Structured and arranged the sale of a ground lease interest to capitalize the acquisition of a 212-unit garden rental community in Orlando, Florida.
Challenges
Client was bidding on a highly desirable, mass-marketed asset in a strong location. As the strike price kept increasing, the client sought a structural solution to enable it to be more competitive in the bidding process.
Solutions
Structured an extremely accretive ground lease and brought in an institutional partner to acquire the leased fee position at a relatively lower yield than the property acquisition. Increased total return by reducing the equity necessary to acquire the asset, and improved the after-tax economics since the entire investment was depreciable and the ground lease payment was tax deductible. Worked with senior lenders to navigate the additional complexity of a leasehold financing.
