Company: Safety, Income and Growth, Inc.
Description: They believe that they are the first publicly-traded company formed primarily to acquire, own, manage, finance and capitalize ground net leases, or GNLs.
Shares: 10.25 million
Price Range: $19.00-$21.00
Trade Date: 6/22
Underwriter(s): BofA Merrill Lynch, J.P.
Co-Manager: Citigroup, Raymond James, Mizuho Securities
Link to S-1/A Prospectus
Investor Access: This deal can be accessed via the three main underwriters and the three co-managers on this deal.
Distributions: They intend to pay a pro rata initial distribution with respect to the period commencing on the completion of this offering and ending on June 30, 2017, based on a distribution of $0.15 per share for a full quarter.
On an annualized basis, this would be $0.60 per share, or an annual distribution rate of approximately 3.0%, based on an assumed initial public offering price of $20.00 per share.
Business: GNLs, or ground net leases, are typically “triple net” leases, meaning that the tenant is responsible for development costs, capital expenditures and all property operating expenses, such as maintenance, real estate taxes and insurance.
GNLs are typically long-term (base terms ranging from 30 to 99 years, often with tenant renewal options) and have contractual base rent increases (either at a specified percentage or consumer price index (CPI) based, or both) and sometimes include percentage rent participations.They believe that a GNL represents a safe position in a property’s capital structure.
This safety is derived from the typical structure of a GNL, which they believe creates a low likelihood of a tenant default and a low likelihood of a loss by the GNL owner in the event of a tenant default.
Financials: Their historical combined total revenue was $18.6 million and $21.7 million, and their net income was $5.7 million and $6.6 million in 2015 and 2016, respectively.
The historical combined total revenue for the first quarter of 2017 increased 16.1% to $5.3 million and their net income increased 96.1% to $1.8 million, compared to the same period in 2016.
Comp / Sector Performance: Below is a graphic of REIT IPO performance in 2017.
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