David E. Hooston
Guardian Advisory launched its first retail-focused private equity fund, Guardian Net Lease Fund I. The investment vehicle has a target procurement of $ 50 million with a purchasing power of $ 100 million and will focus on purchasing triple net lease assets with a single tenant in the United States. Guardian sees great opportunity in net rental income for individual tenants, especially in this late cycle. The company's general partner, Guardian CRE, will manage the fund.
"There is strong investor interest in NNN net rentals at this stage in the real estate cycle, based on the inherent long-term stability of this product and based on long-term leases with major national loan tenants." David E. Hooston, Principal at Guardian Advisory, tells GlobeSt.com. “In our opinion, many other property categories have reached a point where the returns have compressed considerably compared to the potential risk. We believe this will result in a superior risk / return profile for NNN net rentals at this stage of the property cycle. "
The fund is positioned in such a way that it can take advantage of all the possibilities of this asset class for private and institutional capital. “We chose to structure a fund to take advantage of this inequality because investing in pool-based net rentals as structured by the fund allows private and institutional investors to enjoy the many benefits of owning individual NNN net rentals while also enjoying theirs to diversify portfolios between different property types, uses and geographic regions. " John Halvorson, a director at Guardian, tells GlobeSt.com.
While Guardian has only just announced its launch, it has already received healthy interest from sources of capital recognizing the benefits of the late cycle investment strategy. "Interest in the fund has been well received as any limited partnership subscription interest is worth $ 25,000 and requires a minimum investment of $ 100,000," said Hooston. "We have received positive feedback from individual investors while the institutes have expressed interest in levels of $ 3 to 5 million per investor."
It is not surprising that this interest persists. Returns have compressed in the cycle by this point, and investors are looking for places to find returns – and this fund offers them. This fund plans to distribute 5% per annum on the initial capital contribution of investors and the target returns of 8% to 12% for compound lifetimes are highly competitive against other asset classes regardless of category, ”says Halvorson. The combination of these distribution levels and compound returns over the structured term of the fund in combination with the advantages of the income tax advantages of a limited partner's investment in real estate is unique today. "
If there is good interest, there is potential for the Guardian to exceed its target fundraiser of $ 50 million. If so, Hooston will consider oversubscribing. "If interest in the fund's limited partnership units exceeds the $ 50 million set out in the limited partnership agreement, we can either ask limited partners to expand the partnership or open a new partnership to account for the interest," he says.