Ground Lease Capital Partners is seeking to acquire or structure unsubordinated ground leases in primary and secondary markets throughout the United States. Ground Lease Capital Partners is looking to either acquire existing ground leases or partner with property owners in the bifurcation and creation of new ground leases. The ground lease is generally the least expensive passive equity-like investment available in the markets today. Ground Lease Capital Partners’ ideal ground lease investment size is between $25M and $200M. Ground Lease Capital Partners is willing in many cases, to offer the lessee the right to repurchase the ground lease at Fair Market Value (FMV) in year 50. Ground Lease Capital Partners is generally able to close within 60 business days.
Ground Lease Capital Partners has $500 million of pre-committed capital from Institutional Investors. This dedicated pool of capital allows GLCP to move quickly and decisively to closing.
In its simplest form the ground lease structure entails the bifurcation of the ground and the improvements and the sale of a long term unsubordinated ground lease, generally 99 years in length. After the bifurcation, one or more parties will own the fee interest (the ground), while one or more parties will own and operate the leasehold improvements (the building)
This structure is viewed, by leasehold owners and lenders, as akin to fee ownership due the extremely long ground lease term. This structure allows an owner to monetize an illiquid asset and more efficiently re-deploy the capital into the property or alternative investments. One of the greatest benefits of the ground lease structure is the off-balance sheet nature of the transaction, allowing the lessees to access attractive long term fixed rate capital, and maintaining the availability to access additional financing at a future date, due to the enhanced balance sheet.
Ground lease transactions are an alternative method for raising capital and an ideal tool in the recapitalization of real estate assets. A ground lease transaction allows for a portion of an asset to be sold subject to a 99-year unsubordinated ground lease, and the immediate realization of a low cost of capital cash infusion. The ground lease can also be viewed as an alternative to mezzanine financing, but without the high interest rates or short term associated with these structures. After the transaction the lessee is able to make use of the income generating asset (leasehold improvements) and leverage the leasehold position at more modest debt levels, receiving a lower blended cost of capital, with similar or greater loan-to-value rations, than the alternative of a traditional loan and a mezzanine loan.
To see how you could benefit from a ground lease, call 216-765-2622.