Core Insights - Safehold (SAFE) reported revenue of $96.16 million for Q3 2025, a 6% year-over-year increase, with an EPS of $0.41 compared to $0.37 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $95.33 million, resulting in a surprise of +0.87%, while the EPS also surpassed the consensus estimate of $0.40 by +2.5% [1] Revenue Breakdown - Operating lease income was reported at $16.99 million, exceeding the average estimate of $16.66 million, reflecting a year-over-year increase of +2.1% [4] - Other income amounted to $3.66 million, below the average estimate of $4.15 million, indicating a year-over-year decline of -19.7% [4] - Interest income from sales-type leases was $72.43 million, slightly below the estimated $72.96 million, but showed a year-over-year increase of +7.9% [4] Stock Performance - Over the past month, Safehold's shares have returned -3.7%, contrasting with the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - For Q3 2025, GAAP revenue was $96.2 million, net income was $29.3 million, and earnings per share was $0.41, with a year-over-year increase primarily due to a non-recurring $6.8 million provision taken last year [9][10] - Excluding non-recurring items, Q3 earnings per share increased by 4 cents year-over-year, or approximately 12%, driven by new investment activity [10] - The total portfolio at quarter-end was $7 billion, with an estimated unrealized capital appreciation (UCA) of $9.1 billion [7] Business Line Data and Key Metrics Changes - In Q3, the company originated four multifamily ground leases for $42 million, and in Q4 to date, an additional four leases for $34 million, all within the affordable housing subsegment [6] - The ground lease portfolio had 155 assets, including 92 multifamily properties, and has grown 21 times by both book value and estimated unrealized capital appreciation since the IPO [9] - The portfolio's cash yield was 3.8%, with an economic yield of 5.9%, which could increase to 7.5% when factoring in unrealized capital appreciation [10][11] Market Data and Key Metrics Changes - The portfolio's ground lease-to-value (GLTV) ratio remained flat at 52%, while rent coverage slightly declined from 3.5 times to 3.4 times [12] - The company ended the quarter with approximately $1.1 billion of liquidity, supported by joint venture capacity [8][13] Company Strategy and Development Direction - The company is focused on meeting customer needs through innovative products and solutions, including One Stop Capital Solutions and custom pricing [5] - There is a strong emphasis on affordable housing, with expectations for meaningful growth in this sector [6][14] - The company aims to leverage its strong balance sheet and liquidity position to pursue more aggressive strategies with customers [14] Management's Comments on Operating Environment and Future Outlook - Management noted steady activity in the ground lease business, with a recent decline in rates providing a constructive backdrop, although some deals are taking longer to close [4] - The company is optimistic about the affordable housing sector and expects it to boost origination volume [14] - Management expressed caution regarding the ongoing litigation with Park Hotels, emphasizing the importance of protecting shareholder value [15] Other Important Information - The company has an active hedging strategy, with a weighted average debt maturity of approximately 19 years and no maturities due until 2027 [12][13] - The effective interest rate on permanent debt is 4.2%, while the cash interest rate is 3.8% [14] Q&A Session Summary Question: Originations and Rent Coverage - Inquiry about the originations being primarily on the West Coast and the slight decline in rent coverage, with a request for insights on the appetite for affordable housing deals [17] - Response highlighted strong traction in affordable housing and conservative underwriting practices to ensure coverage metrics remain robust [18] Question: Park Hotels Litigation Timing - Question regarding the typical resolution timeframe for litigation [20] - Management indicated that such matters do not resolve quickly and emphasized the need to enforce contractual rights [21] Question: Breach of Contract Details - Inquiry about the specific claims of breach against Park Hotels and whether rent payments were affected [24] - Management clarified that the issue was related to maintenance standards, not rent payments [25] Question: Deal Pipeline and Economic Yields - Question about the expectations for economic yields and the impact of short-term rate changes on future deals [29] - Management noted that yields depend on the timing of closings and current market conditions, with a focus on maintaining a spread over long-term bonds [30] Question: Impact of Rent Stabilization - Inquiry about the potential impact of recent rent stabilization measures in New York City on affordable housing underwriting [51] - Management expressed concerns that reducing incentives to create supply could exacerbate housing shortages, emphasizing the need for increased supply to stabilize rents [52] Question: Multifamily Portfolio and Future Targets - Question about the current percentage of affordable housing in the multifamily portfolio and long-term targets [56] - Management indicated that the affordable housing segment is still small but growing, with aspirations for significant expansion [57] Question: New York City Multifamily Exposure - Inquiry about exposure to rent-stabilized units in New York City and the implications of potential rent freezes [63] - Management acknowledged the complexities of the New York market and the need for solutions that enhance supply rather than restrict it [64]

