Safehold Inc. New · NYSE:SAFE
Safehold Inc. New — Safehold — Debt Investor Presentation (November 2023)
42 slides from Safehold Inc. New's debt investor presentation, November 2023
Slide 1: Fixed Income Update Q3'23
Fixed Income Update Q3'23
Slide 2: Forward-Looking Statements and Other Matters
: Safehold 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”, “re
Slide 3: Credit Update
Gatgho Credit Update
Slide 4: Executive Summary
Gatgho Executive Summary Safehold (NYSE: SAFE) is the creator and market leader of the modern ground lease industry. We provide a capital solution that makes commercial real estate ownership more cost efficient During Q3'23 and Q4’23 to date, we originated 3 new multifamily ground leases totaling $5
Slide 5: Unencumbered Asset Diversification
. oo. Safehold Unencumbered Asset Diversification Safehold primarily invests in the top 30 MSAs across the U.S., positioned for long-term sustainable growth $3.5b UA Core Ground Lease Portfolio (96-year w.a. extended lease term) @ y Top 5 UA Gateway Markets (% of GBv, Count, Rent Coverage?, GLTV3) 1
Slide 6: Unencumbered Asset Evolution
Unencumbered Asset Evolution Q4’20 Total UA GBV! $0.8b ——+92.7b_ Total UA Count 34 — 5? 94 Top 10 UA by GBV 56% 22% _, 34% Est. UA UCA $1.4b ——+*85.0b_ , — $6.3b UA Unique Sponsors 27 137, 66 UA Unique LH Lenders = 16 — 121, 37 Other $162 Washington DC 21% $232 (13 assets}, 30% Aust (assets) Signifi
Slide 7: Unencumbered Asset Overview
Safehold Unencumbered Asset Overview 94 Ground $3.5b ce = $6.3b —Est.ucA «3.8 Rent 41% eLT Leases Coverage” Multifamily 59 Multifamily $1.9b Multifamily $3.9b Multifamily 3.5x Multifamily 37% Office 21 Office $0.9b Office $1.0b Office 4.2x Office 50% Life Science 5 Life Science $0.3b Life Science $0
Slide 8: Capital Structure
Capital Structure Safehold 100% unsecured debt use since initial credit rating of Baal / BBB+, $0 of non-recourse secured debt raised in last 3+ years; commitment to further rating upgrades $4.3b Total Debt! 22.5 Years W.A. Maturity! 2 3.3% / 3.8% Current Cash / Effective Cost of Debt! 2 1.8x Corpor
Slide 9: Underlying Risk Comparison
Safehold Underlying Risk Comparison Safehold and its creditors sit at a significantly lower attachment point in a property's capital structure than typical Lessors, Mortgage and Equity REITs Our creditors are effectively financing long-term, low-risk cash flow streams that have the most subordinate
Slide 10: Relative Value Comparison
Relative Value Comparison We believe Safehold’s secondary spreads do not accurately capture the credit quality and momentum of the business. We believe current levels present an attractive risk-adjusted opportunity for investors to outperform businesses that have fewer near-term credit catalysts and
Slide 11: Credit Ratings Momentum: Moody's upgrade to A3
Gatgho In October 2023, Safehold was upgraded from Baa1 to A3 [Stable] at Moody's, the culmination of a review period following our Positive Outlook change in August 2022. Safehold was put on Positive Outlook at Fitch in February 2023, with a clear path to achieving an A-rating driven by merger comp
Slide 12: Safehold Update
Gatgho Safehold Update
Slide 13: Company Snapshot as of Q3'23
Safehold Company Snapshot as of Q3'23 Portfolio Balance Sheet 3.8b — Unencumbered Assets $6.4b Aggregate GBV oy oo A3 (ete _ $ s eels lense ta BBBinlpsve) rites | IG Unencumbered Assets 135 Ground Leases ite OX to Unsecured Debt $10.0b Est. Unrealized Capital $858 No Until 20 st. Unreatized Capital
Slide 14: Financial Performance
Financial Performance Safehold Safehold benefits from steady, predictable revenue and collections against primarily fixed, long-term liabilities Safehold form lease includes no contractual operating expenses or capital expenditures born by Safehold G&A structure is stable at current levels and built
Slide 15: Large Addressable Market
Gatgho Large Addressable Market Any liquidity event at the property level (buy/sell, recapitalization, development) in a major market presents an opportunity for Safehold to create a ground lease Additional product offerings (SAFExSWAP, GL Plus, Leasehold Loan Fund, SAFExSELL) create opportunity for
Slide 16: Capital
