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Show Summary
In this episode, real estate expert Agostino Pintus shares valuable insights on acquiring durable net lease assets and building a stable income stream through commercial real estate investments. He explains why net lease properties—often backed by large corporate tenants—are considered some of the most reliable and resilient investment opportunities in the commercial real estate market. Agostino discusses the importance of strong broker relationships and networking when sourcing quality deals. Many of the best investment opportunities never reach the open market, making trust and industry connections essential for successful acquisitions.
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Investor Fuel Show Transcript:
Agostino Pintus (00:00)
I got here’s an example. Let’s say you set up a 45 day due diligence, 45 day close and it’s okay to get an extension. You negotiate the extension upfront, you know, that kind of thing. But then you just sit on your hands for 45 days and now arrange the financing and now you’re scrambling at the lastIt’s things like that.
Dylan Silver (00:16)
at the last minute for the financing.Hey folks, welcome back to the show. Today’s guest, Agostino Pintus is a real estate developer and investor with Dey Street Capital. He’s focused on acquiring a central service net lease assets designed to produce durable monthly income. Welcome to the show, Agostino.
Agostino Pintus (02:05)
Hey, thanks for inviting me. Appreciate it.Dylan Silver (02:07)
Now, when we talk net lease, this is an asset class which I think is very durable and resistant to market trends. Am I onto something there or is it the opposite of that?Agostino Pintus (02:21)
No, no, that’s generally what the business thesis is around people that acquire such assets. So what we are looking to buy and what you just said a second ago are businesses that have a corporate guarantee. So think of advanced auto parts, Firestone, Family Dollar, usually publicly traded or large private companies like Mars. Mars owns VCA Animal Hospital, right?And these are companies that are extremely durable. They’re financially backed. They have a lot of money. And they’re not going to go out of business tomorrow. And even if they did, that lease is, it gets paid down first as one of the creditors, right? So before their investors do, which is interesting, right? So in that perspective. ⁓ So yeah, it’s extremely durable.
Dylan Silver (03:10)
Yeah.Agostino Pintus (03:14)
⁓ It’s certainly not easy to acquire these assets because, ⁓ like we said in the green room, you’re looking at many, many, many assets to determine whether the deal is viable or not. So it takes some effort to do that. But you know what? ⁓ It is a very good solution for people that are looking for good, steady stream of income.Very few things are like that. They’re still real estate related. That’s still somewhat predictable as opposed to other asset classes.
Dylan Silver (03:49)
I’ve got a chicken and the egg question. Which one comes first? You know, when you’re dealing with these corporate, you know, ⁓ publicly traded Fortune 500 companies, this type of thing that need retail space, are you finding the real estate asset first and then reaching out to them or are they reaching out to you and saying, hey, we’re expanding in this area, we need some space?Agostino Pintus (04:14)
Sure. well, generally speaking, we’re buying assets that already are ongoing concerns. They’re already running. Like, we’re not looking to develop them right now. We will in the future, but not at this point. But generally speaking, what you want to do is maybe acquire, say, 100 of these things, which is tough, okay? Tough to do. Understand the analytics around it.Dylan Silver (04:26)
Okay.Agostino Pintus (04:42)
And then you’re almost like acting like a scout for them. Because at that point, now you understand the demographic, you understand the vehicles per day, you understand what square footage you’re looking for, how many acres you’re looking for, all these various nuances to that specific vendor. And they can call up the person who manages that lease relationship, right? And you can say, hey, I found a property here. Do you want?Do you me to build it for you and I can lease it? That’s generally, I mean, that’s one way how it’s done. But I have other friends of mine that are in the construction business and they build, I think it’s ⁓ Dollar Trees, they build Dollar Trees, they used to anyway. I think they still do. And Dollar Generals, I think. So ⁓ yeah, they do the construction, sometimes they’ll source the land and do the same thing I just told you, or they’ll get a phone call and say, hey, can you build this unit?
Dylan Silver (05:33)
Right, right.Agostino Pintus (05:38)
here. Generally speaking, that’s how it’s done, right? But I think that’s a very different type of situation. think it’s, ⁓ but there’s always opportunities for that, of course.Dylan Silver (05:45)
Right.Now, when you’re looking at acquisitions as a whole, and we were talking before, you in the green room about how many deals you’re having to look at to find one that pencils, are you scouring multiple sources to find these deals? Are these deals coming to you? Is it a combination of different, you know, lead sources and funnels, so to speak?
