red lily vineyards

Red Lily Vineyards

11777 Highway 238 Jacksonville, Oregon 97530

255-ACRE VINEYARD ESTATE AND WINERY OFFERING

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Offering Memorandum

https://go.pegasusinvestments.com/red-lily-vineyards-jacksonville-or-video

David ChasinMANAGING DIRECTOR

[email protected] O 310.691.1350 x 101 | C 310.710.7172

LIC # 01513027 (CA)

DAYLIN ACKERMANSENIOR VICE PRESIDENT


LIC # 02011508 (CA)

Marc MerchantSENIOR ANALYST


LIC # 02117365 (CA)

JACOB ZWEIGANALYST


Robert NiehausBROKER OF RECORDLIC # 001211078 (OR)

1901 Avenue of the Stars, Suite 630 Los Angeles, CA 90067

310.691.1350 LIC # 01961545 (CA)

www.pegasusinvestments.com

click to email entire deal team

deal team

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3OFFERING SUMMARY

7PRICING

ANALYSIS

8INVESTMENT HIGHLIGHTS

14PHYSICAL

DESCRIPTION

15MARKET

OVERVIEWcontents

mailto:redlilyvineyards%40pegasusinvestments.com?subject=Red%20Lily%20Vineyards

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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 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 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], 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 purchasers to increase wine capacity to 10,000-15,000 cases annually.

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 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 include the Oregon Shakespeare Festival and the Britt Music & Arts Festival which together attract roughly 460,000 annual visitors to the region.

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.

offering summary

WINERY

APPLEGATE RIVER

TASTING ROOM

MAIN RESIDENCE

DETACHED GUEST HOUSE

MAIN BARN

HORSE BARN

WORKSHOP

$8,850,000price:

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.

Emerging Oregon Wine Market

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Red Lily was purchased by its current owners in 2006 and has been 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.

With a new vision for the land, current ownership purchased the 260-acre ranch along Highway 238

Current ownership completed the construction of the winery and tasting room

Red Lily opened its doors for business

The first tempranillo vines were planted in the Bean Patch Vineyard

The Red Lily Story

2006

2008

spring 2011

summer 2011

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Rare Riverfront Winery with 100 acres of irrigation rights

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 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 made Applegate Valley the “crown jewel” of Southern Oregon’s wine industry.

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, 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 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.

Soloro Vineyard

GRANTS PASS

MURPHY

PROVOLT

APPLEGATE

RUCH

To Jacksonville 8 miles

Schmidt Family Vineyards

Rosella’s Vineyard

Woolridge Creek Winery

John Michael Champagne Cellars

Cricket Hill Vineyard

Longsword VineyardValley View

Winery

Cowhorn Vineyard

Wild Wines

Devitt Winery

Augustino Estate

Schultz Wines

Serra VineyardsPlaisance

Ranch

The Academy

Missouri F

lat Rd.

N. Ap

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Humbug Creek Rd.

Applegate Rd.

Little

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Hamilto

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China Gulch Rd.

Gyda

Slage Creek

Water Gap Rd.

Williams Highway

Ferris Gulch

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Thompson Creek Rd.

Cedar Flat

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Kubli Rd.

Located in the Heart of the Applegate Valley

Southern Oregon is no longer the world’s best-kept secret in 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 Oregon allows winemakers to harvest a larger variety of grapes. According to Dr. Greg Jones, a world-renowned climatologist from South Oregon University, the region’s warm weather coupled with the cool micro-climates in the hillside and valleys make Southern Oregon the best grape growing envelope in the world, in terms of grape variety. Further, this region receives significantly less rainfall than other viticultural areas in Oregon (40 percent less than the Willamette Valley). The climate weather is conducive to a bountiful harvest of Tempranillo, Merlot, Sauvignon Blanc, Cabernet Sauvignon, Syrah, among many others.

“Best Grape Growing Envelope in the World” – Dr. Greg Jones, Climatologist, S. Oregon University

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SUBJECT

pricing analysisLAND VALUE ACRESLand (No Irrigation Rights) 155 $1,600,000Land (Irrigation Rights) 100 $2,500,000Premium to subdivide (80 acres) 80 $400,000Riverfront Premium (3/4 mile) $820,000Total $5,320,000

PROPERTY VALUE $8,850,000

BUILDING VALUES SQUARE FEETMaster Residence 4,470 $1,500,000Detached Guest House 1,800 $150,000Workshop 1,200 $60,000Hay Barn 3,000 $50,000Horse Barn 2,500 $50,000Vineyard Storage Shed 400 $20,000Winery 5,200 $1,200,000Tasting Room 2,685 $500,000Total $3,530,000

