Safehold 30 Apr 212021 Q1 Earnings call transcript

Good morning. And welcome to iStar’s First Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, today conference is being recorded. At this time, for opening remarks and introduction, I would like to turn the conference over to Jason Fooks, Senior Vice President of Investor Relation and Marketing. Please go ahead, sir.

morning, good and you, everyone. Thank joining Thank first to iStar’s today XXXX you earnings. for quarter review us With are Investment Marcos Alvarado, Fox-Geen, me Executive Chief our Chief today our President Jay Sugarman, and Officer. Chief Financial Officer; Jeremy and and Chairman Officer; an slides, This these in our results refer can the at istar.com be found Investors presentation and morning earnings highlighting call our we will website section. published which to on our replay a the beginning of p.m. There will be at call X website replay the dialing is and or today our code by with on XXXXXXX. Time confirmation the Eastern X-XXX-XXX-XXXX accessible of

factors like I remind earnings call Before detailed historical differences risk law. iStar’s required from the over disclaims cause statements these to turn iStar reports. are may which that expressly and to facts in SEC this Jay, in results I’d intent statements that be are or any obligation by forward-looking forward-looking. materially actual update to statements the these will could as our not except everyone differ call these forward-looking

Now, to Sugarman. and Chairman Jay? over CEO, call I’d to turn Jay like iStar’s, the

previously This off consistent full good business in to value reducing kicked building and is portfolio. price everyone. portfolio legacy We strategy our continuing the plan announced and reflected the the by use next Jason, and two iStar asset focus Thanks, ground to our morning, lease with to ensure XXXX our on is shares. years of our of

its its business lease portfolio expand of balance continued underlying Safehold its During strong scale of to quarter, on has strategies achieved that conservative growing the and assets, ratings ground the the followed. sheet debut first and principal and safety the diversification credit based

value leases ownership framework grow grown. shareholders, By ground is to significant Safehold, highlight create for to yet able portfolio its of to we what its reflected very on begun additional expect our ownership as increasing growing we continued to value in also has Safehold. capture be the additional sizable has that portfolio share for gains of in for efficiency price, its capital and not a iStar spotlighting has interest valuing scale, believe stake Safehold Importantly, in and residual

the target, the in ground modern detail it below into turn lease short-term been the continue prudent to and quick our as also repatriated we've repurchases. legacy that into XX% quarter. for pools Jeremy exposure With and both them redeploy Progress on monetizing, the ecosystem to capital legacy has and of we grow ground percentage lease let share more recap, Jeremy? to long-term assets. reducing a reduced portfolio continuing While business, the to me of our assets over

Thank you, published and strategy on Slide morning presentation, strengthening of business. sheet Safehold, to Jay we our comments X earnings update this My good on everyone. website. And I'll the our balance scaling and refer an our on simplifying our begin will with morning,

investment Our unrealized $X.X billion gain represents for Safehold stands in at shareholders. a $X.X which iStar billion,

XX sold and legacy which is to down $XXX $XX portfolio asset portfolio million. in $XXX medium-term $XXX a million composed net expressed a million $XXX net see to steady the by new yield can its $X XX-year confidence our we prior of ground reducing And its to Yesterday, also shows from last we during allowing in pool, X% gross robust balance the you with of $X.X $XX $X.X gross million can One-Stop saw million basis Safehold of revolving revolver a weighted $X size five, monetize strong stands with three flexibility in our our of a million of advantages, end $XX quarter Our representing facility and $XX our continue two And rate from On legacy investment see gain should SAFE/STAR strategy. even of invested to debt growing a had and weighted unencumbered million a competitive issued million seven million investments liquidity Safehold reduction assets X% that Access of million $XX including in at Safehold capital $XXX the quarter. significant effective assets, end the which within business. the portfolio market of originating with during of maturity pool, remaining activity of a the billion to at million from offering, $X resulted of asset a Slide target and remains financial $XX unsecured investment-grade credit $XXX X.X%. secured on average of T-plus scale to lease in billion it efficiently in to made book market loan reduction quarter. that financing billion billion value years, To net to million $XXX of XX down, sale provide of the XXX quarter quarter, again at CapEx. assets slide million, its X.X Capital demand. Slide of a XXXX. support availability ratings used our sheet more achieving our a portfolio. of short-term pursue quarter. awarded which Safehold of of connection with facility On we the with for unsecured repurchasing at our legacy with during leases And $XXX X, long-term million $XXX portfolio, priced a total that, $X hand and its portfolio primarily new proceeds, slide its with new us its value cash average million of within larger the as the recognizing legacy its end customers, Solution, portfolio inclusive its least by newly with you stock The quarter. transactions. assets recast points. continues million value deliver at last to the $XXX inaugural Safehold new is million bond, total million to a book six Safehold's unsecured Safehold

loss Safehold and net less Our real down XX% quarter fourth represents share $X.XX XX% a just $XX is to the in $X.XX which approximately monetize and And portfolio. of net of $X.X a or our net the $XXX eight, $XX.X as result portfolio, quarter, last loss we year. quarter continue asset We per loss sales from from million our estate to details and our of Slide period assets. investments a represent of the now finance net million the a a or reported million of same our than of decreased legacy a compared in last earnings. share, lease development for per loss of Land by million, discussed.

