Traction Capital | September 16, 2026 investor briefing
Automatic transcript; recognition errors may remain. Timestamps match the edited replay. Internal preparation and the superseded first Q&A handoff/answer are omitted.

[00:00:00.090] Andrew Davis: Well, welcome everybody, like I said, to our Traction Capital monthly investor briefing. My name is Andrew Davis. I head up IR for Traction Capital, and the purpose of these, as you can see, is very simple. Number one, if you're new, it's just a brief introduction as to who we are and what we do.

[00:00:19.360] Andrew Davis: And then really the bulk of the time is spent on, two…

[00:00:23.440] Andrew Davis: essential pieces. Number one, all of the economic indicators that we're… that we're tracking that underlie our strategy. And then two, the pipeline. What, the different projects that we're working on, what's…

[00:00:36.630] Andrew Davis: what's coming down the pipe and the progress on those, so investors and potential investors get a very clear sense of how projects are performing in real time against projections. And then, as always, we'll leave time at the end for Q&A. You can pop in questions at any time, and if it makes sense to answer them in the

[00:00:56.060] Andrew Davis: flow of the presentation, we'll do that, or we'll touch on them at the end, so… Without further ado…

[00:01:02.150] Andrew Davis: Who's Traction Capital?

[00:01:06.200] Andrew Davis: So, traction, very, very simply, finances residential land development.

[00:01:11.670] Andrew Davis: So we'll dig into the mechanics of this, but very, very simply, we,

[00:01:17.720] Andrew Davis: finance and develop in the title the land that builders, National and Regional Home Builders.

[00:01:23.760] Andrew Davis: need. We have a very unique model, where before we ever deploy investor capital, or call investor capital, we secure builder commitments and significant non-refundable deposits for the finished lot price, so we are,

[00:01:40.780] Andrew Davis: Contracting the exit before we even begin the process of entitling and developing, doing horizontal development on the land.

[00:01:48.970] Andrew Davis: Like I said, my name's Andrew Davis. I have a background in investor relations, working for a couple different PE companies previously, and just really, really enjoy the process of working with and supporting investors as they invest in great projects like these.

[00:02:05.750] Andrew Davis: And, I'll let Brandon introduce himself, and then Wesley.

[00:02:11.120] Brandon Hiett: Absolutely. Thank you, Andrew. My name is Brandon Hyatt. I am the fund manager for Traction Capital. Really my role is to, source, opportunities, underwrite these opportunities, and ultimately be a fiduciary to you, the investor, to ensure that the,

[00:02:27.610] Brandon Hiett: The developments that we're investing in, meet our internal metrics and to get you a risk-adjust return, or as close to a risk-adjusted return as possible.

[00:02:40.470] Wesley Greene: Fantastic. I'm Wesley Greene, and the operator of Sage Communities, and very excited, to share with you what SAGE has been doing for many years.

[00:02:50.460] Wesley Greene: And I've just decided to, scale that up, and so you can see there we've got 22 years' experience, or I have 22 years experience, 28 subdivisions and 1,400 lots.

[00:03:01.230] Wesley Greene: And we've got about 300 lots in the pipeline we'll be talking about and sharing with you tonight.

[00:03:07.500] Andrew Davis: Thank you, Brandon and Wesley, and not joining us, but very much a part of the team, is Dan Frazier, our CFO and advisor.

[00:03:18.320] Andrew Davis: All right, alluded to this a bit already, but this is our model, very simply. So, our model, as we'll dig into further more down the road in this presentation, sits at the, where the demand is for single-family homes, either to, to buy or to rent in the U.S.

[00:03:37.700] Andrew Davis: So, the way that we go about that, and the way that we do this in an inverse way to most

[00:03:44.240] Andrew Davis: private equity projects or private real estate projects like these, is we actually, when we go out and source land, when SAGE goes out and sources land.

[00:03:52.790] Andrew Davis: They are doing so with builder specs in mind, so the builders tell Sage in our key markets what

[00:04:00.500] Andrew Davis: what they need, and then Sage sources that, brings it back to the builder, confirms that it meets their specs.

[00:04:08.010] Andrew Davis: And,

[00:04:09.920] Andrew Davis: Builders, as we'll talk about a little bit later, don't like to buy raw land. They like to buy finished, shovel-ready lots, and so that's the margin or the gap that Sage fills.

