Our Next Event: Alts Expo - Dec 13th
First National Realty Partners was a presenting partner at Alts Expo May 2023, a one-day virtual event hosted by WealthChannel. In this webinar, Michael Hazinski presents the company’s Champion Townhomes deal.
Interested In Learning More About This Opportunity?
Click here to visit the FNRP website.
- Background of FNRP, including the management team and a vertically integrated platform.
- Review of FNRP’s “necessity-based” investment thesis.
- The experience of the FNRP management team in multifamily investments.
- Review of the Champion Townhomes deal located near Orlando, a very unique multifamily opportunity.
- Characteristics of the property and the market that make it appealing to FNRP.
- Live Q&A with webinar attendees.
Connect With First National Realty Partners
- First National Realty Partners – Official Website
- First National Realty Partners on LinkedIn
- Michael Hazinski on LinkedIn
Jimmy: So, welcome to “Alts Expo.” Michael, great to see you. Thanks for joining us today. How are you doing?
Michael: Great. Thank you for having me. Can you hear me okay?
Jimmy: I can hear you great.
Michael: Yes. So, thank you very much for coming, everybody, certainly appreciate the time. My name is Mike Hazinski. I’m the Chief Investment Officer at First National Realty Partners. So, what I’ll do here today is go over the firm, our investment thesis. We’ll go over our property overview for Champion Townhomes, some of the financials, a deal room link to that investment, and then some Q&A thereafter. You know, we always start our presentations with the risk disclaimer here. So, as far as a firm overview goes, First National Realty Partners was founded in 2015. We have 1.5 billion in assets under management. We’ve roughly doubled in size in the last year. You know, really proud of the track record that we’ve been able to accomplish in a really short amount of time at the company. So, we are one of the leading sponsors, real estate private equity sponsors, in the country at this point.
FNRP by the numbers. So, this is a good slide that gives you a nice high-level overview of the company and really breadth and depth of the organization. And what I always like to start with here is all the way to the left, the 19.4%, and that’s the gross IRR on 11 total realized investments in 2022. So, round trip, 11 total deals, 11 dispositions, 19.4% gross IRR at First National Realty Partners. Again, 1.5 billion under management, over 830 million in acquisitions in 2022. One of the leading acquirers of commercial real estate, particularly grocery-anchored retail, which we’ll get into in a minute, 11.5 million square feet of GLA, over 2300 investors in the company, $600 million of equity capital, and $100 million of distributions to date. So, certainly proud of all of these numbers. And again, what we’ve accomplished in a very short amount of time.
Turning to the leadership team here. We have over 130 professionals in the organization. We are a vertically integrated platform which we’ll articulate on the next slide, but certainly a seasoned management team that we’ve been fortunate to put together that really drives one of the secret sauces for the company, which is presented here. It’s the vertical integration at FNRP that we call FNRP 360. So, what this is, is really a cradle to grave approach with very much an ownership mentality at every touchpoint along the way. So, you know, beginning with sourcing and acquisition, underwriting, debt, capital markets, legal, closing, asset management, leasing and construction is all done in-house. Really, again, helps drive our returns and really outsize returns in this case to investors. And it’s, you know, a key benefit of the company is the national scale and expertise with the local knowledge. So, as an example, Fred who runs leasing, has 13 leasing professionals that are in the field, knowing these markets, knowing these assets, and it really differentiates us from a competitor.
Moving along to our investment thesis. So, here, what we wanted to do was really set the table for the main four food groups in commercial real estate and what these investments have returned over a 1, 20, and call it 45-year time horizon. So, what this shows here, apartment, industrial, office, and retail, according to NCREIF, which is really the benchmark for direct real estate, if you see here on the one-year income appreciation and total return really industrial has outperformed in the last year. And as you’ll see to the right, the last 20 years, just driven by the seismic shift of e-commerce. In that 20-year middle column, you see the standard deviation come into play in a sharp ratio, which is what we use as a proxy for risk-adjusted returns. So, you know, over 20 years, and certainly since inception, you see that apartments, industrial, and retail outperform office. You know, these are the three main food groups. I think you can make a pretty good argument here that the food groups have expanded with more alternative real estate investments, such as student housing and data centers. These are still the main four. I think you’ve seen some office allocations leak out to some of those other alternative investments, but over a long time horizon, broadly speaking, apartments, industrial, and retail are the outperformers.
