David E. Hooston
Guardian Advisory has launched its first retail-focused private equity fund, Guardian Net Lease Fund I. The investment vehicle has a target fund raise of $50 million with a buying power of $100 million, and it will focus on buying single-tenant triple-net lease assets across the US. Guardian sees strong opportunities in single-tenant net lease assets, particularly this late in the cycle. The firm's general partner Guardian CRE will manage the fund.
“At this stage in the real estate cycle, there is strong investor interest in NNN net lease properties based on this product's inherent long-term stability, driven by long-term leases with major national credit tenants,” David E. Hooston, a principal at Guardian Advisory, tells GlobeSt.com. “Many other real estate categories, in our opinion, have reached a point where returns have compressed significantly against potential risk. This, we believe, results in a superior risk-return profile for NNN net lease properties at this stage of the real estate cycle.”
John Halvorson
The fund is positioned to take advantage of the full range of opportunities in this asset class for both private and institutional capital. “We were drawn to structuring a Fund to take advantage of this inequity since investing in net lease properties on a pooled basis as structured by the fund also allows private and institutional investors to leverage the many benefits of owning individual NNN net lease properties while diversifying their portfolios among different property types, uses, and geographic regions,” John Halvorson, a principal at Guardian, tells GlobeSt.com.
While Guardian has only just announced the launch, it has already received healthy interest from capital sources that see the benefits of the late-cycle investment strategy. “Interest in the fund has been well received, where each limited partnership interest subscription is valued at $25,000 and minimum investments of $100,000 is required,” says Hooston. “We have received positive feedback from individual investors, while institutions have expressed interest in the $3 million to $5 million level per investor.”
It isn't surprising to see this level of interest. Returns have compressed at this point in the cycle, and investors are chasing places to find yield—and this fund is offering it. This fund planned distribution of 5% per annum on investors' initial capital contribution and the 8% to 12% targeted compound life returns are highly competitive with other investment classes regardless of category,” says Halvorson. Combining these distribution levels and compounded returns over the structured life of the Fund when combined with advantages of the income tax benefits of a limited partnership investment in real estate is unique today.”
With healthy interest, there is potential that Guardian will exceed its $50 million target fundraise. If that is the case, Hooston says they will consider oversubscribing. “If interest in the Fund's limited partnership units exceeds the $50 million identified in the limited partnership agreement, we may either poll limited partners for an expansion of the partnership or open a new partnership to accommodate the interest,” he says.
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Kelsi Maree Borland
