Templeton Preserve Vineyard

Description

Please note the terms of this offering were modified on Friday, June, 30, 2023. Please see the Additional Details Section below and the updated Confidential Private Placement Memorandum (PPM) for more complete information.

Summary

Templeton Preserve Vineyard is a 122 acre wine grape vineyard in San Luis Obispo County, California located in the heart of the Paso Robles wine region in the city of Templeton.

This is an opportunity to invest in an established vineyard in a proven growing region positioned to take advantage of market trends alongside a sponsor team whose experience encompasses the full value chain.

Region

Paso Robles AVA (American Viticultural Area) is California’s fastest growing wine region, known in particular for its cabernet sauvignons. It is swiftly becoming a key producer of this grape variety and wines made from it, which largely supply wines in the $20+ per bottle range. Templeton Preserve Vineyard is located in the El Pomar District of the Paso Robles AVA, a well-established grape growing area with significant institutional presence.

Paso Robles’ combination of climate, growing season duration, and soil variety provides ideal conditions for premium wine grapes. The region’s topography is defined by high, older terraces, fans, and hills as well as quaternary alluvial soils. High soil diversity here allows vineyards to grow multiple grape varieties. The region is known for its unique climate of high daytime temperatures and cool nights, which allow grapes to achieve power and full ripeness while also maintaining their high acidity levels.

Learn more about the state of California's wine market and Paso Robles AVA in "Themes In the U.S. Wine Industry", in-depth research from our permanent crop investment team.

Project

Currently, 94 acres of the property are planted to wine grapes, along with a small section of olives. There is planned redevelopment of ~60 acres into high-demand grape varieties, specifically the better-priced cabernet sauvignon and petit verdot varieties.

The property also includes an on-site winery, which constitutes a large portion of the total asset value. This building is currently leased to the Fableist Wine Company, a label owned and vinted by offering co-sponsor, Andrew Jones.

The Fableist will continue leasing this building under a triple net lease structure paid to the entity purchasing the vineyard. Under this agreement, the tenant assumes all risk of ongoing operations and is responsible for taxes, repair, and maintenance, mitigating risk exposure for investors in this property. The new lease will have a 10 year duration, matching the entirety of the hold period for this investment.

Property History

This property has an established history as a vineyard and winery as the estate vineyard of the Merrill family, a generational winemaking family and the seller of the property. It has been well-maintained as a commercial vineyard.

Templeton Preserve’s history was key to establishing Central Coast Vineyard Team (CCVT), a group dedicated to promoting sustainable wine production. The vineyard itself is SIP (Sustainability In Practice) certified, a third-party standard that ensures vineyards are producing in a way that protects both natural and human resources. This labeling, started by the winery’s previous owner, answers a growing trend in consumers for sustainable wines.

Water Availability

Templeton Preserve relies on its 2 wells to pump groundwater. There is a planting ordinance in place that limits new agricultural developments in the district, limiting sites to their historical irrigation use. Under this ordinance, the redevelopment project planned for this property will be supported by its existing water allocation.

The development plan for this property includes constructing a reservoir with the capacity to hold over 2 million gallons of water. The additional storage will provide for irrigation increases in case of extreme heat events. It will also provide additional security during well downtime needed for repairs. Furthermore, the reservoir will add farming efficiency for the operation, reducing total irrigation time, as well as employee overtime.

Farm Sponsor

This investment will be AcreTrader’s second with offering sponsor, Strongwater Viticultural Investments LLC. Strongwater is a partnership of three leaders in the Central Coast’s wine industry: Anthony Bozzano, Andrew Jones, and Michael Testa. The trio brings to the project over 55 years of combined expertise in wine grape and grape vine nursery sales, viticulture, and vineyard management. The Sponsor team will co-invest $455,000 alongside investors.

Anthony Bozzano owns and operates Bozzano & Company, a Central Coast based wine business specializing in the sourcing and sales of bulk wine, wine grapes, and custom wine brands. He previously managed bulk wine sales and private label product development for the Miller Family, a 5th generation farming family with properties throughout Santa Barbara and San Luis Obispo County. Born and raised in a diversified farming family in Stockton, CA, Anthony graduated from Cal Poly, SLO, where he majored in agricultural business with a minor in viticulture. He is a member of Class 43 of the California Agricultural Leadership Foundation (CALF), as well as the current Regional Director of the CALF Alumni Council.

Andrew Jones is the VP of Sales for Sunridge Nurseries, a premier grapevine nursery for the wine industry. He manages a team of field representatives that oversee the sales of 12-16 million grapevines annually. In addition to his work at Sunridge, he is the owner and winemaker of two wine brands: Field Recordings, based in Paso Robles, and Fableist Wine Co., based in Templeton. In 2015, Andrew was named to the top 40 under 40 - America’s tastemakers by the Wine Enthusiast. He is a graduate of Cal Poly, SLO with a degree in agricultural business and a concentration in viticulture.

Michael Testa is a partner and serves as the General Manager of Coastal Vineyard Care Associates, a premiere vineyard management company in its 40th year of business. Prior to CVCA, Mike worked in several vineyard management and grower relations roles for E&J Gallo Winery. Mike serves on the Board of Directors for the California Association of Winegrape Grower (CAWG) and recently completed a 2 year term as Chairman. He graduated from Cal Poly, SLO with a degree in wine business management, earned his MBA from Arizona State University, and is a member of the Class 42 of the California Agricultural Leadership Foundation (CALF).

Why We Chose This Investment

• Opportunity to invest in a celebrated vineyard property in a premium wine grape pricing district.

• Experienced Sponsor team that brings decades of expertise in wine sales, viticulture, and vineyard management.

• 10 year hold period with value-added improvements and potential for long-term appreciation.

Additional Details

Minimum Subscription Requirement: $4,500,000
Maximum Subscription Amount: $7,650,000
Termination Date: December 31, 2023

Summary of offering changes:

• Seller Financing: Due to the seller’s potential tax burden at sale of the property, by agreeing to provide seller finance to the company, the seller is able to defer the gain on sale of the property over the installment period. This is beneficial for investors in that the terms are interest-only payments for 5-years at a 6% annual interest rate. The sponsor team intends to refinance this seller financing into longer-term non-seller debt during the 5-year hold, ideally at more attractive interest rates.
  The relatively more attractive financing terms are visible in the revised full financial model on the AcreTrader website. Please see the updated Confidential Private Placement Memorandum (PPM) for further information.
• Close of Escrow Visibility: By utilizing the seller financing, the real estate close of escrow and property purchase are anticipated to take place July 21, 2023.
• Increased Sponsor Commitment: In addition to the Sponsor’s $455,000 co-investment, any amount of equity that is not raised by calendar year end 2023 will be funded by a greater co-investment from the Sponsor team.
• New Offering Deadline: As of June 30, 2023, the company has not met its original equity fundraising goals; to date, the company has raised less than the original $8,275,000 minimum necessary to break escrow. The company intends to extend the offering period to the earlier of the date the maximum offering amount of $7,650,000 is reached or Dec 31, 2023 (the "Offering Deadline").
• Minimum Offering Amount: The company has also decided to lower the minimum offering amount to $4,500,000. North Capital Private Securities, the escrow facilitator, will be authorized to release funds once this threshold has been met.
• Decreased Private Placement and Management Fees: Due to the reduced capital raise, both the Private Placement and Management Fees will be reduced accordingly.
• Please see the Financials tab and the Investment and LLC Agreement for additional information. The updated PPM is available in the Documents tab to be viewed or downloaded. The PPM and offering descriptions should be read carefully to fully understand the objectives, risk factors, charges, and expenses of an investment.