Investment News

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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GIPTriple Net Gain
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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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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)

GIPA New Investment Outlook for REITs
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Generations Income Property Competes for SBRE Shark Bowl

Five Small Balance Real Estate (SBRE) Entrepreneurs will compete for a chance for a $100,000 investment at SBREfunds.com’s live Shark Bowl contest

SBRE industry founder Fairway America today selected five SBRE entrepreneurs to present to a panel of seasoned real estate “sharks” and have an opportunity to receive a commitment from one of Fairway’s proprietary funds for a $100,000 investment. The winner will be required to complete a due diligence process in order to receive the investment.

“We wanted to provide new and emerging SBRE fund managers and entrepreneurs an opportunity to develop a presentation, get up on stage, and hone their pitch,” said Fairway’s CEO Matthew Burk. “Not only will it be great fun, having a legitimate opportunity to receive an investment on the line makes it much more interesting and real. We have some very deserving presenters lined up and I can’t wait to see them pitch.”

The presenters who will be competing at the SBRE Shark Bowl are Brian Lynott from Dweller, Randy King at The Legacy Group, Michael Zajas of Brydant Inc., Aaron Gillingham with Aries Capital Northwest, and David Sobelman from Generation Income Properties.

“This group of presenters represents a great cross-section of the SBRE industry and is an excellent example of the amazing diversity of strategies being executed in the space,” said Burk.

The CapitalFlow Conference will be held annually in Fairway’s home town of Portland OR and is expected to attract leading SBRE entrepreneurs and fund managers from around the United States. The main theme for these entrepreneurs is to enhance their capacity to successfully raise capital for their SBRE deal strategy, which the Shark Bowl is expected to help promote. Burk says that Fairway has borrowed bits and pieces of different formats and structures he seen over the years and amalgamated them into a unique construct.

“The CapitalFlow Conference format has been designed by SBRE fund managers for SBRE fund managers (and syndicators) to meet the core challenges and needs of this underserved group,” said Burk.

In order to continue to help facilitate the growing SBRE community of entrepreneurs and investors, Fairway has created a unique and powerful formula that is unavailable anywhere else. In addition to the Shark Bowl, a mini-version of Fairway’s highly sought-after SBRE Investment Summit, the conference also features deep-dive content on fund management issues, capital raising strategies and tactics, and peer-to-peer experience share.

“We work with SBRE fund managers, syndicators and high net worth investors all over the country,” said Burk, a longtime fund manager and investor who will be one of the panelists of Sharks. “Because we have such a deep understanding of the practical challenges we all face, we’ve engineered the CapitalFlow Conference to provide unequaled take home value to the SBRE entrepreneur.”

Fairway will also be announcing the winner of the 1st Annual SBRE Awards in 5 categories as follows: Fund Manager of the Year, Emerging Fund Manager of the Year, SBRE Entrepreneur of the Year, Syndicator of the Year and the first ever inductees into the SBRE Hall of Fame. Finalists have been named in all categories and most or all of them will be on hand for the awards ceremony.

The event will be held at the Portland Hilton Hotel and Towers in downtown Portland Oregon. Winners of the SBRE Awards will be announced during a lunch ceremony on Friday July 29th and will be immediately followed by the SBRE Shark Bowl. The event will conclude at the Willamette Riverfront Park for the 25th Annual Oregon Brewfest, the oldest and largest gathering of microbreweries in the United States. Registration for the event is still open to SBRE entrepreneurs, fund managers, private lenders, and real estate syndicators, as well as high net worth investors who are interested in learning more about the growing SBRE alternative investment space.

“What really makes it all so powerful are the reasons why we come together in the first place – to engage each other on the challenges, strategies, and opportunities of running an SBRE business,” said Burk. “We share ideas, best practices, successes and failures, what works and what doesn’t without fear of judgment or reprisal from other managers – just mutual trust and respect for what we all have to go through to run a successful SBRE enterprise and create value for investors.”

About Fairway America
Fairway America, LLC is a longtime real estate asset based fund manager and real estate finance advisory firm providing strategic business planning services nationwide to SBRE entrepreneurs around the structure, architecture, and administration of proprietary 506 Regulation D pooled investment funds. Fairway’s related entities manage two proprietary funds, Fairway America Fund VI, LLC, and Fairway America Fund VII LP, each focused on the SBRE space with different asset allocations and investment features. Both funds consider investments nationwide.

About SBREfunds.com
SBREfunds.com is an online education, information and match-making site that exclusively lists small balance real estate investment opportunities. Created by Fairway America, SBREfunds.com provides entrepreneurs and investors with education and connectivity to better capitalize and grow an SBRE enterprise. From connection with investors to strategic capital raising plans to live events, SBREfunds.com is the definitive resource for SBRE entrepreneurs and accredited investors to understand how to successfully work with one another for mutual benefit and growth.

