Commercial Property Profile: Chase Bank

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JP Morgan Chase Bank, N.A. is an American consumer and commercial national bank. Their services include investment banking, commercial banking, transaction processing, and asset management. Chase is publicly traded on the New York Stock Exchange as JPM, with a market capitalization of $372 billion. Their stock is also a component of the Dow Jones Industrial Average.

JP Morgan Chase Bank's headquarters are located in Manhattan, New York. They operate 5,000 branches and 16,000 ATMs across 100 countries. Chase is a highly sought after net leased investment because of their A+ Standard & Poor's credit rating and Class A site locations. Primary lease terms are typically 20 year triple net ground leases with 5-year renewal options. For 2017, cap rates and sales prices averaged 4.25% and $5,000,000.

Commercial Property Profile: Best Buy

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Best Buy Company, Inc. is an American consumer electronics retailer. Their products range from computers to cameras and home appliances, as well mobile phones and tech accessories. Best Buy is publicly traded on the New York Stock Exchange as BBY, with a market capitalization of $21.3 billion.

They are headquartered in Richfield, Minnesota, and have 700 stores spanning the United States and Canada. Best Buy is a highly-desired net leased investment because of their BBB- Standard & Poor's credit rating and recent partnership with Amazon (NYSE: AMZN). Primary lease terms are typically 15-20 year triple net leases with 5-year renewal options. For 2017, cap rates and sales prices averaged a very attractive 7.00% and $10,000,000.

Commercial Property Profile: Whole Foods Market

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Whole Foods Market, Inc. is an American supermarket chain. They specialize in selling high-quality natural and organic products, with a strong emphasis on perishable foods. Whole Foods is publicly traded on the Nasdaq Exchange as WFMI, with a market capitalization of $10 billion.

Headquartered in Austin, Texas, with 480 stores across the United States, United Kingdom, and Canada, Whole Foods is a premium net leased investment because of their strong credit rating and recent acquisition by parent company Amazon (Nasdaq: AMZN). Primary lease terms are typically a 20-year triple net ground lease with 5-year renewal options. For 2017, cap rates and sales prices averaged 5.00% and $25,000,000 respectively.

Commercial Property Profile: Chipotle

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Chipotle Mexican Grill, Inc. is an American quick service restaurant food chain. They serve Mission-style burritos and tacos, at a walk-up food counter. Chipotle is publicly traded on the New York Stock Exchange as CMG, with a market capitalization of $13.75 billion.

Headquartered in Denver, Colorado, with restaurants in the United States, United Kingdom, Canada, Germany, and France, Chipotle is a highly sought after net leased investment because of their popular locations and brand. Primary lease terms are generally a 10-15 year triple net ground lease. For 2017, cap rates and sales prices averaged 4.85% and $1,880,000 respectively.

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Selling Real Estate For Cryptocurrency

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If you are considering selling your investment property, then you may want to consider exchanging it for Crytpocurrency. The reason for divesting out of real estate and into Crytocurrency is because Bitcoin was up 1300% for 2017, with a high of 1900% for the year. In comparison, 8% was the U.S. Real Estate Investment Trust yearly average. The S&P 500 averaged 19% in 2017. Exchanging your property into Cryptocurrency can easily be done on the blockchain using verified smart contracts, which are digital versions of traditional real estate contracts. One of the best reasons to Crypto exchange is that your profits stay on the blockchain. This means that at closing all of your equity is readily available in the form of Cryptocurrency and can be re-invested in lieu of fiat currency. In many states, a licensed real estate broker is capable of facilitating a Cryptocurrency exchange and escrow. Using a broker provides accountability and protection for the seller. It is the easiest way to exchange real estate into Cryptocurrency and an exit strategy that all property sellers should take advantage of.

Buying Real Estate With Cryptocurrency

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Real estate can be used to hedge losses in the Cryptocurrency market. Every year the Cryptocurrency market cap dips in Q1 and Q3 between 25-50%. Income producing real estate returns anywhere from 5-15% annually. Exchanging real estate into Cryptocurrency gives you a tangible real world asset. Your funds can even stay on the blockchain if you invest in tokenized real estate. Dividends are dispersed like a traditional investment and this gives the real estate token in intrinsic value upon issuance, which is rare in the world of blockchain developments. In terms of capital requirements, there is little to no barrier to entry for fractional ownership of a tokenized property. This makes it easy for anyone to own investment real estate on the blockchain.

