and uncertainties that could cause future events or results to
differ materially from those set forth or implied by such forward looking statements. These forward-looking statements can be identified
by the use of forward-looking terminology, such as “may,” “will,” “seek,” “should’, “expect,”, “anticipate,” “project’, “estimate”, “intend”,
“continue”, or “believe” or the negatives thereof or other variations thereon or comparable terminology. These forward-looking
statements are only made as of the date of this executive summary and Sponsors undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
The information contained herein is from sources believed to be reliable, however no representation by Sage Oak Assisted Living, Loe
Hornbuckle, Charlton Holmes, US Real Estate Partners, Victor Menasce, New Orleans Equity Partners, Pam Abide, Sharon Foreman, The
Real Asset Investor and Dave Zook (“Sponsors”), either expressed or implied, is made as to the accuracy of any information on this
property and all investors should conduct their own research to determine the accuracy of any statements made. An investment in this
project will be a speculative investment and subject to significant risks and therefore investors are encouraged to consult with their
personal legal and tax advisors. Neither the Sponsors, nor their representatives, officers, employees, affiliates, sub-contractor or vendors
provide tax, legal or investment advice. Nothing in this document is intended to be or should be construed as such advice.
2
4. Sage Oak Assisted Living and Memory Care of Lake Charles presents an opportunity to invest in a new ground up development
of a planned care home community in Lake Charles, LA. The first phase of construction will consist of five 16 bed residential
care homes located on one central campus. 80 beds total, with 48 beds being allocated to boutique assisted living and 32
beds allocated to boutique memory care. The site does allow for up to three additional 16 bed homes and after the first phase,
the Sponsors will review the market conditions and determine the best strategy to build the additional 48 beds. The site plan
and project have been approved by Lake Charles Metropolitan Planning Commission and Lake Charles City Council.
Sage Oak Assisted Living and Memory Care of Lake Charles is seeking to raise $12,400,000 in total, with $4,700,000 in
equity from our funding partners to be combined with $7,700,000 in debt (construction to permanent loan) to complete site
infrastructure work, complete construction, and to stabilize the business operations.
Operations will be handled by Loe Hornbuckle and his team through an affiliated company and funding partners will
participate in income derived from owning the real estate and also owning the assisted living/memory care business.
Sponsors will seek to do a cash out refinance in approximately four to five years after commencement of construction, which
combined with positive cash flows (after stabilization) may result in funding partners receiving a return of their capital plus 25%
upon completion of such refinancing. With an anticipated sale of the project around the ten-year mark, funding partners
should see a total return of 138% which produces an Internal Rate of Return (IRR) of 16.4%.
EXECUTIVE SUMMARY
4
6. THE INDUSTRY
Senior housing exists as its own class of housing because as adults age, their wants and needs often change as well. Some types of
senior housing are strictly focused on socialization, others are primarily focused on safety, and many focus on both socialization and
safety.
The primary driving factor for choosing what type of environment that is right for a specific individual is often driven by how well that
person can take care of their own Activities of Daily Living (ADL’s)
According to PayingforSeniorCare.com in a article from May of 2018, “The Activities of Daily Living are a series of basic activities
performed by individuals on a daily basis necessary for independent living at home or in the community. There are many variations on
the definition of the activities of daily living, but most organizations agree there are 5 basic categories:
Personal Hygiene
•Bathing/showering, grooming, nail care, and oral care
Dressing
•The ability to make appropriate clothing decisions and physically dress/undress oneself
Eating
•The ability to feed oneself, though not necessarily the capability to prepare food
Maintaining continence
•Both the mental and physical capacity to use a restroom, including the ability to get on and off the toilet and cleaning oneself
Transferring/Mobility
•Moving oneself from seated to standing, getting in and out of bed, and the ability to walk independently from one location to another”
6
7. Residential Care Home (RCH)
“Tucked into regular neighborhoods, residential care homes provide non-medical custodial
care for elderly adults. Typically in a single family residence, residential care homes usually
serve between two and ten patients, depending on specific state laws. “They offer a home-
like setting for people who need assisted living but might be intimidated by larger
communities,” says Charlotte S., A Place for Mom’s former West Coast regional manager.
THE INDUSTRY - TERMINOLOGY
Independent Living (IL)
“independent living is ideal for individuals who can still live independently but enjoy having
access to assistance when needed. Independent living communities provide their residents
with convenient access to dining, medical care, entertainment and more. The independent
living lifestyle offers residents a safe living environment, but with minimal assistance.
