Safehold introduced that it has entered right into a three way partnership association with an unnamed sovereign wealth fund centered on new acquisitions for floor lease investments.
The REIT mentioned it has dedicated roughly $275 million for a 55% curiosity within the three way partnership, and the SWF dedicated roughly $225 million for a forty five% curiosity within the three way partnership. The Sovereign Wealth Fund Institute believes the unnamed fund is GIC Non-public Restricted, Singapore’s SWF which can also be one of many REIT’s largest shareholders, however this has not been confirmed by GIC.
“As we navigate the quickly altering market setting and risky capital markets, this partnership supplies Safehold with accretive capital to assist serve our clients,” mentioned Marcos Alvarado, president and chief funding officer.
Safehold is a REIT centered on floor lease constructions and has a $6 billion portfolio. It targets multifamily, workplace, industrial, hospitality, and pupil housing properties.
Safehold has not but decided the belongings it intends to accumulate; the dedicated capital will likely be funded as funding alternatives are recognized.
“General, this three way partnership allows Safehold to originate new tenant relationships, whereas preserving on steadiness sheet capital necessities low amid a risky capital market setting, which needs to be a optimistic in the long term,” wrote Harsh Hemnani in a Inexperienced Road report on the transaction. Nonetheless, he cautioned the market response — which noticed the REIT’s shares bought off by ~4% on April 5, the day of the announcement, underperforming the fairness REIT index by ~350 bps — means that shareholders would possibly dislike the general capital allocation technique.
If your complete quantity dedicated to the enterprise is invested in 2023, Safehold’s pro-rata share of acquisitions would lead to a ~6.5% growth in its asset base and signify ~45% of Inexperienced Road’s full 12 months acquisition expectations of $600 million for the REIT, based on Hemnani’s report.
Inexperienced Road additionally identified the final time Safehold partnered with an SWF, the enterprise acquired 425 Park Ave – a trophy workplace asset in midtown Manhattan – for a mixed buy worth of roughly $620 million. It’s at the moment Safehold’s largest asset.
