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The Ultimate Guide to Net Leasing Investing

As a major component of our core investment strategy, we seek to own and operate grocery store anchored shopping centers.  Whether the property has one tenant or many, we invest a significant amount of time looking at the structure of the existing leases before committing to a deal. Lease structure can vary significantly from one tenant [...]

The Ultimate Guide to CRE Underwriting

On the homepage of our website, we have a statement that reads “we look at 1,000 deals and choose ONE.”  To get from 1,000 deals to one, we devote a significant amount of resources to our underwriting program and have developed an efficient process designed to uncover the deals that have the best chance of being [...]

How to Successfully Invest in Private Equity CRE Deals

Every investor has a preferred asset class.  Some like stocks, some like bonds, others like precious metals, cryptocurrency, or commodities. No matter the investment type, they all have the same objective, to build wealth. While each asset class has its relative merits, we firmly believe - and have built a company around - the idea that [...]

Understanding the Capital Stack of a Real Estate Investment

At the risk of going too-far back to basics, here is some Business 101: to operate, businesses need capital. When starting up, expanding, or purchasing significant assets, they raise that capital from investors. The terms on which investors commit capital reflect the degree of risk investors are willing to bear, and conversely, the returns the investors [...]

The Truth About Real Estate Investing for Passive Income

Real estate investing has an unwarranted reputation as a relatively low-effort source of passive income. Buy a property, set aside some maintenance reserves, sign up some tenants, and sit back while a steady stream of cash rolls in, right? Well, no. In fact, passive investments of the type we just described represent something of a unicorn [...]

Conducting Due Diligence on a CRE Sponsor

506(c) syndication and real estate crowdfunding have changed the face of the passive CRE market forever. The days of requiring personal relationships with real estate operators are long gone, which has opened the door to a far more versatile arena. However, a lack of institutional screening has put individual investors under immense pressure to conduct due [...]

Evaluating Private Real Estate Investment Opportunities

When considering any type of investment, it’s a best practice to perform a significant amount of due diligence before deploying your hard earned money into it.  Depending on the opportunity, this can be tough because the evaluation metrics for each asset class are different and it’d be incredibly time consuming to know all of them.  For [...]

Private Equity Real Estate Fees

The administration of a private equity real estate fund is a time intensive and, at times, laborious process.  It takes a highly dedicated team of skilled professionals to start a fund, file the legal documents, raise the capital, find properties, underwrite them, manage them, and oversee all of the accounting, tax, and reporting responsibilities. For investors [...]

An Introduction to Cap Rates in Commercial Real Estate

The Capitalization or “Cap” Rate is one of many tools that an investor uses to value a commercial real estate property.  The formula for calculating it is relatively simple, but the intuition behind it is much more complex. Calculating the Cap Rate The Cap Rate is calculated as the property’s projected year one Net Operating Income [...]

Private Equity Real Estate Fees: What You Should Know

Depending on the perspective, investment fees are a topic that can elicit mixed responses.  From the investor point of view, they can reduce overall returns.  From the manager’s perspective, they are necessary to support the administration of an investment.  Either way, they are an important topic to discuss. In our case, we run a company that [...]

How to Evaluate Commercial Real Estate Using Discounted Cash Flow Analysis

At the most fundamental level, a commercial real estate investment involves investing a sum of money today to purchase a stream of income in the future.  The concept itself is simple, but the hard part can be trying to determine how much to pay for that stream of income. One of the most widely used, and [...]

Private Equity Real Estate: Fund Fees vs. Individual Deal Fees

At First National Realty Partners, one of our mantras is that “we look at 1,000 deals and choose ONE.”  We believe that this is one of the keys to our success and it requires a talented team of multidisciplinary real estate professionals to do it.  Once identified, it takes another team of equally talented professionals to [...]

Private Equity Real Estate – 9 Risks to Consider Before Investing

Like all investments, there is a distinct risk/reward tradeoff with private equity real estate.  The higher the risk, the higher the potential reward (or loss).  The best investors have a knack for recognizing the risks in each transaction and take proactive steps to mitigate them as part of their project plan. As a private equity firm [...]

FNRP’s COVID-19 Acquisition Strategy

A few weeks ago, our firm was faced with an incredibly difficult situation. We were under contract to purchase a tremendous, dominant shopping center anchored by national tenants in a strong secondary market. We were full steam ahead and proceeding to the closing table. Our third party reports were completed and our financial due diligence was finished. [...]

Real Estate Returns:  Cap Rate vs. Return on Cost

Every real estate investor has their own set of return requirements that help determine whether or not a project is worth pursuing.  To measure potential returns, there are two widely used methods:  Capitalization (or “cap”) Rate and Return on Cost.  They each have their own strengths and weaknesses and both are useful in the appropriate situations. [...]

Evaluating Risk:  Four Types of Commercial Real Estate Investments

Diversification is a foundational principle of nearly all risk management programs.  One way to diversify a real estate investment portfolio is to deploy capital into assets at multiple points on the risk/return spectrum to protect it from extreme changes in the value of any one asset.  It is a time tested strategy that can be applied [...]

Understanding the Capital Stack

Depending on the size of the transaction, the finances of a real estate deal can be a complicated matter.  In the largest deals, funds can come from a variety of sources/investors, each of whom have their own specifications, rules, and requirements.   Collectively, these sources are known as the “Capital Stack” and each component plays an important [...]

Waterfalls, Clawbacks & Catch-Up Clauses – Three Private Equity Terms Explained

Whether allocating money to an investment fund or to an individual deal, the terms and conditions of a private equity real estate investment are governed by a document called the “Private Placement Memorandum” or “PPM” for short.  Among other things, the PPM lays out two important aspects of the transaction: (1) the fee paid to the [...]

The Benefits of Private Commercial Real Estate Investment

No matter the asset class, one of the bedrock principles of investing is that diversification is key ingredient in the recipe for a well balanced portfolio. Historically, conventional wisdom has suggested that a “basket” of stocks and bonds contains all the diversification necessary for a well balanced portfolio. While this is true, there’s another asset class [...]

Why Passive Investors Prefer Private Equity CRE Partnerships

Often, casual conversation can make it seem like owning and operating rental properties is a risk free, passive endeavor. In reality, an individual owner managing one or more rental properties may find that the required level of effort is far from passive and that the returns are sub-optimal when accounting for time invested. For many, this [...]