Safehold (SAFE) - 2025 Q2 - Quarterly Results

Q2'25 Financial Highlights This section provides an overview of the company's financial performance and portfolio metrics for the second quarter of 2025 Q2'25 Summary In Q2'25, the company originated $123 million in ground leases and $97 million in leasehold loans, achieving a 7.2% economic yield on new ground leases, while maintaining a conservative portfolio GLTV of 52% and 3.5x rent coverage, supported by $1.2 billion in available capital Q2'25 Investment Activity | Metric | Value | | :--- | :--- | | Ground Lease Originations | $123 million (4 leases) | | Leasehold Loan Originations | $97 million (3 loans) | | New Markets Entered | 1 | | New Sponsors | 4 | | Ground Lease-to-Value (GLTV) | 33% | | Rent Coverage | 3.2x | | Economic Yield | 7.2% | - The total portfolio maintains a GLTV of 52% and a rent coverage of 3.5x, indicating a stable risk profile[4] - The company has $1.2 billion in available capital from cash and its credit facility, with an additional $400 million in remaining capital for its joint venture with a sovereign wealth fund[4] Portfolio Growth The portfolio's aggregate Gross Book Value (GBV) reached $6.9 billion in Q2'25, marking a 20-fold increase since its IPO, with $123 million in new ground leases and $97 million in new leasehold loans, and multifamily assets comprising 58% of the portfolio by count - Aggregate Gross Book Value (GBV) plus Unrealized Capital Appreciation (UCA) has grown to $9.1 billion, with the portfolio size growing 20x since the IPO[6] Q2'25 Originations & Fundings | Category | Value | Details | | :--- | :--- | :--- | | New Originations | | | | Ground Leases | $123 million | $61 million funded, $62 million unfunded | | Leasehold Loans | $97 million | $43 million funded, $54 million unfunded | | Total Fundings | $114 million | | | Ground Lease Fundings | $65 million | $61 million new (7.0% yield), $4 million existing | | Leasehold Loan Fundings | $49 million | $43 million new (SOFR+249), $6 million existing | Portfolio Asset Allocation by Count | Asset Type | Percentage of Portfolio | | :--- | :--- | | Multifamily | 58% | | Office | 21% | | Hotel | 8% | | Other | 13% | Earnings Results For Q2'25, GAAP Net Income attributable to common shareholders decreased by 6% year-over-year to $27.9 million, with GAAP EPS declining to $0.39, primarily due to a $1.7 million increase in the non-cash general provision for credit losses, despite a 4% increase in total revenues to $93.8 million Q2'25 Earnings Summary (Y/Y) | Metric | Q2'25 | Q2'24 | Y/Y Change | | :--- | :--- | :--- | :--- | | Revenues | $93.8 million | $89.9 million | 4% | | GAAP Net Income | $27.9 million | $29.7 million | -6% | | GAAP EPS | $0.39 | $0.42 | -6% | - The primary reason for the year-over-year decrease in GAAP Net Income and EPS was a higher non-cash general provision for credit losses, which was $2.4 million in Q2'25 compared to $0.6 million in Q2'24[7][8] Portfolio Yields The company's core ground lease portfolio, valued at $6.8 billion with a 91-year weighted average lease term, exhibits a multi-layered yield profile, with an Annualized Cash Yield of 3.7%, an Economic Yield of 5.8%, and an Inflation Adjusted Yield of 6.0% - The analysis is based on the Core Ground Lease Portfolio with a Gross Book Value of $6.8 billion and a weighted average lease term of 91 years, including extensions[9] Portfolio Yield Breakdown | Yield Metric | Rate | Components Included | | :--- | :--- | :--- | | Annualized Cash Yield | 3.7% | Cash Rent | | Annualized GAAP Yield | 5.4% | GAAP Rent | | Economic Yield | 5.8% | GAAP Rent, Variable Rent, CPI Lookbacks | | Inflation Adjusted Yield | 6.0% | Economic Yield components + 2.0% inflation assumption | Portfolio Diversification The $6.8 billion core ground lease portfolio is diversified by geography and asset type, focusing on top U.S. MSAs, with Multifamily and Office properties representing 41% and 40% of GBV respectively, and Manhattan as the largest market at 21% of GBV Portfolio by Asset Type (% of GBV) | Asset Type | GBV % | Rent Coverage | GLTV® | | :--- | :--- | :--- | :--- | | Multifamily | 41% | 3.6x | 38% | | Office | 40% | 3.2x | 69% | | Hotel | 11% | 3.6x | 47% | | Life Science | 6% | 4.6x | 42% | | Mixed Use & Other | 2% | 3.8x | 45% | | Total | 100% | 3.5x | 52% | - The top 10 markets by GBV are: Manhattan (21%), Washington D.C. (10%), Boston (8%), Los Angeles (7%), San Francisco (4%), Denver (4%), Honolulu (3%), Nashville (3%), Miami (3%), and Atlanta (2%)[16] Capital Structure The company maintains a total debt of $4.77 billion and total equity of $2.40 billion, resulting in a debt-to-equity ratio of 1.98x, supported by strong investment-grade credit ratings and $1.2 billion in liquidity, with no corporate debt maturities until 2027 - The company holds investment-grade credit ratings: A3 (Stable) from Moody's, BBB+ (Positive) from S&P, and A- (Stable) from Fitch, with no corporate maturities due until 2027[19] Debt and Liquidity Metrics (Q2'25) | Metric | Value | | :--- | :--- | | Total debt | $4.77 billion | | Total equity | $2.40 billion | | Total debt / Total equity | 1.98x | | Debt cash interest rate | 3.8% | | Cash & credit facility availability | $1.20 billion | - The company utilizes hedges to manage interest rate risk, including a $500 million SOFR swap and $250 million in Treasury locks, which had a gain position of approximately $31 million[20] Appendix This section provides supplementary financial details, including comprehensive statements, reconciliations of key metrics, and specific information regarding the Caret subsidiary Financial Statements The detailed financial statements show that for the six months ended June 30, 2025, total revenues increased to $191.5 million from $183.1 million in the prior year, while net income decreased slightly to $57.4 million from $60.6 million, with the balance sheet reflecting asset growth to $7.06 billion and a corresponding increase in debt obligations Income Statement This section presents the condensed income statement for the three and six months ended June 30, 2025 and 2024, detailing revenues, expenses, net income, and earnings per share Condensed Income Statement (in millions) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Total revenues | $93.842 | $89.895 | $191.519 | $183.108 | | Total costs and expenses | $69.923 | $65.899 | $142.299 | $134.524 | | Net income attributable to Safehold Inc. | $27.947 | $29.665 | $57.311 | $60.393 | | Earnings per share (diluted) | $0.39 | $0.42 | $0.80 | $0.85 | Balance Sheet This section presents the condensed balance sheet as of June 30, 2025, and December 31, 2024, outlining total assets, debt obligations, and shareholders' equity Condensed Balance Sheet (in billions) | | As of June 30, 2025 | As of Dec 31, 2024 | | :--- | :--- | :--- | | Total assets | $7.063 | $6.899 | | Debt obligations, net | $4.444 | $4.317 | | Total Safehold Inc. shareholders' equity | $2.373 | $2.344 | | Total liabilities and equity | $7.063 | $6.899 | Reconciliations This section provides reconciliations for the company's portfolio and earnings, tracking Gross Book Value growth from IPO to $6.84 billion and adjusting GAAP net income to exclude non-recurring items, showing an adjusted EPS of $0.39 for Q2'25 Portfolio Reconciliation This section details the growth of Gross Book Value from the company's IPO to June 30, 2025 Gross Book Value Growth (in billions) | Date | Gross Book Value | | :--- | :--- | | IPO (6/22/17) | $0.339 | | 6/30/21 | $3.524 | | 6/30/22 | $5.542 | | 6/30/23 | $6.068 | | 6/30/24 | $6.493 | | 6/30/25 | $6.844 | Earnings Reconciliation This section reconciles GAAP EPS to EPS excluding non-recurring items for Q2'25 and Q2'24 Reconciliation of GAAP EPS to EPS Excluding Non-Recurring Items (in millions) | | Q2'25 | Q2'24 | | :--- | :--- | :--- | | GAAP Net Income | $27.947 | $29.665 | | Net Income excl. non-recurring items | $27.947 | $29.089 | | EPS excl. non-recurring items (diluted) | $0.39 | $0.41 | Caret Details Caret is a subsidiary formed to capture the value of capital appreciation above the portfolio's cost basis, with Safehold owning approximately 84% of its units, and its Series A investment round redeemed in April 2024 - Caret was formed as a subsidiary to help recognize the value of capital appreciation above the portfolio's Cost Basis[31] - The ownership of Caret units is split with Safehold holding approximately 84%, employees (via a 2018 incentive plan) holding approximately 15%, and MSD Partners and other family offices holding approximately 1%[34] - In April 2024, the Series A investment round in Caret was redeemed using previously restricted funds, having no impact on liquidity or revolver borrowings[31][33]