GIP

Advantages of Investing in a REIT

No Hassle Commercial Property Ownership

A Real Estate Investment Trust (REIT) lets you own commercial real estate without the hassle of securing mortgages, purchasing properties, or managing tenants. Best of all, REITs give the average investor an opportunity to leverage the experience and knowledge of professional property brokers and managers.

Higher Dividends for Your Portfolio

All REITs must distribute 90 percent or more of their taxable income to investors. Because of this, a REIT escapes the burden of high corporate taxes, which means fewer expenses and more money returned as dividends to their investors. This also empowers the investors to reinvest tax free back into the REIT through an IRA or use their dividend toward a vacation home.

The changes in short-term inflation and interest rates have little impact on commercial real estate. Compared with corporate and public bonds, a REIT does not have a fixed value. REITs, on average, outperform corporate bonds by a couple percentage points.

Liquidity and Transparency

Because REITs are traded on the major stock exchanges, buying and selling shares is very easy, especially when compared with buying and selling property. REITs are regulated by the SEC and follow the same rules that govern exchange traded assets. This means they must have a high level of transparency, which is important because REITs have specific asset, income, and ownership requirements by the government, all of which are reported in quarterly and annual financial reports.

Need Diversification?

Investment professionals agree that in order to minimize risk and reduce losses, everyone should have a well-diversified portfolio. This strategy gives investors a better chance to end up with more savings when they reach retirement age.

Real estate is not directly tied to stock prices. As an asset class, the real estate market can move in the same or opposite directions as the market, so it’s a great way to diversify. REITs also minimize investment risk, because they work solely with commercial properties.

Generation Income Properties is the only Trust focusing entirely on triple net leases, where the tenant pays the taxes, insurance and maintenance. Many companies, especially large corporations, find triple net leases to be very attractive for their overall operations. If you have any questions about triple net leases, or Generation Income Properties’ strategy and philosophy about investing, feel free to contact David Sobelman, Founder and CEO or call (813) 448-1234.

GIPAdvantages of Investing in a REIT
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Sobelman Starts New NNN Firm

GIP founder, David Sobelman, was interviewed by Business Observer, announcing the launch of his new triple-net-lease brokerage, 3 Properties.

Sobelman Starts New NNN Firm

Triple net lease specialist and Calkain Cos. co-founder David Sobelman has left the Herndon, Va.-based firm to start his own commercial real estate brokerage.

Like Calkain, the new Tampa-based 3 Properties is focusing on triple-net deals, in which tenants pay pre-arranged operating and other expenses such as taxes, insurance or utilities.

But Sobelman intends to revamp his brokerage business model for 3 Properties and charge clients less in transaction fees, by “drastically” eliminating overhead and expenses.

He adds that company agents will receive more in commissions than standard brokerages, and that many services will be outsourced to consultants and vendors.

“There’s more information out there about real estate than ever before, so there’s less need for traditional intermediaries,” says Sobelman.

“We plan to be the Uber of commercial real estate and triple-net lease brokerage, while everyone else will still be running a taxi company.”

Read the rest of the story on the Business Observer site.

GIPSobelman Starts New NNN Firm
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Triple Net Gain

David Sobelman was featured in the April 14th issue of Business Observer, discussing Generation Income Properties and upcoming milestones of the REIT.

Read the complete story on the Business Observer web site.

David Sobelman literally wrote the book on buying and selling triple net lease properties.

First published in 2010 — a time when such deals were largely unknown — “The Little Book of Triple Net Lease Investing” with business partner Jonathan Hipp is today in its second edition, and has sold more than 8,000 copies.

Now, after more than a decade at Tampa’s Calkain Cos. raising awareness and brokering such deals — in which expenses like utilities or taxes are “netted” out of gross rents and paid by tenants rather than landlords — he’s again venturing out.

Generation Income Properties, which Sobelman founded in September 2015 to target “NNN” opportunities, could begin trading publicly later this year, if it reaches certain U.S. Securities and Exchange Commission milestones.

In January, GIP attracted its 100th investor, an important SEC hurdle for REITs that is a precursor to any initial public offering. This summer, it expects to close on its first acquisition, a 7-Eleven store on the ground floor of a new residential building being constructed in Washington, D.C.

And during the third quarter, the company hopes to raise up to $20 million and begin trading on the Over The Counter exchange.

