Alexander Acuña CRE

02/07/2023

02/07/2023

CRE: ------ PASSIVE INCOME with RETAIL Triple Net Leases -----

What Is a Triple Net Lease (NNN)?

A triple net lease (triple-net or NNN) is a lease agreement on a property whereby the tenant or lessee promises to pay all the expenses of the property, including real estate taxes, building insurance, and maintenance. These expenses are in addition to the cost of rent and utilities. In contrast, in standard commercial lease agreements, some or all of these payments are typically the responsibility of the landlord.

NNNs are just one type of commercial property net lease. A single net lease requires tenants to pay property taxes in addition to rent, and a double net lease typically tacks on property insurance.

KEY TAKEAWAYS
- With a triple net lease (NNN), the tenant agrees to pay the property expenses such as real estate taxes, building insurance, and maintenance in addition to rent and utilities.
- Triple net leases are commonly found in commercial real estate.
- Triple net leases tend to have lower rents because the tenant assumes ongoing expenses that would otherwise be the responsibility of the property owner.
- Other net leases are a single net lease, in which the tenant pays property taxes, and a double net lease, which includes property taxes and property insurance.
- Triple net leased properties have become popular investment vehicles for investors because they provide low-risk, steady income.

The TENANT is responsible for most expenses related to a commercial property with a triple net lease. However, the LANDLORD may be responsible for the roof and the structure, and sometimes the parking lot.

02/03/2023

The good news is always at the end of the commentary.

Keeping Current: Special Commentary

Fed pushes rates up again, suggests more to come

The Federal Reserve raised its short-term interest rate target by 25 basis points on Wednesday, February 1. That’s the eighth consecutive FOMC meeting that has resulted in an increase. The fed funds target range is now 4.50% to 4.75%. A year ago, the target range was 0.00% to 0.25%.

Yesterday’s rate hike was 25 basis points, just as the first one was in March 2022. In between, the rate went up 50 basis points (May), followed by four 75-basis point increases (June through November), and then another 50-basis point hike (December).

The Fed’s own projections for where the fed funds rate will be at year-end 2023 are shown in the top chart. In March 2022, the Fed expected the rate target to end 2023 at just under 3%. By September 2022, the projection was 4.7%; and in December, the last projection available, the Fed’s median projection for the rate was 5.2%. All medians include a 0.125 percentage point increase to show the upper end of the target range.

This shows that the FOMC, the Fed’s monetary policymaking arm, think that rates still need to be increased further in 2023. As they raised the rate yesterday, they wrote: “The Committee anticipates that ongoing increases in the target range will be appropriate.” And Chairman Powell during his press conference yesterday said that the Fed has “more work to do” to bring inflation down.

The good news is that we’re seeing a significant easing in inflation over the short term. The middle chart shows the Personal Consumption Expenditures Price Index, the Fed’s preferred measure of inflation. In the year ending in December 2022, the index rose 5.0%, down from a year-ago rate of 6.1% in October and 7.0% in June.

But look at the annual rates of growth over a four-month span, and the deceleration in inflation is much more dramatic. In December 2022, the PCE Price Index has increased at a 2.6% annual rate over the previous four months. In June, it was rising at an 8.6% annual rate.

The same story holds for the Producer Price Index. The PPI for final demand increased 6.2% in the year ending in December, down from November’s 7.3% year-ago change. In March 2022, the year-ago change was 11.7%. Now consider the 4-month change in the PPI. In, it ran at a 12.5% annual rate. By December, the 4-month change was an annual rate of 1.0%.

This deceleration in inflation is allowing mortgage rates to decline. After reaching 7.08% in late October and early November, the 30-year mortgage rate has dropped to 6.09% by the week ending February 2.

01/31/2023

Here’s a look at the latest new projects registered in North Texas with the Texas Department of Licensing and Regulation, a list of new construction, renovations and alterations in Dallas, Fort Worth and beyond. All projects listed are public records.

01/12/2023

This will speed up the development to the Red River from Highway 380 in Frisco. The tourism impact will deliver investors multiple opportunities from Residential land development to Triple NET business offerings. Give me a shout and let's discuss.

Frisco is getting a Universal Studios theme park that will bring millions of visitors and business to Collin County.

12/21/2022

What are Office Building Classes in Commercial Real Estate?

Key Takeaways

- Class A office buildings are the newest and most state-of-the-art buildings in an area.