[00:04:18.850] Andrew Davis: Before Sage calls investor capital and really deploys into horizontal development and infrastructure, they get a signed purchase and sale agreement for the finished lot price, and a significant non-refundable deposit from the builder.

[00:04:38.080] Andrew Davis: Then once SAGE finishes that horizontal development, they hand those lots over to the builder. The builder

[00:04:45.040] Andrew Davis: Puts a shovel in the ground, goes vertical, and Sage moves on to the next.

[00:04:49.590] Andrew Davis: The next project.

[00:04:53.570] Andrew Davis: And then…

[00:04:54.970] Andrew Davis: very, very simply how, how we work with investors and the return that we target for investors. We've created a preferred equity share class. So, investors sit just above the, or just behind the bank, and in front of the common equity.

[00:05:13.400] Andrew Davis: the builder deposit, and we very simply pay a 12.5% preferred annualized return on your capital with a target timeline for this fund of 42 months. We've structured this very intentionally.

[00:05:27.410] Andrew Davis: So we are incentivized to perform, and we don't make any meaningful, any meaningful compensation on our end until investors are made full, both with their

[00:05:38.820] Andrew Davis: Principal, as well as their targeted return.

[00:05:43.660] Andrew Davis: And that's who SAGE is. Now we're gonna jump into… I'm sorry, that's who Traction is. Now we're gonna jump into Economic Indicators.

[00:05:54.120] Andrew Davis: So, the primary driver, and the reason that we've selected the markets that we have, Texas, North Carolina, and South Carolina, is these are the three fastest-growing markets.

[00:06:06.300] Andrew Davis: in the country. There's markets that are in states that are losing population. These are the states that they're moving to, so this is a core demographic trend that we continue to monitor.

[00:06:19.820] Andrew Davis: And then this is another demand driver. So, this is the estimated U.S. housing deficit. This was the most recent estimate as of July 15th of this year.

[00:06:30.920] Andrew Davis: And, that's just… Very simply highlighting the gap between what is and what needs to be.

[00:06:38.440] Andrew Davis: For housing supply for our growing country.

[00:06:43.360] Andrew Davis: And then the, genesis of the strategy here, I'll let Wesley speak to.

[00:06:51.570] Wesley Greene: Thank you very much, Anne.

[00:06:53.480] Wesley Greene: You know, one of the things that I'll just share with you guys a little bit, is a little bit of history here, is, you know, I was building houses and sourcing lots and, doing that over time, and then I realized that

[00:07:08.700] Wesley Greene: there were people wanting lots, and actually, the whole… there's a lot of demand for raw lots out there, and that's when I began to uncover the model that had switched. Basically, all the lots in the market were being consumed by very national builders, and regional builders were coming in and buying them, so all the smaller builders weren't able to find inventory.

[00:07:25.610] Wesley Greene: And then that's when I realized kind of this shift, and you can kind of see it right here, like Lennar, for example, in the Q1 of 26, 98% of their lots are going to be what we provide, which are finished lots ready for them to go vertical.

[00:07:40.430] Wesley Greene: Right? And so that inventory that they're looking for, they realize that they can boost their stock returns by getting inventory that's ready to go vertical, and they know they can sell. One of the other things that I've learned, too, doing this is that

[00:07:55.740] Wesley Greene: the builders with the budgets know where the market is and know how to incentivize and sell these products. They're very tight on their numbers.

[00:08:03.980] Wesley Greene: And so, that is one of the things where I focus… where do we focus our energies and our markets, and that's kind of where I came into these markets as well.

[00:08:11.760] Wesley Greene: It's where our builder partners are telling us they want light inventory. And so we've been spending a lot of time doing that, so… but you can see the shift, and this is a permanent shift. These builders really have decided that they much would prefer

[00:08:24.580] Wesley Greene: Sage, and I will tell you, some of the work that SAGE does, most of the work SAGE does, is before any money comes into the deal. It is the front-end work of actually learning and finding landowners in these markets.

[00:08:38.010] Wesley Greene: It's the relationship buildings with the builder partners, and it's also working with every different municipality and getting with engineers and architects and front-loading all the costs

[00:08:48.690] Wesley Greene: to those people and taking the risk. I take that risk of putting all that money out there to this whole community, of people. It takes about 15 to…

[00:08:58.080] Wesley Greene: People typically work together to get it to the point where a builder is ready to go, put their money up, sign a contract, and then at that point is when we bring in bank and other money into the situation.

