4A — September 17 - October 21, 2021 — Financial Digest — M id A tlantic Real Estate Journal


F inancial D igest

By Steve Haskell, Kay Properties and Investments, LLC Why real estate income funds have distinct benefits for investors estate through participation in a fund.


he recent fluctuations in the United States stock market have

fund is $50,000,000 with a min- imum investment of $50,000. Example propert ies the funds seeks to acquire include those leased to recessionary- resistant, essential businesses that remained open and pay- ing rent during the pandemic, such as: Amazon, FedEx, Da- vita Kidney Care, Frito Lay, Walgreens, UPS, CVS, Coca- Cola, In-N-Out Burger, and 7 Eleven. *Preferred return is not guaranteed and is subject to available cash flow. Past per - formance is not a guarantee of future results. For further information about cash flow distributions from operations and capital events, please refer to the Private Placement Memo- randum. Three Distinct Benefits of Investing in a Real Estate Income Funds Diversification The ability to diversify in real estate funds has attracted conservative investors that want to avoid the concentra- tion risk that often accompa- nies purchasing one piece of real estate. Typically, real es- tate investing requires a large down payment in order to obtain a loan with reasonable terms, tying up a significant portion of investors’ wealth in a single asset. Funds allow an investor to often place a small- er amount of cash into a highly diversified portfolio, therefore mitigating risk through diver- sification. Not only do funds allow investors to diversify in different pieces of real estate all over the country but inves- tors can also diversify their investment by asset type and combined acquisition sources total $14,150,000. The financ - ing was arranged through Nick Saenz of Penn Community Bank. “Eastern Union attained at - tractive bank financing for this acquisition for two primary reasons,” said Tropp. “First, the sponsor brought a strong local market presence and a solid business plan to the table. And second, our company has de- veloped excellent relationships with scores of the country’s top lenders, and we leveraged these relationships to secure the most favorable terms possible.”

tenants. Funds may hold mul- tifamily apartments, net lease commercial assets, medical, industrial, etc. Asset types can have varying market cycles. Diversifying one’s investment across asset types and geogra- phy can potentially insulate their investment from market volatility. *Diversification does not guarantee profits or protect against losses. Depreciation An additional benefit to real estate income funds is the potential for depreciation. Many real estate income funds allow investors to depreciate their basis in the fund. The non-cash expense lowers the taxable income incurred from fund’s distributions. This may hold significant benefits for investors in high tax states such as California and New York. Investors should speak to their CPA to determine their own potential tax efficiencies from investing in real estate income funds. Able to Optimize Both Inflationary and DeflationaryMarket Cycles Finally, the ability for funds to continue to purchase real estate over time allows inves- tors to optimize both inflation - ary and deflationary market cycles. An inflationary market will theoretically drive up the value of the fund. In a defla - tionary cycle, the fund may continue acquiring assets, cost dollar averaging as the market retreats. Funds have the flex - ibility to pick up these assets at a discount. Cap rates often expand in a deflationary mar - ket, which will allow investors The portfolio is situated with- in an area considered to be Philadelphia’s most actively developed big-box retail/indus- trial corridor -- and a prime location for redevelopment. It is located in immediate proxim- ity to I-95, major ports, arenas and downtown Philadelphia. The three properties are at the center of a major logistics hub that includes a new Ama- zon logistics headquarters, a UPS distribution center, and a 700,000 s/f retail power center anchored by IKEA, Lowe’s and Best Buy. Further reflecting develop -

