Safehold announces public offering, concurrent private placement

• Safehold (NYSE:SAFE) commenced an underwritten public offering to sell 1.75M shares.
• SAFE intends to grant the underwriters a 30-day option to purchase up to an additional 262.5K shares.
• Concurrently with the completion of the public offering, SAFE will sell to iStar (NYSE:STAR) in a private placement a number of shares equal to 64.93% of the total number of shares sold in the offering and the concurrent private placement (excluding any shares sold pursuant to the underwriters' option) or, if less, shares with an aggregate purchase price of $185M at the public offering price per share.
• SAFE intends to use the net proceeds from the public offering and concurrent private placement to make additional investments in ground leases and repay outstanding borrowings under its revolving credit facility.

Comments

[Allen Greathouse]

Shares are way undervalued, this should drive good UCA growth. Long $STAR $SAFE

[Bingy77]

@Allen Greathouse issuing shares at lows is a good way to drive dilution

[SRPSU]

@Bingy77 from the prospectus filed with the SEC:

"Since December 31, 2021, we originated four new Ground Lease investments for $488.0 million (of which we have funded $329.3 million and have $158.7 million of unfunded commitments). Additionally, we funded $6.3 million under existing Ground Lease commitments.

As of the date of this prospectus supplement, we have approximately $317.9 million of unfunded commitments (inclusive of the aforementioned $158.7 million commitment). We also have signed letters of intent or are in an advanced stage of negotiations to originate or enter into a commitment to purchase an aggregate of 14 Ground Leases for approximately $770.0 million, and have $578.9 million in Ground Lease Plus Commitments (there can be no assurance that these transactions will be completed)."

This raise will almost exactly match the $317.9 million of unfunded commitments. The business seems to be doing really well, and either they raise more debt to fund the commitments or issue shares. Since they just raised $475 million of 30 year debt, I'm assuming the rating agencies will not take kindly to them immediately raising more.

This is the business, and how it has been operated since the start.

[Bingy77]

@SRPSU yes I understand how it works, but diluting shareholders by 3% at $59 a share not that ideal