Posted: April 18, 2017
Closes Two Zero-Cash-Flow Deals Totaling Close to $150MM
SRS REAL ESTATE PARTNERS CITES DEAL STRUCTURE AND USE OF CREXi AS DRIVERS SRS Real Estate Partners Cites Deal Structure and Use of CREXi as Drivers
In two large deals illustrating the benefits of Zero-Cash-Flow net-lease properties, SRS Real Estate Partners has closed a 921K SF single tenant AT&T (NYSE: T) corporate facility in Morristown, New Jersey for $101,500,000, and a 27-property net-leased Flower Foods (MYSE: FLO) portfolio for $47,500,000.
Both net-lease deals are unique in that the lease and loan structure result in zero-cash-flow (“ZCF”) to the owner with equity rapidly growing as the loan is paid down and the property appreciates. “ZCF deals don’t meet every investor’s criteria, but are becoming more popular as they should,” notes SRS Vice President John Redfield. “Given the tenant’s investment-grade credit and favorable lease-terms, lenders are willing to lend up to 1.0 debt-service coverage resulting in a highly-leveraged loan requiring less than typical sponsor equity. Investors grow equity as the loan is paid down and achieve their accrued returns at an eventual capital event. Future lease-extensions or re-tenanting at lease expiration can propel these low-risk deals into home-run returns,” Redfield adds.
Redfield also cites the benefit of working with CREXi, an online CRE marketplace, in marketing and assisting with the transactions. “Given the structured nature of ZCF deals, having a platform to help manage the marketing process is a huge value-add. Additionally, the reach CREXi provided ensured that we exposed the opportunity to every possible buyer,” added Redfield. “Our clients hire us to maximize value, in a quick timeframe, with surety of sale and there is no doubt that CREXi assisted on all those fronts.”
Redfield, Tramontano and the rest of the team have already sold this year 62 properties at over $278MM with over $324MM currently under contract. The SRS National Net Lease Group & Investment Properties is comprised of seasoned brokers located and transacting nationally, operating under a single, open platform with all underwriting and marketing efforts strategically located in Southern California.
ABOUT SRS REAL ESTATE PARTNERS
Founded in 1986, SRS is the largest commercial real estate firm in North America exclusively dedicated to retail services. With more than 20 offices across North America and in select global markets, a track record of over 5,400 transactions and current tenant and landlord representation in excess of 20 million square feet, our promise is to deliver true value to our clients. As one of the nation’s most respected retail services brokerage firms, we are guided by our principles of integrity, respect, teamwork and leadership in every real estate transaction.
Founded in 2015 with significant VC backing, CREXi is a commercial real estate marketplace that simplifies transactions for brokers with a suite of easy-to-use tools to manage their sale process. Bringing the traditional CRE sales process online, CREXi leverages the latest advances in technology to optimize pricing and make transactions faster and more efficient.