Net Lease Investment Sales Expert | CRE, VC, & PE GP
San Francisco, CA
Joined June 2011
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Follower Update on Who I Am:
20 years experience brokering retail real estate across the US at @cppartners_cre.
Since 2012, I have been partnering with my developer clients providing them capital to build shopping centers, national restaurants, and medical facilities.
2020-22 I raised and deployed $150M into companies such as @PalantirTech, @anduriltech, @airtable, and a bunch of others - had winners, had losers.
Ended up with investment exposure to 70+ @sonicdrivein locations, @hawaiianbros, and will be announcing the acquisition of a coffee chain shortly.
In summary, I am an investment sales broker with a decade plus track record investing alongside my clients.
Here to share war stories and expertise in real estate investing & brokerage.
Retail investment volume data was just produced by MSCI and the results will surprise you.
MSCIs Q3 retail headline says volume was flat at $18B, but let's peel that back.
Individual asset sales, the deals that actually price this market, rose 7% to $16.6B. That is ten straight quarters of year-over-year growth, a streak that started back in 2024. Year to date, single-asset retail volume is up 16%.
I repeat - there has been 10 consecutive quarters of single asset transaction growth despite rates and individual asset sales are up 7% in the quarter and 16% YTD.
With the 10-year at 5%, this supports my recent claim of 1031 and bonus buyers not flinching at rates at scale.
Volume persists.
We saw 10 offers last week just on one client's deals including 1 deal that had 2 ABOVE LIST PRICE offers on a Black Rock Coffee of all things.
Main takeaway here is when you hear someone pontificating on rates, reach out to me and I can share the full scoreboard report.
I've got a contrarian yet first hand view on rates and their impact on a specific part of the CRE market across my 70+ listings throughout America.
Most buyers in the $2-10M range doing 1031 exchanges to acquire long term single tenant assets have little to no sensitivities on interest rates - their core focus is deferring gains, depreciation, and maximum cash flow.
They are preserving capital via a 1031 exchange, it costs $500K-3M in taxes to care enough about rates and pay taxes in this range.
They are able to take a long term view given the 10-20 year lease terms with rent increases, which Treasuries do not offer.
Treasuries are at 4.5-5.25%, but if a buyer wants these "risk free" they would need to pay $500K-3M in taxes first and then get that same rate on less capital deployed with no built in yield increases.
For investors that are not in a 1031 exchange or chasing larger shopping centers, I get their point of view - they do not have this tax consequence or have alternative yield sensitivities - look at the incentives to see each side's point of view.
We are seeing offers daily on literally everything - Chipotle, Dutch Bros, oil changers, bowling alley's (like actual no credit bowling alley's), $7M casual dining restaurants, etc.
The national brand product (some credit, some franchisee) is getting done in the 4.75-5.75% range all day long during this rising interest rate environment.
Anything bonus related like gas stations or car washes are getting non-stop offer activity particularly now that's its year end.
At the end of the day, the buyers in this specific segment care about deferring gains coupled with max cash flow. These buyers are focused on long term leases that can weather market declines and pay yield in the interim.
I chuckle when folks talk about the investments they just made and how well they are doing
The closing dinners they had
Truth is you dont know until the exit
Those take 2-7 years after the closing and many times nowhere near as well as they had hoped
Told this lady to sell her $5M building as tenant was not doing well and city would ban its drive thru if the building went vacant
She didn’t sell “due to Iran War”
It had a fire so tenant terminated the lease and it’s now vacant with no future drive thru destroying its value
Sherwin Williams is an investment grade corporation that has been around for 150+ years and has very slowly built out another business line focused on multi-family, new residential builds, and senior-living markets - Floorcovering Centers.
These warehouse / distribution centers support their paint store business and now has 135 stores across America.
Always interesting to see concepts that are completely off the radar that are both expanding and backed by real credit.
Guy sells building leased to United Healthcare and an 8K vacancy for $9M
Landlord knows tenant is leaving but doesn’t disclose
Buyer acquires property and moves in to vacancy.
1 month later United says they want to leave
New owner negotiated $4M buyout so basis is $5M
Sells for $12M within a year netting $7M
City council meetings have a lot on the line for developers and resident's
If people could gamble on the outcomes on @Polymarket, it would create absolute mayhem and be so fun to watch
A church property goes under contract for $13,050,000 being sold to another church
During the escrow, buyer sends long email about all the issues and wants $5M price reduction
Reply with “send contract termination instructions”
2 days later buyer sends long email about all the things wrong with the property and asks for a $3.5M price reduction
Reply with “send cancellation instructions”
Same day they say ok can do $2M price reduction
“Send cancellation instructions”
The day of contingency removal with an hour before they need to release a $500K deposit, they end up with a $50K credit
Closes at $13M
You are too kind @andrewmdunn_
As an investor in his projects, the reporting and execution was A+.
As his broker, his and his team’s communication and true understanding of all facets of development was second to none.
Pleasure all mine.
Just checked my inbox to reflect that on September 29, 2023 @jandreini1 slid into my DMs asking "What kind of deals Im working on?" which led to a meet up in person at ICSC in San Diego to then pitching him my ground up retail development in Vegas to be an investor in.
