A replay of the call will be archived on the Company's website. Alternatively, the replay can be accessed via dial-in from 8:00 p.m. ET on Wednesday, November 5, through 12:00 a.m. ET on November 19, 2025 by calling: Replay: 877.481.4010 International: 919.882.2331 Access Code: 53142 Safehold Inc. (NYSE: SAFE) is revolutionizing real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings. Having created the modern ground lease industry in 2017, ...

Investors interested in stocks from the REIT and Equity Trust - Residential sector have probably already heard of Safehold (SAFE) and Essex Property Trust (ESS) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank empha ...

Core Viewpoint - Safehold (SAFE) is currently positioned as a more attractive investment option compared to Essex Property Trust (ESS) for value investors based on various financial metrics and earnings outlook improvements [3][7]. Valuation Metrics - SAFE has a forward P/E ratio of 9.53, significantly lower than ESS's forward P/E of 16.51, indicating that SAFE may be undervalued relative to its earnings potential [5]. - The PEG ratio for SAFE is 1.38, while ESS has a PEG ratio of 6.77, suggesting that SAFE offers better value when considering expected earnings growth [5]. - SAFE's P/B ratio stands at 0.46, compared to ESS's P/B of 2.92, further highlighting SAFE's more favorable valuation [6]. Earnings Outlook - SAFE has experienced stronger estimate revision activity, indicating a more positive earnings outlook compared to ESS [3][7]. - The Zacks Rank for SAFE is 2 (Buy), while ESS holds a Zacks Rank of 3 (Hold), reflecting a stronger investment sentiment towards SAFE [3]. Value Grades - SAFE has a Value grade of B, whereas ESS has a Value grade of D, underscoring the relative attractiveness of SAFE for value investors [6].

Core Points - Safehold Inc. has declared a common stock dividend of $0.177 per share for Q3 2025, which translates to an annualized rate of $0.708 per share, payable on October 15, 2025, to shareholders of record on September 30, 2025 [1] - Safehold is innovating real estate ownership by enabling property owners to unlock the value of the land beneath their buildings, having established the modern ground lease industry in 2017 [2] - The company operates as a real estate investment trust (REIT) and aims to provide safe, growing income and long-term capital appreciation to its shareholders [2]

Core Viewpoint - The comparison between Safehold (SAFE) and American Homes 4 Rent (AMH) indicates that SAFE currently offers better value for investors based on various financial metrics and rankings [1][3]. Group 1: Zacks Rank and Earnings Outlook - Safehold has a Zacks Rank of 2 (Buy), while American Homes 4 Rent has a Zacks Rank of 3 (Hold), suggesting a stronger earnings outlook for SAFE [3]. - The Zacks Rank emphasizes stocks with positive revisions to earnings estimates, indicating an improving earnings outlook for SAFE [3]. Group 2: Valuation Metrics - SAFE has a forward P/E ratio of 10.18, significantly lower than AMH's forward P/E of 18.66, indicating that SAFE may be undervalued [5]. - The PEG ratio for SAFE is 1.48, while AMH's PEG ratio is 2.93, suggesting that SAFE has a more favorable valuation relative to its expected earnings growth [5]. - SAFE's P/B ratio is 0.49, compared to AMH's P/B of 1.64, further indicating that SAFE is trading at a lower valuation relative to its book value [6]. Group 3: Value Grades - SAFE has earned a Value grade of B, while AMH has a Value grade of D, highlighting the relative attractiveness of SAFE for value investors [6]. - The combination of Zacks Rank and Style Scores indicates that SAFE stands out as the better investment option compared to AMH [6].

Core Insights - The individual has extensive experience in the oil and gas sector, particularly in the Middle East, which informs their investment strategy [1] - The investment approach has evolved from growth investing to a blend of value and growth, focusing on the underlying economics of businesses and their competitive advantages [1] - There is an emphasis on generating consistent free cash flow and a moderately conservative orientation towards minimizing downside risk while seeking upside [1] Investment Strategy - The investment strategy includes a gradual rebalancing towards income-generating assets such as dividend-paying equities and REITs as retirement approaches [1] - Investing is viewed not just as a pursuit of high returns but also as a means to achieve peace of mind [1] - The individual is interested in ecologically sensitive businesses, indicating a focus on sustainable investing [1]

