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Safehold Inc. (SAFE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered steady core results: revenue $97.7m, GAAP EPS $0.41; EPS excluding non-recurring losses rose to $0.44 (+$0.01 YoY), supported by higher asset-related revenue and percentage rent, offset by non-cash provisions and lower equity-method earnings .
  • No new originations closed in the quarter amid rate volatility; pipeline strengthened with ~$386m in signed non-binding LOIs (11 ground leases ~$273m; 4 leasehold loans ~$113m), with early deals starting to close post quarter .
  • Portfolio credit and structure metrics remained resilient: GLTV increased to 52% (office revaluations) while rent coverage held at 3.5x; liquidity was ~$1.31b, debt/equity 1.96x, and hedges generated ~$1.7m cash interest savings in Q1 .
  • Near-term stock catalysts: capital recycling/JV or asset sales to highlight public/private valuation gap, continued multifamily/affordable closings already underway in Q2, and active hedging and ratings momentum supporting cost of capital .

What Went Well and What Went Wrong

What Went Well

  • Pipeline acceleration with diversified sponsor/mix: ~$386m LOIs across 11 ground leases and 4 loans; majority multifamily including affordable, 9 new sponsors; early Q2 closings underway .
  • Portfolio income drivers improving: percentage rent was $4.9m vs $4.6m YoY; EPS excluding non-recurring increased ~$0.01 YoY on higher asset-related revenue, despite provision and equity-method headwinds .
  • Balance sheet strength and hedging: ~$1.31b liquidity; revolver swapped at ~3% SOFR produced ~$1.7m cash savings in Q1; treasury locks crystallized $13m cash gain in April with ~$17m remaining mark-to-market gain .

What Went Wrong

  • Originations timing slipped: no new Q1 closes due to rate uncertainty and capital stack decision-making; multiple deals “left at the altar,” pushing activity to Q2/Q3 .
  • GLTV ticked up to 52% from 49% QoQ on office appraisals; management notes valuations can lag declines in office and other sectors .
  • Non-recurring DC office preferred equity loss ($1.9m) reduced GAAP EPS YoY; non-cash general provision rose with increasing GLTVs; equity-method earnings decreased due to leasehold loan repayments .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$90.7 $91.9 $97.7
Net Income ($USD Millions)$19.3 $26.0 $29.4
EPS (GAAP, $USD)$0.27 $0.36 $0.41
EPS (Excl. non-recurring, $USD)$0.37 $0.36 $0.44
Net Income Margin %21.3% (19.3/90.7) 28.3% (26.0/91.9) 30.1% (29.4/97.7)

YoY comparison (Q1):

MetricQ1 2024Q1 2025YoY Change
Revenue ($USD Millions)$93.2 $97.7 +5%
Net Income ($USD Millions, GAAP)$30.7 $29.4 -4%
EPS (GAAP, $USD)$0.43 $0.41 -5%
EPS (Excl. non-recurring, $USD)$0.43 $0.44 +1%

Portfolio/KPI trends:

KPIQ3 2024Q4 2024Q1 2025
Aggregate GBV ($B)$6.7 $6.8 $6.8
Estimated UCA ($B)$9.1 $9.1 $8.9
GLTV (%)48% 49% 52%
Rent Coverage (x)3.5x 3.5x 3.5x
Liquidity ($B)$0.955 $1.32 $1.31
Total Debt / Total Equity (x)1.99x 1.96x 1.96x

Segment/portfolio notes:

  • Asset mix and top markets (by GBV) remained diversified; multifamily count at 85 with portfolio 147 assets; top markets include Manhattan (21%), DC (10%), Boston (8%), LA (7%), etc., with market-level rent coverage and GLTV detailed by management .
  • Portfolio yields: Cash yield 3.7%, annualized GAAP yield 5.4%, economic yield 5.8%, inflation-adjusted yield 5.9% (2.2% breakeven), illustrative Caret-adjusted 7.4% .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per share (Common)Q1 2025—$0.177 payable Apr 15, record Mar 31Maintained run-rate
Dividend per share (Common)Q2 2025$0.177 (run-rate)$0.177 payable Jul 15, record Jun 30Maintained
Revenue/EPS GuidanceFY/QtrNot providedNot providedN/A (company does not provide)
Capital Recycling/Buyback Program2025$50m authorization announced Q4 2024Active evaluation of JVs/asset sales; leverage-neutral intentMaintained/Executing
Ratings/Cost of Capital2024–2025A3 (Moody’s), A- (Fitch), BBB+ (S&P Pos. Outlook)Same; ongoing dialogue with S&P for potential single AMaintained; potential upgrade pursuit

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Originations/Pipeline$104m originations; JV buyout; multifamily focus 2024 originations $225m; plan to double affordable volume; pipeline building No Q1 closes; ~$386m LOIs; early Q2 closings underway; majority multifamily incl. affordable Improving pipeline; timing delays easing
Capital Recycling/Valuation GapJV intent for larger deals; partner ROFR expired $50m buyback; leverage-neutral; consider JVs/asset sales; unlock Caret Explore asset sales/JVs to close public/private gap; processes underway Active evaluation
Office/GLTV/AppraisalsGLTV 48%; modest declines; rent coverage ~3.5x GLTV 49%; RC 3.5x GLTV up to 52% on office revaluations; RC 3.5x; note lagging valuations Slight deterioration (office)
Hedging/Cost of CapitalRevolver swap; treasury locks in gain position; CP savings ~70bps Effective rate ~4.2%; hedges yielded $43m realized; $27m unrealized Revolver swap cash savings ~$1.7m in Q1; treasury locks cash gain $13m; $17m MtM remains Supportive tailwind
Leasehold Loans ToolUsed selectively; JV fund exists; small part of business —Tool to add certainty to closings; keep small % of balance sheet More tactical use
Caret Liquidity—Aim to broaden investor base; long-term liquidity focus Unlocking value remains priority; expansion being evaluated Ongoing initiative
Macro: Rates/TariffsRate volatility constrains decisions Rate swings persisted into early 2025 Rates high vs forward inflation; tariffs create noise; customers seeking early rate locks/floors Stabilization would help

