Continuum Capital: Innovative investment- and financing concepts by using ground leases

Unlike several other European countries like the UK or the Netherlands where ground leases are a common instrument to optimize financing structures, in Germany ground leases are mainly known as instruments to manage real estate by churches or municipalities.
In Deutschland gewinnt das Erbbaurecht als privatwirtschaftliches Gestaltungsinstrument im Rahmen der Immobilienfinanzierung seit rund 10 Jahren an Bedeutung. Aus unserer Sicht wird sich dies in den kommenden Jahren weiter fortsetzen.
In Germany ground leases as a creative tool in relation to real estate financing gets more and more popular in the last decade. We think in the coming years this trend will continue.

The current market environment is characterized by rising real estate prices, in particular in the German Top-7 cities, and a strong demand of long-term investors for secure inflation linked investment opportunities. It is our strong belief that this combination creates a situation in which the creation of new ground leases is a very attractive financing- and investment alternative.

Continuum Capital was founded in year 2009 in order to implement a structuring alternative by using ground leases which generates benefits for investors and financing banks. On the one hand, we are looking for properties which we can structure to new ground leases and acquire the land in a “sale & Lease-back” type transaction.

On the other hand, we are interested in other principal investors who will acquire jointly with us properties and we will manage the bifurcation of the land and the buildings at the same time. As a co-investor, we are prepared to offer our partner a premium on the ground rent tranche, thereby reducing the debt and equity requirements for the building and improving the equity return at the same time.

Continuum Capital allows institutional investors to create an exposure to long-term, inflation-linked and first ranking cash flows and therefore creates an interesting investment opportunity for e.g. pension funds which have a strong need for very long term investments.

The management team has a long track record in the acquisition, structuring and re-financing of ground rent properties and all related income streams thereof. We think this is a solid basis not only to further promote and benefit from the growing ground rent market, but also to actively create this market.