Dinerstein Inks Ground Lease on Orlando Multifamily Property
Promenade Crossing is currently undergoing capital improvements. The property’s amenities include a pool deck with grilling stations, media lounge, fitness center, car wash station, clubhouse and a dog park.
ORLANDO, FL—Safety Income & Growth, Inc. has signed a ground lease with Houston-based the Dinerstein Companies on its Promenade Crossing apartment complex in the Baldwin Place submarket of Orlando.
The 212-unit Promenade Crossing was capitalized by an institutional lender and a “SAFE Ground Lease,” which features fixed annual rent escalations over 99 years with periodic CPI-based adjustments.
“We are pleased to announce our first ‘SAFE Ground Lease’ in the Orlando MSA, a rapidly growing market,” says Tim Doherty, head of ground lease investments for Safety Income & Growth. “SAFE has developed a valuable solution for multifamily investors and we look to continue the strong momentum.”
Promenade Crossing is currently undergoing capital improvements. The property’s amenities include a pool deck with grilling stations, media lounge, fitness center, car wash station, clubhouse and a dog park.
David Eyzenberg, president of Eyzenberg & Co., believes the ground lease structure is becoming more prevalent in the multifamily sector. Eyzenberg & Co. represented the Dinerstein Companies in structuring the ground lease deal. The New York City-based firm facilitated the bifurcation that involved the sale of the property and the subsequent award of the ground lease portion to Safety, Income & Growth. CBRE represented the seller Chicago-based Waterton.
“The fact that a major owner decided to bifurcate an asset I think shows the emergence of this innovative structure,” Eyzenberg says. “This is driving many of our transactions. There is a lot of institutional interest in ground leases as a capital structure because of their accretive nature.”
He adds in this investment climate where cap rates are tight and deals are difficult to find, the ground lease is “an emerging way to structure and hit your return hurdles.”
Last month, New York City-based Safety Income & Growth reported it had entered into a ground lease on two Atlanta office buildings—100 and 200 Glenridge Point—with Richmond Honan.
The transaction marked the third time Richmond Honan has utilized a SAFE ground lease and represents SAFE’s fourth successful ground lease in Atlanta.