UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2018
_______________________________________________________________________________
Safety, Income & Growth Inc.
(Exact name of registrant as specified in its charter)
Maryland | 001-38122 | 30-0971238 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||
1114 Avenue of the Americas, 39th Floor New York, New York | 10036 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (212) 930-9400
_______________________________________________________________________________
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ý
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. ý
ITEM 2.02 Results of Operations and Financial Condition.
On April 26, 2018, Safety, Income & Growth Inc. issued an earnings release and made available on its website an earnings presentation for the first quarter ended March 31, 2018. A copy of the earnings release and earnings presentation are attached as Exhibit 99.1 and Exhibit 99.2, respectively, hereto and incorporated herein by reference.
The information in this Current Report, including the exhibits hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.
ITEM 7.01 Regulation FD Disclosure.
On April 26, 2018, Safety, Income & Growth Inc. made available on its website an earnings presentation for the first quarter ended March 31, 2018. A copy of the earnings presentation is attached as Exhibit 99.2 hereto and incorporated by reference.
The earnings presentation, including Exhibit 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.
ITEM 9.01 Financial Statements and Exhibits.
Exhibit 99.1 Earnings Release.
Exhibit 99.2 Earnings Presentation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Safety, Income & Growth Inc. | |||
Date: | April 26, 2018 | By: | /s/ ANDREW C. RICHARDSON |
Andrew C. Richardson Interim Chief Financial Officer (principal financial and accounting officer) | |||
EXHIBIT INDEX
Exhibit Number | Description | ||
99.1 | |||
99.2 | |||
1114 Avenue of the Americas
New York, NY 10036
T 212.930.9400
investors@safetyincomegrowth.com
Press Release
Safety, Income & Growth Reports First Quarter
2018 Results
NEW YORK, April 26, 2018
Safety, Income & Growth Inc. (NYSE: SAFE) today reported results for the first quarter
ended March 31, 2018. Highlights for the quarter include:
— Net income of $3.7 million or $0.20 per share
— Funds from Operations (FFO) of $6.0 million or $0.33 per share
— Adjusted Funds from Operations (AFFO) of $5.5 million or $0.30 per share
— Received $3.3 million of Park Hotels percentage rent, an increase of 11% over
the prior-year period
— Closed 3 ground lease deals totaling $91 million
— Portfolio increased 18% during the quarter to $588 million
— Value Bank increased 21% during the quarter to $1.2B
— $81 million of additional deals under LOI
SAFE published a presentation detailing these results and a reconciliation of its non-
GAAP financial metrics, which can be found on its website,
www.safetyincomegrowth.com, in the “Investor Relations” section.
The Company will host an earnings conference call reviewing this presentation beginning
at 10:00 a.m. ET today. This conference call can be accessed by all interested parties on the
website (listen only) or by dialing toll-free (866) 393-4306 (U.S. domestic) or (734) 385-2616
(international) using conference ID: 5688969.
For those who are not able to listen to the live broadcast, a replay will be available shortly
after the call on the website or by dialing (855) 859-2056 (international toll free) using the
conference ID: 5688969.
The Company will host its Annual Meeting of Shareholders at the Harvard Club of New
York City on the 2nd Floor in the Gordon Reading Room on Wednesday, May 9, 2018 at
9:00 a.m. ET. The address is 35 West 44th Street, New York, New York 10036. All
shareholders are cordially invited to attend.
Safety, Income & Growth Inc. (NYSE: SAFE) is the first publicly traded company that
focuses on acquiring, owning, managing and capitalizing ground leases. The Company
seeks to provide safe, growing income and capital appreciation to shareholders by
building a diversified portfolio of high quality ground leases. The Company, which is
taxed as a real estate investment trust (REIT), is managed by its largest shareholder, iStar
Inc. Additional information on SAFE is available on its website at
www.safetyincomegrowth.com.
Company Contact:
Jason Fooks, Vice President of Investor Relations & Marketing
(NYSE: SAFE)
Q1’18 Earnings Results
April 26, 2018
1
Safety, Income & Growth Inc.