Hospitality services, such as housekeeping, meals, and laundry may or may not be included in
the monthly rental, but are typically available.” UMH.org
Assisted Living (AL)
“Assisted living communities are for those seniors who want an independent lifestyle but who
may need assistance for their individual needs. In these communities, you should feel like your
independent and have the peace of mind knowing that your specific daily needs are met.
These needs include daily meals, dressing, bathing, help with medication, transportation and
personal mobility. Most assisted living communities also provide (at extra cost) housekeeping,
access to health services, Alzheimer’s care, staff available for personal needs, 24-hour
security, an emergency call system, exercise programs, medication management, personal
laundry service, and social and recreational activities.” Seniorliving.org
Skilled Nursing (SNF)
“Nursing homes, now more commonly known as skilled nursing facilities (SNFs), serve as
licensed healthcare residences for individuals who require a higher level of medical care
than can be provided in an assisted living facility. Skilled nursing staff consisting of RNs,
LPNs, and certified nurses’ aides (CNAs) are available to provide 24-hour medical attention.
Skilled nursing facilities are commonly used for short-term rehabilitative stays. Extending
stays into longer-term care must be medically necessary for the treatment of a serious
medical condition” Seniorcaring.org
In Home Care
“Home care is having a trained home health aide come into a senior’s home (whether it be a
nursing home, assisted living, or private residence) to help them with activities of daily living
for a few hours a day all the way up to 24/7 care. It is one on one care so that at any point
if a senior needs assistance they have someone to provide them help with their activities of
daily living so they can live longer and as independent as possibly in their home.”
Myhomecare.com
Memory Care (MC)
“Memory care is a special kind of care provided to those with varying degrees of dementia
or Alzheimer’s. It involves creating a structured environment that has set schedules and
routines in place to create a stress-free lifestyle, safety features to ensure the health of a
senior, and programs designed to cultivate cognitive skills. “ brookdale.com
There are numerous options for older adults who need assistance with their ADLs, below is some information to help compare and
contrast the various options and clear up any potential confusion about the different types of industry terminology
7
9. 3 KEY INDUSTRY TRENDS
Over the last decade, the trend towards small environments (16 residents and under) has increased. Smaller
environments offer better outcomes than larger facilities, especially for those residents who have memory loss,
are a high fall risk, or just need little extra attention.
“Operators are considering converting semi-private rooms to private rooms, reinvesting to make units more
homelike rather than institutional”
Lois A. Bowers, Senior Editor Mcknight Senior Living.
TRENDING SMALL
Three industry trends that are relevant to this project:
1
9
10. 3 KEY INDUSTRY TRENDS
People that only read national news about senior housing are often asking if senior housing is being overbuilt. We are of the opinion is that although that is the
case in certain markets, the general answer is no. One of the reasons Sage Oak is going after a market like Lake Charles is that secondary and tertiary
markets are often overlooked by the bigger players, even though our market research confirms that Lake Charles occupancy rates are 7-8% higher than the
national average. Therefore, even if senior housing is being overbuilt on a national level, it may not have an impact on markets that are underserved.
Further, If you read any article about senior housing being overbuilt, Dallas is nearly always listed as one of those cities. So why are our care homes constantly
between 95-100% occupancy? The answer is because they solve a real problem in the market place by providing better care, better food and better
communication. When you have a unique selling proposition and you aren’t a commodity like the other options, high occupancy rates may likely follow.
And the experts agree. At the latest Bisnow’s Dallas Senior Living event, Prevarian Senior Living Managing Principal Allen Brown stated that though the market
appears overbuilt, a granular analysis will turn up plenty of viable opportunities for senior housing developments. Silverstone Healthcare Company President
Tom Dwyer said the demographics all point to great potential in the industry, and developers should focus on spending the extra time and resources necessary
to break into high-barrier-to-entry markets like Central Dallas and the Highland Park area.
The trend in senior housing is still for-profit luxury product. NorthMarq Capital Vice President of Capital Markets Ruth Davis said she sees a continuation of the
trend of developers looking to finance for-profit senior housing product. In terms of the type of for-profit product, Capitol Seniors Housing founder Scott Stewart
said it is all about active adult housing. “We see a real volume demographic and strong demand where folks who traditionally just want to stay at home, they
now want to move out; they want to be with like-minded folks … and they’re looking for a third act. They’re not ready to mail it in. They’re not ready to retire.”
Jeremiah Jensen from Bisnow.com: "There is a lot of room in this business for a tremendous amount of growth.”
In conclusion, this may be a great time to be building assisted living and memory care, especially in a market like Lake Charles.
