Government Build-to-Suits ("GBS")

(FOR TO-BE-BUILT GOVERNMENT-OCCUPIED PROPERTIES)   

A Government Build-to-Suit (“GBS”) is a structure that allows a City, County or State Government (“Government”) to have a building constructed that is to be occupied by the Government.  We provide 100% of the funds to construct the Government building. 

Minimum GBS: $1.5 million (prefer $3 mil. or more) 

Maximum GBS: No maximum 

Minimum Government Rating: “BBB+” 

Minimum Government Population: 20,000 for City and 50,000 for County (less population may be considered if Government has low current debt)  

The following is a summary of the GBS structure: 

  1. We can construct the building if desired by the Government.    
  1. In exchange, the Government enters into a 25 year lease.  The 25 year lease can have fixed or flat rental payments for the 25 year term or rent can be lower in the initial years with rent escalations in later years.   
  1. The property is donated back to the Government by the end of the 25 year lease.  There is an option to donate earlier and is typically targeted at the end of the 14th year as the time to donate (due to tax issues) for a $10 million project and at the end of the 15th year for a $100 million project.  This targeted date may change if tax laws change or interest rates rise by approximately 250-300 basis points by the end of the 14th or 15th year.  If the property is donated before the expiration of the 25 year lease, the Government shall assume the financing, which is fully amortized over 25 years with a fixed rate.  The loan payments are slightly less than the rent payments.     
  1. At any time during the 25 year lease, the Government can accelerate the above donation.    

Advantages to Government   

  1. We provide turn-key development of the Government building.    
  1. Government is guaranteed to receive ownership of the property in the form of a donation at the end of the 25 year lease.   
  1. Government is likely to receive ownership of the property earlier than the end of the 25 year lease due to tax issues, if tax laws do not change or if interest rates do not increase by approximately 250-300 basis points by the end of the 14th or 15th year of the lease.   

4.    The Government may not be required to obtain voter approval through a referendum under this GBS structure. The proposed GBS structure is a Capital Lease and is considered debt on the Government’s Balance Sheet.  However, the GBS structure may be viewed more positively by analysts than a general obligation bond due to the residual value (through the Donation) being treated as an additional Government asset.