RW Holdings NNN Outsources Management of 2.4 MSF Portfolio

Aaron Halfacre, CEO, RW Holdings NNN. Image courtesy of RW Holdings NNN

In a move to better focus its business model, RW Holdings NNN REIT will outsource the property accounting and management responsibilities of its 2.4 million-square-foot portfolio to Colliers International.

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The agreement will place a Colliers team in charge of the day-to-day management of the REIT’s properties, while working closely with the REIT. With some duties freed up, NNN can focus on strategic asset management and corporate level accounting functions.

The dedicated Colliers team will manage NNN’s portfolio of 42 properties consisting of 16 retail locations, 14 office assets and 12 industrial buildings. NNN’s portfolio revolves around single-tenant, income-producing properties in the U.S. that are leased to creditworthy tenants under long-term net leases. The portfolio is spread throughout 14 states and its tenants include Costco, 3M, Dollar General, Walgreens, Gap, Harley Davidson and William Sonoma. The REIT’s portfolio also includes a 162,714-square-foot creative office and warehouse space in Chandler, Ariz. that was acquired for $26.5 million in January 2018.

Consolidation versus closing down

Aaron Halfacre, CEO of NNN, said in prepared remarks that some of the company’s duties were better handled by an outsourced party so that the REIT could focus on its main goals. Halfacre told Commercial Property Executive that NNN has competitive advantages in several areas, including mergers and acquisitions, regulatory reporting and strategic asset management.

“Too often, smaller real estate companies, such as ourselves, have a seemingly egoistic desire to be vertically integrated when in reality the result doesn’t always match the highest and best use of finite resources,” Halfacre told CPE. “Philosophically, we have tooled ourselves to be more like your traditional private equity shop whereby a smaller team of domain experts, existing within a relatively flat organization, intently focused on the execution of financial goals.”

Halfacre also told CPE that he expects more consolidation in the industry, particularly with venture-backed crowdfunding platforms that will seriously consider consolidation instead of closing down.

“Within the non-traded REIT space we have already started to see consolidation and I personally think this trend continues given that there are more than 50 vehicles out there which are no longer actively raising sufficient sums of capital,” Halfacre told CPE. “Within the real estate crowdfunding arena, subsequent or follow-on VC rounds are proving harder to come by and at the same time many of these platforms are hitting a plateau in their growth projections before they have been able to right-size their business model economics.”