Management Commentary

  • “Markets are beginning to adjust, and we are finding ways to provide capital our companies need… deploy capital that can represent attractive risk-adjusted returns to Safehold.” — Jay Sugarman, CEO .
  • “We have nonbinding LOIs totaling approximately $386 million… Credit metrics are strong… contractual returns in the low 7% range before factoring in CPI and CARET.” — Brett Asnas, CFO .
  • “Portfolio GLTV… increased quarter-over-quarter from 49% to 52%… Q1 is our largest office revaluation quarter… rent coverage… unchanged at 3.5x.” — Brett Asnas, CFO .
  • “We are actively evaluating opportunities to take advantage of what we believe is a public versus private valuation disconnect on the existing portfolio.” — Brett Asnas, CFO .
  • “Customers [are] asking to lock rate early and/or have some floor and cap… looking for certainty.” — Jay Sugarman, CEO .

Q&A Highlights

  • Pipeline granularity: Majority multifamily with mix of construction and recap; diverse geography (West, Southeast, Northeast, Midwest); expectation most LOIs close in 2025 with timing varying by construction vs stabilized .
  • Capital recycling options: Considering asset sales and JVs to unlock value and fund growth; processes underway; intent to keep leverage neutral while standing behind stock .
  • Leasehold loan strategy: Selective use to add certainty in volatile markets; keep as small percentage of balance sheet; improves ability to control cap stack timing .
  • Ratings outlook: Ongoing dialogue with S&P; timeline often 18–24 months; aim to achieve third single-A rating .
  • Macro commentary: Rate volatility and tariffs affect construction pencils; narrowing volatility band improves decision-making; sponsors increasingly seek early rate locks and certainty .

Estimates Context

  • Wall Street consensus estimates via S&P Global for SAFE were unavailable for Q1 2025 and forward periods; therefore, no “vs. estimates” comparison is included. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Momentum building post-Q1: Expect increased capital deployment as LOIs convert; early Q2 closings already announced (Boston, Florida, San Diego), supporting near-term revenue trajectory .
  • Multifamily/affordable tailwinds: Strong sponsor engagement and stable asset fundamentals make this the core growth vector; management aims to expand footprint and sponsors .
  • Defensive structure with upside: Rent coverage stable at 3.5x, hedges reduce cash interest, CPI lookbacks and percentage rent underpin economic yield beyond GAAP metrics .
  • Watch GLTV/office valuations: GLTV increased to 52% on office reappraisals; management highlights valuation lag risk—monitor subsequent appraisals and rent coverage stability .
  • Capital recycling as a catalyst: Potential asset sales/JVs could crystallize private-market value and fund accretive deployment/buybacks without raising leverage .
  • Balance sheet and ratings support: Long-dated, below-market debt, active hedging, and pursuit of S&P upgrade underpin cost of capital and spread-to-benchmarks .
  • Trading setup: Near-term positive catalysts include deals closing and any announced recycling transactions; medium-term thesis hinges on scaling multifamily/affordable originations, stabilizing rates, and recognition of Caret/UCA value .
Citations:
- Q1 2025 8-K and earnings presentation: **[1095651_0001095651-25-000013_safe-20250506x8k.htm:0]** **[1095651_0001095651-25-000013_safe-20250506x8k.htm:1]** **[1095651_0001095651-25-000013_safe-20250506x8k.htm:3]** **[1095651_0001095651-25-000013_safe-20250506xex99d2.htm:1]** **[1095651_0001095651-25-000013_safe-20250506xex99d2.htm:2]** **[1095651_0001095651-25-000013_safe-20250506xex99d2.htm:4]** **[1095651_0001095651-25-000013_safe-20250506xex99d2.htm:7]** **[1095651_0001095651-25-000013_safe-20250506xex99d2.htm:13]**
- Q1 2025 press release: **[1095651_20250506NY80509:0]** **[1095651_20250506NY80509:1]**
- Q1 2025 earnings call transcript: **[1095651_SAFE_3426159_0]**–**[1095651_SAFE_3426159_19]**
- Q4 2024 8-K and materials: **[1095651_0001095651-25-000003_safe-20250205xex99d2.htm:1]**–**[1095651_0001095651-25-000003_safe-20250205xex99d2.htm:16]**
- Q4 2024 earnings call transcript: **[1095651_SAFE_3414850_1]**–**[1095651_SAFE_3414850_22]**
- Q3 2024 press release/call: **[1095651_20241028NY41585:0]**–**[1095651_20241028NY41585:2]** **[1095651_SAFE_3404395_2]**–**[1095651_SAFE_3404395_16]**
- Dividend press releases: **[1095651_20250314NY38473:0]** **[1095651_20250613NY07405:0]**
- Post-quarter closings: **[1095651_20250527NY95242:0]** **[1095651_20250602NY97027:0]** **[1095651_20250626NY09478:0]**