[PART I Consolidated Financial Information](index=3&type=section&id=PART%20I%20Consolidated%20Financial%20Information) This section presents the company's unaudited consolidated financial statements and related notes, along with management's discussion and analysis of financial condition and results of operations [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for the period ended June 30, 2025, show a slight increase in total assets to $7.1 billion, driven by growth in lease and loan receivables, while total liabilities also increased primarily due to higher debt obligations [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet reflects the company's financial position, showing asset growth primarily from lease and ground lease receivables, alongside an increase in debt obligations | Account | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$7,063,158** | **$6,899,379** | **+2.4%** | | Net investment in sales-type leases | $3,511,257 | $3,454,953 | +1.6% | | Ground Lease receivables, net | $1,903,883 | $1,833,398 | +3.8% | | **Total Liabilities** | **$4,659,091** | **$4,525,352** | **+2.9%** | | Debt obligations, net | $4,444,412 | $4,317,439 | +2.9% | | **Total Equity** | **$2,404,067** | **$2,374,027** | **+1.3%** | - Total assets increased by **$163.8 million** from December 31, 2024, to June 30, 2025, primarily driven by growth in net investment in sales-type leases and ground lease receivables[9](index=9&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The statements of operations indicate revenue growth for Q2 2025, but net income attributable to shareholders decreased due to higher interest expense and credit loss provisions | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YTD 2025 ($ in thousands) | YTD 2024 ($ in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $93,842 | $89,895 | $191,519 | $183,108 | | Interest Expense | $51,265 | $49,107 | $101,691 | $97,738 | | Provision for credit losses | $2,350 | $626 | $4,646 | $1,335 | | Net Income (to Safehold Inc.) | $27,947 | $29,665 | $57,311 | $60,393 | | Diluted EPS | $0.39 | $0.42 | $0.80 | $0.85 | - Net income for Q2 2025 decreased by **5.8% YoY** to **$27.9 million**, and diluted EPS fell to **$0.39** from **$0.42**, primarily due to a significant increase in the provision for credit losses and higher interest expense, which offset revenue growth[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements show increased cash from operations for the first six months of 2025, with financing activities providing significant proceeds from net debt | Cash Flow Activity | Six Months Ended June 30, 2025 ($ in thousands) | Six Months Ended June 30, 2024 ($ in thousands) | | :--- | :--- | :--- | | Net cash from Operating Activities | $36,902 | $21,695 | | Net cash used in Investing Activities | ($123,961) | ($136,823) | | Net cash from Financing Activities | $92,878 | $90,410 | | **Change in Cash** | **$5,819** | **($24,718)** | - For the first six months of 2025, cash from operations increased to **$36.9 million** from **$21.7 million** in the prior year, with cash used in investing activities decreasing slightly due to lower originations of sales-type leases and ground lease receivables, and financing activities providing **$92.9 million** primarily from net debt proceeds[22](index=22&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial statement line items, including the company's business model focused on long-term Ground Leases, its growing lease and loan portfolios, debt obligations, and significant related-party transactions - The company's business is focused on acquiring, managing, and capitalizing long-term Ground Leases, which represent ownership of the land underlying commercial real estate projects, operating as a single reportable segment and electing to be treated as a REIT[24](index=24&type=chunk)[26](index=26&type=chunk) - The combined portfolio of Net Investment in Sales-Type Leases and Ground Lease Receivables grew to **$5.42 billion** as of June 30, 2025, up from **$5.29 billion** at year-end 2024[55](index=55&type=chunk) - In Q2 2025, the company began originating leasehold loans in conjunction with its Ground Leases, with an outstanding principal balance of **$42.8 million** as of June 30, 2025[77](index=77&type=chunk) - Total debt obligations stood at **$4.44 billion** as of June 30, 2025, with the company entering into a new **$2.0 billion** unsecured revolving credit facility in April 2024, replacing previous facilities[105](index=105&type=chunk)[116](index=116&type=chunk) - The company manages Star Holdings and earned management fees of **$2.7 million** and **$6.3 million** for the three and six months ended June 30, 2025, respectively, also holding a **$115.0 million** secured term loan facility outstanding to Star Holdings[82](index=82&type=chunk)[181](index=181&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's single-segment business model centered on Ground Leases, highlighting portfolio diversification, the impact of high interest rates, operational results showing revenue growth offset by increased expenses, and strong liquidity maintained through recent financing activities [Business Overview and Portfolio](index=50&type=section&id=Business%20Overview%20and%20Portfolio) The company's strategy focuses on acquiring, managing, and capitalizing on Ground Leases, which provide safe, growing income and potential for capital appreciation, with a diversified portfolio across property types and geographies - The company's strategy is to acquire, manage, and capitalize on Ground Leases, which it believes provide safe, growing income and potential for capital appreciation through residual rights[189](index=189&type=chunk) Combined Property Value and Unrealized