Net Lease Investor’s Options and/or Alternatives

DAJK GROUP NNN

 

Net lease investor’s objective is:

1) his target CAP rate;

2) with high or with the lowest net lease management fee.

 

There is a San Diego-based Net Lease Management.

http://netleasedmanagement.com/

“Net Leased Management is a cost-effective administrative and management support solution for net-leased property owners. For a small monthly fee, Net Leased Management provides accounting services, monthly financial reporting, lease administration, property-tax compliance and insurance compliance; handles any landlord obligations; and conducts site visits as needed. We also provide access to a master insurance policy for investors to capitalize on bulk pricing and increased limits.”

 

[Full article…]

 

Please note a Higher CAP rate is higher the risk and more involvement with property management.

 

Is there any alternative without paying fee or paying the lowest to net lease management?

 

Yes, I highly recommend all our clients/investor to select only a true triple net lease or an absolute NNN lease.

The more fees investor is paying for a third party; his return of investment would be reduced proportionally as well.

In fact, different net lease investor has different investment objectives.  My task is providing all options both pros and cons and both advantages and disadvantages.

Strategically, when the net lease investor combines with his high taxable income with his net lease investment, it would be a greater benefit for him in a long-term investment.

This strategy would accomplish reducing taxable liability: converting his short term to long term gain which in turn will be taxed at the lowest tax bracket, his fixed income from lease revenue is a passive income to an investor.  [Learn more…]

I would inform all my clients about these options and they need to decide how they would like to proceed.

[Learn more…]

 

Growing, Evolving and Pushing Forward!

 

Related articles:

  1. Big Buyer of Net Lease Report – March 2015
  2. Top 6 Terms You Should Know Before Investing in net lease commercial real estate
  3. First Key selection of net lease Commercial Real Estate investment…?
  4. Net Leased Commercial Real Estate (NNN CRE): Step #2
  5. Should you invest in Net leased commercial Property? Or Multifamily or Self-Storage?
  6. How much McDonald invests in net lease commercial real estate?
  7. TOP Net Lease CRE Investment Books – April Selection! **Additional 10% discount!
  8. Case Study: Sale-Leaseback Technique of Wendy’s and McDonald
  9. What is an alternative investment real estate versus vacation home…?
  10. In Hong Kong, the “Mosquito Apartments” sells for $US 2,872 per square foot
  11. Net lease or Triple-net Lease is an Alternative Solution for Removing 12 Headaches in Real Estate Rental
  12. Net Lease Case Study: Family Dollar

 

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DAJK GROUP is the place where investors, business owners and entrepreneurs can research and find useful information, insight, resources, advice, guidance and inspiration for acquiring funds for their project, acquisition for their net lease commercial real estate, increasing their assets and running their profitable business.

Our group of expert Oil Trader, Commercial Real Estate Specialist, Asset Management, and Business & Financial Analyst, can help to answer all your questions and to provide you with investment alternative and options catered to your investment strategy.  Sign-up for a free 30-minute consultation with us now!

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Case Study: Sale-Leaseback Technique of Wendy’s and McDonald

Sale-leaseback

Wendy’s Refranchising 640 Stores

Following a pattern we’re seeing in the wider market, Wendy’s this week announced that they were going to sell as many as 640 stores to their franchisees. This on the heels of McDonald’s announcing they would do the same for 3,500 stores as part of their effort to boost the bottom-line.

It’s not exactly clear how many, but certainly some sizeable percentage of these stores may be candidates for sale-leasebacks by the Franchisees. Sale-Leaseback activity in the franchise space has been brisk this year and a flurry of new inventory of this type is exactly what the market is looking for.

With constrained supply and high demand, these franchisees would likely have no problem doing sale-leasebacks to help them finance the store purchases, particularly if the stores in question have a good sales history and the franchisee is substantial enough.

This refranchising trend has been increasing lately largely as a mechanism of the franchisors to trim corporate overhead costs.  [1]

Why and How?

