Triple Net Investing & Tokenized Real Estate with Michael Flight

On Accredited Investors Only, host Peter Neill sits down with Michael Flight, a commercial real estate veteran and founder of Liberty Fund, to unpack nearly four decades of retail real estate experience and explore how tokenization and blockchain are reshaping real estate investing.

From Broker to Retail Specialist

Michael Flight began his commercial real estate career in 1986 and formed his own company in 1990 after working for a large national syndicator. He focused on retail because one well-placed retail client could produce multiple transactions, while office and industrial deals often required far more door-knocking for a single outcome. Over the years, his firm has worked with pension funds, insurance companies, hedge funds, and institutional partners, and later shifted toward individual investors and syndicated funds.

That shift was driven by timing and capital deployment dynamics. Institutional capital often needs to be raised and returned on shorter cycles, while large retail redevelopments can take four to five years. Moving into triple net funds allowed Flight to pursue lower-stress, cash-flow-oriented strategies that require less hands-on property management.

Retail Real Estate: Types and Where to Focus

Retail comes in many shapes, and the differences matter for underwriting, leasing, and repositioning. Flight outlines the main asset classes investors will see:

Convenience or unanchored strip centers — smaller centers with 4 to 10 tenants, often locally oriented and commodity-like in pricing. These can be high risk unless located exceptionally well.
Grocery-anchored centers — larger centers (often 150,000 to 300,000 square feet) that benefit from a grocery store draw and stable traffic.
Community and specialty centers — include anchor tenants like Home Depot, Marshalls, Ross, and HomeGoods. These can be well-positioned if traffic supports the tenant mix.
Enclosed malls and lifestyle centers — larger-scale retail products needing deeper analytic work and careful repositioning.
Mixed-use retail — retail under apartments or offices. These units often struggle unless located in very dense urban demographics.

Location and co-tenancy are critical. National tenants prefer intersections with proven traffic and complementary retailers around them. Flight cites McDonald’s as an example: the company’s real estate work created reliable anchors that other tenants followed.

Triple Net (NNN) Leases: Definition and Why Investors Like Them

Understanding net leases is basic but essential:

Single net — tenant pays property taxes.
Double net — tenant pays taxes and insurance.
Triple net — tenant pays taxes, insurance, and maintenance.

Pure single-tenant NNN leases transfer most operational and capital expenses to the tenant. For passive investors and fund structures, this is attractive because it produces a predictable cash flow with minimal landlord intervention. With high-credit national tenants, the rent is reliable and usually deposited directly into the investor’s account on schedule.

Nuances and gotchas

When buying shopping centers, Flight stresses the importance of reading leases. Sellers will sometimes market a center as “triple net” when, in reality, the lease language leaves landlord obligations in place. In multi-tenant shopping centers landlords frequently retain responsibility for roofs, structure, and common area maintenance, even if a property is described as NNN.

Tenant Types: National Chains, Franchises, and Mom-and-Pops

Each tenant type has underwriting pros and cons:

National corporate tenants — easiest to finance and underwrite. Banks like clear credit tenants with corporate guarantees and ratings.
Large franchise groups — some franchisors operate at scale and offer near-credit strength. Lenders focus on who signs the lease and the tenant’s operating history.
Small franchisees and mom-and-pop shops — can be important to local economies but are harder to finance and may carry greater performance risk.

Flight points out that retailer credit quality has deteriorated in some areas. Once-high-credit tenants like CVS and Walgreens have dropped in rating due to competitive pressures and changing industry dynamics. Walmart remains one of the most resilient retail credits in his view.

Preferred Sectors: MedTail, Automotive, Drugstores, and Dollar Stores

Liberty Fund targets assets generally below $6 million. That band avoids intense institutional competition and allows the fund to find attractive yield and underwriting inefficiencies. Preferred tenant types include:

MedTail — dental practices, dialysis centers, urgent care, and other medical retail. These are “sticky” tenants: they value visibility, patient continuity, and built-out spaces, so they rarely relocate.
Automotive — oil-change shops, tire centers, and service facilities. Even with vehicle electrification, service and tires remain durable demand drivers.
Drugstores — historically strong locations with good visibility. They can be harder to backfill due to size and on-market rent differences.
Dollar stores — inexpensive construction and predictable traffic. Be mindful that rent structures vary: Dollar General often uses flat long-term rents, while Dollar Tree tends to include periodic increases.

