Safehold (SAFE)2023-04-27 02:33Financial Data and Key Metrics - Net income for Q1 2023 was 0.41, reflecting a year-over-year decline primarily due to increased interest expenses on borrowings under the revolving credit facility [2] - Revenue for Q1 2023 was 4.7 million and earnings per share of 500 million incremental unsecured revolver, increasing total revolving credit lines to 900 million of cash and credit facility availability at the end of Q1 2023 [94] Company Strategy and Industry Competition - The company aims to diversify its portfolio by market and asset class, with a focus on multi-family properties and expanding into markets like the Southeast and Boston [65] - The company believes ground leases offer one of the best risk-adjusted opportunities in real estate, with long-term low-risk contractual cash flows and inflation kickers [76] - The company is leveraging its capital structure, with a weighted average debt maturity of 23 years and no near-term maturities, to navigate market uncertainty [83] Management Commentary on Operating Environment and Future Outlook - Management highlighted the challenging market backdrop, with transaction activity slowing due to liquidity issues and bank challenges [94] - The company remains optimistic about the multi-family space and expects transaction activity to pick up once liquidity reemerges [101] - Management emphasized the importance of long-term low-cost capital provided by ground leases, especially in a volatile market environment [75] Other Important Information - The company completed a 4.2 billion of debt, with a weighted average interest rate of 3.8% on permanent debt [104] Q&A Session Summary Question: Impact of the merger on future earnings - The merger is expected to provide operating leverage over time, with a potential $2-3 million pickup in net G&A from Q1 to Q2 [31] Question: Pricing and yield expectations for future transactions - The company targets cash yields in the low-4s to mid-4s and inflation-adjusted yields in the mid-6s to high-6s [90] Question: Geographic diversification and market exposure - The company is looking to increase exposure in markets like the Southeast and Boston, while maintaining a diversified portfolio [65][116] Question: Financing strategy and debt structure - The company is exploring various financing options, including different tenors and structures, to optimize debt costs [14][110] Question: Impact of bank lending environment on ground leases - The company believes the bank pullback could increase demand for ground leases as owners seek long-term, low-cost capital [124] Question: Valuation and portfolio revaluation - Approximately 40% of the portfolio was revalued by CBRE, with potential for further adjustments due to market conditions [64]