The Ground Lease Company
Forward-Looking Statements and Other Matters
This release may contain forward-looking statements. All statements other than statements of historical fact are forward-looking
statements. These forward-looking statements can be identified by the use of words such as “illustrative”, “representative”,
“expect”, “plan”, “will”, “estimate”, “project”, “intend”, “believe”, and other similar expressions that do not relate to historical
matters. These forward-looking statements reflect the Company’s current views about future events, and are subject to numerous
known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause Company’s actual results to
differ significantly from those expressed in any forward-looking statement. The Company does not guarantee that the
transactions and events described will happen as described (or that they will happen at all). The following factors, among others,
could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking
statements: market demand for ground lease capital; the Company’s ability to source new ground lease investments; risks that
the rent adjustment clauses in the Company's leases will not adequately keep up with changes in market value and inflation; risks
associated with certain tenant and industry concentrations in our initial portfolio; conflicts of interest and other risks associated
with the Company's external management structure and its relationships with iStar and other significant investors; risks
associated with using debt to fund the Company’s business activities (including changes in interest rates and/or credit spreads,
and refinancing and interest rate risks); general risks affecting the real estate industry and local real estate markets (including,
without limitation, the potential inability to enter into or renew ground leases at favorable rates, including with respect to
contractual rate increases or participating rent); dependence on the creditworthiness of our tenants and their financial condition
and operating performance; competition from other developers, owners and operators of real estate (including life insurance
companies, pension funds, high net worth investors, sovereign wealth funds, mortgage REITs, private equity funds and separate
accounts); unknown liabilities acquired in connection with real estate; and risks associated with our failure to qualify for
taxation as a REIT under the Internal Revenue Code of 1986, as amended. Please refer to the section entitled “Risk Factors” in
our Annual Report on Form 10-K for the year ended December 31, 2017 and any subsequent reports filed with the Securities and
Exchange Commission (SEC) for further discussion of these and other investment considerations. The Company expressly
disclaims any responsibility to update or revise forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.
Investor Relations Contact
Jason Fooks
(212) 930-9400
investors@safetyincomegrowth.com
2
Safety, Income & Growth Inc.
The Ground Lease Company
I. Earnings
3
Safety, Income & Growth Inc.
The Ground Lease Company
Section 1 – Earnings
Q1’18 Results
$91M in ground lease investments closed from 3 new deals
$588M gross book value of portfolio at March 31, 2018
Note: Refer to the Glossary for definitions of capitalized terms used in this presentation.
(1) Refer to the Non-GAAP financial metrics in the FFO/AFFO slide for reconciliations of these measures to GAAP net income.
$ in
Thousands
Per
Share
Aggregated Impact of
Certain Material
Items Per Share
Net Income $3,720 $0.20 ($0.06)
FFO(1) $5,990 $0.33 ($0.06)
AFFO(1) $5,471 $0.30 ($0.13)
Earnings
Investment
Activity
Active
Pipeline
$81M from 6 deals currently under LOI
All of our post-IPO customers for which we structured a SAFE
Ground Lease™ have returned to explore further opportunities
Refer to Impact of
Certain Material
Items slide for
additional details.
4
Safety, Income & Growth Inc.
The Ground Lease Company
Section 1 – Earnings
Q1’18 Highlights
+$91M
in new investments
Investment Momentum Portfolio Expansion
1. Cash rent, excluding Park Hotels
percentage rent, increased 9% to
$5.6M in Q1’18, driven by 3 new
investments.
2. Park Hotels annual portfolio
percentage rent, recognized in
Q1’18, increased 11% over the
prior-year period.
SAFE’s portfolio increased by
18% to $588M since Q4’17 and
rose 73% from its IPO portfolio
of $340M. Additionally, Value
Bank rose to $66 per share, with
each new deal adding value.
SAFE closed 3 ground lease
deals over the quarter,
increasing the portfolio by
$91M. Notably, returning
customers comprise a
significant portion of SAFE’s
pipeline.
Rent Growth
$3.0M $3.3M
$5.1M $5.6M
2. Park Percentage Rent
1. Excluding Park
Percentage Rent
Y/Y +11%
Q/Q +9%
Q/Q Portfolio
Q/Q Value Bank
18% to $588M
21% to $1.2B
5
Safety, Income & Growth Inc.
