Real estate pros are seeing an uptick in the number of ground leases as new capital is raised in the space. “You’re probably seeing more of this now because the market is almost going through a 2.0 situation where it’s become a more institutionalized and expected structure in the marketplace,” said David Eyzenberg of Eyzenberg & Co.
This week on REFI Radio, Eyzenberg explains the ins-and-outs of ground leases, tells us who can benefit from using the structure, and explains the potential pitfalls to avoid when structuring a ground lease agreement.
He noted that in the past, ground lease transactions between two real estate entities were looked at as a zero-sum game: someone had to win and someone had to lose.
But since then, there’s been a maturation in capital markets. “You now have permanent pools of capital being formed to mind this space and they’re not looking at it as a real estate transaction,” he said. “They’re looking at it as a hold-to-maturity, fixed-income investment.”