NEW YORK– iStar Inc. announced that it has signed a definitive agreement to sell a portfolio of its owned and managed net lease assets for a gross purchase price of $3.07 billion.
The portfolio consists of 18.3 million square feet of institutional quality office, entertainment, and industrial properties located throughout the country.
The portfolio is being acquired by an affiliate of Carlyle’s Global Credit platform. The transaction is expected to close in the first quarter of 2022, subject to customary closing conditions.
“The sale of our net lease portfolio is the culmination of a highly successful investment strategy for iStar and the result of the outstanding efforts of our net lease team, led by Barclay Jones and Catherine Tenney. We are pleased to sign an agreement that will recognize the value that we have built up over many years and that will enable the team to continue taking advantage of opportunities in the net lease space on behalf of Carlyle and its investors,” said Jay Sugarman, Chairman and Chief Executive Officer. “For us, this sale continues the execution of our announced corporate strategy of simplifying our portfolio and focusing on the ground lease business, which we view as the next evolutionary wave in commercial real estate.”
The Company estimates that it will recognize total net positive impacts to both net income and common equity of approximately $525 million and to adjusted common equity1 of approximately $250 million. After repayment of all associated mortgage debt and full repayment of its secured term loan, the Company estimates that it will receive net cash proceeds of approximately $1.1 billion. These estimates are subject to increase or decrease based upon the final purchase price allocations, customary prorations and the exact closing date, and are net of estimated distributions to its venture partner, debt prepayment fees, closing costs, promote fees, and distributions under iStar’s long-term incentive plan, iPIP.
The Company expects to record approximately $40 million of net expenses in the fourth quarter of 2021 associated with the transaction, and approximately $565 million of net gains in the quarter in which the transaction is completed, currently expected to be in the first quarter of 2022.
Eastdil Secured served as exclusive financial advisor to iStar.