28 slides from Safehold Inc. New's investor presentation, June 2021
Slide 1: Investor Presentation
INVESTOR PRESENTATION June 2021
Slide 2: Forward-Looking Statements and Other Matters
Forward-Looking Statements and Other Matters This presentation may contain forward-looking statements. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements can be identified by the use of words such as “illustrative”, “representativ
Slide 3: Executive Summary
Executive Summary Disruptive How to Value How to Value Solution for CRE Cash Flows a Unique Asset? Reinvented Ground Leases Above Market Bond-like The Wealth-Creating Portfolio to Fit Within Cash Flow Streams We Call “UCA” Has Grown Modern Financial Markets Dramatically (1) Strong Early The Power of
Slide 4: Strong Financial Growth
Strong Financial Growth Net Income Revenue (Gross of NCI) 63% $158.8m 75% CAGR CAGR $59.1m $111.7m $40.0m $59.9m $19.3m Q1 '19 (TTM) Q1 '20 (TTM) Q1 '21 (TTM) Q1 '19 (TTM) Q1 '20 (TTM) Q1 '21 (TTM) 4
Slide 5: Strong Stock Performance
Strong Stock Performance 41% $78.37 Share Price CAGR $61.00 $46.88 #1 Performing Nareit Member Stock in 2019 & 2020 $34.00 $28.00 $20.00 IPO FO FO FO FO Current (6/22/17) (8/7/19) (11/19/19) (3/18/20) (11/10/20) (6/14/21) Dates of Equity Offerings (1) Please see the “Important Note re COVID-19” in t
Slide 6: Disruptive Business Model
DISRUPTIVE BUSINESS MODEL 6
Slide 7: Better Capital Solution
Better Capital Solution Making ground leases modern , efficient, and value-enhancing for building owners Improved Improved Significant Capital Efficiency Cost Efficiency Risk Reduction $65m Near-term maturity risk $100m Transfer Tax Mortgage Recording Tax $35m Title Insurance Other Transacti
Slide 8: Strong Growth From Customer Adoption
Strong Growth From Customer Adoption (Aggregate Gross Book Value) 10x Portfolio Growth $3.4b $496m Q1 ’21 & Q4 ’20 Since IPO (1) (1) Investment Activity $2.8b 4.9% w.a. Effective Yield 5.2% w.a. Underwritten Effective Yield (2) 39% w.a. GLTV (3) 3.8x w.a. Rent Coverage (3) $1.1b 16 ground lease tran
Slide 9: High Quality Assets Across Top Markets
High Quality Assets Across Top 30 Markets Seattle - Multifamily New York City - Office Honolulu – Hotel Washington, D.C. - Office Philadelphia – Multifamily Los Angeles - Multifamily 9
Slide 10: The Growth Opportunity Ahead
The Growth Opportunity Ahead Innovative Platform Positioned for Growth in 2021 $7 Trillion Market Opportunity Baa1 Moody’s Awards Investment BBB+ Fitch Awards Investment Grade Credit Rating Grade Credit Rating Nationally-Scaled Platform Focus on Top 30 MSAs $400m $1.0b Innovative New Debut Issuance
Slide 11: Significant Value Potential
SIGNIFICANT VALUE POTENTIAL 11
Slide 12: Safety During Turbulent Times
Safety During Turbulent Times Safehold typically has a residual right to regain possession of land and take ownership of the building upon a tenant default, which provides strong incentive for its customers and its customers’ lenders to pay rent. In addition, typical Combined Property Value (CPV) si
Slide 13: Attractive Returns vs. Bond Comparison
Attractive Returns vs. Bond Comparison Target Modern Ground Lease Portfolio vs. 100-Year MIT Bond Target GL MIT YTM: Portfolio YTM: 22.6% vs. 5.2% 3.2% 18.9% “High quality 99-year bonds provide perhaps the closest real time pricing comparison to a diversified pool of 15.5% ground leases.” - Green St
Slide 14: Inflation Protected Cash Flows
Inflation Protected Cash Flows CPI lookbacks typically capture 50% - 85% of the move in inflation (1) Long-term fixed debt provides enhanced interest rate and inflation protection Illustrative Safehold™ Ground Lease YTM Cash Flows with Rising Inflation 6.0% w/ 3% Inflation YTM 5.2% w/ 2% Inflation 1
Slide 15: How to Value a Unique Asset?