Q3'25 Earnings Results - Revenues reached $96.2 million, a 6% increase year-over-year, and $287.7 million year-to-date, a 5% increase[10] - GAAP Net Income was $29.3 million, a 51% increase year-over-year, and $86.6 million year-to-date, a 9% increase[10] - Earnings Per Share (EPS) was $0.41, a 52% increase year-over-year, and $1.21 year-to-date, an 8% increase[10] - Excluding non-recurring gains and losses, EPS increased by $0.04 year-over-year due to asset funding and origination[11] Portfolio Activity - Q3'25 originations included four new ground leases valued at $42 million with a 34% GLTV and a 7.3% economic yield[4,8] - Total portfolio aggregate GBV reached $7.0 billion, with an estimated unrealized capital appreciation (UCA) of $9.1 billion[5] - The company has $1.1 billion available in cash and credit facility[5] - The company has $400 million remaining capital for JV with Leading Sovereign Wealth Fund[5] Portfolio Composition - The core ground lease portfolio has a gross book value of $6.9 billion with a 91-year weighted average extended lease term[12,16] - Multifamily assets constitute 41% of the portfolio by GBV, with a rent coverage of 3.6x and a GLTV of 39%[18] - Office assets constitute 40% of the portfolio by GBV, with a rent coverage of 3.1x and a GLTV of 70%[18]

Financial Performance - Q3'25 revenues increased by 6% year-over-year to $96.2 million, compared to $90.7 million in Q3'24[8] - Net income attributable to Safehold Inc. rose by 51% year-over-year to $29.3 million, up from $19.3 million in Q3'24[8] - Earnings per share (EPS) increased by 52% year-over-year to $0.41, compared to $0.27 in Q3'24[8] - Net income attributable to Safehold Inc. common shareholders for Q3 2025 was $29.282 million, an increase of 51.7% compared to $19.331 million in Q3 2024[30] - EPS excluding non-recurring gains/losses for Q3 2025 was $0.41, compared to $0.37 in Q3 2024, reflecting an increase of 10.8%[30] - The company reported a net income excluding non-recurring gains/losses of $88.538 million for the nine months ended September 30, 2025, compared to $86.528 million for the same period in 2024, an increase of 2.3%[30] Portfolio and Assets - The Core Ground Lease Portfolio gross book value reached $6.9 billion, with a weighted average lease term of 91 years[10][14] - Total portfolio square footage increased to 37.2 million square feet, with 155 total assets[7] - Total assets as of September 30, 2025, reached $7.148 billion, up from $6.899 billion as of December 31, 2024, reflecting a growth of 3.6%[27] - The company's net investment in sales-type leases increased to $3.527 billion as of September 30, 2025, compared to $3.454 billion at the end of 2024, marking a rise of 2.1%[27] - Ground lease receivables increased to $1.961 billion as of September 30, 2025, compared to $1.833 billion at the end of 2024, showing a growth of 7.0%[27] - Real estate-related intangible assets, net, decreased slightly to $205.399 million as of September 30, 2025, from $208.731 million at the end of 2024, a decline of 1.1%[27] Debt and Equity - Total debt stood at $4.84 billion, with a total equity of $2.42 billion, resulting in a debt-to-equity ratio of 2.00x[22] - Total liabilities increased to $4.727 billion as of September 30, 2025, from $4.525 billion at the end of 2024, indicating a growth of 4.5%[27] - The total equity of Safehold Inc. shareholders increased to $2.390 billion as of September 30, 2025, from $2.344 billion at the end of 2024, a growth of 2.0%[27] Cash Flow and Funding - Cash and cash equivalents rose to $12.123 million, up from $8.346 million at the end of 2024, representing a significant increase of 45.5%[27] - The company funded four new ground leases totaling $42 million in Q3'25, with $33 million funded and $9 million unfunded[7] - The company has a remaining capital of $400 million for joint ventures with a leading sovereign wealth fund[4] Economic Metrics - Economic yield for Q3'25 was reported at 7.3%, slightly down from 7.4% in Q2'25[3] - Rent coverage ratio improved to 2.4x in Q3'25, compared to 2.5x in Q4'25 year-to-date[3] Strategic Initiatives - Safehold's merger with iStar was completed on March 31, 2023, resulting in the historical financial statements of Old Safehold becoming those of Safehold Inc.[47] - Safehold's GL Plus Fund targets the origination and acquisition of Ground Leases for commercial real estate projects in pre-development phases[44] Valuation and Yield - The portfolio is valued using Aggregate Gross Book Value, which reflects the historical purchase price plus accrued interest on sales-type leases[44] - The Economic Yield is calculated using projected cash flows beginning January 1, 2025, with an initial value equal to the cost of the land, incorporating contractual fixed escalators and an assumed long-term inflation rate of 2.0%[44] - 81% of the portfolio has some form of CPI lookback, while 93% has some form of inflation capture[44] - The Annualized Yield is based on GAAP treatment, assuming a 0% growth/inflation environment for existing legacy ground leases, with 16% of the portfolio earning 3.5% under this metric[44] Financial Metrics - The Debt Effective Interest Rate reflects the all-in stated interest rate over the term of debt from funding through maturity, excluding the effect of discounts and financing costs[44] - The Rent Coverage ratio is based on estimates of stabilized Property NOI, adjusted for material changes, and is used for assessing the ability to meet annualized Cash Rent obligations[44] - The Company tracks Unrealized Capital Appreciation (UCA) as the difference between the Combined Property Value (CPV) and the Aggregate Cost Basis, reflecting the safety of its position in tenant capital structures[44]