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Debunking the Myth of Net Lease’s Simplicity

While many are drawn to the net lease industry due to the common belief of the sector’s simplicity, building a successful career in the space requires relationships and experience, and dealing with challenges along the way, advises Generation Income Properties Founder & CEO David Sobelman.

David Sobelman was invited to write the following article in the May 17th issue of Commercial Property Executive. 

I’m honored to currently serve and to have previously served as a mentor and sounding board to dozens of new people in the net lease industry. Those interested in the business or those just starting their net lease careers have run the age gamut; from undergraduate interns, new college graduates, change-of-career professionals to retirees that aren’t quite ready to completely leave the workforce. No the level of experience, before we speak to one another about the merits of a net lease property and establishing a career focused on the asset class, each one of them, without fail, has asked, “How do I get started?”

Laozi (Lao Tzu), the ancient Chinese philosopher, is famously quoted as saying, “The journey of a thousand miles begins with one step.” There is no better explanation to how one will begin their net lease career than to ensure one has a complete understanding that the path is filled with a tremendous amount of roadblocks and challenges.

Those not intimately involved in daily net lease transactions see the simplicity of the product type. They like that a net lease property is easy to explain, comes with minimal management and provides an income stream. But what they usually don’t understand are the inherit risks involved in developing, building, owning or brokering a single-tenant, net-lease investment. Developers are constantly balancing the timing of their projects and trying to forecast one to four years in the future when their property will be ready to bring to the market.

For example, I am part of a transaction that will be completed this summer in which the developer/seller signed the original lease in 2012, five years ago. It is just now fully stabilized and ready for a passive investor. Its safe to say that the market has drastically changed in that period of time, but the developer was willing to take the development risk by purchasing land, building a property and hiring endless contractors over those five years. Owners are always hoping their tenancy remains intact for the long term or, if there is an ultimate vacancy, that there is a clear, concise and expedient plan to “back-fill” that building with a new and better tenant—this is obviously easier said than done.

Lastly, brokers are always dealing with their commissioned-based positions, which means they don’t get paid until they actually perform their required duties. Starting as a broker may seem like a lower barrier-to-entry way to infiltrate the net lease industry, but early-in-their-career brokers should be ready to face some very lean years. Starting with the understanding that a new net lease broker doesn’t have any transactions to speak of, clients to fall back on, track record to tout, relationships in the industry or regular income, it should be clear that the simplicity of the business really isn’t that simple.

Net lease assets are true wealth builders, from both an ownership perspective and from the outlook of a net lease service provider. But there are dozens of people involved in the development, ownership and possible sale of any one net-lease investment, making transactions in the sector more complicated. Relationships must be built, experience must be garnered, failure must occur and risk must be taken.

The net lease industry is not simple, contrary to what most people believe when discussing the property type. With an estimated $2 trillion net lease market in the U.S., the industry should be complex, have risks and have failures. There is no secret on how to be productive within the net lease business. However, if you’re willing to take that first step, your journey will surely be interesting.

David Sobelman is the founder & CEO of Generation Income Properties (a public net lease REIT) 

GIPDebunking the Myth of Net Lease’s Simplicity
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REIT Growth in a Dividend-Driven Environment

While the net lease REIT industry has grown into an investment class of its own because of its stable, risk-adjusted returns, there is an important component missing from these REITs’ underwriting, argues Generation Income Properties Founder & CEO David Sobelman.

David Sobelman was invited to write the following article in the April 19th issue of Commercial Property Executive.

There are currently 15 net lease REITs that each have their own philosophy on what type of assets they acquire. Some invest solely in industrial assets, some retail assets, gas stations, or they may even be agnostic on property type but seek out non-credit tenancy. However, it wasn’t that long ago—less than 20 years—that most of these companies were either completely non-existent or few people in the investment community (money managers, broker dealers, average investors, wall street analysts, etc.) even knew what was entailed when discussing a triple-net leased property. The product type was essentially unknown, let alone the concept of a collection of properties to form an entire REIT comprised of just these assets.

