CGA continues the corporate and governmental credit tenant lease financing work of principals and managing directors Richard Jacobs and W. Kyle Gore. Although the operational transition to the new company has only been completed within the last 60 days, CGA has hit the ground running with more than $1 billion of deals and assignments. Those include providing the debt and arranging equity for a private investor that purchased a $125 million sale-leaseback of Novant Health facilities; a $30 million CTL financing for Walgreens properties; a $103 million corporate office building deal with an A+ credit occupant; and a $600 million debt financing transaction for a GSA development project.
Jacobs and Gore were most recently employees of RBS Securities Inc., formerly RBS Greenwich Capital. They joined RBS in 2005, prior to which they led the structured financing and net lease finance group of Legg Mason Wood Walker Inc. for about 17 years.
While they have purchased the net lease finance group from RBS, their relationship with the bank continues. CGA and RBS now have a strategic alliance by which CGA will serve as the exclusive corporate and governmental credit tenant lease financing group for RBS's global banking and markets division in the Americas. CGA will work with the division's real estate advisory group and RBS corporate bankers on net lease property-related assignments for corporate banking clients of RBS, and RBS Securities will lead-manage the sales, trading and distribution of CGA's larger credit lease financings.
"We feel strongly about the net lease asset class," Doug Tiesi, managing director and head of RBS's real estate advisory group, says in an announcement. "That, coupled with RBS's commitment to offering corporate and borrower clients a range of real estate products, means our long-term relationship with CGA allows us to continue to serve those clients in offering the broadest array of available solutions."
With RBS focused on top-tier global market businesses, and the net lease market a niche business, a spin-off of his group made sense for both parties, Gore tells GlobeSt.com.
"The net lease business is definitely a niche business, with a significant and growing amount of opportunity, but it's a niche business that isn't scalable along the lines that are required to be successful in a large, global bank or investment banking operation," Gore notes. "The win-win for us was a recognition by RBS that we can be a significant player, but in a niche business, so it's better for us to do that on our own… It's a win-win because they can still have people who are experts in the field, without having to deal with the fact that it's not a business that is scalable to the size that RBS would understandably expect given the size of RBS."
"The sale of the net lease activities by RBS was a logical decision," Jacobs says in an announcement. "To be active and successful in the net lease business, you must be actively involved in all aspects of the industry including debt, equity, advisory and asset management. In forming the alliance, RBS can participate in those aspects of the industry most appropriate for the bank while CGA benefits from the strong relationship with RBS, a premiere international financial services organization."
CGA maintains the same staff and same offices as the former RBS net lease finance group. In addition to providing debt and equity capital for credit net lease real estate transactions, CGA is also increasingly active as a servicer and asset manager, Gore notes; an upcoming closing will bring its servicing and asset management portfolio past the $1 billion mark.
With their expertise in the CTL arena, CGA's principals expect to continue to be busy with debt and equity capital transactions going forward. "As much as the traditional real estate markets remain dislocated, the net lease business has benefited from the absolute boom in the corporate bond market," Gore tells GlobeSt.com. "The corporate bond market has been absolutely on fire, so that means for investment grade net lease transactions—particularly non-retail, but some retail--if the transactions are well structured, we're finding significant and growing interest from institutional investors."
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