Safehold’s New President Michael Trachtenberg Speaks Volumes

Michael Trachtenberg is ready to lead Safehold into the future. After 20 years at Lubert-Adler, a $10.5 billion real estate investment fund, Trachtenberg came aboard in December 2025 as the new president of Safehold, the publicly traded real estate investment trust (REIT) that specializes in acquiring or capitalizing ground leases, the long-term, mutli-decade leases of land commercial real estate properties sit on that often make up 35 percent of a capital stack. 

Since going public in 2017, Safehold has quickly become the gold standard of ground lease financings, as the firm’s portfolio has grown from $300 million to $7 billion. But since interest rates rose in 2022, the firm has struggled in the eyes of investors, and lost roughly 80 percent of its stock value from its August 2021 peak of $94 per share. 

Founder and CEO Jay Sugarman has tapped Trachtenberg to right the ship. Trachtenberg sat down with Commercial Observer to talk about his move to Safehold, his career in CRE, and why he believes so strongly in the firm’s novel ground lease financial product, as well as his plans to innovate ground leases across multiple asset classes. 

This interview has been edited for length and clarity.

Commercial Observer: How did you get into the commercial real estate industry, and what led you to Safehold? 

Michael Trachtenberg: So I started my career at Merrill Lynch in the real estate investment group, and I quickly concluded that I really wanted to be closer to the brick and sticks — I didn’t want to be an investment banker. And so, in 2005, I was introduced to Lubert-Adler in Philadelphia, which was an amazing seat to sit in, so I went home to Philadelphia and spent 20 years there. I ended up being the president of Lupert-Adler, and I really enjoyed my role there because I was able to partially run a business and also be a deal guy, really focusing on doing complicated, special situations type of transactions. I wasn’t the “apartment guy” in the Northeast, I wasn’t the “hotel guy” on the West Coast. My role was when something went wrong, or was weird, or funky, I was one to bang my head against the wall to figure it out. And I really enjoyed that, but I also liked the human element of running an organization, and that’s what I wound up doing. 

How did you wind up at Safehold?

This seat in Safehold is interesting. Lupert-Adler was one of the original pre-IPO investors in Safehold [in June 2017]. I didn’t happen to work on it at the time, and it’s not how I first got the introduction, it’s just kind of a happenstance, but it’s kind of a small world, right? At least in the sense that we were an investor there on the run-up on my next stop. But I think that, like the role I had at Lupert-Adler, this is a place where I get to wear my “investor” hat, but I also get to wear my “be heavily engaged in the management of the organization” hat. And that was a very interesting combination for me to be able to remain in that type of leadership position.

What attracted you to Safehold, more than anything else, to come here and run the company? 

I’m a big believer in the underlying business, which is just the creation of ground leases. If you look back over time, ground leases were typically controlled by a handful of groups: It was universities, churches, and a couple of high-net-worth families. They were all able to create tremendous amounts of wealth by being in the ground lease business, but it really wasn’t a democratized space. One of the things that [CEO] Jay [Sugarman] really had this vision of was to create a democratized version of a more modern ground lease that really cured all of the ills that were present in a lot of those older ground lease products. 

We’ve seen some of the horror stories around ground leases. [Editors note: Both the Chrysler Building and Lever House in New York City have been pummeled by severe ground lease terms.] A lot of those types of deals go bad because there’s these odd fair-market value resets, or other kinds of provisions, in there that just blow up somewhere along the way. Whereas, the thing that Jay has created here at Safehold was this more modern instrument where everything is relatively predictable, and now you’ve got an institutional organization that’s able to be an interface with whoever the ground lessee is. You know what you’re signing up for, it’s much more financeable. So in that way, what Safehold has is this amazingly novel, creative product, really an institutional instrument, that didn’t really exist otherwise in the marketplace. 

What comes next for Safehold now that you’re here?

I think a couple of things. One, we have a little over a 100 unique sponsors, almost 60 lenders who have financed Safehold ground leases, about 40 percent of our businesses are with repeat customers. So it clearly shows that the market, once they’ve transacted with us, they like our product, they see the value in it, they want to come back and do it again. And I think that one of the complicated things is figuring out this nascent space. There’s lots that one might ultimately try to do in the ground lease space, where we can innovate and create the products that really meet customers’ needs, and what I’m interested in figuring out in all those next iterations is building on the platform that we have, expanding and improving our product to better meet the customer’s needs, and provide even more value to them over time.

Like what? A recent earnings call suggested a bigger push into affordable housing. 

On the affordable housing front, it has been a big push for us, organizationally. We’ve done almost 20 deals in affordable space to date. We asked ourselves: “Can we meet the need to be a low-cost, gap dollar for these affordable housing developers, where they’re trying to complete these capital stacks to build affordable housing?” Right now, our main focus is California, but there’s a dearth of affordable housing across the country, and the need for affordable housing is kind of never ending. And so, we’ve really found a home in that space where you’ve been able to be real value-add financing to those types of developers. 

