Regency Affiliates (OTC: RAFI) Investor Presentation October 24-25, 2016
Disclaimers Not an Offer to Sell Securities This presentation is not, and under no circumstances is to be construed as, an offer to sell, or the solicitation of an offer to buy, securities. An offering of securities, if any, in connection herewith will only be made in compliance with the registration requirements of the Securities Act of 1933, as amended or an exemption therefrom. Projections This presentation includes forecasts, projections and other predictive statements that represent our assumptions and expectations in light of currently available information. These forecasts, projections and other predictive statements are based on industry trends, circumstances involving our business and other factors and they involve risks, variables and uncertainties. Actual performance results may differ from those projected. While the information presented is believed to be accurate, we make no representations or warranties, express or implied, with respect to the completeness or accuracy of the information. No guarantee is presented or implied as to the accuracy of specific forecasts, projections and other predictive statements contained herein. Valuation Estimates of values or ranges of values ascribed herein to assets in which Regency Affiliates, Inc (the “Company” or “Regency”) holds an interest are not intended to represent management's view of the fair market value of Regency's interest in such assets, but instead management's view of potential inherent or underlying values of such assets based on the methodologies described herein. Management believes that a fair market valuation of Regency's interest in such assets would require discounts and other adjustments where appropriate to account for lack of control over an underlying asset (and its associated cash flow stream), the relative illiquidity of the underlying asset or interest therein, and potential negative tax attributes associated with an underlying asset. Use of Non GAAP Measures In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we may use non-GAAP financial measures. We believe that the use of non-GAAP measures helps investors to gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts. When analyzing our operating performance, investors should not consider these non-GAAP measures as a substitute for measures prepared in accordance with GAAP. Forward Looking Statement This presentation may include certain forward-looking statements, opinions, forecasts and projections. Any such statements, opinions, forecasts, and projections reflect various estimates, risks, and assumptions by Regency concerning anticipated results and are subject to change continually and without notice of any kind and may no longer be true after the date indicated. No representations or warranties are made by the Company or its affiliates as to the accuracy of any such statements, opinions, forecasts or projections. Whether or not any such forward-looking statements, opinions, forecasts, or projections are in fact achieved will depend upon future events, some of which are not within the control of the Company or its affiliates. Accordingly, actual results may vary from the projected results due to a variety of factors including, without limitation, economic and market conditions, political events and investor statements, liquidity of secondary markets, and competitive conditions and such variations may be material. Statements contained herein describing documents and agreements are summaries only and such summaries are qualified in their entirety by reference to such documents and agreements. The information in this presentation speaks as of the date hereof or as of the date the information is given. 2
Presenters Laurence Levy Chairman and Chief Executive Officer John Ryan Chief Financial Officer 3
Agenda Topic Page # Company Overview 5 Valuation – Why We are Here Today 10 Self-Storage Overview 17 Security West and Mobile Energy 25 Appendix 27 4
COMPANY OVERVIEW 5
Company Overview Description Current Corporate Structure • Regency Affiliates, Inc. (OTC: RAFI) is an OTC listed company with a focus on investing in assets that generate long-term, predictable and sustainable returns on shareholder capital • The Company targets hard assets in the infrastructure, 50% 50% 97% infrastructure-like and real estate sectors • Regency’s current portfolio includes three assets: Mobile Storage Security West Energy Depot – 50% interest in Security West – 50% interest in Mobile Energy – 97% interest in Storage Depot • Regency’s management team and board of directors are all significant stakeholders of the Company (collectively we own over 50% of the common equity) and are long-term investors with a shared goal and vision of growing Regency’s existing portfolio companies and expanding the portfolio through new platform acquisitions • The Company recently raised approximately $9 million through a rights offering and subsequently acquired Storage Depot with the proceeds of the offering and $2 million of balance sheet cash • While management will continue to be opportunistic, Regency will be focused on and is well-positioned to continue expanding our self-storage portfolio through incremental acquisitions 6
Overview of Current Holdings Portfolio of assets with long-tenured, blue chip customers (U.S. Government and Kimberly Clark) and recession-proof dynamics Security West Mobile Energy Storage Depot Description A limited partnership interest in the A partnership interest alongside Detroit A portfolio of 5 self storage facilities 717,000 square foot Security West Edison in Mobile Energy which owns located in and around Harrisburg, PA. complex located on 34.3 acres in and operates an energy facility located The facilities together comprise Woodlawn, Maryland. The facility is on approximately 11 acres of land in approximately 360,000 square feet of occupied under a lease expiring in Mobile, Alabama. The facility supplies net rentable space consisting of in October 2018 by the United States up to 61 megawatts of co-generated excess of 2,500 climate and non- Social Security Administration (SSA). steam and electricity for use in climate controlled storage units. The buildings were constructed in 1968 Kimberly Clark's tissue mill operations and 1972 and have been occupied by under a 15 year exclusive supplier the SSA since then. agreement signed in April 2004. % Ownership 50% 50% 97% Acquisition Year 1994 (pre Hyde Park investment) 2004 2016 Headquarters Woodlawn, MD Mobile, AL Harrisburg, PA Facility 7
Regency Affiliates’ Timeline Since Hyde Park’s initial investment, Regency has been focused on growth and value generation for shareholders Nov 1994 Oct 2002 Apr 2004 Mar / Apr 2016 2016+ Regency Affiliates Hyde Park Regency acquires Regency raises ~$9 million Regency pursues acquires 50% identifies Regency 50% interest in in rights offering ($5 of $9 incremental self limited partnership as undervalued Mobile Energy million accounted for by storage and other interest in Security and acquires Hyde Park and affiliates) M&A opportunities West controlling and uses proceeds and portion of shares balance sheet cash to acquire Storage Depot 1994 2002 2004 2016 2016+ Portfolio Security West Security West Security West Security West Mobile Energy Mobile Energy Mobile Energy Storage Depot Storage Depot New Self Storage Future M&A Share Price Dividend Increases CAGR Since Initial Investment (Oct ’14, ’15, ‘16); increased 22% since Dividend Before Rights Offering 19.1% first dividend in 2013 announced at Hyde Park Market Price 15.7% $14 $0.20 per share Investment at $12 $1.35 per share $10 $8 $6 March 2016 $4 Rights Offering $2 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 8
Investment Highlights Regency is well-positioned to leverage our core assets to expand the portfolio and continue delivering attractive, predictable returns Stable, Predictable Cash Flow Aligned Quarterly Management and Dividend Shareholders (2.5% Yield) Significantly Diverse Portfolio Undervalued Macro Favorable Market Environment- Dynamics Agnostic Asset Classes 9
VALUATION – WHY WE ARE HERE TODAY 10
Sum of the Parts A simple, conservative sum of the parts showcases the underlying value of our assets A + B + C + D = E Security Mobile Self Cash Regency West Energy Storage Asset Value In the following slides we present both a conservative and an upside scenario for each component of Regency, ultimately building up to a valuation range for Regency Affiliates that materially exceeds our prevailing market price 11
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