Spotlight: Gray Harbor Capital and Its Federal Government-Leased REIT

The Sarasota firm’s private UPREIT has closed three federal buildings since July, including its first IRS and DEA facilities, and ended 2025 with an independently appraised NAV of $1,150 per share.

September 18, 2026

Gray Harbor Capital is a Sarasota, Florida, investment manager whose single business is a private REIT that owns buildings leased to the United States government. Through its wholly owned adviser, Gray Harbor Government Advisors, the firm runs Gray Harbor Government Income REIT, a perpetual-life, non-traded Maryland UPREIT offered to accredited investors under Rule 506(c). The REIT reported 21 properties leased to ten federal agencies as of August 31, 2026, and a Form D amendment filed September 4, 2026 shows $43.7 million of shares sold since the first sale in January 2021.

The founders have run a federal-government REIT before. Edwin Stanton and Philip Kurlander co-founded HC Government Realty Trust, where Stanton was chief executive and Kurlander treasurer, along with its predecessor Holmwood Capital; those entities acquired and managed 17 GSA-leased properties representing more than $100 million, according to the firm. Stanton earlier co-founded U.S. Federal Properties Trust, which assembled 19 GSA-leased buildings worth roughly $250 million. Lori Moody, who heads acquisitions and due diligence, held the same role at Holmwood Capital Advisors and has worked with Stanton since 2004. Roger Osborne, who runs development, first dealt with the team in 2017 when HC Government Realty Trust bought a Sarasota USDA facility he co-developed.

Small buildings, small markets

The REIT buys in a narrow band: single-tenant buildings of 10,000 to 50,000 square feet priced at $5 million to $25 million, in secondary and smaller markets where, the firm says, the federal government prefers to lease rather than own. It favors first- and second-generation built-to-suit or refit-to-suit facilities for agencies it describes as taxpayer-facing and mission-critical. Eleven of the 21 listed properties are Social Security Administration field offices; the rest include Veterans Affairs outpatient clinics in Nebraska, Texas and Washington, D.C., a federal courthouse in Terre Haute, Indiana, a Mine Safety and Health facility in Kentucky, and a Homeland Security building in Ohio. The firm cites fragmentation as the opening: by its account the largest owner of federally leased assets holds just over 5% of the market. Lease terms are deliberately mixed, in what the firm describes as a barbell of longer leases for stable cash flow and shorter ones that may reset to higher rents on renewal.

Terms and the NAV record

Shares were initially priced at $1,000. NAV is appraised semiannually by an independent third party as of June 30 and December 31, and the offering price resets to it. The firm’s performance page shows the board holding NAV at $1,000 from inception through the first independent appraisal at December 31, 2023, which lifted it to $1,049; it rose to $1,072 in June 2024 and $1,096 in December 2024, fell to $1,049 at June 30, 2025, and stood at $1,150 as of December 31, 2025. Distributions have run at 0.50% per month, a 6% annualized rate, since February 2024, replacing an earlier 0.44% monthly rate topped up by special distributions. The firm reports that 100% of distributions from 2021 through 2025 were classified as return of capital on investors’ 1099-DIVs.

The waterfall pays shareholders a 6% cumulative, non-compounded preferred return on net capital contributions before the adviser takes 20% of remaining cash, with no catch-up. The management fee is 0.75% of gross asset value annually, the minimum subscription is $100,000, and placement costs run up to 2.75%: 1% for organization and offering expenses and up to 1.75% to Cobalt Capital, the placement agent named in the Form D. Shares are locked for the first year, then repurchasable at 97%, 98% and 99% of NAV in years two through four and at full NAV thereafter, subject to a cap of 2.5% of outstanding shares per quarter and 10% per year and a 45-business-day notice period. The UPREIT structure also lets owners of GSA-leased buildings contribute property for operating partnership units under Section 721, a route the firm markets to sellers who want to stay in the asset class without managing it; Cottonwood Communities and ExchangeRight run comparable 721 pathways in multifamily and net lease.

Three closings in two months

In January 2026 the REIT bought a newly constructed 25,963-square-foot VA outpatient clinic in Victoria, Texas, under a 15-year lease running to 2039, its 18th property. On July 20 it closed a 5,600-square-foot SSA field office in Marianna, Florida, its 19th property and first in its home state; the deal began as a straight purchase but was restructured as tenants-in-common ownership at the request of an investor completing a 1031 exchange, leaving that investor a path to contribute the interest under Section 721 later. Two more closed August 5: a 3,804-square-foot IRS taxpayer assistance center in Dothan, Alabama, renovated in 2024 and leased through 2040, the REIT’s first IRS building; and a 9,192-square-foot DEA facility in Mobile, Alabama, built to the agency’s specifications in 2024 with a firm lease term through 2037. The firm notes the DEA funded nearly 60% of the more than $2.3 million invested in the Mobile building and the SSA more than 75% of the Marianna renovation, and reads that agency capital as evidence of tenant commitment.

The firm has also put its view of federal downsizing on the record. In a February 2025 note on the Department of Government Efficiency, it argued that space-reduction initiatives would pressure Washington, D.C.-area office landlords while decentralized field offices delivering citizen services would be largely unaffected, and that the executive order ending remote work was positive for demand across property types.