Aside from affordable housing, I think that one of the things that I bring to the table is I’ve done deals in basically every major asset class in nearly every major metro market. So as you look at our existing book, which has got a heavy concentration of apartments and office and a little bit of hospitality, along with a sliver of other things, I think, over time, we’ll look to expand into those other asset classes that we don’t have any large presence in, to the extent that we can find good dirt that we’ll be happy to be the owner of, ultimately. 

How do you see Safehold positioning itself in the current REIT waters, which have been hit by high tariffs, inflation and high borrowing costs? 

One of the things that’s interesting is we now have A3, A-minus and A-minus credit ratings across the three major credit agencies. They were able to really look into the future and see the stability and the durability of our cash-flow stream. If you’re just operating a hotel, or a shopping center, or an industrial building, there’s simply way more variability on what those rental streams might look like, depending on if you lose tenants, or if things go bad. Whereas, with Safehold, because we specialize in ground leases, we are actually a much more predictable instrument. So in that way, regardless of what’s happening in the public markets, stock price wise, our underlying business is much more stable than a lot of those other kinds of REITs or asset classes might look like. 

Ground leases have a tricky reputation. How much education do you still need to do across the marketplace to grow the firm? 

As you look at the roster of the 100-plus customers that we have, and at the amount of repeat business we have, they’d make a great commercial for the benefit of our capital and why it makes sense to use us to capitalize deals and be an efficient source of leverage. But there are certainly people who are still hung up on the old way of ground leases, so it’s really incumbent upon us as an organization to continue to educate the market. People feel a certain way about what our ground lease is, so it’s on us to show them, “No, this is what a ground used to look like in the past, but our ground looks like this, and we’ve cured all those things you think might make them deficient.” 

Safehold’s stock has dropped about 80 percent from its high over the last five years. Why do you think that happened? 

So, a couple of points. First, there’s a number that you see on the screen, and then there’s what we believe is the actual value of the firm. If you look at the company’s fundamentals, and believe that the stock price doesn’t reflect the sum-of-its-parts value of the company, that’s because you need to consider the contractual cash flows compared to other high-grade credit opportunities, which is why we trade at a discount even to that same level of value. The market doesn’t really give us any credit for the inflation protection that we have. It doesn’t really give us a lot of credit for the value from the kinds of residual interest that we are the beneficiary of — this large, diversified pool of assets that continues to grow over time. We also have all these super long-term, fixed-rate debt instruments that really have a lot of value today. So we’ve got an 18-year weighted average debt maturity profile at rates that have been locked in, when the rates were really low, for an extended period of time. 

And what is your plan to get it back up?

I think, fundamentally, it comes down to if you look at your kind of the $94-per-share price we had in 2021, that was at a time in the market when the 30-year Treasury yield was 1.9 percent. Now it’s 4.7 percent. So you’re 2.5 times that rate, and we are an interest rate-sensitive company, and it’s been relatively volatile for that period of time. So going forward, I think we’re focused on sustainable growth, making sure our growth engine is going as aggressive as it possibly can. Last year, we did 40 percent more ground lease volume than we did the year prior, which we think is really important to show the market, as it demonstrates the quality and the type of product innovation we can do over the past couple of years, in this higher interest rate environment, to be able to meet customers where they are and find products that are actually useful and can be value-add to them. 

Is there a plan to confront a world where we won’t have a 1.9 percent 30-year Treasury going forward, especially as the U.S. national debt hits $39 trillion?

I think partially it’s about the shape of the curve, right? If the curve got a little bit flatter, if it came that would be helpful. I think there is some uncertainty about where interest rates are going to settle. It has some sponsors questioning what the right capital solution is for their property today. I think the other thing I would add, though, is given that we’ve been able to increase our credit ratings to all the levels at which we talked about, and we are an unsecured borrower, our cost of capital is low and we’ve got attractive access to capital markets to finance our business, and so we think we have a competitive advantage, in that sense, given the strength of our balance sheet. 

Are you guys looking to expand the type of offerings that you give? 

One of the things that we did a little bit of last year was we combined some work-around leases with leasehold lending. And that’s really about creating a one-stop shop for some customers to try and create a transaction that is easier for them to execute on, where they don’t have to go find us and another debt lender. So we’re doing that very selectively. We’re doing it only where we believe strongly in the last-dollar basis on the attachment point where we are in that capital stack. And it’s a way of ultimately trying to use a shorter-term instrument — call it a three- to five-year loan — to still retain the traditional 99-year ground lease, which is still the core focus of the business. So we’ll never be the driver of our enterprise, but it’s one of the tools in the tool kit. It’s complementary. 

How would you describe your leadership qualities now that you’re president of the firm?

So I’ve always been a team guy, not a “me” type of guy. I try to inspire the gang by showing up and being present, being engaged, working right alongside them to demonstrate that I bought in and that I believe in what we were doing. It’s about leading by example. That’s what I fundamentally believe in. 

Brian Pascus can be reached at bpascus@commercialobserver.com.