Michelle Napoli is editor of Net Lease forum, from which this article is excerpted.
New York City—Steve Olsen and the team behind CB Richard Ellis Investors' Global Net Lease Partners have launched a new investment fund, the Prescott-GNLP Corporate Trust LP, whose investors include the Gordon P. Getty Family Trusts. Structured as a private REIT, the fund is expected to have a total of $150 million of equity that should translate to between $500 million and $600 million of acquisitions in the single-tenant office and industrial sectors.
The fund's management company, GNLP Capital LLC, is jointly owned by the Global Net Lease Partners principals and an affiliate of Prescott Capital Management LLC. The latter is part of New York City-based the Prescott Group LLC, a real estate investment banking firm which counts among its investors—both at the corporate level and in its property investment vehicles—the Getty Trusts. While the new fund is not a CBREI entity, Olsen says his group remains actively involved with the company.
Target deals for the fund are in the $20-million to $70-million transaction size range and 10-year to 15-year lease term range. "We're looking for good properties in good locations. We're not going for the six cap deals and we're not going for the nine cap deals," says Olsen. The fund is taking a buy and hold strategy with a 10-year anticipated holding period.
In terms of tenants, the fund is particularly keen on those on the cusp of becoming investment grade and those that just recently earned investment grade status, Prescott Group managing director Theodore R. Gamble Jr. tells NET LEASE forum. "We think that's an extremely positive part of the capital markets right now," he says, noting that those tenancies can offer enhanced yields but with more comfort than lesser credits.
The fund already has its first deal under contract, an approximately 125,000-sf Time Warner call center in Charlotte, NC, which is being purchased for about $20 million and is being brokered by CB Richard Ellis. Olsen says that with several years already burned off, about 11 years remains on the lease. Two more deals, both office properties, are expected to be under contract soon.
In addition to the Getty Trusts, the new net lease fund's investors include what are termed as "other significant private investment groups," college/university endowments and other institutions.Olsen and Gamble tell NET LEASE forum that structuring the fund as a private REIT offers several advantages: accounting simplicity, legal and tax considerations that enhance the overall package, and the open-ended possibility of taking the entity public some day. A private REIT "will afford us certain advantages in accessing capital," says Gamble.
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