Finance and development firm iStar Inc. has filed preliminary paperwork to form a new REIT that will focus solely on acquiring and managing ground net leases. The proposed REIT is called Safety.
Contrary to normal leases, ground net leases have longer terms that tend to range between 50 and 99 years for the land beneath projects net leased to the building’s owner. The company hopes to raise at least $100M in its initial public offering and in a separate private offering will buy an extra $45M stake, CoStar reports.
In a filing the REIT said ground net leases offer safe and growing cash flow, particularly since it is a largely fragmented sector controlled by only a handful of entities. Safety’s initial portfolio contains 12 properties, most of which are hotels, but also includes a medical office building, office space, apartments and self-storage. The portfolio generates $14.2M in annualized base rent.
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