SAFE - Earnings call transcript Q2 2021

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Operator

Good morning and welcome to Safehold's Second Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. At this time for opening remarks and introduction, I would like to turn the conference over to Jason Fooks, Senior Vice President of Investor Relations and Marketing. Please go ahead, sir.

Jason Fooks

Good morning, everyone, and thank you for joining us today for Safehold's earnings call.

we Marcos Sugarman, Investment Alvarado, today Executive and Officer. call and Officer President the have Chairman Jay Chief On and Chief details This a to plan our that morning, results. second walk quarter we presentation through can clicking the by presentation safeholdinc.com on be website Investors our The at on and link. found beginning the the will the dial-in call this replay be confirmation Eastern PM is of replay X:XX There with code for XXXXXXX. of Time a XXX-XXX-XXXX conference at today and

like be to call this the over I'd statements are to turn everyone I in remind Jay, earnings not Before that historical forward-looking. which call, facts may

Our to actual cause and these materially these as except update any SEC by these could the detailed are forward-looking disclaims in our forward-looking statements results statements may required differ differences reports. expressly that obligation risk law. or factors Safehold from intent

that, Chairman to Now, call to and CEO, like with the Sugarman. Jay? turn over I'd Jay

Jay Sugarman

joining Jason, all today. and us for you thank Thanks,

future transactions quarter. the saw the investing first and in quarter a growing from pipeline closed ramp-up second The nice strongly with deals activity both in

continue long-term, well-structured that providing leases ground for well-priced, significant gain to value modern customers. unlock traction our and We by

at Working through ability Ground This major Safehold to where certain shovel-ready process quarter, pre-development in predetermined lease high-quality Lease the can once ground a markets lease ground iStar, criteria. price with acquire our and ground commits in we Plus leases source to the development we also expanded the the program. development create together early our leases iStar meets ground funds

Safehold in closed to construction a leases, downtown iStar begin. once Texas, pair ground which is covering to acquire the Safehold city on of a committed ready quarter, block approved Austin, full During

we development. be begins major an that Together, option these the unrealized formula could and capital as Safehold's quietly once of to between building opportunities foot grow. X valuation this appreciation value record went both being captured $XXX on on construction also up the understand a triggered simple in to asset generate million MSA be provided site this square we a anticipated secured scale two for We a Seattle front, an believe leases continue with is more irreplaceable we shareholders. investors the progress on have the in $XXX two country. customer Along that top shareholders been the demonstrated significant account but the and public, We've embedded we in now to investors value and since bit highlight our tracking in the vocal for markets ground the about track million value potential the of also of for asset began million will value to technology for

in some across asset saw the $XXX in begin assets billion appreciation and package, $X diversifying $X you major the ground reflected and billion. quarter, By we markets lease capital come top to believe our portfolio be of to value into by our grew in share and As asset increasing US, unrealized price. will sharper our approximately focus growing the this minds investors' in million earnings in consistently our

Marcos? quarter. have the With through the Marcos let's details Okay. that, walk of

Marcos Alvarado

and everyone. Jay, morning, good you, Thank

that Jay growth, shortly. our the the the across which mentioned, period unsecured channel of the Turning the depth unsecured Highlights first are solid liability the of end, more to our cost investment-grade customers innovating capital. with discuss debt providers activity, increasing We steady and we with during down performance results, utilized to significant lifecycle educating of quarter with towards include: is we market our access investment ratings of expanding take UCA the Slide to markets, amount us a earnings as quarter I'll to origination recently dry our powder left awarded X, and ground business. for scaling progress step at asset of with pleased our serve we as new to SAFE the make continue advantage in introduced portfolio driving offering our of our inaugural about the This opportunity. lease goal an

Moving $X.XX, earnings $XX.X Revenues income XX% we Net XX% the for And the increase from quarter, an million million increase $XX.X per let million, $XX.X year. quarter's through was the the in share from $X.XX results. Slide walk period second we period. earnings year. last prior earned the the this earned you were X, to $XX.X in million an year above was XX% me last same

quarter, to Slide of Additionally, share. X our overview of increase dividend Board our Directors in during an investment approved activity. a provides of annualized the per the an $X.XX X.X% rate

we one quarter, investment leases, value deals to lease The the are in new with times. with note, Jacksonville, a the targets, yield in XX%, these markets, line across of of with quarter market new our metrics effective Of X.X average rent coverage six weighted of X.X%, ground associated this six $XXX expanded we Florida. office ground into During and closed five totaling a asset million. multifamily and

