Annual_Report_Final_WithOUT_Financials_copy

2018 Annual Report

Florida | Georgia | Nevada | North Carolina | Texas www.northavenue.com | [email protected] Contents 3 4 Letter from Our Chief Executive 6 Stewards of Capital, Influence & People 8 NAC Portfolio 10 In Their Words 12 Employee Spotlight 14 Borrower Spotlight 16 NAC Leadership & Team 18 NAC Advisory Board 20 A Year of Growth Nationwide Reach

Annual Report for the year ended 31 Dec. 2018 Letter From Our Chief Executive 2018 was truly a breakout year for NAC offered by banks to deliver the capi- consistently communicated to me and our team. Coming off of meaning- tal they need to experience growth, that we are different simply because ful growth in 2017, we set out to stretch stay competitive, and to retain tal- we do what we say we are going to ourselves with objectives targeting ent. do. 100% top and bottom line growth. It is in this trend and struggle that The character, integrity, and the Not only did the team exceed these NAC finds both purpose and op- pursuit of excellence are embod- objectives, but NAC was able to post portunity. 2018 saw our team sur- ied by all 16 members of our team. financial numbers well beyond any pass over $100 million in cumulative Purposeful people do purposeful of our expectations for the year with funding to rural businesses in the things and I believe that through 129% revenue growth, 179% EBITDA form of affordably priced long term these people, NAC has been faith- growth, and 158% Net Income growth. loans. In doing so, NAC has helped ful in stewarding the resources it has This growth was largely driven by a create or save over 1,200 jobs. There been given: capital, influence, and three-fold increase in year over year are companies, jobs, and growth people. originations. Thanks to a strong that would not be here today with- Thanks to 2018’s earnings, new term secondary market, lower cost of out the important work done by the debt recently issued by our senior capital, and fiscal discipline the men and women at NAC. lender, and a substantial cash posi- Company was able to achieve EBIT- The direct correlation between the tion, NAC begins 2019 with a strong DA margins that exceeded 50%. success of our economic develop- balance sheet and all the capital it While shareholder value creation is ment efforts and our shareholder needs to achieve its objective for one of the hallmarks of our respon- value is a dream come true for many 2019: $100 million in originations. sibility as stewards of capital, NAC of us. How rare is it to find a legiti- We know that 2019 will bring its chal- looks far beyond that in measuring mate opportunity where purpose lenges, just as we are already expe- success. We hold the fundamental and profits align? riencing early headwinds due to belief that access to properly priced And behind each of these loans the federal government shutdown. capital is the lifeblood of a free mar- are real people and real stories of However, I’m optimistic as to what ket system. 2018 saw America’s the American entrepreneur some- 2019 holds, thanks to the incred- economy continue its trend of trans- times fighting to grow and other ible support NAC receives from our ferring wealth and resources, includ- times dreaming to launch their busi- teammates, investors, lenders, bor- ing both people and capital, from nesses. These proprietors and their rowers, and partners at the USDA. rural to urban markets. Many of Amer- companies provide opportunity, We remain grateful for the trust you ica’s rural areas can no longer rely livelihood, optimism, and hope to have placed in us and hopeful that on conventional resources and loans real people, real employees, and we can continue our work in a man- real communities. Hopefully, the re- ner that is profitable, purposeful, lationships we have formed and the and, most importantly, faithful to manner in which we serve has led to our mission and Calling. positive influence in real lives. With Gratitude, I personally like to step back and reflect on NAC’s mission statement Ben Chatraw at the end of each year as both a Chief Executive guardrail and measuring stick of the Company’s success. It’s easy for us to see the growth in numbers, but most rewarding to me has been the feedback we receive from our cli- ents, NAC’s borrowers, who have NAC Mission Statement North Avenue Capital exists to honor God through excellence, integrity, and growth as stewards of capital, influence, and people. 3

