Safehold, Inc. Q3 FY2024 earnings call

• Investment activity: Steady investment, including purchase of minority ownership from JV partner and smaller multifamily ground leases, executed at attractive yields. • Earnings: Year-over-year EPS higher excluding credit loss methodology change; UCA estimates moved slightly higher. • Portfolio details: Total portfolio $6.7B, UCA $9.1B, GLTV 48%, rent coverage 3.5 times; liquidity $955M. Ground lease portfolio grew 20x since IPO, with multifamily as primary focus. • Capital structure: Debt $4.6B, credit ratings A3 and BBB+, hedges in place for interest rates, including swaps and treasury locks.

During the third quarter, new origination activity was $104 million, including three multifamily ground leases for $72 million and one leasehold loan for $32 million. The total portfolio was $6.7 billion, with UCA estimated at $9.1 billion, GLTV at 48%, and rent coverage at 3.5 times. Multifamily remains the primary focus for new originations, with 84 multifamily ground leases in the portfolio, increasing exposure from 8% by count at IPO to 58% today. The ground lease portfolio has 146 assets and has grown 20x since IPO, with unrealized capital appreciation above ground leases growing 21 times.

• Cautiously optimistic about better transaction environment in 2025. • JV expected to focus on larger opportunities, Safehold to own 100% of smaller deals. • Believes commercial real estate transaction market is reopening, well-positioned with strong balance sheet and liquidity to capture new opportunities.

• Rate volatility impacting capital stacks and customer decision-making. • Market conditions and macroeconomic factors affecting transaction activity.

Q: Stephen Laws with Raymond James asked about the pipeline and larger deals in the JV.

A: Jay Sugarman and Tim Doherty responded that the market is opening up, larger deals have moving parts, and there are hopes for a better transaction environment in 2025.

Q: Mitch Germain with Citizens JMP inquired about the GIC discussions on the joint venture and the West 50th Street asset.

A: Jay Sugarman explained the JV dynamics, the win-win in the buyout, and that the ground lease capital provides stable long-term funding.

Q: Caitlin Burrows with Goldman Sachs asked about GLTV and the JV ownership of original properties.

A: Jay Sugarman stated that GLTV volatility is part of real estate, and owning 100% of smaller deals makes more economic sense.

Q: Haendel St. Juste with Mizuho asked about GIC intent and leasehold loans.

A: Jay Sugarman said the JV period is over, and Tim Doherty explained leasehold loans are market-driven.

Q: Ronald Kamdem with Morgan Stanley asked about expanding originations beyond multifamily.

A: Tim Doherty mentioned pipeline includes various property types, with office and hospitality showing positive signs.

Q: Anthony Paolone with JPMorgan asked about leasehold loans and unconsolidated equity.

A: Brett Asnas discussed leasehold loan pricing and the run rate of unconsolidated equity earnings.

Q: Ki Bin Kim with Truist asked about fixed charge coverage and the JV buyout.

A: Brett Asnas provided fixed charge coverage details, and Jay Sugarman explained the JV buyout as a win-win with supportive partner.