Safehold is a small-cap REIT that is best known for creating and leading the modern ground lease industry.
The company’s main goal is to buy long-term leases and own them.As the name suggests, a ground lease is used to rent land on which a building is built. Most of the time, these leases are signed for up to 99 years, and commercial property developers often use them to buy land.
Most of the land in SAFE’s portfolio is in urban areas. Leasing to multifamily, office, industrial, hospitality, student housing, life science, and mixed-use properties. With a small cap of $1.78 billion, SAFE was priced out of the small cap category during the bull market from 2019 to 2021.
Rising interest rates, which have slowed down the real estate market, have had an impact on SAFE’s value like they have on many other REITs. But Safehold might be in a good spot because most of its leases are for long periods of time.
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With these long-term ground leases, the company might be able to reduce some of the risks that come with the interest rate spike. But investors may have pushed the stock too far because of the effects of the recession of 2008.
Since their all-time high of $95 in 2021, shares have fallen by a huge amount—nearly 70%. Almost all of the money that the REIT made during the bull market has been lost. The company has a price-to-earnings (P/E) ratio of 12.82, which is much lower than the average for its industry.
The stock also seems to be below its 200-day moving average, which supports the idea that it is oversold. Even though the price of the stock might look good, its dividend yield might not be as good as its peers. The dividend on SAFE is only 2.47 percent per year.
But Safehold doesn’t look like it’s going to slow down. The company just finished a very important lease deal for Park Central, which is a 200-unit Class A apartment complex in Nashville.