Ground In under to addition, our completed structured Ground have don't ground acquisition came in SAFE need innovative lease to that ground origination the our properly that shovel-ready pre-development customers this for the We criteria. capital product efficient form expands Safehold's product leases properly market meet that sized, Partnering we for yet of the iStar, quarter. capitalize transactions to Lease Lease a a our use assets the development. Plus of Plus is to our land meet first channel developed with realize need. of this an

to use zoned its transactions closed to the two iStar these and originate Plus on for In leases. Texas, is balance quarter, with developer the and leases the Austin, assembled tracks product capital to second adjacent its new the vertical Plus first the Lease mixed iStar committed The stack the have in downtown and ground purchase client used once Lease has development. iStar Ground to allowed Concurrently, obtain During SAFE, in locking transactions, which CBD by the meet our At been to Safehold the low-cost prepared risk go to an life asset's assets. cycle, needs sheet Ground ground that build By our well. to high Safehold economic for targets, customers, we for right product leases land, XX-year acquire as principle profile. customer our ground to lease in quality, ground in ground capital. as value innovating continue metrics, and able value prove to a were unlock that value core meet lease create create we we we our the earlier customers'

in since to aggregate quality at ground billion, for development transactions consider one MSA of lease, an to combined meets X quarter, portfolio be an our up to $X.X be In $XXX just growth in in the X. office million our addition of Seattle ground safe in the ago. the country. overview Safehold in leases. two portfolio Safehold discussed. representing expansion. This to the metrics the on developments, seen the unlocked At markets acquired most is when four our More not our stood provides Plus does a of what our product portfolio Lease could Austin, Ground the XX times create IPO include lease Plus transactions allow invest future and attractive can trophy to purchase Slide amount our Austin the This ground opportunity, years to Slide shovel-ready an with the opportunity we option criteria. we end Ground Lease

with XX, an portfolio of annualized June annualized $XXX yield cash million. portfolio's our X.X%. rent of generated was annualized in-place cash The in-place of X.X%, As yield

to rent lease was portfolio XX% weighted of ground average weighted property times. mix, value X.X XX% coverage XX% multifamily, was consists By portfolio's XX% office, and average and our Our hotel.

Our years. lease weighted term is average XX

provides diversify of to portfolio the across the next focus geographic as update an and capital we the continue top Slide breakdown our On X slide, structure. our see on on the you markets. can US XX

debt During the which our due notes, had end closed debt on of secure we of billion of $X.X the XXXX. $X.X quarter, At of ground debut we issuing unsecured leases unsecured in million pro of which share debt of the quarter, million million of successfully and of $XXX $XXX senior X.X% comprised billion rata of have partnership. in our $XXX approximately debt, notes, non-recourse are offering, we

unsecured period quarter. we XX to is from Our notes weighted is this prior issued average maturity the due which the years, primarily XX-year down

of In liquidity. addition, million $X our billion revolver. approximately $XX the had have with we billion on we $XX on of cash $X unsecured million drawn Combined hand,

yield X.X the interest X.X our a times market positive our The to on cash on spread our our X.X% on basis portfolio. basis levered X.X% cap yield levered average on rate effective is portfolio. debt points and current X.X%, on the on to debt rate cash equity interest basis. spread book The weighted are a X.X%, non-revolver We to a XXX revolver times debt is

an UCA. Slide on on update we Moving to XX, provide

billion, appreciation highlighted With representing that the on XX%. to the portfolio addition period grew properties capital in annualized this six the the we page, rate closed $XXX million growth new $X are right of side our an of of unrealized

time the have the progress our with valuable of with reaching investors. highlighting target alluded our this unique of make billion more encouraged initial had pipeline to continue we've Jay been end growth are optimistic conclusion, from As we and feedback steady expands we to, market about as and remain asset In and spending the XXXX. $X.X by

to let it allow we second better business customers executed offering which we industry. modernize to capital Jay. of the us our During and and and me down important our ground quarter, serve to the as that, drive an cost initial our continue lease new innovations With launched turn back should scale bond

Jay Sugarman

Marcos. Great. Thanks,

appreciation one, value two as our to finish the the to as can So higher benefits should efficient year customer And feels ways strong be we're find shareholders. side, we the our higher earnings if it executing a capital to also we punch deliver capital. very strongly better provide on and track creation to growth for of unrealized customers on and more Safehold like continue and continue

it open Now, up ahead let's Operator? questions. go for and

Operator

Thank you. with Crossett Please [Operator ahead. Nate Instructions] comes question Berenberg. go from Our first

Unidentified Analyst

Keegan Nate. the it's for for [ph] guys, questions. Hey, Thanks taking on

properties more little the little you I origination a where were a quarter? Outside think could other things Jacksonville, detail volume on you in if the specifically detail off, can assets? multifamily give give us the of kick purchased the and bit us more to on bit

Jay Sugarman

Yes, you detail. Marcos, little why more don't give a

Marcos Alvarado

as brand in in deal Jacksonville an Denver, new XXXX Portland, Florida, Georgia, in in we Atlanta, So the closed York in Lauderdale South office and brand and in multifamily a a a asset vintage another New multifamily mentioned, asset asset City. area, we new Fort multifamily

Unidentified Analyst

you three can origination we do and over double you but the the guys next you're remind Great. portfolio formal next know or comfortable us can don't in any And give so still year target you think the years. the on guidance, saying I