Annual Report for the year ended 31 Dec 2018 Stewards of Capital, Influence, & People Stewardship /'st(y)ōō,erd,SHip/ (Noun) an ethic that embodies the responsible planning and managing of resources NAC’s mission statement revolves around stewardship. The Company sees capital, influence, and people as the primary resources with which we have been entrusted. Ultimately, NAC’s team recognizes we will be judged based on how successfully we utilize these resources to generate growth, integrity, and excellence. Capital NAC’s commitment to steward- Revenue Growth 179% ship begins with the capital that our investors and equity holders $8.5M Earnings Growth have entrusted to us. NAC seeks $3.7M to maximize long term ROI by $1.5M maximizing profit relative to over- 2017 2018 all risk. It is our belief that prop- Investor Distributions erly underwritten and structured 40% Paid to Date USDA business loans present one of the best risk adjusted returns Balance Sheet Equity available in current market condi- Growth tions. NAC recognizes that proper stewardship of capital via investor returns opens the door to greater opportunities which in turn gen- erate greater profit, more jobs, and more meaningful influence. Influence Originations Growth Cumulative Jobs Created/Saved NAC views our opportunity to $60M 1,200 positively influence the lives of 826 others as an important measure of 3x$20M 593 success. This influence is demon- 45 strated not only through our rela- 2017 2018 tionships with borrowers, strategic 2015 2016 2017 2018 vendors, the USDA, and others, but also more tangibly through Conditional USDA USDA Guaranteed Fees the capital NAC deploys to gen- Commitments erate jobs and drive economic $70M $3M growth in rural communities. $0 $20M +$50M 4 NAC NAC 2017 2018 Contribution Usage

People NAC Employee Growth Purposeful companies attract purposeful people. NAC’s team is truly world 16 class. From former military battlefield leaders to entrepreneurs to career USDA experts, NAC’s team has lived and worked all across America and the world 10 +60% developing experience in a huge diversity of fields. Yet, each team member is united by a common mission and purpose at NAC. We invest in our people 2017 2018 by supporting ongoing development that empowers them to challenge and sharpen one another on a daily basis in our collective pursuit of excellence. In The News North Avenue Capital works closely with our borrowers to strategically notify local and national media outlets when deals close. Want to learn more about our borrowers, their stories, and how they are impacting their communities? Visit our Website at: www.northavenue.com Click on ‘News’ or ‘Stories’ 5

Annual Report for the year ended 31 Dec 2018 NAC Portfolio North Avenue Capital has reviewed over $1.3 billion in potential loans ultimately resulting in $110 million in capital being deployed across a diverse range of industries in rural America. To date, our portfolio has performed without a single loan loss. Industry: Manufacturing Industry: Battery Recycling Loan Amount: $3.2M Loan Amount: $10M Jobs Saved/Created: 45 Jobs Saved/Created: 450 Location: Nevada Location: Florida Industry: Commercial Real Estate Industry: Hotel Loan Amount: $9.5M Loan Amount: $5M Jobs Saved/Created: 95 Jobs Saved/Created: 12 Location: Arkansas Location: Tennessee Industry: Wholesale/ Industry: Lodging/ Retail Nursery Restaurant/Bar Loan Amount: $3.1M Loan Amount: $2.2M Jobs Saved/Created: 40 Jobs Saved/Created: 40 Location: North Carolina Location: North Carolina Industry: Adventure Park Industry: Meat Processing Loan Amount: $5M Loan Amount: $1.9M Jobs Saved/Created: 27 Location: Texas Jobs Saved/Created: 22 Location: Texas Industry: Waterpark Industry: Winery/Event Loan Amount: $10M Venue Jobs Saved/Created: 167 Loan Amount: $1.6M Jobs Saved/Created: 42 Location: Texas Location: Illinois 6

Industry: Event & Hospitality Industry: Portable Toilets Loan Amount: $1.4M Loan Amount: $3.1M Jobs Saved/Created: 4 Location: Florida Jobs Saved/Created:17 Location: North Dakota Industry: Auto Parts Industry: Hotel Manufacturing Loan Amount: $5M Jobs Saved/Created: 20 Loan Amount: $9M Location: Indiana Jobs Saved/Created: 103 Location: Florida Industry: Borrow Pit/Sand Mine Industry: Parking Lot Loan Amount: $10M Loan Amount: $5M Jobs Saved/Created: 8 Location: Florida Jobs Saved/Created: 7 Location: Texas Industry: Engineering & Manufacturing Industry: Honey Distribution Loan Amount: $4.3M Loan Amount: $1.8M Jobs Saved/Created: 5 Jobs Saved/Created: 110 Location: Georgia Location: Illinois Industry: Kart Racing Industry: Resort/Hotel Loan Amount: $5M Loan Amount: $4.5M Jobs Saved/Created: 30 Jobs Saved/Created: 410 Location: Texas Location: Michigan Industry: Int’l Auto Exports Industry: Commercial Real Estate Loan Amount: $1.8M Loan Amount: $7.3M Jobs Saved/Created: 30 Jobs Saved/Created: 10 Location: Georgia Location: Minnesota 7