Core Insights - Safehold Inc. reported a solid performance in Q3 2025, with earnings growth and steady transaction activity, emphasizing the growth of repeat customer business and a focus on efficient capital delivery and favorable risk-adjusted returns for shareholders [1][3]. Financial Performance - Q3 2025 revenue reached $96.2 million, representing a 21% increase compared to the previous year [3]. - Net income attributable to common shareholders for Q3 2025 was $29.3 million [3]. - Earnings per share for Q3 2025 stood at $0.41 [3]. Ground Lease Activity - The company closed $42 million in ground lease originations during Q3 2025 and an additional $34 million in ground lease originations to date in Q4 2025 [3]. - Safehold has forward commitments of $9 million and $29 million for new ground lease originations in Q3 2025 and Q4 2025, respectively, which are subject to certain conditions [3]. Company Overview - Safehold Inc. is revolutionizing real estate ownership by providing innovative solutions for unlocking land value beneath buildings, having established the modern ground lease industry in 2017 [2]. - The company operates as a real estate investment trust (REIT), aiming to deliver safe, growing income and long-term capital appreciation to shareholders [2].

Core Insights - Safehold Inc. has closed ground leases for the development of six Affordable Housing communities in Los Angeles, California, focusing on Low-Income Tax Credit projects [1][2] - The developments will provide over 400 total units upon completion in 2027, targeting neighborhoods in West and Central Los Angeles and the San Fernando Valley [2] Company Overview - Safehold Inc. is a leader in the modern ground lease industry, established in 2017, and aims to unlock land value for property owners [3] - The company operates as a real estate investment trust (REIT), focusing on generating higher returns with less risk across various property types, including affordable housing [3] Strategic Partnerships - Safehold is collaborating with HVN Development, a new firm dedicated to delivering high-quality Affordable Housing in Southern California [1][2] - The company emphasizes the utility of its low-cost, 99-year ground lease capital in advancing Low-Income Housing Tax Credit projects [2]

Core Viewpoint - Investors are evaluating Safehold (SAFE) and American Homes 4 Rent (AMH) to determine which stock offers better value opportunities at present [1] Group 1: Zacks Rank and Earnings Outlook - SAFE has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while AMH has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, suggesting that SAFE has an improving earnings outlook [3][4] Group 2: Valuation Metrics - SAFE has a forward P/E ratio of 9.71, significantly lower than AMH's forward P/E of 17.47 [5] - SAFE's PEG ratio is 1.41, while AMH's PEG ratio is 2.98, indicating that SAFE is expected to grow earnings at a more favorable rate relative to its price [5] - SAFE's P/B ratio is 0.47, compared to AMH's P/B of 1.54, further highlighting SAFE's undervaluation [6] Group 3: Value Grades - Based on the valuation metrics, SAFE earns a Value grade of A, while AMH receives a Value grade of C [6] - The combination of a solid earnings outlook and favorable valuation figures positions SAFE as the superior value option compared to AMH [6]

Core Insights - Safehold Inc. has closed a ground lease for an Affordable Housing community in the San Fernando Valley, Los Angeles, which will provide 275 units by 2029 [1][2] - The project is developed by The Pacific Companies, a repeat customer of Safehold, indicating a strong partnership in the Affordable Housing sector [1][2] - Safehold is expanding its presence in Affordable Housing, having established a dedicated team in 2025 to focus on this sector [2][3] Company Strategy - Safehold's ground lease capital serves as a low-cost solution to address funding gaps in Affordable Housing developments amid rising costs and interest rates [3] - The company aims to unlock land value for various property types, including multifamily and affordable housing, to generate higher returns with reduced risk [4] Market Context - There is significant unmet demand for affordable rental products in the market, which Safehold is strategically positioned to address [2] - The establishment of a dedicated Affordable Housing team reflects the company's commitment to expanding its investment in this growing sector [2]

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, ...

Core Insights - Safehold (SAFE) and Essex Property Trust (ESS) are two stocks in the REIT and Equity Trust - Residential sector that are being compared for value investment opportunities [1] Valuation Metrics - SAFE has a forward P/E ratio of 9.18, while ESS has a forward P/E of 16.02, indicating that SAFE may be undervalued compared to ESS [5] - The PEG ratio for SAFE is 1.33, which is significantly lower than ESS's PEG ratio of 6.21, suggesting that SAFE offers better value when considering expected earnings growth [5] - SAFE's P/B ratio is 0.44, compared to ESS's P/B of 2.84, further highlighting SAFE's relative undervaluation [6] Investment Ratings - SAFE currently holds a Zacks Rank of 2 (Buy), while ESS has a Zacks Rank of 3 (Hold), indicating a more favorable outlook for SAFE among analysts [3] - The Value grades for SAFE and ESS are B and D, respectively, with SAFE being favored in both Zacks Rank and Style Scores models [6]