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A New Trend: The Ground-Sale Leaseback is Sweeping the Country

Rendering of Westin Hotel planned in Southlake, Texas.

SOUTHLAKE, Texas – (Realty News Report) – A new Westin hotel will be built in North Texas, demonstrating a new trend – the ground-sale leaseback, CBRE reports.

The ground-sale leaseback structure is quickly gaining popularity because it lowers equity requirements for developers and hoteliers.

SRH Hospitality, led by Jerry Crenshaw, is developing the 261-room Westin Southlake near Highway 114 and the Southlake Town Square. CBRE’s Nate Sahn, Robert Brennan, and Pravin Boteju handled the deal.

This transaction is one of many ground-sale leasebacks completed by CBRE over the last 48 months. The ground-sale leaseback structure is applicable across all four transaction types: acquisitions, dispositions, refinancing, and development, and offers several benefits to hoteliers seeking to restructure their capital stack and improve cash-on-cash yield.

“Many commercial real estate principals of hotels, office, retail, multifamily & industrial are realizing the benefits of this unique structure, which result in the output of significantly less equity combined with significantly higher cash on cash returns and lower overall risk than the traditional investment model,” said Robert Brennan, Senior Vice President at CBRE.

“Ground sale leasebacks, otherwise known as bifurcations, continue to gain traction in the marketplace as a very attractive capital stack structure.  As their momentum continues to grow, we will see more acquirers, sellers, developers and owners seeking these financings, refinancings and recapitalizations,” said Nate Sahn, Executive Vice President at CBRE.

In the Westin hotel deal, the land is owned by a Florida hedge fund. Located less than five miles northwest of Dallas/Fort Worth International Airport, the six-story hotel will sit on 6.8 acres and feature a 25,000-SF conference center.

Nov. 4, 2019 Realty News Report Copyright 2019

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