Commercial real estate owner find ways to generate revenue and increase capital. A sale-leaseback technique unlock the equity a company has in its real estate and to convert that equity into cash. This involves selling the institution’s headquarters or branch offices and simultaneously leasing them back long-term.

In addition, many property-owners are recognizing the tax benefits and other advantages of these transactions. Finance adviser/consultant can advise clients on the benefits and help them find sale lease back providers.

In general by sale-leaseback its property, a property-owners can lower its operating costs and use that money to increase its cash flow.

Six benefits of sale-lease back transactions:

1)  Favorable Impact on Earnings.  A sale-leaseback transaction converts noncurrent fixed assets such as real estate into current liquid assets— i.e. cash.  It can generate a gain on the sale when properties’ market or appraised values are more than the depreciated book value. Property-owners often can improve their earnings by reinvesting the cash at a greater rate, retiring high cost debt funding mergers and acquisitions, expanding operations, or taking advantage of special investment opportunities.

2)  Total Facility Control. Simultaneously with the sale, the company leases back the property for an initial lease term — typically 15 years with renewable five-year options. In effect this gives the company control of its real estate for at least 40 years. This would be identical to ownership of the property’s normal useful life.

3)  Low cost of Money.  A sale-leaseback transaction can be a quick economical way to raise capital compared to the process of originating a new stock issue. Issuing new stock may result in an ownership dilution at unfavorable prices or with unwanted investors.

The leaseback is a low-cost technique that avoids these consequences as a rule, a sale-leaseback transaction should provide capital at an effective cost of 100 to 150 basis points less than that of long-term mortgage financing or the long-term conventional debt market. It should have no restricted covenants and no principal repayment after all lease payments.

4)  Recapture all costs. In a typical sale-leaseback transaction, the company would recapture all costs relating to the property’s current market value, including legal fees, surveys, architectural engineering, title, and any other closing costs or property- related fees. This contrasts to conventional long-tern mortgage financing, which is usually restricted to percent of the current market value.

5)  Regulatory Compliance. The cash a business receives from a sale-leaseback transaction can help it improve its primary and total capital-to-assets ratios The profit on a sale-leaseback transaction from depreciated value to current appraised value can increase a company’s net worth.

6)  Off-balance-sheet Finance. By carefully structuring an operating lease, the transaction would not require capitalization under Financial Accounting Standards Board is criteria.  In turn, this allows off-balance-sheet treatment, which in effect would have a more favorable impact on the company’s earnings and improve its financial ratios.

RESOURCES from Amazon Corner

  1. Principles of Real Estate Syndication: With Entertainment and Oil-Gas Syndication Supplements Included
  2. Maverick Real Estate Financing: The Art of Raising Capital and Owning Properties Like Ross, Sanders and Carey
  3. Real Estate Investment
  4. Real Estate Finance

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[1] Wendy’s Refranchising 640 Stores


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Financial Planning is like garlic to a vampire

DAJK GROUP is the place where investors, business owners and entrepreneurs can research and find useful information, insight, resources, advice, guidance and inspiration for acquiring funds for their project, acquisition for their net lease commercial real estate, increasing their assets and running their profitable business.

Other books are recommended here

You can browse through our Amazon Corner for any other interests.  Taking advantage of addition 10% OFF for any first time purchase.

Building a Finance Plan Geared to Growth

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I would like to share with you our book reviewer from Ms. P. Fisher, “Garlic to a vampire“.

