Safehold Inc. New · NYSE:SAFE
Safehold Inc. New — Safehold — Investor Presentation (June 2019)
27 slides from Safehold Inc. New's investor presentation, June 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: Safehold
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Slide 4: Formula for Success
Formula for Success Make a Big Industry Deliver a + Better Customer More Efficient : Experience Safehold’s mission is to revolutionize real estate ownership by providing a better and more efficient way for owners to unlock the value of the land beneath their buildings. ys Safehold ||
Slide 5: The Next Big Thing
The Next Big Thing SAFE Addresses a Large Inefficiency in the $7 Trillion U.S. Institutional Commercial Real Estate Market Problem Real estate owners have had to buy two different investments that do not belong together Land + Building Investment Stuck Together -- Combined Investment -- -- Short-Ter
Slide 6: Why Hasn't This Been Done Before?
Why Hasn't This Been Done Before? Historically Archaic Structure Owned by: Not Modernized for Today's Market \idi/ 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 7: The Power of a Safehold Ground Lease
The Power of a Safehold™ Ground Lease Illustrative Property!) $5.25M NOI . 5.25% Cap Rate . Investment with $100.0M Value Investment with a No Ground Lease Safehold™ Ground Lease Safehold™ Ground Lease $35.0M 4.0% Initial Yield Fee Simple Cap Stack $100.0M WO'S9$ 4921S deg pjoyasea $100.0M ---------
Slide 8: Growing Traction - Customers
Growing Traction - Customers Portfolio Growth ($ in M) $621 $339 IPO (6/22/2017) 3/31/2018 ys Safehold || $1,091 3/31/2019 Increasing Market Penetration (by # of MSAs} 20 +82% 13 11 IPO (6/22/2017) 3/31/2018 3/31/2019
Slide 9: Growing Traction - Investors
Growing Traction - Investors Earnings $11.1 Net Income ($M) ys Safehold || $0.36 +77% $0.20 Qi 18 EPS $18.81 12/31/2018 SAFE YTD Stock Performance (As of 6/3/19} $27.50 $21.81 3/31/2019 6/3/2019
Slide 10: Safehold
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Slide 11: What is a Ground Lease?
What is a Ground Lease? A ground lease generally represents ownership of the land underlying a commercial real estate property which is triple net leased on a long-term basis by the Landlord {SAFE} to a Tenant that owns and operates the building. Tenant - receives beneficial ownership of property du
Slide 12: Key Investment Attributes of a Ground Lease
3 Key Investment Attributes of a Ground Lease Imbedded Superior Premium . Principal Safet Ret Capital rincipat sare eturns age P y Appreciation C Senior position in capital structure Superior risk-adjusted returns CG Growing portfolio creates potential CG Senior priority of rent payment G Contractua
Slide 13: Superior Principal Safety
Superior Principal Safety Highest Risk Safest ys Safehold || Single Asset CMBS Ground Lease Structure Leasehold Mortgage Senior Position in Capital Structure Ground Lease 13
Slide 14: Attractive Returns - Bond Comparison
Attractive Returns - Bond Comparison Contractual rent increases create long-term compounding cash flows that generate superior risk-adjusted returns versus similar-risk fixed income securities 30% 25% 20% 15% 10% 5% 0% ys Safehold || Ground Lease vs. 100-Year MIT Bond 26.1% 21.8% 17.9% 3.7% 3.7% 3.7
Slide 15: Attractive Returns - Premium Asset & Business
Attractive Returns - Premium Asset & Business Effective Yield on Assets (ROA) 5.5% - 6.0% Premium Spread Effective Cost of Debt (COD)!2) 4.5% 2x Leverage Return on Equity (Asset ROE) 7.5% - 9.0% Premium Asset Value Portfolio generates superior risk-adjusted returns Premium Business Value We believe
Slide 16: Unrealized Capital Appreciation of $2.1B
Unrealized Capital Appreciation of $2.1B The Unrealized Capital Appreciation in Our Owned Residual Portfolio is calculated as today’s estimated Combined Property Value (CPV) less the Aggregate Cost Basis of SAFE’s portfolio. CBRE conducts independent appraisals of the CPV of each asset.!) $0.4B IPO
Slide 17: Safehold
— Safehold LAA 17
Slide 18: Strong Sponsorship
Strong Sponsorship iStar Safehold Capabilities of SAFE’s manager, iStar, enables SAFE to become the leader in re-inventing ground leases Deeply immersed in all facets of the CRE ecosystem 25-year public + $40 billion of company history =~ —_ investing experience GC iStar is SAFE’s manager and larges
Slide 19: Conclusion
Conclusion Outsized Opportunity ee Use unique skill sets and history of innovation to solve a major market inefficiency in the $7 trillion U.S. institutional real estate market Growth & Value Creation expands Y Growing market penetration plus definable value creation as portfolio Sponsorship N [2 =
Slide 20: Safehold
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Slide 21: 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 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 Unrealized Capital Appreciation Represents contractual commitment to purchase a ground lease on a future dat