Wall Street Journal: A New Real Estate Play for Income Investors
From The Wall Street Journal:
Risk-averse investors looking for income will soon have a new option to consider: ground leases.
iStar Inc., a New York-based real-estate investment, financing and development firm, has spun off some of its ground leases—or the land under buildings—into a separate real-estate investment trust called Safety, Income and Growth Inc. that is expected to raise $250 million from an initial public offering and concurrent private placement.
The shares started trading last Thursday on the New York Stock Exchange.
The leases generate steady income for landowners, potentially making them attractive to investors looking for safety at a time when real-estate and stock-market valuations are high and interest rates remain near historic lows.
“Ground leases are real estate’s analogy to buying Treasurys,” said Jim Sullivan, president of Green Street’s Advisory Group. “When structured properly, they are perhaps the safest form of real estate that an investor can own.”
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