FACE Files Registration Statement for All-Cash REIT Status

The company plans to mine the U.S. market for triple net-leased real estate, as well as mortgages secured by such properties.

December 30, 2010
By Barbra Murray, Contributing Editor

Jeffrey Jinks

With an S-11 registration statement on file with the Securities and Exchange Commission, Free and Clear Equity Inc. has paved the way to enter the commercial real estate game as a publicly traded all-cash REIT. The company plans to mine the U.S. market for triple net-leased real estate, as well as mortgages secured by such properties.

In addition to registering 3,041,778 common stock purchase warrants, FACE will register 122,400,000 common shares at $2.50 per share with hopes of raising as much as $306 million to commence its cash-only shopping spree. “Safety first; with cash investments, there is safety and stability,” Jeffrey J. Jinks, FACE secretary and director, told CPE. “The more debt you have, the more difficult it is to reach your dividend goals. And investing with cash allows for speedier and more certain acquisitions.”

FACE will be on the hunt for real estate assets not just with triple-net leases, but also with long-term triple-net leases, which will keep the REIT’s management activity to a minimum. FACE will be eying industrial, retail and office properties, but it will also consider other property types, such as data centers, that meet the REIT’s specified criteria. “We are primarily driven by the fundamentals of a transaction, so properties with high credit-worthy tenants with good payment histories will be an option.”

Geographically, there will be no limitations; the entire country will be FACE’s playground. “That includes Hawaii and Alaska,” Jinks said. “Sometimes they get left and but there are good opportunities there. There are good opportunities in every one of the 50 states and the District of Columbia. The United States commercial real estate market is the safest and most stable in the world.”

If all goes as FACE plans, the REIT will be free to begin making acquisitions within the next few months. “The government, through the SEC, has a lot of control over how fast things will happen, but we are hoping to become effective in the first quarter of 2011.”

FACE expects to elect and qualify as a REIT with the taxable year ending December 31, 2011.