Agostino Pintus (07:01)
Yeah, generally speaking, it’s very similar to multifamily. And that’s where I cut my teeth is on the multifamily side. I know a lot of a multifamily. built a I built a fairly significant portfolio at one point and in the process of selling everything right now. If the brokers know who you are and you’re easy to deal with, you’re not a jerk, you’re not going to retrade them at the last minute. don’t do the basic rules of aasset acquisition. You don’t ask them to take a haircut on their broker fee. Brokers generally don’t like
If you develop a relationship with many, many brokers, the deals will come to you. That’s one of the hardest things in this whole business. It’s not just NetLease. It’s a multifamily, industrial, anything real estate related. They have to like you. They have to know you can close. And they have to know that you’re not going to be an idiot when you go to get a deal under contract and you start screwing around. ⁓
Dylan Silver (07:50)
Yeah.Agostino Pintus (08:04)
I got here’s an example. Let’s say you set up a 45 day due diligence, 45 day close and it’s okay to get an extension. You negotiate the extension upfront, you know, that kind of thing. But then you just sit on your hands for 45 days and now arrange the financing and now you’re scrambling at the last minute. It’s things like that.Dylan Silver (08:21)
at the last minute for the financing.Agostino Pintus (08:22)
Yeah. And you ask the broker to take a haircut. You do that. The broker, the broker may be gracious and give you the discount. They will never give you another deal.ever again. They’ll remember that. They will remember that. They tell me this. ⁓
Dylan Silver (08:37)
No question. No question.When we talk about,
especially larger deals and economies of scale, one of the things that I’ve heard from investors is, and I think you’re talking about how this is not really advantageous to investors, that this hurts them in the long run, is they’ll say, okay, well, it’s this size, I’m not gonna give you the typical.
percentage of commission, whatever it is, you three to 6 % because you’re going to be making, you know, on a percentage, you’re making so much more money. That’s sometimes a thought process of some investors. We have to realize like, well, this is kind of what is, you know, industry standards. So you’re asking the broker to go under industry standard to work for you upfront for free, right? And are they going to be incentivized to send you deals in the future? Probably not.
Agostino Pintus (09:11)
Mmm.right. And here’s what I mean by that, whole broker situation, the broker fee thing. If you’re negotiating upfront, and you have a decent conversation, you’re absolutely right, Dylan. If the deal is, say, $10 million deal, they’ll generally reduce their broker fee. They’ll do it. They’ll take it down to 1 % or whatever it might be. But then you go and ask them,
after the fact, after you sign it up, ⁓ hey, by the way, I need you to reduce the fee again. Like you don’t do that. Just don’t start retraining or then or you get, we have a guy here in town. He’ll wait ⁓ a week, a week and a half before the money goes hard on due diligence. And they’ll start a retrade always, always does a retrade for quarter million dollars, 200 grand, 150, like significant retrait.
Dylan Silver (10:28)
is real estate strategy.Agostino Pintus (10:30)
Yeah,yeah. It’s like, I’ve never done that. I’ve never, whatever that, if the price I agree to is the price, I always close at that price. Unless there’s a reason for me to do a retrade. Like the only time I did a retrade, we did, there was a sewer line that was broken. We scoped it. We saw the sewer line was broken. We let the broker know ⁓ and the seller, hey, look.
Dylan Silver (10:44)
Yeah.Agostino Pintus (11:30)
We scoped the line, we found this sewer line’s broken. If you want to fix it, go ahead, or here’s a quote from a guy that can fix it. It was based on the reality of what we found, because it’s not based on the asset itself. Like I can walk around, I can see the units, I can understand what it’s going to cost to repair X, Y, and Z. Same thing goes with net lease, same thing goes with any deal you’re doing. The retrade will always kill you, and I don’t care whattype of market we’re in. Nobody’s going to want to deal with it. They just don’t want to deal with
Dylan Silver (12:02)
Yeah. mean, when,when we talk about the, kind of the adversarial relationship that some people can have with, with brokers, right? I mean,
Not only is it going to stifle, you know, possibly getting future deals, but also to you’re mentioning like, you know, that will become your M.O. like your reputation. That’s the person who does X, Y and Z. Right. And then, you know, that’s going to maybe sour, you know, things in your sphere as well. So like it’s not just that relationship with that broker. It could be your sphere, too. I mean, this has a ripple down effect. I would like to pivot here, though, Agostino, and ask you about, you know, some some
that you may be seeing a lot of deals in or that you may be reviewing more deals in. I know that right now, particularly in the Sun Belt is a really hot area, but also some people will say, you know, I’ll just buy wherever the deal pencils. Are you looking at, you know, specific markets in the Sun Belt or is it, you know, a mix across the board?
