Carlyle picking up iStar’s net-lease portfolio for $3B

Office, entertainment, industrial properties span 18.3M sf

National /
Feb.February 03, 2022 11:45 AM

From left: Jay Sugarman, chief executive officer, iStar; Mark Jenkins, head of global credit, The Carlyle Group (iStar, The Carlyle Group, iStock)

The Carlyle Group is accelerating its Global Credit platform with the recent acquisition of a net-lease portfolio from iStar for more than $3 billion.

iStar announced the sale on Tuesday, which closed at $3.07 billion. An affiliate of the asset manager is acquiring owned and managed net lease assets spanning 18.3 million square feet, including office, industrial and entertainment properties.

Carlyle’s Global Credit platform is its fastest-growing segment in recent years, according to the company, reaching $66 billion assets under management in the third quarter. It made its first fund investment for net leases last year, agreeing to provide up to $300 million to Four Springs Capital Trust.

“Acquiring iStar’s net lease business jump starts our real estate credit strategy, quickly giving us scale to accelerate deployment,” said Carlyle’s head of global credit, Mark Jenkins. “We expect to grow this net lease strategy into a $10 billion business with a focus on making the product available to the retail channel over time.”

iStar estimates it will receive about $1.1 billion in net cash proceeds following the sale after it pays off mortgage debts and secured loans. For iStar, the sale continues a plan to cut down on its portfolio and focus more prominently on ground leases.

The transaction is expected to close in the first quarter.

Net-leased properties require tenants to pay a portion of the taxes, insurance and maintenance of a property, as well as the rent. CBRE data reported by the Commercial Observer show investments in these properties rose 3.1 percent year-over-year in the second quarter.

In July, iStar bought a stake in the ground underneath RXR’s 32 Old Slip office building in the Financial District for $90.5 million. The company’s ground lease REIT, Safehold, has been making aggressive moves in the New York market in recent years.

Meanwhile, Carlyle picked up the Jenga tower known as 22-22 Jackson Avenue in November for $85 million. The Queens multifamily building includes 175 rental units.





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