How To Calculate Cap Rates

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Calculating capitalization rates, commonly referred to as the cap rate in the real estate industry, is the easiest way to find the value of an income producing property. To calculate the cap rate you will need two numbers from the subject property; first, its net operating income, or NOI, and second its listing or purchase price.

Let's go over the math behind the calculations first, then I will provide a step by step example for you to follow along.

To find the net operating income, first add together the gross annual income less vacancies. This number is the gross effective income. Next, subtract all of the property's annual operational expenses not including the mortgage payment. The gross effective income minus operating expenses equals the net operating income.

The second step is to find the subject property's listing price or you can use the agreed upon purchase price. Divide the net operating income by the price of the property to find the cap rate.

Now on to our sample case. We will use an example of a property with $100,000 of gross annual income and a 10% vacancy expense. This leaves $90,000 for gross effective income. Annual operating expenses total $30,000. Subtracting expenses from the gross effective income equals $60,000 in net operating income. If this property was listed for $1,000,000 we would divide the NOI by listing price to get a 6% cap rate.

Gross Rental Income - Vacancy Expenses

= Gross Effective Income

- Operational Expenses

= Net Operating Income

/ Property Price

= Capitalization Rate

Single Tenant Net Leased Property Types

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We are going to focus on 5 property types that make up the single tenant net leased market.

Retail

The first category is retail. Primary retailers include stores like CVS, Walgreens, and 7-Eleven. Big box retailers lease larger sites like Kohl's, Costco, and Home Depot. Another retail subset are dollar stores like Dollar General and Family Dollar.

Restaurants

The second net leased property type are restaurants. Fast food, quick serve restaurants include companies like Taco Bell and Starbucks. Casual dining restaurants include Chili's, IHOP, and similar concepts.

Finance and Communication

The third net leased property type are finance and communications. These tenants are comprised of banks like Bank of America and Wells Fargo. Communications tenants include AT&T, T-Mobile, and logistics companies like the UPS Store and FedEx Kinko's.

Automotive

The fourth net leased property category is automotive. This group includes tenants like Auto one, Jiffy Lube, and Midas. Gas stations, car dealerships, and car washes are also included in this group.

Office

The fifth net leased property category is office. These tenants may be investment grade health care providers like Kaiser or independent practitioners like dentists. Call centers and company headquarters are also single tenant net leased office properties.

Financing Net Leased Commercial Real Estate

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The majority of net leased commercial real estate is traded between $1 million and $5 million. To finance these properties borrowers, also known as sponsors, will need a down payment of at least 25% of the purchase price and in most cases 50% of the purchase price. 90% to 100% financing may be available for experienced developers that have secured a long-term, investment grade tenant for their commercial site. Non-recourse and partial recourse programs are also available. Interest rates range from 3.25% to 4.85% depending on 5 -year, 7-year, and 10-year fixed rates. Amortization ranges from 20 to 30 years. The entire lending process takes approximately 45 days to fund your next leased purchase once the property is under contract. Please contact us if you are interested in purchasing a net leased property and need financing!

What Are the Typical Returns From Triple Net Leased Investments?

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The answer depends on how you evaluate your investment.

Capitalization Rates are the most common way to evaluate returns (take 1 year’s net income/purchase price). NNN leased investments currently average 5% to 8% capitalization rates depending on credit risk, location, and value of the income stream. With the ups and downs of the stock market and the recent turmoil in residential housing, more and more investors are seeking refuge in single tenant NNN leased real estate investments. This increased demand, coupled with low interest rates, has driven cap rates down over the past 10 years.

Internal rate of return (IRR) is the value of an investment over a period of time. Assuming over a specified period (usually 10 years) of income, appreciation, payment of debt (if any), resale value, cost of resale and discounting the numbers into today’s dollars, IRRs for NNN leased investments are usually 10%-14%. Yields from single tenant NNN leased real estate exceeded that of 10-year U.S. Treasury securities by 467 basis points as of November 2012.

Credit: Net Leased Real Properties, Inc/National RE Investor

What Are Triple Net Leased Investments?