So, our necessity-based investment thesis really segments those three larger property sectors of retail, apartments and industrial. And how we segment is based on where we focus starting with retail, and that’s grocery-anchored retail. So, within the retail segment, we think grocery-anchored retail will outperform malls, lifestyle centers, which are, you know, outdoor walkable malls, power centers and all other formats of retail. So, grocery-anchored is really daily needs, frequent customer trips, you know, well located assets within neighborhoods, residential communities or regional trade areas. And, you know, the retail, the grocery-anchored retail and necessity-based retail really serves as last mile retail. And again, we’re very bullish on this sector. We’ve been market leaders in this sector, and we think we’ll continue to outperform grocery-anchored retail within the retail segment.
Within the apartment segment, you know, several formats of multi-family. There’s, you know, high-rise. There’s a low-rise. And what we like best is really this workforce market-rate housing, which is typically garden style. And, you know, we believe this product is best positioned, you know, certainly within the current environment when we talk about all the headwinds facing home affordability from interest rates and home prices that have both dramatically risen over a very short amount of time, what inflation is doing to take-home income. You know, this renters by necessity is really where we focus within the apartment space. Really that middle market, middle income space, and we think over the long term will outperform, especially during periods of economic disruption.
And then within industrial, we like distribution center industrial, and again we like distribution industrial better than bulk, or flex, or specialty, cold storage, segments like that. So, you know, these are typically, these distribution centers, are typically larger buildings. They’re more divisible, very well located with access to ports and highways, you know, very malleable buildings, competitive, clear height, truck stacking and the like. So, this is where we’ll focus within these property subtypes, call it. Within retail, we like grocery-anchored retail. Within apartments, we like workforce middle-market apartments. And within industrial, we like distribution centers. And simply put, this necessity-based thesis is food and shelter. And, you know, certainly the last two staples that’ll be compromised in a downturn and always a focal point for the consumer. And, you know, food and shelter to us is covered in food with last mile retail and industrial and shelter in the workforce, multi-family housing. So, that is really the thesis of FNRP when it comes to necessity-based investing. That’s where we look to allocate capital, where we like risk-adjusted returns.
And here we have a nice inflation chart here that just wanted to remind everybody, the relative performance of real estate in high inflation environments. So, what we have here, on the left is high growth, high inflation. Kind of best case I think what we would all agree and you see U.S. real estate outperforming in an absolute and a relative basis compared to equities and bonds. And then on the right, you know, heaven forbid, there’s, there’s a stagflationary environment effectively with low growth coupled with high inflation. Again, U.S. real estate is the clear winner. So, you know, we love the broader base sector and specifically the property sub-sectors we focus on, we think are really well positioned, particularly in this environment. And we think this slide articulates that pretty well.
So, Champion Townhomes, this is our current offering. And what we wanted to start with, this is a multi-family offering, and we wanted to start with our leadership team’s experience in the multi-family space. So, the collective experience is $25 billion in transactions over 500 assets. And again, if you look on the far left and you see $9 billion in dispositions, and the returns that we’ve been able to achieve here for our investors based on, again, the experience of the management team over a 2x equity multiple and a 29% IRR both on a gross basis. But, you know, we’ve had experience in this segment. We really like this segment. And our ability to allocate capital in this segment, I think is well proven here.
So, Champion Townhomes is 132 units roughly 40 miles southwest of Orlando, right on the I-4 growth corridor. It is a 2020 build and 98% occupied. So, this is a very, very unique opportunity to add value in a product that was just built with very high occupancy. And that’s what really makes this unique. As far as the acquisition story, I mentioned the 2020 build originally built as for-sale products. So, you can imagine the quality of the build at that point. The developer pivoted to a for-lease model during the pandemic. And, you know, despite the strength of the asset, the financial performance, the NOI growth just hasn’t been there. And it really comes down to, you know, again, these being built as for-sale products. This was not an apartment management company or an apartment developer that built this. And as such, it hasn’t been managed that way from an amenity standpoint, from an overall systems and comp tracking standpoint. So, it’s really, you know, the NOI is really underperforming the market and what it should be, certainly from a competitive positioning standpoint.