The Ground Lease Company
Section 1 – Earnings
Income Statement
Q1’18
Revenues:
Ground lease and other lease income(1) $11,280
Other income 413
Total revenues $11,693
Costs and expenses:
Interest expense $3,255
Real estate expense 354
Depreciation and amortization 2,270
General and administrative(2) 2,032
Stock based compensation ‒
Other expense 39
Total costs and expenses $7,950
Net income $3,743
Net (income) attributable to noncontrolling interests (23)
Net income attributable to Safety, Income & Growth Inc.
and allocable to common shareholders $3,720
Note: $ in thousands.
(1) Includes Park Hotels percentage rent payment of $3.3M recognized in Q1’18. If this were straight-lined over 2018, it would reduce net income by $2.5M for Q1’18.
(2) Includes $1.3 million of expenses associated with management fee and iStar reimbursables for Q1’18. These fees are waived by our manager until June 30, 2018, however are recorded as expenses under GAAP.
Refer to the General & Administrative Breakdown slide for additional detail on these expenses.
6
Safety, Income & Growth Inc.
The Ground Lease Company
Section 1 – Earnings
FFO / AFFO
Note: $ in thousands except for per share amounts. Refer to the Appendix for an explanation of FFO and AFFO.
(1) The aggregate impact of certain material items is ($0.06) per share to FFO and is ($0.13) per share to AFFO. Impact of certain material items includes: (i) straight-lining Park Hotels percentage rent,
which is recorded annually in Q1 and (ii) G&A expenses which are waived but recorded under GAAP. Refer to the Impact of Certain Material Items slide for additional information.
Q1‘18
Net income allocable to Safety, Income & Growth Inc. common shareholders $3,720
Add: Real estate related depreciation and amortization 2,270
FFO allocable to Safety, Income & Growth Inc. common shareholders $5,990
FFO allocable to Safety, Income & Growth Inc. common shareholders $5,990
Less: Straight-line rental income (2,658)
Add: Amortization of real estate-related intangibles, net 469
Add: Stock-based compensation ‒
Add: Non-cash management fee expense 1,308
Add: Non-cash interest expense 347
Add: Allocable share of noncontrolling interests’ depreciation, amortization and
straight-line rental income 15
AFFO allocable to Safety, Income & Growth Inc. common shareholders $5,471
Weighted avg. share count 18,190
FFO per share(1) $0.33
AFFO per share(1) $0.30
7
Safety, Income & Growth Inc.
The Ground Lease Company
Section 1 – Earnings
Impact of Certain Material Items
(1) Refer to the Asset Summary for more information regarding the Park Hotels Portfolio.
Effected Net
Income Items
Q1’18
Per Share Description
Park Hotel
Percentage Rent
Recognition(1)
($0.13)
Results for the quarter ended March 31, 2018 include the total annual percentage rent
from the Park Hotels Portfolio, which is paid annually in arrears and was received and
recorded by SAFE in the first quarter of 2018 in respect of 2017. If the percentage rent
payment of $3.3M recognized in Q1’18 was straight-lined over 2018, it would reduce net
income by $2.5M for Q1’18.
Waived G&A
Expenses
$0.07
Related to $897K in management expenses and $411K of iStar reimbursables that are
waived, but expensed under GAAP. Refer to the General & Administrative Breakdown
slide for additional information.
8
Safety, Income & Growth Inc.
The Ground Lease Company
Section 1 – Earnings
General & Administrative Breakdown
SAFE’s management contract waives 100% of the
management fee and reimbursables through June 30, 2018
Management fee and reimbursables are recorded as
GAAP expenses during the waiver period, and are offset
with an equal credit to equity on the balance sheet
Note: $ in thousands unless otherwise noted.
Q1’18 Description Notes
Management fee $897 Fee based on 1% of equity. Paid in the form of SAFE stock.
Waived until June 30, 2018. Despite
waiver, recorded as an expense offset
by a credit to equity.