[00:09:12.230] Wesley Greene: But again, that's what they want. They want to offload that risk, and that's the risk that I take, and then when the risk comes in with Traction Capital.

[00:09:20.330] Wesley Greene: Everybody else is committed to it.

[00:09:25.850] Andrew Davis: Excellent. Thank you, Wesley.

[00:09:28.480] Andrew Davis: And I think one of the things that we're always monitoring here is what the gap is between rents and for sale homes. What's the difference in a monthly payment, which is nearly how everybody that purchases a home evaluates whether or not they can afford it, between

[00:09:47.060] Andrew Davis: a single-family home to purchase, or a like-kind rental. And for a long time,

[00:09:54.650] Andrew Davis: home… the cost of owning a home on a monthly basis has been really out of reach, to where, for a lot of people, renting made more sense. But as you can see here, there's a couple interesting things that have occurred in our target markets that make specifically

[00:10:10.830] Andrew Davis: purchases of new homes very attractive for, for home buyers. And one of the things that builders, especially large, well-capitalized builders, are leveraging in order, to… to make… to get these homes to an attractive price point from a monthly cost perspective.

[00:10:28.390] Andrew Davis: is, incentives. So, I just read that Lennar,

[00:10:36.080] Andrew Davis: On average, was giving about $55,000 in incentives per sold home, and those are primarily taking the form of

[00:10:44.320] Andrew Davis: Effectively buying the rate down, and you can see the gap there between

[00:10:49.670] Andrew Davis: What a… what a $450,000 home would cost at the 30-year, the recent 30-year rate, versus

[00:10:57.350] Andrew Davis: that permanent rate scenario. So just another… another demand signal here, and one of the things we really look for in terms of affordability of this end product for builders, for buyers.

[00:11:10.679] Andrew Davis: And, another very, very strong signal is Berkshire Hathaway, who is notoriously very,

[00:11:18.530] Andrew Davis: conservative with their, with their capital. They're sitting on,

[00:11:23.410] Andrew Davis: well over $300 billion, I think close to $400 billion right now, waiting for opportunities to emerge. So when they make an entire company acquisition, like they did with Taylor Morrison over the summer, just a couple months ago now.

[00:11:37.850] Andrew Davis: signals, and they stated very, very specifically around that, acquisition. Actually, just earlier this month, their CEO, Greg Abel, sees a very strong trajectory for the U.S. housing market over the next 5 to 10 years. So, it gives us confidence to be in the same,

[00:11:55.830] Andrew Davis: To be in the same business as those guys.

[00:11:59.590] Andrew Davis: And next, we are going to jump in to the pipeline. I'm gonna let Wesley and Brandon speak to the different projects we are investing in and where we are in the process.

[00:12:14.500] Wesley Greene: Fantastic. I'll, jump in here, Brandon, and talk through some of these and let you speak on the one down there that we've got the beat on. So, the Hewitt project, glad to report that we did go down and met with the City Council and got, 7-0 approval on the Hewitt project, so we got the 194 lots approved, which is fantastic.

[00:12:34.490] Wesley Greene: We also are moving along with all of our engineering, so, excited to get that, and we have an LOI with a regional builder, and, anticipate us having an agreement within the next 2 weeks with that builder, so…

[00:12:49.320] Wesley Greene: Moving along very well. It looks like, we're probably targeting a quarter one close, possibly as early as January, but most likely February close for Hewitt.

[00:12:59.500] Wesley Greene: And the numbers look great on that. We'll be doing a phased approach with that. I can go into that more at another call, but we're doing some phased approach stuff, which will lower our risk profile and, provide really good returns back to everybody on that. So, it's a very good project.

[00:13:17.890] Wesley Greene: Springside project, we are almost resolved the title issue so that we can close on that, so we're looking on closing that project in December.

[00:13:26.200] Wesley Greene: And then we do have two LOIs right now, two different buyers that we're discussing it with, and we'll line up a closing for in the December timeframe. Both those have very good return on cost projects for us.

