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Disrupting the largest capital market ($7T) of real estate

A unique combination of investment attributes offers shareholders safe, growing income and long-term capital appreciation

Throughout our 25-year history, we have dedicated ourselves to building innovative businesses that have provided better structured, better priced capital to the real estate sector. Modernized ground leases represent the best opportunity yet to bring this vision to life.

AAA-like risk

AAA-like risk at excess spreads provides superior principal safety

Comprising the senior-most 30% to 45% of a property’s capital structure and diversified across property types, geographies and customers is a portfolio of Safehold™ ground leases similar to the AAA tranche of a CMBS securitization, providing exceptional portfolio safety. Consistent with AAA metrics, portfolio ground rent is covered 3x–5x by the net operating income of the building.

Excess returns locked in for 99 years creates highly attractive assets in their own right

Contractual rent increases in Safehold’s rapidly growing portfolio create long-term compounding cash flows that generate superior risk adjusted returns versus similar-risk, similar-maturity fixed income securities.

Building a machine that creates excess returns in a large market is worth a lot more

What’s more valuable than the collection of assets itself? The wealth generating machine that consistently churns out excess returns in a $7 trillion market. Operational efficiency, low variable costs and a high rate of returning customers position the business for rapid growth in the years to come.


Further, we are building a large store of wealth through the unrealized capital appreciation of our owned residual portfolio

The unrealized capital appreciation in our owned residual portfolio is calculated as today’s estimated combined property value (CPV) less the Aggregate Cost Basis of SAFE’s portfolio. CBRE conducts independent appraisals of the CPV of each asset.

Why is this important? Because unlike comparable bonds, Safehold doesn’t just get par back at maturity. At the end of the ground lease term, both the land and the building revert back to the landlord. That value can be substantially more than our original investment. Safehold takes the value of this unrealized capital appreciation and publishes it on a quarterly basis. And each time we acquire a new ground lease, this value continues to grow.

Unrealized Capital Appreciation Growth
Unrealized Capital Appreciation Growth

The Unrealized Capital Appreciation in Our Owned Residual Portfolio IUCA] is calculated as today's estimated Combined Property Value (CPV) less the Aggregate Cost Basis of SAFE’s portfolio. CBRE conducts independent appraisals of the CPV of each property.(1)

In order to unlock the value of our UCA and seek to accelerate the realization of its value for our shareholders, the Company has created a subsidiary called CARET which owns 100% of the capital appreciation above SAFE’s original investment (principal & ground rent). Safehold owns 85% of CARET and management can earn up to 15% of CARET under a shareholder approved incentive plan that seeks to further align management and shareholders.

The incentive awards are granted subject to graduated vesting based on hurdles of the Company's stock price ranging up to $35.00, which represents appreciation of approximately 100% above the stock price when the plan was introduced during Q3 '18 and the awards are subject to forfeiture based on time-based employment hurtles. As of the end of Q3 '19, three slack price hurdles were achieved resulting in management vesting in 7.5% of CARETs, subject to partial forfeiture based on continuing service for the net two years.

With a nationally diverse portfolio that grows every time Safehold completes a new ground lease transaction, SAFE’s portfolio contains billions of dollars of unrealized capital appreciation with exponential upside in future years.

Our DNA as innovative thinkers has pushed us to create a growing company that can trade at a material premium to book

We believe the way to achieve this goal is by building a leadership position in a large, untapped market with superior risk-adjusted returns. Reinventing the ground lease sector has the potential to be the best business we have ever built – and we are deeply committed to seizing the opportunity on behalf of our shareholders.

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