Listen to this articleThe FAVO Group, LLC is the External Manager for FAVO Realty, Inc., which is a publicly traded real estate investment company whose dedicated management team is focused on maximizing shareholder value by securing world-class commercial real estate assets that can provide durable and predictable cash flow as well as long-term capital appreciation.
Below is our recent interview with Vincent Napolitano, Founder & CEO of The FAVO Family of Companies.
Q: Could you provide our readers with a brief introduction to FAVO?
A: FAVO is “Honeycomb” in Latin and the Honeycomb or Hexagon is the most efficient shape in the universe. The Honeycomb is efficient, flexible and durable and that’s exactly what we strive for at FAVO. We are dedicated to our mission of accumulating and managing a diversified commercial real estate portfolio that will last for decades.
The FAVO Group is the External Manager of our publicly traded company, FAVO Realty, Inc. which currently trades on the OTC Markets under the ticker symbol “FAVO”. One of our goals is to Uplist to the Nasdaq MarketSite in the next 12 to 18 months. We’ve assembled a phenomenal management team and Advisory Board who collectively have over 200 years’ experience in real estate development and acquisitions, asset and property management, market analysis, real estate finance and capital markets.
We recently launched an Investor Portal site that can be found under the “Invest” tab on our website. https://investors.favogrp.com/authentication/login – This Portal is KYC/AML Compliant and serves as a fully secure dashboard that will give all investors 24/7 access to all investments and offerings, including contributions and distribution history, performance history, reports, emails and tax documents, etc.
Q: You’ve recently announced you signed a Letter of Intent (LOI) to buy your first Dollar General Triple Net Lease Property (NNN) in Johnstown, PA; Could you tell us something more about this acquisition?
A: The Dollar General in Johnstown, PA is the type of property we consider to be a core asset meaning it will provide predictable cash flow and growth for decades. It was built in 2016 and is your prototypical 9,000 SF store. The original triple net lease has 11 ½ years remaining and they have three (3) five (5) year options with rental increases.
This is the first of what will be many Dollar General net lease properties in our portfolio. Dollar General was founded in 1939 in Tennessee and they have stood the test of time. Today, they are an investment grade tenant with revenues north of $27 Billion per year. They have over 16,000 stores across the country and have announced plans to open 1000 stores and remodel 1,500 more in the next 12 months. The Company has experienced 28 consecutive years of same-store sales growth, which is quite phenomenal.
Dollar General has a superb brand and business model. They are uniquely qualified to go to underserved communities across the US and open a 9,000 SF general stores where Walmart, Target, and Costco can’t open a 100,000 SF store.
The Johnstown Dollar General is in a great location. It is on Main Street in the heart of Johnstown, PA and less than one mile from the Johnstown Expressway which averages over 17,000 vehicles per day. The property has a substantial 5-mile population of over 60,000 residents in 27,000 households with an average annual income of $57,000 per year.
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Q: What advantages does The FAVO Group of Companies have over its competitors?
A: We have several unique and distinct advantages over the competition. First and foremost, our team’s experience and knowledge are second to none in the industry.
As a public company, we offer full transparency to investors and shareholders. The transparency that most private companies just don’t offer. We also have one of the lowest fee structures in the industry and we are truly aligned with our shareholders. Since I acquired the public entity and rebranded it to FAVO Realty, Inc., it has never paid one dollar in salary or bonuses to any employee, manager, officer or director including myself the CEO.
Another distinct advantage we have as a public company is, we can offer investors liquidity you just do not get in the private real estate world. We offer investors the same competitive yearly distributions ranging from 4.0% to 8.0% but we believe the growth in our share price is what differentiates ourselves from the private competitors. Our stock over the past 30 days has traded between .25c and .53c and we believe as FAVO grows so will the share price and in turn, investors could see exponential returns.
In summary, we are better because of my team’s experience and dedication and we can offer investors better returns with less risk, more liquidity and we do it with full transparency and alignment with shareholders. Not many can say that!
Q: What are some of the key drivers when making decisions on which NNN properties to buy?
A: Our investment approach is a four-step process. It’s Credit, Mission Critical, Location and Terms.
First, we look at the tenants’ credit and financials. We look at the management team and its history, as well as its future and we only, buy net lease real estate with tenants whose business is e-commerce and recession resistant.
The next step in the process is we want to see if the property is mission-critical to the tenant’s business. We look to see how much capital the tenant has invested in the location and how difficult is it for them to relocate?
We will then look at the location of the property. We analyze the market and its demographics. We take into account the size of the property, its visibility, its access and we study the traffic counts. It must have multiple potential uses for alternative tenants.
Last, but not least we look at pricing and terms. We target off-market deals with 10 to 15 years remaining on the lease plus extensions. We are very conservative in our underwriting with a targeted 60% to 70% LTV and we have great relationships with various lenders to get the best financing terms.
Q: What are your plans for the future?
A: Our long-term goal is to be a billion-dollar-plus NASDAQ traded REIT, and we plan on building it one asset at a time.
Currently, our focus is on acquiring Triple Net Lease (NNN) properties with investment grade tenants who are what we consider Amazon and Recession proof. Tenants such as Dollar General, CVS, Walgreens, Caliber Collision, O’Reilly Auto Parts, DaVita Dialysis, FedEx and a few others. These types of properties are our foundation and soon, we plan on diversifying to other sectors such as Multifamily, Medical Office, Data Centers, and Industrial & Logistics. We believe a portfolio should be diversified by tenant, sector and geographically.
Q: How can I invest with FAVO?
A: Any investor with a brokerage account can buy the stock on the OTC Markets under the symbols “FAVO” or invest in one of our multiple funds that are open to accredited investors, institutions, family offices, and astute overseas investors. The funds are structured as preferred debt with an equity kicker. Investors in our funds receive quarterly distributions plus shares of restricted stock at no additional cost or investment.
Anyone looking for more information can email us at info@favogrp.com or call us at 1. 833.FAVOGRP
You can also find us at www.favogrp.com
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Safe Harbor/Forward-Looking Statements
This interview contains certain forward-looking statements including, but not limited to, statements, estimates, and projections of future trends and the anticipated future performance constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, including, without limitation, statements regarding the Series’ expectations, beliefs, or future strategies that are signified by the words “expects,” “anticipates,” “intends,” “believes,” or similar language. These forward-looking statements concern the Company’s operations, economic performance, and financial condition and are based largely on the Company’s beliefs and expectations. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results may differ materially from expected results. Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of this interview and FAVO Realty, Inc and its Management Team expressly disclaims any obligation to update any such forward-looking statements in this interview to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements unless specifically required by law or regulation.
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