First National Realty Partners: Any Experience Or Knowledge

[John Thedford]

I found this company on FB. They are offering a part ownership in two large grocery store anchored strips in the NE. They are claiming a projected first year cash return of 8% with an IRR of 16%. The project is 36.5M and buy-in is 50K or more. This would be my first time buying into a deal like this. It is a DE corporation and ownership of the strips will be held in an LLC. I know NOTHING about these types of transactions and I am hesitant to just give someone 50K without a good understanding of what I may be getting myself into.

[Joel Owens]

Abba sorry to hear that. 1.5 to 2% return is very low for a retail center. I have been in NNN 20 years investor and principal broker and owner of my company. I specialize in in single tenant and multi-tenant nationally.

My friend owns about 15 million sq ft of retail centers who has been owning over 40 years. Typically pref can be from 6 to 8 depending on variables with the center. Super high quality and all national tenants with long leases maybe 6%. Center with more mix of mom and pop versus national more 8 pref as volatility with small tenants. It's important to know if existing in place rent on the purchase is at, above, or below market for those inline retail box sizes.

Some more inexperienced think retail centers are absolutely better than single tenant because you have multiple tenants paying but it comes down to lease, location, tenant strength, market in place rents for risk factors. Some of my clients buy retail centers but I just do not want to own them. I like high quality single tenant for myself with less management. Our pref is typically 6% and up to accredited LP's. Single tenant has risk too if area is bad, tenant too weak, rent above market tenant is paying due to high tenant improvement credits from owner to get them in their and opening,etc.

Hope things turn around for your investments soon.

[Cory TerEick]

I have one investment with FNRP and I don't recommend them at all based on this experience.  I invested $500k with them on a 1031 almost 2 years ago.  They actually did have some initially good payouts the first year; however, looking back at the financial reports, these first payouts seem to have been programmed into their acquisition model and financed via debt as opposed to the actual earnings of the property.  In year 2, I am looking at 2% in annual distributions.  They will have to refinance their debt soon, so I anticipate these returns going to 0 or negative in Year 3.  

Looking at the reporting I do get, their fees are very high for what you get in terms of them managing the asset.  They tout their leasing team, but to me they do a very pedestrian job and charge high fees for it.   In terms of accounting, they absolutely suck at getting out timely reports.  Last year I didn't receive their accounting file (a trial balance report) for my taxes (due in April) until July.  Lots of BS excuses and finger-pointing at their hired out Accounting Team for this.

My biggest concern now in terms of this one investment is that they are way over-leveraged and are in a position where they will need to refinance soon which will likely result in negative cashflow with interest rates where they are at.   They are not reporting this to investors or highlighting it as a major risk as of yet, but I see it coming in the next 6 months or so.

Before investing with them, I encourage you to look at their reviews.  The positive reviews are very short and look to be posted by employees, affiliates, or brand new investors without much experience with them.  Dig deep into the negative reviews that provide some context on actual experience.  

[Kent Parks]

Quote from @Cory TerEick:

I have one investment with FNRP and I don't recommend them at all based on this experience.  I invested $500k with them on a 1031 almost 2 years ago.  They actually did have some initially good payouts the first year; however, looking back at the financial reports, these first payouts seem to have been programmed into their acquisition model and financed via debt as opposed to the actual earnings of the property.  In year 2, I am looking at 2% in annual distributions.  They will have to refinance their debt soon, so I anticipate these returns going to 0 or negative in Year 3.  

Looking at the reporting I do get, their fees are very high for what you get in terms of them managing the asset.  They tout their leasing team, but to me they do a very pedestrian job and charge high fees for it.   In terms of accounting, they absolutely suck at getting out timely reports.  Last year I didn't receive their accounting file (a trial balance report) for my taxes (due in April) until July.  Lots of BS excuses and finger-pointing at their hired out Accounting Team for this.

My biggest concern now in terms of this one investment is that they are way over-leveraged and are in a position where they will need to refinance soon which will likely result in negative cashflow with interest rates where they are at.   They are not reporting this to investors or highlighting it as a major risk as of yet, but I see it coming in the next 6 months or so.

Before investing with them, I encourage you to look at their reviews.  The positive reviews are very short and look to be posted by employees, affiliates, or brand new investors without much experience with them.  Dig deep into the negative reviews that provide some context on actual experience.  

