Retail commercial real estate is a great investment vehicle for many reasons, including:
- It is a tangible asset that you can visit, walk around, and experience
- Each shopping center is unique and the real estate, by its nature, cannot be duplicated
- The health of the asset can be easily monitored by observing customer traffic, sales reports, and merchandise stock.
- Most leases are multi-year leases, which provide an extended period of predictable cash flow
- Most leases are “net” leases, which means the tenants will reimburse the Landlord for real estate taxes, real estate insurance, and common area maintenance.
- Net Operating Income can be increased through proactive marketing to secure tenants faster, careful selection of a synergistic tenant mix to optimize sales volume, and expert maintenance of the property… basically, many factors that can be controlled by the owner/developer.
Here is how Saglo Development Corporation and its affiliates (“Saglo” / “we”) are different from other sponsors:
- Saglo is a a privately-held company which has leased and managed shopping centers for over 40 years.
- We are very experienced; having owned, managed, and developed commercial real estate since 1976.
- We are well capitalized and have strong balance sheets.
- Saglo’s leasing and management experience contribute to Saglo’s ability to maximize the potential value of each shopping center investment.
- We have an experienced in-house leasing team with a proven track record. By using industry best practices, our leasing team is able to maximize our shopping centers’ occupancy at market or above market rents.
- Our in-house property management team and our maintenance team are able to respond to the needs of our tenants while maintaining and continuously improving our shopping centers. They work tirelessly to make sure our shopping centers safe, clean and desirable destinations for our tenants and their customers.
- Our affiliates are a low-leverage property owners. The combined average loan to value for all the properties owned by our affiliates is around 50%. For new acquisitions, our preference is to limit debt financing to a maximum of 65% of the value of the property. This sound strategy has allowed Saglo’s affiliates to succeed through all downturns and recessions since it the company was founded.
- We perform a thorough analysis of each property before acquiring it. In addition to learning about the property’s trade area and surrounding market, we perform a thorough financial investigation and we prepare a detailed ten-year cash flow analysis using ARGUS software as well as our own proprietary investment model.
- We stress test our models to maximize our ability to deal with unforeseen circumstances, such as anchor tenant vacancies or major capital improvement costs.
- We conduct business using an “open book.” Investors are welcome to visit our offices to see how we operate our business.
Our acquisitions criteria are as follows:
- We will focus primarily on retail shopping centers
- We will focus primarily in the Southeast region of the US.
- Acquisition price range (per property) – $10 Million to $35 Million
- Equity investment range (per property) – $4.0 Million to $13.0
- Minimum Investment – $250,000
- Investor Level IRR over seven to ten year period between 11% and 20% depending on the risk profile of the investment.
- Average annualized cash-on-cash return to investors between 9% and 11% depending on the risk profile of the investment.
The investment structure:
- Investment term – Typically seven to ten years.
- Investment properties are purchased by either a multiple member, Florida limited liability company or a single member Delaware limited liability company (if more than one property is included in the investment; in such instances, the single member limited liability companies would be owned by a multiple member Florida limited liability company.)
- The multiple member Florida limited liability company (the “Investment Company”) is owned by a number of investors who purchase Class A units ($1,000 each) of the Investment Company.
- A Saglo affiliate(s) will always purchase a minimum of 15% of class A units of the Investment Company.
- The Investment Company is managed by a Florida limited liability company which is managed and controlled by Jack Glottmann (the “Manager” or “Class B Member”)
- In most cases Saglo will manage and lease the shopping center(s) on behalf of the Investment Company.
Typical Investor Distributions
- Typically class A members receive an annualized 8% preferred return (on a quarterly basis.) If Manager is unable to distribute the annualized 8% return, it will accrue and it will be distributed as soon as it is possible.
- Cash flow in excess of 8% is distributed as follows: 75% distributed to Class A members and 25% distributed to Class B member / Manager.
- All or a portion of initial investment may be returned upon refinancing of property mortgage.
- At the end of the investment period, property may be sold or new equity may be raised to replace initial class A members.