Safe & Green Holdings Corp. Announces Master Purchase Agreement With Safe and Green Development Corporation for Manufacturing Projects Initially Valued in Excess of $140 Million
Current and planned projects exceed 4,000 units; expected to generate gross revenue in excess of $800 million
MIAMI--(BUSINESS WIRE)-- Safe & Green Holdings Corp. (NASDAQ: SGBX) (“Safe & Green Holdings” or the “Company”), a leading developer, designer, and fabricator of modular structures for residential, commercial, and point-of-care medicine, today announced its SG Echo subsidiary has executed a Master Purchase Agreement (MPA) with Safe and Green Development Corporation (NASDAQ: SGD) (“SG DevCo”), the Company’s real estate development subsidiary, which recently completed a spinout as a standalone public company. Under the MPA, SG DevCo has engaged SG Echo to manufacture modular units for its planned real estate development projects, including design, engineering, fabrication, delivery, and installation of the modular systems. Safe and Green Development Corporation expects the initial value of the MPA to be in excess of $140 million in net revenue to Safe and Green Development Corporation over a multi-year period.
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Rendering of the proposed Magnolia Residential Units (Photo: Business Wire)
Paul Galvin, Chairperson and CEO stated, "We are delighted to formalize this MPA with SG DevCo to manufacture modular units for projects that we expect will initially generate in excess of $140 million of steady and predictable manufacturing revenue. Moreover, we believe this is simply the first of several such agreements to support SG DevCo’s upcoming development projects, which currently total approximately 4,000 units and have the potential to generate in excess of $800 million of gross revenue to Safe & Green Holdings. We believe this agreement is further validation of our strategic decision to spin off SG DevCo earlier this year, as it allows both of our organizations to focus on our core competencies and is already proving extremely beneficial for our respective companies.”
Mr. Galvin continued, “In addition to the revenue potential of this agreement, we see a number of important ancillary benefits. Specifically, the magnitude of this initial MPA and expected future expansion of the agreement has the potential to increase our factory utilization to nearly 100%. Given the fixed cost nature of our business, we expect to benefit from economies of scale and increased operating margins as we increase the throughput at our factories. Importantly, we now have two factories in operation, with a third in the design phase, and a fourth in the planning stage. In total, these four facilities are expected to provide us with over 360,000 square feet of manufacturing space, all within the U.S., contributing to domestic job growth. In addition to the SG DevCo projects, our sales pipeline is growing rapidly, which we expect will support further expansion of our capacity and increased utilization of our facilities, while allowing us to prioritize the most lucrative projects.”
David Villarreal, President & CEO of Safe and Development Corporation, further noted, “Securing a long-term agreement with Safe & Green Holdings reduces risk and provides us visibility on pricing and timing, while allowing SG DevCo to focus on other key elements of the project. Given the modular nature of Safe and Green Holdings’ units, we are able develop high quality projects in a standardized, repeatable and cost effective format. In turn, this should reduce our time-to market, thereby allowing us to begin generating rental income in nearly half the time it would otherwise take.”
About Safe and Green Development Corporation
Safe and Green Development Corporation is a leading real estate development company. Formed in 2021, it focuses on the development of sites using purpose-built, prefabricated modules built from both wood and steel, sourced from one of Safe & Green Holdings Corp’s factories operated by SG Holdings’ SG Echo subsidiary. More information about SG DevCo can be found at www.sgdevco.com.
About Safe & Green Holdings Corp.
Safe & Green Holdings Corp., a leading modular solutions company, operates under core capabilities which include the development, design, and fabrication of modular structures, meeting the demand for safe and green solutions across various industries. The firm supports third-party and in-house developers, architects, builders, and owners in achieving faster execution, greener construction, and buildings of higher value. The Company’s subsidiary, Safe and Green Development Corporation, is a leading real estate development company. Formed in 2021, it focuses on the development of sites using purpose-built, prefabricated modules built from both wood and steel, sourced from one of SG Holdings’ factories and operated by the SG Echo subsidiary. For more information, visit https://www.safeandgreenholdings.com/ and follow us at @SGHcorp on Twitter.
Safe Harbor Statement
Certain statements in this press release constitute "forward-looking statements" within the meaning of the federal securities laws. Words such as "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "predict," "forecast," "project," "plan," "intend" or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. These forward-looking statements are based upon current estimates and assumptions and include statements regarding the Company’s market opportunities, the planned manufacturing expansions for SG Echo, the development pipeline for the Company’s majority-owned subsidiary, SG DevCo, and the Master Purchase Agreement executed between SG DevCo and SG Echo whereby SG DevCo has engaged SG Echo to manufacture modular units for its planned real estate development projects, including design, engineering, fabrication, delivery, and installation of the modular systems. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward-looking statements are subject to various risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include Company’s ability to complete the construction and expansion of its manufacturing facilities as planned, SG DevCo’s ability to complete its real estate development projects, and other factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and its subsequent filings with the SEC, including subsequent periodic reports on Forms 10-Q and 8-K. The information in this release is provided only as of the date of this release, and we undertake no obligation to update any forward-looking statements contained in this release on account of new information, future events, or otherwise, except as required by law.
Crescendo Communications, LLC
Source: Safe & Green Holdings Corp.
Released December 18, 2023