Petershill, a Goldman Sachs Group unit that buys stakes in alternative investment managers has made its latest push into the real-estate industry by purchasing a minority stake in Oak Street Real Estate Capital, according to the Wall Street Journal. The deal values the company at $2 billion.
- Sale-leaseback strategy: Oak Street has raised over $6.5 billion since launching in 2009, and typically buys retail stores (35% of portfolio composition), warehouses (50% of portfolio), and office properties (15% of portfolio) from investment grade tenants and then leases them back.
- Be Smart: Rent collections for the sector have since bounced back to over 90%, according to Green Street. Shares of the sale-leaseback real-estate investment trusts, which are about 80% invested in single-tenant stores, restaurants, and other retail on average are now down 20% since the beginning of the pandemic, compared with 35% for malls and 23% for strip centers.
- Heard on the Street: Oak Street’s co-founder and CEO Marc Zahr estimated that investment-grade businesses in the U.S. and Canada alone own commercial property worth $8.3 trillion that could be sold and leased back. Globally the figure is $24 trillion. “If you have the right partner, you can take a business like ours and turbocharge it… “There’s a massive opportunity to unlock value and shift real estate from the balance sheet of companies that are not in the business of owning real estate to our balance sheet,” he told the Journal.
- Worth Noting: Other real-estate firms in Petershill’s portfolio include Westbrook Partners and Slate Asset Management. [WSJ]