Atlanta-based investor Stonemont Financial Group has acquired a massive portfolio of net-leased real estate from Oak Street Real Estate Capital for $1.3 billion, Commercial Observer has learned. The portfolio is comprised of 100 retail, office and industrial properties across 20 states.
Stonemont financed the acquisition with three layers of mezzanine debt on top of a floating-rate CMBS loan led by J.P. Morgan Chase, which was joined by Deutsche Bank and Barclays as co-issuers, according to a source who asked not to be identified.
The $1.1 billion in financing represents a loan-to-value ratio of 83 percent. The deal closed today, the source said.
Oak Street, a private equity firm based in Chicago, has developed a niche in buying and sometimes leasing back triple-net leased properties to credit tenants. CEO Marc Zahr opened up to Bisnow last year about how his business is “low risk and high yield,” because the tenants have steady rent escalations built into their leases. Triple-net leased properties pass most costs associated with ownership back to the tenant, including taxes, maintenance and insurance. By renting or leasing back to investment grade corporate tenants with long-term leases, the landlord is largely insulated from market fluctuations.
Oak Street’s four funds focused on net-leased assets have performed well, reports show, attracting institutional capital from pension funds and insurers. In February, Teachers’ Retirement System of the State of Illinois pledged $100 million to Oak Street’s latest net-leased fund.
A CBRE team of James Millon, Tom Traynor and Pete Marino secured the funds for the buyer, the source said. CBRE declined to comment on the deal.
Representatives for J.P. Morgan, Oak Street, Deutsche Bank and Barclays did not immediately reply to requests for comment. Representatives for Stonemont were not reachable.