Eyzenberg & Company represents Anika Equities (our founder is also a partner in “Anika Equities GLF”), which is seeking opportunities to create and purchase ground leases on cash-flowing commercial real estate in primary and strong secondary markets. Anika Equities GLF will purchase the land under most asset types, with a minimum investment of $10 million and no maximum. Additionally, Eyzenberg & Company can assist the seller in obtaining competitive leasehold financing.

The General benefits of a bifurcation transaction include:

  • In a refinance/recapitalization scenario, the seller/leaseholder repays existing debt and repatriates equity while continuing to benefit from the future upside of the operating asset

  • In an acquisition scenario, the seller/leaseholder achieves higher “all-in” leverage utilizing a ground lease/leasehold financing combo at a lower blended cost than a senior/mezzanine loan option

  • Unlike a traditional senior/mezzanine stack where all debt usually expires coterminously, a ground lease provides low cost permanent capital with no immediate balloon risk

  • Tax advantaged execution allows the seller/leaseholder to depreciate 100% of the leasehold improvements and deduct 100% of the ground lease rent

Typical Terms and Structure are as follows:

  • Anika Equities GLF buys the ground – taking an unsubordinated fee position. The property is then bifurcated into:

  • Leased Fee ownership of the ground (owned by Anika Equities GLF)

  • Leasehold ownership of the improvements (owned by the Seller)

  • Purchase price of leased fee position –is approximately 30% – 40% of the property value

  • The ground rent – is fixed at a significant discount to the cap rate of the overall asset with fixed annual increases of approximately 2% – 3%

  • Buy-back options – deals can be structured with imbedded options at very favorable terms

  • Leasehold financing – Eyzenberg & Company can assist the Seller in securing senior secured leasehold financing (up to 75% LTV)