Safehold (SAFE)2024-05-07 16:55Financial Data and Key Metrics Changes - The first quarter revenue was 30.7 million, and earnings per share was 21.6 million of merger and Caret related costs that occurred in Q1 2023 [68][69] - The company ended the quarter with 850,000 versus last year, or a 23% increase, primarily due to strong performance at Park Hotels assets [70] - The economic yield of the portfolio is expected to be 5.7%, which aligns with conservative underwriting of investments [72][81] Market Data and Key Metrics Changes - The company has seen customer engagement steadily pick up, leading to eight LOIs signed for potential commitments of approximately 6.5 billion, with an estimated UCA of 1 billion plus in annual originations, with a focus on multifamily assets, which now represent 55% of all ground leases by count [67][39] - The company is strategically positioned with ample liquidity and hedges that are in the money, looking to capitalize on attractive risk-return opportunities as the market stabilizes [96][97] - The focus remains on reducing G&A costs, with a target of a 10% reduction for 2024, having already achieved a 40 million annualized G&A figure [10][79] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in closing the majority of the eight LOIs in the second quarter, citing positive momentum in the market despite current volatility [131] - The company believes the market is reaching a point where the next move will be down in rates, although the timing remains uncertain [116] - Management highlighted that the current economic yields are attractive, and they are prepared to wait out higher rates to take advantage of future opportunities [97][100] Other Important Information - The company has entered into a new 2 billion unsecured revolving credit facility, enhancing financial flexibility and providing an immediate 150 million of incremental credit capacity [59][60] - The redemption of the first round of Caret investors was executed to simplify the structure and focus on long-term family office type investors for future rounds [77][110] Q&A Session Summary Question: What are the current expectations for the next 90 days based on conversations? - Management indicated that the pipeline is primarily focused on multi-family assets and confirmed that the joint venture will be part of funding the deal flow [87][89] Question: Can you elaborate on G&A expectations for the rest of the year? - Management confirmed that net G&A for the first quarter was approximately 10 million, with expectations for a decline in management fees and a steady decrease in G&A over the year [90][92] Question: What factors are driving confidence in closing the LOIs? - Management expressed confidence based on the progress of the deals and the positive momentum observed in recent weeks, although they noted that no guarantees can be made until the deals are closed [114][131] Question: How does the redemption of Caret impact future efforts? - Management clarified that the redemption was primarily driven by liquidity needs from the investors, and it does not significantly impact future efforts around Caret [121][125] Question: How quickly can the pipeline build if rates decrease? - Management indicated that if rates were to drop to around 4.25%, they expect a quicker ramp-up in deal flow, but the exact timing remains uncertain [128][131]