Neither Fairway America nor SBREfunds.com is a registered broker-dealer or investment advisor. None of the Fairway companies perform any activities of a broker or investment adviser, including but not limited to, soliciting investors, providing investment advice, negotiating securities transactions or the terms, conditions or provisions of any offering, or recommending the purchase of securities. This press release does not constitute an offer or solicitation to sell securities in any of the companies mentioned, any funds presenting at SBRE Summit events, or any related or associated companies. Investors must not rely on information provided in this press release for investment decisions.

GIPGenerations Income Property Competes for SBRE Shark Bowl
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Inside the First REIT to Go Public Under Regulation A+

David Sobelman, CEO and Founder of Generation Income Properties talked with Commercial Property Executive about the REIT’s unique fundraising strategy and what sets it apart from others in the net lease space.

“In today’s competitive net lease environment, companies in the space need to find ways to set themselves apart. David Sobelman is doing just that with his REIT, Generation Income Properties (GIP), which this year became the first REIT to go public under the SEC’s Regulation A+. A net lease veteran, Sobelman co-founded Calkain Cos. in 2005 before founding GIP, which started out as a private fund. But when he went back to investors asking about starting another fund or becoming a publicly traded REIT, they were interested in the latter.”

You can read the complete article on Commercial Property Executive and see the interview in the video below:

GIPInside the First REIT to Go Public Under Regulation A+
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Huffington Post Highlights First 16 Reg A+ Companies

The Huffington Post highlights the first 16 companies approved under SEC Regulation A+, including Generation Income Properties.

“Ever since President Obama signed the JOBS Act in 2012, the market for equity crowdfunding has grown steadily. Now, in 2016, funding raised through crowdfunding is expected to pass that from venture capital.

At the center of this revolution in business financing are the Securities and Exchange Commission’s recently enacted rules known as Regulation A+, a provision of the JOBS Act that allows companies to generally solicit and raise money from non-accredited investors. Historically, many investment opportunities have only been open to the wealthiest 3% of Americans known as accredited investors. However, the new rules permit nearly anyone to invest in companies spanning a wide range of fields, from real estate to aviation and even medical marijuana.”

You can read the complete article at the Huffington Post.

GIPHuffington Post Highlights First 16 Reg A+ Companies
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Generations Income Properties Featured in Restaurant Finance Monitor

David Sobelman was interviewed for Restaurant Finance Monitor, a monthly publication focused primarily on the restaurant investment industry.

“Sobelman is not a stranger to real estate investing. He’s had his own private fund since 2012, and he’s the managing member, with outside investors. It’s been successful, and his investors wanted to know when he would launch the next one.

“They liked their returns, and they liked me running it,” he said. “I thought we needed to do it bigger the next time around.” He talked to his investors about a publicly traded REIT, and they were in.

“They would have their own shares, trade them when they wanted to, and have some sense of liquidity, as opposed to a fund, which is more arduous to exit,” Sobelman said. “They loved it.” Sobelman himself liked the transparency of public traded REIT, where investors and others could go online and look at filings, and that it would be “extremely scalable.”

Read the complete article on page 3 of Restaurant Finance Monitor.

GIPGenerations Income Properties Featured in Restaurant Finance Monitor
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Net-Leased Pro Aims to Raise Capital for REIT Through Mini-IPO

David Sobelman, Generation Income Properties Founder and CEO, was interviewed by Commercial Real Estate Direct to discuss the launch of the REIT and the unique position it takes in the market.

“David Sobelman, a long-time player in the net-leased real estate business, has launched a REIT. But it’s not like any other REIT, traded or not.

“His Generation Income Properties Inc. takes advantage of Regulation A+, part of the Jumpstart Our Business Startups, or JOBS, Act that was signed into law in 2012. The rule allows investment offerings to be marketed to non-accredited investors in offerings up to $50 million. It also streamlines the registration process by, for instance, not having to register a securities offering in every state that it’s offered.

Generation Income initially aims to raise $20 million through its so-called mini-IPO by selling shares for $5 each through a best-efforts offering, meaning Sobelman will be making his best effort to place shares with investors. In a traditional underwritten stock offering, an investment bank is used as an intermediary and commits to sell a specific number of shares to investors. Shares in the REIT will be traded over the counter.”

With a registration, you can read the complete article on the Commercial Real Estate Direct web site.

GIPNet-Leased Pro Aims to Raise Capital for REIT Through Mini-IPO
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