Reimbursables 411
Includes bookkeeping, tax and other services performed by
our manager, iStar, which are subject to reimbursement.
Waived until June 30, 2018. Recorded
as an expense offset by a credit to
equity.
Public company
and other costs
724 Auditors, legal, listing fees and other expenses. Paid in cash.
Total $2,032
General & Administrative:
Q1 2018 G&A
$1.3M of $2.0M
is waived
9
Safety, Income & Growth Inc.
The Ground Lease Company
Section 1 – Earnings
Dividends
$0.15 dividend was declared in the first quarter representing an annualized rate of $0.60 per share.
Note: $ given per share.
$0.0066
$0.15
$0.15 $0.15
$0.00
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
$0.14
$0.16
$0.18
June 27 - June 30 Q3 Q4 Q1
$0.1566
$0.0066 in Q3
was paid for a
four day Q2
stub period.
2017 2018
10
Safety, Income & Growth Inc.
The Ground Lease Company
II. Portfolio
11
Safety, Income & Growth Inc.
The Ground Lease Company
Section 2 – Portfolio
First Quarter Investment Metrics
$497M
Gross Book Value
15
Ground Lease Assets
$588M
Gross Book Value
18
Ground Lease Assets
+$91M
From 3 new deals
Q4 2017 Q1 2018
4.2%
2.0% annualized fixed
increases over the lease
term and all deals
include CPI-based
adjustments
4.4x 33.5%
W.A. Ground Rent CoverageAvg. Cap Rate Avg. Rent Escalators W.A. Basis as a % of CPV
Q1’18 Deals
+18%
12
Safety, Income & Growth Inc.
The Ground Lease Company
Section 2 – Portfolio
New Investments
A SAFE Ground Lease™ on a
luxury 14-story multi-family
property containing 266 units
in Washington, D.C. The
property, constructed in 2008,
is well-located in the Navy
Yard neighborhood, one block
from the Navy Yard metro
station and a short walk to
Nationals Park.
A SAFE Ground Lease™ on a
stabilized two-building office
campus comprising 376K
square feet on 27 acres located
in the Research Triangle in
Cary, NC
A SAFE Ground Lease™ on a
7-story, 410K square foot office
building in the Midtown sub-
market of Atlanta, GA. The
building is located on the
corner of 17th St. and Peachtree
St., offering easy access to
I-75, I-85 and GA-400.
Onyx on First Regency Lakeview Pershing Point
13
Safety, Income & Growth Inc.
The Ground Lease Company
Section 2 – Portfolio
Geographic Diversification by MSA
Seattle
12.4%
9.6%
15.5%
Detroit
Salt Lake City
5.5%
San Diego
3.7%
San Francisco
3.5%
Durango
2.3%
Dallas
9.8%
Atlanta
8.4%
Washington, D.C.
1.3%
Milwaukee
24.2%
Los Angeles
0.4%
Minneapolis
Raleigh-Durham3.4%
14
Safety, Income & Growth Inc.
The Ground Lease Company
<3.0x
1%
3.0-4.0x
40%
4.0-5.0x
2%
5.0x+
57%
<30%
37%
30-40%
27%
40-55%
15%
55-60%
21%
Percentage Rent
39%
CPI
24%
Fixed
7%
Fixed w/ CPI-
Based Adjustments
30%
>60 yrs
58%
<20 yrs
42%
20-60 yrs
0%
Hotel
40%
Multi-Family
32%
Office
27%
Industrial
1%
Ground Rent
Coverage
Section 2 - Portfolio
Portfolio Stratification
(1) Weighted based on in-place base rent; assumes leases are fully extended based on in-place rent.
Property Type
Basis as %
of CPV
Lease Term
Remaining(1)
Rent Escalator
Type
15
Safety, Income & Growth Inc.
