DALLAS, TX / ACCESSWIRE / June 10, 2021 / Safehold Inc. (NYSE:SAFE): The full report can be accessed by clicking on the following link: http://stonegateinc.com/reports/SAFE Q1F21.pdf
Safehold Inc. is real estate ownership company that acquires, manages, and capitalizes a portfolio of ground leases throughout the United States. Safehold is seeking to disrupt the $7 trillion real estate industry by delivering a more efficient solution to the conventional real estate ownership model through its use of ground lease capital and aims to deliver a unique combination of safety, excess returns and capital appreciation to its shareholders. The Company targets top metropolitan areas across property types, operates as a real estate investment trust (REIT) for tax purposes and is managed by its largest shareholder iStar Inc. SAFE held its IPO on June 22, 2017 and is headquartered in New York, NY.
Disruptive solution to a large market – Safehold has formulated a new approach to ownership in the over $7 trillion US real estate industry by reinventing ground leases. The Company seeks to invest in long-term ground leases with values at ~30 – 40% of the combined land, building and improvements value; SAFE structures its deals so that buildings/improvements are separated from the land beneath them, offering tenants flexible options for financing with less costly terms.
More efficient solution for real estate owners – Safehold adds value to real estate owners and investors by separating the lower returning land asset from the higher returning operating asset, the building. This separation increases returns for developers and property investors. Safehold ground leases also reduce the frictional costs associated with selling a building such as taxes and fees as well as decreasing debt maturity risk to the building operator by replacing short term debt with 99-year capital.
What is a ground lease – A ground lease is an agreement between a landowner and tenant in which the tenant agrees to pay rent to the landowner in exchange for developing and operating a commercial property. These leases are generally very long term between 30 and 99 years in length with reversion rights of the property to landowner in the event of non-payment or failure to renew the lease.
Unique investment characteristics – We note several benefits to SAFE’s portfolio of ground lease assets including safety, growing income, and capital appreciation potential. The Company’s ground leases hold senior positions in the real estate capital structure, and rent escalations are included in each lease. The land underlying the lease holds capital appreciation potential, as well as the buildings and improvements upon the land which ultimately revert to SAFE upon lease termination.
Exponential growth – SAFE has demonstrated its ability to deliver exponential yet low-risk growth for investors through its ground lease portfolio. Safehold most recently reported more than $3.2B in total assets.
Partnership with iStar – Safehold is an externally managed REIT under an agreement with SFTY Manager, LLC, which is a wholly-owned subsidiary of iStar Inc. (NYSE: STAR). iStar is presently the largest shareholder of SAFE, and thus its interests are heavily aligned with those of SAFE shareholders. iStar’s organization of ~170 team members have a long history in the industry as well as extensive connections with brokers, corporate tenants, and developers.
Valuation – We believe that SAFE offers a unique and risk-adjusted real estate investment opportunity for the marketplace. Using an adjusted DCF framework we come to a range of $63.75 to $89.25 with a mid-point of $75.75. Additional details can be found on page 7.
About Stonegate Capital Partners
Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.
Stonegate Capital Partners
SOURCE: Stonegate Capital Partners
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