Capital Appreciation | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Combined Property Value | $15,577 million | $15,523 million | | Ground Lease Cost | $6,521 million | $6,395 million | | **Unrealized Capital Appreciation (UCA)** | **$9,056 million** | **$9,128 million** | Portfolio Diversification by Property Type | Property Type | % of Gross Book Value | | :--- | :--- | | Multifamily | 41% | | Office | 40% | | Hotel | 11% | | Life Science | 6% | | Mixed Use and Other | 2% | - The portfolio is geographically concentrated, with the top three markets being Manhattan (**21%**), Washington, DC (**10%**), and Boston (**8%**)[216](index=216&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Operational results for Q2 and YTD 2025 show revenue growth driven by portfolio expansion, but net income declined due to increased interest expense and a significant rise in the provision for credit losses - **Q2 2025 vs Q2 2024:** Total revenues increased by **$3.9 million**, primarily due to a **$5.4 million** rise in interest income from sales-type leases from portfolio growth, however, total costs and expenses grew by **$4.0 million**, driven by a **$2.2 million** increase in interest expense and a **$1.7 million** increase in the provision for credit losses, leading to a slight decrease in net income[222](index=222&type=chunk)[223](index=223&type=chunk)[227](index=227&type=chunk) - **YTD 2025 vs YTD 2024:** Total revenues for the six-month period grew by **$8.4 million**, while total costs increased by **$7.8 million**, with the provision for credit losses rising significantly to **$4.6 million** from **$1.3 million**, and other expenses increasing by **$2.1 million** mainly due to a **$1.9 million** write-off of a preferred equity investment[237](index=237&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - Other income decreased in both the three and six-month periods of 2025 compared to 2024, primarily due to lower management fees earned from Star Holdings (**$2.7 million** vs **$4.4 million** in Q2; **$6.3 million** vs **$9.9 million** YTD)[226](index=226&type=chunk)[241](index=241&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with substantial cash and undrawn credit capacity, supported by recent senior note issuances and a new revolving credit facility, while also having unfunded commitments for various investments - The company maintains a strong liquidity position with **$13.9 million** in unrestricted cash and **$1.2 billion** of undrawn capacity on its **$2.0 billion** unsecured revolving credit facility as of June 30, 2025[260](index=260&type=chunk)[262](index=262&type=chunk) - Recent financing activities include the issuance of an aggregate **$700.0 million** in senior notes in November 2024 and February 2024, and the establishment of a new **$2.0 billion** unsecured revolver in April 2024, which extended maturities and increased flexibility[256](index=256&type=chunk)[258](index=258&type=chunk) - The company has a **$50.0 million** share repurchase program authorized in February 2025, but no shares had been repurchased as of June 30, 2025[255](index=255&type=chunk) - Total unfunded commitments as of June 30, 2025, were **$90.5 million** for leasehold improvements, **$35.0 million** for a forward commitment, and **$195.9 million** for performance-based construction and development loans[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on its floating-rate debt, with a sensitivity analysis indicating that a 100 basis point increase in interest rates would decrease annual net income by approximately $3.4 million - The principal market risk is interest rate risk on floating-rate indebtedness, with the company aiming to limit the impact of interest rate changes on operations and cash flows[272](index=272&type=chunk)[274](index=274&type=chunk) Estimated Change in Net Income Due to Interest Rate Changes | Change in Interest Rates | Estimated Change in Net Income ($ in thousands) | | :--- | :--- | | +100 Basis Points | ($3,378) | | +50 Basis Points | ($1,689) | | -50 Basis Points | $1,700 | | -100 Basis Points | $3,478 | [Controls and Procedures](index=74&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[278](index=278&type=chunk) - No changes in the company's internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[279](index=279&type=chunk) [PART II Other Information](index=75&type=section&id=PART%20II%20Other%20Information) This section covers other required disclosures, including legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits [Legal Proceedings](index=75&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no pending legal proceedings that are expected to have a material adverse effect on its business or financial condition - The company reports no pending legal proceedings that would have a material adverse effect on its business or financial condition[283](index=283&type=chunk) [Risk Factors](index=75&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors disclosed in the 2024 Annual Report were reported[284](index=284&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not have any sales of unregistered equity securities during the three months ended June 30, 2025, and no shares were repurchased under its authorized share repurchase program during the quarter - There were no sales of unregistered common stock during the three months ended June 30, 2025[285](index=285&type=chunk) - The company has a board-authorized share repurchase program for up to **$50.0 million**, under which no shares were purchased during the quarter[290](index=290&type=chunk) [Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section provides an index of the exhibits filed with the Form 10-Q, including charter documents, certifications, and XBRL data files