Annual Report for the year ended 31 Dec 2018 In Their Words Borrowers, Employees, & Investors alike trust North Avenue Capital to be an honest, forth- right organization that will stand behind them as they launch into an effectively capitalized future. We pride ourselves in leading the charge with a capable set of individuals from vari- ous backgrounds. Here are a few thoughts about 2018. “NAC was a game changer for us because if we were to try to go through other avenues of different lending options we could not have this project. The way that it was laid out to us, and the way it’s performed all the way to closing has been spot on.” -Dan Laubacker, St. Mark’s Pond, Borrower “We hold our Lenders and Architects to a high standard and take tremen- dous pride in the fact that our portfolio has yet to suffer a single dollar of loan losses and has maintained an on-time payment rate in excess of 99%.” -Joseph Rowell, Chief Operating Officer “NAC’s greatest achievement in 2018 was expanding our team with indi- viduals who are not only experts in their respective areas of specialty but who embody NAC’s Core Values, which helps drive us toward our Mission.” -Eric Johnson, President “The team did what they would say. They nailed their KPIs and are building a functioning repeatable system and process that is poised to continue to grow.” -Len Mazur, Investor “Throughout 2018, NAC worked to gain a greater understanding of its USDA partners’ aims for the Business & Industry Program. These conver- sations have helped us better align with our shared mission of improving economic growth in America.” -Anne MacDonald, Board Member “I can confidently say that without North Avenue Capital, this transaction would have never happened. We’d still be out there wandering around in the woods looking for money.” -Barry Owens, Treetops, Borrower 8

“The NAC team has been extraordinarily effective in helping their clients secure funding for their businesses using the USDA loan program. NAC has repeatedly proven that they are seasoned professionals with the required knowledge, perseverance and professionalism required to serve their cli- ents’ unique financing needs through the USDA approval process.” -Scott Luttrell, Chairman /Investor “Ben and his team try to do things the right way. I’ve called on them for some advice and as a sounding board outside of my business, and Ben and his team have been very helpful.” -Wil Massengill, Five Oaks, Borrower “We endeavor to influence the people and businesses we partner with, and how can you lead someone to a place you have never been or are unwilling to go? We’ve lived the fight to start something new, faced the challenge of establishing a culture tethered to our values, and stand unwavering in our commitment of service to others.” -Mike Wilson, Commercial Lender “As successful as NAC has been to date, I’m more impressed by HOW they run their business than WHAT they have accomplished. Their character, integrity, thoughtfulness, desire for win-win value creation, and creativity in finding solutions is evident and helps explain the level of their success.” -Craig Wenning, Board Member 9

