In today’s financial landscape, affluent investors face a persistent challenge: finding fixed-income investments that provide meaningful returns without excessive risk. Traditional options like bonds, CDs, and money market accounts too often fail to keep pace with inflation, especially on an after-tax basis. Meanwhile, equity markets present higher potential returns but with volatility that can be unsuitable for investors seeking stability and predictable income.
At Phoenix Industrial Redevelopment (PIR), we’ve developed an alternative approach that addresses this dilemma through our FixedFunds Program®—a fixed-income investment vehicle backed by the stability and growth potential of small-bay industrial real estate. This unique approach provides both attractive fixed returns and built-in protection against multiple investment risks.
The Fixed-Income Investor’s Dilemma
Before exploring the solution, let’s examine the core challenges facing fixed-income investors in today’s environment:
Yield Inadequacy
Despite recent increases in interest rates, many traditional fixed-income investments still offer yields that barely keep pace with inflation, particularly after accounting for taxes. This creates a troubling scenario where supposedly “safe” investments actually guarantee negative real returns over time.
Duration Risk
With longer-duration bonds, investors face significant principal risk if interest rates rise further. Many fixed-income portfolios experienced substantial losses during the 2022-2023 rate increase cycle, undermining the very stability these instruments are meant to provide.
Credit Quality Concerns
To chase higher yields, many investors must accept lower credit quality, introducing default risk that can undermine the foundational purpose of fixed-income allocations: stability and capital preservation.
Limited Inflation Protection
Most traditional fixed-income instruments provide little protection against inflation. Even modest inflation can substantially erode purchasing power over the typical 5-10 year investment horizons of many fixed-income allocations.
Tax Inefficiency
Interest income from traditional fixed-income instruments is typically taxed at ordinary income rates, which can significantly reduce after-tax returns for high-income investors.
Opportunity Cost
Perhaps most significantly, traditional fixed-income investments typically offer no participation in the upside potential of the underlying assets or companies. This creates substantial opportunity cost during periods of economic growth and asset value appreciation.
Why Industrial Real Estate Provides a Foundation for Stability
Against this backdrop of fixed-income challenges, industrial real estate—particularly small-bay, multi-tenant industrial properties—emerges as an asset class with remarkable characteristics that address many of these concerns.
Consistent Income Generation
Industrial properties typically generate consistent cash flow through lease payments, with small-bay, multi-tenant properties offering particularly stable income due to tenant diversification. Unlike office or retail properties, industrial assets have demonstrated remarkable rent collection stability even during economic downturns.
Strong Inflation Correlation
Industrial real estate has historically demonstrated strong correlation with inflation for several reasons:
- Replacement Cost Protection: As construction costs rise with inflation, the value of existing industrial buildings typically increases correspondingly.
- Short Lease Duration: Small-bay industrial leases typically run 1-3 years, allowing regular rent adjustments to reflect inflationary pressures.
- Operating Expense Pass-Through: Triple-net lease structures pass through increasing operating costs to tenants, protecting property owners from inflationary erosion of returns.
- Land Value Appreciation: The land component of industrial properties often appreciates with inflation, providing additional protection of principal.
Supply Constraints
The development of new industrial properties, particularly in infill locations, faces significant constraints including limited land availability, rising construction costs, and restrictive zoning. These supply constraints create natural protection against oversupply and support long-term value stability.
Demand Resilience
Small-bay industrial properties serve businesses providing essential products and services, many of which demonstrate remarkable demand resilience during economic fluctuations. From local distributors to specialized manufacturers to service providers, these tenants often maintain operations even during broader economic contractions.
Modest Capital Requirements
Compared to other commercial property types, industrial real estate typically requires lower ongoing capital expenditures, with simpler building systems and more utilitarian finishes. This efficiency translates to more stable net operating income and greater predictability for investors.
The PIR FixedFunds Program®: Fixed Income Backed by Industrial Stability
Recognizing the powerful stability characteristics of small-bay industrial real estate, Phoenix Industrial Redevelopment created the FixedFunds Program® to provide accredited investors access to these benefits through a simplified, fixed-income investment structure.