HOW TO VALUE A UNIQUE ASSET? 15
Slide 16: Unrealized Capital Appreciation
Unrealized Capital Appreciation Under the terms of a typical Safehold ground lease, at the end of the lease term, SAFE will own whatever is on top of the land Since SAFE will eventually own it, we track the estimated value of whatever is on top of our basis across our whole portfolio and report the
Slide 17: Current UCA Portfolio
Current UCA Portfolio 97% CAGR IPO Q2 ’19 Q1 ‘21 $0.4b $2.2b $5.6b Note: Images show current pictures of certain buildings on land owned by SAFE that is leased to tenants. Under the terms of a typical Ground Lease, title to any then-existing improvements on the land reverts to SAFE at the end of the
Slide 18: UCA: The NPV Math
UCA: The NPV Math Starting Value UCA as of 3/31/21 $5.6b Note: These values # of Years Typical Safehold™ Ground Lease Term 99 years represent estimated Estimated Internal Growth Rate Assumed growth in-line with long-term inflation 2% inputs to the NPV formula. Changing these Estimated External Growt
Slide 19: How Much Do We Need to Grow?
How Much Do We Need to Grow? To grow at 6%, UCA must also increase from new origination of GLs at Safehold by 4%: Assuming internal growth rate equals an inflation rate of 2% $1,136m The estimated GL originations necessary to generate the 4% external growth component are substantially less than what
Slide 20: Conclusion: Opportunity Ahead
Conclusion: Opportunity Ahead Rapidly Efficient Big Scaling Capital Raising Upside – We believe the market – CRE transaction volumes – New investment grade does not currently picking up post-COVID credit ratings (Baa1 / understand the – Continue to enter new BBB+) enable more embedded value of UCA r
Slide 21: Appendix
APPENDIX yo Safehold | | 21
Slide 22: Geographic Breakdown
Appendix Geographic Breakdown (Current Portfolio Gross Book Value $3,292m) Seattle Portland Northeast Minneapolis 40% West Milwaukee 22% New Haven San Francisco Central Detroit New York 3% Denver Philadelphia San Jose Salt Lake City Washington, D.C. Mid-Atlantic Los Angeles Nashville 18% San Diego P
Slide 23: Capital Structure
Appendix Capital Structure (As of March 31, 2021) Debt Overview Capital Markets Activity Non-Recourse Secured $1,498m Total Unsecured Revolver Baa1/BBB+ $1.0b $400m $2.0b $255m ($745m remaining capacity) Moody’s/Fitch (Stable Outlook) New Recast Unsecured Debt Issuance of 2.8% Unsecured (1) Revolver
Slide 24: Income Statements
Appendix Income Statements For the three months ended Mar 31, 2021 2020 Revenues: Operating lease income $17,410 $20,780 Interest income from sales-type leases 25,974 18,901 Other income 123 484 Total revenues $43,507 $40,165 Costs and expenses: Interest expense $17,167 $15,148 Real estate expense 5
Slide 25: Balance Sheets
Appendix Balance Sheets March 31, 2021 December 31, 2020 Assets: Real estate: Real estate, at cost $752,420 $752,420 Less: accumulated depreciation (23,821) (22,314) Real estate, net $728,599 $730,106 Real estate-related intangibles assets, net 240,642 242,166 Total real estate, net and real estate-
Slide 26: Portfolio Reconciliation
Appendix Portfolio Reconciliation IPO (6/22/17) 3/31/18 3/31/19 3/31/20 3/31/21 Net investment in Sales-Type Leases - - $129 $1,029 $1,312 Ground Lease receivables - - - $422 $661 Pro-rata interest in Sales-Type Leases held as equity method investments - - - $342 $346 Real estate, net (Operating Lea
Slide 27: Unrealized Capital Appreciation Details
Appendix Unrealized Capital Appreciation Details Refer to the Glossary in the Appendix for a definition of Owned Residual Portfolio, Unrealized Capital Appreciation (“UCA”), and “Combined Property Value” (“CPV”). SAFE relies in part on CBRE’s appraisals of the CPV of our portfolio in calculating UCA
Slide 28: Glossary
Appendix Glossary Aggregate Cost Basis Represents Cost Basis plus unfunded commitments. For unfunded commitments, it represents the aggregate future amount to be paid under the commitments. Represents the Current Portfolio plus unfunded commitments. For unfunded commitments, it represents the aggreg