Agostino Pintus (13:03)
So generally speaking, yeah, we are looking in the sunbelt and the South. And the reasons are probably not what you think they are. We consider the asset. We consider the asset location. We consider the, say, the weather that that property needs to endure year in and year out. If you locate an asset in Boston, Massachusetts, advanced auto parts, OK.You know how the winters are in Boston. They’re pretty brutal. They’re brutal here in Cleveland. They’re brutal there in Boston. I think there might be more brutal up there, right? And I’ll tell you what, depending on how the lease is written, that asphalt is taking a beating every winter. is, aside from the heavy, you know, that’s, that’s, that’s, we’re talking about, again, the advanced auto parts with the asphalt parking lot.
Dylan Silver (13:37)
Yeah.Agostino Pintus (14:03)
You have to deal with the salt and then they’re gonna deal with the snow Melting and then coming back in the snow coming back and it’s gonna get into the cracks and brings it up and now you got a busted up asphalt Who’s gonna pay for that? Well, the lease says that it depends whatever lease is right but if the lease says that the owner gets to pay for it then you have to you have to Make sure that you have budget That’s gonna impact your overall value of the asset if you think about it, right?Dylan Silver (14:31)
Yeah, that’s a great point.Agostino Pintus (14:33)
So I mean, it’s just something minor, but same thing goes with the roof. Same thing goes with, yeah, it all adds up. you know, where in the Southern states, they have different types of things to endure, but those types of things are a little less expensive. So, yeah, it matters, you know, but it all comes down to whatever the lease says. The lease drives everything. If the lease says that they pay for the asphalt, then you have to determine the probabilityDylan Silver (14:36)
Hands up.Agostino Pintus (15:02)
of a renewal if they have to replace the asphalt or they can say screw it we’re just going to find a new place to set up this business.Dylan Silver (15:52)
You know, when we when we talk abouttriple net lease, my understanding is maintenance is typically one of the things that’s a responsibility of the tenant. But you mentioned like asphalt in this case, where it could be an area where hey, what’s mentioned in the lease? Other than asphalt? What are some things that you’ve seen where you know, if this happens that you know, the investor is going to be the one holding the bag?
Agostino Pintus (16:14)
I mean, there could be a roof issue, right? ⁓ You’d be surprised how many people ram their cars into a wall. This has happened numerous times. I don’t know why it happens, but it’s happened. And even though we have insurance for that, there’s a deductible. We have to pay it, right? ⁓ Well, we pay it, and then they reimburse, right? Again, it depends on whatever the lease says.And just because the brokers call it triple net, they always call it triple net, the nets are determined by the lease itself. They’ll refer to it as triple net. You read the lease, it’s actually a double net. Or they’ll say ⁓ that ⁓ the landlord is responsible for shoveling and moving all the snow. Well, I don’t know what the weather is in Boston, Massachusetts, so how am I going to know what…
shovel the snow, right? And then if you know anything about ⁓ snow removal, you have to lock it in early on in the season. Otherwise, you’re going to pay premium. So there’s all kinds of rules around it that you really, really, really have to understand. It requires a high degree of complexity. There’s a high degree of the complexity, rather, to manage all this.
So, I mean, we have technology that we built and we’re building another version of it right now that helps us identify the assets and help us manage these types of things because there’s so many nuances, especially if you’re trying to build a portfolio, like a true portfolio of these net lease assets. You really have to understand those nuances or you’re going to have a hard time.