So, the developer is forced to sell the property on an off-market basis. And we’re acquiring this with the sponsor here, Southport Financial, which you’ll see here, their experience in multi-family, specifically in Florida. They were able to find this opportunity off market, didn’t have to compete via an auction process. So, certainly an opportunistic buy. And when you think about real estate returns and why we’re investing, it’s really a perfect storm. And it’s highlighted here in these three bullets, specifically the first couple. When you think about our cap rate entry point is above market. So, we’re getting an above-market cap rate below-market price on rents that are 15% to 20% below market. So, you really have positive either direction. There’s NOI growth, and there’s opportunity to expand the multiple or decrease the cap rate based on where we’re buying it today.
So, certainly tough to beat that combination. And the only way you beat it is with a low CapEx profile as well. So, again, 2020 build, so, minimal deferred maintenance. Every dollar that we put into this project, by and large, you’ll generate a return on in the form of increased rents. It’s not, you know, replacing roofs and parking lots and deferred maintenance. It’s more revenue generating enhancements that we can make. And by and large, they’re gonna be less capital intensive. It’s gonna be, you know, professional management systems to track comparables to have a better online experience for the renter and really more on the management side, less on the CapEx side. So, that’s really why this is such a unique opportunity. Again, above-market cap rate, below-market rents, low CapEx profile is a recipe for success when it comes to real estate returns.
Some of the multi-family tailwinds. Again, why we like this space, why we like Central Florida. I won’t hit on ’em again here, but I think, again, this asset articulates that necessity-based investing theme and the renters by necessity theme in terms of what the tailwinds are for the space, specifically central Florida and the growth this submarket has experienced, it’s north of 13% on annualized basis per the last census data over 10 years, excuse me. So, you know, we love the location. We love the asset. We love the value-add opportunity and really the outsized return profile.
And here I think this articulates it well, when you have above-market cap rate and below-market rents, that translates to a discount to replacement cost here, you know, roughly a third below on a price per unit. If you look at a price per square foot, again, we really like our acquisition basis here, and we think we’re really set up for success to really add value and really drive NOI growth here. As far as an asset management plan, just more articulated here. You know, we’re accessing a very competitive market and all things Central Florida and, you know, proximity to Orlando and Winter Haven at a below-market acquisition basis, which I’ve touched on. I think, you know, the management system and what our sponsor’s able to bring to the table in the central market, in the Central Florida market, specifically, you know, the CapEx profile, third, I touched on, and our ability to drive rents, just bringing them to market, you know, call it 15% just with better management strategies, let alone what we think the CapEx will do to market rents. So, you know, at the end of the day, the plan is, you know, bridge debt going in, refinancing in year one and exit with a sale at year five. And from a risk-adjusted return standpoint, we think it’s a pretty compelling business plan. And here are the returns here. It’s a $27 million acquisition price on a 5-year hold. We think it’s a 1.5 equity multiple, 12.5% targeted IRR, 8.7% stabilized cash on cash. Again, all of these are targeted returns. And if you’re interested here, First National Realty Partners, you can go to our website. You see it up on the screen, get more information. We’d love to have a conversation with you. Our investor relations team is on the phone 24/7 and is happy to answer any questions. And there’s a wealth of materials on the website as well. So, with that, I think that’s the call it prepared remarks that I had for today, Jimmy.