Today, this $100 billion-plus enterprise value industry has morphed into an investment class of its own, entering into the forefront of stable-return investors’ minds, usually with great fanfare. I’ve had the privilege of working with thousands of people in my 15-year tenure within the net lease industry. The conversations I have with various practitioners that have been quietly entrenched in the net lease world for 20-plus years tell me that the infancy of structuring a single-tenant, net lease property began in the 1970s. Keep in mind that REITs were initially formed in 1960. The next 40-plus years have proven that net lease investments have matured to a point that some institutional investors are comfortable with investing billions of dollars of their capital in the form of stable, risk-adjusted returns that are unmatched in other aspects of real estate investment categories.

What I believe is missing from the underwriting of 14 of the 15 net lease REITs is the simple understanding that real estate matters. Of the $100 billion-plus dollars that are currently invested throughout the net lease REIT industry, there is only one REIT that emphasizes that the most value of any real estate investment, whether it’s purchased by a REIT or a family investing for future generations, is held within the real estate itself. Many of the net lease REITs are left balancing their business models between providing a market dividend for their shareholders, making sure the debt for their portfolios matches expiring lease terms, and raising money from investors for future acquisitions. But rarely is the fundamental—and simplest—form of real estate investment taken into account when determining future and growing values: the real estate itself. In essence, has history proven that a property in the middle of Washington D.C. or New York City increases in value at a higher and faster rate than a property in the middle of Iowa?

A REIT has the pressure to pay out a minimum of 90 percent of its after-expenses revenue to its shareholders, in the form of dividends, in order to maintain its REIT status. However, when a company is not allowed to reinvest the majority of its profits back into the company, there is a constant feeling that new capital has to be raised and a constant question of, “What is more important: a dividend or stock growth?” Berkshire Hathaway, one of the most respected companies on the planet, doesn’t pay a dividend. Every dollar the company generates is poured back into operations and future acquisitions. Other high-functioning companies may pay a dividend, albeit small, in comparison to its revenues and profitability: Costco is a good example, paying about 1.00 percent.

Therefore, the REIT investor is left with the question: “Can you have both a growth company and a solid dividend payer?” If the company’s assets increase in value from the time they are purchased, then the answer is a resounding “yes.” The probability of the value increasing comes from assets that are typically purchased in geographies that allow for appreciation in a shorter period of time than in secondary and tertiary market, (i.e., New York versus Iowa.)

REITs that take advantage of their appreciating assets could be a growth stock, while also providing a dividend in line with its peer group in their respective asset classes.

David Sobelman is the founder & CEO of Generation Income Properties (a public net lease REIT)

 

GIPREIT Growth in a Dividend-Driven Environment
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Tampa broker is big on real estate investment trusts, including his new one

David Sobelman was featured in this Tampa Bay Times story about Generation Income Properties and his vision for its future.

Read the complete story on the Tampa Bay Times web site.

Want to invest in real estate?

The hard way is finding and buying the properties yourself, maintaining them, paying the taxes and insurance, then hoping you can make at least a few bucks from renting or selling them.

Then there are real estate investment trusts, or REITs. Put simply, you invest your money with a company that finds the properties and pays you dividends from the rents it collects.

Generation Income Properties of Tampa is a new REIT. It also was the first REIT in the nation to file with the Securities and Exchange Commission to take advantage of Regulation A+, a 2015 SEC regulation that enables small companies to raise up to $50 million from the public.

So far, Generation Income has raised about $3 million from more than 100 investors and is under contract to buy its first property, a building near the White House in Washington D.C. whose sole tenant is a 7-Eleven.

By year’s end, the trust hopes to have several more rent-producing properties in some of the nation’s largest cities, including Tampa, and start trading shares publicly.

Generation Income is the brainchild of David Sobelman, a veteran commercial broker in Tampa who has managed and overseen more than 1,000 net lease transactions worth over $10 billion. (A net lease is one in which the tenant is responsible for taxes, insurance and maintenance).

Sobelman, 45, recently talked with the Tampa Bay Times about his REIT, his investors, and his forecast.

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GIPTampa broker is big on real estate investment trusts, including his new one
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Net Lease REIT Under Contract with Prime Washington, DC Asset

Generation Income Properties, Inc., a Tampa, FL based real estate investment trust (“REIT”,) recently executed its first contract to purchase a property, occupied by a company owned 7-Eleven store (S&P: AA-), located in the middle of Washington, DC, just north of The White House. The new construction residential condominium building was completed in 2016 and the ground floor unit was developed to be occupied by a credit-worthy commercial tenant to support the high population density area surrounding the building.