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• Red Lily Vineyards (“Red Lily”) is 255-acre turnkey vineyard, winery and tasting room in the Applegate Valley with a strong regional presence and an established customer base

• The vineyard harvests a healthy mix of Tempranillo, Verdejo, Graciano, and Grenache variety

• In a typical year Red Lily produces 2,000 to 3,000 cases of wine without reaching maximum capacity. For buyers looking to add additional value, there currently exists the capacity to produce up to 5,000 cases of wine annually with its current wine facility

• Red Lily has successfully operated the last decade by establishing a steady retail business driven by the winery’s award-winning wines, modern tasting room, and scenic location along the Applegate River

• Aside from the tremendously popular tasting room along the Applegate River, Red Lily has become a destination concert venue. The “Thursday Music on the Beach Concert Series” drew approximately 7,000 attendees in 2019

investment highlights: Exciting, TurnKey Business Acquisition Opportunity

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The Master Residence is a major differentiator for Red Lily versus investing in a traditional winery. The estate’s main residence is a 4,470-square-foot American cedar shingle-style home with four bedrooms, three baths, two fireplaces, and 600 square feet of outdoor living space. The Master Residence overlooks the Jacksonville countryside with a breathtaking view of the Applegate River, featuring an exquisite, covered terrace overlooking the mountain vista. The covered terrace is one of the home’s most impressive amenities, perfect for opening a bottle of Tempranillo and relaxing after a long day of work or entertaining guests with a cocktail hour on a warm summer evening.

The hillside residence is secluded from the operations of the winery, but close enough to enjoy the live, work, play ranch-style environment. The Master Residence is the cultural centerpiece of Red Lily, it emphasizes the family-first culture of the winery. The spectacular residence is versatile, offering a beautiful place to raise a family and have family gatherings, a peaceful place to retire, and a brisk walk down the hill from your very own winery. In addition to the Master Residence, Red Lily has a guest house tucked away from the public in the pasture behind the tasting room. This 1,800 SF guest house is perfect for an on-premises property manager and is out of sight from the primary operations of the winery.

investment highlights: Sprawling Master Residence with Mountain Vista Views + Detached Guest House

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master residence interior/exterior photos

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The organic growth of the Red Lily brand is driven by two core competencies: excellent wine and a progressive tasting room with a vibrant culture. These two value drivers have created a dedicated customer base throughout the Applegate River Valley AVA (American Viticultural Area) and the greater Rogue Valley. The current ownership group typically spends less than $5,000/year on outbound marketing, this strategy has amassed a wine club membership of more than 500 members. Further, Red Lily has persevered through the COVID-19 pandemic and continues to see steady revenue flow through its tasting room and online store. The continued business growth has shown the strength of the Red Lily brand and the intrinsic value of the real estate as a Top-10 wine tasting destination in the Applegate River Valley AVA.

Oregon is one of the five states in the U.S. that does not charge consumers a sales tax. This is a tremendous benefit to Red Lily which realizes a majority of its sales through retail channels like the tasting room and the company’s online store. The hospitable retail sales environment in Oregon attracts not only the local clientele, but numerous out-of-state and international customers who come to visit the scenic Red Lily and experience its special tasting room. Red Lily and Southern Oregon wineries as a whole have received an incremental benefit by lowering the overall cost of each transaction with a customer. This is apparent throughout the whole Southern Oregon wine market which has rapidly increased in terms of sales and planted acres through the last decade. In 2019, the Oregon wine market as a whole experienced a 13% increase in cases sold and the Rogue Valley specifically had a 5.2% increase in planted acres.

investment highlights: “Tasteful” Tasting Room and Popular Wine Club Following

No Sales Tax in Oregon

1. Plant the 20 acres of new vines in the available land in the southwest corner of the property. The projected total cost is estimated to be $600,000 ($30k/acre) and yield an additional +3,000 cases of wine.

2. Construct a 1,600 SF wedding venue on the knoll looking over the Stargazer Vineyard. The estimated cost for the project is ±$400,000. This project would create a one-of-a-kind wedding venue and satellite tasting room/dining room, creating a new business vertical for Red Lily.

3. Construct a new 4,000 SF storage facility in order to support the increased production. The estimated cost for the project is ±$200,000. In its current state Red Lily has the capacity to produce 5,000 cases a year.