Marcos Alvarado

Yes.

annual As prior we've the or business, our don't we quarters, quarterly provide guidance. given said in of lumpiness

remain by XXXX. our target billion I we extremely optimistic the we'll of $X.X end of think that hit

Unidentified Analyst

for Can guys LOI, year? the remainder I mean, else now? final right current one. Okay. you kind guys And expectations just under are you of do what pipeline anything to the the of one the speak have

Marcos Alvarado

We to we've of don't I that about transactions product, disclose will tell satisfaction, this than are the of letter thought under of we've talked happen, effect. you cost We're really that we start ever of been. network customer intent. kind amount awareness our capital, the of our busier seeing

as of half going feels alluded I this really right second next Jay now. early the year think year, good So to, into

Unidentified Analyst

All right.

Thank good. Sounds you.

Jay Sugarman

Thanks.

Operator

Our ahead. next question from with Please comes SMBC. go Anderson Rich

Rich Anderson

Thanks. morning, Good everybody.

to business? on a benefit iStar do in sort kind are what the markup? the lease the So are behalf there iStar of it a land return Safehold Ground longer-term Is trade intentions just and the doing and knowing they They the pay this what's of of in this? you buy Lease program, them -- Plus for they an or ground is iStar on even of

Jay Sugarman

No, is interested putting in participating. finds had iStar out you've capital actually market got it capital third-party returns risk it. We've that also yes. Rich, attractive.

one equals appropriate sense. for is So another pretty risk-reward in the not ground didn't more two. commit those really than places it of make there the one would world this They lease where capital robust around is a iStar. if what's one conversation But plus

think we make smart both can So can and here iStar benefit as Safehold. investments

a never real full customers before way it's think to we're So to here we been to our them capital access the another possibility help that's this idea. there to of what grow building continue power and available leveraging really is we've been

Rich Anderson

pay iStar what that to SAFE, premium works? it a is though, how just So paid,

Jay Sugarman

on Yes. return It's to the iStar. based

Rich Anderson

there are to Okay, iStar existing it to of for parcels got land you. today, similar the sell execution? owns, Within with land that SAFE a opportunities

Jay Sugarman

to certainly some assets that in we value creating -- be. believers monetize still unlock fundamental do perhaps to the to maximize are and trying looks Again, very leases that. we being best is assets, way to would by continue inside belief most the as could got of is the this we way that and Certainly think ultra-efficient one value iStar in high-quality got We've iStar. and ground certainly

done we certainly but future. past the look we've and nothing in something that's So the will again recently, something in certainly

Rich Anderson

this but conversation. it's not to about same the And make kind Okay. iStar, of

lease of kind it close say Is and market the -- you selling some about of portfolio. your to how just You're portfolio all there, or is confidence Is a a level your net that that pipeline be what testing on opportunities that kind lease formally because a of or you more that investigate that does might pipeline to Safehold? exactly are of it there net portfolio? lease telegraphing out of about ground starting growing kind the within of

Jay Sugarman

desirability reaching We, to iStar is a lots a I Safehold We're also Scaling what customers. feel both with everything consistent of to in different are markets and acceptance major of new and Marcos has really said. the reopen think of focus assets. really a our starting companies. we've interest seeing been of level product lot as said,

I in the out so Rich. we up Nothing we're say, way But we would two, the are believe exploration phase, set initiatives hoped. ago strategic certainly the we that And certainly playing three definitive. years all

so think iStar We deliver both path. And execute on continue those we significant continue on to plans. can if this Safehold value to going we're and

Rich Anderson

a one million the put on trying much you debt? mismatch of Is Last So do some ceiling raising of market, but level how the preserve have you Okay. duration liability your you $XXX issue? duration in there understanding while how for terms can asset you debt, to public much can because really into do me. to

Jay Sugarman

kind Yes, was the we so significant XX longer drive has inquiry a longest XX that book year maturities that was in our sweet The to of the issue. We're XX continue entire this try XX obviously market, the spot much to range reverse but year we that with of look, XX of year. year to industry. in inaugural targeted in had the sort a internally at even some offering. We've tenors, will

make don't think markets this changed. I serve unsecured customers. really the the faster, better But bigger, us strategy to to going has So tap we ability as our is

secured the to of we'll fund tenors unsecured ahead So right business, find game. I us but the and just to access else both anybody the opportunity now match the puts think in way

Rich Anderson

Great. Thanks much it. the very Appreciate for color.

