Safehold (NYSE:SAFE) reported second-quarter results marked by increased ground lease originations, new private capital transactions and continued growth in its estimated unrealized capital appreciation account.
GAAP revenue for the quarter was $114.6 million, while net income was $30.2 million, or $0.42 per share. Chief Financial Officer Brett Asnas said net income and earnings per share rose from a year earlier primarily because of accretion from asset fundings and new originations.
The new investments carried a 35% ground lease-to-value ratio, 3.0 times underwritten rent coverage and a 7.4% economic yield, Trachtenberg said. Safehold funded $123 million during the quarter, including $69 million for new ground lease originations, $49 million for pre-existing ground lease commitments and $5 million of leasehold loan fundings.
Portfolio Growth and Multifamily Focus
At quarter-end, Safehold’s total portfolio was valued at $7.3 billion and contained 172 assets. The company estimated its unrealized capital appreciation, or UCA, at $9.8 billion, up $260 million from the preceding quarter, nearly $500 million year to date and nearly $1 billion since appraisal values reached a low in the first quarter of 2025.
Safehold’s portfolio ground lease-to-value ratio was 52%, while rent coverage remained unchanged at 3.4 times. The portfolio includes approximately 39.4 million square feet of institutional-quality commercial real estate underlying its ground leases.
Multifamily remains the company’s primary investment focus. The multifamily segment now includes 111 assets with nearly 25,000 units and accounts for about 65% of the portfolio by asset count and 61% of the estimated UCA value. Trachtenberg said the company intends to “continue to lean into multi as our core asset class going forward,” while remaining open to evaluating opportunities in other property types.
On office properties, Trachtenberg said the sector would face a high hurdle before Safehold returned to the market, but the company is not excluding any asset class entirely.
Chairman and Chief Executive Officer Jay Sugarman said the company’s strategy is centered on owning well-located land in major U.S. markets and benefiting over time from urban densification and redevelopment toward higher-value uses.
Brookfield Venture and Financing Activity
During the quarter, Safehold closed a $348 million joint venture with Brookfield involving a portfolio of seven ground leases. Brookfield acquired a 49% interest in the assets, while Safehold retained control and an option to repurchase Brookfield’s stake after seven years.
Asnas said the venture added a sophisticated institutional partner, demonstrated demand for the company’s portfolio at what management considered an attractive valuation, reduced leverage and created additional investment capacity. He said the transaction was structured around existing originated assets and gave Safehold future flexibility without requiring the company to repurchase the interest.
Safehold also issued $225 million of 30-year step-rate unsecured notes. The notes were priced at an all-in coupon of 6.615%, or Treasury plus 162.5 basis points. After accounting for approximately $30 million of gains from recently unwound hedges, management said the effective cost was approximately 5.83%, or Treasury plus 84 basis points. The notes begin with a 4% cash interest rate that increases gradually over their 30-year term.
The company ended the quarter with about $1.4 billion of cash and credit facility availability. Total debt was approximately $5 billion, including $2.8 billion of unsecured debt, $1.3 billion of non-recourse secured debt, $621 million drawn on its unsecured revolving facility and $270 million representing Safehold’s pro rata share of debt on joint-venture ground leases.
Safehold’s weighted average debt maturity was about 18 years, with no significant debt maturities until 2029. The company reported total debt-to-equity leverage of 2.01 times and an effective interest rate of 4.4% on permanent debt.
Capital Allocation and Pipeline
Safehold repurchased approximately 850,000 common shares during the quarter at an average price of $15.17 per share. It also maintained a $500 million SOFR swap at 3% through April 2028, which Asnas said generated approximately $820,000 of interest savings in the second quarter.
Management said the investment pipeline remains active. Trachtenberg said Safehold converted a substantial portion of the approximately $255 million of non-binding letters of intent discussed in the prior quarter and expects to execute on most of the remaining pipeline over the next two to three quarters.
Despite elevated and volatile interest rates, Trachtenberg said the company continues to receive meaningful sponsor interest and quote a large number of potential transactions. He noted, however, that ground leases are one component of a property’s capital stack, and sponsors must also secure debt and equity financing to complete transactions.
In affordable housing, Executive Vice President and Head of Investments Steve Wylder said California will remain a key market, while Texas is another priority following the company’s second transaction in that state. Safehold is also studying opportunities in the Southeast, Sun Belt and Mid-Atlantic regions.
“The pipeline is active, the balance sheet is well positioned,” Asnas said, adding that the company expects to continue its momentum through the remainder of the year.
About Safehold (NYSE:SAFE)
Safehold Inc is a real estate investment trust that seeks to redefine land ownership for commercial property owners. The company acquires perpetual ground leases from landowners and structures long-term leaseback arrangements, enabling building owners to unlock the value of underlying land without relinquishing operational control of their properties. By separating land ownership from building ownership, Safehold offers an alternative to traditional mortgage financing and land sale–leaseback transactions.
Safehold’s portfolio spans multiple commercial real estate sectors, including office, multifamily, industrial and retail, with a focus on high-quality properties in major U.S.