Core Insights - Safehold reported revenue of $93.84 million for the quarter ended June 2025, reflecting a 4.4% increase year-over-year, but an EPS of $0.39, down from $0.41 in the previous year [1] - The revenue was slightly below the Zacks Consensus Estimate of $93.88 million, resulting in a surprise of -0.04%, while the EPS met the consensus estimate [1] Revenue Breakdown - Operating lease income was reported at $16.71 million, slightly above the estimated $16.64 million, showing a year-over-year increase of 0.1% [4] - Other income was reported at $3.78 million, below the estimated $4.3 million, representing a significant year-over-year decline of 32.6% [4] - Interest income from sales-type leases was $70.64 million, marginally exceeding the estimate of $70.62 million, with a year-over-year increase of 8.3% [4] Stock Performance - Over the past month, Safehold's shares have returned -8.4%, contrasting with a +1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - For the second quarter, GAAP revenue was $93.8 million, net income was $27.9 million, and earnings per share was $0.39, with a decline in GAAP earnings year over year primarily due to a $1.7 million increase in non-cash general provision for credit losses [10][11][12] - Excluding the impact from non-cash general provisions, Q2 earnings per share was $0.42 [10] - The total portfolio was $6.9 billion, with an estimated UCA of $9.1 billion, reflecting a $200 million increase from the previous quarter [8][9] Business Line Data and Key Metrics Changes - New origination activity was approximately $220 million, including four ground leases for $123 million and three leasehold loans for $97 million [5][6] - The ground lease portfolio has grown 20 times by book value since the IPO, with estimated unrealized capital appreciation growing 21 times [9] - The portfolio currently earns a 3.7% cash yield and a 5.4% annualized yield, with an economic yield of 5.8% [11][12] Market Data and Key Metrics Changes - The pace of signed LOIs has increased, currently at its highest level since 2022, driven by success in the affordable housing segment [7][8] - The GLTV remained flat at 52%, and rent coverage was unchanged at 3.5 times [13] Company Strategy and Development Direction - The company aims to simplify and shorten the time to closing by rolling out a test program for one-stop capital solutions combining ground leases and leasehold loans [4][5] - The focus remains on enhancing affordable multifamily projects and maximizing opportunities for top players in that market [4][5] - The company is optimistic about the sectors it is focusing on and the product enhancements being piloted with customers [8] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions remain challenging, with larger customers navigating uncertainty [4] - There is optimism regarding customer engagement translating into more LOIs and closings, with a well-positioned balance sheet and ample liquidity [17] - The impact of recent legislative changes on demand for ground leases is still uncertain, but the company is navigating through the current market dynamics [40][41] Other Important Information - The company has approximately $1.2 billion of liquidity, supported by potential available capacity in its joint venture [8][15] - The weighted average debt maturity is approximately 19 years, with no corporate maturities due until 2027 [13][15] Q&A Session Summary Question: Inquiry about new sponsor conversion and timeline - Management indicated that the timeline for converting clients has shortened, with some deals taking years while others can convert in weeks [20][21] Question: Affordable housing transactions and geographic expansion - The company has expanded its reach into other states and is seeing traction in its pipeline for affordable housing transactions [22][24] Question: Pipeline status and future capital deployment - Management confirmed that the pipeline remains strong, with an increase in LOIs and a positive outlook for future capital deployment [27][28] Question: Nature of leasehold loans - Leasehold loans are intended as accelerators, not permanent capital solutions, with an average term of three years or less [30][31] Question: Impact of recent legislation on ground lease demand - Management believes the impact is still uncertain, but existing assets may benefit while development assets face challenges [40][41] Question: Commentary on the hotel deal and potential for repeat business - The company sees potential for future business with new sponsors and is actively engaging in discussions for additional deals [46][47] Question: Update on Park Hotels portfolio - Management provided insights on the Park portfolio, indicating that two assets are not being renewed, with plans for potential sales of the remaining assets [59][60][66]

Financial Performance - Revenues for Q2'25 reached $93.8 million, a 4% increase compared to $89.9 million in Q2'24[10] - Net income attributable to Safehold Inc common shareholders was $27.9 million in Q2'25, a 6% decrease from $29.7 million in Q2'24[10] - Earnings per share (EPS) were $0.39 in Q2'25, down 6% year-over-year from $0.42[10] Portfolio Growth and Composition - Aggregate Gross Book Value (GBV) of ground leases reached $6.9 billion in Q2'25, a significant increase from $0.3 billion at IPO[8] - Estimated Unrealized Capital Appreciation (UCA) grew to $9.1 billion in Q2'25, a substantial rise from $0.4 billion at IPO[8] - New ground lease originations in Q2'25 totaled $123 million, while new leasehold loan originations amounted to $97 million[8] - Multifamily assets constitute 58% of the portfolio by count, representing 41% of the GBV[19] Capital Structure and Liquidity - The company has $1.2 billion in cash and credit facility availability[5] - Total debt outstanding is $4.77 billion, with total equity at $2.40 billion, resulting in a debt-to-equity ratio of 1.98x[24] Portfolio Yields - The core ground lease portfolio has an economic yield of 5.8%[14] - The illustrative Caret adjusted yield is 7.5%[14]