Introduction Sealy Strategic Equity Partners, L.P. (SSEP) Fund - PowerPoint PPT Presentation

Introduction

Sealy Strategic Equity Partners, L.P. (SSEP) Fund Sealy Strategic Equity Partners LP, or “SSEP,” is a commercial real estate fund that invests in industrial warehouses and distribution centers in selected markets in the South and Southeast. • Sealy Strategic Equity Partners LP, or “SSEP,” is a commercial real estate fund that invests in industrial warehouses and distribution centers in selected markets in the South and Southeast. • SSEP provides exposure to a portfolio of industrial warehouse properties, selected by a family-run business with 70 years of experience. • Strategy: purchase existing properties at or below replacement cost to capture additional gains from value appreciation. • Sealy & Company as manager has a proven track record in all market cycles: 59 industrial transactions since 1990, delivering a 24-plus percent average IRR. • Commerce Street Capital has raised $64 million for SSEP in two engagements, with 188 new LP investors, and is now engaged to raise another $50 million. • SSEP, LP’s portfolio now includes 279 buildings in 10 states, with an estimated value of $725 million – compared to 226 buildings and $420 million just 15 months ago, at December 2015.

SSEP, LP: Significant Aspects  The SSEP Fund has relatively low leverage for a real estate fund, capped at 70% by SSEP’s bank agreement. The firm intends to keep it below 65% in practice. At 1Q-2017, SSEP had about 58% leverage.  Cash distributions are typically paid quarterly, currently at a 5.75% pretax annual rate. Depending on your tax bracket, the tax-equivalent yield may be in the 9% range.  SSEP’s exit strategy is: Full or partial disposition of the portfolio in the 2020 to 2021 time frame for investors who want to redeem their units. At exit, the sharing arrangement is: an 80/20 split after an investor has received an 8% IRR on net investment proceeds.  For investors seeking liquidity, there is an annual redemption option, subject to certain conditions.

Sealy Strategic Equity Partners, L.P. (SSEP) A Sealy & Company sponsored investment This presentation is intended to be educational in nature and is neither an offer or solicitation to purchase any security. Sealy Strategic Equity Partners, L.P. (SSEP), an offering made under Rule 506 of Regulation D, is only sold through a private placement memorandum (PPM) provided to an accredited investor with a preexisting relationship with their financial advisor or the sponsor. There are substantial risks associated with this investment, which are disclosed in the PPM. These risks should be considered and discussed with a knowledgeable and trusted financial advisor before making any investment. The property depicted on this page is owned by SSEP.

Sealy Strategic Equity Partners, L.P. This is neither an offer to sell nor a solicitation of an offer to buy the units in the offering. An investment in the offering may be made through the Private Placement Memorandum (PPM). RISK FACTORS An investment in the Company's units is illiquid and involves significant risks and therefore is suitable only for those persons who understand those risks and the consequences of their investment and who are able to bear the risk of loss of their entire investment. See the "Risk Factors" section beginning on page 40 of the PPM for a discussion of the material risks that should be considered before an investment in the units is made. Additionally, there is no guarantee that the strategy will be successful. Distributions are not guaranteed and may constitute a return of capital. Reg. D Offering / For Accredited Investors Only. 5

Sealy Strategic Equity Partners, L.P. ADDITIONAL RISK DISCLOSURES This investment contains substantial risks, including: • The use of leverage which requires a substantial portion of the investment’s cash flow to service; • Variable interest rates which can increase the servicing costs for the leverage used; • The potential for vacancy in the properties owned in excess of projections; • Competition with affiliated entities for properties to add to SSEP and the attention of senior management; • Certain expenses are advanced by the partnership for reimbursement by the General Partner; • There is no assurances of profitability by SSEP. 6

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Why This Investment? The Sponsor – Sealy & Company The Sector – Industrial Distribution The Strategy – SSEP 8

Sealy & Company The Sponsor SSEP – WillowBrook Property depicted on this page is owned by SSEP.

