Safehold, Brookfield Enter Joint Venture on Ground Lease Portfolio

Ground lease REIT Safehold Inc. has formed a joint venture with a Brookfield affiliate on a portfolio of ground leases. Brookfield will purchase a non-controlling 49% interest in the venture at a gross valuation of approximately $348 million. Safehold will retain a series of call options beginning after year seven to repurchase Brookfield’s interest.

The assets contributed by Safehold are diversified across the U.S. and generate current annualized cash ground rent of approximately $14 million. Safehold will maintain day-to-day control and management of the assets.

“This joint venture creates several important benefits for Safehold: de-leveraging the balance sheet with capital priced below our current equity cost of capital, increasing liquidity and capacity to pursue new ground lease investments, demonstrating institutional demand in the asset class and retaining future flexibility to repurchase the venture assets,” said Brett Asnas, CFO of Safehold.

Eastdil Secured and BofA Securities acted as advisors to Safehold. The REIT’s portfolio is currently valued at approximately $7 billion.

Pictured: 22 Chapel in Brooklyn, NY, a representative Safehold ground lease holding.