Jimmy: That’s tremendous. Thank you, Michael. Thanks for participating on “Alts Expo” today. We got a pretty good chunk of time here to get to a lot of questions. We do have a lot of questions coming in. I want to address Matt’s question in the chat. First of all, Matt asked, “Will this presentation be available on video later this week?” So, yes. Matt and everybody else watching and listening, we are recording this entire event. All of “Alts Expo” is being recorded. We chop up the video recording, and we put a video of every single segment up on our webpage at wealthchannel.com/expo. Those will be available starting as soon as tomorrow morning. We should have the first batch up. And we’ll try to get most, if not all of the videos up by end of day tomorrow. My post-production team is pretty good to turn those around pretty quickly, so we thank them and we will get those videos up. Great question, Matt. Let’s talk about the deal now. Let’s talk about FNRP. Where’d the questions go? Here they are. “FNRP, is there opportunity for 1031 exchange proceeds?” That question’s from Brett.
Michael: Sure. Typically, there is. In this particular investment, there’s not based on the compelling debt that we’re going to put on the property, but we do have another multi-family investment with a similar risk return profile, different business plan that will follow this where we do believe 1031s will be accepted based on the lender, but unfortunately for Champion Townhomes, they’re not. Good question.
Jimmy: Got it. “What cap rate are you purchasing the property at?” And yeah, someone else asked a similar question. “What is the above-market cap rate reference?” That’s from Phil.
Michael: Sure. So, you know, again, let’s assume market rents, right, which here we’re 15% below without even putting a dollar into the property. So, at market rents, we think a market cap rate is closer to 5. We’re going in on 15% to 20% below-market rents at a 5.5 is our entry cap. So, we feel again, really, really good about this acquisition basis, and that’s driving a lot of the value creation here.
Jimmy: Good. Murdy wants to know, “What is your minimum investment requirement?”
Michael: Minimum investment requirement is $25,000, I believe, and $50,000 for a 1031 buyer, which again, we don’t offer here, but typically we do.
Jimmy: Yeah. You do have quite a few different offerings on your platform. And you have different funds open at different points in time, right. But this is the one that you currently have open. How many deals do you typically have open at any given time, or what does that deal flow process look like for you, guys?
Michael: You know, it just depends. It’s pretty situational. I think we’re awfully selective about the deals that we pursue. We have a very wide net, as I mentioned. We’ve acquired almost a billion dollars last year, so, you know, we like to think we’re one of the first couple phone calls for anything multi-family, retail and industrial within the segments that we like. So, you know, typically between one and two, but I think, you know, it just depends. We just finished raising for a two-property portfolio in Atlanta. Those were Publix and Kroger-anchored assets. Those were launched together with Champion Townhomes, you know, certainly in the market at the same time. So, typically one to two, I would say.
Jimmy: Good. Couple questions about management. I’ll kind of combine these questions into one. “Does FNRP use a third-party manager or is that done in-house?” Scott asked a similar question, “Mike, who is your management firm? Do you have an in-house team? If not, do you have someone in mind?”
Michael: Sure. So, let me take it in retail first. Retail we do manage in-house as part of that FNRP 360 approach. I think on the multi-family side, what we’re choosing to do is use best-in-class property managers by market. So, you know, in Davenport, Florida, we have Southport Financial, our sponsor, that’s gonna manage the asset. And they certainly have experience in that market. And then another asset we’re pursuing now let’s call it in the southwest, is gonna be a different property manager that is the market leader in terms of units under management and overall professionalism. So, you know, it’s pretty situational, but for now, let’s assume retail is gonna be in-house. It’s more high touch. It’s much, you know, we have more scale there. It’s more local. And I think on the multi-family side, we’re gonna use best-in-class property management for efficiencies there.
Jimmy: Yeah. With your multi-family, best-in-class management firms that you use, what history do you typically have with those management firms? That was the second part of Scott’s question.
Michael: So, as far as history, I mean, you know, we do a lot of homework on, you know, one, remember this multi-family acquisition and the next one after this will be with a sponsor. So, we’ll have, you know, a management partner or, you know, that in most cases we’ll manage the asset. Here, that’ll be the case of Champions. In the case of our next offering in the southwest, that will be a local property manager that, again, is market leading there. So, we do a lot of homework both on the sponsor side and on the property management side. And again, just given the experience of the team having acquired over 500 multi-family communities, you know, we know who the one or two phone calls to make are in each market. And, you know, like to be local experts in that way and really lean on best-in-class. So, we do a lot of homework on the sponsor side. On the management side, I think we generally know what we think the answer is, and then we diligence around that a number of different ways through our kind of typical diligence process, I would say, without getting into a ton of detail here.
