Blog / Triple Net Property

This section features past triple net investment offering recommendations we've made.


Shops at Main and Lindsey

[This offering is fully subscribed. This is provided as an example of one of the offerings our affiliates have recommended to clients in the past.]

Description:

The Shops at Lindsay & Main was a bank-owned REO property that consisted of a multi-tenant retail strip center located on the Southwest corner of Main Street and Lindsay Road in Mesa, Arizona. The property was only 38% occupied when acquired, providing an opportunity to increase cash flow and upside potential by increasing the occupancy and replacing lower-credit-quality tenants with higher credit quality tenants. The units were also leased at below-market rates, and scheduled increases were written into the terms, providing an additional way to increase cash flow. The location of the property was also a driving factor in the acquisition. The shops are highly visible and accessible, with convenient ingress and egress from both Main Street and Lindsay Road. Main and Lindsay is a heavily trafficked intersection, with around 38,800 vehicles per day. Additionally, there are around 322,550 residents within a 5-mile radius of the shops, and Mesa is the second largest city in the Phoenix metro. The opportunity to acquire the property at a discount, the potential to increase cash flow through lease-up and credit enhancement, and the strong location all aligned to make this opportunity especially appealing. It sold at a 25%+ profit after approximately 26 months.


Tax-Benefits:

The investment was structured for Tenant-in-Common (TIC) ownership, and designed to qualify as a replacement property in a 1031 exchange. Depending on each investor's tax basis at the time of invesment, many investors were also able to utilize depreciation to defer the taxes on a portion of the income derived from the investment. Investors were also able to complete a 1031 exchange out of the investment after it sold to continue to defer 100% of their capital gains taxes.


Goals:

  1. Stable, long-term cash flow backed by value-oriented retail property.
  2. Capital gains tax deferral as a 1031 replacement property option.
  3. An option for income-tax avoidance via depreciation.
  4. Potential long-term upside, either due to a sale or to increasing rental income.


Status:

This offering performed inline with projections, providing steady cash flow for 1031 and cash investors until it sold at a substantial profit. Individual investors in the program will be able to derive income-tax deferral from the depreciation allowed for commercial real estate.


Annualized Cash Flow Return:

Year2011201220132014
Projected4.00%4.00%4.00%4.00%
Actual4.00%4.00%4.00%4.00%
Variance0.00%0.00%0.00%0.00%

 

Total Return (Incl. Cash Flow):

25.31% in 26 and ½ months in addition to a 100% return of capital.


[Past performance does not guarantee future results. This offering’s results are not necessarily indicative of future recommended offerings. Real Estate Investing is subject to risk, including, but not limited to potential disruptions in cash flow, loss of principal, illiquidity, etc.]

 

Written By: Staff




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