Three industry trends that are relevant to this project:
THE MYTH OF MARKET SATURATION2
10
11. 3 KEY INDUSTRY TRENDS
Three industry trends that are relevant to this project:
From McKnights Long Term Care News by Erin Shvetzoff Hennessey (1/8/18):
“Adapting to the rapidly growing senior population is the first challenge to look for in 2018 and byond. The U.S. senior population continues to rise and
new products and companies are entering the senior living market to meet this need. The U.S. Census Bureau projects that by 2020, there will be a senior
population of 56 million and by 2030, that number will balloon to 74 million seniors.
In the face of this dramatic increase, existing campuses and facilities will need to adapt their services and pricing to remain competitive. Senior living
operators will also need to be mindful of two parallel trends affecting the populations entering their facilities: At the same time younger seniors are
entering communities, the average resident has become older and frailer than before. Senior living operators will have to care for more complex residents
while simultaneously remaining attractive to young, technologically savvy seniors.
To better accommodate the influx of older, frailer residents, providers will need to move toward the medicalization of senior living. The average age of an
assisted living resident has risen to 87 years, according to the Assisted Living Federation of America. Older residents bring unique health challenges such
as chronic conditions and increased risks for falls and other issues. To adapt internally, facilities should simplify their pricing structures and ensure residents
can access resources to age in place. Senior living operators should also build strong partnerships with external partners ranging from primary care
providers to home health and hospice services, to provide wellness and therapy programs on site.
While senior living demand is growing dramatically, skilled nursing facilities are feeling the squeeze of shorter stays and declining occupancies. Nursing
home occupancies continue to decrease as payment changes and new options have encouraged many individuals to skip the nursing home entirely and use
alternative services, such as home health. Today's primary user of SNFs is vulnerable and frail. From 2012 to 2017, nursing home occupancies fell from
nearly 86% to less than 82%, according to the National Investment Center for Senior Housing & Care. The financial pressures from value-based and risk-
based payment models have also led to reduced lengths of stay at SNFs.”
SKILLED NURSING IS STRUGGLING3
11
12. 3 KEY INDUSTRY TRENDS
Three industry trends that are relevant to this project:
SKILLED NURSING IS STRUGGLING (CONTINUED)
12
Additionally, A Place for Mom states: “We’ve been seeing it for some time — a move away from the concept of senior housing as synonymous
with nursing homes, and a move toward other senior housing options, whether it’s independent living, home care or memory care. It’s not a trend that’s
likely to change anytime soon. According to Senior Housing News, factors such as the high cost of skilled nursing and recent cuts to Medicare and
Medicaid programs will only accelerate the shift.”
Why this matters is that smaller environments with better staff to resident ratios (better ratios means you can handle more complex medical conditions)
are positioned to pickup market share. Assisted Living has been taking market share from skilled nursing for a while now and residential care homes
are poised to take market share from both skilled nursing facilities and from traditional big box assisted living facilities.
Finally, Lake Charles, LA in particular is very skilled nursing centric. While touring many assisted living and memory care facilities, we learned that
some assisted living and memory care facilities are referring residents to skilled nursing because they felt they could no longer care for the residents.
These types of residents can be the types of residents that residential care homes are designed for. Perhaps these residents don’t have a complex
medical condition that is usually associated with skilled nursing, but instead need a “little extra love” and personal attention. Our boutique model is
uniquely positioned to capitalize on this national trend that seems evident in Lake Charles.
33
14. LAKE CHARLES, LOUISIANA
From Site Selection Magazine, March 2018:
Experts who track the long-term economic growth of Southwest Louisiana are running out of superlatives to describe the record-setting
pace of Lake Charles and the surrounding region.
When noted economist Dr. Loren C. Scott prepared his annual Louisiana Economic Outlook and presented it in October 2017, he wrote
this about the region that encompasses Allen, Beauregard, Calcasieu, Cameron and Jefferson Davis parishes:
“Performance of the Lake Charles economy over the past four years reminds the author of that great race in the 1973 Belmont Stakes
won by Secretariat by 31 lengths. Like Secretariat, Lake Charles is far out in front of all the other MSAs in the state and is one of — if
not the — fastest-growing MSAs in the nation.”
It’s fitting that Scott compared Southwest Louisiana to Secretariat, because the economic performance numbers of this region of
300,000 people are staggering and unprecedented.
According to Scott, the region has been the fastest-growing metro area in the state for four consecutive years, adding 20,500 jobs and
expanding by a remarkable 5.1 percent a year. “In 40 years of monitoring the Louisiana economy, we have never seen back-to-back
job performances like that in any MSA in the state,” Scott wrote in his report.
