SmartStop Asset Management Changes Name

SmartStop Asset Management LLC, a privately held alternative asset management and real estate investment firm, has changed its name to Strategic Asset Management I LLC, effective immediately.

“The new name reflects our continued commitment to our student and senior housing portfolio, while also expanding our platform to include conventional multifamily and industrial properties,” said John Strockis, president. “Our investors want tax-advantaged real estate investments, and we’re excited to expand our portfolio while offering both cash flow and capital appreciation.”

The firm plans to relocate its corporate headquarters to Irvine, California during the second half of 2022 to better accommodate its staff, which includes asset management and acquisitions professionals, as well as its in-house transfer agent, Strategic Transfer Agent Services.

Strategic Asset Management sponsors Strategic Student & Senior Housing Trust Inc., a publicly registered, non-traded real estate investment trust, that currently owns and manages a portfolio valued in excess of $225 million. The company has sponsored multiple other investment vehicles and recently completed a portfolio sale of four student housing properties to an institutional investor for more than $275 million.

The company previously served as the external manager of SmartStop Self Storage REIT, a now self-managed non-traded REIT that plans to list its common stock on the New York Stock Exchange under the ticker symbol “SMST.”

Strategic Asset Management I is a diversified real estate company focused on commercial real estate, with an emphasis in student, senior and conventional multifamily housing. Since 2004, the firm and its affiliates have completed approximately $6 billion in real estate transactions.

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Hines Global REIT II Buys Montrose Student Residences in Dublin

Hines Global REIT II Inc., a publicly registered non-traded real estate investment trust, purchased the Montrose Student Residences for €37.7 million (approximately $40.6 million assuming a rate of $1.08 per EUR as of the contract date).

Montrose was originally developed as a hotel in 1964 and was fully renovated and converted into student housing between 2013 and 2015. It achieved 100 percent occupancy within a year of completion.

The 200-unit property is located across from The University College Dublin, Ireland’s largest university with more than 21,000 full‐time students. The property is a five-minute walk to the center of campus and is the only private student housing asset within a two-mile radius.

“Ireland continues to be an exciting growth market, so we are pleased not only to add to our holdings there but to further diversify our portfolio with our first student housing acquisition,” said Sherri Schugart, president and CEO of Hines Global REIT II.

Alex Knapp, Hines’ managing director responsible for student housing investment and development, noted that Dublin is home to 11 universities and 73,000 students, with a potential rise to 80,000 students by 2020, which would represent 2.3 percent annual growth. “The Dublin student housing market is significantly under‐supplied given the city’s current and anticipated student population,” said Knapp.

The Montrose Student Residences represents Hines Global REIT II’s seventh portfolio acquisition.

Hines Global REIT II, sponsored by global real estate firm Hines, commenced operations in August 2014, and as of March 17, 2017, Hines Global II had raised $307.3 million in investor equity since inception. The company invests in commercial real estate properties located in the United States and internationally, and owns a portfolio of seven properties with a total acquisition cost of approximately $624.2 million.

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Phillips Edison-ARC Shopping Center REIT Stocked Up

Non-traded REIT, Phillips Edison-ARC Shopping Center REIT, announced yesterday that it completed the acquisitions of four grocery-anchored shopping centers.

The acquisitions, which have an aggregate purchase price of approximately $73 million, include:

  • Burbank Plaza, anchored by Jewel-Osco in Burbank, Illinois
  • Hamilton Village, anchored by Walmart Supercenter in Chattanooga, Tennessee
  • Statler Square, anchored by Kroger in Staunton, Virginia
  • Waynesboro Plaza, anchored by Martin’s in Waynesboro, Virginia

The properties have added approximately 736,000 square feet to the Company’s portfolio, which now consists of 102 properties located in 24 states and leased to 31 leading grocery store anchors.

With these new acquisitions and the properties the Company has contracted to acquire, the REIT has used all of the net equity proceeds raised from its initial public offering. The offering is closed to new investors and the company plans to use moderate leverage to continue acquiring grocery-anchored shopping centers.

“Increasing the size of our portfolio to over 100 properties and committing all of the net equity proceeds raised in our initial public offering represent two important milestones for the Company,” commented Jeff Edison, Chairman of the Board and Chief Executive Officer.

Co-sponsored by Phillips Edison and AR Capital, the REIT seeks to acquire and manage well-occupied grocery-anchored neighborhood shopping centers that have a mix of national and regional retailers that sell necessity-based goods and services, in strong demographic markets throughout the U.S.

