Marcos Alvarado, President and CIO Safehold Inc, (NYSE:SAFE), was a guest on the latest episode of Nareit’s REIT Report.
Alvarado said Safehold has made “tremendous” progress over the past six years in terms of portfolio expansion and enterprise value growth, “but in the grand scheme of what we’re trying to accomplish, I think we’re still a long way off.” Very soon…that’s what gets us excited about the future.”
Alvarado noted that there is approximately $7 trillion of institutional quality real estate in the top 30 MSAs, which Safehold focuses on. “Through the volatile times over the past few years, we have been able to deliver over $1 billion of ground leases on an annual basis.”
Transaction volume has slowed recently, he said, with most of the Safehold activity occurring in the multifamily and student housing sector, although transaction volume in multifamily is down 75%. Safehold is also exploring how ground leases can be helpful to developers of affordable multifamily properties.
“Ground leases are here to stay. Modern ground lease has proven that it can create value for our customers. Once we weather this storm, we’re excited to accelerate the growth we’ve achieved over the past few years. I think the best is yet to come for our business,” Alvarado said.
Speaking more broadly on market conditions, Alvarado said, “We are still in a period of quite significant recession and revaluation fears in real estate.” As markets remain volatile, Safehold will continue to think about its funding sources, whether it’s joint ventures or new liability options on the borrowing side, he said.