The primary source of this growth is $43.3 billion in industrial plant projects and other facilities that are under construction, along with
another $65.4 billion in projects that are in various stages of approval. Altogether, by 2022, Southwest Louisiana could see a grand
total of $108.7 billion in construction completed and open for business.
“I keep up with about nine other states in the Southeast,” says Scott. “The announcements in the Lake Charles area are probably 25
times larger than any of these other states.”
14
15. LAKE CHARLES – JOB OUTLOOK
From the July/August 2018 issue of Business Facilities Magazine:
SWLA: GLOBAL GROWTH SURGE
In the spring of 2017, Lotte Chemical USA announced a project that is proof the five-parish area of Southwest Louisiana not only is growing in population and
economic vitality, but garnering the interest of firms that want to do more than build production facilities in the area: the company announced it would
establish its headquarters in Lake Charles (relocating from Houston). This decision bolsters the company’s footprint in Southwest Louisiana, after it announced
the construction of a $1.1 billion monoethylene glycol—or MEG—plant at the junction of I-10 and I-210. Lotte had already closed an investment deal with
Westlake Chemical for the construction of a $1.9-billion ethane cracker complex on the same 250 acres the MEG and headquarters office will be located. In
total, Lotte is involved in more than $3 billion in projects in Southwest Louisiana.
SWLA has more than $120 billion in announced projects. Production and packaging of liquid natural gas is the catalyst for the historic growth.
Growth is encouraging local and state leaders to entice new workers to the region, which in investing in quality of life projects, recruiting retail operators, and
servicing the construction of an estimated 11,000 homes.
George Swift, President and CEO of the Southwest Louisiana Economic Development Alliance, has overseen a constant effort to identify key assets in the five-
parish region (Allen, Beauregard, Calcasieu, Cameron, and Jeff Davis parishes), and marketing them to the world.
“The southwest side of Louisiana is in a strategic location with access to ports, airports, rail, the Intercoastal Canal, and America’s premier pipeline that
delivers industrial products across the country,” he said.
“Working with our partners in the governor’s office and Louisiana Economic Development, we’ve been able to get the attention of some of the world’s best
companies. They not only liked what they saw, they decided to build their company footprints in southwest Louisiana.”
Source: https://businessfacilities.com/2018/09/making-a-splash-in-south-louisiana/
15
16. LAKE CHARLES, LOUISIANA
Economic Outlook - Resources
https://siteselection.com/issues/2018/mar/southwest-louisiana-out-in-front-and-not-
looking-back.cfm
http://www.americanpress.com/news/local/growth-rate-for-lake-charles-economy-
led-nation-in/article_39d65d3c-9faa-11e7-9fd3-13ca9f90537d.html
https://livability.com/la/lake-charles/business/southwest-louisiana-booming-with-
new-home-construction
16
18. PROJECT OVERVIEW
Sage Oak Holdings of Louisiana, LLC is under contract to purchase approximately 6 acres of land at the northwest corner of Ham Reid Road and Weaver
Road in Lake Charles, Louisiana. The project will be named “Sage Oak Assisted Living and Memory Care of Lake Charles”. Loe Hornbuckle, the founder
and operating partner of Sage Oak, is one of the five principle members of the land acquisition team (Southlake Medical, LLC). Mr. Hornbuckle helped
guide the land through the entitlement process and has been working with design/architect team of Greenleaf and Lawson of Mandeville, LA and other
various engineers to prepare the land for construction. We anticipate commencing site work and infrastructure construction in November 2018. At present,
we expect to award the construction contract to Donahue Favret of New Orleans, LA. Donahue Favret is also the general contractor for an adjacent
apartment development named Southlake Village, which creates efficiencies both in terms of costs and overall familiarity with the site.
When thinking of assisted living, one may picture a nursing home or perhaps a large, institutional-type assisted living facility. Sage Oak is different from
this – we are a boutique senior housing company. The product being built is a “planned care home community”. This type of community is laid out like a
residential neighborhood, but instead of single family homes, these homes are purpose-built boutique assisted living and memory care homes. Each home
will have a maximum of 16 residents per home and will be independently-licensed through the Louisiana Department of Health.
PHASE 1
PHASE 1 consisted of guiding the land through the entitlement process, which has been completed.
PHASE 2
PHASE 2 will include the construction of 6 buildings: 3 homes licensed for assisted living, 2 homes licensed for memory care and a standalone sales and
administration building. The 5 homes will accommodate a total of 80 residents - 5 homes with 16 residents per home - and will be categorized by the
Louisiana Department of Health as a Class 2 Assisted Living. The sales/admin building will house the on-site management team which will include the
Executive Director, Resident Care Coordinator (nurse), Sales & Marketing, Director of Resident Engagement and Maintenance Director.