Through its initial public offering, the REIT raised about $1.74 billion in investor capital.

$2.9 Billion Non-Traded REIT Intends to List

TIER REIT, Inc., a public, non-traded REIT, announced that its board of directors voted unanimously to pursue listing its common stock on a national securities exchange. The REIT has engaged J.P. Morgan Securities LLC to guide the process.

In a press release, the REIT explains, “The board believes that such a listing best positions the Company [the REIT] to maximize stockholder value over the long term by giving the Company access to additional capital for future growth.”

Investors, if a listing happens, would be able to sell shares providing liquidity not accessible for over two years.

TIER REIT ceased paying distributions on December 19, 2012 and also suspended its share redemption program at that time.

Formerly known as Behringer Harvard REIT I, Inc., TIER REIT owns a portfolio of commercial office properties throughout the United States. As of December 31, 2014, the REIT’s portfolio included interests in 37 properties in cities such as Atlanta, GA, Philadelphia, PA, Chicago, IL, Washington, D.C., and Houston, TX among others.

The REIT’s current estimated value per share is $4.48 as determined on October 30, 2014. TIER REIT’s valuation policy follows the Investment Program Association’s Practice Guideline 2013-01.

Properties owned as of October 30, 2014 were acquired for an aggregate purchase price of $3.4 billion and the REIT’s estimated value of its real estate assets was about $2.9 billion.

TIER REIT scheduled its fourth quarter conference call for this afternoon at 2pm EST.

Access is as follows:

Conference Call: 800.926.6502

Conference ID# 21755791

LPL Financial Adds Former Oppenheimer Advisor with $220 Million in Client Assets

LPL Financial LLC, the nation’s largest independent broker-dealer, recruited J.R. Frenzel, a Bridgeport, West Virginia-based financial advisor who has aligned with Good Life Companies, an LPL-affiliated broker-dealer and registered investment advisor. Frenzel joins from Oppenheimer & Company Inc. and serves approximately $220 million of client brokerage and advisory assets.

Good Life was founded in 2012 by Conor Delaney and co-founder Courtnie Nein and provides financial planning, risk management, investment management, and retirement planning.

Frenzel is launching Good Life Financial Advisors of West Virginia, the firm said.

“J.R. becomes our first West Virginia advisor group. As a leader in his community, he has chosen Good Life for our ability to take him independent but not make him feel alone,” said Delaney, founder and CEO of Good Life. “By handling the non-revenue generating activities, JR gets back in front of his clients faster and more frequently.”

Frenzel started his career as an advisor in 2009, graduated from West Virginia University with a bachelor’s degree in political science, and holds FINRA Series 7 and Series 66 registrations through LPL.

LPL Financial provides service to approximately $684 billion in brokerage and advisory assets as of the first quarter of 2019. The company provides proprietary technology, comprehensive clearing services, practice management programs and training, and independent research to more than 16,000 financial advisors and 700 financial institutions.

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Capital Square 1031 Purchases Medical Building in Eastern North Carolina

Capital Square 1031 LLC, a sponsor of replacement property for Section 1031 exchanges, has purchased a 10,880-square-foot medical building in Kinston, North Carolina.

The building is 100 percent leased to Bio-Medical Applications of North Carolina, an affiliate of Fresenius Medicare Care, a leading provider of dialysis services and products for people with chronic kidney failure. Fresenius has 61 dialysis clinics in North Carolina and 2,249 clinics in North America.

“This flagship location is one of Fresenius’ largest dialysis clinics in North Carolina, with 39 service chairs and approximately 110 patients. Kinston is a prime location, adjacent to the doctor’s office and only a five-minute drive to the hospital,” said Louis Rogers, founder and chief executive officer of Capital Square 1031. “Having the clinic, doctor’s office and hospital in close proximity makes Kinston convenient for patients and their care givers and efficient for health care providers.”

“Chronic kidney failure is approaching epidemic proportions, which is driving the demand for dialysis clinics,” Rogers added. “There is no alternative to dialysis for most patients with diabetes or other forms of chronic kidney failure and, regrettably, there is no cure for the disease. Because most patients are covered by medical insurance or Medicare, dialysis clinics have proven to be stable, recession-resistant investments.”

Rogers further observed that North Carolina is a Certificate of Need state, which creates a barrier to entry for competing dialysis providers and also makes it more difficult for a provider to leave an existing location because consent would be required from the state’s Division of Health Services Regulation.

