First National Realty Partners Review 2023
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First National Realty Partners Overview
Founded in 2015 and headquartered in Red Bank, New Jersey, First National Realty Partners is a private equity firm that aims to make institutional quality investments available to everyday accredited investors. Its co-founders, Anthony Grosso and Christopher Palermo, focused on a hyper-specific subset of commercial real estate investing—grocery and essential needs-anchored investments—to help provide superior risk-adjusted returns to its partners.
At the time this article was published, First National Realty Partners had a portfolio of 56 grocery and retail properties valued above $1.4 billion. More than 2,000 investors have invested with the platform, and average annual returns range from 12% to 18%
First National Realty Partners practices a fully integrated business model they call FNRP 360—an investment approach that differs from other real estate firms. While most sponsors outsource much if not all of the process, First National keeps every aspect of the investment, management and disposition processes in-house, which allows FNRP to move faster, builds internal expertise and allows for a tighter control over costs.
The firm does this to provide greater maneuverability and to assure investors they handle the investment property with the utmost care while being fully aligned with investors in both due diligence and asset management. Finally, in-housing every function passes along savings to the investor and enables the First National Realty Partners team to secure more value in properties they acquire.
For accredited investors, First National Realty Partners provides a unique opportunity to build your commercial real estate (CRE) portfolio. Investors can choose to purchase grocery-anchored real estate assets without the hassle of managing tenants.
While investing in grocery stores might sound strange, it’s an exciting niche that offers tremendous upside potential and stability during volatile economic periods. Just think about it for a moment: Grocery stores provide essential-needs goods for consumers. Everyone, whether there’s inflation or economic uncertainty, still needs to eat. These national brands capture that need through their consistent foot traffic as individuals come to purchase their food.
This means investors could benefit from a relatively stable asset class that serves as an excellent way to hedge against inflation. Further, it experiences contractual rent increases and price appreciation over time.
If you’re intrigued, read our First National Realty Partners review to learn how it works and determine whether this investment opportunity has a place in your portfolio.
What is an Accredited Investor?
There are certain qualifications a person (or persons) must meet before they’re considered to be an “accredited investor.” You’re considered an accredited investor if you meet one or more of the following criteria:
- Your net worth exceeds $1,000,000 USD. This net worth cannot include your primary residence.
- Your annual income exceeds $200,000 USD. This must be true for the past two years, and your expected future annual income must also exceed this amount.
- You & your spouse’s joint income exceeds $300,000 USD. The same conditions as individual annual income apply.
You can invest with FNRP as long as you’re an accredited investor. If not, you will not be eligible. However, there are many other real estate investment opportunities you can pursue instead.
First National Realty Partners At A Glance
Fees: $50,000 minimum investment per deal. .5% to 1.5% Asset Management Fee, determined on a per-deal basis. Other fees may apply.
Minimum Balance: $50,000 for the Opportunity Fund
Minimum Investment: $50,000
Account Fees: Determined on a per-deal basis
Redemption Options: Non-liquid. Investors
Customer Support: Direct phone support with a team of investment specialists, M-F 9am to 5pm EST
Transparency: Comprehensive due diligence packet on each offering is available directly through their website.
What Does It Offer?
For accredited investors, FNRP has two offerings: individual deals and its main fund that lets you diversify your investment across all its assets. It also offers quarterly distributions for investors and has its own unique process for sourcing and closing deals.
Individual Commercial Real Estate Deals
As mentioned, grocery-anchored real estate is what First National Realty Partner specializes in. At the time of writing, there’s over two dozen of these individual properties that you can invest in. These are generally shopping centers that can accommodate several or even a dozen or more tenants.
Each listing provides a breakdown of the current tenants and the number of openings. FNRP also provides flyers that highlight factors that make the property valuable and some general information about the area, like the average population and income level.
There’s not too much information on each listing page. However, once you reserve a position to invest in a property, you can attend a 20- to 30-minute deal webinar to learn more about the property. In this webinar, First National Realty Partners team explains more about why they’re investing and even field questions from investors.
Granted, First National Realty Partners has a $50,000 investment minimum, so this level of interaction with potential investors is important. And once you find a deal you’re interested in, you can invest through FNRP’s secure online platform. From there, you can collect quarterly cash distributions from Q1 after closing from the property’s net positive cash flow. You can also view performance reports, lease updates, and other updates from your investor dashboard.
Opportunity Fund
Another way to invest with First National Realty Partners is to invest with its Opportunity Fund. With this fund, you can own shares in all of FNRP’s individual deals, creating a more diverse portfolio of commercial real estate holdings.
The main advantage of this fund is that you’re not putting all your eggs in a single basket with one piece of commercial real estate. And according to FNRP, you guarantee placements in its deal, which isn’t always possible since deals can fund rather quickly.
It’s a $50 million fund, and there’s a $50,000 minimum investment requirement as with individual deals. FNRP has an ambitious 12-18% target annual return and 8% targeted annual cash distribution. You can choose to reinvest dividends as well.
Acquisition Process & Tenant-Focused Philosophy
FNRP specializes in grocery-anchored real estate, and this is its unique selling point versus many crowdfunding platforms and certain types of REITs. But it’s important to understand how the company goes about sourcing deals before you become an investor.
According to its website, First National Realty Partners uses a “volume-based approach to find the best possible commercial real estate opportunities in the United States.”
Essentially, it uses its own technology and analysis to vet a large number of potential commercial real estate assets. It calls this the Dragnet Acquisitions Model, and it’s how FNRP vets a large number of potential properties and slowly narrows down the best candidates.
Being tenant-centric as FNRP describes itself is also important here. Since FNRP works with such massive companies for its tenants, it maintains close relationships with them and can look for properties that suit specific tenant needs.
