Safehold Inc. Q4 FY2025 earnings call

• New investments: Closed 10 transactions in Q4, including 9 ground leases and 1 leasehold loan with $167M aggregate commitment. Full-year closed 17 ground leases and 4 leasehold loans totaling $429M.
• Credit ratings: Received a credit ratings upgrade from S&P to A- with a stable outlook, now has single-A ratings from all three major rating agencies.
• Portfolio growth: Year-end portfolio was $7.1B with UCA estimated at $9.3B, up ~$200M from prior quarter due to external growth from new investments.
• Earnings: Q4 GAAP revenue $97.9M, net income $27.9M; full-year GAAP revenue $385.6M, net income $114.5M. Excluding nonrecurring items, EPS improved year over year.
• Portfolio yields: GAAP earnings portfolio earns 3.8% cash yield and 5.4% annualized yield; economic yield is 5.9%, increasing to 6.1% inflation-adjusted and 7.3% including unrealized capital appreciation.
• Capital structure: At year-end, ~$4.9B of debt, weighted average debt maturity ~18 years, ~$1.2B of liquidity, rated A3 by Moody's, A- by S&P and Fitch with stable outlooks.

In the fourth quarter, Safehold closed 10 transactions with an aggregate commitment of $167,000,000, including 9 ground leases and 1 leasehold loan. For the full year, 17 ground leases totaling $277,000,000 and 4 leasehold loans totaling $152,000,000 were closed, with an aggregate capital commitment of $429,000,000. GAAP revenue for the fourth quarter was $97,900,000, and net income was $27,900,000. Full-year GAAP revenue was $385,600,000, and net income was $114,500,000. The portfolio at year-end was $7,100,000,000 with UCA estimated at $9,300,000,000. The portfolio generates a 5.9% economic yield, and GLTV was 52% at year-end.

• Goal to add more ground lease volume in 2026 versus 2025.
• Find ways to get Carats value more readily recognized.
• Begin utilizing previously authorized share repurchase program when trading windows are open and market conditions make sense.

• Actual results may differ materially from forward-looking statements as detailed in SEC reports.
• Litigation related to Park Hotels, with a court date in 2027 and $7,000,000 cost to get contractual rights recognized.

Q: Good morning, and congrats on the quarter and the year. Jay, it sounds like you are a bit more constructive about putting capital to work here. Obviously, a lot of your origination volume has been in the multifamily sector. Any potential willingness to invest back into office at this point?

A: Hey, Mitch. Good morning. I am going to throw that to Michael because we have been talking a lot about the opportunity set in 2026. Michael, you want to jump in here?

Q: Good morning. Thanks for taking my question. Just one follow-up on the remarks around Carat. Just want to clarify. In the past, you have mentioned that to see any progress around liquidity or any other monetizations you would be dependent upon either a pickup in market activity or investor sentiment. But I just want to check that would you still be dependent upon any kind of pickup in activity before you could do anything with the Carats? Thanks.

A: Yes. I do not think it is a, you know, a specific thing, but it is obviously common sense. If Carat is growing, the underlying portfolio is growing. It is easier for people to understand the potential. And, you know, the marks have been, you know, candidly, with particularly on the office side, you know, a pain point for a couple years now. We feel like that is starting to stabilize. You saw UCA actually pop up this quarter. You know, that to us was a little bit of a precondition to get a wider group of investors interested or at least to take the time to understand Carat. So it feels like that is a, you know, a tailwind. If we can put that into the mix, it just makes everything easier.

Q: Thanks. Good morning, everyone. Just to put a finer point on the whole buyback theme. Is it fair to say that you could be kind of killing two birds with one stone in the sense that you sell assets, get a price discovery event for the Carat, use those proceeds to buy back stock, and do it in a leverage-neutral way? Is that one sort of collection of events that, you know, we could potentially expect for 2026?

A: Yes. Certainly.

Q: Hey. I just wanted to double click back on, you know, the origination activity and sort of the opportunities to expand outside of California. Right? Maybe just a little bit more color on what are the sticking points. Is it finding the right partner? Is it regulatory? Is it the different jurisdictions? Just what are the frictions you think as you sort of try to replicate the success in some of the other states on the origination side? Thanks.

A: Yes. Hi, Ronald. So you are right. On the affordable side specifically, the volume has been concentrated in California to date. That is the largest and most active of the affordable markets in the U.S. So we are making good progress there and penetrating that market. It is going to continue to be a big part of what we do, but we are also making really good progress in other states. So we are spending some time to study the state-specific mechanics, the regulatory regimes. It does take some time to build up pipeline and to get those deals across the finish line. But at this point, we have several other transactions in other states under LOI, and we think that will start to translate into closings over the coming quarters.

Q: Thanks. Good morning. Just following up on the Park Hotels portfolio. For the two assets that did not renew, do you expect to continue to operate, release, or sell these? And what might that timeline look like?

A: We have got Hilton staying in place. So that was important. Again, the litigation is really going to dictate a little bit of what we can and cannot do. So timeline still feels like final decisions are going to be dependent on this court process. It is not our long-term goal to run these assets. But I think we need to let the litigation play out before we can make the right decision on timing.