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The Granger Company creates unique opportunities for individuals to invest as little as $50,000 in valuable commercial and industrial real estate. Clients receive a dual benefit by investing in these products -- they add real estate holdings to their portfolios, but they do not have the responsibility of maintaining or managing the property in which they are investing.
These Real Estate Partnerships and Trust Deed Partnerships spread risk across a pool of investors, and they offer higher returns than traditional investments such as certificates of deposit and money market accounts.
More About Real Estate Partnerships
What is a Real Estate Partnership?
The Granger Company forms Real Estate Partnerships for the purpose of acquiring and operating real estate properties. A property in a Partnership is purchased with approximately 40% equity and 60% debt, and Partnership investors are investing in the equity portion of this transaction.
A Partnership typically holds a single investment comprised of several buildings . The rentals collected from tenants in these buildings, minus Partnership operating costs (i.e., carrying costs, leasing commissions, debt service, and maintenance reserves), form the monthly distributions to Partnership investors.
The Partnership property is usually leased to a stabilized rate of 90%-95% occupancy within the first nine months of ownership. All tenant leases are triple-net, meaning the tenants pay their own operating costs, taxes, and insurance expenses.
To date, The Granger Company has taken a lead investor position (20%-40% ownership) in each Partnership it has created, and has returned an average annual return of over 20% to investors.
How do Real Estate Partnerships compare to REITs (Real Estate Investment Trusts)?
Both Real Estate Partnerships and REITs are companies dedicated to owning and operating income-producing real estate, such as warehouses, industrial buildings, shopping centers, and offices. Both enterprises are geared towards the production of income through commercial real estate ownership and finance.
However, REITs are generally owned and managed by large companies. They were created by Congress to enable small investors to make investments in large-scale, income-producing real estate. They tend to hold a large number of properties, so they are bigger in total fund size. Additionally, the minimum investment of a REIT is usually lower than Real Estate Equity Partnerships, and the investment is liquid. Similar to mutual fund investments, REIT shares can be sold on any day that the securities markets are open for business.
A major difference between REITs and Real Estate Partnerships is the level of participation of the principals of the transaction. Managers of a REIT typically own less than 1% of the total value of the fund, whereas The Granger Company owns between 20%-40% of the total value of its Real Estate Partnerships. Principals at The Granger Company feel that the higher the management ownership in an enterprise, the more secure its investors should feel about the investment's return. Indeed, the firm's Partnerships have returned, on average, 20% annually to its investors since inception.
Partnership investors are typically high-net-worth individuals who are interested in investing in real estate without the responsibility of operating the property themselves. They should have an investment horizon of 5-10 years as these investments are not typically liquidated before the Partnership is dissolved and the underlying property is sold.
A Partnership is made up of a number of membership units costing $10,000 each. The minimum investment in a Partnership is five membership units, or $50,000. Membership interests have limited transfer rights.
These Partnerships require an investment horizon of 5-10 years. At the end of the term, the property is sold, the Partnership is dissolved, and the remaining capital and proceeds are distributed to Partnership members.
Partnership profits are sent monthly to members in the form of distributions to shareholders , and are ordinary income for federal income tax purposes. Members are responsible for paying income tax on these distributions.
As with any investment, there are a variety of risks of which investors need to be aware. Among other things, these could include economic risk if the property is vacant for a portion of its term; or environmental risk if hazardous material is found on the property; or interest rate risk if rates rise and affect the return on the property. In addition to consulting his or her own counsel, accountant and financial advisors, a prospective investor should review a Partnership prospectus carefully and rely on his or her own evaluation of the merits and risks of a Partnership investment.
More About Trust Deed Partnerships
What is a Trust Deed Partnership?
A Trust Deed Partnership (TDP) is a pool of loans secured by real property. As TDP manager, The Granger Company carefully evaluates the underlying real estate assets, and the borrowers' ability to pay interest and principal due on the loans. The firm also purchases TDP membership units for its own account, therefore aligning its interests with those of the other investors.
Return and distributions
The investment's profits are derived from the amount of interest collected on the loans in the TDP. A typical annual return is 8% or more, depending on the interest rates paid by the borrowers. Investors are paid monthly and are responsible for paying income tax on these distributions.
TDP investors are high-net-worth individuals who are interested in investing in real estate loans. They should have an investment horizon of 3-5 years, and they must be residents of California.
A TDP is comprised of membership units costing $10,000 each. The minimum investment in a TDP is five units, or $50,000. Membership units have limited transfer rights, and investors must meet income and/or net worth criteria to invest.
Investment term and dissolution
A TDP requires an investment horizon of 3-5 years, and is dissolved when the notes held by the TDP are fully paid.
As with any investment, there are a variety of risks with which investors need to be comfortable. Among other things, these could include economic, borrower bankruptcy and interest rate risks. In addition to consulting his or her own counsel, accountant and financial advisors, a prospective investor should review the TDP offering memorandum carefully and evaluate the merits and risks of the opportunity before investing.
How do TDP's differ from Mortgage REITs?
Like TDP's, mortgage REITs loan money for mortgages to owners of real estate, and revenues are generated from the interest they earn on these loans. Mortgage REITs sometimes also invest in or purchase existing mortgages or mortgage-backed securities.
Because mortgage REITs are much larger in total dollar size than TDP's issued by The Granger Company, REIT owners/managers don't have large stakes in their own investments. The Granger Company invests in its own TDP's, and therefore shares the same risks and rewards as its other investors. Additionally, the total investment of a TDP is capped at a specific dollar amount, which keeps the fund and its investments a manageable size and the quality of investments very high.
Contact us About Investment Opportunities
If you would like more information about Real Estate Partnership or Trust Deed Partnership investment opportunities, contact email@example.com or call us at 310-323-1550