Real estate industry veteran Harold Hofer, backed by former CBRE CEO Ray Wirta, announces the launch of NEXREGEN Real Estate Investment Trust I. NEXREGEN provides a proprietary web-based system through which investors can purchase small interests in commercial real estate properties, in the real estate investment trust or “REIT” format.
"Our goal is to make investing in income-producing commercial real estate an easy and user-friendly experience," Hofer said. "NEXREGEN’s founding principle is that all investors should have access to the same real estate opportunities that are typically reserved for high net worth individuals and institutions. For as little as $5,000, smaller investors can purchase shares in NEXREGEN REIT I, representing ownership in income-generating properties."
The company's name, NEXREGEN, springs from words that welcome investors to the "Next Real Estate Generation." Hofer continued: “We want to reach folks that are internet savvy, and that routinely engage in commerce over the internet." NEXREGEN intends to attract qualified potential investors to NEXREGEN.com utilizing print and on-line advertising, newspaper and magazine articles, blogs, and search engine optimization.
Unlike other private REITs that also offer investors small interests in large commercial property holdings, NEXREGEN utilizes a web-based distribution channel that eliminates the need for commission-based intermediaries. "Typically in other private REITs, 10% of the share price is paid out to broker-dealers in the form of commissions," said Hofer. "Our method of distribution is the internet and our website. We have eliminated the standard 10% commission. Our shareholders will have a significantly greater percentage of their initial investment actually invested in real estate assets."
NEXREGEN's real estate strategy is to invest in single-tenant properties leased to creditworthy retailers under long-term net leases. "The goals of this investment strategy are to generate a predictable and stable cash flow, paid to investors via quarterly dividends, and to preserve and enhance the underlying value of the leased properties," Hofer said. NEXREGEN REIT I intends to purchase approximately 20 net-leased property investments, if it sells all of its 2.5 million authorized shares (priced at $10 per share).
NEXREGEN REIT I has already made its first investment: A minority interest in an existing partnership owning a portfolio of Southern California Del Taco fast-food restaurant properties leased directly to Del Taco. NEXREGEN REIT I is not affiliated with the manager of the portfolio.
"Based upon the rents paid by Del Taco in 2011, we anticipate that the first full year dividend payable to NEXREGEN REIT I shareholders will be approximately 6%," said Hofer. (NOTE: Past performance is not a guarantee of future results).
The REIT’s first investment was purchased using a credit facility provided to NEXREGEN REIT I by its sponsors. "Our rationale for providing the credit facility, and thereby purchasing investments in advance of share sales, is to allow prospective investors an opportunity to 'kick the tires' before their investment decision is finalized. We have committed to fund the credit facility for a two-year term. As shares are sold, the credit facility is proportionately paid down; and then utilized again to buy subsequent investments," Hofer said.
“Perhaps a larger benefit derived from the credit facility is the fact that rent-supported investor dividends accrue immediately, rather than after certain thresholds of share proceeds are achieved. In other words, cash generated from share sales will not be placed into an escrow account until enough shares have been sold to purchase a property – in NEXREGEN REIT I, an investor’s money is put to work immediately," said Hofer.
"We believe that NEXREGEN will appeal to investors seeking to generate current income, realize opportunities for longer-term value growth at the bottom of the current real estate cycle, and diversify an existing investment portfolio," Hofer said. NEXREGEN plans a 7- to 10-year investment holding period, after which the investments will be sold and the REIT liquidated.
Hofer and Wirta founded NEXREGEN in 2007. NEXREGEN's predecessor REIT purchased Firewheel Village, a 148,000-square-foot shopping center located in the Dallas suburb of Garland, Texas. Hofer reports that Firewheel Village continues to be owned by NEXREGEN, is 100% leased, and has paid quarterly dividends of approximately 8% continuously since 2007.
Hofer is a non-practicing lawyer with more than 30 years experience in real estate, and has participated both as a principal and a broker in real estate transactions exceeding $2 billion. Hofer has extensive underwriting and acquisition experience and has asset managed multi-hundred million-dollar portfolios of owned properties. He is NEXREGEN's Managing Principal.
Wirta was the Chief Executive Officer of CBRE (NYSE:CBG), the world’s largest real estate services company with 30,000 employees worldwide, for six years.
Shares in NEXREGEN REIT I are being offered pursuant to a permit issued by the State of California Department of Corporations. Shares may only be offered to, and purchased by, residents of the State of California.
This foregoing is neither an offer nor a solicitation of an offer to buy any securities. It has been designed only to familiarize residents of the State of California with certain aspects of NEXREGEN REIT I, which aspects are more fully described in the Prospectus. Readers must be aware that this material cannot and does not replace the Prospectus and is qualified in its entirety by the Prospectus. Any offer must be made with procedures intended to comply with applicable federal and state securities regulations, including Section 3(a)(11) of the Securities Act of 1933.