Safehold Inc. [SAFE] Filings

10-Q 1 safe-20240630x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended
	June 30, 2024
	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File No. 001-15371

Safehold Inc.

(Exact name of registrant as specified in its charter)


Maryland			95-6881527
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)
1114 Avenue of the Americas
39th Floor
New York	,	NY	10036
(Address of principal executive offices)			(Zip code)

Registrant’s telephone number, including area code: (212) 930-9400

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	SAFE	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
☒	☐	☐	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ◻ No ☒

As of July 29, 2024, there were 71,435,951 shares, $0.01 par value per share, of Safehold Inc. common stock outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
PART I	Consolidated Financial Information
Item 1.	Financial Statements:
	Consolidated Balance Sheets (unaudited) as of June 30, 2024 and December 31, 2023	1
	Consolidated Statements of Operations (unaudited)—For the three and six months ended June 30, 2024 and 2023	2
	Consolidated Statements of Comprehensive Income (Loss) (unaudited)—For the three and six months ended June 30, 2024 and 2023	3
	Consolidated Statements of Changes in Equity (unaudited)—For the three and six months ended June 30, 2024 and 2023	4
	Consolidated Statements of Cash Flows (unaudited)—For the six months ended June 30, 2024 and 2023	5
	Notes to Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
PART II	Other Information	56
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	57
SIGNATURES		58

Table of Contents

PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Financial Statements

Safehold Inc.

Consolidated Balance Sheets⁽¹⁾

(In thousands)

(unaudited)


	As of
	June 30, 2024		December 31, 2023
ASSETS
Net investment in sales-type leases ($1,522 and $465 of allowances as of June 30, 2024 and December 31, 2023, respectively)	$	3,380,007	$	3,255,195
Ground Lease receivables, net ($773 and $369 of allowances as of June 30, 2024 and December 31, 2023, respectively)		1,746,567		1,622,298
Real estate
Real estate, at cost		740,971		744,337
Less: accumulated depreciation		(43,414)		(40,400)
Real estate, net		697,557		703,937
Real estate-related intangible assets, net		210,988		211,113
Real estate available and held for sale		9,654		9,711
Total real estate, net and real estate-related intangible assets, net and real estate available and held for sale		918,199		924,761
Loans receivable, net - related party ($2,356 and $2,429 of allowances as of June 30, 2024 and December 31, 2023, respectively)		112,247		112,111
Equity investments		243,302		310,320
Cash and cash equivalents		13,418		18,761
Restricted cash		8,604		27,979
Deferred tax asset, net		6,607		7,619
Deferred operating lease income receivable		195,444		180,032
Deferred expenses and other assets, net⁽²⁾		144,571		89,238
Total assets	$	6,768,966	$	6,548,314
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	132,582	$	134,518
Real estate-related intangible liabilities, net		63,338		63,755
Debt obligations, net		4,190,587		4,054,365
Total liabilities		4,386,507		4,252,638
Commitments and contingencies (refer to Note 10)
Redeemable noncontrolling interests (refer to Note 3)		—		19,011
Equity:
Safehold Inc. shareholders' equity:
Common stock, $0.01 par value, 400,000 shares authorized, 71,435 and 71,077 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		714		711
Additional paid-in capital		2,191,354		2,184,299
Retained earnings		82,597		47,580
Accumulated other comprehensive income (loss)		38,239		(1,337)
Total Safehold Inc. shareholders' equity		2,312,904		2,231,253
Noncontrolling interests		69,555		45,412
Total equity		2,382,459		2,276,665
Total liabilities, redeemable noncontrolling interests and equity	$	6,768,966	$	6,548,314

(1)	Refer to Note 2 for details on the Company’s consolidated variable interest entities (“VIEs”).

(2)	As of June 30, 2024 and December 31, 2023, includes $5.2 million and $7.1 million, respectively, due from related parties.

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

Safehold Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenues:
Interest income from sales-type leases	$	65,235	$	58,158	$	128,453	$	115,220
Operating lease income		16,691		16,750		37,694		37,651
Interest income - related party⁽¹⁾		2,357		2,381		4,714		2,381
Other income⁽²⁾		5,612		8,372		12,247		8,738
Total revenues		89,895		85,661		183,108		163,990
Costs and expenses:
Interest expense		49,107		46,055		97,738		86,929
Real estate expense		1,041		1,013		2,120		2,218
Depreciation and amortization		2,490		2,527		4,977		4,925
General and administrative⁽³⁾		12,276		18,916		27,904		33,983
Provision for (recovery of) credit losses		626		47		1,335		2,289
Other expense		359		1,274		450		15,363
Total costs and expenses		65,899		69,832		134,524		145,707
Income (loss) from operations before other items		23,996		15,829		48,584		18,283
Earnings (losses) from equity method investments		6,469		6,807		13,381		9,069
Net income (loss) before income taxes		30,465		22,636		61,965		27,352
Income tax expense		(910)		(525)		(1,381)		(525)
Net income (loss)		29,555		22,111		60,584		26,827
Net (income) loss attributable to noncontrolling interests		110		19		(191)		(15)
Net income (loss) attributable to Safehold Inc. common shareholders	$	29,665	$	22,130	$	60,393	$	26,812

