HG bonds: Safehold places upsized 2032 notes offering for refinancing; terms

Safehold Operating Partnership LP today completed an upsized $350 million offering of 2.85% 10-year notes due Jan. 15, 2032, at T+145. The issue was originally marketed at $300 million.

Proceeds will be used to repay borrowings under the company's revolving credit facility and for general corporate purposes, according to regulatory filings.

Safehold last tapped the market in April, when it placed a debut $400 million offering of 2.80% 10-year notes at T+125. For reference, the issue traded late last week at a G-spread of 131 basis points.

The operating partnership is a subsidiary of Safehold Inc., a real estate investment trust focused on acquiring ground leases in U.S. urban areas. It is externally managed by iStar Inc. Safehold was founded in 2017.

The company garnered first-time ratings at Baa1 at Moody's and BBB+ at Fitch during the first quarter. The outlook is stable on both sides.

In May, Fitch noted rating constraints including Safehold's "short operating history as a standalone entity, which limits the ability to assess its execution against stated objectives over market cycles; concentrated exposures to office and hotel properties and certain geographic markets particularly against the backdrop of the coronavirus pandemic and evolving real estate trends; relatively low levels of profitability, particularly on a cash-basis; limited funding diversity given the fully secured funding profile to date; and REIT distribution requirements, which limit the ability to retain capital."

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