Safehold Inc. New · NYSE:SAFE
Safehold Inc. New — Safehold — Investor Presentation (March 2019)
29 slides from Safehold Inc. New's investor presentation, March 2019
Slide 1: Safehold
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Slide 2: Forward-Looking Statements and Other Matters
Forward-Looking Statements and Other Matters This release 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”, “representative”,
Slide 3: Corporate Snapshot
Corporate Snapshot NYSE Ticker Share Price (3/28/19) Book Value / Share Dividend Yield (3/28/19) Market Cap (3/28/19) SAFE $21.28 $20.00 2.8% $655M Total Assets!) $1,002M Total Liabilities $395M Total Equity") $607M Aggregate Portfolio $948M Note: As of 12/31/18 unless otherwise stated. (1) Presente
Slide 4: Safehold
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Slide 5: Safehold: Reimagining real estate capital from the ground up
Safehold Reimagining real estate capital from the ground up Our mission is to revolutionize real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings.
Slide 6: The Next Big Thing
The Next Big Thing SAFE Addresses A Large Market Inefficiency in the $7 Trillion U.S. Real Estate Industry Current Method SAFE Offering (Fee Simple) (Ground Lease] Problem: — Property investors have historically had to buy Solution: Use aSafehold Ground Lease™ to more efficiently separate two differ
Slide 7: Why Hasn't This Been Done Before?
Why Hasn't This Been Done Before? Historically Archaic Structure Owned by: Not Modernized for Wy Se Today's Market Researched & Optimized Modern Safehold™ Ground Leases: Reinvented Customer Focused Solution Low Rates Lower effective cost than alternatives No FMV Resets Gradual rent bumps instead of
Slide 8: How a Safehold Ground Lease Works
How a Safehold™ Ground Lease Works The Power of a Safeh “Ground Lease Before Illustrative With a Safehold™ Ground Lease Property" $5.25M NOI 5.25% Cap Rate $100.0M Value —— > Safehold™ Ground Lease $35.0M 4.0% Initial Yield Fee Simple Cap Stack $100.0M WO'S9$ 4223S deg pjoyasea] $100.0M ------------
Slide 9: Safehold
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Slide 10: Key Investment Attributes of a Ground Lease
3 Key Investment Attributes of a Ground Lease AAA-Like Safety CG Senior position in capital structure. CG Senior priority of rent payment. GC Minimal reinvestment risk with typical 99 year structure. ys Safehold || Excess Returns CG Superior risk-adjusted returns. CG Excess spreads locked in with 99
Slide 11: AAA-Like Safety: Senior Position
AAA-Like Safety: Senior Position Seniority Provides Significant Coverage and Lowers Risk of Default Senior in Capital Structure Senior in Cash Flow Priority Fee Simple Safehold™ ] Highest Risk Ownership —_—- Ground Lease Highest Priority Property Level Revenue $100 | Property Level Expenses: I Real
Slide 12: Excess Returns: Compounding Income Streams
Excess Returns: Compounding Income Streams Contractual rent increases create long-term compounding cash flows that outperform similarly structured fixed income securities Ground Lease vs. 100-Year MIT Bond 30% 26.1% 25% 21.8% 20% 17.9% 14.7% 15% Z 2.1% 10% tu 5% 3.8% —_— 4.0% 4.0% 4.0% 40% 40% 4.0%
Slide 13: Superior Risk-Adjusted Returns
Superior Risk-Adjusted Returns Single Asset Fee Simple First CMBS GL Structure Mortgage Financing First Mortgage Ground Lease Attractive Current Rate Inflation Mitigation High Grade Debt Risk Profile Residual Upside * <8 SINAN wie ow ys Safehold ||
Slide 14: At Market Below Above
At Market Below Above -3σ -2σ -σ +σ +2σ +3σ
Slide 15: Exponential Growth
Exponential Growth $1,800 $1,600 $1,400 $1,200 $1,000 $948 $600 $600 $531 $400 $339 $200 $0 IPO (6/22/17) Q4 "7 Q4 '18 Safehold Note: Represents aggregate portfolio.