Capital Ratings Capital Highlights Total Capital Activity: $2.1b Total equity raised: $762m Total debt raised: $1,145m. Incr. RCF (Capacity]: $200m ($525m) 2019 Fully secured balance sheet with no public credit ratings Total Capital Activity: $0.5b Total equity raised: $199m Total debt raised: $268m
Slide 17: Joint venture program with sovereign wealth fund
Gatgho In March 2023, Safehold formed a joint venture program with a leading sovereign wealth fund, focused on ground lease investments Recently Formed Joint Venture Target $ 500m SAFE: $275 Million - 55% stake Commitment! Partner: $225 Million - 45% stake Management Fee: 25 bps on invested equity f
Slide 18: Value Proposition
Safehold Value Proposition Customers: SAFE ground leases are highly efficient sources of capital that can drive returns, require less equity upfront, eliminate repeated material friction costs and significantly reduce refinancing risk Investors: Ground leases offer durable, compounding cash flows, i
Slide 19: Portfolio Diversification
: ; . . Safehold Portfolio Diversification Safehold primarily invests in the top 30 MSAs across the U.S., which we believe are positioned for long-term sustainable growth $6.2b Core Ground Lease Portfolio Top 10 Markets (% of cBv, count, Rent Coverage’, GLTV') : (72-year wa. extended (ease term) 1.
Slide 20: Growing Customer Adoption
Growing Customer Adoption Diversifying Customer Base 5% 6% Other Public REIT = Global Fund Manager = Family Office = Domestic Fund Manager = Owner/Operator/Developer Increasing Customer Awareness 814 279 3 [| 2017 2019 2023 Cumulative # of unique sponsors that have been pitched a Safehold ground lea
Slide 21: Institutional Customers
Gatgho Institutional Customers Safehold’s 135 ground leases include 91 unique tenants These tenants include financial sponsors, owner/operators, public companies, sovereign wealth funds, and other institutions NEW ENGLAND Bpdinerstein DEVELOPMENT Companies Blackstone Te CartirGrour (Hy HiGHcaTe SAMS
Slide 22: Leasehold Liquidity - Institutional Lenders
Leasehold Liquidity - Institutional Lenders Safehold’s 135 ground leases include 55 unique leasehold lenders Gatgho These lenders include agencies, banks, insurance, CMBS, REITs and debt funds LA Fr eddie Bank of America «Mac eS | WELLS FARGO| @ Santander y © PNC nuveen capital’ A TIAA Compan Blacks
Slide 23: Case Study of Highest and Best Use
Case Study of Highest and Best Use 6200 & 6201 Hollywood Boulevard are two newly-built multifamily properties totaling 1k+ units with parking and billboard space on the corner of Hollywood Boulevard & Argyle Avenue. Safehold acquired the ground lease in June 2017 from the Nederlander’s. For decades,
Slide 24: Case Study of Payments During Covid
Gatgho Case Study of Payments During Covid Alohilani Resort is an 839-key hotel on Waikiki Beach in Honolulu (1 of only 11 hotels with direct beach access). Concurrent with the closing of Safehold’s acquisition of the ground lease, we completed an agreement with the leasehold equity sponsor to conve
Slide 25: New Investors: Introduction to Safehold and the Modern Ground Lease
Gatgho New Investors: Introduction to Safehold and the Modern Ground Lease
Slide 26: What is a Ground Lease
Gatgho A Ground Lease (“GL") represents ownership of the land underlying a commercial real estate property. The land is leased on a long-term basis by the landlord (Safehold] to a tenant that operates the property What is a Ground Lease Ground Lessee / Leaseholder (Safehold's Tenant} Building (Safeh
Slide 27: Typical Safehold Ground Lease Terms
Gatgho Typical Safehold Ground Lease Terms Lease Term 99 Years Contractual Escalators Annual fixed bumps (typically 2.0%] with periodic CPl-based lookbacks Property Expenses No landlord (Safehold) obligations Capital Expenditures No landlord (Safehold} obligations Tenant Repair and Maintenance Tenan
Slide 28: The Modern Ground Lease
Gatgho Safehold’s form structure standardizes how ground leases should function in the capital markets by removing value destroying features found in archaic ground leases and creating a bond-like instrument with growing, predictable cash flows which benefits all parties The Modern Ground Lease Old
Slide 29: Illustrative Principal and Income Safety