- Class B office buildings are usually slightly older, and have fair to good visual appeal.

- Class C office buildings are often much older, and need substantial renovation or improvements.

- Class C buildings are more likely to be occupied by small, family-run businesses, or newer companies that cannot afford higher-quality space.

Make sure you're getting the best financing terms and apply through a trusted and experienced source.

In commercial real estate, office buildings are typically placed in one of three categories: class A, class B, or class C. Each category delineates a different level of price, quality, and amenities. However, since real estate quality varies greatly from place to place, A, B, and C classifications are subjective. As a result, they are based on what's available in a specific, local area. For example, a Class A building in a mid-size city or suburban area might be a Class B building in a larger, urban market.

Class A Office Buildings
Class A office space comprises the newest and most state-of-the-art office buildings in the area. For example, most new high-rises in any city's financial district are considered Class A properties. These buildings usually have high-quality construction, great location, top-notch management and lots of visual appeal, a high parking ratio, state of the art HVAC systems, the latest in security and communications systems, and best-in-class amenities (such as cafes, beautiful lobbies, valet service, etc.).

Class A buildings are also typically quite energy efficient. These buildings occupy the highest-price range in the area, and are often occupied by prestige clients such as well-known law firms and banks. Because of this, Class A buildings are the most expensive, and often offer rents significantly above the area’s market average.

Class B Office Buildings
Often slightly older (usually between 10-20 years old), Class B office buildings have fair to good visual appeal, are somewhat well located, have a fair amount of on-site parking, functional HVAC systems, and decent quality management. Many Class B buildings are four stories or less, but they can vary greatly in size. In many cases, Class B buildings can often be returned to Class A with renovations. Class B buildings are often occupied by mid-market clients, such as a smaller, local businesses. These buildings occupy the medium price range for the area.

Class C Office Buildings
Class C buildings are often much older (often 20+ years), need substantial renovation or improvements, may have little to no parking, don't usually have elevators or central A/C, and are often located farther from desirable areas. A Class C building can sometimes be renovated to become a Class B building, but is unlikely to ever become Class A property due to its smaller size and less desirable location.

Class C buildings are more likely to be occupied by small, family-run businesses, or newer companies that cannot afford higher-quality space. Since Class C buildings occupy the lowest price point in the area, they typically offer below-market rents.

What Else Investors Need to Know About Property Classes
While A, B, and C classifications most commonly apply to office buildings, they can also apply to other kinds of commercial and multifamily real estate projects, such as apartment buildings and retail properties. No matter the property type, Class B and C buildings are usually sold at higher cap rates to compensate for the fact that they will require more in repairs and maintenance (R&M) costs in order to remain marketable.

12/13/2022

RV Park something you're looking for? Here's one in Blue Ridge with County permit approval that sits outside of the ETJ. Contact me for more information. Build your own...nice revenue stream for passive income.

Sale Highlights
- A total of 90 units consisting of 11 premium lots (52'W x 55'D), 79 standard lots(30'W x 55'D)
- 5 separate one(1) acre lots
- RV Park is permitted to build in six(6) phases or all at once. First phase includes 10 units and the remaining five phases include 16 units each phase
- All necessary construction permits with the local city and county have been secured.
- Water service line is approved, meter is easily connected to water main with service provided by Frognot SUD. Electric service from Fannin County Elec
- Collin County has issued a permit for on-site aerobic septic treatment units to serve all 90 units.

12/12/2022

There have been 16 headquarters relocations to the Lone Star State so far this year, down significantly from the 62 in 2021.

Moves to Texas, a Fortune 500 Magnet, Drops Significantly From Last Year's Spike

11/29/2022

Major League Cricket is closer to becoming a reality in the United States with the date and venue set for the new professional sports league's inaugural season to take place in the Dallas area next summer.

The professional cricket league, backed by $44 million that includes funds from Dallas-area businessmen Anurag Jain and Ross Perot Jr., is scheduled to launch July 13 during the opening match at Grand Prairie Stadium in Grand Prairie, Texas, about 13 miles west of downtown Dallas.

Click below for the full CoStar article.
https://bit.ly/3UhScZH

11/14/2022

Sherman LAND SALES pave way for new homes
Investors buy hundreds of acres for future development.

The land rush is heading farther north with the sale of major development sites in Sherman. The just-sold properties are near where semiconductor firms are planning huge new plants in Grayson County.

