Safehold (SAFE) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw $104 million in new originations, including three ground leases and one leasehold loan, and a $69 million JV partner buyout, expanding multifamily focus to 58% of asset count.

• Net income attributable to shareholders was $19.3 million, reversing a prior year loss, with adjusted net income at $26.1 million and adjusted EPS up 11% to $0.37.

• Enhanced credit loss provision methodology resulted in a $7.5 million non-cash charge, mostly on prior period balances.

• The business focuses on acquiring, managing, and capitalizing ground leases, with a diversified portfolio across office, multifamily, hotel, life science, and mixed-use properties.

• Year-over-year EPS was higher, excluding the new general provision for credit losses; UCA estimates moved slightly higher, with new originations offsetting pressure from higher cap rates and office fundamentals.

Financial highlights

• Q3 2024 revenue was $90.7 million, up 6% year-over-year; net income was $19.3 million, and adjusted net income was $26.1 million.

• Adjusted EPS was $0.37, up 11% year-over-year; GAAP EPS was $0.27.

• Portfolio funded $122 million in Q3, with $104 million in new originations and $80 million for JV interest purchases.

• Portfolio economic yield was 5.8%, increasing to 5.9% inflation-adjusted and 7.4% including unrealized capital appreciation.

• Weighted average shares outstanding: 71.5 million (diluted).

Outlook and guidance

• Management notes positive trends in certain markets, with expectations for more large transactions in 2025 as market visibility improves.

• The Federal Reserve's recent rate cut and expectations for further cuts may improve market conditions, but higher rates could still impact leasehold financing availability.

• Improving stock price and tighter bond spreads enhance competitiveness for future growth.

• No material changes to risk factors or forward-looking statements since the last annual report.