[00:13:39.350] Wesley Greene: The Springside project is a 32-lot project, which is very nice. It's a little bit quicker on the, absorption rate. And that's why we're doing the phasing on the larger projects for absorption.

[00:13:51.210] Wesley Greene: Let's go to the next one here, Old Sunset. Super excited about that. We met with the city municipality on that one today, and got very good news. They're very excited about moving that project along. Just to let you know, there were two national builders that had another developer come in and work on those.

[00:14:09.480] Wesley Greene: They had some challenges, and we've been able to address those challenges and actually work through those challenges, and actually now working with the city to overcome it so that we can make sure that the numbers work well, but everything

[00:14:21.910] Wesley Greene: On that project's looking great. We do have 3 buyers right now that are interested in buying that project, and we anticipate, like, a January, close on that project, or February is what we're looking at as well.

[00:14:34.010] Wesley Greene: And then, Brennan, I'll let you speak to the Rockdale.

[00:14:36.960] Brandon Hiett: Absolutely. So, Rockdale's an interesting project, and really, it's in a core market that otherwise was not on our radar, and one of the things that you'll hear Wesley speak about, and then ultimately us at Traction speak about, is de-risking of a project.

[00:14:54.050] Brandon Hiett: One of the things, or one of the many things that makes this project exciting for our underwriting and, overall, is that this project is what we describe as fully engineered.

[00:15:05.210] Brandon Hiett: And, fully approved, which is, basically has gone through all the municipal approval process, and de-risking, so to speak, from the, from the municipality.

[00:15:16.550] Brandon Hiett: So that we know that the project is ready to go. And when I mean ready to go, ready for Sage to come in, and then start building homes for these home builders that they identify.

[00:15:25.530] Brandon Hiett: Now, one of the other unique opportunities of this project is that there is a tremendous amount of growth in this market. As you saw by our last slide.

[00:15:35.050] Brandon Hiett: there was, you know, roughly around 200 plus… 250 plus thousand, net migration to, Texas in the last census year, which is also translating to 166,000 jobs as well. A large amount of those jobs are going to markets not necessarily in the core of, Austin or Houston or Dallas, for example. It's happening on the outer perimeters of these markets.

[00:16:00.010] Brandon Hiett: where there's room to grow and build these factories. And just down the street from this Rockdale project, there is a large former aluminum plant.

[00:16:09.730] Brandon Hiett: called Alcoa, and really what's transformed in that area is data center development and AI infrastructure, including Samsung, who's building a lot of silicon.

[00:16:21.850] Brandon Hiett: for, groups like Tesla, for example, and there was just an announcement

[00:16:26.730] Brandon Hiett: of a $9.1 billion lease to an AI company. They aren't publicly disclosing that AI company, but a rumor is that it is Anthropic, which will bring 1,000-plus jobs to this specific area between Austin and Houston, so…

[00:16:44.640] Brandon Hiett: The story is great, from the, current entitlements and the de-risking point of view, and then also, when we look at this market, can these homes be absorbed?

[00:16:55.630] Brandon Hiett: All indications lead to yes, they can, and not only that, the municipality is also backing the project through, public monies for reimbursements, to the builders, being the horizontal builders, then also the home builders as well.

[00:17:14.420] Andrew Davis: Yeah, and Brandon, I think I want to just touch on something that both you and Wesley… Wesley spoke to, which was an investor question that came up in terms of… really in terms of what… what is the… what is the risk, the operational risk.

[00:17:29.490] Andrew Davis: once SAGE starts to actually develop these, and it sounds like, but you, you guys…

[00:17:37.070] Andrew Davis: I'd like to hear your, your, you know, expansion on this, that the majority of the unknowns in terms of approvals, capacity, etc, is already resolved.

[00:17:49.010] Andrew Davis: Prior to… the project start and investor capital being called.

[00:17:54.570] Wesley Greene: That's… that's a good question. You know, it's one of those things where you talk about aim small, miss small, right? And what I would tell you is, when we do this engineering, we know every pipe, every facet, you know, we've got everything topoed, measured, so we've got a real…

[00:18:11.660] Wesley Greene: accurate, number on what it's going to take to actually get the horizontal infrastructure in, and get the grading done, and the storm, and all that, and it's all approved. So there's not a surprise, like, oh, you've got to put in the system, or whatever.

