Safehold (NYSE:SAFE) executives told investors the company made “good progress on a number of fronts” in the fourth quarter of fiscal 2025 and outlined priorities aimed at improving shareholder value in 2026, including higher origination volume, greater visibility into Caret’s value, and beginning to use its previously authorized share repurchase program when conditions allow.
Chairman and CEO Jay Sugarman said the company continues to face headwinds, but emphasized momentum coming out of 2025. He highlighted the appointment of Michael Trachtenberg as president, continued expansion of Safehold’s affordable housing platform, and actions to “solidify the balance sheet and drive down our cost to capital.” Sugarman said management’s goals for 2026 include “more ground lease volume,” steps to get Caret’s value “more readily recognized,” and selectively initiating buybacks “when trading windows are open and market conditions make sense.”
Fourth-quarter activity included 10 transactions and a ratings upgrade
On the capital side, Asnas said Safehold received a credit ratings upgrade from S&P to A- with a stable outlook, giving the company single-A ratings from all three major agencies. He said the company was already seeing “positive flow through into our cost of capital.”
Safehold also closed a $400 million unsecured term loan during the quarter. Asnas said the borrowing refinanced the company’s nearest term maturity due in 2027, increased liquidity, and replaced secured debt with new unsecured debt that is “low cost and freely prepayable over its term.”
Full-year originations totaled $429 million; portfolio ended at $7.1 billion
For fiscal 2025, Asnas said Safehold closed 17 ground leases for $277 million and four leasehold loans for $152 million, for total commitments of $429 million. The 17 ground leases included 12 affordable housing assets, four market-rate multifamily deals, and one hotel transaction. Management cited underwritten rent coverage of 3.2x, a ground lease-to-value (GLTV) ratio of 34%, and an economic yield of 7.3% on those ground leases.
At year-end, Safehold’s total portfolio stood at $7.1 billion. The company estimated unrealized capital appreciation (UCA) at $9.3 billion, up roughly $200 million from the prior quarter, which Asnas said was “primarily driven by external growth from new investments.” Portfolio GLTV was reported at 52% with rent coverage of 3.4x, and the company ended the year with approximately $1.2 billion of liquidity, with additional potential capacity cited in its joint venture.
Asnas also detailed funding activity. In the fourth quarter, Safehold funded $60 million, including $44 million of ground lease fundings on new originations at a 7.3% economic yield, $11 million on pre-existing commitments at a 7.4% economic yield, and $6 million of leasehold loan fundings at SOFR + 501. For the full year, the company funded $252 million, including $141 million of ground lease fundings on new originations at a 7.2% economic yield, $43 million on pre-existing commitments at a 7.0% economic yield, and $68 million of leasehold loan fundings at SOFR + 347.
Earnings results: GAAP EPS of $0.39 in Q4 and $1.59 for the year
Safehold reported fourth-quarter GAAP revenue of $97.9 million and net income of $27.9 million, or $0.39 per share. Asnas attributed the year-over-year GAAP earnings increase primarily to $3.5 million of net accretion on investment fundings, partially offset by a nonrecurring $2.2 million loss from the early extinguishment of debt. Excluding the loss, he said earnings per share were $0.42, up 15% year over year.
For the full year, Safehold reported GAAP revenue of $385.6 million and net income of $114.5 million, or $1.59 per share. Asnas said the annual increase was driven by $17.2 million of net accretion from investment fundings, offset by a $5.1 million decrease in management fee revenue from Star Holdings and the same $2.2 million loss on debt extinguishment. Excluding nonrecurring items, he said EPS was $1.65, up 5% year over year.
Portfolio yields and Caret value remained key discussion points
Asnas said the portfolio currently earns a 3.8% cash yield and a 5.4% annualized yield for GAAP earnings, with annualized yield reflecting non-cash accounting adjustments but excluding future contractual variable rent such as fair market value resets, percentage rent, and CPI-based escalators. On an economic basis, he said the portfolio generates a 5.9% economic yield (IRR-based) with additional upside from contractual CPI “look-backs” included in 81% of ground leases. Using the Federal Reserve’s long-term break-even inflation rate of 2.25%, Asnas said the 5.9% yield would increase to 6.1% on an inflation-adjusted basis, and to 7.3% after layering in an estimate for unrealized capital appreciation tied to Safehold’s 84% ownership interest in Caret at management’s most recent estimated valuation.
In the Q&A, Sugarman reiterated that management believes Caret represents a “massive asset” that is not being recognized by the market. He said a key challenge is that investors still perceive the value as tied to “a hundred-year asset,” while Safehold believes it can be recognized “much, much earlier.” Sugarman said the company would continue to highlight Caret and consider actions “whether that’s liquidity or sales or monetizations of some sort.”
Buybacks, funding profile, and sector positioning
Management discussed buybacks as a 2026 objective, while emphasizing leverage discipline. Asnas said the company is “cognizant” of leverage targets and wants to remain around 2.0x debt-to-equity or lower. He added that “every $240 million that we fund takes leverage up one-tenth of a turn,” and said Safehold wants to execute repurchases in a “leverage-neutral” way, potentially supported by capital recycling initiatives.
Responding to questions about funding and spreads, Asnas said lower-yielding unfunded commitments written in a prior rate environment have largely rolled off. He said Safehold currently has about $140 million of ground lease unfunded commitments and $125 million on the loan side. He characterized ground lease commitment economic yields as “in the low 7s,” and said loan cash yields are “around $400” (as stated on the call). Asnas said credit spreads are at “all-time tights,” and added that margin math is “in the best place it’s been for a while” versus debt costs, net of hedges.
Trachtenberg said the company may broaden the asset classes it invests in but would be “very, very particular” about any office deals and is “more inclined to look at other food groups.” Sugarman added that Safehold has seen some strengthening in core markets like New York, while other areas remain slower, and noted that appraisers have “taken a pretty good whack” at lagging markets, though he said he did not know if conditions were “absolutely at the bottom.”
Safehold also discussed its affordable housing expansion beyond California. Executive Vice President and Head of Investments Steve Wylder said the company has concentrated volume in California because it is the largest and most active affordable market, but said Safehold is studying state-specific mechanics and regulatory regimes and has “several other transactions in other states under LOI” that management expects could translate into closings over coming quarters.
On leasehold loans, management said these are typically three-year terms, sometimes with extension options, and are deployed selectively as part of a blended “ground lease plus leasehold loan” structure. The company said its blended pricing can be “below market” as a one-stop shop compared to sourcing the full capital stack elsewhere.
Finally, executives addressed questions about Park Hotels-related matters, saying they were limited in what they could disclose. Sugarman said a court date is set for the first quarter of 2027 and that the process is expected to cost “several million.” On two assets that did not renew, management said Hilton is staying in place, but the litigation will influence what the company can do and the timeline for any decisions, adding it is not a long-term goal to operate the assets.
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.
