Safehold Closes Ground Lease for Sacramento Affordable Housing Development
Rhea-AI Summary
Safehold Inc. (NYSE: SAFE) has closed a ground lease for the development of The Crawford, a 265-unit affordable housing community in Roseville, Sacramento, California. The project will be developed by USA Properties Fund, a repeat Safehold customer based in Sacramento.
The development is structured as a low-income tax credit project. During 2024, Safehold completed six affordable housing transactions in California. The company is increasingly focusing on the affordable housing sector, utilizing its ground lease structure to help developers reduce capital costs and advance affordable housing projects.
Safehold, established in 2017, operates as a REIT and specializes in creating modern ground lease solutions for various property types, including multifamily, office, industrial, hospitality, student housing, life science, and mixed-use properties.
Positive
- Expansion in affordable housing sector with six California transactions in 2024
- Strategic partnership with established developer (USA Properties Fund)
- Entry into high-growth market (Roseville) with strong demographics
- Diversification of portfolio with 265-unit development project
Negative
- None.
Insights
This ground lease transaction for The Crawford development represents a strategic expansion in Safehold's affordable housing portfolio. The deal's significance stems from multiple factors: 265 units in the growing Roseville market, partnership with an experienced developer (USA Properties Fund) and alignment with California's critical need for affordable housing solutions.
The transaction's structure leverages Safehold's innovative ground lease model, which effectively separates land ownership from building ownership. This approach typically allows developers to reduce their upfront capital requirements by 30-40
Notably, this marks Safehold's sixth affordable housing transaction in California for 2024, indicating strong execution of their sector-specific strategy. The Roseville market's robust demographics and housing demand fundamentals support the long-term viability of this investment. The deal reinforces SAFE's competitive advantage in the specialized ground lease REIT sector while addressing social infrastructure needs.
The Crawford transaction exemplifies Safehold's evolving business strategy in the affordable housing segment. Ground lease structures are particularly valuable in this sector as they help developers overcome capital constraints while maintaining project viability. The repeat business with USA Properties Fund validates the effectiveness of SAFE's model and suggests potential for additional pipeline opportunities.
From a market positioning perspective, Safehold's focus on affordable housing developments represents a defensive play - these projects typically maintain high occupancy rates through economic cycles due to persistent supply-demand imbalances. The Sacramento region's fundamentals, characterized by population growth and housing shortages, provide strong tailwinds for this investment.
For shareholders, this transaction type offers an attractive risk-adjusted return profile: government-supported cash flows through low-income housing tax credits, combined with the inherent security of land ownership. The expansion in California, a key growth market, demonstrates SAFE's ability to scale its innovative financing solutions while maintaining strategic market selection.
"We're thrilled to expand our relationship with
"
Safehold closed a total of six affordable housing transactions in
"We are increasingly focused on the affordable sector and are positioning our capital as a tool to help developers bridge capital structure gaps, lower their cost of capital, and move much needed affordable housing projects forward," said Wylder.
About Safehold:
Safehold Inc. (NYSE: SAFE) is revolutionizing real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings. Having created the modern ground lease industry in 2017, Safehold continues to help owners of high quality multifamily, office, industrial, hospitality, student housing, life science and mixed-use properties generate higher returns with less risk. The Company, which is taxed as a real estate investment trust (REIT), seeks to deliver safe, growing income and long-term capital appreciation to its shareholders. Additional information on Safehold is available on its website at www.safeholdinc.com.
Transaction Contacts: | Investment Team and IR Contacts: |
Steve Wylder EVP, Head of Investments
Ethan Torbati Vice President, Investments | Tim Doherty Chief Investment Officer
Pearse Hoffmann Senior Vice President Capital Markets & Investor Relations |
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SOURCE Safehold
FAQ
What is the size of Safehold's new affordable housing development in Sacramento?
How many affordable housing transactions did Safehold (SAFE) complete in California during 2024?
Who is developing The Crawford project for Safehold (SAFE) in Sacramento?
What type of financing structure is being used for The Crawford development by Safehold (SAFE)?
How does Safehold's (SAFE) ground lease structure benefit affordable housing developments?