An investment group purchased 500 acres at the northwest corner of Preston Road and Washington Street in Sherman, just a few miles northwest of the planned Globitech and Texas Instruments chip plants.

Plans are to develop the property for future single-family housing as the Sherman area sees continued growth and momentum. More housing will be needed after the chip plants open.

Both projects are expected to create approximately 4,700 new jobs. This tract is extremely well positioned to take advantage of the housing units needed for the chip plants workforce. These new chip plants will give Sherman the platform needed to capture the new

growth that we have been working towards for years.

The same investment group recently acquired the adjoining Preston Club Golf Course, which was an approximate 240-acre site. We are seeing more and more developers and investors gravitating to this area looking for new development opportunities.

Developers have been buying thousands of acres north of Dallas in Collin and Grayson counties to construct new neighborhoods.

Current Sherman LAND available For Sale: CONTACT ME for more details including analysis.

11/14/2022

Grocery-Anchored Shopping Centers May Offer Investors Shelter in an Economic Storm

Retail Properties with Grocers Attached Offer Stability in Hard Times and Face Low Competition From E-Commerce


Essential retailers, such as grocers, typically see stronger consumption relative to discretionary retailers, such as restaurants, in a weaker economy.

(Getty)
By Andrew Zola and Kevin Cody
CoStar Advisory Services
November 4, 2022 | 4:32 P.M.

As the U.S. economy heads toward a likely recession, grocery-anchored shopping centers appear once again to be well positioned to weather the storm, much as they did during the initial stages of the pandemic.

Two of the most compelling cases for investment in grocery-anchored retail are its stability during economic distress and its relatively low competition from e-commerce. The pandemic spotlighted both attributes, as grocery sales were among the most resilient in 2020, a time when consumer spending shifted from discretionary and in-person experiential shopping toward necessity and online shopping.

While experiential shopping has shown signs of recovery as cases of the virus have diminished, e-commerce sales were still 60% higher in the second quarter of 2022 compared to before the pandemic, while in-store sales were only 28% higher.
This jump in e-commerce shopping was a key reason retail and recreation foot traffic, tracked by Google, fell so dramatically at the start of the pandemic and has yet to return to pre-pandemic levels. Conversely, foot traffic at grocery stores and pharmacies held up much better at the beginning of the pandemic and has essentially returned to pre-pandemic levels since early 2021.

As of Oct. 15, total retail and recreational foot traffic was 8% below pre-pandemic levels, while grocery and pharmacy foot traffic was only down 1%. While the virus forced many nonessential retailers to temporarily close, as an essential service, grocery stores remained open and their foot traffic and sales further benefited from the closing of dine-in restaurants. Heading into 2023, it’s important to remember that essential retailers, such as grocers, typically see stronger consumption relative to discretionary retailers, such as restaurants, in weaker economic environments.


Persisting inflation is also continuing to eat into the incomes of consumers, which will probably discourage spending on discretionary goods and services, particularly as the economy slows and with possible job losses on the horizon. Inflation-adjusted wages are down 3% year over year, even though nominal wages are up 4%, showing the impact inflation is having on consumer spending power.

Consumer balance sheets are still healthy thanks to savings that were accumulated earlier on in the pandemic. But with stimulus payments in the past, inflation continues to eat into those savings.
Restaurant sales have also outperformed in 2022, due to a recent shift back toward experiential shopping and socializing as cases of the virus fall. However, with consumer sentiment sitting around all-time lows, consumers facing diminishing spending power and the economy heading into a possible recession, the likelihood of continued strong restaurant sales is in question.


All these macro trends have resulted in strong demand from grocery tenants as well as inline tenants within grocery-anchored shopping centers. This strong demand, coupled with limited supply growth, has led to tighter vacancies in grocery-anchored centers. Grocery-anchored vacancies sit at 5.4% as of the third quarter, 50 basis points below their pre-pandemic vacancy of 5.9%. This is compared to nongrocery-anchored centers, which have an average vacancy of 6.7%, still above its pre-pandemic level of 6.6%. This has led to a vacancy spread of 1.2% as of the third quarter, the highest spread seen since before the Great Recession.
Much of the recent retail vacancy expansion in shopping centers without a grocery anchor can be attributed to regional and super regional malls, as those center types have experienced the most significant negative impact to foot traffic and the largest vacancy expansions since the start of the pandemic.


With persisting inflation and rising rates pushing the U.S. into a possible recession, grocery-anchored retail should remain a source of stability within the retail sector.