Jimmy: Good. Question about the debt side of your capital stack. “How are you able to secure the loans?”
Michael: Sure. So, I think, you know, coupled with being one of the most active acquirers last year, we’re one of the most active debt originators. So, we have a stable of relationship lenders that, you know, are very familiar with us that we’ve done multiple, multiple deals with. So, you know, we’re able to leverage that network for the benefit of our investors. You know, here at Champion Townhomes, we are able to create a very competitive bidding process similar to the Atlanta portfolio I mentioned previously. You know, life companies are extremely active here. We have phenomenal relationships across that spectrum. We were able to you know, get, I think it was five or six quotes on Atlanta and, you know, above five here. And really able to leverage those relationships to select the right piece of debt for the business plan. And that’s what we’ve done here. And again, really just leveraging all the growth, all the experience and being able to acquire so much and originate so much debt in the last year. We’re certainly, you know, have our finger on the pulse of these markets and are top of mind from a relationship standpoint.
Jimmy: Could you talk a little about the market where this is located. What’s the rental market like in this area? It’s near Orlando, is that right, where this is?
Michael: Sure. Yep, yep. So, Orlando adjacent, call it. It’s southwest of Orlando in this Winter Haven submarket. And again, I mentioned the population growth, I mean just riding COVID tailwinds of, you know, the Sunbelt theme, the Florida theme. You know, the population growth is, you know, I mentioned historically in the last census data it was north of 13% annualized. I think it’s gonna be pretty close to that going forward depending on whose projections you look at. So, you know, there’s not a lot of product available what, you know, to purchase. And what is there is very well leased. Again, this is 98%. I think if you look at the competitive set, it’s pretty close to that at much higher rents. So, you know, certainly a great place to be an apartment owner, you know, very little supply and very strong on the demand side.
Jimmy: Murdy with another question, wants to know, “What is the cost for me? So, I guess as an LP, what are the costs or the charges involved?”
Michael: Sure, sure. I won’t go through it all here, but there’s a wealth of information on the website here. If you go to this link here, fnrpusa.com/wealthchannel, you’ll see what our fee structure is. Here it’s a little nuanced because there is a sponsor as well, but it’s all detailed there. I won’t bore everybody online here, but the fee structure is articulated online.
Jimmy: Good. And I’ve just also posted that link in the chat if you want a clickable version of that if you don’t wanna type it in. We’re doing good on time. I think we got another 10 more minutes here. And we got a lot of questions too. So, this is kind of turning into like a mini podcast interview almost, Michael. I love it. Let’s see… You guys are focused historically, your firm is, on grocery-anchored retail or, you know, now you’ve shifted a little bit into necessity-based commercial real estate. Do you feel that grocery is fading? Are you a little bit bearish on grocery or where are you guys at with regards to your investment strategy around grocery?
Michael: I think we’re every bit as bullish on grocery today as we were when we articulated the strategy. I think, you know, if anything, times have supported our strategy and really verified it, whether that’s, you know, the pandemic. And, you know, just how critical retail is both to the consumer and to retailers from a last mile standpoint. You know, from what grocery-anchored retail specifically has done and how these grocers have really thrived coming out of the pandemic and are trying to figure out what the right store format is and what the right delivery model is. And, you know, we feel like, you know, the grocery-anchored strategy has really not only proven resilient, but has really come out stronger over the last couple years, certainly since we built the strategy.