Program Structure and Returns
The FixedFunds Program® offers two investment options tailored to different investor objectives:
Income Notes
- 8.0% fixed annual interest rate
- Monthly interest payments for reliable income
- 5-year term with two one-year extension options
- $50,000 minimum investment with $10,000 increments
Growth Notes
- 8.0% fixed annual interest rate
- Interest compounds monthly (8.30% effective annual yield)
- Principal plus accumulated interest paid at maturity
- 5-year term with two one-year extension options
- $50,000 minimum investment with $10,000 increments
Both note types offer stepped-up interest rates for larger investments:
- Tier 1 ($50,000 to $499,999): 8.00%
- Tier 2 ($500,000 to $999,999): 8.25%
- Tier 3 ($1,000,000+): 8.50%
The Industrial Real Estate Backing
While the FixedFunds Program® provides fixed returns rather than direct ownership, the notes are secured by the Fund’s assets, including its preferred equity investments in Project LLCs that own small-bay, multi-tenant industrial properties across the United States.
These properties share common characteristics that contribute to their stability and growth potential:
- Diversified Tenant Base: Typical properties house 15-25 tenants across diverse industries, creating natural risk distribution.
- Value-Add Opportunities: Properties are acquired with potential for value enhancement through targeted renovations, improved management, and rent optimization.
- Strategic Locations: Properties are selected in markets with strong fundamentals, including population growth, business formation, and industrial demand drivers.
- Professional Management: All properties are managed by Grid Property Management, our affiliated management company with specialized expertise in small-bay industrial assets.
How the FixedFunds Program® Addresses Fixed-Income Challenges
The FixedFunds Program® directly addresses the key challenges facing today’s fixed-income investors:
Attractive Yields
With fixed returns of 8.0% to 8.5% depending on investment size, the program provides yields significantly higher than most traditional fixed-income alternatives, creating meaningful income and growth opportunities.
Inflation Protection
While the notes themselves offer fixed returns, the underlying industrial real estate provides substantial inflation protection, helping to maintain the real value of the principal over time.
Limited Duration Risk
Unlike bonds that can experience principal erosion when interest rates rise, the FixedFunds Program® notes maintain their full value regardless of interest rate fluctuations, eliminating duration risk.
Asset-Backed Security
Each note is backed by the Fund’s assets, including its preferred equity investments in Project LLCs. This connection to tangible, income-producing real estate creates a foundation of stability compared to purely financial instruments.
Simplified Investment Structure
The FixedFunds Program® eliminates the complexities of direct real estate ownership while still providing exposure to the asset class’s stability benefits. Investors receive either regular monthly payments or compounded growth without management responsibilities.
Clear Exit Strategy
The program’s predefined 5-year term with extension options provides investors with clarity regarding the investment horizon. Additionally, an Early Payback Option allows for liquidity needs (subject to certain limitations and a 2% administrative fee).
Beyond Fixed Returns: The Growth Component
While the FixedFunds Program® provides fixed returns rather than direct participation in property appreciation, the underlying growth of the industrial portfolio creates additional stability and value for investors in several ways:
Property Value Enhancement
As PIR implements its value-add strategy for each property—enhancing physical conditions, improving tenant quality, and optimizing rental rates—the underlying asset value typically increases. This growing equity value creates additional security for FixedFunds Program® investors.
Refinance-Driven Liquidity
The PIR business model involves refinancing properties as they become stabilized, typically within 3-4 years of acquisition. These refinancing events provide liquidity that enables the repayment of FixedFunds Program® notes, creating a natural alignment between property performance and investor exits.
Compounding Opportunity
For investors choosing Growth Notes, the compounding of returns at 8.0% annually creates substantial growth over the 5-year term. A $100,000 investment grows to approximately $149,000 over the standard 5-year term through the power of monthly compounding.
Reinvestment Potential
At maturity, FixedFunds Program® investors have priority reinvestment rights, allowing them to maintain exposure to the industrial real estate sector’s stability and growth potential through new notes on similar terms.
