Haven Capital Launches With $1B to Invest in Ground Lease Opportunities

Regis Group and funds managed by the Real Estate Equity and Alternative Credit strategies of Ares Management Corp. have formed Haven Capital, an originator of customized ground lease positions in high quality assets across the US.

With an initial capacity in excess of $1 billion, Haven Capital intends to capitalize ground lease opportunities in most real estate sectors in the top 50 markets. It will target ground leases across all asset classes with a minimum $20 million transaction size. 

“We believe ground leases represent an attractive long-term funding source and we have formed Haven Capital with Ares to provide flexible ground leases to meet the needs of real estate owners across the United States,” Nick Gould, Chairman and Founder, of Regis Group said in a statement.

Haven says its 99-year ground lease can increase asset values for real estate owners and developers by separating land and buildings while reducing equity requirements, and thus, the total cost of capital. It also provides owners the option to repurchase the property. 

Joe Shanley, a former vice president at SL Green Realty who managed equity and debt investments for a variety of asset types across the New York region, will lead the growth in the platform as investment director. 

“The formation of Haven Capital marks the entry of well-established institutional investors into what we believe is a largely untapped sector for commercial property investment,” Shanley said in a prepared statement. “Ground leases are an underutilized tool that provides an alternative source of capital for both existing assets and ground-up developments.”

While Haven will target most sectors, owners in the struggling retail and hospitality might be most interested in ground leases at this time. 

“We’ve seen a mix of asset classes [interested in its 99-year ground leases],” says Dan Amer, Director at Miami-based Kawa Capital Management, which completed 20 ground lease transactions totaling nearly $1 billion to date. “Some of the highest increase in request volume for us this year is in hospitality and retail because those have just been the hardest hit sectors.”

The ground-lease structure has a lot of merit for operators that want to maximize their return on equity capital, according to Amer. It also works well for long-term holders, including people who want to pass the asset onto future generations.

“There certainly are a lot of family real estate operators that passed the portfolio on from one generation to the next generation as a source of cash flow for the family,” he says. “For those groups, the ground-lease structure is always going to have a lot of merit.”