PHASE 3 OPTION
The site will allow for expansion as there is sufficient space to add up to 3 additional homes. If that occurs, the total bed count will increase from 80 to 128
beds. At present, we are basing our financial projections solely on 80 beds. It’s worth noting that if the additional homes are constructed, it would create
efficiencies in the project and increase the projected net operating income projected for PHASE 2.
THIS INVESTMENT OPPORTUNITY IS FOR PHASE 2 ONLY WITH AN OPTION TO PARTICIPATE IN PHASE 3.
18
19. PROJECT LOCATION – LAKE CHARLES, LA
• 6 acres located in southwest Lake Charles at the corner of Ham Reid
Road and Weaver Road.
• This area is familiar to the Sponsors as they are currently
developing the adjacent plot for multi-family and a medical office
building.
Feasibility study commissioned for this project
by MDS Research confirmed in May of 2018
that Lake Charles is both in need of new
assisted living and memory care beds and
that the need in the future will also be
strong. The Lake Charles market has an
average occupancy of 96% for assisted living
and 95% for memory care according to MDS
Research, which is considerably better than
the national average for each.
Lake Charles
19
20. UNIQUE SELLING PROPOSITION
The world is changing. Some say it’s changing faster than ever before. On the other hand, the senior housing industry seems to change
slowly; innovation is often nothing more than a buzzword, corporate jargon, practically meaningless. There are multiple reasons why
smaller, more intimate, home-like environments lead to better resident outcomes, but the problem with small environments is that they are
difficult to scale.
The ultimate small environment is a residential care home but they are difficult to manage, difficult to finance and it’s extremely
challenging to hit “critical mass” when building only 8 to 12 beds at a time. Most companies in the residential care home business stay
small and never scale for that reason. On the other hand, most traditional senior housing companies plod ahead and build the same old,
tired designs that everyone else is doing, most likely on the false premise that if their gym is a little nicer than the competition or their
chandelier a little fancier, that they will have “cracked the code”. The truth is this: prospective residents may not care about the gym or
the chandelier, they may simply want great care, great food and great communication.
Sage Oak agrees that great care, great food and great communication may be key elements for success, so we set out to create a
different model. A planned care home community is an elegant combination of the home-like, intimate feel of a residential care home
and because there are multiple houses on one campus with common management, the problem of scaling may be solved.
20
21. This investment opportunity is for PHASE 2 ONLY and consists of the initial five new-construction 16-bed boutique assisted living and memory
care homes, totaling 80 beds. The funding partners will have partial ownership in the parent LLC which will own the companies that own the
real estate, business and all related personal property.
In exchange for an aggregate of $4,700,000 in equity, funding partners will receive an aggregate 67% of the long term equity in the project.
In addition, until the funding partners receive distributions totaling the amount of their initial capital plus 25%, the funding partners will receive
80% of the cashflow distributions from distributable cash.
It is expected that any proceeds from a cash out refinance will flow 100% to the funding partners on a pro rata basis until their capital is
returned plus 25% and any proceeds beyond that will be split between funding partners and sponsors with 67% going to funding partners on a
pro rata basis and 33% going to sponsors on a pro rata basis. All subsequent distributions regardless of type (cash flow or proceeds from
asset sale) will continue to be split 67/33.
PHASE 2 INVESTMENT OPPORTUNITY
21
PHASE THREE
PHASE TWO
PHASE 2
(Per funding partner)
Minimum Investment: $100,000
Maximum Investment: $1,400,000
FUNDS DUE OCTOBER 22, 2018
22. INVESTMENT STRUCTURE
22
USE OF FUNDS*
Construction Budget $10,480,000.00
Operating Loss Reserves $1,150,000.00
Construction Management Fee** $122,500.00
Developer Fee** $250,000.00
Furniture & Equipment $272,500.00
Closing Costs $125,000.00
TOTAL $12,400,000.00
**Sponsor Compensation
DEBT TERMS*
ESTIMATED LOAN AMOUNT $7,700,000
• 75% Expected Loan to Cost/Value
• 25 Year Amortization
• 2.5 Years of Interest Only, Floating at WSJ Prime
• 4.5 Years Fixed at 5.75%
These terms made available by unlimited personal
guaranty and maintaining minimum liquidity requirements
by sponsors, Loe Hornbuckle and Charlton Holmes.
