Regulation D · Rule 506(c) · Accredited Investors Only
21 NNN gas station & convenience store properties leased to GPM Investments, a wholly-owned subsidiary of ARKO Corp. (Nasdaq: ARKO) — the sixth-largest convenience store operator in the United States.
Investment Thesis
This fund combines institutional-grade NNN lease security with exceptional Year 1 tax efficiency — producing after-tax cash-on-cash returns that significantly exceed the pre-tax figures available in most CRE asset classes.
All 21 leases guaranteed by GPM Investments, LLC — a wholly-owned subsidiary of ARKO Corp. (Nasdaq: ARKO). SEC-reporting, publicly traded, 3,500+ locations. Transparent financials available on EDGAR.
True Triple Net (NNN) structure — tenant bears 100% of property taxes, insurance, and maintenance costs. Zero management overhead for investors throughout the hold period.
10% rent bumps every five years on all 21 leases. Built-in inflation protection that is contractually guaranteed, not subject to market negotiation or operator discretion.
Gas station & C-store assets reclassify the entire depreciable basis into 15-yr property under RMFO. Under OBBBA 100% bonus depreciation (current law), Year-1 after-tax cash-on-cash reaches ~73% at the 37% federal rate.
Store coverage is underwritten from GPM's actual financials and shown as a two-year trend. FY2025 was a softer year across the operator (portfolio 2.45x rent-weighted, down from 3.31x), yet the aggregate still covers rent ~2.4×. The six weakest sites from the original 27-property universe were removed before fund formation. Rent is a binding NNN obligation of ARKO Corp. regardless of store-level results.
At each lease-renewal exit, the partnership votes — a supermajority decides whether to roll proceeds into investment-grade NNN assets (Walgreens, Dollar General, CVS, McDonald's) via a §1031 exchange, deferring all §1245/§1250 recapture, or to distribute proceeds and bear the tax.
Capital Structure
| Capital Stack | Amount |
|---|---|
| Portfolio Purchase Price (7.75% Cap) | $33,351,098 |
| Loan (60% LTV) | $20,010,659 |
| Rate / Amortization | 6.35% / 25 Yr |
| Annual Debt Service | $1,598,926 |
| Down Payment (40%) | $13,340,439 |
| Acquisition Fee (1.5%) | $500,266 |
| Lender Origination (0.75%) | $150,080 |
| Closing / Title (0.5%) | $166,755 |
| Due Diligence (21 sites) | $194,250 |
| Cost Segregation ($3K × 21) | $63,000 |
| Legal & Formation | $50,000 |
| DS Reserve (3 mo) | $399,731 |
| Fund Admin Reserve (Y1) | $75,000 |
| Total Equity Raise | $14,939,523 |
| LP Investor Equity (90.0%) | $13,439,523 |
| Fortis GP Co-Invest (10.0%) | $1,500,000 |
| Annual Cash Flow | Amount |
|---|---|
| Gross NOI (21 NNN Sites) | $2,584,711 |
| Asset Mgmt Fee (1% of NOI) | ($25,847) |
| CPA / Tax Return Prep | ($20,000) |
| Net Operating Income | $2,538,863 |
| Annual Debt Service | ($1,598,926) |
| Cash Available for Distribution | $939,937 |
| DSCR | 1.59x |
| 5% Pref on LP Equity ($13,439,523) | $671,976 |
| Preferred Return — Covered? | YES ✓ |
| Excess Cash Above Full 5% Pref | $192,961 |
| LP Share of Excess (50%) | $96,480 |
| LP Annual Distribution (full year) | $768,457 |
| LP Pre-Tax Cash-on-Cash | 5.72% |
| ⚠ Capital Reserve: first 6 months held; distributions begin Month 7 | — |
Investor Returns
Pro forma exit at Year 8 capturing two contractual 10%/5-year rent escalations (exit rent = base × 1.21). Most leases expire 2027–2029, receiving their second renewal bump by Year 7–8. Exit at entry cap rate (7.75%) on the bumped rent.
Exit Waterfall — Y8
Distribution Waterfall
Preferred return base = LP equity only ($13,439,523). Cumulative. GP participates as LP pro-rata on $1.5M co-invest AND takes 20% promote after return of all capital. Capital reserve ($384,228) returned to LP at exit. At exit, a partnership supermajority vote determines whether proceeds are reinvested via a §1031 exchange (deferring tax) or distributed with the resulting tax borne by investors; the figures above are pre-tax and assume distribution at the modeled exit.
Cost Segregation & Tax Analysis
Gas station and C-store assets are among the most cost-segregation-efficient real estate classes — high concentration of 5-year personal property (pumps, tanks, canopy, equipment, signage) and 15-year land improvements (paving, lighting, landscaping). Under 100% bonus depreciation, all 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), whose losses offset ordinary income, and investors with passive income from other real estate, whose losses offset that income. Michigan does NOT conform to federal bonus depreciation — state tax benefits remain limited to Michigan's own depreciation schedule. 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 — 21 Michigan Properties
Store-level coverage is shown as a two-year trend (FY2024 → FY2025) computed from GPM's actual store financials. The portfolio generated 2.45x rent-weighted coverage in FY2025 (FY2024: 3.31x) — a chain-wide softening year in which 20 of 21 sites declined, driven largely by fuel-margin and cigarette-volume compression across the operator. All leases remain binding NNN obligations of GPM Investments (ARKO Corp.) regardless of store-level results. The six lowest-performing sites from the original 27-property universe were removed prior to fund formation.
| # ↕ | City ↕ | Brand | Store Coverage FY24→25 ↕ | Annual Rent ↕ | Lease Exp ↕ | SF ↕ | Built ↕ | Map |
|---|
Store Coverage = (store operating profit + rent) ÷ rent — a store-level cash-flow multiple computed from GPM Southeast LLC actual financial statements for FY2024 and FY2025 (year ended 12/31/2025). Rows are ordered by FY2024 coverage rank; use the column header to re-sort by current-year (FY2025) coverage. Coverage is a store-level operating metric and an indicator of renewal health; it does not affect the tenant's contractual rent obligation. All leases are Triple Net (NNN); tenant = GPM Investments (subsidiary of ARKO Corp., Nasdaq: ARKO). * Kalamazoo (Bldg 2506): FY2025 reflects a temporary traffic disruption from MDOT reconstruction of M-43/West Main St directly in front of the site (~Apr–Sep 2025); Q4 2025 operating profit returned to positive as the work concluded.
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