Saturday, February 24, 2018
Business

Tampa broker is big on real estate investment trusts, including his new one

TAMPA — Want to invest in real estate?

The hard way is finding and buying the properties yourself, maintaining them, paying the taxes and insurance, then hoping you can make at least a few bucks from renting or selling them.

Then there are real estate investment trusts, or REITs. Put simply, you invest your money with a company that finds the properties and pays you dividends from the rents it collects.

Generation Income Properties of Tampa is a new REIT. It also was the first REIT in the nation to file with the Securities and Exchange Commission to take advantage of Regulation A+, a 2015 SEC regulation that enables small companies to raise up to $50 million from the public.

So far, Generation Income has raised about $3 million from more than 100 investors and is under contract to buy its first property, a building near the White House in Washington D.C. whose sole tenant is a 7-Eleven.

By year's end, the trust hopes to have several more rent-producing properties in some of the nation's largest cities, including Tampa, and start trading shares publicly.

Generation Income is the brainchild of David Sobelman, a veteran commercial broker in Tampa who has managed and overseen more than 1,000 net lease transactions worth over $10 billion. (A net lease is one in which the tenant is responsible for taxes, insurance and maintenance).

Sobelman, 45, recently talked with the Tampa Bay Times about his REIT, his investors, and his forecast:

What was the genesis of Generation Income Properties?

I have a private fund that actually does the exact same thing, and I was investing for my own account and with partners through this fund since 2006. I went back to the fund investors and said, "Would you rather do a second fund or (pursue) this idea to ha a publicly traded REIT?"

Why do you like REITS so much?

The benefit of these types of assets is that you can realize the appreciation of the asset during your ownership of the asset as opposed to waiting until sale occurs and getting profits from that. The assets I'm purchasing are triple net lease investments but I'm only purchasing in the top 20 highest density cities in the country so New York, LA, San Francisco, Atlanta, Washington etc. Tampa is No. 20; I decided to do that.

What kind of properties are you looking for?

Office, industrial, retail, could be health care. The gist of this is single-tenant, typically free-standing but not always, and investment-grade tenants for long periods.

Why only properties in big cities?

That is really important to the model. We are able to quantify that these cities have the highest probability for property valuation. This one asset we have under contract is occupied by a 7-Eleven. They have an S&P AA- credit rating, signed a 10-year lease with options to renew, and it really is a great example of the type of assets that the REIT will be putting in our portfolio.

Any other examples?

The fund that is the precursor for this REIT has a Tampa asset in its portfolio, the Sherwin-Williams building on South Howard. Sherwin Williams signed a 10-year lease and have options to renew. That (property) increased in value from when I bought it to a year later by 9 percent. That is the gist of what we are accomplishing through REITS with well-located properties… that have grown in value while (we are) collecting rent.

Can anyone invest in Generation Income? How much to get in?

There technically are not minimum amounts other than that one share is valued at $5 but most people are investing well above that number. Yes, anyone can invest. The regulation we are using allows you to take investments from non-accredited investors, but I feel it's important that people do have some substance to their personal portfolios so I haven't gotten any $5 investments.

Are most your investors from the Tampa Bay area?

If I had to guess, I'd say 60 percent are local — doctors, lawyers, bankers, both men and women of all professions. What resonates with them the most is that the investment is fairly stable (and) there is a very conservative undertone to the underwriting of each asset so they like the fact there are assets backing this investment. It's not like a tech company investment where you're hoping this works out and is accepted by hundreds of millions of people but you're actually purchasing an asset that provides income.

Any dividends?

We would pay dividends every quarter just like most other REITs and that's important to this model to make sure the investor knows the regular dividend part of this.

What are your goals, both short- and long-term?

Our goal is to have between five and seven properties this year. We'd like to close our fundraising and started trading (shares) this year. On my board currently is Jamie Graff, head of real estate investment banking for Raymond James (Financial) and he estimated the second round of funding to be in the $300 to $500 million range. (To do hat) we would go beyond the Reg. A +. We are using the reg exactly as it was intended to be used: to start a public company in the most effective and efficient way possible in order to grow it to a point beyond the $50 million threshold. Our goal is to have a $1 billion capitalization by 2020.