Annual Report for the year ended 31 Dec 2018 Employee Spotlight: Ben Mathewson Ben Mathewson joined NAC in 2016, making him one of the longest standing Commercial Lenders. He works with diligence and strives for not only personal advances, but team advanc- es. Ben was ready to take his experi- on rural communities,” Ben remarks ence and pursue his dream of be- regarding the economic sensitivity ing central to an entrepreneurial that remains in rural America. endeavor. “Our capital creates ripples; NAC NAC is unlike traditional lending helps job-creating businesses to firms, combining rugged hustle with grow, which in turn puts food on refined investment prowess offer- the plates of hundreds of families.” ing Ben a healthy mix of autonomy and accountability that has driven Ben shares NAC’s unending com- both his personal growth and the mitment to excellence and honor in firm’s organizational success. pursuing opportunities to help rural businesses survive and thrive, along “My position and daily duties are with the communities and families akin to owning one’s own business. they support, using innovative loan Hard work and agility are required structures that are tailored to their and rewarded.” - Ben Mathewson unique needs. Ben Mathewson has been a vital “My position and daily And when he’s not hopping from part of the North Avenue Capital duties are akin to own- sea to shining sea to steward a new team since he completed his mili- ing one’s own business. deal along, Ben serves in his most tary commission 2½ years ago and Hard work and agility important capacity as husband to became a Commercial Lender. are required and re- Carly and father to big sister Isla and His impact has been so profound warded.” little “player to be named later.” that he also serves as Area Man- ager and helps manage the op- - Ben Mathewson NAC couldn’t do what it does and erations of NAC’s Nevada branch. wouldn’t be where it is without Ben was born and raised in a rural high-character men and women After graduating from the Air Force Nebraska community where his fa- leading and investing in the mission Academy and serving as a Finance ther and brother still operate the of the firm. Ben raises the standard Officer stationed across the globe, family’s 3rd generation cattle ranch. every day he wears the NAC jersey. It was this experience and connec- tion to rural America that made his providential encounter with NAC at a job fair for Service Academy grad- uates in 2016 so intriguing. Deals Ben Has Influenced That same background, coupled or Closed at NAC: with his military work ethic, makes him uniquely qualified to under- Applied Fiber Holdings stand and address the needs of the businesses he serves. The Frying Pan & American Fish Company “A missed rain, a hail storm, anoth- er company closing shop: these can Five Oaks Nursery & Tree Farm all have severe and lasting impacts The Manor at 12 Oaks Farm “At the end of the day, business is all about people and relationships, and St. Mark’s Pond NAC’s success is directly correlated to the quality of the people on our team.” -Ben Chatraw, CEO 10

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Annual Report for the year ended 31 Dec 2018 Borrower Spotlight: Weeks Honey Farm With the 3rd generation taking the helm, a South Georgia beekeeping and honey distribution operation uses a USDA loan to move from regional prominence to the national stature they are. “NAC Gave Weeks Honey the Boost They Needed...” - Jill Stuckey, Former USDA State Director of GA Currently available in 28 states & in nearly 3,000 stores including Whole Foods, Sprouts, Kroger & more. Donnie “Ray” Crosby is a man of faith, Honey to regional prominence. Under 3rd Generation“NAC provided real value for my family a devoted husband, a loving father, an Ray’s leadership, the dream of national Family-Owned Honey Farm in Georgia expert beekeeper, and, most recent- distribution is coming true at a furi- ly, the 3rd generation CEO of Weeks ous pace. Having expanded distribu- and me. Not just with the USDA loan, Honey Farm, Inc. (Weeks Honey). tion from 150 to 3,000 retail locations but they introduced us to a new CPA, in 2018, it is clear that consumers un- gave valuable input on our marketing Ray’s grandparents, Margaret & Fla- derstand the value of Weeks Hon- strategy, and have taken a genuine val Weeks, founded Weeks Honey ey’s 100% US-made honey. He said, interest in our business,” added Ray. in 1960, initially taking a hobby and setting out to meet local demand “My grandparents started this in- With fresh capital and shelf-space in for pure, raw, unfiltered honey. credible company more than 50 the nation’s leading grocery stores, years ago, and my parents contin- including Whole Foods, Sprouts, His mother, Sharon Weeks Crosby, ued the legacy of quality and integ- Kroger, Albertson’s, and many more, has been involved with the company rity. I’m honored to carry on the torch Ray expects Weeks Honey to be from its inception and spent over 25 to new markets, with new products, selling their honey in over 3,000 re- years at the helm, leading Weeks and the loan from North Avenue tail locations by the end of 2018. Capital will allow us to do just that.” The nutritional value of honey is un- As with any growing consumer prod- matched and undisputed…even uct, Ray needed capital to effectively the Bible agrees. Weeks Honey manage inventory, fill orders, and keep routinely reminds customers that... the momentum going. The USDA loan, underwritten and funded by NAC, is a key ingredient to realizing the dream. “Weeks Honey is a great example...It’s just the type of project that the USDA likes to get behind...” -- Jill Stuckey, Former USDA State Director of GA 12