I recently read Daniel Nguyen’s Building a Finance Plan Geared to Growth, and have decided to keep this as my small business guidebook to finance management.  I am not an expert, hardly even a novice, when it comes to managing my business.  As a “creative” type, financial planning is like garlic to a vampire.  And yet, financial planning is essential to running a successful business.  I believe that part of my resistance comes from lack of understanding the definitions and how to do things such as create financial statements like profit and loss, cash flow, etc.  When we don’t understand how something works it becomes twice the job and, in my case, gets put on the bottom of the “To Do” pile.  What I really like about this guidebook on how to build a financial plan is that Mr. Nguyen explains what all of these terms mean. He gives us not just a textbook definition, but also shows HOW they work in relation to the overall picture of getting a small business loan, for example. He then shows a sample of what that financial statement should look like.  THIS I can understand!  He also tells the reader what to ask for –and what NOT to ask for.  There is information on establishing credit well in advance of going for a loan, things that I can do now to prepare for my possible or projected business needs in the future. He includes guideposts of ways to evaluate the progress and effectiveness of my current business needs, and then how to assess my possible future needs. Then, for when I am ready to go for a loan, I like the True-False test that he includes in the text.  This test allows me, as the business owner, to self-score how prepared I am to go meet with the banker.  This book is a wealth of good advice, resources and tools that I can use in understanding and applying good financial practices in my business.

I feel that if I follow the outline of this book that I could meet with a bank lender and not appear to be an idiot.  Mr. Nguyen has thought of not only the standard things that I will need to bring and think about beforehand, but also other possibilities that a lender might want to know.  For example, he writes that I, as a business owner, should have not one, but two possible repayment plans, to reassure the lender that I am a good risk. This is good, easy-to-understand information- he gets a score of “10” from me on a practical help scale.

Growing – Evolving and Pushing Forward!


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Top 6 Terms You Should Know Before Investing in net lease commercial real estate


 

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How much McDonald invests in net lease commercial real estate?

McDonald’s Corp. is once again facing pressure to spin off its real estate holdings, as shareholder and hedge fund manager Larry Robbins claims the move could unlock $20 billion in value. McDonald’s owns 70 percent of its restaurant buildings and 45 percent of the land those buildings are built on at a time when net-leased real estate is highly prized.

mcdonalds

The market reacted positively to Robbins’ suggestion, as the company’s shares rose by almost 2 percent on Monday, according to The Street.

As a long-term investor, you don’t want to trade short-term cash for long-term competitive advantage. This is exactly what the real estate assets are to McDonald’s.

Our net lease selection of this week is McDonald’s.

Northwest corner of 35TH AND SOUTHERN AVENUES

PHOENIX, ARIZONA, USA

SINGLE TENANT ABSOLUTE NNN INVESTMENT (NNN CRE)

  • PRICE: $1,842,000
  • CAP RATE: 3.8%
  • RENTABLE SF: ±5,000 SF
  • LAND SF: ±58,990 SF

 INVESTMENT HIGHLIGHTS

  • McDonald’s absolute NNN single tenant ground lease investment opportunity
  • McDonald’s corporate guarantee
  • Brand new 20 year ground lease
  • 10% rental increases every five years in the initial term and option periods
  • Over 31,042 vehicles per day at the intersection
  • McDonald’s is publically traded (NYSE Symbol: MCD) with a S&P “A” investment grade credit rating
  • McDonald’s has approximately 35,000 locations in over 100 countries worldwide
  • Low ground lease rent of $69,996 per year
  • This site is located on the hard corner and sits on ±1.35 acres of land

Related NNN CRE information

Top 6 terms in net lease CRE

First criteria for select of net lease CRE

What are investment objectives?


More information or if you are interested, please contact us

Website:  http://growingevolvingpushingforward.weebly.com/

3592 Rosemead Boulevard – Rosemead – California 91770

Net Leased Commercial Real Estate (NNN CRE): Step #2

Our Net Leased investment objectives:  

  1. Investment funds are secured by commercial propert(ies)
  2. Investor will receive monthly fixed income guaranteed by national tenants who has annual revenue $US 100 million
  3. Investor will also receive its appreciation
  4. For US Investors, it also has some tax implication as well

Our first step in our selection is identify who is a right tenant matching with your investment strategy [read more…]

Famous quote from Warren Buffet: Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

How would investor protect his investment funds?  It’s simply following our net leased investment objectives.