Per common share data:
Net income (loss)
Basic	$	0.42	$	0.35	$	0.85	$	0.42
Diluted	$	0.42	$	0.35	$	0.85	$	0.42
Weighted average number of common shares:
Basic		71,435		63,944		71,303		63,809
Diluted		71,462		63,944		71,351		63,809

(1)	Refer to Note 6.

(2)	For the three and six months ended June 30, 2024, includes $4.4 million and $9.9 million, respectively, of management fees from related parties. For both the three and six months ended June 30, 2023, includes $7.2 million of management fees from related parties.

(3)	For the six months ended June 30, 2023, includes $8.3 million of general and administrative expenses incurred to related parties that includes management fees and expense reimbursements to the Former Manager (refer to Note 1).

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

Safehold Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(unaudited)


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income (loss)	$	29,555	$	22,111	$	60,584	$	26,827
Other comprehensive income (loss):
Reclassification of (gains) losses on derivatives into earnings		(1,688)		(902)		(3,302)		41
Unrealized gain (loss) on derivatives		13,469		34,221		42,878		5,797
Other comprehensive income (loss):		11,781		33,319		39,576		5,838
Comprehensive income (loss)		41,336		55,430		100,160		32,665
Comprehensive (income) loss attributable to noncontrolling interests		110		19		(191)		(15)
Comprehensive income (loss) attributable to Safehold Inc.	$	41,446	$	55,449	$	99,969	$	32,650

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

Safehold Inc.

Consolidated Statements of Changes in Equity

(In thousands)

(unaudited)


							Retained		Accumulated
	Redeemable		Common		Additional		Earnings		Other
	Noncontrolling		Stock at		Paid-In		(Accumulated		Comprehensive		Noncontrolling		Total
	Interests⁽¹⁾		Par		Capital		Deficit)		Income (Loss)		Interests		Equity

Balance at March 31, 2024	$	19,011	$	714	$	2,190,671	$	65,630	$	26,458	$	46,038	$	2,329,511
Net income (loss)		(576)		—		—		29,665		—		466		30,131
Issuance of common stock, net / amortization		—		—		683		—		—		(260)		423
Dividends declared ($0.177 per share)		—		—		—		(12,698)		—		—		(12,698)
Change in accumulated other comprehensive income (loss)		—		—		—		—		11,781		—		11,781
Contributions from noncontrolling interests		—		—		—		—		—		23,559		23,559
Distributions to noncontrolling interests		—		—		—		—		—		(248)		(248)
Redemption of noncontrolling interests		(18,435)		—		—		—		—		—		—
Balance at June 30, 2024	$	—	$	714	$	2,191,354	$	82,597	$	38,239	$	69,555	$	2,382,459

Balance at March 31, 2023	$	19,011	$	639	$	2,031,026	$	144,164	$	(24,200)	$	27,498	$	2,179,127
Net income (loss)		—		—		—		22,130		—		(19)		22,111
Issuance of common stock, net / amortization		—		—		3,652		—		—		488		4,140
Dividends declared ($0.177 per share)		—		—		—		(11,468)		—		—		(11,468)
Change in accumulated other comprehensive income (loss)		—		—		—		—		33,319		—		33,319
Contributions from noncontrolling interests		—		—		—		—		—		6,525		6,525
Distributions to noncontrolling interests		—		—		—		—		—		(12)		(12)
Balance at June 30, 2023	$	19,011	$	639	$	2,034,678	$	154,826	$	9,119	$	34,480	$	2,233,742

Balance at December 31, 2023	$	19,011	$	711	$	2,184,299	$	47,580	$	(1,337)	$	45,412	$	2,276,665
Net income (loss)		(576)		—		—		60,393		—		767		61,160
Issuance of common stock, net / amortization		—		3		7,055		—		—		113		7,171
Dividends declared ($0.354 per share)		—		—		—		(25,376)		—		—		(25,376)
Change in accumulated other comprehensive income (loss)		—		—		—		—		39,576		—		39,576
Change in noncontrolling interests		—		—		—		—		—		—		—
Contributions from noncontrolling interests		—		—		—		—		—		23,682		23,682
Distributions to noncontrolling interests		—		—		—		—		—		(419)		(419)
Redemption of noncontrolling interests		(18,435)		—		—		—		—		—		—
Balance at June 30, 2024	$	—	$	714	$	2,191,354	$	82,597	$	38,239	$	69,555	$	2,382,459