“Pleasant words are like a honeycomb, sweet to the soul and healing to the bones.” Proverbs 16:24 Eric Johnson, President of North Avenue Capi- tal, said this about Ray and Weeks Honey: “Weeks Honey is growing fast, creating new jobs in their community, and doing so with a legacy of integrity and excellence. The USDA loan is a great fit for this rural, family business.” “Pleasant words are a honeycomb, Sweet to the soul and healing to the bones!” Proverbs 16:24 13

Annual Report for the year ended 31 Dec 2018 NAC Leadership BEN CHATRAW ALEX LOUIS ERIC JOHNSON Chief Executive Managing Partner President Strategic Relationships, Originations, Leadership, Leadership, Strategy, Purpose, Under- Originations, Execution Technical Expertise, Execution writing, Marketing, Execution JOSEPH ROWELL BO WEATHERSBEE 5 Chief Operating Officer Chief Financial Officer Offices Nationwide Operations, Servicing, Capital Stack, ROI, Cost of Capital, Headquarters: Underwriting, Relationships, Financial Controls, Reporting, Ponte Vedra, FL Execution Leadership, Execution Offices: Dallas, TX Hahira, GA Henderson, NV Raleigh, NC “NAC is aiming to nearly double production in 2019, a goal that we couldn’t hope to set, much less achieve, without a cohesive, capable, and committed team. These men and women are the real deal!” -Joseph Rowell, Chief Operating Officer 14

Team NAC North Avenue Capital saw a year of growth in 2018. By adding five members to the team, NAC was able to create more opportunity in creating and cultivating deal flow. The new staff, com- ing from all different backgrounds has helped to solidify a firm foundation for a successful launch into 2019. ALEX DESTINO BEN MATHEWSON CHRISTY KROSNER CLINT JUSTICE Exec Director of Business Commercial Lender Servicing Manager & Senior Loan Architect Intelligence & Marketing Loan Architect DAVID LAVENDER EDWARD BHAWANIE JASON HOERR JIM SLAIGHT Senior Credit Manager Business Development Commercial Lender Commercial Lender 16 Team Members KAITLYN CROWDER MARIA JULIANA FUEYO MIKE WILSON Operations & Marketing Loan Architect Commercial Lender Specialist Importance of “Team” NAC’s team is strategically dispersed among five state offices across the country. In order to stay connected, the team attends a 3-day annual meet- ing where they work to cultivate strategies, goals, and objectives while visit- ing loan sites and developing as a team. 15

Annual Report for the year ended 31 Dec 2018 NAC Advisory Board Scott Luttrell Anne MacDonald Brian Walck Advisory Board Chairman Board Member Board Member Mr. Luttrell founded LCM Group in 1988 out of In addition to her role as an Advisory Board Mr. Walck currently serves as Director of his desire to diversify capital and focus on the Member, Ms. MacDonald serves as North Av- a number of non-profit organizations and growing opportunities in the rapidly growing enue Capital’s Senior Advisor on Rural Devel- ministries. In connection with this service, alternative investment sector and currently opment and Strategic Partnerships. Ms. Mac- Mr. Walck holds the position of Executive serves as CEO and Chief Investment Officer. Donald is a policy consultant to Fortune 100 Director of Videre, a non-profit organiza- companies and a Senior Advisor to Texas A&M tion focused on providing business train- Mr. Luttrell currently serves as the Chair- University’s School of Agricultural Economics. ing and affordable debt-based financing man of the Investment Committee for the to entrepreneurs in Ghana and Senegal. YMCA Retirement Fund, serves on Southern Over the course of 10 years, she has worked Methodist University’s Cox School Execu- in the White House, Pentagon, State De- Having led the distribution of more than tive Board, is Chairman of the HOI (Helping partment, and post-Administration of- 100 business loans through this program, Others Internationally), Board of Directors fice of President George W. Bush and Mrs. Mr. Walck has firsthand knowledge of the of East-West Ministries, and the Board of Laura Bush, where she served as the Chief impact debt-based capital can have on Trustees to the National Christian Foun- of Staff to the former First Lady. In these both businesses and their local economies. dation of North Texas. Mr Luttrell also diverse roles, Ms. MacDonald has had a di- serves on the Board of Advisors to Ballast rect impact on rebuilding communities af- In addition to managing several entre- Point Ventures and Mangrove Partners. ter natural disasters and various conflicts. preneurial investments, Mr. Walck serves as the lead Mission’s Pastor at the Vil- Executive Leader Strategic Thinker lage Church in the Dallas metro area. Sophisticated Investor Policy Leader Experienced Director DC Veteran Entrepreneurial Investor Non-Profit Leader NAC’s Digital Footprint Successful Executive 200% Q4 Website Traffic Growth In Quarter 4 2018, NAC grew website traffic by 200% compared to Quarter 4 2017. Q4 2018 New Visitors: 2,800 Q4 2017 New Visitors: 930 16

