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Safehold expands ground-lease strategy for affordable housing deals
The REIT says it has closed more than 25 ground leases in California for federal LIHTC-related developments since launching a dedicated affordable housing platform in 2025.
Safehold has spent nearly a decade modernizing its ground lease strategy, aimed at owning the land underneath development to reduce costs for builders and users, with more recent use focused on affordable housing. Commercial Observer reports the REIT started using the approach to help affordable housing developers close capital stack gaps, and launched a dedicated affordable housing platform in 2025.
According to Commercial Observer, Safehold has accelerated its activity, particularly in California, where it has closed more than 25 ground leases for federal Low-Income Housing Tax Credit, or LIHTC, related developments. The article says 99-year ground leases are designed to provide low-cost capital at a premium to underlying land value, which Safehold says can increase proceeds for 4 percent LIHTC projects by 10 to 20 percent.
Commercial Observer also notes that Safehold has closed 172 ground leases for owner-operators, public companies, and sovereign wealth funds. The article adds that Southern California has become one of the REIT’s most active affordable housing markets, with projects stretching from San Diego to Los Angeles and Ventura County.