To then him investing in said deal and others as well as selling over $21M in product for me over the last year on 5 different deals in Vegas and Reno. Including selling the 3 buildings in that retail development.
He helped give advice along the way and can navigate problems before they arose and when they came up.
Consider him a great broker and friend. Looking forward to doing more deals together but this was a good story about how connected you can be and actually make money from this platform.
#realestate #retail #investmentsales
Thanks for the shout out gents!
SOLD
5.35% cap
Brokers: @jandreini1 @ryan_schulten
It blows me away that BROS cap rates continue to punish SBUX caps
The investor got a $BROS bond that bumps 10% in 2 years and then 10% every 5 years for the next 35 years
Bonus: the value of the RE appreciates over time
Its times like this where private markets are enjoyable because the stock doesn't move 24/7
When public markets are booming, there is FOMO in the daily moves
The least fun is 24/7 watching a recently public position like @SpaceX drop during a lock up period cuz you are so close to liquidity yet so far away watching the balloon deflate
I have no exposure, but I've been there with the @PalantirTech lock up and with conviction, patience can very well pay off
I have one piece of advice for all current and future dad’s on Father’s Day
Never let your kids use floaties
They will swim by age 2
My take on the @SpaceX IPO is I don’t think people realize the level of wealth about to be bestowed upon a pretty large amount of people.
Some of these guys are walking away with billions net to them.
The company was founded 23 years ago and had dozens of investment rounds - these investors all want to cash out a large chunk of that and so do all of the employees to buy houses or move on to next deal.
There will CONTINUE to be an exodus of top talent from the company to the “next Space X” and run it back now that they hit their but with exit liquidity.
I would sit out the IPO and wait until the lock up periods expire for the employees which is staggered starting with “after the first quarterly earnings report” and through Elon’s lockup after 1 year.
Most people will sell asap at the first lock up and then sell into large days of trading volumes.
Good luck out there.
Developer buys a vacant drive-thru property with a signed lease from a major national coffee chain.
The lease has a contingency: permits must be secured by a certain date.
The day before the city council meeting to approve the permits, the tenant emails the city and asks them to pull it off the agenda.
Then the tenant turns around, says “permits weren’t approved on time,” and tries to terminate the lease.
Developer calls BS, refuses the termination, and sues.
City gets subpoenaed and BOOM — the “smoking gun” email from the tenant to planning staff surfaces.
Attorneys on both sides immediately light up.
Meanwhile, while all this is going on… a homeless guy breaks in, starts cooking crack, and burns the entire building to the ground.
Developer still manages to recoup a decent chunk of the loan from insurance.
Now?
He just received a strong new lease offer that could actually make the whole deal profitable.
This, ladies and gentlemen, is how you make (and sometimes lose) money in commercial real estate.
Developer locks up 100 acres at a brand-new highway off-ramp in a booming area.
A big-box retailer wants the site… but refuses to lease or pay market price for it.
They pick up the phone and call the city:
“Use eminent domain, take the land from this guy, hand it over to us for free — and we’ll build a shiny new store in your town.” City says yes.
Land gets seized.
Compensation fights drag on.
And suddenly… there’s a new store in town.
Tenant interviews are the most important part of any CRE acquisition, yet the majority of buyer's don't do this.
For corporate users, speak with a manager - one guy told my client sales were terrible and he was quitting - someone else bought the property because they didn't do this.
When acquiring a strip center, you are buying a small nuanced community - there tends to be an unofficial "mayor" and quarrels amonst the tenants / landlord the broker and seller would never reveal.
Basic questions include:
-Tell me about your business - start the relationships before you close - you need to have a mole per se.
-How are sales?
-What are some things you would like to see done here?
Tenants are extremely fearful of new landlords and will pause capital improvements or undermine a new landlord if they don't give out the right vibes. The best ice breaker is to remind them that their contracts are secure and you are prepared to spend money to improve signage, paint, etc. Completely disarms them. On the other extreme, a landlord bought a strip center did no interviews and sent letters raising rents - the tenants colluded and all ignored the letters for over a year.
Having interviewed hundreds of tenants and strip center villages, the things you will discover would shock you. Happy to provide further insight this into acquisitions folks are making - AMA.
I have been an early investor in defense tech for a while:
Went long PRE IPO on @PalantirTech when everyone thought they were a services company deserving only a 2 multiple.
Jumped into @anduriltech 6 investment rounds ago when their “valuation made no sense”
And rounded it out with @Saronic whom was the obvious Naval play
With this track record in mind, the most exciting new entrant is @AmcaInc
Founded less than 2 years ago, they closed their Series B thanks to @caffeinatedcap, etc. at $1B to solve the #1 issue America and its allies face - supply chain manufacturing limitations. We can’t produce what is needed for defense fast enough, the industry has no incentive to reduce these costs, and there has been limited innovation for a candidly “boring” middle layer making parts.
Thanks to some of the best former @SpaceX engineers and elite talent, these issues are being addressed at scale.
This without a doubt will be a $100B company one day.
They are hiring so for you engineers looking for the next rocket ship, @jaimalik is your guy