Safehold CEO Says Strong Rent Coverage, New Credit Ratings Position REIT for Growth

Safehold CEO Says Strong Rent Coverage, New Credit Ratings Position REIT for Growth
Sarah Borchers…
Apr. 16 2021

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Jay Sugarman says ground lease market could eventually grow to around $1 trillion.

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With 100% of its ground lease rents paid in 2020 and newly-received investment grade credit ratings, Safehold Inc. (NYSE: SAFE) Chairman and CEO Jay Sugarman says the REIT is “really well positioned to keep growing.”

Speaking on the REIT Report, Sugarman noted that despite the challenges of 2020, “last year actually proved how strong the business is.” Meanwhile, new ratings from Moody’s Investors Services and Fitch Ratings “will be a pretty major competitive advantage,” he added.

Sugarman noted that when it comes to selecting particular property types, “our mission is to go where the best markets and land is.” Multifamily has been a “great story so far,” and represents about 25% of the portfolio, he said. “I imagine we’ll be in all property types in the top 30 markets in the next year or so.”

Meanwhile, Sugarman said he believes the modern ground lease structure “can do for commercial real estate what net lease did for the corporate world, and that’s about a $1 trillion industry.”

“We think there are big things ahead as more and more people understand that modern ground leases are just a more efficient, lower cost solution, and very similar to what corporations have been doing with net leases for decades…there’s no reason this can’t become a $1 trillion industry as well,” Sugarman said.

As for new entrants in the market, Sugarman said he welcomes the interest: “We want this to be a mainstream product so the more people who are out there educating the market the better.”

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