How will the public trading of shares work?

As soon as I close the fundraising portion of this, we will hire a transfer agent and the transfer agent will transfer those dollars that people have invested into shares and the shares would be held in the individual accounts, then traded initially on the OTC. I've already had conversations with the New York Stock Exchange. They've reached out to me twice and said, "We've been watching you." That was flattering to me.

Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate.

Comments
Activists call for tech companies to drop NRA’s digital TV channel

Activists call for tech companies to drop NRA’s digital TV channel

Activists are calling for Apple, Amazon, Google and other streaming companies to drop the National Rifle Association’s digital TV channel in the wake of the mass shooting at a Florida school last week, putting the companies in the delicate position o...
Updated: 8 hours ago
Edward Peachey demands severance from CareerSource before stepping down

Edward Peachey demands severance from CareerSource before stepping down

The head of the Pinellas and Hillsborough career centers under multiple investigations into the way they report job placement figures says he has no intention of stepping down.That’s unless he is paid five months severance.In a letter from his attorn...
Published: 02/23/18
Terminally ill Valrico man dies a month after marrying junior high sweetheart

Terminally ill Valrico man dies a month after marrying junior high sweetheart

VALRICO — During his final few days, 19-year-old Dustin Snyder moved to a hospice house, surrounded himself with belongings from home, swam in a pool and visited the beach in Ruskin.Wherever he went, the terminally ill Valrico man had family beside h...
Published: 02/23/18
Tampa Downtown Partnership gets initial city okay to expand north

Tampa Downtown Partnership gets initial city okay to expand north

TAMPA — The Downtowner may be heading to Tampa Heights — but not until Oct. 1.That’s because the nonprofit Tampa Downtown Partnership this week won initial City Council approval to expand into Tampa Heights."Tampa Heights is becoming an important gat...
Published: 02/23/18

Tampa lawyer gets 27 months in federal prison for insider trading

Tampa lawyer Walter "Chet’’ Little was sentenced this week to 27 months in federal prison for engaging in an insider trading scheme that reaped him and a friend profits totaling nearly $1 million.According to federal authorities, Little accessed comp...
Published: 02/23/18
More companies are cutting ties with gun lobby as #BoycottNRA movement gains steam

More companies are cutting ties with gun lobby as #BoycottNRA movement gains steam

Three major companies — Enterprise Holdings, First National Bank of Omaha, and the cybersecurity giant Symantec — have ended co-branding partnerships with the National Rifle Association as a #BoycottNRA social media movement picks up steam.Enterprise...
Published: 02/23/18
Citi to refund $330 Million to credit card customers it overcharged

Citi to refund $330 Million to credit card customers it overcharged

Citigroup is preparing to issue $330 million in refunds after the bank discovered it had overcharged nearly 2 million credit card customers on their annual interest rates, a spokeswoman said Friday.The bank, which has about 150 million credit card ac...
Published: 02/23/18
Girl Scouts camp sold to member of Tampa’s Lykes family

Girl Scouts camp sold to member of Tampa’s Lykes family

ODESSA — The 63-year-old lakeside summer camp had no air conditioning or electricity. Cabin floors were often covered in grime, and cobwebs clung to the windows.But under new ownership, the 18.6 acres of Florida woods known as Camp Scoutcrest to memb...
Published: 02/23/18
BB&T cites ‘technical issue’ in outage affecting customers

BB&T cites ‘technical issue’ in outage affecting customers

Millions of BB&T customers were unable to access their accounts after a service outage which the bank blames on an equipment malfunction. The Winston-Salem, North Carolina-based bank posted a statement on its Twitter page saying the problem persiste...
Published: 02/23/18
Realtors are ‘every 10 feet’ in Florida but more want in the business

Realtors are ‘every 10 feet’ in Florida but more want in the business

ST. PETERSBURG — Tired of working as a yacht captain, Pancho Jiminez decided to get into real estate even though he knows it’s a highly competitive field in Florida."Realtors are every 10 feet around here," he says.Nonetheless, Jiminez is among 30 st...
Published: 02/23/18