Operator

you. Thank

ahead. next Please Our comes from question Anthony JPMorgan. Paolone with go

Anthony Paolone

morning. Good Thanks.

the business. I'd with Star SAFE. maybe that dynamic. I and accelerate I maybe this first Star events question net into that pre-development on guess sale lease is the some ultimate would So thought But getting SAFE between ground guess have Star exploring lease and now Star

in of So, of I suggest level in terms to away Star happening initiatives mean, and anything ultimately? take between what various Star the SAFE something these terms at

Jay Sugarman

would the $X a that. architecture. right too of is when and thought will while past No, this have conversation work. the think about about This at back. of don't billion been I hypothesis, about plenty Star and SAFE publicly it that of refining get be results. much I we're to capital the about for We've the world now in read architecture the see into testing business. the interested in that. our long wouldn't We changes be just to puzzle. anything a thinking to said, sort of in puzzle companies that piece mentioned that be we minds We This appropriate of business, it term our assets, is there's of would another think Again, certainly grow a it we is We've both player. that piece starting it, dominant some mission

source of long-term have at doesn't good but kind launch capital to innovation, So doesn't iStar be. if it is be to want new really helping the this it

Anthony Paolone

mechanism it markup one deals or then does pre-development the these land then, SAFE? when Star what to And is flips of over the Okay. and specifically

Jay Sugarman

of can't both forward. plus independent predicated sort independent with one than that the it Yes. is, to asset Obviously, of for to directors Boards of stage so risk gets appropriate one transaction; and returns of transaction it's really entirety has pre-development. the and the two the market or on in and comfortable It the have to where profile we a approve are equals move again, every is the it see group feel more each of

as market start a and little to meet is or of of measure won't get try to bit there we with there kind management standards is and So a negotiation equity has then that of done.

Anthony Paolone

And doing so, I a if guess is SAFE call five, be that deals it what would let's number Star? for equivalent

Jay Sugarman

profile. Obviously very duration different risk tenor a

side and to different lease two it's everything in the very double some And XX-year from pre-development contractual Safehold benchmarks range is not certainly sort long-term both world pretty fundamentally the in that that's digits at very very ground unusual, the the when iStar flow side. of that in So, market what pre-development the that world know but good the of constructed make are the well and instruments. Safehold of buying, and has you capital appropriate. at from shared we've streams market a is market lease cash well knows with look seen that's We guardrails there ground the feels that just sure Boards what

Anthony Paolone

Okay. And the have deal I yet terms then, about to that commitments, in of were just the there fund. in future some you flow think quarter thinking of

and this in some And Lease I done the things that Plus $XXX $XX out think I of you've think the was it like like got you've million then past. program. Ground million now also,

that's of will that kind kind will, go pretty Just SAFE. pending, wondering at of add just some like what's into visible point up help if you

Jay Sugarman

closed $XXX we together. million be must as met. than are to on segment further There Capital are just is The out range. must up be stack program million That that. is that that single of $XX full put in cycle sort probably it would I funding Plus conditions the of sort Yes, that reaches that things construction and into number have asset. GL

So $XXX the I further in of s $XX near would out the the to that million mentioned million Marcos and million or million sort term is bucket $XXX the $XXX future.

Anthony Paolone

Okay, got math the basically the just million add tracks that it. million $XXX Is the in right when you and in on then $XXX The is two Austin that? Seattle.

Jay Sugarman

Correct.

Anthony Paolone

great. got. Okay, I That's all Thank you.

Operator

comes next ahead. go Raymond Stephen from Please Laws Our with James. question

Stephen Laws

follow Marcos, your Hi, comments. on good wanted morning. to up I

the whole more the four in the earlier a talk three as really you've two long-term Star over You mentioned where to more Lease or from really you competition early now? since medium competitive, Plus Ground development started going involved more really or and you've is and that is that that there? growth about much prepared that ground company. the the and three about business years play and and as lease become Can less think become years we has is the what for Is outsized last competitive remarks opportunity an opportunity

Marcos Alvarado

Yes.

the wanted didn't overall still competitive address can you, me haven't do for our we seen that to anything Let landscape I business. that we tell we do.

our track we've or think the So capital observing closing we are proven issuance, this in record customers transactions, anybody marketplace. the cost received better I advantage can else of of flexibility through than the unsecured

additive entire another our investment capture capture the us product Plus the really channel. our just liquid the haven't as as We competitive way normal It life compete we just pressures customer on and felt markets Ground as we are a allows lifecycle which an does. more So importantly. with of ground Lease to us asset, cycle to this allows functioning market of it certainly entire is lease financing -- fee origination business.

one the the So which kind sort take creates for future us to as for growth early risk, risk and all the than years. natural that to of obviously takeout, more Jay And iStar sense be given in face for made lifecycle everything. extra dynamic alluded us on coming two profile, in they the to of one come equals plus -- this

Stephen Laws

Thanks Great. the there. color for

to expense about I comp, the to into you can higher talk little else think G&A? Moving G&A seasonally stock-based you but increase what a little the a some side, QX went do talk about for sequentially bit. can is due