CAPITAL STACK
Class B Members (Sponsors)* $450,000.00
Class A Members (Funding Partners)* $4,250,000.00
Estimated Loan $7,700,000.00
TOTAL PROJECT $12,400,000.00
*aggregate
*amounts are approximate *amounts are approximate
23. LEGAL STRUCTURE
23
100%
$$$
Triple Net Lease
Funding
Partners
Operations
BUSINESS
HOLDING
COMPANY
REAL ESTATE
HOLDING
COMPANY
67% 33%
PARENT
COMPANY
WYOMING LLC*
Louisiana LLC* Louisiana LLC*
SPONSOR LLC*
MANAGEMENT LLC*
(Loe Hornbuckle)
Management Company is the manager
of all LLCs (no ownership) and collects
all the up-front and operating fees.
*entities to be formed
24. 10 YEAR PRO FORMA
24
CASH OUT REFINANCE ASSET DISPOSITION
INTERNAL RATE OF RETURN (IRR): 16.47%
TOTAL RETURN: 238%
TOTAL PROFIT: 138%
MONTHS 1-12 13-24 25-36 37-48 49-60 61-72 73-84 85-96 97-108 109-120
Revenue Construction See IOD $5,136,187 $5,280,000 $5,427,840 $5,579,819 $5,736,054 $5,896,664 $6,061,770 $6,231,500
Net Expenses Construction See IOD $4,007,928 $4,120,150 $4,235,514 $4,354,109 $4,476,024 $4,601,352 $4,730,190 $4,862,636
Net Income (EBITDA) Construction See IOD $1,128,259 $1,159,850 $1,192,326 $1,225,711 $1,260,031 $1,295,312 $1,331,580 $1,368,864
Debt Service Construction See IOD $578,522 $578,522 $891,255 $891,255 $891,255 $891,255 $891,255 $891,255
Cash Flow Construction See IOD $549,736 $581,328 $301,071 $334,456 $368,776 $404,057 $440,326 $477,610
DCR 1.95 2.00 1.34 1.38 1.41 1.45 1.49 1.54
Market Valuation $12,000,000 $12,000,000 $15,043,448 $15,464,665 $15,897,675 $16,342,810 $16,800,409 $17,270,820 $17,754,403 $18,251,527
Sale/Refinance $4,370,000 $5,629,370
Investor Distributions $300,000 $300,000 $439,789 $4,835,062 $201,718 $224,086 $247,080 $270,718 $295,018 $4,091,676
Cash on Cash Return 6.38% 6.38% 9.36% 102.87% 4.29% 4.77% 5.26% 5.76% 6.28% 87.06%
25. STABILIZED PRO FORMA
YEAR 3
**Asset management fee – 0.5% of gross revenue
**Operations/Property Management fee- 5% of gross revenue, can be
performed by a 3rd party currently tasked to Loe Hornbuckle through an
affiliated company.
25
REVENUE
House 1 $855,813.33
House 2 - Luxury AL $1,025,306.67
House 3 - Luxury AL $1,025,306.67
House 4 - Memory Care $1,114,880.00
House 5 - Memory Care $1,114,880.00
Gross Revenue $5,136,186.67
OPERATING EXPENSES
Corporate (Shared) Payroll $425,000.00
Direct Care Staff Payroll $1,832,592.00
Staff Benefits $180,000.00
Food / Supplies $261,000.00
Regulatory Compliance $30,000.00
Utilities $156,000.00
Insurance $162,540.00
Property Taxes $78,000.00
Payroll Taxes $184,705.79
Transportation $60,000.00
Operations/Property Management Fee** $256,809.33
Asset Management Fee** $25,680.93
Professional Services $60,000.00
Marketing $105,000.00
Maintenance $146,800.00
Miscellaneous $31,800.00
Memory Care Training $12,000.00
Net Expenses $4,007,928.05
Net Income (EBITDA) $1,128,258.61
Debt Service $578,522.23
Cash Flow $549,736.38
Debt Coverage Ratio (DCR) 1.95
Nov. 2018
Construction begins
Nov. 2019
Construction complete
Mar. 2020
LA Dept of Health grants license.
First residents move in.
