In this episode, co-hosts Adam Carswell and Michael Flight are joined by expert special guest Ralph Cram, President and Manager at Envoy Net Lease Partners LLC, to discuss financing net lease (NNN) properties and how lenders should go about choosing Triple Net real estate deals to maximize profits while minimizing risk. Ralph shares his vast experience and wisdom in the net lease investing arena, explaining the stability behind Triple Net properties, the property management styles of franchisees versus large corporations and the different rates of financing NNN real estate with credit tenants. Michael, Adam and Ralph also delve into the developer side of financing and refinancing net lease real estate, looking at their relationships to lenders, financiers and investment funds. They wrap up the episode with Ralph’s sage advice to investors looking to educate themselves in the net lease space, with some great book recommendations to do so!
Michael and Adam would like to give a huge thanks to Ralph for coming on the show and sharing his knowledge and experience with the Nothing But Net community.
Contact Ralph Cram:
hello@envoynnn.com
https://envoynnn.com
Mr. Cram is President and Manager of Envoy Net Lease Partners LLC, a real estate finance company specializing in single-tenant, net-leased properties. He is responsible for providing strategy, marketing and investment advice on all aspects of net lease property investment in single-tenant commercial, medical and industrial properties. Mr. Cram has underwritten, acquired or financed $1.5 billion of real estate assets across all product types and geographic markets over his 25+ years in commercial real estate. He co-founded Envoy in 2011 to fill a void in the market: providing equity/gap financing to developers of built-to-suit single tenant net lease properties.
An expert on net lease financing and investment, he has spoken on net lease, construction lending and capital markets panels for virtually every major national and regional industry conference, including ICSC RECon, GlobeSt., RealShare, Crittenden, InterFace and Net Lease Summit, and has made presentations to the Singapore and Shanghai CFA societies on how to invest in U.S. net lease properties. Prior to Envoy, Mr. Cram led his own real estate advisory firm and earlier served as Vice President of Finance at Bond Companies, a mixed-use retail developer, where he was responsible for more than $120 million of debt and equity financing for various retail and condominium projects. He previously was co-founder and Chief Investment Officer of Theatreplex Entertainment Properties, Inc., a private REIT specializing in acquiring net leased movie theatres, where Mr. Cram oversaw the acquisitions and investment policy. Earlier in his career, he was Director of Acquisitions for Brauvin Real Estate Funds, a net lease syndicator. In 2009, he was awarded membership into the prestigious Counselor of Real Estate (CRE) Association for his work advising investors regarding investments in alternative real estate strategies. He earned his CFA designation in 1995, and is an active member of the Chartered Financial Analyst (CFA) Society of Chicago and the CFA Institute. Mr. Cram received a B.S. in Economics from Kalamazoo College and an M.S. in Real Estate Appraisal and Investment Analysis from the Wisconsin School of Business at the University of Wisconsin-Madison. He is a licensed real estate broker in the state of Illinois.
Timestamped Shownotes:
02:07 – Michael Flight, CEO and co-founder of Liberty Real Estate LLC (Liberty), gives an update on Liberty’s launch
03:15 – Host Adam Carswell and co-host Michael Flight, CEO and co-founder of Liberty Real Estate LLC (Liberty), introduce special guest Ralph Cram, President and Manager at Envoy Net Lease Partners LLC
04:39 – Where did the net lease and Triple Net space get started?
08:03 – What does a lender look for when buying a net lease property?
09:59 – What is the difference between a lender’s interest rate and loan constant for NNN properties?
10:43 – How do net lease properties offer good cash flow and appreciate over time?
11:27 – What kind of tax benefits do Triple Net properties have for investors with accelerated appreciation?
13:10 – How do net lease property investments offer the stability of bonds combined with the cash flow of real estate?
15:26 – How does NNN property management differ between corporate stores and franchisees?
19:21 – Why should lenders evaluate the size of the franchisee before investing in their Triple Net real estate?
21:09 – Why should financiers check the recourse of the loan for whether it is above or below three-fourths of the investment amount?
22:24 – Why would investors choose to invest in a fund versus not for NNN properties?
24:17 – Why did Liberty Real Estate Fund back their net lease investments with security tokens?
24:46 – Do investors get better rates financing Triple Net properties with credit tenants?
26:14 – Does Envoy lend on existing NNN properties as well as offer take-out loans?
30:57 – Why would tenants choose to have developers build net lease properties for them instead of doing it themselves?
33:49 – Does a developer tend to build and sell NNN properties or refinance them from take-out loans?
35:55 – What advice does Ralph have for anyone looking to get involved in net lease real estate?
37:03 – What books does Ralph recommend for investors to educate themselves on Triple Net real estate?
39:31 – What are the three sides of real estate?
Key Points:
1. Financing options of Net Lease and Triple Net (NNN) properties
2. Single Tenant Net Lease (STNL) investments are like bonds wrapped in real estate
3. Benefits of Investment-Grade credit rating for Single Tenant Net Lease (STNL) investment tenants
4. Property management of corporate-run stores versus franchisees
For more information contact us here and mention Nothing But Net or simply NNN:
For more information on:
Liberty Real Estate Fund LLC (https://libertyfund.io/)
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