Index additions and new Austin project put Safehold back on investors’ radar

Safehold (SAFE) has just been added to both the Russell 2000 Value-Defensive Index and the Russell 2000 Defensive Index, while also closing a new affordable housing ground lease in Austin, Texas.

The index inclusions can affect how index funds and other rules based strategies treat Safehold stock, and the Austin transaction shows how the company is continuing to use its ground lease model in the affordable housing segment.

For context, Safehold’s 90 day share price return of 16.99% and year to date share price return of 15.19%, against a 1 year total shareholder return of 3.97%, suggest momentum has improved recently after weaker multi year outcomes, likely reflecting shifting views on its ground lease pipeline and index additions.

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With Safehold trading at $15.70 and sitting about 19% below the average analyst price target of $18.73, investors are left asking whether the recent rebound still leaves room for upside or whether the market is already pricing in future growth.

Most Popular Narrative: 21.9% Undervalued

On the most followed narrative, Safehold’s fair value of $20.09 sits well above the last close at $15.70, putting the spotlight on the assumptions behind that gap.

The expansion of Safehold's addressable market, as institutional and developer demand rises for alternative real estate capital structures such as ground leases, is likely to lift deal originations, drive portfolio growth, and positively impact long-term top-line revenue. High portfolio diversification across top U.S. metropolitan markets, combined with Safehold's proprietary underwriting technology and conservative credit metrics, reduces structural vacancy risk and loss rates, supporting higher net margins and more consistent earnings over time as the platform scales.

Want to understand why this view still points to upside even after Safehold’s recent rebound? The narrative leans on steady revenue expansion, rising margins, and a future earnings multiple that is well below what many real estate peers trade on.

Result: Fair Value of $20.09 (UNDERVALUED)

However, investors also need to weigh risks for Safehold, including potential project delays in commercial real estate development, as well as political or regulatory pressure on affordable housing projects in key markets.

Another View: What the SWS DCF Model Says About Safehold

While analysts see Safehold as 21.9% undervalued relative to their $20.09 fair value, the SWS DCF model comes out more cautious, with an estimate of $12.25. On that view, the current $15.70 price looks rich. This raises a key question: which framework do you trust more for a long term holding?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Safehold for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 43 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this mix of optimism and concern around Safehold feels familiar, treat it as a signal to review the details yourself and weigh both sides using the 4 key rewards and 2 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.