The purpose of investing is to get the largest return possible on your investment. In ideal scenarios, passive income investments earn 12% to 15% annually. So, you can imagine how happy investors were after making a whopping 45% on a recent offering from First National Realty Partners (FNRP).
A little over a year ago, FNRP identified and acquired an appealing commercial opportunity: a single Pick ‘N Save grocery store located just a short drive from Madison, Wisconsin. In addition to being one of Wisconsin’s favorite grocery stores with over 100 outlets, Pick ‘N Save is a subsidiary of the Kroger Co. KR. The strength of these two brands along with its strategic location made Pick ‘N Save an ideal tenant.
About The Deal
Sweetening the deal further was the fact that Pick ‘N Save was signed to a long-term triple-net (NNN) lease. It was also only 15 minutes from the heavily populated city of Madison, a rapidly growing city that’s home to the University of Wisconsin and over 250,000 residents.
The location’s proximity to a growing population and the rock-solid credit of the existing tenant made FNRP’s team identify this property as a strong investment opportunity.
After conducting the due diligence and raising capital from both new and current partners, FNRP closed on the property for $13 million. The original internal rate of return was set projected to be 14% with a projected seven-year hold period.
FNRP was confident that the increased demand and population growth in Madison would lead to strong property appreciation and they were right. Shortly after closing on the deal, commercial and residential property prices in the area began to rise. Last month, FNRP received a $17 million offer on the Pick ‘N Save, which it accepted. The company exited with a $4 million profit, which boosted the IRR from a projected 14% to 45%.
FNRP is a leading private equity real estate firm specializing in necessity-based commercial real estate such as grocery store-anchored shopping centers. The firm was founded in 2015 and has over $1 billion of assets under management.
FNRP is discerning when it comes to selecting deals. They would rather do the right deal than the right now deal. FNRP typically conducts due diligence on thousands of potential opportunities for every deal it chooses but will only invest in a handful of deals that they are fully confident will achieve strong returns. In what may be the ultimate testimonial to the quality of its deal-vetting process, the Pick ‘N Save radically outperformed even FNRP’s expectations. Commercial real estate investors would do well to consider FNRP’s future offerings.
View First National Realty Partners’ current offerings.
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Photo: Courtesy of First National Realty Partners