to potentially realize higher distributions as they wait for the market to turn around. Additional Potential Ben- efits of Real Estate Income Funds • Passive income and/or dis - tribution potential • May provide monthly cash flow and/or distributions • Capital appreciation/equity • Typically low minimum investment amounts ($25k - $50k) • Professional asset manage - ment • Elimination of day-to-day management headaches While it is almost impos- sible to predict what the economic future will look like, many prudent investors are posturing their portfolios to mitigate risk while optimiz- ing their upside potential no matter which direction the market turns. As more inves- tors learn about the potential benefits of Real Estate Income Funds, their popularity will continue to grow throughout the coming years. growth potential • Tax advantages Securities offered through Growth Capital Services, member FINRA, SIPC. Office of Supervisory Jurisdiction located at 2093 Philadelphia Pike Suite 4196 Claymont, DE 19703. Potential returns and appreciation are never guaranteed and loss of princi- pal is possible. Please speak with your CPA and attorney for tax and legal advice. Steve Haskell is vice president of Kay Prop- erties and Investments, LLC. MAREJ ment trends within the area, a seven-acre manufacturing facility owned by the chemi- cal company Inolex -- situ- ated directly opposite the three properties -- is in the process of being sold to a large developer. The partnership expects that the sale and redevelopment of the site will generate added demand and attract new users to the district. “We’ve been seeing consis - tently high demand for flex industrial/commercial space in a supply-constrained market,” saidMichael Bauer, principal of BASH Capital. MAREJ

A Real Estate Income Fund is a specific subset of funds that is focused exclusively on investing in potentially income-generating real estate. Real estate income funds pro- vide another entry point for those looking to invest in large commercial or multifamily real estate portfolios. Real Estate Income Funds are particularly appealing to retail investors who want to own institutional quality real estate that would normally be out of reach for them. A Real Estate Income Fund pools capital from many investors, and then the fund’s sponsor oversees all the fund’s activities, including perform- ing due diligence, underwrit- ing, and propertymanagement. Investing in a Real Estate Income Fund is a great way to potentially generate passive income, gain access to institu- tional level assets, and avoid the responsibilities of direct ownership. An Example of a Typical Real Estate Investment Fund Exclusively Offered by Kay Properties Net Lease Income Fund 18 LLC: Focused on acquiring, owning, and actively managing a portfolio of single-tenant, Long-term, NNN lease, income producing tenants operating in the industrial, medical, and retail spaces throughout select United States markets. This Real Estate Income Fund targets an 8% preferred return* for investors with monthly distributions gener- ated through corporate backed leases. The offering size of this pany, arranged the mortgage on behalf of a partnership consisting of Michael Bauer through his investment arm, New York City-based BASH Capital , and West Chester, PA-based Joseph A. Cunane . The partnership owns and has successfully leased a neighbor- ing property at 22 Wolf St. The overall $9.75-million loan applies $5,194,300 toward acquisition, in conjunction with a credit facility of $4,555,700 for renovations and leasing costs. In addition to the mort- gage, the partnership raised $4,400,000 in equity. The two

many inves- tors looking for more con- servative and less volatile investments. On t o p o f that, tradi - tional invest- ment instru-

Steve Haskell

ments like stocks and bonds are similarly not looking very attractive because of their lackluster yield performances. Therefore, more and more in- vestors are attracted to Real Estate Income Funds. While Kay Properties & Investments is best known for its expert-level knowledge of Delaware Statutory Trust 1031 exchange investment strategies and opportunities, the company also has a great reputation for working with nationally recognized real estate sponsors to source and structure All-Cash/Debt-Free Real Estate Income Funds for accredited investors. What is a Real Estate Income Fund? In general terms, any “in - come fund” is simply a pool of capital that has been as- sembled on behalf of a group of investors. There are literally tens-of-thousands of different types of investment funds, including equity funds, bond funds, money market funds, mutual funds, and hedge funds. While direct ownership of real estate has been a popu- lar investment for centuries, recently many investors have also started investing in real PHILADELPHIA, PA — Eastern Union has secured $9.75 million in financing to - ward the acquisition of a three- property, 218,961 s/f, flex in - dustrial/office portfolio along Philadelphia’s Delaware River waterfront, one of the most highly developed industrial and logistical centers on the East Coast. The portfolio -- acquired off- market at a price below replace- ment cost -- includes 20 Jackson Street, 38 Jackson St. and 21 Wolf St. Marc Tropp , a senior man- aging director with the com-

Eastern Union secures $9.75 million in financing for acquisition of flex industrial/office portfolio On Philadelphia Waterfront

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