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    SAFE
    Earnings call· Jun 2026(Q2 FY26)

    Safehold Q2 FY26 earnings call SAFE

    Jul 30, 2026 Source

    Executive summary

    Safehold Q2 FY26 — Strong Originations, Brookfield JV, and Capital Markets Activity

    Safehold delivered a strong quarter, marked by significant new ground lease originations in affordable multifamily housing and strategic capital markets activity, including a major joint venture with Brookfield and successful unsecured note issuance. The company continues to focus on expanding its portfolio of modern ground leases in top markets, leveraging its capital position to pursue attractive opportunities despite broader market volatility. Management emphasized the long-term value creation from its land portfolio and unrealized capital appreciation.

    Highlights

    5

    • Originated 7 multifamily ground leases for an aggregate commitment of $150 million, marking the most productive quarter since 2022.

    • Closed a $348 million joint venture with Brookfield, adding a sophisticated partner, deleveraging the balance sheet, and creating incremental investment capacity.

    • Raised $225 million of 30-year unsecured notes at an effective cost of 5.83% (T+84 bps), lengthening debt maturity and increasing corporate liquidity.

    • Total portfolio grew to $7.3 billion, with estimated unrealized capital appreciation (UCA) at $9.8 billion, up $260 million QoQ and nearly $1 billion since Q1 FY25.

    • Ended the quarter with approximately $1.4 billion of liquidity, supported by existing joint venture capacity.

    Concerns

    2

    • Multifamily rent coverage across the portfolio is down from year-end, attributed by management to the conservative underwriting of new development deals.

    • Elevated interest rates and market volatility introduce uncertainty, making it challenging for buyers to complete transactions and impacting pipeline conversion.

    Operational metrics

    50
    Net income and EPS
    increasedyear-over-year
    Q2 FY26

    Net income and earnings per share increased year-over-year, primarily driven by net accretion from asset fundings and new originations.

    Capital deployed (new investments and buybacks)
    $135 million-$140 million
    Q2 FY26

    Capital deployed across new investments in existing ground leases, leasehold loans, and stock buybacks.

    Proceeds from JV
    $160 million-$170 million
    Q2 FY26

    Proceeds from the Brookfield joint venture.

    Debt fundings for leverage tick-up threshold
    $250 million
    Q2 FY26

    Amount of debt fundings that would cause leverage to tick up by 0.1x.

    Total portfolio
    $7.3 billion
    Q2 FY26

    Total portfolio value at quarter end.

    Estimated unrealized capital appreciation (UCA)
    $9.8 billionup $260 million QoQ, up nearly $500 million YTD, up nearly $1 billion since Q1 FY25
    Q2 FY26

    Estimated UCA at quarter end, showing significant growth.

    GLTV
    52%rounded up slightly QoQ
    Q2 FY26

    Portfolio Ground Lease to Value.

    Rent coverage
    3.4xunchanged QoQ
    Q2 FY26

    Portfolio rent coverage.

    Liquidity
    $1.4 billion
    Q2 FY26

    Total liquidity at quarter end, further supported by potential available capacity in existing JV.

    Ground lease fundings (new originations)
    $69 million
    Q2 FY26

    Fundings on new originations during the quarter.

    Ground lease fundings (preexisting commitments)
    $49 million
    Q2 FY26

    Fundings on preexisting commitments during the quarter.

    Leasehold loan fundings
    $5 million
    Q2 FY26

    Leasehold loan fundings during the quarter.

    Total fundings
    $123 million
    Q2 FY26

    Total fundings during the second quarter.

    Ground lease portfolio assets
    172
    Q2 FY26

    Number of assets in the ground lease portfolio.

    Ground lease portfolio growth (book value & UCA)
    22x
    since IPO

    Growth in both book value and estimated unrealized capital appreciation since IPO.

    UCA portfolio square feet
    39.4 million
    Q2 FY26

    Total square footage of institutional quality commercial real estate comprising the unrealized capital appreciation portfolio.

    Multifamily assets
    111
    Q2 FY26

    Number of assets in the multifamily segment.

    Multifamily units
    25,000
    Q2 FY26

    Number of units sitting above ground leases in the multifamily segment.

    Multifamily portfolio share (by count)
    65%
    Q2 FY26

    Multifamily segment's share of the total portfolio by asset count.