In fact, once your investment is secured by the commercial real estate and monthly fixed income are guaranteed by a national tenant, you know that you are making a strategy investment decision.  This intelligent and calculated move are not only protect your investment fund; but it is also guaranteed of your appreciation when our selected lease term is at 5 years or 10+ years.

To safeguard our investor investment, our selected net leased properties must be located in a strategic location.  It’s a typical location of our selected net leased location.

Aerial - Typical location

Our typical national tenants are:

7-Eleven, RiteAid, Walgreens, CVS Pharmacy, Dairy Queen, KFC Fried Chicken, Taco Bell, Burger King, Starbucks, Costco, Home Depot, Dollar Family, McDonald, In&Out Burger, Staples, Key Bank, Bank of America, Chase Bank, Wells Fargo Bank, Shell Gas Station, Dunkin’s Donuts, Verizon, AT&T Store, Walmart Neighborhood Market, Dick Sporting Goods, LA Fitness, Tractor Supply, Advance Auto Parts, Davita Dialysis …etc.

Our free consultations are described in our earlier blog

If you would like to invest in net lease commercial real estate (NNN CRE), please contact us.

If you do not see what you like, please send me your ‘wish list’ with specific investment criteria, we will locate and match your investment wish list.

PROCEDURE:  When you select what NNN CRE(s) you are interested, please send me your Letter of Intent (“LOI”) and Proof of fund (“POF”) to engage with the Seller.  The closing time frame is from 30 to 90 days at this point if the Seller accepts our offer.  The escrow instructions will be provided for wiring of your investment funds once the Sale and Purchase Agreement is executed.  Please note your POF can be a Bank Comfort Letter (“BCL”) from Tier 1 bank or a copy of your deposit with First American Title.

Please note our escrow service is with First American Title, website: http://www.firstam.com/title/commercial/about/index.html


For further clarification, please sign-in our free consultation.

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Should you invest in Net leased commercial Property? Or Multifamily or Self-Storage?

Who would invest in Self-storage properties?

ATLANTA – Within 12 months, Stein Investment Group is set to bring almost 250,000 square feet of self-storage facilities to metro Atlanta, a region dotted with suburban and urban sub-markets with a dearth of this asset type.  Construction is currently underway in the Old Fourth Ward on Decatur Street Self-Storage that will provide modern storage solutions to residents of the surrounding urban, residential communities.


Selfstorage 2

The REITs are the major owners in a largely fragmented sector, as about 80 percent of self-storage properties are owned by small mom-and-pop-type firms. But private equity is starting to enter the sector.

What is expecting return of investment?

Long-term returns for self-storage beat out all other commercial real estate sectors, The five-year average return for self-storage is at 24.4 percent, the 10-year average is at 17.8 percent and the 15-year average is at 20.3 percent, beating out the closest sector, multifamily, by about 400 basis points for each category. These numbers, as well as a lack of new supply and unusually high demand, have led to increased competition for assets.

multifamily Building 3

Comparison Table

Property Type Five-year Average of ROI
Multifamily 24% or 4.8% per year
Self-Storage 24.4% or 4.88% per year
NNN CRE 27.5% or 5.5% per year

NNN CRE Various

This simple comparison showing the return of Net Lease commercial property has the highest return of among these investments.

For free consultation, please contact us.

First Key selection of net lease Commercial Real Estate investment…?

Who is your tenant (who pays and guarantees the lease for you)

One of our criteria selection for net lease commercial real estate investment (NNN CRE) is very carefully select the right tenant.  In fact, it is also one of the best way to mitigate your risk as well.

For example, if tenant is Dollar General, you can find out this company profile as follow:

Dollar General Corporation is a United States chain of variety stores headquartered in Goodlettsville, Tennessee. As of January 2015, Dollar General operated over 11,500 stores in 40 U.S. states.

The company acquired the 280 stores of the P.N. Hirsh Division of Interco, Inc. (now Heritage Home Group) in 1983, and in 1985 added 206 stores and a warehouse from Eagle Family Discount Stores, also from Interco, Inc.  In recent years, the chain has started constructing more stand-alone stores, typically in areas not served by another general-merchandise retailer. In some cases, stores are within a few city blocks of each other.