4. Construct lodging units for a 12-18 guest bed and breakfast. The estimated cost for the project will vary depending on the number of lodging units. This project would create a new hospitableity business line for Red Lily.

investment highlights: Four Ways to Create Additional Value

Aside from its inherent beauty and great picnic views, the Applegate River is an extremely valuable natural resource for Red Lily. Flowing directly in front of Red Lily’s tasting room and winery, the Property’s exceptional location fronts nearly a mile of the Applegate River. The current ownership group utilized their permitted water rights to create an irrigation network which transports water from the Applegate River to the three vineyards. The dependable natural resource is a valuable safeguard and cost-saving tool that a majority of vineyards in Oregon and California do not have access to. Even with prevailing drought conditions across the West Coast, Red Lily has a steady supply of irrigation water for each year’s harvest.

Irrigation Rights to the Applegate River

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Red Lily’s vines are entering their most productive age in their lifecycle. Across the three vineyards, the vines were planted between 2008 and 2011. These vines have developed beyond their infancy stage and have moved into their “adult years.” New Age vintners consider years 7 to 12 of the vine’s life to be the most valuable; these vines yield their peak production capacity without sacrificing the quality of the grape. The chart below summarizes Red Lily’s grape variety and harvest summary:

*As a result of a late freeze in October 2008, the vines were replaced in stages from 2009-2011.

• 2019: 2014 Life of Riley wins GOLD in Oregon Wine Experience

• 2018 Certificate of Excellence from TripAdvisor

• 2018: 2017 Stargazer Verdejo wine GOLD in Oregon Wine Experience.

• 2018 : 2014 Life of Riley voted BEST OF CLASS – TEMPRANILLO in Savor Northwest Wine Competition

• 2016: 2014 Night School awarded DOUBLE GOLD at Oregon Wine Experience

• 2016: 2012 Red Lily Tempranillo awarded DOUBLE GOLD at SF Chronicle Wine Competition and GOLD at Savor NW Wine Competition

Red Lily Accolades

investment highlights: Wide Spectrum of Grape

Variety and Harvest Summary

2020 HARVEST SUMMARYVARIETY TONS HARVESTEDTempranillo 12.75 TONSVerdejo 9.20 TONSGraciano 0.50 TONSGrenache 1.2 TONS

STARGAZER VINEYARD (16.2 ACRES)VARIETY # OF VINES YEAR PLANTEDVerdejo 3630 2011Tempranillo 3480 2011Tempranillo HT 651 2011Graciano 600 2011Grenache 600 2011

BEAN PATCH VINEYARD (4.43 ACRES)VARIETY # OF VINES YEAR PLANTEDTempranillo 1260 2008*Tempranillo 4550 2008*

DEMO VINEYARD (0.35 ACRES)VARIETY # OF VINES YEAR PLANTEDTouriga Nacional 100 2013Verdejo 100 2013Tempranillo 100 2013

• 2015: 2013 Night School awarded DOUBLE GOLD and BEST OF SHOW at Oregon Wine Experience

• 2015: 2011 Red Lily Tempranillo awarded GOLD in LA International Wine Competition

• 2013-2015: Voted Best Winery by readers of Southern Oregon Magazine

• 2020: 2014 Thin Line Tempranillo Reserve and 2018 Stargazer Lily Verdejo win GOLD in San Francisco Chronicle Wine Competition

• 2021: 2014 Thin Line Tempranillo wins DOUBLE PLATINUM and 2015 Life of Riley Tempranillo wins PLATINUM in Northwest Wine Competition

PROPERTY NAME RED LILY VINEYARDS

PROPERTY ADDRESS 11777 HIGHWAY 238 JACKSONVILLE, OREGON

COUNTY JACKSON

VINEYARD SIZE ± 18 ACRES (WITH ABILITY TO PLANT UP TO 80 ADDITIONAL ACRES)

VARIETALS WINERY: 5,200 SF MASTER HOUSE: 4,470 SF TASTING ROOM: 1,885 SF GUEST HOUSE: 1,800 SF HORSE BARN: 2,500 SF

HAY BARN: 3,000 SF SHOP: 1,200 SF

BUILDINGS 7

WATER APPLEGATE RIVER

APN 10309774

ZONING EFU

LOT SIZE ± 255 ACRES

physical description

14Rough estimate of parcel boundary lines, buyer to verify

SUBJECT

Nestled in the Siskyou Mountain foothills along the Rogue River Valley, Jacksonville is a quaint town situated itself approximately 5 miles west of Medford, OR. A nexus for wine tasting, scenic recreating, world-class music and tasty eating, Jacksonville is ideally located in the Heart of Rogue Valley wine country which includes the Applegate Valley Wine Trail. Though sometimes busy the small-town ambiance gorgeous setting and beautifully preserved late 1800’s architecture combines to make both a picturesque place to live and a tourist destination for wine lovers and outdoors enthusiasts.

