What We Buy:
We buy free-standing, single tenant retail properties and single tenant industrial properties (warehouses and distribution centers) located anywhere in the United States and Canada, subject to existing leases. We also buy multi-tenant “power center” properties – i.e., retail shopping centers leased primarily to national or regional tenants occupying large or medium spaces. We buy properties opportunistically, as they become available, in primary, secondary and tertiary markets. We buy properties either individually, on a “one off” basis, or as portfolios of multiple properties in a single transaction.
- Drug stores
- Office supply stores
- Auto parts stores
- Home improvement stores
- Pet supply stores
- Furniture stores
- Clothing stores
- Department stores
- Fast food restaurants
- Anchor buildings to malls or shopping centers
- Dollar stores
- Out-lots to malls or shopping centers
- Convenience stores
- “Power center” properties
We generally do not buy multi-tenant shopping centers containing small shop space, shopping malls or movie theaters.
In addition to the above, we also buy non-retail properties, such as the following:
- Single tenant warehouses
- Single tenant distribution centers
- Free standing bank branch buildings
- Office buildings leased to a single tenant
- Land (subject to a ground lease) underlying practically any kind of property (including land underlying multi-tenant retail or office properties.)
Because we are entirely family owned, and have no “outside” investors who expect instant returns on investment, we buy properties for the very long term, with the intention of holding past the termination of the existing tenancy. In making a purchase decision, we consider a property’s overall projected rate of return – including, especially, its future residual value when the property becomes available for a successor tenant. Consequently, unlike other buyers with shorter time horizons, we have do not have any hard and fast requirements for minimum “cap” rates or minimum lease terms, as these are only some of the many factors we consider when making a purchase decision.
We prefer that a property we purchase be subject to an existing lease with a credit tenant, paying rent at (or, preferably, below) currently prevailing market rent levels for that location and property type. When a property is subject to a lease with a long remaining base lease term (say, 15 years or more), we ascribe considerable importance to the tenant’s credit-worthiness, the relationship between the rents actually being paid as compared to prevailing fair market rents, the length of remaining lease term, and whether the asking price will yield a reasonable rate of return over the base lease term. But we will also purchase properties with much shorter lease terms (sometimes, even less than five years). In such cases, we focus more on the investment merits of the real estate itself – its location, condition, demographics, suitability for alternative uses when the current tenant vacates and the expected cost of re-positioning the property for a needs of a successor tenant.
Because we are long term investors, we will often buy properties that produce low, or no, immediate cash flow even for extended periods of time, such as:
- Properties purchased subject to an existing mortgage, where all rent income is applied to liquidate a mortgage that self-amortizes over the term of a non-cancellable base lease with a credit tenant
- Properties purchased subject to lengthy, flat-rent base lease terms, or leases that provide for many decades of tenant renewal options without rent increases (or with declining rents) in the renewal terms; and
- So-called “remainder interest” transactions, where our fee position does not become a possessory property interest (and thus yields no current return) until an intervening “estate for years” property interest, held by a third party (or the seller), expires.
As long as our expectations of a property’s ultimate residual value will yield an acceptable overall rate of return, we are quite content to forego, or to accept reduced, current cash flow from new acquisitions even for an extended period of time. For prospective sellers, our philosophy and approach often produces higher net selling prices than can be obtained from our competitors.
We will consider transactions of all sizes; no transaction is either too small or too large. We have the flexibility to consider even the smallest “one off” transaction. We have the cash, on hand, to purchase even the largest of transactions — whether a single property transaction, or a multi-property portfolio transaction.
We Are All Cash Buyers and Close Promptly:
We are “all cash” buyers with substantial cash funds available to commit to new acquisitions that fit our investment parameters. We need no lender approvals or commitments of any kind in order to commit to even the largest of transactions. And since we are also a family-owned business whose principals are all “in house” and involved with investment decisions from the outset, we have no need to obtain outside investor approvals or commitments for new acquisitions. Therefore, we act extremely quickly, with the flexibility to accommodate almost any conceivable seller requirement. In most cases, we can (and usually do) commit to acquisitions in as little as 48 hours after receipt of submittals, subject only to standard due diligence and third party reports. And since we maintain our own, in-house legal, accounting and property management departments, due diligence proceeds quickly and documentation is finalized swiftly. We can close most acquisitions within thirty days.