Kevin Durant, Michael Rubin invest in Safehold’s Caret Ventures

Investment values subsidiary at $1.75B, ground-lease firm says

New York /
Feb.February 16, 2022 09:45 AM

From left: Kevin Durant, Michael Rubin and Jay Sugarman (Getty Images, iStar, iStock)

Ground lease powerhouse Safehold scored a $24 million investment from a group that includes NBA superstar Kevin Durant and Fanatics founder Michael Rubin’s family office.

The deal marks the first outside investment in Safehold’s subsidiary Caret Ventures, which allows investors to tap into the capital appreciation of current and future Safehold ground leases. It provides investors a new way to make money on ground leases outside of rental streams.

The investment group, including Ribbit Capital, Fifth Wall and Zigg Capital, purchased so-called “Caret Units” — essentially shares of Caret Ventures. In total, the investors bought 1.37 percent of the Caret Units. The investment implies a total Caret Unit valuation of an eye-popping $1.75 billion, according to Safehold.

“This initial Caret Unit sale is a key first step and marks an important milestone for Safehold by helping to unlock a meaningful component of value within the platform,” said Jay Sugarman, Safehold’s chairman and CEO.

The deal marks the first of its kind not only for Safehold, but also for the entire ground leasing business.

Safehold, a publicly traded REIT managed by iStar, makes a lot of money in a business that is decidedly unglamorous, if not boring. A ground lease splits a property from the land underneath. No ribbon-cuttings or topping-off ceremonies are involved.

But the new investment does have a curious twist. Safehold has to provide a public market or securities exchange for the Caret Units in the next two years that allows their new owners to at least recoup their investment. Otherwise, they will be able to redeem the units at their original purchase price, according to an investor presentation.

Safehold will still own 84 percent of the outstanding Caret Units, while Safehold’s management team will own about 15 percent.

The company said the goal of Caret Ventures is to capture “unrealized capital appreciation” in its portfolio which is realized when a ground lease expires or land is sold. It says that its unrealized capital appreciation totaled $8.1 billion as of December.

Safehold’s stock closed up nearly 4 percent to $65 Tuesday.





    Related Articles

    arrow_forward_ios
    With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
    Real estate stocks push up this week as U.S.-China trade tensions ease
    Real estate stocks push up this week as U.S.-China trade tensions ease
    416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
    Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
    Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
    Jamestown chairman Christoph Kahl and One Times Square (Jamestown LP, iStock)
    Jamestown lands $425M to bring the metaverse to One Times Square
    Jamestown lands $425M to bring the metaverse to One Times Square
    Ron Perelman with 35 East 62nd Street and 41 East 62nd Street (Getty, Google Maps)
    Ron Perelman’s former Lenox Hill offices hit market for $160M
    Ron Perelman’s former Lenox Hill offices hit market for $160M
    World Wide Group's James Stanton, Suchman Group's Jeffrey Suchman and rendering of 66 Nowedonah Avenue in Water Mill NY (World Wide Group, Getty Images, The Water Mill Crossing)
    JS Squared gets financing to build 38 Water Mill townhomes
    JS Squared gets financing to build 38 Water Mill townhomes
    Lev CEO Yaakov Zar (LinkedIn, iStock)
    CRE finance marketplace Lev raises $70M Series B, confirming TRD report
    CRE finance marketplace Lev raises $70M Series B, confirming TRD report
    Steve Witkoff and a rendering of 565-589 Fulton Street (Witkoff, Beyer Blinder Belle)
    Apollo, Witkoff eye $420M construction loan for downtown Brooklyn site
    Apollo, Witkoff eye $420M construction loan for downtown Brooklyn site
    Deerfield's James Flynn and 345 Park Avenue South (Deerfield, iStock)
    Deerfield nabs big refi at life sci property
    Deerfield nabs big refi at life sci property
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...