The Ground Lease Company
Section 2 - Portfolio
Portfolio Metrics
Annualized base rent $24.1M
TTM Park Hotels percentage rent $3.3M
Total cash rent $27.4M
Total GAAP rent (including TTM % rent) $41.0M
Total cash rent as % of Ground Lease Basis 4.7%
W.A. annualized contractual fixed rent escalations 1.7%(1)
Rent Statistics
Ground Lease Basis as % of CPV 33.0%
Ground Rent Coverage 4.7x
W.A. lease term remaining 56 years
W.A. lease term remaining including extensions 72 years
Total Ground Lease Basis $588M
Ground Lease Structure
(1) Represents the weighted average annualized escalation of leases that have contractually fixed bumps. Does not include leases with solely inflation-based or percentage rent escalations.
16
Safety, Income & Growth Inc.
The Ground Lease Company
New York
29%
Washington, D.C.
24%
Chicago
19%
Miami
8%
San
Diego
6%
Atlanta
3%
Orlando
3%
Various
8%
Multi-
Family
56%
Office
27%
Hotel
14%
Industrial
3%
Section 2 – Portfolio
Pipeline (as of April 24)
$472M Near-Term Pipeline (18 Deals)
Location
(MSA)
In Discussion
$391M
12 Deals
Under LOI
$81M
6 Deals
Note: There can be no assurance that SAFE will acquire or originate any of the investments currently being pursued on favorable terms or at all. Percentages are based on estimated ground lease value.
Property
Type
17
Safety, Income & Growth Inc.
The Ground Lease Company
Section 2 – Portfolio
Value Bank of $1.2B or $66 per Share
Value Bank is calculated as today’s estimated Combined
Property Value (CPV) less SAFE’s Ground Lease Basis
SAFE uses Value Bank to track the capital appreciation
potential at lease expiration from our rights to acquire the
buildings on our land.(1)
(1) Our ability to recognize value through reversion rights may be limited by the rights of our tenants under some of our ground leases, including tenant
rights to purchase the properties or level properties under certain circumstances. Refer to our Current Report on Form 8-K filed with the SEC on April
26, 2018 and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, as updated from time to time in our subsequent
periodic reports, filed with the SEC, for a further discussion of such tenants rights.
(2) SAFE may utilize management’s estimate of CPV for ground lease investments recently acquired that CBRE has not yet appraised. Refer to our 8-K
filed April 26, 2018 with the SEC for additional detail on CBRE’s valuation and our calculation of Value Bank.
$1,192M
Value Bank
(CPV – Ground Lease Basis)
$588M
Ground Lease
Basis
(SAFE’s initial purchase cost
of the ground lease)
$1.8B
Total
CPV
Combined Property Value
Ground Lease Basis
Value Bank
$1,780M
$588M
$1,192M
CBRE conducts
independent
appraisals of the
CPV of each asset(2)
67%
33%
18
Safety, Income & Growth Inc.
The Ground Lease Company
III. Capital
Structure
19
Safety, Income & Growth Inc.
The Ground Lease Company
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Drawn
Revolver
$10
Section 3 –Capital Structure
Debt Overview
Note: $ in millions. For additional information on our debt please refer to the 10-Q.
(1) Initial maturity is June 2020 with two 1-year extensions. As of March 31, 2018 $10.0 million remains outstanding.
(2) Callable without pre-payment penalty beginning January 2021.
(3) April 2027 represents Anticipated Repayment Date. Final maturity is April 2028.
(4) 3.795% coupon effectively locked in and reduced to 3.77% with swap rate lock.
$300(1)
$227(3)
Debt Maturity Profile
Undrawn
Revolver
$290
W.A. Extended Maturity is 7.9 years
Debt Profile (excludes impact of hedges)
2022
Jun.(1) $10 L+135
2023
Jan.(2) $71 L+133
2027
Apr.(3) $227 3.77%(4)
Total $308
As of March 31, 2018
$71(2)
Various forms of debt financing solutions provide SAFE with flexibility to capitalize opportunistically.
Target Leverage
(i) 2.0x Debt to Equity
(ii) 25% Debt as a % of CPV
Current Leverage
Book Debt
Book Equity
Leverage (Debt to Equity)
Combined Property Value (CPV)
Debt as a % of CPV
$308
$362
0.9x
$1,780
17.3%
20
Safety, Income & Growth Inc.