Comparing Investment Alternatives
To better understand the advantages of the FixedFunds Program®, consider how it compares to alternative fixed-income options available to accredited investors:
| PIR FixedFunds Program® | Corporate Bonds | Bank CDs | Direct Real Estate | |
| Typical Yield | 8.0-8.5% | 5-7% (investment grade) | 3-5% | Variable (6-12% potential) |
| Inflation Protection | Indirect through real estate backing | Limited | None | Strong |
| Duration Risk | None | Significant | Moderate | None |
| Liquidity | Limited; Early Payback Option | Marketable but price fluctuation | Limited; penalties | Very limited |
| Management Requirements | None | None | None | Significant |
| Tax Treatment | Ordinary income | Ordinary income | Ordinary income | Complex; potential advantages |
| Investment Minimum | $50,000 | Varies; typically lower | Low | High; typically $250K+ |
| Asset Backing | Industrial real estate | Corporate credit | FDIC up to limits | Direct ownership |
This comparison illustrates the unique position of the FixedFunds Program® in combining attractive fixed returns with many of the stability benefits of real estate without the management complexities.
Ideal Investors for the FixedFunds Program®
Based on our experience, several investor profiles particularly benefit from the stability and growth characteristics of the FixedFunds Program®:
Affluent Pre-Retirees
Investors approaching retirement who seek to build stable income sources without the volatility of equity markets find the program’s fixed returns and monthly payment option particularly attractive.
Business Liquidity Deployers
Business owners who have accumulated excess cash from operations appreciate the program’s simplicity and attractive returns compared to leaving funds in business checking or savings accounts.
Fixed-Income Portfolio Enhancers
Investors with traditional fixed-income allocations looking to enhance overall portfolio yields without significantly increasing risk often use the program to complement their existing fixed-income positions.
Real Estate Investors Seeking Simplification
Experienced real estate investors looking to simplify their portfolios while maintaining exposure to the asset class find the program offers attractive returns without management responsibilities.
Family Offices Seeking Diversification
Family offices looking to diversify beyond traditional fixed income and equities use the program to add uncorrelated, real estate-backed fixed returns to their overall portfolios.
The PIR Approach to Stability and Growth
The stability and growth potential underlying the FixedFunds Program® stem from PIR’s strategic approach to industrial property investment:
Focus on Small-Bay, Multi-Tenant Properties
Our concentration on properties with diverse tenant bases (typically 15-25 tenants per property) creates natural risk distribution that supports stability through economic cycles.
Value-Add Strategy
We target properties with specific value enhancement opportunities through physical improvements, management optimization, and strategic leasing—creating growth that supports the fixed returns of the program.
Geographic Diversification
By acquiring properties across multiple markets nationwide, we mitigate the impact of regional economic fluctuations, further enhancing the stability of the overall portfolio.
Vertically Integrated Operations
Our affiliated Grid Property Management provides specialized expertise in operating small-bay industrial properties, allowing consistent implementation of our value-creation strategies.
Conservative Leverage Approach
We employ moderate leverage (typically targeting a maximum of 75% loan-to-cost), creating additional stability and reducing refinancing risks during market fluctuations.
Conclusion: Stability, Growth, and Simplicity Combined
In a financial world characterized by inadequate yields, inflation concerns, and market volatility, industrial real estate-backed fixed income offers a compelling alternative for accredited investors seeking stability without sacrificing returns.
The PIR FixedFunds Program® provides a simplified entry point to this opportunity, offering fixed returns of 8.0-8.5% backed by our growing portfolio of small-bay, multi-tenant industrial properties. Whether investors choose monthly income through our Income Notes or compounded growth through our Growth Notes, the program delivers the rare combination of attractive fixed returns, inflation protection, and simplicity.
As the reindustrialization of America continues and small-bay industrial properties maintain their essential role in local and national economies, the stability and growth characteristics of this asset class will likely become increasingly valuable to fixed-income investors. The FixedFunds Program® offers a simplified way to capture these benefits without the complexity and commitment of direct property ownership.
For accredited investors seeking to escape the fixed-income dilemma of inadequate yields or excessive risk, industrial real estate-backed investments deserve serious consideration as a core element of a diversified portfolio. The FixedFunds Program® provides that opportunity with the simplicity, transparency, and reliability that sophisticated investors deserve.
To learn more about how the FixedFunds Program® can enhance your fixed-income strategy with the stability and growth potential of industrial real estate, contact our investment team today.