Jay Sugarman

bit it a have the second of directors Sure. quarter our Yes, expensed. full-year and is in little a fully their in quirk pay get we that

on, quirky and that's little that's a So million. $X clear bit over should we be

So some smooth have we from handling quarter in the a and now, property do quarter the it way an intellectual products that's see standpoint. work experts team this you accounting in-house. costs will who We that out that that stuff. and on of maybe continue. and some do every but we're significant of Got second we These this in-house take innovative bit expertise can will that legal future, develop tremendous right a legal of

in every a we as deal, quarter. we while, see of our spend continue did that hope once first we well we second sense, it it's will we trillion one-time but a we doing trying a, in you'll business. GL And Plus, what to it So worth in work up a With extra -- lot are is to another, think innovate innovate, and dollar crop that it's get money, but right. to in one

think for really potential building the we smart industry. modern are So, out lease ground of investments full these this all

pushed the now, on So quarter compensation fees will two things those directors' this the sort next little high a right that of this bit was away were go say, quarter legal certainly side. and I the the expenses would and the

Stephen Laws

Thanks. questions Great. taking helpful Jay. color, guys this morning. you appreciate That's my very I

Jay Sugarman

Thank you.

Operator

ahead. Burrows Caitlin question next go Sachs. Please Goldman with comes from Our

Caitlin Burrows

Maybe confirm legal you that They costs? topic. for last just were in Hi, just manager, to start follow-up is morning. that to the good on right? Jay, quick included reimbursement expense a line the those could

Jay Sugarman

the guys G&A. line at have What Just level. Safehold straight No, actually they those we are that under? item

Caitlin Burrows

Okay.

look that I guess, higher into the the expense that the to in I something two. what, manager, again. never that know Is looks quarter mind. -- then, So like at you it looking was will if reimbursed I'm

Okay.

Ground iStar's the be it involvement then the the could about, from product, like talk sounds Safehold Plus being might you behind just beginning it on risk-related. versus on, just Lease Moving reasoning

that and relationship? or little about leasing a once is wondering is just in that risk, can taking is that you the plays more leased-up involved talk but Safehold how bit iStar pre-leasing So property it of only is then just

Jay Sugarman

to in there property. our think I wants know value to stack it capital to be or is way be the on the on to XX% Safehold XX% physical easiest think is, property that a about of of to the sort of about wants the asset Yes, and

we do is shovel-ready deals. or to combination taking capital. is not real The that's obviously near-term or there built, that iStar think project a you from is, are is couple There here. third-party done only standard structure but pretty Leasing have we picture for we what a to capital of think to and/or different in see That's going entitlements, physical and and your and the and and pre-development in on there permits, XX% not markets XX% doing you've Obviously, risk. deals risk tie-up different capital of ready best So your are to in the of is puts the GLTV they investors, capital the products, line-up itself pre-development long-term yet. those to so basis and the think iStar on provide depending very stack don't Safehold deals is G&P shown benefit with the moment that G&Ps, best points not you the Safehold some really a and that GLTV standard. a possibilities is profile opportunity ability your great zone. is really that construction. of happens more a return use there and building not And these in leasing developers. at But also is that to really we cycle, land asset obviously literally have the shovel the any our best you get in deal. going it's do put early, And We've a that appropriate build great ground

it's certainly still the tell quiver So, sitting can when you, with it's customers. another but early, we're I arrow in

them hey, Marcos us building We're to in want don't with we're think markets provider want to capital places and we go to said, many that building single customers them now. capital now. to locations, and back others Safehold think with want things best provide say, one-stop long-term do and two engage and relationships a single We the is very can the that years building capital iStar we or think great we from for them can when We they not can. on we wonderful come As be shopping way and in now. don't source best give them asset. We

Caitlin Burrows

funding it, And million over on maybe the the Got that for of then, $XXX that investments the made side just okay. quarter. investments you -- in

You did your issuance I what on and decide million just right what side, is? the equity $XXX at you when looking thinking are to equity guess, deal. this metrics to for unsecured the year plans are equity the time raise

Jay Sugarman

Yes, I have billion of we about think said $X we liquidity.

point past a about also So, said the to liquidity at constraint. like is I of time. in certainly not any think we in We've have $XXX million liquidity around lying

engaged on the these we into be about. if pipeline and is all will that certainly liquidity, start so knocking we Marcos' of So down thinking fronts kinds team and metrics deals fully good. feels are eat the those

Caitlin Burrows

of them, them of Wondering you actually a in could isn't six maybe one last quarter. the the some in on then, completed but closed, deals And the on deals, detail timing the timing although think of that terms Okay. the in quarter. close one did were if of those just give actually I that the acquisitions

Marcos Alvarado

of So, closed for except quarter. in them, $XX the million all

Jay Sugarman

quarter. the in late Somewhat

Caitlin Burrows

the in late Rather Okay. quarter?

Jay Sugarman

sort was -- a of month. June Yes, big

Caitlin Burrows

it. Got

Okay, thank you.

Operator

Haendel Our comes next St. from question

with Please Juste go Mizuho. ahead.

