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Investing.com - Morgan Stanley (NYSE:MS) lowered its price target on Safehold (NYSE:SAFE) to $16.00 from $17.00 on Monday, while maintaining an Equalweight rating on the real estate investment trust. The stock, currently trading at $14.31, offers a 5.02% dividend yield and trades at attractive multiples with a P/B ratio of 0.44x.
The firm cited a sum-of-the-parts analysis that points to limited upside potential for the first public REIT targeting ground leases, a growing segment within commercial real estate. According to InvestingPro data, analyst price targets range from $17 to $32, suggesting potential upside despite the stock’s 37% decline over the past year.
Morgan Stanley’s valuation incorporates two distinct components: a discounted cash flow analysis of the bond-like contractual ground lease rent payments, and the net present value of the Caret component, which represents residual value reverting to Safehold at the end of ground leases.
Despite the reduced price target, the firm acknowledged Safehold’s stable and predictable income streams, which benefit from the seniority of ground lease cash flows and built-in inflation protection.
The analysis also recognized Safehold’s growth opportunities, including potential capital appreciation, a sizeable total addressable market, and a scalable platform for the rapidly modernizing ground lease industry.
In other recent news, Safehold Inc. announced a quarterly dividend of $0.177 per share for the second quarter of 2025, translating to an annualized rate of $0.708 per share, payable on July 15, 2025. RBC Capital Markets has adjusted its price target for Safehold shares to $20.00 from $21.00, maintaining an Outperform recommendation. This adjustment follows a reassessment of financial estimates after the first quarter, considering updated discount rate assumptions. Meanwhile, Citizens JMP reaffirmed its Market Outperform rating for Safehold, highlighting the company’s scalable and diversified portfolio of high credit quality investments. During Safehold’s recent shareholder meeting, five directors were elected, including Jay Sugarman and Robin Josephs, with significant support. Analysts at Citizens JMP also noted Safehold’s unique position in the ground lease market, emphasizing its potential benefits from an improving macroeconomic environment. Safehold’s management has been actively engaging with investors, underscoring the company’s diverse investment alternatives and consistent flow of organic deals.
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