The Fulcrum Model
At Fulcrum Real Estate Partners, we set out to create a vehicle through which more investors can easily add investment in “bricks and mortar” real estate to their portfolios.
We asked ourselves the following: What if we lowered the minimum equity investment to a level that more people could consider, yet still provided them with the benefits of institutional grade commercial real estate experience, expertise, and asset management? What if we gave our investors a choice to invest – or not – in individual properties, rather than in a “fund” of properties in which there is no choice? What if we offered investors the opportunity to invest side-by-side with us, yet ensured that their equity, and the return on that equity, was the first priority?
These considerations formed the basis of the Fulcrum Model, and this is how it works…
The Structure
Each investment property is unique, has its own strategic plan, and is owned individually in a single-asset limited liability corporation (LLC) formed by the General Partners (Fulcrum Real Estate Partners, LLC), and the Limited Partners. As General Partners, we are solely responsible for uncovering investment opportunities, all negotiations, all physical, environmental, and title-related due diligence activities, legal, financing, etc., including closing the purchase of the property, and the on-going management of the assets over the life of the investment. Unlike the General Partners, Limited Partners’ risk (you and other investors including Fulcrum Real Estate Partners, LLC…we have “skin in the game” in every investment too!) is limited to your equity invested. The minimum investment in any one of our deals is only $50,000 although you can invest more if there is availability.
Distribution of Returns
In each deal, the Limited Partners enjoy a Preferred Return on their invested equity (targeted between 7% and 10% annually, dependent on the unique particulars of each deal), which is paid quarterly. The Limited Partners will continue to receive all of the distributed cash flow until all of their invested equity, and the Preferred Return on their invested equity, is returned. Whatever cash is remaining will be divided between the Limited Partners and the General Partners. The total return earned on the Limited Partners’ investment is determined by a combination of the Preferred Return which is disbursed quarterly, and capital appreciation, which is generally the result of a major event including a sale, a refinancing, or a recapitalization of the asset.
Targeted Real Estate Investments
Fulcrum Real Estate Partners investment opportunities may include a diverse set of office investments (i.e. medical office, traditional office, or flex space) and industrial investments (i.e. warehouse, distribution facilities). Within these asset classes, we will consider a variety of scenarios including longer term stabilized investments such as corporate sale leasebacks, lease-up and repositioning opportunities as well. Again, it is our goal to uncover, purchase, and manage commercial real estate investment opportunities that provide our investors with risk-adjusted overall leveraged returns between 12% and 20%, with annual cash-on-cash returns in the 7% to 10% range.
The total return earned on the Limited Partners’ investment is determined by a combination of the preferred return which is disbursed quarterly and capital appreciation, which is generally the result of a major event including a sale, a refinancing, or a recapitalization of the asset.