Sep. 2020
Positive cash flow achieved
May 2021
Stabilization
26. FINANCIAL OVERVIEW Land Acquisition $ 1,800,000.00
Land Development Costs $ 750,000.00
Construction Hard Costs $ 5,750,000.00
Permits $ 15,000.00
Architect $ 200,000.00
Inspection Fees $ 17,500.00
Project Management $ 125,000.00
Interest Reserves $ 400,000.00
Contingency $ 425,000.00
Parking $ 200,000.00
Insurance $ 50,000.00
Property Taxes $ 50,000.00
Loan Origination Fees $ 115,000.00
Landscaping $ 70,000.00
Utility Servicing $ 140,000.00
Road $ 150,000.00
Travel $ 25,000.00
Legal Fees $ 25,000.00
Total $ 10,307,500.00
Cost per SF Total $ 229.06
The project is expected produce annual revenues in excess of $5.1 million per year. This is based on
our entry level assisted living home averaging $4,575 per bed per month, our luxury assisted living
homes averaging $5,475 per bed per month and our memory care homes averaging $5,875 per
bed per month.
All these figures are supported by the market feasibility report from May of 2018 by MDS Research,
“… it is our specific opinion that there appears to be sufficient size and depth of the age and
income qualified market to support the introduction of new assisted living and memory care
units into the Lake Charles market area”
The project, once stabilized, is expected to produce Net Operating Income (NOI) in excess of $1.1
million per year which in turn creates a cap rate of 9.4%. Cash Flow may exceed $545,000 per
year, assuming debt payments are approximately $578,000 per year.
Construction Budget
26
HOUSE
GROSS
REVENUES
ANNUAL NOI CAP RATE
TOTAL INVESTMENT WITH
OPERATING LOSS
House 1 (AL Base) $ 855,813 $ 114,841 4.8% $ 2,369,500
House 2 (AL Lux) $ 1,025,307 $ 227,862 9.6% $ 2,384,500
House 3 (AL Lux 2) $ 1,025,307 $ 227,862 9.6% $ 2,384,500
House 4 (MC) $ 1,114,880 $ 278,847 11.8% $ 2,369,500
House 5 (MC 2) $ 1,114,880 $ 278,847 11.8% $ 2,369,500
TOTAL $ 5,136,187 $ 1,128,259 9.4% $ 12,027,500
27. PHASE 3 OPTION
The site design allows for three additional 16-bed homes, which will be referred to as PHASE 3. PHASE 3 will be a totally separate project in terms of investment
opportunity. PHASE 2 funding partners will not be obligated to participate in PHASE 3 but they will have first right of refusal to decide if they want to invest in
PHASE 3. The possible terms of PHASE 3 have not yet been determined. If PHASE 3 does eventually proceed then all shared operating expenses will be split on a
pro rata basis with PHASE 2. For example, if PHASE 3 involves 3 additional 16 bed houses then PHASE 3 will be responsible for 3/8 of the common/shared
expenses and PHASE 2 will be responsible for 5/8 of those same common/shared expenses. It is expected that PHASE 2 may receive a reduction in expenses
should PHASE 3 occur.
To the extent PHASE 3 occurs, PHASE 3 will purchase the land from PHASE 2 at a preset price of $1,150,000.00 (estimated pro rata total of all initial shared
expenses.) In such event, PHASE 2 Sponsors will receive a disposition fee $34,500 (3% of the purchase price on a pro rata basis) and the proceeds will be split
according to the established distribution rules set forth in the organizational documents.
*PHASE 3 will only proceed if sufficient market conditions exist. PHASE 2 funding partners’ participation in PHASE 3 is strictly optional. 27
PHASE THREE
PHASE TWO
29. OPERATOR & LEAD SPONSOR
Founder - Owner - Chief Executive Officer 2015 – PRESENT
•Operating partner whose primary role is to ensure residents and families are completely satisfied with the care they receive, the food we
serve, and the quality of our communication. Responsible for building and managing the executive team that oversees operations. Total of 40
beds in Dallas, TX across 5 properties overseen by a team of 35 employees. Familiar with raising capital, investor relations, asset protection
and proper deal structure.
SAGE OAK ASSISTED LIVING AND MEMORY CARE
Sales/Support/Memory Care Expert 2017 – PRESENT
•Independent contractor with Gene Guarino and the Residential Assisted Living Academy whose primary role is selling consulting, fulfilling
consulting requests. Created an additional revenue stream by developing and teaching an advanced class on Memory Care. Currently
positioned to become a nationally recognized person in the residential assisted living space as the RALA teaches approximately four thousand
students per year, exposure which will continue to lead to above-average deal flow at no cost, and also creates a unique position in terms of
disposition of assets.
RESIDENTIAL ASSISTED LIVING ACADEMY
Owner/Founder/Client Relations Manager 2010 – PRESENT
•Responsibilities include property management, construction management, financial strategy and capital raising which enabled Loulo Properties
to acquire a portfolio of approximately 60 single family homes in Shreveport, LA with a total value of approximately three million dollars.
