Regulation D · Rule 506(c) · Accredited Investors Only
7 NNN gas station & convenience store properties in Michigan, North Carolina & South Carolina, leased to GPM Investments, LLC, a subsidiary of ARKO Corp. (Nasdaq: ARKO). All 7 rank in the top 29 of 155 GPM sites by FY2024 store rent coverage.
Investment Thesis
A concentrated portfolio selected on store-level performance: every property ranks in the top 29 of 155 GPM sites by FY2024 rent coverage, across northern Michigan and the Wilmington / Myrtle Beach coast.
Four of the seven are in GPM's top six by FY2024 store coverage: #1 Myrtle Beach (13.87x), #2 Myrtle Beach (10.56x), #5 Mackinaw City (7.48x), #6 Wilmington (7.13x). The lowest-ranked site in the fund is #29 of 155.
All 7 leases are with GPM Investments, LLC, a subsidiary of ARKO Corp. (Nasdaq: ARKO), an SEC-reporting operator. ARKO is the advertised parent; a signed ARKO guaranty has not been supplied and is a diligence item.
Offered on Triple Net (NNN) terms with the tenant responsible for taxes, insurance and maintenance. Lease type, escalations and expirations are offering inputs to be confirmed against executed leases and the rent roll.
Gas station & C-store assets can qualify as Retail Motor Fuels Outlets (15-year property). Under 100% bonus depreciation (current law), modeled Year-1 after-tax cash-on-cash is ~71% under RMFO and ~44% under standard cost segregation, at the 37% federal rate.
Three sites in Wilmington / Carolina Beach (NC), two in Myrtle Beach (SC), and two in northern Michigan's resort corridor (Mackinaw City, Petoskey). Michigan FY2025 operator P&Ls: Mackinaw City 7.48x → 6.89x; Petoskey 3.90x → 3.41x.
At exit the partnership votes — a supermajority decides whether to roll proceeds into replacement NNN real estate via a §1031 exchange, deferring §1245/§1250 recapture, or to distribute proceeds and bear the tax.
Capital Structure
| Capital Stack | Amount |
|---|---|
| Portfolio Purchase Price (6.43% Blended Cap) | $13,657,354 |
| Loan (60% LTV) | $8,194,412 |
| Rate / Amortization | 6.35% / 25 Yr |
| Annual Debt Service | $654,764 |
| Down Payment (40%) | $5,462,942 |
| Acquisition Fee (1.5%) | $204,860 |
| Lender Origination (0.75%) | $61,458 |
| Closing / Title (0.5%) | $68,287 |
| Due Diligence (7 sites) | $64,750 |
| Cost Segregation ($3K × 7) | $21,000 |
| Legal & Formation | $50,000 |
| DS Reserve (3 mo) | $163,691 |
| Fund Admin Reserve (Y1) | $75,000 |
| Total Equity Raise | $6,171,988 |
| LP Investor Equity (75.7%) | $4,671,988 |
| Fortis GP Co-Invest (24.3%) | $1,500,000 |
| Annual Cash Flow | Amount |
|---|---|
| Gross NOI (7 NNN Sites) | $878,458 |
| Asset Mgmt Fee (1% of NOI) | ($8,785) |
| CPA / Tax Return Prep | ($7,000) |
| Net Operating Income | $862,673 |
| Annual Debt Service | ($654,764) |
| Cash Available for Distribution | $207,909 |
| DSCR | 1.32x |
| 5% Pref on LP Equity ($4,671,988) | $233,599 |
| Preferred Return — Covered? | NO — shortfall accrues |
| Excess Cash Above Full 5% Pref (LP + GP) | ($100,690) |
| LP Share of Excess (50%) | ($76,219) |
| LP Annual Distribution (full year) | $157,380 |
| LP Pre-Tax Cash-on-Cash | 3.37% |
| ⚠ Capital Reserve: first 6 months held; distributions begin Month 7 | — |
Fixed startup costs (legal & formation, fund admin reserve) and the $1,500,000 GP co-invest are fixed dollar amounts, so they are a larger share of this smaller raise. Loan terms are modeling assumptions; no lender quote has been obtained.
Investor Returns
Pro forma exit at Year 8. Rent escalates 2% annually per the offering terms (modeled at the 2% floor through renewals), and each property is priced at exit at its own entry cap rate on forward Year-9 rent (base × 1.02⁸ = +17.2%). Base lease terms expire 2028–2031 (Dick Pond Rd: Est. 2031, unverified), so the 8-year model assumes the leases are renewed.
Exit Waterfall — Y8
Distribution Waterfall
Preferred return base = LP equity ($4,671,988). Cumulative. GP participates pro-rata on its $1,500,000 co-invest and takes a 20% promote after return of all capital. Capital reserve ($78,690) returned to LP at exit. At exit, a partnership supermajority vote determines whether proceeds are reinvested via a §1031 exchange or distributed; figures above are pre-tax and assume distribution at the modeled exit.
Cost Segregation & Tax Analysis
Gas station and C-store assets carry a high share of short-lived property (pumps, tanks, canopy, equipment, paving, lighting). Under 100% bonus depreciation, short-lived property is written off in Year 1.
