Safehold Gets $2B Loan Facility

Safehold Inc., a leading real estate investment trust known for its innovative ground lease business model, has recently secured a new $2.0 billion unsecured revolving credit facility

This new financial agreement supersedes the company's previous credit facilities totaling $1.85 billion.

With a maturity date of May 1, 2029, and options to extend for two additional six-month periods, the new credit facility offers a lower interest rate of SOFR plus 85 basis points. This provides a nominal cost saving over previous agreements.

Brett Asnas, Chief Financial Officer, expressed his satisfaction with the agreement, emphasizing improved financial conditions for Safehold. He acknowledged the benefits of this refinancing, such as reduced capital costs, extended credit terms, and enhanced liquidity. Asnas also highlighted the importance of banking partnerships in providing more versatile financial services that are keen on generating value for both customers and shareholders.

JPMorgan Chase Bank, N.A. led the administration of the facility, with BofA Securities and others serving as bookrunners and arrangers. Multiple financial institutions have come together to support this initiative.

Our Opinion:

The $2 billion revolving loan facility secured by Safehold undoubtedly has potential benefits, like availability of large capital and enhanced growth opportunities. However, it also comes with potential pitfalls, such as the risk of over-borrowing and the compliance burden that could limit the upside. Therefore, while this development could serve as an incredible impetus for growth for Alternative Lenders, it should be managed with caution and diligent planning. Overall, the decision to engage in such large revolving credit facilities should align with the company's risk tolerance, growth plans, and financial capabilities.

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