Haendel St. Juste

Ground level got guess any could on the or underwriting you investments what one then talk could lease types Ground more. represent your perhaps versus more about for use there Lease I've with? these been Hey, more maybe but already, key ground Plus traditional of much be returns the Thanks. curious, differences you'd know I comfortable deals I my in good I how assets? the morning. And pipeline and lot of has target Thanks Plus I'm questions. a proportionally guess taking of your

Jay Sugarman

talk I'll this a -- Again, let product. our about Marcus the pipeline it's we of and new products customers, dynamics. many offer is so one

the tell would is around Haendel, we of to So to stop we we very overstate that think you, want that our to the markets want best penetrate when of sort be one tool. the markets know slot. we certainty we very opportunity don't all locations, in best that it on think numbers, about. get this those AAA metrics powerful I it's the the good about we in And know into allows us mean, I kind what want but to where price, is, where we've we talked a to

these these work how some you go. everywhere of the So time, calling of really customers really question into are with they some get the do all quality you you they that high do so how is, real quality high markets,

they do we the to tying that we in for available the up hard we get up what's life wouldn't to a at showed be if it we're is, a And at assets them. shot shot probably us want getting So cycle. much off-market in work some deals, later

it's can't done but idea. of the a positive. really customers, extremely been only a about, don't the really caliber reaction couple, talk high. So we The powerful We've to want really overstate it's it. Again, but has

our so this do is what we of of right well. And up This alley a sort feels like Safehold/iStar really fit.

the think you Marcus, is? here so, And potential what

Marcos Alvarado

ground our pipeline, will of we're our leases. we're Ground as we ordinary As Lease excited more But optimistic think course a or every transaction. Jay about And think I share about every customers' lion's quarter, high-quality overall the I announce alluded that to, other capturing is Plus quarter mindset. hopefully super

Our business active. is very regular way very engaged,

way the just most regular pipeline business. So of is

Haendel St. Juste

Thank that. for you it. Got

could some in potential pipeline. were these think upside At pipeline the larger deals you or they on Another Ground larger Austin, about the NAREIT, that transactions. in question guys alluding I Were Plus for you here? Lease represent deals other the to Seattle intimated

Jay Sugarman

No, what alluding of Plus GL regular we're to. business is the transactions way outside is

super the future additive Plus high-quality is So GL just growth.

Haendel St. Juste

around or is So then, on movement still the them these just ongoing any transactions conversations of -- or conclusion continue, some we're this and larger waiting potential of imminent of conversation? sense still any doing sense --

Marcos Alvarado

and transactions for and think could worked as I we've diligence closing would a some guidance to half, these why some of process, I been year on lumpy in provide call reticent it, example. them that's have an -- because been take some -- a conversations, ongoing

are So feel we going close, we can't forward. but predict growth exactly good the about going when to they

Haendel St. Juste

Got And it. more. one

you asset then in quarter. the I'm mentioned the comfortable office that, meaningful notice value New forward? curious how underwrote doing more I you you office City a yield on are guess how asset you did any the think going and York and I closed change in you deals

Jay Sugarman

Yes, high-quality asset. certainly. super We bought City York building, an a interest in office New

our the in think relevant foot $XXX we're I range at metric basis. the is,

traded that XXXX, So some land where sits has value we We do pre-COVID there feel office where -- asset value. it is probably the we're it worth was today. agree where been below from and deterioration in like there some

account so And reset with a at our we metrics basis. consistent our took that into in and it's analysis

Haendel St. Juste

you a of change share been? ballpark value what estimate has you just Can feel that in

Marcos Alvarado

down. XX%

Haendel St. Juste

it. you. Okay, thank Appreciate

Operator

from Howlett comes Our Please next Riley. question with Matthew B. go ahead.

Matthew Howlett

taking Thanks. question. Thanks for my

and works? Just they first program, back the the Plus mortgage to that the the first just does how iStar sell find do mortgage, curious

Jay Sugarman

lease. ground structured mortgage, a it's Yes, a actually structured it's as not as

Matthew Howlett

just go first corresponding will have curious it mean, or, they mortgage it? Do I with along as it with

Jay Sugarman

At equity in just this check. XXX% a Yes. case, least, it's

third-party not it these them. financing. try investment, it in entity be is itself. -- probably leverage iStar are If to lending bring to lay two-year guess our of cycles, go off the we not the predevelopment there's to and of could may kind go capital So seek But total some -- not is certainly, worth

capital have they have like to We that deploy with partnerships iStar. significant would

shouldn't So capital a be problem.

point on plenty we this opportunities has road. but our one-off period. with trying year Safehold So to liquidity something these create to we closely just presence, and about down optimize expand to the Certainly, haven't the is hold at can think of really two focused iStar working

Matthew Howlett

you what terms Jacksonville market, and more how a that? many that, you think of get markets about bit with that the getting then, Talk And do in expanding into markets Jacksonville it. can interesting like Got what's little comparable into?

