$45M Ground Lease Secured for Santa Cruz Affordable Housing Project
Event summary
- $45M ground lease closed for 256-unit affordable housing project in Santa Cruz, California.
- Project developed by The Pacific Companies, with financing from Wells Fargo and Citi Community Capital.
- Delivery expected in 2028, marking Safehold's second recent affordable housing deal in the area.
The big picture
Safehold is expanding its affordable housing portfolio, leveraging ground leases to fill capital structure gaps in high-cost markets. This deal underscores the company's strategic shift towards addressing unmet demand for affordable housing, particularly in coastal submarkets like Santa Cruz. The involvement of major financial institutions highlights the growing reliance on innovative financing structures to support large-scale residential developments.
What we're watching
- Affordable Housing Demand
- How Safehold's focus on affordable housing will impact its portfolio diversification and growth.
- Capital Structure Gaps
- Whether Safehold's ground lease model can effectively address financing challenges in high-cost markets.
- Execution Risk
- The pace at which similar projects will be delivered amid elevated rates and construction costs.
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