Safehold Announces $750 Million Commercial Paper Note Program

Rhea-AI Summary

Safehold (NYSE: SAFE) has launched a $750 million unsecured commercial paper note program through its operating company, Safehold GL Holdings This program allows the issuance of unsecured commercial paper notes, which will rank equally with other senior unsecured debt of the operating company and are fully guaranteed by Safehold. The proceeds will be used for general corporate purposes. Safehold expects cost of capital benefits compared to its $2.0 billion revolving credit facility, which will serve as a liquidity backstop for the notes. The notes are not registered under the Securities Act of 1933 and cannot be sold in the U.S. without registration or exemption.

Positive

• Launch of a $750 million unsecured commercial paper note program, providing significant financing capacity.
• Expected cost of capital benefits compared to the existing $2.0 billion revolving credit facility.
• Use of revolving credit facility as a liquidity backstop, enhancing financial stability.

Negative

• Unregistered notes cannot be sold in the U.S. without registration or applicable exemption, potentially limiting marketability.

Insights

Financial Analyst

Safehold Inc.'s announcement of a $750 million commercial paper note program introduces a noteworthy alternative to its existing $2.0 billion revolving credit facility. The primary benefit of this program lies in its potentially lower cost of capital compared to traditional credit facilities. By issuing short-term, unsecured notes, Safehold could reduce its interest expense, thereby improving its overall financial performance. This move also demonstrates the company's intention to manage liquidity risk by retaining its revolving credit facility as a liquidity backstop. Investors should note that the unsecured nature of these notes means they rank equally with other senior unsecured debt, suggesting a maintained position in the company's capital structure. In the short term, this strategy could enhance Safehold's flexibility and cost efficiency, while in the long term, it might indicate solid liquidity management and a proactive approach to capital structure optimization. However, the reliance on the commercial paper market requires vigilant monitoring of market conditions and interest rate changes.

Market Research Analyst

The establishment of the commercial paper note program by Safehold is a strategic move aimed at leveraging the current dynamics of the capital market. The U.S. commercial paper market is characterized by short-term, lower-cost borrowing, which aligns with Safehold's objective to optimize its cost of capital. This initiative could be a response to current favorable conditions in the commercial paper market, which typically features lower interest rates compared to long-term debt instruments. For retail investors, it is important to understand that this financial maneuver can enhance Safehold's profitability by reducing interest expenses, provided that the market remains stable. This program also underscores the company’s confidence in its creditworthiness and its ability to continuously manage debt efficiently. Nevertheless, the company's success in this strategy will depend on its ongoing ability to access the commercial paper market under favorable terms.

NEW YORK, June 21, 2024 /PRNewswire/ -- Safehold Inc. (the "Company" or "Safehold") (NYSE: SAFE) today announced that its operating company, Safehold GL Holdings LLC (the "operating company"), has established an unsecured commercial paper note program in the United States.

Under the terms of the program, the operating company may issue from time to time unsecured commercial paper notes up to a maximum aggregate amount outstanding at any one time of $750 million. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the operating company's other unsecured senior indebtedness. The notes will be fully and unconditionally guaranteed by the Company. Note proceeds will be used for general corporate purposes.

The Company expects to realize cost of capital benefits in the commercial paper market versus its $2.0 billion revolving credit facility, and expects to use its revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper program.

The notes to be offered under the commercial paper note program have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the notes under the operating company's commercial paper note program.

About Safehold:

Safehold Inc. (NYSE: SAFE) is revolutionizing real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings. Having created the modern ground lease industry in 2017, Safehold continues to help owners of high quality multifamily, office, industrial, hospitality, student housing, life science and mixed-use properties generate higher returns with less risk. The Company, which is taxed as a real estate investment trust (REIT), seeks to deliver safe, growing income and long-term capital appreciation to its shareholders. Additional information on Safehold is available on its website at www.safeholdinc.com.

Company Contact: 

Pearse Hoffmann
Senior Vice President
Capital Markets & Investor Relations
T 212.930.9400
E investors@safeholdinc.com

 

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SOURCE Safehold

FAQ

What has Safehold announced regarding a new financial program on June 21, 2024?

Safehold announced a $750 million unsecured commercial paper note program through its operating company, Safehold GL Holdings

What is the maximum amount of commercial paper notes that Safehold can issue under the new program?

Safehold can issue up to $750 million in unsecured commercial paper notes.

What will the proceeds from Safehold's commercial paper notes be used for?

The proceeds will be used for general corporate purposes.

How does Safehold expect the new commercial paper program to impact its cost of capital?

Safehold expects to realize cost of capital benefits with the new commercial paper program compared to its $2.0 billion revolving credit facility.

Are the commercial paper notes under Safehold's new program registered under the Securities Act of 1933?

No, the notes are not registered under the Securities Act of 1933 and cannot be sold in the U.S. without registration or an applicable exemption.