David Sobelman, CEO, commented, “I am ecstatic that we are under contract with a property that perfectly matches the REIT’s investment criteria. Acquiring properties with the highest probability of appreciation during the REIT’s ownership, as well as having credit-worthy, long term real estate assets with prime real estate is our primary strategy. I’m thrilled to have found this street level retail asset in the heart of one of our target cities – Washington, DC.”

Closing on the asset is intended for the summer of 2017; subject to the parties’ due diligence and compliance.

About Generation Income Properties
Generation Income Properties, Inc. (“GIP”), a real estate investment trust (“REIT”), was founded by David Sobelman, a veteran net lease investment real estate broker. Mr. Sobelman is also the cofounder of Calkain Companies, one of the nations’ few real estate brokerage firms focused exclusively on triple net lease properties. Calkain has been involved with more than $10 billion in net lease transactions. GIP purchases assets with future generations in mind. GIP’s strategy is to acquire assets with credit-worthy, long term tenants solely in the top 20 highest density cities in the United States. The company intends to provide long-term stable yields to its investors, with a focus on future real estate values where the REIT has the best chances of appreciation through the value of the assets and/or rent growth. The single-tenant, net-leased investments that GIP identifies for acquisition are typically singletenant office, retail, or industrial buildings with existing leases of 10 to 25 years.

GIPNet Lease REIT Under Contract with Prime Washington, DC Asset
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A New Investment Outlook for REITs

Why REITs can be both an income and growth investment.

David Sobelman was invited to write the following article for the February 15th issue of Commercial Property Executive.

The growth of all the REIT’s aggregate market capitalizations has increased 68,074 percent in 45 years. NAREIT reports that from 1971 (Market Cap = $1,494 million) to 2016 (Market Cap = $1,018 billion) the REIT industry has grown to an extremely substantial industry. Granted, this growth is highly skewed as the REIT industry has drastically changed in the last almost-half century, and there are considerably more REITs in existence today than at the genesis of the industry. But what if you did invest in the REIT industry at the beginning and continued to invest along the way? Would you have more of a generational investment outlook?

There is a common perception among the investment community that a REIT is a “dividend machine.” Registered Investment Advisors (RIAs,) money managers, stock brokers, among others, explain the merits of REIT investing by the dividend in which it pays shareholders as one of their primary underwriting factors. But a REIT is really just a tax status in which the IRS dictates the percentage of profits (90 percent) that must be paid to investors.

Despite this, REITs are rarely seen as growth stocks; there seems to be a constant unwritten directive to always provide a certain dividend to an investor instead of increasing the stock price by practicing disciplined company decisions. Companies that are not hamstrung by operating under REIT rules have the benefit of reinvesting into their companies and growing their stock price by increasing the value of their firm. They pay either a low dividend or no dividend at all (i.e., Costco, Berkshire Hathaway and Amazon.com.) Therefore, how can a REIT adopt a strategy to grow its value while continuing to pay out its prescribed dividend?

One could look at the net asset value (NAV) of a company, which has a lot of emphasis on the share price of that company. The higher the value of the assets, typically the higher the share price.  When incorporating traditional real estate investing fundamentals, there is a strong possibility that an asset, or a portfolio of assets, will increase in value. Choose better real estate and there is a much higher likelihood of that asset increasing in value over time, which will, most likely and subsequently, increase the NAV of the company and therefore the share price. REITs using the public markets to own and grow the value of the real estate allow an investor to realize the growth in asset values during its ownership of their shares, whereas private investors would have to wait until there is a sale of that asset in order to profit from it.

REITs that focus on growth, rather than solely on providing a dividend, could earn an investor a higher compounded annual growth rate than those that just provide a steady dividend. REITs don’t have the benefit of reinvesting large amounts of capital into their companies, and they are therefore forced to make philosophical business model decisions from the outset—do they solely want to provide a dividend or would it be possible to purchase assets that increase in value and provide a dividend? Growth companies are the darling of any investor’s portfolio and there is no reason why REITs can’t be both an income and growth investment.  While it may not result in a 68,000 percent return, there is a lot of room for a REIT to be a growth model and a dividend model. Most current and future generational investors would see that as a very attractive scenario.

