Carlyle Strikes $3B Deal for iStar’s Net Lease Unit

Barclay Jones, Executive Vice President of Net Lease Investments, iStar. Image courtesy of Carlyle

Carlyle’s Global Credit platform has agreed to acquire iStar Inc.’s net-lease business for an enterprise value of $3.07 billion, the two companies announced Wednesday.

The iStar portfolio consists of triple-net leases spanning industrial, office and entertainment properties totaling 18.3 million square feet across the U.S. No further information is available about the portfolio, a Carlyle spokesperson told Commercial Property Executive.

In addition, the iStar net-lease investment team that had overseen the portfolio, including Barclay Jones, who has led iStar’s net-lease strategy for more than 20 years, and Senior Vice President Catherine Tenney, will join Carlyle’s Real Estate Credit team.

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Carlyle’s Head of Real Estate Credit, Roger Cozzi, served as iStar’s CIO & co-head of its investment committee from 1995 to 2007 and played a major role in this acquisition.

In a prepared statement, Mark Jenkins, head of Global Credit at Carlyle, said that acquiring iStar’s net lease business jump starts the company’s real estate credit strategy, giving it scale to accelerate deployment.

Catherine Tenney, Senior Vice President, iStar Inc. Image courtesy of Carlyle

He added that Carlyle expects to grow this net-lease strategy into a $10 billion business, as part of which it will also expand into the retail sector.

Its Global Credit platform has been Carlyle’s fastest-growing segment over the past three years, surging to a record $66 billion in AUM as of the third quarter, more than two times larger than it was less than four years ago.

The transaction is expected to close in this quarter, assuming the satisfaction of certain customary closing conditions.

Eastdil Secured served as exclusive financial advisor to iStar.

Steady into 2022

Last year, Global Credit made its first fund investment in the net lease arena by agreeing to provide up to $300 million in growth capital to New Jersey-based Four Springs Capital Trust.

In March 2021, Four Springs acquired a distribution facility in Oklahoma City that is occupied by Amazon under a long-term lease. The seller was Crown Enterprises.

After hitting historic lows in the third quarter, cap rates in the single-tenant net-lease sector rebounded slightly for industrial properties, to 6.77 percent, and remained stable for office assets, at 6.80 percent, according to a fourth-quarter report from The Boulder Group.

The change was attributed to a limited supply of suitable properties with long-term leases, locations in primary markets and investment-grade tenants.

Boulder Group expects the sector to remain active this year and surpass the 2021 deal volume.