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Bigger, Better, Bolder

Having grown our portfolio from just over $300 million at IPO in 2017 to over $3 billion at the end of 2020, we are starting to see the benefits of scale. With a lower cost of capital, growing transaction efficiency, and a wider network of participants that understand the modern ground lease industry, we are able to further expand our reach and bring the benefits of a Safehold ground lease to more owners, developers and buyers and sellers of real estate across the country.

What this means for our customers is lower-cost, longer-term capital and more ways to optimize their business strategies and maximize the returns from their success. 2021 will see Safehold introduce several new innovations in response to customer requests, and we continue to work hard to drive down our cost of capital to deliver even more benefits to those who own high quality real estate and want to increase their returns and reduce their maturity risk.

There are two key drivers in our quest to drive down our cost of capital and deliver the lowest-cost capital solutions to customers. The first is attaining investment grade corporate credit ratings that will enable us to most efficiently access debt capital going forward. We achieved this important goal early in 2021 with Baa1 ratings from Moody’s and BBB+ ratings from Fitch. This sets the stage for more flexible and lower cost debt capital going forward and gives us a key competitive advantage.

The second driver that will lower the cost of capital for our customers is getting our equity to reflect the full value of our growing ground lease portfolio. To date, we have focused on the value of the long-term contractual cash flows Safehold’s portfolio generates and the benefits of its principal safety and growing diversification. Comparing our cash flows to other similar high-grade, long-term cash flows available in the bond market has helped investors see the value we are building as our portfolio scales and diversification increases.

But this is only half the value of what we are building. Going forward we need to have our market value reflect the other half of the portfolio value equation as well. This value comes through the growing pool of real estate ownership interests that are embedded in the ground lease structure. Once again, we will demonstrate a simple way for investors to understand this value and show why, as it grows larger and more diversified, it compares favorably to similar assets in the investment world.

Together, investment grade debt ratings and fully valued equity have the potential to accelerate our ability to deliver the benefits of the modern ground lease to our $7 trillion targeted market. With success on these fronts, our dedicated team of professionals can help our customers achieve their full potential and aggressively expand the ground lease marketplace.

Educating and enlightening the market about why the modern ground lease is a better solution is our primary focus, but as we grow we also see a chance to take on a more progressive role in helping think about long-term solutions and opportunities to innovate. During the past twelve months, our teams worked to support small businesses and others hard hit by the crisis, and our long-term vision includes finding new forms of support where we can make an increasing impact over time. We see cracking the code on the ground lease market and developing new ways to solve old problems in society as going hand in hand. We have an exciting future ahead of us.

We thank you for your support and your interest in our company.

Jay Sugarman
Jay Sugarman Chairman & Chief Executive Officer