Red Lily Vineyards 255-ACRE VINEYARD ESTATE AND WINERY OFFERING 11777 Highway 238 Jacksonville, Oregon 97530 Offering Memorandum watch video deal team David Chasin DAYLIN ACKERMAN MANAGING DIRECTOR SENIOR VICE PRESIDENT [email protected] [email protected] O 310.691.1350 x 101 | C 310.710.7172 O 310.691.1350 x 114 | C 818.419.9338 LIC # 01513027 (CA) LIC # 02011508 (CA) Marc Merchant JACOB ZWEIG SENIOR ANALYST ANALYST [email protected] [email protected] O 310.691.1350 x 131 | C 916.995.3298 O 310.691.1350 x 119 | C 216.509.3021 LIC # 02117365 (CA) Robert Niehaus BROKER OF RECORD LIC # 001211078 (OR) click to email entire deal team 1901 Avenue of the Stars, Suite 630 3 7 8 14 15 Los Angeles, CA 90067 OFFERING PRICING INVESTMENT PHYSICAL MARKET 310.691.1350 contents LIC # 01961545 (CA) SUMMARY ANALYSIS HIGHLIGHTS DESCRIPTION OVERVIEW www.pegasusinvestments.com 2 offering summary Pegasus Investments Real Estate Advisory Inc., as exclusive advisor to seller, is pleased to offer Red Lily Vineyards, a once-in-a-lifetime opportunity to acquire a fully operational winery and vineyard estate located within the Applegate River Valley AVA (American Viticultural Area) of Jacksonville, Oregon (“Red Lily”). Situated on 255 picturesque acres majestically set price:$8,850,000 against the foothills of the Sisikiyou Mountains along the Applegate River, Red Lily offers a spectacular opportunity to acquire an award-winning vineyard estate complete with a fully functioning winery, tasting room, and master residence. Red Lily’s enchanting riverfront setting and its dry sandy beach lure visitors from near and far, offering an extremely unique outdoor wine tasting and dining experience. Red Lily offers an extremely rare blend of exceptional lifestyle combined with a special MAIN RESIDENCE business opportunity. Prospective purchasers have the optionality of either (a) continuing to cultivate Red Lily’s 18 acres of planted vineyards [which produces break-even cash flow], WINERY or (b) investing in and cultivating roughly 82 acres of additional arable land, which is not being farmed by the current owners. This unique value proposition will allow prospective TASTING ROOM purchasers to increase wine capacity to 10,000-15,000 cases annually. MAIN BARN Located in the heart of Rogue Valley Wine Country, Red Lily enjoys exceptional vehicular access from OR-238, placing it in an enviable and convenient location along the Applegate WORKSHOP Wine Trail. Less than 20 miles from Rogue Valley International – Medford Airport, Red Lily benefits tremendously from the region’s bustling tourist industry. Visitors come from the local neighborhood to as far as Southeast Asia to experience the unique varietal tastes for which Southern Oregon’s wineries have become critically acclaimed. Popular cultural festivals APPLEGATE RIVER HORSE BARN include the Oregon Shakespeare Festival and the Britt Music & Arts Festival which together attract roughly 460,000 annual visitors to the region. DETACHED GUEST HOUSE Red Lily was last purchased in 2006 by a husband and wife, and has been meticulously cared for over the last 15 years. Several key improvements have been made during the current owner’s tenure, including construction of new irrigation infrastructure, a new winery and tasting room, restoration of the feeder barn which now houses the indoor/outdoor dining facility, and retrofitting of the primary entry bridge over the Applegate River. Additionally, the approximately 20 acres of active vineyard planted between 2008 to 2011, providing new owners with a rare opportunity to step into the vineyard’s most productive and prime years. 3 Emerging Oregon Wine Market The secret of Southern Oregon’s wine region isn’t as quietly guarded as it used to be, as demonstrated by its rapid growth in wine production, new vineyards, influx of new visitors and consistent year-over-year increase in wine exports. Although Oregon’s most well-known wine region is the Willamette Valley, there is good reason to believe that the Rogue Valley Wine Country’s reputation has the potential to rival, or even surpass, that of the Willamette due to its extremely hospitable growing environment. Today, the Southern Oregon AVA represents about 23% of Oregon’s wine production and as much as 80% of Southern Oregon’s Pinot noir is sold out of the area and labeled under the Oregon AVA. “Southern Oregon is a world-class vinicultural region, presenting a complex geology and a terrain and mesoclimates, which lends itself to the production of a broad array of quality grapes from both cool and warm climates. Only now is its true vinicultural potential being discovered and appreciated,” (Forbes, Exploring the Wines of Southern Oregon, 2019). The Oregon Wine Board’s recently published