ARLINGTON, VA-Friedman, Billings, Ramsey Group Inc. and former Washington, DC Mayor Anthony Williams have formed a company that will buy and lease back government and nonprofit real estate. Called Public Properties Realty Investment Trust Inc., the locally based firm will initially be a wholly owned subsidiary of FBR, funded on an as needed basis, a spokeswoman tells

PPT will partner with cities, municipalities and states to provide alternative funding to projects that would be otherwise unfunded, she says, by investing in properties or loans secured by properties. Because these investments are sale-leaseback transactions, the properties will be managed by the tenants.

Investment decisions will be made on a case-by-case basis, she says, but generally sellers will have long-term leases with multiple renewals and repurchase options.

The new company, Williams says in a statement, “will allow any government, quasi-governmental organization, or not-for-profit entity–including those with limited sources of funding, borrowing limits and other constraints–to unlock the embedded value within its real estate. Public Property Trust will provide alternative funding that can revitalize neighborhoods, fund new educational facilities, finance large-scale mixed-use projects, or support ongoing operations.”

At some point in the future Public Property Trust will raise additional third-party capital and elect to be taxed as a REIT. The company would not release any further detail about funding or targeted investment amounts.

According to the spokeswoman, FBR approached Williams last year about the concept. Williams will be the CEO, a member of the board and co-founder of the firm, overseeing development, staffing and other key functions.

“FBR has a history of helping to create and capitalize similar successful net lease businesses, such as Capital Automotive REIT and American Financial Realty Trust, and we are very pleased that the mayor has agreed to lead this venture as CEO,” says chairman and CEO Eric Billings, in a statement.

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