Dylan Silver (17:51)
Now in a typical net lease, is there a average duration? Is it 10 years or is it really just dependent on that lease and that tenant?Agostino Pintus (18:02)
Yeah, it depends on the lease, depends on the tenant. We find that, let’s say for instance, ⁓ animal hospitals, right? The animal hospitals, they build a solid community around them and everybody that lives in that community in that say, 105 mile radius around that animal hospital. And as you know, the animal becomes part of the family.your cat becomes part of the family, your dog becomes part of the family, it’s part of the family. So it’s not just fixing animals or fixing a cat or a dog. You’re taking a member of the family to someone in a place that you trust that will help ⁓ solve the problem that your pet is facing. And ⁓ those ones usually do fairly well, right? So it depends, know? It really just depends on how comfortable the owner or the
Dylan Silver (18:28)
Yeah.Agostino Pintus (18:58)
The franchisee, it depends on if it’s a franchisee, if it’s corporate owned, if it’s franchisee owned. There’s a whole bunch of dependencies, whole lot of dependencies to how these leases work. Oh yeah, greatly, yes.Dylan Silver (19:07)
It could vary, it could vary.Is there a generally accepted, I guess, procedure for increasing rents? Are these written into most leases like, hey, at the five year mark, during the lease we’ll have a scheduled increase, or is it, hey, we have a 10 year lease, the rents are gonna be even during this 10 year period?
Agostino Pintus (19:33)
Yeah, this is where there’s a big difference between multifamily and net lease. And I’ve done multifamily. I’ve done everything. I’ve done the whole gamut in multifamily from acquisition, debt operations, investor communication, all the things from beginning to end. I’ve done it all. And as part of the business plan in a multifamily, you’re able to look at an asset.And maybe if it’s a B class asset, maybe you want to bring it up to a B plus. OK, great. Well, what are you going to do? I’m going to replace the flooring. I’m going to put in a fountain in the lobby. I’m going to put in high end finishes in the units, yada, yada, yada, and increase the rents by $500, because I know that the area will support it. You have many, many things you can do on a multifamily asset to improve and drive revenue. On a net lease, not so much.
Maybe you might do a blend and extend where you’re waiting till the end of the lease. come in and you’re able to acquire the asset because the lease is about to run out and you’re, you have to determine how, what’s the likelihood of that person or that company or that franchisee renewing. You got to figure it out. They’re not going to tell you. They don’t tell you. Sometimes they do, but you know, don’t rely on just them telling you because I’ve seen plenty of cases where
Dylan Silver (20:46)
youAgostino Pintus (20:53)
a company says they’re to do something and they end up doing something else. Happens a lot. ⁓ everything is driven by the lease, including the rent escalations. So you have to really understand the nuances of the deal itself. Like, hey, look, let’s say we’re buying an advanced auto parts and you have to look at the cost per square foot. What do you acquire it at? OK. How many other vacant buildings are in that market?Dylan Silver (21:21)
Yeah.Agostino Pintus (21:22)
And what would it cost to build out something just like that half a mile up the street? If it’s easy for them to do, you better get a good deal on that asset. if you’re hard to deal with as a landlord, as the owner of the asset, they will move that business somewhere else. Like anything else, if you’re difficult, they will move that deal elsewhere, always.Dylan Silver (21:34)
They can move.Yeah.
Agostino Pintus (21:50)
If it’s cheaper to build something modern, they will move it. So it really just depends, yeah. It depends, you know, but…Dylan Silver (21:53)
they’ll move. It’s going to be verymuch the situation by situation, you know, basis for rent escalation and the like. We are coming up on time here though Agostino, any new projects that you’re working on and then as well, what’s the best way for folks to reach out to your team?
Agostino Pintus (22:12)
So, yeah, right now, like I alluded to earlier, we’re building some new technology that helps us underwrite deals and understand the, and consume all the nuances and then come up with a solution because we’re looking at a lot of deals. It’s the only way to scale this thing, especially for the exit that we’re planning. And because my background is tech, we understand how to build that kind of stuff. So that’s not really public facing. That’s something that we use, but it’ll certainly be a huge advantage.for us as we continue growing and scaling the business. Because the type of stuff that we’re putting together is largely used by institutional grade type of companies, not mom and pop buyers that just build a collection of little stores. We’re building an actual portfolio that can one day be acquired by a BlackRock or a Blackstone or a large group that wants to acquire a large portfolio. So it’s two very different models that we do.
⁓ Anyway, so yeah, but if anybody does want to find out a little more about what we do, it’s Deystreet with an D-E-Y street.com. That’s probably the best way to get ahold of us is a contact page area. Feel free to reach out.
Dylan Silver (23:27)
Agostino, thank you so much for joining us today.