Sealy & Company A real estate investment and operating company focused on industrial distribution and logistics properties. Sealy Mission Mitigate investment risk and enhance investment returns. 10

Sealy Footprint  Founded in 1946  4 th generation family company Figures as of 03/21/17 11

Proven Investment Sponsor  Proven investment strategy  Proven track record in all market cycles  59 full cycle industrial transactions since 1990  Delivering average 24.73% IRR since 1990 12 Figures as of 03/01/17

Sponsor Value  Full-service operating platform  Access to pipeline of investment opportunities  Dedicated team of professionals  Valuable corporate infrastructure  Robust systems 13

Sealy Strengths  Execution capacity  Sponsor co-investment  Scalability of operations and investment  Investor relationships  50+ years 14

Sponsor Impact  Solutions that create lasting value for our investors, our properties, and our communities  Our sustainability measures  conserve resources and help the environment  save money  create healthier work places  increase the portfolio’s value 15 15

Sealy Relationships Financial Partnerships Tenants Logos and trade names are the property of the respective companies and are not the property of SSEP. 16

Industrial Real Estate SSEP – Hayden Property depicted on this page is owned by SSEP. 17

Why Industrial?  Broad appeal  Tenants and investors  Triple net leases  Limits financial risk  Expands banking opportunities  Enhances investor confidence  Limited obsolescence  Lower capital additions risk  Long-term functionality 18

Industrial – Limited Obsolescence SSEP – Sealy OKC I-35 Sealy 1720 Hayden Built 1960s Built 2014 Orgill Distribution Center Built 1990s Properties depicted on this page are owned by SSEP and are representative of 19 the types of investments SSEP intends to make.

Industrial – Supply & Demand  Demand is UP  Demand has out-paced supply for 26 consecutive quarters  Supply hasn’t kept UP  Construction since 2008 not addressing the demand for facilities under 250,000 SF Source: CBRE Marketview Snapshot US Industrial & Logistics, Q4 2016 20

Industrial – Rental Rates Source: CBRE US Forecast and Capital Markets Marketview Q4 2016 21

Sealy Strategic Equity Partners, L.P. (SSEP) SSEP – El Paso 22 Property depicted on this page is owned by SSEP.

SSEP – Mission Statement Value investing focused on stable, growing cash flow and equity appreciation through a diversified industrial real estate portfolio. 23

Fund Objectives  Purchase stabilized and near-stabilized assets  Off-market/soft-marketed $5 to $25 million  Purchase properties below replacement cost  Diversified portfolio by location:  65% in primary markets  35% in proven secondary markets  Targeted total return of 15% 24 SSEP cannot provide any assurance that it will achieve its stated objectives.

Investment Benefits  Alignment of interests  Established, growing, and performing portfolio  Equity liquidity feature  Return on appreciation recognized annually  Enterprise financing 25 SSEP cannot provide any assurance that it will achieve its stated objectives.

Enterprise Financing  Available to top level owner/operators  Portfolio covenants versus real estate financing  Lower cost of capital, more flexible terms  Close transactions efficiently  Opportunistic and accretive dispositions 26

2016 Acquisitions Summary Property Summaries SSEP/ Broker/ Occupancy at Year # Transaction ID Closing Date Market Seller Size (SF) JV Company Acquisition Built 1 NW Point 2/12/16 SSEP Houston Eastgroup CBRE 232,307 100.0% 1985 2 Carter Distribution 4/12/16 SSEP D/FW Crow Holdings Off Market 615,005 100.0% 2008 3 Meridian Dist. Center 4/19/16 SSEP Meridan, MS One Meridian LLC Off Market 466,670 96.0% 2011 4 Sealy Frederick Rd 5/17/16 SSEP El Paso John Schweitzer Off Market 99,600 100.0% 1973 5 Dallas Light Industrial 8/26/16 SSEP Dallas Prologis CBRE 1,478,207 86.6% 1982 6 NW Houston 9/1/16 SSEP Houston NW Houston LLC Off Market 783,189 85.7% 1981 7 121 Corporate Drive 11/29/16 SSEP Dallas Oaktree CBRE 163,797 65.0% 2001 TOTALS/AVERAGES 3,838,775 89.9% 1990 23 Past performance is not a guarantee of future results.