8% perf return w/ no upside.... Seems low to me....
Hello, I am considering investing with Battle Monument group with their Guidon fund.
The fund invests in properties that are rented to dollar general / dollar tree stores.
It is a conservative fund, with long term debt and ~70%debt to value.
Which is what I want ( I think of my self as an "old man" investor)
However, it gives a 8% perf return with 6% paid quarterly and the remainder paid when the assets are sold....
That seems a bit low for a conservative play....
Does anyone else have experience playing in "shallow end of the pool" and what returns I should expect.
Best, John
https://www.battlemonument.com/
https://www.guidonfund.net/about
It just goes to show how big this real estate world of ours is, those guys are based less than a mile from me and I've never heard of them until now. Will need to reach out to them.
Stabilized Triple net plays like this one tend to produce conservative returns but also have relatively low risk. 8% is pretty good when the world is in the midst of a deep recession and your tenant is only likely to become more and more popular. There's only going to be more and more vacant commercial space, but it seems like Dollar General has a very good fighting chance compared to any other type of retail. If I was looking for a conservative investment at this point, this type of thing would be on my list to consider.
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#2 Real Estate Agent Contributor
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@John Laney I'm almost surprised the returns are that high. I would guess DG is a very very stable tenant with long term leases that go the term in most cases. So you have to think about the risk with the NNN plays. I would think most people would think DG is very low risk. There are probably plenty of options like this....post offices, starbucks, restaurants, strip centers. Typically with these things if you get solid class A tenants or what we thought were A tenants, returns are lower....get more risky tenants rates go up. Of course this Covid thing maybe have a lot of people rethinking who are A, B, C tenants or what is more risky. Probably some of the golden tenants of last year are now ready to bail on their rent obligations or at least renegotiating them. Be careful out there.
Looks like a pretty good return for a conservative investment. Notes could be argued to be similarly conservative and the note investors I'm familiar with advertise that they buy at 12% yield minimum. Might be an appropriate diversification option to consider.
Which would you prefer:
6% quarterly and hope for 8% at exit or
7% monthly and hope for 16%+ at exit
Also, if there's no upside, investors typically want 10%+ on their money
@John Laney
Preferred return doesn’t necessarily mean there is no upside, just that you get the preferred return before they get their cut. Full disclosure I didn’t read the links you posted...
That being said, if it is an all in return, it’s quite mediocre for value add or opportunistic, but is in line with conservative “core” offerings.
If there is no value added component, you are unlikely to find much better. Personally, I would consider adding some value add allocations to the mix.