Fundamental Income Unveils $500M Net Lease Platform

Targeting capital solutions for a wide variety of businesses, the new entity secured an equity commitment from a fund managed by Brookfield Asset Management.
Alexi Panagiotakopoulos, CIO, Fundamental Income Properties. Image courtesy of Fundamental Income

Fundamental Income has launched a new net lease platform, Fundamental Income Properties, which will provide capital solutions to businesses with established and expanding U.S. operations by investing in single-tenant assets. The investment vehicle kicks off with a $500 million equity commitment from a fund managed by Brookfield Asset Management.


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Fundamental’s introduction of FIP comes in response to the increasing demand among middle-market businesses for efficient, long-term real estate capital. “There are too many businesses facing short-term headwinds because of the unprecedented times we are experiencing. We are coming into this market as a dependable capital provider to help ensure these important American companies can protect the long-term value of their enterprise,” Alexi Panagiotakopolous, CIO of Fundamental Income Properties, told Commercial Property Executive. Panagiotakopolous and fellow Fundamental Income co-founder Chris Burbach are leading FIP, with Burbach acting as CEO.

The new platform focuses on customer-facing real estate and support facilities spanning 85 industries. “From childcare, dentists, veterinary services and restaurants to automotive services and logistics providers—we’re looking to provide the long-term capital and certainty of execution that every business owner strives to find,” added Panagiotakopolous. FIP has tapped Evercore to act as its financial advisor. Brookfield relied on guidance from law firm Latham & Watkins LLP in its investment in FIP.

Timing

The full impact of COVID-19 on businesses is yet to be realized. However, as noted in a first quarter 2020 report from The Boulder Group, amid the pandemic, many net lease tenants may experience substantial financial stress causing concern among investors. At the close of the first quarter, just as the coronavirus was beginning to take hold in the U.S., the majority of investor interest in the net lease market focused on tenants in the essential business category—or those businesses that are least impacted by the pandemic.

As forecasted in the Boulder report, there will be limited investor interest in assets occupied by tenants in the non-essential category until further stability. Fundamental’s new platform endeavors to be an exception. “Net lease real estate is all around us and part of each American’s daily life, not only from a consumption perspective, but also from an employment and economic contribution perspective. We do not want to see companies close their doors simply because they were unable to find a cooperative, well-capitalized partner,” Panagiotakopolous concluded.