Serving as a springboard for trips to nearby Crater Lake and Oregon Caves, Britt Music & Art Festival, the Oregon Shakespeare Festival and several regional theaters, Jacksonville benefits from its central location to not just tourism but cultural events. Locals and visitors come to enjoy live music performances nearly every day of the week and a broad array of visual art in many different media.

Small and sophisticated, Jacksonville radiates both romance and rugged adventure. With miles and miles of hiking, biking, and wilderness offset by amazing Victorian-era architecture, incredible history, there is something for everyone who appreciates the finer things in life.

market overview: jacksonville, or

Britt Music Festival in JacksonvilleBritt Music & Arts Festival is the Pacific Northwest’s premier outdoor summer performing arts festival which draws nearly 60,000 attendees each year. Located 15 miles east of Red Lily, this annual concert series draws big crowds to the Red Lily tasting room during the performance weekends. Britt presents dozens of summer concerts, featuring world-class artists in classical music, jazz, blues, folk, bluegrass, world, pop and country music. Britt’s performance venue is a naturally formed amphitheater set among majestic ponderosa pines and native madrones on the beautiful hillside estate of 19th century photographer Peter Britt.

demographics

Oregon Shakespeare Festival - 400,000 Annual VisitorsAshland, OR is the home of the Oregon Shakespeare Festival which draws more than 400,000 visitors a year. Often called the Broadway of the West Coast, Oregon Shakespeare Festival is one of the biggest regional in Jackson County and has been operating for over 80 years. Time Magazine named it as one of the top five regional theater companies in the country and is well decorated with numerous Tony Awards over the years. The theater season begins in March and typically runs through October. The Oregon Shakespeare Festival is a large foot traffic driver for Red Lily as wine culture goes hand in hand with theater. Many Shakespeareans flock to the tasting room and enjoy river front lunches on performance weekends.

Tourism Attractions in Jackson County

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2020 EST. POPULATION3-MILE 5-MILE 10-MILE

635 2,511 10,752

2020 AVG. HOUSEHOLD INCOME3-MILE 5-MILE 10-MILE$62,064 $75,786 $76,239

2020-2025 EST. POPULATED GROWTH1-MILE 3-MILE 5-MILE+3.0% +3.5% +4.0%

PACI

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BEND OREGONBURNS

MEDFORD

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CORVALLIS

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GOLD BEACH

CRESCENT CITY

CALIFORNIASUBJECT

GRANTS PASS

ABOUT PEGASUS INVESTMENTSPegasus Investments Real Estate Advisory (“Pegasus Investments”) represents a broad range of clients, from institutional investment firms to developers, high net worth individuals, family trusts and partnerships in connection with the purchase & sale and leasing of high quality investment properties nationwide. Pegasus Investments is one of the foremost leading advisory firms within the single tenant and multi-tenant triple net leased retail property category having completed in excess of $1.5 billion in volume since 2014.

Pegasus Investments offers a highly differentiated advisory platform given its ability to collaborate within a vertically integrated environment with Pegasus Capital Markets and Pegasus Asset Management to ensure a seamless transaction for all parties involved. The result is highly customized, creative, streamlined execution.

CONFIDENTIALITY & DISCLAIMER STATEMENT The information contained in this Offering Memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Pegasus Investments and should not be made available to any other person or entity without the written consent of Pegasus Investments. This Offering Memorandum has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property.

The information contained herein is not a substitute for a thorough due diligence investigation. Pegasus Investments has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition of the business prospects of any tenants, or any tenant’s plans or intentions to continue its occupancy of the subject property.

The information contained in this Offering Memorandum has been obtained from sources we believe to be reliable; however, Pegasus Investments has not verified, and will not verify, any of the information contained herein, nor has Pegasus Investments conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. Some or all of the photographs contained within may have been altered from their original format. All potential buyers must take appropriate measures to verify all of the information set forth herein.

David ChasinMANAGING DIRECTOR


LIC # 01513027 (CA)

DAYLIN ACKERMANSENIOR VICE PRESIDENT


LIC # 02011508 (CA)

Marc MerchantSENIOR ANALYST


LIC # 02117365 (CA)

JACOB ZWEIGANALYST


Robert NiehausBROKER OF RECORDLIC # 001211078 (OR)

1901 Avenue of the Stars, Suite 630 Los Angeles, CA 90067

310.691.1350 LIC # 01961545 (CA)

www.pegasusinvestments.com

click to email entire deal team

deal team

mailto:redlilyvineyards%40pegasusinvestments.com?subject=Red%20Lily%20Vineyards

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