Marcos Alvarado

is XX we're multiple market. city, go almost concepts Yes, adjacent was with of is bigger followed bigger the I This original originally about. talked to that of directly we of in the cities actually is we in XX the asset stadiums Jacksonville to think assets. an which kind NFL the one

are asset, the time. So These this materially has quality a beautiful The I where XX-ish Lauderdale Atlanta, market We a land a in is asset. appreciated Fort asset. asset. is great great in top for markets. high properties beautiful think our quarter. locations Portland deal multi. all viewpoint gorgeous over Denver are there It's really did physical

So There mix are of we multifamily business working that are fairly happy some about. on flow really on. we're seeing. large still we happy really steady with we've the a is side that And transactions then got

what ahead Francisco, job cities, be we a gateway And of York, Antonio that or it's just to our exactly LA, Jacksonville it's on city do the pipeline doing. I think a Boston, whether San should in are execute San think whether -- if these us. we these we top So, New like now or is Chicago, the

Matthew Howlett

you've driving ever the more is been you that it? with been, what's of say just you've awareness array the busiest products, what's products, of -- the the When just

Marcos Alvarado

combination think I all of that. it's a

in we're innovating. closing we're of We're a lot. think the I busy because process

customers, there's education So our to different an process. ways which talk requires with

I think the brand awareness is at peak. its

on. of we're look so How look you refinancing? those calls. a it. this? you get used guys involved about selling you at thinking would Are not this? would And guys in to we at early about thinking How lot And I'm processes

So we're cranking.

Matthew Howlett

lot. Thanks Great. a

Operator

ahead. comes Our Truist. Please Ki with question Bin next Kim from go

Ki Bin Kim

morning. Good Thanks.

the going back compensated like Just risk I'm are that yields just for the for of strategy, of getting? deals, how Plus terms getting curious to the Lease inherent pre-development in you Ground you're development,

Jay Sugarman

clear. it I Look, mean, really see can make Yes. if I

you So investments here. have two

three is in basis. phase. of depending have unlevered is two, return profile The You a Safehold phase forward The a years definitely on the lease are double-digit pre-development pre-development ground when phase met. to the risky during returns that marketplace an take on that agreeing out conditions is a

dynamic we know know other think so Safehold we are in we a to the GLTV be -- to markets, be of that where We to But capital to where with on is want capital. long we these want that want the term. is. them And provide sources in we We be pricing also competing one again, that basis.

profile. said, points it's So Safehold's historically the pre-development as alternative the digits, benchmarks think think earn We forms a little low earn, we've higher are the us, to XXX its ground out we high on lease there that risk-reward in capital terms of And double even in above kind we beat to should maybe XXX depending bit cost have funds. single of basis capital. of needs of digits, to

The So of those out benchmarks are pretty well other with well them. established. are Boards teams of competing capital. there are sources aware Both

central where So what's right again, the risk-reward you equation. is pre-development what trade, market targets, of, there if -- that, to asking if mid-teens. it's is ROA digits on are kind marketplace, it high the a lease, know past, earn, I be hey, on it's are single type, digits core you've CBD pretty simply, deal, depending the it's XXX. a does going this in seen in to And the our to of the ground mid-double -- where depending should as But liquid XXX deal asset don't

sometimes they've that's try we the benchmark up. However, set better. still been these which But deals by to

Marcos Alvarado

Yes.

access getting think transactions get in economically of probably their consistent to fantastic. to we certain the and is grabbing the access are a or cycle. it our instances better rest them earlier of even they are from about from is, we quality to in portfolio with life way And and the think assets standpoint, I the metric SAFE's wouldn't perspective by

Ki Bin Kim

doesn't yield do expectation, from of for more what parameters kind write terms Now in a language of yourself, if you standpoint, if any? the you, do in in legal deliver build the project safety

Jay Sugarman

doesn't the built, SAFE buy. If to have project doesn't get

starting And meet for talked progressing. it buy isn't is, the is those it metrics that point that so if about, to Safehold doesn't project not Marcos a a -- that's requirement

bigger, a you safety this smaller, measure. if one bit little eventuality as this if doesn't. one in -- build a building the is bit if can little that's we So is imagine, Usually, happens, if the building

think our is, be up and know setting are be exactly Safehold view don't are deals the when to will recognizing the like exactly that going book, look conditions of feel So while rest we and we I met. that those

way work for is this transaction, source so essentially a but when also forming are not capital only And with the the forever. customer long-term beat they great our to us

Ki Bin Kim

there macro But concerns And question of perspective, scenario calls your inbound just seen and treasuries scenario? a inflation. interest you pipeline certain I'm rate here. course, a or a in Okay. curious more where your activity more see more about We've lot in from -- movements of of business is

Jay Sugarman

are mean, the lowest have longest I cost, XXX rates to higher XXX points capital, whether be or basis term, we basis just Yes. points most efficient lower.

