Safehold Expands Affordable Housing Push With Two California Ground Leases

• Safehold closed two new affordable housing ground leases in California.
• The developments in Santa Cruz and Santa Clarita will deliver a combined 211 affordable housing units by 2028.
• CRP Affordable Housing & Community Development is developing both projects with financing from Citi Community Capital.

What the Ground Lease Deals Include

Safehold has expanded its affordable housing platform with two new ground lease transactions tied to residential developments in Santa Cruz and Santa Clarita, California. The projects will be developed by CRP Affordable Housing & Community Development and are expected to deliver a combined 211 affordable housing units by 2028. The developments are being financed through Low-Income Housing Tax Credit programs, with Citi Community Capital providing both construction and permanent financing.

What This Means for Affordable Housing Development

The deal highlights the growing use of ground lease structures in affordable housing development as builders continue looking for ways to lower upfront land acquisition costs. By separating land ownership from the building itself, ground leases can reduce development expenses and improve project feasibility, particularly in high-cost states like California, where affordable housing projects often face financing challenges. Safehold has increasingly targeted affordable housing as part of its broader investment strategy, expanding beyond traditional office and multifamily ground lease deals.

What This Says About California Housing Demand

Both Santa Cruz and Santa Clarita continue facing housing affordability pressure driven by population growth, limited supply, and elevated construction costs. Affordable housing developers remain active in California despite higher interest rates because state and local governments continue prioritizing new workforce and income-restricted housing projects. The use of tax credit financing combined with alternative capital structures like ground leases has become more common as developers attempt to bridge funding gaps.

What the Projects Could Mean for Investors

For institutional investors, affordable housing continues attracting attention because of its relatively stable long-term demand and government-backed financing support. Safehold’s continued expansion into the sector also reflects how ground lease models are becoming more widely accepted across multiple asset classes, including workforce and affordable housing communities. As more developers seek creative financing strategies, ground lease structures could play a larger role in future California housing projects.