What is a zero-cash-flow investment?

 Investments in properties with debt service matching the property’s net income. With all of the
cash flow attributed to the debt service, the owner receives no income until the loan matures.
In lieu of cash flow, the investment provides annual passive losses which investors may use to
offset income from other investments. Many times, as is the case with this offering, the loans
are fully-amortizing and have terms matching the length of the lease, generally 20 to 30
years. When the mortgage matures, the property is then owned free-and-clear of any debt.
Properties structured as self-liquidating investments are typically net leased to a single tenant
on a long term basis. The leases are generally structured as triple net or bondable, leaving the
landlord with essentially no management or maintenance responsibilities. In most cases, the
tenants hold investment grade ratings, minimizing the risk of default.

Benefits of a zero-cash-flow investment?

• Fully Amortizing Loan: Free and clear ownership upon loan maturity and the subsequent flexibility to leave the asset unleveraged for greater cash flow or to refinance to extract its equity.
• Acquire an Institutional Quality Asset with Less Equity: The credit of the tenant combined with fully-amortizing debt allows lenders to underwrite assets with higher leverage ratios, which means less equity invested.
• Equity in an Exchange can be Cashed Out Tax Free: Meets the requirements of a tax deferred exchange, allowing investor to immediately cash out much of their equity tax free.
• Estate Planning: Free and clear ownership upon loan maturity creates a source of long-term, unencumbered income.
• Annual Depreciation: Provides an annual source of depreciation and interest expense that can be written off against income from other qualifying investments. Accelerated Depreciation can be achieved via cost segregation analysis.