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Many real estate investors become dissatisfied with the management problems associated with real estate investment ownership. In recent years, more investors are becoming familiar with the ease of owning commercial property occupied by a single credit rated national tenant, using the vehicle of a long term triple net lease (NNN). The advantages of NNN leases are that the tenant is obligated to pay for all expenses associated with the operation of the property including property taxes, maintenance, insurance etc. When a NNN lease is combined with a single national credit tenant, the investor can be assured of a management free property with minimal risk. Companies with a net worth of over $1 billion such as Walgreens, Walmart, O’Reilly, Jack-in-the-Box, Barnes and Noble, Winn-Dixie, 7-Eleven, Inc. and Sherwin Williams are the typical types of NNN leased investment properties that investors look for and that we can help you locate.

Up Next: 2018 US Olympic Stream Team

Photo credit: NBA

Photo credit: NBA

eSports is the fastest growing sector in the sports and entertainment industry. eSports are professional competitive video game matches for awards and prize money. Major League Gaming (MLG) is the highest level pro league. Just like traditional sports franchises, eSports organizations have owners, players, sponsors and, last but not least, fans. This year the most streamed MLG event had more viewers than Game 7 of the MLB World Series. Here are the market headlines so far for December:

The NBA announced starting December 15th, it will broadcast G League (formerly D League) games on Twitch, Amazon’s livestream service. NBA G League games can be viewed at twitch.tv/nbagleague.

The Sacramento Kings unveiled plans for a dedicated eSports facility and content studio inside of Golden 1 Center. The gamer lounge will be used for the team’s upcoming NBA 2K League team as well as future Kings’ Gaming teams.

Skillz, the mobile eSports platform backed by owners of the New England Patriots, Milwaukee Bucks, New York Mets, and Sacramento Kings, secured $25 million in Series C funding. The company has seen 50,000% growth in its revenue over the past three years and crossed the $100 million revenue run-rate threshold in 2017.

As eSports continues growing through 2018, the MLB and NHL could also livestream minor league games. The Olympics are around the corner and the stage is set for eSports integrate with the world’s oldest sporting event. Make sure to stream the first ever NBA G League game tomorrow on Twitch!

10 Questions to Pump Up Your Fitness Business Plan

Photo credit: Magnum Photos

Photo credit: Magnum Photos

If you have a bubbling concept of how to help others achieve their goals through personal training, then step into the health and fitness industry. Here are 10 helpful questions to consider before opening your gym:


1)    What sports will you offer?
2)    Personal training is typically subscription based. Are there any other products or services that you would like to offer in the future?
3)    How much revenue will you make from your products and services?
4)    What are the typical costs of goods sold?
5)    What are the size requirements for the space? Where is the ideal location? 
6)    What equipment and improvements are needed?
7)    Are you buying or leasing the space?
8)    Why are you opening this business? How is your concept different or better than existing ones?
9)    Who is your target demographic?
10)    How will the business and equipment be financed?


Answering these questions will help you formulate your business strategy. There is a high demand for health and fitness products and services in California. The regional market is currently under-served and gives entrepreneurs an opportunity to score big as business owners. We are here to help launch and expand your sports related startup company. Contact us today to get started!
 

Finding Your Niche in the Fitness Industry

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When I was in school, I played a variety of sports in P.E. class and after school. I benefited from playing sports through my involvement in team building and goal oriented concepts. As an entrepreneur, those in game experiences have helped me appreciate the small wins in life that I hope lead to success and longevity. Think Michael Jordan, Joe Montana, and Pelé; these players are great at organizational leadership because they understand the need and benefit of accomplishing goals as a team. The sports industry is a growing, high demand market and there is an opportunity for athletes, coaches, and trainers to capitalize. The following is a list of gym uses that your sports concept may fall under. 
    
    Gym Uses
  
 Baseball & Softball*
    Basketball
    Boxing
    Crossfit
    Cycling & Motocross*
    Dance
    Football*
    Gymnastics
    Martial Arts
    Soccer*
    Swimming*
    Tennis*
    Volleyball
    Weightlifting
    Yoga & Pilates
    *Also an outdoor use

Once you have identified your gym use, the next step of your business plan will include detailing out the real estate requirements. Our next blog post will include relevant questions to aid in locating the ideal facility for your team.