This is also why FNRP has its own in-house leasing team to ensure properties are rented quickly and that tenants are happy with the process. Overall, its network of massive tenants helps make FNRP a more attractive investment opportunity.
Quarterly Distributions
As an investor, you receive quarterly distributions from FNRP’s properties. How much you earn depends on several factors, including rental income, operating expenses, insurance, maintenance, and property taxes.
However, there are two types of distributions you can receive:
- Periodic Distributions: These distributions occur regularly and are quarterly for most FNRP offerings.
- Lump Sum Distributions: These are larger, one-time distributions that are generally paid for two reasons. The first occurs if the property increases in value and debt is refinanced to withdraw cash. The second instant occurs when the property is sold for a profit.
According to FNRP, lump sum distributions are where most real estate gains are made. This makes commercial real estate a better long-term investment than short-term investment despite the fact that you often earn quarterly distributions.
The Benefits of FNRP
While there are certain limitations you’ll run into, these are fairly standard when dealing with real estate investments. Opting for investing with FNRP specifically does offer certain advantages though, which may give it an edge over alternative options. These include:
- High standards – Out of every 1,000 investment properties FNRP considers, the firm only invests in one (on average). This means every property has been thoroughly vetted and deemed profitable by the in-house team, even before the opportunity was presented to investors.
- Processes are handled internally – Unlike other companies that often outsource tasks, FNRP handles everything—from property acquisition to real-estate management—in-house. This enables them to close profitable deals efficiently with industry-leading companies.
- Support – In addition to having access to routine meetings and webinars, investors can also refer to a dedicated team of investment specialists with any questions or concerns they may have.
What Are The Drawbacks?
Despite the range of offerings and deal vetting process, there are some downsides and risks investors should consider.
Only Open to Accredited Investors
As mentioned, you need to be an accredited investor to invest with FNRP. This means having a net worth of at least $1 million or annual income of at least $200,000 (or $300,000 with a spouse.)
There are plenty of crowdfunding sites for non-accredited investors, or some that at least have entry-level funds. Unfortunately, this is a high barrier-to-entry for FNRP. But it’s a private equity firm specializing in a more niche class of real estate, so it’s not for every investor.
High Investment Minimums
If you want to invest in real estate without much money, First National Realty Partners isn’t for you. You have to invest $50,000 to get in on the action, and there’s no smaller fund you can begin with.
How Does First National Select Deals?
FNRP selects deals in a few different ways, which we’ll explain below:
- Dragnet Acquisition Model
- Triple Net Leases
- Tenant-Centric Approach
Dragnet Acquisition Model
First National Realty Partners coined the term “Dragnet Acquisition Model” to describe its rigorous deal identification process. Its proprietary technology analyzes properties across the United States, applying filtering criteria (like we mentioned above) to identify potential deals. It then looks at its list of potential investments and considers hundreds of data points before selecting deals that align with its objectives. In addition to the criteria listed above used to source quality deals, FNRP looks at:
- Grocery-anchored retail centers that are the No. 1 or 2 center in a submarket, with the No. 1 or 2 grocer in that same submarket
- Strong anchor tenant sales
- Minimum capitalization rate of 6.0%
Employing technology to analyze properties helps the FNRP team identify optimally located commercial assets fairly quickly.
Triple Net Leases
FNRP focuses on “triple net lease” properties. This means that not only does the tenant pay rent—they also contribute to 1) real estate taxes, 2) building insurance and 3) maintenance costs.
Triple net lease real estate opportunities are attractive to investors in part because they’re more predictable than traditional models—the real estate owner is simply collecting rent and doesn’t have to worry about variances in costs such as taxes or maintenance.
Not only that, but these types of properties typically attract established retailers, making the tenants less of a credit risk. Also, many triple net lease properties require routine rent increases, establishing a baseline of potential growth for investors.
Tenant-Centric Approach
In addition to serving as a partner for investors, First National Realty Partners also takes a tenant-centric approach to its investments. The team dedicates its time to building and maintaining relationships with the biggest grocery store and retail chains in the nation, which can make it easier for them to fill vacancies in newly acquired retail shopping centers.
FNRP has partnered with major chains including Aldi, CVS, Giant, Giant Eagle, Harris Teeter, Kroger, Panera, Publix, Walmart and Whole Foods. These connections give First National management unique industry intelligence that enables them to pick what they deem to be the advantageous properties from the start.
Final Thoughts on This First National Realty Partners Review
First National Realty Partners has found an excellent niche in the commercial real estate investment space, allowing accredited investors to participate in the kinds of deals normally reserved for institutional investors.
The website makes it easy to understand each offering and perform due diligence with a few mouse clicks. The partners at FNRP really know how to take complicated transactions and distill them into simple terms.
We also like the hands-on approach this alternative investment platform takes. All potential investments must make it through a rigorous investment criteria. Once the property is acquired, that’s when the real work begins. The FNRP team focuses on renovations, negotiating leases with current tenants, and bringing new, established tenants into the properties. This creates greater appreciation.
Though it does not provide the immediate portfolio diversification and liquidity of a REIT, an investor can find diversification with First National Realty Partners by investing in multiple properties. The offerings are not only scattered across the U.S. but by investing in properties with different anchor tenants, there’s little or no correlation between performance with each investment.
Click for First National Realty Partners pricing and details.
First National Realty Partners offers the top .1% of all retail-based, commercial institutional-quality investment opportunities you can find without being an institutional investor yourself. We would have liked to see more disclosure about the accompanying fee structure upfront to make it a little more convenient for research, but the offerings, the platform, the customer service, and especially the returns are all top-of-the-line.
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