Four Springs Capital, LLC

Benefits of Net Lease Real Estate Investment:

Monthly cash flow generated by rental income, with periodic increases, derived from the long term triple net lease and contracted rent escalations negotiated within the terms of the lease.

Potential capital appreciation from the resale of the property during the holding term of the asset, which is approximately five to seven years.

If favorable rates and terms are available, mortgage financing may be placed on the property which would increase the cash yield percentage as well as generate a tax-free distribution to SPE member investors in the amount of the mortgage.

Why Real Estate?

FSC believes that real estate provides an investment portfolio with attractive return prospects, excellent portfolio diversification, and a hedge against unanticipated inflation. It also plays a meaningful role as a powerful diversifying tool and a generator of strong returns for both individual and institutional investors who have found that real assets provide relative stability during periods of public market turmoil. By pursuing investments in which asset pricing is at a discount to replacement cost and generating substantial cash yields through its SPE structure, FSC seeks to generate excess returns over market cycles for its investors.

Four Springs Capital, LLC (FSC)
Net-Lease Investment Parameters

Target Property Acquisition Requirements

Credit Tenant – investment grade, solid track record of earnings and S&P ratings, corporate lease obligation.
Existing, long term (10-15 year) non-cancellable triple-net lease.
Contractual rental escalation negotiated within the terms of the triple-net lease.
Absolute triple-net lease – tenant is responsible for all maintenance, insurance, and taxes, as well as all replacement costs of roof and structure.
Rent/SF – current comparable rents in the target market to be at or above the negotiated square foot rental in tenant lease.
Positive demographics in solid growth markets in major retail corridors.
Target Acquisition Value $1.5 million to $10 million.

Typical Ownership Structure

FSC secures the capital necessary to acquire the target property without any debt.
FSC creates a new Special Purpose Entity (SPE) to purchase each property.
FSC assumes the role as the professional Member Manager acting on behalf of all the investors.
FSC ensures monthly rents are collected and monthly cash distributions are made to all the investors. The cash will be dispersed electronically through PNC’s Pinacle Fund Transfer Module, for speed, transparency and security purposes.
Each SPE will either be created as a Limited Liability Company (LLC) or a Delaware Statutory Trust (DST). Selection will depend on the needs of the investors.

Limited Liability Company (LLC)

The LLC owns the property and each investor owns a share of the LLC.
The investors are protected against personal liability.
The LLC is bankruptcy remote.
The LLC can get a mortgage on the property (if agreed).
The LLC will annually file its own federal and state tax returns and each investor will receive a separate K-1.
The LLC does not satisfy the requirements for a 1031 "tax deferred" property exchange.

Delaware Statutory Trust (DST)

The DST owns the property but, for tax purposes, each investor is treated as having a direct ownership share of the property.
The investors are protected against personal liability.
The DST is bankruptcy remote.
The DST can get a mortgage on the property (if agreed).
Each investor files an individual federal and state tax return incorporating the ownership share of the property.
The DST does satisfy the requirements for a 1031 "tax deferred" property exchange.