Fallback if a site does not qualify for RMFO — 100% bonus
Retail Motor Fuels Outlet — entire structure is 15-yr property — 100% bonus
⚠ Tax Treatment: These Year-1 paper losses are passive under IRC §469. This offering is structured for investors who can use them — real estate professionals under §469(c)(7), and investors with passive income from other real estate. Michigan, North Carolina and South Carolina do NOT conform to federal bonus depreciation — the shield above is federal only. Dick Pond Rd (Bldg 2636) may be a ground lease (see Risk Factors), which would change its depreciable basis. Consult your tax advisor before investing.
Investor Liquidity
The Year-1 tax benefit comes from accelerated depreciation — it defers tax, it does not forgive it. Those deductions reduce basis, and on a taxable sale the benefit is recaptured. Eliminating that liability entirely means holding through a chain of §1031 exchanges until a step-up in basis at death (IRC §1014) — the maximum tax outcome, but not the only way to reach liquidity. Investors are not locked in for life; liquidity is, however, structurally constrained and should be understood before investing.
If the partnership votes to sell, capital and profit return in cash; investors pay the deferred recapture and capital-gains tax that year, keeping the time-value benefit of years of tax-deferred cash flow.
The fund exchanges as a single entity into replacement NNN property, deferring tax and keeping capital deployed. An individual LP generally cannot independently cash out at this event — the principal source of mid-hold illiquidity.
A potential restructuring letting individual investors elect their own exchange or cash-out before a sale. Availability and timing are subject to the PPM and counsel; not represented as a guaranteed feature.
An interest may be sold to another qualified accredited investor, subject to transfer restrictions. Interests are illiquid, there is no established secondary market, and a sale may be at a discount to NAV.
A refinancing during the hold may return part of invested capital tax-free — partial liquidity without triggering a taxable disposition. Not a full exit.
The choice between a taxable sale and a §1031 exchange at exit is made at the partnership level by supermajority vote, not by individual investors. Those who require liquidity on a defined timeline should weigh this structure carefully and consult the PPM and their own advisors.
Portfolio — 7 Properties · MI · NC · SC
Store coverage = store operating cash flow before corporate G&A ÷ rent. Michigan sites show FY2024 → FY2025 from GPM operator P&Ls; North and South Carolina sites show FY2024 (no operator P&L supplied). Periods and rent bases differ, so no portfolio average is shown. Download each property's flyer from the table.
| # ↕ | City ↕ | Brand | Store Coverage ↕ | Annual Rent ↕ | Price / Cap ↕ | Lease Exp ↕ | SF / Acres ↕ | Built ↕ | Flyer | Map |
|---|
Rank = position among 155 GPM sites with FY2024 coverage data. Rents are asking rents; prices are rent ÷ 6.50% cap except Dick Pond Rd (Bldg 2636), priced at $531,000 (~4.75%), whose coverage (13.60x) is FY2024 store cash flow on the current $25,245 rent. Bldg 2647 coverage 3.40x is on in-place rent of $115,912 (~3.33x on the $118,231 asking rent). Lease type (NNN), 2% annual increases and expiration dates are offering terms not yet confirmed against executed leases. Coverage is a store-level metric and does not change the tenant's rent obligation.
Sponsor & Management
30-year commercial real estate veteran who ran one of the most productive Marcus & Millichap offices in the country. Steve leads the FCS platform, broker recruitment, and institutional infrastructure. Deep relationships across Michigan and national NNN markets spanning three decades.
University of Michigan. Recruited by Marcus & Millichap, co-founded Fortis Net Lease in 2009. $9.3B+ in total sales across 4,000+ transactions. Holds Real Estate Professional status under IRC §469(c)(7), enabling full paper loss deductibility against ordinary income. Co-investing $1,500,000 as GP sponsor — full alignment with LP investors.
University of Michigan Economics (1999–2002). Began at Marcus & Millichap Detroit. Billions in NNN transactions across nearly all 50 states. Institutional client base includes Realty Income, STORE Capital, Spirit Realty, and VEREIT — the defining names in net lease REITs.
Professional Advisors
Tim Lee — Legal Counsel
Honigman LLP, Partner, Corporate Practice. Domestic and cross-border M&A, corporate finance, securities, Reg D/Rule 506(c). J.D. summa cum laude, MSU College of Law. Best Lawyers in America; Super Lawyers Rising Star. Honigman: AmLaw 200 firm, 350+ attorneys, Band 1 Michigan (Chambers USA).
Matthew Bigelow, CPA — Tax Advisor
Tax Principal, Doeren Mayhew, Troy, MI. ~15 years specializing in pass-through entity taxation (partnerships, S-corps), multi-state nexus, cost segregation analysis. Prior Global Mobility Advisor at KPMG. Doeren Mayhew: founded 1932, Top 50 U.S. CPA firm, 6th largest in Michigan.
Key Risk Factors
The following is a summary of material risk factors. This is not an exhaustive list. Prospective investors must carefully review all risk factors in the full Private Placement Memorandum before investing.
Request Materials
Verified accredited investors may request the complete Private Placement Memorandum, Operating Agreement, and Subscription Agreement. All documents subject to NDA and accredited investor verification prior to distribution.
Or contact us directly:
Rob Bender · Fortis Capital Solutions
30445 Northwestern Hwy, Suite 275 · Farmington Hills, MI 48334
fortisnetlease.com