Balance at December 31, 2022	$	19,011	$	624	$	1,986,417	$	151,226	$	3,281	$	4,056	$	2,145,604
Impact from adoption of new accounting standard		—		—		—		(640)		—		—		(640)
Net income (loss)		—		—		—		26,812		—		15		26,827
Issuance of common stock, net / amortization		—		3		14,128		—		—		497		14,628
Dividends declared ($0.354 per share)		—		—		—		(22,572)		—		—		(22,572)
Change in accumulated other comprehensive income (loss)		—		—		—		—		5,838		—		5,838
Contributions from noncontrolling interests, net		—		—		(1,443)		—		—		30,439		28,996
Distributions to noncontrolling interests		—		—		—		—		—		(527)		(527)
Merger consideration (refer to Note 1 and Note 3)		—		12		35,576		—		—		—		35,588
Balance at June 30, 2023	$	19,011	$	639	$	2,034,678	$	154,826	$	9,119	$	34,480	$	2,233,742

(1)	Refer to Note 3.

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

Safehold Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	For the Six Months Ended
	June 30,
	2024		2023
Cash flows from operating activities:
Net income (loss)	$	60,584	$	26,827
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization		4,977		4,925
Stock-based compensation expense		6,658		12,670
Deferred operating lease income		(15,411)		(15,630)
Non-cash interest income from sales-type leases		(44,420)		(41,084)
Non-cash interest expense		7,258		7,421
Amortization of real estate-related intangibles, net		1,155		1,152
Provision for credit losses		1,335		2,289
Earnings from equity method investments		(13,381)		(9,069)
Distributions from operations of equity method investments		9,578		1,860
Amortization of premium, discount and deferred financing costs on debt obligations, net		3,617		3,623
Non-cash management fees		—		5,199
Other operating activities		(3,785)		242
Changes in assets and liabilities:
Changes in deferred expenses and other assets, net		2,120		(10,234)
Changes in accounts payable, accrued expenses and other liabilities		1,410		339
Cash flows provided by (used in) operating activities		21,695		(9,470)
Cash flows from investing activities:
Origination/acquisition of net investment in sales-type leases and Ground Lease receivables		(180,649)		(130,744)
Origination of loans receivable, net		—		(114,450)
Payment for merger consideration		—		(88,685)
Cash and cash equivalents acquired upon merger		—		3,213
Contributions to equity method investments		(9,621)		(18,362)
Distributions from equity method investments		52,425		—
Funding reserves received from Ground Lease tenant net of disbursements		—		(218)
Net proceeds received from sale of real estate available and held for sale

Safehold Inc. [SAFE] Filings
10-Q	[2024-07-30]
10-Q	[2024-05-07]
10-K	[2024-02-13]
10-Q	[2023-11-01]
10-Q	[2023-08-01]
10-Q	[2023-04-28]
10-K	[2023-02-22]
10-Q	[2022-11-04]
10-Q	[2022-08-04]
10-Q	[2022-05-04]
10-K	[2022-02-25]
10-Q	[2021-11-02]
10-Q	[2021-08-03]
10-Q	[2021-04-29]
10-K	[2021-02-23]
10-Q	[2020-11-03]
10-Q	[2020-08-06]
10-Q	[2020-04-30]
10-K	[2020-02-24]
10-Q	[2019-10-31]
10-Q	[2019-08-01]
10-Q	[2019-05-02]
10-K	[2019-02-26]
10-Q	[2018-11-01]
10-Q	[2018-08-03]
10-Q	[2018-05-03]
10-K	[2018-02-26]
10-Q	[2017-11-02]
10-Q	[2017-08-04]
10-Q	[2017-05-04]
10-K	[2017-02-27]
10-Q	[2016-11-03]
10-Q	[2016-08-04]
10-Q	[2016-05-03]
10-K	[2016-02-26]
10-Q	[2015-11-03]
10-Q	[2015-08-04]
10-Q	[2015-05-04]
10-K	[2015-03-02]
10-Q	[2014-11-04]
10-Q	[2014-08-05]
10-Q	[2014-05-06]
10-K	[2014-03-03]
10-Q	[2013-11-06]
10-Q	[2013-08-06]
10-Q	[2013-05-06]
10-K	[2013-03-01]
10-Q	[2012-11-09]
10-Q	[2012-08-07]
10-Q	[2012-05-10]
10-K	[2012-02-29]