Illustrative Principal and Income Safety Principal Safety Risk Illustrative Asset Illustrative Safehold Backed Security Structure BB (55-60% LTV) Leasehold Mortgage BBB (50-55% LTV) (40-70% CPV) A (45-50% LTV) AA (40-45% LTV) Safehold GL (0-40% CPV) Safety Safehold’s ground rent payment is senior to
Slide 30: UCA Growth Increases Security
UCA Growth Increases Security What is UCA? Unrealized Capital Appreciation (UCA) represents an estimate of today’s value of the buildings on top of our land Safehold typically is the future contractual owner of the property upon lease expiration or tenant default and the termination of the lease upo
Slide 31: CPI Lookback Mechanics
Gatgho CPI Lookback Mechanics CPI Lookbacks' provide meaningful inflation capture that is better than comparable risk, long-term fixed- rate bonds we benchmark against, and continue periodically throughout the life of a lease Target Safehold Ground Lease 2.0% Rent Bumps per Annum | 10-Year CPI Lookb
Slide 32: Illustrative Growth - Contractual Cash Flow and Inflation Capture
Safehold Illustrative Growth — Contractual Cash Flow and Inflation Capture Minimum contractual ground lease cash flows target ~100+ bps of spread vs. similar long-term, high grade fixed income securities. In addition, CPI lookbacks in our portfolio are designed to provide significant inflation captu
Slide 33: A Better Capital Solution
Gatgho A Better Capital Solution Making ground leases modern, efficient, and value-enhancing for building owners Improved Capital Efficiency Improved Cost Efficiency Significant Risk Reduction $60m r_| X Transfer Tax $100m $70m X Mortgage Recording Tax Near-term maturity risk | X Title Insurance moo
Slide 34: Efficient Capital Creates Better Returns for New Transactions
Gatgho Efficient Capital Creates Better Returns for New Transactions $100m $40m Equity Illustrative Example: $24m Safehold’s Modern Ground Lease creates value and liquidity for customers $36m Leasehold Loan? $60m Loan’ = $100m $40m @ue ov $100m Fee Simple Purchase Price $100m [-0%) $40m Equity Requi
Slide 35: Appendix
Gatgho Appendix Safehold | The Ground Lease Company | November 2023 35
Slide 36: Full-service platform and leadership team
Gatgho Safehold benefits from its full-service platform (86 employees) and leadership team with decades of experience in all key functions Jay Sugarman Chairman & CEO Marcos Alvarado President & CIO Organization Structure Brett Asnas Kyle Curtin Chief Financial Officer Chief Administrative Officer E
Slide 37: Income Statement
Income Statement Revenues: Interest income from sales-type leases Operating lease income Interest income - related party Other income Total revenues Costs and expenses: Interest expense Real estate expense Depreciation and amortization General and administrative General and administrative - stock-ba
Slide 38: Balance Sheet
Balance Sheet As of September 30, 2023 As of December 31, 2022 Asse’ Net investment in sales-type leases $3,182,592 $3,106,599 Ground Lease receivables, net 1,563,670 1,374,716 Real estate: Real estate, at cost 744,571 740,971 Less: accumulated depreciation (38,892) (34,371) Real estate, net 799,679
Slide 39: Portfolio Reconciliation
Portfolio Reconciliation Net investment in Sales-Type Leases Ground Lease receivables Pro-rata interest in Ground Leases held as equity method investments Real estate, net (Operating Leases) Add: Accumulated depreciation Add: Lease intangible assets, net Add: Accumulated amortization Add: Other asse
Slide 40: Earnings Reconciliation
Safehold Earnings Reconciliation For the 12 months For the year ended ended September 30, December 31, 2023 2020 Net income attributable to Safehold Inc. common shareholders ($74,362) $59,294 -225% Add: Merger & Caret related costs and non-recurring gains! 25,404 - Add: Impairment for goodwill 145,3
Slide 41: Unrealized Capital Appreciation Details
Safehold Unrealized Capital Appreciation Details Refer to the Glossaryin 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 valuations of the CPV of our portfolioin calculating UCA.
Slide 42: Glossary
Glossary Safehold ‘Aggregate Cost Basis, Represents Cost Basis plus unfunded commitments of the Core Ground Lease Portfolio. For unfunded commitments, it represents the aggregate future amount to be paid under the commitments, Aggregate Gross Book Value Represents the Gross Book Value plus unfunded
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