The investing-public is starving for investment opportunities in high-yield triple net commercial real estate properties. The challenge is the imbalance between the demand for higher yielding triple net (NNN) properties and the supply of available opportunities has had the impact of compressing yields. This is the sign of a healthy market where Rational Choice continues to play out at all levels to be sure, but creates a problem for investors, lenders and underwriters to deal with.
The problem is that the higher the stated yield an investment offers the more likely it is the yield will not be realized – the bigger they are the harder they fall. Triple Net (NNN) commercial real estate (CRE) properties offering the biggest yield opportunities have significant risks that need to be addressed prior to funding that include:
- NNN CRE property investments come with significant investment loss risk due to future changes in competition that can create bankruptcy and foreclosure loss risk.
- Single-tenant NNN properties are especially exposed due to the frenetic pace of innovations and advances in technology that serve to create total investment loss risk by making the tenant’s business model obsolete (ala Sears, ToysRUs, etc.).
- Investment fraud is still a problem that creates loss risk exposure for NNN properties and the higher the forecasted yield, the more likely there will be investment fraud.
- The current lack of supply in triple net commercial real estate equity private placement offering securities makes asset purchases more expensive and this means term default risk and maturity default risk are serious issues that have a high likelihood of making a high-yield triple net property investment a lower-yielding triple net property investment or no-yield triple net property investment (in the case of zero coupon transaction structures).
INVIZEN offers the industry’s only end-to-end solution specifically designed to deal with all of these risk issues and manage them for profit-taking purposes to benefit the lenders, investors, broker-dealers, registered investment advisors, asset managers and investors for the entire term of the investment in a real-time, proactive environment. INVIZEN is the affordable solution that is designed to provide both pre-funding and post-funding underwriting analyses and due diligence reviews on an ongoing (monthly) basis. The INVIZEN approach is keyed towards providing the benefit of maximum investment performance assurance and advance notice of market disruptions and other market events that could lead to a train wreck of up to 24 months.
Find out more about this amazing advance in technology by talking to an INVIZEN representative today at 832.663.9634.