Investment Strategy

Net Lease Driven Strategy

GIP, Inc. employs a net lease driven strategy that focuses on credit-worthy, long-term tenants with great underlying real estate in high-density markets.

Under a net lease, the tenant is typically responsible for paying all operating expenses, including property taxes, and insurance, while in traditional property sectors, the landlord typically bears the responsibility for most or all of these expenses. Net investments are typically considered part real estate and part long-term bond.

Deal Structures

Generation Income Properties acquires assets through the use of multiple investment vehicles

GIP is committed to having the highest credit rated companies as tenants within its portfolio. The REIT’s focus is to primarily buy and hold properties that have investment grade credit tenants occupying the assets.

With the focus of the REIT being on the quality of the real estate, lease length is a primary underwriting tool, but will be secondary to intrinsic real estate values. The ultimate goal is to acquire and hold assets that have 10+ years remaining within the initial lease term.

TRADITIONAL
ACQUISITION

The simplest channel allowing GIP to acquire properties and continue to grow the portfolio.

UPREIT

Gives net lease property owners the opportunity to become common shareholders in GIP REIT. 

DEVELOPMENT PROGRAM

Provides developers the capital required to build a net lease property, with GIP purchasing the land and owning the property at rent commencement. 

FORWARD COMMITMENT

GIP enters into an agreement to purchase the property upon completion of construction at a previously agreed upon cap rate.

FAQ

Most frequent questions and answers

The term UPREIT, is an abbreviation for ‘Umbrella Partnership Real Estate Investment Trust’ and refers to an entity structure that allows property owners to convert their ownership of one or more of their real estate assets into an interest which is, immediately, or can ultimately be converted into, a public security.

In the basic UPREIT structure the REIT properties are acquired and owned directly or indirectly by it’s umbrella partnership, often referred to as the “operating partner”. Therefore, Generation Income Properties, LP, is the managing partner of the UPREIT property.

In an UPREIT transaction, property owners contribute their properties in exchange for ownership units in the operating partnership (“OP Units”).

Therefore, Generation Income Properties, LP, the main subsidiary of GIP, Inc., is the managing partner of the UPREIT property.

UPREIT Advantages:

  • Provides a viable tax deferral/avoidance exit strategy to property owners facing significant capital gain tax liabilities on the sale of appreciated property with a low tax basis

  • Diversification of real estate holdings (OP Unit Holders have an interest in the REITs portfolio rather than just one property)

  • Potential to convert liquid, long-term assets into more salable securities after a 2 year holding period

(OP Units → REIT Shares → Cash)

  • No property management responsibilities or concerns

  • Semi-annual income distributions

  • Improved cash position through potential leveraging of OP Units

The phases of an UPREIT are as follows: 

  1. Contributor and GIPR enter into a contribution agreement to contribute the property to the REITs portfolio
  2. GIPR awards the contributor LP units of equal value to the asset
  3. The Contributor receives semi-annual income distributions
  4. After a 2 year holding period contributor has the ability to convert OP Units into common shares in the REIT
  5. Contributor has the ability to liquidate common shares at any time

GIPR’s development program establishes relationships with developers in order to purchase the land and fund the development of projects to assume control upon rent commencement. Through the program, GIPR is able to fund and own assets at a discounted cap rate, aiding the growth of the REITs portfolio. GIPR becomes a one-stop shop for financing deals allowing developers to fulfill long term relationships established with tenants. 

Program Advantages: 

  • Allows for forward planning by developer for both profit on the project and exit strategy

  • Ease of financing as GIPR becomes the one-stop financing partner

  • Greater bargaining power and marketing tools as the partnership between GIPR and the developer provides security to tenants of the developers ability to perform 

  • Increase in deal volume of developers due to a streamlined development process and ease of access to funding

  • Eliminates typical carry costs and risks for the developer