Capital Square acquired the Kinston property in an all-cash purchase (no debt) primarily for Section 1031 exchange investors.

Capital Square 1031 is a national real estate investment and management company. The firm sponsors institutional-quality real estate exchange programs that qualify for tax deferral under Section 1031 of the Internal Revenue Code. Capital Square uses the Delaware Statutory Trust (DST) structure to make quality real estate available to a larger number of investors. Capital Square provides a range of services, including due diligence, acquisition, loan sourcing, property management/asset management, and disposition, for a growing number of high net worth investors, private equity firms, family offices and institutional investors. As of November 2nd, Capital Square oversees a national portfolio of 56 real estate assets valued at approximately $564 million, based on investment cost.

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Securitized 1031 Exchange Programs Expected to Reach Nearly $2.7 Billion in 2019

Mountain Dell Consulting, a market research and analytics firm focused on the securitized 1031 exchange marketplace, recently released its first quarter 2019 report which revealed that securitized 1031 programs are on pace to raise $2.65 billion this year.

Section 1031 of the Internal Revenue Code allows investors to defer paying capital gains taxes on investment property sales by reinvesting the proceeds into a similar investment property within a specified time frame. Securitized 1031 exchange programs are structured as securities and sold through the broker-dealer community.

In 2018, 38 sponsors raised a total of $2.48 billion in equity, the highest annual fundraising performance in 11 years and a 27.8 percent increase compared to 2017. But it was still a far cry from the industry’s peak in 2006 when 71 sponsors raised $3.65 billion.

During the first quarter of 2019, 34 active sponsors have already raised $612 million – with the vast majority of programs structured as Delaware statutory trust offerings (93.3 percent) focused on multifamily real estate.

So, what is driving the DST business? Louis Rogers, founder and CEO of Capital Square 1031, explains the demographic trend of aging real estate investors is a driving force for the industry’s growth.

“The aging baby boomers who own trillions of dollars of highly appreciated real estate are tired of the THREE T’s – tenants, toilets and trash,” explained Rogers. “DST investments provide a highly desirable passive investment. This trend will grow as we experience the largest transfer of wealth in history from the greatest generation to their children, who don’t want to actively manage real estate.”

Keith Lampi, director and chief operating officer of Inland Private Capital Corporation, agrees that baby boomers and strong real estate values are helping to drive the popularity of 1031 programs.

“The securitized 1031 market continues to be heavily driven by and tied to strength in asset pricing, as well as the demographic trend of aging real estate investors seeking to monetize their current holdings and pivot to a passive ownership structure,” said Lampi.

“A large number of investors are sitting on appreciated values, which means tax ramifications at sale and the way to defer taxes and achieve passive ownership is through a 1031 exchange into a DST. 1031s are still one of the most powerful sections of the tax code as investors take advantage of current market pricing,” he added.

Demand for multifamily assets stayed strong with 51.4 percent of sales concentrated in these assets during the first quarter, a dramatic increase from 2007, when approximately 19 percent of equity was raised in multifamily offerings.

Office properties were the second most popular asset type with nearly 20.1 percent of the total, a decrease of half when compared to the 40.4 percent of total equity raise in 2017. Retail offerings remain popular with 13.6 percent of the quarterly raise.

While multifamily was the most popular asset type for 1031 exchange offerings, Lampi believes that investor demand for asset diversification will be a key factor in future product offerings.

“While 2018 was a very successful year for our industry, product supply was heavily weighted in the multifamily sector due to the volume of supply offered,” said Lampi. “Investors are increasingly looking to invest in a broader variety of asset types – especially when looking at where we are in the market cycle – so we believe 2019 will rely on sponsors’ ability to bring additional sector diversity to market in future product offerings.”

Rogers also pointed to diversification as a key feature in today’s DST offerings, as opposed to the tenant-in-common structure that dominated the mid-2000s and represents less than 4 percent of the modern 1031 space.

“By acquiring a portfolio of DST replacement property, exchangers are able to reduce the risk from a more concentrated investment,” said Rogers. “DSTs are a turn-key investment with a very low minimum investment, making diversification possible. Compare this to the TIC-era, when the minimum investment was very high (frequently $1 million!) forcing exchangers into a concentrated investment.”

