Check the Fine Print in Triple Net Lease Agreements

Posted on September 17, 2020

Not all triple net leases are created equal. Rather, investors purchasing commercial property with NNN tenants already in place should take the time to review each individual lease agreement to understand from the onset all the benefits, restrictions and obligations they will inherit after the purchase closes.

For example, investors should read the fine print to confirm that the responsibilities for insuring the property and paying insurance premiums, property taxes, utilities and costs for general repairs and maintenance all falls to the tenants. It is not uncommon for an agreement to carve out exceptions for these items. For example, a lease agreement may require a landlord to cover all costs associated with a building’s structural repairs, such as replacing a roof, or share with the tenant the costs of certain other expenses. As a final reminder, investors should review lease agreements to identify if they contain escalation clauses, or reset clauses, and understand how these potential rent increases can affect them and their tenants over the life of the lease.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Orion Real Estate Group Acquires 26 Properties, Latest transaction brings fund acquisitions to $100 million

Posted on September 11, 2020

MIAMI – Sept. 11, 2020 – Orion Real Estate Group today announced a $61 million acquisition as part of its Orion Real Estate Opportunities Fund 2019 bringing total investments through the fund to nearly $100 million. OREOF19 was created to acquire value-add net lease property across the country.

Today’s $61 million acquisition consists of 26 properties in 16 states. Tenants include CVS, Tractor Supply, Office Depot, Fresenius Health Care and Bridgestone Tire.

“This was a strategic acquisition for Orion Real Estate Group to expand our single tenant net lease portfolio throughout the country with tenants that are considered essential businesses, commented Orion President Kevin Sanz. “These are tenants that have continued to thrive during the pandemic, and we are excited to add them to our portfolio.”

The company holds property in more than 20 states and four Canadian provinces.

About Orion Real Estate Group

Orion Real Estate Group provides commercial real estate services to investment clients around the world. Since its founding in 1978, the firm has been involved in more than $4 billion in transactions and holds a portfolio exceeding $800 million.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, visit www.orionmiami.com.

 

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Convenience is Key to QSRs Tenants’ Post-COVID Survival

Posted on September 09, 2020

Restaurants did a good job flexing their creativity and adapting to the pandemic lockdowns and social distancing measures. However, even as these businesses begin to reopen for inside dining, a significant number of consumers are continuing to exercise caution and opt for the convenience, speed and contactless features of order-ahead and drive-through service. In fact, according to a recent consumer survey on the health crisis’s impact on consumer behavior, an overwhelming majority of respondents are increasingly picking up family meals from restaurants that offer drive-through or counter pick-up services. In addition, brands that offer drive-through services and are therefore more apt to be located on an outparcel, are outselling their competitors located in strip centers. Not only is this good for many quick-serve brands but also the investors who own the property and/or the land on which those establishments sit.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Millenia Orlando Outparcels Acquired in $22.7 Million Transaction

Posted on September 02, 2020

ORLANDO – Sept. 2, 2020 – Limestone Asset Management, an affiliate of Orion Real Estate Group, has purchased seven outparcels of the Millenia Mall in Orlando, Fl, for $22.7 million. The acquisition includes more than 100,000 square feet of commercial and office space. Long-term tenants include Olive Garden, BJ’s Brewhouse, Old Navy, West Elm, Ethan Allen, DSW and Ingenus Pharmaceuticals.

Ibrahim Al-Rashid, chairman of Limestone commented, “Millenia is an ideal addition to our portfolio. Commercial and office properties continue to be a focus of our acquisition efforts and we believe in the long-term growth story in Florida.”

Limestone currently holds $200 million in commercial and mixed-use real estate located across the United States. The Miami-based company uses Orion Real Estate Group’s expertise to  complete all North America-based transactions.

Orion Real Estate Group

Orion Real Estate Group provides commercial real estate services to investment clients around the world. Since its founding in 1978, the firm has been involved in more than $4 billion in transactions and holds a portfolio exceeding $800 million.

