Safehold has closed ground leases worth more than $1.3 billion in the first three quarters 2022, despite a turbulent year for the markets. Commercial Observer: Safehold recently surpassed $6B in ground leases, and you have closed more than $1.3B in 2022. Marcos Alvarado: 2022 was a turbulent year. We didn't anticipate the impact of inflation on the capital markets. Our investment arc has followed that path. When we have functioning capital markets, our business is able to function well. These markets have been dysfunctional over the past few months. If you look at our investment history, we saw very solid volumes at the beginning 2022, but they have been tapering off since then. This is not a reflection of our ground lease product but the macro environment. In the middle of all that volatility, we closed nearly $300 million in transactions during Q3. We have announced only a few transactions in Q4. We are the best capital provider in the market when customers require capital solutions. Our customers know that. Our cost of capital has increased along with the wider market. As a result, our ground lease costs have increased for our customers. However, customers can see their options from the capital solution perspective and they are likely 200-250 basis points behind. Is this a consistent experience across all customers? This is what we all go through. Multifamily owners who thought their asset was worth $100 12 months ago may now think it is worth $80 today. The psychological impact is that they are now thinking, "I used to borrow at [X], but now I borrow @ [Y], and my asset is less." You may not want your asset to be sold or recapitalized if you think this is a temporary event. These are the kinds of decisions our customers are making right now. Safehold has done a lot to educate the market about the benefits of modern ground leases relative to traditional capital sources. It is a vastly different world from the place we were when we started our business. We were a misunderstood and niche product. We are now not misunderstood but we are still in the early stages of adoption. This is what excites and motivates us about the potential for our business. It's evident in our repeat customers, our growing customer base, the quality and quality of our assets, as well as in our quality customers. Proof of concept is the best feedback. It is amazing to see how many building owners have completed two, three, four or five transactions with us. The growth is the proof of our concept. It's encouraging to see customers who we dealt with two, three or four years ago selling their assets and refinancing them, which is also encouraging. They are realizing the dreams we presented them when the product was created, and they keep coming back to us. We are at $6 billion and have ambitious plans to expand the portfolio. We believe in the product. We solve both ends of this spectrum. We are innovating on the liability aspect of our business and looking for new ways to innovate with customers and how we capitalize our business. Our greatest strengths are our people, and the intellectual capital that we have built by creating new markets and working closely with customers and partners. The market is the biggest challenge. This is not your ground lease. You should take the time to meet with our team and learn about the successes we have had. Also, you will see the market liquidity. Safehold is a viable alternative capital solution for capitalizing your project.
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