So, you know, we’re the leader in grocery-anchored. We acquired more grocery-anchored retail last year on an individual deal basis than pretty much everybody. So, we expect to continue that leadership position, grocery-anchored retail. And, you know, when you think about necessity-based investing and multi-family and workforce housing and renters by necessity, this is something that we’ve talked about as a firm for a couple years. And we wanted to make sure the platform was really in the right spot. So, we’ve historically focused on grocery-anchored retail. We built a track record there in a really short amount of time. I showed the returns. We’re at, you know, north of 19% IRR. So, we feel like, you know, the platform has been validated in that respect, and, you know, now is the right time with the leadership team we have, with the experience we have to really be able to add on to the retail platform. It’s not, you know, in place of or in any way, you know, detracting from the retail focus. It’s in addition to really expanding that necessity-based thesis into multi-family apartments. And we see a lot of opportunity as evidence by Champion Townhomes and the opportunity we have right after it. So, we’re pretty optimistic, and, you know, again, still a great environment to be a retail landlord as well. We think, you know, the best retail keeps getting better and that’s the grocery-anchored, necessity-based retail that we own and are still extremely active and again, market leaders in that space.
Jimmy: Yeah. Speaking of market leaders, I’ll skip ahead to this next question here. This person asks, he or she says, “I saw somewhere that you guys were the number one private acquirer last year. Given the tightening capital markets, how many deals do you think you’ll do this year?”
Michael: Yeah, it’s a great question. You know, I think we were the market leader last year for sure. We are still the market leader, albeit on a much lower transaction volume. So, you know, depending on which stats you look at, year-to-date transaction volume’s down in grocery retail between 50% and 70%, it’s the third lowest transaction volume over the past couple decades. But for the global financial crisis and, you know, call it peak COVID Q3 of 2020. So, certainly much lower transaction volume just given what rates have done. We’re still incredibly active. We’ve, you know, in terms of closed on our contracts, we have, you know, pushing a hundred million year to date. You know, it remains to be seen. We want to be really opportunistic in this environment and really leverage, you know, all the success we’ve had and the experience and the sourcing candidly. I mean, we are, you know, one of the first in the room just given our track record for performance and what we’ve been able to accomplish.
So, you know, we’re being as selective as ever. But again, still the market leader in that space, just everybody’s on a much lower volume just given the new reality. So, you know, I think if we get some stability here in the broader capital markets, you’ll see that transaction volume tick up, and we’ve seen deal flow on the retail side tick up. You know, certainly in the last, call it month or two, it’s better than it looked in January. And again, we expect to be market leaders. If there’s lower transaction volume, then that’s what it is. We’ll continue to be selective and take our fiduciary responsibility, you know, as serious as ever and, you know, continue to be market leaders there and bring out the best opportunities we can.
Jimmy: Good. Let’s move on to this question here from Bob. I love seeing Bob and hearing from Bob. He comes to a lot of these events. Bob, great to see you here. Bob asks, “Do you look at smaller market airport properties in Central Florida for industrial?”
Michael: Not specifically, but I think we would. I think, you know, we think about risk-adjusted returns when we evaluate opportunities. We cast a pretty wide net. But, you know, you think about the acquisition kind of funnel as we call it, gets whittled down pretty quickly. So, in a short answer, is not specifically, but we would.
Jimmy: Good. Next question here comes from Alan. And Alan asks, “What are the terms of the loan? Is it a balloon payment, IO period interest, LTV? What can you tell us about the loan?”
Michael: So, what’s contemplated here are two loans. One, initially a bridge loan that would be open to prepayment. It would be a fixed loan. And then once we’re able to drive rents here, improve NOI, make some capital improvements, again, doesn’t need much here, given the 2020 build, then we would put on a longer-term fixed-rate loan that would allow for an exit in 5 years. So, that’s what’s modeled here. You can see the specific assumptions, again, in the deal room. But it’s really two loans. It’s a bridge loan execution for call it, you know, plus or minus 18 months, and then a more permanent loan once we’re able to drive value here and really increase rents and execute the business plan.
Jimmy: Good. I think we’ve got time for a few more questions. We’ve got about three or four minutes left before our next presentation. Murdy’s back with another question. He says, “This person’s visiting your website, but could not find what I am looking for, management fees or the cost to LP investors.” Can you go into a little bit more specifics on the fees, please or tell Murdy where they can go to learn more about the fees exactly?