    Multifamily portfolio share (by UCA value)
    61%
    Q2 FY26

    Multifamily segment's share of the total portfolio by estimated unrealized capital appreciation value.

    GAAP cash yield
    3.8%
    Q2 FY26

    Portfolio's cash yield for GAAP earnings.

    GAAP annualized yield
    5.5%
    Q2 FY26

    Portfolio's annualized yield for GAAP earnings.

    Economic yield
    6.0%
    Q2 FY26

    Portfolio's economic yield.

    Inflation adjusted yield
    6.2%
    Q2 FY26

    Economic yield adjusted for inflation.

    Inflation adjusted yield (with UCA)
    7.4%
    Q2 FY26

    Inflation adjusted yield after layering in an estimate for unrealized capital appreciation.

    CPI lookbacks in ground leases
    84%
    Q2 FY26

    Percentage of ground leases with periodic CPI lookbacks.

    Top 10 markets share (by gross book value)
    65%
    Q2 FY26

    Share of the portfolio represented by the top 10 markets.

    Total debt
    $5.0 billion
    Q2 FY26

    Total debt outstanding at quarter end.

    Unsecured debt
    $2.8 billion
    Q2 FY26

    Amount of unsecured debt.

    Nonrecourse secured debt
    $1.3 billion
    Q2 FY26

    Amount of nonrecourse secured debt.

    Unsecured revolver drawn
    $621 million
    Q2 FY26

    Amount drawn on the unsecured revolver.

    Pro rata share of JV debt
    $270 million
    Q2 FY26

    Company's pro rata share of debt on ground leases owned in joint ventures.

    Weighted average debt maturity
    18 years
    Q2 FY26

    Weighted average debt maturity with no significant maturities until 2029.

    SOFR swap amount
    $500 million
    Q2 FY26

    SOFR swap protecting limited floating rate borrowings.

    Interest savings from SOFR swap
    $820,000
    Q2 FY26

    Interest savings for the second quarter from the SOFR swap.

    Treasury locks terminated
    $225 million
    Q2 FY26

    Long-term treasury locks terminated for a cash gain, recognized as an offset to interest expense.

    Treasury locks outstanding
    $25 million
    Q2 FY26

    Long-term treasury locks still outstanding.

    Total debt-to-equity
    2.01x
    Q2 FY26

    Leverage ratio at quarter end.

    Effective interest rate on permanent debt
    4.4%
    Q2 FY26

    Effective interest rate on permanent debt.

    Cash interest rate on permanent debt
    3.9%
    Q2 FY26

    Cash interest rate on permanent debt.

    Shares repurchased
    850,000
    Q2 FY26

    Common stock repurchased under authorization.

    Multifamily ground lease originations
    7
    Q2 FY26

    Number of multifamily ground leases originated, all within affordable housing subsector.

    Multifamily ground lease commitment
    $150 million
    Q2 FY26

    Aggregate commitment for new multifamily ground lease originations.

    GLTV (new originations)
    35%
    Q2 FY26

    Ground Lease to Value for new multifamily originations, in line with portfolio targets.

    Underwritten rent coverage (new originations)
    3.0x
    Q2 FY26

    Underwritten rent coverage for new multifamily originations, in line with portfolio targets.

    Economic yield (new originations)
    7.4%
    Q2 FY26

    Economic yield for new multifamily originations, in line with portfolio targets.

    Unsecured notes issued
    $225 million
    Q2 FY26

    Amount of 30-year private unsecured notes issued.

    Unsecured notes all-in coupon
    6.615%T+162.5 basis points
    Q2 FY26

    All-in coupon for the 30-year unsecured notes.

    Unsecured notes effective cost
    5.83%T+84 basis points
    Q2 FY26

    Effective cost of the 30-year unsecured notes, net of recently unwound hedge gains.

    Unsecured notes starting cash interest rate
    4%
    Q2 FY26

    Starting cash interest rate on the 30-year unsecured notes, which will step up gradually.

    Orderbook & backlog

    2
    Nonbinding LOIs$255 millionQ1 FY26

    Last quarter's pipeline, $150 million of which was converted this quarter.

    Remaining LOI pipeline$100 millionQ2 FY26

    Remaining portion of the nonbinding LOI pipeline from last quarter, expected to be executed in the next 2-3 quarters.

