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Investment manager Kawa acquires $273M ground lease portfolio

Florida-based investment manager, Kawa, has acquired a $273 million portfolio of ground leases across New Jersey, Virginia, Pennsylvania and North Carolina.

The company acquired a ground lease portfolio underneath 3.9 million square feet of rentable commercial real estate with an institutional partner for total equity investment of $97 million and assumed $176 million of in-place financing.

The seller was not disclosed but Brandywine Realty Trust leases and operates the portfolio, which includes 58 office and industrial flex properties that have collectively maintained an 89 percent occupancy rate since 2013 and are home to more than 380 individual tenants, including government defense contractors, tech companies and pharmaceutical firms.

DANIEL ADES

“Kawa and our investors were drawn to this opportunity for several reasons, including the consistent income in-place derived from a number of credit tenants operating within these properties and their locations in major metropolitan markets with strong demographics,” said Daniel Ades, Kawa’s managing partner.

“Additionally, the diversification of asset classes throughout the 58 office and industrial properties speaks to the portfolio’s long-term continuity through changing economic cycles.”

The ground is leased to a joint-venture controlled by Brandywine through a long-term, fee-simple master ground lease and includes 308 Harper Drive in Moorestown (pictured top), a three-story, 59,500 s/f office property located in the East Gate Corporate Center, the largest business park in southern New Jersey.

According to Kawa, a recent report demonstrated that properties within the Mid-Atlantic ground lease portfolio continue to successfully navigate the current economic landscape, with approximately 98 percent of tenants having made on-time lease payments for April, May and June.

12015 Lee Jackson Memorial Highway, in Fairfax, VA.

To date, Kawa has completed 20 transactions with an aggregate ground lease value of $964 million across a range of asset classes, including retail, hotels, office, and solar energy production and across the capital structure from being the senior lender, to equity holder of the fee interest position.

“Kawa has become very active in ground lease transactions in recent years and created a program that serves as a reliable vehicle for asset owners looking to free up liquidity and sponsors seeking to fund capital requirements at all stages of development– from acquisition to recapitalization and renovation,” Ades added.

 “In an environment post-COVID where financing may not be as readily available, Kawa continues to finance across the capital structure and be a true partner for ground lessors on transactions large and small.”

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