quarter This share, prior year per period. earnings the $XX.X to or were as compared million $XX.X million in share adjusted or per $X.XX $X.XX

in that an impact Safehold modeling, for from incentive on of rapidly slide economic and XX, provisions $X by from the in period were certain our in positive on XXXX, reserve paid the $XX compensation expenses million by driven this income loans iPip of and the that the swing in used in was price can CECL impacted You loan year the statement losses. long-term And share quarter off an becoming the Stock-based this our mark-to-market appreciation during forecasts in provisions recoveries, see by in evolution reduction swing plans worsening expense partly earnings million was compensation for as driven partly quarter. QX significant notably loan more losses quarter. by in and stock-based prior

be stock share repurchases. weighted million shares Our X.X a this price dilution are shares average of calculation year, net convertible count quarter $XX.XX money earnings the the million based repaid $XXX result with Adjusted share share million XXXX per settlement now past strike over of is from The impacted was approximately per also our in principal a decreased the of dilution September of by meaning, by on bonds as that share. three adjusted Safe's cash. $XX.XX. value per market value of in illustrates at financial our share our our book common per with through conversion our allowance, Slide as value $XX.XX. value shows CECL reported is created Including equity Safehold, settled depreciation, in but and statements. will And any And XX, be nine, above stands share stock. recognized equity for common per value when not principal March value the share will and amortization excess

the Safehold back let me the dilution, This of conclusion, count convertible progress includes also continued asset impact With to investment our previously mentioned. activity sales. In quarter the goals with it on the that, and legacy hand share I quarter represented Jay. steady at

Jeremy. Great,

and delivering Safehold path grow So, think the market iStar returns with activity. execute iStar just its in to economy helping to more is strategy, to well-positioned reopening the sum to to on value We transaction estate and up, scale continue real seeing a shareholders. strong and

up go open let's and ahead Operator, it Okay. questions. for

question-and-answer Jade Rahmani session be will from Today’s phone. [Operator with go Please conducted the ahead. comes KBW. Instructions] you. first over question Thank Our

Thank is very like its much. bond make you progress Looks issuance. with to investment-grade continuing inaugural Safehold

that. ground portfolio? called you offer structure? ground They've value it's how the a Have in I further Fairhold that that might lease on does company. securitizations, And investors congratulations in you've it's unlocking any template Limited. if Was of at So, UK, looked for potentially a the wondering looked lease about believe, company issued think Securitisation embedded at

at the Hey, we past. Thanks. No, Yes. looked Jade. that in

right opportunities had we capital, lease ground can worked is for longest new valuable if industry format to way think the modern open unsecured best more that what think our other best to to this aren't term that ratings, cost We've us structures create market we there this to we lowest unsecured the the even believe now up. create at those the viewpoints we flexible to creating since is at think most That's I we see But actually public benefits. to went the positions investment-grade get because to being whole best scale. look customers. is delivering hard not say the to they

Thank you that. for

of Safehold Is years value? the to at communication? two plan appreciated You've the main the strategic form to is been structural capital Or the iStar's next that enunciate the action portfolio, also not bright and or some place unlock expect market. come action the is there over of believe the value to plans you portfolio of we and in very in by that take what discussing the as least kind may should part

Yes.

communication. into began have we We education value. one iStar's is would Safehold for just step that and reflects laying ownership think value And believed obviously, what out unlock shareholders. definitely that stakes I back

at very, beginning. just we're So, the very

week in a think response. really we're to got to or into dig we've starting think this. about People I are And two quite it. positive

it's almost till as equation, add next value but we're continues not and I the But Safehold enough a portfolio. clearly story one any enough And being for continues now across out think real investment going big of value market exciting we have to part investors obvious part them we only to basically variables strategy. business talk with we what not a in of valued. big about historically story. enough that's that now there's a and the tracking think that's estate-centric think very they the been The yet the the be that that the finally asset did we growth it shared large not That Safehold grow. throughout said, more little we investors see had to diversified have why expect proved has of substantial will to

to separate cash certainly So, of I have the to with that the and value ways value communicate. stream one number to can what even understand people is about you and thinking shareholder make a even we're that tools capturing educate, to for excited more shareholders. base portfolio. continue expanded the There it that why sure from apart you have so across it that there of optimal want then more are way start we the the we that have about an people giving want we we But and think flow is, could start envision to we'll capture

two mentioned deployment were the if and color capital in them? could segments? but real the very think in lease provide much. provide Could any million wondering on estate of on just $XX Thanks finance of I the program, deals the some SAFE/STAR color you net you you

Yes.

been lease they've attractive We because of fast well. often ground customers continue the We from we've we are typically it the the and and that ground a the But that first that quite are as when One opportunity enough markets with mortgage. mortgage the to seen for certain look Safehold places iStar. both we place from enough presents capital do loan source lease a first best overall itself risk-adjusted to where there liquid for don't can returns think enhance is provide ecosystem.

