Real Estate Investments

Real estate has long been among the most popular of all investment options; the family home continues to represent the largest portion of wealth for most. Direct investment in large institutional real estate investment options, long the sole province of banks, pension funds and large corporations, is now available to individual investors.

Real estate is a tangible, “hard,” asset that is comparatively unaffected by stock market fluctuations due to its inherent value. While real estate certainly experiences a fair share of peaks and valleys on historical value charts, real estate has traditionally been a less volatile asset class than stocks and mutual funds in the short term.

Investing in real estate continues to be an increasingly attractive investment option. A well-diversified investment portfolio is essential given the volatility of the financial markets and investments in various types of real estate can provide this diversity, and may also provide tax advantages and appealing returns (e.g. income plus capital gains).

There are risks associated with investing in real estate and it is not suitable for all investors. Real estate values may fluctuate based on economic and environmental factors and it is not suitable for all investors. Many real estate investments are illiquid by nature. There is no recognized secondary market and you may be unable to sell your interest prior to liquidation.

Real Estate Investment Links:

Single Tenant NNN Leased Properties

This type of Special Purpose Entity (SPE) investment provides investors with access to a variety of institutional quality net-leased properties nationwide. The Sponsor of the property identifies, negotiates and acquires real estate on behalf of its SPE member investors.

These properties are triple-net leased to credit worthy tenants with long term leases containing regular rent escalations. Tenants can include drug stores, fast-food restaurants, home improvement stores and many others.

The income produced under the terms of the lease is distributed to investors per their pro rata ownership and this passive income is eligible to absorb passive losses from other investments. Potential capital appreciation from the resale of the property during the holding term of the asset (typically five to seven years) is also distributed to investors.
Real Estate Income Funds and Secured Notes

Real Estate Income Funds
& Secured Notes

Real Estate funds seek to obtain a favorable long-term total return through both capital appreciation and current income by investing primarily in equity and fixed-income securities of companies principally engaged in or related to the real estate industry.

Many investors choose to consider an investment in real estate, or real estate related securities, for a number of reasons. These include:

a possible combination of capital gain and investment income;
portfolio diversification;
professional management;
possibly some tax deferral through depreciation of the asset and the employment of certain strategies (e.g. 1031 Exchange); and
historically, real estate can be an inflation hedge through the projected growth of rental rates combined with the ownership of “real” property.

Most invest in a select portfolio of REITs, which own office, industrial, apartment, health care and other types of income-producing properties.

Others invest in both REITs and other publicly traded companies involved in real estate ownership and real estate development, and seek companies with first-class management teams who view real estate as a means of producing steadily increasing income and strong returns on capital.

It is important to remind investors that distributions on real estate investments can come from a number of different sources. Income distributions may not be currently earned on a specific property or investment. This is especially true as new development or re-development projects are completed and become fully leased. Distributions may come from financing or re-financing a property and that can be very common the longer an investment is held. Some distributions may come simply as a return of capital.

Real estate funds are subject to special risks, including market risk, company risk, real estate investing risk, real estate securities risk, interest rate risk, small-cap risk, credit risk, income volatility risk, prepayment risk, extension risk, foreign investment risks, and risks specific to a given property.