The Ground Lease Company
2.82%
1.87%
1.00%
1.20%
1.40%
1.60%
1.80%
2.00%
2.20%
2.40%
2.60%
2.80%
3.00%
1mo LIBOR Curve Blended Hedge Rate
Section 3 –Capital Structure
Interest Rate Hedges
As of March 31, 2018
Short-Term Hedges
End
Date
Notional
($M)
Blended
Hedge
Rate
Total 10/1/20 $137 1.87%
Long-Term Hedges
Start
Date
End
Date
Notional
($M)
Blended
Hedge
Rate
Total 10/1/20 10/1/30 $184 2.73%
SAFE enters into hedging contracts to mitigate the impact of interest rate fluctuations
In the money In the money
2.73%
2.50%
2.60%
2.70%
2.80%
2.90%
3.00%
3.10%
3.20%
10
/1
/202
0
4/
1/
202
1
10
/1
/202
1
4/
1/
202
2
10
/1
/202
2
4/
1/
202
3
10
/1
/202
3
4/
1/
202
4
10
/1
/202
4
4/
1/
202
5
10
/1
/202
5
4/
1/
202
6
10
/1
/202
6
4/
1/
202
7
10
/1
/202
7
4/
1/
202
8
10
/1
/202
8
4/
1/
202
9
10
/1
/202
9
4/
1/
203
0
10
/1
/203
0
Long-Term Hedges
Fwd Swap Curve Blended Hedge Rate
3.02%
Long-term interest rate protection policy
12.5 weighted average years of interest rate protection on our existing debt
21
Safety, Income & Growth Inc.
The Ground Lease Company
Section 3 –Capital Structure
Balance Sheets
Note: $ in thousands.
(1) “Real estate-related intangibles, net” represents real estate-related intangible assets of $184M and $139M for the periods ended March 31, 2018 and December 31, 2017, respectively, less real estate-
related intangible liabilities of $58M for the periods ended March 31, 2018 and December 31, 2017, respectively.
As of As of
March 31, 2018 December 31, 2017
Assets
Real estate
Real estate, gross $456,476 $413,145
Accumulated depreciation (5,754) (4,253)
Real estate, net 450,722 408,892
Real estate-related intangibles, net(1) 125,802 80,766
Ground lease assets, net 576,524 489,658
Cash and cash equivalents 83,177 168,214
Other assets 18,719 12,682
Total assets $678,420 $670,554
Liabilities and Equity
Liabilities:
Debt obligations, net $307,178 $307,074
Accounts payable and other liabilities 7,585 7,545
Total liabilities $314,763 $314,619
Equity:
Common stock $182 $182
Additional paid-in capital 366,227 364,919
Retained earnings (deficit) (8,295) (9,246)
AOCI 3,770 80
Total shareholders’ equity $361,884 $355,935
Noncontrolling interests 1,773 -
Total equity $363,657 $355,935
Total liabilities and equity $678,420 $670,554
22
Safety, Income & Growth Inc.
The Ground Lease Company
Appendix
23
Safety, Income & Growth Inc.
The Ground Lease Company
Appendix
Asset Summary
Note: Refer to the Glossary for definitions.
†Park Hotels Portfolio Asset which is on a single master lease.
(1) A majority of the land underlying this property is owned by a third party and is ground leased to us through 2044 with rents that are subject to changes in the CPI; however, our tenant pays this cost directly to the
third party.