Michael: Sure. I apologize if it’s not as obvious as maybe it could be, but I think you’re able to chat online with an IRR professional. That box will pop up and they can direct you. But I guess, you know, starting with the returns that I showed, those are net returns. So, those are net of fees. You know, there is a management fee. There is an acquisition fee, a disposition fee. You know, should be pretty well laid out. And if it’s not as obvious, again you know, I would encourage you to use that chat box or call investor relations. They’d be happy to answer any questions. But, you know, pretty typical, frontend, backend, ongoing fees. But again, the returns shown here are net to investors. So, the gross is north of this. The net is what actually goes in the investor’s pocket. And encourage you to use the chat function or call investor relations. And I’ll check on my end too if for some reason that isn’t showing up again, as obvious as it should be.
Jimmy: No. But Mike, that’s important to note that the return projections there are net, so, those are after fees already. So, what you’re seeing, those net returns are already taking into account the fees. There’s nothing that’s gonna knock those down after that, I guess taxes. And speaking of taxes, by the way, Stephan wants to know, “What are we talking about here in terms of tax forms? We’re talking K-1s, 1099s, what do investors receive to support their tax filings?”
Michael: Sure, sure. It is a K-1 that you’ll receive, you know, at the end of the tax year. We do distributions quarterly. You know, Q1 will go out in April as an example or did go out in April. So, you know, I think pretty consistent timeline with a K-1 investment. You know, we do a cost segregation study as well. That’s a big part of it. Able to capitalize on some depreciation benefits as well.
Jimmy: Good. Question here in the chat from Elizabeth. Elizabeth wants to know, two-part question, I guess. “Are you investing in Raleigh, North Carolina at all? And do you do any opportunity zone deals?”
Michael: Sure. We’d love to invest in Raleigh. Certainly a lot of things to like about that market. You know, it’s a pretty tight transaction market. There’s not much comes for sale across our product types specifically in retail, you know, in addition to industrial and multifamily. We are not currently focused on opportunity zones. Maybe at some point in the future, or there might be, you know, an opportunity that we like that happens to be in an opportunity zone. It just depends. It’s, again, it’s not a focal point. It’s something we would consider. But, you know, again, we’re pretty focused on, you know, risk-adjusted returns and the real estate. If it happens to be in an opportunity zone, all the better.
Jimmy: Do FNRP principles invest in every deal? Do you guys have skin in the game?
Michael: So, FNRP principles do have, you know, plus or minus 5%. Typically, it’s even north of 5% interest in equity participation in every investment, including Champion Townhomes.
Jimmy: Let’s see… Next question is, I think we got time for… We’ll do one or two more questions then we’ll wrap up. Can you explain what the sponsor is doing versus what FNRP is doing on the Champion Townhomes deal? And do you usually have a sponsor partner?
Michael: So, great question. So, on Champion Townhomes, we’ll have a sponsor partner. On the next multi-family deal up that I can see, we will as well. We’ll also do direct investments and as I said, utilize third-party management. So, what the sponsor’s gonna do is essentially execute the day-to-day business plan. They are the Central Florida experts. You know, when we think about driving rents to market, when we think about some of these light capital improvement projects, whether it be to amenities or interior finishes, like they will execute the day-to-day. We are the majority equity partner, FNRP is and our investors are. And, you know, we will be involved in the day-to-day, but certainly from a management standpoint. But they are the execution on a day-to-day basis, I think is the best way to describe it. They will staff it both from a leasing standpoint and a maintenance standpoint and execute the day-to-day, while we’re the majority investor, majority decision maker I should add as well, and really ensuring that the business plan is performing to what we all thought it would be. And we’re extremely confident in that, given what we’ve seen thus far.
Jimmy: Fantastic. Well, Michael Hazinski, First National Realty Partners, FNRP, we’ve run out of time. Really want to thank you for joining us today on “Alts Expo.” We have to move along to our next presentation, but please do visit fnrpusa.com/wealthchannel to get more information on their current offering, Champion Townhomes. I’ve also posted that link in the chat. I think we had a few questions we didn’t get to it. We do have to move along. If you have any questions that went unanswered, head to that website and you can get in touch with Mike and his team through there. Mike, thank you so much for joining us today. Really appreciate your time.
Michael: Awesome. Thank you, Jimmy. I appreciate it.