According to Dan Budzyn, writing for Bezinga.com, international buyers combined to purchase $59 billion worth of U.S. residential properties between April 2021 and March 2022, with about $6.1B of that attributable to China. See the article here.
One of the challenges with electing as a REIT is the loose definition of “qualifying income,” which is generally accepted to be “rents from real property.” The law firm of Vinson & Elkins has published an article on JDSupra that helps navigate this complex area of REIT law as it relates to the emerging demand of electric vehicle charging stations. They address the issue of charging tenants for that service here.
When we started Premium Property Trust, we couldn’t help but look at the performance and history of another Birmingham, AL based REIT, Medical Properties Trust. Bryan Seller of Fade the Market, has just published an article entitled: Medical Properties Trust: My Favorite REIT. It is an excellent read about a great local success story.
I spent over 10 years in the federal government contracting space and 15 years before that developing software. I was successful at it. I was able to work with hundreds of talented, passionate people. We built great teams and provided our country with great technologies to support important missions.
But some changes in my personal life gave me the opportunity to reflect on some childhood experiences. One of the most influential men in my life (like so many other boys) was my grandfather. He was a general contractor in Baton Rouge and worked on many small and medium-sized projects. His career was waning as I was growing up and he was mentoring my cousin, who was starting his own firm.
I worked with my grandfather one summer and was able to drive around Baton Rouge with him in his pickup truck to work on various projects, provide estimates for potential customers, and check in on various crews. My biggest joy was when he’d point something out: “You see that parking deck over there? We built that 10 years ago, when you were just six years old.”
The permanence and impact of construction made an impression on me.
I loved writing software. I was good at it. But as I moved from C to C++ to Java to C# and beyond, I realized much of what I was doing was ephemeral. This is not to say that software isn’t important; that’s a silly conclusion. But, as I got older, the joy of learning new technologies was tempered by the realization that a new one would be coming around the corner. And, importantly for me, what I was building simply wouldn’t last.
So, here I was. Fifty years old with an accumulated skill set that the market saw as valuable. And opportunities in the DC area are always plentiful. But I had a nagging feeling that I wanted to do something different; something that might last a bit longer than the usefulness of my ability to build TSR apps (inside joke for the old coders out there).
So, when my best friend suggested I relocate to Alabama to help him launch a real estate investment fund (where we would buy, build, and improve large real estate assets), I jumped at the chance. Well, that’s not entirely true. Actually, it’s a lie. I fretted over the decision for a long time. I had several “safe” opportunities in DC to lead other contracting firms. I had a reputation for helping 8A companies “get to the next level” and that’s what many 8A firms want to do.
Eventually I decided that returning to my hometown (Birmingham, AL) on a shoestring budget (moving into my friend’s basement) was a roll of the dice worth taking. I had ongoing financial obligations, including two kids in college, and knew my knowledge of real estate was a thin as my knowledge of Rust (inside joke for the young coders out there).
We recently announced a special investor distribution and acquisition of $24.7 million in properties. We have another $150M of off-market opportunities in our pipeline today. And we were able to build it during a global pandemic. No one knows the future, but I’m loving driving my own pickup to sites under construction. I love being back home where my parents and so many of my old friends live. I love seeing my best friend envision the transformation of a property and then bring it to life, in a way that elevates both the property and the surrounding community.
I cannot predict if the financial future will be better or worse for my choice. I’m still not where I was related to income. But my quality of life and satisfaction in my career is substantially higher. Ultimately, I am helping build something that lasts and that matters to me at a core level.
We all face crossroads in our lives. Sometimes the “easy” road is the right choice. Other times, it’s better to “follow your heart” even if that path is less certain and more challenging. I share this only because I know some of my former friends and colleagues are facing similar choices today and I hope my story might provide some encouragement.
With much thanks to everyone who I have worked with, who have mentored me, who have invested in my success, and who have supported me with encouragement during difficult times.
Birmingham-based Premium Property Trust acquired seven properties in a package deal from its founder and various joint partners.
Premium Property added 63,000 square feet of combined office, retail and medical space as part of the $24.7 million deal, it said. The assets were previously jointly owned by founder Chris Reebals and various investment partners.
“While Reebals founded Premium Property and is still its chairman, the company is now made up of independent investors,” said CEO Burke Cox. The plan right now is to use these in-service properties to launch an investment fund and eventually elect as a real estate investment trust. “Longer term, the company would seek a public offering,” Cox said.
“It is an exciting time for us as we have spent over two years raising capital and negotiating this deal with several partners across the properties,” Cox said.
The properties the company acquired as part of the deal were:
• 2601 Highland Ave., Birmingham: 13,190 square feet
• 3040 Independence Drive, Birmingham: 5,000 square feet
• 2913 Linden Ave., Homewood: 7,500 square feet
• 2915 Linden Ave., Homewood: 1,300 square feet
• 324 Commons Drive, Birmingham: 15,030 square feet
• 2081 Columbiana Road, Vestavia Hills: 14,130 square feet
• 4213 Dolly Ridge Road, Vestavia Hills: 2,800 square feet
Premium Property also consolidated a refinancing deal for one of its existing properties, the 5,000-square-foot 1920 Huntington Road, as part of the transaction.
“Premium Property is also in the midst of a 60,000-square-foot mixed-use development project on Morris Avenue called the Armour Building,” Cox said.
Dev Ashsish explains why real estate investment trusts are not proxies for equity, but are assets that can deliver better returns than debt instruments over the long term.