The Ground Up

Transparency, Liquidity Driving Modern Ground Lease Adoption

The inflexible ground lease of old has been rendered obsolete by Safehold, just over four years after the company effectively created a new industry by creating a modern, client-friendly structure. Commercial Observer's Partner Insights spoke with Doug Heitner, Safehold’s Chief Legal Officer, about how ground leases and the industry’s response to them have evolved over that time.

Commercial Observer: Talk about some of the key structural innovations that Safehold brought to the ground lease sector.

Doug Heitner: The first would be transparency around the economics. That’s the biggest change from old ground leasing – a transparent rental calculation that allows owners to really plan. The second innovation was creating leaseholds that are financeable and sellable in a way that aligns with the modern capital markets. Those are the two main innovations, transparency and liquidity for our leasehold owners.

We’re also beginning to use ground leases in ways they’ve never really been used before. For example, our Ground Lease Plus program focuses on the development stage of an asset’s life cycle. Some of the environmental initiatives we hope to roll out in the next year are also novel ways of using a ground lease.


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