And we see later lease that on period investment the lending out to net it. our investment sovereign side, with for period wealth that out the before venture then the opportunities runs the continue joint finish fund in to that's this So year. of continue piece market

with Thanks of And finally on very outlook credit the today? respect just as the to much. changes loan in portfolio any

I able be starting more of the where real the up certainly across Jeremy the said liquidity to little to remarks, different based a liquid. Well, say We going we're market number has environment it's open there been. received in and parts think today but reserves we in challenges the increased get to a to significantly. estate the markets Not market commercial aren't world, payoffs on of as his versus reverse some see quite

pay loan book capital down whatever improve either us, credit So see position the repay our access we continue to we on borrowers have. us customers’ to

quarter those see we those conditions this being you'll see improving. unwound as reserves So market

taking Thanks the for questions.

Thanks, Jade.

comes Stephen Please Our ahead. Laws Raymond with next go question James. from

Hi. comments earlier at were sales to I And behind back of mirror by the maybe to monetization of in how appreciate Good the growth assets of how were that timelines not many lot stuff I resolution? COVID of legacies delayed wanted look gains week. certainly actually towards morning. like that with on legacy What's you quarter. a those to Looks things move many talk us, pace Can during the those a rearview but Jay, touch were though kind slight that's -- how much and uninterrupted able can remaining? continue selling on iStar about it's extended now you certainly last kind how progress. at year completely even really much? here or the and the the and SAFE and resolutions opportunity then

was the the I toughest certainly Yes. frozen. to Day Thanks, Labor part much Steve. period March markets guess pretty that the COVID of were

saw that period of those as much lot is the into And that Labor So certainly assets out a tone during beginnings a Coming we of The the of of teeing XXXX much level conversations. is in not head had higher. certainly been we the progress on of revival better. we some now up. Day engagement

think asset those monetizing things putting doing maybe we actually the of So management team we of to has been But months nine months market great in them. pleased a lost on our conversations. six preparing job some pretty them

peak part walked through just You've terms the portfolio. in being seen progress. Jeremy last around reducing Obviously, the latter that success some of as year. Made Asbury we of talked in about

So good you've in our there reducing seen some progress capital.

So certainly chess we've candidly, positive, pointing bit direction stuff move the of right to are and vectors is these the happened given little all fronts, direction. we right a feel good two-year have in could some on board. window the all ourselves pieces all But the like the down earlier. this And which now,

buying SAFE do you've dividends uses points the past when able buyback year money placements where significant concurrent and in of about invest shares, or and between amounts been a number of of SAFE. And two, into to there's you cash Thanks. private think been

looking and of in SAFE and you that maybe With there the that may or dividend talk as debt But you you new allocation and in don't when growth the levels as purchases happen place at opportunity about focus how options? much buybacks about I know can of size. really outlook, think frequently not kind what those

intended of next corridor, about think ground to strong scale Safehold leases. big mean, kind a of safe I which into milestone, is sheet, no Sure. a what balance help the we premise really with $X is the we of start we create wanted billion to pun very build

position. strong we shares, heard think create So, to overall money the about, that that really another today. you of choices enhances and as Safehold goal we deploy our of the buy in price share ecosystem, Then, we when portfolio had rest to reflected a just not make SAFE Safehold in even lease use in talk some first sure, have capital, foremost our that we been foundation. they're do that's into but value us way we excess think the then, ground expand we material things which the and We leg prudently materially to And because any think the the there's to value we still the whole today, valuation it of undervalue, isn't make.

value we when get the about what by thoughtful So, and a to can prudent think Safehold full continuing grow understand to shares we building the create really then, it buying effect and to double barrel it's makes continuing of sense. market be

our whether it's it it's the create think shareholders. capture is then mission whether so, for SAFE, and clear, we STAR, value And pretty

on repurchase? Great. shares And from buyback willing last you'd or one then limits standpoint be STAR a there anything the guess that much structural how I Jay, covenant is to

creating question to continue to balance executing business both our Look, strong commitment again, sure a Other our and have really that our we Yes. creditors. prudent want very want it's this window and we make on and to of That's plan. prudence be saying, Board to we than our very sheet. a strong

I through been think value some grown we SAFE substantial have flexibility. the We liquidity. we've on balance position. think, sheet the building We've

We it's think, upset again the don't that executing prudence point optimal terms do value strategy just applecart. want to matter this in create I that to really capture of of at the anything a the So might value.

the the QX morning. Great. progress this update appreciate Well, and on congratulations in

Thanks, Steve.

no [Operator further question. Instructions] we have Mr. Fooks,

you please to contact on conference you Operator, should directly. have replay give you Okay. please any release, free And today's once Great. would the call me if additional again? for Thank feel questions tuning in. Thanks. instructions earnings

after gentlemen, midnight. at Time this for today, through Eastern conference will X:XX and replay Ladies XX p.m. you. Yes. Thank May available be

and the dialing access conference participation. at one of the your again numbers code conclude for access are XXXX-XXX-XXXX Thank replay our you with time XXXXXXX. any That code XXXX-XXX-XXXX executive system Those access the may by entering does XXXXXXX. You for today.

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