Flight notes one practical underwriting point: a blue-chip tenant can pay well above-market rent because of the location. If that tenant leaves, the landlord must assess the realistic replacement rent and determine which tenants would accept the space.

Lease Term, Cap Rate Risk, and Replacement Strategy

Investors should separate cap rate risk from lease term risk. Many 1031 buyers want long-term leases to match expected hold horizons, but Liberty Fund is willing to take shorter-term lease exposure if the site and market permit backfilling. The key is understanding how easy a space will be to release based on size, configuration, and location.

Bank branches illustrate a redevelopment challenge. Purpose-built branches often have vaults and configurations that complicate conversion, sometimes making them economically infeasible to repurpose without creative solutions.

Fund Structure and Investor Experience

Liberty Fund emphasizes diversification across tenant types and geography to reduce concentration risk. For investors, a triple net fund offers:

Immediate cash flow, which in many cases enables monthly distributions.
Reduced landlord responsibilities compared with direct ownership of multifamily or active retail redevelopment.
Potential tax advantages typical of real estate syndications.
Credit and industry diversification similar to a bond portfolio.

Flight also notes that multifamily syndicators find triple net funds attractive because they offer cash flow up front and lower management overhead compared with operating apartment assets.

Tokenization and Blockchain: What It Changes

Michael Flight explains tokenization as a way to represent shares of real assets on a blockchain, unlocking new functionality:

Faster, borderless transfers of value — stablecoins and cryptocurrencies settle far more quickly than traditional bank wires.
Potential liquidity for traditionally illiquid real estate shares — tokenized shares can be structured to trade, subject to securities rules.
Expanded portfolio functionality — tokens can enable borrowing against shares, easier inheritance planning, and programmable rights.

Most crypto guys don’t understand. They think that at some point you’re going to be able to just trade a house instantaneously. I’m like, you don’t understand. Even if they get everything on the blockchain, you probably wouldn’t want a house or a piece of property to trade instantaneously because it’s a bundle of rights.

That quote captures an important nuance. A house is layered with rights and obligations, mineral rights, air rights, lease encumbrances, and local community rules. Tokenization does not magically eliminate those complexities. Instead, tokenization fits naturally with pooled fund shares: a fund issues tokens representing ownership in a diversified pool of properties, and those tokens can be traded or used in financial arrangements more easily than fractional deeds to individual homes.

Regulatory and Practical Hurdles

Tokenized real estate in the U.S. still must navigate securities regulation. That is both a hurdle and a safety feature. For accredited investor offerings, tokens can be tradable after required lockups and regulatory compliance. Flight emphasizes that education and compliant on-ramps for fiat-to-crypto are critical to broader adoption.

Real-World Uses and Adjacent Projects

Flight is also involved in a blockchain-enabled fitness app that rewards physical activity with tokens. The app supports social features like tribes and challenges, and the token interacts with physical gym franchises and festivals. This example shows how token models can combine digital incentives with real-world businesses and events.

Practical Resources

For investors who want to learn more, Flight points to resources and reports available through Liberty Fund and his personal site. He also organizes a Blockchain Real Estate Summit that brings together an international audience to discuss tokenization and regulation. Key resources include:

LibertyFund.io for information on the triple net fund and fund strategy
MichaelJFlight.com for downloadable triple net reports
BlockchainRealEstateSummit.com for conference and education materials

Five Key Takeaways

Triple net (NNN) leases offer predictable, passive income because tenants typically handle taxes, insurance, and maintenance.
MedTail tenants like dental and dialysis centers are high-retention, visibility-dependent tenants that rarely relocate.
Tokenization can unlock liquidity and new financial uses for real estate shares, but it must be implemented within securities and regulatory frameworks.
Retail success is highly location-dependent. Anchor tenants and complementary retail neighbors drive traffic and leasing stability.
Blockchain is an infrastructure for faster, cheaper cross-border value transfer and enables practical applications beyond crypto speculation.

Michael Flight blends decades of retail real estate experience with an early embrace of tokenization. For accredited investors seeking steady income with lower management overhead, triple net funds that target resilient, service-oriented tenants offer an attractive option. Tokenization may expand options for liquidity and portfolio management, but solid underwriting and legal compliance remain critical.