David Sobelman is the founder & CEO of Generation Income Properties (a public net lease REIT)

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Net Lease REIT Expands Investor Interest in Generational Assets

Generation Income Properties (“GIP”) recently reached its 100 investor milestone with investments from individuals, family offices and investment funds. The Tampa, Florida based real estate investment trust (“REIT”) focusing on triple net lease property intends to begin purchasing real estate assets for its portfolio of properties in the first quarter of 2017.

David Sobelman, CEO, commented, “I am absolutely honored that the early investors believe in the growth strategy of the REIT as well as my abilities to follow through on the scalable investment philosophy. Our industry, to many, is still believed to be in its early stages considering that the current $100 billion triple net lease real estate REIT market is forecasted by some to be a $2 trillion industry.”

Interested investors are still able to participate in this offering prior to the company being listed on the OTC Markets exchange.

About Generation Income Properties
Generation Income Properties (“GIP”), a real estate investment trust, was founded by David Sobelman, a veteran net lease investment real estate broker. Mr. Sobelman is also the co-founder of Calkain Companies, one of the nation’s leading triple net lease investment brokerage firms. Calkain has been involved with more than $10 billion in net lease transactions. GIP purchases assets with future generations in mind. GIP’s strategy is to acquire assets with credit-worthy, long term tenants with great underlying real estate. The company intends to provide long-term stable yields to its investors, with a focus on real estate that has the best chances of future appreciation either through the value of the assets or growth through lease expirations. The single-tenant, net-leased investments that the company identifies are typically freestanding office, retail, or industrial buildings with existing leases of 10 to 25 years in the 20 most densely populated cities in the United States.

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Real Estate or Return?

Where to place your net lease investment emphasis.

David Sobelman was invited to write the following article for the January 18th issue of Commercial Property Executive.

“I’m looking for a low-yielding property.” This is most likely a phrase that has never been spoken. But when discussing the options of where to place the most underwriting emphasis for your net lease investment, most investors—institutional entities or individuals using their own money—frequently use the credit of the tenant and terms of the lease to determine the majority of the value of the asset. When a linearly focused valuation of an asset is used, there may be a tremendous amount of data that is overlooked when considering the real estate investment.

It should be noted that the most conservative way to invest in a single-tenant net lease investment is to start your underwriting knowing that the parcel of land and the four walls of the building actually matter. A tenant, no matter what its credit may be, may occupy a property for 50 years and provide a nice long-term income. However, when they decide to leave, whether its in five decades or in five months, you are left with real estate to either re-tenant, re-purpose or sell. Fundamental real estate investment variables become paramount when you have a vacant building or land. An investor, and subsequent future users, are not going to look at your asset the same way you did so many years ago: solely as an income producing asset that was purchased by paying a market cap rate. New tenants will now focus on geography, specific location within that geography, traffic patterns, access to the location, permitted uses, among other factors. In essence, tenants will need to deduce whether the site fits their business model, whatever that may be in their operational life-cycle. Therefore, buying a real estate asset, whether its income producing from a net lease tenant or completely vacant, will determine how many options you have going forward.

While moderating a panel discussion on the state of the net lease market in New York last September, the panelists were asked if they would purchase a net lease investment in the then-current market and if so, what would they purchase. Each panelist framed their answer as to what they would purchase with their own money except for one member, Will Pike of CBRE. Will mentioned that he was not a buyer of any net lease asset type in the market due to the compressed cap rates that are being offered for the assets he regularly sells to others. However, it was interesting that he, nor the other panelists, put any value on the real estate underwriting that could actually make the investor more money over the ownership of the asset. This phenomenon of valuing a net lease property as an actual real estate asset is readily discussed but rarely practiced. Data from multiple sources, including Real Capital Analytics, Moody’s, Morgan Stanley and Case Schiller, all point to the fact that densely populated areas typically have the highest rate of real estate value appreciation as well as rent growth. The panelists linearly and directly considered only the credit and initial cap rate of the investment and there was no consideration of that asset appreciating in value from a real estate perspective.

Even though the data shows that better real estate typically equals higher long-term returns, an investor should decide whether a net lease investment is either a core real estate asset or a financially engineered mechanism that provides a stable return. Whatever the motivation of the investor, deciding on what is more important from the outset is of paramount importance.

David Sobelman is the founder & CEO of Generation Income Properties (a public net lease REIT)

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