Dollar General offers both name brand and generic merchandise — including off-brand goods and closeouts of name-brand items — in the same store, often on the same shelf. Although it has the word “dollar” in the name, Dollar General is not a dollar store. Most of its products are priced at more than $1.00. However, goods are usually sold at set price points the range of 50 to 60 dollars, not counting phone cards and loadable store gift cards.

Dollar General often serves communities that are too small for Walmarts (although many locations are in relatively close driving distance to a Walmart store or in the same communities that Walmart is located). It competes in the dollar store format with national chains Family Dollar and Dollar Tree, regional chains such as Fred’s in the southeast, and numerous independently owned stores.

Since 2000, Dollar General has experimented with stores that carry a greater selection of grocery items. These stores, (similar to the Walmart Supercenter, but much smaller), operate under the name “Dollar General Market”.

Formerly called J.L. Turner and Son Wholesale
Type Public
Traded as NYSE: DG
S&P 500 Component
Industry Discount retailer
Founded 1939 in Scottsville, KY
Founders J.L. Turner
Cal Turner Sr.
Headquarters Goodlettsville, Tennessee
Number of locations 11,500+ (2014)
Areas served Contiguous United Statesexcept for the Northwest,North Dakota and Maine
Key people Richard W. Dreiling (Chairman & CEO)
David M. Tehle (Executive Vice President & CFO)[1]
Products General Merchandise, Grocery, Photofinishing
Revenue $16.022 billion (2013[1])
Operating income $1.655 billion (2013)
Net income $952.7 million (2013)
Total assets $10.367 billion (2013)
Divisions Dollar General Market
Website Dollar General

The dollar store chain is gearing up for heated competition after losing its bid to buy Family Dollar in January, which will instead merge with Dollar Tree and usurp Dollar General of its title as the biggest dollar store company in the country.

As part of its efforts to compete, Dollar General said it will open approximately 730 new stores in 2015, bolstering its current footprint of 11,789 stores across 40 states. To compare, Dollar Tree will have approximately 13,000 stores after it combines with Family Dollar.

In the quarter, Dollar General said same-store sales climbed 4.9%, driven by strong growth across food and tobacco, as well as increased customer traffic and average transaction size. Total revenue rose 9.9% to $4.94 billion, just missing analyst estimates of $4.95 billion.

The company revealed plans to return capital to shareholders through a $1 billion share repurchase program, plus the initiation of a quarterly dividend of 22 cents per share.

Net income rose to $355 million, or $1.17 per share, compared to $322 million, or $1.01 per share, a year ago. This was in line with the consensus call for $1.17 per share.

For 2015, the company is projecting per-share earnings of $3.85 to $3.95 and revenue growth of 8 to 9%. Analysts had forecast $3.99 per share in earnings and 9% revenue growth.

Shares are up 20% over the last 12 months and rose 2% to $73.15 in premarket trading.


If you would like to invest in net lease commercial real estate (NNN CRE) with Dollar General, please contact us.

If you do not see what you like, please send me your ‘wish list’ with specific investment criteria, we will locate and match your investment wish list.

PROCEDURE:  When you select what NNN CRE(s) you are interested, please send me your Letter of Intent (“LOI”) and Proof of fund (“POF”) to engage with the Seller.  The closing time frame is from 30 to 90 days at this point if the Seller accepts our offer.  The escrow instructions will be provided for wiring of your investment funds once the Sale and Purchase Agreement is executed.  Please note your POF can be a Bank Comfort Letter (“BCL”) from Tier 1 bank or a copy of your deposit with First American Title.

Please note our escrow service is with First American Title, website: http://www.firstam.com/title/commercial/about/index.html

Daniel Nguyen

DAJK Group

daniel586@sbcglobal.net

+562.301.7231

3592 Rosemead Blvd

Rosemead, California 91770

Los Angeles – USA


For further clarification, please sign-in our free consultation

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