09/21/2023 | by Sarah Borchersen-Keto

Marcos Alvarado, president and CIO at Safehold Inc. (NYSE: SAFE), was a guest on the latest episode of Nareit’s REIT Report.

Alvarado said Safehold has made a “tremendous” amount of progress in the last six years in terms of portfolio expansion and growth in enterprise value, “but in the greater scheme of what we're looking to accomplish, I think we're still very, very early on…that's what excites us about the future.”

Alvarado noted that there's about $7 trillion of institutional quality real estate in the top 30 MSAs that Safehold focuses on. “In fluid times over the last few years, we've been able to originate over $1 billion of ground leases on an annual basis.”

Transaction volume has slowed of late, with the bulk of Safehold activity occurring in the multifamily and student housing space, he said, although transaction volumes in multifamily are off by 75%. Safehold is also exploring how ground leases can be accretive to developers of affordable multifamily properties.

“Ground leases are here to stay. The modern ground lease has proven it can create value for our customers. We're excited, once we get through this storm, to reaccelerate the growth that we had achieved over the last few years. I think the best is yet to come for our business,” Alvarado said.

Speaking more broadly on market conditions, Alvarado noted that, “We're still early in the wave of what we anticipate to be a pretty significant downturn and revaluation across real estate.” As markets remain choppy, Safehold will continue to think about its funding sources, whether that is joint ventures or new liability options on the lending side, he noted.

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