Safehold's Florida Ground Lease Deal: A Blueprint for Multifamily Dominance in Rising Rate Markets

The real estate landscape is shifting, and Safehold Inc. (NYSE: SAFE) is capitalizing on it with precision. The company's recent $100 million ground lease transaction for a 336-unit multifamily property in Florida's Space Coast isn't just another deal—it's a masterclass in how to disrupt traditional financing models while positioning itself at the forefront of the multifamily recapitalization boom. This strategic move with Texas-based JT Capital underscores Safehold's ability to deliver low-cost, long-term capital in an era of soaring interest rates, and it's a signal that investors should take notice.

The Deal: A New Partnership, A Proven Model
Safehold's collaboration with JT Capital marks its first with a Texas-based firm and its 18th transaction in Florida—a market it clearly dominates. The structure is straightforward yet powerful: a long-term ground lease paired with a leasehold loan to recapitalize the property. For JT Capital, this means unlocking equity trapped in the land beneath the building while securing favorable terms that reduce their reliance on expensive debt. For Safehold, it's another brick in the wall of its growing portfolio, which now totals over $5 billion in ground leases.

The partnership's success hinges on Safehold's REIT structure, which allows it to offer tax-advantaged, long-duration financing—critical in an environment where 30-year mortgage rates have surged above 7%. This transaction isn't an outlier; it's part of a pattern. Safehold's ground lease model has already attracted over 200 partners, and this deal with JT Capital expands its reach into Texas' investment networks while deepening ties in Florida's booming multifamily sector.

Why Ground Leases Are the Future of Real Estate Finance
The structural advantages of Safehold's model are clear. Ground leases decouple the value of the land from the building, enabling property owners to refinance or recapitalize without selling equity. For example, a multifamily owner might lease the land to Safehold for 99 years, using the land's value as collateral to secure financing at rates far below traditional mortgage costs. This structure also offers:
- Tax Efficiency: Lower taxable income for the property owner due to depreciation benefits.
- Risk Mitigation: Safehold's long-term ownership of the land removes land value volatility from the equation.
- Scalability: The model works for both stabilized assets and pre-development sites, making it adaptable to diverse needs.

Safehold's products—like its Ground Lease Plus and SAFExSWAP—further cement its edge. These tools allow partners to swap out old debt for safer, cheaper capital or refinance during market swings. In Florida, where multifamily occupancy rates have hit 95% (as of Q1 2025) and rents are rising at a 6% annual clip, the demand for such solutions is insatiable.

Florida's Space Coast: The Tip of the Iceberg
Florida's Space Coast isn't just a vacation spot—it's a growth corridor. With NASA's Artemis program driving job creation, SpaceX's presence, and a booming retiree population, the region's multifamily demand is surging. Safehold's 18th deal here isn't accidental; it's a bet on a market with 20% population growth since 2010 and a chronic undersupply of affordable housing.

But Florida is just one piece. Safehold's strategy is national, targeting high-growth multifamily markets where traditional financing is too costly or inflexible. The company's pipeline includes similar deals in Texas, Georgia, and the Carolinas—all regions with strong job markets and rising rent trajectories.

The Investment Case: Safehold as a Rate-Hike Winner
Here's why this matters for investors:
1. Interest Rate Hedge: As the Fed tightens, traditional REITs face margin pressure. Safehold's ground leases are long-term, fixed-rate agreements, making it a rare “rising rate beneficiary.”
2. Stable Cashflows: Its REIT structure mandates 90% dividend payout ratios, and its leasehold loans provide steady income streams.
3. Undervalued Potential: With a P/FFO (Price-to-Funds-From-Operations) ratio of just 12x—below peers like Equity Residential (EQR) at 15x—Safehold is cheap relative to its growth prospects.

The Bottom Line: A Multifamily Disruptor in Prime Position
Safehold isn't just another REIT. It's a financial engineering powerhouse, redefining how real estate is capitalized. The Florida deal with JT Capital is more than a transaction—it's proof that Safehold's model works at scale, attracts top-tier partners, and thrives in turbulent markets.

With multifamily vacancy rates near historic lows and financing costs near highs, the demand for Safehold's low-cost capital will only grow. For investors seeking a leveraged play on the housing boom—and a hedge against rising rates—Safehold's stock offers a compelling entry point now. The question isn't whether ground leases are the future of real estate finance. It's whether you'll be on the right side of this shift.