LOULO PROPERTIES
Property Manager 2014 – 2015
•Responsible for increasing occupancy and controlling expenses to position the asset to be sold. (88% to 93% occupancy during tenure.)
MC COMPANIES - THE PLACE AT VANDERBILT
Finance Director 2002 – 2013
•Finance Director over the entire auto group, managing the Honda, Mercedes Benz, Land Rover, Jaguar, Volvo and Sprinter locations, the total
group retailed almost 4500 vehicles per year plus nearly 2,000 wholesale units. Every one of those deals had to go through the finance
department in some capacity. During tenure, increased both profit and profit-per-unit over 50 percent. The owner, Charlton Holmes, eventually
became Loulo Properties primary investor and a partner in Sage Oak Assisted Living.
HOLMES HONDA/HOLMES EUROPEAN MOTORS
LOE HORNBUCKLE
SKILLS
Leadership
Marketing
Team Building
National Speaker on Assisted Living/ Memory
Care (Radio, TV, Events)
Certified ALF Manager
Syndication/Capital Raising
PASSIVE INVESTOR
Multifamily
Workforce Housing (RV Park)
Mobile Homes
Single Family
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30. SPONSORS
CHARLTON HOLMES is a Louisiana native who owns and operates Holmes Automotive, one of the most successful dealership groups in Louisiana. Because of that success, Charlton
and Holmes Automotive are very well known and respected all over the nation, especially among fellow Honda and Mercedes Benz dealers. Charlton is a partner in Sage Oak
Assisted Living and Memory Care, LLC and its various subsidiary companies. In the last decade, Charlton has overseen over $60 million of real estate development projects in car
dealerships, assisted living and single family homes. Charlton’s love of auto racing got him into the family business of automobile sales. Starting as an employee, he worked his way
up to eventually became the President and CEO in 1993 and was able to help build a great team and grow sales to just under $200 million in 2017. In addition to the car business,
Charlton has invested in dozens of successful start-ups across many different industries both as an advisor and as a passive investor. Charlton has been investing in real estate
transactions alongside Loe Hornbuckle since 2011. Charlton is instrumental in guiding Sage Oak, LLC and its subsidiary companies through the scaling process. He has vast
experience in helping transform small start-ups into highly successful businesses.
VICTOR MENASCE is Managing Partner at US Real Estate Partners where he is responsible for strategy and capital deployment for projects across the country. The company
specializes in realizing new projects in high demand markets. The vast majority of the company’s projects consist of new construction, and the remainder involve repositioning and
redevelopment of existing assets. The company is based in Chicago, Illinois. Mr. Menasce brings 30 years of senior management and investment management experience to the
partnership. Mr. Menasce is the author of “Magnetic Capital” and is a frequent guest on radio and TV as an authority on real estate and investment.
PAM ABIDE is a principal at New Orleans Equity Partners where she is responsible for operations and management of the investment portfolio. She is also responsible for acquisition
of new assets. The company’s holdings include commercial and residential real estate, land, mineral rights, and oil and gas wells. Ms. Abide brings a wealth of service and retail
experience to the table and has been instrumental in building the company’s operations and systems.
SHARON FOREMAN is a principal at New Orleans Equity Partners where she is responsible for marketing and client relationship management. Ms. Foreman brings a wealth of
entrepreneurial experience as the co- founder and franchisor of Another Broken Egg of America which she sold in 2011. She has extensive project management experience and has
been involved in the development of significant real estate projects in her career. Ms. Foreman is playing a key role in assembling the core team on the ground to execute the
projects.
DAVE ZOOK is the founder and CEO at The Real Asset Investor. Dave is a successful business owner and an experienced real estate investor active in the Multi Family apartment
space. Dave and his partners own well over $100 Million dollars worth of Multi Family apartments purchased since 2009 in some of the strongest job markets in the US. He is well
versed and actively involved in the ATM investment space and has provided investment opportunities to lots of investors looking for strong cash flow and tax benefits. Dave is a
published author and has been guest speaker at the International Business conference, The Jason Hartman real estate mastermind, The Wealth Formula podcast and the Real Estate
Guys radio show as well as a host of others.
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31. CONTACT INFORMATION
Loe Hornbuckle
(318) 458-3554
loe@thesageoak.com
Pam Abide
(985) 630-0965
pam@neworleansequitypartners.com
Sharon Foreman
(985) 264-1231
sharon@neworleansequitypartners.com
Victor Menasce
(613) 762-0162
victor@victorjm.com
Dave Zook
(717) 278-2456
dave@therealassetinvestor.com
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