NEW YORK - Fitch Ratings has elevated Safehold Inc. (NYSE: NYSE:SAFE), a $1.42 billion market cap real estate investment trust, to an A- credit rating from its previous BBB+ status, projecting a stable future. The upgrade also extends to Safehold's operating subsidiary, Safehold GL Holdings LLC, which received an identical rating and outlook. According to InvestingPro data, the company's strong financial position is evidenced by its exceptional current ratio of 43.35x.
The upgrade, as detailed by Fitch, acknowledges Safehold's dedication to the ground lease asset class, noted for its low-risk profile and potential for long-term, growing revenue. The agency highlighted the company's strategic shift towards unsecured debt, enhanced portfolio diversification, robust asset quality, conservative leverage, and the strength of its dividend coverage. InvestingPro analysis supports this assessment, revealing impressive revenue growth of 23.33% and strong liquidity metrics. Subscribers can access 6 additional ProTips and comprehensive financial analysis in the Pro Research Report.
Brett Asnas, Safehold's Chief Financial Officer, responded to the upgrade by underscoring the company's commitment to maintaining a top-tier credit profile, which includes a focus on high-quality assets and stable funding sources. Asnas anticipates that the improved ratings from two major agencies will lead to more favorable capital costs and accessibility, ultimately benefiting shareholders and customers alike.
Safehold Inc., listed on the New York Stock Exchange under the ticker SAFE, is known for pioneering the modern ground lease market since 2017. The company aims to revolutionize real estate ownership by offering owners of various high-quality properties a method to unlock land value, potentially leading to higher returns and reduced risk. As a REIT, Safehold's strategy is to provide its shareholders with secure and growing income alongside long-term capital appreciation, currently offering a 3.41% dividend yield and trading at an attractive P/E ratio of 11.75. InvestingPro's Fair Value analysis suggests the stock is currently undervalued.
The announcement made today is based on a press release statement from Safehold.
In other recent news, Safehold Inc. has been the focus of recent analyst adjustments and earnings reports. Mizuho (NYSE:MFG) Securities increased its price target for Safehold from $20 to $25, maintaining a neutral stance. This decision reflects Safehold's sensitivity to interest rate changes due to its investment spread business model and long-duration leases. The firm, however, noted limited visibility on Safehold's transaction activity and growth prospects.
In the third quarter of 2024, Safehold reported steady investment activity and financial growth. The company's new origination activity totaled $104 million, with revenue for the quarter standing at $90.7 million and net income at $19.3 million. Earnings per share reached $0.27, an 11% year-over-year increase excluding non-cash provisions.
Despite the volatility in interest rates, Safehold expressed cautious optimism for improved transaction conditions in 2025. The company also announced the acquisition of minority interests and smaller multifamily ground leases, aiming to increase ownership to 100%. These are among the recent developments as Safehold continues to navigate the real estate investment landscape.
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