FAQ's | Firm Foundation Fund

Why invest in Dental/Medical Office Buildings?

Recession Resistant Investment Offers stability in unstable world In-person Services Required Dentists will always need buildings Our Competitive Advantage: Experience in ownership of dental buildings. Relationships with brokers in the Minnesota and Wisconsin markets. Understanding of the changing dental markets and knowledge of a unique market niche that is developing.
What are the current trends affecting dental real estate?

Medical/Dental market in greater need in an aging population The private equity takeover of dentistry is leaving dental real estate opportunities more available than in the past when dentists preferred to own their own buildings. Dental school tuition increases have made it extremely difficult for newer dentists to own their own buildings. Property management in multi-family real estate is becoming more expensive and challenging unless done in-house. Thereby making triple net leases more advantageous, and predictable.
Why do dentists make ideal tenants?

Financially stable Long-term tenants Patients prefer a consistency of location Triple Net Lease Predictable expenses in an unpredictable time for interest rates, insurance rates, etc. Tenants take on the risk of expense fluctuations in an inflationary market. Triple Net Lease, a lease agreement on a property where the tenant promises to pay all expenses, including real estate taxes, building insurance, and maintenance. High barriers for the tenant to exit the building Dental renovations make it cost prohibitive to move Patient loyalty to dental buildings is important, fear of changing anything in dental care can be problematic for fearful patients
What are the goals for the investment fund?

To create cash flow and appreciation for our partners while maintaining quality buildings for our dental and medical teams to provide excellent patient care. 12% Average Annual Return 7% Cash Flow 5% Appreciation Cash on Cash Return: No debt Cap Rate / Projected Exit Cap Rate: 6-8% metro, 10-12% out metro
What locations will we pursue for this fund?

Minnesota and Wisconsin will be the target markets for their excellence in dental care, proximity to dental schools, and the knowledge of the partners in this market.
What is the business plan for this fund?

Buy and hold for 5 years unless value increases enough to meet 12% return goal.
How are shares determined and valued?

Shares are determined by the property values based on cost paid on purchase of the buildings or when new buildings are added
Will there be value added opportunities within the fund?

There will be buildings purchased where growth in remodeling will likely occur. Our goal would be to find dentists in need of updated or expanded space and provide them with remodeled space, when a favorable lease is in place.
What will be the condition of the properties?

The properties will offer diversification within the fund to provide value add opportunities and flagship appreciation anchor tenants.
What is the exit strategy for this fund?

We aim to package up the buildings and sell to a larger private equity firm or to sell the individual buildings as they meet the 12% return goal.
What are the financial commitments of the partners?

General partner commitment of $100K within the first year of the fund, additional as needed. Limited partner minimum commitment of $100K.
What is the fee structure and profit sharing?

European financial model which insures the limited partners receive their full investment back before the general partners receive their portion of the profit sharing (80/20). Acquisition Fee: 1% Property Management Fees: 1% Limited Partner/General Partner Split of the profit: 80/20

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