10 Cheap REITs with Huge Upside

1. Safehold Inc. (NYSE:SAFE)

Average Upside Potential: 24.09%

Forward P/E: 14.08

Number of Hedge Funds: 13

Safehold Inc. (NYSE:SAFE) serves as the first publicly traded company to focus on modern ground leases. Safehold’s ground lease helps building owners generate a stronger return profile and lower cost of capital with less risk while lowering the upfront equity requirements. The REIT gives investors access to an ownership stake in a dynamically growing and diversified portfolio of ground leases.

Safehold is the only nationally-scaled platform focusing on making ground leases value-enhancing for customers. Through an innovative ground lease platform, the firm tries to capture the value of economic activity in the top US markets. SAFE targets well-located, institutionally owned commercial real estate with attractive fundamentals diversified across the top 30 MSAs, which the firm believes are positioned for long-term sustainable growth.

Safehold Inc.’s (NYSE:SAFE) Q2 GAAP net income and EPS increased 34% and 20% year-over-year respectively. The firm originated six multifamily ground leases for $98 million during the quarter. It funded a total of $78 million which includes $37 million of new Q2 originations that have a 7.5% economic yield and $41 million of existing ground leases that have a 6.4% economic yield.

Therefore, Safehold Inc. (NYSE:SAFE) is a market leader of the modern ground lease industry which has grown its portfolio from $0.3 billion to $6.5 billion since 2017 IPO thereby building national scale and brand equity over the years. It is important to consider that ground leases are a compelling asset class and investors can participate in this historically inaccessible asset class with a significant addressable market through SAFE.

While we acknowledge the potential of SAFE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than SAFE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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