Inland Private Capital Corporation remains the leading 1031 sponsor with 28 percent of the market share, followed by NexPoint Real Estate Advisors (Highland) with 10 percent, and ExchangeRight Real Estate and Passco Companies each with 9 percent of the market share. Capital Square rounded out the top five with 6 percent of the market.

The report notes that more institutional sponsors and some larger broker-dealers are entering the space again, while the involvement of registered investment advisors continues to grow.

Mountain Dell believes there could be up to 50 sponsors with offerings in 42 states in the coming months.

As of March 22, 2019, there is a total of $769.9 million available equity in 50 active offerings with a first-year average return of 5.75 percent.

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Hines Global Income Trust Buys Industrial Property in Prague

Hines Global Income Trust Inc., a publicly registered non-traded real estate investment trust, has purchased Eastgate Park, an industrial logistics property located in Prague, Czech Republic, for approximately $44.2 million.

Eastgate Park is an approximately 420,000 square feet last-mile logistics facility situated in an established industrial zone in Štěrboholy within the Prague metro area. The property is currently 99 percent leased to 22 tenants.

“The Czech Republic is proving to be an important and growing market for industrial tenants,” said Mietek Godzisz, senior managing director in the Hines Prague Office. “We have strong conviction about future growth here. Eastgate Park is a best-in-class business park in one of the Czech Republic’s most robust markets.”

The REIT’s $2.3 billion portfolio is 95 percent leased. Its industrial allocation, which makes up roughly half of the portfolio’s value, also includes properties in the United States, Netherlands, United Kingdom, Poland, Germany and Spain.

From inception in August 2014 through May 13, 2021, Hines Global Income Trust raised approximately $1.3 billion in investor equity in its public offerings. The REIT launched its second follow-on offering at the beginning of June 2021 and has raised $175.8 million as of mid-October 2021.

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American Realty Capital New York City REIT Launches Tender Offer to Deter MacKenzie

American Realty Capital New York City REIT Inc., a publicly registered non-traded real estate investment trust sponsored by AR Global, has launched a $6.5 million tender offer in response to a $6 million unsolicited tender offer made by MacKenzie Realty Capital Inc.

MacKenzie is offering to purchase up to 500,000 shares of ARC NYC REIT common stock for $12.04 each, while the REIT is offering to purchase up to 500,000 shares for $12.95 each. The expiration date of the MacKenzie offer is July 20, 2018, while the REIT’s offer expires on July 24, 2018

Shares of ARC New York City REIT were originally sold for $25.00 each and have an estimated net asset value per share of $20.26 as of June 30, 2017. MacKenzie’s offer price is 41 percent less than the REIT’s NAV per share, while the REIT’s offer price is 36 percent less.

Over the past few years, MacKenzie has launched three prior mini-tender offers for ARC New York City REIT common stock. The REIT’s board recommends that stockholders not tender their shares in either offer, as both are “well below” the company’s estimated NAV per share.

American Realty Capital New York City REIT invests in properties located in the five boroughs of New York City, with a focus on Manhattan. The company closed its offering in May 2015 and raised a total of $776 million in investor equity, as of the first quarter of 2018. The company owns six properties with an investment cost of $725 million, according to Summit Investment Research.

Based in Moraga, California, MacKenzie Capital Management has specialized in discounted real estate securities and asset management since its formation in 1982.

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Terra Capital Partners Hires New Managing Director of Investment Originations

New York-based real estate investment sponsor, Terra Capital Partners (Terra) has welcomed Dan Hartman to its team as managing director of investment originations.

With over 25 years of experience in commercial real estate, Mr. Hartman has worked for GE Capital Corp, Daimler Chrysler Capital Services, ORIX USA, and Chase Manhattan Bank. He joins Terra from Ares Management, where he served as a principal for nine years.

Mr. Hartman attended Cornell University where he received a BA in Economics and Math, New York University Real Estate Institute, and Fordham Graduate School of Business where he received an MBA in Real Estate Finance.

“We are thrilled to welcome Dan to the Terra team,” commented Bruce Batkin, CEO of Terra. “He brings a wealth of investment experience, and his institutional background and entrepreneurial spirit are a perfect fit for Terra,” he added.

Terra specializes in mezzanine and preferred equity investments in high quality commercial real estate in the U.S. It is also the sponsor of Terra Income Fund 6, which is the first and only business development company (BDC) dedicated to commercial real estate lending. Since its founding in 2002, Terra has originated investments in more than 300 properties valued at approximately $6 billion on behalf of investors.