annual report, marked 2019 as a strong year for Oregon wines across a variety of channels. Oregon wine sales increased 18% between 2018 and 2019 with over 4.6 million cases sold in 2019. Oregon wine expanded its international footprint as well shipping over 104,000 cases outside of the United States, a 10% increase year-over-year. As of October 2020, Oregon wine sales continued their upward trend throughout the COVID-19 pandemic, Nielsen’s store data reflect Oregon wine sales increased +19% compared to overall wine category sales growth of +12%. One of the bright spots in the Oregon market is the growth of Southern Oregon AVA, specifically the Rogue Valley. In 2019, Rogue Valley had the highest growth rate in planted acreage in the whole state of Oregon at 5.2%. The Rogue Valley has become increasingly popular for its meticulous focus on quality wines with a wide breath of varietals. As a whole, the Southern Oregon AVA represents roughly 23% of Oregon’s wine production and nearly 80% of Southern Oregon’s pinot noir sales. 4 The Red Lily Story Red Lily was purchased by its current owners in 2006 and has been Rare Riverfront Winery with 100 acres of irrigation rights meticulously cared for over the last 15 years. The property boasts several key improvements made during the current owner’s tenure, including: • Installation of new irrigation infrastructure • Construction of a new winery and tasting room • Restoration of a previous feeder barn which now houses the indoor/ outdoor dining facility • Retrofitting of the primary entry bridge over the Applegate River Approximately 20 acres of active vineyard were planted between 2008 and 2011, providing new owners with a rare opportunity to step into the vineyard’s most productive and prime years. 2006 With a new vision for the land, current ownership purchased the 260-acre ranch along Highway 238 2008 The first tempranillo vines were planted in the Bean Patch Vineyard spring 2011 Current ownership completed the construction of the winery and tasting room summer 2011 Red Lily opened its doors for business 5 Located in the Heart of the Applegate Valley GRANTS PASS Soloro Vineyard Schmidt Family MURPHY Missouri Flat Rd. Vineyards Serra Plaisance Kubli Rd. Ranch Water Gap Rd. Vineyards Red Lily is located in the heart of Oregon’s Applegate Valley AVA (American Viticultural Area). The Applegate Valley AVA is represented by the Applegate Valley Vintners Cedar Flat Rosella’s Association, a group of 19 wineries committed to producing a diverse array of hand-crafted, high quality wines. The top-tier quality wines coming out this association has Vineyard made Applegate Valley the “crown jewel” of Southern Oregon’s wine industry. Powell Unlike most wineries in the state, Red Lily has a 2/3-mile strip fronting the Applegate River. Red Lily’s fertile land meets the Applegate River at its renowned sandy beach, Williams Highway Woolridge dotted with picnic tables and lawn chairs for Red Lily’s visitors to enjoy. Red Lily’s immaculate location along the Applegate River with immediate access to OR-238 creates Slage Creek significant competitive advantages compared to the other 19 wineries in the Applegate Valley AVA. There are only 4 wineries with direct highway access within the region. Creek Winery Ferris Gulch PROVOLT Schultz Wines ThompsonThe Creek Academy Rd. Augustino N. Applegate Rd. “Best Grape Growing Estate Envelope in the World” Browns Rd. APPLEGATE – Dr. Greg Jones, Climatologist, S. Oregon University Humbug CreekJohn Rd. Michael Champagne Cellars Devitt Winery Southern Oregon is no longer the world’s best-kept secret in Gyda the world of viticulture, although it’s still up and coming. Once overshadowed by the Willamette Valley because of its dominance in the pinot noir space, the unmatched warmer climate in Southern SUBJECT Oregon allows winemakers to harvest a larger variety of grapes. According to Dr. Greg Jones, a world-renowned climatologist from HamiltonLongsword Rd. South Oregon University, the region’s warm weather coupled with Valley View Vineyard the cool micro-climates in the hillside and valleys make Southern Winery China Gulch Rd. Oregon the best grape growing envelope in the world, in terms Applegate Rd. of grape variety. Further, this region receives significantly less RUCH rainfall than other viticultural areas in Oregon (40 percent less Cowhorn Vineyard To Jacksonville than the Willamette Valley). The climate weather is conducive to a Cricket Hill Vineyard 8 miles bountiful harvest of Tempranillo, Merlot, Sauvignon Blanc, Cabernet Sauvignon, Syrah, among many others. Little Applegate Rd. Wild Wines 6 pricing analysis LAND VALUE ACRES Land (No Irrigation Rights) 155 $1,600,000 Land (Irrigation Rights) 100 $2,500,000 Premium to subdivide