Investments in Triple Net (NNN) single-tenant retail properties offer the opportunity to receive stable returns but also come with significant loss severity risk exposure over the holding periods that exceed the 2-year “golden window”. The reason for this is simple: the underwriting analysis and due diligence review process that accompanies the commercial real estate securities offering is really only pertinent in looking forward up to 24 months. After 24 months, the crystal ball gets much darker as the opportunity for changes in competition (mainly due to innovations and technology advances that breed new competition) can start to impact the revenue-generating opportunity of the tenant of a single-tenant retail property. In single-tenant retail properties there is no diversification of tenants – just that one tenant on whose business success everyone is dependent.
The most common investment vehicle is a Delaware Statutory Trust (DST) that holds multiple properties and is available as an equity investment opportunity pursuant to a private placement offering. NNN 1031 exchange properties represent a special class of risk – ask anyone who was a late investor in NNN leases for Sears, ToysRUs or Brookstone. NNN 1031 exchange properties are a special class of investment risk because tax regulations require a 10-year holding period. Think of everything that has happened in our economy in the last 10 years and ask yourself if you really believe things will stay the same, change slightly or have the propensity to change a whole heck of a lot because we live in the new Information Age and technology advances come to market so fast. Technology advances and other innovations have the power to cause potentially powerful market disruptions within the local trade area of a variety of CRE property classes. That spells potential problems.
There is so much more to the INVIZEN Real-Time Status Asset Care Protection Program that INVIZEN was intentionally designed to support:
- CRE Developers & Sponsors. Developers and sponsors seeking capital financing have the advantage of a systemic solution that provides the support needed to increase the odds of a successful capital financing outcome that saves time, money and reduces their capital investment risk.
- Investors & Lenders. Investors and lenders seeking to participate in commercial real estate securities private placement offerings and other credit instruments have the advantage of a systemic solution that provides the highest practical investment performance assurance we can contrive. INVIZEN gives investors and lenders the proactive investment loss severity risk prevention and monitoring they really need, but have never been able to obtain in the past.
- Broker-Dealers & Registered Investment Advisors. Securities broker-dealers and registered investment advisors on both the buy-side and sell-side of the transaction have the advantage of a reporting system that provides FINRA compliance support, protection from future investment fraud claims, increased transaction velocity and the opportunity to increase their operating margins – all in one package. If your firm doesn’t have this approach, then you are still operating in an environment that will penalize your opportunity to profit and control costs.
INVIZEN offers the first and only end-to-end solution for helping combat these problems that focuses on both the underwriting requirements for funding, but also prevention of future losses due to the asset value being impaired by term default risk, maturity default risk and/or technical default risk. Find out more about this proactive, real-time program designed specifically to help prevent investment loss severity risk by talking to an INVIZEN representative today at 832.663.9634.