[00:18:24.120] Wesley Greene: everywhere else. All those systems are identified, all of them are done, all of our,

[00:18:28.520] Wesley Greene: Horizontal contracting partners, have bid on that. Typically, we'll have two bids come in on that, or three. We have partners that we work with, we trust, and basically, it's a very low margin of risk. We do put contingency in every project, of course. Some things could happen.

[00:18:43.100] Wesley Greene: But as far as our timeline to get from where we start and where we finish, it's typically 8 to 12 months, and those are calculated, measured, and we have a contract on the front side, so there's very low risk.

[00:18:55.060] Brandon Hiett: And I would just compound on that. That is, the de-risking part, and what Wesley's describing is what SAGE is doing before Traction's, monies and capital is then put to work within the, specific project. So, it is being de-risked from that perspective before we deploy capital.

[00:19:13.100] Andrew Davis: Excellent. Thank you, guys.

[00:19:15.340] Andrew Davis: I know we… we already touched on these a bit. Any… any additional color that you guys want to add on Hewitt?

[00:19:23.020] Wesley Greene: Yeah, I just hit the phasing real quick on this one. One of the things that we talked about is finishing up the LOI right now, is the absorption rate. Every market's got an absorption rate, and so this one will have a little bit longer tail on it for the absorption.

[00:19:37.160] Wesley Greene: But it also is what really helps us with our building partners, is they know the markets very well, and so that allows us

[00:19:43.350] Wesley Greene: to basically pull about $6,000 of cost, I mean, $6 million of cost off of this project until we actually can put it in to return. And so, we're able to do those, adjustments. And yeah, it's just a fantastic project. Brandon, now that you speak to the market. You did more study on the market and all the things going on in this market.

[00:20:03.360] Brandon Hiett: Yeah, no, the Hue Market is, very strong. It's a suburb of Waco, and really, Hue, it's a municipality that is built on neighborhoods. Adjacent to this project.

[00:20:14.180] Brandon Hiett: There is a brand new state-of-the-art elementary school, for example. Baylor University employs a large amount of the residents as well, which is also bringing in research dollars, et cetera, to the area, and then also,

[00:20:30.330] Brandon Hiett: salaries that can then also support home values as well. One of the unique,

[00:20:35.830] Brandon Hiett: economic points of this project specifically was the variety of the homes and product being built within this. Again, talking about de-risking and diversification.

[00:20:46.550] Brandon Hiett: Many of the homes in the market are either smaller lots or much larger lots, call them estate lots, for example. This is a nice middle ground and a move-up product for all these families that are growing, from their first home and their new homes to a better, and, more established neighborhood and a better product in the market. So, it's really diversifying.

[00:21:09.190] Brandon Hiett: Really, the family units and where they're at today, economically, and then also the product that's in the market as well.

[00:21:20.560] Wesley Greene: Yes, so Springside, this one sits next to five schools. It's, very close to the Biltmore Park Urban Center, here in Asheville.

[00:21:31.080] Wesley Greene: And, the lots are of a good size that we can bring in a good price point. So, again, the entitlements are there, the entitlements are there, we've just got a… the seller has an issue they're resolving, and so that's all we've been waiting on for this project, and I'm very excited to get this one going. It's in a great location, it's ready to go.

[00:21:55.950] Wesley Greene: Yep, so we did speak on this one. This is the one we met with the city on. Like I said, we've got really engaged builders for this. They feel this is a very strong market.

[00:22:07.880] Wesley Greene: Super excited to bring this one to market. We had a stormwater issue and a wetlands issue, as I mentioned.

[00:22:15.980] Wesley Greene: And we've been able to address that, work with the people on municipalities and our team. That's where I go back to understand, it really does take… I don't want to list all the different companies that I pay or hire.

[00:22:29.880] Wesley Greene: But it takes a lot of people.

[00:22:31.680] Wesley Greene: To get these through, to meet the qualifications to get entitlements.

[00:22:37.490] Wesley Greene: And so this one is in the early phase of that. I mean, I say early, we're probably a third of the way through. But we're… we're… all the… when I look at these type of projects, I either see checks or X's.

[00:22:50.070] Wesley Greene: Everything right now is checks. It's all a go. Like I said, we've got the buyer, we've got the landowner, and we've got the municipality. Everybody's a go to work on it, so it's an exciting project.

