Castelnau Estates purchases ground rents from developers, landlords, investors, and other sellers looking to generate valuable cash flow and offload the many burdens associated with owning ground rents.
Ground rents as an asset are generally surplus to the core business objectives of landlords, real estate investors and housebuilders, requiring the knowledge of experienced ground rent experts and the use of complex valuation models to fully understand. Without large economies of scale, ground rents are challenging to manage and costly to administer, requiring numerous additional business processes, dedicated managers and procedures in accordance with lease terms and legislation.
Castelnau Estates’ comprehensive acquisitions strategy focuses on a combination of income ground rents, reversionary ground rents, private rented sector (PRS) assets and development / refurbishment.
Outside The Box Approach
The Castelnau Estates team purchases ground rents of all lease lengths and locations throughout England and Wales. Our innovative acquisitions strategy provides flexibility, enabling us to purchase ground rent portfolios consisting of 1,000+ units, companies and without the restrictions of a minimum value or low price threshold.
Our ground rent acquisitions come in various forms. We purchase ground rents with either fixed increase lease structures or increases tied to the Retail Price Index (RPI), with the latter being our preference. We also consider forward purchase agreements with developers. For such acquisitions, Castelnau Estates forward commits to purchase the freehold ground rent element of a new development. These arrangements improve the development’s overall viability, balance sheet and ability to secure financing at the predevelopment stage.
Quality Property Management
Property management of the highest quality is integral to the Castelnau Estates business. Our growing ground rent portfolio is focused on the acquisition of ground rents for buildings that have been under the professional management of leading property managers. As buildings in prime locations are more frequently managed by reputable property management firms, ground rents for residential assets within or directly connected to city centers are of particular interest.
Our dedication to providing leaseholders with top quality property management is further exemplified by the fact that we partner with top-performing, local level professional property managers. As part of our commitment to maintaining high quality assets, we prefer to control the assignment of management for our buildings, rather than relying on leaseholder-owned management companies, which vary widely in quality and professionalism.
In addition to providing leaseholders with quality management, Castelnau Estates’ partnerships with highly regarded property managers further support our problem-solving acquisitions approach. Working alongside some of the best property managers in the business enables us to skillfully acquire and resolve complex or challenging situations. We are highly experienced at acquiring and managing ground rents for sites in need of major works, extensive property management overhaul, unfinished or defective buildings.
Innovative Partnerships and Development
Throughout our business, Castelnau Estates sees value where others do not. This includes our ability to create opportunities and recognize the value of partnering with newer, less established developers. In fact, many of our largest acquisitions have stemmed from building long-term relationships with developers whose product initially did not fit the investment criteria of more traditional investors.
Castelnau Estates is continually partnering with developers of all sizes at all stages of predevelopment planning and development. Our Asset Management team and legal specialists provide valuable guidance when structuring rent review provisions in developer leases to maximise final development value by ensuring a competitive long lease hold interest.
We also partner closely with developers who are focusing on the redevelopment and refurbishment of existing buildings. This includes landlords or developers who are refurbishing or renovating existing units to increase rental income and / or the value of a tenanted portfolio. We also invest in ground rents with opportunities for future development on the freehold land, opportunities such as this normally arise as a result of changes in local planning policies to meet growing population demand.
All lease lengths, values and locations throughout England and Wales
Residential or mixed use with commercial on ground floor
Private Rented Sector (PRS)
Residential tenanted portfolio properties
Particular interest in high growth areas of Central London and locations in the South East with direct Central London transport links
Smaller and newer developer partnerships
Existing building redevelopment or refurbishment
Forward purchase agreements
Further development on freehold land