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The impact of COVID-19 has laid bare certain realities of commercial real estate investing, one of which is the critical importance of resiliency in the underlying business models of tenants.

The impact of COVID-19 has laid bare certain realities of commercial real estate investing, one of which is the critical importance of resiliency in the underlying business models of tenants. Investors who can adapt by properly assessing the economic outlook and re-evaluating property selection will continue to generate strong returns while maintaining a sense of certainty in the long-term, even in an uncertain environment.

In the pandemic era, the world is increasingly relying on essential sectors to power the economy, and digital infrastructure to maintain commerce and communications. Commercial real estate investors must now view opportunities through this new framework. Pandemic resistant real estate investments and digitally driven operations will continue to be promising investments for the foreseeable future.

This is a primary reason why Sentinel has focused on acquiring mission-critical, tech-focused properties through triple net lease investment (NNN) strategies. By focusing on NNN lease investments like Amazon customer service offices, AT&T call centers, credit card processing facilities and regional grocery stores, Sentinel and its investors, capture long-term value and passive income sources that are built to last.

Pandemic-Proof Real Estate Investments 

Sentinel sets itself apart in the real estate investing sector by capitalizing on unique conditions and market positioning in the NNN lease space. With decades of experience in commercial real estate investing across multiple asset types and classes, Sentinels’ principals view these NNN lease investments as offering strong diversification opportunities decoupled from traditional equity and fixed income markets. As a long-term investor, Sentinel has been able to capitalize on short-term volatility to make strategic investments at what it believes to be exceptional risk-adjusted returns.

Sentinel’s recent NNN lease investments in Illinois highlight these benefits. “Our acquisitions of two Schnucks Fresh Food Grocery Stores represent a primary essential service where demand and revenue have remained strong during the COVID-19 pandemic. Additionally, Schnucks is a tech forward business that participates in online ordering and delivery, which has been the fastest growing revenue sector in retail over the past year,” said Dennis Cisterna, Chief Investment Officer for Sentinel.

With digital infrastructure now being key to maintaining commerce and communication, retail real estate properties have had to adapt to the variety of new consumption avenues, with online ordering and delivery services taking precedence as customers rely increasingly on shopping from the comfort of their homes. As consumers shift to the “new normal,” retailers are providing their services in new ways for their local communities in an attempt to revive their business and stay resilient by changing with the times. Brick and mortar stores still have the capacity to compete with digital platforms and to also work alongside them for contactless transactions moving forward, to help shape the future of the e-commerce landscape.

Another Sentinel pandemic-proof real estate investment, a CardWorks servicing center in Orlando is also an example of forward-looking positioning in commercial real estate. As an essential services investment, credit card processing has indeed proven to be an essential service during the COVID-19 pandemic, with online purchasing increasing dramatically with stay-at-home orders across the nation and retailers offering contact-free transactions.

In addition to NNN lease investments, the strategy is also a prime factor in producing strong value for investors. According to Globe Street, the future of retail is net lease, as the pandemic has highlighted that retailers are now omnichannel as it becomes more prevalent for consumers to take advantage of stores providing drive-throughs and curbside pickup.

Generate Passive Income

Sentinel’s due diligence on select commercial real estate investments during this COVID-19 shutdown takes into account the lack of liquidity of these properties for opportunistic acquisitions that have the ability to generate passive monthly income with compelling returns. The firm conducts proactive analysis and investment based on rapidly shifting demographic and economic trends that focus solely on thriving businesses.

“The fact that we were able to close these transactions during the pandemic, with the real estate capital markets essentially frozen, is a testament to the quality of these transactions as well as the acumen of our team at Sentinel,” said Fred Lewis, Sentinel’s Chief Executive Officer. “We conducted an extensive amount of due diligence on these properties and were able to give our investors and lender a high degree of confidence in these acquisitions.”

Contact our team if you are an accredited investor interested in learning more about investing in commercial real estate.

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Sentinel Net Lease is a privately-owned real estate investment firm that acquires and manages commercial real estate properties across the nation. Our philosophy marries institutional-quality, data-driven investment analysis with exceptional boots-on-the-ground operational experience and meticulous asset management to deliver strong, risk-adjusted returns. We currently own 15 assets totaling over 1.5 million square feet with assets under management in excess of $240MM.

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