Slide 16: Growing Market Penetration
Growing Market Penetration San Francisco Los Angeles ys Safehold || Seattle Minneapolis Salt Lake City Colorado a) Milwaukee Nashville Phoenix my San Diego Dallas Atlanta Detroit 8 0 Washington, D.C. ) a Raleigh-Durham Orlando Miami 16
Slide 17: Safehold
— Safehold LAA 17
Slide 18: iStar and Safehold Partnership
iStar and Safehold Partnership iStar Safehold iStar, as SAFE’s manager, positions the Company well to become the “category killer” provider of ground leases 25-year public , «$40 billion of | -_—- Dee bly Immersed in : . : : all facets of the company history investing experience CRE ecosystem CG iSt
Slide 19: SAFE/STAR One-Stop Capital Program
“SAFE/STAR” One-Stop Capital Program In Q1 ‘19, SAFE and iStar introduced the SAFE/STAR Capital Program which combines iStar’s creative financing capabilities with SAFE’s innovative Safehold™ offering to provide a one-stop capital solution that delivers a better, more efficient capital structure to
Slide 20: Conclusion
Conclusion Use unique skill sets and history of innovation to create the next big thing a Solves a major market inefficiency in the $7 trillion U.S. real estate market Execution O Rapid portfolio growth since IPO with 96% CAGR and increased market O penetration AT = A Stock trading at a deep discoun
Slide 21: Safehold
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Slide 22: Impact of New Accounting Standards
Impact of New Accounting Standards (As of December 31, 2018) Current Method (Applied in Q4 '18) All of SAFE’s ground leases qualified as operating leases. Lease Classification Recorded as “Ground Lease Income” based on straight-line rent. Purchase price is recorded as “Real Estate” and “Lease Intang
Slide 23: Income Statements
Income Statements Q4 ‘18 Q4'17 FY ‘18 Revenues: Ground lease and other lease income $14,692 $6,579 $47,400 Other income 121 171 2,324 Total revenues $14,813 $6,750 $49,724 Costs and expenses: Interest expense $5,011 $3,172 $15,389 Real estate expense 392 364 1,600 Depreciation and amortization 2,307
Slide 24: EPS, FFO & AFFO Reconciliation
EPS, FFO & AFFO Reconciliation Q4 ‘18 FY ‘18 Net income allocable to Safehold Inc. common shareholders $4,308 $11,740 Add: Real estate related depreciation and amortization 2,307 9,142 FFO allocable to Safehold Inc. common shareholders $6,615 $20,882 FFO allocable to Safehold Inc. common shareholder
Slide 25: Balance Sheets
Balance Sheets Q4 ‘18 Q4 ‘17 Assets Real estate Real estate, gross $669,923 $413,145 Accumulated depreciation (10,257) (4,253) Real estate, net $659,666 408,892 Real estate-related intangibles, net!’) 204,911 80,766 Ground lease assets, net $864,577 489,658 Cash and cash equivalents 16,418 168,214 O
Slide 26: Portfolio Basis Reconciliation
Portfolio Basis Reconciliation ys Safehold |__| Q4 ‘18 Real estate, net $659,666 Add: Accumulated depreciation 10,257 Real estate, gross $669,923 Add: Lease intangible assets, net 262,531 Add: Leasing costs, net 481 Add: Accumulated amortization 8,986 Less: Lease intangible liabilities, net (57,620)
Slide 27: Appendix: Asset Summary
Appendix Asset Summary Location Lease Expiration / Rent Escalation Property (MSA) Property Type As Extended Structure 6201 Hollywood {North} Los Angeles, CA Multifamily 2104 / 2104 CPl-Linked 6200 Hollywood {South} Los Angeles, CA Multifamily 2104 / 2104 CPl-Linked Onyx on First Washington, D.C. Mul
Slide 28: Appendix: Glossary
Appendix Glossary Adjusted Funds from Operations (AFFO) Aggregate Portfolio Annualized Cash Rent Cash Rent Cost Basis Cost Basis as % of CPV Combined Property Value (CPV) Current Portfolio Effective Yield Estimated Underlying Property NOI Calculated by adding (or subtracting) to FFO the following it
Slide 29: Appendix: Glossary
Appendix Glossary Forward Commitments Funds from Operations (FFO) Ground Rent Coverage Leverage Percentage Rent Quarterly Cash Rent Safehold Total Annualized GAAP Rent Underlying Property NOI Value Bank Represents contractual commitment to purchase a ground lease on a future date, typically related