Safehold Announces New $2.0 Billion Unsecured Revolving Credit Facility
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Insights
The establishment of Safehold's new $2 billion unsecured revolving credit facility is a significant move that reflects the company's creditworthiness and potential for growth. The reduced interest rate, now adjusted SOFR plus 85 basis points, represents a modest but meaningful decrease in borrowing costs, which could enhance the company's net interest margin over time.
Furthermore, the extended maturity date of May 1, 2029, with two six-month extension options, provides Safehold with a stable, long-term capital structure. This move could potentially lead to improved financial metrics, which might be viewed favorably by shareholders and analysts tracking the company's financial stability and agility in capital management.
The involvement of prominent financial institutions such as JPMorgan Chase, BofA Securities and Goldman Sachs as arrangers signals strong banking confidence in Safehold's business model and future prospects. This could positively influence investor sentiment and Safehold's stock price, provided the broader market conditions support such a trend.
From a strategic perspective, the additional liquidity from the new revolving credit facility could enable Safehold to capitalize on investment opportunities within the modern ground lease industry, an area where it has established itself as a pioneer. With increased financial flexibility, the company might aggressively pursue expansion or acquisitions, which could ultimately enhance its market position and competitive edge.
The sector's response to this development will depend on how effectively Safehold deploys the new capital. If used judiciously, it could lead to a virtuous cycle of growth, investor confidence and a more robust balance sheet. Conversely, if the increased capital leads to overextension or suboptimal investments, the consequences could negatively impact the business and investor perception.
The legal structure of an unsecured revolving credit facility is pertinent, as it implies that Safehold is not pledging any collateral against the borrowed funds. This suggests a level of trust from the lenders regarding the company's ability to repay the debt based on its creditworthiness and the value of its business model. It also hints at the robustness of Safehold's legal and financial disclosures, as lenders have conducted due diligence before allocating such a significant credit line.
Monitoring any covenants or stipulations associated with the facility is key for understanding its potential impact on Safehold's operational freedom. While the news release does not detail these, they are typically significant in shaping a company's financial decision-making process and could affect its strategic choices.
The new facility has a fully extended maturity date of May 1, 2029 which includes two six-month extension options. Based upon Safehold's current credit ratings, the interest rate on the new unsecured revolving facility is adjusted SOFR plus 85 basis points, a 5 basis point savings from the prior facilities.
"This execution is a strong outcome for Safehold, lowering the Company's cost of capital, extending term and increasing liquidity," said Brett Asnas, Chief Financial Officer. "We appreciate the support of our banking relationships, and believe the additional financial flexibility positions us well to deliver attractive capital solutions to customers and create long-term value for shareholders."
JPMorgan Chase Bank, N.A. is the administrative agent for this new revolving facility with JPMorgan Chase Bank, N.A. and BofA Securities, Inc. acting as the joint bookrunners and joint lead arrangers on the transaction; Goldman Sachs Bank
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
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