Safehold (SAFE)2024-10-29 18:53Financial Data and Key Metrics Changes - For Q3 2024, revenue was 19.3 million, and earnings per share (EPS) was 0.37, up 11% year-over-year, driven by a net increase in asset-related revenue and savings in general and administrative expenses [24][22] - The company ended the quarter with approximately 104 million, including three multifamily ground leases for 32 million [11] - Ground lease credit metrics were in line with targets, with a ground lease-to-value (GLTV) of 29%, rent coverage of 3.2 times, and an economic yield of 7.2% [12] - The total portfolio reached 9.1 billion [14] Market Data and Key Metrics Changes - The portfolio's GLTV remained unchanged at 48%, with slight declines in appraisals offset by lower GLTVs on new originations [29] - Rent coverage slightly declined from 3.6 times to 3.5 times quarter-over-quarter [30] - The company noted an increase in engagement across various customers due to lower rates, although recent yield jumps and volatility may impact decision-making [8] Company Strategy and Development Direction - The company plans to focus on owning 100% of smaller ground lease deals while pursuing larger transactions through joint ventures [7][14] - The management remains cautiously optimistic about macro industry conditions improving transaction environments in 2025 [8] - The company aims to capitalize on its strong balance sheet and liquidity to capture new investment opportunities as the commercial real estate market shows signs of reopening [37] Management's Comments on Operating Environment and Future Outlook - Management highlighted that the rate environment is a key driver of investment activity, with expectations for improved conditions in 2025 [8] - The company is refining its credit loss methodology to better reflect the risk attributes of its investments [20] - Management believes that the current economic yield of 5.8% has upside potential due to periodic CPI lookbacks in 83% of ground leases [27] Other Important Information - The company has a diversified portfolio across various property types, with multifamily being the primary focus for new originations [16][28] - The weighted average debt maturity is approximately 21 years, with no corporate maturities due until 2027 [32] - The company has implemented a commercial paper program to achieve cost savings compared to its revolving credit facility [36] Q&A Session Summary Question: Pipeline discussions with borrowers - Management noted that the market is opening up, with increased volume and positive signs in market fundamentals, although rate stability is still needed [40][41] Question: Leverage and equity capital needs - The company aims to maintain leverage around 2 times, with room for additional debt funding without immediate equity capital needs [44][46] Question: Joint venture discussions - The joint venture was intended to provide capital for larger deals, and recent buyouts were seen as mutually beneficial for both parties [49][50] Question: Ground lease arrangements and value perception - Management emphasized the long-term stability and low-cost capital provided by their ground leases, which can be beneficial for property owners [52][54] Question: GLTV assessment and modifications - Management stated that while they cannot unilaterally change lease terms, they are open to helping customers create value [58][60] Question: Leasehold loan opportunities - The company sees potential in leasehold loans as part of their financing strategy, with competitive pricing in the current market [68][79] Question: Future originations beyond multifamily - The pipeline includes various property types, with signs of recovery in hospitality and office sectors, although rate fluctuations are currently a limiting factor [72][74]