Borrower Brief Chris Dance Craig Wenning North Florida’s Newest Premier Wedding & Event Venue Board Member Board Member 42-Acre, Private Woodland Property Mr. Dance is President of Havenshare Fi- Mr. Wenning is the Chief Executive Officer nancial, LLC where he provides compre- of Annandale Capital, an investment man- Green Cove Springs, Florida hensive family office services for high net agement firm based in Dallas, Texas that worth families. In this role, Mr. Dance over- focuses on advancing each client’s distinct For years, Steve Magiera had a desire sees activities including investment man- investment objectives through asset al- to retire, but not in the traditional agement, tax and estate planning, legal location, manager selection, research, sense. He wanted to break free from services, and operations management. portfolio customization, and reporting. the corporate life and build a legacy of his own by starting and cultivating his Prior to Havenshare, he served in executive- Prior to joining Annandale in 2009, Mr. Wenning own business. level positions at Mt. Vernon Investments, served as the Senior Director of Operations of Glow Networks, and Excel Communication Watermark Community Church and was Vice Through careful research, Steve discov- in roles ranging from Investment Manager to President of Symmetry Capital Advisors, LLC, ered a notable lack of affordable event Business Unit President to General Counsel, where he managed money for high net worth options for the residents of North overseeing an IPO, a $1 billion acquisition, and individuals and families. Prior to business Florida. the sale of a company for more than $3 billion. school, Mr. Wenning held various manage- ment roles at the technology startup Life- Having found the perfect piece of land, Family Office Leader Minders.com. His efforts culminated in help- Steve simply needed a financial partner Business Founder ing take LifeMinders public on the NASDAQ. to stand behind him and his start-up. Strategic Investor North Avenue Capital stepped in with a Portfolio Manager loan structure that allowed Steve to see his vision become reality. Company Leader “I feel so fortunate to have found NAC Investment Professional in 2017, as traditional lending options weren’t going to meet the unique “2018 was a breakout year for NAC...” requirements of this project.” -Steve Magiera, Owner “...The company deployed over $60M in capital into the areas of our country that need it the most, generating over 1,200 jobs and, in doing so strengthening com- Today The Manor’s weekends and weekdays are booking fast for wed- munities.” dings, corporate events, retreats, team- building outings, business meetings, -Ben Chatraw, Chief Executive and more. Magiera is thrilled to have The Manor be a backdrop for memo- ries of families and friends. Interested in an event at The Manor at 12 Oaks? Visit The Manor online at: www.themanor12oaks.com 1,200 48 Cumulative Jobs Created or On average, for every loan Saved since NAC’s Founding NAC makes, 48 rural jobs are created or saved. 17