is the which more efficient a think mousetrap, way markets, financing a have cases better competition regular Our we we built mousetrap. most in

alternatives more, So than are at responded are is their anything customers Ki our to yours that. not have looking doing saying what bin, and They better.

nice reflation the We lock getting but So I nervous. that's trade a little the goal. They sort storyline, in of people saw don't was drove long-term really our bit all. rates. wanted to and That business think at a it

And tool shareholders leases. true this just really a with true to and we into with people corporate tool it's We become understand being think is. in commercial ground interest embedding a going helping understand it's protections the beginning of is your in inflation think capital tried long-term estate. their I are And we rates. and tried to world are how the real again, powerful efficient that world real estate our regardless

better at to protection feel places one has has protected the like it It high look with we capital, backs. CPI of grow rates So, long-term our is this UCA. asset continues given this for that

So haven't We you I think comfortable deflation. markets can about impact reflation worried whether the feel are or it the business. seen really

Ki Bin Kim

Okay, thank you.

Operator

Our go America. Instructions] [Operator from question Hewett comes Derek with Please ahead. next Bank of

Derek Hewett

some my Good of morning, addressed, but everyone. issues. maybe housekeeping Most questions were

points activity quarter only portfolio basis yield on second a yield to up was X.X% while X.X%. XX investment the basis, quarter-over-quarter about was First, the

the overall So yield growth? what for portfolio accounted

Jay Sugarman

that just X for X.X%, out it there are I specific don't figure to X.X%, are X.X%, could any asset there's the probably if We'll caused specific it a kicked where margins. in. around But know see sort take at We just or to that transactions moving Derek, take bumps that, look out bump X you. decimals they of to and happen. small very if

Derek Hewett

point? all then, calculation of And associated terms this in just Okay. with flowed through headwinds at that the of of COVID the has kind UCA,

Jay Sugarman

just end assets have quarter. most it XX% been how to year, revalued of many the XX% think But through at. have being our this We relooked of see assets of you'll on depends come still the will all each because I in. assets new It flush by

of are I think what Hospitality actually voracious some multifamily seeing knock. up, we Office got is and given little of a rates bid pretty for bit good Multifamily, these cases, we in of sort expected. days. a knock. kind got falling

of expecting the of the right But appraisers. important variable not getting that growth end process those in now. it's are say, is more far by year, full we would our quarterly that new And right certainly, from we're and nothing now, I see the So reports impact. still third-party we'll

Derek Hewett

you. Thank great. Okay,

Operator

JPMorgan. Our Instructions] go from question ahead. next comes Anthony Please Paolone with [Operator

Anthony Paolone

in yield the into something that X% or some typical are differently where say, a bit Thanks. pricing? or there's bumps. are how take I or Seattle just markets we rent have a like the current for be land and pretty maybe follow-up bumps where than something you prospects to, things the pricing strong When in growth may yield given market higher Jacksonville a structure you around or just think us about the like between different other element, the pricing tech the comparison

Jay Sugarman

in I'm that Marcos, puts but starting kind transaction to on the you going sort kind XXX again, I on the have basis of eye was X.XX% can and X% we high you say, to point the XXX to benchmark good cash starting to where point Xs into it thought the of rate for pretty of capital ROAs. That And depending team, these with I'd a gets to kick zone, of all Brett X.XX% processes. a bumps fund. markets

the comfortably pricing the art Marcos go those transaction. is sort on like team meeting we spreads every are we and of feel But that individual that we through So want. benchmark

Marcos Alvarado

tons say, demand. would difference. very I assets, of quality, super institutional Yes. high slight a pricing probably liquid There's

a are a of building office spread trophy than probably So a our debt. more make But accomplish in Jacksonville would I'll the trying that Seattle across cost bit MSA. little we just in portfolio, say, multifamily over to

Anthony Paolone

Got it.

too bumps much almost the Like standardized around coupon that pretty market? changing -- the irrespective the is not how that's it's the much bump? So still, are the -- versus pretty of

Marcos Alvarado

bump has later but you, tell with lookbacks. discussion catch ground will bumps we Occasionally, around there's X% initially certain every up our it's lease inflation generally, I X% relief new some and bumps. on,

Anthony Paolone

Thank got it. you. Okay,

Operator

Mr. have no Fooks, we further questions.

Jason Fooks

discussion. everyone, great. Okay, the Thanks, for good

feel questions additional please you today's the any to directly. should contact earnings you replay release, could me give on have instructions again? Tiffany, free If

Operator

after Thank August X:XX you. midnight. and will Absolutely. Time be replay Ladies for gentlemen, today through this Eastern PM available conference at X

code You may XXXXXXX. does for time conclude our dialing access the by XXXXXXX. participation. Those access the access X-XXX-XXX-XXXX X-XXX-XXX-XXXX and at That system executive again, replay conference entering today. Thank the any numbers with you code are your for

now may disconnect. You

Safehold (SAFE) 22 Jul 212021 Q2 Earnings call transcript