 Thanks for your feedback Cory. Did you do any due diligence before you invested with them?

[Kent Parks]

Quote from @Abba Kader:

I have a lengthy post on FNRP. All I can tell you is that they are a joke. Don't do it.

I am a seasoned investor and did 2 deals $400K each. my returns are no where close to what was promised and I don't see any hope. at the present time after 2 + years I am at about 1.5 - 2% return. I have discussed this with them and there was mention of a "Capital call". So instead of them giving me the returns or just returning my initial investment, they want more money to stay afloat.  

Thanks for your report on them Abba. Did you do any due diligence before you invested with them?

[Cory TerEick]

Quote from @Kent Parks:

Quote from @Cory TerEick:

I have one investment with FNRP and I don't recommend them at all based on this experience.  I invested $500k with them on a 1031 almost 2 years ago.  They actually did have some initially good payouts the first year; however, looking back at the financial reports, these first payouts seem to have been programmed into their acquisition model and financed via debt as opposed to the actual earnings of the property.  In year 2, I am looking at 2% in annual distributions.  They will have to refinance their debt soon, so I anticipate these returns going to 0 or negative in Year 3.  

Looking at the reporting I do get, their fees are very high for what you get in terms of them managing the asset.  They tout their leasing team, but to me they do a very pedestrian job and charge high fees for it.   In terms of accounting, they absolutely suck at getting out timely reports.  Last year I didn't receive their accounting file (a trial balance report) for my taxes (due in April) until July.  Lots of BS excuses and finger-pointing at their hired out Accounting Team for this.

My biggest concern now in terms of this one investment is that they are way over-leveraged and are in a position where they will need to refinance soon which will likely result in negative cashflow with interest rates where they are at.   They are not reporting this to investors or highlighting it as a major risk as of yet, but I see it coming in the next 6 months or so.

Before investing with them, I encourage you to look at their reviews.  The positive reviews are very short and look to be posted by employees, affiliates, or brand new investors without much experience with them.  Dig deep into the negative reviews that provide some context on actual experience.  

 Thanks for your feedback Cory. Did you do any due diligence before you invested with them?

I did, but I wish I would have done a lot more.  The sales rep that sold it to me quit just a few months after close.  I would have dug a lot more into their fees, their legal contracts, and their actual capital investment into the project.  They seem to have it structured so they make money no matter how the asset performs.  This lack of alignment with the investor's interest and their own is problematic.

[Kent Parks]

Quote from @Cory TerEick:

Quote from @Kent Parks:

Quote from @Cory TerEick:

I have one investment with FNRP and I don't recommend them at all based on this experience.  I invested $500k with them on a 1031 almost 2 years ago.  They actually did have some initially good payouts the first year; however, looking back at the financial reports, these first payouts seem to have been programmed into their acquisition model and financed via debt as opposed to the actual earnings of the property.  In year 2, I am looking at 2% in annual distributions.  They will have to refinance their debt soon, so I anticipate these returns going to 0 or negative in Year 3.  

Looking at the reporting I do get, their fees are very high for what you get in terms of them managing the asset.  They tout their leasing team, but to me they do a very pedestrian job and charge high fees for it.   In terms of accounting, they absolutely suck at getting out timely reports.  Last year I didn't receive their accounting file (a trial balance report) for my taxes (due in April) until July.  Lots of BS excuses and finger-pointing at their hired out Accounting Team for this.

My biggest concern now in terms of this one investment is that they are way over-leveraged and are in a position where they will need to refinance soon which will likely result in negative cashflow with interest rates where they are at.   They are not reporting this to investors or highlighting it as a major risk as of yet, but I see it coming in the next 6 months or so.

Before investing with them, I encourage you to look at their reviews.  The positive reviews are very short and look to be posted by employees, affiliates, or brand new investors without much experience with them.  Dig deep into the negative reviews that provide some context on actual experience.  

 Thanks for your feedback Cory. Did you do any due diligence before you invested with them?

I did, but I wish I would have done a lot more.  The sales rep that sold it to me quit just a few months after close.  I would have dug a lot more into their fees, their legal contracts, and their actual capital investment into the project.  They seem to have it structured so they make money no matter how the asset performs.  This lack of alignment with the investor's interest and their own is problematic.

What kind of returns were they promising you during the sales phase?