    Deals & partnerships

    2
    BrookfieldSale of 49% interest in a portfolio of 7 ground leases.$348 millionCall option after 7 years

    Joint venture on a portfolio of 7 diversified ground leases across the United States. Safehold retains control and has an option to repurchase Brookfield's 49% interest after 7 years.

    Sovereign wealth fundExisting joint venture with potential available capacity.

    Existing joint venture, mentioned as a source of potential available capacity to support liquidity.

    Risks & headwinds

    2
    Market Volatility & Interest RatesNear-term

    Elevated interest rates

    Mitigation: Management continues to show sponsors value, but acknowledges volatility impacts transaction completion.

    Old Ground Lease Provisions

    Difficult to fix or unsuitable for modern capital markets

    Mitigation: The company is selective about which older ground leases they engage with, focusing on 'SafeSwap' opportunities where they can modernize terms.

    What to watch in Q3 FY26

    4

    Pipeline conversion

    Next 2-3 quarters
    Current$100 million remaining from Q1 FY26 LOI pipeline
    TargetExecution of most of the remaining pipeline

    Why it matters

    Indicates the company's ability to convert potential deals into actual investments and sustain growth momentum.

    So that pipeline that we talked about last quarter, we're going to continue to convert on those deals and replenish over the next coming few quarters. But we did a big chunk of it this quarter. And in the next 2, 3 quarters, we'll execute on most of that pipeline.

    Q&A highlights

    6

    Asked for more details on the Brookfield joint venture, including any fees and implications for Caret.

    Brett Asnas explained the Brookfield JV's benefits: adding an institutional partner, attractive valuation, deleveraging, creating liquidity, and retaining a call option to repurchase Brookfield's 49% interest after 7 years. He confirmed there were customary fees and no Caret event.

    “I think the feature in this deal of being able to have that call option after 7 years is an important one for us as we continue to build and scale the platform and continue to grow our UCA account.”

    asked by Anthony Paolone · answered by Brett Asnas

    2 min read5 chapters

    Detailed Narrative

    01

    Market-Leading Position & Strategy

    Safehold is actively building an irreplaceable portfolio of ground leases in the top 30-40 US markets, which benefit from the densification of economic activity and the ongoing pursuit of highest and best use of land. The company's goal is to own well-located land in every major US market, expecting the power of compounding and a growing economy to drive long-term value. The US has added approximately 250 million people over the past 100 years, underscoring the long-term demand for land.

    02

    Modern Ground Lease Approach

    The company is focused on modernizing the ground lease business, distinguishing its transactions from older, 'value-destroying' ground leases that often contain restrictive or unfavorable provisions. Safehold offers a 'SafeSwap' product to help customers buy out and modernize existing ground leases, providing a more efficient capital market solution for real estate owners. While welcoming opportunities to fix problematic ground leases, the company is selective, avoiding those that are incorrectly sized or too badly written to be amenable to modern capital market structures.

    03

    Multifamily Focus and Diversification

    Safehold continues to prioritize multifamily as its core asset class, with 111 assets and nearly 25,000 units, representing 65% of the portfolio by count and 61% of the estimated unrealized capital appreciation value. While multifamily remains a strong fit for their product, the company is not closed to other asset classes, though the office sector faces the highest bar for re-engagement. This strategic focus allows for continued growth in a resilient sector.

    04

    Affordable Housing Expansion

    The company is making significant progress in expanding its affordable housing ground lease originations beyond California, having closed a second transaction in Texas during the quarter. Efforts are underway to open new markets in the Southeast, Sunbelt, and Mid-Atlantic regions. This expansion is supported by bipartisan support for tax credit programs, which fuel investment activity in the affordable housing sector and help meet demand in these communities.

    05

    Capital Recycling & Liquidity Management

    The joint venture with Brookfield, involving a $348 million sale of a 49% interest in a portfolio of 7 ground leases, served multiple strategic goals. It added an institutional partner, demonstrated demand for their portfolio at an attractive valuation (low-4% cap rate), deleveraged the balance sheet, and created incremental investment capacity. Safehold retains a call option to repurchase Brookfield's interest after 7 years, providing future flexibility. The company ended the quarter with $1.4 billion in liquidity and no near-term equity needs.

    AI-generated summary of the company’s earnings call. Not investment advice.