Limestone Asset Management

Miami-based Limestone Asset Management was founded in 2010 and invests in and acquires real estate properties over all asset classes throughout North America.  Its holdings exceed $200 million.

 

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3 Factors to Remember When Assessing Triple Net Lease Property

Posted on August 25, 2020

Savvy investors recognize the inherent benefits of triple net lease properties (NNN), in which tenants pay rent and all the other expenses of managing that property, including utilities, real estate taxes, insurance and costs for repairs and maintenance. Without these responsibilities, investors can pretty much sit back and collect a steady stream of passive rental income while building equity in those properties. However, not all NNN properties are created equal. Investors should still conduct thorough due diligence and focus on the following three factors:

  1. Geographic Location. Look for properties located in cities with a strong or strengthening economies, including positive employment levels and population growth?
  2. Physical Location. You want a property with good traffic, easy accessibility and a mix of different types of tenants, including a strong anchor that is either within the property or very close to it.
  3. Tenant Mix. If the COVID-19 pandemic has taught us just one lesson it would be that properties with essential businesses, such as grocery stores, pharmacies, hardware store, discount retailers and medical offices, will always attract consumers. Often, brands with a national presence with drive more foot traffic than mom and pop stores

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

What is a Reset Clause in A Commercial Real Estate Lease?

Posted on August 20, 2020

Reset clauses are typically used in long-term ground leases to provide landowners with a mechanism for capturing increases in the market value of the land they lease to a tenant for a period that can be as long as 99 years. In other words, they enable investors to lock in periodic rent increases at predetermined rates based on the land’s fair market value at any given point. Those rates may be fixed over the life of the lease or they may be based on an existing metric, such as the consumer price index (CPI).

For tenants, however, reset clauses can be troublesome due to the future uncertainty they create. A tenant may not know today the economic environment and financial pressures they will face 20 years from now nor will they know if they will be able to abide by rent increases that far down the round. To avoid these challenges, landowner should ensure that lease agreements include specific language that provides explicit details about what exactly will be valued in the future for purposes of determining rent increases. For example, will future valuations be based on just the land or will it also include the structures the tenant added as improvements to the land? Will it recognize the value of the lease or should it be valued based on a vacant building?

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

What’s Next for Retail, Dining and Entertainment Property?

Posted on August 12, 2020

The COVID-19 pandemic is generating renewed predictions about the death of commercial retail property. While there has been a staggering number of store closings and many landlords are struggling to fill those vacant spaces, the longer-term outlook may not be so dire.

Truth be told, the retail, restaurant and entertainment landscape has been changing for quite some time as consumers’ buying and dining preferences have shifted to prioritize convenience and the experiential nature of those activities. Those tenants that pivoted and adapted their business strategies and physical locations to meet consumers’ demand are better positioned to ride out the long-term impact of the COVID-19 health crisis. Survival will also depend on the underlying fundamentals of specific properties. For example, location will always play an important role in real estate, and those properties in high traffic locations within stable communities will continue to thrive over the long-term. This has already been evidenced by the increasing number of e-tailers and online businesses that are continuing to open brick-and-mortar locations to connect with customers in person.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Is Now the Time to Buy Commercial Property?

Posted on August 04, 2020

During the last recession, U.S. commercial real estate prices fell 35 percent more and then doubled over the next decade, providing substantial returns to patient investors. Now, as the financial impact of the COVID-19 health crisis disrupts commercial property pricing and distressed assets begin to hit the market, investors face similar circumstances and the decision of whether it makes financial sense to expand their commercial property portfolios. Like most investments, the answer can be found only after individuals assess the strengths and weaknesses of a particular property against their unique risk tolerance and short- and long-term goals.

With all the uncertainty surrounding the pandemic’s long-term impact on commercial properties and how a recovery may look, investors should be careful to work with experienced real estate professionals with deep market knowledge to evaluate deals and determine whether it is worth their time and money to buy distressed assets now or in the near future.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.