Great Elm Group, Inc. · NASDAQ:GEG

Great Elm — Great Elm Capital Group — Merger or Acquisition (March 2018)

24 slides from Great Elm's merger presentation, Mar 6, 2018

  1. Slide 1: An Introduction to the Fort Myers Transaction & GEC's Real Estate Strategy

    Great Elm Capital Group, Inc. An Introduction to the Fort Myers Transaction & GEC’s Real Estate Strategy March 6, 2018 © 2018 Great Elm Capital Group, Inc.

  2. Slide 2: Disclaimer

    Disclaimer Statements in this presentation that are “forward-looking” statements, including statements regarding potential or expected IRRs, cash-on-cash returns and net operating loss utilization, involve risks and uncertainties that may individually or collectively impact the matters described her

  3. Slide 3: Table of Contents

    Table of Contents Slide(s): 4-5 Organizational Overview 6-7 Real Estate Overview 8 - 12 An Introduction to the Fort Myers Transaction 13 – 18 An Introduction to GEC’s Real Estate Strategy 19 Q&A 20 – 24 Appendix © 2018 Great Elm Capital Group, Inc. 3

  4. Slide 4: Organizational Overview

    Organizational Overview *All debt of subsidiaries is non-recourse to GEC Investment Management Real Estate Operating Companies Great Elm Capital Management, Inc. (“GECM”) Great Elm FM Acquisition, Inc. Operating Company 1  SEC Registered Investment Advisor  Great Elm FM Acquisition, Inc. indirectl

  5. Slide 5: Organizational Overview: Drivers of Shareholder Value

    Organizational Overview: Drivers of Shareholder Value  Grow GECC through additional equity raises and debt issuance, as well as by Investment acquiring other BDCs via M&A Management  Increase AUM via new fund launches, SMAs and co-investments  Seek other opportunities, such as the Fort Myers tran

  6. Slide 6: Real Estate Overview

    Real Estate Overview © 2018 Great Elm Capital Group, Inc. 6

  7. Slide 7: Real Estate Overview

    Real Estate Overview  Acquired an 80.1% equity interest in 257,000 square feet of Class A office space and nearly 17 acres of land in Fort Myers, Florida leased on a long-term basis to Gartner  Capital outlay totaled approximately $3 million on an overall transaction value of $61 Fort Myers Transa

  8. Slide 8: The Fort Myers Transaction

    An Introduction to the Fort Myers Transaction © 2018 Great Elm Capital Group, Inc. 8

  9. Slide 9: The Fort Myers Transaction

    An Introduction to the Fort Myers Transaction  We are excited to announce the closing of our first real estate investment with the acquisition of an 80.1% equity interest in 257 thousand square feet of Class A office space on nearly 17 acres of land in Fort Myers, Florida (the “Property”) for appro

  10. Slide 10: The Fort Myers Transaction

    An Introduction to the Fort Myers Transaction © 2018 Great Elm Capital Group, Inc. 10

  11. Slide 11: The Fort Myers Transaction

    An Introduction to the Fort Myers Transaction  The Property is comprised of two, connected office buildings (Gartner I & II) situated on 16.99 acres of land in the upscale Gateway Community of Fort Myers, one of the fastest growing Metropolitan Statistical Areas (“MSAs”) in the country. The two bui

  12. Slide 12: The Fort Myers Transaction: Sources & Uses

    An Introduction to the Fort Myers Transaction  Upon completion of this transaction, GEC will own valuable land and office space leased to a credit-worthy tenant in a growing and insulated market  Importantly, this deal offers approximately 94% loan-to-value, allowing GEC to create its position wit

  13. Slide 13: GEC's Real Estate Strategy

    An Introduction to GEC’s Real Estate Strategy © 2018 Great Elm Capital Group, Inc. 13

  14. Slide 14: GEC's Real Estate Strategy

    An Introduction to GEC’s Real Estate Strategy  We intend to create long-term shareholder value by building a diversified portfolio of high-quality, income-producing real estate assets. We expect our tax attributes to give us a significant advantage when we compete to acquire certain of these assets

  15. Slide 15: GEC's Real Estate Strategy – CTL Description

    An Introduction to GEC’s Real Estate Strategy – CTL Description  A CTL is a method of financing the purchase of real estate. The highly leveraged sub-set of the CTL market on which we are focusing is relatively liquid with an estimated $5 billion+ of deal activity per year  In a CTL structure, a r

  16. Slide 16: GEC's Real Estate Strategy – Deal Pipeline

    An Introduction to GEC’s Real Estate Strategy – Deal Pipeline 100+ Through a network of bankers, brokers, developers and other investors in real opportunities estate, we review greater than 100 CTL and related opportunities per year that per year have to-date ranged in size from $3 to $370 million A

  17. Slide 17: GEC's Real Estate Strategy – Investment Considerations

    An Introduction to GEC’s Real Estate Strategy – Investment Considerations Important characteristics of our underwriting and structuring process include:  A focus on high-quality lessees  Utilize our team’s corporate credit analytical expertise to evaluate both the lessee’s creditworthiness and the

  18. Slide 18: GEC's Real Estate Strategy – Investment Considerations

    An Introduction to GEC’s Real Estate Strategy – Investment Considerations  A preference for property in or near growing MSAs  A focus on geographical areas with the following characteristics:  Large and growing populations  Stable and growing per capita income  Low, sustained unemployment  Hig

  19. Slide 19: Q&A

    Q&A © 2018 Great Elm Capital Group, Inc. 19

  20. Slide 20: Appendix

    Appendix © 2018 Great Elm Capital Group, Inc. 20

  21. Slide 21: Appendix: GAAP Impact of Transaction – Next 12 Months

    Appendix: GAAP Impact of Transaction – Next 12 Months Fort Myers Real Estate Transaction Subsidiary Unaudited Pro Forma Condensed Statement of Operations For the Period: Next 12 Months Post Transaction Close In Thousands (except per share data) Rental Income $ 6,071 Operating costs and expenses: Rea

  22. Slide 22: Appendix: GAAP Impact of Transaction – Until Debt Maturity (March 2030)

    Appendix: GAAP Impact of Transaction – Until Debt Maturity (March 2030) Fort Myers Real Estate Transaction Subsidiary Unaudited Pro Forma Condensed Statement of Operations For the Period: January 1, 2018 to March 15, 2030 In Thousands (except per share data) Rental Income $ 74,086 Operating costs an

  23. Slide 23: Appendix: Base Case Assumptions

    Appendix: Base Case Assumptions Assumptions that drive the base case returns for the Fort Myers transaction: 1. Purchase price of the Property: $61.2 million 2. Sale price of the Property upon lease expiration in 2030: $83.6 million 3. Capitalization rate of approximately 6.4% is held constant from

  24. Slide 24: Appendix: Contact Information

    Appendix: Contact Information Investor Relations Meaghan K. Mahoney Senior Vice President 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com © 2018 Great Elm Capital Group, Inc. 24

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