Property
Location
(MSA) Property Type
Lease Expiration /
As Extended
Rent Escalation
Structure
6201 Hollywood (North) Los Angeles, CA Multi-Family 2104 / 2104 % of CPI
6200 Hollywood (South) Los Angeles, CA Multi-Family 2104 / 2104 % of CPI
Onyx on First Washington, D.C. Multi-Family 2117 /2117 Fixed w/ CPI-Based Adjustments
The Buckler Apartments Milwaukee, WI Multi-Family 2112 / 2112 Fixed
One Ally Center Detroit, MI Office 2114 / 2174 Fixed w/ CPI-Based Adjustments
LifeHope Medical Campus Atlanta, GA Office 2116 / 2176 Fixed
Northside Forsyth Hospital Medical Center Atlanta, GA Office 2115 / 2175 Fixed w/ CPI-Based Adjustments
NASA/JPSS Headquarters Washington, D.C. Office 2075 / 2105 Fixed
Pershing Point Atlanta, GA Office 2117 /2124 Fixed w/ CPI-Based Adjustments
Regency Lakeview Raleigh-Durham, NC Office 2117 /2122 Fixed w/ CPI-Based Adjustments
Doubletree Seattle Airport(1)† Seattle, WA Hospitality 2025 /2035 % Rent
Hilton Salt Lake† Salt Lake City, UT Hospitality 2025 / 2035 % Rent
Doubletree Mission Valley† San Diego, CA Hospitality 2025 / 2035 % Rent
Doubletree Durango† Durango, CO Hospitality 2025 /2035 % Rent
Doubletree Sonoma† San Francisco, CA Hospitality 2025 / 2035 % Rent
Dallas Market Center: Sheraton Suites Dallas, TX Hospitality 2114 / 2114 Fixed
Dallas Market Center: Marriott Courtyard Dallas, TX Hospitality 2026 / 2066 % Rent
Lock Up Self Storage Facility Minneapolis, MN Industrial 2037 / 2037 Fixed
Weighted Avg. 56 / 72 yrs
by Property Type
24
Safety, Income & Growth Inc.
The Ground Lease Company
Appendix
Glossary
Ground Lease Basis Ground Lease Basis is the historical purchase price paid by SAFE to acquire or originate a ground lease.
Combined Property Value (CPV)
The current combined value of the land, buildings and improvements relating to a commercial property, as if there was no
ground lease on the land at the property. CPV is based on independent appraisals by CBRE. The Company will use
management estimates for recently acquired and originated ground leases for which appraisals from CBRE are not yet
available.
Basis as % of CPV
Calculated as our Ground Lease Basis divided by CPV. We believe the metric is an indicative measure of the safety of our
position in a real estate property’s capital structure and represents our last-dollar economic exposure to the underlying
property values.
Value Bank
Calculated as the difference between CPV and Ground Lease Basis. We believe Value Bank represents additional potential
value to SAFE stockholders through the reversion rights embedded in standard ground leases.
Ground Rent Coverage
The ratio of Underlying Property NOI or Estimate Underlying Property NOI to the annualized base rental payment due to
us. We believe the metric is indicative of our seniority in a property’s cash flow waterfall. Underlying Property NOI is
based on information reported to us by our tenants without any independent investigation or verification by us.
Funds from Operations (FFO)
FFO is calculated in accordance with the National Association of Real Estate Investment Trusts (NAREIT) which defines
FFO as net income (determined in accordance with GAAP), excluding gains or losses from sales of depreciable operating
property, plus real estate-related depreciation and amortization.
Adjusted Funds from Operations (AFFO)
Calculated by adding (or subtracting) to FFO the following items: straight-line rental income, the amortization of real
estate-related intangibles, stock-based compensation, acquisition costs, non-cash management fees, and expense
reimbursements, the amortization of deferred financing costs and other expenses related to debt obligations.
25
Safety, Income & Growth Inc.
The Ground Lease Company
Appendix
Glossary – (cont’d)
Underlying Property NOI
With respect to a property, the net operating income of the commercial real estate being operated at the property without
giving effect to any rent paid or payable under our ground lease. Net operating income is calculated as property-level
revenues less property-level operating expenses as reported to us by the tenant, or as otherwise publicly available. We rely
on net operating income as reported to us by our tenants without any independent investigation by us, or as otherwise
publicly available. Note that figures denoted by Underlying Property NOI include One Ally using the source: Prospectus,
dated December 14, 2017, of the Wells Fargo Commercial Mortgage Trust 2017-C42.
Leverage The ratio of book debt to book equity.
Estimated Underlying Property NOI
Management utilizes (i) estimated underlying property net operating income (NOI) in situations where actual underlying
property NOI is unavailable and (ii) projected stabilized property NOI when a project is under development. These figures
are based on leasing activity at the property and may include other available market information, such as comparable
properties or third party valuations.