A Year of Growth $60M Loan Originations Triple Purposeful People are Loans Originated from Previous Year Attracted to Purposeful Companies In 2018, NAC was the The NAC team closed over $60M in fastest growing USDA USDA B&I loans in 2018, representing In 2018, NAC substantially increased B&I Lender in the country. 207% year-over-year growth from the head count, adding new team mem- prior year. This significant increase in bers who bring a wide variety of back- Cumulative Originations production was driven by expanding grounds and expertise. A USDA loan NAC’s nationwide reach, strengthen- requires a special mix of people and $110M ing NAC’s market reputation among talent to source, underwrite, and ser- industry participants, and establish- vice. The right skill set combines exten- $50M ing several effective sourcing chan- sive banking and credit expertise, keen $30M nels. NAC was also able to grow understanding of the dynamics and our pipeline to over $300M eligible trade-offs of risk and return tradition- $10M loans setting the stage for an even ally found in private equity, a high level 2015 2016 2017 2018 greater origination volume in 2019. of attention to detail, and an entrepre- neurial spirit. NAC’s success in 2018 Access to Capital was largely a result of combining the Broadens with Senior right team with these essential skill sets. Banking Relationship Nationwide Reach In 2017, NAC formed a strategic fi- Expands Through nancial relationship with a leading Strengthened Relation- commercial bank. NAC and the bank ships with State Offices expanded the relationship in 2018 to provide NAC with even greater ac- Each USDA B&I loan must be approved cess to capital to fund loans across the by the USDA Rural Development of- country. NAC has proven our commit- fice in the state in which the loan was ment to financial stability and cred- originated. NAC has now closed loans it-worthiness demonstrated by our in nearly a dozen states and has active strong historical performance, clean projects in over half of the U.S. Main- track record of third-party audits and taining a sharp focus on USDA lending credit exams, and close adherence to has enabled NAC to efficiently sub- all relevant compliance and regula- mit loan requests and subsequently tions. Each of these factors has played receive approval on 93% of the firm’s an essential role in enabling NAC to submitted packages from a wide strengthen and grow our balance sheet range of states. This success is a result and secure long term investment from of an alignment of NAC’s loan struc- investors and financial institutions. tures and the USDA’s program regu- lations, but more importantly, a com- mitment to the heart and mission of both NAC and the USDA B&I program. “NAC’s exciting growth in 2018 was driven by a combination of hustle and teamwork. While those factors will always remain an important part of NAC’s culture, perhaps the Company’s greatest lesson from the year was the importance of systematizing the lead generation and qualification process. NAC will invest over $500,000 in 2019 into systematic marketing and business intelligence. This investment is already yielding fruit via the generation of more than 10 new leads each week. The steady increase of new leads combined with the expansion of a very talented commercial lending team gives me great optimism that we can meet NAC’s very ambitious goals for 2019.” -Eric Johnson, President 18

93% 12 $1.3B Loans USDA Approval States with Underwritten Rate NAC Closed Loans $110M 128% Cumulative Originations Revenue Growth 1,200 207% 1 Jobs Created/Saved Origination Loan Paid In Growth Full 22 $0 0 Closed LLoosasens Loans in Deals Delinquency North Avenue Capital 19 Quick Stats 2018

Annual Report for the year ended 31 Dec 2018 Nationwide Reach North Avenue Capital has active projects in 26 states across the United States of America and Puerto Rico. NAC’s team of commercial lenders and network of affiliates source deals through a variety of marketing channels. States with Active North 2019 Marketing Expansion Avenue Capital Projects North Avenue Capital Affiliates North Avenue Capital Offices Affiliate Program National Reach Local Presence North Avenue launched the NAC Affiliate Program in 2018. This nationwide program allows NAC Affiliates to offer their clients ac- cess to NAC’s long-term debt financing. To learn more about the Affiliate Program, please visit northavenue.com/affiliates 20

NAC’s USDA Loans are available to a wide variety of industries - not only agriculture. Top-Rated Golf and Ski World’s Only Clean Battery Northeast Florida’s Premier Largest Portable Toilet Resort in Northern Michi- Recycling Publically-Traded Wedding and Event Venue Supplier in North Dakota gan Company in Nevada 17% NAC Loans by Industry 17% North Avenue Capital has the experience 24% 23% and expertise to analyze and underwrite any 19% business operating in the countless indus- tries eligible for a USDA loan. NAC’s current portfolio represents a diverse group of businesses - all supporting local economies. Manufacturing Commercial Real Estate Retail Trade Entertainment Hospitality Retail Trade Entertainment Hospitality Manufacturing Commercial Real Estate $5M 8% 22 Average Loan Average Interest Rate Average Term NAC makes loans between A USDA loan provides access Longer amortization periods $1 Million and $25 Million. to capital at affordable rates. improve borrowers’ cash flow. 21

www.northavenue.com Interested in Growing Your Business with North Avenue Capital? (866) 526-4950 [email protected] www.northavenue.com