[00:23:01.070] Andrew Davis: Like, it checks not X's.

[00:23:03.160] Wesley Greene: That's right.

[00:23:04.690] Andrew Davis: Anything else on Rock Hill?

[00:23:06.110] Wesley Greene: I mean, this one's great. This one closes, in, like, 10 days from now. So, it's a great project. And, a builder has their, contracts, and their escrow is with the attorney. The lender's signed up to go, so everything's set to go. We'll be delivering these lots, since it's so small, we'll be delivering lots in the quarter two of next year.

[00:23:26.350] Andrew Davis: Excellent.

[00:23:28.420] Andrew Davis: Alright, well, that wraps up our pipeline review and discussion. So, talked about who traction is, the economic indicators that we're continuing to watch, and pipeline progress.

[00:23:40.390] Andrew Davis: And now, opening it up for, for Q&A, and I meant, I meant to say this, but, webinar will be recorded and shared.

[00:23:49.150] Andrew Davis: So, yeah, now's the time for any questions that you have.

[00:23:56.850] Andrew Davis: And one that comes up, or one that comes in here, is… because of the nature of the fund having multiple projects at any given time.

[00:24:07.970] Andrew Davis: For investors, when their capital is invested and it's called and deployed, does that 12.5% continue to accrue, even when there's, you know, projects start and stop, et cetera, over the life of the fund?

[00:24:21.760] Andrew Davis: Yeah, absolutely, and that's part of the, you know, the stewardship that we take here, is making sure that we have a really robust pipeline. So when your capital is called, that 12.5% is accruing throughout the entire, the entire 42 months that it's in the fund.

[00:24:38.940] Andrew Davis: Regardless of where different projects are at in there.

[00:24:41.900] Andrew Davis: in their phases. And…

[00:24:46.760] Andrew Davis: I think one of the other questions that's been coming up as well is just kind of what's, you know, what risks exist

[00:24:53.410] Andrew Davis: you know, once investor capital has been called, and I think that we've covered that very, very well. Builders…

[00:24:59.230] Andrew Davis: You know, these… the builders that we work with, the large, national and regional home builders, they have, you know, they're always looking forward and making sure, with, you know, as much confidence as they can possibly, get.

[00:25:13.580] Andrew Davis: That, that the homes that they're building, are going to be, you know, they're going to sell through.

[00:25:20.450] Andrew Davis: And the more money that they're deploying in any given market at any given time, the more research, the more people they have watching all the different indicators, making sure that those markets stay strong. So, we believe we're in strong markets, we have a strong team and a strong product.

[00:25:36.420] Andrew Davis: in a strong and durable housing market. So, if there's no further questions, we'll wrap up on this Wednesday evening.

[00:25:45.260] Andrew Davis: So it looks like we might have one coming up here.

[00:25:49.140] Andrew Davis: Wow.

[00:25:51.230] Andrew Davis: Oh, yes. How long is an investment, in the fund? And the answer is, we're targeting 42 months.

[00:25:58.400] Andrew Davis: So, as… as you've seen here, as we reviewed the…

[00:26:02.620] Andrew Davis: As we reviewed our pipeline, we have a lot of things that we're controlling, but we don't always know exactly how long the development phase is going to take. But for this fund, we're targeting a 42-month timeline and 12.5% annualized return across that timeline.

[00:26:25.780] Andrew Davis: Okay, well, I'm dropping my email, phone, and…

[00:26:30.900] Andrew Davis: calendar link in the chat here for everybody to see. So, this is my job. I'm here to answer your questions and walk you through the investment process, not just ahead of your investment, but throughout the entire life of your investment. We are committed to

[00:26:47.800] Andrew Davis: Consistent, highly detailed reporting, giving our investors all the information that they need to be confident about the stewardship of their investment.

[00:26:57.430] Andrew Davis: And you can also see,

[00:27:01.870] Andrew Davis: You can also use this QR code as well to book a call to connect with us. And, again, thank you everybody so much for being on the call.

[00:27:10.680] Andrew Davis: We'll share, replay within the next 24 hours, and I look forward to connecting with you soon.

[00:27:18.390] Wesley Greene: Fantastic. Thank you, everybody. Have a good evening.

[00:27:20.730] Andrew Davis: Everybody.

[00:27:21.990] Brandon Hiett: Appreciate it.